<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------------
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OF 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OF 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from________________ to _________________
Commission File Number 0-26560
HARDIN BANCORP, INC.
--------------------------------------------------------------
(Exact name of Registrant as specified in its Charter)
Delaware 43-1719104
- ------------------------------ -----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
2nd and Elm Street, Hardin, Missouri 64035
- ------------------------------------ ----------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code:(816) 398-4312
--------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 of 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 December 31, 1996
- ---------------------------- --------------------------------
Common stock, .01 par value 954,845
<PAGE>
HARDIN BANCORP, INC. AND SUBSIDIARIES
CONTENTS
<TABLE>
<CAPTION>
PART I FINANCIAL INFORMATION
<S> <C> <C>
Item 1. Financial Statements Page
Consolidated Balance Sheets........................1
Consolidated Statements of Earnings................2
Consolidated Statement of Stockholders' Equity.....3
Consolidated Statements of Cash Flows........... 4-5
Notes to Consolidated Financial Statements.......6-7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations......................................8-12
PART II OTHER INFORMATION.................................13
Signatures........................................14
</TABLE>
<PAGE>
HARDIN BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, AND MARCH 31, 1996
<TABLE>
<CAPTION>
(Unaudited)
December 31, March 31,
1996 1996
------------- ------------
Assets
------
<S> <C> <C>
Cash $ 306,356 $ 253,557
Interest bearing deposits 6,632,730 5,430,396
Investment securities - available for sale 15,332,564 6,362,850
Mortgage backed securities:
Held to maturity 13,965,110 16,298,987
Available for sale 6,079,433 7,906,862
Loans receivable, net 52,310,804 45,031,460
Accrued interest receivable:
Investment securities 151,957 116,562
Mortgage backed securities 149,898 188,532
Loans receivable 364,288 296,775
Premises and equipment 772,948 510,218
Stock in Federal Home Loan Bank (FHLB) of
Des Moines, at cost 742,000 742,000
Prepaid expenses and other assets 207,409 248,623
----------- -----------
Total assets $97,015,497 $83,386,822
=========== ===========
Liabilities and Stockholders' Equity
------------------------------------
Liabilities:
Deposits $67,866,412 $66,605,247
Advances from borrowers for taxes and insurance 146,465 223,752
Advances from FHLB 14,000,000 0
Accrued interest payable 63,933 30,385
Income taxes payable:
Current 6,028 56,575
Deferred 39,113 48,000
Accrued expenses and other liabilities 577,721 387,922
----------- -----------
Total liabilities 82,699,672 67,351,881
----------- -----------
Stockholders' equity:
Serial preferred stock, $.01 par value;
500,000 shares authorized, none issued or outstanding 0 0
Common stock, $.01 par value: 3,500,000 shares
authorized; 1,058,000 shares issued; and
954,845 and 1,058,000 outstanding at
December 31, and March 31, 1996, respectively 10,580 10,580
Additional paid-in capital 10,055,448 10,055,448
Retained earnings 6,864,799 6,885,230
Unrealized loss on available for sale securities, net (172,601) (154,597)
Unearned employee stock ownership plan (761,720) (761,720)
Deferred recognition and retention plan (434,635) 0
Treasury stock (103,155 shares at cost) (1,246,046) 0
----------- -----------
Total stockholders' equity 14,315,825 16,034,941
----------- -----------
Total liabilities and stockholders' equity $97,015,497 $83,386,822
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
1
<PAGE>
HARDIN BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
<TABLE>
<CAPTION>
Three months ended Nine months ended
December 31 December 31
------------------ -----------------
1996 1995 1996 1995
-------------- --------------- ---------- ----------
<S> <C> <C> <C> <C>
Interest income:
Loans receivable $1,061,788 $ 819,811 $3,025,304 $2,275,539
Mortgage backed securities 318,929 414,108 1,032,058 1,223,131
Investment securities 232,845 94,901 635,875 267,543
Other 67,621 125,596 157,685 290,743
---------- ---------- ---------- ----------
Total interest income 1,681,183 1,454,416 4,850,922 4,056,956
---------- ---------- ---------- ----------
Interest expense:
Deposits 851,283 850,413 2,517,993 2,591,930
FHLB advances 104,652 0 250,501 12,876
---------- ---------- ---------- ----------
Total interest expense 955,935 850,413 2,768,494 2,604,806
---------- ---------- ---------- ----------
