UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the
Quarter Ended March 31, 2000 Commission File Number: 0-12437
One American Corp.
(Exact name of registrant as specified in its charter)
Louisiana 72-0948181
(State or other jurisdiction of (IRS Employer
Identification No.)
Incorporation of Organization)
2785 LA Hwy. 20 West
P. O. Box 550
Vacherie, Louisiana 70090-0550
(Address of principal executive (Zip Code)
offices)
Registrant's Telephone Number, including area code: (225) 265-2265
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $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 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, 2,651,883 shares outstanding as of
May 12, 2000.
<PAGE> 1
Form 10-Q Index
Part I
Financial Information
Financial Statements
Consolidated Balance Sheets,
March 31, 2000, December 31, 1999, and March 31, 1999 3
Consolidated Statements of Income
for the three month periods ended March 31, 2000 and 1999 4
Consolidated Statements of Changes in Stockholders' Equity
for the three months ended March 31, 2000 and 1999 5
Consolidated Statements of Cash Flows
for the three months ended March 31, 2000 and 1999 6
Notes to Consolidated Financial Statements 8
Management's Discussion and Analysis of Financial Condition
and Results of Operations 12
Average Balance Sheets and Interest Rate Analysis
for the three months ended March 31, 2000, December 31,
1999,
and March 31, 1999 24
Interest Differentials
for the three months ended March 31, 2000, December 31,
1999,
and March 31, 1999 25
Part II
Other Information
Legal Proceedings 26
Submission of Matters to a Vote of Security Holders 26
Other Information 26
Exhibits and Reports on Form 8-K 26
Management's Responsibility for Financial Reporting 27
Review by Independent Public Accountant 28
Signatures 29
<PAGE> 2
<TABLE>
<CAPTION>
Consolidated Balance Sheets Unaudited Unaudited
One American Corp. and Subsidiaries March 31, December 31 March 31,
In thousands 2000 1999 1999
Assets
<S> <C> <C> <C>
Cash and Due From Banks $12,759 $16,494 $12,399
Interest Bearing Deposits in Other Banks 1,546 1,529 10,548
Federal Funds Sold and Securities
Purchased Under Resale Agreements 11,325 5,700 13,725
Securities Available for Sale (Amortized Cost of $95,019, $91,695,
and $99,003, respectively) 93,816 90,608 99,517
Loans 224,446 215,286 186,523
Less: Allowance for Loan Losses (3,850) (4,155) (3,326)
Loans, Net 220,596 211,131 183,197
Bank Premises and Equipment 13,368 12,598 12,238
Other Real Estate 19 19 249
Accrued Interest Receivable 2,060 2,007 1,900
Other Assets 3,481 3,689 2,942
Total Assets $358,970 $343,775 $336,715
Liabilities
Deposits:
Noninterest Bearing $59,516 $56,208 $58,255
Interest Bearing 256,404 245,683 237,509
Total Deposits 315,920 301,891 295,764
Accrued Interest Payable 1,068 968 855
Other Liabilities 2,525 1,950 1,992
Total Liabilities 319,513 304,809 298,611
Stockholders' Equity
Common Stock-$2.50 par value;
Authorized-10,000,000 shares;
Issued-3,000,000 shares 7,500 7,500 7,500
Surplus 5,000 5,000 5,000
Retained Earnings 29,702 28,745 26,712
Accumulated Other Comprehensive Income (794) (718) 339
Treasury Stock - 348,081, 334,140 and 329,924 shares at cost (1,951) (1,561) (1,447)
Total Stockholders' Equity 39,457 38,966 38,104
Total Liabilities and Stockholders' Equity $358,970 $343,775 $336,715
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
Consolidated Statements of Income
One American Corp. and Subsidiaries
for the three months ended March 31, 2000 and 1999 Unaudited Unaudited
In thousands, except per share data 2000 1999
Interest Income
<S> <C> <C>
Interest and Fees on Loans $4,786 $3,975
Interest on Securities:
Taxable Interest 1,196 1,242
Nontaxable Interest 122 138
Total Interest on Securities 1,318 1,380
Other Interest Income 199 266
Total Interest Income 6,303 5,621
Interest Expense on Deposits 2,513 2,125
Net Interest Income 3,790 3,496
Provision for Loan Losses 150 225
Net Interest Income After
Provision for Loan Losses 3,640 3,271
Other Income
Service Charges on Deposit Accounts 533 498
Gain on Securities 7 0
Gain on Purchased Assets 366 62
Other Operating Income 365 278
Total Other Income 1,271 838
Income Before Other Expenses 4,911 4,109
Other Expenses
Salaries and Employee Benefits 1,400 1,262
Net Occupancy Expense 394 326
Net ORE and Repossession Expense (4) 18
Other Operating Expenses 971 898
Total Other Expenses 2,761 2,504
Income Before Income Taxes 2,150 1,605
Applicable Income Taxes 703 523
Net Income $1,447 $1,082
Net Income Per Share $0.54 $0.41
Cash Dividends Per Share $0.19 $0.18
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE> 4
<TABLE>
<CAPTION>
Consolidated Statements of Changes in Stockholders' Equity
One American Corp. and Subsidiaries
for the three months ended March 31, 2000 and 1999
Unaudited Accumulated
Other Total
Common Retained Comprehensive Treasury Stockholders'
In thousands Stock Surplus Earnings Income Stock Equity
<S> <C> <C> <C> <C> <C> <C>
Balances, January 1, 2000 $7,500 $5,000 $28,745 $(718) $(1,561) $38,966
Comprehensive Income:
Net Income 1,447 1,447
Other Comprehensive Income,
Net of Tax:
Net Change in Unrealized Gain (Loss)
on Securities Available-for-Sale (69) (69)
Less: Reclassification Adjustments (7) (7)
Total Comprehensive Income 1,371
Treasury Stock Purchased (390) (390)
Cash Dividends (490) (490)
Balances, March 31, 2000 7,500 5,000 29,702 (794) (1,951) 39,457
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Balances, January 1, 1999 7,500 5,000 26,111 609 (1,420) 37,800
Comprehensive Income:
Net Income 1,082 1,082
Other Comprehensive Income,
Net of Tax:
Net Change in Unrealized Gain (Loss)
on Securities Available-for-Sale (270) (270)
Total Comprehensive Income 812
Treasury Stock Purchased (27) (27)
Cash Dividends (481) (481)
Balances, March 31, 1999 $7,500 $5,000 $26,712 $339 $(1,447) $38,104
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE> 5
