SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 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 number: 0-28510
HOME FINANCIAL BANCORP
(Exact name of registrant specified in its charter)
Indiana 35-1975585
- ---------------------------------------- ----------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
279 East Morgan Street
Spencer, Indiana 47460
(Address of principle executive offices,
including Zip Code)
(812) 829-2095
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 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 report), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
The number of shares of the Registrant's common stock, without par value,
outstanding as of May 1, 1997 was 485,926.
<PAGE>
Home Financial Bancorp
Form 10-Q
Index
PART I. FINANCIAL INFORMATION Page No.
Item 1. Financial Statements
Consolidated Condensed Statement of Financial
Condition as of March 31, 1997 and June 30, 1996 3
Consolidated Condensed Statement of Income for the three
months ended March 31, 1997 and 1996 4
Consolidated Condensed Statement of Income for the nine
months ended March 31, 1997 and 1996 5
Consolidated Condensed Statement of Changes in
Shareholders' Equity for the nine months ended March
31, 1997 and 1996 6
Consolidated Condensed Statement of Cash Flows for the
nine months ended March 31, 1997 and 1996 7
Notes to Consolidated Condensed Financial Statements 9
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations. 11
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 17
Item 4. Submission of Matters to a Vote of Security Holders 17
Item 6. Exhibits and Reports on Form 8-K 18
SIGNATURES 19
<PAGE>
HOME FINANCIAL BANCORP
AND WHOLLY-OWNED SUBSIDIARY
OWEN COMMUNITY BANK, s.b.
CONSOLIDATED CONDENSED STATEMENT OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
March 31, June 30,
1997 1996
------------ ------------
(Unaudited)
ASSETS
<S> <C> <C>
Cash $ 228,350 $ 385,824
Short-term interest-bearing deposits 2,410,143 5,334,796
------------ ------------
Total cash and cash equivalents 2,638,493 5,720,620
Investment securities available for sale 2,341,713 4,901,120
Loans 32,793,117 27,274,557
Allowance for loan losses (207,352) (149,833)
------------ ------------
Net loans 32,585,765 27,124,724
Real estate acquired for development 27,898 171,580
Premises and equipment 949,158 512,768
Stock in Federal Home Loan Bank 410,000 360,000
Other assets 490,355 635,499
Total assets $ 39,443,382 $ 39,426,311
============ ============
LIABILITIES
Deposits $ 23,980,077 $ 28,725,700
Federal Home Loan Bank advances 8,000,000 7,200,000
Other liabilities 116,418 90,539
Total liabilities 32,096,495 36,016,239
------------ ------------
SHAREHOLDERS' EQUITY Preferred stock, without par value:
Authorized and unissued - 2,000,000 shares - - - - - - - -
Common stock, without par value:
Authorized - 5,000,000 shares
Issued - 485,926 shares 4,528,294
Paid-in capital 13,945
Retained earnings 3,425,407 3,427,201
Unrealized gain (loss) on securities available for sale 29,287 (17,129)
Unearned Compensation RRP (275,663)
Unearned ESOP shares (374,383)
Total shareholders' equity 7,346,887 3,410,072
Total liabilities and shareholders' equity $ 39,443,382 $ 39,426,311
============ ============
</TABLE>
See notes to consolidated condensed financial statements.
<PAGE>
HOME FINANCIAL BANCORP
AND WHOLLY-OWNED SUBSIDIARY
OWEN COMMUNITY BANK, s.b.
CONSOLIDATED CONDENSED STATEMENT OF INCOME
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------------
1997 1996
-------- --------
(Unaudited)
Interest income
<S> <C> <C>
Loans $752,247 $670,613
Interest-bearing deposits 22,378 33,048
Investment securities 68,211 35,502
Tax-exempt investments 12,756 3,485
Other interest and dividend income 7,937 5,172
-------- --------
Total interest income 863,529 747,820
Interest expense
Deposits 290,331 318,385
Advances from Federal Home Loan Bank and
other borrowings 124,200 80,097
Total interest expense 414,531 398,482
-------- --------
Net interest income 448,999 349,338
Provision for losses on loans 17,000 21,000
Net interest income after provision for losses on loans 431,999 328,338
-------- --------
Noninterest income
Service charges on deposit accounts 10,493 9,331
Gain (loss) on sale of real estate acquired for
development 11,534 19,220
Gain (loss) on sales of securities available for sale 16,758 - - - -
Other income 6,508 6,547
Total noninterest income 45,293 35,098
-------- --------
Noninterest expenses
Salaries and employee benefits 165,575 101,902
Net occupancy expenses 17,836 17,111
Equipment expenses 14,477 18,037
Deposit insurance expense 3,671 12,840
Computer processing fees 18,089 15,846
Legal and accounting fees 59,124 8,353
Other expenses 68,656 70,306
Total noninterest expenses 347,428 244,395
-------- --------
Income before income taxes 129,864 119,041
Income tax expense 51,126 47,758
Net income $ 78,738 $ 71,283
======== ========
Net income per share $ .17 Not applicable
Average shares outstanding 466,111 Not applicable
</TABLE>
See notes to consolidated condensed financial statements.
<PAGE>
HOME FINANCIAL BANCORP
AND WHOLLY-OWNED SUBSIDIARY
OWEN COMMUNITY BANK, s.b.
CONSOLIDATED CONDENSED STATEMENT OF INCOME
<TABLE>
<CAPTION>
Nine Months Ended
March 31,
----------------------------
1997 1996
---------- ----------
(Unaudited)
Interest income
<S> <C> <C>
Loans $2,132,701 $1,993,937
Interest-bearing deposits 85,392 98,891
Investment securities 249,376 113,398
Tax-exempt investments 30,073 11,710
Other interest and dividend income 23,946 15,565
---------- ----------
Total interest income 2,521,488 2,233,501
Interest expense
Deposits 899,832 951,562
Advances from Federal Home Loan Bank and
other borrowings 336,720 244,066
Total interest expense 1,236,552 1,195,628
---------- ----------
Net interest income 1,284,936 1,037,873
Provision for losses on loans 59,500 63,500
Net interest income after provision for losses on loans 1,225,436 974,373
---------- ----------
Noninterest income
Service charges on deposit accounts 30,657 27,944
Gain on sale of real estate acquired for
development 15,793 37,861
Gain on sales of securities available for sale 1,851 - - - -
Other income 21,111 19,774
Total noninterest income 69,412 85,579
---------- ----------
Noninterest expenses
Salaries and employee benefits 363,958 276,957
Net occupancy expenses 53,056 52,106
Equipment expenses 39,978 39,981
Deposit insurance expense 160,611 38,155
Computer processing fees 49,743 42,630
Legal and accounting fees 133,986 24,693
Other expenses 234,374 210,972
Total noninterest expenses 1,035,706 685,494
---------- ----------
Income before income taxes 259,142 374,458
Income tax expense 104,391 149,028
Net income $ 154,751 $ 225,430
========== ==========
Net income per share $ .33 Not applicable
Average shares outstanding 466,176 Not applicable
</TABLE>
See notes to consolidated condensed financial statements.
<PAGE>
HOME FINANCIAL BANCORP
AND WHOLLY-OWNED SUBSIDIARY
OWEN COMMUNITY BANK, s.b.
CONSOLIDATED CONDENSED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
1997 1996
----------- -----------
(Unaudited)
Balance, July 1 $ 3,410,072 $ 3,159,162
Net income 154,751 225,430
Common stock issued in conversion, net of costs 4,728,294
Common stock repurchased and retired (310,000)
Contribution for unearned ESOP shares (404,740)
ESOP shares earned 44,302
Contribution for unearned RRP shares (290,172)
RRP shares earned 14,509
Cash dividends (46,545)
----------- -----------
----------- -----------
Net change in unrealized gain (loss) on securities
available for sale 46,416 (34,341)
----------- -----------
Balance, March 31 $ 7,346,887 $ 3,350,251
=========== ===========
See notes to consolidated condensed financial statements.
<PAGE>
HOME FINANCIAL BANCORP
AND WHOLLY-OWNED SUBSIDIARY
OWEN COMMUNITY BANK, s.b.
