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 December 31, 1998
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)
1304 North Walnut 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 February 12, 1999
Common stock, .01 par value 2,189,759
CAMERON FINANCIAL CORPORATION
Contents
PART I - FINANCIAL INFORMATION
Item 1: Financial Statements Page
Consolidated Balance Sheets at December 31, 1998,
unaudited, and September 30, 1998 3
Consolidated Statements of Earnings for the Three
Months Ended December 31, 1998 and 1997, unaudited 4
Consolidated Statements of Stockholder's
Equity for the Three Months Ended
December 31, 1998, unaudited 5
Consolidated Statements of Cash Flows for
the Three Months Ended December 31, 1998 and
1997, unaudited 6-7
Notes to Unaudited Consolidated Financial
Statements 8
Item 2: Management's Discussion and Analysis of
Financial Condition and Results of
Operations 9-16
PART II - OTHER INFORMATION 17
Signatures 17
CAMERON FINANCIAL CORPORATION AND SUBSIDIARY
Consolidated Balance Sheets
(Dollars in thousands)
<TABLE>
December 31, September
1998 1998
Assets (unaudited)
<S> <C> <C>
Cash and cash equivalents $4,732 $7,719
Investment securities held-to-maturity (estimated fair
value of $15,349,000 at December 31 and $16,467,000 at
September 30) 15,308 16,302
Mortgage-backed securities held-to-maturity 6 7
Loans receivable, net 188,033 184,605
Accrued interest receivable:
Loans and mortgage-backed securities 1,264 1,346
Investment securities 186 229
Office property and equipment, net 7,819 7,861
Stock in Federal Home Loan Bank(FHLB) of Des Moines, at cost 2,013 2,013
Deferred income taxes 155 155
Other assets 1,423 1,284
Total assets $220,939 $221,521
Liabilities and Stockholders' Equity
Liabilities:
Savings deposits 140,175 136,622
Advances from FHLB 37,250 37,250
Advance payments for taxes and insurance 569 1,903
Accrued interest on savings deposits 126 180
Accrued expenses and other liabilities 1,429 1,901
Income taxes payable 505 192
Total liabilities 180,054 178,048
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 30,095 30,058
Retained earnings, substantially restricted 26,541 26,220
Less:
Unearned employee benefits (1,804) (1,947)
Treasury stock, at cost- 837,169 shares at December
31, 1998 and 646,196 at September 30, 1998 (13,977) (10,888)
Total stockholders' equity 40,885 43,473
Total liabilities and stockholders' equity $220,939 $221,521
</TABLE>
See accompanying Notes to Unaudited Consolidated Financial Statements.
CAMERON FINANCIAL CORPORATION AND SUBSIDIARY
Consolidated Statements of Earnings
(unaudited)
<TABLE>
Three Months Ended
December 31,
1998 1997
(Dollars in thousands, except share and per share data)
Interest income:
<S> <C> <C>
Loans $3,925 $3,823
Investment securities 235 218
Certificates of deposit and other 96 148
Total interest income 4,256 4,189
Interest expense:
Savings deposits 1,841 1,786
Borrowed money 559 512
Total interest expense 2,400 2,298
Net interest income 1,856 1,891
Provision for loan losses 33 83
Net interest income after provision
for loan loss 1,823 1,808
Noninterest income:
Loan fees and deposit service charges 92 49
Gain on sale of investments 5 -
Other income 38 25
Total noninterest income 135 74
Noninterest expense:
Compensation, payroll taxes and
fringe benefits 685 606
Occupancy expense 177 158
Data processing 61 50
Federal insurance premiums 20 20
Advertising 37 35
(Gain) loss on real estate owned (3) 7
Other operating expenses 219 155
Total noninterest expense 1,196 1,031
Earnings before income taxes 762 851
Income taxes 297 316
Net earnings $ 465 $ 535
Basic and diluted earnings per share $ 0.22 $ 0.22
Basic common shares outstanding 2,122,616 2,407,721
Common stock equivalents - stock options 13,763 45,953
Diluted shares outstanding 2,136,379 2,453,674
See accompanying Notes to Unaudited Consolidated Financial Statements.
