UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the
Quarter Ended September 30, 1996 Commission File Number: 0-12437
One American Corp.
(Exact name of registrant as specified in its charter)
Louisiana 72-0948181
(State or other jurisdiction of (IRS Employer Identification No.)
Incorporation of Organization)
2785 LA Hwy. 20 West
P. O. Box 550
Vacherie, Louisiana 70090-0550
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, including area code:(504) 265-2265
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No ___
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date.
Common stock $5 Par Value, 1,351,615 shares outstanding as
of November 8, 1996.
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FORM 10-Q Index
Part I
Financial Information
Financial Statements
Consolidated Balance Sheets,
September 30, 1996, December 31, 1995, and September 30,1995 3
Consolidated Statements of Income
for the three and nine months ended September 30, 1996
and 1995 4
Consolidated Statements of Changes in Stockholders' Equity
for the nine months ended September 30, 1996 and 1995 5
Consolidated Statements of Cash Flows
for the nine months ended September 30, 1996 and 1995 6
Notes to Consolidated Financial Statements 8
Management's Discussion and Analysis of Financial Condition
and Results of Operations 11
Average Balance Sheets and Interest Rate Analysis
for the three months ended September 30, 1996, June 30, 1996, 20
September 30, 1995,
Average Balance Sheets and Interest Rate Analysis for the
nine months ended September 30, 1996 and 1995 21
Interest Differentials
for the three months ended September 30, 1996, June 30, 1996,
September 30, 1995,
and nine months ended September 30, 1996 and 1995 22
Part II
Other Information
Legal Proceedings 23
Exhibits and Reports on Form 8-K 23
Management's Responsibility for Financial Reporting 24
Signatures 25
2
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<TABLE>
<CAPTION>
Consolidated Balance Sheets
One American Corp. and Subsidiaries Unaudited Unaudited Unaudited
In thousands September 30,December 30,September 30,
1996 1995 1995
<S> <C> <C> <C>
Assets
Cash and Due From Banks $12,949 $14,365 $10,706
Interest Bearing Deposits in Other Banks 1,039 867 298
Federal Funds Sold and Securities
Purchased Under Resale Agreements 9,925 7,375 5,550
Securities:
Held to Maturity (Fair Value of $-0-, $-0-,
and $18,773, respectively) - - 18,404
Available for Sale (Amortized Cost of $115,433, $132,030
and $112,972, respectively) 115,285 132,592 112,519
Total Securities 115,285 132,592 130,923
Loans 132,348 107,593 106,182
Less: Allowance for Loan Losses (3,328) (3,273) (3,166)
Loans, Net 129,020 104,320 103,016
Bank Premises and Equipment 9,146 8,461 8,674
Other Real Estate 51 - -
Accrued Interest Receivable 2,191 2,112 1,881
Other Assets 2,547 1,536 2,013
Total Assets $282,153 $271,628 $263,061
Liabilities
Deposits:
Noninterest Bearing $46,689 $44,920 $44,560
Interest Bearing 200,636 194,803 189,060
Total Deposits 247,325 239,723 233,620
Accrued Interest Payable 618 603 487
Other Liabilities 1,456 1,090 642
Total Liabilities 249,399 241,416 234,749
Stockholders' Equity
Common Stock-$5.00 par value;
Authorized-10,000,000 shares;
Issued-1,500,000 shares 7,500 7,500 7,500
Surplus 5,000 5,000 5,000
Retained Earnings 20,977 17,966 16,736
Unrealized Gain (Loss) on Securities Available for Sale, Net (98) 371 (299)
Treasury Stock - 148,385 shares at cost (625) (625) (625)
Total Stockholders' Equity 32,754 30,212 28,312
Total Liabilities and Stockholders' Equity $282,153 $271,628 $263,061
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
3
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<TABLE>
<CAPTION>
Consolidated Statements of Income
One American Corp. and Subsidiaries Three Months Ended Nine Months Ended
for the three and nine months ended September 30, 1996 Unaudited Unaudited Unaudited Unaudited
In thousands, except per share data 1996 1995 1996 1995
<S> <C> <C> <C> <C>
Interest Income
Interest and Fees on Loans $3,005 $2,583 $8,498 $7,267
Interest on Securities:
Taxable Interest 1,709 1,815 5,353 5,234
Nontaxable Interest 135 160 425 475
Total Interest on Securities 1,844 1,975 5,778 5,709
Other Interest Income 100 143 407 459
Total Interest Income 4,949 4,701 14,683 13,435
Interest Expense on Deposits 1,809 1,679 5,380 4,801
Net Interest Income 3,140 3,022 9,303 8,634
Provision for Loan Losses 75 100 165 400
Net Interest Income After
Provision for Loan Losses 3,065 2,922 9,138 8,234
Other Income
Service Charges on Deposit Accounts 554 462 1,556 1,383
Gain or (Loss) on Securities 0 0 285 275
Gain on Purchased Assets 133 175 717 908
Other Operating Income 196 197 550 525
Total Other Income 883 834 3,108 3,091
Income Before Other Expenses 3,948 3,756 12,246 11,325
Other Expenses
Salaries and Employee Benefits 1,070 1,009 3,131 2,976
Net Occupancy Expense 313 260 855 790
Net ORE Expense (5) (6) (17) (160)
Other Operating Expenses 845 738 2,365 2,469
Total Other Expenses 2,223 2,001 6,334 6,075
Income Before Income Taxes 1,725 1,755 5,912 5,250
Applicable Income Taxes 536 522 1,887 1,571
Net Income $1,189 $1,233 $4,025 $3,679
Net Income Per Share $0.88 $0.91 $2.98 $2.72
Cash Dividends Per Share $0.25 $0.20 $0.75 $0.40
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
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<TABLE>
<CAPTION>
Consolidated Statements of Changes in Stockholders' Equity
One American Corp. and Subsidiaries
for the nine months ended September 30, 1996 and 1995 Unaudited Unaudited
In thousands 1996 1995
<S> <C> <C>
Common Stock
Beginning and End of Period $7,500 $7,500
Surplus
Beginning and End of Period $5,000 $5,000
Retained Earnings
Balance - Beginning of Period $17,966 $13,597
Net Income 4,025 3,679
Cash Dividends (1,014) (540)
Balance - End of Period $20,977 $16,736
Balance - Beginning of Period $371 ($1,482)
Net Change in Unrealized Gain (Loss) (469) 1,183
Balance - End of Period ($98) ($299)
Treasury Stock
Balance - Beginning and End of Period ($625) ($625)
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
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<TABLE>
<CAPTION>
Consolidated Statements of Cash Flows
One American Corp. and Subsidiaries
for the nine months ended September 30, 1996 and 1995 Unaudited Unaudited
In thousands 1996 1995
<S> <C> <C>
Cash Flows From Operating Activities
Net Income $4,025 $3,679
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities:
Gain on Purchased Assets (717) (908)
Provision for Depreciation 512 518
Provision for Loan Losses 165 400
Accretion on Securities (68) (285)
Provision (Credit) for Deferred Income Taxes (59) 10
(Gain) Loss on Sale of Other Real Estate (8) (153)
(Gain) Loss on Sale of Equipment - 6
(Gain) Loss on Securities (284) (275)
Changes in Assets and Liabilities:
(Increase) Decrease in Accrued Interest Receivable (79) (141)
(Increase) Decrease in Other Assets (710) (274)
Increase (Decrease) in Accrued Interest Payable 15 152
Increase (Decrease) in Other Liabilities 364 257
Net Cash Provided by Operating Activities 3,156 2,986
Cash Flows From Investing Activities
Maturities or Calls of Securities Available for Sale 53,674 42,849
Maturities or Calls of Securities Held to Maturity - 766
Purchases of Securities Available for Sale (37,000) (44,516)
Purchases of Securities Held to Maturity - (502)
Proceeds from Sale of Securities Available for Sale 276 272
Net (Increase) Decrease in Federal Funds Sold (2,550) 2,650
Net (Increase) Decrease in Loans (24,202) (9,960)
Proceeds from Sale of Other Real Estate 11 293
Proceeds from Sale of Premises, Equipment, and Other Assets - (269)
