SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________________
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) FOR THE
SECURITIES EXCHANGE ACT OF 1934
For the Transition period from ___________ to ____________
Commission File Number 0-25516
CAMERON FINANCIAL CORPORATION
(Exact name of Registrant as specified in its Charter)
Delaware 43-1702410
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1304 North Walnut Street, Cameron, Missouri 64429
(Address of principal executive offices) (ZIP Code)
Registrant's telephone number, including area code: (816) 632-2154
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Yes (X) No ( )
Indicate the number of shares outstanding of each of the issuer's
class of common stock as of the latest practicable date.
Class Outstanding at May 8, 2000
Common stock, .01 par value 1,913,749
CAMERON FINANCIAL CORPORATION
Contents
PART I - FINANCIAL INFORMATION
Item 1: Financial Statements Page
Consolidated Balance Sheets at March 31, 2000,
unaudited, and September 30, 1999 3
Consolidated Statements of Earnings for the Three
Months and Six Months Ended March 31, 2000 and
1999, unaudited 4
Consolidated Statements of Stockholders' Equity for
the Six Months Ended March 31, 2000, unaudited 5
Consolidated Statements of Cash Flows for
the Six Months Ended March 31, 2000 and
1999, unaudited 6
Notes to Unaudited Consolidated Financial Statements 7
Item 2: Management's Discussion and Analysis of
Financial Condition and Results of
Operations 8-16
PART II - OTHER INFORMATION 17
Signatures 18
CAMERON FINANCIAL CORPORATION AND SUBSIDIARY
Consolidated Balance Sheets
(Dollars in thousands)
March 31, September 30,
2000 1999
Assets (unaudited)
Cash and cash equivalents $5,166 $6,100
Investment securities held-to-maturity (estimated fair
value of $22,162,000 at March 31 and $18,191,000 at
September 30) 22,902 18,538
Mortgage backed securities 4 5
Loans receivable, net 240,298 221,909
Accrued interest receivable:
Loans 1,681 1,523
Investment securities 351 268
Office property and equipment, net 7,554 7,748
Stock in Federal Home Loan Bank(FHLB) of Des Moines, at cost 4,849 3,556
Deferred income taxes 74 74
Other assets 1,888 1,832
Total assets $284,767 $261,553
Liabilities and Stockholders' Equity
Liabilities:
Savings deposits 143,448 143,737
Advances from FHLB 96,970 71,101
Advance payments for taxes and insurance 1,157 2,244
Accrued interest on savings deposits 165 158
Accrued expenses and other liabilities 3,474 3,491
Income taxes payable 117 198
Total liabilities 245,331 220,929
Stockholders' Equity:
Serial preferred stock, $.01 par, 2,000,000
authorized, none issued or outstanding --- --
Common stock, $.01 par value, authorized 10,000,000
shares, 3,026,928 shares issued 30 30
Additional paid in capital 30,159 30,163
Retained earnings, substantially restricted 27,963 27,385
Less:
Unearned employee benefits (1,297) (1,483)
Treasury stock, at cost- 1,105,179 shares at March 31, 2000
and 944,749 at September 30, 1999 (17,419) (15,471)
Total stockholders' equity 39,436 40,624
Total liabilities and stockholders' equity $284,767 $261,553
See accompanying Notes to Unaudited Consolidated Financial Statements.
CAMERON FINANCIAL CORPORATION AND SUBSIDIARY
Consolidated Statements of Earnings
(unaudited)
Three Months Ended Six Months Ended
March 31, March 31,
2000 1999 2000 1999
(Dollars in thousands, except share data)
Interest income:
Loans $4,718 $4,021 $9,234 $7,946
Investment securities 347 231 638 466
Certificates of deposit and other 91 78 188 174
Total interest income 5,156 4,330 10,060 8,586
Interest expense:
Savings deposits 1,834 1,802 3,660 3,643
Borrowed money 1,292 576 2,401 1,135
Total interest expense 3,126 2,378 6,061 4,778
Net interest income 2,030 1,952 3,999 3,808
Provision for loan losses 102 (144) 151 (111)
Net interest income after
provision for loan losses 1,928 2,096 3,848 3,919
Noninterest income:
Loan fees and service charges 98 82 194 174
Gain on sale of investments - - - 5
Other income 45 30 92 68
Total noninterest income 143 112 286 247
Noninterest expense:
Compensation, payroll taxes and
fringe benefits 705 677 1,452 1,362
Occupancy expense 203 200 417 377
Data processing 51 63 92 124
Federal insurance premiums 7 21 18 41
Advertising 27 41 55 78
Loss on real estate owned - 5 2 2
Other operating expenses 254 198 461 417
Total noninterest expense 1,247 1,205 2,497 2,401
Earnings before income taxes 824 1,003 1,637 1,765
Income taxes 275 375 546 672
Net earnings $549 $628 $1,091 $1,093
Basic earnings per share $0.30 $0.30 $0.56 $0.50
Diluted earnings per share $0.30 $0.30 $0.56 $0.50
Basic average shares outstanding 1,851,877 2,069,044 1,945,073 2,172,791
Common stock equivalents-stock options 166 - 105 6,271
Diluted average shares outstanding 1,852,043 2,069,044 1,945,178 2,179,062
See accompanying Notes to Unaudited Consolidated Financial Statements.
