UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 0-20911
ALGIERS BANCORP, INC.
(Exact name of small business issuer as specified in its charter)
LOUISIANA 72 - 1317594
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
#1 WESTBANK EXPRESSWAY, NEW ORLEANS, LOUISIANA 70114
(Address of principal executive offices)
Issuer's telephone number, including area code: (504) 367-8222
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the issuer was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [ X ] No [ ]
Shares of common stock, par value $.01 per share, outstanding as of September
30, 1998: 584,842
Transitional Small Business Disclosure Format (check one):
Yes [ ] No [ X ]
<PAGE>
Algiers Bancorp, Inc.
Form 10-QSB
Quarter Ended September 30, 1998
PART I - FINANCIAL INFORMATION
Interim Financial Information required by Rule 10-01 of Regulation S-X and Item
303 of Regulation S-B is included in this Form 10-QSB as referenced below:
Item 1 - Financial Statements Page
Consolidated Statements Of Financial Condition (Unaudited)
At September 30, 1998 and December 31, 1997....................... 3
Consolidated Statements Of Income (Unaudited) For the Three and
Nine Months Ended September 30, 1998 and 1997....................... 5
Consolidated Statements Of Cash Flows (Unaudited) For the
Nine Months Ended September 30, 1998 and 1997....................... 7
Notes to Consolidated Financial Statements.......................... 9
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations...................................... 11
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings......................................... 15
Item 2 - Changes in Securities..................................... 15
Item 3 - Defaults Upon Senior Securities........................... 15
Item 4 - Submission of Matters to a Vote of Security-Holders....... 15
Item 5 - Other Information......................................... 15
Item 6 - Exhibits and Reports on Form 8-K.......................... 15
Signatures......................................................... 16
<PAGE>
<TABLE>
<CAPTION>
ALGIERS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
ASSETS
September 30, December 31,
1998 1997
------- -------
(Unaudited)
(In Thousands)
<S> <C> <C>
Cash and Cash Equivalents $ 448 $ 482
Interest-Bearing Deposits in Other Banks 4,082 2,073
Investments Available-for-Sale - at Fair Value (Note 2) 6,479 4,087
Loans Receivable - Net 9,882 9,198
Mortgage-Backed Securities - Available-for-Sale -
at Fair Value (Note 2) 24,903 6,615
Mortgage-Backed Securities - Held-to-Maturity - Fair Value
of $21,580 -- 21,830
Stock in Federal Home Loan Bank 490 483
Accrued Interest Receivable 390 269
Real Estate Owned - Net 62 --
Office Properties and Equipment, at Cost - Furniture,
Fixtures and Equipment, Less Accumulated
Depreciation of $224 and $212, respectively 382 253
Investment in Subsidiary 139 --
Accounts Receivable 99 --
Deferred Charges -- 19
Other Assets 89 3
------- -------
Total Assets $47,445 $45,312
======= =======
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
-3-
<PAGE>
<TABLE>
<CAPTION>
ALGIERS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
September 30 December 31,
1998 1997
-------- --------
LIABILITIES (Unaudited)
(In Thousands)
<S> <C> <C>
Deposits $ 37,945 $ 35,534
Advance Payments from Borrowers for
Insurance and Taxes 91 112
Accured Interest Payable on Depositors' Accounts 32 1
Dividends Payable 29 31
Deferred Tax Liability 28 28
Income Taxes Payable 35 17
Other Liabilities 42 53
-------- --------
Total Liabilities 38,202 35,776
-------- --------
STOCKHOLDERS' EQUITY
Stockholders' Equity
Common Stock, $.01 Par Value; Authorized
10,000,000 Shares, 648,025 Issued Shares 6 6
Treasury Stock, 63,182 shares and 32,401 shares
respectively, at cost (844) (472)
Paid-in Capital in Excess of Par 6,136 6,122
Retained Earnings 4,395 4,299
