FORM 10-QSB
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: JUNE 30, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transaction period from to .
Commission file number: 333-32245
Heartland Bancshares, Inc.
(Exact name of small business issuer as specified in its charter)
Indiana 35-2017085
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
420 North Morton Street, P.O. Box 469, Franklin, Indiana 46131
(Address of principal executive offices)
(317) 738-3915
(Registrant's telephone number)
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities 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
Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date.
As of August 13, 1998, the latest practicable date, 1,265,000 shares of the
Registrant's Common Stock, no par value, were issued and outstanding.
Transitional Small Business Disclosure Format Yes No X
<PAGE>
HEARTLAND BANCSHARES, INC.
FORM 10-QSB
Franklin, Indiana
June 30, 1998
INDEX
PART I - FINANCIAL INFORMATION
FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS.............................................
CONSOLIDATED STATEMENTS OF INCOME.......................................
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' DEFICIT.............
CONSOLIDATED STATEMENTS OF CASH FLOWS...................................
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS..............................
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS....................................................
PART II - OTHER INFORMATION................................................
SIGNATURES.................................................................
EXHIBITS...................................................................
<PAGE>
<TABLE>
HEARTLAND BANCSHARES, INC.
FORM 10-QSB
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share data)
- ------------------------------------------------------------------------------
<CAPTION>
June 30, December 31,
1998 1997
<S> <C> <C>
ASSETS
Cash and due from banks ................................. $ 2,222 $ 1,140
Securities available-for-sale, at market ................ 10,069 8,012
Loans ................................................... 24,562
3,958
Allowance for loan losses ............................ 369 46
-------- --------
Loans, net ......................................... 24,193 3,912
Premises, furniture and equipment, net .................. 1,759 1,207
Accrued interest receivable and other assets ............ 470 248
-------- --------
Total assets ..................................... $ 38,713 $ 14,519
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Noninterest-bearing deposits ......................... $ 2,791 $ 988
Interest-bearing demand and savings deposits ......... 5,869 603
Interest-bearing time deposits ....................... 18,882 488
-------- --------
Total deposits ..................................... 27,542 2,079
Short-term borrowings ................................ -- 800
Accrued interest payable and other liabilities ....... 133 136
-------- --------
Total liabilities .................................. 27,675 3,015
Shareholders' equity
Common stock, no par value: 10,000,000 shares
authorized; 1,265,000 shares issued; and outstanding 1,265
1,265
Additional paid-in capital ........................... 10,466 10,466
Retained deficit ..................................... (721) (240)
Unrealized gain on securities available-for-sale ..... 28 13
-------- --------
Total shareholders' equity ......................... 11,038 11,504
-------- --------
Total liabilities and shareholders' equity ....... $ 38,713 $ 14,519
======== ========
</TABLE>
- ------------------------------------------------------------------------------
(See accompanying notes)
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME
for the three months and six months ended June 30, 1998 and
For the period from May 27, 1997 (date of inception) to June 30, 1997
(Dollar amounts in thousands, except per share data)
- ------------------------------------------------------------------------------
Three Months Period May 27, 1997 Six Months
Ended (date of inception) Ended
June 30, 1998 to June 30, 1997 June 30, 1998
Interest income
Loans ................................ $ 424 $-- $ 608
Taxable securities ................... 134 -- 247
Other ................................ 49 -- 62
----- ----- -----
Total interest income .............. 607 -- 917
Interest expense
Deposits ............................. 267 -- 348
Short-term borrowings ................ -- -- 2
----- ----- -----
Total interest expense ............. 267 -- 350
----- ----- -----
Net interest income ..................... 340 -- 567
Provision for loan losses ............... 180 -- 323
----- ----- -----
Net interest income after provision for
loan losses ........................... 161 -- 244
Noninterest income
Service charges and fees ............. 74 -- 121
Noninterest expense
Salaries and employee benefits ....... 241 6 476
Occupancy and equipment expenses, net 43 1 79
Data processing expense .............. 40 -- 69
Printing and supplies ................ 14 1 39
