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 June 30, 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 $60,720,865 as of June 30, 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 July 31, 2004: 661,644
Index
| Page Number | ||||||
| PART I. FINANCIAL INFORMATION |
||||||
| Item 1. |
Financial Statements (Unaudited): |
|||||
| Consolidated Balance Sheet as of June 30, 2004 and December 31, 2003 |
3 | |||||
| Consolidated Statement of Income for the six months ended June 30, 2004 and 2003 |
4 | |||||
| Consolidated Statement of Income for the three months ended June 30, 2004 and 2003 |
5 | |||||
| Consolidated Statement of Changes In Shareholders’ Equity for the six months ended June 30, 2004 |
6 | |||||
| Consolidated Statement of Cash Flows for the six months ended June 30, 2004 and 2003 |
7 | |||||
| 8-9 | ||||||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
10-19 | ||||
| Item 3. |
20-21 | |||||
| Item 4. |
22 | |||||
| PART II. OTHER INFORMATION |
||||||
| Item 1. |
23 | |||||
| Item 2. |
Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities |
23 | ||||
| Item 3. |
23 | |||||
| Item 4. |
23-24 | |||||
| Item 5. |
24 | |||||
| Item 6. |
24 | |||||
| 25 | ||||||
-2-
CONSOLIDATED BALANCE SHEET (UNAUDITED)
| June 30, 2004 |
December 31, 2003 |
|||||||
| ASSETS |
||||||||
| Cash and cash equivalents: |
||||||||
| Cash and amounts due from depository institutions |
$ | 8,992,635 | $ | 9,755,218 | ||||
| Federal funds sold |
— | 7,800,000 | ||||||
| Total cash and cash equivalents |
8,992,635 | 17,555,218 | ||||||
| Investment securities: |
||||||||
| Securities available for sale |
12,191,121 | 17,582,096 | ||||||
| Securities held to maturity (market value of $41,056,685 and $42,954,101) |
39,328,036 | 40,628,977 | ||||||
| Total investment securities |
51,519,157 | 58,211,073 | ||||||
| Loans (net of allowance for loan losses of $2,849,035 and $2,792,430) |
213,602,458 | 198,628,138 | ||||||
| Loans held for sale |
176,000 | 521,450 | ||||||
| Premises and equipment, net |
4,989,887 | 5,020,577 | ||||||
| Accrued interest receivable |
914,536 | 924,193 | ||||||
| Goodwill, net |
1,329,249 | 1,329,249 | ||||||
| Other assets |
2,279,801 | 1,949,477 | ||||||
| Total assets |
$ | 283,803,723 | $ | 284,139,375 | ||||
| LIABILITIES |
||||||||
| Deposits: |
||||||||
| Noninterest bearing demand |
$ | 39,116,126 | $ | 40,136,527 | ||||
| Interest bearing demand |
32,467,374 | 34,745,944 | ||||||
| Money market |
16,696,223 | 17,398,777 | ||||||
| Savings |
41,999,187 | 41,579,239 | ||||||
| Time |
106,477,514 | 107,863,327 | ||||||
| Total deposits |
236,756,424 | 241,723,814 | ||||||
| Federal Home Loan Bank advances |
7,076,444 | 3,444,805 | ||||||
| Short-term borrowings |
5,020,000 | 4,365,000 | ||||||
| Accrued interest and other liabilities |
418,263 | 544,202 | ||||||
| Total liabilities |
249,271,131 | 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 |
30,356,116 | 29,430,710 | ||||||
| Accumulated other comprehensive income |
10,783 | 166,471 | ||||||
| Treasury stock, at cost (56,787 and 53,643 shares) |
(4,680,977 | ) | (4,382,297 | ) | ||||
| Total shareholders’ equity |
34,532,592 | 34,061,554 | ||||||
| Total liabilities and shareholders’ equity |
$ | 283,803,723 | $ | 284,139,375 | ||||
See accompanying notes to the unaudited consolidated financial statements.