Unrealized Gain (Loss) on Securities Available-for-Sale,
Net of Applicable Deferred Income Tax 3 14
-------- --------
9,696 9,969
-------- --------
Less: Unearned ESOP Shares (405) (433)
Unearned MRP Shares (48 --
-------- --------
(453) (433)
Total Stockholders' Equity 9,243 9,536
-------- --------
Total Liabilities and Stockholders' Equity $ 47,445 $ 45,312
======== ========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
-4-
<PAGE>
<TABLE>
<CAPTION>
ALGIERS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended Nine Months Ended
September 30 September 30 September 30 September 30
1998 1997 1998 1997
------ ------ ------ ------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
(In Thousands) (In Thousands)
<S> <C> <C> <C> <C>
INTEREST INCOME
Loans $ 152 $ 197 $ 623 $ 578
Mortgage-Backed Securities 444 479 1,282 1,540
Investment Securities 125 90 330 161
Other Interest-Earning Assets 39 (10) 103 131
------ ------ ------ ------
Total Interest Income 760 756 2,338 2,310
------ ------ ------ ------
INTEREST EXPENSE
Deposits 466 434 1,342 1,290
FHLB Advances -- 1 -- 29
------ ------ ------ ------
Total Interest Expense 466 435 1,342 1,319
------ ------ ------ ------
NET INTEREST INCOME BEFORE
PROVISION FOR LOAN LOSSES 294 321 996 991
PROVISION FOR LOAN LOSSES -- -- -- --
------ ------ ------ ------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 294 321 996 991
------ ------ ------ ------
NON INTEREST INCOME
Gain - Sale of Investments -- 10 31 11
Service Charges and Fees 81 39 107 115
Recapture of Allowance on GIC Bonds -- -- 2 62
Recovery of GIC Bonds Previously
Written Off -- -- -- 54
Miscellaneous Income (3) 33 14 57
------ ------ ------ ------
Total Non-Interest Income 78 82 154 299
------ ------ ------ ------
</TABLE>
(Continued on Following Page)
The accompanying notes are an integral part of these
consolidated financial statements.
-5-
<PAGE>
<TABLE>
<CAPTION>
ALGIERS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended Nine Months Ended
September 30 September 30 September 30 September 30
1998 1997 1998 1997
----- ----- ----- -----
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
(In Thousands) (In Thousands)
<S> <C> <C> <C> <C>
NON-INTEREST EXPENSES
Compensation and Benefits $ 125 $ 207 $ 420 $ 589
Occupancy and Equipment 47 48 140 148
Computer 20 8 50 31
Deposit Insurance Premium 8 6 19 12
Professional Services 19 34 86 89
FHLB Service Charges 2 6 14 18
Real Estate Owned Expenses 3 -- 5 2
(Recovery of) Provision for Losses on
Real Estate Owned -- -- (10) --
Other 48 59 175 151
----- ------ ------ -----
Total Non-Interest Expense 272 368 899 1,040
----- ------ ------ -----
INCOME BEFORE FEDERAL
INCOME TAX EXPENSE 100 35 251 250
FEDERAL INCOME TAX EXPENSE 20 70 66 122
----- ------ ------ -----
NET INCOME 80 (35) 185 128
OTHER COMPREHENSIVE INCOME-
NET OF INCOME TAX
Unrealized Gains (Losses) on Securities 35 3 (11) 10
===== ====== ====== =====
COMPREHENSIVE INCOME $ 115 $ (32) $ 174 $ 138
===== ====== ====== =====
EARNINGS PER SHARE
Basic $0.24 $(0.06) $ 0.34 $0.20
===== ====== ====== =====
Fully Diluted $0.24 $(0.06) $ 0.34 $0.20
===== ====== ====== =====
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
-6-
<PAGE>
<TABLE>
<CAPTION>
ALGIERS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended
September 30 September 30
1998 1997
------- -------
(Unaudited) (Unaudited)
(In Thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 185 $ 128
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities:
Depreciation and Amortization 15 21
Premium Amortization Net of Discount Accretion (46) 69
Stock Dividend - FHLB (7) (20)
Gain on Sale of Investments (31) (11)
ESOP and MRP Expense 54 52
Increase in Accrued Interest Payable 31 3
(Decrease) Increase in Other Liabilities (11) 62
Increase in Accrued Interest Receivable (121) (7)
Increase in Income Tax Payable 18 91
