<PAGE> 1
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 March 31, 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)
<TABLE>
<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
- - -------------------------------------------------------------------------------
(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 May 8, 1998, 2,555,750 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 180,189
were not committed to be released.
1
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ACADIANA BANCSHARES, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C> <C>
PART 1. FINANCIAL INFORMATION
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Item 1. Financial Statements
Consolidated Statements of Financial Condition
(As of March 31, 1998 and December 31, 1997) 3
Consolidated Statements of Operations (For the three
Months ended March 31, 1998 and 1997) 4
Consolidated Statements of Stockholders' Equity (For
the three months ended March 31, 1998 and 1997) 5
Consolidated Statements of Cash Flows (For the
three months ended March 31, 1998 and 1997) 6
Consolidated Statements of Comprehensive Income (For
The three months ended March 31, 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
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Item 1. Legal Proceedings 18
Item 2. Changes in Securities 18
Item 3. Defaults Upon Senior Securities 18
Item 4. Submission of Matters to a Vote of Security Holders 18
Item 5. Other Information 18
Item 6. Exhibits and Reports on Form 8-K 18
Signatures 19
</TABLE>
2
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ACADIANA BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(In Thousands, except share data)
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
----------- ------------
<S> <C> <C>
ASSETS
Cash and Cash Equivalents:
Cash and Amounts Due from Banks $ 793 $ 622
Interest Bearing Deposits 29,719 13,535
----------- ------------
Total 30,512 14,157
Investment Securities:
Equity Securities Held for Trading 919 826
Available for Sale, at fair value 9,027 11,044
Mortgage-Backed Securities:
Held to Maturity (fair value of $12,769 and $12,736, respectively) 12,702 12,806
Available for Sale, at fair value 16,637 17,846
Loans Receivable, net of Allowance for
Loan Losses of $2,790 and $2,760, respectively 215,571 212,840
Federal Home Loan Bank stock, at Cost 2,519 1,887
Real Estate Owned, Net 13 204
Premises and Equipment, Net 2,824 2,806
Accrued Interest Receivable 1,453 1,416
Other Assets 1,330 1,234
----------- -----------
TOTAL ASSETS $ 293,507 $ 277,066
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Deposits $ 195,885 $ 193,422
Advances from Federal Home Loan Bank 49,728 36,628
Accrued Interest Payable on Deposits 99 49
Advance Payments by Borrowers for Taxes and Insurance 484 431
Accrued and Other Liabilities 2,287 1,974
----------- -----------
TOTAL LIABILITIES $ 248,483 $ 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 32,061 32,005
Retained Earnings (Substantially Restricted) 19,857 19,355
Unearned Common Stock Held by ESOP (2,162) (2,228)
Unearned Common Stock Held by RRP Trust (1,545) (1,602)
Treasury Stock, at Cost; 156,000 shares and 150,000 shares, respectively (3,585) (3,445)
Accumulated Other Comprehensive Income 371 450
----------- -----------
TOTAL STOCKHOLDERS' EQUITY $ 45,024 $ 44,562
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 293,507 $ 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
Ended March 31,
------------------------------------
1998 1997
-------------- -----------------
<S> <C> <C>
INTEREST INCOME:
Loans $ 4,334 $ 3,756
Mortgage-Backed Securities 531 611
Investment Securities 226 384
Interest Bearing Deposits 216 202
-------------- -----------------
Total interest income $ 5,307 $ 4,953
-------------- -----------------
INTEREST EXPENSE:
Deposits $ 2,272 $ 2,294
Advances from Federal Home Loan Bank 604 301
-------------- -----------------
Total Interest Expense 2,876 2,595
-------------- -----------------
Net Interest Income 2,431 2,358
Provision for Loan Losses 45 45
-------------- -----------------
Net Interest Income After Provision for
Loan Losses 2,386 2,313
-------------- -----------------
NON-INTEREST INCOME:
Loan Fees and Service Charges $ 35 $ 37
Servicing Fees on Loans Sold 11 17
Deposit Fees and Service Charges 177 178
Investment Securities Gains, Net 95 8
Gain (Loss) on Sale of Fixed Rate Loans, Net 45 (1)
Other 21 22
-------------- -----------------
Total Non-Interest Income $ 384 $ 261
-------------- -----------------
