U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
----------------------------------------
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 December 31, 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.
X Yes No
--- ---
As of December 31, 1999, there were 154,208 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>
Form 10-QSB
LANDMARK FINANCIAL CORP. AND SUBSIDIARY
Table of Contents
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Statements of Financial Condition at December 31,
1999, (unaudited) and March 31,1999.................................3
Consolidated Statements of Operations for the three months and
nine months ended December 31, 1999 and 1998,
(unaudited).........................................................4
Consolidated Statement of Changes In Stockholders' Equity for
the nine months ended December 31, 1999,
(Unaudited)..................................5
Consolidated Statements of Cash Flows for the nine months
ended December 31, 1999 and 1998 (Unaudited)........................6
Notes to Unaudited Consolidated Financial Statements................7
Item 2. Management's Discussion and Analysis of Financial Condition
And Results of Operations...........................................9
PART II - OTHER INFORMATION...................................................14
SIGNATURES....................................................................15
FINANCIAL DATA SCHEDULE.......................................................16
<PAGE>
Landmark Financial Corporation and Subsidiary
Consolidated Statements of Financial Condition
December 31, 1999 and March 31, 1999
<TABLE>
<CAPTION>
December 31, 1999 March 31, 1999
(Unaudited) (Audited)
Assets
<S> <C> <C>
Cash $764,893 $285,227
Interest Bearing Deposits 490,393 10,600
Investment Securities, (Available For Sale) 2,096,137 1,900,992
Mortgage-Backed Securities, (Held To Maturity) 26,641 38,468
Loans Receivable, Net 21,715,270 19,189,257
Accrued Interest Receivable 143,284 107,805
Stock In Federal Home Loan Bank, At Cost 125,000 100,900
Premises And Equipment, At Cost
Less Accumulated Depreciation 563,188 583,401
Deferred Tax Asset 31,942 39,597
Foreclosed Real Estate 0 118,815
Other Assets 67,574 78,261
------ ------
Total Assets $26,024,323 $22,453,323
=========== ===========
Liabilities and Stockholders' Equity
Accounts Payable 1,388 1,853
Deposits 21,900,034 19,273,877
Accrued Interest On Deposits 118 0
Advance Payments By Borrowers For Taxes
And Insurance 188,494 108,174
Advances From FHLB 1,933,012 1,084,586
Accrued Expenses And Other Liabilities 43,547 56,899
------ ------
Total Liabilities $24,066,594 $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 September 30, 1999 and
March 31, 1999 respectively 15,451 15,200
Additional Paid-In Capital 1,225,186 1,192,833
Retained Earnings, Substantially Restricted 923,727 867,348
Accumulated Other Comprehensive Income (Loss) (73,931) (5,403)
Unearned Stock Based Compensation (29,344) (32,604)
Unearned ESOP Shares (103,360) (109,440)
--------- ---------
Total Stockholders' Equity $ 1,957,729 $1,927,934
----------- ----------
Total Liabilities and Stockholders' Equity $26,024,323 $ 22,453,323
=========== ============
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
<PAGE>
Landmark Financial Corporation and Subsidiary
Consolidated Statements of Operations
December 31, 1999 and 1998
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended 12/31 For the Nine Months Ended 12/31
1999 1998 1999 1998
---- ---- ---- ----
Interest income:
<S> <C> <C> <C> <C>
Loans receivable $470,666 $378,284 $1,357,913 $1,040,674
Mortgage-backed securities 581 1,260 1,961 3,526
Investments 39,943 23,471 105,415 108,255
------ ------ ------- -------
Total interest income 511,190 403,015 1,465,288 1,152,455
Interest expense:
Deposits 272,100 226,349 774,990 659,395
Advances from FHLB 28,640 4,565 73,854 4,565
------ ----- -------- ------
Total interest expense 300,740 230,914 848,843 663,960
------- ------- ------- -------
Net interest income 210,451 172,101 616,445 488,495
Provision for losses on loans 9,500 54,100 35,500 84,268
Net interest income after
