-----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, Lnq0+lOVeNWuVp2RhdUdmwRY9FNrqsDLL9FiOzHcDV58vf+xfDLe3LQ6AWOlo1bw 3OrPfHIe5nBX7O8ZTiXM0w== 0000928385-96-001537.txt : 19961118 0000928385-96-001537.hdr.sgml : 19961118 ACCESSION NUMBER: 0000928385-96-001537 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961114 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: HARDIN BANCORP INC CENTRAL INDEX KEY: 0000947220 STANDARD INDUSTRIAL CLASSIFICATION: SAVINGS INSTITUTION, FEDERALLY CHARTERED [6035] IRS NUMBER: 431719104 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-26560 FILM NUMBER: 96665713 BUSINESS ADDRESS: STREET 1: 2ND & ELM STS STREET 2: P O BOX 608 CITY: HARDIN STATE: MO ZIP: 64035 BUSINESS PHONE: 8163984312 MAIL ADDRESS: STREET 1: 2ND & ELM STS STREET 2: P O BOX 608 CITY: HARDIN STATE: MO ZIP: 64035 10QSB 1 FORM 10-QSB SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------------------------- FORM 10-QSB [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OF 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1996 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OF 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ------------------- ------------------- Commission File Number 0-26560 HARDIN BANCORP, INC. -------------------------------------------------------------- (Exact name of Registrant as specified in its Charter) Delaware 43-1719104 ------------------------------ ----------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 2nd and Elm Street, Hardin, Missouri 64035 - ---------------------------------------- ----------- (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code:(816) 398-4312 -------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 of 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes (X) No ( ) Indicate the number of shares outstanding of each of the issuer's common stock as of the latest practicable date. Class Outstanding at September 30, 1996 - ---------------------------- --------------------------------- Common stock, .01 par value 1,005,100 HARDIN BANCORP, INC. AND SUBSIDIARIES CONTENTS
Page PART I FINANCIAL INFORMATION Item 1 Financial Statements Consolidated Balance Sheets....................... 1 Consolidated Statements of Operations............. 2 Consolidated Statement of Stockholders' Equity.... 3 Consolidated Statements of Cash Flows............. 4-5 Notes to Consolidated Financial Statements........ 6-7 Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations.......................................... 8-12 PART II OTHER INFORMATION................................... 13-14 Signatures.......................................... 15
HARDIN BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS SEPTEMBER 30, 1996 AND MARCH 31, 1996
(Unaudited) September 30, March 31, 1996 1996 -------------- ----------- Assets ------------ Cash $ 289,238 253,557 Interest bearing deposits 1,893,041 5,430,396 Investment securities - available for sale 11,749,250 6,362,850 Mortgage backed securities: Held to maturity 14,588,790 16,298,987 Available for sale 6,301,821 7,906,862 Loans receivable, net 50,403,869 45,031,460 Accrued interest receivable: Investment securities 306,398 116,562 Mortgage backed securities 157,808 188,532 Loans receivable 344,942 296,775 Premises and equipment 777,476 510,218 Stock in Federal Home Loan Bank (FHLB) of Des Moines, at cost 742,000 742,000 Prepaid expenses and other assets 252,767 248,623 ----------- ---------- Total assets $87,807,400 83,386,822 =========== ========== Liabilities and Stockholders' Equity - --------------------------------------------------------- Liabilities: Deposits $66,695,606 66,605,247 Advances from borrowers for taxes and insurance 458,024 223,752 Advances on FHLB line of credit 5,000,000 0 Accrued interest payable 58,218 30,385 Income taxes payable: Current (120,408) 56,575 Deferred 427 48,000 Accrued expenses and other liabilities 978,221 387,922 ----------- ---------- Total liabilities 73,070,088 67,351,881 ----------- ---------- Stockholders' equity: Serial preferred stock, $.01 par value; 500,000 shares authorized, none issued or outstanding 0 0 Common stock, $.01 par value: 3,500,000 shares authorized; 1,058,000 shares issued; and 1,005,100, and 1,058,000 outstanding at September 30 and March 31, 1996, respectively 10,580 10,580 Additional paid-in capital 10,055,448 10,055,448 Retained earnings 6,745,218 6,885,230 Unrealized gain or (loss) on available for sale securities, net (237,872) (154,597) Unearned employee stock ownership plan (761,720) (761,720) Deferred recognition and retention plan (455,807) 0 Treasury stock (52,900 shares, at cost) (618,535) 0 ----------- ---------- Total stockholders' equity 14,737,312 16,034,941 ----------- ---------- Total liabilities and stockholders' equity $87,807,400 83,386,822 =========== ==========
