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, 1997
One American Corp 0-12437
(Exact name of registrant (Comm. File No.)
as specified in its charter)
Louisiana 72-0948181
(State or other jurisdiction of (I.R.S. Employer
Incorporation of 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: $38,298,182.00 (1,035,086
Shares @ $37.00 per share)*
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date.
Common stock $5 Par Value, 1,351,090 shares outstanding as
of March 12, 1998.
Documents Incorporated by Reference
Document Part of Form 10-K
Definitive Proxy Statement for 1998 Part I and Part III
Annual Meeting of Stockholders
*For purposes of the computation, shares (316,004) owned by
executive officers, directors and 5% shareholders have been
excluded.
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Part I
Item 1 Description of Business 3
Supplemental Financial Information:
Average Balance Sheets and Interest Yield Analysis 7
Interest Differential 7
Securities Portfolio 8
Loan Portfolio 8
Non-Performing Loans 8
Summary of Loan Loss Experience 8
Deposits 8
Return on Equity and Assets 9
Item 2 Description of Properties 9
Item 3 Legal Proceedings 9
Item 4 Submission of Matters to a Vote of Security Holders 9
Part II
Item 5 Market for the Registrant's Common Stock
and Related Security Holder Matters 10
Item 6 Selected Financial Data 11
Item 7 Management's Discussion and Analysis of
Financial Condition and Results of Operation 13
Item 8 Financial Statements and Supplementary Data 27
Item 9 Disagreements on Accounting
and Financial Disclosures 49
Part III
Item 10 Directors and Executive Officers of the Registrant 49
Item 11 Executive Compensation 49
Item 12 Security Ownership of Certain Beneficial Owners
and Management 49
Item 13 Certain Relationships and Related Transactions 49
Part IV
Item 14 Exhibits, Financial Statement Schedules and Reports
On Form 8-K 49
Signatures 50
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Part I
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 12, 1998.
The Bank presently has a main office at LA Highway 20 West,
Vacherie, St. James Parish, Louisiana, and sixteen (16) branch
offices and one (1) loan production office. 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
One branch is located in Assumption Parish, in the city of
Napoleonville. One loan production office is lcoated in St.
Tammany Parish in the city of Mandeville. 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
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 Napoleonville branch was
approved on August 4, 1997, by the Commissioner of Financial
Institutions of the State of Louisiana, and on July 24, 1997, by
the Federal Deposit Insurance Corporation. The Mandeville loan
production office was approved on October 2, 1997, by the
Commissioner of Financial Institutions of the State of Louisiana.
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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, 1997,
these three categories accounted for approximately 80.0%, 9.4%
and 10.6%, respectively, of the Bank's loan portfolio. (See Note
E in the 1997 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
agencies. At December 31, 1997, State and Political
Subdivisions, maintained time deposits and money market deposits
account balances of $7.7 million, interest bearing demand
deposits of $6.8 million, and non-interest bearing demand
deposits of $2.4 million. 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, 1997, the Bank had 13,994 demand deposit
accounts with a total balance of $51.7 million; 1,179 NOW and
Super NOW accounts with a total balance of $24.6 million; 2,459
Insured Money Market Accounts with a balance of $51.4 million;
14,033 savings accounts with a total balance of $31.8 million;
and 7,125 other time deposit accounts with a total balance of
$104.2 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, Tangipahoa and Assumption Parish, 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.
On February 26, 1998, First American Agency, L.L.C., a
subsidiary of First American Bank and Trust, was formed. First
American Agency, L.L.C. was formed to provide insrurance needs
for the Bank's market area. On March 5, 1998, First American
Agency, L.L.C. acquired Riverbend Insurance Agency, Inc. of
Destrehan, St Charles Parish, Louisiana.
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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.
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 147
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, the south central portion of
Tangipahoa Parish , Assumption Parish and St. Tammany Parish, all
located in Louisiana. These parishes have experienced moderate
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 155 full time employees, and
12 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
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.
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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
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 1997 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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Regulatory Matters
The capital ratios for the Company and the Bank currently
exceed the regulatory capital requirements at December 31, 1997.
The capital ratios are included in the 1997 Form 10-K in the
Section titled "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and incorporated herein by
reference.
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 $5.2 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 1997 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, 1997, 1996, and 1995
Interest Differential
The following information called for by Item 1 is included
in the 1997 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, 1997 and 1996
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Securities Portfolio
The following information called for by Item 1 is included
in the 1997 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 1997 Form 10-K Section titled "Notes to
Consolidated Financial Statements" and is incorporated herein by
reference.
See Note D titled Securities in the 1997 Form 10-K for a
detailed analysis of the security portfolio.
There were no securities held by the Company at December 31,
1997, that exceeded, in aggregate by issuer, 10% of Stockholders'
Equity.
Loan Portfolio
The following information called for by Item 1 is included
in the 1997 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, 1997, 1996, 1995,
1994, and 1993
Non-Performing Loans
The following information called for by Item 1 is included
in the 1997 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, 1997, 1996, 1995,
1994, and 1993
Summary of Loan Loss Experience
The following information called for by Item 1 is included
in the 1997 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, 1997, 1996, 1995,
1994, and 1993
Deposits
The following information called for by Item 1 is included
in the 1997 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, 1997, 1996, and 1995
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Maturities of time deposits of $100,000 or more at December
31, 1997, are summarized below:
In thousands
3 Months or Less $6,178
Over 3 through 6 Months 2,173
Over 6 through 12 Months 2,751
Over 12 Months 2,596
$13,698
Return on Equity and Assets
The following information called for by Item 1 is included
in the 1997 Form 10-K in the Section titled Item 6. "Selected
Financial Data" and is incorporated herein by reference.
Average Total Assets
December 31, 1997, 1996, 1995, 1994, and 1993
Average Stockholders' Equity
December 31, 1997, 1996, 1995, 1994, and 1993
Selected Ratios
for the years ended December 31, 1997, 1996, 1995,
1994, and 1993
Per Share
for the years ended December 31, 1997, 1996, 1995,
1994, and 1993
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 also leases the office from which
its Loan Production Office operates.
The Company considers all properties to be suitable and
adequate for their intended purposes and its lease to be fair and
reasonable.
Item 3. Legal Proceedings
The following information called for by Item 3 is included
in the 1997 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 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, 1997.
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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:
1997 1996
First Quarter $31.00 $28.00
Second Quarter $32.00 $30.00
Third Quarter $32.00 $31.00
Fourth Quarter $32.00 $31.00
There can be no assurance that these limited inquiries
adequately reflect the actual high and low bids or prices for the
stock of the Company.
Information - Request for additional information or copies
of Form 10-K filed with the Securities and Exchange Commission in
Washington, DC should be directed to:
J. B. Falgoust
Chairman
One American Corp.
P. O. Box 550
Vacherie, LA 70090-0550
Transfer Agent and Registrar
First American Bank and Trust
P. O. Box 550
Vacherie, LA 70090-0550
General Counsel
Martin, Himel, Peytavin & Nobile
P. O. Box 278
Lutcher, LA 70071-0278
Independent Accountants
Hannis T. Bourgeois, L. L. P.
