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, 1998
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: (225)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, $2.50 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: $55,759,374 (2,065,162 Shares
@ $27.00 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 $2.50 Par Value, 2,670,076 shares outstanding
as of March 11, 1999.
Documents Incorporated by Reference
Document Part of Form 10-K
Definitive Proxy Statement for 1999 Part I and Part III
Annual Meeting of Stockholders
*For purposes of the computation, shares (604,914) owned by
executive officers, directors and 5% shareholders have been
excluded.
<PAGE> 1
Part I
Item 1 Description of Business 3
Supplemental Financial Information:
Average Balance Sheets and Interest Yield Analysis 7
Interest Differential 8
Securities Portfolio 8
Loan Portfolio 8
Non-Performing Loans 8
Summary of Loan Loss Experience 8
Deposits 9
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 10
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 26
Item 9 Disagreements on Accounting and Financial Disclosures 50
Part III
Item 10 Directors and Executive Officers of the Registrant 50
Item 11 Executive Compensation 50
Item 12 Security Ownership of Certain Beneficial Owners and
Management 50
Item 13 Certain Relationships and Related Transactions 50
Part IV
Item 14 Exhibits, Financial Statement Schedules and Reports
On Form 8-K 50
Signatures 51
<PAGE> 2
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.
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 11, 1999.
The Bank presently has a main office at LA Highway 20 West,
Vacherie, St. James Parish, Louisiana and eighteen (18) 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. Two branches are located in Lafourche
Parish in the city of Thibodaux. One is currently in operation
and a second branch is under construction and scheduled to open
in the first quarter of 1999. 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.
Two branches are located in Assumption Parish, one in the in the
city of Napoleonville, and one in the city of Pierre Part. One
loan production office is located 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 original Thibodaux branch, located on
North Canal Boulevard, 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 new Thibodaux branch, located on Audubon Avenue, was approved
by the Commissioner of Financial Institutions of the State of
Louisiana and the Federal Deposit Insurance Corpoartion on
September 2, 1997 and August 29, 1997, respectively. The five
branches located in St. Charles Parish were acquired from the
Federal Deposit Insurance Corporation on November 2, 1989 and
were approved on that 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 that 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 that 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 that 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 Pierre Part branch was
approved by the Commissioner of Financial Institutions of the
State of Louisiana and the Federal Deposit Insurance Corporation
on April 24, 1998 and April 23, 1998, respectively. The
Mandeville loan production office was approved on October 2, 1997
by the Commissioner of Financial Institutions of the State of
Louisiana.
<PAGE> 3
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 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. Through its
wholly-owned subsidiary, First American Agency, L.L.C. (the
Agency), the Bank provides general insurance agent services
related to property and casualty, credit life, accident and
health, and general liability insurance as well. 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, 1998,
these three categories accounted for approximately 82.1%, 8.3%
and 9.6%, respectively, of the Bank's loan portfolio. (See Note
E in the 1998 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, 1998, State and Political Subdivisions
maintained time deposits and money market deposits account
balances of $7.6 million, interest bearing demand deposits of
$7.7 million, and non-interest bearing demand deposits of $1.5
million. Although no agreement or understanding exist between
these particular customers and the Bank regarding time deposits,
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, 1998, the Bank had 14,851 demand deposit
accounts with a total balance of $58.4 million; 1,096 NOW and
Super NOW accounts with a total balance of $26.7 million; 2,588
Insured Money Market Accounts with a balance of $60.6 million;
14,608 savings accounts with a total balance of $31.9 million;
and 7,435 other time deposit accounts with a total balance of
$111.6 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. In 1998,
First American Agency, L.L.C., a wholly-owned subsidiary of the
Bank, was formed. Through this subsidiary the Bank provides
insurance services in its market area. Other than this entry
into the insurance business, 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.
<PAGE> 4
The Agency
On February 28, 1998, First American Agency, L.L.C. (the
"Agency"), a wholly-owned subsidiary of the Bank was formed. On
March 5, 1998, the Agency acquired Riverbend Insurance Agency,
Inc. of Destrehan, St Charles Parish, Louisiana. Through this
subsidiary, the Bank is engaged in the insurance agency business.
As a result of this acquisition, the Company's Board of
Directors voted to dissolve One American Agency, Inc., the
Company's former insurance agency subsidiary. One Amercian
Agency, Inc. previously provided limited insurance products as
dictated by Federal regulations. Effective December 31, 1998,
the assets of One American Agency, Inc., which were
insignificant, were merged into the Company.
The Agency operates out of the offices of the former
Riverbend Insurance Agency at 1972 Ormond Blvd., Suite C,
Destrehan, St. Charles Parish, Louisiana. Plans are in effect to
relocate this office to Luling, St. Charles Parish, Louisiana
sometime in 1999. The Agency provides general insurance agent
services for the Company and its subsidiary. The Agency also
provides agent services in relation to property and casualty,
credit life, accident and health, and general liability insurance
that maybe related to the extension of credit or other financial
services of the Bank.
Competition
The Company's general market area contains approximately 204
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, credit
unions, 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 164 full time employees, and 7
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
<PAGE> 5
activity is a proper incident to banking or managing
or controlling banks, the Board must consider whether its
performance by an affiliate of a holding company can reasonably
be expected to produce benefits to the public, such as
convenience, increased competition, or gains in efficiency that
outweigh possible adverse effects, such as undue concentration of
resources, unfair competition, conflicts of interest, or unsound
banking practices.
The Board has adopted regulations implementing the
provisions of the Act with respect to the activities of bank
holding companies. Such regulations reflect a determination by
the Board that the following activities are permissible for bank
holding companies: (1) making, for its own account or for the
account of others, loans such as would be made, for example, by a
mortgage, finance or factoring company; (2) operating as an
industrial bank; (3) servicing loans; (4) acting as a
fiduciary; (5) acting as an investment or financial advisor,
including acting in such capacity for a mortgage investment trust
or real estate investment trust; (6) leasing personal or real
property, where the lease is to serve as the functional
equivalent of an extension of credit to the lessee of the
property; (7) investing in community welfare corporations or
projects; (8) providing bookkeeping and data processing services
for a bank holding company and its subsidiaries, or storing and
processing certain other banking, financial, or related economic
data; (9) acting as an insurance agent, principally insurance
issued in connection with extensions of credit by the holding
company or any of its subsidiaries; (10) underwriting credit
life and credit accident and health insurance related to
extensions of credit; (11) providing courier services for
documents and papers related to banking transaction; (12)
providing management consulting advice to non-affiliated banks;
and (13) selling money orders, travelers cheques and U.S. Savings
Bonds. In each case, the Company must secure the approval of the
Board prior to engaging in any of these activities.
Whether or not a particular non-banking activity is
permitted under the Act, the Board is authorized to require a
holding company to terminate any activity or divest itself of any
non-banking subsidiary if in its judgment the activity or
subsidiaries would be unsound.
Under the Act and the Board's regulations, a bank holding
company and its subsidiaries are prohibited from engaging in
certain tie-in arrangements in connection with any extensions of
credit or provision of any property or services.
In addition to the limitation of Louisiana law with respect
to the ownership of banks, as described below, the ownership or
control of voting shares of a second bank by a bank holding
company, such as One American Corp., is restricted by the Act
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.
The Louisiana Bank Holding Company 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.
<PAGE> 6
In 1997, the State of Louisiana enacted the Financial
Institution Insurance Sales Law. The Financial Institution Sales
Law made it possible for the Bank to sell all forms of insurance
through its newly formed subsidiary, First American Agency,
L.L.C.
Additional information regarding supervision and regulation
can be found in the 1998 Form 10-K in the Section titled
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" and incorporated herein by reference.
Regulatory Matters
The capital ratios for the Company and the Bank currently
exceed the regulatory capital requirements at December 31, 1998.
The capital ratios are included in the 1998 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 $3.6 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., 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 1998 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, 1998, 1997, and 1996
<PAGE> 7
Interest Differential
The following information called for by Item 1 is included
in the 1998 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, 1998 and 1997
Securities Portfolio
The following information called for by Item 1 is included
in the 1998 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 1998 Form 10-K Section titled "Notes to
Consolidated Financial Statements" and is incorporated herein by
reference.
See Note D titled Securities in the 1998 Form 10-K for a
detailed analysis of the security portfolio.
There were no securities held by the Company at December 31,
1998, that exceeded, in aggregate by issuer, 10% of Stockholders'
Equity.
Loan Portfolio
The following information called for by Item 1 is included
in the 1998 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, 1998, 1997, 1996,
1995, and 1994
Non-Performing Loans
The following information called for by Item 1 is included
in the 1998 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, 1998, 1997, 1996,
1995, and 1994
Summary of Loan Loss Experience
The following information called for by Item 1 is included
in the 1998 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, 1998, 1997, 1996,
1995, and 1994
<PAGE> 8
Deposits
The following information called for by Item 1 is included
in the 1998 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, 1998, 1997, and 1996
Maturities of time deposits of $100,000 or more at December
31, 1998, are summarized below:
In thousands
3 Months or Less $6,143
Over 3 through 6 Months 3,849
Over 6 through 12 Months 2,824
Over 12 Months 2,341
$15,157
Return on Equity and Assets
The following information called for by Item 1 is included
in the 1998 Form 10-K in the Section titled Item 6. "Selected
Financial Data" and is incorporated herein by reference.
Average Total Assets
December 31, 1998, 1997, 1996, 1995, and 1994
Average Stockholders' Equity
December 31, 1998, 1997, 1996, 1995, and 1994
Selected Ratios
for the years ended December 31, 1998, 1997, 1996,
1995, and 1994
Per Share
for the years ended December 31, 1998, 1997, 1996,
1995, and 1994
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 sixteen
of its branches are located and holds a lease for the one
remaining branch. The Bank also leases the premises from which
its Loan Production Office and First American Agency, L.L.C.
operate.
The Company considers all properties to be suitable and
adequate for their intended purposes and its leases to be fair and
reasonable.
Item 3. 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.
<PAGE> 9
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, 1998.
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:
1998 1997
First Quarter $18.50 $15.50
Second Quarter $25.00 $16.00
Third Quarter $25.00 $16.00
Fourth Quarter $27.00 $16.00
There can be no assurance that these limited inquiries
adequately reflect the actual high and low bids or prices for the
stock of the Company.
