UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
_______________________
FORM 10-Q
(Mark One)
[X] Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act
of 1934 For the Quarterly Period Ended September 30, 2001.
or
[_] Transition Report Under Section 13 or 15(d) of the Securities Exchange Act
of 1934 For the Transition Period From __________ to __________.
Commission File Number 1-13676
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KANKAKEE BANCORP, INC.
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(Exact Name of Registrant as Specified in its Charter)
Delaware 36-3846489
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(State or Other Jurisdiction of Incorporation (I.R.S. Employer Identification
or Organization) Number)
310 South Schuyler Avenue, Kankakee, Illinois 60901
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(Address of Principal Executive Offices) (Zip Code)
(815) 937-4440
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(Registrant's telephone number, including area code)
Check whether the Issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 ______
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As of November 2, 2001, there were 1,216,358 issued and outstanding shares of
the Issuer's common stock (exclusive of 533,642 shares of the Issuer's common
stock held as treasury stock).
KANKAKEE BANCORP, INC.
INDEX
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Page
Number
Part I. FINANCIAL INFORMATION
Item 1. Consolidated Financial
Statements (Unaudited)
Statements of Financial Condition,
September 30, 2001 and December 31, 2000 1 - 2
Statements of Income and Comprehensive Income,
Three Months Ended September 30, 2001 and 20003
Statements of Income and Comprehensive Income,
Nine Months Ended September 30, 2001 and 2000 4
Statements of Cash Flows, Nine Months
Ended September 30, 2001 and 2000 5 - 6
Notes to Financial Statements 7
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 8-19
Item 3. Quantitative and Qualitative Disclosure
About Market Risk 10
Part II. OTHER INFORMATION
Item 1. Legal Proceedings 20
Item 2. Changes in Securities 20
Item 3. Defaults Upon Senior Securities 20
Item 4. Submission of Matters to a Vote of Security Holders 20
Item 5. Other Information 20
Item 6. Exhibits and Reports on Form 8-K 20
SIGNATURES 21
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (UNAUDITED)
KANKAKEE BANCORP, INC. AND SUBSIDIARY
September 3, December 31,
2001 2000
------------ ------------
Assets
Cash and due from banks $ 13,717,074 $ 18,707,762
Federal funds sold 1,434,698 1,329,776
Money market funds 3,713,814 5,109,735
------------ ------------
Cash and cash equivalents 18,865,586 25,147,273
------------ ------------
Certificates of deposit 50,000 50,000
------------ ------------
Securities:
Investment securities:
Available-for-sale, at fair value 40,111,584 57,169,644
Held-to-maturity, at cost (fair value: September 30, 2001 -
$2,118,927; December 31, 2000 - $1,434,708) 2,104,850 1,447,846
------------ ------------
Total investment securities 42,216,434 58,617,490
------------ ------------
Mortgage-backed securities:
Available-for-sale, at fair value 12,663,650 16,050,792
Held-to-maturity, at cost (fair value: September 30, 2001 -
$44,766; December 31, 2000 - $67,727) 44,388 66,867
------------ ------------
Total mortgage-backed securities 12,708,038 16,117,659
------------ ------------
Non-marketable equity securities 461,000 501,000
------------ ------------
Loans, net of allowance for losses on loans ($2,323,329 at
September 30, 2001; $2,156,420 at December 31, 2000) 384,454,781 338,956,136
Loans held for sale 525,575 -
Real estate held for sale 526,189 484,320
Federal Home Loan Bank stock, at cost 2,406,200 2,112,000
Office properties and equipment 8,328,606 8,594,823
Accrued interest receivable 3,046,484 3,282,214
Prepaid expenses and other assets 1,370,738 1,225,070
Intangible assets 4,524,788 4,805,849
------------ ------------
Total assets $479,484,419 $459,893,834
============ ============
(Continued)
1
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (UNAUDITED) (continued)
KANKAKEE BANCORP, INC. AND SUBSIDIARY
September 30, December 31,
2001 2000
------------- -------------
Liabilities and stockholders' equity
Liabilities:
Deposits
Noninterest bearing $ 25,023,779 $ 25,357,749
Interest bearing 381,305,480 362,692,592
Short term borrowings -- 14,000,000
Other borrowings 30,000,000 15,000,000
Advance payments by borrowers for taxes and insurance 646,124 1,813,412
Other liabilities 1,996,944 1,740,938
------------- -------------
Total liabilities 438,972,327 420,604,691
------------- -------------
Stockholders' equity
Preferred stock, $.01 par value; authorized, 500,000
shares; none outstanding -- --
Common stock, $.01 par value; authorized, 3,500,000
shares; shares issued 1,750,000 17,500 17,500
Additional paid-in capital 15,291,660 15,328,249
Retained income, substantially restricted 36,234,115 34,285,960
Treasury stock (544,592 shares at September 30,
2001; 486,892 shares at December 31, 2000) (11,861,354) (10,458,535)
Accumulated other comprehensive income 830,171 115,969
------------- -------------
Total stockholders' equity 40,512,092 39,289,143
------------- -------------
Total liabilities and stockholders' equity $ 479,484,419 $ 459,893,834
============= =============
See notes to consolidated financial statements (unaudited)
2
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (UNAUDITED)
KANKAKEE BANCORP, INC. AND SUBSIDIARY
Three Months Ended September 30,
---------------------------------
2001 2000
---------- ----------
Interest income:
Loans $7,195,970 $6,362,081
Investment securities and other 227,850 307,405
Mortgage-backed securities 788,540 1,224,727
---------- ----------
Total interest income 8,212,360 7,894,213
---------- ----------
Interest expense:
Deposits 4,358,917 4,291,344
Borrowed funds 307,740 368,445
---------- ----------
Total interest expense 4,666,657 4,659,789
---------- ----------
Net interest income 3,545,703 3,234,424
Provision for losses on loans 139,000 20,000
---------- ----------
