UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the
Quarter Ended March 31, 1998 Commission File Number:0-12437
One American Corp.
(Exact name of registrant as specified in its charter)
Louisiana 72-0948181
(State or other jurisdiction of (IRS Employer
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)265-2265
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 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 May 6, 1998.
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FORM 10-Q Index
Part I
Financial Information
Financial Statements
Consolidated Balance Sheets,
March 31, 1998, December 31, 1997 and March 31, 1997 3
Consolidated Statements of Income
for the three months ended March 31, 1998 and 1997 4
Consolidated Statements of Changes in Stockholders' Equity
for the three months ended March 31, 1998 and 1997 5
Consolidated Statements of Cash Flows
for the three months ended March 31, 1998 and 1997 6
Notes to Consolidated Financial Statements 7
Management's Discussion and Analysis of Financial Condition
and Results of Operations 11
Average Balance Sheets and Interest Rate Analysis
for the three months ended March 31, 1998,
December 31, 1997 and March 31, 1997 22
Interest Differentials
for the three months ended March 31, 1998,
December 31,1997 and March 31, 1997 23
Part II
Other Information
Legal Proceedings 24
Exhibits and Reports on Form 8-K 24
Management's Responsibility for Financial Reporting 25
Signatures 26
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<TABLE>
<CAPTION>
Consolidated Balance Sheets
One American Corp. and Subsidiaries Unaudited Unaudited Unaudited
March 31, 1998 and 1997 March 31, December 31,March 31,
In thousands 1998 1997 1997
<S> <C> <C> <C>
Assets
Cash and Due From Banks $13,513 $10,219 $10,946
Interest Bearing Deposits in Other Banks 5,265 2,896 2,283
Federal Funds Sold and Securities
Purchased Under Resale Agreements 15,625 12,150 10,650
Securities
Available for Sale (Amortized Cost of $112,500, $114,212
and $114,094, respectively) 113,176 114,877 113,824
Total Securities 113,176 114,877 113,824
Loans 150,399 149,165 141,007
Less: Allowance for Loan Losses (2,621) (2,190) (3,171)
Loans, Net 147,778 146,975 137,836
Bank Premises and Equipment 11,045 10,837 9,682
Other Real Estate 78 78 51
Accrued Interest Receivable 1,981 2,176 2,065
Other Assets 2,161 2,186 2,323
Total Assets $310,622 $302,394 $289,660
Liabilities
Deposits:
Noninterest Bearing $55,130 $52,015 $48,922
Interest Bearing 215,658 211,642 204,562
Total Deposits 270,788 263,657 253,484
Accrued Interest Payable 723 777 581
Other Liabilities 2,373 1,705 1,735
Total Liabilities 273,884 266,139 255,800
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 24,434 23,943 22,162
Unrealized Gain (Loss) on Securities Available for Sale, Net 446 439 (177)
Treasury Stock - 148,450, 148,450 and 148,385 shares at cost (642) (627) (625)
Total Stockholders' Equity 36,738 36,255 33,860
Total Liabilities and Stockholders' Equity $310,622 $302,394 $289,660
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
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<TABLE>
<CAPTION>
Consolidated Statements of Income
One American Corp. and Subsidiaries
for the three months ended March 31, 1998 and 1997 UnauditedUnaudited
In thousands, except per share data 1998 1997
<S> <C> <C>
Interest Income
Interest and Fees on Loans $3,504 $3,159
Interest on Securities:
Taxable Interest 1,464 1,480
Nontaxable Interest 150 134
Total Interest on Securities 1,614 1,614
Other Interest Income 229 234
Total Interest Income 5,347 5,007
Interest Expense on Deposits 2,008 1,855
Net Interest Income 3,339 3,152
Provision for Loan Losses 450 75
Net Interest Income After
Provision for Loan Losses 2,889 3,077
Other Income
Service Charges on Deposit Accounts 521 521
Gain on Securities - 24
Gain on Purchased Assets 260 111
Other Operating Income 217 190
Total Other Income 998 846
Income Before Other Expenses 3,887 3,923
Other Expenses
Salaries and Employee Benefits 1,223 1,100
Net Occupancy Expense 320 293
Net ORE and Repossession Expense (34) (9)
Other Operating Expenses 911 1,010
Total Other Expenses 2,420 2,394
Income Before Income Taxes 1,467 1,529
Applicable Income Taxes 502 557
Net Income $965 $972
Net Income Per Share $0.71 $0.72
Cash Dividends Per Share $0.35 $0.30
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
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<TABLE>
<CAPTION>
Consolidated Statements of Changes in Stockholders' Equity
One American Corp. and Subsidiaries
for the three months ended March 31, 1998 and 1997 UnauditedUnaudited
In thousands 1998 1997
<S> <C> <C>
Common Stock
Balance - Beginning and End of Period $7,500 $7,500
Surplus
Balance - Beginning and End of Period $5,000 $5,000
Retained Earnings
Balance - Beginning of Period $23,943 $21,596
Net Income 965 972
Cash Dividends (474) (406)
Balance - End of Period $24,434 $22,162
Unrealized Gain (Loss) on Securities Available for Sale, Net
Balance - Beginning of Period $439 $64
Net Change in Unrealized Gain (Loss) 7 (241)
Balance - End of Period $446 ($177)
Treasury Stock
Balance - Beginning of Period ($627) ($625)
Treasury Stock Purchased ( 460 shares ) (15) -
Balance - End of Period ($642) ($625)
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
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<TABLE>
<CAPTION>
Consolidated Statements of Cash Flows
One American Corp. and Subsidiaries
for the three months ended March 31, 1998 and 1997 UnauditedUnaudited
In thousands 1998 1997
<S> <C> <C>
Cash Flows From Operating Activities
Net Income $965 $972
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities:
Gain on Purchased Assets (260) (111)
Provision for Depreciation 199 182
