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 June 30, 1997
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
common stock as of the latest practicable date.
Class Outstanding at August 8, 1997
Common stock, .01 par value 2,626,696
CAMERON FINANCIAL CORPORATION
Contents
PART I - FINANCIAL INFORMATION
Item 1: Financial Statements Page
Consolidated Balance Sheets at June 30, 1997,
unaudited, and September 30, 1996 3
Consolidated Statements of Earnings for the Three
Months and Nine Months Ended June 30, 1997 and
1996, unaudited 4
Consolidated Statements of Equity for the
Nine Months Ended June 30, 1997, unaudited 5
Consolidated Statements of Cash Flows for
the Nine Months Ended June 30, 1997 and
1996, unaudited 6-7
Notes to Unaudited Consolidated Financial
Statements 8
Item 2: Management's Discussion and Analysis of
Financial Condition and Results of
Operations 9-17
PART II - OTHER INFORMATION 18
Signatures 18
CAMERON FINANCIAL CORPORATION AND SUBSIDIARY
Consolidated Balance Sheets
(Dollars in thousands)
June 30, September 30,
1997 1996
Assets (unaudited)
Cash and cash equivalents $7,056 $6,283
Investment securities held-to-maturity (estimated fair
value of $14,927,000 at June 30 and $18,249,000 at
September 30) 14,913 18,297
Mortgage-backed securities held-to-maturity 10 13
Loans receivable, net 174,741 154,444
Accrued interest receivable:
Loans and mortgage-backed securities 1,261 1,090
Investment securities 268 206
Office property and equipment, net 6,377 2,874
Stock in Federal Home Loan Bank(FHLB) of Des Moines, at cost 1,762 1,259
Deferred income taxes 444 611
Other assets 1,273 1,269
Total assets $208,105 $186,346
Liabilities and Stockholders' Equity
Liabilities:
Savings deposits 124,818 123,108
Advances from FHLB 35,250 12,250
Advance payments for taxes and insurance 1,380 1,729
Accrued interest on savings deposits 122 141
Accrued expenses and other liabilities 1,139 1,989
Income taxes payable 260 314
Total liabilities 162,969 139,531
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 29,750 29,622
Retained earnings, substantially restricted 24,091 22,756
Less:
Unearned employee benefits (2,661) (3,082)
Treasury stock, at cost- 400,232 shares at June 30, 1997
and 177,248 at September 30, 1996 (6,074) (2,511)
Total stockholders' equity 45,136 46,815
Total liabilities and stockholders' equity $208,105 $186,346
See accompanying Notes to Unaudited Consolidated Financial Statements.
CAMERON FINANCIAL CORPORATION AND SUBSIDIARY
Consolidated Statements of Earnings
(unaudited)
Three Months Ended Nine Months Ended
June 30, June 30,
1997 1996 1997 1996
(Dollars in thousands, except share data)
Interest income:
Loans $3,716 $3,116 $10,668 $8,923
Investment securities 245 297 762 1,037
Mortgage-backed securities - - 1 1
Certificates of deposit and othe 98 56 332 338
Total interest income 4,059 3,469 11,763 10,299
Interest expense:
Savings deposits 1,622 1,599 4,850 4,850
Borrowed money 458 46 1,054 77
Total interest expense 2,080 1,645 5,904 4,927
Net interest income 1,979 1,824 5,859 5,372
Provision for loan losses 93 88 362 268
Net interest income after
provision for loan losses 1,886 1,736 5,497 5,104
Noninterest income:
Loan fees and service charges 38 36 119 99
Other income 7 49 34 75
Total noninterest income 45 85 153 174
Noninterest expense:
Compensation, payroll taxes and
fringe benefits 562 429 1,597 1,202
Occupancy expense 110 52 248 151
Data processing 43 39 125 117
Federal insurance premiums 21 71 97 212
Advertising 50 20 105 58
Loss on real estate owned - - - 1
Other operating expenses 147 132 477 457
Total noninterest expense 933 743 2,649 2,198
Earnings before income taxe 998 1,078 3,001 3,080
Income taxes 361 401 1,134 1,140
Net earnings $637 $677 $1,867 $1,940
Net earnings per share $0.25 $0.26 $0.71 $0.70
Average common shares outstanding 2,519,908 2,651,249 2,626,436 2,768,727
See accompanying Notes to Unaudited Consolidated Financial Statements.
