SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 2000
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.: 0-25470
Community Investors Bancorp, Inc.
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(Exact name of registrant as specified in its charter)
Ohio 34-1779309
---------------------------------- --------------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
119 South Sandusky Avenue
Bucyrus, Ohio 44820
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(Address) (Zip Code)
Registrant's telephone number, including area code: (419) 562-7055
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Securities registered pursuant to Section 12(b) of the Act:
Not Applicable
Securities registered pursuant to Section 12(g) of the Act
Common Stock (par value $.01 per share)
(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all reports required
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the Registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
Yes X No
----- ------
<PAGE>
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
The aggregate market value of the voting stock held by non-affiliates of the
Registrant at September 25, 2000 was $7.4 million.
The number of shares issued and outstanding of the Registrant's Common Stock as
of September 25, 2000 was 1,180,438.
DOCUMENTS INCORPORATED BY REFERENCE
Annual Report to Shareholders for fiscal year ended June 30, 2000 - Parts I, II
and IV.
Definitive Proxy Statement for the Annual Meeting of Stockholders to be held
October 23, 2000. - Part III.
<PAGE>
COMMUNITY INVESTORS BANCORP, INC.
FORM 10-K ANNUAL REPORT
TABLE OF CONTENTS
PART I
Item 1. Business of Community Investors Bancorp, Inc.........................1
Item 2. Properties..........................................................28
Item 3. Legal Proceedings...................................................28
Item 4. Submission of Matters to a Vote of Security Holders.................28
PART II
Item 5. Market for Registrant's Common Equity and Related Shareholder
Matters..........................................................29
Item 6. Selected Financial Data.............................................29
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations............................................29
Item 8. Financial Statements and Supplementary Data.........................29
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.........................................29
PART III
Item 10. Directors and Executive Officers of the Registrant.................30
Item 11. Executive Compensation.............................................30
Item 12. Security Ownership of Certain Beneficial Owners and Management.....30
Item 13. Certain Relationships and Related Transactions.....................30
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K....31
Signatures...................................................................33
<PAGE>
PART I
Item 1. Business of Community Investors Bancorp, Inc.
General
Community Investors Bancorp, Inc. (the "Corporation") was organized in
September 1994 at the direction of the Board of Directors of First Federal
Savings and Loan Association of Bucyrus (the "Association") for the purpose of
acquiring all of the capital 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"). Upon 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 $10.7 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. 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 consumer loans. The Association also invests in U. S. Treasury and
federal government agency obligations and mortgage-backed securities which are
issued or guaranteed by federal agencies.
Lending Activities
General
A savings association generally may not make loans to one borrower and
related entities in an amount which exceeds 15% of its unimpaired capital and
surplus, although loans in an amount equal to an additional 10% of unimpaired
capital and surplus may be made to a borrower if the loans are fully secured by
readily marketable securities. See "Regulation - Federal Regulation of Savings
Associations." At June 30, 2000, the Association's limit on loans-to-one
borrower was approximately $1.5 million and its five largest loans or groups of
loans-to-one borrower, including related entities, aggregated $573,000,
$548,000, $467,000, $373,000, and $371,000. All of these loans or groups of
loans were performing in accordance with their terms at June 30, 2000.
-1-
<PAGE>
Loan Portfolio Composition. The increase in net loans outstanding over
the prior year was $4.4 million, $6.3 million and $7.1 million in fiscal 2000,
1999 and 1998, respectively. The loan portfolio contains no foreign loans nor
any concentrations to identified borrowers engaged in the same or similar
industries exceeding 10% of total loans.
The following table sets forth the composition of the Association's loan
portfolio by type of loan at the dates indicated.
<TABLE>
<CAPTION>
June 30,
2000 1999 1998
Amount % Amount % Amount %
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Mortgage loans:
Secured by one-to-four family residences $75,358 78.5% $75,600 82.1% $67,205 78.7%
Secured by other residential properties 1,202 1.3 399 0.4 500 0.6
Construction loans 801 0.8 1,374 1.5 1,026 1.2
Nonresidential 7,990 8.3 3,733 4.1 4,744 5.6
------ ----- ------ ----- ------ -----
Total mortgage loans 85,351 88.9 81,106 88.1 73,475 86.1
Other loans:
Commercial 2,668 2.8 2,041 2.2 1,357 1.6
Automobile 2,809 2.9 3,032 3.3 3,133 3.7
Home equity and improvement 674 0.7 1,076 1.2 1,732 2.0
Other 4,461 4.7 4,855 5.2 5,678 6.6
------ ----- ------ ----- ------ -----
Total other loans 10,612 11.1 11,004 11.9 11,900 13.9
------ ----- ------ ----- ------ -----
Total loans 95,963 100.0% 92,110 100.0% 85,375 100.0%
===== ===== =====
Less:
Net deferred loan origination fees 312 308 308
Undisbursed loan funds 801 1,289 930
Allowance for loan losses 484 591 563
------ ------ ------
Loans receivable - net $94,366 $89,922 $83,574
====== ====== ======
</TABLE>
-2-
<PAGE>
Contractual Principal Repayments and Interest Rates. The following table
sets forth certain information at June 30, 2000, regarding the dollar amount of
loans maturing in the Association's portfolio, based on the contractual terms to
maturity, before giving effect to net items. Demand loans, loans having no
stated schedule of repayments and no stated maturity and overdraft loans are
reported as due in one year or less.
<TABLE>
<CAPTION>
Mortgage Loans Other Loans
Secured by
One-to-four Other Consumer
Family Mortgage and
Residences (1) Loans (2) Commercial Other Total
<S> <C> <C> <C> <C> <C>
Amounts due in:
One year or less $ 897 $ 5 $1,243 $4,168 $ 6,313
After one year through two years 317 9 25 710 1,061
After two years through three years 440 21 170 1,077 1,708
After three years through five years 1,685 390 600 1,745 4,420
After five years through ten years 9,494 2,785 365 218 12,862
After ten years through twenty years 13,096 1,398 - 26 14,520
Over twenty years 50,230 4,584 265 - 55,079
------ ----- ----- ----- ------
Total $76,159 $9,192 $2,668 $7,944 $95,963
====== ===== ===== ===== ======
Interest rate terms on amounts due
after one year:
Fixed $36,209
Adjustable 53,441
------
$89,650
======
</TABLE>
(1) Includes construction loans.
(2) Includes loans secured by other residential properties and nonresidential
mortgage loans.
-3-
<PAGE>
Origination, Purchase and Sale of Loans
The lending activities of the Association are subject to the written
non-discriminatory, underwriting standards and loan origination procedures
established by the Association's Board of Directors and management. Loan
originations are obtained primarily through real estate brokers, existing
customers, walk-in customers and branch managers. Appraisals are performed on
all real estate loans of $75,000 or more and may be performed on certain loans
less than $75,000. Property valuations are always performed by independent
outside appraisers approved by the Association's Board of Directors. Hazard
insurance is required on substantially all property that serves as collateral.