Net interest income after provision for losses on loans 3,406,703 3,214,424
Other income:
Net gain on sale of securities available-for-sale 441,120 --
Net gain on sales of real estate held for sale 14,330 16,107
Net gain on sales of loans held for sale 72,548 765
Fee income 600,114 526,536
Insurance commissions 23,537 33,877
Other 90,811 85,420
---------- ----------
Total other income 1,242,460 662,705
---------- ----------
Other expenses:
Compensation and benefits 1,605,956 1,575,153
Occupancy 337,918 280,469
Furniture and equipment 150,146 173,322
Federal deposit insurance premiums 18,351 18,140
Advertising 101,204 89,322
Provision for losses on foreclosed assets 45,300 89,079
Data processing services 93,434 88,399
Telephone and postage 96,451 91,490
Amortization of intangible assets 93,687 94,617
Other general and administrative 573,801 468,699
---------- ----------
Total other expenses 3,116,248 2,968,690
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Income before income taxes 1,532,915 908,439
Income taxes 512,700 300,625
---------- ----------
Net income $1,020,215 $ 607,814
========== ==========
Net income $1,020,215 $ 607,814
Other comprehensive income:
Unrealized gains on available-for-sale
securities, net of related income taxes 376,340 519,479
---------- ----------
Comprehensive income $1,396,555 $1,127,293
========== ==========
Basic earnings per share $ 0.84 $ 0.48
========== ==========
Diluted earnings per share $ 0.82 $ 0.47
========== ==========
See notes to consolidated financial statements (unaudited)
3
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (UNAUDITED)
KANKAKEE BANCORP, INC. AND SUBSIDIARY
Nine Months Ended September 30,
---------------------------------
2001 2000
----------- -----------
Interest income:
Loans $21,135,829 $17,441,229
Investment securities and other 765,262 931,348
Mortgage-backed securities 2,763,826 3,719,861
----------- -----------
Total interest income 24,664,917 22,092,438
----------- -----------
Interest expense:
Deposits 13,370,060 11,804,839
Borrowed funds 998,794 708,133
----------- -----------
Total interest expense 14,368,854 12,512,972
----------- -----------
Net interest income 10,296,063 9,579,466
Provision for losses on loans 194,000 20,000
----------- -----------
Net interest income after provision for losses on loans 10,102,063 9,559,466
Other income:
Net gain on sale of securities available-for-sale 441,120 --
Net gain on sales of real estate held for sale 25,644 28,068
Net gain on sales of loans held for sale 112,628 4,059
Net gain on sales of property held for expansion -- 11,552
Fee income 1,689,798 1,404,640
Insurance commissions 71,505 142,710
Other 288,752 266,159
----------- -----------
Total other income 2,629,447 1,857,188
----------- -----------
Other expenses:
Compensation and benefits 4,779,317 4,654,203
Occupancy 943,765 806,793
Furniture and equipment 499,127 524,419
Federal deposit insurance premiums 54,885 54,480
Advertising 274,933 233,642
Provision for losses on foreclosed assets 80,214 120,805
Data processing services 293,392 258,375
Telephone and postage 318,207 268,584
Amortization of intangible assets 281,061 283,851
Other general and administrative 1,622,657 1,386,976
----------- -----------
Total other expenses 9,147,558 8,592,128
----------- -----------
Income before income taxes 3,583,952 2,824,526
Income taxes 1,199,150 948,050
----------- -----------
Net income $ 2,384,802 $ 1,876,476
=========== ===========
Net income $ 2,384,802 $ 1,876,476
Other comprehensive income:
Unrealized gains on available-for-sale
securities, net of related income taxes 714,202 420,971
----------- -----------
Comprehensive income $ 3,099,004 $ 2,297,447
=========== ===========
Basic earnings per share $ 1.96 $ 1.49
=========== ===========
Diluted earnings per share $ 1.92 $ 1.45
=========== ===========
See notes to consolidated financial statements (unaudited)
4
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
KANKAKEE BANCORP, INC. AND SUBSIDIARY
Nine Months Ended September 30,
--------------------------------
2001 2000
------------- -------------
Cash flows from operating activities:
Net income $ 2,384,802 $ 1,876,476
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for losses on loans 194,000 20,000
Provision for losses on real estate held for sale 80,214 120,805
Depreciation and amortization 967,657 967,942
Amortization of investment premiums and discounts, net (19,803) 2,658
Accretion of loan fees and discounts 5,983 10,902
Deferred income tax provision (benefit) 23,858 (41,838)
Originations of loans held for sale (10,824,918) (251,382)
Proceeds from sales of loans 10,411,971 255,441
Decrease (Increase) in interest receivable 235,730 (111,620)
Decrease in interest payable on deposits (118,948) (8,859)
Net gain on sales of loans (112,628) (4,059)
Net gain on sales of securities available-for-sale (441,120) --
Net gain on sales of real estate held for sale (25,644) (28,068)
Net income on sales of office related property -- (11,552)
Federal home Loan Bank of Chicago, stock dividend (116,900) --
Other, net (279,556) 441,424
------------- -------------
Net cash from operating activities 2,364,698 3,238,270
------------- -------------
Cash flows from investing activities:
Investment securities:
Available-for-sale:
Purchases (22,106,834) (6,492,404)
Proceeds from sales 5,437,350 --
Proceeds from calls and maturities 35,070,000 11,500,000
Held to maturity:
Purchases (660,404) (100,000)
Proceeds from maturities and paydowns 3,166 2,976
Mortgage-backed securities:
Available-for-sale:
Purchases (300,890) (1,962,724)
Proceeds from maturities and paydowns 3,888,898 2,538,308
Held-to-maturity:
Proceeds from maturities and paydowns 22,480 24,999
Proceeds from sales of real estate 260,762 130,263
Deferred loan fees and costs, net 209,117 76,359
Loans originated (145,272,661) (137,475,649)
Principal collected on loans 98,988,189 81,357,379
Purchases of office properties and equipment, net (421,079) (232,949)
------------- -------------
Net cash from investing activities (24,881,906) (50,633,442)
------------- -------------
See notes to consolidated financial statements (unaudited).
