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 March 31, 1999 Commission File Number 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, LA 70791-0497
(Address of principal executive office) (Zipcode)
Registrant's telephone number, including area code 225 654 2701
NONE
(Former name, former address and former fiscal
year of change since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Common Stock, $10 par value, 193,667 shares outstanding as of March
31, 1999.
I N D E X
Financial Statements:
Consolidated Balance Sheets -
March 31, 1999, December 31, 1998 and March 31, 1998 2
Consolidated Statements of Income -
for the three months ended March 31, 1999 and 1998 3
Consolidated Statements of Changes in Stockholders' Equity -
for the three months ended March 31, 1999 and 1998 4
Consolidated Statements of Cash Flows -
for the three months ended March 31, 1999 and 1998 5-6
Notes to Consolidated Financial Statements 7-11
Management's Discussion and Analysis of Financial
Condition and Results of Operations 12-14
Part II - Other Information 15
Signatures 16
Management's Responsibility for Financial Reporting 17
1
Zachary Bancshares, Inc. and Subsidiary
CONSOLIDATED BALANCE SHEETS
March 31, 1999, December 31, 1998 and March 31, 1998
ASSETS
(UNAUDITED) (UNAUDITED) (UNAUDITED)
MARCH 31, DECEMBER 31, MARCH 31,
1999 1998 1998
Cash and Due from Banks $ 2,416,954 $ 2,815,507 $ 3,280,870
Interest Bearing Deposits in
Other Institutions 1,719,558 1,701,873 45,123
Reserve Funds Sold 5,150,000 6,175,000 3,550,000
Securities Available for Sale
(Amortized Cost $16,630,964,
$17,563,961 and $23,482,871) 16,621,369 17,572,539 23,501,196
Loans 54,643,071 52,372,002 46,338,808
Less: Allowance for Loan Losses (880,920) (858,856) (782,205)
53,762,151 51,513,146 45,556,603
Bank Premises and Equipment 3,708,956 3,067,869 1,691,465
Other Real Estate 6 191,592 206,154
Accrued Interest Receivable 536,312 518,258 574,968
Other Assets 247,786 231,935 201,362
Total Assets $84,163,092 $83,787,719 $78,607,732
LIABILITIES
Deposits:
Noninterest Bearing $17,753,670 $17,636,206 $14,941,689
Interest Bearing 56,728,415 56,814,190 54,629,775
74,482,085 74,450,396 69,571,464
Accrued Interest Payable 193,493 231,360 200,240
Other Liabilities 388,050 203,202 359,343
Total Liabilities 75,063,628 74,884,958 70,131,047
STOCKHOLDERS' EQUITY
Common Stock - $10 Par Value;
Authorized 2,000,000 Shares;
Issued 216,000 Shares, Respec-
tively 2,160,000 2,160,000 2,160,000
Surplus 1,480,000 1,480,000 1,480,000
Retained Earnings 5,912,456 5,703,759 5,271,251
Accumulated Other Comprehensive
Income (6,332) 5,662 12,094
Treasury Stock (22,333 Shares
at Cost) (446,660) (446,660) (446,660)
Total Stockholders' Equity 9,099,464 8,902,761 8,476,685
Total Liabilities and
Stockholders' Equity $84,163,092 $83,787,719 $78,607,732
The accompanying notes are an integral part of these financial statements.
