SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________________
FORM 10-Q
[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) FOR THE
SECURITIES EXCHANGE ACT OF 1934
For the Transition period from ___________ to ____________
Commission File Number 0-25516
CAMERON FINANCIAL CORPORATION
(Exact name of Registrant as specified in its Charter)
Delaware 43-1702410
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
123 East Third Street, Cameron, Missouri 64429
(Address of principal executive offices) (ZIP Code)
Registrant's telephone number, including area code: (816) 632-2154
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Yes (X) No ( )
Indicate the number of shares outstanding of each of the issuer's
common stock as of the latest practicable date.
Class Outstanding at May 8, 1997
Common stock, .01 par value 2,650,696
CAMERON FINANCIAL CORPORATION
Contents
PART I - FINANCIAL INFORMATION
Item 1: Financial Statements Page
Consolidated Balance Sheets at March 31, 1997,
unaudited, and September 30, 1996 3
Consolidated Statements of Earnings for the Three
Months and Six Months Ended March 31, 1997 and
1996, unaudited 4
Consolidated Statements of Equity for the
Six Months Ended March 31, 1997, unaudited 5
Consolidated Statements of Cash Flows for
the Six Months Ended March 31, 1997 and
1996, unaudited 6-7
Notes to Unaudited Consolidated Financial
Statements 8
Item 2: Management's Discussion and Analysis of
Financial Condition and Results of
Operations 9-18
PART II - OTHER INFORMATION 19
Signatures 20
CAMERON FINANCIAL CORPORATION AND SUBSIDIARY
Consolidated Balance Sheets
(Dollars in thousands)
<TABLE>
March 31, September 30,
1997 1996
Assets (unaudited)
<S> <C> <C>
Cash and cash equivalents $5,652 $6,283
Investment securities held-to-maturity (estimated fair
value of $14,386,000 at March 31 and $18,249,000 at
September 30) 14,407 18,297
Mortgage-backed securities held-to-maturity 11 13
Loans receivable, net 167,608 154,444
Accrued interest receivable:
Loans and mortgage-backed securities 1,118 1,090
Investment securities 140 206
Office property and equipment, net 5,876 2,874
Stock in Federal Home Loan Bank(FHLB) of Des Moines, at cost 1,262 1,259
Deferred income taxes 401 611
Other assets 1,218 1,269
Total assets $197,693 $186,346
Liabilities and Stockholders' Equity
Liabilities:
Savings deposits 124,635 123,108
Advances from FHLB 25,250 12,250
Advance payments for taxes and insurance 966 1,729
Accrued interest on savings deposits 139 141
Accrued expenses and other liabilities 1,006 1,989
Income taxes payable 316 314
Total liabilities 152,312 139,531
Stockholders' Equity:
Serial preferred stock, $.01 par, 2,000,000
authorized, none issued or outstanding --- --
Common stock, $.01 par value, authorized 10,000,000
shares, 3,026,928 shares issued 30 30
Additional paid in capital 29,703 29,622
Retained earnings, substantially restricted 23,626 22,756
Less:
Unearned employee benefits (2,801) (3,082)
Treasury stock, at cost- 344,732 shares at March 31
and 177,248 at September 30, 1996 (5,177) (2,511)
Total stockholders' equity 45,381 46,815
Total liabilities and stockholders' equity $197,693 $186,346
</TABLE>
See accompanying Notes to Unaudited Consolidated Financial Statements.
CAMERON FINANCIAL CORPORATION AND SUBSIDIARY
Consolidated Statements of Earnings
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31, March 31,
1997 1996 1997 1996
(Dollars in thousands, except share data)
Interest income:
<S> <C> <C> <C> <C>
Loans $3,514 $2,973 $6,952 $5,807
Investment securities 240 355 517 740
Mortgage-backed securities 1 1 1 1
Certificates of deposit and other 109 98 234 282
Total interest income 3,864 3,427 7,704 6,830
Interest expense:
Savings deposits 1,589 1,608 3,228 3,251
Borrowed money 365 28 596 31
Total interest expense 1,954 1,636 3,824 3,282
Net interest income 1,910 1,791 3,880 3,548
Provision for loan losses 80 138 269 180
Net interest income after
provision for loan losses 1,830 1,653 3,611 3,368
Noninterest income:
Loan fees and service charges 41 30 81 63
Other income 21 17 27 26
Total noninterest income 62 47 108 89
Noninterest expense:
Compensation, payroll taxes and
fringe benefits 574 397 1,035 773
Occupancy expense 79 54 138 99
Data processing 42 37 82 78
Federal insurance premiums 20 71 76 141
Advertising 29 17 55 38
Loss on real estate owned - 1 - 1
Other operating expenses 182 221 330 325
Total noninterest expense 926 798 1,716 1,455
Earnings before income taxe 966 902 2,003 2,002
Income taxes 380 324 773 739
Net earnings $586 $578 $1,230 $1,263
Net earnings per share $0.23 $0.20 $0.46 $0.45
Average common shares outstanding 2,567,167 2,841,533 2,652,003 2,827,151
See accompanying Notes to Unaudited Consolidated Financial Statements.
