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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
-----------------------------
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998
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)
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<S> <C>
Louisiana 72-1317124
- - -------------------------------------------------------------- ------------------
(State or Other Jurisdiction of Incorporation or Organization) (I.R.S. Employer
Identification No.)
101 West Vermilion Street
Lafayette, Louisiana 70501
- - -------------------------------------------------------------- ------------------
(Address of Principal Executive Offices) (Zip Code)
</TABLE>
(318)232-4631
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(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 X 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 October 5, 1998, 2,050,769 shares of the Registrant's common stock
were issued and outstanding. Of that total, 218,369 shares were held by
the Registrant's Employee Stock Ownership Plan, of which 185,662 were not
committed to be released.
1
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ACADIANA BANCSHARES, INC.
TABLE OF CONTENTS
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Page
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PART 1. Financial Information
- - ------- ---------------------
Item 1. Financial Statements
Consolidated Statements of Financial Condition
(As of September 30, 1998 and December 31, 3
1997)
Consolidated Statements of Income (For the
three and nine Months ended September 30, 1998 and 1997) 4
Consolidated Statements of Stockholders'
Equity (For The nine months ended September 30, 1998 and
1997) 5
Consolidated Statements of Cash Flows (For
the nine Months ended September 30, 1998 and 1997) 6
Consolidated Statements of Comprehensive
Income (For The three and nine months ended September 30,
1998 and 1997) 7
Notes to Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 11
PART II. Other Information
- - -------- -----------------
Item 1. Legal Proceedings 21
Item 2. Changes in Securities 21
Item 3. Defaults Upon Senior Securities 21
Item 4. Submission of Matters to a Vote of Security
Holders 21
Item 5. Other Information 21
Item 6. Exhibits and Reports on Form 8-K 21
Signatures 22
</TABLE>
2
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ACADIANA BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(In Thousands, except share data)
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
-------------------- --------------------
<S> <C> <C>
ASSETS
Cash and Cash Equivalents:
Cash and Amounts Due from Banks $ 1,104 $ 622
Interest Bearing Deposits 21,404 13,535
-------------------- --------------------
Total 22,508 14,157
Investment Securities:
Equity Securities Held for Trading 679 826
Available for Sale, at fair value 9,990 11,044
Mortgage-Backed Securities:
Held to Maturity (fair value of $12,661 and $12,736, respectively) 12,504 12,806
Available for Sale, at fair value 13,117 17,846
Loans Receivable, net of Allowance for
Loan Losses of $2,687 and $2,760, respectively 220,968 212,840
Federal Home Loan Bank Stock, at Cost 2,878 1,887
Real Estate Owned, Net 34 204
Premises and Equipment, Net 2,813 2,806
Accrued Interest Receivable 1,330 1,416
Other Assets 2,366 1,234
-------------------- --------------------
TOTAL ASSETS $ 289,187 $ 277,066
==================== ====================
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Deposits $ 205,652 $ 193,422
Advances from Federal Home Loan Bank 41,728 36,628
Accrued Interest Payable on Deposits 189 49
Advance Payments by Borrowers for Taxes and Insurance 612 431
Accrued and Other Liabilities 1,532 1,974
------------------- --------------------
TOTAL LIABILITIES 249,713 232,504
------------------- ---------------------
Commitments and contingencies
STOCKHOLDERS' EQUITY:
Preferred Stock of $.01 Par Value; 5,000,000 shares authorized, -0- shares
issued or outstanding
Common Stock of $.01 Par Value; 20,000,000 shares authorized, 27 27
2,731,250 shares issued
Additional Paid-In Capital 32,169 32,005
Retained Earnings (Substantially Restricted) 20,518 19,355
Unearned Common Stock Held by ESOP (2,031) (2,228)
Unearned Common Stock Held by RRP Trust (1,428) (1,602)
Treasury Stock, at Cost; 452,618 shares and 150,000 shares, respectively (10,175) (3,445)
Accumulated Other Comprehensive Income 394 450
------------------- --------------------
TOTAL STOCKHOLDERS' EQUITY 39,474 44,562
------------------- --------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 289,187 $ 277,066
=================== ====================
</TABLE>
See Notes to Consolidated Financial Statements
3
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ACADIANA BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, except per share data)
<TABLE>
<CAPTION>
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
--------------------------------- ----------------------------------
1998 1997 1998 1997
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<S> <C> <C> <C> <C>
INTEREST INCOME:
Loans $ 4,386 $ 4,050 $ 13,153 $ 11,650
MortgageBacked Securities 460 574 1,485 1,778
Investment Securities 138 367 550 1,285
Interest Bearing Deposits 441 115 1,017 383
----------- ----------- ------------ ------------
Total interest income $ 5,425 $ 5,106 $ 16,205 $ 15,096
----------- ----------- ------------ ------------
INTEREST EXPENSE:
Deposits $ 2,432 $ 2,274 $ 7,047 $ 6,860
Advances from Federal Home Loan Bank 679 488 1,968 1,152
----------- ----------- ------------ ------------
Total Interest Expense 3,111 2,762 9,015 8,012
----------- ----------- ------------ ------------
Net Interest Income 2,314 2,344 7,190 7,084
Provision for Loan Losses - 45 90 135
----------- ----------- ------------ ------------
Net Interest Income After Provision for
Loan Losses 2,314 2,299 7,100 6,949
----------- ----------- ------------ ------------
NONINTEREST INCOME:
Loan Fees and Service Charges $ 29 $ 39 $ 98 $ 100
Servicing Fees on Loans Sold 16 15 39 46
Deposit Fees and Service Charges 216 183 591 551
Investment Securities Gain (Loss), Net (165) 71 (114) 95
Gain (Loss) on Sale of Fixed Rate Loans, Net 48 175 (1)
Other 20 19 59 58
----------- ----------- ------------ ------------
Total NonInterest Income $ 164 $ 327 $ 848 $ 849
----------- ----------- ------------ ------------
NONINTEREST EXPENSE:
Salaries and Employee Benefits $ 854 $ 825 $ 2,549 $ 2,355
Occupancy 70 80 208 246
Depreciation 107 83 284 233
Net Costs of Real Estate Owned 19 (1) (7) (36)
SAIF Deposit Insurance Premium 29 30 88 92
Advertising 75 75 243 217
Consulting 24 20 63 71
Bank Shares and Franchise Tax Expense 102 95 288 228
Other 368 363 1,213 1,199
----------- ----------- ------------ ------------
Total NonInterest Expenses $ 1,648 $ 1,570 $ 4,929 $ 4,605
----------- ----------- ------------ ------------
Income Before Income Taxes $ 830 $ 1,056 $ 3,019 $ 3,193
Income Tax Expense 310 362 1,107 1,103
----------- ----------- ------------ ------------
Net Income $ 520 $ 694 $ 1,912 $ 2,090
=========== =========== ============ ============
Net Income Per Common Share basic $ 0.25 $ 0.29 $ 0.86 $ 0.86
Net Income Per Common Share diluted $ 0.24 $ 0.28 $ 0.84 $ 0.84
</TABLE>
See Notes to Consolidated Financial Statements
4
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ACADIANA BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
( In Thousands)
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<CAPTION>
Retained Unearned
Earnings Common
Common Paid In (Substantially Stock Held
Stock Capital Restricted) By ESOP
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<S> <C> <C> <C> <C>
Balance, January 1, 1997 $ 27 $ 31,827 $ 17,344 $(2,490)
Net Income 2,090
Cash Dividends Declared (678)
Common Stock Released by ESOP Trust 114 197
Repurchase of Common Stock
Common Stock Acquired by Recognition
and Retention Plan Trust
Common Stock Earned by Participants of
Recognition and Retention Plan Trust
Change in Unrealized Gain on Securities
Available for Sale, Net of Deferred Taxes
-------- -------- -------- --------
Balance, September 30, 1997 $ 27 $ 31,941 18,756 $(2,293)
======== ======== ======== ========
Balance, January 1, 1998 $ 27 $ 32,005 19,355 $(2,228)
Net Income 1,912
Cash Dividends Declared (749)
Common Stock Released by ESOP Trust 164 197
Repurchase of Common Stock
Common Stock Earned by Participants of
Recognition and Retention Plan Trust
Change in Unrealized Gain on Securities
Available for Sale, Net of Deferred Taxes
-------- -------- -------- --------
Balance, September 30, 1998 $ 27 $ 32,169 20,518 $(2,031)
-------- -------- -------- --------
</TABLE>
<TABLE>
<CAPTION>
Unearned
Common Accumulated
Stock Other Total
Held By Treasury Comprehensive Stockholders'
RRP Trust Stock Income Equity
----------- ---------- --------------- --------------
<S> <C> <C> <C> <C>
Balance, January 1, 1997 $ $ $ 383 $47,091
Net Income 2,090
Cash Dividends Declared (678)
Common Stock Released by ESOP Trust 311
Repurchase of Common Stock (741) (741)
Common Stock Acquired by Recognition
and Retention Plan Trust (1,830) (1,830)
Common Stock Earned by Participants of
Recognition and Retention Plan Trust 171 171
Change in Unrealized Gain on Securities
Available for Sale, Net of Deferred Taxes 19 19
-------- -------- -------- --------
Balance, September 30, 1997 $ (1,659) $ (741) 402 $46,433
======== ======== ======== ========
Balance, January 1, 1998 (1,602) $ (3,445) $ 450 $44,562
Net Income 1,912
Cash Dividends Declared (749)
Common Stock Released by ESOP Trust 361
Repurchase of Common Stock (6,730) (6,730)
Common Stock Earned by Participants of
Recognition and Retention Plan Trust 174 174
Change in Unrealized Gain on Securities
Available for Sale, Net of Deferred Taxes (56) (56)
-------- -------- -------- --------
Balance, September 30, 1998 $ (1,428) $(10,175) 394 $39,474
-------- -------- -------- --------
</TABLE>
See Notes to Consolidated Financial Statements
5
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ACADIANA BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
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<CAPTION>
For the Nine Months Ended
----------------------------------
September 30, September 30,
1998 1997
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,912 $ 2,090
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 297 233
Provision for deferred income taxes (52) 111
Provision for losses on loans 90 135
Compensation expense recognized on RRP 174 171
ESOP contribution 361 311
Other gains and losses, net (17) (14)
Net change in securities classified as trading 147 (679)
(Gain) loss on sale of loans held for sale (175) 1
Proceeds from sales of loans held for sale 14,464 921
Originations of loans held for sale (14,289) (922)
Accretion of discounts, net of premium amortization on securities (34) (50)
Amortization of deferred revenues and unearned income on loans (32) (18)
FHLB stock dividend received (112) (81)
Changes in assets and liabilities:
Decrease in accrued interest receivable 86 108
(Increase) decrease in other assets (1,064) 178
(Decrease) increase in accounts payable and accrued expenses (271) 226
---------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES 1,485 2,721
CASH FLOWS FROM INVESTING ACTIVITIES: ---------- --------
Proceeds from calls and maturities of securities available for sale 7,998 16,500
Purchases of securities available for sale (6,978) (10,000)
Net advances on loans (8,301) (23,178)
Purchases of premises and equipment (292) (1,044)
Purchases of FHLB stock (879) -
Proceeds from sale of real estate owned and other property acquired 311 223
Capital costs incurred on real estate owned and other property acquired
(9) 9
Principal collections on mortgage-backed securities available for sale 4,717 2,780
Principal collections on mortgage-backed securities held to maturity 298 212
---------- --------
NET CASH USED IN INVESTING ACTIVITIES (3,135) (14,498)
CASH FLOWS FROM FINANCING ACTIVITIES: ---------- --------
Net change in demand, NOW and savings deposits 11,018 (2,889)
Net change in time deposits 1,212 (1,571)
Net change in mortgage escrow funds 181 158
Proceeds from FHLB advances 5,100 14,378
Dividends paid to shareholders (780) (678)
Acquisition of common stock by RRP - (1,830)
Payments to repurchase common stock (6,730) (741)
---------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES 10,001 6,827
---------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 8,351 (4,950)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 14,157 19,784
---------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 22,508 $ 14,834
SUPPLEMENTAL SCHEDULE OF NONCASH ACTIVITIES: ========== ========
Acquisition of real estate in settlement of loans $ 115 $ 209
Unrealized (loss) appreciation on securities $ (84) $ 29
