<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934
For the Fiscal Year Ended December 31, 1997 Commission File Number 0-11928
AMERICAN BANCORP, INC.
(Exact name of registrant as specified in its charter)
Louisiana 72-0951347
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
328 East Landry Street
Opelousas, Louisiana 70570
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, including area code: (318) 948-3056
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $5.00 Par Value
(Title of Class)
Indicate by check mark whether the registrant: (l) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of the voting stock held by non-affiliates* of the
registrant: $3,380,764.
The number of shares outstanding of each of the issuer's classes of common
stock, as of December 31, 1997: Common Stock, $5.00 Par Value, 119,962 shares
outstanding.
Documents Incorporated by Reference
Portions of the annual shareholders' report for the year ended December 31, 1997
are incorporated by reference into Parts I and II.
Portions of the proxy statement for the annual shareholders meeting to be held
April 8, 1998 are incorporated by reference into Part III.
*For purposes of the computation, shares owned by executive officers,
directors, 5% shareholders and shares by non-affiliates whose voting rights have
been assigned to directors have been excluded.
- 1 -
<PAGE> 2
PART I
Item 1. Business
American Bancorp, Inc. (the Company) was incorporated under the laws of
the State of Louisiana in 1982. On October 1, 1983, American Bank and Trust
Company (the Bank) was reorganized as a subsidiary of the Company. Prior to
October 1, 1983, the Company had no material activity. The Company is currently
engaged, through its subsidiary, in banking and related business. The Bank is
the Company's principal asset and primary source of revenue.
The Bank
The Bank, incorporated under the State Banking Laws on August 1, 1958 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 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 boxes, bank money orders, wire
transfer facilities, and electronic banking facilities.
The State of Louisiana, through its various departments and agencies,
deposits public funds with the Bank. However, as of December 31, 1997, the State
of Louisiana did not have any funds on deposit with the Bank.
The Bank's general market area is in St. Landry Parish, which has a
population of approximately 80,331. Its primary market is Opelousas, which has a
population of approximately 19,300, and has experienced little population growth
over the past several years.
The commercial banking business in St. Landry Parish is highly
competitive. The Depository Institutions Deregulation and Monetary Control Act
of 1980 and the Garn-St. Germain Depository Institutions Act of 1982 have
eliminated most, if not all, substantive distinctions between the services of
commercial banks and thrift institutions. The Bank competes with three banks and
two savings and loan institutions located in St. Landry Parish. The following is
a list of banks and savings associations in this market with the total deposits
and assets as of December 31, 1997.
<TABLE>
<CAPTION>
(In thousands of dollars)
Assets Deposits
------ --------
<S> <C> <C>
American Bank and Trust Company $ 64,621 $ 55,857
St. Landry Bank and Trust Company $ 212,101 $ 179,874
First National Bank of Lafayette $ 854,112 $ 737,313
St. Landry Homestead $ 120,535 $ 104,011
Washington State Bank $ 75,645 $ 58,523
First Federal Savings & Loan $ 62,815 $ 44,764
</TABLE>
- 2 -
<PAGE> 3
Item 1. Business (continued)
In addition to the institutions listed above, further competition is
provided by banks and other financial institutions located in Lafayette,
Louisiana, which is 20 miles south of Opelousas and Baton Rouge, Louisiana, the
state capital, which is 60 miles east of St. Landry Parish.
Louisiana Banking Law provides that generally Louisiana banks having
capital of one hundred thousand dollars or more may open one or more branch
offices within the State or may acquire one or more banks or any or all branches
thereof, or both. On July 2, 1986, Louisiana passed an interstate banking law
affirmatively permitting Louisiana bank holding companies to immediately acquire
out-of-state bank holding companies and banks. On July 1, 1987, bank holding
companies located in a fifteen state region were permitted to acquire banks or
bank holding companies in Louisiana, and beginning January 1, 1991, out-of-state
bank holding companies may acquire banks or bank holding companies provided that
the law of the state in which the out-of-state bank holding company has its
principal place of business permits Louisiana bank holding companies to acquire
banks and bank holding companies in that state.
The effect of the new liberalized branching laws and the Louisiana
Interstate Banking Law on the Company cannot be predicted at this time, but
increased competition is expected.
Employees
During 1997, the average number of full-time equivalent employees at the
Bank was 43. This includes the officers of the Company that are listed under
Item 1 below.
There are no unions or bargaining units that represent the employees of
the Bank. The relation between management and employees is considered to be
good.
Executive Officers
The executive officers of the Company are as follows:
<TABLE>
<CAPTION>
Years of
Officer Name Service Age Position Currently Held
------------ -------- --- -----------------------
<S> <C> <C> <C>
Salvador L. Diesi, Sr. 24 67 Chairman of the Board of the
Company and the Bank;
President of the Company
and the Bank
Ronald J. Lashute 25 48 Executive Vice-President and
Chief Executive Officer of the
Bank and Secretary/Treasurer
of the Company
</TABLE>
- 3 -
<PAGE> 4
Item 1. Business (continued)
None of the directors and executive officers of the Company or the Bank
holds a directorship in any company with a class of securities registered under
Section 12 of the Securities Exchange Act of 1934, as amended, or subject to the
requirements of Section 15(d) of that Act or in any company registered as an
investment company under the Investment Company Act of 1940. Salvador L. Diesi,
Sr. and Ronald J. Lashute are the nephews of J.C. Diesi. No other family
relationships exist among the above named directors or executive officers of the
Company.
Supervision and Regulation
The Bank is subject to regulation and regular examinations by the
Louisiana Commissioner of Financial Institutions and by the Federal Deposit
Insurance Corporation. Applicable regulations relate to reserves, investments,
loans, issuance of securities, establishment of branches, and other aspects of
its operations.
The Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA") further expanded the regulatory and enforcement powers of bank
regulatory agencies. Among the significant provisions of FDICIA is the
requirement that bank regulatory agencies prescribe standards relating to
internal controls, information systems, loan documentation, credit underwriting,
interest rate exposure, asset growth, compensation, fees and benefits. FDICIA
mandates annual examinations of banks by their primary regulators.
The Company 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 Company 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 Company and all of its activities. The activities that
may be engaged in by the Company and its subsidiary are limited by the Act to
those so closely related to banking or managing or controlling banks as to be a
proper incident thereto. In determining whether a particular activity is a
proper incident to banking or managing or controlling banks, the Board must
consider whether its performance by an affiliate of a holding company can
reasonably be expected to produce benefits to the public, such as greater
convenience, increased competition or gains in efficiency that outweigh 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 non-banking activities of bank holding companies. Such
regulations reflect a determination by the Board that certain specified
activities are permissible for a bank holding company. An activity not listed in
the regulation may be engaged in if, upon application, the Board determines that
the activity meets the criteria described in the preceding paragraph. In each
case, a bank holding company must secure the approval of the Board prior to
engaging in any of these activities.
Whether or not a particular non-banking activity is permitted under the
Act, the Board is authorized to require a holding company to terminate any
activity, or divest itself of any non-banking subsidiary, if in its judgment the
activity or subsidiaries would be unsound.
- 4 -
<PAGE> 5
Item 1. Business (continued)
Under the Act and the Board's regulations, a bank holding company and
its subsidiaries are prohibited from engaging in certain tie-in arrangements in
connection with any extension of credit or provision of any property or
services.
In some cases, the Company must receive the prior approval of the Board
in order to repurchase or redeem its outstanding equity securities.
With certain exceptions, the Subsidiary Bank is restricted by Sections
22 and 23A of the Federal Reserve Act from extending credit or making loans to
or investments in the Company and certain other affiliates as defined in the
Federal Reserve Act. Such transactions by the Subsidiary Bank with the Company
or any such affiliate are limited in an amount to 10% of the Subsidiary Bank's
capital and surplus. Furthermore, loans and extensions of credit are subject to
various collateral requirements.
The Louisiana bank holding company law, as amended (the "Louisiana
Act"), permits bank holding companies to own more than one bank. In addition, a
bank holding company and its subsidiaries may not engage in any insurance
activity in which a bank may not engage. The Louisiana Commissioner of Financial
Institutions is authorized to administer the Louisiana Act and to issue orders
and regulations.
The Board of Directors of the Company have no present plans or
intentions to cause the Company to engage in any substantial business activity
which would be permitted to it under the Act or 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 Company concludes
that such action would be in the best interest of stockholders.
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 Financial Condition and Results of
Operations. The 1997 Annual Report to Shareholders is incorporated herein by
reference under Item 8.
Investment Portfolio
The following table sets forth the carrying amount of Investment
Securities at the dates indicated (in thousands of dollars):
<TABLE>
<CAPTION>
December 31,
-------------------------------------------
1997 1996 1995
-------- -------- ---------
<S> <C> <C> <C>
Securities held to maturity:
U.S. Treasury $ 3,692 $ 4,005 $ 5,508
U.S. Government Agencies 10,512 11,513 10,997
-------- -------- --------
$ 14,204 $ 15,518 $ 16,505
======== ======== ========
</TABLE>
- 5 -
<PAGE> 6
Item 1. Business (continued)
<TABLE>
<CAPTION>
December 31,
-------------------------------------------
1997 1996 1995
-------- -------- ---------
<S> <C> <C> <C>
Securities available for sale:
Mortgage-backed securities $ 1,210 $ 1,787 $ 2,342
U.S. Treasury securities 2,009 1,002 -
U.S. Government Agencies 5,532 3,012 1,536
State and Political subdivisions 3,442 2,870 1,263
-------- ------- --------
$ 12,193 $ 8,671 $ 5,141
======== ======= ========
</TABLE>
The following tables set forth the maturities of investment securities
at December 31, 1997, 1996, and 1995 and the weighted average yields of such
securities (in thousands of dollars):
<TABLE>
<CAPTION>
December 31, 1997
--------------------------------------------------------------------------------------
After One After Five
But Within But Within After
Within One Year Five Years Ten Years Ten Years
----------------- ------------------ ------------------ -----------------
Amount Yield Amount Yield Amount Yield Amount Yield
------ ----- ------ ----- ------ ----- ------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Securities held
to maturities:
U.S. Treasury $ 1,200 5.95% $ 2,492 6.25% $ - - % $ - - %
U.S. Government
Agencies 2,498 5.92 7,016 6.49 998 7.16 - -
------- -------- -------- --------
Total held
to maturity 3,698 5.93 9,508 6.43 998 7.16 -0- -
------- -------- -------- --------
Securities available for
sale:
U.S. Treasury 1,001 6.27 1,008 6.28 - - - -
U.S. Government
Agencies - - 5,532 6.53 - - - -
Mortgage-backed
securities 4 9.35 407 8.66 68 9.16 731 8.66
State and Political
Subdivisions 10 6.43 2,006 7.29 1,221 7.01 205 8.68
------- -------- -------- --------
Total available
for sale 1,015 6.28 8,953 6.76 1,289 7.11 936 8.67
------- -------- -------- --------
Total securities $ 4,713 6.01% $ 18,461 6.59% $ 2,287 7.13% $ 936 8.67%
======= ===== ======== ===== ======== ===== ======== =====
</TABLE>
- 6 -
<PAGE> 7
Item 1. Business (continued)
<TABLE>
<CAPTION>
December 31, 1996
--------------------------------------------------------------------------------------
After One After Five
But Within But Within After
Within One Year Five Years Ten Years Ten Years
----------------- ------------------ ------------------ -----------------
Amount Yield Amount Yield Amount Yield Amount Yield
------ ----- ------ ----- ------ ----- ------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Securities held
to maturities:
U.S. Treasury $ 1,801 6.15% $ 2,204 5.88% $ - - % $ - - %
U.S. Government
Agencies 4,496 6.64 7,017 6.56 - - - -
------- -------- -------- --------
Total held
to maturity 6,297 6.50 9,221 6.40 -0- - -0- -
------- -------- -------- --------
Securities available for
sale:
U.S. Treasury - - 1,002 6.27 - - - -
U.S. Government
Agencies 1,507 7.03 1,505 6.44 - - - -
Mortgage-backed
securities 124 8.24 906 8.20 757 9.14 - -
State and Political
Subdivisions - - 1,481 7.81 1,389 7.04 - -
------- -------- -------- --------
Total available
for sale 1,631 7.12 4,894 7.15 2,146 7.78 -0- -
------- -------- -------- --------
Total securities $ 7,928 6.63% $ 14,115 6.67% $ 2,146 7.78% $ -0- - %
======= ===== ======== ===== ======== ===== ======== =====
</TABLE>
- 7 -
<PAGE> 8
Item 1. Business (continued)
<TABLE>
<CAPTION>
December 31, 1995
--------------------------------------------------------------------------------------
After One After Five
But Within But Within After
Within One Year Five Years Ten Years Ten Years
----------------- ------------------ ------------------ -----------------
Amount Yield Amount Yield Amount Yield Amount Yield
------ ----- ------ ----- ------ ----- ------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Securities held
to maturities:
U.S. Treasury $ 3,499 6.32% $ 2,009 6.18% $ - - % $ - - %
U.S. Government
Agencies 5,002 5.62 5,495 6.37 500 6.36 - -
------- -------- -------- --------
Total held
to maturity 8,501 5.91 7,504 6.32 500 6.36 -0- -
------- -------- -------- --------
Securities
available for sale:
U.S. Government
Agencies - - 1,536 6.77 - - - -
Mortgage-backed
securities 183 7.92 1,116 8.92 1,043 8.47 - -
State and Political
Subdivisions* - - 377 7.85 886 6.58 - -
------- -------- -------- --------
Total available
for sale 183 7.92 3,029 7.69 1,929 7.59 -0- -
------- -------- -------- --------
Total securities $ 8,684 5.96% $ 10,533 6.70% $ 2,429 7.35% $ -0- - %
======= ===== ======== ===== ======== ===== ======== =====
</TABLE>
* Weighted average yields have been computed on a fully tax-equivalent basis
assuming a rate of 34% for 1997, 1996 and 1995.
- 8 -
<PAGE> 9
Item 1. Business (continued)
Loan Portfolio
The amounts of loans outstanding at the indicated dates are shown in the
following table according to type of loan (in thousands of dollars):
<TABLE>
<CAPTION>
December 31,
-------------------------------------------
1997 1996 1995
-------- -------- ---------
<S> <C> <C> <C>
Commercial, financial and agricultural $ 7,549 $ 7,437 $ 6,240
Real Estate - Construction 359 285 119
Real Estate - Mortgage 15,543 16,278 16,473
Installment 4,984 4,925 4,182
-------- -------- --------
Total 28,435 28,925 27,014
Less:
Allowance for possible loan losses (600) (614) (624)
Unearned income - - -
-------- -------- -------
$ 27,835 $ 28,311 $ 26,390
======== ======== ========
</TABLE>
The following table presents information concerning the aggregate amount
of nonperforming loans. Nonperforming loans comprise: (a) loans accounted for on
a nonaccrual basis; (b) loans contractually past due ninety days or more as to
interest or principal payments [but not included in the nonaccrual loans in (a)
above]; (c) other loans whose terms have been restructured to provide a
reduction or deferral of interest or principal because of a deterioration in the
financial position of the borrower [exclusive of loans in (a) or (b) above]; and
(d) loans now current where there are serious doubts as to the ability of the
borrower to comply with present loan requirement terms (in thousands of
dollars):
<TABLE>
<CAPTION>
December 31,
-------------------------------------------
1997 1996 1995
-------- -------- ---------
<S> <C> <C> <C>
Loans accounted for on a nonaccrual basis $ 308 $ 496 $ 2
Restructured loans which are not on
non-accrual 70 94 112
-------- -------- --------
378 590 114
Other real estate and repossessed assets
received in complete or partial
satisfaction of loan obligations 7 14 14
-------- -------- --------
Total nonperforming assets $ 385 $ 604 $ 128
======== ======== ========
Loans contractually past due ninety days
or more as to principal or interest,
but which were not on non-accrual $ 9 $ 27 $ 10
======== ======== ========
</TABLE>
- 9 -
<PAGE> 10
Item 1. Business (continued)
As of January 1, 1995, the Company adopted SFAS No. 114, "Accounting by
Creditors for Impairment of a Loan," which, as it relates to in-substance
foreclosures, requires that a creditor continue to classify these assets as
loans in the balance sheet unless the creditor receives physical possession of
the collateral. The Company had no in-substance foreclosures at the date of
adoption of SFAS No. 114. At December 31, 1997, the recorded investment in loans
that were considered to be impaired under SFAS No. 114 was $308,059, with the
related allowance for loan losses of $150,000. These loans are included in
nonaccrual loans.
The effect of nonperforming loans on interest income has not been
substantial in the past three years. Had interest been accrued on the
nonperforming loans, interest income would have been recorded in the amount of
$44,501, $59,177 and $13,732, for the years 1997, 1996, and 1995, respectively.
Interest income in the amount of $-0-, $6,633 and $7,638 on nonperforming loans
during 1997, 1996 and 1995, respectively, was recorded.
At December 31, 1997, 1996 and 1995 there were no significant
commitments to lend additional funds to debtors whose loans were considered to
be nonperforming.
The Bank places loans on nonaccrual when the borrower is no longer able
to make periodic interest payments due to a deterioration of the borrowers
financial condition.
At December 31, 1997, the Bank has an insignificant amount of loans for
which payments are current, but the borrowers are experiencing financial
difficulties. These loans are subject to constant management attention, and
their classification is reviewed on a monthly basis.
