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 June 30, 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 June 30, 1997:
$.10 par value common stock 1,710,666 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
June 30, 1997 (unaudited) and September 30, 1996 1
Statements of Income for the Three and Nine
Months Ended June 30, 1997 and 1996 (unaudited) 2
Statements of Cash Flows for the Nine Months Ended
June 30, 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
1
LANDMARK BANCSHARES, INC. AND ITS WHOLLY-OWNED SUBSIDIARY,
LANDMARK FEDERAL SAVINGS BANK
Consolidated Statements of Financial Condition
June 30, 1997 September 30, 1996
(Unaudited)
--------------------------------
ASSETS
Cash and cash equivalents:
Interest bearing $ 127,357 $ 3,063
Non-interest bearing 771,112 470,647
Time deposits in other financial institutions 199,611
479,949
Securities held to maturity 24,423,100
29,398,520
Securities available for sale 6,141,169 4,137,637
Mortgage-backed securities held to maturity 39,459,699 45,877,120
Loans receivable, net 152,883,706 128,013,228
Loans held for sale 264,445 1,890,007
Accrued income receivable 1,679,602 1,518,640
Real estate owned or in judgment and other
repossessed property, net 70,042 0
Office properties and equipment, at cost less
accumulated depreciation 984,779 949,786
Prepaid expenses and other assets 1,095,199 973,383
Deferred income taxes 0 21,710
------------- -------------
TOTAL ASSETS $ 228,099,823 $ 213,733,690
------------- -------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits 143,413,143 143,814,910
Outstanding checks in excess of bank balance 0 143,808
Other Borrowed Money 50,133,335 33,466,668
Advances from borrowers for taxes and
insurance 1,240,703 1,673,142
Accrued expenses and other Liabilities 1,254,166 2,193,296
Deferred income taxes 209,933 0
Income taxes
Current 393,787 52,691
------------- -------------
TOTAL LIABILITIES . $ 196,645,067 $ 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; 570,646 and 428,316 shares of common stock
on June 30, 1997 and September 30, 1996 respectively, at cost (8,784,176) (6,027,206)
Retained income (substantially restricted) 18,810,525 17,468,325
Employee Stock Ownership Plan (994,695) (994,695)
Management Stock Bonus Plan (337,829) (482,612)
Unrealized gain on available for sale securities, net of
deferred tax 588,625 253,057
------------- -------------
Total Stockholders' Equity 31,454,756 32,389,175
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 228,099,823 $ 213,733,690
------------- -------------
2
LANDMARK BANCSHARES, INC. AND ITS WHOLLY-OWNED SUBSIDIARY,
LANDMARK FEDERAL SAVINGS BANK
Consolidated Statements of Income
Three Months Ended June 30 Nine Months Ended June 30
1996 1997 1996 1997
(unaudited) (unaudited)
----------------------------------------------------
INTEREST INCOME
Interest on loans 2,294,259 3,012,389 6,544,288 8,616,830
Interest and dividends on investment securities 473,548 558,159 1,415,359 1,642,057
Interest on mortgage-backed securities 813,639 653,538 2,804,699 2,081,862
----------------------------------------------------
Total interest income 3,581,446 4,224,086 10,764,346 12,340,749
INTEREST EXPENSE
Deposits 1,814,134 1,831,927 5,586,977 5,444,109
Borrowed funds 263,855 654,651 873,745 1,747,448
----------------------------------------------------
Total interest expense 2,077,989 2,486,578 6,460,722 7,191,557
Net interest income 1,503,457 1,737,508 4,303,624 5,149,192
PROVISION FOR LOSSES ON LOANS 30,000 110,000 90,000 210,000
----------------------------------------------------
Net interest income after provision for losses 1,473,457 1,627,508 4,213,624 4,939,192
NON-INTEREST INCOME
Service charges and late fees 61,521 73,506 159,266 197,258
Net gain (loss) on sale of available
for sale investments 3,125 0 10,625 172,916
Net gain (loss) on sale of loans 7,853 121,055 51,076 185,718
Net gain on sale of available for sale
mortgage-backed securities 0 0 135,208 0
Service fees on loans sold 38,895 29,530 121,271 110,578
Other income 38,803 33,979 85,364 101,480
----------------------------------------------------
150,197 258,070 562,810 767,950
NON-INTEREST EXPENSE
Compensation and related expenses 462,118 530,630 1,409,214 1,542,408
Occupancy expense 41,971 43,436 125,654 126,088
Advertising 13,849 18,240 51,483 50,187
Federal insurance premium 96,924 39,078 293,596 158,892
Loss (gain) from real estate operations (25) 3,343 3,289 4,332
Data processing 44,128 41,565 142,453 137,379
Other expense 176,545 164,279 526,420 580,499
----------------------------------------------------
835,510 840,571 2,552,109 2,599,785
