SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20594
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended December 31, 1997 Commission File No. 0-22376
HOME BANCORP
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(exact name of registrant as specified in its charter)
Indiana 35-1906765
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(State or other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
132 East Berry Street, P.O. Box 989, Fort Wayne, Indiana 46801-0989
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 219-422-3502
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Former name, former address and former fiscal year,
if changed since last report.
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 [ ]
As of December 31, 1997, there were 3,381,305 shares of common stock issued and
2,385,325 shares outstanding.
<PAGE>
HOME BANCORP
Fort Wayne, Indiana
FORM 10-Q
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements of Home Bancorp
Consolidated Balance Sheets as of December 31, 1997
and September 30, 1997
Consolidated Statements of Income for the three months
ended December 31, 1997 and 1996
Consolidated Statements of Cash Flows for the
three months ended December 31, 1997 and 1996
Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
PART II. OTHER INFORMATION
SIGNATURES
<PAGE>
HOME BANCORP
And wholly owned subsidiary
HOME LOAN BANK fsb
Fort Wayne, Indiana
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
AS OF December 31, 1997 (unaudited) and SEPTEMBER 30, 1997
(unaudited)
ASSETS December 31, 1997 September 30, 1997
---------------- -------------
<S> <C> <C>
Cash on hand and in other banks ........................... $ 1,737,944 $ 1,282,926
Interest earning deposits in other banks .................. 5,568,848 8,162,372
Federal funds sold ........................................ 5,300,000 7,000,000
------------- -------------
Cash and cash equivalents ................................. 12,606,792 16,445,298
Investment securities available for sale .................. 13,145,687 11,126,562
Investment securities held to maturity
(Market value $23,190,625; $27,213,750) .............. 22,984,130 26,954,555
Loans receivable, net
(Allowance for loan losses $1,388,589; $1,387,989) ... 294,346,991 283,986,922
Federal Home Loan Bank stock .............................. 2,449,100 2,449,100
Accrued interest receivable ............................... 2,028,215 2,049,564
Bank premises & equipment ................................. 2,657,945 2,710,492
Intangible assets ......................................... -- --
Foreclosed real estate, net ............................... -- --
Deferred & current income taxes ........................... (345,730) 116,739
Other assets .............................................. 165,284 202,070
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TOTAL ASSETS .............................................. $ 350,038,414 $ 346,041,302
============= =============
LIABILITIES
Deposits .................................................. $ 302,803,942 $ 297,492,625
Borrowings ................................................ -- --
Advances from borrowers for taxes and insurance ........... 1,296,628 2,092,412
Accrued interest payable .................................. 1,011,817 971,296
Other liabilities ......................................... 2,386,112 1,493,917
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TOTAL LIABILITIES ......................................... 307,498,499 302,050,250
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STOCKHOLDERS' EQUITY
Preferred stock, no par value, 5,000,000 shares authorized,
none issued .......................................... -- --
Common stock, no par value, 10,000,000 shares authorized,
3,381,305 issued, 2,385,325; 2,467,238 outstanding .. 34,075,299 33,985,413
Retained earnings, substantially restricted ............... 28,170,391 27,618,839
Unearned ESOP compensation ................................ (1,712,559) (1,769,379)
Unearned RRP compensation ................................. (654,770) (714,294)
Treasury stock 995,980; 914,067 shares, at cost ........... (17,385,397) (15,180,548)
Net unrealized (loss) gain on securities available for sale 46,951 51,021
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TOTAL STOCKHOLDERS' EQUITY ................................ 42,539,915 43,991,052
------------- -------------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY .................. $ 350,038,414 $ 346,041,302
============= =============
</TABLE>
<PAGE>
HOME BANCORP
And wholly owned subsidiary
HOME LOAN BANK fsb
Fort Wayne, Indiana
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED DECEMBER 31, 1997 AND DECEMBER 31, 1996
(unaudited)
3 Months Ended: December 31,
----------------------------
1997 1996
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<S> <C> <C>
INTEREST INCOME
Loans receivable ............................. $5,622,176 $4,970,921
Investment securities ........................ 853,740 999,083
---------- ----------
Total interest income ........................ 6,475,916 5,970,004
INTEREST EXPENSE
Deposits ..................................... 4,121,952 3,619,445
Borrowings ................................... -- --
---------- ----------
Total interest expense ....................... 4,121,952 3,619,445
Net interest income .......................... 2,353,964 2,350,559
Provision for loan losses .................... 600 600
---------- ----------
Net interest income after provision .......... 2,353,364 2,349,959
NON-INTEREST INCOME
Net gain-sale of interest earning assets ..... 36,770 --
Net gain-sale of real estate ................. -- --
Fees and service charges ..................... 70,917 59,071
---------- ----------
