<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
_____________________________
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
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 1-14364
Acadiana BancShares, Inc.
------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
Louisiana 72-1317124
- - ------------------------------- ------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
107 West Vermilion Street
Lafayette, Louisiana 70502
--------------------------------------- ---------
(Address of Principal Executive Offices) (Zip Code)
(318)232-4631
---------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
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____ No____
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date:
As of November 1, 1996, 2,731,250 shares of the Registrant's common
stock were issued and outstanding. Of that total, 218,500 shares are
held by the Registrant's Employee Stock Ownership Plan, of which 213,027
were not committed to be released.
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ACADIANA BANCSHARES, INC.
TABLE OF CONTENTS
<TABLE>
Page
<S> <C> <C>
<CAPTION>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of Financial Condition
(As of September 30, 1996 and December 31, 1995) 3
Consolidated Statements of Operations (For the three
months and nine months ended September 30, 1996 and 1995) 4
Consolidated Statements of Stockholders' Equity (For the nine
months ended September 30, 1996 and 1995) 5
Consolidated Statements of Cash Flows (For the nine
months ended September 30, 1996 and 1995) 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 20
Item 2. Changes in Securities 20
Item 3. Defaults Upon Senior Securities 20
Item 4. Submission of Matters to a Vote of Security Holders 20
Item 5. Other Information 20
Item 6. Exhibits and Reports on Form 8-K 20
</TABLE>
SIGNATURES
2
<PAGE>
ACADIANA BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(In Thousands)
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
---- ----
<S> <C> <C>
ASSETS:
Cash and cash equivalents:
Cash and amounts due from banks $885 $802
Interest bearing deposits 19,147 15,679
---------- --------
Total 20,032 16,481
Investment securities:
Available for sale 23,446 4,030
Mortgage-backed securities:
Held-to-maturity (market value of $12,996
and $13,539, respectively) 13,182 13,492
Available for sale 22,200 26,022
Loans receivable, net 178,509 157,362
Premises and equipment, net 1,846 1,799
Real estate owned, net 238 845
Federal Home Loan Bank stock, at cost 1,753 1,677
Accrued interest receivable 1,572 1,187
Other assets 2,301 2,353
------- -------
Total assets $265,079 $225,248
======== ========
LIABILITIES:
Deposits $195,151 $206,343
Advances from Federal Home Loan Bank 20,250 250
Accrued interest payable on deposits 51 31
Advance payments by borrowers for taxes and insurance 492 414
Accrued other liabilities 2,368 513
Dividends Payable 246 --
-------- --------
Total liabilities $218,558 $207,551
-------- --------
STOCKHOLDERS' EQUITY:
Preferred Stock of $.01 par value, authorized 5,000,000
shares, none issued or outstanding
Common Stock of $.01 par value, authorized 20,000,000
shares, issued and outstanding 2,731,250 shares $27 $--
Paid In Capital 31,815 --
Retained Earnings 17,029 16,996
Unearned Common Stock Held by ESOP (2,556) --
Unrealized gain on securities
available for sale, net of deferred taxes 206 701
-------- ------
Total equity $46,521 $17,697
Total liabilities and stockholders'
equity $265,079 $225,248
======== ========
</TABLE>
See Notes to Consolidated Financial Statements
3
<PAGE>
ACADIANA BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands, except per share data)
<TABLE>
<CAPTION>
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
-------------------- --------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
INTEREST INCOME:
Loans $3,652 $3,223 $10,508 $9,582
Mortgage-backed securities 636 626 1,993 1,815
Investment securities 434 142 741 753
Interest-bearing deposits 236 272 484 568
---------- ---------- --------- ----------
Total interest income $4,958 $4,263 $13,726 $12,718
---------- ---------- --------- ----------
INTEREST EXPENSE:
Deposits $2,524 $2,609 7,802 $7,451
Advances from FHLB 215 4 288 14
---------- ---------- --------- ----------
Total interest expense 2,739 2,613 8,090 7,465
---------- ---------- --------- ----------
Net interest income 2,219 1,650 5,636 5,253
Provision for loan losses 45 -- 135 --
---------- ---------- --------- ----------
Net interest income after provision
for loan losses 2,174 1,650 5,501 5,253
---------- ---------- --------- ----------
NON-INTEREST INCOME:
Loan fees and service charges $34 $32 $117 $88
Servicing fees on loans sold 14 16 43 52
Deposit fees and service charges 136 137 406 434
Gain (loss) on sale of fixed rate loans (51) (2) (53) (1)
Other income 32 20 153 69
---------- ---------- ---------- ---------
Total non-interest income $165 $203 $666 $642
---------- ---------- ---------- ---------
NON-INTEREST EXPENSE:
Salaries and employee benefits $668 $606 $1,954 $1,819
Occupancy 62 62 197 169
Depreciation 84 61 234 202
Net costs of real estate owned 85 109 167 167
SAIF deposit insurance premium 1,458 117 1,692 353
Advertising expense 44 59 150 159
Consulting expense 41 23 140 66
Other expenses 422 435 1,195 1,055
---------- --------- ---------- ----------
Total non-interest expense $2,864 $1,472 $5,729 $3,990
---------- --------- ---------- ----------
Income (loss) before income taxes $(525) $381 $438 $1,905
Income tax expense (credit) (173) 130 159 648
---------- --------- ---------- ----------
Net income (loss) $(352) $251 $279 $1,257
========== ========= ========== ==========
Net Income (Loss) per Common Share $(0.14)
==========
Weighted Average Shares Outstanding 2,515,487
==========
</TABLE>
See Notes to Consolidated Financial Statements
4
