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 March 31, 2002.
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 (I.R.S. Employer Identification Number)
Incorporation or Organization)
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 May 8, 2002, there were 1,217,976 issued and outstanding shares of the
Issuer's common stock (exclusive of 532,024 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) 3-4
Statements of Financial Condition,
March 31, 2002 and December 31, 2001 5
Statements of Income and Comprehensive Income,
Three Months Ended March 31, 2002 and 2001 6
Statements of Cash Flows, Three Months
Ended March 31, 2002 and 2001 7
Notes to Financial Statements 8-9
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 10
Item 3. Quantitative and Qualitative Disclosure 13
About Market Risk
Part II. OTHER INFORMATION 22
Item 1. Legal Proceedings 22
Item 2. Changes in Securities 22
Item 3. Defaults Upon Senior Securities 22
Item 4. Submission of Matters to a Vote of Security Holders 22
Item 5. Other Information 22
Item 6. Exhibits and Reports on Form 8-K 22-23
SIGNATURES 24
2
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (UNAUDITED)
KANKAKEE BANCORP, INC. AND SUBSIDIARY
March 31, December 31,
2002 2001
------------- --------------
Assets
Cash and due from banks $ 15,230,379 $ 15,432,128
Federal funds sold 7,142,264 7,112,641
Money market funds 3,924,056 4,117,945
------------- --------------
Cash and cash equivalents 26,296,699 26,662,714
------------- --------------
Certificates of deposit 50,000 50,000
------------- --------------
Securities:
Investment securities:
Available-for-sale, at fair value 36,319,360 34,755,192
Held-to-maturity, at cost (fair value: March 31, 2002 -
$1,473,129; December 31, 2001 - $1,483,946) 1,464,757 1,464,804
------------- -------------
Total investment securities 37,784,117 36,219,996
------------- -------------
Mortgage-backed securities:
Available-for-sale, at fair value 40,898,541 11,635,592
Held-to-maturity, at cost (fair value: March 31, 2002 -
$32,439; December 31, 2001 - $38,003) 32,118 37,627
------------- -------------
Total mortgage-backed securities 40,930,659 11,673,219
------------- -------------
Non-marketable equity securities 1,000 1,000
------------- -------------
Loans, net of allowance for losses on loans ($2,727,592 at
March 31, 2002; $2,582,234 at December 31, 2001) 395,905,044 393,789,828
Loans held for sale 387,200 828,610
Real estate held for sale 523,391 469,165
Federal Home Loan Bank stock, at cost 2,478,700 2,443,300
Office properties and equipment 8,690,183 8,397,173
Accrued interest receivable 2,908,552 2,823,090
Prepaid expenses and other assets 11,213,280 2,490,672
Intangible assets 4,385,084 4,431,101
------------ ------------
Total assets $531,553,909 $490,279,868
============ ============
(Continued)
3
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (UNAUDITED) (continued)
KANKAKEE BANCORP, INC. AND SUBSIDIARY
March 31, December 31,
2002 2001
--------------- --------------
Liabilities and stockholders' equity
Liabilities:
Deposits
Noninterest bearing $ 29,665,437 $ 25,854,152
Interest bearing 392,821,016 389,612,684
Other borrowings 62,600,000 30,000,000
Advance payments by borrowers for taxes and insurance 3,084,716 1,905,766
Other liabilities 2,066,379 1,716,366
------------ ------------
Total liabilities 490,237,548 449,088,968
------------ ------------
Stockholders' equity
Preferred stock, $.01 par value; authorized, 500,000
shares; none outstanding - -
Common stock, $.01 par value; authorized, 3,500,000
shares; issued 1,750,000 17,500 17,500
Additional paid-in capital 15,106,564 15,226,853
Retained income, partially restricted 37,710,135 36,964,331
Treasury stock (526,243 shares at March 31,
2002; 533,642 shares at December 31, 2001) (11,756,340) (11,622,862)
Accumulated other comprehensive income 238,502 605,078
------------ ------------
Total stockholders' equity 41,316,361 41,190,900
------------ ------------
Total liabilities and stockholders' equity $531,553,909 $490,279,868
============ ============
See notes to consolidated financial statements (unaudited)
4
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (UNAUDITED)
KANKAKEE BANCORP, INC. AND SUBSIDIARY
Three Months Ended March 31,
----------------------------
2002 2001
----------- -----------
Interest income:
Loans $ 6,980,330 $ 6,855,666
Investment securities and other 588,562 1,057,244
Mortgage-backed securities 210,880 281,830
----------- -----------
Total interest income 7,779,772 8,194,740
----------- -----------
Interest expense:
Deposits 3,571,121 4,487,054
Borrowed funds 361,949 362,402
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Total interest expense 3,933,070 4,849,456
----------- -----------
Net interest income 3,846,702 3,345,284
Provision for losses on loans 147,968 15,000
----------- -----------
Net interest income after provision for losses on loans 3,698,734 3,330,284
----------- -----------
Other income:
Net gain on sales of real estate held for sale 10,209 10,383
Net gain on sales of loans held for sale 237,918 -
Fee income 590,416 472,903
Insurance commissions 10,793 26,627
Other 110,125 87,652
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Total other income 959,461 597,565
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Other expenses:
Compensation and benefits 1,802,732 1,555,156
Occupancy 297,744 304,019
Furniture and equipment 148,876 184,021
Federal deposit insurance premiums 18,267 18,327
Advertising 67,923 68,518
Provision for losses on foreclosed assets 6,000 16,700
Data processing services 115,043 100,702
Telephone and postage 136,052 101,980
Amortization of intangible assets 46,017 93,687
Other general and administrative 741,508 536,436
