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 June 30, 2000
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
class of common stock as of the latest practicable date.
Class Outstanding at August 7, 2000
Common stock, .01 par value 1,913,649
CAMERON FINANCIAL CORPORATION
Contents
PART I - FINANCIAL INFORMATION
Item 1: Financial Statements Page
Consolidated Balance Sheets at June 30, 2000,
unaudited, and September 30, 1999 3
Consolidated Statements of Earnings for the Three
Months and Nine Months Ended June 30, 2000 and
1999, unaudited 4
Consolidated Statements of Stockholders' Equity
for the Nine Months Ended June 30, 2000, unaudited 5
Consolidated Statements of Cash Flows for
the Nine Months Ended June 30, 2000 and
1999, unaudited 6
Notes to Unaudited Consolidated Financial Statements 7
Item 2: Management's Discussion and Analysis of
Financial Condition and Results of
Operations 8-17
PART II - OTHER INFORMATION 18
Signatures 19
<TABLE>
CAMERON FINANCIAL CORPORATION AND SUBSIDIARY
Consolidated Balance Sheets
(Dollars in thousands)
June 30, September 30,
2000 1999
Assets (unaudited)
(Dollars in thousands)
<S> <C> <C>
Cash and cash equivalents $6,253 $6,100
Investment securities held-to-maturity
(estimated fair value of $22,692 at June 30 and $18,191
at September 30) 23,382 18,538
Mortgage backed securities 3 5
Loans receivable, net 252,768 221,909
Accrued interest receivable:
Loans 1,742 1,523
Investment securities 353 268
Office property and equipment, net 7,457 7,748
Stock in Federal Home Loan Bank(FHLB) of Des Moines, at cost 5,309 3,556
Deferred income taxes 74 74
Other assets 1,894 1,832
Total assets $299,235 $261,553
Liabilities and Stockholders' Equity
Liabilities:
Savings deposits 147,673 143,737
Advances from FHLB 106,154 71,101
Advance payments for taxes and insurance 1,835 2,244
Accrued interest on savings deposits 142 158
Accrued expenses and other liabilities 3,467 3,491
Income taxes payable 130 198
Total liabilities 259,401 220,929
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 30,179 30,163
Retained earnings,
substantially restricted 28,316 27,385
Unearned employee benefits (1,169) (1,483)
Treasury stock, at cost-
1,113,279 shares at June 30, 2000
and 944,749 at September 30, 1999 (17,522) (15,471)
Total stockholders' equity 39,834 40,624
Total liabilities and stockholders' equity $299,235 $261,553
</TABLE>
See accompanying Notes to Unaudited Consolidated Financial Statements.
<TABLE>
CAMERON FINANCIAL CORPORATION AND SUBSIDIARY
Consolidated Statements of Earnings
(unaudited)
Three Months Ended Nine Months Ended
June 30, June 30,
2000 1999 2000 1999
(Dollars in thousands, except share data)
Interest income:
<S> <C> <C> <C> <C>
Loans $5,075 $4,123 $14,309 $12,069
Investment securities 372 248 1,010 714
Certificates of deposit and other 113 52 301 226
Total interest income 5,560 4,423 15,620 13,009
Interest expense:
Savings deposits 1,885 1,810 5,545 5,453
Borrowed money 1,561 698 3,962 1,833
Total interest expense 3,446 2,508 9,507 7,286
Net interest income 2,114 1,915 6,113 5,723
Provision for loan losses 201 65 352 (46)
Net interest income after
provision for loan losses 1,913 1,850 5,761 5,769
Noninterest income:
Loan fees and service charges 128 76 322 250
Gain on sale of investments - - - 5
Other income 56 38 148 106
Total noninterest income 184 114 470 361
Noninterest expense:
Compensation, payroll taxes and
fringe benefits 706 694 2,158 2,056
Occupancy expense 213 173 630 550
Data processing 55 84 147 208
Federal insurance premiums 8 21 26 62
Advertising 19 34 74 112
(Gain) Loss on real estate owned - (1) 2 1
Other operating expenses 154 227 615 644
Total noninterest expense 1,155 1,232 3,652 3,633
Earnings before income taxes 942 732 2,579 2,497
Income taxes 317 284 863 956
Net earnings $625 $448 $1,716 $1,541
Basic earnings per share $0.34 $0.23 $0.90 $0.73
Diluted earnings per share $0.34 $0.23 $0.90 $0.73
Basic average shares outstanding 1,824,089 1,966,6271,907,312 2,102,395
Common stock equivalents-stock options 1,591 - 393 -
Diluted average shares outstanding 1,825,680 1,966,6271,907,705 2,102,395
</TABLE>
See accompanying Notes to Unaudited Consolidated Financial Statements.
