10-Q 1 l86496ae10-q.txt COLUMBIA FINANCIAL OF KENTUCKY, INC. FORM 10-Q 1 FORM 10-Q 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, 2000 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 ------------------------------- -------------- (Zip Code) (Address of principal executive office) Registrant's telephone number, including area code: (859) 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 12, 2001, the latest practicable date, 2,625,950 common shares of the registrant, no par value, were issued and outstanding. Page 1 of 14 2 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 Quantitative and Qualitative Disclosures About Market Risk 11 PART II - OTHER INFORMATION 12 SIGNATURES 14 Page 2 of 14 3 COLUMBIA FINANCIAL OF KENTUCKY, INC. CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

~~Page~~DEC. 31 SEPT. 30 2000 2000 --------------- ~~PART~~---------------- I(In Thousands, Except Share Data) ASSETS Cash and due from Banks $ 582 $ 605 Interest Bearing Deposits in Other Banks 3,893 4,385 --------- ~~FINANCIAL~~--------- ~~INFORMATION~~Total ~~Consolidated~~Cash ~~Statements~~and Cash Equivalents 4,475 4,990 Investment Securities Held to Maturity, At Cost (Market Value of ~~Financial~~$14,746 ~~Condition~~and 3$14,512 ~~Consolidated~~at ~~Statements~~December 31, and and September 30, 2000, Respectively) 14,838 14,842 Mortgage-Backed Securities, At Cost (Market Value of $15,798 and $16,360 at December 31, and and September 30, 2000, Respectively) 16,023 16,637 Loans Receivable, Net 71,171 70,682 Interest Receivable 744 836 Premises and Equipment, Net 1,480 1,500 Federal Home Loan Bank Stock, At Cost 1,588 1,559 Federal Income 4Tax ~~Consolidated~~- ~~Statements~~Refund ofReceivable ~~Cash~~-- ~~Flows~~409 5Deferred ~~Notes~~Federal toIncome ~~Consolidated~~Tax ~~Financial~~Asset ~~Statements~~48 6-- ~~Management~~Other Assets 82 59 --------- --------- Total Assets $ 110,449 $ 111,514 ========= ========= LIABILITIES AND SHAREHOLDERS's ~~Discussion~~EQUITY Liabilities Deposits $ 76,646 $ 75,462 Short-Term Borrowings 4,000 6,000 Advances from Borrowers for Taxes and ~~Analysis~~Insurance of151 ~~Financial~~405 ~~Condition~~Accrued Federal Income Tax Liability 52 -- Deferred Federal Income Tax Liability 160 250 Other Liabilities 320 286 --------- --------- Total Liabilities 81,329 82,403 --------- --------- Shareholders' 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, 2,650,950 Issued and ~~Results~~Outstanding) of-- ~~Operations~~-- 8Additional ~~PART~~Paid IIin Capital 18,832 18,266 Retained Earnings - ~~OTHER~~Substantially ~~INFORMATION~~Restricted 1213,194 ~~SIGNATURES~~13,817 15Treasury Stock, 20,500 Shares at Cost (489) (489) Unearned ESOP Shares (1,294) (1,360) Shares Acquired by RRP Trust (1,123) (1,123) --------- --------- Total Shareholders' Equity 29,120 29,111 --------- --------- Total Liabilities and Shareholders' Equity $ 110,449 $ 111,514 ========= =========