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Total other expenses 3,380,162 2,979,546
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Income before income taxes 1,278,033 948,303
Income taxes 384,846 317,300
----------- -----------
Net income $ 893,187 $ 631,003
=========== ===========
Net income $ 893,187 $ 631,003
Other comprehensive income:
Unrealized gains (losses) on available-for-sale
securities, net of related income taxes (366,576) 473,642
----------- -----------
Comprehensive income $ 526,611 $ 1,104,645
=========== ===========
Basic earnings per share $ 0.73 $ 0.51
=========== ===========
Diluted earnings per share $ 0.72 $ 0.50
=========== ===========
See notes to consolidated financial statements (unaudited)
5
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
KANKAKEE BANCORP, INC. AND SUBSIDIARY
Three Months Ended March 31,
----------------------------
2002 2001
------------- -------------
Cash flows from operating activities:
Net income $ 893,187 $ 631,003
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for losses on loans 147,968 15,000
Provisions for losses on real estate held for sale 6,000 16,700
Depreciation and amortization 259,185 341,464
Amortization of investment premiums and discounts, net 8,709 (8,811)
Accretion of loan fees and discounts (35,116) 13,391
Deferred income tax provision (benefit) - 23,858
Originations of loans held for sale (15,892,028) (1,741,425)
Proceeds from sales of loans 16,571,356 1,741,425
(Increase) decrease in interest receivable (85,462) 369,276
Increase in interest payable on deposits 44,484 72,663
Net gain on sales of loans (237,918) -
Net gain on sales of real estate held for sale (10,209) (10,383)
Federal Home Loan Bank of Chicago, stock dividend (35,400) (42,000)
Other, net (169,531) (790,184)
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Net cash from operating activities 1,465,225 631,977
------------- -------------
Cash flows from investing activities:
Investment securities
Available-for sale:
Purchases ($ 4,005,781) ($ 2,008,944)
Proceeds from calls and maturities 2,000,000 20,070,000
Mortgage-backed securities:
Available-for-sale:
Purchases (30,607,096) (300,890)
Proceeds from maturities and pay downs 1,221,649 1,276,429
Held-to-maturity:
Proceeds from maturities and pay downs 5,509 7,522
Proceeds from sales of real estate - 58,484
Deferred loan fees and costs, net (2,124) 57,174
Loans originated (37,481,976) (39,458,334)
Loans purchased (1,400,000) -
Principal collected on loans 36,575,893 28,014,035
Purchases of office properties and equipment, net (506,178) (237,640)
Purchase of bank owned life insurance (8,000,000) -
------------- -------------
Net cash from investing activities (42,200,104) 7,477,836
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See notes to consolidated financial statements (unaudited).
6
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) (continued)
KANKAKEE BANCORP, INC. AND SUBSIDIARY
Three Months Ended March 31,
----------------------------
2002 2001
------ ------
Cash flows from financing activities
Net increase in non-certificate of deposit accounts $ 2,640,828 $ 3,404,364
Net increase in certificate of deposit accounts 4,334,305 3,333,617
Net increase in advance payments by
borrowers for taxes and insurance 1,194,882 1,278,822
Proceeds from short-term borrowings - 5,000,000
Repayments of short-term borrowings - (19,000,000)
Proceeds from other borrowings 37,600,000 12,000,000
Repayments of other borrowings (5,000,000) -
Proceeds from exercise of stock options 433,685 62,273
Dividends paid (147,384) (146,689)
Purchase of treasury stock (687,452) (1,048,985)
------------ ------------
Net cash from financing activities 40,368,864 4,883,402
------------ ------------
Increase (decrease) in cash and cash equivalents (366,015) 12,993,215
Cash and cash equivalents:
Beginning of period 26,662,714 25,147,273
------------ ------------
End of period $ 26,296,699 $ 38,140,488
============ ============
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest on deposits $ 3,526,600 $ 4,414,400
============ ============
Interest on borrowed funds $ 334,800 $ 378,700
============ ============
Income taxes $ - $ 55,218
============ ============
Supplemental disclosures of non-cash investing activities:
Real estate acquired through foreclosure $ 63,306 $ 65,899
============ ============
Increase (decrease) in unrealized gains
on securities available-for-sale ($551,242) $ 717,638
============ ============
Increase in deferred taxes attributable to the
unrealized gains on securities available-for-sale $ 184,666 $ 243,996
============ ============
See notes to consolidated financial statements (unaudited).
7
KANKAKEE BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
March 31, 2002
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, 2001 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 period
ended March 31, 2002 are not necessarily indicative of the results that may be
expected for the year ending December 31, 2002. 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, 2001.
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 1,228,689. 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, totaling 13,587, 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 March 31, 2002, stockholders' equity included a positive $239,000, 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 income tax of $123,000. An increase in market interest rates
during the three months ended March 31, 2002 resulted in a $366,000 decrease 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 2001, the
market value of the available-for-sale securities portfolio exceeded the book
value by $605,000, net of income tax benefit.
