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 MARCH 31, 1998 Commission File Number 33-43386
-------------- --------
HARDWICK HOLDING COMPANY
------------------------------------------------------
(Exact name of registrant as specified in its charter)
GEORGIA 58-1408388
- ------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
One Hardwick Square, P.O. Box 1367, Dalton, GA. 30722-1367
- ----------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (706) 217-3950
--------------
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 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
--- ---
Number of shares of common stock outstanding
at May 11, 1998
4,036,496 Shares
----------------
<PAGE>
HARDWICK HOLDING COMPANY AND SUBSIDIARIES
INDEX
PAGE NO.
PART I- FINANCIAL INFORMATION
Consolidated Statements of Financial
Position at March 31, 1998 and
December 31, 1997 3
Consolidated Statements of Income
for the Three Months Ended March 31,
1998 and 1997 4
Consolidated Statements of Cash Flows
for the Three Months Ended March 31,
1998 and 1997 5-6
Notes to Unaudited Consolidated Financial
Statements 7-9
Management's Discussion and Analysis of
Financial Position and Results of Operations 10-15
PART II- OTHER INFORMATION 16
SIGNATURES 17
2
<PAGE>
HARDWICK HOLDING COMPANY
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Dollars in thousands, except share amounts)
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
ASSETS ---- ----
(unaudited)
-----------
<S> <C> <C>
Cash and due from banks $ 23,516 $ 25,533
Federal funds sold 25,064 12,982
---------- ----------
Total cash and cash equivalents 48,580 38,515
Investment securities, available-for-sale 121,387 119,431
Loans, net 301,323 310,159
Premises and equipment, net 13,823 14,079
Assets under capital lease, net 369 418
Accrued interest receivable 4,092 3,988
Excess of cost over fair value of
subsidiaries acquired, net of amortization 4,412 4,556
Other assets 1,956 1,746
---------- ----------
Total assets $ 495,942 $ 492,892
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits-
Noninterest-bearing $ 85,310 $ 86,904
Interest-bearing 341,626 322,881
---------- ----------
Total deposits 426,936 409,785
Securities sold under agreements to repurchase 3,694 19,339
Other borrowed funds 8,213 8,231
Capital lease obligation 421 472
Other liabilities 5,074 4,462
---------- ----------
Total liabilities 444,338 442,289
---------- ----------
Commitments and contingencies (Notes 2 and 4)
Stockholders' equity-
Common stock, $.50 par value, 10,000,000 shares authorized,
4,176,141 and 4,161,141 shares issued; 4,036,496 and
4,021,496 shares outstanding at March 31,1998 and
December 31, 1997, respectively 2,088 2,081
Additional paid-in capital 21,228 20,935
Retained earnings 31,186 30,381
Other comprehensive income-Unrealized gains on investment
securities available-for-sale, net of tax (Note 3) 750 590
Less treasury stock, at cost, 139,645 at March 31, 1998 and
December 31, 1997, respectively (2,564) (2,564)
Less deferred compensation from restricted stock plan (1,084) (820)
---------- ----------
Total stockholders' equity 51,604 50,603
---------- ----------
Total liabilities and stockholders' equity $ 495,942 $ 492,892
========== ==========
(See notes to consolidated financial statements.)
