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 June 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) 367-8221
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 June 30,
1998: 584,842
Transitional Small Business Disclosure Format (check one): Yes [ ] No [ X ]
<PAGE>
Algiers Bancorp, Inc.
Form 10-QSB
Quarter Ended June 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
Consolidated Statements Of Financial Condition (Unaudited)
At June 30, 1998 and December 31, 1997....................... Page 3
Consolidated Statements Of Income (Unaudited) For the Three and
Six Months Ended June 30, 1998 and 1997........................ 5
Consolidated Statements Of Cash Flows (Unaudited) For the
Six Months Ended June 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
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<PAGE>
<TABLE>
ALGIERS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
ASSETS
<CAPTION>
June 30, December 31,
1998 1997
------- -------
(Unaudited)
(In Thousands)
<S> <C> <C>
Cash and Cash Equivalents $ 522 $ 482
Interest-Bearing Deposits in Other Banks 1,750 2,073
Investments Available-for-Sale - at Fair Value (Note 2) 7,729 4,087
Loans Receivable - Net 10,386 9,198
Mortgage-Backed Securities - Available-for-Sale -
at Fair Value (Note 2) 4,640 6,615
Mortgage-Backed Securities - Held-to-Maturity - Fair Value
of $19,709 and $21,580, respectively 19,833 21,830
Stock in Federal Home Loan Bank 497 483
Accrued Interest Receivable 377 269
Real Estate Owned - Net 105 --
Office Properties and Equipment, at Cost - Furniture,
Fixtures and Equipment, Less Accumulated
Depreciation of $220 and $212, respectively 332 253
Investment in Subsidiary 79 --
Accounts Receivable 92 --
Deferred Charges -- 19
Other Assets 44 3
------- -------
Total Assets $46,386 $45,312
======= =======
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
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<PAGE>
<TABLE>
ALGIERS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
<CAPTION>
June 30 December 31,
1998 1997
-------- --------
LIABILITIES (Unaudited)
(In Thousands)
<S> <C> <C>
Deposits $ 37,049 $ 35,534
Advance Payments from Borrowers for
Insurance and Taxes 92 112
Accured Interest Payable on Depositors' Accounts 7 1
Dividends Payable 29 31
Deferred Tax Liability -- 28
Income Taxes Payable 19 17
Other Liabilities 49 53
-------- --------
Total Liabilities 37,245 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 , at cost (904) (472)
Paid-in Capital in Excess of Par 6,135 6,122
Retained Earnings 4,339 4,299
Unrealized Gain (Loss) on Securities Available-for-Sale,
Net of Applicable Deferred Income Tax (32) 14
-------- --------
9,544 9,969
Less: Unearned ESOP Shares (403) (433)
-------- --------
Total Stockholders' Equity 9,141 9,536
-------- --------
Total Liabilities and Stockholders' Equity $ 46,386 $ 45,312
======== ========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
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<PAGE>
<TABLE>
ALGIERS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30 June 30 June 30
1998 1997 1998 1997
------ ------ ------ ------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
(In Thousands) (In Thousands)
<S> <C> <C> <C> <C>
INTEREST INCOME
Loans $ 243 $ 191 $ 471 $ 381
Mortgage-Backed Securities 407 538 838 1,061
Investment Securities 111 -- 205 71
Other Interest-Earning Assets 25 14 64 41
------ ------ ------ ------
Total Interest Income 786 743 1,578 1,554
------ ------ ------ ------
INTEREST EXPENSE
Deposits 447 429 876 856
FHLB Advances -- 15 -- 28
------ ------ ------ ------
Total Interest Expense 447 444 876 884
------ ------ ------ ------
NET INTEREST INCOME BEFORE
PROVISION FOR LOAN LOSSES 339 299 702 670
PROVISION FOR LOAN LOSSES -- -- -- --
------ ------ ------ ------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 339 299 702 670
------ ------ ------ ------
NON INTEREST INCOME
Gain - Sale of Investments 16 -- 31 1
Service Charges and Fees 12 59 26 76
Recapture of Allowance on GIC Bonds 2 42 2 62
Recovery of GIC Bonds Previously
Written Off -- 54 -- 54
Miscellaneous Income 14 21 17 24
------ ------ ------ ------
Total Non-Interest Income 44 176 76 217
------ ------ ------ ------
</TABLE>
(Continued on Following Page)
The accompanying notes are an integral part of these
consolidated financial statements.
