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 Commission File
Number 2-84047
Peoples Bancshares of Pointe Coupee Parish, Inc.
(Exact name of registrant as specified in its charter)
Louisiana 72-0995027
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
805 Hospital Road 70760
New Roads, Louisiana (Zip Code)
(Address of principal executive offices)
Registrant's Telephone Number, including area code: (225) 638-3713
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 12 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
State the aggregate market value of the voting stock held by nonaffiliates
of the registrant:
$6,915,639
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, 308,577 shares outstanding as of March 31,
1999.
Documents Incorporated by Reference
Document Part of Form 10-K
"Consolidated Financial Statements for Part I and Part II
Years Ended December 31, 1998, 1997 and
1996 and Independent Auditors' Report"
Item 1: Business
Peoples Bancshares of Pointe Coupee Parish, Inc. (the Corporation) was
incorporated under the laws of the State of Louisiana in 1983. On December 9,
1983, Peoples Bank and Trust Company (the Bank) was reorganized as a subsidiary
of the Corporation. Prior to December 9, 1983, the corporation had no
activity. The Corporation is currently engaged, through its subsidiary, in
banking and related business. The Bank is the Corporation's principal asset
and primary source of income.
The Bank
The Bank incorporated under the State Banking Laws in 1979 and received
its charter on March 31, 1980. It is in the business of gathering funds by
accepting checking, savings, and other time-deposit accounts and reemploying
these by making loans and investing in securities and other interest
bearing assets. The Bank is a full service commercial bank. Some of the
major services which it provides include checking, NOW accounts, money
market investments, money market checking, savings and other time deposits
of various types, loans for business, agriculture, real estate,
personal use, home improvement, automobile, and a variety of other types of
loans and services including letters of credit, safe deposit rental, bank
money orders, cashiers checks, credit cards, and wire transfers.
The State of Louisiana and various agencies of Parish (County) Government
deposits public funds with the Bank. As of December 31, 1998, $1,767,884
were on deposit representing 5.32% of total deposits outstanding. Of this
total, $1,670,211 represented demand deposits and $97,673 were time deposits.
The weighted average interest rate on these deposits was 4.43%. The
maturity of these deposits range from fifteen days to twelve months.
The Bank's general and primary market area is in Pointe Coupee Parish
which has apopulation of approximately 25,000. Population of Pointe Coupee
has experienced little growth since inception of the bank.
The Bank faces keen competition from three other banks operating in nine
locations throughout the parish. At present time, Peoples Bank has
approximately the same asset base as Guaranty Bank. The largest bank in the
parish as of December 31, 1998 was Regions Bank of Alabama, New Roads Branch,
which had in excess of $30 billion in assets nationwide. Regions Bank of
Alabama acquired the former Bank of New Roads in August of 1994, and it
operated as a separate bank until the summer of 1995, at which time it was
merged into the Regions Bank of Louisiana system. Regions Bank of Louisiana
was merged into Regions Bank of Alabama during 1998. The other banks
operating in Pointe Coupee are Guaranty Bank and Trust Company which had
total assets of approximately $41 million as of December 31, 1998 and
Cottonport Bank, which opened a branch in 1998 with assets of approximately
$135 million on December 31, 1998. Additional competition for deposits and
loans comes from banks and non-banks (credit unions, brokerage houses, etc.)
in Baton Rouge, the capital city of Louisiana, which is 35 miles from New
Roads.
Supervision and Regulation
The Bank is subject to regulation and regular examinations by the State
Banking Department and by the Federal Deposit Insurance Corporation.
Applicable regulations relate to reserves, investments, loans, issuance of
securities, establishment of branches and aspects of its operations.
The Corporation is a bank holding company within the meaning of the Bank
Holding Company Act of 1956, as amended (the Act), and is thereby 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 Corporation to file with the Board an annual report
containing such information as the Board may require. The Board is
authorized by the Act to examine the Corporation and all its activities.
The activities that may be engaged in by the Corporation and its subsidiary
are limited by the Act to those so closely related 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 greater convenience, increased competition
or gains in efficiency that out-weigh possible adverse effects, such as
undue concentration of resources, decreased or 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 trust or a
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 insurance agent or broker with respect to certain kinds of
insurance, 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 transactions; (12) providing management consulting advice to
non-affiliated banks; and (13) selling money orders, travelers checks and
U.S. Savings Bonds. In each case, the Corporation 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 judgement
the activity or subsidiaries would be unsound.
Under the Act the Board's regulations, a bank holding company and its
subsidiaries are prohibited from engaging in certain tie-in arrangements in
connection with any extension of credit or provision of any property or
services.
The Board of Directors of the Corporation has no present plans or
intentions to cause the Corporation to engage in any substantial business
activity which would be permitted under the Louisiana Act but which is not
permitted to the Bank; however, a significant reason for formation of the
one-bank holding company is to take advantage of the additional flexibility
afforded by that structure if the Board of Directors of the Corporation
concludes that such action would be in the best interest of stockholders.
With certain exceptions, the Bank is restricted by Sections 22 and 23A
of the Federal Reserve Act and Section 18(j) of the Federal Deposit
Insurance Corporation Act from extending credit or making loans to or
investments in the Corporation.
Statistical Information
The following tables contain additional information concerning the
business and operations of the Registrant and its subsidiary and should be
read in conjunction with the Consolidated Financial Statements of the
Registrant and Management's Discussion and Analysis of Operations.
I. Distribution of Assets, Liabilities and Stockholders' Equity
Interest Rates and Interest Differential
<TABLE>
(In Thousands)
1998 1997
Amount Amount
Average Earned Yield/ Average Earned Yield/
Balance or Paid Rate Balance or Paid Rate
Assets: ------- ------- ------ ------- ------- ------
Interest earning
assets
<S> <C> <C> <C> <C> <C> <C>
Loans and Leases $30,435 $3,006 9.88% $25,866 $2,672 10.33%
Taxable
securities 5,114 313 6.12% 7,708 480 6.22%
Tax exempt
securities
(tax equivalent
yields) 759 46 9.00% 764 45 8.90%
Federal funds
sold and
time deposits
with other banks 1,892 100 5.29% 3,182 175 5.49%
------- ------- ------ ------- ------- ------
Total interest
earning assets 38,200 3,415 9.07% 37,520 3,372 8.99%
------- ------ ------- ------
Non-interest
earnings assets:
Cash and due
from banks 1,745 1,888
Bank premises
and equipment 670 574
Other assets 777 818
Allowance for
Loan Losses (873) (875)
------- -------
Total assets $40,519 $39,925
======= =======
</TABLE>
<TABLE>
LIABILITIES AND STOCKHOLDERS'EQUITY
Interest bearing
Liabilities:
Deposits
<S> <C> <C> <C> <C> <C> <C>
Savings account $5,930 162 2.73% $5,920 $158 2.67%
NOW accounts 4,508 155 3.44% 4,913 174 3.54%
Money market
investment
accounts 1,025 24 2.34% 1,278 31 2.43%
Other time
deposits 15,291 751 4.91% 16,038 776 4.83%
Federal funds purchased
and securities
sold under
agreements to
repurchase 300 18 6.00% 5 -- 6.00%
Other borrowed
funds 428 22 5.14%
------ ------ ------ ------ ----- -----
Total interest
bearing
Liabilities 27,482 1,132 4.12% 28,154 1,139 4.05%
------ ------ ------- ------
Non-interest
bearing
Liabilities
and stockholders'
equity:
Demand deposits 6,416 5,542
Other Liabilities 350 451
Stockholders'
equity 6,271 5,778
------- -------
Total Liabilities
and stockholders'
equity $40,519 $39,925
======= =======
Net interest
income $2,333 $2,233
======= =======
Margin Analysis
Interest
Income/earnings
assets 9.07% 8.99%
Interest
Expense/earnings
assets 4.12% 4.05%
------ ------
Net interest
income/earnings
assets 4.95% 4.94%
====== =====
</TABLE>
<TABLE>
1998 Compared with 1997 1997 Compared with 1996
Variance due to Variance due to
----------------------------- ---------------------------
Rate/ Rate/
Volume Rate Volume Total Volume Rate Volume Total
------ ------ ------- ------ ------ ------ ------ ------
INTEREST INCOME
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Loan and Leases $472 ($117) ($21) $334 $341 ($137) ($19) $185
Taxable securities (162) (7) 2 (167) (45) 9 (1) (37)
Tax exempt securities
(tax equivalent yield) -- 1 -- 1 4 -- -- 4
Federal funds sold and
time deposits with other
banks (71) (7) 3 (75) (54) 6 (2) (50)
----- ----- ----- ----- ----- ----- ----- ----
Total interest
earning assets 239 (130) (16) 93 246 (122) (22) 102
INTEREST EXPENSE
Savings accounts -- 3 -- 3 14 (2) -- 12
NOW accounts (14) (5) -- (19) (18) (5) 1 (22)
Money market
investment accounts (6) (1) -- (7) 3 (7) (1) (5)
Other time deposit (36) 13 -- (23) 30 8 -- 38
Federal funds purchased
and securities sold
under agreements to
repurchase 17 -- -- 17 (1) -- -- (1)
Other borrowed funds -- -- 22 22
------ ------ ------- ------ ------ ------ ------ ----
Total interest bearing
liabilities (39) 10 22 (7) 28 (6) -- 22
Net interest income $278 ($140) ($38) $100 $218 ($116) ($22) $80
===== ====== ===== ==== ==== ====== ===== ====
</TABLE>
<TABLE>
I. Investment Portfolio
For year ended December 31, 1998
Govt.
