SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------
FORM 10-Q
Quarterly Report Under Section 13 or 15 (d)
of the Securities and Exchange Act of 1934
-------------------------------------------
For Quarter Ended Commission File Number
DECEMBER 31, 1999 0-22376
HOME BANCORP
------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Indiana 35-1906765
- -------------------------- --------------------------
(State or other jurisdiction or (I.R.S. Employer Identification
incorporation or organization) Number)
132 East Berry Street, P.O. Box 989
Fort Wayne, Indiana 46801-0989
- -------------------------- --------------------------
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code: (219) 422-3502
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, 1999, there were 3,378,868 shares of common stock issued and
2,014,906 shares outstanding.
<PAGE>
HOME BANCORP
FORT WAYNE, INDIANA
FORM 10-Q
INDEX
Page
Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements of Home Bancorp
Consolidated Balance Sheets as of December 31, 1999
and September 30, 1999 1
Consolidated Statements of Income for the three months
ended December 31, 1999, and 1998 2
Consolidated Statements of Cash Flow for the three
months ended December 31, 1999, and 1998 3
Notes to Consolidated Financial Statements 4
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operation 5
Item 3. Quantitative and Qualitative Disclosures About Market Risk 10
PART II. OTHER INFORMATION 12
Signatures 13
<PAGE>
<TABLE>
<CAPTION>
HOME BANCORP
AND WHOLLY OWNED SUBSIDIARY
HOME LOAN BANK FSB
FORT WAYNE, INDIANA
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 1999 (UNAUDITED) AND SEPTEMBER 30, 1999
(UNAUDITED)
ASSETS DECEMBER 31, 1999 SEPTEMBER 30, 1999
----------------- ------------------
<S> <C> <C>
Cash on hand and in other banks $ 2,706,556 $ 2,081,354
Interest earning deposits in other banks 21,387,421 18,231,528
Federal funds sold 15,500,000 16,000,000
------------- -------------
Cash and cash equivalents 39,593,977 36,312,882
Investment securities available for sale 22,884,063 23,159,062
Investment securities held to maturity
(Market value $0; $0) -- --
Loans receivable, net
(Allowance for loan losses $1,342,820; $1,342,220) 349,699,570 345,999,338
Federal Home Loan Bank stock 3,173,700 3,173,700
Accrued interest receivable 1,903,833 2,156,465
Bank premises & equipment 2,870,553 2,916,349
Intangible assets -- --
Foreclosed real estate, net -- --
Other assets 200,382 239,004
------------- -------------
TOTAL ASSETS $ 420,326,078 $ 413,956,800
============= =============
LIABILITIES
Deposits $ 370,202,214 $ 363,354,269
Federal Home Loan Bank advances 7,000,000 7,000,000
Advances from borrowers for taxes and insurance 2,184,791 2,971,219
Accrued interest payable 912,427 1,011,119
Other liabilities 3,004,931 1,697,102
------------- -------------
TOTAL LIABILITIES 383,304,363 376,033,709
------------- -------------
STOCKHOLDERS' EQUITY
Preferred stock, no par value, 5,000,000 shares authorized,
none issued
Common stock, no par value, 10,000,000 shares authorized,
3,378,868 issued, 2,014,906; 2,050,506 outstanding 35,548,635 34,874,404
Retained earnings, substantially restricted 31,957,938 32,159,378
Unearned ESOP compensation (1,226,664) (1,287,963)
Unearned RRP compensation (95,652) (232,608)
Treasury stock 1,363,962; 1,329,749 shares, at cost (28,909,093) (27,480,087)
Net unrealized (loss) gain on securities available for sale (253,449) (110,033)
------------- -------------
TOTAL STOCKHOLDERS' EQUITY 37,021,715 37,923,091
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 420,326,078 $ 413,956,800
============= =============
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
HOME BANCORP
AND WHOLLY OWNED SUBSIDIARY
HOME LOAN BANK FSB
FORT WAYNE, INDIANA
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
THREE MONTHS ENDED DECEMBER 31, 1999 AND DECEMBER 31, 1998
(UNAUDITED)
3 Months Ended: December 31,
1999 1998
----------- -----------
<S> <C> <C>
INTEREST INCOME
Loans receivable 6,317,976 6,096,253
Investment securities 876,418 556,877
----------- -----------
Total interest income $ 7,194,394 $ 6,653,130
INTEREST EXPENSE
Deposits $ 4,538,953 $ 4,147,760
Advances 94,249 102,602
----------- -----------
Total interest expense 4,633,202 4,250,362