Summary of Loan Loss Experience
The following table summarizes loan balances at the end of each period
and average loans based on daily average balances for 1997, 1996, and 1995;
changes in the allowance for possible loan losses arising from loans charged off
and recoveries on loans previously charged off by loan category; and additions
to the allowance which have been charged to expense (in thousands of dollars):
<TABLE>
<CAPTION>
1997 1996 1995
-------- -------- ------
<S> <C> <C> <C>
Amount of loans outstanding
at end of period $ 28,435 $ 28,926 $ 27,014
======== ======== ========
Average amount $ 27,797 $ 27,635 $ 26,748
======== ======== ========
</TABLE>
- 10 -
<PAGE> 11
Item 1. Business (continued)
Allowance for Possible Loan Losses
(In thousands of dollars)
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------------
1997 1996 1995
-------- -------- -------
<S> <C> <C> <C>
Beginning balance $ 614 $ 624 $ 614
Provision charged against income - - -
-------- -------- -------
614 624 614
-------- -------- --------
Charge-offs:
Commercial, financial and
agricultural loans (1) - -
Real estate mortgage loans - - -
Real estate construction loans - - -
Installment loans (16) (18) (6)
-------- -------- --------
Total charge-offs (17) (18) (6)
-------- -------- --------
Recoveries:
Commercial, financial and agricultural loans - 5 8
Real estate mortgage loans - 1 -
Real estate construction loans - - -
Installment loans 3 2 8
-------- -------- --------
3 8 16
-------- -------- --------
Net (charge-offs) recoveries (14) (10) 10
-------- -------- --------
Ending balance $ 600 $ 614 $ 624
======== ======== ========
Ratio of net (charge-offs) recoveries
during the period to average loans
outstanding during the period (.05)% (.04)% .04%
======= ======= ========
</TABLE>
The allowance for possible loan losses has been allocated according to
the amount deemed to be reasonably necessary to provide for the possibility of
losses being incurred within the following categories of loans at the date
indicated:
Allocation of Allowance for Possible Loan Losses
(In thousands of dollars)
<TABLE>
<CAPTION>
December 31, 1997 December 31, 1996
---------------------------- --------------------------
% of Loans % of Loans
Outstanding Outstanding
to Total to Total
Allowance Loans Allowance Loans
--------- ------- ------- -------
<S> <C> <C> <C> <C>
Commercial, financial and
agricultural loans $ 218 36.33% $ 201 32.74%
Real estate construction 5 .83 3 .49
Real estate mortgage loans 97 16.17 146 23.78
Installment loans 280 46.67 264 42.99
--------- ------- ------- -------
$ 600 100.00% $ 614 100.00%
========= ======= ======= =======
</TABLE>
- 11 -
<PAGE> 12
Item 1. Business (continued)
Allocation of Allowance for Possible Loan Losses (continued)
(In thousands of dollars)
<TABLE>
<CAPTION>
December 31, 1995
--------------------------
% of Loans
Outstanding
to Total
Allowance Loans
--------- -------
<S> <C> <C>
Commercial, financial and
agricultural loans $ 134 21.47%
Real estate construction 5 0.80
Real estate mortgage loans 400 64.10
Installment loans 85 13.63
--------- -------
$ 624 100.00%
========= =======
</TABLE>
Deposits
The average amount of deposits, using daily average balances for 1997,
1996, and 1995, is summarized for the periods indicated in the following table
(in thousands of dollars):
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------------
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Non-interest bearing demand deposits $ 16,846 $ 15,530 $ 15,707
Interest-bearing demand deposits 11,752 11,510 11,480
Savings deposits 8,374 8,597 8,782
Time deposits 19,003 17,659 15,977
-------- -------- --------
$ 55,975 $ 53,296 $ 51,946
======== ======== ========
</TABLE>
Return on equity and assets
The ratio of Net Income to Average Shareholders' Equity and to Average
Total Assets, and certain other ratios, are as follows:
<TABLE>
<CAPTION>
December 31,
--------------------------------------------
1997 1996 1995
-------- -------- ---------
<S> <C> <C> <C>
Percentage of net income to:
Average total assets 1.47% 1.70% 1.64%
Average shareholders' equity 11.70% 14.32% 15.46%
Percentage of dividends declared per
common share to net income per
common share 13.92% 11.56% 10.59%
Percentage of average shareholders'
equity to daily average total assets 12.58% 11.88% 10.60%
</TABLE>
- 12 -
<PAGE> 13
Item 1. Business (continued)
Short-Term Borrowing
The Company's short-term borrowing and the average interest rate thereon
at the end of the last three years, are as follows (in thousands of dollars):
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------
1997 1996 1995
-------- -------- ------
<S> <C> <C> <C>
Balance at December 31 $ - $ - $ -
Weighted average interest rate at
year end - % - % - %
Maximum amount outstanding at any
month's end $ - $ 950 $ 1,650
Average amount outstanding during
the year $ - $ 66 $ 17
Weighted average interest rate
during the year - % 4.55% 11.76%
</TABLE>
Item 2. Properties
The main office of the Company and the Bank are presently located at 328
East Landry Street, Opelousas, Louisiana, in the downtown business district. The
Bank leases four branch sites. The building in which the main office is located
is free of all mortgages.
For information with respect to the Company obligations under its lease
commitments, see Note 11 to the Consolidated Financial Statements, which are
incorporated herein by reference under Item 8.
Item 3. Legal Proceedings
The Company is not involved in any legal actions; however, there are
presently pending by the Bank a number of legal proceedings. It is the opinion
of management that the resulting liability, if any, from these actions and other
pending claims will not materially affect the consolidated financial statements.
Item 4. Submission of Matters to a Vote of Security Holders
No matters were submitted during the fourth quarter of the fiscal year
covered by this report to a vote of security holders, through the solicitation
of proxies or otherwise.
- 13 -
<PAGE> 14
PART II
Item 5. Market for Registrant's Common Stock and Related Security Holder
Matters
MARKET PRICE AND DIVIDENDS DECLARED
<TABLE>
<CAPTION>
Dividends
Year Quarter High Low Per Share
---- ------- ---- --- ---------
<S> <C> <C> <C> <C>
1997 First $ 30 $ 20 $ -
Second 30 30 -
Third 30 30 -
Fourth 53 30 1.10
1996 First $ 25 $ 20 $ -
Second 20 6 -
Third 25 20 -
Fourth 25 20 1.00
</TABLE>
Note: The primary market area for American Bancorp, Inc.'s common stock
is the Opelousas, Louisiana area with American Bank and Trust Company acting as
registrar and transfer agent. There were approximately 555 shareholders of
record at December 31, 1997.
Source of market price - American Bank & Trust Company acts as the
transfer agent for the Company. The stock is thinly traded and the price ranges
are based on stated sales price to the transfer agent, which does not represent
all sales.
RESTRICTIONS ON CASH DIVIDENDS PAYABLE BY THE REGISTRANT:
The only source of funds by the Company to pay dividends is dividends
paid by the Subsidiary Bank, the payment of which is restricted by applicable
federal and state statutes.
Federal bank regulatory authorities have authority under the Financial
Institutions Supervisory Act to prohibit a bank from engaging in an unsafe or
unsound practice. The payment of a dividend by the Bank could, depending upon
the financial condition of the Bank and other factors be deemed an unsafe or
unsound practice.
Applicable Louisiana law prohibits a state bank subsidiary from paying a
dividend if its surplus remaining after payment of the dividend would be less
than half the aggregate par value of its outstanding stock. In addition, a state
bank subsidiary is required to obtain the prior approval of the Commissioner of
Financial Institutions of Louisiana before declaring or paying a dividend in a
given year if the total of all dividends declared or paid during that year would
exceed the total of its net profits for that year combined with the net profits
from the immediately preceding year.
- 14 -
<PAGE> 15
Item 6. Selected Financial Data
The information called for by Item 6 is included in Registrant's Annual
Report on page 5 in the Section titled "Summary of Operations for the Last Five
Years" and is incorporated herein by reference.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The information called for by Item 7 is included in the Registrant's
Annual Report in the section titled "Management's Discussion and Analysis of
Operations" and is incorporated herein by reference.
Item 8. Financial Statements and Supplementary Data
The following consolidated financial statements of the Registrant and
its subsidiary included on pages 28 through 55 in the Annual Report are
incorporated herein by reference:
Consolidated Balance Sheets - December 31, 1997 and 1996
Consolidated Statements of Income - Years Ended December 31, 1997,
1996, and 1995
Consolidated Statements of Shareholders' Equity - Years Ended December
31, 1997, 1996, and 1995
Consolidated Statements of Cash Flows - Years Ended December 31, 1997,
1996, and 1995
Notes to Consolidated Financial Statements
Item 9. Disagreements in Accounting and Financial Disclosure
There have been no disagreements with an independent accountant on any
matter of accounting principles or practice, financial disclosure, auditing
scope or procedure.
PART III
Item 10. Directors and Executive Officers
With the exception of identification of executive officers of the
Company, the information called for by Item 10 is omitted pursuant to General
Instruction G(3) and is included in Registrant's definitive Proxy Statement
filed pursuant to Section 14(a). Executive officers of the Company are
identified in Item 1, "Executive Officer," included in Part I of this report.
Item 11. Management Remuneration and Transactions
The information called for by this item is included in Registrant's
definitive Proxy Statement filed pursuant to Section 14(a) of the Securities
Exchange Act of 1934 and is incorporated herein by reference.
- 15 -
<PAGE> 16
Item 12. Security Ownership of Certain Beneficial Owners and Management
The information called for by this item is included in Registrant's
definitive Proxy Statement filed pursuant to Section 14(a) of the Securities
Exchange Act of 1934 and is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions
The information called for by this item is included in Registrant's
definitive Proxy Statement filed pursuant to Section 14(a) of the Securities
Exchange Act of 1934 and is incorporated herein by reference.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) 1. Financial Statements
The following consolidated financial statements of
American Bancorp, Inc. and Subsidiary, included in pages
28 through 55 of the Registrant's Annual Report are
incorporated by reference in Item 8:
Consolidated Balance Sheets - December 31, 1997 and 1996
Consolidated Statements of Income - Years Ended
December 31, 1997, 1996 and 1995
Consolidated Statements of Shareholders' Equity - Years
Ended December 31, 1997, 1996 and 1995
Consolidated Statements of Cash Flows - Years Ended
December 31, 1997, 1996 and 1995
Notes to Consolidated Financial Statements
(a) 2. Financial Statement Schedules
The Schedules to the consolidated financial statements
required by Article 9, and all other schedules to the
financial statements of the Registrant required by Article
9 of Regulation S-X are not required under the related
instructions or are inapplicable and therefore have been
omitted.
(a) 3. Exhibits
(13) 1997 Annual Report to Shareholders
(22) Proxy Statement for Annual Meeting of Shareholders
to be held on April 8, 1998
(23) Consent of Independent Auditors
(27) Financial data schedule
- 16 -
<PAGE> 17
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(continued)
(b) Reports on Form 8-K
None
(c) Exhibits
The response to this portion of Item 14 is submitted as a
separate section of this report.
(d) Financial Statement Schedules
The response to this portion of Item 14 is submitted as a
separate section of this report.
- 17 -
<PAGE> 18
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
American Bancorp, Inc.
(Registrant)
By: /s/ Salvador L. Diesi
----------------------------------
Salvador L. Diesi, Sr., Chairman
of the Board of the Company
and the Bank; President of
the Company and the Bank
Date: 03/11/98
--------------------------------
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.
/s/ Salvador L. Diesi /s/ Joseph J. Artall
- ------------------------------------- --------------------------------------
Salvador L. Diesi, Sr., Chairman of Joseph J. Artall, Director
the Board of the Company and the
Bank; President of the Company
and the Bank
Date: 03/11/98 Date: 03/11/98
------------------------------- -------------------------------
/s/ Ronald J. Lashute /s/ Walter J. Champagne
- ------------------------------------- --------------------------------------
Ronald J. Lashute, Executive Vice- Walter J. Champagne, Jr., Director
President and Chief Executive Officer
of the Bank; Secretary/Treasurer of
the Company
Date: 03/11/98 Date: 03/11/98
------------------------------- -------------------------------
/s/ J. C. Diesi
--------------------------------------
J. C. Diesi, Director
Date: 03/11/98
-------------------------------
- 18 -
<PAGE> 19
EXHIBIT INDEX
<TABLE>
<CAPTION>
Number Description
------ -----------
<S> <C>
13.1 1997 Annual Report to shareholders
of American Bancorp, Inc.
22.1 1997 Proxy Statement for annual
meeting of shareholders.
23.1 Consent of Independent Auditors.
27.1 Financial Data Schedule.
</TABLE>
- 19 -
<PAGE> 1
EXHIBIT 13.1
[AMERICAN BANCORP, INC. LOGO]
---------------------------------------------------------------------------
1997 ANNUAL REPORT
AMERICAN BANCORP, INC.
POST OFFICE BOX 1579
OPELOUSAS, LOUISIANA 70570
<PAGE> 2
NATURE OF BUSINESS
American Bancorp, Inc. is a one-bank holding company whose sole
subsidiary is American Bank and Trust Company, a commercial bank whose general
business is that of providing banking services to the Opelousas, Louisiana area.
The Bank serves the needs of the area through 46 employees at six banking
locations. The main office is located at the corner of Landry Street and Union
Street in Opelousas. Branch banking-offices are located in the parish of St.
Landry in the communities of Lawtell, Krotz Springs, Port Barre and an office on
Creswell Lane in South Opelousas. In addition, the Bank has a branch located on
Moss Street, in Lafayette, Louisiana.
MARKET PRICE AND DIVIDENDS DECLARED
<TABLE>
<CAPTION>
DIVIDENDS
YEAR QUARTER HIGH LOW PER SHARE
------ --------- ------ ----- ------------
<S> <C> <C> <C> <C>
1997 First $ 30 $ 20 $ -
Second 30 30 -
Third 30 30 -
Fourth 53 30 1.10
1996 First $ 25 $ 20 $ -
Second 20 6 -
Third 25 20 -
Fourth 25 20 1.00
</TABLE>
Note: The primary market area for American Bancorp, Inc.'s common stock is the
Opelousas, Louisiana area with American Bank and Trust Company acting as
registrar and transfer agent. There were approximately 555 shareholders of
record at December 31, 1997.
Source of market price - American Bank & Trust Company acts as the
transfer agent for the Company. The stock is thinly traded and the price ranges
are based on stated sales price to the transfer agent, which does not represent
all sales.
ANNUAL SHAREHOLDERS' MEETING
The annual meeting of the shareholders of American Bancorp, Inc. will be
held on April 8, 1998 in the Board of Directors Room at the Operations Center
located at 328 East Landry Street, Opelousas, Louisiana.
FORM 10-K ANNUAL REPORT
American Bancorp, Inc. files an annual report with the Securities and
Exchange Commission on Form 10-K. A copy of the report filed on Form 10-K will
be sent free of charge to any shareholder by writing to: Ronald J. Lashute,
Chief Executive Officer and Executive Vice-President, American Bank and Trust
Company, Post Office Box 1579, Opelousas, Louisiana 70570.
-1-
<PAGE> 3
FINANCIAL SUMMARY
(In thousands of dollars except per share data and ratios)
<TABLE>
<CAPTION>
1997 1996 1995
---- ---- ----
<S> <C> <C> <C>
FOR THE YEAR
Net income $ 948 $ 1,038 $ 963
Return on average shareholders' equity 11.70% 14.32% 15.46%
Return on average total assets 1.47% 1.70% 1.64%
AT YEAR END
Total assets $ 64,621 $ 67,254 $ 63,070
Total earning assets $ 57,377 $ 60,666 $ 55,080
Total loans $ 27,835 $ 28,311 $ 26,390
Total deposits $ 55,857 $ 59,367 $ 55,655
Total shareholders' equity $ 8,513 $ 7,656 $ 6,785
Common shares outstanding 119,962 120,000 120,000
PER SHARE
Net income $ 7.90 $ 8.65 $ 8.03
Book value $ 70.96 $ 63.80 $ 56.55
Cash dividends declared $ 1.10 $ 1.00 $ .85
CAPITAL RATIOS
Total risk-based capital ratio 27.38% 24.48% 23.17%
Leverage ratio 12.97% 12.44% 11.36%
</TABLE>
-2-
<PAGE> 4
C O N T E N T S
<TABLE>
<CAPTION>
PAGE
<S> <C>
Financial Summary ........................................... 2
A Message to the Shareholders ............................... 4
Management's Discussion and Analysis of Financial
Condition and Results of Operations ...................... 5 - 27
Independent Auditors' Report ................................ 28
Consolidated balance sheets ................................. 29 and 30
Consolidated statements of income ........................... 31
Consolidated statements of changes in shareholders' equity 33 and 34
Consolidated statements of cash flows ....................... 35 and 36
Notes to consolidated financial statements .................. 37 - 55
Officers and directors of American Bank and Trust Company 56
Officers and directors of American Bancorp, Inc. ............ 57
</TABLE>
-3-
<PAGE> 5
TO THE SHAREHOLDERS
This past year's performance was very rewarding for American Bancorp,
Inc. and American Bank &Trust Co., it's sole subsidiary. Net income for the year
was $947,536 or $7.90 per share. Return on average assets was 1.47% and return
on average equity was 11.70%. As a result, the book value of the bank's stock
increased 11.22% to $70.96 per share at year end.
Average assets of the company climbed during 1997 to $64,384,000, an
increase of $3,372,000 or 5.53% over 1996, thus surpassing our growth goal for
the year. The company's leverage capital ratio increased to 12.97% from 12.44%
or $856,290. Dividends paid to the shareholders in 1997 represented a 10%
increase over the 1996 dividend.
As growth goals were surpassed, and income goals met, asset quality of
the company remained good. At December 31, 1997, non performing assets had
decreased by 36% to less than 1% of total assets, and net charged off loans
were only $14,886. The bank also ended the year with a healthy reserve for loan
losses in the amount of $599,593.
In 1997, the company created a market for its shareholders by
establishing a stock repurchase program. This will provide liquidity for
shareholders who may desire to sell their stock.
The company will be introducing its newest product, the debit card, in
early 1998. The debit card is the card that writes a check. It is convenient and
can be used to make purchases at merchants worldwide.
Having completed another successful year and with the continued
introduction of new products and services, we look forward to the continuance of
prosperity with the same spirit, optimism, and personal approach which has
proven successful in the past.
We appreciate the continuing support of our shareholders, customers, and
dedicated staff of employees.