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Nine Months Ended
March 31,
--------------------------
1997 1996
----------- -----------
(Unaudited)
OPERATING ACTIVITIES
<S> <C> <C>
Net income $ 154,751 $ 225,430
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan losses 57,519 63,500
Depreciation 56,391 63,824
Investment securities losses 1,851
Change in interest receivable (10,665) (3,540)
Amortization of unearned ESOP shares 44,302
Amortization of unearned RRP shares 14,509
Other adjustments 113,471 116,358
----------- -----------
Net cash provided by operating activities 432,129 465,572
----------- -----------
INVESTING ACTIVITIES
Purchases of securities available for sale (3,094,744)
Proceeds from sales of securities available for sale 4,374,184 317,988
Proceeds from maturities and repayments of investment
securities available for sale 1,279,967 160,463
Proceeds from maturities and repayments of
investment securities held to maturity 93,833
Net changes in loans (5,518,560) (1,085,752)
Purchase of Federal Home Loan Bank of Indianapolis
stock (50,000) (10,000)
Proceeds from sale of premises and equipment 35,000
Purchases of premises and equipment (414,999) (195,347)
Purchase of real estate acquired for development (29,655)
Proceeds from sale of real estate acquired for
development 143,682 76,607
----------- -----------
Net cash used by investing activities (3,245,470) (671,873)
----------- -----------
FINANCING ACTIVITIES Net change in:
NOW and savings accounts (4,063,629) 505,121
Certificates of deposit (681,994) 2,376,246
Proceeds from Federal Home Loan Bank advances 2,300,000 200,000
Repayment of Federal Home Loan Bank advances (1,500,000)
Sale of common stock, net of costs 4,728,294
Contribution for unearned ESOP shares (404,740)
Contribution for unearned RRP shares (290,172)
Purchase of stock (310,000)
Cash dividends (46,545)
Other financing activities (126,306)
----------- -----------
Net cash used by financing activities (268,786) 2,955,061
----------- -----------
</TABLE>
<PAGE>
HOME FINANCIAL BANCORP
AND WHOLLY-OWNED SUBSIDIARY
OWEN COMMUNITY BANK, s.b.
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS (CON'D)
Nine Months Ended
March 31,
--------------------------
1997 1996
----------- -----------
(Unaudited)
NET CHANGE IN CASH AND CASH EQUIVALENTS
(3,082,127) 2,748,770
CASH AND CASH EQUIVALENTS, BEGINNING OF
PERIOD 5,720,620 1,385,979
----------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD
$ 2,638,493 $ 4,134,749
=========== ===========
ADDITIONAL CASH FLOWS AND
SUPPLEMENTARY INFORMATION
Interest paid $ 1,236,522 $ 1,195,628
Income tax paid 157,000 169,000
See notes to consolidated condensed financial statements.
<PAGE>
HOME FINANCIAL BANCORP
AND WHOLLY-OWNED SUBSIDIARY
OWEN COMMUNITY BANK, s.b.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
NOTE A: Basis of Presentation
The unaudited interim consolidated condensed financial statements include the
accounts of Home Financial Bancorp ("Company") and its subsidiary, Owen
Community Bank, s.b. ("Bank").
The unaudited interim consolidated condensed financial statements have been
prepared in accordance with the instructions to Form 10-Q and, therefore, do not
include all information and disclosures required by generally accepted
accounting principles for complete financial statements. The significant
accounting policies followed by the Company and Bank for interim financial
reporting are consistent with the accounting policies followed for annual
financial reporting. All adjustments, consisting of normal recurring
adjustments, which in the opinion of management are necessary for a fair
presentation of the results for the periods reported, have been included in the
accompanying consolidated financial statements. Financial and other data
contained herein prior to July 1, 1996 relates solely to the Bank (See Note B).
The results of operations for the nine months ended March 31, 1997 are not
necessarily indicative of those expected for the remainder of the year.
NOTE B: Conversion to State Stock Savings Bank
In October, 1995, the Board of Directors adopted a Plan of Conversion ("Plan")
to convert the Bank from a state-chartered mutual savings bank to a
state-chartered stock savings bank through amendment of its charter and the sale
of common stock to a holding company formed in connection with the conversion.
On July 1, 1996, the Bank completed the conversion and the formation of Home
Financial Bancorp as the holding company of the Bank. As part of the conversion,
the Company issued 505,926 shares of common stock at $10 per share of which
40,474 shares were issued to an Employee Stock Ownership Plan. Net proceeds of
the Company's stock issuance, after costs, were approximately $4,728,000 of
which $2,472,548 were used to acquire 100% of the stock and ownership of the
Bank. Costs associated with the conversion were deducted from the proceeds of
stock sold by the Company. The transaction was accounted for in a manner similar
to a pooling of interests. Since the Company did not commence operations until
July 1, 1996, financial and other data contained herein prior to July 1, 1996
relates solely to the Bank.
At the date of conversion, the Bank established a liquidation account of
$3,293,000 which equaled the Bank's retained earnings as of the most recent
financial statements, December 31, 1995, contained in the final conversion
prospectus. The liquidation account was established to provide a limited
priority claim to the assets of the Bank to qualifying depositors who continue
to maintain deposits in the Bank after conversion. In the unlikely event of a
complete liquidation of the Bank, and only in such event, qualifying depositors
would receive a liquidation distribution based on their proportionate share of
the then total remaining qualifying deposits.
The Company, subject to certain supervisory policies of the Board of Governors
of the Federal Reserve System and the Federal Deposit Insurance Corporation, may
pay dividends to its shareholders if its assets exceed its liabilities and it is
able to pay its debts as they come due. Current regulations allow the Bank to
pay dividends on its stock after the conversion if its regulatory capital would
not be reduced below the amount then required for the liquidation account, and
if those dividends do not exceed net profits of the Bank for the current year
plus those for the previous two years.
<PAGE>
NOTE C: Special Savings Association Insurance Fund Assessment
The deposits of the Bank are presently insured by the Savings Association
Insurance Fund ("SAIF"). A recapitalization plan for the SAIF was enacted in
late September 1996 which provided for a special assessment on substantially all
SAIF-insured institutions to enable the SAIF to achieve its required level of
reserves. The assessment of .657% was effected based on deposits as of March 31,
1995, and the Bank's special assessment was $142,457 before taxes. Accordingly,
this special assessment, which was recorded as a liability as of September 30,
1996 and was paid in November 1996, significantly increased other expenses and
adversely affected results of operations for the nine month period ended March
31, 1997.
NOTE D: Stock Benefit Plans
As part of the conversion, the Company established an Employee Stock Ownership
Plan ("ESOP") covering substantially all employees of the Bank. The ESOP
acquired 40,474 shares of the Company common stock at $10 per share in the
conversion with funds provided by the Company. Accordingly, the $404,740 of
common stock acquired by the ESOP is shown as a reduction of stockholders'
equity. Compensation expense is recorded equal to the fair market value of the
stock when contributions, which are determined annually by the Board of
Directors of the Bank, are made to the ESOP.
Also as part of the conversion, the Board of Directors approved a Recognition
and Retention Plan ("RRP"). Restricted stock awards covering up to 4% of the
common stock sold in the conversion may be awarded to the Bank's directors,
officers, and key employees under the RRP. In January 1997, the Company
purchased 20,237 shares amounting to $290,000 for the RRP. Accordingly,
shareholders equity was reduced by this amount. As the awards vest over a five
year period, expense will be recognized and equity increased.
Awards of 15,178 shares amounting to $218,000 were granted during the quarter.
Of that amount, $15,000 was earned and recorded as compensation expense.
<PAGE>
Item 2: Management's Discussion and Analysis of Financial Condition and Results
of Operations.
General
Home Financial Bancorp ("Company") is an Indiana corporation which was organized
in February 1996 to become a bank holding company upon its acquisition of all
the capital stock of Owen Community Bank, s.b. ("Bank") in connection with the
Bank's conversion from mutual to stock form. The Company became the Bank's
holding company at July 1, 1996. All historical financial and other data prior
to July 1, 1996 relates solely to the Bank. At March 31, 1997, the principal
asset of the Company consisted of 100% of the issued and outstanding shares of
common stock of the Bank. At that date, the Company had no material liabilities
and the Company had not conducted any material operations. As a result, the
consolidated condensed financial statements appearing herein and the following
discussion of results of operations relate primarily to the Bank.
The Bank has been, and continues to be, a community-oriented financial
institution offering selected financial services to meet the needs of the
communities it serves. The Bank attracts deposits from the general public and
historically has used such deposits, together with other funds, primarily to
originate one-to-four-family residential loans. The Bank also originates
commercial mortgage, consumer and, to a lesser extent, construction loans.
Through its only office located in Spencer, Indiana, the Bank serves communities
in Owen and surrounding counties.
BSF, Inc. ("BSF") is the wholly owned subsidiary of the Bank which engages in
purchasing and developing large tracts of real estate. After land is purchased,
BSF subdivides the real estate into lots, makes improvements such as streets and
sells individual lots, usually on contract. In connection with the Bank's
conversion to an Indiana mutual savings bank, the FDIC required the Bank to
cease BSF's land acquisitions, divest BSF's nonconforming real estate holdings
by November 16, 2000, and maintain the Bank's capital at levels sufficient to
classify the Bank as a well-capitalized institution. BSF has ceased land
acquisitions and is in process of divesting of its real estate holdings.