</TABLE>
3
<PAGE>
HARDWICK HOLDING COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
For the Three Months Ended
------------------------------
March 31, March 31,
INTEREST INCOME: 1998 1997
------------------------------
<S> <C> <C>
Interest and fees on loans $ 7,291 $ 6,472
Interest on investment securities-
Taxable 1,479 1,306
Nontaxable 278 304
Interest on fed funds sold and bank deposits 140 158
--------- ---------
Total interest income 9,188 8,240
--------- ---------
INTEREST EXPENSE:
Interest on deposits 3,754 3,314
Interest on securities sold under agreements to repurchase 56 56
Interest on other borrowed funds 112 1
Interest on note payable and capital lease obligations 9 11
--------- ---------
Total interest expense 3,931 3,382
--------- ---------
NET INTEREST INCOME BEFORE PROVISION FOR LOAN
LOAN LOSSES 5,257 4,858
PROVISION FOR LOAN LOSSES 150 500
--------- ---------
NET INTEREST INCOME 5,107 4,358
--------- ---------
NONINTEREST INCOME:
Service charges on deposit accounts 648 650
Securities gains, net 8 29
Other noninterest income 673 2,739
--------- ---------
Total noninterest income 1,329 3,418
--------- ---------
NONINTEREST EXPENSE:
Salaries and employee benefits 2,215 2,165
Net occupancy expense 790 798
Other noninterest expense 1,537 1,624
--------- ---------
Total noninterest expense 4,542 4,587
--------- ---------
INCOME BEFORE PROVISION FOR INCOME TAXES 1,894 3,189
PROVISION FOR INCOME TAXES 614 921
--------- ---------
NET INCOME $ 1,280 $ 2,268
========= =========
BASIC NET INCOME PER SHARE $ 0.32 $ 0.57
========= =========
DILUTIVE NET INCOME PER SHARE $ 0.32 $ 0.56
========= =========
(See notes to consolidated financial statements.)
</TABLE>
4
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
For the Three
Months Ended
March 31,
CASH FLOWS FROM OPERATING ACTIVITIES: 1998 1997
-------------------
<S> <C> <C>
Net income $ 1,280 $ 2,268
Adjustments to reconcile net income to net cash
provided by operating activities
Provision for loan losses 150 500
Provision for depreciation and amortization 601 671
Loss on disposition of premises and equipment 0 188
Premium amortization (discount accretion) of investment securities 33 (23)
Deferred income tax (benefit) provision (45) 213
Securities gains, net (8) (29)
(Increase) decrease in accrued interest receivable (104) 87
Decrease (increase) in other assets 234 (543)
Increase in other liabilities 614 490
--------- --------
Net cash provided by operating activities 2,755 3,822
--------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities of investment securities available-for-sale 7,179 4,706
Proceeds from sales of investment securities available-for-sale 3,875 11,711
Purchases of investment securities available-for-sale (13,277) (15,113)
Net cash flows from loans originated and principal collected on loans 8,686 (4,934)
Proceeds from disposal of premises and equipment 0 14
Purchases of premises and equipment (114) (226)
--------- --------
Net cash provided by (used in) investing activities 6,349 (3,842)
--------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in demand deposits, NOW accounts, and
savings accounts 2,821 (1,584)
Net cash flows from sales and maturities of certificates of deposit 14,330 11,291
Net decrease in fed funds purchased and securities sold
under agreement to repurchase (15,645) (2,632)
Decrease in other borrowed funds (18) (18)
Proceeds from note payable to bank 0 900
Payments on note payable to bank and capital lease obligations (51) (51)
Purchase of treasury stock, at cost 0 (184)
Payments of cash dividends (476) (241)
--------- --------
Net cash provided by financing activities $ 961 $ 7,481
--------- --------
</TABLE>
5
<PAGE>
HARDWICK HOLDING COMPANY
& SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS-(Continued)
(Unaudited)
(In Thousands)
<TABLE>
<CAPTION>
For the Three Months
Ended
March 31,
--------------------------
1998 1997
--------------------------
<S> <C> <C>
NET INCREASE IN CASH AND CASH EQUIVALENTS $ 10,065 $ 7,461
CASH AND CASH EQUIVALENTS, beginning of period 38,515 33,797
--------- ---------
CASH AND CASH EQUIVALENTS, end of period $ 48,580 41,258
========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for Interest $ 3,641 $ 3,054
========= ========
Cash paid during the period for income taxes $ 0 $ 578
========= ========
Non-cash transactions during the period ended:
Increase in deferred compensation from issue of restricted stock $ 300 $ 720
========= ========
</TABLE>
(See notes to consolidated financial statements.)
6
<PAGE>
HARDWICK HOLDING COMPANY AND SUBSIDIARIES
-----------------------------------------
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
-----------------------------------------------------
(1) BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements
include the accounts of Hardwick Holding Company (HHC) and its
wholly owned subsidiaries, Hardwick Bank and Trust Company (HBT)
and First National Bank of Northwest Georgia (FNBNWG),
collectively referred to as the "Company". All significant
intercompany balances and transactions have been eliminated.