Net interest income 2,561,192 2,402,768
Provision for loan losses 600 600
----------- -----------
Net interest income after provision 2,560,592 2,402,168
NON-INTEREST INCOME
Net gain-sale of interest earning assets 0 24,615
Net gain-sale of real estate 4,657 0
Fees and service charges 85,834 88,986
----------- -----------
Total non-interest income 90,491 113,601
NON-INTEREST EXPENSE
Compensation & employee benefits 961,751 768,274
Net occupancy & equipment 186,475 173,334
FDIC insurance premiums 52,280 44,582
Other general & administrative expenses 400,900 186,100
----------- -----------
Total non-interest expense 1,601,406 1,172,290
Earnings before income tax 1,049,677 1,343,479
Income tax expense 436,677 578,479
----------- -----------
NET INCOME $ 613,000 $ 765,000
----------- -----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
3 Months Ended: December 31,
1999 1998
----------- -----------
<S> <C> <C>
Other comprehensive income
Net unrealized gains (losses) on securities available for sale
Unrealized losses arising during the period (239,027) (22,843)
Reclassification adjustment for realized gains included in net income 0 (24,615)
----------- -----------
Net unrealized losses on securities available for sale (239,027) (47,458)
Tax effect 95,611 18,983
----------- -----------
Total other comprehensive income (loss) (143,416) (28,475)
Comprehensive income $ 469,584 $ 736,525
=========== ===========
Earnings per share, basic $ 0.32 $ 0.37
Earnings per share, assuming dilution $ 0.31 $ 0.35
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
HOME BANCORP
Fort Wayne, Indiana
STATEMENTS OF CASH FLOW
THREE MONTHS ENDED DECEMBER 31, 1999, AND 1998
(UNAUDITED)
1999 1998
------------ ------------
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES
Net Income $ 613,000 $ 765,000
Adjustments to reconcile net income to net cash from operating activities
Depreciation 76,805 73,509
Provision for loan losses 600 600
Gain on sale of securities -- (22,610)
Gain on sale of loans -- (2,005)
Gain on sale of foreclosed real estate (4,657) --
Loans originated for sale -- --
Proceeds from loan sales -- 87,114
Proceeds from real estate owned -- --
ESOP expense 133,582 156,906
Amortization of RRP contribution 31,884 58,268
Loss on disposal of premises and equipment 7,099 --
Amortization of premiums and accretion of discounts, net (35,974) (8,686)
Change in
Accrued interest receivable 252,632 199,472
Other liabilities 1,209,137 (780,841)
Other assets 279,685 (45,461)
------------ ------------
Net cash from operating activities $ 2,563,793 $ 481,266
CASH FLOW FROM INVESTING ACTIVITIES
Proceeds from maturities of securities held to maturity -- 4,000,000
Proceeds from sales of securities available for sale -- 2,014,264
Purchase of securities available for sale -- --
Purchase of securities held to maturity -- --
Purchase of Federal Home Loan Bank stock -- --
Net change in loans (3,700,232) (8,149,494)
Purchase of premises and equipment (26,018) (195,636)
------------ ------------
Net cash from investing activities (3,726,250) (2,330,866)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
CASH FLOW FROM FINANCING ACTIVITIES
Net change in deposit 6,847,945 14,544,986
Advances from Federal Home Loan Bank -- (2,000,000)
Decrease in advance payments by borrowers for taxes and insurance (786,428) (793,507)
Purchase of treasury stock, net of reissuance of shares (2,087,135) (1,935,416)
Cash dividends paid (205,551) (174,804)
Proceeds from exercise of stock options 674,721 34,541
------------ ------------
Net cash provided by financing activities 4,443,552 9,675,800
Net change in cash and cash equivalents 3,281,095 7,826,200
Cash and cash equivalents, beginning of period 36,312,882 23,365,826
------------ ------------
Cash and cash equivalents, end of period $ 39,593,977 $ 31,192,026
============ ============
Supplemental disclosures of cash flow information
Cash paid for
Interest $ 4,630,038 $ 4,244,894
Income taxes 178,619 286,377
Supplemental schedule of non-cash investing and financing activities Investment
securities held to maturity transferred to investment securities
available for sale $ -- --
Loans transferred to foreclosed real estate 27,793 --
Loans transferred to loans held for sale -- --
</TABLE>
3
<PAGE>
HOME BANCORP
