-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Kz9DOROwmkktaBtIikhL6ITteBRq5izynMztRvGkocUKYTY8ZmS7dy/cdEUSGRzh 9KRGclN7SUwFdJPbu3qleg== 0000910647-99-000038.txt : 19990212 0000910647-99-000038.hdr.sgml : 19990212 ACCESSION NUMBER: 0000910647-99-000038 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990211 FILER: COMPANY DATA: COMPANY CONFORMED NAME: COLUMBIA FINANCIAL OF KENTUCKY INC CENTRAL INDEX KEY: 0001051000 STANDARD INDUSTRIAL CLASSIFICATION: SAVINGS INSTITUTIONS, NOT FEDERALLY CHARTERED [6036] IRS NUMBER: 611319175 STATE OF INCORPORATION: OH FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-23935 FILM NUMBER: 99529431 BUSINESS ADDRESS: STREET 1: 2497 DIXIE HIGHWAY CITY: FT. MITCHELL STATE: KY ZIP: 41017 BUSINESS PHONE: 6063312419 MAIL ADDRESS: STREET 1: 2497 DIXIE HIGHWAY CITY: FT.MITCHELL STATE: KY ZIP: 41017 10QSB 1 BODY OF FORM 10-QSB FOR 1ST QUARTER FORM 10-QSB SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1998 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ------------- ------------- Commission File No. 0-23935 --------- COLUMBIA FINANCIAL OF KENTUCKY, INC. ------------------------------------------------------ (Exact name of registrant as specified in its charter) Ohio 61-1319175 - ------------------------------- ---------------------- (State or other jurisdiction of (I.R.S. Employer incorporation of organization) Identification Number) 2497 Dixie Highway Ft. Mitchell, Kentucky 41017-3085 - ------------------------------- ---------- (Address of principal executive (Zip Code) office) Registrant's telephone number, including area code: (606) 331-2419 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 ------ ----- State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: As of February 9, 1999, the latest practicable date, 2,671,450 common shares of the registrant, no par value, were issued and outstanding. INDEX ----- COLUMBIA FINANCIAL OF KENTUCKY, INC. Page ---- PART I - FINANCIAL INFORMATION Consolidated Statements of Financial Condition 3 Consolidated Statements of Income 4 Consolidated Statements of Cash Flows 5 Notes to Consolidated Financial Statements 6 Management's Discussion and Analysis of Financial Condition and Results of Operations 8 PART II - OTHER INFORMATION 12 SIGNATURES 16 Columbia Financial of Kentucky, Inc. CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
Dec. 31 Sept. 30 1998 1998 ------- -------- (In Thousands Except Share Data) ASSETS Cash and due from Banks $ 610 $ 631 Interest Bearing Deposits in Other Banks 7,243 5,629 --------------------- Total Cash and Cash Equivalents 7,853 6,260 Investment Securities Held to Maturity, At Cost (Market Value of $18,766 and $19,148 at December 31, 1998 and September 30, 1998) 18,019 18,980 Available-for-Sale, At Market Value 4,081 4,091 Mortgage-Backed Securities, At Cost (Market Value of $22,188 and $22,604 at December 31, 1998 and September 30, 1998) 21,754 22,352 Loans Receivable, Net 64,445 62,161 Interest Receivable 803 891 Premises and Equipment, Net 1,603 1,625 Federal Home Loan Bank Stock, At Cost 1,377 1,354 Deferred Federal Income Tax Asset 61 - Other Assets 92 86 --------------------- Total Assets $120,088 $117,800 ===================== LIABILITIES AND EQUITY Liabilities Deposits $ 81,568 $ 79,484 Advances from Borrowers for Taxes and Insurance 150 343 Accrued Federal Income Tax Liability 212 5 Deferred Federal Income Tax Liability 162 172 Other Liabilities 84 78 --------------------- Total Liabilities 82,176 80,082 --------------------- Equity Preferred Stock (1,000,000 Shares, No Par Value, Authorized, No Shares Issued or Outstanding) - - Common Stock (6,000,000 Shares, No Par Value, Authorized, 2,671,450 Issued and Outstanding) - - Additional Paid in Capital 26,215 25,821 Retained Earnings - Substantially Restricted 13,563 13,834 Shares Acquired by Employee Stock Ownership Plan (ESOP) (1,866) (1,937) --------------------- Total Equity 37,912 37,718 --------------------- Total Liabilities and Equity $120,088 $117,800 =====================
