U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
[ ] 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 0-22951
LANDMARK FINANCIAL CORP.
-----------------------
(Exact name of Registrant as specified in its Charter)
Delaware 16-1531343
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
211 Erie Boulevard, Canajoharie, New York 13317
----------------------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (518) 673-2012
-------------
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
reports), and (2) has been subject to such filing requirements for the
past 90 days.
Yes X No
--- ---
As of June 30, 1999, there were 154,508 shares of the
Registrant's common stock, par value $0.10 per share, outstanding.
Transitional Small Business Disclosure Format (check one): Yes X No
-- --
<PAGE>
LANDMARK FINANCIAL CORP. AND SUBSIDIARY
Table of Contents
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Statements of Financial Condition at June 30,
1999 and March 31, 1999........................................3
Consolidated Statements of Operations for the three months ended
June 30, 1999 and 1998.........................................4
Consolidated Statement of Changes In Stockholders' Equity for
the
three Months ended June 30, 1999...............................5
Consolidated Statements of Cash Flows for the three months ended
June 30, 1999 and 1998.........................................6
Notes to Consolidated Financial Statements..........................7
Item 2. Management's Discussion and Analysis of Financial Condition
And Results of Operations...........................................9
PART II - OTHER INFORMATION...................................................15
SIGNATURES....................................................................17
FINANCIAL DATA SCHEDULE.......................................................18
2
<PAGE>
<TABLE>
<CAPTION>
Landmark Financial Corporation and Subsidiary
Consolidated Statements of Financial Condition
June 30, 1999 and March 31, 1999
June 30, 1999 March 31,1999
------------- -------------
(Unaudited)
Assets
<S> <C> <C>
Cash $654,476 $285,227
Interest Bearing Deposits 40,167 10,600
Investment Securities, (Available For Sale) 1,784,026 1,900,992
Mortgage-Backed Securities, (Held To Maturity) 33,702 38,468
Loans Receivable, Net 20,584,006 19,189,257
Accrued Interest Receivable 124,397 107,805
Stock In Federal Home Loan Bank, At Cost 100,900 100,900
Premises And Equipment, At Cost
Less Accumulated Depreciation 576,374 583,401
Deferred Tax Asset 35,547 39,597
Foreclosed Real Estate 0 118,815
Other Assets 90,961 78,261
------ ------
Total Assets $24,024,556 $22,453,323
=========== ===========
Liabilities and Stockholders' Equity
Accounts Payable 2,015 1,853
Deposits 19,953,750 19,273,877
Accrued Interest On Deposits 146 0
Advance Payments By Borrowers For Taxes
And Insurance 147,624 108,174
Advances From FHLB 1,952,452 1,084,586
Accrued Expenses And Other Liabilities 53,124 56,899
------ ------
Total Liabilities $22,109,112 $20,525,389
----------- -----------
Stockholders' Equity:
Preferred Stock, $0.10 Par Value Per Share:
100,000 Shares Authorized; None Issued 0 0
Common Stock, $0.10 Par Value Per Share:
400,000 Shares Authorized; 154,508 and 152,000
issued at June 30, 1999 and
March 31, 1999 Respectively 15,200 15,200
Additional Paid-In Capital 1,192,833 1,192,833
Retained Earnings, Substantially Restricted 879,488 867,348
Accumulated Other Comprehensive Income (Loss) (32,060) (5,403)
Unearned Stock Based Compensation (32,604) (32,604)
Unearned ESOP Shares (107,413) (1109,440)
--------- ----------
Total Stockholders' Equity $ 1,915,444 $1,927,934
----------- ----------
Total Liabilities and Stockholders' Equity $24,024,556 $ 22,453,323
=========== ============
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
3
<PAGE>
<TABLE>
<CAPTION>
Landmark Financial Corporation and Subsidiary
Consolidated Statements of Operations
June 30, 1999 and 1998
(Unaudited)
For the Three Months Ended 6/30
1999 1998
---- ----
Interest income:
<S> <C> <C>
Loans receivable $429,103 $315,157
Mortgage-backed securities 737 1,348
Investments 32,320 47,618
------ ------
Total interest income 462,160 364,123
Interest expense:
Deposits 249,989 210,190
Advances from FHLB 17,877 0
------ -----------
Total interest expense 267,866 210,190
------- -------
Net interest income 194,294 153,933
Provision for losses on loans 12,500 18,447
