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 September 30, 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 October 31, 1994
----- -------------------------------
Common Stock (Voting), $1 par
Value 1,680,096
---------
<PAGE>
HOMETOWN BANCORPORATION, INC.
-----------------------------
INDEX
-----
Page
----
Part I - Financial Information
------------------------------
Item 1. - Financial Statements
-------
Consolidated Balance Sheet -
September 30, 1994 and December 31, 1993 3
Consolidated Statement of Income -
Three Months Ended September 30, 1994 and 1993 4-5
Consolidated Statement of Income -
Nine Months Ended September 30, 1994 and 1993 6-7
Consolidated Statement of Cash Flows -
Nine Months Ended September 30, 1994 and 1993 8
Item 2. - Management's Discussion and Analysis
------- of Financial Condition and Results of Operations 9-13
Part II - Other Information
- ---------------------------
Item 6. - Exhibits and Reports on Form 8-K 14
-------
Signatures 15
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
September 30, December 31,
1994 1993
---- ----
ASSETS (unaudited)
Cash and due from banks $7,641 $7,124
Federal funds sold -- 6,370
Investments available for sale, at fair value 71,740 54,016
Investments held to maturity (fair value:
$47,546 in 1994 and $40,558 in 1993) 48,131 40,060
Loans, less allowance for loan losses of
$3,030 in 1994 and $3,640 in 1993 81,965 85,461
Equipment and leasehold improvements, net of
accumulated depreciation of $1,491 in 1994
and $1,578 in 1993 1,662 1,781
Other real estate owned 1,118 1,271
Other assets 5,969 5,269
------- -------
Total Assets $218,226 $201,352
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Demand $21,185 $22,995
NOW and money market accounts 76,791 78,806
Savings deposits 16,016 15,275
Certificates of deposit of $100 and over 8,771 6,426
Other time deposits 55,960 36,139
------- -------
178,723 159,641
FHLBB advances 24,295 25,000
Accrued interest and other liabilities 1,228 2,257
------- -------
Total Liabilities 204,246 186,898
------- -------
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, 1,680,096 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) 489 (494)
Treasury stock - 153,255 and 174,155 shares in 1994
and 1993, respectively, at cost (887) (1,008)
Unrealized (loss) gain on investments available
for sale (1,415) 163
------- -------
Total Stockholders' Equity 13,980 14,454
------- -------
Total Liabilities and Stockholders' Equity $218,226 $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
September 30,
1994 1993
---- ----
Interest and dividend income: (unaudited) (unaudited)
Interest and fees on loans $1,804 $1,621
Interest on investment securities:
Taxable:
Obligations of U.S. Agencies 971 553
Other 573 583
Interest on federal funds sold 5 37
Dividends 27 26
------- -------
Total interest and dividend income 3,380 2,820
Interest expense:
Deposits 1,245 979
Other 330 268
------- -------
1,575 1,247
Net interest income 1,805 1,573
Provision for loan losses 25 25
Provision for OREO losses -- --
------- -------
Net interest income after provision for
loan and OREO losses 1,780 1,548
Other operating revenue:
Deposit and other service charges 165 173
Mortgage origination fees 100 277
Other 37 37
------- -------
Net interest income and operating revenue 2,082 2,035
Other operating expenses:
Salaries and benefits 760 657
Occupancy expense 142 142
FDIC insurance premiums 93 105
Depreciation 100 87
Advertising and marketing 62 50
Foreclosure expense and cost of other
real estate owned 30 45
Other operating expenses 379 346
------- -------
Total other operating expenses 1,566 1,432
Income before taxes 516 603
Provision for federal and state income taxes 187 242
------- -------
Net income $329 $361
==== =====
4
<PAGE>
Restated
For the three months ended
September 30,
1994 1993
---- ----
(unaudited) (unaudited)
Earnings per share
Primary:
Earnings per share -- primary $.19 $.21
==== ====
Average number of shares outstanding 1,758,032 1,711,913
========= =========
Fully diluted:
Earnings per share -- fully diluted $.19 $.21
==== ====
Total common stock equivalents 1,758,459 1,712,838
========= =========
5
<PAGE>
Hometown Bancorporation, Inc.