Columbia Financial of Kentucky, Inc. CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended Dec. 31, 1998 1997 ---- ---- (In Thousands Except Share Data) Interest Income Loans $1,363 $1,348 Mortgage-Backed Securities 345 279 Investments 359 248 Interest-Bearing Deposits 65 57 ------------------------ Total Interest Income 2,132 1,932 ------------------------ Interest Expense Deposits 935 1,098 ------------------------ Net Interest Income 1,197 834 Provision for Losses on Loans - 74 ------------------------ Net Interest Income After Provision for Losses on Loans 1,197 760 ------------------------ Non-Interest Income 31 27 ------------------------ Non-Interest Expense Salaries and Employee Benefits 495 425 Occupancy Expense of Premises 65 64 Federal Deposit Insurance Premium 13 14 Data Processing Services 24 28 Advertising 30 35 Other 173 141 ------------------------ Total Non-Interest Expense 800 707 ------------------------ Income Before Federal Income Tax Expense 428 80 Federal Income Tax Expense 145 27 ------------------------ Net Income $ 283 $ 53 ======================== Other Comprehensive Income - - ------------------------ Total Comprehensive Income $ 283 $ 53 ======================== Earnings Per Share Basic $ 0.11 N/A ------ Diluted $ 0.11 N/A ------
Columbia Financial of Kentucky, Inc. STATEMENTS OF CASH FLOWS
Three Months Ended December 31, ------------------ 1998 1997 ---- ---- (In Thousands) Cash Flows From Operating Activities Net Income $ 283 $ 53 Reconciliation of Net Income with Cash Flows from Operations Depreciation 27 30 Provision for Losses on Loans - 74 FHLB Stock Dividends (23) (23) Deferred Federal Income Tax (71) - Changes In Interest Receivable 88 (13) Other Assets (6) (55) Federal Income Tax Receivable / Liability 207 27 Other Liabilities 6 (36) ------------------- Net Cash Provided by Operating Activities 511 57 ------------------- Cash Flows From Investing Activities Investment Securities Purchased (6,996) (4,000) Matured 7,967 2,010 Mortgage-Backed Securities Principal Collected 598 232 Loan Originations and Repayments, Net (2,284) 141 Deferred Conversion Costs - (78) Purchases of Property and Equipment (5) (27) ------------------- Net Cash Used by Investing Activities (720) (1,722) ------------------- Cash Flows From Financing Activities Advances from Borrowers for Taxes and Insurance (193) (296) Change in Deposits 2,084 (740) Dividends Paid (187) - ESOP Shares Released 98 - ------------------- Net Cash Provided (Used) by Financing Activities by Financing Activities 1,802 (1,036) ------------------- Change in Cash and Cash Equivalents 1,593 (2,701) Beginning Balance, Cash and Cash Equivalents 6,260 6,827 ------------------- Ending Balance, Cash and Cash Equivalents $ 7,853 $ 4,126 ===================
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS COLUMBIA FINANCIAL OF KENTUCKY, INC. For the three-month period ended December 31, 1998 and 1997 1. Basis of Presentation --------------------- The accompanying unaudited financial statements were prepared in accordance with instructions for Form 10-QSB, and, therefore, do not include information or footnotes necessary for complete presentation of financial position, results of operations and cash flows in conformity with generally accepted accounting principles. Accordingly, these financial statements should be read in conjunction with the consolidated financial statements and notes thereto of Columbia Federal Savings Bank for the year ended September 30, 1998. However, in the opinion of management, all adjustments (consisting of only normal recurring accruals) which are necessary for fair presentation of the consolidated financial statements have been included. The results of operations for the three-month period ended December 31, 1998 and 1997 are not necessarily indicative of the results that may be expected for an entire fiscal year. The accompanying consolidated financial statements include the accounts of Columbia Financial of Kentucky, Inc. ("CFKY") and Columbia Federal Savings Bank ("Columbia Federal"). All significant intercompany items have been eliminated. 2. Impact of Recent Accounting Standards ------------------------------------- In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive Income," which establishes standards for reporting and displaying comprehensive income and its components (revenues, expenses, gains and losses) in a full set of general-purpose financial statements. SFAS No. 130 requires that all items that are required to be recognized under accounting standards as components of comprehensive income be reported in a financial statement that is displayed with the same prominence as other financial statements and requires that an enterprise (a) classify items of other comprehensive income by their nature in a financial statement and (b) display the accumulated balance of other comprehensive income separately from retained earnings and additional paid-in capital in the equity