The Association has local counsel perform a title search on each loan and issue
a legal opinion as to good and marketable title. The Association, however, does
not require title insurance on such loans. Substantially all of the
Association's loans are secured by property located in its market area. The
Association has not been an active purchaser or seller of loans.
All real estate loans are reviewed by the Executive Committee and,
provided they are within the Association's guidelines regarding amount and do
not raise other special considerations requiring Board of Director approval, may
be approved by that committee. The Association's managing officer is authorized
to approve letters of credit of $10,000 or less and open-end additions in any
amount provided that the total outstanding amount does not exceed the amount of
the original mortgage. The consumer loan officer is authorized to approve
consumer loans of $25,000 or less. Any loan in excess of $250,000 or any other
loan that, after funded, would result in a borrower having total loans in excess
of $250,000 must be approved by the Board of Directors. All other loans must be
ratified by the Board, including those loans approved by the Executive
Committee.
The Association has emphasized the origination of ARM loans for several
years. As a result, at June 30, 2000, approximately 62.4% of 1-4 residential
mortgage loans in the Association's portfolio were comprised of ARM loans. All
real estate mortgage loans are originated for portfolio, usually under terms and
conditions which did not permit the immediate sale of such loans to the Federal
Home Loan Mortgage Corporation ("FHLMC") or the Federal National Mortgage
Association ("FNMA").
-4-
<PAGE>
The following table shows origination, purchase and sale activity of the
Association with respect to its loans during the periods indicated:
<TABLE>
<CAPTION>
Year ended June 30,
2000 1999 1998
(In thousands)
<S> <C> <C> <C>
Mortgage loan originations:
Secured by one-to-four family residences $16,087 $25,031 $17,323
Construction loans 1,398 2,676 1,774
Nonresidential 1,915 3,214 1,486
------ ------ ------
Total mortgage loan originations 19,400 30,921 20,583
Other loan originations:
Mobile homes 14 71 82
Commercial 1,666 1,050 493
Automobiles 978 2,189 2,392
Home equity and improvement 978 2,015 2,132
Other 947 1,484 2,050
------ ------ ------
Total other loans 4,583 6,809 7,149
Purchases of loan participations - - 60
------ ------ ------
Total loans originated and purchased 23,983 37,730 27,792
Less:
Loan principal repayments 18,013 31,200 20,421
Sales of whole loans and participations 1,199 - -
Transferred to real estate, mobile homes and
other assets held for sale 345 179 177
Other, net (18) 3 66
------ ------ ------
Net increase in total loans $ 4,444 $ 6,348 $ 7,128
====== ====== ======
</TABLE>
-5-
<PAGE>
Asset Quality
The Association's credit policy establishes guidelines to manage credit
risk and asset quality. These guidelines include loan review and early
identification of problem loans to ensure sound credit decisions. The
Association's credit policies and procedures are meant to minimize the risk and
uncertainties inherent in lending. In following these policies and procedures,
management must rely on estimates, appraisals and evaluations of loans and the
possibility that changes in these could occur quickly because of changing
economic conditions.
Interest receivable is accrued on all loans and credited to income as
earned. When a loan is delinquent three payments or more, the unpaid interest is
fully reserved by a provision to the allowance for uncollected interest. A
nonmortgage loan is generally charged off after it becomes delinquent 120 days.
Loans may be reinstated to accrual status when all payments are brought current
and, in the opinion of management, collection of the remaining balances can be
reasonably expected. The Association had accruing loans 90 or more days
delinquent totaling $10,000 at June 30, 2000, and no accruing loans 90 or more
days delinquent at June 30, 1999 or 1998.
-6-
<PAGE>
Delinquent Loans
The following table sets forth information concerning delinquent loans at
the dates indicated, in dollar amounts and as a percentage of each category of
the Association's loan portfolio. The amounts presented represent the total
outstanding principal balances of the related loans, rather than the actual
payment amounts which are past due.
<TABLE>
<CAPTION>
June 30, 2000
------------------------------------------------------------------
30-59 Days 60 to 89 Days 90 or More Days
------------------ --------------------- --------------------
Percent of Percent of Percent of
Loan Loan Loan
Amount Category Amount Category Amount Category
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Mortgage loans:
Secured by one-to-four
family residences $648 .86% $267 .35% $416 .55%
Secured by other
residential properties - - - - - -
Construction loans - - - - - -
Other, nonresidential 26 .33 - - - -
--- --- ---
Total mortgage loans 674 .79 267 .31 416 .49
Other loans:
Mobile homes 8 12.50 - - - -
Commercial - - - - - -
Automobile 70 2.49 15 .53 18 .64
Home equity and
Improvement - - - - 5 .74
Other 13 .30 13 .30 10 .23
--- --- ---
Total other loans 91 .86 28 .26 33 .31
--- --- ---
Total $765 .80% $295 .31% $449 .47%
=== ===== === ==== === ====
</TABLE>
<TABLE>
<CAPTION>
June 30, 1999
---------------------------------------------------------------------
30-59 Days 60-89 Days 90 or More Days
--------------------- --------------------- ---------------------
Percent of Percent of Percent of
Loan Loan Loan
Amount Category Amount Category Amount Category
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Mortgage loans:
Secured by one-to-four
family residences $223 .29% $ 10 .01% $661 .87%
Secured by other
residential properties 24 6.02 - - - -
Construction loans - - - - - -
Other, nonresidential - - - - - -
--- -- --
Total mortgage loans 247 .30 10 .01 661 .81
Other loans:
Mobile homes 170 11.46 80 5.39 197 13.27
Commercial - - - - - -
Automobile 68 2.24 8 .26 32 1.06
Home equity and
Improvement - - 6 .56 10 .93
Other 12 .36 13 .39 12 .36
--- --- ---
Total other loans 250 2.27 107 .97 251 2.28
--- --- ---
Total $497 .54% $117 .13% $912 .99%
=== ===== === ==== === =====
</TABLE>
-7-
<PAGE>
The following table sets forth the amounts and categories of the
Association's non-performing assets and troubled debt restructurings at the
dates indicated.
<TABLE>
<CAPTION>
June 30,
2000 1999 1998
(Dollars in thousands)
<S> <C> <C> <C>
Non-accruing loans:
Secured by one-to-four family residences $416 $ 661 $377
Secured by other residential properties - - -
Nonresidential - - -
Mobile homes - 197 166
Automobile 18 32 -
Other 5 22 57
Accruing loans 90 days or more delinquent 10 - -
--- ----- ---
Total non-performing loans 449 912 600
Property acquired in settlement of loans 69 50 58
--- ----- ---
Total non-performing assets 518 962 658
Troubled debt restructurings 15 52 34
--- ----- ---
Total $533 $1,014 $692
=== ===== ===
Total non-performing loans and troubled
debt restructurings as a percentage of
total loans 0.49% 1.07% 0.76%
==== ==== ====
Total non-performing assets and troubled
debt restructurings as a percentage of
total assets 0.45% 0.87% 0.67%
==== ==== ====
</TABLE>
Additional interest income that would have been recognized had such loans
performed in accordance with their original terms amounted to approximately
$41,000, $65,000 and $44,000 for the fiscal years ended June 30, 2000, 1999 and
1998, respectively.
