<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, 1998 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: $3,979,560.
The number of shares outstanding of each of the issuer's classes of common
stock, as of December 31, 1998: Common Stock, $5.00 Par Value, 118,449 shares
outstanding.
Documents Incorporated by Reference
Portions of the annual shareholders' report for the year ended December 31, 1998
are incorporated by reference into Parts I and II.
Portions of the proxy statement for the annual shareholders meeting to be held
April 14, 1999 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, 1998, 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 81,939. Its primary market is Opelousas, which has a
population of approximately 19,540, 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, 1998.
<TABLE>
<CAPTION>
(In thousands of dollars)
Assets Deposits
--------- ---------
<S> <C> <C>
American Bank and Trust Company $ 73,666 $ 63,819
St. Landry Bank and Trust Company $ 220,090 $ 187,346
St. Landry Homestead $ 132,653 $ 109,725
Washington State Bank $ 81,329 $ 63,716
First Federal Savings & Loan $ 65,823 $ 48,474
</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 1998, the average number of full-time equivalent employees at the
Bank was 44. 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. 25 68 Chairman of the Board of the
Company and the Bank;
President of the Company
and the Bank
Ronald J. Lashute 26 49 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
- 4 -
<PAGE> 5
Item 1. Business (continued)
itself of any non-banking subsidiary, if in its judgment the activity or
subsidiaries would be unsound.
Under the Act and the Board's regulations, a bank holding company and
its subsidiaries are prohibited from engaging in certain tie-in arrangements in
connection with any 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 1998 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,
------------------------------------------
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Securities held to maturity:
U.S. Treasury $ 2,696 $ 3,692 $ 4,005
U.S. Government Agencies 3,005 10,512 11,513
-------- -------- --------
$ 5,701 $ 14,204 $ 15,518
======== ======== ========
</TABLE>
- 5 -
<PAGE> 6
Item 1. Business (continued)
<TABLE>
<CAPTION>
December 31,
------------------------------------------
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Securities available for sale:
Mortgage-backed securities $ 4,455 $ 1,210 $ 1,787
U.S. Treasury securities 3,553 2,009 1,002
U.S. Government Agencies 9,002 5,532 3,012
State and Political subdivisions 6,907 3,442 2,870
Equity securities 97 - -
-------- -------- --------
$ 24,014 $ 12,193 $ 8,671
======== ======== ========
</TABLE>
The following tables set forth the maturities of investment securities
at December 31, 1998, 1997, and 1996 and the weighted average yields of such
securities (in thousands of dollars):
<TABLE>
<CAPTION>
December 31, 1998
---------------------------------------------------------------------------------------
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 $ 2,496 6.25% $ 200 4.54% $ - - % $ - - %
U.S. Government
Agencies 506 6.22 1,999 6.91 500 7.03 - -
------- -------- -------- --------
Total held
to
maturity 3,002 6.24 2,199 6.69 500 7.03 -0- -
------- -------- -------- --------
Securities
available for
sale:
U.S. Treasury - - 3,553 5.75 - - - -
U.S. Government
Agencies - - 7,966 6.25 1,036 6.06 - -
Mortgage-backed
securities - - 669 6.85 2,301 5.77 1,485 6.82
State and
Political
Subdivisions 222 7.48 3,011 7.16 3,113 7.12 561 7.11
Equity
securities 97 - - - - - - -
------- -------- -------- --------
Total
available
for sale 319 7.48 15,199 6.34 6,450 6.47 2,046 6.90
------- -------- -------- --------
Total
securities $ 3,321 6.33% $ 17,398 6.38% $ 6,950 6.51% $ 2,046 6.90%
======= ===== ======== ===== ======== ===== ======== =====
</TABLE>
- 6 -
<PAGE> 7
Item 1. Business (continued)
<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>
- 7 -
<PAGE> 8
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>
* Weighted average yields have been computed on a fully tax-equivalent basis
assuming a rate of 34% for 1998, 1997 and 1996.
- 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,
------------------------------------------
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Commercial, financial and agricultural $ 7,666 $ 7,549 $ 7,437
Real Estate - Construction 51 359 285
Real Estate - Mortgage 15,361 15,543 16,278
Installment 4,981 4,984 4,925
-------- -------- --------
Total 28,059 28,435 28,925
Less:
Allowance for possible loan losses (596) (600) (614)
Unearned income - - -
-------- -------- --------
$ 27,463 $ 27,835 $ 28,311
======== ======== ========
</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,
------------------------------------------
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Loans accounted for on a nonaccrual basis $ 145 $ 308 $ 496
Restructured loans which are not on
non-accrual 61 70 94
-------- -------- --------
206 378 590
Other real estate and repossessed assets
received in complete or partial
satisfaction of loan obligations - 7 14
-------- -------- --------
Total nonperforming assets $ 206 $ 385 $ 604
======== ======== ========
Loans contractually past due ninety days
or more as to principal or interest,
but which were not on non-accrual $ 15 $ 9 $ 27
======== ======== ========
</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, 1998, the recorded investment in loans
that were considered to be impaired under SFAS No. 114 was $144,797, with the
related allowance for loan losses of $100,000. 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
$32,424, $53,417 and $59,177, for the years 1998, 1997, and 1996, respectively.
Interest income in the amount of $4,796, $5,621 and $6,633 on nonperforming
loans during 1998, 1997 and 1996, respectively, was recorded.
At December 31, 1998, 1997 and 1996 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, 1998, 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 1998, 1997, and 1996;
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>
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Amount of loans outstanding
at end of period $ 28,058 $ 28,435 $ 28,926
======== ======== ========
Average amount $ 28,548 $ 27,797 $ 27,635
======== ======== ========
</TABLE>
- 10 -
<PAGE> 11
Item 1. Business (continued)
Allowance for Possible Loan Losses
(In thousands of dollars)
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------------
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Beginning balance $ 600 $ 614 $ 624
Provision charged against income - - -
-------- -------- --------
600 614 624
-------- -------- --------
Charge-offs:
Commercial, financial and
agricultural loans - (1) -
Real estate mortgage loans - - -
Real estate construction loans - - -
Installment loans (15) (16) (18)
-------- -------- --------
Total charge-offs (15) (17) (18)
-------- -------- --------
Recoveries:
Commercial, financial and agricultural loans - - 5
Real estate mortgage loans - - 1
Real estate construction loans - - -
Installment loans 11 3 2
-------- -------- --------
11 3 8
-------- -------- --------
Net (charge-offs) recoveries (4) (14) (10)
-------- -------- --------
Ending balance $ 596 $ 600 $ 614
======== ======== ========
Ratio of net (charge-offs) recoveries
during the period to average loans
outstanding during the period (.01)% (.05)% (.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, 1998 December 31, 1997
---------------------------- ----------------------------
% of Loans % of Loans
Outstanding Outstanding
to Total to Total
Allowance Loans Allowance Loans
--------- ----------- --------- ------------
<S> <C> <C> <C> <C>
Commercial, financial and
agricultural loans $ 135 27.32% $ 218 26.55%
Real estate construction 1 .18 5 1.27
Real estate mortgage loans 272 54.75 97 54.66
Installment loans 188 17.75 280 17.52
--------- ------- --------- -------
$ 596 100.00% $ 600 100.00%
========= ======= ========= =======
</TABLE>
- 11 -
<PAGE> 12
Item 1. Business (continued)
Allocation of Allowance for Possible Loan Losses (continued)
(In thousands of dollars)
<TABLE>
<CAPTION>
December 31, 1996
---------------------------
% of Loans
Outstanding
to Total
Allowance Loans
--------- -----------
<S> <C> <C>
Commercial, financial and
agricultural loans $ 201 25.71%
Real estate construction 3 .98
Real estate mortgage loans 146 56.28
Installment loans 264 17.03
--------- -------
$ 614 100.00%
========= =======
</TABLE>
Deposits
The average amount of deposits, using daily average balances for 1998,
1997, and 1996, is summarized for the periods indicated in the following table
(in thousands of dollars):
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------------
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Non-interest bearing demand deposits $ 19,070 $ 16,846 $ 15,530
Interest-bearing demand deposits 11,104 11,752 11,510
Savings deposits 9,223 8,374 8,597
Time deposits 19,747 19,003 17,659
-------- -------- --------
$ 59,144 $ 55,975 $ 53,296
======== ======== ========
</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>
Year Ended December 31,
-------------------------------------------
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Percentage of net income to:
Average total assets 1.47% 1.47% 1.70%
Average shareholders' equity 11.27% 11.70% 14.32%
Percentage of dividends declared per
common share to net income per
common share 14.76% 13.92% 11.56%
Percentage of average shareholders'
equity to daily average total assets 13.06% 12.58% 11.88%
</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,
-------------------------------------------
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Balance at December 31 $ - $ - $ -
Weighted average interest rate at
year end - % - % - %
Maximum amount outstanding at any
month's end $ - $ - $ 950
Average amount outstanding during
the year $ 29 $ - $ 66
Weighted average interest rate
during the year 6.90% - % 4.55%
</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 12 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>
1998 First $ 53 $ 53 $ -
Second 55 55 -
Third 57 57 -
Fourth 60 30 1.25
1997 First $ 30 $ 20 $ -
Second 30 30 -
Third 30 30 -
Fourth 53 30 1.10
</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 540 shareholders of
record at December 31, 1998.
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 56 in the Annual Report are
incorporated herein by reference:
Consolidated Balance Sheets - December 31, 1998 and 1997
Consolidated Statements of Income - Years Ended December 31, 1998,
1997, and 1996
Consolidated Statements of Shareholders' Equity - Years Ended
December 31, 1998, 1997, and 1996
Consolidated Statements of Cash Flows - Years Ended December 31, 1998,
1997, and 1996
Notes to Consolidated Financial Statements
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 56 of the Registrant's Annual Report are
incorporated by reference in Item 8:
Consolidated Balance Sheets - December 31, 1998 and
1997
Consolidated Statements of Income - Years Ended
December 31, 1998, 1997 and 1996
Consolidated Statements of Shareholders' Equity - Years
Ended December 31, 1998, 1997 and 1996
Consolidated Statements of Cash Flows - Years Ended
December 31, 1998, 1997 and 1996
Notes to Consolidated Financial Statements
(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) 1998 Annual Report to Shareholders
(22) Proxy Statement for Annual Meeting of Shareholders
to be held on April 14, 1999
(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, Sr.