Advertising .......................... 21 -- 43
Professional fees .................... 7 -- 29
Credit reports and other loan expenses 9 -- 21
Amortization of organization costs ... 19 -- 22
Other operating expenses ............. 38 -- 68
----- ----- -----
Total noninterest expense .......... 432 8 846
----- ----- -----
Income before income taxes .............. (197) (8) (481)
Income taxes ............................ -- -- --
----- ----- -----
Net loss ................................ $(197) $ (8) $(481)
===== ===== =====
Basic and diluted earnings per share . $(.16) $(.01) $(.38)
===== ===== =====
Comprehensive income (Note 1) ........... $(208) $ (8) $(466)
===== ===== =====
- ------------------------------------------------------------------------------
(See accompanying notes)
<PAGE>
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY for the six
months ended June 30, 1998 and
For the period from May 27, 1997 (date of inception) to June 30, 1997
(Dollar amounts in thousands, except share and per share data)
- ------------------------------------------------------------------------------
Unrealized
Gain
Additional on Securities Total
Common Paid-in Retained Available- Shareholders'
Stock Capital Earnings for-Sale Equity
Balance at inception,
(May 27, 1997) ........ $ -- $ -- $ -- $ -- $ --
Issuance of common stock
1 share ............... -- -- -- -- --
Net loss May 27, 1997 to
June 30, 1997 ......... -- -- (8) -- (8)
-------- -------- -------- -------- --------
Balance
June 30, 1997 ......... -- -- (8) -- (8)
Issuance of common stock
1,265,000 shares ...... 1,265 11,385 -- -- 12,650
Underwriter's discount
On issuance of common
stock ................. -- (816) -- -- (816)
Costs associated with
issuance of common
stock ................. -- (103) -- -- (103)
Net loss six months ended
December 31, 1997 ..... -- -- (232) -- (232)
Change in unrealized
gain on securities
available-for-sale .... -- -- -- 13 13
------- -------- -------- -------- --------
Balance
December 31, 1997 ..... 1,265 10,466 (240) 13 11,504
Net loss six months
ended June 30, 1998 ... -- -- (481) -- (481)
Change in unrealized
gain on securities
available-for-sale .... -- -- -- 15 15
------- -------- -------- -------- --------
Balance
June 30, 1998 ......... 1,265 $ 10,466 $ (721) $ 28 $ 11,038
======= ======== ======== ======== ========
- ------------------------------------------------------------------------------
(See accompanying notes)
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the six months ended June 30, 1998 and
For the period from May 27, 1997 (date of inception) to
June 30, 1997 (Dollar amounts in thousands)
- ------------------------------------------------------------------------------
Six Months May 27, 1997
Ended (date of inception)
June 30, 1998 to June 30, 1997
Cash flows from operating activities
Net loss ......................................... $ (481) $ (8)
Adjustments to reconcile net loss to net cash
from operating activities
Depreciation and amortization .................. 72 --
Provision for loan losses ...................... 323 --
Change in assets and liabilities:
Accrued interest receivable and other assets . (243) (46)
Accrued interest payable and other liabilities (3) 81
-------- --------
Net cash from operating activities ......... (332) 27
Cash flows from investing activities
Purchase of securities available-for-sale ........ (3,043) --
Maturity of securities available-for-sale ........ 1,000 --
Loans made to customers, net of payments collected (20,604)
--------- ---------
Property and equipment expenditures .............. (602) (13)
-------- --------
Net cash from investing activities ............. (23,249) (13)
Cash flows from financing activities
Net change in deposit accounts ................... 25,463 --
Net change in short-term borrowings .............. (800) 25
Deferred offering costs .......................... -- (29)
Proceeds from issuance of common stock ........... -- --
-------- --------
Net cash from financing activities ............. 24,663 (4)
-------- --------
Net change in cash and cash equivalents ............. 1,082 10
Cash and cash equivalents at beginning of year ...... 1,140 --
-------- --------
Cash and cash equivalents at end of year ........... $ 2,222 $ 10
======== ========
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest ....................................... $ 238 $ --
Income taxes ................................... -- --
- ------------------------------------------------------------------------------
(See accompanying notes)
<PAGE>
HEARTLAND BANCSHARES, INC.
FORM 10-QSB
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1998
- ------------------------------------------------------------------------------
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description of Business: The consolidated financial statements include the
accounts of Heartland Bancshares, Inc. (Corporation) and its wholly-owned
subsidiary, Heartland Community Bank (Bank), after elimination of significant
inter-company transactions and accounts. The Bank commenced operation December
17, 1997.