U.S. Agency/ Total MKT
Year Treasury Mtg. Munie Bk Value Value
Within
<S> <C> <C> <C> <C> <C>
one year $ - $ - $125,346 $125,346 $125,583
After one
year but
within 5 yrs $ - $2,851,719 $117,008 $2,968,727 $2,973,404
After 5 yrs
but within
10 yrs $799,596 $15,174 $814,770 $836,796
After 10 yrs $616,206 $499,151 $1,115,357 $1,149,259
Total $ - $4,267,521 $756,679 $5,024,200 $5,085,042
Avg.
Yield - 6.279% 5.228%
% of
Portfolio - 84.94% 15.06%
</TABLE>
<TABLE>
III. Loan Portfolio
Major Classification of loans are summarized as follows:
(in thousands)
For year ended Dec. 31, 1998 1997
<S> <C> <C>
Real Estate $4,766 $ 4,675
Commercial 9,673 9,676
Agricultural 7,619 7,475
Individual 6,785 6,054
Other 279 255
------ ------
TOTAL LOANS: 29,122 28,135
Less Unearned Discount - -
------ ------
Net Loans 29,122 28,135
</TABLE>
<TABLE>
Loan Analysis of Principal Subject to Rate Change
December 31, 1998
1 Year Over 1 Year Over 5
or Less Less than 5 Years
1. Commercial, Financial,
Agricultural, Real Estate,
<S> <C> <C> <C>
Consumer and Other $17,696,477 $9,280,149 $2,042,062
Non-Accrual 103,312
Average Rate 8.77% 9.34% 9.17%
</TABLE>
Non-performing Loans and Other Problem Assets
It is managements policy to discontinue accrual of interest on
loans where there is reasonable doubt as to collectibility. The policy to
place loans on non-accrual status is to normally discontinue accrual of
interest when the loan is delinquent 90 days or more, or where circumstances
indicate that collection of principal or interest is doubtful, unless the
obligation is secured (1) by mortgage on real estate or pledge of securities
that have a realizable value sufficient to pay the debt in full; or (2) by
guarantee of a financially responsible party. The following tables presents
the non-performing loans and other problem assets at December 31, 1997 and
1998. Assets acquired through the default of loans are recorded at the
lower of the outstanding loan amount or fair market value of the assets
acquired at the time of foreclosure. Reductions from outstanding loan
amounts to fair market value are charged against the reserve for possible
loan losses. Subsequent adjustments to market valuations are charged to
operating expense.
<TABLE>
1998 1997
<S> <C> <C>
NON-ACCRUAL LOANS $103,312 $301,334
Restructured Loans 89,582 150,296
Other Real Estate 181,925 4
-------- --------
TOTAL NON-ACCRUAL & ORE $374,819 $451,634
======== ========
</TABLE>
<TABLE>
Loans Over 90-days past due and still accruing interest:
1998 1997
<S> <C> <C>
Commercial $ -0- $ 33,307
Agriculture -0- 65,232
Student 7,700 18,177
Installment -0- 105,702
-------- --------
TOTAL OVER 90-DAYS $ 7,700 $222,418
=========== ==========
</TABLE>
The effect of non-accruing loans on interest income for 1998 was $9,467.
The effect of restructured loans on interest income for 1998 was $751.
At December 31, 1998, there were no commitments to lend additional
funds to debtors whose loans were considered to be non-performing.
All loans listed above are subject to constant attention by management
and their progress is reviewed monthly.
At the present time, management does not track loan concentrations by
Particular industries, but rather by the grouping of types of loan, i.e.,
Agriculture, Real Estate, Consumer and Commercial. As we are located in an
Agricultural area, this industry comprises the largest sector, but we
attempt to avoid any undue concentration in any particular sector.
IV. Summary of Loan Loss Experience
<TABLE>
Changes in the allowance for loan losses were as follows:
1998 1997
<S> <C> <C>
Balance, January 1, 846,958 920,601
Provision charged to Operations (46,000) -0-
Loans charged off (38,571) (66,830)
Recoveries 89,784 50,966
------- -------
Balance December 31, 852,171 846,958
======= =======
</TABLE>
In determining the adequacy of the loan loss reserves, management
uses the following formulas: 100% of loans classified loss, 50% of doubtful
loans, 5% of substandard loans, 0% of savings loans and government guaranteed
loans and 1.5% of all other loan types. This analysis is performed on a
quarterly basis.
<TABLE>
V. Deposits
Deposits are summarized below:
December 31,
1998 1997
<S> <C> <C>
Demand deposits accounts $ 6,967,973 $ 6,324,279
NOW accounts 4,427,077 4,890,781
Savings accou 6,313,596 5,995,025
Time accounts 15,447,867 15,709,739
------------ ------------
$ 33,156,513 $ 32,919,824
============= =============
</TABLE>
Included in deposits are approximately $4,266,000 and $4,205,000 of
certificates of deposit in excess of $100,000 at December 31, 1998
and 1997, respectively.
<TABLE>
Certificate of Deposit Maturity and Rate Analysis
As of December 31, 1998:
0-90 91-364 1 Year Over
Days Days 5 Years 5 Years
<S> <C> <C> <C> <C>
Total Certificates $5,236,208 $7,339,843 $2,871,816 $ -0-
of Deposit
Average Rate 4.33% 4.89% 5.49% ---
</TABLE>
ITEM 2: Properties
The main office of the Corporation and Bank are presently located
in a two-story office building on State Highway 3131, New Roads, Louisiana.
The bank owns one branch located on State Highway 78, Livonia, Louisiana,
which is approximately 13 miles from the main office. Additionally, in
1994 the bank purchased from its Other Real Estate portfolio the property
directly behind the bank for $75,000. This property was formerly an
insurance building and lot. It was acquired in an exchange of properties
from Farm Bureau Insurance. All locations are owned free of any mortgages
or liens.
ITEM 3: Legal Proceedings
There is no threatened or pending litigation against the Corporation,
the Bank, or its officers.
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 fiscal year covered by this report.
PART II
ITEM 5: Market Price Dividends on the Registrant's Common Equity and
Related Stockholder Matters
The primary market area for the Corporation stock is Pointe Coupee
Parish with Peoples Bank and Trust Company acting as registrar and transfer
agent. There were approximately 575 shareholders of record as of December
31, 1998. The stock of the Corporation is not listed on any security
exchange.
Due to lack of an active trading market, the Corporation does not
have available information to furnish a high and low sales price on the
range of bid and asked quotations for its stock. Based on limited inquiries
by management, it is believed that less than 3,000 shares traded in 1998.
There can be no assurance that the limited inquiries adequately reflect the
marketability of the stock.
In March 1998 Peoples Bancshares declared a special dividend of $.50 per
share to all stockholders of record as of March 31, 1998, totaling $154,289.
Additionally, In December of 1998, Peoples Bancshares declared a dividend of
$.35 per share to all stockholders of record as of November 30, 1998, totaling
$108,002.
Management, will for the foreseeable future, approach the payment of
dividends on an annual basis and according to the profitability of the bank
in that particular year, as well as considering the long-term capital needs
of the bank in the future.
<TABLE>
ITEM 6: Selected Financial Data
Condensed Consolidated Statement of Income
For Year Ended Dec. 31, 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
Interest Income 3,465,179 3,371,808 3,268,130 3,211,553 2,746,784
Interest Expense 1,131,970 1,139,117 1,115,370 1,004,653 832,764
Net Interest Income 2,333,209 2,232,691 2,152,760 2,206,900 1,914,020
Credit (Provision
for Loan Losses) 46,000 -0- 32,000 32,000 (2,000)
Other non-interest income
and expenses net (1,004,289) (853,166) (836,731) (846,548) (799,670)
Income Tax
(Expense) benefit (452,387) (465,439) (442,004) (469,001) (316,278)
Net Income (Loss) 922,533 914,086 906,025 923,351 796,072
Per Share:
Net (Income) $2.99 $2.96 $2.94 $2.99 $2.58
Cash Dividend $262,288 $200,575 $200,575 $154,289 $154,304
Book Value-End of Year 22.41 20.21 17.90 15.72 12.41
Selected Ratios
Loans to Asset 71.17 71.52 58.69 56.38 57.75
Loans to Deposits 87.83 85.47 68.51 65.71 65.11
Deposits to Assets 81.03 83.69 85.66 85.80 88.69
Capital to Assets 16.90 15.85 14.02 13.86 11.05
Capital to Deposits 20.85 18.95 16.36 16.16 12.46
Return on Avg. Assets 2.27 2.32 2.34 2.64 2.33
Return on Avg. Equity 14.70 15.82 17.42 20.77 20.75
Dividend Payout Ratio .28 .22 .22 .17 .19
</TABLE>
ITEM 7: Management Discussion and Analysis of Financial Condition
and Results of Operation
Peoples Bancshares of Pointe Coupee Parish, Inc., (Bancshares) is a
one bank holding company whose sole subsidiary is Peoples Bank and Trust
Company of Pointe Coupee Parish, Inc., (the Bank). All items discussed
below are attributable to the activities of the Bank unless otherwise stated.