2
Zachary Bancshares, Inc. and Subsidiary
CONSOLIDATED STATEMENTS OF INCOME
for the three months ended
March 31, 1999 and 1998
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31,
1999 1998
Interest Income:
Interest and Fees on Loans $ 1,180,457 $1,017,501
Interest on Securities 261,779 378,627
Other Interest Income 72,312 49,097
Total Interest Income $ 1,514,548 $1,445,225
Interest Expense on Deposits 544,271 564,337
Net Interest Income $ 970,277 $ 880,888
Provision for Loan Losses 44,384 23,785
Net Interest Income After Provision for
Loan Losses $ 925,893 $ 857,103
Other Income:
Service Charges on Deposit Accounts 116,219 118,166
Other Operating Income 39,978 40,130
Total Other Income $ 156,197 $ 158,296
Income before Other Expenses $ 1,082,090 $1,015,399
Other Expenses:
Salaries and Employee Benefits 377,998 364,989
Occupancy Expense 47,457 41,422
Net Other Real Estate Expense 81,363 4,922
Other Operating Expenses 261,583 2 34,656
Total Other Expenses $ 768,401 $ 645,990
Income before Income Taxes 313,689 369,410
Applicable Income Taxes 104,992 122,225
Net Income $ 208,697 $ 247,185
Per Share:
Net Income $ 1.08 $ 1.28
The accompanying notes are an integral part of these financial statements.
3
Zachary Bancshares, Inc. and Subsidiary
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
for the three months ended March 31,1999 and 1998
ACCUMULATED
OTHER TOTAL
COMMON RETAINED COMPREHENSIVETREASURY STOCKHOLDERS'
STOCK SURPLUS EARNINGS INCOME STOCK EQUITY
Balances,(Unaudited)
January 1, 1999 $2,160,000 $1,480,000 $5,703,759 $5,662$(446,660)$8,902,761
Comprehensive Income:
Net Income 208,697 208,697
Change in Unrealized
Gain (Loss) on Securities
Available for Sale (11,994) (11,994)
Less: Reclassification
Adjustment - -
Total Comprehensive _______
Income 196,703
Cash Dividends - -
Balances, (Unaudited)
March 31, 1999 $2,160,000 $1,480,000 $5,912,456$ (6,332) $(446,660)$9,099,464
Balances, (Unaudited)
January 1, 1998 $2,160,000 $1,480,000 $5,024,066 $(2,671) $(446,660)$8,214,735
Comprehensive Income:
Net Income 247,185 247,185
Change in Unrealized
Gain (Loss) on Securities
Available for Sale 14,765 14,765
Less: Reclassification
Adjustment - -
Total Comprehensive
Income 261,950
Cash Dividends - -
Balances, (Unaudited)
March 31, 1998 $2,160,000 $1,480,000$5,271,251$ 12,094$(446,660)$8,476,685
The accompanying notes are an integral part of these financial statements.
4
Zachary Bancshares, Inc. and Subsidiary
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the three months ended March 31, 1999 and 1998
(UNAUDITED)
MARCH 31
1999 1998
Cash Flows From Operating Activities:
Net Income $ 208,697 $ 247,185
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities:
Provision for Loan Losses 44,384 23,785
Provision for Depreciation and Amortization 48,424 52,691
Stock Dividends - Federal Home Loan Bank (4,800) (3,900)
Net Amortization Securities Premium 5,312 1,671
Charge Off of Other Real Estate 92,654 -
Gain on Sale of Real Estate (11,239) -
(Increase) in Accrued Interest Receivable (18,054) (16,467)
(Increase)in Other Assets (15,851) (132,214)
Increase (Decrease)in Accrued Interest Payable(37,867) 12,052
Increase in Other Liabilities 191,027 129,751
Net Cash Provided by Operating
Activities 502,687 314,554
Cash Flows From Investing Activities:
Net(Increase)Decrease in Reserve Funds Sold 1,025,000 (1,850,000)
Purchase of Securities Available for Sale (2,995,938) (51,300)
Maturities or Calls of Securities
Available for Sale 3,000,000 1,500,000)
Principal Payments on Mortgaged
Back Securities 928,423 694,819
Net Increase in Loans (2,293,389) (210,665)
Purchases of Premises and Equipment (689,511) (50,269)
Proceeds from Sales of Other Real Estate 110,171 11,247
Net Cash Used in Investing Activities (915,244) 43,832
(CONTINUED)
5
(UNAUDITED)
MARCH 31
1999 1998
Cash Flows From Financing Activities:
Net Increase (Decrease) in Demand
Deposits, NOW Accounts and
Savings Accounts (551,759) 892,201
Net Increase (Decrease) in Certificate
of Deposit 583,448 (501,509)
Net Cash Provided by Financing Activities 31,689 390,692
Increase (Decrease) in Cash and Interest
Bearing Deposits (380,868) 749,078
Cash and Interest Bearing Deposits -
Beginning of Period 4,517,380 2,576,915
Cash and Interest Bearing Deposits -
End of Period $ 4,136,512 $ 3,325,993
Supplemental Disclosures of Cash Flow
Information:
Noncash Investing Activities:
Change in Unrealized Gain or (Loss)
on Securities Available for Sale $ (18,173) $ 22,372
Change in Deferred Tax Effect on
Unrealized Gain or (Loss) on Securities
Available for Sale $ 6,179 $ (7,607)
Cash Payments For:
Interest Paid on Deposits $ 582,137 $ 552,285
The accompanying notes are an integral part of these financial statements.