</TABLE>
CAMERON FINANCIAL CORPORATION AND SUBSIDIARY
Consolidated Statements of Stockholders' Equity
For The Six Months Ended March 31, 1997
(Unaudited)
(Dollars in Thousands)
<TABLE>
<CAPTION>
Additional Unearned Total
Common paid-in Retained employee Treasury stockholders'
Stock capital earnings benefits stock equity
<S> <C> <C> <C> <C> <C> <C>
Balance at September 30, 1996 $30 $29,622 $22,756 ($3,082) ($2,511) $46,815
Net earnings - - 1,230 - - 1,230
Amortization of RRP - - - 139 - 139
Purchase of treasury stock - - - - (2,666) (2,666)
Allocation of ESOP shares - 81 - 142 - 223
Dividends declared($.07 per share) - - (360) - - (360)
Balance at March 31, 1997 $30 $29,703 $23,626 ($2,801) ($5,177) $45,381
See accompanying Notes to Unaudited Consolidated Financial Statements.
</TABLE>
CAMERON FINANCIAL CORPORATION AND SUBSIDIARY
Consolidated Statements of Cash Flows
Six Months Ended March 31,
(Unaudited)
<TABLE>
1997 1996
Cash flows from operating activities:
<S> <C> <C>
Net earnings $1,230 $1,263
Adjustments to reconcile net earnings to cash
provided by operating activities:
Depreciation and amortization 26 16
Provision for loan losses 269 180
Provision for losses on real estate owned 3 -
Amortization of RRP and allocation of ESOP shares 362 46
Deferred income taxes 210 (34)
Gain on sales of real estate owned (4) -
Stock dividend received from FHLB of Des Moines (3) (25)
Amortization of deferred loan fees (229) (175)
Proceeds from sales of loans held for sale 646 836
Origination of loans held for sale (641) (746)
Gain on sale of loans held for sale (5) (8)
Changes in assets and liabilities:
Accrued interest receivable 38 21
Other assets (19) (34)
Accrued interest payable (2) (13)
Accrued expenses and other liabilities (971) 106
Current income taxes payable 2 (243)
Cash provided by operating activities $912 $1,190
Cash flows from investing activities:
Net increase in loans receivable (13,156) (12,653)
Purchase of loans receivable - (882)
Mortgage-backed securities principal payments 2 2
Maturity of investment securities
held to maturity 4,410 9,244
Purchase of investment securities
held to maturity (500) (3,541)
Net decrease (increase) in certificates of
deposit in other financial institutions - 991
Net proceeds from sale of real estate owned 27 -
Additions and improvements to real estate owned -4 -
Purchase of office properties and equipment (3,048) (967)
Cash used in investing activities ($12,269) ($7,806)
Cash flows from financing activities:
Net (decrease) in NOW, passbook and money market
deposit accounts (330) (431)
Net increase in certificate accounts 1,857 474
Net decrease in advance payments by
borrowers for taxes and insurance (763) (772)
Proceeds from FHLB advances 15,000 3,250
Repayment of FHLB advances (2,000) -
Dividends paid (372) (393)
Purchase of Treasury stock (2,666) (3,881)
Net cash provided by (used in)
financing activities 10,726 (1,753)
Net (decrease) in cash (631) (8,369)
Cash and cash equivalents at beginning of period 6,282 10,934
Cash and cash equivalents at end of period $5,651 $2,565
Supplemental disclosure of cash flow information:
Cash paid during the period for income taxes $385 $1,017
Cash paid during the period for interest, net
of capitalized interest $3,881 $3,295
Supplemental schedule of noncash investing and financing
activities:
Conversion of real estate owned to loans $51 -
Dividend declared and payable $174 $164
See accompanying Notes to Unaudited Consolidated Financial Statements.
</TABLE>
CAMERON FINANCIAL CORPORATION AND SUBSIDIARY
Notes to Unaudited Consolidated Financial Statements
(1) Cameron Financial Corporation
Cameron Financial Corporation (the "Company") was incorporated under the laws
of the State of Delaware for the purpose of becoming the savings & loan holding
company of The Cameron Savings & Loan Association, FA (the "Association") in
connection with the Association's conversion from a federally chartered mutual
savings and loan to a federally chartered stock savings and loan, pursuant to
its Plan of Conversion. On February 27, 1995, the Company commenced a
Subscription and Community Offering of its shares in connection with the
conversion of the Association (the "Offering"). The Offering was consummated
and the Company acquired the Association on March 31, 1995.