Page 3 of 14 4 COLUMBIA FINANCIAL OF KENTUCKY, INC. CONSOLIDATED STATEMENTS OF INCOME

~~(Unaudited)~~THREE ~~June~~MONTHS 30ENDED ~~Sept~~DEC. 3031, -------- -------- ~~2000 1999~~ -------- -------- ~~(Dollars~~2000 in1999 ~~Thousands) ASSETS Cash and due from Banks $ 596 $ 937 Interest Bearing Deposits in Other Banks 2,802 2,504~~ -------------- ------------- ~~Total~~(In ~~Cash~~Thousands ~~and~~Except ~~Cash~~Share ~~Equivalents~~Data) ~~3,398~~INTEREST ~~3,441~~INCOME ~~Investment~~Loans ~~Securities Held to Maturity, At Cost (Market Value of~~ $151,~~281~~444 ~~and~~ $161,~~664~~450 ~~at June 30, 2000 and September 30, 1999) 15,866 16,999~~ Mortgage-Backed Securities, At266 ~~Cost~~302 ~~(Market~~Investments ~~Value~~252 of267 ~~$17,073~~Interest-Bearing ~~and~~Deposits ~~$19,610~~52 at28 ~~June~~------ ~~30,~~------ ~~2000~~Total ~~and September 30, 1999) 17,391 19,968 Loans Receivable, Net 71,366 69,089~~ Interest ~~Receivable~~Income ~~769 867 Premises and Equipment~~2,014 ~~Net 1~~2,~~517~~047 ~~1,534 Federal Home Loan Bank Stock, At Cost 1,530 1,451 Federal Income Tax~~ ------ ~~Refund Receivable~~ ------ 11INTEREST ~~Deferred~~EXPENSE ~~Federal~~Deposits ~~Income~~940 ~~Tax~~860 ~~Asset~~FHLB ~~207~~Advances --82 ~~Other~~39 ~~Assets 49 61~~ -------- -------- Total ~~Assets~~Interest ~~$112,093~~Expense ~~$113~~1,~~421~~022 ~~========~~899 ~~========~~------ ~~LIABILITIES~~------ ~~AND~~NET ~~EQUITY~~INTEREST ~~Liabilities~~INCOME ~~Deposits~~992 ~~$ 75,332 $ 81,654 Short-Term Borrowings 7,000~~ 1,~~000~~148 ~~Advances~~PROVISION ~~from~~FOR ~~Borrowers~~LOSSES ~~for~~ON ~~Taxes~~LOANS ~~and~~-- ~~Insurance~~-- ~~358~~------ ~~381 Accrued Federal Income Tax Liability 85~~ ------ ~~Deferred~~Net ~~Federal~~Interest Income ~~Tax~~After ~~Liability~~Provision --for 45Losses ~~Other~~on ~~Liabilities~~Loans ~~281~~992 ~~162~~1,148 -------- ------ NON--INTEREST ~~Total~~INCOME ~~Liabilities~~23 ~~83,056~~48 ~~83,242~~ -------- ------ NON--INTEREST ~~Equity~~EXPENSE ~~Preferred~~Salaries ~~Stock~~and ~~(1,000,000~~Employee ~~Shares,~~Benefits No553 ~~Par~~596 ~~Value,~~Occupancy ~~Authorized,~~Expense Noof ~~Shares~~Premises ~~Issued~~65 or74 ~~Outstanding)~~Federal --Deposit --Insurance ~~Common~~Premiums ~~Stock~~4 ~~(6,000,000~~13 ~~Shares,~~Data NoProcessing ~~Par~~Services ~~Value,~~33 ~~Authorized,~~28 ~~2,650,950~~Advertising ~~Issued~~18 ~~and~~21 ~~Outstanding)~~Other 147 180 ------ ------ ~~Additional~~Total ~~Paid~~Non-Interest InExpense ~~Capital~~820 ~~18,280~~912 ~~18,194~~------ ~~Retained Earnings~~ ------ ~~Substantially~~Income ~~Restricted~~Before ~~13,854~~Federal ~~13,890~~Income ~~Treasury~~Tax ~~Stock~~Expense ~~(20,500~~195 ~~shares~~284 atFEDERAL ~~cost)~~INCOME ~~(262)~~TAX ~~(262)~~EXPENSE ~~Unearned~~66 ~~ESOP~~96 ~~Shares (1,432) (1,643) Shares Acquired by RRP Trust (1,403)~~ - -----~~---~~ -------- ~~Total~~NET ~~Equity~~INCOME ~~29,037~~$ ~~30,179~~129 ~~--------~~$ ~~--------~~188 ~~Total~~====== ~~Liabilities~~====== ~~and~~EARNINGS ~~Equity~~PER SHARE Basic $~~112,093~~ 0.05 $~~113,421~~ 0.08 ====== ====== Diluted $ 0.05 $ 0.08 ====== ======

