UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
450 5TH STREET, N.W.
WASHINGTON, D.C. 20549
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FORM 10-QSB
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 1997
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to Commission File No. 0-27154
JOACHIM BANCORP, INC.
(Exact name of registrant as specified in its charter)
Missouri 43-1721475
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
De Soto Plaza, De Soto, Missouri 63020
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (314) 586-8821
Not applicable
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X . No .
Indicate the number of shares outstanding of the issuer's classes of common
stock, as of the latest practicable date.
Class Outstanding October 31, 1997
Common Stock, par value $.01 per share 722,415 Shares
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JOACHIM BANCORP, INC. AND SUBSIDIARY
FORM 10-QSB
FOR THE QUARTER ENDED SEPTEMBER 30, 1997
INDEX
PAGE NO.
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PART I - Financial Information (Unaudited)
Consolidated Balance Sheets 1
Consolidated Statements of Earnings 2
Consolidated Statements of Cash Flows 3
Notes to Consolidated Financial Statements 4
Management's Discussion and Analysis of
Financial Condition and Results of Operations 5
PART II - Other Information 9
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JOACHIM BANCORP, INC. AND SUBSIDIARY
Consolidated Balance Sheets
(Unaudited)
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September 30, March 31,
Assets 1997 1997
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Cash and cash equivalents $ 3,020,220 2,091,535
Certificates of deposit 1,143,427 3,052,899
Securities held to maturity, at amortized cost (market value of
$4,413,059 and $4,746,611, respectively) 4,415,282 4,793,178
Stock in Federal Home Loan Bank of Des Moines 288,500 288,500
Mortgage-backed and related securities held to maturity, at
amortized cost (market value of $834,663 and $820,499,
respectively) 834,663 840,127
Loans receivable, net 24,624,133 23,771,636
Premises and equipment, net 472,915 358,133
Foreclosed real estate held for sale, net - 126,104
Accrued interest receivable:
Securities and certificates of deposit 88,001 170,483
Mortgage-backed and related securities 4,621 4,651
Loans receivable 147,038 132,476
Other assets 34,694 26,624
Total assets $ 35,073,494 35,656,346
Liabilities and Stockholders' Equity
Deposits $ 24,616,652 24,825,297
Accrued interest on deposits 23,210 25,137
Advances from borrowers for taxes and insurance 246,134 122,711
Other liabilities 104,343 143,890
Income taxes payable 213,157 204,842
Total liabilities 25,203,496 25,321,877
Commitments and contingencies
Stockholders' equity;
Preferred stock, $.01 par value; 1,000,000 shares
authorized; none issued and outstanding - -
Common stock, $.01 par value; 5,000,000 shares authorized;
760,437 shares issued 7,604 7,604
Additional paid-in capital 7,067,986 7,047,500
Common stock acquired by ESOP (403,595) (448,440)
Common stock acquired by MRDP (270,037) (305,615)
Treasury stock, at cost, 38,022 shares (544,190) -
Retained earnings - substantially restricted 4,012,230 4,033,420
Total stockholders' equity 9,869,998 10,334,469
Total liabilities and stockholders' equity $ 35,073,494 35,656,346
See accompanying notes to consolidated financial statements.
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JOACHIM BANCORP, INC. AND SUBSIDIARY
Consolidated Statements of Earnings
(Unaudited)
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Three Months Ended Six Months Ended
September 30, September 30,
1997 1996 1997 1996
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Interest income:
Loans receivable $ 497,307 469,666 989,696 937,890
Mortgage-backed and related securities 13,486 13,941 27,017 28,067
Securities 69,678 72,826 140,592 147,095
Other interest-earning assets 52,871 80,044 110,917 164,498
Total interest income 633,342 636,477 1,268,222 1,277,550
Interest expense on deposits 274,418 270,479 543,553 545,262
Net interest income 358,924 365,998 724,669 732,288
Provision for loan losses 1,500 2,000 4,641 3,500
Net interest income after
provision for loan losses 357,424 363,998 720,028 728,788
Noninterest income:
Loan service charges 4,982 4,754 9,747 14,538
NOW service charges 4,640 5,397 9,331 12,086
Gain on investment in data center - - - 12,668
Other 3,321 1,297 3,994 2,573
Total noninterest income 12,943 11,448 23,072 41,865
Noninterest expense:
Compensation and benefits 194,863 194,749 377,675 352,182
Occupancy expense 5,977 6,186 10,856 10,593
Equipment and data processing expense 18,026 19,162 36,323 39,503
Loss (gain) on foreclosed real estate, net - - (7,387) -
SAIF deposit insurance premium 3,896 14,705 7,781 29,190
SAIF deposit special assessment - 167,146 - 167,146
Professional services 20,103 26,553 38,879 41,317
Other 22,276 32,988 41,829 59,552
Total noninterest expense 265,141 461,489 505,956 699,483
Earnings before income taxes 105,226 (86,043) 237,144 71,170
Income taxes 39,040 (35,260) 88,940 21,000
Net earnings $ 66,186 (50,783) 148,204 50,170
Net earnings per common share $ .09 (.07) .20 .07
Weighted-average shares outstanding 729,843 710,573 723,694 712,280
Dividends per share $ .125 .125 .25 .25
See accompanying notes to consolidated financial statements.
