SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10 - QSB
Quarterly Report Under Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For the Quarter ended September 30, 1995 Commission File Number 0-13397
Zachary Bancshares, Inc.
(Exact name of registrant as specified in its charter)
Louisiana 72-0981148
(State of or other jurisdiction (I.R.S. Employer Incorporation
of organization) or Identification No.)
4700 Main Street
Post Office Box 497
Zachary, Louisiana 70791-0497
(Address of principal executive office) (Zipcode)
Registrant's telephone number, including area code 504 654 2701
None
(Former name, former address and former fiscal
year of changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports re-
quired to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Common Stock, $10 par value, 193,667 shares outstanding as of September 30,
1995.
I N D E X
Financial Statements:
Consolidated Balance Sheets - September 30, 1995,
December 31, 1994 and September 30, 1994 2
Consolidated Statements of Income - for the three and
nine months ended September 30, 1995 and 1994 3
Consolidated Statements of Changes in Stockholders'
Equity - for the nine months ended
September 30, 1995 and 1994 4
Consolidated Statements of Cash Flows - for the nine
months ended September 30, 1995 and 1994 5-6
Notes to Consolidated Financial Statements 7-10
Management's Discussion and Analysis of Financial
Condition and Results of Operations 11-12
Part II - Other Information 13
Signatures 14
Report of Independent Accountant 15
1
Zachary Bancshares, Inc. and Subsidiary
CONSOLIDATED BALANCE SHEETS
September 30, 1995, December 31, 1994 and September 30, 1994
ASSETS
(UNAUDITED) (UNAUDITED)
SEPTEMBER 30, DECEMBER 31, SEPTEMBER 30,
1995 1994 1994
Cash and Due from Banks $ 2,055,660 $ 2,592,065 $ 2,110,144
Reserve Funds Sold 4,300,000 2,100,000 2,500,000
Securities:
Available for Sale (Amortized Cost
of $29,290,140, $31,162,869
and $33,337,741, Respectively) $29,093,865 $29,685,000 $32,349,524
Loans $30,843,988 $28,241,397 $26,005,781
Less: Allowance for Loan Losses (834,927) (820,000) (830,100)
$30,009,061 $27,421,397 $25,175,681
Bank Premises and Equipment 941,400 909,465 935,124
Other Real Estate 532,239 563,369 640,269
Accrued Interest Receivable 539,529 553,417 466,008
Other Assets 172,927 583,333 429,636
Total Assets $67,644,681 $64,408,046 $64,606,386
LIABILITIES
Deposits:
Noninterest Bearing $11,265,238 $12,192,031 $11,664,010
Interest Bearing 46,965,937 46,212,790 46,590,520
$58,231,175 $58,404,821 $58,254,530
FHLB Borrowings 2,000,000 - -
Accrued Interest Payable 170,155 125,111 109,681
Other Liabilities 323,020 199,643 359,198
Total Liabilities $60,724,350 $58,729,575 $58,723,409
STOCKHOLDERS' EQUITY
Common Stock - $10 Par Value;
Authorized 2,000,000 Shares;
Issued 216,000 Shares $ 2,160,000 $ 2,160,000 $ 2,160,000
Surplus 1,480,000 1,480,000 1,480,000
Retained Earnings 3,856,532 3,460,525 3,341,860
Unrealized Loss on Securities
Available for Sale, Net (129,541) (975,394) (652,223)
Treasury Stock 22,333 Shares,
at Cost (446,660) (446,660) (446,660)
Total Stockholders' Equity $ 6,920,331 $ 5,678,471 $ 5,882,977
Total Liabilities and
Stockholders' Equity $67,644,681 $64,408,046 $64,606,386
See accountant's report and accompanying notes.