6
Zachary Bancshares, Inc. and Subsidiary
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
March 31, 1999 and 1998
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 principles
which significantly affect the determination of financial position,
results of operations, changes in stockholders' equity and cash flows
are summarized below.
Presentation
The accompanying unaudited consolidated interim financial statements do
not include all of the information and footnotes required by generally
accepted accounting principles. Management is of the opinion that the
unaudited interim financial statements reflect all normal, recurring
accrual adjustments necessary to provide a fair statement of the
results for the interim periods presented. It is noted that the
results for the first three months ended March 31, 1999 are no
indication of the expected results for the annual period which ends
December 31, 1999. Additional information concerning the audited
financial statements and notes can be obtained from Zachary Bancshares,
Inc.'s annual report and Form 10-KSB filed for the period ended
December 31, 1998.
Principles of Consolidation
The consolidated financial statements include the accounts of Zachary
Bancshares, Inc. (the Company), and its wholly-owned subsidiary, 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.
Estimates
The preparation of financial statements in conformity with gener
ally accepted accounting principles requires management to make esti
mates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results
could differ from those estimates.
The determination of the adequacy of the allowance for loan
losses is based on estimates that are particularly susceptible to
significant changes in the economic environment and market
conditions. In connection with the determination of the estimated
losses on loans, management obtains independent appraisals for
significant collateral.
The Bank's loans are generally secured by specific items of
collateral including real property, consumer assets, and business
assets. Although the Bank has a diversified loan portfolio, a
substantial portion of its debtors' ability to honor their contracts
is dependent on local economic conditions.
7
While management uses available information to recognize losses on
loans, further reductions in the carrying amounts of loans may be
necessary based on changes in local economic conditions. In
addition, regulatory agencies, as an integral part of their
examination process, periodically review the estimated losses on
loans. Such agencies may require the Bank to recognize additional
losses based on their judgments about information available to them
at the time of their examination. Because of these factors, it is
reasonably possible that the estimated losses on loans may change
materially in the near term. However, the amount of the change that
is reasonably possible cannot be estimated.
Securities
Securities classified as held to maturity are those debt securities the
Bank has both the intent and ability to hold to maturity regardless of
changes in market conditions, liquidity needs or changes in general
economic conditions. Securities classified as trading are those
securities held for resale in anticipation of short-term market move
ments. The Bank had no securities classified as held to maturity or
trading at March 31, 1999 or 1998.
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 gains
or losses are reported as increases or decreases in stockholders' eq
uity, net of the related deferred tax effect. Realized gains or losse
s, determined on the basis of the cost of specific securities sold, are
included in earnings.
Loans
Loans are stated at principal amounts outstanding, less the allow
ance for loan losses. Interest on commercial and individual loans is
accrued daily based on the principal outstanding.