5
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (continued)
KANKAKEE BANCORP, INC. AND SUBSIDIARY
Nine Months Ended September 30,
-------------------------------
2001 2000
------------- ------------
Cash flows from financing activities
Net increase in non-certificate of deposit accounts $ 10,719,539 ($ 1,353,407)
Net increase in certificate of deposit accounts 7,678,327 26,023,646
Net increase in advance payments by
borrowers for taxes and insurance (1,286,290) (816,830)
Proceeds from short-term borrowings 15,000,000 31,000,000
Repayments of short-term borrowings (29,000,000) (19,000,000)
Proceeds from other borrowings 25,000,000 10,000,000
Repayments of other borrowings (10,000,000) (6,200,000)
Proceeds from exercise of stock options 103,952 623,853
Dividends paid (436,647) (455,844)
Purchase of treasury stock (1,543,360) (937,872)
------------ ------------
Net cash from financing activities 16,235,521 38,883,546
------------ ------------
Decrease in cash and cash equivalents (6,281,687) (8,511,626)
Cash and cash equivalents:
Beginning of period 25,147,273 30,093,583
------------ ------------
End of period $ 18,865,586 $ 21,581,957
============ ============
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest on deposits $ 13,489,000 $ 11,796,300
============ ============
Interest on borrowed funds $ 1,030,000 $ 640,000
============ ============
Income taxes $ 1,140,218 $ 776,824
============ ============
Supplemental disclosures of non-cash investing activities:
Real estate acquired through foreclosure $ 310,110 $ 99,616
============ ============
Increase (decrease) in unrealized gains on
securities available-for-sale $ 1,073,988 $ 637,835
============ ============
(Increase) decrease in deferred taxes attributable to the
unrealized gains on securities available-for-sale ($ 359,786) ($ 216,864)
============ ============
See notes to consolidated financial statements (unaudited).
6
KANKAKEE BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
September 30, 2001
Note 1 - Basis of Presentation
The accompanying unaudited consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States of America for interim financial information and with instructions
to Form 10-Q. Accordingly, they do not include all of the information and
footnotes required by accounting principles generally accepted in the United
States of America for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. The statement of condition
at December 31, 2000 has been derived from the audited financial statements at
that date, but does not include all of the information and footnotes required by
accounting principles generally accepted in the United States of America for
complete financial statements. Operating results for the three-month and
nine-month periods ended September 30, 2001 are not necessarily indicative of
the results that may be expected for the year ending December 31, 2001. For
further information, refer to the consolidated financial statements and
footnotes thereto included in the annual report for Kankakee Bancorp, Inc. (the
"Company") on Form 10-K for the year ended December 31, 2000.
Note 2 - Earnings Per Share
Basic earnings per share of common stock have been determined by dividing
net income for the period by the average number of shares of common stock
outstanding of 1,205,408. Diluted earnings per share of common stock have been
determined by dividing net income for the period by the average number of shares
of common stock and common stock equivalents outstanding. Common stock
equivalents assume exercise of stock options, and the calculation assumes
purchase of treasury stock with the option proceeds at the average market price
for the period (when dilutive). The Company has an incentive stock option plan
for the benefit of directors, officers and employees. Diluted earnings per share
have been determined considering the stock options granted, net of stock options
which have been exercised.
Note 3 - Accounting for Certain Investments in Debt and Equity Securities
At September 30, 2001, stockholders' equity included a positive $830,000,
which represents the amount by which the market value of the available-for-sale
securities and the available-for-sale mortgage-backed securities exceeded the
book value, net of an income tax of $428,000. A decrease in market interest
rates during the nine months ended September 30, 2001 resulted in a $714,000
increase in the market value, net of income tax effect, of the
available-for-sale securities and the available-for-sale mortgage-backed
securities. At the end of 2000, the book value of the available-for-sale
securities portfolio exceeded the market value by $116,000, net of income tax.
7
KANKAKEE BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
The Company is a Delaware company formed in 1992 for the purpose of
becoming the savings and loan holding company of Kankakee Federal Savings Bank
(the "Bank"), the Company's principal subsidiary. The Bank was originally
chartered in 1885 as an Illinois savings and loan association and was converted
to a federally chartered thrift institution in 1937.
The Company serves the financial needs of families and local businesses in
its primary market areas through its main office at 310 South Schuyler Avenue,
Kankakee, Illinois and fourteen branch offices located in the communities of
Ashkum, Bourbonnais, Bradley, Braidwood, Champaign, Coal City (2), Diamond,
Dwight, Herscher, Hoopeston, Manteno, Momence and Urbana, Illinois. The
Company's business involves attracting deposits from the general public and
using such deposits to originate residential mortgage loans and, to a lesser
extent, commercial real estate, consumer, commercial business, multi-family and
construction loans in its market areas. The Company also invests in investment
securities, mortgage-backed securities and various types of short term liquid
assets.
ECONOMIC CLIMATE AND BUSINESS DEVELOPMENTS
Through October 2, 2001, the Federal Open Market Committee (the "FOMC") has
this year lowered its target short-term interest rates nine times, by a total of
four percentage points. The federal funds target is currently 2.50% and the
Federal Reserve discount rate is currently 2.00%. The federal funds rate is the
rate at which financial institutions borrow from each other, while the discount
rate is the rate at which member institutions borrow from the Federal Reserve.
The FOMC continues to cite a slowing economy and the risk of recession as
the motivating factors for lowering interest rates. The tragic events of
September 11, 2001 have further clouded the economic outlook, severely impacting
several major industries, as well as the economy as a whole. Additionally,
consumer confidence, a key factor in the economy, has been negatively impacted.
Lowering rates to current levels, with the possibility of further cuts, is
intended to provide stimulus to the economy by reducing borrowing costs for both
businesses and individuals.
A slowing economy could adversely affect cash flows for both commercial and
individual borrowers, as a result of which, the Company could experience
increases in problem assets, delinquencies and losses on loans.
Lower market interest rates could benefit the Company by reducing its cost
of funds, as term deposits and borrowed money reprice to lower rates at
maturity. However, lower interest rates could also reduce the Company's return
on interest-earning assets. As investments mature, are sold or are called, and
as loans are repaid or prepaid, the reinvestment rates on those funds decrease.
The impact of changes in market interest rates on the Company's financial
condition and results of operations is the Company's interest rate sensitivity.
While management believes that the Company's current level of interest rate
sensitivity is reasonable, significant fluctuations in interest rates may have
an adverse effect on the Company's financial condition and results of
operations.
8
During 2000, the Company initiated an aggressive growth strategy which was
aimed at increasing deposits and growing the loan portfolio, while continuing to
reduce the size of the investment portfolio. While committed to continuing
profitable growth of its assets and liabilities, the Company, during the second
quarter of 2001, again began to sell most of the long-term, fixed-rate
single-family mortgage loans it originated. Loans with terms of less than 20
years continued to be retained in the portfolio. During the third quarter of
2001, the Company also began to sell loans with terms of 15 years to 20 years.
FINANCIAL CONDITION
Total assets of the Company increased by $19.6 million, or 4.3%, to $479.5
million at September 30, 2001 from $459.9 million at December 31, 2000.
