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These excerpts taken from the HFBC 10-K filed Mar 28, 2008. Comparison of Operating Results for the Years Ended December 31, 2006 and 2005 Net Income. The Company’s net income for the year ended December 31, 2006 was $3.9 million compared to $4.1 million for the year ended December 31, 2005. Net Interest Income. Net interest income for the year ended December 31, 2006 was $17.4 million, compared to $14.2 million for the year ended December 31, 2005. The increase in net interest income for the year ended December 31, 2006 was the result of loan and investment portfolio growth and an increase in short-term interest rates. For the year ended December 31, 2006, the Company’s tax equivalent average yield on total interest-earning assets was 6.30% compared to 5.39% for the year ended December 31, 2005, and its average cost of interest-bearing liabilities was 3.85%, compared to 3.00% for the year ended December 31, 2005. As a result, the Company’s tax equivalent interest rate spread for the year ended December 31, 2006 was 2.45%, compared to 2.39% for the year ended December 31, 2005 and its tax equivalent net interest margin was 2.71% for the year ended December 31, 2006, compared to 2.61% for the year ended December 31, 2005. Interest Income. Interest income increased $11.0 million from $29.7 million to $40.7 million, or by 37.1% during the year ended December 31, 2006 compared to 2005. The increase was attributable to an increase in loan and investment volume as well as an increase in short-term interest rates on such interest earning assets. The average balance on securities held to maturity declined approximately $3.0 million, from $21.4 million at December 31, 2005 to $18.4 million at December 31, 2006. The average balance on taxable securities available for sale increased $14.3 million, from $142.9 million at December 31, 2005 to $157.2 million at December 31, 2006. The average balance of non-taxable securities available for sale decreased approximately $3.7 million, from $19.4 million at December 31, 2005 to $15.7 million at December 31, 2006. Average time deposits and other interest-bearing cash deposits increased approximately $3.0 million, from $3.5 million at December 31, 2005 to $6.5 million at December 31, 2006. Overall, average total interest-earning assets increased approximately $92.6 million from December 31, 2005 to December 31, 2006.
Interest Expense. Interest expense increased to $23.3 million for the year ended December 31, 2006 compared to $15.5 million for 2005. The increase in interest expense was attributable to an increase in the average balances of both deposit and Federal Home Loan Bank (FHLB) borrowings as well as an increase in short-term interest rates. The average cost of average interest-bearing liabilities increased from 3.00% for the year ended December 31, 2005 to 3.85% for the year ended December 31, 2006. Over the same period, the average balance of interest bearing deposits increased from $424.9 million for the year ended December 31, 2005 to $471.8 million at December 31, 2006. The average balance of FHLB borrowings increased from $79.7 million for the year ended December 31, 2005 to $111.0 million for the year ended December 31, 2006. The average cost of FHLB borrowings increased from 3.62% for the year ended December 31, 2005 to 4.52% for the year ended December 31, 2006. The Company’s cost of repurchase agreements was 5.00% for the year ended December 31, 2006. The Company did not offer repurchase agreements prior to 2006. Provision for Loan Losses. The Company determined that an additional $1.0 million in provision for loan losses was required for the year ended December 31, 2006. For the year ended December 31, 2005, the Company determined that a provision for loan losses of $1.25 million was required. Non-Interest Income. Non-interest income increased by $1.3 million for the year ended December 31, 2006 to $5.8 million, compared to $4.5 million for the year ended December 31, 2005. The increase in non-interest income is the result of higher income realized on checking accounts and a larger volume of loan applications. Gains on the sale of loans and securities decreased from $518,000 for the year ended December 31, 2005 to $192,000 for the year ended December 31, 2006. The decrease in gains on the sale of securities is the result of the sale of the Bank’s data processing provider, Intrieve, Inc. in 2005. Non-Interest Expense. Total non-interest expense for the year ended December 31, 2006 was $16.5 million, compared to $11.6 million in 2005. The increase was the result of several factors, including the June 2006 acquisition of four retail offices in Middle Tennessee, the addition of a new office in Hopkinsville, Kentucky, the addition of one retail office in Clarksville, Tennessee and the planned addition of two additional offices in Clarksville. Income Taxes. The effective tax rate for the year ended December 31, 2006 was 30.3%, compared to 29.7% for 2005. The increase in the Company’s effective tax rate is the result of a reduced balance in municipal bonds. Comparison of Operating Net Income. The Company’s net income for the year ended Net Interest Income. Interest Income. Interest income increased $11.0 million from $29.7 million to $40.7 million, or by 37.1% during the year Interest Expense. Interest expense increased to $23.3 million for the year ended December 31, Provision for Loan Losses. The Non-Interest Income. Non-interest income increased by $1.3 million for the year ended December 31, 2006 Non-Interest Expense. Total non-interest expense for the year ended December 31, Income The Company’s
