UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
for the quarterly period ended March 31, 1997
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 Number 0-23164
LANDMARK BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
Kansas 48-1142260
(State or other jurisdiction I.R.S. Employer
of incorporation or organization) Identification Number
CENTRAL AND SPRUCE STREETS, DODGE CITY, KANSAS 67801
(Address and Zip Code of principal executive offices)
(316) 227-8111
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year,
if changed since last report)
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
The number of shares outstanding of each of the issuer's classes of common
stock, as of March 31, 1997:
$.10 par value common stock 1,807,996 shares
(Class) (Outstanding)
Transitional Small Business Disclosure Format:
Yes [ ] No [X]
LANDMARK BANCSHARES, INC.
INDEX
Page Number
PART I. FINANCIAL INFORMATION
Item 1.Financial Statements
Statements of Financial Condition as of
March 31, 1997 (unaudited) and September 30, 1996 1
Statements of Income for the Three and Six
Months Ended March 31, 1997 and 1996 (unaudited) 2
Statements of Cash Flows for the Six Months Ended
March 31, 1997 and 1996 (unaudited) 3 - 4
Notes to Financial Statements 5 - 8
Item 2.Management's Discussion and Analysis of
Financial Condition and Results of Operations 9 - 12
PART II - OTHER INFORMATION
Item 2.Changes in Securities 13
Item 4.Submission of Matter to a Vote of Security Holders 13
Item 5.Other Information 13
Item 6(b). Reports on Form 8-K 13
SIGNATURES 14
LANDMARK BANCSHARES, INC. AND ITS WHOLLY-OWNED SUBSIDIARY,
LANDMARK FEDERAL SAVINGS BANK
Consolidated Statements of Financial Condition
March 31, 1997 September 30, 1996
(Unaudited)
-----------------------------------
ASSETS
Cash and cash equivalents:
Interest bearing $ 0 $ 3,063
Non-interest bearing 669,371 470,647
Time deposits in other financial institutions 199,472 479,949
Securities held to maturity 27,619,482 29,398,520
Securities available for sale 4,928,022 4,137,637
Mortgage-backed securities held to maturity 41,665,753 45,877,120
Loans receivable, net 144,340,088 128,013,228
Loans held for sale 655,926 1,890,007
Accrued income receivable 1,557,730 1,518,640
Real estate owned or in judgment and other
repossessed property, net 215,313 0
Office properties and equipment, at cost less
accumulated depreciation 943,672 949,786
Prepaid expenses and other assets 1,004,504 973,383
Income taxes receivable - deferred 0 21,710
TOTAL ASSETS $ 223,799,333 $ 213,733,690
------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits 149,397,743 143,814,910
Outstanding checks in excess of bank balance 70,664 143,808
Other Borrowed Money 38,633,335 33,466,668
Advances from borrowers for taxes and
insurance 995,827 1,673,142
Accrued expenses and other Liabilities 1,471,261 2,193,296
Deferred income taxes 113,558 0
Income taxes
Current 367,059 52,691
------------------------------
TOTAL LIABILITIES $ 191,049,447 $ 181,344,515
------------------------------
Stockholders' Equity
Preferred stock, no par value; 5,000,000 shares
authorized; no shares outstanding
Common Stock 228,131 228,131
$.10 par value; 10,000,000 shares authorized;
2,281,312 shares issued
Additional Paid-in Capital 21,944,175 21,944,175
Treasury Stock; 473,316 and 428,316 shares of common stock
on March 31, 1997 and September 30, 1996 repectively, at cost (6,839,018) (6,027,206)
Retained income (substantially restricted) 18,355,170 17,468,325
Employee Stock Ownership Plan (994,695) (994,695)
Management Stock Bonus Plan (386,090) (482,612)
Unrealized gain available on for sale securities, net of
deferred tax 442,213 253,057
------------------------------
Total Stockholders' Equity 32,749,886 32,389,175
------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 223,799,333 $ 213,733,690
------------------------------