Purchases of Premises and Equipment (1,197) 40
Net Cash Used in Investing Activities (10,988) (8,377)
<FN>
(Continued on next page)
</TABLE>
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<TABLE>
<CAPTION>
Consolidated Statements of Cash Flows
for the nine months ended September 30, 1996 and 1995
In thousands Unaudited Unaudited
(Continued) 1996 1995
<S> <C> <C>
Cash Flows From Financing Activities
Net Increase (Decrease) in Demand Deposits, NOW
and Savings Accounts (2,098) (7,594)
Net Increase (Decrease) in Certificates of Deposits 9,700 10,352
Dividends Paid (1,014) (811)
Net Cash Provided (Used) By Financing Activities 6,588 1,947
Decrease in Cash and Cash Equivalents (1,244) (3,444)
Cash and Cash Equivalents - Beginning of Year 15,232 14,449
Cash and Cash Equivalents - End of Period 13,988 $11,004
Supplemental Disclosure of Cash Flow Information:
Income Tax Payments $1,961 $1,396
Interest Paid on Deposits $5,365 $4,649
Noncash Investing Activities:
Other Real Estate Acquired in Settlement of Loans $54 $46
Change in Unrealized Gain (Loss) on
Securities Available for Sale ($711) $1,792
Change in Deferred Tax Effect on
Unrealized Gain (Loss) on Securities Available for Sale ($242) $609
Noncash Financing Activities:
Dividends Declared and Not Paid $338 $270
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
7
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One American Corp. and Subsidiaries
Notes to Consolidated Financial Statements
September 30, 1996
(UNAUDITED)
Summary of Significant Accounting Policies
The accounting principles followed by One American Corp.
(the Company) and its wholly-owned Subsidiaries, First American
Bank and Trust (the Bank), and One American Agency, Inc. are
those which are generally practiced within the banking industry.
The methods of applying those principles conform with generally
accepted accounting principles and have been applied on a
consistent basis. The principles which significantly affect the
determination of financial position, results of operations,
changes in stockholders' equity, and cash flows are summarized
below.
Presentation - The accompanying unaudited consolidated
interim financial statements do not include all of the
information and footnotes required by generally accepting
accounting principles. Management is of the opinion that the
following unaudited interim financial statements reflect all
normal, recurring accrual adjustments necessary to provide a fair
statement of the results for the interim periods presented. It
is noted that the results of the first nine months ended
September 30, 1996 are no indication of the expected results for
the annual period which ends December 31, 1996. Additional
information concerning the audited financial statements and notes
can be obtained from One American Corp.'s annual report and Form
10-K filed for the period ended December 31, 1995.
Principles of Consolidation - The consolidated financial
statements include the accounts of One American Corp. and its
wholly-owned subsidiaries, First American Bank and Trust, and One
American Agency, Inc. All significant intercompany balances and
transactions have been eliminated. Certain reclassifications to
previously published financial statements have been made to
comply with current reporting requirements.
One American Corp., a Louisiana corporation, was
incorporated on May 14, 1982. At a special meeting on December
14, 1982, the stockholders of First American Bank and Trust
(Bank) approved a Joint Agreement of Merger and Plan of
Reorganization by and among the Bank, First American Interim Bank
(FAIB) and One American Corp. On January 21, 1983, the Bank was
merged into FAIB and the surviving Bank, First American Bank and
Trust became a wholly-owned subsidiary of One American Corp.,
through a one-for-one exchange for all of the outstanding common
stock of First American Bank and Trust. The organization has
been accounted for as a pooling-of-interest.
On July 14, 1983, One American Agency, Inc. was incorporated
under the laws of the State of Louisiana. The primary business
of the Agency is the sale of insurance. The Agency is a wholly-
owned subsidiary of One American Corp.
Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial
statements and reported amounts of revenues and expenses during
the period. Actual results could differ from those estimates.
Securities - Securities are being accounted for in
accordance with Statement of Financial Accounting Standards
(SFAS) No. 115, "Accounting for Investments in Debt and Equity
Securities," which requires the classification of securities as
held to maturity, trading, or available for sale.
8
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Securities classified as held to maturity are those debt
securities the Bank has both the intent and ability to hold to
maturity regardless of changes in market conditions, liquidity
needs or changes in general economic conditions. Securities
classified as trading are those securities held for resale in
anticipation of short term market movements. The Bank has no
securities classified as held to maturity or trading.
Securities classified as available for sale are those debt
securities that the Bank intends to hold for an indefinite period
of time but not necessarily to maturity. Any decision to sell a
security classified as available for sale would be based on
various factors, including significant movements in interest
rates, changes in the maturity mix of the Bank's assets and
liabilities, liquidity needs, regulatory capital considerations,
and other similar factors. Securities available for sale are
carried at fair value. Unrealized gains or losses are reported
as increases or decreases in stockholders' equity, net of the
related deferred tax effect. Realized gains or losses,
determined on the basis of the cost of specific securities sold,
are included in earnings.
Loans - Loans are stated at principal amounts outstanding,
less unearned income and allowance for loan losses. Interest on
commercial loans is accrued daily based on the principal
outstanding. Interest on installment loans is recognized and
included in interest income using the sum-of-the-digits method,
which does not differ materially from the interest method. A
loan is considered impaired when it is probable the Bank will not
be able to collect all contractual principal and interest
payments due in accordance with the terms of the loan agreement.
The Bank generally discontinues the accrual of interest
income when a loan becomes 90 days past due as to principal or
interest. Interest on impaired loans is discontinued when, in
management's opinion, the borrower may be unable to meet payments
as they become due. When a loan is placed on non-accrual status,
previously recognized but uncollected interest is reversed to
income or charged to the allowance for loan losses. Interest
income is subsequently recognized only to the extent cash
payments are received.
Allowance for Loan Losses - The allowance for loan losses is
an amount which in management's judgment is adequate to absorb
potential losses in the loan portfolio. The allowance for loan
losses is based upon management's review and evaluation of the
loan portfolio. Factors considered in the establishment of the
allowance for loan losses include management's evaluation of
specific loans, the level and composition of classified loans,
historical loss experience, results of examinations by regulatory
agencies, an internal asset review process, expectations of
future economic conditions and their impact on particular
borrowers, and other judgmental factors.