Total non-interest income .................... 107,687 59,071
NON-INTEREST EXPENSE
Compensation & employee benefits ............. 750,268 705,715
Net occupancy & equipment .................... 144,756 143,488
FDIC insurance premiums ...................... 45,343 152,337
Other general & administrative expenses ...... 286,118 297,261
---------- ----------
Total non-interest expense ................... 1,226,485 1,298,801
Earnings before income tax ................... 1,234,566 1,110,229
Income tax expense ........................... 569,566 459,229
---------- ----------
NET INCOME ................................... $ 665,000 $ 651,000
========== ==========
Earnings per share ........................... $ 0.29 $ 0.26
Earnings per share, assuming dilution ........ $ 0.28 $ 0.26
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
HOME BANCORP
Fort Wayne, Indiana
STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED DECEMBER 31, 1997 AND 1996
(unaudited)
1997 1996
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<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES
Net Income ................................................................ $ 665,000 $ 651,000
Adjustments to reconcile net income to net cash from operating activities
Depreciation ......................................................... 54,965 47,072
Provision for loan losses ............................................ 600 600
Gain on sale of securities ........................................... (36,770) --
Gain of sale of loans ................................................ -- --
Gain on sale of foreclosed real estate ............................... -- --
Loans originated for sale ............................................ -- --
Proceeds from loan sales ............................................. -- --
ESOP expense ......................................................... 167,349 86,589
Amortization of RRP contribution ..................................... 59,525 59,757
Loss on disposal of premises and equipment ........................... -- --
Amortization of premiums and accretion of discounts, net ............. (69,743) (23,250)
Change in
Accrued interest receivable ........................................ 21,349 201,237
Other liabilities .................................................. 932,716 (1,522,348)
Other assets ....................................................... 640,782 469,622
------------ ------------
Net cash from operating activities .............................. 2,435,773 (29,721)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from maturities of securities held to maturity .............. 4,000,000 12,000,000
Proceeds from sales of securities available for sale ................. 2,028,854 --
Purchase of securities available for sale ............................ (3,985,125) --
Purchase of securities held to maturity .............................. -- --
Purchase of Federal Home Loan Bank stock ............................. -- --
Net change in loans .................................................. (10,360,669) (6,228,695)
Purchase of premises and equipment ................................... (2,418) (258,922)
------------ ------------
Net cash from investing activities .............................. (8,319,358) 5,512,383
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
HOME BANCORP
Fort Wayne, Indiana
STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED DECEMBER 31, 1997 AND 1996
(unaudited)
(continued)
1997 1996
------------ ------------
<S> <C> <C>
CASH FLOW FROM FINANCING ACTIVITIES
Net change in deposit ................................................ 5,311,317 5,854,405
Decrease in advance payments by borrowers for taxes and insurance .... (795,784) (655,483)
Purchase of treasury stock, net of reissuance of shares .............. (2,357,006) (1,944,959)
Cash dividends paid .................................................. (113,448) (134,112)
------------ ------------
Net cash provided by financing activities ....................... 2,045,079 3,119,851
Net change in cash and cash equivalents ................................... (3,838,506) 8,602,513
Cash and cash equivalents, beginning of period ............................ 16,445,298 11,922,568
------------ ------------
Cash and cash equivalents, end of period .................................. $ 12,606,792 $ 20,525,081
============ ============
Supplemental disclosures of cash flow information
Cash paid for
Interest on deposits ............................................... $ 4,081,431 $ 3,472,854
Income taxes ....................................................... 105,000 262,976
</TABLE>
<PAGE>
Home Bancorp
Fort Wayne, IN
Notes to Consolidated Financial Statements
(Unaudited)
Item 1
Summary of Significant Accounting Policies
A. Basis of Presentation
The interim financial statements for Home Bancorp (the "Company") and its
wholly-owned subsidiary, Home Loan Bank fsb (the "Bank"), have been prepared in
accordance with the instructions to Form 10-Q; and, therefore, do not include
all information and footnotes normally shown for full annual financial
statements.
The interim financial statements at December 31, 1997 and for the interim
periods ended December 31, 1997, and 1996 are unaudited, but reflect all
adjustments (consisting of only normal recurring adjustments) which are, in the
opinion of management, necessary to present fairly the financial position,
results of operations and cash flows for such periods.
These interim financial statements should be read in conjunction with the
Company's most recent annual financial statements and footnotes. The results of
the periods presented are not necessarily representative of the results of
operations and cash flows which may be expected for the entire year.