Generally, the Bank discontinues the accrual of interest income
when a loan becomes 90 days past due as to principal or interest. When
a loan is placed on non-accrual status, previously recognized but
uncollected interest is reversed to income or charged to the allowance
for loan losses. Interest income is subsequently recognized only to
the extent cash payments are received. The Bank classifies loans as
impaired if, based on current information and events, it is probable
that the Bank will be unable to collect the scheduled payments of
principal and interest when due according to the contractual terms of
the loan agreement. The measurement of impaired loans is based on the
present value of the expected future cash flows discounted at the
loan's effective interest rate or the loan's observable market price or
based on the fair value of the collateral if the loan is collateral-
dependent.
Allowance for Loan Losses
The allowance for loan losses is maintained at a level which in
management's judgment is adequate to absorb credit losses inherent in
the loan portfolio. The allowance for loan losses is based upon
management's review and evaluation of the loan portfolio. Factors
considered in the establishment of the allowance for loan losses
include management's evaluation of specific loans; the level and
composition of classified loans; historical loss experience; results of
examinations by regulatory agencies; an internal asset review process;
expectations of future economic conditions and their impact on
particular borrowers; and other judgmental
8
factors. Allowances for impaired loans are generally determined based
on collateral values or the present value of estimated cash flows.
Although management uses available information to recognize losses on
loans, because of uncertainties associated with local economic
conditions, collateral values, and future cash flows on impaired loans,
it is reasonably possible that a material change could occur in the
allowance for loan losses in the near term. However, the amount of the
change that is reasonably possible cannot be estimated.
The allowance for loan losses is based on estimates of potential
future losses, and ultimate losses may vary from the current estimates.
These estimates are reviewed periodically and as adjustments become
necessary, the effect of the change in estimate is charged to operating
expenses in the period incurred. All losses are charged to the
allowance for loan losses when the loss actually occurs or when
management believes that the 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 reporting.
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 capitalized.
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 value, minus estimated costs 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
Expense. Revenues and expenses associated with maintaining or
disposing of foreclosed properties are recorded during the period in
which they are incurred.
Income Taxes
The provision for income taxes is based on income as reported
in the financial statements. Also certain items of income and expenses
are recognized in different time periods for financial statement
purposes than for income taxes purposes. Thus provisions for deferred
taxes are recorded in recognition of such timing differences.
Deferred taxes are provided utilizing a liability method whereby
deferred tax assets are recognized for deductible temporary differences
and operating loss and tax credit carryforwards and deferred tax
liabilities are recognized for taxable temporary differences.
Temporary differences are the differences between the reported amounts
of assets and liabilities and their tax bases. Deferred tax assets are
reduced by a valuation
9
allowance when, in the opinion of management, it is more likely than
not that some portion or all of the deferred tax assets will not be
realized. Deferred tax assets and liabilities are adjusted for the
effects of
changes in tax laws and rates on the date of enactment.
The corporation and its subsidiary file a consolidated federal
income tax return. In addition, state income tax returns are filed in
dividually by the Company in accordance with state statutes.
Earnings per Common Share
In February 1997, Statement of Financial Accounting Standard No.
128 "Earnings Per Share" ("SFAS No. 128") was issued which establishes
standards for computing and presenting earnings per share (EPS). Under
SFAS No. 128, primary EPS is replaced with basic EPS. Basic EPS is
computed by dividing income applicable to common shares by the weighted
average shares outstanding; no dilution for any potentially convertible
shares is included in the calculation. Fully diluted EPS, now called
diluted EPS, reflects the potential dilution that could occur if
securities or other contracts to issue common stock were exercised or
converted into common stock or resulted in the issuance of common stock
that then shared in the earnings of the Company. At March 31, 1999,
the Company had no convertible shares or other contracts to issue
common stock. The weighted average number of shares of common stock
used to calculate basic EPS was 193,667 for the periods ended March 31,
1999 and 1998, respectively.
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).