The allowance for loan losses is based on estimates of
potential future losses, and ultimate losses may vary from the
current estimates. These estimates are reviewed periodically and
as adjustments become necessary, the effect of the change in
estimate is charged to operating expenses in the period incurred.
All losses are charged to the allowance for loan losses when the
loss actually occurs or when management believes that the
collectibility of the principal is unlikely. Recoveries are
credited to the allowance at the time of recovery.
Bank Premises and Equipment - Bank premises and equipment
are stated at cost less accumulated depreciation. Depreciation
is provided at rates based upon estimated useful service lives
(ten to thirty years for buildings, three to ten years for
equipment) using the straight-line method for financial reporting
purposes and accelerated methods for income tax purposes.
The cost of assets retired or otherwise disposed of and the
related accumulated depreciation are eliminated from the accounts
in the year of disposal and the resulting gains or losses are
included in current operations.
Expenditures for maintenance and repairs are charged to
operations as incurred. Costs of major additions and
improvements are capitalized.
Other Real Estate - Other real estate is comprised of
properties acquired through foreclosure or negotiated settlement.
The carrying value of these properties is lower of cost or fair
value less estimated selling expenses. Loan losses arising from
the acquisition of these properties are charged against the
allowance for loan losses. Any subsequent market reductions
required are charged to other real estate expense. Revenues and
expenses associated with maintaining or disposing of foreclosed
properties are recorded during the period in which they are
incurred.
Income Taxes - The provision for income taxes is based on
income as reported in the financial statements after interest
income from state and municipal securities is excluded. Also
certain items of income and expenses are recognized in different
time periods for financial statement purposes than for income tax
purposes. Thus, provisions for deferred taxes are recorded in
recognition of such timing differences.
9
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Deferred taxes are provided utilizing a liability method in
accordance with SFAS No. 109 whereby deferred tax assets are
recognized for deductible temporary differences and operating
loss and tax credit carryforwards and deferred tax liabilities
are recognized for taxable temporary differences. Temporary
differences are the differences between the reported amounts of
assets and liabilities and their tax bases. Deferred tax assets
are reduced by a valuation allowance when, in the opinion of
management, it is more likely than not that some portion or all
of the deferred tax assets will not be realized. Deferred tax
assets and liabilities are adjusted for the effects of changes in
tax laws and rates on the date of enactment.
The Company and its subsidiaries file a consolidated federal
income tax return. In addition, state income tax returns are
filed individually by the Companies in accordance with state
statutes.
Earnings per Common Share - The computation of earnings per
share and other per share amounts of common stock is based on the
weighted average number of shares of common stock outstanding
during each year, which is 1,351,615 for all periods presented.
Statements of Cash Flows - For purposes of reporting cash
flows, cash and cash equivalents include cash on hand and amounts
due from banks (including cash items in process of clearing).
Acquisitions - On September 23, 1996, the Bank acquired the
First American Bank of Tangipahoa located in Hammond, Tangipahoa
Parish, Louisiana for a purchase price of $1.8 million. Pursuant
to a Merger and Acquisition Agreement, the Bank acquired assets
with a fair value of $6.9 million and assumed $5.7 million in
deposits and specific liabilities as disclosed in the table
below. The excess of the purchase price over the value of the
net tangible assets has been assigned to goodwill and is being
amortized over fifteen years. This acquisition was accounted for
using the purchase method of accounting, and the results of
operations are included in the consolidated financial statements
from the date of acquisition.
<TABLE>
9/23/96
<S> <C>
Assets:
Cash and Due From Banks $727,410
Federal Funds Sold 1,825,000
Securities 234,982
Loans, Net 4,044,018
Bank Premises and Equipment 5,719
Other Real Estate 22,000
Accrued Interest Receivable 43,729
Other Assets 4,947
Total Assets $6,907,805
Liabilities and Stockholders Equity:
Deposits $5,658,993
Accrued Interest Payable $19,087
Other Liabilities 16,478
Stockholders Equity 1,213,247
Total Liabilities and Stockholders Equity $6,907,805
</TABLE>
10
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One American Corp. and Subsidiaries
Management's Discussion and Analysis of Financial
Condition and Results of Operations
September 30, 1996
Third Quarter in Review
Net income for the current quarter of 1996 was $1.2 million,
approximately equal to the same quarter of 1995. Earnings per
common share were $.88 and $.91 for the third quarters of 1996
and 1995, respectively. Return on average assets on an
annualized basis was 1.73% for the current quarter, and 1.87% in
the same quarter of 1995. For the third quarters of 1996 and
1995, return on average equity on an annualized basis was 15.28%
and 18.00%, respectively. Cash dividends were $.25 per share for
the current quarter and $.20 per share for the third quarter of
1995.
Net interest income (FTE) for the current quarter was $3.2
million, 4.0% higher than the third quarter of 1995, due to an
increase in volume of loans which offset an increase in interest
expense. The increased volume of loans is a result of greater
loan demand in the Bank's trade area. The net interest spread
(FTE) was 4.18% for the current quarter and 4.24% for the same
quarter of 1995.
During the third quarter of 1996, in comparison with the
same quarter of 1995, average loans outstanding increased $20.6
million or 20.0% to $123.5 million. Average total deposits for
the current quarter increased $6.2 million or 2.6% to $241.3
million when compared to the average total deposits for the same
quarter of 1995. Average total assets for the current quarter
increased $11.0 million or 4.2% to $274.5 million when
respectively compared to the total average assets of the third
quarter of 1995.
Net income for the first nine months of 1996 was $4.0
million compared to $3.7 million for the same period of 1995.
Earnings per common share were $2.98 and $2.72 for the first nine
months of 1996 and 1995, respectively. Return on average assets
on an annualized basis was 1.94% for the first nine months, and
1.89% in the same period of 1995. For the first nine months of
1996 and 1995, return on average equity on an annualized basis
was 17.76% and 18.51%, respectively. Cash dividends were $.75
per share for the first nine months of 1996 and $.40 per share
for the same period of 1995.
Net interest income (FTE) for the first nine months was $9.5
million, 7.3% higher than the first nine months of 1995. The net
interest spread (FTE) was 4.16% for the first nine months and
4.26% for the same period of 1995.
During the first nine months of 1996, in comparison with the
same period of 1995, average loans outstanding increased $16.0
million or 16.1% to $115.6 million. Average total deposits for
the first nine months increased $12.8 million or 5.5% to $244.0
million when compared to the average total deposits for the same
period of 1995. Average total assets for the first nine months
increased $17.7 million or 6.8% to $276.3 million when
respectively compared to the total average assets of the same
period of 1995.
Earnings Analysis
Net Interest Income - The primary source of earnings for
the Bank is net interest income; the difference between interest
and fees generated from interest-earning assets less interest
expense for interest-bearing liabilities. For analytical
purposes, net interest income is presented on a tax equivalent
basis, using a 34% tax rate. Certain earning assets are exempt
from income taxes, therefore a tax equivalent adjustment is
included so that tax exempt earning assets are tax equivalent and
comparable with other taxable earning assets. The primary
factors that affect net interest income are changes in volume and
mix of earning assets and interest-bearing liabilities, along
with changes in market rates.
