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, 1999
___ 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.
(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) (Zip Code)
Issuer's telephone number: (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 ___
Number of shares of Common Stock outstanding on July 26, 1999: 517,248
Transitional Small Business Disclosure Format (check one): Yes ___ No _X_
ALGIERS BANCORP, INC.
QUARTERLY REPORT ON FORM 10-QSB FOR
THE QUARTER ENDED JUNE 30, 1999
TABLE OF CONTENTS
PAGE
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, 1999 and December 31, 1998 1
Consolidated Statements of Income (Unaudited) For
the Three and Six Months Ended June 30, 1999 and 1998 3
Consolidated Statements Of Cash Flows (Unaudited) For
the Six Months Ended June 30, 1999 and 1998 5
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 15
Item 6. Exhibits and Reports on Form 8-K 15
ALGIERS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
ASSETS
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
--------------- ----------------
(Unaudited)
(In Thousands)
<S> <C> <C>
Cash and Cash Equivalents $ 1,104 $ 3,659
Interest-Bearing Deposits in Other Banks 2,085 1,222
Investments Available-for-Sale - at Fair Value (Note 2) 4,828 5,304
Loans Receivable - Net 8,918 9,297
Mortgage Loans Held for Resale 112 -
Mortgage-Backed Securities - Available-for-Sale - at Fair Value (Note 2) 29,3812 7,392
Stock in Federal Home Loan Bank 512 512
Accrued Interest Receivable 606 369
Real Estate Owned - Net 62 62
Office Properties and Equipment, at Cost - Furniture,
Fixtures and Equipment, Less Accumulated Depreciation
of $313 and $258, respectively 888 662
Prepaid Expenses 80 87
Income Tax Receivable 101 28
Other Assets 30 32
----------- ----------
Total Assets $ 48,707 $ 48,626
=========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
ALGIERS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
--------------- ---------------
(Unaudited)
(In Thousands)
<S> <C> <C>
LIABILITIES
Deposits $ 39,794 $ 39,495
Advance Payments from Borrowers for Insurance and Taxes 52 114
Accrued Interest Payable on Depositors' Accounts 26 23
Dividends Payable 26 32
Deferred Tax Liability 213 212
Income Taxes Payable - -
Other Liabilities 60 84
------------ ------------
40,171 39,960
Minority Interest in Subsidiary 66 87
------------ ------------
Total Liabilities 40,237 40,047
------------ ------------
STOCKHOLDERS' EQUITY
Preferred Stock - Par Value $.01; 5,000,000 Shares
Authorized; 0 Shares Issued and Outstanding - -
Common Stock - Par Value $.01; 10,000,000 Shares
Authorized; 648,025 Issued Shares 6 6
Treasury Stock - 141,677 and 128,777 Shares
Respectively, at Cost (1,823) (1,675)
Paid-in Capital in Excess of Par 6,137 6,137
Retained Earnings 4,381 4,344
Accumulated Other Comprehensive Income 193 191
------------ ------------
8,894 9,003
------------ ------------
Less: Unearned ESOP Shares (376) (376)
Unearned MRP Shares (48) (48)
------------ ------------
(424) (424)
------------ ------------
Total Stockholders' Equity 8,470 8,579
------------ ------------
Total Liabilities and Stockholders' Equity $ 48,707 $ 48,626
============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
ALGIERS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
1999 1998 1999 1998
----------- ------------ ----------- -----------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
(In Thousands) (In Thousands)
<S> <C> <C> <C> <C>
INTEREST INCOME
Loans $ 197 $ 243 $ 427 $ 471
Mortgage-Backed Securities 426 407 837 838
Investment Securities 175 111 337 205
Other Interest-Earning Assets 42 25 96 64
--------- ---------- ---------- ---------
Total Interest Income 840 786 1,697 1,578
--------- ---------- ---------- ---------
INTEREST EXPENSE
Deposits 468 447 933 876
FHLB Advances - - - -
--------- ---------- ---------- ---------
Total Interest Expense 468 447 933 876
NET INTEREST INCOME BEFORE PROVISION FOR LOAN LOSSES 372 339 764 702
PROVISION FOR LOAN LOSSES - - - -
--------- ---------- ---------- ---------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 372 339 764 702
