1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended June 30, 1998
Commission File Number 000-24147
KILLBUCK BANCSHARES, INC.
(Exact name of registrant as specified in its Charter)
OHIO 34-1700284
- ---- ----------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
165 N. Main Street, Killbuck, OH 44637
(Address of principal executive offices and zip code)
(330) 276-2771
(Registrant's telephone number, including area code)
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 90 days.
(1) Yes x (2) No
--- ---
State the number of shares outstanding of each of the issue's classes of
commerce equity as of the latest practicable date:
Class: Common stock, no par value outstanding at July 30,1998: 66l,900
KILLBUCK BANCSHARES, INC.
Index
Page Number
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheet (unaudited) as of
June 30, 1998 and December 31, 1997 3
Consolidated Statement of Income (unaudited)
For the six months ended June 30, 1998 and 1997 4
Consolidated Statement of Income (unaudited)
For the three months ended June 30, 1998 and 1997 5
Consolidated Statement of Changes in Shareholders' Equity
(unaudited) for the six months ended June 30, 1998 6
Consolidated Statement of Cash Flows (unaudited)
For the six months ended June 30, 1998 and 1997 7
Notes to Unaudited Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9-13
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 2. Changes in Securities 14
Item 3. Default Upon Senior Securities 14
Item 4. Submissions of Matters to a Vote of
Security Holders 14
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 15
SIGNATURES 16
-2-
Killbuck Bancshares, Inc.
CONSOLIDATED BALANCE SHEET (UNAUDITED)
June 30, December 31,
1998 1997
------------ ------------
ASSETS
Cash and cash equivalents:
Cash and amounts due from depository
institutions $ 6,116,643 $ 6,300,777
Federal funds sold 9,400,000 8,300,000
------------ ------------
Total cash and cash equivalents 15,516,643 14,600,777
------------ ------------
Investment securities:
Securities available for sale 34,023,300 35,078,516
Securities held to maturity (market value of
$25,140,601 and $23,966,533) 24,613,948 23,398,480
------------ ------------
Total investment securities 58,637,248 58,476,996
------------ ------------
Loans (net of unearned income of $346,128
and $363,127) 126,218,377 121,670,643
Less: allowance for loan losses 1,792,261 1,744,586
------------ ------------
Net loans 124,426,116 119,926,057
------------ ------------
Premises and equipment, net 2,800,268 2,808,078
Accrued interest 1,640,487 1,633,451
Other assets 560,858 463,271
------------ ------------
Total assets $ 203,581,620 $ 197,908,630
============ ============
LIABILITIES
Deposits:
Noninterest bearing demand $ 21,164,464 $ 21,592,573
Interest bearing demand 33,912,249 37,574,203
Savings 20,007,510 19,376,757
Time 92,431,225 85,265,101
------------ ------------
Total deposits 167,515,448 163,808,634
Securities sold under repurchase
agreements 2,585,000 2,710,000
Federal Home Loan Bank advances 9,733,404 8,745,174
Accrued interest and other liabilities 375,279 487,213
------------ ------------
Total liabilities 180,209,131 175,751,021
------------ ------------
SHAREHOLDERS' EQUITY
Common stock - 1,000,000 shares
authorized, 675,000 issued with
no par value at June 30, 1998
and December 31, 1997 2,700,000 2,700,000
Capital surplus 3,106,500 3,106,500
Retained earnings 18,197,294 17,018,414
Net unrealized gain (loss) on
securities available for sale 2,183 (33,817)
Treasury stock, at cost (13,100 shares) (633,488) (633,488)
------------ ------------
Total shareholders' equity 23,372,489 22,157,609
------------ ------------
Total liabilities and
shareholders' equity $ 203,581,620 $ 197,908,630
============ ============
See accompanying notes to the unaudited consolidated financial statements.
-3-
Killbuck Bancshares, Inc.
CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
Six Months Ended
June 30,
1998 1997
----------- -----------
INTEREST INCOME
Interest and fees on loans $ 5,997,458 $ 5,610,324
Federal funds sold 210,948 153,616
Investment securities:
Taxable 1,019,793 1,176,762
Tax exempt 583,711 478,325
----------- -----------
Total interest income 7,811,910 7,419,027
----------- -----------
INTEREST EXPENSE
Deposits 3,440,965 3,345,559
Federal Home Loan Bank advances 298,920 193,403
Securities sold under repurchase agreements 40,569 7,518
----------- -----------
Total interest expense 3,780,454 3,546,480
----------- -----------
NET INTEREST INCOME 4,031,456 3,872,547
Provision for loan losses 90,000 90,000
----------- -----------
NET INTEREST INCOME AFTER PROVISION FOR LOAN
LOSSES 3,941,456 3,782,547
----------- -----------
OTHER INCOME
Service fees on deposit accounts 200,081 187,221
Other income 54,524 28,370
----------- -----------
Total other income 254,605 215,591
----------- -----------
OTHER EXPENSE
Salaries and employee benefits 1,128,746 1,002,881
Occupancy expense 85,245 81,860
Equipment expense 232,427 222,393
Professional fees 131,934 89,174
Franchise tax 165,968 149,229
Other expenses 458,752 437,301
----------- -----------
Total other expense 2,203,072 1,982,838
----------- -----------
INCOME BEFORE INCOME TAXES 1,992,989 2,015,300
Income taxes 483,159 549,691
----------- -----------
NET INCOME $ 1,509,830 $ 1,465,609
=========== ===========
PER SHARE DATA
Earning per common share $ 2.28 $ 2.20
=========== ===========
Average shares outstanding 661,900 667,500
=========== ===========
See accompanying notes to the unaudited consolidated financial statements.
- -4-
Killbuck Bancshares, Inc.
CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
Three Months Ended
June 30,
1998 1997
----------- -----------
INTEREST INCOME
Interest and fees on loans $ 3,025,232 $ 2,867,239
Federal funds sold 103,604 65,286
Investment securities:
Taxable 513,930 634,455
Tax exempt 296,476 248,947
----------- -----------
Total interest income 3,939,242 3,815,927
----------- -----------
INTEREST EXPENSE
Deposits 1,756,153 1,735,820
Federal Home Loan Bank advances 151,237 106,587
Securities sold under repurchase agreements 18,276 7,452
----------- -----------
Total interest expense 1,925,666 1,849,859
----------- -----------
NET INTEREST INCOME 2,013,576 1,966,068
Provision for loan losses 45,000 45,000
----------- -----------
NET INTEREST INCOME AFTER PROVISION FOR LOAN
LOSSES 1,968,576 1,921,068
----------- -----------
OTHER INCOME
Service fees on deposit accounts 104,354 96,670
Other income 20,235 14,702
----------- -----------
Total other income 124,589 111,372
----------- -----------
OTHER EXPENSE
Salaries and employee benefits 511,061 456,498
Occupancy expense 34,744 33,380
Equipment expense 121,131 111,274
Professional fees 63,524 25,138
Franchise tax 82,984 74,615
Other expenses 240,433 242,076
----------- -----------
Total other expense 1,053,877 942,981
----------- -----------
INCOME BEFORE INCOME TAXES 1,039,288 1,089,459
Income taxes 245,755 300,808
----------- -----------
NET INCOME $ 793,533 $ 788,651
=========== ===========
PER SHARE DATA
Earning per common share $ 1.20 $ 1.18
=========== ===========
Average shares outstanding 661,900 667,500
=========== ===========
See accompanying notes to the unaudited consolidated financial statements.
