<PAGE>
<PAGE>
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, 1998
Commission file number 333-34153
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
-------------------------------------------
(Address of Principal Executive Offices)
719-539-2516
--------------------------------------------------
(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:
Shares of common stock outstanding as of September 30, 1998
1,322,500
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HIGH COUNTRY BANCORP, INC.
CONTENTS
PART I - FINANCIAL INFORMATION
Item 1: Financial Statements
Consolidated Statements of Condition at
June 30, 1998 and September 30, 1998 3
Consolidated Statements of Income for
Three Months Ended September 30, 1998
and 1997 4
Consolidated Statement of Cash Flows
for the Three Months Ended September 30,
1998 and 1997 5
Notes to Financial Statements 6 - 7
Item 2: Management's Discussion and Analysis
of Financial Condition and Results of
Operations 8 - 10
PART II - OTHER INFORMATION
Item 1: Legal Proceedings 11
Item 2: Changes in Securities 11
Item 3: Defaults Upon Senior Securities 11
Item 4: Submission of Matters to a Vote
of Security Holders 11
Item 5: Other Information 11
Item 6: Exhibits and Reports on Form 8-K 11
Signature 11
2<PAGE>
<PAGE>
HIGH COUNTRY BANCORP, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(UNAUDITED)
<TABLE>
<CAPTION>
September 30, June 30,
1998 1998
ASSETS ------------ ------------
<S> <C> <C>
Cash and amounts due from banks $ 2,092,097 $ 2,999,284
Interest-bearing deposits at other institutions 7,601,181 6,963,130
Mortgage-backed securities, held to maturity 3,973,565 4,326,603
Securities held-to-maturity 310,000 310,000
Loans receivable - net 85,444,096 81,359,296
Federal Home Loan Bank stock, at cost 1,085,600 1,065,500
Accrued interest receivable 723,571 699,982
Property and equipment, net 2,655,475 2,475,773
Mortgage servicing rights 28,966 29,856
Prepaid expenses and other assets 329,264 359,231
------------ ------------
TOTAL ASSETS $104,243,815 $100,588,655
============ ============
LIABILITIES AND EQUITY
LIABILITIES
Deposits $ 66,935,376 $ 63,424,713
Advances by borrowers for taxes and insurance 157,377 92,954
Accounts payable and other liabilities 516,662 566,641
Advances from Federal Home Loan Bank 17,890,000 17,890,000
Accrued income taxes payable 163,000 288,140
Deferred income taxes 47,300 47,300
------------ ------------
TOTAL LIABILITIES 85,709,715 82,309,748
------------ ------------
Commitments and contingencies
EQUITY
Preferred stock - $.01 par value;
authorized 1,000,000 shares; no
shares issued or outstanding -- --
Common Stock - $.01 par value;
authorized 3,000,000 shares; issued
and outstanding 1,322,500 shares 13,225 13,225
Paid-in capital 12,697,817 12,690,438
Retained earnings - substantially restricted 6,767,323 6,519,509
Note receivable from ESOP Trust (944,265) (944,265)
------------ ------------
TOTAL EQUITY 18,534,100 18,278,907
------------ ------------
TOTAL LIABILITIES AND EQUITY $104,243,815 $100,588,655
============ ============
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3<PAGE>
<PAGE>
HIGH COUNTRY BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
September 30,
1998 1997
------------ ------------
<S> <C> <C>
Interest Income
Interest on loans $1,828,211 $1,474,734
Interest on securities held-to-maturity 71,484 89,632
Interest on other interest-bearing assets 131,431 30,493
---------- ----------
Total interest income 2,031,126 1,594,859
---------- ----------
Interest Expense
Deposits 654,769 594,357
Federal Home Loan Bank advances 274,095 211,612
---------- ----------
Total interest expense 928,864 805,969
---------- ----------
Net interest income 1,102,262 788,890
Provision for losses on loans 59,928 50,000
---------- ----------
Net income after provision
for loan losses 1,042,334 738,890
---------- ----------
Noninterest Income
Service charges on deposits 37,410 33,598
Other 14,904 4,969
---------- ----------
Total noninterest income 52,314 38,567
---------- ----------
Noninterest Expense
Compensation and benefits 375,458 369,227
Occupancy and equipment 160,246 137,754
Insurance and professional fees 51,668 32,151
Other 95,734 66,376
---------- ----------
Total noninterest expense 683,106 605,508
---------- ----------
Income before income taxes 411,542 171,949
Income tax expense 163,728 67,800