Pursuant to Section 13(e)(1) of the Securities Exchange Act
of 1934, One American Corp filed a Issuer Tender Offer Statement
with the Securities and Exchange Commission on July 20, 1998.
Also pursuant to Section 13(e)(1) of the Securities Exchange Act
of 1934, One American Corp filed a Final Amendment Issuer Tender
Offer Statement with the Securities and Exchange Commission on
August 27, 1998. For specifics on these two filings, please
refer to One American Corp's EDGAR filings with the Securities
and Exchange Commission.
Information - Request for additional information or copies
of Form 10-K filed with the Securities and Exchange Commission in
Washington, DC should be directed to:
Frank J. Bourgeois General Counsel
President Martin, Himel, Peytavin &
Nobile
One American Corp. P. O. Box 278
P. O. Box 550 Lutcher, LA 70071-0278
Vacherie, LA 70090-0550
Transfer Agent and Registrar Independent Accountants
First American Bank and Trust Hannis T. Bourgeois, L.L.P.
P. O. Box 550 2322 Tremont Drive, Suite
200
Vacherie, LA 70090-0550 Baton Rouge, LA 70809
<PAGE> 10
Item 6. Selected Financial Data
<TABLE>
<CAPTION>
One American Corp. and Subsidiaries
Condensed Consolidated Balance Sheets
December 31, 1998, 1997, 1996, 1995, and 1994
($ in thousands, except per share data)
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Assets
Cash and Due from Banks $22,755 $13,115 $13,946 $15,232 $14,448
Securities 111,035 127,027 125,219 139,967 135,639
Loans 178,462 146,975 132,776 104,320 92,593
Other Assets 17,124 15,277 14,170 12,109 13,162
Total Assets $329,376 $302,394 $286,111 $271,628 $255,842
Liabilities and Stockholders' Equity
Deposits $289,191 $263,657 $250,704 $239,724 $230,862
Other Liabilities 2,385 2,482 1,872 1,692 990
Stockholders' Equity 37,800 36,255 33,535 30,212 23,990
Total Liabilities and Stockholders' Equity $329,376 $302,394 $286,111 $271,628 $255,842
Average Total Assets $312,545 $292,308 $278,223 $261,692 $255,747
Average Stockholders' Equity $36,730 $35,022 $32,287 $28,186 $24,330
Selected Ratios:
Loans to Assets 54.18% 48.60% 46.41% 38.41% 36.19%
Loans to Deposits 61.71% 55.74% 52.96% 43.52% 40.11%
Deposits to Assets 87.80% 87.19% 87.62% 88.25% 90.24%
Equity to Assets 11.48% 11.99% 11.72% 11.12% 9.38%
Return on Average Assets 1.30% 1.38% 1.82% 2.01% 1.67%
Return on Average Equity 11.06% 11.52% 15.64% 18.62% 17.53%
Dividend Payout 46.97% 41.85% 28.10% 16.74% 12.68%
Avg. Equity-to-Avg. Assets 11.75% 11.98% 11.60% 10.77% 9.51%
<CAPTION>
Condensed Consolidated Statements of Income
for the years ended December 31, 1998, 1997, 1996, 1995, and 1994
1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Interest Income $22,249 $20,757 $19,717 $18,205 $15,693
Interest Expense 8,335 7,712 7,244 6,511 5,326
Net Interest Income 13,914 13,045 12,473 11,694 10,367
Provision for Loan Losses 1,200 1,025 90 0 350
Net Interest Income After
Provision for Loan Losses 12,714 12,020 12,383 11,694 10,017
Other Income 3,638 3,740 3,978 4,464 4,045
Other Expenses 10,406 9,673 9,030 8,501 7,990
Income Before Income Taxes 5,946 6,087 7,331 7,657 6,072
Applicable Income Tax Expense 1,885 2,050 2,281 2,410 1,808
Net Income $4,061 $4,037 $5,050 $5,247 $4,264
Per Share:
Net Income $1.51 $1.49 $1.87 $1.94 $1.58
Cash Dividends $0.71 $0.63 $0.53 $0.33 $0.20
Book Value - End of Year $14.15 $13.41 $12.41 $11.18 $8.88
</TABLE>
<PAGE> 11
<TABLE>
<CAPTION>
SELECTED QUARTERLY DATA
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
One American Corp. and Subsidiaries
for the quarter periods in the years ended December 31, 1998 and
1997
FOURTH THIRD SECOND FIRST
($ in thousands, except per share data) QUARTER QUARTER QUARTER QUARTER
<S> <C> <C> <C> <C>
Interest Income $5,713 $5,633 $5,556 $5,347
Interest Expense 2,145 2,136 2,046 2,008
Net Interest Income 3,568 3,497 3,510 3,339
Provision for Loan Losses 225 225 300 450
Net Interest Income after Provision
for Loan Losses 3,343 3,272 3,210 2,889
Other Income 806 904 930 998
Other Expenses 2,798 2,595 2,592 2,421
Income before Income Taxes 1,351 1,581 1,548 1,466
Applicable Income Taxes 380 513 490 502
Net Income $971 $1,068 $1,058 $964
Per Share:
Net Income $0.36 $0.40 $0.39 $0.36
Dividends $0.19 $0.18 $0.17 $0.17
<CAPTION>
1997 FOURTH THIRD SECOND FIRST
($ in thousands, except per share data) QUARTER QUARTER QUARTER QUARTER
<S> <C> <C> <C> <C>
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 $0.32 $0.37 $0.44 $0.36
Dividends $0.18 $0.15 $0.15 $0.15
</TABLE>
<PAGE> 12
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. (the Company) is comprised of one
subsidiary, First American Bank and Trust (the Bank). The
company's operations relate principally to its investment in the
Bank.
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 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. Through its wholly-owned subsidiary, First American
Agency, L.L.C. (the Agency), the Bank provides general insurance
agent services related to property and casualty, credit life,
accident and health, and general liability insurance as well.
Overview of 1998
Net income for the year 1998 was $4.1 million compared to
$4.0 million for the year 1997. For the year ended 1998, earnings
per share were $1.51 compared to $1.49 in 1997. Return on
average assets was 1.30% and 1.38% for the years ended 1998 and
1997, respectively. For the years ended 1998 and 1997, return on
average stockholders' equity was 11.06% and 11.52%, respectively.
Net interest income for 1998 was $13.9 million, a 6.7%
increase over the $13.0 million for 1997. The net interest
margin on a fully tax equivalent basis (FTE) was 4.94% for the
current year and 4.96% for the same period of 1997.
During the year 1998, in comparison with the same period of
1997, average loans outstanding increased $21.1 million or 15%
due to continued efforts to grow the percentage of earning assets
represented by loans and taking advantage of an increased loan
demand. Average total deposits for the year 1998 increased $18.0
million or 7% when compared to the average total deposits for the
same period of 1997. Average total assets for the current year
increased $20.2 million or 7% when compared to the total average
assets of the year 1997. Average stockholders' equity for 1998
was $36.7 million, an increase of 5% over the average
stockholders' equity for 1997.
The Bank opened a full-service office in Pierre Part,
Louisiana on September 9, 1998, increasing its presence in
Assumption Parish, a trade area similar to the Bank's other rural
trade areas. Under construction is a second full-service office
in Thibodaux, Louisiana, with an opening planned in the first
quarter of 1999. This office will provide access and convenience
to customers in the Nicholls State University and the Thibodaux
Regional Medical Center areas of the city. With the opening of
the new Thibodaux branch, the Bank will have in operation a total
of eighteen full-service offices and one loan production office.
In the first quarter of 1998, First American Agency, L.L.C.,
a subsidiary of First American Bank and Trust, was formed. First
American Agency, L.L.C. provides insurance services in the Bank's
market area. Also in the first quarter of 1998, First American
Agency, L.L.C. acquired Riverbend Insurance Agency, Inc. of
Destrehan, St Charles Parish, Louisiana. The ability of the
Bank's customers to purchase insurance from a subsidiary of the
Bank provides an additional level of convenience and the ability
for the Bank to increase non-interest income.
Effective December 31, 1998, One American Agency, Inc., a
subsidiary of the Company, was dissolved. One American Agency,
Inc. previously provided limited insurance products as dictated
by Federal regulations.
On April 22, 1998, the organization reduced the par value of
its common shares from $5.00 to $2.50 per share to effect a 2 -
for - 1 stock split issued May 8, 1998. The earnings per common
share for the annual periods ended December 31, 1998, and 1997,
respectively, have been adjusted for this stock split.
<PAGE> 13
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 1998, 1997, and 1996. Certain
earning assets are exempt from income taxes, therefore, a tax
equivalent adjustment is included so that tax exempt earning
assets will be compatible with other earning assets. The primary
factors that affect net interest income are the changes in volume
and mix of earning assets and interest-bearing liabilities, along
with the change in market rates.
Net interest income on a fully tax equivalent basis (FTE)
increased $871 thousand or 7%. Net interest income (FTE) for
1998 was $14.2 million compared to $13.3 million for the prior
year. Net interest income (FTE) for 1996 was $12.8 million.
Earning Assets, Interest Bearing Liabilities, and Net
Interest Spread - Average earning assets increased $18.7 million
or 7% to $287.8 million during 1998. Average earning assets were
$269.1 million in 1997 and $257.1 million in 1996. 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
16. 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 the current economic
environment in the Bank's 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 and interest bearing money market
accounts. As an additional note, the Bank continues to benefit
from the increase in non-interest bearing deposits , 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 1998, the average yield on earning assets
was 7.83%, while the average cost of interest bearing funds was
3.79%, producing a net interest spread (FTE) of 4.04%. The net
interest margin (FTE) was 4.94% for the year ended 1998. The net
interest margin remained relatively stable when compared to the
net interest margins of 4.96% and 4.95% for the years ended 1997
and 1996, respectively.