8
Note 4 - Accounting Change
Effective January 1, 2002, the Company applied FASB Statement No. 142,
Goodwill and Other Intangible Assets. Among its provisions is a requirement to
disclose what reported net I income would have been in all periods presented
exclusive of amortization expense (net of related income tax effects) recognized
in those periods related to goodwill, intangible assets no longer being
amortized, and changes in amortization periods for intangible assets that will
continue to be amortized together with related per share amounts.
Three months ended
March 31,
2002 2001
--------------
Reported net income $893,187 $631,003
Add goodwill amortization - 31,462
---------------------
Adjusted net income $893,187 $662,465
=====================
Basic earnings per share:
Reported net income $ 0.73 $ 0.51
Goodwill amortization - $ 0.03
---------------------
Adjusted net income $ 0.73 $ 0.54
=====================
Diluted earnings per share:
Reported net income $ 0.70 $ 0.50
Goodwill amortization - $ 0.03
---------------------
Adjusted net income $ 0.70 $ 0.53
=====================
During the second quarter of 2002, the Company will perform the first of the
impairment tests required under FASB Statement No. 142. However, based on
information currently available, the Company does not believe that the results
of this first test will have a material effect on either the earnings or
financial position of the Company.
9
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
During 2001, the Federal Open Market Committee ("the FOMC") lowered its
target short-term interest rates by a total of four and three-quarters
percentage points. The federal funds target went from 6.50% to 1.75% and the
Federal Reserve discount rate went from 6.00% to 1.25%. 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 banks borrow from the Federal Reserve.
During 2001, the FOMC cited a slowing economy and a possible recession as the
primary reasons for lowering interest rates. Lower short-term interest rates
would tend to stimulate economic activity by reducing the financing costs on
borrowed funds for both businesses and individuals.
A slowing economy would usually result in some increase in problem assets,
and could possibly result in some increase in loan losses. In a slowing economy
or recession, cash flows and profits of commercial customers decrease, which
could result in an increase in delinquencies. Additionally, individual borrowers
experience cash flow problems from job loss, reduction in investment returns or
other causes. This could also result in an increase in delinquencies.
During the first quarter of 2002, the FOMC held target interest rates at
the same levels they were at December 31, 2001 while maintaining a cautionary
posture on the state of the economy. While some economic indicators are pointing
toward a recovery, others are still weak, indicating that the economy remains
slow. If the economy does move into a full recovery, then the next FOMC interest
rate move would likely be an increase in its target rates.
Rising interest rates, because of the Company's current structure of assets
and liabilities, could have a detrimental effect on the Company's interest rate
spread and results of operations. Since the Company had, at December 31, 2001, a
negative cumulative one-year gap of 5.0%, an increase in market interest rates
might negatively affect net interest income and the results of operations. This
is due to liabilities maturing, and repricing, from their current rates to
higher rates, more quickly than assets will mature and reprice to higher rates.
Management believes that the Company's current level of interest rate
sensitivity is reasonable, in light of the current market rates and the
possibility of increasing market rates. However, significant fluctuations in
interest rates may have an adverse effect on the Company's financial condition
and results of operations.
10
BUSINESS DEVELOPMENTS
During the late 1990s, the Company experienced significant growth and
improvement in its office facilities and a widening of its market areas. This
was accomplished through the acquisition of a bank, the opening of several new
offices and the replacement of an outdated office building. There were also
significant changes and improvements in products and services brought about
through the use of technology.
During this same period, the Company began the process of shifting its
operating philosophy to a sales orientation and away from traditional approaches
to banking services. Management continues to support and encourage this process,
recognizing that changes, particularly of this type and magnitude, require
employee education and customer communication. These changes in philosophy and
culture require not only time but allocation of other Company resources. None of
these efforts were without cost, and have been, and, to some degree, will
continue to be, reflected in operating expenses and net income.
In the first quarter of 2000, management initiated an aggressive growth
strategy which was aimed at increasing deposits and growing the loan portfolio,
which resulted in the reduction of the size of the investment portfolio. The
strategy, which continued into the first quarter of 2001, was intended to
improve earnings in a number of ways which included:
. Improved utilization of facilities and increased productivity of
personnel;
. Increased capital leverage; and
. Improved asset yields, due to increased commercial and consumer
lending and the replacement of investments with fixed-rate mortgage
loans.
It was recognized that such a strategy would:
. Likely increase the cost of funds, due to aggressive deposit pricing
and the potential need to borrow money at wholesale market rates; and
. Necessitate the assumption of an increased level of interest rate
risk, due to aggressive loan pricing and the need to retain longer
term, fixed-rate mortgages for the portfolio.
In response to rapidly falling interest rates during 2001, the Company
modified its growth strategy and, once again, began to sell its fixed-rate
mortgage originations in the secondary market.
During the last half of 2001, the Company began reviewing the potential
benefits of Bank Owned Life Insurance, (commonly referred to as "BOLI"), which
is variable rate, single premium whole life insurance on the lives of key
employees of the Company. The Company is the beneficiary of the policies, and
the policies build cash value. Neither the increase in cash value, which is
included in other income, nor the death benefits are taxable to the Company.
This provides a significant enhancement to earnings, which will be used to
offset increases in the cost of employee benefits such as health insurance. The
Bank completed the BOLI purchase, totaling $8.0 million, in the last half of
March 2002, and therefore, the effects of the transaction on first quarter
results were minimal.
