FORM 10-Q/A
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Amendment No. 1
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1994
----------------
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 0-16272
------------
Hometown Bancorporation, Inc.
-----------------------------
(Exact name of Registrant as specified its charter)
Delaware 06-1199559
-------- ----------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
20 West Avenue, P.O. Box 1265, Darien, CT 06820
------------------------------------------------
(Address of principal executive offices)
(203) 656-2265
--------------
(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:
Class Outstanding at April 30, 1994
----- -----------------------------
Common Stock (Voting), $1 par
Value 1,670,171
---------
<PAGE>
HOMETOWN BANCORPORATION, INC.
INDEX
Page
Part I - Financial Information
------------------------------
Item 1. - Financial Statements
-------
Consolidated Balance Sheet -
March 31, 1994 and December 31, 1993 3
Consolidated Statement of Income -
Three Months Ended March 31, 1994 and 1993 4-5
Consolidated Statement of Cash Flows -
Three Months Ended March 31, 1994 and 1993 6
Item 2. - Management's Discussion and Analysis
------- of Financial Condition and Results of Operations 7-12
Part II - Other Information
- ---------------------------
Item 6. - Exhibits and Reports on Form 8-K 12
-------
Signatures 13
2
<PAGE>
Part I
Item 1. - Financial Statements
------------------------------
Hometown Bancorporation, Inc.
Consolidated Balance Sheet
(000's of dollars except par value and share amounts)
Restated
March 31, December 31,
1994 1993
---- ----
ASSETS (unaudited)
Cash and due from banks $9,428 $7,124
Federal funds sold 520 6,370
Investments available for sale, at fair value 61,834 54,016
Investments held to maturity (fair value:
$40,136 in 1994 and $40,558 in 1993) 39,762 40,060
Loans, less allowance for loan losses of
$3,366 in 1994 and $3,640 in 1993 83,267 85,461
Equipment and leasehold improvements, net of
accumulated depreciation of $1,663 in 1994
and $1,578 in 1993 1,780 1,781
Other real estate owned 1,706 1,271
Other assets 5,394 5,269
------- -------
Total Assets $203,691 $201,352
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Demand $21,445 $22,995
NOW and money market accounts 82,412 78,806
Savings deposits 15,756 15,275
Certificates of deposit of $100 and over 5,765 6,426
Other time deposits 37,340 36,139
------- -------
162,718 159,641
FHLBB advances 25,000 25,000
Accrued interest and other liabilities 1,047 2,257
------- -------
Total Liabilities 188,765 186,898
------- -------
STOCKHOLDERS' EQUITY
Preferred Stock, par value $1; 2,000,000 shares
authorized, none issued and outstanding
Common Stock, par value $1; 10,000,000 shares
authorized, 1,670,171 and 1,659,141 issued
and outstanding in 1994 and 1993, respectively 1,833 1,833
Surplus 13,960 13,960
Retained earnings (accumulated deficit) (134) (494)
Treasury stock - 163,155 and 174,155 shares in 1994
and 1993, respectively, at cost (945) (1,008)
Unrealized gain on investments available for sale 212 163
------- -------
Total Stockholders' Equity 14,926 14,454
------- -------
Total Liabilities and Stockholders' Equity $203,691 $201,352
======= =======
3
<PAGE>
Hometown Bancorporation, Inc.