CAMERON FINANCIAL CORPORATION AND SUBSIDIARY
Consolidated Statements of Stockholders' Equity
For The Nine Months Ended June 30, 1997
(Unaudited)
(Dollars in Thousands)
Additional Unearned Total
Common paid-in Retained employee Treasury stockholders'
Stock capital earnings benefits stock equity
Balance at September 30, 1996 $30 $29,622 $22,756 ($3,082) ($2,511) $46,815
Net earnings - - 1,867 - - 1,867
Amortization of RRP - - - 208 - 208
Purchase of treasury stock - - - - (3,563) (3,563)
Allocation of ESOP shares - 128 - 213 - 341
Dividends declared($.07 per share) - - (532) - - (352)
Balance at March 31, 1997 $30 $29,750 $24,091 ($2,661) ($6,074) $45,316
See accompanying Notes to Unaudited Consolidated Financial Statements.
CAMERON FINANCIAL CORPORATION AND SUBSIDIARY
Consolidated Statements of Cash Flows
Nine Months Ended June 30,
(Unaudited)
(Dollars in Thousands)
1997 1996
Cash flows from operating activities:
Net earnings $1,867 $1,940
Adjustments to reconcile net earnings to cash
provided by operating activities:
Depreciation and amortization 62 34
Provision for loan losses 362 268
Provision for losses on real estate owned 3 -
Amortization of RRP and allocation of ESOP shares 549 116
Deferred income taxes 167 (34)
Gain on sales of real estate owned (4) -
Stock dividend received from FHLB of Des Moines (503) (24)
Amortization of deferred loan fees (344) (287)
Proceeds from sales of loans held for sale 822 1,210
Origination of loans held for sale (816) (1,116)
Gain on sale of loans held for sale (6) (12)
Changes in assets and liabilities:
Accrued interest receivable (233) (46)
Other assets (74) 284
Accrued interest payable (19) (38)
Accrued expenses and other liabilities (836) 395
Current income taxes payable (54) (54)
Cash provided by operating activities $943 $2,636
Cash flows from investing activities:
Net increase in loans receivable (20,267) (17,031)
Purchase of loans receivable - (882)
Mortgage-backed securities principal payments 3 3
Maturity of investment securities
held to maturity 4,410 11,723
Purchase of investment securities
held to maturity (1,000) (4,041)
Net decrease (increase) in certificates of
deposit in other financial institutions - 991
Net proceeds from sale of real estate owned 27 -
Additions and improvements to real estate owned (4) -
Purchase of office properties and equipment (3,591) 1,620)
Cash used in investing activities ($20,422) ($10,857)
Cash flows from financing activities:
Net (decrease) increase in NOW, passbook and
money market deposit accounts (1,170) 117
Net increase in certificate accounts 2,880 1,846
Net decrease in advance payments by
borrowers for taxes and insurance (349) (350)
Proceeds from FHLB advances 25,000 3,250
Repayment of FHLB advances (2,000) -
Dividends paid (546) (577)
Purchase of Treasury stock (3,563) (3,881)
Net cash provided by
financing activities 20,252 405
Net increase (decrease) in cash 773 (7,816)
Cash and cash equivalents at beginning of period 6,283 10,935
Cash and cash equivalents at end of period $7,056 $3,119
Supplemental disclosure of cash flow information:
Cash paid during the period for income taxes $1,021 $1,228
Cash paid during the period for interest, net
of capitalized interest $5,865 $4,964
Supplemental schedule of noncash investing and financing
activities:
Conversion of real estate owned to loans - $94
Dividend declared and payable $172 $184
See accompanying Notes to Unaudited Consolidated Financial Statements.
