Exhibit 99
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IROQUOIS BANCORP, INC.
401(K) SAVINGS PLAN
Financial Statements and Schedules
December 31, 1999 and 1998
(With Independent Auditors' Report Thereon)
IROQUOIS BANCORP, INC.
401(K) SAVINGS PLAN
Table of Contents
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Page
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Independent Auditors' Report 1
Financial statements for the years ended December 31, 1999 and 1998:
Statements of Net Assets Available for Benefits at
December 31, 1999 and 1998 2
Statements of Changes in Net Assets Available for
Benefits for the Years Ended December 31, 1999 and 1998 3
Notes to financial statements 4-8
Supplemental schedules as of and for the year ended December 31, 1999:
Item 27a Schedule of Assets Held for Investment Purposes 9
Item 27d Schedule of Reportable (5%) Transactions 10
INDEPENDENT AUDITORS' REPORT
The Pension Plan Trustees of Iroquois Bancorp, Inc.
401(k) Savings Plan:
We have audited the accompanying statement of net assets available for benefits
of Iroquois Bancorp, Inc. 401(k) Savings Plan as of December 31, 1999 and 1998,
and the related statement of changes in net assets available for benefits for
the years then ended. These financial statements are the responsibility of the
Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of Iroquois
Bancorp, Inc. 401(k) Savings Plan as of December 31, 1999 and 1998, and the
changes in net assets available for benefits for the years then ended in
conformity with generally accepted accounting principles.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules, as listed in
the accompanying index, are presented for the purpose of additional analysis and
are not a required part of the basic financial statements but are supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. The supplemental schedules have been subjected to the auditing procedures
applied in the audit of the basic financial statements and, in our opinion, are
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
/s/ The Fagliarone Group, P.C.
- ------------------------------
THE FAGLIARONE GROUP, P.C.
February 25, 2000
IROQUOIS BANCORP, INC.
401(K) SAVINGS PLAN
Statements of Net Assets Available for Benefits
December 31,
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1999 1998
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Assets
Investments, at fair value:
Money market funds $ 50,680 169,361
U.S. Government securities -- 87,688
Corporate bonds -- 511,403
Common stocks 1,531,714 3,876,226
Mutual funds 1,773,728 --
Collective trust funds 541,200 --
Employees' loans 218,300 222,719
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4,115,622 4,867,397
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Receivables:
Accrued interest and dividends -- 6,923
Due from employees -- 48,821
Due from employer -- 14,154
-- 69,898
Net assets available for
benefits $4,115,622 4,937,295
=================================================================
See accompanying notes to financial statements.
2
IROQUOIS BANCORP, INC.
401(K) SAVINGS PLAN
Statements of Changes in Net Assets Available for Benefits
December 31,
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1999 1998
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Investment income:
Dividends on Iroquois Bancorp, Inc.
common stock $ 48,302 46,178
Interest and dividends 117,163 69,978
Net appreciation(depreciation)
in fair value of investments (461,397) (711,228)
---------------------- ----------------------
(295,932) (595,072)
---------------------- ----------------------
Contributions:
Employees 357,219 352,921
Employer 125,265 139,653
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482,484 492,574
---------------------- ----------------------
Total additions 186,552 (102,498)
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Benefits paid to participants 972,645 157,643
Administrative expenses 35,580 33,894
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Total deductions 1,008,225 191,537
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Net increase(decrease) (821,673) (294,035)
Net assets available for benefits:
Beginning of year 4,937,295 5,231,330
---------------------- ----------------------
End of year $4,115,622 4,937,295
====================== ======================
See accompanying notes to financial statements.
3
IROQUOIS BANCORP, INC.
401(K) SAVINGS PLAN
Notes to Financial Statements
December 31, 1999
(1) Description of the Plan
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The following description of the Iroquois Bancorp, Inc. 401(K) Savings Plan
(Plan) is provided for general informational purposes only. Participants
should refer to the Plan agreement for more complete information.
General
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The Plan is a defined contribution plan sponsored by Iroquois Bancorp, Inc.