Cash and cash equivalents decreased by $6.2 million, or 25.0%, from $25.1
million at December 31, 2000 to $18.9 million at September 30, 2001. The
decrease was primarily attributable to an increase in loans during the period.
During the nine-month period ended September 30, 2001, net loans receivable
increased by $45.5 million, or 13.4%, from $339.0 million to $384.5 million.
This was primarily the result of the origination of $104.1 million of real
estate loans and the origination of $41.2 million of consumer and commercial
business loans, offset by loan repayments which totaled $99.0 million.
Loans held for sale were $526,000 as of September 30, 2001. There were no
loans held for sale at December 31, 2000. During the nine months ended September
30, 2001, $9.0 million in residential real estate loans were originated for sale
and $8.5 million of those loans were sold. In addition, $1.8 million in
commercial real estate loans were originated for sale and sold during the
period.
Securities available-for-sale decreased by $17.1 million, or 29.8%, to
$40.1 million at September 30, 2001 from $57.2 million at December 31, 2000 as
the result of the maturity, or the exercise of call options by issuers, of $35.1
million of securities, and the sale of $5.0 million of securities which were
partially offset by the purchase of $22.1 million of securities and by the net
change in market value adjustment.
Mortgage-backed securities available-for-sale decreased by $3.4 million, or
21.1%, to $12.7 million at September 30, 2001 from $16.1 million at December 31,
2000. The decrease resulted from the maturity of $3.9 million of securities,
which was partially offset by the purchase of $301,000 of securities and by the
net change in market value adjustments.
Deposits increased by $18.2 million, or 4.7%, from $388.1 million at
December 31, 2000 to $406.3 million at September 30, 2001. During the nine month
period, there was a $7.6 million increase in certificate of deposit accounts and
a $10.7 million increase in passbook, checking and money market accounts.
Total borrowings increased by $1.0 million, or 3.4%, from $29.0 million at
December 31, 2000 to $30.0 million at September 30, 2001. The increase was the
result of $40.0 million in new borrowings, which were partially offset by
repayments of $39.0 million. Borrowings consisted entirely of advances from the
Federal Home Loan Bank of Chicago.
9
ASSET/LIABILITY MANAGEMENT
Management attempts to control fluctuations in net interest income which
result from an imbalance in the amounts of assets and liabilities that reprice
during a period of time. The Company attempts to mitigate its interest rate
exposure, to the extent consistent with the maintenance of an adequate interest
rate spread. Adjustable rate mortgage loans, and loans with typically shorter
terms, such as commercial real estate loans, commercial business loans and
consumer loans, have historically been, and continue to be, retained.
Historically, most fixed-rate mortgage loans, particularly those with terms of
20-years or longer, have been sold in the secondary market (with servicing
usually retained). Since the beginning of 2000 and through the first quarter of
2001, the Company retained virtually all the fixed-rate mortgage loans it
originated. Approximately $10.3 million of fixed-rate mortgage loans with terms
of 20 years or longer were originated and retained during the first quarter of
2001. While the Company continues to promote the origination of adjustable rate
mortgages, commercial real estate loans, commercial business loans and consumer
loans, management determined that the Company's asset/liability position was
such that retention of additional longer term fixed-rate mortgage loans was
appropriate. In light of the changing economic climate and the current interest
rate environment, the Company has, during the second quarter of 2001, resumed
selling fixed-rate mortgage loans with terms of 20 years or longer in the
secondary market. In addition, during the third quarter of 2001, the Company
began selling fixed-rate mortgage loans with terms of 15 to 20 years. Management
reviews the Company's asset/liability position on a regular basis.
The Company has not entered into derivative financial instruments including
futures, forwards, interest rate risk swaps, option contracts, or other
financial instruments with similar characteristics. However, the Company is a
party to financial instruments with off-balance sheet risk in the normal course
of business to meet the financing needs of its customers such as commitments to
extend credit and letters of credit.
NON-PERFORMING ASSETS AND ALLOWANCE FOR LOSSES ON LOANS
The Company's non-performing assets decreased to $2.2 million, or 0.47%, of
total assets at September 30, 2001 from $3.5 million, or 0.76% of total assets
at December 31, 2000. During the nine month period ended September 30, 2001,
non-performing construction and development loans, non-performing one-to-four
family loans, non-performing commercial loans, and non-performing commercial
business loans decreased by $900,000, $52,000, $10,000 and $713,000,
respectively. These decreases were partially offset by an increase in
non-performing consumer loans of $198,000. In addition, foreclosed assets
increased by $40,000 and restructured troubled debts decreased by $189,000. The
decrease in non-performing construction and development loans was due to the
repayment in full of a single loan. The decrease in non-performing commercial
business loans was due to the loans involved having been brought current. The
ratio of the allowance for losses on loans to non-performing loans increased to
212.5% as of September 30, 2001 compared to 83.9% as of December 31, 2000. The
increase in this ratio, which excludes foreclosed assets and restructured
troubled debt, was primarily the result of the decrease of $1.5 million in
non-performing loans.
The Company classified $1.6 million of its assets as Special Mention, $7.2
million as Substandard, $10,000 as Doubtful and $148,000 as Loss as of September
30, 2001. This represents a decrease of $2.0 million in the Special Mention
category and a net increase of $5.1
10
million in the other categories from the December 31, 2000 totals for
classified assets. The ratio of classified assets to total assets (including
items classified as Special Mention) was 1.88% at September 30, 2001 as compared
to 1.29% at December 31, 2000. The ratio of the allowance for losses on loans to
classified assets decreased to 25.8% as of September 30, 2001 as compared to
36.3% as of December 31, 2000.
The allowance for losses on loans is established through a provision for
losses on loans based on management's evaluation of the risk inherent in the
loan portfolio and changes in the nature and volume of its loan activity. Such
evaluation, which includes a review of all loans with respect to which full
collectibility may not be reasonably assured, considers the fair value of the
underlying collateral, economic conditions, historical loan loss experience,
level of classified loans and other factors that warrant recognition in
providing for an adequate allowance for losses on loans.
While management believes that it uses the best information available to
determine the allowance for losses on loans, unforeseen market conditions could
result in adjustments to the allowance for losses on loans and net earnings
could be significantly affected if circumstances differ substantially from the
assumptions used in establishing the allowance for losses on loans.
