<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended June 30, 1995 Commission File Number 2-988651
------------- --------
Kingfisher Bancorp, Inc.
------------------------------------------------------
(Exact name of registrant as specified in its Charter)
OKLAHOMA 73-1247579
- --------------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
P.O. Box 419
124 South Main Street
Kingfisher, Oklahoma 73750
- --------------------------------------- ------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (405) 375-3121
------------------
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.
Class Outstanding at June 30, 1995
Common Stock, $1 par value 66,008
------------------------------ ----------------------------
<PAGE>
KINGFISHER BANCORP, INC. AND SUBSIDIARY
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Part I. FINANCIAL INFORMATION:
Item 1. Financial Statements
Condensed Consolidated Balance Sheets -
June 30, 1995 and December 31, 1994 3
Condensed Consolidated Statements of Income - Three
Months and Six Months Ended June 30, 1995 and 1994 4
Condensed Consolidated Statements of Changes in Stockholders'
Equity - Six Months Ended June 30, 1995 and 1994 5
Condensed Consolidated Statements of Cash Flows - Three
Months and Six Months Ended June 30, 1995 and 1994 6
Notes to Condensed Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
Part II. OTHER INFORMATION:
Signatures 12
</TABLE>
2
<PAGE>
KINGFISHER BANCORP, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
June 30, 1995 December 31, 1994
------------- -----------------
<S> <C> <C>
ASSETS:
Cash and due from banks $ 3,955,907 $ 1,312,256
Federal funds sold 4,500,000 -
Investment securities:
United States government 25,989,760 26,683,171
States and political subdivisions 3,260,355 4,118,501
----------- -----------
Total investment securities 29,250,115 30,801,672
Loans, net of unearned income 50,461,465 55,633,842
Less allowance for possible loan loss (1,295,000) (1,182,000)
----------- -----------
Net loans 49,166,465 54,451,842
Owned real estate 34,684 264,197
Bank premises and equipment, net 293,722 335,841
Deferred income taxes 399,116 452,337
Accrued interest and other assets 1,538,990 1,519,834
----------- -----------
TOTAL $89,138,999 $89,137,979
=========== ===========
LIABILITIES AND EQUITY:
Deposits:
Demand $ 6,687,343 $ 6,834,733
NOW accounts 8,560,711 8,492,928
Savings and time deposits 62,544,862 61,947,070
----------- -----------
77,792,916 77,274,731
Other short-term borrowings 272,700 1,061,707
Notes payable 51,194 62,474
Accrued interest and other liabilities 749,702 629,748
----------- -----------
Total liabilities 78,866,512 79,028,660
Stockholders equity:
Common stock, par value $1 per share,
240,000 shares authorized;
120,000 shares issued 120,000 120,000
Additional paid-in capital 2,360,000 2,360,000
Retained earnings 11,351,306 11,121,400
Unrealized gain (loss) on securities available
for sale, net of deferred income taxes 13,953 (98,709)
Less treasury shares (53,992 and 52,432) (3,572,772) (3,393,372)
----------- -----------
Total stockholders' equity 10,272,487 10,109,319
----------- -----------
TOTAL $89,138,999 $89,137,979
=========== ===========
</TABLE>
See notes to unaudited condensed consolidated financial statements.