Decrease in Dividends Payable -- --
(Increase) in Real Estate Owned -- --
Increase in Other Assets (86) (4)
Decrease in Deferred Loan Fees 19 --
Decrease in Deferred Charges -- (19)
(Increase) in Accounts Receivable (99) --
Decrease in Prepaid Income Taxes -- 64
(increase) Decrease in Deferred Income Taxes (5) 33
------- -------
Net Cash (Used In) Provided by Operating Activities (84) 462
------- -------
Maturities of Investment Securities - Held-to-Maturity -- 625
Purchase of Investment Securities - Available-for-Sale (6,077) (1,880)
Maturities of Investment Securities - Available-for-Sale 3,685 500
Purchases of Mortgage- Backed Securities - Held-to-Maturity (1,406) (185)
Maturities of Mortgage- Backed Securities - Held-to-Maturity 3,399 1,847
Purchases of Mortgage- Backed Securities - Available-for-Sale -- (490)
Maturities of Mortgage-Backed Securities - Available-for-Sale 426 1,023
Proceeds from Sale of Mortgage Backed Securities - Available-for-Sale 1,194 1,661
Principal Collected on Loans 2,558 1,080
Loans Made to Customers (3,347) (1,140)
Purchase of Furniture and Fixtures (283) (36)
(Increase) in Investment in Subsidiary 43 --
------- -------
Net Cash Provided by (Used In) Investing Activities 192 3,005
------- -------
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
-7-
<PAGE>
<TABLE>
<CAPTION>
ALGIERS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended
September 30 September 30
1998 1997
------- -------
(Unaudited) (Unaudited)
(In Thousands)
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Net Increase (Decrease) in Deposits $ 2,411 $(1,117)
Net Decrease in Advances from
Borrowers for Taxes and Insurance (21) (107)
Repayment of Federal Home Loan Advance -- (1,500)
Purchase of Treasury Stock (432) (451)
Dividends Paid on Common Stock (91) (62)
------- -------
Net Cash Provided by (Used in) Financing Activities 1,867 (3,237)
------- -------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 1,975 230
CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR 2,555 1,722
------- -------
CASH AND CASH EQUIVALENTS - END OF YEAR $ 4,530 $ 1,952
======= =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash Paid During the Year for:
Interest $ 1,311 $ 1,316
Income Taxes $ 48 $ --
SUPPLEMENTAL DISCLOSURE OF NON-CASH TRANSACTIONS
Dividends Declared $ 89 $ 31
Mortgage-Backed Securities transferred from Held-to-Maturity $19,837 $ --
to Available-for-Sale
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
-8-
<PAGE>
Algiers Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
September 30, 1998
Note 1 - Basis of Presentation -
The accompanying consolidated financial statements for the three and
nine months ended September 30, 1998 include the accounts of Algiers Bancorp,
Inc. (the "Company"), its wholly owned subsidiary, Algiers Homestead Association
(the "Association") and its wholly-owned subsidiary, Algiers.Com, Inc., L.L.C.
("ACI"). Currently, the business and management of Algiers Bancorp, Inc. is
primarily the business and management of the Association. All significant
intercompany transactions and balances have been eliminated in the
consolidation. ACI owns a 51% interest in Planet Mortgage, Inc., L.L.C. that is
engaged in the formation of an Internet site for the solicitation of mortgage
loans and the sale of advertising space to real estate related companies. No
income or expense for the activities of ACI was incurred during this quarter. It
is anticipated that the web site will be functional in the fourth quarter of
1998.
On February 5, 1996, the Association incorporated Algiers Bancorp,
Inc., to facilitate the conversion of the Association from mutual to stock form
(the "Conversion"). In connection with the Conversion, the Company offered its
common stock to the depositors and borrowers of the Association as of specified
dates, to an employee stock ownership plan and to members of the general public.
