<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
--------------------------------------------------
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 0-20960
---------
Hamilton Bancorp Inc.
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
Florida 65-0149935
- --------------------------------------------------------------------------------
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
3750 N.W. 87th Avenue, Miami, Florida 33178
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (305) 717 - 5500
-----------------------------
- -------------------------------------------------------------------------------
Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report.
Indicate by check X 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 No X
----- -----
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Section 12, 13 or 15 (d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes No
----- -----
<PAGE> 2
ITEM 1
PART I. FINANCIAL INFORMATION
HAMILTON BANCORP INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CONDITION
(In thousands)
<TABLE>
<CAPTION>
March 31, December 31,
----------- -----------
1997 1996
----------- -----------
(Unaudited) (Audited)
<S> <C> <C>
ASSETS
CASH AND DEMAND DEPOSITS WITH OTHER BANKS $ 14,111 $ 14,806
FEDERAL FUNDS SOLD 10,000 18,300
--------- ---------
Total cash and cash equivalents 24,111 33,106
INTEREST-EARNING DEPOSITS WITH OTHER BANKS 121,009 80,477
SECURITIES AVAILABLE FOR SALE 22,321 29,020
LOANS-NET 604,417 527,279
DUE FROM CUSTOMERS ON BANKERS ACCEPTANCES 56,037 60,761
DUE FROM CUSTOMERS ON DEFERRED PAYMENT LETTERS OF CREDIT 6,048 7,343
PROPERTY AND EQUIPMENT-NET 3,766 3,460
ACCRUED INTEREST RECEIVABLE 7,835 6,471
GOODWILL-NET 2,139 2,183
OTHER ASSETS 2,800 5,470
--------- ---------
TOTAL $ 850,483 $ 755,570
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
DEPOSITS $ 704,027 $ 638,641
BANKERS ACCEPTANCES OUTSTANDING 56,037 60,761
DEFERRED PAYMENT LETTERS OF CREDIT OUTSTANDING 6,048 7,343
OTHER LIABILITIES 4,220 5,025
--------- ---------
Total liabilities 770,332 711,770
--------- ---------
STOCKHOLDERS' EQUITY:
Preferred stock, non-voting, non-cumulative, 14% maximum dividend rate, par
value $.01 per share, 2,000,000 shares authorized, 101,207 shares issued
and outstanding 0 1
Common stock, $.01 par value, 75,000,000 shares authorized, 5,205,030 shares
issued and outstanding at December 31, 1996 and 9,467,949 shares issued
and outstanding at March 31, 1997 95 52
Capital surplus 50,972 17,317
Retained earnings 29,077 26,432
Net unrealized gain (loss) on securities available for sale, net of taxes 7 (2)
--------- ---------
Total stockholders' equity 80,151 43,800
--------- ---------
TOTAL $ 850,483 $ 755,570
========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
1
<PAGE> 3
HAMILTON BANCORP INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1997 1996
------------ -------------
INTEREST INCOME: (Unaudited)
<S> <C> <C>
Loans, including fees $ 13,191 $ 11,050
Deposits with other banks 1,883 1,078
Securities 293 574
Federal funds sold 228 382
---------- ----------
Total 15,595 13,084
---------- ----------
INTEREST EXPENSE:
Deposits 8,237 6,588
Federal funds purchased 49 0
---------- ----------
Total 8,286 6,588
---------- ----------
NET INTEREST INCOME 7,309 6,496
PROVISION FOR CREDIT LOSSES 748 500
---------- ----------
NET INTEREST INCOME AFTER PROVISION FOR CREDIT
LOSSES 6,561 5,996
---------- ----------
NON-INTEREST INCOME:
Trade finance fees and commissions 2,758 1,901
Capital market fees, net 86 1
Customer service fees 256 643
Other 69 34
---------- ----------
Total 3,169 2,579
---------- ----------
OPERATING EXPENSES:
Employee compensation and benefits 2,703 2,274
Occupancy and equipment 682 721
Other 1,938 1,541
---------- ----------
Total 5,323 4,536
---------- ----------
INCOME BEFORE PROVISION FOR INCOME TAXES 4,407 4,039
PROVISION FOR INCOME TAXES 1,585 1,523
---------- ----------
NET INCOME $ 2,822 $ 2,516
========== ==========
NET INCOME PER COMMON AND COMMON EQUIVALENT SHARES:
PRIMARY $ 0.47 $ 0.46
========== ==========
FULLY DILUTED $ 0.47 $ 0.46
========== ==========
AVERAGE WEIGHTED SHARES OUTSTANDING 5,953,528 5,430,030
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE> 4
HAMILTON BANCORP INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Net
Unrealized
(Loss)
Gain on
Securities
Preferred Stock Common Stock Available Total
---------------- ----------------- Capital Retained for Sale, Stockholders'
Shares Amount Shares Amount Surplus Earnings Net of Taxes Equity
---------------- ----------------- ------- -------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1996 (audited) 101,207 $ 1 5,205,030 $ 52 $17,317 $26,432 $ (2) $43,800
Conversion of preferred stock for
common stock, w/ 6.5 to 1 split (101,207) (1) 466,160 5 (4) -- -- 0
Conversion of warrants with 6.5 to 1 split -- -- 1,396,759 14 (14) -- -- 0
Sale of 2,400,000 shares of common
stock in public offering, net -- -- 2,400,000 24 33,673 -- -- 33,697
Net change in unrealized gain on
securities available for sale, net of
taxes -- -- -- -- -- -- 9 9
Net income for the quarter ended
March 31, 1997 -- -- -- -- -- 2,822 -- 2,822
Cash dividends on preferred stock, net
of withholding taxes -- -- -- -- -- (177) -- (177)
--------- ----- --------- ----- -------- ------- ---- ------
Balance as of March 31, 1997 (unaudited) 0 $ 0 9,467,949 $ 95 $ 50,972 $29,077 $ 7 $80,151
========= ===== ========= ===== ======== ======= ==== =======
</TABLE>
3
<PAGE> 5
HAMILTON BANCORP INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1997 1996
------------ ------------
(Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 2,822 $ 2,516
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 249 276
Provision for credit losses 748 500
Deferred tax provision (benefit) 235 (277)
Proceeds from the sale of bankers acceptances and
loan participations, net of loan participations
purchased 25,325 15,669
Decrease (increase) in accrued interest receivable and other
assets 1,082 (1,250)
Decrease in other liabilities (805) (62)
--------- ---------
Net cash provided by operating activities 29,656 17,372
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in interest-earning deposits with other banks (40,532) (9,532)
Purchase of securities available for sale (12,741) (6,168)
Proceeds from maturities of securities held to maturity 9,976
Proceeds from sales and maturities of securities available
for sale 19,440 0
Increase in loans-net (103,211) (22,245)
Purchases of property and equipment-net (512) (136)
--------- ---------
Net cash used in investing activities (137,556) (28,105)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in deposits-net 65,385 27,853
Net Proceeds from issuance of common stock IPO 33,697 0
Cash dividends on preferred stock (177) (177)
--------- ---------
Net cash provided by financing activities 98,905 27,676
NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS (8,995) 16,943
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE
PERIOD 33,106 46,589
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF THE PERIOD $ 24,111 $ 63,532
========= =========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Interest paid during the quarter $ 8,151 $ 6,497
Income taxes paid during the quarter $ 0 $ 95
</TABLE>
See accompanying notes to consolidated statement.