<TABLE>
<CAPTION>
Consolidated Statements of Cash Flows
One American Corp. and Subsidiaries
for the three months ended March 31, 2000 and 1999 Unaudited Unaudited
In thousands 2000 1999
Cash Flows From Operating Activities
<S> <C> <C>
Net Income $1,447 $1,082
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities:
Gain on Purchased Assets (366) (62)
Provision for Depreciation 234 226
Provision for Loan Losses 150 225
Net Amortization (Accretion) on Securities (8) (21)
Provision (Credit) for Deferred Income Taxes 99 76
(Gain) Loss on Sale of Other Real Estate and Repossessions 0 (3)
Changes in Assets and Liabilities:
(Increase) Decrease in Accrued Interest Receivable (53) 233
(Increase) Decrease in Other Assets 149 42
Increase (Decrease) in Accrued Interest Payable 100 30
Increase (Decrease) in Other Liabilities 630 467
Net Cash Provided by Operating Activities 2,382 2,295
Cash Flows From Investing Activities
Maturities or Calls of Securities Available for Sale 9,076 19,685
Purchases of Securities Available for Sale (12,392) (20,079)
Proceeds from Sale of Securities Available for Sale 0 0
Net (Increase) Decrease in Federal Funds Sold (5,625) (2,200)
Net (Increase) Decrease in Loans (9,249) (5,128)
Proceeds from Sale of Other Real Estate and Repossessions 0 57
Purchases of Premises and Equipment (1,005) (467)
Net Cash Used in Investing Activities (19,195) (8,132)
Cash Flows From Financing Activities
Net Increase (Decrease) in Demand Deposits, NOW
and Savings Accounts 6,423 2,366
Net Increase (Decrease) in Certificates of Deposits 7,607 4,207
Proceeds from Other Borrowings 0 0
Repayments of Amounts Borrowed (51) (36)
Dividends Paid (494) (481)
Treasury Stock Purchased (390) (27)
Net Cash Provided By Financing Activities 13,095 6,029
Increase (Decrease) in Cash and Cash Equivalents (3,718) 192
Cash and Cash Equivalents - Beginning of Period 18,023 22,755
Cash and Cash Equivalents - End of Period $14,305 $22,947
<FN>
Continued on next page
</TABLE>
<PAGE> 6
<TABLE>
<CAPTION>
Consolidated Statements of Cash Flows
One American Corp. and Subsidiaries
for the three months ended March 31, 2000 and 1999 Unaudited Unaudited
In thousands 2000 1999
Supplemental Disclosure of Cash Flow Information:
<S> <C> <C>
Income Tax Payments $0 $0
Interest Paid on Deposits $2,413 $2,095
Noncash Investing Activities:
Other Real Estate Acquired in Settlement of Loans $0 $230
Change in Unrealized Gain (Loss) on
Securities Available for Sale ($76) ($408)
Change in Deferred Tax Effect on
Unrealized Gain (Loss) on Securities Available for Sale ($26) ($139)
Noncash Financing Activities:
Dividends Declared and Not Paid $490 $481
<FN>
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE> 7
Notes to Consolidated Financial Statements
March 31, 2000
(UNAUDITED)
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 the Bank's wholly-owned subsidiary, First
American Agency, L.L.C. (the Agency), are those which are
generally practiced within the banking industry. The methods of
applying those principles conform to generally accepted
accounting principles and have been applied on a consistent
basis. The principles that significantly affect the
determination of financial position, results of operations,
changes in stockholders' equity, and cash flows are summarized
below.
Presentation - The accompanying unaudited consolidated
interim financial statements do not include all of the
information and footnotes required by generally accepting
accounting principles. Management is of the opinion that the
unaudited interim financial statements reflect all normal,
recurring accrual adjustments necessary to provide a fair
statement of the results for the interim periods presented. It
is noted that the results of the three-month period ended March
31, 2000 are not an indication of the expected results for the
annual period that ends December 31, 2000. Additional
information concerning the audited financial statements and notes
can be obtained from One American Corp.'s annual report and Form
10-K filed for the period ended December 31, 1999.
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 the Bank's wholly-owned subsidiary, First American
Agency, L.L.C. (the Agency). 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 that
conform to generally accepted accounting principles requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities, the disclosure of
contingent assets and liabilities at the date of the financial
statements, and the 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
<PAGE> 8
recognize additional losses based on their judgement 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. Securities purchased for trading
purposes are classified as trading securities and are carried at
market value with market adjustments included in non-interest
income. The Bank had no securities classified as held to
maturity or trading at March 31, 2000 or 1999.
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.
Generally, the Bank discontinues the accrual of interest
income when a loan becomes 90 days past due as to principal or
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 possible 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
<PAGE> 9
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. Actual 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, 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 - 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. Diluted EPS,
reflects the potential dilution that could occur if securities or
<PAGE> 10
other contracts to issue common stock were exercised or converted
into common stock or resulted in the issuance of common stock
that then shared in the earnings of the company. At March 31,
2000 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 2,655,761 and
2,670,425 for the three months ended March 31, 2000 and 1999,
respectively.