In late March, Kankakee Federal Savings Bank reimplemented a capital
utilization strategy, which involved the purchase of $30.0 million of
adjustable-rate, mortgage-backed securities, using borrowed funds. The
securities are the collateral for the borrowed funds, and there is a positive
spread in the transaction which enhances net interest income, net income and
earnings per share. The Company has evaluated the program, and it is comfortable
with potential earnings volatility that may result from interest rate
fluctuation. The effects of this transaction on the results for the first
quarter were also minimal.
11
The Company engaged an independent third party to evaluate its existing
branch network and other service delivery systems, focusing on locations, market
areas, physical layouts, accessibility and market potentials. This evaluation
also included a review of other potential market areas suggested by both
management and the third party. During March of this year the preliminary
reports were received and are in the process of review. No decisions have yet
been made as to the result of these evaluations. However, they will likely
precipitate some changes in the organization, with a view toward increased
earnings and an enhancement of long-term stockholder value.
During the quarter, the Company committed to the issuance of $10.0 million
in trust preferred securities as part of a large pool of such securities. These
securities, which carry a variable rate of interest, are includable, within
specified limits, in regulatory capital. The proceeds from the issuance of these
securities, which were received in the second week of April 2002, could be used
to repurchase stock, fund an accretive acquisition, purchase securities as part
of a leveraging strategy or for other general corporate uses. Interest payments
on these securities are deductible for income tax purposes.
FINANCIAL CONDITION
Total assets of the Company increased by $41.3 million, or 8.4%, to $531.6
million at March 31, 2002 from $490.3 million at December 31, 2001.
Cash and cash equivalents decreased by $366,000, or 1.4%, from $26.7
million at December 31, 2001 to $26.3 million at March 31, 2002. The decrease
was primarily attributable to increases in investment and mortgage-backed
securities available-for-sale, loans and other assets. The majority of the
funding for these increases was provided by increases in deposits and borrowed
money.
During the three-month period ended March 31, 2002, net loans receivable
increased by $2.1 million, or 0.5%, from $393.8 million to $395.9 million. This
was primarily the result of the origination of $23.7 million of real estate
loans, the purchase of $1.4 million of real estate loans and the origination of
$13.8 million of consumer and commercial business loans, offset by loan
repayments which totaled $36.6 million.
Loans held for sale decreased by $441,000, or 53.3%, from $828,000 at
December 31, 2001 to $387,000 at March 31, 2002. This was the result of the sale
of $16.6 million of loans held for sale, at a net gain of $238,000, which was
partially offset by the origination of $15.9 million of such loans.
Securities available-for-sale increased by $1.6 million, or 4.5%, to $36.3
million at March 31, 2002 from $34.8 million at December 31, 2001 as the result
of the purchase of $4.0 million of securities, which was partially offset by the
exercise of call options by issuers on $2.0 million of securities, and by the
net change in market value adjustment.
Mortgage-backed securities available-for-sale increased by $29.3 million,
or 251.5%, to $40.9 million at March 31, 2002 from $11.6 million at December 31,
2001. The increase resulted from the purchase of $30.6 million of securities,
which was partially offset by the maturity of $1.2 of securities, and by the net
change in market value adjustments.
Deposits increased by $7.0 million, or 1.7%, from $415.5 million at
December 31, 2001 to $422.5 million at March 31, 2002. During the three month
period, there was a $4.3 million increase in certificate of deposit accounts and
a $2.7 million increase in passbook, checking and money market accounts.
Total borrowings increased by $32.6 million, or 108.7%, from $30.0 million
at December 31, 2001 to $62.6 million at March 31, 2002. The increase was the
result of $37.6 million in new borrowings, which were partially offset by
repayments of $5.0 million. Borrowings at March 31, 2002 consisted of $35.0
million in advances
12
from the Federal Home Loan Bank of Chicago and $27.6 million in funds from
securities sold under agreement to repurchase.
ASSET/LIABILITY MANAGEMENT
During the first quarter of 2001, consistent with the growth strategy
implemented in 2000, the Company retained virtually all the fixed-rate mortgage
loans it originated. As a result of the changing interest rate environment
during 2001, the Company, during the second quarter of 2001, resumed selling
fixed-rate mortgage loans with terms of 20 years or longer in the secondary
market. Late in the third quarter of 2001, the Company also began selling loans
with terms of 15 years. Through the first quarter of 2002, the Company has
continued to sell virtually all fixed-rate mortgage loans it originates with
terms of 15 years of longer.
In an attempt to manage its exposure to changes in interest rates,
management closely monitors the Company's interest rate risk. The Bank has a
funds management committee, consisting of the president, certain vice presidents
and the controller of the Bank, which meets weekly and reviews the Bank's
interest rate risk position and evaluates its current asset/liability pricing
and strategies. This committee adjusts pricing and strategies as needed and
makes recommendations to the Bank's board of directors regarding significant
changes in strategy. In addition, on a quarterly basis the board reviews the
Bank's asset/liability position, including simulations of the effect on the
Bank's capital of various interest rate scenarios.