-3-
Killbuck Bancshares, Inc. and Subsidiary
CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
| Six Months Ended June 30, | ||||||
| 2004 |
2003 | |||||
| INTEREST INCOME |
||||||
| Interest and fees on loans |
$ | 5,616,648 | $ | 5,503,404 | ||
| Federal funds sold |
19,997 | 62,172 | ||||
| Investment securities: |
||||||
| Taxable |
323,208 | 783,021 | ||||
| Exempt from federal income tax |
860,894 | 908,817 | ||||
| Total interest income |
6,820,747 | 7,257,414 | ||||
| INTEREST EXPENSE |
||||||
| Deposits |
1,479,021 | 2,031,193 | ||||
| Federal Home Loan Bank advances |
108,251 | 135,943 | ||||
| Short term borrowings |
3,980 | 2,575 | ||||
| Total interest expense |
1,591,252 | 2,169,711 | ||||
| NET INTEREST INCOME |
5,229,495 | 5,087,703 | ||||
| Provision for loan losses |
120,000 | 210,000 | ||||
| NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES |
5,109,495 | 4,877,703 | ||||
| OTHER INCOME |
||||||
| Service charges on deposit accounts |
386,647 | 345,558 | ||||
| Gain on sale of loans, net |
34,515 | 157,543 | ||||
| Other income |
73,826 | 70,209 | ||||
| Total other income |
494,988 | 573,310 | ||||
| OTHER EXPENSE |
||||||
| Salaries and employee benefits |
1,985,360 | 1,876,393 | ||||
| Occupancy and equipment expense |
486,535 | 522,312 | ||||
| Professional fees |
119,173 | 131,346 | ||||
| Franchise tax |
216,467 | 191,031 | ||||
| Other expenses |
821,218 | 805,234 | ||||
| Total other expense |
3,628,753 | 3,526,316 | ||||
| INCOME BEFORE INCOME TAXES |
1,975,730 | 1,924,697 | ||||
| Income taxes |
420,433 | 403,293 | ||||
| NET INCOME |
$ | 1,555,297 | $ | 1,521,404 | ||
| Earning per common share |
$ | 2.34 | $ | 2.24 | ||
| Weighted Average shares outstanding |
663,644 | 679,624 | ||||
See accompanying notes to the unaudited consolidated financial statements.
-4-
Killbuck Bancshares, Inc. and Subsidiary
CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
| Three Months Ended June 30, | ||||||
| 2004 |
2003 | |||||
| INTEREST INCOME |
||||||
| Interest and fees on loans |
$ | 2,848,717 | $ | 2,749,960 | ||
| Federal funds sold |
6,214 | 26,976 | ||||
| Investment securities: |
||||||
| Taxable |
151,414 | 372,355 | ||||
| Exempt from federal income tax |
428,413 | 455,320 | ||||
| Total interest income |
3,434,758 | 3,604,611 | ||||
| INTEREST EXPENSE |
||||||
| Deposits |
724,029 | 977,902 | ||||
| Federal Home Loan Bank advances |
52,766 | 66,397 | ||||
| Short term borrowings |
2,632 | 1,133 | ||||
| Total interest expense |
779,427 | 1,045,432 | ||||
| NET INTEREST INCOME |
2,655,331 | 2,559,179 | ||||
| Provision for loan losses |
30,000 | 105,000 | ||||
| NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES |
2,625,331 | 2,454,179 | ||||
| OTHER INCOME |
||||||
| Service charges on deposit accounts |
203,306 | 196,825 | ||||
| Gain on sale of loans, net |
7,578 | 96,935 | ||||
| Other income |
39,554 | 34,724 | ||||
| Total other income |
250,438 | 328,484 | ||||
| OTHER EXPENSE |
||||||
| Salaries and employee benefits |
1,059,009 | 996,226 | ||||
| Occupancy and equipment expense |
242,814 | 248,989 | ||||
| Professional fees |
46,935 | 60,457 | ||||
| Franchise tax |
108,467 | 86,769 | ||||
| Other expenses |
425,837 | 413,663 | ||||
| Total other expense |
1,883,062 | 1,806,104 | ||||
| INCOME BEFORE INCOME TAXES |
992,707 | 976,559 | ||||
| Income taxes |
210,578 | 206,886 | ||||
| NET INCOME |
$ | 782,129 | $ | 769,673 | ||
| Earning per common share |
$ | 1.18 | $ | 1.14 | ||
| Weighted Average shares outstanding |
662,919 | 677,089 | ||||
See accompanying notes to the unaudited consolidated financial statements.
-5-
Killbuck Bancshares, Inc. and Subsidiary
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (UNAUDITED)
SIX MONTHS ENDED JUNE 30, 2004
| Common Stock |
Retained Earnings |
Accumulated Income |
Treasury Stock |
Total Equity |
Comprehensive Income |
||||||||||||||||||
| Balance, December 31, 2003 |
$ | 8,846,670 | $ | 29,430,710 | $ | 166,471 | $ | (4,382,297 | ) | $ | 34,061,554 | ||||||||||||
| Net income |
1,555,297 | 1,555,297 | $ | 1,555,297 | |||||||||||||||||||
| Purchase of Treasury stock, at cost (3,144 shares) |
(298,680 | ) | (298,680 | ) | |||||||||||||||||||
| Other comprehensive income: |
|||||||||||||||||||||||
| Net unrealized loss on securities, net of tax |
(155,688 | ) | |||||||||||||||||||||