The Corporation operates primarily in the banking industry, which accounts for
more than 90% of its revenues, operating income and assets. The Bank is engaged
in the business of commercial and retail banking, with operations conducted
through its main office located in Franklin, Indiana. The Bank opened an
additional branch location in Greenwood, Indiana in January 1998. The majority
of the Bank's income is derived from commercial and retail business lending
activities and investments. The majority of the Bank's loans are secured by
specific items of collateral including business assets, real property and
consumer assets.
Use of Estimates: To prepare financial statements in conformity with generally
accepted accounting principles, management makes estimates and assumptions based
on available information. These estimates and assumptions affect the amounts
reported in the financial statements and the disclosures provided, and future
results could differ. The allowance for loan losses, the fair values of
financial statements, and status of contingencies are particularly subject to
change.
Securities: Securities are classified as held to maturity and carried at
amortized cost when management has the positive intent and ability to hold them
to maturity. Securities are classified as available for sale when they might be
sold before maturity. Securities available for sale are carried at fair value,
with unrealized holding gains and losses reported separately in shareholders'
equity, net of tax. Securities are written down to fair value when a decline in
fair value is not temporary. Interest and dividend income, adjusted by
amortization of purchase premium or discount, is included in earnings. The Bank
had no held to maturity securities at December 31, 1997 or June 30, 1998.
Loans: Loans are reported at the principal balance outstanding, net of unearned
interest, deferred loan fees and costs, and an allowance for loan losses.
Interest income is reported on the interest method and includes amortization of
net deferred loan fees and costs over the loan term.
Interest income is not reported when full loan repayment is in doubt, typically
when payments are past due over 90 days (180 days for residential mortgages).
Payments received on such loans are reported as principal reductions.
Allowance for Loan Losses: The allowance for loan losses is a valuation
allowance, increased by the provision for loan losses and decreased by
charge-offs less recoveries. Management estimates the allowance balance required
based on past loan loss experience, known and inherent risks in the portfolio,
information about specific borrower situations and estimated collateral values,
economic conditions, and other factors. Allocations of the allowance may be made
for specific loans, but the entire allowance is available for any loan that, in
management's judgment, should be charged-off.
- ------------------------------------------------------------------------------
(Continued)
<PAGE>
HEARTLAND BANCSHARES, INC.
FORM 10-QSB
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1998
- ------------------------------------------------------------------------------
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Loan impairment is reported when full payment under the loan terms is not
expected. Impairment is evaluated in total for smaller-balance loans of similar
nature such as residential mortgage, consumer and credit card loans, and on an
individual loan basis for other loans. If a loan is impaired, a portion of the
allowance is allocated so that the loan is reported, net, at the present value
of estimated future cash flows using the loan's existing rate or at the fair
value of collateral if repayment is expected solely from the collateral. Loans
are evaluated for impairment when payments are delayed, typically 90 days or
more, or when it is probable that all principal and interest amounts will not be
collected according to the original terms of the loan.
Premises, Furniture and Equipment: Premises, furniture and equipment are stated
at cost less accumulated depreciation. Depreciation expense is recognized over
the estimated useful lives of the assets, principally on the straight-line
method. These assets are reviewed for impairment when events indicate the
carrying amount may not be recoverable. Maintenance and repairs are expensed and
major improvements are capitalized.
Intangibles: Organizational costs are included in other assets. Under a new
accounting standard, costs associated with the organization of a business are
now expensed as incurred and any accumulated costs are to be expensed in the
current period. Under previous accounting standards, such costs were accumulated
during the organization or start-up period and expensed over a period of five
years. The new standard is effective for all financial statements for periods
beginning after December 15, 1998 and early adoption is encouraged. Intangibles
are assessed for impairment based on estimated undiscounted cash flows, and
written down if necessary.
Stock Compensation: Expense for employee compensation under stock option plans
is based on Accounting Principles Board Opinion 25, with expense reported only
if options are granted below market price at grant date. Pro forma disclosures
of net income and earnings per share are provided as if the fair value method of
Financial Accounting Standard No. 123 were used for stock-based compensation.
Income Taxes: Income tax expense is the sum of the current year income tax due
or refundable and the change in deferred tax assets and liabilities. Deferred
tax assets and liabilities are the expected future tax consequences of temporary
differences between the carrying amounts and tax bases of assets and
liabilities, computed using enacted tax rates. A valuation allowance, if needed,
reduces deferred tax assets to the amount expected to be realized.
Statement of Cash Flows: Cash and cash equivalents are defined to include cash
on hand, amounts due from banks, and federal funds sold. The Corporation reports
net cash flows for customer loan transactions, deposit transactions, and
short-term borrowings.