2
LANDMARK BANCSHARES, INC. AND ITS WHOLLY-OWNED SUBSIDIARY,
LANDMARK FEDERAL SAVINGS BANK
Consolidated Statements of Income
Three Months Ended March 31 Six Months Ended March 31
1996 1997 1996 1997
(unaudited) (unaudited)
-------------------------------------------------------
INTEREST INCOME
Interest on loans 2,137,829 2,853,594 4,250,030 5,604,442
Interest and dividends on investment securities 434,236 541,311 941,814 1,084,898
Interest on mortgage-backed securities 907,084 692,989 1,991,060 1,428,324
-------------------------------------------------------
Total interest income 3,479,149 4,087,894 7,182,904 8,117,664
INTEREST EXPENSE
Deposits 1,847,113 1,796,919 3,772,843 3,612,181
Borrowed funds 253,281 575,658 609,891 1,092,796
-------------------------------------------------------
Total interest expense 2,100,394 2,372,577 4,382,734 4,704,977
Net interest income 1,378,755 1,715,317 2,800,170 3,412,687
PROVISION FOR LOSSES ON LOANS 30,000 55,000 60,000 100,000
-------------------------------------------------------
Net interest income after provision for losses 1,348,755 1,660,317 2,740,170 3,312,687
NON-INTEREST INCOME
Service charges and late fees 49,278 63,410 97,745 123,753
Net gain (loss) on available for sale investments 7,500 64,223 7,500 172,916
Net gain (loss) on sale of loans (9,142) 5,224 43,224 64,663
Net gain on sale of available for sale
mortgage-backed securities 135,208 0 135,208 0
Service fees on loans sold 40,828 40,692 82,376 81,049
Other income 20,645 33,104 46,561 67,502
-------------------------------------------------------
244,317 206,653 412,614 509,883
NON-INTEREST EXPENSE
Compensation and related expenses 453,566 514,347 947,096 1,011,779
Occupancy expense 41,637 41,695 83,683 82,652
Advertising 21,820 17,499 37,634 31,947
Federal insurance premium 99,246 20,148 196,672 119,814
Loss (gain) from real estate operations 986 683 3,314 989
Data processing 55,568 52,327 98,325 95,815
Other expense 195,283 240,824 349,875 416,224
-------------------------------------------------------
868,106 887,523 1,716,599 1,759,220
Income before income taxes 724,966 979,447 1,436,185 2,063,350
INCOME TAXES EXPENSES 292,000 398,300 573,500 829,800
-------------------------------------------------------
Net income 432,966 581,147 862,685 1,233,550
-------------------------------------------------------
Primary earnings per share $ 0.22 $ 0.32 $ 0.43 $ 0.67
Fully diluted earnings per share $ 0.22 $ 0.32 $ 0.43 $ 0.67
Dividends per share $ 0.10 $ 0.10 $ 0.20 $ 0.20
3
LANDMARK BANCSHARES, INC. AND ITS WHOLLY-OWNED SUBSIDIARY
LANDMARK FEDERAL SAVINGS BANK
Consolidated Statements of Cash Flows
Six Months Ended March 31
1996 1997
(unaudited) (unaudited)
------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 862,685 $ 1,233,550
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 59,067 59,203
Decrease (increase) in accrued interest receivable 292,136 (39,090)
Increase (decrease) in outstanding checks in excess of bank balance (1,050,816) (73,144)
Increase (decrease) in accrued and deferred income taxes 79,255 449,636
Increase (decrease) in accounts payable and accrued expenses 50,512 (722,036)
Amortization of premiums and discounts on investments and loans (78,745) 5,008
Provision for losses on loans and investments 60,000 100,000
Gain/loss on available for sale securities (7,500) (172,916)
Other non-cash items, net (221,223) 33,298
Sale of loans held for sale 3,415,650 8,437,797
Gain on sale of loans held for sale (43,224) (64,663)
Origination of loans held for sale (4,266,405) (6,394,353)
Purchase of loans held for sale (971,700) (744,700)
------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES $ (1,820,308) $ 2,104,590
------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Loan originations and principal payment on loans held for investment (4,103,058) 442,408