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ACADIANA BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In Thousands)
<TABLE>
<CAPTION>
Unearned
Common Net
Stock Unrealized Total
Common Paid In Retained Held Gain (Loss) Stockholders'
Stock Capital Earnings By ESOP On Securities Equity
------ ------- -------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1994 $17,962 $(117) $17,845
Net income 1,257 1,257
Change in unrealized loss on
Securities Available for Sale,
Net of Deferred Taxes 95 95
------- ------- -------- ------- ----------- -----------
BALANCE, SEPTEMBER 30, 1995 $-- $-- $19,219 $-- $(22) $19,197
======= ======= ======== ======= =========== ===========
BALANCE, DECEMBER 31, 1995 $-- $-- $16,996 $-- $701 $17,697
Net income 279 279
Cash Dividends Declared (246) (246)
Common Stock Issued in Conversion $27 $31,811 $(2,622) 29,216
Common Stock Released by ESOP Trust 4 66 70
Change in unrealized gain on
Securities Available for Sale,
Net of Deferred Taxes (495) (495)
--------- --------- --------- ------- --------- ------------
BALANCE, SEPTEMBER 30, 1996 $27 $31,815 $17,029 $(2,556) 206 $46,521
========= ========= ========= ======= ========= ============
</TABLE>
See Notes to Consolidated Financial Statements
5
<PAGE>
ACADIANA BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
<TABLE>
<CAPTION>
For the Nine Months Ended
---------------------------------
September 30, September 30,
1996 1995
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $279 $1,257
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 234 202
Provision for deferred income taxes -- (364)
Provision for losses on loans 135 --
Provision for losses on real estate
owned and other property acquired 224 149
Loss (gain) on sale of real estate owned
and other property acquired (105) (24)
Loss on sale of fixed rate loans 53 1
Proceeds from sales of loans held for sale 3,905 137
Originations and purchases of loans held
for sale (3,958) (138)
Loss on sale of premises and equipment 12 --
Gain on sale of other equity securities (26) (10)
Accretion of discounts, net of premium
amortization on securities (36) (27)
Amortization of deferred revenues (12) (84)
Amortization of unearned income on loans (2) (40)
FHLB stock dividend received (76) (77)
Changes in assets and liabilities:
Decrease (increase) in accrued
interest receivable (385) 10
Decrease (increase) in other assets 225 (640)
Increase (decrease) in accounts
payable and accrued expenses 1,875 213
--------- -------
NET CASH PROVIDED BY OPERATING ACTIVITIES 2,342 565
--------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities of
securities available for sale -- 1,500
Proceeds from calls and maturities of
securities held to maturity -- 10,500
Purchases of securities available for sale (19,500) --
Net advances on loans (21,353) (3,672)
Proceeds from sale of premises and equipment 9 3
Purchases of premises and equipment (302) (207)
Proceeds from sale of real estate owned
and other property acquired 604 376
Capital costs incurred on real estate
owned and other property acquired (31) (12)
Purchases of mortgage-backed securities -- (5,000)
Principal collections on mortgage-backed
securities available for sale 3,184 --
Principal collections on mortgage-backed
securities held to maturity 304 2,659
Proceeds from redemptions and sales of
other equity securities 122 60
------- -------
NET CASH PROVIDED BY (USED IN) INVESTING
ACTIVITIES (36,963) 6,207
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net change in demand, NOW and savings
deposits (2,184) (7,275)
Net change in time deposits (9,008) 7,254
Net change in mortgage escrow funds 78 101
Proceeds from FHLB Advances 20,000 --
Proceeds from issuance of common stock 30,153 --
Stock conversion costs incurred (867) --
------- -------
NET CASH PROVIDED BY (USED IN) FINANCING
ACTIVITIES 38,172 80
------- -------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 3,551 6,852
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 16,481 10,384
------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $20,032 $17,236
======= =======
SUPPLEMENTAL SCHEDULE OF NONCASH ACTIVITIES:
Acquisition of real estate in settlement
of loans $-- $30
Loans made to facilitate sales of real
estate owned $-- $225
Common stock acquired by ESOP in conversion $2,622 $--
Fair value of ESOP shares released $70 $--
SUPPLEMENTAL DISCLOSURES:
Cash paid for:
Interest on deposits and borrowings $8,070 $7,460
Income taxes $526 $665
</TABLE>
See Notes to Consolidated Financial Statements
6
<PAGE>
ACADIANA BANCSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF FINANCIAL STATEMENT PRESENTATION
Acadiana Bancshares, Inc. (the "Company") was incorporated under Louisiana
law in February 1996 by LBA Savings Bank (the "Bank") in connection with the
conversion of the Bank from a Louisiana chartered mutual savings bank to a
Louisiana chartered stock savings bank and the issuance of the Bank's common
stock to the Company and the offer and sale of the Company's common stock by
the Company to certain depositors of the Bank and the Bank's Employee Stock
Ownership Plan (the "ESOP") (the "Conversion"). Upon consummation of the
Conversion on July 15, 1996, the Company became the holding company for the
Bank.
The accompanying consolidated financial statements were prepared in
accordance with instructions to Form 10-Q, and therefore, do not include
information or footnotes necessary for a complete presentation of financial
position, results of operations and cash flows in conformity with generally
accepted accounting principles. However, all normal, recurring adjustments
which, in the opinion of management, are necessary for a fair presentation of
financial statements, have been included. These financial statements should
be read in conjunction with the audited financial statements and the notes
thereto for the period ended December 31, 1995 contained in the Company
Prospectus dated May 14, 1996.