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JOACHIM BANCORP,INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows
(Unaudited)
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Six Months Ended
September 30,
1997 1996
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Cash flows from operating activities:
Net earnings $ 148,204 50,170
Adjustments to reconcile net earnings to net cash provided by
(used for) operating activities:
Depreciation expense 11,498 14,791
ESOP expense 65,331 56,056
MRDP expense 35,578 33,316
Amortization of premiums (discounts), net on securities and MBS 2,896 796
Provision for loan losses 4,641 3,500
Loss (gain) on foreclosed real estate, net (7,387) -
Decrease (increase) in:
Accrued interest receivable 67,950 7,247
Other assets (8,070) (9,829)
Increase (decrease) in:
Accrued interest on deposits (1,927) (3,366)
Other liabilities (39,547) 194,104
Income taxes payable 8,315 -
Other, net (1,240) -
Net cash provided by (used for) operating activities 286,242 346,785
Cash flows from investing activities:
Loans receivable:
Originated (2,878,580) (3,215,548)
Principal collections 1,992,610 2,546,103
Principal collections on mortgage-backed and related securities 5,464 16,933
Securities held to maturity:
Proceeds from maturity 375,000 250,000
Certificates of deposit:
Purchased (600,000) (1,750,000)
Proceeds from maturity 2,510,712 500,000
Purchases of premises and equipment (126,280) (2,122)
Proceeds from sale of (additions to) foreclosed real estate, net 162,323 -
Net cash provided by (used for) investing activities 1,441,249 (1,654,634)
Cash flows from financing activities:
Net increase (decrease) in:
Deposits (208,645) (919,422)
Advances from borrowers for taxes and insurance 123,423 113,261
Purchase of treasury stock (544,190) -
Cash dividends (169,394) (176,657)
Net cash provided by (used for) financing activities (798,806) (982,818)
Net increase (decrease) in cash and cash equivalents 928,685 (2,290,667)
Cash and cash equivalents at beginning of period 2,091,535 5,384,802
Cash and cash equivalents at end of period $ 3,020,220 3,094,135
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest on deposits $ 545,480 548,628
Income taxes $ 86,086 24,000
Real estate acquired in settlement of loans $ 28,832 -
See accompanying notes to consolidated financial statements.
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JOACHIM BANCORP,INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(1) The information contained in the accompanying consolidated financial statements is unaudited.
In the opinion of management, the financial statements contain all adjustments (none of which
were other than normal recurring entries) necessary for a fair statement of the results of operations
for the interim periods. The results of operations for the interim periods are not necessarily
indicative of the results which may be expected for the entire fiscal year. The accompanying
consolidated financial statements should be read in conjunction with the consolidated financial
statements for the year ended March 31, 1997 contained in the Annual Report to stockholders and
as an exhibit filed with Form 10-KSB.
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JOACHIM BANCORP,INC. AND SUBSIDIARY
Management's Discussion and Analysis of
Financial Condition and Results of Operations
General
On December 27, 1995, Joachim Federal Savings and Loan Association (Association) converted from
mutual to stock form and became a wholly-owned subsidiary of a newly formed Missouri holding
company, Joachim Bancorp, Inc. (Company). The Company has no significant assets other than
common stock of the Association, the loan to the ESOP and net proceeds retained by the Company
following the conversion. The Company's principal business is the business of the Association.
Therefore, the discussion in the Management's Discussion and Analysis of Financial Condition and
Results of Operations relates to the Association and its operations.
Certain statements in this report which relate to the Company's plans, objectives or future performance
may be deemed to be forward-looking statements within the meaning of Private Securities Litigation
Act of 1995. Such statements are based on management's current expectations. Actual strategies
and results in future periods may differ materially from those currently expected because of various
risks and uncertainties. Additional discussion of factors affecting the Company's business and
prospects is contained in periodic filings with the Securities and Exchange Commission.
During the quarter ended September 30, 1997, Mrs. Margaret Smith and Mr. Andrew England changed
from director to director emeritus status. Effective October 16, 1997, the bylaws were amended
reducing the number of directors from seven to five.