Principal repayments on mortgage-backed securities 5,680,662 4,188,387
Loans purchased for investment (2,195,925) (17,105,864)
Proceeds from sale of mortgage-backed securities available for sale 11,355,417 0
Acquisition of mortgage-backed securities held to maturity (1,482,865) 0
Acquisition of investment securities held to maturity (6,799,500) (3,300,000)
Acquisition of investment securities available for sale (1,146,693) (951,165)
Proceeds from sale of investment securities 100,000 485,205
Proceeds from maturities or calls of investment securities 15,662,135 5,090,000
Net (increase) decrease in time deposits 219,000 280,000
Sale of real estate acquired in settlement of loans 47,484 2,000
Acquisition of fixed assets (21,723) (50,089)
Other investing activity (2,986) 0
------------------------------
NET CASH PROVIDED (USED) IN INVESTING ACTIVITIES 17,311,948 (10,919,118)
------------------------------
4
LANDMARK BANCSHARES, INC. AND ITS WHOLLY-OWNED SUBSIDIARY,
LANDMARK FEDERAL SAVINGS BANK
Consolidated Statements of Cash Flows
(Continued)
Six Months Ended March 31
1996 1997
(unaudited) (unaudited)
-------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in deposits $ (2,611,440) $ 5,582,833
Net increase (decrease) in escrow accounts (529,858) (677,315)
Proceeds from FHLB advance and other borrowings 5,000,000 47,223,000
Repayment of FHLB advance and other borrowings (14,633,333) (42,056,333)
Treasury Stock (2,012,316) (811,813)
Other Financing Activities 96,522 96,522
Dividend Payment (391,219) (346,705)
-------------------------------
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES (15,081,644) 9,010,189
-------------------------------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 409,996 195,661
BEGINNING CASH AND CASH EQUIVALENTS 462,021 473,710
-------------------------------
ENDING CASH AND CASH EQUIVALENTS 872,017 669,371
-------------------------------
SUPPLEMENTAL DISCLOSURES Cash paid during the year for:
Interest on deposits, advances, and other borrowings 4,499,375 4,752,544
Income taxes 247,387 829,800
Transfers from loans to real estate acquired through foreclosure 27,205 0
Transfer of mortgage-backed securities from held to maturity to
available for sale 11,500,000 0
LANDMARK BANCSHARES, INC.
PART I - FINANCIAL INFORMATION
ITEM 1. - FINANCIAL STATEMENTS
LANDMARK FEDERAL SAVINGS BANK
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying unaudited financial statements were prepared in
accordance with the instructions for form 10-QSB and , accordingly, do not
include all information and disclosures necessary to present financial
condition, results of operations and cash flows of Landmark Bancshares, Inc.
(the "Company") and its wholly-owned subsidiary Landmark Federal Savings Bank
(the "Bank") in conformity with generally accepted accounting principles.
However, all normal recurring adjustments have been made which, in the opinion
of management, are necessary for the fair presentation of the financial
statements.
The results of operation for the three months ending March 31, 1997, are not
necessarily indicative of the results which may be expected for the fiscal year
ending September 30, 1997.
2. On March 28, 1994, the Bank segregated and restricted $15,144,357 of retained
earnings in a liquidation account for the benefit of eligible savings account
holders who continue to maintain their accounts at the bank after the conversion
of the bank from mutual to stock form. In the event of a complete liquidation of
the Bank, each eligible account holder will be entitled to receive a
distribution from the liquidation account in an amount proportionate to the
current adjusted balances of all qualifying deposits then held. The liquidation
account will be reduced annually at September 30th to the extent that eligible
account holders have reduced their qualifying deposits.