provision for losses on loans 200,951 118,001 580,945 404,227
Non-interest income:
Late charges and other loan fees 5,465 3,895 20,219 15,050
Gain on sale of investment securities
and mortgage-backed securities 0 0 2,850 0
Commissions and other fees 0 200 0 2,746
Other 15,022 6,013 39,883 13,660
------ ----- ------ ------
Total non-interest income 20,487 10,108 62,953 31,456
Non-interest expense:
Compensation and employee benefits 88,759 86,844 262,804 249,402
Office buildings and equipment 15,846 14,152 46,304 29,352
Data processing 14,101 13,663 41,399 32,936
Advertising 1,525 3,289 4,263 6,966
Deposit insurance premiums 2,934 3,698 9,586 10,982
Other 60,840 76,597 200,079 207,122
Amortization of cost in excess of
fair Value of net assets acquired 2,340 657 4,280 3,338
----- --- ----- -----
Total non-interest expense 186,346 198,900 568,714 540,098
------- ------- ------- -------
Income (loss) before income taxes 35,092 (70,791) 75,184 (104,415)
Income taxes 8,855 (15,845) 18,805 (25,000)
----- -------- ------ --------
Net income (loss) $26,237 ($54,946) $56,379 ($79,415)
======= ======== ======= =========
Earnings per share $0.18 ($0.39) $0.39 ($0.57)
===== ====== ===== ======
Average common and common
equivalent shares outstanding 144,071 140,752 143,868 140,553
======= ======= ======= =======
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
Landmark Financial Corporation and Subsidiary
Consolidated Statements of Changes in Stockholders' Equity
Nine Months Ended December 31, 1999
(Unaudited)
Additional Accumulated other Unearned Unearned Total
Common paid-in Retained Comprehensive Stock Based ESOP Stockholders'
Stock capital earnings income(loss) Compensation Shares Equity
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balances at March 31, 1999 $15,200 $1,192,833 $867,348 ($5,403) ($32,604) ($109,440) $1,927,934
Comprehensive Income
Net income (loss) 56,379 56,379
Change in unrealized gain on
securities available for sale,
net of tax effects (68,528) (68,528)
Total Comprehensive Income (loss) (12,149)
Stock based compensation earned 3,260 3,260
ESOP shares earned 6,080 6,080
Shares Granted for Recognition 251 32,353 32,604
And Retention Plan
- ------------------------------------------------------------------------------------------------------------------------------------
Balances at December 31,1999 $15,451 $1,225,186 $923,727 ($73,931) ($29,344) ($103,360) $1,957,729
======= ========== ========= ========= ========== ========== =========
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
<PAGE>
Landmark Financial Corporation and Subsidiary
Consolidated Statements of Cash Flows
Nine Months Ended December 31, 1999 and 1998
(Unaudited)
<TABLE>
<CAPTION>
Dec 31, Dec 31,
1999 1998
CASH FLOWS PROVIDED (USED) BY OPERATING ACTIVITIES
<S> <C> <C>
Net income (loss) $56,379 ($79,415)
Adjustments to reconcile net income to net cash provided by (used in)
Operating activities
Depreciation 37,112 19,998
Amortization (accretion), net 4,280 3,338
Provision for loan losses 35,500 84,268
Deferred income taxes 7,655 (25,485)
Allocation of ESOP Shares 6,080 5,999
Allocation of Stock Based Compensation 3,260 0
Decrease (increase) in
Accrued interest receivable (35,479) (25,362)
Real Estate Foreclosed 118,815 0
Other assets 10,687 (28,162)
Increase (decrease) in
Accounts payable (465) (868)
Other liabilities 19,369 2,919
------ -----
263,193 (42,770)
------- --------
CASH FLOWS PROVIDED (USED) BY INVESTING ACTIVITIES
Net increase in loans receivable (2,561,513) (4,027,245)
Proceeds from maturities and calls of available-for-sale securities 400,000 500,000
Purchases of available-for-sale securities (818,090) (1,204,643)
Proceeds from principal repayments of mortgage-backed securities 161,965 127,345
Purchase of premises and equipment (16,899) (394,524)
Purchase of investments required by law, FHLB stock (24,100) 0
------- -------
(2,858,637) (4,999,067)
---------- ----------
CASH FLOWS PROVIDED (USED) BY FINANCING ACTIVITIES
Net increase (decrease) in deposits 2,626,157 2,942,020
Net increase (decrease) in short-term advances, FHLB 250,000 500,000