11
<PAGE>
Net interest income on a fully tax equivalent basis (FTE)
for the current quarter of 1996 was $3.2 million compared to $3.1
million for the same quarter of 1995. An increase in the volume
of loans partially offset by an increase in the cost of funds
accounted for the increase in net interest income (FTE) of $106
thousand over the same quarter of 1995. Net interest income on a
fully tax equivalent basis (FTE) for the first nine months of
1996 was $9.5 million compared to $8.9 million for the same
period of 1995 resulting in an increase in net interest income
(FTE) of $644 thousand.
Earning Assets, Interest Bearing Liabilities, and Net
Interest Spread - During the current quarter of 1996, average
earning assets were $255.6 million, an increase of $11.2 million
or 4.6% over the third quarter of 1995. The trend in earning
assets over the quarters compared shows a shift in the mix of
earning assets toward the loan portfolio from the securities
portfolio as shown in the table Earning Asset Structure.
Management has strategized to increase the Bank's earning asset
mix to include a greater percentage of higher yielding loans over
lower yielding securities. The Bank's primary market area of the
past produced lower levels of loan demand than those levels of
loan demand provided today given opportunities from new markets
associated with past out - of - market acquisitions. Management
believes the greater loan demand will exist in the near future
due to opportunities that were non-existent over the last decade
caused by economic challenges experienced in the southeast
portion of the state of Louisiana. However, there is no
guarantee that the Bank will continue to experience the loan
growth enjoyed over the last twelve months. The current loan
demand, in the Bank's primary market area, appears to be the
result of an improving economic climate and lower interest rates
compared to years past. The trend over the quarters compared
shows the mix of interest bearing liabilities shifted to higher
interest bearing certificates of deposit from lower interest
bearing savings and NOW accounts and money market accounts.
For the current quarter of 1996, the average yield on
earning assets was 7.80%, while the average cost of interest
bearing funds was 3.62%, producing a net interest spread (FTE) of
4.18%. The net interest margin (FTE) was 4.98% for the current
quarter of 1996. In comparison, the net interest margin (FTE)
for the same quarter of 1995 was 5.04%.
The cost of interest bearing liabilities during the third
quarter of 1995 was 3.52%, while the yield on average earning
assets was 7.76%, producing a net interest spread of 4.24%. The
10 basis point increase in the average cost of interest bearing
liabilities from the third quarter of 1995 to the same quarter of
1996, was greater than the 3 basis point increase in the yield on
interest earning assets for the respective quarters, which
provided for the reduction in net interest spread at the close of
the third quarter of 1996.
For the first nine months of 1996, the average yield on
earning assets was 7.78%, while the average cost of interest
bearing funds was 3.62%, producing a net interest spread (FTE) of
4.16%. The net interest margin (FTE) was 4.97% for the first
nine months of 1996. In comparison, the net interest margin
(FTE) for the same period of 1995 was 4.99%. The cost of
interest bearing liabilities during the first nine months of 1995
was 3.43%, while the yield on average earning assets was 7.69%,
producing a net interest spread of 4.26%.
The table of Average Balance Sheets and Interest Rate
Analysis for the quarterly periods ended September 30, 1996, June
30, 1995, and September 30, 1995, and the nine month periods
ended September 30, 1996 and 1995 and the corresponding table of
Interest Differentials detail the effect a change in average
balance outstanding of assets and liabilities and the change
interest yield and interest costs have on net interest income for
the respective periods. Also, the tables of Earning Asset
Structure and Deposit Structure show a more condensed,
descriptive analysis of the common size percentage changes in
earning assets and deposit mix over the quarterly periods
analyzed.
Provision for Loan Losses
Provision for Loan Losses was $75 thousand and $100 thousand
for the third quarters of 1996 and 1995, respectively. Net
charge-offs (recoveries) were $12 thousand for the current
quarter. Net charge-offs (recoveries) were immaterial for the
third quarter of 1995. Recoveries as a percentage of gross
charge-offs for the current quarter were 57.7% versus 108.6% for
the same quarter of 1995. For the first nine months of 1996,
provision for loan losses was $165 thousand and $400 thousand for
the same period of 1995.
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<TABLE>
<CAPTION>
Earning Asset Structure Third Second Third
In thousands Quarter 1996 Quarter 1996 Quarter 1995
% of % of % of
Average Earning Average Earning Average Earning
Balances Assets Balances Assets Balances Assets
<S> <C> <C> <C> <C> <C> <C>
Interest Bearing Deposits $1,103 0.4% $1,046 0.4% $246 0.1%
Federal Funds Sold 6,186 2.4% 6,630 2.6% 8,557 3.5%
Securities
Taxable 115,299 45.2% 126,270 48.7% 121,610 49.7%
Non-Taxable 9,470 3.7% 9,479 3.7% 10,939 4.5%
Loans - Net 123,537 48.3% 115,277 44.6% 103,036 42.2%
Total Earning Assets $255,595 100.0% $258,702 100.0% $244,388 100.0%
Deposit Structure Third Second Third
In thousands Quarter 1996 Quarter 1996 Quarter 1995
Average % of Average % of Average % of
Balances Deposits Balances Deposits Balances Deposits
Noninterest Bearing Deposits $44,351 18.4% $46,460 18.8% $45,671 19.4%
NOW Accounts 24,031 9.9% 24,667 10.0% 22,186 9.4%
Savings Accounts 32,065 13.3% 32,836 13.4% 32,687 13.9%
Money Market Deposit Accounts 52,313 21.7% 53,640 22.0% 54,945 23.4%
Certificates of Deposits less than $100,000 77,618 32.2% 77,426 31.6% 71,231 30.3%
Total Core Deposits 230,378 95.5% 235,029 95.8% 226,720 96.4%
Certificates of Deposits greater than $100,000 10,906 4.5% 10,194 4.2% 8,394 3.6%
Total Deposits $241,284 100.0% $245,223 100.0% $235,114 100.0%
Interest Bearing Liabilities as a percentage
of Earning Assets 77.0% 76.8% 77.5%
Core Deposits as a percentage
of Total Average Assets 83.9% 84.7% 86.0%
</TABLE>
13
<PAGE>
Other Income
Other income, including gains and losses from security
transactions, for the current quarter was $883 thousand, a
increase of $49 thousand or 5.9% compared to the same quarter of
1995. For the first nine months of 1996, other income, including
gains and losses from security transactions, was $3.1 million,
comparable to the same period of 1995.
Gain on purchased assets was $133 thousand for the current
quarter, a decrease of $42 thousand from the third quarter of
1995. For the first nine months of 1996 gain on purchased assets
was $717 thousand, a decrease of $191 thousand or 21.0% from the
same period of 1995. These gains are recognition of the
collection of principal on certain doubtful loans acquired as a
result of past bank acquisitions. The Bank continues to pursue
the collection of these doubtful loans. However, the amount of
future gains, if any are indeterminable.
Gains from security transactions involving Available for
Sale securities were non-existent for the current and same
quarter of 1995. The Bank did not experience any recoveries as
gains from security transactions during the current quarter of
1996 from Louisiana Agricultural Finance Authority Bonds and
Louisiana Housing Finance Authority Bonds which were partially
written off in accordance with regulatory directives in May of
1992. For the first nine months of 1996, gains from security
transactions involving Available for Sale securities were $285
thousand, compared to $275 thousand for the same period of 1995.
