SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 2001.
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number: 0-26570
CKF Bancorp, Inc.
-----------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Delaware 61-1267810
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
340 West Main Street, Danville, Kentucky 40422
- ---------------------------------------- -------------------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (859) 236-4181
--------------
Check whether the issuer: (1) 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 requirement for the past 90 days.
Yes X No _____
-----
As of May 7, 2001, 738,915 shares of the registrant's common stock were issued
and outstanding.
Transitional Small Business Disclosure Format: Yes _____ No X
-----
Page 1 of 13 Pages Exhibit Index at Page N/A
-----
CONTENTS
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of March 31, 2001 (unaudited) and
December 31, 2000......................................................... 3
Consolidated Statements of Income for the Three-Month Periods Ended
March 31, 2001 and 2000 (unaudited)....................................... 4
Consolidated Statement of Changes in Stockholders' Equity for the
Three Month Periods Ended March 31, 2001 and 2000 (unaudited)............. 5
Consolidated Statements of Cash Flows for the Three-Month Periods Ended
March 31, 2001 and 2000 (unaudited)....................................... 6
Notes to Consolidated Financial Statements................................... 7
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations..................................................... 8
PART II. OTHER INFORMATION
Item 1. Legal Proceedings............................................................ 13
Item 2. Changes in Securities and Use of Proceeds.................................... 13
Item 3. Defaults Upon Senior Securities.............................................. 13
Item 4. Submission of Matters to a Vote of Security Holders.......................... 13
Item 5. Other Information............................................................ 13
Item 6. Exhibits and Reports on Form 8-K............................................. 13
SIGNATURES
CKF BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
As of As of
March 31, December 31,
2001 2000
----------- -----------
(Unaudited)
ASSETS
Cash and due from banks $ 442,942 $ 415,198
Interest bearing deposits 5,198,542 2,851,509
Investment securities:
Securities available-for-sale 518,640 536,480
Securities held-to-maturity 2,643,104 1,710,916
Loans receivable, net 72,721,288 70,444,968
Real estate owned 93,600
Accrued interest receivable 622,149 595,773
Office property and equipment, net 1,426,107 1,447,550
Other assets 264,294 113,446
----------- -----------
Total assets $83,930,666 $78,115,840
=========== ===========
Liabilities and Stockholders' Equity
Deposits $67,790,631 $54,470,412
Advances from Federal Home Loan Bank 3,042,323 10,556,625
Advance payment by borrowers for taxes and insurance 61,793 26,209
Other liabilities 835,536 735,728
----------- -----------
Total liabilities 71,730,283 65,788,974
----------- -----------
Commitments and contingencies
Preferred stock, 500,000 shares, authorized and unissued
Common stock, $.01 par value, 4,000,000 shares authorized;
637,685 and 648,106, issued and outstanding at March 31,
2001 and December 31, 2000, respectively 10,000 10,000
Additional paid-in capital 9,583,174 9,578,665
Retained earnings, substantially restricted 8,120,817 8,091,071
Accumulated other comprehensive income 337,133 348,909
Treasury stock, 261,085 and 249,085 shares, respectively, at cost (4,301,010) (4,136,260)
Incentive Plan Trust, 55,600 shares, at cost (1,093,433) (1,093,433)
Unearned Employee Stock Ownership Plan (ESOP) stock (456,298) (472,086)
----------- -----------
Total stockholders' equity 12,200,383 12,326,866
----------- -----------
Total liabilities and stockholders' equity $83,930,666 $78,115,840
=========== ===========
See accompanying notes to consolidated financial statements.