2322 Tremont Drive, Suite 200
Baton Rouge, LA 70809
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Item 6. Selected Financial Data
<TABLE>
<CAPTION>
One American Corp. and Subsidiaries
Condensed Consolidated Balance Sheets
December 31, 1997, 1996, 1995, 1994, and 1993
($ in thousands, except per share data)
1997 1996 1995 1994 1993
Assets
<S> <C> <C> <C> <C> <C>
Cash and Due from Banks $13,115 $13,946 $15,232 $14,448 $17,078
Securities 127,027 125,219 39,967 135,639 153,378
Loans 146,975 132,776 104,320 92,593 75,652
Other Assets 15,277 14,170 12,109 13,162 11,602
Total Assets $302,394 $286,111 $271,628 $255,842 $257,710
Liabilities and Stockholders' Equity
Deposits $263,657 $250,704 $239,724 $230,862 $234,762
Other Liabilities 2,482 1,872 1,692 990 749
Stockholders' Equity 36,255 33,535 30,212 23,990 22,199
Total Liabilities and Stockholders' Equity
Stockholders' Equity $302,394 $286,111 $271,628 $255,842 $257,710
Average Total Assets $292,308 $278,223 $261,692 $255,747 $249,766
Average Stockholders' Equity $35,022 $32,287 $28,186 $24,330 $20,439
Selected Ratios:
Loans to Assets 48.60% 46.41% 38.41% 36.19% 29.36%
Loans to Deposits 55.74% 52.96% 43.52% 40.11% 32.22%
Deposits to Assets 87.19% 87.62% 88.25% 90.24% 91.10%
Equity to Assets 11.99% 11.72% 11.12% 9.38% 8.61%
Return on Average Assets 1.38% 1.82% 2.01% 1.67% 1.21%
Return on Average Equity 11.52% 15.64% 18.62% 17.53% 14.81%
Dividend Payout 41.85% 28.10% 16.74% 12.68% 13.40%
Avg. Equity-to-Avg. Assets 11.98% 11.60% 10.77% 9.51% 8.18%
<CAPTION>
Condensed Consolidated Statements of Income
for the years ended December 31, 1997, 1996, 1995, 1994, and 1993
1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
Interest Income $20,757 $19,717 $18,205 $15,693 $15,031
Interest Expense 7,712 7,244 6,511 5,326 5,139
Net Interest Income 13,045 12,473 11,694 10,367 9,892
Provision for Loan Losses 1,025 90 - 350 900
Net Interest Income After
Provision for Loan Losses 12,020 12,383 11,694 10,017 8,992
Other Income 3,740 3,978 4,464 4,045 2,930
Other Expenses 9,673 9,030 8,501 7,990 7,694
Income Before Income Taxes 6,087 7,331 7,657 6,072 4,228
Applicable Income Tax Expense 2,050 2,281 2,410 1,808 1,201
Net Income $4,037 $5,050 $5,247 $4,264 $3,027
Per Share:
Net Income $2.99 $3.74 $3.88 $3.15 $2.24
Cash Dividends $1.25 $1.05 $0.65 $0.40 $0.30
Book Value - End of Year $26.82 $24.81 $22.35 $17.75 $16.42
</TABLE>
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SELECTED QUARTERLY DATA
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
One American Corp. and Subsidiaries
for the quarter periods in the years ended December 31, 1997 and 1996
1997 FOURTH THIRD SECOND FIRST
($ in thousands, except per share data) QUARTER QUARTER QUARTER QUARTER
Interest Income $5,418 $5,208 $5,124 $5,007
Interest Expense 2,035 1,940 1,882 1,855
Net Interest Income 3,383 3,268 3,242 3,152
Provision for Loan Losses 500 300 150 75
Net Interest Income after Provision
for Loan Losses 2,883 2,968 3,092 3,077
Other Income 929 902 1,063 846
Other Expenses 2,476 2,416 2,387 2,394
Income before Income Taxes 1,336 1,454 1,768 1,529
Applicable Income Taxes 456 460 577 557
Net Income $880 $994 $1,191 $972
Per Share:
Net Income $0.65 $0.74 $0.88 $0.72
Dividends $0.35 $0.30 $0.30 $0.30
1996 FOURTH THIRD SECOND FIRST
($ in thousands, except per share data) QUARTER QUARTER QUARTER QUARTER
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 3,065 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
12
<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 (the Bank) 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 1997
Net income for the year 1997 was $4.0 million compared to
$5.1 million for the year 1996. For the year ended 1997, earnings
per share were $2.99 compared to $3.74 in 1996. Return on
average assets was 1.38% and 1.82% for the years ended 1997 and
1996, respectively. For the years ended 1997 and 1996, return on
average stockholders' equity was 11.52% and 15.64%, respectively.
The reduction in net income, which resulted in a reduction in
earnings per share, return on average assets, and return on
average stockholders' equity from 1996 to 1997 was primarily due
to an increase in other expenses and a decision by management to
increase the provision for loan losses.
Net interest income for 1997 was $13.0 million, 5% greater
than $12.5 million from the year 1996, 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 4.95% for the same
period of 1996.
During the year 1997, in comparison with the same period of
1996, average loans outstanding increased $22.4 million or 19%
due to management's effort to increase the percentage of earning
assets represented by loans and increased loan demand. Average
total deposits for the year 1997 increased $11.3 million or 5%
when compared to the average total deposits for the same period
of 1996. Average total assets for the current year increased
$14.1 million or 5% when compared to the total average assets of
the year 1996. Average stockholders' equity for 1997 was $35.0
million, an increase of 8% over the average stockholders' equity
for 1996.
The Bank opened a full service office in Napoleonville,
Assumption Parish, Louisiana on September 2, 1997. The opening
of this office increases the Bank's full service offices to
sixteen. This office currently operates from a temporary
facility, however renovation of a permanent facility will begin
within the first quarter of 1998. Management anticipates the
completion of the permanent facility during the second quarter of
1998. The Assumption Parish trade area is very similar to the
Bank's other rural trade areas. On September 18, 1997, the Bank
purchased real estate in Hammond, Tangipahoa Parish, Louisiana.
This real estate is intended for a future branch site in Hammond
with plans to build a new office at a later date. This will
provide the Bank its second office in Hammond, one of the fastest
growing areas of the State.
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 1997, 1996, and 1995. Certain
13
<PAGE>
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 $581 thousand or 5%. Net interest income (FTE) for
1997 was $13.3 million compared to $12.8 million for the prior
year. Net interest income (FTE) for 1995 was $12.0 million.
Earning Assets, Interest Bearing Liabilities, and Net
Interest Spread - Average earning assets increased $12.0 million
or 5% to $269.1 million during 1997. Average earning assets were
$257.1 million in 1996 and $241.4 million in 1995. 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
17. Management's continued strategy is 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 continues to produce levels of loan demand
which has enhanced the Bank's earning asset structure.
Management continues to believe that greater levels of loan
demand will exist in the near future due to opportunities that
were non-existent in the Bank's primary market area. 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.
The trend over the years compared shows the mix of interest
bearing liabilities shifting to higher interest bearing
certificates of deposit from lower interest bearing money market
accounts. As an additional note, the Bank continues to benefit
from the increase in non-interest bearing deposits while at the
same time improving the relationship as a percentage of total
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 1997, the average yield on earning assets
was 7.82%, while the average cost of interest bearing funds was
3.72%, producing a net interest spread (FTE) of 4.10%. The net
interest margin (FTE) was 4.96% for the year ended 1997. In
comparison, the net interest margin (FTE) for the year ended 1996
was 4.95%. The slight increase in net interest margin resulted
from earning assets growing at a faster rate than interest
bearing deposits, further supported by a greater volume of non-
interest bearing deposits.
The table of Average Balance Sheets and Interest Rate
Analysis for the periods ended December 31, 1997, 1996, and 1995
on pages 26, and the corresponding table of Interest
Differentials on page 27 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 17 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 $1.025 million for 1997, an
increase of $935 thousand from the provision for loan losses of
$90 thousand for 1996. The provision for loan losses in 1995 was
$0. Management feels a need to increase the unallocated portion
of the Allowance for Loan Losses. The need to increase the
funding of Allowance for Loan Losses was created due to a non-
domestic credit which utilized a portion of the unallocated
Allowance for Loan Losses during 1997. More specifics can be
found in the sections entitled Allowance for Loan Losses and Non-
performing Assets.
Other Income
Other income was $3.7 million for 1997 and $4.0 million for
1996. Exclusive of security transactions other income decreased
$143 thousand. Service charges on deposit accounts were $2.1
million for 1997 and 1996. Gain on purchased assets decreased
$205 thousand to $607 thousand for 1997 when compared to the
prior year. These gains are recognition of collection of
principal on certain loans acquired in past Bank acquisitions.
The Bank continues to pursue the collection of these loans.
However, the amount of future gains, if any, are indeterminable.
14
<PAGE>
Other operating income for 1997 was $851 thousand compared
to $746 thousand in 1996. Included in other operating income are
fees from bankcard services, safe deposit box rentals, and other
operating fees associated with the daily operations of the Bank.
Net gains on investment securities decreased by $95 thousand
for 1997, compared to a net gain on investment securities of $285
thousand for 1996. The Bank netted $190 thousand as gains from
security transactions during the year 1997. 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 $9.7 million in 1997, a 7% increase
over the 1996 total of $9.0 million. Salaries and employee
benefits increased $314 thousand or 7%, to $4.7 million for 1997
compared to 1996. The increase in salaries is due to an increase
in personnel from two full service offices which were not
reflected in salaries and employee benefits during 1996. Net
occupancy expense was $1.2 million for 1997 and 1996. Other
operating expenses totaled $3.9 million for 1997 compared to $3.4
million for 1996, an increase of $444 thousand or 13%. Other
operating expenses primarily increased due to legal and
professional expenses which were a one time association with a
non-domestic impaired credit. Also, property taxes increased
substantially due in part to a re-assessment of property values
and new physical locations. For a further analysis of other
operating expenses see Note K.
Net other real estate and repossession expense produced a
benefit of $180 thousand for 1997 which was an increase of $167
thousand from the $13 thousand benefit in 1996. 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
and repossessed assets totaled $142 thousand, which were offset
by the income generated from the operations of other real estate
of $17 thousand, and net gains on the sale of other real estate
and repossessed assets of $305 thousand.
For 1996, net other real estate and repossession expense
produced a benefit of $13 thousand. Expenses from other real
estate totaled $5 thousand, which were offset by income 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. 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 1997, 1996, and 1995 were $2.1
million, $2.3 million, and $2.4 million, respectively, producing
an effective tax rate of 34%, 31%, and 31%, 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.
