UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the quarterly period ended March 31, 1998.
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the transition period from ................. to
..............
Commission File Number: 1-13823
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HERITAGE BANCORP, INC.
(Exact name of registrant as specified in its charter)
Delaware 58-2356162
................................ ....................................
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
201 West Main Street, Laurens, South Carolina 29360
...................................................
(Address of principal executive offices)
(864) 984-4581
....................................................
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 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 issuer's classes of
common stock, as of the latest practicable date.
Common Stock Issued and Outstanding: 4,628,750 at April 21, 1998.
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Table of Contents
Page
Part I. Financial Information
- ------ ---------------------
Item 1. Financial Statements (unaudited)
Consolidated Balance Sheets at March 31, 1998
and September 30, 1997 1
Consolidated Statements of Income for the Three
and Six Month Periods Ended March 31, 1998 and 1997 2
Consolidated Statements of Cash Flows for the Three
and Six Month Periods Ended March 31, 1998 and 1997 3-4
Notes to Consolidated Financial Statements 5-6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7-9
Item 3. Quantitative and Qualitative Disclosures About
Market Risk 9
Part II. Other Information 10
SIGNATURES 11
EXHIBITS 12-13
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ITEM 1. FINANCIAL STATEMENTS
- -----------------------------
HERITAGE BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
(In Thousands of Dollars)
ASSETS March 31, September 30,
1998 1997
(Unaudited)
Cash $ 2,279 $ 2,012
Federal funds sold and overnight interest-bearing
deposits 88,728 12,647
-------- --------
Total cash and cash equivalents 91,007 14,659
Investment securities:
Held-to-maturity - at amortized cost (market
value: March 31, 1998 - $19,802; September 30,
1997 - $15,954) 19,859 15,988
Available-for-sale - at fair value (amortized
cost: March 31, 1998 - $5,562; September 30,
1997 - $6,063) 8,737 8,390
Mortgage-backed securities - held to maturity -
at amortized cost (market value: March 31, 1998 -
$4,412; September 30, 1997 - $6,635) 4,435 6,665
Loans receivable - net 195,145 192,663
Loans held-for-sale - at lower of cost or market
(market value: March 31, 1998 - $873; September
30, 1997 - $1,065) 856 1,045
Office properties and equipment - net 4,155 4,278
Federal Home Loan Bank Stock - at cost 2,042 2,042
Accrued interest receivable 1,234 1,242
Real estate acquired in settlement of loans - net 295 410
Other assets 554 117
-------- --------
TOTAL $328,319 $247,499
======== ========
LIABILITIES AND EQUITY
LIABILITIES:
Deposit accounts $294,025 $215,412
Accrued interest on deposit accounts 455 338
Other liabilities 2,895 2,514
-------- --------
Total liabilities 297,375 218,264
-------- --------
EQUITY:
Retained income - substantially restricted 28,944 27,769
Unrealized gain on available-for-sale securities,
net of taxes 2,000 1,466
-------- --------
Total equity 30,944 29,235
-------- --------
TOTAL $328,319 $247,499
======== ========
See notes to consolidated financial statements.
1
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HERITAGE BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands of Dollars)
(Unaudited)
Three Months Ended Six Months Ended
March 31, March 31,
------------------ ----------------
1998 1997 1998 1997
INTEREST INCOME:
Interest on loans $3,936 $3,675 $7,810 $7,359
Investment securities and other 796 584 1,358 1,200
Mortgage-backed securities 62 118 138 249
------ ------ ------ ------
Total interest income 4,794 4,377 9,306 8,808
------ ------ ------ ------
INTEREST EXPENSE:
Deposits 3,178 2,949 6,296 5,964
Federal Home Loan Bank borrowings 81 162
------ ------ ------ ------
Total interest expense 3,178 3,030 6,296 6,126
------ ------ ------ ------
NET INTEREST INCOME 1,616 1,347 3,010 2,682
PROVISION FOR LOAN LOSSES
(RECOVERY OF ALLOWANCE) (115) 21 (115) 21
------ ------ ------ ------
NET INTEREST INCOME AFTER PROVISION FOR
LOAN LOSSES 1,731 1,326 3,125 2,661
------ ------ ------ ------
OTHER INCOME:
Service charges and fees 57 47 106 101
Other income (expense), net 0 3 (1) 3
------ ------ ------ ------
Total other income 57 50 105 104
------ ------ ------ ------
OTHER OPERATING EXPENSES:
Employee compensation and benefits 413 375 736 711
Deposit insurance premiums 34 45 67 164
Occupancy and equipment expense 107 86 211 182
Data processing - service bureau fees 29 35 62 68
Office supplies, postage, printing,
etc. 45 29 62 46
Professional fees 17 19 34 30
(Income) expense of real estate
operations 57 (98) 83 (176)
Other 75 46 110 93
------ ------ ------ ------
Total other operating expense 777 537 1,365 1,118
------ ------ ------ ------
INCOME BEFORE INCOME TAXES 1,011 839 1,865 1,647
PROVISION FOR INCOME TAXES 360 296 690 606
------ ------ ------ ------
NET INCOME $ 651 $ 543 $1,175 $1,041
====== ====== ====== ======
See notes to consolidated financial statements.
