-----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, QliX4L91KHTrJutWl35SDCzYb+Uqq5vqoBUHglHrj0aJc0BciKJGds90S4506ZE+ fqlVM1F1Xqz+dBxU3Vh00w== 0000946275-98-000305.txt : 19980513 0000946275-98-000305.hdr.sgml : 19980513 ACCESSION NUMBER: 0000946275-98-000305 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980512 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: SEC FILE NUMBER: 000-23164 FILM NUMBER: 98616642 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 FORM 10QSB 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, 1998 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, 1998: $.10 par value common stock 1,655,482 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, 1998 (unaudited) and September 30, 1997 1 Statements of Income for the Three and Six Months Ended March 31, 1998 and 1997 (unaudited) 2 Statements of Cash Flows for the Six Months Ended March 31, 1998 and 1997 (unaudited) 3 - 4 Notes to Financial Statements 5 - 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9 - 12 PART II - OTHER INFORMATION Item 2. Changes in Securities 13 Item 4. Submission of Matter to a Vote of Security Holders 13 Item 5. Other Information 13 Item 6(b). Reports on Form 8-K 13 SIGNATURES 14 1 LANDMARK BANCSHARES, INC. AND ITS WHOLLY-OWNED SUBSIDIARY, LANDMARK FEDERAL SAVINGS BANK Consolidated Statements of Financial Condition
March 31, 1998 September 30, 1997 (Unaudited) ------------------------------ ASSETS Cash and cash equivalents: Interest bearing $ 5,738,632 $ 2,062,879 Non-interest bearing 676,217 678,173 Time deposits in other financial institutions 160,732 110,580 Securities held to maturity 12,989,522 18,837,942 Securities available for sale 8,930,804 7,122,785 Mortgage-backed securities held to maturity 29,726,731 36,689,551 Loans receivable, net 165,396,676 157,672,603 Loans held for sale 2,662,603 490,234 Accrued income receivable 1,394,489 1,446,605 Real estate owned or in judgment and other repossessed property, net 160,234 251,950 Office properties and equipment, at cost less accumulated depreciation 1,661,570 1,188,250 Prepaid expenses and other assets 1,769,326 1,233,038 Income taxes receivable - current 0 65,564 ------------------------------ TOTAL ASSETS $ 231,267,536 $ 227,850,154 ------------------------------ LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Deposits 149,965,557 144,734,739 Other Borrowed Money 43,900,000 46,200,000 Advances from borrowers for taxes and insurance 1,210,523 1,673,057 Accrued expenses and other Liabilities 2,542,085 2,304,593 Deferred income taxes 949,514 692,435 Income taxes Current 56,783 0 ------------------------------ TOTAL LIABILITIES $ 198,624,462 $ 195,604,824 ------------------------------ Stockholders' Equity Common Stock 228,131 228,131 $.10 par value; 10,000,000 shares authorized; 2,281,312 shares issued March 31, 1998 Additional Paid-in Capital 22,207,701 22,173,827 Treasury Stock; 625,830 shares of common stock at cost (10,007,178) (9,249,935) Retained income (substantially restricted) 20,034,394 19,305,087 Employee Stock Ownership Plan (844,597) (844,597) Management Stock Bonus Plan (193,045) (289,567) Net unrealized gain/loss on available for sale securities 1,217,668 922,384 ------------------------------ Total Stockholders' Equity 32,643,074 32,245,330 ------------------------------ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 231,267,536 $ 227,850,154 ------------------------------
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 1997 1998 1997 1998 (unaudited) (unaudited) ------------------------------------------------------ INTEREST INCOME Interest on loans 2,853,594 3,416,614 5,604,442 6,757,895 Interest and dividends on investment securities 541,311 369,234 1,084,898 802,162 Interest on mortgage-backed securities 692,989 522,540 1,428,324 1,106,708 ------------------------------------------------------ Total interest income 4,087,894 4,308,388 8,117,664 8,666,765 INTEREST EXPENSE Deposits 1,796,919 1,853,397 3,612,181 3,718,202 Borrowed funds 575,658 676,002 1,092,796 1,383,649 ------------------------------------------------------ Total interest expense 2,372,577 2,529,399 4,704,977 5,101,851 Net interest income 1,715,317 1,778,989 3,412,687 3,564,914 PROVISION FOR LOSSES ON LOANS 55,000 75,000 100,000 145,000 ------------------------------------------------------ Net interest income after provision for losses 1,660,317 1,703,989 3,312,687 3,419,914 NON-INTEREST INCOME Service charges and late fees 63,410 89,254 123,753 154,615 Net gain (loss) on available for sale investments 64,223 95,042 172,916 95,042 Net gain (loss) on sale of loans 5,224 107,740 64,663 164,189 Service fees on loans sold 40,692 18,772 81,049 58,023 Other income 33,104 41,346 67,502 