-----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, AUZJY6Hx9efzcB2IQTLC/RiP4BI3JkdkcXxMS/HSgckHXg1JGIGppcTq1ynfFIss aRiHKiuDO/LHZJ099yhv5A== 0000928385-97-000203.txt : 19970221 0000928385-97-000203.hdr.sgml : 19970221 ACCESSION NUMBER: 0000928385-97-000203 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970211 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: 97523878 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 FORMS 10QSB 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 December 31, 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 December 31, 1996 - ---------------------------- -------------------------------- Common stock, .01 par value 954,845 HARDIN BANCORP, INC. AND SUBSIDIARIES CONTENTS
PART I FINANCIAL INFORMATION Item 1. Financial Statements Page Consolidated Balance Sheets........................1 Consolidated Statements of Earnings................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 Signatures........................................14
HARDIN BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS DECEMBER 31, AND MARCH 31, 1996
(Unaudited) December 31, March 31, 1996 1996 ------------- ------------ Assets ------ Cash $ 306,356 $ 253,557 Interest bearing deposits 6,632,730 5,430,396 Investment securities - available for sale 15,332,564 6,362,850 Mortgage backed securities: Held to maturity 13,965,110 16,298,987 Available for sale 6,079,433 7,906,862 Loans receivable, net 52,310,804 45,031,460 Accrued interest receivable: Investment securities 151,957 116,562 Mortgage backed securities 149,898 188,532 Loans receivable 364,288 296,775 Premises and equipment 772,948 510,218 Stock in Federal Home Loan Bank (FHLB) of Des Moines, at cost 742,000 742,000 Prepaid expenses and other assets 207,409 248,623 ----------- ----------- Total assets $97,015,497 $83,386,822 =========== =========== Liabilities and Stockholders' Equity ------------------------------------ Liabilities: Deposits $67,866,412 $66,605,247 Advances from borrowers for taxes and insurance 146,465 223,752 Advances from FHLB 14,000,000 0 Accrued interest payable 63,933 30,385 Income taxes payable: Current 6,028 56,575 Deferred 39,113 48,000 Accrued expenses and other liabilities 577,721 387,922 ----------- ----------- Total liabilities 82,699,672 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 954,845 and 1,058,000 outstanding at December 31, and March 31, 1996, respectively 10,580 10,580 Additional paid-in capital 10,055,448 10,055,448 Retained earnings 6,864,799 6,885,230 Unrealized loss on available for sale securities, net (172,601) (154,597) Unearned employee stock ownership plan (761,720) (761,720) Deferred recognition and retention plan (434,635) 0 Treasury stock (103,155 shares at cost) (1,246,046) 0 ----------- ----------- Total stockholders' equity 14,315,825 16,034,941 ----------- ----------- Total liabilities and stockholders' equity $97,015,497 $83,386,822 =========== ===========
See accompanying notes to consolidated financial statements. 1 HARDIN BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
Three months ended Nine months ended December 31 December 31 ------------------ ----------------- 1996 1995 1996 1995 -------------- --------------- ---------- ---------- Interest income: Loans receivable $1,061,788 $ 819,811 $3,025,304 $2,275,539 Mortgage backed securities 318,929 414,108 1,032,058 1,223,131 Investment securities 232,845 94,901 635,875 267,543 Other 67,621 125,596 157,685 290,743 ---------- ---------- ---------- ---------- Total interest income 1,681,183 1,454,416 4,850,922 4,056,956 ---------- ---------- ---------- ---------- Interest expense: Deposits 851,283 850,413 2,517,993 2,591,930 FHLB advances 104,652 0 250,501 12,876 ---------- ---------- ---------- ---------- Total interest expense 955,935 850,413 2,768,494 2,604,806 ---------- ---------- ---------- ---------- Net interest income 725,248 604,003 2,082,428 1,452,150 Provision for loan losses 7,500 0 23,590 0 ---------- ---------- ---------- ---------- Net interest income after provision for losses 717,748 604,003 2,058,838 1,452,150 Non-interest income: Service charges 20,901 17,216 60,122 49,272 Loan servicing fees 8,803 10,365 27,609 32,614 Gain (loss) on sale of investments and mortgage backed securities 5,286 0 (2,410) (2,886) Other income 20,562 40,031 119,364 124,958 ---------- ---------- ---------- ---------- Total non-interest income 55,552 67,612 204,685 203,958 ---------- ---------- ---------- ---------- Non-interest expense: Compensation and benefits 240,682 250,352 736,376 599,962 Occupancy and equipment 34,146 28,573 85,570 77,102 Federal insurance premiums 38,022 38,804 113,855 116,062 