CAMERON FINANCIAL CORPORATION AND SUBSIDIARY
Consolidated Statements of Stockholders' Equity
For The Six Months Ended March 31, 2000
(Unaudited)
Additional Unearned Total
Common paid-in Retained employee Treasury stockholders'
Stock capital earningsbenefits stock equity
(Dollars in thousands)
Balance at September 30, 1999 $30 $30,163 $27,385($1,483) ($15,471) $40,624
Net earnings - - 1,091 - - $1,091
Amortization of RRP - - - 154 (24) 130
Allocation of ESOP shares - 28 - 121 - 149
Additional RRP award - (32) - (89) 121 -
Dividends declared - - (513) - - (513)
Purchase 160,430 shares of
treasury stock - - - - (2,045) (2,045)
Balance at March 31, 2000 $30 $30,159 $27,963($1,297) ($17,419) $39,436
See accompanying Notes to Unaudited Consolidated Financial Statements.
CAMERON FINANCIAL CORPORATION AND SUBSIDIARY
Consolidated Statements of Cash Flows
Six Months Ended March 31,
(Unaudited)
2000 1999
(Dollars in Thousands)
Cash flows from operating activities:
Net earnings $1,091 $1,093
Adjustments to reconcile net earnings to cash
provided by operating activities:
Depreciation and amortization 228 219
Provision for loan losses 151 (111)
Provision for losses on real estate owned - 1
Amortization of RRP and allocation of ESOP shares 279 326
Deferred income taxes - 2
Gain on sale of real estate owned (2) 2
Amortization of deferred loan fees (71) (251)
Proceeds from sales of loans held for sale 1,101 3,290
Origination of loans held for sale (1,025) (2,893)
Gain on sale of loans held for sale (17) (36)
Changes in assets and liabilities:
Accrued interest receivable (241) 10
Other assets (79) (175)
Accrued interest payable 7 3
Accrued expenses and other liabilities (42) 908
Current income taxes payable (81) 78
Net cash provided by operating activities $1,299 $2,466
Cash flows from investing activities:
Net increase in loans receivable (18,502) (13,967)
Mortgage-backed securities principal payments 1 1
Maturity of investment securities
held to maturity 1,637 8,214
Purchase of investment securities
held to maturity (6,000) (8,499)
Purchase of FHLB stock (1,293) (299)
Net proceeds from sale of real estate owned (1) 17
Additions and improvements to real estate owned - (1)
Purchase of office properties and equipment, net (35) (125)
Cash used in investing activities ($24,193)($14,659)
Cash flows from financing activities:
Net (decrease) increase in NOW passbook and
money market deposit accounts (857) 4,736
Net increase in certificate accounts 568 1,270
Net decrease in advance payments by
borrowers for taxes and insurance (1,087) (760)
Proceeds from FHLB advances 89,000 12,000
Repayment of FHLB advances (63,131) (3,021)
Dividends paid (488) (295)
Purchase of Treasury stock (2,045) (4,646)
Net cash provided by (used in)
financing activities 21,960 9,284
Net (decrease) in cash (934) (2,909)
Cash and cash equivalents at beginning of period 6,100 7,719
Cash and cash equivalents at end of period $5,166 $4,810
Supplemental disclosure of cash flow information:
Cash paid during the period for income taxes $626 $609
Cash paid during the period for interest $6,006 $4,775
Supplemental schedule of noncash investing and financing
activities:
Conversion of loans to real estate owned - $157
Conversion of real estate owned to loans $25 $137
Dividend declared and payable $272 $137
Issuance of unearned RRP shares $89 $88
See accompanying Notes to Unaudited Consolidated Financial Statements.