In managing its asset/liability mix, the Company, at times, depending on
the relationship between long-term and short-term interest rates, market
conditions and consumer preferences, may place somewhat greater emphasis on
maximizing its net interest margin than on better matching the interest rate
sensitivity of its assets and liabilities in an effort to improve its net
income. Management believes that the increased net income resulting from a
mismatch in the maturity of its asset and liability portfolios can, during
periods of declining or stable interest rates, provide returns that justify the
increased exposure to sudden and unexpected increases in interest rates which
can result from such a mismatch.
The Company attempts to manage its interest rate risk to the extent
consistent with its interest margin objectives through management of the mix of
its assets and liabilities in a number of ways, including the following:
. To the extent requested in its lending areas, the Company has focused
its one-to-four family residential lending program on adjustable rate
mortgages ("ARMS").
. The Company has continued its origination of consumer loans having
terms to maturity that are significantly shorter than residential
loans.
. The Company has increased originations of commercial business and
construction loans having adjustable or floating interest rates,
relatively short terms to maturity, or a combination thereof.
. The Company regularly reviews its policy on newly originated
fixed-rate mortgage loans, as to the question of which loans, if any,
should be retained in portfolio versus which should be sold in the
secondary market. Trends in the economy, trends in market interest
rates, the Company's interest margin and the Company's current
asset/liability mix are among the factors considered. Changes
resulting from these reviews take effect on a specific calendar date
and impact either those loans which are applied for on or after that
date, or those loans which are closed on or after that date.
The Company currently does not enter 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.
13
NON-PERFORMING ASSETS AND ALLOWANCE FOR LOSSES ON LOANS
The Company's non-performing assets increased to $5.7 million, or 1.07%, of
total assets at March 31, 2002 from $2.2 million, or 0.45% of total assets at
December 31, 2001. During the three month period ended March 31, 2002,
non-performing construction and development loans, non-performing commercial
real estate loans and non-performing commercial business loans increased by $2.1
million, $179,000 and $1.2 million, respectively. These increases were slightly
offset by a decrease in non-performing consumer loans of $67,000. In addition,
foreclosed assets increased by $52,000 and restructured troubled debts decreased
by $9,000.
Non-performing assets increased by approximately $3.5 million. The increase
was primarily due to previously classified loans to three of the Company's
long-term borrowers that became non-performing during the first quarter of 2002.
Many financial institutions, such as the Company, have experienced an increase
in non-performing assets during this difficult economic period, as even
well-established business borrowers have developed cash flow and other business
related problems. It is management's belief that the allowance for losses on
loans at March 31, 2002, remains adequate, even in light of the first quarter
movement of these loans from classified to non-performing. However, there can be
no assurance that the allowance for losses on loans will be adequate to cover
all losses.
The ratio of the allowance for losses on loans to non-performing loans
decreased to 59.7% as of March 31, 2002 compared to 230.3% as of December 31,
2001. The decrease in this ratio, which excludes foreclosed assets and
restructured troubled debt, was the result of the increase of $3.5 million in
non-performing assets.
The Company classified $1.4 million of its assets as Special Mention, $8.7
million as Substandard and $98,000 as Loss as of March 31, 2002. No assets were
classified as Doubtful at March 31, 2002. This represents a decrease of $156,000
in the Special Mention category and a net increase of $1.5 million in the other
categories from the December 31, 2001 totals for classified assets. The ratio of
classified assets to total assets (including items classified as Special
Mention) was 1.91% at March 31, 2002 as compared to 1.80% at December 31, 2001.
The ratio of the allowance for losses on loans to classified assets decreased to
26.9% as of March 31, 2002 compared to 29.3% as of December 31, 2001.
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 MARCH 31, 2002 AND 2001
Net income for the quarter ended March 31, 2002 was $893,000 compared to
$631,000 for the same period in 2001. This represented a $262,000, or 41.1%,
increase. The increase in net income resulted from increases of $501,000 in net
interest income and $362,000 in other income, which were partially offset by
14
Basic earnings per share were $.73 for the quarter ended March 31, 2002
compared to $.51 for the 2001 period. Diluted earnings per share were $.72 for
the quarter ended March 31, 2002 compared to $.50 for the comparable 2001
period, representing an increase of 44.0%.
Net interest income increased $501,000, or 15.0%, during the quarter ended
March 31, 2002, compared to the quarter ended March 31, 2001.
The table presented on page 21 ("Table I"), sets forth an analysis of the
Company's net interest income for the three-month periods ended March 31, 2002
and 2001.
As Table I indicates, interest income decreased $416,000, or 5.1%, to $7.8
million for the three-month period ended March 31, 2002 from $8.2 million for
the same period in 2001. The decrease in interest income was the result of a
decrease in the yield earned on interest-earning assets to 6.71% during the 2002
period from 7.73% during the 2001 period, which was partially offset by an
increase in the average balance of interest-earning assets to $470.4 million
during the 2002 period from $429.7 million during the 2001 period. The increase
in the average balance of interest-earning assets was due to increases in
balances of loans, mortgage-backed securities, FHLB stock and other
interest-earning assets during the quarter, which were partially offset by a
decrease in the balance of investment securities. The decrease in the yield
earned on interest-earning assets was the result of decreasing market interest
rates during 2001, which resulted in lower yields on short term assets and a
lower yield on both the reinvestment of principal repayments on loans and newly
originated loans. The increase in average loans was primarily the result of an
aggressive lending program during 2001 and the first quarter of 2002.