The Company's results of operations depend primarily upon the level of net
interest income, which is the difference between the interest income earned on
its interest-earning assets such as loans and investments, and the costs of the
Company's interest-bearing liabilities, primarily deposits and borrowings.
Results of operations are also dependent upon the level of the Company's
non-interest income, including fee income and service charges, and affected by
the level of its non-interest expenses, including its general and administrative
expenses.
Financial Condition
Total assets increased to $39,443,000 at March 31, 1997 compared to $39,426,000
at June 30, 1996. Cash and short-term interest bearing deposits decreased
approximately $3.1 million due primarily to the use of funds for lending
activities and acquisition of additional premises and equipment. At June 30,
1996, cash and short-term investments were unusually high as a result of funds
on deposit related to the conversion. Investment securities decreased $2.6
million and provided a source of funding for loans. Total loans increased $5.5
million as of March 31, 1997, compared to June 30, 1996, primarily due to
commercial real estate loans originated. Since June 30, 1996, premises and
equipment increased $436,000 to $949,000 at March 31, 1997. This increase was
due to the acquisition of real estate slated to be a future Owen Community Bank
branch site in the southern Putnam County town of Cloverdale, as well as
construction on future facilities adjacent to the Bank's existing main office in
Spencer. Total expenditures for the Cloverdale and adjacent locations are
estimated to be $658,000 and $450,000.
Since June 30, 1996, deposits decreased $4.7 million primarily due to the use of
customer deposits to fund
<PAGE>
conversion stock purchases. Borrowings at the Federal Home Loan Bank ("FHLB")
increased $800,000 to $8.0 million as of March 31, 1997. The additional
borrowings were used to fund loan originations.
The $3.9 million net increase in shareholders' equity during the nine months
ended March 31, 1997, was largely the result of stock issued by the Company to
complete the conversion process on July 1, 1996. During the recent quarter ended
March 31, 1997, the Company repurchased and retired 20,000 shares of common
stock pursuant to a 10% stock repurchase plan announced on March 10, 1997. Also
during the recently completed quarter, shares were purchased on the open market
for the purposes of the Company's recognition and retention plan and trust
("RRP"). The stock repurchase transaction reduced the level of shares
outstanding and the RRP related transaction reduced the level of total
shareholders' equity. Shareholders' equity stood at $7.3 million, or 18.6% of
total assets as of March 31, 1997. Book value at March 31, 1997 was $15.12 per
share based on 485,926 shares outstanding.
Comparison of Operating Results for the Three-Month Periods Ended March 31, 1997
and 1996
The Company reported net income of $79,000, or $.17 per share, for the
three-months ended March 31, 1997, compared to net income of $71,000 for the
three-month period ended March 31, 1996. The increase of $7,500, or 10.5%, was
primarily due to increased net interest income.
Net interest income before the provision for loan losses increased $100,000, or
28.5%, to $449,000 for the 1997 period, from $349,000 for the 1996 period. The
increase was primarily attributed to an increase in loans.
Management has established valuation allowances sufficient to absorb estimated
losses or exposure inherent in the Bank's asset structure. Adjustments to these
allowances reflect management's assessment of various risk factors which
include, but are not limited to changes in the type and volume of the lending
portfolio, level and trend of loan delinquencies, size of individual credit
exposure, and effectiveness of collection efforts. During the quarter ended
March 31, 1997, the provision for loan losses was $17,000, compared to $21,000
for the same period in 1996. At March 31, 1997, the allowance for loan losses
was .63% of total loans compared to .55% at June 30, 1996.
Total noninterest income increased $10,000 for the quarter ended March 31, 1997
compared to the same period in 1996. The increase primarily resulted from a net
gain on securities sold to fund loan demand. Management anticipates that gains
on the sale of real estate acquired for development will decrease in the future
and consequently contribute less to noninterest income. In connection with the
Bank's conversion to an Indiana stock savings bank, the FDIC required the Bank
to terminate this business activity by November, 2000.
Total noninterest expenses increased $103,000 to $347,000 for the 1997 quarter
compared to $244,000 for the 1996 quarter. Overall noninterest expense increased
despite a $9,000 decrease in deposit insurance expense for the three months
ended March 31, 1997, compared to the same period in 1996. This drop in deposit
insurance expense resulted from reduced FDIC premium rates associated with the
recapitalization of the Savings Association Insurance Fund ("SAIF") in
September, 1996.
The net increase in noninterest expenses in the 1997 quarter was attributed to
increases in expenses associated with salaries and employee benefits as well as
legal and accounting fees. The increase in salaries and employee benefits during
the 1997 period was primarily a result of expenses related to the employee stock
ownership plan adopted in July 1996, and the recognition and retention plan and
trust approved by shareholders on January 8, 1997. Most of the increase in legal
and accounting expenses stemmed from efforts to meet legal, filing and reporting
requirements mandated by various banking and securities industry regulatory
bodies, as well as other matters related to the conversion. Specifically,
compared to a year earlier, salaries and employee benefits expenses, and legal
and accounting expenses increased by $64,000 and $51,000, respectively.
<PAGE>
Income taxes increased from an expense of $48,000 for the three months ended
March 31, 1996 to $51,000 for the 1997 period, primarily due to the increase in
pre-tax income.
Comparison of Operating Results for the Nine-Month Periods Ended March 31, 1997
and 1996
The Company posted net income of $155,000 for the nine-months ended March 31,
1997 compared to net income of $225,000 for the nine-month period ended March
31, 1996. The decrease of $71,000 was primarily due to the one-time FDIC special
assessment to recapitalize SAIF, net of tax, and the substantial increase in
legal, accounting, and other professional fees related to the conversion. Absent
the one-time SAIF assessment, net income for the nine-months ended March 31,
1997 would have been approximately $241,000, or $ .52 per share.
Net interest income before the provision for loan losses increased $247,000 to
$1,285,000 for the 1997 period from $1,038,000 for the 1996 period. Proceeds
from the conversion were originally invested in short-term money market
investments and subsequently invested in higher yielding loans. The increase
resulted primarily from an increase in the level of earning assets and a higher
yield on earning assets during the nine months ended March 31, 1997.
The provision for loan losses was $59,500 during the nine month period ended
March 31, 1997 compared to $63,500 for the same period a year earlier. As of
March 31, 1997, the allowance for loan losses was .63% of total loans compared
to .55% at June 30, 1996.
Total noninterest income decreased $16,000 for the nine months ended March 31,
1997 compared to the same period in 1996. The net decrease was primarily the
result of a $12,000 drop in income from the sale of real estate acquired for
development. Management anticipates that gains on the sale of real estate
acquired for development will continue to decline in the future. In connection
with the Bank's conversion to an Indiana stock savings bank, the FDIC required
the Bank to terminate this business activity by November, 2000.
Total noninterest expenses increased $350,000 to $1,036,000 for the nine months
ended March 31, 1997 compared to $685,000 for the same period in 1996. The
increase in noninterest expenses were primarily the result of the one-time FDIC
special assessment to recapitalize the SAIF, and legal, accounting and other
professional fees associated with the conversion. FDIC deposit insurance
expenses increased $122,000 to $161,000 for the nine months ended March 31,
1997, from $38,000 for the same period in 1996. Legal and accounting fees
increased $109,000 to $134,000 for the nine month period in 1997 compared to
$25,000 for the same period in 1996. An extraordinary level of legal and
accounting fees were incurred to meet legal, filing and reporting requirements
mandated by various banking and securities industry regulatory bodies related to
the conversion. Noninterest expenses also increased due to the $87,000 rise in
salaries and employee benefits in the 1997 period compared to a year earlier.
Most of this increase was the result of expenses related to the employee stock
ownership plan adopted in July 1996 and the recognition and retention plan and
trust approved by shareholders on January 8, 1997.
Income tax expense decreased from $149,000 for the nine months ended March 31,
1996 to $104,000 for the same period in 1997. The decrease in tax expense for
the 1997 period primarily relates to the impact of the one-time FDIC special
assessment.
Asset Quality
The allowance for loan losses was $207,000 at March 31, 1997 compared to
$150,000 at June 30, 1996. Management considered the allowance for loan losses
at March 31, 1997, to be adequate to cover estimated losses inherent in the loan
portfolio at that date, including probable losses that could be reasonably
estimated. The increase in the allowance results from increased loan volume and
changes in composition. Such beliefis based upon an analysis of loans currently
outstanding, past loss experience, current economic
<PAGE>
conditions and other factors and estimates which are subject to change over
time. The following table sets forth the changes affecting the allowance for
loan losses for the nine months ended March 31, 1997.
Balance, July 1, 1996 $149,833
Provision for loan losses 59,500
Recoveries --
Loans charged off (1,981)
-------
Balance, March 31, 1997 $207,352
========
Total non-performing loans rose to $386,000 or 1.18% of total loans at March 31,
1997 compared to $359,000 or 1.32% of total loans at June 30, 1996.
