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 June 30, 2001
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 0-25180
CKF Bancorp, Inc.
------------------------------------------------------
(Exact name of registrant 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)
Registrant's telephone number, including area code: (606) 236-4181
--------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed 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 ninety days.
Yes X No
--------------- _______________
As of August 12, 2001, 738,915 shares of the registrant's common stock were
issued and outstanding.
Page 1 of 16 pages Exhibit Index at Page N/A
CONTENTS
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of June 30, 2001 (unaudited) and
December 31, 2000..................................................... 3
Consolidated Statements of Income for the Three-Month Periods
Ended June 30, 2001 and 2000 (unaudited) and the Six-Month
Periods Ended June 30, 2001 and 2000 (unaudited)...................... 4
Consolidated Statement of Changes in Stockholders' Equity for the
Six Month Period Ended June 30, 2001 and 2000 (unaudited)............. 5
Consolidated Statements of Cash Flows for the Six-Month Periods Ended
June 30, 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................................................. 10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings........................................................ 15
Item 2. Changes in Securities.................................................... 15
Item 3. Defaults Upon Senior Securities.......................................... 15
Item 4. Submission of Matters to a Vote of Security Holders...................... 15
Item 5. Other Information........................................................ 15
Item 6. Exhibits and Reports on Form 8-K......................................... 15
SIGNATURES
CKF BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
_________________________
As of As of
June 30, December 31,
2001 2000
--------------- ---------------
(Unaudited)
ASSETS
Cash and due from banks $ 4,727,117 $ 415,198
Interest-bearing deposits 2,014,331 2,851,509
Investment securities:
Securities available-for-sale 2,189,024 536,480
Securities held-to-maturity 3,729,708 1,710,916
Loans receivable, net 122,694,242 70,444,968
Real estate owned, net 855,257
Accrued interest receivable 1,056,722 595,773
Office property and equipment, net 2,111,836 1,447,550
Goodwill 1,172,013
Other assets 174,286 113,446
--------------- ---------------
Total assets $ 140,724,536 $ 78,115,840
=============== ===============
Liabilities and Stockholders Equity
Deposits $ 108,645,015 $ 54,470,412
Advances from Federal Home Loan Bank 18,069,829 10,556,625
Advance payment by borrowers for taxes and insurance 144,008 26,209
Other liabilities 1,347,253 735,728
--------------- ---------------
Total liabilities 128,206,105 65,788,974
--------------- ---------------
Commitments and contingencies
Preferred stock, 500,000 shares, authorized and unissued Common stock,
$.01 par value, 4,000,000 shares authorized;
640,485 and 648,106, issued and outstanding at June 30,
2001 and December 31, 2000, respectively 10,000 10,000
Additional paid-in capital 9,588,631 9,578,665
Retained earnings, substantially restricted 8,374,927 8,091,071
Accumulated other comprehensive income 361,620 348,909
Treasury stock, 261,085 and 249,085 shares, respectively, at cost (4,301,010) (4,136,260)
Incentive Plan Trust, 54,100 shares, at cost (1,072,433) (1,093,433)
Unearned Employee Stock Ownership Plan (ESOP) stock (443,304) (472,086)
--------------- ---------------
Total stockholders' equity 12,518,431 12,326,866
--------------- ---------------
Total liabilities and stockholders' equity $ 140,724,536 $ 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 For the Six-Month Periods
Ended June 30, Ended June 30,
------------------------------- ------------------------------
2001 2000 2001 2000
-------------- ------------- ------------- -------------
Interest income:
Interest on loans.................... $ 1,848,758 $ 1,261,998 $ 3,340,321 $ 2,494,386
Interest and dividends on
investments........................ 44,750 32,877 76,239 62,556
Other interest income................ 47,384 18,199 75,324 41,611
-------------- ------------- ------------- -------------
Total interest income.............. 1,940,892 1,313,074 3,491,884 2,598,553
-------------- ------------- ------------- -------------
Interest expense:
Interest on deposits................. 1,086,417 663,889 1,947,362 1,311,079
Other interest expense............... 79,741 93,777 154,593 158,279
-------------- ------------- ------------- -------------
Total interest expense............. 1,166,158 757,666 2,101,955 1,469,358
-------------- ------------- ------------- -------------
Net interest income..................... 774,734 555,408 1,389,929 1,129,195