BUSINESS
The Company's principal business is conducted through its wholly owned
subsidiary, LBA Savings Bank, which conducts business from its main office
and three branch offices, all located in Lafayette, Louisiana, and one loan
production office in Eunice, Louisiana. The Bank holds deposits from the
general public and provides residential real estate loans and other loans to
the Lafayette, Louisiana area. The Bank's deposits are insured by the
Savings Association Insurance Fund ("SAIF") to the maximum extent permitted
by law. The Bank is subject to competition from other financial institutions
and other companies which provide financial services. The Bank is subject to
examination and comprehensive regulation by the Office of Financial
Institutions of the State of Louisiana ("OFI"), which is the Bank's
chartering authority and primary regulator. The Bank is also subject to
regulation by the Federal Deposit Insurance Corporation ("FDIC"), as the
administrator of the SAIF. The Bank is a member of the Federal Home Loan
Bank of Dallas ("FHLB").
7
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PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company,
the Bank and the Bank's wholly owned subsidiary, which was liquidated in
December 1995. All significant intercompany balances and transactions have
been eliminated in consolidation. The accompanying consolidated financial
statements have been prepared on the accrual basis.
(2) LOANS RECEIVABLE
Loans receivable (in thousands) at September 30, 1996 and December 31,
1995 consisted of the following:
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
---- ----
<S> <C> <C>
Mortgage Loans:
Single Family Residential $139,475 $127,597
Single Family Construction 13,728 7,304
Multi-family Residential 878 1,202
Commercial Real Estate 13,089 13,370
-------- --------
Total Mortgage loans 167,170 149,473
Commercial Business Loans 5,843 1,349
Consumer Loans:
Savings 2,799 2,632
Indirect Auto 8,217 5,472
Other 6,204 5,597
--------- --------
Total Loans 190,233 164,523
Less:
Allowance for Loan Losses (2,392) (2,329)
(Unearned Discounts) Deferred Premiums 192 (296)
Net Deferred Loan Origination Fees (496) (244)
Loans in Process (9,028) (4,292)
-------- -------
Net Loans 178,509 157,362
======== =======
</TABLE>
(3) EMPLOYEE STOCK OWNERSHIP PLAN
In connection with the conversion from mutual to stock form, the Company
established an Employee Stock Ownership Plan ("ESOP") for the benefit of
employees of the Company and the Bank. The ESOP purchased 218,500 shares, or
8% of the total stock sold in the subscription, for $2,622,000, financed by a
loan from the Company. The Company will account for its ESOP in accordance
with Statement of Position 93-6, "Employer's Accounting for Employee Stock
Ownership Plans".
8
<PAGE>
The ESOP was effective upon completion of the conversion. Full-time
employees of the Company and The Bank who have been credited with at lest
1,000 hours of service during a 12-month period and who have attained age 21
are eligible to participate in the ESOP. The Company will make scheduled
discretionary cash contributions to the ESOP sufficient to amortize the
principal and interest on the loan, which matures in 2006.
Shares purchased by the ESOP with the proceeds of the loan will be held in a
suspense account and released on a pro rata basis as debt service payments
are made. Shares released will be reallocated among participants on the
basis of compensation. Participants will vest in their right to receive
their account balances within the ESOP at the rate of 20% per year starting
after one year of service. Years of service are measured from date of
employment.
Under SOP 93-6, unearned ESOP shares are not considered outstanding and are
shown as a reduction of stockholders' equity. Dividends on unallocated ESOP
shares are considered to be compensation expense. The Company will recognize
compensation cost equal to the fair value of the ESOP shares during the
periods in which they become committed to be released. To the extent fair
value of the Company's ESOP shares differ from the cost of such shares, this
differential will be charged to equity. The Company will receive a tax
deduction equal to the cost of the shares released. The loan receivable from
the ESOP to the Company is not shown as an asset and the debt of the ESOP is
not shown as a Company liability.
Compensation cost for the ESOP for the three months ended September 30, 1996
was $70,000 based on the release of 5,473 shares. At September 30, 1996,
there were no allocated shares, 5,473 shares had been committed to be
released, and 213,027 shares were held in suspense by the ESOP. The fair
value of the unearned ESOP shares at such date was approximately $2,929,000.
(4) EARNINGS PER SHARE
Earnings per share was based on 2,515,487 weighted average shares outstanding
during the three month period ended September 30, 1996. The weighted average
was calculated by excluding the ESOP shares unearned at the beginning of the
period and excluding the ESOP shares released, which was pro-rated by days,
from the shares outstanding at beginning of period. Earnings per share for
periods preceding the three months ended September 30, 1996 are not
applicable, as the Bank's conversion from mutual-to-stock form and
reorganization into a holding company format was not completed until July 16,
1996.
(5) STOCK CONVERSION
On July 16, 1996, (1) LBA Savings Bank converted from a state chartered
mutual savings bank to a state chartered stock savings bank, and (2) Acadiana
Bancshares, Inc. acquired all of the common stock of the Bank, thereby
becoming the parent holding company for
9
<PAGE>
the Bank. On July 16, 1996, the Company also consummated its initial public
offering of shares of its common stock, par value $.01 per share ("common
stock"), with the sale of 2,731,250 shares of common stock at a price of
$12.00 per share. The public offering resulted in $ 31.8 million in capital
stock and paid-in capital, net of related expenses. The Company used $15.9
million for the purchase of 100% of the issued and outstanding capital stock
of the Bank and $2.6 million for a loan to the Company's and Bank's Employee
Stock Ownership Plan. The remaining proceeds were retained by the Company.