2
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HERITAGE BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands of Dollars)
(Unaudited)
Three Months Ended Six Months Ended
March 31, March 31,
------------------ ----------------
1998 1997 1998 1997
OPERATING ACTIVITIES:
Net income $ 651 $ 543 $1,175 $1,041
Adjustments to reconcile net
income to net cash provided
by operating activities:
Deferred income tax (benefit)
expense (87) 161 (89) 161
Accretion (amortization) of
discount (premium) on investment
and mortgage-backed securities (1) 12 (3) 22
Amortization of net deferred income (43) (42) (74) (85)
Provision for Loan Losses (recovery
of allowance) (115) 21 (115) 21
Gain on sale of loans (2) (3) (3) (3)
Proceeds from the sale of loans
held-for-sale 207 150 292 150
Depreciation on office properties
and equipment 70 61 141 122
Provision for losses (recovery of
allowance) on real estate acquired
in settlement of loans 25 (4) 39 1
Loss (gain) on sales of real estate
acquired in settlement of loans 30 (91) 39 (182)
(Increase) decrease in accrued
interest receivable and other
assets (297) 87 (429) 174
Increase (decrease) in accrued
interest payable and other
liabilities 249 717 273 (1,059)
------- ------ ------ ------
Net cash provided by operating
activities 687 1,612 1,246 363
------- ------ ------ ------
INVESTING ACTIVITIES:
Proceeds from maturities and calls
of available-for-sale investment
securities 500 2,600 500 4,100
Proceeds from maturities and calls
of held-to-maturity investment
securities 5,000 1,000 7,750 4,000
Purchases of held-to-maturity
investment securities (8,113) (1,997) (11,614) (2,493)
Purchase of available-for-sale
investment securities (500) (500)
Principal repayments on mortgage-
backed securities 668 956 2,227 1,496
Purchase of loans receivable (7,395) (8,821) 0
Net loan (originations) and
principal payments on loans 4,433 (2,700) 6,299 (6,703)
Proceeds from sales of real estate
acquired in settlement of loans 384 349 591 484
Capitalized costs of real estate
acquired in settlement of loans (116) 0 (424) 0
Acquisition of office properties
and equipment (9) (16) (19) (26)
------- ------ ------ ------
Net cash provided by (used in)
investing activities (4,648) (308) (3,511) 358
------- ------ ------ ------
FINANCING ACTIVITIES:
Increase in deposits from issuance
of stock subscriptions 71,673 71,673
Net increase in deposits from other
than stock subscriptions 3,122 2,140 6,940 2,720
------- ------ ------- ------
Net cash provided by financing
activities 74,795 2,140 78,613 2,720
------- ------ ------- ------
3
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HERITAGE BANCORP, INC.
STATEMENTS OF CASH FLOWS
(In Thousands of Dollars)
(Unaudited)
Three Months Ended Six Months Ended
March 31, March 31,
------------------ ----------------
1998 1997 1998 1997
NET INCREASE IN CASH AND CASH
EQUIVALENTS 70,834 3,444 76,348 3,441
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR 20,173 5,872 14,659 5,875
------- ------ ------- ------
CASH AND CASH EQUIVALENTS AT
END OF YEAR $91,007 $9,316 $91,007 $9,316
======= ====== ======= ======
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION:
Cash paid during the year for:
Interest $ 3,057 $3,057 $ 6,178 $6,135
======= ====== ======= ======
Income taxes $ 540 $ 0 $ 545 $ 10
======= ====== ======= ======
SUPPLEMENTAL DISCLOSURE OF NON-
CASH TRANSACTIONS:
Transfers from loans to real
estate acquired in
settlement of loans $ 73 $ 137 $ 129 $ 320
======= ====== ======= ======
Increase (decrease) in net
unrealized gain on available-
for-sale investment securities $ 240 $ (275) $ 534 $ (147)
======= ======= ======= ======
See notes to consolidated financial statements.
