SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OF 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OF 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File Number 0-26560
HARDIN BANCORP, INC.
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its Charter)
Delaware 43-1719104
- ---------------------------------------- ---------------------------------------
State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization
2nd and Elm Street, Hardin, Missouri 64035
- ---------------------------------------- ---------------------------------------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (816) 398-4312
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 of 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 June 30, 1997
- ---------------------------------------- ---------------------------------------
Common stock, .01 par value 859,360
HARDIN BANCORP, INC. AND SUBSIDIARIES
CONTENTS
Page
----
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets................................. 1
Consolidated Statements of Earnings......................... 2
Consolidated Statement of Stockholders' Equity.............. 3
Consolidated Statements of Cash Flows....................... 4-5
Notes to Consolidated Financial Statements.................. 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations...................................................... 7-10
PART II OTHER INFORMATION............................................... 11
Signatures...................................................... 12
HARDIN BANCORP, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
June 30, and March 31, 1997
(Unaudited)
June 30 March 31
----------- --------
Assets
------
Cash $ 389,029 $ 258,745
Interest bearing deposits 8,690,961 4,007,164
Investment securities available-for-sale 21,543,922 22,340,420
Mortgage-backed securities:
Held-to-maturity 13,065,606 13,456,912
Available-for-sale 5,512,918 5,757,213
Loans receivable, net 55,728,219 54,567,570
Accrued interest receivable:
Investment securities 191,547 309,223
Mortgage-backed securities 140,079 144,271
Loans receivable 356,399 329,200
Real estate owned 0 103,410
Premises and equipment 863,250 850,210
Stock in Federal Home Loan Bank (FHLB) of
Des Moines at cost 1,200,000 950,000
Deferred income taxes receivable 109,667 43,000
Prepaid expenses and other assets 226,076 236,410
------------ ------------
Total assets $108,017,673 $103,353,748
============ ============
Liabilities and Stockholders' Equity
------------------------------------
Liabilities:
Deposits $ 74,165,984 $ 70,200,857
Advances from borrowers for taxes and insurance 393,627 275,440
Advances from FHLB 19,000,000 19,000,000
Accrued interest payable 79,509 55,251
Current income taxes payable 355,945 137,164
Accrued expenses and other liabilities 546,716 475,310
------------ ------------
Total liabilities 94,541,781 90,144,022
Stockholders' equity:
Serial preferred stock, $.01 par value;
500,000 shares authorized, none issued
or outstanding 0 0
Common stock, $.01 par value: 3,500,000 shares
authorized, 1,058,000 shares issued 10,580 10,580
Additional paid-in-capital 10,084,729 10,084,729
Retained earnings 7,129,913 6,994,680
Unrealized loss on available-for-sale
securities, net (124,836) (234,597)
Unearned employee stock ownership plan (636,800) (636,800)
Deferred recognition and retention plan (392,292) (413,464)
Treasury stock (198,640 shares at cost) (2,595,402) (2,595,402)
------------ ------------
Total stockholders' equity 13,475,892 13,209,726
------------ ------------
Total liabilities and stockholders' equity $108,017,673 $103,353,748
============ ============
1
HARDIN BANCORP, INC. AND SUBSIDIARIES
Consolidated Statements of Earnings
For The Three Months Ended
June 30, 1997 and 1996
(Unaudited)
1997 1996
---- ----
Interest income:
Loans receivable $1,152,107 $ 947,561
Mortgage-backed securities 313,385 367,865
Investment securities 395,622 197,029
Other 93,517 60,065
------ ------
Total interest income 1,954,631 1,572,520
--------- ---------
Interest expense:
Deposits 916,570 829,107
FHLB advances 291,951 68,288
------- ------
Total interest expense 1,208,521 897,395
--------- -------
Net interest income 746,110 675,125
Provision for loan losses 39,000 7,500
------ -----
Net interest income after provision for
losses 707,110 667,625
------- -------
Non-interest income:
Service charges 24,632 20,565
Loan servicing fees 8,153 9,613