Provision for Loan Losses 450 75
Net Amortization (Accretion) on Securities (84) (27)
Provision (Credit) for Deferred Income Taxes (93) 10
(Gain) Loss on Sale of Other Real Estate and Repossession (16) (11)
(Gain) Loss on Securities - (24)
Changes in Assets and Liabilities:
(Increase) Decrease in Accrued Interest Receivable 195 (34)
(Increase) Decrease in Other Assets 115 216
Increase (Decrease) in Accrued Interest Payable (54) (112)
Increase (Decrease) in Other Liabilities 689 576
Net Cash Provided by Operating Activities 2,106 1,712
Cash Flows From Investing Activities
Maturities or Calls of Securities Available for Sale 23,313 15,549
Purchases of Securities Available for Sale (21,518) (17,816)
Proceeds from Sale of Securities Available for Sale - 24
Net (Increase) Decrease in Federal Funds Sold (3,475) 2,675
Net (Increase) Decrease in Loans (1,027) (5,024)
Proceeds from Sale of Other Real Estate and Repossessions 50 28
Purchases of Premises and Equipment (407) (219)
Proceeds from Other Borrowings (36) (21)
Net Cash Used in Investing Activities (3,100) (4,804)
Cash Flows From Financing Activities
Net Increase (Decrease) in Demand Deposits, NOW
and Savings Accounts 6,275 (1,175)
Net Increase (Decrease) in Certificates of Deposits 856 3,955
Dividends Paid (474) (405)
Net Cash Provided By Financing Activities 6,657 2,375
Increase (Decrease) in Cash and Cash Equivalents 5,663 (717)
Cash and Cash Equivalents - Beginning of Year 13,115 13,946
Cash and Cash Equivalents - End of Year $18,778 $13,229
Supplemental Disclosure of Cash Flow Information:
Income Tax Payments - -
Interest Paid on Deposits $2,062 $1,967
Noncash Investing Activities:
Other Real Estate Acquired in Settlement of Loans - -
Change in Unrealized Gain (Loss) on
Securities Available for Sale $11 ($365)
Change in Deferred Tax Effect on
Unrealized Gain (Loss) on Securities Available for Sale $4 ($124)
Noncash Financing Activities:
Dividends Declared and Not Paid $474 $406
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
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One American Corp. and Subsidiaries
Notes to Consolidated Financial Statements
March 31, 1998
(UNAUDITED)
Summary of Significant Accounting Policies
The accounting principles followed by One American Corp.
(the Company) and its wholly-owned Subsidiaries, First American
Bank and Trust (the Bank), and One American Agency, Inc. are
those which are generally practiced within the banking industry.
The methods of applying those principles conform with generally
accepted accounting principles and have been applied on a
consistent basis. The principles which significantly affect the
determination of financial position, results of operations,
changes in stockholders' equity, and cash flows are summarized
below.
Presentation - The accompanying unaudited consolidated
interim financial statements do not include all of the
information and footnotes required by generally accepting
accounting principles. Management is of the opinion that the
following unaudited interim financial statements reflect all
normal, recurring accrual adjustments necessary to provide a fair
statement of the results for the interim periods presented. It
is noted that the results of the first three months ended March
31, 1998 are no indication of the expected results for the annual
period which ends December 31, 1998. Additional information
concerning the audited financial statements and notes can be
obtained from One American Corp.'s annual report and Form 10-K
filed for the period ended December 31, 1997.
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
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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 March 31, 1998 or 1997.
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.
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
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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 - In February 1997, Statement of
Financial Accounting Standards No. 128 "Earnings Per Share"
("SFAS NO. 128") was issued which establishes standards for
computing and presenting earnings per share (EPS). Under SFAS
No. 128, primary EPS is replaced with basic EPS. Basic EPS is
computed by dividing income applicable to common shares by the
weighted average shares outstanding; no dilution for any
potentially convertible shares is included in the calculation.
Fully diluted EPS, now called diluted EPS, reflects the potential
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dilution that could occur if securities or other contracts to
issue common stock were exercised or converted into common stock
or resulted in the issuance of common stock that then shared in
the earnings of the company. At March 31, 1998, the company had
no convertible shares or other contracts to issue common stock.
The weighted average number of shares of common stock used to
calculate basic EPS was 1,351,090 for the first quarter of 1998
and 1,351,615 for the first quarter of 1997.
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).
Comprehensive Income - The Financial Accounting Standards
Board issued Statement No. 130 "Reporting Comprehensive Income,"
which became effective for fiscal years beginning after December
15, 1997. This statement establishes standards for reporting and
display of comprehensive income and its components which are
revenues, expenses, gains, and losses that under GAAP are
included in comprehensive income but excluded from net income.
The company adopted this statement in 1998. The only component
of comprehensive income affecting the financial statements was
unrealized gain or loss on securities available for sale which
was immaterial for all periods presented.