--------- ---------- ---------- ---------
NON-INTEREST INCOME
Gain - Sale of Investments - 16 - 31
Service Charges and Fees 84 12 101 26
Recapture of Allowance on GIC Bonds - 2 - 2
Recovery of GIC Bonds Previously Written Off - - - -
Miscellaneous Income 3 14 8 17
-------- ---------- ---------- ---------
Total Non-Interest Income 87 44 109 76
-------- ---------- ---------- ---------
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
ALGIERS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
1999 1998 1999 1998
----------- ----------- ----------- ---------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
(In Thousands) (In Thousands)
<S> <C> <C> <C> <C>
NON-INTEREST EXPENSES
Compensation and Benefits $ 163 $ 163 $ 311 $ 295
Occupancy and Equipment 62 48 145 93
Computer 10 18 19 30
Deposit Insurance Premium 6 6 20 11
Professional Services 71 28 126 67
FHLB Service Charges 2 9 4 12
Real Estate Owned Expenses 1 1 2 2
(Recovery of) Provision for Losses on Real Estate Owned - (4) - (4)
Other 110 40 169 121
------ ------ ------- ------
Total Non-Interest Expense 425 309 796 627
------ ------ ------- ------
INCOME BEFORE INCOME TAXES AND MINORITY INTEREST 34 74 77 151
FEDERAL INCOME TAX EXPENSE - 20 15 46
------ ------ ------- ------
INCOME BEFORE MINORITY INTEREST 34 54 62 105
MINORITY INTEREST IN SUBSIDIARY 10 - 21 -
------ ------- ------- ------
NET INCOME 44 54 83 105
OTHER COMPREHENSIVE INCOME NET OF INCOME TAX
Unrealized Gains (Losses) on Securities (1) (12) 2 (32)
====== ====== ======= ======
COMPREHENSIVE INCOME $ 43 $ 42 $ 85 $ 73
====== ====== ======= ======
EARNINGS PER SHARE
Basic $ 0.09 $ 0.09 $ 0.18 $ 0.19
Fully Diluted $ 0.09 $ 0.09 $ 0.18 $ 0.19
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
ALGIERS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Six Months Ended
June 30, June 30,
1999 1998
----------- -----------
(Unaudited) (Unaudited)
(In Thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 83 $ 105
Adjustments to Reconcile Net Income to Net
Cash Used In Operating Activities:
Depreciation and Amortization 55 8
Premium Amortization Net of Discount Accretion 7 7
Stock Dividend - FHLB - (14)
Gain on Sale of Investments - (31)
ESOP and MRP Expense 46 53
Increase in Accrued Interest Payable 36
(Decrease) in Other Liabilities (4) (70)
Increase in Accrued Interest Receivable (237) (108)
Increase in Income Tax Payable - 2
Increase in Dividends Payable - (2)
Increase in Real Estate Owned - (105)
(Increase) Decrease in Other Assets 1 (99)
Decrease in Deferred Loan Fees (1) (9)
Increase in Deferred Charges 7 19
Increase in Mortgages Held for Resale (112) -
Increase in Accounts Receivable - (92)
Increase in Prepaid Income Taxes (73) -
Increase in Minority Interest in Subsidiary (21) -
Decrease in Deferred Income Taxes - 28
-------- --------
Net Cash Used In Operating Activities (312) (236)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Investment Securities - Available-for-Sale - (5,327)
Maturities of Investment Securities - Available-for-Sale 500 1,685
Maturities of Mortgage- Backed Securities - Held-to-Maturity - 1,966
Purchases of Mortgage- Backed Securities - Available-for-Sale (5,485) -
Maturities of Mortgage-Backed Securities - Available-for-Sale 3,469 851
Proceeds from Sale of Mortgage Backed Securities - Available-for-Sale - 1,163
Principal Collected on Loans 1,186 1,695
Loans Made to Customers (806) (2,947)
Purchase of Furniture and Fixtures (281) (87)
Proceeds from Sales of Foreclosed Real Estate - -
(Increase) in Investment in Subsidiary - (79)
-------- --------
Net Cash Used In Investing Activities (1,417) (1,080)
-------- --------
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
ALGIERS BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Six Months Ended
June 30, June 30,
1999 1998
----------- -----------
(Unaudited) (Unaudited)
(In Thousands)
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Net Increase in Deposits $ 299 $ 1,515
Net Decrease in Advances from
Borrowers for Taxes and Insurance (62) (20)
Repayment of Federal Home Loan Advance - -
Purchase of Treasury Stock (148) (432)
Dividends Paid on Common Stock (52) (30)