section of the statement of financial position. Under existing accounting standards, other comprehensive income shall be classified separately into foreign currency items, minimum pension liability adjustments and unrealized gains and losses on certain investments in debt and equity securities. The provisions of SFAS No. 130 are effective for fiscal years beginning after December 15, 1997. The adoption of SFAS No. 130 has not had a material impact on the disclosure requirements of CFKY. 3. Consummation of the Conversion to a Stock Savings Bank ------------------------------------------------------ On October 9, 1997, the Board of Directors of Columbia Federal unanimously adopted a Plan of Conversion to convert Columbia Federal from a federal mutual savings bank to a federal stock savings bank with the concurrent formation of a newly formed holding company, CFKY, incorporated under the laws of the State of Ohio. The conversion was accomplished through the adoption of a Federal Stock Charter and Federal Stock Bylaws and the sale of CFKY's common shares in an amount equal to the pro forma market value of Columbia Federal after giving effect to the conversion. A subscription offering of the shares of CFKY to Columbia Federal's members and to an employee stock benefit plan was conducted. The conversion was completed on April 15, 1998 and resulted in the issuance of 2,671,450 common shares of CFKY which, after consideration of offering expenses totaling approximately $775,000 and 213,716 shares allocated to the Columbia Federal of Kentucky, Inc. Employee Stock Ownership Plan (the "ESOP"), resulted in net proceeds of $23.8 million. At the time of conversion, Columbia Federal established a liquidation account in an amount equal to its regulatory capital as of September 30, 1997. The liquidation account will be maintained for the benefit of eligible depositors who continue to maintain their accounts at Columbia Federal after the conversion. The liquidation account will be reduced annually to the extent eligible depositors have reduced their qualifying deposits. Subsequent increases in deposits will not restore an eligible account holder's interest in the liquidation account. In the event of complete liquidation, and only in such event, each eligible depositor will be entitled to receive a distribution from the liquidation account in an amount proportionate to the current adjusted qualifying balances for accounts then held. Columbia Federal may not pay dividends that would reduce shareholders' equity below the required liquidation account balance. Under OTS regulations, limitations have been imposed on all "capital distributions", including cash dividends by savings institutions. The regulation establishes a three-tiered system of restrictions, with the greatest flexibility afforded to thrifts that are both well capitalized and given favorable qualitative examination ratings by the OTS. 4. Pending Legislative Changes --------------------------- Congress is considering legislation to eliminate the federal savings association charter and the separate regulation of federal thrifts, including federal savings banks. Pursuant to such legislation, Congress may develop a common charter for all financial institutions, eliminate the OTS and regulate Columbia Federal under federal law as a bank or require Columbia Federal to change its charter, which would likely change the type of activities in which Columbia Federal may engage and would probably subject Columbia Federal to more regulation by the FDIC. In addition, CFKY may become subject to different holding company regulations, including separate capital requirements and limitations on activities. Although CFKY cannot predict whether or when Congress may actually pass legislation regarding CFKY's and Columbia Federal's regulatory requirements or charter, it is not anticipated that the current activities of CFKY or Columbia Federal will be materially affected by such legislation. 5. Earnings Per Share ------------------ Basic earnings per share is computed based upon the weighted average shares outstanding during the period, less shares in the ESOP that are unallocated and not committed to be released. Weighted average common shares outstanding, which give effect to 193,661 unallocated ESOP shares, totaled 2,477,789 shares for the three-month period ended December 31, 1998. Diluted earnings per share is computed taking into consideration common shares outstanding and dilutive potential common shares. Presently, CFKY has no dilutive potential common shares. Weighted-average shares outstanding for purposes of computing diluted earnings per share totaled 2,477,789 for the three months ended December 31, 1998. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS COLUMBIA FINANCIAL OF KENTUCKY, INC. Note Regarding Forward-Looking Statements ----------------------------------------- In addition to historical information contained herein, this Form 10- QSB contains forward-looking statements that involve risks and uncertainties. Economic circumstances, Columbia Federal's operations and actual results could differ significantly from those discussed in the forward-looking statements. Some of the factors that could cause or contribute to such differences are discussed herein but also include changes in the economy and interest rates in the nation and Columbia Federal's market area generally. Some of the forward-looking statements included herein are the statements regarding management's determination of the amount of allowance for losses on loans, the adequacy of collateral on nonperforming loans, legislative changes with respect to the federal thrift charter, the effect of certain accounting pronouncements and the year 2000. See Exhibit 99 "Safe Harbor Under the Private Securities Litigation Reform Act of 1995," attached hereto and incorporated herein by reference. Discussion of Financial Condition Changes from September 30, 1998 to - -------------------------------------------------------------------- December 31, 1998 - ----------------- General. CFKY's assets totaled $120.1 million at December 31,1998, an increase of $2.3 million, or 2.0%, from $117.8 million at September 30, 1998. The increase resulted primarily from a $1.6 million increase in cash and cash equivalents and a $2.3 million increase in loans receivable, partially offset by a $961,000 decrease in held-to-maturity securities and a $598,000 decrease in mortgage-backed securities. Deposits increased $2.1 million and advances from borrowers for taxes and insurance decreased $193,000. Liquid Assets and Investments. Liquid assets (cash and cash equivalents) totaled $7.9 million at December 31, 1998, an increase of $1.6 million, or 25%, from the total at September 30, 1998. Loans Receivable. Net loans receivable equaled $64.4 million at December 31,1998, compared to $62.2 million at September 30, 1998, a 3.7% increase, attributable to loans being originated more rapidly than loans were being repaid. Allowance for Losses on Loans. Columbia Federal's allowance for loan losses totaled $300,000 at December 31, 1998, and September 30, 1998. The allowance represented .47% of total loans at December 31, 1998 and .48% at September 30, 1998. As of September 30, 1998, there were $173,000 in nonperforming loans, which was .28% of total net loans at that date. As of December 31,1998, there was $169,000 in nonperforming loans which was .26% of total net loans at that date. It is management's policy to maintain an allowance for estimated losses based on the perceived risk of loss in the loan portfolio. In assessing risk, management considers historical loss experience, the volume and type of lending conducted by the Bank, industry standards, past due loans, general economic conditions and other factors related to the collectibility of the loan portfolio. The following table sets forth the composition of the Bank's portfolio by type of loan at the dates indicated.
December 31, 1998 September 30, 1998 ------------------- ------------------- Amount Percent Amount Percent ------ ------- ------ ------- Real Estate Loans One-to-four Family Residential $55,031 81.48% $53,579 81.21% Multi-family and Non-residential 7,729 11.44 7,440 11.28 Land and Construction: Nonresidential Real Estate 830 1.23 704 1.07 Construction Loans 3,932 5.82 4,228 6.41 ------------------------------------------ Total Real Estate Loans 67,522 99.97 65,951 99.96 ------------------------------------------ Consumer Loans Savings Accounts 17 0.02 20 0.03 Other Consumer Loans 4 0.01 5 0.01 ------------------------------------------ Total Consumer Loans 21 0.03 25 0.04 ------------------------------------------ Total Loans 67,543 100.00% 65,976 100.00% ------- ====== ------- ====== Less Loans in Process 2,024 2,759 Deferred Loan Fees 774 756 Allowance for Loan Losses 300 300 ------- ------- Loans Receivable, Net $64,445 $62,161 ======= =======
The following is the change in the allowance for loan losses for the periods indicated.