SAIF special assessment 0 0 441,018 0 Data processing 22,794 22,259 67,567 66,284 Real estate owned 0 0 0 (3,050) Other 96,155 88,288 375,904 259,084 ---------- ---------- ---------- ---------- Total non-interest expense 431,799 428,276 1,820,290 1,115,444 ---------- ---------- ---------- ---------- Earnings before income taxes 341,501 243,339 443,233 540,664 Income tax expense 126,436 85,663 164,093 184,748 ---------- ---------- ---------- ---------- Net earnings $ 215,065 $ 157,676 $ 279,140 $ 355,916 ========== ========== ========== ========== Net earnings per common share: Primary and fully diluted $ 0.24 0.16 0.30 0.37 Weighted average common and common equivalent shares outstanding 901,191 973,360 934,553 973,360
See accompanying notes to consolidated financial statements. 2 HARDIN BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY NINE MONTHS ENDED DECEMBER 31, 1996 (UNAUDITED)
Unrealized Unearned Gain or (Loss) Employee Additional on Stock 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 0 279,140 0 0 0 0 279,140 Change in unrealized loss on available- for-sale securities, net of tax 0 0 0 (18,004) 0 0 (18,004) Repurchase of common stock 0 0 0 0 0 0 (1,744,196) (1,744,196) Adoption of RRP 0 0 0 0 0 (498,150 498,150 0 Amortization of RRP 0 0 0 0 0 63,515 0 63,515 Dividend declared ($.30 per share) 0 0 (299,571) 0 0 0 0 (299,571) ---------- ----------- --------- ---------- ---------- -------- -------- ---------- Balance at December 31, 1996 $ 10,580 10,055,448 6,864,799 (172,601) (761,720) (434,635 (1,246,046) 14,315,825 ---------- ----------- --------- ---------- --------- -------- --------- ----------
See accompanying notes to consolidated financial statements. 3 HARDIN BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS NINE MONTHS ENDED DECEMBER 31, 1996 AND 1995 (UNAUDITED)
Operating Activities: 1996 1995 ------------- ----------- Net Earnings $ 279,140 355,916 Adjustments to reconcile net earnings to net cash provided by operating activities: Provision for losses on loans 23,590 0 Depreciation 38,949 32,606 Premium accretion and amortization of discounts and deferred loan fees, net 65,946 68,410 FHLB stock dividends 0 (14,600) Net loss on sale of loans and investment securities available for sale 2,410 2,886 Gain on sale of premises and equipment 0 (4,877) Amortization of deferred Recognition and Retention Plan (RRP) 63,515 0 Provision for deferred income taxes 1,538 24,467 Changes in assets and liabilities: Interest receivable (64,274) (43,635) Other assets 41,214 38,237 Accrued interest payable 33,548 (7,765) Accrued expenses and other liabilities 200,114 9,503 Income taxes payable (50,547) 36,524 ------------ ---------- Net cash provided by operating activities 635,143 497,672 ------------ ---------- Investing Activities: Net increase in loans receivable (4,793,153) (3,563,812) Proceeds from maturities of certificates of deposits in other institutions 0 100,000 Purchase of loans receivable (2,506,169) (4,744,277) Principal payments on mortgage backed securities: Available for sale 939,436 32,210 Held to maturity 2,287,193 3,257,099 Purchase of investment securities: Available for sale (14,003,686) (4,890,500) Held to maturity 0 (267,655) Proceeds from maturities of investment securities: Available for sale 3,000,000 2,700,000 Held to maturity 0 1,374 Proceeds from sales of mortgage backed securities available for sale 863,408 (522,781) Proceeds from sales of investment securities available for sale 2,004,844 2,993,438 Purchase of office premises and equipment (301,679) (32,722) Proceeds from sale of office premises and equipment 0 13,500 ------------ ---------- Net cash used in investing activities $(12,509,806) (4,924,126) ------------ ----------
4 HARDIN BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED NINE MONTHS ENDED DECEMBER 31, 1996 AND 1995 (UNAUDITED)
1996 1995 ------------ ------------ Financing Activities: Net increase (decrease) in savings deposits $ 1,261,165 (1,230,394) Proceeds from FHLB advances 14,000,000 1,000,000 Repayments of FHLB advances 0 (2,500,000) Net decrease in advances from borrowers for taxes and insurance (77,287) (110,544) Proceeds from issuance of stock, net of issuance costs 0 9,201,000 Payment of dividends (309,886) 0 Purchase of treasury stock (1,744,196) 0 ----------- ----------- Net cash provided by financing activities 13,129,796 6,360,062 ----------- ----------- Increase in cash 1,255,133 1,933,608 Cash at beginning of period 5,683,953 4,442,116 ----------- ----------- Cash at end of period $ 6,939,086 $ 6,375,724 =========== =========== Supplemental disclosure of cash flow information: Cash paid for: Interest $ 2,734,946 2,611,183 Income