(6) SAIF DEPOSIT INSURANCE PREMIUM
On September 30, 1996 President Clinton signed into law an omnibus
appropriations bill that provided for an immediate recapitalization of the
Savings Association Insurance Fund ("SAIF"), and proposed a merger of the
Bank Insurance Fund ("BIF") with the SAIF possibly as early as January 1,
1999. The Bank's deposits are insured by FDIC through the SAIF, and as such,
the Bank incurred a one-time special assessment of $1.3 million (pre-tax) on
September 30, 1996. For the first three quarters of 1996, the Bank's SAIF
premium rate was 23 basis points, exclusive of the special assessment. Based
upon the new law, the Bank expects the SAIF premium rate for the fourth
quarter of 1996 to be approximately 11 basis points (annual equivalent), and
approximately 6.5 basis points annually in 1997, 1998, and 1999.
10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
GENERAL
On July 16, 1996, Acadiana Bancshares, Inc. (the "Company") issued 2,731,250
shares of common stock in its initial public offering upon the conversion
(the "Conversion") of LBA Savings Bank (the "Bank") from mutual to stock form
and reorganization into a holding company format. Net proceeds of $31.8
million were credited to stockholders' equity. The Company's employee stock
ownership plan ("ESOP"), effective upon completion of the Conversion,
purchased 218,500 shares for $2.6 million, financed by a loan from the
Company. The total additional cash received from the Conversion, net of $6.4
million withdrawn from deposit accounts for purchase of the stock, was $22.8
million. The additional cash was invested in an investment security and
interest-bearing deposit. The Conversion proceeds resulted in an increase of
investment securities and interest-bearing deposits as a proportion of total
assets. Such increase in interest-earning assets contributed to increased
amounts of interest income in the period subsequent to the Conversion.
CHANGES IN FINANCIAL CONDITION
At September 30, 1996, the consolidated assets of the Company totaled $265.1
million, an increase of $39.8 million or 17.7% from December 31, 1995. This
was due primarily to the net new funds of $22.8 million from the stock
offering and $20 million in advances from the Federal Home Loan Bank of
Dallas ("FHLB").
Loans receivable, net, increased by $21.1 million, or 13.4%, to $178.5
million at September 30, 1996, compared to $157.4 million at December 31,
1995. The increase was primarily the result of an $11.9 million, or 9.3%,
increase in single-family residential loans, a $6.4 million, or 88.0%,
increase in single-family construction loans, a $4.5 million, or 333.1%,
increase in commercial business loans, and a $3.5 million, or 25.7%, increase
in consumer loans. The increase in loans receivable was funded primarily by
advances from the FHLB.
Interest bearing deposits at other institutions increased $3.5 million, or
22.1%, to $19.1 million at September 30, 1996, compared to $15.7 million at
December 31, 1995. The Company's investment securities available for sale
increased $19.4 million, or 481.8%, to $23.4 million at September 30, 1996,
compared to $4.0 million at December 31, 1995. Such increase was the result
of purchases of $19.5 million of investment securities. The increases in
interest bearing deposits and investment securities available for sale were
funded primarily by the net proceeds of the Bank's conversion from
mutual-to-stock form.
11
<PAGE>
Mortgage-backed securities decreased by an aggregate of $4.1 million, or
10.5%, to $35.4 million at September 30, 1996. Such decrease was primarily
the result of principal repayments.
Deposits decreased $11.2 million, or 5.4%, to $195.2 million at September 30,
1996, compared to $206.3 million at December 31, 1995. This was due primarily
to $6.4 million of deposits which were withdrawn from the Bank and
subsequently invested in the stock of the Company during its initial public
offering. The remaining $4.8 million of the net decrease in deposits was
primarily the result of the Company electing not to renew certain higher rate
(which rates were generally in excess of 7.0%) certificates of deposit
maturing in July and August of 1996.
Advances from the FHLB of Dallas increased $20 million to $20.3 million at
September 30, 1996. The $20 million of new advances have variable rates of
interest and mature within 2 years, and were used primarily to fund loan
growth and as a replacement for higher interest bearing certificates of
deposit that matured and were not renewed. The company's FHLB advances had
an average rate of 5.58% during the three months ended September 30, 1996.
Total stockholders' equity increased $28.8 million, or 162.9%, to $46.5
million at September 30, 1996, compared to $17.7 million at December 31,
1995. The increase was primarily the result of $29.2 million of net proceeds
received from the Company's initial public offering. The increase was
partially offset by a decrease in net unrealized gains on investments
available for sale of $495,000 and dividends declared of $246,000.
The Bank's non-performing assets amounted to 0.32% of total assets at
September 30, 1996 compared to 0.70% at December 31, 1995. In addition, the
ratio of the Bank's allowance for loan losses to non-performing loans and
troubled debt restructurings was 189.99% at September 30, 1996 compared to
143.94% at December 31, 1995.
RESULTS OF OPERATIONS
The Company reported a net loss of $352,000 for the three months ended
September 30, 1996, compared to a net income of $251,000 for the three months
ended September 30, 1995. The $603,000, or 240.2%, decrease was due
primarily to the one-time special SAIF assessment of $1.3 million, which was
partially offset by a $524,000, or 31.7%, increase in net interest income
after provision for loan losses and a $303,000 decrease in income tax expense.