2
Zachary Bancshares, Inc. and Subsidiary
CONSOLIDATED STATEMENTS OF INCOME
for the three and nine months ended September 30, 1995 and 1994
(UNAUDITED)
THREE MONTHS ENDED
SEPTEMBER 30,
1995 1994
Interest Income:
Interest and Fees on Loans $ 660,047 $ 533,902
Interest on Securities 450,533 503,944
Other Interest Income 52,744 18,249
Total Interest Income $1,163,324 $1,056,095
Interest Expense:
Interest Expense on Deposits 451,355 341,370
Interest Expense on Borrowings 29,733 -
Total Interest Expense $ 481,088 $ 341,370
Net Interest Income $ 682,236 $ 714,725
Provision for (Recovery of) Loan Losses - -
Net Interest Income After
Provision for (Recovery of) Loan
Losses $ 682,236 $ 714,725
Other Income:
Service Charges on Deposit Accounts $ 121,162 $ 123,212
Gain (Loss) on Securities - (79,568)
Other Operating Income 15,144 14,051
Total Other Income $ 136,306 $ 57,695
Income before Other Expenses $ 818,542 $ 772,420
Other Expenses:
Salaries and Employee Benefits $ 314,571 $ 332,060
Occupancy Expense 45,607 49,549
Net Other Real Estate Expense 4,728 (50,000)
Other Operating Expenses 188,342 205,787
Total Other Expenses $ 553,248 $ 537,396
Income before Income Taxes $ 265,294 $ 235,024
Applicable Income Taxes 91,175 80,500
Net Income $ 174,119 $ 154,524
Per Share:
Net Income .90 .80
Cash Dividends - -
See accountant's report and accompanying notes.
3
(UNAUDITED)
NINE MONTHS ENDED
SEPTEMBER 30,
1995 1994
$1,919,115 $1,479,657
1,389,558 1,463,201
172,294 78,891
$3,480,967 $3,021,749
$1,334,453 $ 986,827
29,733 -
$1,364,186 $ 986,827
$2,116,781 $2,034,922
(16,169) -
$2,132,950 $2,034,922
$ 386,806 $ 381,801
(22,950) (61,755)
43,809 44,037
$ 407,665 $ 364,083
$2,540,615 $2,399,005
$ 983,411 $ 977,466
128,340 138,154
10,421 (47,420)
631,591 629,484
$1,753,763 $1,697,684
$ 786,852 $ 701,321
264,962 240,000
$ 521,890 $ 461,321
2.69 2.38
.65 .60
3
Zachary Bancshares, Inc. and Subsidiary
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
for the nine months ended September 30, 1995 and 1994
(UNAUDITED)
SEPTEMBER 30,
1995 1994
Common Stock:
Balance - Beginning and End of Period $2,160,000 $2,160,000
Surplus:
Balance - Beginning and End of Period $1,480,000 $1,480,000
Retained Earnings:
Balance - Beginning of Period $3,460,525 $2,996,739
Net Income 521,890 461,321
Cash Dividends (125,883) (116,200)
Balance - End of Period $3,856,532 $3,341,860
Net Unrealized Gain (Loss) on Securities
Available for Sale:
Balance - Beginning of Period $ (975,394) $ 128,363
Net Change in Unrealized Gain (Loss)
on Securities Available for Sale 845,853 (780,586)
Balance - End of Period $ (129,541) $ (652,223)
Treasury Stock:
Balance - Beginning and End of Period $ (446,660) $ (446,660)
See accountant's report and accompanying notes.