15
<PAGE>
<TABLE>
<CAPTION>
Table 1-
Average Earning Asset Structure
In thousands 1997 1996 1995
% of % of % of
Average Earning Average Earning Average Earning
Balances Assets Balances Assets Balances Assets
<S> <C> <C> <C> <C> <C> <C>
Interest Bearing Deposits $2,753 1.0% $1,670 0.6% $387 0.1%
Federal Funds Sold 11,872 4.4% 9,149 3.6% 9,588 4.0%
Securities
Taxable 102,144 38.0% 116,771 45.4% 119,173 49.4%
Non-Taxable 10,134 3.8% 9,727 3.8% 10,902 4.5%
Loans - Net 142,240 52.8% 119,802 46.6% 101,318 42.0%
Total Average Earning Assets $269,143 100.0% $257,119 100.0% $241,368 100.0%
<CAPTION>
Average Deposit Structure
In thousands 1997 1996 1995
Average % of Average % of Average % of
Balances Deposits Balances Deposits Balances Deposits
<S> <C> <C> <C> <C> <C> <C>
Noninterest Bearing Deposits $48,896 19.1% $45,417 18.6% 43,622 18.8%
NOW Accounts 25,572 10.0% 24,802 10.2% 22,469 9.7%
Savings Accounts 32,082 12.6% 32,225 13.2% 32,189 13.8%
Money Market Deposit Accounts 49,738 19.5% 53,485 21.9% 56,457 24.3%
Certificates of Deposits less than $100,000 87,017 34.1% 77,416 31.7% 69,497 29.8%
Total Average Core Deposits 243,305 95.3% 233,345 95.6% 224,234 96.4%
Certificates of Deposits greater than $100,000 11,999 4.7% 10,638 4.4% 8,269 3.6%
Total Average Deposits $255,304 100.0% $243,983 100.0% $232,503 100.0%
Average Interest Bearing Liabilities
as a percentage of Earning Assets 76.7% 77.2% 78.3%
Average Core Deposits
as a percentage of Total Average Assets 83.2% 83.9% 85.7%
</TABLE>
Liquidity
Liquidity management is the process of ensuring that the
Bank'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, 1997,
average core deposits were approximately $243.3 million or 95% of
total average deposits and 83% 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
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.
16
<PAGE>
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 19
presents the Bank's interest rate sensitivity position at
December 31, 1997. Table 2 indicates that the Company's earning
assets slightly exceed its interest bearing liabilities out to
the one year point in time suggesting the Bank is positively rate
sensitive. This may not be the case in reality given that
mentioned above as it pertains to GAP analysis.
The Bank is 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 Bank 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.
Total commitments were $11.7 million and $14.4 million at
December 31, 1997 and 1996, respectively. Available loan
commitments at December 31, 1997, were $7.6 million and $10.0
million at December 31, 1996. The Bank had letters of credit of
$562 thousand issued at December 31, 1997. Additionally, the
Bank has deposit customers who have credit lines available to
them through their deposit accounts. At December 31, 1997 the
available portion of these credit lines was $329 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
$3.2 million and $2.9 million at December 31, 1997 and 1996.
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. The
Bank is not a party to financial instruments defined as interest
rate exchange agreements, financial futures, or financial
17
<PAGE>
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.
Table 2-
<TABLE>
<CAPTION>
Interest Rate Sensitivity Table
December 31, 1997
In thousands
0-90 91-365 1 Year - Over 5 Non-
Days Days 5 Years Years Sensitive Total
Assets
<S> <C> <C> <C> <C> <C> <C>
Securities $25,029 $23,664 $56,136 $10,048 - $114,877
Loans, Net of Unearned Income 17,265 44,219 64,795 20,411 285 146,975
Federal Funds Sold 12,150 - - - - 12,150
Other Assets 2,896 - - - 25,496 28,392
Total Assets $57,340 $67,883 $120,931 $30,459 $25,781 $302,394
Liabilities
NOW and Super NOW Deposits $957 $2,886 $15,826 $4,916 - $24,585
Insured Money Market Accounts 241 26,464 26,053 - - 52,758
Savings Deposits 1,052 3,163 20,918 6,284 - 31,417
Certificates of Deposits 29,489 48,535 22,729 2,129 - 102,882
Noninterest Bearing Deposits 3,295 9,971 28,367 10,382 - 52,015
Other Liabilities 36 116 713 301 1,316 2,482
Stockholders' Equity - - - - 36,255 36,255
Total Liabilities and
Stockholders' Equity $35,070 $91,135 $114,606 $24,012 $37,571 $302,394
Interest Rate Sensitivity Gap $22,270 ($23,252) $6,325 $6,447 ($11,790) -
Cumulative Interest Rate
Sensitivity Gap $22,270 ($982) $5,343 $11,790 -
GAP / Assets 7.4% -7.7% 2.1% 2.1% -3.9%
Cumulative GAP / Assets 7.4% -0.3% 1.8% 3.9% 0.0%
</TABLE>
18
<PAGE>
Loans
An analysis of the loan portfolio at December 31, 1997,
1996, 1995, 1994, and 1993, is as follows:
<TABLE>
<CAPTION>
($ in thousands) 1997 1996 1995 1994 1993
Commercial, Financial and Agricultural $15,811 $10,444 $10,786 $8,567 $5,812
Real Estate
<S> <C> <C> <C> <C> <C>
Construction 3,987 3,184 1,662 1,241 499
Mortgage 113,117 105,800 81,082 74,403 61,690
Individuals 13,892 13,559 11,457 10,569 9,927
Foreign - 1,361 1,846 - -
All Other Loans 2,395 1,576 793 901 479
Total Loans 149,202 135,924 107,626 95,681 78,407
Unearned Income (37) (65) (33) (11) (38)
Allowance for Loan Losses (2,190) (3,083) (3,273) (3,077) (2,717)
Total Loans, Net $146,975 $132,776 $104,320 $92,593 $75,652
</TABLE>
The following is the detail of maturities and sensitivity of
loans to changes in interest rates at December 31, 1997:
($ in thousands) Amount
Fixed Rate Loans
Maturity
1 Year or Less $56,994
Over 1 through 5 Years 56,264
Over 5 Years 18,808
Total Fixed Rate Loans 132,066
Variable Rate Loans
Repricing Frequency
1 Year or Less 16,851
Over 1 through 5 Years -
Over 5 Years -
Total Variable Rate Loans 16,851
Nonaccrual Loans (Various) 285
Total Loans $149,202
Note: The information necessary for a breakdown of maturity of
the various types of loans is not readily available.
Securities
Included in the category of Securities of Other US
Government Agencies at December 31, 1997 is $17.5 million par
value of structured notes, with an amortized cost of $17.5
million and a fair value of $17.4 million, resulting in an
unrealized loss in the amount of $70 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
19
<PAGE>
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 $2.2 million at year end
1997 or 1.47% of net loans outstanding. At year end 1996, the
allowance for loan losses was $3.1 million or 2.27% 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.
Management reviews Allowance for Loan Losses on a monthly basis
to ensure that it contains an adequate amount of reserves to
absorb potential loan losses.
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.
Net charge offs (recoveries) were $1.9 million for 1997,
compared to $280 thousand for 1996. As a percentage of average
loans, net charge offs (recoveries) were 1.35% in 1997 and .23%
in 1996. Gross charge offs were 1.48% in 1997 and .43% in 1996.
Recoveries as a percentage of gross charge offs were 8.62% in
1997 and 45.10% in 1996. The net charge off position of $1.9
million was caused primarily by a non-domestic credit which
resulted in a charge off of $1.5 million. This individual credit
significantly influenced the change in ratios between the two
reporting periods.
20
<PAGE>
Table 3, Activity in Allowance for Loan Losses, below presents an
analysis of activity in the allowance for loan losses for the
past five years.
Table 3-
($ in thousands) Year Ended December 31,
Activity in Allowance for Loan Losses 1997 1996 1995 1994 1993
Beginning Balance $3,083 $3,273 $3,077 $2,717 $2,036
Loans Charged Off:
Real Estate 312 78 295 54 451
Commercial, Financial, and Agricultural 1,631 392 103 47 61
Individual and Others 156 40 40 10 62
Total Charged Off 2,099 510 438 111 574
Loan Recoveries:
Real Estate 22 24 98 40 39
Commercial, Financial, and Agricultural 130 185 523 58 234
Individual and Others 29 21 13 23 82
Total Recoveries 181 230 634 121 355
Net Loans Charged Off 1,918 280 (196) (10) 219
Provision charged to
Expense 1,025 90 - 350 900
Ending Balance $2,190 $3,083 $3,273 $3,077 $2,717
<TABLE>
<CAPTION>
Year Ended December 31,
($ in thousands) 1997 1996 1995 1994 1993
Ending Balance
<S> <C> <C> <C> <C> <C>
Loans-Net $149,165 $135,859 $107,593 $95,670 $78,369
Daily Average Loans 142,240 $119,802 $101,318 $86,625 $73,580
Ratio of Net Charge-Offs
to Total Loans 1.29% 0.21% -0.18% -0.01% 0.28%
Ratio of Net Charge-Offs
to Average Loans 1.35% 0.23% -0.19% -0.01% 0.30%
</TABLE>
The allowance for loan losses has been allocated according to
the type of loan described in the table below, at December 31,
1997, 1996, 1995, 1994, and 1993:
($ in thousands) 1997 1996 1995 1994 1993
Real Estate $636 $1,231 $2,052 $2,433 $2,155
Commercial, Financial, and Agricultural 95 667 415 276 201
Individual and Others 117 79 23 368 361
Unallocated 1,342 1,106 783 - -
Total Allowance $2,190 $3,083 $3,273 $3,077 $2,717
21
<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, 1997 and 1996 were $285 thousand and $174 thousand,
respectively. Loans past due 90 days and still accruing at
December 31, 1997 and 1996 were $365 thousand and $395 thousand,
respectively. At December 31, 1997, nonaccrual loans were .19%
of gross loans outstanding and 13.01% of the allowance for loan
losses. At December 31, 1996, these ratios were .13% and 5.64%,
respectively.