Statements of Cash Flows - For purposes of reporting cash
flows, cash and cash equivalents includes cash and due from banks
and interest bearing deposits in other banks.
Comprehensive Income - Components of comprehensive income
are revenues, expenses, gains, and losses that under GAAP are
included in comprehensive income but excluded from net income.
The components of comprehensive income are disclosed in the
Statements of Changes in Stockholders Equity for all periods
presented.
<PAGE> 11
One American Corp. and Subsidiaries
Management's Discussion and Analysis of Financial
Condition and Results of Operations
March 31, 2000
The purpose of this discussion and analysis is to focus on
significant changes in the financial condition of the Company and
its results of operations during the three-month periods ending
March 31, 2000 and 1999. This discussion and analysis is
intended to highlight and supplement information contained
elsewhere in this Quarterly Report on Form 10-Q, particularly the
preceding Consolidated Financial Statements and Notes to
Consolidated Financial Statements. This should be read in
conjunction with the Consolidated Financial Statements, Notes to
Consolidated Financial Statements and Management's Discussion and
Analysis of Financial Condition and Results of Operations in the
1999 Annual Report on Form 10-K.
This quarterly report on Form 10-Q includes statements that
may constitute forward-looking statements, usually containing the
words "believe", "estimate", "expect", "intend", or similar
expressions. These statements are made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act
of 1995. Forward-looking statements inherently involve risks and
uncertainties that could cause actual results to differ
materially from those reflected in the forward-looking
statements. Factors that could cause future results to vary from
current expectations include, but are not limited to, the
following: changes in economic conditions (both generally and
more specifically in the markets in which the Company operates):
changes in interest rates, deposit flows, and loan demand,
changes in real estate values, changes in competition; changes in
accounting principles, policies, or guidelines, and changes in
government legislation and regulation (which change from time to
time and over which the Company has no control), and other risks
detailed in this quarterly report on Form 10-Q and the Company's
other Securities and Exchange Commission filings. Readers are
cautioned not to place undue reliance on these forward-looking
statements, which reflect management's analysis only as of the
date hereof. The Company undertakes no obligation to publicly
revise these forward-looking statements to reflect events or
circumstances that arise after the date hereof.
First Quarter in Review
For the first quarter of 2000, net income was $1.4 million
compared to $1.1 million for the same quarter of 1999. Increases
in net interest income and other non-interest income of $294
thousand and $433 thousand respectively were offset by a $257
thousand increase in non-interest expenses. Earnings per common
share were $0.54 and $0.41 for the first quarters of 2000 and
1999, respectively. Return on average assets on an annualized
basis was 1.64% for the current quarter, and 1.31% for the same
quarter of 1999. Cash dividends were $.185 per share for the
current quarter and $.180 per share for the same quarter of 1999.
Net interest income on a fully tax equivalent basis (FTE)
for the current quarter was $3.9 million, $286 thousand greater
than that of the first quarter of 1999. The net interest margin
(FTE) was 4.75% for the current quarter and 4.77% for the same
quarter of 1999.
During the first quarter of 2000, in comparison with the
<PAGE> 12
same quarter of 1999, average loans outstanding increased $36.0
million or 19.7% to $219.0 million. Average total deposits for
the current quarter increased $19.7 million or 6.8% to $310.1
million when compared to the average total deposits for the same
quarter of 1999. Average total assets for the current quarter
increased $22.7 million or 6.9% to $352.9 million when compared
to the total average assets of the first quarter of 1999.
Earnings Analysis
Net Interest Income - The primary source of earnings for the
Bank is net interest income; the difference between interest and
fees generated from interest-earning assets less interest expense
for interest-bearing liabilities. For analytical purposes, net
interest income is presented on a tax equivalent basis, using a
34% tax rate. Certain earning assets are exempt from income
taxes, therefore a tax equivalent adjustment is included so that
tax exempt earning assets are tax equivalent and comparable with
other taxable earning assets. The primary factors that affect
net interest income are changes in volume and mix of earning
assets and interest-bearing liabilities, along with changes in
market rates.
Net interest income (FTE) for the current quarter of 2000
was $3.9 million, 8.0% greater than the same quarter of 1999.
The improvement in net interest income can be primarily
attributed to the change in volume of loans that provided an
increase of $782 thousand in interest income when comparing the
first quarter of 2000 to the first quarter of 1999.
Earning Assets, Interest-Bearing Liabilities, and Net
Interest Spread - During the current quarter of 2000, average
earning assets were $326.0 million, an increase of $22.4 million
or 7.4% over the first quarter of 1999. The trend in earning
assets over the quarters compared continues to show a shift in
the mix of earning assets toward the loan portfolio from the
securities portfolio as shown in the table Earning Asset
Structure. Management's strategy continues to increase the level
of earning assets as well as to alter their mix by including a
greater percentage of higher yielding loans over lower yielding
securities. The Bank's primary market area currently enjoys a
strong economic climate that provides good lending opportunities.
For the quarter ended March 31, 2000 the loan portfolio grew $8.0
million or 3.8%. During the first quarter of 1999, the loan
portfolio grew $4.0 million or 2.2%. However, there is no
guarantee that either similar levels of growth or the current
strong economic climate will continue into the future.
The trend over the quarters compared shows an increase in
interest bearing liabilities with the largest growth in
certificates of deposit and money market accounts. The Bank also
benefited from an increase in volume of non-interest bearing
deposits, even though its relationship as a percentage of total
deposits decreased slightly. The Bank continually strives to
attract a broad core deposit base consisting of individual and
commercial customers.