4
Zachary Bancshares, Inc. and Subsidiary
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the nine months ended September 30, 1995 and 1994
(UNAUDITED)
SEPTEMBER 30,
1995 1994
Cash Flows From Operating Activities:
Net Income $ 521,890 $ 461,321
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating
Activities:
Provision for (Recovery of) Loan Losses (16,169) -
Provision for Losses on Other
Real Estate - (46,700)
Provision for Depreciation 88,498 89,794
Amortization (Accretion) of
Securities Premiums (Discounts) 42,738 147,732
(Gain) Loss on Sale of Securities
Available for Sale 22,950 61,755
Gain on Sale of Other Real Estate - (720)
(Increase) Decrease in Interest
Receivable 13,888 9,382
(Increase) Decrease in Other
Assets (25,335) 218,734
Increase (Decrease) in Accrual Interest
Payable 45,044 3,058
Increase (Decrease) in Other
Liabilities 123,377 126,130
Net Cash Provided by Operating
Activities $ 816,881 $ 1,070,486
Cash Flows From Investing Activities:
Net (Increase) Decrease in Reserve
Funds Sold $ (2,200,000) $ 1,000,000
Purchases of Securities Available for Sale (2,234,194) (18,117,500)
Proceeds from Maturities of Securities
Available for Sale 1,530,315 6,384,443
Proceeds from Sales of Securities Available
for Sale 2,510,920 14,020,468
Net Increase in Loans (2,571,495) (5,200,041)
Proceeds from Sale of Premises and
Equipment - -
Purchases of Premises and Equipment (120,433) (67,874)
Proceeds from Sales of Other Real Estate 31,130 232,362
Net Cash Used in
Investing Activities $ (3,053,757) $ (1,748,142)
(CONTINUED)
5
(UNAUDITED)
SEPTEMBER 30,
1995 1994
Cash Flows From Financing Activities:
Increase in FHLB Borrowings $ 2,000,000 $ -
Net Increase (Decrease) in Demand
Deposits, NOW Accounts and Savings
Accounts (1,036,303) 1,020,115
Net Increase (Decrease) in Certificates
of Deposit 862,657 (562,181)
Cash Dividends (125,883) (116,200)
Net Cash Provided by Financing
Activities $ 1,700,471 $ 341,734
Decrease in Cash and Due from Banks $ (536,405) $ (335,922)
Cash and Due from Banks - Beginning of
Period 2,592,065 2,446,066
Cash and Due from Banks - End of Period $ 2,055,660 $ 2,110,144
Supplemental Disclosures of Cash Flow
Information:
Noncash Investing Activities:
Other Real Estate Acquired in
Settlement of Loans $ - $ 55,685
Increase (Decrease) in Unrealized
Gain (Loss) on Securities Available
for Sale $ 1,281,594 $ (1,182,706)
Decrease in Deferred Tax Effect
on Unrealized Gain on Securities
Available for Sale $ (437,947) $ (402,120)
Cash Payments For:
Interest Paid on Deposits $ 1,319,142 $ 983,769
Income Tax Payments $ 294,081 $ 228,000
See accountant's report and accompanying notes.
6
Zachary Bancshares, Inc. and Subsidiary
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
September 30, 1995 and 1994
Note A - Summary of Significant Accounting Policies -
The accounting principles followed by Zachary Bancshares, Inc. and
its wholly-owned Subsidiary, Bank of Zachary, are those which are
generally practiced within the banking industry. The methods of
applying those principles conform with generally accepted accounting
principles and have been applied on a consistent basis. The princi-
ples which significantly affect the determination of financial posi-
tion, results of operations, changes in stockholders' equity and cash
flows are summarized below. In the opinion of management, the con-
solidated financial statements reflect all normal recurring adjust-
ments necessary for a fair presentation of financial position and
results of operations for the periods presented. Results of opera-
tions for the interim periods presented are not necessarily indica-
tive of results which may be expected for any other interim period or
for the year as a whole.
Principles of Consolidation
The consolidated financial statements include the accounts of
Zachary Bancshares, Inc. (the Company), and its wholly-owned subsid-
iary, Bank of Zachary (the Bank). All material intercompany accounts
and transactions have been eliminated. Certain reclassifications to
previously published financial statements have been made to comply
with current reporting requirements.
Securities
Securities classified as held to maturity are those debt securities
the Bank has both the intent and ability to hold to maturity regard-
less of changes in market conditions, liquidity needs or changes in
general economic conditions. These securities are carried at cost
adjusted for amortization of premium and accretion of discount, com-
puted by various methods approximating the interest method over their
contractual lives.
Securities classified as available for sale are those debt securi-
ties that the Bank intends to hold for an indefinite period of time
but not necessarily to maturity. Any decision to sell a security
classified as available for sale would be based on various factors,
including significant movements in interest rates, changes in the
maturity mix of the Bank's assets and liabilities, liquidity needs,
regulatory capital considerations, and other similar factors. Secu-
rities available for sale are carried at fair value. Unrealized
7
gains or losses are reported as increases or decreases in stock-
holders' equity, net of the related deferred tax effect. Realized
gains or losses, determined on the basis of the cost of specific
securities sold, are included in earnings. The Bank does not engage
in trading activities.