Non-Interest Expense:
Salaries and Employee Benefits $ 864 $ 761
Occupancy 62 78
Depreciation 77 75
Net Costs of Real Estate Owned (22) (24)
SAIF Deposit Insurance Premium 29 31
Advertising 93 43
Consulting 24 21
Bank Shares and Franchise Tax Expense 108 86
Other 339 332
-------------- -----------------
Total Non-Interest Expenses $ 1,574 $ 1,403
-------------- -----------------
Income Before Income Taxes $ 1,196 $ 1,171
Income Tax Expense 432 400
-------------- -----------------
Net Income $ 764 $ 771
============== =================
Net Income Per Common Share - basic $ 0.33 $ 0.31
Net Income Per Common Share - diluted $ 0.32 $ 0.31
</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
Unearned Common
Common Stock
Common Paid In Retained Stock Held Held By
Stock Capital Earnings By ESOP RRP Trust
-------- ---------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1997 $ 27 $ 31,827 $ 17,344 $ (2,490) $ -
Net Income 771
Cash Dividends Declared (226)
Common Stock Released by ESOP Trust 27 65
Common Stock Acquired by Recognition
and Retention Plan Trust (1,830)
Common Stock Earned by Participants of
Recognition and Retention Plan Trust 57
Change in Unrealized Gain on Securities
Available for Sale, Net of Deferred Taxes
-------- ---------- ----------- ----------- ------------
BALANCE, MARCH 31, 1997 $ 27 $ 31,854 $ 17,889 $ (2,425) $ (1,773)
======== ========== =========== =========== ============
BALANCE, JANUARY 1, 1998 $ 27 $ 32,005 $ 19,355 $ (2,228) (1,602)
Net Income 764
Cash Dividends Declared (262)
Common Stock Released by ESOP Trust 56 66
Repurchase of Common Stock
Common Stock Earned by Participants of
Recognition and Retention Plan Trust 57
Change in Unrealized Gain on Securities
Available for Sale, Net of Deferred Taxes
-------- ---------- ----------- ----------- ------------
BALANCE, MARCH 31, 1998 $ 27 $ 32,061 $ 19,857 $ (2,162) $ (1,545)
======== ========== =========== =========== ============
<CAPTION>
Accumulated
Other Total
Treasury Comprehensive Stockholders'
Stock Income Equity
------------- ------------ ---------------
<S> <C> <C> <C>
BALANCE, JANUARY 1, 1997 $ - $ 383 $ 47,091
Net Income 771
Cash Dividends Declared (226)
Common Stock Released by ESOP Trust 92
Common Stock Acquired by Recognition
and Retention Plan Trust (1,830)
Common Stock Earned by Participants of
Recognition and Retention Plan Trust 57
Change in Unrealized Gain on Securities
Available for Sale, Net of Deferred Taxes (339) (339)
------------- ------------ ---------------
BALANCE, MARCH 31, 1997 $ - $ 44 $ 45,616
============= ============ ===============
BALANCE, JANUARY 1, 1998 $ (3,445) $ 450 $ 44,562
Net Income 764
Cash Dividends Declared (262)
Common Stock Released by ESOP Trust 122
Repurchase of Common Stock (140) (140)
Common Stock Earned by Participants of
Recognition and Retention Plan Trust 57
Change in Unrealized Gain on Securities
Available for Sale, Net of Deferred Taxes (79) (79)
------------- ------------ ---------------
BALANCE, MARCH 31, 1998 $ (3,585) $ 371 $ 45,024
============= ============ ===============
</TABLE>
See Notes to Consolidated Financial Statements
5
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ACADIANA BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
<TABLE>
<CAPTION>
For the Three Months Ended
-------------------------------
March 31, March 31,
1998 1997
-------------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 764 $ 771
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 79 75
Provision for deferred income taxes 33 -
Provision for losses on loans 45 45
Compensation expense recognized on RRP 57 57
ESOP contribution 122 92
Other gains and losses, net (3) (10)
Net change in securities classified as trading (93) (274)
Gain on sale of loans held for sale (45) (1)
Proceeds from sales of loans held for sale 3,732 921
Originations of loans held for sale (3,687) (920)
Accretion of discounts, net of premium amortization on securities (12) (20)
Amortization of deferred revenues and unearned income on loans (8) (8)
FHLB stock dividend received (33) (26)
Changes in assets and liabilities:
(Increase) decrease in accrued interest receivable (37) 65
(Increase) decrease in other assets (91) 133
Increase in accounts payable and accrued expenses 361 575
-------------- --------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 1,184 1,475
-------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from calls and maturities of securities available for sale 2,000 1,000
Purchases of securities available for sale - (4,998)