Three-Months Ended Year Ended December 31, 1998 September 30, 1998 ------------------ ------------------ Allowance for Loan Losses Balance at Beginning of Period $300 $300 Net (Charge-Offs) Recoveries - (74) Provision for Loan Losses - 74 --------------------------- Balance at End of Period $300 $300 ===========================
Although management believes that its allowance for loan losses at December 31, 1998, was adequate based upon the available facts and circumstances, there can be no assurances that additions to such allowance will not be necessary in future periods, which could adversely affect CFKY's results of operations. Deposits. Total deposits increased by $2.1 million, to $81.6 million, at December 31, 1998, from $79.5 million at September 30, 1998. At December 31, 1998, certificates of deposit that will mature within one year accounted for 39.4% of Columbia Federal's deposit liabilities. Regulatory Capital Requirements. Columbia Federal is required by OTS regulations to meet certain minimum capital requirements. These requirements call for tangible capital of 1.5% of adjusted total assets, core capital (which for Columbia Federal is equal to tangible capital) of 3% of adjusted total assets, and risk-based capital (which for Columbia Federal consists of core capital and general valuation allowances) equal to 8% of risk-weighted assets. Assets and certain off balance sheet items are weighted at percentage levels ranging from 0% to 100% depending on their relative risk. The OTS has proposed to amend the core capital requirement so that those associations that do not have the highest examination rating and exceed an acceptable level of risk will be required to maintain core capital from 4% to 5%, depending on the association's examination rating and overall risk. Columbia Federal does not anticipate that it will be adversely affected if the core capital requirement regulation is amended as proposed. Columbia Federal's core capital ratio at December 31, 1998, was 22.2%. The OTS has adopted regulations governing prompt corrective action to resolve the problems of capital deficient and otherwise troubled savings associations. At each successively lower capital category, an institution is subject to more restrictive and numerous mandatory or discretionary regulatory actions or limits, and the OTS has less flexibility in determining how to resolve the problems of the institution. In addition, the OTS can downgrade an association's designation notwithstanding its capital level, based on less than satisfactory examination ratings in areas other than capital or, after notice and an opportunity for hearing, if the institution is deemed to be in an unsafe or unsound condition or to be engaging in an unsafe or unsound practice. Each undercapitalized association must submit a capital restoration plan to the OTS within 45 days after it becomes undercapitalized. Such institution will be subject to increased monitoring and asset growth restrictions and will be required to obtain prior approval for acquisitions, branching and engaging in new lines of business. A critically undercapitalized institution must be placed in conservatorship or receivership within 90 days after reaching such capitalization level, except under limited circumstances. Columbia Federal's capital at December 31, 1998 met the standards for the highest category, a "well-capitalized" association. Comparison of Operating Results for the Three-Month Periods Ended December - -------------------------------------------------------------------------- 31, 1998 and 1997 - ----------------- General. CFKY's recorded net income of $283,000 for the three months ended December 31, 1998, compared to income of $53,000 for the same period in 1997, a $230,000 and 434% increase. The increase resulted primarily from a $200,000 increase in interest income and decreases in interest expense of $163,000 and provision for loan losses of $74,000. Such changes were offset by a $93,000 increase in non-interest expenses and a $118,000 increase in income tax expense. Interest Income. Interest income increased $200,000 for the three months ended December 31, 1998 compared to the three months ended December 31, 1997. This was primarily a result of an increase of $15.6 million in average balances in interest earning assets as a result of additional funds to invest from the offering proceeds, partially offset by a decrease of 35 basis points, from 7.73% for the three months ended December 31, 1997 to 7.38% for the three months ended December 31, 1998, in the yield on interest earning assets. Interest Expense. Interest expense decreased $163,000 for the three months ended December 31, 1998 compared to the three months ended December 31, 1997. This decrease was the result of a decrease in cost of funds from 4.91% for the three months ended December 31,1997 to 4.66% for