------ ------
Net interest income after provision
for losses on loans 181,794 135,486
Non-interest income:
Late charges and other loan fees 10,045 6,996
Gain on sale of investment securities
and mortgage-backed securities 1,725 0
Commissions and other fees 9,256 2,637
Other 2,060 3,923
----- -----
Total non-interest income 23,086 13,556
Non-interest expense:
Compensation and employee benefits 87,132 81,607
Office buildings and equipment 15,283 2,446
Data processing 12,951 9,936
Advertising 1,134 1,638
Deposit insurance premiums 3,856 3,848
Other 67,412 64,778
Amortization of cost in excess of fair
Value of net assets acquired 923 7,450
--- -----
Total non-interest expense 188,691 171,703
------- -------
Income (loss) before income taxes 16,190 (22,661)
Income taxes 4,050 (6,155)
----- -------
Net income (loss) 12,140 ($16,506)
====== ========
Earnings per share $0.09 ($0.12)
===== =======
Average common and common
equivalent shares outstanding 142,430 139,942
======= =======
See accompanying notes to unaudited consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Landmark Financial Corporation and Subsidiary
Consolidated Statements of Changes in Stockholders' Equity
Three Months Ended June 30, 1999
(Unaudited)
Additional Accumulated Unearned Unearned Total
Common Paid-in Retained Other Comprehensive Stock based ESOP Stockholders'
Stock Capital earnings Income (Loss) Compensation Shares Equity
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at March 31, 1999 $15,200 $1,192,833 $867,348 ($5,403) ($32,604) ($109,440) $1,927,934
Comprehensive Income (loss)
Net income (loss) 12,140 12,140
Change in unrealized gain
(loss) on securities
available for sale, net (26,657) (26,657)
of tax effects
Total Comprehensive
Income (loss)
(14,517)
Unearned stock
Based compensation (32,604) (32,604)
ESOP shares earned 2,027 2,027
- ------------------------------------------------------------------------------------------------------------------------------------
Balances at June 30,1999 $15,200 $1,192,833 $879,488 (32,060) ($32,604) ($107,413) $1,915,444
======= ========== ======== ======== ========= ========== ==========
See accompanying notes to audited consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Landmark Financial Corporation and Subsidiary
Consolidated Statements of Cash Flows
Three Months Ended June 30, 1999 and 1998
(Unaudited)
June 30,
1999 1998
CASH FLOWS PROVIDED (USED) BY OPERATING ACTIVITIES
<S> <C> <C>
Net income (loss) $12,140 ($16,506)
Adjustments to reconcile net income to net cash provided by (used in)
Operating activities
Depreciation 11,677 4,017
Amortization (accretion), net 923 3,433
Provision for loan losses 12,500 18,447
Deferred income taxes 4,050 (6,155)
Allocation of ESOP shares 2,027 2,027
Decrease (increase) in
Accrued interest receivable (16,592) (19,890)
Other assets 106,115 (47,688)
Increase (decrease) in
Accounts payable 162 39
Other liabilities (3,629) 19,459
------- ------
129,373 (42,817)
CASH FLOWS PROVIDED (USED) BY INVESTING ACTIVITIES
Net increase in loans receivable (1,407,249) (1,140,218)
Proceeds from maturities and calls of available-for-sale securities 90,664 0
Purchase of available-for-sale securities (101,000) 0
Proceeds from principal repayments of mortgage-backed securities 4,489 11,180
Purchase of premises and equipment (4,649) (177,694)
Proceeds from sale of available-for-sale securities 100,000 0
------- ---------
(1,317,746) (1,306,732)
----------- -----------
CASH FLOWS PROVIDED (USED) BY FINANCING ACTIVITIES
Net increase (decrease) in deposits 679,873 2,153,233
Net increase (decrease) in short term advances, FHLB 150,000 0
Proceeds from long term advances, FHLB 750,000 0
Payments on long term advances, FHLB (32,134) 0
Increase (decrease) in advances from borrowing taxes and insurance 39,450 35,229
------ ------
4,258,172 5,674,732
--------- ---------
Net increase (decrease) in cash 398,816 838,913
CASH, beginning of year 295,827 1,530,236
------- ---------
CASH, end of period $694,643 $2,369,149
======= ==========
SUPPLEMENTAL DISCLOURES:
Cash paid for:
Income taxes $0 $0
-= --
Interest $267,866 $210,151
======== ========
Transfers from loans to real estate acquired through foreclosure $0 $0
== ==
Increase (decrease) on unrealized gain
on securities available-for-sale ($26,657) $2,376
========= ======
See accompanying notes to unaudited consolidated financial statements.