The Bank recovered $277 thousand as gains from security
transactions during the first nine months of 1996 from Louisiana
Agricultural Finance Authority Bonds and Louisiana Housing
Finance Authority. More specifics can be found on the gains
recognized from the Guaranteed Investment Contracts in the
discussion section entitled Non-performing Assets.
Other Expenses
Total other expenses were $2.2 million for the current
quarter of 1996, an increase of $222 thousand from the same
quarter of 1995. For the first nine months of 1996, total other
expenses were $6.3 million, an increase of $259 thousand from the
same period of 1995. The bank enjoyed a credit of $139 thousand
relating to deposit insurance premiums from the Federal Deposit
Insurance Corporation during the third quarter of 1995.
Applicable Income Taxes
Applicable income taxes for the current quarter were $536
thousand compared to $522 thousand for the third quarter of 1995.
Effective tax rates for the respective quarters were 31% and 30%.
For the first nine months of 1996, applicable income taxes were
$1.9 million compared to $1.6 million for the same period of
1995. Effective tax rates for the respective nine month periods
were 32% and 30% The Company's effective income tax expense as a
percentage of pretax income is different from statutory rates due
to tax-exempt interest income earned from investments in state
and municipal bonds. Interest income from state and municipal
bonds is generally exempt from federal income taxes.
Liquidity
Liquidity management is the process of ensuring that the
Company's asset and liability structure is the proper mix to meet
the withdrawals of its' depositors, and to fund loan commitments
and other funding requirements. Management's primary source of
funds is the Bank's core deposit base. During the current
quarter, average core deposits were approximately $230.4 million
or 95.5% of total average deposits and 83.9% of total average
assets. For a comparison with prior period quarters see the
table entitled Deposit Structure. Other sources of liquidity are
maturities in the investment portfolio and loan maturities and
repayments. Management continually evaluates the maturities and
mix of its earning assets and interest-bearing liabilities to
monitor its ability to meet current and future obligations and to
achieve maximum net interest income. Due to the stability of the
core deposit base as noted above and the maturities of the
investment portfolio, management does not anticipate any
difficulties in meeting the needs of its depositors nor the
ability to fund future loan commitments.
14
<PAGE>
Interest Rate Sensitivity
Interest rate risk is the measurement of risk exposure or
changes in net interest income and subsequently net income given
changes in the external interest rate markets. This possible
risk exposure is produced by the different repricing intervals of
interest earning assets and interest bearing liabilities, given
changes in the mix of such assets and liabilities, and the growth
of such assets and liabilities. One measurement of interest rate
risk is gap analysis. The gap matches the repricing of interest
rate sensitive assets and liabilities for selective intervals.
GAP analysis, is a static measurement based on an individual
point in time. This interest rate risk measurement process may
not indicate actual rate exposure given contractual maturities
and repricing period inconsistencies. Management also measures
interest rate risk exposure by process of dynamic income
simulation. The latter process measures possible levels of
exposure more accurately given the ability to better identify
contractual maturities and repricing periods.
For gap analysis, a decay rate methodology is used to arrive
at the principal and interest cash flows used in the market value
calculations given FDIC regulatory guidelines as set forth in
FDICIA 305. First, rate sensitive and non-rate sensitive
balances are separated. Higher decay rates force rate sensitive
cash flows to occur within one year. Decay rates are then input
for the non-rate sensitive funds. These decay rates spread the
non-rate sensitive balances out as far as the FDIC regulatory
guidelines allow in FDICIA 305. Decay rates assumptions
implemented are based on a flat rate environment and at
management's discretion.
The Bank has established decay rate assumptions given data
collection over the last 10 or so years on MMDA, Savings
Accounts, Now Accounts, and Non-interest Bearing Accounts. The
assumptions are based on account type sensitivity patterns given
the change in the Bank's benchmark for pricing and the change in
relationship each account type has to total deposits. Decay
rates are updated at each modeling session if warranted by rate
changes in the market or changes in non-rate sensitivity patterns
given the account type. The identification of the non-rate
sensitive portion of such accounts provides a more complete
picture of the actual core deposit base which may not reprice in
the same manner as the rate sensitive portion.
The Interest Rate Sensitivity Table presents the Bank's
interest rate sensitivity position at September 30, 1996. The
table indicates that the Company's interest bearing liabilities
exceed its earning assets out to the one year point in time
suggesting a decrease in net interest income in a flat rate
environment. This may not be the case in reality given that
mentioned above as it pertains to GAP analysis.
In May 1994 the Bank enhanced its interest rate management
tools by becoming a member of the Federal Home Loan Bank of
Dallas (FHLB). The FHLB provides the Bank the ability to further
match the rates and maturities of its funding with those of
earning assets. Also, the FHLB provides the Bank the ability to
offer long term, fixed rate loans to its customer base with
minimal additional interest rate risk exposure.
15
<PAGE>
<TABLE>
<CAPTION>
Interest Rate Sensitivity Table
September 30, 1996
In thousands
0-90 91-365 1 Year- Over 5 Non-
Days Days 5 Years Years Sensitive Total
<S> <C> <C> <C> <C> <C> <C>
Assets
Securities $29,369 $31,247 $46,001 $8,668 -$115,285
Loans, Net 22,112 32,727 51,151 22,963 67 129,020
Federal Funds Sold 9,925 - - - - 9,925
Other Assets 1,039 - - - 26,884 27,923
Total Assets $62,445 $63,974 $97,152$31,631 $26,951$282,153
Liabilities
NOW and Super NOW Deposits $2,003 $5,335 $11,785 $4,849 - $23,972
Insured Money Market Accounts 1,026 23,519 27,567 - - 52,112
Savings Deposits 2,928 7,694 14,977 5,882 - 31,481
Certificates of Deposits 25,109 50,728 17,234 - - 93,071
Noninterest Bearing Deposits 4,927 12,460 19,903 9,399 - 46,689
Other Liabilities 24 75 469 213 1,293 2,074
Stockholders' Equity - - - - 32,754 32,754
Total Liabilities and
Stockholders' Equity $36,017 $99,811 $91,935$20,343 $34,047$282,153
Interest Rate Sensitivity Gap$26,428($35,837 $5,217$11,288 ($7,096) -
Cumulative Interest Rate
Sensitivity Gap $26,428 ($9,409)($4,192)$7,096 $0
GAP / Assets 9.4% -12.7% 1.8% 4.0% -2.5%
Cumulative GAP / Asset 9.4% -3.3% -1.5% 2.5% 0.0%
</TABLE>
Financial Instruments
In the normal course of business the Company enters into
agreements which, for accounting purposes, are considered off -
balance sheet activities. These agreements are loans and lines
of credit commitments to customers to extend credit at specified
rates, duration, and purpose. The commitments adhere to normal
lending policy, collateral requirements, and credit reviews.