(2) Basis of Preparation
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles (GAAP) for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. To the extent that information and footnotes required by
generally accepted accounting principles for complete financial statements are
contained in or consistent with the audited financial statements incorporated
by reference in the Company's Annual Report on Form 10-K for the year ended
September 30, 1996, such information and footnotes have not been duplicated
herein. In the opinion of management, all adjustments, consisting of only
normal recurring accruals, necessary for a fair presentation have been
included. The results of operations and other data for the three month and six
month period ended March 31, 1997 are not necessarily indicative of results
that may be expected for the entire fiscal year ending September 30, 1997.
(3) Earnings Per Share
Earnings per share of common stock have been determined by dividing net
earnings for the period by the weighted average number of shares of common
stock and common stock equivalents outstanding, less treasury shares and
unallocated ESOP shares. Stock options are regarded as common stock
equivalents and are therefore considered in both primary and fully diluted
earnings per share calculations. Common stock equivalents are computed using
the treasury stock method. In February 1997, the Financial Accounting
Standards Board issued Statement No. 128, "Earnings Per Share" which revises
the calculation and presentation provisions of Accounting Principles Board
Opinion 15 and related interpretations. Statement No. 128 is effective for
the Company's fiscal year ending September 30, 1998. Retroactive application
will be required. The Company believes the adoption of Statement No. 128
will not have a significant effect on its reported earnings per share.
CAMERON FINANCIAL CORPORATION AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion compares the financial condition of Cameron
Financial Corporation, the "Company", and its wholly owned subsidiary, The
Cameron Savings & Loan Association, F.A., the "Association", at March 31,
1997 to its fiscal year ended September 30, 1996, and the results of
operations for the three and six months ended March 31, 1997 with the three
and six months ended March 31, 1996. This discussion should be read in
conjunction with the interim financial statements and notes which are
included herein.
GENERAL
The Company was organized as a Delaware corporation in December 1994, at
the direction of the Association's Board of Directors, to acquire all of
the capital stock issued by the Association upon its conversion from the
mutual to stock form of ownership. The business of the Company consists
primarily of the business of the Association.
The Association was originally founded in April 1887 as a Missouri
chartered savings and loan association located in Cameron, Missouri. On
November 28, 1994, the Association members voted to convert the Association
to a Federal charter. The Association conducts its business through its
main office in Cameron, Clinton County, two full service branch offices
located in Maryville, Nodaway County, and Mound City, Holt County, and a
loan production office located in Liberty, Clay County, Missouri. OTS
approval has been received to open a full service branch office in Liberty.
The loan production office will be closed upon the opening of the branch
office. Deposits are insured by the Federal Deposit Insurance Corporation,
FDIC, to the maximum allowable.
The Association's business strategy is to operate as awell-capitalized,
profitable and independent community savings institution dedicated to home
mortgage lending and, to a lesser extent, consumer finance, funded primarily by
retail deposits from the Association's main and branch offices. The
Association has sought to implement this strategy by emphasizing residential
mortgage lending, developing a construction lending business, maintaining
asset quality, managing interest rate risk exposure, maintaining an investment
portfolio of high grade securities and other investments, maintaining
acceptable levels of profitability and capital, and emphasizing customer
service.
The net income of the Association is dependent primarily on its net
interest income, which is the difference between interest earned on its
loans and investments and the interest paid on interest bearing liabilities.
Net income is also affected by the generation of non-interest income, which
primarily consists of fees and service charges. Net interest income is
determined by the difference between the yield earned on interest earning
assets and rates paid on interest bearing liabilities (interest rate spread),
and the relative amounts of interest earning assets and interest bearing
liabilities (net interest margin). The interest rate spread is affected by
loan demand and deposit flows. In addition, net income is affected by the
level of operating expenses and the establishment of loan loss reserves.
The operation of a financial institution is significantly affected
by prevailing economic conditions, competition, and the monetary and fiscal
policies of governmental agencies. Lending activities are influenced by
the demand for and supply of housing, competition among lenders, the level
of interest rates, and the availability of funds. Deposit flows and cost
of funds are influenced by prevailing market rates of interest primarily
on competing investments, account maturities and the levels of personal
income and savings in the market area of the financial institution.
FINANCIAL CONDITION
Total assets increased 6.1%, or $11,347,000, to $197,693,000 atMarch 31,
1997 from $186,346,000 at September 30, 1996. During the six months ended
March 31, 1997, the Company repurchased 164,900 shares of common stock.