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that effect the reported amounts
of assets and liabilities and disclosure of contingent assets and
liabilities at 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,
although, in the opinion of management, such differences would
not be significant.
In the opinion of management, the accompanying unaudited
consolidated financial statements contain all adjustments
(consisting only of normal recurring adjustments) necessary for
fair statement of the consolidated financial position and the
results of operations of the Company for the interim periods.
The results of operations for the three month period ended March
31, 1998 are not necessarily indicative of the results which may
be expected for the entire year.
(2) FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK
The Company is a participant in financial instruments with off-
balance-sheet risk. These instruments are entered into in the
normal course of business to meet the financing needs of its
customers and to reduce the Company's own exposure to
fluctuations in interest rates. These financial instruments
include commitments to extend credit and standby letters of
credit. These instruments involve, to varying degrees, elements
of credit and interest rate risk in excess of the amount
recognized in the consolidated balance sheets. The contract
amounts of these instruments reflect the extent of involvement
the Company has in particular classes of financial instruments.
The Company's exposure to credit loss in the event of
nonperformance by the counterparty to the financial instrument
for commitments to extend credit and standby letters of credit is
represented by the contractual amount of these instruments. The
Company uses the same credit and collateral policies in making
commitments and conditional obligations as it does for on-
balance-sheet instruments.
HBT and FNBNWG grant various types of loans and financial
instruments to customers within their respective market areas
(primarily Northwest Georgia). Although the Company has a
diversified loan portfolio, a significant portion of the
Company's loans originate from customers that are directly or
7<PAGE>
indirectly related to the carpet industry. Notably, approximately
40% of the work force in the Company's market area is employed by
companies directly related to the carpet industry. Adverse economic
trends in the carpet industry could impair these customers' ability
to repay their obligations and result unfavorably on the results of
operations of the Company.
Commitments to extend credit are agreements to lend to a customer
as long as there is no violation of any condition established in
the contract. Commitments generally have fixed expiration dates
or other termination clauses and may require payment of a fee.
Since many of the commitments are expected to expire without
being drawn upon, the total commitment amounts do not necessarily
represent future cash requirements. Total commitments to extend
credit at March 31, 1998, were approximately $98,338,000. HBT
and FNBNWG evaluate each customer's creditworthiness on a case-
by-case basis. The amount of collateral obtained, if deemed
necessary by HBT and FNBNWG, upon extension of credit is based on
management's credit evaluation of the customers. Collateral held
varies but may include accounts receivable, inventory, property,
plant and equipment, residential real estate, and income-
producing commercial properties.
Standby letters of credit are conditional commitments issued by
HBT and FNBNWG to guarantee the performance of a customer to a
third party. Those guarantees are primarily issued to support
public and private borrowing arrangements, including commercial
paper, bond financing and similar transactions. The credit risk
involved in issuing letters of credit is essentially the same as
that involved in extending loan facilities to customers. The
collateral varies but may include accounts receivable, inventory,
property, plant and equipment and residential real estate for
those commitments for which collateral is deemed necessary. The
Company had irrevocable standby letters of credit of
approximately $2,104,000 outstanding at March 31, 1998.
(3) RECENT ACCOUNTING PRONOUNCEMENTS
The Registrant adopted SFAS No. 130, "Reporting Comprehensive
Income"; and SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information" effective as of January 1,
1998. Comprehensive income for the Registrant includes net income
and the unrealized gains (losses) on investment securities
available-for-sale. Comprehensive net income for the three-month
period ended March 31, 1998 was $1,440,000 consisting of net
income of $1,280,000 and the $160,000 change in the unrealized
gains(losses) on investment securities available-for-sale. The
cumulative unrealized gains and losses are approximately $750,000
net of tax of approximately $386,000. The Registrant has only
one segment of business. The adoption by the Company did not have
a significant effect on the Company's financial condition or
results of operations.