the three months ended December 31, 1998, and by a decrease in average deposits of $9.3 million from $89.5 million for the three months ended December 31, 1997 to $80.2 for the three months ended December 31,1998. Columbia Federal's net interest rate spread was 2.72% for the three months ended December 31, 1998, compared to 2.82% for the three months ended December 31, 1997. Non-interest Income and Non-interest Expense. Non-interest income was $31,000 for the three months ended December 31, 1998, compared to $27,000 for the same period in 1997, primarily due to an increase in fee income. Non-interest expense increased $93,000, or 13.2%, to $800,000. The primary reason for this increase was the increase in salaries and employee benefits from $425,000 for the three months ended December 31, 1997, to $495,000 for the three months ended December 31, 1998 as a result of costs associated with CFKY's new ESOP. Also, other expenses increased $32,000 for the period primarily due to expenses associated with the operation of a public company. Year 2000 Readiness - ------------------- Because the Bank's operations rely extensively on computer systems, the Bank is addressing problems associated with the possibility that computer systems will not recognize the year 2000 ("Y2K") correctly. The Bank has developed a Year 2000 Plan, which was presented to the Board of Directors in 1997. The Board of Directors appointed a Year 2000 Committee, which reports to the Board of Directors quarterly. The Bank relies primarily on third-party vendors for its computer output and processing, as well as other significant functions and services, such as securities safekeeping services, ATM service, and wire transfers. The Year 2000 Committee is working with the vendors to assess their Y2K readiness. Based upon an initial assessment, the Board of Directors believes that with planned modifications to existing software and hardware and planned conversions to new software and hardware, the third-party vendors are taking the appropriate steps to ensure that critical systems will function properly. The planned modifications and conversions should be completed and tested by June 30, 1999. All date-dependent equipment and related software throughout the Bank have been inventoried and tested for Y2K capabilities. Equipment identified as not being Y2K compatible has been replaced. The Bank has estimated that the cost for new hardware and software will be approximately $15,000. If the modifications and conversions by both third-party vendors and the Bank are not completed on a timely basis or if they fail to function properly, the operations and financial condition of the Company could be materially adversely affected. The Bank is developing contingency plans for continued operations in the event of system failure. In addition, financial institutions may experience increases in problem loans and credit losses in the event that borrowers fail to prepare properly for Y2K, and higher funding costs could result if consumers react to publicity about the issue by withdrawing deposits. The Bank is assessing such risks among its customers. The Company could also be materially adversely affected if other third parties, such as governmental agencies, clearing houses, telephone companies, utilities and other service providers fail to prepare properly. The Bank is therefore attempting to assess these risks and take action to minimize their effect. PART II COLUMBIA FINANCIAL OF KENTUCKY, INC. Item 1. Legal Proceedings ----------------- Not applicable. Item 2. Changes in Securities and Use of Proceeds ----------------------------------------- (a) Not applicable. (b) Not applicable. (c) Not applicable. (d) Not applicable. Item 3. Defaults Upon Senior Securities ------------------------------- Not applicable. Item 4. Submission of Matters to a Vote of Security Holders --------------------------------------------------- The Corporation held its 1998 annual meeting of stockholders on Thursday, January 28, 1998. The following information sets forth the matters considered at such annual meeting and the voting with respect to such matters. Broker 1. Election of Directors For Withheld Non Votes --- -------- --------- a. Daniel T. Mistler 1,783,867 34,590 0 b. Geraldine Zembrodt 1,784,105 34,352 0 c. Fred A. Tobergte, Sr. 1,774,750 43,707 0 2. Ratification of Auditors Broker For Against Abstain Non Votes --- ------- ------- --------- 1,793,192 13,420 11,845 0 Item 5. Other Information ----------------- On January 15, 1999, Columbia Financial of Kentucky, Inc. announced that it intended to commence at the end of January, 1999, a repurchase program in which up to 5% of its outstanding common shares may periodically be purchased in the over-the-counter market during the next twelve months. The timing of purchases, the number of shares to be purchased, and the price