Provision for loan losses............... 11,000 9,000 20,000 18,000
-------------- ------------- ------------- -------------
Net interest income after
provision for loan losses.......... 763,734 546,408 1,369,929 1,111,195
-------------- ------------- ------------- -------------
Non-interest income:
Loan and other service fees.......... 41,170 20,201 75,407 38,895
Gain on sale of real estate owned.... 15,544 15,544
Other, net........................... 5,955 896 11,261 1,622
-------------- ------------- ------------- -------------
Total non-interest income.......... 62,669 21,097 102,212 40,517
-------------- ------------- ------------- -------------
Non-interest expense:
Compensation and benefits............ 203,343 147,575 363,033 288,721
Federal insurance premium............ 4,147 2,743 8,204 8,312
State franchise tax.................. 15,766 14,923 34,275 29,845
Occupancy expenses, net.............. 39,495 15,677 65,631 29,261
Data processing expenses............. 46,375 15,990 68,796 32,788
Legal and other professional fees.... 4,989 3,957 16,113 12,910
Other operating expenses............. 131,715 63,079 177,454 128,017
-------------- ------------- ------------- -------------
Total non-interest expense......... 445,830 263,944 733,506 529,854
-------------- ------------- ------------- -------------
Income before income tax expense........ 380,573 303,561 738,635 621,858
Provision for income taxes.............. 126,463 103,211 251,136 211,432
-------------- ------------- ------------- -------------
Net income.............................. $ 254,110 $ 200,350 $ 487,499 $ 410,426
============== ============= ============= =============
Earnings per common share-basic......... $ .40 $ .30 $ .76 $ .60
============== ============= ============= =============
Earnings per common share-diluted....... $ .40 $ .30 $ .76 $ .60
============== ============= ============= =============
Weighted average common shares
outstanding during the quarter....... 638,156 670,917 637,859 681,930
============== ============= ============= =============
Weighted average common shares after
dilutive effect outstanding during
the quarter.......................... 640,489 671,962 640,192 682,975
============== ============= ============= =============
4
CKF BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
for the six month periods ended June 30, 2001 and 2000
(unaudited)
_____________________
Accumulated
Additional Other
Common Paid-in Retained Comprehensive Treasury
Stock Capital Earnings Income Stock
----------- -------------- ------------- ------------- ---------------
Balance, December 31, 1999 $ 10,000 $ 9,585,429 $ 7,733,718 $ 243,322 $ (3,265,804)
Comprehensive income:
Net income 410,426
Other comprehensive loss, net of tax,
net unrealized loss on securities (34,650)
Total comprehensive income
Dividend declared (210,183)
ESOP shares earned 9,147
Purchase of common stock, 38,880 shares (542,907)
----------- -------------- ------------- ------------- --------------
Balance, June 30, 2000 $ 10,000 $ 9,594,576 $ 7,933,961 $ 208,672 $ (3,808,711)
=========== ============== ============= ============= ==============
Balance, December 31, 2000 $ 10,000 $ 9,578,665 $ 8,091,071 $ 348,909 $ (4,136,260)
Comprehensive income:
Net income 487,499
Other comprehensive loss, net of tax ,
net unrealized gain on securities 12,711
Total comprehensive income
Dividend declared (203,643)
ESOP shares earned 9,966
Issue of common stock
Purchase of common stock (164,750)
----------- -------------- ------------- ------------- --------------
Balance, June 30, 2001 $ 10,000 $ 9,588,631 $ 8,374,927 $ 361,620 $ (4,301,010)
=========== ============== ============= ============= ==============
Unearned Total
Incentive ESOP Stockholders'
Plan Shares Equity
------------ -------------- -------------
Balance, December 31, 1999 $(1,172,073) $ (524,206) $ 12,610,386
-------------
Comprehensive income:
Net income 410,426
Other comprehensive loss, net of tax,
net unrealized loss on securities (34,650)
-------------
Total comprehensive income 375,776
Dividend declared (210,183)
ESOP shares earned 26,060 35,207
Purchase of common stock, 38,880 shares (542,907)
----------- -------------- -------------
Balance, June 30, 2000 $(1,172,073) $ (498,146) $ 12,268,279
=========== ============== =============
Balance, December 31, 2000 $(1,093,433) $ (472,086) $ 12,326,866
-------------
Comprehensive income:
Net income 487,499
Other comprehensive loss, net of tax ,
net unrealized gain on securities 12,711
-------------
Total comprehensive income 500,210
Dividend declared (203,643)
ESOP shares earned 28,782 38,748
Issue of common stock 21,000 21,000
Purchase of common stock (164,750)
----------- -------------- -------------
Balance, June 30, 2001 $(1,072,433) $ (443,304) $ 12,518,431
=========== ============== =============
The accompanying notes are an integral part of the consolidated financial
statements.