8<PAGE>
(4) CONTINGENCIES
The Company is involved in litigation and other legal proceedings
arising in the course of its normal business activities.
Although the ultimate outcome of these matters cannot be
determined at this time, it is the opinion of management that
none of these matters, when resolved, will have a significant
effect on the Company's financial condition or results of
operations.
(5) EARNINGS PER SHARE
Earnings per share is calculated on the basis of basic and
dilutive weighted average number of shares outstanding, which was
3,970,496 and 4,044,568, and 3,982,733 and 4,044,547 for the
three month period ended March 31, 1998 and 1997, respectively.
9
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
POSITION AND RESULTS OF OPERATIONS
FINANCIAL POSITION
- ------------------
Total assets increased by approximately $3,050,000 from
approximately $492,892,000 at December 31, 1997, to approximately
$495,942,000 at March 31, 1998. The principal fluctuations were
in federal funds sold and net loans. Loans decreased by
approximately $8,836,000 from approximately $310,159,000 at
December 31, 1997 to approximately $301,323,000 at March 31,
1998, an decrease of 2.9%. The decrease was offset by an increase
in federal funds sold of approximately $12,082,000 or 93.1% from
approximately $12,982,000 at December 31, 1997, to approximately
$25,064,000 at March 31, 1998. Investment securities available-
for-sale increased approximately $1,956,000 or 1.6% to
approximately $121,387,000 at March 31, 1998, from approximately
$119,431,000 at December 31, 1997. Cash and due from banks also
decreased by approximately $2,017,000 or 7.9% from approximately
$25,533,000 at December 31, 1997 to approximately $23,516,000 at
March 31, 1998. HHC's cash and cash equivalents reflected a net
increase of approximately $10,065,000 or 26.1% for the three
month period ended March 31, 1998.
Savings and other interest-bearing deposit accounts increased
approximately $18,745,000 or 5.8% during the three-months ended
March 31, 1998, to approximately $341,626,000. It is management's
opinion that HHC maintains competitive deposit rates while
exercising prudent strategies in competing with local
institutions. Average rates paid on deposits for the current
period were approximately 4.54% compared with approximately 4.35%
for the same period in the preceding year.
At March 31, 1998, HHC's financial position continued to reflect
strong equity and liquidity, with an equity to assets ratio of
10.4%. At March 31, 1998, 61% of HHC's loans were in real estate
loans (including mortgage and construction loans), 18% in
commercial loans (including agricultural loans), 10% in consumer
loans (including credit cards) and other loans were 11%. HHC's
loan to deposit ratio was 71% at March 31, 1998, and 50% of all
deposits were invested in time certificates of deposit.
In the event of higher than anticipated requirements related to
loan commitments or deposit withdrawals, HHC's bank subsidiaries
maintain federal funds lines with regional banks. Also, the bank
subsidiaries of the Company have become members of the Federal
Home Loan Bank and have credit lines to draw from. At March 31,
1998 approximately $8,213,000 was outstanding under the Federal
Home Loan Bank lines of credit.
10
<PAGE>
The following table represents the changes in consolidated
stockholders' equity for the nine-months ended March 31, 1998:
Balance, December 31, 1997 $ 50,603,000
Net income 1,280,000
Change in unrealized gains (losses) on securities
available-for-sale, net of tax 160,000
Amortization of deferred compensation-restricted
stock plan 37,000
Dividends declared (476,000)
------------
Balance, March 31, 1998 $ 51,604,000
============
RESULTS OF OPERATIONS
- ---------------------
For the three-months ended March 31, 1998 and 1997:
NET INTEREST INCOME
Net interest income after provision for loan losses for the
three-month period ended March 31, 1998 was approximately
$5,107,000 which was approximately $749,000 or 17.2% greater than
the $4,358,000 for the same period the year before. The net
interest income for the current period contained loan loss
provisions of approximately $150,000 compared with $500,000 for
the previous year. Total interest income increased by
approximately $948,000 or 11.5% while total interest expense
increased approximately $549,000 or 16.2% for the three month
period ended March 31, 1998, as compared to the comparable three-
months ended in the previous year.