4
<PAGE> 6
HAMILTON BANCORP AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997
NOTE 1: BASIS OF PRESENTATION
The consolidated statements of condition for Hamilton Bancorp and Subsidiary
(the "Company") as of March 31, 1997 and December 31, 1996, and the related
consolidated statements of income , stockholders' equity and the cash flows for
the three month periods ended March 31, 1997 and 1996 included in the Form 10Q
have been prepared by the Company in conformity with the instructions to Form
10Q and Article 10 of Regulation S-X and, therefore, do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. The statements are unaudited except for the
consolidated statement of condition as of December 31, 1996.
The accounting policies followed for interim financial reporting are consistent
with the accounting policies set forth in Note 1 to the consolidated financial
statements appearing in the Company's registration statement on Form S-1 for the
year ended December 31, 1996 as filed with the Securities and Exchange
Commission.
NOTE 2:
The Company completed its initial public offering of 2,400,000 shares of common
stock on March 31, 1997. In connection with the initial public offering, the
Board amended and restated the articles of incorporation of the Company
authorizing 75,000,000 shares of common stock and 10,000,000 shares of "blank
check" preferred stock. In addition, the Board approved a 6.5 for 1 common stock
split and reorganization of the capital structure of the Company consisting of
(i) the conversion of all outstanding shares of the Company's preferred shares
(Series B and C) into 466,168 shares (post-stock split) of common stock and (ii)
the issuance of an aggregate of 1,396,761 shares (post-stock split) of common
stock for all outstanding warrants to purchase shares of common stock of the
Bank. The Reorganization was consummated in March 1997.
NOTE 3: NEW ACCOUNTING PRONOUNCEMENT
Accounting Change. The Company adopted Statement of Financial Accounting
Standard ("SFAS") No. 125, Accounting for Transfers and Servicing of Financial
Assets and Extinquishments of Liabilities, effective January 1, 1997. This
statement provides consistent guidance for distinguishing transfers of financial
assets (securitizations) that are sales from transfers that are secured
borrowings. The adoption of SFAS No. 125 did not have a material impact on the
Company's financial condition or results of operations.
In February 1997, the Financial Accounting Standards Board issued SFAS No. 128,
Earnings Per Share. This statement is effective for financial statements for
periods ending after December 15, 1997, and changes the method in which earnings
per share will be determined. Adoption of SFAS No. 128 by the Company will not
have a material impact on earnings per share.
NOTE 4: SUBSEQUENT EVENTS
On April 9, 1997 the Company issued 360,000 additional shares of common stock
upon the exercise of the over-allotment option granted to Oppenheimer and
Company, Inc., and Natwest Securities Ltd. as part of the Company's initial
public offering which was completed on March 31, 1997. The net proceeds from the
issuance of these additional shares totaled $5,189,400.
On April 14, 1997, Hamilton Bancorp through its subsidiary opened its seventh
Florida branch located in West Palm Beach, Florida.
5
<PAGE> 7
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
INTRODUCTION
Hamilton Bancorp, Inc. ("Bancorp") is a bank holding company which conducts
operations principally through its 99.8% subsidiary Hamilton Bank, N.A. (the
"Bank"). The Bank is a national bank which specializes in financing foreign
trade between the United States, South and Central America and the Caribbean,
(collectively, the "Region"). The Bank has a network of seven FDIC-insured
branches in Florida, with locations in Miami, Sarasota, Tampa, West Palm Beach
and Winter Haven. Hamilton Bancorp completed its initial public offering on
March 31, 1997 with net proceeds of $34 million.
Throughout this discussion, Bancorp and its subsidiary are collectively
referred to as the "Company".
This Form 10-Q contains certain "forward-looking statements" within the meaning
of Section 21E of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), which represents the Company's expectations or beliefs,
including, but not limited to, statements concerning industry performance and
the Company's operations, performance, financial condition, growth and
strategies. For this purpose, any statements contained in this Prospectus that
are not statements of historical fact may be deemed to be forward-looking
statements. Without limiting the generality of the foregoing, words such as
"may," "will," "expect," "believe," "anticipate," "intend," "could,"
"estimate," or "continue," or the negative or other variations thereof or
comparable terminology are intended to identify forward-looking statements.
These statements by their nature involve substantial risks and uncertainties,
certain of which are beyond the Company's control, and actual results may
differ materially depending on a variety of important factors, including
regional economic conditions, potential political instability, credit risks
collateral-related risks, concentration of cross-border lending activities,
potential impact of changes in interest rates, ability of the Company to
continue its growth strategy, the concentration of deposits, dependence on
management and key personnel and risks associated with competition, supervision
and regulation.
The Company cautions that the factors described above could cause actual
results or outcomes to differ materially from those expressed in any
forward-looking statements of the Company made by or on behalf of the Company.
Any forward-looking statement speaks only as of the date on which such
statement is made, and the Company undertakes no obligation to update any
forward-looking statement or statements to reflect events or circumstances
after the date on which such statement is made or to reflect the occurrence of
unanticipated events. New factors emerge from time to time, and it is not
possible for management to predict all of such factors or the effect that any
such factor may have on the Company's business.
FINANCIAL CONDITION - MARCH 31, 1997 VS. DECEMBER 31, 1996.
Total consolidated assets increased $94.9 million or 12.6%, during the first
three months of 1997, which included an increase of $102.7 million in interest
earning assets offset by a decrease of $7.8 million in non-interest earning
assets. The increase in consolidated assets reflects increases in loans-net of
$77.1 million and an increase of $40.5 million in interest-earning deposits with
other banks. These increases were principally funded by retained earnings,
deposits from the branch network, time deposits from banks and deposits from
other financial institutions, mainly credit unions. The Company opened a branch
in Sarasota during the first quarter, and a branch in West Palm Beach subsequent
to the quarter end that are intended to further support future asset growth. In
addition, the net proceeds of $34 million of the initial public offering
completed on March 31, 1997 will support future growth.
Cash, Demand Deposits with Other Banks and Federal Funds Sold
Cash, demand deposits with other banks and federal funds sold are considered
cash and cash equivalents. Balances of these items fluctuate daily depending on
many factors, which include or relate to the particular banks that are clearing
funds, loan payoffs, deposit gathering and reserve requirements. Cash, demand
deposits with other banks and federal funds sold were $24.1 million at March 31,
1997 compared to $33.1 million at December 31, 1996.
Investment Securities and Interest-Earning Deposits with Other Banks
Interest-earning deposits with other banks increased to $121.0 million at March
31, 1997 from $80.5 million at December 31, 1996. These deposits are placed with
correspondent banks in the Region, generally on a short term basis (less than
365 days), to increase yields and enhance relationships with the correspondent
banks. The level of such deposits has grown as the overall assets of the Company
have increased during the three months ended March 31, 1997. The short term
nature of these deposits allow the Company the flexibility to redeploy the
assets into higher yielding loans which are largely related to the financing of
trade.
Investment securities decreased to $22.3 million at March 31, 1997 from $29.0
million at December 31, 1996. The decrease was a result of maturities of United
States treasury bill obligations which were not renewed. This portfolio
consists primarily of United States treasury bills.