Net interest income 725,248 604,003 2,082,428 1,452,150
Provision for loan losses 7,500 0 23,590 0
---------- ---------- ---------- ----------
Net interest income after
provision for losses 717,748 604,003 2,058,838 1,452,150
Non-interest income:
Service charges 20,901 17,216 60,122 49,272
Loan servicing fees 8,803 10,365 27,609 32,614
Gain (loss) on sale of investments and
mortgage backed securities 5,286 0 (2,410) (2,886)
Other income 20,562 40,031 119,364 124,958
---------- ---------- ---------- ----------
Total non-interest income 55,552 67,612 204,685 203,958
---------- ---------- ---------- ----------
Non-interest expense:
Compensation and benefits 240,682 250,352 736,376 599,962
Occupancy and equipment 34,146 28,573 85,570 77,102
Federal insurance premiums 38,022 38,804 113,855 116,062
SAIF special assessment 0 0 441,018 0
Data processing 22,794 22,259 67,567 66,284
Real estate owned 0 0 0 (3,050)
Other 96,155 88,288 375,904 259,084
---------- ---------- ---------- ----------
Total non-interest expense 431,799 428,276 1,820,290 1,115,444
---------- ---------- ---------- ----------
Earnings before income taxes 341,501 243,339 443,233 540,664
Income tax expense 126,436 85,663 164,093 184,748
---------- ---------- ---------- ----------
Net earnings $ 215,065 $ 157,676 $ 279,140 $ 355,916
========== ========== ========== ==========
Net earnings per common share:
Primary and fully diluted $ 0.24 0.16 0.30 0.37
Weighted average common and common
equivalent shares outstanding 901,191 973,360 934,553 973,360
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE>
HARDIN BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
NINE MONTHS ENDED DECEMBER 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
Unrealized Unearned
Gain or (Loss) Employee
Additional on Stock
Common Paid-in Retained Securities, Ownership Deferred Treasury Stockholders'
Stock Capital Earnings net Plan RRP Stock Equity
---------- ---------- ---------- ------------ ---------- -------- -------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at March 31, 1996 $ 10,580 10,055,448 6,885,230 (154,597) (761,720) 0 0 16,034,941
Net earnings 0 0 279,140 0 0 0 0 279,140
Change in unrealized loss
on available-
for-sale securities,
net of tax 0 0 0 (18,004) 0 0 (18,004)
Repurchase of common stock 0 0 0 0 0 0 (1,744,196) (1,744,196)
Adoption of RRP 0 0 0 0 0 (498,150 498,150 0
Amortization of RRP 0 0 0 0 0 63,515 0 63,515
Dividend declared ($.30
per share) 0 0 (299,571) 0 0 0 0 (299,571)
---------- ----------- --------- ---------- ---------- -------- -------- ----------
Balance at December 31,
1996 $ 10,580 10,055,448 6,864,799 (172,601) (761,720) (434,635 (1,246,046) 14,315,825
---------- ----------- --------- ---------- --------- -------- --------- ----------
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
HARDIN BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED DECEMBER 31, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
Operating Activities: 1996 1995
------------- -----------
<S> <C> <C>
Net Earnings $ 279,140 355,916
Adjustments to reconcile net earnings
to net cash provided by operating activities:
Provision for losses on loans 23,590 0
Depreciation 38,949 32,606
Premium accretion and amortization
of discounts and deferred loan fees, net 65,946 68,410
FHLB stock dividends 0 (14,600)
Net loss on sale of loans and
investment securities available for sale 2,410 2,886
Gain on sale of premises and equipment 0 (4,877)
Amortization of deferred Recognition
and Retention Plan (RRP) 63,515 0
Provision for deferred income taxes 1,538 24,467
Changes in assets and liabilities:
Interest receivable (64,274) (43,635)
Other assets 41,214 38,237
Accrued interest payable 33,548 (7,765)
Accrued expenses and other liabilities 200,114 9,503
Income taxes payable (50,547) 36,524
------------ ----------
Net cash provided by operating activities 635,143 497,672
------------ ----------
Investing Activities:
Net increase in loans receivable (4,793,153) (3,563,812)
Proceeds from maturities of certificates
of deposits in other institutions 0 100,000
Purchase of loans receivable (2,506,169) (4,744,277)
Principal payments on mortgage backed securities:
Available for sale 939,436 32,210
Held to maturity 2,287,193 3,257,099
Purchase of investment securities:
Available for sale (14,003,686) (4,890,500)
Held to maturity 0 (267,655)
Proceeds from maturities of investment securities:
Available for sale 3,000,000 2,700,000
Held to maturity 0 1,374
Proceeds from sales of mortgage backed
securities available for sale 863,408 (522,781)
Proceeds from sales of investment
securities available for sale 2,004,844 2,993,438
Purchase of office premises and equipment (301,679) (32,722)