-----------------------------------
Salvador L. Diesi, Sr., Chairman
of the Board of the Company
and the Bank; President of
the Company and the Bank
Date: March 10, 1999
---------------------------------
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, Sr. /s/ Jasper J. Artall
- ------------------------------------ --------------------------------------
Salvador L. Diesi, Sr., Chairman of Jasper J. Artall, Director
the Board of the Company and the
Bank; President of the Company
and the Bank
Date: March 10, 1999 Date: March 10, 1999
------------------------------ --------------------------------
/s/ Ronald J. Lashute /s/ Walter J. Champagne, Jr.
- ------------------------------------ --------------------------------------
Ronald J. Lashute, Executive Vice- Walter J. Champagne, Jr., Director
President and Chief Executive
Officer of the Bank; Secretary/
Treasurer of the Company
Date: March 10, 1999 Date: March 10, 1999
------------------------------ ---------------------------------
/s/ J. C. Diesi
--------------------------------------
J. C. Diesi, Director
Date: March 10, 1999
---------------------------------
- 18 -
<PAGE> 19
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<S> <C>
13.1 1998 Annual Report to shareholders of American Bancorp, Inc.
22.1 1998 Proxy Statement for annual meeting of shareholders.
23.1 Consent of Independent Auditors.
27.1 Financial Data Schedule.
</TABLE>
<PAGE> 1
EXHIBIT 13.1
[LOGO]
1998 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 45 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>
1998 First $ 53 $ 53 $ --
Second 55 55 --
Third 57 57 --
Fourth 60 30 1.25
1997 First $ 30 $ 20 $ --
Second 30 30 --
Third 30 30 --
Fourth 53 30 1.10
</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 540 shareholders of
record at December 31, 1998.
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 14, 1999 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>
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
FOR THE YEAR
Net income .................................... $ 1,008 $ 948 $ 1,038
Return on average shareholders' equity ........ 11.27% 11.70% 14.32%
Return on average total assets ................ 1.47% 1.47% 1.70%
AT YEAR END
Total assets .................................. $ 73,666 $ 64,621 $ 67,254
Total earning assets .......................... $ 67,114 $ 57,377 $ 60,666
Total loans ................................... $ 27,463 $ 27,835 $ 28,311
Total deposits ................................ $ 63,819 $ 55,857 $ 59,367
Total shareholders' equity .................... $ 9,446 $ 8,513 $ 7,656
Common shares outstanding ..................... 118,449 119,962 120,000
PER SHARE
Net income .................................... $ 8.47 $ 7.90 $ 8.65
Book value .................................... $ 79.75 $ 70.96 $ 63.80
Cash dividends declared ....................... $ 1.25 $ 1.10 $ 1.00
CAPITAL RATIOS
Total risk-based capital ratio ................ 28.72% 27.38% 24.48%
Leverage ratio ................................ 13.36% 12.97% 12.44%
</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 - 56
Officers and directors of American Bank and Trust Company ....... 57
Officers and directors of American Bancorp, Inc. ................ 58
</TABLE>
-3-
<PAGE> 5
TO THE SHAREHOLDERS
We are pleased to announce that net earnings for American Bancorp, Inc.
and American Bank & Trust Company, its sole subsidiary, for 1998 was $1,007,868
up from $947,536 in 1997. Earnings per share this past year was $8.47 compared
to $7.90 in 1997. As a result of earnings, the book value of the company's stock
increased 12.39% to $79.75 per share at year end.
Growth for the company in 1998 also exceeded that of 1997. Average
assets for the company during 1998 were $68,472,000 up by $4,088,000 or 6.35%
over 1997. The company's average capital ratio at year end was a very healthy
13.36% up from 12.97% at year end 1997. Dividends declared in 1998 represented
an increase of 13.64% over the dividends declared in 1997.
Asset quality of the company remains at an exceptionally high level. At
December 31, 1998, nonperforming assets were .28% of total assets, and net
charged off loans were a mere $3,831.
With the remarkably good year experienced in 1998, as well as the
preceding years during this decade, it is apparent that community banking is
alive and well. We are excited about the opportunity to continue serving you and
the local community with your banking needs as the new millennium approaches.
Your management and Board of Directors are committed to maintain
unsurpassed customer service, sustained growth, and increased shareholder value.
Our success can be attributed to your support, our customers, and a staff
committed to quality and personal service.
/s/ DALVADOR L. DIESI
Salvador L. Diesi, Sr., Chairman of the Board
and President
/s/ RONAL J. LASHUTE
Ronald J. Lashute, Chief Executive Officer and
Executive Vice-President of American
Bank & Trust Co.
-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,
--------------------------------------------------------
1998 1997 1996 1995 1994
--------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Operating Data:
Net interest income ........................... $ 3,211 $ 3,085 $ 2,976 $ 3,065 $ 2,567
Provision for possible loan
losses ..................................... $ -- $ -- $ -- $ -- $ 12
Net income .................................... $ 1,008 $ 948 $ 1,038 $ 963 $ 962
Per share data:
Weighted average number of
shares outstanding ......................... 118,965 119,997 120,000 120,000 120,000
Net income .................................... $ 8.47 $ 7.90 $ 8.65 $ 8.03 $ 8.02
Cash dividends declared ....................... $ 1.25 $ 1.10 $ 1.00 $ .85 $ .65
Book value at end of year ..................... $ 79.75 $ 70.96 $ 63.80 $ 56.55 $ 48.49
Balance sheet totals:
Average assets ................................ $ 68,472 $ 64,384 $ 61,012 $ 58,733 $ 54,863
Average shareholders' equity .................. $ 8,942 $ 8,099 $ 7,251 $ 6,230 $ 5,356
Relationship between significant financial ratios:
Percentage of net income
to average total assets ................. 1.47% 1.47% 1.70% 1.64% 1.75%
Percentage of net income
to average shareholders'
equity .................................. 11.27% 11.70% 14.32% 15.46% 17.96%
Percentage of dividends
declared per common share
to net income per common
share ................................... 14.76% 13.92% 11.56% 10.59% 8.10%
Percentage of average share-
holders' equity to average
total assets ............................ 13.06% 12.58% 11.88% 10.60% 9.76%
Tier 1 risk-based capital ratio ............... 27.47% 26.13% 23.23% 21.92% 18.51%
Total risk-based capital ratio ................ 28.72% 27.38% 24.48% 23.17% 19.76%
Leverage ratio ................................ 13.36% 12.97% 12.44% 11.36% 10.38%
</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 $1,007,868 in 1998 compared to
$947,536 in 1997 and $1,038,309 in 1996. Interest income has increased over the
last three years. The increase for 1998 was $.174 million and an increase of
$.177 million from 1996 to 1997. Interest expense also increased in 1998. The
increase for 1998 was $.049 million and an increase of $.068 million from 1996
to 1997. Net income before taxes has been fairly consistent over the past three
years.
Average total assets continue to increase. These assets have grown
6.4%, 5.5%, and 3.9% in 1998, 1997, and 1996, respectively. This increase is a
result of the growth of non-interest bearing demand deposits in 1998 and time
deposits in 1996, 1997 and 1998. Non-interest bearing demand deposits increased
$2.224 million in 1998 or 13.2% and an increase of $.744 million in 1997 or 3.9%
over the 1996 balance. Time deposits increased $1.550 million or 8.1% in 1998
over the 1997 amounts and $1.344 million or 7.6% in 1997 over the 1996 amounts.
The year end balance sheet reflects an increase of $9.045 million or
14.0% in total assets. Federal funds sold reflected an increase of $6.100
million or 248.98% from 1997. During the same period, total securities increased
by $3.317 million or 12.60%. In addition, total deposits increased $7.962
million or 14.25% in comparing 1998 to 1997. For the same period, there was an
increase of $.933 million in stockholders' equity.
STATEMENT OF INCOME ANALYSIS
Net interest income on a taxable-equivalent basis was $3.324 million in
1998, an increase of $.165 million, or 5.22% compared to 1997. In 1997, net
interest income was $3.159 million, an increase of $.155 million, or 3.74% over
the prior year. The net interest margin for 1998 was 5.32% compared to 5.39% in
1997 and 5.49% for 1996. 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, securities available for
sale, and short-term investments had a positive effect on the change in net
interest margin from 1997 to 1998. However, this effect was partially negated by
the decrease in average rates earned on these assets. The increase in the
average balance on time and saving deposits also had an impact on the change in
the net interest margin from 1997 to 1998.
PROVISION FOR POSSIBLE LOAN LOSSES. The provision for possible loan losses was
$-0- in 1998, 1997 and 1996. As a percentage of outstanding loans, the allowance
for possible loans losses was 2.12%, 2.11% and 2.12% at December 31, 1998, 1997
and 1996, 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.
-6-
<PAGE> 8
NON-INTEREST INCOME. There have been immaterial variances in most non-interest
income accounts for the three year period ended 1998. 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 1998 to 1997, there were immaterial variances
between years. These increases are mainly due to increases in overall salaries
for the three year period.
INCOME TAXES. The Company recorded income tax expense of $407,896 in 1998 as
compared to an expense of $405,265 in 1997. 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, 1998 was $29,714,218 which represented a $3,317,108 or 12.57%
increase from the $26,397,110 balance outstanding at December 31, 1997.
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 are 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 (39%), this is less than 1997 pledged percentage of
55%. The amount of public funds on deposit has been increasing slightly for the
last three years and management anticipates this source of deposits will not
grow substantially 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.
The Bank's primary use of funds is to meet loan demand. Loans, net of
unearned income, were $28,058,357 at December 31, 1998, compared to $28,434,531
at December 31, 1997. This $376,174 or 1.32% decrease is the result of increased
competition in the market area.
-7-
<PAGE> 9
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, 1998, total deposits increased $7,962,237 or 14.25%
from December 31, 1997. The most significant change in deposits from 1997 to
1998 were increases in NOW and non-interest bearing demand deposit accounts of
$2,375,091 or 27.64% and $3,701,505 or 21.37%, respectively. The increase in NOW
accounts is attributable to an increase in deposits in 1998 as compared to 1997
by a local public body. The increase in non-interest bearing accounts is
attributable to an increase in commercial accounts in 1998.
