<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, 1999
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
---------------------------------------------
(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, $.01 par value outstanding as of
September 30, 1999 1,259,719
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HIGH COUNTRY BANCORP, INC.
CONTENTS
PART I - FINANCIAL INFORMATION
Item 1: Financial Statements
Consolidated Statements of Condition at
June 30, 1999 and September 30, 1999 3
Statements of Consolidated Income for
the Three Months Ended September 30,
1999 and 1998 4
Statements of Consolidated Cash Flows for the
Three Months Ended September 30, 1999 and 1998 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
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HIGH COUNTRY BANCORP, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(UNAUDITED)
<TABLE>
<CAPTION>
September 30, June 30,
1999 1999
ASSETS ------------ ------------
<S> <C> <C>
Cash and amounts due from banks $ 2,958,340 $ 2,248,971
Interest-bearing deposits at other institutions 4,037,220 4,409,949
Mortgage-backed securities, held to maturity 3,061,484 3,328,789
Securities held to maturity 310,000 310,000
Loans receivable - net 101,285,025 98,433,182
Loans held for sale, lower of cost or market 350,400 --
Federal Home Loan Bank stock, at cost 1,222,400 1,201,300
Accrued interest receivable 861,043 801,223
Property and equipment, net 3,167,771 2,863,725
Mortgage servicing rights 20,884 22,496
Prepaid expenses and other assets 404,889 386,664
Deferred income taxes 13,000 7,400
------------ ------------
TOTAL ASSETS $117,692,456 $114,013,699
============ ============
LIABILITIES AND EQUITY
LIABILITIES
Deposits $ 76,262,850 $ 72,604,408
Advances by borrowers for taxes and insurance 143,233 18,015
Accounts payable and other liabilities 680,914 656,030
Advances from Federal Home Loan Bank 22,635,000 22,685,000
Accrued income taxes payable 154,099 22,014
------------ ------------
TOTAL LIABILITIES 99,876,096 95,985,467
------------ ------------
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 1,259,719 shares
(9/30/99) and 1,298,719 shares
(6/30/99) 12,597 12,987
Paid-in capital 11,948,745 12,426,953
Retained earnings - substantially restricted 7,127,893 6,868,120
Note receivable from ESOP Trust (838,465) (838,465)
Deferred MRP stock awards (434,410) (441,363)
------------ ------------
TOTAL EQUITY 17,816,360 18,028,232
------------ ------------
TOTAL LIABILITIES AND EQUITY $117,692,456 $114,013,699
============ ============
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3
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HIGH COUNTRY BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
September 30,
1999 1998
------------ ------------
<S> <C> <C>
Interest Income
Interest on loans $2,117,243 $1,828,211
Interest on securities held-to-maturity 52,561 71,484
Interest on other interest-bearing assets 70,435 131,431
---------- ----------
Total interest income 2,240,239 2,031,126
---------- ----------
Interest Expense
Deposits 702,733 654,769
Federal Home Loan Bank advances 335,668 274,095
---------- ----------
Total interest expense 1,038,401 928,864
---------- ----------
Net interest income 1,201,838 1,102,262
Provision for losses on loans 44,925 59,928
---------- ----------
Net income after provision
for loan losses 1,156,913 1,042,334
---------- ----------
Noninterest Income
Service charges on deposits 37,708 37,410
Other 87,567 14,904
---------- ----------
Total noninterest income 125,275 52,314
---------- ----------
Noninterest Expense
Compensation and benefits 531,581 375,458
Occupancy and equipment 162,504 160,246
Insurance and professional fees 53,238 51,668
Other 118,692 95,734
---------- ----------
Total noninterest expense 866,015 683,106
---------- ----------
Income before income taxes 416,173 411,542
Income tax expense 156,400 163,728
---------- ----------
Net income $ 259,773 $ 247,814
========== ==========
Basic Earnings Per Common Share $ 0.22 $ 0.20
========== ==========
Diluted Earnings Per Common Share $ 0.22 $ 0.20
========== ==========
Weighted Average Common Shares
Outstanding Basic 1,178,883 1,237,860
Diluted 1,178,883 1,237,860
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4
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HIGH COUNTRY BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
September 30,
1999 1998
---------- ----------
<S> <C> <C>
Operating Activities
Net income $ 259,773 $ 247,814
Adjustments to reconcile net income to net
cash provided by operating activities:
Amortization of:
Deferred loan origination fees (36,818) (64,229)
Premiums on investments 2,127 4,198
Compensation expense on Management Recognition
Plan 6,188
Stock dividend received from FHLB (21,100) (20,100)
ESOP market value expense 6,172 7,379
Provision for losses on loans 45,000 60,000
Deferred income taxes (5,600) -
Depreciation 45,198 46,339
Income taxes 132,085
Net change in miscellaneous assets (76,433) 7,268
Net change in miscellaneous liabilities 24,884 (175,119)
