SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 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)
201 Northeast Elm Street, Hardin, Missouri 64035
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (660) 398-4312
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 classes of
common stock as of the latest practicable date.
Class Outstanding at September 30, 1999
- --------------------------------------------------------------------------------
Common stock, .01 par value 734,753
<PAGE>
HARDIN BANCORP, INC. AND SUBSIDIARIES
CONTENTS
PART I
FINANCIAL INFORMATION
Item 1.
Unaudited Financial Statements ...................................... Page
Consolidated Balance Sheets...................................... 1
Consolidated Statements of Earnings.............................. 2
Consolidated Statements of Stockholders' Equity.................. 3
Consolidated Statements of Cash Flows........................... 4-5
Notes to Consolidated Financial Statements....................... 6
Item 2.
Management's Discussion and Analysis of
Financial Condition and Results of
Operations........................................................... 7-10
PART II
OTHER INFORMATION.................................................... 11
Signatures.......................................................... 12
<PAGE>
<TABLE>
<CAPTION>
Hardin Bancorp, Inc. and Subsidiaries
Consolidated Balance Sheets
September 30, 1999 March 31, 1999
------------------ --------------
(Unaudited)
Assets
<S> <C> <C>
Cash $ 981,794 $ 838,044
Interest bearing deposits 1,596,153 4,156,648
Investment securities available-for-sale 39,099,619 44,519,193
Mortgage-backed securities available-for-sale 12,305,641 12,584,419
Loans receivable, net 75,580,506 69,504,900
Accrued interest receivable:
Investment securities 500,148 501,114
Mortgage-backed securities 86,180 91,008
Loans receivable 539,148 456,003
Real estate owned 93,051 --
Premises and equipment 1,833,064 1,832,311
Stock in Federal Home Loan Bank (FHLB) of Des Moines, at cost 2,000,000 2,000,000
Deferred income taxes receivable 704,295 188,000
Prepaid expenses and other assets 458,684 384,481
============= =============
Total assets $ 135,778,283 $ 137,056,121
============= =============
Liabilities and Stockholders' Equity
Liabilities:
Deposits $ 84,078,752 $ 83,326,871
Advances from borrowers for property taxes and insurance 613,405 294,424
Advances from FHLB 38,000,000 40,000,000
Accrued interest payable 42,680 40,949
Current income taxes payable 175,278 159,367
Accrued expenses and other liabilities 727,820 674,969
------------- -------------
Total liabilities 123,637,935 124,496,580
------------- -------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Stockholders' equity:
Serial preferred stock, $.01 par value;
500,000 shares authorized, none issued or outstanding -- --
Common stock, $.01 par value; 3,500,000 shares authorized,
1,058,000 shares issued 10,580 10,580
Additional paid in capital 10,290,201 10,252,604
Retained earnings 8,409,061 8,097,420
Accumulated other comprehensive loss (1,273,135) (394,038)
Unearned employee benefits (532,729) (643,395)
Treasury stock (323,247 shares at cost) (4,763,630) (4,763,630)
------------- -------------
Total stockholders' equity 12,140,348 12,559,541
============= =============
Total liabilities and stockholders' equity $ 135,778,283 $ 137,056,121
============= =============
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
1
<PAGE>
<TABLE>
<CAPTION>
Hardin Bancorp, Inc. and Subsidiaries
Consolidated Statements of Earnings
(Unaudited)
Three months ended Six months ended
September 30 September 30
--------------------------------- -------------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Interest income:
Loans receivable $ 1,482,685 $ 1,358,504 $ 2,913,075 $ 2,665,755
Mortgage-backed securities 163,563 263,860 332,584 547,337
Investment securities 667,723 575,237 1,342,330 1,144,698
Other 61,028 93,168 122,798 157,824
----------- ----------- ----------- -----------
Total interest income 2,374,999 2,290,769 4,710,787 4,515,614
----------- ----------- ----------- -----------
Interest expense:
Deposits 941,058 982,176 1,885,394 1,962,381
FHLB advances 481,786 546,847 959,221 1,004,901
----------- ----------- ----------- -----------
Total interest expense 1,422,844 1,529,023 2,844,615 2,967,282
----------- ----------- ----------- -----------
Net interest income 952,155 761,746 1,866,172 1,548,332