5
CKF BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
___________________
For the Six-Month Periods
Ended June 30
------------------------------
2001 2000
------------- -------------
Cash flows from operating activities:
Net income $ 487,499 $ 410,426
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan losses 20,000 18,000
Amortization of loan fees (7,218) (7,962)
ESOP benefit expense 38,748 35,207
Provision for depreciation 46,320 21,792
FHLB stock dividend (27,300) (21,300)
Amortization of premiums and discounts, net 29,496 290
Non-cash compensation under stock based benefit plan 21,000
Change in:
Interest receivable (127,613) (39,498)
Other liabilities and federal income taxes payable (210,511) 4,760
Prepaid expense 21,503 (42,285)
Interest payable 73,253 13,470
------------- -------------
Net cash provided by operating activities 365,177 392,900
------------- -------------
Cash flows from investing activities:
Loan originations and principal payment on loans, net (4,472,626) (2,115,129)
Payments for land and construction of Branch bank building (482,472)
Purchase of office equipment (4,307) (141,601)
Cash consideration in the First Lancaster acquisition, net (10,795,858)
Matured held-to-maturity securities 250,000
Purchase of held-to-maturity securities (992,468)
Principle repayment on mortgage-backed securities 66,559 21,477
Investment in service corp. (76,320)
------------- -------------
Net cash provided (used) by investing activities (16,275,020) (2,467,725)
------------- -------------
Cash flows from financing activities:
Net increase (decrease) in demand deposits, NOW accounts
and savings accounts 2,434,587 (247,442)
Net increase (decrease) in certificates of deposit 19,770,572 (1,594,641)
Net increase (decrease) in custodial accounts 84,197 70,554
Proceeds from FHLB advances 12,000,000 3,000,000
Payments on FHLB advances (14,536,379) (16,088)
Dividends paid (203,643) (210,183)
Purchase of common stock (164,750) (542,907)
------------- -------------
Net cash provided by financing activities 19,384,584 459,293
------------- -------------
Increase (decrease) in cash and cash equivalents 3,474,741 (1,615,532)
Cash and cash equivalents, beginning of period 3,266,707 4,323,816
------------- -------------
Cash and cash equivalents, end of period $ 6,741,448 $ 2,708,284
============= =============
Supplemental disclosures of cash flow information:
Cash paid for income taxes $ 195,000 $ 243,045
============= =============
Cash paid for interest $ 2,063,233 $ 1,455,888
============= =============
6
NOTES TO UNAUDITED 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-Q 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 six month period ended June 30, 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):
June 30, 2001
--------------------------------------------------------------------------------
To be Well
For Capital Capitalized Under
Adequacy Purpose Prompt Corrective
Action Provisions
------------------------ ------------------------ -------------------------
Actual Required Required
------------------------ ------------------------ -------------------------
Amount % Amount % Amount %
------------------------ ------------------------ -------------------------
Core capital $8,193 5.9% $5,568 4.0% $8,352 6.0%
Tangible capital $8,193 5.9% $5,568 4.0% N/A N/A
Total Risk based capital $8,632 9.1% $7,551 8.0% $9,439 10.0%
Leverage $8,193 5.9% N/A N/A $6,960 5.0%
3. Dividends
A cash dividend of $0.32 per share was paid on February 10, 2001 to stockholders
of record as of January 29, 2001. The total dividends paid by the Company for
the six months ended June 30, 2001 amounted to $203,643.
7
4. Common Stock
The Company purchased 12,000 shares of treasury stock at a cost of $164,750
during the six months ended June 30, 2001. In addition, the Company granted
1,500 shares of common stock as employee compensation during the quarter ended
June 30, 2001 at a cost of $21,000. The stock was issued from shares held in the
Incentive Plan Trust.
5. Business Combination
On May 31, 2001, the Company acquired First Lancaster Bancshares, Inc. (First
Lancaster), the holding company of First Lancaster Federal Savings Bank
(Lancaster), a federally chartered savings bank, located in Lancaster, Kentucky.
