<PAGE>
<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[ X ] Quarterly Report under Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended June 30, 1997
Commission File Number: 333-20489
Rocky Ford Financial, Inc.
- ----------------------------------------------------------------
(Exact Name of Small business Issuer as Specified in Its Charter)
Delaware 84-1413346
- ------------------------------- -----------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
801 Swink Avenue, Rocky Ford, Colorado 81067
- -----------------------------------------------------------------
(Address of Principal Executive Offices)
719-254-7642
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(Issuer's Telephone Number, Including Area Code)
Check whether the issuer's: (1) filed all reports required
to be filed by Section 13 or 15(d) of the Exchange Act during the
past 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
State the number of shares outstanding of each of the
issuer's classes of common equity, as of the latest practicable
date:
Shares of common stock outstanding as of June 30, 1997 423,200
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ROCKY FORD FINANCIAL, INC.
CONTENTS
PART I - FINANCIAL INFORMATION
Item 1: Financial Statements
Consolidated Statement of Condition at
June 30, 1997 and September 30, 1996 3
Statements of Consolidated Income for the
Three Months and Nine Months Ended
June 30, 1997 and 1996 4
Statements of Consolidated Cash Flows for
the Nine Months Ended June 30, 1997 and 1996 5
Notes to Financial Statements 6 - 7
Item 2: Management's Discussion and Analysis of
Financial Condition and Results of
Operations 8 - 10
PART II - OTHER INFORMATION
Item 1: Legal Proceedings 11
Item 2: Changes in Securities 11
Item 3: Defaults Upon Senior Securities 11
Item 4: Submission of Matters to a Vote
of Security Holders 11
Item 5: Other Information 11
Item 6: Exhibits and Reports on Form 8-K 11
Signature 11
<PAGE>
<PAGE>
ROCKY FORD FINANCIAL, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(UNAUDITED)
<TABLE>
<CAPTION>
June 30 September 30
1997 1996
---------- ------------
ASSETS
<S> <C> <C>
Cash and cash equivalents $4,300,000 $2,000,000
Interest - bearing 68,032 221,416
Non-interest bearing 1,698,000 1,897,000
Certificates of deposit
Securities available for sale
Equity securities (amortized cost
of $11,327) 404,880 282,300
Securities held to maturity
Mortgage-backed securities (estimated
market value of $2,629,000 and
$2,660,700) 2,532,856 2,616,767
U.S. agencies (estimated market value
of $743,000 and $488,600) 748,906 500,000
Loans receivable - net 13,135,046 12,286,909
Federal Home Loan Bank stock, at cost 317,700 302,400
Retirement trust assets 216,482 -
Accrued interest receivable 145,760 125,018
Premises and equipment 88,278 98,672
Prepaids 51,842 57,611
----------- -----------
TOTAL ASSETS $23,707,782 $20,388,093
=========== ===========
LIABILITIES AND EQUITY
Deposits $16,754,702 $17,144,638
Advances from borrowers for taxes and
insurance 24,949 41,778
Accounts payable and accrued expenses 377,036 273,217
Deferred income taxes 181,442 150,200
----------- -----------
TOTAL LIABILITIES 17,338,129 17,609,833
----------- -----------
Commitments and contingencies
Preferred stock - $.01 par value;
authorized 1,000,000 shares; no
shares issued or outstanding - -
Common stock-$.01 par value;
authorized 3,000,000 shares;
issued and outstanding 423,200
shares at June 30, 1997 4,232 -
Paid-in capital 3,831,347 -
Retained earnings - substantially
restricted 2,624,723 2,607,578
Net unrealized gain on securities
available for sale, net of tax of
$145,640 and $100,300 274,911 170,682
Note receivable from ESOP Trust (338,560) -
----------- -----------
TOTAL EQUITY 6,369,653 2,778,260
----------- -----------
TOTAL LIABILITIES AND EQUITY $23,707,782 $20,388,093
=========== ===========
</TABLE>
See Notes to Consolidated Financial Statements.