taxes, net of refunds $ 214,640 148,224 Noncash investing and financing: Allocation of treasury stock to RRP $ 498,150 0 Dividends declared and payable $ 95,485 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 nine months ended December 31, 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 nine month period ended December 31, 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 nine month period ended December 31, 1995 are based upon shares outstanding at December 31, 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 nine 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 nine month period ended December 31, 1996 was $112,166. (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 December 31, 1996, 35,972 shares have been awarded to plan participants. The cost of these shares ($498,150) 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 was 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. Due to the SAIF reaching its statutory reserve ratio, the Bank anticipates a reduction in the premium schedule which will reduce the Bank's federal insurance premium for future periods. 8 PENDING 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 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. 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 $97,015,497 as of December 31, 1996, compared to $83,386,822 on March 31, 1996, an increase of $13,628,675. The increase in assets was primarily funded by an increase in Federal Home Loan Bank advances of $14,000,000 and an increase in deposits of $1,261,165. 9 The growth rate of 16.3% is in accordance with the Company's objective to leverage its excess capital in order to enhance return on stockholders' equity. The funds were used primarily to purchase U.S. Government agency securities with maturity or re-pricing terms similar to the maturity or repricing terms of the liability. These transactions are commonly referred to as arbitrages. Loans receivable, net increased to $52,310,804 on December 31, 1996, from $45,031,460 on March 31, 1996, an increase of $7,279,344. Mortgage backed securities decreased $4,161,306 to $20,044,543 at December 31, 1996, from $24,205,849 on March 31, 1996. 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 $67,866,412 on December 31, 1996, an increase of $1,261,165 from $66,605,247 on March 31, 1996. The increase in deposits is primarily due to a successful special certificate of deposit promotion. Stockholders' equity was $14,315,825 on December 31, 1996, compared to $16,034,941 on March 31, 1996, a decrease of $1,719,116. The decrease was the result of 103,155 shares of Hardin Bancorp, Inc., common stock acquired as treasury stock at a cost of $1,246,046, the purchase of 42,320 shares at an original cost of $498,150 to fund the Hardin Bancorp, Inc. Recognition and Retention Plan (RRP), and three quarterly cash dividends totaling $299,571. These items were partially off-set by net income for the nine month period of $279,140. RESULTS OF OPERATIONS - --------------------- Net earnings for the Company's third fiscal quarter ended December 31, 1996, were $215,065 compared to $157,676 for the comparable quarter in 1995. The increase was due to an improved net interest margin and an increase in interest- earning assets. Earnings per share for the quarter ended December 31, 1996, were $0.24 per share based on an average of 901,191 shares outstanding compared to $0.16 per share for the comparable quarter in 1995 based on an average of 973,360 shares outstanding. Net interest income after provision for loan losses for the third quarter ended December 31, 1996, was $717,748 compared to $604,003 for the quarter ended December 31, 1995, an increase of $113,745. This increase was a result of interest income rising from $1,454,416 in 1995 to $1,681,183 in 1996 while interest expense increased from $850,413 in 1995 to $955,935 in 1996. The increase is due to an increase in total interest-earning assets funded by increased Federal Home Loan Bank advances and deposits. Non-interest income decreased from $67,612 for the quarter ended December 31, 1995, to $55,552 for the quarter ended December 31, 1996. The decrease was due to lower earnings at the Bank's insurance subsidiary and a reduction in the dividend received from, Fiserv, the Bank's data processing center. The Company's non-interest expense for the three months ended December 31, 1996, was $431,799 compared to $428,276 for the third quarter in 1995. The slight increase was due to higher occupancy and equipment expense, increased expense related to conversion to a stock company and partially off-set by a reduction in compensation and benefits. 