<TABLE>
CAMERON FINANCIAL CORPORATION AND SUBSIDIARY
Consolidated Statements of Stockholders' Equity
For The Nine Months Ended June 30, 2000
Additional Unearned Total
Common paid-in Retained employee Treasury stockholders'
Stock capital earnings benefits stock equity
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Balance at September 30, 1999 $30 $30,163 $27,385 ($1,483) ($15,471) $40,624
Net earnings - - 1,716 - - $1,716
Amortization of RRP - - - 222 (25) 197
Allocation of ESOP shares - 48 - 181 - 229
Additional RRP award - (32) - (89) 121 -
Dividends declared ($0.45 per share) - - (785) - - (785)
Purchase 172,700 shares of
treasury stock - - - - (2,147) (2,147)
Balance at June 30, 2000 $30 $30,179 $28,316 ($1,169) ($17,522) $39,834
</TABLE>
See accompanying Notes to Unaudited Consolidated Financial Statements.
<TABLE>
CAMERON FINANCIAL CORPORATION AND SUBSIDIARY
Consolidated Statements of Cash Flows
Nine Months Ended June 30,
(Unaudited)
2000 1999
(Dollars in Thousands)
Cash flows from operating activities:
<S> <C> <C>
Net earnings $1,716 $1,541
Adjustments to reconcile net earnings to cash
provided by operating activities:
Depreciation and amortization 343 294
Provision for loan losses 352 (46)
Provision for losses on real estate owned - 1
Amortization of RRP and allocation of ESOP shares 426 478
Deferred income taxes - 2
(Loss) gain on sale of real estate owned (2) (1)
Amortization of deferred loan fees (110) (341)
Proceeds from sales of loans held for sale 1,242 4,990
Origination of loans held for sale (1,650) (4,666)
Gain on sale of loans held for sale (18) (56)
Changes in assets and liabilities:
Accrued interest receivable (304) (8)
Other assets (85) (406)
Accrued interest payable (16) 24
Accrued expenses and other liabilities (49) 1,014
Current income taxes payable (68) 97
Net cash provided by operating activities $1,777 $2,917
Cash flows from investing activities:
Net increase in loans receivable (30,650) (23,788)
Mortgage-backed securities principal payments 2 2
Maturity of investment securities
held to maturity 2,136 8,714
Purchase of investment securities
held to maturity (6,978) (9,999)
Purchase of FHLB stock (1,753) (766)
Net proceeds from sale of real estate owned - 17
Additions and improvements to real estate owned - (1)
Purchase of office property and equipment, net (54) (250)
Cash used in investing activities ($37,297) ($26,071)
Cash flows from financing activities:
Net increase in NOW passbook and
money market deposit accounts 117 6,129
Net increase in certificate accounts 3,819 442
Net decrease in advance payments by
borrowers for taxes and insurance (409) (237)
Proceeds from FHLB advances 115,450 29,700
Repayment of FHLB advances (80,397) (11,384)
Proceeds of other borrowed money - 910
Dividends paid (760) (424)
Purchase of Treasury stock (2,147) (4,645)
Net cash provided by (used in)
financing activities 35,673 20,491
Net increase (decrease) in cash 153 (2,663)
Cash and cash equivalents at beginning of period 6,100 7,719
Cash and cash equivalents at end of period $6,253 $5,056
Supplemental disclosure of cash flow information:
Cash paid during the period for income taxes $931 $870
Cash paid during the period for interest $9,346 $7,357
Supplemental schedule of noncash investing and financing activities:
Conversion of loans to real estate owned - $197
Conversion of real estate owned to loans $25 $137
Dividend declared and payable $271 $243
Issuance of unearned RRP shares $89 $88
</TABLE>
See accompanying Notes to Unaudited Consolidated Financial Statements.