Consolidated Statement of Income
(000's of dollars except par value and share amounts)
Restated
For the three months ended
March 31,
1994 1993
---- ----
Interest and dividend income: (unaudited) (unaudited)
Interest and fees on loans $1,621 $1,640
Interest on investment securities:
Taxable:
Obligations of U.S. Agencies 778 620
Other 384 484
Interest on federal funds sold 29 9
Dividends 30 25
------- -------
Total interest and dividend income 2,842 2,778
Interest expense:
Deposits 909 1,034
Other 263 236
------- -------
1,172 1,270
Net interest income 1,670 1,508
Provision for loan losses 25 185
Provision for OREO losses 9 --
------- -------
Net interest income after provision for
loan and OREO losses 1,636 1,323
Other operating revenue:
Deposit and other service charges 168 161
Mortgage origination fees 166 93
Securities gains 45 27
Other 66 78
------- -------
Net interest income and operating revenue 2,081 1,682
Other operating expenses:
Salaries and benefits 705 642
Occupancy expense 143 140
FDIC insurance premiums 99 97
Depreciation 99 83
Advertising and marketing 63 50
Foreclosure expense and cost of other
real estate owned 30 46
Other operating expenses 336 330
------- -------
Total other operating expenses 1,475 1,388
Income before taxes and cumulative effect
of an accounting change 606 294
Provision for federal and state income taxes 219 100
------- -------
Net income before cumulative effect of an
accounting change 387 194
Cumulative effect of an accounting change
FAS 109 -- 1,125
------- -------
Net income $387 $1,319
==== =====
4
<PAGE>
Restated
For the three months ended
March 31,
1994 1993
(unaudited) (unaudited)
Earnings per share
Primary:
Earnings per share before taxes and cumulative
effect of an accounting change $.22 $.12
Cumulative effect of an accounting change - FAS 109 --- .67
Earnings per share -- primary $.22 $.79
==== ====
Average number of shares outstanding 1,743,556 1,673,647
========= =========
Fully diluted:
Earnings per share before taxes and cumulative
effect of an accounting change $.22 $.12
Cumulative effect of an accounting change - FAS 109 --- .67
Earnings per share -- fully diluted $.22 $.79
==== ====
Total common stock equivalents 1,743,556 1,673,647
======= =======
5
<PAGE>
Hometown Bancorporation, Inc.
Consolidated Statement of Cash Flows
(thousands of dollars)
Restated
For the three months ended
March 31,
1994 1993
---- ----
Cash Flows from Operating Activities: (unaudited) (unaudited)
Net income $387 $1,319
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization, net 99 83
Provision for loan losses and OREO losses 34 185
Securities gains (45) (27)
Increase in other assets (125) (43)
Decrease in other liabilities (1,210) (173)
------- -------
Net cash (used) provided by operating activities (860) 1,344
------- -------
Cash Flows from Investing Activities:
Proceeds from the maturity of investments held
to maturity 5,781 1,444
Purchase of investments held to maturity (6,959) (4,166)
Proceeds from the sale of investments held to
maturity -- 7,800
Proceeds from the maturity of investments
available for sale 7,366 --
Purchase of investment securities available
for sale (20,421) --
Proceeds from the sale of investments available
for sale 6,484 --
Net decrease (increase) in loans 2,468 (3,732)
Increase in foreclosed assets (435) --
Purchase of capital assets (84) (275)
------- -------
Net cash (used) provided by investing activities (5,800) 1,071
------- -------
Cash Flows from Financing Activities:
Net increase (decrease) in demand deposits, NOW
accounts, money market accounts and
savings accounts 2,537 (8,038)
Net increase (decrease) in certificates of deposit
and other time deposits 540 (1,438)
Exercise of stock options 37 357
------- -------
Net cash provided (used) by financing activities 3,114 (9,119)
------- -------
Net decrease in cash and cash equivalents (3,546) (6,704)
Cash and cash equivalents at the beginning of
the period 13,494 14,857
------- -------
Cash and cash equivalents at the end of the period $9,948 $8,153
====== ======
6
<PAGE>
Item 2. - Management's Discussion and Analysis of Financial
-------------------------------------------------
Condition and Results of Operations
-----------------------------------
Introduction
------------
Hometown Bancorporation, Inc. (the "Company") was formed to become
a holding company for The Bank of Darien (the "Bank"), to raise
additional capital and to provide a vehicle for other permitted holding
company activities. On July 21, 1987, each share of the Bank's
outstanding common stock was exchanged for one share of Common Stock,
par value $1.00, of the Company. This transaction was recorded in a
manner analogous to a pooling of interests.
The Bank is the sole subsidiary of the Company. The business of the
Company consists of ownership of the capital stock of the Bank.
The Bank, which currently has offices in Darien and Westport,
Connecticut, is a full service commercial institution with a market area
within Southern Fairfield County. Its commitment to service excellence
is supported by a flexible approach to banking, immediate problem
resolution and local decision making with fast turnaround. The staff's
commitment to excellence is evidenced by low turnover of personnel and
courteous and efficient service.
The Bank, a member of the FDIC, offers a complete line of financial
services to the retail and commercial market segments. Deposit products
range from checking, NOW and money market accounts, savings accounts,
certificates of deposit, individual retirement accounts and Keoghs.