- -5-
Killbuck Bancshares, Inc.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED)
Net
Unrealized
Gain (Loss) on
Securities Total Other
Common Capital Retained Available for Treasury Shareholders' Comprehensive
Stock Surplus Earnings Sale Stock Equity Income
----------- ----------- ----------- ----------- ------------ ----------- -----------
Balance, December 31, 1997 $ 2,700,000 $ 3,106,500 $17,018,414 $ (33,817) $ (633,488) $22,157,609
Net income 1,509,830 1,509,830 $ 1,509,830
Other comprehensive income
Net unrealized gain on securities 36,000 36,000 36,000
Dividends paid (330,950) (330,950)
----------- ----------- ----------- ----------- ------------ ----------- -----------
Balance, June 30, 1998 $ 2,700,000 $ 3,106,500 $18,197,294 $ 2,183 $ (633,488) $23,372,489 $ 1,545,830
=========== =========== =========== =========== ============ =========== ===========
See accompanying notes to the unaudited consolidated financial statements.
- -6-
Killbuck Bancshares, Inc.
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
Six Months Ended
June 30,
1998 1997
------------ ------------
Operating Activities
Net income $ 1,509,830 $ 1,465,609
Adjustments to reconcile net income to net cash
provided by
Operating activities:
Provision for loan losses 90,000 90,000
Provision for depreciation and amortization 142,995 151,510
Origination of loans held for sale (2,005,249) -
Proceeds from the sale of loans 2,005,249 -
Increase in accrued interest and other assets (123,169) (362,342)
Decrease in accrued expenses and other
liabilities (111,934) (60,943)
------------ ------------
Net cash provided by operating activities 1,507,722 1,283,834
------------ ------------
INVESTING ACTIVITIES
Investment securities available for sale:
Proceeds from maturities and repayments 10,625,657 5,084,476
Purchases (9,507,560) (12,042,248)
Investment securities held to maturity:
Proceeds from maturities and repayments 799,585 485,335
Purchases (2,027,548) (2,452,294)
Net increase in loans (4,590,059) (5,653,857)
Purchase of premises and equipment (131,025) (40,687)
------------ ------------
Net cash used for investing activities (4,830,950) (14,619,275)
------------ ------------
FINANCING ACTIVITIES
Net increase in deposits 3,706,814 6,912,932
Proceeds from advances from Federal Home Loan Bank 1,500,000 2,200,000
Payments on advances from Federal Home Loan Bank (511,770) (196,870)
Net (decrease) increase in repurchase agreements (125,000) 1,700,000
Dividends paid (330,950) (293,700)
------------ ------------
Net cash provided by financing activities 4,239,094 10,322,362
------------ ------------
Net increase (decrease) in cash and cash equivalents 915,866 (3,013,079)
Cash and cash equivalents at beginning of period 14,600,777 12,240,758
------------ ------------
Cash and cash equivalents at end of period $ 15,516,643 $ 9,227,679
============ ============
Supplemental Disclosures of Cash Flows Information
Cash paid during the period for:
Interest on deposits and borrowings $ 3,775,016 $ 3,567,914
============ ============
Income taxes $ 500,000 $ 506,332
============ ============
See accompanying notes to the unaudited consolidated financial statements.
- -7-
Killbuck Bancshares, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
The consolidated financial statements include the accounts of Killbuck
Bancshares, Inc. (the "Company") and its wholly-owned subsidiary Killbuck
Savings Bank Company (the "Bank"). All significant intercompany balances and
transactions have been eliminated in the consolidation.
The accompanying unaudited consolidated financial statements have been
prepared in accordance with the instructions to Form 10-Q and, therefore, do
not necessarily include all information that would be included in audited
financial statements. The information furnished reflects all adjustments
which are, in the opinion of management, necessary for a fair statement of
the results of operations. All such adjustments are of a normal recurring
nature. The results of operations for the interim periods are not necessarily
indicative of the results to be expected for the full year or any other
interim period.