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(Continued)
<PAGE>
HEARTLAND BANCSHARES, INC.
FORM 10-QSB
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1998
- ------------------------------------------------------------------------------
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Fair Values of Financial Instruments: Fair values of financial instruments are
estimated using relevant market information and other assumptions, as more fully
disclosed separately. Fair value estimates involve uncertainties and matters of
significant judgment regarding interest rates, credit risk, prepayments, and
other factors, especially in the absence of broad markets for particular items.
Changes in assumptions or in market conditions could significantly affect the
estimates. The fair value estimates of existing on- and off-balance sheet
financial instruments does not include the value of anticipated future business
or the values of assets and liabilities not considered financial instruments.
Comprehensive Income: Under a new accounting standard, FAS No. 130,
Comprehensive income is now reported for all periods. Comprehensive income
includes both net income or loss and other comprehensive income. Other
comprehensive income includes the change in unrealized gain on securities
available-for-sale, net of tax.
NOTE 2 - GENERAL
These financial statements were prepared in accordance with the Securities and
Exchange Commission instructions for Form 10-QSB and for interim periods do not
include all of the disclosures necessary for a complete presentation of
financial position, results of operations and cash flows in conformity with
generally accepted accounting principles. These financial statements have been
prepared on a basis consistent with the annual financial statements and include,
in the opinion of management, all adjustments, consisting of only normal
recurring adjustments, necessary for a fair presentation of the results of
operations and financial position at the end of and for the periods presented.
NOTE 3 - PER SHARE DATA
The following illustrates the computation of basic and diluted earnings per
share.
Three months May 27, 1997 Six months
ended (date ofinception) ended
June 30, 1998 to June 30, 1997 June 30, 1998
Basic earnings per share
Net loss (in thousands) ...........$ (197) $ (8) $ (481)
Weighted average shares
outstanding .... 1,265,000 1,265,000 1,265,000
----------- ----------- -----------
Basic earnings per share ..... $ (.16) $ (.01) $ (.38)
=========== =========== ===========
Diluted earnings per share
Net loss (in thousands) ....... $ (197) $ (8) $ (481)
Weighted average shares
outstanding .... 1,265,000 1,265,000 1,265,000
Stock options .................. 83,000 -- 83,000
Assumed shares repurchased
upon exercise.................. (75,403) (--) (76,932)
----------- ----------- -----------
Diluted average shares
outstanding.................... 1,272,597 1,265,000 1,271,068
Diluted earnings per share ..... $ (.16) $ (.01) $ (.38)
=========== =========== ===========
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<PAGE>
HEARTLAND BANCSHARES, INC.
FORM 10-QSB
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
- ------------------------------------------------------------------------------
INTRODUCTION
The following discussion focuses on the plan of operation, the financial
condition of Heartland Bancshares, Inc. (Heartland) at June 30, 1998 compared to
December 31, 1997 and the results of operations for the three and six month
periods ended June 30, 1998 in comparison to the period from inception May 27,
1997, ended June 30, 1997. Heartland was incorporated May 27, 1997 and therefore
no additional information is available for the six month period ended June 30,
1997. Heartland was formed with the specific intent to form a wholly owned
subsidiary state chartered bank (Heartland Community Bank or Bank). Heartland
received approval from the Federal Reserve Bank of Chicago to be a bank holding
company in the fall of 1997. Operations of the Bank began December 17, 1997.
This discussion should be read in conjunction with the interim financial
statements and related footnotes.
The registrant is not aware of any trends, events or uncertainties that will
have or are reasonably likely to have a material effect on the liquidity,
capital resources or operations except as discussed herein. Also, the Registrant
is not aware of any current recommendations by regulatory authorities that would
have such effect if implemented.
GENERAL
As of October 2, 1997, Heartland raised approximately $11,735,000 in equity
capital through the sale of 1,265,000 shares of the Company's common stock at
$10 per share, net of underwriting discounts and offering costs. Proceeds from
the offering were used to capitalize the Bank and provide working capital.
Heartland's only activity beyond holding stock of the Bank is investment in
securities using working capital provided by the issuance of shares of common
stock.