See accompanying notes to consolidated financial statements. 1 HARDIN BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Three months ended Six months ended September 30 September 30 ---------------------- ---------------------- 1996 1995 1996 1995 ---------- ---------- ---------- ---------- Interest income Loans receivable $1,015,955 751,490 1,963,516 1,455,728 Mortgage backed securities 345,264 405,073 713,129 809,023 Investment securities 206,001 178,904 403,030 337,789 Other 29,999 0 90,064 0 ---------- --------- --------- --------- Total interest income 1,597,219 1,335,467 3,169,739 2,602,540 ---------- --------- --------- --------- Interest expense Deposits 837,603 889,559 1,666,710 1,741,517 FHLB advances 77,561 4,288 145,849 12,876 ---------- --------- --------- --------- Total interest expense 915,164 893,847 1,812,559 1,754,393 ---------- --------- --------- --------- Net interest income 682,055 441,620 1,357,180 848,147 Provision for loan losses 8,590 0 16,090 0 ---------- --------- --------- --------- Net interest income after provision for loan losses 673,465 441,620 1,341,090 848,147 Non-interest income Service charges 18,656 16,496 39,221 32,056 Loan servicing fees 9,193 10,896 18,806 22,249 Loss on sale of investments and mortgage backed securities (7,696) 0 (7,696) (2,886) Other income 36,475 59,147 98,802 84,927 ---------- --------- --------- --------- Total non-interest income 56,628 86,539 149,133 136,346 ---------- --------- --------- --------- Non-interest expense Compensation and benefits 264,668 184,658 495,694 349,610 Occupancy and equipment 25,538 26,242 51,424 48,529 Federal insurance premiums 38,062 38,598 75,833 77,258 SAIF special assessment 441,018 0 441,018 0 Data processing 22,441 21,875 44,773 44,025 Real estate owned 0 (3,050) 0 (3,050) Other 146,728 90,389 279,749 170,796 ---------- --------- --------- --------- Total non-interest expense 938,455 358,712 1,388,491 687,168 ---------- --------- --------- --------- Earnings (loss) before income taxes (208,362) 169,447 101,732 297,325 Income tax expense (benefit) (77,161) 50,670 37,657 94,085 ---------- --------- --------- --------- Net earnings (loss) $ (131,201) 118,777 64,075 203,240 ========== ========= ========= ========= Net earnings (loss) per common share: Primary and fully diluted $(.14) 0.12 0.07 0.21 Weighted average common and common equivalent shares outstanding 929,763 973,360 941,167 973,360
See accompanying notes to consolidated financial statements. 2 HARDIN BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY SIX MONTHS ENDED SEPTEMBER 30, 1996 (UNAUDITED)
Unrealized Unearned Gain or Employee Additional (Loss) on Stock Total Common Paid-in Retained Securities, Ownership Deferred Treasury Stockholders' Stock Capital Earnings net Plan RRP Stock Equity ------- ---------- --------- ----------- --------- ----------- ---------- ------------- Balance at March 31, 1996 $10,580 10,055,448 6,885,230 (154,597) (761,720) 0 0 16,034,941 Net earnings 0 0 64,075 0 0 0 0 64,075 Change in unrealized loss on available-for-sale securities, net of tax 0 0 0 (83,2750) 0 0 0 (83,275) Repurchase of common stock 0 0 0 0 0 0 (1,116,685) (1,116,685) Adoption of RRP 0 0 0 0 0 (498,150) 498,150 0 Amortization of RRP 0 0 0 0 0 42,343 0 42,343 Dividend declared ($.10 per share) 0 0 (204,087) 0 0 0 0 (204,087) ------- ---------- --------- -------- -------- -------- ---------- ---------- Balance at September 30, 1996 $10,580 10,055,448 6,745,218 (237,872) (761,720) (455,807) (618,535) 14,737,312 ======= ========== ========= ======== ======== ======== ========== ==========
See accompanying notes to consolidated financial statements. 3 HARDIN BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS SIX MONTHS ENDED SEPTEMBER 30, 1996 AND 1995 (UNAUDITED)