3. INVESTMENTS AND MORTGAGE - BACKED SECURITIES
A summary of the Bank's carrying value of investment and mortgage -
backed securities as of March 31, 1997 and September 30, 1996, is as follows:
Investment Securities March 31, 1997 September 30, 1996
------------------------------------
Held to maturity:
Government Agency Securities 25,779,482 27,168,520
Municipal Obligations 1,840,000 2,230,000
------------------------------------
$27,619,482 $29,398,520
Available for sale:
Common Stock 2,668,722 2,396,237
Stock in Federal Home Loan Bank 2,249,300 1,731,400
Other 10,000 10,000
------------------------------------
$ 4,928,022 $ 4,137,637
6
Mortgage - Backed Securities held to maturity:
FNMA - Arms 14,267,888 15,425,620
FHLMC -Arms 5,286,461 6,215,951
FHLMC -Fixed Rate 306,004 399,854
CMO Government Agency 15,556,472 16,659,609
CMO Private Issue 4,976,986 5,636,850
FNMA - Fixed Rate 755,981 876,016
GNMA - Fixed Rate 427,368 551,646
Unamortized Premiums 200,564 268,015
Unearned Discounts (111,971) (156,441)
-----------------------------
$ 41,665,753 $ 45,877,120
4. Loan Receivable, Net
A summary of the Bank's loans receivable at March 31, 1997 and
September 30, 1996, is as follows:
March 31, 1997 September 30, 1996
-----------------------------------
Mortgage Loans Secured by
One to Four Family Residences 113,534,433 99,579,583
Secured by Other Properties 3,489,598 3,726,333
Construction Loans 1,268,456 1,129,915
Other 1,537,518 1,852,243
------------------------------
119,830,005 106,288,074
Plus (Less):
Unamortized Premium on Loan Purchase 35,540 46,617
Unearned Discount and Loan Fees (359,974) (304,237)
Undisbursed Loan Proceeds 11,668 0
Allowance for Loan Losses (560,841) (531,749)
------------------------------
Total Mortgage Loans 118,956,398 105,498,705
------------------------------
Consumer and Other Loans:
Automobile 11,373,657 9,783,677
Commercial leases 3,543,929 3,600,888
Loans on Deposits 543,731 554,550
Home Equity and Second Mortgage 9,118,688 8,139,668
Mobile Home 43,966 27,791
Other 1,028,316 616,546
------------------------------
25,652,287 22,723,120
Less:
Allowance for Loan Losses (268,597) (208,597)
------------------------------
Total Consumer and Other Loans 25,383,690 22,514,523
------------------------------
Net Loans Receivable $ 144,340,088 $128,013,228
7
A summary of the Bank's allowance for loan losses for the 3 and 6 months ended
March 31, 1997 and 1996, are as follows:
Three Months Ended Six Months Ended
March 31 March 31
1996 1997 1996 1997
------------------------------------------------
Balance Beginning $ 662,089 $ 780,095 $ 643,547 $ 740,346
Provisions Charged to Operations 30,000 55,000 60,000 100,000
Loans Charged Off Net of Recoveries 331 (5,657) (11,127) (10,908)
------------------------------------------------
Balance Ending $ 692,420 $ 829,438 $ 692,420 $ 829,438
There has been no significant change in the level of non performing loans from
September 30, 1996 to March 31, 1997.
5. Real Estate owned or in judgment and other repossessed property:
March 31, 1997 September 30, 1996
---------------------------------------
Real Estate Acquired by Foreclosure $ 0 $ 0
Real Estate Loans in Judgment and
Subject to Redemption 215,313 0
Other Repossessed Assets 0 0
---------------------------------------
$215,313 $ 0
6. The Bank is a party to financial instruments with off-balance-sheet risk in
the normal course of business to meet the financial needs of its customers and
to reduce its own exposure to fluctuations in interest rates. The financial
instruments include commitments to extend credit and commitments to sell loans.
The instruments involve, to varying degrees, elements of credit and interest
rate risk in excess of the amount recognized in the statement of financial
condition. The contract or notional amounts of those instruments reflect the
extent of involvement the Bank has in particular classes of financial
instruments.
The Bank's exposure to credit loss in the event of non-performance by the other
party to the financial instrument for loan commitments is represented by the
contractual or notional amount of those instruments. The Bank uses the same
credit policies in making commitments as it does for on-balance-sheet
instruments.
At March 31, 1997, the Bank had outstanding commitments to fund real estate
loans of $2,334,205. Of the commitments outstanding, $1,159,040 are for fixed
rate loans at rates of 7.0% to 8.75%. Commitments for adjustable rate loans
amount to $1,175,165 with initial rates of 7.375% to 8.25%. Outstanding loan
commitments to sell as of March 31, 1997 were $1,059,633.