CAMERON FINANCIAL CORPORATION AND SUBSIDIARY
Notes to Unaudited Consolidated Financial Statements
(1) Basis of Preparation
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles (GAAP)
for interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. To the extent that information and footnotes
required by generally accepted accounting principles for complete financial
statements are contained in or consistent with the audited financial
statements incorporated by reference in the Company's Annual Report on Form
10-K for the year ended September 30, 1999, such information and footnotes
have not been duplicated herein. In the opinion of management, all
adjustments, consisting of only normal recurring accruals, necessary for a
fair presentation have been included. The results of operations and other
data for the three month and six month period ended March 31, 2000 are not
necessarily indicative of results that may be expected for the entire fiscal
year ending September 30, 2000. The September 30, 1999 balance sheet
information has been derived from the consolidated balance sheet as of that
date.
(2) Impact of Accounting Standards not yet adopted.
The Financial Accounting Standards Board ("FASB") issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities", in June
1998. SFAS No. 133, as amended by SFAS No. 137, "Accounting for Derivative
Instruments and Hedging Activities - Deferral of the Effective Date of FASB
Statement No. 133", establishes accounting and reporting standards for
derivative instruments, including certain derivative instruments embedded
in other contracts, and for hedging activities. It requires that an entity
recognize all derivatives as either assets or liabilities in the statement
of financial position and measure those instruments at fair value. This
statement is effective for all fiscal quarters beginning after June 15,
2000. Management believes adoption of these accounting standards will not
significantly effect the Company's consolidated financial statements.
The FASB recently issued Interpretation No. 44, "Accounting for Certain
Transactions Involving Stock Compensation". The Interpretation, which is
effective July 1, 2000, clarifies the application of APB Opinion No. 25
"Accounting for Stock Issued to Employees". Management does not expect that
the Interpretation will have a significant impact on the Companys' financial
statements.
CAMERON FINANCIAL CORPORATION AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Quarterly Report on Form 10-Q may contain certain forward-looking
statements consisting of estimates with respect to the financial condition,
results of operations and business of Cameron Financial Corporation, the
"Company", that are subject to various factors which could cause actual
results to differ materially from these estimates. These factors include,
but are not limited to, general economic conditions, changes in interest
rates, deposit flows, loan demand, real estate values, and competition;
changes in accounting principles, policies or guidelines; changes in
legislation or regulation; and other economic, competitive, governmental
regulatory, and technical factors affecting the Company's operations,
pricing, products and services.
The following discussion compares the financial condition of the Company
and its wholly owned subsidiary, The Cameron Savings & Loan Association,
F.A., the "Association", at March 31, 2000 to its fiscal year end September
30, 1999, and the results of operations for the three and six months ended
March 31, 2000 with the three and six months ended March 31, 1999. This
discussion should be read in conjunction with the interim financial
statements and notes which are included herein.
GENERAL
The Company was organized as a Delaware corporation in December 1994, at
the direction of the Association's Board of Directors, to acquire all of
the capital stock issued by the Association upon its conversion from the
mutual to stock form of ownership. The business of the Company consists
primarily of the business of the Association.
The Association was originally founded in April 1887 as a Missouri
chartered savings and loan association located in Cameron, Missouri. On
November 28, 1994, the Association members voted to convert the Association
to a Federal charter. The Association conducts its business through its
main office in Cameron, Dekalb County, and three full service branch
offices located in Liberty, Clay County, Maryville, Nodaway County, and
Mound City, Holt County. Deposits are insured by the Federal Deposit
Insurance Corporation, FDIC, to the maximum allowable.
The Association's business strategy is to operate as a well-capitalized,
profitable and independent community savings institution dedicated to home
mortgage lending and, to a lesser extent, consumer finance, funded
primarily by retail deposits from the Association's main and branch
offices. The Association has sought to implement this strategy by
emphasizing residential mortgage lending and construction lending,
maintaining asset quality, managing interest rate risk exposure,
maintaining an investment portfolio of high grade securities and other
investments, maintaining acceptable levels of profitability and capital,
and emphasizing customer service.