Under the Agreement and Plan of Merger dated as of December 14, 2000, the
Company acquired First Lancaster for a cash purchase price of $13.6 million,
which represented $16.27 per share for each outstanding share of First Lancaster
common stock. An additional payment of $130,371 was made for the cancellation of
all outstanding First Lancaster stock options. As a result of the merger,
Lancaster was merged into Central Kentucky Federal Savings Bank.
The combination was accounted for under the purchase method of accounting, and
accordingly, the net assets were recorded at their estimated fair values at the
date of acquisition, May 31, 2001. Fair value adjustments on the assets and
liabilities included in the purchase are being amortized over the estimated
lives of the related assets and liabilities. The excess of the purchase price
over the estimated fair value of the underlying net assets of $1,172,013 was
allocated to goodwill and is being amortized over 15 years using the straight-
line method.
The following unaudited pro forma condensed consolidated financial information
reflects the results of operations of the Company for the year ended December
31, 2000 and for the six months ended June 30, 2001 as if the transaction had
occurred at the beginning of each period presented. These pro forma results are
not necessarily indicative of what the Company's results of operations would
have been had the acquisition actually taken place at the beginning of each
period presented.
Year Ended Six Months Ended
December 31, 2000 June 30, 2001
----------------- ----------------
(Dollars in Thousands)
Net interest income $3,768 $2,032
================= ================
Net income $886 $591
================= ================
Diluted net income per share $1.34 $0.92
================= ================
6. New Accounting Pronouncements
In June of 2001 the Financial Accounting Standards Board (FASB) issued Statement
No. 141, "Business Combinations" and Statement No. 142, "Goodwill and Other
Intangible Assets."
8
Statement No. 141 pertains to business combinations initiated after June 30,
2001 and requires all business combinations after this date to be accounted for
using the purchase method of accounting. Statement No. 142 pertains to the
accounting for goodwill and other intangible assets and is effective for the
Company beginning January 1, 2002. Beginning in January 2002, the Company will
be required to cease amortizing goodwill acquired in business combinations prior
to July 1, 2001. Subsequent to January 1, 2002 and at a minimum on an annual
basis, the Company must test the goodwill recorded for impairment. If it is
determined that the goodwill has been impaired, then the carrying value of
goodwill must be reduced for the impairment. The Company does not anticipate the
effect of implementing these statements to be material to its financial position
or results of operations.
9
ITEM 2: MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Financial Condition
Total assets increased approximately $63 million, from $78.1 million at December
31, 2000 to $140.1 million at June 30, 2001. The increase in the assets of the
Company was primarily due to the Company's acquisition of First Lancaster
Bancshares, Inc. on May 31, 2001. The assets acquired in this transaction
totaled $55 million, which included loans of $48 million. Liabilities assumed in
the transaction totaled approximately $42 million, including deposits of $32
million and FHLB borrowings of $10 million. The goodwill recorded as a result of
this transaction totaled $1.2 million. Since December 31, 2000, net loans have
increased $52.2 million, while cash, interest-bearing deposits, and investments
have increased a total of $7.1 million.
The Company's aggregate investment portfolio increased $3.7 million from
December 31, 2000 to $5.9 million at June 30, 2001. Approximately $2.7 million
was due to investments acquired in the First Lancaster acquisition. The
remaining increase was due to the purchase of government agency-backed bonds
totaling approximately $1 million.
Loans increased $52 million from December 31, 2000 to $122.7 million at June 30,
2001 with approximately $48 million of the increase due to the First Lancaster
acquisition. In addition, as a result of the First Lancaster acquisition, real
estate owned increased by $855,000, which is net of an allowance for losses of
$155,000.
Deposits increased $54 million from December 31, 2000 to $109 million at June
30, 2001 with approximately $32 million of the increase due to the First
Lancaster acquisition. In addition to the First Lancaster acquisition, deposits
have increased an additional $22 million. This increase is due to 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 decline in equity market indexes during this period.
Advances from the Federal Home Loan Bank increased $7.5 million from December
31, 2000 to $18.1 million at June 30, 2001, with approximately $10 million being
assumed in the First Lancaster transaction. The Company borrowed $12 million to
finance the First Lancaster transaction during the period presented.