Loan products include personal and commercial loans, mortgages, home
equity lines of credit, secured and unsecured loans, MasterCard, VISA
and Gold MasterCard credit cards.
Results of Operations
---------------------
The Company earned consolidated net income of $387,000 or $.22 per
share and $1,319,000 or $.79 per share for the three months ended
March 31, 1994 and 1993, respectively. Net income for the three months
ended March 31, 1993 included a one-time benefit of $1,125,000 or
$.67 per share as a result of the Company's adoption of Financial
Accounting Standard No. 109, "Accounting for Income Taxes" ("FAS 109"),
as of January 1, 1993. (See discussion below under "Change in
Accounting Principle.") Net operating income (net income before the
cumulative effect of FAS 109 in 1993) increased 99% from $194,000 or
$.12 per share during the first quarter of 1993 to $387,000 or $.22 per
share during the first quarter of 1994.
Change in Accounting Principle
------------------------------
The Company adopted FAS 109 as of January 1, 1993. Income taxes had
previously been accounted for in accordance with Accounting Principle
Bulletin No. 11. The benefit of the accounting change is a one-time
credit of $1,125,000, during the first quarter of 1993 resulting from
the recording of a deferred tax asset as of January 1, 1993.
7
<PAGE>
Net Interest Income
-------------------
Net interest income increased $162,000 or 11% from $1,508,000 for
the three months ended March 31, 1993 to $1,670,000 for the three months
ended March 31, 1994. The increase in net interest income was due
primarily to an increase in average interest earning assets of 11% from
the quarter ended March 31, 1993 to the quarter ended March 31, 1994.
Below is the yield analysis for the three months ended March 31, 1994
and for the year ended December 31, 1993.
HOMETOWN BANCORPORATION, INC.
YIELD ANALYSIS
(000's of dollars)
For the Three Months Ended For the Year Ended
March 31, 1994 December 31, 1993
Average Average
Balance Interest Yield Balance Interest Yield
------- -------- ----- -------- -------- -----
ASSETS
- ------
Interest earning assets:
Loans $ 88,792 $1,621 7.30% $ 91,043 $ 6,596 7.24%
Investment securities 98,081 1,192 4.86% 80,875 4,598 5.69%
Federal funds sold 3,781 29 3.11% 3,839 110 2.87%
-------------------------------------------------------
Total interest earning
assets 190,654 2,842 5.96% 175,757 11,304 6.43%
-------------------------------------------------------
Non interest earning assets:
Cash and due from banks 6,568 6,665
Allowance for loan
losses (3,643) (3,353)
Other assets 8,645 12,048
------- -------
Total assets $202,224 $191,117
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Interest bearing liabilities:
Savings deposits $ 15,970 78 1.98% $ 14,535 343 2.36%
NOW accounts 28,999 95 1.33% 24,635 488 1.98%
Money market deposits 51,261 315 2.49% 50,228 1,381 2.75%
Time deposits 42,845 422 3.99% 43,033 1,610 3.74%
Other interest bearing
liabilities 25,081 262 4.24% 24,170 1,173 4.85%
------------------------------------------------------
Total interest bearing
liabilities 164,156 1,172 2.90% 156,601 4,995 3.19%
------------------------------------------------------
Non interest bearing
liabilities:
Demand deposits 19,006 17,701
Other liabilities 4,064 3,163
Stockholders' equity 14,998 13,652
Total liabilities and -------- --------
stockholders' equity $202,224 $191,117
======== ========
------ -------
Net interest income $1,670 $ 6,309
====== =======
Net yield on interest
earning assets 3.50% 3.59%
===== =====
8
<PAGE>
Provision and Allowance for Loan Losses
---------------------------------------
The Company maintains an allowance for loan losses which is recorded
through a provision for loan losses. The provision for loan losses is
charged to operations based on management's assessment of such loan
related factors as loan risk, including collateral and liquidation value
of that collateral, loan type, current economic conditions and other
pertinent factors.
The Company, in its assessment of the allowance for loan losses,
utilizes a risk rating system. This system involves an ongoing review
of the loan portfolio that culminates in loans being assigned a risk
factor based upon various credit criteria. If the review indicates a
possibility that some portion of the loan may result in a loss, a
specific allowance is established for the amount of the estimated loss.