1996 1995 ------------ ---------- Operating Activities: Net Earnings $ 64,075 203,240 Adjustments to reconcile net earnings to net cash provided by operating activities: Provision for losses on loans 16,090 0 Depreciation 24,529 21,434 Premium accretion and amortization of discounts and deferred loan fees, net 45,593 47,188 Net loss on sale of loans and investment securities available for sale 7,696 2,886 Gain on sale of premises and equipment 0 (4,878) Amortization of deferred Recognition and Retention Plan (RRP) 42,343 0 Provision for deferred income taxes 1,538 0 Changes in assets and liabilities: Interest receivable (207,279) (67,601) Other assets (4,144) (3,689) Accrued interest payable 27,833 (177) Accrued expenses and other liabilities 595,588 35,383 Income taxes payable (176,983) 40,328 ----------- ---------- Net cash provided by operating activities 436,879 274,114 ----------- ---------- Investing Activities: Net increase in loans receivable (3,675,677) (2,049,090) Proceeds from maturities of certificates of deposits in other institutions 0 100,000 Purchase of loans receivable (1,712,590) (3,091,346) Principal payments on mortgage backed securities: Available for sale 708,793 0 Held to maturity 1,677,957 2,212,546 Purchase of investment securities: Available for sale (7,499,531) (1,500,000) Held to maturity 0 (1,267,654) Proceeds from maturities of investment securities: Available for sale 2,000,000 0 Held to maturity 0 825 Proceeds from sales of mortgage backed securities available for sale 855,712 0 Proceeds from sales of investment securities available for sale 0 2,993,438 Purchase of office premises and equipment (291,787) (10,933) Proceeds from sale of office premises and equipment 0 13,500 ----------- ---------- Net cash used in investing activities $(7,937,123) (2,598,714) ----------- ---------- 4
HARDIN BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED SIX MONTHS ENDED SEPTEMBER 30, 1996 AND 1995 (UNAUDITED)
1996 1995 ------------ ------------ Financing Activities: Net (decrease) increase in savings deposits $ 90,359 (1,844,676) Proceeds from FHLB advances 5,000,000 1,000,000 Repayments of FHLB advances 0 (2,500,000) Net increase in advances from borrowers for taxes and insurance 234,272 183,234 Proceeds from issuance of stock, net of issuance costs 0 9,201,000 Payment of dividends (209,376) 0 Purchase of treasury stock (1,116,685) 0 ----------- ----------- Net cash provided by financing activities 3,998,570 6,039,558 ----------- ----------- (Decrease) increase in cash (3,501,674) 3,714,958 Cash at beginning of period 5,683,953 4,442,116 ----------- ----------- Cash at end of period $ 2,182,279 $ 8,157,074 =========== =========== Supplemental disclosure of cash flow information: Cash paid for: Interest $ 1,784,726 1,754,570 Income taxes, net of refunds $ 214,640 53,757 Noncash investing and financing: Allocation of treasury stock to RRP $ 498,150 0 Dividends declared and payable $ 100,510 0
See accompanying notes to consolidated financial statements. 5 HARDIN BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (1) Hardin Bancorp, Inc. Hardin Bancorp, Inc. (the "Holding Company") was incorporated under the laws of the State of Delaware for the purpose of becoming the savings and loan holding company of Hardin Federal Savings Bank, (the "Bank") in connection with the Bank's conversion from a federally chartered mutual savings bank to a federally chartered stock savings bank, pursuant to its Plan of Conversion. On August 21, 1995, the Holding Company commenced a Subscription and Community Offering of its shares in connection with the conversion of the Bank (the "Offering"). The Offering was consummated and the Holding Company acquired the Bank on September 28, 1995. The Holding Company had no assets prior to the conversion and acquisition on September 28, 1995. The accompanying consolidated financial statements as of and for the six months ended September 30, 1996 include the accounts of the Holding Company and the Bank. (2) Basis of Preparation The accompanying unaudited consolidated financial statements were prepared in accordance with instructions for Form 10-QSB. To the extent that information and footnotes required by generally accepted accounting principles for complete financial statements are contained in the audited financial statements included in the Holding Company's Annual Report for the year ended March 31, 1996, such information and footnotes have not been duplicated herein. In the opinion of management, all adjustments, consisting only of normal recurring accruals, which are necessary for the fair presentation of the interim financial statements have been included. The statements of operations for the six month period ended September 30, 1996 are