An additional 17,500 shares were repurchased in April 1997. Approximately
100,000 shares remain to be repurchased in the repurchase program previously
announced. Stockholders' equity decreased $1,434,000 or3.1% to $45,381,000 at
March 31, 1997 compared to $46,815,000 at September 30, 1996. The decrease
was due to the stock repurchase program and quarterly cash dividends exceeding
net income. Cash, investment securities and certificates of deposits in other
financial institutions decreased 18.4%, or $4,521,000 to $20,059,000 at
March 31, 1997 from $24,580,000 at September 30, 1996. Loans receivable, net,
increased 8.5%, or $13,164,000, to $167,608,000 at March 31, 1997 from
$154,444,000 at September 30, 1996. Real estate loan and consumer loan growth
in this time period were $14,158,000 and $274,000, respectively. Office
property and equipment increased $3,002,000 to $5,876,000 at March 31, 1997 from
$2,874,000 at September 30, 1996, as a result of construction continuing on the
new home office building in Cameron and the purchase of land in Liberty,
Missouri for a new branch office. OTS has approved the establishment of a
full service branch in Liberty, Missouri. When the branch office is
opened, the current loan production office will be closed. The total cost of
the new home office is estimated at $4,600,000 and completion is expected
in late May 1997. The Company purchased approximately four acres of land
in Liberty, Missouri at a cost of $850,000. Construction costs are
estimated at $1.0 million, although no formal construction plans have been
prepared and the estimate is subject to change. Completion of the office
could occur in late 1997 or early 1998 with funds expected to be provided
by normal operations. The Company intends to use approximately one
acre for the branch facility and the remainder as investment property.
<PAGE>
The following table sets forth certain information regarding the
composition of the Association's loan portfolio.
<TABLE>
<CAPTION>
March 31, September 30,
1997 1996
<S> <C> <C>
One- to four family $114,542,000 $109,292,000
Multifamily 3,953,000 2,908,000
Commercial real estate 3,571,000 4,322,000
Land 5,479,000 5,404,000
Development 3,139,000 4,201,000
Construction (1) 51,247,000 41,646,000
Consumer loans 8,604,000 8,330,000
Total Loans Receivable 190,535,000 176,103,000
Less:
Deferred loan fees, net 821,000 804,000
Loans in process 20,496,000 19,502,000
Allowance for loan losses 1,610,000 1,353,000
Net Loans Receivable $167,608,000 $154,444,000
(1) Speculative construction $42,371,000 $26,685,000
Contract and permanent
construction $8,876,000 $14,961,000
Total $51,247,000 $41,646,000
</TABLE>
During the six months ended March 31, 1997, construction loans increased
by $9,601,000 to $51,247,000, and permanent 1-4 family loansincreased by
$5,250,000 to $114,542,000.
Deposits were $124,635,000 at March 31, 1997, an increase of $1,527,000,
or 1.2% from $123,108,000 at September 30, 1996. Competition from other
financial and non-financial entities will continue to impact savings
growth. The Association offers competitive interest rates on its deposit
products.
Due to continued loan demand, the Association borrowed an additional
$7,000,000 from the Federal Home Loan Bank during the quarter ended March
31, 1997. During the six months ended March 31, 1997, FHLB advances have
increased $13,000,000. No advances matured or were repaid. The FHLB
advances have maturities between two and five years and fixed interest
rates between 6.07% and 6.43%. In April 1997, the Association borrowed an
additional $5,000,000 from the Federal Home Loan Bank. It had a maturity
of one year with a variable interest rate based on LIBOR.
At March 31, 1997 FHLB advances and certificates of deposit were 16.9% and
67.4% of interest-bearing liabilities respectively. At September 30, 1996,
they were 9.1% and 73.2% respectively.
RESULTS OF OPERATIONS
Net Earnings: Earnings per share increased 15.0% to $0.23 for the quarter
ended March 31, 1997, compared to the quarter ended March 31, 1996. Net
earnings increased $8,000, or 1.4%, to $586,000 for the quarter ended March
31, 1997, compared with $578,000 for the quarter ended March 31, 1996. Net
income decreased $33,000, or 2.6%, to $1,230,000, or $0.46 per share, for
the six months ended March 31, 1997, compared with $1,263,000, or $0.45 per
share for the six months ended March 31, 1996. For the quarterly period,
the increases in interest income and non-interest income and a decrease in
the provision for loan losses offset increases in interest expense and non-
interest expenses. For the six-month period, increases in interest expense,
provision for loan loss and non-interest expense offset increases
in interest income and non-interest income.
Net Interest Income: Net interest income increased $119,000, or 6.6%, to
$1,910,000 for the quarter ended March 31, 1997, compared with $1,791,000
for the quarter ended March 31, 1996. Net interest income increased $332,000 or
9.4% to $3,880,000 for the six months ended March 31, 1997, compared with
$3,548,000 for the six months ended March 31, 1996. Most of
the increase was due to increases in balances of interest earning assets.