The table of Average Balance Sheets and Interest Rate
Analysis for the periods ended December 31, 1998, 1997, and 1996
on page 24 and, and the corresponding table of Interest
Differentials on page 25 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 16 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 $1.2 million in 1998, an
increase of $175 thousand from the provision for loan losses of
$1.0 million in 1997. The provision for loan losses in 1996 was
$90 thousand. Management decided to increase the unallocated
portion of the Allowance for Loan Losses to compensate for a non-
domestic credit which utilized a portion of the unallocated
Allowance for Loan Losses during 1997. See the sections entitled
Allowance for Loan Losses and Non-Performing Assets for more
details on the Provision for Loan Losses.
Other Income
Other income was $3.6 million for 1998 and $3.7 million for
1997. Exclusive of security transactions other income increased
$83 thousand. Service charges on deposit accounts were $2.1
million for 1998 and 1997. Gain on purchased assets increased $2
thousand to $609 thousand for 1998 when compared to the prior
year. These
<PAGE> 14
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.
Other operating income for 1997 was $956 thousand compared
to $851 thousand in 1997. 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 gain on investment securities decreased by $185 thousand
for 1998, compared to a decrease of $95 thousand for 1997. The
Bank recovered $5 thousand as gains from security transactions
during the year 1998. 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.
Other Expenses
Other expenses totaled $10.4 million in 1998, an 8% increase
over the 1997 total of $9.7 million. Salaries and employee
benefits increased $556 thousand or 12%, to $5.3 million for 1998
compared to 1997. 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 a portion of
1997. Net occupancy expense was $1.3 million for 1998 and $1.2
million for 1997. Other operating expenses totaled $3.8 million
and $3.9 million, respectively, for 1998 and 1997, a decrease of
$25 thousand or 1%. For a further analysis of other operating
expenses see Note K.
Net other real estate and repossession expense produced a
benefit of $9 thousand for 1998, a decrease of $171 thousand from
the $180 thousand benefit in 1997. 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. During 1998, expenses from other real
estate and repossessed assets totaled $24 thousand, which were
offset by the income generated from the operations of other real
estate of $10 thousand, and net gains on the sale of other real
estate and repossessed assets of $23 thousand.
For 1997, net other real estate and repossession expense
produced a benefit of $180 thousand. Expenses from other real
estate totaled $142 thousand, which were offset by income 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. 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 1998, 1997, and 1996 were $1.9
million, $2.1 million, and $2.3 million, respectively, producing
an effective tax rate of 32%, 33%, 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.
<PAGE> 15
<TABLE>
<CAPTION>
Table 1-
Average Earning Asset Structure
In thousands 1998 1997 1996
% 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 $5,128 1.78% $2,753 1.02% $1,670 0.65%
Federal Funds Sold 11,144 3.87% 11,872 4.41% 9,149 3.56%
Securities
Taxable 97,988 34.04% 102,144 37.95% 116,771 45.42%
Non-Taxable 10,263 3.57% 10,134 3.77% 9,727 3.78%
Loans - Net 163,321 56.74% 142,240 52.85% 119,802 46.59%
Total Average Earning Assets $287,844 100.00% $269,143 100.00% $257,119 100.00%
<CAPTION>
Average Deposit Structure
In thousands 1998 1997 1996
Average % of Average % of Average % of
Balances Deposits Balances Deposits Balances Deposits
<S> <C> <C> <C> <C> <C> <C>
Noninterest Bearing Deposits $54,161 19.92% $48,896 19.05% $45,417 18.61%
NOW Accounts 24,063 8.81% 25,572 10.02% 24,802 10.17%
Savings Accounts 31,277 11.45% 32,082 12.57% 32,225 13.21%
Money Market Deposit Accounts 55,992 20.49% 49,738 19.48% 53,485 21.92%
Certificates of Deposits less than $100,000 96,254 35.22% 87,017 34.08% 77,416 31.73%
Total Average Core Deposits 261,747 95.78% 243,305 95.30% 233,345 95.64%
Certificates of Deposits greater than $100,000 11,531 4.22% 11,999 4.70% 10,638 4.36%
Total Average Deposits $273,278 100.00% $255,304 100.00% $243,983 100.00%
Average Interest Bearing Liabilities
as a percentage of Earning Assets 76.1% 76.7% 77.2%
Average Core Deposits
as a percentage of Total Average Assets 83.7% 83.2% 83.9%
</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, 1998,
average core deposits were approximately $261.7 million or 96% of
total average deposits and 84% of total average assets. For a
comparison with prior period year ends, see the table entitled
Average Deposit Structure. Other sources of liquidity are
maturities in the investment portfolio and loan maturities and
repayments. Management continually evaluates the maturities and
mix of its earning assets and interest-bearing liabilities to
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.
<PAGE> 16
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, 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 maturity and
repricing period inconsistencies.
Management also measures interest rate risk exposure by the
process of dynamic income simulation. This process measures
possible levels of exposure more accurately given the ability to
better identify contractual maturities and repricing periods.
Key assumptions used in the simulation model include the relative
timing of prepayments on mortgage related assets and the cash
flows and maturities of other financial instruments. These
assumptions are intrinsically uncertain and, as a result, the
model cannot specifically estimate net interest income or
precisely predict the impact of a change in interest rates on net
income or stockholders' equity. Actual results will differ from
the simulated results due to the timing, magnitude, and frequency
of interest rate changes and changes in market conditions and
management strategies, among other factors.
The Bank's objective is to limit the impact on net interest
income from a gradual change in interest rates of 200 basis
points over twelve months to 10% of projected net interest
income. Based on the results of dynamic income simulation, at
December 31, 1998 the Bank would expect a decrease in net
interest income of $87,000 in the event of a gradual 200 basis
point increase in interest rates and a decrease of $6,000 in the
event of a gradual 200 basis point decrease in interest rates.
Both of these changes are well within the Bank's interest rate
risk policy limits.
For gap analysis, prepayment assumptions are applied to
loans reflective of historical experience and employing a "flat-
rate" interest rate change scenario. Decay rate methodology is
applied to non-fixed rate deposit accounts 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 deposit 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 based on
historical data collection 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 the
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 18
presents the Bank's interest rate sensitivity position at
December 31, 1998, using gap analysis, based on the expected
maturity intervals of interest rate sensitive assets and
liabilities. Table 2 indicates that the Company's interest
bearing liabilities slightly exceed its interest earning assets
at the one year point in time suggesting the Bank is slightly
negatively rate sensitive. This table does not necessarily
reflect the impact of interest rate movements on the Bank's net
income because the effective maturities or repricing of certain
assets and liabilities is subject to competition and other
limitations. As a result, certain assets and liabilities
indicated as maturing or repricing within a stated period may in
fact mature or reprice at different times and at different
volumes.
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.
<PAGE> 17
<TABLE>
<CAPTION>
Table 2-
Interest Rate Sensitivity Table
December 31, 1998
In thousands
Expected Maturity, Years Ended:
Non- Fair
1999 2000 2001 2002 2003 ThereafterSensitiveTotal Value
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Assets
Investments -
Fixed-Rate Securities $44,397 $34,528 $5,429 $1,853 $2,957 $3,748 $0 $92,912 $92,912
Average Interest Rates 5.78% 5.63% 6.15% 6.41% 6.57% 5.86% 0.00% 5.79%
Variable-Rate Securities 2,743 1,653 540 398 202 1,062 0 6,598 6,598
Average Interest Rates 5.80% 5.82% 6.80% 6.85% 7.09% 7.10% 0.00% 6.20%
Total Investments 47,140 36,181 5,969 2,251 3,159 4,810 0 99,510 99,510
Average Interest Rates 5.78% 5.64% 6.21% 6.49% 6.60% 6.13% 0.00% 5.81%
Loans -
Fixed-Rate Loans, Net 63,809 19,330 21,138 13,291 16,877 27,986 730 163,161 166,492
Average Interest Rates 8.74% 8.80% 8.55% 8.79% 8.46% 7.81% 0.00% 8.50%
Variable-Rate Loans, Net 9,184 2,333 2,002 1,152 204 426 0 15,301 15,373
Average Interest Rates 7.80% 7.66% 7.78% 7.93% 8.31% 8.74% 0.00% 7.82%
Total Loans 72,993 21,663 23,140 14,443 17,081 28,412 730 178,462 181,865
Average Interest Rates 8.62% 8.68% 8.48% 8.72% 8.46% 7.82% 0.00% 8.44%
Interest-Bearing Deposits in
Other Banks 10,629 0 0 0 0 0 0 10,629 10,629
Average Interest Rates 4.30% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0
Federal Funds Sold 11,525 0 0 0 0 0 0 11,525 11,525
Average Interest Rates 5.30% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 5.30%
Other Assets 29,250 29,250
Total Assets $142,287 $57,844 $29,109 $16,694 $20,240 $33,222 $29,980 $329,376
Liabilities
NOW and Super NOW Deposits $2,146 $6,941 $6,941 $2,672 $2,672 $5,344 $0 $26,716 $25,540
Average Interest Rates 2.18% 2.18% 2.18% 2.18% 2.18% 2.18% 0.00% 2.18%
Insured Money Market Accounts 29,259 15,694 15,694 0 0 0 0 60,647 59,897
Average Interest Rates 3.14% 3.14% 3.14% 0.00% 0.00% 0.00% 0.00% 3.14%
Savings Deposits 3,886 7,605 7,605 3,188 3,188 6,375 0 31,847 31,156
Average Interest Rates 2.54% 2.54% 2.54% 2.54% 2.54% 2.54% 0.00% 2.54%
Variable-Rate Certificates of Deposit 1,217 2,382 2,382 998 998 1,997 0 9,974 10,043
Average Interest Rates 4.46% 4.46% 4.46% 4.46% 4.46% 4.46% 0.00% 4.46%
Certificates of Deposits 86,560 12,640 683 632 1,086 0 0 101,601 101,765
Average Interest Rates 4.69% 5.15% 5.24% 5.82% 5.71% 0.00% 0.00% 4.77%
Noninterest Bearing Deposits 21,787 6,628 6,628 5,841 5,841 11,681 0 58,406 58,406
Other Interest-Bearing Liabilities 133 143 152 162 172 264 0 1,026 1,070
Average Interest Rates 0 0 0 0 0 0 0 0
Other Liabilities 0 0 0 0 0 0 1,359 1,359
Stockholders' Equity 0 0 0 0 0 0 37,800 37,800
Total Liabilities and
Stockholders' Equity $144,988 $52,033 $40,085 $13,493 $13,957 $25,661 $39,159 $329,376
Interest Rate Sensitivity Gap ($2,701) $5,811 ($10,976) $3,201 $6,283 $7,561 ($9,179) $0
Cumulative Interest Rate
Sensitivity Gap ($2,701) $3,110 ($7,866) ($4,665) $1,618 $9,179 $0
GAP / Assets -0.82% 1.76% -3.33% 0.97% 1.91% 2.30% -2.79%
Cumulative GAP / Assets -0.82% 0.94% -2.39% -1.42% 0.49% 2.79% 0.00%
</TABLE>
<PAGE> 18
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 $20.3 million and $11.7 million at
December 31, 1998 and 1997, respectively. Available loan
commitments at December 31, 1998, were $14.9 million and $7.6
million at December 31, 1997. The Bank had letters of credit of
$646 thousand issued at December 31, 1998. Additionally, the
Bank has deposit customers who have credit lines available to
them through their deposit accounts. At December 31, 1998 the
available portion of these credit lines was $345 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
$4.3 million and $3.2 million at December 31, 1998 and 1997.
