SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the
Fiscal Year Ended December 31, 1996
One American Corp 0-12437
(Exact name of registrant as (Comm. File No.)
specified in its charter)
Louisiana 72-0948181
(State or other jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
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)265-4061
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $5.00 Par Value
(Title of Class)
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 by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
State the aggregate market value of the voting stock held by
non-affiliates of the registrant: $31,800,110.00 (1,025,810
Shares @ $31.00 per share)*
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date.
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Common stock $5 Par Value, 1,351,615 shares outstanding as
of March 13, 1997.
Documents Incorporated by Reference
Document Part of Form 10-K
Definitive Proxy Statement for 1997 Part I and Part III
Annual Meeting of Stockholders
*For purposes of the computation, shares (325,805) owned by
executive officers, directors and 5% shareholders have been
excluded.
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Part I
Item 1 Description of Business 4
Supplemental Financial Information:
Average Balance Sheets and Interest Yield Analysis 10
Interest Differential 10
Securities Portfolio 11
Loan Portfolio 11
Non-Performing Loans 11
Summary of Loan Loss Experience 11
Deposits 12
Return on Equity and Assets 12
Item 2 Description of Properties 12
Item 3 Legal Proceedings 13
Item 4 Submission of Matters to a Vote of Security Holders13
Part II
Item 5 Market for the Registrant's Common Stock
and Related Security Holder Matters 14
Item 6 Selected Financial Data 15
Item 7 Management's Discussion and Analysis of
Financial Condition and Results of Operation 17
Item 8 Financial Statements and Supplementary Data 38
Item 9 Disagreements on Accounting and Financial
Disclosures 63
Part III
Item 10 Directors and Executive Officers
of the Registrant 63
Item 11 Executive Compensation 63
Item 12 Security Ownership of Certain Beneficial
Owners and Management 63
Item 13 Certain Relationships and Related Transactions 63
Part IV
Item 14 Exhibits, Financial Statement Schedules
and Reports On Form 8-K 63
Signatures 64
Part I
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Item 1. Business
The Registrant
One American Corp., (the "Company") was incorporated in
Louisiana on May 14, 1982. At a special meeting on December 14,
1982, the stockholders of First American Bank and Trust, (the
"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 the Company
through a one-for-one exchange for all of the outstanding common
stock (150,000 shares) of the Bank. The reorganization has been
accounted for as a pooling-of-interests. The Company is now
engaged, through its subsidiary, in the banking business. The
Bank is the Company's principal asset and primary source of
revenue.
On July 14, 1983, One American Agency, Inc. (the "Agency")
was incorporated under the laws of the State of Louisiana. The
Agency issued all of its outstanding common stock (100 shares) to
the Company, and became a wholly-owned subsidiary of the Company.
Through its subsidiary, the Company is now engaged in the
insurance agency business. The Agency is neither the Company's
principal asset, nor a primary source of revenue.
The Bank
The Bank (formerly Bank of Vacherie) was incorporated under
the laws of the State of Louisiana on December 3, 1910, and was
licensed by the Louisiana State Banking Department and commenced
operations as a Louisiana State chartered bank on February 11,
1911. The name of the bank was changed from Bank of Vacherie to
First American Bank and Trust on January 17, 1978. The Bank's
securities consist of one class of common stock of which there
were 150,000 shares held 100% by its parent, the Company, as of
March 13, 1997.
The Bank presently has a main office at LA Highway 20 West,
Vacherie, St. James Parish, Louisiana, and fifteen branch
offices. Four branches are located in St. James Parish in the
cities of Vacherie (2), Gramercy, and Lutcher. One branch is
located in Lafourche Parish in the city of Thibodaux. Five
branches are located in St. Charles Parish in the cities of
Boutte, Des Allemands, Luling, Norco, and St. Rose (2). Two
branches are located in Jefferson Parish, one in the city of
Kenner, the other in Metairie. One branch is located in St. John
Parish in the city of LaPlace. One branch is located in
Tangipahoa, Parish in the city of Hammond. The branches located
in St. James Parish were approved on July 9, 1969, November 11,
1974, July 30, 1979, April 16, 1984, respectively, by the
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Commissioner of Financial Institutions of the State of Louisiana
and by the Federal Deposit Insurance Corporation. The Thibodaux
branch was approved on July 7, 1988, by the Commissioner of
Financial Institutions of the State of Louisiana, and on July 5,
1988, by the Federal Deposit Insurance Corporation. The five
branches located in St. Charles Parish were acquired from the
Federal Deposit Insurance Corporation on November 2, 1989, and
were approved on this date by the Commissioner of Financial
Institutions of the State of Louisiana, and the Federal Deposit
Insurance Corporation. The two branches located in Jefferson
Parish were acquired from the Federal Deposit Insurance
Corporation on February 14, 1991, and were approved on this date
by the Commissioner of Financial Institutions of the State of
Louisiana, and the Federal Deposit Insurance Corporation. The
one branch located in St. John Parish was acquired from the
Resolution Trust Corporation on August 26, 1994, and was approved
on this date by the Commissioner of Financial Institutions of the
State of Louisiana, and the Federal Deposit Insurance
Corporation. The one branch located in Tangipahoa Parish was
acquired from First American Bank of Tangipahoa on September 23,
1996 , and was approved on this date by the Commissioner of
Financial Institutions of the State of Louisiana, and the Federal
Deposit Insurance Corporation.
The Bank is engaged in primarily the same business
operations as any independent commercial bank, with special
emphasis in retail banking, including the acceptance of checking
and saving deposits, and the making of commercial, real estate,
personal, home improvement, automobile and other installment and
term loans. The Bank also offers, among services, travelers'
cheques, safe deposit boxes, note collection, escrow and other
customary bank services to its customers, with the exception of
trust services. In addition, the Bank offers drive-up teller
services, automated teller machines and night depository
facilities. First American Bank and Trust is insured under the
Federal Deposit Insurance Act; but, is not a member of the
Federal Reserve System.
The three main areas in which the Bank has directed its
lending activity are (1) real estate loans; (2) loans to
individuals for household, family and other consumer
expenditures; and (3) commercial loans. As of December 31, 1996,
these three categories accounted for approximately 80.1%, 9.9%
and 9.8%, respectively, of the Bank's loan portfolio. (See Note
E in the 1996 Form 10-K section titled "Financial Statements and
Supplementary Data" for a detailed analysis of the loan
portfolio.)
The majority of the Bank's deposits are from individuals,
farmers, and small business-related sources. The average deposit
balance is relatively small. This makes the Bank less subject to
the adverse effects from the loss of a substantial depositor who
may be seeking higher yields in other markets, or have need of
money on deposit in the Bank. In addition to the deposits
mentioned above, the Bank is a depository for some governmental
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agencies. The time deposit and money market balances of all
State and Political Subdivisions were $7.1 million, interest
bearing demand deposits of $6.2 million, and non-interest bearing
demand deposits of $1.4 million as of December 31, 1996. These
depositors are considered by management to be important to the
Bank. Although no agreement or understanding exist between these
customers and the Bank, management has no reason to believe that
these time deposit balances will substantially decrease or
increase. In connection with the deposits of these State and
Political Subdivisions, the Bank is required to pledge securities
to secure such deposits (except for the first $100,000 of such
deposits, which is insured by the Federal Deposit Insurance
Corporation).
As of December 31, 1996, the Bank had 13,751 demand deposit
accounts with a total balance of $45.9 million; 1,263 NOW and
Super NOW accounts with a total balance of $24.3 million; 2,584
Insured Money Market Accounts with a balance of $56.5 million;
13,758 savings accounts with a total balance of $32.2 million;
and 6,390 other time deposit accounts with a total balance of
$91.8 million.
There are no securities held by the Bank that are subject to
repurchase agreements.
The Bank holds no patents, registered trademarks, licenses
(other than licenses required to be obtained from appropriate
bank regulatory agencies), franchises or concessions. There has
been no significant change in the kinds of services offered by
the Bank during the last three fiscal years.
The Bank has not engaged in any research activities relating
to the development of new services or the improvement of existing
services except in the normal course of the business activities.
The Bank presently has no plans for any new line of business
requiring the investment of a material amount to total assets.
Most of the Bank's business originates from within the
parishes of St. James, St. Charles, Jefferson, Lafourche, St.
John, and Tangipahoa Louisiana; however, some business is
obtained from the parishes immediately surrounding these
parishes. There has been no material effect upon the Bank's
capital expenditures, earnings, or competitive position as a
result of federal, state, or local environmental regulations.
The Agency
The Agency was incorporated under the laws of the State of
Louisiana on July 14, 1983. The Agency was approved and began
operations on November 25, 1983. The Agency's securities consist
of one class, common stock, of which there were 100 shares held
100% by its parent, One American Corp., as of March 13, 1997.
The Agency operates out of the main office of the Bank at LA
Highway 20 West, Vacherie, St. James Parish, Louisiana.
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The Agency provides general insurance agent services for the
Company and its subsidiaries. The Agency also provides agent
services in relation to credit life and accident and health
insurance that is directly related to the extension of credit of
other financial services of the Bank.
Competition
The Company's general market area contains approximately 138
thousand households. It's primary market place consists of St.
James Parish, St. John Parish, St. Charles Parish, the northern
portion of Lafourche Parish, the east bank of the Mississippi
river in Jefferson Parish, and the south central portion of
Tangipahoa Parish, all located in Louisiana. These parishes have
experienced little population growth over the last several years.
In the primary market area, there are several banks and
branches of savings and loan institutions aggressively pursuing
loans, deposits and other accounts.
Interest rates on loans made and deposits received were
mostly deregulated by law in 1983, but are substantially the same
among banks operating in the area served. Competition among
banks for loan customers is generally governed by such factors as
loan terms other than interest charges, restrictions on borrowers
and compensating balances, and the services offered by the bank.
Competition for deposits is governed primarily by the services
offered, including convenience of location.
In addition federal regulations have significantly broadened
the powers of savings and loan institutions with the result that
such institutions may now engage in certain activities formerly
permitted only to banks. The Company has experienced no major
effects from this legislation at this time.
Employees
The Company has approximately 148 full time employees, and
14 part-time employees. Management considers its relationship
with the employees to be good.
Supervision and Regulation
The Company is a bank holding company within the meaning of
the Bank Holding Company Act of 1956 (the "Act"), as amended, is
subject to the provisions of the Act and to regulation by the
Board of Governors of the Federal Reserve System (the "Board").
The Act requires the Company to file with the Board annual
reports containing such information as the Board may require.
The Board is authorized by the Act to examine the Company and all
of its activities. The activities that may be engaged in by the
Company and its subsidiaries are limited by the Act to those
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closely related to banking or managing or controlling banks as to
be a proper incident thereto. In determining whether a
particular activity is a proper incident to banking or managing
or controlling banks, the Board must consider whether its
performance by an affiliate of a holding company can reasonably
be expected to produce benefits to the public, such as
convenience, increased competition, or gains in efficiency that
outweigh possible adverse effects, such as undue concentration of
resources, unfair competition, conflicts of interest, or unsound
banking practices.