For the current quarter of 2000, the average yield on
earning assets was 7.85% while the average cost of interest
bearing liabilities was 4.00%, producing a net interest spread
(FTE) of 3.85%. The net interest margin (FTE) was 4.75% for the
current quarter of 2000. In comparison, the net interest margin
(FTE) for the same quarter of 1999 was 4.77%. The cost of
interest-bearing liabilities during the first quarter of 1999 was
3.67%, while the yield on average earning assets was 7.61%,
producing a net interest spread of 3.94%.
<PAGE> 13
The table of Average Balance Sheets and Interest Rate
Analysis for the quarterly periods ended March 31, 2000, December
31, 1999, and March 31, 1999 and the corresponding table of
Interest Differentials detail the effects that changes in the
average balances outstanding of assets and liabilities and the
changes in interest yield and interest costs have had on net
interest income for the respective periods. Also, the tables of
Earning Asset Structure and Deposit Structure show a more
condensed, descriptive analysis of the common size percentage
changes in earning assets and deposit mix over the quarterly
periods analyzed.
<TABLE>
<CAPTION>
Average Earning Asset Structure First Fourth First
In thousands Quarter 2000 Quarter 1999 Quarter 1999
% of % of % of
Average Earning Average Earning Average Earning
Balances Assets Balances Assets Balances Assets
<S> <C> <C> <C> <C> <C> <C>
Interest Bearing Deposits $2,898 0.89% $3,418 1.08% $9,922 3.27%
Federal Funds Sold 11,092 3.40% 10,582 3.34% 12,859 4.24%
Securities
Taxable 83,677 25.56% 82,189 25.93% 88,046 29.00%
Non-Taxable 9,327 2.86% 9,747 3.07% 9,731 3.20%
Loans - Net 219,049 67.18% 211,048 66.58% 183,078 60.30%
Total Average Earning Assets $326,043 100.00% $316,984 100.00% $303,636 100.00%
<CAPTION>
Average Deposit Structure First Fourth First
In thousands Quarter 2000 Quarter 1999 Quarter 1999
Average % of Average % of Average % of
Balances Deposits Balances Deposits Balances Deposits
<S> <C> <C> <C> <C> <C> <C>
Noninterest Bearing Deposits $58,817 18.97% $58,977 19.37% $57,450 19.78%
NOW Accounts 22,912 7.39% 21,993 7.26% 26,566 9.15%
Savings Accounts 32,193 10.38% 31,996 10.56% 31,979 11.01%
Money Market Deposit Accounts 69,544 22.42% 67,185 22.18% 61,648 21.22%
Certificates of Deposits less than $100,000 114,359 36.82% 111,140 36.69% 100,975 34.76%
Total Average Core Deposits 297,825 95.98% 291,291 96.17% 278,618 95.92%
Certificates of Deposits greater than $100,000 12,307 3.97% 11,600 3.83% 11,854 4.08%
Total Average Deposits $310,132 100.00% $302,891 100.00% $290,472 100.00%
Average Interest Bearing Deposits
as a percentage of Average Earning Assets 77.1% 76.9% 76.7%
Average Core Deposits
as a percentage of Total Average Assets 84.4% 84.3% 84.4%
</TABLE>
<PAGE> 14
Provision for Loan Losses
Provision for Loan Losses was $150 thousand and $225
thousand for the first quarters of 2000 and 1999, respectively.
See the discussion of "Allowance for Loan Losses".
Other Income
Other income for the current quarter was $1.3 million, an
increase of $433 thousand or 51.7% compared to $838 thousand for
the same quarter of 1999. The primary cause for this increase
was gain on purchased assets, which grew $304 thousand when
compared to the first three months of 1999.
Gain on purchased assets was $366 thousand for the current
quarter and $62 thousand for the same period of 1999. These
gains are recognition of the collection of principal on certain
loans acquired as a result of past bank acquisitions. There was
a greater than normal payment activity on such loans in the
quarter ended March 31, 2000. The Bank continues to pursue the
collection of these loans. However, the amount of future gains,
if any, are indeterminable.
Contributing to the increase in other operating income for
the quarter were the results from the Agency. First American
Agency earned $113 thousand for the three months ended March 31,
2000, an increase of $68 thousand from the $45 thousand earned
for the three months ended March 31, 1999.
Other Expenses
Other expenses were $2.8 million for the first quarter of
2000, an increase of $257 thousand or 10.3% over the same quarter
of 1999. Salaries and employee benefits were $1.4 million for
the current quarter compared to $1.3 million for the same of
quarter of 1999. Net occupancy expense was $394 thousand for the
current quarter, compared to $326 thousand for the first quarter
of 1999. Other operating expenses were $971 thousand for the
current quarter, an increase of $73 thousand or 8.1% compared to
the same quarter of 1999.
<PAGE> 15
Applicable Income Taxes
Applicable income taxes for the current quarter were $703
thousand compared to $523 thousand for the first quarter of 1999.
Effective tax rates were 32.7% for the first quarter of 2000 and
32.6% for the quarter ended March 31, 1999. The Company's
effective income tax expense as a percentage of pretax income is
different from statutory rates due to tax-exempt interest income
earned from investments in state and municipal bonds. Interest
income from state and municipal bonds is generally exempt from
federal income taxes.
