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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
450 5TH STREET, N.W.
WASHINGTON, D. C. 20549
FORM 10-QSB
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1996
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 January 31, 1997
Common Stock, par value $.01 per share 760,437 Shares
<PAGE>
JOACHIM BANCORP, INC. AND SUBSIDIARY
FORM 10-QSB
FOR THE QUARTER ENDED DECEMBER 31, 1996
INDEX
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<CAPTION>
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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Consolidated Balance Sheets
(Unaudited)
<CAPTION>
December 31, March 31,
Assets 1996 1996
<S> <C> <C>
Cash and cash equivalents $ 1,824,485 5,384,802
Certificates of deposit 2,552,231 1,300,242
Securities held to maturity, at amortized cost (market value of
$4,777,997 and $5,266,825, respectively) 4,795,409 5,298,854
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 $847,125 and $861,705, respectively) 853,869 873,599
Loans receivable, net 24,026,974 22,932,379
Premises and equipment, net 350,975 365,101
Foreclosed real estate held for sale, net 100,816 -
Accrued interest receivable:
Securities and certificates of deposit 152,454 120,420
Mortgage-backed and related securities 4,734 4,850
Loans receivable 131,283 126,240
Other assets, including prepaid income taxes of $3,888 and
$34,580, respectively) 28,727 84,364
Total assets $ 35,110,457 36,779,351
Liabilities and Stockholders' Equity
Deposits $ 24,064,009 25,644,434
Accrued interest on deposits 19,158 26,644
Advances from borrowers for taxes and insurance 47,495 128,166
Other liabilities 130,864 80,762
Deferred tax liability 148,000 148,000
Total liabilities 24,409,526 26,028,006
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 and outstanding 7,604 7,604
Additional paid-in capital 7,098,540 7,077,876
Common stock acquired by ESOP (470,863) (538,130)
Retained earnings - substantially restricted 4,065,650 4,203,995
Total stockholders' equity 10,700,931 10,751,345
Total liabilities and stockholders' equity $ 35,110,457 36,779,351
See accompanying notes to consolidated financial statements.
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<PAGE>1
<TABLE>
Consolidated Statements of Earnings
(Unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
December 31, December 31,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Interest income:
Loans receivable $ 480,070 459,212 1,417,960 1,368,787
Mortgage-backed and related securities 13,824 2,368 41,891 7,252
Securities 70,463 44,509 217,558 123,270
Other interest-earning assets 65,877 90,670 230,375 208,648
Total interest income 630,234 596,759 1,907,784 1,707,957
Interest expense - deposits 265,083 313,262 810,345 881,209
Net interest income 365,151 283,497 1,097,439 826,748
Provision for loan losses 2,000 3,000 5,500 10,087
Net interest income after provision
for loan losses 363,151 280,497 1,091,939 816,661
Noninterest income:
Loan service charges 5,198 5,374 19,736 15,878
NOW service charges 4,944 5,884 17,030 17,387
Rental income from foreclosed real estate, net - (2,472) - (8,307)
Gain on investment in data center - - 12,668 -
Other 1,756 1,491 4,329 18,796
Total noninterest income 11,898 10,277 53,763 43,754
Noninterest expense:
Compensation and benefits 180,093 144,025 532,275 409,854
Occupancy expense 5,153 6,316 15,746 18,897
Equipment and data processing expense 17,780 20,234 57,283 58,636
Loss (gain) on foreclosed real estate, net - 1,175 - (2,204)
SAIF deposit insurance premium 14,503 15,005 210,839 44,005
Professional fees 13,206 7,093 54,523 24,342
Other 27,520 27,979 87,072 69,798
Total noninterest expense 258,255 221,827 957,738 623,328
Earnings before income taxes 116,794 68,947 187,964 237,087
Income taxes 40,325 22,900 61,325 79,500
Net earnings $ 76,469 46,047 126,639 157,587
Net earnings per share $ .11 * .18 *
Weighted-average shares outstanding 714,507 * 716,734 *
Dividends per share $ .125 .00 .375 .00
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* Not meaningful since the common stock was issued on December 27, 1995.