SIZE="2">Liquidity. Liquidity management is both a daily and long-term function of business management. If the Bank requires funds beyond its ability to generate them internally, the Bank believes that it could borrow funds from the FHLB. At Subordinated Debentures Issuance. On September 25, 2003, the The Bank’s primary sources of funds consist of deposits, repayment of loans and mortgage-backed
respectively. Cash flows from investing activities were a net use of funds of $38.3 million, $60.1 million and $63.8 million in 2007, 2006 At December 31, 2007, the Bank had $51.3 million in outstanding The have a greater impact on the Company’s performance than do the effects of general levels of inflation. Interest rates do not necessarily move in the same direction or to the same extent as the price of goods and services. Management’s This excerpt taken from the HFBC 10-K filed Mar 30, 2007. Comparison of Operating Results for the Years Ended December 31, 2006 and 2005 Net Income. The Company’s net income for the year ended December 31, 2006 was $3.9 million compared to $4.1 million at December 31, 2005. Net Interest Income. Net interest income for the year ended December 31, 2006 was $17.4 million, compared to $14.2 million for the year ended December 31, 2005. The increase in net interest income for the year ended December 31, 2006 was the result of loan and investment portfolio growth and an increase in short-term interest rates. For the year ended December 31, 2006, the Company’s tax equivalent average yield on total interest-earning assets was 6.30% compared to 5.39% for the year ended December 31, 2005, and its average cost of interest-bearing liabilities was 3.85%, compared to 3.00% for the year ended December 31, 2005. As a result, the Company’s tax equivalent interest rate spread for the year ended December 31, 2006 was 2.45%, compared to 2.39% for the year ended December 31, 2005 and its tax equivalent net interest margin was 2.71% for the year ended December 31, 2006, compared to 2.61% for the year ended December 31, 2005. Interest Income. Interest income increased $11.0 million from $29.7 million to $40.7 million, or by 37.1% during the year ended December 31, 2006 compared to 2005. The increase was attributable to an increase in loan and investment volume as well as an increase in short-term interest rates on such interest-earning assets. The average balance on securities held to maturity declined approximately $3.0 million, from $21.4 million at December 31, 2005 to $18.4 million at December 31, 2006. The average balance on taxable securities available for sale increased $14.3 million, from $142.9 million at December 31, 2005 to $157.2 million at December 31, 2006. The average balance of non-taxable securities available for sale decreased $3.7 million, from $19.4 million at December 31, 2005 to $15.7 million at December 31, 2006. Average time deposits and other interest-bearing cash deposits increased $3.0 million, from $3.5 million at December 31, 2005 to $6.5 million at December 31, 2006. Overall, average total interest-earning assets increased $92.6 million from December 31, 2005 to December 31, 2006. Interest Expense. Interest expense increased to $23.3 million for the year ended December 31, 2006 compared to $15.5 million for 2005. The increase in interest expense was attributable to an increase in the average balances of both deposit and Federal Home Loan Bank (“FHLB”) borrowings as well as an increase in short-term interest rates. The average cost of average interest-bearing liabilities increased from 3.00% for the year ended December 31, 2005 to 3.85% for the year ended December 31, 2006.
Table of ContentsOver the same period, the average balance of interest bearing deposits increased from $424.9 million for the year ended December 31, 2005 to $471.8 million at December 31, 2006. The average balance of FHLB borrowings increased from $79.7 million for the year ended December 31, 2005 to $111.0 million for the year ended December 31, 2006. The average cost of FHLB borrowings increased from 3.62% for the year ended December 31, 2005 to 4.52% for the year ended December 31, 2006. During 2006, the Company began borrowing funds in the form in short and long-term repurchase accounts. For the year ended December 31, 2006, the average balance of investments sold with the intent to repurchase was $12.6 million at an average cost of 5.0%. Provision for Loan Losses. The Company determined that an additional $1.0 million in provision for loan losses was required for the year ended December 31, 2006 and $1.25 million in provision for loan loss was required for the year ended December 31, 2005. Non-Interest Income. Non-interest income increased by $1.3 million for the year ended December 31, 2006 to $5.8 million, compared to $4.5 million for the year ended December 31, 2005. The increase in non-interest income is the result of higher income realized on an increase in checking accounts and a larger number of loan applications. Gains on sales of loans and securities decreased from $518,000 for the year ended December 31, 2005 to $192,000 for the year ended December 31, 2006. The decrease in gains on the sale of securities is the result of the sale of the Bank’s data processing provider, Intrieve, Inc in 2005. Non-Interest Expense. Total non-interest expense for the year ended December 31, 2006 was $16.5 million, compared to $11.6 million in 2005. The increase was the result of several factors, including the June 2006 acquisition of four retail offices in Middle Tennessee, the addition of a new office in Hopkinsville, Kentucky, the additional of one office in Clarksville, Tennessee and the planned addition of two additional Clarksville offices. The Company’s expansion plans include an additional office in Murray, Kentucky in 2007. Income Taxes. The effective tax rate for the year ended December 31, 2006 was 30.3% compared with an effective tax rate of 29.7% for the year ended December 31, 2005. | EXCERPTS ON THIS PAGE:
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