-8-
<PAGE>
Classified Assets
Federal regulations require that each insured savings association
classify its assets on a regular basis. In addition, in connection with
examinations of insured institutions, federal examiners have authority to
identify problem assets and, if appropriate, classify them. There are three
classifications for problem assets: "substandard," "doubtful" and "loss."
Substandard assets have one or more defined weaknesses and are characterized by
the distinct possibility that the insured institution will sustain some loss if
the deficiencies are not corrected. Doubtful assets have the weaknesses of
substandard assets with the additional characteristic that the weaknesses make
collection or liquidation in full on the basis of currently existing facts,
conditions and values questionable, and there is a high possibility of loss. An
asset classified loss is considered uncollectible and of such little value that
continuance as an asset of the institution is not warranted. Another category
designated "watch" also may be established and maintained for assets which do
not currently expose an insured institution to a sufficient degree of risk to
warrant classification as substandard, doubtful or loss. At June 30, 2000, the
Association had approximately $1.3 million of classified assets, net of specific
loss allowances, consisting of $717,000 of substandard and $628,000 of "watch".
There were no assets categorized as "loss" at June 30, 2000.
Allowance for Loan Losses
The allowance for loan losses is maintained at a level believed adequate
by management to absorb potential losses in the loan portfolio. Management's
determination of the adequacy of the allowance is based on an evaluation of the
portfolio, past loan loss experience, current economic conditions, volume,
growth and composition of the loan portfolio, and other relevant factors. The
allowance is increased by provisions for loan losses charged against earnings.
While management uses available information to recognize losses on loans, future
additions to the allowance may be necessary based on changes in economic
conditions. In addition, various regulatory agencies, as an integral part of
their examination process, periodically review the Association's allowance for
losses on loans. Such agencies may require the Association to recognize
additions to the allowance based on their judgments of information available to
them at the time of their examination. For additional information, see
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included in the Corporation's Annual Report to Shareholders.
-9-
<PAGE>
The following table summarizes changes in the allowance for loan losses
and other selected statistics for the periods presented.
<TABLE>
<CAPTION>
Year ending June 30,
2000 1999 1998
(Dollars in thousands)
<S> <C> <C> <C>
Average loans, net $93,277 $88,179 $81,586
====== ====== ======
Allowance for loan losses, beginning of year $ 591 $ 563 $ 478
Charged-off loans:
Secured by one-to-four family residences 11 15 29
Mobile homes 199 48 29
Automobiles 10 2 9
Other 9 9 20
------ ------ ------
Total charged-off loans 229 74 87
Recoveries on loans previously charged off:
Secured by one-to-four family residences - 8 9
Secured by other residential properties - - -
Mobile homes - - -
Automobiles 1 - 2
Other - - 5
------ ------ ------
Total recoveries 1 8 16
------ ------ ------
Net loans charged-off 228 66 71
Provision for loan losses 121 94 156
------ ------ ------
Allowance for loan losses, end of year $ 484 $ 591 $ 563
====== ====== ======
Net loans charged-off to average loans, net .24% .07% .09%
Allowance for loan losses to total loans .51% .64% .66%
Allowance for loan losses to nonperforming loans 107.80% 64.80% 93.83%
Net loans charged-off to allowance for loan losses 47.11% 11.17% 12.61%
</TABLE>
-10-
<PAGE>
The following table presents the allocation of the allowance for loan
losses to the total amount of loans in each category listed at the dates
indicated.
<TABLE>
<CAPTION>
June 30,
2000 1999 1998
% of Loans % of Loans % of Loans
In Each In Each In Each
Category Category Category
To Total To Total To Total
Amount Loans Amount Loans Amount Loans
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Secured by one-to-four
family residences $262 54.2% $253 82.1% $272 78.7%
Secured by other
residential properties 2 0.4 - 0.4 - 0.6
Construction loans 2 0.4 - 1.5 - 1.2
Other, nonresidential 44 9.1 65 4.1 18 5.6
Mobile homes 1 0.2 125 1.6 234 2.3
Commercial 5 1.0 - 2.2 - 1.6
Automobile 8 1.7 63 3.3 - 3.7
Home equity and improvement 2 0.4 22 1.2 7 2.0
Other 158 32.6 63 3.6 32 4.3
--- ----- --- ----- --- -----
Total $484 100.0% $591 100.0% $563 100.0%
=== ===== === ===== === =====
</TABLE>
Investment Activities
The Association has the authority as a federal association to invest in a
wide range of mortgage securities products and low risk U. S. Government and
agency securities. The Corporation accounts for investment and mortgage-backed
securities in accordance with SFAS No. 115, "Accounting for Certain Investments
in Debt and Equity Securities." In accordance with SFAS No. 115, management
determines the appropriate classification of debt securities at the time of
purchase. Debt securities are classified as held to maturity when either the
Corporation or the Association has the positive intent and ability to hold the
securities to maturity. Held to maturity securities are stated at amortized
cost. Debt securities not classified as held to maturity and equity securities
are classified as available for sale. Available for sale securities are stated
at fair value with any unrealized gain or loss recorded to stockholders' equity,
net of related tax effects.
The Corporation's securities portfolio is managed in accordance with a
written policy adopted by the Board of Directors. All securities transactions
must be approved by the Board of Directors.
-11-
<PAGE>
The Corporation's investment portfolio includes two collateralized
mortgage obligations (CMO's) issued totaling $1,002,000. These investments are
considered derivative securities. None of the Corporation's investments are
considered to be high risk and management does not believe the risks associated
with these investments to be significantly different from risks associated with
other pass-through mortgage-backed or agency securities. The Corporation does
not invest in off-balance sheet derivative securities.
For additional information regarding the Corporation's investment
portfolio refer to Notes A-2 and B to the consolidated financial statements.
Sources of Funds
General - Deposits are the primary source of the Corporation's funds for
lending and other investment purposes. In addition to deposits, the Corporation
derives funds from principal repayments and prepayments on loans and
mortgage-backed securities. Repayments on loans and mortgage-backed securities
are a relatively stable source of funds, while deposits inflows and outflows are
significantly influenced by general interest rates and money market conditions.
Borrowings may be used on a short-term basis to compensate for reductions in the
availability of funds from other sources including the FHLB of Cincinnati.
Deposits - The Corporation's deposit products include a broad selection
of deposit instruments, including passbooks, NOW and super NOW accounts, money
market demand accounts and term certificate accounts. Deposit account terms
vary, with the principal differences being the minimum balance required, the
time periods the funds must remain on deposit and the interest rate.