The Company reported net income of $279,000 for the nine months ended
September 30, 1996, compared to $1.3 million for the nine months ended
September 30, 1995. The $1 million, or 77.8%, decrease was due primarily to
the one-time special SAIF assessment of $1.3 million, which was partially
offset by a $248,000, or 4.7%, increase in net interest income after
provision for loan losses and a $489,000, or 75.5%, decrease in income tax
expense.
12
<PAGE>
AVERAGE BALANCES, NET INTEREST INCOME, AND YIELDS EARNED
AND RATES PAID. The following table sets forth, for the periods indicated,
information regarding (i) the dollar amount of interest income of the Company
from interest-earning assets and the resultant average yields; (ii) the total
dollar amount of interest expense on interest-bearing liabilities and the
resultant rate; (iii) net interest income; (iv) interest rate spread; and (v)
net interest margin. Non-accrual loans have been included in the appropriate
average balance loan category, but interest on non-accrual loans has been
included for purposes of determining interest income only to the extent that
cash payments are actually received.
<TABLE>
<CAPTION>
Three Months Ended September 30,
-------------------------------------------------------
1996 1995
Yield/ --------------------------- -------------------------
Cost at Average Average
September 30, Average Yield/ Average Yield/
1996 Balance Interest Cost Balance Interest Cost
---- ------- -------- ---- ------- -------- ----
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans receivable:
Real estate mortgage loans 7.90% $153,410 $3,176 8.28% $140,379 $2,943 8.39%
Commercial business loans 9.62% 4,395 100 9.10% 1,478 33 8.93%
Consumer and other loans 9.16% 17,630 376 8.53% 10,920 247 9.05%
-------- ------ -------- ------
Total loans 8.06% 175,435 3,652 8.33% 152,777 3,223 8.44%
Mortgage-backed securities 7.32% 35,924 636 7.08% 33,941 626 7.38%
Investment securities (1) 7.09% 24,433 434 7.11% 9,327 142 6.09%
Other earning assets 5.15% 16,848 236 5.60% 19,874 272 5.47%
-------- ----- ------- ------
Total interest-earning assets 7.78% $252,640 $4,958 7.85% $215,919 $4,263 7.90%
------ ------
Noninterest-earning assets 11,463 7,858
-------- --------
Total Assets $264,103 $223,777
======== ========
Interest-bearing liabilities:
Deposits:
Demand deposits 1.94% $15,593 $71 1.82% $15,437 $68 1.76%
Passbook savings deposits 2.57% 28,022 177 2.53% 28,240 178 2.52%
Certificates of deposit 6.01% 152,388 2,276 5.97% 156,458 2,363 6.04%
------- ----- ------- -----
Total deposits 5.19% 196,003 2,524 5.15% 200,135 $2,609 5.21%
Advance from FHLB 5.42% 15,411 215 5.58% 250 4 6.40%
------- ----- ------- ------
Total interest-bearing
liabilities 5.21% $211,414 $2,739 5.18% $200,385 $2,613 5.22%
------ ------
Noninterest-bearing demand deposits 3,331 2,888
Other noninterest-bearing liabilities 6,796 1,713
-------- --------
Total liabilities $221,541 $204,986
Equity 42,561 18,791
-------- --------
Total liabilities and equity $264,102 $223,777
======== ========
Net interest-earning assets $41,226 $15,534
======== ========
Net interest income/interest rate spread 2.57% $2,219 2.67% $1,650 2.68%
===== ====== ===== ====== =====
Net interest margin 3.51% 3.06%
===== =====
Ratio of average interest-earning assets
to average interest-bearing liabilities 119.50% 107.75%
======= =======
Nine Months Ended September 30,
----------------------------------------------------------
1996 1995
--------------------------- ----------------------------
Average Average
Average Yield/ Average Yield/
Balance Interest Cost Balance Interest Cost
------- -------- ---- ------- -------- ----
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans receivable:
Real estate mortgage loans $148,046 $9,237 8.32% $139,229 $8,715 8.35%
Commercial business loans 3,103 207 8.89% 1,480 99 8.92%
Consumer and other loans 16,519 1,064 8.59% 11,353 768 9.02%
-------- ------ -------- -----
Total loans 167,668 10,508 8.36% 152,062 9,582 8.40%
Mortgage-backed securities 37,441 1,993 7.10% 33,087 1,815 7.31%
Investment securities (1) 14,296 741 6.91% 16,507 753 6.08%
Other earning assets 11,993 484 5.38% 13,766 568 5.50%
------- ------ ------- -----
Total interest-earning assets $231,398 $13,726 7.91% $215,422 $12,718 7.87%
------- -------
Noninterest-earning assets 10,262 7,896
-------- --------
Total Assets $241,660 $223,318
======== ========
Interest-bearing liabilities:
Deposits:
Demand deposits $16,111 $220 1.82% $15,994 $211 1.76%
Passbook savings deposits 28,148 529 2.51% 30,051 562 2.49%
Certificates of deposit 156,638 7,053 6.00% 154,450 6,678 5.76%
------- ----- ------- -----
Total deposits 200,897 7,802 5.18% 200,495 7,451 4.96%
Advance from FHLB 6,737 288 5.70% 250 14 7.47%
-------- ------ ------- ------
Total interest-bearing
liabilities $207,634 $8,090 5.20% $ 200,745 $7,465 4.96%
------ ------
Noninterest-bearing demand deposits 3,173 2,589
Other noninterest-bearing liabilities 4,671 1,637
-------- --------
Total liabilities $215,478 $204,971
Equity 26,183 18,347
-------- --------
Total liabilities and equity $241,661 $223,318
======== ========
Net interest-earning assets $23,764 $14,677
======== ========
Net interest income/interest rate spread $5,636 2.71% $5,253 2.91%
====== ===== ====== =====
Net interest margin 3.25% 3.25%
===== =====
Ratio of average interest-earning assets
to average interest-bearing liabilities 111.45% 107.31%
======= =======
</TABLE>
(1) Includes FHLB stock.