</TABLE>
CAMERON FINANCIAL CORPORATION AND SUBSIDIARY
Consolidated Statements of Stockholders' Equity
For The Three Months Ended December 31, 1998
(Unaudited)
(Dollars in Thousands)
<TABLE>
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, 1998 $30 $30,058 $26,220 ($1,947) ($10,888) $43,473
Net earnings - - 465 - - 465
Amortization of RRP - - - 73 (9) 64
Allocation of ESOP shares - 37 - 70 - 107
Dividends declared - - (144) - - (144)
Purchase 190,973 shares of
treasury stock - - - - (3,080) (3,080)
Balance at December 31, 1998 $30 $30,095 $26,541 ($1,804) ($13,977) $40,885
See accompanying Notes to Unaudited Consolidated Financial Statements.
</TABLE>
<TABLE>
CAMERON FINANCIAL CORPORATION AND SUBSIDIARY
Consolidated Statements of Cash Flows
Three Months Ended December 31,
(Unaudited)
1998 1997
Cash flows from operating activities:
<S> <C> <C>
Net earnings $465 $535
Adjustments to reconcile net earnings to cash
provided by operating activities:
Depreciation and amortization 107 78
Provision for loan losses 33 83
Provision for losses on real estate owned 1 -
Amortization of RRP and allocation of ESOP shares 171 205
Deferred income taxes - (66)
Amortization of deferred loan fees (120) (119)
Proceeds from sales of loans held for sale 2,223 2,357
Origination of loans held for sale (1,674) (1,957)
Gain on sale of loans held for sale (23) (19)
Changes in assets and liabilities:
Accrued interest receivable 125 (92)
Other assets (139) (8)
Accrued interest payable (54) (47)
Accrued expenses and other liabilities (466) (112)
Current income taxes payable 313 348
Net cash provided by operating activities $962 $1,186
Cash flows from investing activities:
Net increase in loans receivable (3,872) (2,624)
Mortgage-backed securities principal payments 1 1
Maturity of investment securities
held to maturity 7,497 1,000
Purchase of investment securities
held to maturity (6,500) (2,997)
Net proceeds from sale of real estate owned 4 -
Additions and improvements to real estate owned - (8)
Purchase of office properties and equipment (68) (588)
Cash used in investing activities ($2,938) ($5,216)
Cash flows from financing activities:
Net increase in NOW passbook and
money market deposit accounts 2,654 1,085
Net increase in certificate accounts 899 1,209
Net decrease in advance payments by
borrowers for taxes and insurance (1,334) (1,358)
Repayment of FHLB advances - (3,000)
Issuance of common stock under stock option plan - 52
Dividends paid (150) (168)
Purchase of Treasury stock (3,080) -
Net cash provided by
financing activities (1,011) (2,180)
Net (decrease) in cash (2,987) (6,210)
Cash and cash equivalents at beginning of period 7,719 10,509
Cash and cash equivalents at end of period $4,732 $4,299
Supplemental disclosure of cash flow information:
Cash paid during the period for income taxes - $35
Cash paid during the period for interest, net
of capitalized interest $2,454 $2,345
Supplemental schedule of noncash investing and financing
activities:
Conversion of loans to real estate owned $55 $188
Conversion of real estate owned to loans $49 -
Dividend declared and payable $144 $168
See accompanying Notes to Unaudited Consolidated Financial Statements.
</TABLE>
CAMERON FINANCIAL CORPORATION AND SUBSIDIARY
Notes to Unaudited Consolidated Financial Statements
(1) 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, 1998, 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 period ended December 31, 1998 are not necessarily
indicative of results that may be expected for the entire fiscal year ending
September 30, 1999. The September 30, 1998 balance sheet information has
been derived from the consolidated balance sheet as of that date.
(2) Comprehensive income and segment reporting.
Effective for the quarter ended December 31, 1998, the Company adopted the
provisions of SFAS No. 130, "Reporting Comprehensive Income" and SFAS No.
131, "Disclosures About Segments of an Enterprise and Related Information."
SFAS No. 130 requires the classification of other comprehensive income by
their nature in the consolidated financial statements and display the
accumulated balance of other comprehensive income separately from retained
earnings and additional paid-in capital in the equity section of the
consolidated statement of stockholder's equity. The Company had no components
of comprehensive income other than net income. SFAS No. 131
requires financial and descriptive reporting about their reportable
operating segments. Operating segments are components of an enterprise
about which separate financial information is available that is evaluated
regularly by management. The Company has only one segment.