CAMERON FINANCIAL CORPORATION AND SUBSIDIARY
Notes to Unaudited Consolidated Financial Statements
(1) Cameron Financial Corporation
Cameron Financial Corporation (the "Company") was incorporated under the
laws of the State of Delaware for the purpose of becoming the savings & loan
holding company of The Cameron Savings & Loan Association, FA (the
"Association") in connection with the Association's conversion from a
federally chartered mutual savings and loan to a federally chartered stock
savings and loan, pursuant to its Plan of Conversion. On February 27, 1995,
the Company commenced a Subscription and Community Offering of its shares
in connection with the conversion of the Association (the "Offering"). The
Offering was consummated and the Company acquired the Association on March
31, 1995.
(2) 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, 1996, 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 nine month period ended June 30, 1997 are not
necessarily indicative of results that may be expected for the entire fiscal
year ending September 30, 1997.
(3) Earnings Per Share
Earnings per share of common stock have been determined by dividing net
earnings for the period by the weighted average number of shares of common
stock and common stock equivalents outstanding, less treasury shares and
unallocated ESOP shares. Stock options are regarded as common stock
equivalents and are therefore considered in both primary and fully diluted
earnings per share calculations. Common stock equivalents are computed
using the treasury stock method. In February 1997, the Financial Accounting
Standards Board issued Statement No. 128, "Earnings Per Share" which revises
the calculation and presentation provisions of Accounting Principles Board
Opinion 15 and related interpretations. Statement No. 128 is effective for
the Company's fiscal year ending September 30, 1998. Retroactive application
will be required. The Company believes the adoption of Statement No. 128 will
not have a significant effect on its reported earnings per share.
CAMERON FINANCIAL CORPORATION AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion compares the financial condition of Cameron
Financial Corporation, the "Company", and its wholly owned subsidiary, The
Cameron Savings & Loan Association, F.A., the "Association", at June 30,
1997 to its fiscal year ended September 30, 1996, and the results of
operations for the three and nine months ended June 30, 1997 with the three
and nine months ended June 30, 1996. 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, three full service branch offices
located in Cameron, Clinton County, Maryville, Nodaway County, and Mound
City, Holt County, and a loan production office located in Liberty, Clay
County, Missouri. OTS approval has been received to open a full service
branch office in Liberty. The loan production office will be closed upon
the opening of the branch office. 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
and Federal Home Loan Bank advances. The Association has sought to
implement this strategy by emphasizing residential mortgage lending,
developing a construction lending business, 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 11.7%, or $21,759,000, to $208,105,000 at June 30,
1997 from $186,346,000 at September 30, 1996. During the nine months ended
June 30, 1997, the Company repurchased 222,984 shares of common stock.
There are 64,618 shares remaining to be repurchased in the repurchase
program previously announced. Stockholders' equity decreased $1,679,000
or 3.6% to $45,136,000 at June 30, 1997 compared to $46,815,000 at
September 30, 1996. The decrease was due to the stock repurchase program
and quarterly cash dividends exceeding net income. Cash, investment
securities and certificates of deposits in other financial institutions
decreased 10.6%, or $2,611,000 to $21,969,000 at June 30, 1997 from
$24,580,000 at September 30, 1996. Loans receivable, net, increased 13.1%,
or $20,297,000, to $174,741,000 at June 30, 1997 from $154,444,000 at
September 30, 1996. Real estate loan and consumer loan growth in this time
period were $22,120,000 and $272,000, respectively. Office property and
equipment increased $3,503,000 to $6,377,000 at June 30, 1997 from
$2,874,000 at September 30, 1996, as a result of construction continuing
on the new home office building in Cameron and the purchase of land in
Liberty, Missouri for a new branch office. The new home office opened June
23, 1997. Construction costs for the new home office approximated through
June 30, 1997 are $4,600,000. The OTS has approved the establishment of
a full service branch in Liberty, Missouri. When the branch office is
opened, the current loan production office in Liberty will be closed. The
Company purchased approximately four acres of land in Liberty, Missouri at
a cost of $850,000. Construction costs for the Liberty branch office are
estimated at $1.0 million, although no formal construction plans have been
prepared and the estimate is subject to change. Completion of the office
should occur in early 1998 with funds expected to be provided by normal
operations. The Company intends to use approximately one acre for the
branch facility and the remainder as investment property.