7. Earnings per share for the three and six months ending March 31, 1997 and
1996, was determined by the weighted average shares outstanding as follows;
8
STATEMENT REGARDING COMPUTATION OF EARNINGS PER SHARE
Primary Earnings Per Share
Three months ended Six months ended
March 31 March 31
1996 1997 1996 1997
------------------------------------------------------
Weighted average common shares outstanding 2,085,332 1,852,996 2,085,332 1,852,996
Net effect of dilutive stock options 70,451 107,664 66,779 100,020
Average unallocated ESOP shares (109,698) (96,010) (111,418) (97,740)
Weighted average treasury shares purchased (91,835) (37,611) (53,553) (20,050)
------------------------------------------------------
Common Stock Equivalents 1,954,250 1,827,039 1,987,140 1,835,226
------------------------------------------------------
Net Earnings 432,966 581,147 862,685 1,233,550
------------------------------------------------------
Per share amount $ 0.22 $ 0.32 $ 0.43 $ 0.67
Fully Dilutive Earnings Per Share
Three months ended Six months ended
March 31 March 31
1996 1997 1996 1997
-----------------------------------------------------
Weighted average common shares outstanding 2,085,332 1,852,996 2,085,332 1,852,996
Net effect of dilutive stock options 73,466 108,678 73,466 105,805
Average unallocated ESOP shares (109,698) (96,010) (111,418) (97,740)
Weighted average treasury shares purchased (91,835) (37,611) (53,553) (20,050)
-----------------------------------------------------
Common Stock Equivalents 1,957,265 1,828,053 1,993,827 1,841,011
-----------------------------------------------------
Net Earnings 432,966 581,147 862,685 1,233,550
-----------------------------------------------------
Per share amount $ 0.22 $ 0.32 $ 0.43 $ 0.67
Earnings per share have been computed on the treasury stock method in using
average market price for the common stock equivalents (options).
8. At a January 1997 board meeting, the Directors of the Company declared a .10
per share dividend. The dividend was payable to all stockholders of record as of
February 3, 1997.
9
LANDMARK BANCSHARES, INC.
PART I - FINANCIAL INFORMATION
ITEM 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General:
Landmark Bancshares, Inc. ("Company") is the holding company for
Landmark Federal Savings Bank ("Bank"). Apart from the operations of the Bank,
the Company did not engage in any significant operations during the quarter
ended March 31, 1997. The Bank is primarily engaged in the business of accepting
deposit accounts from the general public, using such funds to originate mortgage
loans for the purchase and refinancing of single-family homes located in Central
and Southwestern Kansas and for the purchase of mortgage-backed and investment
securities. In addition, the Bank also offers and purchases loans through
correspondent lending relationships in Wichita, Kansas City, and other cities in
Kansas and in Albuquerque and Santa Fe, New Mexico. To a lesser extent, the Bank
will purchase adjustable rate mortgages loans, to manage its interest rate risk
as deemed necessary. The Bank also makes automobile loans, second mortgage
loans, home equity loans and savings deposit loans.
Changes in financial condition between March 31, 1997 and September 30, 1996:
Total assets increased by $10,065,643, or approximately 4.71% between
September 30, 1996 and March 31, 1997. This increase is largely attributed to a
$16,326,860 increase in the loan receivables.
Management Strategy:
Management's strategy has been to maintain profitability and increase
return on equity for shareholder. The Bank's lending strategy has historically
focused on the origination of traditional, conforming one to four-family
mortgage loans with the primary emphasis on single-family residences. The Bank's
secondary focus has been on consumer loans, commercial leases, second mortgage
loans, home equity loans and savings deposit loans. This focus, and the
application of strict underwriting standards, are designed to reduce the risk of
loss on the Bank's loan portfolio. However, this lack of diversification in its
portfolio structure does increase the Bank's portfolio concentration risk by
making the value of the portfolio more susceptible to declines in real estate
values in its market area. This has been mitigated in recent years, through the
investment in mortgage-backed securities and the continued sales of loans in the
secondary market.
Certain risks are inherent in the sales of loans in the secondary
market. There is a risk that the Bank will not be able to sell all the loans
that it has originated, or conversely, will be unable to fulfill its commitment
to deliver loans pursuant to a firm commitment to sell loans. In addition, in
periods of rising interest rates, loans originated by the bank may decline in
value. Exposure to market and interest rate risk is significant during the
period between the time the interest rate on a customer's mortgage loan
application is established and the time the mortgage loan closes, and also
during the period between the time the interest rate is established and the time
the Bank commits to sell the loan. If interest rates change in an unanticipated
fashion, the actual percentage of loans that close may differ from projected
percentages. The resultant mismatching of commitments to close loans and
commitments to deliver sold loans may have an adverse effect on the
profitability of loan originations.
A sudden increase in interest rates can cause a higher percentage of
loans to close than projected. To the degree that this was not anticipated, the
Bank will not have made commitments to sell these loans and may incur
significant mark to market losses, adversely affecting results of operations.