Available loan commitments at September 30, 1996, were $6.9
million and $6.0 million at September 30, 1995. The Bank had
letters of credit of $729 thousand issued at September 30, 1996
compared to $826 thousand at September 30, 1995. Additionally,
the Bank has deposit customers who have credit lines available to
them through their deposit accounts. At September 30, 1996 the
available portion of these credit lines was $621 thousand
compared to $628 thousand at September 30, 1995. These credit
lines are immediately cancelable by the Bank. The credit lines
provide a source of income to the Bank through service fees
charged and interest earned on balances outstanding. The credit
lines are reviewed regularly and do not pose a material credit
risk to the Bank. To date the Bank does not have instruments
outstanding that can be specifically described as a financial
guarantee which guarantees the performance of a customer to a
third party other than the financial standby letters of credit
described above. The Bank began issuing credit cards during the
third quarter of 1992. As of September 30, 1996, the aggregate
credit available was $2.8 million, and $2.6 million at September
30, 1995. Applicants are reviewed through normal lending
policies and credit reviews.
16
<PAGE>
The Bank is not a party to financial instruments defined as
interest rate exchange agreements, financial futures, or
financial options. Therefore, the Bank is not exposed to
interest rate risk in excess of the amount recognized in the
consolidated balance sheets as that risk may apply to interest
rate exchange agreements, financial futures, or financial
options.
Securities
During December 1995, management had a one time opportunity
to reclassify Available for Sale and Held to Maturity securities
in the security portfolio. Management reclassified securities
classified at the time as Held to Maturity to Available for Sale.
Therefore, the Bank's entire security portfolio is classified as
Available for Sale.
Included in the category of Securities of Other US
Government Agencies at September 30, 1996 is $23.0 million par
value of structured notes, with an amortized cost of $23.0
million and a fair value of $22.6 million, resulting in an
unrealized loss in the amount of $357 thousand. The structured
notes, which are issued by US government sponsored agencies, are
debt securities whose cash flows are dependent on one or more
indices which can create interest rate risk. The majority of the
securities held as structured notes are considered deleveraged
bonds. The rate on these securities is a fraction of (40 - 50%)
the 10 year CMT plus a certain number of basis points (60 - 170
basis points). These securities are variable in nature and
reprice on a monthly, quarterly, or semi-annual basis. However,
the majority of the securities reprice quarterly. The 10 year
CMT related securities mature during the first and second quarter
of 1998. A fluctuation in interest rates should in no way effect
the principal balance of these securities at maturity.
Management understands the risks associated with these types of
instruments and has the capability to effectively monitor the
notes activity. Although classified in the available for sale
category, it is management's intention to hold the structured
notes until the notes mature at par value. Based on the variable
nature of said securities and the securities percentage
relationship to earning assets, a +/- 200 basis point interest
rate shock and income simulation on the security class showed
minimal impact on earnings. Further, management is of the
opinion that earning trends indicate the ability to accept any
adverse risk associated with the possible sale of said securities
should the decision to hold the structured notes to maturity
change.
Allowance for Loan Losses
The allowance for loan losses was $3.4 million at September
30, 1996 or 2.6% of loans outstanding. At September 30, 1995,
the allowance for loan losses was $3.2 million or 3.0% of loans
outstanding. The allowance for loan losses account represents
amounts available for possible future losses based on modeling
and management's evaluation of the loan portfolio. To ascertain
the potential losses in the portfolio, management reviews past
due loans on a monthly basis. Additionally, the loan review
department performs an ongoing review of the loan portfolio.
Loans are reviewed for compliance to the Bank's lending policy
and the borrower's current financial condition and ability to
meet scheduled repayment terms. Based on these functions and
management's knowledge of the Bank's borrowers, the allowance for
loan losses in management's judgment, is adequate to absorb
potential loan losses based on current review of the quality of
the loan portfolio. The Bank has established the balances in
allowance for loan losses in order to accept any adverse loan
relationships which have the potential to occur. As the Bank's
loan - to - deposit relationship continues to increase, so does
the potential to experience adverse loans at a rate uncommon to
the Bank's historical loan loss basis, given the smaller loan -
to - deposit relationships of the past.
Nonperforming Assets
Nonperforming assets include nonaccrual and impaired loans
and other real estate. Generally, loans are considered
nonaccrual when the interest becomes 90 days past due or when
there is uncertainty about the repayment of principal and
interest in accordance with the terms of the loans. Nonaccrual
loans at September 30, 1996, were $67 thousand, compared to $594
thousand at September 30, 1995. Loans past due 90 days and still
accruing at September 30, 1996 and 1995 were $546 thousand and
$494 thousand, respectively. For September 30, 1996 and 1995,
nonaccrual loans were insignificant and .6% of gross loans
outstanding and insignificant and 18.8% of the allowance for loan
losses, respectively.
17
<PAGE>
Impaired loans having recorded investments of $4.0 million
at September 30, 1996 have been recognized in conformity with
SFAS No. 114 as amended by SFAS No. 118. The total allowance for
loan losses related to these loans was $1.6 million at September
30, 1996. Interest received on impaired loans amounted to $371
thousand at September 30, 1996.
Other real estate is properties held for sale acquired
though foreclosure or negotiated settlements of debt. Other real
estate was $51 thousand at the close of the current quarter and
insignificant at the third quarter of 1995.
In the process of reviewing the loan portfolio, management
acknowledges certain potential problem loans which are not
classified as impaired, non-accrual, greater than 90 days
delinquent, or restructured. Management does not feel that any
of these potential problem loans are reasonably likely to have or
will have a material effect on the Company's liquidity, capital
resources, or results of operations.
The Bank also has approximately $342 thousand in par value
of Louisiana Agricultural Finance Authority Bonds and Louisiana
Housing Finance Authority Bonds with a book value of $1, on
nonaccrual status. Under a directive from state regulatory
agencies the original $2.35 million in par value of the
Guaranteed Investment Contracts were placed on nonaccrual status
in May, 1992. Due to the directive, the bonds were written down
to $.20 on the dollar or $470 thousand. While management has
written down these bonds in accordance with regulatory policy as
mentioned above, management continues to feel that the fair value
was not representative of the potential liquidation value of
these bonds. Management is of the opinion that the permanent
impairment of the bonds was not in excess of the prescribed
regulatory write downs. A class action suit was filed on behalf
of the bondholders. In summary, the suit sought a determination
of the priority treatment the bondholders would receive under
California statutes in the liquidation of Executive Life
Insurance Company. Under Priority 5 the Guaranteed Investment
Contracts (GICs), which support the municipal bonds, would be
treated as insurance policies and would have the same payout
ratio as other policies. Under Priority 6, the GICs would have
the status of a general unsecured creditor. On November 15,
1992, the Superior Court in California ruled the GICs were a
Priority 5. As a result of pending litigation, continued
settlement proposals are taking place between the guarantors of
the bonds and the bondholders. To date, the Bank has recovered
approximately $2.008 million as partial payments of the $2.35
million in original par value. Of the $2.008 million, $1.539
million were recognized as gains on securities available for sale
since the original write down. The remaining $470 thousand was
applied against the book value. Of the $1.539 million in gains
recognized since the write down, $277 thousand were recognized in
1996, $440 thousand were recognized in 1995, and $822 thousand
were recognized prior to 1995. The Bank continues to pursue the
collection of principal on these securities. However, the amount
of any future fulfillment of these collection actions remain
uncertain.
