-----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, OaZugjeTnkMMvjMxpLrYX+lWmnXc2bxWTOMkR815LNUh+XHAZ93qY93YcRFe855n BuHDDouIhU83I7SHr2VdhA== 0000950164-98-000152.txt : 19981118 0000950164-98-000152.hdr.sgml : 19981118 ACCESSION NUMBER: 0000950164-98-000152 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980930 FILED AS OF DATE: 19981116 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: SEC FILE NUMBER: 000-26560 FILM NUMBER: 98750144 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, 1998 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 Identification Number) incorporation or organization 2nd and Elm Street, Hardin, Missouri 64035 - ---------------------------------------- --------------------------------------- (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code: (660) 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 classes of common stock as of the latest practicable date. Class Outstanding at September 30, 1998 --------------------------- --------------------------------- Common stock, .01 par value 816,392 HARDIN BANCORP, INC. AND SUBSIDIARIES CONTENTS PAGE ---- PART I FINANCIAL INFORMATION Item 1. Unaudited Financial Statements 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 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations ............................................... 7-10 PART II OTHER INFORMATION ......................................................... 11 Signatures ................................................................ 12 Hardin Bancorp, Inc. and Subsidiaries Consolidated Balance Sheets (Unaudited) September 30, 1998 March 31, 1998 ------------------ -------------- Assets ------ Cash ........................................ $ 885,390 $ 556,927 Interest bearing deposits ................... 9,661,405 3,224,874 Investment securities: Held-to-maturity .......................... 0 10,000,000 Available-for-sale ........................ 32,768,917 22,656,010 Mortgage-backed securities: Held-to-maturity .......................... 0 10,995,511 Available-for-sale ........................ 17,326,285 8,019,725 Loans receivable, net ....................... 67,277,905 61,273,984 Accrued interest receivable on: Investment securities ..................... 319,647 359,601 Mortgage-backed securities ................ 120,441 133,459 Loans receivable .......................... 457,214 395,138 Premises and equipment ...................... 1,842,955 1,725,383 Stock in Federal Home Loan Bank (FHLB) of Des Moines, at cost .................... 1,975,000 1,475,000 Prepaid expenses and other assets ........... 361,390 276,492 ------------ ------------ Total assets ................................ $132,996,549 $121,092,104 ============ ============ Liabilities and Stockholders' Equity ------------------------------------ Liabilities: Deposits .................................. $ 78,766,896 $ 76,884,462 Advances from borrowers for property taxes and insurance ..................... 537,889 264,317 Advances from FHLB ........................ 39,000,000 29,500,000 Accrued interest payable .................. 61,796 56,149 Income taxes payable: Current ................................. 165,097 323,520 Deferred ................................ 71,807 15,000 Accrued expenses and other liabilities .... 702,823 571,084 ------------ ------------ Total liabilities ........................... 119,306,308 107,614,532 ------------ ------------ Stockholders' equity: Common stock, $.01 par value; 3,500,000 shares authorized, 1,058,000 shares issued .................................. 10,580 10,580 Serial preferred stock, $.01 par value; 500,000 shares authorized, none issued or outstanding .......................... 0 0 Additional paid in capital ................ 10,165,436 10,165,436 Retained earnings ......................... 7,690,346 7,482,320 Unrealized loss on available for sale securities, net ......................... (1,600) (98,326) Unearned employee stock ownership plan .... (518,280) (518,280) Deferred recognition and retention plan ... (282,902) (327,011) Treasury stock (241,608 and 234,440, shares at cost, respectively) ........... (3,373,339) (3,237,147) ------------ ------------ Total stockholders' equity .................. 13,690,241 13,477,572 ------------ ------------ Total liabilities and stockholders' equity .. $132,996,549 $121,092,104 ============ ============ See accompanying notes to consolidated financial statements. 1 Hardin Bancorp, Inc. and Subsidiaries Consolidated Statements of Earnings (Unaudited)