Upon consummation of the Conversion on July 8, 1996, all of the Association's
outstanding common stock was issued to the Company, the Company became the
holding company for the Association and the Company issued 648,025 shares of
common stock. The Conversion was accounted for under the pooling of interests
method of accounting.
The accompanying consolidated unaudited financial statements were
prepared in accordance with instructions for Form 10-QSB 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 adjustments (consisting
only of normal recurring accruals) which, in the opinion of management, are
necessary for a fair presentation of the consolidated financial statements have
been included. The results of operations for the nine months ended September 30,
1998 are not necessarily indicative of the results to be expected for the year
ending December 31, 1998.
Note 2 - Available for Sale Securities-
A new accounting standard SFAS No. 133 allows the transfer from
investments held-to-maturity to investments available-for-sale. As of September
30, 1998 the Company adopted this new standard and transferred $19.8 million of
mortgage-backed securities from held-to-maturity to available-for-sale.
Investments and mortgage-backed securities available-for-sale at September 30,
1998 and December 31, 1997 are summarized as follows (in thousands):
<PAGE>
<TABLE>
<CAPTION>
September 30, 1998
----------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
------ ------- ----- ------
<S> <C> <C> <C> <C>
Investments $ 6,489 $ -- $ (10) $ 6,499
======= ======= ===== =======
GNMA Certificates $ 3,236 $ -- $ (10) $ 3,226
FNMA Certificates 17,293 -- (14) 17,279
FHLMC Certificates 4,371 27 -- 4,398
------- ------- ----- ------
$24,900 $ 27 $ (24) $24,903
======= ======= ===== =======
<CAPTION>
December 31, 1997
----------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
------ ------- ----- ------
<S> <C> <C> <C> <C>
Investments $4,093 $ 11 $ 17 $4,087
====== ======= ===== ======
GNMA Certificates $ 502 $ 9 $ 1 $ 510
FNMA Certificates 4,902 96 35 4,963
FHLMC Certificates 1,132 18 8 1,142
------ ------- ----- ------
$6,536 $ 123 $ 44 $6,615
====== ======= ===== ======
</TABLE>
-9-
<PAGE>
Note 3 - Employee Stock Ownership Plan-
The Company sponsors a leveraged employee stock ownership plan (ESOP)
that covers all employees who have at least one year of service with the
Company. The ESOP shares initially were pledged as collateral for the ESOP debt.
The debt is being repaid based on a ten-year amortization and the shares are
being released for allocation to active employees annually over the ten-year
period. The shares pledged as collateral are deducted from stockholders' equity
as unearned ESOP shares in the accompanying Consolidated Statements of Financial
Condition.
As shares are released from collateral, the Company reports
compensation expense equal to the current market price of the shares. Dividends
on allocated ESOP shares are recorded as a reduction of retained earnings;
dividends on unallocated ESOP shares are recorded as a reduction of unearned
ESOP shares. ESOP compensation expense was $42,000 and $52,000 for the nine
months ended September 30, 1998 and 1997, respectively, based on the annual
release of shares.
Note 4 - Management Recognition Plan-
On July 18, 1997, the Company established the 1997 Recognition and
Retention Plan as an incentive to retain personnel of experience and ability in
key positions. A total of 25,921 shares of stock of the Company will be acquired
by the Plan.
Plan share awards are earned by recipients at a rate of 20% of the
aggregate number of shares awarded by the plan over five years. If the
employment of an employee or service as a non-employee director is terminated
prior to the fifth anniversary of the date of grant of a plan share award for
any reason other than death, disability or retirement, the recipient shall
forfeit the right to any shares subject to the award which have not been earned.
During the nine months ended September 30, 1998, a total of 4,502 shares were
awarded under the Plan. Those shares will be taken from the treasury stock the
Company currently owns until such time as the total number of shares under the
Plan can be purchased. For the nine months ended September 30, 1998, $12,000 was
included in compensation expense for the shares awarded under the Plan in 1998.