Income before income taxes 788,144 1,045,007 2,224,325 3,107,357
INCOME TAXES EXPENSES 315,300 417,800 888,800 1,247,600
----------------------------------------------------
Net income 472,844 627,207 1,335,525 1,859,757
----------------------------------------------------
Primary earnings per share $ 0.25 $ 0.35 $ 0.68 $ 1.02
Fully diluted earnings per share $ 0.25 $ 0.35 $ 0.68 $ 1.02
Dividends per share $ 0.10 $ 0.10 $ 0.30 $ 0.30
3
LANDMARK BANCSHARES, INC. AND ITS WHOLLY-OWNED SUBSIDIARY
LANDMARK FEDERAL SAVINGS BANK
Consolidated Statements of Cash Flows
Nine Months Ended June 30
1996 1997
(unaudited) (unaudited)
----------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 1,335,525 $ 1,859,757
Adjustments to reconcile net income to net
cash provided by operating activities:
Amortization and impairment of mortgage servicing rights 0 10,175
Depreciation 87,464 84,546
Decrease (increase) in accrued interest receivable 238,024 (160,962)
Increase (decrease) in outstanding checks in excess of bank balance (1,050,816) (143,808)
Increase (decrease) in accrued and deferred income taxes 172,649 572,739
Increase (decrease) in accounts payable and accrued expenses 193,440 (939,130)
Amortization of premiums and discounts on investments and loans (105,385) 19,291
Provision for losses on loans 90,000 210,000
Gain (loss) on sale of available for sale securities (10,625) (172,916)
Gain (loss) on sale of available for sale mortgage-backed securities (135,208) 0
Other non-cash items, net 205,340 (43,901)
Sale of loans held for sale 6,123,880 10,704,707
Gain on sale of loans held for sale (51,076) (185,718)
Origination of loans held for sale (1,074,792) (7,911,802)
Purchase of loans held for sale (6,764,627) (1,076,500)
----------------------------
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES $ (746,207) $ 2,826,478
----------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Loan originations and principal payment on loans held for investment (14,281,637) (1,041,365)
Principal repayments on mortgage-backed securities 9,467,934 6,370,727
Loans purchased for investment (2,445,675) (24,282,931)
Proceeds from sale of mortgage-backed securities available for sale 11,490,625 0
Acquisition of mortgage-backed securities held to maturity (1,482,865) 0
Acquisition of investment securities held to maturity (10,795,500) (3,300,000)
Acquisition of investment securities available for sale (1,940,222) (1,921,525)
Proceeds from sale of available for sale investment securities 181,250 485,205
Proceeds from maturities or calls of investment securities 19,512,135 8,290,000
Net (increase) decrease in time deposits 198,569 279,005
Sale of real estate acquired in settlement of loans 81,811 135,990
Acquisition of fixed assets (40,270) (119,540)
Other investing activity (4,272) 0
----------------------------
NET CASH PROVIDED (USED) IN INVESTING ACTIVITIES 9,941,883 (15,104,434)
----------------------------
4
LANDMARK BANCSHARES, INC. AND ITS WHOLLY-OWNED SUBSIDIARY,
LANDMARK FEDERAL SAVINGS BANK
Consolidated Statements of Cash Flows
(Continued)
Nine Months Ended June 30
1996 1997
(unaudited) (unaudited)
---------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in deposits $ 2,395,511 $ (401,767)
Net increase (decrease) in escrow accounts (109,085) (432,439)
Proceeds from FHLB advance 5,000,000 95,123,000
Repayment of FHLB advance (13,133,333) (78,456,333)
Acquisition of Treasury Stock (2,568,947) (2,756,970)
Other Financing Activities 144,784 144,783
Dividend Payment (574,956) (517,558)
---------------------------
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES (8,846,026) 12,702,716
---------------------------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 349,650 424,760
BEGINNING CASH AND CASH EQUIVALENTS 462,021 473,710
---------------------------
ENDING CASH AND CASH EQUIVALENTS 811,671 898,470
SUPPLEMENTAL DISCLOSURES Cash paid during the year for:
Interest on deposits, advances, and other borrowings 6,617,118 7,265,526
Income taxes 682,351 906,504
Transfers from loans to real estate acquired through foreclosure 91,212 134,731
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 and nine months ending June 30, 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 June 30, 1997 and September 30, 1996, is as follows:
Investment Securities June 30, 1997 September 30, 1996
----------------------------------
Held to maturity:
Government Agency Securities 22,783,100 27,168,520
Municipal Obligations 1,640,000 2,230,000
----------------------------------
$ 24,423,100 $ 29,398,520
Available for sale:
Common Stock 3,208,569 2,396,237