/s/ SALVADOR L. DIESI
- ----------------------------------------------
Salvador L. Diesi, Sr., Chairman of the Board
and President
/s/ RONALD J. LASHUTE
- ----------------------------------------------
Ronald J. Lashute, Chief Executive Officer and
Executive Vice-President
-4-
<PAGE> 6
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
SUMMARY OF OPERATIONS FOR THE LAST FIVE YEARS
(In thousands of dollars except per share data and ratios)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------
1997 1996 1995 1994 1993
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Operating Data:
Net interest income. . . . . . . . . . . . . . . . . $ 3,085 $ 2,976 $ 3,065 $ 2,567 $ 2,442
Provision for possible loan
losses. . . . . . . . . . . . . . . . . . . . . . $ -- $ -- $ -- $ 12 $ 36
Net income . . . . . . . . . . . . . . . . . . . . . $ 948 $ 1,038 $ 963 $ 962 $ 725
Per share data:
Weighted average number of
shares outstanding. . . . . . . . . . . . . . . . 119,997 120,000 120,000 120,000 120,000
Net income . . . . . . . . . . . . . . . . . . . . . $ 7.90 $ 8.65 $ 8.03 $ 8.02 $ 6.04
Cash dividends declared. . . . . . . . . . . . . . . $ 1.10 $ 1.00 $ .85 $ .65 $ .50
Book value at end of year. . . . . . . . . . . . . . $ 70.96 $ 63.80 $ 56.55 $ 48.49 $ 41.12
Balance sheet totals:
Average assets . . . . . . . . . . . . . . . . . . . $ 64,384 $ 61,012 $ 58,733 $ 54,863 $ 52,937
Average shareholders' equity . . . . . . . . . . . . $ 8,099 $ 7,251 $ 6,230 $ 5,356 $ 4,599
Relationship between significant
financial ratios:
Percentage of net income
to average total assets. . . . . . . . . . . . 1.47% 1.70% 1.64% 1.75% 1.37%
Percentage of net income
to average shareholders'
equity . . . . . . . . . . . . . . . . . . . . 11.70% 14.32% 15.46% 17.96% 15.76%
Percentage of dividends
declared per common share
to net income per common
share . . . . . . . . . . . . . . . . . . . . 13.92% 11.56% 10.59% 8.10% 8.28%
Percentage of average share-
holders' equity to average
total assets . . . . . . . . . . . . . . . . . 12.58% 11.88% 10.60% 9.76% 8.69%
Tier 1 risk-based capital ratio. . . . . . . . . . . 26.13% 23.23% 21.92% 18.51% 17.96%
Total risk-based capital ratio . . . . . . . . . . . 27.38% 24.48% 23.17% 19.76% 19.21%
Leverage ratio . . . . . . . . . . . . . . . . . . . 12.97% 12.44% 11.36% 10.38% 9.31%
</TABLE>
-5-
<PAGE> 7
Management's discussion and analysis of financial condition and results
of operations should be read in conjunction with the accompanying financial
statements and notes.
OVERVIEW
The Company reported net income of $947,536 in 1997 compared to
$1,038,309 in 1996 and $963,456 in 1995. Interest income has increased over the
last three years. The primary increase for 1997 was in taxable interest income
on investment securities. The interest income on these securities increased
$.158 million in 1997 and $.001 million in 1996. Interest expense also increased
in 1997. The increase for 1997 was $.068 million and an increase of $.172
million from 1995 to 1996. Net income before taxes has been fairly consistent
over the past three years.
Average total assets continue to increase. These assets have grown 5.5%,
3.9% and 7.1% in 1997, 1996 and 1995, respectively. This increase is a result of
the growth of non-interest bearing demand deposits in 1995 and time deposits in
1996 and 1997. Non-interest bearing demand deposits increased $2.213 million in
1995 or 16.4% and a slight decrease of $177,000 in 1996 or 1.13%. Non-interest
bearing demand deposits increased $1.316 million or 8.47% in 1997 over the 1996
balance. Time deposits increased $1.682 million or 10.5% in 1996 over the 1995
amounts and $1.344 million or 7.6% in 1997 over the 1996 amounts.
The year end balance sheet reflects a decrease of $2.633 million or 3.9%
in total assets. Federal funds sold reflected a decrease of $4.625 million or
65.37% from 1996. During the same period, total securities increased by $2.208
million or 9.13%. In addition, total deposits decreased $3.510 million or 5.91%
in comparing 1997 to 1996. These decreases are related to reduced deposits by a
local public body. For the same period, there was an increase of $.856 million
in stockholders' equity.
STATEMENT OF INCOME ANALYSIS
Net interest income on a taxable-equivalent basis was $3.159 million in
1997, an increase of $.114 million, or 3.74% compared to 1996. In 1996, net
interest income was $3.045 million, a decrease of $.040 million, or 1.3% over
the prior year. The net interest margin for 1997 was 5.39% compared to 5.49% in
1996 and 5.79% for 1995. Table 1 summarizes average balances, income and average
yields on earning assets and expense and average rates paid on interest bearing
liabilities. Table 2 analyzes the change in net interest income for the two most
recent annual intervals.
The increase in the average balances of loans and securities available
for sale had a positive effect on the net interest margin. However, this effect
was partially negated by the decrease in average rates earned on these assets.
The increase in the average balance as well as an increase in the average rate
paid on time deposits also had a significant impact on the change in the net
interest margin from 1996 to 1997.
-6-
<PAGE> 8
PROVISION FOR POSSIBLE LOAN LOSSES. The provision for possible loan losses was
$-0- in 1997, 1996 and 1995. As a percentage of outstanding loans, the allowance
for possible loans losses was 2.11%, 2.12% and 2.31% at December 31, 1997, 1996
and 1995, respectively. The annual provision is determined by the level of net
charge offs, the size of the loan portfolio, the level of nonperforming loans,
anticipated economic conditions, and review of financial condition of specific
customers.
NON-INTEREST INCOME. There have been immaterial variances in most non-interest
income accounts for the three year period ended 1997. The Bank's management
realizes that non-interest income will become increasingly important as
deregulation continues to impact the net interest margin; therefore, we are
continuously evaluating new opportunities for fee revenues through proper
pricing of services and the development of new sources of non-interest revenue.
NON-INTEREST EXPENSE. In comparing 1997 to 1996 and 1995, there were immaterial
variances between years. Non-interest expense for 1997 is only $10,132 more than
1995 balance.
INCOME TAXES. The Company recorded income tax expense of $405,265 in 1997 as
compared to an expense of $335,198 in 1996. Effective January 1, 1992, the
Company adopted Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes." Due to limitations related to the valuation of deferred tax
assets, there was no cumulative effect adjustment at adoption. At December 1996,
the valuation reserve was removed resulting in a reduction in income tax expense
of $61,938.
This change in accounting principle enabled the Company to more clearly
reflect the impact of net operating loss carryforwards on results of operations.
Previously, these tax benefits were required to be reported as extraordinary
income.
BALANCE SHEET AND CAPITAL FUNDS ANALYSIS
Investment securities are a major use of funds by the Bank. The balance
at December 31, 1997 was $26,397,110 which represented a $2,208,301 or 9.13%
increase from the $24,188,809 balance outstanding at December 31, 1996.
Investment securities serve several purposes. A portion of investment securities
provides liquidity or secondary reserves, which management can use, if
necessary, to meet loan demand or deposit withdrawals. Investment securities,
especially obligations of state and political subdivisions, provide for schools,
road construction, sewers, and various other projects. The Bank invests a
portion of these funds in the market area as a service to the community in which
it operates. The remainder of these funds is invested in obligations of the
United States Government or its agencies. It is management's policy to minimize
risk in investments and provide liquidity by investing in short-term maturities
with quality ratings. While a substantial portion of the investment portfolio is
pledged on public deposits (55%), this is slightly less than 1996 pledged
percentage of 61%. The amount of public funds on deposit has been fairly
constant for the last three years and management anticipates this source of
deposits will remain relatively constant in the future.
On January 1, 1994, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 115, "Accounting for Certain Investments in Debt
and Equity Securities," which requires the classification of securities into one
of three categories: trading, available for sale or held to maturity. Management
determines the appropriate classification of debt securities at the time of
purchase and re-evaluates this classification periodically.
-7-
<PAGE> 9
The Bank's primary use of funds is to meet loan demand. Loans, net of
unearned income, were $28,434,531 at December 31, 1997, compared to $28,925,810
at December 31, 1996. This $491,279 or 1.70% decrease is the result of increased
competition in the market area.
The Bank attracts deposits from consumers and businesses, and also
utilizes its access to the money markets to purchase funds to support the asset
side of the balance sheet. The two primary sources of funds may be classified as
"interest-bearing deposits" and "non-interest bearing deposits."
"Interest-bearing deposits" consist of time deposits, savings accounts, NOW
accounts and Money Market deposit accounts. The largest source of "non-interest
bearing deposits" is demand deposits, which consist of gross demand deposits
less reciprocal balances with our correspondent banks.
As of December 31, 1997, total deposits decreased $3,509,887 or 5.91%
from December 31, 1996. The most significant change in deposits from 1996 to
1997 were decreases in NOW accounts of $4,981,623, a 36.7% decrease. The
decrease in NOW accounts is attributable to a decrease in deposits in 1997 as
compared to 1996 by a local public body.
Shareholders' equity increased $856,290 or 11.18% from December 31, 1996
to December 31, 1997. The equity or book value of the Bank is the shareholders'
investment in the Bank resulting from the sale of stock and the accumulation of
earnings retained by the Bank. The strength of the Bank and its ability to grow
depends to a great extent on management's ability to maintain a corresponding
growth in shareholders' equity.
We declared cash dividends in the amount of $132,000 or $1.10 per share
in 1997 and $120,000 or $1.00 per share in 1996. Dividends of $102,000 or $.85
per share were declared in 1995.
-8-
<PAGE> 10
NONPERFORMING ASSETS AND PAST DUE LOANS. Nonperforming assets are loans carried
on a nonaccrual basis, those classified as restructed loans (loans with
below-market interest rates or other concessions due to the deteriorated
financial condition of the borrower), repossessed real estate, property in the
process of being repossessed and repossessed movable property. A loan is placed
on nonaccrual when, in management's judgment, the borrower's financial condition
has deteriorated to the point that his ability to service the principal and/or
interest is in doubt. At that time, any accrued interest on the loan is reversed
and accruing of interest is discontinued. The Company's nonperforming assets
consist primarily of a pool of automobile loans by individual borrowers outside
of the Bank's market area.
Nonperforming assets at December 31, 1997 were $385,129, a decrease of
$218,791 or 36.22% from December 31, 1996. The most significant decrease in
nonperforming assets from 1996 to 1997 was in the loans on nonaccrual status.
This resulted primarily from collections on a group of automobile loans
purchased in 1996. Other real estate and repossessed assets also were reduced by
$6,900 or 50% at December 31, 1997. The Bank has experienced little activity in
other real estate since 1994. Management anticipates this favorable trend to
continue.
As of January 1, 1995, the Company adopted SFAS No. 114, "Accounting by
Creditors for Impairment of a Loan," which, as it relates to in-substance
foreclosures, requires that a creditor continue to classify these assets as
loans on the balance sheet unless the creditor receives physical possession of
the collateral. The Company had no in-substance foreclosures in 1997 or 1996. At
December 31, 1997, the recorded investment in loans that were considered to be
impaired under SFAS No. 114 was $308,059, with the related reserve for possible
loan losses of $150,000. These loans are included in nonaccrual loans in
Table 7.
LIQUIDITY. Liquidity is the ability to ensure that adequate funds are available
to satisfy contractual liabilities, fund operations, meet withdrawal
requirements of depositors, and provide for customers' credit needs in a timely
manner. The liquidity position of the Bank is founded on a stable base of core
deposits. The primary source of liquidity for the Bank is its short-term
investments. The Bank has overnight funds lines with correspondent banks
providing additional sources of liquidity. Securities available for sale also
provide a major source of liquidity to the Bank, as do the cash flows from
repayments and maturities of its loan portfolio. The franchise from which the
Bank operates allows access to a broad base of retail customers, and management
has been successful at attracting additional deposits when a continuing need for
further funding has arisen. The Bank's core deposit base is supplemented by
public fund time deposits and federal funds obtained through correspondent
relationships.
At the Parent Company (American Bancorp, Inc.) level, cash is needed to
fund operations and to pay dividends. During December 31, 1997, the Parent
Company received $185,000 from the Bank in dividends. The majority of these
funds were used to pay dividends to stockholders.
The purpose of liquidity management is to assure that the Bank has the
ability to raise funds to support asset growth, meet deposit withdrawal,
maintain reserve requirements and otherwise operate the Bank on a continuing
basis. Liquidity for the Bank is provided by the acquisition of additional funds
in the form of deposits, borrowing such as federal funds, investment maturities
and sales, and loan maturities and repayments.
In recognition of the increased pace of deregulation and increasing
competition, the Bank will continue to increase its competitive position in the
area to assure the availability of funds. The Bank's reputation, capital
position and base of deposits will help to insure flexibility and liquidity.
-9-
<PAGE> 11
CAPITAL ADEQUACY. The management of capital is a continuous process which
consists of providing capital for anticipated growth of the Bank. An evaluation
of capital adequacy cannot be made solely in terms of total capital or related
ratios. A more comprehensive indication of financial strength is management's
ability to generate capital through the retention of earnings. The Bank's main
source of capital during the last several years has been cumulative earnings
derived through profitable operations.
In 1992, the Federal Deposit Insurance Corporation (FDIC) issued
regulations for the classification of banks based on their capital levels
pursuant to the Federal Deposit Insurance Corporation Improvement Act passed by
Congress in 1991. The rules place each bank into one of the nine risk categories
for assessing risk-based deposit premiums based on capital ratios and on other
supervisory information. Three capital categories are used for capital ratios
ranging from "well capitalized" to "undercapitalized." The regulations define
"well capitalized" banks as those banks with at least 6% Tier 1 risk-based
capital ratio, 10% total risk-based capital ratio and a 5% leverage ratio. Banks
are also assigned to one of three supervisory subgroups ranging from "healthy"
to "substantial supervisory concern." The Bank is included in the top rating
categories for both capital ratios and the supervisory subgroup. At December 31,
1997, the Bank had a Tier 1 risk-based capital ratio of 26.13% and 27.38% total
risk-based capital ratio. The leverage ratio has increased to 12.97% at December
31, 1997. The Bank presently meets or exceeds all required risk-based capital
standards and anticipates no difficulty in maintaining those standards.
FAIR VALUES OF FINANCIAL INSTRUMENTS. Statement of Financial Accounting
Standards No. 107, "Disclosures About Fair Values of Financial Instruments"
requires disclosure of estimated fair values of financial instruments. Financial
instruments are defined as cash and contractual rights and obligations that
require settlement, directly or indirectly, in cash. Note 14 to the consolidated
financial statements provides information regarding the fair values of financial
instruments as of December 31, 1997.
YEAR 2000. The Company is aware of the issues associated with the programming
code in existing computer systems as the millennium (year 2000) approaches. The
"year 2000" problem is pervasive and complex, as virtually every computer
operation will be affected in some way by the rollover of the two-digit year
value to zero. Note 17 to the consolidated financial statements provides
information regarding the status of the Company's effort on the "year 2000"
problem.
MARKET RISK. Market risk is the effect that interest rate changes in market
interest rates have on a Bank's earnings and its underlying economic value.
Changes in interest rates affect a Bank's earnings by changing its net interest
income and the level of other sensitive income and operating expenses. The
underlying economic value of the Company's assets, liabilities, and off-balance
sheet instruments also are affected by changes in interest rates. These changes
occur because the present value of future cash flows, and in some cases the cash
flows themselves, change when interest rates change. The combined effects of the
changes in these present values reflect the change in the Bank's underlying
economic value.
Table 14 presents the Bank's Interest Rate Sensitivity Analysis. The
table is prepared utilizing present value calculations. Present value is the
future cash flows of a financial instrument, or portfolio of financial
instruments, discounted to the present. The discount rate is constructed by the
use of the build-up approach or the risk premium approach.
-10-
<PAGE> 12
The build-up approach views the discount rate as consisting of four
components. They are risk-free rate, credit risk, operating expense, and
prepayment option price. Risk-free rate forms the foundation of the discount
rate and is derived from the Treasury yield curve. The credit risk component is
the annualized yield needed to cover the loss of value expected over the entire
life of a portfolio. The operating expense component respresents an annualized
cost rate derived from operating expense allocations. This component is used to
adjust the risk-free rate in order to compensate for operating expenses. The
prepayment option price is the final component, and represents a basis point
adjustment to the risk-free rate to reflect the value of imbedded prepayment
options.
The risk premium approach views the discount rate as the sum of two
components: the risk-free rate, and a risk premium. The risk-free rate is the
same as defined above. The risk premium is the annualized yield needed to cover
the risk reflected in the portfolio. This risk premium incorporates all forms of
risk in a single spread to the Treasury yield curve. Consistent with an entry
rate concept of selecting a discount rate, the marginal pricing rate for each
account serves as the basis for determining an appropriate risk premium to the
Treasury yield curve. This risk premium is calculated by subtracting the value
on the Treasury yield curve which corresponds to the average maturity of the
account from the account's marginal pricing rate.
The build-up approach is used for loans, deposits, and short-term
borrowing. The risk premium approach is used for securities and short-term
investments.
The cash flows for all assets and liabilities are estimated based upon
reasonable assumptions on the time remaining until maturity, repricing
frequency, decay factors, and prepayment rates. These assumptions are either
based on historical trends or available industry accepted information.
The effect of an increase in 200 basis points from December 31, 1997
rates would be a reduction of $.673 million in total market value of
shareholders' equity or a 6.7% decrease in the market value of the portfolio
equity. A decrease of 200 basis points from December 31, 1997 rates would result
in an increase of $.372 million or a 3.70% increase in the market value of the
portfolio equity.
The effect on earnings is also reflected in Table 14. A 200 basis point
increase on the assets and liabilities outstanding as of December 31, 1997 would
result in an increase in net income of $.072 million or a 7.98% increase in net
income. A 200 basis point decrease on the assets and liabilities outstanding as
of December 31, 1997 would have the opposite effect and would result in a
decrease of net income in the amount of $.083 million or a 9.26% decrease in net
income.
Computation of prospective effects of hypothetical interest rate changes
are based on many assumptions, including relative levels of market interest
rates, loan prepayments, and deposits decay. They should not be relied upon as
indicative of actual results. Further, the computations do not contemplated
certain actions that management could undertake in response to changes in
interest rates.