The Board has adopted regulations implementing the
provisions of the Act with respect to the activities of bank
holding companies. Such regulations reflect a determination by
the Board that the following activities are permissible for bank
holding companies: (1) making, for its own account or for the
account of others, loans such as would be made, for example, by a
mortgage, finance or factoring company; (2) operating as an
industrial bank; (3) servicing loans; (4) acting as a fiduciary;
(5) acting as an investment or financial advisor, including
acting in such capacity for a mortgage investment trust or real
estate investment trust; (6) leasing personal or real property,
where the lease is to serve as the functional equivalent of an
extension of credit to the lessee of the property; (7) investing
in community welfare corporations or projects; (8) providing
bookkeeping and data processing services for a bank holding
company and its subsidiaries, or storing and processing certain
other banking, financial, or related economic data; (9) acting
as an insurance agent, principally insurance issued in connection
with extensions of credit by the holding company or any of its
subsidiaries' (10) underwriting credit life and credit accident
and health insurance related to extensions of credit; (11)
providing courier services for documents and papers related to
banking transaction; (12) providing management consulting advice
to non-affiliated banks; and (13) selling money orders, travelers
cheques and U.S. Savings Bonds. In each case, the Company must
secure the approval of the Board prior to engaging in any of
these activities.
Whether or not a particular non-banking activity is
permitted under the Act, the Board is authorized to require a
holding company to terminate any activity or divest itself of any
non-banking subsidiary if in its judgment the activity or
subsidiaries would be unsound.
Under the Act and the Board's regulations, a bank holding
company and its subsidiaries are prohibited from engaging in
certain tie-in arrangements in connection with any extensions of
credit or provision of any property or services.
In addition to the limitation of Louisiana law with respect
to the ownership of banks, as described below, the ownership or
control of voting shares of a second bank by a bank holding
company, such as One American Corp., is restricted by the Act
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unless the prior approval of the Board is obtained. The Act
prohibits the Board from approving an application from a bank
holding company to acquire shares of a bank located outside the
state in which the operations of the holding company's
subsidiaries are principally conducted, unless such an
acquisition is specifically authorized by statue of the state in
which the bank whose shares are to be acquired is located.
Under the Louisiana Bank Holding Company Act of 1962, as
amended (the "Louisiana Act"), one-bank holding companies are
authorized to operate in Louisiana provided the activities of the
nonbank subsidiaries are limited to the ownership of real estate
and improvements, computer services, equipment leasing and other
directly related banking activities. The Louisiana Act, as
amended in 1984, authorized multi-banking holding companies
within the state. Certain limitations and restrictions were set,
which expired July 1, 1989. These restrictions limit
acquisitions of additional banks to those which have been in
existence for at least five years. The State Commissioner of
Financial Institutions is authorized to administer the Louisiana
Act by issuance of orders and regulations.
In addition, Louisiana banking laws were changed in 1985 and
1986 to allow interparish banking, limited statewide branching
beginning January 1, 1987, and regional banking beginning July 1,
1987. These changes have allowed Louisiana and the regional
banks and other financial institutions to engage in a wider range
of activities than were previously allowed to such institutions.
The restrictions on state banking were repealed in 1988, with the
intention of allowing state charted banks to branch bank state
wide.
Also effective January 1, 1991, Louisiana's reciprocal
interstate banking laws allowed bank holding companies domiciled
in any state of the United States to acquire Louisiana banks and
bank holding companies, if the state in which the bank holding
company is domiciled allows Louisiana banks and bank holding
companies the same opportunities.
Additional information regarding supervision and regulation
can be found in the 1996 Form 10-K in the Section titled
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" and incorporated herein by reference.
Regulatory Matters
The capital ratios for the Company and the Bank currently
exceed the regulatory capital requirements at December 31, 1996.
The capital ratios are included in the 1996 Form 10-K in the
Section titled "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and incorporated herein by
reference.
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Capital Adequacy
The Company's dividends are determined by its Board of
Directors. The current policy is to maintain dividends at a
level which ensures the Company and Bank are able to maintain
sufficient regulatory capital levels. The Company's primary
source of funds is the dividend received from the Bank. Under
current regulatory limitations the Bank could pay in dividends
without regulatory approval approximately $7.0 million. The
Company carries no debt, therefore future liquidity needs are
limited to the payment of any declared dividends. The Company
maintains sufficient liquidity to maintain its operations should
a regulatory agency limit the Bank from paying dividends.
The Bank is subject to regulation and regular examination by
the Federal Deposit Insurance Corporation, and the Office of
Financial Institutions of the State of Louisiana. Applicable
regulations relate to reserves, investments, loans, issuance of
securities, the level of capital, establishment of branches and
other aspects of its operations. Should the Bank fail to comply
with current regulations, the Federal Deposit Insurance
Corporation may initiate sanctions and other administrative
proceedings for failure to comply with current regulations and
may cease deposit insurance.
Statistical Information
The following data contains information concerning the
business and operations of One American Corp. and its
subsidiaries, First American Bank and Trust, and One American
Agency, Inc. This information should be read in conjunction with
Financial Statements and Management's Discussion and Analysis of
Financial Condition and Results of Operations.
Average Balance Sheets and Interest Yield Analysis
The following information called for by Item 1 is included
in the 1996 Form 10-K Section titled "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and is
incorporated herein by reference.
Average Balance Sheets and Interest Rate Analysis
for the years ended December 31, 1996, 1995, and 1994
Interest Differential
The following information called for by Item 1 is included
in the 1996 Form 10-K Section titled "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and is
incorporated herein by reference.
Interest Differentials
for the years ended December 31, 1996 and 1995
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Securities Portfolio
The following information called for by Item 1 is included
in the 1996 Form 10-K Section titled "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and is
incorporated herein by reference.
Securities
Also, the following information called for by Item 1 is
included in the 1996 Form 10-K Section titled "Notes to
Consolidated Financial Statements" and is incorporated herein by
reference.
See Note D titled Securities in the 1996 Form 10-K for a
detailed analysis of the security portfolio.
There were no securities held by the Company at December 31,
1996, that exceeded, in aggregate by issuer, 10% of Stockholders'
Equity.
Loan Portfolio
The following information called for by Item 1 is included
in the 1996 Form 10-K Section titled "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and is
incorporated herein by reference.
Loans
for the years ended December 31, 1996, 1995, 1994,
1993, and 1992
Non-Performing Loans
The following information called for by Item 1 is included
in the 1996 Form 10-K Section titled "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and is
incorporated herein by reference.
Non-Performing Loans
for the years ended December 31, 1996, 1995, 1994,
1993, and 1992
Summary of Loan Loss Experience
The following information called for by Item 1 is included
in the 1996 Form 10-K Section titled "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and is
incorporated herein by reference.
Summary of Loan Loss Experience
for the years ended December 31, 1996, 1995, 1994,
1993, and 1992
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Deposits
The following information called for by Item 1 is included
in the 1996 Form 10-K Section titled "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and is
incorporated herein by reference.
Average Balance Sheets and Interest Rate Analysis
for the years ended December 31, 1996, 1995, and 1994
Maturities of time deposits of $100,000 or more at December
31, 1996, are summarized below:
In thousands
3 Months or Less $6,024
Over 3 through 6 Months 3,381
Over 6 through 12 Months 1,517
Over 12 Months 1,295
$12,217
Return on Equity and Assets
The following information called for by Item 1 is included
in the 1996 Form 10-K in the Section titled Item 6. "Selected
Financial Data" and is incorporated herein by reference.
Average Total Assets
December 31, 1996, 1995, 1994, 1993, and 1992
Average Stockholders' Equity
December 31, 1996, 1995, 1994, 1993, and 1992
Selected Ratios
for the years ended December 31, 1996, 1995, 1994,
1993, and 1992
Per Share
for the years ended December 31, 1996, 1995, 1994,
1993, and 1992
Item 2. Description of Properties
One American Corp. is located in Vacherie, Louisiana in the
main office building of First American Bank and Trust. Through its
subsidiary First American Bank and Trust the Company owns the
premises in which its main office, operation center, and thirteen
of its branches are located and holds a lease for the one
remaining branch.
The Company considers all properties to be suitable and
adequate for their intended purposes and its lease to be fair and
reasonable.
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Item 3. Legal Proceedings
The following information called for by Item 3 is included
in the 1996 Form 10-K Section titled "Management's Discussion and
Analysis of Financial Condition and Results of Operations"
Subsection titled "Allowance for Loan Losses" and is incorporated
herein by reference.
In February 1997, a party filed a $5.1 million suit against
the Bank. This petition is still in its early stages and no
documentation has been provided to support any of the allegations
which have been made against the Bank. At this time, Bank's
Counsel believes there is no merit to the claim and no liability
to the Bank. No provision has been made in these financial
statements.
In addition, during the normal course of business, the
Company is involved in various other 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 4. Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders
during the fourth quarter of the year ended December 31, 1996.
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Part II
Item 5. Market for Registrant's Common Stock and Related Security
Holder's Matters
Common Stock - One American Corp.'s (the Company) stock is
not listed on any security exchange. Due to the lack of an
active trading market, One American Corp. does not have the
available information to furnish the high and low sales price or
the range of bid and ask quotations for its stock. Based upon
limited inquiries by management, it is believed that the stock of
the Company traded at the following amounts:
1996 1995
First Quarter $28.00 $20.00
Second Quarter $30.00 $22.00
Third Quarter $31.00 $23.00
Fourth Quarter $31.00 $26.50
There can be no assurance that these limited inquiries
adequately reflect the actual high and low bids or prices for the
stock of the Company.
Information - Request for additional information or copies
of Form 10-K filed with the Securities and Exchange Commission in
Washington, DC should be directed to:
J. B. Falgoust
President - Chief Executive Officer
One American Corp.
P. O. Box 550
Vacherie, LA 70090-0550
Transfer Agent and Registrar
First American Bank and Trust
P. O. Box 550
Vacherie, LA 70090-0550
General Counsel
Martin, Himel, Peytavin & Nobile
P. O. Box 278
Lutcher, LA 70071-0278
Independent Accountants
Hannis T. Bourgeois & Co., L. L. P.