Acquisitions - On March 5, 1998, First American Agency,
L.L.C., a subsidiary of First American Bank and Trust, acquired
Riverbend Insurance Agency, Inc of Destrehan, St Charles Parish,
Louisiana. The results of its operations are included in the
financial statements for the three months ended March 31, 1998.
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One American Corp. and Subsidiaries
Management's Discussion and Analysis of Financial
Condition and Results of Operations
March 31, 1998
First Quarter in Review
Net income for the current quarter of 1998 was $965 thousand
compared to $972 thousand for the same quarter of 1997. The
decrease in net income is a result of an increase in provision
for loan losses. Earnings per common share were $.71 and $.72
for the first quarters of 1998 and 1997, respectively. Return on
average assets on an annualized basis was 1.26% for the current
quarter, and 1.35% in the same quarter of 1997. For the first
quarters of 1998 and 1997, return on average equity on an
annualized basis was 10.70% and 11.52%, respectively. Cash
dividends were $.35 per share for the current quarter and $.30
per share for the same quarter of 1997.
Net interest income (FTE) for the current quarter was $3.4
million, $196 thousand greater than that of the first quarter of
1997. The net interest margin (FTE) was 4.95% for the current
quarter and 4.92% for the same quarter of 1997.
During the first quarter of 1998, in comparison with the
same quarter of 1997, average loans outstanding increased $12.6
million or 9% to $148.8 million. Average total deposits for the
current quarter increased $14.7 million or 6% to $266.7 million
when compared to the average total deposits for the same quarter
of 1997. Average total assets for the current quarter increased
$17.6 million or 6% to $305.1 million when respectively compared
to the total average assets of the first quarter of 1997.
On February 28, 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 insurance 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. Management intends to provide the
Bank's customer base the ability to obtain insurance. The
ability for the Bank's customer base to obtain insurance from a
subsidiary of the Bank provides an additional level of
convenience to the Bank's customer base and the ability for the
Bank to increase non-interest income.
Earnings Analysis
Net Interest Income - The primary source of earnings for
the Bank is net interest income; the difference between interest
and fees generated from interest-earning assets less interest
expense for interest-bearing liabilities. For analytical
purposes, net interest income is presented on a tax equivalent
basis, using a 34% tax rate. Certain earning assets are exempt
from income taxes, therefore a tax equivalent adjustment is
included so that tax exempt earning assets are tax equivalent and
comparable with other taxable earning assets. The primary
factors that affect net interest income are changes in volume and
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mix of earning assets and interest-bearing liabilities, along
with changes in market rates.
Net interest income on a fully tax equivalent basis (FTE)
for the current quarter of 1998was $3.4 million, 6% greater than
that of the same quarter of 1997. Net interest spread for the
first quarter of 1998 was 4.09%, 2 basis points less than the
same quarter of 1997. However, net interest margin increased 3
basis points to 4.95% when comparing the quarters mentioned. The
improvement in net interest margin can be attributed to the
change in volume of loans which provided an increase of $196
thousand in net income (FTE) when comparing the first quarter of
1998 to the first quarter of 1997.
Earning Assets, Interest Bearing Liabilities, and Net
Interest Spread - During the current quarter of 1998, average
earning assets were $280.0 million, an increase of $14.4 million
or 5% over the first quarter of 1997. The trend in earning
assets over the quarters compared continues showing a shift in
the mix of earning assets toward the loan portfolio from the
securities portfolio as shown in the table Earning Asset
Structure. Management'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 a strong economic climate.
The trend over the quarters compared continues showing 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 improves 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 current quarter of 1998, the average yield on
earning assets was 7.87%, while the average cost of interest
bearing liabilities was 3.78%, producing a net interest spread
(FTE) of 4.09%. The net interest margin (FTE) was 4.95% for the
current quarter of 1998. In comparison, the net interest margin
(FTE) for the same quarter of 1997 was 4.92%. The cost of
interest bearing liabilities during the first quarter of 1997 was
3.66%, while the yield on average earning assets was 7.76%,
producing a net interest spread of 4.10%. The 13 basis point
increase in the average cost of interest bearing liabilities from
the first quarter of 1997 to the same quarter of 1998, was
greater than the 12 basis point increase in the yield on
interest earning assets for the respective quarters. Also, the
change in volume of dollars funded into loans provided for the
improvement in net interest income (FTE), while the spread
between the two periods decreased slightly.