FORT WAYNE, INDIANA
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, 1999 and for the interim
periods ended December 31, 1999, and 1998 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. 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. 130, "Reporting Comprehensive Income." Comprehensive income
consists of net income and other comprehensive income. Other comprehensive
income includes the net change in unrealized appreciation (depreciation) on
securities available for sale, net of tax which is also recognized as a separate
component of shareholders' equity. The accounting standard that requires
reporting comprehensive income first applied as of October 1, 1998, with prior
information restated to be comparable.
2) SFAS No. 131, "Disclosures About Segments of Enterprises", redefines
segment reporting to follow how each company's chief operating decision maker
gets information about business segments to make operating decisions. This
statement is not applicable to the Company, as it does not have multiple
business segments.
3) SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities", requires all derivatives to be recognized at fair value as either
assets or liabilities in the Consolidated Balance Sheets for fiscal years
beginning after June 15, 1999. Changes in fair value of derivatives not
designated as hedging instruments are either to be recognized currently in
earnings or are to be recognized as a component of other comprehensive income,
depending on the intended use of the derivatives and the resulting designations.
Another provision of the statement allows for a reallocation of securities from
held to maturity to available for sale. The Company choose early adoption of
this new standard as of January 1, 1999. Its adoption has no material impact on
its consolidated financial position or results of operations.
<PAGE>
C. 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.
4
<PAGE>
HOME BANCORP
FORT WAYNE, INDIANA
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 marketplace 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.
FORWARD-LOOKING STATEMENTS
The Company and the Bank may from time to time make written or oral
"forward-looking statements", including statements contained in this Form 10-Q
or future filings with the Securities and Exchange Commission (including
Exhibits thereto), in its reports to shareholders and in other communications by
the Company, which are made in good faith by the Company and the Bank pursuant
to the "safe harbor" provisions of the Private Securities Litigation Reform Act
of 1995.
These forward-looking statements include statements with respect to the
Company's and the Bank's beliefs, plans, objectives, goals, expectations,
anticipations, estimates and intentions, that are subject to significant risks
and uncertainties, and are subject to change based on various factors (some of
which are beyond the Company's and Bank's control). The words "may", "could",
"should", "would", "believe", "anticipate", "estimate", "expect", "intend",
"plan" and similar expressions are intended to identify forward-looking
statements. The following factors, among others, could cause the Company's and
the Bank's financial performance to differ materially from the plans,
objectives, expectations, estimates and intentions expressed in such
forward-looking statements: the strength of the US economy in general and the
strength of the local economies in which the Company and Bank conduct
operations; the effects of, and changes in, trade, monetary and fiscal policies
<PAGE>
and laws, including interest rate policies of the Federal Reserve Board;
inflation, interest rate, market and monetary fluctuations; the timely
development of and acceptance of new products and services of the Bank and the
perceived overall value of the products and services; the willingness of users
to substitute competitors' products and services for the Bank's products and
services, when required; the impact of changes in financial services' laws and
regulations (including laws concerning taxes, banking, securities and
insurance); technological changes; acquisitions; changes in consumer spending
and saving habits; and the success of the Company and the Bank at managing risks
involved in the foregoing.