4
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HERITAGE BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
Heritage Bancorp, Inc. (the "Corporation") was incorporated under Delaware law
in November 1997 by Heritage Federal Savings & Loan Association (the
"Association") (now known as Heritage Federal Bank) in connection with the
conversion of the Association from a federally chartered mutual savings and
loan association to a federally chartered stock savings bank, the issuance of
the Association's stock to the Corporation and the offer and sale of the
Corporation's common stock by the Corporation (the "Conversion"). Upon
consummation of the Conversion on April 6, 1998, the Corporation became the
unitary holding company for the Association. See Note 2 for a more detailed
description of the mutual to stock conversion.
For purposes of this Form 10-Q, the financial statements and management's
discussion and analysis of financial condition and results of operations are
presented for the Association since the Corporation was not active during any
of the periods presented. No pro forma effect has been given to the sale of
the Corporation's common stock in the Conversion.
The accompanying consolidated financial statements of the Corporation have
been prepared in accordance with instructions to Form 10-Q. Accordingly, they
do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. However,
such information reflects all adjustments (consisting solely of normal
recurring adjustments) which are, in the opinion of management, necessary for
a fair statement of results for the interim periods.
The results of operations for the six months ended March 31, 1998 are not
necessarily indicative of the results to be expected for the year ending
September 30, 1998. The consolidated financial statements and notes thereto
should be read in conjunction with the audited financial statements and notes
thereto for the year ended September 30, 1997, contained in the Corporation's
prospectus dated February 3, 1998.
2. CONVERSION TO CAPITAL STOCK FORM OF OWNERSHIP
On September 10, 1997, the Board of Directors of the Association adopted a
Plan of Conversion to convert from a federally chartered mutual savings and
loan association to a federally chartered capital stock savings bank. The
conversion was accomplished through the formation of the Corporation in
November 1997, the adoption of a federal stock charter, the sale of all of the
Association's stock to the Corporation on April 6, 1998 and the sale of the
Corporation's stock to the public on April 6, 1998.
A subscription offering ("offering") of the shares of common stock of the
Corporation was conducted whereby the shares were offered initially to
eligible account holders, the Association's Employee Stock Ownership Plan
("ESOP"), supplemental eligible account holders and other members of the
Association (collectively "subscribers"). During the offering, subscribers
submitted orders for common stock along with full payment for the order in
either cash, by an authorization to withdraw funds for payment from an
existing deposit account at the Association upon issuance of stock, or a
combination of cash and account withdrawal. Subscription funds received in
connection with the offering were placed in special escrow accounts in the
Association. For those orders that were to be funded through account
withdrawals, the Association placed "holds" on those accounts, restricting
withdrawal of any amount which would reduce the account balance below the
amount of the order. At March 31, 1998, the Association held $71.6 million in
subscription escrow accounts and had restricted withdrawals from deposits
accounts in the amount of $37.6 million.
5
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On April 6, 1998, the Corporation issued 4.6 million shares of common stock
for proceeds of $69.4 million. The aggregate purchase price was determined by
an independent appraisal. As the Corporation received subscriptions in excess
of shares available, shares were allocated in accordance with the Plan of
Conversion. Sources of proceeds were as follows (in thousands of dollars):
Subscription escrow accounts $ 35,204
Deposit account withdrawals 28,672
Note receivable from ESOP 5,555
---------
Gross Proceeds $ 69,431
=========
All excess subscriptions funds were refunded and holds on deposit accounts
were released after the stock was issued.
Conversion expenses totaled approximately $1.4 million and were deducted from
gross proceeds to result in net proceeds of approximately $68.0 million. As
of March 31, 1998, prepaid conversion costs were approximately $464,000 and
were included in the balance sheet caption Other Assets.
The Association issued all its outstanding capital stock to the Corporation in
exchange for one-half of the net proceeds. The Corporation accounted for the
purchase in a manner similar to a pooling of interests whereby assets and
liabilities of the Association maintain their historical cost basis in the
consolidated company.