(3) Impact of Accounting Standards.
The Financial Accounting Standards Board ("FASB") issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities", in June
1998. SFAS No. 133 established accounting and reporting standards for
derivative instruments, including certain derivative instruments embedded
in other contracts, and for hedging activities. It requires that an entity
recognize all derivatives as either assets or liabilities in the statement
of financial position and measures those instruments at fair value.
This statement is effective for all fiscal quarters beginning after June
15, 1999. Management believes adoption of SFAS No. 133 will not have
a material effect on the Company's financial position or results of
operations, nor will adoption require additional capital resources.
CAMERON FINANCIAL CORPORATION AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Quarterly Report of Form 10-Q may contain certain forward-looking
statements consisting of estimates with respect to the financial condition,
results of operations and business of the Company that are subject to
various factors which could cause actual results to differ materially from
these estimates. These factors include, but are not limited to, general
economic conditions, changes in interest rates, deposit flows, loan demand,
real estate values, and competition; changes in accounting principles,
policies, or guidelines; changes in legislation or regulation; and other
economic, competitive, governmental regulatory, and technical factors
affecting the Company's operations, pricing, products and services.
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 December
31, 1998 to its fiscal year ended September 30, 1998, and the results of
operations for the three months ended December 31, 1998 with the three
months ended December 31, 1997. 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, Dekalb County, and three full service branch
offices located in Liberty, Clay County, Maryville, Nodaway County, and
Mound City, Holt County. Deposits are insured by the Federal Deposit
Insurance Corporation, FDIC, to the maximum allowable.
The Association's business strategy is to operate as a well-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
and Federal Home Loan Bank advances. 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 decreased 0.3%, or $582,000, to $220,939,000 at December 31,
1998 from $221,521,000 at September 30, 1998. Stockholders' equity
decreased $2,588,000 or 6.0% to $40,885,000 at December 31, 1998 compared
to $43,473,000 at September 30, 1998. The decrease in stockholder's equity
was primarily due to the purchase of 190,973 shares of treasury stock for
$3,080,000. Cash, investment securities and certificates of deposits in
other financial institutions decreased 16.6%, or $3,981,000 to $20,040,000
at December 31, 1998 from $24,021,000 at September 30, 1998. Loans receivable,
net, increased 1.9%, or $3,428,000, to $188,033,000 at December
31, 1998 from $184,605,000 at September 30, 1998. Deposits increased 2.6%,
or $3,553,000, to $140,175,000 at December 31, 1998 from $136,622,000 at
September 30, 1998.
The following table sets forth certain information regarding the
composition of the Association's loan portfolio.
<TABLE>
December 31, September 30,
1998 1998
<S> <C> <C>
One- to four family $138,476,000 $134,416,000
Multifamily 2,915,000 2,943,000
Commercial real estate 3,862,000 3,243,000
Land 7,361,000 7,805,000
Development 4,378,000 3,254,000
Construction (1) 41,387,000 45,654,000
Consumer loans 9,690,000 9,241,000
Total Loans Receivable 208,069,000 206,556,000
Less:
Deferred loan fees, net 633,000 700,000
Loans in process 17,854,000 19,730,000
Allowance for loan losses 1,549,000 1,521,000
Net Loans Receivable $188,033,000 $184,605,000
(1) Speculative construction $28,474,000 $30,304,000
Contract and permanent
construction $12,913,000 $15,350,000
Total $41,387,000 $45,654,000
</TABLE>
During the three months ended December 31, 1998, development loans
increased by $1,124,000 to $4,378,000, and permanent 1-4 family loans
increased by $4,060,000 to $138,476,000. Construction loans decreased by
$4,267,000 to $41,387,000.
Deposits were $140,175,000 at December 31, 1998, an increase of $3,553,000,
or 2.6% from $136,622,000 at September 30, 1998. Competition from other
financial and non-financial entities will continue to impact savings
growth. The Association offers competitive interest rates on its deposit
products.
There was no activity in FHLB advances in the quarter ended December 31,
1998. In January 1999, the Association borrowed $6,000,0000 in FHLB
advances and repaid a maturing advance of $3,000,000.