Liquidity
Liquidity management is the process of ensuring that the
Company's asset and liabilities are properly structured to meet
the withdrawals of its depositors, fund loan commitments, and
satisfy other funding requirements. The Company's primary source
of funds is the Bank's core deposit base. During the quarter,
average core deposits were approximately $297.8 million or 96.0%
of total average deposits and 84.4% of total average assets. For
a comparison with prior period quarters see the table entitled
Deposit Structure. Other sources of liquidity are maturities in
the investment portfolio, loan maturities and repayments, and
sources of short-term borrowings. Management continually
evaluates the maturities and mix of its earning assets and
interest-bearing liabilities to monitor its ability to meet
current and future obligations and to achieve maximum net
interest income. Due to the stability of the core deposit base
as noted above, the maturities of the investment portfolio, cash
flows from the loan portfolio, and the ability of short-term
borrowings, management does not anticipate any difficulties in
meeting the needs of its depositors and in funding future loan
commitments.
Interest Rate Sensitivity
Interest rate risk is the measurement of risk exposure or
changes in net interest income and subsequently net income given
changes in the external interest rate markets. This possible
risk exposure is produced by the different repricing intervals of
interest-earning assets and interest-bearing liabilities, 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
<PAGE> 16
income. Based on the results of a dynamic income simulation at
March 31, 2000; the Bank would expect a decrease in net interest
income of $77 thousand in the event of a gradual 200 basis point
increase in interest rates, and a decrease of $21 thousand 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.
The Interest Rate Sensitivity Table, on page 18 presents the
Bank's interest rate sensitivity position at March 31, 2000,
using gap analysis, based on the expected maturity intervals of
interest rate sensitive assets and liabilities. The table
indicates that the Company's interest-earning assets exceed its
interest-bearing liabilities at the one year point in time
suggesting the Bank is positively 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>
Interest Rate Sensitivity Table
March 31, 2000
In thousands
Expected Maturity, Years Ended:
Non- Fair
3/31/01 3/31/02 3/31/03 3/31/04 3/31/05 Thereafter Sensitive Total Value
Interest-Bearing Deposits in
Assets
Investments -
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Fixed-Rate Securities $41,088 $26,486 $9,134 $4,176 $3,072 $5,358 $0 $89,314 $89,314
Average Interest Rates 5.69% 5.86% 6.11% 6.49% 6.49% 5.57% 0.00% 5.84%
Variable-Rate Securities 2,770 470 291 157 133 681 0 4,502 4,502
Average Interest Rates 5.84% 6.60% 6.64% 6.72% 6.72% 6.72% 0.00% 6.16%
Total Investments 43,858 26,956 9,425 4,333 3,205 6,039 0 93,816 93,816
Average Interest Rates 5.70% 5.87% 6.13% 6.49% 6.50% 5.70% 0.00% 5.86%
Loans -
Fixed-Rate Loans, Net 102,830 37,936 21,528 13,187 8,439 8,211 997 193,128 191,366
Average Interest Rates 8.60% 8.46% 8.34% 8.24% 8.15% 7.72% 0.00% 8.42%
Variable-Rate Loans, Net 16,684 4,039 2,257 1,299 644 2,545 0 27,468 27,164
Average Interest Rates 8.21% 8.72% 8.94% 8.95% 8.90% 9.06% 0.00% 8.47%
Total Loans 119,515 41,975 23,785 14,486 9,083 10,756 997 220,596 218,530
Average Interest Rates 8.54% 8.49% 8.40% 8.30% 8.20% 8.03% 0.00% 8.42%
Interest Bearing Deposits in
Other Banks 1,546 0 0 0 0 0 0 1,546 1,546
Average Interest Rates 5.10% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 5.10%
Federal Funds Sold 11,325 0 0 0 0 0 0 11,325 11,325
Average Interest Rates 4.93% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 4.93%
Other Assets 31,687 31,687
Total Assets $176,243 $68,931 $33,210 $18,819 $12,288 $16,795 $32,684 $358,970
Liabilities
NOW and Super NOW Deposits $2,719 $5,707 $5,707 $2,354 $2,354 $4,707 $0 $23,548 $21,247
Average Interest Rates 2.11% 2.11% 2.11% 2.11% 2.11% 2.11% 0.00% 2.11%
Insured Money Market Accounts 33,588 17,947 17,947 0 0 0 0 69,482 67,509
Average Interest Rates 3.61% 3.61% 3.61% 0.00% 0.00% 0.00% 0.00% 3.61%
Savings Deposits 3,364 8,197 8,197 3,286 3,286 6,572 0 32,902 30,402
Average Interest Rates 2.54% 2.54% 2.54% 2.54% 2.54% 2.54% 0.00% 2.54%
Variable-Rate Certificates of Deposit 934 2,275 2,275 912 912 1,824 0 9,132 8,730
Average Interest Rates 4.46% 4.46% 4.46% 4.46% 4.46% 4.46% 0.00% 4.46%
Certificates of Deposits 109,249 9,141 1,401 1,522 27 0 0 121,340 120,363
Average Interest Rates 4.65% 4.85% 5.62% 5.66% 4.79% 0.00% 0.00% 4.68%
Non Interest Bearing Deposits 22,096 13,856 8,691 5,455 3,427 5,991 0 59,516 59,516
Other Interest Bearing Liabilities 181 191 203 216 229 351 0 1,371 1,342
Average Interest Rates 5.88% 5.88% 5.88% 5.88% 5.88% 5.88% 0.00% 5.88%
Other Liabilities 0 0 0 0 0 0 2,222 2,222
Stockholders' Equity 0 0 0 0 0 0 39,457 39,457
Total Liabilities and
Stockholders' Equity $172,131 $57,314 $44,421 $13,745 $10,235 $19,445 $41,679 $358,970
Interest Rate Sensitivity Gap $4,112 $11,617 ($11,211) $5,074 $2,053 ($2,650) ($8,995) $0
Cumulative Interest Rate
Sensitivity Gap $4,112 $15,729 $4,518 $9,592 $11,645 $8,995 $0
GAP / Assets 1.15% 3.24% -3.12% 1.41% 0.57% -0.74% -2.51%
Cumulative GAP / Assets 1.15% 4.38% 1.26% 2.67% 3.24% 2.51% 0.00%
</TABLE>
<PAGE> 18
Financial Instruments
In the normal course of business the Company enters into
agreements which, for accounting purposes, are considered off-
balance sheet activities. These agreements are loans and lines
of credit commitments to customers to extend credit at specified
rates, duration, and purpose. The commitments adhere to normal
lending policy, collateral requirements, and credit reviews.