The net income of the Association is dependent primarily on its net
interest income, which is the difference between interest earned on its
loans and investments and the interest paid on interest bearing
liabilities. Net income is also affected by the generation of non-interest
income, which primarily consists of fees and service charges. Net interest
income is determined by the difference between the yield earned on interest
earning assets and rates paid on interest bearing liabilities (interest
rate spread), and the relative amounts of interest earning assets and
interest bearing liabilities (net interest margin). The interest rate
spread is affected by loan demand and deposit flows. In addition, net
income is affected by the level of operating expenses and the establishment
of loan loss reserves.
The operation of a financial institution is significantly affected by
prevailing economic conditions, competition, and the monetary and fiscal
policies of governmental agencies. Lending activities are influenced by
the demand for and supply of housing, competition among lenders, the level
of interest rates, and the availability of funds. Deposit flows and cost
of funds are influenced by prevailing market rates of interest primarily
on competing investments, account maturities and the levels of personal
income and savings in the market area of the financial institution.
FINANCIAL CONDITION
Total assets increased 8.9%, or $23,214,000, to $284,767,000 at March 31,
2000 from $261,553,000 at September 30, 1999. Loans receivable, net,
increased 8.3%, or $18,389,000, to $240,298,000 at March 31, 2000 from
$221,909,000 at September 30, 1999. Cash, investment securities and
certificates of deposits in other financial institutions increased 13.9%,
or $3,429,000, to $28,072,000 at March 31, 2000 from $24,643,000 at
September 30, 1999. Deposits decreased 0.2%, or $289,000, to $143,448,000
at March 31, 2000 from $143,737,000 at September 30, 1999. Advances from
the Federal Home Loan Bank increased 36.4%, or $25,869,000, to $96,970,000
at March 31, 2000 from $71,101,000 at September 30, 1999. Stockholders'
equity decreased 2.9%, or $1,188,000 to $39,436,000 at March 31, 2000 from
$40,624,000 at September 30, 1999. The decrease in stockholder's equity
was primarily due to the purchase of 160,430 shares of treasury stock for
$2,045,000 and dividends declared of $513,000 offsetting net earnings of
$1,091,000 and amortization of unearned employee benefits of $186,000.
The following table sets forth certain information regarding the
composition of the Association's loan portfolio.
March 31, September 30,
2000 1999
One- to four family $170,139,000 $160,789,000
Multifamily 7,721,000 7,360,000
Commercial real estate 9,553,000 6,398,000
Land 3,819,000 6,025,000
Development 9,008,000 8,635,000
Construction (1) 42,256,000 40,301,000
Consumer loans 20,016,000 16,459,000
Total Loans Receivable 262,512,000 245,967,000
Less:
Deferred loan fees, net 467,000 529,000
Loans in process 19,995,000 21,927,000
Allowance for loan losses 1,752,000 1,602,000
Net Loans Receivable $240,298,000 $221,909,000
Speculative construction $29,925,000 $24,205,000
Contract and permanent
construction $12,331,000 $16,096,000
Total (1) $42,256,000 $40,301,000
During the six months ended March 31, 2000, permanent 1-4 family loans
increased $9,350,000, or 5.8%, to $170,139,000; commercial real estate
loans increased $3,155,000, or 49.3%, to $9,553,000; consumer loans
increased $3,557,000, or 21.6%, to $20,016,000; and construction loans
increased $1,955,000, or 4.8%, to $42,256,000. During that time period,
speculative construction loans increased $5,720,000, or 23.6%, while
contract and construction-permanent loans decreased $3,765,000.
Deposits were $143,448,000 at March 31, 2000, a decrease of $289,000, or
0.2%, from $143,737,000 at September 30, 1999. Competition from other
financial and non-financial entities will continue to impact deposit
growth. The Association offers competitive interest rates on its deposit
products.
FHLB advances increased $25,869,000, or 36.4%, to $96,970,000 at March 31,
2000 from $71,101,000 at September 30, 1999. New advances during the
quarter ended March 31, 2000 were $56,500,000 and repayments were $40,066,000.
At March 31, 2000, FHLB advances and certificates of deposit were 40.3%
and 46.0% of interest-bearing liabilities, respectively. At September 30,
1999, they were 33.1% and 51.3%, respectively.