not necessarily indicative of the results which may be expected for the entire year. The March 31, 1996 consolidated balance sheet has been derived from the audited consolidated financial statements as of that date. (3) Earnings Per Share Earnings per share of common stock have been determined by dividing net earnings for the period by the weighted average number of shares of common stock and common stock equivalents outstanding, less treasury shares and unallocated ESOP shares. Stock options are regarded as common stock equivalents and are therefore considered in both primary and fully diluted earnings per share calculations. Common stock equivalents are computed using the treasury stock method. Earnings per share amounts for the three and six month periods ended September 30, 1995 are based upon shares issued September 30, 1995, exclusive of the shares issued to the ESOP, as though those shares were outstanding for the entire period. The computation does not reflect the pro forma effects of the investment income that would have been earned had the net proceeds for the conversion been received at the beginning of the three or six month period. 6 (4) Stockholders' Equity and Stock Conversion The Bank converted from a federally chartered mutual savings bank to a federally chartered stock savings bank pursuant to its Plan of Conversion which was approved by the Bank's members on September 21, 1995. The conversion was effective on September 28, 1995 and resulted in the issuance of 1,058,000 shares of common stock (par value $0.01) at $10.00 per share for a gross sales price of $10,580,000. Costs related to conversion (primarily underwriters' commissions, printing, and professional fees) aggregated $532,600 and were deducted to arrive at the net proceeds of $10,047,400. The Holding Company established an employee stock ownership trust which purchased 84,640 shares of common stock of the Holding Company at the issuance price of $10.00 per share with funds borrowed from the holding company. (5) Employee Stock Ownership Plan (ESOP) All employees meeting age and service requirements are eligible to participate in an ESOP established on September 28, 1995. Contributions made by the Bank to the ESOP are allocated to participants by a formula based on compensation. Participant benefits become 100 percent vested after five years. The ESOP purchased 84,640 shares in the Bank's conversion. ESOP expense for the six month period ended September 30, 1996 was $73,267. (6) Recognition and Retention Plan (RRP) On April 16, 1996, the shareholders approved adoption of a RRP whereby 42,320 shares of common stock were authorized to be purchased by the plan. At September 30, 1996, 35,972 shares have been awarded to plan participants. The cost of these shares will be amortized as compensation expense over the five year vesting period. 7 HARDIN BANCORP, INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL - ------- Hardin Bancorp, Inc. (the "Company") was incorporated under the laws of the state of Delaware to become a savings bank holding company with Hardin Federal Savings Bank (the "Bank") of Hardin, Missouri, as its subsidiary. The holding company was incorporated at the direction of the Board of Directors of the Bank, and on September 28, 1995, acquired all of the capital stock of the Bank upon its conversion from mutual to stock form (the "conversion"). Prior to the conversion, the holding company did not engage in any material operations. Hardin Federal Savings Bank was originally founded in 1888 as a Missouri chartered savings and loan association located in Hardin, Missouri. On March 21, 1995, the Bank members voted to convert the Bank to a Federal mutual charter. The Bank conducts its business through its main office in Hardin, Ray County, and two full service branch offices located in Richmond, Ray County, and Excelsior Springs, Clay County, Missouri. Deposits are insured by the Federal Deposit Insurance Corporation (FDIC) to the maximum allowable. The Bank is principally engaged in the business of attracting retail savings deposits from the general public and investing those funds in first mortgage loans on owner occupied, single-family residential loans, commercial real estate loans, mortgage backed securities, U.S. Government and agency securities, and insured interest bearing deposits. The Bank also originates consumer loans for the purchase of automobiles, home improvement, and home equity lines of