------- --------
Net Cash Provided by Financing Activities 37 1,033
------- --------
NET DECREASE IN CASH AND
CASH EQUIVALENTS (1,692) (283)
CASH AND CASH EQUIVALENTS - BEGINNING OF THE YEAR 4,881 2,555
------- --------
CASH AND CASH EQUIVALENTS - END OF YEAR $ 3,189 $ 2,272
======= ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash Paid During the Year for:
Interest $ 930 $ 266
Income Taxes $ 88 $ 20
SUPPLEMENTAL DISCLOSURE OF NON-CASH
TRANSACTIONS
Dividends Declared $ 26 $ 29
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements.
Algiers Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
June 30, 1999
Note 1 - Basis of Presentation -
Algiers Bancorp, Inc. was organized as a Louisiana corporation on
February 5, 1996 for the purpose of engaging in any lawful act or activity
for which a corporation may be formed under the Louisiana Business
Corporation Law, as amended. Other than steps related to the
reorganization described below, the Corporation was essentially inactive
until July 8, 1996, when it acquired Algiers Homestead Association in a
business reorganization of entities under common control in a manner
similar to a pooling of interest. Algiers Homestead Association is engaged
in the savings and loan industry. The acquired association became a
wholly-owned subsidiary of the Corporation through the issuance of 1,000
shares of common stock to the Corporation in exchange for 50% of the net
proceeds received by the Corporation in the reorganization.
On December 23, 1996, Algiers Bancorp, Inc. entered into a limited
liability company partnership when it acquired a majority interest in
Jefferson Community Lending, LLC. Jefferson Community Lending, LLC is
engaged in the business of consumer lending. During 1998, the Corporation
initiated a restructuring plan to reduce costs and increase future
operating efficiency by consolidating the operations of Jefferson Community
Lending, LLC. Accordingly, net assets of Jefferson Community Lending, LLC
have been reduced to $-0- at December 31, 1998.
During 1998, the Algiers Bancorp, Inc. formed Algiers Com, Inc., a
subsidiary that owns a 51% interest in Planet Mortgage, LLC. Planet
Mortgage, LLC is engaged in the solicitation of mortgage loans through its
Internet site.
The accompanying consolidated financial statements include the
accounts of the Company and its wholly-owned subsidiaries, Algiers
Homestead Association and Algiers Com, Inc. and its majority-owned
subsidiary, Jefferson Community Lending, LLC. In consolidation,
significant inter-company accounts, transactions, and profits have been
eliminated.
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, 1999 are not necessarily indicative of the
results to be expected for the year ending December 31, 1999.
Note 2 - Available for Sale Securities -
Investments and mortgage-backed securities available-for-sale at June
30,1999 and December 31, 1998, respectively, are summarized as follows (in
thousands):
<TABLE>
<CAPTION>
June 30, 1999
-----------------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
--------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
Investments $ 4,812 $ 16 $ - $ 4,828
========= ========== ========== =========
GNMA Certificates $ 7,651 $ 90 $ - $ 7,741
SBA Certificates 1,007 1,007
FNMA Certificates 15,781 156 - 15,937
FHLMC Certificates 4,666 30 - 4,696
--------- ---------- ---------- ---------
$ 29,105 $ 276 $ - $ 29,381
========= ========== ========== =========
</TABLE>
<TABLE>
<CAPTION>
December 31, 1998
---------------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
--------- ---------- ---------- --------
<S> <C> <C> <C> <C>
Investments $ 5,292 $ 39 $ 27 $ 5,304
========= ========== ========== ========
GNMA Certificates $ 6,885 $ 90 $ - $ 6,975
FNMA Certificates 16,320 156 - 16,476
FHLMC Certificates 3,911 30 - 3,941
--------- ---------- ----------- --------
$ 27,116 $ 276 $ - 27,392
========= ========== =========== ========
</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 $33,700 and $38,000
for the six months ended June 30, 1999 and 1998, based on the annual
release of shares.