At December 31, 1998 FHLB advances and certificates of deposit represented
21.0% and 62.1% of interest-bearing liabilities, respectively. At September 30,
1998, they represented 21.4% and 62.9% of interest-bearing
liabilities respectively.
RESULTS OF OPERATIONS
Net Earnings: Earnings per share were $0.22 for both the quarter ended
December 31, 1998 and the quarter ended December 31, 1997. Net earnings
decreased $70,000, or 13.1%, to $465,000 for the quarter ended December 31,
1998, compared to $535,000 for the quarter ended December 31, 1997.
Increases in interest income and non-interest income and a decrease in the
provisions for loan losses and income taxes were offset by increases in
interest expense and non-interest expense.
Net Interest Income: Net interest income decreased $35,000, or 1.9%, to
$1,856,000 for the quarter ended December 31, 1998, compared with $1,891,000 for
the quarter ended December 31, 1997. Most of the decrease
was due to the increase of interest bearing liabilities exceeding the
increase in interest earning assets. As a result, the net interest margin
decreased to 3.51% for the three months ended December 31, 1998 compared
to 3.79% for the three months ended December 31, 1997. Interest earning
assets averaged 119.42% of interest bearing liabilities for the three
months ended December 31, 1998 compared to 123.28% for the comparable
period in 1997 as a result of increases in fixed assets. The average
spread between interest earning assets and interest bearing liabilities
decreased to 2.61% for the three months ended December 31, 1998, compared
to 2.65% for the same period in 1997. Most of the decrease in interest
rate spread was due to average rates earned on interest earning assets
decreasing more than average rates on interest bearing liabilities.
Interest Income: Interest income increased by $67,000, or 1.6%, for the
quarter ended December 31, 1998, to $4,256,000 from $4,189,000 for the
quarter ended December 31, 1997. The increase was primarily due to increased
interest earning assets.
Interest Expense: Interest expense increased $102,000, or 4.4%, to $2,400,000
for the quarter ended December 31, 1998, compared to $2,298,000
for the comparable period in 1997. The increase is primarily a result of
increased balances in interest bearing liabilities in the current period.
Average rates on interest-bearing liabilities decreased during the quarter
ended December 31, 1998 compared to the prior period. There was no activity in
FHLB advances during the quarter ended December 31, 1998.
Provision for Loan Losses: The provision for loan losses was $33,000 for
the quarter ended December 31, 1998, compared to $83,000 for the same
period in 1997. The decrease was primarily due to the changing composition
of the loan portfolio between the two periods. The Association maintains
a program for establishing general loan loss reserves by classifying
various components of the loan portfolio by potential risk. 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. As of December 31, 1998, the allowance for loan losses was
$1,549,000, or .74% of total loans receivable and 57.01% of total nonperforming
loans. Charge-offs were $5,000 and $2,000 for the quarters
ended December 31, 1998 and 1997, respectively.
A reconciliation of the Association's allowance for loan losses is
summarized as follows:
<TABLE>
Three Months Ended December 31,
1997 1996
Balance at beginning
<S> <C> <C>
of period $1,624,000 $1,353,000
Provision (17,000) 362,000
Charge-offs (23,000) (12,000)
Recoveries - -
Balance at end of period $1,584,000 $1,703,000
</TABLE>
Noninterest Income: Noninterest income increased to $135,000 for the
quarter ended December 31, 1998 from $74,000 for the comparable period in
1997. Loan fees and deposit service charges increased $43,000 for the
three months ended December 31, 1998 compared to the same period in 1997,
due primarily to increased deposit accounts with monthly charges and income
from ATM and debit card transactions and increased underwriting fees. Other
income increased $13,000 in the quarter ended December 31, 1998 compared
to the same period in 1997. The increase was primarily due to increased
profit on the sale of loans and commissions from the new brokerage operation
of the Association's service corporation. Profits on the sale
of loans totaled $23,000 in the quarter ended December 31, 1998 compared
to $19,000 in the quarter ended December 31, 1997. The brokerage operation
did not open until September 1998. Commissions in the quarter ended
December 31, 1998 were $5,000.