The Corporation considers its primary market area to be Crawford County,
Ohio. The Corporation attracts deposit accounts by offering a wide variety of
accounts, competitive interest rates, and convenient office locations and
service hours. The Corporation does not advertise for deposits outside of its
primary market area. While the Corporation no longer utilizes the services of
deposit brokers, approximately $735,000 of the Corporation's certificates of
deposit consisted of broker deposits at June 30, 2000.
The Corporation has been competitive in the types of accounts and in
interest rates it has offered on its deposit products but does not necessarily
seek to match the highest rates paid by competing institutions.
-12-
<PAGE>
The following table shows the distribution of, and certain other
information relating to, the Corporation's deposits by type of deposit as of the
dates indicated.
<TABLE>
<CAPTION>
June 30,
2000 1999 1998
Amount Percent Amount Percent Amount Percent
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Passbook $16,070 20.3% $16,263 20.3% $16,139 21.2%
Money market demand,
NOW and super NOW 10,315 13.0 10,058 12.6 8,757 11.6
Certificates of deposit 52,753 66.7 53,633 67.1 51,059 67.2
------ ----- ------ ----- ------ -----
Total deposits at end of
period $79,138 100.0% $79,954 100.0% $75,955 100.0%
====== ===== ====== ===== ====== =====
</TABLE>
The following table sets forth the Corporation's net deposit flows during
the periods indicated.
<TABLE>
<CAPTION>
Year ended June 30,
2000 1999 1998
(In thousands)
<S> <C> <C> <C>
Net increase (decrease) before interest credited $(3,549) $1,042 $ (131)
Interest credited 2,733 2,957 3,175
------ ----- -----
Net deposits increase (decrease) $ (816) $3,999 $3,044
====== ===== =====
</TABLE>
The following table sets forth maturities of the Corporation's
certificates of deposit of $100,000 or more at June 30, 2000 by time remaining
to maturity.
<TABLE>
<CAPTION>
(Amount in thousands)
<S> <C>
Three months or less $ 115
Over three months through six months 444
Over six months through 12 months 1,583
Over 12 months 2,317
-----
Total $4,459
=====
</TABLE>
-13-
<PAGE>
The following table presents, by various interest rate categories, the
amount of certificates of deposit at June 30, 2000 and the amounts at June 30,
2000 which mature during the periods indicated.
<TABLE>
<CAPTION>
Amounts at June 30, 2000
Maturing Within
One Two Three
Certificates of Deposit Year Years Years Thereafter
(In thousands)
<S> <C> <C> <C> <C>
4.01% to 6.0% $36,750 $ 8,879 $1,481 $819
6.01% to 8.0% 296 4,480 48 -
------ ------ ----- ---
Total certificate accounts $37,046 $13,359 $1,529 $819
====== ====== ===== ===
</TABLE>
Borrowings - The Association may obtain advances from the FHLB of
Cincinnati upon the security of the common stock it owns in the FHLB and certain
of its residential mortgage loans, provided certain standards related to
creditworthiness have been met. Such advances are made pursuant to several
credit programs, each of which has its own interest rate and range of
maturities. Such advances are generally available to meet seasonal and other
withdrawals of deposit accounts and to permit increased lending. Programs are
also available to match maturities on certain loans with payments on advances
secured from the FHLB.
The following table sets forth the maximum month-end balance and average
balance of the Corporation's FHLB advances during the periods indicated.
<TABLE>
<CAPTION>
Year ended June 30,
2000 1999 1998
(Dollars in thousands)
<S> <C> <C> <C>
Maximum balance $28,611 $25,538 $15,558
Average balance 27,086 23,735 10,695
Weighted average interest rate of
FHLB advances 5.84% 5.30% 5.61%
</TABLE>
-14-
<PAGE>
The following table sets forth certain information as to the
Corporation's FHLB advances at the dates indicated.
<TABLE>
<CAPTION>
June 30,
2000 1999 1998
(Dollars in thousands)
<S> <C> <C> <C>
FHLB advances $28,611 $25,291 $15,558
Weighted average interest rate of
FHLB advances 6.33% 5.28% 5.58%
</TABLE>
Employees
The Corporation had 26 full-time employees and 8 part-time employees at
June 30, 2000. None of these employees is represented by a collective bargaining
agreement, and the Corporation believes that it enjoys good relations with its
personnel.
-15-
<PAGE>
REGULATION
Set forth below is a brief description of material laws and regulations
which currently relate to the regulation of the Association. The description of
these laws and regulations, as well as descriptions of laws and regulations
contained elsewhere herein, does not purport to be complete and is qualified in
its entirety by reference to applicable laws and regulations.
General
The Association, as a federally chartered savings association, is subject
to federal regulation and oversight by the OTS extending to all aspects of its
operations. The Association also is subject to regulation and examination by the
FDIC, which insures the deposits of the Association to the maximum extent
permitted by law, and requirements established by the Federal Reserve Board. The
laws and regulations governing the Association generally have been promulgated
to protect depositors and the deposit insurance funds and not for the purpose of
protecting stockholders.
Federal Savings Association Regulation
The investment and lending authority of a federally chartered savings
association is prescribed by federal laws and regulations, and it is prohibited
from engaging in any activities not permitted by such laws and regulations.
These laws and regulations generally are applicable to all federally-chartered
savings associations and many also apply to state-chartered savings
associations.
Among other things, OTS regulations provide that no savings association
may invest in corporate debt securities not rated in one of the four highest
rating categories by a nationally recognized rating organization. In addition,
HOLA provides that loans secured by nonresidential real property may not exceed
400% of regulatory capital, subject to increase by the OTS on a case-by-case
basis.
The Association is subject to limitations on the aggregate amount of
loans that it can make to any one borrower, including related entities.
Applicable regulations generally do not permit loans-to-one borrower to exceed
15% of unimpaired capital and surplus, provided that loans in an amount equal to
an additional 10% of unimpaired capital and surplus also may be made to a
borrower if the loans are fully secured by readily marketable securities. The
OTS by regulation has amended the loans-to-one borrower rule to permit savings
associations meeting certain requirements, including fully phased-in capital
requirements, to extend loans-to-one borrower in additional amounts under
circumstances limited essentially to loans to develop or complete residential
housing units. At June 30, 2000, the Association was in compliance with
applicable loans-to-one borrower limitations.
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Regulatory Capital Requirements - As a federally insured savings
association, the Association is required to maintain minimum levels of
regulatory capital. The regulatory capital standards for savings associations
generally must be as stringent as the comparable capital requirements imposed on
national banks. The OTS also is authorized to impose capital requirements in
excess of these standards on individual associations on a case-by-case basis.
The Association must satisfy three different OTS capital requirements;
"tangible" capital equal to 1.5% of adjusted total assets, "core" capital
generally equal to 4% of adjusted total assets and "risk-based" capital (a
combination of core and "supplementary" capital) equal to 8% of "risk-weighted"
assets. Any savings association that fails any of the capital requirements is
subject to possible enforcement actions by the OTS or the FDIC. Such actions
could include a capital directive, a cease and desist order, civil money
penalties, the establishment of restrictions on an association's operations,
termination of federal deposit insurance and the appointment of a conservator or
receiver.