Available loan commitments at March 31, 2000 and 1999, were $23.2
million and $17.8 million, respectively. The Bank had letters of
credit of $458 thousand issued at March 31, 2000 compared to $570
thousand at March 31, 1999. Additionally, the Bank has deposit
customers who have credit lines available to them through their
deposit accounts. At March 31, 2000 the available portion of
these credit lines was $279 thousand compared to $377 thousand at
March 31, 1999. 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
also issues credit cards. The aggregate credit available was
$5.5 million at March 31, 2000 and $4.8 million at March 31,
1999. Applicants are reviewed through normal lending policies
and credit reviews.
The Bank is not a party to financial instruments defined as
interest rate exchange agreements, financial futures, or
financial options. Therefore, the Bank is not exposed to
interest rate risk in excess of the amount recognized in the
consolidated balance sheets as that risk may apply to interest
rate exchange agreements, financial futures, or financial
options.
Allowance for Loan Losses
The Allowance for Loan Losses was $3.9 million at March 31,
2000, or 1.7%, of loans outstanding. At March 31, 1999 the
Allowance for Loan Losses was $3.3 million, or 1.8%, of loans
outstanding. Net charge-offs (recoveries) were $455 thousand for
the current quarter, versus $430 thousand for the same quarter of
1999. Gross charge-offs as a percentage of average loans were
.22% and .24% in the first quarters of 2000 and 1999,
respectively. Recoveries as a percentage of gross charge-offs
for the current quarter were 4.2% versus 3.1% for the same
quarter of 1999.
The Allowance for Loan Losses account represents amounts
available for possible future losses based on modeling and
management's evaluation of the loan portfolio. To ascertain the
potential losses in the portfolio, management reviews past due
loans on a monthly basis. Additionally, the loan review
department performs an ongoing review of the loan portfolio.
Loans are reviewed for compliance to the Bank's lending policy
and the borrower's current financial condition and ability to
meet scheduled repayment terms.
The Bank maintains the balance in the Allowance for Loan
Losses in order to accept any adverse loan relationships that
have the potential to occur in the future. Impaired loans are
individually evaluated and specific portions of the allowance are
allocated to each loan, based on collateral values and the
present value of estimated cash flows. The remainder of the
allowance is unallocated and is tested for adequacy by comparing
its level to the sum of: a percentage of the balances of loans
<PAGE> 19
graded substandard plus the sum of the non-impaired, non-
substandard remainder of the loan portfolio multiplied by a model-
generated "potential default" factor. The model analyzes various
classes of loans by industry to determine the inherent default
risk in each class. These risks are then quantified into
potential default factors, which are applied to each class of
loans in the Bank's portfolio. As the process applies the total
"potential default'' factor to the non classified portion of the
loan portfolio, it accounts for additional reserves necessary
because of loan growth.
Also in determining the level of Allowance for Loan Losses,
management considers the uncertainty in estimating loan losses,
including the possibility of improper risk ratings and specific
reserve allocations, as well as the uncertainty in predicting the
future performance of the economy in the Bank's market area. As
the Bank's ratio of loans to deposits continues to increase, so
will the potential for problem loans increase at a rate uncommon
to the Bank's historical loan loss experience given the smaller
loan to deposit ratios of the past.
Non-performing Assets
Non-performing assets include non-accrual loans, impaired
loans, repossessions and other real estate. Generally, loans are
considered non-accrual when the interest becomes 90 days past due
or when there is uncertainty about the repayment of principal and
interest in accordance with the terms of the loans. Loans past
due 90 days and still accruing at March 31, 2000 and 1999 were
$194 thousand and $33 thousand, respectively. Impaired loans
having recorded investments of $5.2 million at March 31, 2000
compared to $2.8 million at March 31, 1999 have been recognized
in conformity with SFAS No. 114 as amended by SFAS No. 118. The
total Allowance for Loan Losses related to these loans was $1.1
million at March 31, 2000 compared to $1.0 million at March 31,
1999. Interest received on impaired loans amounted to $119
thousand at March 31, 2000 compared to $77 thousand at March 31,
1999. Non-accrual loans not included in impaired loans were
immaterial at March 31, 2000 and 1999.
Other real estate is properties held for sale acquired
through foreclosure or negotiated settlement of debt. Other real
estate was $19 thousand at March 31, 2000 and $249 thousand at
the close of the first quarter of 1999. Repossessions are
movable assets acquired through foreclosure or negotiated
settlement of debt. Repossessions at March 31, 2000 were
insignificant.
In the process of reviewing the loan portfolio, management
acknowledges certain potential problem loans that 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.
<PAGE> 20
Regulatory Matters
The Bank is subject to various capital requirements
administered by the Federal Banking Agencies. Failure to meet
minimum capital requirements can initiate certain mandatory and
possibly discretionary actions by regulators that, if undertaken,
could have a material effect on the Bank's financial statements.
Various regulations require the Bank to meet specific capital
adequacy guidelines that involve quantitative measures of the
Bank's assets, liabilities, and certain off-balance sheet items
as calculated under regulatory accounting practices. The Bank's
capital classification is also subject to qualitative judgments
by the regulators about components, risk weightings, and other
factors. Quantitative measures established by regulation to
ensure capital adequacy require the Bank to maintain minimum
amounts and ratios as set forth in the section entitled Capital
Adequacy below.
