-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TiJ5/U/j3vbVDiyz7twkrrLEYxKCYhVM+i1T6l0aq8V4jeonhCeMngDvhd+lf06n /A6RnbPAblC+Ai34ONmBug== 0000743530-95-000044.txt : 19951119 0000743530-95-000044.hdr.sgml : 19951119 ACCESSION NUMBER: 0000743530-95-000044 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951114 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: 95592062 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 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1995 Commission file number: 0-12668 Hills Bancorporation Incorporated in Iowa I.R.S. Employer Identification No. 42-1208067 131 MAIN STREET, HILLS, IOWA Telephone number: (319) 679-2291 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 October 31, 1995 ----- ------------------- Common Stock, no par value 487,622 HILLS BANCORPORATION CONSOLIDATED BALANCE SHEETS (In Thousands) September 30, 1995 December 31, Unaudited 1994* ------------- ------------ ASSETS Cash and due from banks .......................... $ 10,117 $ 10,805 Investment securities: Available for sale (amortized cost September 30, 1995 $96,043; December 31, 1994 $94,914) ................. 95,912 90,795 Held to maturity (fair value September 30, 1995 $20,093; December 31, 1994 $19,561) ................. 19,704 19,255 Federal funds sold ............................... 10,855 7,500 Loans, net ....................................... 316,656 300,821 Property and equipment, net ...................... 6,835 6,350 Accrued interest receivable ...................... 4,954 3,776 Deferred income taxes, net ....................... 1,459 2,935 Other assets ..................................... 3,825 2,675 -------- -------- $470,317 $444,912 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES Noninterest-bearing deposits ......................... $ 37,061 $ 35,470 Interest-bearing deposits ............................ 342,259 337,368 --------- --------- Total deposits ................................... $ 379,320 $ 372,838 Federal funds purchased and securities sold under agreements to repurchase .............. 10,303 7,043 Federal Home Loan Bank notes ......................... 30,727 20,758 Accrued interest payable ............................. 1,832 1,548 Other liabilities .................................... 1,412 1,068 --------- --------- $ 423,594 $ 403,255 --------- --------- REDEEMABLE COMMON STOCK HELD BY EMPLOYEE STOCK OWNERSHIP PLAN (ESOP) ........................................... $ 5,381 $ 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 .................................... 37,890 35,336 Unrealized gains (losses) on debt securities, net .... (82) (2,594) --------- --------- $ 46,723 $ 41,657 Less, maximum cash obligation related to ESOP shares . 5,381 5,210 --------- --------- $ 41,342 $ 36,447 --------- --------- $ 470,317 $ 444,912 ========= ========= * Derived from audited financial statements.
See Notes to Financial Statements. HILLS BANCORPORATION UNAUDITED CONSOLIDATED STATEMENTS OF INCOME Three and Nine Months Ended September 30, 1995 and 1994 (In Thousands, Except Per Share Data) Three Months Ended Nine Months Ended September 30 September 30 --------------------------- ------------------------- 1995 1994 1995 1994 ------- ------- ------- ------- Interest Income: Interest and fees on loans ............................ $ 7,041 $ 5,947 $20,300 $17,002 Interest on investment securities Taxable ............................................. 1,273 1,238 3,677 3,818 Non-taxable ......................................... 249 259 770 789 Other interest income ................................. 180 18 283 116 ------- ------- ------- ------- Total interest income ................................. $ 8,743 $ 7,462 $25,030 $21,725 ------- ------- ------- ------- Interest Expense: Interest on deposits .................................. $ 4,193 $ 3,317 $11,923 $ 9,990 Interest on securities sold under agreements to repurchase ............................ 102 75 270 141 Interest on FHLB borrowings ........................... 546 279 1,380 771 Interest portion of Employee Stock Ownership Plan contribution ......................... 0 1 0 4 ------- ------- ------- ------- Total interest expense .............................. $ 4,841 $ 3,672 $13,573 $10,906 ------- ------- ------- ------- Net interest income ................................. $ 3,902 $ 3,790 $11,457 $10,819 Provision for loan losses ................................. 180 180 540 540 ------- ------- ------- ------- Net interest income after provision for loan losses ......................... $ 3,722 $ 3,610 $10,917 $10,279 ------- ------- ------- ------- Other Income: Real estate origination fees .......................... $ 139 $ 82 $ 215 $ 362 Trust department fees ................................. 