B. Employee Stock Ownership Plan (ESOP)
The ESOP, a tax qualified employee benefit plan for officers and employees of
the Company and the Bank, purchased 231,209 shares of common stock offered in
the conversion to a public company on March 29, 1995. The ESOP purchased the
shares with funds borrowed for such purpose from the Company. The ESOP will
repay the loan through periodic tax-deductible contributions from the Bank over
a 12-year period with interest at the applicable Federal Rate as set forth under
the Internal Revenue Code of 1986, as amended.
C. Stock Option and Incentive Plan (SOP) and Recognition and Retention Plan
(RRP)
On October 10, 1995 at a special meeting of the shareholders, a stock option and
incentive plan (SOP) and recognition and retention plan (RRP) were approved.
Both benefit plans are administered by the compensation committee of the
Company. This committee selects recipients and terms of awards
<PAGE>
Home Bancorp
Fort Wayne, IN
Notes to Consolidated Financial Statements
(Unaudited)
Item 1 Continued
pursuant to the plan. The maximum total shares intended to be made available
under the SOP and RRP plans are 330,317 and 115,611, respectively. Of the shares
available under the SOP, 228,504 shares have been awarded to directors and
officers, subject to certain vesting requirements over a 5 year period, and
exercisable over a term not to exceed ten years from the date of the grant,
October 10, 1995. A total of 78,127 shares under the RRP have been awarded to
directors, officers and employees of the Company subject to certain vesting and
employment requirements over a five year period commencing one year from the
date of the grant on October 10, 1995. All options and grants will be priced at
$15.25, equal to the fair market value of the shares on the date of the grants.
D. New Accounting Pronouncements
Recent pronouncements by the Financial Accounting Standards Board (FASB) may
have an impact on financial statements issued in this and subsequent periods.
These standards include the following Statements of Accounting Financial
Standards (SFAS):
1) SFAS No. 128, "Earnings Per Share," revises the accounting
requirements for calculating earnings per share. Basic earnings per share for
the quarter ended December 31, 1997 and later will be calculated solely on the
average common shares outstanding. Diluted earnings per share will reflect the
potential dilution of stock options and other common stock equivalents. All
prior calculations will be restated to be comparable to new methods.
2) SFAS No. 130, "Reporting Comprehensive Income," establishes
standards for reporting and display of comprehensive income and its components
(revenue, expenses, gains and losses) in a full set of general-purpose financial
statements. This Statement requires that all items that are required to be
recognized under accounting standards as components of comprehensive income be
reported in a financial statement that is displayed with the same prominence as
other financial statements. Income tax effects must also be shown. This
Statement is effective for fiscal years beginning after December 15, 1997.
3) SFAS No. 131, "Disclosures about Segments of an Enterprise and
Related Information," establishes standards for the way a public business
enterprises report information about operating segments in annual financial
statements and requires those enterprises report selected information about
operating segments in interim financial reports issued to shareholders. It also
establishes standards for related disclosures about products and services,
geographic areas, and major customers. This statement is effective for financial
statements for periods beginning after December 15, 1997.
Management has determined that the impact of the adoption of these statements on
the financial position or results of operations will not be material.
<PAGE>
Home Bancorp
Fort Wayne, IN
Notes to Consolidated Financial Statements
(Unaudited)
Item 1 Continued
E. Earnings Per Share
Basic earnings per common share are calculated by dividing net earnings by the
average number of common shares outstanding during the period (total shares
issued less unallocated shares in the Employee Stock Ownership Plan and less
treasury shares). Diluted earnings per share takes into account the effect of
dilution from the assumed exercise of all outstanding stock options. Diluted
earnings per share are calculated by dividing net earnings by the average number
of common shares outstanding adjusted for the incremental shares resulting from
the exercise of dilutive options during the period. All prior amounts have been
restated to be comparable.
Management's Discussion and Analysis of
Financial Condition and Results of Operation
Item 2
General
Home Bancorp (the "Company") was formed as an Indiana corporation on December
14, 1993 for the purpose of issuing Common Stock and owning all of the
outstanding shares of the Company. On March 29, 1995, Home Bancorp acquired all
the capital stock of the Bank upon its Conversion from a mutual to stock
institution. Prior to the conversion, the Company had no operating history. The
principal business of savings banks, including Home Loan, has historically
consisted of attracting deposits from the general public and making loans
secured by residential real estate. The Company's earnings are primarily
dependent on net interest income, the difference between interest income and
interest expense. This is a function of the yield on interest-earning assets
less the cost of interest-bearing liabilities. Earnings are also affected by
provisions for loan losses, service charges and fee income, operating expenses
and income taxes.