Shareholders' equity increased $932,823 or 10.96% from December 31, 1997
to December 31, 1998. 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 $148,134 or $1.25 per share
in 1998 and $132,000 or $1.10 per share in 1997. Dividends of $120,000 or $1.00
per share were declared in 1996.
NONPERFORMING ASSETS AND PAST DUE LOANS. Nonperforming assets are loans carried
on a nonaccrual basis, those classified as restructured 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, 1998 were $205,549, a decrease of
$179,580 or 46.63% from December 31, 1997. The most significant decrease in
nonperforming assets from 1997 to 1998 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
$6,899 or 99.99% at December 31, 1998. 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 1998, 1997 or
1996. At December 31, 1998, the recorded investment in loans that were
considered to be impaired under SFAS No. 114 was $144,797, with the related
reserve for possible loan losses of $100,000. These loans are included in
nonaccrual loans in Table 7.
-8-
<PAGE> 10
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 fund 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, 1998, the Parent
Company received $216,134 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.
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,
1998, the Bank had a Tier 1 risk-based capital ratio of 27.47% and 28.72% total
risk-based capital ratio. The leverage ratio has increased to 13.36% at December
31, 1998. The Bank presently meets or exceeds all required risk-based capital
standards and anticipates no difficulty in maintaining those standards.
-9-
<PAGE> 11
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 15 to the consolidated
financial statements provides information regarding the fair values of financial
instruments as of December 31, 1998.
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.
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.
-10-
<PAGE> 12
The effect of an increase in 200 basis points from December 31, 1998
rates would be a reduction of $.589 million in total market value of
shareholders' equity or a 5.45% decrease in the market value of the portfolio
equity. A decrease of 200 basis points from December 31, 1998 rates would result
in an increase of $.326 million or a 3.01% 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, 1998 would
result in an increase in net income of $.153 million or a 15.26% increase in net
income. A 200 basis point decrease on the assets and liabilities outstanding as
of December 31, 1998 would have the opposite effect and would result in a
decrease of net income in the amount of $.165 million or a 16.42% 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 contemplate
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.
YEAR 2000. Many computer systems and software programs which run date-sensitive
applications utilize two digits to define an applicable year rather than using
four digits. The Year 2000 issue results from the possibility that these systems
may read the "00" during the year 2000 as the year 1900. This problem effects
all companies and organizations using computerized information systems.
American Bancorp, Inc. formed the "Y2K (Year 2000) Steering Committee"
in 1997 to address the Year 2000 issue. The objective of this committee was to
detail a plan of action for conversion of its computer applications to Year 2000
compliant applications, to ensure compliance with all "Federal Financial
Institutions Examination Council" ("FFIEC") regulations regarding the Year 2000
by the end of the second quarter 1999, and to ensure uninterrupted service to
its customers. The Bank has undertaken an extensive awareness campaign both
internally and externally in an effort to maintain heightened awareness of Year
2000 implications to its employees, Board of Directors, suppliers and customers.
The Bank developed a comprehensive inventory and risk assessment plan
to identify all systems and processes which could potentially be effected by the
century date change. Because core processing systems are acquired from third
party vendors, the Bank has very little control over the remediation of these
systems. However, the Bank has maintained close contact with its core system and
all other vendors identified in the inventory and risk assessment, complying
with FFIEC guidelines regarding assessment of the status of these third party
vendor's Year 2000 readiness efforts. As of December 31, 1998, all of the Bank's
core processing systems had been replaced or upgraded with Year 2000 compliant
systems and software. The majority of these systems and processes have been
tested. Those systems and processes not tested at year end are scheduled for
testing during the first quarter of 1999.
As of December 31, 1998, the Bank incurred costs related to the Year
2000 issue of approximately $14,000 and anticipates an additional $3,000 in
expenditures for the 1999 fiscal year.
-11-
<PAGE> 13
The Company's estimated investment costs and estimated time period set
forth above are based on management's current estimates, which are based on
numerous assumptions about future events. Actual results could differ from those
estimates. Because of the critical nature of the Year 2000 issue to the Company,
if necessary modifications are not made, operations of the Company could be
materially impacted. However, because management feels remediation efforts are
on schedule to achieve Year 2000 compliance, an adverse impact on the Company's
operations is not expected.
THE DISCUSSION ABOVE ENTITLED "YEAR 2000," INCLUDES CERTAIN "FORWARD
LOOKING STATEMENTS" WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995 ("PSLRA"). THIS STATEMENT IS INCLUDED FOR THE EXPRESS PURPOSE
OF AVAILING AMERICAN BANCORP, INC. OF THE PROTECTIONS OF THE SAFE HARBOR
PROVISIONS OF THE PSLRA. MANAGEMENT'S ABILITY TO PREDICT RESULTS OR EFFECTS OF
YEAR 2000 ISSUES IS INHERENTLY UNCERTAIN, AND IS SUBJECT TO FACTORS THAT MAY
CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE PROJECTED. FACTORS THAT
COULD AFFECT THE ACTUAL RESULTS INCLUDE THE POSSIBILITY THAT REMEDIATION EFFORTS
AND CONTINGENCY PLANS WILL NOT OPERATE AS INTENDED, THE COMPANY'S FAILURE TO
TIMELY OR COMPLETELY IDENTIFY ALL SOFTWARE AND HARDWARE APPLICATIONS REQUIRING
REMEDIATION, UNEXPECTED COSTS, AND THE UNCERTAINTY ASSOCIATED WITH THE IMPACT OF
YEAR 2000 ISSUES ON THE BANKING INDUSTRY AND ON THE COMPANY'S CUSTOMERS,
VENDORS, AND OTHERS WITH WHOM IT CONDUCTS BUSINESS. READERS ARE CAUTIONED NOT TO
PLACE UNDUE RELIANCE ON THESE FORWARD LOOKING STATEMENTS.
-12-
<PAGE> 14
TABLE 1
SUMMARY OF CONSOLIDATED NET INTEREST INCOME
Fully taxable equivalent basis (In thousands)
<TABLE>
<CAPTION>
1998
--------------------------------
AVERAGE AVERAGE
BALANCE INTEREST RATE
-------- -------- --------
<S> <C> <C> <C>
ASSETS
Short-term investments $ 5,732 $ 309 5.39%
Loans, net of unearned income (1) (2) 28,548 2,639 9.24
Securities available for sale (1) (3) 19,113 1,237 6.47
Securities held to maturity 9,092 585 6.43
-------- -------- --------
Total interest earning assets 62,485 4,770 7.63%
Allowance for possible loan losses (602)
Cash and due from banks 4,093
Other assets 2,496
--------
Total assets $ 68,472
========
LIABILITIES
Interest-bearing demand deposits $ 11,104 $ 216 1.95%
Savings deposits 9,223 250 2.71
Time deposits 19,747 978 4.95
Short-term borrowings 29 2 6.90
-------- --------
Total interest-bearing liabilities 40,103 1,446 3.61%
-------- --------
Non-interest bearing demand deposits 19,070
Other liabilities 357
--------
Total liabilities 59,530
SHAREHOLDERS' EQUITY
Shareholders' equity 8,942
--------
Total liabilities and shareholders' equity $ 68,472
========
Total interest expense related to earning assets 2.31%
--------
Net interest income $ 3,324
========
Net interest margin 5.32%
========
</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 1998, 1997, and 1996.
(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> 15
<TABLE>
<CAPTION>
1997 1996
-----------------------------------------------------------------------
AVERAGE AVERAGE AVERAGE AVERAGE
BALANCE INTEREST RATE BALANCE INTEREST RATE
-------- -------- -------- -------- -------- --------
<S> <C> <C> <S> <C> <C>
$ 4,612 $ 251 5.44% $ 4,623 $ 247 5.34%
27,797 2,572 9.25 27,635 2,596 9.39
10,922 756 6.92 16,635 1,041 6.26
15,270 977 6.40 6,537 490 7.50
-------- -------- -------- --------
58,601 4,556 7.77% 55,430 4,374 7.89%
-------- -------- -------- --------
(604) (621)
3,963 3,775
2,424 2,428
-------- --------
$ 64,384 $ 61,012
======== ========
$ 11,752 $ 229 1.95% $ 11,510 $ 222 1.93%
8,374 227 2.71 8,597 234 2.72
19,003 941 4.95 17,659 870 4.93
-- -- -- 66 3 4.55
-------- -------- -------- --------
39,129 1,397 3.57% 37,832 1,329 3.51%
-------- -------- -------- --------
16,846 15,530
310 399
-------- --------
56,285 53,761
8,099 7,251
-------- --------
$ 64,384 $ 61,012
======== ========
2.38% 2.40%
-------- ========
$ 3,159 $ 3,045
======== ========
5.39% 5.49%
======== ========
</TABLE>
-14-
<PAGE> 16
TABLE 2
RATE/VOLUME ANALYSIS
Fully taxable equivalent basis (In thousands)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------
1998/1997
---------------------------
INCREASE (DECREASE)
DUE TO CHANGE IN: (1)
---------------------------
AVERAGE AVERAGE NET
BALANCE RATE CHANGE
--------- -------- -------
<S> <C> <C> <C>
Interest income:
Short-term investments ............................. $ 61 $ (3) $ 58
Loans, net of unearned income (2) .................. 69 (2) 67
Securities available for sale (3) .................. 549 (68) 481
Securities held to maturity ........................ (396) 4 (392)
----- ----- -----
Total interest income ........................... 283 (69) 214
----- ----- -----
Interest expense:
Demand deposits .................................... (13) -- (13)
Savings deposits ................................... 23 -- 23
Time deposits ...................................... 37 -- 37
Short-term borrowing ............................... 1 1 2
----- ----- -----
Total interest expense .......................... 48 1 49
----- ----- -----
Taxable-equivalent net interest income ................ $ 235 $ (70) $ 165
===== ===== =====
</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> 17
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
- ---------------------------
1997/1996
- ---------------------------
INCREASE (DECREASE)
DUE TO CHANGE IN: (1)
- ---------------------------
AVERAGE AVERAGE NET
BALANCE RATE CHANGE
- --------- -------- -------
<S> <C> <C>
$ (1) $ 5 $ 4
15 (39) (24)
316 (50) 266
(86) 22 (64)
----- ----- -----
244 (62) 182
----- ----- -----
5 2 7
(6) (1) (7)
66 5 71
(2) (2) (4)
----- ----- -----
63 4 67
----- ----- -----
$ 181 $ (66) $ 115
===== ===== =====
</TABLE>
-16-
<PAGE> 18
TABLE 3
SECURITIES PORTFOLIO
(In thousands)
<TABLE>
<CAPTION>
DECEMBER 31, 1998 DECEMBER 31, 1997
------------------------------- -------------------------------
HELD TO AVAILABLE HELD TO AVAILABLE
MATURITY FOR SALE TOTAL MATURITY FOR SALE TOTAL
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
U.S. Treasury ................ $ 2,696 $ 3,553 $ 6,249 $ 3,692 $ 2,009 $ 5,701
U.S. Government and
Agencies .................. 3,005 9,002 12,007 10,512 5,532 16,044
Mortgage-Backed
Securities ................ -- 4,455 4,455 -- 1,210 1,210
State and Political
Subdivisions .............. -- 6,907 6,907 -- 3,442 3,442
Equity Securities ............ -- 97 97 -- -- --
------- ------- ------- ------- ------- -------
$ 5,701 $24,014 $29,715 $14,204 $12,193 $26,397
======= ======= ======= ======= ======= =======
</TABLE>
-17-
<PAGE> 19
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, 1998:
Held to maturity:
U.S. Treasury ......................... $ 2,496 6.25% $ 200 4.54% $ -- -- %
U.S. Government
and Agencies ....................... 506 6.22 1,999 6.91 500 7.03
------- ------- ------- ------- ------- -------
Total held to maturity ......... 3,002 6.24% 2,199 6.69% 500 7.03%
------- ------- ------- ------- ------- -------
Available for sale:
U.S. Treasury ......................... -- -- % 3,553 5.75% -- -- %
U.S. Government
and Agencies ....................... -- -- 7,966 6.25 1,036 6.06
Mortgage-Backed
Securities (2) ..................... -- -- 669 6.85 2,301 5.77
State and
Political
Subdivisions (1) ................... 222 7.48 3,011 7.16 3,113 7.12
Equity Securities ..................... 97 -- -- -- -- --
------- ------- ------- ------- ------- -------
Total available for sale ........ 319 7.48% 15,199 6.34% 6,450 6.47%
------- ------- ------- ------- ------- -------
Total securities ................ $ 3,321 6.33% $17,398 6.38% $ 6,950 6.51%
======= ======= ======= ======= ======= =======
</TABLE>
(1) Tax exempt yields are expressed on a fully taxable equivalent basis.