3
<PAGE>
KINGFISHER BANCORP, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
----------------------------------- ------------------------
1995 1994 1995 1994
------------------ ---------------- ----------- -----------
<S> <C> <C> <C> <C>
INTEREST INCOME:
Interest and fees on loans $1,099,696 $ 987,912 $2,274,107 $2,006,377
Investment securities:
United States government 415,419 407,610 828,976 761,866
State and political subdivisions 56,424 87,417 115,151 169,903
Federal funds sold 33,491 60,759 44,411 127,942
---------- ---------- ---------- ----------
Total interest income 1,605,030 1,543,698 3,262,645 3,066,088
INTEREST EXPENSE:
Savings and other time deposits 837,652 654,171 1,626,311 1,275,841
Other short-term borrowings 1,591 1,793 6,161 4,080
Notes payable 915 1,116 1,903 2,285
---------- ---------- ---------- ----------
Total interest expense 840,159 657,080 1,634,375 1,282,206
---------- ---------- ---------- ----------
NET INTEREST INCOME 764,871 886,618 1,628,270 1,783,882
PROVISION FOR POSSIBLE LOAN LOSSES 60,000 60,000 120,000 120,000
---------- ---------- ---------- ----------
NET INTEREST INCOME, after provision
for possible loan losses 704,871 826,618 1,508,270 1,663,882
---------- ---------- ---------- ----------
OTHER INCOME:
Service charges on deposit accounts 79,589 63,795 151,627 119,784
Other 12,255 12,745 33,151 29,928
---------- ---------- ---------- ----------
Total other income 91,845 76,540 184,778 149,712
OTHER EXPENSES:
Salaries and employee benefits 262,711 250,792 517,802 498,631
Occupancy 11,086 12,555 21,885 27,146
Depreciation and amortization 25,392 31,691 52,483 63,219
Other 193,020 187,827 441,026 434,224
---------- ---------- ---------- ----------
Total other expenses 492,209 482,865 1,033,196 1,023,220
---------- ---------- ---------- ----------
INCOME BEFORE INCOME TAXES 304,507 420,293 659,852 790,374
INCOME TAX PROVISION 81,114 114,086 158,475 238,416
---------- ---------- ---------- ----------
NET INCOME $ 223,393 $ 306,207 $ 501,377 $ 551,958
========== ========== ========== ==========
NET INCOME PER SHARE: $ 3.31 $ 4.45 $ 7.43 $ 8.03
====== ====== ======= =======
</TABLE>
See notes to unaudited condensed consolidated financial statements.
4
<PAGE>
KINGFISHER BANCORP, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(Unaudited)
<TABLE>
<CAPTION>
1995 1994
------------- ------------
<S> <C> <C>
COMMON STOCK $ 120,000 $ 120,000
ADDITIONAL PAID-IN CAPITAL 2,360,000 2,360,000
RETAINED EARNINGS:
Balance at beginning of year 11,121,400 10,569,214
Cash dividends declared (271,471) (274,872)
Net income 501,377 551,958
----------- -----------
11,351,306 10,846,300
UNREALIZED GAIN (LOSS) ON SECURITIES AVAILABLE FOR SALE:
Balance at beginning of year (98,709) -
Unrealized gain on securities available for sale 112,662 (95,571)
----------- -----------
13,953 (95,571)
TREASURY SHARES:
Balance, at beginning of year, at
cost net of sales (3,393,372) (3,261,122)
Acquisition of 1,560 and 40 shares (179,400) (4,600)
----------- -----------
(3,572,772) (3,265,722)
----------- -----------
$10,272,487 $ 9,965,007
=========== ===========
</TABLE>
See notes to unaudited condensed consolidated financial statements.
5
<PAGE>
KINGFISHER BANCORP, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------------------- ---------------------------
1995 1994 1995 1994
------------------- ----------------- ------------ -------------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 223,393 $ 306,207 $ 501,377 $ 551,958
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for loan losses 60,000 60,000 120,000 120,000
Amortization of investment security
premiums 16,221 17,729 32,298 36,854
Accretion of investment security premiums (25,021) (20,512) (49,843) (39,603)
Depreciation and amortization 25,392 31,691 52,483 63,219
Provision for deferred taxes (30,854) (22,700) (16,656) (41,089)
Other transactions, net 516 (1) 1 (2)
Changes in operating assets and liabilities:
Decrease (increase) in accrued interest
receivable and other assets 79,833 23,688 (19,156) (49,736)
Increase in accrued interest payable
and other liabilities 87,675 (2,184) 119,954 11,022
----------- ------------ ----------- ------------
Net cash provided by
operating activities 437,155 393,918 740,458 662,623
CASH FLOWS FROM INVESTING ACTIVITIES:
Net decrease in loans 2,900,328 1,759,045 5,165,377 3,580,031
Proceeds from maturities of investment
securities 1,164,878 5,437,369 1,751,641 8,075,480
Purchase of investment securities - (8,443,415) - (14,915,134)
(Purchase) sale of premises and equipment (4,813) 22,861 (10,364) (33,136)
Purchase of owned real estate - - - (157,807)
Sale of owned real estate 164,120 5,289 229,513 -
----------- ------------ ----------- ------------
Net cash used in
investing activities (4,224,513) (1,264,573) (7,136,167) (3,450,566)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net decrease in demand deposit and