Results of Operations for the Three Months Ended June 30, 2001 and 2000
Net Income
Net income for the three months ended June 30, 2001 was $254,000, compared to
$200,000 for the corresponding period in 2000, an increase of $54,000, or 26.8%.
The increase resulted from increases in net interest income of $219,000 and a
$42,000 increase in non-interest income, offset in
10
part by an increase of $182,000 in non-interest expense and a $23,000 increase
in income tax expense.
Interest Income
Interest income increased by $628,000, or 47.8%, to $1.9 million for the quarter
ended June 30, 2001, compared to $1.3 million for the quarter ended June 30,
2000. The increase in interest income resulted primarily from the growth in the
Company's loan and investment portfolios as a result of the First Lancaster
acquisition plus a higher yield on interest-earning assets. Interest income
totaled 8.3% of average interest-earning assets for the quarter ended June 30,
2001, compared to 7.5% for the comparable quarter in year 2000. The average
balance of interest-earning assets totaled $93 million for the quarter ended
June 30, 2001, compared to $70 million in the comparable quarter in 2000.
Interest Expense
Interest expense totaled $1.2 million and $758,000 for the three months ended
June 30, 2001 and 2000, respectively. The increase in interest expense of
$408,000, or 53.9%, was due primarily to the increase in the average balance of
interest-bearing liabilities in the quarter ended June 30, 2001, compared to the
same period in 2000. The average balance of interest-bearing liabilities was $86
million for the quarter ended June 30, 2001, compared to $59 million for the
same period in year 2000. The average rate paid on the interest-bearing deposits
for the quarter ended June 30, 2001 was 5.4%, compared to 5.1% in the same
period in year 2000.
Provision for Loan Losses
The Bank established a provision for loan losses of $11,000 and $9,000 for the
quarters ended June 30, 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. The Company's allowance for loan losses as a percentage of
total loans outstanding, net of unearned loan origination fees, totaled .36% at
June 30, 2001, compared to .26% at December 31, 2000.
Non-Interest Income
Non-interest income amounted to $63,000 and $21,000 for the three months ended
June 30, 2001 and 2000, respectively. Non-interest income included primarily
fees charged in connection with loans and service charges on deposit accounts of
$45,000 and $20,000 for the three months ended June 30, 2001 and 2000,
respectively.
11
Non-interest Expense
Non-interest expense totaled $446,000 and $264,000 for the three months ended
June 30, 2001 and 2000, respectively. Non-interest expense increased $182,000,
or 68.9%, for the quarter ended June 30, 2001, compared to the same period in
year 2000. The increase of $182,000 was due to an increase of $56,000 in
compensation and benefits, an increase of $24,000 in occupancy expense, an
increase of $30,000 in data processing expense, and an increase of $69,000 in
other operating expense. The increases were due to the increased costs in these
categories from the First Lancaster acquisition, plus expenses related to the
Company opening a new branch location in June of 2000.
Income Taxes
The provision for income taxes for the three months ended June 30, 2001 and 2000
was $126,000 and $103,000, respectively, which as a percentage of income before
income taxes was 33% and 34%, respectively.
Results of Operations for the Six Months Ended June 30, 2001 and 2000
Net Income
Net income for the six months ended June 30, 2001 was $487,000, as compared to
$410,000 for the corresponding period in 2000, an increase of $77,000, or 18.8%.
The increase resulted primarily from increases in net interest income of
$261,000 and a $62,000 increase in non-interest income, offset in part by an
increase of $204,000 in non-interest expense and a $40,000 increase in income
tax expense.
Interest Income
Interest income increased by $893,000, or 34.4%, to $3.5 million for the six
months ended June 30, 2001, compared to $2.6 million for the same period in year
2000. The increase in interest income resulted from the growth in the Company's
loan and investment portfolios, including the acquisition of First Lancaster,
plus a higher yield on interest-earning assets. Interest income totaled 8.1% of
average interest-earning assets for the six months ended June 30, 2001, compared
to 7.5% for the comparable period in year 2000. The average balance of
interest-earning assets totaled $86 million for the six months ended June 30,
2001, compared to $69 million in the comparable period in 2000.
Interest Expense
Interest expense totaled $2.1 million and $1.5 million for the six-month period
ended June 30, 2001 and 2000, respectively. The increase in interest expense
$633,000, or 43.0%, was due primarily to the increase in the average balance of
interest-bearing liabilities in the six-month period ended June 30, 2001,
compared to the same period in 2000. The average balance of interest-bearing
liabilities was $77.4 million for the six-month period ended June 30, 2001,
compared to $57.8 million for the same period in year 2000. The average rate
paid on the interest-bearing deposits for the period ended June 30, 2001 was
5.4%, compared to 5.1% in the same period in year 2000.