Consolidated Statement of Income
(000's of dollars except par value and share amounts)
Restated
For the nine months ended
September 30,
1994 1993
---- ----
Interest and dividend income: (unaudited) (unaudited)
Interest and fees on loans $5,082 $4,928
Interest on investment securities:
Taxable:
Obligations of U.S. Agencies 2,470 1,743
Other 1,588 1,584
Interest on federal funds sold 51 77
Dividends 79 71
----- -----
Total interest and dividend income 9,270 8,403
Interest expense:
Deposits 3,223 2,912
Other 868 862
----- -----
4,091 3,774
Net interest income 5,179 4,629
Provision for loan losses 50 335
Provision for OREO losses 34 60
----- -----
Net interest income after provision for
loan and OREO losses 5,095 4,234
Other operating revenue:
Deposit and other service charges 492 505
Mortgage origination fees 435 634
Securities gains 45 27
Other 133 136
----- -----
Net interest income and operating revenue 6,200 5,536
Other operating expenses:
Salaries and benefits 2,205 1,937
Occupancy expense 427 421
FDIC insurance premiums 292 298
Depreciation 298 252
Advertising and marketing 188 150
Foreclosure expense and cost of other
real estate owned 90 137
Other operating expenses 1,125 1,044
----- -----
Total other operating expenses 4,625 4,239
Income before taxes and cumulative effect
of an accounting change 1,575 1,297
Provision for federal and state income taxes 569 495
Net income before cumulative effect of an ----- -----
accounting change 1,006 802
Cumulative effect of an accounting change
FAS 109 -- 1,125
----- -----
Net income $1,006 $1,927
===== =====
6
<PAGE>
Restated
For the nine months ended
September 30,
1994 1993
---- ----
(unaudited) (unaudited)
Earnings per share
Primary:
Earnings per share before taxes and
cumulative effect of an accounting change $.58 $.47
Cumulative effect of an accounting change - FAS 109 -- .66
----- -----
Earnings per share -- primary $.58 $1.13
==== ====
Average number of shares outstanding 1,749,548 1,698,567
========= =========
Fully diluted:
Earnings per share before taxes and
cumulative effect of an accounting change $.57 $.47
Cumulative effect of an accounting change - FAS 109 -- .66
----- -----
Earnings per share -- fully diluted $.57 $1.13
==== ====
Average number of shares outstanding 1,750,683 1,702,487
========= =========
7
<PAGE>
Hometown Bancorporation, Inc.
Consolidated Statement of Cash Flows
(thousands of dollars)
Restated
For the nine Months ended
September 30,
1994 1993
---- ----
Cash Flows from Operating Activities: unaudited) (unaudited)
Net income $1,006 $1,927
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization, net 453 407
Provision for loan losses and OREO losses 84 395
Securities gains (45) (27)
Decrease (increase) in other assets (855) (2,171)
(Decrease) in other liabilities (1,029) 1,510
----- -----
Net cash (used) provided by operating activities (386) 2,041
----- -----
Cash Flows from Investing Activities:
Proceeds from the maturity of investments held
to maturity 13,916 8,506
Purchase of investments held to maturity (23,513) (13,726)
Proceeds from the sale of investments held to
maturity -- 7,800
Proceeds from the maturity of investments
available for sale 14,329 --
Purchase of investment securities available
for sale (42,374) (10,304)
Proceeds from the sale of investments available
for sale 9,615 --
Net decrease in loans 4,106 98
Decrease in foreclosed assets 119 1,011
(Purchase) of capital assets (140) (479)
------ -----
Net cash (used) by investing activities (23,942) (7,094)
------ -----
Cash Flows from Financing Activities:
Net (decrease) in demand deposits, NOW
accounts, money market accounts and
savings accounts (3,084) (3,023)
Net increase in certificates of deposit
and other time deposits 22,166 1,845
(Decrease) increase in FHLBB advances (705) 5,000
Exercise of stock options 98 376
----- -----
Net cash provided by financing activities 18,475 4,198
------ -----
Net decrease in cash and cash equivalents (5,853) (855)
Cash and cash equivalents at the beginning of
the period 13,494 14,857
----- -----
Cash and cash equivalents at the end of the period $7,641 $14,002
====== ======
8
<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 $329,000 or $.19 per
share and $361,000 or $.21 per share for the three months ended
September 30, 1994 and 1993, respectively. The Company earned consolidated
net income of $1,006,000 or $.58 per share ($.57 per share-fully
diluted) and $1,927,000 or $1.13 per share for the nine months ended
September 30, 1994 and 1993, respectively. Net income for the nine
months ended September 30, 1993 includes a one-time benefit of
$1,125,000 or $.66 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.
Net operating income increased $204,000 or 25% from $802,000 (net
income before the cumulative effect of FAS 109 in 1993) or $.47 per
share during the first nine months of 1993 to $1,006,000 or $.58 per share
($.57 per share -- fully diluted) during the first nine months of 1994.
