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, 2000
[ ] 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, 2000, 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>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
HEARTLAND BANCSHARES, INC.
CONSOLIDATED BALANCE SHEETS
June 30, 2000 and December 31, 1999
(Amounts in thousands, except share data)
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<CAPTION>
June 30, December 31,
2000 1999
---- ----
<S> <C> <C>
ASSETS
Cash due from banks $ 7,517 $ 3,598
Federal funds sold 4,083 75
-------- --------
Total cash and cash equivalents 11,600 3,673
Securities available-for-sale, at market 15,202 13,677
Loans 115,361 91,045
Allowance for loan losses (1,730) (1,365)
-------- --------
Loans, net 113,631 89,680
Premises, furniture and equipment, net 2,030 1,659
Accrued interest receivable and other assets 1,881 1,450
-------- --------
$144,344 $110,139
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Noninterest-bearing deposits $ 12,078 $ 8,707
Interest-bearing demand and savings deposits 35,850 29,428
Interest-bearing time deposits 70,222 50,384
-------- --------
Total deposits 118,150 88,519
Short-term borrowings 6,356 3,519
Other borrowings 7,000 6,000
Accrued interest payable and other liabilities 725 458
-------- --------
132,231 98,496
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 earnings 620 105
Accumulated other comprehensive income (238) (193)
-------- --------
12,113 11,643
$144,344 $110,139
======== ========
</TABLE>
See accompanying notes.
<PAGE>
<TABLE>
HEARTLAND BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME
For the three and six months ended June 30, 2000 and 1999
(Dollar amounts in thousands, except per share data)
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<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Interest income
Loans $2,628 $1,560 $ 4,870 $ 2,825
Securities:
Taxable 223 163 440 329
Non-taxable 6 6 12 12
Other 82 12 101 27
------ ------ ------- -------
Total interest income 2,939 1,741 5,423 3,193
Interest expense
Deposits 1,323 798 2,416 1,463
Short-term borrowings 51 18 95 24
Other borrowings 99 - 181 -
------ ------ ------- -------
Total interest expense 1,473 816 2,692 1,487
------ ------ ------- -------
Net interest income 1,466 925 2,731 1,706
Provision for loan losses 254 222 411 398
------ ------ ------- -------
Net interest income after
provision for loan losses 1,212 703 2,320 1,308
Noninterest income
Service charges and fees 75 51 140 78
Investment commissions 106 - 165 -
------ ------ ------- -------
181 51 305 78
Noninterest expense
Salaries and employee
Benefits 545 311 1,031 609
Occupancy and equipment
expenses, net 80 50 168 99
Data processing expense 107 65 202 127
Printing and supplies 26 19 60 32
Advertising 32 21 65 38
Director fees 7 7 14 14
Professional fees 39 16 70 28
Credit reports and other
loan expenses 11 12 29 26
Other 65 46 119 79
------ ------ ------- -------
Total noninterest expense 912 547 1,758 1,052
------ ------ ------- -------
Income before income taxes 481 207 867 334
Income taxes 198 - 352 -
------ ------ ------- -------
Net income $ 283 $ 207 $ 515 $ 334
====== ====== ======= =======
Basic and diluted earnings
per share $ .22 $ .16 $ .41 $ .26
====== ====== ======= =======
Comprehensive income $ 275 $ 62 $ 470 $ 107
====== ====== ======= =======
</TABLE>
See accompanying notes.
<PAGE>
<TABLE>
HEARTLAND BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
For the six months ended June 30, 2000 and 1999
(Dollar amounts in thousands)
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<CAPTION>
Accumulated
Other Total
Additional Retained Compre- Share-
Common Paid-in Earnings/ hensive holders'
Stock Capital (Deficit) Income Equity
----- ------- --------- ------ ------
<S> <C> <C> <C> <C> <C>
Balance January 1, 1999 $1,265 $ 10,466 $ (868) $ 53 $10,916
Comprehensive income
Net income for six months
Ended June 30, 1999 334 334
Change in net unrealized
gain/(loss) (227) (227)
------
Total comprehensive income 107
------- -------- ------ -------- -------
Balance June 30, 1999 $ 1,265 $ 10,466 $ (534) $ (174) $11,023
======= ======== ======= ========= =======
Balance January 1, 2000 $ 1,265 $ 10,466 $ 105 $ (193) $11,643
Comprehensive income
Net income for six months
ended June 30, 2000 515 515
Change in net unrealized
gain/(loss) (45) (45)
-------
Total comprehensive income 470
------- -------- ------- --------- -------
Balance June 30, 2000 $ 1,265 $ 10,466 $ 620 $ (238) $12,113
======= ======== ======= ========= =======
</TABLE>
See accompanying notes.