-10-
<PAGE>
ALGIERS BANCORP, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
The following discussion compares the consolidated financial condition
of Algiers Bancorp, Inc. and Subsidiaries at September 30, 1998 to December 31,
1997 and the results of operations for the three and nine months ended September
30, 1998 with the same periods in 1997. Currently, the business and management
of Algiers Bancorp, Inc. is primarily the business and management of the
Association. This discussion should be read in conjunction with the interim
consolidated financial statements and footnotes included herein.
This quarterly report includes statements that may constitute
forward-looking statements, usually containing the words "believe," "estimate,"
"project," "expect," "intend" or similar expressions. These statements are made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements inherently involve risks and
uncertainties that could cause actual results to differ materially from those
reflected in the forward-looking statements. Factors that could cause future
results to vary from current expectations include, but are not limited to, the
following: changes in economic conditions (both generally and more specifically
in the markets in which the Company operates); changes in interest rates,
deposit flows, loan demand, real estate values and competition; changes in
accounting principles, policies or guidelines and in government legislation and
regulation (which change from time to time and over which the Company has no
control); and other risks detailed in this quarterly report and in the Company's
other public filings. Readers are cautioned not to place undue reliance on these
forward-looking statements, which reflect management's analysis only as of the
date hereof. The Company undertakes no obligation to publicly revise these
forward-looking statements to reflect events or circumstances that arise after
the date hereof.
Changes in Financial Condition
Total assets increased $2.1 million or 4.6% from $45.3 million at
December 31, 1997 to $47.4 million at September 30, 1998. The increase in assets
is primarily due to an increase in deposits, loans and investment securities
available for sale.
Interest-earning deposits in other banks and investments was $10.6
million at September 30, 1998 and $6.2 million at December 31, 1997. This
increase was due to the purchase of $6.1 million of investment securities during
the nine months ending September 30, 1998. These assets currently provide a
higher yield than mortgage-backed securities and have shorter maturities.
The mortgage-backed securities portfolio decreased $3.5 million or
12.3% from $28.4 million at December 31, 1997 to $24.9 million at September 30,
1998, as the amount of mortgage-backed securities maturing increased and new
mortgage-backed securities purchased increased slightly. Mortgage-backed
securities amounted to $24.9 million or 52.5% of total assets at September 30,
1998, compared to $28.4 million or 62.7% of total assets at December 31, 1997.
Due to an increase in the demand for single-family mortgage loans in
the Association's market area, the loan portfolio increased $700,000 or 7.6%
over the past nine months from $9.2 million at December 31, 1997 to $9.9 million
at September 30, 1998.
<PAGE>
Total deposits increased $2.4 million or 6.8% to $37.9 million at
September 30, 1998 from $35.5 million at December 31, 1997. The increase was
primarily in certificate of deposit accounts.
Total stockholders' equity declined by $293,000 during the past nine
months. Net income was $185,000, and additional paid -in capital increased by
$14,000, but these items were offset by the purchase of $432,000 of treasury
stock, an $11,000 decrease in the reserve for unrealized loss on securities
available-for-sale during the period, and a $29,000 dividend declared on common
stock. Stockholders' equity at September 30, 1998 totaled $9.24 million or 19.5%
of total assets compared to $9.54 million or 21.1% of total assets at December
31, 1997.
Results of Operations
The profitability of the Company depends primarily on its net interest
income, which is the difference between interest and dividend income on
interest-earning assets, principally mortgage-backed securities, loans and
investment securities, and interest expense on interest-bearing deposits and
borrowings. Net interest income is dependent upon the level of interest rates
and the extent to which such rates are changing. The Company's profitability
also is dependent, to a lesser extent, on the level of its non-interest income,
provision for loan losses, non-interest expense and income taxes. For the nine
months ended September 30, 1998, net interest income before provision for loan
losses was more than total non-interest expense. During the nine months ended
September 30, 1997, net interest income before provision for loan losses was
nominally less than total non-interest expense due to the additional expenses
incurred in connection with the benefit plans that were adopted as a result of
the conversion to stock. Total non-interest expense consists of general,
administrative and other expenses, such as compensation and benefits, occupancy
and equipment expense, federal insurance premiums, and miscellaneous other
expenses.