-5-
<PAGE>
<TABLE>
ALGIERS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<CAPTION>
Three Months Ended Six Months Ended
June 30 June 30 June 30 June 30
1998 1997 1998 1997
----- ----- ----- -----
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
(In Thousands) (In Thousands)
<S> <C> <C> <C> <C>
NON-INTEREST EXPENSES
Compensation and Benefits $ 163 $ 196 $ 295 $ 382
Occupancy and Equipment 48 56 93 100
Computer 18 12 30 21
Deposit Insurance Premium 6 5 11 6
Professional Services 28 47 67 45
FHLB Service Charges 9 6 12 12
Real Estate Owned Expenses 1 2 2 2
(Recovery of) Provision for Losses on
Real Estate Owned (4) -- (4) --
Other 40 34 121 103
----- ----- ----- -----
Total Non-Interest Expense 309 358 627 671
----- ----- ----- -----
INCOME BEFORE FEDERAL
INCOME TAX EXPENSE 74 117 151 216
FEDERAL INCOME TAX EXPENSE 20 15 46 52
----- ----- ----- -----
NET INCOME 54 102 105 164
OTHER COMPREHENSIVE INCOME-
NET OF INCOME TAX
Unrealized Gains (Losses) on Securities (12) (130) (32) (17)
===== ===== ===== =====
COMPREHENSIVE INCOME $ 42 $ (28) $ 73 $ 147
===== ===== ===== =====
EARNINGS PER SHARE
Basic $0.09 $0.19 $0.19 $0.29
===== ===== ===== =====
Fully Diluted $0.09 $0.19 $0.19 $0.29
===== ===== ===== =====
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
-6-
<PAGE>
<TABLE>
ALGIERS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
Six Months Ended
June 30 June 30
1998 1997
------- -------
(Unaudited) (Unaudited)
(In Thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 105 $ 164
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities:
Depreciation and Amortization 8 16
Premium Amortization Net of Discount Accretion 7 63
Stock Dividend - FHLB (14) (13)
Gain on Sale of Investments (31) (1)
ESOP and MRP Expense 53 35
Increase in Accrued Interest Payable 6 2
(Decrease) Increase in Other Liabilities (4) 45
Decrease (Increase) in Accrued Interest Receivable (108) 33
Increase in Income Tax Payable 2 --
Decrease in Dividends Payable (2) --
(Increase) in Real Estate Owned (105) --
(Increase) Decrease in Other Assets (99) 4
(Increase) in Deferred Loan Fees (9) (11)
Decrease in Deferred Charges 19 --
(Increase) in Accounts Receivable (92) --
Decrease in Prepaid Income Taxes -- (18)
Decrease in Deferred Income Taxes 28 20
------- -------
Net Cash (Used In) Provided by Operating Activities (236) 339
------- -------
Maturities of Investment Securities - Held-to-Maturity -- 625
Purchase of Investment Securities - Available-for-Sale (5,327) --
Maturities of Investment Securities - Available-for-Sale 1,685 326
Purchases of Mortgage- Backed Securities - Held-to-Maturity -- (185)
Maturities of Mortgage- Backed Securities - Held-to-Maturity 1,966 1,123
Purchases of Mortgage- Backed Securities - Available-for-Sale -- (490)
Maturities of Mortgage-Backed Securities - Available-for-Sale 851 823
Proceeds from Sale of Mortgage Backed Securities - Available-for-Sale 1,163 1,464
Principal Collected on Loans 1,695 711
Loans Made to Customers (2,947) (887)
Purchase of Furniture and Fixtures (87) (27)
(Increase) in Investment in Subsidiary (79) --
------- -------
Net Cash Provided by (Used In) Investing Activities (1,080) 3,483
------- -------
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
-7-
<PAGE>
<TABLE>
ALGIERS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
Six Months Ended
June 30 June 30
1998 1997
------- -------
(Unaudited) (Unaudited)
(In Thousands)
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Net Increase (Decrease) in Deposits $ 1,515 $ (612)
Net Decrease in Advances from
Borrowers for Taxes and Insurance (20) (79)
Repayment of Federal Home Loan Advance -- (1,500)
Purchase of Treasury Stock (432) (451)
Dividends Paid on Common Stock (30) (31)
------- -------
Net Cash Provided by (Used in) Financing Activities 1,033 (2,673)
------- -------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (283) 1,149
CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR 2,555 1,722
------- -------
CASH AND CASH EQUIVALENTS - END OF YEAR $ 2,272 $ 2,871
======= =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash Paid During the Year for:
Interest $ 266 $ 236
Income Taxes $ 20 $ 38
SUPPLEMENTAL DISCLOSURE OF NON-CASH TRANSACTIONS
Dividends Declared $ 29 $ 31
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
-8-
<PAGE>
Algiers Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
June 30, 1998
Note 1 - Basis of Presentation -
The accompanying consolidated financial statements for the three and
six months ended June 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 six months ended June 30, 1998
are not necessarily indicative of the results to be expected for the year ending
December 31, 1998.