NOTE 2 - EARNINGS PER SHARE
Earnings per share are calculated based upon the weighted number of shares of
stock outstanding during the period. In February, 1997, the Financial
Accounting Standards Board ("FASB") issued Statement of Financial Accounting
Standards No. 128, "Earnings Per Share." Statement No. 128 replaced the
previous reporting requirement of primary and fully diluted earnings per share
with basic and diluted earnings per share. The Company maintains a simple
capital structure, therefore, there is no dilutive effect on earnings per share.
NOTE 3 - STOCK SPLIT
On April 13, 1998 the board of directors authorized an increase in the
authorized common shares from 200,000 to 1,000,000 shares and also authorized
a 5 for 1 stock split of common stock to shareholders of record on May 1,1998.
Per share amounts in the accompanying financial statements have been adjusted
for the split.
NOTE 4- COMPREHENSIVE INCOME
On January 1, 1998, the Company adopted the Statement of Financial Accounting
Standard No. 130, "Reporting Comprehensive Income." In adopting Statement No.
130, the Company is required to present comprehensive income and its components
in a full set of general purpose financial statements. The Company has
elected to report the effects of Statement No. 130 as part of the Statement of
Changes in Shareholders' Equity.
NOTE 5 - PLAN OF MERGER
On April 13, 1998, Killbuck Bancshares, Inc. (Killbuck) and The Commercial and
Savings Bank Co. (Commercial) of Danville, Ohio, executed an agreement and
plan of reorganization to merge subject to shareholder and regulatory
approval. Under the terms of the agreement, all outstanding shares of
Commercial will be exchanged for 2.1585 shares of Killbuck. This exchange
ratio of 2.1585 is adjusted for Killbuck's five for one stock split on May 1,
1998.
- -8-
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
COMPARISON OF FINANCIAL CONDITION AT JUNE 30, 1988 AND DECEMBER 31, 1997
Total assets at June 30, 1998, increased by approximately $5,673,000 or 2.9%
for the first half of 1998.
Cash and cash equivalents increased by approximately $916,000 or 6.3% from
December 31, 1997, to June 30, 1998, with liquid funds held in the form of
federal funds sold increasing $1,100,000. Management increased liquid funds
due to expected loan growth.
Investment securities increased slightly by approximately $160,000 or .3% from
December 31, 1997 to June 30, 1998. The composition changed slightly with
securities available for sale decreasing by approximately $1,055,000 and
securities held to maturity increasing by approximately $1,215,000.
Management classified new purchases as held to maturity based upon their
intent and ability to hold these securities.
The loan portfolio increased by approximately $4,548,000 or 3.7% from December
31, 1997, to June 30, 1998. The majority ($3,918,000 or 86.1%) of that
increase occurred in the commercial loan category due to the continuing demand
of commercial loans in the Bank's market area and the Bank's competitive
pricing of these loans.
Total deposits increased by approximately $3,707,000 or 2.3% for the first six
months of 1998. Interest-bearing demand deposits decreased by approximately
$3,662,000 or 9.7%, while time deposits increased by approximately $7,166,000
or 8.4%. Management attributes this decrease/increase to current depositors
transferring deposits from interest bearing demand accounts to time accounts
and new customers opening time deposit accounts due to the current competitive
rates being offered by the Bank.
Shareholders' Equity increased by approximately $1,215,000 or 5.5%, which was
mainly due to earnings of $1,510,000 for the first six months of 1998 reduced
by the cash dividends paid in June, 1998 of $331,000. Management monitors
risk-based capital and leveraged capital ratios in order to assess compliance
of the regulatory guidelines. At June 30, 1998, the total capital ratio was
19.51%; the Tier I capital ratio was 18.26%, and the leverage ratio was
11.55%, compared to regulatory capital requirements of 8%, 4% and 4%
respectively. These ratios are well in excess of regulatory capital
requirements.
