-----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, PdakKPSRbULbTTqnpaeNnGYu3fxDE9aS2r0jAn0yM5bpUtqRuf1sJe8qqI182KL5 CIF32Gjfm412x3QeQi35Aw== 0000946275-97-000276.txt : 19970514 0000946275-97-000276.hdr.sgml : 19970514 ACCESSION NUMBER: 0000946275-97-000276 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970331 FILED AS OF DATE: 19970513 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: LANDMARK BANCSHARES INC CENTRAL INDEX KEY: 0000915800 STANDARD INDUSTRIAL CLASSIFICATION: SAVINGS INSTITUTION, FEDERALLY CHARTERED [6035] IRS NUMBER: 481142260 STATE OF INCORPORATION: KS FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-23164 FILM NUMBER: 97602145 BUSINESS ADDRESS: STREET 1: CENTRAL & SPRUCE STS CITY: DODGE CITY STATE: KS ZIP: 67801 BUSINESS PHONE: 3162278111 MAIL ADDRESS: STREET 2: CENTRAL & SPRUCE STREETS CITY: DODGE CITY STATE: KS ZIP: 67801 10QSB 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the quarterly period ended March 31, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ---------- ----------- Commission File Number 0-23164 LANDMARK BANCSHARES, INC. (Exact name of registrant as specified in its charter) Kansas 48-1142260 (State or other jurisdiction I.R.S. Employer of incorporation or organization) Identification Number CENTRAL AND SPRUCE STREETS, DODGE CITY, KANSAS 67801 (Address and Zip Code of principal executive offices) (316) 227-8111 (Registrant's telephone number, including area code) N/A (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No The number of shares outstanding of each of the issuer's classes of common stock, as of March 31, 1997: $.10 par value common stock 1,807,996 shares (Class) (Outstanding) Transitional Small Business Disclosure Format: Yes [ ] No [X] LANDMARK BANCSHARES, INC. INDEX
Page Number PART I. FINANCIAL INFORMATION Item 1.Financial Statements Statements of Financial Condition as of March 31, 1997 (unaudited) and September 30, 1996 1 Statements of Income for the Three and Six Months Ended March 31, 1997 and 1996 (unaudited) 2 Statements of Cash Flows for the Six Months Ended March 31, 1997 and 1996 (unaudited) 3 - 4 Notes to Financial Statements 5 - 8 Item 2.Management's Discussion and Analysis of Financial Condition and Results of Operations 9 - 12 PART II - OTHER INFORMATION Item 2.Changes in Securities 13 Item 4.Submission of Matter to a Vote of Security Holders 13 Item 5.Other Information 13 Item 6(b). Reports on Form 8-K 13 SIGNATURES 14
LANDMARK BANCSHARES, INC. AND ITS WHOLLY-OWNED SUBSIDIARY, LANDMARK FEDERAL SAVINGS BANK Consolidated Statements of Financial Condition
March 31, 1997 September 30, 1996 (Unaudited) ----------------------------------- ASSETS Cash and cash equivalents: Interest bearing $ 0 $ 3,063 Non-interest bearing 669,371 470,647 Time deposits in other financial institutions 199,472 479,949 Securities held to maturity 27,619,482 29,398,520 Securities available for sale 4,928,022 4,137,637 Mortgage-backed securities held to maturity 41,665,753 45,877,120 Loans receivable, net 144,340,088 128,013,228 Loans held for sale 655,926 1,890,007 Accrued income receivable 1,557,730 1,518,640 Real estate owned or in judgment and other repossessed property, net 215,313 0 Office properties and equipment, at cost less accumulated depreciation 943,672 949,786 Prepaid expenses and other assets 1,004,504 973,383 Income taxes receivable - deferred 0 21,710 TOTAL ASSETS $ 223,799,333 $ 213,733,690 ------------------------------ LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Deposits 149,397,743 143,814,910 Outstanding checks in excess of bank balance 70,664 143,808 Other Borrowed Money 38,633,335 33,466,668 Advances from borrowers for taxes and insurance 995,827 1,673,142 Accrued expenses and other Liabilities 1,471,261 2,193,296 Deferred income taxes 113,558 0 Income taxes Current 367,059 52,691 ------------------------------ TOTAL LIABILITIES $ 191,049,447 $ 181,344,515 ------------------------------ Stockholders' Equity Preferred stock, no par value; 5,000,000 shares authorized; no shares outstanding Common Stock 228,131 228,131 $.10 par value; 