3
<PAGE>
<PAGE>
ROCKY FORD FINANCIAL, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
June 30, June 30,
--------------------- --------------------
1997 1996 1997 1996
---------- --------- -------- --------
<S> <C> <C> <C> <C>
INTEREST INCOME
Loans receivable $291,880 $271,635 $ 838,550 $ 774,532
Securities held 80,725 64,489 202,725 172,218
Other interest-bearing assets 63,785 43,731 180,860 191,915
-------- -------- ---------- ----------
TOTAL INTEREST INCOME 436,390 379,855 1,222,135 1,138,665
INTEREST ON DEPOSITS 214,530 203,364 627,806 615,101
-------- -------- ---------- ----------
NET INTEREST INCOME 221,860 176,491 594,329 523,564
(PROVISION FOR) RECOVERY OF
LOAN LOSSES - - - -
-------- -------- ---------- ----------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 221,860 176,491 594,329 523,564
-------- -------- ---------- ----------
NON-INTEREST INCOME
Other charges 12,181 15,495 48,416 40,572
Gain on sale of foreclosed
real estate - - - 2,191
-------- -------- ---------- ----------
TOTAL NON-INTEREST INCOME 12,181 15,495 48,416 42,763
-------- -------- ---------- ----------
NON-INTEREST EXPENSE
GENERAL AND ADMINISTRATIVE
Compensation and benefits 96,641 58,640 449,297 169,584
Occupancy and equipment 11,500 9,585 27,559 29,056
Computer services 8,524 8,267 24,986 21,791
SAIF deposit insurance 4,561 10,721 18,471 33,077
Other 30,519 30,541 105,922 97,955
-------- -------- ---------- ----------
TOTAL NON-INTEREST EXPENSE 151,745 117,754 626,235 351,463
-------- -------- ---------- ----------
INCOME BEFORE TAXES 82,296 74,232 16,510 214,864
INCOME TAX (EXPENSE) BENEFIT (28,574) (27,689) 635 (80,145)
-------- -------- ---------- ----------
NET INCOME $ 53,722 $ 46,543 $ 17,145 $ 134,719
======== ======== ========== ==========
EARNINGS PER COMMON SHARE $ 0.06 $ 0.06
======== ==========
</TABLE>
Based on income allocated from May 21, 1997.
See Notes to Consolidated Financial Statements.
4<PAGE>
<PAGE>
ROCKY FORD FINANCIAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
June 30,
----------------------------
1997 1996
---------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 17,145 $ 134,719
----------- -----------
Adjustments to reconcile net income to
net cash provided by operating activities:
Amortization of:
Deferred loan origination fees (12,450) (8,046)
Discounts on investments (755) (1,022)
Stock dividend received from FHLB (15,300) (13,800)
ESOP market value expense 3,100 -
Depreciation 15,024 15,793
Change in assets and liabilities
Accrued interest receivable (20,742) 28,835
Prepaids 5,769 188
Accounts payable and accrued expenses 55,298 (58,692)
Current income taxes - 6,883
Deferred income - (2,191)
Deferred income taxes (14,109) -
----------- -----------
TOTAL ADJUSTMENTS 15,835 (32,052)
----------- -----------
NET CASH PROVIDED (USED) BY OPERATING
ACTIVITIES 32,980 102,667
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Net change in certificates of deposit 199,000 489,000
Loan originations and principal payments
on loans (835,687) (800,594)
Purchase of investment securities held to
maturity (248,906) -
Proceeds from maturities of investment
securities held to maturity - 2,200,000
Purchase of mortgage-backed securities - (1,485,000)
Principal payments on mortgage-backed
securities 84,666 157,130
Capital purchases (4,630) (32,468)
Proceeds from sale of foreclosed real estate - 17,430
Establishing retirement plan trust (216,482) -
----------- -----------
NET CASH PROVIDED (USED) BY INVESTING
ACTIVITIES (1,022,039) 545,498
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of common stock 3,542,440 -
Net change in deposits (389,936) 506,954
Net change in mortgage escrow funds (16,829) (17,602)
----------- -----------
NET CASH PROVIDED (USED) BY FINANCING
ACTIVITIES 3,135,675 489,352
----------- -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 2,146,616 1,137,517
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 2,221,416 1,260,363
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 4,368,032 $ 2,397,880
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS
Cash paid for:
Taxes $ 20,367 $ 43,205
Interest 323,093 297,264
</TABLE>
See Notes to Consolidated Financial Statements.