RESULTS OF OPERATIONS
Net Earnings: Basic and diluted earnings per share were $0.30 for the
quarters ended March 31, 2000 and 1999. Net earnings decreased $79,000,
or 12.6%, to $549,000 for the quarter ended March 31, 2000, compared to
$628,000 for the quarter ended March 31, 1999. Basic and diluted earnings
per share increased $0.06 to $0.56 for the six months ended March 31, 2000
compared to $0.50 basic and diluted earnings per share for the six months
ended March 31, 1999. Net earnings decreased $2,000, or 0.2%, to
$1,091,000 for the six months ended March 31, 2000, compared with
$1,093,000 for the six months ended March 31, 1999. For both the three and
six month periods ended March 31, 2000, increases in interest income and
non-interest income and a decrease in the provision for income taxes were
offset by increases in interest expense, non-interest expenses and the
provision for loan losses.
Net Interest Income: Net interest income increased $78,000, or 4.0%, to
$2,030,000 for the quarter ended March 31, 2000, compared to $1,952,000 for
the quarter ended March 31, 1999. Net interest income increased $191,000
or 5.0% to $3,999,000 for the six months ended March 31, 2000, compared to
$3,808,000 for the six months ended March 31, 1999. The net interest
margin decreased to 3.14% for the six months ended March 31, 2000 compared
to 3.55% for the six months ended March 31, 1999. Interest earning assets
averaged 113.71% of interest bearing liabilities for the six months ended
March 31, 2000 compared to 118.63% for the comparable period in 1999. The
average spread between interest earning assets and interest bearing
liabilities decreased to 2.49% for the six months ended March 31, 2000,
compared to 2.71% for the comparable period in 1999.
Interest Income: Interest income increased by $826,000, or 19.1%, to
$5,156,000 for the quarter ended March 31, 2000, from $4,330,000 for the
quarter ended March 31, 1999. Interest income increased by $1,474,000, or
17.2%, to $10,060,000 for the six months ended March 31, 2000, from
$8,586,000 for the six months ended March 31, 1999. The increases were
primarily due to increased balances of interest earning assets.
Interest Expense: Interest expense increased $748,000, or 31.5%, to
$3,126,000 for the quarter ended March 31, 2000, from $2,378,000 for the
comparable period in 1999. For the six-month period ended March 31, 2000,
interest expense increased $1,283,000, or 26.9% to $6,061,000 from
$4,778,000 for the prior period. The increases were primarily a result of
increases of average balances in savings deposits and FHLB advances.
Provision for Loan Losses: The provision for loan losses was $102,000 for
the quarter ended March 31, 2000, compared to a reversal $144,000 for the
comparable period in 1999. The provision for loan losses was $151,000 for
the six month period ended March 31, 2000, compared to a reversal $111,000
for the comparable period in 1999. The increases for both periods were due
to the change in the mix or composition of the portfolio and increases in
the total loan portfolio. The allowance for loan losses is reviewed and
adjusted monthly by management based on the size and composition or mix of
the gross loan portfolio. Various percentages are applied to the different
types of loans in the portfolio with the highest requirement assigned to
the loans with the greatest inherent risk. The provision will vary based
on increases or decreases in the total loan portfolio and changes in the
composition or mix of the portfolio. Speculative construction loans, which
carry the highest risk factor of mortgage loans, increased $5,720,000, or
23.6%, to $29,925,000 at March 31, 2000 from $24,205,000 at September 30,
1999. Consumer loans, which carry the highest risk factor, increased
$3,557,000, or 21.6%, to $20,016,000 at March 31, 2000 from $16,459,000 at
September 30, 1999. As of March 31, 2000, the allowance for loan losses
was $1,752,000, or 0.73% of net loans receivable and 768.42% of total
nonperforming loans. While management believes that it uses the best
information available to determine the allowance for loan losses,
unforeseen market conditions could result in adjustments to the allowance
for loan losses, and net earnings could be significantly affected, if
circumstances differ substantially from the assumptions used in making the
final determination. Future additions to the Association's allowance will
be the result of periodic loan, property and collateral reviews and thus
cannot be predicted in advance. Charge-offs were $1,000 and $5,000 for the
six-month periods ended March 31, 2000 and 1999, respectively.