If the review indicates that it is probable that some portion of the
loan will result in a loss, that portion of the loan is charged-off as a
reduction of the loan and allowance for loan losses balance. In
determining the allowance for loan losses for the balance of the
portfolio, loans are classified as to industry and collateral type with
risk assessments made for each category of loans. Reserve requirements
are then established for each category and provided for in the allowance
for loan losses.
For the three months ended March 31, 1994 and 1993 the Company
recorded a provision to the allowance for loan losses of $25,000 and
$185,000, respectively. The reduction in the provision for loan losses
is due to an overall improvement in the performance of the loan
portfolio as reflected in the decline in nonperforming assets. The
following table illustrates nonperforming assets and allowance for
possible loan loss coverage ratios for the Company at March 31, 1994 and
December 31, 1993.
March 31, December 31,
1994 1993
(thousands of dollars)
Nonaccruing loans $713 $1,583
Other real estate owned, net 1,706 1,271
----- -----
Total nonperforming assets $2,419 $2,854
===== =====
Restructured and performing loans $878 $1,348
===== =====
Nonaccruing loans to gross loans .82% 1.77%
Nonperforming assets to total assets 1.18% 1.41%
Allowance for loan losses $3,366 $3,640
Coverage Ratios:
Allowance for loan losses to gross loans 3.87% 4.07%
Allowance for loan losses to nonperforming
assets 139.15% 127.54%
Had the nonaccruing loans in the table above been current, gross
interest income on these loans for the three months ended March 31, 1994
would have been approximately $14,000. There was no interest income
actually recorded on these loans during 1994.
9
<PAGE>
Other Operating Revenue
-----------------------
For the three months ended March 31, 1994, total other operating
revenue increased $86,000 or 24% as compared to the three months ended
March 31, 1993. This increase was due to a $73,000 or 79% increase in
mortgage origination fees from $93,000 for the quarter ended March 31, 1993
to $166,000 for the quarter ended March 31, 1994. Investment securities
gains increased $18,000 or 67% from March 31, 1993 to March 31, 1994.
Other Operating Expenses
------------------------
Total other operating expenses increased $87,000 or 6% from
$1,388,000 for the three months ended March 31, 1993 to $1,475,000 for
the three months ended March 31, 1994. The increase in total other
operating expenses during the three months ended March 31, 1994 is
primarily due to increases in salaries and benefits, depreciation and
advertising and marketing.
Total other operating expenses as a percentage of average total
assets declined to an annual rate of 2.92% for the three months ended
March 31, 1994 from 3.03% for the three months ended March 31, 1993.
For the three months ended March 31, 1994 salaries and benefits
expense increased $63,000 or 10% versus the three months ended March 31,
1993. This increase reflects increases in the cost of comprehensive
benefits, primarily medical and dental insurance, offered to employees
combined with unemployment and FICA taxes, and an increase in full-time
equivalent employees to support the Company's growth in assets.
Occupancy expense increased $3,000 or 2% for the three months ended
March 31, 1994 as compared to the three months ended March 31, 1993.
This increase is due to scheduled rent increases for the new year.
For the three months ended March 31, 1994, FDIC insurance premiums
increased $2,000 or 2% as compared to the three months ended March 31,
1993. The increase is due to an increase in deposits during the three
months ended March 31, 1994 versus the three months ended March 31, 1993.
Depreciation expense increased $16,000 or 19% for the three months
ended March 31, 1994 as compared to the three months ended March 31,
1993. This increase is due to the Bank upgrading its computer system
during the fourth quarter of 1994. The previous system was eight years
old.
For the three months ended March 31, 1994 advertising and marketing
expense increased $13,000 or 26% from $50,000 for the three months ended
March 31, 1993 to $63,000 for the three months ended March 31, 1994.
The increase is due to increased advertising, public relations, and
direct marketing of the Bank's products.
Foreclosure expense and cost of Other Real Estate Owned is down
$16,000 or 35% from $46,000 for the three months ended March 31, 1993 to
$30,000 for the three months ended March 31, 1994. This decrease is due
to a reduction in problem assets and an overall improvement in the loan
portfolio during 1994.
For the three months ended March 31, 1994 other operating expenses-
other increased $6,000 or 2% as compared to the three months ended March
31, 1993. This increase was primarily due to increases in variable
costs associated with the Bank's increase in deposits during the last
three months.