SUPPLEMENTAL DISCLOSURES:
Cash paid for:
Interest on deposits and borrowings $ 8,873 $ 7,976
Income taxes $ 1,143 $ 1,644
</TABLE>
See Notes to Consolidated Financial Statements
6
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ACADIANA BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In Thousands)
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<CAPTION>
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
---------------------------------------------------------------
1998 1997 1998 1997
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NET INCOME $ 520 $ 694 $ 1,912 $ 2,090
OTHER COMPREHENSIVE INCOME
Unrealized Gains and Losses on Investment
in Debt and Equity Securities Classified as
Available for Sale 106 218 (85) 29
Income Tax Effect (36) (74) 29 (10)
-------- --------- ---------- ----------
Net Gain (Loss) 70 144 (56) 19
-------- --------- ---------- ----------
COMPREHENSIVE INCOME $ 590 $ 838 $ 1,856 $ 2,109
-------- --------- ---------- ----------
</TABLE>
See Notes to Consolidated Financial Statements
7
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ACADIANA BANCSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF FINANCIAL STATEMENT PRESENTATION
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 interim financial statements should be read in conjunction
with the audited financial statements and the notes thereto for Acadiana
Bancshares, Inc. (the "Company") previously filed with the Securities and
Exchange Commission in the Company's 1997 Annual Report and on Form 10-K for the
year ended December 31, 1997.
BUSINESS
The Company's principal business is conducted through its wholly owned
subsidiary, LBA Savings Bank, (the "Bank") which conducts business from its main
office and three branch offices located in Lafayette, Louisiana, one branch
office in New Iberia, Louisiana, and one loan production office in Eunice,
Louisiana. The Bank holds deposits from the public and provides residential real
estate loans and other loans to the Lafayette, Louisiana area. The Savings
Association Insurance Fund ("SAIF") insures the Bank's deposits 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"). The
Company is subject to examination and comprehensive regulation by the Federal
Reserve.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company and
the Bank. All significant inter-company balances and transactions have been
eliminated in consolidation.
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(2) LOANS RECEIVABLE
Loans receivable (in thousands) at September 30, 1998 and December 31, 1997
consisted of the following
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<CAPTION>
September 30, December 31,
1998 1998
---------------------- ---------------------
<S> <C> <C>
Mortgage Loans:
Single Family Residential $ 170,661 $ 169,637
Single Family Construction 12,597 9,301
Multi-family Residential 495 546
Commercial Real Estate 8,278 9,363
---------------------- ---------------------
Total Mortgage Loans 192,031 188,847
Commercial Business Loans 18,937 15,400
Consumer Loans:
Savings 2,113 2,046
Indirect Dealer 2,732 4,526
Other 15,433 9,783
---------------------- ---------------------
Total Loans 231,246 220,602
Less:
Allowance for Loan Losses (2,687) (2,760)
Unearned Discounts and Prepaid Dealer
Reserve 162
74
Net Deferred Loan Origination Fees (376) (535)
Loans in Process and Undisbursed Funds (7,289) (4,629)
---------------------- ---------------------
====================== =====================
Net Loans $ 220,968 $ 212,840
====================== =====================
</TABLE>
Earnings Per Share
The Company adopted FAS 128, Earnings Per Share, as of December 31, 1997.
Weighted average shares of common stock outstanding for basic EPS excludes the
weighted average shares unreleased by the Employee Stock Ownership Plan ("ESOP")
(171,920 and 193,842 shares at September 30, 1998 and September 30, 1997,
respectively) and the weighted average unvested shares in the Recognition and
Retention Plan ("RRP") (94,611 and 109,250 at September 30, 1998 and September
30, 1997, respectively). The effect on diluted EPS of stock option shares
outstanding and unvested RRP shares is calculated using the treasury stock
method. The following is a reconcilement of the numerator and denominator for
basic and diluted Earnings Per Share.
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<TABLE>
<CAPTION>
Three months ended Nine months ended
----------------------------------- -----------------------------------
September 1998 September 1997 September 1998 September 1997
-------------- --------------- -------------- ---------------
<S> <C> <C> <C> <C>
BASIC EPS
Income available to Common Stockholders $ 520,000 $ 694,000 $ 1,912,000 $ 2,090,000
============== =============== ============= ==============
Weighted average shares of common
stock outstanding 2,095,365 2,411,166 2,220,506 2,433,663
============== =============== ============= ==============
Per-Share Amount $ 0.25 $ 0.29 $ 0.86 $ 0.86
============== =============== ============= ==============
Diluted EPS
Effect of Dilutive Securities:
Stock Options Outstanding 43,067 50,321 53,284 30,340
Restricted Stock Grants 16,664 20,486 15,792 12,717
-------------- --------------- -------------- ---------------
Weighted average shares of common
stock outstanding 2,155,096 2,481,973 2,289,581 2,476,720
============== =============== ============= ==============
Per-Share Amount $ 0.24 $ 0.28 $ 0.84 $ 0.84
-------------- --------------- -------------- ---------------
</TABLE>
(4) EFFECTS OF NEW ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued SFAS 133,
Accounting for Derivative Instruments and Hedging Activities. The statement
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments imbedded in other contracts. It
requires that an entity recognize all derivatives as either assets or
liabilities in the statement of financial position and measure those instruments
at fair value. The accounting for changes in the fair value of a derivative
(that is, gains and losses) depends on the intended use of the derivative and
the resulting designation. The statement is effective for fiscal years beginning
after June 15, 1999. The Company currently has no derivatives and does not have
any hedging activities. The adoption of this statement is not expected to have a
material effect on financial position and results of operations.