Proceeds from sale of office premises and equipment 0 13,500
------------ ----------
Net cash used in investing activities $(12,509,806) (4,924,126)
------------ ----------
</TABLE>
4
<PAGE>
HARDIN BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED
NINE MONTHS ENDED DECEMBER 31, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Financing Activities:
Net increase (decrease) in savings deposits $ 1,261,165 (1,230,394)
Proceeds from FHLB advances 14,000,000 1,000,000
Repayments of FHLB advances 0 (2,500,000)
Net decrease in advances from borrowers
for taxes and insurance (77,287) (110,544)
Proceeds from issuance of stock, net of issuance costs 0 9,201,000
Payment of dividends (309,886) 0
Purchase of treasury stock (1,744,196) 0
----------- -----------
Net cash provided by financing activities 13,129,796 6,360,062
----------- -----------
Increase in cash 1,255,133 1,933,608
Cash at beginning of period 5,683,953 4,442,116
----------- -----------
Cash at end of period $ 6,939,086 $ 6,375,724
=========== ===========
Supplemental disclosure of cash flow information:
Cash paid for:
Interest $ 2,734,946 2,611,183
Income taxes, net of refunds $ 214,640 148,224
Noncash investing and financing:
Allocation of treasury stock to RRP $ 498,150 0
Dividends declared and payable $ 95,485 0
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
HARDIN BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) Hardin Bancorp, Inc.
Hardin Bancorp, Inc. (the "Holding Company") was incorporated under the laws of
the State of Delaware for the purpose of becoming the savings and loan holding
company of Hardin Federal Savings Bank, (the "Bank") in connection with the
Bank's conversion from a federally chartered mutual savings bank to a federally
chartered stock savings bank, pursuant to its Plan of Conversion. On August 21,
1995, the Holding Company commenced a Subscription and Community Offering of its
shares in connection with the conversion of the Bank (the "Offering"). The
Offering was consummated and the Holding Company acquired the Bank on September
28, 1995. The Holding Company had no assets prior to the conversion and
acquisition on September 28, 1995.
The accompanying consolidated financial statements as of and for the nine months
ended December 31, 1996 include the accounts of the Holding Company and the
Bank.
(2) Basis of Preparation
The accompanying unaudited consolidated financial statements were prepared in
accordance with instructions for Form 10-QSB. To the extent that information
and footnotes required by generally accepted accounting principles for complete
financial statements are contained in the audited financial statements included
in the Holding Company's Annual Report for the year ended March 31, 1996, such
information and footnotes have not been duplicated herein. In the opinion of
management, all adjustments, consisting only of normal recurring accruals, which
are necessary for the fair presentation of the interim financial statements have
been included. The statements of operations for the nine month period ended
December 31, 1996 are not necessarily indicative of the results which may be
expected for the entire year. The March 31, 1996 consolidated balance sheet has
been derived from the audited consolidated financial statements as of that date.
(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.
Earnings per share amounts for the nine month period ended December 31, 1995 are
based upon shares outstanding at December 31, 1995, exclusive of the shares
issued to the ESOP, as though those shares were outstanding for the entire
period. The computation does not reflect the pro forma effects of the
investment income that would have been earned had the net proceeds for the
conversion been received at the beginning of the nine month period.
6
<PAGE>
(4) Stockholders' Equity and Stock Conversion
The Bank converted from a federally chartered mutual savings bank to a
federally chartered stock savings bank pursuant to its Plan of
Conversion which was approved by the Bank's members on September 21,
1995. The conversion was effective on September 28, 1995, and resulted
in the issuance of 1,058,000 shares of common stock (par value $0.01) at
$10.00 per share for a gross sales price of $10,580,000. Costs related
to conversion (primarily underwriters' commissions, printing, and
professional fees) aggregated $532,600 and were deducted to arrive at
the net proceeds of $10,047,400. The Holding Company established an
employee stock ownership trust which purchased 84,640 shares of common
stock of the Holding Company at the issuance price of $10.00 per share
with funds borrowed from the holding company.