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<TABLE>
<CAPTION>
Earning Asset Structure First Fourth First
In thousands Quarter 1998 Quarter 1997 Quarter 1997
% 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 $4,588 1.6% $2,645 1.0% $3,739 1.4%
Federal Funds Sold and Securities 14,220 5.1% 12,338 4.5% 14,362 5.4%
Securities
Taxable 101,804 36.4% 101,363 36.9% 101,838 38.3%
Non-Taxable 10,633 3.8% 10,886 4.0% 9,400 3.5%
Loans - Net 148,787 53.1% 147,760 53.6% 136,214 51.4%
Total Earning Assets $280,032 100.0% $274,992 100.0% $265,553 100.0%
<CAPTION>
Deposit Structure First Fourth First
Quarter 1998 Quarter 1997 Quarter 1997
Average % of Average % of Average % of
Balances Deposits Balances Deposits Balances Deposits
<S> <C> <C> <C> <C> <C> <C>
Noninterest Bearing Deposits $52,864 19.8% $51,412 19.7% $46,807 18.6%
NOW Accounts 25,641 9.6% 23,872 9.1% 26,909 10.7%
Savings Accounts 31,128 11.7% 31,380 12.0% 31,938 12.7%
Money Market Deposit Accounts 52,356 19.6% 47,876 18.4% 52,421 20.8%
Certificates of Deposits
less than $100,000 92,804 34.9% 93,798 35.8% 81,873 32.4%
Total Core Deposits 254,793 95.6% 248,338 95.0% 239,948 95.2%
Certificates of Deposits
greater than $100,000 11,860 4.4% 13,038 5.0% 11,968 4.8%
Total Deposits $266,653 100.0% $261,376 100.0% $251,916 100.0%
Interest Bearing Liabilities as a
percentage of Earning Assets 76.3% 76.4% 77.2%
Core Deposits as a percentage
of Total Average Assets 83.5% 82.9% 83.5%
</TABLE>
The table of Average Balance Sheets and Interest Rate
Analysis for the quarterly periods ended March 31, 1998, December
31, 1997, and March 31, 1997, and the corresponding table of
Interest Differentials detail the effect a change in average
balance outstanding of assets and liabilities and the change
interest yield and interest costs have on net interest income for
the respective periods. Also, the tables of Earning Asset
Structure and Deposit Structure show a more condensed,
descriptive analysis of the common size percentage changes in
earning assets and deposit mix over the quarterly periods
analyzed.
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Provision for Loan Losses
Provision for Loan Losses was $450 thousand and $75 thousand
for the first quarters of 1998 and 1997, respectively. Net
charge-offs (recoveries) were $19 thousand for the current
quarter, versus ($13) thousand for the same quarter of 1997.
Gross charge-offs as a percentage of average loans were
insignificant in the first quarters of 1998 and 1997. Recoveries
as a percentage of gross charge-offs for the current quarter
were 69% versus 112% for the same quarter of 1997. Management
provided $150 thousand per month to provision for loan losses
during the first quarter of 1998 due to a need to increase the
unallocated portion of Allowance for Loan Losses.
Other Income
Other income, including gains and losses from security
transactions for the current quarter, was $998 thousand, an
increase of $152 thousand or 18% compared to the same quarter of
1997. Exclusive of security transactions, other income for the
current quarter increased $176 thousand or 21% from the same
period of 1997.
Gain on purchased assets was $260 thousand for the current
quarter, an increase of $149 thousand or 134% from the same
quarter of 1997. These gains are recognition of the collection
of principal on certain loans acquired as a result of past bank
acquisitions. The Bank continues to pursue the collection of
these loans. However, the amount of future gains, if any are
indeterminable.
The Bank did not experience any gains from security
transactions involving Available - for - Sale securities during
the current quarter. However, the Bank experienced $24 thousand
as gains from security thansactions involving Available for Sale
securities during the first quarter of 1997.
Other Expenses
Other expenses were $2.4 million for the first quarter of
1998 and 1997. Salaries and employee benefits were $1.2 million
for the current quarter compared to $1.1 million for the same of
quarter of 1997. Net occupancy expense was $320 thousand for the
current quarter, compared to $293 thousand for the first quarter
of 1997. Other operating expenses were $911 thousand for the
current quarter, a decrease of $99 thousand or 10% compared to
the same quarter of 1997. The decrease in other operating
expenses is related to a reduction in legal and professional
expenses associated with the foreclosure of a non-domestic credit
the Bank experienced during the first quarter of 1997.
Applicable Income Taxes
Applicable income taxes for the current quarter were $502
thousand compared to $557 thousand for the first quarter of 1998.
Effective tax rates are 34% and 36%, respectively. The Company's
effective income tax expense as a percentage of pretax income is
different from statutory rates due to tax-exempt interest income
earned from investments in state and municipal bonds. Interest
income from state and municipal bonds is generally exempt from
14
<PAGE>
federal income taxes.
Liquidity
Liquidity management is the process of ensuring that the
Company's asset and liability structure is the proper mix to meet
the withdrawals of its' depositors, and to fund loan commitments
and other funding requirements. Management's primary source of
funds is the Bank's core deposit base. During the quarter,
average core deposits were approximately $254.8 million or 96% of
total average deposits and 84% of total average assets. For a
comparison with prior period quarters see the table entitled
Deposit Structure. Other sources of liquidity are maturities in
the investment portfolio, loan maturities and repayments, and
sources of short term borrowings. 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 the maturities of the investment portfolio; cash
flows from the loan portfolio; and the ability of short term
borrowings, management does not anticipate any difficulties in
meeting the needs of its depositors nor the ability to fund
future loan commitments.
Interest Rate Sensitivity
Interest rate risk is the measurement of risk exposure or
changes in net interest income and subsequently net income given
changes in the external interest rate markets. This possible
risk exposure is produced by the different repricing intervals of
interest earning assets and interest bearing liabilities, given
changes in the mix of such assets and liabilities, and the growth
of such assets and liabilities. One measurement of interest rate
risk is gap analysis. The gap matches the repricing of interest
rate sensitive assets and liabilities for selective intervals.
GAP analysis, is a static measurement based on an individual
point in time. This interest rate risk measurement process may
not indicate actual rate exposure given contractual maturities
and repricing period inconsistencies. Management also measures
interest rate risk exposure by process of dynamic income
simulation. The latter process measures possible levels of
exposure more accurately given the ability to better identify
contractual maturities and repricing periods.