Net advances on loans (2,810) (3,148)
Purchases of premises and equipment (95) (174)
Purchases of FHLB stock (599) -
Proceeds from sale of real estate owned and other property acquired 240 62
Capital costs incurred on real estate owned and other property acquired (4) (3)
Principal collections on mortgage-backed securities available for sale 1,120 737
Principal collections on mortgage-backed securities held to maturity 103 77
-------------- --------------
NET CASH USED IN INVESTING ACTIVITIES (45) (6,447)
-------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net change in demand, NOW and savings deposits 2,854 (2,525)
Net change in time deposits (391) 720
Net change in mortgage escrow funds 53 18
Proceeds from FHLB advances 13,100 -
Dividends paid to shareholders (260) (226)
Acquisition of common stock by RRP - (1,830)
Payments to repurchase common stock (140) -
-------------- --------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 15,216 (3,843)
-------------- --------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 16,355 (8,815)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 14,157 19,784
-------------- --------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 30,512 $ 10,969
============== ==============
SUPPLEMENTAL SCHEDULE OF NONCASH ACTIVITIES:
Acquisition of real estate in settlement of loans $ 42 $ 67
Unrealized appreciation (loss) on securities $ (119) $ (521)
SUPPLEMENTAL DISCLOSURES:
Cash paid for:
Interest on deposits and borrowings $ 2,774 $ 2,576
Income taxes $ 70 $ -
</TABLE>
See Notes to Consolidated Financial Statements
6
<PAGE> 7
ACADIANA BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In Thousands)
<TABLE>
<CAPTION>
For the Three Months
Ended March 31,
---------------------------------
1998 1997
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<S> <C> <C>
NET INCOME $ 764 $ 771
OTHER COMPREHENSIVE INCOME
Unrealized Gains and Losses on Investment
in Debt and Equity Securities Classified as
Available for Sale (119) (514)
Income Tax Effect 40 175
------------- ----------------
Net Gain (Loss) (79) (339)
------------- ----------------
COMPREHENSIVE INCOME $ 685 $ 432
============= ================
</TABLE>
See Notes to Consolidated Financial Statements
7
<PAGE> 8
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.
8
<PAGE> 9
(2) LOANS RECEIVABLE
Loans receivable (in thousands) at March 31, 1998 and December 31, 1997
consisted of the following
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
------------ -------------
<S> <C> <C>
Mortgage Loans:
Single Family Residential $ 173,054 $ 169,637
Single Family Construction 10,099 9,301
Multi-family Residential 535 546
Commercial Real Estate 8,738 9,363
------------ -------------
Total Mortgage loans 192,426 188,847
Commercial Business Loans 15,909 15,400
Consumer Loans:
Savings 2,039 2,046
Indirect Automobile Dealer 3,872 4,526
Other 10,505 9,783
------------ -------------
Total Loans 224,751 220,602
Less:
Allowance for Loan Losses (2,790) (2,760)
Unearned Discounts and Prepaid Dealer
Reserve 124 162
Net Deferred Loan Origination Fees (540) (535)
Loans in Process and Undisbursed Funds (5,974) (4,629)
------------ -------------
Net Loans $ 215,571 $212,840
============ =============
</TABLE>
(3) 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") (182,955 and 204,787 shares at March 31, 1998 and March 31, 1997,
respectively) and the weighted average unvested shares in the Recognition and
Retention Plan ("RRP") (98,189 and 109,250 at March 31, 1998 and March 31,
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.
9
<PAGE> 10
<TABLE>
<CAPTION>
Income Shares Per-Share
(Numerator) (Denominator) Amount
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<S> <C> <C> <C>
THREE MONTHS ENDED MARCH 31, 1998:
Basic EPS
Income Available to Common Stockholders $764,000 2,294,632 $0.33
=====
Effect of Dilutive Securities
Stock Options Outstanding - 54,904
Restricted Stock Grants - 13,412
------
Diluted EPS
Income Available to Common Stockholders
Plus Assumed Conversions $764,000 2,362,948 $0.32
======== ========= =====
THREE MONTHS ENDED MARCH 31, 1997:
Basic EPS
Income Available to Common Stockholders $771,000 2,467,138 $0.31
======== ========= =====
Effect of Dilutive Securities
Stock Options Outstanding - 10,935
Restricted Stock Grants - 4,617
-----
Diluted EPS
Income Available to Common Stockholders
Plus Assumed Conversions $761,000 2,482,689 $0.31
======== ========= =====
</TABLE>
10
<PAGE> 11
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.