10
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
The following discussion and analysis is intended to assist readers in
understanding the financial condition and results of operations of Acadiana
Bancshares, Inc, and its subsidiary, LBA Savings Bank, for the periods
indicated. This review should be read in conjunction with the audited
consolidated financial statements, accompanying footnotes and supplemental data
included in the Company's 1997 Annual Report and FORM 10-K for the years ended
December 31, 1995 through 1997.
YEAR 2000
The Year 2000 date change is possibly the largest technological challenge ever
faced by the business and financial community. Many computer systems may not be
able to distinguish between the year 2000 and the year 1900, which is a critical
issue as the new millennium approaches. Most computers were originally
programmed to record years using two-digit fields, rather than four-digit
fields. Being Year 2000 ready means that software can appropriately distinguish
between the year 1900 and the year 2000, as well as correctly interpreting
certain other esoteric dates, which could otherwise lead to incorrect
calculations or other problems.
The Company completed its awareness and assessment phases of its Year 2000
planning process. The Company's essential information technology ("IT") systems
are provided by several large third-party vendors. Based on successful test
results, third-party vendors providing essential IT for the Company's financial
and operation systems have made representations to the Company or the Bank that
such products are Year 2000 ready. Such renovated products are installed and
running at the Company, without any material change in recurring or ongoing
operational costs relating to product support services or renovation of existing
products and services provided by third party vendors. The Company has completed
its assessment of issues related to the impact of the year 2000 on its critical
IT and non-critical IT systems. Based on its assessment, the Company has
determined that there are no consequences of its Year 2000 issues that would be
material to the Company's business, results of operations, or financial
condition. The Company has estimated total costs of completion to not exceed
$10,000.
The Company is now involved in its testing and validation phase of its Year 2000
Plan. In addition to its assessment of its Year 2000 issues, management plans to
conduct its own tests of such products. The plan provides for off-site as well
as on-site tests that will be conducted during the fourth quarter of 1998.
FINANCIAL CONDITION
ASSETS
GENERAL - At September 30, 1998, the consolidated assets of the Company totaled
$289.2 million, an increase of $12.1 million, or 4.4%, from December 31, 1997.
The primary reasons for the increase in consolidated assets were increases in
interest bearing deposits of $7.9 million, or 58.1%, loans receivable, net, of
$8.1 million, or 3.8%, and Federal Home Loan Bank stock of $991,000, or 52.5%,
all of which were partially offset by a decrease in
11
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investment securities available for sale of $1.1 million, or 9.5%, and a $5.0
million, or 16.4% decrease in mortgage-backed securities.
LOANS RECEIVABLE, NET - Net loans grew $8.1 million, or 3.8%, for the nine
months ended September 30, 1998, to $221.0 million compared to $212.8 million at
December 31, 1997. The Company originated and sold $14.3 million of primarily
30-year single-family fixed rate loans during the same nine month period,
resulting in the net growth in loans to be substantially less than would have
been without the loan sales.
Commercial loans, net, increased $3.5 million, or 23.2%, to $18.8 million
at September 30, 1998 compared to $15.3 million at December 31, 1997. Consumer
loans, net, increased $4.2 million, or 26.8%, to $20.1 million at September 30,
1998 compared to $15.8 million at December 31, 1997. Mortgage loans, net,
increased slightly by $0.3 million, or 0.2%, to $182.1 million at September 30,
1998 compared to $181.7 at December 31, 1997.
CASH AND CASH EQUIVALENTS - Cash and interest bearing deposits at other
institutions increased $7.9 million, or 58.1%, to $21.4 million at September 30,
1998, compared to $13.5 million at December 31, 1997. The primary source of net
new cash was $5.1 million in proceeds from FHLB Advances. Net cash flows from
financing activities provided $10.0 million and net cash flows from operating
activities provided $1.5 million, for the nine months ended September 30, 1998,
while net cash flows from investing activities used $3.1 million.
INVESTMENT SECURITIES - The Company owned $679,000 of investment securities held
for trading as of September 30, 1998. Investment securities available for sale
decreased $1.1 million, or 9.6%, to $10.0 million at September 30, 1998,
compared to $11.0 million at December 31, 1997, because of the redemption of
$8.0 million of investment securities, partially offset by the purchase of $7.0
million of investment securities, during the nine months ended September 30,
1998.
Mortgage-backed securities held to maturity decreased $302,000, or 2.4%,
to $12.5 million at September 30, 1998 compared to $12.8 million at December 31,
1997. Such decrease was primarily the result of principal repayments. The
mortgage-backed securities available for sale portfolio decreased $4.7 million,
or 26.5%, to $13.1 million at September 30, 1998 as compared to $17.8 million at
December 31, 1997. The decrease reflects monthly principal repayments and a
decrease of $34,000 in market values of the securities.
LIABILITIES AND STOCKHOLDERS' EQUITY
GENERAL - The Company's primary funding sources include deposits, borrowings
from the FHLB and stockholders' equity. The discussion that follows focuses on
the major changes in this mix.
DEPOSITS - Deposits increased $12.2 million, or 6.3%, to $205.7 million at
September 30, 1998, compared to $193.4 million at December 31, 1997. This
increase was due primarily to deposit inflows, including interest earned and
credited to deposit balances. Deposits funded 71.1% of assets at September 30,
1998 compared to 69.8% at December 31, 1997.
BORROWINGS - Advances from the FHLB of Dallas increased $5.1 million, or 13.9%,
to $41.7 million at September 30, 1998 as compared to $36.6 million at December
31, 1997. Of the Company's total outstanding FHLB advances, $2.0 million mature
in the year ending December 31, 1998, $9.4 million mature in the year ending
December 31, 1999, and $30.3
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million mature in five years or more. The Company has the ability to borrow up
to approximately $98.9 million from the FHLB of Dallas, which together with the
current advances, would be secured by mortgage loans under an existing blanket
collateral agreement, and by Federal Home Loan Bank Stock. Borrowings funded
14.4% of assets at September 30, 1998 compared to 13.2% at December 31, 1997.