Loans
Loans are stated at principal amounts outstanding, less unearned
income and allowance for loan losses. Interest on commercial loans
is accrued daily based on the principal outstanding. Interest on
installment loans is recognized and included in interest income using
the sum-of-the-digits method, which does not differ materially from
the interest method.
The Bank discontinues the accrual of interest income when a loan
becomes 90 days past due as to principal or interest. When a loan is
placed on non-accrual status, previously recognized but uncollected
interest is reversed to income or charged to the allowance for loan
losses. If the underlying collateral value is sufficient to cover
the principal balance and accrued interest, the Bank may decide to
continue the accrual of interest.
Allowance for Loan Losses
The allowance for loan losses is an amount which in management's
judgment is adequate to absorb potential losses in the loan port-
folio. The allowance for loan losses is based upon management's
review and evaluation of the loan portfolio. Factors considered
in the establishment of the allowance for loan losses include man-
agement's evaluation of specific loans; the level and composition of
classified loans; historical loss experience; results of examinations
by regulatory agencies; an internal asset review process; expecta-
tions of future economic conditions and their impact on particular
borrowers; and other judgmental factors.
The allowance for loan losses is based on estimates of potential
future losses, and ultimate losses may vary from the current esti-
mates. These estimates are reviewed periodically and as adjustments
become necessary, the effect of the change in estimate is charged to
operating expenses in the period incurred. All losses are charged to
the allowance for loan losses when the loss actually occurs or when
management believes that the collectibility of the principal is un-
likely. Recoveries are credited to the allowance at the time of
recovery.
Bank Premises and Equipment
Bank premises and equipment are stated at cost less accumulated
depreciation. Depreciation is provided at rates based upon estimated
useful service lives using the straight-line method for financial
reporting purposes and accelerated methods for income tax purposes.
8
The cost of assets retired or otherwise disposed of and the related
accumulated depreciation are eliminated from the accounts in the year
of disposal and the resulting gains or losses are included in current
operations.
Expenditures for maintenance and repairs are charged to operations
as incurred. Cost of major additions and improvements are capital-
ized.
Other Real Estate
Other real estate is comprised of properties acquired through fore-
closure or negotiated settlement. The carrying value of these prop-
erties is lower of cost or fair market value minus estimated cost to
sell. Loan losses arising from the acquisition of these properties
are charged against the allowance for loan losses. Any subsequent
market reductions required are charged to Net Other Real Estate Ex-
pense. Revenues and expenses associated with maintaining or dispos-
ing of foreclosed properties are recorded during the period in which
they are incurred.
Income Taxes
The provision for income taxes is based on income as reported in the
financial statements after interest income from state and municipal
securities is excluded. Also certain items of income and expenses are
recognized in different time periods for financial statement purposes
than for income tax purposes. Thus provisions for deferred taxes are
recorded in recognition of such timing differences.
Deferred taxes are provided on a liability method whereby deferred
tax assets are recognized for deductible temporary differences and
operating loss and tax credit carryforwards and deferred tax liabili-
ties are recognized for taxable temporary differences. Temporary dif-
ferences are the differences between the reported amounts of assets
and liabilities and their tax bases. Deferred tax assets are reduced
by a valuation allowance when, in the opinion of management, it is
more likely than not that some portion or all of the deferred tax as-
sets will not be realized. Deferred tax assets and liabilities are
adjusted for the effects of changes in tax laws and rates on the date
of enactment.
The corporation and its subsidiary file a consolidated federal
income tax return. In addition, state income tax returns are filed
individually by Company in accordance with state statutes.
Earnings per Common Share
The computation of earnings per share and other per share amounts
of common stock is based on the weighted average number of shares of
common stock outstanding during each year, which is 193,667 in 1995
and 1994.
9
Statements of Cash Flows
For purposes of reporting cash flows, cash and due from banks in-
cludes cash on hand and amounts due from banks (including cash items
in process of clearing).
Current Accounting Developments
In December, 1991, the Financial Accounting Standards Board issued
Statement No. 107, "Disclosures about Fair Value of Financial Instru-
ments." This statement requires disclosure of the fair value of
financial instruments, both assets and liabilities, whether or not
such instruments are recognized in the balance sheet. As it relates
to the Company, financial instruments include primarily cash equiva-
lents, securities, loans, and deposits. SFAS No. 107 will be adopted
by the Company for the fiscal year ended December 31, 1995.