-11-
<PAGE>
The Company's net income for the three months ended September 30, 1998
increased $115,000 or 328.6% compared to the three months ended September 30,
1997. The increase was due to an increase of $4,000 or .53% in interest income,
a decrease of $96,000 or 26.1% in non-interest expense and a decrease of $50,000
or 71.4% in income tax expense partially offset by a $31,000 or 7.1% increase in
interest expense and a decrease of $4,000 or 4.9% in non-interest income.
The Company's net income for the nine months ended September 30, 1998
increased $57,000 or 44.5% compared to the nine months ended September 30, 1997.
The increase was due to an increase of $28,000 or 12.1% in interest income, a
decrease of 141,000 or 13.6% in non-interest expense and a decrease of $61,000
or 50.0% in income tax expense partially offset by a $23,000 or 17.4% increase
in interest expense and a decrease of $145,000 or 48.5% in non-interest income.
Total interest income increased by $28,000 or 1.2% during the nine
months ended September 30, 1998 compared to the nine months ended September 30,
1997, due to an increase in the average yield on interest-earning assets from
6.77% in the first nine months of 1997 to 7.13% in the first nine months of
1998. The higher yield was partially offset by a $300,000 million or 7.06%
decrease in average interest-earning assets. The decrease in the average balance
was primarily due to the pay off of a $1.5 million advance from the Federal Home
Loan Bank, the Company's repurchase of $432,000 of common stock since December
31, 1997 and the payment of dividends on common stock of $89,000. Total interest
expense decreased by $23,000 or 1.7% in the nine months ending September 30,
1998 compared to the nine months ending September 30, 1997, primarily due to
decreases in FHLB advances of $600,000 million and a decrease in average
deposits of $839,000 or 2.3% in the first nine months of 1998 over the
comparable 1997 period. The lower average balance was partially offset by an
increase the average rate on interest-bearing liabilities to 4.86% from 4.77%
over the same period in 1997.
The increased net interest income of $5,000 was due to an increase in
the average interest rate spread to 2.27% in the first nine months of 1998 from
2.00% in the first nine months of 1997. The higher spread was partially offset
by a decrease of $295,000 or .70% in net average interest-earning assets in the
nine months ended September 30, 1998 over the comparable 1997 period. The
average yield on interest-earning assets increased to 7.13% during the nine
months ended September 30, 1998 compared to 6.77% during the nine months ended
September 30, 1997. The increased yield on assets was primarily due to an
increase in the average rate earned on investments. In the nine months ending
September 30, 1998, the Company used a portion of its maturing mortgage-backed
securities and interest-earning deposits in other banks to fund the repurchase
of $432,000 of its outstanding common stock and to purchase $6.1 million of
investments issued by agencies of the U.S. Government. The average rate on
deposits increased from 4.77% during the first nine months of 1997 to 4.86%
during the first nine months of 1998.
During the quarter ended September 30, 1998 compared to the same period
of 1997, non-interest income decreased $4,000 due to a decrease of $36,000 in
miscellaneous income a decrease of $10,000 in gain on sale of investments,
partially offset by a $42,000 increase in service charges and fees.
The Association had no provision or credit for loan losses in the nine
months ended September 30, 1998 and 1997. Total non-performing loans at
September 30, 1998 were $771,000 compared to $636,000 at December 31, 1997, and
the allowance for loan losses at September 30, 1998 was $506,000 compared to
$485,000 at December 31, 1997 attributable to a reduction in the specific
reserve for real estate owned due to the sale of property that was fully
reserved.
<PAGE>
The decrease in non-interest income in the nine months ended September
30, 1998 was due to a decrease of $60,000 in recapture of allowance on GIC
bonds, a decrease of $54,000 in recovery of GIC bonds previously written off,
and a decrease of $8,000 in service charges and fees, offset by an increase of
$20,000 in gain on sale of investments.
