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, 1995
--------------
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
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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, 1995
----- -----------------------------
Common Stock (Voting), $1 par
Value 1,683,126
---------
<PAGE>
HOMETOWN BANCORPORATION, INC.
-----------------------------
INDEX
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Page
----
Part I - Financial Information
- ------------------------------
Item 1. - Financial Statements
-------
Consolidated Balance Sheet -
March 31, 1995 and December 31, 1994 3
Consolidated Statement of Income -
Three Months Ended March 31, 1995 and 1994 4
Consolidated Statement of Cash Flows -
Three Months Ended March 31, 1995 and 1994 5
Item 2. - Management's Discussion and Analysis
------- of Financial Condition and Results of Operations 6-10
Part II - Other Information
- ---------------------------
Item 6. - Exhibits and Reports on Form 8-K 10
-------
Signatures 11
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,
1995 1994
---- ----
ASSETS (unaudited)
Cash and due from banks $6,300 $8,549
Investments available for sale, at fair value 88,981 76,854
Investments held to maturity (fair value:
$44,006 in 1995 and $44,965 in 1994) 45,074 46,273
Loans, less allowance for loan losses of
$3,021 in 1995 and $3,004 in 1994 74,976 74,940
Equipment and leasehold improvements, net of
accumulated depreciation of $1,654 in 1995
and $1,576 in 1994 1,616 1,627
Other real estate owned 1,015 1,016
Other assets 4,553 4,732
------- -------
Total Assets $222,515 $213,991
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Demand $22,476 $24,932
NOW and money market accounts 80,029 77,050
Savings deposits 13,580 14,369
Certificates of deposit of $100 and over 9,394 9,351
Other time deposits 56,844 57,029
------- -------
182,323 182,731
FHLBB advances 26,279 16,681
Accrued interest and other liabilities 383 2,042
------- -------
Total Liabilities 208,985 201,454
------- -------
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, 1,683,126 and 1,680,096 issued
and outstanding in 1995 and 1994, respectively 1,833 1,833
Surplus 13,960 13,960
Retained earnings 901 534
Unrealized loss on investments available for sale (2,294) (2,903)
Treasury stock - 149,979 and 153,255 shares in 1995
and 1994, respectively, at cost (870) (887)
------- -------
Total Stockholders' Equity 13,530 12,537
------- -------
Total Liabilities and Stockholders' Equity $222,515 $213,991
======= =======
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,
1995 1994
---- ----
Interest and dividend income: (unaudited) (unaudited)
Interest and fees on loans $1,769 $1,621
Interest on investment securities:
Taxable:
Obligations of U.S. Agencies 1,403 778
Other 505 384
Interest on federal funds sold -- 29
Dividends 33 30
----- -----
Total interest and dividend income 3,710 2,842
Interest expense:
Deposits 1,554 909
Other 312 263
----- -----
1,866 1,172
Net interest income 1,844 1,670
Provision for loan losses 25 25
Provision for OREO losses -- 9
----- -----
Net interest income after provision for
loan and OREO losses 1,819 1,636
Other operating revenue:
Deposit and other service charges 173 168
Mortgage origination fees 56 166
Securities gains -- 45
Other 33 66
----- -----
Net interest income and operating revenue 2,081 2,081
Other operating expenses:
Salaries and benefits 754 705
Occupancy expense 145 143
FDIC insurance premiums 102 99
Depreciation 91 99
Advertising and marketing 55 63
Stationery and office supplies 34 33
Foreclosure expense and cost of OREO 30 30
Other operating expenses-other 298 303
----- -----
Total other operating expenses 1,509 1,475
Income before federal and state income taxes 572 606
Provision for federal and state income taxes 202 219
----- -----
Net income $370 $387
===== =====
Earnings per share:
Primary earnings per share $.21 $.22
========= =========
Average number of shares outstanding 1,762,349 1,743,556
========= =========
Fully diluted earnings per share $.21 $.22
========= =========
Average number of shares outstanding 1,762,349 1,743,556
========= =========
4
<PAGE>
Hometown Bancorporation, Inc.
Consolidated Statement of Cash Flows
(thousands of dollars)
Restated
For the three months ended
March 31,
1995 1994
---- ----
Cash Flows from Operating Activities: (unaudited) (unaudited)
Net income $370 $387
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization, net 91 99
Provision for loan losses and OREO losses 25 34
Securities gains -- (45)
Increase in other assets 179 (125)
Decrease in other liabilities (1,659) (1,210)
----- -----
Net cash (used) by operating activities (994) (860)
----- -----
Cash Flows from Investing Activities:
Proceeds from the maturity of investments held
to maturity 1,199 5,781
Purchase of investments held to maturity -- (6,959)
Proceeds from the maturity of investments
available for sale 1,629 7,366
Purchase of investment securities available
for sale (16,910) (20,421)
Proceeds from the sale of investments available
for sale 3,742 6,484
Net (increase) decrease in loans (53) 2,468
Decrease (increase) in OREO 1 (435)
Purchase of capital assets (67) (84)
------ -----
Net cash used in investing activities (10,459) (5,800)
------ -----
Cash Flows from Financing Activities:
Net (decrease) increase in demand deposits, NOW
accounts, money market accounts and
savings accounts (266) 2,537
Net (decrease) increase in certificates of deposit
and other time deposits (142) 540
Increase in FHLBB advances 9,598 --
Exercise of stock options 14 37
----- -----
Net cash provided by financing activities 9,204 3,114
----- -----
Net decrease in cash and cash equivalents (2,249) (3,546)
Cash and cash equivalents at the beginning of
the period 8,549 13,494
----- -----
Cash and cash equivalents at the end of the period $6,300 $9,948
====== ======
5
<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 $370,000 or $.21 per
share and $387,000 or $.22 per share for the three months ended March 31,
1995 and 1994, respectively. The decrease in net income for the first
quarter of 1995 as compared to the first quarter of 1994 was primarily
the result of a decline in mortgage origination fees which offset an
increase in net interest income.