Year 2000
The Association is reviewing computer applications with its outside data processing service bureau and
other software vendors to ensure operational and financial systems are not adversely affected by "year
2000" software failures. All major customer applications are processed through the outside service
bureau. The service bureau has indicated that it expects to modify existing programs to make them
year 2000 compliant. Management of the Association is unable to estimate any additional expense
related to this issue. Any year 2000 compliance failures could result in additional expense to the
Association.
Liquidity and Capital Resources
The Association's principal sources of funds are cash receipts from deposits, loan repayments by
borrowers and net earnings. The Association has an agreement with the Federal Home Loan Bank of
Des Moines to provide cash advances.
For regulatory purposes, liquidity is measured as a ratio of cash and certain investments to
withdrawable deposits. The minimum level of liquidity required by regulation is presently 5%. The
Association's liquidity ratio was approximately 27% at September 30, 1997.
Since the early 1980's, the Association has originated primarily adjustable-rate mortgage loans in order
to reduce interest-rate risk exposure.
During May, 1997, the Company repurchased an additional 38,022 shares of treasury stock at a price
of $14.3125 per share. While the purchase of treasury stock may be beneficial to the Company or
shareholders, the purchase of treasury stock reduces interest-earning assets of the Company. Capital
of the Association may also be reduced to the extent treasury stock purchases are funded by dividends
from the Association to the Company.
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JOACHIM BANCORP,INC. AND SUBSIDIARY
The Association is required to maintain certain minimum capital requirements under OTS regulations.
Failure by a savings institution to meet minimum capital requirements can initiate certain actions by
regulators that, if undertaken, could have a direct material effect on the Bank's financial statements.
Under the capital adequacy guidelines and regulatory framework for prompt corrective action, the
Association must meet specific capital guidelines that involve quantitative measures of the
Association's assets, liabilities, and certain off-balance sheet items as calculated under regulatory
accounting practices.
The Association's actual and required capital amounts and ratios at September 30, 1997 are
summarized as follows:
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Minimum Required Minimum Required
for Capital to be "Well
Actual Adequacy Capitalized"
Amount Ratio Amount Ratio Amount Ratio
(Dollars in Thousands)
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Consolidated stockholders'
equity $ 9,870
Stockholders' equity of
Company $ (2,079)
Tangible capital $ 7,791 23.3% $ 501 1.5%
General valuation allowance $ 79
Total capital to risk-
weighted assets $ 7,870 46.5% $ 1,354 8.0% $ 1,692 10.0%
Tier 1 capital to risk
weighted-assets $ 7,791 46.0% $ 677 4.0% $ 1,015 6.0%
Tier 1 capital to total assets $ 7,791 23.3% $ 1,003 3.0% $ 1,671 5.0%
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Commitments to originate adjustable-rate and fixed-rate mortgage loans at September 30, 1997 were
approximately $122,000 and $137,000, respectively.
Financial Condition
Maturing certificates of deposit and principal collections on loans were used to fund purchase of
treasury shares, loan originations, deposit account withdrawals and an increase in cash and cash
equivalents. Premises and equipment increased due to remodeling costs. Estimated cost to complete
the remodeling of the Association's office building was approximately $15,000 at September 30, 1997.
Foreclosed real estate held for sale was sold during the quarter ended June 30, 1997 at a net gain of
$7,387. Accrued interest receivable decreased due to a substantial decrease in certificates of deposit
and the timing of collection of interest on securities. Accrued interest on mortgage loans increased due
to higher level of loans, lower nonaccrual loans, and higher interest rates on new loans. Advances from
borrowers for taxes and insurance increased due to seasonal factors. Real estate taxes are paid on
behalf of borrowers in December of each year. Other liabilities decreased due to the timing of payment
of certain accrual items.
Asset Quality
Loans are generally placed on a nonaccrual status when contractually delinquent more than ninety days.
Nonaccrual loans amounted to $69,000, or .28% of net loans receivable, at September 30, 1997.
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JOACHIM BANCORP,INC. AND SUBSIDIARY
Results of Operations
Net Earnings
Net earnings increased from a loss of $51,000 for the three months ended September 30, 1996 to net
earnings of $66,000 for the three months ended September 30, 1997. Net earnings increased from
$50,000 for the six months ended September 30, 1996 to $148,000 for the six months ended
September 30, 1997. The increases were primarily due to reduced SAIF deposit insurance premiums,
lower other noninterest expense, offset by higher income taxes.