The $141,000 decrease in total non-interest expense in the nine months
ended September 30, 1998 was due to a $169,000 decrease in compensation expense,
a $8,000 decrease in occupancy and equipment expense, a $3,000 decrease in
professional services, a decrease of $4,000 in FHLB service charges and a
$10,000 recovery of provision for losses on real estate owned partially offset
by a $24,000 increase in other expenses, a $19,000 increase in computer
expenses, a $7,000 increase in deposit insurance premiums, and a $3,000 increase
in real estate owned expenses.
Total non-interest expense decreased $91,000 in the three months ended
September 30, 1998 compared to the three months ended September 30, 1997 due to
a $82,000 decrease in compensation expense, a $15,000 decrease in professional
services, an $11,000 decrease in other expenses, a $4,000 decrease in FHLB
service charges and a $1,000 decrease in occupancy and equipment, partially
offset by a $12,000 increase in computer expenses, a $3,000 increase in real
estate owned expenses, and a $2,000 increase in deposit insurance premiums. The
reduction in the expenses for the three months ending September 30, 1998 is the
result of the closing of the Company's subsidiary Jefferson Community Lending,
LLC.
The $56,000 or 45.9% decrease in income tax expense was primarily due
to an increase of $57,000 or 44.5% in pre-tax income for the nine months ended
September 30, 1998 from the comparable 1997 period.
-12-
<PAGE>
Liquidity and Capital Resources
The Association is required under applicable federal regulations to
maintain specified levels of "liquid" investments in qualifying types of U.S.
Government, federal agency and other investments having maturities of five years
or less. Current OTS regulations require that a savings institution maintain
liquid assets of not less than 4% of its average daily balance of net
withdrawable deposit accounts and borrowings payable in one year or less. At
September 30, 1998, the Association's liquidity was 19.3% or $5.6 million in
excess of the minimum OTS requirement of 4%.
The Association is required to maintain regulatory capital sufficient
to meet tangible, core and risk-based capital ratios of 1.5%, 3.0%, and 8.0%,
respectively. At September 30, 1998, the Association's tangible and core capital
both amounted to $7.4 million or 16.14% of adjusted total assets of $46.0
million, and the Association's risk-based capital amounted to $7.3 million or
63.03% of adjusted risk-weighted assets of $12.0 million.
As of September 30, 1998, the Association's unaudited regulatory
capital requirements are as indicated in the following table:
<TABLE>
<CAPTION>
TANGIBLE CORE RISK-BASED
CAPITAL CAPITAL CAPITAL
------- ------- -------
(Dollars in Thousands)
<S> <C> <C> <C>
GAAP Capital $7,424 $7,424 $7,424
Additional Capital Items:
General Valuation Allowances -- -- 148
------ ------ ------
Regulatory Capital 7,424 7,424 7,276
Minimum Capital Requirement 961 1,840 961
------ ------ ------
Regulatory Capital Excess $6,463 $5,584 $6,315
====== ====== ======
Regulatory Capital as a
Percentage 16.14% 16.14% 63.03%
Minimum Capital Required
as a Percentage 1.50% 3.00% 8.00%
------ ------ ------
Regulatory Capital as a
Percentage in Excess
of Requirements 14.64% 13.14% 55.03%
====== ====== ======
</TABLE>
Based on the above capital ratios, the Association meets the criteria
for a "well capitalized" institution at September 30, 1998. The Association's
management believes that under the current regulations, the Association will
continue to meet its minimum capital requirements in the foreseeable future.
However, events beyond the control of the Association, such as increased
interest rates or a downturn in the economy of the Association's area, could
adversely affect future earnings.