During the first quarter of 1995 the Company adopted Statement of
Financial Accounting Standards No. 114, "Accounting by Creditors
for Impairment of a Loan", and Statement of Financial Accounting
Standards No. 118, "Accounting by Creditors for Impairment of a
Loan - Income Recognition and Disclosures". The Statements generally
require impaired loans to be measured on the present value of expect-
ed future cash flows discounted at the loan's effective interest
rate, or as an expedient, at the loan's observable market price or
the fair value of the collateral if the loan is collateral dependent.
A loan is impaired when it is probable the creditor will be unable to
collect all contractual principal and interest payments due in accor-
dance with the terms of the loan agreement. The effect of these
statements on the financial statements of the Company was immaterial.
10
Zachary Bancshares, Inc. and Subsidiary
MANAGEMENT'S DISCUSSION
September 30, 1995
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of the
significant changes in income and expenses in relation to the changes
in financial position for the nine months ended September 30, 1995 and
1994. This information should be read in conjunction with the finan-
cial statements and notes relating thereto. The Company is unaware of
any trends, uncertainties or events which would or could have a materi-
al impact on future operating results, liquidity, or capital.
FOR THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 1995
OVER 1994
NET INCOME
Net Income for the nine month period ended September 30, 1995,
as compared to the respective period of 1994, increased 13% or $61,569.
The Company's increased income resulted from increased net interest
income and a smaller 1995 loss on sale of selected securities compared
to 1994.
INTEREST INCOME
Interest Income for the nine month period ended September 30,
1995 was $3,480,967, an increase of $459,218 over the same period in
1994. The Company's earning asset yield continues to adjust downward
with current market rates, which have continued a downward trend during
recent reporting periods. The 1995 speed of asset rate adjustment has
slowed considerably. The majority of the Company's liabilities are
priced at current market rates.
Net loans for the nine month period ended September 30, 1995, as
compared to the respective period in 1994, increased $4,838,207 to
$30,843,988. Loan income increased $439,458 or 30% to $1,919,115 for
the nine months ended September 30, 1995 from $1,479,657 for the nine
months ended September 30, 1994. Loan volume resulted in the 1995
income increase.
Securities and other interest bearing assets (excluding loans)
as of September 30, 1995 decreased $1,454,839 or 4% compared to the
similar time period in 1994. Securities and other interest bearing
account interest income in the first nine months of 1995 increased
$19,760. The income increase generally results from an increased Re-
verse Funds Sold rate.
11
INTEREST EXPENSE
Interest Bearing Liabilities increased by $2,375,417 or 4% from
September 30, 1994 to September 30, 1995. Interest Expense in the
similar time period increased $377,359 or 38%. The subsidiary deposit
liabilities are short-term; therefore, reflective of current market
rates. The Company borrowed $2,000,000 from the Federal Home Loan Bank
of Dallas in July 1995 and repaid the loan on October 3, 1995. This
loan was to satisfy short funding requirements.
PROVISION FOR LOSSES
In the first nine months of 1995, the Company had a $16,169
negative loan loss provision. No loan loss provision was incurred in
the similar 1994 period. The Company's Allowance for Loan Losses
exceed $830,000 in both quarter under consideration. Management's
quarterly review of the Allowance for Loan Losses will determine 12-31-
95 levels. Current information indicates possible additional negative
Provision for Losses in 1995.
OTHER INCOME
Total Other Income for the time period under consideration in-
creased $43,582 or 12%. In 1994, the Company sold specific securities
resulting in a $61,759 Loss on Sale of Securities. The 1995 Loss on
Sale of Securities was $22,950 or a $38,805 differential between the
compared time periods . Management voluntarily sold securities at a
loss in both periods, to either improve asset quality and/or to enhance
future earnings. Other component of Other Income experienced little
change.