This section should be read in conjunction with the consolidated financial
statements and related notes and the tables presented in an earlier section
of this report.
Year 2000 Compliance
As of year end 1998, Peoples Bank has been examined twice by
the F.D.I.C. regarding its Y2K readiness and testing and has been
deemed as being in compliance. The Y2K initiative is being managed by
a team of internal staff. The team activities are designed to ensure
that there is no adverse effect on the Companys core business operations
and that transactions with customers, suppliers and financial institutions
are fully supported. Our estimates are that we will spend approximately
$40,000 on new software, wiring and related costs. While we believe our
planning efforts are adequate to address Y2K concerns, there can be no
guarantees that the systems of other companies on which our systems and
operations rely will be converted on a timely basis and will not have a
material effect on the Company. The costs of Y2K initiatives is not
expected to be material to the results of operation or financial position.
Merger Discussions
In January of 1999, Peoples Bancshares signed a Letter of Intent
to merge with Great Guaranty Bancshares. The new company would be named
Peoples Guaranty Bancshares and the new bank would be called Peoples
Guaranty Bank. This announcement happened subsequent to the audit report
date. The Letter of Intent is conditioned on signing a definitive agreement
and if successful, the pending merger would be expected to be complete in
the last quarter of 1999.
FINANCIAL REVIEW
Summary
Bancshares consolidated net income for 1998 was $922,533. This
represents a Return on Average Assets of 2.27%, which we believe is a good
return. This is in comparison to 2.32% for 1997 and 2.34% in 1996.
Several factors contributed to this continued success. The most
important factors were: 1) good interest rate margins; 2) a low level of
classified assets; and 3) elimination of loan loss provisions.
In 1998, charge-offs were $38,571 as compared to $66,830 in 1997, while
at the same time we reduced the reserve by $46,000.00 loan losses and
recovered $89,784. Provisions for 1997 were $-0- and recoveries were
$50,966.
The prospects for 1999 remain encouraging. The bank continues to note
financial stability and deem our reserves as adequate. As a result, the
projections for income are good. Additionally, Peoples Bank is deemed to
be a well capitalized institution within the guidelines of the FDIC.
However, we still remain conservative in our view of the economy and
current management will maintain that philosophy throughout 1999.
Other Income and Expenses
Other Income, excluding loan related income, decreased $115,029 or
18.43% in 1998 as compared to 1997. The decrease was due to a difference
from a one time sale of other real estate in 1997, but was equal to other
income in 1996.
Other expenses, excluding interest expense increased by $36,094 or
2.44% in 1998 as compared to 1997. Salaries and employee benefits decreased
$20,483 or 2.42%.
Income Taxes
Bancshares files a consolidated federal income tax return. Deferred
income taxes are Pro vided using the liability method on items of income
or expenses recognized in different time periods for financial statement
and income tax purposes.
Statement of Condition
Total deposits as of December 31, 1998 increased $236,689 or .72% as
compared to year end 1997. Non-interest bearing deposits increased $643,694
or 10.18% and interest bearing deposits decreased $407,005 or 1.53%. Total
loans excluding loan reserves increased $986,684 or 3.51% and investment
securities decreased $2,109,117 or 29.32%. The increase in loans was
concentrated primarily in agricultural equipment and consumer related loans.
The increase in loans along with the increase in federal funds sold accounted
for the decrease in the investment portfolio.
Liquidity Management
The purpose of liquidity management is to assure the corporation's
ability, at an acceptable cost, to raise funds to support asset growth,
meet deposit withdrawals, and otherwise operate the Corporation on a
continuing basis. The overall liquidity position of the bank is insured by
acquisition of additional funds in the form of time deposits, borrowings
such as Federal Funds and the sale of maturing of investments.
In management's opinion, there are no known trends, commitments or
uncertainties that will or should have a material effect on deposits or
the liquidity position. Additionally, no trends or events were cited by
the regulatory authorities.
Capital Adequacy
The management of capital is a continuous process which consists
of providing capital for the current position and the anticipated future
growth of the Corporation. The purposes of capital are to serve as a source
of funds, protect depositors against losses, and provide a measure of
reassurance to the public that the community's needs will continue to be
served. Since capital serves a multiplicity of purposes, the evaluation
of capital adequacy cannot be made solely in terms of total capital or
related ratios.
Traditionally, the source of additional capital has been retained
earnings. However, in the mid 1980's retained earnings were not providing
the needed capital. However, due to strong earnings from 1990 - 1998,
and large recoveries of charged-off loans, our capital ratio is at an
acceptable level. As such, retained earnings should provide the needed
capital. Additionally, we will concentrate on the following to provide
for our capital needs:
1. Increase non-interest income and reduce non-interest expenses
2. Maintain an adequate interest rate spread
3. Actively pursue previous charged-off loans for recoveries
4. Manage our growth rate
Furthermore, the prospects for 1999 continue to be encouraging. Our
capital base continued to grow in 1998; our loan loss reserve is adequate;
our net income was extremely good with a Return on Average Assets of 2.27%;
loan delinquencies continued to be manageable; and classified assets have
remained at a manageable level.
ECONOMIC CONDITIONS
Current economic conditions are slightly above average compared to
the previous (5) five years, but are certainly not great. Our
asset/liability management strategy helped produced good margins in 1998.
However, our strategies remain conservative; therefore, we are positioned
as interest rates continue to fluctuate.
Item 8: Financial Statements (following on next pages)
Item 9: Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None
PART III
Item 10: Directors and Executive Officers
Directors of Bancshares are identified in the following table:
Type of Percent
Name Stock Amount of
Principal Occupation Age Ownership Owned Total
Joseph Jefferson David 79 Direct 30,638 9.929
Stephen P. David 41 Direct 4,035 1.308
President and CEO of Peoples Indirect 19,477 6.312
Bancshares of Pointe Coupee &
Peoples Bank & Trust Company
Frank Ned Foti 63 Direct 24,561 7.959
C. E. Hebert, III 55 Direct 5,588 1.811
Junies W. Hurst 87 Direct 3,888 1.260
Clyde Walker Kimball 57 Direct 5,014 1.625
Camille N. Laborde 71 Direct 5,028 1.629
Norris A. Melancon, Jr. 71 Direct 20,491 6.640
Thomas W. Montgomery, III 59 Direct 3,588 1.163
Joseph Major Thibaut 45 Direct 600 .194
Indirect 1,000 .324
All Directors and Principal Direct 103,431 33.519
Officers as a Unit (10 Persons) Indirect 20,477 6.636
MANAGEMENT OF THE BANK AND BANCSHARES
Employees
On December 31, 1998, there were twenty full time employees. This
includes the officers of the Corporation and Bank listed below:
Executive Officers
Name Age Position Currently Held
Stephen P. David 41 President and CEO of Peoples Bancshares
and Peoples Bank and Trust Company
Joyce A. York 51 Vice President and Cashier of
Peoples Bank
R. Blain Houston 26 Loan Officer of Peoples Bank
Robin Cashio 48 Branch Manager of Peoples Bank
Kenneth R. Ramagos 43 Assistant Vice - President and
Loan Officer of Peoples Bank
Melissa Laborde 35 Loan Review Officer of Peoples Bank
Julie Perrault 38 Administrative Assistant
Mary Posey 40 Loan Collections Officer
Annie LeBlanc 65 Customer Account Officer
Ms. York has been with Peoples Bank since inception. Mr. David
was elected an officer of the Bank in December of 1983.
Stephen P. David, Director, CEO, and President of Bancshares and the
Bank, age 41. Mr. David joined the Bank on August 3, 1981 and has held many
positions, including, Loan Officer; Assistant Vice President; Senior Loan
Officer; Senior Vice-President and Assistant Secretary to the Board of
Directors prior to being named to his current post on February 1, 1990.
Bancshares was formed in 1983 and became the Bank's sole shareholder
on December 27, 1983, at which time all directors of the Bank became
directors of Bancshares. Dates prior to that time reflects service as a
Director of the Bank.
Joseph Jefferson David is the father of Stephen P. David.
Item 11: Executive Compensation
a) Remuneration of Directors and Officers:
All Executive Officers (President David & Vice President York)
had direct cash compensation of $190,732, $181,400, and $162,900
excluding board fees, but including bonuses in 1998, 1997, and 1996,
respectively.
On September 17, 1981, the Board of Directors of the Bank
approved a profit sharing plan which conforms to the Internal Revenue
Code, Section 401(a). All employees who have been employed by the Bank
or a period of six months or more; who are 25 years of age; and who
have at least 1,000 hours of service annually may participate in the
profit sharing plan. No contributions were made to the plan in 1998.
In January 1990 the Board of Directors approved a 401(k) savings
plan which conforms to the Internal Revenue Code. All employees who
have been employed by the bank for a period of six months or more
were eligible to participate in the plan. Contributions by the bank
in 1998 totaled $13,307. The accrued amount at year end totaled
$474,828.
The Bank has a deferred compensation plan available to its directors.
At present only one director is participating. Upon retirement, the
Bank will pay the director his deferred compensation plus interest, which
accrues at the "low Wall Street rate", in 15 equal annual installments
beginning the month after retirement. Upon pre-retirement death, the bank
will pay his designated beneficiaries the greater of $8,400 a year for 15
years or his deferred compensation and accrued interest. The bank is the
owner and beneficiary of an insurance policy on the life of the director.