</TABLE>
LANDMARK FINANCIAL CORP. AND SUBSIDIARY
Notes To Consolidated Financial Statements
(Unaudited)
June 30, 1999
(1) Landmark Financial Corp. and Subsidiary
Landmark Financial Corp. (the Company) was incorporated under the laws
of the state of Delaware for the purpose of becoming the savings and
loan holding company of Landmark Community Bank, a Savings Bank (the
Bank) in connection with the Bank's conversion from a federally
chartered mutual savings bank to a federally chartered stock savings
bank, pursuant to its Plan of Conversion. On August 12, 1997, the
Company commenced a Subscription and Community Offering of its shares
in connection with the conversion of the Bank (the Offering). The
Offering was consummated and the Company acquired the Bank on November
13, 1997. The Company had no assets prior to the conversion and
acquisition on November 13, 1997.
The accompanying consolidated financial statements as of and for the
three months ended June 30, 1999, and June 30, 1998 and the statement
of financial condition as of March 31, 1999, respectively include the
accounts of the Company and the Bank.
(2) Basis of Preparation
The accompanying unaudited consolidated financial statements were
prepared in accordance with instructions for Form 10-QSB. To the extent
that information and footnotes required by generally accepted
accounting principles for complete financial statements are contained
in or consistent with the audited financial statements incorporated by
reference in the Company's Annual Report on Form 10-KSB for the year
ended March 31, 1999, such information and footnotes have not been
duplicated herein. In the opinion of management, all adjustments
consisting only of normal recurring accruals which are necessary for
the fair presentation of the interim financial statements have been
included. The consolidated statement of operations for the three month
period ended June 30, 1999 is not necessarily indicative of the results
which may be expected for the entire year. The March 31, 1999 balance
sheet has been derived from the audited financial statements of that
date.
(3) Earnings Per Share
On November 13, 1997, 152,000 shares of the Company's stock were
issued, including 12,160 shares issued to the Employees Stock
Ownership Plan (ESOP). Income per share amounts for the three month
period ended June 30, 1999 is based upon 142,430 shares, exclusive of
10,741 unearned shares issued to the ESOP, as though those shares were
outstanding for the entire period.
<PAGE>
LANDMARK FINANCIAL CORP. AND SUBSIDIARY
Notes To Consolidated Financial Statements
(Unaudited)
June 30, 1999
(4) Stockholders' Equity and Stock Conversion
The Bank converted from a federally chartered mutual savings bank to a
federally chartered stock savings bank pursuant to its Plan of
Conversion which was approved by the Bank's members on September 23,
1997. The conversion was effective on November 23, 1997 and resulted in
the issuance of 152,000 shares of common stock (par value $0.10) at
$10.00 per share for a gross sales price of $1,520,000. Cost related to
conversion (primarily underwriters' commissions, printing and
professional fees) aggregated $311,967 and were deducted to arrive at
the net proceeds of $1,086,433 net of the ESOP loan. The company
established an employee stock ownership trust which purchased 12,160
shares of common stock of the Company at the issuance price of $10.00
per share with funds borrowed from the Bank.
(5) Employee Stock Ownership Plan
All employees meeting age and service requirements are eligible to
participate in an ESOP established on November 23, 1997. Contributions
made by the Bank to the ESOP are allocated to participants by a formula
based on compensation. Participant benefits become 100% vested after
five years. ESOP expense for the periods ended June 30, 1999 and June
30, 1998 was $2,027 each period.
<PAGE>
Landmark Financial Corp. and Subsidiary
June 30, 1999
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion compares the financial condition of Landmark Financial
Corp. and its wholly owned subsidiary, Landmark Community Bank, a Savings Bank,
(collectively the Bank) at June 30, 1999 to the financial condition at March 31,
1999, its fiscal year-end, and the results of operations for the three months
ended June 30, 1999, with the same period in fiscal 1998. This discussion should
be read in conjunction with the interim financial statements and notes which are
included herein.