5<PAGE>
<PAGE>
ROCKY FORD FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
JUNE 30, 1997
Note 1. Nature of Business
Rocky Ford Financial, Inc. (the "Company") was incorporated under
the laws of the State of Delaware for the purpose of becoming the
holding company of Rocky Ford Federal Savings and Loan
Association (the "Association") in connection with the
Association's conversion from a federally chartered mutual
savings and loan association to a federally chartered stock
savings and loan association, pursuant to its Plan of
Conversion. The Company was organized in January 1997 to acquire
all of the common stock of Rocky Ford Federal Savings and Loan
Association upon its conversion to stock form. The subscription
and community offering of the Company's shares was completed on
May 21, 1997.
Note 2. Basis of Presentation
The accompanying unaudited consolidated financial
statements,(except for the statement of financial condition
at September 30, 1996, which is audited) have been prepared in
accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form
10-QSB of Regulation S-X. Accordingly, they do not include all
of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the
opinion of management all adjustments necessary for a fair
presentation of the financial position and results of operations
for the periods presented have been included. The financial
statements of the Company are presented on a consolidated basis
with those of Rocky Ford Federal Saving and Loan Association.
The account balances include only the accounts and operations of
Rocky Ford Federal Savings and Loan Association prior to May 21,
1997. The results of operations for the three and nine months
ended June 30, 1997 are not necessarily indicative of the results
of operations that may be expected for the year ended September
30, 1997.
The accounting policies followed are as set forth in Note 1. of
the Notes to Financial Statements in the 1996 Rocky Ford Federal
Savings and Loan Association financial statements
Note 3. Regulatory Capital Requirements
At June 30, 1997, the Association met each of the three current
minimum regulatory capital requirements. The following table
summarizes the Association's regulatory capital position at June
30, 1997:
Tangible Capital:
Actual $4,532,000 20.77%
Required 327,000 1.50
Excess $4,205,000 19.27%
Core Capital:
Actual $4,532,000 20.77%
Required 655,000 3.00
Excess $3,877,000 17.77%
6
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ROCKY FORD FINANCIAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
JUNE 30, 1997
Note 3. Regulatory Capital Requirements (Continued)
Risk-Based Capital:
Actual $4,592,000 53.55%
Required 686,000 8.00
Excess $3,906,000 45.55%
Tangible and core capital levels are shown as a percentage of
total adjusted assets; risk-based capital levels are shown as a
percentage of risk-weighted assets.
Note 4. Mutual to Stock Conversion
On January 14, 1997, The Board of Directors of the Association
adopted a Plan of Conversion (the Plan) under which the
Association would convert from a federally charted mutual savings
and loan association to a federally chartered stock savings and
loan association and become a wholly-owned subsidiary of the
Company formed in connection with the Conversion. The Plan was
approved by the Office of Thrift Supervision (OTS) and included
the filing of a registration statement with Securities and
Exchange Commission. The Plan was approved by the members of the
Association at a special meeting held May 6, 1997. In accordance
with the Plan, the Company issued common stock which was sold in
the Conversion. The closing of the offering occurred on May 21,
1997 and resulted in a stock offering of $4,232,000 (including
$331,560 in shares subscribed by the ESOP). The Company
transferred fifty percent of the net proceeds for the purchase of
all of the capital stock of the Association.
The costs of issuing the common stock were deferred and was
deducted from the proceeds of the stock sale and amounted to
$399,521.
For the purpose of granting eligible members of the Association a
priority in the event of future liquidation, the Association, at
the time of conversion, established a liquidation account equal
to its regulatory capital as of the date of the latest balance
sheet used in the final conversion offering circular. In the
event (and only in such event) of future liquidation of the
converted Association, an eligible savings account holder who
continues to maintain a savings account shall be entitled to
receive a distribution from the liquidation account, in the
proportionate amount of the then-current adjusted balance of the
savings deposits then held, before any distributions may be made
with respect to capital stock.
The Association may not declare or pay a cash dividend on its
common stock if its net worth would thereby be reduced below
either the aggregate amount then required for the liquidation
account or the minimum regulatory capital requirements imposed by
federal regulations.
The ESOP stock purchases will be financed by issuing a note to
the Company for the entire purchase.
Note 5. Retirement Plan
The Association Board of Directors adopted a retirement plan for
Directors and the Senior Officer effective March 31, 1997. The
amount accrued for the past services of those eligible was
approximately $226,000.