10,000,000 shares authorized; 2,281,312 shares issued Additional Paid-in Capital 21,944,175 21,944,175 Treasury Stock; 473,316 and 428,316 shares of common stock on March 31, 1997 and September 30, 1996 repectively, at cost (6,839,018) (6,027,206) Retained income (substantially restricted) 18,355,170 17,468,325 Employee Stock Ownership Plan (994,695) (994,695) Management Stock Bonus Plan (386,090) (482,612) Unrealized gain available on for sale securities, net of deferred tax 442,213 253,057 ------------------------------ Total Stockholders' Equity 32,749,886 32,389,175 ------------------------------ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 223,799,333 $ 213,733,690 ------------------------------
2 LANDMARK BANCSHARES, INC. AND ITS WHOLLY-OWNED SUBSIDIARY, LANDMARK FEDERAL SAVINGS BANK Consolidated Statements of Income
Three Months Ended March 31 Six Months Ended March 31 1996 1997 1996 1997 (unaudited) (unaudited) ------------------------------------------------------- INTEREST INCOME Interest on loans 2,137,829 2,853,594 4,250,030 5,604,442 Interest and dividends on investment securities 434,236 541,311 941,814 1,084,898 Interest on mortgage-backed securities 907,084 692,989 1,991,060 1,428,324 ------------------------------------------------------- Total interest income 3,479,149 4,087,894 7,182,904 8,117,664 INTEREST EXPENSE Deposits 1,847,113 1,796,919 3,772,843 3,612,181 Borrowed funds 253,281 575,658 609,891 1,092,796 ------------------------------------------------------- Total interest expense 2,100,394 2,372,577 4,382,734 4,704,977 Net interest income 1,378,755 1,715,317 2,800,170 3,412,687 PROVISION FOR LOSSES ON LOANS 30,000 55,000 60,000 100,000 ------------------------------------------------------- Net interest income after provision for losses 1,348,755 1,660,317 2,740,170 3,312,687 NON-INTEREST INCOME Service charges and late fees 49,278 63,410 97,745 123,753 Net gain (loss) on available for sale investments 7,500 64,223 7,500 172,916 Net gain (loss) on sale of loans (9,142) 5,224 43,224 64,663 Net gain on sale of available for sale mortgage-backed securities 135,208 0 135,208 0 Service fees on loans sold 40,828 40,692 82,376 81,049 Other income 20,645 33,104 46,561 67,502 ------------------------------------------------------- 244,317 206,653 412,614 509,883 NON-INTEREST EXPENSE Compensation and related expenses 453,566 514,347 947,096 1,011,779 Occupancy expense 41,637 41,695 83,683 82,652 Advertising 21,820 17,499 37,634 31,947 Federal insurance premium 99,246 20,148 196,672 119,814 Loss (gain) from real estate operations 986 683 3,314 989 Data processing 55,568 52,327 98,325 95,815 Other expense 195,283 240,824 349,875 416,224 ------------------------------------------------------- 868,106 887,523 1,716,599 1,759,220 Income before income taxes 724,966 979,447 1,436,185 2,063,350 INCOME TAXES EXPENSES 292,000 398,300 573,500 829,800 ------------------------------------------------------- Net income 432,966 581,147 862,685 1,233,550 ------------------------------------------------------- Primary earnings per share $ 0.22 $ 0.32 $ 0.43 $ 0.67 Fully diluted earnings per share $ 0.22 $ 0.32 $ 0.43 $ 0.67 Dividends per share $ 0.10 $ 0.10 $ 0.20 $ 0.20
3 LANDMARK BANCSHARES, INC. AND ITS WHOLLY-OWNED SUBSIDIARY LANDMARK FEDERAL SAVINGS BANK Consolidated Statements of Cash Flows
Six Months Ended March 31 1996 1997 (unaudited) (unaudited) ------------------------------ CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 862,685 $ 1,233,550 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 59,067 59,203 Decrease (increase) in accrued interest receivable 292,136 (39,090) Increase (decrease) in outstanding checks in excess of bank balance (1,050,816) (73,144) Increase (decrease) in accrued and deferred income taxes 79,255 449,636 Increase (decrease) in accounts payable and accrued expenses 50,512 (722,036) Amortization of premiums and discounts on investments and loans (78,745) 5,008 Provision for losses on loans and investments 60,000 100,000 Gain/loss on available for sale securities (7,500) (172,916) Other non-cash