The net interest margin decreased to 4.16% at March 31, 1997 compared to
4.18% at March 31, 1996. Interest earning assets averaged 129.24% of
interest bearing liabilities for the six months ended March 31, 1997
compared with 138.78% for the same period in 1996. The average spread
between interest earning assets and interest bearing liabilities increased
to 2.70% for the six months ended March 31, 1997, compared with 2.68% for
the same period in 1996.
Interest Income: Interest income increased by $437,000, or 12.8%, for the
quarter ended March 31, 1997, to $3,864,000 from $3,427,000 for the quarter
ended March 31, 1996. Interest income increased by $874,000, or 12.8%, for
the six months ended March 31, 1997, to $7,704,000 from $6,830,000 for the
six months ended March 31, 1996.
Interest Expense: Interest expense increased $318,000, or 19.4%, to
$1,954,000 for the quarter ended March 31, 1997, compared to $1,636,000 for
the same period in 1996. The increase is a result of increases in savings
deposits of $3.3 million or 2.7% from $121.3 million at March 31, 1996 to
$124.6 million at March 31, 1997 and increases of FHLB advances of $22.0
million from $3.3 million at March 31, 1996 to $25.3 million at March 31,
1997 and increased rates on interest-bearing liabilities. The Association
borrowed an additional $7.0 million from the Federal Home Loan Bank of Des
Moines during the quarter ended March 31, 1997. The advances have maturities
between two and five years and fixed rates between 6.07% and 6.43%.
Provision for Loan Losses: The provision for loan losses was $80,000 for
the quarter ended March 31, 1997, compared to $138,000 for the same period
in 1996. The provision for loan losses was $269,000 for the six month
period ended March 31, 1997, compared to $180,000 for the same period in
1996. The allowance for loan losses is reviewed and adjusted monthly by
management based on the size and composition or mix of the gross loan
portfolio. Various percentages are applied to the different types of loans
in the portfolio with the highest requirement assigned to the loans with
the greatest inherent risk. The provision will vary based on increases or
decreases in the total loan portfolio and changes in the composition or mix
of the portfolio. Speculative construction loans, which carry the highest
risk factor, increased $15.7 million, or 58.8%, to $42.4 million at March
31, 1997 from $26.7 million at September 30, 1996. Non-performing loans
fell $0.3 million, or 19.6%, to $1.2 million at March 31, 1997 from $1.5
million at September 30, 1996. As of March 31, 1997, the allowance for
loan losses was $1,610,000, or .96% of net loans receivable and 135.41% of
total nonperforming loans.
A reconciliation of the Association's allowance for loan losses is
summarized as follows:
<TABLE>
<CAPTION>
Six Months Ended March 31
1997 1996
Balance at beginning
<S> <C> <C>
of period $1,353,000 $994,000
Provision 269,000 180,000
Charge-offs (12,000) (2,000)
Recoveries - -
Balance at end of period $1,610,000 $1,172,000
</TABLE>
Noninterest Income: Noninterest income increased to $62,000 for the
quarter ended March 31, 1997 from $47,000 for the same period in 1996.
Loan fees and deposit service charges increased $11,000 for the three
months ended March 31, 1997 compared to the same period in 1996, due
primarily to increased number of loans and new deposit accounts with
monthly charges. Other income increased $4,000 in the quarter ended March
31, 1997 compared to the same period in 1996 due primarily to receipt of
the final installment from the sale of the Association's share of a
cooperative data center. Noninterest income increased to $108,000 for the
six months ended March 31, 1997 from $89,000 for the six months ended March
31, 1996. Loan fees and deposit service charges increased $18,000 for the
six months ended March 31, 1997 compared to the same period in 1996, due
primarily to increased numbers of loans and new deposit accounts with
monthly service charges. Other income increased $1,000 during the six
months ended March 31, 1997 compared to the six months ended March 31, 1996
Decreased loan sales in the secondary market with fewer gains on the sale
of loans was offset by the gain on the final installment of the sale of a
cooperative data center partially owned by the Association.
Noninterest Expense: Noninterest expense increased $128,000 to $926,000
for the quarter ended March 31, 1997 from $798,000 for the same period in
1996. Personnel expenses increased $177,000 in 1997 compared to 1996.
Cash compensation increased $65,000 for the current quarter. The Association
had 53 full-time equivalent employees at March 31, 1997 compared to 40 at March
31, 1996, and 45 at September 30, 1996. Most of the staffing increase is
preparation of the opening of the new home office in Cameron. In addition to
the expanded hours at the new office, part of the existing office will remain
open. Recognition and Retention Plan (RRP) expenses increased $23,000 for
the quarter ended March 31, 1997 compared to the same period in 1996. The RRP
was approved by stockholders in January 1996. As a result, the quarter ended
March 31, 1996 had two months expense but the current quarter had three months
expense. Decreased loan originations in the quarter ended March 31, 1997
compared to the quarter ended March 31, 1996, resulted in $44,000 fewer costs
deferred in accordance with FAS 91 for the current quarter. Payroll taxes and
other benefits increased $25,000 due to the first vesting of RRP awards
in January 1997 and increased number of employees. ESOP expenses were
$6,000 higher in the quarter ended March 31, 1997 compared to the same
period in 1996 due to higher stock prices in the current quarter.