At the time of the Conversion, the Association established a liquidation
account totaling approximately $29.8 million for the benefit of eligible
account holders as of June 30, 1996 and December 31, 1997 who continue to
maintain their accounts at the Association after the Conversion. The
liquidation account will be reduced annually to the extent that eligible
account holders have reduced their qualifying deposits. Subsequent increases
will not restore an eligible account holder's interest in the liquidation
account. In the event of a distribution from the liquidation of the
Association, each eligible account holder will be entitled to receive a
distribution from the liquidation account in an amount proportionate to the
current adjusted qualifying balances for accounts then held before any
distribution may be made to the Corporation with respect to the Association's
capital stock.
The Association also established the ESOP for the benefit of its employees.
The Corporation issued 370,300 shares of common stock to the ESOP in exchange
for a note in the amount of approximately $5.5 million. The Association will
make contributions in the amount necessary, when combined with any dividends
earned by the ESOP on unallocated shares, to make quarterly payments of
principal and interest on the note. As payments are made, the corporation
will release shares from collateral. Released shares will be allocated to
participants over the term of the note.
6
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Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Comparison of Financial Condition at March 31, 1998 and September 30, 1997
Total assets increased $80.8 million, or 32.7%, during the first six months of
fiscal 1998 to $328.3 million. The increase resulted primarily from increases
in federal funds sold and overnight interest-bearing deposits of $76.3
million, investment securities of $4.2 million and loans receivable of $2.5
million offset by a decrease in mortgage-backed securities of $2.2 million.
Cash and cash equivalents increased to $91.0 million from $14.7 million as the
Association continued to accumulate cash from the issuance of stock
subscriptions related to the public offering of common stock of the
Corporation. The total cash received for stock subscriptions was $71.6
million as of March 31, 1998. Approximately $36.3 million was returned to
subscribers in April 1998 at the conclusion of the offering. Investment
securities increased to $28.6 million from $24.4 million, or 17.3%. Loans
receivable increased $2.5 million, or 1.3%, as loan demand remained constant
during the first six months of fiscal year 1998. Mortgage-backed securities
decreased to $4.4 million from $6.7 million as a result of continued
repayments.
Deposit accounts increased $78.6 million, or 36.5%, during the first six
months of fiscal 1998 to $294.0 million. The increase is due primarily to
cash received from stock subscriptions which were held in deposit accounts
until the stock was sold on April 6, 1998. At March 31, 1998, such deposited
amounted to $71.6 million. The remaining increase in deposits of $7.0 million
can be attributed to re-investment of deposit dividends and new deposits
gained since September 30, 1997.
Total equity increased $1.7 million, or 5.8%, to $31.0 million at March 31,
1998 from $29.2 million at September 30, 1997. The increase was due to $1.2
million in net income for the six months ended March 31, 1998 and an increase
of $534,000 in the unrealized gain on available-for-sale securities.
Nonaccrual loans decreased $33,000 to $901,000 at March 31, 1998 from $934,000
at September 30, 1997. Nonaccrual one- to four-family mortgage loans and
nonaccrual home equity loans decreased $158,000 and $17,000, respectively
while, nonaccrual builder construction loans increased $142,000. At March 31,
1998 and September 30, 1997, total nonaccrual loans accounted for 0.5% of net
loans receivable. Real estate owned decreased $115,000 to $295,000 at March
31, 1998 from $410,000 at September 30, 1997 as a result of sales of
properties during the first six months of fiscal year 1998. Total
nonperforming assets were 0.4% of total assets at March 31, 1998, compared to
0.5% at September 30, 1997.
Comparison of Operating Results for the Three Months Ended March 31, 1998 and
1997
General. Net income increased $108,000, or 19.9%, to $651,000 for the three
months ended March 31, 1998 from $543,000 for the three months ended March 31,
1997. The increase in net income was primarily the result of an increase in
interest income and recovery of loan losses which was partially offset by an
increase in interest expense, other operating expenses and income taxes.
Net Interest Income. Net interest income increased $269,000, or 20.0%, from
the second quarter of fiscal 1997 to the second quarter of fiscal 1998.
Interest income increased $417,000, or 9.5%, between the periods. Interest
income on loans increased $261,000 as a result of an increase in the average
balance of loans receivable to $194.0 million from $187.9 million and an
increase in the average yield to 8.11% from 7.82%. The average balance of
interest-earning assets increased to $258.0 million from $238.9 million and
the average yield on total interest-earning assets was 7.43% for the second
quarter of fiscal 1998 compared to 7.33% for the second quarter of fiscal
1997. The increase in the average balance of interest-earning assets was due
in part to cash received for subscriptions in conjunction with the Conversion
and invested in federal funds sold and overnight interest-bearing deposits and
an increase in the average balance of loans receivable.