154 154 482 472 Deposit account charges and fees ...................... 419 382 1,202 1,103 Other fees and charges ................................ 235 203 709 625 ------- ------- ------- ------- $ 947 $ 821 $ 2,608 $ 2,562 ------- ------- ------- ------- Other Expenses: Salaries and employee benefits ........................ $ 1,538 $ 1,299 $ 4,247 $ 3,896 Occupancy expenses .................................... 203 184 579 527 Furniture and equipment ............................... 277 253 801 739 F.D.I.C. insurance .................................... (24) 200 388 592 Office supplies and postage ........................... 189 153 533 456 Other operating ....................................... 479 575 1,675 1,774 ------- ------- ------- ------- $ 2,662 $ 2,664 $ 8,223 $ 7,984 ------- ------- ------- Income before income taxes .......................... $ 2,007 $ 1,767 $ 5,302 $ 4,857 Federal and state income taxes ............................. 568 501 1,480 1,317 Net Income ................................................. $ 1,439 $ 1,266 $ 3,822 $ 3,540 Per common share: Net income .................................................. $ 2.93 $ 2.59 $ 7.79 $ 7.25 Dividend, January ........................................... 0 0 2.60 2.40 Weighted average of common outstanding stock ................ 490,816 489,319 490,832 488,342
See Notes to Financial Statements HILLS BANCORPORATION UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY Nine Months Ended September 30, 1995 and 1994 (In Thousands) Capital Retained Unrealized ESOP Total Stock Earnings Losses Obligations -------- -------- -------- ---------- ----------- Balance, January 1, 1995 ...................... $ 36,447 $ 8,915 $ 35,336 $ (2,594) $ (5,210) Net income .................................... 3,822 0 3,822 Change related to ESOP shares ................. (171) 0 0 0 (171) Cash dividends ($2.60 per share) .............. (1,268) 0 (1,268) 0 0 Unrealized gains (losses) on debt securities, net ........................ 2,512 0 0 2,512 0 -------- -------- -------- -------- -------- Balance, September 30, 1995 ................... $ 41,342 $ 8,915 $ 37,890 $ (82) $ (5,381) ======== ======== ======== ======== ======== Balance, January 1, 1994 ...................... $ 35,943 $ 8,898 $ 31,573 $ 283 $ (4,811) Net income .................................... 3,540 0 3,540 0 0 Payment on debt of ESOP ....................... 131 0 0 0 131 Change related to ESOP shares ................. (571) 0 0 0 (571) Cash dividends ($2.40 per share) .............. (1,170) 0 (1,170) 0 0 Unrealized gains (losses) on debt securities, net ............................. (2,029) 0 0 (2,029) 0 -------- -------- -------- -------- -------- Balance, September 30, 1994 ................... $ 35,844 $ 8,898 $ 33,943 $ (1,746) $ (5,251) ======== ======== ======== ======== ========
See Notes to Financial Statements. HILLS BANCORPORATION UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS Nine Months Ended September 30, 1995 and 1994 (In Thousands) 1995 1994 -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES Net income ......................................... $ 3,822 $ 3,540 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation ................................... 607 535 Provision for loan losses ...................... 540 540 (Increase) decrease in accrued interest receivable ................................... (1178) (247) Amortization of bond discount .................. 374 600 (Increase) in other assets ..................... (1150) (324) Increase in accrued interest and other liabilities .................................. 628 324 -------- -------- Net cash provided by operating activities ...... $ 3,643 $ 4,968 -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from maturities of investment securities: Available for sale ............................... $ 13,000 $ 29,069 Held to maturity ................................. 2,382 2,243 Purchase of investment securities Available for sale ............................... (14,458) (19,360) Held to maturity ................................. (2,876) (1,979) Federal funds sold, net ............................ (3,355) 3,469 Loans made to customers, net of collections ........ (16,375) (29,056) Purchases of property and equipment ................ (1,092) (557) -------- -------- Net cash (used in) investing activities .......... $(22,774) $(16,171) -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES Net increase (decrease) in deposits .............. $ 6,482 $ 5,337 Net increase (decrease) in securities sold under agreements to repurchase ................. 