Loans
The Company's loan portfolio increased by $77.1 million or 14.7% during the
first three months of 1997 in relation to the quarter ended December 31, 1996.
This was primarily due to economic stability in the Region resulting in
increased trade activity, as well as the Company's growth, which allowed it to
provide more trade financing. Commercial-domestic loans increased by $101.7
million and banks and other financial institutions - foreign increased by $52.0
million. Details on the loans by type are shown in the table below. At March 31,
1997 approximately 28% of the Company's portfolio consisted of loans to domestic
borrowers and 72% of the Company's portfolio consisted of loans to foreign
borrowers. The Company's loan portfolio is relatively short-term, as
approximately 79.4% of loans at March 31, 1997 were short-term trade finance
loans with average maturities of approximately 180 days. See "Interest Rate
Sensitivity Report".
6
<PAGE> 8
The following table sets forth the loans by type of the Company's loan portfolio
at the dates indicated.
LOANS BY TYPE
(In thousands)
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
---- ----
<S> <C> <C>
Domestic:
Commercial (1) $135,339 $110,322
Acceptances discounted 21,991 23,314
Residential mortgages 11,125 10,610
Installment 424 428
-------- --------
Total domestic $168,879 $144,674
Foreign:
Government and official institutions $ 775 $ 750
Banks and other financial institutions 231,030 129,376
Commercial and industrial (1) 132,723 179,824
Acceptances discounted 79,673 80,935
Other loans 0 0
-------- --------
Subtotal foreign $444,201 $390,885
-------- --------
Total loans $613,080 $535,559
======== ========
</TABLE>
(1) Includes pre-export financing, warehouse receipts and refinancing of
letter of credits.
7
<PAGE> 9
Loans by Country. The following table reflects both the Company's growth and
diversification in financing trade flows between the United States and the
Region. Exposure levels in any given country at the end of each period may be
impacted by the flow of trade between the United States (and to a large extent
Florida) and the given countries, as well as the price of the underlying goods
or commodities being financed. At March 31, 1997 approximately 43.8% in
principal amount of the Company's loans were outstanding to borrowers in five
countries other than the United States: Guatemala (13.0%), Panama (9.3%),
Ecuador (7.3%), El Salvador (7.1%) and Peru (7.1%).
LOANS BY COUNTRY
(Dollars in thousands)
<TABLE>
<CAPTION>
At March 31, 1997 At December 31, 1996
-------------------------- -----------------------------
% of % of
Total Total
Country Amount Loans Amount Loans
------ ----- ------ -----
<S> <C> <C> <C> <C>
United States $168,879 27.55% $144,674 27.01%
Argentina 25,832 4.21 35,241 6.58
Bolivia 12,675 2.07 15,815 2.95
Brazil 26,566 4.33 27,255 5.09
British West Indies 15,675 2.56 14,740 2.75
Dominican Republic 10,569 1.72 9,450 1.76
Ecuador 44,512 7.26 29,799 5.56
El Salvador 43,524 7.10 28,472 5.32
Guatemala 79,629 12.99 79,483 14.84
Honduras 34,970 5.70 24,277 4.53
Jamaica (1) -- -- 10,971 2.05
Panama 57,006 9.30 50,553 9.44
Peru 43,496 7.09 26,658 4.98
Venezuela 14,385 2.35 10,245 1.91
Other (1) 35,362 5.77 27,926 5.23
-------- ------ -------- ------
Total $613,080 100.00% $535,559 100.00%
======== ====== ======== ======
</TABLE>
(1) Other consists of loans to borrowers in countries in which loans did
not exceed 1% of total assets.
8
<PAGE> 10
Total Outstandings by Country. The following table sets forth, at the dates
indicated, the aggregate amount of the Company's crossborder outstandings by
primary credit risk (including cash and demand deposits with other banks,
interest earning deposits with other banks, investment securities, due from
customers on bankers acceptances, due from customers on deferred payment letters
of credit and loans-net) (collectively "Cross-Border Outstandings"), as well as
the percentage of such Cross-Border Outstandings to the Company's total assets
for the periods indicated.
TOTAL CROSS-BORDER OUTSTANDINGS BY COUNTRY
(Dollars in millions)
<TABLE>
<CAPTION>
% of % of
March 31, Total December 31, Total
1997 Assets 1996 Assets
---- ------ ---- ------
<S> <C> <C> <C> <C>
Argentina $ 41 4.8% $ 58 7.7%
Bahamas (1) 18 2.1 -- --
Bolivia 22 2.6 27 3.6
Brazil 45 5.3 36 4.7
British West Indies 12 1.4 11 1.5
Colombia (1) -- -- 6 0.8
Dominican Republic 14 1.7 6 0.8
Ecuador 57 6.7 35 4.6
El Salvador 43 5.1 32 4.2
Guatemala 81 9.5 96 12.7
Honduras 52 6.1 33 4.4
Jamaica 21 2.5 22 2.9
Panama 39 4.6 41 5.4
Peru 47 5.5 26 3.4
Venezuela (1) -- -- 10 1.3
Other (1) 32 3.8 17 2.3
---- ---- ---- ----
Total $524 61.7% $456 60.3%
==== ==== ==== ====
</TABLE>
(1) Other consists of cross-border outstandings to countries in which such
cross-border outstandings did not exceed 0.75% of the Company's total
assets at any of the dates shown.
9
<PAGE> 11
Contingencies
The following table sets forth the total volume and average monthly volume of
the Company's export and import letters of credit for each of the periods
indicated.
CONTINGENCIES - COMMERCIAL LETTERS OF CREDIT
(In thousands)
<TABLE>
<CAPTION>
Quarter Ended March 31, 1997 Year Ended December 31, 1996
---------------------------- ----------------------------
Average Average
Total Monthly Total Monthly
Volume Volume Volume Volume
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Export Letters of Credit (1) $ 78,781 $ 26,260 $369,367 $ 30,781
Import Letters of Credit (1) 78,839 26,279 312,964 26,080
-------- -------- -------- --------
Total $157,620 $ 52,539 $682,331 $ 56,861
======== ======== ======== ========
</TABLE>
(1) Represents certain contingent liabilities not reflected on the
Company's balance sheet.
The following table sets forth the distribution of the Company's contingent
liabilities by country of the applicant and issuing bank for import and export
letters of credit, respectively. As shown by the table, contingent liabilities
increased by 2.4% from December 31, 1996 to March 31, 1997. Individual
fluctuations reflect relative changes in the flow of trade.
CONTINGENT LIABILITIES (1)
(In thousands)
<TABLE>
<CAPTION>
March 31, 1997 December 31, 1996
-------------- -----------------
<S> <C> <C>
Argentina $ 4,322 $ 7,095
Aruba (2) 1,568 --
Bolivia 2,873 4,401
Brazil 4,059 4,770
Dominican Republic 5,493 2,719
Ecuador 3,027 1,858
El Salvador 5,359 5,616
Germany (2) 1,491 --
Guatemala 12,701 13,981
Haiti (2) 2,416 --
Honduras 5,871 8,315
Jamaica 2,999 1,556
Nicaragua 2,483 1,414
Panama 8,333 9,803
Paraguay 3,955 5,105
Peru 3,533 5,864
United States 60,531 55,991
Other (2) 3,820 3,224
-------- --------
Total $134,834 $131,712
======== ========
</TABLE>
(1) Includes export and import letters of credit, standby letters of credit
and letters of indemnity.