Stock in Federal Home Loan Bank 2,922,600 1,731,400
Other 10,000 10,000
----------------------------------
$ 6,141,169 $ 4,137,637
6
Mortgage - Backed Securities held to maturity:
FNMA - Arms $ 13,492,541 $ 15,425,620
FHLMC -Arms 5,136,900 6,215,951
FHLMC -Fixed Rate 254,211 399,854
CMO Government Agency 14,721,005 16,659,609
CMO Private Issue 4,659,771 5,636,850
FNMA - Fixed Rate 731,091 876,016
GNMA - Fixed Rate 399,301 551,646
Unamortized Premiums 168,157 268,015
Unearned Discounts (103,278) (156,441)
----------------------------
$ 39,459,699 $ 45,877,120
4. Loan Receivable, Net
A summary of the Bank's loans receivable at June 30, 1997 and September
30, 1996, is as follows:
June 30, 1997 September 30, 1996
--------------------------------
Mortgage Loans Secured by
One to Four Family Residences 119,623,947 99,579,583
Secured by Other Properties 3,441,389 3,726,333
Construction Loans 1,781,895 1,129,915
Other 2,467,259 1,852,243
-----------------------------
127,614,490 106,288,074
Plus (Less):
Unamortized Premium on Loan Purchase 33,023 46,617
Unearned Discount and Loan Fees (354,879) (304,237)
Undisbursed Loan Proceeds (72,899) 0
Allowance for Loan Losses (584,590) (531,749)
-----------------------------
Total Mortgage Loans 126,480,943 105,498,705
-----------------------------
Consumer and Other Loans:
Automobile 12,217,942 9,783,677
Commercial Leases 3,559,863 3,600,888
Loans on Deposits 603,069 554,550
Home Equity and Second Mortgage 9,437,800 8,139,668
Mobile Home 50,645 27,791
Other 830,076 616,546
-----------------------------
26,699,395 22,723,120
Less:
Allowance for Loan Losses (296,632) (208,597)
-----------------------------
Total Consumer and Other Loans 26,402,763 22,514,523
----------------------------
Net Loans Receivable $ 152,883,706 $ 128,013,228
7
A summary of the Bank's allowance for loan losses for the three and nine months
ended June 30, 1997 and 1996, are as follows:
Three Months Ended Nine Months Ended
June 30 June 30
1996 1997 1996 1997
------------------------------------------------
Balance Beginning $ 692,420 $ 829,438 $ 643,547 $ 740,346
Provisions Charged to Operations 30,000 110,000 90,000 210,000
Loans Charged Off Net of Recoveries (8,946) (58,217) (20,073) (69,125)
------------------------------------------------
Balance Ending $ 713,474 $ 881,221 $ 713,474 $ 881,221
There has been no significant change in the level of non performing loans from
September 30, 1996 to June 30, 1997.
5. Real Estate owned or in judgment:
June 30, 1997 September 30, 1996
---------------------------------------------
Real Estate Acquired by Foreclosure $ 9,076 $ 0
Real Estate Loans in Judgment and
Subject to Redemption 47,173 0
Other Repossessed Assets 13,793 0
---------------------------------
$70,042 $ 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.
On June 30, 1997, the Bank had outstanding commitments to fund real estate loans
of $1,583,567. Of the commitments outstanding, $1,195,767 are for fixed rate
loans at rates of 7.375% to 10.00%. Commitments for adjustable rate loans amount
to $387,800 with initial rates of 7.375% to 10.00%. Outstanding loan commitments
to sell as of June 30, 1997 were $413,546.
7. Earnings per share for the three and nine months ending June 30, 199
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 Nine months ended
June 30 June 30
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 76,518 113,526 70,025 104,522
Average unallocated ESOP shares (106,276) (92,588) (109,711) (96,023)
Weighted average treasury shares purchased
during the period (145,706) (82,549) (84,158) (40,883)
Common Stock Equivalents 1,909,868 1,791,385 1,961,488 1,820,612
-----------------------------------------------------
Net Earnings 472,844 627,207 1,335,526 1,859,757
-----------------------------------------------------
Per share amount $ 0.25 $ 0.35 $ 0.68 $ 1.02
Fully Dilutive Earnings Per Share
Three months ended Nine months ended
June 30 June 30
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 78,537 117,300 71,407 109,637
Average unallocated ESOP shares (106,276) (92,588) (109,711) (96,023)
Weighted average treasury shares purchased
during the period (145,706) (82,549) (84,158) (40,883)
------------------------------------------------------------
Common Stock Equivalents 1,911,887 1,795,159 1,962,870 1,825,727
------------------------------------------------------------
Net Earnings 472,844 627,207 1,335,526 1,859,757
------------------------------------------------------------
Per share amount $ 0.25 $ 0.35 $ 0.68 $ 1.02
Earnings per share have been computed on the treasury stock method and includes
common stock equivalents (options).