Occupancy expense increased $25,000 to $79,000 for the quarter ended March
31, 1997 compared to the quarter ended March 31, 1996 due to increased real
estate taxes on the new home office building and increased expenses for
office equipment, computer upgrades and increased depreciation expense.
Federal insurance premiums decreased $51,000 to $20,000 for the quarter
ended March 31, 1997 compared to the quarter ended March 31, 1996 due to
decreased SAIF premiums after the special one-time assessment in September
1996. Advertising expenses increased $12,000 to $29,000 for the quarter
ended March 31, 1997 compared to the same period in 1996 due to increased
advertising for the new deposit products introduced during the current
period and promotional items for the opening of the new home office. Other
operating expenses decreased $39,000 to $182,000 for the quarter ended
March 31, 1997 compared to the quarter ended March 31, 1996.
Substantially all of the decrease was due to increased accruals which related to
the Company becoming a publicly held stock institution which were taken in the
quarter ended March 31, 1996.
Noninterest expense increased $261,000 for the six months ended March 31,
1997 compared to the six months ended March 31, 1996. Personnel expenses
increased $262,000 for the current period. Cash compensation increased
$113,000 due primarily to more employees. RRP expenses increased $93,000
due to six months expense in the current period versus two months in the
prior period. Payroll taxes and other benefits increased $30,000 due to
more employees and the first years vesting of the RRP. Due to a decrease
in loan originations in the six month period ended March 31, 1997 compared
to the same period in 1996, $15,000 less in expenses were deferred. ESOP
expense increased in the current period by $7,000 due to higher average
stock prices. Occupancy expenses increased $39,000 to $138,000 for the six
month period ended March 31, 1997 compared to the same period in 1996,
primarily due to increased real estate taxes on the new home office
building and increased expenses for office equipment, computer upgrades and
increased depreciation expense. Federal insurance premiums decreased
$65,000 to $76,000 for the six months ended March 31, 1997 compared to the
same period in 1996. The decrease was due to reduced SAIF premiums as a
result of the one-time assessment to recapitalize SAIF in September 1996.
Advertising expenses increased $17,000 to $55,000 for the six months ended
March 31, 1997 compared to the same period in 1996. The increase was
primarily due to increased advertising for new deposit accounts and promotional
items for the opening of the new home office building.
Income Taxes: Income tax expense increased $56,000 to $380,000 for the
quarter ended March 31, 1997, compared to $324,000 for the same period in
1996, due to an increase of $64,000 in pre-tax income for the comparable
periods. The effective tax rate was 39.3% and 35.9% for the quarters ended
March 31, 1997 and 1996, respectively. Income tax expense increased
$34,000 to $773,000 for the six months ended March 31, 1997, compared to
$739,000 for the six months ended March 31, 1996, due to an increase of
$1,000 in pre-tax income for the comparable periods. The effective tax
rate was 38.6% and 36.9% for the six months periods ended March 31, 1997
and 1996, respectively.
<PAGE>
NON-PERFORMING ASSETS
The following table sets forth the amounts and categories of the
Association's non-performing assets. Loans are placed on non-accrual
status when the collection of principal and/or interest is not probable;
however, in no event is interest accrued on loans for which interest is
more than 90 days delinquent. Foreclosed assets include assets acquired
in settlement of loans.
<TABLE>
<CAPTION>
March 31 September 30,
1997 1996
(Dollars in Thousands)
Non-Accruing Loans:
<S> <C> <C>
One- to four-family $386 $638
Multi-family -- --
Commercial -- --
Land -- --
Construction 172 131
Consumer -- --
Total non-accuring loans 558 769
Accruing loans delinquent 90 days or more
One- to four-family 593 653
Multi-family -- --
Commercial -- --
Land -- --
Construction -- --
Consumer 38 56
Total accruing loans delinquent
90 days or more 631 709
Total non-performing loans 1,189 1,478
Foreclosed Assets:
One- to four-family -- 70
Multi-family -- --
Commercial -- --
Land -- --
Construction -- --
Consumer -- --
Total foreclosed assets -- 70
Total non-performing assets $1,189 $1,548
Total classified assets $10,392 $7,729
Total non-performing loans as a
percentage of loans receivable 0.62% 0.84%
Total non-performing assets as a
percentage of total assets 0.60% 0.83%
</TABLE>
Non-performing loans decreased $289,000, or 19.6% to $1,189,000 at March
31, 1997 from $1,478,000 at September 30, 1996. Classified assets
increased 34.45% to $10,392,000 at March 31, 1997 from $7,729,000 at
September 30, 1996, primarily because of the increase in speculative
construction loans that were not paid off in their initial one year term.