A reconciliation of the Association's allowance for loan losses is
summarized as follows:
Six Months Ended December 31, 1999
2000 1999
Balance at beginning
of period $1,602,000 $1,521,000
Provision 151,000 (111,000)
Charge-offs (1,000) (5,000)
Recoveries - -
Balance at end of period $1,752,000 $1,405,000
Non-interest Income: Non-interest income increased $31,000, or 27.7% to
$143,000 for the quarter ended March 31, 2000 from $112,000 for the
comparable period in 1999. Loan fees and deposit service charges increased
$16,000 to $98,000 for the three months ended March 31, 2000 compared to
$82,000 for the comparable period in 1999. Other income increased $15,000
to $45,000 in the quarter ended March 31, 2000 compared to $30,000 for the
comparable period in 1999. Non-interest income increased $39,000, or 15.8%
to $286,000 for the six months ended March 31, 2000 from $247,000 for the
six months ended March 31, 1999. Loan fees and deposit service charges
increased $20,000 to $194,000 for the six months ended March 31, 2000
compared to $174,000 for the comparable period in 1999. Other income
increased $24,000 to $92,000 during the six months ended March 31, 2000
compared to $68,000 for the six months ended March 31, 1999. Loan fees and
deposit service charges increased in both periods primarily due to the
increased number of loans and increased deposit accounts with monthly
charges. Other income increased in both the three and six months ended
March 31, 2000 primarily due to increased brokerage and insurance
commissions from the Association's service corporation offsetting decreased
profits on the sale of loans. Profits on the sale of loans were $5,000 and
$12,000 for the quarters ended March 31, 2000 and 1999 respectively.
Brokerage and insurance commissions from the Association's service
corporation were $33,000 and $15,000 for the quarters ended March 31, 2000
and 1999, respectively. Brokerage and insurance commissions were $62,000
and $25,000 for the six months ended March 31, 2000 and 1999, respectively.
Profits on the sale of loans were $17,000 and $36,000 for the six months
ended March 31, 2000 and 1999 respectively.
Non-interest Expense: Non-interest expense increased $42,000 to $1,247,000
for the quarter ended March 31, 2000 from $1,205,000 for the comparable
period in 1999. Personnel expenses increased $28,000 to $705,000 for the
quarter ended March 31, 2000 compared to $677,000 for the comparable period
in 1999. Cash compensation increased $14,000 for the current quarter. Due
to a decrease in loan originations in the three months ended March 31, 2000
compared to the comparable period in 1999, $39,000 less in expenses were
deferred. Payroll taxes and other benefits decreased $6,000 for the
current quarter. The Association had 70 full-time equivalent employees at
March 31, 2000 compared to 67 at March 31, 1999. ESOP expenses decreased
$18,000 in the quarter ended March 31, 2000 compared to the prior period
due to lower average prices of the Company's common stock in the current
quarter.
Occupancy expense increased $3,000 to $203,000 for the quarter ended March
31, 2000 compared to $200,000 for the quarter ended March 31, 1999. The
increase was due to increased real estate taxes.
Data processing expenses decreased $12,000 to $51,000 for the quarter ended
March 31, 2000 compared to the prior year. In June 1999, the Association
converted to an in-house data processing system. Although data processing
costs have decreased, compensation expense has increased due to additional
data processing staff. Federal insurance premiums have decreased $14,000
in the three months ended March 31, 2000 compared to the three months ended
March 31, 1999 due to equal sharing of FICO bond expenses by all banks and
thrifts effective January 1, 2000. Advertising expenses decreased $14,000
to $27,000 for the quarter ended March 31, 2000 compared to $41,000 for the
comparable period in 1999. The prior year saw increased advertising for
a new senior's club and increased advertising for the new branch office in
Liberty. Other operating expenses increased $56,000 to $254,000 for the
quarter ended March 31, 2000 compared to the quarter ended March 31, 1999.
In the current quarter, dealer participation fees paid increased $37,000
and charitable contributions increased $27,000. Postage increased $2,000,
while telephone expenses and office supply expenses decreased $5,000 each.
Professional fees decreased $11,000 due primarily to one time charges in
prior periods.
Non-interest expense increased $96,000 for the six months ended March 31,
2000 compared to the six months ended March 31, 1999. Personnel expenses
increased $90,000 for the current period. Cash compensation increased
$55,000 due primarily to more employees and annual pay increases. Due to
decreased loan originations in the six months ended March 31, 2000 compared
to the prior year, $77,000 less in expense was deferred. ESOP expense
decreased in the current period by $48,000 due to lower average prices of
the Company's common stock in the current period. Occupancy expenses
increased $40,000 to $417,000 for the six month period ended March 31, 2000
compared to $377,000 for the comparable period in 1999, due to increased
real estate taxes. Data processing expenses decreased $32,000 to $92,000
for the six months ended March 31, 2000 compared to $124,000 forthe prior
year. The decrease was primarily due to the conversion to an in-house
processing system. Additional data processing staff increased compensation
expense. Federal insurance premiums decreased $23,000 due to reduced FICO
assessments in the current period. Advertising expenses decreased $23,000
to $55,000 for the six months ended March 31, 2000 compared to $78,000 for
the comparable period in 1999. The decrease was primarily due to
advertising for the new Liberty branch and the new senior's program in the
prior year. Other operating expenses increased $44,000 to $461,000 for the
six months ended March 31, 2000 compared to $417,000 for the prior year.