The Bank does not invest in derivatives and has none in its securities
portfolio.
-11-
<PAGE> 13
TABLE 1
SUMMARY OF CONSOLIDATED NET INTEREST INCOME
Fully taxable equivalent basis (In thousands)
<TABLE>
<CAPTION>
1997
-----------------------------------
AVERAGE AVERAGE
BALANCE INTEREST RATE
--------- ---------- ---------
<S> <C> <C> <C>
ASSETS
Short-term investments $ 4,612 $ 251 5.44%
Loans, net of unearned income (1) (2) 27,797 2,572 9.25
Securities available for sale (3) 10,922 756 6.92
Securities held to maturity 15,270 977 6.40
-------- ------
Total interest earning assets 58,601 4,556 7.77%
------ ----
Allowance for possible loan losses (604)
Cash and due from banks 3,963
Other assets 2,424
--------
Total assets $ 64,384
========
LIABILITIES
Interest-bearing demand deposits $ 11,752 $ 229 1.95%
Savings deposits 8,374 227 2.71
Time deposits 19,003 941 4.95
Short-term borrowings - - -
-------- ------
Total interest-bearing liabilities 39,129 1,397 3.57%
Non-interest bearing demand deposits 16,846 ------ ----
Other liabilities 310
--------
Total liabilities 56,285
SHAREHOLDERS' EQUITY
Shareholders' equity 8,099
--------
Total liabilities and shareholders'
equity $ 64,384
========
Total interest expense related to
earning assets 2.38%
====
Net interest income $3,159
======
Net interest margin 5.39%
====
</TABLE>
(1) Interest income earned on nontaxable investment securities and certain loans
are exempt from taxation. However, an adjustment has been made for the tax
preference item related to nontaxable securities purchased after December
31, 1982. An incremental tax rate of 34% is used to compute the taxable
equivalent adjustment for 1997, 1996, and 1995.
(2) For purposes of yield computations, non-accrual loans are included in loans
outstanding.
(3) Yield computations are based on historical cost of securities available for
sale.
-13-
<PAGE> 14
<TABLE>
<CAPTION>
1996 1995
- ------------------------------------ -----------------------------------
AVERAGE AVERAGE AVERAGE AVERAGE
BALANCE INTEREST RATE BALANCE INTEREST RATE
- --------- ---------- --------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C>
$ 4,623 $ 227 5.34% $ 4,930 $ 271 5.50%
27,635 2,596 9.39 26,748 2,573 9.62
16,635 1,041 6.26 3,843 312 8.12
6,537 490 7.50 17,779 1,087 6.11
- -------- -------- ------ --------
55,430 4,374 7.89% 53,300 4,243 7.96%
-------- ---- -------- ----
(621) (621)
3,775 3,815
2,428 2,239
- -------- --------
$ 61,012 $ 58,733
======== ========
$ 11,510 $ 222 1.93% $ 11,480 $ 217 1.89%
8,597 234 2.72 8,782 239 2.72
17,659 870 4.93 15,977 700 4.38
66 3 4.55 17 2 11.76
- -------- -------- ------ --------
37,832 1,329 3.51% 36,256 1,158 3.19%
15,530 -------- ---- 15,707 -------- ----
399
- -------- 540
53,761 --------
52,503
7,251 6,230
- -------- --------
$ 61,012 $ 58,733
======== 2.40% ========
---- 2.17%
$ 3,045 ----
======== $ 3,085
5.49% ========
==== 5.79%
====
</TABLE>
-14-
<PAGE> 15
TABLE 2
RATE/VOLUME ANALYSIS
Fully taxable equivalent basis (In thousands)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------
1997/1996
------------------------------------
INCREASE (DECREASE)
DUE TO CHANGE IN: (1)
----------------------
AVERAGE AVERAGE NET
BALANCE RATE CHANGE
--------- ------- --------
<S> <C> <C> <C>
Interest income:
Short-term investments ............... $ (1) $ 5 $ 4
Loans, net of unearned income (2) .... 15 (39) (24)
Securities available for sale (3) .... 316 (50) 266
Securities held to maturity .......... (86) 22 (64)
--------- ------- --------
Total interest income ............. 244 (62) 182
======== ======== =======
Interest expense:
Demand deposits ...................... 5 2 7
Savings deposits ..................... (6) (1) (7)
Time deposits ........................ 66 5 71
Short-term borrowing ................. (2) (2) (4)
--------- ------- --------
Total interest expense ............ 63 4 67
--------- ------- --------
Taxable-equivalent net interest income .. $ 181 $ (66) $ 115
======== ======== =======
</TABLE>
(1) The change in interest due to both rate and volume has been allocated to
rate and volume changes in proportion to the relationship of the absolute
dollar amounts of the change in each.
(2) Non-accrual loans are included in loans outstanding.
(3) Yield computations are based on historical cost of securities available for
sale.
-15-
<PAGE> 16
YEAR ENDED DECEMBER 31,
- ------------------------------------
1996/1995
- ------------------------------------
INCREASE (DECREASE)
DUE TO CHANGE IN: (1)
- ----------------------
AVERAGE AVERAGE NET
BALANCE RATE CHANGE
- --------- --------- --------
$ (17) $ (7) $ (24)
84 (61) 23
920 (191) 729
(765) 168 (597)
- --------- ------- ------
222 (91) 131
- -------- ------- ------
1 4 5
(5) - (5)
78 92 170
4 (3) 1
- -------- ------- ------
78 93 171
- -------- ------- ------
$ 144 $ (184) $ (40)
======== ======= ======
-16-
<PAGE> 17
TABLE 3
SECURITIES PORTFOLIO
(In thousands)
<TABLE>
<CAPTION>
DECEMBER 31, 1997 DECEMBER 31, 1996
---------------------------------- ----------------------------------
HELD TO AVAILABLE HELD TO AVAILABLE
MATURITY FOR SALE TOTAL MATURITY FOR SALE TOTAL
-------- --------- -------- -------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
U.S. Treasury................... $ 3,692 $ 2,009 $ 5,701 $ 4,005 $ 1,002 $ 5,007
U.S. Government and
Agencies..................... 10,512 5,532 16,044 11,513 3,012 14,525
Mortgage-Backed
Securities................... - 1,210 1,210 - 1,787 1,787
State and Political
Subdivisions................. - 3,442 3,442 - 2,870 2,870
-------- --------- ------- -------- -------- --------
$ 14,204 $ 12,193 $26,397 $ 15,518 $ 8,671 $ 24,189
======== ========= ======= ======== ======== ========
</TABLE>
-17-
<PAGE> 18
TABLE 4
MATURITY DISTRIBUTION AND SECURITIES PORTFOLIO YIELDS
(In thousands)
<TABLE>
<CAPTION>
AFTER AFTER
ONE BUT FIVE BUT
WITHIN ONE WITHIN FIVE WITHIN TEN
YEAR AMT. YIELD YEARS AMT. YIELD YEARS AMT. YIELD
---------- ----- ----------- ----- ----------- -----
<S> <C> <C> <C> <C> <C> <C>
December 31, 1997:
Held to maturity:
U.S. Treasury .................. $ 1,200 5.95% $ 2,492 6.25% $ - -%
U.S. Government
and Agencies ................ 2,498 5.92 7,016 6.49 998 7.16
------- ----- -------- ----- -------- ----
Total held to maturity .. 3,698 5.93% 9,508 6.43% 998 7.16%
------- ----- -------- ----- -------- ----
Available for sale:
U.S. Treasury .................. 1,001 6.27% 1,008 6.28% - -%
U.S. Government
and Agencies ................ - - 5,532 6.53 - -
Mortgage-Backed
Securities (1) .............. 4 9.34 407 8.66 68 9.16
State and
Political
Subdivisions (2) ............ 10 6.43 2,006 7.29 1,221 7.01
------- ---- ------- ----- -------- ----
Total available for sale . 1,015 6.28% 8,953 6.76% 1,289 7.11%
------- ---- ------- ----- -------- ----
Total securities ......... $ 4,713 6.01% $18,461 6.59% $ 2,287 7.13%
======= ==== ======= ===== ======= ====
</TABLE>
(1) Distributed by contractual maturity without regard to repayment schedules
or projected payments.
(2) Tax exempt yields are expressed on a fully taxable equivalent basis.
-19-
<PAGE> 19
<TABLE>
<CAPTION>
AFTER TEN TOTAL
YEARS AMT. YIELD AMOUNT YIELD
- ---------- ------- -------- -------
<S> <C> <C> <C>
$ - - % $ 3,692 6.15%
- - 10,512 6.42
------- ---- -------- ----
-0- - % 14,204 6.35%
------- ---- -------- ----
- - % 2,009 6.27%
- - 5,532 6.53
731 8.66 1,210 8.69
205 8.68 3,442 7.27
------- ---- -------- ----
936 8.67% 12,193 6.90%
------- ---- -------- ----
$ 936 8.67% $ 26,397 6.60%
======= ==== ======== ====
</TABLE>
-20-
<PAGE> 20
TABLE 5
LOAN PORTFOLIO
The amounts of loans outstanding for the three years ended December 31, 1997 are
shown in the following table according to type of loan (in thousands).
<TABLE>
<CAPTION>
1997 1996 1995
--------- ---------- ---------
<S> <C> <C> <C>
Commercial, financial and agricultural.............. $ 7,549 $ 7,437 $ 6,240
Real Estate - Construction.......................... 359 285 119
Real Estate - Mortgage.............................. 15,543 16,278 16,473
Installment ........................................ 4,983 4,925 4,182
--------- --------- ---------
Total....................................... 28,434 28,925 27,014
Less:
Allowance for possible loan losses ............... (599) (614) (624)
Unearned income .................................. - - -
--------- --------- ---------
$ 27,835 $ 28,311 $ 26,390
========= ========= =========
</TABLE>
- ------------------------------------------------------------------------------
TABLE 6
LOAN MATURITY AND INTEREST RATE SENSITIVITY
The following table shows the amount of commercial, financial and agricultural
loans, real estate-construction loans and real estate mortgage loans, exclusive
of installment loans, outstanding as of December 31, 1997 which, based on
remaining scheduled repayments of principal, are due in the amounts indicated.
Also, the amounts due after one year are classified according to the sensitivity
to the changes in interest rates (in thousands).
<TABLE>
<CAPTION>
ONE YEAR OVER ONE
OR TO OVER
LESS (1) 5 YEARS 5 YEARS TOTAL
--------- ---------- --------- ---------
<S> <C> <C> <C> <C>
Maturity of Loans:
Commercial, financial and
agricultural ...................... $ 4,090 $ 3,516 $ 218 $ 7,824
Real Estate - mortgage and
construction ...................... 2,615 8,835 4,177 15,627
--------- ---------- --------- ---------
Total............................ $ 6,705 $ 12,351 $ 4,395 $ 23,451
========= ========== ========= =========
Interest Rate Sensitivity of Loans:
With predetermined interest rates... $ 3,402 $ 9,783 $ 516 $ 13,701
With floating interest rates (2).... 3,303 2,568 3,879 9,750
--------- ---------- --------- ---------
Total........................... $ 6,705 $ 12,351 $ 4,395 $ 23,451
========= ========== ========= =========
</TABLE>
(l) Includes demand loans, loans having no stated schedule of repayments and no
stated maturity, and overdrafts.
(2) The floating interest rate loans generally fluctuate according to a formula
based on a prime rate.
-21-
<PAGE> 21
TABLE 7
NONPERFORMING ASSETS
Nonperforming assets include nonaccrual loans, loans which are contractually 90
days past due, restructured loans, and foreclosed assets. Restructured loans are
loans which, due to a deteriorated financial condition of the borrower, have a
below-market yield. Interest payments received on nonperforming loans are
applied to reduce principal if there is doubt as to the collectibility of the
principal; otherwise, these receipts are recorded as interest income. Certain
nonperforming loans that are current as to principal and interest payments are
classified as nonperforming because there is a question concerning full
collection of both principal and interest.
Nonperforming assets totaled $385,129 at year ended 1997, a $218,791 (36.23%)
decrease from the prior year. Nonperforming assets totaling $603,920 at December
31, 1996, which was an increase of $476,061 (372.33%) from December 31, 1995.
The composition of nonperforming assets for the past three years are illustrated
below.
<TABLE>
<CAPTION>
1997 1996 1995
---------- ---------- ------------
<S> <C> <C> <C>
Nonperforming loans:
Loans on nonaccrual ...................... $ 308,059 $ 496,490 $ 2,051
Restructured loans which are not
on nonaccrual .......................... 70,170 93,630 112,008
---------- ---------- ----------
Total nonperforming loans ............ 378,229 590,120 114,059
Other real estate and repossessed
assets received in complete or
partial satisfaction of loan
obligations ............................. 6,900 13,800 13,800
---------- ---------- ----------
Total nonperforming assets .......... $ 385,129 $ 603,920 $ 127,859
========== ========== ==========
Loans contractually past due 90
days or more as to principal or
interest but which are not on
nonaccrual .............................. $ 8,649 $ 27,434 $ 9,504
========== ========== ==========
</TABLE>
At December 31, 1997, the Bank has loans outstanding to multiple numbers of
borrowers engaged in the medical industry and the legal profession. The loans to
the medical industry totaled $5,141,814, while the loans to the legal profession
were $2,533,036. There were no significant nonperforming loans outstanding in
these two concentrations.
-22-
<PAGE> 22
TABLE 8
ALLOWANCE FOR POSSIBLE LOAN LOSSES
(In Thousands)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------
1997 1996 1995
------ ------ ------
<S> <C> <C> <C>
Beginning balance .................................. $ 614 $ 624 $ 614
------ ------ ------
Provision charged against income ................... -0- -0- -0-
------ ------ ------
Charge-offs:
Commercial, financial and agricultural loans ..... (1) - -
Real estate mortgage loans ....................... - - -
Real estate construction loans ................... - - -
Installment loans ................................ (16) (18) (6)
------ ------ ------
Total charge-offs .............................. (17) (18) (6)
------ ------ ------
Recoveries:
Commercial, financial and agricultural loans ..... - 5 8
Real estate mortgage loans ....................... - 1 -
Real estate construction loans ................... - - -
Installment loans ................................ 3 2 8
------ ------ ------
Total recoveries ............................. 3 8 16
------ ------ ------
Net (charge-offs) recoveries ....................... (14) (10) 10
------ ------ ------
Ending balance ..................................... $ 600 $ 614 $ 624
====== ====== ======
Ratio of net (charge-offs) recoveries during
the period to average loans outstanding
during the period ................................ (.05)% (.04)% .04%
====== ====== ======
</TABLE>
-23-
<PAGE> 23
TABLE 9
ALLOCATION FOR POSSIBLE LOAN LOSSES
(In thousands)
The allowance for possible loan losses has been allocated according to the
amount deemed to be reasonably necessary to provide for the possibility of
losses being incurred within the following categories of loans at the date
indicated.
<TABLE>
<CAPTION>
DECEMBER 31, 1997 DECEMBER 31, 1996
----------------------------- -----------------------------
% OF LOANS % OF LOANS
OUTSTANDING OUTSTANDING
TO TOTAL TO TOTAL
ALLOWANCE LOANS ALLOWANCE LOANS
--------- ----------------- --------- -----------------
<S> <C> <C> <C> <C>
Commercial, financial and
agricultural loans.................. $ 218 36.33% $ 201 32.74%
Real estate construction............... 5 .83 3 .49
Real estate mortgage loans............. 97 16.17 146 23.78
Installment loans...................... 280 46.67 264 42.99
-------- ------ ------- ------
$ 600 100.00% $ 614 100.00%
======== ====== ======= ======
</TABLE>
<TABLE>
DECEMBER 31, 1995
---------------------------
% OF LOANS
OUTSTANDING
TO TOTAL
ALLOWANCE LOANS
--------- -----------
<S> <C> <C>
Commercial, financial and
agricultural loans......................... $ 134 21.47%
Real estate construction...................... 5 .80
Real estate mortgage loans.................... 400 64.10
Installment loans ............................ 85 13.63
------- ------
$ 624 100.00%
======= ======
</TABLE>
-24-
<PAGE> 24
TABLE 10
DEPOSITS
The following table presents the average balance and an average rate paid on
deposits (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------------------------------------------
1997 1996 1995
------------------- ------------------- -------------------
AVERAGE AVERAGE AVERAGE AVERAGE AVERAGE AVERAGE
BALANCE RATE BALANCE RATE BALANCE RATE
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Non-interest bearing
demand deposits.................. $ 16,846 -% $ 15,530 -% $ 15,707 -%
Interest bearing
demand deposits.................. 11,752 1.95 11,510 1.93 11,480 1.89
Savings deposits................... 8,374 2.71 8,597 2.72 8,782 2.72
Time deposits...................... 19,003 4.95 17,659 4.93 15,977 4.38
Short-term borrowings.............. - - 66 4.55 17 11.76
-------- -------- --------
Total.................... $ 55,975 $ 53,362 $ 51,963
======== ======== ========
</TABLE>
- -------------------------------------------------------------------------------
TABLE 11
CERTIFICATES OF DEPOSIT OF $100,000 OR MORE, MATURITY DISTRIBUTION
The following table provides the maturities of time certificates of deposit of
the Bank in amounts of $100,000 or more (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------------------------
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Maturing in:
3 months or less................................... $ 2,289 $ 2,801 $ 601
Over 3 months less than 6 months................... 700 717 800
Over 6 months less than 12 months.................. 300 897 550
Over 12 months..................................... 217 - 814
-------- -------- --------
Total........................................ $ 3,506 $ 4,415 $ 2,765
======== ======== ========
</TABLE>
-25-
<PAGE> 25
TABLE 12
RISK-BASED CAPITAL
(In thousands)
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1997 1996
-------- ----------
<S> <C> <C>
Risk-weighted assets ............................. $ 31,967 $ 32,671
========== ==========
Capital:
Tier I ........................................ $ 8,352 $ 7,588
Tier II ....................................... 400 408
---------- ----------
Total capital .............................. $ 8,752 $ 7,996
========== ==========
Ratios:
Tier I capital to risk-weighted assets ........ 26.13% 23.23%
Tier II capital to risk-weighted assets ....... 1.25 1.25
---------- ----------
Total capital to risk-weighted assets ...... 27.38% 24.48%
========== ==========
Leverage - Tier I capital to total
average assets ............................. 12.97% 12.44%
========== ==========
</TABLE>
- -------------------------------------------------------------------------------
TABLE 13
RETURN ON EQUITY AND ASSETS
The following table shows consolidated operating and capital ratios for each of
the last three years:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------------------
1997 1996 1995
------ ------ ------
<S> <C> <C> <C>
Return on average total assets............................ 1.47% 1.70% 1.64%
Return on average shareholders' equity.................... 11.70% 14.32% 15.46%
Dividend payout ratio..................................... 13.92% 11.56% 10.59%
Average equity to average assets ratio.................... 12.58% 11.88% 10.60%
</TABLE>
-26-
<PAGE> 26
TABLE 14
INTEREST RATE SENSITIVITY ANALYSIS
DECEMBER 31, 1997
(In thousands)
<TABLE>
<CAPTION>
RATES
--------------------------
FORECAST +200 BP -200 BP
-------- ------- -------
<S> <C> <C> <C>
Economic value at risk:
Total assets ............................. $ 64,598
Bank equity .............................. $ 8,452
Market value of portfolio equity ......... $ 10,036 $ 9,363 $ 10,408
Market value to book value
of equity ............................. 1.19 1.11 1.23
Amount of change in market value of
or portfolio equity ................... $ (673) $ 372
Percent change in market value of
portfolio equity ...................... (6.71)% 3.70%
Total securities market value premium
percentage ............................ .81% (4.07)% 5.60%
Net loans present value premium
percentage ............................ 1.24% (1.26)% 3.77%
Total deposits present value premium
percentage ............................ 2.11% 4.07% (.37)%
Earnings at risk:
January 1 to December 31, 1998
Interest margin on earning assets ........ 5.35% 5.54% 5.13%
Amount of change in interest margin
on earning assets...................... .19% (.22)%
Net interest income .................. $3,032 $ 3,139 $ 2,908
Amount of change in net
interest income ................... $ 107 $ (124)
Percent change in net interest
income ............................ 3.53% (4.11)%
Net income ............................ $ 902 $ 974 $ 819
Amount change in net income ........... $ 72 $ (83)
Percent change in net income .......... 7.98% (9.26)%
</TABLE>
-27-
<PAGE> 27
[BROUSSARD, POCHE, LEWIS & BREAUX LOGO]
[BROUSSARD, POCHE, LEWIS & BREAUX LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Directors
American Bancorp, Inc.