(2) Other includes those countries in which contingencies represent less
than 1% of the Company's total contingencies at both of the above
dates.
10
<PAGE> 12
Allowance for Credit Losses. The allowance for credit losses reflects
management's judgment of the level of an allowance adequate to provide for
reasonably foreseeable losses, based upon the following factors: (i) the
economic conditions in those countries in the Region in which the Company
conducts trade finance activities; (ii) the credit condition of its customers
and correspondent banks, as well as the underlying collateral, if any; and (iii)
historical experience.
In addition, although the Company's credit losses have been relatively limited
to date, management believes that the level of the Company's allowance should
reflect the potential for political and economic instability in certain
countries of the Region and the possibility that serious economic difficulties
in a country could adversely affect all of the Company's loans to borrowers in
or doing business with that country.
Determining the appropriate level of the allowance for credit losses requires
management's judgment, including application of the factors described above to
assumptions and estimations made in the context of changing political and
economic conditions in many of the countries of the Region. Accordingly, there
can be no assurance that the Company's current allowance for credit losses will
prove to be adequate in light of future events and developments. At March 31,
1997, the allowance for credit losses was approximately $6.5 million, an
increase of 13.1% from $5.7 million at December 31, 1996.
11
<PAGE> 13
The following tables provides certain information with respect to the Company's
allowance for credit losses, provision for credit losses and chargeoff and
recovery activity for the periods shown. There were no net charge-offs during
the first quarter of 1997 as reflected below and the allowance to total loans
remained consistent in relation to prior periods.
CREDIT LOSS EXPERIENCE
(In thousands)
<TABLE>
<CAPTION>
Quarter Ended Quarter Ended Year Ended
March 31, 1997 December 31, 1996 December 31, 1996
-------------- ----------------- -----------------
<S> <C> <C> <C>
Balance of allowance for credit losses at
beginning of period $ 5,725 $ 5,744 $ 4,450
Charge-offs:
Domestic:
Commercial (69) (616) (951)
Acceptances 0 0 0
Residential 0 0 0
Installment (3) (3) (8)
--------- --------- ---------
Total domestic (72) (619) (959)
Foreign:
Government and official institutions 0 0 0
Banks and other financial institutions 0 0 (678)
Commercial and industrial 0 0 (146)
Acceptances discounted 0 0 0
--------- --------- ---------
Total foreign 0 0 (824)
--------- --------- ---------
Total charge-offs (72) (619) (1,783)
Recoveries:
Domestic
Commercial 76 0 16
Acceptances 0 0 0
Residential 0 0 0
Installment 0 0 2
Foreign 0 0 0
--------- --------- ---------
Total recoveries 76 0 18
--------- --------- ---------
Net recoveries 4 (619) (1,765)
Provision for credit losses 748 600 3,040
--------- --------- ---------
Balance at end of the period $ 6,477 $ 5,725 $ 5,725
--------- --------- ---------
Average loans $ 561,472 $ 550,125 $ 485,758
Total loans $ 613,080 $ 535,559 $ 535,559
Net charge-offs to average loans 0.00% 0.11% 0.36%
Allowance to total loans 1.06% 1.07% 1.07%
</TABLE>
12
<PAGE> 14
The following tables set forth an analysis of the allocation of the allowance
for credit losses by category of loans and the allowance for credit losses
allocated to foreign loans. The allowance is established to cover potential
losses inherent in the portfolio as a whole or is available to cover potential
losses on any of the Company's loans. While the absolute numbers have increased
to reflect the growth in the loan portfolio, the percent of allowance for each
category of loans has remained consistent.
ALLOCATION OF ALLOWANCE FOR CREDIT LOSSES
(In thousands)
<TABLE>
<CAPTION>
At At
March 31, 1997 December 31, 1996
-------------- -----------------
<S> <C> <C>
Allocation of the allowance by category of loans:
Domestic:
Commercial $ 2,377 $ 1,900
Acceptances 246 226
Residential 54 54
Installment 6 6
Overdraft 51 58
-------- --------
Total domestic $ 2,734 $ 2,244
Foreign:
Government and official institutions 0 0
Banks and other financial institutions 1,406 2,112
Commercial and industrial 1,755 920
Acceptances discounted 582 449
-------- --------
Total foreign $ 3,743 $ 3,481
Total $ 6,477 $ 5,725
======== ========
Percent of loans in each category to total loans:
Domestic:
Commercial 21.0% 20.1%
Acceptances 3.6% 4.4%
Residential 1.8% 2.0%
Installment 0.1% 0.1%
Overdraft 1.1% 0.4%
-------- --------
Total domestic 27.6% 27.0%
Foreign:
Government and official institutions 0.1% 0.1%
Banks and other financial institutions 37.7% 24.2%
Commercial and industrial 21.6% 33.6%
Acceptances discounted 13.0% 15.1%
-------- --------
Total foreign 72.4% 73.0%
Total 100.0% 100.0%
======== ========
</TABLE>
ANALYSIS OF ALLOWANCE FOR CREDIT LOSSES ALLOCATED TO FOREIGN LOANS
(In thousands)
<TABLE>
<CAPTION>
At At
March 31, 1997 December 31, 1996
-------------- -----------------
<S> <C> <C>
Balance, beginning of year $ 3,481 $ 3,380
Provision for credit losses 262 925
Net charge-offs (0) (824)
------- -------
Balance, end of year $ 3,743 $ 3,481
======= =======
</TABLE>
13
<PAGE> 15
The Company does not have a rigid chargeoff policy but instead charges off loans
on a case-by-case basis as determined by management and approved by the Board of
Directors. In some instances, loans may remain in the nonaccrual category for a
period of time during which the borrower and the Company negotiated restructured
repayment terms.
The Company attributes its favorable asset quality to the short-term nature of
its loan portfolio, the composition of its borrower base, the importance that
borrowers in the Region attach to maintaining their continuing access to
financing for foreign trade and to the Company's loan underwriting policies.
The Company accounts for impaired loans in accordance with Financial Accounting
Standards ("SFAS") No. 114, Accounting by Creditors for Impairment of a Loan.
Under these standards, individually identified impaired loans are measured based
on the present value of payments expected to be received, using the historical
effective loan rate as the discount rate. Alternatively, measurement may also be
based on observable market prices, or for loans that are solely dependent on the
collateral for repayment, measurement may be based on the fair value of the
collateral. The Company evaluates commercial loans individually for impairment,
while groups of smaller-balance homogeneous loans (generally residential
mortgage and installment loans) are collectively evaluated for impairment.
The following tables sets forth information regarding the Company's
nonperforming loans at the dates indicated. There was a modest decrease in
nonperforming loans from December 31, 1996 to March 31, 1997. The ratios of
total nonperforming loans to total loans and to total assets has decreased as
the loans and assets portfolio continues to grow and the nonperforming assets
remain relatively consistent.