OTHER EXPENSES
Total Other Expenses have increased $56,079 or 3.3%, totaling
$1,753,763 in 1995. Components of 1995 Other Expenses and the percent-
age change in the specific categories are: employee benefits (insur-
ance, salaries and retirement) up 1% and general operating expenses
(postage, telephone, data processing, printing, supplies, etc) less
than 1% increase, and occupancy expense down 7%. The Company in 1994
reversed an internal Reserve for Other Real Estate Loss totaling $50,-
000 which is included in the 1994 Other Expense category, this reversal
is non-reoccurring. The 1995 Net Other Real Estate Expense is $10,421
or a year to year differential of $57,841. The subsidiary received a
non-reoccurring Federal Deposit Insurance Corp premium refund of $36,-
875 for prior periods in the third quarter of 1995.
APPLICABLE INCOME TAXES
The Company is fully taxable in both 1995 and 1994. Amounts
expensed in the referenced time periods are $264,962 and $240,000 re-
spectively. The Company expects to be fully taxable in the future.
12
PART II
Item 6. EXHIBITS AND REPORTS
a. The following exhibit is filed as a part of this report.
Exhibit 15 - Report of Independent Accountants
13
SIGNATURES
Pursuant to the requirement of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
ZACHARY BANCSHARES, INC.
Date: November 02 1995
Harry S. Morris, Jr.
President
Mark Thompson
Treasurer
14
October 18, 1995
Independent Accountant's Report
To the Board of Directors
Zachary Bancshares, Inc. and Subsidiary
Zachary, Louisiana
We have reviewed the accompanying Consolidated Balance Sheets of
Zachary Bancshares, Inc. and Subsidiary as of September 30, 1995 and
1994, and the related Consolidated Statements of Income, Changes in
Stockholders' Equity and Cash Flows for the nine month periods then
ended all in accordance with standards established by the American
Institute of Certified Public Accountants.
We previously audited and expressed our unqualified opinion in our
report dated January 13, 1995, on the Balance Sheet of Zachary Banc-
shares, Inc. and Subsidiary as of December 31, 1994.
A review of interim financial information consists principally of
obtaining an understanding of the system for the preparation of interim
financial information, applying analytical review procedures to finan-
cial data, and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an
examination in accordance with generally accepted auditing standards,
the objective of which is the expression of an opinion regarding the
financial statements taken as a whole. Accordingly, we do not express
such an opinion.
Based on our review, we are not aware of any material modifica-
tions that should be made to the accompanying consolidated financial
statements for them to be in conformity with generally accepted ac-
counting principles.
Respectfully submitted,
15
Management's Responsibility for Financial Reporting
The management of Zachary Bancshares, Inc. is responsible for the preparation
of the financial statements, related financial data and other information in
this quarterly report. The financial statements are prepared in accordance with
generally accepted accounting principles and includes some amounts that are
necessarily based on management's informed estimates and judgments, with con-
sideration given to materiality. All financial information contained in this
quarterly report is consistent with that in the financial statements.
Management fulfills its responsibility for the integrity, objectivity,
consistency and fair presentation of the financial statements and financial
information through an accounting system and related internal accounting con-
trols that are designed to provide reasonable assurance that assets are safe-
guarded and that transactions are authorized and recorded in accordance with
established policies and procedures. The concept of reasonable assurance is
based on the recognition that the cost of a system of internal accounting
controls should not exceed the related benefits. As an integral part of the
system of internal accounting controls, Zachary Bancshares, Inc. has a pro-
fessional staff who monitors compliance with and assesses the effectiveness
of the system of internal accounting controls and coordinates audit coverage
with the independent public accountants.
The Audit Committee of the Board of Directors, composed solely of outside
directors, meets periodically with management, and the independent public
accountants to review matters relating to financial reporting, internal
accounting control and the nature, extent and results of the audit effort.
The independent public accountants have direct access to the Audit Committee
with or without management present.
The financial statements as of December 31, 1994 were examined by Hannis T.
Bourgeois and Co., L.L.P., independent public accountants, who rendered an
independent professional opinion on the financial statements prepared by
management. The financial statements as of September 30, 1995 have been
reviewed by Hannis T. Bourgeois and Co., L.L.P. in accordance with standards
established by the American Institute of Certified Public Accountants.
Mark Thompson
Treasurer and Chief
Financial Officer
16
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<CHARGE-OFFS> 15
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 835
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 321
</TABLE>