Page 4 of 14 5 COLUMBIA FINANCIAL OF KENTUCKY, INC. STATEMENTS OF CASH FLOWS

THREE MONTHS ENDED ~~JUNE~~DECEMBER 3031, ~~NINE MONTHS ENDED JUNE 30,~~ --------------------------- --~~--------------------------~~ 2000 1999 ~~2000 1999~~ ------ ------ ------ ------ (InIN ~~Thousands,~~THOUSANDS) ~~Except~~CASH ~~Share~~FLOWS ~~Data)~~FROM ~~INTEREST~~OPERATING ~~INCOME~~ACTIVITIES ~~Loans~~Net ~~$1,438~~Income $~~1,387~~ ~~$4,315~~129 $~~4,130~~ ~~Mortgage-Backed~~188 ~~Securities~~Reconciliation ~~279~~of ~~324~~Net ~~878~~Income ~~1,005~~with ~~Investments~~Cash ~~263~~Flows ~~303~~from ~~791~~Operations ~~1,002~~Depreciation ~~Interest-Bearing~~27 ~~Deposits~~27 43Shares 71Released ~~113~~to ~~205~~ESOP ~~------~~66 ~~------~~109 ~~------~~FHLB ~~------~~Stock ~~Total~~Dividends ~~Interest~~(29) (26) Deferred Federal Income ~~2,023~~Tax ~~2,085~~368 ~~6,097~~(44) ~~6,342~~Changes ~~------~~In ~~------~~Interest ~~------~~Receivable ~~------~~92 ~~INTEREST~~84 ~~EXPENSE~~Other ~~Deposits~~Assets ~~874~~(23) ~~911~~(15) ~~2,575~~Federal ~~2,775~~Income ~~FHLB~~Tax ~~Advances~~Receivable ~~113~~/ --Liability ~~240~~(45) --160 ~~------~~Other ~~------~~Liabilities 34 61 ------- ------- ~~Total~~Net ~~Interest~~Cash ~~Expense~~Provided ~~987~~by ~~911~~Operating ~~2,815~~Activities ~~2,775~~619 ~~------~~544 ------ -~~-----~~ ------- ~~NET~~CASH ~~INTEREST~~FLOWS ~~INCOME~~FROM ~~1,036~~INVESTING ~~1,174~~ACTIVITIES ~~3,282~~Investment ~~3,567~~Securities ~~PROVISION~~Matured ~~FOR~~4 ~~LOSSES~~1,006 ONMortgage-Backed ~~LOANS~~Securities --Principal --Collected --614 --797 ~~------~~Loan ~~------~~Originations ~~------~~and ~~------~~Repayments, Net ~~Interest~~(489) ~~Income~~(1,067) ~~After~~Purchases ~~Provision~~of ~~for~~Property ~~Losses~~and onEquipment ~~Loans~~(7) ~~1,036~~(21) ~~1,174 3,282 3,567~~ ------ -~~-----~~ ------ -~~-----~~ ~~NON-INTEREST~~Net ~~INCOME~~Cash 23Provided 27by 96Investing 85Activities ~~------~~122 ~~------~~715 ------- ------ ~~NON~~-~~INTEREST~~ ~~EXPENSE~~CASH ~~Salaries~~FLOWS ~~and~~FROM ~~Employee~~FINANCING ~~Benefits~~ACTIVITIES ~~550~~FHLB ~~514~~Advances 1(2,~~747~~000) 13,~~510~~000 ~~Occupancy~~Advances ~~Expense~~from ofBorrowers ~~Premises~~for 56Taxes 69and ~~197 203 Federal Deposit~~ Insurance ~~Premiums~~(254) 13(229) 14Change 30in 41Deposits ~~Data~~1,184 ~~Processing~~(2,794) ~~Services~~Dividends 28Paid 28(186) 88(186) 82Shares ~~Advertising~~Acquired 18by 32RRP ~~57 93 Other 114 133 469 508~~ --~~----~~ ~~------~~(95) ------- ------- ~~Total~~NET ~~Non-Interest~~CASH ~~Expense~~(USED) ~~779~~BY ~~790~~FINANCING ~~2,588~~ACTIVITIES 2(1,~~437~~256) ~~------~~(304) ------ -~~-----~~ ------- ~~Income~~CHANGE ~~Before~~IN ~~Federal~~CASH ~~Income~~AND ~~Tax~~CASH ~~Expense~~EQUIVALENTS ~~280~~(515) ~~411~~955 ~~790~~BEGINNING 1BALANCE,~~215~~ ~~FEDERAL~~CASH ~~INCOME~~AND ~~TAX~~CASH ~~EXPENSE~~EQUIVALENTS 954,990 ~~140~~3,441 ~~268 413~~ ------ -~~-----~~ ------ -~~-----~~ ~~NET~~ENDING ~~INCOME~~BALANCE, $CASH ~~185~~AND $CASH ~~271~~EQUIVALENTS $ ~~522~~4,475 $ ~~802~~4,396 ====== =~~=====~~ ====== =~~===== EARNINGS PER SHARE Basic $ 0.07 $ 0.11 $ 0.21 $ 0.32 ====== ====== ====== ====== Diluted $ 0.07 $ 0.11 $ 0.21 $ 0.32 ====== ====== ====== ======~~