3
CKF BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
For the Three-Month Periods
Ended March 31
---------------------------
2001 2000
---------- ----------
Interest income:
Interest on loans $1,491,563 $1,232,388
Interest and dividends on investments 31,489 29,679
Other interest income 27,940 23,412
---------- ----------
Total interest income 1,550,992 1,285,479
---------- ----------
Interest expense:
Interest on deposits 860,945 647,190
Other interest 74,852 64,502
---------- ----------
Total interest expense 935,797 711,692
---------- ----------
Net interest income 615,195 573,787
Provision for loan losses 9,000 9,000
---------- ----------
Net interest income after provision for loan losses 606,195 564,787
---------- ----------
Non-interest income:
Loan and other service fees 34,237 18,693
Other, net 5,306 726
---------- ----------
Total non-interest income 39,543 19,419
---------- ----------
Non-interest expense:
Compensation and benefits 159,690 141,146
Federal insurance premium 4,057 5,569
Legal and professional fees 11,124 16,640
State franchise tax 18,509 16,082
Occupancy expense, net 26,136 13,584
Data processing 22,421 16,798
Other operating expenses 45,739 56,091
---------- ----------
Total non-interest expense 287,676 265,910
---------- ----------
Income before income tax expense 358,062 318,296
Provision for income taxes 124,673 108,220
---------- ----------
Net income $ 233,389 $ 210,076
========== ==========
Earnings per common share $ .36 $ .30
========== ==========
Earnings per common share - assuming dilution $ .36 $ .30
========== ==========
Weighted average common shares outstanding during the quarter 637,562 692,943
========== ==========
Weighted average common shares after dilutive effect outstanding
during the quarter 637,562 692,943
========== ==========
See accompanying notes to consolidated financial statements.
4
CKF BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
for the three month periods ended March 31, 2001 and 2000
(unaudited)
Accumulated
Additional Other Incentive Unearned Total
Common Paid-in Retained Comprehensive Treasury Plan ESOP Stockholders'
Stock Capital Earnings Income Stock Trust Shares Equity
-------- ----------- ----------- ------------- ----------- ----------- --------- ------------
Balance, December 31, 1999 $ 10,000 $ 9,585,429 $ 7,733,718 $ 243,322 $(3,265,804) $(1,172,073) $(524,206) $ 12,610,386
------------
Comprehensive income:
Net income 210,076 210,076
Other comprehensive loss,
net of tax unrealized loss
on securities (15,167) (15,167)
------------
Total comprehensive income 194,909
Dividend declared (210,183) (210,183)
ESOP shares earned 4,196 13,030 17,226
Purchase of common stock,
24,998 shares (346,734) (346,734)
-------- ----------- ----------- ------------- ----------- ----------- --------- ------------
Balance, March 31, 2000 $ 10,000 $ 9,589,625 $ 7,733,611 $ 228,155 $(3,612,538) $(1,172,073) $(511,176) $ 12,265,604
======== =========== =========== ============= =========== =========== ========= ============
Balance, December 31, 2000 $ 10,000 $ 9,578,665 $ 8,091,071 $ 348,909 $(4,136,260) $(1,093,433) $(472,086) $ 12,326,866
------------
Comprehensive income:
Net income 233,389 233,389
Other comprehensive loss,
net of tax unrealized loss
on securities (11,776) (11,776)
------------
Total comprehensive income 221,613
Dividend declared (203,643) (203,643)
ESOP shares earned 4,509 15,788 20,297
Purchase of common stock,
12,000 shares (164,750) (164,750)
-------- ----------- ----------- ------------- ----------- ----------- --------- ------------
Balance, March 31, 2001 $ 10,000 $ 9,583,174 $ 8,120,817 $ 337,133 $(4,301,010) $(1,093,433) $(456,298) $ 12,200,383
======== =========== =========== ============= =========== =========== ========= ============
See accompanying notes to consolidated financial statements.