FINANCIAL CONDITION
ASSETS
GENERAL - At March 31, 1998, the consolidated assets of the Company totaled
$293.5 million, an increase of $16.4 million, or 5.9%, from December 31, 1997.
The primary reasons for the increase in consolidated assets were increases in
interest bearing deposits by $16.2 million, or 119.6%, and loans receivable,
net, by $2.7 million, or 1.3%, all of which were partially offset by a decrease
in investment securities available for sale of $2.0 million, or 18.3%, and a
$1.3 million, or 4.3% decrease in mortgage-backed securities.
LOANS RECEIVABLE, NET - Net loans grew $2.7 million, or 1.3%, for the three
months ended March 31, 1998, to $215.6 million compared to $212.8 million in
net loans at December 31, 1997. The Company originated and sold $3.7 million
of 30-year single-family fixed rate loans during the same three month period,
resulting in the net growth in loans to be substantially less than would have
been without the loan sales.
The growth in total loans (before contra-loan balances) for the three
months ended March 31, 1998, was $4.1 million, or 1.9%, compared to total loan
balances at December 31, 1997. Total mortgage loans increased $3.6 million, or
1.9%, to $192.4 million at March 31, 1998, compared to $188.8 million at
December 31, 1997. Total single family residential loans increased $4.2
million, or 2.4%, to $183.2 million, commercial business loans increased
$509,000, or 3.3%, to $15.9 million, and consumer loans increased $61,000, or
.4%, to $16.4 million during the three months ended March 31, 1998. These
increases were partially offset by a $625,000, or 6.7%, decrease in commercial
real estate mortgage loans and an $11,000, or 2.0%, decrease in multi-family
residential loans, during the same period.
CASH AND CASH EQUIVALENTS - Cash and interest bearing deposits at other
institutions increased $16.4 million, or 115.5%, to $30.5 million at March 31,
1998, compared to $14.2 million at December 31, 1997. The primary source of net
new cash was $13.1 in proceeds from FHLB Advances. Net cash flows from
financing activities provided $15.2 million and net cash flows from operating
activities provided $1.2 million, for the three months ended March 31, 1998,
while net cash flows from investing activities used $45,000.
INVESTMENT SECURITIES - The Company owned $919,000 of investment securities
held for trading, as of March 31, 1998. Investment securities available for
sale decreased $2.0 million, or 18.3%, to $9.0 million at March 31, 1998,
compared to $11.0 million at December 31, 1997, because of the redemption of
$2.0 million of investment securities during the quarter.
11
<PAGE> 12
Mortgage-backed securities held to maturity decreased $104,000, or
.8%, to $12.7 million at March 31, 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 $1.2 million,
or 6.8%, to $16.6 million at March 31, 1998 as compared to $17.8 million at
December 31, 1997. The decrease reflects monthly principal repayments and a
decrease of $89,000 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 $2.5 million, or 1.3%, to $195.9 million at March
31, 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 66.7% of assets at March 31, 1998 compared
to 69.8% at December 31, 1997.
BORROWINGS - Advances from the FHLB of Dallas increased $13.1 million, or
35.8%, to $49.7 million at March 31, 1998 as compared to $36.6 million at
December 31, 1997. Of the Company's total outstanding FHLB advances, $22.0
million mature in the year ending December 31, 1998, $14.4 million mature in
the year ending December 31, 1999, and $13.3 million mature in five years or
more. The Company has the ability to borrow up to approximately $127.7
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 16.9% of
assets at March 31, 1998 compared to 13.2% at December 31, 1997.
STOCKHOLDERS' EQUITY - Total stockholders' equity increased $462,000, or 1.0%,
to $45.0 million at March 31, 1998, compared to $44.6 million at December 31,
1997. The increase was primarily attributable to $764,000 of net income and
credits of $179,000 reflecting the value of participants' earnings related to
stock-based compensation plans, all of which was partially offset by $140,000
for the purchase of 6,000 common shares of Treasury Stock, $262,000 in
dividends declared on common stock, and a $79,000 decrease in unrealized gain
on securities available for sale, net of deferred taxes. Stockholders' equity
funded 15.3% of assets at March 31, 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 Board of Directors declared dividends of $0.11 per share to be paid on
April 15, 1998.