Interest expense increased $148,000, or 4.9%, between the periods. Interest
expense on deposits increased $229,000, or 7.8%, as a result of an increase in
the average balance of deposits to $232.3 million from $216.2
7
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million. This increase was partially offset by a decrease in the average
yield on deposits to 5.47% from 5.59%. The increase in the average balance of
deposits was due in part to the subscription deposits received in conjunction
with the Conversion. As no borrowings were outstanding during the second
quarter of fiscal 1998, there was no interest expense on FHLB borrowings in
the second quarter of 1998 compared with $81,000 in interest expense in the
second quarter of fiscal 1997. The average rate paid on interest-bearing
liabilities was 5.47% for the second quarter of fiscal 1998, compared to 5.61%
for the same period of the prior year.
Provision for Loan Losses. There was a net recovery for loan losses of
$115,000 in the second quarter of fiscal 1998 compared to a provision for loan
loss of $21,000 during the second quarter of fiscal 1997. The recovery was
the result of a fully reserved loan being repaid by the borrower. During the
three months ended March 31, 1998, the Association had charge-offs of $8,000
and recoveries of $0. At March 31, 1998, the Association's allowance for loan
losses totaled $750,000, which equaled 0.38% of total net loans compared to an
allowance for loan losses of $874,000 at September 30, 1997 or 0.5% of total
net loans.
Other Operating Expenses. Other operating expenses increased $240,000, or
44.7%, from the second quarter of fiscal 1997 to the second quarter of fiscal
1998. Employee benefit and compensation expense increased $38,000 during the
second quarter of fiscal 1997 primarily due to increases in personnel and
normal salary increases. Expenses for real estate owned were $57,000 in the
second quarter of fiscal 1998 compared to income of $98,000 in the second
quarter of fiscal 1997. In the three months ended March 31, 1997, the
Association sold real estate owned for a net gain of $98,000. The increase in
other categories of other operating expenses generally are attributable to the
growth of the Company and to inflation. The Company anticipates that other
operating expenses will continue to increase in subsequent periods as a result
of increased costs associated with operating as a public company.
Income Taxes. The provision for income taxes was $360,000 in the second
quarter of fiscal 1998 compared to $296,000 in the second quarter of fiscal
1997. The income tax provision was higher in fiscal 1998 because of higher
taxable income.
Comparison of Operating Results for the Six Months Ended March 31, 1998 and
1997
General. Net income increased $134,000, or 12.9%, to $1,175,000 for the six
months ended March 31, 1998 from $1,041,000 for the six months ended March 31,
1997. The increase in net income was primarily the result of an increase in
interest income and recovery of loan losses which was partially offset by an
increase in interest expense, other operating expenses and income taxes.
Net Interest Income. Net interest income increased $328,000, or 12.2%, from
the six months of fiscal 1997 compared to the six months of fiscal 1998.
Interest income increased $498,000, or 5.7%, between the periods. Interest
income on loans increased $451,000 as a result of an increase in the average
balance of loans receivable to $193.7 million from $186.8 million and an
increase in the average yield to 8.07% from 7.88%. The average balance of
interest-earning assets increased to $250.1 million from $238.1 million and
the average yield on total interest-earning assets was 7.44% compared to 7.40%
for the respective six-month periods. The increase in the average balance of
interest-earning assets was due in part to cash received for subscriptions in
conjunction with the Conversion and invested in federal funds sold and
overnight interest-bearing deposits and an increase in the average balance of
loans receivable.
Interest expense increased $170,000, or 2.77%, between the periods. Interest
expense on deposits increased $332,000, or 5.6%, as a result of an increase
in the average balance of deposits to $224.2 million from $210.3 million.
This increase was partially offset by a decrease in the average yield on
deposits to 5.62% from 5.67%. The increase in the average balance of deposits
was due in part to the subscription deposits received in conjunction with the
Conversion. As no borrowings were outstanding during the first and second
quarters of fiscal 1998, there was no interest expense on FHLB borrowings in
the first six months of fiscal
8
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1998 compared with $162,000 for the respective six-month period in 1997. The
average rate paid on interest-bearing liabilities was 5.62% versus 5.69% for
the respective six-month periods in fiscal 1998 and 1997, respectively.
Provision for Loan Losses. There was a net recovery for loan losses of
$115,000 in the first six months of fiscal 1998 compared to a provision for
loan loss of $21,000 during the first six months of fiscal 1997. During the
first six months ended March 31, 1998, the Association had charge-offs of
$9,000 and $0 of recoveries.