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, 1999, 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 nine month periods ended June 30, 2000 are not
necessarily indicative of results that may be expected for the entire fiscal
year ending September 30, 2000. The September 30, 1999 balance sheet
information has been derived from the consolidated balance sheet as of that
date.
(2) Impact of Accounting Standards not yet adopted.
The Financial Accounting Standards Board ("FASB") issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities", in June
1998. SFAS No. 133, as amended by SFAS No. 137, "Accounting for Derivative
Instruments and Hedging Activities - Deferral of the Effective Date of FASB
Statement No. 133"and SFAS No. 138, "Accounting for Certain Derivative
Instruments and Certain Hedging Activities - Amendment of SFAS No. 133",
establishes 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 measure those instruments at fair value. This statement is
effective for all fiscal quarters beginning after June 15, 2000. Management
believes adoption of these accounting standards will not significantly
effect the Company's consolidated financial statements.
The FASB recently issued Interpretation No. 44, "Accounting for Certain
Transactions Involving Stock Compensation". The Interpretation, which is
effective July 1, 2000, clarifies the application of APB Opinion No. 25
"Accounting for Stock Issued to Employees". Management does not expect that
the Interpretation will have a significant impact on the Company's financial
statements.
CAMERON FINANCIAL CORPORATION AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Quarterly Report on 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 June 30,
2000 to its fiscal year end September 30, 1999, and the results of
operations for the three and nine months ended June 30, 2000 with the three
and nine months ended June 30, 1999. 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, the "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 FHLB advances. The Association has sought to implement this strategy
by emphasizing residential mortgage lending and construction lending,
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, deposit flows and borrowings. 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 14.4%, or $37,682,000, to $299,235,000 at June 30,
2000 from $261,553,000 at September 30, 1999. Loans receivable, net,
increased 13.9%, or $30,859,000, to $252,768,000 at June 30, 2000 from
$221,909,000 at September 30, 1999. Cash, investment securities and
certificates of deposits in other financial institutions increased 20.3%,
or $4,995,000, to $29,638,000 at June 30, 2000 from $24,643,000 at
September 30, 1999. Deposits increased 2.7%, or $3,936,000, to
$147,673,000 at June 30, 2000 from $143,737,000 at September 30, 1999.
Advances from the Federal Home Loan Bank increased 49.3%, or $35,053,000,
to $106,154,000 at June 30, 2000 from $71,101,000 at September 30, 1999.
Stockholders' equity decreased 1.9%, or $790,000 to $39,834,000 at June 30,
2000 from $40,624,000 at September 30, 1999, primarily as a result of the
Company's stock repurchase programs and dividends paid exceeding net
earnings. On November 18, 1999 the Company announced its intention to
repurchase up to 10% of its outstanding shares, totaling 208,217 shares,
in the open market over the next 12 months. At June 30 ,2000, a total of
172,700 shares had been repurchased at a cost of $2,147,000.
The following table sets forth certain information regarding the
composition of the Association's loan portfolio.
<TABLE>
June 30, September 30,
2000 1999
<S> <C> <C>
One- to four family $174,026,000 $160,789,000
Multifamily 9,307,000 7,360,000
Commercial real estate 9,786,000 6,398,000
Land 4,922,000 6,025,000
Development 8,456,000 8,635,000
Construction (1) 44,523,000 40,301,000
Consumer loans 25,348,000 16,459,000
Total Loans Receivable 276,368,000 245,967,000
Less:
Deferred loan fees, net 285,000 529,000
Loans in process 21,367,000 21,927,000
Allowance for loan losses 1,948,000 1,602,000
Net Loans Receivable $252,768,000 $221,909,000
Speculative construction $31,908,000 $24,205,000
Contract and permanent
construction $12,615,000 $16,096,000
Total (1) $44,523,000 $40,301,000
</TABLE>
During the nine months ended June 30, 2000, permanent 1-4 family loans
increased $13,237,000, or 8.2%, to $174,026,000; consumer loans increased
$8,889,000, or 54.0%, to $25,348,000; construction loans increased
$4,222,000, or 10.5%, to $44,523,000; and commercial real estate loans
increased $3,388,000, or 53.0%, to $9,786,000. These increases were
primarily due to continued aggressive loan solicitation by the Association.