At September 30, 1996, 37 loans for a total of $4.4 million were in that
category compared to 54 loans for a total of $6.6 million at March 31,
1997. The increase is primarily due to a later spring season in the
Association's market area. Cold and damp weather has decreased the traffic
of potential home buyers in new subdivisions. Sixteen of the 54 have
signed sales contracts but the Association's loans have not yet been paid.
Only two speculative construction loans were delinquent more than thirty
days interest at March 31, 1997.
CAPITAL RESOURCES
The Association is subject to three capital to asset requirements in
accordance with Office of Thrift Supervision regulations. The following
table is a summary of the Association's regulatory capital requirements and
actual capital as of March 31, 1997:
<TABLE>
<CAPTION>
Actual Required Excess
Amount/Percent Amount/Percent Amount/Percent
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Tangible $33,731 17.95% $2,818 1.50% $30,913 16.45%
Core Leverage
Capital 33,731 17.95% 5,636 3.00% 28,095 14.95%
Risk-Based
Capital 34,708 26.76% 10,376 8.00% 24,332 18.76%
</TABLE>
LIQUIDITY
The Association's principal sources of funds are deposits, advances from
the Federal Home Loan Bank of Des Moines, principal and interest payments
on loans, and investment securities classified as held to maturity. While
scheduled loan repayments and maturing investments are relatively predictable,
deposit flows and early loan prepayments are more influenced by interest rates,
general economic conditions and competition.
The Association is required to maintain minimum levels of liquid assets as
defined by regulations. The required percentage is currently 5% of net
withdrawable savings deposits and borrowings payable on demand or in one
year or less. The Association has maintained its liquidity ratios at
levels exceeding the minimum requirement. The eligible liquidity ratios
at March 31, 1997 and September 30, 1996 were 5.85% and 6.43% respectively.
In light of the competition for deposits and demand for loans, the
Association has utilized the funding sources of the Federal Home Loan Bank
to meet demand in accordance with the Association's growth plan. The
wholesale funding sources may allow the Association to obtain a lower cost
of funding and create a more efficient liability match to the respective
assets being funded. The Association borrowed $7.0 million in the quarter
ended March 31, 1997. The advances have maturities between two and five
years and fixed interest rates between 6.07% and 6.43%. No advances were
repaid during the quarter ended March 31, 1997. In April 1997, the
Association borrowed $5.0 million. That advance had a one year term with
a variable interest rate based on LIBOR. Certificates of deposits were
81.0% of total savings and 67.4% of total interest-costing liabilities at
March 31, 1997 compared to 80.5% and 73.2% respectively at September 30,
1996.
Office property and equipment has increased $3.0 million in the six months
ended March 31, 1997. The Association has started construction of its new
home office building in Cameron. Cost of the new building is expected to
be $4.6 million and will be completed in May 1997. On November 15, 1996,
the Company signed a contract to purchase approximately four acres of land
in Liberty, Missouri for use as a future branch office. It is the
Association's intent to convert the current loan production office to a full
service branch office. Application for the branch office has been approved by
OTS. The cost of the land was $850,000. Although bids have not been completed
at this time, construction costs are estimated at $1.0 million. Completion of
the office could occur in late 1997 or early 1998 with funds provided by normal
operations. The Company intends to use approximately one acre for the branch
facility and the remainder as investment property.
As of May 2, 1997, the Company has purchased 196,400 of the 285,018 shares
to be repurchased in the 10% stock buyback announced in September, 1996.
The cost of the remaining 88,618 shares would be approximately $1.45
million based on the current bid-asked range of Company stock.
In September 1996, Congress enacted legislation to recapitalize the SAIF
by a one-time assessment on all SAIF-insured deposits held as of March 31,
1995. The assessment was 65.7 basis points per $100 in deposits, payable
on November 27, 1996. For the Association, the assessment amounted to
$800,000 (or $509,000 when adjusted for taxes), based on the Association's
deposits on March 31, 1995. In addition, beginning January 1, 1997,
pursuant to the legislation, interest payments on FICO bonds issued in the
late 1980's by the Financing Corporation to recapitalize the now defunct
Federal Savings and Loan Insurance Corporation will be paid jointly by BIF-
and SAIF-insured institutions. The FICO assessment will be 1.29 basis
points per $100 in BIF insured deposits and 6.44 basis points in SAIF
deposits. Beginning January 1, 2000, the FICO interest payments will be
paid pro rata by banks and thrifts based on deposits (approximately 2.4
basis points per $100 in deposits). The BIF and SAIF will be merged on
January 1, 1999, provided the bank and savings association charters are
merged by that date. In that event, pro rata FICO sharing will begin on
January 1, 1999.