8. At a April 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 May 5, 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 June 30, 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 and Madison, Wisconsin. 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.
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 loans, second mortgage
loans, home equity loans and savings deposit loans. This focus, and the
application of 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 closed 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 sells 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.
Through out the first nine months of fiscal year 1997 rates continued
with moderate decline. As a result of the rates at the end of June 1997, the
Bank reflected an unrealized gain of $4,212 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.
10
Changes in financial condition between June 30, 1997 and September 30, 1996:
Total assets increased by $14,366,133, or approximately 6.72% between
September 30, 1996 and June 30, 1997. This increase is largely attributed to a
$24,870,478 increase in loan receivables. The Bank utilizes FHLB line of credit
and short term advances which increased over $16.6 million from September 30,
1996 to June 30, 1997 to fund the acquisition of adjustable rate mortgages. In
managing the Bank's overall interest rate risk, loan purchases have been make
which increase that level of risk to the extent that borrowing will reprice more
frequently than the adjustments on the mortgages.
Results of operations: comparison between the three and nine months ended June
30, 1997 and 1996:
Net income for the three-month period ended June 30, 1997 of $627,207
represents an increase of $154,363 or a 32.64% increase from the net income
reported for the three-month period ended June 30, 1997. The increase was
primarily due to an increase of $718,130 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 nine-month period ended June 30, 1997 of $1,859,757
represents an increase of $524,232 or a 39.25% increase over the net income
reported for the nine-month period ended June 30, 1996. This increase was
primarily due to an increase of $2,072,542 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 June 30, 1997 increased $234,051 or approximately
15.56% to $1,737,508 as compared with $1,503,457 for the same period ended June
30, 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
nine-month period ended June 30, 1997 increased $845,568 or 19.65% to $5,149,192
as compared with $4,303,624 for the same period ended June 30, 1996. This
increase is associated with the increased interest received on the mortgage
loans.
Interest expense for the three-month period ended June 30, 1997
increased $408,589 or 19.66% to $2,486,578 as compared with $2,077,989 for the
same period ended June 30, 1996. This increase is due to the increased costs
associated with savings rates and increased borrowing from FHLB as discussed
earlier.
Interest expense for the nine-month period ended June 30, 1997increased
$730,835 or 11.31% to $7,191,557 as compared with $6,460,722 for the same period
ended June 30, 1996. This increase is due to the increased costs associated with
savings rates and increased borrowing from FHLB as discussed earlier.
The Bank added $110,000 for the three month period ending June 30, 1997
and $210,000 for the nine month period ending June 30, 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 June 30, 1997 increased $107,873 or 71.82% to $258,070 as compared with
$150,197 for the same period ended June 30, 1996. This increase primarily was
due to $121,055 on gains of sale of loans during the quarter ending June 30,
1997.
Other income including non operating items for the nine-month period
ended June 30, 1997 increased $205,140 or 36.44% to $767,950 as compared with
$562,810 for the same period ended June 30, 1996. This increase was primarily
due to a $134,642 increase in net gains on sale of loans. Gain on sale of
available for sale investment securites increased in 1997 over 1996 by $162,291,
due to the sale of equity securities, while gain on the sale of available for
sale mortgage backed securities decreased due to the one time reclassification
and sale of mortgage backed securities previously classified as held to
maturity.
11
Non interest expenses for the three-month period ended June 30, 1997
increased $5,061 or 0.61% to $840,571 as compared with $835,510 for the same
period ended June 30, 1996. This increase is primarily due to increased
compensation expense partially offset by a decrease in the SAIF premium.
Non interest expenses for the nine-month period ended June 30, 1997
increased $47,676 or 1.86% to $2,599,785 as compared with $2,552,109 for the
same period ended June 30, 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 June 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 June 30, 1997:
Amount (Thousands) Percent of Assets
GAAP Capital $27,431 12.15%
Tangible Capital:
Actual 27,431 12.15%
Required 3,386 1.50%
Excess 24,045 10.65%
Core Capital:
Actual 27,431 12.15%
Required 6,772 3.00%
Excess 20,659 9.15%
Risk-Based Capital:
Actual 28,313 26.59%
Required 8,519 8.00%
Excess $19,794 18.59%
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
NONE
Item 5. - Other Information
NONE
Item 6(b). - Reports on Form 8-K
During the quarter, a report on Form 8-K (Items 5 and 7) was filed (dated
April 24, 1997). The filing reported the announcement that the Board of
Directors of Landmark Bancshares Inc., had adopted a stock repurchase program of
up to 15% of outstanding shares authorized by the Board of Directors on April
24, 1997.
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 August 1, 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)