Liquidity and Capital Resources
The Company's most liquid assets are cash and interest bearing deposits. The
levels of these assets are dependent on the Company's operating, financing and
investing activities. At March 31, 1997 and June 30, 1996, cash and
interest-bearing deposits totaled $2.6 million and $5.7 million, respectively.
The level at June 30, 1996 was unusually high as a result of funds on deposit
related to the conversion. Funds deposited for purposes of participating in the
conversion were invested short term by the Company.
The Company's primary sources of funds include principal and interest payments
on loans, loan maturities, and repayments on investment securities. While
scheduled loan repayments and proceeds from investment securities are relatively
predictable, deposit flows and early repayments are more influenced by interest
rates, general economic conditions and competition. The Company attempts to
price its deposits to meet asset-liability objectives and local market
conditions.
If the Company requires funds beyond its ability to generate them internally, it
has the ability to borrow funds from the FHLB of Indianapolis. Federal law
limits an institution's borrowings from the FHLB to 20 times the amount paid for
capital stock in the FHLB, subject to regulatory capital requirements. As a
policy matter, however, the FHLB of Indianapolis typically limits the amount of
borrowings from the FHLB to 50% of adjusted assets (total assets less
borrowings). At March 31, 1997, the Company had approximately $8.0 million of
unused credit available to it under such guidelines. At March 31, 1997,
borrowing from the FHLB totaled $8.0 million.
Shareholders' equity was $7.3 million at March 31, 1997 or 18.6% of total
assets. Book value at March 31, 1996 was $15.12 per share based on 485,926
outstanding shares. All fully phased-in regulatory capital requirements are
currently met. In connection with the Bank's conversion to a state savings bank,
the FDIC imposed heightened capital requirements on the Bank because of the
impermissible real estate development activities of the Bank's subsidiary. The
FDIC currently requires that the Bank maintain capital (after deduction of its
investment in its subsidiary) at levels sufficient for the Bank to be classified
as a well- capitalized institution. The Bank's actual and required capital
amounts (in thousands) and ratios are as follows as of March 31, 1997.
<PAGE>
<TABLE>
<CAPTION>
Required For Required To Be
Actual Adequate Capital* Well Capitalized*
------------------------ ----------------------- -------------------------
Amount Ratio Amount Ratio Amount Ratio
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Total capital *(to risk weighted assets) $6,008 28.8% $1,666 8.0% $2,083 10.0%
Tier 1 capital *(to risk weighted assets) 5,801 27.9% 833 4.0% 1,250 6.0%
Tier 1 capital *(to total assets) 5,801 15.2% 1,528 4.0% 1,910 5.0%
</TABLE>
*As defined by the regulatory agencies
Effect of Inflation and Changing Prices
The Company's asset and liability structure is substantially different from that
of an industrial company in that most of its assets and liabilities are monetary
in nature. Management believes the impact of inflation on financial results
depends upon the Company's ability to react to changes in interest rates and, by
such reaction, reduce the inflationary impact on performance. Interest rates do
not necessarily move in the same direction at the same time, or at the same
magnitude, as the prices of other goods and services. Management relies on its
ability to manage the relationship between interest-sensitive assets and
liabilities to protect against wide interest rate fluctuations, including those
resulting from inflation.
Accounting Matters
Accounting for Stock-Based Compensation. SFAS No. 123, Accounting for
Stock-Based Compensation, establishes a fair value based method of accounting
for stock-based compensation plans. The FASB encourages all entities to adopt
this method for accounting for all arrangements under which employees receive
shares of stock or other equity instruments of the employer, or the employer
incurs liabilities to employees in amounts based on the price of its stock.
Due to the extremely controversial nature of this project, the Statement permits
a company to continue the accounting for stock-based compensation prescribed in
Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to
Employees. If a company elects that option, proforma disclosures of net income
(and earnings per share, if presented) are required in the footnotes as if the
provisions of this Statement had been used to measure stock-based compensation.
The disclosure requirements of Opinion No.
25 have been superseded by the disclosure requirements of this Statement.
Once an entity adopts the fair value based method for accounting for these
transactions, that election cannot be reversed.
Equity instruments granted or otherwise transferred directly to an employee by a
principal stockholder are stock-based employee compensation to be accounted for
in accordance with either Opinion 25 or this Statement, unless the transfer
clearly is for a purpose other than compensation.
The accounting requirements of this Statement are effective for transactions
entered into in fiscal years that begin after December 15, 1995. The disclosure
requirements are effective for financial statements for fiscal years beginning
after December 15, 1995. Proforma disclosures required for entities that elect
to continue to measure compensation cost using Opinion 25 must include the
effects of all awards granted in fiscal years that begin after December 15,
1994.
During the initial phase-in period, the effects of applying this Statement are
not likely to be representative of the effects on the reported net income for
future years because options vest over several years and additional awards
generally are made each year. If that situation exists, the entity shall include
a statement to that effect.
<PAGE>
Management does not believe the impact of SFAS No. 123 on either the Company's
financial position or results of operations will be material.
Accounting for Employee Stock Plans. In November 1993, the American Institute of
Certified Public Accountants issued Statement of Position ("SOP") 93-6 which
addresses the accounting for shares of stock issued to employees by an employee
stock ownership plan ("Employee Plan"). SOP 93-6 requires that the employer
record compensation expense in an amount equal to the fair value of shares
committed to be released to employees from the Employee Plan. SOP 93-6 is
effective for fiscal years beginning after December 15, 1993 and relates to
shares purchased by an Employee Plan after December 31, 1992. Assuming shares of
common stock appreciate in value overtime, the adoption of SOP 93-6 will likely
increase compensation expense relative to the Company's ESOP established in
connection with the Conversion, as compared with prior guidance which would have
required the recognition of compensation expense based on the cost of shares
acquired by the ESOP.
Accounting for Transfers and Servicing of Financial Assets and Extinguishments
of Liabilities. Statement of Financial Accounting Standards ("SFAS") No. 125,
Accounting for Transfers and Servicing of Financial Assets and Extinguishments
of Liabilities, was adopted by the Company on January 1, 1997. SFAS No. 125
provides consistent standards for distinguishing transfers of financial assets
that are sales from transfers that are considered secured borrowings. A transfer
of financial assets in which the transferor surrenders control over those assets
is accounted for as a sale to the extent that consideration other than
beneficial interests in the transferred assets is received in exchange. The
transferor has surrendered control over transferred assets only if all specific
conditions are met. This Statement provides detailed measurement standards for
assets and liabilities included in these transactions. The adoption of this
Statement had no material impact on the Company's financial condition and
results of operations.
<PAGE>
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
Neither the Bank nor the Company were during the three-month period ended March
31, 1997 or are as of the date hereof involved in any legal proceedings of a
material nature. From time to time, the Bank is a party to legal proceedings
wherein it enforces its security interests in connection with its mortgage and
other loans.
Item 4. Submission of Matters to Vote of Security Holders
On January 8, 1997, the Company held its first annual meeting of shareholders at
which time matters submitted to a vote of stockholders included an election of
Company directors, approval and ratification of the Home Financial Bancorp Stock
Option Plan, approval and ratification of the Owen Community Bank, s.b.
Recognition and Retention Plan, and approval and ratification of the appointment
of Geo. S. Olive & Co., LLC as auditors for the fiscal year ending June 30,
1997.
All director nominees were elected and the Company's previous Board of Directors
was re-elected in its entirety. The Recognition and Retention Plan and
appointment of auditors were also approved and ratified by a majority of the
505,926 issued and outstanding share votes. The proposed Stock Option Plan
failed to receive the votes required for approval. A tabulation of votes cast as
to each matter submitted to stockholders is presented below:
Director Nominees For Against Abstain Non-Vote
- ----------------------------- ------- ------ ------- --------
John T. Gillaspy - 1 year 393,895 37,080 - 74,951
Robert W. Raper - 1 year 393,095 37,880 - 74,951
Charles W. Chambers - 2 years 392,895 38,080 - 74,951
Stephen Parrish - 2 years 394,070 36,905 - 74,951
Kurt J. Meier 3 years 393,395 37,580 - 74,951
Frank R. Stewart - 3 years 394,795 36,180 - 74,951
Tad Wilson - 3 years 394,095 36,880 - 74,951
Other Matters
Stock Option Plan 246,335 118,797 625 140,169
Recognition and Retention Plan 296,678 118,967 830 89,451
Auditors 381,475 49,500 - 74,951
<PAGE>
Item 6. Exhibits And Reports On Form 8K.
(a) Exhibits
3(1) The Articles of Incorporation of the Registrant are
incorporated by reference to Exhibit 3(1) to the
Registration Statement on Form S-1 (Registration No. 333-
1746).