Management is unaware, regulatory or otherwise, of any known
trends, events or uncertainties which are reasonably likely to
have or will have a material effect on the Company's liquidity,
capital resources, or results of operations.
Capital Adequacy
The strength of a company is in its capital, earnings
history, asset quality, and management. Capital can be increased
through the retention of earnings and the issuance of equity
stock. Management feels the current trend of earnings and
dividend distribution is sufficient to maintain its capital
adequacy requirements.
The Bank is required to maintain minimum amounts of capital
to total risk-weighted assets, as defined by the regulators. The
guidelines require total capital of 8.00%, half of which must be
Tier 1 capital. The computation of risk-weighted ratios follow
the transitional rule, which currently does not include the
unrealized gain (loss) on securities available for sale in Tier 1
capital.
The leverage ratio consists of Tier 1 capital as a
percentage of average total assets. The minimum leverage ratio
for all banks and bank holding companies is 3.00%. This minimum
ratio is dependent upon the strength of the individual bank or
holding company and may be increased by regulatory authorities on
an individual basis. The 3.00% minimum was established to make
certain that all banks have a minimum capital level to support
their assets, regardless of risk profile. As shown in the table
Capital Adequacy Ratios below, the Company's ratios for the
reporting periods exceed regulatory minimums.
<PAGE> 21
<TABLE>
<CAPTION>
Capital Adequacy Ratios
In Thousands March 31, December 31, March 31,
2000 1999 1999
Tier 1 Capital:
<S> <C> <C> <C>
Stockholders' Equity $39,541 $38,957 $36,988
Tier 2 Capital:
Allowance for Loan Losses 2,679 2,505 2,211
Total Capital $42,220 $41,462 $39,199
Risk-Weighted Ratios:
Tier 1 Capital 18.6% 19.6% 21.0%
Total Capital 19.8% 20.9% 22.3%
Leverage Ratio 11.2% 11.3% 11.2%
Stockholders' Equity 11.0% 11.3% 11.0%
<CAPTION>
Regulatory Risk-Based Capitalization Requirements
SignificantlyCritically
Well Adequately Under Under Under
CapitalizedCapitalizedCapitalized Capitalized Capitalized
Risk-Weighted Ratios:
Tier 1 Capital 6.0% 4.0% < 4.0% < 3.0%
Total Capital 10.0% 8.0% < 8.0% < 6.0%
Leverage Ratio 5.0% 4.0% < 4.0% < 3.0% <= 2.0% Tangible
Equity
</TABLE>
The Company's dividend policy is determined by its Board of
Directors. The current policy is to maintain dividends at a
level which ensures that the Company is able to maintain
sufficient regulatory capital levels. The Company's primary
source of funds is the dividends received from the Bank. Under
current dividend limitations, the Bank could pay, without
regulatory approval, dividends of approximately $4.1 million.
The Company carries no debt, therefore future liquidity needs are
limited to the payment of any declared dividends. Should a
regulatory agency limit the Bank from paying dividends, the
Company maintains sufficient liquidity to maintain its
operations.
The Year 2000
The Bank formed a Year 2000 committee to identify and
provide for potential costs and uncertainties related to the Year
2000 date change. "Mission-critical" systems as well as business-
resumption contingency plans were implemented and tested. The
Year 2000 threshold was crossed with no problems encountered to
date that effected significantly the Company's liquidity, capital
resources, or results of operation. The Bank will remain
vigilant for the remainder of the year 2000 for any undiscovered
date-change problems
The discussion entitled "Year 2000" includes certain
"forward-looking statements" within the meaning of the Private
Securities Litigation Relief 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
<PAGE> 22
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>
<CAPTION>
AVERAGE BALANCE SHEETS AND INTEREST RATE ANALYSIS
In thousands
First Quarter 2000 Fourth Quarter 1999 First Quarter 1999
AVERAGE INCOME/ YIELD/ AVERAGE INCOME/ YIELD/ AVERAGE INCOME/ YIELD/
BALANCE EXPENSE RATE BALANCE EXPENSE RATE BALANCE EXPENSE RATE
Assets
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Interest Bearing Deposit Accounts $2,898 $48 6.64% $3,418 $44 5.22% $9,922 $122 5.00%
Federal Funds Sold and Securities
Purchased under Resale Agreements 11,092 151 5.48% 10,582 137 5.25% 12,859 144 4.53%
Securities:
Taxable 83,677 1,196 5.75% 82,189 1,133 5.59% 88,046 1,242 5.72%
Non-Taxable* 9,327 185 7.96% 9,747 195 8.13% 9,731 209 8.71%
Loans - Net 219,049 4,786 8.79% 211,048 4,629 8.90% 183,078 3,975 8.81%
Total Earning Assets 326,043 6,366 7.85% 316,984 6,138 7.85% 303,636 5,692 7.61%
Allowance for Loan Losses (4,153) (3,967) (3,595)
Nonearning Assets 31,056 32,493 30,205
Total Assets $352,946 $345,510 $330,246
Liabilities and Stockholders' Equity
NOW Accounts $22,912 $117 2.06% $21,993 $110 2.03% $26,566 $137 2.09%
Savings Accounts 32,193 203 2.53% 31,996 204 2.59% 31,979 198 2.51%
Money Market Deposit Accounts 69,544 657 3.80% 67,185 592 3.57% 61,648 477 3.13%
Certificates of Deposits less than $100,000 114,359 1,369 4.81% 111,140 1,285 4.69% 100,975 1,129 4.53%
Certificates of Deposits greater than $100,000 12,307 146 4.78% 11,600 132 4.61% 11,854 168 5.75%
Total Interest Bearing Deposits 251,315 2,492 3.99% 243,914 2,323 3.86% 233,022 2,109 3.67%
Other Borrowings 1,392 21 6.03% 1,441 22 6.19% 1,005 16 6.34%
Total Interest Bearing Liabilities 252,707 2,513 4.00% 245,355 2,345 3.88% 234,027 2,125 3.67%
Noninterest Bearing Deposits 58,817 58,977 57,450
Other Liabilities 1,454 1,700 1,290
Stockholders' Equity 39,968 39,478 37,479