items, net (221,223) 33,298 Sale of loans held for sale 3,415,650 8,437,797 Gain on sale of loans held for sale (43,224) (64,663) Origination of loans held for sale (4,266,405) (6,394,353) Purchase of loans held for sale (971,700) (744,700) ------------------------------ NET CASH PROVIDED BY OPERATING ACTIVITIES $ (1,820,308) $ 2,104,590 ------------------------------ CASH FLOWS FROM INVESTING ACTIVITIES Loan originations and principal payment on loans held for investment (4,103,058) 442,408 Principal repayments on mortgage-backed securities 5,680,662 4,188,387 Loans purchased for investment (2,195,925) (17,105,864) Proceeds from sale of mortgage-backed securities available for sale 11,355,417 0 Acquisition of mortgage-backed securities held to maturity (1,482,865) 0 Acquisition of investment securities held to maturity (6,799,500) (3,300,000) Acquisition of investment securities available for sale (1,146,693) (951,165) Proceeds from sale of investment securities 100,000 485,205 Proceeds from maturities or calls of investment securities 15,662,135 5,090,000 Net (increase) decrease in time deposits 219,000 280,000 Sale of real estate acquired in settlement of loans 47,484 2,000 Acquisition of fixed assets (21,723) (50,089) Other investing activity (2,986) 0 ------------------------------ NET CASH PROVIDED (USED) IN INVESTING ACTIVITIES 17,311,948 (10,919,118) ------------------------------
4 LANDMARK BANCSHARES, INC. AND ITS WHOLLY-OWNED SUBSIDIARY, LANDMARK FEDERAL SAVINGS BANK Consolidated Statements of Cash Flows (Continued)
Six Months Ended March 31 1996 1997 (unaudited) (unaudited) ------------------------------- CASH FLOWS FROM FINANCING ACTIVITIES Net increase (decrease) in deposits $ (2,611,440) $ 5,582,833 Net increase (decrease) in escrow accounts (529,858) (677,315) Proceeds from FHLB advance and other borrowings 5,000,000 47,223,000 Repayment of FHLB advance and other borrowings (14,633,333) (42,056,333) Treasury Stock (2,012,316) (811,813) Other Financing Activities 96,522 96,522 Dividend Payment (391,219) (346,705) ------------------------------- NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES (15,081,644) 9,010,189 ------------------------------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 409,996 195,661 BEGINNING CASH AND CASH EQUIVALENTS 462,021 473,710 ------------------------------- ENDING CASH AND CASH EQUIVALENTS 872,017 669,371 ------------------------------- SUPPLEMENTAL DISCLOSURES Cash paid during the year for: Interest on deposits, advances, and other borrowings 4,499,375 4,752,544 Income taxes 247,387 829,800 Transfers from loans to real estate acquired through foreclosure 27,205 0 Transfer of mortgage-backed securities from held to maturity to available for sale 11,500,000 0
LANDMARK BANCSHARES, INC. PART I - FINANCIAL INFORMATION ITEM 1. - FINANCIAL STATEMENTS LANDMARK FEDERAL SAVINGS BANK NOTES TO FINANCIAL STATEMENTS (UNAUDITED) 1. BASIS OF PRESENTATION The accompanying unaudited financial statements were prepared in accordance with the instructions for form 10-QSB and , accordingly, do not include all information and disclosures necessary to present financial condition, results of operations and cash flows of Landmark Bancshares, Inc. (the "Company") and its wholly-owned subsidiary Landmark Federal Savings Bank (the "Bank") in conformity with generally accepted accounting principles. However, all normal recurring adjustments have been made which, in the opinion of management, are necessary for the fair presentation of the financial statements. The results of operation for the three months ending March 31, 1997, are not necessarily indicative of the results which may be expected for the fiscal year ending September 30, 1997. 2. On March 28, 1994, the Bank segregated and restricted $15,144,357 of retained earnings in a liquidation account for the benefit of eligible savings account holders who continue to maintain their accounts at the bank after the conversion of the bank from mutual to stock form. In the event of a complete liquidation of the Bank, each eligible account holder will be entitled to receive a distribution from the liquidation account in an amount proportionate to the current adjusted balances of all qualifying deposits then held. The liquidation account will be reduced annually at September 30th to the extent that eligible account holders have reduced their qualifying deposits. 