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
Net income for the quarter ended September 30, 2001 was $1.0 million
compared to $608,000 for the same period in 2000. This represented a $412,000,
or 67.8%, increase. The increase in net income resulted from increases of
$311,000 in net interest income and $580,000 in other income, which were
partially offset by increases of $148,000 in other expenses, $119,000 in
provisions for losses on loans and $212,000 in income taxes.
Basic earnings per share were $.84 for the quarter ended September 30, 2001
compared to $.48 for the comparable 2000 period. Diluted earnings per share were
$.82 for the quarter ended September 30, 2001 compared to $.47 for the
comparable 2000 period.
Net interest income increased $311,000, or 9.6%, during the quarter ended
September 30, 2001, compared to the quarter ended September 30, 2000.
One of the tables presented at the end of management's discussion and
analysis ("Table I"), sets forth an analysis of the Company's net interest
income for the three-month periods ended September 30, 2001 and 2000.
As Table I indicates, interest income increased $318,000, or 4.0%, to $8.2
million for the three-month period ended September 30, 2001 from $7.9 million
for the same period in 2000. The increase in interest income was the result of
an increase in the average balance of interest-earning assets to $447.4 million
during the 2001 period from $409.8 million during the 2000 period, which was
partially offset by a decrease in the yield earned on interest-earning assets to
7.28% during the 2001 period from 7.64% during the 2000 period. The increase in
the average balance of interest-earning assets was due to increases in balances
of loans and FHLB stock, which were partially offset by decreases in balances of
mortgage-backed securities, investment securities and other interest-earning
assets during the quarter. The decrease in the yield earned on interest-earning
assets was the result of decreasing market interest rates during the quarter,
which resulted in lower yields on short term assets and a lower yield on the
reinvestment of principal repayments and
11
prepayments on loans and on newly originated loans. The increase in average
loans was primarily the result of an aggressive lending program during 2000 and
the first nine months of 2001.
Interest expense increased $7,000, or 0.1%, remaining at $4.7 million for
the third quarter of 2001. The increase in interest expense was the result of an
increase in the average outstanding balance of interest-bearing liabilities to
$434.1 million during the 2001 period from $399.7 million during the 2000
period, which was substantially offset by a decrease in the average yield on
interest-bearing liabilities to 4.27% during the 2001 period from 4.63% during
the 2000 period. The increase in average interest-bearing liabilities resulted
primarily from a more aggressive pricing policy and the continuing movement to a
sales oriented operation. The decrease in the average yield on interest-bearing
liabilities resulted from decreasing market interest rates during the quarter
which resulted in lower costs on new and maturing certificates of deposit,
money-market deposits and borrowed funds.
Based on management's review of the adequacy of the allowance for losses on
loans, a provision for losses on loans of $139,000 was recorded during the third
quarter of 2001 compared to a provision for losses on loans of $20,000 recorded
during the third quarter of 2000. The increase in classified assets was a
significant factor in the increase.
Other income for the three-month period ended September 30, 2001 increased
$580,000, or 87.5%, to $1.2 million compared to $663,000 for the same period in
2000. The increase was primarily attributable to a $441,000 gain on the sale of
securities available for sale. In addition, there were increases of $74,000 in
fee income, $72,000 in gain on the sale of loans held for sale and $5,000 in
other income. These increases were partially offset by decreases of $2,000 in
gain on the sale of real estate held for sale and $10,000 in insurance
commissions. The $74,000 increase in fee income resulted primarily from an
increase in checking accounts subject to fees and the $72,000 increase in gain
on the sale of loans held for sale was the result of a resumption of selling
fixed-rate mortgage loans.
Other expenses for the third quarter of 2001 increased $148,000 or 5.0%, to
$3.1 million from $3.0 million for the third quarter of 2000. There were
increases of $57,000 (20.5%) in occupancy costs, $105,000 (22.4%) in other
expenses, $5,000 (5.7%) in data processing services, $31,000 (2.0%) in
compensation and benefits, $12,000 (13.3%) in advertising and $5,000 (5.4%) in
telephone and postage. These increases were partially offset by decreases of
$23,000 (13.4%), $44,000 (49.1%) and $1,000 (1.0%) in furniture and equipment
expense, provision for losses on foreclosed assets and amortization of
intangible assets, respectively. The increase in occupancy costs was the result
of an increase in the number of building maintenance projects during 2001
compared to 2000. Postage expenses increased as a result of an increase in the
number of checking accounts. A contributing factor to the increase in
compensation and benefits was the higher cost of health insurance.
Federal income taxes increased $212,000 to $513,000 for the three-month
period ended September 30, 2001, compared to $301,000 for the same period in
2000. The primary reason for this increase was the increase in pre-tax income.
RESULTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 2001 and 2000
Net income for the nine-months ended September 30, 2001 was $2.4 million
compared to $1.9
12
million for the same period in 2000. This represented a $508,000, or 27.1%,
increase. The increase in net income resulted from an increase of $717,000 in
net interest income, and an increase of $772,000 in other income, which were
partially offset by increases of $555,000 in other expenses, $174,000 in
provision for losses on loans and $251,000 in income tax expense.
Basic earnings per share were $1.96 for the nine months ended September 30,
2001 compared to $1.49 for the 2000 period. Diluted earnings per share were
$1.92 for the nine months ended September 30, 2001 compared to $1.45 for the
comparable 2000 period.
Net interest income increased $717,000, or 7.5%, during the nine months
ended September 30, 2001, compared to the nine months ended September 30, 2000.
One of the tables presented at the end of management's discussion and
analysis ("Table II"), sets forth an analysis of the Company's net interest
income for the nine-month periods ended September 30, 2001 and 2000.
As Table II indicates, interest income increased $2.6 million, or 11.6%, to
$24.7 million for the nine-month period ended September 30, 2001 from $22.1
million for the same period in 2000. The increase in interest income was the
result of an increase in the average balance of interest-earning assets to
$439.4 million during the 2001 period from $389.9 million during the 2000
period, which was partially offset by a decrease in the yield on
interest-earning assets to 7.50% during the 2001 period from 7.57% during the
2000 period. The increase in the average balance of interest-earning assets was
primarily due to increases in balances of loans and other interest-earning
assets, which were partially offset by decreases in balances of mortgage-backed
securities and investment securities during the period. The decrease in the
yield earned on interest-earning assets was the result of decreasing market
interest rates during 2001. Market interest rates decreased significantly during
the first nine months of 2001, and the repricing to lower rates of maturing and
prepaying assets reduced yields on those assets.