The most significant outside factors influencing the operations of the Bank and
other savings institutions include general economic conditions, competition in
the local market place and the related monetary and fiscal policies of agencies
that regulate financial institutions. More specifically, the cost of funds
(deposits) is influenced by interest rates on competing investments and general
market rates of interest, while lending activities are influenced by the demand
for real estate financing, which in turn is affected by the interest rates at
which such loans may be offered and other factors affecting loan demand and
funds availability.
<PAGE>
Home Bancorp
Fort Wayne, IN
Management's Discussion and Analysis of
Financial Condition and Results of Operation
Item 2 Continued
When used in this Form 10-Q or future filings by the Company with the Securities
and Exchange Commission, in the Company's press releases or other public or
shareholder communications, or in oral statements made with the approval of an
authorized executive officer, the words or phrases "will likely result", "are
expected to", "will continue", "is anticipated", "estimated", "project",
"believe" or similar expressions are intended to identify "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. The Company wishes to caution readers not to place undue reliance on
any such forward-looking statements, which speak only as of the date made, and
to advise readers that various factors, including regional and national economic
conditions, changes in the levels of market interest rates, credit risks of
lending activities, and competitive and regulatory factors, could affect the
Company's financial performance and could cause the Company's actual results for
future periods to differ materially from those anticipated or projected.
The Company does not undertake, and specifically disclaims any obligation, to
publicly release the result of revisions which may be made to forward-looking
statements to reflect the occurrence of anticipated or unanticipated events or
circumstances after the date of such statements.
Financial Condition
The Company's total assets were $350.0 million as of December 31, 1997 compared
to $346.0 million as of September 30, 1997, an increase of $4.0 million. For the
same period, equity decreased from $44.0 million as of September 30, 1997 to
$42.5 million as of December 31, 1997. The Company's growth in total assets
reflects continued growth in the Company's loan portfolio that is funded by
consumer deposit growth. The net decrease in equity for the period ended
December 31, 1997 was primarily the result of the repurchase of shares of the
Company's common stock held as treasury stock. The treasury stock purchases
represented $2.4 million.
Loans receivable increased $10.3 million, primarily from 1-4 family residential
originations, from $284.0 million at September 30, 1997 to $294.3 million at
December 31, 1997. Deposits increased $5.3 million for the three months ended
December 31,1997 from $297.5 million as of September 30, 1997 to $302.8 million
as of December 31, 1997.
Cash and cash equivalents decreased from $16.4 million as of September 30, 1997
to $12.6 million as of December 31, 1997, a decrease of $3.8 million. Investment
securities available for sale increased $2.0 million to $13.1 million as of
December 31, 1997 while securities held to maturity decreased $4.0 million, from
$27.0 million as of September 30, 1997 to $23.0 million as of December 31, 1997.
The decrease in cash and cash equivalents, and investment securities was the
result of use of these funds for the stock repurchase program, and to fund loan
portfolio growth.
<PAGE>
Home Bancorp
Fort Wayne, IN
Management's Discussion and Analysis of
Financial Condition and Results of Operation
Item 2 Continued
Income taxes, current and deferred, as of December 31, 1997 reflect timing
differences on the remittance of accrued federal income tax liabilities for the
current quarter of the fiscal year in comparison to September 30, 1997.
Advances from borrowers for taxes and insurance decreased from $2.1 million as
of September 30, 1997 to $1.3 million as of December 31, 1997 primarily from the
timing of semi-annual payments of real estate taxes and annual insurance
premiums on behalf of loan customers.
Other liabilities increased to $2.4 million as of December 31, 1997 from $1.5
million as of September 30, 1997. The balance as of December 31, 1997 includes
increased balances on remittance items payable to third party vendors.
Results of Operation
General. Net income for the three months ended December 31, 1997 increased by
$14,000, or 2.2%, to $665,000 from $651,000 for the same period ended December
31, 1996. This increase is attributed to a modest increase in net interest
income for the period, increases in non-interest income, lower operating
expenses for like periods, but generally offset by increases in provisions for
tax liabilities.
Net Interest Income. The Company's net income is primarily dependent upon net
interest income. The increase in total interest income of approximately $506,000
for the three month period ended December 31, 1997 compared to the same period
in 1996, was nearly offset by an increase of $503,000 in interest expense on
deposits. The average yield on interest-earning assets increased from 7.40% to
7.55% for the like three month period ended December 31st due to increases in
outstanding loan balances. For the three months ended December 31, 1997, the
average cost of interest-bearing liabilities was 5.47% compared to 5.26% for the
like period in 1996. This increase in average cost is attributed to competitive
pressures on market rates for deposits.