3. INVESTMENTS AND MORTGAGE - BACKED SECURITIES A summary of the Bank's carrying value of investment and mortgage - backed securities as of March 31, 1997 and September 30, 1996, is as follows: Investment Securities March 31, 1997 September 30, 1996 ------------------------------------ Held to maturity: Government Agency Securities 25,779,482 27,168,520 Municipal Obligations 1,840,000 2,230,000 ------------------------------------ $27,619,482 $29,398,520 Available for sale: Common Stock 2,668,722 2,396,237 Stock in Federal Home Loan Bank 2,249,300 1,731,400 Other 10,000 10,000 ------------------------------------ $ 4,928,022 $ 4,137,637 6 Mortgage - Backed Securities held to maturity: FNMA - Arms 14,267,888 15,425,620 FHLMC -Arms 5,286,461 6,215,951 FHLMC -Fixed Rate 306,004 399,854 CMO Government Agency 15,556,472 16,659,609 CMO Private Issue 4,976,986 5,636,850 FNMA - Fixed Rate 755,981 876,016 GNMA - Fixed Rate 427,368 551,646 Unamortized Premiums 200,564 268,015 Unearned Discounts (111,971) (156,441) ----------------------------- $ 41,665,753 $ 45,877,120 4. Loan Receivable, Net A summary of the Bank's loans receivable at March 31, 1997 and September 30, 1996, is as follows:
March 31, 1997 September 30, 1996 ----------------------------------- Mortgage Loans Secured by One to Four Family Residences 113,534,433 99,579,583 Secured by Other Properties 3,489,598 3,726,333 Construction Loans 1,268,456 1,129,915 Other 1,537,518 1,852,243 ------------------------------ 119,830,005 106,288,074 Plus (Less): Unamortized Premium on Loan Purchase 35,540 46,617 Unearned Discount and Loan Fees (359,974) (304,237) Undisbursed Loan Proceeds 11,668 0 Allowance for Loan Losses (560,841) (531,749) ------------------------------ Total Mortgage Loans 118,956,398 105,498,705 ------------------------------ Consumer and Other Loans: Automobile 11,373,657 9,783,677 Commercial leases 3,543,929 3,600,888 Loans on Deposits 543,731 554,550 Home Equity and Second Mortgage 9,118,688 8,139,668 Mobile Home 43,966 27,791 Other 1,028,316 616,546 ------------------------------ 25,652,287 22,723,120 Less: Allowance for Loan Losses (268,597) (208,597) ------------------------------ Total Consumer and Other Loans 25,383,690 22,514,523 ------------------------------ Net Loans Receivable $ 144,340,088 $128,013,228
7 A summary of the Bank's allowance for loan losses for the 3 and 6 months ended March 31, 1997 and 1996, are as follows:
Three Months Ended Six Months Ended March 31 March 31 1996 1997 1996 1997 ------------------------------------------------ Balance Beginning $ 662,089 $ 780,095 $ 643,547 $ 740,346 Provisions Charged to Operations 30,000 55,000 60,000 100,000 Loans Charged Off Net of Recoveries 331 (5,657) (11,127) (10,908) ------------------------------------------------ Balance Ending $ 692,420 $ 829,438 $ 692,420 $ 829,438
There has been no significant change in the level of non performing loans from September 30, 1996 to March 31, 1997. 5. Real Estate owned or in judgment and other repossessed property: March 31, 1997 September 30, 1996 --------------------------------------- Real Estate Acquired by Foreclosure $ 0 $ 0 Real Estate Loans in Judgment and Subject to Redemption 215,313 0 Other Repossessed Assets 0 0 --------------------------------------- $215,313 $ 0 6. The Bank is a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financial needs of its customers and to reduce its own exposure to fluctuations in interest rates. The financial instruments include commitments to extend credit and commitments to sell loans. The instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the statement of financial condition. The contract or notional amounts of those instruments reflect the extent of involvement the Bank has in particular classes of financial