Interest expense decreased $917,000, or 18.9%, to $3.9 million during the
first quarter from $4.8 million in the same period in 2001. The decrease in
interest expense was the result of a decrease in the average yield on
interest-bearing liabilities to 3.50% during the 2002 period from 4.73% during
the 2001 period, which was partially offset by an increase in the average
outstanding balance of interest-bearing liabilities to $455.8 million during the
2002 period from $415.5 million during the 2001 period. The increase in average
interest-bearing liabilities resulted primarily from a more aggressive pricing
policy, an increase in the use of borrowed funds, and the continuing movement to
a sales oriented operation. The decrease in the average yield on
interest-bearing liabilities resulted from market rates moving significantly
lower during 2001.
The provision for losses on loans totaled $148,000 during the first quarter
of 2002 compared to $15,000 during the first quarter of 2001. The increase in
the provision for losses on loans during the first quarter of 2002 compared to
the first quarter of 2001 was the result of several factors, including the
increase in the total loan portfolio and an increase in non-performing assets.
Other income for the three-month period ended March 31, 2002 increased
$362,000, or 60.6%, to $959,000 compared to $598,000 for the same period in
2001. The increase was attributable to increases of $117,000 in fee income,
$238,000 in gain on the sale of loans held for sale and $22,000 in other income.
These increases were partially offset by a decrease of $16,000 in insurance
commissions. The 24.8% 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 the resumption in sales during the
second quarter of 2001 of most originated fixed-rate mortgages. The $16,000
decrease in insurance commissions resulted primarily from a corresponding
decrease in sales of annuity products during the first quarter of 2002 compared
to the same period in 2001.
General and administrative expenses for the first quarter of 2002 increased
$401,000 or 13.4%, to $3.4 million from $3.0 million for the first quarter of
2001. There were increases of $248,000 (15.9%) in compensation and benefits,
$205,000 (38.2%) in other expenses, $14,000 (14.2%) in data processing services
and $34,000 (33.4%) in telephone and postage costs. These increases were
partially offset by decreases of $6,000 (2.1%) in occupancy costs, $35,000
(19.1%) in furniture and equipment expense, $11,000 (64.1%) in
15
provision for losses on foreclosed assets, $48,000 (50.9%) in amortization of
intangible assets and several other small decreases. The major reason for the
increase in other expenses, and a significant reason for the overall increase in
general and administrative expenses, was additional costs in preparation for the
annual meeting. During the quarter the Company incurred additional costs,
necessitated by a proxy contest, which totaled approximately $190,000. After the
effect of income taxes, net income was reduced by approximately $125,000 and
diluted earnings per share were reduced by approximately $1.0 per share, as a
direct result of the proxy contest.
Federal income taxes increased $66,000 to $385,000 for the three-month
period ended March 31, 2002, compared to $317,000 for the same period in 2001.
The primary reason for this increase was the increase in pre-tax income.
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 accumulated other comprehensive income 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 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
16
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 March 31, 2002, 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 March 31, 2002, the Bank's
tangible capital was $34.7 million, or 6.6%, of adjusted total assets, which
exceeded the 1.5% requirement by $26.8 million and exceeded the 2.0% "critically
undercapitalized" threshold by $24.1 million. In addition, at March 31, 2002,
the Bank had core capital of $34.7 million, or 6.6%, of adjusted total assets,
which exceeded the 4.0% requirement by $13.6 million and exceeded the 5.0% "well
capitalized" threshold by $8.4 million. The Bank had risk-based capital of $37.3
million at March 31, 2002, or 11.1%, of risk-adjusted assets, which exceeded the
minimum risk-based capital requirement by $10.4 million and exceeded the 10.0%
"well capitalized" threshold by $3.6 million. Additionally, the Bank's $34.7
million of core capital equaled 10.3% of total risk-weighted assets, which
exceeded the 6.0% "well capitalized" threshold by $14.4 million.
RECENT REGULATORY DEVELOPMENTS
On October 26, 2001, President Bush signed into law the Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism Act of 2001 (the "USA PATRIOT Act"). Among its other
provisions, the USA PATRIOT Act requires each financial institution: (i) to
establish an anti-money laundering program; (ii) to establish due diligence
policies, procedures and controls with respect to its private banking accounts
and correspondent banking accounts involving foreign individuals and certain
foreign banks; and (iii) to avoid establishing, maintaining, administering, or
managing correspondent accounts in the United States for, or on behalf of,
foreign banks that do not have a physical presence in any country. The USA
PATRIOT Act also requires the Secretary of the Treasury to prescribe, by
regulations to be issued jointly with the federal banking regulators and certain
other agencies, minimum standards that financial institutions must follow to
verify the identify of customers, both foreign and domestic, when a customer
opens an account. In addition, the USA PATRIOT Act contains a provision
encouraging cooperation among financial institutions, regulatory authorities and
law enforcement authorities with respect to individuals, entities and
organizations suspected of engaging in terrorist acts or money laundering
activities.