5
CKF BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Three-Month Periods
Ended March 31
---------------------------
2001 2000
----------- -----------
Cash flows from operating activities:
Net income $ 233,389 $ 210,076
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan losses 9,000 9,000
Amortization of loan fees (2,852) (2,352)
ESOP benefit expense 20,297 17,226
Provision for depreciation 21,443 10,359
FHLB stock dividend (11,400) (10,300)
Amortization of investment premium 1,324 118
Change in:
Interest receivable (26,376) (17,019)
Other liabilities and federal income taxes payable 140,402 102,784
Prepaid expense (68,895) 4,051
Interest payable (34,530) (741)
----------- -----------
Net cash provided by operating activities 281,802 323,202
----------- -----------
Cash flows from investing activities:
Loan originations and principal payment on loans, net (2,376,068) (1,814,267)
Purchase of government agency bonds (992,468)
Payments for construction of Branch bank building (150,669)
Purchase of office equipment (31,829)
Acquisition cost (81,953)
Principle repayment on mortgage back securities 70,356 9,477
----------- -----------
Net cash (used) by investing activities (3,380,133) (1,987,288)
----------- -----------
Cash flows from financing activities:
Net increase (decrease) in demand deposits, NOW accounts
and savings accounts 723,965 134,521
Net increase (decrease) in certificates of deposit 12,596,254 151,697
Net increase (decrease) in custodial accounts 35,584 38,547
Payments on FHLB advances (7,514,302) (7,975)
Dividends paid (203,643) (210,183)
Purchase of common stock (164,750) (346,734)
----------- -----------
Net cash provided (used) by financing activities 5,473,108 (240,127)
----------- -----------
Increase (decrease) in cash and cash equivalents 2,374,777 (1,904,213)
Cash and cash equivalents, beginning of period 3,266,707 4,323,816
----------- -----------
Cash and cash equivalents, end of period $ 5,641,484 $ 2,419,603
=========== ===========
Supplemental disclosures of cash flow information:
Cash paid for income taxes $ 21,542 $ 3,045
=========== ===========
Cash paid for interest $ 970,328 $ 712,433
=========== ===========
Real estate owned acquired by foreclosure $ 93,600
===========
See accompanying notes to consolidated financial statements.
6
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
CKF Bancorp, Inc. (the "Company") was formed in August 1994 at the direction
of Central Kentucky Federal Savings Bank (the "Bank") to become the holding
company of the Bank upon the conversion of the Bank from mutual to stock
form (the "Conversion"). Since the Conversion, the Company's primary assets
have been the outstanding capital stock of the Bank, cash on deposit with
the Bank, and a note receivable from the Company's Employee Stock Ownership
Plan ("ESOP"), and its sole business is that of the Bank. Accordingly, the
consolidated financial statements and discussions herein include both the
Company and the Bank. On December 29, 1994, the Bank converted from mutual
to stock form as a wholly owned subsidiary of the Company. In conjunction
with the Conversion, the Company issued 1,000,000 shares of its common stock
to the public.
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles
("GAAP") for interim financial information and with the instructions to Form
10-QSB and Article 10 of Regulation S-X. Accordingly, they do not include
all of the information and footnotes required by GAAP for complete financial
statements. In the opinion of management, all adjustments (consisting of
only normal recurring accruals) necessary for fair presentation have been
included. The results of operations and other data for the three month
period ended March 31, 2001 are not necessarily indicative of results that
may be expected for the entire fiscal year ending December 31, 2001.
2. Regulatory Capital
The Bank's actual capital and its statutory required capital levels based on
the consolidated financial statements accompanying these notes are as
follows (in thousands):
March 31, 2001
-------------------------------------------------------------------------
To be Well
Capitalized Under
For Capital Prompt Corrective
Adequacy Purposes Action Provisions
--------------------- --------------------- ---------------------
Actual Required Required
--------------------- --------------------- ---------------------
Amount % Amount % Amount %
-------- ------- -------- ------- -------- -------
Core capital $ 10,086 12.1% $ 3,338 4.0% $ 5,006 6.0%
Tangible capital 10,086 12.1 3,338 4.0 N/A N/A
Total Risk based capital 10,269 18.8 4,381 8.0 5,476 10.0
Leverage 10,086 12.1 N/A N/A 4,172 5.0
3. Dividends
A cash dividend of $0.32 per share was paid on February 12, 2001 to
stockholders of record as of January 29, 2001. The total dividends paid by
the Company for the quarter ended March 31, 2001 amounted to $203,643.
4. Common Stock
The Company purchased 12,000 shares of treasury stock at a cost of $164,750
during the three months ended March 31, 2001.
7
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Financial Condition
Total assets increased approximately $5.8 million, from $78.1 million at
December 31, 2000 to $83.9 million at March 31, 2001. The net increase in assets
includes a $2.3 million or 3.2% increase in net loans receivable, a $2.4 million
increase in cash and interest-bearing deposits, plus an increase of $914,000 in
the investment security portfolio. The $5.8 million increase in net assets was
primarily funded by a $13.3 million growth in deposits offset in part by the
repayment of FHLB Advances totaling approximately $7.5 million.