Heartland's plan of operation is centralized around the growth of the Bank. The
primary operation of the Bank is to accept deposits and make loans. The
operating results of Heartland are affected by general economic conditions, the
monetary and fiscal policies of federal agencies and the regulatory policies of
agencies that regulate financial institutions. Heartland's cost of funds is
influenced by interest rates on competing investments and general market rates
of interest. Lending activities are influenced by consumer and commercial
demand, which in turn are affected by the interest rates at which such loans are
made, general economic conditions and the availability of funds for lending
activities.
The Federal Financial Institutions Examination Council (FFIEC) has issued
several statements regarding preparing for the Year 2000 date change and related
issues. Those statements have identified specific actions and plans to be
adopted by financial institutions, all of which would be materially adversely
affected by Year 2000 failure of loan and deposit data processing systems. As of
June 30, 1998, Heartland has implemented the procedures and plans set out by
FFIEC. Heartland has begun the evaluation and testing of computer and software
systems in cooperation with its independent data processing service provider and
estimates that the amount of costs that will be incurred to prepare for the date
change will not be significant. Although Heartland has no reason to expect that
its data processing and other costs and expenses will be significant or that its
financial condition and results of operations will be adversely affected by Year
2000 problems, this is a forward-looking statement, and actual expenses may vary
materially from current expectations due to the possibility, among other risks,
that the Company's data processing service provider will be unable to perform in
accordance with the Year 2000 plan and the possibility that the Company's
customers may not be Year 2000 compliant.
- ------------------------------------------------------------------------------
(Continued)
<PAGE>
HEARTLAND BANCSHARES, INC.
FORM 10-QSB
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
- ------------------------------------------------------------------------------
FINANCIAL CONDITION
Heartland experienced growth through the first six months of operations for the
Bank. Total assets at June 30, 1998 are $38.7 million, an increase of $24.2
million or 166.64% from the December 31, 1997 total assets of $14.5 million.
Investment securities total $10.1 million at June 30, 1998 compared to $8.0
million at December 31, 1997, an increase of $2.1 million or 25.67%. Total gross
loans were $24.6 million at June 30, 1998, representing growth of $20.6 million,
or 520.57%, from the December 31, 1997 total of $ 4.0 million. Fixed assets
increased from $1.2 million at December 31, 1997 to $1.8 million at June 30,
1998, net of accumulated depreciation, an increase of $600,000 or 45.73%.
The growth in assets was primarily funded by an increase in total deposits of
$25.4 million to $27.5 million at June 30, 1998, or 1,224.77% from $2.1 million
at December 31, 1997. Heartland also eliminated the short-term borrowings of
$800,000 that were outstanding at December 31, 1997.
RESULTS OF OPERATIONS
Heartland incurred a net loss of $481,000 for the six months ended June 30,
1998, a net loss of $208,000 for the three months ended June 30, 1998 and a net
loss of $8,000 for the period from inception May 27, 1997, ended June 30, 1997.
Interest income for the six months and three months ended June 30, 1998 was
$917,000 and $607,000 respectively and was $0 for the period from inception May
27, 1997, through June 30, 1997. Non-interest income was $121,000, $74,000 and
$0 for the six months and three months ended June 30, 1998 and the period from
inception May 27, 1997, ended June 30, 1997, respectively.
Interest expense of $350,000 and $267,000 was incurred during the six months and
three months ended June 30, 1998. Interest expense during the period from
inception May 27, 1997, through June 30, 1997 was less than $500. Interest
expense during the six months and three months ended June 30, 1998 is related to
interest bearing deposits and short-term borrowings. Interest expense during the
period from inception May 27, 1997, through June 30, 1997 is related to related
party notes payable outstanding during a portion of the development period.
Provision for loan losses recorded during the six-month and three-month periods
ended June 30, 1998 was $323,000 and $180,000 compared to $0 in the period from
inception May 27, 1997 to June 30, 1997. No loans have been charged-off since
inception.
Salaries and benefits expense was $476,000 for the six months ended June 30,
1998, $241,000 for the three months ended June 30, 1998 and $6,000 for the
period from inception May 27, 1997, through June 30, 1997. Salaries and benefits
were paid to employees during the development stage for services performed.
- ------------------------------------------------------------------------------
(Continued)
<PAGE>
HEARTLAND BANCSHARES, INC.