13
<PAGE>
NET INTEREST INCOME
Net interest income increased $569,000, or 34.5%, in the three months ended
September 30, 1996, to $2.2 million, compared to $1.7 million in the three
months ended September 30, 1995. The increase was due to a $695,000, or
16.3%, increase in interest income, which was partially offset by a $126,000,
or 4.8% increase in interest expense. The increase in interest income was
the result of a $36.7, or 17.0%, increase in the average balance of
interest-earning assets which was partially offset by an 5 basis point (100
basis point being equal to 1%) decrease in the yield thereon. The increase
in interest expense was the result of a $11.0 million, or 5.5%, increase in
the average balance of interest-bearing liabilities as the result of a $15.2
million increase in the average balance of FHLB advances which more than
offset a $4.1 million decrease in the average balance of deposits. Such
increase in the average balance in total interest-bearing liabilities was
partially offset by a 4 basis point decrease in the cost thereof. During the
quarter ended September 30, 1996, the Company increased its utilization of
FHLB advances, which had an average cost of 5.58% during the period, and
reduced its reliance on certificates of deposit, which had an average cost of
5.97% during the period, as a source of funds. The Company's interest rate
spread (the difference between the weighted average yield on interest-earning
assets and the weighted average cost of interest-bearing liabilities) and net
interest margin (net interest income as a percentage of average
interest-earning assets) amounted to 2.67% and 3.51%, respectively, during
the three months ended September 30, 1996 compared to 2.68% and 3.06%,
respectively, for the comparable period in 1995. The increase in net
interest margin of 45 basis points is primarily attributable to the increase
in the ratio of interest-earning assets to interest-bearing liabilities as a
result of the stock proceeds received.
For the nine months ended September 30, 1996, net interest income increased
$383,000, or 7.3%, to $5.6 million, compared to $5.3 million in the nine
months ended September 30, 1995. The increase was due to a $1.0 million, or
7.9% increase in interest income, which was partially offset by a $625,000,
or 8.4%, increase in interest expense. The increase in interest income was
the result of a $16.0 million, or 7.4%, increase in the average balance of
interest-earning assets and a 4 basis point increase in the yield earned
thereon. The increase in interest expense was the result of a $6.9 million,
or 3.4%, increase in the average balance of interest-bearing liabilities and
a 24 basis point increase in the cost thereon. The Company's interest rate
spread and net interest margin amounted to 2.71% and 3.25%, respectively,
during the nine months ended September 30, 1996 compared to 2.91% and 3.25%,
respectively, for the comparable period in 1995.
INTEREST INCOME
The Company's total interest income was $5.0 million for the three months
ended September 30, 1996, compared to $4.3 million for the three months ended
September 30, 1995. The reasons for the $695,000, or 16.3%, increase in
interest income were a $429,000, or 13.3%, increase in interest income from
loans, a $292,000, or 205.6%, increase in interest income from investment
securities, and a $10,000, or 1.6%, increase
14
<PAGE>
in interest income from mortgage-backed securities, partially offset by a
$36,000, or 13.2%, decrease in interest income from interest-bearing
deposits. The increase in interest income from loans was the result of a
$22.7 million, or 14.8%, increase in the average balance of loans, which was
partially offset by an eleven basis point decrease in the average yield
earned thereon. The increase in interest income from investment securities
was the result of a $15.1 million, or 162.0%, increase in the average balance
of investment securities and a 102 basis point increase in the yield thereon.
The increase in interest income on mortgage-backed securities was the result
of a $2.0 million, or 5.8%, increase in the average balance of
mortgage-backed securities, which was partially offset by a 30 basis point
decrease in the yield earned thereon. The decrease in interest income on
other earning assets, substantially all of which are interest-bearing
deposits at the FHLB, was the result of a $3.0 million, or 15.2%, decrease in
the average balance of other earning assets, which was partially offset by a
13 basis point increase in the yield earned thereon. The increase in the
average balance of the investment securities is due primarily to the proceeds
of the Conversion.
For the nine months ended September 30, 1996, the Company's total interest
income was $13.7 million, compared to $12.7 million for the nine months ended
September 30, 1995. The reasons for the $1.0 million, or 7.9%, increase in
interest income were a $926,000, or 9.7%, increase in interest income from
loans and a $178,000, or 9.8%, increase in interest income from
mortgage-backed securities, partially offset by a $12,000, or 1.6%, decrease
in interest income from investment securities available for sale and an
$84,000, or 14.8%, decrease in interest income from interest-bearing
deposits. The increase in interest income from loans was the result of a
$15.6 million, or 10.3%, increase in the average balance of loans, which was
partially offset by a four basis point decrease in the average yield earned
thereon. The decrease in interest income from investment securities was the
result of a $2.2 million, or 13.4%, decrease in the average balance of
investment securities, which was partially offset by an 83 basis point
increase in the yield thereon. The increase in interest income on
mortgage-backed securities was the result of a $4.4 million, or 13.2%,
increase in the average balance of mortgage-backed securities, which was
partially offset by a 21 basis point decrease in the yield earned thereon.