Provision for Loan Losses
The Bank established a provision for loan losses of $20,000 and $18,000 for both
six month periods ended June 30, 2001 and 2000. Management considers many
factors in determining the necessary level of the
12
allowance for loan losses, including an analysis of specific loans in the
portfolio, estimated value of the underlying collateral, assessment of general
trends in the real estate market, delinquency trends, prospective economic and
regulatory conditions, inherent loss in the loan portfolio, and the relationship
of the allowance for loan losses to outstanding loans.
Non-Interest Income
Non-interest income amounted to $102,000 and $41,000 for the six months ended
June 30, 2001 and 2000, respectively. Noninterest income included primarily fees
charged in connection with loans and service charges on deposit accounts of
$70,000 and $39,000 for the six months ended June 30, 2001 and 2000,
respectively.
Non-Interest Expense
Non-interest expense totaled $734,000 and $530,000 for the six months ended June
30, 2001 and 2000, respectively. Non-interest expense increased $204,000, or
38.4%, for the six-month period ended June 30, 2001, compared to the same period
in year 2000. The increase of $204,000 was due to an increase of $74,000 in
compensation and benefits, an increase of $36,000 in occupancy expense, an
increase of $36,000 in data processing expense, and an increase of $49,000 in
other operating expense. The increases were due to the increased costs in these
categories from the First Lancaster acquisition, plus expenses related to the
Company opening a new branch location in June of 2000.
Income Taxes
The provision for income taxes for the six months ended June 30, 2001 and 2000
was $251,000 and $211,000, respectively, and, as a percentage of income before
income taxes was 34% and 34% for the six months ended June 30, 2001 and 2000,
respectively.
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.
June 30, December 31,
2001 2000
------------- -------------
(amounts in thousands)
Loans accounted for on a non-accrual basis:/1/
Real Estate:
Residential $ 365 $ 194
Commercial
Consumer 38 28
------------- -------------
Total $ 403 $ 222
============= =============
Accruing loans which are contractually past due 90 days or more:
Real Estate:
Residential 531 348
Commercial 681
Consumer
------------- -------------
Total 1,212 348
============= =============
Total of loans accounted for as non-accrual or as accruing past
due 90 days or more $ 1,615 $ 570
============= =============
13
Percentage of total loans 1.32% .81%
============= =============
Other non-performing assets/2/ $ 855 $ -
============= =============
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 six months ended June 30, 2001, additional interest income of $18,506
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 six months ended June 30, 2001 totaled $7,324.
At June 30, 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.
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. Under current regulations, the Bank at June 30, 2001 was adequately
capitalized.
At June 30, 2001, the Bank had outstanding commitments to originate loans
totaling $3.1 million, excluding $2.1 million in approved but unused home equity
lines of credit and $4.1 million in mortgage loans approved, but not disbursed.
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 June 30, 2001 totaled $48.5 million. Management
believes that a significant percentage of such deposits will remain with the
Bank.
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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
The Company's Annual Meeting of Stockholders was held on April 17, 2001,
587,715 shares of CKF Bancorp, Inc. common stock were represented at the
Annual Meeting in person or by proxy.
Stockholders voted in favor of the election of three nominees for
director. The voting results for each nominee were as follows:
----------------------------------------------------------------------
Nominee Votes in Votes
Favor of Election Withheld
----------------------------------------------------------------------
W. Irvine Fox 583,015 4,700
----------------------------------------------------------------------
Warren O. Nash 583,015 4,700
----------------------------------------------------------------------
John H. Stigall 583,015 4,700
----------------------------------------------------------------------
Item 5. Other Information None
Item 6. Exhibits and Reports on Form 8-K
(a) The disclosure required by this item is incorporated by reference to
the Company's current 8K/A filed with the commission on August 10,
2001.
15
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: August 12, 2001 /s/
--------------------------------------------------
John H. Stigall, President and Chief Executive
Officer (Duly Authorized Officer)
Date: August 12, 2001 /s/
--------------------------------------------------
Ann L. Hooks, Vice President and Treasurer
(Principal Financial and Accounting Officer)
16