<TABLE>
<CAPTION>
Nonperforming Loans
(In thousands)
March 31, March 31, December 31,
1997 1996 1996
-------- -------- ------------
<S> <C> <C> <C>
Domestic:
Non accrual $2,962 $1,976 $3,087
Past due over 90 days and accruing 0 0 0
------ ------ ------
Total domestic nonperforming loans $2,962 $1,976 $3,087
====== ====== ======
Foreign
Non accrual $1,822 $2,262 $1,654
Past due over 90 days and accruing 0 0 112
------ ------ ------
Total foreign nonperforming loans $1,822 $2,262 $1,766
====== ====== ======
Total nonperforming loans $4,784 $4,238 $4,853
====== ====== ======
Total nonperforming loans to total loans 0.78% 0.99% 0.91%
Total nonperforming assets to total assets 0.56% 0.66% 0.64%
</TABLE>
At December 31, 1996, and March 31, 1996 and 1997 the Company had no nonaccruing
investment securities.
Due from Customers on Bankers' Acceptances and Deferred Payment Letters of
Credit.
Due from customers on bankers' acceptances and deferred payment letters of
credit were $56.0 million and $6.0 million, respectively, at March 31, 1997,
compared to $60.8 million and $7.3 million, respectively, at December 31, 1996.
These assets represent a customers liability to the Company while the Company's
corresponding liability to third parties is reflected on the balance sheet as
"Bankers Acceptances Outstanding" and "Deferred Payment Letters of Credit
Outstanding."
14
<PAGE> 16
Deposits
Total deposits were $704.0 million at March 31, 1997, compared to $638.6 million
at December 31, 1996 and $532.9. Deposits have grown in order to fund asset
growth.
The following table provides an analysis of the Company's average deposits for
the quarters indicated.
DEPOSITS
(In thousands)
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
-------- --------
<S> <C> <C>
Non-interest bearing demand deposits $ 58,018 $ 54,875
NOW and money market accounts 63,246 60,795
Savings deposits 4,567 7,172
Time deposits 426,526 434,276
Time deposits from banks
(International Banking Facilities) 110,949 88,267
-------- --------
Total deposits $663,306 $645,385
======== ========
</TABLE>
The increases in deposits during the three months ended March 31, 1997 was
primarily in time deposits from banks due to the increased activities with such
banks.
The primary sources of the Company's domestic time deposits are deposits from
its branches located in Florida. The Company has three Bank branches in Miami,
Florida, one each in Tampa, Winter Haven, Sarasota, and West Palm Beach, the
latter which was opened during April 1997. Although the Company is not currently
actively pursuing new branch sites, it may consider other potential branch sites
that are consistent with the Company's requirements.
During the quarter the Company also increased deposits from other financial
institutions, mainly credit unions, which are usually in denominations of
$100,000. In addition, the Company is also obtaining deposits from the State of
Florida as the Bank is a qualified public depository pursuant to Florida law.
The following table indicates the maturities and amounts of certificates of
deposit and other time deposits issued in denominations of $100,000 or more as
of March 31, 1997:
MATURITIES OF AND AMOUNTS OF CERTIFICATES OF DEPOSITS
AND OTHER TIME DEPOSITS OVER $100,000
(In thousands)
<TABLE>
<CAPTION>
Certificates Other Time
of Deposit Deposits
$100,000 or More $100,000 or More Total
---------------- ---------------- ------------
<S> <C> <C> <C>
Three Months or less $ 68,877 $41,412 $110,289
Over 3 through 6 months 53,376 24,425 77,801
Over 6 through 12 months 69,232 2,630 71,862
Over 12 months 26,832 0 26,832
-------- ------- --------
Total $218,317 $68,467 $286,784
======== ======= ========
</TABLE>
15
<PAGE> 17
Stockholders' Equity
The Company's stockholders' equity at March 31, 1997, was $80.2 million compared
to $43.8 million at December 31, 1996. On the last day of the first quarter the
Company completed its initial public offering by issuing 2.4 million shares and
thereby increasing stockholders' equity by $33.7 million after the underwriters'
discount and expenses related to the offering. Stockholders equity also
increased by $2.8 million, representing the net income for the first quarter of
1997.
Interest Rate Sensitivity
The following table presents the projected maturities or interest rate
adjustments of the Company's earning assets and interest-bearing funding sources
based upon the contractual maturities or adjustment dates at March 31, 1997. The
interest-earning assets and interest-bearing liabilities of the Company and the
related interest rate sensitivity gap given in the following table may not be
reflective of positions in subsequent periods.
INTEREST RATE SENSITIVITY REPORT
(Dollars in thousands)
<TABLE>
<CAPTION>
MARCH 31, 1997
=========================================================================
0 TO 30 31 TO 90 91 TO 180 181 TO 365 1 TO 5 OVER 5
DAYS DAYS DAYS DAYS YEARS YEARS TOTAL
=========================================================================
<S> <C> <C> <C> <C> <C> <C>
EARNING ASSETS:
LOANS $ 130,196 $179,275 $177,479 $ 33,542 $54,535 $ 38,053 $613,080
FEDERAL FUNDS SOLD 10,000 0 0 0 0 0 10,000
INVESTMENT SECURITIES 3,993 3,119 10,761 2,894 0 1,554 22,321
INTEREST EARNING DEPOSITS WITH OTHER BANKS 26,000 21,357 44,037 29,615 0 0 121,009
------------------------------------------- ----------------- --------
TOTAL $ 170,189 $203,751 $232,277 $ 66,051 $54,535 $ 39,607 $766,410
------------------------------------------- ----------------- --------
FUNDING SOURCES:
SAVINGS AND TRANSACTION DEPOSITS 38,278 28,685 0 0 0 0 66,963
TIME DEPOSITS OF $100 OR MORE 41,839 38,462 53,276 69,132 26,727 106 229,542
TIME DEPOSITS UNDER $100 8,741 31,104 110,499 87,913 11,169 84 249,510
OTHER TIME DEPOSITS 41,477 24,425 1,804 935 0 0 68,641
FUNDS OVERNIGHT 44,675 0 0 0 0 0 44,675
------------------------------------------- ----------------- --------
TOTAL $ 175,010 $122,676 $165,579 $ 157,980 $37,896 $ 190 $659,331
=========================================== ================= ========
INTEREST SENSITIVITY GAP $ (4,821) $ 81,075 $ 66,698 $ (91,929) $16,639 $ 39,417 $107,079
=========================================== ================= ========
CUMULATIVE GAP $ (4,821) $ 76,254 $142,952 $ 51,023 $67,662 $107,079
=========================================== =================
CUMULATIVE GAP AS A PERCENTAGE OF TOTAL EARNING ASSETS -.63% 9.95% 18.65% 6.66% 8.83% 13.97%
=========================================== =================
</TABLE>
16
<PAGE> 18
Liquidity
The Company's principal sources of liquidity and funding are its diverse deposit
base and the sales of bankers' acceptances as well as loan participations. The
level and maturity of deposits necessary to support the Company's lending and
investment activities is determined through monitoring loan demand and through
its asset/liability management process. Considerations in managing the Company's
liquidity position include scheduled cash flows from existing assets,
contingencies and liabilities, as well as projected liquidity needs arising from
anticipated extensions of credit. Furthermore, the liquidity position is
monitored daily by management to maintain a level of liquidity conducive to
efficient operations and is continuously evaluated as part of the
asset/liability management process.
Historically, the Company has increased its level of deposits to allow for its
planned asset growth. Customer deposits have increased through the branch
network, as well as, deposits related to the trade activity. The level of
deposits is also influenced by general interest rates, economic conditions and
competition, among other things.