For gap analysis, a decay rate methodology is used to arrive
at the principal and interest cash flows used in the market value
calculations given FDIC regulatory guidelines as set forth in
FDICIA 305. First, rate sensitive and non-rate sensitive
balances are separated. Higher decay rates force rate sensitive
cash flows to occur within one year. Decay rates are then input
for the non-rate sensitive funds. These decay rates spread the
non-rate sensitive balances out as far as the FDIC regulatory
guidelines allow in FDICIA 305. Decay rates assumptions
implemented are based on a flat rate environment and at
management's discretion.
The Bank has established decay rate assumptions given data
collection over the last 10 or so years on MMDA, Savings
Accounts, Now Accounts, and Non-interest Bearing Accounts. The
assumptions are based on account type sensitivity patterns given
the change in the Bank's benchmark for pricing and the change in
relationship each account type has to total deposits. Decay
15
<PAGE>
rates are updated at each modeling session if warranted by rate
changes in the market or changes in non-rate sensitivity patterns
given the account type. The identification of the non-rate
sensitive portion of such accounts provides a more complete
picture of the actual core deposit base which may not reprice in
the same manner as the rate sensitive portion.
The Interest Rate Sensitivity Table presents the Bank's
interest rate sensitivity position at
March 31, 1998. The table indicates that the Company's interest
bearing liabilities slightly exceed its earning assets out to the
one year point in time, suggesting liabilities may reprice at a
faster rate than assets. This may not be the case in reality
given that mentioned above as it pertains to GAP analysis.
In May 1994 the Bank enhanced its interest rate management
tools by becoming a member of the Federal Home Loan Bank of
Dallas (FHLB). The FHLB provides the Bank the ability to further
match the rates and maturities of its funding with those of
earning assets. Also, the FHLB provides the Bank the ability to
offer long term, fixed rate loans to its customer base with
minimal additional interest rate risk exposure.
<TABLE>
<CAPTION>
Interest Rate Sensitivity Table
March 31, 1998
In thousands
0-90 91-365 1 Year - Over 5 Non-
Days Days 5 Years Years Sensitive Total
<S> <C> <C> <C> <C> <S><C>
Assets
Securities $15,484 $29,746 $52,170 $15,776 - $113,176
Loans, Net of Unearned Income 18,383 40,113 58,870 29,746 666 147,778
Federal Funds Sold 15,625 - - - - 15,625
Other Assets 5,265 - - - 28,778 34,043
Total Assets $54,757 $69,859 $111,040 $45,522 $29,444 $310,622
Liabilities
NOW and Super NOW Deposits $345 $1,013 $18,280 $4,904 - $24,542
Insured Money Market Accounts 596 25,907 27,254 - - 53,757
Savings Deposits 966 2,904 21,898 6,449 - 32,217
Certificates of Deposits 23,533 58,297 21,217 2,095 - 105,142
Noninterest Bearing Deposits 5,070 15,334 23,710 11,016 - 55,130
Other Liabilities 36 114 693 292 1,961 3,096
Stockholders' Equity - - - - 36,738 36,738
Total Liabilities and
Stockholders' Equity $30,546 $103,569 $113,052 $24,756 $38,699 $310,622
Interest Rate Sensitivity Gap $24,211 ($33,710) ($2,012) $20,766 ($9,255) -
Cumulative Interest Rate
Sensitivity Gap $24,211 ($9,499) ($11,511) $9,255 -
GAP / Assets 7.8% -10.9% -0.6% 6.7% -3.0%
Cumulative GAP / Assets 7.8% -3.1% -3.7% 3.0% -
</TABLE>
16
<PAGE>
Financial Instruments
In the normal course of business the Company enters into
agreements which, for accounting purposes, are considered off -
balance sheet activities. These agreements are loans and lines
of credit commitments to customers to extend credit at specified
rates, duration, and purpose. The commitments adhere to normal
lending policy, collateral requirements, and credit reviews.
Available loan commitments at March 31, 1998 and 1997, were $10.0
million and $9.0 million, respectively. The Bank had letters of
credit of $562 thousand issued at March 31, 1998 compared to $597
thousand at March 31, 1997. Additionally, the Bank has deposit
customers who have credit lines available to them through their
deposit accounts. At March 31, 1998 the available portion of
these credit lines was $343 thousand compared to $573 thousand at
March 31, 1997. 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
issues credit cards. As of March 31, 1998, the aggregate credit
available was $3.4 million, and $3.2 million at March 31, 1997.
Applicants are reviewed through normal lending policies and
credit reviews.
The Bank is not a party to financial instruments defined as
interest rate exchange agreements, financial futures, or
financial options. Therefore, the Bank is not exposed to
interest rate risk in excess of the amount recognized in the
consolidated balance sheets as that risk may apply to interest
rate exchange agreements, financial futures, or financial
options.
Securities
Included in the category of Securities of Other US
Government Agencies at March 31, 1998 is $9.0 million par value
of structured notes, with an amortized cost of $9.0 million and a
fair value of $8.96 million, resulting in an unrealized loss in
the amount of $38 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 in ways
that 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 related securities mature during the second quarter of
1998. A fluctuation in interest rates should in no way effect
the principal balance of these securities at maturity.