The Bank historically sold 30 year fixed rate mortgages in the secondary
market, however the Bank is keeping all 15 and 20 year or shorter mortgages with
fixed rates above 7.0% and 7.25% for investment and selling all other fixed rate
loans.
10
Throughout the first six months of fiscal year 1997 rates continued with
moderate decline, however toward the end of March 1997, rates began to edge
upward. As a result of the rates at the end of March 1997, the Bank reflected an
unrealized loss of $3,487 in loans held for sale. Sustained levels of gain on
sale of loans is dependent on continued stable or downward interest rate
movement and would likely be adversely affected by a continued rise in interest
rates.
Effective October 1, 1994, the Bank adopted the Financial Accounting
Standards Board SFAS Statement No. 115, "accounting for certain investments in
debt and equity securities". This statement is not retroactively applied. In
conjunction with the adoption of SFAS No. 115, investment securities as of
October 1, 1994, are designated as held-to-maturity and available-for-sale. The
effect of classifying securities as available-for-sale was to reflect an
unrealized gain net of tax effect, as a component of stockholders' equity of
$442,213 as of March 31, 1997.
Results of operations: comparison between the three and six months ended March
31, 1997 and 1996:
Net income for the three-month period ended March 31, 1997 of $581,147
represents an increase of $148,181 or a 34.22% increase from the net income
reported for the three-month period ended March 31, 1996. The increase was
primarily due to an increase of $608,745 on interest income from increased
volume on loans. Mortgage loans purchased from correspondents and originations
are being partially funded through additional FHLB advances at a positive
spread.
Net income for the six-month period ended March 31, 1997 of $1,233,550
represents an increase of $370,865 or a 42.98% increase over the net income
reported for the six-month period ended March 31, 1996. This increase was
primarily due to an increase of $934,760 on interest income from increased
volume on loans. Mortgage loans purchased from correspondents and originations
are being partially funded through additional FHLB advances at a positive
spread.
Net interest income before provision for losses on loans for the
three-month period ended March 31, 1997 increased $336,562 or approximately
24.41% to $1,715,317 as compared with $1,378,755 for the same period ended March
31, 1996. This increase is associated with the increased interest received on
the mortgage loan portfolio.
Net interest income before provision for losses on loans for the
six-month period ended March 31, 1997 increased $612,517 or 21.87% to $3,412,687
as compared with $2,800,170 for the same period ended March 31, 1996. This
increase is associated with the increased interest received on the mortgage
loans.
Interest expense for the three-month period ended March 31, 1997
increased $272,183 or 12.96% to $2,372,577 as compared with $2,100,394 for the
same period ended March 31, 1996. This increase is due to the increased costs
associated with savings rates and increased borrowing from FHLB. Saving deposit
balances increased significantly late in the quarter resulting in minimal
interest expense during the quarter.
Interest expense for the six-month period ended March 31, 1997 increased
$322,243 or 7.35% to $4,704,977 as compared with $4,382,734 for the same period
ended March 31, 1996. This increase is due to the increased costs associated
with savings rates and increased borrowing from FHLB. Saving deposit balances
increased significantly late in the quarter resulting in minimal interest
expense during the quarter.
The Bank added $55,000 for the three month period ending March 31, 1997
and $100,000 for the six month period ending March 31, 1997 to the provision for
loan losses. These additions are due to increased loan production during this
period and related credit risk.
Other income including non operating items for the three-month period
ended March 31, 1997 decreased $37,664 or 15.42% to $206,653 as compared with
$244,317 for the same period ended March 31, 1996 This decrease primarily was
due to $135,208 on gains of sales of available for sale securities during the
quarter ending March 31, 1996.
11
Other income including non operating items for the six-month period
ended March 31, 1997 increased $97,269 or 23.57% to $509,883 as compared with
$412,614 for the same period ended March 31, 1996. This increase was primarily
due to $172,916 on net gains of sales of available for sale investment
securities. Gain on sale of loans held for sale increased by 49.60% over the
previous six month period. Although the volume of loan sales increased from
$3,415,650 to $8,437,797, the net profit on sales was lower due to rising rates
late in the period.
Non interest expenses for the three-month period ended March 31, 1997
increased $19,417 or 2.23% to $887,523 as compared with $868,106 for the same
period ended March 31, 1996. This increase is primarily due to increased
compensation expense partially offset by a decrease in the SAIF premium.
