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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[ X ] Quarterly report under Section 13 or 15 (d) of the
Securities Exchange Act of 1934
For the quarterly period ended September 30, 1997
Commission file number 0-23409
High Country Bancorp, Inc.
- ----------------------------------------------------------------
(Exact Name of Small business Issuer as Specified in Its
Charter)
Colorado 84-1438612
- ------------------------------- -------------------
(State of Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
130 West 2nd Street, Salida Colorado 81201
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(Address of Principal Executive Offices)
719-539-2516
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(Issuer's Telephone Number, Including Area Code)
Check whether the issuer's: (1) filed all reports required
to be filed by Section 13 or 15(d) of the Exchange Act during
the past 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90- days.
Yes X No
------ --------
State the number of shares outstanding of each of the
issuer's classes of common equity, as of the latest
practicable date: None as of September 30, 1997.
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HIGH COUNTRY BANCORP, INC.
CONTENTS
PART I - FINANCIAL INFORMATION
Item 1: Financial Statements
Consolidated Statements of Condition at
June 30, 1997 September 30, 1997 3
Statements of Consolidated Income for
the Three Months Ended September 30,
1997 and 1996 4
Statements of Consolidated Cash Flows
for the Three Months Ended September
30, 1997 and 1996 5
Notes to Financial Statements 6 - 7
Item 2: Management's Discussion and Analysis of
Financial Condition and Results of
Operations 8 - 9
PART II - OTHER INFORMATION
Item 1: Legal Proceedings 10
Item 2: Changes in Securities 10
Item 3: Defaults Upon Senior Securities 10
Item 4: Submission of Matters to a Vote
of Security Holders 10
Item 5: Other Information 10
Item 6: Exhibits and Reports on Form 8-K 10
Signature 10
2<PAGE>
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HIGH COUNTRY BANCORP, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
SEPTEMBER 30 AND JUNE 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
SEPTEMBER 30 JUNE 30
------------ ------------
<S> <C> <C>
Cash and amounts due from banks $ 1,755,474 $ 894,995
Interest-bearing deposits at other institutions 2,247,338 2,381,315
Securities held-to-maturity 5,141,254 5,339,762
Loans receivable, net 66,048,850 63,126,864
Federal Home Loan Bank stock 988,500 988,500
Accrued interest receivable 651,463 595,007
Property and equipment, net 2,526,498 2,507,398
Mortgage servicing rights 35,133 35,352
Prepaid expenses and other assets 468,699 454,909
----------- -----------
Total Assets $79,863,209 $76,324,102
=========== ===========
LIABILITIES AND EQUITY
Liabilities
Deposits $60,404,057 $56,152,178
Advances by borrowers for taxes and insurance 283,973 127,175
Accounts payable and other liabilities 508,696 491,929
Advances from Federal Home Loan Bank 12,520,000 13,520,000
Accrued income taxes payable 20,712 --
Deferred income taxes 63,400 74,600
----------- -----------
Total Liabilities 73,800,838 70,365,882
Commitments and contingencies
Equity
Retained earnings, substantially restricted 6,062,371 5,958,220
----------- -----------
Total Liabilities and Equity $79,863,209 $76,324,102
=========== ===========
</TABLE>
See Notes to Consolidated Financial Statements
3<PAGE>
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HIGH COUNTRY BANCORP, INC.