(the "Company") for the benefit of its employees and the employees of its
wholly owned subsidiaries, Cayuga Bank and The Homestead Savings (FA).
Employees may elect to participate in the Plan after completion of 1,000
hours of service in a Plan year and attainment of age 21. Participants may
not be subject to the terms of a collective bargaining agreement with the
Company, or its subsidiaries.
Description of Investment Options
---------------------------------
Participants elect to have their contributions allocated to any combination
of the various investment options offered by the Plan. The following is a
description of the current investment options:
Diversified Global Stock Fund: Investments in U.S. and international
-----------------------------
stock funds seeking long-term capital growth through a diversified
global stock strategy.
Diversified U.S. Stock Fund: Investments, primarily in large cap
----------------------------
growth and value funds investing in large U.S. companies.
Diversified Conservative Income Fund: Investments providing current
-------------------------------------
income with the opportunity for capital growth through investing
primarily in a U.S. Bond fund with limited participation in the U.S.
stock market.
Diversified Conservative Fund: Investments primarily in bond funds
------------------------------
with moderate allocations to stock funds, including exposure to non-
U.S. investments.
Diversified Global Moderate Growth Fund: Investments in the U.S. and
----------------------------------------
international stock markets, primarily large and small cap funds,
along with investments in U.S. bond funds.
Diversified Global Growth Fund: Investments primarily in U.S. and
-------------------------------
international stock funds with limited allocation in bond funds.
Diversified Moderate Growth Fund: Investments with significant
---------------------------------
allocations to both stock and bond funds, including non-U.S. stocks.
Stable Asset Fund: Investments primarily in a diversified portfolio
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of stable value contracts issued by insurance companies and banks.
Common Stock Fund - Common stock of the Company and money market funds
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or interest-bearing savings accounts.
Contributions
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Contributions to the Plan are determined as follows:
4
IROQUOIS BANCORP, INC.
401(K) SAVINGS PLAN
Notes to Financial Statements
(1) Description of the Plan (continued)
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(1) Employee contributions are 1% to 10% of the participant's
compensation, as defined, and are subject to IRS limitations for any
Plan year.
(2) Employer matching contributions are equal to 50% of employee
contributions for any Plan year up to 6% of compensation, as defined.
The Company may also contribute to the Plan a discretionary amount as
determined by the Board of Directors.
Participants' Accounts
----------------------
An account is maintained for each participant. The fair value of each
participant's account is determined as of each valuation date. The change
in the fair value of each participant's account includes the effect of
employer and employee contributions, income collected or accrued, realized
and unrealized appreciation or depreciation of assets, distributions,
withdrawals, expenses, and all other transactions affecting the assets.
Participants may elect to transfer their interest between funds in
multiples of 10% of either account balance or annual contributions.
Net investment income by fund is allocated to each participant's account
based on the proportion in which the value of each participant's account
bears to the total value of all participants' accounts.
Participants who have attained age 59 1/2 may withdraw the portion of their
account attributed to employee contributions prior to normal retirement
(age 65).
Forfeitures are applied to the Company's matching and discretionary
contributions as a reduction of those contributions.
As of any valuation date, a participant with a hardship, as defined in the
Internal Revenue Code, may withdraw funds available for hardship
withdrawal.
Participants have the right to borrow from their accounts, amounts not
exceeding 50% of the participant's vested balance and not less than $1,000.
The interest rate charged on employee loans is based on the prime rate at
the time a loan is granted. Loans shall be for a period of not less than
one year and not more than ten years. These loans are subject to terms and
conditions as set forth by the plan administrator. Participant loans are
treated as a transfer from the participant directed accounts into the Loan
Fund. Principal and interest payments on the loans are allocated to the
Loan Fund and transferred to the participant directed accounts based on
their current investment allocations.
Vesting
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Cumulative employer contributions and related income become vested at the
rate of 20% per year during the first five years of employment. After five
years of employment, employer contributions vest immediately to the benefit
of the employee. Upon attaining age 65, retirement, death, full or partial
Plan termination, or a change in control of the Company, as defined, a
participant becomes 100% vested in the portion of their accounts
attributable to employer contributions.