Non interest expenses for the six-month period ended March 31, 1997
increased $42,621 or 2.48% to $1,759,220 as compared with $1,716,599 for the
same period ended March 31, 1996. This increase is primarily due to increased
compensation expense partially offset by a decrease in the SAIF premium.
Liquidity and Capital Resources:
The Bank is required to maintain minimum levels of liquid assets, as defined by
the Office of Thrift Supervision ("OTS") regulations. This requirement, which
may be varied from time to time depending upon economic conditions and deposit
flows, is based upon a percentage of deposits and short-term borrowing. The
required minimum ratio is currently 5 percent. The Bank's liquidity ratio
averaged 5.57% during March 1997. The Bank manages its liquidity ratio to meet
its funding needs, including: deposit outflows, disbursement of payments
collected from borrowers for taxes and insurance, and loan principal
disbursements. The Bank also manages its liquidity ratio to meet its
asset/liability management objectives.
In addition to funds provided from operations, the Bank's primary sources of
funds are: savings deposits, principal repayments on loans and mortgage-backed
securities, and matured or called investment securities. In addition, the Bank
may borrow funds from time to time from the Federal Home Loan Bank of Topeka.
Scheduled loan repayments and maturing investment securities are a relatively
predictable source of funds. However, savings deposit flows and prepayments on
loans and mortgage-backed securities are significantly influenced by changes in
market interest rates, economic conditions and competition. The Bank strives to
manage the pricing of its deposits to maintain a balanced stream of cash flows
commensurate with its loan commitments.
When applicable, cash in excess of immediate funding needs is invested into
longer-term investments and mortgage-backed securities which typically earn a
higher yield than overnight deposits, some of which may also qualify as liquid
investments under current OTS regulations.
As required by the financial institutions reform, recovery and enforcement act
of 1989 ("FIRREA"), OTS prescribed three separate standards of capital adequacy.
The regulations require financial institutions to have minimum regulatory
capital equal to 1.50 percent of tangible assets; minimum core capital equal to
3.00 percent of adjusted tangible assets; and risk-based capital equal to 8.00
percent of risk-based assets.
12
The Bank's capital requirements and actual capital under the OTS regulations are
as follows at March 31, 1997:
Amount (Thousands) Percent of Assets
GAAP Capital $26,848 12.16%
Tangible Capital:
Actual 26,848 12.16%
Required 3,312 1.50%
Excess 23,536 10.66%
Core Capital:
Actual 26,848 12.16%
Required 6,625 3.00%
Excess 20,223 9.16%
Risk-Based Capital:
Actual 27,678 27.30%
Required 8,109 8.00%
Excess $19,569 19.30%
13
LANDMARK BANCSHARES, INC.
PART II - OTHER INFORMATION
Item 2. - Changes in Securities
NONE
Item 4. - Submission of Matter to a Vote of Security Holders
An annual meeting was held on January 15, 1997 to ratify the election of
C. Duane Ross and Richard A. Ball to serve as Directors for three years. In
addition the stockholders did ratify Regier Carr & Monroe, L.L.P. as independent
auditors of Landmark Bancshares, Inc. for the fiscal year ending September 30,
1997.
Votes were as follows: Number Percentage
C. Duane Ross For 1,607,233 99.86%
Against 2,200 00.13%
Abstain 0
Richard A. Ball For 1,607,233 99.86%
Against 2,200 00.13%
Abstain 0
Regier Carr & Monroe For 1,608,418 99.93%
Against 103 0.01%
Abstain 912 0.06%
Directors continuing in office following the annual meeting include Larry
Schugart, Jim Lewis and David H. Snapp.
Item 5. - Other Information
None
Item 6(b). - Reports on Form 8-K
A report on Form 8-K was filed March 20, 1997. The filing reported the
announcement that the Board of Directors of Landmark Bancshares Inc., had
discontinued a stock repurchase program authorized by the Board of Directors on
October 16, 1996.
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.
Date May 5, 1997 LANDMARK BANCSHARES, INC.
------------------------
By /S/ Larry Schugart
-------------------------------------
LARRY SCHUGART
President and Chief Executive Officer
(Duly Authorized Representative)
By /S/ James F. Strovas
-------------------------------------
JAMES F. STROVAS
Senior Vice President and
Chief Financial Officer
(Duly Authorized Representative)