<PAGE>
<TABLE>
HEARTLAND BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the six months ended June 30, 2000 and 1999
(Dollar amounts in thousands)
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<CAPTION>
2000 1999
---- ----
<S> <C> <C>
Cash flows from operating activities
Net income $ 515 $ 334
Adjustments to reconcile net income to net cash
from operating activities
Depreciation and amortization 68 40
Provision for loan losses 411 398
Change in assets and liabilities:
Accrued interest receivable and other assets (400) (335)
Accrued interest payable and other liabilities 267 227
-------- ---------
Net cash from operating activities 861 664
Cash flows from investing activities
Purchase of securities available-for-sale (6,861) (2,333)
Proceeds from sales, calls and maturities of
securities available-for-sale 5,268 700
Loans made to customers, net of payments collected (24,362) (25,959)
Net purchases of property and equipment (447) (5)
-------- ---------
Net cash from investing activities (26,402) (27,597)
Cash flows from financing activities
Net change in deposit accounts 29,631 22,498
Net change in short-term borrowings 2,837 3,674
Draws on other borrowings 6,000 -
Repayments on other borrowings (5,000) -
-------- ---------
Net cash from financing activities 33,468 26,172
-------- ---------
Net change in cash and cash equivalents 7,927 (761)
Cash and cash equivalents at beginning of period 3,673 3,163
-------- ---------
Cash and cash equivalents at end of period $ 11,600 $ 2,402
======== =========
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest $ 2,798 $ 1,312
Income taxes 87 169
</TABLE>
See accompanying notes.
<PAGE>
HEARTLAND BANCSHARES, INC.
FORM 10-QSB
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000
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NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description of Business: The consolidated financial statements include the
accounts of Heartland Bancshares, Inc. (Heartland) and its wholly-owned
subsidiary, Heartland Community Bank (Bank), after elimination of significant
inter-company transactions and accounts.
Heartland 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 offices located in Franklin, Greenwood and Bargersville, Indiana. 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.
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 June 30, 1999 or 2000.
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 significantly past due. Payments received on such loans are
reported as principal reductions.
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(Continued)
<PAGE>
HEARTLAND BANCSHARES, INC.
FORM 10-QSB
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000
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NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
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 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.
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 significantly delayed, 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.
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. Heartland reports net
cash flows for customer loan transactions, deposit transactions, and short-term
borrowings.
Earnings Per Common Share: Basic earnings per common share is net income divided
by the weighted average number of common shares outstanding during the period.
Diluted earnings per common share includes the dilutive effect of additional
potential common shares issuable under stock options.
Comprehensive Income: Comprehensive income consists of net income and other
comprehensive income. Other comprehensive income includes unrealized gains and
losses on securities available for sale which are also recognized as separate
components of equity.
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(Continued)
<PAGE>
HEARTLAND BANCSHARES, INC.
FORM 10-QSB
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2000
(Dollar amounts in thousands, except per share data)
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NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Dividend Restriction: Banking regulations require maintaining certain
capital levels and may limit the dividends paid by the bank to the holding
company or by the holding company to shareholders.
Industry Segment: Internal financial information is primarily reported and
aggregated in one line of business, i.e. banking.
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 for the three and six months ended June 30, 2000 and 1999.
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Basic earnings per share
Net income/(loss) $ 283 $ 207 $ 515 $ 334
========= ========= ========= =========
Weighted average shares
outstanding 1,265,000 1,265,000 1,265,000 1,265,000
========= ========= ========= =========
Basic earnings per share $ .22 $ .16 $ .41 $ .26
========= ========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Dilutive earnings per share
Net income/(loss) $ 283 $ 207 $ 515 $ 334
========= ========= ========= =========
Weighted average shares
outstanding 1,265,000 1,265,000 1,265,000 1,265,000
Dilutive effect of assumed
exercise of stock options - - - -
--------- --------- --------- ---------
Diluted average shares
Outstanding 1,265,000 1,265,000 1,265,000 1,265,000
--------- --------- --------- ---------
Diluted earnings per share $ .22 $ .16 $ .41 $ .26
========= ========= ========= =========
</TABLE>
<PAGE>
HEARTLAND BANCSHARES, INC.