(2) Distributed by contractual maturity without regard to repayment
schedules or projected payments.
-19-
<PAGE> 20
<TABLE>
<CAPTION>
AFTER TEN TOTAL
YEARS AMT. YIELD AMOUNT YIELD
------- ------- ------- -------
<S> <C> <C> <C>
$ -- -- % $ 2,696 6.12%
-- -- 3,005 6.81
------- ------- ------- -------
-0- -- % 5,701 6.49%
------- ------- ------- -------
-- -- % 3,553 5.75%
-- -- 9,002 6.23
1,485 6.82 4,455 6.28
561 7.11 6,907 7.15
-- -- 97 --
------- ------- ------- -------
2,046 6.90% 24,014 6.43%
------- ------- ------- -------
$ 2,046 6.90% $29,715 6.44%
======= ======= ======= =======
</TABLE>
-20-
<PAGE> 21
TABLE 5
LOAN PORTFOLIO
The amounts of loans outstanding for the three years ended December 31, 1998 are
shown in the following table according to type of loan (in thousands).
<TABLE>
<CAPTION>
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Commercial, financial and agricultural ...... $ 7,666 $ 7,549 $ 7,437
Real Estate - Construction .................. 51 359 285
Real Estate - Mortgage ...................... 15,361 15,543 16,278
Installment ................................. 4,981 4,984 4,925
-------- -------- --------
Total ............................... 28,059 28,435 28,925
Less:
Allowance for possible loan losses ........ (596) (600) (614)
Unearned income ........................... -- -- --
-------- -------- --------
$ 27,463 $ 27,835 $ 28,311
======== ======== ========
</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, 1998 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 ....................... $ 4,620 $ 3,200 $ 195 $ 8,015
Real Estate - mortgage and
construction ....................... 2,550 9,280 3,233 15,063
------- ------- ------- -------
Total ............................ $ 7,170 $12,480 $ 3,428 $23,078
======= ======= ======= =======
Interest Rate Sensitivity of Loans:
With predetermined interest rates .... $ 4,177 $10,377 $ 388 $14,942
With floating interest rates (2) ..... 2,993 2,103 3,040 8,136
------- ------- ------- -------
Total ............................ $ 7,170 $12,480 $ 3,428 $23,078
======= ======= ======= =======
</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> 22
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 $205,549 at year ended 1998, a $179,580 (46.63%)
decrease from the prior year. Nonperforming assets totaled $385,129 at December
31, 1997, which was a decrease of $218,791 (36.23%) from December 31, 1996. The
composition of nonperforming assets for the past three years are illustrated
below.
<TABLE>
<CAPTION>
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Nonperforming loans:
Loans on nonaccrual ....................... $144,797 $308,059 $496,490
Restructured loans which are not
on nonaccrual ........................... 60,751 70,170 93,630
-------- -------- --------
Total nonperforming loans ............. 205,548 378,229 590,120
Other real estate and repossessed
assets received in complete or
partial satisfaction of loan
obligations .............................. 1 6,900 13,800
-------- -------- --------
Total nonperforming assets ........... $205,549 $385,129 $603,920
======== ======== ========
Loans contractually past due 90
days or more as to principal or
interest but which are not on
nonaccrual .............................. $ 14,718 $ 8,649 $ 27,434
======== ======== ========
</TABLE>
At December 31, 1998, 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 were approximately $5,890,000, while the loans to the legal
profession were approximately $2,746,000. There were no significant
nonperforming loans outstanding in these two concentrations.
-22-
<PAGE> 23
TABLE 8
ALLOWANCE FOR POSSIBLE LOAN LOSSES
(In Thousands)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Beginning balance ................................ $ 600 $ 614 $ 624
-------- -------- --------
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 .............................. (15) (16) (18)
-------- -------- --------
Total charge-offs ............................ (15) (17) (18)
-------- -------- --------
Recoveries:
Commercial, financial and agricultural loans ... -- -- 5
Real estate mortgage loans ..................... -- -- 1
Real estate construction loans ................. -- -- --
Installment loans .............................. 11 3 2
-------- -------- --------
Total recoveries ........................... 11 3 8
-------- -------- --------
Net (charge-offs) recoveries ..................... (4) (14) (10)
-------- -------- --------
Ending balance ................................... $ 596 $ 600 $ 614
======== ======== ========
Ratio of net (charge-offs) recoveries during
the period to average loans outstanding
during the period .............................. (.01)% (.05)% (.04)%
======== ======== ========
</TABLE>
-23-
<PAGE> 24
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, 1998 DECEMBER 31, 1997
---------------------- ----------------------
% OF LOANS % OF LOANS
OUTSTANDING OUTSTANDING
TO TOTAL TO TOTAL
ALLOWANCE LOANS ALLOWANCE LOANS
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Commercial, financial and
agricultural loans ............. $ 135 27.32% $ 218 26.55%
Real estate construction .......... 1 .18 5 1.27
Real estate mortgage loans ........ 272 54.75 97 54.66
Installment loans ................. 188 17.75 280 17.52
-------- -------- -------- --------
$ 596 100.00% $ 600 100.00%
======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1996
-------------------------
% OF LOANS
OUTSTANDING
TO TOTAL
ALLOWANCE LOANS
-------- -----------
<S> <C> <C>
Commercial, financial and
agricultural loans ............. $ 201 25.71%
Real estate construction .......... 3 .98
Real estate mortgage loans ........ 146 56.28
Installment loans ................. 264 17.03
-------- --------
$ 614 100.00%
======== ========
</TABLE>
-24-
<PAGE> 25
TABLE 10
DEPOSITS
The following table presents the average balance and an average rate paid on
deposits (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------------------------------------------------
1998 1997 1996
------------------------- -------------------- -----------------------
AVERAGE AVERAGE AVERAGE AVERAGE AVERAGE AVERAGE
BALANCE RATE BALANCE RATE BALANCE RATE
--------- --------- --------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Non-interest bearing
demand deposits ............ $ 19,070 -- % $ 16,846 -- % $ 15,530 -- %
Interest bearing
demand deposits ............ 11,104 1.95 11,752 1.95 11,510 1.93
Savings deposits ............. 9,223 2.71 8,374 2.71 8,597 2.72
Time deposits ................ 19,747 4.95 19,003 4.95 17,659 4.93
Short-term borrowings ........ 29 6.90 -- -- 66 4.55
--------- --------- ---------
Total ............... $ 59,173 $ 55,975 $ 53,362
========= ========= =========
</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,
----------------------------------
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Maturing in:
3 months or less .................... $ 2,587 $ 2,289 $ 2,801
Over 3 months less than 6 months .... 920 700 717
Over 6 months less than 12 months ... 500 300 897
Over 12 months ...................... -- 217 --
-------- -------- --------
Total ......................... $ 4,007 $ 3,506 $ 4,415
======== ======== ========
</TABLE>
-25-
<PAGE> 26
TABLE 12
RISK-BASED CAPITAL
(In thousands)
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1998 1997
---------- ----------
<S> <C> <C>
Risk-weighted assets ............................. $ 33,315 $ 31,967
========== ==========
Capital:
Tier I ........................................ $ 9,153 $ 8,352
Tier II ....................................... 416 400
---------- ----------
Total capital .............................. $ 9,569 $ 8,752
========== ==========
Ratios:
Tier I capital to risk-weighted assets ........ 27.47% 26.13%
Tier II capital to risk-weighted assets ....... 1.25 1.25
---------- ----------
Total capital to risk-weighted assets ...... 28.72% 27.38%
========== ==========
Leverage - Tier I capital to total
average assets ............................. 13.36% 12.97%
========== ==========
</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,
---------------------------------
1998 1997 1996
------- ------- -------
<S> <C> <C> <C>
Return on average total assets .............. 1.47% 1.47% 1.70%
Return on average shareholders' equity ...... 11.27% 11.70% 14.32%
Dividend payout ratio ....................... 14.76% 13.92% 11.56%
Average equity to average assets ratio ...... 13.06% 12.58% 11.88%
</TABLE>
-26-
<PAGE> 27
TABLE 14
INTEREST RATE SENSITIVITY ANALYSIS
DECEMBER 31, 1998
(In thousands)
<TABLE>
<CAPTION>
RATES
----------------------
FORECAST +200 BP -200 BP
-------- -------- --------
<S> <C> <C> <C>
Economic value at risk:
Total assets .................................. $ 73,632
Bank equity ................................... $ 9,409
Market value of portfolio equity .............. $ 10,815 $ 10,226 $ 11,141
Market value to book value
of equity .................................. 1.15 1.09 1.18
Amount of change in market value of
portfolio equity ........................... $ (589) $ 326
Percent change in market value of
portfolio equity ........................... (5.45)% 3.01%
Total securities market value premium
percentage ................................. 1.41% (4.59)% 7.58%
Net loans present value premium
percentage ................................. 3.13% .59% 5.66%
Total deposits present value premium
percentage ................................. .79% 2.98% (1.83)%
Earnings at risk:
January 1 to December 31, 1999 -
Interest margin on earning assets ..... 4.90% 5.24% 4.54%
Amount of change in interest
margin on earning assets ........... .34% (.36)%
Net interest income ................... $ 3,153 $ 3,383 $ 2,906
Amount of change in net
interest income .................... $ 230 $ (247)
Percent change in net interest
income ............................. 7.29% (7.84)%
Net income ............................ $ 1,002 $ 1,155 $ 837
Amount change in net income ........... $ 153 $ (165)
Percent change in net income .......... 15.26% (16.42)%
</TABLE>
-27-
<PAGE> 28
[BROUSSARD, POCHE, LEWIS & BREAUX, L.L.P.