credit. The most significant outside factors influencing the operations of the Bank and other financial institutions include general economic conditions, competition in the local market place and the related monetary and fiscal policies of agencies that regulate financial institutions. More specifically, the cost of funds primarily consisting of insured deposits is influenced by interest rates on competing investments and general market rates of interest, while lending activities are influenced by the demand for real estate financing and other types of loans, which in turn is affected by the interest rates at which such loans may be offered and other factors affecting loan demand and funds availability. The deposits of the Bank are presently insured by the Savings Association Insurance Fund (SAIF), which together with the Bank Insurance Fund (BIF), are the two insurance funds administered by the FDIC. In the third quarter of 1995 the FDIC lowered the premium schedule for BIF-insured institutions in anticipation of the BIF achieving its statutory reserve ratio. The reduced premium created a significant disparity in deposit insurance expense, causing a competitive advantage for BIF members. Legislation enacted on September 30, 1996, provided for a one-time special assessment of .657% of the Bank's SAIF insured deposits at March 31, 1995. The purpose of the assessment is to bring the SAIF to its statutory reserve ratio. Based on the above formula, the Bank's SAIF assessment of $441,018 was recorded in the quarter ended September 30, 1996. Although the special one-time assessment significantly increased non- interest expense for the quarter, the anticipated reduction in the premium schedule will reduce the Bank's Federal Insurance premiums for the future periods. RELATIVE LEGISLATION - -------------------- The Congress is now expected to consider legislation requiring all Federal thrift institutions, such as the Bank, to either convert to a national bank or a state depository institution by January 1, 1998. In addition, the Company might no longer be regulated as a thrift holding company, but rather as a bank holding 8 company. The Office of Thrift Supervision (OTS) also might be abolished and its functions transferred among the Federal banking regulators. Certain aspects of the legislation remain to be resolved and therefore no assurance can be given as to whether or in what form the legislation will be enacted or its effect on the Company and the Bank. Under Section 593 of the Code, until the first tax year beginning on or after January 1, 1996, thrift institutions such as the Bank, which met certain definitional test primarily relating to their assets and the nature of their business, were permitted to establish a tax reserve for bad debts and to make annual additions thereto, which additions, within specified limitations, could be deducted in arriving at their taxable income. The Bank's deduction with respect to "qualifying loans," which are generally loans secured by certain interests in real property, were computed using an amount based on the Bank's actual loss experience (the "Experience Method"), or a percentage equal to 8.0% of the Bank's taxable income (the "PTI Method"), computed without regard to this deduction and with additional modifications and reduced by the amount of any permitted addition to the non-qualifying reserve. Under recently enacted legislation, the PTI Method was repealed. If a Bank is not a "large" bank, i.e., the quarterly average of the Bank's total assets or of the consolidated group of which it is a member exceeds $500 million for the year, the Bank will continue to be permitted to use the Experience Method. In addition, the Bank is required to recapture (i.e., take into income) over a multi-year period its "applicable excess reserves", i.e., the balance of its reserve for losses on qualifying loans and non-qualifying loans, as of the close of its last tax year beginning before January 1, 1996, over the greater of (a) the balance of such reserves as of December 31, 1987 or (b) in the case of a bank which is not a "large" bank, an amount that would have been the balance of such reserves as of the close of its last tax year beginning before January 1, 1996, had the Bank always computed the additions to its reserves using the experience method. The Bank would not be required to recapture its supplemental reserves or its pre-1988 reserves, even if the Bank later became