Deposits were $147,673,000 at June 30, 2000, an increase of $3,936,000, or
2.7% from $143,737,000 at September 30, 1999. Competition from other
financial and non-financial entities have, and will continue to impact
deposit growth. The Association offers competitive interest rates on its
deposit products.
During the quarter ended June 30, 2000, the Association borrowed an
additional $8,000,000 of long term advances from the Federal Home Loan Bank
and repaid amortizing long term advances of $67,000. During that quarter,
the Association borrowed $18,450,000 of short term advances and repaid
$17,200,000 of short term advances.
At June 30, 2000, FHLB advances and certificates of deposit were 41.8% and
44.9% of interest-bearing liabilities, respectively. At September 30,
1999, they were 33.1% and 51.3%, respectively.
RESULTS OF OPERATIONS
Net Earnings: Basic and diluted earnings per share increased $0.11, or
47.8%, to $0.34 for the quarter ended June 30, 2000, compared to $0.23 for
the quarter ended June 30, 1999. Net earnings increased $177,000, or
39.5%, to $625,000 for the quarter ended June 30, 2000, compared with
$448,000 for the quarter ended June 30, 1999. Basic and diluted earnings
per share increased $0.17, or 23.3%, to $0.90 for the nine months ended
June 30, 2000, compared to $0.73 for the nine months ended June 30, 1999.
Net earnings increased $175,000, or 11.4%, to $1,716,000 for the nine
months ended June 30, 2000, compared with $1,541,000 for the nine months
ended June 30, 1999. For the quarterly period, the increases in interest
income, non-interest income and the decrease in non-interest expense offset
increases in interest expense, the provision for loan losses, and the
provision for income taxes. For the nine-month period, increases in
interest income and non-interest income and a decrease in the provision for
income taxes offset increases in interest expense, non-interest expense and
increases in the provision for loan losses.
Net Interest Income: Net interest income increased $199,000, or 10.4%, to
$2,114,000 for the quarter ended June 30, 2000, compared to $1,915,000 for
the quarter ended June 30, 1999. Net interest income increased $390,000 or
6.8% to $6,113,000 for the nine months ended June 30, 2000, compared to
$5,723,000 for the nine months ended June 30, 1999. The net interest
margin decreased to 3.12% for the nine months ended June 30, 2000 compared
to 3.51% for the nine months ended June 30, 1999. Interest earning assets
averaged 113.16% of interest bearing liabilities for the nine months ended
June 30, 2000 compared to 117.86% for the same period in 1999. The average
spread between interest earning assets and interest bearing liabilities
decreased to 2.48% for the nine months ended June 30, 2000, compared to
2.58% for the same period in 1999.
Interest Income: Interest income increased by $1,137,000, or 25.7%, to
$5,560,000 for the quarter ended June 30, 2000, from $4,423,000 for the
quarter ended June 30, 1999. Interest income increased by $2,611,000, or
20.1%, to $15,620,000 for the nine months ended June 30, 2000, from
$13,009,000 for the nine months ended June 30, 1999. The increases were
primarily due to increased balances of interest earning assets. The
average yield on interest earning assets for the nine months ending June
30, 2000 was 7.96% compared to 7.93% for the prior period.
Interest Expense: Interest expense increased $938,000, or 37.4%, to
$3,446,000 for the quarter ended June 30, 2000, from $2,508,000 for the
quarter ended June 30, 1999. For the nine-month period ended June 30,
2000, interest expense increased $2,221,000, or 30.5% to $9,507,000 from
$7,286,000 for the nine months ended June 30, 1999. The increases were
primarily a result of increases of average balances in savings deposits and
FHLB advances and increased average rates paid on FHLB advances. The
average cost of interest bearing liabilities for the nine months ended June
30, 2000 was 5.48% compared to 5.35% for the prior period.