The following table presents information on the amount of
non-performing loans at December 31, 1997, 1996, 1995, 1994 and
1993:
($ in thousands) 1997 1996 1995 1994 1993
Non-accrual $285 $174 $527 $432 $240
Past due 90 days or more 364 395 441 313 331
Restructured and Impaired 2,965 3,826 3,073 156 273
$3,614 $4,395 $4,041 $901 $844
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.
Other real estate is properties held for sale acquired
through foreclosure or negotiated settlements of debt. Other
real estate increased $10 thousand during 1997. At December 31,
1997 and 1996, other real estate was $78 and $68 thousand,
respectively.
The Bank also has approximately $153 thousand in par value
of Louisiana Agricultural Finance Authority Bonds and Louisiana
Housing Finance Authority Bonds with a book value of $1, on
nonaccrual status. Under a directive from state regulatory
agencies the original $2.35 million in par value of the
Guaranteed Investment Contracts were placed on nonaccrual status
in May, 1992. Due to the directive, the bonds were written down
to $.20 on the dollar or $470 thousand. While management has
written down these bonds in accordance with regulatory policy as
mentioned above, management continues to feel that the fair value
was not representative of the potential liquidation value of
these bonds. Management is of the opinion that the permanent
impairment of the bonds was not in excess of the prescribed
regulatory write downs. A class action suit was filed on behalf
of the bondholders. In summary, the suit sought a determination
of the priority treatment the bondholders would receive under
California statutes in the liquidation of Executive Life
Insurance Company. Under Priority 5 the Guaranteed Investment
Contracts (GICs), which support the municipal bonds, would be
treated as insurance policies and would have the same payout
ratio as other policies. Under Priority 6, the GICs would have
the status of a general unsecured creditor. On November 15,
1992, the Superior Court in California ruled the GICs were a
Priority 5. As a result of pending litigation, continued
settlement proposals are taking place between the guarantors of
the bonds and the bondholders. To date, the Bank has recovered
approximately $2.21 million as partial payments of the $2.35
million in original par value. Of the $2.21 million, $1.74
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 $1.74 million in gains
recognized since the write down, $190 thousand was recognized in
1997 and $277 thousand was recognized in the year 1996. 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
22
<PAGE>
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
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 $5.2 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.
23
<PAGE>
Table 4-
Capital Adequacy Ratios
In Thousands December 31, December 31,
1997 1996
Tier 1 Capital:
Stockholders' Equity $34,954 $32,549
Tier 2 Capital:
Allowance for Loan Losses 1,833 1,706
Total Capital $36,787 $34,255
Risk-Weighted Ratios:
Tier 1 Capital 23.9% 24.1%
Total Capital 25.1% 25.3%
Leverage Ratio 11.7% 11.8%
Stockholders' Equity 11.6% 11.4%
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 10.00% 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
1997. The Bank opened a full service office in Napoleonville,
Assumption Parish, Louisiana on September 2, 1997. The opening
of this office increases the Bank's full service offices to
sixteen. This office currently operates from a temporary
facility, however renovation of a permanent facility will begin
within the first quarter of 1998. Management anticipates the
completion of the permanent facility during the third quarter of
1998. The Assumption Parish trade area is very similar to the
Bank's other rural trade areas. On September 18, 1997, the Bank
purchased real estate in Hammond, Tangipahoa Parish, Louisiana.
This real estate is intended for a future branch site in Hammond.
This will provide the Bank its second office in Hammond, one of
the fastest growing areas of the State.
The Year 2000
The Bank has formed a Year 2000 committee. The purpose of
the committee is to identify potential costs and uncertainties
relating to the Year 2000. To date the committee has written a
policy which addresses the issues approaching the Year 2000 in
five phases. The phases include awareness, assessment,
renovation, validation, and implementation. The committee feels
that the Bank is currently in the assessment phase. While only
in the assessment phase, management does not feel that issues
related to the Year 2000 are reasonably likely to have or will
have a material effect on the Company's liquidity, capital
resources, or results of operation. The costs expensed related
to the Year 2000 issue during 1997 were immaterial.
24
<PAGE>
<TABLE>
<CAPTION>
Table 5 -
AVERAGE BALANCE SHEETS AND INTEREST RATE ANALYSIS
In thousands
1997 1996 1995
AVERAGE INCOME/ YIELD/ AVERAGE INCOME/ YIELD/ AVERAGE INCOME/ YIELD/
BALANCE EXPENSE RATE BALANCE EXPENSE RATE BALANCE EXPENSE RATE
Assets
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Interest Bearing Deposit Accounts $2,753 $155 5.63% $1,670 $80 4.77% $387 $23 5.94%
Federal Funds Sold and Securities
Purchased under Resale Agreements 11,872 641 5.40% 9,149 494 5.38% 9,588 559 5.83%
Securities:
Taxable 102,144 5,948 5.82% 116,771 6,891 5.89% 119,173 7,040 5.91%
Non-Taxable* 10,134 873 8.62% 9,727 847 8.69% 10,902 963 8.83%
Loans - Net 142,240 13,437 9.45% 119,802 11,693 9.73% 101,318 9,948 9.82%
Total Earning Assets 269,143 $21,054 7.82% 257,119 $20,005 7.76% 241,368 $18,533 7.68%
Allowance for Loan Losses (2,505) (3,276) (3,046)
Nonearning Assets 25,670 24,380 23,370
Total Assets $292,308 $278,223 $261,692
Liabilities and Stockholders' Equity
NOW Accounts $25,572 $541 2.12% $24,802 $529 2.13% $22,469 $491 2.19%
Savings Accounts 32,082 811 2.53% 32,225 820 2.54% 32,189 812 2.52%
Money Market Deposit Accounts 49,738 1,401 2.82% 53,485 1,500 2.80% 56,457 1,604 2.84%
Certificates of Deposits less than $100,000 87,017 4,368 5.02% 77,416 3,827 4.93% 69,497 3,217 4.63%
Certificates of Deposits greater than $100,000 11,999 542 4.52% 10,638 528 4.95% 8,269 387 4.68%
Total Interest Bearing Deposits 206,408 7,663 3.71% 198,566 7,204 3.62% 188,881 6,511 3.45%
Other Borowings 811 49 6.07% 675 40 5.91% 24 - -
Total Interest Bearing Liabilities 207,219 7,712 3.72% 199,241 7,244 3.63% 188,905 6,511 3.45%
Noninterest Bearing Deposits 48,896 45,417 43,622
Other Liabilities 1,171 1,278 979
Stockholders' Equity 35,022 32,287 28,186
Total Liabilities and Stockholders' Equity $292,308 $278,223 $261,692
Net Interest Income - Tax Equivalent Basis* 13,342 12,761 12,022
Tax Equivalent Adjustment (297) (288) (328)
Net Interest Income $13,045 $12,473 $11,694
Net Interest Income - Spread* 4.10% 4.13% 4.23%
Net Interest Income as a % of Total Earning Assets* 4.96% 4.95% 4.98%
*Tax Equivalent Basis - 34% Rate for the periods dated
</TABLE>
25
<PAGE>
<TABLE>
<CAPTION>
Table 6 -
INTEREST DIFFERENTIALS
In thousands
1997/1996 1996/1995
Change due to Total Change due to Total
Volume Rate Change Volume Rate Change
Interest Earning Assets:
<S> <C> <C> <C> <C> <C> <C>
Interest Bearing Deposit Accounts $52 $23 $75 $76 ($19) $57
Federal Funds Sold 147 - 147 (25) (40) (65)
Securities:
Taxable (863) (80) (943) (142) (7) (149)
Non-Taxable* 35 (9) 26 (104) (12) (116)
Loans 2,190 (446) 1,744 1,815 (70) 1,745
Total Interest Income 1,561 (512) 1,049 1,620 (148) 1,472
Interest Bearing Liabilities:
NOW Accounts 17 (5) 12 51 (13) 38
Savings Accounts (4) (5) (9) 1 7 8
Money Market Deposit Accounts (106) 7 (99) (85) (19) (104)
Certificates of Deposits less than $100,000 475 66 541 367 243 610
Certificates of Deposits greater than $100,000 68 (54) 14 111 30 141
Other Borrowings 8 1 9 - 40 40
Total Interest Expense 458 10 468 445 288 733
Increase (Decrease) in
Interest Differential $1,103 ($522) $581 $1,175 ($436) $739
*Tax Equivalent Basis - 34% Rate for the periods dated
</TABLE>
26
<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, 1997 and 1996,
were audited by Hannis T. Bourgeois, L. L. P., independent
public accountants, who rendered an independent professional
opinion on the financial statements prepared by management.