Net Interest Income
-------------------
Net interest income increased $174,000 or 10% from $1,670,000 for
the three months ended March 31, 1994 to $1,844,000 for the three months
ended March 31, 1995. The increase in net interest income was due to a
10% increase in average interest earning assets. Below is the yield
analysis for the three months ended March 31, 1995 and for the year
ended December 31, 1994
6
<PAGE>
HOMETOWN BANCORPORATION, INC.
YIELD ANALYSIS
(000's of dollars)
For the Three Months Ended For the Year Ended
March 31, 1995 December 31, 1994
Average Average
Balance Interest Yield Balance Interest Yield
------- -------- ----- -------- -------- -----
ASSETS
- ------
Interest earning assets:
Loans $ 77,867 $1,769 9.09% $ 85,968 $ 6,912 8.04%
Investment securities 132,780 1,941 5.85% 112,713 5,739 5.09%
Federal funds sold -- -- -- 1,573 51 3.24%
-------------------------------------------------------
Total interest earning
assets 210,647 3,710 7.04% 200,254 12,702 6.34%
-------------------------------------------------------
Non interest earning assets:
Cash and due from banks 7,565 6,952
Allowance for loan
losses (3,011) (3,267)
Other assets 5,857 8,292
------- -------
Total assets $221,058 $212,231
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Interest bearing liabilities:
Savings deposits $ 13,926 83 2.42% $ 15,834 337 2.13%
NOW accounts 24,648 104 1.71% 26,586 387 1.46%
Money market deposits 53,522 539 4.08% 51,578 1,520 2.95%
Time deposits 66,296 828 5.00% 54,860 2,215 4.04%
Other interest bearing
liabilities 25,837 312 4.90% 25,568 1,354 5.30%
------------------------------------------------------
Total interest bearing
liabilities 184,229 1,866 4.05% 174,426 5,813 3.33%
------------------------------------------------------
Non interest bearing
liabilities:
Demand deposits 21,706 20,259
Other liabilities 819 2,367
Stockholders' equity 14,304 15,179
Total liabilities and -------- --------
stockholders' equity $221,058 $212,231
======== ========
------ -------
Net interest income $1,844 $ 6,889
====== =======
Net yield on interest
earning assets 3.50% 3.44%
===== =====
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
7
<PAGE>
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.
The Company recorded a $25,000 provision to the allowance for loan
losses for the three-month periods ended March 31, 1995 and 1994.
The following table illustrates nonperforming assets and allowance for
possible loan loss coverage ratios for the Company at March 31, 1995 and
December 31, 1994.
March 31, December 31,
1995 1994
---- ----
(thousands of dollars)
Nonaccruing loans $1,806 $851
Other real estate owned, net 1,015 1,016
----- -----
Total nonperforming assets $2,821 $1,867
===== =====
Restructured and performing loans $694 $865
===== =====
Nonaccruing loans to gross loans 2.32% 1.09%
Nonperforming assets to total assets 1.27% .87%
Allowance for loan losses $3,021 $3,004
Coverage Ratios:
Allowance for loan losses to gross loans 3.87% 3.85%
Allowance for loan losses to nonperforming 107.05% 160.90%
assets
Had the nonaccruing loans in the table above been current, gross
interest income on these loans for the three months ended March 31, 1995
would have been approximately $41,000. There was no interest income
actually recorded on these loans during 1995.
Other Operating Revenue
-----------------------
For the three months ended March 31, 1995, total other operating
revenue decreased $183,000 or 41% as compared to the three months ended
March 31, 1994. This decrease was due to a $110,000 or 71% decline in
mortgage origination fees from $166,000 for the quarter ended March 31,
1994 to $56,000 for the quarter ended March 31, 1995. The decline in
mortgage activity was primarily due to higher interest rates during the
quarter as compared to the same period in 1994. Investment securities
gains decreased $45,000 or 100% from March 31, 1994 to March 31, 1995.
Other Operating Expenses
------------------------
Total other operating expenses increased $34,000 or 2% from
$1,475,000 for the three months ended March 31, 1994 to $1,509,000 for
the three months ended March 31,
8
<PAGE>
1995. The increase in total other operating expenses during the three
months ended March 31, 1995 is primarily due to increases in salaries and
benefits.