instruments. The Bank's exposure to credit loss in the event of non-performance by the other party to the financial instrument for loan commitments is represented by the contractual or notional amount of those instruments. The Bank uses the same credit policies in making commitments as it does for on-balance-sheet instruments. At March 31, 1997, the Bank had outstanding commitments to fund real estate loans of $2,334,205. Of the commitments outstanding, $1,159,040 are for fixed rate loans at rates of 7.0% to 8.75%. Commitments for adjustable rate loans amount to $1,175,165 with initial rates of 7.375% to 8.25%. Outstanding loan commitments to sell as of March 31, 1997 were $1,059,633. 7. Earnings per share for the three and six months ending March 31, 1997 and 1996, was determined by the weighted average shares outstanding as follows; 8 STATEMENT REGARDING COMPUTATION OF EARNINGS PER SHARE
Primary Earnings Per Share Three months ended Six months ended March 31 March 31 1996 1997 1996 1997 ------------------------------------------------------ Weighted average common shares outstanding 2,085,332 1,852,996 2,085,332 1,852,996 Net effect of dilutive stock options 70,451 107,664 66,779 100,020 Average unallocated ESOP shares (109,698) (96,010) (111,418) (97,740) Weighted average treasury shares purchased (91,835) (37,611) (53,553) (20,050) ------------------------------------------------------ Common Stock Equivalents 1,954,250 1,827,039 1,987,140 1,835,226 ------------------------------------------------------ Net Earnings 432,966 581,147 862,685 1,233,550 ------------------------------------------------------ Per share amount $ 0.22 $ 0.32 $ 0.43 $ 0.67
Fully Dilutive Earnings Per Share Three months ended Six months ended March 31 March 31 1996 1997 1996 1997 ----------------------------------------------------- Weighted average common shares outstanding 2,085,332 1,852,996 2,085,332 1,852,996 Net effect of dilutive stock options 73,466 108,678 73,466 105,805 Average unallocated ESOP shares (109,698) (96,010) (111,418) (97,740) Weighted average treasury shares purchased (91,835) (37,611) (53,553) (20,050) ----------------------------------------------------- Common Stock Equivalents 1,957,265 1,828,053 1,993,827 1,841,011 ----------------------------------------------------- Net Earnings 432,966 581,147 862,685 1,233,550 ----------------------------------------------------- Per share amount $ 0.22 $ 0.32 $ 0.43 $ 0.67
Earnings per share have been computed on the treasury stock method in using average market price for the common stock equivalents (options). 8. At a January 1997 board meeting, the Directors of the Company declared a .10 per share dividend. The dividend was payable to all stockholders of record as of February 3, 1997. 9 LANDMARK BANCSHARES, INC. PART I - FINANCIAL INFORMATION ITEM 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS General: Landmark Bancshares, Inc. ("Company") is the holding company for Landmark Federal Savings Bank ("Bank"). Apart from the operations of the Bank, the Company did not engage in any significant operations during the quarter ended March 31, 1997. The Bank is primarily engaged in the business of accepting deposit accounts from the general public, using such funds to originate mortgage loans for the purchase and refinancing of single-family homes located in Central and Southwestern Kansas and for the purchase of mortgage-backed and investment securities. In addition, the Bank also offers and purchases loans through correspondent lending relationships in Wichita, Kansas City, and other cities in Kansas and in Albuquerque and Santa Fe, New Mexico. To a lesser extent, the Bank will purchase adjustable rate mortgages loans, to manage its interest rate risk as deemed necessary. The Bank also makes automobile loans, second mortgage loans, home equity loans and savings deposit loans. Changes in financial condition between March 31, 1997 and September 30, 1996: Total assets increased by $10,065,643, or approximately 4.71% between September 30, 1996 and March 31, 1997. This increase is largely attributed to a $16,326,860 increase in the loan receivables. Management Strategy: Management's strategy has been to maintain profitability and increase return on equity for shareholder. The Bank's lending strategy has historically focused on the origination of traditional, conforming one to four-family mortgage loans with the primary emphasis on single-family residences. The Bank's secondary focus has been on consumer loans, commercial leases, second mortgage loans, home equity loans and savings deposit loans. This focus, and the application of strict underwriting standards, are designed to reduce the risk of loss on the Bank's loan portfolio. However, this lack of diversification in its portfolio structure does increase the Bank's portfolio concentration risk by making the value of the portfolio more susceptible to declines in real estate values in its market area. This has been mitigated in recent years, through the investment in mortgage-backed securities and the continued sales of loans in the secondary market. Certain risks are inherent in the sales of loans in the secondary market. There is a risk that the Bank will not be able to sell all the loans that it has originated, or conversely, will be unable to fulfill its commitment to deliver loans pursuant to a firm commitment to sell loans. In addition, in periods of rising interest rates, loans originated by the bank may decline in value. Exposure to market and interest rate risk is significant during the period between the time the interest rate on a customer's mortgage loan application is established and the time the mortgage loan closes, and also during the period between the time the interest rate is established and the time the Bank commits to sell the loan. If interest rates change in an unanticipated fashion, the actual percentage of loans that close may differ from projected percentages. The resultant mismatching of commitments to close loans and commitments to deliver sold loans may have an adverse effect on the profitability of loan originations. A sudden increase in interest rates can cause a higher percentage of loans to close than projected. To the degree that this was not anticipated, the Bank will not have made commitments to sell these loans and may incur significant mark to market losses, adversely affecting results of operations. The Bank historically sold 30 year fixed rate mortgages in the secondary market, however the Bank is keeping all 15 and 20 year or shorter mortgages with fixed rates above 7.0% and 7.25% for investment and selling all other fixed rate loans. 10 Throughout the first six months of fiscal year 1997 rates continued with moderate decline, however toward the end of March 1997, rates began to edge upward. As a result of the rates at the end of March 1997, the Bank reflected an unrealized loss of $3,487 in loans held for sale. Sustained levels of gain on sale of loans is dependent on continued stable or downward interest rate movement and would likely be adversely affected by a continued rise in interest rates. Effective October 1, 1994, the Bank adopted the Financial Accounting Standards Board SFAS Statement No. 115, "accounting for certain investments in debt and equity securities". This statement is not retroactively applied. In conjunction with the adoption of SFAS No. 115, investment securities as of October 1, 1994, are designated as held-to-maturity and available-for-sale. The effect of classifying securities as available-for-sale was to reflect an unrealized gain net of tax effect, as a component of stockholders' equity of $442,213 as of March 31, 1997. Results of operations: comparison between the three and six months ended March 31, 1997 and 1996: Net income for the three-month period ended March 31, 1997 of $581,147 represents an increase of $148,181 or a 34.22% increase from the net income reported for the three-month period ended March 31, 1996. The increase was primarily due to an increase of $608,745 on interest income from increased volume on loans. Mortgage loans purchased from correspondents and originations are being partially funded through additional