Provision for Loan Losses: The provision for loan losses was $201,000 for
the quarter ended June 30, 2000, compared to $65,000 for the quarter ended
June 30, 1999. The provision for loan losses was $352,000 for the nine
months ended June 30, 2000, compared to a reversal of $46,000 for the nine
months ended June 30, 1999. The changes were due to the change in the size
and composition of the portfolio. The allowance for loan losses is
reviewed and adjusted monthly by management based on the size and
composition 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 of the portfolio. As of June 30,
2000, the allowance for loan losses was $1,948,000, or 0.77% of net loans
receivable compared with $1,602,000, or 0.72% at September 30, 1999. The
allowance for loan losses was 595.72% of total nonperforming loans at June
30, 2000. While management believes that it uses the best information
available to determine the allowance for loan losses, unforeseen market
conditions could result in adjustments to the allowance for loan losses,
and net earnings could be significantly affected, if circumstances differ
substantially from the assumptions used by management. Future additions
to the Association's allowance will be the result of periodic loan,
property and collateral reviews and thus cannot be predicted in advance.
A reconciliation of the Association's allowance for loan losses is
summarized as follows:
<TABLE>
Nine Months Ended June 30,
2000 1999
<S> <C> <C>
Balance at beginning of period $1,602,000 $1,521,000
Provision 352,000 (46,000)
Charge-offs (6,000) (5,000)
Recoveries - -
Balance at end of period $1,948,000 $1,470,000
</TABLE>
Non-interest Income: Non-interest income increased 61.4% to $184,000 for
the quarter ended June 30, 2000 from $114,000 for the same period in 1999.
Loan fees and deposit service charges increased $52,000 to $128,000 for the
quarter ended June 30, 2000 compared to $76,000 for the same period in
1999. Other income increased $18,000 to $56,000 in the quarter ended June
30, 2000 compared to $38,000 for the same period in 1999. Non-interest
income increased 30.2% to $470,000 for the nine months ended June 30, 2000
from $361,000 for the nine months ended June 30, 1999. Loan fees and
deposit service charges increased $72,000 to $322,000 for the nine months
ended June 30, 2000 compared to $250,000 for the same period in 1999.
Other income increased $42,000 to $148,000 during the nine months ended
June 30, 2000 compared to $106,000 for the nine months ended June 30, 1999.
Loan fees and deposit service charges increased in both periods primarily
due to the increased number of loans and increased deposit accounts with
monthly charges. Other income increased in the quarter ended June 30, 2000
primarily due to brokerage commissions from the Association's service
corporation offsetting decreased profits on the sale of loans. Profits on
the sale of loans were $1,000 and $20,000 for the quarters ended June 30,
2000 and 1999 respectively. Brokerage commissions from the Association's
service corporation were $42,000 and $10,000 for the quarters ended June
30, 2000 and 1999, respectively. Commissions from the service
corporation's insurance agency were $5,000 for both of the quarters ended
June 30, 2000 and 1999 respectively. Other income increased in the nine
months ended June 30, 2000, compared to the prior period primarily due to
increased brokerage commissions and insurance commissions. Brokerage
commissions were $76,000 and $28,000 for the nine months ended June 30,
2000 and 1999, respectively. Insurance commissions were $34,000 and
$12,000 for the nine months ended June 30, 2000 and 1999, respectively.
Profit on the sale of loans were $18,000 and $56,000 for the nine months
ended June 30, 2000 and 1999, respectively.
Non-interest Expense: Non-interest expense decreased $77,000 to $1,155,000
for the quarter ended June 30, 2000 from $1,232,000 for the same period in
1999. Personnel expenses increased $12,000 to $706,000 for the quarter
ended June 30, 2000 compared to $694,000 for the same period in 1999. Cash
compensation decreased $14,000 and payroll taxes and other benefits
decreased $4,000 for the current quarter. The Association had 65 full-time
equivalent employees at June 30, 2000 compared to 67 at June 30, 1999.