Page 5 of 14 6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS COLUMBIA FINANCIAL OF KENTUCKY, INC. For the three-month periods ended December 31, 2000 and 1999 1. BASIS OF PRESENTATION --------------------- The accompanying unaudited financial statements were prepared in accordance with instructions for Form 10-Q, 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 Financial of Kentucky, Inc. ("CFKY" or the "Company") for the year ended September 30, 2000. 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 periods ended December 31, 2000 and 1999 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 CFKY and Columbia Federal Savings Bank ("Columbia Federal" or the "Savings Bank"). All significant intercompany items have been eliminated. 2. COMPREHENSIVE INCOME -------------------- Comprehensive income includes net income and other non-owner changes in equity. The Company had no other comprehensive income for the quarters ended December 31, 2000 and 1999. 3. IMPACT OF RECENT ACCOUNTING STANDARDS ------------------------------------- On November 12, 1999, the Gramm-Leach-Bliley Act (the "GLB Act") was enacted into law. The GLB Act makes sweeping changes in the financial services in which various types of financial institutions may engage. The Glass-Steagall Act, which had generally prevented banks from affiliating with securities and insurance firms, was repealed. A new "financial holding company," which owns only well capitalized and well managed depository institutions, will be permitted to engage in a variety of financial activities, including insurance and securities underwriting and agency activities. The GLB Act permits unitary savings and loan holding companies in existence on May 4, 1999, including the Company, to continue to engage in all activities in which they were permitted to engage prior to the enactment of the Act. Such activities are essentially unlimited, provided that the thrift subsidiary remains a qualified thrift lender. Any thrift holding company formed after May 4, 1999, will be subject to the same restrictions as a multiple thrift holding company. In addition, a unitary thrift holding company in existence on May 4, 1999, may be sold only to a financial holding company engaged in activities permissible for multiple savings and loan holding companies. The GLB Act did not have a material effect on the activities in which the Company and the Savings Bank currently engage, except to the extent that competition with other types of financial institutions may increase as they engage in activities not permitted prior to enactment of the GLB Act. Page 6 of 14 7 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS COLUMBIA FINANCIAL OF KENTUCKY, INC. 4. PENDING LEGISLATIVE CHANGES --------------------------- None. 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 169,333 unallocated ESOP shares, totaled 2,456,617 shares for the three-month period ended December 31, 2000. Diluted earnings per share is computed using basic common shares outstanding because options on 252,600 shares were not considered due to their anti-dilutive effects. Page 7 of 14 8 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-Q 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, interest rate risk, and the effect of certain accounting pronouncements. 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, 2000 TO -------------------------------------------------------------------- DECEMBER 31, 2000 ----------------- GENERAL. CFKY's assets totaled $110.4 million at December 31, 2000, a decrease of $1.1 million, or 1.0%, from $111.5 million at September 30, 2000. Cash and cash equivalents decreased $515,000, investments and mortgage-backed securities decreased $618,000 and loans receivable increased $489,000. Deposits increased $1.2 million. Short-term borrowings decreased $2.0 million and advances from borrowers for taxes and insurance decreased $254,000. LIQUID ASSETS AND INVESTMENTS. Liquid assets (cash and cash equivalents) totaled $4.5 million at December 31, 2000, a decrease of $515,000, from the total at September 30, 2000. LOANS RECEIVABLE. Net loans receivable equaled $71.2 million at December 31, 2000, compared to $70.7 million at September 30, 2000, a .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, 2000 and September 30, 2000. The allowance represented .42% of net loans at December 31, 2000 and September 30, 2000. As of September 30, 2000, there was $117,000 in nonperforming loans, which was .17% of net loans at that date. As of December 31, 2000, there was $85,000 in nonperforming loans, which was .12 % of 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. Page 8 of 14 9 The following table sets forth the composition of the Bank's portfolio by type of loan at the dates indicated.