Three months ended Six months ended September 30 September 30 ----------------------- ----------------------- 1998 1997 1998 1997 ---------- ---------- ---------- ---------- Interest income: Loans receivable .................. $1,358,504 $1,175,879 $2,665,755 $2,327,986 Mortgage-backed securities ........ 263,860 285,801 547,337 599,186 Investment securities ............. 575,237 462,610 1,144,698 858,232 Other ............................. 93,168 118,478 157,824 211,995 ---------- ---------- ---------- ---------- Total interest income ............... 2,290,769 2,042,768 4,515,614 3,997,399 ---------- ---------- ---------- ---------- Interest expense: Deposits .......................... 982,176 968,214 1,962,381 1,884,784 FHLB advances ..................... 546,847 318,369 1,004,901 610,320 ---------- ---------- ---------- ---------- Total interest expense .............. 1,529,023 1,286,583 2,967,282 2,495,104 ---------- ---------- ---------- ---------- Net interest income ................. 761,746 756,185 1,548,332 1,502,295 Provision for loan losses ........... 16,200 15,577 31,200 54,577 ---------- ---------- ---------- ---------- Net interest income after provision for loan losses ................... 745,546 740,608 1,517,132 1,447,718 ---------- ---------- ---------- ---------- Non-interest income: Service charges ................... 90,556 29,757 167,659 54,389 Loan servicing fees ............... 8,071 8,184 16,050 16,337 Gain on sale of loans held for sale 0 13,958 14,998 16,442 Gain on sale of real estate owned . 0 0 0 4,105 Gain on sale of investments and mortgage-backed securities ...... 118,444 5,391 131,046 49,822 Other ............................. 37,345 21,972 54,738 51,970 ---------- ---------- ---------- ---------- Total non-interest income ........... 254,416 79,262 384,491 193,065 ---------- ---------- ---------- ---------- Non-interest expense: Compensation and benefits ......... 332,194 335,743 657,917 595,774 Occupancy and equipment ........... 61,544 32,529 118,780 62,176 Federal insurance premiums ........ 11,734 11,048 23,676 22,061 Data processing ................... 48,922 25,547 83,918 49,334 Real estate owned ................. 0 363 0 1,406 Other ............................. 164,271 133,082 347,804 262,546 ---------- ---------- ---------- ---------- Total non-interest expense .......... 618,665 538,312 1,232,095 993,297 ---------- ---------- ---------- ---------- Earnings before income taxes ........ 381,297 281,558 669,528 647,486 Income tax expense .................. 137,186 103,857 239,779 239,069 ---------- ---------- ---------- ---------- Net earnings ........................ $ 244,111 $ 177,701 $ 429,749 $ 408,417 ========== ========== ========== ========== Net earnings per share: Basic ............................. $ 0.32 $ 0.22 $ 0.56 $ 0.51 ========== ========== ========== ========== Diluted ........................... 0.31 0.22 0.54 0.50 ========== ========== ========== ==========
See accompanying notes to consolidated financial statements. 2 Hardin Bancorp, Inc. and Subsidiaries Consolidated Statements of Stockholders' Equity For the Six Months Ended September 30, 1998 (Unaudited)
Unearned Unrealized Employee Additional Gain or (loss) Stock Total Common Paid-in Retained on Ownership Deferred Treasury Stockholders' Stock Capital Earnings Securities, net Plan RRP Stock Equity ------ ---------- -------- --------------- --------- -------- -------- ------------- Balance at March 31, 1998 .... $10,580 10,165,436 7,482,320 (98,326) (518,280) (327,011) (3,237,147) 13,477,572 Net earnings ................. 0 0 429,749 0 0 0 0 429,749 Change in net unrealized loss on securities available for sale, net of tax ....... 0 0 0 96,726 0 0 0 96,726 Repurchase of common stock ... 0 0 0 0 0 0 (136,192) (136,192) Amortization of recognition and retention plan ......... 0 0 0 0 0 44,109 0 44,109 Dividends declared ........... 0 0 (221,723) 0 0 0 0 (221,723) ------- ---------- --------- ------- -------- -------- ---------- ---------- Balance at September 30, 1998 $10,580 10,165,436 7,690,346 (1,600) (518,280) (282,902) (3,373,339) 13,690,241 ======= ========== ========= ======= ======== ======== ========== ==========
See accompanying notes to consolidated financial statements. 3 Hardin Bancorp, Inc. and Subsidiaries Consolidated Statements of Cash Flows Six Months Ended September 30, 1998 and 1997 (Unaudited)
1998 1997 ------------ ----------- Operating Activities: Net Earnings .......................................... $ 429,749 $ 408,417 Adjustments to reconcile net earnings to net cash provided by operating activities: Provision for losses on loans ..................... 31,200 54,577 Depreciation ...................................... 65,183 32,864 Premium accretion and amortization of discounts and deferred loan fees, net ........ (182,644) 46,366 Net (gain)/loss on sale of loans and investment and mortgage-backed securities ....... (146,044) (66,264) Gain on real estate owned ......................... 0 (4,105) Proceeds from sale of loans ....................... 590,680 0 Origination of loans held for sale ................ (1,896,140) 0 Amortization of deferred Recognition and Retention Plan (RRP) ........................ 44,109 42,344 Changes in asset and liabilities: Interest receivable ............................. (9,104) (11,628) Other assets .................................... (84,898) (2,707) Accrued interest payable ........................ 5,647 42,350 Accrued expense and other liabilities ........... 131,373 228,728 Income taxes payable ............................ (158,423) 63,405 ------------ ----------- Net cash (used in) provided by operating activities ... (1,179,312) 834,347 ------------ ----------- Investing Activities: Net increase in loans receivable .................... (5,094,015) (2,930,008) Purchase of loans receivable ........................ 0 (340,000) Proceeds from sales of loans ........................ 371,770 0 Principal payments on mortgage-backed and related securities: Available-for-sale .............................. 1,324,085 449,793 Held-to-maturity ................................ 1,026,694 1,067,333 Purchase of mortgage-backed securities: Available-for-sale .............................. 0 (7,819,121) Proceeds from sales of mortgage-backed securities ... 0 4,895,433 Purchase of investment securities available-for-sale (16,117,348) (15,649,312) Proceeds from maturities of investment securities: Available-for-sale .............................. 8,000,000 9,148,589 Proceeds from sales of investment securities ........ 7,817,418 488,370 Purchase of stock in FHLB of Des Moines ............. (500,000) (375,000) Purchase of real estate owned ....................... 0 (8,272) Proceeds from sales of real estate owned ............ 0 107,515 Purchase of office properties and equipment ......... (182,755) (135,374) ------------ ----------- Net cash (used in) investing activities ............... $ (3,354,151) $(11,100,054) ------------ -----------
4 Hardin Bancorp, Inc. and Subsidiaries Consolidated Statements of Cash Flows Six Months Ended September 30, 1998 and 1997 (Unaudited)
1998 1997 ------------ ----------- Financing Activities: Net increase in savings deposits .................... 1,882,434 5,626,288 Proceeds from FHLB advances ......................... 15,000,000 17,500,000 Repayments of FHLB advances ......................... (5,500,000) (10,000,000) Net increase in advances from borrowers for taxes and insurance ............................... 273,572 221,527 Payment of dividends ................................ (221,357) (189,059) Purchase of treasury stock .......................... (136,192) 0 ------------ ----------- Net cash provided by financing activities ............. 11,298,457 13,158,756 ------------ ----------- Increase in cash ...................................... 6,764,994 2,893,049 Cash at beginning of period ........................... 3,781,801 4,265,909 ------------ ----------- Cash at end of period ................................. 10,546,795 7,158,958 ------------ ----------- Supplemental disclosure of cash flow information: Cash paid for: Interest .......................................... $ 2,961,635 $2,452,754 Income taxes, net of refunds ...................... $ 398,202 $ 175,664 Non-cash investing and financing: Dividends declared and payable ...................... $ 122,459 $ 103,123 Transfer of investment and mortgage-backed securities from held-to-maturity to available-for-sale ....... $ 19,951,798 $ 0
See accompanying notes to consolidated financial statements. 5 HARDIN BANCORP, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) (1) Basis of Presentation The accompanying unaudited consolidated financial statements of Hardin Bancorp, Inc. and subsidiaries have been 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 Company's Annual Report for the year ended March 31, 1998, 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 statement of earnings for the six month period ended September 30, 1998 are not necessarily indicative of the results which may be expected for the entire year. The March 31, 1998 consolidated balance sheet has been derived from the audited consolidated financial statements as of that date. (2) Earnings Per Share Basic earnings per share excludes dilution and is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share includes the effect of potential dilutive common shares (stock options) outstanding during the period. All 1997 per share data has been restated to reflect the adoption of SFAS No. 128, "Earnings per Share". The shares used in the calculation of basic and diluted earnings per share are shown below:
For the three months ended For the six months ended September 30 September 30 -------------------------- ------------------------ 1998 1997 1998 1997 ------- ------- ------- ------- Basic weighted average shares ........... 761,216 795,680 762,352 795,680 Common stock equivalents/stock options .. 30,716 27,629 34,134 22,687 ------- ------- ------- ------- Diluted weighted average shares ......... 791,932 823,309 796,486 818,367 ======= ======= ======= =======
(3) Comprehensive Income On April 1, 1998 the Company adopted SFAS No. 130, "Reporting Comprehensive Income" which requires the reporting of comprehensive income and its components. Comprehensive income is defined as the change in equity from transactions and other events and circumstances from non-owner sources and excludes investments by and distributions to owners. Comprehensive income includes net income and other items of comprehensive income meeting the above criteria. The Company's only component of other comprehensive income is the unrealized holding gains and losses on available-for-sale securities.