3(2) Code of By-Laws
10(6)Owen Community Bank, s.b. Recognition and Retention Plan
and Trust is incorporated by reference to Exhibit B to the
Registrant's Proxy Statement for its Annual Shareholder
Meeting held on January 8, 1997.
27 Financial Data Schedule
(b) Reports on Form 8-K
The Registrant filed no reports on Form 8-K during the
quarter ended March 31, 1997.
<PAGE>
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HOME FINANCIAL BANCORP
Date: May 14, 1997 By: /s/ Kurt J. Meier
----------------------
Kurt J. Meier
President and
Chief Executive Officer
Date: May 14, 1997 By: /s/ Kurt D. Rosenberger
----------------------------
Kurt D. Rosenberger
Vice President and
Chief Financial Officer
CODE OF BY-LAWS
OF
HOME FINANCIAL BANCORP
ARTICLE I
Offices
Section 1. Principal Office. The principal office (the "Principal Office")
of Home Financial Bancorp (the "Corporation") shall be at 279 East Morgan
Street, Spencer, Indiana 47460, or such other place as shall be determined by
resolution of the Board of Directors of the Corporation (the "Board").
Section 2. Other Offices. The Corporation may have such other offices at
such other places within or without the State of Indiana as the Board may from
time to time designate, or as the business of the Corporation may require.
ARTICLE II
Seal
Section 1. Corporate Seal. The corporate seal of the Corporation (the
"Seal") shall be circular in form and shall have inscribed thereon the words
"HOME FINANCIAL BANCORP" and "INDIANA." In the center of the seal shall appear
the word "Seal." Use of the Seal or an impression thereof shall not be required,
and shall not affect the validity of any instrument whatsoever.
ARTICLE III
Shareholder Meetings
Section 1. Place of Meeting. Every meeting of the shareholders of the
Corporation (the "Shareholders") shall be held at the Principal Office, unless a
different place is specified in the notice or waiver of notice of such meeting
or by resolution of the Board or the Shareholders, in which event such meeting
may be held at the place so specified, either within or without the State of
Indiana.
Section 2. Annual Meeting. The annual meeting of the Shareholders (the
"Annual Meeting") shall be held each year at 3:00 o'clock P.M. on the second
Tuesday in October (or, if such day is a legal holiday, on the next succeeding
day not a legal holiday), for the purpose of electing directors of the
Corporation ("Directors") and for the transaction of such other business as may
legally come before the Annual Meeting. If for any reason the Annual Meeting
shall not be held at the date and time herein provided, the same may be held at
any time thereafter, or the business to be transacted at such Annual Meeting may
be transacted at any special meeting of the Shareholders (a "Special Meeting")
called for that purpose.
Section 3. Notice of Annual Meeting. Written or printed notice of the
Annual Meeting, stating the date, time and place thereof, shall be delivered or
mailed by the Secretary or an Assistant Secretary to each Shareholder of record
entitled to notice of such Meeting, at such address as appears on the records of
the Corporation, at least ten and not more than sixty days before the date of
such Meeting.
Section 4. Special Meetings. Special Meetings, for any purpose or purposes
(unless otherwise prescribed by law), may be called by only the Chairman of the
Board of Directors (the "Chairman"), if any, or by the Board, pursuant to a
resolution adopted by a majority of the total number of Directors of the
Corporation, to vote on the business proposed to be transacted thereat. All
requests for Special Meetings shall state the purpose or purposes thereof, and
the business transacted at such Meeting shall be confined to the purposes stated
in the call and matters germane thereto.
<PAGE>
Section 5. Notice of Special Meetings. Written or printed notice of all
Special Meetings, stating the date, time, place and purpose or purposes thereof,
shall be delivered or mailed by the Secretary or the President or any Vice
President calling the Meeting to each Shareholder of record entitled to notice
of such Meeting, at such address as appears on the records of the Corporation,
at least ten and not more than sixty days before the date of such Meeting.
Section 6. Waiver of Notice of Meetings. Notice of any Annual or Special
Meeting (a "Meeting") may be waived in writing by any Shareholder, before or
after the date and time of the Meeting specified in the notice thereof, by a
written waiver delivered to the Corporation for inclusion in the minutes or
filing with the corporate records. A Shareholder's attendance at any Meeting in
person or by proxy shall constitute a waiver of (a) notice of such Meeting,
unless the Shareholder at the beginning of the Meeting objects to the holding of
or the transaction of business at the Meeting, and (b) consideration at such
Meeting of any business that is not within the purpose or purposes described in
the Meeting notice, unless the Shareholder objects to considering the matter
when it is presented.
Section 7. Quorum. At any Meeting, the holders of a majority of the voting
power of all shares of the Corporation (the "Shares") issued and outstanding and
entitled to vote at such Meeting (after giving effect to the provisions in
Article 11 of the Articles of Incorporation of the Corporation, as the same may,
from time to time, be amended (the "Articles")), represented in person or by
proxy, shall constitute a quorum for the election of Directors or for the
transaction of other business, unless otherwise provided by law, the Articles or
this Code of By-Laws, as the same may, from time to time, be amended (these
"By-Laws"). If, however, a quorum shall not be present or represented at any
Meeting, the Shareholders entitled to vote thereat, present in person or
represented by proxy, shall have power to adjourn the Meeting from time to time,
without notice other than announcement at the Meeting of the date, time and
place of the adjourned Meeting, unless the date of the adjourned Meeting
requires that the Board fix a new record date (the "Record Date") therefor, in
which case notice of the adjourned Meeting shall be given. At such adjourned
Meeting, if a quorum shall be present or represented, any business may be
transacted that might have been transacted at the Meeting as originally
scheduled.
Section 8. Voting. At each Meeting, every Shareholder entitled to vote
shall have one vote for each Share standing in his name on the books of the
Corporation as of the Record Date fixed by the Board for such Meeting, except as
otherwise provided by law or the Articles, and except that no Share shall be
voted at any Meeting upon which any installment is due and unpaid and no share
which is not entitled to vote pursuant to Article 11 of the Articles shall be
voted at any Meeting. Voting for Directors and, upon the demand of any
Shareholder, voting upon any question properly before a Meeting, shall be by
ballot. A plurality vote shall be necessary to elect any Director, and on all
other matters, the action or a question shall be approved if the number of votes
cast thereon in favor of the action or question exceeds the number of votes cast
opposing the action or question, except as otherwise provided by law or the
Articles.
Section 9. Shareholder List. The Secretary shall prepare before each
Meeting a complete list of the Shareholders entitled to notice of such Meeting,
arranged in alphabetical order by class of Shares (and each series within a
class), and showing the address of, and the number of Shares entitled to vote
held by, each Shareholder (the "Shareholder List"). Beginning five business days
before the Meeting and continuing throughout the Meeting, the Shareholder List
shall be on file at the Principal Office or at a place identified in the Meeting
notice in the city where the Meeting will be held, and shall be available for
inspection by any Shareholder entitled to vote at the Meeting. On written
demand, made in good faith and for a proper purpose and describing with
reasonable particularity the Shareholder's purpose, and if the Shareholder List
is directly connected with the Shareholder's purpose, a Shareholder (or such
Shareholder's agent or attorney authorized in writing) shall be entitled to
inspect and to copy the Shareholder List, during regular business hours and at
the Shareholder's expense, during the period the Shareholder List is available
for inspection. The original stock register or transfer book (the "Stock Book"),
or a duplicate thereof kept in the State of Indiana, shall be the only evidence
as to who are the Shareholders entitled to examine the Shareholder List, or to
notice of or to vote at any Meeting.
<PAGE>
Section 10. Proxies. A Shareholder may vote either in person or by proxy
executed in writing by the Shareholder or a duly authorized attorney-in-fact. No
proxy shall be valid after eleven months from the date of its execution, unless
a shorter or longer time is expressly provided therein.