(5) Employee Stock Ownership Plan (ESOP)
All employees meeting age and service requirements are eligible to
participate in an ESOP established on September 28, 1995. Contributions
made by the Bank to the ESOP are allocated to participants by a formula
based on compensation. Participant benefits become 100 percent vested
after five years. The ESOP purchased 84,640 shares in the Bank's
conversion. ESOP expense for the nine month period ended December 31,
1996 was $112,166.
(6) Recognition and Retention Plan (RRP)
On April 16, 1996, the shareholders approved adoption of a RRP whereby
42,320 shares of common stock were authorized to be purchased by the
plan. At December 31, 1996, 35,972 shares have been awarded to plan
participants. The cost of these shares ($498,150) will be amortized as
compensation expense over the five year vesting period.
7
<PAGE>
HARDIN BANCORP, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
- -------
Hardin Bancorp, Inc. (the "Company") was incorporated under the laws of the
state of Delaware to become a savings bank holding company with Hardin Federal
Savings Bank (the "Bank") of Hardin, Missouri, as its subsidiary. The holding
company was incorporated at the direction of the Board of Directors of the Bank,
and on September 28, 1995, acquired all of the capital stock of the Bank upon
its conversion from mutual to stock form (the "conversion"). Prior to the
conversion, the holding company did not engage in any material operations.
Hardin Federal Savings Bank was originally founded in 1888 as a Missouri
chartered savings and loan association located in Hardin, Missouri. On March
21, 1995, the Bank members voted to convert the Bank to a Federal mutual
charter. The Bank conducts its business through its main office in Hardin, Ray
County, and two full service branch offices located in Richmond, Ray County, and
Excelsior Springs, Clay County, Missouri. Deposits are insured by the Federal
Deposit Insurance Corporation (FDIC) to the maximum allowable.
The Bank is principally engaged in the business of attracting retail savings
deposits from the general public and investing those funds in first mortgage
loans on owner occupied, single-family residential loans, commercial real estate
loans, mortgage backed securities, U.S. Government and agency securities, and
insured interest bearing deposits. The Bank also originates consumer loans for
the purchase of automobiles, home improvement, and home equity lines of credit.
The most significant outside factors influencing the operations of the Bank and
other financial institutions include general economic conditions, competition in
the local market place and the related monetary and fiscal policies of agencies
that regulate financial institutions. More specifically, the cost of funds
primarily consisting of insured deposits is influenced by interest rates on
competing investments and general market rates of interest, while lending
activities are influenced by the demand for real estate financing and other
types of loans, which in turn is affected by the interest rates at which such
loans may be offered and other factors affecting loan demand and funds
availability.
The deposits of the Bank are presently insured by the Savings Association
Insurance Fund (SAIF), which together with the Bank Insurance Fund (BIF), are
the two insurance funds administered by the FDIC. In the third quarter of 1995
the FDIC lowered the premium schedule for BIF-insured institutions in
anticipation of the BIF achieving its statutory reserve ratio. The reduced
premium created a significant disparity in deposit insurance expense, causing a
competitive advantage for BIF members. Legislation enacted on September 30,
1996, provided for a one-time special assessment of .657% of the Bank's SAIF
insured deposits at March 31, 1995. The purpose of the assessment was to bring
the SAIF to its statutory reserve ratio. Based on the above formula, the Bank's
SAIF assessment of $441,018 was recorded in the quarter ended September 30,
1996. Due to the SAIF reaching its statutory reserve ratio, the Bank
anticipates a reduction in the premium schedule which will reduce the Bank's
federal insurance premium for future periods.
8
<PAGE>
PENDING LEGISLATION
- -------------------
The Congress is now expected to consider legislation requiring all Federal
thrift institutions, such as the Bank, to either convert to a national bank or a
state depository institution by January 1, 1998. In addition, the Company might
no longer be regulated as a thrift holding company, but rather as a bank
holding company. The Office of Thrift Supervision (OTS) also might be abolished
and its functions transferred among the Federal banking regulators.
Certain aspects of the legislation remain to be resolved and therefore no
assurance can be given as to whether or in what form the legislation will be
enacted or its effect on the Company and the Bank.