Provision for loan losses - 16,200 1,297 31,200
----------- ----------- ----------- -----------
Net interest income after provision
for loan losses 952,155 745,546 1,864,875 1,517,132
Non-interest income:
Service charges 153,244 90,556 286,219 167,659
Loan servicing fees 8,581 8,071 15,653 16,050
Gain on sale of loans 9,331 - 9,331 14,998
Gain on sale of investments and
mortgage-backed securities - 118,444 7,164 131,046
Other 92,690 37,345 132,122 54,738
----------- ----------- ----------- -----------
Total non-interest income 263,846 254,416 450,489 384,491
----------- -----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Non-interest expense:
Compensation and benefits 369,321 332,194 709,462 657,917
Occupancy and equipment 66,853 61,544 133,158 118,780
Federal insurance premiums 12,042 11,734 23,982 23,676
Data processing 50,361 48,922 100,315 83,918
Real estate owned 1,126 - 1,126 -
Other 222,252 164,271 434,868 347,804
----------- ----------- ----------- -----------
Total non-interest expense 721,955 618,665 1,402,911 1,232,095
----------- ----------- ----------- -----------
Earnings before income taxes 494,046 381,297 912,453 669,528
Income tax expense 157,920 137,186 306,910 239,779
----------- ----------- ----------- -----------
Net earnings $ 336,126 $ 244,111 $ 605,543 $ 429,749
=========== =========== =========== ===========
Net earnings per share:
Basic $ 0.49 $ 0.32 $ 0.88 $ 0.56
=========== =========== ========= ===========
Diluted 0.47 0.31 0.85 0.54
=========== =========== ========= ===========
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
2
<PAGE>
<TABLE>
<CAPTION>
Hardin Bancorp, Inc. and Subsidiaries
Consolidated Statements of Stockholders' Equity
For the Six Months Ended September 30, 1999
(Unaudited)
Accumulated
Additional Other Unearned
Common Paid-in Retained Comprehensive Employee
Stock Capital Earnings Loss Benefits
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Balance at March 31, 1999 $ 10,580 10,252,604 8,097,420 (394,038) (643,395)
Comprehensive income:
Net earnings -- -- 605,543 -- --
Change in net unrealized loss on securities
available for sale, net of tax -- -- -- (879,097) --
----------- ----------- ----------- ----------- -----------
Total comprehensive income (loss) -- -- 605,543 (879,097) --
----------- ----------- ----------- ----------- -----------
Allocation of ESOP shares -- 37,597 -- -- 58,500
Amortization of recognition and retention plan -- -- -- -- 52,166
Dividends declared ($.20 per share) -- -- (293,902) -- --
=========== =========== =========== =========== ===========
Balance at September 30, 1999 $ 10,580 10,290,201 8,409,061 (1,273,135) (532,729)
=========== =========== =========== =========== ===========
<CAPTION>
Total
Treasury Shareholders'
Stock Equity
----------- -----------
<S> <C> <C>
Balance at March 31, 1999 (4,763,630) 12,559,541
Comprehensive income:
Net earnings -- 605,543
Change in net unrealized loss on securities
available for sale, net of tax -- (879,097)
----------- -----------
Total comprehensive income (loss) -- (273,554)
----------- -----------
Allocation of ESOP shares -- 96,097
Amortization of recognition and retention plan -- 52,166
Dividends declared ($.20 per share) -- (293,902)
=========== ===========
Balance at September 30, 1999 (4,763,630) 12,140,348
=========== ===========
</TABLE>
See accompanying notes to unaudited consolidated financial statements
3
<PAGE>
<TABLE>
<CAPTION>
Hardin Bancorp, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
For the Six Months Ended September 30, 1999 and 1998
(Unaudited)
1999 1998
----------- ----------
<S> <C> <C>
Operating Activities:
Net Earnings $ 605,543 429,749
Adjustments to reconcile net earnings
to net cash provided by operating activities:
Provision for losses on loans 1,297 31,200
Depreciation 70,670 65,183
Premium accretion and amortization
of discounts and deferred loan fees, net 29,993 (182,644)
Net gain on sale of loans and investment and
mortgage-backed securities (16,495) (146,044)
Origination of loans held for sale -- (1,896,140)
Proceeds from sales of loans 674,218 590,680
Allocation of ESOP shares 96,097 --
Amortization of deferred Recognition
and Retention Plan (RRP) 52,166 44,109
Changes in asset and liabilities:
Interest receivable (77,351) (9,104)
Other assets (74,203) (84,898)
Accrued interest payable 1,731 5,647
Accrued expense and other liabilities 38,156 131,373
Income taxes payable 15,911 (158,423)
-----------