The Bank also maintains a supplemental executive retirement plan
with its president. Upon retirement, the president will receive $25,000
per year for 20 years, beginning immediately. The bank is the owner and
beneficiary of an insurance policy on the life of the president. If
employment is terminated "without cause" prior to retirement, the bank
will pay the president his accrued benefit, which is based on the number
of months of completed service since January, 1996.
The Board of Directors of Bancshares held twelve (12) regular
scheduled meetings during 1998. The Board of Directors of the Bank
held twelve (12) regularly scheduled meetings. The Bank has a
personnel committee which met one (1) times during 1998, and a loan
committee which met twenty-four (24) times during the year. The
Board of Directors held no special meeting during 1998. The Bank also
has an audit committee and executive committee which did not meet during
1998.
The Board of Directors of Bancshares and the Bank do not have a
nomination committee.
Directors of Bancshares receive no remuneration for serving in
that capacity. Each director of the Bank received a fee of $500 for
each regular board meeting. Members of each committee receive $75.00
per meeting attended.
Item 12: Security Ownership of Certain Beneficial Owners and
Management
As of March 31, 1999, Peoples Bancshares had authorized 1,000,000
shares of common stock and of this amount, 308,577 shares were outstanding.
Additionally, as of this date, Peoples Bancshares had authorized but
unissued 500,000 shares of Series A Preferred stock and 500,000 shares of
Series B Preferred stock.
As of March 31, 1999 the management of Bancshares knew of no other
person or group that owned 5% or more of the outstanding stock of Bancshares
other than Mr. N. A. Melancon, Jr., with 20,491 shares representing 6.640%;
Mr. Frank N. Foti with 24,561 shares representing 7.959%; Mr. J. Jeff David
with 30,638 shares representing 9.929% and William C. David* with 19,477
shares representing 6.312%.
*William C. David has granted a Proxy Authority to his brother,
Stephen P. David.
Item 13: Certain Relationships & Related Transactions
b) Transactions with Management:
From time to time the Bank has extended credit to its Officers and
Directors and to businesses in which Officers and Directors own an
interest; and the Bank intends to continue this policy because of the
deposits, business and the income that these activities generate for
the Bank. Such loans are made only with the approval of the Board of
Directors.
At no time in 1998 did these transactions exceed 10% of the equity
capital, except for those matters noted below.
All directors and officers as a group had total loans outstanding
at year end 1998 and 1997 of $1,382,362 and $1,213,533 respectively.
PART IV
Item 14: EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
A. (1) Financial Statements
The financial statements are listed under Part II, Item 8 of this Report
(2) Financial Statement Schedules
The financial statement schedules are listed under Part II,
Item 8 of this Report.
B. Reports on Form 8-K
None
C. Exhibits
None
Signatures
Pursuant to the requirements of Section 13 of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the under signed, thereunto duly authorized.
PEOPLES BANCSHARES OF POINTE COUPEE
PARISH, INC.
By:_________________________________
Joseph M. Thibaut, Sr.
Chairman
Pursuant to the Requirements of the Securities Exchange Act of 1934,
this report has been signed by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:
________________________________ ______________________________
Joseph Jefferson David Clyde Walker Kimball
Director Director
________________________________ ______________________________
Frank Ned Foti Camille N. LaBorde
Director Director
________________________________ ______________________________
Norris A. Melancon, Jr. C. E. Hebert, III
Director Director and Secretary
________________________________ ______________________________
Stephen P. David Junies W. Hurst
President/CEO and Director Director
________________________________ ______________________________
Thomas W. Montgomery, III Joseph Major Thibaut
Director Director
C O N T E N T S
Independent Auditors' Report
Consolidated Statements of Financial Condition
December 31, 1998 and 1997
Consolidated Statements of Operations and Comprehensive Income
Years ended December 31, 1998, 1997, and 1996
Consolidated Statements of Changes in Stockholders' Equity
Years ended December 31, 1998, 1997, and 1996
Consolidated Statements of Cash Flows
Years ended December 31, 1998, 1997, and 1996
Notes to Consolidated Financial Statements
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
Peoples Bancshares of Pointe Coupee Parish, Inc.
New Roads, Louisiana
We have audited the accompanying consolidated statements of financial
condition of Peoples Bancshares of Pointe Coupee Parish, Inc. and
Subsidiary as of December 31, 1998 and 1997, and the related
consolidated statements of operations and comprehensive income,
changes in stockholders' equity and cash flows for each of the years
during the three year 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 consolidated
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 audits 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 consolidated financial statements referred to
above present fairly, in all material respects, the financial position
of Peoples Bancshares of Pointe Coupee Parish, Inc. and Subsidiary as of
December 31, 1998 and 1997, and the results of their operations and their
cash flows for each of the years during the three year period ended December
31, 1998, in conformity with generally accepted accounting principles.
Postlethwaite and Netterville
Baton Rouge, Louisiana
January 26, 1999
<TABLE>
PEOPLES BANCSHARES OF POINTE COUPEE PARISH, INC. AND SUBSIDIARY
NEW ROADS, LOUISIANA
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
DECEMBER 31, 1998 AND 1997
A S S E T S
1998 1997
<S> <C> <C> <C>
Cash and due from banks $1,691,500 $ 2,265,075
Interest-bearing deposits
in other banks 394,000 493,000
Federal funds sold 4,025,000 800,000
Securities available-for-sale 5,085,042 7,194,159
Loans, less allowances for loan
losses of $852,171 and $846,958
at December 31, 1998 and 1997,
Respectively 28,269,513 27,288,042
Accrued interest receivable 513,129 537,746
Bank premises and equipment,
net of accumulated depreciation 673,598 685,100
Other assets 264,676 74,068
TOTAL ASSETS $40,916,458 $ 39,337,190
The accompanying notes are an integral part of these consolidated financial
statements.
</TABLE>
<TABLE>
PEOPLES BANCSHARES OF POINTE COUPEE PARISH, INC. AND SUBSIDIARY
NEW ROADS, LOUISIANA
YEARS ENDED DECEMBER 31, 1998,
1997, AND 1996
L I A B I L I T I E S A N D S T O C K H O L D E R S'
E Q U I T Y
1998 1997
CURRENT LIABILITIES
Deposits:
<S> <C> <C> <C> <C>
Noninterest-bearing $ 6,967,973 $ 6,324,279
Interest-bearing 26,188,540 26,595,545
Total deposits 33,156,513 32,919,824
Other borrowed funds 628,000 -
Accrued interest payable 100,369 95,895
Other liabilities 115,937 84,717
Total liabilities 34,000,819 33,100,436
COMMITMENTS AND CONTINGENCIES - -
STOCKHOLDERS' EQUITY
Common stock; $2.50 par value;
1,000,000 shares Authorized;
309,677 shares issued;
and 308,577 shares outstanding 774,193 774,193
Capital Surplus 1,525,808 1,525,808
Retained earnings 4,588,482 3,928,237
Accumulated other comprehensive
income 40,156 21,516
6,928,639 6,249,754
Less: 1,100 shares held in
treasury at cost (13,000) (13,000)
Total stockholders equity 6,915,639 6,236,754
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 40,916,458 $ 39,337,190
</TABLE>
<TABLE>
PEOPLES BANCSHARES OF POINTE COUPEE PARISH, INC. AND SUBSIDIARY
NEW ROADS, LOUISIANA
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
YEARS ENDED DECEMBER 31, 1998, 1997, AND 1996
1998 1997 1996
INTEREST INCOME
<S> <C> <C> <C>
Interest on loans $ 3,006,132 $ 2,671,661 $ 2,487,275
Interest on
available-for-sale
securities 358,338 525,504 544,844
Interest on
held-to-maturity
securities - - 11,783
Interest on federal
funds sold 76,353 128,333 162,721
Interest on deposits
in other banks 24,356 46,310 61,507
Total interest income 3,465,179 3,371,808 3,268,130
INTEREST EXPENSE
Interest on deposits 1,092,939 1,138,820 1,114,362
Interest on federal
funds purchased 18,085 297 1,008
Interest on other
borrowed funds 20,946 - -
1,131,970 1,139,117 1,115,370
NET INTEREST INCOME 2,333,209 2,232,691 2,152,760
Provision (credit) for
loan losses (46,000) - (32,000)
NET INTEREST INCOME AFTER
PROVISION (CREDIT) FOR
LOAN LOSSES 2,379,209 2,232,691 2,184,760
NON-INTEREST INCOME
Service charges on
deposit accounts 122,414 125,120 126,756
Other service charges
and fees 321,839 316,297 290,846
Net realized gains on
sales of
available-for-sale
securities 2,505 14,973 23,558
Other income 62,233 167,630 67,747
Total other income 508,991 624,020 508,907
The accompanying notes are an integral part of these consolidated
financial statements.