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<PAGE>
Note 2-Available for Sale Securities-
Investments and mortgage-backed securities available-for-sale at June
30, 1998 are summarized as follows (in thousands):
<TABLE>
<CAPTION>
June 30, 1998
----------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
------ ------- ----- ------
<S> <C> <C> <C> <C>
Investments $7,738 $ -- $ 9 $7,729
====== ======= ===== ======
GNMA Certificates $ 407 $ -- $ 1 $ 406
FNMA Certificates 3,286 -- (19) 3,267
FHLMC Certificates 929 38 -- 967
------ ------- ----- ------
$4,622 $ 38 $ (18) $4,640
====== ======= ===== ======
<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>
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 $38,000 and $35,000 for the six
months ended June 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 six months ended June 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 six months ended June 30, 1998, $15,000 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 June 30, 1998 to December 31, 1997
and the results of operations for the three and six months ended June 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 $1.1 million or 2.4% from $45.3 million at
December 31, 1997 to $46.4 million at June 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 $9.5
million at June 30, 1998 and $6.2 million at December 31, 1997. This increase
was due to the purchase of $5.3 million of investment securities during the six
months ending June 30, 1998. These assets currently provide a higher yield than
mortgage-backed securities and have shorter maturities.
The mortgage-backed securities portfolio decreased $4.0 million or
14.0% from $28.4 million at December 31, 1997 to $24.5 million at June 30, 1998,
as the amount of mortgage-backed securities maturing increased and no new
mortgage-backed securities were purchased. Mortgage-backed securities amounted
to $24.5 million or 52.8% of total assets at June 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 $1.2 million or
13.0% over the past six months from $9.2 million at December 31, 1997 to $10.4
million at June 30, 1998.
Total deposits increased $1.5 million or 4.2% to $37.0 million at June
30, 1998 from $35.5 million at December 31, 1997. The increase was primarily in
certificate of deposit accounts.
Total stockholders' equity declined by $395,000 during the past six
months. Net income was $105,000, and additional paid -in capital increased by
$13,000, but these items were offset by the purchase of $432,000 of treasury
stock, a $32,000 increase 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 June 30, 1998 totaled $9.14 million or 19.7% 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 six
months ended June 30, 1998, net interest income before provision for loan losses
was more than total non-interest expense. During the six months ended June 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 June 30, 1998
decreased $48,000 or 47.1% compared to the three months ended June 30, 1997. The
decrease was due to a decrease of $132,000 or 75.0% in non-interest income, a
$3,000 or .7% increase in interest expense, and a $5,000 or 30.0% increase in
income taxes partially offset by a decrease of $49,000 or 13.7% in non-interest
expenses and an increase of $43,000 or .6% in interest income.