10
<PAGE>
Liquidity and Capital Resources
- -------------------------------
Total deposits of the Company increased $3,077,000 to $162,718,000
at March 31, 1994 from December 31, 1993 when total deposits were
$159,641,000. This increase was due primarily to higher NOW and money
market account balances at March 31, 1994.
In addition to deposits (the Bank's primary funding and liquidity
source) liquidity is managed through continuous maturity of earning
assets, federal funds lines of credit and Federal Home Loan Bank
Advances.
The Company's total capital increased $472,000 from December 31,
1993 to March 31, 1994, primarily due to the net income of $387,000 for
the three months ended March 31, 1994 and to the exercise of 11,000
stock options resulting in $37,000 in additional capital. Illustrated
below are the Company's capital to asset ratios and the corresponding
regulatory minimums.
Hometown Bancorporation, Inc.
Capital Ratios
March 31, Regulatory
1994 Minimum
--------- -----------
Tier one leverage capital ratio 6.69% 4.00%
Risk-based capital ratio 14.90% 8.00%
11
<PAGE>
The following summarizes the Company's investment portfolio by type of
security at March 31, 1994:
Carrying Approximate
Amount Fair Value
------ ----------
(thousands of dollars)
Investments held to maturity:
Obligations of U. S. Government Agencies $ 1,047 $ 1,096
U. S. Agency Mortgage-backed Securities 29,971 30,264
Other mortgage-backed securities 7,724 7,730
U. S. Treasury Securities 1,020 1,046
------ ------
$39,762 $40,136
====== ======
Investments available for sale:
Obligations of U. S. Government Agencies $ 497 $ 497
U. S. Agency Mortgage-backed Securities 35,855 36,036
Other mortgage-backed securities 19,819 19,868
U. S. Treasury Securities 4,107 4,089
Federal Home Loan Bank Stock 1,344 1,344
------ ------
$61,622 $61,834
====== ======
Part II
Item 6. Exhibits and Reports on form 8-K
- -----------------------------------------
(a) Exhibits
No. Description
--- -----------
27 Financial Data Schedule
(b) Reports on Form 8-K
During the quarter ended March 31, 1994, the Company filed no
Current Reports on Form 8-K.
12
<PAGE>
Signatures
----------
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
Hometown Bancorporation, Inc.
Date: November 28, 1995 By:/s/KEVIN E. GAGE
Kevin E. Gage
President and
Chief Executive Officer
Date: November 28, 1995 By:/s/ALBERT T. JARONCZYK
Albert T. Jaronczyk
Senior Vice President and
Chief Financial Officer
13
<PAGE>
EXHIBIT INDEX
No. Description
- --- -----------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF THE COMPANY AS OF MARCH 31, 1994 AND FOR THE THREE
MONTHS THEN ENDED AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> MAR-31-1994
<CASH> 9,428
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 520
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 61,834
<INVESTMENTS-CARRYING> 39,762
<INVESTMENTS-MARKET> 40,136
<LOANS> 86,633
<ALLOWANCE> 3,366
<TOTAL-ASSETS> 203,691
<DEPOSITS> 162,718
<SHORT-TERM> 25,000
<LIABILITIES-OTHER> 1,047
<LONG-TERM> 0
<COMMON> 1,833
0
0
<OTHER-SE> 13,093
<TOTAL-LIABILITIES-AND-EQUITY> 203,691
<INTEREST-LOAN> 1,621
<INTEREST-INVEST> 1,192
<INTEREST-OTHER> 29
<INTEREST-TOTAL> 2,842
<INTEREST-DEPOSIT> 909
<INTEREST-EXPENSE> 1,172
<INTEREST-INCOME-NET> 1,670
<LOAN-LOSSES> 25
<SECURITIES-GAINS> 45
<EXPENSE-OTHER> 1,475
<INCOME-PRETAX> 606
<INCOME-PRE-EXTRAORDINARY> 387
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 387
<EPS-PRIMARY> 0.22
<EPS-DILUTED> 0.22
<YIELD-ACTUAL> 5.96
<LOANS-NON> 713
<LOANS-PAST> 510
<LOANS-TROUBLED> 878
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 3,640
<CHARGE-OFFS> 309
<RECOVERIES> 10
<ALLOWANCE-CLOSE> 3,366
<ALLOWANCE-DOMESTIC> 3,366
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