Net Interest Income
-------------------
Net interest income increased $232,000 or 15% and $550,000 or 12%
for the three and nine months ended September 30, 1994, as compared to
the three and nine months ended September 30, 1993, respectively. The
increases in net interest income were due
9
<PAGE>
primarily to an increase in average interest earning assets for the three and
nine month periods as compared to the prior year. Below is the yield analysis
for the nine months ended September 30, 1994 and for the year ended December
31, 1993.
HOMETOWN BANCORPORATION, INC.
YIELD ANALYSIS
(000's of dollars)
For the Nine Months Ended For the Year Ended
September 30, 1994 December 31, 1993
Average Average
Balance Interest Yield Balance Interest Yield
------- -------- ----- -------- -------- -----
ASSETS
- ------
Interest earning assets:
Loans (1) $ 87,555 $5,082 7.74% $ 91,043 $ 6,596 7.24%
Investment securities 109,164 4,137 5.05% 80,875 4,598 5.69%
Federal funds sold 2,036 51 3.35% 3,839 110 2.87%
-------------------------------------------------------
Total interest earning
assets 198,755 9,270 6.22% 175,757 11,304 6.43%
-------------------------------------------------------
Non interest earning assets:
Cash and due from banks 6,287 6,665
Allowance for loan
losses (3,343) (3,353)
Other assets 9,098 12,048
------- -------
Total assets $210,797 $191,117
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Interest bearing liabilities:
Savings deposits $ 16,068 250 2.08% $ 14,535 343 2.36%
NOW accounts 27,504 289 1.40% 24,635 488 1.98%
Money market deposits 51,515 1,063 2.76% 50,228 1,381 2.75%
Time deposits 51,463 1,621 4.20% 43,033 1,610 3.74%
Other interest bearing
liabilities 26,369 868 4.39% 24,170 1,173 4.85%
------------------------------------------------------
Total interest bearing
liabilities 172,919 4,091 3.15% 156,601 4,995 3.19%
------------------------------------------------------
Non interest bearing
liabilities:
Demand deposits 19,159 17,701
Other liabilities 3,579 3,163
Stockholders' equity 15,140 13,652
Total liabilities and -------- --------
stockholders' equity $210,797 $191,117
======== ========
------ -------
Net interest income $5,179 $ 6,309
====== =======
Net yield on interest
earning assets 3.47% 3.59%
===== =====
(1) Includes nonaccruing loans.
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.
10
<PAGE>
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-month periods ended September 30, 1994 and 1993 the
Company recorded a provision to the allowance for loan losses of
$25,000. For the nine months ended September 30, 1994 and 1993,
the Company recorded a provision to the allowance for loan losses of
$50,000 and $335,000, 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 September 30, 1994
and December 31, 1993.
Sepember 30, December 31,
1994 1993
---- ----
(thousands of dollars)
Nonaccruing loans $1,432 $1,583
Other real estate owned, net 1,118 1,271
----- -----
Total nonperforming assets $2,550 $2,854
===== =====
Restructured and performing loans $872 $1,348
===== =====
Nonaccruing loans to gross loans 1.68% 1.77%
Nonperforming assets to total assets 1.17% 1.41%
Allowance for loan losses $3,030 $3,640
Coverage Ratios:
Allowance for loan losses to gross loans 3.56% 4.07%
Allowance for loan losses to nonperforming assets 118.82% 127.54%
Had the nonaccruing loans in the table above been current, gross
interest income on these loans for the nine months ended September 30,
1994 would have been approximately $99,000. There was no interest income
actually recorded on these loans during 1994.
Other Operating Revenue
-----------------------
For the three and nine months ended September 30, 1994, total
other operating revenue decreased $185,000 or 38% and $197,000 or 15%,
as compared to the three and nine months ended September 30, 1993. The
decline in the third quarter is due to a $177,000 or 64% decline in
mortgage origination fees from $277,000 for the quarter ended September
30, 1993 to $100,000 for the quarter ended September 30, 1994. The
decline for the nine months ended September 30, 1994 as compared to the
nine months ended September 30, 1993 reflects lower mortgage origination
fees as compared to 1993. The
11
<PAGE>
decline in mortgage origination fees during 1994 is the result of the rise
in interest rates which curbed mortgage loan demand.
Other Operating Expenses
------------------------
For the three and nine months ended September 30, 1994 total other
operating expenses increased $134,000 or 9% and $386,000 or 9%,
respectively, as compared to the three and nine months ended September
30, 1993. The increase in total other operating expenses during the
three and nine months ended September 30, 1994 is primarily due to
increases in salaries and benefits, depreciation, and advertising and
marketing offset in part by reduced foreclosure expense and cost of
other real estate owned.