FORM 10-QSB
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
- ------------------------------------------------------------------------------
Net occupancy and equipment expenses of $79,000, $43,000 and $1,000 were
incurred during the six months ended June 30, 1998, the three months ended June
30, 1998 and the period from inception May 27, 1997, ended June 30, 1997,
respectively. The Bank entered into a 10 year lease agreement with a non-related
party for a facility located on Highway 135 in Greenwood, Indiana and commenced
banking activities in that facility in May, 1998.
Data processing expense was $69,000 for the six months ended June 30, 1998,
$40,000 for the three months ended June 30, 1998 and $0 for the period from
inception May 27, 1997, through June 30, 1997. In the fourth quarter of 1997,
the Bank entered into a three-year contract with a third party service provider
for core data processing, with monthly expense partially based on volume of
accounts and transactions.
Printing and supplies expense was $39,000 and $14,000 for the six months and
three months ended June 30, 1998 and $1,000 for the period from inception May
27, 1997, through June 30, 1997.
Heartland incurred advertising expense of $43,000, $21,000 and $0 during the six
months ended June 30, 1998, the three months ended June 30, 1998 and the period
from inception May 27, 1997, ended June 30, 1997, respectively.
Professional fees expense for the six months ended June 30, 1998 were $29,000,
$7,000 for the three months ended June 30, 1998 and $0 for the period from
inception May 27, 1997, ended June 30, 1997.
The remaining expenses of $111,000 during the six months ended June 30, 1998
$66,000 during the three months ended June 30, 1998 and $0 during the period
from inception May 27, 1997, ended June 30, 1997, relate to various other items
such as postage, insurance, training, credit reports and amortization of
organization costs.
CAPITAL RESOURCES
Shareholders' equity totaled $11.0 million at June 30, 1998, compared to $11.5
million at December 31, 1997. The change is attributable to the net loss of
$481,000 for the six months ended June 30, 1998, partially offset by an increase
of $15,000 in unrealized gain on securities available-for-sale from $13,000 at
December 31, 1997 to $28,000 at June 30, 1998. As of June 30, 1998, 1,265,000
shares of common stock were issued and outstanding. Additional paid-in capital
was $10.5 million at December 31, 1997 and June 30, 1998.
LIQUIDITY
Liquidity management focuses on the ability to keep funds available to meet the
requirements of withdrawals of depositors and funding of new loans and
investments. The primary source of liquidity for Heartland is the receipt of new
deposits. The Bank has the ability to borrow Federal funds from other commercial
banks on a daily basis. Such borrowings are secured by investment securities.
Heartland manages liquidity through the use of deposits with other financial
institutions, Federal Funds and investment securities.
- ------------------------------------------------------------------------------
<PAGE>
HEARTLAND BANCSHARES, INC.
FORM 10-QSB
PART II
- ------------------------------------------------------------------------------
Item 6 - Exhibits and Reports on Form 8-K:
(a) Exhibit 27: Financial Data Schedule
(b) No reports on Form 8-K were filed during the three months
ended June 30, 1998.
- ------------------------------------------------------------------------------
<PAGE>
HEARTLAND BANCSHARES, INC.
FORM 10-QSB
SIGNATURES
- ------------------------------------------------------------------------------
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
HEARTLAND BANCSHARES, INC.
(Registrant)
Date: August 14, 1998
/s/Steve Bechman
President and Chief Executive Officer
Date: August 14, 1998
/s/Jeffery D. Joyce
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 9
<CIK> 0001042905
<NAME> HEARTLAND BANCSHARES, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 219
<INT-BEARING-DEPOSITS> 2,003
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 10,069
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 24,562
<ALLOWANCE> 369
<TOTAL-ASSETS> 38,713
<DEPOSITS> 27,542
<SHORT-TERM> 0
<LIABILITIES-OTHER> 133
<LONG-TERM> 0
0
0
<COMMON> 11,731
<OTHER-SE> (693)
<TOTAL-LIABILITIES-AND-EQUITY> 38,713
<INTEREST-LOAN> 608
<INTEREST-INVEST> 247
<INTEREST-OTHER> 62
<INTEREST-TOTAL> 917
<INTEREST-DEPOSIT> 348
<INTEREST-EXPENSE> 2
<INTEREST-INCOME-NET> 567
<LOAN-LOSSES> 323
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 846
<INCOME-PRETAX> (481)
<INCOME-PRE-EXTRAORDINARY> (481)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (481)
<EPS-PRIMARY> (.38)
<EPS-DILUTED> (.38)
<YIELD-ACTUAL> 4.62
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 46
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 369
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 369
</TABLE>