A great deal of information has been disseminated about the global computer
crash that may occur in the year 2000. Many computer programs that can only
distinguish the final two digits of the year entered (a common programming
practice in earlier years) are expected to read entries for the year 2000 as
the year 1900 and compute payment, interest or delinquency based on the wrong
date or are expected to be unable to compute payment, interest or delinquency.
Rapid and accurate data processing is essential to the operation of the Bank.
- -9-
The Company has initiated a year 2000 plan and has closely monitored its
situation by thoroughly assessing systems and programs which may be date
sensitive. The systems which are not currently year 2000 compatible are
scheduled for renovation before December 1998. There can be no assurance that
the Company will not experience adverse financial consequences as a result of
the Y2K, however, management, under the direction of the Board of Directors,
continues to monitor Y2K to minimize the risks associated with it wherever
identified. Management has estimated that the total cost to become year 2000
compliant is approximately $65,000.
COMPARISON OF THE RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1998
AND 1997
Total interest income of approximately $7,812,000 for the six month period
ended June 30, 1998, compares to approximately $7,419,000 for the same period
in 1997, an increase of $393,000 or 5.3%. The majority of the overall
increase in total interest income is attributed to an increase in interest and
fees on loans of approximately $387,000 or 98.5% of the overall increase. The
increase in interest and fees on loans is due primarily to increased volume in
the loan portfolio. The daily average balances outstanding for the six month
periods of 1998 and 1997 respectively were $124,980,000 and $118,211,000, an
increase of approximately $6,769,000.
Total interest expense of approximately $3,780,000 for the six month period
ending June 30, 1998, represents an increase of $234,000 from the
approximately $3,546,000 reported for the same six month period in 1997. The
increase in interest expense on deposits of approximately $95,000 is due
mainly to an overall increase in volume. The daily average balances of
interest bearing demand deposits for the six month period of 1998 and 1997
respectively were $36,796,000 and $35,334,000, an increase of approximately
$1,462,000. The daily average balances of savings accounts, which remained
fairly stable, for the six month period of 1998 and 1997 respectively were
$19,440,000 and $19,351,000. The daily average balances of time deposits for
the six month periods of 1998 and 1997 respectively were $88,784,000 and
$88,457,000 an increase of approximately $327,000. The interest expense on
Federal Home Loan Bank advances increased by approximately $106,000 due to an
increase in the daily average balance outstanding. The daily average balances
outstanding for the six month periods of 1998 and 1997 respectively were
$8,952,000 and $5,789,000, an increase of approximately $3,163,000. The
interest expense on securities sold under repurchase agreements increased by
approximately $33,000 due to an increase in the daily average balance
outstanding. The daily average balances outstanding for the six month periods
of 1998 and 1997 respectively were $2,473,000 and $455,000, an increase of
approximately $2,018,000.
Net interest income of approximately $4,031,000 for the six months ended June
30, 1998, compares to approximately $3,873,000 for the same six month period
in 1997, an increase of $158,000 or 4.1%.
Total other income for the six month period ended June 30, 1998, of
approximately $255,000 compares to approximately $216,000 for the same six
month period in 1997, an increase of $39,000 or 18.1%. Income from the
alternative investment service the Bank introduced in 1997 accounted for
$19,000 or 48.7% of this increase with the remaining increase attributed to
normal activity.
- -10-
Total other expense of approximately $2,203,000 for the six months ended June
30, 1998, compares to approximately $1,983,000 for the same six month period
in 1997. This represents an increase of $220,000 or 11.1%. Net increases in
salaries and employee benefits expense of approximately $126,000, professional
fees of $43,000 and other expenses of approximately $21,000 were the major
contributors to the overall net increase. The increase in salary and employee
benefits is attributed to normal annual salary increases, staff additions and
increased hospitalization premiums and pension costs. The increase in
professional fees is attributed to costs of becoming a securities and exchange
registrant and merger expenses. The increase in other expenses were brought
about by those items that are generally thought to be normal and recurring in
nature. Net income for the six month period ended June 30, 1998, was
approximately $1,510,000, an increase of $44,000 or 3.0% from the
approximately $1,466,000 reported at June 30, 1997.