General
Landmark Financial Corp. was organized as a Delaware corporation in June 1997 to
acquire all of the capital stock issued by Landmark Community Bank, a Savings
Bank upon its conversion from the mutual to stock form of ownership. Landmark
Community Bank, a Savings Bank was founded in 1925 as a New York chartered
savings and loan association located in Canajoharie, New York. In 1997, its
members voted to convert to a federal charter. The business of the holding
company consists primarily of the business of the Bank.
The Bank conducts its business through its main office in Canajoharie,
Montgomery County, New York. The Bank has been, and intends to continue 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 mortgage loans,
construction and land loans for single-family residential properties, and
consumer loans consisting primarily of loans secured by automobiles. While the
Bank's primary business has been that of a traditional thrift institution,
originating loans in its primary market area for retention in its portfolio, the
Bank also has been an active participant in the origination of consumer loans
primarily for the purchase of automobiles.
The most significant factors influencing the operations of the Bank and other
financial institutions include general economic conditions, competition in the
local market place and the related monetary and fiscal policies of agencies that
regulate financial institutions. More specifically, the cost of funds primarily
consisting of insured deposits is influenced by interest rates on competing
investments and general market rates of interest, while lending activities are
influenced by the demand for real estate financing and other types of loans,
which in turn is affected by the interest rates at which such loans may be
offered and other factors affecting loan demand and funds availability.
Financial Condition
Total assets increased $1.57 million, or 7.0%, to $24.02 million at June 30,
1999 from $22.45 million at March 31, 1999. The increase in assets is due to
increases in loans receivable outstanding and cash on hand.
Loans receivable, net, increased by $1.4 million, or 7.2%, to $20.58 million at
June 30, 1999 from $19.19 million at March 31, 1999, primarily due to increases
in consumer loans of $469,000, an increase in commercial loans of $477,000, and
an increase in one-to-four family portfolio loans of $397,000.
Investment and mortgage-backed securities decreased $122,000 or 6.3% to $1.82
million at June 30, 1999 from $1.94 million at March 31, 1999. The decrease was
primarily due to principal pay down of mortgage backed securities.
<PAGE>
Landmark Financial Corp. and Subsidiary
June 30, 1999
Foreclosed real estate decreased to $0 from $119,000 due to the sale of the
(two) properties in April 1999.
Deposits increased $685,000, or 3.5%, to $19.95 million at June 30, 1999 from
$19.27 million at March 31, 1999. The increase in deposits is primarily
attributable to an increase in savings deposits of $365,000 and an increase in
DDA accounts of $321,000.
Total equity decreased $12,490, or 0.6%, to $1,915,444 at June 30, 1999 from
$1,927,934 at March 31, 1999, due to an decrease in accumulated other
comprehensive income of $26,657 which was due to a decline in the market value
of securities. Net profit for the three months ended June 30, 1999 of $12,140
partially offset the decrease in other comprehensive income as did the $2,027
decrease in unearned ESOP shares.
Comparison of Operating Results for the Three Months Ended June 30, 1998 and the
Three Months Ended June 30, 1999
Performance Summary. The Company's net income increased $28,646 to $12,140 for
the three months ended June 30, 1999, compared to a net loss of $16,506 for the
three months ended June 30, 1998. The increase in earnings for the three months
ended June 30, 1999 as compared to the same period in 1998 is primarily due to
increases in net interest income and non-interest income, and a decrease in
provision for loan losses, partially offset by an increase in non-interest
expense.
Net interest income. The Company's net interest income increased $40,361 or
26.2%, to $194,294 for the three months ended June 30, 1999, from $153,933 for
the three months ended June 30, 1998. The increase in net interest income
reflects an increase of $98,037 in interest income and a corresponding increase
of $57,676 in interest expense for the three months ended June 30, 1999 as
compared to the same period in 1998. The increase in interest income reflects
increased balances of loans receivable, primarily consumer auto loans,
commercial and agricultural mortgage loans, and one-to-four family mortgage
loans. Interest expense increased primarily due to the increase in savings
deposits.
Provision for Loan Losses. During the three months ended June 30, 1999, the Bank
charged $12,000 against earnings as a provision for loan losses compared to a
provision of $18,447 charged against earnings for the three months ended June
30, 1998. The allowance for loan losses at June 30, 1999 was .97% of loans
receivable, as compared to .89% of loans receivable, at March 31, 1998. Total
nonperforming loans at June 30, 1999 were $51,366, or 0.25% of loans receivable,
as compared to total nonperforming loans at March 31, 1999 of 106,181 or 0.55%
of loans receivable.