Total Liabilities and Stockholders' Equity $352,946 $345,510 $330,246
Net Interest Income - Tax Equivalent Basis* $3,853 $3,793 $3,567
Tax Equivalent Adjustment (63) (66) (71)
Net Interest Income $3,790 $3,727 $3,496
Net Interest Income - Spread* 3.85% 3.98% 3.94%
Net Interest Income as a % of Total Earning Assets* 4.75% 4.85% 4.77%
*Tax Equivalent Basis - 34% Rate for the periods dated
</TABLE>
<PAGE> 24
<TABLE>
<CAPTION>
INTEREST DIFFERENTIALS
In thousands
First Quarter 2000 First Quarter 2000
vs vs
Fourth Quarter 1999 First Quarter 1999
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 ($7) $11 $4 ($87) $13 ($74)
Federal Funds Sold 7 7 14 (20) 27 7
Securities:
Taxable 20 43 63 (62) 16 (46)
Non-Taxable* (9) (2) (11) (8) (16) (24)
Loans 176 (18) 158 782 30 812
Total Interest Income $187 $41 $228 $606 $70 $675
Interest Bearing Liabilities:
NOW Accounts $4 $3 $7 ($19) ($1) ($20)
Savings Accounts 1 (2) (1) 1 4 5
Money Market Deposit Accounts 21 45 66 61 120 181
Certificates of Deposits less than $100,000 37 47 84 150 90 240
Certificates of Deposits greater than $100,000 8 6 14 6 (28) (22)
Other Borrowings (1) 0 (1) 6 (1) 5
Total Interest Expense 70 99 169 205 184 389
Increase (Decrease) in
Interest Differential $117 ($58) $59 $401 ($115) $286
*Tax Equivalent Basis - 34% Rate for the periods dated
</TABLE>
<PAGE> 25
Part II
Item 1. Legal Proceedings
During the normal course of business, the Company is
involved in various legal proceedings. In the opinion of
management and counsel, any liability resulting from such
proceedings would not have a material adverse effect on the
Company's financial statements.
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(b) Reports on Form 8-K
None
<PAGE> 26
Management's Responsibility for Financial Reporting
The management of One American Corp. and Subsidiaries is
responsible for the preparation of the financial statements,
related financial data, and other information in this quarterly
report. The financial statements are prepared in accordance with
generally accepted accounting principles and include some amounts
that are necessarily based on management's informed estimates and
judgments, with consideration given to materiality. All
financial information contained in this quarterly report is
consistent with that in the financial statements.
Management fulfills its responsibility for the integrity,
objectivity, consistency, and fair presentation of the financial
statements and financial information through an accounting system
and related internal accounting controls that are designed to
provide reasonable assurance that assets are safeguarded and
transactions are authorized and recorded in accordance with
established policies and procedures. The concept of reasonable
assurance is based on the recognition that the cost of a system
of internal accounting controls should not exceed the related
benefits. As an integral part of the system of internal
accounting controls, One American Corp. and Subsidiaries has a
professional staff who monitors compliance with and assesses the
effectiveness of the system of internal accounting controls and
coordinates audit coverage with the independent public
accountant.
The Audit Committee of the Board of Directors, composed
solely of outside directors, meets periodically with management,
and the independent public accountant to review matters relating
to financial reporting, internal accounting control and the
nature, extent and results of the audit effort. The independent
public accountant has direct access to the Audit Committee with
or without the presence of management.
The financial statements as of December 31, 1999 were
examined by Hannis T. Bourgeois, L L P, independent public
accountants, who rendered an independent professional opinion.
The financial statements as of March 31, 2000 were reviewed by
Hannis T. Bourgeois, L L P.
<PAGE> 27
Independent Accountant's Report
April 27, 2000
To the Shareholders and Board of Directors
One American Corp. and Subsidiaries
Vacherie, Louisiana
We have reviewed the accompanying Consolidated Balance
Sheets of One American Corp. and Subsidiaries as of March 31,
2000 and 1999, and the related Consolidated Statements of Income
and Cash Flows for the three month periods then ended.
We previously audited and expressed our unqualified opinion
in our report dated January 14, 2000 on the Consolidated Balance
Sheet of One American Corp. and Subsidiaries as of December 31,
1999.
We conducted our reviews in accordance with standards
established by the American Institute of Certified Public
Accountants. A review of interim financial information consists
principally of obtaining an understanding of the system for the
preparation of interim financial information, applying analytical
review procedures to financial data, and making inquiries of
persons responsible for financial and accounting matters. It is
substantially less in scope than an examination in accordance
with generally accepted auditing standards, the objective of
which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such
an opinion.
Based on our reviews, we are not aware of any material
modifications that should be made to the accompanying
consolidated financial statements for them to be in conformity
with generally accepted accounting principles.
Respectfully submitted,
/s/ Hannis T. Bourgeois, LLP
HANNIS T. BOURGEOIS, LLP
Baton Rouge, Louisiana
<PAGE> 28
Signatures
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
One American Corp.
By: /s/ Frank J. Bourgeois
Frank J. Bourgeois, President
May 12, 2000
Date
<PAGE> 29
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