</TABLE>
<TABLE>
PEOPLES BANCSHARES OF POINTE COUPEE PARISH, INC. AND SUBSIDIARY
NEW ROADS, LOUISIANA
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
YEARS ENDED DECEMBER 31, 1998, 1997, AND 1996
1998 1997 1996
NON-INTEREST EXPENSES
Salaries and employee
<S> <C> <C> <C> <C> <C> <C>
benefits $ 826,312 $ 846,795 $ 750,479
Occupancy expenses 160,318 148,939 146,304
Data processing expenses 107,173 72,783 79,245
Deposit insurance premiums 17,022 14,787 11,999
Other operating expenses 402,455 393,882 357,611
Total other expenses 1,513,280 1,477,186 1,345,638
INCOME BEFORE INCOME 1,374,920 1,379,525 1,348,029
TAX EXPENSE
Income tax expense 452,387 465,439 442,004
NET INCOME 922,533 914,086 906,025
OTHER COMPREHENSIVE INCOME
Unrealized holding gains
(losses) arising during 21,145 11,888 (7,342)
The period, net taxes
Less: reclassifications
adjustment for realized gain (2,505) (523) (23,558)
Totals $ 941,173 $ 925,451 $ 875,125
COMPREHENSIVE INCOME
Per common share data:
Net income $ 2.99 $ 2.96 $ 2.94
Cash dividends $ 0.85 $ 0.65 $ 0.65
Average number of shares
outstanding 308,577 308,577 308,577
The accompanying notes are an integral part of these consolidated
financial statements.
</TABLE>
<TABLE>
PEOPLES BANCSHARES OF POINTE COUPEE PARISH, INC. AND SUBSIDIARY
NEW ROADS, LOUISIANA
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1998, 1997, AND 1996
Common Stock Capital
Shares Amount Surplus
Balance at December 31,
<S> <C> <C> <C> <C> <C> <C>
1995 $ 309,677 $ 774,193 $ 550,808
Net income - - -
Net change in unrealized
gain (loss)
On available-for-sale
securities,
Net of deferred income
tax
Benefit of $15,918 - - -
Cash dividends declared - - -
Balance at December 31,
1996 309,677 774,193 550,808
Net income - - -
Net change in unrealized
gain (loss)
On available-for-sale
securities,
Net of deferred income
taxes of $5,854 - - - -
Cash dividend paid - - -
Board designated
transfer from retained
earnings to capital
surplus - - 975,000
Balance at December 31,
1997 309,677 774,193 1,525,808
Net income - - -
Net change in unrealized
gain (loss)
on available-for-sale
securities,
net of deferred income
taxes of $9,602 - - -
Cash dividends paid - - -
Balance at December 31,
1998 $ 309,677 $ 774,193 $ 1,525,808
The accompanying notes are an integral part of these consolidated
financial statements.
</TABLE>
<TABLE>
Accumulated
Other Total
Retained Comprehensive Treasury Stock Stockholders'
Earnings Income Shares Amount Equity
<C> <C> <C> <C> <C> <C> <C>
$ 3,484,276 $ 41,051 1,100 $ (13,000) $ 4,837,328
906,025 - - - 906,025
- (30,900) - - (30,900)
(200,575) - - - (200,575)
4,189,726 10,151 1,100 (13,000) 5,511,878
914,086 - - - 914,086
- 11,365 - - 11,365
(200,575) - - - (200,575)
(975,000) - - - -
3,928,237 21,516 1,100 (13,000) 6,236,754
922,533 - - - 922,533
- 18,640 - - 18,640
(262,288) - - - (262,288)
$ 4,588,482 $ 40,156 1,100 $ (13,000) $ 6,915,639
</TABLE>
<TABLE>
1998 1997 1996
<S> <C> <C> <C> <C> <C> <C>
Net income $ 922,533 $ 914,086 $ 906,025
Adjustments to reconcile net
income to net cash
provided by operating
activities:
Gain on sales of other real
estate (2,950) (523) (18,258)
Gain on sales of other assets 3,760 (119,980) -
Net realized gains from sales
and maturities
of available-for-sale
securities (2,505) (14,973) (23,558)
Net accretion of investment
security discounts /
amortization of investment
security premiums 12,270 3,262 (35,564)
Provision (credit) for loan
losses (46,000) - (32,000)
Loss (gain) on sales of bank
premises and equipment - (300) 2,821
Depreciation 60,714 55,718 48,767
Net changes in operating
assets and liabilities:
Accrued interest receivable 24,617 19,012 (9,480)
Other assets (44,204) 9,585 6,951
Accrued interest payable 4,474 2,485 (8,834)
Other liabilities 31,220 39,877 16,249
Net cash provided by operating
activities 963,929 908,249 853,119
CASH FLOWS FROM INVESTING
ACTIVITIES
Proceeds from sales and
maturities of
available-for-sale
securities 6,139,493 6,740,227 3,665,177
Proceeds from maturities of
securities held-to-maturity - - 300,000
Purchases of available-for-
sale securities (4,011,896) (4,546,187) (5,179,031)
Net decrease (increase) in
interest-bearing
deposits in other banks 99,000 590,000 (199,000)
Net decrease (increase) in
federal funds sold (3,225,000) 2,950,000 (450,000)
Increase in net loans (1,122,940) (5,101,067) (2,514,323)
Proceeds from sales of other
assets 12,650 131,382 35,000
Proceeds from sales of other
real estate owned 18,000 10,000 79,324
Proceeds from sales of bank
premises and equipment - 300 -
Purchases of bank premises
and equipment (49,212) (73,569) (63,755)
Net cash provided by (used
in) investing activities (2,139,905) 701,086 (4,326,608)
The accompanying notes are an integral part of these consolidated
financial statements.
</TABLE>
<TABLE>
PEOPLES BANCSHARES OF POINTE COUPEE PARISH, INC. AND SUBSIDIARY
NEW ROADS, LOUISIANA
CONSOLIDATED STATEMENTS OF
CASH FLOWS
YEARS ENDED DECEMBER 31, 1998, 1997, AND
1996
1998 1997 1996
CASH FLOWS FROM FINANCING
ACTIVITIES
Net increase in noninterest-
bearing demand deposit
accounts, savings accounts,
<S> <C> <C> <C> <C> <C> <C>
and NOW account $ 498,561 $ 131,840 $ 175,339
Net increase (decrease) in
time deposits (261,872) (973,601) 3,565,474
Net increase in other
borrowed funds 628,000 - -
Dividends paid (262,288) (200,575) (200,575)
Net cash provided by (used
in) financing activities 602,401 (1,042,336) 3,540,238
Net increase (decrease) in
cash and due from banks (573,575) 566,999 66,749
Cash and due from banks -
beginning of year 2,265,075 1,698,076 1,631,327
$ 1,691,500 $ 2,265,075 $ 1,698,076
Supplemental disclosures of
cash flow information
Cash paid for interest $ 1,127,496 $ 1,136,632 $ 1,013,487
Cash paid for income taxes $ 468,120 $ 424,671 $ 415,186
The accompanying notes are an integral part of these consolidated
financial statements.
</TABLE>
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting and reporting policies of Peoples Bancshares
of Pointe Coupee Parish, Inc. (Bancshares) and its subsidiary conform
to generally accepted accounting principles and to the prevailing
practices within the banking industry. A summary of significant
accounting policies is as follows:
Basis of presentation
The consolidated financial statements include the accounts of
Bancshares and its wholly owned subsidiary, Peoples Bank and Trust
Company (the Bank). All significant intercompany accounts and
transactions have been eliminated in consolidation.
Nature of operations
Substantially all of the assets, liabilities, and operations
presented in the consolidated financial statements are attributable
to Peoples Bank and Trust Company. The Bank provides a variety
of banking services to individuals and businesses primarily in and
around Pointe Coupee Parish, Louisiana. Its primary deposit
products are demand deposits, savings deposits, and certificates of
deposits, and its primary lending products are agriculture,
commercial business, real estate, and consumer loans.
Use of 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 the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from these 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 the estimated
losses on loans, management obtains independent appraisals
for significant collateral.
The Banks 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 economic conditions and
the agricultural industry.
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 judgments 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.
Investment securities
The Bank's investments in securities are classified in two categories
and accounted for as follows:
? Securities to be held-to-maturity. Bonds, notes, and debentures
for which the Bank has the positive intent and ability to hold to
maturity are reported at cost, adjusted for premiums and discounts
which are recognized in interest income using the interest method,
over the period to maturity.
? Securities available-for-sale. Available-for-sale securities consist
of bonds, notes, and debentures that are available to meet the Bank's
operating needs. These securities are reported at fair value as
determined by quoted market prices.
Unrealized holding gains and losses, net of tax, on available-for-sale
securities are reported as a net amount in other comprehensive income.
Gains and losses on the sale of investment securities are determined
using the specific-identification method. Realized gains (losses) on
the sales and maturities of available-for-sale securities are classified
as non-interest income and reported as a reclassification adjustment in
other comprehensive income.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Loans receivable
Loans receivable that management has the intent and ability to hold
for the foreseeable future or until maturity or pay-off are reported
at their outstanding principal adjusted for any charge-offs, the
allowance for loan losses, and any deferred fees or costs on originated
loans and unamortized premiums or discounts on purchased loans.
The accrual of interest on impaired loans is discontinued when, in
management's opinion, the borrower may be unable to meet payments as
they become due. When interest accrual is discontinued, all unpaid
accrued interest is reversed. Interest income is subsequently recognized
only to the extent cash payments are received.
The allowance for loan losses is increased by charges to income and
decreased by charge-offs (net of recoveries). Management's periodic
evaluation of the adequacy of the allowance is based on the Bank's
past loan loss experience, known and inherent risks in the portfolio,
adverse situations that may affect the borrower's ability to repay, the
estimated value of any underlying collateral, and current economic
conditions.
