SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For Quarter Ended March 31, 2004
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF SECURITIES EXCHANGE ACT OF 1934 |
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 incorporation or organization) |
(I.R.S. Employer Identification No.) |
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. Yes x No ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes ¨ No x
The aggregate market value of the voting stock held by nonaffiliates of the registrant, calculated by reference to the stock valuation done on Killbuck Bancshares, Inc. common stock as of December 31, 2003 was $61,048,520 and was $60,990,095 as of March 31, 2004 (Registrant has assumed that all of its executive officers and directors are affiliates. Such assumption shall not be deemed to be conclusive for any other purpose):
State the number of shares outstanding for each of the issuer’s classes of common equity as of the latest practicable date:
Class: Common Stock, no par value
Outstanding at May 4, 2004: 663,044
Index
| Page Number | ||||||
| PART I. FINANCIAL INFORMATION |
||||||
| Item 1. |
Financial Statements (Unaudited): |
|||||
| Consolidated Balance Sheet as of March 31, 2004 and December 31, 2003 |
3 | |||||
| Consolidated Statements of Income for the three months ended March 31, 2004 and 2003 |
4 | |||||
| Consolidated Statements of Changes In Shareholders’ Equity for the three months ended March 31, 2004 |
5 | |||||
| Consolidated Statements of Cash Flows for the three months ended March 31, 2004 and 2003 |
6 | |||||
| 7 | ||||||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
8-14 | ||||
| Item 3. |
15-16 | |||||
| Item 4. |
17 | |||||
| PART II. OTHER INFORMATION |
||||||
| Item 1. |
18 | |||||
| Item 2. |
Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities |
18 | ||||
| Item 3. |
18 | |||||
| Item 4. |
18 | |||||
| Item 5. |
18 | |||||
| Item 6. |
19 | |||||
| 20 | ||||||
-2-
CONSOLIDATED BALANCE SHEET (UNAUDITED)
| March 31, 2004 |
December 31, 2003 |
|||||||
| ASSETS |
||||||||
| Cash and cash equivalents: |
||||||||
| Cash and amounts due from depository institutions |
$ | 8,660,472 | $ | 9,755,218 | ||||
| Federal funds sold |
8,300,000 | 7,800,000 | ||||||
| Total cash and cash equivalents |
16,960,472 | 17,555,218 | ||||||
| Investment securities: |
||||||||
| Securities available for sale |
14,863,152 | 17,582,096 | ||||||
| Securities held to maturity (market value of $42,954,101 and $42,952,009) |
39,965,351 | 40,628,977 | ||||||
| Total investment securities |
54,828,503 | 58,211,073 | ||||||
| Loans (net of allowance for loan losses of $2,792,430 and $2,701,943) |
207,864,402 | 198,628,138 | ||||||
| Loans held for sale |
202,500 | 521,450 | ||||||
| Premises and equipment, net |
4,967,520 | 5,020,577 | ||||||
| Accrued interest receivable |
1,344,356 | 924,193 | ||||||
| Goodwill, net |
1,329,249 | 1,329,249 | ||||||
| Other assets |
2,091,675 | 1,949,477 | ||||||
| Total assets |
$ | 289,588,677 | $ | 284,139,375 | ||||
| LIABILITIES |
||||||||
| Deposits: |
||||||||
| Noninterest bearing demand |
$ | 40,118,641 | $ | 40,136,527 | ||||
| Interest bearing demand |
36,924,621 | 34,745,944 | ||||||
| Money market |
20,735,275 | 17,398,777 | ||||||
| Savings |
42,745,494 | 41,579,239 | ||||||
| Time |
106,924,029 | 107,863,327 | ||||||
| Total deposits |
247,448,060 | 241,723,814 | ||||||
| Federal Home Loan Bank advances |
3,253,066 | 3,444,805 | ||||||
| Short-term borrowings |
3,515,000 | 4,365,000 | ||||||
| Accrued interest and other liabilities |
566,827 | 544,202 | ||||||
| Total liabilities |
254,782,953 | 250,077,821 | ||||||
| SHAREHOLDERS’ EQUITY |
||||||||
| Common stock – No par value: 1,000,000 shares authorized, 718,431 issued |
8,846,670 | 8,846,670 | ||||||
| Retained earnings |
30,203,878 | 29,430,710 | ||||||
| Accumulated other comprehensive income |
195,898 | 166,471 | ||||||
| Treasury stock, at cost (54,258 and 53,643 shares) |
(4,440,722 | ) | (4,382,297 | ) | ||||
| Total shareholders’ equity |
34,805,724 | 34,061,554 | ||||||
| Total liabilities and shareholders’ equity |
$ | 289,588,677 | $ | 284,139,375 | ||||
See accompanying notes to the consolidated financial statements.
