-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, ENeAflV72+qPYdYRwcK88Lvosdlw/G5XllW2xk1Nsn7EdO8HbijmpCm86WU1PiMs w92Ggu7QPptH1t6poMXgCw== 0000743530-95-000019.txt : 19950511 0000743530-95-000019.hdr.sgml : 19950511 ACCESSION NUMBER: 0000743530-95-000019 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950331 FILED AS OF DATE: 19950510 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: HILLS BANCORPORATION CENTRAL INDEX KEY: 0000732417 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 421208067 STATE OF INCORPORATION: IA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-12668 FILM NUMBER: 95535899 BUSINESS ADDRESS: STREET 1: 131 MAIN ST CITY: HILLS STATE: IA ZIP: 52235 BUSINESS PHONE: 3196792291 MAIL ADDRESS: STREET 1: 131 MAIN ST CITY: HILLS STATE: IA ZIP: 52235 10-Q 1 FORM 10-Q - QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (As last amended in Rel. No. 34-26589, eff. 4/12/93.) UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X]Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the period ended March 31, 1995 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 0-12668 Hills Bancorporation (Exact name of registrant as specified in its charter) Iowa 42-1208067 (State or other jurisdiction of (I.R.S. Employer Identification incorporation or organization) Number) 131 Main Street, Hills, Iowa 52235 (Address of principal executive offices) (Zip code) (319) 679-2291 (Registrant's telephone number, including area code) Not Applicable (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. [X] Yes [ ] No APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practical date. SHARES OUTSTANDING CLASS AT APRIL 30, 1995 Common Stock, no par value 487,773 HILLS BANCORPORATION Index to Form 10-Q Part I FINANCIAL INFORMATION Page Number Item 1. Financial Statements Consolidated balance sheets, March 31, 1995 (unaudited) and December 31, 1994 Consolidated statements of income, (unaudited) for three months ended March 31, 1995 and 1994 Consolidated statement of stockholders' equity, (unaudited) for three months ended March 31, 1995 and 1994 Consolidated statements of cash flows (unaudited) for three months ended March 31, 1995 and 1994 Note to consolidated financial statements Item 2. Management's discussion and analysis of financial condition and results of operations Part II OTHER INFORMATION Item 1. Legal proceedings Item 2. Changes in securities Item 3. Defaults upon senior securities Item 4. Submission of matters to vote of security holders Item 5. Other information Item 6. Exhibits and reports on Form 8-K COMPUTATION OF EARNINGS PER SHARE SIGNATURES HILLS BANCORPORATION CONSOLIDATED BALANCE SHEETS (In Thousands) March 31, 1995 December 31, ASSETS Unaudited 1994* Cash and due from banks $ 9,804 $ 10,805 Investment securities: Available for sale (amortized cost March 31, 1995 $94,303; December 31, 1994 $94,914) 91,977 90,795 Held to maturity (fair value March 31, 1995 $19,450; December 31, 1994 $19,561) 19,459 19,255 Federal funds sold 788 7,500 Loans, net 307,204 300,821 Property and equipment, net 6,527 6,350 Accrued interest receivable 4,173 3,776 Deferred income taxes, net 2,271 2,935 Other assets 2,687 2,675 $444,890 $444,912 LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES Noninterest-bearing deposits $ 36,350 $ 35,470 Interest-bearing deposits 328,439 337,368 Total deposits $364,789 $372,838 Federal funds purchased and securities sold under agreements to repurchase 8,541 7,043 Federal Home Loan Bank notes 25,758 20,758 Accrued interest payable 1,519 1,548 Other liabilities 1,548 1,068 $402,155 $403,255 REDEEMABLE COMMON STOCK HELD BY EMPLOYEE STOCK OWNERSHIP PLAN (ESOP) $ 5,265 $ 5,210 STOCKHOLDERS' EQUITY Capital stock, common, no par value; authorized 2,000,000 shares; issued 487,773 shares $ 8,915 $ 8,915 Retained earnings 35,285 35,336 Unrealized gains (losses) on debt securities, net (1,465) (2,594) $ 42,735 $ 41,657 Less, maximum cash obligation related to ESOP shares 5,265 5,210 $ 37,470 $ 36,447 $444,890 $444,912 * Derived from audited financial statements. See Note to Consolidated Financial Statements. HILLS BANCORPORATION UNAUDITED CONSOLIDATED STATEMENTS OF INCOME Three Months Ended March 31, 1995 and 1994 (In Thousands, Except Per Share Data) 1995 1994 Interest income: Interest and fees on loans $ 6,411 $ 5,455 Interest on investment securities Taxable 1,194 1,291 Non taxable 261 267 Interest on federal funds sold 40 48 Total interest income $ 7,906 $ 7,061 Interest expense: Interest on deposits $ 3,669 $ 3,328 Interest on securities sold under agreements to repurchase 