FORM 10-QSB
MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2000
(Dollar amounts in thousands, except per share data)
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INTRODUCTION
The following discussion focuses on the financial condition at June 30, 2000
compared to December 31, 1999 and the results of operations for the three and
six month periods ended June 30, 2000 in comparison to the three and six month
periods ended June 30, 1999 of Heartland Bancshares, Inc.(Heartland).
This discussion should be read in conjunction with the interim financial
statements and related footnotes and the consolidated financial statements and
other financial data, and the Management's Discussion and Analysis of Financial
Condition and Results of Operation included in Heartland's December 31, 1999
Annual Report to Shareholders.
GENERAL
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.
FINANCIAL CONDITION
Heartland experienced continued growth through the first six months of 2000.
Total assets at June 30, 2000 are $144,344, an increase of $34,205 or 31% from
the December 31, 1999 total assets of $110,139. Total gross loans were $115,361
at June 30, 2000, representing growth of $24,316, or 27%, from the December 31,
1999 total of $91,045.
An increase in total deposits of $29,631 to $118,150 at June 30, 2000, or 33%
from $88,519 at December 31, 1999 primarily funded the growth in assets.
Short-term borrowings were increased by $2,837 from $3,519 at December 31, 1999
to $6,356 at June 30, 2000. Other borrowings, consisting entirely of Federal
Home Loan Bank Advances, increased from $6,000 at December 31, 1999 to $7,000 at
June 30, 2000.
Heartland's total equity to total asset ratio was 8.39% at June 30, 2000
compared to 10.57% at December 31, 1999. The change was primarily due to the
growth in assets, offset by the total comprehensive income for the six months
ended June 30, 2000. Book value per common share of Heartland was $9.58 at June
30, 2000 compared to $9.20 at December 31, 1999. The change in book value per
common share resulted from the total comprehensive income for the six months
ended June 30, 2000.
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(Continued)
<PAGE>
HEARTLAND BANCSHARES, INC.
FORM 10-QSB
MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2000
(Dollar amounts in thousands, except per share data)
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RESULTS OF OPERATIONS
Heartland recorded net income of $283 for the three months ended June 30, 2000
compared to $207 for the three months ended June 30, 1999. Similarly net income
for the six months ended June 30, 2000 was $515 compared to $334 for the six
months ended June 30, 1999. The improvements were driven by increased net
interest income which offset higher noninterest expense and income tax expense
recorded in 2000. Net interest income for the three and six months ended June
30, 2000 was $1,466 and $2,731 compared to $925 and $1,706 for the three and six
months ended June 30, 1999. Non-interest income was $181 and $305 for the three
and six months ended June 30, 2000. Comparatively, non-interest income was $51
and $78 for the three and six months ended June 30, 1999. Non-interest income
increased primarily due to commissions generated by Heartland Investment
Services, a full service brokerage department established in November 1999. The
department generates commission income from the sale of investment products,
such as stocks and mutual funds. Commissions were $106 and $165 for the three
and six month periods ended June 30, 2000.
Increases in net interest income were achieved primarily through increased
volume of interest earning assets. Total interest income for the three months
ended June 30, 2000 was $2,939 compared to $1,741 for the same period in 1999.
Interest income for the six months ended June 30, 2000 and 1999 was $5,423 and
$3,193 respectively. Interest expense of $1,473 and $2,692 was incurred during
the three and six months ended June 30, 2000. Interest expense during the three
and six months ended June 30, 1999 was $816 and $1,487. Interest income and
interest expense were increased primarily through the increase in volume of
interest earning assets and interest bearing liabilities and secondarily through
increases in interest rates.
The provision for loan losses recorded during the three months ended June 30,
2000 was $254 compared to $222 for the three months ended June 30, 1999.