3,260 4,451 Borrowings from FHLB ............................. 10,000 5,000 Payments on FHLB ................................. (31) (32) Dividends paid ................................... (1,268) (1,170) -------- -------- Net cash provided by financing activities ..... $ 18,443 $ 13,586 -------- -------- Increase in cash and due from banks ........... $ (688) $ 2,383 CASH AND DUE FROM BANKS Beginning ........................................ $ 10,805 10,107 -------- -------- Ending ........................................... $ 10,117 $ 12,490 ======== ======== SUPPLEMENTAL DISCLOSURES Cash payments for: Interest paid to depositors and others ........... $ 11,639 $ 10,940 Interest paid on other obligations ............. 1,650 867 Income taxes ................................... 1,538 1,439 Non-cash financing transactions: Increase in maximum cash obligation related to ESOP shares ............................... 171 571 Increase in stockholders' equity related to ESOP debt ................................. 0 132 Net unrealized gains (losses) on debt securities ................................... 2,512 2,029 See Notes to 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. Note 2. Loans The following tables set forth the composition of loans and the allowance for loan losses: (In thousands) September 30, September 31, 1995 1994 ------------- ------------- Agricultural ......................... $ 19,591 $ 17,826 Commercial and financial ............. 27,569 26,024 Real estate, construction ............ 7,886 6,933 Real estate, mortgage ................ 236,763 225,342 Loans to individual .................. 31,455 30,906 -------- -------- $323,264 $307,031 Less allowance for loan losses ....... 6,608 6,210 -------- -------- $316,656 $300,821 ======== ======== Transactions in the allowance for loan losses are as follows: (In thousands) Three months Nine months ended ended September 30, September 30, 1995 1995 ------------- ------------- Balance, beginning .............. $ 6,529 $ 6,210 Provision charged to expense .. 180 540 Net charge-offs ............... (101) (142) ------- ------- Balance, ending ................. $ 6,608 $ 6,608 ======= ======= The following summarizes the Company's nonaccrual, past due, restructured and impaired loans: (In thousands) September 30, September 31, 1995 1994 ------------- ------------ Nonaccrual .................... $ 0 $ 0 Accruing loans, past due 90 days or more ................ 1,146 822 Restructured loan ............. 0 0 There are no impaired loans as of September 30, 1995 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 September 30, 1995 reflects total assets of $470,317,000 which is an increase of $25,405,000 from December 31, 1994. Net loans are $316,656,000 which represents an increase of $15,835,000 from December 31, 1994. Compared to one year ago, total assets have increased from $432,463,000 to $470,317,000 for an increase of $37,854,000. Also during this time, net loans increased $25,164,000 to $316,656,000 as of September 30, 1995. These loan increases were primarily single family residential loans in the Iowa City and Coralville area. By September 30, 1995, the U.S. Government bond interest rates, after increasing during 1994, have decreased back to yields similar to mid-1994. Due to these falling interest rates on investment securities, the unrealized loss on investment securities that was $4,119,000 at December 31, 1994 has been reduced to an unrealized loss of $131,000 at September 30, 1995. This also had the effect of increasing stockholders' equity by $2,512,000 from December 31, 1994 to September 30, 1995. The changes in interest rates have a direct effect on secondary market financing and as a result on other income for the Bank in terms of loan origination fees. Deposits (when federal funds purchased and securities sold under agreements to repurchase are included) as of September 30, 1995 totaled $389,623,000, an increase of $9,742,000 for the first nine months. September 30, 1995 deposits, including repos, have grown $25,135,000 from September 30, 1994. Also during the last twelve months, borrowings from the FHLB have increased from $20,758,000 to $30,727,000. 