Foreclosed real estate
Real estate properties acquired through, or in lieu of, loan foreclosure
are to be sold and are initially recorded at fair value at the date of
foreclosure, establishing a new cost basis. After foreclosure, valuations
are periodically performed by management, and the real estate is
subsequently carried at the lower of carrying amount or fair value, less
cost to sell. Revenue and expenses from operations and changes in the
valuation allowance are included in loss on foreclosed real estate.
Bank premises and equipment
Land is carried at cost. Bank premises and equipment are stated at cost
less accumulated depreciation, which is computed using straight-line and
accelerated methods over the estimated useful lives of the assets, which
range from 3 to 30 years.
Income taxes
Provisions for income taxes are based on taxes payable or refundable
for the current year (after exclusion of non-taxable income such as
interest on state and municipal securities) and deferred taxes on
temporary differences between the amount of taxable income and pretax
financial income and between the tax bases of assets and liabilities
and their reported amounts in the financial statements. Deferred tax
assets and liabilities are included in the financial statements at
currently enacted income tax rates applicable to the period in which
the deferred tax assets and liabilities are expected to be realized or
settled as prescribed in SFAS No. 109, Accounting for Income Taxes. As
changes in tax laws or rates are enacted, deferred tax assets and
liabilities are adjusted through the provision for income taxes.
Net Income per share
Net income per share of common stock has been computed on the basis
of the weighted average number of shares of common stock outstanding.
Comprehensive income
Comprehensive income is the change in stockholders equity during the
period from transactions and other events and circumstances from
non-owner sources. Comprehensive income includes the change in unrealized
gains (losses), net of taxes, on available-for-sale securities during the
period.
Cash and cash equivalents
For purposes of presentation in the consolidated statements of cash
flows, cash and cash equivalents are defined as those amounts included
in the balance sheet caption "Cash and due from banks."
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Off-balance sheet financial instruments
In the ordinary course of business, the Bank has entered into
off-balance sheet financial instruments consisting of commitments
to extend credit, commercial letters of credit, and standby letters
of credit. Such financial instruments are recorded in the financial
statements when they are funded or related fees are incurred or
received.
Fair values of financial instruments
Statement of Financial Accounting Standards (SFAS) No. 107,
Disclosures about Fair Value of Financial Instruments, requires
disclosure of fair value information about financial instruments,
whether or not recognized in the balance sheet. In cases where
quoted market prices are not available, fair values are based on
estimates using present value or other valuation techniques. Those
techniques are significantly affected by the assumptions used,
including the discount rate and estimates of future cash flows. In
that regard, the derived fair value estimates cannot be substantiated
by comparison to independent markets and, in many cases, could not be
realized in immediate settlement of the instruments from its disclosure
requirements. Accordingly, the aggregate fair value amounts presented
do not represent the underlying value of Bancshares.
The following methods and assumptions were used by Bancshares in
estimating its fair value disclosures for financial instruments:
Cash and cash equivalents - the carrying amounts of cash and
cash equivalents approximate their fair values.
Interest-bearing deposits in other banks - fair values for
interest-bearing deposits in other banks are estimated using a
discounted cash flow analysis that applies interest rates currently
being offered on certificates to a schedule of aggregated contractual
maturities on such time deposits.
The following methods and assumptions were used by Bancshares in
estimating its fair value disclosures for financial instruments:
Investment securities - fair values for investment securities are
based on quoted market prices, where applicable. If quoted market
prices are not available, fair values are based on quoted market
prices of comparable instruments.
Loans receivable - for variable-rate loans that reprice frequently
and have no significant change in credit risk, fair values are
based on carrying values. Fair values for certain mortgage loans
(i.e., one-to-four family residential), credit card loans, and other
consumer loans are based on quoted market prices of similar loans
sold in conjunction with securitization transactions, adjusted for
differences in loan characteristics. Fair values for commercial real
estate and commercial loans are estimated using discounted cash flow
analyses, using interest rates currently being offered for loans with
similar terms to borrowers of similar credit quality. Fair values for
impaired loans are estimated using discounted cash flow analyses or
underlying collateral values, where applicable.
Deposit liabilities - the fair values disclosed for demand deposits
are, by definition, equal to the amount payable on demand at the
reporting date (that is, their carrying amounts). The carrying
amounts of variable-rate, fixed-term money market accounts and
certificates of deposit approximate their fair values at the
reporting date. Fair values for fixed-rate certificates of
deposit are estimated using a discounted cash flow calculation
that applies interest rates currently being offered on certificates
to a schedule of aggregated expected monthly maturities on time deposits.
Short-term borrowings - the carrying amounts of other short-term
borrowings maturing within 90 days approximate their fair values. Fair
values of other short-term borrowings are estimated using discounted
cash flow analyses based on the incremental borrowing rates for similar
types of borrowing arrangements.
Accrued interest - the carrying amounts of accrued interest approximate
their fair values.
Off-balance sheet instruments - fair values for off-balance sheet
lending commitments are based on fees currently charged to enter into
similar agreements, taking into account the remaining terms of the
agreements and the counterparties' credit standing.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Reclassification
Certain amounts in the 1997 and 1996 consolidated financial statements
have been reclassified to conform with the current year presentation.
2. INVESTMENT SECURITIES
Debt and equity securities have been classified in the consolidated
statements of financial condition according to managements intent.
Securities classified as available-for-sale consisted of the following:
<TABLE>
December 31, 1998
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
U.S. Treasury
securities
and obligations
of other
governmental
<S> <C> <C> <C> <C> <C> <C>
entities $ 3,251,067 $ 62,009 $ 1,479 $ 3,311,597
Mortgage-backed
securities 1,421,533 3,295 2,983 1,421,845
Other 351,600 - - 351,600
$ 5,024,200 $ 65,304 $ 4,462 $ 5,085,042
</TABLE>
<TABLE>
December 31, 1997
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
U.S. Treasury
securities and
obligations of
other
governmental
<S> <C> <C> <C> <C> <C>
entities $ 5,856,381 $ 48,354 $ 9,955 $ 5,894,780
Mortgage-backed
securities 1,305,178 7,300 6,529 1,299,379
$ 7,161,559 $ 49,084 $ 16,484 $ 7,194,159
</TABLE>
<TABLE>
Realized gains on sales of securities during the years ended
December 31, 1998, 1997, and 1996 were as follows:
1998 1997 1996
U.S. Treasury securities and
obligations of other
<S> <C> <C> <C>
governmental entities $ 2,505 $ 7,582 $ 23,558
Mortgage-backed securities - 7,391 -
$ 2,505 $ 14,973 $ 23,558
</TABLE>
The amortized costs and estimated market values of debt securities at
December 31, 1998, by contractual maturity, are shown below. Expected
maturities may differ from contractual maturities because borrowers have
the right to call or prepay obligations with or without call or
prepayment penalties.
<TABLE>
Amortized Fair
Cost Value
<S> <C> <C>
Within one year $ 125,346 $ 125,583
Greater than one but within
five years 2,968,727 2,973,404
Greater than five but within
ten years 814,770 836,796
Greater than ten years 1,115,357 1,149,259
$ 5,024,200 $ 5,085,042
</TABLE>
2. INVESTMENT SECURITIES (continued)
Investment securities with carrying values of approximately
$2,110,000 and $5,280,000 at December 31, 1998 and 1997, respectively,
were pledged to secure public deposits and for other purposes as
required or permitted by law.
3. LOANS
<TABLE>
The components of loans in the consolidated statements of financial
condition were as follows:
1998 1997
(in thousands) (in thousands)
<S> <C> <C>
Agricultural loans $ 7,619 $ 7,475
Commercial loans 9,673 9,676
Real estate loans 4,766 4,675
Consumer loans 6,785 6,054
Other 279 255
29,122 28,135
Less: allowance
for loan losses ( 852) ( 847)
Loans, net $ 28,270 $ 27,288
</TABLE>
<TABLE>
Changes in the allowance for loan losses during the years ended
December 31, 1998, 1997, and 1996 were as follows:
1998 1997 1996
<S> <C> <C> <C>
Balance - beginning of year $ 846,958 $ 920,601 $ 1,020,205
Provision credited to
operations ( 46,000) - ( 32,000)
Loans charged-off ( 38,571) ( 109,181) ( 106,648)
Recoveries 89,784 35,538 39,044
Balance - end of year $ 852,171 $ 846,958 $ 920,601
</TABLE>
Impairment of loans having recorded investments of $192,894 at
December 31, 1998 and $451,630 at December 31, 1997 has been
recognized in conformity with SFAS No. 114, Accounting by Creditors for
Impairment of a Loan, as amended by SFAS No. 118. The average recorded
investment in impaired loans during 1998 and 1997 was approximately
$320,000 and $460,000, respectively. The total allowances for loan losses
related to these loans was $22,500 at both December 31, 1998 and 1997.
Interest income on impaired loans, which is recognized when cash
payments are received, totaled approximately $8,300, $10,000, and
$12,000 during the years ended December 31, 1998, 1997, and 1996,
respectively.
The Bank transferred approximately $187,468 and $22,156 of real estate
acquired in settlements of loans to other real estate owned and other
assets during the years ended December 31, 1998 and 1997, respectively.
The Bank is not committed to lend additional funds to debtors whose loans
have been modified.