CERTIFIED PUBLIC ACCOUNTANTS 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, 1998 and 1997, and 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, 1998. These
consolidated 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 consolidated financial position of
American Bancorp, Inc. and subsidiary as of December 31, 1998 and 1997, and the
consolidated results of their operations and their cash flows for each of the
three years in the period ended December 31, 1998, in conformity with generally
accepted accounting principles.
/s/ BROUSSARD, POCHE, LEWIS & BREAUX
Lafayette, Louisiana
January 19, 1999
-28-
<PAGE> 29
AMERICAN BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
ASSETS 1998 1997
------------ ------------
<S> <C> <C>
Cash and due from banks ............................... $ 4,333,107 $ 4,924,106
Short-term investments:
Federal funds sold ................................. 8,550,000 2,450,000
Interest-bearing deposits with banks ............... 1,387,000 694,000
------------ ------------
9,937,000 3,144,000
Securities held to maturity (estimated
market values $5,744,057 and $14,264,145,
respectively) ...................................... 5,700,657 14,203,724
Securities available for sale ......................... 24,013,561 12,193,386
Loans, net of unearned income ($-0- and
$-0-, respectively) ................................ 28,058,357 28,434,531
Less: allowance for possible loan losses ........ (595,762) (599,593)
------------ ------------
27,462,595 27,834,938
Bank premises and equipment ........................... 1,113,368 1,227,409
Other real estate, net of allowances of
$112,799 and $105,900, respectively ................ 1 6,900
Accrued interest receivable ........................... 608,776 619,977
Other assets .......................................... 497,239 466,531
------------ ------------
$ 73,666,304 $ 64,620,971
============ ============
</TABLE>
See Notes to Consolidated Financial Statements.
-29-
<PAGE> 30
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY 1998 1997
------------ ------------
<S> <C> <C>
LIABILITIES
Deposits:
Non-interest bearing demand deposits ...................... $ 21,026,282 $ 17,324,777
Interest bearing deposits:
NOW accounts ........................................... 10,969,200 8,594,109
Money Market accounts .................................. 2,059,420 2,761,187
Savings ................................................ 9,159,284 8,122,017
Time deposits $100,000 or more ......................... 4,006,621 3,506,101
Other time deposits .................................... 16,598,176 15,548,555
------------ ------------
Total deposits ...................................... 63,818,983 55,856,746
Accrued interest payable ..................................... 144,268 120,167
Other liabilities ............................................ 257,546 131,374
------------ ------------
Total liabilities ................................... 64,220,797 56,108,287
------------ ------------
SHAREHOLDERS' EQUITY
Common stock, $5 par value; 10,000,000
shares authorized; 120,000 shares
issued, 118,449 and
119,962 shares outstanding, respectively .................. 600,000 600,000
Surplus ...................................................... 2,150,000 2,150,000
Retained earnings ............................................ 6,524,015 5,664,281
Net unrealized appreciation on securities
available for sale, net of tax of $131,975
and $51,729, respectively ................................. 256,187 100,417
Treasury stock, 1,551 and 38 shares at cost, respectively .... (84,695) (2,014)
------------ ------------
Total shareholders' equity ........................... 9,445,507 8,512,684
------------ ------------
$ 73,666,304 $ 64,620,971
============ ============
</TABLE>
-30-
<PAGE> 31
AMERICAN BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
<TABLE>
<CAPTION>
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
Interest income:
Interest and fees on loans ...................... $ 2,642,229 $ 2,573,981 $ 2,589,227
Interest on investment securities-
Taxable ...................................... 1,478,482 1,509,350 1,351,094
Tax-exempt ................................... 226,872 147,928 118,525
Federal funds sold .............................. 240,724 208,636 186,011
Deposits with banks ............................. 68,220 42,634 60,875
----------- ----------- -----------
Total interest income ..................... 4,656,527 4,482,529 4,305,732
Interest expense:
Interest on deposits ............................ 1,445,816 1,397,264 1,329,455
----------- ----------- -----------
Net interest income ................................ 3,210,711 3,085,265 2,976,277
Provision for possible loan losses ................. -- -- --
----------- ----------- -----------
Net interest income after provision
for possible loan losses ........................ 3,210,711 3,085,265 2,976,277
----------- ----------- -----------
Non-interest income:
Service charges on deposit accounts ............. 508,135 498,551 539,449
Other ........................................... 104,250 107,847 127,104
----------- ----------- -----------
Total non-interest income ................. 612,385 606,398 666,553
----------- ----------- -----------
Non-interest expense:
Salary and employee benefits .................... 1,198,730 1,143,226 1,104,448
Net occupancy expense ........................... 293,939 295,030 288,498
Equipment expense ............................... 246,471 267,191 263,411
Net cost (revenue) from other
real estate .................................. 299 (610) (4,051)
Other ........................................... 667,893 634,025 617,017
----------- ----------- -----------
Total non-interest expense ................ 2,407,332 2,338,862 2,269,323
----------- ----------- -----------
Income before income taxes ......................... 1,415,764 1,352,801 1,373,507
Provision for income taxes ......................... 407,896 405,265 335,198
----------- ----------- -----------
Net income ................................ $ 1,007,868 $ 947,536 $ 1,038,309
=========== =========== ===========
Net income per common share ........................ $ 8.47 $ 7.90 $ 8.65
=========== =========== ===========
</TABLE>
See Notes to Consolidated Financial Statements.
-31-
<PAGE> 32
AMERICAN BANCORP, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
<TABLE>
<CAPTION>
COMMON STOCK
SHARES AMOUNT SURPLUS
---------- ---------- ----------
<S> <C> <C> <C>
Balance, December 31, 1995 ............................ 120,000 $ 600,000 $2,150,000
Comprehensive income
Net income for 1996 ........................... -- -- --
Other comprehensive income, net of tax:
Changes in unrealized holding gains
(losses) on securities available
for sale, net of tax of $29,698 .......... -- -- --
Total comprehensive income ............... -- -- --
Dividends paid in 1996 ................................ -- -- --
---------- ---------- ----------
Balance, December 31, 1996 ............................ 120,000 600,000 2,150,000
Comprehensive income
Net income for 1997 ........................... -- -- --
Other comprehensive income, net of tax:
Changes in unrealized holding gains
(losses) on securities available
for sale, net of tax of $51,729 .......... -- -- --
Total comprehensive income ............... -- -- --
Purchase of treasury stock ............................ -- -- --
Dividends paid in 1997 ................................ -- -- --
---------- ---------- ----------
Balance, December 31, 1997 ............................ 120,000 600,000 2,150,000
Comprehensive income
Net income for 1998 ........................... -- -- --
Other comprehensive income, net of tax:
Changes in unrealized holding gains
(losses) on securities available
for sale, net of tax of $131,975 ......... -- -- --
Total comprehensive income ............... -- -- --
Purchase of treasury stock ............................ -- -- --
Dividends paid in 1998 ................................ -- -- --
---------- ---------- ----------
Balance, December 31, 1998 ............................ 120,000 $ 600,000 $2,150,000
========== ========== ==========
</TABLE>
-33-
<PAGE> 33
<TABLE>
<CAPTION>
ACCUMULATED
OTHER
RETAINED COMPREHENSIVE TREASURY COMPREHENSIVE
EARNINGS INCOME STOCK INCOME TOTAL
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
$ 3,930,436 $ 105,063 $ -- $ -- $ 6,785,499
1,038,309 -- -- 1,038,309 1,038,309
-- (47,414) -- (47,414) (47,414)
-----------
-- -- -- $ 990,895
===========
(120,000) -- -- (120,000)
----------- ----------- ----------- -----------
4,848,745 57,649 -0- $ -- 7,656,394
947,536 -- -- 947,536 947,536
-- 42,768 -- 42,768 42,768
-----------
-- -- -- $ 990,304 --
===========
-- -- (2,014) (2,014)
(132,000) -- -- (132,000)
----------- ----------- ----------- -----------
5,664,281 100,417 (2,014) $ -- 8,512,684
1,007,868 -- -- 1,007,868 1,007,868
-- 155,770 -- 155,770 155,770
-----------
-- -- -- $ 1,163,638 --
===========
-- -- (82,681) (82,681)
(148,134) -- -- (148,134)
----------- ----------- ----------- -----------
$ 6,524,015 $ 256,187 $ (84,695) $ 9,445,507
=========== =========== =========== ===========
</TABLE>
-34-
<PAGE> 34
AMERICAN BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
<TABLE>
<CAPTION>
1998 1997 1996
------------ ------------ ------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income .................................... $ 1,007,868 $ 947,536 $ 1,038,309
Adjustments to reconcile net income
to net cash provided by operating
activities:
Premium amortization, net of
discount accretion on investment
securities .............................. 5,846 8,294 (9,613)
Depreciation ............................... 165,247 198,377 198,895
(Gain) loss on disposal of assets .......... -- 9,862 345
(Increase) decrease in assets:
Write down of other real estate
owned ................................ 6,899 6,900 --
Accrued interest receivable ............. 11,201 (52,194) (16,256)
Other assets ............................ (21,372) (5,802) 1,561
Increase (decrease) in liabilities:
Accrued interest payable ................ 24,101 1,192 15,701
Other liabilities ....................... 45,983 19,317 (414,740)
------------ ------------ ------------
Net cash provided by operating
activities ........................ 1,245,773 1,133,482 814,202
------------ ------------ ------------
INVESTING ACTIVITIES
Proceeds from sales and maturities
of available for sale securities ........... 4,364,835 1,689,443 594,999
Proceeds from sales and maturities
of held to maturity securities ............. 8,700,000 4,300,000 8,000,000
Purchase of available for sale
securities ................................. (15,951,986) (5,177,099) (4,114,176)
Purchase of held to maturity
securities ................................. (199,844) (2,986,173) (7,086,352)
(Increase) decrease in loans .................. 372,343 476,533 (1,921,243)
Purchases of property and equipment ........... (51,206) (99,249) (100,194)
Other ......................................... (9,336) (6,281) 24,459
------------ ------------ ------------
Net cash used in investing
activities ........................... (2,775,194) (1,802,826) (4,602,507)
------------ ------------ ------------
</TABLE>
-35-
<PAGE> 35
<TABLE>
<CAPTION>
1998 1997 1996
------------ ------------ ------------
<S> <C> <C> <C>
FINANCING ACTIVITIES
Increase (decrease) in liabilities:
Demand deposits, transaction
accounts and savings ............... 6,412,096 (3,830,567) 743,373
Time deposits ......................... 1,550,141 320,682 2,968,543
Dividends paid ........................... (148,134) (132,000) (120,000)
Purchase of treasury stock ............... (82,681) (2,014) --
------------ ------------ ------------
Net cash provided by (used in)
financing activities ............ 7,731,422 (3,643,899) 3,591,916
------------ ------------ ------------
Increase (decrease) in cash and cash
equivalents .............................. 6,202,001 (4,313,243) (196,389)
Cash and cash equivalents at
beginning of year ........................ 8,068,106 12,381,349 12,577,738
------------ ------------ ------------
Cash and cash equivalents at end
of year .................................. $ 14,270,107 $ 8,068,106 $ 12,381,349
============ ============ ============
SUPPLEMENTAL DISCLOSURES
Cash payments for:
Interest expense ...................... $ 1,308,437 $ 1,396,072 $ 1,313,754
============ ============ ============
Income taxes .......................... $ 410,200 $ 433,000 $ 708,049
============ ============ ============
</TABLE>
See Notes to Consolidated Financial Statements.