CONSOLIDATED STATEMENTS OF CONDITION
THREE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
1997 1997
------------ ------------
<S> <C> <C>
Interest Income
Interest on loans $1,474,734 $1,189,963
Interest on securities available-for-sale -- 10,881
Interest on securities held-to-maturity 89,632 111,115
Interest on other interest-bearing assets 30,493 20,975
---------- ----------
Total interest income 1,594,859 1,332,934
---------- ----------
Interest Expense
Deposits 594,357 527,996
Federal Home Loan Bank advances 211,612 111,513
---------- ----------
Total interest expense 805,969 639,509
---------- ----------
Net interest income 788,890 693,425
Provision for losses on loans 50,000 22,400
---------- ----------
Net interest income after provision for loan
losses 738,890 671,025
Noninterest Income
Service charges on deposits 33,598 28,268
Other 4,969 6,977
---------- ----------
Total noninterest income 38,567 35,245
---------- ----------
Noninterest Expense:
Compensation and benefits 369,227 250,030
Occupancy and equipment 137,754 97,759
Insurance and professional fees 32,151 52,906
Other 66,376 86,876
SAIF special assessment -- 296,578
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Total noninterest expense 605,508 784,149
---------- ----------
Income (loss) before income taxes 171,949 (77,879)
Income tax expense (benefit) 67,800 (29,615)
---------- ----------
Net income (loss) $ 104,149 $ (48,264)
========== ==========
</TABLE>
See Notes to Consolidated Financial Statements
4<PAGE>
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HIGH COUNTRY BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED SEPTEMBER 30 AND JUNE 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
1997 1997
------------ ------------
<S> <C> <C>
Operating Activities
Net income (loss) $ 104,149 $ (48,264)
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation 44,781 27,864
Net amortization of premiums and discounts
on investments 4,027 5,767
Amortization of loan fees (18,442) (28,494)
Provision for losses on loans 50,000 22,400
Deferred income taxes (11,200) 2,200
Net change in miscellaneous assets 30,307 (76,506)
Net change in miscellaneous liabilities 37,479 304,994
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Net cash provided by operating
activities 241,101 209,961
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Investing Activities
Net change in loans receivable (2,953,544) (4,194,207)
Purchase of securities available-for-sale -- (999,695)
Proceeds from sale of securities available-
for-sale -- 1,000,000
Principal repayments of mortgage-backed
securities held-to-maturity 194,483 417,219
Purchase of property and equipment (63,881) (369,733)
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Net cash used by investing activities (2,822,942) (4,146,416)
----------- -----------
Financing Activities
Net increase in deposit accounts 4,251,879 2,875,063
Net increase (decrease) in mortgage escrow
funds 156,798 140,076
Conversion costs incurred (100,334) --
Proceeds (payment)on borrowings (1,000,000) 500,000
----------- -----------
Net cash provided by financing
activities 3,308,343 3,515,139
----------- -----------
Net increase in cash and cash
equivalents 726,502 (421,316)
Cash and cash equivalents, beginning 3,276,310 2,087,997
----------- -----------
Cash and cash equivalents, ending $ 4,002,812 $ 1,666,681
=========== ===========
Supplemental disclosure of cash flow
information
Interest paid on deposits and borrowings $ 311,969 $ 211,509
Income taxes paid $ -- $ --
</TABLE>
See Notes to Consolidated Financial Statements
5<PAGE>
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HIGH COUNTRY BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
SEPTEMBER 30, 1997
Note 1. Nature of Business
High Country Bancorp, Inc. (the "Company") was incorporated
under the laws of the State of Colorado for the purpose of
becoming the holding company of Salida Building and Loan
Association (the "Association") in connection with the
Association's conversion from a federally chartered mutual
savings and loan association to a federally chartered stock
savings and loan association, pursuant to its Plan of
Conversion. The Company was organized in August 1997 to acquire
all of the common stock of Salida Building and Loan Association
upon its conversion to stock form. The subscription and
community offering period of the Company's shares closed on
November 25, 1997, and the mutual to stock conversion of the
Association was expected to close in mid-December.
Note 2. Basis of Presentation
The accompanying unaudited consolidated financial
statements,(except for the statement of financial condition at
June 30, 1997, which is audited) have been prepared in
accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form
10-QSB of Regulation S-X. Accordingly, they do not include all
of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the
opinion of management all adjustments necessary for a fair
presentation of the financial position and results of operations
for the periods presented have been included. The financial
statements of the Company are presented on a consolidated basis
with those of Salida Building and Loan Association, although the
Company did not own any shares of the Association and had no
assets, liabilities, equity or operations as of September 30,
1997. Therefore, the financial statements presented include
only the accounts and operations of Salida Building and Loan
Association. The results of operations for the three months
ended September 30, 1997 are not necessarily indicative of the
results of operations that may be expected for the year ended
June 30, 1998.
The accounting policies followed are as set forth in Note 1. of
the Notes to Financial Statements in the 1997 Salida Building
and Loan Association financial statements
Note 3. Regulatory Capital Requirements
At September 30, 1997, the Association met each of the three
current minimum regulatory capital requirements. The following
table summarizes the Association's regulatory capital position
at September 30, 1997:
Tangible Capital:
Actual $6,058,371 7.57%
Required 1,200,225 1.50
Excess $4,588,146 6.07%
Core Capital:
Actual $6,058,371 7.57%
Required 2,400,450 3.00
Excess $3,657,921 4.57%
Risk-Based Capital:
Actual $6,680,371 13.42%
Required 3,982,480 8.00
Excess $2,697,891 5.42%
Tangible and core capital levels are shown as a percentage of
total adjusted assets; risk-based capital levels are shown as
a percentage of risk-weighted assets.