The foregoing list of important factors is not exclusive. The Company does not
undertake to update any forward-looking statement, whether written or oral, that
may be made from time to time by or on behalf of the Company or the Bank.
5
<PAGE>
HOME BANCORP
FORT WAYNE, INDIANA
MANAGEMENT'S DISCUSSION AND ANALYSIS
FINANCIAL CONDITION AND RESULTS OF OPERATION
ITEM 2 CONTINUED
FINANCIAL CONDITION
The Company's total assets were $420.3 million as of December 31, 1999 compared
to $414.0 million as of September 30, 1999, an increase of $6.3 million. For the
same period, equity decreased from $37.9 million as of September 30, 1999 to
$37.0 million as of December 31, 1999. The increase in total assets was the
result of continued growth in the Company's loan and investment securities
funded by deposit growth. The decrease in equity for the period ended December
31, 1999 was primarily the result of the repurchase of 78,457 shares of the
Company's common stock held as treasury stock, net of shares issued from the
exercise of options. The treasury stock purchases represented a gross purchase
of $2.1 million.
Loans receivable increased $3.7 million, primarily from 1-4 family residential
originations, from $346.0 million at September 30, 1999 to $349.7 million at
December 31, 1999. Deposits increased $6.8 million for the three month period,
increasing from $363.4 million as of September 30, 1999 to $370.2 million as of
December 31, 1999.
Cash and cash equivalents increased from $36.3 million as of September 30, 1999
to $39.6 million as of December 31, 1999. On January 1, 1999 the Company adopted
FASB No. 133 and reclassified all of its securities as available for sale. As of
December 31, 1999, securities available for sale totaled $22.9 million, a
decrease of $.3 million, from the aggregate of investment securities held
September 30, 1999.
As of both December 31, 1999 and September 30, 1999 the Company held no
repossessed assets.
The balance in Federal Home Loan Bank advances remained unchanged during the
three-month period ended December 31, 1999. Deposit growth during the period
financed continued loan portfolio growth and enhanced the Company's liquidity
position in anticipation of Year 2000 without further borrowings.
Advances from borrowers for taxes and insurance decreased from $.8 million as of
September 30, 1999 to $2.2 million as of December 31, 1999 primarily from the
timing of semi-annual payments of real estate taxes and annual insurance
premiums on behalf of loan customers. Other liabilities increased from $1.7
million as of September 30, 1999 to $3.0 million as December 31, 1999, primarily
from an increase in payable balances as of the period end.
RESULTS OF OPERATION
GENERAL. Net income for the three months ended December 31, 1999 decreased by
$152,000, or 20.0%, to $613,000 from $765,000 for the same period ended December
31, 1998. The period decrease is attributed to higher non-interest expenses and
a slowdown in residential mortgage closings.
<PAGE>
The three month earnings represent an annualized return on average assets (ROA)
of 0.58% and a return on average equity (ROE) of 6.61%. For the like period
ended December 31, 1998, earnings represent an annualized ROA of 0.82% and a ROE
of 7.60%.
NET INTEREST INCOME. The Company's net income is primarily dependent upon net
interest income. Net interest income for the three-month period ended December
31, 1999 increased by approximately $158,000, compared to the same period in
1998. This increase was primarily the net result of a slight reduction in
interest rate spreads earned on higher interest earning balances.
Total interest income at December 31, 1999 increased by approximately $541,000
for the three-month period when compared to the same period ended December 31,
1998. The yield on interest-earning assets decreased in the three month period
ended December 31, 1999 to 6.96%, compared to 7.22% for the same period in the
preceding year. These decreasing yields are attributed to general decreases in
market interest rates on loans and investments.