The Company's aggregate investment securities portfolio increased $914,000, or
40.7%, to $2.6 million at March 31, 2001. Securities classified as available-
for-sale and recorded at market value per SFAS No. 115 decreased $18,000 due
solely to the decrease in the market value of such securities. Other investment
securities classified as securities held to maturity increase $992,000 due to
the purchase of government agency bonds, which was partially offset by the
principal repayment of $70,000 on mortgage backed securities.
Under SFAS No. 115, unrealized gains or losses on securities available-for-sale
are recorded net of deferred income tax as a separate component of stockholders'
equity. At March 31, 2001, the Company included net unrealized gains of
approximately $337,000 in stockholders' equity. At December 31, 2000, the
Company included net unrealized gains of approximately $349,000 in stockholders'
equity. Per SFAS No. 115, such gains or losses will not be reflected as a charge
or credit to earnings until the underlying securities are sold, and then only to
the extent of the amount of gain or loss, if any, actually realized at the time
of sale.
Loans receivable increased by $2.3 million, or 3.2%, from $70.4 million at
December 31, 2000 to $72.7 million at March 31, 2001 as management continued its
efforts to be competitive in meeting the loan demand in the Bank's market area.
Deposits increased by $13.3 million, or 24.5%, to $67.8 million at March 31,
2001. This increase reflects the Company's competitively priced product line
within the local market area, plus the reaction of customers to the increased
risk in alternative investments as evidenced by the recent decline in the stock
market indexes.
Results of Operations for the Three Months Ended March 31, 2001 and 2000
Net Income
Net income for the three months ended March 31, 2001 was $233,000 compared to
$210,000 for the corresponding period in 2000, an increase of $23,000, or 11.1%.
The increase resulted primarily from an increase in net interest income of
$41,000, plus an increase of $20,000 in non-interest income, offset by increases
in non-interest expense of $22,000 and income tax expense of $16,000.
Interest Income
Interest income totaled 7.9% of average assets for the quarter ended March 31,
2001 compared to 7.5% for the quarter ended March 31, 2000. Interest income
increased $266,000, or 20.6%, to $1.6 million for the quarter ended March 31,
2001 from $1.3 million for the quarter ended March 31, 2000. The increase was
due to an increase of 40 basis points in the effective rate earned on interest-
bearing assets, and an increase in the
8
average earning assets of $9.3 million for the quarter ended March 31, 2001
compared to the same period in 2000.
Interest Expense
Interest expense totaled $936,000 and $712,000 for the three months ended March
31, 2001 and 2000, respectively. The increase in interest expense of $224,000 or
31.5%, for the three months ended March 31, 2001 as compared to the same period
for 2000 was due to an increase of $10.4 million in average interest bearing
liabilities for the quarter ended March 31, 2001 compared to the same period in
2000, plus an increase of approximately 56 basis points in the interest rate
paid on average interest bearing liabilities for the quarter ended March 31,
2001 compared to the same period in 2000.
Provision for Loan Losses
The Bank established a provision for loan losses of $9,000 in each of the
quarters ended March 31, 2001 and 2000, respectively. Management established the
Bank's existing level of its allowance for loan losses based upon its analysis
of various factors, including the market value of the underlying collateral,
composition of the loan portfolio, the Bank's historical loss experience,
delinquency trends and prevailing and projected economic conditions in the
Bank's market area.
Non-Interest Income
Non-interest income amounted to $39,000 and $19,000 for the three months ended
March 31, 2001 and 2000, respectively. Non-interest income included primarily
fees charged in connection with loans and service charges on deposit accounts of
$34,000 and $18,000 for the three months ended March 31, 2001 and 2000,
respectively.