4. BANK PREMISES AND EQUIPMENT
<TABLE>
Major classifications of bank premises and equipment are summarized
as follows:
1998 1997
<S> <C> <C>
Land $ 100,081 $ 100,081
Buildings and
improvements 876,819 869,529
Equipment 513,844 479,909
1,490,744 1,449,519
Less: accumulated
depreciation ( 817,146) ( 764,419)
$ 673,598 $ 685,100
Depreciation expense amounted to $60,714, $55,718, and $48,767
during the years ended December 31, 1998, 1997, and 1996, respectively.
</TABLE>
5. DEPOSITS
<TABLE>
Deposits are summarized below:
1998 1997
<S> <C> <C> <C> <C>
Demand deposit accounts $ 6,967,973 $ 6,324,279
NOW accounts 4,427,077 4,890,781
Savings accounts 6,313,596 5,995,025
Time accounts 15,447,867 15,709,739
$ 33,156,513 $ 32,919,824
</TABLE>
<TABLE>
At December 31, 1998, the scheduled maturities of all outstanding
certificates of deposit were as follows:
During the
year ending
December 31, Amount
<C> <C>
1999 $ 12,557,615
2000 2,319,636
2001 373,302
2002 197,314
$ 15,447,867
</TABLE>
Included in deposits are approximately $4,266,000 and $4,205,000 of
certificates of deposit in excess of $100,000 at December 31, 1998
and 1997, respectively. Interest expense on such deposits was
approximately $198,000, $200,000, and $187,000 during the years ended
December 31, 1998, 1997, and 1996, respectively.
6. OTHER BORROWED FUNDS
The Bank established a line-of-credit with the Federal Home Loan Bank
(FHLB) during 1998 to provide an additional source of operating
capital. The current advances, which totaled $628,000 at December
31, 1998, bore interest at 5.275% and were completely repaid on
January 11, 1999.
This line of credit is secured by $351,000 of FHLB stock owned by the
Bank and all wholly-owned residential (1-4 units) first mortgage loans.
7. INCOME TAXES
The source and tax effect of items reconciling income tax expense to
the amount computed by applying the federal income tax rates in effect
to income before income tax expense for the years ended December 31,
1998, 1997, and 1996 were as follows:
<TABLE>
1998 1997 1996
Amoun % Amount % Amount %
Income before income
<S> <C> <C> <C> <C> <C>
tax expense $1,374,920 100.0% $1,379,525 100.0% $1,348,029 100.0%
Income tax expense
at statutory rate $ 467,473 34.0% $ 469,039 34.0% $ 458,330 34.0%
Tax-exempt interest
Income and
nondeductible
interest cost ( 29,348) ( 2.1) ( 12,077)( 0.9) ( 12,746) (0.9)
Other 14,262 1.0 8,477 0.6 ( 3,580) (0.3)
$ 452,387 32.9% $ 465,439 33.7% $ 442,004 32.8%
</TABLE>
<TABLE>
The components of income tax expense during the years ended December
31, 1998, 1997, and 1996 were as follows:
1998 1997 1996
<S> <C> <C> <C> <C> <C>
Current tax expense $ 449,201 $ 470,991 $ 406,371
Deferred tax expense
(benefit) 3,186 ( 5,552) 35,633
$ 452,387 $ 465,439 442,004
</TABLE>
<TABLE>
Bancshares records deferred income taxes on the tax effect of temporary
differences. Deferred tax assets are subject to a valuation allowance
if their realization is less than fifty percent probable. Deferred tax
assets (liabilities) were comprised of the following at December 31, 1998
and 1997:
1998 1997
<S> <C> <C>
Depreciation ($ 137,708) ($ 128,160)
Unrealized gains on
securities ( 20,686) ( 11,084)
Gross deferred tax liability ( 158,394) ( 139,244)
Reserve for loan losses 124,123 113,135
Write-downs of foreclosed
property 13,290 24,281
Deferred compensation 19,872 13,507
Gross deferred tax assets 157,285 150,923
Less: deferred tax asset
valuation allowance - -
Net deferred tax asset
(liability) ($ 1,109) ($ 11,679)
</TABLE>
8. EMPLOYEE BENEFITS
The Bank maintains a 401(k) savings plan for which the majority of
its employees are eligible. The employer contributes to the plan
based on the discretion of the Board of Directors. The Bank matches 50%
of employee contributions up to 6% of each employee's salary. The Bank
recognized expenses relating to this plan of approximately $13,300,
$13,800, and $11,600 during the years ended December 31, 1998, 1997,
and 1996, respectively.
The Bank maintains a deferred compensation agreement with a
director. Upon retirement, the Bank will pay the director his deferred
compensation plus interest. The Bank is the owner and beneficiary
of several insurance policies covering the life of this director.
The Bank also maintains a supplemental executive retirement plan agreement
with its president. Upon retirement, or in the event of death, the
president, or his designated beneficiary, will receive the benefit over
20 years. The Bank is the owner and beneficiary of an insurance policy
covering the life of the president. If employment is terminated "without
cause" prior to retirement, the Bank will pay the president his accrued
benefit, which is based on the number of months of completed service since
January, 1996.
9. FINANCIAL INSTRUMENTS
The Bank 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 and standby letters of credit. These instruments involve, to
varying degrees, elements of credit and interest rate risk in excess of
the amount recognized in the consolidated statements of financial.
condition. The contract or notional amounts of these instruments reflect
the extent of the Bank's involvement in particular classes of
financial instruments.
The Bank's exposure to credit loss in the event of nonperformance by
the other party to the financial instrument for commitments to extend
credit and standby letters of credit is represented by the contractual
notional amount of those instruments. The Bank uses the same credit
policies in making commitments and conditional obligations as it does for
financial instruments recorded on its balance sheet.
Unless noted otherwise, the Bank does not require collateral or other
security to support financial instruments with credit risk.
Commitments to Extend Credit
Commitments to extend credit are agreements to lend to a customer, as
long as there is no violation of any condition established in the
contract. Commitments generally have fixed expiration dates
or other termination clauses and may require the payment of a fee.
Since many of the commitments are expected to expire without being
drawn upon, the total commitment amounts do not necessarily represent
future cash requirements. The Bank evaluates each customer's
creditworthiness on a case-by-case basis. The amount of collateral
obtained, if it is deemed necessary by the Bank upon extension of
credit, is based on management's credit evaluation of the
counterparty. Collateral held varies but may include accounts
receivable; inventory; property, plant and equipment; and
income-producing commercial properties. At December 31, 1998,
unfunded loan commitments totaled approximately $2,800,000.
Standby letters of credit are conditional commitments issued by
the Bank to guarantee the performance of a customer to a third
party. Those guarantees are primarily issued to support public
and private borrowing arrangements, including commercial paper,
bond financing, and similar transactions. At December 31, 1998,
commitments under standby letters of credit totaled approximately
$457,000. The credit risk involved in issuing letters of credit
is essentially the same as that involved in extending loan
facilities to customers. Because these instruments have fixed
maturity dates, they do not generally present any significant
liquidity risk to the Bank.
The Bank has not been required to perform on any financial
guarantees during the past three years. The Bank did not incur
any losses on such commitments during either 1998, 1997, or 1996.
<TABLE>
The estimated fair values of Bancshares financial instruments at
December 31, 1998 and 1997 were as follows (in thousands):
1998 1997
Carrying Fair Carrying Fair
Amount Value Amount Value
Financial assets:
Cash and due from banks,
Interest bearing
deposits in other
banks, and federal
<S> <C> <C> <C> <C>
funds sold $ 6,111 $ 6,111 $ 3,558 $ 3,558
Securities
available-for-sale 5,085 5,085 7,194 7,194
Loans receivable (net) 28,270 28,283 27,288 26,901
Accrued interest
Receivable 513 513 538 538
Financial liabilities:
Deposit liabilities 33,157 33,234 32,920 32,964
Other borrowed funds 628 628 - -
</TABLE>
10. RELATED PARTY TRANSACTIONS
<TABLE>
In the ordinary course of business, certain officers and directors of
the Bank and companies in which they have 10% or more beneficial ownership
maintain a variety of banking relationships with the Bank. An analysis of
activity during 1998, 1997, and 1996 with respect to loans to
officers and directors of the Bank is as follows:
1998 1997 1996
Balance - beginning
<S> <C> <C> <C>
of year $ 1,213,533 $ 915,967 $ 845,526
Additions 897,008 869,256 443,523
Payments ( 728,179) ( 571,690) (373,082)
Balance - end of year $ 1,382,362 $ 1,213,533 $915,967
Included in deposits are deposits from directors, officers,
their immediate families, and related companies. These
accounts totaled approximately $1,809,000 and $1,080,000 at December
31, 1998 and 1997, respectively.
</TABLE>
11. RESTRICTIONS OF RETAINED EARNINGS
The Bank, as a state chartered Bank, is subject to the dividend
restrictions set forth by the Commissioner. Under such restrictions,
the Bank may not, without the prior approval of the Commissioner, declare
dividends in excess of the sum of the current year's retained net
earnings (as defined) plus the retained net earnings (as defined) from
the prior year. At December 31, 1998, the Bank could not declare any
additional dividends without the approval of the Commissioner.