Note 4 - Management Recognition Plan -
On July 18, 1997, the Association established a Recognition and
Retention Plan as an incentive to retain personnel of experience and
ability in key positions. The Association approved a total of 25,921
shares of stock to be acquired for the Plan, of which 4,205 have been
allocated for distribution to key employees and directors. As shares are
acquired for the Plan, the purchase price of these shares is recorded as
unearned compensation, a contra equity account. As the shares are
distributed, the contra equity account is reduced.
Plan share awards are earned by recipients at a rate of 20% of the
aggregate number of shares covered 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 plan
share award for any reason, the recipient shall forfeit the right to any
shares subject to the award which have not been earned. The total cost
associated with the Plan is based on the market price of the stock as of
the date on which the Plan shares were granted.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
GENERAL
The following discussion compares the consolidated financial condition
of Algiers Bancorp, Inc. and Subsidiaries at June 30, 1999 to December 31,
1998 and the results of operations for the three and six months ended June
30, 1999 with the same periods in 1998. 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 $81,000 or .2% from $48.6 million at December
31, 1998 to $48.7 million at June 30, 1999. The increase in assets is
primarily due to an increase in deposits, mortgage-backed securities
available for sale, and interest bearing deposits in other banks, offset by
decreases in cash and cash equivalents, investment securities available for
sale and loans.
Interest-earning deposits in other banks and investments was $6.9
million at June 30, 1999 and $6.5 million at December 31, 1998. This
increase was due to an increase in balances held by FHLB, offset by
maturities of $500,000 in investments.
The mortgage-backed securities portfolio increased $2 million or 7.3%
from $27.4 million at December 31, 1998 to $29.4 million at June 30, 1999,
as the amount of mortgage-backed securities maturing increased and $5.5
million of new mortgage-backed securities were purchased. Mortgage-backed
securities amounted to $29.4 million or 60.4% of total assets at June 30,
1999, compared to $27.4 million or 56.3% of total assets at December 31,
1998.
The Association's loan portfolio decreased $379,000 or 4.1% over the
past six months from $9.3 million at December 31, 1998 to $8.9 million at
June 30, 1999.
Total deposits increased $299,000 or .8% to $39.8 million at June 30,
1999 from $39.5 million at December 31, 1998. The increase was primarily
in certificate of deposit accounts.
Total stockholders' equity declined by $109,000 during the past six
months. Net income was $83,000, and was offset by the purchase of $148,000
of treasury stock, and $52,000 in dividends declared on common stock.
Stockholders' equity at June 30, 1999 totaled $8.5 million or 17.5% of
total assets compared to $8.6 million or 17.6% of total assets at December
31, 1998.
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, 1999, net interest
income before provision for loan losses was nominally less than total
non-interest expense. 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.
The Company's net income for the three months ended June 30, 1999
decreased $10,000 or 18.5% compared to the three months ended June 30,
1998. The decrease was due to an increase of $54,000 or 6.9% in interest
income, an increase of $43,000 or 97.7% in non-interest income partially
offset by a $21,000 or 4.7% increase in interest expense and an increase of
$116,000 or 37.5% in non-interest expense.
Total interest income increased by $119,000 or 7.5% during the six
months ended June 30, 1999 compared to the six months ending June 30, 1998,
due to an increase in the average yield on interest earning assets from
7.16% in the first six months of 1998 to 7.67% in the first six months of
1999, and a slight increase in average interest-earning assets. Total
interest expense increased by $57,000 or 6.5% in the six months ending June
30, 1999 compared to the six months ending June 30, 1998, primarily due to
an increase in average deposits of $3.3 million or 9.2% in the first six
months of 1999 over the comparable 1998 period. The higher average balance
was partially offset by a decrease in the average rate on interest-bearing
liabilities to 4.71% from 4.83% over the same period in 1998.