The following table sets forth certain information regarding the
composition of the Association's loan portfolio.
June 30, September 30,
1996 1996
One- to four family $120,054,000 $109,292,000
Multifamily 4,222,000 2,908,000
Commercial real estate 3,492,000 4,322,000
Land 5,460,000 5,404,000
Development 3,761,000 4,201,000
Construction (1) 52,905,000 41,646,000
Consumer loans 8,602,000 8,330,000
Total Loans Receivable 198,496,000 176,103,000
Less:
Deferred loan fees, net 834,000 804,000
Loans in process 21,218,000 19,502,000
Allowance for loan losses 1,703,000 1,353,000
Net Loans Receivable $174,741,000 $154,444,000
(1) Speculative construction $41,017,000 $26,685,000
Contract and permanent
construction $11,888,000 $14,961,000
Total $52,905,000 $41,646,000
During the nine months ended June 30, 1997, construction loans increased
by $11,259,000 to $52,905,000, and permanent 1-4 family loans increased by
$10,762,000 to $120,054,000.
Deposits were $124,818,000 at June 30, 1997, an increase of $1,710,000, or
1.4% from $123,108,000 at September 30, 1996. Competition from other
financial and non-financial entities will continue to impact savings
growth. The Association offers competitive interest rates on its deposit
products.
Due to continued loan demand, the Association borrowed an additional
$10,000,000 from the Federal Home Loan Bank during the quarter ended June
30, 1997. No FHLB advances matured or were repaid during the current
quarter. The FHLB advances obtained during the three months ended June 30,
1997 have maturities between one and three years. A $5,000,000 advance has
a maturity of one year with a variable interest rate based on LIBOR.
Another $5,000,000 advance has a fixed interest rate of 5.55% anda three
year maturity but is subject to a call quarterly. During the nine months
ended June 30, 1997, FHLB advances have increased $23,000,000.
At June 30, 1997 FHLB advances and certificates of deposit represented
22.0% and 63.7% of interest-bearing liabilities respectively. At September
30, 1996, they represented 9.1% and 73.2% of interest-bearing liabilities
respectively.
RESULTS OF OPERATIONS
Net Earnings: Earnings per share decreased $0.01 to $0.25 for the quarter
ended June 30, 1997, compared to the quarter ended June 30, 1996.
Net earnings decreased $40,000, or 5.9%, to $637,000 for the quarter
ended June 30, 1997, compared with $677,000 for the quarter ended June 30,
1996. Earnings per share increased $0.01 to $0.71 for the nine months
ended June 30, 1997 compared to the same period in 1996. Net earnings
decreased $73,000, or 3.8% to $1,867,000 for the nine months ended June 30,
1997, compared with $1,940,000 for the prior period. For both the
quarterly period and the nine-month period, increases in interest income
were offset by decreases in non-interest income and increases in the
provision for loan losses, interest expense and non-interest expenses.
Net Interest Income: Net interest income increased $155,000, or
8.5%, to $1,979,000 for the quarter ended June 30, 1997, compared with
$1,824,000 for the quarter ended June 30, 1996. Net interest income
increased $487,000 or 9.1% to $5,859,000 for the nine months ended June 30,
1997, compared with $5,372,000 for the nine months ended June 30, 1996. Most of
the increase was due to increased balances of interest earning
assets. The net interest margin for the nine months decreased to 4.14% at June
30, 1997 compared to 4.22% at June 30, 1996. Interest earning assets
averaged 127.82% of interest bearing liabilities for the nine months ended
June 30, 1997 compared to 136.10% for the comparable period in 1996. The
average spread between interest earning assets and interest bearing
liabilities decreased to 2.70% for the nine months ended June 30, 1997,
compared to 2.77% for the same period in 1996.
Interest Income: Interest income increased by $590,000, or 17.0%, for the
quarter ended June 30, 1997, to $4,059,000 from $3,469,000 for the quarter
ended June 30, 1996. Interest income increased by $1,464,000, or 14.2%,
for the nine months ended June 30, 1997, to $11,763,000 from $10,299,000
for the nine months ended June 30, 1996. The increase for both periods was
primarily due to increased interest earning assets.