~~NINE~~December ~~MONTHS~~31, ~~ENDED~~2000 ~~JUNE~~September 30, 2000 ----------------- ------- ~~2000 1999~~ ------- ----~~---~~ ~~(In~~Amount ~~Thousands)~~Percent ~~CASH~~Amount ~~FLOWS~~Percent FROM OPERATING ACTIVITIES Net Income $ 522 $ 802 Reconciliation of Net Income with Cash Flows from Operations Depreciation 81 81 FHLB Stock Dividends (79) (71) Deferred Federal Income Tax (252) (127) Changes In Interest Receivable 98 130 Other Assets 12 (19) Federal Income Tax Receivable / Liability 96 60 Other Liabilities 119 26 ------- ------- ~~NET CASH PROVIDED BY OPERATING ACTIVITIES 597 882~~ ------- ------- ~~CASH~~REAL ~~FLOWS~~ESTATE ~~FROM~~LOANS ~~INVESTING ACTIVITIES Investment Securities Purchased~~ One-to-four ~~(7,996)~~Family ~~Matured~~Residential 1$62,~~133~~677 1485.17% $60,~~917~~994 ~~Mortgage~~82.97% Multi-~~Backed~~family ~~Securities~~and ~~Purchased~~ Non--residential (4,147 5.63 3,~~093)~~805 ~~Principal~~- ~~Collected~~Land ~~2,577~~and ~~4,059~~Construction: ~~Loan~~Nonresidential ~~Originations~~Real ~~and~~Estate ~~Repayments~~2,864 ~~Net~~3.89 (23,~~277)~~763 (5~~,491)~~.18 ~~Purchases~~Construction ofLoans ~~Property~~3,883 ~~and~~5.28 ~~Equipment~~4,762 ~~(64)~~6.48 ~~(11)~~ ------- ------- ~~NET CASH (USED) PROVIDED BY INVESTING ACTIVITIES 1,369 2,385~~ ------- ------- ~~CASH~~Total ~~FLOWS~~Real ~~FROM~~Estate ~~FINANCING~~Loans ~~ACTIVITIES FHLB Advances 6~~73,~~000~~571 --99.97 ~~Advances from Borrowers for Taxes and Insurance (23) 13 Change in Deposits (6~~73,~~322)~~324 ~~3,089~~99.75 ~~Dividends Paid (558) (8,543) ESOP Shares Released 297 278 Treasury Shares Acquired~~ - ~~(262) Shares Acquired by RRP (1,403)~~ -- --- ----- ------ ------ ~~NET~~CONSUMER ~~CASH~~LOANS ~~(USED)~~Loans ~~PROVIDED~~on BYDeposit ~~FINANCING~~23 ~~ACTIVITIES~~.03 ~~(2,009)~~187 ~~(5,425)~~.25 ------ ----- ------ ------ ~~CHANGE~~Total INLoans ~~CASH~~73,594 ~~AND~~100.00% ~~CASH~~73,511 ~~EQUIVALENTS~~100.00% ~~(43)~~====== ~~(2,158)~~====== ~~BEGINNING~~====== ~~BALANCE,~~====== ~~CASH~~LESS ~~AND~~Loans ~~CASH~~in ~~EQUIVALENTS~~Process 31,~~441~~417 61,~~260~~818 Deferred Loan Fees 706 711 Allowance for Loan Losses 300 300 ------- ------- ~~ENDING~~Loans ~~BALANCE~~Receivable, ~~CASH~~Net ~~AND CASH EQUIVALENTS~~ $ 371,~~398~~171 $ 470,~~102~~682 ======= =======

The following is the change in the allowance for loan losses for the periods indicated.