73,561 ------------------------------------------------------ 206,653 352,154 509,883 545,430 NON-INTEREST EXPENSE Compensation and related expenses 514,347 614,785 1,011,779 1,196,942 Occupancy expense 41,695 49,392 82,652 96,674 Advertising 17,499 12,691 31,947 29,021 Federal insurance premium 20,148 39,018 119,814 77,840 Loss (gain) from real estate operations 683 (788) 989 2,759 Data processing 52,327 63,245 95,815 109,244 Other expense 240,824 257,863 416,224 437,852 ------------------------------------------------------ 887,523 1,036,206 1,759,220 1,950,332 Income before income taxes 979,447 1,019,937 2,063,350 2,015,012 INCOME TAXES EXPENSES 398,300 407,500 829,800 806,450 ------------------------------------------------------ Net income 581,147 612,437 1,233,550 1,208,562 ------------------------------------------------------ Basic earnings per share $ 0.35 $ 0.39 $ 0.73 $ 0.77 Diluted earnings per share $ 0.32 $ 0.36 $ 0.68 $ 0.70 Dividends per share $ 0.10 $ 0.20 $ 0.20 $ 0.30
3 LANDMARK BANCSHARES, INC. AND ITS WHOLLY-OWNED SUBSIDIARY LANDMARK FEDERAL SAVINGS BANK Consolidated Statements of Cash Flows
Six Months Ended March 31 1997 1998 (unaudited) (unaudited) ----------------------------- CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 1,233,550 $ 1,208,562 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 56,203 64,711 Decrease (increase) in accrued interest receivable (39,090) 48,156 Increase (decrease) in outstanding checks in excess of bank balance (73,144) 0 Increase (decrease) in accrued and deferred income taxes 449,636 379,426 Increase (decrease) in accounts payable and accrued expenses (722,036) 241,397 Amortization of premiums and discounts on investments and loans 5,008 (29,298) Provision for losses on loans 100,000 145,000 Gain/loss on available for sale investments (172,916) (95,042) Other non-cash items, net 33,298 (652,233) Sale of loans held for sale 8,437,797 7,595,266 Gain on sale of loans held for sale (64,663) (164,189) Origination of loans held for sale (6,394,353) (6,096,336) Purchase of loans held for sale (744,700) (3,507,110) ----------------------------- NET CASH PROVIDED BY OPERATING ACTIVITIES $ 2,104,590 $ (861,690) ----------------------------- CASH FLOWS FROM INVESTING ACTIVITIES Loan originations and principal payment on loans held for investment 442,408 409,567 Principal repayments on mortgage-backed securities 4,188,387 6,957,942 Loans purchased for investment (17,105,864) (8,437,257) Proceeds from sale of mortgage-backed securities available for sale 485,205 0 Acquisition of investment securities held to maturity (3,300,000) (4,000,000) Acquisition of investment securities available for sale (951,165) (1,503,656) Proceeds from sale of investment securities available for sale 485,205 0 Proceeds from maturities or calls of investment securities 5,090,000 10,100,000 Net (increase) decrease in time deposits 280,000 (50,000) Sale of real estate acquired in settlement of loans 2,000 269,114 Acquisition of fixed assets (50,089) (538,587) ----------------------------- NET CASH PROVIDED (USED) IN INVESTING ACTIVITIES (10,919,118) 3,207,123 -----------------------------
4 LANDMARK BANCSHARES, INC. AND ITS WHOLLY-OWNED SUBSIDIARY, LANDMARK FEDERAL SAVINGS BANK Consolidated Statements of Cash Flows (Continued)
Six Months Ended March 31 1997 1998 (unaudited) (unaudited) ------------------------------ CASH FLOWS FROM FINANCING ACTIVITIES Net increase (decrease) in deposits $ 5,582,833 $ 5,230,818 Net increase (decrease) in escrow accounts (677,315) (462,479) Proceeds from FHLB advance and other borrowings 47,223,000 44,100,000 Repayment of FHLB advance and other borrowings (42,056,333) (46,400,000) Treasury Stock (811,813) (757,243) Other Financing Activities 96,522 96,522 Dividend Payment (346,705) (479,254) ------------------------------ NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES 9,010,189 1,328,364 ------------------------------ NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 195,661 3,673,797 BEGINNING CASH AND CASH EQUIVALENTS 473,710 2,741,052 ------------------------------ ENDING CASH AND CASH EQUIVALENTS 669,371 6,414,849 ------------------------------ SUPPLEMENTAL DISCLOSURES Cash paid during the year for: Interest on deposits, advances, and other borrowings 4,752,544 5,212,822 Income taxes 829,800 684,103 Transfers from loans to real estate acquired through foreclosure 0 19,155
5 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 six months ending March 31, 1998, are not necessarily indicative of the results which may be expected for the fiscal year ending September 30, 1998. 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, and only in such event, 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, 1998 and September 30, 1997, is as follows:
Investment Securities March 31, 1998 September 30, 1997 ------------------------------------------------------- Held to maturity: Government Agency Securities 11,499,522 17,297,942 Municipal Obligations 1,240,000 1,540,000 Other 250,000 0 -------------------------------------------------------- $12,989,522 $18,837,942 Available for sale: Common Stock 5,627,604 4,086,785 Stock in Federal Home Loan Bank 3,093,200 2,976,000 Other 210,000 60,000 -------------------------------------------------------- $ 8,930,804 $ 7,122,785
6 Mortgage - Backed Securities held to maturity: FNMA - Arms 11,328,080 13,157,644 FHLMC -Arms 3,790,408 4,768,042 FHLMC -Fixed Rate 204,821 245,443 CMO Government Agency 10,260,744 13,310,277 CMO Private Issue 3,336,807 4,245,057 FNMA - Fixed Rate 492,947 589,777 GNMA - Fixed Rate 312,924 373,311 ------------------------------ $29,726,731 $36,689,551 4. Loan Receivable, Net A summary of the Bank's loans receivable at March 31, 1998 and September 30, 1997, is as follows: March 31, 1998 September 30, 1997 -------------------------------- Mortgage Loans Secured by One to Four Family Residences 126,251,871 122,015,418 Secured by Other Properties 3,405,082 3,452,789 Construction Loans 1,254,521 1,936,517 Other 4,431,850 2,666,395 ------------------------------ 135,343,325 130,071,119 Plus (Less): Unamortized Premium on Loan Purchase 42,118 29,460 Unearned Discount and Loan Fees (307,850) (348,405) Undisbursed Loan Proceeds 133,645 (1,724) Allowance for Loan Losses (670,056) (615,049) ------------------------------ Total Mortgage Loans 134,541,181 129,135,401 ------------------------------ Consumer and Other Loans: Automobile 15,462,484 13,309,943 Commercial leases 4,686,064 4,049,950 Loans on Deposits 371,674 573,654 Home Equity and Second Mortgage 9,895,916 9,986,176 Mobile Home 39,564 46,900 Other 797,091 924,153 -------------------------------- 31,252,793 28,890,776 Less: Allowance for Loan Losses (397,298) (353,574) ------------------------------ Total Consumer and Other Loans 30,855,495 28,537,202 ------------------------------ Net Loans Receivable $ 165,396,676 $ 157,672,603 7 A summary of the Bank's allowance for loan losses for the 3 and 6 months ended March 31, 1998 and 1997, are as follows:
Three Months Ended Six Months Ended March 31 March 31 1997 1998 1997 1998 -------------------------------------------------------- Balance Beginning $ 780,095 $ 1,043,931 $ 740,346 $ 968,623 Provisions Charged to Operations 55,000 75,000 100,000 145,000 Loans Charged Off Net of Recoveries (5,657) (51,577) (10,908) (46,269) -------------------------------------------------------- Balance Ending $ 829,438 $ 1,067,354 $ 829,438 $ 1,067,354
There has been no significant change in the level of non performing loans from September 30, 1997 to March 31, 1998. 5. REAL ESTATE OWNED OR IN JUDGMENT Real Estate owned or in judgment, including in-substance foreclosures and other repossessed property:
March 31, 1998 September 30, 1997 -------------------------------------------- Real Estate Acquired by Foreclosure $19,155 $232,851 Real Estate Loans in Judgment and Subject to Redemption 128,296 19,099 Other Repossessed Assets 12,783 0 -------------------------------------------- $160,234 $251,950
6. FINANCIAL INSTRUMENTS 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, 1998, the Bank had outstanding commitments to fund real estate loans of $2,622,259. Of the commitments outstanding, $1,707,850 are for fixed rate loans at rates of 6.625% to 10.00%. Commitments for adjustable rate loans amount to $914,409 with initial rates of 5.875% to 8.25%. Outstanding loan commitments to sell as of March 31, 1998 were $282,616. In addition the Bank had outstanding commercial loan commitments of $3,316,039 with initial rates of 8.00% to 10.00%. 7. EARNINGS PER SHARE Basic earnings per share (EPS) is computed by dividing income available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock (potential common stock) were exercised or converted to common stock. For the periods presented potential common 8 stock includes outstanding stock options and nonvested stock awarded under the Management Stock Bonus Plan. Earnings per share for the three and six months ending March 31, 1998 and 1997, was determined as follows; STATEMENT REGARDING COMPUTATION OF EARNINGS PER SHARE
Basic Earnings Per Share Three months ended Six months ended March 31 March 31 1998 1997 1998 1997 ------------------------------------------------------ Weighted average common shares outstanding Net of Treasury shares 1,688,641 1,852,996 1,688,641 1,852,996 Average unallocated ESOP shares (81,000) (96,010) (82,711) (97,721) Weighted average treasury shares purchased (19,408) (37,611) (9,704) (20,240) Nonvested MSBP shares (20,526) (38,773) (22,810) (41,059) Weighted Average Shares for Basic EPS 1,567,707 1,680,602 1,573,416 1,693,976 ------------------------------------------------------ Net Earnings 612,437 581,147 1,208,562 1,233,550 ------------------------------------------------------ Per share amount $ 0.39 $ 0.35 $ 0.77 $ 0.73