Regulatory Matters
The Bank is subject to various capital requirements
administered by the federal Banking agencies. Failure to meet
minimum capital requirements can initiate certain mandatory - and
possibly discretionary - actions by regulators that, if
undertaken, could have a material effect on the Bank's financial
statements. Various regulations require the Bank to meet
specific capital adequacy guidelines that involve quantitative
measures of the Bank's assets, liabilities, and certain off -
balance - sheet items as calculated under regulatory accounting
practices. The Bank's capital classification is also subject to
qualitative judgments by the regulators about components, risk
weightings, and other factors. Quantitative measures established
by regulation to ensure capital adequacy require the Bank to
maintain minimum amounts and ratios as set forth in the section
entitled Capital Adequacy below.
Management is unaware, regulatory or otherwise, of any known
trends, events or uncertainties which are reasonably likely to
have or will have a material effect on the Company's liquidity,
capital resources, or results of operations.
18
<PAGE>
Capital Adequacy
The strength of a company is measured by the company's
capital, earnings history, asset quality, and management.
Capital can be increased by the retention of earnings and
issuance of equity stock. Management feels the current trend of
earnings and dividend distribution is sufficient to maintain its
capital adequacy requirements.
The Company is required to maintain minimum amounts of
capital to total risk-weighted assets, as defined by the
regulators. The guidelines require total capital of 8.00%, half
of which must be Tier 1 capital. The computation of risk-
weighted ratios follow the transitional rule, which currently
does not include the unrealized gain (loss) on securities
available for sale in Tier 1 capital.
The leverage ratio consists of Tier 1 capital as a
percentage of average total assets. The minimum leverage ratio
for all banks and bank holding companies is 3.00%. This minimum
ratio is dependent upon the strength of the individual bank or
holding company and may be increased by regulatory authorities on
an individual basis. The 3.00% minimum was established to make
certain that all banks have a minimum capital level to support
their assets, regardless of risk profile. As shown in the table
Capital Adequacy Ratios below, the Company's ratios for the
reporting periods exceed regulatory minimums.
<TABLE>
<CAPTION>
Capital Adequacy Ratios
In Thousands September 30,December 30, September 30,
1996 1995 1995
<S> <C> <C> <C>
Tier 1 Capital:
Stockholders' Equity $31,912 $29,428 $28,191
Tier 2 Capital:
Allowance for Loan Losses 1,684 1,407 1,359
Total Capital $33,596 $30,835 $29,550
Risk-Weighted Ratios:
Tier 1 Capital 24.0% 26.6% 26.4%
Total Capital 25.2% 27.9% 27.6%
Leverage Ratio 11.7% 11.1% 10.7%
Stockholders' Equity 11.3% 10.8% 10.7%
Regulatory Risk-Based Capitalization Requirements
Significantly Critically
Well Adequately Under Under Under
Capitalized Capitalized Capitalized Capitalized Capitalized
Risk-Weighted Ratios:
Tier 1 Capital 6.0% 4.0% < 4.0% < 3.0%
Total Capital 10.0% 8.0% < 8.0% < 6.0%
Leverage Ratio 5.0% 4.0% < 4.0% < 3.0% <= 2.0% tangible
equity
</TABLE>
The Company's dividends are determined by its Board of
Directors. The current policy is to maintain dividends at a
level which ensures that the Company is able to maintain
sufficient regulatory capital levels and provides a basis for
future growth. The Company's primary source of funds is the
dividend received from the Bank. Under current dividend
limitations, the Bank could pay in dividends without regulatory
approval of approximately $7.2 million. Should a regulatory
agency limit the Bank from paying dividends, the Company
maintains sufficient liquidity to maintain its operations.
19
<PAGE>
<TABLE>
<CAPTION>
AVERAGE BALANCE SHEETS AND INTEREST RATE ANALYSIS
for the quarterly periods ended September 30, 1996, June 30, 1996, and September 30, 1995
In thousands
Third Quarter 1996 Second Quarter 1996 Third Quarter 1995
AVERAGE INCOME/ YIELDAVERAGE INCOME/ YIELDAVERAGE INCOME/ YIELD/
BALANCE EXPENSE RATE BALANCE EXPENSE RATE BALANCE EXPENSE RATE
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Assets
Interest Bearing Deposit Accounts $1,103 $15.1 5.43% $1,046 $10.3 3.95% $246 $3.9 6.23%
Federal Funds Sold and Securities
Purchased under Resale Agreements 6,186 80.8 5.18% 6,630 91.4 5.53% 8,557 126.5 5.87%
Securities:
Taxable 115,299 1,713.6 5.90% 126,270 1,846.9 5.87% 121,610 1,827.7 5.96%
Non-Taxable* 9,470 203.8 8.54% 9,479 203.8 8.62% 10,939 241.8 8.77%
Loans - Net 123,537 3,005.0 9.65% 115,277 2,833.0 9.86% 103,036 2,582.9 9.95%
Total Earning Assets 255,595 5,018.3 7.80% 258,702 4,985.4 7.74% 244,388 4,782.8 7.76%
Allowance for Loan Losses (3,291) (3,233) (3,109)
Nonearning Assets 22,173 21,964 22,207
Total Assets $274,477 $277,433 $263,486
Liabilities and Stockholders' Equity
NOW Accounts $24,031 $126.9 2.10% $24,667 $129.7 2.11% $22,186 $119.3 2.13%
Savings Accounts 32,065 205.1 2.54% 32,836 207.2 2.53% 32,687 207.8 2.52%
Money Market Deposit Accounts 52,313 356.8 2.71% 53,640 372.6 2.79% 54,945 388.0 2.80%
Certificates of Deposits less than $100,000 77,618 986.3 5.04% 77,426 963.5 4.99% 71,231 844.9 4.71%
Certificates of Deposits greater than $100,000 10,906 121.2 4.41% 10,194 107.8 4.24% 8,394 119.3 5.64%
Total Interest Bearing Deposits 196,933 1,796.3 3.62% 198,763 1,780.8 3.59% 189,443 1,679.2 3.52%
Other Borrowings 789 12.7 6.39% 790 10.1 5.13% - - 0.00%
Total Interest Bearing Liabilities 197,722 1,809.0 3.62% 199,553 1,790.9 3.59% 189,443 1,679.2 3.52%
Noninterest Bearing Deposits 44,351 46,460 45,671
Other Liabilities 1,236 1,211 1,021
Stockholders' Equity 31,138 30,209 27,351
Total Liabilities and Stockholders' Equity $274,447 $277,433 $263,486
Net Interest Income - Tax Equivalent Basis* 3,209.3 3,194.5 3,103.6
Tax Equivalent Adjustment (69.3) (69.3) (82.2)
Net Interest Income $3,140.0 $3,125.2 $3,021.4
Net Interest Income - Spread* 4.18% 4.15% 4.24%
Net Interest Income as a % of Total Earning Assets* 4.98% 4.95% 5.04%
*Tax Equivalent Basis - 34% Rate for the periods dated
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
AVERAGE BALANCE SHEETS AND INTEREST RATE ANALYSIS
for the nine month periods ended September 30, 1996 and 1995