savings accounts (650,581) (15,492,322) (79,607) (191,985)
Net increase in time deposits 1,077,686 11,792,402 597,792 770,638
(Decrease) increase in other
borrowed funds 148,354 (59,878) (789,007) (283,841)
Repayment of notes payable (5,676) (5,392) (11,280) (10,732)
</TABLE>
(Continued)
6
<PAGE>
KINGFISHER BANCORP, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
(Continued)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------------------- --------------------------
1995 1994 1995 1994
------------------- ----------------- ------------ ------------
<S> <C> <C> <C> <C>
Payments to acquire treasury stock (127,650) (4,600) (179,400) (4,600)
Dividends paid (271,472) (274,872) (271,472) (274,872)
---------- ----------- ---------- -----------
Net cash (used in) provided
by financing activities 170,661 (4,044,662) (732,974) 4,608
---------- ----------- ---------- -----------
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 4,832,329 (4,915,317) 7,143,651 (2,783,335)
CASH AND CASH EQUIVALENTS:
Beginning of the period 3,623,578 12,179,261 1,312,256 10,047,279
---------- ----------- ---------- -----------
End of the period $8,455,907 $ 7,263,944 $8,455,907 $ 7,263,944
========== =========== ========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period
for interest $ 824,693 $ 651,524 $1,592,980 $ 1,272,787
========== =========== ========== ===========
Cash paid during the period for
income taxes $ - $ 131,019 $ - $ 131,019
========== =========== ========== ===========
SUPPLEMENTAL SCHEDULE OF NONCASH FINANCING ACTIVITIES:
Loans transferred to (from) owned
real estate $ - $ (5,289) $ (228,263) $ 187,207
========== =========== ========== ===========
In-substance foreclosure owned real
estate transferred to (from) loans $ (163,620) $ 149,084 $ - $ 149,084
========== =========== ========== ===========
Unrealized gain (loss) on securities
available for sale $ 64,231 $ (80,581) $ 112,662 $ (95,570)
========== =========== ========== ===========
</TABLE>
See notes to unaudited condensed consolidated financial statements.
7
<PAGE>
KINGFISHER BANCORP, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 1995
------------------------------
1. The consolidated financial statements include the accounts of Kingfisher
Bancorp, Inc. (the Company) and Kingfisher Bank and Trust Co. (the Bank) after
elimination of all material intercompany accounts and transactions.
2. Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. It is suggested that these consolidated
financial statements be read in conjunction with the consolidated financial
statements and notes thereto included in the Company's annual report on Form 10-
K.
3. Net income per share is computed on the basis of weighted average number of
common shares outstanding during the periods.
4. The financial statements include all adjustments necessary to fairly present
the results of operations for the periods presented. All such adjustments are
of a normal recurring nature.
5. Investment securities:
<TABLE>
<CAPTION>
June 30, 1995 December 31, 1994
------------------------- ------------------------------
Approximate Carrying Approximate Carrying
Fair Value Amount Fair Value Amount
------------ ---------- ----------- -----------
<S> <C> <C> <C> <C>
Held to maturity $26,414,042 $26,261,065 $26,942,700 $27,999,812
Available for sale 2,989,050 2,989,050 2,801,860 2,801,860
----------- ----------- ----------- -----------
Total securities $29,403,092 $29,250,115 $29,744,560 $30,801,672
=========== =========== =========== ===========
</TABLE>
6. As of January 1, 1995 the Company adopted the provisions of Statement of
Financial Accounting Standards No. 114 ("SFAS 114") "Accounting by Creditors for
Impairment of a Loan" and SFAS No. 118 " Accounting by Creditors for Impairment
of a Loan-Income Recognition and Disclosures" These new standards had no
material impact on the Company's financial statements at initial adoption nor
expected ongoing operations. The new standards address the accounting by
creditors for impairment of loans, except large groups of smaller-balance
homogeneous loans, that are collectively valued for impairment. The new
standards require that the allowance for possible loan loss on impaired loans be
measured based on the present value of expected future cash flows discounted at
the loans' effective interest rate or, as a practical expedient, at the loan's
observable market price or the fair value of the collateral if the loan is
collateral dependent. As the measurement of the allowance for possible loan
losses changes, the change is reported as provision for possible loan losses in
the same manner in which the impairment initially was recognized or as a
reduction in the amount of provision for possible loan losses that otherwise
would be reported.