Under Section 593 of the Code, until the first tax year beginning on or after
January 1, 1996, thrift institutions such as the Bank, which met certain
definitional test primarily relating to their assets and the nature of their
business, were permitted to establish a tax reserve for bad debts and to make
annual additions thereto, which additions, within specified limitations, could
be deducted in arriving at their taxable income. The Bank's deduction with
respect to "qualifying loans," which are generally loans secured by certain
interests in real property, were computed using an amount based on the Bank's
actual loss experience (the "Experience Method"), or a percentage equal to 8.0%
of the Bank's taxable income (the "PTI Method"), computed without regard to this
deduction and with additional modifications and reduced by the amount of any
permitted addition to the non-qualifying reserve.
Under recently enacted legislation, the PTI Method was repealed. If a Bank is
not a "large" bank, i.e., the quarterly average of the Bank's total assets or of
the consolidated group of which it is a member exceeds $500 million for the
year, the Bank will continue to be permitted to use the Experience Method. In
addition, the Bank is required to recapture (i.e., take into income) over a
multi-year period its "applicable excess reserves", i.e., the balance of its
reserve for losses on qualifying loans and non-qualifying loans, as of the close
of its last tax year beginning before January 1, 1996, over the greater of (a)
the balance of such reserves as of December 31, 1987 or (b) in the case of a
bank which is not a "large" bank, an amount that would have been the balance of
such reserves as of the close of its last tax year beginning before January 1,
1996, had the Bank always computed the additions to its reserves using the
experience method. The Bank would not be required to recapture its supplemental
reserves or its pre-1988 reserves, even if the Bank later became a "large" bank.
Under the legislation, such recapture requirements would be suspended for each
of two successive taxable years beginning January 1, 1997 if the principal
amount of residential loans made by the Bank during each such year is not less
than the average of the principal amounts of such loans made by the Bank during
its six taxable years preceding January 1, 1996.
If the Bank ceases to qualify as a "bank" (as defined in Code Section 581) or
converts to a credit union, the pre-1988 reserves and supplemental reserves are
restored to income ratably over a six-year period, beginning in the tax year
the association no longer qualifies as a bank. The balance of the pre-1988
reserves are also subject to recapture in the case of certain excess
distributions to (including distributions on liquidation and dissolution), or
redemptions of stockholders. See "Regulation" and "Regulation-Federal and State
Taxation-Federal Taxation."
FINANCIAL CONDITION
- -------------------
Consolidated assets of Hardin Bancorp, Inc. were $97,015,497 as of December 31,
1996, compared to $83,386,822 on March 31, 1996, an increase of $13,628,675.
The increase in assets was primarily funded by an increase in Federal Home Loan
Bank advances of $14,000,000 and an increase in deposits of $1,261,165.
9
<PAGE>
The growth rate of 16.3% is in accordance with the Company's objective to
leverage its excess capital in order to enhance return on stockholders' equity.
The funds were used primarily to purchase U.S. Government agency securities with
maturity or re-pricing terms similar to the maturity or repricing terms of the
liability. These transactions are commonly referred to as arbitrages.
Loans receivable, net increased to $52,310,804 on December 31, 1996, from
$45,031,460 on March 31, 1996, an increase of $7,279,344. Mortgage backed
securities decreased $4,161,306 to $20,044,543 at December 31, 1996, from
$24,205,849 on March 31, 1996. The decrease in mortgage backed securities and
the increase in loans receivable reflect the Bank's plan to increase the
mortgage and consumer loan portfolios and decrease the level of mortgage backed
securities.
Deposits totaled $67,866,412 on December 31, 1996, an increase of $1,261,165
from $66,605,247 on March 31, 1996. The increase in deposits is primarily due
to a successful special certificate of deposit promotion.
Stockholders' equity was $14,315,825 on December 31, 1996, compared to
$16,034,941 on March 31, 1996, a decrease of $1,719,116. The decrease was the
result of 103,155 shares of Hardin Bancorp, Inc., common stock acquired as
treasury stock at a cost of $1,246,046, the purchase of 42,320 shares at an
original cost of $498,150 to fund the Hardin Bancorp, Inc. Recognition and
Retention Plan (RRP), and three quarterly cash dividends totaling $299,571.
These items were partially off-set by net income for the nine month period of
$279,140.
RESULTS OF OPERATIONS
- ---------------------
Net earnings for the Company's third fiscal quarter ended December 31, 1996,
were $215,065 compared to $157,676 for the comparable quarter in 1995. The
increase was due to an improved net interest margin and an increase in interest-
earning assets.