Proceeds from long-term advances, FHLB 750,000 750,000
Payments on long-term advances, FHLB (151,574) (1,591)
Increase (decrease) in advances from borrowers for taxes and insurance 80,320 67,743
3,554,903 4,258,172
---------- ----------
Net increase (decrease) in cash 959,459 (783,665)
CASH, beginning of year 295,827 1,530,236
------- ---------
CASH, end of period $1,255,286 $746,571
========== ========
SUPPLEMENTAL DISCLOURES:
Cash paid for:
Income taxes 0 0
= =
Interest $848,843 $663,960
======== ========
Issuance of Common Stock-Recognition and Retention Plan $32,604 $0
Decrease in Deferred Compensation Payable ($32,604) $0
Increase (decrease) on unrealized gain
on securities available-for-sale ($68,528) $8,390
========= ======
Transfers from loans receivable to foreclosed real estate 0 $78,236
= =======
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
<PAGE>
LANDMARK FINANCIAL CORP. AND SUBSIDIARY
Notes To Consolidated Financial Statements
(Unaudited)
December 31, 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, (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. The Bank's conversion to stock form was
completed on November 13, 1997 at which time the Company acquired the
Bank. The Company had no assets prior to the conversion and acquisition
on November 13, 1997.
The accompanying consolidated financial statements and the statements
of financial condition 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 statements of operations for the three month
period and nine month period ended December 31, 1999 are 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 as 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). On May 21, 1999 an additional 2,508 shares were issued
pursuant to the Recognition and Retention Plan. Income per share
amounts for the three month and nine month periods ended December 31,
1999 are based upon average shares outstanding of 144,071 shares and
143,868 shares respectively. The averages are exclusive of 10,336 and
10,944 unearned shares, respectively, 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)
December 31, 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 expenses for the three and nine month periods ended
December 31, 1999 were $2,026 and $6,080 respectively. ESOP expenses
for the three and nine month periods ended December 31, 1998 were
$2,026 and $5,999 respectively.
<PAGE>
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, (collectively
the "Company") at December 31, 1999 to the financial condition at March 31,
1999, its fiscal year-end, and the results of operations for the three month and
nine month periods ended December 31, 1999, with the same periods 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 upon its
conversion from the mutual to stock form of ownership. Landmark Community Bank
was founded in 1925 as a New York chartered savings and loan association located
in Canajoharie, New York. In 1997, the Bank converted 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 located at 211 Erie
Blvd., 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, small business and agricultural loans, and consumer
loans consisting primarily of loans secured by 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 $3.5 million, or 15.9%, to $26.0 million at December 31,
1999 from $22.5 million at March 31, 1999. The increase in assets is primarily
due to increases in loans receivable, investment securities (available for
sale), and cash and deposits, partially offset by decreases in mortgage backed
securities (held to maturity), deferred tax assets, and foreclosed real estate
and other assets.
Loans receivable, net, increased by $2.5 million, or 13.2%, to $21.7 million at
December 31, 1999 from $19.2 million at March 31, 1999, primarily due to
increases in commercial and agricultural loans of $1.5 million, an increase in
one-to-four family loans of $827,000 an increase in home equity loans of
$332,000, offset by a decrease in consumer loans of $100,000.
Investment securities increased by $195,000, or 10.3%, to $2.1 million at
December 31, 1999 from $1.9 million at March 31, 1999.