The majority of the Company's deposits are short-term and closely match the
short-term nature of the Company's assets. See "--Interest Rate Sensitivity". At
March 31, 1997, interest-earning assets maturing within six months were $606.2
million, representing 79% of total earning assets. The short-term nature of the
loan portfolio and the fact that a portion of the loan portfolio consists of
bankers' acceptances provides additional liquidity to the Company. Liquid assets
at March 31, 1997 were $167.4 million, 19.7% of total assets, and consisted of
cash and cash equivalents, due from banks-time and United States treasury bills.
At March 31, 1997, the Company had been advised of $77 million in available
interbank funding.
Capital Resources
The Company and the Bank are subject to various regulatory capital requirements
administered by the federal banking agencies. Failure to meet minimum capital
requirements can result in certain mandatory and possibly additional
discretionary actions by regulators that, if undertaken, could have a direct
material effect on the Company's financial statements. The regulations require
the Company and the Bank to meet specific capital adequacy guidelines that
involve quantitative measures of their assets, liabilities, and certain
off-balance sheet items as calculated under regulatory accounting practices.
The Company's and the Bank's capital classification is also subject to
qualitative judgments by the regulators about interest rate risk, concentration
of credit risk and other factors.
Quantitative measures established by regulation to ensure capital adequacy
require the Company and the Bank to maintain minimum amounts and ratios (set
forth in the table below) of Tier I capital (as defined in the regulations) to
total averages assets (as defined), and minimum ratios of Tier I and total
capital (as defined) to risk-weighted assets (as defined). The Company's and the
Bank's actual capital amounts and ratios are also presented in the table.
As indicated in the stockholder's equity section above the Company completed its
initial public offering in March 31, 1997 which resulted in significantly higher
capital ratios being reported for the first quarter of 1997. These ratios are
expected to decline as assets begin to grow.
17
<PAGE> 19
COMPANY CAPITAL RATIOS
(Dollars in thousands)
<TABLE>
<CAPTION>
March 31, March 31, December 31, December 31,
1997 1997 1996 1996
-------- -------- ----------- -----------
<S> <C> <C> <C> <C>
Tier 1 risk-weighted capital:
Actual $78,011 17.16% $41,634 10.2%
Minimum $18,103 4.00% $16,329 4.0%
Total risk-weighted capital:
Actual $83,711 18.41% $46,744 11.5%
Minimum $36,206 8.00% $32,657 8.0%
Leverage:
Actual $78,011 10.06% $41,634 5.8%
Minimum $23,272 3.00% $21,713 3.0%
</TABLE>
BANK CAPITAL RATIOS
(Dollars in thousands)
<TABLE>
<CAPTION>
March 31, March 31, December 31, December 31,
1997 1997 1996 1996
--------- -------- ------------ ------------
<S> <C> <C> <C> <C>
Tier 1 risk-weighted capital:
Actual $74,282 16.32% $41,351 10.1%
Minimum to be well capitalized
$27,316 6.00% $24,534 6.0%
Minimum to be adequately capitalized
$18,211 4.00% $16,356 4.0%
Total risk-weighted capital:
Actual $79,982 17.57% $46,470 11.4%
Minimum to be well capitalized
$45,527 10.00% $40,890 10.0%
Minimum to be adequately capitalized
$36,422 8.00% $32,712 8.0%
Leverage:
Actual $74,282 9.62% $41,351 5.7%
Minimum to be well capitalized
$38,617 5.00% $36,261 5.0%
Minimum to be adequately capitalized
$30,893 4.00% $29,009 4.0%
</TABLE>
RESULTS OF OPERATIONS
Net Interest Income
Net interest income is the difference between interest and fees earned on loans
and investments and interest paid on deposits and other sources of funds, and it
constitutes the Company's principal source of income. Net interest income
increased to $7.3 million for the three months ended March 31, 1997 from $6.5
million for the same period in 1996, a 12.3% increase. The primary reason for
the increase was an increase in average earning assets offset, to some extent,
by a decrease in net interest margin. Average earning assets increased to $691.6
million for the quarter ended March 31, 1997 from $531.9 million for the same
period in 1996, a 30.0% increase. Average loans and acceptances discounted
increased to $546.1 million for the quarter ended March 31, 1997 from $411.9
million for the same period in 1996, a 30.7% increase, while average interest
earning deposits with other banks increased to $91.5 million for the quarter
ended March 31, 1997 from $41.2 million for the same period in 1996, a 121.8%
increase. Net interest margin decreased to 4.23% for the quarter ended March 31,
1997 from 4.83% for the same period in 1996, a 12.4% decrease, although the
margin increased slightly when compared to the previous quarter margin of 4.12%.
The primary reasons for this decrease were that (i) loan yields relative to
reference rates decreased in certain countries in the Region as a result of
perceived economic stability and lower credit risk, and (ii) loans to larger
corporate and bank customers, which command more competitive pricing, increased
as a percentage of total loans, and was offset by a decrease in the cost of
funds as a result of a decline in the rates paid on certificates of deposit and
time deposits from banks.
Interest income increased to $15.6 million for the three months ended March 31,
1997 from $13.1 million for the same period in 1996, a 19.2% increase,
reflecting an increase in loans in the Region, partially offset by a decrease in
prevailing interest rates and a tightening of loan spreads in the Region, as
discussed above. Interest expense increased to $8.3 million for the quarter
ended March 31, 1997 from $6.6 million for the same period in 1996, a 25.8%
increase, reflecting the additional deposits to fund asset growth. Average
interest-
18
<PAGE> 20
bearing deposits increased to $605.3 million for the quarter ended March 31,
1997 from $468.5 million for the same period in 1996, a 29.2% increase. The
growth in deposits was primarily a result of the Bank seeking new deposits of
such types to fund asset growth. The Company's time deposits from banks also
increased to $110.9 million for the quarter ended March 31, 1997 from $87.0
million for the same period in 1996.
Provision for Credit Losses
The Company's provision for credit-losses increased to $.8 million for the
quarter ended March 31, 1997 from $.5 million for the same period in 1996, a
49.6% increase. Net loan chargeoffs during the first quarter of 1997 amounted to
$76 thousand compared to 619 thousand for the fourth quarter of 1996. The
allowance for credit losses was increased to $6.5 million at March 31, 1997 from
$5.0 million for the same period in 1996, a 30.0% increase. The increase was
primarily to support the growth of the Company's loan portfolio. The ratio of
the allowance for credit losses to total loans increased slightly to
approximately 1.06% at March 31, 1997 from approximately .99% at March 31, 1996.
Non-Interest Income
Non-interest income increased to approximately $3.2 million for the quarter
ended March 31, 1997 from $2.6 million for the same period in 1996, a 22.8%
increase. Trade finance fees and commissions increased by $858,000 due largely
to higher letters of credit volume. In addition, the Company had more lending
facility fees charged during the first quarter of 1997 compared to 1996. Capital
market fees increased by $86,000 as a result of a capital market transaction.
Customer service fees decreased by $386,000 as a result of lower overdrafts
experienced in the period.
The following table sets forth details regarding the components of non-interest
income for the periods indicated.