FHLB advances at a positive spread. Net income for the six-month period ended March 31, 1997 of $1,233,550 represents an increase of $370,865 or a 42.98% increase over the net income reported for the six-month period ended March 31, 1996. This increase was primarily due to an increase of $934,760 on interest income from increased volume on loans. Mortgage loans purchased from correspondents and originations are being partially funded through additional FHLB advances at a positive spread. Net interest income before provision for losses on loans for the three-month period ended March 31, 1997 increased $336,562 or approximately 24.41% to $1,715,317 as compared with $1,378,755 for the same period ended March 31, 1996. This increase is associated with the increased interest received on the mortgage loan portfolio. Net interest income before provision for losses on loans for the six-month period ended March 31, 1997 increased $612,517 or 21.87% to $3,412,687 as compared with $2,800,170 for the same period ended March 31, 1996. This increase is associated with the increased interest received on the mortgage loans. Interest expense for the three-month period ended March 31, 1997 increased $272,183 or 12.96% to $2,372,577 as compared with $2,100,394 for the same period ended March 31, 1996. This increase is due to the increased costs associated with savings rates and increased borrowing from FHLB. Saving deposit balances increased significantly late in the quarter resulting in minimal interest expense during the quarter. Interest expense for the six-month period ended March 31, 1997 increased $322,243 or 7.35% to $4,704,977 as compared with $4,382,734 for the same period ended March 31, 1996. This increase is due to the increased costs associated with savings rates and increased borrowing from FHLB. Saving deposit balances increased significantly late in the quarter resulting in minimal interest expense during the quarter. The Bank added $55,000 for the three month period ending March 31, 1997 and $100,000 for the six month period ending March 31, 1997 to the provision for loan losses. These additions are due to increased loan production during this period and related credit risk. Other income including non operating items for the three-month period ended March 31, 1997 decreased $37,664 or 15.42% to $206,653 as compared with $244,317 for the same period ended March 31, 1996 This decrease primarily was due to $135,208 on gains of sales of available for sale securities during the quarter ending March 31, 1996. 11 Other income including non operating items for the six-month period ended March 31, 1997 increased $97,269 or 23.57% to $509,883 as compared with $412,614 for the same period ended March 31, 1996. This increase was primarily due to $172,916 on net gains of sales of available for sale investment securities. Gain on sale of loans held for sale increased by 49.60% over the previous six month period. Although the volume of loan sales increased from $3,415,650 to $8,437,797, the net profit on sales was lower due to rising rates late in the period. Non interest expenses for the three-month period ended March 31, 1997 increased $19,417 or 2.23% to $887,523 as compared with $868,106 for the same period ended March 31, 1996. This increase is primarily due to increased compensation expense partially offset by a decrease in the SAIF premium. Non interest expenses for the six-month period ended March 31, 1997 increased $42,621 or 2.48% to $1,759,220 as compared with $1,716,599 for the same period ended March 31, 1996. This increase is primarily due to increased compensation expense partially offset by a decrease in the SAIF premium. Liquidity and Capital Resources: The Bank is required to maintain minimum levels of liquid assets, as defined by the Office of Thrift Supervision ("OTS") regulations. This requirement, which may be varied from time to time depending upon economic conditions and deposit flows, is based upon a percentage of deposits and short-term borrowing. The required minimum ratio is currently 5 percent. The Bank's liquidity ratio