Yields on interest-bearing assets averaged 8.4% for the current
period compared to 8.3% for the same period the year before.
Total average interest-bearing assets increased by approximately
$40,565,000 or 10.2% for the current period when compared with
the three-months ended March 31, 1997. Average loans for the
three-months ended March 31, 1998, increased approximately
$34,926,000 or 12.8% more than the average loans for the three-
months ended March 31, 1997. The average yield on loans for the
three-months ended March 31, 1998, was 9.5%, relatively unchanged
from the three-months ended March 31, 1997.
There were no nonaccrual loans at March 31, 1998 and accruing
loans contractually past due ninety days or more were
approximately $50,000 at March 31, 1998. This compares to
approximately $323,000 in nonaccrual and approximately $504,000
in loans past due ninety days or more and still accruing at
December 31, 1997.
Interest accruals on nonaccrual loans are recorded only when they
are fully current with respect to interest and principal and when
in the judgment of management, the loans are estimated to be
fully collectible as to both principal and interest. Interest
income on nonaccrual loans which would have been reported on an
accrual basis amounted to approximately $4,000 during the three
11
<PAGE>
month period ended March 31, 1998. Nonaccrual loan interest
collected and reported in the three month period ended March 31,
1998, was approximately $4,000.
Rates paid on interest-bearing liabilities averaged 4.6% for the
three-months ended March 31, 1998, compared with 4.4% for the
three-months ended March 31, 1997. Rates paid in the current
three month period on average have increased approximately 10
basis points from rates paid on average for the year ended
December 31, 1997. Management's liability pricing strategies
include competitive deposit rates with increased awareness of
cash flow needs within the balance sheet. Management anticipates
rates to decrease slightly during the remainder of the year.
NONINTEREST INCOME
Total other noninterest income decreased approximately $2,089,000
for the three-months ended March 31, 1998, as compared with the
three-months ended March 31, 1997. The decrease is primarily due
to a decrease in other noninterest income of approximately
$2,125,000 from a settlement with a vendor for the three-months
ended March 31, 1997, a decrease in net gains on sales of
investment securities available-for-sale of approximately
$21,000, and a decrease service charges on deposit accounts of
approximately $2,000 while being partially offset by increases in
various other income accounts of approximately $59,000 when
compared with the three-months ended March 31, 1997.
NONINTEREST EXPENSES
Total noninterest expenses decreased by approximately $45,000, or
0.98% for the three-months ended March 31, 1998, as compared to
the same period ended in the preceding year. The decrease is due
principally to decreases of approximately $8,000 in net occupancy
expenses and other expense of approximately $87,000 while being
offset by an increase in salary and employee benefits of
approximately $50,000 when compared with the three-months ended
March 31, 1997.
12
<PAGE>
INCOME TAX PROVISION
The effective tax rates reported for the three-months ended March
31, 1998 and 1997, were 32.4% and 28.9%, respectively. Tax
exempt interest income earned on loans and investment securities
available-for-sale decreased by approximately $39,000 from March
31, 1997 when compared with March 31, 1998; while, taxable
interest income on loans and investment securities available-for-
sale increased approximately $948,000 for the same period.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Liquidity is achieved through the continual maturing of interest-
earning assets, as well as by investing in short term marketable
securities. Liquidity is also available through deposit growth,
borrowing capacity, loan sales and repayments of principal on
loans and securities.
High levels of liquidity are normally obtained at a net interest
cost due to lower yields on short term, liquid earning assets and
higher interest expense usually associated with the extension of
deposit maturities. The trade-off of the level of desired
liquidity versus its cost is evaluated in determining the
appropriate amount of liquidity at any one time.
For the three-months ended March 31, 1998, cash and cash
equivalents increased approximately $10,065,000 or 26.1% from
December 31, 1997. Operating, investing and financing activities
provided cash and cash equivalents of approximately $2,755,000,
$6,349,000 and $961,000 respectively. Net income of
approximately $1,280,000, provision for loan losses of
approximately $150,000; depreciation and amortization not
requiring the use of cash of approximately $601,000, a decrease
in other assets of approximately $234,000 and an increase in
other liabilities of approximately $614,000 were the principal
sources of funds provided from operating activities while being
partially offset by an increase in accrued interest receivable of
approximately $104,000 and a deferred tax benefit of
approximately $45,000.