Management regularly reviews the loan portfolio, including problem loans, and
changes in the relative makeup of the loan portfolio to determine whether any
loans require classification or the establishment of additional reserves.
Management will continue to monitor its allowance for loan losses and make
future additions to the allowance as economic conditions dictate. Although the
Bank maintains its allowance for loan losses at a level which it considers to be
adequate to provide for potential losses, there can be no assurance that future
losses will not exceed estimated amounts or that additional provisions for loan
losses will not be required in future periods.
Noninterest Income. For the three months ended June 30, 1999, noninterest income
increased $9,530 or 70.3%, to $23,086 from $13,556 for the same period in 1998.
The increase was primarily due to an increase in both loan and deposit fees and
a gain realized on the sale of investment securities in the amount of $1,725. No
investment securities were sold in the three months ended June 30, 1998.
<PAGE>
Landmark Financial Corp. and Subsidiary
June 30, 1999
Noninterest Expense. Noninterest expense increased $16,988 or 9.9%, to $188,691
for the three months ended June 30, 1999 from $171,703 for the same period in
1998. The increase was primarily due to an increase in occupancy expense of
$12,837 due to the Bank's new facilities and equipment, an increase in employee
compensation and related benefits expense of $5,525 and increases in other
expenses primarily related to the increased operating expenses related to a
stock savings bank and increased data processing expense.
Nonperforming Assets
On June 30, 1999, nonperforming assets were $51,366 compared to $225,646 on
March 31, 1999. The nonperforming assets at June 30 consisted of non-accrual
loans while at March 31, 1999 there were non-accrual loans of 106,831 and
foreclosed assets of $118,815. The balance of the Bank's allowance for loan
losses was $202,334 or 393.9% of nonperforming assets as of June 30, 1999. The
balance of the Bank's allowance for loan losses was $191,019 or 84.7% of
nonperforming assets as of June 30, 1998. Loans are considered nonperforming
when the collection of principal and/or interest is not probable, or in the
event payments are more than ninety days delinquent.
Capital Resources
The Bank is subject to three capital to asset requirements in accordance with
OTS regulations. The following table is a summary of the Bank's regulatory
capital requirements versus actual capital as of June 30, 1999 and March 31,
1999, respectively:
<TABLE>
<CAPTION>
June 30, 1999
-------------
Actual Required Excess
amount/percent amount/percent amount/percent
-------------- -------------- --------------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Tangible $1,890 7.86% $361 1.50% $1,529 6.36%
Core leverage capital $1,890 7.86% $962 4.00 $ 928 3.86%
Risk-based capital $2,092 12.86% $1,301 8.00% $ 791 4.86%
</TABLE>
<TABLE>
<CAPTION>
March 31, 1999
--------------
Actual Required Excess
amount/percent amount/percent amount/percent
-------------- -------------- --------------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Tangible $1,860 8.29% $337 1.50% $1,523 6.79%
Core leverage capital $1,860 8.29% $897 4.00% $963 4.29%
Risk-based capital $2,051 13.18% $1,245 8.00% $806 5.18%
</TABLE>
Landmark Financial Corp. and Subsidiary
June 30, 1999
Liquidity
The Bank's principal sources of funds are deposits, principal and interest
payments on loans and investment securities. While scheduled loan repayments and
maturing investments are relatively predictable, deposit flows and early loan
prepayments are more influenced by interest rates, general economic conditions
and competition. Additional sources of funds may be obtained from the FHLB of
New York by utilizing numerous available products to meet funding needs.
The Bank is required to maintain minimum levels of liquid assets as defined by
regulations. The required percentage is currently 4.0% of net withdrawable
savings deposits and borrowings payable on demand or in one year or less. The
Bank has maintained its liquidity ratio at levels exceeding the minimum
requirement. The eligible liquidity ratios at June 30, 1999 and March 31, 1999
were 13.30% and 12.95%, respectively.
In light of the competition for deposits, the Bank may utilize the funding
source of the FHLB to meet demand in accordance with the Bank's growth plans.
The wholesale funding sources may allow the Bank to obtain a lower cost of
funding and create a more efficient liability match to the respective assets
being funded.