Comprehensive Income
The Financial Accounting Standards Board (FASB) issued Statement
No. 130 "Reporting Comprehensive Income." which became effective for
fiscal years beginning after December 15, 1997. This statement
established standards for the reporting and display of comprehensive
income and its components which are revenues, expenses, gains, and
losses that under GAAP are included in comprehensive income but
excluded from net income. The Company adopted this statement in 1998.
The components of comprehensive income are disclosed in the Statements
of Changes in Stockholder's Equity for all periods presented.
10
Zachary Bancshares, Inc. and Subsidiary
MANAGEMENT'S DISCUSSION
March 31, 1999
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of the signifi
cant changes in income and expenses in relation to the changes in fi
nancial position for the three months ended March 31, 1999 and 1998
This information should be read in conjunction with the financial
statements and the notes relating thereto. The Company is unaware of
any trends, uncertainties or events which would or could have a
material impact on future operating results, liquidity or capital.
FINANCIAL CONDITION ANALYSIS
Loans
Total loans were $54,643,071 at March 31, 1999 compared to $46,338,808
at March 31, 1998. This represents an increase of $8,304,263 or 18%.
Loan growth was funded from reallocation of investment securities as
they matured and from deposit growth.
Investment Securities
Investment securities decreased 29% to $16,621,369 at March 31, 1999
compared to $23,501,196 at March 31, 1998. This decrease was due to
the reallocation of these fund to the loan portfolio as the securities
matured and the payment on the building contract discussed below.
Bank Premises and Equipment
Total bank premises and equipment were $3,708,956 at March 31, 1999
compared to $1,691,465 at March 31, 1998. The Company entered into a
contract totaling $2,916,826 for the construction of a new main office
facility to be located in Zachary, Louisiana. Construction began in
March, 1998 and will be completed during the second quarter of 1999.
Under the terms of the contract, disbursements totaling $2,272,585 have
been made as of March 31, 1999.
11
Deposits
Total deposits increased $4,910,621 or 7% to $74,482,085 at March 31,
1999 compared to $69,571,464 at March 31, 1998.
RESULTS OF OPERATION
For the Three Month Period Ended March 31, 1999 over 1998
Net Income
Net Income was $208,697 for the three month period ended March 31, 1999
compared to $247,185 in the same period in 1998. This change was
primarily due to an increase in total interest income offset by a
$81,363 charge off of Other Real Estate Owned.
Interest Income
Interest Income for the three month period ended March 31, 1999 was
$1,514,548 or a 5% increase over the same period in 1998. The interest
income increase resulted from the Company's continued asset mix
reallocation from lower yielding securities to higher yielding loans.
The Subsidiary's loan portfolio increased 18% to $54,643,071 while its
investment portfolio decreased 29% to $16,621,369 in the time period
under consideration.
Interest Expense
Interest Expense for the quarter ended March 31, 1999 was $544,270 or a
decrease of 4% over the same quarter in 1998 at $564,337. Non-interest
bearing deposits increased $2,811,981 to $17,753,670 at March 1999 from
$14,941,689 at March 31, 1998. Interest bearing deposits also increased
to $56,728,415 at March 31, 1999 from $54,629,775. Weighted average
deposit rates decreased to 2.99% at March 31, 1999 from 3.24% at March
31, 1998.
Provision for Loan Losses
The Company included $44,384 for provision for loan losses during the
three month period ended March 31, 1999 due to continued increases in
the loan portfolio. The Company's Watch List volumes were stable in
the last half of 1998 and to date in 1999. Management does not
anticipate any unusual Watch List changes and remains committed to
providing for losses in a timely manner.
12
Total Other Expense
Total Other Expenses increased 19% or $122,412 to $768,401 at March 31,
1999 from $645,990 at March 31, 1998. $81,363 of this increase was due
to the complete writedown of Other Real Estate Owned property which had
been on the books of the Company for ten years. After ten years state
law requires that property in this situation be written off. The
amount represents 42 lots in an existing residential subdivision where
sale activity has increased recently. A purchaser has an option to
acquire ten of the lots for a total of $75,000 later this year.