RESULTS OF OPERATIONS
GENERAL - The Company reported net income of $764,000 for the three months
ended March 31, 1998, compared to net income of $771,000 for the three months
ended March 31, 1997. The .9% decrease in net income for the quarter ended
March 31, 1998, as compared to the quarter ended March 31, 1997, was due
primarily to a slightly higher effective income tax rate for the quarter ended
March 31, 1998. Income before taxes was stable for the quarters ended March
31, 1998 and 1997, at $1.2 million.
12
<PAGE> 13
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 Bank 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 March 31,
--------------------------------------------
1998
--------------------------------------------
Average
Average Yield/
Balance Interest Cost
------------ ------------- ----------
(Dollars in Thousands)
<S> <C> <C> <C>
Interest-earning assets:
Loans receivable:
Real estate mortgage loans $ 183,712 $ 3,594 7.83%
Commercial business loans 15,500 364 9.39%
Consumer and other loans 15,936 376 9.44%
------------ -------------
Total loans 215,148 4,334 8.06%
Mortgage-backed securities 30,191 531 7.04%
Investment securities (1) 13,962 223 6.39%
Other earning assets 17,780 219 4.93%
------------ -------------
Total interest-earning assets 277,081 5,307 7.66%
------------ -------------
Noninterest-earning assets 6,359
------------
Total assets $ 283,440
============
Interest-bearing liabilities:
Deposits:
Demand deposits $ 19,509 143 2.93%
Passbook savings deposits 23,204 124 2.14%
Certificates of deposit 141,842 2,005 5.65%
------------ -------------
Total deposits 184,555 2,272 4.92%
Advance from FHLB 43,399 604 5.57%
------------ -------------
Total interest-bearing liabilities 227,954 2,876 5.05%
Noninterest-bearing demand deposits 8,140 -------------
Other noninterest-bearing liabilities 2,431
------------
Total liabilities 238,525
Stockholders' equity 44,915
------------
Total liabilities and stockholders' $ 283,440
============
Net interest-earning assets $ 49,127
============
Net interest income/interest rate spread $ 2,431 2.61%
============= ==========
Net interest margin 3.51%
==========
Ratio of average interest-earning assets
to average interest-bearing liabilities 121.55%
=============
<CAPTION>
Three Months Ended March 31,
----------------------------------------------
1997
----------------------------------------------
Average
Average Yield/
Balance Interest Cost
------------- ------------ ------------
(Dollars in Thousands)
<S> <C> <C> <C>
Interest-earning assets:
Loans receivable:
Real estate mortgage loans $ 158,904 $ 3,203 8.06%
Commercial business loans 7,863 181 9.21%
Consumer and other loans 16,528 372 9.00%
------------- ------------
Total loans 183,295 3,756 8.20%
Mortgage-backed securities 34,235 611 7.14%
Investment securities (1) 21,982 384 6.99%
Other earning assets 16,425 202 4.92%
------------- ------------
Total interest-earning assets 255,937 4,953 7.74%
------------
Noninterest-earning assets 5,686
-------------
Total assets $ 261,623
=============
Interest-bearing liabilities:
Deposits:
Demand deposits $ 16,460 $ 61 1.48%
Passbook savings deposits 24,086 131 2.18%
Certificates of deposit 146,563 2,102 5.74%
------------- ------------
Total deposits 187,109 2,294 4.90%
Advance from FHLB 22,250 301 5.41%
------------- ------------
Total interest-bearing liabilities 209,359 2,595 4.96%
Noninterest-bearing demand deposits 3,368 ------------
Other noninterest-bearing liabilities 2,278
-------------
Total liabilities 215,005
-------------
Stockholders' equity 46,618
-------------
Total liabilities and stockholders' $ 261,623
=============
Net interest-earning assets $ 46,578
=============
Net interest income/interest rate spread $ 2,358 2.78%
============ ============
Net interest margin 3.69%
============
Ratio of average interest-earning assets
to average interest-bearing liabilities 122.25%
============
</TABLE>
(1) Includes FHLB Stock.