5
IROQUOIS BANCORP, INC.
401(K) SAVINGS PLAN
Notes to Financial Statements
(1) Description of the Plan (continued)
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Payment of Benefits
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Vested benefits are payable in a lump-sum payment.
Participants' Claims Upon Plan Termination
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Although it has not expressed any intent to do so, the Company may
terminate the Plan, subject to the provisions of ERISA, at any time. In the
event the Plan is terminated, participants will become fully vested in
their asset accounts and their accounts will be paid to them as provided by
the Plan document.
(2) Summary of Significant Accounting Policies
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Basis of Presentation
---------------------
The accompanying financial statements have been prepared on the accrual
basis of accounting, adjusted for fair value changes of assets. Management
of the Plan has made estimates and assumptions relating to the reporting of
net assets available for plan benefits to prepare the financial statements.
Actual results could differ from those estimates.
Investment Valuation and Income Recognition
-------------------------------------------
Through September 30, 1999, Marine Midland Bank, NA was Custodian and
Trustee for the Plan. Clover Capital Management, Inc. and Marine Midland
Bank, NA managed Plan investments. Effective October 1, 1999, the Plan
changed trustees. Cayuga Bank is the Trustee for the Plan and also manages
the investments of the Plan.
The Plan's investments are stated at fair value. The fair values are
determined as follows:
Stocks and corporate bonds are valued at the closing prices on national
exchanges.
Investments in certificates of deposit, money market funds, savings
accounts and employee loans are stated at cost which approximates fair
value.
Investments in U.S. Government and U.S. Government Agency obligations are
stated at fair value based on quoted market prices.
Shares of mutual funds are valued at the net asset value of shares held by
the Plan at year end.
Security transactions are accounted for on a trade date basis. Dividends
are recorded on the ex-dividend date. Realized gains and losses on
securities are derived using the specific identification method for
determining the cost of securities.
Administrative Expenses
-----------------------
All normal expenses of operating and administering the Plan are paid by the
Plan except to the extent paid by the Company.
Payment of Benefits
-------------------
Benefits are recorded when paid.
6
IROQUOIS BANCORP, INC.
401(K) SAVINGS PLAN
Notes to Financial Statements
(2) Summary of Significant Accounting Policies (continued)
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Federal Income Taxes
--------------------
The Internal Revenue Service issued its latest determination letter on
November 3, 1993 which stated that the Plan and its underlying trust, as
designed, qualify under the applicable provisions of the Internal Revenue
Code. Although the Plan has been amended since receiving the determination
letter, the Plan administrator and the Plan's tax counsel believe that the
Plan is designed and is currently being operated in compliance with the
applicable requirements of the IRC. In the opinion of the plan
administrator, the Plan and its underlying trust have operated within the
terms of the Plan and remain qualified under the applicable provisions of
the Internal Revenue Code.
As long as the Plan continues to be qualified under present federal income
tax laws and regulations, participants will not be taxed on Company
contributions or on investment earnings on such contributions at the time
such contributions and investment earnings are received by the Trustee, but
may be subject to tax thereon at such time as they receive distributions
under the Plan.
(3) Investments
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The following table presents the fair value of investments. Investments
that represent 5 percent or more of the Plan's net assets available for
plan benefits are separately identified.
Number of
Shares or
December 31, 1999 Principal
Amount
------------
Investments at fair value as
determined by
quoted market price:
Common stocks:
Iroquois Bancorp, Inc. 103,845 $1,531,714
Mutual funds:
SEI Diversified U.S. Stock Fund 12,829 228,477
SEI Diversified Global Growth Fund 46,073 686,948
SEI Diversified Moderate Growth Fund 28,326 397,976
Other 34,729 460,327
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3,305,442
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Investments valued at cost, which
approximates fair value:
Collective trust funds:
SEI Stable Asset Fund 541,200 541,200
Money market funds 50,680 50,680
Employee Loans -- 218,300
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810,180
$4,115,622
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7
IROQUOIS BANCORP, INC.