Opelousas, Louisiana
We have audited the accompanying consolidated balance sheets of American
Bancorp, Inc. and subsidiary as of December 31, 1997 and 1996, the related
consolidated statements of income, changes in shareholders' equity and cash
flows for each of the three years in the period ended December 31, 1997. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of American Bancorp,
Inc. and subsidiary as of December 31, 1997 and 1996, and the consolidated
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1997, in conformity with generally accepted
accounting principles.
/s/ BROUSSARD, POCHE, LEWIS & BREAUX
Lafayette, Louisiana
January 20, 1998
-28-
<PAGE> 28
AMERICAN BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
ASSETS 1997 1996
------------ ------------
<S> <C> <C>
Cash and due from banks............................................ $ 4,924,106 $ 4,215,349
Short-term investments:
Federal funds sold ............................................. 2,450,000 7,075,000
Interest-bearing deposits with banks............................ 694,000 1,091,000
----------- -----------
3,144,000 8,166,000
Securities held to maturity (estimated
market values $14,264,145 and $15,561,983,
respectively)................................................... 14,203,724 15,517,896
Securities available for sale...................................... 12,193,386 8,670,913
Loans, net of unearned income ($-0- and
$-0-, respectively)............................................. 28,434,531 28,925,810
Less: allowance for possible loan losses..................... (599,593) (614,339)
----------- -----------
27,834,938 28,311,471
Bank premises and equipment........................................ 1,227,409 1,336,399
Other real estate, net of allowances of
$105,900 and $99,000, respectively.............................. 6,900 13,800
Accrued interest receivable........................................ 619,977 567,783
Other assets....................................................... 466,531 454,448
----------- -----------
$64,620,971 $67,254,059
=========== ===========
</TABLE>
See Notes to Consolidated Financial Statements.
-29-
<PAGE> 29
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY 1997 1996
------------ -----------
<S> <C> <C>
LIABILITIES
Deposits:
Non-interest bearing demand deposits .... $17,324,777 $16,727,523
Interest bearing deposits:
NOW accounts ......................... 8,594,109 13,575,732
Money Market accounts ................ 2,761,187 2,021,474
Savings .............................. 8,122,017 8,307,930
Time deposits $100,000 or more ....... 3,506,101 4,414,899
Other time deposits .................. 15,548,555 14,319,075
----------- -----------
Total deposits .................... 55,856,746 59,366,633
Accrued interest payable ................... 120,167 118,975
Other liabilities .......................... 131,374 112,057
----------- -----------
Total liabilities ................. 56,108,287 59,597,665
----------- -----------
SHAREHOLDERS' EQUITY
Common stock, $5 par value; 10,000,000
shares authorized; 120,000 shares
issued, 119,962 and
120,000 shares outstanding, respectively 600,000 600,000
Surplus .................................... 2,150,000 2,150,000
Retained earnings .......................... 5,664,281 4,848,745
Net unrealized appreciation on securities
available for sale, net of tax of $51,729
and $29,698, respectively ............... 100,417 57,649
Treasury stock, 38 shares at cost .......... (2,014) -
----------- -----------
Total shareholders' equity ......... 8,512,684 7,656,394
----------- -----------
$64,620,971 $67,254,059
=========== ===========
</TABLE>
-30-
<PAGE> 30
AMERICAN BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
Interest income:
Interest and fees on loans..................... $ 2,573,981 $ 2,589,227 $ 2,569,393
Interest on investment securities-
Taxable.................................... 1,509,350 1,351,094 1,349,650
Tax-exempt................................. 147,928 118,525 32,560
Federal funds sold............................ 208,636 186,011 220,667
Deposits with banks........................... 42,634 60,875 50,014
----------- ----------- -----------
Total interest income................... 4,482,529 4,305,732 4,222,284
Interest expense:
Interest on deposits.......................... 1,397,264 1,329,455 1,157,705
----------- ----------- -----------
Net interest income.............................. 3,085,265 2,976,277 3,064,579
Provision for possible loan losses............... - - -
----------- ----------- -----------
Net interest income after provision
for possible loan losses...................... 3,085,265 2,976,277 3,064,579
----------- ----------- -----------
Non-interest income:
Service charges on deposit accounts........... 498,551 539,449 554,024
Other......................................... 107,847 127,104 123,376
----------- ----------- -----------
Total non-interest income............... 606,398 666,553 677,400
----------- ----------- -----------
Non-interest expense:
Salary and employee benefits.................. 1,143,226 1,104,448 1,166,288
Net occupancy expense......................... 295,030 288,498 314,064
Equipment expense............................. 267,191 263,411 237,132
Net revenue from other
real estate................................ (610) (4,051) (4,737)
Other......................................... 634,025 617,017 615,983
----------- ----------- -----------
Total non-interest expense.............. 2,338,862 2,269,323 2,328,730
----------- ----------- -----------
Income before income taxes....................... 1,352,801 1,373,507 1,413,249
Provision for income taxes....................... 405,265 335,198 449,793
----------- ----------- -----------
Net income.............................. $ 947,536 $ 1,038,309 $ 963,456
============ =========== ============
Net income per common share...................... $ 7.90 $ 8.65 $ 8.03
============ =========== ============
</TABLE>
See Notes to Consolidated Financial Statements.
-31-
<PAGE> 31
AMERICAN BANCORP, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
COMMON STOCK
SHARES AMOUNT SURPLUS
------- ---------- -----------
<S> <C> <C> <C>
Balance, December 31, 1994.................... 120,000 $ 600,000 $ 2,150,000
Net income for 1995........................... - - -
Dividends paid in 1995........................ - - -
Change in unrealized holding gains
(losses) on securities available
for sale, net of tax........................ - - -
------- ---------- -----------
Balance, December 31, 1995.................... 120,000 600,000 2,150,000
Net income for 1996........................... - - -
Dividends paid in 1996........................ - - -
Change in unrealized holding gains
(losses) on securities available
for sale, net of tax........................ - - -
------- ---------- -----------
Balance, December 31, 1996.................... 120,000 600,000 2,150,000
Net income for 1997........................... - - -
Dividends paid in 1997........................ - - -
Change in unrealized holding gains
(losses) on securities available
for sale, net of tax........................ - - -
Purchase of treasury stock.................... - - -
------- ---------- -----------
Balance, December 31, 1997.................... 120,000 $ 600,000 $ 2,150,000
======= ========== ===========
</TABLE>
See Notes to Consolidated Financial Statements.
-33-
<PAGE> 32
<TABLE>
<CAPTION>
NET UNREALIZED
APPRECIATION
ON SECURITIES
RETAINED AVAILABLE TREASURY
EARNINGS FOR SALE STOCK TOTAL
----------- --------------- ------------ ------------
<S> <C> <C> <C>
$ 3,068,980 $ (667) $ - $ 5,818,313
963,456 - - 963,456
(102,000) - - (102,000)
- 105,730 - 105,730
----------- ------------- ------------ ------------
3,930,436 105,063 -0- 6,785,499
1,038,309 - - 1,038,309
(120,000) - - (120,000)
- (47,414) - (47,414)
----------- ------------- ------------ ------------
4,848,745 57,649 -0- 7,656,394
947,536 - - 947,536
(132,000) - - (132,000)
- 42,768 - 42,768
- - (2,014) (2,014)
----------- ------------- ------------ ------------
$ 5,664,281 $ 100,417 $ (2,014) $ 8,512,684
=========== ============= ============ ============
</TABLE>
-34-
<PAGE> 33
AMERICAN BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income .................................... $ 947,536 $1,038,309 $ 963,456
Adjustments to reconcile net income
to net cash provided by operating
activities:
Premium amortization, net of
discount accretion on investment
securities .............................. 8,294 (9,613) (9,863)
Depreciation ............................... 198,377 198,895 177,106
(Gain) loss on sale of assets .............. 9,862 345 2,943
(Increase) decrease in assets:
Write down of other real estate
owned ................................ 6,900 - -
Accrued interest receivable.............. (52,194) (16,256) (121,824)
Other assets ............................ (5,802) 1,561 (134,918)
Increase (decrease) in liabilities:
Accrued interest payable ................ 1,192 15,701 23,241
Other liabilities ....................... 19,317 (414,740) 460,259
---------- ---------- ----------
Net cash provided by operating
activities ........................ 1,133,482 814,202 1,360,400
---------- ---------- ----------
INVESTING ACTIVITIES
Proceeds from sales and maturities
of available for sale securities ........... 1,689,443 594,999 384,850
Proceeds from sales and maturities
of held to maturity securities ............. 4,300,000 8,000,000 6,500,000
Purchase of available for sale
securities ................................. (5,177,099) (4,114,176) (2,234,432)
Purchase of held to maturity
securities ................................. (2,986,173) (7,086,352) (6,511,313)
(Increase) decrease in loans................... 476,533 (1,921,243) 662,774
Purchases of property and equipment ........... (99,249) (100,194) (237,411)
Other ........................................ (6,281) 24,459 -
---------- ---------- ----------
Net cash used in investing
activities............................ (1,802,826) (4,602,507) (1,435,532)
---------- ---------- ----------
</TABLE>
-35-
<PAGE> 34
<TABLE>
<CAPTION>
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
FINANCING ACTIVITIES
Increase (decrease) in liabilities:
Demand deposits, transaction
accounts and savings ............. (3,830,567) 743,373 (3,643,438)
Time deposits ....................... 320,682 2,968,543 67,985
Dividends paid ......................... (132,000) (120,000) (102,000)
Purchase of treasury stock ............. (2,014) -- --
------------ ------------ ------------
Net cash provided by (used in)
financing activities .......... (3,643,899) 3,591,916 (3,677,453)
------------ ------------ ------------
Increase (decrease) in cash and cash
equivalents ............................ (4,313,243) (196,389) (3,752,585)
Cash and cash equivalents at
beginning of year ...................... 12,381,349 12,577,738 16,330,323
------------ ------------ ------------
Cash and cash equivalents at end
of year ................................ $ 8,068,106 $ 12,381,349 $ 12,577,738
============ ============ ============
SUPPLEMENTAL DISCLOSURES
Cash payments for:
Interest expense .................... $ 1,396,072 $ 1,313,754 $ 1,134,464
============ ============ ============
Income taxes ........................ $ 433,000 $ 708,049 $ 8,003
============ ============ ============
</TABLE>
See Notes to Consolidated Financial Statements.
-36-
<PAGE> 35
AMERICAN BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Accounting Policies
American Bancorp, Inc. (the Company) and its subsidiary, American Bank
and Trust Company (the Bank), follow generally accepted accounting
principles and reporting practices applicable to the banking industry.
Descriptions of significant accounting policies are summarized below:
Consolidation:
The consolidated financial statements include the accounts of the
respective parent Company and its subsidiary. All significant
intercompany accounts and transactions have been eliminated.
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 amounts reported in the consolidated
financial statements and accompanying notes. Actual results could
differ from those estimates.
Securities:
At January 1, 1994, the Bank adopted Statement of Financial
Accounting Standards (SFAS) No. 115, "Accounting for Certain
Investments in Debt and Equity Securities." SFAS No. 115 requires the
classification of securities into one of three categories: trading,
available for sale, or held to maturity.
Management determines the appropriate classification of debt
securities at the time of purchase and re-evaluates this
classification periodically. Trading account securities are held for
resale in anticipation of short-term market movements. Debt
securities are classified as held to maturity when the Bank has the
positive intent and ability to hold the securities to maturity.
Securities not classified as held to maturity or trading are
classified as available for sale.
Trading account securities are carried at market value and are
included in short-term investments. Gains and losses, both realized
and unrealized, are reflected in earnings. Held to maturity
securities are stated at amortized cost. Available for sale
securities are stated at fair value, with unrealized gains and
losses, net of tax, reported in a separate component of shareholders'
equity.
The amortized cost of debt securities classified as held to maturity
or available for sale is adjusted for amortization of premiums and
accretion of discounts to maturity or, in the case of mortgage-backed
securities, over the estimated life of the security. Amortization,
accretion and accruing interest are included in interest income on
securities. Realized gains and losses, and declines in value judged
to be other than temporary, are included in net securities gains. The
cost of securities sold is determined on the specific identification
method.
-37-
<PAGE> 36
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Loans:
Loans 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 unearned income. Interest on loans and accretion of
unearned income are computed by methods which approximate a level
rate of return on recorded principal.
Loan fees and costs associated with originating loans are recognized
in the period in which they originate as the amounts involved are
immaterial to the basic financial statements. The Company has adopted
the policy of deferring all material loan fees and costs associated
with originating loans as required by Statement of Financial
Accounting Standards No. 91.
Commercial loans are placed in nonaccrual status when, in
management's opinion, there is doubt concerning full collectibility
of both principal and interest. All commercial nonaccrual loans are
considered to be impaired in accordance with SFAS No. 114,
"Accounting by Creditors for Impairment of a Loan." Consumer loans
are generally charged off when any payment of principal or interest
is more than 120 days delinquent. Interest payments received on
nonaccrual loans are applied to principal if there is doubt as to the
collectibility of the principal; otherwise, these receipts are
recorded as interest income. A loan remains in nonaccrual status
until it is current as to principal and interest, and the borrower
demonstrates its ability to fulfill the contractual obligation.
Allowance for possible loan losses:
The allowance for possible loan losses is maintained to provide for
possible losses inherent in the loan portfolio. On January 1, 1995,
the Company adopted SFAS No. 114, as amended by SFAS No. 118,
"Accounting for Creditors for Impairment of a Loan - Income
Recognition and Disclosures." Beginning in 1996, in accordance with
SFAS No. 114, the allowance for possible loan losses related to loans
that are identified as impaired is based on discounted cash flows
using the loan's initial effective interest rate or the fair value of
the collateral for certain collateral dependent loans. Prior to 1995,
the allowance for possible loan losses related to these loans was
based on undiscounted cash flows or the fair value of the collateral
for collateral dependent loans.
The allowance is based on management's estimate of future losses;
actual losses may vary from the current estimate. The estimate is
reviewed periodically, taking into consideration the risk
characteristics of the loan portfolio, past loss experience, general
economic conditions and other factors which deserve current
recognition. As adjustments to the estimate of future losses become
necessary, they are reflected as a provision (positive or negative)
for possible loan losses in current-period earnings. However, because
factors such as loan growth, the future collectibility of loans and
the amounts and timing of future cash flows expected to be received
on impaired loans are uncertain, the level of future provisions
(positive or negative), if any, generally cannot be predicted. Actual
loan losses are deducted from and subsequent recoveries are added to
the reserve.
-38-
<PAGE> 37
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Bank premises and equipment:
Bank premises and equipment are stated at cost less accumulated
depreciation. Depreciation is computed primarily by the straight-line
method. Useful lives utilized for purposes of computing depreciation
are as follows: buildings, 10 to 30 years; furniture and equipment, 3
to 10 years. Maintenance, repairs and minor improvements are charged
to operating expenses. Gains or losses on dispositions are reflected
currently in the Statement of Income.
The Company adopted SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed of," as of
January 1, 1996. The impact on the Company's financial position and
results of operations for the year ended December 31, 1996 was not
material.
Foreclosed assets:
Collateral acquired through foreclosure or in settlement of loans is
classified as either other real estate owned ("OREO") or other assets
and is carried at its fair value, net of estimated costs to sell, or
the remaining investment in the loan, whichever is lower. At
acquisition, any excess of the recorded loan value over the estimated
fair value of the collateral is charged against the allowance for
possible loan losses. After acquisition, valuation allowances are
established with a charge to current earnings to adjust the reported
value of foreclosed assets to reflect changes in the estimate of a
property's fair value or selling costs. Revenues and expenses
associated with the management of foreclosed assets prior to sale are
included in current earnings.