~~June~~Three ~~30,~~Months ~~2000~~Ended ~~September~~Year ~~30,~~Ended ~~1999~~December ~~------------- ------------------ Amount Percent Amount Percent ------- ------- -------- ------- (In Thousands) (In Thousands) REAL ESTATE LOANS One-to-Four Family Residential $60~~31,~~933~~ ~~81.17%~~2000 ~~58,675~~September ~~80.03% Multi-Family and Non Residential 3~~30,~~930~~ ~~5.24~~2000 ~~5,493 7.49 Land and Construction Non Residential Real Estate 3,882 5.17 3,671 5.01 Construction Loans 6,305 8.40 5,439 7.42~~ ------- ------ ------- ------ ~~Total Real Estate Loans 75,050 99.98 73,278 99.95~~ ------- ------ ~~-------~~ALLOWANCE ~~------~~FOR ~~CONSUMER~~LOAN ~~LOANS~~LOSSES ~~Loans~~Balance onat ~~Deposit~~Beginning 17of ~~.02~~Period 38$300 ~~.05~~$300 ~~Home~~Net ~~Improvement Loans~~ (Charge--Offs) --Recoveries -- -- ~~-------~~Provision ~~------~~for ~~-------~~Loan ~~------~~Losses ~~Total Consumer Loans 17 .02 38 .05~~ -~~------~~ -~~-----~~ ----~~---~~ ------ ~~Total~~Balance ~~Loans~~at ~~75,067~~End ~~100.00%~~of ~~73,316~~Period ~~100.00% ------- ====== ------- ====== LESS Loans in Process 2,668 3,174 Deferred Loan Fees 733 753 Allowance for Loan Losses~~ $300 $300 ~~------- ------- Loans Receivable, Net $71,366 $69,089~~ ====~~===~~ ====~~===~~

Although management believes that its allowance for loan losses at December 31, 2000, 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 $1.2 million, to $76.6 million, at December 31, 2000, from September 30, 2000. At December 31, 2000, certificates of deposit that will mature within one year accounted for 31.6% of Columbia Federal's deposit liabilities. SHORT-TERM BORROWINGS: Advances from the FHLB were $4.0 million at December 31, 2000, compared to $6.0 million at September 30, 2000. The increase in deposits was used to reduce FHLB advances. LIQUIDITY AND CAPITAL RESOURCES ------------------------------- The Savings Bank's liquidity, represented by cash and cash equivalents, is a product of its operating, investing and financing activities. The Savings Bank's primary sources of funds are deposits, borrowings, amortization, prepayments and maturities of outstanding loans, sales of loans, maturities of investment securities and other short-term investments and funds provided from operations. While scheduled loan amortization and maturing investment securities and short-term investments are relatively predictable sources of funds, deposit flows and loan prepayments are greatly influenced by general interest rates, economic conditions and competition. The Savings Bank manages the pricing of its deposits to maintain a steady deposit balance. In addition, the Savings Bank invests excess funds in overnight deposits and other short-term interest-earning assets which provide liquidity to meet lending requirements. The Savings Bank has generally been able to generate enough Page 9 of 14 10 cash through the retail deposit market, its traditional funding source, to offset the cash utilized in investing activities. As an additional source of funds, the Savings Bank may borrow from the FHLB of Cincinnati. At December 31, 2000, the Savings Bank had $4 million in outstanding advances from the FHLB of Cincinnati. Liquidity management is both a daily and long-term function of business management. Excess liquidity is generally invested in short-term investments such as overnight deposits. On a longer-term basis, the Savings Bank maintains a strategy of investing in various lending products. The Savings Bank uses its sources of funds primarily to meet its ongoing commitments, to pay maturing savings certificates and savings withdrawals and fund loan commitments. At December 31, 2000, the total approved loan commitments outstanding, excluding construction loans, amounted to $212,000. At the same date, the unadvanced portion of construction loans approximated $2.6 million. The Savings Bank did not have any investment securities scheduled to mature within one year. Mortgage-backed securities scheduled to mature in one year or less at December 31, 2000 totaled $16,000. On the liability side, certificates of deposit scheduled to mature in one year or less at December 31, 2000 totaled $25.4 million. The Savings Bank is required by the OTS to maintain average daily balances of liquid assets (as defined) in an amount equal to 4% of net withdrawable deposits and borrowings payable in one year or less to assure its ability to meet demand for withdrawals and repayment of short-term borrowings. The liquidity requirements may vary from time to time at the direction of the OTS depending upon economic conditions and deposit flows. The Savings Bank generally maintains a liquidity ratio of at least 8% of its net withdrawable deposits and borrowings payable in one year or less. The Savings Bank's liquidity for December 31, 2000 was approximately $18.7 million, or 22.64%. Federally insured savings institutions are required to satisfy three different OTS capital requirements. Under these standards, savings institutions must maintain "tangible" capital equal to at least 1.5% of adjusted total assets, "core" capital generally equal to at least 4% of adjusted total assets and "total" capital (a combination of core and "supplementary" capital) equal to at least 8% of "risk-weighted" assets. For purposes of the regulation, core capital is defined as common stockholders' equity (including retained earnings), noncumulative perpetual preferred stock and related surplus, minority interests in the equity accounts of fully consolidated subsidiaries, certain nonwithdrawable accounts and pledged deposits and qualifying supervisory goodwill. Core capital is generally reduced by the amount of a savings institution's intangible assets. Tangible capital is core capital less all intangible assets, with a limited exception for purchased mortgage-servicing rights. Risk-based capital is defined as core capital plus certain additional items of capital, which in the case of the Savings Bank, includes a general valuation allowance for losses on loans of $300,000 at December 31, 2000. Under the "prompt corrective action" regulations of OTS, a savings bank that has not received the highest possible examination rating may become subject to corrective action if its core capital is less than 4% of its adjusted total assets. The Savings Bank substantially exceeded each of the above-described regulatory capital requirements at December 31, 2000. COMPARISON OF OPERATING RESULTS FOR THE THREE-MONTH PERIODS ENDED ----------------------------------------------------------------- DECEMBER 31, 2000 AND 1999 -------------------------- GENERAL. CFKY recorded earnings of $129,000 for the quarter ended December 31, 2000, a decrease of $59,000 and 31% from the same period in 1999. The decrease was a result of a decrease in net interest income of $156,000 and a decrease of non-interest income of $25,000, partially offset by a decrease in non-interest expense of $92,000 and a decrease in federal income tax expense of $30,000. INTEREST INCOME. Interest income decreased $33,000 for the three months ended December 31, 2000 compared to the three months ended December 31, 1999. This was primarily a result of a decrease of $3.1 million in average balances in interest-earning assets. INTEREST EXPENSE. Interest expense increased $123,000 for the three months ended December 31, 2000 compared to the three months ended December 31, 1999. This increase was the result of an increase in the cost of funds of 72 basis points to 5.06% at December 31, 2000. Columbia Federal's net interest rate spread was 2.46% for the three months ended December 31, 2000, compared to 3.08% for the three months ended December 31, 1999. Page 10 of 14 11 NON-INTEREST INCOME AND NON-INTEREST EXPENSE. Non-interest income was $23,000 for the three months ended December 31, 2000, compared to $48,000 for the same period in 1999, primarily due to a decrease in fee income. Non-interest expense decreased $92,000, or 10%, to $820,000. The primary reason for this decrease was a reduction in salaries and employee benefits from $596,000 for the three months ended December 31, 1999, to $553,000 for the three months ended December 31, 2000 as a result of reduced costs associated with CFKY's ESOP and RRP. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company's December 31, 2000 analysis of the impact of changes in interest rates on net interest income over the next 12 months indicates no significant changes in its exposure to interest rate changes since the Company filed its Annual Report on Form 10 K with the Securities and Exchange Commission for the year ended September 30, 2000. Page 11 of 14 12 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 --------------------------------------------------- CFKY held its 2000 Annual Meeting of Shareholders on Thursday, January 25, 2001. The following information sets forth the matters considered at such annual meeting and the voting with respect to such matters.