Section 11. Notice of Shareholder Business. At an Annual Meeting of the
Shareholders, only such business shall be conducted as shall have been properly
brought before the Meeting. To be properly brought before an Annual Meeting,
business must be (a) specified in the notice of Meeting (or any supplement
thereto) given by or at the direction of the Board, (b) otherwise properly
brought before the Meeting by or at the direction of the Board, or (c) otherwise
properly brought before the Meeting by a Shareholder. For business to be
properly brought before an Annual Meeting by a Shareholder, the Shareholder must
have the legal right and authority to make the Proposal for consideration at the
Meeting and the Shareholder must have given timely notice thereof in writing to
the Secretary of the Corporation. To be timely, a Shareholder's notice must be
delivered to or mailed and received at the principal executive offices of the
Corporation, not less than 60 days prior to the Meeting; provided, however, that
in the event that less than 70 days' notice or prior public disclosure of the
date of the Meeting is given or made to Shareholders (which notice or public
disclosure shall include the date of the Annual Meeting specified in these
By-Laws, if such By-Laws have been filed with the Securities and Exchange
Commission and if the Annual Meeting is held on such date), notice by the
Shareholder to be timely must be so received not later than the close of
business on the 10th day following the day on which such notice of the date of
the Annual Meeting was mailed or such public disclosure was made. A
Shareholder's notice to the Secretary shall set forth as to each matter the
Shareholder proposes to bring before the Annual Meeting (a) a brief description
of the business desired to be brought before the Annual Meeting and the reasons
for conducting such business at the Annual Meeting, (b) the name and record
address of the Shareholders proposing such business, (c) the class and number of
shares of the Corporation which are beneficially owned by the Shareholder, and
(d) any material interest of the Shareholder in such business. Notwithstanding
anything in these By-Laws to the contrary, no business shall be conducted at an
Annual Meeting except in accordance with the procedures set forth in this
Section 11. The Chairman of an Annual Meeting shall, if the facts warrant,
determine and declare to the Meeting that business was not properly brought
before the Meeting and in accordance with the provisions of this Section 11, and
if he should so determine, he shall so declare to the Meeting and any such
business not properly brought before the Meeting shall not be transacted. At any
Special Meeting of the Shareholders, only such business shall be conducted as
shall have been brought before the Meeting by or at the direction of the Board
of Directors.
Section 12. Notice of Shareholder Nominees. Only persons who are nominated
in accordance with the procedures set forth in this Section 12 shall be eligible
for election as Directors. Nominations of persons for election to the Board may
be made at a Meeting of Shareholders by or at the direction of the Board of
Directors, by any nominating committee or person appointed by the Board of
Directors or by any Shareholder of the Corporation entitled to vote for the
election of Directors at the Meeting who complies with the notice procedures set
forth in this Section 12. Such nominations, other than those made by or at the
direction of the Board, shall be made pursuant to timely notice in writing to
the Secretary of the Corporation. To be timely, a Shareholder's notice shall be
delivered to or mailed and received at the principal executive offices of the
Corporation not less than 60 days prior to the Meeting; provided, however, that
in the event that less than 70 days' notice or prior public disclosure of the
date of the Meeting is given or made to Shareholders (which notice or public
disclosure shall include the date of the Annual Meeting specified in these
By-Laws, if such By-Laws have been filed with the Securities and Exchange
Commission and if the Annual Meeting is held on such date), notice by the
Shareholders to be timely must be so received not later than the close of
<PAGE>
business on the 10th day following the day on which such notice of the date of
the Meeting was mailed or such public disclosure was made. Such Shareholder's
notice shall set forth (a) as to each person whom the Shareholder proposes to
nominate for election or re-election as a Director, (i) the name, age, business
address and residence address of such person, (ii) the principal occupation or
employment of such person, (iii) the class and number of shares of the
Corporation which are beneficially owned by such person and (iv) any other
information relating to such person that is required to be disclosed in
solicitations of proxies for election of Directors, or is otherwise required, in
each case pursuant to Regulation 14A under the Securities Exchange Act of 1934,
as amended (including without limitation such person's written consent to being
named in the proxy statement as a nominee and to serving as a Director if
elected); and (b) as to the Shareholder giving the notice (i) the name and
record address of such Shareholder and (ii) the class and number of shares of
the Corporation which are beneficially owned by such Shareholder. No person
shall be eligible for election as a Director of the Corporation unless nominated
in accordance with the procedures set forth in this Section 12. The Chairman of
the Meeting shall, if the facts warrant, determine and declare to the Meeting
that a nomination was not made in accordance with the procedures prescribed by
these By-Laws, and if he should so determine, he shall so declare to the Meeting
and the defective nomination shall be disregarded.
ARTICLE IV
Board of Directors
Section 1. Number and Qualifications. The business and affairs of the
Corporation shall be managed by a Board of not less than five (5) nor more than
fifteen (15) Directors, as may be specified from time to time by resolution
adopted by a majority of the total number of the Corporation's Directors,
divided into three classes as provided in the Articles. If and whenever the
Board of Directors has not specified the number of Directors, the number shall
be seven (7). Directors must (a) have their primary domicile in Owen County, or
one of the adjoining Counties; specifically, Monroe, Greene, Clay, Morgan, or
Putnam Counties of Indiana, and (b) must have a loan or deposit relationship
with Owen Community Bank s.b. which they have maintained for at least a
continuous period of twelve (12) months immediately prior to their nomination to
the Board. In addition, each Director who is not an employee of the Corporation
or any of its subsidiaries must have served as a member of a civic or community
organization based in their home county for at least a continuous period of
twelve (12) months immediately prior to their nomination to the Board. IN
addition, each Director who is not an employee of the Corporation or any of its
subsidiaries must have served as a member of a civic or community organization
based in their home county for at least a continuous period of twelve (12)
months during the five (5) years prior to his or her nomination to the Board.
The Board may elect or appoint, from among its members, a Chairman of the Board
(the "Chairman") and a Vice Chairman of the Board (the "Vice Chairman"), who
need not be an officer (an "Officer") or employee of the Corporation. The
Chairman, if elected or appointed, shall preside at all Shareholder Meetings and
Board Meetings and shall have such other powers and perform such other duties as
are incident to such position and as may be assigned by the Board. The Vice
Chairman shall act in the absence of the Chairman, and shall have such other
powers and perform such other duties as may be assigned by the Board.
Section 2. Vacancies and Removal. Any vacancy occurring in the Board shall
be filled as provided in the Articles. Shareholders shall be notified of any
increase in the number of Directors and the name, principal occupation and other
pertinent information about any Director elected by the Board to fill any
vacancy. Any Director, or the entire Board, may be removed from office only as
provided in the Articles.
Section 3. Powers and Duties. In addition to the powers and duties
expressly conferred upon it by law, the Articles or these By-Laws, the Board may
exercise all such powers of the Corporation and do all such lawful acts and
things as are not inconsistent with the law, the Articles or these By-Laws.
<PAGE>
Section 4. Annual Board Meeting. Unless otherwise determined by the Board,
the Board shall meet each year immediately after the Annual Meeting, at the
place where such Meeting has been held, for the purpose of organization,
election of Officers of the Corporation (the "Officers") and consideration of
any other business that may properly be brought before such annual meeting of
the Board (the "Annual Board Meeting"). No notice shall be necessary for the
holding of the Annual Board Meeting. If the Annual Board Meeting is not held as
above provided, the election of Officers may be held at any subsequent duly
constituted meeting of the Board (a "Board Meeting").
Section 5. Regular Board Meetings. Regular meetings of the Board ("Regular
Board Meetings") may be held at stated times or from time to time, and at such
place, either within or without the State of Indiana, as the Board may
determine, without call and without notice.
Section 6. Special Board Meetings. Special meetings of the Board ("Special
Board Meetings") may be called at any time or from time to time, and shall be
called on the written request of at least two Directors, by the Chairman or the
President, by causing the Secretary or any Assistant Secretary to give to each
Director, either personally or by mail, telephone, telegraph, teletype or other
form of wire or wireless communication at least two days' notice of the date,
time and place of such Meeting. Special Board Meetings shall be held at the
Principal Office or at such other place, within or without the State of Indiana,
as shall be specified in the respective notices or waivers of notice thereof.
Section 7. Waiver of Notice and Assent. A Director may waive notice of any
Board Meeting before or after the date and time of the Board Meeting stated in
the notice by a written waiver signed by the Director and filed with the minutes
or corporate records. A Director's attendance at or participation in a Board
Meeting shall constitute a waiver of notice of such Meeting and assent to any
corporate action taken at such Meeting, unless (a) the Director at the beginning
of such Meeting (or promptly upon his arrival) objects to holding of or
transacting business at the Meeting and does not thereafter vote for or assent
to action taken at the Meeting; (b) the Director's dissent or abstention from
the action taken is entered in the minutes of such Meeting; or (c) the Director
delivers written notice of his dissent or abstention to the presiding Director
at such Meeting before its adjournment, or to the Secretary immediately after
its adjournment. The right of dissent or abstention is not available to a
Director who votes in favor of the action taken.
Section 8. Quorum. At all Board Meetings, a majority of the number of
Directors designated for the full Board (the "Full Board") shall be necessary to
constitute a quorum for the transaction of any business, except (a) that for the
purpose of filling of vacancies a majority of Directors then in office shall
constitute a quorum, and (b) that a lesser number may adjourn the Meeting from
time to time until a quorum is present. The act of a majority of the Board
present at a Meeting at which a quorum is present shall be the act of the Board,
unless the act of a greater number is required by law, the Articles or these
By-Laws.