a "large" bank. Under the legislation, such recapture requirements would be suspended for each of two successive taxable years beginning January 1, 1997 if the principal amount of residential loans made by the Bank during each such year is not less than the average of the principal amounts of such loans made by the Bank during its six taxable years preceding January 1, 1996. As of September 30, 1996, the Bank's bad debt reserve subject to recapture over a six-year period totaled approximately $453,028. If the Bank ceases to qualify as a "bank" (as defined in Code Section 581) or converts to a credit union, the pre-1988 reserves and supplemental reserves are restored to income ratably over a six-year period, beginning in the tax year the association no longer qualifies as a bank. The balance of the pre-1988 reserves are also subject to recapture in the case of certain excess distributions to (including distributions on liquidation and dissolution), or redemptions of stockholders. See "Regulation" and "Regulation-Federal and State Taxation-Federal Taxation." FINANCIAL CONDITION - ------------------- Consolidated assets of Hardin Bancorp, Inc. were $87,807,400 as of September 30, 1996, an increase of $4,420,578 as compared to March 31, 1996. At September 30, 1996, total stockholders' equity was $14,737,312, a decrease of $1,297,629 when compared to stockholders' equity at March 31, 1996. The increase in assets was due to growth in investment securities and the loan portfolio which was funded primarily by a $5,000,000 increase in Federal Home Loan Bank advances. The decrease in stockholders' equity was a result of the Company purchasing 52,900 shares of its common stock for $618,535, the payment of cash dividends on common stock in the amount of $209,376, and the purchase of 42,320 shares of common stock by the Hardin Bancorp, Inc. Recognition and Retention Plan at a cost of $498,150. Cash, interest bearing deposits, and investment securities increased to $13,931,529 at 9 September 30, 1996, from $12,046,803 on March 31, 1996, an increase of $1,884,726. Mortgage backed securities decreased $3,315,238 to $20,890,611 at September 30, 1996, from $24,205,849 on March 31, 1996. Loans receivable increased to $50,403,869 on September 30, 1996, from $45,031,460 on March 31, 1996, an increase of $5,372,409. The decrease in mortgage backed securities and the increase in loans receivable reflect the Bank's plan to increase the mortgage and consumer loan portfolios and decrease the level of mortgage backed securities. Deposits totaled $66,695,606 on September 30, 1996, an increase from $66,605,247 on March 31, 1996. The increase of $90,359 is primarily due to a special certificate of deposit (CD) offer during the quarter. RESULTS OF OPERATIONS - --------------------- For the second quarter ended September 30, 1996, the Company experienced a loss in the amount of $131,201 compared to earnings in the amount of $118,777 for the comparable period in 1995. The decrease in earnings was due to the payment of a one-time special assessment in the amount of $441,018, pre-tax, to recapitalize the SAIF. The long anticipated one-time special assessment became due when President Clinton signed the Omnibus Appropriations Bill on September 30, 1996, which required institutions insured by the Federal Deposit Insurance Corporation's (FDIC) SAIF to pay 65.7 cents for every $100 of deposits held on March 31, 1995. Net interest income after provision for loan losses for the second quarter ended September 30, 1996, was $673,465 compared to $441,620 for the second quarter of 1995, an increase of $231,845. The increase is primarily due to the improvement in the net interest margin from 2.38% for the quarter ended September 30, 1995, to 3.15% for the quarter ended September 30, 1996. The improvement in net interest income is primarily the result of an increase in interest earning assets due to the investment of the net proceeds of the Bank's conversion to stock. Non-interest income for the second quarter of 1996 totaled $56,628 compared to $86,539 for the second quarter of 1995. The decrease was due to a loss recognized on the sale of mortgage backed securities of $7,696 in 1996, and the elimination of the dividend received on the Bank's investment in its former data processing center. The Company's non-interest expense for the second quarter of 1996 totaled $938,455 compared to $358,712 in the comparable quarter in 1995, an increase