The company has defined its population of impaired loans as consisting of all
internally classified by management's loan review process.
8
<PAGE>
<TABLE>
<CAPTION>
June 30, 1995 December 31, 1994
-------------- ------------------
<S> <C> <C>
Gross impaired loans which have allowances $3,669,000 $3,875,000
Less: Related allowances for loan losses (639,000) (607,000)
---------- ----------
Net impaired loans with related allowances 3,030,000 3,268,000
Impaired loans with no related allowances 2,453,000 2,166,000
---------- ----------
$5,483,000 $5,434,000
========== ==========
</TABLE>
The average impaired loans outstanding for the period ended June 30, 1995 was
approximately $6,081,000 as compared to approximately $5,805,000 for the same
period in 1994. Interest income recognized for the quarter ended June 30, 1995
was $209,000 as compared to $223,000 for the same period in 1994.
<TABLE>
<CAPTION>
Period Ended June 30,
--------------------------
1995 1994
------------ ------------
<S> <C> <C>
Allowance for loan loss activity:
Beginning of quarter $1,182,000 $1,162,000
Provision for losses 120,000 120,000
Recoveries 13,664 1,000
Realized losses (20,664) (23,000)
---------- ----------
End of quarter $1,295,000 $1,260,000
========== ==========
</TABLE>
Uncollected interest on loans which are more than 90 days past due are currently
being charged off. Subsequently, such interest is recognized as income as it is
collected.
7. Accounting Standards Issued but Not Yet Adopted
In May 1995, the Financial Accounting Standards Board (FASB) issued SFAS No.
122, "Accounting for Mortgage Servicing Rights" which amends the accounting for
the rights to service mortgage loans originated and requires evaluating for
impairment amounts capitalized as mortgage servicing rights. In March 1995, the
FASB issued SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed of", which establishes accounting
standards for such assets. Adoption of SFAS No. 122 and 121 is required in
fiscal years beginning after December 15, 1995. The Company will adopt these
new standards effective January 1, 1996. Management believes that adoption of
SFAS No. 122 and 121 will not have a material impact on the Company's
consolidated financial position or results of operations.
9
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
Net income for the three months ended June 30, 1995 was $223,393 as compared
to $306,207 for the same period in 1994. This 27.05% decrease was primarily due
to a decrease in net interest income.
Net income for the six months ended June 30, 1995 was $501,377, a 9.16%
decrease from the $551,958 recorded for the six months ended June 30, 1994.
This decrease was the result of a decrease in net interest income.
NET INTEREST INCOME
Net interest income is affected by the volume of earning assets, the interest
rate earned on those assets, the volume of interest bearing liabilities and the
rates paid on those liabilities.
Net interest income for the three months ended June 30, 1995, was $704,871 as
compared to $826,618 for the same period last year. This 14.73% decrease was the
result of interest expense rising at a faster rate than interest income.
Net interest income for the six month period ending June 30, 1995 and June 30,
1994 was $1,508,270 and $1,663,882, respectively. This 9.35% decrease can be
attributed to interest expense rising at a faster rate than interest income and
a 9.3% decrease in loans.
The net interest spread is the difference between the rate earned on earning
assets and the rate paid on interest bearing liabilities. The net interest
spread at June 30, 1995, was 3.74% as compared to 4.08% at June 30, 1994.
OTHER INCOME
Other income increased 20.00% for the three months ended June 30, 1995, as
compared to the same period last year.
Other income increased 23.42% to $184,778 for the six months ended June 30,
1995 as compared to $149,712 for the same period last year. These increases can
be attributed to an increase in service charge income.
OTHER EXPENSES
Other expenses increased 1.94% to $492,209 for the three months ended June 30,
1995, as compared to $482,865 for the same period last year.
Other expenses increased 0.97% to $1,033,196 for the six months ended June 30,
1995, as compared to $1,023,220 for the same period last year.