STOCKHOLDERS' EQUITY - Total stockholders' equity decreased $5.1 million, or
11.4%, to $39.5 million at September 30, 1998, compared to $44.6 million at
December 31, 1997. The decrease was primarily attributable to $6.7 million for
the purchase of 303,000 common shares of Treasury Stock, $749,000 in dividends
declared on common stock, and a $56,000 decrease in unrealized gain on
securities available for sale, net of deferred taxes, all of which was partially
offset by $1.9 million of net income and credits of $535,000 reflecting the
value of participants' earnings related to stock-based compensation plans.
Stockholders' equity funded 13.6% of assets at September 30, 1998 compared to
16.1% at December 31, 1997.
The dividends paid during the first quarter of 1998 were declared at
December 31, 1997, and paid on January 15, 1998 at the rate of $0.11 per share.
The dividends paid during the second quarter of 1998 were declared at March 31,
1998, and paid on April 15, 1998 at the rate of $0.11 per share. The dividends
paid during the third quarter of 1998 were declared at June 30, 1998, and paid
on July 15, 1998 at the rate of $0.11 per share. The Board of Directors declared
dividends of $0.11 per share on September 30, 1998 to be paid on October 15,
1998.
13
<PAGE> 14
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,
-------------------------------------------------------------------------------
1998 1997
----------------------------------- ----------------------------------------
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 $ 181,537 $ 3,490 7.69% $ 171,938 $ 3,377 7.86%
Commercial business loans 18,793 431 9.17% 12,497 302 9.67%
Consumer and other loans 19,465 465 9.56% 15,728 371 9.44%
------------ --------- ------------ ------------
Total loans 219,795 4,386 7.98% 200,163 4,050 8.09%
Mortgage-backed securities 26,449 460 6.96% 32,267 574 7.12%
Investment securities (1) 9,325 138 5.92% 21,639 367 6.78%
Other earning assets 33,297 441 5.30% 9,859 115 4.67%
------------ --------- ------------ ------------
Total interest-earning assets 288,866 5,425 7.51% 263,928 5,106 7.74%
Noninterest-earning assets 6,483 6,218
------------ ------------
Total Assets $ 295,349 $ 270,146
============ ============
Interest-bearing liabilities:
Deposits:
Demand deposits $ 27,842 243 3.49% $ 13,233 58 1.75%
Passbook savings deposits 20,834 109 2.09% 23,186 127 2.19%
Certificates of deposit 144,418 2,080 5.76% 143,304 2,089 5.83%
------------ --------- ------------ ------------
Total deposits 193,094 2,432 5.04% 179,723 2,274 5.06%
Advance from FHLB 49,550 679 5.48% 33,979 488 5.74%
------------ --------- ------------ ------------
Total interest-bearing liabilities 242,644 3,111 5.13% 213,702 2,762 5.17%
Noninterest-bearing demand deposits 8,518 ========= 7,268
Other noninterest-bearing liabilities 2,947 2,635
------------ ------------
Total liabilities 254,109 223,605
Equity 41,240 46,541
------------ ------------
Total liabilities and equity $ 295,349 $ 270,146
============ ============
Net interest-earning assets $ 46,222 $ 50,226
============ ============
Net interest income/interest rate spread $ 2,314 2.38% $ 2,344 2.57%
======== ===== ============ =======
Net interest margin 3.20% 3.55%
===== ============ =======
Ratio of average interest-earning assets
to average interest-bearing liabilities 119.05% 123.50%
======== ============
(1) Includes FHLB stock.
</TABLE>
<TABLE>
<CAPTION>
Nine Months Ended September 30,
---------------------------------------------------------------------------------
1998 1997
--------------------------------------- --------------------------------------
Average Average
Average Yield/ Average Yield/
Balance Interest Cost Balance Interest Cost
------------ --------- -------- ------------ ---------- -----
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans receivable:
Real estate mortgage loans $ 182,823 $ 10,686 7.79% $ 164,962 $ 9,831 7.95%
Commercial business loans 17,387 1,223 9.38% 9,873 704 9.51%
Consumer and other loans 17,534 1,244 9.46% 16,047 1,115 9.26%
----------- ----------- ------------ ----------
Total loans 217,744 13,153 8.05% 190,882 11,650 8.14%
Mortgage-backed securities 28,317 1,485 6.99% 33,232 1,778 7.13%
Investment securities (1) 11,759 550 6.24% 24,713 1,285 6.93%
Other earning assets 26,382 1,017 5.14% 10,817 383 4.72%
----------- ----------- ------------ ----------
Total interest-earning assets 284,202 16,205 7.60% 259,644 15,096 7.75%
Noninterest-earning assets 6,466 5,877
----------- ------------
Total Assets $ 290,668 $ 265,521
=========== ============
Interest-bearing liabilities:
Deposits:
Demand deposits $ 23,140 557 3.21% $ 13,375 179 1.78%
Passbook savings deposits 22,070 363 2.19% 23,679 387 2.18%
Certificates of deposit 143,328 6,127 5.70% 145,178 6,294 5.78%
----------- ----------- ------------ ----------
Total deposits 188,538 7,047 4.98% 182,232 6,860 5.02%
Advance from FHLB 47,559 1,968 5.52% 27,322 1,152 5.62%
----------- ----------- ------------ ----------
Total interest-bearing liabilities 236,097 9,015 5.09% 209,554 8,012 5.10%
Noninterest-bearing demand deposits 8,242 7,011
Other noninterest-bearing liabilities 2,693 2,545
----------- ------------
Total liabilities 247,032 219,110
Equity 43,636 46,411
----------- ------------
Total liabilities and equity $ 290,668 $ 265,521
=========== ============
Net interest-earning assets $ 48,105 $ 50,090
=========== ============
Net interest income/interest rate spread $ 7,190 2.51% $ 7,084 2.65%
=========== ==== ========== ====
Net interest margin 3.37% 3.64%
==== ====
Ratio of average interest-earning assets
to average interest-bearing liabilities 120.38% 123.90%
=========== ==========
(1) Includes FHLB stock.