Section 9. Audit and Other Committees of the Board. The Board shall, by
resolution adopted by a majority of the Full Board, designate an Audit Committee
comprised of two or more Directors, which shall have such authority and exercise
such duties as shall be provided by resolution of the Board. The Board may, by
resolution adopted by such majority, also designate other regular or special
committees of the Board ("Committees"), in each case comprised of two or more
Directors and to have such powers and exercise such duties as shall be provided
by resolution of the Board.
Section 10. Resignations. Any Director may resign at any time by giving
written notice to the Board, The Chairman, the President or the Secretary. Any
such resignation shall take effect when delivered unless the notice specifies a
later effective date. Unless otherwise specified in the notice, the acceptance
of such resignation shall not be necessary to make it effective.
ARTICLE V
Officers
Section 1. Officers. The Officers shall be the President, one or more Vice
Presidents, the Secretary and the Treasurer, and may include one or more
Assistant Secretaries, one or more Assistant Treasurers, a Comptroller and one
or more Assistant Comptrollers. Any two or more offices may be held by the same
person. The Board may from time to time elect or appoint such other Officers as
<PAGE>
it shall deem necessary, who shall exercise such powers and perform such duties
as may be prescribed from time to time by these By-Laws or, in the absence of a
provision in these By-Laws in respect thereto, as may be prescribed from time to
time by the Board.
Section 2. Election of Officers. The Officers shall be elected by the Board
at the Annual Board Meeting and shall hold office for one year or until their
respective successors shall have been duly elected and shall have qualified;
provided, however, that the Board may at any time elect one or more persons to
new or different offices and/or change the title, designation and duties and
responsibilities of any of the Officers consistent with the law, the Articles
and these By-Laws.
Section 3. Vacancies; Removal. Any vacancy among the Officers may be filled
for the unexpired term by the Board. Any Officer may be removed at any time by
the affirmative vote of a majority of the Full Board.
Section 4. Delegation of Duties. In the case of the absence, disability,
death, resignation or removal from office of any Officer, or for any other
reason that the Board shall deem sufficient, the Board may delegate, for the
time being, any or all of the powers or duties of such Officer to any other
Officer or to any Director.
Section 5. President. The President shall be a Director and, subject to the
control of the Board, shall have general charge of and supervision and authority
over the business and affairs of the Corporation, and shall have such other
powers and perform such other duties as are incident to this office and as may
be assigned to him by the Board. In the case of the absence or disability of the
Chairman or if no Chairman shall be elected or appointed by the Board, the
President shall preside at all Shareholder Meetings and Board Meetings.
Section 6. Vice Presidents. Each of the Vice Presidents shall have such
powers and perform such duties as may be prescribed for him by the Board or
delegated to him by the President. In the case of the absence, disability,
death, resignation or removal from office of the President, the powers and
duties of the President shall, for the time being, devolve upon and be exercised
by the Executive Vice President, if there be one, and if not, then by such one
of the Vice Presidents as the Board or the President may designate, or, if there
be but one Vice President, then upon such Vice President; and he shall
thereupon, during such period, exercise and perform all of the powers and duties
of the President, except as may be otherwise provided by the Board.
Section 7. Secretary. The Secretary shall have the custody and care of the
Seal, records, minutes and the Stock Book of the Corporation; shall attend all
Shareholder Meetings and Board Meetings, and duly record and keep the minutes of
their proceedings in a book or books to be kept for that purpose; shall give or
cause to be given notice of all Shareholder Meetings and Board Meetings when
such notice shall be required; shall file and take charge of all papers and
documents belonging to the Corporation; and shall have such other powers and
perform such other duties as are incident to the office of secretary of a
business corporation, subject at all times to the direction and control of the
Board and the President.
Section 8. Assistant Secretaries. Each of the Assistant Secretaries shall
assist the Secretary in his duties and shall have such other powers and perform
such other duties as may be prescribed for him by the Board or delegated to him
by the President. In case of the absence, disability, death, resignation or
removal from office of the Secretary, his powers and duties shall, for the time
being, devolve upon such one of the Assistant Secretaries as the Board, the
President or the Secretary may designate, or, if there be but one Assistant
Secretary, then upon such Assistant Secretary; and he shall thereupon, during
such period, exercise and perform all of the powers and duties of the Secretary,
except as may be otherwise provided by the Board.
Section 9. Treasurer. The Treasurer shall have control over all records of
the Corporation pertaining to moneys and securities belonging to the
Corporation; shall have charge of, and be responsible for, the collection,
receipt, custody and disbursements of funds of the Corporation; shall have the
<PAGE>
custody of all securities belonging to the Corporation; shall keep full and
accurate accounts of receipts and disbursements in books belonging to the
Corporation; and shall disburse the funds of the Corporation as may be ordered
by the Board, taking proper receipts or making proper vouchers for such
disbursements and preserving the same at all times during his term of office.
When necessary or proper, he shall endorse on behalf of the Corporation all
checks, notes or other obligations payable to the Corporation or coming into his
possession for or on behalf of the Corporation, and shall deposit the funds
arising therefrom, together with all other funds and valuable effects of the
Corporation coming into his possession, in the name and the credit of the
Corporation in such depositories as the Board from time to time shall direct, or
in the absence of such action by the Board, as may be determined by the
President or any Vice President. If the Board has not elected a Comptroller or
an Assistant Comptroller, or in the absence or disability of the Comptroller and
each Assistant Comptroller or if, for any reason, a vacancy shall occur in such
offices, then during such period the Treasurer shall have, exercise and perform
all of the powers and duties of the Comptroller. The Treasurer shall also have
such other powers and perform such other duties as are incident to the office of
treasurer of a business corporation, subject at all times to the direction and
control of the Board and the President.
If required by the Board, the Treasurer shall give the Corporation a bond,
in such an amount and with such surety or sureties as may be ordered by the
Board, for the faithful performance of the duties of his office and for the
restoration to the Corporation, in case of his death, resignation, retirement or
removal from office, of all books, papers, vouchers, money and other property of
whatever kind in his possession or under his control belonging to the
Corporation.
Section 10. Assistant Treasurers. Each of the Assistant Treasurers shall
assist the Treasurer in his duties, and shall have such other powers and perform
such other duties as may be prescribed for him by the Board or delegated to him
by the President. In case of the absence, disability, death, resignation or
removal from office of the Treasurer, his powers and duties shall, for the time
being, devolve upon such one of the Assistant Treasurers as the Board, the
President or the Treasurer may designate, or, if there be but one Assistant
Treasurer, then upon such Assistant Treasurer; and he shall thereupon, during
such period, exercise and perform all the powers and duties of the Treasurer
except as may be otherwise provided by the Board. If required by the Board, each
Assistant Treasurer shall likewise give the Corporation a bond, in such amount
and with such surety or sureties as may be ordered by the Board, for the same
purposes as the bond that may be required to be given by the Treasurer.
Section 11. Comptroller. The Comptroller shall have direct control over all
accounting records of the Corporation pertaining to moneys, properties,
materials and supplies, including the bookkeeping and accounting departments;
shall have direct supervision over the accounting records in all other
departments pertaining to moneys, properties, materials and supplies; shall
render to the President and the Board, at Regular Board Meetings or whenever the
same shall be required, an account of all his transactions as Comptroller and of
the financial condition of the Corporation; and shall have such other powers and
perform such other duties as are incident to the office of comptroller of a
business corporation, subject at all times to the direction and control of the
Board and the President.
Section 12. Assistant Comptrollers. Each of the Assistant Comptrollers
shall assist the Comptroller in his duties, and shall have such other powers and
perform such other duties as may be prescribed for him by the Board or delegated
to him by the President. In case of the absence, disability, death, resignation
or removal from office of the Comptroller, his powers and duties shall, for the
time being, devolve upon such one of the Assistant Comptrollers as the Board,
the President or the Comptroller may designate, or, if there be but one
Assistant Comptroller, then upon such Assistant Comptroller; and he shall
thereupon, during such period, exercise and perform all the powers and duties of
the Comptroller, except as may be otherwise provided by the Board.
<PAGE>
ARTICLE VI
Certificates for Shares
Section 1. Certificates. Certificates for Shares ("Certificates") shall be
in such form, consistent with law and the Articles, as shall be approved by the
Board. Certificates for each class, or series within a class, of Shares, shall
be numbered consecutively as issued. Each Certificate shall state the name of
the Corporation and that it is organized under the laws of the State of Indiana;
the name of the registered holder; the number and class and the designation of
the series, if any, of the Shares represented thereby; and a summary of the
designations, relative rights, preferences and limitations applicable to such
class and, if applicable, the variations in rights, preferences and limitations
determined for each series and the authority of the Board to determine such
variations for future series; provided, however, that such summary may be
omitted if the Certificate states conspicuously on its front or back that the
Corporation will furnish the Shareholder such information upon written request
and without charge. Each Certificate shall be signed (either manually or in
facsimile) by (i) the President or a Vice President and (ii) the Secretary or an
Assistant Secretary, or by any two or more Officers that may be designated by
the Board, and may have affixed thereto the Seal, which may be a facsimile,
engraved or printed.