See accompanying notes to consolidated financial statements.
<PAGE>3
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Consolidated Statements of Cash Flows
(Unaudited)
<CAPTION>
Nine Months Ended
December 31,
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 126,639 157,587
Adjustments to reconcile net earnings to net cash
provided by (used for) operating activities:
Depreciation 20,685 23,054
Provision for loan losses 5,500 10,087
(Gain) loss on foreclosed real estate, net - (2,204)
Amortization of premiums (discounts), net on securities 3,445 5,048
Interest credited to certificate of deposit (1,989) -
ESOP expense 87,931 5,000
MRP expense 51,105 -
FHLB stock dividend - (5,700)
Decrease (increase) in:
Accrued interest receivable (36,961) (75,860)
Other assets 55,637 51,373
Increase (decrease) in:
Accrued interest on deposits (7,486) 4,459
Other liabilities (1,003) 54,003
Accrued income taxes - 12,194
Net cash provided by (used for) operating activities 303,503 239,041
Cash flows from investing activities:
Loans:
Originated (3,572,775) (3,382,918)
Purchased (1,337,688) -
Principal collections 3,709,552 4,011,869
Principal collections on mortgage-backed securities held to maturity 19,730 7,764
Securities held to maturity:
Purchased - (500,000)
Proceeds from maturity 500,000 490,907
Certificates of deposit:
Purchased (2,500,000) (2,000,000)
Proceeds from maturity 1,250,000 500,000
Purchase of premises and equipment (6,559) (6,328)
Proceeds from sale of foreclosed real estate, net - (19,206)
Net cash provided by (used for) investing activities (1,937,740) (897,912)
Cash flows from financing activities:
Net increase (decrease) in:
Deposits (1,580,425) (143,271)
Advances from borrowers for taxes and insurance (80,671) (134,967)
Cash dividends (264,984) -
Proceeds from sale of common stock - 6,465,575
Net cash provided by (used for) financing activities (1,926,080) 6,187,337
Net increase (decrease) in cash and cash equivalents (3,560,317) 5,528,466
Cash and cash equivalents at beginning of period 5,384,802 2,978,861
Cash and cash equivalents at end of period $ 1,824,485 8,507,327
Supplemental schedule of cash flow information:
Cash paid during the year for:
Interest on deposits $ 817,831 876,750
Income taxes 24,000 17,615
Real estate acquired in settlement of loans $ 100,816 -
See accompanying notes to consolidated financial statements.
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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, 1996 contained in the Annual Report to stockholders and
as an exhibit filed with Form 10-KSB.
(2) On July 17, 1996, the stockholders of Joachim Bancorp, Inc. ratified the 1996 Stock Option Plan.
Of the 76,044 shares reserved for issuance under the Stock Option Plan, 60,839 shares were
awarded in July, 1996, and the remainder are available for future awards. The stock options were
awarded at $12.3125 per share which was equal to the average selling price of the Company's
common stock on the NASDAQ exchange on the day prior to the date of grant.
On July 17, 1996, the stockholders ratified the 1996 Management Recognition and Development
Plan (MRP). All 30,417 shares under the MRP were awarded in July, 1996 to directors, executive
officers and employees. During January, 1997, the Company repurchased 30,417 shares of its
common stock at $14.3125 per share for the MRP.
<PAGE>5
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.
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, should the need for additional funds be required.
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 24% at December 31, 1996.
The savings and loan industry historically has accepted interest rate risk as a part of its operating
philosophy. Long-term, fixed-rate loans were funded with deposits which adjust to market interest
rates more frequently. Since the early 1980's, the Association has originated primarily adjustable-rate
mortgage loans in order to reduce interest-rate risk exposure.
The Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA) requires that the
Association maintain core capital equal to 3% of adjusted total assets and maintain tangible capital
equal to 1.5% of adjusted total assets. The Association must maintain an 8% risk-based capital.