401(K) SAVINGS PLAN
Notes to Financial Statements
(3) Investments (continued)
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Number of
Shares or
Principal
December 31, 1998 Amount
------------
Investments at fair value as
determined by
quoted market price:
U.S. Government securities 75,351 $ 87,688
Corporate bonds:
Marine Midland Collective Trust 18,088 400,666
Other 110,000 110,737
Common stocks:
Iroquois Bancorp, Inc. 116,798 2,452,758
Other 66,239 1,423,468
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4,475,317
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Investments valued at cost, which
approximates fair value:
Employee loans -- 222,719
Money market funds 169,361 169,361
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392,080
$4,867,397
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The Plan's investments (including gains and losses on investments bought, sold,
and held during the year) appreciated(depreciated) in value by ($461,397) and
$(711,228) during 1999 and 1998, respectively, as follows:
Year ended December 31,
1999 1998
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U.S. Government securities $ (6,664) 4,665
Corporate bonds 10,581 24,072
Common Stock (592,056) (739,965)
Mutual funds 126,742 --
--------------------------------------------
$(461,397) (711,228)
============================================
8
Schedule 1
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IROQUOIS BANCORP, INC.
401(K) SAVINGS PLAN
Item 27a - Schedule of Assets Held for Investment Purposes
December 31, 1999
Number
of Shares
or Par Value Description Cost Fair Value
------------ ----------- ---- ----------
Money Market Funds
------------------
50,680 SEI Daily Income Money Market Fund $ 50,680 $ 50,680
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Common Stocks
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* 103,845 Iroquois Bancorp, Inc. 1,289,912 1,531,714
---------- ----------
Mutual Funds
------------
12,385 SEI Diversified Global Stock Fund 169,258 190,986
12,829 SEI Diversified U.S. Stock Fund 207,472 228,477
3,172 SEI Diversified Conservative Income Fund 35,776 36,128
11,522 SEI Diversified Conservative Fund 129,251 132,162
7,650 SEI Diversified Global Moderate Growth Fund 94,485 101,051
46,073 SEI Diversified Global Growth Fund 634,512 686,948
28,326 SEI Diversified Moderate Growth Fund 377,192 397,976
---------- ----------
1,647,946 1,773,728
Collective trust funds
----------------------
541,200 SEI Stable Asset Fund 541,200 541,200
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-- Employees Loans 218,300 218,300
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$3,740,038 $4,115,622
========== ==========
* Party in interest
9
Schedule 6
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IROQUOIS BANCORP, INC.
401(K) SAVINGS PLAN
Item 27d - Schedule of Reportable (5%) Transactions
Year ended December 31, 1999
Value of
Asset on
Purchase Selling Expenses Transaction Net
Date Party/Description Price Price Incurred Cost Date Gain
- --------------------------------------------------------------------------------------------------------
Various HSBC Collective Trust
Short Term Investment Fund
Directed 1,330,966 -- -- 1,330,966 1,330,966 --
Various HSBC Collective Trust
Short Term Investment Fund
Directed -- 1,330,988 -- 1,330,988 1,330,988 --
Various HSBC
Provident Institutional Funds 4,470,947 -- -- 4,470,947 4,470,947 --
Various HSBC
Provident Institutional Funds -- 4,640,285 -- 4,640,285 4,640,285 --
Various HSBC
Stable Return Fund -- 458,302 -- 371,376 458,302 86,926
Various SEI Daily Income
Money Market Fund 5,078,509 -- -- 5,078,509 5,078,509 --
Various SEI Daily Income
Money Market Fund -- 5,027,829 -- 5,027,829 5,027,829 --
Various SEI Diversified
Global Growth Fund 666,936 -- -- 666,936 666,936 --
Various SEI Diversified
Moderate Growth Fund 384,406 -- -- 384,406 384,406 --
Various SEI
Stable Asset Fund 731,125 -- -- 731,125 731,125 --
10