The decrease in interest income on other earning assets was the result of a
$1.8 million, or 12.9%, decrease in the average balance of other earning
assets and a 12 basis point decrease in the yield earned thereon.
INTEREST EXPENSE
The Company's total interest expense was $2.7 million during the three months
ended September 30, 1996, compared to $2.6 million for the three months ended
September 30, 1995. The primary reason for the $126,000, or 4.8%, increase
in interest expense was an increase of $211,000 in interest expense paid on
advances from the FHLB on an average balance of $15.4 million, which was
partially offset by an $87,000, or 3.7%, decrease in interest expense paid on
certificates of deposit due to a $4.1 million, or 2.6%, decrease in the
average balance of such certificates together with a seven basis point
decrease in the
15
<PAGE>
average cost thereof. The borrowings from the FHLB are used to fund
residential, consumer, and commercial loans.
The Company's total interest expense was $8.1 million during the nine months
ended September 30, 1996, compared to $7.5 million for the nine months ended
September 30, 1995. The primary reasons for the $625,000, or 8.4%, increase
in interest expense was a $375,000, or 5.6%, increase in interest expense
paid on certificates of deposit due to a $2.2 million, or 1.4%, increase in
the average balance of such certificates together with a 24 basis point
increase in the average cost thereof and an increase of $274,000 in interest
expense paid on advances from the FHLB on an average balance of $6.7 million.
PROVISION FOR LOAN LOSSES
The provision for loan losses was $45,000 in the three months ended September
30, 1996 as compared to $0 for the same period in 1995. No provision for
loan losses was taken in 1995 until the fourth quarter, with such provision
being $1.3 million.
For the nine months ended September 30, 1996, the provision for loan losses
increased $135,000 when compared to the nine month period ended September 30,
1995. There was no provision for loan losses for the nine month period ended
September 30, 1995.
NON-INTEREST INCOME
Non-interest income decreased $38,000, or 18.7%, in the three months ended
September 30, 1996 to $165,000, compared to $203,000 for the three months
ended September 30, 1995. Such decrease was due primarily to a $49,000, or
100.0%, increase in net losses on the sale of loans, which was partially
offset by a $12,000, or 62.1%, increase in miscellaneous other income.
For the nine month period ended September 30, 1996, non-interest income
increased $24,000, or 3.7%, to $666,000, compared to $642,000 for the nine
month period ended September 30, 1995. Such increase was due primarily to an
$84,000, or 121.7%, increase in nonrecurring miscellaneous other income,
which was partially offset by an increase of $52,000, or 100.0%, in net
losses on the sale of loans.
NON-INTEREST EXPENSE
Noninterest expense increased $1.4 million, or 94.6%, in the three months
ended September 30, 1996 to $2.9 million, compared to $1.5 million in the
three months ended September 30, 1995. Such increase was due primarily to a
$1.3 million increase in Federal Deposit Insurance Premiums resulting from a
one-time special SAIF assessment of $1.3 million.
For the nine months ended September 30, 1996, noninterest expense increased
$1.7 million, or 43.6%, to $5.7 million, compared to $4.0 million for the
nine months ended
16
<PAGE>
September 30, 1995. Such increase was due primarily to a $1.3 million
increase in Federal Deposit Insurance Premiums resulting from a one-time
special SAIF assessment, a $135,000, or 7.4%, increase in salaries and
employee benefits, and a $140,000, or 13.3%, increase in miscellaneous other
expenses.
INCOME TAX EXPENSE
Income tax expense decreased by $303,000, or 233.1%, in the three months
ended September 30, 1996 to become a tax benefit of $173,000, compared to an
income tax expense of $130,000 for the three months ended September 30, 1995.
The decrease in income tax expense reflects a loss before income taxes.
In the nine month period ended September 30, 1996, income tax expense
decreased $489,000, or 75.5%, to $159,000, compared to $648,000 for the nine
months ended September 30, 1995. The decrease in income tax expense reflects
a decrease in taxable income.
FDIC INSURANCE EXPENSE
On September 30, 1996 President Clinton signed into law an omnibus
appropriations bill that provided for an immediate recapitalization of the
Savings Association Insurance Fund ("SAIF"), and proposed a merger of the
Bank Insurance Fund ("BIF") with the SAIF possibly as early as January 1,
1999. The Bank's deposits are insured by FDIC through the SAIF, and as such,
the Bank incurred a one-time special assessment of $1.3 million (pre-tax) on
September 30, 1996. For the first three quarters of 1996, the Bank's SAIF
premium rate was 23 basis points, exclusive of the special assessment. Based
upon the new law, the Bank expects the SAIF premium rate for the fourth
quarter of 1996 to be approximately 11 basis points (annual equivalent), and
approximately 6.5 basis points annually in 1997, 1998, and 1999.
LIQUIDITY AND CAPITAL RESOURCES
The Company's liquidity, represented by cash and cash equivalents, is a
product of its operating, investing, and financing activities. The Company's
primary sources of funds are deposits, borrowings, amortization, prepayments
and maturities of outstanding loans and mortgage-backed securities, sales of
loans, maturities of investment securities and other short-term investments
and funds provided from operations. While scheduled payments from the
amortization of loans and mortgage-backed securities and maturing investment
securities and short-term investments are relatively predictable sources of
funds, deposit flows and loan prepayments are greatly influenced by general
interest rates, economic conditions and competition. In addition, the
Company invests excess funds in overnight deposits and other short-term
interest-earning assets which provide liquidity to meet lending requirements.