7
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ROCKY FORD FINANCIAL, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
COMPARISON OF FINANCIAL CONDITION AT JUNE 30, 1997 AND SEPTEMBER
30, 1996
The Company's total assets increased by $3.3 million or 16.28%
from $20.4 million at September 30, 1996 to $23.7 million at June
30, 1997.
The Company's loan portfolio increased by approximately $848
thousand during the nine months ended June 30, 1997. Net loans
totaled $13.1 million at June 30, 1997 and $12.3 million at
September 30, 1996.
The allowance for loan losses totaled $60,000 at June 30, 1997
and September 30, 1996. As of those dates the Company did not
have any non-performing loans in its portfolio. There were no
loans charged off or recoveries of previous loan losses during
the nine months ended June 30, 1997. The determination of the
allowance for loan losses is based on management's analysis,
performed on a quarterly basis, of various factors, including the
market value of the underlying collateral, growth and composition
of the loan portfolio, the relationship of the allowance for loan
losses to outstanding loans, historical loss experience,
delinquency trends and prevailing economic conditions. Although
management believes its allowance for loan losses is adequate,
there can be no assurance that additional allowances will not be
required or that losses on loans will not be incurred. The
Company has had minimal losses on loans in prior years. At June
30, 1997, the ratio of the allowance for loan losses to net loans
was .46%. as compared to .49% at September 30, 1996.
At June 30, 1997, the Company's investment portfolio included
mortgage-backed and related securities classified as "held to
maturity" carried at amortized cost of $3.3 million and an
estimated fair value of $3.4 million, and equity securities
classified as "available for sale" with an estimated fair value
of $405 thousand. The balance of the Company's investment
portfolio at June 30, 1997 consists of interest bearing deposits
with various financial institutions totaling $4.3 million.
At June 30, 1997 deposits decreased to $16.8 million from $17.1
million at September 30, 1996 or a net decrease of 2.27%. The
decrease is attributed to withdrawals to purchase common stock.
Management is continually evaluating the investment alternatives
available to the Company's customers, and adjusts the
pricing on its savings products to maintain its existing
deposits.
COMPARISON OF OPERATING RESULTS FOR THE NINE MONTHS ENDED JUNE
30, 1997 AND 1996
Net Income. The Company's net income for the nine months ended
June 30, 1997 was $17,145 compared to net income of $134,719 for
the nine months ended June 30, 1996. The decrease in net
earnings for the six months ended June 30, 1997 resulted
primarily from the recognition of past service retirement
expense of approximately $142,000, net of deferred income tax
effect, in accordance with the retirement plan adopted
by the board of directors effective March 31, 1997.
Net Interest Income. Net interest income for the nine months
ended June 30, 1997 was $594,000 compared to $524,000 for the
nine months ended June 30, 1996. The increase in net interest
income for the nine months ended June 30, 1997 was due to an
increase in the interest rate spread from 3.04% in 1996 to 3.18%
in 1997.
Interest Income. Interest income increased by $83,000 from
$1,139,000 to $1,222,000 or by 7.29%, during 1997 compared to
1996. This increase resulted in part from an overall increase of
interest-earning assets by $2,964,000 from $19,451,000 to
$22,415,000 or by 15.24% from 1996 to 1997. The Company
experienced a increase in the average yield on the
interest-earning assets from 7.81% in 1996 to 8.02% in 1997.
8
<PAGE>
ROCKY FORD FINANCIAL, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
Interest Expense. Interest expense increased $12,000 to $627,000
for the nine months ended June 30, 1997 from $615,000 for the
nine months ended June 30, 1996. The comparable expense for the
periods was caused by the increase of the average rate paid from
4.77% in 1996 to 4.84% in 1997 with a corresponding decrease in
deposits from $17,145,000 in 1996 to $16,755,000 in 1997.
Provision for Loan Losses. The allowance for loan losses is
established through a provision for loan losses based on
management's evaluation of the risk inherent in its loan
portfolio and the general economy. Such evaluation considers
numerous factors including, general economic conditions, loan
portfolio composition, prior loss experience, the estimated fair
value of the underlying collateral and other factors that warrant
recognition in providing for an adequate loan loss allowance.
The Company determined a provision for loan loss was not required
for the nine months ended June 30, 1997 and 1996.