The cash provided by investing activities was principally due to
proceeds from the maturities and calls of investment securities
available-for-sale of approximately $7,179,000, sales of
investment securities available-for-sale of approximately
$3,875,000 and net cash flows from loans originated and principal
collected on loans of approximately $8,686,000. Purchases of
investment securities available-for-sale of approximately
$13,277,000 and purchases of premises and equipment of
approximately $114,000 were investing activities using cash.
Funds provided by financing activities was due principally to
proceeds from net cash flows from sales and maturities of
certificates of deposit of approximately $14,330,000 and a net
increase in NOW accounts, demand deposits and savings accounts of
approximately $2,821,000. The use of cash from financing
activities was due to a decrease in fed funds sold and repurchase
agreements of approximately $15,645,000, payment of cash
13
<PAGE>
dividends of approximately $476,000, a decrease in other borrowed
funds of approximately $18,000 and payments on capital lease
obligations of approximately $51,000.
YEAR 2000
- ---------
The "year 2000 issue" arises from the widespread use of
computer programs that rely on two-digit codes to perform
computations or decision-making functions. Many of these
programs may fail due to an inability to properly interpret date
codes beginning January 1, 2000. For example, such programs may
misinterpret "00" as the year 1900 rather than 2000. In
addition, some equipment, being controlled by microprocessor
chips, may not deal appropriately with the year "00". The
Registrant has developed a plan that will assure the Registrant
of being ready to process in the year 2000. The plan involves
costs such as purchasing both hardware and software and will
entail the use of both internal and external personnel.
Modifications and upgrades will be performed on the majority of
the Registrant's existing systems. The cost of assuring
readiness to process in the year 2000 will be approximately
$1,000,000 to $2,000,000; however, unexpected costs may arise as
the Registrant implements its plan of action. These costs will
be expensed as incurred. The Registrant's mainframe processing
is outsourced to a vendor which is one of the largest bank
processing companies in the United States. The Registrant is in
regular communication with this vendor as both companies prepare
for processing in year 2000.
There is no assurance that the Registrant's customers and
vendors will be ready to process in the year 2000. The inability
of the Registrant's significant customers or vendors to process
in the year 2000 could have a material effect on the financial
condition and results of operations of the Registrant for the
year 2000 and years thereafter.
MARKET RISK MANAGEMENT
- ----------------------
There has been no material changes in market risk for the
Registrant for the quarter ended March 31, 1998 when compared
with December 31, 1997.
CAPITAL RESOURCES
- -----------------
HHC and its subsidiary banks are subject to a minimum Tier 1
capital to risk-weighted assets ratio of 4% and a total capital
(Tier 1 plus Tier 2) to risk-weighted assets ratio of 8%. The
Federal Reserve Board ("Board") has also established an
additional capital adequacy guideline referred to as the Tier 1
leverage ratio that measures the ratio of Tier 1 Capital to
average quarterly assets. The most highly rated bank holding
companies will be required to maintain a minimum Tier 1 leverage
ratio of 3%. The required ratio will be based on the Board's
assessment of the individual bank holding company's asset
quality, earnings performance, interest-rate risk and liquidity.
14
<PAGE>
Bank holding companies experiencing internal growth or making
acquisitions will be expected to maintain strong capital
positions substantially above the minimum supervisory levels
without significant reliance on intangible assets.
The following tables represent HHC's regulatory capital position
at March 31, 1998:
<TABLE>
<CAPTION>
Risk Based Capital Ratios: Amount Ratio
------------- -----------
<S> <C> <C>
Tier 1 Capital $ 46,442 12.15%
Tier 1 Capital minimum requirement $ 15,288 4.00%
---------- --------
Excess $ 31,154 8.15%
---------- --------
Total Capital $ 51,249 13.41%
Total Capital minimum requirement $ 30,576 8.00%
Excess $ 20,673 5.41%
========== ========
Risk adjusted assets net of goodwill
and excess loan loss allowance $ 382,204
Leverage Ratio:
Tier 1 Capital to adjusted total assets $ 46,442 9.61%
("Leverage Ratio")
Minimum leverage requirement $ 14,503 3.00%
---------- --------
Excess $ 31,939 6.61%
========== ========
Average total assets, net of goodwill (1) $ 483,445
</TABLE>
(1) Average total assets, net of goodwill for the three-months
ended March 31, 1998.