Income taxes:
The Company files a consolidated federal income tax return with the
subsidiary Bank. The Company accounts for income taxes using the
liability method. Under this method, deferred tax assets and
liabilities are based on the temporary differences between the
financial reporting basis and tax basis of the Company's assets and
liabilities at enacted tax rates expected to be in effect when such
amounts are realized or settled.
Cash and cash equivalents:
Cash and cash equivalents include cash and due from banks, federal
funds sold and interest bearing deposits in banks.
-39-
<PAGE> 38
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Recent pronouncements:
In June 1996, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards ("SFAS") No. 125,
"Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities," which requires an entity to
recognize the financial and servicing assets it controls and the
liabilities it has incurred and to cease to recognize them as
financial assets when control has been surrendered in accordance with
the criteria provided in SFAS No. 125. Subsequently, the FASB issued
SFAS No. 127, "deferred of the Effective Date of Certain Provisions
of SFAS No. 125," which deferred until January 1, 1998, the
implementation of certain aspects of the original statement. The
adoption of SFAS No. 125 is not expected to have a material impact on
the financial condition or operating results of the Company. The
Company will apply the new rules prospectively to transactions when
required.
In February 1997, the FASB issued SFAS No. 128, "Earnings Per Share"
and SFAS No. 129, "Disclosure of Information About Capital Structure"
which are effective for quarters ending after December 15, 1997, and
fiscal years ending after December 15, 1997, respectively. Management
believes the implementation of these statements will not have a
material effect on its results of operations or financial statement
disclosures.
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income" and SFAS No. 131, "Disclosures About Segments of an
Enterprise and Related Information." SFAS No. 130 establishes
standards for reporting and display of comprehensive income in the
financial statements. Comprehensive income is the total of net income
and all other non-owner changes in equity. SFAS No. 131 requires that
companies disclose segment data based on how management makes
decisions about allocating resources to segments and measuring their
performance. SFAS Nos. 130 and 131 are effective for 1998. Adoption
of these standards is not expected to have an effect on the Company's
financial statements, financial position or results of operations.
Reclassifications:
Certain amounts in the 1996 and 1995 financial statements have been
reclassified to conform with the financial statement presentation for
1997 for comparability. These reclassifications had no effect on net
income as previously reported for the 1996 and 1995 fiscal years.
Note 2. Restrictions on Cash and Due From Bank Accounts
The Bank is required to maintain average reserve balances by the
Federal Reserve Bank. The average amount of these reserve balances was
$534,000 and $456,000 for the years ended December 31, 1997 and 1996,
respectively.
-40-
<PAGE> 39
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 3. Investment Securities
The carrying amounts of investment securities as shown in the
consolidated balance sheets of the Bank and their approximate market
values at December 31 were as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1997
-----------------------------------------------------------
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Securities held to maturity:
U.S. Treasury Securities ........... $ 3,692,308 $ 21,065 $ 322 $ 3,713,051
U.S. Government and Agencies ....... 10,511,416 48,508 8,830 10,551,094
----------- ----------- ----------- -----------
$14,203,724 $ 69,573 $ 9,152 $14,264,145
=========== =========== =========== ===========
Securities available for sale:
Mortgage-Backed Securities ......... $ 1,153,434 $ 59,198 $ 2,359 $ 1,210,273
U.S. Treasury Securities ........... 1,994,322 14,395 -- 2,008,717
U.S. Government and Agencies ....... 5,498,493 35,610 2,422 5,531,681
State and Political Subdivisions ... 3,394,993 50,139 2,417 3,442,715
----------- ----------- ----------- -----------
$12,041,242 $ 159,342 $ 7,198 $12,193,386
=========== =========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1996
-----------------------------------------------------------
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Securities held to maturity:
U.S. Treasury Securities ........... $ 4,005,216 $ 7,359 $ 4,953 $ 4,007,622
U.S. Government and Agencies ....... 11,512,680 74,124 32,443 11,554,361
----------- ----------- ----------- -----------
$15,517,896 $ 81,483 $ 37,396 $15,561,983
=========== =========== =========== ===========
Securities available for sale:
Mortgage-Backed Securities ......... $ 1,722,323 $ 68,810 $ 3,979 $ 1,787,154
U.S. Treasury Securities ........... 996,305 6,114 -- 1,002,419
U.S. Government and Agencies ....... 3,000,115 15,473 4,014 3,011,574
State and Political Subdivisions ... 2,864,823 29,349 24,406 2,869,766
----------- ----------- ----------- -----------
$ 8,583,566 $ 119,746 $ 32,399 $ 8,670,913
=========== =========== =========== ===========
</TABLE>
Securities with book values of $14,421,874 and $14,775,340 at December 31, 1997
and 1996, respectively, were pledged to secure public deposits and other
transactions as required by law.
There were no gross-realized gains or gross-realized losses on sales of
securities for the fiscal years ended December 31, 1997, 1996 or 1995.
-41-
<PAGE> 40
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The maturities of investment securities at December 31, 1997 were as
follows:
<TABLE>
<CAPTION>
SECURITIES TO BE HELD
TO MATURITY
---------------------------
AMORTIZED FAIR
YEARS TO MATURITY COST VALUE
----------- -----------
<S> <C> <C>
Less than one ......................... $ 3,698,505 $ 3,696,609
Greater than one but less than five ... 9,507,306 9,555,290
Greater than five but less than ten ... 997,913 1,012,246
Greater than ten ...................... -- --
----------- -----------
$14,203,724 $14,264,145
=========== ===========
</TABLE>
<TABLE>
<CAPTION>
SECURITIES AVAILABLE
FOR SALE
---------------------------
AMORTIZED FAIR
YEARS TO MATURITY COST VALUE
----------- -----------
<S> <C> <C>
Less than one ......................... $ 1,013,493 $ 1,015,670
Greater than one but less than five ... 8,873,912 9,052,913
Greater than five but less than ten ... 1,266,259 1,289,277
Greater than ten ...................... 887,578 835,526
----------- -----------
$12,041,242 $12,193,386
=========== ===========
</TABLE>
-42-
<PAGE> 41
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 4. Loans
Major classifications of subsidiary bank's loan portfolio at December
31, are as follows:
<TABLE>
<CAPTION>
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Commercial, financial and
agricultural ............... $ 7,548,970 $ 7,437,376 $ 6,239,611
Real estate construction ...... 358,917 285,247 119,530
Real estate mortgage .......... 15,543,098 16,277,777 16,472,824
Installment ................... 4,983,546 4,925,410 4,182,430
------------ ------------ ------------
28,434,531 28,925,810 27,014,395
Unearned income ............... -- -- (45)
------------ ------------ ------------
Net loans .................. 28,434,531 28,925,810 27,014,350
Allowance for possible loan
losses ..................... (599,593) (614,339) (624,122)
------------ ------------ ------------
$ 27,834,938 $ 28,311,471 $ 26,390,228
============ ============ ============
</TABLE>
The following is a summary of loans classified by type at December 31,
1997:
<TABLE>
<S> <C>
Commercial, financial and
agricultural ....................................... $ 7,548,970
Real estate construction .............................. 358,917
Real estate mortgage .................................. 8,792,648
-----------
Total commercial ................................... 16,700,535
-----------
Residential mortgage .................................. 6,750,450
Installment ........................................... 4,983,546
-----------
Total consumer ..................................... 11,733,996
-----------
Total loans ........................................ $28,434,531
===========
</TABLE>
-43-
<PAGE> 42
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following summarizes the non-performing elements of the loan portfolio and
total foreclosed assets at December 31:
<TABLE>
<CAPTION>
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Nonperforming loans:
Loans on nonaccrual ...................... $308,059 $496,490 $ 2,051
Restructured loans which
are not on nonaccrual ................. 70,170 93,630 112,008
-------- -------- --------
Total nonperforming loans ....... 378,229 590,120 114,059
Other real estate and
repossessed assets received
in complete or partial
satisfaction of loan
obligations .............................. 6,900 13,800 13,800
-------- -------- --------
Total nonperforming assets ..... $385,129 $603,920 $127,859
======== ======== ========
Loans contractually past
due 90 days or more as
to principal or interest,
but which are not on
nonaccrual ............................ $ 8,649 $ 27,434 $ 9,504
======== ======== ========
</TABLE>
As discussed in Note 1, the Company adopted SFAS No. 114 effective January 1,
1995. The adoption of SFAS No. 114 did not have a material impact on the
financial condition or operating results of the Company. At December 31, 1997,
the recorded investment in loans that were considered to be impaired under SFAS
No. 114 was $308,059. Included in this amount was $301,319 of the impaired loans
for which the related allowance for loan losses was $150,000 and $6,740 of
impaired loans that do not have an allowance for loan losses. The average
recorded investment in impaired loans during the year ended December 31, 1997
was approximately $392,000. Interest payments received on impaired loans are
applied to principal if there is doubt as to the collectibility of the
principal; otherwise, these receipts are recorded as interest income. For the
year ended December 31, 1997, the Company did not recognized income on impaired
loans.
As it relates to in-substance foreclosures, SFAS No. 114 requires that a
creditor continue to follow loan classification on the balance sheet unless the
creditor receives physical possession of the collateral. The Company has had no
in-substance foreclosures for any of the periods presented.
Interest income in the amount of $44,501 for 1997, $59,177 for 1996 and $13,732
for 1995 would have been recorded on nonperforming loans if they had been
classified as performing. The Company recorded $-0-, $6,633 and $7,638 of
interest income on nonperforming loans during 1997, 1996 and 1995, respectively.
-44-
<PAGE> 43
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following is a summary of the allowance for loan losses for the
three years ended December 31, 1997:
<TABLE>
<CAPTION>
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Balance, beginning of year ........ $ 614,339 $ 624,122 $ 614,310
Provisions charged to operating
expense ........................ -- -- --
Recoveries on loans ............... 2,250 7,946 15,382
Loans charged off ................. (16,996) (17,729) (5,570)
--------- --------- ---------
Balance, end of year .............. $ 599,593 $ 614,339 $ 624,122
========= ========= =========
</TABLE>
Note 5. Related Party Transactions
In the ordinary course of business, loans have been made to directors
and executive officers and their associates. Such loans to these
related parties were made on substantially the same terms, including
interest rates and collateral, as those prevailing at the time for
comparable transactions with other persons. Loans to these related
parties were approximately $1,546,942 and $1,259,914 at December 31,
1997 and 1996, respectively. The following provides an analysis of the
activity with respect to loans to related parties:
<TABLE>
<CAPTION>
<S> <C>
Balance at January 1, 1997 ............................ $ 1,259,914
New loans made ........................................ 1,266,895
Repayment on loans .................................... (979,867)
-----------
Balance at December 31, 1997 .......................... $ 1,546,942
===========
</TABLE>
Note 6. Bank Premises and Equipment
Bank premises and equipment, at cost, consisted of the following as of
December 31:
<TABLE>
<CAPTION>
1997 1996 1995
---------- ---------- ----------
<S> <C> <C> <C>
Land .................................. $ 384,387 $ 384,387 $ 384,387
Premises and leasehold
improvements ....................... 1,788,590 1,784,621 1,781,317
Furniture and equipment ............... 1,228,258 1,190,307 1,151,645
---------- ---------- ----------
3,401,235 3,359,315 3,317,349
Less accumulated depreciation
and amortization ................... 2,173,826 2,022,916 1,881,903
---------- ---------- ----------
Total ............................ $1,227,409 $1,336,399 $1,435,446
========== ========== ==========
</TABLE>
Depreciation and amortization expense included in non-interest expense
was $198,377 in 1997, $198,895 in 1996, and $177,106 in 1995.
-45-
<PAGE> 44
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 7. Concentrations of Credit Risk
All of the Bank's loans, commitments and standby letters of credit have
been granted to customers in the Bank's market area of South Louisiana.
Investments in state and municipal securities also involve governmental
entities within the Bank's market area. The concentrations of credit by
type of loan are set forth in Note 4. The distribution of commitments
to extend credit approximates the distribution of loans outstanding.
Standby letters of credit were granted primarily to commercial
borrowers. The Bank, as a matter of policy, does not extend credit to
any single borrower or group of related borrowers in excess of
$1,375,000.
At December 31, 1997, the Bank has loans outstanding to multiple
numbers of borrowers engaged in the medical industry and the legal
profession. The loans to the medical industry totaled $5,141,814, while
the loans to the legal profession were $2,533,037. There were no
significant nonperforming loans outstanding in these two
concentrations.
Note 8. Earnings Per Share
The earnings per share computation are based on weighted average number
of shares outstanding during each year of 119,997, 120,000 and 120,000
for the years ended December 31, 1997, 1996 and 1995 respectively.
Note 9. Employee Benefit Plan
The Bank maintains a 401(k) Savings Plan available to employees with
over one year of service. The Bank matches 50% of the salary deferral,
up to a maximum of 2% in 1996 and 3% in 1997 of compensation, which
becomes vested after five years of service. Total contributions to the
plan by the Bank were $15,214 for 1997 and $9,491 for 1996. The Bank
entered into a non-qualified deferred compensation plan for certain
executives of the Company in 1995. The total deferred compensation
expense for 1997 and 1996 was $10,817 and $10,109, respectively.
-46-
<PAGE> 45
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 10. Income Taxes
The Company adopted SFAS No. 109 effective January 1, 1992. Income
tax expense includes amounts currently payable and amounts deferred
to or from other years as a result of differences in the timing of
recognition of income and expense for financial reporting and
deferral tax purposes. The components of income tax expense are as
follows:
<TABLE>
<CAPTION>
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Current federal income tax
expense ............................. $ 408,433 $ 318,215 $ 429,877
Deferred federal income tax
expense (benefit) ................... (3,168) 16,983 19,916
--------- --------- ---------
$ 405,265 $ 335,198 $ 449,793
========= ========= =========
Included in shareholders' equity:
Deferred tax expense
(benefit) related to the
change in net unrealized
gain (loss) on securities
available for sale ................... $ 22,031 $ (24,425) $ 54,467
========= ========= =========
</TABLE>
The reconciliation of the federal statutory income tax rate to the
Company's effective rate is summarized as follows for the years ended
December 31:
<TABLE>
<CAPTION>
1997 1996 1995
--------------- --------------- ---------------
AMOUNT RATE AMOUNT RATE AMOUNT RATE
--------- ---- --------- ---- --------- ----
<S> <C> <C> <C> <C> <C> <C>
Tax based on
federal
statutory rate ...... $ 459,953 34.0% $ 466,992 34.0% $ 480,505 34.0%
Effect of tax-
exempt income ....... (60,149) (4.4) (52,782) (3.8) (81,919) (5.8)
Change in deferral
valuation reserve ... -- -- (61,938) (4.5) -- --
Other .................. 5,461 .4 (17,074) (1.3) 51,207 3.6
--------- ---- --------- ---- --------- ----
$ 405,265 30.0% $ 335,198 24.4% $ 449,793 31.8%
========= ==== ========= ==== ========= ====
</TABLE>
-47-
<PAGE> 46
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Deferred tax assets and liabilities included in other assets or other
liabilities at December 31 consist of the following:
<TABLE>
<CAPTION>
1997 1996
-------- --------
<S> <C> <C>
Deferred tax assets:
Allowance for loan losses ......................... $ 14,022 $ 14,022
Foreclosed assets ................................. 36,006 33,660
Other ............................................. 4,784 8,362
-------- --------
Total deferred tax assets ...................... 54,812 56,044
-------- --------
Deferred tax liabilities:
Net unrealized appreciation
on available for sale securities ............... 51,729 29,698
Accumulated depreciation .......................... 32,111 36,511
-------- --------
Total deferred tax liabilities ................. 83,840 66,209
-------- --------
Total net deferred tax asset (liability) ............. $(29,028) $(10,165)
======== ========
</TABLE>
Management estimates realizability of the net deferred tax asset
based on the Company's ability to generate taxable income in the
future. A deferred tax valuation reserve is established, if needed,
to limit the net deferred tax asset to its realizable value.
Note 11. Lease Commitments
The Company leases land, buildings, and equipment under cancelable
and noncancelable leases. The leased properties are used primarily
for banking purposes.
Future minimum payments, by year and in the aggregate, for
noncancelable operating leases with initial or remaining terms of one
year or more consisted of the following at December 31, 1997:
<TABLE>
<CAPTION>
YEAR ENDING AMOUNT
- ----------- ------
<S> <C>
1998................................................ $ 63,457
1999................................................ 45,919
2000................................................ 45,919
2001................................................ 45,919
2002................................................ 45,919
----------
Total future minimum lease payments................. $ 247,133
==========
</TABLE>
-48-
<PAGE> 47
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
All leases contain options to extend the lease term upon expiration
and will probably be exercised.
The total rental expense on operating leases for the years ended
December 31, 1997, 1996, and 1995, amount to $60,096, $58,538 and
$58,538, respectively.
One of the bank's branch offices is leased from a corporation in
which some of the lessor's shareholders are directors of the bank.
Note 12. Other Operating Expenses
The composition of other operating expenses for each of the three
years for the period ended December 31 are as follows:
<TABLE>
<CAPTION>
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
FDIC and Louisiana assessments ............ $ 21,636 $ 16,046 $ 71,669
Office supplies ........................... 79,418 76,439 68,812
Postage ................................... 52,202 52,358 57,043
Other insurance ........................... 16,390 29,440 31,638
ATM expenses .............................. 25,803 25,836 28,466
Director fees ............................. 80,500 70,400 61,100
Other ..................................... 358,076 346,498 297,255
-------- -------- --------
$634,025 $617,017 $615,983
======== ======== ========
</TABLE>
-49-
<PAGE> 48
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 13. American Bancorp, Inc. (Parent Company Only)
The following financial statements of American Bancorp, Inc. (Parent
Company Only) include the Bank under the equity method of accounting.