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 1995, Hills Bancorporation paid a dividend of $2.60 per share, 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 September 30, 1995 of $41,342,000. Stockholders' equity at September 30, 1995 and December 31, 1994 reflects an adjustment for unrealized gain (losses) on debt securities, net of income taxes. The total stockholders' equity of Hills Bancorporation before the reduction for the ESOP shares as a percent of total assets is 9.93%. Under risk-based capital rules, total capital is 14.80% of risk- adjusted assets, compared to the current 8% requirement. The consolidated net income for the three months ended September 30, 1995 was $1,439,000 compared to $1,266,000 for the same period ended September 30, 1994. This is an increase of $173,000 representing an earnings per share for the three months of $2.93 compared to $2.59 for the same three months in 1994. For the nine months ending September 30, 1995 and 1994, the net income was $3,822,000 and $3,540,000; respectively. Net interest income for 1995 is up by $638,000 over 1994 and is primarily the result of earning assets being $32.0 million higher in 1995 compared to 1994. The provisions for loan losses are the same for all 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 September 30, 1995. Other income of the bank was $2,608,000 compared to $2,562,000 for the nine months ended September 30, 1995 and 1994, respectively. Loan origination fees amounted to $215,000 for the nine month period ended September 30, 1995 and $362,000 for the nine months ended September 30, 1994. Due to current interest rates, loan origination fees are expected to continue except the Bank will see a drop for 1995 in total loan origination fees compared to prior years. The Trust Department fees were $482,000 and $472,000 for the nine months ending September 30, 1995 and 1994, respectively and represents primarily an increase in accounts under management. Other expenses have increased from $7,984,000 for the nine months ended September 30, 1994 to $8,223,000 for the period ended September 30, 1995. Of this net increase of $239,000, salaries and employee benefits accounted for a $351,000 increase. This is a combination of salary increases and the number of full-time equivalent employees increasing from September 30, 1994 to September 30, 1995 by nine employees. For the quarter and the nine months ending September 30, 1995 compared to the same period in 1994 the major increase in net income is accounted for by a reduction of F.D.I.C. insurance premiums. The premium was retroactively adjusted back to June 1, 1995, from $.23 per $100 in deposits to $.04 and resulted in a refund for the third quarter of approximately $230,000. The occupancy, furniture and equipment, office supplies and the other operating expenses totaled $3,588,000 for the nine months ending September 30, 1995 compared to $3,496,000 for the same period in 1994. 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 No matters were submitted to a vote of security holders during the quarter ended September 30, 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 September 30, 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) 11/14/95 /s/ Dwight O. Seegmiller - ------------------------------ ------------------------------- Date Dwight O. Seegmiller, President (Duly authorized officer of the registrant) /s/ James G. Pratt ------------------------------- James G. Pratt, Treasurer (Principal Financial Officer) EX-27 2
9 THIS SCHEDULE CONTAINS SUMMARY FINANCAIL INFORMATION EXTRACTED FROM THE THIRD QUARTER 10-Q OF HILLS BANCORPORATION AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS 1,000 9-MOS DEC-31-1995 SEP-30-1995 10,117 0 10,855 0 95,912 19,704 20,093 323,264 6,680 470,317 379,320 31,030 3,244 5,381 8,915 0 0 32,427 470,317 20,300 4,447 283 25,030 11,923 13,573 11,457 540 0 8,223 5,302 3,822 0 0 3,822 7.79 7.79 0 0 1,146 0 0 6,210 142 0 6,608 0 0 0
EX-11 3 HILLS BANCORPORATION EXHIBIT II COMPUTATION OF EARNINGS PER COMMON SHARE Three Months Ended Nine Months Ended September 30 September 30 --------------------------- --------------------------- 1995 1994 1995 1994 -------- ------- -------- -------- Shares of common stock, beginning ...................... 487,773 487,622 487,773 487,622 Shares issued during this period ................... 0 0 0 0 -------- -------- -------- -------- Shares of common stock, ending ......................... 487,773 487,622 487,773 487,622 ======== ======== ======== ======== Weighted average number of shares outstanding #......... 490,816 489,319 490,832 488,342 ======== ======== ======== ======== Earnings and Earnings per share: Net income (in thousands) .......................... $ 1,439 $ 1,266 $ 3,822 $ 3,540 ======== ======== ======== ======== Earnings per common share .......................... $ 2.93 $ 2.59 $ 7.79 $ 7.25 ======== ======== ======== ======== # Computation of weighted average number of shares include equivalent shares attributable to stock options granted in 1993, computed under the treasury stock method.
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