The increased net interest income of $62,000 was due to an increase in
the average interest rate spread to 2.96% in the first six months of 1999
from 2.33% in the first six months of 1998. The higher spread was
partially offset by a decrease of $3.1 million or 40.5% in net average
interest-earning assets in the six months ended June 30, 1999 over the
comparable 1998 period. The average yield on interest-earning assets
increased to 7.67% during the six months ended June 30, 1999 compared to
7.16% during the six months ended June 30, 1998. 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, 1999, the Company used a
portion of its maturing mortgage-backed securities and interest-earning
deposits in other banks to fund the repurchase of 148,000 of its
outstanding common stock. The average rate on deposits decreased from
4.83% during the first six months of 1998 to 4.71% during the first six
months of 1999.
During the quarter ended June 30, 1999 compared to the same period of
1998, non-interest income increased $43,000 due to an increase of $72,000
in service charges and fees, partially offset by a decrease in gain on sale
of investments of $16,000.
The Association had no provision or credit for loan losses in the six
months ended June 30, 1999 and 1998. Total non-performing loans at June 30,
1999 and December 31, 1998 was $737,000 and the allowance for loan losses
at June 30, 1999 and December 31, 1998 was $526,000.
The increase in non-interest income in the six months ended June 30,
1999 was due to an increase of $75,000 in service charges and fees, offset
by a decrease in gain on sale of investments of $31,000 and a decrease of
$9,000 in miscellaneous income.
The $116,000 increase in total non-interest expense in the three
months ended June 30, 1999 was due to a $14,000 increase in occupancy and
equipment expense, a $43,000 increase in professional services, a $70,000
increase in other expenses, offset by a $8,000 decrease in computer
expenses.
The $169,000 increase in non-interest expense in the six months ended
June 30, 1999 was due to a $16,000 increase in compensation and benefits, a
$52,000 increase in occupancy and equipment, a $59,000 increase in
professional services and a $48,000 increase in other expenses, partially
offset by an $11,000 decrease in computer expenses.
The $31,000 or 67.4% decrease in income tax expense was primarily due
to a decrease of $74,000 or 49.0% in pre-tax income for the six months
ended June 30, 1999 from the comparable 1998 period.
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, 1999, the Association's liquidity was 8.08% or
$1.6 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 June 30, 1999, the Association's tangible and core
capital both amounted to $7.5 million or 15.69% of adjusted total assets of
$48.0 million, and the Association's risk-based capital amounted to $7.7
million or 54.22% of adjusted risk-weighted assets of $14.2 million.
As of June 30, 1999, 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 $ 7,744 $ 7,744 $ 7,744
Additional Capital Items:
General Valuation Allowances -- -- 151
Unrealized Gain on Securities - Available-For-Sale (207) (207) (207)
---------- --------- ----------
Regulatory Capital 7,537 7,537 7,688
Minimum Capital Requirement 720 1,441 1,134
Regulatory Capital Excess $ 6,817 6,096 6,554
---------- --------- ----------
Regulatory Capital as a Percentage 15.69% 15.69% 54.22%
Minimum Capital Required as a Percentage 1.50% 3.00% 8.00%
---------- --------- ----------
</TABLE>
Based on the above capital ratios, the Association meets the criteria
for a "well capitalized" institution at June 30, 1999. 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 utilizes and is dependent upon data processing systems and
software to conduct its business. The approach of the Year 2000 presents a
problem in that many computer programs have been written using two digits
rather than four digits to define the appropriate year. Computer programs
that have time-sensitive software may recognize a date using "00" as the
year 1900 rather than the Year 2000. For example, computer systems may
compute payment, interest, delinquency or other figures important to the
operations of the Company based on the wrong date. This could result in
internal system failure or miscalculations, and also creates risks for the
Company from third parties with whom the Company deals on financial
transactions.