Non-Interest Expense. The increase in the non-interest expense
section of the consolidated statement of income is attributed to
a $226,000 expense recognized in accordance with the retirement
plan adopted by the board effective March 31, 1997.
COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED JUNE
30, 1997 AND 1996
Net Income (Loss). The Company's net income for the three months
ended June 30, 1997 was $54,000 compared to net income of $47,000
for the three months ended June 30, 1996. The increase is
attributed to the additional funds available to Company from the
stock offering, less the effects of benefit plans that have
been adopted in the current period.
The other accounts and balances as of June 30, 1997 are
comparable to June 30, 1996
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary sources of funds consists of deposits,
repayment of loans and mortgage-backed securities, maturities of
investments and interest-bearing deposits, and funds provided
form operations. While scheduled repayments of loans and
mortgage-backed securities and maturities of investment
securities are predicable sources of funds, deposit flows and
loan prepayments are greatly influenced by the general level
of interest rates, economic conditions and competition. The
Company uses its liquidity resources principally to fund existing
and future loan commitments, to fund maturing certificates of
deposit and demand deposit withdrawals, to invest in other
interest-earning assets, to maintain liquidity, and to meet
operating expenses. Management believes that proceeds from the
stock sale, loan repayments and other sources of funds will be
adequate to meet the Company's liquidity needs for the immediate
future.
The Company is required to maintain minimum levels of liquid
assets as defined by OTS regulations. This requirement, which
may be varied at the direction of the OTS depending upon economic
conditions and deposit flows, is based upon a percentage of
deposits and short-term borrowings. The required minimum ratio
is currently 5%. The Company has historically maintained a level
of liquid assets in excess of regulatory requirements. The
Company's liquidity ratios at June 30, 1997 and 1996 were 23% and
29%, respectively.
9
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ROCKY FORD FINANCIAL, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
IMPACT OF INFLATION AND CHANGING PRICES
The financial statements and related data presented herein have
been prepared in accordance with generally accepted accounting
principles, which require the measurement of financial position
and results of operations in terms of historical dollars without
considering changes in the relative purchasing power of money
over time because of inflation. Unlike most industrial
companies, virtually all of the assets and liabilities of the
Company are monetary in nature. As a result, interest rates have
a more significant impact on the Company's performance than the
effects of general levels of inflation. Interest rates do not
necessarily move in same direction or in the same magnitude as
the prices of goods and services.
10
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ROCKY FORD FINANCIAL, INC.
PART II - OTHER INFORMATION
ITEM 1: Legal Proceedings
None.
ITEM 2: Changes in Securities
Not Applicable.
ITEM 3: Defaults Upon Senior Securities
Not Applicable
ITEM 4: Submission of Matters to a Vote of Security Holders.
Not Applicable
ITEM 5: Other Information
None
ITEM 6: Exhibits and Reports on Form 8-K
None
SIGNATURE
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.
Rocky Ford Financial, Inc.
Registrant
Date August 12, 1997 /s/ Keith E Waggoner
----------------------------
Keith E. Waggoner, President
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> JUN-30-1997
<CASH> 68,032
<INT-BEARING-DEPOSITS> 5,998,000
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 748,906
<INVESTMENTS-CARRYING> 2,532,856
<INVESTMENTS-MARKET> 2,629,000
<LOANS> 13,135,046
<ALLOWANCE> 60,000
<TOTAL-ASSETS> 23,707,782
<DEPOSITS> 16,754,702
<SHORT-TERM> 0
<LIABILITIES-OTHER> 583,427
<LONG-TERM> 0
<COMMON> 4,232
0
0
<OTHER-SE> 6,365,421
<TOTAL-LIABILITIES-AND-EQUITY> 23,707,782
<INTEREST-LOAN> 838,550
<INTEREST-INVEST> 202,725
<INTEREST-OTHER> 180,860
<INTEREST-TOTAL> 1,222,135
<INTEREST-DEPOSIT> 627,806
<INTEREST-EXPENSE> 627,806
<INTEREST-INCOME-NET> 594,329
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 626,235
<INCOME-PRETAX> 16,510
<INCOME-PRE-EXTRAORDINARY> 16,510
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 17,145
<EPS-PRIMARY> .06
<EPS-DILUTED> .06
<YIELD-ACTUAL> 8.02
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 60,000
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 60,000
<ALLOWANCE-DOMESTIC> 60,000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