92 34 Interest on FHLB notes 366 245 Interest portion of Employee Stock Ownership Plan contribution - - 2 Total interest expense $ 4,127 $ 3,609 Net interest income $ 3,779 $ 3,452 Provision for loan losses 180 180 Net interest income after provision for loan losses $ 3,599 $ 3,272 Other income: Loan origination fees $ 19 $ 174 Trust fees 151 179 Deposit account charges and fees 373 349 Other fees and charges 250 232 $ 793 $ 934 Other expenses: Salaries and employee benefits $ 1,340 $ 1,299 Occupancy 190 175 Furniture and equipment 253 234 F.D.I.C. insurance 209 198 Office supplies and postage 177 152 Other 541 541 $ 2,710 $ 2,599 Income before income taxes $ 1,682 $ 1,607 Federal and state income taxes $ 465 $ 436 Net income $ 1,217 $ 1,171 Per common share: Net income $ 2.48 $ 2.40 Dividend, January 2.60 2.41 Weighted average of common outstanding stock 490,799 488,691 See Note to Consolidated Financial Statements HILLS BANCORPORATION UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY Three Months Ended March 31, 1995 and 1994 (In Thousands) Total Balance, January 1, 1995 $ 36,447 Net income 1,217 Change related to ESOP shares (55) Cash dividends ($2.60 per share) (1,268) Unrealized gains (losses) on debt securities, net 1,129 Balance, March 31, 1995 $ 37,470 Balance, January 1, 1994 $ 35,943 Net income 1,171 Payment on debt of ESOP 131 Change related to ESOP shares 32 Cash dividends ($2.40 per share) (1,170) Unrealized gains (losses) on debt securities, net (1,096) Balance, March 31, 1994 $ 35,011 See Note to Consolidated Financial Statements. HILLS BANCORPORATION UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS Three Months Ended March 31, 1995 and 1994 (In Thousands) 1995 1994 CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 1,217 $ 1,171 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 202 178 Provision for loan losses 180 180 (Increase) in accrued interest receivable (397) (48) Amortization of bond discount 138 223 (Increase) in other assets (12) (192) Increase in accrued interest and other liabilities 451 516 Net cash provided by operating activities $ 1,779 $ 2,028 CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from maturities of investment securities: Available for sale $ 4,000 $ 9,000 Held to maturity 330 615 Purchase of investment securities: Available for sale (3,510) (8,084) Held to maturity (551) (738) Federal funds sold, net 6,712 533 Loans made to customers, net of collections (6,563) (2,944) Purchases of property and equipment (379) (26) Net cash provided by (used in) investing activities $ 39 $ (1,644) CASH FLOWS FROM FINANCING ACTIVITIES Net decrease in deposits $ (8,049) $ (30) Net increase (decrease) in federal funds purchased and securities sold under agreements to repurchase 1,498 (29) Borrowings from FHLB 5,000 - - Dividends paid (1,268) (1,170) Net cash (used in) financing activities $ (2,819) $ (1,229) (Decrease) increase in cash and due from banks $ (1,001) $ (845) CASH AND DUE FROM BANKS Beginning 10,805 10,107 Ending $ 9,804 $ 9,262 SUPPLEMENTAL DISCLOSURES Cash payments for: Interest paid to depositors and others $ 3,698 $ 3,393 Interest paid on other obligations 458 281 Non-cash financing transactions: Increase in stockholders' equity related to ESOP debt - - 132 Increase in maximum cash obligation related to ESOP shares (55) (32) Net unrealized gains (losses) on debt securities 1,129 (1,096) See Note to Consolidated Financial Statements. HILLS BANCORPORATION NOTE TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Note 1. Interim Financial Statements Interim consolidated financial statements have not been examined by independent public accountants, but include all adjustments (consisting only of normal recurring accruals) which, in the opinion of management, are necessary for a fair presentation of the results for these periods. The results of operation for the interim periods are not necessarily indicative of the results for a full year. For purposes of reporting cash flows, cash and due from banks includes cash on hand and amounts due from banks (including cash items in process of clearing). Cash flows from demand deposits, NOW accounts, savings accounts, and federal funds purchased and sold are reported net since their original maturities are less than three months. Cash flows from loans and time deposits are presented as net increases or decreases. PART I, ITEM 2. HILLS BANCORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OPERATION The consolidated balance sheet of Hills Bancorporation as of March 31, 1995 reflects total assets of $444,890,000 which