-13-
<PAGE>
The Year 2000
The Company is currently addressing the computer and data processing
issues relating to the Year 2000. Management has completed the assessment phase
and certain hardware and software, which is not Year 2000 compliant, have been
identified which will have to be replaced at a cost of approximately $15,000. In
addition, the Association's on-line data processor has been replaced with an
in-house system that is Year 2000 compliant. The additional cost of conversion
will be approximately $20,000 for additional training and implementation. As of
September 30, 1998 approximately $15,000 has been spent on Year 2000 issues. It
is management's opinion that issues related to the Year 2000 are not likely to
have a material adverse effect on the Company's liquidity, capital resources or
results of operations on a consolidated basis.
Common Stock Repurchase Plan
On March 12, 1997, the Company received permission from the Office of
Thrift Supervision ("OTS") to repurchase up to 32,401 shares or 5.0% of the
Company's then outstanding common stock. Pursuant to the plan, the Company
purchased 29,901 shares of its common stock on April 1, 1997 and 2,500 shares of
its common stock on May 7, 1997. These two purchases have fulfilled the number
of shares approved by the OTS.
<PAGE>
On October 15, 1997, the Company received permission from the OTS to
repurchase up to 30,781 shares or 5.0% of the Company's then outstanding common
stock. Several purchases of the Company's common stock were made and the 5.0%
repurchase was completed on April 3, 1998.
The OTS granted the Company permission on September 3, 1998 to
repurchase approximately 14% of the Company's outstanding common stock. The
approval included 21,419 shares to fund the 1997 Management Recognition and
Retention Plan and shares for general corporate purposes. As of September 30,
1998 the Company has not purchased any of these shares.
-14-
<PAGE>
Algiers Bancorp, Inc.
Form 10-QSB
Quarter Ended September 30, 1998
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings:
There are no matters required to be reported under this item.
Item 2 - Changes in Securities:
There are no matters required to be reported under this item.
Item 3 - Defaults Upon Senior Securities:
There are no matters required to be reported under this item.
Item 4 - Submission of Matters to a Vote of Security Holders:
There are no matters required to be reported under this item.
Item 5 - Other Information:
There are no matters required to be reported under this item.
Item 6 - Exhibits and Reports on Form 8-K:
(a) The following exhibit is filed herewith:
EXHIBIT NO. DESCRIPTION
----------- -----------
27.1 Financial Data Schedule
(b) Reports on Form 8-K:
No reports on Form 8-K were filed by the Registrant during
the quarter ended September 30, 1998.
-15-
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of
1934, the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ALGIERS BANCORP, INC.
Registrant
Date: November 16, 1998 By:/s/Hugh E. Humphrey, Jr.
---------------------------
Hugh E. Humphrey, Jr., Chairman
of the Board, President and
Chief Executive Officer
Date: November 16, 1998 By:/s/Dennis J. McCluer
-----------------------
Dennis J. McCluer
Vice President
Date: November 16, 1998 By:/s/Francis Minor, Jr.
------------------------
Francis Minor, Jr.
Chief Financial Officer
-16-
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 448
<INT-BEARING-DEPOSITS> 4,082
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 31,382
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 9,882
<ALLOWANCE> 506
<TOTAL-ASSETS> 47,445
<DEPOSITS> 37,945
<SHORT-TERM> 0
<LIABILITIES-OTHER> 257
<LONG-TERM> 0
0
0
<COMMON> 6
<OTHER-SE> 9,237
<TOTAL-LIABILITIES-AND-EQUITY> 47,445
<INTEREST-LOAN> 623
<INTEREST-INVEST> 1,612
<INTEREST-OTHER> 103
<INTEREST-TOTAL> 2,338
<INTEREST-DEPOSIT> 1,342
<INTEREST-EXPENSE> 1,342
<INTEREST-INCOME-NET> 996
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 31
<EXPENSE-OTHER> 899
<INCOME-PRETAX> 251
<INCOME-PRE-EXTRAORDINARY> 251
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 185
<EPS-PRIMARY> .34
<EPS-DILUTED> .34
<YIELD-ACTUAL> 0
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 485
<CHARGE-OFFS> 0
<RECOVERIES> 21
<ALLOWANCE-CLOSE> 506
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