Total other operating expenses as a percentage of average total
assets declined to an annual rate of 2.93% for the nine months ended
September 30, 1994 from 2.99% for the nine months ended September 30,
1993.
For the three and nine months ended September 30, 1994 salaries and
benefits expense increased $103,000 or 16% and $268,000 or 14%,
respectively, versus the three and nine months ended September 30, 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.
For the three and nine months ended September 30, 1994, depreciation
increased $13,000 or 15% and $46,000 or 18% as compared to the three and
nine months ended September 30, 1993. This increase is due to the
Bank's upgrade of its computer system during the fourth quarter of 1993.
Advertising and marketing increased $12,000 or 24% and $38,000 or
25% for the three and nine months ended September 30, 1994 versus the
three and nine months ended September 30, 1993. This increase reflects
the Bank's continuing effort to market the Bank's products effectively.
Liquidity and Capital Resources
-------------------------------
Total deposits of the Company increased $19,082,000 or 12% to
$178,723,000 at September 30, 1994 from December 31, 1993 when total
deposits were $159,641,000. Deposit balances increased due primarily to
higher CD and other time deposit balances at September 30, 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 decreased $474,000 from December 31,
1993 to September 30, 1994, due to unrealized loss on investments
available-for-sale of $1,578,000 offset by net income of $1,006,000 for
the nine months ended September 30, 1994 and the sale of treasury stock.
Illustrated below are the Company's capital to asset ratios and the
corresponding regulatory minimums.
12
<PAGE>
Hometown Bancorporation, Inc.
Capital Ratios
September 30, Regulatory
1994 Minimum
------------- ----------
Tier one leverage capital ratio 6.64% 4.00%
Risk-based capital ratio 14.69% 8.00%
The following summarizes the Company's investment portfolio by type of security
at September 30, 1994:
Carrying Approximate
Amount Fair Value
-------- -----------
(thousands of dollars)
Investments held to maturity:
Obligations of U. S. Government Agencies $10,400 $10,333
U. S. Agency Mortgage-backed Obligations 26,417 26,080
Other mortgage-backed securities 10,299 10,116
U. S. Treasury Securities 1,015 1,017
------ ------
$48,131 $47,546
====== ======
Investments available for sale:
Obligations of U. S. Government Agencies $ 495 $ 479
U. S. Agency Mortgage-backed Obligations 43,056 41,733
Other mortgage-backed securities 24,774 24,738
U. S. Treasury Securities 3,113 3,073
Federal Home Loan Bank Stock 1,717 1,717
------ ------
$73,155 $71,740
====== ======
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 September 30, 1994, the Company filed no
Current Reports on Form 8-K.
13
<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
14
<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 SEPTEMBER 30, 1994 AND FOR THE
NINE MONTHS THEN ENDED AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> SEP-30-1994
<CASH> 7,641
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 71,740
<INVESTMENTS-CARRYING> 48,131
<INVESTMENTS-MARKET> 47,546
<LOANS> 84,995
<ALLOWANCE> 3,030
<TOTAL-ASSETS> 218,226
<DEPOSITS> 178,723
<SHORT-TERM> 24,295
<LIABILITIES-OTHER> 1,228
<LONG-TERM> 0
<COMMON> 1,833
0
0
<OTHER-SE> 12,147
<TOTAL-LIABILITIES-AND-EQUITY> 218,226
<INTEREST-LOAN> 5,082
<INTEREST-INVEST> 4,137
<INTEREST-OTHER> 51
<INTEREST-TOTAL> 9,270
<INTEREST-DEPOSIT> 3,223
<INTEREST-EXPENSE> 4,091
<INTEREST-INCOME-NET> 5,179
<LOAN-LOSSES> 50
<SECURITIES-GAINS> 45
<EXPENSE-OTHER> 4,625
<INCOME-PRETAX> 1,575
<INCOME-PRE-EXTRAORDINARY> 1,006
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,006
<EPS-PRIMARY> 0.58
<EPS-DILUTED> 0.57
<YIELD-ACTUAL> 6.22
<LOANS-NON> 1,432
<LOANS-PAST> 4
<LOANS-TROUBLED> 872
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 3,640
<CHARGE-OFFS> 688
<RECOVERIES> 28
<ALLOWANCE-CLOSE> 3,030
<ALLOWANCE-DOMESTIC> 3,030
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