In August 1993 the OTS adopted final regulations which incorporate an
interest rate risk ("IRR") component into the current risk-based capital
requirement. The IRR component is a dollar amount that will be deducted from
total capital for the purpose of calculating an institution's risk-based capital
requirement. The IRR component will be equal to one-half of the difference
between an institution's "measured exposure" and a "normal" level of exposure,
in each case as measured in terms of the sensitivity of an institution's net
portfolio value ("NPV") to changes in interest rates. The OTS will calculate
changes in an institution's NPV based on financial data submitted by the
institution on a quarterly basis and guidance provided by the OTS. An
institution's measured IRR is expressed as the change that occurs in the NPV as
a result of a hypothetical 200 basis point increase or decrease in interest
rates (whichever leads to a lower NPV) divided by the estimated economic value
(present value) of its assets. An institution with a "normal" level of interest
rate risk is defined as one whose measured IRR is less than 2%, as estimated by
the OTS model, and only institutions whose measured IRR exceeds 2% will be
required to maintain an IRR component. Since the regulations were issued
requiring the IRR component, the OTS has continually waived the required
adjustment. In August 1995, the OTS issued Thrift Bulletin No. 67 which allows
eligible institutions to request an adjustment to their IRR component, as
calculated by the OTS, or to request to use their own computer model to
calculate their IRR component. The OTS also indicated that it will delay
invoking its IRR rule requiring institutions with above normal IRR exposure to
adjust their regulatory capital requirement until the new procedures are
implemented and evaluated. The OTS has not yet established an effective date for
the capital deduction. Had the IRR component been required as of June 30, 2000,
the date of the latest available information, there would have been a reduction
of approximately $630,000 in the Association's risk-based capital. However, the
Association would still have exceeded the risk-based capital requirement by
approximately $4.4 million.
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<PAGE>
Prompt Corrective Action
Under Section 38 of the FDIA, as added by the Federal Deposit Insurance
Corporation Improvement Act of 1991 ("FDICIA"), each federal banking agency is
required to implement a system of prompt corrective action for institutions
which it regulates. In September 1992, the federal banking agencies adopted
substantially similar regulations which are intended to implement the system of
prompt corrective action established by Section 38 of the FDIA, which became
effective on December 19, 1992. Under the regulations, an institution shall be
deemed to be (i) "well capitalized" if it has a total risk-based capital ratio
of 10.0% or more, has a Tier I risk-based capital ratio of 6.0% or more, has a
Tier I leverage capital ratio of 5.0% or more and is not subject to specified
requirements to meet and maintain a specific capital level for any capital
measure, (ii) "adequately capitalized" if it has a total risk-based capital
ratio of 8.0% or more, a Tier I risk-based capital ratio of 4.0% or more and a
Tier I leverage capital ratio of 4.0% or more (3.0% under certain circumstances)
and does not meet the definition of "well capitalized," (iii) "undercapitalized"
if it has a total risk-based capital ratio that is less than 8.0%, a Tier I
risk-based capital ratio that is less than 4.0% or a Tier I leverage capital
ratio that is less than 4.0% (3.0% under certain circumstances), (iv)
"significantly undercapitalized" if it has a total risk-based capital ratio that
is less than 6.0%, a Tier I risk-based capital ratio that is less than 3.0% or a
Tier I leverage capital ratio that is less than 3.0%, and (v) "critically
undercapitalized" if it has a ratio of tangible equity to total assets that is
equal to or less than 2.0%.
Section 38 of the FDIA and the implementing regulations also provide that
a federal banking agency may, after notice and an opportunity for a hearing,
reclassify a well capitalized institution as adequately capitalized and may
require an adequately capitalized institution or an undercapitalized institution
to comply with supervisory actions as if it were in the next lower category if
the institution is in an unsafe or unsound condition or engaging in an unsafe or
unsound practice. (The FDIC may not, however, reclassify a significantly
undercapitalized institution as critically undercapitalized.)
An institution generally must file a written capital restoration plan
which meets specified requirements, as well as a performance guaranty by each
company that controls the institution, with the appropriate federal banking
agency within 45 days of the date that the institution receives notice or is
deemed to have notice that it is undercapitalized, significantly
undercapitalized or critically undercapitalized. Immediately upon becoming
undercapitalized, an institution shall become subject to the provisions of
Section 38 of the FDIA, which sets forth various mandatory and discretionary
restrictions on its operations.
At June 30, 2000, the Association was a "well capitalized" institution
under the prompt corrective action regulations of the OTS.
Standards for Safety and Soundness - The FDICIA requires the federal
banking regulatory agencies to prescribe, by regulation, standards for all
insured depository institutions and depository institution holding companies
relating to: (i) internal controls, information systems and internal audit
systems; (ii) loan documentation; (iii) audit underwriting; (iv) interest rate
risk exposure; (v) asset growth; and (vi) compensation, fees and benefits. The
compensation
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<PAGE>
standards would prohibit employment contracts, compensation or benefit
arrangements, stock options plans, fee arrangements or other compensatory
arrangements that would provide excessive compensation, fees or benefits or
could lead to material financial loss. In addition, the federal banking
regulatory agencies would be required to prescribe by regulation standards
specifying: (i) maximum classified assets to capital ratios; (ii) minimum
earnings sufficient to absorb losses without impairing capital; and (iii) to the
extent feasible, a minimum ratio of market value to book value for publicly
traded shares of depository institutions and depository institution holding
companies.
Liquidity Requirements
All savings associations are required to maintain an average daily
balance of liquid assets in each calendar quarter equal to a certain percentage
of the sum of its average daily balance of net withdrawable accounts and
short-term borrowings. The liquidity requirement may vary from time to time
(between 4% and 10%) depending upon economic conditions and savings flows of all
savings associations. At the present time, the required liquid asset ratio is
4%. In addition to meeting the minimum liquidity requirement, each savings
association must maintain sufficient liquidity to ensure its safe and sound
operation.
Liquid assets for purposes of this ratio include cash, certain deposits,
certain banker's acceptances, U.S. Government obligations, and state and state
agency obligations with a maximum term of two years. Monetary penalties may be
imposed upon associations for violations of liquidity requirements.
At June 30, 2000, the Association's regulatory liquidity totaled $12.9
million, or 11.69%, which exceeded the minimum regulatory requirement by $8.5
million.
Qualified Thrift Lender Test
All savings associations are required to meet a qualified thrift lender
("QTL") test set forth in Section 10(m) of the HOLA and regulations of the OTS
thereunder to avoid certain restrictions on their operations. A savings
association that does not meet the QTL test set forth in the HOLA and
implementing regulations must either convert to a bank charter or comply with
the following restrictions on its operations: (i) the association may not engage
in any new activity or make any new investment, directly or indirectly, unless
such activity or investment is permissible for a national bank; (ii) the
branching powers of the association shall be restricted to those of a national
bank; (iii) the association shall not be eligible to obtain any advances from
its FHLB; and (iv) payment of dividends by the association shall be subject to
the rules regarding payment of dividends by a national bank. Upon the expiration
of three years from the date the association ceases to be a QTL, it must cease
any activity and not retain any investment not permissible for a national bank
and immediately repay any outstanding FHLB advances (subject to safety and
soundness considerations). In addition, within one year of the date on which a
savings association controlled by a company ceases to be a QTL, the company must
register as a bank holding company and becomes subject to the rules applicable
to such companies.