For the three months ended For the six months ended September 30 September 30 -------------------------- ------------------------ 1998 1997 1998 1997 -------- -------- -------- -------- Net income .............................. $244,000 $178,000 $430,000 $408,000 Change in unrealized security loss, net . 64,000 44,000 97,000 66,000 -------- -------- -------- -------- Comprehensive income .................... $308,000 $222,000 $527,000 $474,000 ======== ======== ======== ========
6 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's 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 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. FINANCIAL CONDITION - ------------------- Consolidated assets of Hardin Bancorp, Inc. were $132,996,549 as of September 30, 1998, as compared to $121,092,104 on March 31, 1998, an increase of $11,904,445. An increase in deposits of $1,882,434 and an increase in advances from the Federal Home Loan Bank of Des Moines in the amount of $9,500,000 primarily funded the increase. The 9.8% increase in total assets for the six months ended September 30, 1998 is in accordance with the Company's growth objectives. The funds were used to purchase investment securities, interest bearing deposits and to fund loan growth. Loans receivable, net, increased to $67,277,905 on September 30, 1998 from $61,273,984 on March 31, 1998, an increase of $6,003,921. Mortgage-backed securities decreased $1,688,951 to $17,326,285 on September 30, 1998, from $19,015,236 on March 31, 1998. The decrease in mortgage-backed securities and the increase in loans reflect the Bank's plan to increase the loan portfolio and decrease mortgage-backed securities to improve the overall yield on interest earning assets. Cash, interest bearing deposits and investment securities increased $6,877,901 from $36,437,811 on March 31, 1998, to $43,315,712 on September 30, 1998. The increase was primarily funded by an increase in savings deposits and FHLB advances. Deposits totaled $78,766,896 on September 30, 1998, an increase of $1,882,434 from $76,884,462 on March 31, 1998. The increase in deposits is primarily due to a successful special certificate of deposit promotion and the Bank's high performance checking account program. 7 Stockholders' equity was $13,690,241 at September 30, 1998, compared to $13,477,572 at March 31, 1998. The small change in stockholders' equity was the result of net retained earnings, which was partially offset by a reduction in deferred recognition and retirement plan, unrealized loss on available-for-sale securities, net and the acquisition of 7,168 shares of treasury stock at an aggregate purchase price of $136,192 or $19.00 per share. RESULTS OF OPERATIONS - --------------------- Net earnings for the Company's quarter ended September 30, 1998 were $244,111 compared to $177,701 for the comparable quarter in 1997. The increase in earnings was due to an increase in total non-interest income, primarily due to increased service charges and gains on sales of investments and mortgage-backed securities, which were partially offset by an increase in total non-interest expense. Basic earnings per share for the quarter ended September 30, 1998 were $0.32 per share while diluted earnings per share were $0.31. Basic earnings per share were calculated based on 761,216 average shares outstanding and diluted earnings per share were calculated based on 791,732 average shares outstanding. Basic and diluted earnings per share for the comparable quarter ended September 30, 1997 were $0.22. Basic earnings per share were calculated based on 795,680 average shares outstanding and diluted earnings per share were calculated based on 823,309 average shares outstanding. Net interest income after provision for loan losses for the quarter ended September 30, 1998 was $745,546 compared to $740,608 for the quarter ended September 30, 1997, an increase of $4,938. This increase was a result of interest income increasing $248,001 from $2,042,768 in 1997 to $2,290,769 in 1998 while interest expense increased $242,440 from $1,286,583 in 1997 to $1,529,023 in 1998. The increases in interest income and interest expense are both due to increases in the average balance of interest-earning assets and interest-bearing liabilities. Non-interest income increased from $79,262 for the quarter ended September 30, 1997 to $254,816 for the quarter ended September 30, 1998. Service charge income increased by $60,799 and gains realized on the sale of investments and mortgage-backed securities increased by $113,053. The Company's non-interest expense for the three months ended September 30, 1998 was $618,665 compared to $538,312 for the comparable quarter in 1997. The increase was due to higher occupancy and equipment expense and data processing expense related to the opening of the new branch office in Richmond. Other non-interest expense increased from $133,082 