For the purpose of the cash flow statement, all short-term investments with a
maturity of three months or less at date of purchase are considered cash
equivalents. Cash and cash equivalents for the periods ended June 30, 1999 and
March 31, 1999 were $694,657 and $295,827, respectively. The increase was
primarily due to the fact that increases in deposits of $680,000, as well as
FHLB advances of $868,000, and proceeds from principal repayment of mortgage
backed securities of $91,000 were only partially offset by an increase in loans
receivable of $1.4 million.
Net cash provided by operating activities increased to $129,373 at June 30,
1999, from $(42,817) at June 30, 1998.
Year 2000
The Bank has conducted a review of its computer systems in order to determine
which systems could be affected by the "Year 2000" issue, and developed an
implementation plan to resolve any identified problem. The testing phase of the
implementation plan is currently under way. The "Year 2000" problem is the
result of computer programs that were written using a two digit field rather
than a four digit field to define the year. For example, programs that have
date-sensitive fields may recognize a date using "00" as the year 1900 rather
than the year 2000. The results of this programming error could be system
failure or miscalculation. Management believes that with modifications to
existing software and by converting to new hardware, the "Year 2000" problem
will not pose significant operational problems for the Bank. Given the Bank's
interdependence on a third-party service provider, the internal costs related to
the Bank's Year 2000 efforts will consist primarily of accelerating various
hardware and software upgrades which generally would have been incurred in the
normal course of business, and testing various information systems. The upgrades
for hardware and software were substantially in place as of December 31, 1998.
Management believes that the internal costs necessary to address the "Year 2000"
issue have been identified and these costs have been estimated to be
approximately $20,000. Management cannot guarantee that any third-party service
provider will be Year 2000 ready other than through assurances provided from the
third party service provider to the Company. All third party providers have been
contacted and the Company has received such assurances.
<PAGE>
Landmark Financial Corp. and Subsidiary
June 30, 1999
Recent Developments
FASB Statement on Employer Disclosures about Pensions and Post-retirement
Benefits In February, 1998, the FASB issued SFAS No. 132 which standardizes the
disclosure requirements for pensions and other post-retirement benefits;
requires additional information on changes in the benefit obligations and fair
values of plan assets; and eliminates certain present disclosure requirements.
The Statement does not change the measurement or recognition requirements for
post-retirement benefits. SFAS No. 132 is effective for fiscal years beginning
after December 15, 1997 and, accordingly, will be adopted by the Company in the
year ending March 31, 1999. Management does not expect that this standard will
significantly affect the Company's financial reporting.
FASB Statement on Derivatives and Hedging Activities - In June, 1998, the FASB
issued SFAS No. 133 which establishes accounting and reporting standards for
derivative instruments and for hedging activities. The Statement requires that
an entity recognize all derivatives as either assets or liabilities in the
balance sheet at fair value. If certain conditions are met, a derivative may be
specifically designated as a fair value hedge, a cash flow hedge, or a foreign
currency hedge. Entities may reclassify securities from the held-to-maturity
category to the available-for-sale category at the time adopting SFAS No. 133.
SFAS No. 133 is effective for all fiscal quarters of fiscal years beginning
after June 15, 1999 and, accordingly, would apply to the Company beginning on
April 1, 2000. The Company plans to adopt the standard at that time and does not
presently intend to reclassify securities between categories. The Company has
not engaged in derivatives and hedging activities covered by the new standard,
and does not expect to do so in the foreseeable future. Accordingly, SFAS No.
133 is not expected to have a material impact on the Company's financial
statements.
FASB Statement on Mortgage-Backed Securities Retained after the Securitization
Of Mortgage Loans Held for Sale by a Mortgage Banking Enterprise - In October,
1998 the FASB issued SFAS No. 134 which amends SFAS No. 65 "Accounting for
Certain Mortgage Banking Activities". Statement No. 65, as amended by Statement
No. 115 and Statement No. 125, required that after securitization of a mortgage
loan held for sale, a mortgage banking enterprise classify the resulting
security as a trading security. Statement No. 134 amends this section to require
that after the securitization of mortgage loans held for sale, the entity
classify the resulting mortgage-backed security or other retained interest based
on its ability and intent to sell or hold those investments. SFAS 134 is
effective for the first quarter beginning after December 15, 1998 and
accordingly would apply to the Company for the year ending March 31, 1999. The
Company has not engaged in retaining securities after the securitization of its
mortgage loans held for sale and does not expect to do so in the foreseeable
future. Accordingly, SFAS No. 134 is not expected to have a material impact on
the Company's financial statements
<PAGE>
Item 3. Quantitative and Qualitative Disclosures about Market Risk
The Company's most significant form of market risk is interest rate risk, as the
majority of the Company's assets and liabilities are sensitive to changes in
interest rates. The Company's assets consist primarily of fixed rate mortgage
and consumer loans which have longer maturities than the Company's liabilities
which consist primarily of deposits. The Company's mortgage loan portfolio,
consisting primarily of loans secured by residential real property located in
Montgomery County, is also subject to risks associated with the local economy.