6
<PAGE>
HOME BANCORP
FORT WAYNE, INDIANA
MANAGEMENT'S DISCUSSION AND ANALYSIS
FINANCIAL CONDITION AND RESULTS OF OPERATION
ITEM 2 CONTINUED
The growth in total interest income was negated by increased interest expense
during the three month period ended December 31, 1999. Interest expense
increased by approximately $383,000 for the three month period in comparison to
the like period in 1998. This increase was the result of increased balances of
costing-liabilities as average funding costs decreased in the like period from
the prior year results. For the three month period ended December 31, 1999, the
average cost of interest-bearing liabilities was 5.03%, down from 5.16% for the
same period in 1998. The Company's average costs of funds continue to be higher
than those experienced by national peers, primarily from competitive pressures
on market rates for deposits in the Company's service area.
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.
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, 1999, the same
amount for the like period in 1998.
Changes in the provision for loan losses are attributed to management's analysis
of the adequacy of the allowance for loan losses to both recognizable and
unforeseen losses. At December 31, 1999, the Company's allowance for loan losses
totaled $1.3 million or .38% of net loans receivable and 3,510% 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.
<PAGE>
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 or real estate owned. Non-interest
income decreased approximately $23,000 for the three month period ended December
31, 1999 in comparison to the like period in 1998. This decrease was attributed
primarily to a decrease in gains realized on the sale of securities available
for sale.
7
<PAGE>
HOME BANCORP
FORT WAYNE, INDIANA
MANAGEMENT'S DISCUSSION AND ANALYSIS
FINANCIAL CONDITION AND RESULTS OF OPERATION
ITEM 2 CONTINUED
NON-INTEREST EXPENSE. Non-interest expenses for the three month period ended
December 31, 1999 were approximately $1,601,000, compared to $1,172,000 reported
from the same prior year period in 1998. Compensation and employee benefits have
increased by approximately $193,000 for the three month period when compared to
the same period in 1998. This variance is attributed primarily to expense
associated with severance pay agreed to upon the early retirement of the former
Chairman and Chief Executive Officer Mr. W. Paul Wolf. The Bank elected to
expense a significant portion of this severance in this quarter. For the period
ended December 31, 1999, net occupancy and equipment expense is up from the
prior year approximately $13,000 for the period. This increase is generally the
result of the opening of a second branch office in Adams County. This second
Decatur IN branch primarily serves drive through traffic. Other general and
administrative expenses were approximately $215,000 higher for the three month
period ended December 31, 1999 than for the same period a year earlier. This
change is attributed primarily to fluctuations in the number and timing of loan
originations where applied costs are reduced by associated income. During the
fiscal 2000 period, the Company has continued its cost containment efforts.
INCOME TAX EXPENSE. Income tax expense for the three month period ended December
31, 1999 reflects lower pretax earnings than in the previous like year period.
For the comparative three month period, fiscal 2000 tax provisions are modestly
lower due to higher non-income deductions than for the previous like year
period.
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, 1999, the Bank had $7.0 million in advances from
the FHLB of Indianapolis.
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, 1999, the Bank's quarterly liquidity ratio
was 18.1%. As of December 31, 1998, the Bank's liquidity was 12.2%.
The Bank uses its liquidity resources principally to meet ongoing loan
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 liquidity needs.
At December 31, 1999 the Bank had outstanding commitments to extend credit which
amounted to $15.4 million (including $12.3 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.
<PAGE>
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, 1999, the Bank had tangible and core
capital of $35.5 million, or 8.44% of adjusted total assets. Risk-based capital
totaled $36.8 million, or 18.27% of risk-based assets. The institution
substantially exceeded all regulatory capital standards.