Interest expense increased $1.9 million, or 14.8%, to $14.4 million during
the first nine months of 2001 from $12.5 million in the same period in 2000. The
increase in interest expense was the result of an increase in the average
outstanding balance of interest-bearing liabilities to $425.6 million during the
2001 period from $380.2 million during the 2000 period, and by an increase in
the average yield on interest-bearing liabilities to 4.51% during the 2001
period from 4.40% during the 2000 period. The increase in average
interest-bearing liabilities resulted primarily from a more aggressive pricing
policy and the continuing movement to a sales oriented operation. The increase
in the average yield on interest-bearing liabilities resulted from increasing
market rates during 2000 and a more aggressive pricing policy. While market
interest rates have decreased significantly during the first nine months of
2001, the impact of these decreases did not reduce funding costs to the same
levels as those of the first nine months of 2000.
Based on management's review of the adequacy of the allowance for losses on
loans, a provision for losses on loans of $194,000 was recorded during the first
nine months of 2001, compared to a $20,000 provision for losses on loans
recorded during the first nine months of 2000.
Other income for the nine-month period ended September 30, 2001 increased
$772,000, or 41.6%, to $2.6 million compared to $1.9 million for the same period
in 2000. The increase was primarily attributable to a $441,000 gain on the sale
of securities available-for-sale. There were also increases of $285,000 in fee
income, $23,000 in other income and $109,000 in gain on the sale of loans held
for sale. These increases were partially offset by decreases of $71,000 in
insurance
13
commissions and $2,000 in gain on sale of real estate held for sale. The
increase in fee income was primarily the result of an increase in checking
accounts subject to fees. The increase in gain on the sale of loans held for
sale was the result of resuming the sale of long-term, fixed-rate loans during
the second quarter. The decrease in insurance commissions was due to a high
level of commissions during the first quarter of 2000 which did not recur in
2001.
Other expenses for the first nine months of 2001 increased $555,000, or
6.5%, to $9.1 million from $8.6 million during the 2000 period. Most categories
of other expenses increased, including increases of $125,000 (2.7%) in
compensation and benefits, $137,000 (17.0%) in occupancy expenses, $41,000
(17.7%) in advertising, $35,000 (13.6%) in data processing services, $50,000
(18.5%) in telephone and postage and $236,000 (17.0%) in other expenses. The
increase in compensation and benefits was due in large part to increased costs
of medical insurance in 2001. The increase in the cost of data processing
services was due to costs associated with an upgrade in mainframe hardware and
to costs associated with implementation of on-line banking. Postage expenses
increased as a result of an increase in the number of checking accounts and an
extensive mailing required to inform customers of the Company's privacy policy.
LIQUIDITY AND CAPITAL RESOURCES
The Company maintains a certain level of cash and other liquid assets to
fund normal volumes of loan commitments, deposit withdrawals and other
obligations. The Office of Thrift Supervision (the "OTS") regulations currently
require each savings association to maintain sufficient liquidity to ensure its
safe and sound operation.
The Company's primary sources of funds are deposits and proceeds from
payments of principal and interest on loans and the sale or maturity of
investment securities and mortgage-backed securities. Management considers
current liquidity and additional sources of funds adequate to meet outstanding
liquidity needs.
Federally insured savings banks, such as the Bank, are required by federal
law and OTS regulations to maintain minimum levels of regulatory capital. The
OTS has established the following minimum capital requirements: a risk-based
capital ratio, a core capital ratio and a tangible capital ratio. In addition to
these minimum regulatory capital requirements, another provision of federal law
grants the OTS broad power to take prompt corrective action to resolve the
problems of undercapitalized institutions. The OTS regulations implementing this
statutory authority (the "prompt corrective action regulations") establish other
capital thresholds which determine whether an institution will be deemed to be
"well capitalized", "adequately capitalized", "undercapitalized", "significantly
undercapitalized" or "critically undercapitalized". The capital category to
which an institution is assigned in turn determines the actions the OTS may take
to address the institution's undercapitalization. The capital regulations of the
OTS exclude the effect of SFAS 115 for the purpose of calculating regulatory
capital.
The capital regulations currently require tangible capital of at least 1.5%
of adjusted total assets (as defined by regulation). Under the prompt corrective
action regulations, however, an institution with a ratio of tangible capital to
total assets below 2.0% is deemed to be "critically undercapitalized" and, as
such, will be subject to a variety of sanctions under the prompt corrective
action regulations, including, without limitation, limits on asset growth,
restrictions on activities and, ultimately, the appointment of a receiver.
Tangible capital generally includes common stockholders' equity and retained
income and certain non-cumulative perpetual preferred stock and related income
less
14
intangible assets (other than specified amounts of mortgage servicing rights)
and certain non-includable investments in subsidiaries.
The capital regulations also currently require core capital equal to at
least 3.0% of adjusted total assets (as defined by regulation). Under the prompt
corrective action regulations, however, an institution with a ratio of core
capital to adjusted total assets of 3.0% will be deemed to be "adequately
capitalized" only if the institution also has a composite rating of "1" under
the Uniform Financial Institutions Rating System ("UFIRS"). All other
institutions must maintain a minimum ratio of core capital to adjusted total
assets of 4.0% in order to be deemed to be "adequately capitalized", and an
institution, regardless of its UFIRS rating, will be deemed to be "well
capitalized" only if it maintains a ratio of core capital to adjusted total
assets of at least 5.0%. If an institution fails to remain at least "adequately
capitalized", the OTS may impose one or more of a variety of sanctions on the
institution to address its undercapitalized condition, including, without
limitation, requiring the submission of a capital plan, restricting growth and
restricting the payment of capital distributions (such as dividends). Core
capital generally consists of tangible capital plus specified amounts of certain
intangible assets.
The OTS risk-based requirement currently requires associations to have
total capital of at least 8.0% of risk-weighted assets. In order to be
considered "well capitalized" under the prompt corrective action regulations,
however, an institution must maintain a ratio of total capital to total
risk-weighted assets of at least 10.0% and a ratio of core capital to total
risk-weighted assets of at least 6.0%. Total capital consists of core capital
plus supplementary capital, which consists of, among other things, maturing
capital instruments, such as subordinated debt and mandatorily redeemable
preferred stock, and a portion of the Bank's general allowance for losses on
loans.