----------- -----------
Net cash provided by operating
activities 381,476 113,550
----------- -----------
Investing Activities
Net change in loans receivable (3,210,425) (4,080,571)
Principal repayments of mortgage-backed
securities held-to-maturity 265,178 348,840
Purchases of property and equipment (349,244) (226,041)
----------- -----------
Net cash used by investing activities (3,294,491) (3,957,772)
----------- -----------
Financing Activities
Net change in deposits 3,658,442 3,510,663
Net change in mortgage escrow funds 125,218 64,423
Purchase of common stock (484,005) --
Proceeds (payment)on FHLB advances (50,000) --
----------- -----------
Net cash provided by financing
activities 3,249,655 3,575,086
----------- -----------
Net increase (decrease) in cash and
cash equivalents 336,640 (269,136)
Cash and cash equivalents, beginning 6,658,920 9,962,414
----------- -----------
Cash and cash equivalents, ending $ 6,995,560 $ 9,693,278
=========== ===========
Supplemental disclosure of cash flow
information
Cash paid for:
Taxes $ 29,915 $ 222,140
Interest 1,044,287 913,969
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5
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HIGH COUNTRY BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
SEPTEMBER 30, 1999
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, which 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,
1999, 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, 1999 are
not necessarily indicative of the results of operations that may
be expected for the year ended June 30, 2000. 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 1999 High Country
Bancorp, Inc. financial statements
Note 3. Regulatory Capital Requirements
At September 30, 1999, 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, 1999:
Tangible Capital:
Actual $12,809,000 11.11%
Required 1,729,000 1.50
Excess $11,080,000 9.61%
Core Capital:
Actual $12,809,000 11.11%
Required 3,457,000 3.00
Excess $ 9,352,000 8.11%
Risk-Based Capital:
Actual $13,742,000 17.54%
Required 6,267,000 8.00
Excess $ 7,475,000 9.54%
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, 1999
Note 4. Earnings Per Share
The Company adopted Financial Accounting Standards Board
Statement No. 128 relating to earnings per share, effective for
the quarter ended December 30, 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, 1999 AND SEPTEMBER
30, 1999
The Company's total assets increased by $3.7 million or 3.2% from
$114.0 million at June 30, 1999 to $117.7 million at September
30, 1999. The increase in assets was due to loan growth of $3.2
million.
Net loans totaled $101.3 million at September 30, 1999 and $98.4
million at June 30, 1999. The increase in loans occurred in
commercial real estate loans which increased $1.7 million and
consumer loans which increased $1.0 million.
During the quarter, the Association continued the recently
implemented program of ongoing loan sales of fixed-rate loans to
the Federal Home Loan Mortgage Corporation (FHLMC). Loan sales
for the three months ended September 30, 1999 totaled $3.9
million. At September 30, 1999, loans held for sale were
$350,000. The loans are valued at the lower of cost or market.
The allowance for loan losses totaled $933,000 at September 30,
1999 and $909,000 at June 30, 1999. As of those dates the non-
performing loans in the Association's portfolio were $340,000 and
$275,000, respectively. The total non-performing loans at
September 30, 1999 include 18 loans secured by single family
residences, business equipment and autos. The largest non-
performing loan balance was $74,000. There was $22,000 of loans
charged off and less than $1,000 of recoveries of previous loan
losses during the three months ended September 30, 1999. 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, 1999 and June 30, 1999, the ratio
of the allowance for loan losses to net loans was .92%.
At September 30, 1999, the Company's investment portfolio
included mortgage-backed securities and local municipal bonds
classified as "held to maturity" carried at amortized cost of
$3.4 million and an estimated fair value of $3.4 million. The
balance of the Company's investment portfolio at September 30,
1999 consists of interest bearing deposits with various financial
institutions totaling $4.0 million.
At September 30, 1999 deposits increased to $76.3 million from
$72.6 million at June 30, 1999 or a net increase of 5.04%. 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.
The Company announced the commencement of a stock repurchase
program on May 24, 1999. The program will acquire up to 10% of
the Company's outstanding common stock or up to 132,250 shares
over a twelve-month period. For the three months ended September
30, 1999 the Company repurchased 39,000 shares at a total cost of
$484,000. The Company repurchased an additional 21,748 shares in
October 1999 at a cost of $275,000. Since May 24, 1999 and
through October 25, 1999, the Company has repurchased 84,529 or
6.39% of the original outstanding stock.