Applicants are reviewed through normal lending policies and
credit reviews.
Additionally the Bank has privity to agreements to fund and
sell long term mortgages to third party mortgage companies. The
Bank is not a party to financial instruments defined as interest
rate exchange agreements, financial futures, or financial
options. Therefore, the Bank is not exposed to interest rate
risk in excess of the amount recognized in the consolidated
balance sheets as that risk may apply to interest rate exchange
agreements, financial futures, or financial options.
Loans
<TABLE>
<CAPTION>
An analysis of the loan portfolio at December 31, 1998,
1997, 1996, 1995, and 1994, is as follows:
($ in thousands) 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Commercial, Financial and Agricultural $17,526 $15,811 $10,444 $10,786 $8,567
Real Estate
Construction 1,334 3,987 3,184 1,662 1,241
Mortgage 144,815 113,117 105,800 81,082 74,403
Individuals 15,120 13,892 13,559 11,457 10,569
Foreign 0 0 1,361 1,846 0
All Other Loans 3,199 2,395 1,576 793 901
Total Loans 181,994 149,202 135,924 107,626 95,681
Unearned Income (2) (37) (65) (33) (11)
Allowance for Loan Losses (3,530) (2,190) (3,083) (3,273) (3,077)
Total Loans, Net $178,462 $146,975 $132,776 $104,320 $92,593
</TABLE>
Allowance for Loan Losses
The allowance for loan losses was $3.5 million at year end
1998 or 1.94% of net loans outstanding. At year end 1997, the
allowance for loan losses was $2.2 million or 1.47% 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,
<PAGE> 19
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 ($140 thousand) for 1998,
compared to $1.9 million for 1997. As a percentage of average
loans, net charge offs (recoveries) were 0.09% in 1998 and 1.35%
in 1997. Gross charge offs were 0.16% in 1998 and 1.48% in 1997.
Recoveries as a percentage of gross charge offs were 154.05% in
1998 and 8.62% in 1997. The net charge off position of $1.9
million in 1997 was caused primarily by a non-domestic credit
which resulted in a charge off of $1.5 million. This individual
credit significantly influenced the change in ratios between the
two reporting periods.
Table 3, Activity in Allowance for Loan Losses, below presents an
analysis of activity in the allowance for loan losses for the
past five years.
<TABLE>
<CAPTION>
Table 3-
($ in thousands) Year Ended December 31,
Activity in Allowance for Loan Losses 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Beginning Balance $2,190 $3,083 $3,273 $3,077 $2,717
Loans Charged Off:
Real Estate 77 312 78 295 54
Commercial, Financial, and Agricultural 121 1,631 392 103 47
Individual and Others 61 156 40 40 10
Total Charged Off 259 2,099 510 438 111
Loan Recoveries:
Real Estate 356 22 24 98 40
Commercial, Financial, and Agricultural 23 130 185 523 58
Individual and Others 20 29 21 13 23
Total Recoveries 399 181 230 634 121
Net Loans Charged Off (Recovered) (140) 1,918 280 (196) (10)
Provision charged to
Expense 1,200 1,025 90 0 350
Ending Balance $3,530 $2,190 $3,083 $3,273 $3,077
<CAPTION>
Year Ended December 31,
($ in thousands) 1998 1997 1996 1995 1994
Ending Balance
<S> <C> <C> <C> <C> <C>
Loans-Net $181,992 $149,165 $135,859 $107,593 $95,670
Daily Average Loans $163,321 $142,204 $119,802 $101,318 $86,625
Ratio of Net Charge-Offs
to Total Loans -0.08% 1.29% 0.21% -0.18% -0.01%
Ratio of Net Charge-Offs
to Average Loans -0.09% 1.35% 0.23% -0.19% -0.01%
</TABLE>
<PAGE> 20
The allowance for loan losses has been allocated according
to the type of loan described in the table below, at December 31,
1998, 1997, 1996, 1995, and 1994:
<TABLE>
<CAPTION>
($ in thousands) 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Real Estate $1,094 $636 $1,231 $2,052 $2,433
Commercial, Financial, and Agricultural 287 95 667 415 276
Individual and Others 58 117 79 23 368
Unallocated 2,091 1,342 1,106 783 0
Total Allowance $3,530 $2,190 $3,083 $3,273 $3,077
</TABLE>
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, 1998 and 1997 were $730 thousand and $285 thousand,
respectively. Loans past due 90 days and still accruing at
December 31, 1998 and 1997 were $242 thousand and $364 thousand,
respectively. At December 31, 1998 nonaccrual loans were .40% of
gross loans outstanding and 20.68% of the allowance for loan
losses. At December 31, 1997, these ratios were .19% and 13.01%,
respectively.
The following table presents information on the amount of
non-performing loans at December 31, 1998, 1997, 1996, 1995, and
1994:
<TABLE>
<CAPTION>
($ in thousands) 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Non-accrual $730 $285 $174 $527 $432
Past due 90 days or more 242 364 395 441 313
Restructured and Impaired 3,685 2,965 3,826 3,073 156
$4,657 $3,614 $4,395 $4,041 $901
</TABLE>
In the process of reviewing the loan portfolio, management
acknowledges certain potential problem loans which are not
classified as impaired, non-accrual, greater than 90 days
delinquent, or restructured. Management does not feel that any
of these potential problem loans are reasonably likely to have or
will have a material effect on the Company's liquidity, capital
resources, or results of operations.
Other real estate is properties held for sale acquired
through foreclosure or negotiated settlements of debt. Other
real estate decreased $5 thousand during 1998. At December 31,
1998 and 1997, other real estate was $73 and $78 thousand,
respectively.
Regulatory Matters
The Bank is subject to various capital requirements
administered by the federal banking agencies. Failure to meet
minimum capital requirements can initiate certain mandatory and
possibly discretionary actions by regulators that, if undertaken,
could have a material effect on the Bank's financial statements.
Various regulations require the Bank to meet specific capital
adequacy guidelines that involve quantitative measures of the
Bank's assets, liabilities, and certain off - balance sheet items
as calculated under regulatory accounting practices. The Bank's
capital classification is also subject to qualitative judgments
by the regulators about components, risk weightings, and other
factors. Quantitative measures established by regulation to
ensure capital adequacy require the Bank to maintain minimum
amounts and ratios as set forth in the section entitled Capital
Adequacy below.
Management is unaware, based on recent regulatory
examinations or otherwise, of any known trends, events or
uncertainties which are reasonably likely to have or will have a
material effect on the Company's liquidity, capital resources, or
results of operations.
<PAGE> 21
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 $3.6 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.
Table 4-
<TABLE>
<CAPTION>
Capital Adequacy Ratios
In Thousands December 31, December 31,
1998 1997
<S> <C> <C>
Tier 1 Capital:
Stockholders' Equity $36,397 $34,954
Tier 2 Capital:
Allowance for Loan Losses 2,147 1,833
Total Capital $38,544 $36,787
Risk-Weighted Ratios:
Tier 1 Capital 21.4% 23.9%
Total Capital 22.6% 25.1%
Leverage Ratio 11.3% 11.7%
Stockholders' Equity 11.1% 11.6%
<CAPTION>
Regulatory Risk-Based Capitalization Requirements
Significantly Critically
Well Adequately Under Under Under
Capitalized Capitalized Capitalized Capitalized Capitalized
<S> <C> <C> <C> <C> <C>
Risk-Weighted Ratios:
Tier 1 Capital 6.0% 4.0%< 4.0% < 3.0%
Total Capital 10.0% 8.0%< 8.0% < 6.0%
Leverage Ratio 5.0% 4.0%< 4.0% < 3.0% <= 2.0% tangible
equity
</TABLE>
<PAGE> 22
Capital Expenditures
The Bank continued to expand its branch network with the
opening of a full-service office in Pierre Part, Assumption
Parish, Louisiana on September 9, 1998. Under construction is a
second full-service office in Thibodaux, Lafourche Parish,
Louisiana, with an opening planned in the first quarter of 1999.
With the opening of the new Thibodaux branch, the Bank will have
in operation a total of eighteen full-service offices and one
loan production office.
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. The committee has adopted a policy
which addresses the issues approaching the Year 2000 in five
phases. The phases include awareness, assessment, renovation,
validation, and implementation. The Bank is currently in the
implementation phase. Management does not believe 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 1998 were not material.
The discussion entitled "Year 2000" includes certain
"forward looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995 ("PSLRA"). This statement
is included for the purpose of availing the Company of the
protections of the safe harbor provisions of the PSLRA.
Management's ability to predict the results or the effects of
Year 2000 issues is inherently uncertain and subject to factors
that may cause actual results to materially differ from those
anticipated. Factors that could affect actual results include
the possibility that contingency plans and remediation efforts
will not operate as intended, the Bank's failure to timely or
completely identify all software and hardware applications that
require remediation, unexpected costs, and the general
uncertainty associated with the impact of Year 2000 issues on the
banking industry, the Bank's customers, vendors, and others with
whom it conducts business. Readers are cautioned not to place
undue reliance on these forward looking statements.