Dealer participation fees paid increased $63,000 and charitable
contributions increased $32,000. Deposit account supplies increased
$8,000. Employee travel expenses decreased $9,000 due to data processing
conversion charges in the prior year. Professional fees decreased $35,000
due primarily to one time charges in the prior period.
Income Taxes: Income tax expense decreased $100,000 to $275,000 for the
quarter ended March 31, 2000, compared to $375,000 for the comparable
period in 1999. The effective tax rate was 33.4% and 37.4% for the quarters
ended March 31, 2000 and 1999, respectively. Income tax expense decreased
$126,000 to $546,000 for the six months ended March 31, 2000, compared to
$672,000 for the six months ended March 31, 1999. The effective tax rate
was 33.4% and 38.1% for the six months periods ended March 31, 2000 and
1999, respectively. Taxable income fell for both the three and six month
periods ended March 31, 2000 compared to the three and six months ended
March 31, 1999 and reduced taxes due.
Asset and Liability Management - Interest Rate Sensitivity
At March 31, 2000, the Company's total interest-bearing liabilities
maturing or repricing within one year exceeded interest-earning assets
maturing or repricing in the same period by $16.1 million, representing a
cumulative negative one-year gap ratio of 5.7% to total assets. At
September 30, 1999, the negative gap was $34.0 million, or 13.0% to total
assets. The change is primarily due to increased speculative construction
loans, increased adjustable rate mortgage loans now subject to annual
adjustments, increased consumer loans with shorter terms, increased longer
term FHLB advances and increased balances in longer term certificates of
deposits by customers.
The Year 2000 Issue
The Association has not encountered any Year 2000 related problems to date.
The Association will continue to monitor all data processing and other
applications throughout the year.
Quantitative and Qualitative Disclosures about Market Risk
For a discussion of the Company's management of market risk, see "Asset and
Liability Management" above and pages 14 and 15 of the Company's Annual
Report incorporated by reference in Part IV, item 14, of Form 10-K for the
fiscal year ended September 30, 1999.
For quantitative information about market risk, see pages 14 and 15
of the Company's Annual Report.
There has been no material changes in the quantitative disclosures about
market risk as of March 31, 2000 from those presented in the Company's 1999
Annual Report.
NON-PERFORMING ASSETS
The following table sets forth the amounts and categories of the
Association's non-performing assets. Loans are placed on non-accrual
status when the collection of principal and/or interest is not probable;
however, in no event is interest accrued on loans for which interest is
more than 90 days delinquent. Foreclosed assets include assets acquired
in settlement of loans.
March 31, September 30,
1999 1999
(Dollars in Thousands)
Non-Accruing Loans:
One- to four-family $126 $171
Multi-family -- --
Commercial -- --
Land -- 63
Construction -- --
Consumer 35 13
Total non-accuring loans 161 247
Accruing loans delinquent 90 days or more(1)
One- to four-family 67 --
Multi-family -- --
Commercial -- --
Land -- --
Construction -- --
Consumer -- --
Total accruing loans delinquent
90 days or more 67 --
Total non-performing loans 228 247
Foreclosed Assets:
One- to four-family -- 23
Multi-family -- --
Commercial -- --
Land -- --
Construction -- --
Consumer 7 --
Total foreclosed assets 7 23
Total non-performing assets $235 $270
Total classified assets $5,326 $8,062
Total non-performing loans as a
percentage of loans receivable 0.09% 0.10%
Total non-performing assets as a
percentage of total assets 0.08% 0.10%
____________________
(1) These loans are delinquent 90 days or more as to principal but
not as to interest. This can occur when the Association receives
a partial payment from a borrower which is first applied to interest
due.
Non-performing assets decreased $35,000, or 13.0% to $235,000 at March 31,
2000 from $270,000 at September 30, 1999. Classified assets decreased
$2,736,000, or 33.9%, to $5,326,000 at March 31, 2000 from $8,062,000 at
September 30, 1999, primarily because of the decrease in speculative
construction loans that were not paid off in their initial one year term.