Other Operating Expenses. Other operating expenses increased $247,000, or
22.1%, from the first six months of fiscal 1997 compared to the first six
months of fiscal 1998. Employee benefit and compensation expense increased
$25,000 in the first six months of fiscal 1998 compared to the same period in
the prior year primarily due to increases in personnel and normal salary
increases. Expenses for real estate owned were $83,000 in the first six
months of fiscal 1998 compared to income of $176,000 in the first six months
of fiscal 1997. In the first six months ended March 31, 1997, the Association
sold two real estate owned properties for a net gain of $176,000. The
increase in other operating expenses was partially offset by a $97,000
decrease in deposit insurance premiums resulting from a rate decrease in
premiums. The increase in other categories of other operating expenses
generally are attributable to the growth of the Company and to inflation. The
Company anticipates that other operating expenses will continue to increase in
subsequent periods as a result of increased costs associated with operating as
a public company.
Income Taxes. The provision for income taxes was $690,000 in the first six
months of fiscal 1998 compared to $606,000 in the second quarter of fiscal
1997. The income tax provision was higher in fiscal 1998 because of higher
taxable income.
Liquidity and Capital Resources
The Association's primary sources of funds are customer deposits, proceeds
from principal and interest payments on and the sale of loans, maturing or
sale of securities and advances from the FHLB of Atlanta. While maturities
and scheduled amortization of loans are a predictable source of funds, deposit
flows, securities and loan sales and mortgage prepayments are greatly
influenced by general interest rates, economic conditions and competition.
The Association must maintain an adequate level of liquidity to ensure the
availability of sufficient funds to fund loan originations and deposit
withdrawals, to satisfy other financial commitments and to take advantage of
investment opportunities. The Association generally maintains sufficient cash
and short-term investments to meet short-term liquidity needs. At March 31,
1998, cash and cash equivalents totaled $91.0 million, or 27.7% of total
assets, and investment securities classified as available-for-sale totaled
$8.7 million. At March 31, 1998, the Association also maintained, but did not
draw upon, an uncommitted credit facility with the FHLB of Atlanta.
As of March 31, 1998, the Association's regulatory capital was in excess of
all applicable regulatory requirements. At March 31, 1998, under regulations
of the Office of Thrift Supervision, the Association's actual tangible, core
and risk-based capital ratios were 8.87%, 8.87% and 20.86%, respectively,
compared to regulatory requirements of 1.5%, 4.0% and 8.0%, respectively.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
There have been no material changes in the quantitative and qualitative
disclosures about market risks as of March 31, 1998 than presented in the
Company's prospectus dated February 3, 1998.
9
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HERITAGE BANCORP, INC.
Part II. Other Information
Item 1. Legal Proceedings
-----------------
Not applicable
Item 2. Changes in Securities and Use of Proceeds
-----------------------------------------
Use of Proceeds - As discussed in Note 1 to Notes to Consolidated
Financial Statements under Item 1 of this Quarterly Report, the
Conversion was completed on April 6, 1998. In connection therewith:
1. The effective date of the Registration Statement on Form S-1, as
amended (File No. 333-41857) ("Registration Statement"), was
February 3, 1998.
2. The offering closed on April 6, 1998 with the sale of all
securities registered pursuant to the Registration Statement.
Trident Securities, Inc. acted as the marketing agent for the
Offering.
3. The class of securities registered pursuant to the Registration
Statement was common stock, par value $0.01 per share. The
aggregate amount of such securities registered and sold was
4,628,750 shares for an aggregate dollar amount of $69,431,250.
4. The total conversion offering expense incurred by the Company were
$1,359,433.
5. The net proceeds of the conversion offering were $68,071,817, which
were used as follows: $5,554,500 to fund a loan to the Associations
employee stock ownership plan ("ESOP"), $34,035,909 to acquire all
of the issued and outstanding common stock of the Association; and
the remaining is expected to be invested primarily in U.S.
Government and agency obligations.
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
--------------------------------
(a) Exhibits
(27) Financial Data Schedule
(b) Reports on Form 8-K: None.
10
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<PAGE>
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HERITAGE BANCORP, INC.
Date: May 13, 1998 By: /s/ J. Edward Wells
--------------------------------------
J. Edward Wells
President and Chief Executive Officer
Date: May 13, 1998 By: /s/ Edwin I. Shealy
--------------------------------------
Edwin I. Shealy
Treasurer and Chief Financial Officer
11
<PAGE>
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