2322 Tremont Drive, Suite 200
Baton Rouge, LA 70809
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Item 6. Selected Financial Data
<TABLE>
<CAPTION>
One American Corp. and Subsidiaries
Condensed Consolidated Balance Sheets
December 31, 1996, 1995, 1994, 1993, and 1992
($ in thousands, except per share data)
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Assets
Cash and Due from Banks $13,946 $15,232 $14,448 $17,078 $15,953
Securities 125,219 139,967 135,639 153,378 158,223
Loans 132,776 104,320 92,593 75,652 66,500
Other Assets 14,170 12,109 13,162 11,602 11,641
Total Assets $286,111 $271,628 $255,842 $257,710 $252,317
Liabilities and Stockholders' Equity
Deposits $250,704 $239,724 $230,862 $234,762 $232,501
Other Liabilities 1,872 1,692 990 749 688
Stockholders' Equity 33,535 30,212 23,990 22,199 19,128
Total Liabilities and Stockholders' Equity
Stockholders' Equity $286,111 $271,628 $255,842 $257,710 $252,317
Average Total Assets $276,561 $260,485 $254,367 $248,887 $246,230
Average Stockholders' Equity $30,625 $26,979 $22,950 $19,560 $17,332
Selected Ratios:
Loans to Assets 46.41% 38.41% 36.19% 29.36% 26.36%
Loans to Deposits 52.96% 43.52% 40.11% 32.22% 28.60%
Deposits to Assets 87.62% 88.25% 90.24% 91.10% 92.15%
Equity to Assets 11.72% 11.12% 9.38% 8.61% 7.58%
Return on Average Assets 1.83% 2.01% 1.68% 1.22% 1.40%
Return on Average Equity 16.49% 19.45% 18.58% 15.48% 19.84%
Dividend Payout 28.10% 16.74% 12.68% 13.40% 9.83%
Avg. Equity-to-Avg. Assets 11.07% 10.36% 9.02% 7.86% 7.04%
<CAPTION>
Condensed Consolidated Statements of Income
for the years ended December 31, 1996, 1995, 1994, 1993, and 1992
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Interest Income $19,717 $18,205 $15,693 $15,031 $16,828
Interest Expense 7,244 6,511 5,326 5,139 6,716
Net Interest Income 12,473 11,694 10,367 9,892 10,112
Provision for Loan Losses 90 - 350 900 1,200
Net Interest Income After
Provision for Loan Losses 12,383 11,694 10,017 8,992 8,912
Other Income 3,978 4,464 4,045 2,930 3,484
Other Expenses 9,030 8,501 7,990 7,694 7,622
Income Before Income Taxes 7,331 7,657 6,072 4,228 4,774
Applicable Income Tax Expense 2,281 2,410 1,808 1,201 1,335
Net Income $5,050 $5,247 $4,264 $3,027 $3,439
Per Share:
Net Income $3.74 $3.88 $3.15 $2.24 $2.54
Cash Dividends $1.05 $0.65 $0.40 $0.30 $0.25
Book Value - End of Year $24.81 $22.35 $17.75 $16.42 $14.15
</TABLE>
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<TABLE>
<CAPTION>
SELECTED QUARTERLY DATA
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
One American Corp. and Subsidiaries
for the quarter periods in the years ended December 31, 1996 and 1995
1996 FOURTH THIRD SECOND FIRST
($ in thousands, except per share data) QUARTER QUARTER QUARTER QUARTER
<S> <C> <C> <C> <C>
Interest Income $5,034 $4,949 $4,916 $4,818
Interest Expense 1,864 1,809 1,791 1,780
Net Interest Income 3,170 3,140 3,125 3,038
Provision for Loan Losses (75) 75 60 30
Net Interest Income after Provision
for Loan Losses 3,245 3,0065 3,065 3,008
Other Income 871 883 1,211 1,014
Other Expenses 2,697 2,223 2,066 2,045
Income before Income Taxes 1,419 1,725 2,210 1,977
Applicable Income Taxes 394 536 693 658
Net Income $1,025 $1,189 $1,517 $1,319
Per Share:
Net Income $0.76 $0.88 $1.12 $0.98
Dividends $0.30 $0.25 $0.25 $0.25
<CAPTION>
1995 FOURTH THIRD SECOND FIRST
($ in thousands, except per share data) QUARTER QUARTER QUARTER QUARTER
<S> <C> <C> <C> <C>
Interest Income $4,770 $4,701 $4,476 $4,258
Interest Expense 1,711 1,679 1,614 1,507
Net Interest Income 3,059 3,022 2,862 2,751
Provision for Loan Losses (400) 100 150 150
Net Interest Income after Provision
for Loan Losses 3,459 2,922 2,712 2,601
Other Income 1,373 834 1,304 953
Other Expenses 2,427 2,000 2,069 2,005
Income before Income Taxes 2,405 1,756 1,947 1,549
Applicable Income Taxes 839 522 672 377
Net Income $1,566 $1,234 $1,275 $1,172
Per Share:
Net Income $1.16 $0.91 $0.94 $0.87
Dividends $0.25 $0.20 $0.20 $0.00
</TABLE>
16
<PAGE>
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
One American Corp. and Subsidiaries
Management's Discussion and
Analysis of Financial Condition and Results of Operations
The Businesses of One American Corp.
One American Corp. is comprised of two subsidiaries, First
American Bank and Trust and One American Agency.
First American Bank and Trust is engaged in primarily the
same business operations as any independent commercial bank, with
special emphasis in retail banking, including the acceptance of
checking and saving deposits, and the making of commercial, real
estate, personal, home improvement, automobile and other
installment and term loans. The Bank also offers, among
services, travelers' cheques, safe deposit boxes, note
collection, escrow and other customary bank services to its
customers, with the exception of trust services. In addition,
the Bank offers drive-up teller services, automated teller
machines and night depository facilities. First American Bank
and Trust is insured under the Federal Deposit Insurance Act;
but, is not a member of the Federal Reserve System.
One American Agency provides general insurance agent
services for the Company and its subsidiaries. The Agency also
provides agent services in relation to credit life and accident
and health insurance that is directly related to the extension of
credit of other financial services of the Bank.
Overview of 1996
One American Corp. enjoyed net income for the year 1996 of
$5.1 million compared to $5.2 million for the same period of
1995. Earnings per common share were $3.74 and $3.88 for the
years ended 1996 and 1995, respectively. Return on average
assets was 1.83% for the current year, and 2.01% in the same
period of 1995. For the years ended 1996 and 1995, return on
average stockholders' equity was 16.49% and 19.45%, respectively.
Net interest income for 1996 was $12.5 million, 6% greater
than $11.7 million from the year 1995, due to a greater volume of
loans. The net interest margin on a fully tax equivalent basis
(FTE) was 4.96% for the current year and 4.98% for the same
period of 1995.
During the year 1996, in comparison with the same period of
1995, average loans outstanding increased $18.5 million or 18%
due to an increased loan demand. Average total deposits for the
year 1996 increased $11.5 million or 5% when compared to the
average total deposits for the same period of 1995. Average
total assets for the current year increased $16.1 million or 6%
when compared to the total average assets of the year 1995.
17
<PAGE>
Average stockholders' equity for 1996 was $30.6 million, an
increase of 14% over the average stockholders' equity for 1995.
Earnings Analysis
Net Interest Income - Net interest income is the difference
between interest and fees generated from interest earning assets
and the interest expense for interest bearing liabilities and is
the primary source of earnings for the Bank. For analytical
purposes, net interest income is presented on a tax equivalent
basis. A 34% tax rate is used for 1996, 1995, and 1994. Certain
earning assets are exempt from income taxes, therefore, a tax
equivalent adjustment is included so that tax exempt earning
assets will be compatible with other earning assets. The primary
factors that affect net interest income are the changes in volume
and mix of earning assets and interest-bearing liabilities, along
with the change in market rates.
Net interest income on a fully tax equivalent basis (FTE)
increased $800 thousand or 7%. Net interest income (FTE) for
1996 was $12.8 million compared to $12.0 million for the prior
year. Net interest income (FTE) for 1994 was $10.7 million.
Earning Assets, Interest Bearing Liabilities, and Net
Interest Spread - Average earning assets increased $15.8 million
or 7% to $257.1 million during 1996. Average earning assets were
$241.3 million in 1995 and $234.8 million in 1994. The trend in
earning assets over the years 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 on page
19. 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 years 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. As
an additional note, the Bank has benefited by the increase in non-
interest bearing deposits. The growth is attributed to a
concertive effort by the Bank to attract a broader core deposit
base consisting of commercial and personal customers.
For the year ended 1996, the average yield on earning assets
was 7.78%, while the average cost of interest bearing funds was
18
<PAGE>
3.64%, producing a net interest spread (FTE) of 4.14%. The net
interest margin (FTE) was 4.96% for the year ended 1996. In
comparison, the net interest margin (FTE) for the year ended 1995
was 4.98%. The slight decrease in net interest margin resulted
from an increased cost of interest bearing deposits. The cost of
interest bearing deposits increased at a greater rate than the
increase in yield of earning assets.
The table of Average Balance Sheets and Interest Rate
Analysis for the periods ended December 31, 1996, December 31,
1995, and December 31, 1994 on pages 34, and the corresponding
table of Interest Differentials on page 35 detail the effect a
change in average balances outstanding and the change in interest
yield and costs have on net interest income for the respective
periods. Also, the tables of Earning Asset Structure and Deposit
Structure on page 22 show a more condensed, descriptive analysis
of the common size percentage changes in average earning assets
and average deposit mix over the annual periods analyzed.
Provision for Loan Losses
Provision for loan losses was $90 thousand for 1996, an
increase of $90 thousand from the provision for loan losses of $0
for 1995. Net charge offs (recoveries) were $280 thousand for
1996, a change from recoveries of $(196) thousand for 1995. As a
percentage of average loans net charge offs (recoveries) were
.23% in 1996 and (.19)% in 1995. Gross charge offs were .43% in
1996 and 1995. Recoveries as a percentage of gross charge offs
were 45.13% in 1996 and 144.63% in 1995.
The provision for loan losses in 1994 was $350 thousand. In
1994, recoveries were $(186) thousand, or (.02)% of average
loans. Gross charge offs were .13% of average loans and
recoveries were 108.93% of gross charge offs. More specifics can
be found in the sections entitled Allowance for Loan Losses and
Non-performing Assets.
Other Income
Other income for 1996 was $3.9 million, compared to $4.5
million in 1995. Exclusive of security transactions other income
decreased $329 thousand.
Service charges on deposit accounts were $2.1 million for
1996, an increase of $286 thousand or 15% over 1995. Service
charges on deposit accounts were $1.8 million in 1995. The
primary reasons for the increase in 1996 was an increased number
of deposit accounts.
Gain on purchased assets decreased $335 thousand to $812
thousand for 1996 when compared to the prior year. These gains
are recognition of collection of principal on certain doubtful
loans acquired in the Bank acquisitions. The Bank continues to
pursue the collection of these doubtful loans. However, the
amount of future gains, if any, are indeterminable.
Other operating income for 1996 was $746 thousand compared
to the 1995 total of $1.0 million. Included in other operating
19
<PAGE>
income are fees from bankcard services, safe deposit box rentals,
and other operating fees associated with the daily operations of
the Bank. A portion of the decrease in other operating income
from 1995 to 1996 was non-recurring. Specifically, in the fourth
quarter of 1995 the Bank received class action damage restitution
in the amount of $169 thousand resulting from Guaranteed
Investment Contracts which were written down based on regulatory
directives in 1992. More specifics can be found on the
Guaranteed Investment Contracts in the section entitled Non-
performing Assets. Also, in the fourth quarter of 1995 the Bank
received a settlement on a prior pending contingency, involving
its insurer, of which a portion of the settlement in the amount
of $168 thousand was realized as other income.
Net gains on investment securities decreased other income by
$157 thousand for 1996, compared to a net gain on investment
securities of $442 thousand for 1995. The Bank netted $285
thousand as gains from security transactions during the year
1996. These securities included Louisiana Agricultural Finance
Authority Bonds and Louisiana Housing Finance Authority Bonds
that were partially written off in accordance with regulatory
directives in May of 1992. More specifics can be found on the
gains recognized from the Guaranteed Investment Contracts in the
discussion section entitled Non-performing Assets.
Other Expenses
Other expenses totaled $9.0 million in 1996, a 6% increase
over the 1995 total of $8.5 million. Salaries and employee
benefits increased $210 thousand or 5%, to $4.4 million for 1996
when compared to $4.2 million for 1995. A portion of the
increase in salaries and employee benefits, $192 thousand, was
from a performance compensation program instituted by the Bank in
1995. A fraction of additional earnings over the past year were
shared with employees on a goal achieved basis. Net occupancy
expense was $1.2 million for 1996 and 1995. Other operating
expenses totaled $3.4 million for 1996 compared to $3.3 million
for 1995, an increase of $138 thousand or 4%. For a further
analysis of other operating expenses see Note K.
Net other real estate expense produced a benefit of $13
thousand for 1996. This is a decrease in benefit from 1995 of
$146 thousand. Net other real estate and repossession expense is
the operating expense of other real estate and repossessed assets
less the income generated by other real estate and the net gains
from the sale of other real estate and repossessed assets.
Expenses from other real estate totaled $5 thousand, which were
offset by the income generated from the operations of other real
estate of $9 thousand, and net gains on the sale of other real
estate and repossessed assets of $9 thousand.