As of September 30, 2001, the Bank exceeded all current minimum regulatory
capital standards and was deemed to be "well capitalized" for purposes of the
OTS's prompt corrective action regulations. At September 30, 2001, the Bank's
tangible capital was $33.0 million, or 7.0%, of adjusted total assets, which
exceeded the 1.5% requirement by $25.9 million and exceeded the 2.0% "critically
undercapitalized" threshold by $23.6 million. In addition, at September 30,
2001, the Bank had core capital of $33.0 million, or 7.0%, of adjusted total
assets, which exceeded the 4.0% requirement by $14.1 million and exceeded the
5.0% "well capitalized" threshold by $9.4 million. The Bank had risk-based
capital of $35.3 million at September 30, 2001, or 11.4%, of risk-adjusted
assets, which exceeded the minimum risk-based capital requirement by $10.6
million and exceeded the 10.0% "well capitalized" threshold by $4.4 million.
Additionally, the Bank's $33.0 million of core capital equaled 10.7% of total
risk-weighted assets, which exceeded the 6.0% "well capitalized" threshold by
$14.5 million.
EMERGING ACCOUNTING STANDARDS
In June 2001, the Financial Accounting Standards Board issued two
statements which are summarized as follows:
Business Combinations Statement of Financial Accounting Standard No. 141,
"Business Combinations" (FAS 141) addresses financial accounting and reporting
for business combinations. It requires all business combinations covered by the
scope of the Standard to be accounted for using the purchase method. It is
effective for business combinations initiated after June 30, 2001 and business
combinations completed July 1, 2001 and later which use the purchase method of
accounting. The Company has no pending business combinations which would be
impacted by this
15
statement. The requirements of this statement would need to be considered in any
business combination contemplated in the future.
Goodwill and Other Intangible Assets Statement of Financial Accounting
Standard No. 142, "Goodwill and Other Intangible Assets" (FAS 142) addresses
financial accounting and reporting for goodwill and other intangible assets. It
addresses how intangible assets should be accounted for at the time of
acquisition and in subsequent periods. It requires that goodwill and other
intangible assets having indefinite useful lives not be amortized. Instead, such
assets must be tested at least annually for impairment. Such assets having
finite useful lives would continue to be amortized over those lives. The
Standard provides specific guidance for testing goodwill and other intangible
assets for impairment and also requires additional disclosures concerning
goodwill and other intangible assets.
FAS 142 is effective for fiscal years beginning after December 15, 2001 and
must be applied to all goodwill and other intangible assets recognized in
financial statements as of the start of that fiscal year. Impairment losses
resulting from the initial application of the Standard are to be reported as
resulting from a change in accounting principle. There has been a great deal of
discussion concerning the method or methods which should be applied to determine
the extent of impairment of goodwill, particularly in the case of publicly held
corporations, such as the Company. While a final determination has not been
made, the maximum impact on net income in 2002 due to the adoption of this
Standard would be approximately $2.9 million, representing the full impairment
of goodwill of $4.4 million, net of income tax of $1.5 million.
STOCK REPURCHASE
During the quarter ended September 30, 2001, the Company repurchased 2,000
shares of common stock at a total cost of $52,000 under the repurchase program
approved by the Company's Board of Directors in January 2001. Through September
30, 2001, a total of 669,507 shares of common stock of the Company had been
purchased under the current and previous repurchase programs at a total cost of
$14.4 million. As of September 30, 2001, the Company held 544,592 shares of its
common stock as treasury stock. During the period from September 30, 2001
through November 2, 2001 no additional shares of common stock were repurchased.
STOCK OPTIONS
During the third quarter of 2001, options on 2,500 shares of common stock
were exercised. Between October 1, 2001 and November 2, 2001, options on 10,950
shares of common stock were exercised. Through November 2, 2001, the Company had
received no additional notification from holders of options of their intent to
exercise options.
DIVIDENDS
On October 9, 2001, a cash dividend of $.12 per share was declared, payable
on November 30, 2001 to stockholders of record as of November 14, 2001. Future
dividends will depend primarily upon earnings, financial condition and need for
funds, as well as restrictions imposed by regulatory authorities regarding
dividend payments and capital requirements.
16
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
This report contains certain forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. The Company intends such
forward-looking statements to be covered by the safe harbor provisions for
forward-looking statements contained in the Private Securities Reform Act of
1995, and is including this statement for purposes of these safe harbor
provisions. Forward-looking statements, which are based on certain assumptions
and describe future plans, strategies and expectations of the Company, are
generally identifiable by use of the words "believe," "expect," "intend,"
"anticipate," "estimate," "project" or similar expressions. The Company's
ability to predict results or the actual effect of future plans or strategies is
inherently uncertain. Factors which could have a material adverse effect on the
operations and future prospects of the Company and its subsidiaries include, but
are not limited to, changes in: interest rates, general economic conditions,
legislative/regulatory changes, monetary and fiscal policies of the U. S.
Government, including policies of the U. S. Treasury and the Federal Reserve
Board, the quality of composition of the loan or investment portfolios, demand
for loan products, deposit flows, competition, demand for financial services in
the Company's market area, implementation by the Company of new technologies,
the Company's ability to develop and maintain secure and reliable electronic
systems, and accounting principles, policies and guidelines. These risks and
uncertainties should be considered in evaluating forward-looking statements and
undue reliance should not be placed on such statements. Further information
concerning the Company and its business, including additional factors that could
materially affect the Company's financial results, is included in the Company's
filings with the Securities and Exchange Commission.