8
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HIGH COUNTRY BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED
SEPTEMBER 30, 1999 AND 1998
Net Income. The Company's net income for the three months ended
September 30, 1999 was $260,000 compared to net income of
$248,000 for the three months ended September 30, 1998. The
$12,000 increase in net income for the three months ended
September 30, 1999 resulted principally from increased interest
income and income from loan sales which offset increased interest
expense and compensation.
Net Interest Income. Net interest income for the three months
ended September 30, 1999 was $1,202,000 compared to $1,102,000
for the three months ended September 30, 1998. The increase is
attributed to increased interest earned on interest earning
assets due to loan growth less the increase in interest expense
due to the increase in interest bearing liabilities. The
increase in interest earning assets offset a decrease in the
interest rate spread from 3.72% for the three months ended
September 30, 1998 to 3.61% for the three months ended September
30, 1999. This was caused by a decrease in the average yield on
earning assets from 8.40% at September 30, 1998 to 8.08% at
September 30, 1999. The decrease was due to refinancing of
higher rate mortgage loans to lower rates. The interest rate
spread was also affected by a decrease in the average cost of
interest bearing liabilities from 4.68% at September 30, 1998 to
4.47% at September 30, 1999.
Non-interest Income. Non-interest income was $125,000 for the
three months ended September 30, 1999 as compared to $52,000 for
the three months ended September 30, 1998. The majority of the
increase is due to income from loan sales of $60,000 for the
three months ended September 30, 1999. The income is from loan
origination fees and gains on the sale of the loans.
Non-interest Expenses. Non-interest expenses were $866,000 for
the three months ended September 30, 1999 as compared to $683,000
for the three months ended September 30, 1998. The majority of
the increase occurred in compensation and benefit expense, which
increased $156,000. The increase was from the adoption of the
Management Recognition Plan and additional employees associated
with growth.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary sources of funds consist of deposits,
repayment of loans and mortgage-backed securities, maturities of
investments and interest-bearing deposits, and funds provided
from 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 Association 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 Association has historically maintained a level of
liquid assets in excess of regulatory requirements. The
Association's liquidity ratios at September 30, 1999 and 1998
were 5.07% and 7.57%, respectively.
9
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HIGH COUNTRY BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
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.
YEAR 2000 READINESS DISCLOSURE
The Company is continually 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 on a timely basis and has tested 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 review this system as well as other
critical systems during the remainder of 1999. The primary data
processor has completed testing the interfaces they have with
other systems for year 2000 compliance. The data processor has
not encountered Year 2000 problems with these tests. 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 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 disaster plan for the majority of the systems includes
pre-year 2000 procedures as well as post-year 2000 procedures.
The pre-year 2000 procedures include having customer information,
forms and software available for critical systems. The post-year
2000 procedures have been developed to identify alternatives if
critical systems fail in the year 2000. Depending on the
problems encountered in the post-year 2000 environment, the
contingency and business resumption plan includes working from a
manual basis to a fully functioning basis. The plan is reviewed
on an ongoing basis.
10
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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.
None
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 4, 1999 /s/ Larry D. Smith
---------------- ------------------------------
Larry D. Smith, President
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-END> SEP-30-1999
<CASH> 2,958,340
<INT-BEARING-DEPOSITS> 4,037,220
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 3,371,484
<INVESTMENTS-MARKET> 3,388,945
<LOANS> 101,285,025
<ALLOWANCE> 932,933
<TOTAL-ASSETS> 117,692,456
<DEPOSITS> 76,262,850
<SHORT-TERM> 6,000,000
<LIABILITIES-OTHER> 978,246
<LONG-TERM> 16,635,000
<COMMON> 12,597
0
0
<OTHER-SE> 17,803,763
<TOTAL-LIABILITIES-AND-EQUITY> 117,692,456
<INTEREST-LOAN> 2,117,243
<INTEREST-INVEST> 52,561
<INTEREST-OTHER> 70,435
<INTEREST-TOTAL> 2,240,239
<INTEREST-DEPOSIT> 702,733
<INTEREST-EXPENSE> 1,038,401
<INTEREST-INCOME-NET> 1,201,838
<LOAN-LOSSES> 44,925
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 866,015
<INCOME-PRETAX> 416,173
<INCOME-PRE-EXTRAORDINARY> 259,773
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 259,773
<EPS-BASIC> 0.22
<EPS-DILUTED> 0.22
<YIELD-ACTUAL> 8.07
<LOANS-NON> 340,000
<LOANS-PAST> 0
<LOANS-TROUBLED> 35,929
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 909,471
<CHARGE-OFFS> 21,747
<RECOVERIES> 209
<ALLOWANCE-CLOSE> 932,933
<ALLOWANCE-DOMESTIC> 932,933
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