Management understands the risks associated with these types of
instruments and has the capability to effectively monitor the
notes activity. Although classified in the available for sale
category, it is management's intention to hold the structured
notes until the notes mature at par value. Based on the variable
nature of said securities and the securities percentage
relationship to earning assets, a +/- 200 basis point interest
rate shock and income simulation on the security class showed
minimal impact on earnings. Further, management is of the
17
<PAGE>
opinion that earning trends indicate the ability to accept any
adverse risk associated with the possible sale of said securities
should the decision to hold the structured notes to maturity
change.
Allowance for Loan Losses
The allowance for loan losses was $2.6 million at March 31,
1998 or 1.7% of loans outstanding. At March 31, 1997, the
allowance for loan losses was $3.2 million or 3.2% of loans
outstanding. The allowance for loan losses account represents
amounts available for possible future losses based on modeling
and management's evaluation of the loan portfolio. To ascertain
the potential losses in the portfolio, management reviews past
due loans on a monthly basis. Additionally, the loan review
department performs an ongoing review of the loan portfolio.
Loans are reviewed for compliance to the Bank's lending policy
and the borrower's current financial condition and ability to
meet scheduled repayment terms. The Bank is increasing the
balance in Allowance for Loan Losses in order to accept any
adverse loan relationships which have the potential to occur in
the future.
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.
Management feels a need to increase the unallocated portion of
the Allowance for Loan Losses. The need to increase the
Allowance for Loan Losses was created due primarily to a non-
domestic impaired credit which utilized a portion of the
unallocated Allowance for Loan Losses during the third quarter of
1997.
Management feels a necessity to replenish the unallocated
portion of the Allowance for Loan Losses which was utilized by
this non-domestic credit. Management funded Allowance for Loan
Losses from Provision for Loan Losses in the amount of $150
thousand per month during the first quarter of 1998. Management
intends to continue funding the unallocated portion of Allowance
for Loan Losses at an acceptable level until Allowance for Loan
Losses is within an acceptable range based on modeling of the
loan portfolio and the status of the allocated and unallocated
portion of the Allowance for Loan Losses.
Nonperforming Assets
Nonperforming assets include nonaccrual loans, impaired
loans, repossessions and other real estate. Generally, loans are
considered nonaccrual when the interest becomes 90 days past due
or when there is uncertainty about the repayment of principal and
interest in accordance with the terms of the loans. Loans past
due 90 days and still accruing at March 31, 1998 and 1997 were
$592 thousand and $398 thousand, respectively. Impaired loans
having recorded investments of $3.4 million at March 31, 1998
compared to $4.3 million at March 31, 1997 have been recognized
in conformity with SFAS No. 114 as amended by SFAS No. 118. The
total allowance for loan losses related to these loans is $898
thousand at March 31, 1998 compared to $2.2 million at March 31,
1997. Interest received on impaired loans amounted to $86
thousand at March 31, 1998 compared to $98 thousand at March 31,
1997. Non-accrual loans not included in impaired loans was
immaterial at March 31, 1998 and 1997.
Other real estate is properties held for sale acquired
through foreclosure or negotiated settlements of debt. Other
real estate was $78 thousand at March 31, 1998 and insignificant
18
<PAGE>
at the close of the first quarter of 1997. Repossessions are
movable assets acquired through foreclosure or negotiated
settlements of debt. Repossessions at March 31, 1998 were
insignificant.
In the process of reviewing the loan portfolio, management
acknowledges certain potential problem loans which are not
classified as impaired, non-accrual, greater than 90 days
delinquent, or restructured. Management does not feel that any
of these potential problem loans are reasonably likely to have or
will have a material effect on the Company's liquidity, capital
resources, or results of operations.
The Bank also has approximately $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 were recognized as gains on securities available for sale
since the original write down. The remaining $470 thousand was
applied against the book value. Of the $1.74 million in gains
recognized since the write down, $190 thousand was recognized in
1997, $227 thousand was recognized in 1996, and $1.31 million was
recognized prior to 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 capital classification is also subject to
qualitative judgments by the regulators about components, risk
19
<PAGE>
weightings, and other factors. Quantitative measures established
by regulation to ensure capital adequacy require the Bank to
maintain minimum amounts and ratios as set forth in the section
entitled Capital Adequacy below.
Management is unaware, regulatory or otherwise, of any known
trends, events or uncertainties which are reasonably likely to
have or will have a material effect on the Company's liquidity,
capital resources, or results of operations.
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 Bank is required to maintain minimum amounts of capital
to total risk-weighted assets, as defined by the regulators. The
guidelines require total capital of 8.00%, half of which must be
Tier 1 capital. The computation of risk-weighted ratios follow
the transitional rule, which currently does not include the
unrealized gain (loss) on securities available for sale in Tier 1
capital.
The leverage ratio consists of Tier 1 capital as a
percentage of average total assets. The minimum leverage ratio
for all banks and bank holding companies is 3.00%. This minimum
ratio is dependent upon the strength of the individual bank or
holding company and may be increased by regulatory authorities on
an individual basis. The 3.00% minimum was established to make
certain that all banks have a minimum capital level to support
their assets, regardless of risk profile. As shown in the table
Capital Adequacy Ratios below, the Company's ratios for the
reporting periods exceed regulatory minimums.