Interest Expense: Interest expense increased $435,000, or 26.4%, to
$2,080,000 for the quarter ended June 30, 1997, compared to $1,645,000 for
the comparable period in 1996. The increase is a result of increases in
savings deposits of $1.6 million or 1.3% from $123.2 million at June 30,
1996 to $124.8 million at June 30, 1997 and increases of FHLB advances of
$32.0 million from $3.3 million at June 30, 1996 to $35.3 million at June
30, 1997 and increased rates on interest-bearing liabilities. The
Association borrowed an additional $10.0 million from the Federal Home Loan
Bank of Des Moines during the quarter ended June 30, 1997.
Provision for Loan Losses: The provision for loan losses was $93,000 for
the quarter ended June 30, 1997, compared to $88,000 for the same period
in 1996. The provision for loan losses was $362,000 for the nine month
period ended June 30, 1997, compared to $268,000 for the same period in
1996. 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. Total loans receivable increased $22.4 million to $198.5
million during the nine months ended June 30, 1997. Speculative construction
loans, which carry the highest risk factor, increased $14.3
million, or 53.7%, to $41.0 million at June 30, 1997 from $26.7 million at
September 30, 1996. Non-performing loans were $1.5 million at both June
30, 1997 and September 30, 1996. As of June 30, 1997, the allowance for
loan losses was $1,703,000, or .86% of total loans receivable and 111.82%
of total nonperforming loans. Charge-offs were zero and $2,000 for the
quarters ended June 30, 1997 and 1996, respectively.
A reconciliation of the Association's allowance for loan losses is
summarized as follows:
Nine Months Ended
June 30,
1997 1996
Balance at beginning of period $1,353,000 $994,000
Provision 362,000 268,000
Charge-offs (12,000) (4,000)
Recoveries - -
Balance at end of period $1,703,000 $1,258,000
Noninterest Income: Noninterest income decreased to $45,000 for the
quarter ended June 30, 1997 from $85,000 for the comparable period in 1996.
Loan fees and deposit service charges increased $2,000 for the three months
ended June 30, 1997 compared to the same period in 1996, due primarily to
increased number of loans and new deposit accounts with monthly charges.
Other income decreased $42,000 in the quarter ended June 30, 1997 compared
to the same period in 1996 due primarily to the gain on the sale of $40,000
for the Association's share of a cooperative data center in 1996.
There was no comparable activity in the current period. There were no
gain on the sale of loans for the quarter ended June 30, 1997 compared to
a $4,000 gain in the 1996 quarter. Noninterest income decreased to
$153,000 for the nine months ended June 30, 1997 from $174,000 for the nine
months ended June 30, 1996. Loan fees and deposit service charges increased
$20,000 for the nine months ended June 30, 1997 compared to the same period
in 1996, due primarily to increased numbers of loans and new deposit
accounts with monthly service charges. Other income decreased $41,000 during
the nine months ended June 30, 1997 compared to the nine months ended June
30, 1996 due primarily to the gain on the sale of the cooperative data
center during 1996. Gains on the sale of loans decreased to $6,200 for the
nine months ended June 30, 1997 compared to $11,500 for the prior period.
Noninterest Expense: Noninterest expense increased $190,000 to $933,000
for the quarter ended June 30, 1997 from $743,000 for the same period in
1996. Personnel expenses increased $133,000 in 1997 compared to 1996.
Cash compensation increased $98,000 for the current quarter. The Association
had 52 full-time equivalent employees at June 30, 1997 compared to 42 at
June 30, 1996, and 45 at September 30, 1996. Most of the staffing increase is
due to the opening of the new home office in Cameron.
In addition to the expanded hours at the new office, part of the
existing office will remain open. Decreased loan originations in the
quarter ended June 30, 1997 compared to the quarter ended June 30, 1996,
resulted in $3,000 fewer costs deferred in accordance with FAS 91 for the
current quarter. Payroll taxes and other benefits increased $31,000 due
to the increased number of employees. ESOP expenses were $13,000 higher
in the quarter ended June 30, 1997 compared to the same period in 1996
due to higher average stock prices in the current quarter.