-36-
<PAGE> 36
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> 37
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> 38
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> 39
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Recent pronouncements:
In February 1997, the Financial Accounting Standards Board
("FASB") issued Statement of Financial Accounting Standards
("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. The
implementation of these statements did 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.
In March 1998, the Accounting Standards Executive Committee of
the American Institute of Certified Public Accountants issued
Statement of Position (SOP) 98-1, "Accounting for the Cost of
Computer Software Developed or Obtained for Internal Use." SOP
98-1 is effective for financial statements for years beginning
after December 15, 1998. The adoption of SOP 98-1 is not
expected to have a material impact on the financial condition
or operating results of the Company.
In June 1998, the FASB issued SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities," which is
effective for financial statements for years beginning after
June 15, 1999. Because of the limited use of derivatives,
management does not anticipate that the adoption of SFAS No.
133 will have a material impact on the financial condition or
operating results of the Company.
Reclassifications:
Certain amounts in the 1997 and 1996 financial statements have
been reclassified to conform with the financial statement
presentation for 1998 for comparability. These
reclassifications had no effect on net income as previously
reported for the 1997 and 1996 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
$632,000 and $534,000 for the years ended December 31, 1998 and 1997,
respectively.
-40-
<PAGE> 40
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, 1998
-----------------------------------------------------------
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Securities held to maturity:
U.S. Treasury Securities ............. $ 2,695,449 $ 22,691 $ 838 $ 2,717,302
U.S. Government and Agencies ......... 3,005,208 21,547 -- 3,026,755
----------- ----------- ----------- -----------
$ 5,700,657 $ 44,238 $ 838 $ 5,744,057
=========== =========== =========== ===========
Securities available for sale:
Mortgage-Backed Securities ........... $ 4,425,163 $ 45,982 $ 15,760 $ 4,455,385
U.S. Treasury Securities ............. 3,508,363 44,545 -- 3,552,908
U.S. Government and Agencies ......... 8,932,763 71,699 2,810 9,001,652
State and Political Subdivisions ..... 6,662,209 254,273 9,766 6,906,716
Equity Securities .................... 96,900 -- -- 96,900
----------- ----------- ----------- -----------
$23,625,398 $ 416,499 $ 28,336 $24,013,561
=========== =========== =========== ===========
</TABLE>
-41-
<PAGE> 41
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 3. Investment Securities (continued)
<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>
Securities with book values of $11,604,616 and $14,421,874 at December 31, 1998
and 1997, 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, 1998, 1997 or 1996.
-42-
<PAGE> 42
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The maturities of investment securities at December 31, 1998 were as
follows:
<TABLE>
<CAPTION>
SECURITIES TO BE HELD
TO MATURITY
-------------------------
AMORTIZED FAIR
YEARS TO MATURITY COST VALUE
---------- ----------
<S> <C> <C>
Less than one ............................... $3,001,304 $3,026,737
Greater than one but less than five ......... 2,199,353 2,213,750
Greater than five but less than ten ......... 500,000 503,570
Greater than ten ............................ -- --
---------- ----------
$5,700,657 $5,744,057
========== ==========
</TABLE>
<TABLE>
<CAPTION>
SECURITIES AVAILABLE
FOR SALE
---------------------------
AMORTIZED FAIR
YEARS TO MATURITY COST VALUE
----------- -----------
<S> <C> <C>
Less than one ............................... $ 318,465 $ 319,270
Greater than one but less than five ......... 15,030,565 15,198,578
Greater than five but less than ten ......... 6,276,743 6,450,070
Greater than ten ............................ 1,999,625 2,045,643
----------- -----------
$23,625,398 $24,013,561
=========== ===========
</TABLE>
Note 4. Loans
Major classifications of subsidiary bank's loan portfolio at December
31, are as follows:
<TABLE>
<CAPTION>
1998 1997 1996
------------ ------------ ------------
<S> <C> <C> <C>
Commercial, financial and
agricultural ................... $ 7,666,021 $ 7,548,970 $ 7,437,376
Real estate construction .......... 50,622 358,917 285,247
Real estate mortgage .............. 15,361,086 15,543,098 16,277,777
Installment ....................... 4,980,628 4,983,546 4,925,410
------------ ------------ ------------
28,058,357 28,434,531 28,925,810
Unearned income ................... -- -- --
------------ ------------ ------------
Net loans ...................... 28,058,357 28,434,531 28,925,810
Allowance for possible loan
losses ......................... (595,762) (599,593) (614,339)
------------ ------------ ------------
$ 27,462,595 $ 27,834,938 $ 28,311,471
============ ============ ============
</TABLE>
-43-
<PAGE> 43
The following is a summary of loans classified by type at December 31,
1998:
<TABLE>
<S> <C>
Commercial, financial and
agricultural ............................. $ 7,666,021
Real estate construction .................... 50,622
Real estate mortgage ........................ 8,164,528
-----------
Total commercial ......................... 15,881,171
-----------
Residential mortgage ........................ 7,196,558
Installment ................................. 4,980,628
-----------
Total consumer ........................... 12,177,186
-----------
Total loans .............................. $28,058,357
===========
</TABLE>
The following summarizes the non-performing elements of the loan portfolio and
total foreclosed assets at December 31:
<TABLE>
<CAPTION>
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Nonperforming loans:
Loans on nonaccrual ................. $144,797 $308,059 $496,490
Restructured loans which
are not on nonaccrual ............ 60,751 70,170 93,630
-------- -------- --------
Total nonperforming loans .... 205,548 378,229 590,120
Other real estate and
repossessed assets received
in complete or partial
satisfaction of loan
obligations ......................... 1 6,900 13,800
-------- -------- --------
Total nonperforming assets ... $205,549 $385,129 $603,920
======== ======== ========
Loans contractually past
due 90 days or more as
to principal or interest,
but which are not on
nonaccrual ....................... $ 14,718 $ 8,649 $ 27,434
======== ======== ========
</TABLE>
-44-
<PAGE> 44
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, 1998,
the recorded investment in loans that were considered to be impaired under SFAS
No. 114 was $144,797. Included in this amount was $140,576 of the impaired loans
for which the related allowance for loan losses was $100,000 and $4,221 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, 1998
was approximately $231,403. 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, 1998, 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 $32,424 for 1998, $53,417 for 1997 and $59,177
for 1996 would have been recorded on nonperforming loans if they had been
classified as performing. The Company recorded $4,796, $5,261 and $6,633 of
interest income on nonperforming loans during 1998, 1997 and 1996, respectively.
The following is a summary of the allowance for loan losses for the
three years ended December 31, 1998:
<TABLE>
<CAPTION>
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Balance, beginning of year .......... $ 599,593 $ 614,339 $ 624,122
Provisions charged to operating
expense .......................... -- -- --
Recoveries on loans ................. 11,370 2,250 7,946
Loans charged off ................... (15,201) (16,996) (17,729)
--------- --------- ---------
Balance, end of year ................ $ 595,762 $ 599,593 $ 614,339
========= ========= =========
</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 $1,400,278 and $1,546,942 at December 31,
1998 and 1997, respectively. The following provides an analysis of the
activity with respect to loans to related parties:
<TABLE>
<S> <C>
Balance at January 1, 1998 ............. $ 1,546,942
New loans made ......................... 1,646,016
Repayment on loans ..................... (1,792,680)
-----------
Balance at December 31, 1998 ........... $ 1,400,278
===========
</TABLE>
-45-
<PAGE> 45
Note 6. Bank Premises and Equipment
Bank premises and equipment, at cost, consisted of the following as of
December 31:
<TABLE>
<CAPTION>
1998 1997 1996
---------- ---------- ----------
<S> <C> <C> <C>
Land ................................ $ 384,387 $ 384,387 $ 384,387
Premises and leasehold
improvements ..................... 1,789,144 1,788,590 1,784,621
Furniture and equipment ............. 1,216,548 1,228,258 1,190,307
---------- ---------- ----------
3,390,079 3,401,235 3,359,315
Less accumulated depreciation
and amortization ................. 2,276,711 2,173,826 2,022,916
---------- ---------- ----------
Total .......................... $1,113,368 $1,227,409 $1,336,399
========== ========== ==========
</TABLE>
Depreciation and amortization expense included in non-interest expense
was $165,247 in 1998, $198,377 in 1997, and $198,895 in 1996.