In thousands Nine Months Ended Nine Months Ended
September 30, 1996 September 30, 1995
AVERAGE INCOME/ YIELD AVERAGE INCOME/ YIELD/
BALANCE EXPENSE RATE BALANCE EXPENSE RATE
<S> <C> <C> <C> <C> <C> <C>
Assets
Interest Bearing Deposit Accounts $1,531 $59.0 5.17% $251 $11.4 6.13%
Federal Funds Sold and Securities
Purchased under Resale Agreements 8,752 343.7 5.27% 9,409 411.8 5.89%
Securities:
Taxable 121,386 5,357.3 5.92% 119,538 5,270.3 5.94%
Non-Taxable* 9,825 643.9 8.80% 10,821 718.9 8.95%
Loans - Net 115,575 8,498.0 9.87% 99,558 7,266.5 9.83%
Total Earning Assets $257,069 $14,901.9 7.78% $239,577 $13,678.9 7.69%
Allowance for Loan Losses (3,261) (2,991)
Nonearning Assets 22,526 22,095
Total Assets $276,334 $258,681
Liabilities and Stockholders' Equity
NOW Accounts $25,063 $400.2 2.14% $22,514 $370.3 2.22%
Savings Accounts 32,334 614.5 2.55% 32,096 605.0 2.54%
Money Market Deposit Accounts 54,078 1,133.3 2.81% 57,340 1,222.5 2.87%
Certificates of Deposits less than $100,000 76,659 2,866.5 5.02% 68,521 2,318.4 4.56%
Certificates of Deposits greater than $100,000 10,423 337.7 4.35% 8,092 284.7 4.74%
Total Interest Bearing Deposits 198,557 5,352.2 3.62% 188,563 4,800.8 3.43%
Other Borrowings 790 27.8 4.72% - - 0.00%
Total Interest Bearing Liabilities 199,347 5,380.0 3.62% 188,563 4,800.8 3.43%
Noninterest Bearing Deposits 45,478 42,722
Other Liabilities 1,286 893
Stockholders' Equity 30,223 26,503
Total Liabilities and Stockholders' Equity $276,334 $258,681
Net Interest Income - Tax Equivalent Basis* 9,521.9 8,878.1
Tax Equivalent Adjustment ($218.9) ($244.4)
Net Interest Income $9,303.0 $8,633.7
Net Interest Income - Spread* 4.16% 4.26%
Net Interest Income as a % of Total Earning Assets* 4.97% 4.99%
*Tax Equivalent Basis - 34% Rate for the periods dated
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
INTEREST DIFFERENTIALS
for the quarterly periods ended September 30, 1996, June 30, 1996, and September 30, 1995
and nine month periods ended September 30, 1996 and 1995
In thousands
Nine Months Ended
Third Quarter 1996 Third Quarter 1996 September 30, 1996
vs vs vs
Second Quarter 1996 Third Quarter 1995 September 30, 1995
Change due to Total Change due to Total Change due to Total
Volume Rate Change Volume Rate Change Volume Rate Change
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Interest Earning Assets:
Interest Bearing Deposit Accounts $0.6 $4.2 $4.8 $13.4 ($2.2) $11.2 $58.3 ($10.7) $47.6
Federal Funds Sold (6.1) (4.5) (10.6) (35.1) (10.6) (45.6) (28.8) (39.3) (68.1)
Securities:
Taxable (160.5) 27.2 (133.3) (94.8) (19.3) (114.2) 81.5 5.5 87.0
Non-Taxable* (0.2) 0.2 (0.0) (32.5) (5.5) (38.0) (66.2) (8.8) (75.0)
Loans 203.0 (31.0) 172.0 513.9 (91.8) 422.2 1,169.0 62.5 1,231.5
Total Interest Income 36.8 (3.9) 32.9 364.9 (129.5) 235.4 1,213.8 9.2 1,223.0
Interest Bearing Liabilities:
NOW Accounts (3.3) 0.5 (2.8) 9.9 (2.3) 7.6 41.9 (12.0) 29.9
Savings Accounts (4.9) 2.8 (2.1) (4.0) 1.3 (2.7) 4.4 5.1 9.4
Money Market Deposit Accounts (9.2) (6.6) (15.8) (18.6) (12.6) (31.2) (69.5) (19.7) (89.2)
Certificates of Deposits less than $100,000 2.4 20.4 22.8 75.8 65.6 141.3 275.3 272.8 548.2
Certificates of Deposits greater than $100,000 7.5 5.9 13.4 35.7 (33.7) 2.0 82.0 (28.9) 53.1
Other Borrowings (0.0) 2.6 2.6 0.0 12.7 12.7 0.0 27.8 27.8
Total Interest Expense (7.5) 25.6 18.1 98.8 31.0 129.8 334.1 245.1 579.2
Increase (Decrease) in
Interest Differential $44.3 ($29.5) $14.8 $266.1 ($160.5)$105.6 $879.7($235.9) $643.8
*Tax Equivalent Basis - 34% Rate for the periods dated
</TABLE>
22
<PAGE>
Part II
Item 1. Legal Proceedings
During the normal course of business, the Company is
involved in various legal proceedings. In the opinion of
management and counsel, any liability resulting from such
proceedings would not have a material adverse effect on the
Company's financial statements.
Item 6. Exhibits and Reports on Form 8-K
(b) Reports on Form 8-K
None
23
<PAGE>
Management's Responsibility for Financial Reporting
The management of One American Corp. and Subsidiaries is
responsible for the preparation of the financial statements,
related financial data and other information in this quarterly
report. The financial statements are prepared in accordance with
generally accepted accounting principles and include some amounts
that are necessarily based on management's informed estimates and
judgments, with consideration given to materiality. All
financial information contained in this quarterly report is
consistent with that in the financial statements.
Management fulfills its responsibility for the integrity,
objectivity, consistency and fair presentation of the financial
statements and financial information through an accounting system
and related internal accounting controls that are designed to
provide reasonable assurance that assets are safeguarded and that
transactions are authorized and recorded in accordance with
established policies and procedures. The concept of reasonable
assurance is based on the recognition that the cost of a system
of internal accounting controls should not exceed the related
benefits. As an integral part of the system of internal
accounting controls, One American Corp. and Subsidiaries has a
professional staff who monitors compliance with and assess the
effectiveness of the system of internal accounting controls and
coordinate audit coverage with the independent public
accountants.
The Audit Committee of the Board of Directors, composed
solely of outside directors, meets periodically with management,
and the independent public accountants to review matters relating
to financial reporting, internal accounting control and the
nature, extent and results of the audit effort. The independent
public accountants have direct access to the Audit Committee with
or without management present.
The financial statements as of December 31, 1995, were
examined by Hannis T. Bourgeois & Co., L. L. P. independent
public accountants, who rendered an independent professional
opinion on the financial statements prepared by management. The
financial statements as of September 30, 1996, have not been
reviewed by Hannis T. Bourgeois & Co., L. L. P.
24
<PAGE>
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.
One American Corp.
By: /s/ J. B. Falgoust
J. B. Falgoust, President
November 8, 1996
Date
25
<PAGE>
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