Cash increased by $480,000, or 168.2%, to $765,000 at December 31, 1999 from
$285,000 at March 31, 1999. The increase is due to build up of liquidity in
anticipation of Year 2000 related withdrawals. Interest bearing deposits
increased $480,000 to $490,000 at December 31, 1999.
<PAGE>
Deposits increased $2.6 million, or 13.6%, to $21.9 million at December 31, 1999
from $19.3 million at March 31, 1999. The increase in deposits is primarily
attributable to an increase in certificates of deposit of $1.8 million, an
increase in demand deposits of $490,000, and an increase in savings accounts of
$387,000.
Advances from FHLB increased $848,000 from $1.1 million to $1.9 million. The
increase in borrowings and the increase in deposits were used to fund loan
demand and liquidity.
Total equity increased $30,000 or 1.5%, to $1,957,729 at December 31, 1999 from
$1,927,934 at March 31, 1999, due to the earnings for the period of $56,379 and
the issuance of $32,604 in common stock, partially offset by an increase in
accumulated other comprehensive income (loss) of ($68,528) which was the result
of increased unrealized loss on securities.
Comparison of Operating Results for the Three Months and Nine Months Ended
December 31, 1999 and the Three Months and Nine Months Ended December 31, 1998
------------------------------------------------------------------------------
Performance Summary. The Company's net income increased $81,183 to $26,237 for
the three months ended December 31, 1999, compared to a net loss of ($54,946)
for the three months ended December 31, 1998. The increase in net income for the
three months ended December 31, 1999 as compared to the same period in 1998 is
due to a decrease in the provision for loan losses of $44,600, an increase in
net interest income of $38,350, and an increase of $10,379 in non-interest
income. Non-interest expense decreased $12,554 and income tax expense increased
$24,700. Net income increased $135,794 to $56,379 for the nine months ended
December 31, 1999 as compared to a loss of ($79,415) for the same period in
fiscal year 1998. The increase in earnings is primarily due to an increase in
net interest income of $127,950, a decrease in provision for loan losses of
$48,768, and an increase of $31,497 in non-interest income. Non-interest expense
increased $28,616 and income tax expense increased $43,805.
Net Interest Income. The Company's net interest income increased $38,350, or
22.3%, to $210,451 for the three months ended December 31, 1999, from $172,101
for the three months ended December 31, 1998. For the nine months ended December
31, 1999, net interest income increased $127,950, or 26.2%, to $616,445 from
$488,495 for the same period in fiscal 1998. The increases in net interest
income reflect an increase of $108,175 in interest income and a corresponding
increase of $69,826 in interest expense for the three months ended December 31,
1999 as compared to the same period in 1998, and an increase of $313,833 in
interest income and an increase of $184,883 in interest expense for the nine
months ended December 31, 1999 as compared to the same period in 1998. The
increase in interest income reflects increased balances of loans receivable,
while interest expense increased due to the increase in deposits and in
borrowings from FHLB.
Provision for Loan Losses. During the three months ended December 31, 1999, the
Bank charged $9,500 against earnings as a provision for loan losses compared to
a provision of $54,100 charged against earnings for the three months ended
December 31, 1998. For the nine months ended December 31, 1999 the Bank charged
$35,500 against earnings as a provision for losses compared to $84,268 charged
against earnings for same period in fiscal 1998. The lower provision for loan
losses was deemed appropriate in light of the overall level of the allowance for
loan losses and the lower level of non-performing loans in the comparative
periods. The allowance for loan losses at December 31, 1999 is 1.01% of loans
receivable, as compared to .89% of loans receivable, at December 31, 1998. Total
non-performing loans at December 31, 1999 are $25,000 or 0.12% of loans
receivable, as compared to total non-performing loans at December 31, 1998 of
80,000 or 0.46% of loans receivable.
<PAGE>
Management regularly reviews the loan portfolio, including problem loans and
changes in the relative makeup of the 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.