Note 7. Deposits
Deposit account balances at December 31, 1998 and 1997, are summarized
as follows:
<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
Non-interest bearing ................ $21,026,282 $17,324,777
Interest bearing demand ............. 13,028,620 11,355,296
Savings deposits .................... 9,159,284 8,122,017
Time deposits ....................... 20,604,797 19,054,656
----------- -----------
$63,818,983 $55,856,746
=========== ===========
</TABLE>
Time deposits maturing in years ending December 31, as of December 31,
1998:
<TABLE>
<S> <C>
1999..................................... $19,078,091
2000..................................... 851,223
2001..................................... 675,483
-----------
$20,604,797
===========
</TABLE>
The Bank held related party deposits of approximately $1,697,000 and
$1,927,000 at December 31, 1998 and 1997.
-46-
<PAGE> 46
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 8. Concentrations of Credit Risk
Substantially, 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, 1998, 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 were approximately
$5,890,000, while the loans to the legal profession were approximately
$2,746,000. There were no significant nonperforming loans outstanding
in these two concentrations.
Note 9. Earnings Per Share
The earnings per share computation are based on weighted average number
of shares outstanding during each year of 118,965, 119,997 and 120,000
for the years ended December 31, 1998, 1997 and 1996, respectively.
Note 10. 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 3% of compensation for 1998 and 1997, which becomes
vested after five years of service. Total contributions to the plan by
the Bank were $30,528 for 1998 and $15,214 for 1997. The Bank entered
into a non-qualified deferred compensation plan for certain executives
of the Company in 1995. The total deferred compensation expense for
1998 and 1997 was $11,574 and $10,817, respectively.
-47-
<PAGE> 47
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 11. 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>
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Current federal income tax
expense ............................. $ 418,969 $ 408,433 $ 318,215
Deferred federal income tax
expense (benefit) ................... (11,073) (3,168) 16,983
--------- --------- ---------
$ 407,896 $ 405,265 $ 335,198
========= ========= =========
Included in shareholders' equity:
Deferred tax expense
(benefit) related to the
change in net unrealized
gain (loss) on securities
available for sale .................. $ 80,246 $ 22,031 $ (24,425)
========= ========= =========
</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>
1998 1997 1996
------------------------- ------------------------- -------------------------
AMOUNT RATE AMOUNT RATE AMOUNT RATE
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Tax based on
federal
statutory rate ................. $ 481,360 34.0% $ 459,953 34.0% $ 466,992 34.0%
Effect of tax-
exempt income .................. (82,593) (5.8) (60,149) (4.4) (52,782) (3.8)
Change in deferral
valuation reserve .............. -- -- -- -- (61,938) (4.5)
Other ............................. 9,129 .6 5,461 .4 (17,074) (1.3)
--------- --------- --------- --------- --------- ---------
$ 407,896 28.8% $ 405,265 30.0% $ 335,198 24.4%
========= ========= ========= ========= ========= =========
</TABLE>
-48-
<PAGE> 48
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>
1998 1997
-------- --------
<S> <C> <C>
Deferred tax assets:
Allowance for loan losses ................ $ 14,022 $ 14,022
Foreclosed assets ........................ 38,352 36,006
Deferred executive compensation .......... 12,119 3,935
Other .................................... -- 849
-------- --------
Total deferred tax assets ............... 64,493 54,812
-------- --------
Deferred tax liabilities:
Net unrealized appreciation
on available for sale securities ...... 131,975 51,729
Accumulated depreciation ................. 30,719 32,111
-------- --------
Total deferred tax liabilities ........ 162,694 83,840
-------- --------
Net deferred tax liability .................. $(98,201) $(29,028)
======== ========
</TABLE>
Management estimates realizability of a 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 12. 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, 1998:
<TABLE>
<CAPTION>
Year Ending Amount
----------- ----------
<S> <C>
1999......................................... $ 68,360
2000......................................... 45,871
2001......................................... 45,871
2002......................................... 45,871
2003......................................... 40,771
----------
Total future minimum lease payments $ 246,744
==========
</TABLE>
All leases contain options to extend the lease term upon expiration and
will probably be exercised.
-49-
<PAGE> 49
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The total rental expense on operating leases for the years ended
December 31, 1998, 1997, and 1996, amount to $63,409, $60,096 and
$58,538, respectively.
One of the bank's branch offices is leased from a corporation which is
owned by a shareholder and director of the Bank. Lease expense related
to this property totaled $20,671 for the 1998 fiscal year.
Note 13. 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>
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
FDIC and Louisiana assessments ......... $ 24,707 $ 21,636 $ 16,046
Advertising ............................ 63,622 26,670 25,179
Office supplies ........................ 70,465 79,418 76,439
Postage ................................ 56,269 52,202 52,358
Other insurance ........................ 12,727 16,390 29,440
ATM expenses ........................... 27,029 25,803 25,836
Director fees .......................... 87,700 89,750 71,850
Other .................................. 325,374 322,156 319,869
-------- -------- --------
$667,893 $634,025 $617,017
======== ======== ========
</TABLE>
-50-
<PAGE> 50
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 14. 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,
----------------------------
1998 1997
----------- -----------
<S> <C> <C>
ASSETS
Cash on deposit with subsidiary ......................... $ 30,816 $ 54,864
Investment in subsidiary ................................ 9,409,206 8,452,334
Due from American Bank .................................. 20,331 11,562
----------- -----------
Total assets ......................................... $ 9,460,353 $ 8,518,760
=========== ===========
LIABILITIES
Accrued income taxes payable ............................ $ 14,846 $ 6,077
----------- -----------
Total liabilities ..................................... 14,846 6,077
----------- -----------
SHAREHOLDERS' EQUITY
Common stock: $5 par value, 10,000,000
shares authorized; 120,000 shares
issued, 118,449 and
119,962 shares outstanding, respectively ............. 600,000 600,000
Surplus ................................................. 2,150,000 2,150,000
Retained earnings ....................................... 6,524,015 5,664,283
Net unrealized loss on securities
available for sale, net of tax of $131,975
and $51,729, respectively ............................ 256,187 100,414
Treasury stock, 1,551 and 38 shares
at cost, respectively .............................. (84,695) (2,014)
----------- -----------
Total shareholders' equity ........................ 9,445,507 8,512,683
----------- -----------
Total liabilities and shareholders' equity ........ $ 9,460,353 $ 8,518,760
=========== ===========
</TABLE>
-51-
<PAGE> 51
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
American Bancorp, Inc. (Parent Company Only)
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------
1998 1997 1996
---------- ---------- ----------
<S> <C> <C> <C>
Income:
Dividends from bank subsidiary ...... $ 216,134 $ 185,000 $ 123,000
---------- ---------- ----------
Expenses:
Directors fees ...................... 8,400 -- --
Other expenses ...................... 967 890 1,765
---------- ---------- ----------
9,367 890 1,765
---------- ---------- ----------
Earnings before income taxes
and equity in undistributed
earnings of subsidiary .............. 206,767 184,110 121,235
Provision for income taxes ............. -- -- --
---------- ---------- ----------
Earnings before equity in
undistributed earnings of
subsidiary .......................... 206,767 184,110 121,235
Equity in undistributed
earnings of subsidiary .............. 801,101 763,426 917,074
---------- ---------- ----------
Net income ....................... $1,007,868 $ 947,536 $1,038,309
========== ========== ==========
</TABLE>
-52-
<PAGE> 52
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
American Bancorp, Inc. (Parent Company Only)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------
1998 1997 1996
----------- ----------- -----------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income .................................... $ 1,007,868 $ 947,536 $ 1,038,309
Adjustments to reconcile net
income to net cash provided
by operating activities:
Equity in undistributed
earnings of subsidiary ............... (801,101) (763,426) (917,074)
(Increase) decrease in other assets ..... (8,769) 24,567 391,833
Increase (decrease) in income taxes
payable .............................. 8,769 (24,567) (389,833)
----------- ----------- -----------
Net cash provided by
operating activities .............. 206,767 184,110 123,235
----------- ----------- -----------
FINANCING ACTIVITIES
Dividends paid to shareholders ................ (148,134) (132,000) (120,000)
----------- ----------- -----------
Net cash used by
financing activities .............. (148,134) (132,000) (120,000)
----------- ----------- -----------
INVESTING ACTIVITIES
Purchase of treasury stock .................... (82,681) (2,014) -0-
----------- ----------- -----------
Net cash used by
investing activities ............... (82,681) (2,014) -0-
----------- ----------- -----------
Increase (decrease) in cash
and cash equivalents ............... (24,048) 50,096 3,235
Cash and cash equivalents at
beginning of year ............................. 54,864 4,768 1,533
----------- ----------- -----------
Cash and cash equivalents at
end of year ................................... $ 30,816 $ 54,864 $ 4,768
=========== =========== ===========
</TABLE>
-53-
<PAGE> 53
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 15. 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 $595,762 at December 31, 1998.
The fair value estimates presented are based on information available
to management as of December 31, 1998. 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.