Risks to the Company if its computer system is not Year 2000 compliant
include the inability to process customer deposits or checks drawn on the
Association, inaccurate interest accruals, and maturity dates of loans and
time deposits, and the inability to update accounts for daily transactions.
Other risks to the Company exist if certain of its vendors', suppliers' and
customers' computer systems are not Year 2000 compliant. These risks
include the interruption of business in the event of power outages, the
inability of loan customers to comply with repayment terms if their
businesses are interrupted, the inability to make payment for checks drawn
on the Association, receive payment for checks deposited by the
Association's customers, or invest excess funds if the FHLB or
correspondent banks are not Year 2000 compliant.
The Company has structured its Year 2000 compliance plans in
accordance with the OTS and FDIC guidelines. As part of its Year 2000
compliance plan, the Company has identified mission critical systems and is
developing contingency plans relating to a "worst case scenario" relative
to the Year 2000 issue. The Company's most important mission critical
system is the software and hardware responsible for maintaining and
processing the general ledger, deposits and loan accounts. This system and
other internal systems used by the Company have been tested as part of the
Company's Year 2000 compliance plan and have been certified Year 2000
compliant. The Company's Year 2000 plan also addresses contingencies
related to increased liquidity and currency demands which may arise in the
latter part of 1999.
The Company has communicated with its key vendors and suppliers to
determine their Year 2000 compliance and to determine the potential
impact of such third parties' failure to remediate their own Year 2000
issues. The Company has been assured that such third parties either are
already Year 2000 compliant or are in the process of modifying, upgrading
or replacing their computer applications to ensure Year 2000 compliance.
In light of its compliance efforts, the Company does not believe that
the Year 2000 issue is likely to have a material adverse effect on the
Company's liquidity, capital resources or results of operations. However,
there can be no assurance that all of the Company's systems will be Year
2000 compliant, or that the failure of any such system will not have a
material adverse effect on the Company's business, financial condition or
operating results. In addition, to the extent that the Year 2000 issue has
a material adverse effect on the business, financial condition or operating
results of third parties with whom the Company has material relationship,
such as other financial institutions, the Year 2000 issue could have a
material adverse effect on the Company's business, financial condition and
operating results.
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 5.0% 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 tock. The
approval included 21,419 shares to fund the 1997 Management Recognition and
Retention Plan and shares for general corporate purposes.
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The Annual Meeting of Stockholders of the Company was held on July
15, 1999 (the "Annual Meeting").
(b) At the Annual Meeting, Hugh E. Humphrey, III was re-elected to
serve until the annual meeting of stockholders for the year 2002.
In addition to the director elected at the Annual Meeting, the
terms of Hugh E. Humphrey, Jr., Thomas M. Arnold, Sr. Thu Dang and
John H. Gary, III continued after the Annual Meeting.
(c) At the Annual Meeting, holders of shares of the Company's Common
Stock elected one director with the number of votes cast for and
withheld for such nominees as follows:
Name For Withheld
---- --- --------
Hugh E. Humphrey, III 482,916 15,807
With respect to the election of the director, there were no abstentions
or non-votes.
At the Annual Meeting, the stockholders also voted on and approved
a proposal to ratify the appointment of LaPorte, Sehrt, Romig &
Hand, Certified Public Accountants, as the Company's independent
auditors for the fiscal year ending December 31, 1999. Holders of
497,923 shares voted for, holders of 500 shares voted against and
holders of 300 shares abstained from voting on such proposal. There
were no non-votes with respect to such proposal.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K:
(a) The following exhibit is filed herewith:
Exhibit No. Description
----------- -----------
27 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, 1999.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ALGIERS BANCORP, INC.
Date: August 13, 1999 By: /S/ Hugh E. Humphrey, Jr.
-------------------------------
Hugh E. Humphrey, Jr.,
Chairman of the Board,
President and
Chief Executive Officer
Date: August 13, 1999 By: /S/ Francis M. Minor
------------------------------
Francis M. Minor, Jr.
Chief Financial Officer
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