<PAGE> 23
Table 5 -
<TABLE>
<CAPTION>
AVERAGE BALANCE SHEETS AND INTEREST RATE ANALYSIS
In thousands
1998 1997 1996
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 $5,128 $221 4.30% $2,753 $155 5.63% $1,670 $80 4.78%
Federal Funds Sold and Securities
Purchased under Resale Agreements 11,144 590 5.30% 11,872 641 5.40% 9,149 494 5.38%
Securities:
Taxable 97,988 5,710 5.83% 102,144 5,948 5.82% 116,771 6,891 5.89%
Non-Taxable* 10,263 880 8.58% 10,134 873 8.61% 9,727 847 8.68%
Loans - Net 163,321 15,147 9.27% 142,240 13,437 9.45% 119,802 11,693 9.73%
Total Earning Assets 287,844 $22,548 7.83% 269,143 $21,054 7.82% 257,119 $20,005 7.76%
Allowance for Loan Losses (2,928) (2,505) (3,276)
Nonearning Assets 27,629 25,670 24,380
Total Assets $312,545 $292,308 $278,223
Liabilities and Stockholders' Equity
NOW Accounts $24,063 $502 2.09% $25,572 $541 2.12% $24,802 $529 2.13%
Savings Accounts 31,277 792 2.53% 32,082 811 2.53% 32,225 820 2.54%
Money Market Deposit Accounts 55,992 1,734 3.10% 49,738 1,401 2.82% 53,485 1,500 2.80%
Certificates of Deposits less than $100,000 96,254 4,677 4.86% 87,017 4,368 5.02% 77,416 3,827 4.93%
Certificates of Deposits greater than $100,000 11,531 561 4.87% 11,999 542 4.52% 10,638 528 4.95%
Total Interest Bearing Deposits 219,117 8,266 3.77% 206,408 7,663 3.71% 198,566 7,204 3.62%
Other Borrowings 1,094 69 6.31% 811 49 6.04% 675 40 5.91%
Total Interest Bearing Liabilities 220,211 8,335 3.79% 207,219 7,712 3.72% 199,241 7,244 3.63%
Noninterest Bearing Deposits 54,161 48,896 45,417
Other Liabilities 1,443 1,171 1,278
Stockholders' Equity 36,730 35,022 32,287
Total Liabilities and Stockholders' Equity $312,545 $292,308 $278,223
Net Interest Income - Tax Equivalent Basis* $14,213 $13,342 $12,761
Tax Equivalent Adjustment (299) (297) (288)
Net Interest Income $13,914 $13,045 $12,473
Net Interest Income - Spread* 4.04% 4.10% 4.13%
Net Interest Income as a % of Total Earning Assets* 4.94% 4.96% 4.95%
*Tax Equivalent Basis - 34% Rate for the periods dated
</TABLE>
<PAGE> 24
Table 6 -
<TABLE>
<CAPTION>
INTEREST DIFFERENTIALS 1998/1997 1997/1996
In thousands 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 $134 ($68) $66 $52 $23 $75
Federal Funds Sold (39) (12) (51) 147 (0) 147
Securities:
Taxable (242) 4 (238) (863) (80) (943)
Non-Taxable* 11 (4) 7 35 (9) 26
Loans 1,991 (281) 1,710 2,190 (446) 1,744
Total Interest Income 1,855 (361) 1,494 1,561 (512) 1,049
Interest Bearing Liabilities:
NOW Accounts (32) (7) (39) 16 (4) 12
Savings Accounts (20) 1 (19) (4) (5) (9)
Money Market Deposit Accounts 176 157 333 (105) 6 (99)
Certificates of Deposits less than $100,000 464 (155) 309 475 66 541
Certificates of Deposits greater than $100,000 (21) 40 19 68 (54) 14
Other Borrowings 17 3 20 8 1 9
Total Interest Expense 584 39 623 458 10 468
Increase (Decrease) in
Interest Differential $1,271 ($400) $871 $1,103 ($522) $581
*Tax Equivalent Basis - 34% Rate for the periods dated
</TABLE>
<PAGE> 25
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, 1998 and 1997,
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.
<PAGE> 26
Report of Independent Auditor
January 15, 1999
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, 1998
and 1997, 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, 1998. 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, 1998
and 1997, 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, 1998, 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
<PAGE> 27
<TABLE>
<CAPTION>
Consolidated Balance Sheets
One American Corp. and Subsidiaries
December 31, 1998 and 1997
In thousands 1998 1997
Assets
<S> <C> <C>
Cash and Due From Banks $12,126 $10,219
Interest Bearing Deposits in Other Banks 10,629 2,896
Federal Funds Sold and Securities
Purchased Under Resale Agreements 11,525 12,150
Securities Available for Sale (Amortized Cost of $98,588
and $114,212, respectively) 99,510 114,877
Loans 181,992 149,165
Less: Allowance for Loan Losses (3,530) (2,190)
Loans, Net 178,462 146,975
Bank Premises and Equipment 11,997 10,837
Other Real Estate 73 78
Accrued Interest Receivable 2,133 2,176
Other Assets 2,921 2,186
Total Assets $329,376 $302,394
Liabilities
Deposits:
Noninterest Bearing $58,406 $52,015
Interest Bearing 230,785 211,642
Total Deposits 289,191 263,657
Accrued Interest Payable 825 777
Other Liabilities 1,560 1,705
Total Liabilities 291,576 266,139
Stockholders' Equity
Common Stock-$2.50 par value;
Authorized-10,000,000 shares;
Issued-3,000,000 shares 7,500 7,500
Surplus 5,000 5,000
Retained Earnings 26,111 23,943
Accumulated Other Comprehensive Income 609 439
Treasury Stock - 328,922 and 148,450 shares at cost (1,420) (627)
Total Stockholders' Equity 37,800 36,255
Total Liabilities and Stockholders' Equity $329,376 $302,394
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE> 28
<TABLE>
<CAPTION>
Consolidated Statements of Income
One American Corp. and Subsidiaries
for the years ended December 31, 1998, 1997, and 1996
In thousands, except per share data 1998 1997 1996
Interest Income
<S> <C> <C> <C>
Interest and Fees on Loans $15,147 $13,437 $11,701
Interest on Securities:
Taxable Interest 5,710 5,948 6,884
Nontaxable Interest 581 576 559
Total Interest on Securities 6,291 6,524 7,443
Other Interest Income 811 796 573
Total Interest Income 22,249 20,757 19,717
Interest Expense on Deposits 8,335 7,712 7,244
Net Interest Income 13,914 13,045 12,473
Provision for Loan Losses 1,200 1,025 90
Net Interest Income After
Provision for Loan Losses 12,714 12,020 12,383
Other Income
Service Charges on Deposit Accounts 2,068 2,092 2,135
Gain on Securities 5 190 285
Gain on Purchased Assets 609 607 812
Other Operating Income 956 851 746
Total Other Income 3,638 3,740 3,978
Income Before Other Expenses 16,352 15,760 16,361
Other Expenses
Salaries and Employee Benefits 5,305 4,749 4,435
Net Occupancy Expense 1,267 1,236 1,184
Net ORE and Repossession Expense (9) (180) (13)
Other Operating Expenses 3,843 3,868 3,424
Total Other Expenses 10,406 9,673 9,030
Income Before Income Taxes 5,946 6,087 7,331
Applicable Income Taxes 1,885 2,050 2,281
Net Income $4,061 $4,037 $5,050
Net Income Per Share $1.51 $1.49 $1.87
Cash Dividends Per Share $0.71 $0.63 $0.53
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE> 29
<TABLE>
<CAPTION>
Consolidated Statements of Changes in Stockholders' Equity
One American Corp. and Subsidiaries
for the years ended December 31, 1998, 1997, and 1996
Accumulated
Other Total
Common RetainedComprehensiveTreasuryStockholders'
In thousands Stock Surplus Earnings Income Stock Equity
<S> <C> <C> <C> <C> <C> <C>
Balances, January 1, 1996 $7,500 $5,000 $17,966 $371 ($625) $30,212
Comprehensive Income:
Net Income 5,050 5,050
Other Comprehensive Income,
Net of Tax:
Net Change in Unrealized Gain (Loss)
on Securities Available-for-Sale (22) (22)
Less: Reclassification Adjustments (285) (285)
Total Comprehensive Income 4,743
Cash Dividends (1,420) (1,420)
Balances, December 31, 1996 7,500 5,000 21,596 64 (625) 33,535
Comprehensive Income:
Net Income 4,037 4,037
Other Comprehensive Income,
Net of Tax:
Net Change in Unrealized Gain (Loss)
on Securities Available-for-Sale 565 565
Less: Reclassification Adjustments (190) (190)
Total Comprehensive Income 4,412
Treasury Stock Purchased (2) (2)
Cash Dividends (1,690) 690)
Balances, December 31, 1997 7,500 5,000 23,943 439 (627) 36,255
Comprehensive Income:
Net Income 4,061 4,061
Other Comprehensive Income,
Net of Tax:
Net Change in Unrealized Gain (Loss)
on Securities Available-for-Sale 175 175
Less: Reclassification Adjustments (5) (5)
Total Comprehensive Income 4,231
Treasury Stock Purchased (793) (793)
Cash Dividends (1,893) (1,893)
Balances, December 31, 1998 $7,500 $5,000 $26,111 $609 ($1,420) $37,800
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE> 30
<TABLE>
<CAPTION>
Consolidated Statements of Cash Flows
One American Corp. and Subsidiaries
for the years ended December 31, 1998, 1997, and 1996
In thousands 1998 1997 1996
Cash Flows From Operating Activities
<S> <C> <C> <C>
Net Income $4,061 $4,037 $5,050
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities:
Gain on Purchased Assets (609) (607) (812)
Provision for Depreciation 828 762 679
Provision for Loan Losses 1,200 1,025 90
Net Amortization (Accretion) on Securities (261) (149) (87)
Provision (Credit) for Deferred Income Taxes (435) 412 (1)
(Gain) Loss on Sale of Other Real Estate and Repossessions (6) (304) (8)
(Gain) Loss on Sale of Equipment 0 (1) 0
(Gain) Loss on Securities (5) (190) (285)
Changes in Assets and Liabilities:
(Increase) Decrease in Accrued Interest Receivable 43 (145) 81
(Increase) Decrease in Other Assets (386) (363) (726)
Increase (Decrease) in Accrued Interest Payable 48 84 90
Increase (Decrease) in Other Liabilities (11) 54 (394)
Net Cash Provided by Operating Activities 4,467 4,615 3,677
Cash Flows From Investing Activities
Maturities or Calls of Securities Available for Sale 67,370 61,775 62,565
Purchases of Securities Available for Sale (51,485) (64,041) (42,235)
Proceeds from Sale of Securities Available for Sale 5 189 276
Net (Increase) Decrease in Federal Funds Sold 625 1,175 (5,950)
Net (Increase) Decrease in Loans (32,166) (15,174) (27,806)
Proceeds from Sale of Other Real Estate and Repossessions 99 850 11
Purchases of Premises and Equipment (1,988) (1,953) (1,863)
Proceeds from Other Borrowings 0 407 411
Repayments of Amounts Borrowed (142) 0 0
Net Cash Used in Investing Activities (17,682) (16,772) (14,591)
Cash Flows From Financing Activities
Net Increase (Decrease) in Demand Deposits, NOW
and Savings Accounts 18,019 476 1,605
Net Increase (Decrease) in Certificates of Deposits 7,515 12,477 9,375
Dividends Paid (1,886) (1,625) (1,352)
Treasury Stock Purchased (793) (2) 0
Net Cash Provided By Financing Activities 22,855 11,326 9,628
Increase (Decrease) in Cash and Cash Equivalents 9,640 (831) (1,286)
Cash and Cash Equivalents - Beginning of Year 13,115 13,946 15,232
Cash and Cash Equivalents - End of Year $22,755 $13,115 $13,946
<FN>
Continued on next page
</TABLE>
<PAGE> 31
<TABLE>
<CAPTION>
Consolidated Statements of Cash Flows
One American Corp. and Subsidiaries
for the years ended December 31, 1998, 1997, and 1996
In thousands 1998 1997 1996
<S> <C> <C> <C>
Supplemental Disclosure of Cash Flow Information:
Income Tax Payments $2,317 $1,536 $2,403
Interest Paid on Deposits $8,287 $7,628 $7,154
Noncash Investing Activities:
Other Real Estate Acquired in Settlement of Loans $88 $556 $71
Change in Unrealized Gain (Loss) on
Securities Available for Sale $258 $568 ($465)
Change in Deferred Tax Effect on
Unrealized Gain (Loss) on Securities Available for Sale $88 $193 ($158)
Noncash Financing Activities:
Dividends Declared and Not Paid $481 $473 $405
<FN>
The accompanying notes are an integral part of these financial statements.One American Corp. and Subsidiaries
</TABLE>
<PAGE> 32
Notes to Consolidated Financial Statements
December 31, 1998, 1997, and 1996
NOTE A
Summary of Significant Accounting Policies
The accounting principles followed by One American Corp.