Diluted Earnings Per Share Three months ended Six months ended March 31 March 31 1998 1997 1998 1997 ------------------------------------------------ Weighted average shares for Basic EPS 1,567,707 1,680,602 1,573,416 1,693,976 Dilutive stock options 134,290 107,664 136,424 99,872 Dilutive MSBP shares 6,881 10,375 7,781 10,146 ------------------------------------------------ Weighted Average Shares for Diluted EPS 1,708,877 1,798,641 1,717,647 1,803,993 ------------------------------------------------ Net Earnings 612,437 581,147 1,208,562 1,233,550 ------------------------------------------------ Per share amount $ 0.36 $ 0.32 $ 0.70 $ 0.68
8. DIVIDENDS At a January 1998 board meeting, the Directors of the Company declared a $0.10 per share dividend and a $0.10 per share special dividend. The dividends were payable to all stockholders of record as of February 2, 1998. 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, 1998. The Bank is primarily engaged in the business of accepting deposit accounts from the general public, using such funds to originate mortgage loans for the purchase and refinancing of single-family homes located in Central and Southwestern Kansas and for the purchase of mortgage-backed and investment securities. In addition, the Bank also offers and purchases loans through correspondent lending relationships in Wichita, Kansas City, and other cities in Kansas and in Albuquerque and Santa Fe, New Mexico, and Madison, Wisconsin. To a lesser extent, the Bank will purchase adjustable rate mortgage loans, to manage its interest rate risk as deemed necessary. The Bank also makes automobile loans, second mortgage loans, home equity loans and savings deposit loans. Management Strategy: Management's strategy has been to maintain profitability and increase capital. 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, 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 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 currently originated 15 year and 20 year or shorter mortgages with fixed rates at or above 7.0% and 7.25% for investment and selling all other fixed rate loans. Throughout the first six months of fiscal year 1998 rates continued with moderate decline. As a result of the rates at the end of March 1998, the Bank has a unrealized gain of $107,740 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. Changes in financial condition between March 31, 1998 and September 30, 1997: 10 Total assets increased by $3,714,382, or approximately 1.49% between September 30, 1997 and March 31, 1998. This increase is largely attributed to a $9,896,442 increase in loan receivables. Results of operations: comparison between the three and six months ended March 31, 1998 and 1997: Net income for the three-month period ended March 31, 1998 of $612,437 represents an increase of $31,290 or a 5.3% increase from the net income reported for the three-month period ended March 31, 1997. The increase was primarily due to an increase of $563,020 on interest income from increased volume on loans. Mortgage loans purchased from correspondents and originations are being partially funded through investments maturing or being called. Net income for the six-month period ended March 31, 1998 of $1,208,562 represents a decrease of $24,988 or a 0.02% decrease over the net income reported for the six-month period ended March 31, 1997. This decrease was primarily due to an increase of $191,112 in non-interest expense. Net interest income before provision for losses on loans for the three-month period ended March 31, 1998 increased $63,672 or approximately 3.71% to $1,778,989 as compared with $1,715,317 for the same period ended March 31, 1997. 