NON-INTEREST INCOME
(Dollars in thousands)
<TABLE>
<CAPTION>
For the Quarter Ended March 31,
-------------------------------
1996 to 1997
1996 % Change 1997
---- -------- ----
<S> <C> <C> <C>
Trade finance fees and commissions $1,901 45.1% $2,758
Capital market fees, net 1 8500 86
Customer service fees 643 (60.2) 256
Net gain (loss) on sale of securities AFS 0 0 0
Other 34 103.9 69
------ ----- ------
Total non-interest income $2,579 22.9% $3,169
====== ===== ======
</TABLE>
Operating Expenses
Operating expenses increased to $5.3 million for the three months ended March
31, 1997 from $4.5 million for the same period in 1996, a 17.4% increase.
Employee compensation and benefits increased to $2.7 million for the quarter
ended March 31, 1997 from $2.3 million for the same period in 1996, an 18.9%
increase. This was primarily due to an increase in the number of employees to
237 at March 31, 1997 from 208 for the same period in 1996, as well as salary
increases for existing personnel. Occupancy expenses decreased to $682 thousand
for the three months ended March 31, 1997 from $721 thousand for the same period
in 1996, a 5.4% decrease as a result of reduced maintenance and computer rental
expense during the period under review. Other expenses increased to $1.6 million
for the quarter ended March 31, 1997 from $1.2 million for the same period in
1996, primarily due to a loss realized in liquidating inventory which was
acquired in 1996 as a result of a default on a loan. Directors fees decreased by
13.2% for the period under review. Insurance and examination fees (FDIC and OCC)
increased to $114 thousand for the three months ended March 31, 1997 from $36
thousand for the same period in 1996. As a result of the enactment of the
Federal Deposit Insurance Funds Act of 1996 on September 30, 1996, commercial
banks are now required to pay part of the interest on the Financing Corporation
("FICO") bonds issued to deal with the savings and loan crisis of the late 1980.
The Company's efficiency ratio remains favorably below the industry average at
50.8%.
19
<PAGE> 21
The following table sets forth detail regarding the components of operating
expenses for the periods indicated.
OPERATING EXPENSES
(Dollars in thousands)
<TABLE>
<CAPTION>
For the Quarter Ended March 31,
1996 to 1997
1996 % Change 1997
---- -------- ----
<S> <C> <C> <C>
Employee compensation and benefits $2,274 18.9% $2,703
Occupancy and equipment 721 (5.4) 682
Other operating expenses 1,240 28.6 1,594
Directors' fees 265 (13.2) 230
Insurance and examination fees (FDIC and
OCC) 36 216.7 114
------ ----- ------
Total operating expenses $4,536 17.4% $5,323
====== ===== ======
</TABLE>
20
<PAGE> 22
HAMILTON BANCORP, INC.
YIELDS EARNED AND RATES PAID
FOR THE QUARTER ENDED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR QUARTER ENDED FOR QUARTER ENDED
MARCH 31, 1997 MARCH 31, 1996
---------------------------- -------------------------------
AVERAGE REVENUE/ YIELD/ AVERAGE REVENUE/ YIELD/
BALANCE EXPENSE RATE BALANCE EXPENSE RATE
============================ ===============================
TOTAL EARNING ASSETS (Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
LOANS:
Commerical loans $443,575 $10,300 (1) 9.29% $319,185 $ 8,155 (1) 10.11%
Mortgage loans 10,881 226 8.31% 11,441 242 8.37%
Installment loans 436 10 9.17% 351 8 9.02%
Acceptances Discounted 102,533 2,476 9.66% 92,705 2,385 10.18%
Overdraft 4,047 179 17.65% 5,824 260 17.65%
-------- ------- ----- -------- ------- -----
TOTAL LOANS (1) $561,472 $13,191 9.40% $429,506 $11,050 10.18%
Investments 21,013 293 5.60% 33,007 574 6.88%
Federal funds sold 17,677 228 5.16% 28,183 382 5.36%
Time Deposit with Banks 91,456 1,883 8.24% 41,229 1,078 10.35%
-------- ------- ----- -------- ------- -----
Total Investments and Time Deposit
with Banks $130,146 $ 2,404 7.39% $102,419 $ 2,034 7.86%
Total Interest Earning assets $691,618 $15,595 9.02% $531,925 $13,084 9.73%
-------- ------- ----- -------- ------- -----
Total non interest earning assets 84,129 93,089
-------- --------
TOTAL ASSETS $775,747 $625,014
======== ========
INTEREST BEARING LIABILITIES
DEPOSITS:
Super NOW, NOW 15,543 87 2.24% 15,595 129 3.27%
Money Market 44,170 517 4.68% 37,083 459 4.90%
Presidential Market 3,533 25 2.83% 3,319 34 4.05%
Super Savings, Savings 4,567 35 3.07% 9,899 79 3.16%
Certificate of Deposits (including IRA) 426,461 6,160 5.78% 315,545 4,727 5.93%
Time Deposits from Banks (IBF) 110,949 1,413 5.09% 87,008 1,159 5.27%
Collateral Accounts 65 0 0.00% 87 1 4.55%
-------- ------- ----- -------- ------- -----
TOTAL DEPOSITS $605,288 $ 8,237 5.44% $468,536 $ 6,588 5.56%
Federal Funds Purchased 3,679 49 5.44% 0 0 0.00%
Other Borrowings 0 0 0.00% 0 0 0.00%
-------- ------- ----- -------- ------- -----
Total interest bearing liabilities $608,967 $ 8,286 5.44% $468,536 $ 6,588 5.56%
-------- ------- ----- -------- ------- -----
Non interest bearing liabilities
Demand Deposits 58,018 48,064
Other Liabilities 64,097 72,713
-------- --------
Total non interest bearing liabilities $122,115 $120,777
Stockholders equity 44,665 35,701
-------- --------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $775,747 $625,014
======== ========
NET INTEREST INCOME / NET INTEREST SPREAD $ 7,309 3.58% $ 6,496 4.17%
======= ===== ======= ======
MARGIN
INTEREST INCOME / INTEREST EARNING ASSETS 9.02% 9.73%
INTEREST EXPENSE / INTEREST EARNING ASSETS 4.79% 4.90%
------ ------
NET INTEREST MARGIN 4.23% 4.83%
====== ======
</TABLE>
(1) Interest income for calculating yields includes $98 thousand and $57
thousand of loan fees for the quarter ended March 31, 1997 and March 31, 1996,
respectively.
21
<PAGE> 23
YIELDS EARNED - DOMESTIC AND FOREIGN EARNING ASSETS
(dollars in thousands)
<TABLE>
<CAPTION>
March 31, 1997 March 31, 1996
----------------------------------------------------------------------------
% of Total % of Total
Average Average Average Average Averag Average
Balance Interest Yield/Rate Assets Balance Interest Yield/Rate Assets
--------- ------- ---------- ----- --------- ------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Interest-earning assets
Loans:
Domestic $156,791 $3,957 (1) 10.1% 20.2% $150,457 $ 4,381 11.5%(1) 24.1%
Foreign 404,681 9,234 9.2% 52.2% 279,049 6,669 9.5% 44.7%
-------- ------ ---- ---- -------- ------- ---- -----
Total loans 561,472 13,191 9.4% 72.4% 429,506 11,050 10.2% 68.8%
Investments and time deposits with banks
Domestic 37,962 931 9.8% 4.9% 51,482 713 5.5% 8.2%
Foreign 92,184 1,473 6.4% 11.9% 50,937 1,321 10.3% 8.2%
-------- ------ ---- ---- -------- ------- ---- -----
Total investments and time deposits with banks 130,146 2,404 7.4% 16.8% 102,419 2,034 7.9% 16.4%
Total interest-earning assets $691,618 15,595 9.0% 89.2% $531,925 13,084 9.7% 85.2%
======== ====== === ======== ======= ===== =====
Total non-interest earning assets 84,129 10.8% 93,089 14.8%
-------- ---- -------- -----
Total assets $775,747 100.0% $625,014 100.0%
======== ===== ======== =====
</TABLE>
(1) Interest income for calculating yields includes $98 thousand and $57
thousand of loan fees for the quarters ended March 31, 1997 and March 31,
1996, respectively.