Noninterest Expense: Noninterest expense increased $165,000 to $1,196,000
for the quarter ended December 31, 1998 from $1,031,000 for the same period
in 1997. Personnel expenses increased $79,000 in the 1998 period compared
to the comparable 1997 period. Cash compensation increased $93,000 for the
current quarter. The Association had 68 full-time equivalent employees at
December 31, 1998 compared to 57 at December 31, 1997. Most of the
staffing increase is due to the opening of the new branch office in Liberty
with its extended hours. Payroll taxes and other benefits increased
$26,000 due to the increased number of employees. ESOP expenses were
$29,000 lower in the quarter ended December 31, 1998 compared to the same
period in 1997 due to lower average prices of the Company's common stock
in the current quarter.
Occupancy expense increased $19,000 to $177,000 for the quarter ended
December 31, 1998 compared to the quarter ended December 31, 1997 due to
increased real estate taxes and depreciation expenses for the new branch
office building which was opened in August 1998 and increased expenses for
office equipment, computer upgrades and increased depreciation expense for
the new equipment.
Federal insurance premiums were $20,000 for both the quarter ended December
31, 1998 and the quarter ended December 31, 1997. Advertising expenses
increased $2,000 to $37,000 for the quarter ended December 31, 1998
compared to the same period in 1997. Other operating expenses increased
$64,000 to $219,000 for the quarter ended December 31, 1998 compared to the
quarter ended December 31, 1997. A consultant was hired in the current
quarter to assist in establishing a formal salary administration program.
Professional fees increased due to the establishment of the brokerage
operation and a cost recovery study done on the recent buildings.
Increases in insurance, postage and telephone expense offset decreases in
office supplies and other expense.
Income Taxes: Income tax expense decreased $19,000 to $297,000 for the
quarter ended December 31, 1998, compared to $316,000 for the same period
in 1997, primarily due to a decrease of $89,000 in pre-tax income for the
comparable periods. The effective tax rate was 39.0% and 37.1% for the
quarters ended December 31, 1998 and 1997, respectively.
Asset and Liability Management - Interest Rate Sensitivity
At December 31, 1998, the Company's total interest-bearing liabilities
maturing or repricing within one year exceeded interest-earning assets
maturing or repricing in the same period by $15.5 million, representing a
cumulative negative one-year gap ratio of 7.0% to total assets. At
September 30, 1998, the negative gap was $1.2 million. The change is
primarily due to the decrease in the average term of liabilities. That is
primarily due to increased balances in money market deposit accounts and
other transaction accounts which have no stated maturity and a preference
by customers for shorter term certificates of deposit. During this time
of lower interest rates, loan customers are also indicating their preference for
longer term instruments.
The Year 2000 issue
The Association has an ongoing program designed to ensure that its
operational and financial systems will not be adversely affected by Year
2000 software failures, due to processing errors arising from calculations
using the Year 2000 date. Should the Company's mission critical systems
fail in the Year 2000, the Company would have difficulty in processing
transactions for loan and deposit customers, which could cause significant
damage to the Company's important customer relationships.
The Association has completed assessment of its computer hardware Year 2000
compliance and testing of such hardware operating systems is approximately
95% complete. The Association has two mission critical software areas: the
hardware operating system and the core (loan and deposit) processing
system. The hardware operating system currently in use is acknowledged as
Year 2000 compliant. A contract has been signed for a Year 2000 compliant
core processing system with installation scheduled for June 1999. Proxy
testing will be reviewed prior to conversion.
The Association is requiring its computer systems and software vendors to
represent that the products are, or will be, Year 2000 compliant. Major
suppliers and vendors have been requested to provide the Association with
their progress in becoming Year 2000 compliant. Responses and progress of
vendors is being monitored.
In the quarter ended December 31, 1998, Year 2000 costs did not exceed
$20,000. Additional costs of Year 2000 compliance are not expected to
exceed $80,000 in fiscal 1999. This estimate of costs to become Year 2000
compliant is exclusive of the estimated $425,000 necessary to purchase the
new core processing system and related hardware.
Contingency plans are being developed for non-compliant non-mission
critical items which continue to be updated and improved. Most of the
contingency plans involve development of manual procedures or use of
alternate systems.