HHC is a legal entity separate and distinct from the Banks. Most
of the revenues of HHC result from dividends paid to it by the
Banks. There are statutory and regulatory requirements
applicable to the payment of dividends by the subsidiary banks as
well as by HHC to its shareholders. HHC paid cash dividends of
$486,000 or $.12 per share in the first quarter of 1998, that had
been declared at December 31, 1997. HHC declared $484,000 or
$.12 per share of common stock at March 31, 1998 which was paid
on April 19, 1998.
15
<PAGE>
HARDWICK HOLDING COMPANY AND SUBSIDIARIES
PART II
ITEM 1. LEGAL PROCEEDINGS
HHC is not aware of any material pending legal proceedings to
which HHC or any of its subsidiaries is a party or to which any
of their property is subject.
ITEM 2. CHANGES IN SECURITIES -None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES -None
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.
(a) Exhibit 27.1-Financial Data Schedule for three month period
ended March 31, 1998*
(b) Exhibit 27.2-Restated Financial Data Schedule for quarters
ended March 31, 1997, June 30, 1997 and September 30, 1997*
(c) Exhibit 27.3-Restated Financial Data Schedule for year ended
December 31, 1996*
(d) Form 8-K -None.
- ----------
* For SEC use only.
16
<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 duly authorized.
CORPORATION HARDWICK HOLDING COMPANY
- ----------- ------------------------
Date: May 11, 1998 By:/s/ Michael Robinson
- ------------------- ---------------------------------
Michael Robinson
Executive Vice President,
Chief Financial Officer
(Principal Financial Officer
and Duly Authorized Officer)
17
<TABLE> <S> <C>
<ARTICLE> 9
<CIK> 0000787465
<NAME> HARDWICK HOLDING COMPANY
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 23,402
<INT-BEARING-DEPOSITS> 114
<FED-FUNDS-SOLD> 25,064
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 121,387
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 308,519
<ALLOWANCE> 7,196
<TOTAL-ASSETS> 495,942
<DEPOSITS> 426,936
<SHORT-TERM> 3,906
<LIABILITIES-OTHER> 5,074
<LONG-TERM> 8,422
0
0
<COMMON> 2,088
<OTHER-SE> 49,516
<TOTAL-LIABILITIES-AND-EQUITY> 495,942
<INTEREST-LOAN> 7,291
<INTEREST-INVEST> 1,897
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 9,188
<INTEREST-DEPOSIT> 3,754
<INTEREST-EXPENSE> 3,931
<INTEREST-INCOME-NET> 5,257
<LOAN-LOSSES> 150
<SECURITIES-GAINS> 8
<EXPENSE-OTHER> 4,542
<INCOME-PRETAX> 1,894
<INCOME-PRE-EXTRAORDINARY> 1,894
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,280
<EPS-PRIMARY> .32
<EPS-DILUTED> .32
<YIELD-ACTUAL> 8.40
<LOANS-NON> 0
<LOANS-PAST> 50
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 6,984
<CHARGE-OFFS> 90
<RECOVERIES> 152
<ALLOWANCE-CLOSE> 7,196
<ALLOWANCE-DOMESTIC> 7,196
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<RESTATED>
<CIK> 0000787465
<NAME> HARDWICK HOLDING COMPANY
<MULTIPLIER> 1,000