</TABLE>
14
<PAGE> 15
RESULTS OF OPERATIONS
GENERAL - The Company reported net income of $520,000 for the three months ended
September 30, 1998, compared to net income of $694,000 for the three months
ended September 30, 1997. The $174,000, or 25.1%, decrease in net income for the
quarter ended September 30, 1998, as compared to the quarter ended September 30,
1997, was due primarily to $165,000 in losses on investment securities held for
trading compared to a $71,000 gain on investment securities held for trading in
the same quarter of the prior year.
The Company reported net income of $1.9 million for the nine months ended
September 30, 1998, compared to net income of $2.1 million for the nine months
ended September 30, 1997. The $178,000, or 8.5%, decrease in net income for the
nine months ended September 30, 1998, as compared to the nine months ended
September 30, 1997, was due primarily to $114,000 in losses on investment
securities held for trading compared to a $95,000 gain on investment securities
held for trading in the same period of the prior year.
NET INTEREST INCOME - Net interest income decreased slightly, by $30,000, or
1.3%, for the three months ended September 30, 1998, to $2.3 million, compared
to $2.3 million for the three months ended September 30, 1997. The decrease was
due to an increase in interest expense of $349,000, or 12.6%, which was
partially offset by a $319,000, or 6.2%, increase in interest income. The
increase in interest income was the result of a $24.9 million, or 9.4%, increase
in the average balances of interest-earning assets which was partially offset by
a 23 basis point (100 basis points being equal to 1%) decrease in the yield
thereon. The increase in interest expense was the result of a $28.9 million, or
13.5%, increase in average interest-bearing liabilities which was partially
offset by a 4 basis point decrease in the yield thereon. 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 2.38% and 3.20%, respectively,
during the three months ended September 30, 1998 compared to 2.57% and 3.55%,
respectively, for the comparable period in 1997. The average balance in
non-interest bearing demand deposit accounts grew $1.3 million, or 17.2%, for
the three months ended September 30, 1998 as compared to September 30, 1997.
For the nine months ended September 30, 1998, net interest income
increased $106,000, or 1.5%, to $7.2 million, compared to $7.1 million for the
nine months ended September 30, 1997. The increase was due to a $1.1 million, or
7.3%, increase in interest income which was partially offset by an increase in
interest expense of $1.0 million, or 12.5%. The increase in interest income was
the result of a $24.6 million, or 9.5%, increase in the average balance of
interest-earning assets which was partially offset by a 15 basis point decrease
in the yield thereon. The increase in interest expense was the result of a $26.5
million, or 12.7%, increase in average interest-bearing liabilities which was
partially offset by a 1 basis point decrease in the yield thereon. The Company's
interest rate spread and net interest margin amounted to 2.51% and 3.37%,
respectively, during the nine months ended September 30, 1998 compared to 2.65%
and 3.64%, respectively, for the comparable period in 1997.
INTEREST INCOME - The Company's total interest income was $5.4 million for the
three months ended September 30, 1998, compared to $5.1 million for the three
months ended September 30, 1997. The reasons for the $319,000, or 6.2%, increase
in interest income was a $336,000, or 8.3%, increase in interest income from
loans and a $326,000 or 283.5%,
15
<PAGE> 16
increase in interest income from other earning assets, all of which were
partially offset by a $114,000, or 19.9%, decrease in interest income from
mortgage-backed securities, and a $229,000, or 62.4%, decrease in interest
income from investment securities. The increase in interest income from loans
was the result of a $19.6 million, or 9.8%, increase in the average balance of
loans, which was partially offset by an 11 basis point decrease in the yield
thereon. The decrease in interest income from investment securities was the
result of a $12.3 million, or 56.9%, decrease in the average balance of
investments together with an 86 basis point decrease in the yield thereon. The
decrease in interest income on mortgage-backed securities was the result of a
$5.8 million, or 18.0%, decrease in the average balance of mortgage-backed
securities, together with a decrease of 16 basis points in the yield thereon.
The increase in interest income from other earning assets, substantially all of
which are interest-bearing deposits at the FHLB, was the result of a $23.4
million increase in the average balance of other earning assets, together with a
63 basis point increase in the yield thereon.
For the nine months ended September 30, 1998, the Company's total
interest income was $16.2 million, compared to $15.1 million for the nine months
ended September 30, 1997. The reasons for the $1.1 million, or 7.3%, increase in
interest income was a $1.5 million, or 12.9%, increase in interest income from
loans and a $634,000 or 165.5%, increase in interest income from other earning
assets, all of which were partially offset by a $293,000, or 16.5%, decrease in
interest income from mortgage-backed securities, and a $735,000, or 57.2%,
decrease in interest income from investment securities. The increase in interest
income from loans was the result of a $26.9 million, or 14.1%, increase in the
average balance of loans, which was partially offset by a 9 basis point decrease
in the yield thereon. The decrease in interest income from investment securities
was the result of a $13.0 million, or 52.4%, decrease in the average balance of
investments together with a 69 basis point decrease in the yield thereon. The
decrease in interest income on mortgage-backed securities was the result of a
$4.9 million, or 14.8%, decrease in the average balance of mortgage-backed
securities, together with a decrease of 14 basis points in the yield thereon.
The increase in interest income from other earning assets was the result of a
$15.6 million, or 143.9%, increase in the average balance of other earning
assets, together with a 42 basis point increase in the yield thereon.
INTEREST EXPENSE - The Company's total interest expense was $3.1 million during
the three months ended September 30, 1998, compared to $2.8 million for the
three months ended September 30, 1997. The $349,000, or 12.6%, increase in
interest expense was comprised of an increase of $191,000 in interest expense on
advances from the FHLB, together with an increase of $158,000 in interest
expense on deposits. The increase in interest expense on deposits was the result
of an increase of $13.4 million, or 7.4%, in average balances in interest
bearing deposits which was partially offset by a decrease of 2 basis points in
the cost thereon. The increase in interest expense on advances from the FHLB was
the result of an increase in the average balances of $15.6 million, which was
partially offset by a decrease of 26 basis points in the cost thereon.