---------- ----------
Net income $ 247,814 $ 104,149
========== ==========
Basic Earnings Per Common Share $ 0.20
==========
Diluted Earnings Per Common Share $ 0.20
==========
Weighted Average Common Shares
Outstanding Basic 1,237,860
Diluted 1,237,860
</TABLE>
See Notes to Consolidated Financial Statements
4<PAGE>
<PAGE>
HIGH COUNTRY BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
September 30,
1998 1997
---------- ----------
<S> <C> <C>
Operating Activities
Net income $ 247,814 $ 104,149
Adjustments to reconcile net income to net
cash provided by operating activities:
Amortization of:
Deferred loan origination fees (64,229) (18,442)
Discounts on investments 4,198 4,027
Stock dividend received from FHLB (20,100) -
ESOP market value expense 7,379 -
Provision for losses on loans 60,000 50,000
Deferred income taxes - (11,200)
Depreciation 46,339 44,781
Net change in miscellaneous assets 7,268 30,307
Net change in miscellaneous liabilities (175,119) 37,479
----------- -----------
Net cash provided by operating
activities 113,550 241,101
----------- -----------
Investing Activities
Net change in loans receivable (4,080,571) (2,953,544)
Principal repayments of mortgage-backed
securities held-to-maturity 348,840 194,483
Purchases of property and equipment (226,041) (63,881)
----------- -----------
Net cash used by investing activities (3,957,772) (2,822,942)
----------- -----------
Financing Activities
Conversion costs incurred -- (100,334)
Net change in deposits 3,510,663 4,251,879
Net change in mortgage escrow funds 64,423 156,798
Proceeds (payment)on FHLB advances -- (1,000,000)
----------- -----------
Net cash provided by financing
activities 3,575,086 3,308,343
----------- -----------
Net increase in cash and cash
equivalents (269,136) 726,502
Cash and cash equivalents, beginning 9,962,414 3,276,310
----------- -----------
Cash and cash equivalents, ending $ 9,693,278 $ 4,002,812
=========== ===========
Supplemental disclosure of cash flow
information
Cash paid for:
Taxes $ 222,140 $ --
Interest 913,969 311,969
</TABLE>
See Notes to Consolidated Financial Statements
5<PAGE>
<PAGE>
HIGH COUNTRY BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
SEPTEMBER 30, 1998
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 n August 1997 to acquire
all of the common stock of Salida Building and Loan Association
upon its conversion to stock form. A subscription and community
offering of the Company's shares was completed on December 9,
1997.
Note 2. Basis of Presentation
The accompanying unaudited consolidated financial statements,
(except for the statement of financial condition at June
30, 1998, 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. The results
of operations for the three months ended September 30, 1998 are
not necessarily indicative of the results of operations that may
be expected for the year ended June 30, 1999. The preparation
of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and
liabilities as the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
The accounting policies followed are as set forth in Note 1. of
the Notes to Financial Statements in the 1998 Salida Building
and Loan Association financial statements
Note 3. Regulatory Capital Requirements
At September 30, 1998, 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, 1998:
Tangible Capital:
Actual $12,488,000 12.71%
Required 1,474,000 1.50
Excess $11,014,000 11.21%
Core Capital:
Actual $12,488,000 12.71%
Required 2,948,000 3.00
Excess $ 9,540,000 9.71%
Risk-Based Capital:
Actual $13,256,000 21.31%
Required 4,976,000 8.00
Excess $ 8,280,000 13.31%
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<PAGE>
<PAGE>
HIGH COUNTRY BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
September 30, 1998
Note 4. Mutual to Stock Conversion
On May 15, 1997, The Board of Directors of the Salida Building
and Loan 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 Company issued common stock which was sold
in the Conversion. The closing of the offering and the
conversion occurred on December 9, 1997 and resulted in a stock
subscription of $13,225,000 (including $1,058,000 in shares
subscribed by the ESOP). The Company transferred 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 were deducted from the
proceeds of the stock sale, and amounted to $570,716, resulting
in net proceeds of $12,654,284.