For 1995, net other real estate expense produced a benefit
of $159 thousand. Expenses from other real estate totaled $12
thousand, which were offset by income from the operations of
other real estate of $18 thousand, and net gains on the sale of
other real estate and repossessed assets of $153 thousand.
20
<PAGE>
Management continues to convert these non-performing assets to
investable funds at a value which management feels is beneficial
to the earnings of the Bank. Also, management recognizes that
the contribution of the non-recurring income offset by net gains
on the sale of other real estate is going to be less in years to
come due to the reduction of such assets.
Applicable Income Taxes
Applicable income taxes for 1996, 1995, and 1994 were $2.3
million, $2.4 million, and $1.8 million, respectively, producing
an effective tax rate of 31%, 31%, and 30%, respectively. The
Company's effective income tax expense as a percentage of pretax
income is different from statutory rates because of tax-exempt
income and the related nondeductible interest expense. A portion
of the Company's interest income is from investments in state and
municipal bonds and is generally exempt from federal income
taxes. Interest expense on funds used for tax-exempt investments
is generally nondeductible for federal income taxes.
21
<PAGE>
Table 1-
<TABLE>
<CAPTION>
Average Earning Asset Structure
In thousands 1996 1995 1994
% 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 $1,670 0.6% $387 0.1% $172 0.1%
Federal Funds Sold 9,149 3.6% 9,588 4.0% 9,303 4.0%
Securities
Taxable 116,771 45.4% 119,173 49.4% 127,372 54.2%
Non-Taxable 9,727 3.8% 10,902 4.5% 11,371 4.8%
Loans - Net 119,802 46.6% 101,318 42.0% 86,625 36.9%
Total Average Earning Assets $257,119 100.0% $241,368 100.0% $234,843 100.0%
<CAPTION>
Average Deposit Structure
In thousands 1996 1995 1994
Average % of Average % of Average % of
Balances Deposits Balances Deposits Balances Deposits
<S> <C> <C> <C> <C> <C> <C>
Noninterest Bearing Deposits $45,417 18.6% $43,622 18.8% 39,534 17.1%
NOW Accounts 24,802 10.2% 22,469 9.7% 22,869 9.9%
Savings Accounts 32,225 13.2% 32,189 13.8% 32,741 14.2%
Money Market Deposit Accounts 53,485 21.9% 56,457 24.3% 65,046 28.3%
Certificates of Deposits less than $100,000 77,415 31.7% 69,497 29.8% 62,883 27.3%
Total Average Core Deposits 233,344 95.6% 224,234 96.4% 223,073 96.9%
Certificates of Deposits greater than $100,000 10,638 4.4% 8,269 3.6% 7,447 3.2%
Total Average Deposits $243,982 100.0% $232,503 100.0% $230,520 100.0%
Average Interest Bearing Liabilities
as a percentage of Earning Assets 77.2% 78.3% 81.3%
Average Core Deposits
as a percentage of Total Average Assets 84.4% 86.1% 87.7%
</TABLE>
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. At December 31, 1996,
average core deposits were approximately $233.3 million or 96% of
total average deposits and 84% of total average assets. For a
comparison with prior period year ends, see the table entitled
Average 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
22
<PAGE>
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.
Interest Rate Risk
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 rate 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.
Table 2, Interest Rate Sensitivity Table, on page 25
presents the Bank's interest rate sensitivity position at
December 31, 1996. Table 2 indicates that the Company's interest
23
<PAGE>
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.
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 December 31, 1996, were $10.0
million and $11.3 million at December 31, 1995. The Bank had
letters of credit of $697 thousand issued at December 31, 1996.
Additionally, the Bank has deposit customers who have credit
lines available to them through their deposit accounts. At
December 31, 1996 the available portion of these credit lines was
$580 thousand. 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 had credit cards with aggregate credit available of
$2.9 million at December 31, 1996 and 1995. Applicants are
reviewed through normal lending policies and credit reviews.
Additionally the Bank has privity to agreements to fund and
sell long term mortgages to third party mortgage companies. In
the past, some of the mortgage loans were sold with recourse of
six months which provided the mortgage companies an option to put
back the mortgage loan to the Bank if the borrower became 60 days
delinquent according to the loan repayment schedule. Put back
options due to delinquencies no longer exist between the Bank and
the long-term mortgage companies.
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.
24
<PAGE>
Table 2-
<TABLE>
<CAPTION>
Interest Rate Sensitivity Table
December 31, 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 $30,898 $31,547 $42,600 $6,849 - $111,894
Loans, Net of Unearned Income 23,503 35,001 51,773 22,325 174 132,776
Federal Funds Sold 13,325 - - - - 13,325
Other Assets 2,770 - - - 25,346 28,116
Total Assets $70,496 $66,548 $94,373 $29,174 $25,520 $286,111
Liabilities
NOW and Super NOW Deposits $1,929 $5,787 $11,696 $4,859 - $24,271
Insured Money Market Accounts 1,677 26,345 28,511 - - 56,533
Savings Deposits 2,912 8,737 14,095 6,437 - 32,181
Certificates of Deposits 31,586 42,458 17,767 - - 91,811
Noninterest Bearing Deposits 4,558 13,742 18,434 9,174 - 45,908
Other Liabilities 24 73 455 210 1,110 1,872
Stockholders' Equity - - - - 33,535 33,535
Total Liabilities and
Stockholders' Equity $42,686 $97,142 $90,958 $20,680 $34,645 $286,111
Interest Rate Sensitivity Gap $27,810 ($30,594) $3,415 $8,494 ($9,125) $0
Cumulative Interest Rate
Sensitivity Gap $27,810 ($2,784) $631 $9,125 $0
GAP / Assets 9.7% -10.7% 1.2% 3.0% -3.2%
Cumulative GAP / Assets 9.7% -1.0% 0.2% 3.2% 0.0%
</TABLE>
25
<PAGE>
Loans
An analysis of the loan portfolio at December 31, 1996,
1995, 1994, 1993, and 1992, is as follows:
<TABLE>
<CAPTION>
($ in thousands) 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Commercial, Financial and Agricultural $10,444 $10,786 $8,567 $5,812 $5,074
Real Estate
Construction 3,184 1,662 1,241 499 473
Mortgage 105,800 81,082 74,403 61,690 52,775
Individuals 13,559 11,457 10,569 9,927 10,161
Foreign 1,361 1,846 - - -
All Other Loans 1,576 793 901 479 163
Total Loans 135,924 107,626 95,681 78,407 68,646
Unearned Income (65) (33) (11) (38) (110)
Allowance for Loan Losses (3,083) (3,273) (3,077) (2,717) (2,036)
Total Loans, Net $132,776 $104,320 $92,593 $75,652 $66,500
</TABLE>
The following is the detail of maturities and sensitivity of
loans to changes in interest rates at December 31, 1996:
($ in thousands) Amount
Fixed Rate Loans
Maturity
1 Year or Less $51,275
Over 1 through 5 Years 52,976
Over 5 Years 22,844
Total Fixed Rate Loans 127,095
Variable Rate Loans
Repricing Frequency
1 Year or Less 8,655
Over 1 through 5 Years -
Over 5 Years -
Total Fixed Rate Loans 8,655
Nonaccrual Loans (Various) 174
Total Loans $135,924
Note: The information necessary for a breakdown of maturity of
the various types of loans is not readily available.
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 from 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 December 31, 1996 is $21.5 million par
value of structured notes, with an amortized cost of $21.5
million and a fair value of $21.2 million, resulting in an
26
<PAGE>
unrealized loss in the amount of $265 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 create interest rate risk. The majority of the
securities held as structured notes are considered deleveraged
bonds. The rate on these securities are 40 - 50% of the 10 year
CMT plus 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
majority of the 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 earnings 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 $3.1 million at year end
1996 or 2.27% of net loans outstanding. At year end 1995, the
allowance for loan losses was $3.3 million or 3.04% of net 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. In management's judgment, based
on these functions and management's knowledge of the Bank's
borrowers, the allowance for loan losses, 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.
During 1991, the Company filed suit against its insurer
under the forgery or alteration clause of its financial
institution bond. The suit was the result of having obtained
27
<PAGE>
counterfeit collateral from foreclosure on a charged-off loan.
The Twenty-ninth Judicial District Court for the Parish of St.
Charles, State of Louisiana awarded a $500 thousand judgment in
favor of the Bank. The Fifth Circuit Court of Appeal of
Louisiana upheld the district court judgment in favor of the
Bank. The insurer applied for a writ of certiorari to the
Louisiana Supreme Court of Appeal. The Louisiana Supreme Court
denied the writ of certiorari, thus making the district court
judgment final. The $500 thousand judgment was received during
the fourth quarter of 1995 and placed into Allowance for Loan
Losses in the form of a recovery.
28
<PAGE>
Table 3, Activity in Allowance for Loan Losses, below
presents an analysis of activity in the allowance for loan losses
for the past five years.
Table 3-
<TABLE>
<CAPTION>
($ in thousands) Year Ended December 31,
Activity in Allowance for Loan Losses 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Beginning Balance $3,273 $3,077 $2,717 $2,036 $1,089
Loans Charged Off:
Real Estate 78 295 54 451 282
Commercial, Financial, and Agricultur 392 103 47 61 248
Individual and Others 40 40 10 62 25
Total Charged Off 510 438 111 574 555
Loan Recoveries:
Real Estate 24 98 40 39 108
Commercial, Financial, and Agricultur 185 523 58 234 173
Individual and Others 21 13 23 82 21
Total Recoveries 230 634 121 355 302
Net Loans Charged Off 280 (196) (10) 219 253
Provision charged to
Expense 90 - 350 900 1,200
Ending Balance $3,083 $3,273 $3,077 $2,717 $2,036
<CAPTION>
Year Ended December 31,
($ in thousands) 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Ending Balance
Loans-Net $135,859 $107,593 $95,670 $78,369 $68,536
Daily Average Loans $119,802 $101,318 $86,625 $73,580 $62,777
Ratio of Net Charge-Offs
to Total Loans 0.21% -0.18% -0.01% 0.28% 0.37%
Ratio of Net Charge-Offs
to Average Loans 0.23% -0.19% -0.01% 0.30% 0.40%
</TABLE>
The allowance for loan losses has been allocated according to
the type of loan described in the table below, at December 31,
1996, 1995, 1994, 1993, and 1992:
<TABLE>
<CAPTION>
($ in thousands) 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Real Estate $1,231 $2,052 $2,433 $2,155 $1,579
Commercial, Financial, and Agricultural 667 415 276 201 151
Individual and Others 79 23 368 361 306
Unallocated 1,106 783 - - -
Total Allowance $3,083 $3,273 $3,077 $2,717 $2,036
</TABLE>
29
<PAGE>
Non-performing Assets
Non-performing assets include nonaccrual and impaired loans
and other real estate. Loans are considered nonaccrual when the
principal or 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
December 31, 1996 and 1995 were $174 thousand and $527 thousand,
respectively. Loans past due 90 days and still accruing at
December 31, 1996 and 1995 were $320 thousand and $441 thousand,
respectively. At December 31, 1996, nonaccrual loans were .13%
of gross loans outstanding and 5.64% of the allowance for loan
losses. At December 31, 1995, these ratios were .49% and 16.09%,
respectively.
The following table presents information on the amount of
non-performing loans at December 31, 1996, 1995, 1994, 1993 and
1992:
<TABLE>
<CAPTION>
($ in thousands) 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Non-accrual $174 $527 $432 $240 $505
Past due 90 days or more 395 441 313 331 484
Restructured and Impaired 4,000 3,600 156 273 33
$4,569 $4,568 $901 $844 $1,022
</TABLE>
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 experienced a
reduction in restructured and impaired loans during the first
quarter of 1997 in the amount of $1.4 million due to the payout
of certain loans.