COMPARISON OF THE RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30,
1998 AND 1997.
Total interest income of approximately $3,939, 000 for the three month period
ended June 30, 1998, compares to approximately $3,816,000 for the same period
in 1997, an increase of $123,000 or 3.2%. Interest and fees on loans and
interest on federal funds sold increased respectively approximately $158,000
and $38,000 due mainly to an increase in the balances outstanding. These
increases were offset by a decrease in investment income of approximately
$73,000. This decrease is due mainly to an overall reduction in the
investment balances outstanding.
Total interest expense of approximately $1,926,000 for the three month period
ending June 30, 1998, represents an increase of $76,000 from the approximately
$1,850,000 reported for the same three month period in 1997. The majority of
the overall increase is attributed to an increase in interest expense on
Federal Home Loan Bank advances of approximately $45,000 or 59.2% of the
overall increase. This increase is attributed to an increase in the daily
average balances outstanding. The daily average balances outstanding for the
three month periods of 1998 and 1997 respectively were $9,243,000 and
$6,380,000, an increase of approximately $2,863,000.
Net interest income of approximately $2,014,000 for the three months ended
June 30, 1998, compares to approximately $1,966,000 for the same three month
period in 1997, an increase of $48,000 or 2.4%.
Total other income for the three month period ended June 30, 1998, of
approximately $125,000 compares to approximately $111,000 for the same three
month period in 1997, an increase of $14,000 or 12.6%. Income from the
alternative investment service the Bank introduced in 1997 accounted for
approximately $4,300 of the overall increase with the remaining increase
attributed to normal activity.
- -11-
Total other expense of approximately $1,054,000 for the three months ended
June 30, 1998, compares to approximately $943,000 for the same three month
period in 1997. This represents an increase of $111,000 or 11.8%. Net
increases in salaries and employee benefits expense of approximately $55,000
and professional fees of $38,000 were the major contributors to the overall
net increases. The increase in salary and employee benefits is attributed to
normal annual salary increases, staff additions and increased hospitalization
premiums and pension costs. The increase in professional fees is attributed
to costs of becoming a securities and exchange registrant and merger expenses.
Net income for the three month period ended June 30, 1998 was approximately
$794,000, an increase of $5,000 or .6% from the approximately $789,000
reported for the same three month period in 1997.
LIQUIDITY
Management monitors projected liquidity needs and determines the level
desirable based in part on the Bank's commitments to make loans and
management's assessment of the Bank's ability to generate funds.
The primary sources of funds are deposits, repayment of loans, maturities of
investments, funds provided from operations and advances from the FHLB of
Cincinnati. While scheduled repayments of loans and maturities of investment
securities are predictable sources of funds, deposit flows and loan repayments
are greatly influenced by the general level of interest rates, economic
conditions and competition. The Bank uses its sources of funds to fund
existing and future loan commitments, to fund maturing time deposits and
demand deposit withdrawals, to invest in other interest-earning assets, to
maintain liquidity, and to meet operating expenses.
Cash and cash equivalents totaled $15,517,000 at June 30, 1998, an increase of
$916,000 from $14,601,000 at December 31,1997. These assets provide the
primary source of liquidity for the Bank. In addition, management has
designated a substantial portion of the investment portfolio, approximately
$34,023,000 as available for sale and has an available line of credit with the
Federal Home Loan Bank of Cincinnati with a borrowing limit of $8,000,000 at
June 30, 1998, to provide additional sources of liquidity.
Cash was provided during the six month period ended June 30, 1998, mainly from
operating activities of $1,508,000, a net increase in deposits of $3,707,000
and an increase in Federal Home Loan Bank advances of $988,000. Cash was used
during the six month period ended June 30, 1998, mainly to fund a net increase
in loans of $4,590,000 and to pay dividends of $331,000.