While the interest rate environment of recent years has proven beneficial to
most financial institutions, including the Company, increases in market rates of
interest generally adversely affect the net income of most financial
institutions. Because the Company's liabilities generally reprice more quickly
than assets, interest margins would likely decrease if interest rates were to
rise, or the yield on repricing assets was not enhanced.
<PAGE>
Home Bancorp
Fort Wayne, IN
Management's Discussion and Analysis of
Financial Condition and Results of Operation
Item 2 Continued
Provision for Loan Losses. The provision for loan losses is a result of
management's periodic analysis of the adequacy for loan losses. The provision
for loan losses was $600 for the three months ended December 31, 1997 and was
the same for the three month period in 1996. Changes in the provision for loan
losses is attributed to management's analysis of the adequacy of the allowance
for loan losses to both recognizable and unforeseen losses. At December 31,
1997, the Company's allowance for loan losses totaled $1.4 million or .47% of
net loans receivable and 465% of total nonperforming loans.
The Company establishes an allowance for loan losses based on an analysis of
risk factors in the loan portfolio. This analysis includes, among other factors,
the level of the Company's classified and nonperforming assets and their
estimated value, the national economic outlook which may tend to inhibit
economic activity and depress real estate and other values in the Company's
primary market area, regulatory issues, and the levels of the allowance for loan
losses established by the Company's peers in assessing the adequacy of the loan
loss allowance. Accordingly, the calculation of the adequacy of the allowance
for loan losses is not based directly on the level of nonperforming loans.
The Company will continue to monitor its allowance for loan losses and make
future additions to the allowance through the provision for loan losses as
economic conditions dictate. Although the Company maintains its allowance for
loan losses at a current level which it considers to be adequate to provide for
losses, there can be no assurance that future losses will not exceed estimated
amounts or that additional provisions for loan losses will not be required in
future periods. In addition, the Company's determination as to the amount of the
allowance for loan losses is subject to review by the OTS, as part of their
examination process, which may result in the establishment of an additional
allowance based upon their judgment of the information available to them at the
time of their examination.
Non-Interest Income. Non-interest income consists primarily of service fees on
deposit accounts, loan servicing and late fees, as well as, any recognized gain
from the sale of interest earning assets. Non-interest income increased
approximately $49,000 for the three month period ended December 31, 1997 in
comparison to the like period in 1996. The Company recognized a gain of
approximately $37,000 from the sale of an investment security held available for
sale during the three month period ended December 31, 1997. Fees and service
charges for the three month period ended December 31, 1997 increased by
approximately $12,000 over the like period in 1996 from increased consumer
service related fees and/or bank imposed charges.
<PAGE>
Home Bancorp
Fort Wayne, IN
Management's Discussion and Analysis of
Financial Condition and Results of Operation
Item 2 Continued
Non-Interest Expense. Non-interest expenses for the three month periods ended
December 31, 1997 and 1996, were approximately $1,226,000 and $1,299,000,
respectively, a decrease of approximately $73,000 for the like periods. For the
period ended December 31, 1997, compensation and employee benefits increased
approximately $45,000 compared to the same period in 1996 due primarily to
staffing needs associated with asset growth. FDIC insurance premium expense
decreased approximately $107,000 for the period ended December 31, 1997 compared
to the same period in 1996 from the reduction of rates associated with the
recapitalization of the insurance fund in 1996. Other general and administrative
expenses were moderately lower in the 1997 period compared to 1996 due to
general cost containment measures.
Asset/Liability Management
The primary objective of asset/liability management is to manage interest rate
risk so as to control and limit fluctuations in net interest income. The Company
monitors its asset/liability mix on an ongoing basis and attempts to manage
interest rate risk by applying policies that provide strategic and tactical
guidance for improving net interest income. Those policies include the sale of
fixed-rate loans with terms over twenty years in the secondary market, and the
aggressive promotion of adjustable rate products. In addition, the Company
strives to match maturities of long-term deposits with that of fixed rate
portfolio loans. Management actively manages its liquidity position to achieve a
balance between the desire to minimize risk and maximize yield to fulfill its
asset/liability goals.
<PAGE>
Home Bancorp
Fort Wayne, IN
Management's Discussion and Analysis of
Financial Condition and Results of Operation
Item 2 Continued
The following table provides key ratios and balances for the periods indicated.
(For calculation purposes, month-end averages, which do not differ materially
from daily averages, have been used.)