----------- -----------
Net cash provided by (used in) operating activities 1,417,733 (1,179,312)
----------- -----------
Investing Activities:
Net increase in loans receivable (6,840,987) (5,094,015)
Proceeds from sales of loans -- 371,770
Principal payments on mortgage-backed & related securities:
Available-for-sale 4,728,615 1,324,085
Held-to-maturity -- 1,026,694
Proceeds from sales of available-for-sale
mortgage-backed securities 363,166 --
Purchase of available-for-sale investment securities (1,810,904) (16,117,348)
Proceeds from maturities of available-for-sale
investment securities -- 8,000,000
Proceeds from sales of available for sale
investment securities 1,005,400 7,817,418
Purchase of stock in FHLB of Des Moines -- (500,000)
Purchase of office properties and equipment (71,423) (182,755)
-----------
----------- -----------
Net cash used in investing activities $(2,626,133) (3,354,151)
----------- -----------
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Hardin Bancorp, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
For the Six Months Ended September 30, 1999 and 1998
(Unaudited)
1999 1998
------------- ------------
<S> <C> <C>
Financing Activities:
Net increase in savings deposits $ 751,881 1,882,434
Proceeds from FHLB advances 14,000,000 15,000,000
Repayments of FHLB advances (16,000,000) (5,500,000)
Net decrease in advances from borrowers for
taxes and insurance 318,981 273,572
Payment of dividends (279,207) (221,357)
Purchase of treasury stock -- (136,192)
------------ ------------
Net cash (used in) provided by financing activities (1,208,345) 11,298,457
------------ ------------
(Decrease) increase in cash (2,416,745) 6,764,994
Cash and equivalents at beginning of period 4,994,692 3,781,801
------------ ------------
Cash and equivalents at end of period $ 2,577,947 10,546,795
============ ============
Supplemental disclosure of cash flow information:
Cash paid for:
Interest $ 2,842,884 2,961,635
Income taxes, net of refunds $ 290,999 398,202
Non-cash investing and financing:
Dividends declared and payable $ 146,951 122,459
Loans transferred to real estate owned $ 93,051 --
Transfer of investment and mortgage-backed securities
from held-to-maturity to available-for-sale -- 19,951,798
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
5
<PAGE>
HARDIN BANCORP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
(1) Basis of Presentation
The accompanying unaudited consolidated financial statements of Hardin
Bancorp, Inc. and subsidiaries have been 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 Company's Annual Report for the year ended
March 31, 1999, 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 statement of earnings for the six-month period ended September 30,
1999 is not necessarily indicative of the results, which may be
expected for the entire year. The March 31, 1999 consolidated balance
sheet has been derived from the audited consolidated financial
statements as of that date.
(2) Earnings Per Share
Basic earnings per share excludes dilution and is computed by dividing
income available to common stockholders by the weighted average number
of common shares outstanding during the period. Diluted earnings per
share includes the effect of potential dilutive common shares (stock
options) outstanding during the period.
The shares used in the calculation of basic and diluted earnings per
share are shown below:
<TABLE>
<CAPTION>
For the three months ended For the six months ended
September 30, September 30,
1999 1998 1999 1998
------- ------- ------- -------
<S> <C> <C> <C> <C>
Basic weighted average shares 689,886 761,216 690,383 762,352
Common stock equivalents/stock options 24,615 30,716 25,541 34,134
------- ------- ------- -------
Diluted weighted average shares 714,501 791,932 715,924 796,486
======= ======= ======= =======
</TABLE>
(3) Comprehensive Income
On April 1, 1998 the Company adopted SFAS No. 130, "Reporting
Comprehensive Income" which requires the reporting of comprehensive
income and its components. Comprehensive income is defined as the
change in equity from transactions and other events and circumstances
from non-owner sources and excludes investments by and distributions to
owners. Comprehensive income includes net income and other items of
comprehensive income meeting the above criteria. The Company's only
component of other comprehensive income is the unrealized holding gains
and losses on available-for-sale securities.