ESOP expenses decreased $5,000 in the quarter ended June 30, 2000 compared
to the prior period due to lower average prices of the Company's common
stock in the current quarter. Due to fewer loan originations in the
quarter ended June 30, 2000 compared to the quarter ended June 30, 1999,
there was $38,000 less in expenses deferred, in accordance with FAS 91, in
the current quarter.
Occupancy expense increased $40,000 to $213,000 for the quarter ended June
30, 2000 compared to $173,000 for the quarter ended June 30, 1999. The
increase was due to increased real estate taxes and increased depreciation
expense on office equipment and computers.
Data processing expenses decreased $29,000, to $55,000 for the quarter
ended June 30, 2000. The decrease was due to the data processing
conversion by the Association in June 1999. Advertising expenses decreased
$15,000 to $19,000 for the quarter ended June 30, 2000 compared to $34,000
for the quarter ended June 30, 1999. The prior year saw increased
advertising for a new senior's club and increased advertising for the new
branch office in Liberty. Federal insurance premiums decreased $13,000 to
$8,000 for the quarter ended June 30, 2000 from $21,000 for the quarter
ended June 30, 1999, due to equal sharing of FICO bond expenses by all
banks and thrifts effective January 1, 2000. Other operating expenses
decreased $73,000 to $154,000 for the quarter ended June 30, 2000 compared
to the quarter ended June 30, 1999. In the quarter ended June 30, 2000,
dealer participation fees that had been previously charged to expense
during the fiscal year were capitalized. They are currently being
amortized as a yield adjustment. In the current quarter, dealer
participation fees decreased $92,000, telephone expense decreased $10,000,
and expenses for office supplies decreased $8,000. Expenses for employee
travel decreased $15,000 due to the data processing conversion in 1999.
Accruals for audit and exam expenses for the quarter ended June 30, 2000
increased $31,000 over the quarter ended June 30, 1999. Other professional
fees increased $6,000.
Non-interest expense increased $19,000 for the nine months ended June 30,
2000 compared to the nine months ended June 30, 1999. Personnel expenses
increased $102,000 for the current period. Cash compensation increased
$41,000 due primarily to a greater number of employees. Payroll taxes and
other benefits increased $8,000 due to a greater number of employees. ESOP
expense decreased in the current period by $53,000 due to lower average
prices of the Company's common stock in the current period. Occupancy
expenses increased $80,000 to $630,000 for the nine month period ended June
30, 2000 compared to $550,000 for the same period in 1999, due to increased
real estate taxes and increased depreciation expense. Data processing
expenses decreased $61,000 to $147,000 for the nine months ended June 30,
2000 compared to $208,000 for the prior period. The decrease was primarily
due to the Association's data processing conversion in 1999. Federal
insurance premiums decreased $36,000 to $26,000 for the nine months ended
June 30, 2000 due to equal sharing of FICO bond expenses. Advertising
decreased $38,000 to $74,000 for the nine months ended June 30, 2000 from
$112,000 for the prior period. Other operating expenses decreased $29,000
to $615,000 for the nine months ended June 30, 2000 compared to $644,000
for the prior period. The decrease was primarily due to the change in
treatment of dealer participation fees discussed above. Telephone expenses
decreased $11,000; training expenses decreased $23,000; deposit account
supply expenses increased $10,000; loan expenses increased $5,000; and
charitable contributions increased $25,000.
Income Taxes: Income tax expense increased $33,000 to $317,000 for the
quarter ended June 30, 2000, compared to $284,000 for the same period in
1999. The effective tax rate was 33.7% and 38.8% for the quarters ended
June 30, 2000 and 1999, respectively. Income tax expense decreased $93,000
to $863,000 for the nine months ended June 30, 2000, compared to $956,000
for the nine months ended June 30, 1999. The effective tax rate was 33.5%
and 38.3% for the nine months periods ended June 30, 2000 and 1999,
respectively.