Occupancy expense increased $58,000 to $110,000 for the quarter
ended June 30, 1997 compared to the quarter ended June 30, 1996 due to
increased real estate taxes on the new home office building and increased
expenses for office equipment, computer upgrades and increased depreciation
expense.
Federal insurance premiums decreased $50,000 to $21,000 for the quarter
ended June 30, 1997 compared to the quarter ended June 30, 1996 due to
decreased SAIF premiums after the special one-time assessment in September
1996. Advertising expenses increased $30,000 to $50,000 for the quarter
ended June 30, 1997 compared to the same period in 1996 due to increased
advertising for new deposit products introduced during 1997 and promotional
items for the opening of the new home office. Other operating expenses
increased $15,000 to $147,000 for the quarter ended June 30, 1997 compared
to the quarter ended June 30, 1996. Increases in office supplies and
professional expense offset decreases in postage and other employee
expense.
Noninterest expense increased $451,000 for the nine months ended June 30,
1997 compared to the nine months ended June 30, 1996. Personnel expenses
increased $395,000 for the current period. Cash compensation increased
$227,000 due primarily to more employees. Expenses for the Recognition and
Retention Plan, the "RRP", which was approved by stockholders in January
1996, increased $92,000 due to nine months expense in the current period
versus five months in the prior period. Payroll taxes and other benefits
increased $47,000 due to more employees and the first year's vesting of the
RRP. Due to a decrease in loan originations in the nine month period ended
June 30, 1997 compared to the same period in 1996, $13,000 less in expenses
were deferred. ESOP expense increased in the current period by $20,000 due
to higher average stock prices. Occupancy expenses increased $97,000 to
$248,000 for the nine month period ended June 30, 1997 compared to the same
period in 1996, primarily due to increased real estate taxes on the new
home office building and increased expenses for office equipment, computer
upgrades and increased depreciation expense. Federal insurance premiums
decreased $115,000 to $97,000 for the nine months ended June 30, 1997
compared to $212,000 for the comparable period in 1996. The decrease was
due to reduced SAIF premiums as a result of the one-time assessment to
recapitalize SAIF in September 1996. Advertising expenses increased
$47,000 to $105,000 for the nine months ended June 30, 1997 compared to the
same period in 1996. The increase was primarily due to increased advertising
for new deposit accounts and promotional items for the opening of the new home
office building.
Income Taxes: Income tax expense decreased $40,000 to $361,000 for the
quarter ended June 30, 1997, compared to $401,000 for the same period in
1996, primarily due to a decrease of $80,000 in pre-tax income for the
comparable periods. The effective tax rate was 36.2% and 37.2% for the
quarters ended June 30, 1997 and 1996, respectively. Income tax expense
decreased $6,000 to $1,134,000 for the nine months ended June 30, 1997,
compared to $1,140,000 for the nine months ended June 30, 1996, primarily
due to a decrease of $79,000 in pre-tax income for the comparable periods.
The effective tax rate was 37.8% and 37.0% for the nine month periods ended
June 30, 1997 and 1996, respectively.
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.
June 30, September 30,
1997 1996
(Dollars in Thousands)
Non-Accruing Loans:
One- to four-family $385 $638
Multi-family -- --
Commercial -- --
Land -- --
Construction 105 131
Consumer -- --
Total non-accuring loans 490 769
Accruing loans delinquent 90 days or more(1)
One- to four-family 700 653
Multi-family -- --
Commercial -- --
Land -- --
Construction 281 --
Consumer 52 56
Total accruing loans delinquent
90 days or more 1,033 709
Total non-performing loans 1,523 1,478
Foreclosed Assets:
One- to four-family -- 70
Multi-family -- --
Commercial -- --
Land -- --
Construction -- --
Consumer -- --
Total foreclosed assets -- 70
Total non-performing assets $1,523 $1,548
Total classified assets $9,176 $7,729
Total non-performing loans as a
percentage of loans receivable 0.77% 0.84%
Total non-performing assets as a
percentage of total assets 0.73% 0.83%
_________________
(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 loans increased $45,000, or 3.0% to $1,523,000 at June 30,
1997 from $1,478,000 at September 30, 1996. Classified assets increased
18.72% to $9,176,000 at June 30, 1997 from $7,729,000 at September 30,
1996, primarily because of the increase in speculative construction loans
that were not paid off in their initial one year term. At September 30,
1996, 37 loans for a total of $4.4 million were in that category compared
to 43 loans for a total of $5.5 million at June 30, 1997. Although the
total is up from September 30, 1996, it has decreased from the March 31,
1997 totals of 54 loans for $6.6 million. Twelve speculative construction
loans were delinquent more than thirty days as to interest at June 30,
1997.