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1997 1996
----------- -----------
<S> <C> <C>
ASSETS
Cash on deposit with subsidiary .................... $ 54,864 $ 4,768
Investment in subsidiary ........................... 8,452,334 7,646,142
Due from American Bank ............................. 11,562 36,128
----------- -----------
Total assets .................................... $ 8,518,760 $ 7,687,038
=========== ===========
LIABILITIES
Accrued income taxes payable ....................... $ 6,077 $ 30,644
----------- -----------
Total liabilities ................................ 6,077 30,644
----------- -----------
SHAREHOLDERS' EQUITY
Common stock: $5 par value, 10,000,000
shares authorized; 120,000 shares
issued, 119,962 and
120,000 shares outstanding, respectively ........ 600,000 600,000
Surplus ............................................ 2,150,000 2,150,000
Retained earnings .................................. 5,664,283 4,848,745
Net unrealized loss on securities
available for sale, net of tax of $51,729
and $29,698, respectively ....................... 100,414 57,649
Treasury stock, 38 shares at cost .................. (2,014) --
----------- -----------
Total shareholders' equity ................... 8,512,683 7,656,394
----------- -----------
Total liabilities and shareholders' equity ... $ 8,518,760 $ 7,687,038
=========== ===========
</TABLE>
-50-
<PAGE> 49
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
American Bancorp, Inc. (Parent Company Only)
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------
1997 1996 1995
---------- ---------- ----------
<S> <C> <C> <C>
Income:
Dividends from bank subsidiary ............................. $ 185,000 $ 123,000 $ --
Expenses:
Other expenses ............................................. 890 1,765 5,880
---------- ---------- ----------
Earnings before income taxes
and equity in undistributed
earnings of subsidiary ..................................... 184,110 121,235 (5,880)
Provision for income taxes .................................... -- -- (9,400)
---------- ---------- ----------
Earnings before equity in
undistributed earnings of
subsidiary ................................................. 184,110 121,235 (15,280)
Equity in undistributed
earnings of subsidiary ..................................... 763,426 917,074 978,736
---------- ---------- ----------
Net income .............................................. $ 947,536 $1,038,309 $ 963,456
========== ========== ==========
</TABLE>
-51-
<PAGE> 50
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
American Bancorp, Inc. (Parent Company Only)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income .................................. $ 947,536 $ 1,038,309 $ 963,456
Adjustments to reconcile net
income to net cash provided
by operating activities:
Equity in undistributed
earnings of subsidiary ............. (763,426) (917,074) (978,737)
(Increase) decrease in other assets ... 24,567 391,833 (305,781)
Increase (decrease) in income taxes
payable ............................ (24,567) (389,833) 420,478
----------- ----------- -----------
Net cash provided by
operating activities ............ 184,110 123,235 99,416
----------- ----------- -----------
FINANCING ACTIVITIES
Dividends paid to shareholders .............. (132,000) (120,000) (102,000)
----------- ----------- -----------
Net cash used by
financing activities ............ (132,000) (120,000) (102,000)
----------- ----------- -----------
INVESTING ACTIVITIES
Treasury Stock .............................. (2,014) -0- -0-
----------- ----------- -----------
Net cash used by
investing activities ............. (2,014) -0- -0-
----------- ----------- -----------
Increase (decrease) in cash
and cash equivalents ............. 50,096 3,235 (2,584)
Cash and cash equivalents at
beginning of year ........................... 4,768 1,533 4,117
----------- ----------- -----------
Cash and cash equivalents at
end of year ................................. $ 54,864 $ 4,768 $ 1,533
=========== =========== ===========
</TABLE>
-52-
<PAGE> 51
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 14. Financial Instruments
Generally accepted accounting principles require disclosure of fair
value information about financial instruments for which it is
practicable to estimate fair value, whether or not the financial
instruments are recognized in the financial statements. When 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. The derived fair
value estimates cannot be substantiated through comparison to
independent markets and, in many cases, could not be realized in
immediate settlement of the instrument. Certain financial instruments
and all non-financial instruments are excluded from these disclosure
requirements. Further, the disclosures do not include estimated fair
values for items which are not financial instruments but which
represent significant value to the Bank, among them, core deposit
intangibles, loan servicing rights and other fee-generating
businesses. Accordingly, the aggregate fair value amounts presented
do not represent the underlying value of the Company.
The carrying amount of cash and short-term investments and demand
deposits approximates the estimated fair value of these financial
instruments. The estimated fair value of securities is based on
quoted market prices, dealer quotes and prices obtained from
independent pricing services. The estimated fair value of loans and
interest bearing deposits is based on present values using applicable
risk-adjusted spreads to the appropriate yield curve to approximate
current interest rates applicable to each category of these financial
instruments.
Interest rates were not adjusted for changes in credit risk of
performing commercial loans for which there are no known credit
concerns. Management segregates loans into appropriate risk
categories and believes the risk factor embedded in the interest
rates results in a fair valuation of these loans on an entry-value
basis.
Variances between the carrying amount and the estimated fair value of
loans reflect both credit risk and interest rate risk. The Bank is
protected against changes in credit risk by the allowance for
possible loan losses of $599,593 at December 31, 1997.
The fair value estimates presented are based on information available
to management as of December 31, 1997. Although management is not
aware of any factors that would significantly affect the estimated
fair value amounts, these amounts have not been revalued for purposes
of these financial statements since that date. Therefore, current
estimates of fair value may differ significantly from the amounts
presented. None of the assets or liabilities included in the table
below are held for trading purposes.
The Bank issues financial instruments in the normal course of
business to meet the financing needs of its customers and to reduce
exposure to fluctuations in interest rates. These financial
instruments include commitments to extend credit and letters of
credit and involve, to varying degrees, elements of credit and
interest rate risk in excess of the amount recognized on the balance
sheet.
-53-
<PAGE> 52
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
CARRYING FAIR
AMOUNT VALUE
----------- -----------
<S> <C> <C>
ASSETS
Cash and short-term investments.. $ 8,068,108 $ 8,068,106
Securities held to maturity ..... $14,203,724 $14,264,145
Securities available for sale ... $12,193,386 $12,193,386
Commercial loans ................ $ 7,548,970 $ 7,574,000
Consumer loans .................. $ 4,983,546 $ 4,949,000
Real estate loans ............... $15,902,015 $15,995,000
LIABILITIES
Demand deposits ................. $17,324,777 $17,324,777
NOW accounts .................... $ 8,594,109 $ 8,594,109
Money market accounts ........... $ 2,761,187 $ 2,761,187
Savings ......................... $ 8,122,017 $ 8,142,000
Time Deposits ................... $19,054,656 $19,087,000
</TABLE>
Commitments to extend credit are legally binding, conditional
agreements generally having fixed expiration or termination dates and
specified interest rates and purposes. These commitments generally
require customers to maintain certain credit standards. Collateral
requirements and loan-to-value ratios are the same as those for
funded transactions and are established based on management's credit
assessment of the customer. Commitments may expire without being
drawn upon. Therefore, the total commitment amount does not
necessarily represent future funding requirements. The Bank's
experience has been that most loan commitments are drawn upon by
customers.
The Bank issues letters of credit and financial guarantees (standby
letters of credit) whereby it agrees to honor certain financial
commitments in the event its customers are unable to perform. The
majority of the standby letters of credit consist of performance
guarantees. Management conducts regular reviews of all outstanding
standby letters of credit, and the results of these reviews are
considered in assessing the adequacy of the Bank's reserve for
possible loan losses. The Bank has not incurred any losses in its
commitments in 1997 or 1996. Management does not anticipate any
material losses related to these instruments.
The estimated fair values of off-balance-sheet financial instruments
are not material. A summary of the notional amounts of the Bank's
financial instruments with off-balance-sheet risk at December 31,
1997 and 1996 are as follows:
<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
Commitments to extend credit .. $4,568,172 $3,532,574
Credit card arrangements ...... $1,200,902 $1,097,857
Standby letters of credit ..... $ 169,101 $ 152,768
</TABLE>
-54-
<PAGE> 53
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 15. Regulatory Matters
The Bank is subject to the dividend restrictions set forth by the
Louisiana Commissioner of Financial Institutions. Under such
restrictions, the Bank may not, without the prior approval of the
Commissioner of Financial Institutions, declare dividends in excess
of the sum of the current year and prior year earnings less
dividends paid during these periods. The dividends as of December
31, 1997, that the Bank could declare without the approval of the
Commissioner of Financial Institutions, amounted to $1,733,845. The
Bank is also required to maintain minimum amounts of capital to
total "risk weighted" assets, as defined by the banking regulators.
At December 31, 1997, the Bank is required to have minimum Tier 1
and Total capital ratios of 4% and 8%, respectively. The Bank's
actual ratios at that date were 26.13% and 27.38%, respectively. The
Bank's leverage ratio were 12.97% and 12.44% as of December 31, 1997
and 1996, respectively.
Under Section 18J of the Federal Deposit Insurance Act, which is
subject to Section 23A of the Federal Reserve Act, the Bank cannot
make loans, extensions of credit, repurchase agreements,
investments, and advances, which exceed 10 percent of its capital
stock and surplus, to an affiliate. Such loans must be
collateralized by assets with market values of 100% to 130% of loan
amounts, depending upon the mature of the collateral.
Note 16. Contingencies
In the ordinary course of business, the Bank has various outstanding
commitments and contingent liabilities that are not reflected in the
accompanying consolidated financial statements. In addition, the Bank
is a defendant in certain claims and legal actions arising in the
ordinary course of business. In the opinion of management, after
consultation with legal counsel, the ultimate disposition of these
matters is not expected to have a material adverse effect on the
consolidated financial condition of the Bank.
Note 17. Year 2000
The Company is aware of the issues associated with the programming
code in existing computer systems as the millennium ("year 2000")
approaches. The "year 2000" problem is pervasive and complex, as
virtually every computer operation will be affected in some way by
the rollover of the two-digit year value to zero. The issue is
whether computer systems will properly recognize date-sensitive
information when the year changes to 2000. Systems that do not
properly recognize such information could generate erroneous data or
cause a system to fail.
The Company is utilizing both internal and external resources to
identify, correct or reprogram, and test the systems for the "year
2000" compliance. It is anticipated that all reprogramming efforts
will be complete by December 31, 1998, allowing adequate time for
testing. To date, confirmations have been received from the Company's
primary processing vendors that plans are being developed to address
processing of transactions in the "year 2000." Management has not yet
assessed the "year 2000" compliance expense and related potential
effect on the Company's earnings but it is not expected to be
significant.
-55-
<PAGE> 54
OFFICERS AND DIRECTORS OF
AMERICAN BANK AND TRUST COMPANY
CHAIRMAN OF THE BOARD AND PRESIDENT
Salvador L. Diesi, Sr.
CHIEF EXECUTIVE OFFICER AND EXECUTIVE VICE-PRESIDENT
Ronald J. Lashute
SENIOR VICE-PRESIDENT
Walter J. Champagne, Jr.
VICE-PRESIDENTS
Charlene Louviere Joan T. Muller, Chief
Angel Powell Financial Officer,
Peter Strawitz, III Cashier
ASSISTANT VICE-PRESIDENT
David Gremillion
ASSISTANT CASHIERS
Elaine D. Ardoin Elizabeth Miller
Audrey Cormier Bonnie Pavy
Sally Hooks Stephanie Richard
Cindy Melancon Audrey Thibodeaux
DIRECTORS
Joseph J. Artall Salvador L. Diesi, Sr.
Walter J. Champagne, Jr. Alvin Haynes II
Attaway Darbonne Charles Jagneaux
J.C. Diesi Sylvia Sibille
OFFICES LOCATED IN
OPELOUSAS KROTZ SPRINGS
LAFAYETTE PORT BARRE
LAWTELL
-56-
<PAGE> 55
OFFICERS AND DIRECTORS OF
AMERICAN BANCORP, INC.
CHAIRMAN OF THE BOARD AND PRESIDENT
Salvador L. Diesi, Sr.
SECRETARY/TREASURER
Ronald J. Lashute
<TABLE>
<CAPTION>
BOARD OF DIRECTORS OCCUPATION AND MAIN AFFILIATION
<S> <C>
Joseph J. Artall Farmer.
Walter J. Champagne, Jr. Retired; Farming interest.
J.C. Diesi Automobile Dealer; Diesi
Pontiac-Cadillac-Buick, Inc.
Salvador L. Diesi, Sr. Chairman of the Board and President,
American Bancorp, Inc. and American
Bank & Trust Company; Wholesale Beer
Distributor, Premium Brands, Inc.;
Gas Station, Convenience Store, and
Video Poker; Little Capitol of
Louisiana, Inc.; Commercial real
estate, farming interest; and Attorney at Law.
Ronald J. Lashute Chief Executive Officer and Executive Vice President
of American Bank & Trust Company and
Secretary/Treasurer of American Bancorp, Inc.
</TABLE>
-57-
<PAGE> 1
EXHIBIT 22.1
AMERICAN BANCORP, INC.
PROXY STATEMENT FOR ANNUAL MEETING
TO BE HELD APRIL 8, 1998
GENERAL
The accompanying proxy is solicited by and on behalf of the Board of
Directors of American Bancorp, Inc. (the Corporation), for use at the annual
meeting of shareholders to be held April 8, 1998, at the time and place set
forth in the accompanying Notice of Meeting. The principal executive offices of
the Corporation and its wholly-owned subsidiary, American Bank & Trust Company
(the Bank), are located at 328 East Landry Street, Opelousas, Louisiana 70570.
The date on which this Proxy Statement and the enclosed form of proxy were first
sent to shareholders is approximately March 25, 1998.
Only shareholders of record at the close of business on February 13, 1998,
are entitled to notice of and to vote at the meeting. On that date, the
Corporation had outstanding 119,281 shares of common stock, each of which is
entitled to one vote on all matters presented to the shareholders at the
meeting. To the knowledge of the Corporation, all persons beneficially owning
more than five percent (5%) of its outstanding voting securities are listed in
the section entitled "Shareholders Owning 5% or More of Outstanding Shares" on
page 4 of this Proxy Statement.
The shares represented by any proxy in the enclosed form, if it is properly
executed and received at or prior to the meeting, will be voted in accordance
with the specifications made thereon. Proxies received on which no specification
is made will be voted for election as directors of the five nominees named
herein and in favor of the remaining proposal as set forth on the enclosed
proxy. Proxies are revocable by written notice to the Secretary of the Board of
Directors, Ronald J. Lashute, at any time prior to their exercise or by
submitting a later dated proxy at or before the annual meeting. Written
revocations of proxy may be presented in person or mailed to: Ronald J. Lashute,
Executive Vice-President and Chief Executive Officer, American Bank & Trust
Company, P. O. Box 1579, Opelousas, Louisiana 70571-1579. Proxies will be deemed
revoked by attendance and voting at the annual meeting.
All expenses of preparing, printing, and mailing the proxy and any other
materials and all expenses incurred in solicitation will be borne by the
Corporation. Proxies also may be solicited in person or by telephone or
telegraph by directors, officers, and other employees of the Corporation or the
Bank, none of whom will receive additional compensation for such services, but
who may be reimbursed for any actual expenses incurred, which expenses are
estimated not to exceed the aggregate sum of $2,000. The Corporation also may
request brokerage houses, custodians, and nominees, if any such persons are
listed as record owners of the Corporation's common stock, to forward these
materials to the beneficial owners of the stock held of record by them and pay
the reasonable expenses of such persons for forwarding the material.
<PAGE> 2
SECURITY OWNERSHIP OF MANAGEMENT
The five members of the Board of Directors of the Corporation and the two
executive officers of the Corporation (both of whom also serve on the Board of
Directors), as a group own, directly or indirectly, 50,152 (42%) shares of the
common stock of the Corporation. See "Election of Directors" for the stock
ownership of individual directors.
ELECTION OF DIRECTORS
The Articles of Incorporation of the Corporation provide that the number of
directors will be designated in the Bylaws, or if not so designated, will be the
number elected from time to time by the shareholders. The Bylaws provide for a
board of five directors.
The information below lists each nominee for director of the Corporation,
each of whom currently serves as a director, setting forth his address, age,
principal occupation or employment, and amount and percentage of beneficial
ownership of common stock of the Corporation as of February 13, 1998. Each
person listed below has been named as a nominee for election as director at the
meeting to which this Proxy Statement relates. Directors are elected to hold
office until the next annual meeting of shareholders unless they sooner become
disqualified, or until such time as their successors are elected and have
qualified. Unless otherwise indicated, all nominees have been with the same
organization in essentially the same position as listed below for the past five
years, and the nominees beneficially own, with sole voting and investment power,
the shares listed below. The nominees, except Ronald J. Lashute, are also
members of the Board of Directors of the Corporation's subsidiary, American Bank
& Trust Company. The year listed under the heading "First Elected Director"
indicates the year in which the nominee or director was first elected as a
director of the Bank prior to formation of the Corporation or the year in which
the nominee or director was first elected as a director of the Corporation.
Those persons listed on the table below, except Ronald J. Lashute, first became
directors of the Corporation on June 30, 1982. Ronald J. Lashute has been an
executive officer of the Corporation and the Bank since 1990. See "Executive
Officers."
None of the directors of the Corporation holds a directorship in any other
company with a class of securities registered under Section 12 of the Securities
Exchange Act of 1934, as amended, or subject to the requirements of Section
15(d) of that Act or in any company registered as an investment company under
the Investment Company Act of 1940.
-2-
<PAGE> 3
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY
FIRST OWNED AS OF
PRINCIPAL OCCUPATION ELECTED FEBRUARY 13, 1998
NAME AND ADDRESS AGE OR EMPLOYMENT DIRECTOR NUMBER PERCENTAGE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Joseph J. Artall 91 Farmer 1958 4,620 3.9%
P. O. Box 486
Melville, LA 71353
Walter J. Champagne, Jr. 77 Retired; Farming interest; 1958 2,045 1.7%
P. O. Box 8 and Vice-Pres./Bank
Port Barre, LA 70577
J.C. Diesi (1,3) 77 Diesi Pontiac-Cadillac- 1958 11,800 9.9%
148 W. Smiley Street Buick, Inc., (Automobile
Opelousas, LA 70570 Dealer & Service)
Salvador L. Diesi, Sr. 67 Chairman of the Board and 1973 15,259 12.8%
(1,2,3,4) President, American
1355 Dietlein Blvd. Bancorp, Inc. and
Opelousas, LA 70570 American Bank & Trust
Company; Wholesale Beer
Distributor, Premium
Brands, Inc.; Gas Station,
Convenience Store, and
Video Poker; Little
Capitol of Louisiana,
Inc.; Commercial real
estate, farming interest;
and Attorney at Law
Ronald J. Lashute 48 Executive Vice-President 1994 16,428 13.8%
(2,3,5) and Chief Executive
2057 Jasmine Drive Officer of the Bank and
Opelousas, LA 70570 Secretary, Treasurer of
the Corporation
------ ------
Total for directors (five persons) 50,152 42%
====== ======
</TABLE>
(1) J.C. Diesi is Salvador L. Diesi's uncle.