During the first quarter of 2002, the Financial Crimes Enforcement Network
(FinCEN), a bureau of the Department of the Treasury, issued proposed and
interim regulations as mandated by the USA PATRIOT Act that would: (i) prohibit
certain financial institutions from providing correspondent accounts to foreign
shell banks; (ii) require such financial institutions to take reasonable steps
to ensure that correspondent accounts provided to foreign banks are not being
used to indirectly provide banking services to foreign shell banks; (iii)
require certain financial institutions that provide correspondent accounts to
foreign banks to maintain records of the ownership of such foreign banks and
their agents in the United States; (iv) require the termination of correspondent
accounts of foreign banks that fail to turnover their account records in
response to a lawful request from the Secretary of the Treasury or the Attorney
General; and (v) encourage information sharing among financial institutions and
federal law enforcement agencies to identify, prevent, deter and report money
17
laundering and terrorist activity. To date, it has not been possible to predict
the impact the USA PATRIOT Act and its implementing regulations may have on the
Company or the Bank in the future.
On April 11, 2002, the OTS announced the implementation of a restructuring
plan designed to achieve greater operating efficiencies and consistency of
regulation for the thrift industry. Under the plan, the OTS consolidated and
realigned its regional structure into four supervisory regions by eliminating
the Central Region (formerly located in Chicago, Illinois) and apportioning
supervisory responsibilities for the institutions in the states that made up
that region among other regions. Although the OTS will continue to maintain a
Chicago office with a substantial supervisory presence, under the realignment,
the Southeast Region (located in Atlanta, Georgia) assumed oversight of thrifts
in Michigan, Illinois, Indiana and Kentucky, the Midwest Region (located in
Dallas, Texas) assumed oversight of thrifts in Wisconsin and Tennessee and Ohio
became part of the Northeast Region (located in Jersey City, New Jersey). In
addition, North and South Dakota, Colorado and New Mexico were transferred to
the West Region (located in San Francisco, California) from the Midwest region.
STOCK REPURCHASE
During the quarter ended March 31, 2002, the Company repurchased 18,036
shares of common stock at a total cost of $687,000 under its current stock
repurchase program. Through March 31, 2002, a total of 687,543 shares of common
stock of the Company had been purchased under the current and previous
repurchase programs at a total cost of $15.0 million. As of March 31, 2002, the
Company held 526,243 shares of its common stock as treasury stock. During the
period from March 31, 2002 through May 8, 2002, an additional 13,481 shares of
common stock were repurchased at a total cost of $511,000.
STOCK OPTIONS
During the first quarter of 2002, options on 25,435 shares of common stock
were exercised. Between March 31, 2002 and May 8, 2002, options on 7,700 shares
of common stock were exercised. Through May 8, 2002, no notice was received from
the one remaining holder of options of the intention to exercise options.
DIVIDENDS
On April 9, 2002, a cash dividend of $.15 per share was declared, payable
on May 31, 2002 to stockholders of record as of May 15, 2002. This represents a
25% increase in the dividend from the amount paid during the first quarter of
2002, and was the result of the Company's continuing strong earnings
performance. The Company has paid a dividend every quarter since the dividend
program was instituted in the first quarter of 1995. 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.
SPECIAL NOTE CONCERNING FORWARD-LOOKING STATEMENTS
This document (including information incorporated by reference) contains,
and future oral and written statements of the Company and its management may
contain, forward-looking statements, within the meaning of such term in the
Private Securities Litigation Reform Act of 1995, with respect to the financial
condition, results of operations, plans, objectives, future performance and
business of the Company. Forward-looking statements, which may be based upon
beliefs, expectations and assumptions of the Company's management and on
information currently available to management, are generally identifiable by the
use of words such as "believe," "expect," "anticipate," "plan," "intend"
"estimate," "may," "will," "would," "could," "should" or other similar
expressions. Additionally, all statements in this document, including
forward-looking statements, speak only as of the date they are made, and the
Company undertakes no obligation to update any statement in light of new
information or future events.
18
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, the following:
. The strength of the United States economy in general and the
strength of the local economies in which the Company conducts its
operations which may be less favorable than expected and may
result in, among other things, a deterioration in the credit
quality and value of the Company's assets.
. The economic impact of the terrorist attacks that occurred on
September 11th, as well as any future threats and attacks, and
the response of the United States to any such threats and
attacks.
. The effects of, and changes in, federal, state and local laws,
regulations and policies affecting banking, securities, insurance
and monetary and financial matters.
. The effects of changes in interest rates (including the effects
of changes in the rate of prepayments of the Company's assets)
and the policies of the Board of Governors of the Federal Reserve
System.
. The ability of the Company to compete with other financial
institutions as effectively as the Company currently intends due
to increases in competitive pressures in the financial services
sector.
. The inability of the Company to obtain new customers and to
retain existing customers.
. The timely development and acceptance of products and services,
including products and services offered through alternative
delivery channels such as the Internet.
. Technological changes implemented by the Company and by other
parties, including third party vendors, which may be more
difficult or more expensive than anticipated or which may have
unforeseen consequences to the Company and its customers.
. The ability of the Company to develop and maintain secure and
reliable electronic systems.
. The ability of the Company to retain key executives and employees
and the difficulty that the Company may experience in replacing
key executives and employees in an effective manner.
. Consumer spending and saving habits which may change in a manner
that affects the Company's business adversely.
. Business combinations and the integration of acquired businesses
which may be more difficult or expensive than expected.
. The costs, effects and outcomes of existing or future litigation.
. Changes in accounting policies and practices, as may be adopted
by state and federal regulatory agencies and the Financial
Accounting Standards Board.
The ability of the Company to manage the risks associated with the foregoing as
well as anticipated. These risks and uncertainties should be considered in
evaluating forward-looking
19
statements and undue reliance should not be placed on such statements.