Other real estate is properties held for sale acquired
through foreclosure or negotiated settlements of debt. Other
real estate increased $68 thousand during 1996. At December 31,
1996 and 1995, other real estate was $68 thousand and
insignificant, respectively.
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
30
<PAGE>
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 was recognized in
1996 and $440 thousand was recognized in the year 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, based on recent regulatory
examinations 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.
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
31
<PAGE>
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 Table 4,
Capital Adequacy Ratios, the Company's ratios for the reporting
periods exceed regulatory minimums.
The Company's dividends are determined by its Board of
Directors. The current policy is to maintain dividends at a
level which ensures the Company and Bank are able to maintain
sufficient regulatory capital levels. The Company's primary
source of funds is dividends received from the Bank. Under
current dividend limitations the Bank could pay dividends of
approximately $7.0 million without regulatory approval. The
Company carries no debt; therefore, future liquidity needs are
limited to the payment of any declared dividends. The Company
maintains sufficient liquidity to maintain its operations should
a regulatory agency limit the Bank from paying dividends.
32
<PAGE>
Table 4-
Capital Adequacy Ratios
In Thousands December 31, December 31,
1996 1995
Tier 1 Capital:
Stockholders' Equity $32,549 $29,428
Tier 2 Capital:
Allowance for Loan Losses 1,706 1,407
Total Capital $34,255 $30,835
Risk-Weighted Ratios:
Tier 1 Capital 24.1% 26.8%
Total Capital 25.3% 28.1%
Leverage Ratio 11.8% 10.6%
Stockholders' Equity 11.4% 10.6%
Regulatory Risk-Based Capitalization Requirements
<TABLE>
<CAPTION>
Significantly Critically
Well Adequately Under Under Under
Capitalized Capitalized Capitalized Capitalized Capitalized
Risk-Weighted Ratios:
<S> <C> <C> <C> <C> <C>
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>
Capital Expenditures
The Bank made capital improvements to several offices during
1996. The Bank constructed a new office in LaPlace, St. John
Parish, Louisiana in 1996. This office replaced an old facility
which was leased from a third party. The construction of this
facility should greatly enhance the ability to serve the current
and future customer base within this market.
33
<PAGE>
Table 5 -
<TABLE>
<CAPTION>
AVERAGE BALANCE SHEETS AND INTEREST RATE ANALYSIS
In thousands
1996 1995 1994
AVERAGE INCOME/ YIELD/ AVERAGE INCOME/ YIELD/ AVERAGE 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 $1,670 $80 4.78% $387 $23 5.94% $172 $7 4.07%
Federal Funds Sold and Securities
Purchased under Resale Agreements 9,149 494 5.39% 9,588 559 5.83% 9,303 369 3.97%
Securities:
Taxable 116,771 6,891 5.90% 119,173 7,040 5.91% 127,372 6,121 4.81%
Non-Taxable* 9,727 847 8.71% 10,902 963 8.83% 11,371 1,022 8.99%
Loans - Net 119,802 11,693 9.76% 101,318 9,948 9.82% 86,625 8,521 9.84%
Total Earning Assets 257,119 $20,005 7.78% 241,368 $18,533 7.68% 234,843 $16,040 6.83%
Allowance for Loan Losses (3,276) (3,046) (2,908)
Nonearning Assets 22,718 22,163 22,432
Total Assets $276,561 $260,485 $254,367
Liabilities and Stockholders' Equity
NOW Accounts $24,802 $529 2.13% $22,469 $491 2.19% $22,869 $828 3.62%
Savings Accounts 32,225 820 2.54% 32,189 812 2.52% 32,741 492 1.50%
Money Market Deposit Accounts 53,485 1,500 2.81% 56,457 1,604 2.84% 65,046 1,729 2.66%
Certificates of Deposits less than $100,000 77,416 3,827 4.94% 69,497 3,217 4.63% 62,883 2,033 3.23%
Certificates of Deposits greater than $100,000 10,638 528 4.96% 8,269 387 4.68% 7,447 244 3.28%
Total Interest Bearing Deposits 198,566 7,204 3.64% 188,881 6,511 3.45% 190,986 5,326 2.79%
Other Borowings 675 40 5.93% 24 - - - - -
Total Interest Bearing Liabilities 199,241 $7,244 3.64% 188,905 $6,511 3.45% 190,986 $5,326 2.79%
Noninterest Bearing Deposits 45,417 43,622 39,534
Other Liabilities 1,278 979 897
Stockholders' Equity 30,625 26,979 22,950
Total Liabilities and Stockholders' Equity $276,561 $260,485 $254,367
Net Interest Income - Tax Equivalent Basis* 12,761 12,022 10,714
Tax Equivalent Adjustment (288) (328) (347)
Net Interest Income $12,473 $11,694 $10,367
Net Interest Income - Spread* 4.14% 4.23% 4.04%
Net Interest Income as a % of Total Earning Assets* 4.96% 4.98% 4.56%
*Tax Equivalent Basis - 34% Rate for the periods dated
</TABLE>
34
<PAGE>
Table 6 -
<TABLE>
<CAPTION>
INTEREST DIFFERENTIALS
In thousands
1996/1995 1995/1994
Change due to Total Change due to Total
Volume Rate Change Volume Rate Change
<S> <C> <C> <C> <C> <C> <C>
Interest Earning Assets:
Interest Bearing Deposit Accounts $76 ($19) $57 $9 $7 $16
Federal Funds Sold (25) (40) (65) 11 179 190
Securities:
Taxable (142) (7) (149) (394) 1,312 918
Non-Taxable* (104) (12) (116) (42) (17) (59)
Loans 1,815 (70) 1,745 1,445 (18) 1,427
Total Interest Income 1,620 (148) 1,472 1,029 1,463 2,492
Interest Bearing Liabilities:
NOW Accounts 52 (14) 38 (14) (323) (337)
Savings Accounts 1 7 8 (8) 328 320
Money Market Deposit Accounts (85) (19) (104) (228) 103 (125)
Certificates of Deposits less than $100,000 366 243 610 215 969 1,184
Certificates of Deposits greater than $100,000 111 30 141 27 116 143
Other Borrowings - 40 40 - - -
Total Interest Expense 445 288 733 (8) 1,193 1,185
Increase (Decrease) in
Interest Differential $1,175 ($436) $739 $1,037 $270 $1,307
*Tax Equivalent Basis - 34% Rate for the periods dated
</TABLE>
35
<PAGE>
Item 8. Financial Statements and Supplementary Data
One American Corp. and Subsidiaries
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 annual
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 in this annual 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 the 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 monitor compliance with and assess the
effectiveness of the system of internal accounting controls while
coordinating 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 controls 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, 1996 and 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.
36
<PAGE>
Report of Independent Auditor
January 17, 1997
To the Shareholders
and Board of Directors of
One American Corp. and Subsidiaries
Vacherie, Louisiana
We have audited the accompanying Consolidated Balance Sheets
of One American Corp. and Subsidiaries as of December 31, 1996
and 1995, and the related Consolidated Statements of Income,
Changes in Stockholders' Equity, and Cash Flows for each of the
three years in the period ended December 31, 1996. These
financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that we
plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of One American Corp. and Subsidiaries as of December 31, 1996
and 1995, and the results of their operations, changes in their
stockholders' equity and their cash flows for each of the three
years in the period ended December 31, 1996, in conformity with
generally accepted accounting principles.
Respectfully submitted,
/s/ Hannis T. Bourgeois & Co., L. L. P.
Hannis T. Bourgeois & Co., L. L. P.
Baton Rouge, Louisiana
37
<PAGE>
<TABLE>
<CAPTION>
Consolidated Balance Sheets
One American Corp. and Subsidiaries
December 31, 1996 and 1995
In thousands 1996 1995
<S> <C> <C>
Assets
Cash and Due From Banks - Note C $11,176 $14,365
Interest Bearing Deposits in Other Banks 2,770 867
Federal Funds Sold and Securities
Purchased Under Resale Agreements 13,325 7,375
Securities - Note D:
Available for Sale (Amortized Cost of $111,797
and $132,030, respectively) 111,894 132,592
Total Securities 111,894 132,592
Loans - Note E 135,859 107,593
Less: Allowance for Loan Losses - Note F (3,083) (3,273)
Loans, Net 132,776 104,320
Bank Premises and Equipment - Note G 9,645 8,461
Other Real Estate 68 -
Accrued Interest Receivable 2,031 2,112
Other Assets 2,426 1,536
Total Assets $286,111 $271,628
Liabilities
Deposits - Note H:
Noninterest Bearing $45,907 $44,921
Interest Bearing 204,797 194,803
Total Deposits 250,704 239,724
Accrued Interest Payable 693 603
Other Liabilities 1,179 1,089
Total Liabilities 252,576 241,416
Stockholders' Equity
Common Stock-$5.00 par value;
Authorized-10,000,000 shares;
Issued-1,500,000 shares 7,500 7,500
Surplus 5,000 5,000
Retained Earnings 21,596 17,966
Unrealized Gain (Loss) on Securities Available for Sale, Net - Note D 64 371
Treasury Stock - 148,385 shares at cost (625) (625)
Total Stockholders' Equity 33,535 30,212
Total Liabilities and Stockholders' Equity $286,111 $271,628
The accompanying notes are an integral part of these financial statements.
</TABLE>
38
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Income
One American Corp. and Subsidiaries
for the years ended December 31, 1996, 1995, and 1994
In thousands, except per share data 1996 1995 1994
<S> <C> <C> <C>
Interest Income
Interest and Fees on Loans 11,701 9,948 8,521
Interest on Securities:
Taxable Interest 6,884 7,040 6,108
Nontaxable Interest 559 636 674
Total Interest on Securities 7,443 7,676 6,782
Other Interest Income 573 581 390
Total Interest Income 19,717 18,205 15,693
Interest Expense on Deposits - Note H 7,244 6,511 5,326
Net Interest Income 12,473 11,694 10,367
Provision for Loan Losses - Note F 90 - 350
Net Interest Income After
Provision for Loan Losses 12,383 11,694 10,017
Other Income
Service Charges on Deposit Accounts 2,135 1,849 1,704
Gain or (Loss) on Securities - Note D 285 442 823
Gain on Purchased Assets - Note B 812 1,147 1,059
Other Operating Income 746 1,026 459
Total Other Income 3,978 4,464 4,045
Income Before Other Expenses 16,361 16,158 14,062
Other Expenses
Salaries and Employee Benefits - Note J 4,435 4,224 3,851
Net Occupancy Expense 1,184 1,150 1,110
Net ORE Expense (13) (159) (435)
Other Operating Expenses - Note K 3,424 3,286 3,464
Total Other Expenses 9,030 8,501 7,990
Income Before Income Taxes 7,331 7,657 6,072
Applicable Income Taxes - Note L 2,281 2,410 1,808
Net Income $5,050 $5,247 $4,264
Net Income Per Share $3.74 $3.88 $3.15
Cash Dividends Per Share $1.05 $0.65 $0.40
The accompanying notes are an integral part of these financial statements.