Gain on sale of loans held for sale 2,484 0
Gain on sale of real estate owned 4,105 0
Gain on sale of investments and mortgage-
backed securities 44,431 0
Other income 29,998 62,327
------ ------
Total non-interest income 113,803 92,505
------- ------
Non-interest expense
Compensation and benefits 251,631 231,026
Occupancy and equipment 29,647 25,886
Federal insurance premiums 11,013 37,771
Data processing 23,787 22,332
Real estate owned 1,043 0
Other 137,864 133,021
------- -------
Total non-interest expense 454,985 450,036
------- -------
Earnings before income taxes 365,928 310,094
Income tax expense 135,212 114,818
------- -------
Net earnings $ 230,716 $ 195,276
========== ==========
Net earnings per common share:
Primary and fully diluted $ 0.28 $ 0.20
========== ==========
Weighted average common and common equivalent
shares outstanding 812,574 972,301
========== ==========
2
HARDIN BANCORP, INC. AND SUBSIDIARIES
Consolidated Statement of Stockholders' Equity
For The Three Months Ended June 30, 1997
(Unaudited)
Unrealized Unearned
Additional Loss Employee Total
Common Paid-in Retained on Stock Deferred Treasury Stockholders'
Stock Capital Earnings Securities, net Ownership Plan RRP Stock Equity
----- ------- -------- --------------- -------------- -------- ----- ------
Balance at March 31, 1997 $10,580 10,084,729 6,994,680 (234,597) (636,800) (413,464) (2,595,402) 13,209,726
Net earnings 0 0 230,716 0 0 0 0 230,716
Change in unrealized loss on
available-for-sale
securities, net of tax 0 0 0 109,761 0 0 0 109,761
Amortization of RRP 0 0 0 0 0 21,172 0 21,172
Dividends declared ($.12
per share) 0 0 (95,483) 0 0 0 0 (95,483)
------- ---------- --------- -------- -------- -------- ---------- ----------
Balance at June 30, 1997 $10,580 10,084,729 7,129,913 (124,836) (636,800) (392,292) (2,595,402) 13,475,892
======= ========== ========= ======== ======== ======== ========== ==========
3
HARDIN BANCORP, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Three Months Ended June 30, 1997 and 1996
(Unaudited)
1997 1996
---- ----
Operating activities:
Net earnings $ 230,716 195,276
Adjustments to reconcile net earnings
to net cash provided by operating activities:
Provision for losses on loans 39,000 7,500
Depreciation 16,327 12,263
Premium accretion and amortization of
discounts and deferred loan fees, net 15,586 23,863
(Gain)/loss on real estate owned (4,105) 0
Amortization of deferred Recognition and
Retention Plan (RRP) 21,172 21,171
Changes in assets and liabilities:
Interest receivable 94,669 (73,524)
Other assets 10,334 11,322
Accrued interest payable 24,258 10,095
Accrued expense and other liabilities 61,859 48,615
Income taxes payable 87,668 114,818
------ -------
Net cash provided by operating activities 597,484 371,399
------- -------
Investing activities:
Net increase in loans receivable (1,196,332) (1,753,741)
Purchase of loans receivable 0 (396,238)
Principal payments on mortgage-backed securities:
Available-for-sale 254,883 305,910
Held-to-maturity 382,436 1,049,407
Purchase of investment securities available-
for-sale (3,148,453) (7,499,531)
Proceeds from maturities of investment securities
available-for-sale 4,000,000 1,500,000
Proceeds from sales of investment securities 98,537 0
Purchase of stock in FHLB of Des Moines (250,000) 0
Purchase of office premises and equipment (29,367) (35,527)
Proceeds from sales of real estate owned 107,515 0
------- -----------
Net cash used in investing activities 219,219 (6,829,720)
------- ----------
Financing activities:
Net increase (decrease)in deposits 3,965,127 (514,391)
Proceeds from FHLB advances 10,000,000 5,000,000
Repayments of FHLB advances (10,000,000) 0
Net increase in advances from borrowers for
taxes and insurance 118,187 119,712
Payment of dividends (85,936) (105,800)
Purchase of treasury stock 0 (1,034,665)
--------- ---------
Net cash provided by financing activities 3,997,378 3,464,856
--------- ---------
Increase/(decrease) in cash 4,814,081 (2,993,465)
Cash at beginning of period 4,265,909 5,683,953
--------- ---------
Cash at end of period $ 9,079,990 2,690,488
============ =========
4
HARDIN BANCORP, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows, (continued)
Three Months Ended June 30, 1997 and 1996
(Unaudited)
1997 1996
---- ----
Supplemental disclosure of cash flow information:
Cash paid for:
Interest $ 1,184,263 887,300
Income taxes, net of refunds $ 47,544 0
Noncash investing and financing:
Allocation of treasury stock to RRP $ 0 498,150
Dividends declared and payable $ 95,483 100,511
5
HARDIN BANCORP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
(1) Basis of Presentation
The accompanying unaudited consolidated financial statements of Hardin
Bancorp, Inc. and subsidiaries have been prepared in accordance with
instructions for Form 10-QSB. To the extent that information and
footnotes required by generally accepted accounting principles for
complete financial statements are contained in the audited financial
statements included in the Holding Company's Annual Report for the
year ended March 31, 1997, such information and footnotes have not
been duplicated herein. In the opinion of management, all adjustments,
consisting only of normal recurring accruals, which are necessary for
the fair presentation of the interim financial statements have been
included. The statements of earnings for the three month period ended
June 30, 1997 are not necessarily indicative of the results which may
be expected for the entire year. The March 31, 1997 consolidated
balance sheet has been derived from the audited consolidated financial
statements as of that date.
(2) 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.
Earnings per share amounts for the three month period ended June 30,
1997 are based upon shares outstanding at June 30, 1997, exclusive of
the shares issued to the ESOP, as though those shares were outstanding
for the entire period.
6
HARDIN BANCORP, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
- -------
Hardin Bancorp, Inc. (the "Company") was incorporated under the laws of the
state of Delaware to become a savings bank holding company with Hardin Federal
Savings Bank (the "Bank") of Hardin, Missouri, as its subsidiary. The holding
company was incorporated at the direction of the Board of Directors of the Bank,
and on September 28, 1995, acquired all of the capital stock of the Bank upon
its conversion from mutual to stock form (the "conversion"). Prior to the
conversion, the holding company did not engage in any material operations.
Hardin Federal Savings Bank was originally founded in 1888 as a Missouri
chartered savings and loan association located in Hardin, Missouri. On March 21,
1995, the Bank's members voted to convert the Bank to a Federal mutual charter.
The Bank conducts its business through its main office in Hardin, Ray County,
and two full service branch offices located in Richmond, Ray County, and
Excelsior Springs, Clay County, Missouri. Deposits are insured by the Federal
Deposit Insurance Corporation (FDIC) to the maximum allowable.
The Bank is principally engaged in the business of attracting retail savings
deposits from the general public and investing those funds in first mortgage
loans on owner occupied, single-family residential loans, commercial real estate
loans, mortgage-backed securities, U.S. Government and agency securities, and
insured interest bearing deposits. The Bank also originates consumer loans for
the purchase of automobiles, home improvement, and home equity lines of credit.
The most significant outside factors influencing the operations of the Bank and
other financial institutions include general economic conditions, competition in
the local market place and the related monetary and fiscal policies of agencies
that regulate financial institutions. More specifically, the cost of funds
primarily consisting of insured deposits is influenced by interest rates on
competing investments and general market rates of interest, while lending
activities are influenced by the demand for real estate financing and other
types of loans, which in turn is affected by the interest rates at which such
loans may be offered and other factors affecting loan demand and funds
availability.
The deposits of the Bank are presently insured by the Savings Association
Insurance Fund (SAIF), which together with the Bank Insurance Fund (BIF), are
the two insurance funds administered by the FDIC. Due to the SAIF reaching its
statutory reserve ratio on September 30, 1996, the Bank anticipates a reduction
in the premium schedule which will reduce the Bank's federal insurance premium
for future periods.
FINANCIAL CONDITION
- -------------------
Consolidated assets of Hardin Bancorp, Inc. were $108,017,673 as of June 30,
1997, compared to $103,353,748 on March 31, 1997, an increase of $4,663,925. The
increase was primarily funded by an increase in deposits of $3,965,127.