-3-
Killbuck Bancshares, Inc. and Subsidiary
CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
| Three Months Ended March 31, | ||||||
| 2004 |
2003 | |||||
| INTEREST INCOME |
||||||
| Interest and fees on loans |
$ | 2,767,931 | $ | 2,753,444 | ||
| Federal funds sold |
13,782 | 35,196 | ||||
| Investment securities: |
||||||
| Taxable |
171,794 | 410,666 | ||||
| Exempt from federal income tax |
432,481 | 453,497 | ||||
| Total interest income |
3,385,988 | 3,652,803 | ||||
| INTEREST EXPENSE |
||||||
| Deposits |
754,992 | 1,053,291 | ||||
| Federal Home Loan Bank advances |
55,485 | 69,546 | ||||
| Short term borrowing |
1,348 | 1,442 | ||||
| Total interest expense |
811,825 | 1,124,279 | ||||
| NET INTEREST INCOME |
2,574,163 | 2,528,524 | ||||
| Provision for loan losses |
90,000 | 105,000 | ||||
| NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES |
2,484,163 | 2,423,524 | ||||
| NONINTEREST INCOME |
||||||
| Service charges on deposit accounts |
183,341 | 148,733 | ||||
| Gain on sale of loans, net |
26,937 | 60,608 | ||||
| Other income |
34,272 | 35,485 | ||||
| Total other income |
244,550 | 244,826 | ||||
| NONINTEREST EXPENSE |
||||||
| Salaries and employee benefits |
926,351 | 880,167 | ||||
| Occupancy and equipment expense |
243,721 | 273,323 | ||||
| Professional fees |
72,239 | 70,889 | ||||
| Franchise tax |
108,000 | 104,262 | ||||
| Other expenses |
395,379 | 391,571 | ||||
| Total other expense |
1,745,690 | 1,720,212 | ||||
| INCOME BEFORE INCOME TAXES |
983,023 | 948,138 | ||||
| Income taxes |
209,855 | 196,407 | ||||
| NET INCOME |
$ | 773,168 | $ | 751,731 | ||
| Earning per common share |
$ | 1.16 | $ | 1.10 | ||
| Weighted Average shares outstanding |
664,369 | 682,158 | ||||
See accompanying notes to the unaudited consolidated financial statements.
-4-
Killbuck Bancshares, Inc. and Subsidiary
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (UNAUDITED)
THREE MONTHS ENDED MARCH 31, 2004
| Common Stock |
Retained Earnings |
Accumulated Other Comprehensive Income |
Treasury Stock |
Total Shareholders’ |
Comprehensive Income | |||||||||||||||
| Balance, December 31, 2003 |
$ | 8,846,670 | $ | 29,430,710 | $ | 166,471 | $ | (4,382,297 | ) | $ | 34,061,554 | |||||||||
| Net income |
773,168 | 773,168 | $ | 773,168 | ||||||||||||||||
| Purchase of Treasury stock, at cost (615 shares) |
(58,425 | ) | (58,425 | ) | ||||||||||||||||
| Other comprehensive income: |
||||||||||||||||||||
| Net unrealized gain on securities, net of tax |
29,427 | 29,427 | 29,427 | |||||||||||||||||
| Comprehensive income |
$ | 802,595 | ||||||||||||||||||
| Balance, March 31, 2004 |
$ | 8,846,670 | $ | 30,203,878 | $ | 195,898 | $ | (4,440,722 | ) | $ | 34,805,724 | |||||||||
See accompanying notes to the unaudited consolidated financial statements.
-5-
Killbuck Bancshares, Inc. and Subsidiary
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
| Three Months Ended March 31, |
||||||||
| 2004 |
2003 |
|||||||
| OPERATING ACTIVITIES |
||||||||
| Net income |
$ | 773,168 | $ | 751,731 | ||||
| Adjustments to reconcile net income to net cash provided by Operating activities: |
||||||||
| Provision for loan losses |
90,000 | 105,000 | ||||||
| Gain on sale of loans |
(26,937 | ) | (60,608 | ) | ||||
| Provision for depreciation and amortization |
101,081 | 125,578 | ||||||
| Origination of loans held for sale |
(3,894,760 | ) | (6,794,700 | ) | ||||
| Proceeds from the sale of loans |
4,240,647 | 6,642,108 | ||||||
| Federal Home Loan Bank stock dividend |
(11,400 | ) | (12,300 | ) | ||||
| Net change in: |
||||||||
| Accrued interest and other assets |
(566,121 | ) | (695,027 | ) | ||||
| Accrued expenses and other liabilities |
22,625 | 79,681 | ||||||
| Net cash provided by operating activities |
728,303 | 141,463 | ||||||
| INVESTING ACTIVITIES |
||||||||
| Investment securities available for sale: |
||||||||
| Proceeds from maturities and repayments |
3,322,627 | 7,046,342 | ||||||
| Purchases |
(560,037 | ) | (4,053,415 | ) | ||||
| Investment securities held to maturity: |
||||||||
| Proceeds from maturities and repayments |
655,697 | 926,679 | ||||||
| Purchases |
— | (1,134,673 | ) | |||||
| Net increase in loans |
(9,326,264 | ) | (2,911,657 | ) | ||||
| Purchase of premises and equipment |
(39,154 | ) | (22,834 | ) | ||||
| Net cash used in investing activities |
(5,947,131 | ) | (149,558 | ) | ||||
| FINANCING ACTIVITIES |
||||||||
| Net increase in demand, money market and savings deposits |
6,663,544 | 3,636,324 | ||||||