~~Nine~~Broker ~~Months~~1. ~~Ended~~Election ~~Year~~of ~~Ended~~Three ~~June~~Directors ~~30,~~For ~~2000~~Withheld ~~September~~Non-votes ~~30, 1999~~ --- --------~~------~~ ---------~~---------~~ ~~(In~~a. ~~Thousands)~~Daniel ~~(In~~T. ~~Thousands)~~Mistler ~~ALLOWANCE~~2,084,274 ~~FOR~~72,706 ~~LOAN LOSSES Balance at Beginning of Period $300 $300 Net (Charge~~-~~Offs) Recoveries~~ 0-- ~~(8)~~b. ~~Provision~~Fred ~~for~~A. ~~Loan~~Tobergate, ~~Losses~~Sr. --2,084,074 872,906 -0--- ~~----~~c. ~~Balance~~Geraldine atZembrodt ~~End~~2,082,974 of74,006 ~~Period $300 $300 ==== ====~~-0-

2. Ratification of Auditors Broker For Against Abstain Non-votes --- ------- ------- --------- 2,096,292 19,063 41,625 - 0 - ITEM 5. OTHER INFORMATION ----------------- Not Applicable Page 12 of 14 13 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 Page 13 of 14 14 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 13, 2001 By: /S/ Robert V. Lynch ---------------------- ------------------------------------ Robert V. Lynch, President and Chief Executive Officer Date: February 13, 2001 By: /S/ Abijah Adams ---------------------- ------------------------------------ Abijah Adams, Controller Page 14 of 14

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