<TABLE>
<CAPTION>
Capital Adequacy Ratios
In Thousands March 31, December 31, March 31,
1998 1997 1997
<S> <C> <C> <C>
Tier 1 Capital:
Stockholders' Equity $35,447 $34,954 $33,125
Tier 2 Capital:
Allowance for Loan Losses 1,851 1,833 1,728
Total Capital $37,298 $36,787 $34,853
Risk-Weighted Ratios:
Tier 1 Capital 24.06% 23.90% 24.21%
Total Capital 25.32% 25.15% 25.48%
Leverage Ratio 11.65% 11.71% 11.62%
Stockholders' Equity 11.41% 11.56% 11.44%
<CAPTION>
Regulatory Risk-Based Capitalization Requirements
Significantly Critically
Well Adequately Under Under Under Under Under
Capitalized Capitalized Capitalized Capitalized Capitalized Capitalized Capitalized
Risk-Weighted Ratios:
Tier 1 Capital 6.0% 4.0% < 4.0% < 4.0% < 4.0% < 3.0%
Total Capital 10.0% 8.0% < 8.0% < 8.0% < 8.0% < 6.0%
Leverage Ratio 5.0% 4.0% < 4.0% < 4.0% < 4.0% < 3.0% <= 2.0% tangible
equity
</TABLE>
20
<PAGE>
The Company's dividends are determined by its Board of
Directors. The current policy is to maintain dividends at a
level which ensures that the Company is able to maintain
sufficient regulatory capital levels. The Company's primary
source of funds is the dividends received from the Bank. Under
current dividend limitations, the Bank could pay, without
regulatory approval, dividends of approximately $4.8 million.
The Company carries no debt, therefore future liquidity needs are
limited to the payment of any declared dividends. Should a
regulatory agency limit the Bank from paying dividends, the
Company maintains sufficient liquidity to maintain its
operations.
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 capitalized and /
or expensed related to the Year 2000 issue during 1998 were
immaterial.
21
<PAGE>
<TABLE>
<CAPTION>
AVERAGE BALANCE SHEETS AND INTEREST RATE ANALYSIS
In thousands
First Quarter 1998 Fourth Quarter 1997 First Quarter 1997
AVERAGE INCOME/ YIELD/ AVERAGE INCOME/ YIELD/ AVERAGE INCOME/ YIELD/
BALANCE EXPENSE RATE BALANCE EXPENSE RATE BALANCE EXPENSE RATE
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Assets
Interest Bearing Deposit Accounts $4,588 $43.5 3.85% $2,645 $45.5 6.83% $3,739 $48.4 5.25%
Federal Funds Sold and Securities
Purchased under Resale Agreements 14,220 185.3 5.28% 12,338 167.3 5.38% 14,362 185.2 5.23%
Securities:
Taxable 101,804 1,464.3 5.83% 101,363 1,470.4 5.76% 101,838 1,480.2 5.89%
Non-Taxable* 10,633 227.9 8.69% 10,886 233.3 8.50% 9,400 202.4 8.73%
Loans - Net 148,787 3,504.1 9.55% 147,760 3,580.8 9.61% 136,214 3,159.5 9.41%
Total Earning Assets 280,032 5,425.1 7.87% 274,992 5,497.3 7.93% 265,553 5,075.7 7.75%
Allowance for Loan Losses (2,329) (1,938) (3,142)
Nonearning Assets 27,386 26,431 25,047
Total Assets $305,089 $299,485 $287,458
Liabilities and Stockholders' Equity
NOW Accounts $25,641 139.7 2.21% $23,872 126.0 2.09% $26,909 139.7 2.11%
Savings Accounts 31,128 194.5 2.53% 31,380 200.7 2.54% 31,938 198.6 2.52%
Money Market Deposit Accounts 52,356 360.0 2.79% 47,876 345.0 2.86% 52,421 362.2 2.80%
Certificates of Deposits less than $100,000 92,804 1,152.8 5.04% 93,798 1,191.2 5.04% 81,873 1,003.6 4.97%
Certificates of Deposits greater than $100,000 11,860 143.7 4.91% 13,038 157.9 4.80% 11,968 139.4 4.72%
Total Interest Bearing Deposits 213,788 1,990.7 3.78% 209,964 2,020.8 3.82% 205,109 1,843.5 3.65%
Other Borrowings 1,147 17.9 6.33% 1,060 14.2 5.32% 749 11.8 6.39%
Total Interest Bearing Liabilities 214,935 2,008.6 3.78% 211,024 2,035.0 3.83% 205,858 1,855.3 3.66%
Noninterest Bearing Deposits 52,864 51,412 46,807
Other Liabilities 1,235 1,435 1,039
Stockholders' Equity 36,054 35,614 33,754
Total Liabilities and Stockholders' Equity $305,089 $299,485 $287,458
Net Interest Income - Tax Equivalent Basis* 3,416.5 3,462.3 3,220.4
Tax Equivalent Adjustment (77.5) (79.3) (68.8)
Net Interest Income $3,339.0 $3,383.0 $3,151.6
Net Interest Income - Spread* 4.09% 4.11% 4.11%
Net Interest Income as a % of Total Earning Assets* 4.95% 5.00% 4.92%
*Tax Equivalent Basis - 34% Rate for the periods dated
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
INTEREST DIFFERENTIALS
In thousands
First Quarter 1998 First Quarter 1998
vs vs
Fourth Quarter 1997 First Quarter 1997
Change due to Total Change due to Total
Volume Rate Change Volume Rate Change
<S> <C> <C> <C> <C> <C> <C>
Interest Earning Assets:
Interest Bearing Deposit Accounts $33.4 ($35.4) ($2.0) $11.0 ($15.9) ($4.9)
Federal Funds Sold 25.5 (7.5) 18.0 (1.8) 1.9 0.1
Securities:
Taxable 6.4 (12.5) (6.1) (0.5) (15.4) (15.9)
Non-Taxable* (5.4) (0.0) (5.4) 26.6 (1.1) 25.5
Loans 24.9 (101.6) (76.7) 291.6 53.0 344.6
Total Interest Income 84.8 (157.0) (72.2) 326.9 22.5 349.4