The Company has been able to generate sufficient cash through its deposits
as well as borrowings (primarily consisting of
17
<PAGE>
advances from the FHLB of Dallas). At September 30, 1996, the Company had
$20.3 million of outstanding advances from the FHLB of Dallas, and no other
borrowings.
Liquidity management is both a daily and long-term function of business
management. Excess liquidity is generally invested in short-term investments
such as overnight deposits. On a longer-term basis, the Company maintains a
strategy of investing in various lending products. The Company uses its
sources of funds primarily to meet its ongoing commitments and maintain a
portfolio of mortgage-backed and investment securities. At September 30,
1996, the total approved loan commitments outstanding amounted to $7.0
million and the undisbursed loans in process totaled $9.0 million. At the
same date, commitments under unused lines of credit and standby letters of
credit amounted to $443,000 and $110,000 respectively. Certificates of
deposit scheduled to mature in one year or less at September 30, 1996 totaled
$80.4 million. Management believes that a significant portion of maturing
deposits will remain with the Bank. The Company anticipates that even with
interest rates at lower levels than have been experienced in recent years,
which has caused a disintermediation of funds, it will continue to have
sufficient funds to meet its current commitments.
Federally-insured state-chartered banks are required to maintain minimum
levels of regulatory capital. Under current FDIC regulations, insured
state-chartered banks generally must maintain (i) a ratio of Tier 1 leverage
capital to total assets of at least 3.0% (4.0% to 5.0% for all but the most
highly rated banks) and (ii) a ratio of Tier 1 capital risk weighted assets
of at least 4.0% and a ratio of total capital risk weighted assets of at
least 8.0%. At September 30, 1996 the Bank was in compliance with all
applicable regulatory capital requirements.
The following reflects the Bank's actual levels of regulatory capital and
applicable regulatory capital requirements at September 30, 1996.
<TABLE>
<CAPTION>
Required Actual Excess
-------------------- ----------------- -----------------
Percent Amount Percent Amount Percent Amount
------- ------ ------- ------ ------- ------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Tier 1 leverage capital ratios 4.00% $10,130 13.07% $33,096 9.07% $22,966
Risk-based capital ratios
Tier 1 4.00 5,143 25.74% 33,096 21.74% 27,953
Total 8.00 10,286 27.00% 34,713 19.00% 24,427
</TABLE>
The Company has separate, similar regulatory capital requirements applicable
to it as a bank holding company. As of September 30, 1996, the Company's
levels of regulatory capital also were well in excess of the minimum
regulatory capital requirements. The Company, as a separately incorporated
holding company, has no significant operations other than serving as sole
stockholder of the Bank. On an unconsolidated basis, the Company has no paid
employees. The Company's assets consist of its investment in the Bank, the
Company's loan to the Bank's ESOP and 50% of the net proceeds retained
18
<PAGE>
from the Conversion, and its sources of income consist primarily of earnings
from the investment of such funds as well as any dividends from the Bank.
The only expenses incurred by the Company relate to its reporting obligations
under the Securities Exchange Act of 1934, as amended ("Exchange Act"), and
related expenses as a publicly traded company. Management believes that the
Company has adequate liquidity available to respond to liquidity demands.
19
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
Not applicable.
Item 2. Changes in Securities.
Not applicable.
Item 3. Defaults Upon Senior Securities.
Not applicable.
Item 4. Submission of Matters to a Vote of Security-Holders.
Not applicable.
Item 5. Other Information.
Not applicable.
Item 6. Exhibits and Reports on Form 8-K.
a) Not applicable.
b) No Form 8-K reports were filed during the quarter.
20
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ACADIANA BANCSHARES, INC.
Date: November 7, 1996 By: /S/ GERALD G. REAUX, JR
____________________________
Gerald G. Reaux, Jr.,
President and Chief Executive
Officer
Date: November 7, 1996 By: /S/ EMILE E. SOULIER, III
_______________________________
Emile E. Soulier, III,
Vice-President and Chief
Financial Officer
21
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 885
<INT-BEARING-DEPOSITS> 19,147
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 45,646
<INVESTMENTS-CARRYING> 13,182
<INVESTMENTS-MARKET> 12,996
<LOANS> 180,901
<ALLOWANCE> 2,392
<TOTAL-ASSETS> 265,079
<DEPOSITS> 195,151
<SHORT-TERM> 0
<LIABILITIES-OTHER> 2,368
<LONG-TERM> 20,250
0
0
<COMMON> 27
<OTHER-SE> 46,494
<TOTAL-LIABILITIES-AND-EQUITY> 265,079
<INTEREST-LOAN> 10,508
<INTEREST-INVEST> 741
<INTEREST-OTHER> 2,477
<INTEREST-TOTAL> 13,726
<INTEREST-DEPOSIT> 7,802
<INTEREST-EXPENSE> 8,090
<INTEREST-INCOME-NET> 5,636
<LOAN-LOSSES> 135
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 5,729
<INCOME-PRETAX> 438
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 279
<EPS-PRIMARY> 0.11<F1>
<EPS-DILUTED> 0
<YIELD-ACTUAL> 7.78
<LOANS-NON> 668
<LOANS-PAST> 0
<LOANS-TROUBLED> 591
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 2,329
<CHARGE-OFFS> 179
<RECOVERIES> 107
<ALLOWANCE-CLOSE> 2,392
<ALLOWANCE-DOMESTIC> 356
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 2,036
<FN>
<F1>EPS figure is calculated using the nine months ending net income figure divided
by the weighted average number of shares outstanding for the quarter ending
9-30-96.
</FN>
</TABLE>