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 June 30, 1997:
Actual Required Excess
Amount/Percent Amount/Percent Amount/Percent
(Dollars in Thousands)
Tangible $34,027 17.11% $2,983 1.50% $31,044 15.61%
Core Leverage
Capital 34,027 17.11% 5,966 3.00% 28,061 14.11%
Risk-Based
Capital 34,787 25.59% 10,876 8.00% 23,911 17.59%
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 5% of net
withdrawable savings deposits 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 June 30, 1997 and September 30, 1996 were 5.27% and 6.43% 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. The Association borrowed $10.0 million in the quarter
ended June 30, 1997. The advances have maturities between one and three
years and interest rates between 5.55% and 5.628%. No advances were repaid
during the quarter ended June 30, 1997. Certificates of deposit were
81.7% of total savings and 63.7% of total interest-bearing liabilities at
June 30, 1997 compared to 80.5% and 73.2% respectively at September 30,
1996.
Office property and equipment has increased $3.5 million in the nine months
ended June 30, 1997. The Association completed construction of its new
home office building in Cameron in June 1997. Construction costs of the
new building are approximated at $4.6 million through June 30, 1997. On
November 15, 1996, the Company signed a contract to purchase approximately
four acres of land in Liberty, Missouri for use as a future branch office.
It is the Association's intent to convert the current loan production
office to a full service branch office. Application for the change has
been approved by OTS. The cost of the land was $850,000. Although bids
have not been completed at this time, construction costs are estimated at
$1.0 million. Completion of the office should occur in early 1998 with
funds provided by normal operations. The Company intends to use approximately
one acre for the branch facility and the remainder as investment property.
As of August 2, 1997, the Company has purchased 220,400 of the 285,018
shares to be repurchased in the 10% stock buyback announced in September,
1996. The cost of the remaining 64,618 shares would be approximately $1.13
million based on the current bid-asked range of Company stock.
Recently enacted legislation provides that the Bank Insurance Fund ("BIF")
and the Savings Association Insurance Fund ("SAIF") will merge on January
1, 1999 if there are no more savings associations as of that date. Several
bills have been introduced in the current Congress that would eliminate the
federal thrift charter and the OTS. The bills would require that all
federal savings associations convert to national banks or state depository
institutions by no later than January 1, 1998 in one bill and June 30, 1998
in the other, and would treat all state savings associations as state banks
for purposes of federal banking laws. Subject to a narrow grandfathering
provision, all savings and loan holding companies would become subject to
the same regulation and activities restrictions as bank holding companies
under the pending legislative proposals. The legislative proposals would
also abolish the OTS and transfer its functions to the federal bank
regulators with respect to the institutions and to the Board of Governors
of the Federal Reserve System with respect to the regulation of holding
companies. The Association is unable to predict whether the legislation
will be enacted or, given such uncertainty, determine the extent to which
the legislation, if enacted, would affect its business. The Association
is also unable to predict whether the SAIF and BIF will eventually be merged.
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
None
ITEM 5. Other Information
None
ITEM 6. Exhibits and Reports of Form 8-K
None
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: August 12, 1997 /s/ David G.Just
David G. Just, President and Chief
Executive Officer (Duly Authorized
Officer)
Date: August 12, 1997 /s/ Ronald W. Hill
Ronald W. Hill, Vice-President &
Treasurer (Principal Financial &
Accounting Officer)