Similarly, Heartland recorded a provision for loan losses of $411 during the six
months ended June 30, 2000 and $398 during the same period in 1999. Net
charge-offs in 2000 to date, were only $46. Management analyzes the level of the
allowance at least quarterly and records a provision sufficient to maintain the
allowance at a level commensurate with the size of the loan portfolio and the
risks identified therein.
Salaries and benefits expense was $545 and $1,031 for the three and six months
ended June 30, 2000 compared to $311 and $609 for the three and six months ended
June 30, 1999. Increases in salaries and benefits expense were primarily due to
the increase in number of employees including staff for the investment
department opened in November 1999, the third banking office opened in January
2000 and the Certificate of Deposit Program also opened January 2000.
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(Continued)
<PAGE>
HEARTLAND BANCSHARES, INC.
FORM 10-QSB
MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2000
(Dollar amounts in thousands, except per share data)
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Net occupancy and equipment expenses of $80 were incurred during the three
months ended June 30, 2000 compared to $50 during the same period in 1999.
Heartland recorded net occupancy and equipment expenses of $168 and $99 for the
six months ended 2000 and 1999 respectively. The Bank entered into a 10 year
lease agreement with a non-related party for a parcel of land located in
Bargersville, Indiana and commenced banking activities in a temporary facility
on that site in January 2000. The permanent building was constructed on the land
during the six months ended June 30, 2000 and was occupied in June. The
temporary facility was closed at that time.
Data processing expense was $107 for the three months ended June 30, 2000
compared to $65 for the three months ended June 30, 1999. Data processing
expense was $202 for the six months ended June 30, 2000 and $127 for the same
period in 1999. 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 the volume of accounts and
transactions. The increases in data processing expense were primarily due to the
increase in volume of accounts and transactions, data processing costs
associated with the additional banking office opened in January 2000 and
additional costs related to the implementation of a new loan documentation
software in the first quarter of 2000.
Printing and supplies expense was $26 for the three months ended June 30, 2000
and $19 for the three months ended June 30, 1999. Heartland incurred printing
and supplies expense of $60 for the six months ended June 30, 2000 compared to
$32 for the same period in 1999. The increase is primarily due to the increased
volume of loan and deposit customers.
Heartland incurred advertising expense of $32 during the three months ended June
30, 2000 compared to $21 during the three months ended June 30, 1999.
Advertising expense for the six month periods ended June 30, 2000 and 1999 was
$65 and $38, respectively. The increases are primarily due to promotion of the
Bargersville, Indiana banking office opened in January of 2000.
Professional fees for the three months ended June 30, 2000 were $39, compared to
$16 for the three months ended June 30, 1999 and $70 for the six months ended
June 30, 2000 versus $28 for the six months ended June 30, 1999. The increase in
professional fees is due primarily to the use of professional consulting firms
for internal audit, loan review and compliance review procedures during 2000.
The remaining expenses of $83 during the three months ended June 30, 2000, $65
during the three months ended June 30, 1999, $162 during the six months ended
June 30, 2000 and $119 during the six months ended June 30, 1999, relate to
various other items such as directors' fees, loan related expenses, postage,
insurance and training and were increased primarily due to the increase in
volume of loans and deposits.
CAPITAL RESOURCES
Shareholders' equity totaled $12,113 at June 30, 2000, compared to $11,643 at
December 31, 1999. The change is attributable to the total comprehensive income
for the three months ended June 30, 2000. As of June 30, 2000, 1,265,000 shares
of common stock were issued and outstanding.
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(Continued)
<PAGE>
HEARTLAND BANCSHARES, INC.
FORM 10-QSB
MANAGEMENT'S DISCUSSION AND ANALYSIS
JUNE 30, 2000
(Dollar amounts in thousands, except per share data)
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LIQUIDITY
Liquidity management for Heartland 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. The Bank also has the ability to borrow from the Federal
Home Loan Bank of Indianapolis with various repayment terms ranging from 1 day
to 15 years. Such borrowings are secured by a "blanket" collateral agreement
covering all available mortgage loans and investment securities in the Bank's
portfolio. Heartland manages liquidity through the use of deposits with other
financial institutions, Federal Funds and investment securities.