<TABLE>
<CAPTION>
At and For the
Three Months Ended
December 31,
FINANCIAL HIGHLIGHTS (Averages) ....................... 1997 1996
----------- -----------
<S> <C> <C>
Return on assets ...................................... 0.76% 0.80%
Return on equity ...................................... 6.14% 5.66%
Yield on interest-earning assets ...................... 7.55% 7.40%
Cost of interest-bearing liabilities .................. 5.47% 5.26%
Net interest spread ................................... 2.08% 2.14%
Net interest rate margin .............................. 2.69% 2.90%
Net interest income to operating (G&A) expenses ....... 191.93% 180.98%
Operating (G&A) expenses to assets .................... 1.40% 1.60%
Non-interest income to assets ......................... 0.12% 0.07%
Interest-earning assets to interest-bearing liabilities 113.81% 115.88%
Efficiency ratio ...................................... 50.58% 53.90%
Equity to assets ...................................... 12.39% 14.21%
Tangible equity to assets ............................. 12.39% 14.21%
Average assets (dollars in thousands) ................. $ 349,509 $ 323,859
ASSET QUALITY RATIOS
Non-performing assets to total assets ................. 0.09% 0.06%
Non-performing loans to net loans ..................... 0.10% 0.08%
Allowance for loan losses to net loans ................ 0.47% 0.54%
Allowance for loan losses to non-performing loans ..... 465% 675%
Net charge offs to loans .............................. -- --
Loans to deposits ..................................... 97.21% 92.60%
Loans to assets ....................................... 84.09% 78.89%
PER COMMON SHARE
Net income ............................................ $ 0.29 $ 0.26
Net income (diluted) .................................. $ 0.28 $ 0.26
Book value ............................................ $ 17.83 $ 17.15
Tangible book value ................................... $ 17.83 $ 17.15
STOCK PRICE
High .................................................. $ 29.50 $ 19.50
Low ................................................... $ 24.00 $ 16.00
Close ................................................. $ 29.50 $ 19.00
</TABLE>
<PAGE>
Home Bancorp
Fort Wayne, IN
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Item 2 Continued
Liquidity and Capital Resources
The Company's primary source of funds are deposits, principal and interest
payments on loans, and maturities of investment securities. While maturities of
investment securities and scheduled amortizations of loans are a predictable
source of funds, deposit flows and mortgage prepayments are greatly influenced
by general interest rates, economic conditions and competition. In addition, if
the Bank requires additional funds beyond its ability to acquire them locally,
it has borrowing capability through the Federal Home Loan Bank (the "FHLB") of
Indianapolis. At December 31, 1997, the Bank had no advances from the FHLB of
Indianapolis or other borrowings outstanding and has not had any such advances
or other borrowings outstanding since 1983.
Home Loan Bank is required by federal regulations to maintain specific levels of
"liquid" assets consisting of cash and other eligible investments. The standard
measure of liquidity for thrift institutions is the ratio of qualifying assets
due within one year to net withdrawable savings. Currently the minimum
requirement is 4%. At December 31, 1997, the Bank's liquidity ratio was 15.8%.
As of September 30, 1997, the Bank's liquidity was 16.0%.
The Bank uses its liquidity resources principally to meet ongoing commitments,
to fund maturing certificates of deposit and deposit withdrawals and to meet
operating expenses. The Bank anticipates that it will have sufficient funds
available to meet current loan commitments and those liquidity needs. At
December 31, 1997, the Bank had outstanding commitments to extend credit which
amounted to $15.2 million (including $10.6 million in unused lines of credit).
Management believes that loan repayments and other sources of funds will be
adequate to meet the Bank's foreseeable liquidity needs.
The institution is required to maintain specific amounts of regulatory capital
pursuant to regulations of the Office of Thrift Supervision. Regulatory
standards impose the following capital requirements: a risk-based capital
expressed as a percent of risk-adjusted assets, a leverage ratio of core capital
to total adjusted assets, and a tangible capital ratio expressed as a percent of
total adjusted assets. As of December 31, 1997, the Bank's capital totaled $33.4
million, or 9.71% of tangible and core capital. Risk-based capital totaled $34.7
million, or represented 20.66% of risk-based assets. The institution
substantially exceeded all regulatory capital standards.
<PAGE>
Home Bancorp
Fort Wayne, IN
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Item 2 Continued
The Year 2000 Issue
The Company is aware of the issues associated with the programming code in
existing computer systems as the Year 2000 approaches. The "Year 2000" problem
will affect virtually every computer operation in some way by the rollover of
the two digit value to 00. The issue is whether computer systems will properly
recognize date-sensitive information when the year changes to 2000. Systems that
do not properly recognize such information could generate erroneous data or
cause a system to fail.
The Company recognizes the need to ensure its operations will not be adversely
impacted by Year 2000 software failures. The Company has established a process
for evaluating and managing risks associated with this issue. An assessment of
the Year 2000 compliance of the Company's computer systems has been completed.