22
<PAGE> 24
PART II
OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES.
(a) In 1994, the Company issued an aggregate of 60,206.5 shares of
Series B and 41,000 shares of Series C Fixed Rate Non-Voting,
Non-Cumulative, Perpetual Preferred Stock (collectively, the "Preferred
Stock"). The Preferred Stock had a stated value of $50.00 per share
(the "Stated Value") and entitled each holder thereof to receive
quarterly dividends at an annual rate of 14% of such Stated Value.
Pursuant to the applicable Certificates of Designation respecting the
Preferred Stock, the Company had the right, commencing five years from
the date of issuance, to call and redeem all or part of the outstanding
shares of Preferred Stock at 125% of the Stated Value. The Certificates
of Designation also authorized the holders thereof to convert all or
some of their shares of Preferred Stock or require the Company to
convert all of the shares of Preferred Stock into shares of the
Company's Common Stock upon the occurrence of certain events. Pursuant
to these rights and obligations, the Preferred Stock would be converted
into a number of shares of Common Stock determined by dividing (a) the
aggregate Stated Value of the Preferred Stock held by each shareholder
by (b) the product of (1) 1.85 and (2) the adjusted per share equity
value of the Common Stock. In January 1997 the holders of the
Preferred Stock consented to a provision in the Certificates of
Designation authorizing the Company to redeem their shares of
Preferred Stock upon five days notice at the Company's discretion.
(c) In January 1997, the Company took action to reorganize its
capital structure by entering into definitive agreements with the 15
holders of warrants to purchase shares of common stock of Hamilton
Bank, N.A. to cancel all the outstanding warrants and issue in lieu
thereof an aggregate of 1,396,761 shares of Common Stock of the Company
(post-6.5 to 1 stock split). The reorganization was consummated on
March 14, 1997. Such shares of Common Stock were issued in accordance
with the exemption provided by Section 4(2) of the Act in a transaction
not involving a public offering.
Also in connection with the reorganization, the Company issued
an aggregate of 277,316 shares (post-6.5 to 1 stock split) and 188,852
shares (post-6.5 to 1 stock split) of Common Stock of the Company upon
conversion of outstanding shares of the Company's Series B Preferred
Stock and Series C Preferred Stock, respectively. These shares were
issued in accordance with the exemption provided by Section 3(a)(9) of
the Act as an exchange transaction with the Company's existing security
holders where no commission or other remuneration was paid or given
directly or indirectly for soliciting such exchange.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
At a special meeting of Shareholders held on January 21, 1997
(prior to the Company becoming a reporting company) the shareholders
adopted Amended and Restated Articles of Incorporation and took action
to reorganize the Company's capital structure by approving the issuance
of 214,886 shares (pre-6.5 to 1 stock split) of the Company's Common
Stock in lieu of the cancellation of all outstanding warrants to
purchase common stock of Hamilton Bank, N.A. and adopting amendments to
the Certificates of Designation,
23
<PAGE> 25
Preferences, Rights and Limitations with respect to the Corporation's
Series B and Series C 14% Fixed Rate Non-Voting, Non-Cumulative,
Perpetual Preferred Stock to facilitate the conversion of such
Preferred Stock into 71,717 shares (pre-6.5 to 1 stock split) of the
Company's Common Stock. All of the proposals were adopted unanimously
by the 735,960 (Pre-split) shares present at the meeting, representing
91.9% of the then outstanding shares of Common Stock of the Company.
Prior to the meeting, the holders of all of the outstanding shares of
the Preferred Stock consented in writing to the amendments to the
applicable Certificates of Designation respecting the Preferred Stock.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 11 - Calculation of Earnings Per Share
(b) No Current Reports on Form 8-K were filed by the Company during the
quarter ended March 31, 1997.
Item 27. Financial Data Schedule
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 thereunto duly authorized.
Date: May __, 1997 Hamilton Bancorp Inc.
-----------------------------------------------
Eduardo A. Masferrer,
Chairman, President and Chief Executive Officer
-----------------------------------------------
Maria Ferrer-Diaz,
Senior Vice President - Finance and Principal
Financial and Chief Accounting Officer
24
<PAGE> 1
Exhibit 11
HAMILTON BANCORP, INC. AND SUBSIDIARY
CALCULATION OF EARNINGS PER SHARE
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------------
1997 1996
---------- ----------
<S> <C> <C>
Primary
Weighted average number of
common shares outstanding 5,716,915 5,205,030
Common equivalent shares
outstanding - options 236,613 225,000
---------- ----------
Total common and common
equivalent shares outstanding 5,953,528 5,430,030
Net income $ 2,822 $ 2,517
Primary earnings per share $ 0.47 $ 0.46
Fully diluted:
Weighted average number of
common shares outstanding 5,716,915 5,205,030
Common equivalent shares
outstanding - options 236,613 225,000
---------- ----------
Total common and common
equivalent shares outstanding 5,953,528 5,430,030
Net income $ 2,822 $ 2,517
Fully diluted earnings per share $ 0.47 $ 0.46
</TABLE>
25
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 14,111
<INT-BEARING-DEPOSITS> 121,009
<FED-FUNDS-SOLD> 10,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 22,321
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 610,894
<ALLOWANCE> 6,477
<TOTAL-ASSETS> 850,483
<DEPOSITS> 704,027
<SHORT-TERM> 0
<LIABILITIES-OTHER> 4,220
<LONG-TERM> 0
0
0
<COMMON> 95
<OTHER-SE> 80,056
<TOTAL-LIABILITIES-AND-EQUITY> 850,483
<INTEREST-LOAN> 13,191
<INTEREST-INVEST> 293
<INTEREST-OTHER> 2,111
<INTEREST-TOTAL> 15,595
<INTEREST-DEPOSIT> 8,237
<INTEREST-EXPENSE> 8,286
<INTEREST-INCOME-NET> 7,309
<LOAN-LOSSES> 748
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 5,323
<INCOME-PRETAX> 4,407
<INCOME-PRE-EXTRAORDINARY> 4,407
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,822
<EPS-PRIMARY> 0.47
<EPS-DILUTED> 0.47
<YIELD-ACTUAL> 9.02
<LOANS-NON> 4,784
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 5,725
<CHARGE-OFFS> 72
<RECOVERIES> 76
<ALLOWANCE-CLOSE> 6,477
<ALLOWANCE-DOMESTIC> 2,734
<ALLOWANCE-FOREIGN> 3,743
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