(the Company), its wholly-owned subsidiary, First American Bank
and Trust (the Bank), and its wholly-owned subsidiary, First
American Agency, L.L.C. (the Agency), and One American Agency,
Inc. are those which are generally practiced within the banking
industry. First American Agency, L.L.C. was formed in March,
1998 and One American Agency, Inc. was liquidated in December,
1998. 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. (the
Company), its wholly-owned subsidiary, First American Bank and
Trust (the Bank), and its wholly-owned subsidiary, First American
Agency, L.L.C. (the Agency), 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.
The determination of the adequacy of the allowance for loan
losses is based on estimates that are particularly susceptible to
significant changes in the economic environment and market
conditions. In connection with the determination of estimated
losses on loans, management obtains independent appraisals for
significant collateral. The Bank's loans are generally secured
by specific items of collateral including real property, consumer
assets, and business assets. Although the Bank has a diversified
loan portfolio, a substantial portion of its debtors' ability to
honor their contracts is dependent on local conditions in the
area. While management uses available information to recognize
losses on loans, further reductions in the carrying amounts of
loans may be necessary based on changes in local economic
conditions. In addition, regulatory agencies, as an integral
part of their examination process, periodically review the
estimated losses on loans. Such agencies may require the Bank to
recognize additional losses based on their judgements about
information available to them at the time of their examination.
Because of these factors, it is reasonably possible that the
estimated losses on loans may change materially in the near term.
However, the amount of the change that is reasonably possible
cannot be estimated.
Securities - Management determines the appropriate
classification of debt securities (Held to Maturity, Available
for Sale, or Trading) at the time of purchase and re-evaluates
this classification periodically. Securities that management has
both the intent and ability to hold to maturity regardless of
changes in market conditions, liquidity needs, or changes in
general economic conditions are classified as securities held to
maturity. 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 that may be sold prior to maturity are classified
as securities available for sale. 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, 1998 or 1997.
Securities purchased for trading purposes are classified as
trading securities and are carried at market value with market
adjustments included in non-interest income.
<PAGE> 33
Loans - Loans are stated at principal amounts outstanding,
less unearned income and allowance for loan losses. Interest on
commercial and individual 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. Gain on purchased assets is recognized on acquired loans
from previous bank acquisitions on a cost recovery method as
principal payments are made.
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. The Bank classifies loans as impaired if,
based on current information and events, it is probable that the
Bank will be unable to collect the scheduled payments of
principal and interest when due according to the contractual
terms of the loan agreement. The measurement of impaired loans
is based on the present value of the expected future cash flows
discounted at the loan's effective interest rate or the loan's
observable market price or based on the fair value of the
collateral if the loan is collateral-dependent.
Allowance for Loan Losses - The allowance for loan losses is
maintained at a level which, in management's judgement, is
adequate to absorb credit losses inherent 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 examination by regulatory agencies; an internal asset
review process; expectations of future economic conditions and
their impact on particular borrowers; and other judgmental
factors. Allowances for impaired loans are generally determined
based on collateral values or the present value of estimated cash
flows. Although management uses available information to
recognize losses on loans, because of uncertainties associated
with local economic conditions, collateral values, and future
cash flows on impaired loans, it is reasonably possible that a
material change could occur in the allowance for loan losses in
the near term. However, the amount of the change that is
reasonably possible cannot be estimated.
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
collectability 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
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,
<PAGE> 34
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 Standard 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 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 December 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 2,686,389 for the year ended December 31,
1998 and 2,703,230 for the years ended December 31, 1997 and
1996, respectively.
On April 22, 1998, the organization reduced the par value of
its common shares from $5.00 to $2.50 per share to effect a 2 -
for - 1 stock split issued May 8, 1998. The earnings per common
share for the years ended December 31, 1997 and December 31, 1996
have been retroactively restated for this stock split.
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
31, 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 components of
comprehensive income are disclosed in the Statements of Changes
in Stockholders Equity for all periods presented.
Current Accounting Developments - In June 1997, the FASB
issued SFAS No. 131, "Disclosures about Segments of an Enterprise
and Related Information," which establishes standards for the
reporting of financial information from operating segments in
annual and interim financial statements. SFAS No. 131 requires
that financial information be reported on the same basis that it
is reported internally for evaluating segment performance and
allocating resources to segments. The adoption of this statement
had no material effect on the financial statements as of December
31, 1998.
In February, 1998 the FASB issued Statement No. 132,
"Employers' Disclosures about Pensions and Other Postretirement
Benefits." FASB Statement No. 132 revises employers' disclosures
about pension and other postretirement benefit plans. It does
not change the measurement or recognition of those plans. It
standardizes the disclosure requirements for pensions and other
postretirement benefits. The adoption of this statement in 1998
had no material impact on the Company's financial position or
results of operations.
In June, 1998, the FASB issued SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities". The provisions
of this statement are effective for the Company's year ended
December 31, 1998. The impact of adopting this statement did not
have a material effect on the Company's financial statements.
In early 1998, the AICPA issued Statement of Position 98-5,
"Reporting on the Costs of Start-Up Activities" ("SOP"). The SOP
is effective for fiscal years beginning after December 15, 1998
and will require the costs of start-up activities and
organization costs to be expensed as incurred. Any such
unamortized costs on the date of adoption of the new standard
will be written off and be reflected as a cumulative effect of a
change in accounting principle. The adoption of this statement
in 1999 should not have a material impact on the financial
statements of the company.
<PAGE> 35
NOTE B
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. Equity earnings from First American Agency, L.L.C. in
the amount of $54 thousand are included in Other Income of the
Company for the year ended December 31, 1998. The net equity of
$639 thousand in First American Agency, L.L.C. is reflected in
Other Assets in the Balance Sheet as of December 31, 1998. As a
result of this acquisition, the Company's Board of Directors
voted to dissolve One American Agency, Inc. The assets of One
American Agency, Inc., which were insignificant, were merged into
its Parent Company effective December 31, 1998.
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, 1998 and
1997, were approximately $4.2 million and $3.6 million,
respectively.
NOTE D
Securities
Amortized costs and fair values of securities available for
sale as of December 31, 1998 and 1997 are summarized as follows:
<TABLE>
<CAPTION>
1998
Gross Gross
Amortized Unrealized Unrealized Fair
($ in thousands) Cost Gains Losses Value
<S> <C> <C> <C> <C>
U. S. Treasury Securities $36,017 $288 ($2) $36,303
Securities of Other U. S. Government Agencies 35,888 109 (44) 35,953
Mortgage-Backed Securities 15,607 200 (11) 15,796
Obligations of State and Political Subdivisions 10,118 382 0 10,500
Equity Securities 958 0 0 958
Totals $98,588 $979 ($57) $99,510
<CAPTION>
1997
Gross Gross
Amortized Unrealized Unrealized Fair
($ 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 0 11,336
Equity Securities 902 0 0 902
Totals $114,212 $792 ($127) $114,877
</TABLE>
<PAGE> 36
The following table shows the amortized cost, fair value,
maturity distribution, and weighted average yield of the
securities available for sale as of December 31, 1998.
Maturities may differ from contractual maturities in mortgage-
backed securities because the mortgages underlying the securities
may be called or repaid without any penalties.