27
<PAGE>
Report of Independent Auditor
January 16, 1998
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, 1997
and 1996, 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, 1997. 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, 1997
and 1996, 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, 1997, in conformity with
generally accepted accounting principles.
Respectfully submitted,
/s/ Hannis T Bourgeois, L.L.P.
Hannis T. Bourgeois, L. L. P.
Baton Rouge, Louisiana
28
<PAGE>
<TABLE>
<CAPTION>
Consolidated Balance Sheets
One American Corp. and Subsidiaries
December 31, 1997 and 1996
In thousands 1997 1996 1995
Assets
<S> <C> <C> <C>
Cash and Due From Banks $10,219 $11,176 $14,365
Interest Bearing Deposits in Other Banks 2,896 2,770 867
Federal Funds Sold and Securities
Purchased Under Resale Agreements 12,150 13,325 7,375
Securities
Available for Sale (Amortized Cost of $114,212
and $111,797, respectively) 114,877 111,894 132,592
Total Securities 114,877 111,894 132,592
Loans 149,165 135,859 107,593
Less: Allowance for Loan Losses (2,190) (3,083) (3,273)
Loans, Net 146,975 132,776 104,320
Bank Premises and Equipment 10,837 9,645 8,461
Other Real Estate 78 68 -
Accrued Interest Receivable 2,176 2,031 2,112
Other Assets 2,186 2,426 1,536
Total Assets $302,394 $286,111 $271,628
Liabilities
Deposits:
Noninterest Bearing 52,015 45,907 44,921
Interest Bearing 211,642 204,797 194,803
Total Deposits 263,657 250,704 239,724
Accrued Interest Payable 777 693 603
Other Liabilities 1,705 1,179 1,089
Total Liabilities 266,139 252,576 241,416
Stockholders' Equity
Common Stock-$5.00 par value;
Authorized-10,000,000 shares;
Issued-1,500,000 shares 7,500 7,500 7,500
Surplus 5,000 5,000 5,000
Retained Earnings 23,943 21,596 17,966
Unrealized Gain (Loss) on Securities Available for Sale, Net 439 64 371
Treasury Stock - 148,450 and 148,385 shares at cost (627) (625) (625)
Total Stockholders' Equity 36,255 33,535 30,212
Total Liabilities and Stockholders' Equity $302,394 $286,111 $271,628
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
29
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Income
One American Corp. and Subsidiaries
for the years ended December 31, 1997, 1996, and 1995
In thousands, except per share data 1997 1996 1995
Interest Income
<S> <C> <C> <C>
Interest and Fees on Loans $13,437 $11,701 $9,948
Interest on Securities:
Taxable Interest 5,948 6,884 7,040
Nontaxable Interest 576 559 636
Total Interest on Securities 6,524 7,443 7,676
Other Interest Income 796 573 581
Total Interest Income 20,757 19,717 18,205
Interest Expense on Deposits 7,712 7,244 6,511
Net Interest Income 13,045 12,473 11,694
Provision for Loan Losses 1,025 90 -
Net Interest Income After
Provision for Loan Losses 12,020 12,383 11,694
Other Income
Service Charges on Deposit Accounts 2,092 2,135 1,849
Gain on Securities 190 285 442
Gain on Purchased Assets 607 812 1,147
Other Operating Income 851 746 1,026
Total Other Income 3,740 3,978 4,464
Income Before Other Expenses 15,760 16,361 16,158
Other Expenses
Salaries and Employee Benefits 4,749 4,435 4,224
Net Occupancy Expense 1,236 1,184 1,150
Net ORE and Repossession Expense (180) (13) (159)
Other Operating Expenses 3,868 3,424 3,286
Total Other Expenses 9,673 9,030 8,501
Income Before Income Taxes 6,087 7,331 7,657
Applicable Income Taxes 2,050 2,281 2,410
Net Income $4,037 $5,050 $5,247
Net Income Per Share $2.99 $3.74 $3.88
Cash Dividends Per Share $1.25 $1.05 $0.65
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
30
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Changes in Stockholders' Equity
One American Corp. and Subsidiaries
for the years ended December 31, 1997, 1996, and 1995
In thousands 1997 1996 1995
Common Stock
<S> <C> <C> <C>
Balance - Beginning and End of Year $7,500 $7,500 $7,500
Surplus
Balance - Beginning and End of Year $5,000 $5,000 $5,000
Retained Earnings
Balance - Beginning of Year $21,596 $17,966 $13,597
Net Income 4,037 5,050 5,247
Cash Dividends (1,690) (1,420) (878)
Balance - End of Year $23,943 $21,596 $17,966
Unrealized Gain (Loss) on Securities Available for Sale, Net
Balance - Beginning of Year $64 $371 ($1,482)
Net Change in Unrealized Gain (Loss) 375 (307) 1,853
Balance - End of Year $439 $64 $371
Treasury Stock
Balance - Beginning of Year ($625) ($625) ($625)
Treasury Stock Purchased ( 65 shares ) (2) - -
Balance - End of Year ($627) ($625) ($625)
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
31
<PAGE>
<TABLE>
<CAPTION>
Consolidated Statements of Cash Flows
One American Corp. and Subsidiaries
for the years ended December 31, 1997, 1996, and 1995
In thousands 1997 1996 1995
Cash Flows From Operating Activities
<S> <C> <C> <C>
Net Income $4,037 $5,050 $5,247
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities:
Gain on Purchased Assets (606) (811) (1,147)
Provision for Depreciation 762 679 686
Provision for Loan Losses 1,025 90 -
Net Amortization (Accretion) on Securities (149) (87) (412)
Provision (Credit) for Deferred Income Taxes 412 (1) (90)
(Gain) Loss on Sale of Other Real Estate and Repossessions (304) (8) (153)
(Gain) Loss on Sale of Equipment (1) - 6
(Gain) Loss on Securities (189) (284) (442)
Changes in Assets and Liabilities:
(Increase) Decrease in Accrued Interest Receivable (145) 81 (372)
(Increase) Decrease in Other Assets (365) (728) (41)
Increase (Decrease) in Accrued Interest Payable 84 90 268
Increase (Decrease) in Other Liabilities 54 (394) 288
Net Cash Provided by Operating Activities 4,615 3,677 3,838
Cash Flows From Investing Activities
Maturities or Calls of Securities Available for Sale 61,775 62,565 65,451
Maturities or Calls of Securities Held to Maturity - - 767
Purchases of Securities Available for Sale (64,041) (42,235) (67,651)
Purchases of Securities Held to Maturity - - (502)
Proceeds from Sale of Securities Available for Sale 189 276 442
Net (Increase) Decrease in Federal Funds Sold 1,175 (5,950) 825
Net (Increase) Decrease in Loans (15,174) (27,806) (10,626)
Proceeds from Sale of Other Real Estate and Repossessions 850 11 293
Proceeds from Sale of Premises and Equipment - - 215
Purchases of Premises and Equipment (1,953) (1,863) (398)
Proceeds from Other Borrowings 407 411 350
Net Cash Used in Investing Activities (16,772) (14,591) (10,834)
Cash Flows From Financing Activities
Net Increase (Decrease) in Demand Deposits, NOW
and Savings Accounts 476 1,605 (3,367)
Net Increase (Decrease) in Certificates of Deposits 12,477 9,375 12,227
Dividends Paid (1,627) (1,352) (1,080)
Net Cash Provided By Financing Activities 11,326 9,628 7,780
Increase (Decrease) in Cash and Cash Equivalents (831) (1,286) 784
Cash and Cash Equivalents - Beginning of Year 13,946 15,232 14,448
Cash and Cash Equivalents - End of Year $13,115 $13,946 $15,232
Supplemental Disclosure of Cash Flow Information:
Income Tax Payments $1,536 $2,403 $2,032
Interest Paid on Deposits $7,628 $7,154 $6,243
Noncash Investing Activities:
Other Real Estate Acquired in Settlement of Loans $556 $71 $46
Change in Unrealized Gain (Loss) on
Securities Available for Sale $568 ($465) $2,807
Change in Deferred Tax Effect on
Unrealized Gain (Loss) on Securities Available for Sale $193 ($158) $954
Transfer of Securities from Held to Maturity
to Available for Sale - - $18,384
Noncash Financing Activities:
Dividends Declared and Not Paid $473 $405 $338
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
32
<PAGE>
One American Corp. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 1997, 1996, and 1995
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
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 had no securities classified
as held to maturity or trading at December 31, 1997 or 1996.