The Company does not own any trading assets. At June 30, 1999, the Company did
not have any hedging transactions in place, such as interest rate swaps and
caps. The Company's interest rate risk management program focuses primarily on
evaluating and managing the composition of the Company's assets and liabilities
in the context of various interest rate scenarios. Factors beyond management's
control, such as market interest rates and competition, also have an impact on
interest income and interest expense.
During the quarter ended June 30, 1999, there were no significant changes in the
Company's assessment of market risk.
<PAGE>
Landmark Financial Corp. and Subsidiary
June 30, 1999
Part II - Other Information
Item 1. Legal Proceedings
From time to time, the Company is involved as a plaintiff or defendant
in various legal actions incident to its business. None of these actions
individually or in the aggregate is believed to be material to the financial
condition of the Company.
Item 2. Changes in Securities and Use of Proceeds
Not applicable
Item 3. Defaults Upon Senior Securities
Not applicable
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
Financial Data Schedule Attached
<PAGE>
Landmark Financial Corp. and Subsidiary
June 30, 1999
SIGNATURES
Under the requirement of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
LANDMARK FINANCIAL CORP.
Date : 07/30/99 /s/ Gordon E. Coleman
------------------------------------------
Gordon E. Coleman
President and Chief Executive Officer
(Duly Authorized Officer)
Date : 07/30/99 /s/ Paul S. Hofmann
------------------------------------------
Paul S. Hofmann
Vice President and Chief Financial Officer
(Principal Financial Officer)
<PAGE>
Landmark Financial Corporation and Subsidiary
Financial Data Schedule
Three Months Ended June 30, 1999
(Unaudited)
Multiplier: 1,000
Period Type 3 months
Fiscal year-end 03/31/00
Period-end 06/30/99
<TABLE>
<S> <C>
Cash 654.5
Interest-bearing deposits 40.2
Federal funds sold-purchased securities for resale 0.0
Trading account assets 0.0
Investment and mortgage-backed securities held for sale 1,784.0
Investment and mortgage-backed securities held to maturity - carrying value 33.7
Investment and mortgage-backed securities held to maturity - market value 33.4
Loans 20,584
Allowance for losses (202.3)
Total assets 24,025
======
Deposits 19,953,750
Short-term borrowings 400.0
Other liabilities 202.9
Long-term debt 1,552.5
Common stocks 15.2
Preferred stock -mandatory redemption 0.0
Preferred stock - no mandatory redemption 0.0
Other stockholders' equity 1,900.2
-------
Total Liabilities and stockholders' equity 24,025
</TABLE>
<PAGE>
Landmark Financial Corporation and Subsidiary
Financial Data Schedule
Three Months Ended June 30, 1999
(Unaudited)
(Page 2)
Interest and fees on loans 429.1
Interest and dividends on investments 33.5
Other interest income 0.0
Total interest income 462.2
Interest on deposits 250.0
Total interest expense 267.9
Net interest income 194.3
Provision for loan losses (12.5)
Investment securities gains/losses 1.7
Other expenses (188.7)
Income/loss before income tax 16.2
Income/loss before extraordinary items 16.2
Extraordinary items, less tax 0.0
Cumulative change in accounting principles 0.0
Net income or (loss) 12.1
Earnings per share - primary 0.09
Earnings per share - fully diluted 0.09
Net yield - interest-earning assets - actual 3.19
Loans on non-accrual 51.4
Accruing loans past due 90 days or more 0.0
Troubled debt restructuring 0.0
Potential problem loans 62.2
Allowance for loan loss -beginning of period 191.0
Total charge-offs (3.0)
Total recoveries 0.0
Allowance for loan loss - end of period 202.3
Loan loss allowance allocated to domestic loans 0.0
Loan loss allowance allocated to foreign loans 0.0
Loan loss allowance - unallocated 202.3