The only notable area identified is relative to the replacement of older
computer hardware that will not be Year 2000 compliant, but had been previously
identified and scheduled for replacement over the next twelve month period. The
Company is requiring its data processor, NCR Corporation that provides most of
the Company's mission critical operations, and other software vendors to
represent that their products are, or will be, Year 2000 compliant, and has
planned a program for testing of compliance. The financial impact to the Company
and its financial position or results of operations can not be reasonably
estimated as of December 31, 1997.
Market Risk
The Company is exposed to the impact of interest rate changes and changes in the
market value of it investments.
The Company currently focuses lending efforts toward originating competitively
priced adjustable-rate loan products with maturities out thirty years and
fixed-rate loan products with maturities not to exceed twenty years. This allows
the Company to maintain a portfolio of loans which will be sensitive to changes
in interest rates while providing a reasonable spread to the cost of liabilities
used to fund the loans.
The Company's primary objective for its investment portfolio is to provide the
liquidity necessary to meet loan funding needs. This portfolio is used in the
ongoing management of changes to the Company's asset/liability mix, while
contributing to profitability through earnings flow. The investment policy
generally calls for funds to be invested in overnight fed funds, government and
agency securities with relatively short maturities based upon the Company's need
for liquidity, desire to achieve a proper balance between risk while maximizing
yield, and to fulfill the Company's asset/liability management goals.
<PAGE>
Home Bancorp
Fort Wayne, IN
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Item 2 Continued
The company emphasizes and promotes its savings, money market, demand and NOW
accounts, and certificates of deposit with maturities of 91 days through twelve
years, principally from its primary market area. The savings, money market, and
NOW accounts tend to be less susceptible to rapid changes in interest rates. The
acceptance of longer term certificates of deposit generally offer the Company a
lower cost source of funding for longer term lending than borrowings, and
provides a good asset/liability match on these products.
In managing its asset/liability mix, the Company, at times, depending on the
relationship between long- and short-term interest rates, market conditions and
consumer preference, as well as, consideration to the Company's total risk
profile may place greater emphasis on maximizing its net interest margin than
strictly matching the interest rate sensitivity of its assets and liabilities.
Management believes that the increased net income which may result from an
acceptable mismatch in actual maturity or repricing of its asset and liability
portfolios can, during periods of declining or stable interest rates, provide
sufficient returns to justify the increased exposure to sudden and unexpected
increases in interest rates which may result from such a mismatch. The Company
has established levels of acceptable risks, which may from time to time be
exceeded in recognition to those instances previously discussed. There can be no
assurance, however, that in the event of an adverse change in interest rates the
Company's efforts to limit interest rate risk will be successful.
Net Portfolio Value. The Company uses a Net Portfolio Value ("NPV") approach to
the quantification of interest rate risk. This approach calculates the
difference between the present value of expected cash flows from assets and the
present value of expected cash flows from liabilities, as well as cash flows
from off-balance sheet items. Management of the Company's assets and liabilities
is performed within the context of the marketplace, but subject to levels deemed
acceptable by the Board. Generally, the Board has chosen to monitor and adjust
exposures rather than limits.
Presented below, as of December 31, 1997, is an analysis of the Company's
interest rate risk as prepared by OTS for changes in NPV for an instantaneous
and sustained parallel shift in the yield curve, in 100 basis point increments,
up and down 300 basis points. As illustrated in the table , the Company's NPV is
more sensitive to rising rate changes than declining rates. This occurs
primarily because, as rates rise, the market value of fixed-rate loans declines
due both to the rate increase and the related slowing of prepayments. When rates
decline, the Company does not experience a significant rise in market value for
these loans because borrowers prepay at relatively higher rates.
<PAGE>
Home Bancorp
Fort Wayne, IN
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Item 2 Continued
<TABLE>
<CAPTION>
At December 31, 1997
- -------------------------------------------------------------------------------
Change in Interest Rate Board Limit $ Change % Change
(Basis Points) % Change (In Thousands)
<S> <C> <C> <C>
+300 bp (27) ($17,368) (42)
+200 bp (20) ($10,987) (27)
+100 bp (12) ($ 4,947) (12)
0 bp - - -
-100 bp ( 9) $ 2,559 6
-200 bp (12) $ 1,120 3
-300 bp (19) ($ 1,511) ( 4)
</TABLE>
Certain shortcomings are inherent in the method of analysis presented in the
foregoing table. For example, although certain assets and liabilities may have
similar maturities or periods of repricing, they may react in different degrees
to changes in interest rates. Also, the interest rates on certain types of
assets and liabilities may fluctuate in advance of changes in market interest
rates, while interest rates on other types may lag behind changes in market
rates. Additionally, certain assets such as adjustable-rate mortgage loans, have
features which restrict changes in interest rates on a short-term basis and over
the life of the asset. Further, in the event of a change in interest rates,
prepayments and early withdrawal levels would likely deviate from those assumed
in calculating the table. Finally, the ability of some borrowers to service
their debt may decrease in the event of an interest rate increase. The Company
considers all of those factors in monitoring its exposure to interest rate risk.