16
<PAGE> 17
The Company's total interest expense was $9.0 million during the nine
months ended September 30, 1998, compared to $8.0 million for the nine months
ended September 30, 1997. The $1.0 million, or 12.5%, increase in interest
expense was comprised of an increase of $816,000 in interest expense on advances
from the FHLB, together with an increase of $187,000 in interest expense on
deposits. The increase in interest expense on deposits was the result of an
increase of $6.3 million, or 3.5%, in average balances in interest bearing
deposits which was partially offset by a decrease of 4 basis points in the cost
thereon. The increase in interest expense on advances from the FHLB was the
result of an increase in the average balances of $20.2 million which was
partially offset by a decrease of 10 basis points in the cost thereon.
PROVISION FOR LOAN LOSSES - There was no provision for loan losses for the three
months ended September 30, 1998, compared to $45,000 for the same period in
1997. The Company's non-performing assets amounted to .07% of total assets at
September 30, 1998 compared to .22% at December 31, 1997. In addition, the ratio
of the Bank's allowance for loan losses to non-performing loans and troubled
debt restructurings was 409.60% at September 30, 1998 compared to 297.09% at
December 31, 1997. During the three months ended September 30, 1998, the Company
charged-off $213,000 of loans and recovered $82,000 of loans previously
charged-off.
The provision for loan losses for the nine months ended September 30,
1998 was $90,000, compared to $135,000 for the same period in 1997. During the
nine months ended September 30, 1997, the Company charged-off $297,000 of loans
and recovered $135,000 of loans previously charged-off.
NON-INTEREST INCOME - Non-interest income decreased $163,000 or 49.8%, for the
three months ended September 30, 1998 to $164,000, compared to $327,000 for the
three months ended September 30, 1997. Such decrease was due primarily to
$165,000 in losses on investment securities held for trading compared to a
$71,000 gain on investment securities held for trading in the same quarter of
the prior year. The decrease in non-interest income was partially offset by a
$48,000 gain on the sale of fixed-rate residential loans and an increase of
$33,000 in deposit fees and charges. The gain from the sale of loans reflects
the Company's decision to sell certain newly originated fixed rate mortgage
loans. The investment gains and losses are related to the Company's trading
portfolio.
Non-interest income remained relatively constant for the nine months
ended September 30, 1998 at $848,000, compared to $849,000 for the nine months
ended September 30, 1997. The slight decrease was the result of $114,000 in
losses on investment securities held for trading compared to a $95,000 gain on
investment securities held for trading in the same quarter of the prior year.
The decrease in non-interest income was offset by a $176,000 increase in gain on
the sale of fixed-rate residential loans and an increase of $40,000 in deposit
fees and charges.
NON-INTEREST EXPENSE - Non-interest expense increased $78,000, or 5.0%, for the
three months ended September 30, 1998, to $1.6 million, compared to $1.6 million
for the three months ended September 30, 1997. The primary reasons for such
increase were a $29,000, or 3.5%, increase in salaries and employee benefits, a
$24,000, or 28.9%, increase in depreciation, and a $20,000 increase in the net
cost of real estate owned. The increase in salaries and employee benefits
reflect an increase in retail staffing, including the New Iberia branch office,
which was opened in the third quarter of 1997, additional staff for commercial
loan origination functions, all of which was slightly offset by a quarterly
decrease in the cost of
17
<PAGE> 18
the Company's employee stock ownership plan, which generally requires the
Company to record expenses based on the current market value of the Company's
stock. The average price of the Company's stock was $20.151 for the quarter
ended September 30, 1998, compared to $21.474 for the quarter ended September
30, 1997.
Non-interest expense increased $324,000, or 7.0%, for the nine months
ended September 30, 1998, to $4.9 million, compared to $4.6 million for the nine
months ended September 30, 1997. The primary reasons for such increase were a
$194,000, or 8.2%, increase in salaries and employee benefits, a $51,000, or
21.9%, increase in depreciation, and a $60,000, or 26.3%, increase in bank share
and franchise tax expense. The average price of the Company's stock was $21.922
for the nine months ended September 30, 1998, compared to $18.483 for the nine
months ended September 30, 1997.
INCOME TAXES - Income tax expense was $310,000 for the three months ended
September 30, 1998, compared to $362,000 for the three months ended September
30, 1997. The $52,000, or 14.4%, decrease was due to a $226,000, or 21.4%,
decrease in income before taxes which was partially offset by a slightly higher
effective income tax rate for the quarter ended September 30, 1998.
Income tax expense was $1.1 million for the nine months ended September
30, 1998 and 1997. The $4,000, or .04% increase was due to a slightly higher
effective income tax rate for the nine months ended September 30, 1998.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary liquidity, represented by cash and cash
equivalents, is a product of its operating, investing and financing activities.
Excess liquidity includes the Company's portfolios of investment securities held
for sale and mortgage-backed securities held for sale. The Company's primary
sources of funds are deposits, borrowings, proceeds from sale of stock and
amortization, prepayments and maturities from its loan portfolio, and its held
to maturity investment securities and mortgage-backed securities portfolios, and
other funds provided from operations. While scheduled payments from the
amortization of loans and mortgage-backed securities and maturing investment
securities are relatively predictable sources of funds, deposit flows, loan
prepayments, and mortgage-backed securities prepayments are greatly influenced
by general interest rates, economic conditions and competition. The Company,
through its subsidiary Bank, has the ability to borrow up to approximately $98.9
million from the FHLB of Dallas, which together with the current advances, would
be secured by mortgage loans under an existing blanket collateral agreement, and
by Federal Home Loan Bank Stock. Additionally, it has the ability to borrow up
to approximately $24.2 million from the FHLB of Dallas, using securities
available for collateral under a separate agreement. At September 30, 1998, the
Company had $41.7 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. The Company uses its primary liquidity to meet its ongoing
commitments, to pay maturing certificates of deposit and deposit withdrawals and
to fund loan commitments. The Company's excess liquidity and borrowing capacity
provide added readiness to meet ongoing commitments and growth. At September 30,
1998, the total approved commitments to extend credit amounted to $32.7 million.