<PAGE>
<TABLE>
<CAPTION>
For the three months ended For the six months ended
September 30, September 30,
1999 1998 1999 1998
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Unrealized holding gains (losses) (525,470) 420,740 (1,388,228) 603,329
Less: reclassification adjustment
for gains included in net income 7,164 318,750 7,164 449,796
---------- ---------- ---------- ----------
Net unrealized gains (losses) on securities (532,634) 101,990 (1,395,392) 153,533
Income tax benefit (197,075) (37,736) (516,295) (56,807)
---------- ---------- ---------- ----------
Other comprehensive income (loss) (335,559) 64,254 (879,097) 96,726
========== ========== ========== ==========
</TABLE>
6
<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's 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 (the "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 insured by the Savings Association Insurance Fund
(the "SAIF"), which together with the Bank Insurance Fund (the "BIF"), are the
two insurance funds administered by the FDIC.
FINANCIAL CONDITION
- -------------------
Consolidated assets of Hardin Bancorp, Inc. were $135,778,283 as of September
30, 1999, as compared to $137,056,121, on March 31, 1999, a decrease of
$1,277,838. The decrease was primarily due to a decrease in investment
securities and interest-bearing deposits partially offset by an increase in
loans.
Loans receivable, net, increased to $75,580,506 on September 30, 1999 from
$69,504,900 on March 31, 1999, an increase of $6,075,606. Mortgage-backed
securities decreased $278,778 to $12,305,641 on September 30, 1999, from
$12,584,419 on March 31, 1999. The decrease in mortgage-backed securities and
the increase in loans reflect the Bank's plan to increase the loan portfolio and
decrease mortgage-backed securities.
<PAGE>
Cash, interest bearing deposits and investment securities decreased $7,836,319
from $49,513,885 on March 31, 1999, to $41,677,566 on September 30, 1999. The
decrease was due to investment funds being utilized to repay FHLB advances and
originate mortgage and consumer loans.
Deposits totaled $84,078,752 on September 30, 1999, an increase of $751,881 from
$83,326,871 on March 31, 1999. The increase in deposits was primarily due to a
successful special certificate of deposit promotion and the Bank's high
performance checking account program.
Stockholders' equity was $12,140,348 on September 30, 1999, compared to
$12,559,541 on March 31, 1999. The change in stockholders' equity was the result
of an increase in the unrealized loss on investment securities due to an
increase in interest rates, which causes the market value of fixed rate
securities to decline.
7
<PAGE>
RESULTS OF OPERATIONS
- ---------------------
Net earnings for the Company's quarter ended September 30, 1999 were $336,126
compared to $244,111 for the comparable quarter in 1998. The increase was due to
an increase in net interest income after provision for loan losses and an
increase in total non-interest income, which was partially offset, by an
increase in total non-interest expense.
Basic earnings per share for the quarter ended September 30, 1999 was $0.49 per
share while diluted earnings per share was $0.47. Basic earnings per share for
the quarter ended September 30, 1999 were calculated based on 689,886 average
shares outstanding and diluted earnings per share were calculated based on
714,501 average shares outstanding. Basic earnings per share for the comparable
quarter ended September 30, 1998 was $0.32 per share while diluted earnings per
share was $0.31. Basic earnings per share for the quarter ended September 30,
1998 were calculated based on 761,216 average shares outstanding and diluted
earnings per share were calculated based on 791,932 average shares outstanding.
Net interest income after provision for loan losses was $952,155 for the quarter
ended September 30, 1999 compared to $745,546 for the quarter ended September
30, 1998, an increase of $206,609. This increase was a result of total interest
income increasing $84,230 from $2,290,769 in 1998 to $2,374,999 in 1999 while
total interest expense decreased $106,179 from $1,529,023 in 1998 to $1,422,844
in 1999. The increase in total interest income was due to an increase in the
average yield on interest earning assets while the decrease in total interest
expense was a result of a decrease in the average cost of deposits.