Employee salaries and benefits increased 4% for the three month period
under consideration. Other expenses increased 11% or $26,926 to
$261,582 from $234,656 at March 31,1998. This increase was primarily
due to expenditures of $15,694 for Year 2000 expenses.
Income Tax
The Company's income is fully taxable at the maximum rate (34%) both in
1999 and 1998 and expects to remain taxable at the current rate
throughout 1999.
Earnings Per Share
The Company's 1999 earnings per share at March 31, 1999 was $1.08
compared to $1.28 per share the previous year.
Year 2000 Issues
Management does not feel that the issues related to Y2K are reasonably
likely to have or will have a material effect on the Company's
liquidity, capital resources, or results of operation. The following
information is given regarding this determination.
The Bank has had two FDIC Y2K readiness exams during the last six
months and received satisfactory results on both.
Approximately $15,000 was expensed during 1998 for software upgrades
and testing. For 1999, $60,000 has been budgeted for these types of
expenses, known and unknown.
13
The Board of Directors of the Bank have been given monthly updates on
the status of our Y2K readiness and have approved the following
policies: (a) Policy for responding to Customer Inquiries Regarding
Y2K; (b) Bank of Zachary 2000 Test Plan; (c) Bank of Zachary Emergency
Operating Procedures and Y2K Business Resumption Plan The Bank is
presently performing a risk assessment of its larger customers and
preliminarily these do not represent any material financial effect on
the Bank.
This discussion entitled "Year 2000 Issues" includes certain "forward
looking statements" within the meaning of the Private Securities
Litigation Act of 1995 (PSLA). This statement is included for the
purpose of availing the Company of the protections of the safe harbor
provisions of the PSLA. Management's ability to predict the results of
the effects of Year 2000 issues is inherently uncertain and subject to
factors that may cause actual results to materially differ from those
anticipated. Factors that could affect actual results include the
possibility that contingency plans and remediation efforts will not
operate as intended, the Bank's failure to timely or completely
identify all software and hardware applications that require
remediation, unexpected costs, and the general uncertainty associated
with the impact of Year 2000 issues on the banking industry, the Bank's
customers, vendors, and others with whom it conducts business. Readers
are cautioned not to place undue reliance on these forward looking
statements.
14
PART II
Item l. LEGAL PROCEEDINGS
During the normal course of business, the Company is involved
in various legal proceedings. In the opinion of management and
counsel, any liability resulting from such proceedings would not have a
material adverse effect on the Company's financial statements.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
a. None
15
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: May 12, 1999 s/Harry S. Morris, Jr.
Harry S. Morris, Jr.
President
s/Larry Bellard
Larry Bellard
Treasurer
16
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 princi
ples and include some amounts that are necessarily based on manage
ment's informed estimates and judgments, with consideration given to
materiality. All financial information contained in this quarterly
report is consistent with that in the financial statements.
Management fulfills its responsibility for the integrity, objec
tivity, consistency and fair presentation of the financial statements
and financial information through an accounting system and related
internal accounting controls that are designed to provide reasonable
assurance that assets are safeguarded and that transactions are author
ized and recorded in accordance with established policies and proce
dures. 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 profes
sional 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 indepen
dent public accountants to review matters relating to financial report
ing, 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, 1998 were examined by
Hannis T. Bourgeois, L.L.P., independent public accountants, who
rendered an independent professional opinion on the financial state
ments prepared by management. Hannis T. Bourgeois, L.L.P. has not
reviewed the financial statements as of March 31, 1999.
Larry Bellard, Treasurer
17
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 2417
<INT-BEARING-DEPOSITS> 1720
<FED-FUNDS-SOLD> 5150
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 16621
<INVESTMENTS-CARRYING> 0
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<ALLOWANCE> (582)
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<LONG-TERM> 0
0
0
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<INTEREST-TOTAL> 1515
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<INTEREST-INCOME-NET> 970
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<INCOME-PRETAX> 314
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<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 881
</TABLE>