Item 2. Changes in Securities and Use of Proceeds
On June 23, 2000, the Company's Board of Directors adopted a shareholder rights
plan (the "Plan"). Under the Plan, rights attached to the outstanding common
shares of the Company at the rate of one right for each share held by
shareholders of record at the close of business on July 7, 2000. The rights will
become exercisable only if a person or group of affiliated persons (an
"Acquiring Person") acquires 15% or more of the Company's common shares or
announces a tender offer or exchange offer that would result in the acquisition
of 30% or more of the outstanding common shares. At that time, the rights may be
redeemed at the election of the Board of Directors of the Company. If not
redeemed, then prior to the acquisition by such person of 50% or more of the
outstanding common shares of the Company, the Company may exchange the rights
(other than rights owned by the Acquiring Person, which would have become void)
for common shares (or other securities) of the Company on a one-for-one basis.
If not exchanged, the rights may be exercised and the holders may acquire
preferred share units or common shares of the Company having a value of two
times the exercise price of $35.00. Each preferred share unit carries the same
voting rights as one common share. If the Acquiring Person engages in a merger
of other business combination with the Company, the rights would entitle the
holders to acquire shares of the Acquiring Person having a market value equal to
twice the exercise price of the rights. The Plan will expire on June 22, 2010.
The distribution of the rights is not a taxable event for shareholders of the
Company. In connection with the adoption of the Plan, the Board of Directors
also approved the terms of the Series A Preferred Shares and amended the
Articles of Incorporation of the Company to designate the relative rights,
preferences and limitations of the Series A Preferred Shares.
ITEM 4. Submission of Matters to a Vote of Security Holders.
Heartland held its Annual Meeting of Shareholders on April 24, 2000. At the
Annual Meeting, the shareholders elected as directors for an additional
three-year term the three nominees proposed by the Board of Directors.
Nominee Votes Votes Broker
Cast for Withheld Non-Votes
Sharon Acton 1,243,046 0 21,454
Jeffrey L. Goben 1,243,046 0 21,454
John Norton 1,243,046 0 21,454
Total abstentions were 500 for all nominees.
The following members of the Board of Directors continued in office following
the meeting for terms expiring at the annual meetings in the following years:
2001 -- J. Michael Jarvis, Robert Richardson and Patrick A. Sherman and
2002 - Steve Bechman, Gordon R. Dunn, and James C. Stewart.
Item 5. Other Information
Heartland Community Bank the wholly owned subsidiary of Heartland Bancshares,
Inc opened its fourth full service banking facility August 7, 2000. The new
branch is located at the corner of US 31 and Madison Avenue in Greenwood,
Indiana. The facility includes an automatic teller machine and a drive-up lane.
The building, which is leased, was previously operated as a branch office for a
regional bank until it closed in August 1999.
<PAGE>
HEARTLAND BANCSHARES, INC.
FORM 10-QSB
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PART II.
Item 6 - Exhibits and Reports on Form 8-K:
(a)
Exhibit NO. Description
4.01 Rights Agreement dated as of June 23, 2000 between Heartland
Bancshares, Inc., and Heartland Community Bank, as Rights Agent, is
incorporated by reference to Exhibit 4.01 to Form 8-K filed June 30,
2000.
4.02 Terms of Common Shares and Preferred Shares are included in the
Amended and Restated Articles of Incorporation of Heartland
Bancshares, Inc., which are incorporated by reference to Exhibit 3.1
to the Registration Statement on Form SB-2, filed July 28, 1997, as
amended.
4.03 Terms of Series A Preferred Shares are included in the Articles of
Amendment of Articles of Incorporation of Heartland Bancshares,
Inc., as filed with the Indiana Secretary of State on June 27, 2000,
which are incorporated by reference to Exhibit 3.01 to Form 8-K
filed June 30, 2000.
27 Financial Data Schedule
(b) Form 8-K Current Report June 23,2000: Shareholder Rights Plan filed June 30,
2000.
<PAGE>
HEARTLAND BANCSHARES, INC.
FORM 10-QSB
SIGNATURES
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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: 8/14/00 /s/ Steve Bechman
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Steve Bechman
President and
Chief Executive Officer
Date: 8/14/00 /s/ Jeffery D. Joyce
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Jeffery D. Joyce
Chief Financial Officer