</TABLE>
39
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Changes in Stockholders' Equity
One American Corp. and Subsidiaries
for the years ended December 31, 1996, 1995, and 1994
In thousands 1996 1995 1994
<S> <C> <C> <C>
Common Stock
Balance - Beginning and End of Period $7,500 $7,500 $7,500
Surplus
Balance - Beginning and End of Period $5,000 $5,000 $5,000
Retained Earnings
Balance - Beginning of Period $17,966 $13,597 $9,874
Net Income 5,050 5,247 4,264
Cash Dividends (1,420) (878) (541)
Balance - End of Period $21,596 $17,966 $13,597
Unrealized Gain (Loss) on Securities Available for Sale, Net
Balance - Beginning of Period $371 ($1,482) $448
Net Change in Unrealized Gain (Loss) (307) 1,853 (1,930)
Balance - End of Period $64 $371 ($1,482)
Treasury Stock
Balance - Beginning and End of Period ($625) ($625) ($625)
The accompanying notes are an integral part of these financial statements.
</TABLE>
40
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Cash Flows
One American Corp. and Subsidiaries
for the years ended December 31, 1996, 1995, and 1994
In thousands 1996 1995 1994
<S> <C> <C> <C>
Cash Flows From Operating Activities
Net Income $5,050 $5,247 $4,264
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities:
Gain on Purchased Assets (811) (1,147) (1,059)
Provision for Depreciation 679 686 655
Provision for Loan Losses 90 - 350
Net Amortization (Accretion) on Securities (87) (412) (264)
Provision (Credit) for Deferred Income Taxes (1) (90) (97)
(Gain) Loss on Sale of Other Real Estate (8) (153) (430)
(Gain) Loss on Sale of Equipment - 6 0
(Gain) Loss on Securities (284) (442) (823)
Changes in Assets and Liabilities:
(Increase) Decrease in Accrued Interest Receivable 81 (372) 196
(Increase) Decrease in Other Assets (728) (41) (824)
Increase (Decrease) in Accrued Interest Payable 90 268 91
Increase (Decrease) in Other Liabilities (394) 288 13
Net Cash Provided by Operating Activities 3,677 3,838 2,072
Cash Flows From Investing Activities
Maturities or Calls of Securities Available for Sale 62,565 65,451 111,943
Maturities or Calls of Securities Held to Maturity - 767 350
Purchases of Securities Available for Sale (42,235) (67,651) (103,105)
Purchases of Securities Held to Maturity - (502) (4,433)
Proceeds from Sale of Securities Available for Sale 276 442 470
Net (Increase) Decrease in Federal Funds Sold (5,950) 825 10,675
Net (Increase) Decrease in Loans (27,806) (10,626) (16,247)
Proceeds from Sale of Other Real Estate 11 293 991
Proceeds from Sale of Premises, Equipment, and Other Assets - 215 1
Purchases of Premises and Equipment (1,863) (398) (1,043)
Proceeds from Other Borrowings 411 350 -
Net Cash Used in Investing Activities ($14,591) ($10,834) ($398)
(Continued on next page)
</TABLE>
41
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Cash Flows
for the years ended December 31, 1996, 1995, and 1994
In thousands
(Continued) 1996 1995 1994
<S> <C> <C> <C>
Cash Flows From Financing Activities
Net Increase (Decrease) in Demand Deposits, NOW
and Savings Accounts $1,605 ($3,367) ($4,784)
Net Increase (Decrease) in Certificates of Deposits 9,375 12,227 886
Dividends Paid (1,352) (1,080) (406)
Net Cash Provided (Used) By Financing Activities 9,628 7,780 (4,304)
Decrease in Cash and Cash Equivalents (1,287) 784 (2,630)
Cash and Cash Equivalents - Beginning of Year 15,232 14,448 17,078
Cash and Cash Equivalents - End of Period $13,945 $15,232 $14,448
Supplemental Disclosure of Cash Flow Information:
Income Tax Payments $2,403 $2,032 $1,987
Interest Paid on Deposits $7,154 $6,243 $5,235
Noncash Investing Activities:
Other Real Estate Acquired in Settlement of Loans $71 $46 $16
Change in Unrealized Gain (Loss) on
Securities Available for Sale ($465) $2,807 ($2,925)
Change in Deferred Tax Effect on
Unrealized Gain (Loss) on Securities Available for Sale ($158) $954 ($995)
Transfer of Securities from Held to Maturity to Available for Sale $- $18,384 $-
Noncash Financing Activities:
Dividends Declared and Not Paid $405 $338 $541
The accompanying notes are an integral part of these financial statements.
</TABLE>
42
<PAGE>
One American Corp. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 1996, 1995, and 1994
NOTE A
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.
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.
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.
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. These
securities are carried at cost adjusted for amortization of
premium and accretion of discount, computed by various methods
approximating the interest method over their contractual lives.
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
43
<PAGE>
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. The Bank does not engage in trading
account activities.
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.
Impaired loans are being accounted for in accordance with
Statement of Financial Standards (SFAS) No. 114, "Accounting by
Creditors for Impairment of a Loan," as amended by Statement No.
118, "Accounting by Creditors for Impairment of a Loan - Income
Recognition and Disclosure." The statements generally require
impaired loans to be measured on the present value of expected
future cash flows discounted at the loan's effective interest
rate, or as an expedient, at the loan's observable market price
or the fair value of the collateral if the loan is collateral
dependent.
A loan is impaired when it is probable the creditor will be
unable to collect all contractual principal and interest payments
due in accordance with the terms of the loan agreement. Interest
on impaired loans is discontinued when, in management's opinion,
the borrower may be able to meet payments as they become due.
Generally, the Bank discontinues the accrual of interest income
when a loan becomes 90 days past due as to principal or interest.
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
44
<PAGE>
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.
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
45
<PAGE>
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).
Current Accounting Developments - The Financial Accounting
Standards Board has issued Statement No. 125, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishments
of Liabilities." This statement becomes effective for transfers
and servicing of financial assets and extinguishments of
liabilities occurring after December 31, 1996. This statement
provides accounting and reporting standards for transfers and
servicing of financial assets and extinguishments of liabilities.
The statement generally requires that after a transfer of
financial assets, an entity would recognize all financial assets
and servicing it controls and liabilities it has incurred , and
would not recognize financial assets when control has been
surrendered or liabilities when they have been extinguished. The
Bank has addressed the potential future impact of the application
of this statement, and considers it to be immaterial.
NOTE B
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 $5.7 million in deposits
and specific liabilities as disclosed in the table below. The
excess of the purchase price over the value of the net tangible
assets has been assigned to goodwill and is being amortized over
fifteen years. This acquisition was accounted for using the
purchase method of accounting, and the results of operations are
included in the consolidated financial statements from the date
of acquisition.
46
<PAGE>
($ in thousands) 9/23/96
Assets:
Cash and Due From Banks $727
Federal Funds Sold 1,825
Securities 235
Loans, Net 4,044
Bank Premises and Equipment 6
Other Real Estate 22
Accrued Interest Receivable 44
Other Assets 5
Total Assets $6,908
Liabilities and Stockholders Equity:
Deposits $5,659
Accrued Interest Payable $19
Other Liabilities 17
Stockholders Equity 1,213
Total Liabilities and Stockholders Equity $6,908
Gain on purchased assets is recognized from acquired loans
from previous bank acquisitions on a cost recovery method as
principal payments are made and is included in the financial
statements as Gain on Purchased Assets.
NOTE C
Cash and Due from Banks
The Bank is required to maintain average cash reserve
balances. The amounts of those reserves at December 31, 1996 and
1995, were approximately $3.0 million and $2.4 million,
respectively.
47
<PAGE>
NOTE D
Securities
Amortized costs and fair values of securities available for
sale as of December 31, 1996 and 1995 are summarized as follows:
<TABLE>
<CAPTION>
1996
Gross Gross
Amortized Unrealized Unrealized Fair
($ in thousands) Cost Gains Losses Value
<S> <C> <C> <C> <C>
U. S. Treasury Securities $34,232 $86 ($14) $34,304
Securities of Other U. S. Government Agencies 58,610 14 (499) 58,125
Mortgage-Backed Securities 8,674 205 (50) 8,829
Obligations of State and Political Subdivisions 9,430 355 - 9,785
Equity Securities 851 - - 851
Totals $111,797 $660 ($563) $111,894
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
($ in thousands) Cost Gains Losses Value
<S> <C> <C> <C> <C>
U. S. Treasury Securities $44,630 $318 ($2) $44,946
Securities of Other U. S. Government Agencies 64,227 141 (543) 63,825
Mortgage-Backed Securities 11,254 223 (25) 11,452
Obligations of State and Political Subdivisions 11,133 452 (2) 11,583
Equity Securities 786 - - 786
Totals $132,030 $1,134 ($572) $132,592
</TABLE>
Included in the category of Securities of Other US
Government Agencies at December 31, 1996 is $21.5 million par
value of structured notes, with an amortized cost of $21.5
million and a fair value of $21.2 million. At December 31, 1995,
the Bank held $19.6 million of par value of these notes with an
amortized cost of $19.6 million with a fair value of $19.2
million. The structured notes, which are issued by US Government
Agencies, are debt securities whose cash flows are dependent on
one or more indices in ways that create interest rate risk.
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.
The Bank also has approximately $342 thousand in par value
of Louisiana Agricultural Finance Authority Bonds and Louisiana
48
<PAGE>
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 $2.0 million as partial payments of the $2.35
million in original par value. Of the $2.0 million, $1.54
million was 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 $1.54 million in gains
recognized since the write down, $277 thousand was recognized in
1996, and $440 thousand was recognized in the year 1995. The
Bank continues to pursue the collection of principal on these
securities. However, the amount of any future fulfillment of
these collection actions remain uncertain.
The following table shows the amortized cost, fair value,
maturity distribution, and weighted average yield of the
securities available for sale as of December 31, 1996.
Maturities may differ from contractual maturities in mortgage-
backed securities because the mortgages underlying the securities
may be called or repaid without any penalties.
49
<PAGE>
<TABLE>
<CAPTION>
($ in thousands) Amortized Fair Average
Cost Value Yield
<S> <C> <C> <C>
U. S. Treasury Securities
Within 1 Year $28,735 $28,790 5.32%
After 1 but Within 5 Years 5,497 5,514 4.89%
After 5 but Within 10 Years - - -
After 10 Years - - -
34,232 34,304 5.25%
Securities of Other U. S. Government Agencies
Within 1 Year 11,107 11,095 5.44%
After 1 but Within 5 Years 47,503 47,030 5.74%
After 5 but Within 10 Years - - -
After 10 Years - - -
58,610 58,125 5.68%
Mortgage-Backed Securities
Within 1 Year 2 2 14.19%
After 1 but Within 5 Years 403 433 9.43%
After 5 but Within 10 Years 1,156 1,235 9.29%
After 10 Years 7,113 7,159 6.87%
8,674 8,829 7.34%
Obligations of State and Political Subdivisions*
Within 1 Year 109 110 9.40%
After 1 but Within 5 Years 6,630 6,884 8.36%
After 5 but Within 10 Years 2,565 2,644 7.72%
After 10 Years 126 147 10.75%
9,430 9,785 8.23%
Equity Securities 851 851 5.90%
851 851 5.90%
Totals $111,797 $111,894 5.91%
* Tax Equivalent Basis - 34% in 1996
</TABLE>
Securities available for sale with a carrying amount of
$38.2 million and $20.1 million at December 31, 1996 and 1995,
respectively, were pledged as collateral on public deposits and
for other purposes as required or permitted by law.
The Bank has invested in Federal Home Loan Bank of Dallas
stock which is included in Equity Securities and is reflected at
the lower of cost or fair value in these financial statements.
The cost of these securities was $851 thousand and $786 thousand,
which approximates fair value, at December 31, 1996 and 1995,
respectively.