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 unable 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.
33
<PAGE>
When a loan is placed on non-accrual status, previously
recognized but uncollected interest is reversed to income or
charged to the allowance for loan losses. Interest income is
subsequently recognized only to the extent cash payments are
received.
Allowance for Loan Losses - The allowance for loan losses is
an amount which in management's judgment is adequate to absorb
potential losses in the loan portfolio. The allowance for loan
losses is based upon management's review and evaluation of the
loan portfolio. Factors considered in the establishment of the
allowance for loan losses include management's evaluation of
specific loans, the level and composition of classified loans,
historical loss experience, results of examinations by regulatory
agencies, an internal asset review process, expectations of
future economic conditions and their impact on particular
borrowers, and other judgmental factors.
The allowance for loan losses is based on estimates of
potential future losses, and ultimate losses may vary from the
current estimates. These estimates are reviewed periodically and
as adjustments become necessary, the effect of the change in
estimate is charged to operating expenses in the period incurred.
All losses are charged to the allowance for loan losses when the
loss actually occurs or when management believes that the
collectibility of the principal is unlikely. Recoveries are
credited to the allowance at the time of recovery.
Bank Premises and Equipment - Bank premises and equipment
are stated at cost less accumulated depreciation. Depreciation
is provided at rates based upon estimated useful service lives
(ten to thirty years for buildings, three to ten years for
equipment) using the straight-line method for financial reporting
purposes and accelerated methods for income tax purposes.
The cost of assets retired or otherwise disposed of and the
related accumulated depreciation are eliminated from the accounts
in the year of disposal and the resulting gains or losses are
included in current operations.
Expenditures for maintenance and repairs are charged to
operations as incurred. Costs of major additions and
improvements are capitalized.
Other Real Estate - Other real estate is comprised of
properties acquired through foreclosure or negotiated settlement.
The carrying value of these properties is lower of cost or fair
value less estimated selling expenses. Loan losses arising from
the acquisition of these properties are charged against the
allowance for loan losses. Any subsequent market reductions
required are charged to other real estate expense. Revenues and
expenses associated with maintaining or disposing of foreclosed
properties are recorded during the period in which they are
incurred.
Income Taxes - The provision for income taxes is based on
income as reported in the financial statements after interest
income from state and municipal securities is excluded. Also
certain items of income and expenses are recognized in different
time periods for financial statement purposes than for income tax
purposes. Thus, provisions for deferred taxes are recorded in
recognition of such timing differences.
Deferred taxes are provided utilizing a liability method in
accordance with SFAS No. 109 whereby deferred tax assets are
recognized for deductible temporary differences and operating
loss and tax credit carryforwards and deferred tax liabilities
are recognized for taxable temporary differences. Temporary
differences are the differences between the reported amounts of
assets and liabilities and their tax bases. Deferred tax assets
are reduced by a valuation allowance when, in the opinion of
management, it is more likely than not that some portion or all
of the deferred tax assets will not be realized. Deferred tax
assets and liabilities are adjusted for the effects of changes in
tax laws and rates on the date of enactment.
The Company and its subsidiaries file a consolidated federal
income tax return. In addition, state income tax returns are
filed individually by the Companies in accordance with state
statutes.
Earnings per Common Share - The computation of earnings per
share and other per share amounts of common stock is based on the
weighted average number of shares of common stock outstanding
during each year, which is 1,351,615 for all periods presented.
Statements of Cash Flows - For purposes of reporting cash
flows, cash and cash equivalents include cash on hand and amounts
due from banks (including cash items in process of clearing).
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
34
<PAGE>
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
application of this statement had no effect on the financial
statements as of December 31, 1997.
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.
In thousands 09/23/96
Assets:
Cash and due From Banks $727
Federal Funds Sold 1,825
Securities 235
Loans, Net 4,044
Bank Premises 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 Liabilites 17
Stockholders' Equity 1,213
Total Liabities 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, 1997 and
1996, were approximately $3.6 million and $3.0 million,
respectively.
35
<PAGE>
NOTE D
Securities
Amortized costs and fair values of securities available for
sale as of December 31, 1997 and 1996 are summarized as follows:
<TABLE>
<CAPTION>
1997
Gross Gross
Amortized Unrealized Unrealized Fair
($ in thousands) Cost Gains Losses Value
<S> <C> <C> <C> <C>
U. S. Treasury Securities $38,348 $128 ($7) $38,469
Securities of Other U. S. Government Agencies 54,323 80 (107) 54,296
Mortgage-Backed Securities 9,762 125 (13) 9,874
Obligations of State and Political Subdivisions 10,877 459 - 11,336
Equity Securities 902 - - 902
Totals $114,212 $792 ($127) $114,877
<CAPTION>
1996
Gross Gross
Amortized Unrealized Unrealized Fair
($ 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
</TABLE>
Included in the category of Securities of Other US
Government Agencies at December 31, 1997 is $17.5 million par
value of structured notes, with an amortized cost of $17.5
million and a fair value of $17.4 million. At December 31, 1996,
the Bank held $21.5 million of par value of these notes with an
amortized cost of $21.5 million with a fair value of $21.5
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
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
36
<PAGE>
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 $2.2 million as partial payments of the $2.35
million in original par value. Of the $2.2 million, $1.8 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
$1.8 million in gains recognized since the write down, $190
thousand was recognized in 1997 and $277 thousand was recognized
in 1996. The Bank continues to pursue the collection of
principal on these securities. However, the amount of any future
fulfillment of these collection actions remain uncertain.
The following table shows the amortized cost, fair value,
maturity distribution, and weighted average yield of the
securities available for sale as of December 31, 1997.
Maturities may differ from contractual maturities in mortgage-
backed securities because the mortgages underlying the securities
may be called or repaid without any penalties.
($ in thousands) Amortized Fair Average
Cost Value Yield
U. S. Treasury Securities
Within 1 Year $18,352 $18,374 5.58%
After 1 but Within 5 Years 19,996 20,095 5.99%
After 5 but Within 10 Years - - -
After 10 Years - - -
38,348 38,469 5.79%
Securities of Other U. S. Government Agencies
Within 1 Year 24,339 24,292 5.16%
After 1 but Within 5 Years 29,984 30,004 5.94%
After 5 but Within 10 Years - - -
After 10 Years - - -
54,323 54,296 5.59%
Mortgage-Backed Securities
Within 1 Year 5 5 9.72%
After 1 but Within 5 Years 320 332 9.30%
After 5 but Within 10 Years 4,456 4,511 7.13%
After 10 Years 4,981 5,026 6.64%
9,762 9,874 6.95%
Obligations of State and Political Subdivisions*
Within 1 Year 536 538 8.38%
After 1 but Within 5 Years 6,408 6,671 8.35%
After 5 but Within 10 Years 3,340 3,498 7.47%
After 10 Years 593 629 7.94%
10,877 11,336 8.06%
Equity Securities 902 902 5.57%
902 902 5.57%
Totals $114,212 $114,877 6.02%
* Tax Equivalent Basis - 34%
Securities available for sale with a carrying amount of
$33.4 million and $38.2 million at December 31, 1997 and 1996,
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 $902 thousand and $851 thousand,
which approximates fair value, at December 31, 1997 and 1996,
respectively.
37
<PAGE>
Gross realized gains and losses from the sale of securities
for the years ended December 31, 1997, 1996, and 1995 are as
follows:
($ in thousands) 1997 1996 1995
Realized gains $190 $285 $442
Realized losses - - -
$190 $285 $442
NOTE E
Loans
An analysis of the loan portfolio at December 31, 1997 and
1996, is as follows:
($ in thousands) 1997 1996
Commercial, Financial, and Agricultural $15,811 $10,442
Real Estate - Construction 3,987 3,184
Real Estate - Mortgage 113,117 105,800
Individuals 13,892 13,559
Foreign - 1,361
All Other Loans 2,395 1,578
Total Loans 149,202 135,924
Unearned Income (37) (65)
Total Loans, net of Unearned Income $149,165 $135,859
Impaired loans having recorded investments of $3.2 million
at December 31, 1997 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, 1997 was approximately $3.5 million. Impaired
loans at December 31, 1996 were $4.0 million. The allowance for
loan losses related to these loans was
$849 thousand at December 31, 1997 and $1.9 million at December
31, 1996. Interest received on impaired loans amounted to $348
thousand and $458 thousand at December 31, 1997 and 1996,
respectively. All non-accrual loans were considered impaired at
December 31, 1997. Non-accrual loans not included in impaired
loans were immaterial at December 31, 1996.