LOAN QUALITY
The allowance for possible loan losses as a percent of loans was 2.57% at June
30, 1995, as compared to 2.12% at December 31, 1994. This increase is due to
management's continued
10
<PAGE>
systematic evaluation of the local economic conditions and a decrease in loans
due to seasonal loan demand in the agricultural sector. The continuous
fluctuations of wheat and livestock prices requires continued monitoring of
agricultural lines of credit. Based on current data, management continues to
believe that the provision for possible loan losses continues to be adequate.
Management believes the demand for loans will begin increasing during the
latter part of next quarter and on in to the last quarter of 1995 due to
seasonal demand for livestock loans.
BALANCE SHEET COMPOSITION
The loan to deposit ratio was 64.87% at June 30, 1995 as compared to 71.99% at
December 31, 1994. Seasonal lending for stocker loans is the primary reason for
this decline.
The capital to asset ratio at June 30, 1995 was 11.52% as compared to 11.34%
at December 31, 1994.
CAPITAL ADEQUACY
The Federal Deposit Insurance Corporation requires minimum capital for a "well
capitalized" institution as follows: 10% total risk-based capital to net risk-
weighted assets; 6% Tier I risk-based capital to net risk-weighted assets; and a
5% leverage ratio. The bank's capital ratios as of June 30, 1995 are as follows:
21.23% total risk-based capital to net risk-weighted assets; 19.98% Tier I risk-
based capital to net risk-weighted assets; and a 11.62% leverage ratio.
LIQUIDITY
Liquidity can be defined as a financial institutions ability to meet possible
deposit withdrawals, provide for the credit needs of its customers and take
advantage of investment opportunities as they arise. Management considers the
banks liquidity position adequate to meet these needs.
OTHER MATTERS
In May 1995, the FASB issued SFAS No. 122, "Accounting for Mortgage
Servicing Rights", which amends the accounting for the rights to service
mortgage loans originated and requires evaluating for impairment amounts
capitalized as mortgage servicing rights. In March 1995, the FASB issued SFAS
No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of", which establishes accounting standards for such
assets. Adoption of SFAS Nos. 122 and 121 is required in fiscal years beginning
after December 15, 1995. The Company will adopt these new standards effective
January 1, 1996. Management believes that adoption of SFAS Nos. 122 and 121
will not have a material impact on the Company's consolidated financial position
or results of operations.
11
<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 hereunto duly authorized.
KINGFISHER BANCORP, INC.
Date: July 25, 1995 /s/ Waynard Hasenfratz
----------------------- -----------------------------
President
Date: July 25, 1995 /s/ George Brownlee
----------------------- -----------------------------
Secretary
12
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 3,956
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 4,500
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 2,989
<INVESTMENTS-CARRYING> 26,261
<INVESTMENTS-MARKET> 26,414
<LOANS> 50,461
<ALLOWANCE> 1,295
<TOTAL-ASSETS> 89,139
<DEPOSITS> 77,793
<SHORT-TERM> 273
<LIABILITIES-OTHER> 750
<LONG-TERM> 51
<COMMON> 120
0
0
<OTHER-SE> 10,152
<TOTAL-LIABILITIES-AND-EQUITY> 89,139
<INTEREST-LOAN> 2,274
<INTEREST-INVEST> 989
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 3,263
<INTEREST-DEPOSIT> 1,626
<INTEREST-EXPENSE> 1,634
<INTEREST-INCOME-NET> 1,628
<LOAN-LOSSES> 120
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 1,033
<INCOME-PRETAX> 660
<INCOME-PRE-EXTRAORDINARY> 501
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 501
<EPS-PRIMARY> 7.43
<EPS-DILUTED> 7.43
<YIELD-ACTUAL> 0.60
<LOANS-NON> 1,526
<LOANS-PAST> 243
<LOANS-TROUBLED> 212
<LOANS-PROBLEM> 5,521
<ALLOWANCE-OPEN> 1,182
<CHARGE-OFFS> 14
<RECOVERIES> 21
<ALLOWANCE-CLOSE> 1,295
<ALLOWANCE-DOMESTIC> 639
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 656
</TABLE>