Gross realized gains and losses from the sale of securities
for the years ended December 31, 1996, 1995, and 1994 are as
follows:
<TABLE>
<CAPTION>
($ in thousands) 1996 1995 1994
<S> <C> <C> <C>
Realized gains $285 $442 $823
Realized losses - - -
$285 $442 $823
</TABLE>
50
<PAGE>
NOTE E
Loans
An analysis of the loan portfolio at December 31, 1996 and
1995, is as follows:
($ in thousands) 1996 1995
Commercial, Financial, and Agricultural $10,442 $10,786
Real Estate - Construction 3,184 1,662
Real Estate - Mortgage 105,800 81,082
Individuals 13,559 11,457
Foreign 1,361 1,846
All Other Loans 1,578 793
Total Loans 135,924 107,626
Unearned Income (65) (33)
Total Loans, net of Unearned Income $135,859 $107,593
Impaired loans having recorded investments of $4.0 million
at December 31, 1996 have been recognized in conformity with FASB
Statement No. 114 as amended by FASB Statement No. 118. The
average recorded investment in impaired loans during the year
ended December 31, 1996 was approximately $3.8 million. Impaired
loans at December 31, 1995 were $3.6 million. The allowance for
loan losses related to these loans was
$1.9 million at December 31, 1996 and $1.4 million at December
31, 1995. Interest received on impaired loans amounted to $458
thousand and $399 thousand at December 31, 1996 and 1995,
respectively. Non-accrual loans not included in impaired loans
were immaterial at December 31, 1996 and 1995.
The Bank is permitted, under the laws of the State of
Louisiana, to make extensions of credit to its executive officers
and directors and their affiliates in the ordinary course of
business. An analysis of the aggregate loans, for December 31,
1996 and 1995, are as follows:
($ in thousands) 1996 1995
Balance - Beginning of Year $1,955 $2,197
New Loans 2,672 954
Repayments (1,929) (1,196)
Balance - End of Year $2,698 $1,955
Maximum Balance During the Year $2,796 $2,197
51
<PAGE>
NOTE F
Allowance for Loan Losses
Following is a summary of the activity in the allowance for
loan losses:
<TABLE>
<CAPTION>
($ in thousands) 1996 1995 1994
<S> <C> <C> <C>
Balance - Beginning of Year $3,273 $3,077 $2,717
Current Provision from Income 90 - 350
Recoveries on Loans Charged-Off 230 634 121
Loans Charged-Off (510) (438) (111)
Balance - End of Year $3,083 $3,273 $3,077
Ratio of Allowance for Loan Losses to
Impaired Loans at End of Year 74.91% 90.92% -
Ratio of Allowance for Loan Losses to Loans
Outstanding at End of Year 2.27% 3.04% 3.22%
Ratio of Net Loans Charged-Off to
Loans Outstanding at End of Year 0.20% (.18%) (.02%)
</TABLE>
NOTE G
Bank Premises and Equipment
Bank premises and equipment costs and the related
accumulated depreciation at December 31, 1996 and 1995, are as
follows:
($ in thousands) 1996 1995
Land $2,645 $2,342
Bank Premises 8,008 6,999
Furniture and Equipment 4,839 4,322
15,492 13,663
Accumulated Depreciation (5,847) (5,202)
$9,645 $8,461
Depreciation charged to operating expenses for the three
years ended December 31, 1996, 1995, and 1994, respectively, was
$679 thousand, $686 thousand, and $655 thousand.
52
<PAGE>
NOTE H
Deposits
Following is a detail of deposits as of December 31, 1996
and 1995:
($ in thousands) 1996 1995
Non-interest Bearing Accounts $45,907 $44,921
NOW and Super NOW Accounts 24,273 24,160
Insured Money Market Accounts 56,535 55,909
Savings Accounts 32,181 32,299
Certificates of Deposit over $100,000 12,352 10,102
Other Certificates of Deposit 79,456 72,333
Total Deposits $250,704 $239,724
Interest expense on Certificates of Deposit over $100
thousand at December 31, 1996, 1995, and 1994, amounted to $472
thousand, $387 thousand and $244 thousand, respectively.
Public Fund deposits at December 31, 1996 and 1995, were
$18.3 million and $15.7 million, respectively.
NOTE I
Stockholders' Equity and Regulatory Matters
Dividends are paid by the Company from its assets which are
provided primarily by dividends from the Bank. Dividends are
payable only out of retained earnings and current earnings of the
Company. Certain restrictions exist regarding the ability of the
Bank to transfer funds to the Company in the form of cash
dividends. Regulatory approval is required to pay dividends in
excess of the Bank's earnings in the current year plus retained
net profits for the preceding year. As of January 1, 1997, the
Bank had retained earnings of $23.0 million of which $7.0 million
was available for distribution without prior regulatory approval.
The Bank is also required to maintain minimum amounts of
capital to total risk weighted assets, as defined by the banking
regulators. At December 31, 1996, the Bank is required to have
minimum Tier 1 and Total Capital ratios of 4.00% and 8.00%,
respectively. The Bank's actual ratios at that date were 24.09%
and 25.35%, respectively. The Bank's Leverage Ratio at December
31, 1996, was 11.75%.
Under current regulations, the Bank is limited in the amount
it may loan to its affiliates. Loans to a single affiliate may
not exceed 10%, and loans to all affiliates may not exceed 20% of
the Bank's capital and surplus.
NOTE J
Employee Benefit Plans
The Bank maintains a Salary Deferral Plan qualified under
Internal Revenue Service Code Section 401(k) for all employees
who are 21 years of age and have completed one year of service.
Covered employees may elect to contribute 1% to 15% of gross pay
53
<PAGE>
to the plan. The majority of the plans assets are invested in
mutual funds. As part of the plan, the Bank has, at its
discretion, the ability to match the contributions or make
supplemental contributions. No amounts were contributed by the
Bank for either 1996 or 1995.
The Bank maintains a noncontributory defined benefit pension
plan covering all employees who qualify as to age and length of
service. Current policy is to fund annual pension costs as they
accrue. Pension expense was $127 thousand, $164 thousand and
$133 thousand for the years ended December 31, 1996, 1995, and
1994, respectively. The majority of the plans assets are invested
in money market funds or mutual funds. The following table sets
forth the plan's funded status at December 31, 1996 and 1995.
($ in thousands) 1996 1995
Actuarial Present Value of Benefit Obligations:
Vested Benefits $3,448 $2,455
Accumulated Benefits $3,681 $3,305
Projected Benefits ($4,842) ($4,456)
Plan Assets at Fair Value 5,346 4,881
Projected Benefit Obligation Less
Than (In Excess Of) Plan Assets 504 425
Unrecognized Net (Gain) Loss (79) 207
Unrecognized Net Obligation (Asset) (158) (256)
Prepaid Pension Expense $267 $376
Assumptions used by the Company in the determination of
pension plan information consisted of the following:
Discount Rate 8.25% 8.25%
Rate of Increase in Compensation Levels 5.50% 5.50%
Expected Long-Term Rate of Return
on Plan Assets 9.00% 9.00%
Net pension expense for 1996, 1995, and 1994 included the
following components:
<TABLE>
<CAPTION>
($ in thousands) 1996 1995 1994
<S> <C> <C> <C>
Service Cost $248 $245 $249
Interest Cost 328 297 256
Return on Assets (496) (724) 14
Net Amortization and Deferral 47 346 (386)
$127 $164 $133
</TABLE>
The Bank's employee benefit program also includes self-
funded health and dental insurance plans for all full-time
employees. The costs of these plans are completely funded by the
Bank. The employees can also elect to purchase dependent
54
<PAGE>
coverage under the plans. The Bank pays a premium to a reinsurer
for coverage on losses and claims that exceed $20,000 per
individual per plan year. Amounts paid by the Bank in
association with these plans totaled $530 thousand and $529
thousand for the years ended December 31, 1996 and 1995,
respectively. The Bank had set aside reserves in the amount of
$618 thousand for payment of unreported claims with dates of
service through December 31, 1996.
NOTE K
Other Operating Expenses
The analysis of other operating expenses for the years ended
December 31, 1996, 1995, and 1994, are as follows:
<TABLE>
<CAPTION>
($ in thousands) 1996 1995 1994
<S> <C> <C> <C>
Advertising and Public Relations $349 $344 $331
Armored Courier Service 115 94 96
Director Fees 177 152 161
Equipment Expense 946 888 821
Legal and Professional 398 266 337
Postage and Shipping 175 167 159
Regulatory Assessments 32 267 603
Service Charges-Other Institutions 126 112 113
Stationery, Printing, and Supplies 322 328 274
Telephone 233 189 210
Other 551 479 359
$3,424 $3,286 $3,464
</TABLE>
NOTE L
Income Taxes
The total provision for income taxes charged to income
amounted to $2.3 million for 1996, $2.4 million for 1995, and
$1.8 million for 1994. The provisions represent effective tax
rates of 31% for 1996 and 1995, and 30% for 1994. Following is a
reconciliation between income tax expense based on the federal
statutory tax rates and income taxes reported in the statements
of income.
<TABLE>
<CAPTION>
($ in thousands) 1996 1995 1994
<S> <C> <C> <C>
Income Taxes Based on Statutory Rates -
34% for periods shown $2,492 $2,603 $2,064
Tax Exempt Income (188) (216) (229)
Other - Net (23) 23 (27)
$2,281 $2,410 $1,808
</TABLE>
55
<PAGE>
The components of consolidated income tax expense (benefits)
are:
<TABLE>
<CAPTION>
($ in thousands) 1996 1995 1994
<S> <C> <C> <C>
Provision for Current Taxes $2,282 $2,500 $1,905
Provision (Credit) for Deferred Taxes (1) (90) (97)
$2,281 $2,410 $1,808
</TABLE>
A deferred income tax asset of $630 thousand and $471
thousand is included in other assets at December 31, 1996 and
1995, respectively. The deferred tax provision (credit) consists
of the following timing differences:
<TABLE>
<CAPTION>
($ in thousands) 1996 1995 1994
<S> <C> <C> <C>
Depreciation Expense for Tax Reporting
in Excess of Amount for Financial Reporting ($2) $14 $6
Provision for Loan Losses for Financial
Reporting in Excess of Amount for
Tax Reporting 21 (63) (128)
Accretion Income for Financial Reporting
in Excess of Tax Reporting (17) (4) 25
Increase in Insurance Reserve (21) (147) -
Increase in Prepaid Pension 18 110 -
($1) ($90) ($97)
</TABLE>
The net deferred tax asset consists of the following
components at December 31, 1996 and 1995:
<TABLE>
<CAPTION>
($ in thousands) 1996 1995
<S> <C> <C>
Depreciation ($349) ($351)
Provision for Loan Losses 993 1,014
Accretion Income (21) (38)
Insurance Reserve 168 147
Prepaid Pension (128) (110)
Unrealized (Gain) Loss on Securities
Available for Sale (33) (191)
Total Deferred Tax Asset $630 $471
</TABLE>
NOTE M
Short-Term Borrowings
The Bank maintains an open line of credit with the Federal
Home Loan Bank of Dallas. The total line of credit available
with Federal Home Loan Bank of Dallas amounts to approximately
$6.5 million at December 31, 1996. This amount is computed based
on the Bank's stock position less current advances, not to exceed
65% of the Bank's outstanding 1-4 family mortgage loans. The
agreement provides for interest based upon the federal funds rate
on outstanding balances for short term purposes and a certain
spread above the treasury yield curve for longer term advances.