The Bank is permitted, under the laws of the State of
Louisiana, to make extensions of credit to its executive officers
and directors and their affiliates in the ordinary course of
business. An analysis of the aggregate loans, for December 31,
1997 and 1996, are as follows:
($ in thousands) 1997 1996
Balance - Beginning of Year $2,698 $1,955
New Loans 3,455 2,672
Repayments (1,085) (1,929)
Balance - End of Year $5,068 $2,698
Maximum Balance During the Year $5,694 $2,796
38
<PAGE>
NOTE F
Allowance for Loan Losses
Following is a summary of the activity in the allowance for
loan losses:
($ in thousands) 1997 1996 1995
Balance - Beginning of Year $3,083 $3,273 $3,077
Current Provision from Income 1,025 90 -
Recoveries on Loans Charged-Off 181 230 634
Loans Charged-Off (2,099) (510) (438)
Balance - End of Year $2,190 $3,083 $3,273
Ratio of Allowance for Loan Losses to
Impaired Loans at End of Year 67.39% 74.91% 90.92%
Ratio of Allowance for Loan Losses to Loans
Outstanding at End of Year 1.47% 2.27% 3.04%
Ratio of Net Loans Charged-Off to
Loans Outstanding at End of Year 1.29% 0.20% (.18%)
NOTE G
Bank Premises and Equipment
Bank premises and equipment costs and the related
accumulated depreciation at December 31, 1997 and 1996, are as
follows:
($ in thousands) 1997 1996
Land $3,115 $2,645
Bank Premises 8,743 8,008
Furniture and Equipment 5,588 4,839
17,446 15,492
Accumulated Depreciation (6,609) (5,847)
$10,837 $9,645
Depreciation charged to operating expenses for the three
years ended December 31, 1997, 1996, and 1995, respectively, was
$762 thousand, $679 thousand, and $686 thousand.
39
<PAGE>
NOTE H
Deposits
Following is a detail of deposits as of December 31, 1997
and 1996:
($ in thousands) 1997 1996
Non-interest Bearing Accounts $52,015 $45,907
NOW and Super NOW Accounts 24,585 24,273
Insured Money Market Accounts 51,355 56,535
Savings Accounts 31,417 32,181
Certificates of Deposit over $100,000 12,528 12,352
Other Certificates of Deposit 91,757 79,456
Total Deposits $263,657 $250,704
Interest expense on Certificates of Deposit over $100
thousand at December 31, 1997, 1996, and 1995, amounted to $542
thousand, $472 thousand and $387 thousand, respectively.
Public Fund deposits at December 31, 1997 and 1996, were
$16.2 million and $18.3 million, respectively.
NOTE I
Stockholders' Equity and Regulatory Matters
Stockholders' Equity of the Company includes the
undistributed earnings of the Bank. 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. Louisiana
statutes require approval to pay dividends in excess of a state
bank's earnings in the current year plus retained net profits for
the preceding year. As of January 1, 1998, the Bank had retained
earnings of $17.5 million of which $5.2 million was available for
distribution without prior regulatory approval.
The company and the Bank are subject to various regulatory
capital requirements administered by federal and state banking
agencies. Failure to meet minimum regulatory capital
requirements can initiate certain mandatory, and possible
additional discretionary actions by regulators, that if
undertaken, could have a direct material affect on the Company's
financial statements. Under the capital adequacy guidelines and
the regulatory framework for prompt corrective action, the
Company and the Bank must meet specific capital guidelines
involving quantitative measures of assets, liabilities, and
certain, off-balance-sheet items as calculated under regulatory
accounting practices. The Company and the Bank's capital amounts
and classification under the prompt corrective action guidelines
are 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 Company to maintain minimum amounts
and ratios. As detailed below, as of December 31, 1997 and 1996,
the Company met all of the capital adequacy requirements to which
it is subject.
As of December 31, 1997 and 1996, the Company was
categorized as well capitalized under the regulatory framework
for prompt corrective action. There are no conditions or events
since the most recent notification that management believes have
changed the prompt corrective action category.
40
<PAGE>
Following is a summary of capital levels at December 31,
1997 and 1996:
<TABLE>
<CAPTION>
To Be Well
Capitalized
Under
Required for Prompt
Capital Corrective
Actual Adequacy Actions
As of December 31, 1997 Ratios Purposes Provision
<S> <C> <C> <C>
Total Capital (to Risk Weighted Assets) 25.1% 8.00% 10.00%
Tier 1 Capital (to Risk Weighted Assets) 23.9% 4.00% 6.00%
Tier 1 Leveraged Capital (to Average Assets) 11.7% 4.00% 5.00%
As of December 31, 1996
Total Capital (to Risk Weighted Assets) 25.3% 8.00% 10.00%
Tier 1 Capital (to Risk Weighted Assets) 24.1% 4.00% 6.00%
Tier 1 Leveraged Capital (to Average Assets) 11.8% 4.00% 5.00%
</TABLE>
Under current regulations, the Bank is limited in the amount it
may loan to its parent. Loans to the Parent may not exceed 10%
of the Bank's capital and surplus. There were no loans
outstanding at December 31, 1997 and 1996.
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
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 1997 or 1996.
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 $151 thousand, $127 thousand and
$164 thousand for the years ended December 31, 1997, 1996, and
1995, respectively. The majority of the plans assets are invested
in money market funds or mutual funds. The following table sets
forth the plan's funded status at December 31, 1997 and 1996.
($ in thousands) 1997 1996
Actuarial Present Value of Benefit Obligations:
Vested Benefits $4,266 $3,448
Accumulated Benefits $4,584 $3,681
Projected Benefits ($6,146) ($4,842)
Plan Assets at Fair Value 6,204 5,346
Projected Benefit Obligation Less
Than (In Excess Of) Plan Assets 58 504
Unrecognized Net (Gain) Loss 336 (1)
Unrecognized Net Obligation (Asset) (217) (236)
Prepaid Pension Expense $177 $267
41
<PAGE>
Assumptions used in the determination of pension plan
information consisted of the following:
1997 1996
Discount Rate 7.00% 7.50%
Rate of Increase in Compensation Levels 5.50% 5.50%
Expected Long-Term Rate of Return
on Plan Assets 9.00% 9.00%
Net pension expense for 1997, 1996, and 1995 included the
following components:
<TABLE>
<CAPTION>
($ in thousands) 1997 1996 1995
<S> <C> <C> <C>
Service Cost $268 $248 $245
Interest Cost 376 328 297
Return on Assets (851) (496) (724)
Net Amortization and Deferral $358 $47 $346
</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
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 $548 thousand and $530
thousand for the years ended December 31, 1997 and 1996,
respectively. The Bank had set aside reserves in the amount of
$647 thousand for payment of unreported claims with dates of
service through December 31, 1997.
NOTE K
Other Operating Expenses
The analysis of other operating expenses for the years ended
December 31, 1997, 1996, and 1995, are as follows:
<TABLE>
<CAPTION>
($ in thousands) 1997 1996 1995
<S> <C> <C> <C>
Advertising and Public Relations $301 $349 $344
Armored Courier Service 131 115 94
Director Fees 263 200 152
Equipment Expense 1,047 946 888
Legal and Professional 506 400 266
Postage and Shipping 180 175 167
Regulatory Assessments 67 32 267
Service Charges-Other Institutions 122 126 112
Stationery, Printing, and Supplies 356 338 328
Telephone 295 233 189
Other 600 510 479
$3,868 $3,424 $3,286
</TABLE>
NOTE L
Income Taxes
The total provision for income taxes charged to income
amounted to $2.0 million for 1997, $2.3 million for 1996, and
42
<PAGE>
$2.4 million for 1995. The provisions represent effective tax
rates of 33% for 1997 and 31% for 1996 and 1995. Following is a
reconciliation between income tax expense based on the federal
statutory tax rates and income taxes reported in the statements
of income.
<TABLE>
<CAPTION>
($ in thousands) 1997 1996 1995
Income Taxes Based on Statutory Rates -
<C> <C> <C> <C>
34% for periods shown $2,069 $2,492 $2,603
Tax Exempt Income (196) (188) (216)
Other - Net 177 (23) 23
$2,050 $2,281 $2,410
</TABLE>
The components of consolidated income tax expense (benefits)
are:
<TABLE>
<CAPTION>
($ in thousands) 1997 1996 1995
<S> <C> <C> <C>
Provision for Current Taxes $1,638 $2,282 $2,500
Provision (Credit) for Deferred Taxes 412 (1) (90)
$2,050 $2,281 $2,410
</TABLE>
A deferred income tax asset of $25 thousand and $630
thousand is included in other assets at December 31, 1997 and
1996, respectively. The deferred tax provision (credit) consists
of the following timing differences:
<TABLE>
<CAPTION>
($ in thousands) 1997 1996 1995
Depreciation Expense for Tax Reporting
<S> <C> <C> <C>
in Excess of Amount for Financial Reporting ($3) ($2) $14
Provision for Loan Losses for Financial
Reporting in Excess of Amount for
Tax Reporting 427 21 (63)
Accretion Income for Financial Reporting
in Excess of Tax Reporting 14 (17) (4)
Increase in Insurance Reserve (10) (21) (147)
Increase (Decrease) in Prepaid Pension (16) 18 110
$412 ($1) ($90)
</TABLE>
The net deferred tax asset consists of the following
components at December 31, 1997 and 1996:
($ in thousands) 1997 1996
Depreciation ($346) ($349)
Provision for Loan Losses 566 993
Accretion Income (35) (21)
Insurance Reserve 178 168
Prepaid Pension (112) (128)
Unrealized (Gain) Loss on Securities
Available for Sale (226) (33)
Total Deferred Tax Asset $25 $630
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
$9.6 million at December 31, 1997. 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.