10 Net earnings for the nine months ended December 31, 1996, were $279,140 compared to $355,916 for the nine months ended December 31, 1995. The decrease was primarily due to a special assessment to recapitalize the Savings Association Insurance Fund and an increase in employee expense related to stock benefit plans. Earnings per share for the nine months ended December 31, 1996, were $0.30 per share based on an average of 934,553 shares outstanding compared to $0.37 per share for the nine months ended December 31, 1995 based on an average of 973,360 shares outstanding. Net interest income after provision for loan losses for the nine months ended December 31, 1996, was $2,058,838 compared to $1,452,150 for the nine months ended December 31, 1995, an increase of $606,688. The increase in net interest income is due to an increase in interest-earning assets, funded by increased Federal Home Loan Bank advances, deposit growth, and the investment of the net proceeds from the Company's conversion to stock, which was consummated on September 28, 1995. Non-interest income increased slightly from $203,958 for the nine months ended December 31, 1995, to $204,685 for the nine months ended December 31, 1996. Non-interest expense for the nine months ended December 31, 1996, was $1,820,290 compared to $1,115,444 for the nine month period in 1995, an increase of $704,846. The increase was primarily due to a special one-time Savings Association Insurance Fund (SAIF) assessment in the amount of $441,018, expenses associated with the Hardin Bancorp, Inc. Recognition and Retention Plan (RRP) of $63,515, Hardin Bancorp, Inc. Employee Stock Ownership Plan (ESOP) expenses of $112,166, and additional accounting, legal, franchise tax, and printing expense related to the conversion to a stock 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 December 31, 1996, was $7,500, and for the nine months ended December 31, 1996, was $23,590. 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. NON-PERFORMING ASSETS - --------------------- On December 31, 1996, non-performing assets were $171,000 compared to $124,000 on March 31, 1996. At December 31, 1996, the Bank's allowance for loan losses was $155,000, or 90% of non-performing assets compared to $131,000 or 107% at March 31, 1996. Loans are considered non-performing when the collection of principal and/or interest is not expected, or in the event payments are more than 90 days delinquent. The allowance for loan losses was .30% of total loans as of December 31, 1996 compared to .29% at March 31, 1996. 11 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 December 31, 1996:
CAPITAL REQUIREMENTS: Actual Required Excess Amount/Percent Amount/Percent Amount/Percent (Dollars in Thousands) Tangible Capital $11,189/11.84% $1,420/1.50% $9,769/10.34% Core Leverage Capital $11,189/11.84% $2,839/3.00% $8,350/08.84% Risk-Based Capital $11,345/29.72% $3,054/8.00% $8,291/21.72%
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 ratio at December 31, 1996, was 10.34%. 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 December 31, 1996 and 1995 were $6,939,086 and $6,375,724, respectively. The increase was primarily due to an increase in cash provided by financing activities, primarily proceeds from FHLB advances. Net cash provided by operating activities increased from $497,672 at December 31, 1995 to $635,143 at December 31, 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 --------------------------------------------------- None. Item 5. Other Information ----------------- During the quarter, the Company purchased 50,255 shares of the Company's common stock at an aggregate purchase price of $627,511. As of December 31, 1996, the Company held 103,155 shares of its common stock as treasury at an aggregate purchase price of $1,246,046. Item 6. Exhibits and Reports on Form 8-K -------------------------------- Exhibits: 27 - Financial Data Schedule Reports on Form 8-K: None. 13 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: February 11, 1996 /s/ Robert W. King ----------------- --------------------------------------- Robert W. King, President and Chief Executive Officer (Duly Authorized Officer) Date: February 11, 1996 /s/ Karen K. Blankenship ------------------ ---------------------------------------- Karen K. Blankenship, Senior Vice President and Secretary (Principal Financial Officer) 14 EX-27 2 FINANCIAL DATA SCHEDULE
9 1,000 9-MOS MAR-31-1997 DEC-31-1996 306 6,633 0 0 21,412 13,965 13,661 52,466 155 97,015 67,866 14,000 833 0 0 0 11 14,305 97,015 4,057 636 158 4,851 2,518 2,768 2,082 24 (2) 1,820 443 443 0 0 279 .30 .30 7.75 171 0 0 695 131 0 0 155 140 0 15
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