Non-interest Expense
Non-interest expense totaled $288,000 and $266,000 for the three months ended
March 31, 2001 and 2000, respectively, an increase of $22,000, or 8.3%, and such
expense amounted to 1.4% and 1.5% of average assets for the periods ended March
31, 2001 and 2000, respectively. The increase of $22,000 was due to increases in
compensation and benefits of $19,000, occupancy expense of $13,000 and data
processing expense of $6,000 offset by a net decrease in the other non-interest
expense categories of $16,000. The increases in compensation and benefits,
occupancy expense, and data processing are primarily due to the operations of a
new branch location that opened in June of 2000.
Income Taxes
The provision for income taxes for the three months ended March 31, 2001 and
2000 was $125,000 and $108,000, respectively, which as a percentage of income
before income taxes was 34.8% for the three months ended March 31, 2001 and
34.0% for the same period in the prior year.
9
Non-Performing Assets
The following table sets forth information with respect to the Bank's non-
performing assets at the dates indicated. No loans were recorded as
restructured loans within the meaning of SFAS No. 15 at the dates indicated.
March 31, December 31,
2001 2000
---------- ------------
(amounts in thousands)
Loans accounted for on a non-accrual basis:/1/
Real Estate:
Residential $ 91 $ 194
Commercial
Consumer 27 28
---------- ------------
Total $ 118 $ 222
========== ============
Accruing loans which are contractually past due 90 days or more:
Real Estate:
Residential 303 348
Commercial
Consumer 11
---------- ------------
Total 314 348
========== ============
Total of loans accounted for as non-accrual or as accruing past
due 90 days or more $ 432 $ 570
========== ============
Percentage of total loans .59% .81%
========== ============
Other non-performing assets/2/ $ 94 $ -
========== ============
Restructured loans $ - $ -
========== ============
/1/Non-accrual status denotes any mortgage loan past due 90 days and whose loan
balance, plus accrued interest exceeds 90% of the estimated loan collateral
value, and any consumer or commercial loan more than 90 days past due. Payments
received on a non-accrual loan are either applied to the outstanding principal
balance or recorded as interest income, or both, depending on assessment of the
collectibility of the loan.
/2/Other non-performing assets represent property acquired by the Bank through
foreclosure or repossession. Such property is carried at the lower of its fair
market value or the principal balance of the related loan.
During the three months ended March 31, 2001, additional interest income of
$5,351 would have been recorded on loans accounted for on a non-accrual basis if
the loans had been current throughout the year. Interest on such loans actually
included in income during the three months ended March 31, 2001 totaled $695.
At March 31, 2001, there were no loans identified by management, which were not
reflected in the preceding table, but as to which known information about
possible credit problems of borrowers caused management to have serious doubts
as to the ability of the borrowers to comply with present loan repayment terms.
Liquidity and Capital Resources
The Bank's principal sources of funds for operations are deposits from its
primary market area, principal and interest payments on loans, and proceeds from
maturing investment securities. The principal uses of funds by the Bank include
the origination of mortgage and consumer loans and the purchase of investment
securities.
10
The Bank must satisfy two capital standards, as set by the OTS. These standards
include a ratio of core capital to adjusted total assets of 4.0%, and a
combination of core and "supplementary" capital equal to 8.0% of risk-weighted
assets. The Bank's capital exceeded these capital standards at March 31, 2001.
At March 31, 2001, the Bank had outstanding commitments to originate loans
totaling $2.7 million, excluding $1.5 million in approved but unused home equity
lines of credit. Management believes that the Bank's sources of funds are
sufficient to fund all of its outstanding commitments. Certificates of deposits
which are scheduled to mature in one year or less from March 31, 2001 totaled
$30.9 million. Management believes that a significant percentage of such
deposits will remain with the Bank.
11
PART II. OTHER INFORMATION
Item 1. Legal Proceedings None
Item 2. Changes in Securities and Use of Proceeds None
Item 3. Defaults Upon Senior Securities None
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
No reports on Form 8-K were filed during the quarter ended March 31,
2001.
12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CKF Bancorp, Inc.
Date: May 8, 2001 /s/ John H. Stigall
______________________________________________________
John H. Stigall, President and Chief Executive Officer
(Duly Authorized Officer)
Date: May 8, 2001 /s/ Ann L. Hooks
______________________________________________________
Ann L. Hooks, Vice President and Treasurer
(Principal Financial and Accounting Officer)
13