Earnings per share for the quarter ended December 31, 1996, were $0.24 per share
based on an average of 901,191 shares outstanding compared to $0.16 per share
for the comparable quarter in 1995 based on an average of 973,360 shares
outstanding.
Net interest income after provision for loan losses for the third quarter ended
December 31, 1996, was $717,748 compared to $604,003 for the quarter ended
December 31, 1995, an increase of $113,745. This increase was a result of
interest income rising from $1,454,416 in 1995 to $1,681,183 in 1996 while
interest expense increased from $850,413 in 1995 to $955,935 in 1996. The
increase is due to an increase in total interest-earning assets funded by
increased Federal Home Loan Bank advances and deposits.
Non-interest income decreased from $67,612 for the quarter ended December 31,
1995, to $55,552 for the quarter ended December 31, 1996. The decrease was due
to lower earnings at the Bank's insurance subsidiary and a reduction in the
dividend received from, Fiserv, the Bank's data processing center.
The Company's non-interest expense for the three months ended December 31, 1996,
was $431,799 compared to $428,276 for the third quarter in 1995. The slight
increase was due to higher occupancy and equipment expense, increased expense
related to conversion to a stock company and partially off-set by a reduction in
compensation and benefits.
10
<PAGE>
Net earnings for the nine months ended December 31, 1996, were $279,140 compared
to $355,916 for the nine months ended December 31, 1995. The decrease was
primarily due to a special assessment to recapitalize the Savings Association
Insurance Fund and an increase in employee expense related to stock benefit
plans.
Earnings per share for the nine months ended December 31, 1996, were $0.30 per
share based on an average of 934,553 shares outstanding compared to $0.37 per
share for the nine months ended December 31, 1995 based on an average of 973,360
shares outstanding.
Net interest income after provision for loan losses for the nine months ended
December 31, 1996, was $2,058,838 compared to $1,452,150 for the nine months
ended December 31, 1995, an increase of $606,688. The increase in net interest
income is due to an increase in interest-earning assets, funded by increased
Federal Home Loan Bank advances, deposit growth, and the investment of the net
proceeds from the Company's conversion to stock, which was consummated on
September 28, 1995.
Non-interest income increased slightly from $203,958 for the nine months ended
December 31, 1995, to $204,685 for the nine months ended December 31, 1996.
Non-interest expense for the nine months ended December 31, 1996, was $1,820,290
compared to $1,115,444 for the nine month period in 1995, an increase of
$704,846. The increase was primarily due to a special one-time Savings
Association Insurance Fund (SAIF) assessment in the amount of $441,018, expenses
associated with the Hardin Bancorp, Inc. Recognition and Retention Plan (RRP) of
$63,515, Hardin Bancorp, Inc. Employee Stock Ownership Plan (ESOP) expenses of
$112,166, and additional accounting, legal, franchise tax, and printing expense
related to the conversion to a stock company.
PROVISION FOR LOAN LOSSES
- -------------------------
The provision for loan losses is based on the periodic analysis of the loan
portfolio by management. In establishing the provision, management considers
numerous factors including general economic conditions, loan portfolio
condition, prior loss experience, and independent analysis. The provision for
loan losses for the three months ended December 31, 1996, was $7,500, and for
the nine months ended December 31, 1996, was $23,590. Based upon the analysis
of the addition to established allowances and the composition of the loan
portfolio, management concluded that the allowance is adequate. While current
economic conditions in the Bank's market are stable, future conditions will
dictate the level of future allowances for losses on loans.
NON-PERFORMING ASSETS
- ---------------------
On December 31, 1996, non-performing assets were $171,000 compared to $124,000
on March 31, 1996. At December 31, 1996, the Bank's allowance for loan losses
was $155,000, or 90% of non-performing assets compared to $131,000 or 107% at
March 31, 1996.
Loans are considered non-performing when the collection of principal and/or
interest is not expected, or in the event payments are more than 90 days
delinquent.
The allowance for loan losses was .30% of total loans as of December 31, 1996
compared to .29% at March 31, 1996.