Additional information concerning the Company and its business, including other
factors that could materially affect the Company's financial results, is
included in the Company's filings with the Securities and Exchange Commission.
20
TABLE I
NET INTEREST INCOME ANALYSIS (UNAUDITED)
KANKAKEE BANCORP, INC. AND SUBSIDIARY
Three Months Ended March 31,
------------------------------------------------------------------------
2002 2001
---------------------------------- -------------------------------------
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) $393,954 $6,980 7.19% $343,504 $6,856 8.09%
Mortgage-backed securities (2) 18,902 211 4.53% 15,721 282 7.27%
Investments securities (3) 35,674 458 5.21% 50,728 776 6.20%
Other interest-earning assets 19,415 99 2.07% 17,589 244 5.63%
FHLB stock 2,470 31 5.09% 2,144 37 7.00%
-------- ------ -------- ------
Total interest-earning assets 470,415 7,779 6.71% 429,686 8,195 7.73%
-------- ----- -------- ------
Other assets 31,405 28,976
--------- --------
Total assets $501,820 $458,662
======== ========
Interest-bearing liabilities:
Certificate accounts $250,953 2,844 4.60% $246,581 3,607 5.93%
Savings deposits 69,755 356 2.07% 57,080 357 2.54%
Demand and NOW deposits 96,961 371 1.55% 85,622 523 2.48%
Borrowings 38,150 362 3.85% 26,250 363 5.61%
-------- ------ -------- ------
Total interest-bearing liabilities 455,819 3,933 3.50% 415,533 4,850 4.73%
-------- ------ -------- ------
Other liabilities 4,445 4,062
-------- --------
Total liabilities 460,264 419,595
-------- --------
Stockholders' equity 41,556 39,067
-------- --------
Total liabilities and
stockholders' equity $501,820 $458,662
======== ========
Net interest income $3,846 $3,345
====== ======
Net interest rate spread 3.21% 3.00%
==== ====
Net earning assets $ 14,596 $14,153
======== =======
Net yield on average interest-
earning assets (net interest
margin) 3.32% 3.16%
==== ====
Average interest-earning assets to
average interest-bearing liabilities 103.20% 103.41%
====== ======
(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.
21
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 - The Meeting of
---------------------------------------------------
Stockholders of the Company was held on April 26, 2002. At the meeting,
stockholders voted to elect two nominees to the board of directors and
to ratify the appointment of McGladrey & Pullen, LLP, as the Company's
independent auditors for 2002. Because of the contested nature of the
annual meeting, the Company hired IVS Associates, Inc. to act as the
independent inspectors of election. IVS Associates has certified that
William Cheffer and Michael A. Stanfa were elected to serve as
directors with terms expiring in 2005. The matters approved by
stockholders at the meeting and the number of votes cast for, against
or withheld (as well as the number of abstentions) as to each matter
are set forth below:
a. The election of directors for a three year term
expiring in 2005.
---------------------------------------------------------
NOMINEE FOR WITHHOLD
---------------------------------------------------------
William Cheffer 603,911 9,252
---------------------------------------------------------
Michael A. Stanfa 605,598 7,565
---------------------------------------------------------
Lawrence Seidman 478,434` 2,001
---------------------------------------------------------
Robert Williamson 478,434 2,001
---------------------------------------------------------
b. The ratification of McGladrey & Pullen, LLP, as the
auditors for the year ending December 31, 2002.
---------------------------------------------------------
FOR AGAINST ABSTAIN
---------------------------------------------------------
1,062,964 10,640 19,984
---------------------------------------------------------
Item 5. Other Information - None
-----------------
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
a. Exhibits - None
--------
b. Reports on Form 8-K
-------------------
On February 1, 2002, the Company filed a report on Form 8-K
stating under Item 5 that the Company had, on February 1,
2002, issued a news release announcing its earnings for the
quarter ending December 31, 2001, its payment of a quarterly
dividend to its stockholders and the date of its annual
meeting of stockholders.
22
On April 15, 2002, the Company filed a report on Form 8-K
stating under Item 5 that the Company had, on April 15,
2002, issued a news release announcing its earnings for the
quarter ending March 31, 2002, as well as other recent
corporate events.
On April 22, 2002, the Company filed a report on Form 8-K
stating under Item 5 that the Company had, on April 22,
2002, issued a news release announcing that Institutional
Shareholder Services ("ISS"), the nation's leading
independent proxy voting advisory firm, recommended
management's nominees for director at this year's annual
meeting of stockholders.
On May 1, 2002, the Company filed a report on Form 8-K
stating under Item 5 that the Company had, on May 1, 2002,
issued a news release announcing the preliminary results of
the election of directors conducted at the annual meeting of
stockholders on April 26, 2002.
On May 8, 2002, the Company filed a report on Form 8K
stating under Item 5 that the Company had, on May 8, 2002,
issued a news release announcing the certification of the
results of the election of directors conducted at the annual
meeting of stockholders on April 26, 2002.
23
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: May 13, 2002 /s/ LARRY D. HUFFMAN
------------------------ --------------------------------
President and CEO
Date: May 13, 2002 /s/ RONALD J. WALTERS
------------------------ --------------------------------
Vice President and Treasurer
(Principal Financial
And Accounting Officer)
24