is a slight decrease of $22,000 from December 31, 1994. Net loans are $307,204,000 which represents an increase of $6,383,000 from December 31, 1994. Compared to one year ago, total assets have increased from $416,404,000 to $444,890,000 for an increase of $28,486,000. Also during this time, net loans increased $41,464,000 to $307,204,000 as of March 31, 1995. These loan increases were primarily single family residential loans in the Iowa City and Coralville area. By March 31, 1995, the U.S. Government bond interest rates, after increasing during 1994, have decreased back to yields effective in December, 1994. The changes in rates have a direct effect on secondary market financing and also on other income for the Bank in terms of loan origination fees. At this time, loan demand for in-house real estate loans appears to be strong and the funding of these loans will come from deposit growth and/or FHLB advances. On the liability side of the bank, deposits (when federal funds purchased and securities sold under agreements to repurchase are included) as of March 31, 1995 totaled $373,330,000, a decrease of $6,551,000 for the first three months. March 31, 1995 deposits, including repos, have grown $15,414,000 from March 31, 1994. Also during the last twelve months, borrowings from the FHLB has increased from $15,790,000 to $25,758,000. Asset-liability management encompasses both the management of interest rate sensitivity and the maintenance of adequate liquidity. Interest rate sensitivity management attempts to provide the optimal level of net interest income while managing exposure to risks associated with interest rate movements. Liquidity management involves planning to meet anticipated funding needs. Management monitors the rate sensitivity and liquidity positions on an on-going basis and, when necessary, appropriate action is taken to minimize any adverse effects of rapid interest rate movements or any unexpected liquidity concerns. In January of 1995, Hills Bancorporation paid a dividend of $2.60 per share. The dividend of $2.60 per share represents an 8.33% increase from the $2.40 paid in January, 1994. The total dividend of $1,268,000 is deducted from stockholders' equity and is reflected in the resulting stockholders' equity as of March 31, 1995 of $37,470,000. Stockholders' equity at March 31, 1995 and December 31, 1994 reflects an adjustment for unrealized gain (losses) on debt securities, net of income taxes. Prior to December 31, 1993 all debt securities were carried at amortized cost. Effective December 31, 1993, the Company adopted FASB Statement No. 115, "Accounting for Certain Investments in Debt and Equity Securities," and classified investments as held to maturity or available for sale. Investment securities held to maturity are those for which the Company has the ability and intent to hold to maturity. Securities meeting such criteria at the date of purchase and as of the balance sheet date are carried at cost, adjusted for amortization of premiums and discounts. Gains and losses on sales of investment securities are based upon the adjusted book value of the specific securities sold. Debt securities available for sale are accounted for at fair value and the unrealized holding gains or losses are presented as a separate component of stockholders' equity, net of their deferred income tax effect. The unrealized holding gains net of deferred income taxes, of the debt securities available for sale as of December 31, 1994, is presented as an adjustment of the separate component of stockholders' equity. At March 31, 1995, due to the change in government interest rates, the gross unrealized loss decreased to $2,326,000 from $4,119,000 at December 31, 1994. After the adjustment for deferred income taxes, the net effect on stockholders' equity was a $1,129,000 increase. The change in interest rates is represented by an example of a U.S. Government bond with a two- year maturity and a yield of 7.55% in December, 1994 and at the end of March the yield available was 6.65%. The total stockholders' equity of Hills Bancorporation before the reduction for the ESOP shares as a percent of total assets is 9.60%. Under risk-based capital rules, total capital is 00.00% of risk-adjusted assets, compared to the current 8% requirement. The consolidated net income for the three months ended March 31, 1995 was $1,217,000 compared to $1,171,000 for the same period ended March 31, 1994. This is an increase of $46,000 representing an earnings per share for the three months of $2.48 compared to $2.40 for the same three months in 1994. Net