Section 2. Record of Certificates. Shares shall be entered in the Stock
Book as they are issued, and shall be transferable on the Stock Book by the
holder thereof in person, or by his attorney duly authorized thereto in writing,
upon the surrender of the outstanding Certificate therefor properly endorsed.
Section 3. Lost or Destroyed Certificates. Any person claiming a
Certificate to be lost or destroyed shall make affidavit or affirmation of that
fact and, if the Board or the President shall so require, shall give the
Corporation and/or the transfer agents and registrars, if they shall so require,
a bond of indemnity, in form and with one or more sureties satisfactory to the
Board or the President and/or the transfer agents and registrars, in such amount
as the Board or the President may direct and/or the transfer agents and
registrars may require, whereupon a new Certificate may be issued of the same
tenor and for the same number of Shares as the one alleged to be lost or
destroyed.
Section 4. Shareholder Addresses. Every Shareholder shall furnish the
Secretary with an address to which notices of Meetings and all other notices may
be served upon him or mailed to him, and in default thereof notices may be
addressed to him at his last known address or at the Principal Office.
ARTICLE VII
Corporate Books and Records
Section 1. Places of Keeping. Except as otherwise provided by law, the
Articles or these By-Laws, the books and records of the Corporation (including
the "Corporate Records," as defined in the Articles) may be kept at such place
or places, within or without the State of Indiana, as the Board may from time to
time by resolution determine or, in the absence of such determination by the
Board, as shall be determined by the President.
Section 2. Stock Book. The Corporation shall keep at the Principal Office
the original Stock Book or a duplicate thereof, or, in case the Corporation
employs a stock registrar or transfer agent within or without the State of
Indiana, another record of the Shareholders in a form that permits preparation
of a list of the names and addresses of all the Shareholders, in alphabetical
order by class of Shares, stating the number and class of Shares held by each
Shareholder (the "Record of Shareholders").
Section 3. Inspection of Corporate Records. Any Shareholder (or the
Shareholder's agent or attorney authorized in writing) shall be entitled to
inspect and copy at his expense, after giving the Corporation at least five
business days' written notice of his demand to do so, the following Corporate
Records: (1) the Articles; (2) these By-Laws; (3) minutes of all Shareholder
Meetings and records of all actions taken by the Shareholders without a meeting
(collectively, "Shareholders Minutes") for the prior three years; (4) all
written communications by the Corporation to the Shareholders including the
financial statements furnished by the Corporation to the Shareholders for the
prior three years; (5) a list of the names and business addresses of the current
<PAGE>
Directors and the current Officers; and (6) the most recent Annual Report of the
Corporation as filed with the Secretary of State of Indiana. Any Shareholder (or
the Shareholder's agent or attorney authorized in writing) shall also be
entitled to inspect and copy at his expense, after giving the Corporation at
least five business days' written notice of his demand to do so, the following
Corporate Records, if his demand is made in good faith and for a proper purpose
and describes with reasonable particularity his purpose and the records he
desires to inspect, and the records are directly connected with his purpose: (1)
to the extent not subject to inspection under the previous sentence,
Shareholders Minutes, excerpts from minutes of Board Meetings and of Committee
meetings, and records of any actions taken by the Board or any Committee without
a meeting; (2) appropriate accounting records of the Corporation; and (3) the
Record of Shareholders.
Section 4. Record Date. The Board may, in its discretion, fix in advance a
Record Date not more than seventy days before the date (a) of any Shareholder
Meeting, (b) for the payment of any dividend or the making of any other
distribution, (c) for the allotment of rights, or (d) when any change or
conversion or exchange of Shares shall go into effect. If the Board fixes a
Record Date, then only Shareholders who are Shareholders of record on such
Record Date shall be entitled (a) to notice of and/or to vote at any such
Meeting, (b) to receive any such dividend or other distribution, (c) to receive
any such allotment of rights, or (d) to exercise the rights in respect of any
such change, conversion or exchange of Shares, as the case may be,
notwithstanding any transfer of Shares on the Stock Book after such Record Date.
Section 5. Transfer Agents; Registrars. The Board may appoint one or more
transfer agents and registrars for its Shares and may require all Certificates
to bear the signature either of a transfer agent or of a registrar, or both.
ARTICLE VIII
Checks, Drafts, Deeds and Shares of Stock
Section 1. Checks, Drafts, Notes, Etc. All checks, drafts, notes or orders
for the payment of money of the Corporation shall, unless otherwise directed by
the Board or otherwise required by law, be signed by one or more Officers as
authorized in writing by the President. In addition, the President may authorize
any one or more employees of the Corporation ("Employees") to sign checks,
drafts and orders for the payment of money not to exceed specific maximum
amounts as designated in writing by the President for any one check, draft or
order. When so authorized by the President, the signature of any such Officer or
Employee may be a facsimile signature.
Section 2. Deeds, Notes, Bonds, Mortgages, Contracts, Etc. All deeds,
notes, bonds and mortgages made by the Corporation, and all other written
contracts and agreements, other than those executed in the ordinary course of
corporate business, to which the Corporation shall be a party, shall be executed
in its name by the President, a Vice President or any other Officer so
authorized by the Board and, when necessary or required, the Secretary or an
Assistant Secretary shall attest the execution thereof. All written contracts
and agreements into which the Corporation enters in the ordinary course of
corporate business shall be executed by any Officer or by any other Employee
designated by the President or a Vice President to execute such contracts and
agreements.
Section 3. Sale or Transfer of Stock. Subject always to the further orders
and directions of the Board, any share of stock issued by any corporation and
owned by the Corporation (including reacquired Shares of the Corporation) may,
for sale or transfer, be endorsed in the name of the Corporation by the
President or a Vice President, and said endorsement shall be duly attested by
the Secretary or an Assistant Secretary either with or without affixing thereto
the Seal.
<PAGE>
Section 4. Voting of Stock of Other Corporations. Subject always to the
further orders and directions of the Board, any share of stock issued by any
other corporation and owned or controlled by the Corporation (an "Investment
Share") may be voted at any shareholders' meeting of such other corporation by
the President or by a Vice President. Whenever, in the judgment of the
President, it is desirable for the Corporation to execute a proxy or give a
shareholder's consent in respect of any Investment Share, such proxy or consent
shall be executed in the name of the Corporation by the President or a Vice
President, and, when necessary or required, shall be attested by the Secretary
or an Assistant Secretary either with or without affixing thereto the Seal. Any
person or persons designated in the manner above stated as the proxy or proxies
of the Corporation shall have full right, power and authority to vote an
Investment Share the same as such Investment Share might be voted by the
Corporation.
ARTICLE IX
Fiscal Year
Section 1. Fiscal Year. The Corporation's fiscal year shall begin on July 1
of each year and end on June 30 of the same year.
ARTICLE X
Amendments
Section 1. Amendments. These By-Laws may be altered, amended or repealed,
in whole or in part, and new By-Laws may be adopted, at any Board Meeting by the
affirmative vote of a majority of the Full Board.
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS
ENDED MARCH 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0001009242
<NAME> Home Financial Bancorp
<MULTIPLIER> 1,000
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> AUG-1-1996
<PERIOD-END> MAR-31-1997
<EXCHANGE-RATE> 1.000
<CASH> 228
<INT-BEARING-DEPOSITS> 2,410
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 2,342
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 32,793
<ALLOWANCE> 207
<TOTAL-ASSETS> 39,443
<DEPOSITS> 23,980
<SHORT-TERM> 3,800
<LIABILITIES-OTHER> 84
<LONG-TERM> 4,200
0
0
<COMMON> 4,528
<OTHER-SE> 2,819
<TOTAL-LIABILITIES-AND-EQUITY> 39,443
<INTEREST-LOAN> 2,133
<INTEREST-INVEST> 249
<INTEREST-OTHER> 139
<INTEREST-TOTAL> 2,521
<INTEREST-DEPOSIT> 900
<INTEREST-EXPENSE> 1,237
<INTEREST-INCOME-NET> 1,285
<LOAN-LOSSES> 60
<SECURITIES-GAINS> 2
<EXPENSE-OTHER> 1,036
<INCOME-PRETAX> 259
<INCOME-PRE-EXTRAORDINARY> 259
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 155
<EPS-PRIMARY> 0.33
<EPS-DILUTED> 0.33
<YIELD-ACTUAL> 8.90
<LOANS-NON> 215
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 150
<CHARGE-OFFS> 2
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 207
<ALLOWANCE-DOMESTIC> 207
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