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, 1998 increased $152,227 or 4.46% to $3,564,914 as compared with $3,412,687 for the same period ended March 31, 1997. This increase is associated with the increased interest received on the mortgage loans. Interest expense for the three-month period ended March 31, 1998 increased $156,822 or 6.61% to $2,529,399 as compared with $2,372,577 for the same period ended March 31, 1997. This increase is due to a growth in saving deposit balances. Interest expense for the six-month period ended March 31, 1998 increased $396,874 or 8.44% to $5,101,851 as compared with $4,704,977 for the same period ended March 31, 1997. This increase is due to a growth in saving deposit balances and a increase in the average balance of borrowed funds. The Bank added $75,000 for the three month period ending March 31, 1998 and $145,000 for the six month period ending March 31, 1998 to the provision for loan losses. These additions are due to increased loan production during this period including increased consumer and commercial loans and related credit risk. Other income including non operating items for the three-month period ended March 31, 1998 increased $145,501 or 70.41% to $352,154 as compared with $206,653 for the same period ended March 31, 1997 This increase primarily was due to $30,819 increase in gains of sales of available for sale securities and an increase of $102,516 on gain of sale of loans during the quarter. Other income including non operating items for the six-month period ended March 31, 1998 increased $35,547 or 6.97% to $545,430 as compared with $509,883 for the same period ended March 31, 1997. This increase was primarily due to $99,526 increase in net gains of sale of loans. Non interest expenses for the three-month period ended March 31, 1998 increased $148,683 or 16.75% to $1,036,206 as compared with $887,523 for the same period ended March 31, 1997. This increase is primarily due to the expansion of the commercial lending department and staffing at new branch facility. Non interest expenses for the six-month period ended March 31, 1998 increased $191,112 or 10.86% to $1,950,220 as compared with $1,759,220 for the same period ended March 31, 1997. This increase is primarily due to the expansion of the commercial lending department and staffing at new branch facility. 11 Earnings Per Share: Effective with the quarter ended December 31, 1997, the Company adopted the provisions of Statement of Financial Accounting Standards No. 128, Earnings per Share. The Statement is to be applied to financial statements issued for periods ending after December 15, 1997, including interim periods; earlier application is not permitted. The Statement requires restatement of all prior-period earnings per share (EPS) data presented. FAS No. 128 simplifies the standards for computing EPS and makes them comparable to international EPS standards. It replaces the presentation of primary EPS with a presentation of basic EPS. It also requires presentation of basic and diluted EPS on the face of the income statement for all entities with complex capital structures. Basic EPS excludes dilution and is computed by dividing income available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the company. Diluted EPS is computed similarly to the previously presented fully diluted earnings per share. Y2K Compliance The Bank has developed a plan to attain Y2K compliance of critical operation systems. That plan includes assessment and testing of vendors systems including external data processing center and equipment and software upgrades. The plan currently calls for testing of mission critical systems by August 1998. The Y2K costs are projected to be approximately $75,000 - $100,000 for conversions cost and approximately $300,000 for hardware and software upgrades. 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 4 percent. The Bank's liquidity ratio averaged 5.25% during March 1998. 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, 1998: Amount (Thousands) Percent of Assets Core Capital: Actual 25,101 11.19% Required 8,969 4.00% Excess 16,132 7.19% Risk-Based Capital: Actual 25,868 22.71% Required 9,113 8.00% Excess $16,755 14.71% 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 21, 1998 to elect Larry L. Schugart and Jim W. Lewis 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, 1998. Votes were as follows: Number Percentage Larry L. Schugart For 1,260,390 99.80% Against 2,177 00.20% Abstain 0 Jim W. Lewis For 1,260,390 99.80% Against 2,177 00.20% Abstain 0 Regier Carr & Monroe For 1,261,910 99.90% Against 0 0.00% Abstain 906 0.10% Directors continuing in office following the annual meeting include C. Duane Ross, Richard A. Ball and David H. Snapp. Item 5. - Other Information None Item 6(b). - Reports on Form 8-K None 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, 1998 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 FDS 10QSB
9 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION DERIVED FROM THE QUARTERLY REPORT ON FORM 10-QSB AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL INFORMATION. 1,000 6-MOS SEP-30-1998 MAR-31-1998 6,415 161 0 0 8,931 42,716 42,857 168,059 1,067 231,268 149,966 43,900 4,759 0 0 0 228 32,415 231,268 6,758 1,909 0 8,667 3,718 1,384 3,565 145 0 1,950 2,015 0 0 0 1,209 .77 .70 285 13 292 160 1,314 967 52 0 1,067 1,067 0 0
-----END PRIVACY-ENHANCED MESSAGE-----