to be paid will depend upon the availability of shares, the prevailing market prices and any other considerations which may, in the opinion of the Board of Directors or management, affect the advisability of purchasing of CFKY shares. The repurchase program will be funded by excess liquidity. Item 6. Exhibits and Reports on Form 8-K -------------------------------- Exhibit 3.1 - Articles of Incorporation of Columbia Financial of Kentucky, Inc. Incorporated by reference to Registration Statement on Form 8-A of the Registrant filed with the SEC on March 20, 1998, Exhibit 2(a) and 2(b). Exhibit 3.2 - Code of Regulations of Columbia Financial of Kentucky, Inc. Incorporated by reference to Registration Statement on Form 8-A of the Registrant filed with the SEC on March 20, 1998, Exhibit 2(c). Exhibit 27 - Financial Data Schedule Exhibit 99 - Safe Harbor Under the Private Securities Litigation Reform Act of 1995 SIGNATURES COLUMBIA FINANCIAL OF KENTUCKY, INC. Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: February 9, 1999 By: /s/ Robert V. Lynch ---------------- -------------------------------- Robert V. Lynch, President and Chief Executive Officer Date: February 9, 1999 By: /s/ Abijah Adams ---------------- -------------------------------- Abijah Adams, Controller EX-27 2 FDS ARTICLE 9 FOR 1ST QUARTER
9 1,000 3-MOS SEP-30-1999 DEC-31-1998 610 7,243 0 0 4,081 39,773 40,954 64,445 300 120,088 81,568 0 608 0 0 0 0 37,912 120,088 1,363 704 65 2,132 935 935 1,197 0 0 800 428 428 0 0 283 0.11 0.11 4.14 0 169 0 0 300 0 0 300 300 0 0
EX-99.2 3 SAFE HARBOR UNDER THE PRIVATE SECURITIES, ETC. EXHIBIT 99.2 Safe Harbor Under the Private Securities Litigation Reform Act of 1995 ---------------------------------------------------------------------- The Private Securities Litigation Reform Act of 1995 (the "Act") provides a "safe harbor" for forward-looking statements to encourage companies to provide prospective information about their companies, so long as those statements are identified as forward-looking and are accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those discussed in the statement. Columbia Financial of Kentucky, Inc. ("CFKY") desires to take advantage of the "safe harbor" provisions of the Act. Certain information, particularly information regarding future economic performance and finances and plans and objectives of management, contained or incorporated by referencing CFKY's Form 10-QSB for the three-months ended December 31, 1998, is forward-looking. In some cases, information regarding certain important factors that could cause actual results of operations or outcomes of other events to differ materially from any such forward-looking statement appears together with such statement. In addition, forward-looking statements are subject to other risks and uncertainties affecting the financial institutions industry, including but not limited to, the following: Interest Rate Risk - ------------------ CFKY's operating results are dependent to a significant degree on its net interest income, which is the difference between interest income from loans and investments and interest expense on deposits and borrowings. The interest income and interest expense of CFKY change as the interest rates and mortgages, securities and other assets and on deposits and other liabilities change. Interest rates may change because of general economic conditions, the policies of various regulatory authorities and other factors beyond CFKY's control. The interest rates on specific assets and liabilities of CFKY will change or "reprice" in accordance with the contractual terms of the asset or liability instrument and in accordance with customer reaction to general economic trends. In a rising interest rate environment, loans tend to prepay slowly and new loans at higher rates increase slowly, while interest paid on deposits increases readily because the terms to maturity of deposits tend to be shorter than the terms to maturity or prepayment of loans. Such differences in the adjustment of interest rates on assets and liabilities may negatively affect CFKY's income. Moreover, rising interest rates tend to decrease loan demand in general, negatively affecting CFKY's income. Possible Inadequacy of the Allowance for Loan Losses - ---------------------------------------------------- Columbia Federal Savings Bank ("Columbia Federal") maintains an allowance for loan losses based upon a number of relevant factors, including, but not limited to, trends in the level of nonperforming assets and classified loans, current and anticipated economic conditions in the primary lending area, past loss experience, possible losses arising from specific problem assets and changes in the composition of the loan portfolio. While the Board of Directors of Columbia Federal believes that it uses the best information available to determine the