Currently, the QTL test requires that 65% of an institution's
"portfolio assets" (as defined) consist of certain housing and consumer-related
assets on a monthly average basis in nine out of every 12 months. Assets that
qualify without limit for inclusion as part of the 65% requirement
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<PAGE>
are loans made to purchase, refinance, construct, improve or repair domestic
residential housing and manufactured housing; home equity loans; mortgage-backed
securities (where the mortgages are secured by domestic residential housing or
manufactured housing); FHLB stock; direct or indirect obligations of the FDIC
and loans for educational purposes, loans to small businesses, and loans made
through credit cards or credit card accounts. In addition, the following assets,
among others, may be included in meeting the test subject to an overall limit of
20% of the savings institution's portfolio assets: 50% of residential mortgage
loans originated and sold within 90 days of origination; loans for personal,
family or homehold purposes (other than those included in the 100% basket
above); and stock issued by the FHLMC or the FNMA. Portfolio assets consist of
total assets minus the sum of (i) goodwill and other intangible assets, (ii)
property used by the savings institution to conduct its business, and (iii)
liquid assets up to 20% of the institution's total assets. At June 30, 2000, the
qualified thrift investments of the Association were approximately 99.8% of its
portfolio assets.
Restrictions on Capital Distributions
An OTS regulation governs capital distributions by savings associations,
which include cash dividends, stock redemptions or repurchases, cash-out
mergers, interest payments on certain convertible debt and other transactions
charged to the capital account of a savings association to make capital
distributions. 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.
Federal Home Loan Bank System
The Association is a member of the FHLB of Cincinnati, which is one of 12
regional FHLBs that administers the home financing credit function of savings
associations. Each FHLB serves as a reserve or central bank for its members
within its assigned region. It is funded primarily from proceeds derived from
the sale of consolidated obligations of the FHLB System. It makes loans to
members (i.e., advances) in accordance with policies and procedures established
by the Board of Directors of the FHLB. At June 30, 2000, the Association had
advances of $28.6 million from the FHLB of Cincinnati.
As a member, the Association is required to purchase and maintain stock
in the FHLB of Cincinnati in an amount equal to a least 1% of its aggregate
unpaid residential mortgage loans, home purchase contracts or similar
obligations at the beginning of each year. At June 30, 2000, the Association had
$1.5 million in FHLB stock, which was in compliance with this requirement.
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<PAGE>
The FHLBs are required to provide funds for the resolution of troubled
savings associations and to contribute to affordable housing programs through
direct loans or interest subsidies on advances targeted for community investment
and low and moderate-income housing projects. These contributions have adversely
affected the level of FHLB dividends paid and could continue to do so in the
future. These contributions also could have an adverse effect on the value of
FHLB stock in the future. Dividends paid by the FHLB of Cincinnati to the
Association for the fiscal year ended June 30, 2000 totaled $102,000.
Branching by Federal Savings Institutions
Effective May 11, 1992, the OTS amended its Policy Statement on Branching
by Federal Savings Institutions to permit interstate branching to the full
extent permitted by statute (which is essentially unlimited). Prior policy
permitted interstate branching for federal savings institutions only to the
extent allowed for state-chartered institutions in the states where the
institution's home office was located and where the branch was sought. Prior
policy also permitted healthy out-of-state federal institutions to branch into
another state, regardless of the law in that state, provided the branch office
was the result of a purchase of an institution that was in danger of default.
Generally, federal law prohibits federal savings institutions from
establishing, retaining or operating a branch outside the state in which the
federal institution has its home office unless the institution meets the
Internal Revenue Service's ("IRS") domestic building and loan test (generally,
60% of a thrift's assets must be housing-related) ("IRS Test"). The IRS Test
requirement does not apply if: (i) the branch(es) result(s) from an emergency
acquisition of a troubled savings institution (however, if the troubled savings
institution is acquired by a bank holding company, does not have its home office
in the state of the bank holding company bank subsidiary and does not qualify
under the IRS Test, its branching is limited to the branching laws for
state-chartered banks in the state where the savings institution is located);
(ii) the branch was authorized for the federal savings association prior to
October 15, 1982; (iii) the law of the state where the branch would be located
would permit the branch to be established if the federal savings institution
were chartered by the state in which its home office is located; or (iv) the
branch was operated lawfully as a branch under state law prior to the savings
institution's conversion to a federal charter.
Furthermore, the OTS will evaluate a branching applicant's record of
compliance with the Community Reinvestment Act of 1977 ("CRA"). An
unsatisfactory CRA record may be the basis for denial of a branching
application.
Federal Reserve System
The Federal Reserve Board requires all depository institutions to
maintain reserves against their transaction accounts (primarily NOW and Super
NOW checking accounts) and non-personal time deposits. Currently, reserves of 3%
must be maintained against total transaction accounts of $51.9 million or less
(after a $4.0 million exemption), and an initial reserve of 10% (subject to
adjustment by the Federal Reserve Board to a level between 8% and 14%) must be
maintained against that portion of total transaction accounts in excess of such
amount. At June 30, 2000, the Association was in compliance with applicable
requirements.
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The balances maintained to meet the reserve requirements imposed by the
Federal Reserve Board may be used to satisfy applicable liquidity requirements.
Because required reserves must be maintained in the form of vault cash or a non
interest-bearing account at a Federal Reserve Bank, the effect of this reserve
requirement is to reduce the Association's earning assets.
Transactions with Affiliates
The Association is subject to certain restrictions on loans to the
Corporation or its non-bank subsidiaries, on investments in the stock or
securities thereof, on the taking of such stock or securities as collateral for
loans to any borrower, and on the issuance of a guarantee or letter of credit on
behalf of the Corporation or its non-bank subsidiaries. The Association also is
subject to certain restrictions on most types of transactions with the
Corporation or its non-bank subsidiaries, requiring that the terms of such
transactions be substantially equivalent to terms of similar transactions with
non-affiliated firms. In addition, the Association is subject to restrictions on
loans to its executive officers, directors and principal stockholders.
Miscellaneous
In addition to requiring a new system of risk-based insurance assessments
and a system of prompt corrective action with respect to undercapitalized banks,
as discussed above, recent legislation requires federal banking regulators to
adopt regulations in a number of areas to ensure bank safety and soundness,
including: internal controls; credit underwriting; asset growth; management
compensation; ratios of classified assets to capital; and earnings. Recent
legislation also contains provisions which are intended to enhance independent
auditing requirements; restrict the activities of state-chartered insured banks;
amend various consumer banking laws; limit the ability of "undercapitalized
banks" to borrow from the Federal Reserve Board's discount window; and require
regulators to perform annual on-site bank examinations and set standards for
real estate lending.