The Company's net income decreased by $59,000 or 36.0% in the six
months ended June 30, 1998 from the six months ended June 30, 1997. The decrease
was due to a decrease of $141,000 or 66.0% in non-interest income, which factor
was partially offset by an increase of $32,000 or 4.8% in net interest income, a
decrease of $44,000 or 6.6% in non-interest expense and a decrease of $6,000 or
11.5% in income tax expense.
Total interest income increased by $24,000 or 1.5% during the six
months ended June 30, 1998 compared to the six months ended June 30, 1997, due
to an increase in the average yield on interest-earning assets from 6.77% in the
first six months of 1997 to 7.05% in the first six months of 1998. The higher
yield was partially offset by a $2.5 million or 5.47% 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 the December 31, 1997 and
the payment of dividends on common stock of $60,000. Total interest expense
decreased by $8,000 or 9.0% in the six months ending June 30, 1998 compared to
the six months ending June 30, 1997, primarily due to decreases in FHLB advances
of $1.5 million and a decrease in average deposits of $435,000 or 1.2% in the
first six 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 4.79% from 4.77% over the same period in 1997.
The increased net interest income of $32,000 was due to an increase in
the average interest rate spread to 2.26% in the first half of 1998 from 2.00%
in the first half of 1997. The higher spread was partially offset by a decrease
of $435,000 or 1.2% in net average interest-earning assets in the six months
ended June 30, 1998 over the comparable 1997 period. The average yield on
interest-earning assets increased to 7.05% during the six months ended June 30,
1998 compared to 6.77% during the six months ended June 30, 1997. The increased
yield on assets was primarily due to an increase in the average rate earned on
investments. In the six months ending June 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 $5.3 million of investments issued by agencies of the U.S.
Government. The average rate on deposits increased from 4.77% during the first
six months of 1997 to 4.79% during the first six months of 1998.
During the quarter ended June 30, 1998 compared to the same period of
1997, non-interest income decreased $132,000 due to a decrease of $54,000 in
recovery of GIC bonds previously written off, a $47,000 decrease in service
charges and fees mostly that were reclassified to interest income, a $40,000
decrease in recapture of allowance on GIC bonds, and a $7,000 decrease in
miscellaneous income, partially offset by a $16,000 increase in gain-sale of
investments.
The Association had no provision or credit for loan losses in the six
months ended June 30, 1998 and 1997. Total non-performing loans at June 30, 1998
was $511,000 compared to $636,000 at December 31, 1997, and the allowance for
loan losses at June 30, 1998 was $445,000 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.
The decrease in non-interest income in the six months ended June 30,
1998 was due to a decrease of $62,000 in recapture of allowance on GIC bonds, a
decrease of $54,000 in recovery of GIC bonds previously written off, and a
decrease of $50,000 in service charges and fees, offset by an increase of
$31,000 in gain on sale of investments.
The $44,000 decrease in total non-interest expense in the six months
ended June 30, 1998 was due to an $87,000 decrease in compensation expense, a
$7,000 decrease in occupancy and equipment expense and a $4,000 recovery of
provision for losses on real estate owned partially offset by a $22,000 increase
in professional services, an $18,000 increase in other expenses, a $9,000
increase in computer expenses and a $5,000 increase in deposit insurance
premiums.
Total non-interest expense decreased $49,000 in the three months ended
June 30, 1998 compared to the three months ended June 30, 1997 due to a $33,000
decrease in compensation expense, a $19,000 decrease in professional services,
an $8,000 decrease in occupancy and equipment, a $4,000 decrease in provision
for losses on real estate owned, and a $1,000 decrease in real estate owned
expenses, partially offset by a $6,000 increase in computer expenses, a $6,000
increase in other expenses, a $3,000 increase in FHLB charges and a $1,000
increase in deposit insurance premiums. The $6,000 increase in other expenses
was due to an increase of $30,000 representing a payment made by the Association
to settle a labor and personnel dispute, partially offset by a reduction in
expenses of the Company's discontinued 70% owned subsidiary Jefferson Community
Lending Corporation, L.L.C.
The $6,000 or 11.5% decrease in income tax expense was primarily due to
a decrease of $65,000 or 30.1% in pre-tax income for the six months ended June
30, 1998 from the comparable 1997 period. Net income in the first half of 1997
of $164,000 was reduced by the recovery of GIC bonds previously written off of
$62,000 that was non-taxable income.