<S> <C> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1997 DEC-31-1997
<PERIOD-START> JAN-01-1997 JAN-01-1997 JAN-01-1997
<PERIOD-END> MAR-31-1997 JUN-30-1997 SEP-30-1997
<CASH> 23,833 23,693 20,707
<INT-BEARING-DEPOSITS> 25 25 43
<FED-FUNDS-SOLD> 17,400 12,548 4,281
<TRADING-ASSETS> 0 0 0
<INVESTMENTS-HELD-FOR-SALE> 117,644 121,516 121,779
<INVESTMENTS-CARRYING> 0 0 0
<INVESTMENTS-MARKET> 0 0 0
<LOANS> 283,100 289,670 304,804
<ALLOWANCE> 7,196 7,018 6,858
<TOTAL-ASSETS> 461,516 466,708 420,325
<DEPOSITS> 403,647 404,321 401,525
<SHORT-TERM> 4,390 7,510 9,571
<LIABILITIES-OTHER> 4,733 4,701 5,211
<LONG-TERM> 710 859 3,568
0 0 0
0 0 0
<COMMON> 2,081 2,081 2,081
<OTHER-SE> 45,955 47,253 48,369
<TOTAL-LIABILITIES-AND-EQUITY> 431,516 466,708 470,325
<INTEREST-LOAN> 6,472 13,178 20,327
<INTEREST-INVEST> 1,768 3,729 5,669
<INTEREST-OTHER> 0 0 0
<INTEREST-TOTAL> 8,240 16,907 25,996
<INTEREST-DEPOSIT> 3,314 6,810 10,475
<INTEREST-EXPENSE> 3,382 157 279
<INTEREST-INCOME-NET> 4,858 9,940 15,242
<LOAN-LOSSES> 500 375 400
<SECURITIES-GAINS> 29 20 62
<EXPENSE-OTHER> 4,587 9,068 13,585
<INCOME-PRETAX> 3,189 5,017 6,932
<INCOME-PRE-EXTRAORDINARY> 3,189 5,017 6,932
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> 2,268 3,478 4,691
<EPS-PRIMARY> .57 .87 1.17
<EPS-DILUTED> .56 .86 1.16
<YIELD-ACTUAL> 8.40 8.40 8.40
<LOANS-NON> 1,887 574 509
<LOANS-PAST> 289 655 305
<LOANS-TROUBLED> 0 0 0
<LOANS-PROBLEM> 0 0 0
<ALLOWANCE-OPEN> 6,778 6,778 6,778
<CHARGE-OFFS> 175 319 569
<RECOVERIES> 93 184 249
<ALLOWANCE-CLOSE> 7,196 7,018 6,858
<ALLOWANCE-DOMESTIC> 7,196 7,018 6,858
<ALLOWANCE-FOREIGN> 0 0 0
<ALLOWANCE-UNALLOCATED> 0 0 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<RESTATED>
<CIK> 0000787465
<NAME> HARDWICK HOLDING COMPANY
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-01-1996
<CASH> 26,774
<INT-BEARING-DEPOSITS> 23
<FED-FUNDS-SOLD> 7,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 120,166
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 278,248
<ALLOWANCE> 6,778
<TOTAL-ASSETS> 452,061
<DEPOSITS> 393,940
<SHORT-TERM> 6,118
<LIABILITIES-OTHER> 4,243
<LONG-TERM> 783
0
0
<COMMON> 2,063
<OTHER-SE> 44,914
<TOTAL-LIABILITIES-AND-EQUITY> 452,061
<INTEREST-LOAN> 24,972
<INTEREST-INVEST> 7,301
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 32,273
<INTEREST-DEPOSIT> 12,920
<INTEREST-EXPENSE> 13,169
<INTEREST-INCOME-NET> 19,104
<LOAN-LOSSES> 396
<SECURITIES-GAINS> 8
<EXPENSE-OTHER> 17,540
<INCOME-PRETAX> 5,250
<INCOME-PRE-EXTRAORDINARY> 5,250
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,570
<EPS-PRIMARY> .89
<EPS-DILUTED> .87
<YIELD-ACTUAL> 8.6
<LOANS-NON> 449
<LOANS-PAST> 551
<LOANS-TROUBLED> 49
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 6,616
<CHARGE-OFFS> 899
<RECOVERIES> 667
<ALLOWANCE-CLOSE> 6,778
<ALLOWANCE-DOMESTIC> 6,778
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