Total non-interest income increased from $254,416 for the quarter ended
September 30, 1998 to $263,846 for the quarter ended September 30, 1999. The
increase was primarily due to higher service charge income and other income from
the Bank's service corporation partially offset by gains on sales of investment
securities recognized in 1998.
The Company's total non-interest expense for the three months ended September
30, 1999 was $721,955 compared to $618,665 for the comparable quarter in 1998.
The increase was primarily due to increases in compensation and benefits
expense, occupancy and equipment expense, data processing expense, and other
expense related to Year 2000 compliance issues.
Net earnings for the six months ended September 30, 1999, were $605,543 compared
to $429,749 for the six months ended September 30, 1998, an increase of
$175,794. The increase was primarily due to increases in net interest income and
non-interest income, partially offset, by an increase in total non-interest
expense.
Net interest income after provision for loan losses for the six month period
ended September 30, 1999 was $1,864,875 compared to $1,517,132 for the six month
period ended September 30, 1998, an increase of $347,743. The increase was due
to an increase in the Bank's net interest margin.
Non-interest income for the six months ended September 30, 1999, was $450,489
compared to $384,491 for the six month period a year earlier, an increase of
$65,998. The increase was due to an increase in service charges and other
non-interest income offset by gains on sales of investment securities in 1998.
The Company's non-interest expense for the six months ended September 30, 1999
was $1,402,911, compared to $1,232,095 for the six months ended September 30,
1998, an increase of $170,816. The increase was due to an increase in
compensation and benefits, occupancy and equipment expense, data processing
expense and other non-interest expense related to Year 2000 issues.
<PAGE>
PROVISION FOR LOAN LOSSES
- -------------------------
For the three months ended September 30, 1999 the Company did not record a
provision for loan losses in accordance with its classification of assets
policy. The Company's loan portfolio consists primarily of one to four family
loans, and has experienced minimal charge-offs in the past two years.
At September 30, 1999, the Bank's allowance for loan losses was $308,155, or
117% of non-performing assets compared to $311,196, or 135% at March 31, 1999.
The allowance for loan losses was .41% of total loans at September 30, 1999,
compared to .45% at March 31, 1999.
At September 30, 1999, non-performing assets were $263,594 compared to $231,000
at March 31, 1999. Loans are considered non-performing when the collection of
principal and/or interest is not probable, or in the event payments are more
than 90 days delinquent.
8
<PAGE>
Management will continue to monitor its allowance for loan losses and make
additions to the allowance through the provision for loan losses as economic
conditions dictate. Although the Company maintains its allowance for loan losses
at a level considered to be adequate, there can be no assurance that future
losses will not exceed estimated amounts or that additional provisions for loan
losses will not be required in the future.
CAPITAL RESOURCES
- -----------------
The Bank is subject to three capital to asset requirements in accordance with
Office of Thrift Supervision (the "OTS") regulations. The following table is a
summary of the Bank's regulatory capital requirements versus actual capital at
September 30, 1999.
<TABLE>
<CAPTION>
Actual Required Excess
Amount/Percent Amount/Percent Amount/Percent
-------------- -------------- --------------
(Dollars in Thousands)
<S> <C> <C> <C>
Tangible Capital $12,388/ 9.09% $2,044/1.50% $10,344/ 7.59%
Core Leverage Capital $12,388/ 9.09% $4,088/3.00% $8,300/ 6.09%
Risk-based Capital $12,689/20.13% $5,044/8.00% $7,645/12.13%
</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 FHLB 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 four 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 September 30, 1999 was
53.69%.
In light of the competition for deposits, the Bank may utilize the funding
sources of the 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 the date of purchase are considered cash equivalents.
Cash and cash equivalents for the periods ended September 30, 1999 and 1998 were
$2,577,947 and $10,546,795 respectively. The decrease was primarily due to an
increase in net cash used in financing activities.
<PAGE>
Net cash provided by financing activities decreased from $11,298,457 for the six
months ended September 30, 1998 compared to ($1,208,345) for the six months
ended September 30, 1999. The decrease in net cash provided by financing
activities was due to repayments of FHLB advances and a reduction in
available-for-sale securities.