<PAGE>6
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The following table presents the Association's capital position relative to
its regulatory capital requirements under FIRREA at December 31, 1996:
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<CAPTION>
Unaudited Regulatory Capital
Tangible Core Risk-Based
<S> <C> <C> <C>
Stockholders' equity per consolidated
financial statements $ 10,700,931 10,700,931 10,700,931
Stockholders' equity of Joachim Bancorp, Inc. not
available for regulatory capital purposes (3,274,264) (3,274,264) (3,274,264)
GAAP capital 7,426,667 7,426,667 7,426,667
General valuation allowances - - 75,094
Regulatory capital 7,426,667 7,426,667 7,501,761
Regulatory capital requirement (484,975) (969,950) (1,308,080)
Regulatory capital - excess $ 6,941,692 6,456,717 6,193,681
Regulatory capital ratio 22.97% 22.97% 45.88%
Regulatory capital requirement (1.50) (3.00) (8.00)
Regulatory capital ratio - excess 21.47% 19.97% 37.88%
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Commitments to originate adjustable-rate mortgage loans at December 31, 1996 were approximately
$160,000. There were no commitments to originate fixed-rate mortgage loans at December 31,
1996.
Financial Condition
Cash and cash equivalents and principal collections on loans were used to purchase certificates of
deposit, fund loan originations and purchases and deposit outflows. Components of interest-bearing
assets vary from time to time due to the availability and interest rates of short-term interest-bearing
investments, securities, mortgage-backed securities and loans. Foreclosed real estate held for sale
consists of one single-family loan made to a builder. Estimated completion cost for the home is
approximately $25,000. No loss is anticipated on the sale of the property. Other assets decreased
due to the timing of Federal income tax payments and timing of payment of certain prepaid items.
Advances by borrowers for taxes and insurance decreased due to seasonal factors. Real estate taxes
are paid on behalf of borrowers in December of each year. Other liabilities increased due primarily
to accrued MRP expense of $51,100.
Asset Quality
Loans are generally placed on a nonaccrual status when contractually delinquent more than ninety
days. Nonaccrual loans amounted to approximately $160,000, or 0.67% of net loans receivable, at
December 31, 1996. Nonaccrual loans at December 31, 1996 consists of five loans. Management
of the Company does not believe that the increase in nonaccrual loans is related to any adverse
economic trends.
Results of Operations
Net Earnings
Net earnings increased from $46,000 for the three months ended December 31, 1995 to $76,000
for the three months ended December 31, 1996. Net earnings decreased from $158,000 for the nine
months ended December 31, 1995 to $127,000 for the nine months ended December 31, 1996.
The decrease for the nine month period was due to a non-recurring, SAIF special assessment of
$167,000 recorded during the quarter ended September 30, 1996 and higher noninterest expenses,
<PAGE>7
offset by higher net interest income, higher noninterest income and lower income taxes. The
increase for the three month period was due to higher net interest income offset by higher
noninterest expenses and higher income taxes.
Net Interest Income
Net interest income increased from $284,000 for the three months ended December 31, 1995 to
$365,000 for the three months ended December 31, 1996. Net interest income increased from
$827,000 for the nine months ended December 31, 1995 to $1,097,000 for the nine months ended
December 31, 1996. The increase in net interest income for both comparative periods was due to
a higher ratio of average interest-earning assets to average interest-bearing liabilities which more than
offset the effect of a lower interest rate spread. The higher ratio was due primarily to proceeds from
sale of common stock on December 27, 1995. Interest on loans receivable increased due to a higher
average balance, offset by a decrease in the average yield. During February and March, 1996, the
Association purchased $1.4 million of loan participations on one to four family and commercial real
estate loans in Missouri. During the nine months ended December 31, 1996 the Association
purchased $1.3 million of loans secured by single family residences in the state of Missouri.
Interest on mortgage-backed and related securities, interest on securities and interest on other
interest-earning assets increased as a result of investment of proceeds from sale of common stock.
Interest on deposits decreased as the average balances and rates decreased from the 1995 to 1996
periods. The decrease in deposits is due to several factors, including local competition, competition
from other financial instruments, and interest rate management of the Association.