17
TABLE I
NET INTEREST INCOME ANALYSIS (UNAUDITED)
KANKAKEE BANCORP, INC. AND SUBSIDIARY
Three Months Ended September 30,
-----------------------------------------------------------------------------
2001 2000
--------------------------------- -------------------------------------
Average Average
Outstanding Interest Yield/ Outstanding Interest Yield/
Balance Earned/Paid Rate Balance Earned/Paid Rate
--------------------------------- -------------------------------------
(Dollars in Thousands)
Interest-earning assets:
Loans receivable (1) $378,830 $7,196 7.54% $316,328 $ 6,362 7.98%
Mortgage-backed securities (2) 13,197 228 6.85% 17,385 307 7.01%
Investments securities (3) 42,265 616 5.78% 60,767 953 6.22%
Other interest-earning assets 10,738 135 4.99% 13,500 236 6.94%
FHLB stock 2,397 37 6.12% 1,868 36 7.65%
-------- ------ -------- -------
Total interest-earning assets 447,427 8,212 7.28% 409,848 7,894 7.64%
-------- ------ -------- -------
Other assets 29,337 29,916
-------- --------
Total assets $476,764 $439,764
======== ========
Interest-bearing liabilities:
Certificate accounts $252,649 3,469 5.45% $239,083 3,445 5.72%
Savings deposits 64,442 423 2.60% 60,264 379 2.50%
Demand and NOW deposits 89,257 467 2.08% 76,632 467 2.42%
Borrowings 27,750 308 4.40% 23,750 369 6.16%
-------- ------ ---- -------- -------
Total interest-bearing liabilities 434,098 4,667 4.27% 399,729 4,660 4.63%
-------- ------ -------- -------
Other liabilities 2,798 2,466
-------- --------
Total liabilities 436,896 402,195
-------- --------
Stockholders' equity 39,868 37,569
-------- --------
Total liabilities and
stockholders' equity $476,764 $439,764
======== ========
Net interest income $3,545 $ 3,234
====== =======
Net interest rate spread 3.01% 3.01%
==== =====
Net earning assets $ 13,329 $ 10,119
======== =======
Net yield on average interest-
earning assets (net interest
margin) 3.14% 3.13%
==== =====
Average interest-earning assets to
average interest-bearing liabilities 103.07% 102.53%
====== =======
(1) Calculated including loans held for sale, and net of deferred loan fees,
loan discounts, loans in process and the allowance for losses on loans.
(2) Calculated including mortgage-backed securities available-for-sale.
(3) Calculated including investment securities available-for-sale and
certificates of deposit.
18
TABLE II
NET INTEREST INCOME ANALYSIS (UNAUDITED)
KANKAKEE BANCORP, INC. AND SUBSIDIARY
Nine Months Ended September 30,
-------------------------------------------------------------------------------
2001 2000
------------------------------------ ------------------------------------
Average Average
Outstanding Interest Yield/ Outstanding Interest Yield/
Balance Earned/Paid Rate Balance Earned/Paid Rate
------------------------------------ ------------------------------------
(Dollars in Thousands)
Interest-earning assets:
Loans receivable (1) $361,639 $21,136 7.81% $ 294,217 $17,441 7.92%
Mortgage-backed securities (2) 14,491 765 7.06% 17,815 931 6.98%
Investments securities (3) 45,484 2,028 5.96% 61,451 2,870 6.24%
Other interest-earning assets 15,508 624 5.38% 14,527 749 6.89%
FHLB stock 2,290 112 6.54% 1,840 101 7.33%
-------- ------- --------- -------
Total interest-earning assets 439,412 24,665 7.50% 389,850 22,092 7.57%
-------- ------- --------- -------
Other assets 29,424 29,998
-------- ---------
Total assets $468,836 $ 419,848
======== =========
Interest-bearing liabilities:
Certificate accounts $250,050 10,709 5.73% $ 226,888 9,341 5.50%
Savings deposits 61,058 1,185 2.59% 60,598 1,141 2.52%
Demand and NOW deposits 87,503 1,476 2.26% 76,314 1,323 2.32%
Borrowings 27,000 999 4.95% 16,360 708 5.78%
--------- ------- --------- -------
Total interest-bearing liabilities 425,611 14,369 4.51% 380,160 12,513 4.40%
-------- ------- --------- -------
Other liabilities 3,833 2,960
-------- ---------
Total liabilities 429,444 383,120
-------- ---------
Stockholders' equity 39,392 36,728
-------- ---------
Total liabilities and
stockholders' equity $468,836 $ 419,848
======== =========
Net interest income $10,296 $ 9,579
======= =======
Net interest rate spread 2.99% 3.17%
===== =====
Net earning assets $ 13,801 $ 9,690
======== =========
Net yield on average interest-
earning assets (net interest
margin) 3.13% 3.28%
===== =====
Average interest-earning assets to
average interest-bearing liabilities 103.24% 102.55%
======= =======
(1) Calculated including loans held for sale, and net of deferred loan fees,
loan discounts, loans in process and the allowance for losses on loans.
(2) Calculated including mortgage-backed securities available-for-sale.
(3) Calculated including investment securities available-for-sale and
certificates of deposit.
19
KANKAKEE BANCORP, INC.
PART II - OTHER INFORMATION
---------------------------
Item 1. Legal Proceedings - There are no material pending legal proceedings to
-----------------
which the Company or the Bank is a party other than ordinary routine
litigation incidental to their respective businesses.
Item 2. Changes in Securities - None
---------------------
Item 3. Defaults Upon Senior Securities - None
-------------------------------
Item 4. Submission of Matters to a Vote of Security Holders - None
---------------------------------------------------
Item 5. Other Information - None
-----------------
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
a. Exhibits - None
--------
b. Reports on Form 8-K
-------------------
On July 23, 2001, the Company filed a report on Form 8-K stating
under Item 5 that the Company had, on July 23, 2001, issued a news
release announcing its earnings for the quarter ended June 30, 2001,
as well as other recent corporate events.
On October 11, 2001, the Company filed a report on Form 8-K stating
under item 5 that the Company had, on October 10, 2001, issued a
news release announcing that Thomas Schneider resigned as director
of the Company and Kankakee Federal Savings Bank (the "Bank"),
effective October 31, 2001, as the result of his relocation out of
the Kankakee area. The Company also announced that on October 9,
2001, the Company's and the Bank's boards of directors elected Mark
Smith to fill the vacancies created by Mr. Schneider's resignation,
effective November 1, 2001.
On October 23, 2001, the Company filed a report on Form 8-K stating
under item 5 that the Company had, on October 23, 2001, issued a
news release announcing its earnings for the quarter ended September
30, 2001, and that the Company had entered into change of control
agreements with six of its executive officers.
20
KANKAKEE BANCORP, INC.
SIGNATURES
----------
In accordance with the requirements of the Securities Exchange Act of 1934,
the Registrant has caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
KANKAKEE BANCORP, INC.
Registrant
Date: November 2, 2001 /s/ LARRY D. HUFFMAN
------------------------- --------------------------------
President and CEO
Date: November 2, 2001 /s/ RONALD J. WALTERS
------------------------- --------------------------------
Vice President and Treasurer
(Principal Financial
and Accounting Officer)
21