<PAGE>
Home Bancorp
Fort Wayne, IN
Part II Other Information
Item 1 Legal Proceedings
There were no material proceedings to which Home Bancorp or Home Loan Bank fsb
is a party or of which any of their property is subject. From time-to-time, the
Bank is a party to various legal proceedings incident to its business.
Item 2 Changes in Securities
None
Item 3 Defaults Upon Senior Securities
None
Item 4 Submission of Matters to a Vote of Security Holders
No matter was submitted to a vote of security holders, through the solicitation
of proxies or otherwise during the quarter ended December 31, 1997. Subsequent
to December 31, 1997, however, the following matters ere voted on:
(a) Annual Meeting of the Shareholders: January 27, 1998
(b) Meeting of January 27, 1998 involved the election of three (3) directors,
Messrs. C. Philip Andorfer, Richard P. Hormann, and W. Paul Wolf. The expiration
of their terms and those directors continuing in office are as follows:
Director Expiration of Term
-------- ------------------
C. Philip Andorfer 2001
Richard P. Hormann 2001
W. Paul Wolf 2001
Daniel F. Fulkerson 2000
Walter A. McComb, Jr. 2000
Donald E. Thornton 2000
Matthew P. Forrester 1999
Rod M. Howard 1999
Luben Lazoff 1999
<PAGE>
(c) Matters voted upon at the Annual Meeting on January 27, 1997 included the
following items and the number of votes cast included:
Election of Directors Votes For Votes Against
- --------------------- --------- -------------
C. Philip Andorfer 2,053,381 7,067
Richard P. Hormann 2,054,797 5,651
W. Paul Wolf 2,056,144 4,304
Votes Against
Ratification of Auditor Votes For Or Withheld
- ----------------------- --------- -----------
Crowe, Chizek 2,039,630 20,818
and Company LLP
Item 5 Other Information
None
Item 6 Exhibits and Reports on Form 8-k
Press releases filed on Form 8-k for the quarter ended December 31, 1997
and subsequently, and not previously incorporated on Form 10-K for the fiscal
year ended September 30, 1997 include:
Date of Report Subject
-------------- -------
12-10-97 Press Release relative to Stock Repurchase
Program
1-21-98 Press Release relative to Declaration of Cash
Dividend
2-09-98 Press Release relative to 1st Quarter Fiscal
1998 Earnings
<PAGE>
Home Bancorp
Fort Wayne, IN
Signatures
Pursuant to the requirement 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.
Home Bancorp
Date: February 10, 1998 /s/ W. Paul Wolf
----------------
W. Paul Wolf
Chairman, President, CEO
Date: February 10, 1998 /s/ Matthew P. Forrester
------------------------
Matthew P. Forrester
Vice President, Treasurer
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> DEC-31-1997
<CASH> 1,738
<INT-BEARING-DEPOSITS> 5,569
<FED-FUNDS-SOLD> 5,300
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 13,146
<INVESTMENTS-CARRYING> 22,984
<INVESTMENTS-MARKET> 23,191
<LOANS> 294,347
<ALLOWANCE> 1,389
<TOTAL-ASSETS> 350,038
<DEPOSITS> 302,804
<SHORT-TERM> 0
<LIABILITIES-OTHER> 4,694
<LONG-TERM> 0
0
0
<COMMON> 34,075
<OTHER-SE> 8,465
<TOTAL-LIABILITIES-AND-EQUITY> 350,038
<INTEREST-LOAN> 5,622
<INTEREST-INVEST> 854
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 6,476
<INTEREST-DEPOSIT> 4,122
<INTEREST-EXPENSE> 4,122
<INTEREST-INCOME-NET> 2,354
<LOAN-LOSSES> 1
<SECURITIES-GAINS> 37
<EXPENSE-OTHER> 1,226
<INCOME-PRETAX> 1,235
<INCOME-PRE-EXTRAORDINARY> 665
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 665
<EPS-PRIMARY> 0.29
<EPS-DILUTED> 0.28
<YIELD-ACTUAL> 7.55
<LOANS-NON> 0
<LOANS-PAST> 299
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,389
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 1,389
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 1,389
</TABLE>