While the legislation has reduced the disparity between premiums paid on
BIF and SAIF deposits, and has relieved the thrift industry of a portion
of the contingent liability represented by the FICO bonds, the premium
disparity between SAIF-insured institutions, such as the Association, and
BIF-insured institutions will continue until at least January 1, 1999.
Under the legislation, the Association anticipates that its ongoing annual
SAIF premiums will be approximately $80,000.
Legislation recently enacted by Congress contains a provision that repeals
the tax bad-debt reserve currently available to thrifts (including the
percentage-of-taxable-income method) for tax years beginning after December
31, 1995. The Association will have to change to the experience method of
computing its bad debt deduction. The legislation requires a thrift to
recapture the portion of its bad debt reserve that exceeds the base year
reserve (defined as the tax reserve as of the last taxable year beginning
before 1988). The amount of recapture would generally be taken into
taxable income ratably over a six year period. Postponement of the
recapture is possible if an association meets a minimum level for mortgage
lending for 1996 and 1997. As of September 30, 1996, the Association's bad
debt reserve subject to recapture over a six year period totaled approximately
$288,000. The Association has established a deferred tax
liability of approximately $96,000 for this recapture.
CAMERON FINANCIAL CORPORATION
FORM 10-Q
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings
The Holding Company and the Association are not involved in
any legal proceedings incident to the business of the
Holding Company and the Association, which involve amounts
in the aggregate which management believes are material to
the financial condition and results of operation.
ITEM 2. Changes in Securities
Not Applicable
ITEM 3. Defaults upon Senior Securities
Not Applicable
ITEM 4. Submissions of Matters to a Vote of Security Holders
The annual meeting of stockholders of the Company was held
on January 27, 1997. Mr David G. Just and Mr. William J.
Heavner were each elected as directors for three year terms
as follows: Mr. Just had 2,186,308 shares for, 23,985
shares withheld and no broker non-votes; Mr. Heavner had
2,184,958 shares for, 24,985 shares withheld and no
broker non-votes. The following Directors' terms of office
continued after the meeting: Herschel Pickett, Jon N.
Crouch, William F. Barker, Harold D. Lee and Kennith R.
Baker.
The stockholders approved the ratification of the
appointment of KPMG Peat Marwick, LLP as the company's
auditors by a vote of 2,186,613 shares for, 23,200 shares
against, 480 abstentions and no broker non-votes.
ITEM 5. Other Information
None
ITEM 6. Exhibits and Reports of Form 8-K
None
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.
CAMERON FINANCIAL CORPORATION
Registrant
Date: May 9, 1997 /s/ David G. Just
David G. Just, President and Chief
Executive Officer (Duly Authorized
Officer)
Date: May 9, 1997 /s/ Ronald W. Hill
Ronald W. Hill, Vice-President &
Treasurer (Principal Financial &
Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from Form 10-Q
and is qualified in its entirety by reference to such Form 10-Q.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> MAR-31-1997
<CASH> 345000
<INT-BEARING-DEPOSITS> 5307000
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 14418000
<INVESTMENTS-MARKET> 14397000
<LOANS> 169218000
<ALLOWANCE> 1610000
<TOTAL-ASSETS> 197693000
<DEPOSITS> 124635000
<SHORT-TERM> 25250000
<LIABILITIES-OTHER> 2427000
<LONG-TERM> 0
0
0
<COMMON> 30000
<OTHER-SE> 45351000
<TOTAL-LIABILITIES-AND-EQUITY> 197693000
<INTEREST-LOAN> 6952000
<INTEREST-INVEST> 517000
<INTEREST-OTHER> 235000
<INTEREST-TOTAL> 7704000
<INTEREST-DEPOSIT> 3228000
<INTEREST-EXPENSE> 3824000
<INTEREST-INCOME-NET> 3880000
<LOAN-LOSSES> 269000
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 1716000
<INCOME-PRETAX> 2003000
<INCOME-PRE-EXTRAORDINARY> 2003000
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1230000
<EPS-PRIMARY> .46
<EPS-DILUTED> .46
<YIELD-ACTUAL> 8.29
<LOANS-NON> 386000
<LOANS-PAST> 631000
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 9203000
<ALLOWANCE-OPEN> 1353000
<CHARGE-OFFS> 12
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 1610000
<ALLOWANCE-DOMESTIC> 1610000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