11
<PAGE>
CAPITAL RESOURCES
- -----------------
The Bank is subject to three capital to asset requirements in accordance with
Office of Thrift Supervision (OTS) regulations. The following table is a
summary of the Bank's regulatory capital requirements versus actual capital as
of December 31, 1996:
<TABLE>
<CAPTION>
CAPITAL REQUIREMENTS:
<S> <C> <C> <C>
Actual Required Excess
Amount/Percent Amount/Percent Amount/Percent
(Dollars in Thousands)
Tangible Capital $11,189/11.84% $1,420/1.50% $9,769/10.34%
Core Leverage Capital $11,189/11.84% $2,839/3.00% $8,350/08.84%
Risk-Based Capital $11,345/29.72% $3,054/8.00% $8,291/21.72%
</TABLE>
LIQUIDITY
- ---------
The Bank's principal sources of funds are deposits, principal and interest
payments on loans, deposits in other insured institutions, and investment
securities. While scheduled loan repayments and maturing investments are
relatively predictable, deposit flows and early loan payments are more
influenced by interest rates, general economic conditions and competition.
Additional sources of funds may be obtained from the Federal Home Loan Bank of
Des Moines by utilizing numerous available products to meet funding needs.
The Bank is required to maintain minimum levels of liquid assets as defined by
regulations. The required percentage is currently five percent of net
withdrawable savings deposits and borrowings payable on demand or in one year or
less. The Bank has maintained its liquidity ratio at levels exceeding the
minimum requirement. The eligible liquidity ratio at December 31, 1996, was
10.34%.
In light of the competition for deposits, the Bank may utilize the funding
sources of the Federal Home Loan Bank of Des Moines (FHLB) to meet loan demand
in accordance with the Bank's growth plans. The wholesale funding sources may
allow the Bank to obtain a lower cost of funding and create a more efficient
liability match to the respective assets being funded.
For purposes of the cash flows, all short-term investments with a maturity of
three months or less at date of purchase are considered cash equivalents. Cash
and cash equivalents for the periods ended December 31, 1996 and 1995 were
$6,939,086 and $6,375,724, respectively. The increase was primarily due to an
increase in cash provided by financing activities, primarily proceeds from FHLB
advances.
Net cash provided by operating activities increased from $497,672 at December
31, 1995 to $635,143 at December 31, 1996. The increase was due to improved net
earnings, exclusive of the SAIF assessment, and normal adjustments to accrued
income and expense items.
12
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
-----------------
None.
Item 2. Changes in Securities
---------------------
None.
Item 3. Defaults Upon Senior Securities
-------------------------------
None.
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
None.
Item 5. Other Information
-----------------
During the quarter, the Company purchased 50,255 shares of the
Company's common stock at an aggregate purchase price of $627,511. As
of December 31, 1996, the Company held 103,155 shares of its common
stock as treasury at an aggregate purchase price of $1,246,046.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
Exhibits:
27 - Financial Data Schedule
Reports on Form 8-K:
None.
13
<PAGE>
SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HARDIN BANCORP, INC.
Registrant
Date: February 11, 1996 /s/ Robert W. King
----------------- ---------------------------------------
Robert W. King, President and Chief
Executive Officer (Duly Authorized
Officer)
Date: February 11, 1996 /s/ Karen K. Blankenship
------------------ ----------------------------------------
Karen K. Blankenship, Senior Vice
President and Secretary (Principal
Financial Officer)
14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> DEC-31-1996
<CASH> 306
<INT-BEARING-DEPOSITS> 6,633
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 21,412
<INVESTMENTS-CARRYING> 13,965
<INVESTMENTS-MARKET> 13,661
<LOANS> 52,466
<ALLOWANCE> 155
<TOTAL-ASSETS> 97,015
<DEPOSITS> 67,866
<SHORT-TERM> 14,000
<LIABILITIES-OTHER> 833
<LONG-TERM> 0
0
0
<COMMON> 11
<OTHER-SE> 14,305
<TOTAL-LIABILITIES-AND-EQUITY> 97,015
<INTEREST-LOAN> 4,057
<INTEREST-INVEST> 636
<INTEREST-OTHER> 158
<INTEREST-TOTAL> 4,851
<INTEREST-DEPOSIT> 2,518
<INTEREST-EXPENSE> 2,768
<INTEREST-INCOME-NET> 2,082
<LOAN-LOSSES> 24
<SECURITIES-GAINS> (2)
<EXPENSE-OTHER> 1,820
<INCOME-PRETAX> 443
<INCOME-PRE-EXTRAORDINARY> 443
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 279
<EPS-PRIMARY> .30
<EPS-DILUTED> .30
<YIELD-ACTUAL> 7.75
<LOANS-NON> 171
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 695
<ALLOWANCE-OPEN> 131
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 155
<ALLOWANCE-DOMESTIC> 140
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 15
</TABLE>