for the quarter ended September 30, 1997 to $164,271 for the quarter ended September 30, 1998. The increase was primarily due to marketing expenses related to the Bank's high performance checking account program in an attempt to increase checking accounts. Net earnings for the six months ended September 30, 1998, were $429,749 compared to $408,417 for the six months ended September 30, 1997, an increase of $21,332. The increase is related to net interest income after provision for loan losses, an increase of non-interest income, partially offset by an increase in total non-interest expense. Net interest income after provision for loan losses for the six month period ended September 30, 1998 was $1,517,132 compared to $1,447,718 for the six month period ended September 30, 1997, an increase of $69,414. The increase was due to an increase in interest earning assets. Non-interest income for the six months ended September 30, 1998, was $384,491 compared to $193,065 for the six month period a year earlier, an increase of $191,426. The increase was due to an increase in service charge income and gains on the sale of investments and mortgage-backed securities. The Company's non-interest expense for the six months ended September 30, 1998 was $1,232,095, compared to $993,297 for the six month period ended September 30, 1997, an increase of $238,798. The increase was due to an increase in compensation and benefits, occupancy and equipment expense, data processing expense and other non-interest expense primarily related to the opening of a new branch office in Richmond, Missouri, on March 30, 1998, and marketing expenses related to the Bank's high performance checking account program. Income tax expense for the six months ended September 30, 1998, was $239,779 compared to $239,069 for the similar period in 1997. The increase was due to slightly higher earnings before taxes in 1998. 8 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, 1998, was $16,200 and for the six months ended September 30, 1998, was $31,200. 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 September 30, 1998, non-performing assets were $193,530 compared to $231,577 on March 31, 1998. On September 30, 1998, the Bank's allowance for loan losses was $278,910, or 144% of non-performing assets compared to $247,710, or 107% on March 31, 1998. Loans are considered non-performing when the collection of principal and/or interest is not probable, or in the event payments are more than 90 days delinquent. The allowance for loan losses was .41% of total loans as of September 30, 1998 compared to .40% at March 31, 1998. 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, 1998. Actual Required Excess Amount/Percent Amount/Percent Amount/Percent -------------- -------------- -------------- (Dollars in Thousands) Tangible Equity ............ $11,906/09.05% $2,631/2.00% $9,275/07.05% Core Leverage Capital ...... $11,906/09.05% $5,262/4.00% $6,644/05.05% Risk-based Capital ......... $12,185/25.20% $3,869/8.00% $8,316/17.20% 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 four 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 September 30, 1998 was 49.45%. 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 the date of purchase are considered cash equivalents. Cash and cash equivalents for the periods ended September 30, 1998 and 1997 were $10,546,795 and $7,158,958, respectively. The increase was primarily due to an increase from the sale of investment securities partially offset by a reduction in deposit flows. 9 Net cash provided by financing activities decreased from $13,158,756 for the six months ended September 30, 1997 compared to $11,298,457 for the six months ended September 30, 1998. The decrease was primarily due to a reduction in net increase in savings deposits of $3.8 million, reduced proceeds from FHLB advances in the amount of $1.5 million, offset by a $4.5 million reduction in repayments of FHLB advances. RECENT ACCOUNTING DEVELOPMENTS - ------------------------------ The Financial Accounting Standards Board (FASB) issued SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, in June 1998. SFAS No. 133 establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. It requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. This statement is effective for all fiscal quarters of fiscal years beginning after June 15, 1999, however, in accordance with the provision of the statement, the Company has chosen to apply the provisions of the statement as of July 1, 1998. At the date of initial application, the Company transferred all of its held-to-maturity securities to the available-for-sale category. Accordingly, all unrealized holding gains or losses at the date of transfer were recognized in a separate component of stockholders' equity and other comprehensive income. YEAR 2000 COMPLIANCE - -------------------- The Company utilizes and is dependent upon