averaged 5.57% during March 1997. The Bank manages its liquidity ratio to meet its funding needs, including: deposit outflows, disbursement of payments collected from borrowers for taxes and insurance, and loan principal disbursements. The Bank also manages its liquidity ratio to meet its asset/liability management objectives. In addition to funds provided from operations, the Bank's primary sources of funds are: savings deposits, principal repayments on loans and mortgage-backed securities, and matured or called investment securities. In addition, the Bank may borrow funds from time to time from the Federal Home Loan Bank of Topeka. Scheduled loan repayments and maturing investment securities are a relatively predictable source of funds. However, savings deposit flows and prepayments on loans and mortgage-backed securities are significantly influenced by changes in market interest rates, economic conditions and competition. The Bank strives to manage the pricing of its deposits to maintain a balanced stream of cash flows commensurate with its loan commitments. When applicable, cash in excess of immediate funding needs is invested into longer-term investments and mortgage-backed securities which typically earn a higher yield than overnight deposits, some of which may also qualify as liquid investments under current OTS regulations. As required by the financial institutions reform, recovery and enforcement act of 1989 ("FIRREA"), OTS prescribed three separate standards of capital adequacy. The regulations require financial institutions to have minimum regulatory capital equal to 1.50 percent of tangible assets; minimum core capital equal to 3.00 percent of adjusted tangible assets; and risk-based capital equal to 8.00 percent of risk-based assets. 12 The Bank's capital requirements and actual capital under the OTS regulations are as follows at March 31, 1997: Amount (Thousands) Percent of Assets GAAP Capital $26,848 12.16% Tangible Capital: Actual 26,848 12.16% Required 3,312 1.50% Excess 23,536 10.66% Core Capital: Actual 26,848 12.16% Required 6,625 3.00% Excess 20,223 9.16% Risk-Based Capital: Actual 27,678 27.30% Required 8,109 8.00% Excess $19,569 19.30% 13 LANDMARK BANCSHARES, INC. PART II - OTHER INFORMATION Item 2. - Changes in Securities NONE Item 4. - Submission of Matter to a Vote of Security Holders An annual meeting was held on January 15, 1997 to ratify the election of C. Duane Ross and Richard A. Ball to serve as Directors for three years. In addition the stockholders did ratify Regier Carr & Monroe, L.L.P. as independent auditors of Landmark Bancshares, Inc. for the fiscal year ending September 30, 1997. Votes were as follows: Number Percentage C. Duane Ross For 1,607,233 99.86% Against 2,200 00.13% Abstain 0 Richard A. Ball For 1,607,233 99.86% Against 2,200 00.13% Abstain 0 Regier Carr & Monroe For 1,608,418 99.93% Against 103 0.01% Abstain 912 0.06% Directors continuing in office following the annual meeting include Larry Schugart, Jim Lewis and David H. Snapp. Item 5. - Other Information None Item 6(b). - Reports on Form 8-K A report on Form 8-K was filed March 20, 1997. The filing reported the announcement that the Board of Directors of Landmark Bancshares Inc., had discontinued a stock repurchase program authorized by the Board of Directors on October 16, 1996. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date May 5, 1997 LANDMARK BANCSHARES, INC. ------------------------ By /S/ Larry Schugart ------------------------------------- LARRY SCHUGART President and Chief Executive Officer (Duly Authorized Representative) By /S/ James F. Strovas ------------------------------------- JAMES F. STROVAS Senior Vice President and Chief Financial Officer (Duly Authorized Representative) EX-27 2 ARTICLE 9 FDS FOR FORM 10-QSB
9 1000 6-MOS SEP-30-1997 MAR-31-1997 669 199 0 0 4,928 69,285 69,062 144,996 833 223,799 149,398 38,704 2,948 0 0 0 228 32,522 223,799 5,604 2,513 0 8,117 3,612 1,093 3,412 100 173 1,759 2,063 0 0 0 1,234 .64 .64 3.19 500 441 213 1,742 740 11 0 833 833 0 0
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