(2) Executive Officer of the Corporation who participates in major policy making
functions.
(3) Ronald J. Lashute is a cousin of Salvador L. Diesi, Sr. and a nephew of
J.C. Diesi.
(4) Of the 15,259 shares held by Salvador L. Diesi, Sr., 9,977 shares
(8.4%) are held by a Corporation of which Mr. Diesi owns 51%.
(5) Of the 16,428 shares held by Ronald J. Lashute, 16,000 shares (13.4% of
the Corporation's outstanding common stock) are owned by The Diesi Family
Trust. Mr. Ronald J. Lashute is the trustee of The Diesi Family Trust and
has sole voting authority with respect to the shares of the Corporation's
common stock held by the said trust. See "Shareholder's Owning 5% or More of
Outstanding Shares." Mr. Lashute became the trustee of The Diesi Family
Trust on September 9, 1997 to replace the former trustee, Mr. Salvador
Diesi. In connection with becoming the trustee of the Trust, Mr. Lashute
filed with the Federal Reserve Bank in Atlanta a notice of change in bank
control.
-3-
<PAGE> 4
If elected by the shareholders to serve as the Corporation's Board of
Directors, the nominees listed above plan to direct the Chairman of the Board of
the Corporation, as the sole shareholder of the Bank, to vote the stock of the
Bank owned by the Corporation in favor of the following persons to serve as the
Board of Directors of the Bank: Joseph J. Artall, Walter J. Champagne, Jr., J.
C. Diesi, Salvador L. Diesi, Charles Jagneaux, Alvin Haynes, II, Sylvia Sibille
and Attaway Darbonne. Each of these persons has served on the Board of Directors
of the Bank for the past year.
SHAREHOLDERS OWNING 5% OR MORE OF OUTSTANDING SHARES
The following table sets forth as of February 13, 1998, information
concerning the beneficial ownership of voting stock of American Bancorp, Inc.,
by persons who are known to the Corporation to be beneficial owners of 5% or
more of the Corporation's outstanding shares of voting common stock:
<TABLE>
<CAPTION>
PERCENTAGE
AMOUNT AND OF CLASS
NAME AND ADDRESS OF NATURE OF BENEFICIAL OF SHARES
TITLE OF CLASS BENEFICIAL OWNER OWNERSHIP OWNED
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common stock Salvador L. Diesi, Sr. 15,259 shares 12.8%
1355 Dietlein Blvd. Direct and Indirect (1)
Opelousas, LA 70570
Common stock J.C. Diesi 11,800 shares 9.9%
148 W. Smiley St. Direct
Opelousas, LA 70570
Common stock Ronald J. Lashute 16,428 shares 13.8%
2057 Jasmine Drive Direct and Indirect (2)
Opelousas, LA 70570
Common stock Bobby Dupre 6,022 shares 5.0%
444 King Street Direct and Indirect (3)
Opelousas, LA 70570
</TABLE>
(1) Mr. Salvador L. Diesi, Sr. directly owns 5,282 shares or 4.4% of the
outstanding shares of the Corporation. In addition, he owns 9,977 shares,
which is equal to 8.4% of the outstanding shares of the Corporation,
indirectly, through his associations with his business.
(2) Mr. Ronald J. Lashute directly owns 428 shares or .4% of the outstanding
shares of the Corporation. Mr. Lashute is the trustee of The Diesi Family
Trust. The Trust owns 16,000 shares or 13.4% of the outstanding shares of
the Corporation. The Trust is for the benefit of the grandchildren of Frank
(a former director of the Corporation) and Marie Diesi.
(3) Mr. Bobby Dupre directly owns 2,164 shares or 1.8% of the outstanding
shares of the Corporation. In addition, he owns 3,858 or 3.2% of the
outstanding shares of the Corporation indirectly, through his associations
with his businesses.
-4-
<PAGE> 5
BOARD MEETINGS AND COMMITTEES
During 1997, the Board of Directors of the Corporation held a total of four
regular and special meetings. Each director attended seventy-five percent or
more of the aggregate number of meetings of the Board of Directors of the
Corporation and committees of the Board of Directors of the Corporation on which
he served. During 1997, the Board of Directors of the Bank held a total of
twelve regular and special meetings. Each director of the Bank attended
seventy-five percent or more of the aggregate number of meetings of the Board of
Directors of the Bank and committees of the Board of Directors of the Bank on
which he served.
The Board of Directors of the Corporation has no audit, nominating or
compensation committees or committees performing similar functions.
The Board of Directors of the Bank has established the following committees:
The Loan Discount Committee reviews and approves all large loans. This
committee met five (5) times in 1997 and is composed of Salvador L. Diesi, Sr.,
Chairman, J.C. Diesi, Charles Jagneaux, Alvin Haynes, II, Walter J. Champagne,
Jr. and Attaway Darbonne.
The Audit Committee, composed of Walter J. Champagne, Jr., Chairman, Sylvia
Sibille and Joseph J. Artall, met one (1) time in 1997. The duties of the Audit
Committee include, but are not limited to the following:
1. Review the Bond Portfolio, Time and Savings Deposits, Demand Deposits and
Loan Portfolio.
2. Analyze the Statement of Condition and the Statement of Income and Expenses.
3. Review the audit report of the external auditors, F.D.I.C. and State
Examiners Reports.
4. Review the Bank's insurance policies including the Blanket Bond and
Liability Policy.
5. Report results of its review to the Board of Directors.
-5-
<PAGE> 6
EXECUTIVE OFFICERS
The Executive Officers of the Corporation are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION CURRENTLY HELD
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
Salvador L. Diesi, Sr. 67 Chairman of the Board of the Corporation and
the Bank since April 14, 1993 and
President of the Corporation and the Bank
since April 13, 1983.
Ronald J. Lashute 48 Secretary/Treasurer of the Corporation and
Executive Vice-President and Chief
Executive Officer of the Bank since
March 1990; Director of the Corporation
since December 1994.
</TABLE>
Executive Officers are chosen by the Board of Directors to hold office at the
pleasure of the Board. Mr. Salvador L. Diesi, Sr. has been an officer of the
Corporation and the Bank for more than five years. Mr. Ronald Lashute has been
on the staff of the Corporation and, prior to its formation, the Bank for 24
years.
The family relationships among the executive officers of the Corporation are
indicated in the list of directors. See "Election of Directors."
COMPENSATION AND OTHER TRANSACTIONS
DIRECTORS FEES
Directors of the Corporation receive no compensation for their services. In
1997, each director of the Bank received a board fee of $500 per month for the
months of January through March, and $600 per month for the months of April
through December. In addition, each director of the Bank received a cash bonus
of $3,000 in 1997. Directors serving on the Bank's Loan Discount Committee
received $50 per meeting attended in January and February and $150 per month
March through December 1997. The Bank's Audit Committee met once in 1997. The
Chairman of the Audit Committee received $300 for attending that meeting. Other
members of the Audit Committee received $150 for attending that meeting. The
Chairman of the Audit Committee also received $200 for attending the 1996
meeting and the other members received $100 for attending the 1996 meeting.
COMPENSATION
The following table sets forth all compensation paid, distributed or accrued
for the account of the persons listed below for the fiscal year ended December
31, 1997 by the Bank to the Executive Officers of the Corporation and the Bank.
-6-
<PAGE> 7
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
NAME AND SALARY AND
PRINCIPAL DIRECTOR BONUS OTHER ANNUAL ALL OTHER
POSITION YEAR FEES($) ($)(1) COMPENSATION($)(2) COMPENSATION($)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Salvador L. Diesi, 1997 36,268 (4) 3,100 - 337 (3)
Sr., Chairman of 1996 33,922 (5) 3,100 - 337 (3)
the Board and 1995 32,590 (5) 3,100 - 276 (3)
President of the
Corporation and
the Bank
Ronald J. Lashute 1997 79,574 (6) 6,142 - 8,687 (9)
Executive Vice- 1996 73,248 (7) 5,933 - 8,145 (10)
President and 1995 71,615 (8) 5,683 - 2,639 (11)
Chief Executive
Officer of the
Bank and Secre-
tary/Treasurer
of the Corporation
</TABLE>
(1) The Bank had a cash bonus plan in 1997, 1996, and 1995, whereby a bonus
was declared by the Board of Directors. The total amount of the Bonus paid
to all eligible employees of the Bank was $49,950, $49,471 and $50,364,
respectively, for those years. In addition, cash bonuses of $3,000 in 1997,
1996 and 1995 were paid to each director of the Bank. Cash bonuses paid to
the Executive Officers of the Bank are noted in the table above.
(2) No amounts for perquisites and other personal benefits, such as company
automobiles, which may accrue to the named executive officers and which, in
the opinion of management, are job related and appropriate in connection
with the conduct of the Corporation's and the Bank's affairs, are shown.
The aggregate amount of such compensation does not exceed 10% of the total
of annual salary and bonus reported for the named executive officer.
(3) These figures represent term life insurance premiums paid by the Bank.
(4) This amount includes $818 that was contributed by the Bank for the
account of Mr. Diesi in accordance with the terms of a 401(k) Plan
established by the Bank for the benefit of its employees in January 1993
(the 401(k) Plan).
(5) This amount includes $540 that was contributed by the Bank for the
account of Mr. Diesi in accordance with the terms of the 401(k) Plan.
(6) This amount includes $2,168 that was contributed by the Bank for the
account of Mr. Lashute in accordance with the terms of the 401(k) Plan.
(7) This amount includes $1,436 that was contributed by the Bank for the
account of Mr. Lashute in accordance with the terms of the 401(k) Plan.
-7-
<PAGE> 8
(8) This amount includes $1,303 that was contributed by the Bank for the
account of Mr. Lashute in accordance with the terms of the 401(k) Plan.
(9) This amount includes $8,125 of deferred compensation accrued under a
supplemental executive retirement plan established by the Bank on September
1, 1995. This amount also includes $562 in term life insurance premiums
paid by the Bank.
(10) This amount includes $7,593 of deferred compensation accrued under a
supplemental executive retirement plan and $552 in term life insurance
premiums paid by the Bank.
(11) This amount includes $2,363 of deferred compensation accrued under a
supplemental executive retirement plan and $276 in term life insurance
premiums paid by the Bank.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires officers,
directors and beneficial owners of more than 10% of the outstanding shares of
the Corporation to file with the Securities and Exchange Commission (the SEC)
certain reports describing their stock ownership and changes in their stock
ownership. They must also furnish the Corporation with copies of these forms.
Based solely on its review of the copies of such forms received by it and
written representations from certain reporting persons that they have complied
with the relevant filing requirements, the Corporation believes that filing
requirements under Section 16(a) were met on a timely basis, except that Mr.
Salvador L. Diesi, Sr. filed one Form 4 late following his resignation as
trustee of the Diesi Family Trust.
LEGAL PROCEEDINGS
No director, officer or affiliate of the Corporation, or owner of more than
five (5%) of the outstanding shares of the Corporation, is a party adverse to
the Corporation or its subsidiary in any currently pending legal proceeding, nor
does any such party have a material interest adverse to the Corporation or the
Bank in any currently pending legal proceeding.
OTHER TRANSACTIONS
The Bank has had, and expects to have in the future, banking transactions in
the ordinary course of business with directors, officers and principal
stockholders of the Corporation and of the Bank and their associates, affiliates
or members of their immediate families. The transactions have been and will
continue to be made on the same terms, including interest rates and collateral
on loans, as those prevailing at the same time for comparable transactions with
others and do not involve more than the normal risk of collectibility or present
other unfavorable features.
In addition, the Bank has had other transactions, as indicated below, with
certain directors of the Bank. Such transactions were made in the ordinary
course of business and were on terms competitive with those existing in the
community at the time made.
-8-
<PAGE> 9
The Bank is obligated under a lease for the South Branch location with
Little Capitol of Louisiana, Inc., which corporation is owned by Salvador L.
Diesi, Sr. and a trust set up by Frank (a former director of the Bank) and Marie
Diesi for the benefit of their grandchildren. For the year ended December 31,
1997, the Bank paid Little Capitol of Louisiana, Inc. $19,558 under the terms of
the lease. The initial lease expired on May 31, 1997, but was renewed through
May 31, 2002.
During 1997, the Bank had its vehicles repaired at Diesi
Pontiac-Cadillac-Buick, Inc. and paid an aggregate amount of $2,380 for such
repairs. Also in 1997, the Bank purchased a car for $27,513 from Diesi
Pontiac-Cadillac-Buick, Inc. Mr. J.C. Diesi, a Director of the Corporation, is
an owner of the car dealership.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
Broussard, Poche', Lewis & Breaux has served as the Corporation's
independent Certified Public Accountants for the fiscal years ending December
31, 1986 to 1997. At the 1998 Annual Shareholders Meeting, the following
resolution will be subject to ratification by a simple majority vote of shares
represented at the meeting:
RESOLVED, That the selection of Broussard, Poche', Lewis & Breaux, as the
independent Certified Public Accountants of American Bancorp, Inc. and its
sole subsidiary, American Bank and Trust Company, for the fiscal year ending
December 31, 1998, is hereby ratified.
If ratification is not achieved, the selection of an independent Certified
Public Accountant will be reconsidered and made by the Board of Directors. Even
if selection is ratified, the Board of Directors reserves the right, and in its
discretion, may direct the appointment of any other independent Certified Public
Accounting firm at any time if the Board decides that such a change would be in
the best interests of the Corporation and its shareholders.
A representative of Broussard, Poche', Lewis & Breaux is expected to attend
the Annual Shareholder's Meeting with the opportunity to make a statement, if
desired, and is expected to be available to respond to shareholder's inquiries.
SHAREHOLDER PROPOSALS FOR 1999 ANNUAL MEETING
Shareholders who desire to present a proposal for inclusion in the proxy
material relating to the 1999 annual meeting of shareholders of American
Bancorp, Inc. must forward such proposals to Ronald Lashute at the address
listed on the first page of this Proxy Statement in time to arrive at the
Corporation prior to November 25, 1998.
-9-
<PAGE> 10
OTHER MATTERS
Quorum and Voting of Proxies
The presence, in person or by proxy, of a majority of the outstanding shares
of common stock of the Corporation is necessary to constitute a quorum. If a
quorum is present, the vote of a majority of the shares present or represented
by proxy will decide all questions properly brought before the meeting, except
that directors will be elected by plurality vote. A shareholder's abstention or
refusal to vote on a particular matter will not affect the presence of a quorum
or reduce the voting power present. (In effect, therefore, an abstention is
counted as a vote against a matter.) A non-vote (including broker non-votes)
will have no affect on the items to be addressed at the meeting.
All proxies received in the form enclosed will be voted as specified, and,
in the absence of instruction to the contrary, will be voted FOR the election of
the nominees named above, and FOR the ratification of independent Certified
Public Accountants.
The Corporation does not know of any matters to be presented at the annual
meeting other than those mentioned above. However, if any other matters properly
come before the meeting or any adjournment thereof, it is the intention of the
persons named on the enclosed proxy to vote the shares represented by them in
accordance with their best judgment, unless authority to do so is withheld.
ADDITIONAL CORPORATE INFORMATION
ANY SHAREHOLDER MAY, BY WRITTEN REQUEST, OBTAIN WITHOUT CHARGE AN ADDITIONAL
COPY OF THE CORPORATION'S 1997 ANNUAL REPORT OR A COPY OF THE CORPORATION'S FORM
10-K AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. REQUESTS SHOULD BE
ADDRESSED TO RONALD LASHUTE, EXECUTIVE VICE-PRESIDENT AND CHIEF EXECUTIVE
OFFICER, AMERICAN BANK AND TRUST COMPANY, P. O. BOX 1579, OPELOUSAS, LOUISIANA
70571-1579.
-10-
<PAGE> 1
EXHIBIT 23.1
[SEAL] [BROUSSARD, POCHE, LEWIS & BREAUX LETTERHEAD]
CONSENT OF INDEPENDENT AUDITORS
As Independent Auditors, we hereby consent to the
incorporation by reference in this Form 10-K of American
Bancorp, Inc. for the years ended December 31, 1997, 1996
and 1995, of our report dated January 20, 1998, which
appears on Pages 28 through 55 of the annual report to
shareholders.
/s/ BROUSSARD, POCHE, LEWIS & BREAUX
Lafayette, Louisiana
January 20, 1998
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 4,924
<INT-BEARING-DEPOSITS> 694
<FED-FUNDS-SOLD> 2,450
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 12,193
<INVESTMENTS-CARRYING> 14,204
<INVESTMENTS-MARKET> 14,264
<LOANS> 28,435
<ALLOWANCE> 600
<TOTAL-ASSETS> 64,621
<DEPOSITS> 55,857
<SHORT-TERM> 0
<LIABILITIES-OTHER> 251
<LONG-TERM> 0
0
0
<COMMON> 600
<OTHER-SE> 7,913
<TOTAL-LIABILITIES-AND-EQUITY> 64,621
<INTEREST-LOAN> 2,574
<INTEREST-INVEST> 1,657
<INTEREST-OTHER> 251
<INTEREST-TOTAL> 4,482
<INTEREST-DEPOSIT> 1,397
<INTEREST-EXPENSE> 1,397
<INTEREST-INCOME-NET> 3,085
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 634
<INCOME-PRETAX> 1,353
<INCOME-PRE-EXTRAORDINARY> 1,353
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 948
<EPS-PRIMARY> 7.90
<EPS-DILUTED> 0
<YIELD-ACTUAL> 5.39
<LOANS-NON> 308
<LOANS-PAST> 9
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 614
<CHARGE-OFFS> 17
<RECOVERIES> 3
<ALLOWANCE-CLOSE> 600
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 600
</TABLE>