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
Note 5. Earnings Per Share
The Company adopted Financial Accounting Standards Board
Statement No. 128 relating to earnings per share, effective for
the quarter ended December 31, 1997. The statement requires
dual presentations of basic and diluted earnings per share on
the face of the income statement and requires a reconciliation
of the numerator and denominator of the basic EPS computation
to the numerator and denominator of the diluted EPS computation.
Basic EPS excludes dilution and is computed by dividing income
available to common stockholders by the weighted-average number
of common shares outstanding for the period. Diluted EPS
reflects the potential dilution that could occur if securities
or other contracts to issue common stock were exercised or
converted into common stock or resulted in the issuance of
common stock that then shares in the earnings of the entity.
7
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HIGH COUNTRY BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
COMPARISON OF FINANCIAL CONDITION AT JUNE 30, 1998 AND SEPTEMBER
30, 1998
The Company's total assets increased by $3.6 million or 3.63%
from $100.6 million at June 30, 1998 to $104.2 million at
September 30, 1998. The increase in assets was due to loan
growth of $4.0 million.
Net loans totaled $85.4 million at September 30, 1998 and $81.4
million at June 30, 1998. The majority of the increase occurred
in residential mortgage loans which increased $3.9 million.
The growth in loans is due to significant refinancing of
residential mortgage loans due to low mortgage interest rates
and the Association offering attractive rates relative to other
lenders.
The allowance for loan losses totaled $771,000 at September 30,
1998 and $751,000 at June 30, 1998. As of those dates the non-
performing loans in the Association's portfolio were $217,000
and $392,000. The total non-performing loans at September 30,
1998 include 23 loans to consumer and small business borrowers.
The largest loan balance was $77,000 and the loans are secured
by single family residences, equipment and autos. There were
$42,000 of loans charged off and $2,000 of recoveries of
previous loan losses during the six months ended September 30,
1998. 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, 1998,
the ratio of the allowance for loan losses to net loans was
.90%. as compared to .92% at June 30, 1998.
At September 30, 1998, the Company's investment portfolio
included mortgage-backed securities and local municipal bonds
classified as "held to maturity" carried at amortized cost of
$4.3 million and an estimated fair value of $4.3 million. The
balance of the Company's investment portfolio at September 30,
1998 consists of interest bearing deposits with various
financial institutions totaling $7.6 million.
At September 30, 1998 deposits increased to $66.9 million from
$63.4 million at June 30, 1998 or a net increase of 5.54%. The
increase was used to fund loan growth. 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.
Advances from the Federal Home Loan Bank remained at $17.9
million September 30, 1998, from June 30, 1998. Sufficient
growth occurred in deposit accounts to fund loan growth.
COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED
SEPTEMBER 30, 1998 AND 1997
Net Income. The Company's net income for the three months ended
September 30, 1998 was $248,000 compared to net income of
$104,000 for the three months ended September 30, 1997. The
increase in net income for the three months ended September 30,
1998 resulted principally from increased interest income.
8
<PAGE>
<PAGE>
HIGH COUNTRY BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
Net Interest Income. Net interest income for the three months
ended September 30, 1998 was $1,102,000 compared to $789,000 for
the three months ended September 30, 1997. The increase in net
interest income for the three months ended September 30, 1998
was due to an increase in interest earning assets from $74.8
million as of September 30, 1997 to $98.8 million as of
September 30, 1998, less the effect of the increase in interest
bearing accounts from $69.6 million at September 30, 1997 to
$81.6 million at September 30, 1998. The increase in interest
earning assets offset a decrease in the average yield on earning
assets from 8.68% at September 30, 1997 to 8.40% at September
30, 1998. The decrease was due to refinancing of higher rate
mortgage loans to lower rates. The average cost of interest
bearing liabilities decreased slightly from 4.71% at September
30, 1997 to 4.68% at September 30, 1998.