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 $3,000 and $2,000
for the three month periods ended December 31, 1995 and 1996, respectively, as compared to
$10,000 and $5,500 for the nine month periods ended December 31, 1995 and 1996, respectively.
Noninterest Income
Noninterest income increased from $10,000 for the three months ended December 31, 1995 to
$12,000 for the three months ended December 31, 1996. Noninterest income increased from
$44,000 for the nine months ended December 31, 1995 to $54,000 for the nine months ended
December 31, 1996. Other noninterest income for the nine months ended December 31, 1995
included a one-time patronage dividend of $14,500. During the three months ended June 30, 1996,
the Association recognized income of $13,000 as a result of the sale of assets by its data processing
service bureau. Loan service charges include a prepayment penalty income of $4,500 on a
participation loan in the nine months ended December 31, 1996. The Association had incurred net
rental expense of $8,000 for the nine months ended December 31, 1995 related to foreclosed real
estate which was sold during that period.
<PAGE>8
Noninterest Expense
Noninterest expense increased from $222,000 for the three months ended December 31, 1995 to
$258,000 for the three months ended December 31, 1996. Noninterest expense increased from
$623,000 for the nine months ended December 31, 1995 to $958,000 for the nine months ended
December 31, 1996. Compensation and benefits expense increased for the three and nine months
ended December 31, 1996 due to the implementation of the Association's ESOP and MRP plans.
ESOP plan expense was $32,000 and $88,000 for the three and nine months ended December 31,
1996 compared to $5,000 in the three and nine months ended December 31, 1995 periods. Under
generally accepted accounting principles, expense of the ESOP is affected by changes in the market
price of the Company's stock. MRP plan expense was $18,000 and $51,000 for the three and nine
months ended December 31, 1996 compared to none in the corresponding 1995 periods. MRP
expense includes $18,500 related to the accelerated vesting of shares upon the death of a director.
SAIF deposit insurance premium increased substantially due to recording of the non-recurring, SAIF
special assessment of $167,000 during the three months ended September 30, 1996. Recurring
SAIF assessments are expected to be lower effective January 1, 1997. Professional fees and other
noninterest expense increased due to costs incurred operating as a public company. These costs
included legal expenses incurred with filing of the Company's annual report and attendance of annual
meeting, printing costs of the annual report, and stock registrar expenses.
Income Taxes
Income taxes fluctuated due to the level of earnings before income taxes.
<PAGE>8
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
None.
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.
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: February 10, 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
<S>
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<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 1-MO
<FISCAL-YEAR-END> MAR-30-1997
<PERIOD-END> DEC-31-1996
<CASH> 1,824,485
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 4,795,409
<INVESTMENTS-MARKET> 0
<LOANS> 24,026,974
<ALLOWANCE> 75,094
<TOTAL-ASSETS> 35,110,457
<DEPOSITS> 24,064,009
<SHORT-TERM> 0
<LIABILITIES-OTHER> 345,517
<LONG-TERM> 0
0
0
<COMMON> 8
<OTHER-SE> 10,700,923
<TOTAL-LIABILITIES-AND-EQUITY> 35,110,457
<INTEREST-LOAN> 1,459,851
<INTEREST-INVEST> 217,558
<INTEREST-OTHER> 230,375
<INTEREST-TOTAL> 1,907,784
<INTEREST-DEPOSIT> 810,345
<INTEREST-EXPENSE> 0
<INTEREST-INCOME-NET> 1,097,439
<LOAN-LOSSES> 5,500
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 957,738
<INCOME-PRETAX> 187,964
<INCOME-PRE-EXTRAORDINARY> 187,964
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 126,639
<EPS-PRIMARY> .18
<EPS-DILUTED> .18
<YIELD-ACTUAL> 0
<LOANS-NON> 160,000
<LOANS-PAST> 160,000
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 72,000
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 75,094
<ALLOWANCE-DOMESTIC> 75,094
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 75,094
</TABLE>