interest income is up by $327,000 over the prior three months one year ago and is reflective primarily of volume increases in terms of total number of assets while the interest rate margin, which is the difference between what the bank earns on investments and loans and pays on interest-bearing deposits is up slightly from one year ago. Total average earning assets were up over $25.7 million for the first quarter of 1995 compared to the same period in 1994. The provisions for loan losses are the same for both quarters presented and is reflective of management's overall opinion of the loan portfolio at this time, the growth of the loan portfolio, and the level of the reserve as of March 31, 1995. Other income of the bank was $793,000 compared to $934,000 for the three months ended March 31, 1995 and 1994, respectively. Loan origination fees amounted to $19,000 for the three month period ended March 31, 1995 and $174,000 for the three months ended March 31, 1994. As already discussed, due to raising interest rates, loan origination fees are not expected to continue at the prior year's pace and the Bank will see a drop for the year in loan origination fees. The Trust Department fees were $373,000 and $349,000 for the three months ending March 31, 1995 and 1994, respectively and represents primarily an increase in accounts under management. Other expenses have increased from $2,599,000 for the three months ended March 31, 1994 to $2,710,000 for the period ended March 31, 1995. Of this increase of $111,000, $11,000 is from increases in F.D.I.C. insurance and salary and employee benefits have increased compared to one year ago by $41,000. This is a combination of salary increases and the number of full-time equivalent employees increasing from March 31, 1994 to March 31, 1995 by ten employees. Occupancy and furniture and equipment expenses are up $34,000 for the three months ending March 31, 1995 compared to one year ago. This increase is primarily in property taxes, rent, and repairs and maintenance on buildings. Federal and state income taxes for 1995 are more than in 1994, primarily the result of increased income before taxes. The Bank's principal sources of funds continues to be prepayment of loan principal and current amortized loan payments. In addition, funds are provided from current operations. All of the funds are used to fulfill loan commitments, make short-term investments, and fund any deposit withdrawals needed. The Company has no material commitments or plans which will affect its liquidity or capital resources. The acquisition of property and equipment may be in cash purchases, or they may be financed if favorable terms are available. HILLS BANCORPORATION PART II - OTHER INFORMATION Item 1. Legal Proceedings There are no material pending legal proceedings. Item 2. Changes in Securities There were no changes in securities. Item 3. Defaults upon Senior Securities Hills Bancorporation has no senior securities. Item 4. Submission of Matters to a Vote of Security Holders There have been no matters submitted to a vote of security holders during the quarter ended March 31, 1995. Item 5. Other Information None Item 6. Exhibits and Reports on Form 8-K (a) Exhibit See exhibit II - Statement Re Computation of Earnings Per Common Share (b) Reports on Form 8-K No reports on Form 8-K have been filed during the quarter ended March 31, 1995. 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 and thereunto duly authorized. HILLS BANCORPORATION (Registrant) /s/ Dwight O. Seegmiller Date 05/09/95 Dwight O. Seegmiller, President (Duly authorized officer of the registrant) /s/ James G. Pratt James G. Pratt, Treasurer (Principal Financial Officer) EX-11 2 HILLS BANCORPORATION EXHIBIT 11 COMPUTATION OF EARNINGS PER COMMON SHARE Three Months Ended March 31, 1995 1994 Shares of common stock, beginning 487,773 487,622 Shares issued during this period - - - - Shares of common stock, ending 487,773 487,622 Weighted average number of shares 490,799 488,691 outstanding # Earnings and Earnings per share: Net income (in thousands) $ 1,217 $ 1,171 Earnings per common share $ 2.48 $ 2.40 # Computation of weighted average number of shares include equivalent shares attributable to stock options granted in 1993, computed under the treasury stock method. EX-27 3
9 1,000 3-MOS DEC-31-1995 MAR-31-1995 9,804 0 788 0 91,977 19,459 19,450 313,700 6,496 444,890 364,789 8,541 3,067 31,023 8,919 0 0 28,555 444,890 6,411 1,455 40 7,906 3,669 4,127 3,779 180 0 2,710 1,682 1,682 0 0 1,217 2.48 2.48 0 0 0 0 0 0 0 0 0 0 0 0
-----END PRIVACY-ENHANCED MESSAGE-----