Allowance for Loan Losses. The provision for loan losses for
the three months ended September 30, 1998 was $60,000 as
compared to $50,000 for the three months ended September 30,
1997. The increase in the provision was due to the 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.
Non-interest Expenses. Non-interest expenses were $683,000 for
the three months ended September 30, 1998 as compared to
$606,000 for the three months ended September 30, 1997. The
increase is attributable to Company legal and accounting
expenses, higher data processing expenses associated with growth
and other miscellaneous expenses.
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 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 was 5% until November 24, 1997 when the
requirement was lowered to 4%. The Company has historically
maintained a level of liquid assets in excess of regulatory
requirements. The Company's liquidity ratios at September 30,
1998 and 1997 were 7.57% and 7.29%, 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.
MANAGEMENT DISCUSSION AND ANALYSIS
YEAR 2000 ISSUE
The Company is evaluating the potential effect of the year 2000
on its information processing systems. Because critical
computer systems and software are vendor maintained, the Company
is not directly involved with programming changes or application
upgrades. The Company expects the providers to be compliant in
a timely basis and is testing the compliance efforts. The
Association's primary data processor has indicated that
renovations to their system for year 2000 compliance are
complete. The Association tested the system in September 1998
in a year 2000 environment and did not encounter any problems.
The Association will continue to test this system as well as
other critical systems into 1999. The primary data processor is
also testing the interfaces they have with other systems for
year 2000 compliance. It is management's opinion that the
modifications will not have a material effect on the Company's
financial position. All costs associated with modifications
will be expensed as incurred.
The Association has developed a contingency and business
resumption plan in case critical systems are not expected to be
year 2000 ready or fail in the year 2000. The plan has
identified alternative means of operations in case a system is
not expected to be year 2000 ready by a certain date or
malfunctions in the year 2000. The plan is reviewed on an
ongoing basis.
10<PAGE>
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HIGH COUNTRY BANCORP, INC.
PART II - OTHER INFORMATION
ITEM 1: Legal Proceedings
None
ITEM 2: Changes in Securities
None
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 November 13, 1998 /s/ Larry D. Smith
---------------------------
Larry D. Smith, President
11
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-END> SEP-30-1998
<CASH> 2,092,097
<INT-BEARING-DEPOSITS> 7,601,181
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 4,283,565
<INVESTMENTS-MARKET> 4,346,596
<LOANS> 85,444,096
<ALLOWANCE> 771,125
<TOTAL-ASSETS> 104,243,815
<DEPOSITS> 66,935,376
<SHORT-TERM> 4,500,000
<LIABILITIES-OTHER> 884,339
<LONG-TERM> 13,390,000
<COMMON> 13,225
0
0
<OTHER-SE> 18,520,875
<TOTAL-LIABILITIES-AND-EQUITY> 104,243,815
<INTEREST-LOAN> 1,828,211
<INTEREST-INVEST> 71,484
<INTEREST-OTHER> 131,431
<INTEREST-TOTAL> 2,031,126
<INTEREST-DEPOSIT> 654,769
<INTEREST-EXPENSE> 928,864
<INTEREST-INCOME-NET> 1,102,262
<LOAN-LOSSES> 59,928
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 683,106
<INCOME-PRETAX> 411,542
<INCOME-PRE-EXTRAORDINARY> 247,814
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 247,814
<EPS-PRIMARY> 0.20
<EPS-DILUTED> 0.20
<YIELD-ACTUAL> 8.15
<LOANS-NON> 217,000
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 751,123
<CHARGE-OFFS> 42,123
<RECOVERIES> 2,125
<ALLOWANCE-CLOSE> 771,125
<ALLOWANCE-DOMESTIC> 771,125
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