8
<PAGE>
HOME BANCORP
FORT WAYNE, INDIANA
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
1999 1998
------------ ------------
<S> <C> <C>
FINANCIAL HIGHLIGHTS (AVERAGES)
Return on assets 0.58% 0.82%
Return on equity 6.61% 7.60%
Yield on interest-earning assets 6.96% 7.22%
Cost of interest-bearing liabilities 5.03% 5.16%
Net interest spread 1.93% 2.06%
Net interest rate margin 2.48% 2.56%
Net interest income to operating (G&A) expenses
Operating (G&A) expenses to assets 159.93% 204.96%
Non-interest income to assets 1.52% 1.25%
Interest-earning assets to interest-bearing liabilities 0.09% 0.12%
Efficiency ratio 112.14% 112.02%
EQUITY TO ASSETS (AT END OF PERIOD) 60.39% 46.59%
TANGIBLE EQUITY TO ASSETS (AT END OF PERIOD) 8.81% 10.73%
AVERAGE ASSETS (DOLLARS IN THOUSANDS) 8.81% 10.73%
$ 421,585 $ 375,340
ASSET QUALITY RATIOS
Non-performing assets to total assets 0.01% 0.12%
Non-performing loans to net loans 0.01% 0.14%
Allowance for loan losses to net loans 0.38% 0.42%
Allowance for loan losses to non-performing loans 3,510% 307%
Net charge offs to loans -- --
Loans to deposits 94.46% 100.57%
Loans to assets 83.20% 86.94%
PER COMMON SHARE
Net income $ 0.32 $ 0.37
NET INCOME (DILUTED) 0.31 0.35
Book value 18.37 18.30
Tangible book value 18.37 18.30
STOCK PRICE
High $ 28.000 $ 29.500
Low 16.500 26.563
Close 17.375 28.500
</TABLE>
9
<PAGE>
HOME BANCORP
FORT WAYNE, INDIANA
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 3
MARKET RISK
The Company is exposed to the impact of interest rate changes and changes in the
market value of its investments. The Company currently focuses lending efforts
toward originating competitively priced adjustable-rate loan products with
maturities out to 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.
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 offers 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 of 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.
<PAGE>
As the OTS's Interest Rate Risk Exposure Report for December 31, 1999, was not
available as of the filing date, the information presented below is as of
September 30, 1999. Shown 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.
10
<PAGE>
HOME BANCORP
FORT WAYNE, INDIANA
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 3 CONTINUED
- --------------------------------------------------------------------------------
Change in Interest Rate Board Limit $ Change % Change
(Basis Points) % Change (In Thousands)
+300 bp (45) ($22,048) (58)
+200 bp (29) (14,447) (38)
+100 bp (13) (6,867) (18)
0 bp - - -
-100 bp (2) 4,611 12
-200 bp (6) 6,566 17
-300 bp (10) 7,702 20
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, interest rates on certain 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.
11
<PAGE>
HOME BANCORP
FORT WAYNE, INDIANA
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
None
ITEM 5 OTHER INFORMATION
None
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
Press releases filed on Form 8-K during the quarter ended December
31, 1999 and subsequent to that date include:
DATE OF REPORT SUBJECT
-------------- -------
10-07-99 Registrant's Press Release Relative to
Earnings Growth
10-12-99 Registrant's Press Release Relative to
W. Paul Wolf Retirement from Home Loan
Bank
10-21-99 Registrant's Press Release Relative to
Stock Repurchase
10-22-99 Registrant's Press Release Relative to
Interim President/CEO
12-16-99 Registrant's Press Release Relative to
Declared Cash Dividend
12
<PAGE>
HOME BANCORP
FORT WAYNE, INDIANA
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 14, 2000 /S/ DONALD E. THORNTON
----------------------
Donald E. Thornton
Senior Vice-President
DATE: FEBRUARY 14, 2000 /S/ TIMOTHY A. SHEPPARD
-----------------------
Timothy A. Sheppard
Treasurer
13
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