Management is not aware of any conditions, including any regulatory
recommendations or requirements, which would adversely affect its liquidity or
ability to meet its funding needs in the normal course of business.
- -12-
RISK ELEMENTS
The table below presents information concerning nonperforming assets including
nonaccrual loans, renegotiated loans, loans 90 days or more past due, other
real estate loans and repossessed assets at June 30, 1998, and December 31,
1997. A loan is classified as nonaccrual when, in the opinion of management,
there are doubts about collectibility of interest and principal. At the time
the accrual of interest is discontinued, future income is recognized only when
cash is received. Renegotiated loans are those loans which terms have been
renegotiated to provide a reduction or deferral of principal or interest as of
result of the deterioration of the borrower.
June 30, December 31,
1998 1997
(dollars in thousands)
------- -------
Loans on nonaccrual basis $ 133 $ 121
Loans past due 90 days or more 176 75
Total nonperforming loans $ 309 $ 196
======= =======
Nonperforming loans as a percent of total loans .24% .16%
======= =======
Nonperforming assets as a percent of total
assets .15% .10%
======= =======
Allowance for loan losses to
nonperforming loans 579.94% 890.31%
======= =======
The Bank had no renegotiated loans, other real estate or repossessed assets of
June 30, 1998, and December 31, 1997.
Management monitors impaired loans on a continual basis. As of June 30, 1998,
impaired loans had no material effect on the Bank's financial position or
results of operations.
The allowance for loan losses at June 30, 1998, totaled $1,792,000 or 1.4% of
total loans as compared to $1,745,000 or 1.4% at December 31, 1997.
Provisions for loan losses were $90,000 for both six month periods ended June
30, 1998 and 1997.
Management performs a quarterly evaluation of the allowance for loan losses.
The evaluation incorporates internal loan review, actual historical losses, as
well as any negative economic trends in the local market. The evaluation is
presented to and approved by the Board of Directors of the Bank. Management,
through the use of the quarterly evaluation, believes that the allowance is
maintained at an adequate level. However, there can be no assurance that the
current allowance for loan losses will be adequate to absorb all future loan
losses.
- -13-
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings
None
Item 2 - Changes in the rights of the Company's security holders
None
Item 3 - Defaults by the Company on its senior securities
None
Item 4 - Results of votes of security holders
The following represents the results of matters submitted to a vote of the
shareholders at the annual meeting held on April 13, 1998:
Election of Directors:
The following directors were elected with terms to expire April 2001:
For Abstain Absent
------- ------- ------
Thomas D. Gindlesberger 103,267 622 28,491
Dean Mullett 103,267 622 28,491
Michael S. Yoder 103,267 622 28,491
Amend the articles of incorporation:
Increasing the authorized shares of the corporation from 200,000 to 1,000,000
shares and effecting a five for one stock split effective May 1,1998.
For 103,887
Abstain 2
Absent 28,491
Item 5 - Other Information
None
- -14-
PART II - OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K
a) The following exhibits are included in this report or incorporated herein
by reference:
3(i) Articles of Incorporation of Killbuck Bancshares, Inc.*
3(ii) Code of Regulations of Killbuck Bancshares, Inc.*
10 Agreement and Plan of Reorganization with Commercial and
Savings Bank Co.*
21 Subsidiaries of Registrant*
27 Financial Data Schedule (in electronic filing only)
b) No reports on Form 8-K were filed during the last quarter of the period
covered by this report.
*Incorporated by reference to an identically numbered exhibit to the Form 10
(File No. 0-24147) filed with SEC on April 30, 1998 and subsequently amended
on July 8, 1998 and July 31, 1998.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused the report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Killbuck Bancshares, Inc.
Date: _______________ By: /s/Luther E. Proper
______________________________
Luther E. Proper
President and
Chief Executive Officer
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