-54-
<PAGE> 54
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
CARRYING FAIR
AMOUNT VALUE
----------- -----------
<S> <C> <C>
ASSETS
Cash and short-term investments ..... $14,270,107 $14,270,107
Securities held to maturity ......... $ 5,700,657 $ 5,744,057
Securities available for sale ....... $24,013,561 $24,013,561
Commercial loans .................... $ 7,666,021 $ 7,662,000
Consumer loans ...................... $ 4,980,628 $ 4,886,000
Real estate loans ................... $15,411,708 $15,782,000
LIABILITIES
Demand deposits ..................... $21,026,282 $21,026,282
NOW accounts ........................ $10,969,200 $10,969,200
Money market accounts ............... $ 2,059,420 $ 2,059,420
Savings ............................. $ 9,159,284 $ 9,159,284
Time Deposits ....................... $20,604,797 $20,756,000
</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
1998 or 1997. 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, 1998
and 1997 are as follows:
<TABLE>
<CAPTION>
1998 1997
---------- ----------
<S> <C> <C>
Commitments to extend credit ................ $4,902,427 $4,568,172
Credit card arrangements .................... $1,902,592 $1,200,902
Standby letters of credit ................... $ 153,007 $ 169,101
</TABLE>
-55-
<PAGE> 55
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 16. 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, 1998, that the
Bank could declare without the approval of the Commissioner of
Financial Institutions, amounted to $1,675,270. 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,
1998, 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 27.47% and 28.72%, respectively. The Bank's leverage ratio
was 13.36% and 12.97% as of December 31, 1998 and 1997, 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 nature of
the collateral.
Note 17. 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.
-56-
<PAGE> 56
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-PRESIDENTS
David Gremillion Christopher Choate
ASSISTANT CASHIERS
Elaine D. Ardoin Elizabeth Miller
Audrey Cormier Bonnie Pavy
Sally Hooks Stephanie Richard
Cindy Whitmore Audrey Thibodeaux
DIRECTORS
Walter J. Champagne, Jr. Alvin Haynes II
Attaway Darbonne Charles Jagneaux
J.C. Diesi Sylvia Sibille
Salvador L. Diesi, Sr.
OFFICES LOCATED IN
OPELOUSAS KROTZ SPRINGS
LAFAYETTE PORT BARRE
LAWTELL
-57-
<PAGE> 57
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>
Jasper J. Artall Farmer.
Walter J. Champagne, Jr. Farmer.
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>
-58-
<PAGE> 1
EXHIBIT 22.1
AMERICAN BANCORP, INC.
PROXY STATEMENT FOR ANNUAL MEETING
TO BE HELD APRIL 14, 1999
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 14, 1999, 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 31, 1999.
Only shareholders of record at the close of business on February 15,
1999, are entitled to notice of and to vote at the meeting. On that date, the
Corporation had outstanding 118,448 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, 46,101 (38.9%) 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 15, 1999.
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 Jasper J. Artall and 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 Jasper J. Artall
and 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 15, 1999
NAME AND ADDRESS AGE OR EMPLOYMENT DIRECTOR NUMBER PERCENTAGE
- ---------------- --- -------------------- -------- ------ ----------
<S> <C> <C> <C> <C> <C>
Jasper J. Artall 57 Farmer 1998 200 .17%
P. O. Box 201
Melville, LA 71353
Walter J. Champagne, Jr. 78 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) 78 Diesi Pontiac-Cadillac- 1958 12,009 10.1%
148 W. Smiley Street Buick, Inc., (Automobile
Opelousas, LA 70570 Dealer & Service)
Salvador L. Diesi, Sr. 68 Chairman of the Board and 1973 15,419 13.0%
(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 49 Executive Vice-President 1994 16,428 13.9%
(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) 46,101 38.9%
====== ====
</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 15,419 shares held by Salvador L. Diesi, Sr., 10,137 shares (8.6%)
are held by Corporations of which Mr. Diesi owns 51% or more.
(5) Of the 16,428 shares held by Ronald J. Lashute, 16,000 shares (13.5% 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."
-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: Jasper 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, except Mr. Artall, 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 15, 1999, 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. 15,419 shares 13.0%
1355 Dietlein Blvd. Direct and Indirect (1)
Opelousas, LA 70570
Common stock J.C. Diesi 12,009 shares 10.1%
148 W. Smiley St. Direct
Opelousas, LA 70570
Common stock Ronald J. Lashute 16,428 shares 13.9%
2057 Jasmine Drive Direct and Indirect (2)
Opelousas, LA 70570
Common stock Bobby Dupre 6,022 shares 5.1%
444 King Street Direct and Indirect (3)
Opelousas, LA 70570
</TABLE>
(1) Mr. Salvador L. Diesi, Sr. directly owns 5,282 shares or 4.5% of the
outstanding shares of the Corporation. In addition, he owns 10,137 shares,
which is equal to 8.6% of the outstanding shares of the Corporation,
indirectly, through his associations with his businesses.
(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 13.5% 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 3.3% of the
outstanding shares of the Corporation indirectly, through his associations
with his businesses.
-4-
<PAGE> 5
BOARD MEETINGS AND COMMITTEES
During 1998, the Board of Directors of the Corporation held a total of
three 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 1998, 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 nine (9) times in 1998 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 and
Sylvia Sibille did not meet in 1998. 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. 68 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 49 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. Both Mr. Salvador L. Diesi, Sr. and Mr. Ronald
Lashute have been officers of the Corporation and the Bank for more than five
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 received a board fee of $200 per month for
the months of April through December 1998 for their services. In 1998, each
director of the Bank received a board fee of $600 per month. In addition, each
director of the Bank received a cash bonus of $3,100 in 1998. Directors serving
on the Bank's Loan Discount Committee received $150 per month in 1998.
COMPENSATION
The following table sets forth all compensation paid, distributed or
accrued for the account of the persons listed below for the fiscal year ended
December 31, 1998 by the Bank to the Executive Officers of the Corporation and
the Bank.
-6-
<PAGE> 7
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
NAME AND SALARY AND
PRINCIPAL DIRECTOR BONUS OTHER ANNUAL ALL OTHER
POSITION YEAR FEES($) ($)(1) COMPENSATION($)(2) COMPENSATION($)
- -------- ---- ------- ------ ------------------ ---------------
<S> <C> <C> <C> <C> <C>
Salvador L. Diesi, 1998 38,618 (4) 3,200 -- 226 (3)
Sr., Chairman of 1997 36,268 (5) 3,100 -- 337 (3)
the Board and 1996 33,922 (6) 3,100 -- 337 (3)
President of the
Corporation and
the Bank
Ronald J. Lashute 1998 85,740 (7) 7,100 -- 9,136 (10)
Executive Vice- 1997 79,574 (8) 6,142 -- 8,687 (11)
President and 1996 73,248 (9) 5,933 -- 8,145 (12)
Chief Executive
Officer of the
Bank and Secre-
tary/Treasurer
of the Corporation
</TABLE>
(1) The Bank had a cash bonus plan in 1998, 1997, and 1996, 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 $54,711, $49,950 and
$49,471, respectively, for those years. In addition, cash bonuses of
$3,100 in 1998, and of $3,000 in 1997 and 1996 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 $818 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 $540 that was contributed by the Bank for the
account of Mr. Diesi in accordance with the terms of the 401(k) plan.
(7) This amount includes $2,256 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 $2,168 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 $1,436 that was contributed by the Bank for the
account of Mr. Lashute in accordance with the terms of the 401(k) Plan.
(10) This amount includes $8,694 of deferred compensation accrued under a
supplemental executive retirement plan established by the Bank on
September 1, 1995. This amount also includes $442 in term life insurance
premiums paid by the Bank.
(11) This amount includes $8,125 of deferred compensation accrued under a
supplemental executive retirement plan and $562 in term life insurance
premiums paid by the Bank.
(12) 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.
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.
Jasper J. Artall inadvertently filed Form 3 four days late after becoming a
director of the Corporation.
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,
1998, the Bank paid Little Capitol of Louisiana, Inc. $20,671 under the terms of
the lease. The initial lease expired on May 31, 1997, but was renewed through
May 31, 2002.
During 1998, the Bank had its vehicles repaired at Diesi
Pontiac-Cadillac-Buick, Inc. and paid an aggregate amount of $2,712 for such
repairs. Also in 1998, the Bank purchased a car and a truck for $49,269 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 1998. At the 1999 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, 1999, 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 2000 ANNUAL MEETING
Shareholders who desire to present a proposal for inclusion in the
proxy material relating to the 2000 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 30, 1999. Shareholders who desire to present a
proposal at the 2000 annual meeting other than one that will be included in the
Corporation's proxy materials must notify the Corporation (by notice to Mr.
Lashute at the address listed on the first page of this proxy statement) no
later than February 14, 2000. If a shareholder who wishes to present a proposal
fails to notify the Corporation by this date, the proxies solicited for the
meeting will have discretionary authority to vote on the shareholder's proposal
if it is properly brought before the meeting. If a shareholder makes a timely
notification, the proxies may still exercise discretionary voting authority
under circumstances consistent with the SEC's proxy rules.
-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 1998 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
[BROUSSARD, POCHE, LEWIS & BREAUX, L.L.P. 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, 1998,
1997 and 1996, of our report dated January 19, 1999, which appears on Pages 28
through 56 of the annual report to shareholders.
/s/ BROUSSARD, POCHE, LEWIS & BREAUX, L.L.P.
Lafayette, Louisiana
January 19, 1999
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 4,333
<INT-BEARING-DEPOSITS> 1,387
<FED-FUNDS-SOLD> 8,550
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 24,014
<INVESTMENTS-CARRYING> 5,701
<INVESTMENTS-MARKET> 5,744
<LOANS> 28,058
<ALLOWANCE> 596
<TOTAL-ASSETS> 73,666
<DEPOSITS> 63,819
<SHORT-TERM> 0
<LIABILITIES-OTHER> 402
<LONG-TERM> 0
600
0
<COMMON> 0
<OTHER-SE> 8,846
<TOTAL-LIABILITIES-AND-EQUITY> 73,666
<INTEREST-LOAN> 2,642
<INTEREST-INVEST> 1,705
<INTEREST-OTHER> 310
<INTEREST-TOTAL> 4,657
<INTEREST-DEPOSIT> 1,446
<INTEREST-EXPENSE> 1,446
<INTEREST-INCOME-NET> 3,211
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 668
<INCOME-PRETAX> 1,416
<INCOME-PRE-EXTRAORDINARY> 1,416
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,008
<EPS-PRIMARY> 8.47
<EPS-DILUTED> 0
<YIELD-ACTUAL> 5.32
<LOANS-NON> 145
<LOANS-PAST> 15
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 600
<CHARGE-OFFS> 15
<RECOVERIES> 11
<ALLOWANCE-CLOSE> 596
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 596
</TABLE>