Regulatory Enforcement Matters
The enforcement powers available to federal banking regulators is
substantial and includes, among other things, the ability to assess civil
monetary penalties, to issue cease-and-desist or removal orders and to initiate
injunctive actions against banking organizations and institution-affiliated
parties, as defined. In general, these enforcement actions must be initiated for
violations of laws and regulations and unsafe or unsound practices. Other
actions or inactions may provide the basis for enforcement action, including
misleading or untimely reports filed with regulatory authorities. Applicable law
also requires public disclosure of final enforcement actions by the federal
banking agencies.
In July 2000, the Association's directorate entered into an agreement
with the OTS that requires the completion of a number of regulatory related
initiatives over the next 90 days. Among other things, the agreement provides
for (a) the hiring of a Compliance Officer or external consultant specializing
in compliance matters, and (b) adoption of a written compliance program,
including comprehensive training and compliance testing. In addition, the
Association has reaffirmed, within the context of the agreement, its commitment
to comply with all applicable consumer banking regulations in the future.
Management believes that the Association is in compliance with the operative
provisions of the agreement as of September 25, 2000.
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FEDERAL AND STATE TAXATION
General
The Corporation and the Association are subject to the generally
applicable corporate tax provisions of the Internal Revenue Code of 1986, as
amended (the "Code"), as well as certain additional provisions of the Code which
apply to thrifts and other types of financial institutions. The following is a
discussion of material tax aspects applicable to the Corporation and the
Association. It is intended only as a summary and does not purport to be a
comprehensive description of the tax rules applicable to the Corporation and the
Association.
Fiscal Year - The Corporation and the Association will file federal
income tax returns on a separate company basis.
Method of Accounting - The Corporation maintains its books and records
for federal income tax purposes using the accrual method of accounting. The
accrual method of accounting generally requires that items of income be
recognized when all events have occurred that establish the right to receive the
income and the amount of income can be determined with reasonable accuracy, and
that items of expense be deducted at the later of (i) the time when all events
have occurred that establish the liability to pay the expense and the amount of
such liability can be determined with reasonable accuracy or (ii) the time when
economic performance with respect to the item of expense has occurred.
Bad Debt Reserves - Under applicable provisions of the Code, savings
institutions such as the Association are permitted to establish reserves for bad
debts and to make annual additions thereto which qualify as deductions from
taxable income. The bad debt deduction is generally based on a savings
institution's actual loss experience (the "Experience Method"). Alternatively,
provided that certain definitional tests relating to the composition of assets
and the nature of its business are met, a savings institution may elect annually
to compute its allowable addition to its bad debt reserves for qualifying real
property loans (generally loans secured by improved real estate) by reference to
a percentage of its taxable income (the "Percentage Method").
Under the Experience Method, the deductible annual addition is the amount
necessary to increase the balance of the reserve at the close of the taxable
year to the greater of (i) the amount which bears the same ratio to loans
outstanding at the close of the taxable year as the total net charge-offs
sustained during the current and five preceding taxable years bear to the sum of
the loans outstanding at the close of those six years or (ii) the balance in the
reserve account at the close of the Association's "base year," which was its tax
year ended December 31, 1987.
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Under the Percentage Method, the bad debt deduction with respect to
qualifying real property loans was computed as a percentage of the Association's
taxable income before such deduction, as adjusted for certain items (such as
capital gains and the dividends received deduction). Under this method, a
qualifying institution such as the Association generally was able to deduct 8%
of its taxable income. The availability of the Percentage Method has permitted a
qualifying savings institution, such as the Association, to be taxed at an
effective federal income tax rate of 31.3%, as compared to 34% for corporations
generally.
The Percentage Method deduction was limited to the excess of 12% of
savings accounts at year end over the sum of surplus, undivided profits and
reserves at the beginning of the year. For taxable years ended on or before June
30, 1994, the Association has generally elected to use the Percentage Method to
compute the amount of its bad debt deduction with respect to its qualifying real
property loans.
Pursuant to certain legislation which was effective for tax years
beginning after 1995, a small thrift institution (one with an adjusted basis of
assets of less than $500 million), such as the Association, is no longer
permitted to make additions to its tax bad debt reserve under the percentage of
taxable income method. Such institutions are permitted to use the experience
method in lieu of deducting bad debts only as they occur. Such legislation
requires the Association to realize increased tax liability over a period of at
least six years, beginning in 1996. Specifically, the legislation requires a
small thrift institution to recapture (i.e., take into income) over a multi-year
period the balance of its bad debt reserves in excess of the lesser of (i) the
balance of such reserves as of the end of its last taxable year ending before
1988 or (ii) an amount that would have been the balance of such reserves had the
institution always computed its additions to its reserves using the experience
method. The recapture requirement would be suspended for each of two successive
taxable years beginning January 1, 1996 in which the Association originates an
amount of certain kinds of residential loans which in the aggregate are equal to
or greater than the average of the principal amounts of such loans made by the
Association during its six taxable years preceding 1996. The recapture of the
Association's bad debt reserves accumulated after 1987 will not have a material
adverse effect on the Association's financial condition and results of
operations.
Distribution - If the Association were to distribute cash or property to
its sole stockholder having a total fair market value in excess of its
accumulated tax-paid earnings and profits, or were to distribute cash or
property to its stockholder in redemption of its stock the Association would
generally be required to recognize as income an amount which, when reduced by
the amount of federal income tax that would be attributable to the inclusion of
such amount in income, is equal to the lesser of: (i) the amount of the
distribution or (ii) the sum of (a) the amount of the accumulated bad debt
reserve of the Association with respect to qualifying real property loans (to
the extent that additions to such reserve exceed the additions that would be
permitted under the experience method) and (b) the amount of the Association's
supplemental bad debt reserve.
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As of June 30, 2000, the Association's accumulated bad debt reserve for
qualifying real property loans and its supplemental bad debt reserve balances
totaled approximately $1.2 million. The Association believes it has
approximately $4.0 million of accumulated earnings and profits as of June 30,
2000, which would be available for dividend distributions, provided regulatory
restrictions applicable to the payment of dividends are met. See "Dividend
Policy."
Minimum Tax - The Code imposes an alternative minimum tax at a rate of
20% on a base of regular taxable income plus certain tax preferences
("alternative minimum taxable income" or "AMTI"). The alternative minimum tax is
payable to the extent such AMTI is in excess of an exemption amount. The Code
provides that an item of tax preference is the excess of the bad debt deduction
allowable for a taxable year pursuant to the percentage of taxable income method
over the amount allowable under the experience method. The other items of tax
preference that constitute AMTI include (a) tax exempt interest on newly-issued
(generally, issued on or after August 8, 1986) private activity bonds other than
certain qualified bonds and (b) for taxable years beginning after 1989, 75% of
the excess (if any) of (i) adjusted current earnings as defined in the Code,
over (ii) AMTI (determined without regard to this preference and prior to
reduction by net operating losses). Net operating losses can offset no more than
90% of AMTI. Certain payments of alternative minimum tax may be used as credits
against regular tax liabilities in future years.