At that same date, certificates of deposit scheduled to
18
<PAGE> 19
mature in one year or less totaled $72.4 million. Management believes that a
significant portion of maturing deposits will stay with the Company. The Company
anticipates it will continue to have sufficient funds together with available
borrowings to meet its current commitments.
IMPACT OF INFLATION AND CHANGING PRICES
The Consolidated Financial Statements and related financial data
presented herein have been prepared in accordance with generally accepted
accounting principles, which generally require the measurement of financial
position and operation results in terms of historical dollars, without
considering changes in relative purchasing power over time due to inflation.
Unlike most industrial companies, most of the Company's assets and liabilities
are monetary in nature. Consequently, interest rates generally have a more
significant impact on the Company's performance than does the effect of
inflation. Interest rates do not necessarily move in the same direction or in
the same magnitude as the prices of goods and services, since such prices are
affected by inflation to a larger extent than interest rates.
MARKET RISK
Market risk is the risk of loss in a financial instrument arising from
adverse changes in market rates or prices such as interest rates, foreign
currency exchange rates, commodity prices, and equity prices. The Company's
primary market risk exposure is interest rate risk. The ongoing monitoring and
management of this risk is an important component of the Company's
asset/liability management process which is governed by policies established by
its Board of Directors that are reviewed and approved annually.
INTEREST RATE RISK
Interest rate risk represents the sensitivity of earnings to changes in
market interest rates. As interest rates change the interest income and interest
expense streams associated with the Company's financial instruments also change
thereby impacting net interest income ("NII"), the primary component of the
Company's earnings.
The ability to maximize net interest income is largely dependent upon the
achievement of a positive interest-rate spread that can be sustained during
fluctuations of interest rates. Interest rate sensitivity is a measure of the
difference between amounts of interest-earning assets and interest-bearing
liabilities that either reprice or mature within a given period. The difference,
or the interest rate repricing "gap", provides an indication of the extent to
which an institution's interest rate spread will be affected by changes in
interest rates. A gap is considered positive when the amount of interest-rate
sensitive assets exceeds the amount of interest-rate sensitive liabilities, and
is considered negative when the amount of interest-rate sensitive liabilities
exceeds the amount of interest-rate sensitive assets, in a given time period.
Generally, during a period of rising interest rates, a negative gap within
shorter maturities would adversely affect net interest income, while a positive
gap within shorter maturities would result in an increase in net interest
income, and during a period of falling interest rates, a negative gap within
shorter maturities would result in an increase in net interest income while a
positive gap within shorter maturities would have the opposite effect. The
Company utilizes
19
<PAGE> 20
the results of a detailed and dynamic simulation model to quantify the estimated
exposure of NII to sustained interest rate changes. While the Company routinely
monitors simulated NII sensitivity over a rolling two-year horizon, it also
utilizes additional tools to monitor potential longer-term interest rate risk.
More information may be found in the Company's 1997 Annual Report.
CAPITAL ADEQUACY
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, 1998, the Bank complied 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, 1998.
<TABLE>
<CAPTION>
Required Actual Excess
------------------------ ----------------------- --------------------
Percent Amount Percent Amount Percent Amount
------- --------- ------- --------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Tier I leverage capital ratios 4.00% $ 11,292 8.05% $ 22,720 4.05% $ 11,428
Risk-based capital ratios:
Tier I 4.00% $ 6,029 15.07% $ 22,720 11.07% $ 16,691
Total 8.00% $ 12,058 16.33% $ 24,616 8.33% $ 12,558
</TABLE>
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
interest bearing deposits, and its sources of income consists primarily of
earnings from such deposits as well as any dividends from the Bank. The expenses
expected to be incurred by the Company will relate to its reporting obligations
under the Securities Exchange Act of 1934, as amended ("Exchange Act"), and
related expenses as a publicly traded company. The Bank regularly reimburses the
Company for all such expenses.
20
<PAGE> 21
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.
21
<PAGE> 22
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 13, 1998
By: /s/ GERALD G. REAUX, JR.
-----------------------------------
Gerald G. Reaux, Jr., President and
Chief Executive Officer
Date: November 13, 1998
By: /s/ EMILE E. SOULIER, III
-----------------------------------
Emile E. Soulier, III, Vice-President
and Chief Financial Officer
22
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 1,104
<INT-BEARING-DEPOSITS> 21,404
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 679
<INVESTMENTS-HELD-FOR-SALE> 23,107
<INVESTMENTS-CARRYING> 12,504
<INVESTMENTS-MARKET> 12,661
<LOANS> 223,655
<ALLOWANCE> 2,687
<TOTAL-ASSETS> 289,187
<DEPOSITS> 205,652
<SHORT-TERM> 9,000
<LIABILITIES-OTHER> 2,333
<LONG-TERM> 37,728
0
0
<COMMON> 27
<OTHER-SE> 39,447
<TOTAL-LIABILITIES-AND-EQUITY> 289,187
<INTEREST-LOAN> 13,153
<INTEREST-INVEST> 2,035
<INTEREST-OTHER> 1,017
<INTEREST-TOTAL> 16,205
<INTEREST-DEPOSIT> 7,047
<INTEREST-EXPENSE> 9,015
<INTEREST-INCOME-NET> 7,190
<LOAN-LOSSES> 90
<SECURITIES-GAINS> (114)
<EXPENSE-OTHER> 4,929
<INCOME-PRETAX> 3,019
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,912
<EPS-PRIMARY> .86
<EPS-DILUTED> .84
<YIELD-ACTUAL> 7.51
<LOANS-NON> 159
<LOANS-PAST> 0
<LOANS-TROUBLED> 497
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 2,759
<CHARGE-OFFS> 297
<RECOVERIES> 135
<ALLOWANCE-CLOSE> 2,687
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 2,687
</TABLE>