The 4.5% growth rate of assets for the quarter is in accordance with the
Company's growth objectives. The funds were used to purchase investment
securities, interest bearing deposits, and to fund loan growth.
Loans receivable, net increased to $55,728,219 on June 30, 1997, from
$54,567,570 on March 31, 1997, an increase of $1,160,649. Mortgage-backed
securities decreased $635,601 to $18,578,524 at June 30, 1997, from $19,214,125
on March 31, 1997. The decrease in mortgage-backed securities and the increase
in loans reflect the Bank's plan to increase the loan portfolio and decrease
mortgage-backed securities.
Cash, interest bearing deposits, and investment securities increased $4,017,583
from $26,606,329 on March 31, 1997, to $30,623,912 on June 30, 1997. The
increase was primarily funded by an increase in savings deposits.
7
Deposits totaled $74,165,984 on June 30, 1997, an increase of $3,965,127 from
$70,200,857 on March 31, 1997. The increase in deposits is primarily due to a
successful special certificate of deposit promotion.
Stockholders' equity was $13,475,892 on June 30, 1997, compared to $13,209,726
on March 31, 1997, an increase of $266,166. The increase was due to reductions
in unrealized loss on available-for-sale securities of $109,761, a decrease in
deferred recognition and retention plan in the amount of $21,172, earnings for
the quarter of $230,716, off-set by the Company's quarterly cash dividend of
$95,483.
RESULTS OF OPERATIONS
- ---------------------
Net earnings for the Company's first fiscal quarter ended June 30, 1997, were
$230,716 compared to $195,276 for the comparable quarter in 1996. The increase
was due to an increase in net interest income after provision for loan losses,
and gains realized on the sale of fixed rate loans, investments and
mortgage-backed securities and real estate owned.
Earnings per share for the quarter ended June 30, 1997, were $0.28 per share
based on an average of 812,574 shares outstanding compared to $0.20 per share
for the comparable quarter in 1996 based on an average of 972,301 shares
outstanding.
Net interest income after provision for loan losses for the quarter ended June
30, 1997, was $707,110 compared to $667,625 for the quarter ended June 30, 1996,
an increase of $39,485. This increase was a result of interest income increasing
$382,111 from $1,572,520 in 1996 to $1,954,631 in 1997, while interest expense
increased $311,126 from $897,395 in 1996 to $1,208,521 in 1997. The increase in
interest income and interest expense are both due to increases in the average
balance of interest- earning assets and interest-bearing liabilities.
Non-interest income increased from $92,505 for the quarter ended June 30, 1996,
to $113,803 for the quarter ended June 30, 1997. The increase was due to higher
service charge income and gains realized on the sale of loans, investments,
mortgage-backed securities and real estate owned. Other income decreased due to
the sale of the Bank's Data Processing Center which paid a bonus patronage
dividend in the quarter ended June 30, 1996.
The Company's non-interest expense for the three months ended June 30, 1997 was
$454,985 compared to $450,036 for the comparable quarter in 1996. The slight
increase was due to higher compensation and benefits expense, and higher
occupancy and equipment expense which was partially off-set by a reduction in
federal insurance premiums.
PROVISION FOR LOAN LOSSES
- -------------------------
The provision for loan losses is based on the periodic analysis of the loan
portfolio by management. In establishing the provision management considers
numerous factors including general economic conditions, loan portfolio
condition, prior loss experience, and independent analysis. The provision for
loan losses for the three months ended June 30, 1997, was $39,000. Based upon
the analysis of the addition to established allowances and the composition of
the loan portfolio, management concluded that the allowance is adequate. While
current economic conditions in the Bank's market are stable, future conditions
will dictate the level of future allowances for losses on loans.
NON-PERFORMING ASSETS
- ---------------------
On June 30, 1997, non-performing assets were $167,519 compared to $379,990 on
March 31, 1997. At June 30, 1997, the Bank's allowance for loan losses was
$197,115, or 118% of non-performing assets compared to $158,000, or 42% at March
31, 1997.