43
<PAGE>
Drawings on the line included in other liabilities, were $1.2
million and $761 thousand at December 31, 1997 and 1996
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 $11.7 million at December 31,
1997. This amount includes unfunded commitments aggregating
$11.1 million and letters of credit of $562 thousand.
NOTE O
Concentrations of Credit
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
$4 million.
NOTE P
Fair Value of Financial Instruments
The following methods and assumptions were used to estimate
the fair value of each class of financial instruments for which
it is practicable to estimate that value:
Cash and Short-Term Investments - For those short-term
instruments, the carrying amount is a reasonable estimate of fair
value.
Securities - Fair value of securities held to maturity and
available for sale is based on quoted market prices or dealer
quotes. If a quoted market price is not available, fair value is
estimated using quoted market prices for similar securities.
Loans - The fair value for loans is estimated using
discounted cash flow analyses, with interest rates currently
being offered for similar loans to borrowers with similar credit
rates. Loans with similar classifications are aggregated for
purposes of the calculations. The allowance for loan losses
which was used to measure the credit risk, is subtracted from
loans.
Deposits - The fair value of demand deposits, savings
accounts, and certain money market deposits is the amount payable
on demand at the reporting date. The fair value of fixed-
maturity certificates of deposit is estimated using discounted
cash flow analyses, with interest rates currently offered for
deposits of similar remaining maturities.
Commitments to Extend Credit and Standby Letters of Credit -
The fair value of commitments is estimated using the fees
currently charged to enter into similar agreements, taking into
account the remaining terms of the agreements and the present
creditworthiness of the parties. For fixed-rate loan
commitments, fair value also considers the difference between
44
<PAGE>
current levels of interest rates and the committed rates. The
fair value of letters of credit is based on fees currently
charged for similar agreements at the reporting date. The
estimated approximate fair values of the Bank's financial
instruments as of December 31, 1997 and 1996 are as follows:
($ in thousands) 1997 1996
Carrying Carrying
Financial Assets: Amount Fair Value Amount Fair Value
Cash and
Short-Term Investments $25,265 $25,265 $27,271 $27,271
Securities 114,877 114,877 111,894 111,894
Loans - Net 146,975 147,511 132,776 132,683
$287,117 $287,653 $271,941 $271,848
Financial Liabilities:
Deposits $263,657 $263,259 $250,704 $250,175
Unrecognized Financial Instruments
Commitments to Extend Credit
and Letters of Credit $- $- $- $-
NOTE Q
Litigation and Contingencies
During the normal course of business, the Company is
involved in various legal proceedings. In the opinion of
management and counsel, any liability resulting from such
proceedings would not have a material adverse effect on the
Company's financial statements.
45
<PAGE>
NOTE R
Parent Company Financial Statements
The financial statements for One American Corp. (Parent
Company Only) are presented below:
BALANCE SHEETS
December 31, 1997 and 1996
($ in thousands) 1997 1996
Assets
Cash $2,107 $1,699
Receivables from Subsidiaries 20 18
Income Tax Receivable 12 122
Investment in Subsidiaries:
First American Bank and Trust 34,397 32,044
One American Agency, Inc. 233 194
34,630 32,238
Total Assets $36,769 $34,077
Liabilities
Accrued Dividend Payable $472 $135
Payables to Subsidiaries 42 407
514 542
Stockholders' Equity
Common Stock 7,500 7,500
Surplus 5,000 5,000
Retained Earnings 24,382 21,660
Treasury Stock - 148,450 and 148,385 shares at cost (627) (625)
Total Stockholders' Equity 36,255 33,535
Total Liabilities and Stockholders' Equity $36,769 $34,077
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<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF INCOME
for the years ended December 31, 1997, 1996, and 1995
($ in thousands) 1997 1996 1995
Income
<S> <C> <C> <C>
Interest Income $44 $34 $17
Dividends from Subsidiaries:
First American Bank and Trust 2,025 1,800 1,425
One American Agency, Inc. - - -
Total Income 2,069 1,834 1,442
Expenses
Operating Expenses 52 48 53
Total Expenses 52 48 53
Income before Income Taxes and Equity in
Undistributed Net Income of Subsidiaries 2,017 1,786 1,389
Income Tax Expense (Benefit) (3) (5) (12)
Income before Equity in Undistributed
Net Income of Subsidiaries 2,020 1,791 1,401
Equity in Undistributed Net Income of Subsidiaries 2,017 3,259 3,846
Net Income $4,037 $5,050 $5,247
</TABLE>
47
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CASH FLOWS
for the years ended December 31, 1997, 1996, and 1995
($ in thousands) 1997 1996 1995
Cash Flows From Operating Activities:
<S> <C> <C> <C>
Net Income $4,037 $5,050 $5,247
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities:
Equity in Undistributed Net Income of Subsidiaries (2,017) (3,259) (3,846)
Changes in Assets and Liabilities:
Increase (Decrease) in Payables to Subsidiaries (93) 135 -
(Increase) Decrease in Receivables from Subsidiaries (2) 343 (361)
(Increase) Decrease in Income Tax Receivables 110 (122) 13
Increase (Decrease) in Income Taxes Payable - (348) 348
Net Cash Provided by Operating Activities 2,035 1,799 1,401
Cash Flows From Financing Activities:
Dividends Paid (1,627) (1,352) (1,080)
Net Cash Used in Financing Activities (1,627) (1,352) (1,080)
Net Increase in Cash 408 447 321
Cash - Beginning of Year 1,699 1,252 931
Cash - End of Year $2,107 $1,699 $1,252
Noncash Financing Activities:
Dividends Declared and Not Paid $473 $405 $338
Change in Unrealized Gain (Loss) on Securities Available
For Sale, Net $375 ($307) $1,853
</TABLE>
48
<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 1998 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 1997 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, 1997.
(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 1998
Annual Meeting of Stockholders' of One American Corp.
49
<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
Chairman
Dated March 12, 1998
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 12, 1998:
/s/ J. B. Falgoust, Chairman (principal executive, financial, and
J. B. Falgoust accounting officer) and Director
/s/ Frank J. Bourgeois, President and Director
Frank J. Bourgeois
/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/ A. Earle Cefalu, Director
A. Earle Cefalu
/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/ Gloria A. Kliebert, Secretary / Treasurer and Director
Gloria A. Kliebert
/s/ Anthony J. Nobile, Director
Anthony J. Nobile
50
<PAGE>
/s/ Carl J. Poche, M.D., Director
Carl J. Poche, M.D.
/s/ David J. Vial, M.D., Director
David J. Vial, M.D.
/s/ Craig A. Vitrano, M.D., Director
Craig A. Vitrano, M.D.
/s/ Albert J. Waguespack, Director
Albert J. Waguespack
51
<PAGE>
One American Corp. Board of Directors
Frank J. Bourgeois Honora F. Gravois
1997 1993
President and CEO, One American President, M & H Builders, Inc.
Corp.
President and CEO, First Contractor
American Bank and Trust
Craig G. Brazan O. J. Gravois III
1986 1996
Marathon Oil Company President, Gravois Farms, Inc.
Petroleum Engineer Farmer
E. V. Cazenave. Jr. Gloria A. Kliebert
1986 1997
President, Cazenave Motor Secretary / Treasurer, One
company, Inc. American Corp.
Retailer Secretary to the Board and
Senior Vice President,
First American Bank and Trust
Michael J. Cazenave
1992 Anthony J. Nobile
Eckerd Drugs 1992
Pharmacist Martin, Himel, Peytavin & Nobile
Attorney
A. Earle Cefalu, Jr.
1997 Carl J. Poche, M.D.
Dealer Principal, Hood - Cefalu 1986
Co., Inc.
Retailer Coroner of St. James Parish
Physician
Dean T. Falgoust
1992 David J. Vial, M.D.
Freeport-McMoran, Inc. 1991
Director of Taxes, Legal and Coroner of St. Charles Parish
Planning
Attorney Physician
J. B. Falgoust Craig A. Vitrano, M.D.
1961 1993
Chairman, One American Corp. Physician
Chairman, First American Bank
and Trust
Albert J. Waguespack
Preston L. Falgoust 1993
1975 Waguespack Oil Co. and AJW Farms
President, Chauvin Business Oil Distributor and Farmer
Systems, Inc.
Retailer
Marcel T. Graugnard, Jr.
1975
President, Graugnard, Inc.
Retailer
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<S> <C>
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<PERIOD-START> JAN-01-1997
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