of $579,743. The increase was a result of the one-time special assessment to recapitalize the SAIF in the amount of $441,018, an increase in compensation expense of $80,010 due to employee stock benefit plans, and other non-interest expense rising $56,339 due to the cost of the Company's annual meeting and other expenses related to becoming a public company. Net earnings for the six months ended September 30, 1996, were $64,075 compared to $203,240 for the six months ended September 30, 1995, a decrease of $139,165. The decrease in earnings for the period was primarily due to the non-interest expense related to the one-time special Federal Insurance assessment in the amount of $441,018. Net earnings for the semi-annual period ended September 30, 1996, would have been $341,933 without the SAIF assessment. Net interest income after provision for loan losses for the six months ended September 30, 1996, was $1,341,090 compared to $848,147 for the six months ended September 30, 1995, an increase of $492,943. 10 The increase in net interest income is due to the investment of the net proceeds from the Bank's conversion to stock in the Bank's loan and securities portfolios. Non-interest income increased from $136,346 for the six months ended September 30, 1995, to $149,133 for the semi-annual period ended September 30, 1996. The increase was due to a gain on the sale of the Bank's former data processing center, which was partially off-set by an increase in losses taken on the sale of mortgage backed securities. The Company's non-interest expense for the six months ended September 30, 1996, was $1,388,491 compared to $687,168 for the six months ended September 30, 1995, an increase of $701,323. The increase was due to the one-time special SAIF assessment of $441,018, compensation expense increasing $146,084 due to the implementation of employee stock benefit plans, expenses associated with the annual meeting of stockholders, and additional expenses related to becoming a public company. PROVISION FOR LOAN LOSSES - ------------------------- The provision for loan losses is based on the periodic analysis of the loan portfolio by management. In establishing the provision, management considers numerous factors including general economic conditions, loan portfolio condition, prior loss experience, and independent analysis. The provision for loan losses for the three months ended September 30, 1996, was $8,590, and for the six months ended September 30, 1996, was $16,090. Based upon the analysis of the addition to established allowances and the composition of the loan portfolio, management concluded that the allowance is adequate. While current economic conditions in the Bank's market are stable, future conditions will dictate the level of future allowances for losses on loans. NONPERFORMING ASSETS - -------------------- On September 30, 1996, nonperforming assets were $163,044 compared to $134,000 on June 30, 1996. At September 30, 1996, the Bank's allowance for loan losses was $147,130, or 91% of nonperforming assets. Loans are considered nonperforming when the collection of principal and/or interest is not probable, or in the event payments are more than 90 days delinquent. Allowance for loan losses was .292% of total loans as of September 30, 1996. CAPITAL RESOURCES - ----------------- The Bank is subject to three capital to asset requirements in accordance with Office of Thrift Supervision (OTS) regulations. The following table is a summary of the Bank's regulatory capital requirements versus actual capital as of September 30, 1996: CAPITAL REQUIREMENTS:
Actual Required Excess Amount/Percent Amount/Percent Amount/Percent (Dollars in Thousands) Tangible Capital $10,979/12.92% $1,274/1.50% $9,705/11.42% Core Leverage Capital $10,979/12.92% $2,548/3.00% $8,431/09.92% Risk-Based Capital $11,126/31.22% $2,851/8.00% $8,275/23.22%