6
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HIGH COUNTRY BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
September 30, 1997
Note 4. Mutual to Stock Conversion
On May 15, 1997, The Board of Directors of the Association
adopted a Plan of Conversion (the Plan) under which the
Association would convert from a federally charted mutual
savings and loan association to a federally chartered stock
savings and loan association and become a wholly-owned
subsidiary of the Company formed in connection with the
Conversion. The Plan was approved by the Office of Thrift
Supervision (OTS) and included the filing of a registration
statement with Securities and Exchange Commission. The Plan was
approved by the members of the Association at a special meeting
held December 1, 1997. In accordance with the Plan, the Company
will issue common stock sold in the Conversion. The
closing of the Conversion is expected to occur in mid-December.
The Company will transfer up to fifty percent of the net
proceeds for the purchase of all of the capital stock of the
Association.
The costs of issuing the common stock have been deferred and
will be deducted from the proceeds of the stock sale. At
September 30, 1997, the Association had incurred $100,334 of
such costs.
For the purpose of granting eligible members of the Association
a priority in the event of future liquidation, the Association,
at the time of conversion, established a liquidation account
equal to its regulatory capital as of the date of the latest
balance sheet used in the final conversion offering circular.
In the event (and only in such event) of future liquidation of
the converted Association, an eligible savings account holder
who continues to maintain a savings account shall be entitled
to receive a distribution from the liquidation account, in the
proportionate amount of the then-current adjusted balance of the
savings deposits then held, before any distributions may be made
with respect to capital stock.
The Association may not declare or pay a cash dividend on its
common stock if its net worth would thereby be reduced below
either the aggregate amount then required for the liquidation
account or the minimum regulatory capital requirements imposed
by federal regulations
The ESOP stock purchases will be financed by issuing a note to
the Company for the entire purchase.
7
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HIGH COUNTRY BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
COMPARISON OF FINANCIAL CONDITION AT JUNE 30, 1997 AND SEPTEMBER
30, 1997
The Company's total assets increased by $3.6 million or 4.63%
from $76.3 million at June 30, 1997 to $79.9 million at
September 30, 1997.
The Company's loan portfolio increased by approximately $2.9
million during the three months ended September 30, 1997. Net
loans totaled $66.0 million at September 30, 1997 and $63.1
million at June 30, 1997.
The allowance for loan losses totaled $643,700 at September 30,
1997 and $604.400 at June 30, 1997. As of those dates the non-
performing loans in its portfolio were $286,000 and $140,000.
There were immaterial loans charged off and recoveries of
previous loan losses during the three months ended September 30,
1997. The determination of the allowance for loan losses is
based on management's analysis, performed on a quarterly basis,
of various factors, including the market value of the underlying
collateral, growth and composition of the loan portfolio, the
relationship of the allowance for loan losses to outstanding
loans, historical loss experience, delinquency trends and
prevailing economic conditions. Although management believes
its allowance for loan losses is adequate, there can be no
assurance that additional allowances will not be required or
that losses on loans will not be incurred. The Company has had
minimal losses on loans in prior years. At September 30, 1997,
the ratio of the allowance for loan losses to net loans was
.97%. as compared to .96% at June 30, 1997.
At September 30, 1997, the Company's investment portfolio
included mortgage-backed and related securities classified as
"held to maturity" carried at amortized cost of $5.4 million and
an estimated fair value of $5.2 million. The balance of the
Company's investment portfolio at September 30, 1997 consists of
interest bearing deposits with various financial institutions
totaling $2.2 million.
At September 30, 1997 deposits increased to $60.4 million from
$56.2 million at June 30, 1997 or a net increase of 7.57%.
Management is continually evaluating the investment alternatives
available to the Company's customers, and adjusts the pricing on
its savings products to maintain its existing deposits.
COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED
SEPTEMBER 30, 1997 AND 1996
Net Income (Loss). The Company's net loss for the three months
ended September 30, 1996 was $(48,264) compared to net income of
$104,149 for the three months ended September 30, 1997. The
decrease in net earnings for the three months ended September
30, 1996 resulted primarily from the recognition of SAIF special
assessment expense of approximately $297,000.
Net Interest Income. Net interest income for the three months
ended September 30, 1997 was $789,000 compared to $693,000 for
the three months ended September 30, 1996. The increase in net
interest income for the three months ended September 30, 1997
was due to an increase in interest earning assets of $63.5
million as of September 30, 1996 to $76.2 million as of
September 30, 1997, less the effect of the increase in interest
bearing accounts from $60.1 million at September 30, 1996 to
$72.9 million at September 30, 1997.
Allowance for Loan Losses. The provision for loan losses for
the three months ended September 30, 1997 was $50,000 as
compared to $22,400 for the three months ended September 30,
1996. The increase in the provision was due to the anticipated
increase in the balance of loans held by the Association, the
mix of loans being made and the need to maintain an adequate
balance in the allowance for loan losses.