Total other operating expenses as a percentage of average total
assets declined to an annual rate of 2.73% for the three months ended
March 31, 1995 from 2.92% for the three months ended March 31, 1994.
For the three months ended March 31, 1995 salaries and benefits
expense increased $49,000 or 7% versus the three months ended March 31,
1994. 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 $2,000 or 1% for the three months ended
March 31, 1995 as compared to the three months ended March 31, 1994.
This increase is due to scheduled rent increases for the new year.
For the three months ended March 31, 1995, FDIC insurance premiums
increased $3,000 or 3% as compared to the three months ended March 31, 1994.
The increase is due to an increase in deposits during the three months ended
March 31, 1995 versus the three months ended March 31, 1994 offset
by a decline in the percentage premiums paid to the FDIC due to the
Company's strong capital position.
Depreciation expense decreased $8,000 or 8% for the three months
ended March 31, 1995 as compared to the three months ended March 31,
1994. This decrease was due to more assets becoming fully depreciated
during the quarter than were purchased.
For the three months ended March 31, 1995 advertising and marketing
expense decreased $8,000 or 13% from $63,000 for the three months ended
March 31, 1994 to $55,000 for the three months ended March 31, 1995.
The decrease is due to decreased advertising, public relations, and
direct marketing of the Bank's products in the first quarter of 1995;
however, the Company expects to increase the level of advertising and
marketing expense during the last three quarters of 1995.
For the three months ended March 31, 1995, other operating expenses-
other decreased $5,000 or 2% as compared to the three months ended March
31, 1994. This decrease was primarily due to improved operating
efficiency of the Company.
Liquidity and Capital Resources
-------------------------------
Total deposits of the Company decreased $408,000 to $182.3 million
at March 31, 1995 from December 31, 1994 when total deposits were $182.7
million. This decrease was due primarily to lower demand and savings
deposit balances at March 31, 1995.
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 of
Boston ("FHLBB") advances. FHLBB advances increased $9.6 million
from $16.7 million at December 31, 1994 to $26.3 million at March 31,
1995. This increase was used to fund investments at a positive spread
to the Company and to improve the Company's interest rate risk position.
The Company's total capital increased $993,000 from December 31,
1994 to March 31, 1995, and was due to the net income for the quarter of
$370,000, to the reduction of unrealized loss on investments available-
for-sale of $609,000 and the exercise of 3,000 stock options resulting
in $14,000 in additional capital. Illustrated below are the Company's
capital to asset ratios and the corresponding regulatory minimums.
9
<PAGE>
Capital Ratios
March 31, Regulatory
1995 Minimum
--------- ----------
Hometown Bancorporation, Inc.
-----------------------------
Tier one leverage capital ratio 6.78% 4.00%
Risk-based capital ratio 15.54% 8.00%
The following summarizes the Company's investment portfolio by type of
security at March 31, 1995:
Carrying Approximate
Amount Fair Value
-------- -----------
(thousands of dollars)
Investments held to maturity:
U. S. Agency Mortgage-Backed Securities $23,891 $23,631
Obligations of U. S. Government Agencies 10,409 10,138
Other mortgage-backed securities 9,763 9,228
U. S. Treasury Securities 1,011 1,009
------ ------
Total investments held-to-maturity $45,074 $44,006
====== ======
Investments available for sale:
U. S. Agency Mortgage-Backed Securities $63,588 $62,187
Obligations of U. S. Government Agencies 500 484
Other mortgage-backed securities 22,400 21,556
U. S. Treasury Securities 3,070 3,037
FHLBB stock 1,717 1,717
------ ------
Total investments available-for-sale $91,275 $88,981
====== ======
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, 1995, the Company filed no
Current Reports on Form 8-K.
10
<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
11
<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, 1995 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-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 6,300
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 88,981
<INVESTMENTS-CARRYING> 45,074
<INVESTMENTS-MARKET> 44,006
<LOANS> 77,997
<ALLOWANCE> 3,021
<TOTAL-ASSETS> 222,515
<DEPOSITS> 182,323
<SHORT-TERM> 26,279
<LIABILITIES-OTHER> 383
<LONG-TERM> 0
<COMMON> 1,833
0
0
<OTHER-SE> 11,697
<TOTAL-LIABILITIES-AND-EQUITY> 222,515
<INTEREST-LOAN> 1,769
<INTEREST-INVEST> 1,941
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 3,710
<INTEREST-DEPOSIT> 1,554
<INTEREST-EXPENSE> 1,866
<INTEREST-INCOME-NET> 1,844
<LOAN-LOSSES> 25
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 1,509
<INCOME-PRETAX> 572
<INCOME-PRE-EXTRAORDINARY> 370
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 370
<EPS-PRIMARY> 0.21
<EPS-DILUTED> 0.21
<YIELD-ACTUAL> 7.04
<LOANS-NON> 1,806
<LOANS-PAST> 0
<LOANS-TROUBLED> 694
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 3,004
<CHARGE-OFFS> 13
<RECOVERIES> 5
<ALLOWANCE-CLOSE> 3,021
<ALLOWANCE-DOMESTIC> 3,021
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