11 LIQUIDITY - --------- The Bank's principal sources of funds are deposits, principal and interest payments on loans, deposits in other insured institutions, and investment securities. While scheduled loan repayments and maturing investments are relatively predictable, deposit flows and early loan payments are more influenced by interest rates, general economic conditions and competition. Additional sources of funds may be obtained from the Federal Home Loan Bank of Des Moines by utilizing numerous available products to meet funding needs. The Bank is required to maintain minimum levels of liquid assets as defined by regulations. The required percentage is currently five percent of net withdrawable savings deposits and borrowings payable on demand or in one year or less. The Bank has maintained its liquidity ratio at levels exceeding the minimum requirement. The eligible liquidity ratios at June 30, 1996, and September 30, 1996, were 6.79% and 5.71% respectively. In light of the competition for deposits, the Bank may utilize the funding sources of the Federal Home Loan Bank of Des Moines (FHLB) to meet loan demand in accordance with the Bank's growth plans. The wholesale funding sources may allow the Bank to obtain a lower cost of funding and create a more efficient liability match to the respective assets being funded. For purposes of the cash flows, all short-term investments with a maturity of three months or less at date of purchase are considered cash equivalents. Cash and cash equivalents for the periods ended September 30, 1996 and 1995 were $2,182,279 and $8,157,074 respectively. The decrease was primarily due to the net cash used in investing activities for loan origination, loan purchases, and the purchase of investment securities off-set by borrowings from FHLB. Net cash provided by operating activities increased from $274,114 at September 30, 1995, to $436,879 at September 30, 1996. The increase was due to improved net earnings, exclusive of the SAIF assessment, and normal adjustments to accrued income and expense items. 12 PART II - OTHER INFORMATION Item 1. Legal Proceedings ----------------- None. Item 2. Changes in Securities --------------------- None. Item 3. Defaults Upon Senior Securities ------------------------------- None. Item 4. Submission of Matters to a Vote of Security Holders --------------------------------------------------- On July 25, 1996, the annual meeting of stockholders was held at the American Legion Hall, located at 103 West Elm Street, Hardin, Missouri. The meeting was conducted with a quorum present in person, or by proxy. Matters which were submitted to and approved by a majority of stockholders were as follows: 1. The election of two directors of the Company for three year terms. Robert W. King received 797,009 votes for, and 13,400 votes withheld. David D. Lodwick received 789,459 votes for, and 20,950 votes withheld. There were no broker non-votes. The election of one director of the Company for a two year term. William L. Homan received 787,259 votes for, and 23,150 votes withheld. There were no broker non-votes. The election of one director of the Company for a one year term. Karen K. Blankenship received 786,370 votes for, and 24,039 votes withheld. There were no broker non-votes. 2. The ratification of the appointment of KPMG Peat Marwick LLP as the auditors of the Company for the fiscal year ending March 31, 1997. Votes for KPMG Peat Marwick LLP were 800,409, votes against were 900, and 9,100 abstained. Item 5. Other Information ----------------- During July 1996, the Company purchased 7,080 shares of the Company's common stock at an aggregate purchase price $82,020. As of September 30, 1996, the Company held 52,900 shares of its common stock as treasury stock at an aggregate purchase price of $618,535. On September 19, 1996, the Company's Board of Directors authorized the purchase of an additional 50,255 shares, to be acquired over the next twelve months, and notified The Office of Thrift Supervision (OTS) in compliance with OTS regulations. 13 Item 6. Exhibits and Reports on Form 8-K -------------------------------- Exhibits: 27 - Financial Data Schedule Reports on Form 8-K: None. 14 SIGNATURES Pursuant to the requirement of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. HARDIN BANCORP, INC. Registrant Date: November 14, 1996 /s/ Robert W. King ----------------------- --------------------------------------------- Robert W. King, President and Chief Executive Officer (Duly Authorized Officer) Date: November 14, 1996 /s/ Karen K. Blankenship ----------------------- -------------------------------------- Karen K. Blankenship, Senior Vice President and Secretary (Principal Financial Officer) 15 EX-27 2 FINANCIAL DATA SCHEDULE
9 1,000 6-MOS MAR-31-1997 SEP-30-1996 289 1,893 0 0 18,051 14,589 14,345 51,231 147 87,807 66,696 5,000 1,373 0 0 0 11 14,727 87,807 1,361 403 90 3,170 1,667 1,813 1,357 16 (8) 1,388 102 102 0 0 64 .07 .07 7.72 163 0 0 369 131 0 0 147 99 0 48
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