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>
December 31, September 30,
1998 1998
(Dollars in Thousands)
Non-Accruing Loans:
<S> <C> <C>
One- to four-family $552 $721
Multi-family -- --
Commercial -- 34
Land -- --
Construction 1,053 1,044
Consumer -- --
Total non-accuring loans 1,605 1,799
Accruing loans delinquent 90 days or more(1)
One- to four-family 441 870
Multi-family 7 7
Commercial -- --
Land 19 --
Construction 599 450
Consumer 46 10
Total accruing loans delinquent
90 days or more 1,112 1,337
Total non-performing loans 2,717 3,136
Foreclosed Assets:
One- to four-family -- --
Multi-family -- --
Commercial -- --
Land -- --
Construction -- --
Consumer 14 19
Total foreclosed assets 14 19
Total non-performing assets $2,731 $3,155
Total classified assets $12,692 $11,803
Total non-performing loans as a
percentage of loans receivable 1.31% 1.52%
Total non-performing assets as a
percentage of total assets 1.24% 1.42%
_________________
(1) These loans are delinquent 90 days or more as to principal but
not as to interest. This can occur when the Association receives a
partial payment from a borrower which is first applied to interest due.
</TABLE>
Non-performing loans decreased $419,000, or 13.4% to $2,717,000 at December
31, 1998 from $3,136,000 at September 30, 1997. Classified assets increased
7.53% to $12,692,000 at December 31, 1998 from $11,803,000 at
September 30, 1998, primarily due to increased delinquencies on development
loans. At December 31, 1998, four development loans were delinquent.
Since that date, three are now current as to interest and one has been paid
off.
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 December 31, 1998:
<TABLE>
Actual Required Excess
Amount/Percent Amount/Percent Amount/Percent
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Tangible Capital $35,006 16.18% $3,245 1.50% $31,761 14.68%
Core Leverage
Capital 35,006 16.18% 8,653 4.00% 26,353 12.18%
Risk-Based
Capital 36,555 24.81% 11,785 8.00% 24,770 16.81%
</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 4% of net
withdrawable savings deposits, less withdrawable deposits maturing in more
than one year, 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 December 31, 1998
and September 30, 1998 were 12.77% and 15.00% 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. There was no activity for advances for the quarter
ended December 31, 1998.The Association borrowed $6.0 million in FHLB
advances in January 1998 and repaid a maturing advance of $3.0 million.
Certificates of deposits were 78.6% of total savings and 62.1% of total
interest-bearing liabilities at December 31, 1998 compared to 80.0% and
62.9% respectively at September 30, 1998.
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
None
ITEM 5. Other Information
None
ITEM 6. Exhibits and Reports of Form 8-K
Financial Data Schedule; EX-27
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: February 12, 1998 /s/ David G. Just
David G. Just, President and Chief
Executive Officer (Duly Authorized
Officer)
Date: February 12, 1998 /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>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-END> DEC-31-1998
<CASH> 831
<INT-BEARING-DEPOSITS> 3,901
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 15,314
<INVESTMENTS-MARKET> 15,355
<LOANS> 189,582
<ALLOWANCE> 1,549
<TOTAL-ASSETS> 220,939
<DEPOSITS> 140,175
<SHORT-TERM> 37,250
<LIABILITIES-OTHER> 2,629
<LONG-TERM> 0
0
0
<COMMON> 30
<OTHER-SE> 40,855
<TOTAL-LIABILITIES-AND-EQUITY> 220,939
<INTEREST-LOAN> 3,925
<INTEREST-INVEST> 235
<INTEREST-OTHER> 96
<INTEREST-TOTAL> 4,256
<INTEREST-DEPOSIT> 1,841
<INTEREST-EXPENSE> 2,400
<INTEREST-INCOME-NET> 1,856
<LOAN-LOSSES> 33
<SECURITIES-GAINS> 5
<EXPENSE-OTHER> 1,196
<INCOME-PRETAX> 762
<INCOME-PRE-EXTRAORDINARY> 762
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 465
<EPS-PRIMARY> 0.22
<EPS-DILUTED> 0.22
<YIELD-ACTUAL> 7.96
<LOANS-NON> 1,605
<LOANS-PAST> 1,112
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 9,961
<ALLOWANCE-OPEN> 1,521
<CHARGE-OFFS> 5
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 1,549
<ALLOWANCE-DOMESTIC> 1,549
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