<TABLE>
<CAPTION>
($ in thousands) Amortized Fair Average
Cost Value Yield
U. S. Treasury Securities
<S> <C> <C> <C>
Within 1 Year $24,989 $25,135 5.90%
After 1 but Within 5 Years 11,028 11,168 5.50%
After 5 but Within 10 Years 0 0 0.00%
After 10 Years 0 0 0.00%
36,017 36,303 5.78%
Securities of Other U. S. Government Agencies
Within 1 Year 13,879 13,920 5.28%
After 1 but Within 5 Years 22,009 22,033 5.44%
After 5 but Within 10 Years 0 0 0.00%
After 10 Years 0 0 0.00%
35,888 35,953 5.38%
Mortgage-Backed Securities
Within 1 Year 1,035 1,042 5.85%
After 1 but Within 5 Years 2,329 2,344 6.66%
After 5 but Within 10 Years 9,153 9,291 6.59%
After 10 Years 3,090 3,119 6.36%
15,607 15,796 6.51%
Obligations of State and Political Subdivisions
Within 1 Year 1,971 1,988 8.18%
After 1 but Within 5 Years 5,908 6,120 8.16%
After 5 but Within 10 Years 2,171 2,307 7.58%
After 10 Years 68 85 10.80%
10,118 10,500 8.06%
Equity Securities 958 958 5.57%
Totals $98,588 $99,510 5.99%
<FN>
* Tax Equivalent Basis - 34%
</TABLE>
Securities available for sale with a carrying amount of
$42.1 million and $33.4 million at December 31, 1998 and 1997,
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 $958 thousand and $902 thousand,
which approximates fair value, at December 31, 1998 and 1997,
respectively.
Gross realized gains and losses from the sale of securities
for the years ended December 31, 1998, 1997, and 1996 are as
follows:
<TABLE>
<CAPTION>
($ in thousands) 1998 1997 1996
<S> <C> <C> <C>
Realized gains $5 $190 $285
Realized losses 0 0 0
$5 $190 $285
</TABLE>
<PAGE> 37
Note E
Loans
An analysis of the loan portfolio at December 31, 1998 and
1997, is as follows:
<TABLE>
<CAPTION>
($ in thousands) 1998 1997
<S> <C> <C>
Commercial, Financial, and Agricultural $17,526 $15,811
Real Estate - Construction 1,334 3,987
Real Estate - Mortgage 144,815 113,117
Individuals 15,120 13,892
All Other Loans 3,199 2,395
Total Loans 181,994 149,202
Unearned Income (2) (37)
Total Loans, net of Unearned Income $181,992 $149,165
</TABLE>
Impaired loans having recorded investments of $4.4 million
at December 31, 1998 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, 1998 was approximately $3.8 million. Impaired
loans at December 31, 1997 were $3.2 million. The allowance for
loan losses related to these loans was
$1.4 million at December 31, 1998 and $849 thousand at December
31, 1997. Interest received on impaired loans amounted to $430
thousand and $348 thousand at December 31, 1998 and 1997,
respectively. All non-accrual loans were considered impaired at
December 31, 1998 and 1997.
The Bank is permitted, under the laws of the State of
Louisiana, to make extensions of credit to its executive officers
and directors and their affiliates in the ordinary course of
business. An analysis of the aggregate loans, for December 31,
1998 and 1997, are as follows:
<TABLE>
<CAPTION>
($ in thousands) 1998 1997
<S> <C> <C>
Balance - Beginning of Year $5,068 $2,698
New Loans 3,492 3,455
Repayments (2,889) (1,085)
Balance - End of Year 5,671 5,068
Maximum Balance During the Year $5,671 $5,694
</TABLE>
<PAGE> 38
NOTE F
Allowance for Loan Losses
Following is a summary of the activity in the allowance for
loan losses:
<TABLE>
<CAPTION>
($ in thousands) 1998 1997 1996
<S> <C> <C> <C>
Balance - Beginning of Year $2,190 $3,083 $3,273
Current Provision from Income 1,200 1,025 90
Recoveries on Loans Charged-Off 398 181 230
Loans Charged-Off (258) (2,099) (510)
Balance - End of Year $3,530 $2,190 $3,083
Ratio of Allowance for Loan Losses to
Impaired Loans at End of Year 79.95% 67.39% 74.91%
Ratio of Allowance for Loan Losses to Loans
Outstanding at End of Year 1.94% 1.47% 2.27%
Ratio of Net Loans Charged-Off to
Loans Outstanding at End of Year -0.08% 1.29% 0.20%
</TABLE>
NOTE G
Bank Premises and Equipment
Bank premises and equipment costs and the related
accumulated depreciation at December 31, 1998 and 1997, are as
follows:
<TABLE>
<CAPTION>
($ in thousands) 1998 1997
<S> <C> <C>
Land $3,303 $3,115
Bank Premises 9,173 8,743
Furniture and Equipment 6,959 5,588
19,435 17,446
Accumulated Depreciation (7,438) (6,609)
$11,997 $10,837
</TABLE>
Depreciation charged to operating expenses for the three
years ended December 31, 1998, 1997, and 1996, respectively, was
$828 thousand, $762 thousand, and $679 thousand.
<PAGE> 39
NOTE H
Deposits
Following is a detail of deposits as of December 31, 1998
and 1997:
<TABLE>
<CAPTION>
($ in thousands) 1998 1997
<S> <C> <C>
Non-interest Bearing Accounts $58,406 $52,015
NOW and Super NOW Accounts 26,716 24,585
Insured Money Market Accounts 60,647 51,355
Savings Accounts 31,847 31,417
Certificates of Deposit over $100,000 15,157 12,528
Other Certificates of Deposit 96,418 91,757
Total Deposits $289,191 $263,657
</TABLE>
Following is a detail of certificate of deposit maturities
as of December 31, 1998:
<TABLE>
<CAPTION>
($ in thousands)
<S> <C>
December 31, 1999 $87,777
December 31, 2000 15,022
December 31, 2001 3,065
December 31, 2002 1,630
December 31, 2003 & After 4,081
Total Certificates of Deposit $111,575
</TABLE>
Interest expense on Certificates of Deposit over $100
thousand at December 31, 1998, 1997, and 1996, amounted to $561
thousand, $542 thousand and $472 thousand, respectively.
Public Fund deposits at December 31, 1998 and 1997, were
$16.8 million and $16.2 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, 1999, the Bank had retained
earnings of $19.6 million of which $3.6 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, 1998 and 1997,
the Company met all of the capital adequacy requirements to which
it is subject.
<PAGE> 40
As of December 31, 1998 and 1997, 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.
Following is a summary of capital levels at December 31,
1998 and 1997:
<TABLE>
<CAPTION>
To Be Well
Capitalized
Under
Required for Prompt
Capital Corrective
Actual Adequacy Actions
As of December 31, 1998 Ratios Purposes Provision
<S> <C> <C> <C>
Total Capital (to Risk Weighted Assets) 22.6% 8.00% 10.00%
Tier 1 Capital (to Risk Weighted Assets) 21.4% 4.00% 6.00%
Tier 1 Leveraged Capital (to Average Assets) 11.3% 4.00% 5.00%
As of December 31, 1997
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%
</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, 1998 and 1997.
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 1998 or 1997.
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. 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, 1998 and 1997.
<PAGE> 41
<TABLE>
<CAPTION>
($ in thousands) 1998 1997
Change in Benefit Obligation:
<S> <C> <C>
Benefit Obligation at Beginning of Year $6,146 $4,842
Service Cost 380 269
Interest Cost 441 376
Plan Participants' Contributions 0 0
Actuarial (Gain)/Loss 558 713
Benefits Paid (190) (54)
Benefit Obligation at End of Year $7,335 $6,146
Change in Plan Assets:
Fair Value of Plan Assets at Beginning of Year $6,204 $5,346
Actual return on Plan Assets 1,121 851
Employer Contributions 110 61
Plan Participant's Contributions 0 0
Benefits Paid (190) (54)
Fair Value of Plan Assets at End of Year $7,245 $6,204
Funded Status ($90) $58
Unrecognized Net Actuarial Loss 321 336
Unrecognized transaction obligation (asset) (354) (398)
Unrecognized Prior Service Cost 156 181
Prepaid (Accrued) Benefit Cost $33 $177
</TABLE>
Assumptions used in the determination of pension plan
information consisted of the following:
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
Discount Rate 6.75% 7.00%
Rate of Increase in Compensation Levels 5.50% 5.50%
Expected Long-Term Rate of Return
on Plan Assets 9.00% 9.00%
</TABLE>
Net pension expense for 1998, 1997, and 1996 included the
following components:
<TABLE>
<CAPTION>
($ in thousands) 1998 1997 1996
<S> <C> <C> <C>
Service Cost $379 $268 $248
Interest Cost 441 376 328
Expected Return on (547) (474) (430)
Amortization of Prior Service Cost 25 25 25
Transition (Asset)/Obligation Recognition (44) (44) (44)
Net Periodic Benefit Cost $254 $151 $127
</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 $582 thousand and $548
thousand for the years ended December 31, 1998 and 1997,
respectively. The Bank had set aside reserves in the amount of
$774 thousand for payment of unreported claims with dates of
service through December 31, 1998.
<PAGE> 42
NOTE K
Other Operating Expenses
The analysis of other operating expenses for the years ended
December 31, 1998, 1997, and 1996, are as follows:
<TABLE>
<CAPTION>
($ in thousands) 1998 1997 1996
<S> <C> <C> <C>
Advertising and Public Relations $390 $301 $349
Armored Courier Service 165 131 115
Director Fees 218 263 200
Equipment Expense 1,188 1,047 946
Legal and Professional 266 506 400
Postage and Shipping 180 180 175
Regulatory Assessments 83 67 32
Service Charges-Other Institutions 125 122 126
Stationery, Printing, and Supplies 372 356 338
Telephone 304 295 233
Other 552 600 510
$3,843 $3,868 $3,424
</TABLE>
NOTE L
Income Taxes
The total provision for income taxes charged to income
amounted to $1.9 million for 1998, $2.0 million for 1997, and
$2.3 million for 1996. The provisions represent effective tax
rates of 32% for 1998, 33% for 1997, and 31% for 1996. Following
is a reconciliation between income tax expense based on the
federal statutory tax rates and income taxes reported in the
statements of income.