Audit by IRS - The Association's federal income tax returns for taxable
years through June 30, 1996 have been closed for the purpose of examination by
the IRS.
Other Matters - Other recent changes in the system of federal taxation
that could affect the Association's business include a provision that an
individual taxpayer will generally not be permitted to deduct personal interest
paid or accrued during the taxable year unless, subject to certain limitations,
the interest is paid or accrued on indebtedness which is secured by the
principal or secondary residence of the taxpayer or indebtedness incurred by the
taxpayer to pay for certain medical and educational expenses. The deductibility
of losses generated by investments in certain passive activities of a taxpayer
and the deduction for contributions to individual retirement accounts of a
taxpayer if the taxpayer is a participant in an employer-maintained retirement
plan is now limited. The Association does not believe that these changes will
have a material adverse effect on its operations.
State Taxation
The Association is subject to an Ohio franchise taxed based on its equity
capital plus certain reserve amounts. Total capital for this purpose is reduced
by certain exempted assets. The resultant net taxable value was taxed at a rate
of 1.3% and 1.4% for 2000 and 1999, respectively.
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<PAGE>
Item 2. Properties
At June 30, 2000, the Corporation conducted its business from its
executive offices in Bucyrus, Ohio and two full-service branch offices. All of
these offices are located in Crawford County, Ohio.
The following table sets forth certain information with respect to the
Corporation's office properties at June 30, 2000.
<TABLE>
<CAPTION>
Net Book
Leased/ Value of Amount of
Owned Property Deposits
(In thousands)
<S> <C> <C> <C>
Main Office Owned $233 $64,895
119 South Sandusky Avenue
Bucyrus, Ohio 44820
South Branch Office Owned 147 6,929
South Sandusky and Marion Road
Bucyrus, Ohio 44820
New Washington Branch Owned 48 7,314
115 South Kibler Street
New Washington, Ohio 44854
Automated Teller Machine Owned 39 -
1661 Marion Road (machine
Bucyrus, Ohio only) --- ------
$467 $79,138
=== ======
</TABLE>
Item 3. Legal Proceedings
The Corporation is involved in routine legal proceedings occurring in the
ordinary course of business which, in the aggregate, are believed by management
to be immaterial to the Corporation's financial condition.
Item 4. Submission of Matters to a Vote of Securities Holders
No matters were submitted to a vote of securities holders during the
fourth quarter of fiscal 2000.
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PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
The information required herein is incorporated by reference from pages 3
and 4 of the Corporation's Annual Report to Stockholders for fiscal 2000
("Annual Report"), which is included herein as Exhibit [13].
Item 6. Selected Financial Data
The information required herein is incorporated by reference from pages 5
and 6 of the Annual Report.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The information required herein is incorporated by reference from pages 7
through 12 of the Annual Report.
Item 8. Financial Statements and Supplementary Data
The financial statements required herein are incorporated by reference
from pages 19 through 51 of the Annual Report.
Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure
Not applicable.
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PART III
Item 10. Directors, Executive Officers, Promoters and Control Persons;
Compliance With Section 16(a) of the Exchange Act
The information required herein is incorporated by reference from pages 3
to 6 of the Registrant's Proxy Statement dated September 22, 2000 ("Proxy
Statement").
Item 11. Executive Compensation
The information required herein is incorporated by reference from pages 8
to 10 of the Registrant's Proxy Statement.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The information required herein is incorporated by reference from pages 7
and 8 of the Registrant's Proxy Statement.
Item 13. Certain Relationships and Related Transactions
The information required herein is incorporated by reference from page 10
of the Registrant's Proxy Statement.
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PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) (1) Financial Statements
The following financial statements are incorporated herein by reference
from pages 22 through 53 of the Annual Report:
Report of Independent Certified Public Accountants
Consolidated Statements of Financial Condition as of June 30, 2000 and
1999
Consolidated Statements of Earnings for the years ended June 30, 2000,
1999 and 1998
Consolidated Statements of Comprehensive Income for the years ended
June 30, 2000, 1999 and 1998
Consolidated Statements of Changes in Stockholders' Equity for the years
ended June 30, 2000, 1999 and 1998
Consolidated Statements of Cash Flows for the years ended June 30, 2000,
1999 and 1998
Notes to Consolidated Financial Statements
(2) Financial Statement Schedules
All schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required under the
related instructions or are included in the Notes to Financial Statements
incorporated herein by reference and therefore have been omitted.
(3) Exhibits
The following exhibits are either filed as a part of this report or are
incorporated herein by reference to documents previously filed as indicated
below:
Exhibit
Number Description
3.1 Articles of Incorporation *
3.2 Code of Regulations of Community Investors Bancorp, Inc. *
3.3 Bylaws of Community Investors Bancorp, Inc. *
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<PAGE>
4.1 Specimen Stock Certificate of Community Investors Bancorp, Inc. *
10.1 Form of Severance Agreement between Community Investors
Bancorp, Inc. and John W. Kennedy, Brian R. Buckley, Phillip W.
Gerber and Robert W. Siegel *
10.5 Employee Stock Ownership Plan *
13 Annual Report to Stockholders
27 Financial Data Schedule
* Incorporated by reference from the Registrant's Registration Statement on Form
S-1 (File No. 33-84132) filed with the Securities and Exchange Commission on
September 16, 1994, as amended.
(b) Reports on Form 8-K
There were no reports on Form 8-K for the quarter ended June 30, 2000.
(c) See (a)(3) above for all exhibits filed herewith or incorporated herein by
reference to documents previously filed and the Exhibit Index.
(d) There are no other financial statements and financial statement schedules
which were excluded from the Annual Report to Stockholders which are required to
be included herein.
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<PAGE>
SIGNATURES
Pursuant to the requirements of Sections 13 or 15(d) 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.
FIRST FEDERAL SAVINGS AND LOAN
September 25, 2000 By:/s/ John W. Kennedy
-------------------------
John W. Kennedy
President and Managing Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated on September 25, 2000.
Signature Title
/s/ John W. Kennedy President and Managing Officer
-------------------
John W. Kennedy
/s/ Robert W. Siegel Assistant Vice President and Treasurer
--------------------
Robert W. Siegel
/s/ Dale C. Hoyles Chairman of the Board
------------------
Dale C. Hoyles
/s/ David M. Auck Vice Chairman of the Board
-----------------
David M. Auck
/s/ D. Brent Fissel Director
-------------------
D. Brent Fissel
/s/ Philip E. Harris Director
--------------------
Philip E. Harris
/s/ John D. Mizick Director
------------------
John D. Mizick
/s/ Michael J. Romanoff Director
-----------------------
Michael J. Romanoff
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