Net Interest Income
Net interest income decreased slightly for both the three and six months ended September 30, 1997
as compared to the 1996 periods. Interest on loans receivable increased as both the average balance
and yield increased. The average balance increased from $23.2 million for the six months ended
September 30, 1996 to $24.3 million for the six months ended September 30, 1997. Interest on other
interest-earning assets decreased due primarily to a decline in the average balance from $5.7 million
for 1996 to $3.9 million for 1997. Components of interest income change from time to time based on
the availability, quality and interest rates on securities, MBSs and other interest-earning assets.
Provision for Loan Losses
Provision for loan losses is based upon management's consideration of economic conditions which may
affect the ability of borrowers to repay the loans. Management also reviews individual loans for which
full collectibility may not be reasonably assured and considers, among other matters, the risks inherent
in the Association's portfolio and the estimated fair value of the underlying collateral. This evaluation
is ongoing and results in variations in the Association's provision for loan losses. As a result of this
evaluation, the Association's provision for loan losses amounted to $2,000 and $3,500 for the three
and six month periods ended September 30, 1996, as compared to $1,500 and $4,641 for the three
and six month periods ended September 30, 1997.
Noninterest Income
Noninterest income increased from $11,000 for the three months ended September 30, 1996 to
$13,000 for the three months ended September 30, 1997. Noninterest income decreased from
$42,000 for the six months ended September 30, 1996 to $23,000 for the six months ended
September 30, 1997. During the six months ended September 30, 1996 the Association recognized
income of $13,000 as a result of the sale of assets of the Association's data processing service bureau.
In addition, the Association recognized prepayment penalty income of $4,500 on a participation loan.
Noninterest Expense
Noninterest expense decreased from $461,000 for the three months ended September 30, 1996 to
$265,000 for the three months ended September 30, 1997. Noninterest expense decreased from
$699,000 for the six months ended September 30, 1996 to $506,000 for the six months ended
September 30, 1997. Compensation and benefits expense increased for the six months ended
September 30, 1997 due primarily to an increase in the ESOP plan expense. ESOP plan expense was
$56,000 for the six months ended September 30, 1996 and $65,000 for the 1997 period. Under
generally accepted accounting principles, expense of the ESOP is affected by changes in the market
price of the Company's stock. The Association sold two foreclosed properties held for sale in the six
months ended September 30, 1997 at a net gain of $7,000. There were no sales in the comparable
1996 period. The 1996 periods included a special one-time SAIF deposit insurance assessment of
$167,000. In addition, subsequent to the September 30, 1996 special SAIF assessment, the
Association's recurring SAIF premiums are assessable at a lower rate. Professional services and other
expenses decreased since the 1996 periods reflect initial filings for stock benefit plans. Other expenses
in 1997 also reflects lower industry convention expenses.
Income Taxes
Income taxes increased due to the level of earnings before income taxes.
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JOACHIM BANCORP, INC. AND SUBSIDIARY
PART II - Other Information
Item 1 - Legal Proceeding
There are no material legal proceedings to which the Holding Company or the Association is a party
or of which any of their property is subject. From time to time, the Association is a party to
various legal proceedings incident to its business.
Item 2 - Changes in Securities
None.
Item 3 - Defaults upon Senior Securities
Not applicable.
Item 4 - Submission of Matters to a Vote of Security Holders
(a) On July 16, 1997, the Company held its Annual Meeting of Stockholders.
(b) At the meeting Margaret F. Smith and James H. Wilkins were elected for terms to expire in
2000. Lee Ellen Hogan was elected with a term to expire in 1999.
(c) Stockholders voted on the following matters:
(i) The election of the following directors of the Company:
DIRECTOR: FOR WITHHELD
Margaret F. Smith 577,539 7,000
James H. Wilkins 577,589 6,950
Lee Ellen Hogan 582,059 2,500
(ii) The ratification of the appointment of Michael Trokey & Company, P.C. as auditors for
the Company for the fiscal year ended March 31, 1998:
VOTES: FOR AGAINST ABSTAIN NON-VOTES
584,539 583,939 100 500 -
Item 5 - Other Information
None.
Item 6 - Exhibits and Reports on Form 8-K.
(a) Exhibits: none
(b) Reports on Form 8-K: No reports on Form 8-K have been filed during the quarter for which
this report is filed.
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JOACHIM BANCORP, INC. AND SUBSIDIARY
PART II - Other Information
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned thereunto duly authorized.
JOACHIM BANCORP, INC.
(Registrant)
DATE: November 5, 1997 BY: Bernard R. Westhoff
Bernard R. Westhoff, President and
Duly Authorized Officer
BY: Lee Ellen Hogan
Lee Ellen Hogan, Treasurer and
Chief Financial Officer
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