12. REGULATORY MATTERS
The Bank is subject to various regulatory capital requirements
administered by the federal banking agencies. Failure to meet
minimum capital requirements can initiate certain mandatory,
and possibly additional discretionary actions, by regulators that,
if undertaken, could have a direct material effect on the Bank's
financial statements. Under capital adequacy guidelines and
the regulatory framework for prompt corrective action, the Bank must
meet specific capital 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
amounts and classification 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 Bank to maintain minimum amounts and ratios (set
forth in the table on the following page) of total and Tier I capital
(as defined in the regulations) to risk-weighted assets (as defined),
and of Tier I capital (as defined) to average assets (as defined).
Management believes, as of December 31, 1998, that the Bank meets
all capital adequacy requirements to which it is subject.
The most recent notification from the Office of Financial Institutions
(as of June 30, 1997) categorized the Bank as well capitalized under the
regulatory framework for prompt corrective action. To remain as well
capitalized the Bank must maintain minimum total risk-based, Tier I
risk-based, and Tier I leverage ratios as set forth in the table below
(on the following page). There are no conditions or events since that
notification that management believes have changed the institution's
category.
<TABLE>
The Banks actual capital amounts and ratios as of December 31, 1998 and
1997 are presented below:
To be well
capitalized under
For capital prompt corrective
Actual adequacy purposes action provisions
Amount Ratio Amount Ratio Amount Ratio
As of December 31, 1998:
Total capital
(to risk-weighted
<S> <C> <C> <C> <C> <S><C> <C> <S><C>
assets) $ 5,962,572 22.7% $ 2,101,120 >8.0% $2,626,400 >10.0%
Tier I capital
(to risk-weighted
assets) 5,634,272 21.5 1,050,560 >4.0 1,575,840 >6.0
Tier I capital
(to average
assets) 5,634,272 13.9 1,617,600 >4.0 2,022,000 >5.0
As of December 31, 1997:
Total capital
(to risk-weighted
assets) $ 6,575,334 22.5% $ 2,336,204 >8.0% $ 2,920,300 >10.0%
Tier I capital
(to risk-weighted
assets) 6,210,296 21.3 1,168,120 >4.0 1,752,180 >6.0
Tier I capital
(to average
assets) 6,210,296 15.2 1,633,240 >4.0 2,041,550 >5.0
</TABLE>
13. SIGNIFICANT GROUP CONCENTRATIONS OF CREDIT RISK
Most of the Bank's business activity is with customers located within
Pointe Coupee Parish. Investments in state and municipal securities
involve governmental entities within the Bank's market area. As of
December 31, 1998, the Bank's receivables from, guarantees of, and
obligations from agriculture loans made to sugar cane, cotton, and
wheat farmers were considered a concentration. These loans are generally
secured by assets or farm crops, and a large majority of these loans
are 90% guaranteed by the Farm Service Agency. The loans are expected
to be repaid from cash flow or proceeds from the sale of crops. Loan
losses arising from lending transactions with farmers compare favorably
with the Bank's loan loss experience on its loan portfolio as a whole.
The distribution of commitments to extend credit approximates the
distribution of loans outstanding. Commercial and standby letters of
credit were granted primarily to commercial borrowers.
The contractual amounts of credit-related financial instruments such as
commitments to extend credit, and letters of credit represent the amounts
of potential accounting loss should the contract be fully drawn upon,
the customer default, and the value of any existing collateral become
worthless.
14. SUPPLEMENTAL EXPENSE ITEMS
<TABLE>
Supplemental expense items during the years ended December 31, 1998, 1997,
and 1996 were as follows:
1998 1997 1996
<S> <C> <C> <C> <C> <C> <C>
Director fees $ 60,000 $ 64,600 $ 48,000
Professional fees $ 70,250 $ 69,375 $ 69,387
</TABLE>
<TABLE>
15. BANK ONLY FINANCIAL STATEMENTS:
STATEMENTS OF FINANCIAL CONDITION
DECEMBER 31, 1998 AND 1997
A S S E T S
1998 1997
<S> <C> <C> <C>
Cash and due from banks $ 1,691,500 $ 2,265,075
Interest-bearing deposits
in other banks 394,000 493,000
Federal funds sold 4,025,000 800,000
Securities available-for-sale 4,537,811 7,194,159
Loans, less allowances for
loan losses of $852,171
and $846,958 at December 31,
1998 and 1997, respectively 28,269,513 27,288,042
Accrued interest receivable 509,126 537,746
Bank premises and equipment, net of
accumulated depreciation 673,598 685,100
Other assets 271,443 74,068
Total assets $ 40,371,991 $ 39,337,190
</TABLE>
<TABLE>
15. BANK ONLY FINANCIAL STATEMENTS (continued)
L I A B I L I T I E S A N D S T O C K H O L D E R' S E Q U I T Y
1998 1997
LIABILITIES
Deposits:
<S> <C> <C> <C>
Noninterest-bearing $ 7,064,431 $ 6,329,221
Interest-bearing 26,188,540 26,595,545
Total deposits 33,252,971 32,924,766
Due to parent company 600,000 -
Other borrowed funds 628,000 -
Accrued interest payable 100,369 95,895
Other liabilities 115,247 84,717
Total liabilities 34,696,587 33,105,378
COMMITMENTS AND CONTINGENCIES - -
STOCKHOLDER'S EQUITY
Common stock; $2.50 par
value; 1,000,000 shares
Authorized; 309,677
shares issued and outstanding 774,193 774,193
Capital surplus 2,225,808 1,625,808
Retained earnings 2,634,271 3,810,295
Accumulated other
comprehensive income 41,132 21,516
Total stockholder's equity 5,675,404 6,231,812
Total liabilities and
stockholders equity $ 40,371,991 $ 39,337,190
</TABLE>
<TABLE>
16. PARENT ONLY FINANCIAL STATEMENTS
STATEMENTS OF FINANCIAL CONDITION
DECEMBER 31, 1998 AND 1997
A S S E T S
1998 1997
<S> <C> <C> <C> <C>
Cash in subsidiary bank $ 96,458 $ 4,942
Securities available-for-sale 547,231 -
Accrued interest receivable 4,003 -
Due from subsidiary bank 600,000 -
Investment in subsidiary bank 5,675,404 6,231,812
Total assets $ 6,923,096 $ 6,236,754
</TABLE>
<TABLE>
L I A B I L I T I E S A N D S T O C K H O L D E R S' E Q U I T Y
LIABILITIES
<S> <C> <C> <S>
Due to subsidiary bank $ 6,767 $ -
Other liabilities 690 -
Total liabilities 7,457 -
STOCKHOLDERS' EQUITY
Common stock; $2.50 par
value; 1,000,000 shares
authorized; 309,677
shares issued; and 308,577
<S> <C> <C>
shares outstanding 774,193 774,193
Capital surplus 1,525,808 1,525,808
Retained earnings 4,588,482 3,928,237
Accumulated other
comprehensive income 40,156 21,516
6,928,639 6,249,754
Less: 1,100 shares held in
treasury - at cost ( 13,000) ( 13,000)
Total stockholders'
equity 6,915,639 6,236,754
Total liabilities and
stockholders equity $ 6,923,096 $ 6,236,754
</TABLE>
<TABLE>
16. PARENT ONLY FINANCIAL STATEMENTS (continued)
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1998, 1997, AND 1996
1998 1997 1996
INCOME
Dividends received from
<S> <C> <C> <C> <C>
subsidiary $ 1,473,394 $ 208,000 $ 203,075
Interest on
available-for-sale
securities 32,175 - -
Interest on loan to
subsidiary 13,516 - -
1,519,085 208,000 203,075
EXPENSES
Operating expenses 20,528 3,743 2,198
Income before equity in
undistributed earnings
of subsidiary 1,498,557 204,257 200,877
Equity (deficit) in
Undistributed earnings
of subsidiary ( 576,024) 709,829 705,148
NET INCOME 922,533 914,086 906,025
OTHER COMPREHENSIVE INCOME
Unrealized holding gains
(losses) arising during
the period, net of taxes 21,145 11,888 ( 7,342)
Less: reclassification
adjustment for realized
gains ( 2,505) ( 523) ( 23,558)
18,640 11,365 ( 30,900)
COMPREHENSIVE INCOME $ 941,173 $ 925,451 $ 875,125
</TABLE>
<TABLE>
16. PARENT ONLY FINANCIAL STATEMENTS (continued)
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1998, 1997, AND 1996
1998 1997 1996
CASH FLOWS FROM
OPERATING ACTIVITIES
<S> <C> <C> <C> <C>
Net income $ 922,533 $ 914,086 $ 906,025
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Increase in accrued
interest receivable ( 4,003) - -
Increase in other
liabilities and due to
subsidiary 7,457 - -
Equity in undistributed
earnings of subsidiary 576,024 ( 709,829) ( 705,148)
Net cash provided by
operating activities 1,502,011 204,257 200,877
CASH FLOWS FROM INVESTING
ACTIVITIES
Purchases of
available-for-sale
<S> <C> <S>
securities (5,085,242) - -
Proceeds from maturities
of available-for-
sale securities 4,537,035 - -
Advancement of funds to
subsidiary ( 600,000) - -
Net cash used in investing
activities (1,148,207) - -
CASH FLOWS FROM FINANCING
ACTIVITIES
Dividends paid ( 262,288) ( 200,575) ( 200,575)
Net cash used in
financing activities ( 262,288) ( 200,575) ( 200,575)
Net increase in cash 91,516 3,682 302
Cash - beginning of year 4,942 1,260 958
Cash - end of year $ 96,458 $ 4,942 $ 1,260
</TABLE>