CAPITAL RESOURCES
The Association is subject to three capital to asset requirements in
accordance with Office of Thrift Supervision regulations. The following
table is a summary of the Association's regulatory capital requirements and
actual capital as of March 31, 2000:
Actual Required Excess
Amount/Percent Amount/Percent Amount/Percent
(Dollars in Thousands)
Tangible Capital $35,870 12.71% $4,234 1.50% $31,636 11.21%
Core Leverage
Capital 35,870 12.71% 11,291 4.00% 24,579 8.71%
Risk-Based
Capital 37,614 20.01% 15,037 8.00% 22,577 12.01%
LIQUIDITY
The Association's principal sources of funds are deposits, advances from
the Federal Home Loan Bank of Des Moines, principal and interest payments
on loans, and investment securities classified as held to maturity. While
scheduled loan repayments and maturing investments are relatively
predictable, deposit flows and early loan prepayments are more influenced
by interest rates, general economic conditions and competition.
The Association is required to maintain minimum levels of liquid assets as
defined by regulations. The required percentage is currently 4% of net
withdrawable savings deposits, less withdrawable deposits maturing in more
than one year, and borrowings payable on demand or in one year or less.
The Association has maintained its liquidity ratios at levels exceeding the
minimum requirement. The eligible liquidity ratios at March 31, 2000 and
September 30, 1999 were 17.53% and 11.89%, respectively.
In light of the competition for deposits and demand for loans, the
Association has utilized the funding sources of the Federal Home Loan Bank
to meet demand in accordance with the Association's growth plan. The
wholesale funding sources may allow the Association to obtain a lower cost
of funding and create a more efficient liability match to the respective
assets being funded. Long term advances increased $15,869,000 during the
six months ended March 31, 2000 due to new long term . Certificates of
deposits were 77.0% of total savings and 46.0% of total interest-bearing
liabilities at March 31, 2000 compared to 76.6% and 51.3% respectively at
September 30, 1999.
In November 1999, the Company announced a 10% stock repurchase program.
By March 31, 2000 a total of 164,700 shares were repurchased at a cost of
$2,026,000. At March 31, 2000, 43,517 shares remain outstanding in that
repurchase program.
CAMERON FINANCIAL CORPORATION
FORM 10-Q
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings
The Holding Company and the Association are not involved in
any legal proceedings incident to the business of the
Holding Company and the Association, which involve amounts
in the aggregate which management believes are material to
the financial condition and results of operation.
ITEM 2. Changes in Securities
Not Applicable
ITEM 3. Defaults upon Senior Securities
Not Applicable
ITEM 4. Submissions of Matters to a Vote of Security Holders
The annual meeting of stockholders of the Company was held
on January 24, 2000. Mr David G. Just and Mr. William J.
Heavner were each elected as directors for three year terms
as follows: Mr. Just had 1,716,809 shares for, 52,417
shares withheld and no broker non-votes; Mr. Heavner had
1,489,708 shares for, 279,518 shares withheld and no broker
non-votes. The following Directors' terms of office
continued after the meeting: Jon N. Crouch, William F.
Barker, Harold D. Lee, Kennith R. Baker and Dennis E.
Marshall.
The stockholders approved the ratification of the
appointment of KPMG LLP as the Company's auditors by a vote
of 1,747,749 shares for, 14,763 shares against, 6,714
abstentions and no broker non-votes.
ITEM 5. Other Information
Effective February 1, 2000, Director Baker resigned as a
Director of the Company for personal reasons
ITEM 6. Exhibits and Reports of Form 8-K
On March 1, 2000, the Company filed a Form 8-K for the
purpose of reporting, under Item 5 thereof, the resignation
of David G. Just as Chief Executive Officer and the
appointment of Duane Kohlstaedt as Chief Executive Officer.
Financial Data Schedule; EX-27
SIGNATURES
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.
CAMERON FINANCIAL CORPORATION
Registrant
Date: May 12, 2000 /s/ Duane Kohlstaedt
Duane Kohlstaedt, Executive Vice-
President and Chief Executive Officer
(Duly Authorized Officer)
Date: May 12, 2000 /s/ Ronald W. Hill
Ronald W. Hill, Vice-President &
Treasurer (Principal Financial &
Accounting Officer)