Drawings on the line were $761 thousand and $350 at December 31,
56
<PAGE>
1996 and 1995 respectively. The line is collateralized by a
blanket lien on 1-4 family mortgage loans.
NOTE N
Off-Balance Sheet Instruments
The Company is a party to financial instruments with off-
balance-sheet risk in the normal course of business to meet the
financing needs of its customers. These financial instruments
include commitments to extend credit, financial guarantees, and
letters of credit. Those instruments involve, to varying
degrees, elements of credit risk in excess of the amount
recognized in the balance sheets.
The Company's exposure to credit loss in the event of
nonperformance by the other party to the financial instrument for
commitments to extend credit and letters of credit is represented
by the contractual amount of those instruments. The Bank uses
the same credit policies in making commitments and conditional
obligations as they do for on-balance sheet instruments.
In the normal course of business the Company has made
commitments to extend credit of $10.0 million at December 31,
1996. This amount includes unfunded loan commitments aggregating
$9.3 million and letters of credit of $697 thousand.
NOTE O
Concentrations of Credit
All of the Bank's business activities are with customers in
the Bank's market area, which consists primarily of the southeast
region of the State of Louisiana. Investments in state and
municipal securities also involve governmental entities within
the Bank's market area. The concentrations of credit by type of
loan are shown in Note E. Most of the Bank's credits are to
individuals and small businesses secured by real estate. The
Bank, as a matter of policy, does not extend credit to any single
borrower or group of related borrowers in excess of $4 million.
NOTE P
Fair Value of Financial Instruments
The following methods and assumptions were used to estimate
the fair value of each class of financial instruments for which
it is practicable to estimate that value:
Cash and Short-Term Investments - For those short-term
instruments, the carrying amount is a reasonable estimate of fair
value.
Securities - Fair value of securities held to maturity and
available for sale is based on quoted market prices or dealer
quotes. If a quoted market price is not available, fair value is
estimated using quoted market prices for similar securities.
57
<PAGE>
Loans - The fair value for loans is estimated using
discounted cash flow analyses, with interest rates currently
being offered for similar loans to borrowers with similar credit
rates. Loans with similar classifications are aggregated for
purposes of the calculations. The allowance for loan losses
which was used to measure the credit risk, is subtracted from
loans.
Deposits - The fair value of demand deposits, savings
accounts, and certain money market deposits is the amount payable
on demand at the reporting date. The fair value of fixed-
maturity certificates of deposit is estimated using discounted
cash flow analyses, with interest rates currently offered for
deposits of similar remaining maturities.
Commitments to Extend Credit and Standby Letters of Credit -
The fair value of commitments is estimated using the fees
currently charged to enter into similar agreements, taking into
account the remaining terms of the agreements and the present
creditworthiness of the parties. For fixed-rate loan
commitments, fair value also considers the difference between
current levels of interest rates and the committed rates. The
fair value of letters of credit is based on fees currently
charged for similar agreements at the reporting date.
The estimated approximate fair values of the Bank's
financial instruments as of December 31, 1996 and 1995 are as
follows:
<TABLE>
<CAPTION>
($ in thousands) 1996 1995
Carrying Carrying
Financial Assets: Amount Fair Value Amount Fair Value
<S> <C> <C> <C> <C>
Cash and
Short-Term Investments $13,946 $13,946 $22,607 $22,607
Securities 111,894 111,894 132,592 132,592
Loans - Net 132,776 132,683 104,320 104,416
$258,616 $258,523 $259,519 $259,615
Financial Liabilities:
Deposits $250,704 $250,175 $239,724 $239,817
Unrecognized Financial Instruments
Commitments to Extend Credit
and Letters of Credit $- $- $- $2
</TABLE>
NOTE Q
Litigation and Contingencies
In February 1997, a party filed a $5.1 million suit against
the bank. This petition is still in its early stages and no
documentation has been provided to support any of the allegations
which have been made against the Bank. At this time, Bank's
Counsel believes there is no merit to the claim and no liability
58
<PAGE>
to the Bank. No provision has been made in these financial
statements.
During the normal course of business, the Company is
involved in various other legal proceedings. In the opinion of
management and counsel, any liability resulting from such
proceedings would not have a material adverse effect on the
Company's financial statements.
59
<PAGE>
NOTE R
Parent Company Financial Statements
The financial statements for One American Corp. (Parent
Company Only) are presented below:
<TABLE>
<CAPTION>
BALANCE SHEETS
December 31, 1996 and 1995
($ in thousands) 1996 1995
<S> <C> <C>
Assets
Cash $1,699 $1,252
Receivables from Subsidiaries 18 361
Income Tax Receivable 122 -
Investment in Subsidiaries:
First American Bank and Trust 32,044 29,125
One American Agency, Inc. 194 160
32,238 29,285
Total Assets $34,077 $30,898
Liabilities
Accrued Dividend Payable $135 $338
Payables to Subsidiaries 407 -
Income Taxes Payable - 348
542 686
Stockholders' Equity
Common Stock 7,500 7,500
Surplus 5,000 5,000
Retained Earnings 21,660 18,337
Treasury Stock - 148,385 shares at cost (625) (625)
Total Stockholders' Equity 33,535 30,212
Total Liabilities and Stockholders' Equity $34,077 $30,898
</TABLE>
60
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF INCOME
for the years ended December 31, 1996, 1995, and 1994
($ in thousands) 1996 1995 1994
<S> <C> <C> <C>
Income
Interest Income $34 $17 $11
Dividends from Subsidiaries:
First American Bank and Trust 1,800 1,425 600
One American Agency, Inc. - - -
Total Income 1,834 1,442 611
Expenses
Operating Expenses 48 53 48
Total Expenses 48 53 48
Income before Income Taxes and Equity in
Undistributed Net Income of Subsidiaries 1,786 1,389 563
Income Tax Expense (Benefit) (5) (12) (13)
Income before Equity in Undistributed
Net Income of Subsidiaries 1,791 1,401 576
Equity in Undistributed Net Income of Subsidiaries 3,259 3,846 3,688
Net Income $5,050 $5,247 $4,264
</TABLE>
61
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CASH FLOWS
for the years ended December 31, 1996, 1995, and 1994
($ in thousands) 1996 1995 1994
<S> <C> <C> <C>
Cash Flows From Operating Activities:
Net Income $5,050 $5,247 $4,264
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities:
Equity in Undistributed Net Income of Subsidiaries (3,259) (3,846) (3,688)
Changes in Assets and Liabilities:
Increase (Decrease) in Payables from Subsidiaries 135 - -
(Increase) Decrease in Receivables from Subsidiaries 343 (361) 45
(Increase) Decrease in Income Tax Receivables (122) 13 (13)
Increase (Decrease) in Income Taxes Payable (348) 348 (25)
Net Cash Provided by Operating Activities 1,799 1,401 583
Cash Flows From Financing Activities:
Dividends Paid (1,352) (1,080) (406)
Net Cash Used in Financing Activities (1,352) (1,080) (406)
Net Increase in Cash
Cash - Beginning of Year 1,252 931 754
Cash - End of Year $1,699 $1,252 $931
Noncash Financing Activities:
Dividends Declared and Not Paid $407 $338 $541
Change in Unrealized Gain (Loss) on Securities Available
For Sale, Net ($307) $1,853 ($1,930)
</TABLE>
62
<PAGE>
Item 9. Disagreements on Accounting and Financial Disclosures
Not Applicable.
Part III
Items 10, 11, 12, and 13.
The information required by items 10, 11, 12 and 13 is
included in the Company's Proxy Statement, for the 1997 Annual
Meeting of Stockholders and is incorporated herein by reference.
Part IV
Item 14. Exhibits, Financial Statements Schedules and Reports on
Form 8-K
(a) Financial Statements
1. The financial statements of One American
Corp. in the Company's 1996 Form 10-K are
incorporated by reference in Item 8.
2. Other financial statement schedules are
either omitted because they are inapplicable or
included in the financial statements or related
notes.
(b) Reports on Form 8-K
There were no Forms 8-K filed in the quarter ended
December 31, 1996.
(c) Exhibits
3. Articles of Incorporation and by-laws of
One American Corp. are incorporated by reference to
the Company's Registration Statement on Form S-14
filed October 29, 1982, with the Security and
Exchange Commission.
22. Subsidiaries of the Registrant
First American Bank and Trust, incorporated
under the laws of the State of Louisiana
One American Agency, Inc., incorporated
under the laws of the State of Louisiana
23. Definitive Proxy Statement for the 1997
Annual Meeting of Stockholders' of One American
Corp.
63
<PAGE>
Signatures
Pursuant to the requirements of Section 13 or 15(d) 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.
/s/ J. B. Falgoust
J. B. Falgoust
President
Dated March 13, 1997
Pursuant to the requirements of the Securities Act of 1934,
this report has been signed by the following persons in the
capacities indicated on March 13, 1997:
/s/ J. B. Falgoust, President, (principal executive, financial and
accounting officer) and Director
J. B. Falgoust
/s/ Craig G. Brazan, Director
Craig G. Brazan
/s/ E. V. Cazenave, Jr., Director
E. V. Cazenave, Jr.
/s/ Michael J. Cazenave, Director
Michael J. Cazenave
/s/ Dean T. Falgoust, Director
Dean T. Falgoust
/s/ Preston L. Falgoust, Director
Preston L. Falgoust
/s/ Marcel T. Graugnard, Jr., Director
Marcel T. Graugnard, Jr.
/s/ Honora F. Gravois, Director
Honora F. Gravois
/s/ Ozane J. Gravois III, Director
Ozane J. Gravois III
/s/ Anthony J. Nobile, Director
Anthony J. Nobile
/s/ Dr. Carl J. Poche, Director
Dr. Carl J. Poche
64
<PAGE>
/s/ Craig A. Vitrano, Director
Craig A. Vitrano
/s/ David J. Vial, Director
David J. Vial
/s/ Albert J. Waguespack, Director
Albert J. Waguespack
/s/ Francis A. Waguespack, Jr., Director
Francis A. Waguespack, Jr.
65
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1000
<S> <C>
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<PERIOD-TYPE> 12-MOS
<CASH> 11,176
<INT-BEARING-DEPOSITS> 2,770
<FED-FUNDS-SOLD> 13,325
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 111,894
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 135,859
<ALLOWANCE> 3,083
<TOTAL-ASSETS> 286,111
<DEPOSITS> 250,704
<SHORT-TERM> 0
<LIABILITIES-OTHER> 1,872
<LONG-TERM> 0
<COMMON> 7,500
0
0
<OTHER-SE> 26,035
<TOTAL-LIABILITIES-AND-EQUITY> 286,111
<INTEREST-LOAN> 11,701
<INTEREST-INVEST> 7,443
<INTEREST-OTHER> 559
<INTEREST-TOTAL> 19,717
<INTEREST-DEPOSIT> 14
<INTEREST-EXPENSE> 7,244
<INTEREST-INCOME-NET> 12,473
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 285
<EXPENSE-OTHER> 9,030
<INCOME-PRETAX> 7,331
<INCOME-PRE-EXTRAORDINARY> 7,331
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,050
<EPS-PRIMARY> 3.74
<EPS-DILUTED> 3.74
<YIELD-ACTUAL> 7.78
<LOANS-NON> 174
<LOANS-PAST> 395
<LOANS-TROUBLED> 1,869
<LOANS-PROBLEM> 2,131
<ALLOWANCE-OPEN> 3,273
<CHARGE-OFFS> 510
<RECOVERIES> 230
<ALLOWANCE-CLOSE> 3,083
<ALLOWANCE-DOMESTIC> 1,900
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 1,183
</TABLE>