Asset and Liability Management - Interest Rate Sensitivity
At June 30, 2000, 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 $20.0 million, representing a cumulative
negative one-year gap ratio of 6.7% to total assets. At September 30,
1999, the negative gap was $34.0 million, or 13.0% to total assets. The
change is primarily due to increased speculative construction loans,
increased adjustable mortgage loans now subject to annual adjustments,
increased consumer loans with shorter terms, increased longer term FHLB
advances and increased balances in longer term certificates of deposits by
customers.
The Year 2000 Issue
The Association has not encountered any Year 2000 related problems to date.
The Association will continue to monitor all data processing and other
applications throughout the year.
Quantitative and Qualitative Disclosures about Market Risk
For a discussion of the Company's management of market risk, see "Asset and
Liability Management" above and pages 14 and 15 of the Company's Annual
Report incorporated by reference in Part IV, item 14, of Form 10-K for the
fiscal year ended September 30, 1999.
For quantitative information about market risk, see pages 14 and 15 of the
Company's Annual Report.
There has been no material changes in the quantitative disclosures about
market risk as of June 30, 2000 from those presented in the Company's 1999
Annual Report.
<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>
June 30, September 30,
2000 1999
(Dollars in Thousands)
Non-Accruing Loans:
<S> <C> <C>
One- to four-family $84 $171
Multi-family -- --
Commercial -- --
Land -- 63
Construction -- --
Consumer 43 13
Total non-accuring loans 127 247
Accruing loans delinquent 90 days or more(1)
One- to four-family -- --
Multi-family -- --
Commercial -- --
Land -- --
Construction 200 --
Consumer -- --
Total accruing loans delinquent
90 days or more 200 --
Total non-performing loans 327 247
Foreclosed Assets:
One- to four-family -- 23
Multi-family -- --
Commercial -- --
Land -- --
Construction -- --
Consumer 31 --
Total foreclosed assets 31 23
Total non-performing assets $358 $270
Total classified assets $11,995 $8,062
Total non-performing loans as a
percentage of loans receivable 0.12% 0.10%
Total non-performing assets as a
percentage of total assets 0.12% 0.10%
</TABLE>
__________________
(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.
Non-performing loans increased $80,000 to $327,000 at June 30, 2000 from
$247,000 at September 30, 1999. Classified assets increased 48.8% to
$11,995,000 at June 30, 2000 from $8,062,000 at September 30, 1999,
primarily because of three borrowers becoming 30 days delinquent at June
30, 2000. One borrower with $2.05 million of speculative construction
loans paid interest current in July 2000. A developer with a $1.6 million
development loan and another borrower with $0.9 million in construction
loans remain delinquent.
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 June 30, 2000:
<TABLE>
Actual Required Excess
Amount/Percent Amount/Percent Amount/Percent
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Tangible Capital $36,115 12.18% $4,449 1.50% $31,666 10.68%
Core Leverage
Capital 36,115 12.18% 11,864 4.00% 24,251 8.18%
Risk-Based
Capital 38,055 19.22% 15,838 8.00% 22,217 11.22%
</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 June 30, 2000 and
September 30, 1999 were 17.82% and 11.89%, 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. In addition, the Association utilizes short term
borrowings from the Federal Home Loan Bank to meet day to day cash needs
as required. Long term advances were $92,904,000 at June 30, 2000 compared
to $69,101,000 at September 30, 1999. Short term advances were $13,250,000
at June 30, 2000 compared to $2,000,000 at September 30, 1999.
Certificates of deposits were 77.3% of total savings and 44.9% of total
interest-bearing liabilities at June 30, 2000 compared to 76.6% and 51.3%
respectively at September 30, 1999.
In November 1999, the Company announced a 10% stock repurchase program.
By June 30, 2000 a total of 172,700 shares were repurchased at a cost of
$2,147,000. At June 30, 2000, 35,517 shares remain to be repurchased in
that repurchase program.
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: August 11, 2000 /s/ Duane Kohlstaedt
Duane Kohlstaedt, Executive Vice-
President and Chief Executive Officer
(Duly Authorized Officer)
Date: August 11, 2000 /s/ Ronald W. Hill
Ronald W. Hill, Vice-President &
Treasurer (Principal Financial &
Accounting Officer)