<TABLE>
<CAPTION>
($ in thousands) 1998 1997 1996
Income Taxes Based on Statutory Rates -
<S> <C> <C> <C>
34% for periods shown $2,022 $2,069 $2,492
Tax Exempt Income (198) (196) (188)
Other - Net 61 177 (23)
$1,885 $2,050 $2,281
</TABLE>
The components of consolidated income tax expense (benefits)
are:
<TABLE>
<CAPTION>
($ in thousands) 1998 1997 1996
<S> <C> <C> <C>
Provision for Current Taxes $2,320 $1,638 $2,282
Provision (Credit) for Deferred Taxes (435) 412 (1)
$1,885 $2,050 $2,281
</TABLE>
<PAGE> 43
A deferred income tax asset of $370 thousand and $25
thousand is included in other assets at December 31, 1998 and
1997, respectively. The deferred tax provision (credit) consists
of the following timing differences:
<TABLE>
<CAPTION>
($ in thousands) 1998 1997 1996
<S> <C> <C> <C>
Depreciation Expense for Tax Reporting
in Excess of Amount for Financial Reporting $10 ($3) ($2)
Provision for Loan Losses for Financial
Reporting in Excess of Amount for
Tax Reporting (391) 427 21
Accretion Income for Financial Reporting
in Excess of Tax Reporting (6) 14 (17)
Increase in Insurance Reserve (33) (10) (21)
Increase (Decrease) in Prepaid Pension (15) (16) 18
($435) $412 ($1)
</TABLE>
The net deferred tax asset consists of the following
components at December 31, 1998 and 1997:
<TABLE>
<CAPTION>
($ in thousands) 1998 1997
<S> <C> <C>
Depreciation ($356) ($346)
Provision for Loan Losses 957 566
Accretion Income (29) (35)
Insurance Reserve 211 178
Prepaid Pension (97) (112)
Unrealized (Gain) Loss on Securities
Available for Sale (316) (226)
Total Deferred Tax Asset $370 $25
</TABLE>
NOTE M
Short-Term Borrowings
The Bank maintains an open line of credit with the Federal
Home Loan Bank of Dallas. The total line of credit available
with Federal Home Loan Bank of Dallas amounts to approximately
$18.1 million at December 31, 1998. This amount is computed
based on the Bank's stock position less current advances, not to
exceed 65% of the Bank's outstanding 1-4 family mortgage loans.
The agreement provides for interest based upon the federal funds
rate on outstanding balances for short term purposes and a
certain spread above the treasury yield curve for longer term
advances. Drawings on the line included in other liabilities,
were $1.0 million and $1.2 million at December 31, 1998 and 1997
respectively. The line is collateralized by a blanket lien on 1-
4 family mortgage loans.
The Bank also maintains an open line of credit with a
correspondent to assist in maintaining short-term liquidity. The
agreement provides for interest based upon the federal funds rate
on outstanding balances. This line totaling $4.5 million was
unfunded at December 31, 1998 and December 31, 1997.
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
<PAGE> 44
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 $20.3 million at December 31,
1998. This amount includes unfunded commitments aggregating
$19.6 million and letters of credit of $646 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 the Bank's
legal lending limits.
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
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, 1998 and 1997 are as
follows:
<PAGE> 45
<TABLE>
<CAPTION>
($ in thousands) 1998 1997
Carrying Carrying
Financial Assets: Amount Fair Value Amount Fair Value
<S> <C> <C> <C> <C>
Cash and
Short-Term Investments 34,280 $34,280 $25,265 $25,265
Securities 99,510 99,510 114,877 114,877
Loans - Net 178,462 181,865 146,975 147,511
$312,252 $315,655 $287,117 $287,653
Financial Liabilities:
Deposits $289,191 $286,807 $263,657 $263,259
Other Borrowings 1,026 1,070 1,167 1,217
$290,217 $287,877 $264,824 $264,476
Unrecognized Financial Instruments
Commitments to Extend Credit
and Letters of Credit $0 $0 $0 $0
</TABLE>
Note Q
Litigation and Contingencies
During the normal course of business, the Company is
involved in various legal proceedings. In the opinion of
management and counsel, any liability from such proceedings would
not have a material adverse effect on the Company's financial
statements.
<PAGE> 46
Note R
Parent Company Financial Statements
The financial statements for One American Corp. (Parent
Company Only) are presented below:
<TABLE>
<CAPTION>
BALANCE SHEETS
December 31, 1998 and 1997
($ in thousands) 1998 1997
Assets
<S> <C> <C>
Cash $2,136 $2,107
Receivables from Subsidiaries 0 20
Income Tax Receivable 99 12
Investment in Subsidiaries:
First American Bank and Trust 36,168 34,397
One American Agency, Inc. 0 233
36,168 34,630
Total Assets $38,403 $36,769
Liabilities
Accrued Dividend Payable $481 $472
Payables to Subsidiaries 122 42
603 514
Stockholders' Equity
Common Stock 7,500 7,500
Surplus 5,000 5,000
Retained Earnings 26,720 24,382
Treasury Stock - 328,922 and 296,900 shares at cost (1,420) (627)
Total Stockholders' Equity 37,800 36,255
Total Liabilities and Stockholders' Equity $38,403 $36,769
</TABLE>
<PAGE> 47
<TABLE>
<CAPTION>
STATEMENTS OF INCOME
for the years ended December 31, 1998, 1997, and 1996
($ in thousands) 1998 1997 1996
Income
<S> <C> <C> <C>
Interest Income $46 $44 $34
Dividends from Subsidiaries:
First American Bank and Trust 2,475 2,025 1,800
One American Agency, Inc. 12 0 0
Total Income 2,533 2,069 1,834
Expenses
Operating Expenses 86 52 48
Total Expenses 86 52 48
Income before Income Taxes and Equity in
Undistributed Net Income of Subsidiaries 2,447 2,017 1,786
Income Tax Expense (Benefit) (13) (3) (5)
Income before Equity in Undistributed
Net Income of Subsidiaries 2,460 2,020 1,791
Equity in Undistributed Net Income of Subsidiaries 1,601 2,017 3,259
Net Income $4,061 $4,037 $5,050
</TABLE>
<PAGE> 48
<TABLE>
<CAPTION>
STATEMENTS OF CASH FLOWS
for the years ended December 31, 1998, 1997, and 1996
($ in thousands) 1998 1997 1996
Cash Flows From Operating Activities:
<S> <C> <C> <C>
Net Income $4,061 $4,037 $5,050
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities:
Equity in Undistributed Net Income of Subsidiaries (1,601) (2,017) (3,259)
Changes in Assets and Liabilities:
Increase (Decrease) in Payables to Subsidiaries 80 (93) 135
(Increase) Decrease in Receivables from Subsidiaries 20 (2) 343
(Increase) Decrease in Income Tax Receivables (87) 110 (122)
Increase (Decrease) in Income Taxes Payable 0 0 (348)
Net Cash Provided by Operating Activities 2,473 2,035 1,799
Cash Flows From Investing Activities:
Proceeds From Liquidation of One
American Agency 235 0 0
Net Cash Provided by Investing Activities 235 0 0
Cash Flows From Financing Activities:
Treasury Stock Purchased (793) (2) 0
Dividends Paid 1,886) (1,625) (1,352)
Net Cash Used in Financing Activities 2,679) (1,627) (1,352)
Net Increase in Cash 29 408 447
Cash - Beginning of Year 2,107 1,699 1,252
Cash - End of Year $2,136 $2,107 $1,699
Noncash Financing Activities:
Dividends Declared and Not Paid $481 $472 $405
Change in Unrealized Gain (Loss) on Securities Available
For Sale, Net $170 $375 ($307)
</TABLE>
<PAGE> 49
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 1999 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 1998 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, 1998.
(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 Securities and
Exchange Commission.
22. Subsidiaries of the Registrant
First American Bank and Trust, incorporated
under the laws of the State of Louisiana
23. Definitive Proxy Statement for the 1999
Annual Meeting of Stockholders' of One American
Corp.
<PAGE> 50
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/ Frank J. Bourgeois
Frank J. Bourgeois
President
Dated March 11, 1999
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 11, 1999:
/s/ Frank J. Bourgeois, President (principal executive, financial
and accounting officer) 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
/s/ Carl J. Poche, M.D., Director
Carl J. Poche, M.D.
<PAGE> 51
/s/ Clarence J. Savoie, II, Director
Clarence J. Savoie, II
/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
<PAGE> 52
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1000
<S> <C>
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<PERIOD-TYPE> 12-MOS
<CASH> 12,126
<INT-BEARING-DEPOSITS> 10,629
<FED-FUNDS-SOLD> 11,525
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 99,510
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 181,992
<ALLOWANCE> 3,530
<TOTAL-ASSETS> 329,376
<DEPOSITS> 289,191
<SHORT-TERM> 0
<LIABILITIES-OTHER> 2,385
<LONG-TERM> 0
<COMMON> 7,500
0
0
<OTHER-SE> 30,300
<TOTAL-LIABILITIES-AND-EQUITY> 329,376
<INTEREST-LOAN> 15,147
<INTEREST-INVEST> 6,291
<INTEREST-OTHER> 811
<INTEREST-TOTAL> 22,249
<INTEREST-DEPOSIT> 8,335
<INTEREST-EXPENSE> 8,335
<INTEREST-INCOME-NET> 13,914
<LOAN-LOSSES> 1,200
<SECURITIES-GAINS> 5
<EXPENSE-OTHER> 10,406
<INCOME-PRETAX> 5,946
<INCOME-PRE-EXTRAORDINARY> 5,946
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,061
<EPS-PRIMARY> 1.51
<EPS-DILUTED> 1.51
<YIELD-ACTUAL> 7.83
<LOANS-NON> 730
<LOANS-PAST> 242
<LOANS-TROUBLED> 173
<LOANS-PROBLEM> 3,512
<ALLOWANCE-OPEN> 2,190
<CHARGE-OFFS> 259
<RECOVERIES> 399
<ALLOWANCE-CLOSE> 3,530
<ALLOWANCE-DOMESTIC> 1,439
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 2,091
</TABLE>