Non-interest Income. For the three months ended December 31, 1999, non-interest
income increased $10,379 or 102.7%, to $20,487 from $10,108 for the same period
in 1998. For the nine months ended December 31, 1999, non-interest income
increased $31,497 or 100.1% to $62,953 from $31,456 for the same period in 1998.
The increase is primarily due to increased fee income on deposit and loan
accounts.
Non-interest Expense. Non-interest expense decreased $12,554 or 6.3%, to
$186,346 for the three months ended December 31, 1999 from $198,900 for the same
period in 1998. The decrease is primarily attributed to a reduction in loan
origination expenses. Non-interest expense increased $28,616 or 5.3% for the
nine months ended December 31, 1999 to $568,714 from $540,098 in the same period
in 1998, primarily due to increased occupancy expense related to the Company's
facilities and equipment, increased data processing expense due to higher
volumes, and increased employee compensation and benefit expense.
Income Taxes. Income tax expense, (benefit) increased $24,700 to $8,855 for the
three months ended December 31, 1999, from ($15,845) for the same period in
1998. For the nine months ended December 31, 1999 income tax expense was $18,805
compared to ($25,000) for the nine months ended December 31, 1998.
Non-performing Assets
- ---------------------
On December 31, 1999, non-performing assets were $25,000 compared to $225,000 on
March 31, 1999. The non-performing assets on December 31, 1999 consisted of one
loan of $25,000 while at March 31, 1999 non-performing assets consisted of loans
of $106,000 and repossessed or foreclosed assets of $119,000. The balance of the
Bank's allowance for loan losses was $220,400 or 8.8 times non-performing assets
as of December 31, 1999. The balance of the Bank's allowance for loan losses was
$191,019 or 84.7% of non-performing assets as of March 31, 1999. Loans are
considered non-performing when the collection of principal and/or interest is
not probable, or in the event payments are more than ninety days delinquent.
<PAGE>
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 December 31, 1999 and March 31,
1999, respectively:
December 31, 1999
-----------------
<TABLE>
<CAPTION>
Actual Required Excess
amount/percent amount/percent amount/percent
-------------- -------------- --------------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Tangible $1,978 7.58% $ 391 1.50% $1,587 6.08%
Core leverage capital $1,978 7.58% $ 1,043 4.00% $ 935 3.58%
Risk-based capital $2,198 12.26% $ 1,435 8.00% $ 763 4.25%
</TABLE>
March 31, 1999
--------------
<TABLE>
<CAPTION>
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>
Liquidity
- ---------
The Bank's principal sources of funds are deposits, principal and interest
payments on loans, deposits in other insured institutions 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 December 31, 1999 and March 31,
1999 were 14.38% and 12.95%, respectively.
In addition to local deposits, the Bank utilizes the funding sources of the FHLB
and out-of-market certificates of deposit 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/or 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 December 31, 1999
and March 31, 1999 were $1,255,286 and $295,827, respectively. The increase was
primarily due to increases in deposits of $2.6 million and Federal Home Loan
Bank advances of
<PAGE>
$848,000, partially offset by an increase in loans receivable of $2.5 million,
and an increase in investment securities of $195,000.
Net cash provided (used) by operating activities increased to $263,193 for the
nine months ended December 31, 1999, from ($42,770) at December 31, 1998.
Year 2000
- ---------
The Bank did not experience any "Year 2000" related problems or interruptions in
service. All of the hardware and software upgrades are performing as designed
and anticipated. The Bank's third party service provider reported encountering a
few minor problems, which were corrected almost as quickly as they were
discovered.
The additional liquidity built up in anticipation of customer withdrawals has
been eliminated subsequent to the report date.
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, has been 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>
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 - pages 16&17
<PAGE>
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: 1/31/00 /s/ Gordon E. Coleman
---------------------------------
Gordon E. Coleman
President and Chief Executive Officer
(Duly Authorized Officer)
Date: 1/31/00 /s/ Paul S. Hofmann
---------------------------------
Paul S. Hofmann
Vice President and Chief Financial Officer
(Principal Financial Officer)
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