-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
June 30, 1998, the Association's liquidity was 18.3% or $6.5 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 June 30, 1998, the Association's tangible and core capital both
amounted to $7.3 million or 16.28% of adjusted total assets of $44.0 million,
and the Association's risk-based capital amounted to $7.5 million or 60.98% of
adjusted risk-weighted assets of $12.3 million.
<PAGE>
As of June 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 $7,309 $7,309 $7,309
Additional Capital Items:
General Valuation Allowances -- -- 155
------ ------ ------
Regulatory Capital 7,309 7,309 7,464
Minimum Capital Requirement 901 1,802 983
------ ------ ------
Regulatory Capital Excess $6,408 $5,507 $6,481
====== ====== ======
Regulatory Capital as a
Percentage 16.28% 16.28% 60.98%
Minimum Capital Required
as a Percentage 1.50% 3.00% 8.00%
------ ------ ------
Regulatory Capital as a
Percentage in Excess
of Requirements 14.78% 13.28% 52.98%
====== ====== ======
</TABLE>
Based on the above capital ratios, the Association meets the criteria
for a "well capitalized" institution at June 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.
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 will be replaced with an
in-house system that is Year 2000 compliant, before the end of the current
quarter. The additional cost of conversion will be approximately $20,000 for
additional training and implementation. As of June 30, 1998 approximately $5,000
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.
-13-
<PAGE>
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.
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%
repurchase was completed on April 3, 1998. The Company has 584,842 shares of
common stock outstanding as of April 8, 1998.
-14-
<PAGE>
Algiers Bancorp, Inc.
Form 10-QSB
Quarter Ended June 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:
At the Annual Meeting of Stockholders held on April 29, 1998, the
stockholders of the Company approved each of the proposals as set forth below.
The number of shares present at the Annual Meeting in person or by proxy was
422,528. The matters voted upon together with the applicable voting results were
as follows (there were no broker non-votes at the meeting):
FOR WITHHOLD
--- --------
1. Election of Directors
John Gary, III 406,528 16,000
Thu Dang 406,528 16,000
Hugh E. Humphrey, Jr., Thomas Arnold and Hugh E. Humphrey, III continued as
directors.
FOR AGAINST
--- -------
2. Ratification of appointment
of LaPorte, Sehrt, Romig and
Hand as independent auditors. 407,428 15,500
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 June 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: August 12, 1998 By:/s/Hugh E. Humphrey, Jr.
---------------------------
Hugh E. Humphrey, Jr., Chairman
of the Board, President and
Chief Executive Officer
Date: August 12, 1998 By:/s/Dennis J. McCluer
-----------------------
Dennis J. McCluer
Vice President
Date: August 12, 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> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-1-1998
<PERIOD-END> JUN-30-1998
<CASH> 522
<INT-BEARING-DEPOSITS> 1,750
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 12,369
<INVESTMENTS-CARRYING> 19,833
<INVESTMENTS-MARKET> 19,709
<LOANS> 10,386
<ALLOWANCE> 445
<TOTAL-ASSETS> 46,386
<DEPOSITS> 37,049
<SHORT-TERM> 0
<LIABILITIES-OTHER> 196
<LONG-TERM> 0
0
0
<COMMON> 6
<OTHER-SE> 9,135
<TOTAL-LIABILITIES-AND-EQUITY> 46,386
<INTEREST-LOAN> 243
<INTEREST-INVEST> 518
<INTEREST-OTHER> 25
<INTEREST-TOTAL> 786
<INTEREST-DEPOSIT> 447
<INTEREST-EXPENSE> 0
<INTEREST-INCOME-NET> 339
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 16
<EXPENSE-OTHER> 309
<INCOME-PRETAX> 74
<INCOME-PRE-EXTRAORDINARY> 74
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 54
<EPS-PRIMARY> .09
<EPS-DILUTED> .09
<YIELD-ACTUAL> 7.05
<LOANS-NON> 615
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 500
<ALLOWANCE-OPEN> 485
<CHARGE-OFFS> 40
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 445
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