8<PAGE>
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HIGH COUNTRY BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
Noninterest Expenses And SAIF Special Assessment. Noninterest
expenses was $605,000 for the three months ended September 30,
1997 as compared to $784,000 for the three months ended
September 30, 1996. The decrease was attributable to the SAIF
special assessment of $297,000 during the quarter ended
September 30, 1996, which was not included in the 1997 period
results, partially offset in the 1997 period by the increased
costs of the branch opened in Buena Vista, Colorado, and
increases in total compensation.
Interest Expense. Interest expense increased to $806,000 for
the three months ended September 30, 1997 from $640,000 for the
three months ended September 30, 1996. The increase is
attributable to an increase in deposits from $52.4 million in
1996 to $60.4 million and an increase in advances from Federal
Home Loan Bank from $7.7 million as of September 30, 1996 to
$12.5 million as of September 30, 1997.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary sources of funds consists of deposits,
repayment of loans and mortgage-backed securities, maturities of
investments and interest-bearing deposits, and funds provided
form operations. While scheduled repayments of loans and
mortgage-backed securities and maturities of investment
securities are predicable sources of funds, deposit flows and
loan prepayments are greatly influenced by the general level of
interest rates, economic conditions and competition. The
Company uses its liquidity resources principally to fund
existing and future loan commitments, to fund maturing
certificates of deposit and demand deposit withdrawals, to
invest in other interest-earning assets, to maintain liquidity,
and to meet operating expenses. Management believes that
proceeds from the stock sale, loan repayments and other sources
of funds will be adequate to meet the Company's liquidity needs
for the immediate future.
The Company is required to maintain minimum levels of liquid
assets as defined by OTS regulations. This requirement, which
may be varied at the direction of the OTS depending upon
economic conditions and deposit flows, is based upon a
percentage of deposits and short-term borrowings. The required
minimum ratio is currently 5%. The Company has historically
maintained a level of liquid assets in excess of regulatory
requirements. The Company's liquidity ratios at September 30,
1997 and 1996 were 8.46% and 6.45%, respectively.
IMPACT OF INFLATION AND CHANGING PRICES
The financial statements and related data presented herein have
been prepared in accordance with generally accepted accounting
principles, which require the measurement of financial position
and results of operations in terms of historical dollars without
considering changes in the relative purchasing power of money
over time because of inflation. Unlike most industrial
companies, virtually all of the assets and liabilities of the
Company are monetary in nature. As a result, interest rates
have a more significant impact on the Company's performance than
the effects of general levels of inflation. Interest rates do
not necessarily move in same direction or in the same magnitude
as the prices of goods and services.
9
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HIGH COUNTRY BANCORP, INC.
PART II - OTHER INFORMATION
ITEM 1: Legal Proceedings
None.
ITEM 2: Changes in Securities
Not Applicable.
ITEM 3: Defaults Upon Senior Securities
Not Applicable
ITEM 4: Submission of Matters to a Vote of Security Holders.
Not Applicable
ITEM 5: Other Information
None
ITEM 6: Exhibits and Reports on Form 8-K
Exhibit 27 - Financial Data Schedule
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned thereunto duly authorized.
High Country Bancorp, Inc.
Registrant
Date December 8, 1997 /s/ Larry D. Smith
----------------------------
Larry D. Smith, President
10
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> SEP-30-1997
<CASH> 1,755,474
<INT-BEARING-DEPOSITS> 2,247,338
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 5,141,254
<INVESTMENTS-MARKET> 5,213,331
<LOANS> 66,048,850
<ALLOWANCE> 643,700
<TOTAL-ASSETS> 79,863,209
<DEPOSITS> 60,404,057
<SHORT-TERM> 8,500,000
<LIABILITIES-OTHER> 876,781
<LONG-TERM> 4,020,000
<COMMON> 0
0
0
<OTHER-SE> 6,062,371
<TOTAL-LIABILITIES-AND-EQUITY> 79,863,209
<INTEREST-LOAN> 1,474,734
<INTEREST-INVEST> 89,632
<INTEREST-OTHER> 30,493
<INTEREST-TOTAL> 1,594,859
<INTEREST-DEPOSIT> 594,357
<INTEREST-EXPENSE> 805,969
<INTEREST-INCOME-NET> 788,890
<LOAN-LOSSES> 50,000
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 605,508
<INCOME-PRETAX> 171,949
<INCOME-PRE-EXTRAORDINARY> 171,949
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 104,149
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<YIELD-ACTUAL> 8.60
<LOANS-NON> 87,000
<LOANS-PAST> 14,000
<LOANS-TROUBLED> 20,000
<LOANS-PROBLEM> 573,000
<ALLOWANCE-OPEN> 604,405
<CHARGE-OFFS> (10,705)
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 643,700
<ALLOWANCE-DOMESTIC> 643,700
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