13
<PAGE> 14
NET INTEREST INCOME - Net interest income increased slightly, by $73,000, or
3.1%, for the three months ended March 31, 1998, to $2.4 million, compared to
$2.4 million for the three months ended March 31, 1997. The increase was due
to a $354,000, or 7.1%, increase in interest income which was partially offset
by an increase in interest expense of $281,000, or 10.8%. The increase in
interest income was the result of an $21.1 million, or 8.3%, increase in the
average balances of interest-earning assets which was partially offset by an 8
basis point (100 basis points being equal to 1%) decrease in the yield thereon.
The increase in interest expense was the result of an $18.6 million, or 8.9%,
increase in the average interest-bearing liabilities together with a 9 basis
point increase in 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 2.61% and 3.51%, respectively, during the three months ended March
31, 1998 compared to 2.78% and 3.69%, respectively, for the comparable period
in 1997.
INTEREST INCOME - The Company's total interest income was $5.3 million for the
three months ended March 31, 1998, compared to $5.0 million for the three
months ended March 31, 1997. The reason for the $354,000, or 7.1%, increase in
interest income was a $578,000, or 15.4%, increase in interest income from
loans and a $14,000 or 6.9%, increase in interest income from interest-bearing
deposits, which was partially offset by a $80,000, or 13.1%, decrease in
interest income from mortgage-backed securities, and a $158,000, or 41.1%,
decrease in interest income from investment securities. The increase in
interest income from loans was the result of a $31.9 million, or 17.4%,
increase in the average balance of loans, which was partially offset by a 14
basis point decrease in the yield thereon. The decrease in interest income
from investment securities was the result of a $8.0 million, or 36.5%, decrease
in the average balance of investments together with a 52 basis point decrease
in the yield thereon. The decrease in interest income on mortgage-backed
securities was the result of a $4.0 million, or 11.8%, decrease in the average
balance of mortgage-backed securities, together with an decrease of 10 basis
point 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 $1.4 million increase in the average balance of other
earning assets, which was partially offset by a 6 basis point decrease in the
yield thereon.
INTEREST EXPENSE - The Company's total interest expense was $2.9 million during
the three months ended March 31, 1998, compared to $2.6 million for the three
months ended March 31, 1997. The $281,000 increase in interest expense was
comprised of an increase of $303,000 in interest expense on advances from the
FHLB, which was partially offset by a decrease of $22,000 in interest expense
on deposits. The decrease in interest expense on deposits was the result of a
decrease of $2.6 million, or 1.4%, in average balances in interest bearing
deposits which was partially offset by an increase 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 $21.1 million, together
with an increase of 16 basis points in the cost thereon.
PROVISION FOR LOAN LOSSES - The provision for loan losses was $45,000
for the three months ended March 31, 1998 and 1997. The Company's
non-performing assets amounted to .16% of total assets at March 31, 1998
compared to .31% at December 31,
14
<PAGE> 15
1997. In addition, the ratio of the Bank's allowance for loan losses to
non-performing loans and troubled debt restructurings was 290.32% at March 31,
1998 compared to 208.64% at December 31, 1997. During the three months ended
March 31, 1998, the Company charged-off $39,000 of loans and recovered $24,000
of loans previously charged-off. During the three months ended March 31, 1997,
the Company charged-off $71,000 of loans and recovered $17,000 of loans
previously charged-off.
NON-INTEREST INCOME - Non-interest income increased $123,000 or 47.1%, for the
three months ended March 31, 1998 to $384,000, compared to $261,000 for the
three months ended March 31, 1997. Such increase was due primarily to an
increase of $87,000 on investment securities gains (net) and a $45,000 net gain
on sale of fixed rate loans, both of which were partially offset by a decrease
in servicing fees on loans sold of $6,000. The gain from the sale of loans
reflects the Company's decision to sell certain newly originated fixed rate
loans. The investment gains are related to the Company's trading portfolio.
NON-INTEREST EXPENSE - Non-interest expense increased $171,000, or 12.2%, for
the three months ended March 31, 1998, to $1.6 million, compared to $1.4
million for the three months ended March 31, 1997. The primary reasons for
such increase were a $103,000, or 13.5%, increase in salaries and employee
benefits, a $50,000, or 116.3%, increase in advertising, and a $22,000, or
25.6%, increase in bank share and franchise tax expense. 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, and the
increased cost of 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 $22.237 for
the quarter ended March 31, 1998, compared to $16.848 for the quarter ended
March 31, 1997.