Loans are considered non-performing when the collection of principal and/or
interest is not expected, or in the event payments are more than 90 days
delinquent.
The allowance for loan losses was .35% of total loans as of June 30, 1997,
compared to .29% at March 31, 1997.
8
CAPITAL RESOURCES
- -----------------
The Bank is subject to three capital to asset requirements in accordance with
Office of Thrift Supervision (OTS) regulations. The following table is a summary
of the Bank's regulatory capital requirements versus actual capital as of June
30, 1997:
CAPITAL REQUIREMENTS:
Actual Required Excess
Amount/Percent Amount/Percent Amount/Percent
-------------- -------------- --------------
(Dollars in Thousands)
Tangible Capital $11,406/10.73% $1,596/1.50% $9,810/9.23%
Core Leverage Capital $11,406/10.73% $3,191/3.00% $8,215/7.73%
Risk-Based Capital $11,600/27.53% $3,371/8.00% $8,229/19.53%
LIQUIDITY
- ---------
The Bank's principal sources of funds are deposits, FHLB advances, principal and
interest payments on loans, the maturity of investment securities and interest
income. While scheduled loan repayments and maturing investments are relatively
predictable, deposit flows and early loan payments are more influenced by
interest rates, general economic conditions and competition.
The Bank is required to maintain minimum levels of liquid assets as defined by
regulations. The required percentage is currently five percent of net
withdrawable savings deposits and borrowings payable on demand or in one year or
less. The Bank has maintained its liquidity ratio at levels exceeding the
minimum requirement. The eligible liquidity ratio at June 30, 1997 was 10.02%.
In light of the competition for deposits, the Bank may utilize the funding
sources of the FHLB of Des Moines to meet loan demand in accordance with the
Bank's growth plans. The wholesale funding sources may allow the Bank to obtain
a lower cost of funding and create a more efficient liability match to the
respective assets being funded.
For purposes of the cash flows, all short-term investments with a maturity of
three months or less at the date of purchase are considered cash equivalents.
Cash and cash equivalents for the periods ended June 30, 1997 and 1996 were
$9,079,990 and $2,690,488, respectively. The increase was primarily due to an
increase in cash provided by financing activities, primarily a net increase in
deposits.
Net cash provided by operating activities increased from $371,399 for the three
months ended June 30, 1996 to $597,484 for the three months ended June 30, 1997.
The increase was due to improved net earnings, and normal adjustments to accrued
income and expense items.
RECENT ACCOUNTING DEVELOPMENTS
- ------------------------------
The Company will adopt SFAS Nos. 125 and 127 relating to transfers and servicing
of financial assets and extinguishments of liabilities during 1997 and 1998,
according to the required implementation dates. SFAS No. 125, adopted April 1,
1997, did not have a material effect on the financial position or results of
operations. The adoption of SFAS No. 127 is not expected to have a material
effect on the financial position or results of operations.
9
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 March 31, 1998. Retroactive application will be required. The Company
believes the adoption of SFAS No. 128 will not have a significant effect on its
reports of earnings per share.
PENDING LEGISLATION
- -------------------
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 Bank 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 Bank is also unable to
predict whether the SAIF and BIF will eventually be merged.
10
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
-----------------
None.
Item 2. Changes in Securities
---------------------
None.
Item 3. Defaults Upon Senior Securities
-------------------------------
None.
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
None.
Item 5. Other Information
-----------------
As of June 30, 1997, the Company held 198,640 shares of its common
stock as treasury stock at an aggregate purchase price of $2,595,402.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
Exhibits:
27 - Financial Data Schedule
Reports on Form 8-K:
None.
11
SIGNATURES
Pursuant to the requirement 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.
HARDIN BANCORP, INC.
Registrant
Date: August 14, 1997 Robert W. King
--------------- -----------------------------------
Robert W. King, President and Chief
Executive Officer (Duly Authorized
Officer)
Date: August 14, 1997 Karen K. Blankenship
--------------- -----------------------------------
Karen K. Blankenship, Senior Vice
President and Secretary (Principal
Accounting Officer)
12