allowance for loan losses, unforeseen market conditions could result in material adjustments, and net earnings could be significantly adversely affected if circumstances differ substantially from the assumptions used in making the final determination. Loans not secured by one-to four-family residential real estate are generally considered to involve greater risk of loss than loans secured by one- to four-family residential real estate due, in part, to the effects of general economic conditions. The repayment of multifamily residential and nonresidential real estate loans generally depends upon the cash flow from the operation of the property, which may be negatively affected by national and local economic conditions that cause leases not to be renewed or that negatively affect the operations of a commercial borrower. Construction loans may also be negatively affected by such economic conditions, particularly loans made to developers who do not have a buyer for a property before the loan is made. The risk of default on consumer loans increases during periods of recession, high unemployment and other adverse economic conditions. When consumers have trouble paying their bills, they are more likely to pay mortgage loans than consumer loans, and the collateral securing such loans, if any, may decrease in value more rapidly than the outstanding balance of the loan. Competition - ----------- Columbia Federal competes for deposits with other savings associations, commercial banks and credit unions and issuers of commercial paper and other securities, such as shares in money market mutual funds. The primary factors in competing for deposits are interest rates and convenience of office location. In making loans, Columbia Federal competes with other savings associations, commercial banks, consumer finance companies, credit unions, leasing companies, mortgage companies and other lenders. Competition is affected by, among other things, the general availability of lendable funds, general and local economic conditions, current interest rate levels and other factors that are not readily predictable. The size of financial institutions competing with Columbia Federal is likely to increase as a result of changes in statutes and regulations eliminating various restrictions on interstate and inter- industry branching and acquisitions. Such increased competition may have an adverse effect upon CFKY. Legislation and Regulation that may Adversely Affect CFKY's Earnings - -------------------------------------------------------------------- Columbia Federal is subject to extensive regulation by the Office of Thrift Supervision (the "OTS") and the Federal Deposit Insurance Corporation (the "FDIC") and is periodically examined by such regulatory agencies to test compliance with various regulatory requirements. As a savings and loan holding company, CFKY is also subject to regulation and examination by the OTS. Such supervision and regulation of Columbia Federal and CFKY are intended primarily for the protection of depositors and not for the maximization of shareholder value and may affect the ability of the company to engage in various business activities. The assessments, filing fees and other costs associated with reports, examinations and other regulatory matters are significant and may have an adverse effect on CFKY's net earnings. The FDIC is authorized to establish separate annual assessment rates for deposit insurance of members of the Bank Insurance Fund (the "BIF") and the Savings Association Insurance Fund (the "SAIF"). The FDIC may increase assessment rates for either fund if necessary to restore the fund's ratio of reserves to insured deposits to the target level within a reasonable time and may decrease such rates if such target level has been met. The FDIC has established a risk-based assessment system for both SAIF and BIF members. Under such system, assessments may vary depending on the risk the institution poses to its deposit insurance fund. Such risk level is determined by reference to the institution's capital level and the FDIC's level of supervisory concern about the institution. Congress is considering legislation to eliminate the federal thrift charter and the separate federal regulation of savings and loan associations. As a result, Columbia Federal may have to convert to a different financial institution charter or might be regulated under federal law as a bank. If Columbia Federal becomes a bank or is regulated as a bank, it would become subject to the more restrictive holding company requirements, including activity limits and capital requirements similar to those imposed on Columbia Federal. CFKY cannot predict the impact of the conversion of Columbia Federal to, or regulation of Columbia Federal as, a bank until any legislation requiring such change is enacted. -----END PRIVACY-ENHANCED MESSAGE-----