INCOME TAXES - Income tax expense was $432,000 for the three months ended March
31, 1998, compared to $400,000 for the three months ended March 31, 1997 due
primarily to a slightly higher effective income tax rate for the quarter ended
March 31, 1998. Income before income taxes was stable, remaining at $1.2
million for the three months ended March 31, 1998 and 1997.
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 $127.7 million from the FHLB of Dallas, which together with the
current
15
<PAGE> 16
advances, would be secured by mortgage loans under an existing blanket
collateral agreement, and by Federal Home Loan Bank Stock. At March 31, 1998,
the Company had $49.7 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 March 31, 1998, the total approved commitments to extend credit
amounted to $29.4 million. At that same date, certificates of deposit
scheduled to mature in one year or less totaled $65.3 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
16
<PAGE> 17
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 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 March 31, 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 March 31, 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% $ 10,902 12.47% $ 33,982 8.47% $ 23,080
Risk-based capital ratios:
Tier I 4.00% $ 5,884 23.10% $ 33,982 19.10% $ 28,098
Total 8.00% $ 11,767 24.36% $ 35,832 16.36% $ 24,065
</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 50% of the net proceeds retained from the Conversion, and its sources
of income consists primarily of earnings from the investment of such funds 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.
17
<PAGE> 18
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.
On April 29, 1998 the Company held the annual meeting of the
stockholders for the following purposes: (1) to elect three directors
for a three-year term expiring in 2000, and until their successors are
elected and qualified; (2) to ratify the appointment by the Board of
Directors of Castaing, Hussey & Lolan, L.L.P. as the Company's
independent auditors for the fiscal year ending December 31, 1998.
Votes were cast as follows:
<TABLE>
<CAPTION>
- - ----------------------------------------------------------------------------------------------------------------
1 (a) Al W. 1 (b) James J. 1 (c) Kaliste J. 2 Castaing, Hussey &
Beacham, M.D. Montelaro Saloom, Jr. Lolan, L. L. P.
- - ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
For 2,236,075 2,236,925 2,236,925 2,233,808
- - ----------------------------------------------------------------------------------------------------------------
Against 1,050
- - ----------------------------------------------------------------------------------------------------------------
Abstain/Withheld 1,675 825 825 2,892
- - ----------------------------------------------------------------------------------------------------------------
Total Votes Cast 2,237,750 2,237,750 2,237,750 2,237,750
- - ----------------------------------------------------------------------------------------------------------------
</TABLE>
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.
18
<PAGE> 19
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: May 8, 1998 By: /s/ GERALD G. REAUX, JR.
------------------------------------
Gerald G. Reaux, Jr., President and
Chief Executive Officer
Date: May 8, 1998 By: /s/ EMILE E. SOULIER, III
------------------------------------
Emile E. Soulier, III, Vice-President
and Chief Financial Officer
19
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 793
<INT-BEARING-DEPOSITS> 29,719
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 919
<INVESTMENTS-HELD-FOR-SALE> 25,664
<INVESTMENTS-CARRYING> 12,702
<INVESTMENTS-MARKET> 12,769
<LOANS> 218,361
<ALLOWANCE> 2,790
<TOTAL-ASSETS> 293,507
<DEPOSITS> 195,885
<SHORT-TERM> 22,000
<LIABILITIES-OTHER> 2,870
<LONG-TERM> 27,728
0
0
<COMMON> 27
<OTHER-SE> 44,997
<TOTAL-LIABILITIES-AND-EQUITY> 293,507
<INTEREST-LOAN> 4,334
<INTEREST-INVEST> 757
<INTEREST-OTHER> 216
<INTEREST-TOTAL> 5,307
<INTEREST-DEPOSIT> 2,272
<INTEREST-EXPENSE> 2,876
<INTEREST-INCOME-NET> 2,431
<LOAN-LOSSES> 45
<SECURITIES-GAINS> 95
<EXPENSE-OTHER> 1,574
<INCOME-PRETAX> 1,196
<INCOME-PRE-EXTRAORDINARY> 1,196
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 764
<EPS-PRIMARY> 0.33
<EPS-DILUTED> 0.32
<YIELD-ACTUAL> 7.66
<LOANS-NON> 433
<LOANS-PAST> 0
<LOANS-TROUBLED> 509
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 2,760
<CHARGE-OFFS> 39
<RECOVERIES> 24
<ALLOWANCE-CLOSE> 2,790
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 2,790
</TABLE>