data processing systems and software to conduct its business. The data processing systems and software include those developed and maintained by the Company's data processor and purchased software which is run on in-house computer networks. In 1997 the Company initiated a review and assessment of all hardware and software to confirm that it will function properly in the year 2000. The Company's data processor has announced the completion of all mainframe application and personal computer based enhancements required for Year 2000 processing and for testing. The Company will verify the results of testing in the quarter ending December 31, 1998. The Company has incurred costs of approximately $7,000 for testing to date and anticipates only minimal additional costs. The data processor will conduct terminal/network connectivity testing with the Company in the first quarter of 1999. The Company has recently purchased Year 2000 compliant personal computers for the teller system in the current year at a cost of approximately $75,000. Additional costs of approximately $7,000 are anticipated to complete the system. The equipment replaced obsolete teller equipment. The Company estimates the total remaining costs to ensure Year 2000 compliance to be approximately $10,000. The Company has reviewed the commercial loan portfolio and does not believe there is potential risk of repayment with any of the loans due to the failure of the businesses. The Company's estimate of Year 2000 project costs and dates set forth above by which certain phases of the project are expected to be completed are based on management's best current estimate. Actual results could differ from those estimated. The failure to correct material Year 2000 problems could result in an interruption in, or failure of, certain normal business activities or operations. Such failures could materially and adversely affect the Company's results of operations, liquidity and financial condition. Due to the uncertainty inherent in the Year 2000 problem, the Company, at this time, is unable to determine whether the consequences of Year 2000 failure will have a material impact on the Company's results of operations, liquidity and financial condition. The Company believes it will significantly reduce the possibility of significant interruptions or failures with the completion of the Year 2000 project as scheduled. Hardin Bancorp, Inc. continues to make progress toward Year 2000 compliancy and has contingency plans, which include converting to another currently compliant platform of the present data processor or operating on a manual basis, should other third party vendors prove non-compliant. 10 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 23, 1998, the annual meeting of stockholders was held at Hardin Federal Savings Bank, located at 200 North Spartan Drive, Richmond, 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 three directors of the Company for three year terms. David K. Hatfield received 726,572 votes for and 10,263 votes were withheld. William L. Homan received 727,222 votes for, and 9,613 votes were withheld. W. Levan Thurman received 726,572 votes for, and 10,263 votes were withheld. 2. The ratification of the appointment of KPMG Peat Marwick LLP as the auditors of the Company for the fiscal year ending March 31, 1999. Votes for KPMG Peat Marwick LLP were 712,066, votes against were 4,569 and votes abstaining were 5,200. Item 5. Other Information ----------------- On September 17, 1998, the Company's Board of Directors authorized the purchase of 81,639 shares of the Company's common stock to be acquired over the next twelve months and notified the Office of Thrift Supervision (OTS) in compliance with OTS regulations. As of September 30, 1998, the Company held 241,608 shares of it common stock as treasury stock at an aggregate purchase price of $3,373,339. On September 17, 1998 the Board of Directors declared a $.15 per share cash dividend to all stockholders of record on October 2, 1998, payable on October 16, 1998. Item 6. Exhibits and Reports on Form 8-K -------------------------------- Exhibits: 27 -- Financial Data Schedule Reports on Form 8-K: None. 11 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 16, 1998 /s/ Robert W. King ----------------- ----------------------------------- Robert W. King, President and Chief Executive Officer (Duly Authorized Officer) Date: November 16, 1998 /s/ Karen K. Blankenship ----------------- ----------------------------------- Karen K. Blankenship, Senior Vice President and Secretary (Principal Accounting Officer) 12 EX-27 2 FINANCIAL DATA SCHEDULE
9 1,000 6-MOS MAR-31-1999 SEP-30-1998 885 9,661 0 0 50,095 0 0 67,557 279 132,997 78,767 39,000 1,539 0 0 0 11 13,461 132,997 2,666 1,692 157 4,515 1,962 2,967 1,548 31 131 1,232 670 670 0 0 430 .56 .54 7.01 194 0 0 389 248 31 0 279 185 0 94
-----END PRIVACY-ENHANCED MESSAGE-----