RECENT ACCOUNTING DEVELOPMENTS
- ------------------------------
In June of 1999, the Financial Accounting Standards board issued SFAS No. 137,
"Accounting for Derivative Instruments and Hedging Activities - Deferral of the
Effective Date of FASB Statement No. 133." This statement amends SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities, " to defer its
effective date. SFAS No. 137 is effective for all fiscal quarters beginning
after June 15, 2000, however the Company adopted the provisions of SFAS No. 133
at July 1, 1998 and utilized an option to transfer its held-to-maturity
investment security portfolio to available-for-sale. Accordingly, all unrealized
gains and losses were recorded at that date. The Company does not have any
financial instruments considered to be derivatives under the provisions of SFAS
No. 133.
YEAR 2000 COMPLIANCE
- --------------------
The Company utilizes and is dependent upon data processing systems and software
to conduct its business. The data processing systems and software include those
developed and maintained by the Company's data processor and purchased
9
<PAGE>
software which is run on in-house computer networks. In 1997, the Company
initiated a review and assessment of all hardware and software to confirm that
it will function properly in the year 2000. The Company has replaced its
computer hardware with Year 2000 compliant equipment and updated software with
Year 2000 compliant versions. The primary service provider for the Company is
Fiserv, Inc., Des Moines, Iowa. Fiserv has provided the Company with proxy test
results indicating Year 2000 compliance. A specific connectivity was tested with
Fiserv in March 1999. Third party vendors have identified Year 2000 issues and
are completing revisions to systems and software to become Year 2000 compliant.
Security systems, heating and cooling systems and other mechanical devices on
which the Company relies have been evaluated.
The approximate cost incurred by the Company to date for Year 2000 compliance is
$83,000. Other expenses, if incurred, are expected to be minimal.
The Company is substantially dependent on its computer systems and the computer
system of its data processor. Failure of the data center would have a serious
impact on the operation of the Company and could result in an interruption of
service to customers, as well as an adverse financial impact on the Company. The
worse case scenario might be, (1) loss of customers due to decreased levels of
customer service or loss of utilities, (2) large withdrawal requests creating
deposit outflows, (3) increased employee expense if extra staff is needed to
perform data processing.
The Company has prepared a contingency/business resumption plan to provide
contingencies for possible serious failures of the Company's hardware, software
or vendor's systems. The plan addresses recovery procedures for potential
failures in the event of a Year 2000 disruption. The Company has taken the
necessary steps to validate and test its contingency/business resumption plan in
order to minimize the impact on operations should there be system failures.
FORWARD LOOKING STATEMENT
- -------------------------
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 technological factors affecting the
Company's operations, pricing, products and services.
10
<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
---------------------------------------------------
On July 22, 1999, the annual meeting of stockholders was held at the
Hardin United Methodist Church Fellowship Hall located at 101
Northeast 1st Street, Hardin, Missouri.
The meeting was conducted with a quorum present in person, or by
proxy. Matters, which were submitted to and approved by a majority
of stockholders, were as follows:
1. The election of two directors of the Company for three year
terms. Robert King received 631,878 votes for and 14,740 votes
were withheld. David Lodwick received 631,478 votes for, and
15,140 votes were withheld.
2. The ratification of the appointment of KPMG as the auditors of
the Company for the fiscal year ending March 31, 2000. Votes for
KPMG were 628,727, votes against were 11,840 and votes abstaining
were 6,051.
Item 5. Other Information
-----------------
As of September 30, 1999, the Company held 323,247 shares of its
common stock as treasury stock at an aggregate purchase price of
$4,763,630.
On September 16, 1999 the Board of Directors declared a $.20 per
share cash dividend to all stockholders of record on October 1,
1999, payable on October 15, 1999.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
Exhibits:
27 - Financial Data Schedule
Reports on Form 8-K:
None.
11
<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: November 15, 1999 /s/ Robert W. King
----------------- ------------------
Robert W. King, President and Chief
Executive Officer (Duly Authorized
Officer)
Date: November 15, 1999 /s/ Karen K. Blankenship
----------------- ------------------------
Karen K. Blankenship, Senior Vice
President and Secretary (Principal
Accounting Officer)
12
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