Interest Bearing Liabilities:
NOW Accounts 9.3 4.4 13.7 (6.6) 6.6 0.0
Savings Accounts (1.6) (4.6) (6.2) (5.0) 0.9 (4.1)
Money Market Deposit Accounts 32.3 (17.3) 15.0 (0.4) (1.8) (2.2)
Certificates of Deposits less than $100,000 (12.6) (25.8) (38.4) 134.0 15.2 149.2
Certificates of Deposits greater than $100,000 (14.3) 0.1 (14.2) (1.3) 5.6 4.3
Other Borrowings 1.2 2.5 3.7 6.3 (0.2) 6.1
Total Interest Expense 14.3 (40.7) (26.4) 127.0 26.3 153.3
Increase (Decrease) in
Interest Differential $70.5 ($116.3) ($45.8) $199.9 ($3.7) $196.1
*Tax Equivalent Basis - 34% Rate for the periods dated
</TABLE>
23
<PAGE>
Part II
Item 1. Legal Proceedings
During the normal course of business, the Company is
involved in various legal proceedings. In the opinion of
management and counsel, any liability resulting from such
proceedings would not have a material adverse effect on the
Company's financial statements.
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 6. Exhibits and Reports on Form 8-K
(b) Reports on Form 8-K
None
24
<PAGE>
Management's Responsibility for Financial Reporting
The management of One American Corp. and Subsidiaries is
responsible for the preparation of the financial statements,
related financial data and other information in this quarterly
report. The financial statements are prepared in accordance with
generally accepted accounting principles and include some amounts
that are necessarily based on management's informed estimates and
judgments, with consideration given to materiality. All
financial information contained in this quarterly report is
consistent with that in the financial statements.
Management fulfills its responsibility for the integrity,
objectivity, consistency and fair presentation of the financial
statements and financial information through an accounting system
and related internal accounting controls that are designed to
provide reasonable assurance that assets are safeguarded and that
transactions are authorized and recorded in accordance with
established policies and procedures. The concept of reasonable
assurance is based on the recognition that the cost of a system
of internal accounting controls should not exceed the related
benefits. As an integral part of the system of internal
accounting controls, One American Corp. and Subsidiaries has a
professional staff who monitors compliance with and assess the
effectiveness of the system of internal accounting controls and
coordinate audit coverage with the independent public accountant.
The Audit Committee of the Board of Directors, composed
solely of outside directors, meets periodically with management,
and the independent public accountant to review matters relating
to financial reporting, internal accounting control and the
nature, extent and results of the audit effort. The independent
public accountant has direct access to the Audit Committee with
or without management present.
The financial statements as of December 31, 1997, were
examined by Hannis T. Bourgeois, L. L. P. independent public
accountant, who rendered an independent professional opinion on
the financial statements prepared by management. The financial
statements as of March 31, 1998, have not been reviewed by Hannis
T. Bourgeois, L. L. P.
25
<PAGE>
Signatures
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
One American Corp.
By:/s/ Frank J. Bourgeois
Frank J. Bourgeois, President
May 6, 1998
Date
26
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1000
<S> <C>
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<PERIOD-TYPE> 3-MOS
<CASH> 13513
<INT-BEARING-DEPOSITS> 5265
<FED-FUNDS-SOLD> 15625
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 113176
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 150399
<ALLOWANCE> 2621
<TOTAL-ASSETS> 310622
<DEPOSITS> 270788
<SHORT-TERM> 0
<LIABILITIES-OTHER> 3096
<LONG-TERM> 0
<COMMON> 7500
0
0
<OTHER-SE> 29238
<TOTAL-LIABILITIES-AND-EQUITY> 310622
<INTEREST-LOAN> 3504
<INTEREST-INVEST> 1614
<INTEREST-OTHER> 185
<INTEREST-TOTAL> 5303
<INTEREST-DEPOSIT> 44
<INTEREST-EXPENSE> 2008
<INTEREST-INCOME-NET> 3339
<LOAN-LOSSES> 450
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 2420
<INCOME-PRETAX> 1467
<INCOME-PRE-EXTRAORDINARY> 1467
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 965
<EPS-PRIMARY> .71
<EPS-DILUTED> .71
<YIELD-ACTUAL> 7.87
<LOANS-NON> 666
<LOANS-PAST> 592
<LOANS-TROUBLED> 504
<LOANS-PROBLEM> 2892
<ALLOWANCE-OPEN> 2190
<CHARGE-OFFS> 61
<RECOVERIES> 42
<ALLOWANCE-CLOSE> 2621
<ALLOWANCE-DOMESTIC> 898
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 1723
</TABLE>
