UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
For the quarterly period ended September 30, 1998
Commission file Number 2-89561
Teche Bancshares, Inc.
Louisiana 72-1008552
(State or other jurisdiction of (I.R.S Employer
incorporation or organization) Identification No.)
606 South Main Street, St. Martinville, Louisiana 70582
(Address of principal executive offices 70582
Registrant's telephone number, including area code:
(318) 394-9726
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 ( )
Indicated the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practical date.
Common Stock, $10 Par Value - 27,925 shares as of September 30, 1998.
TECHE BANCSHARES, INC. AND SUBSIDIARY
St. Martinville, Louisiana
(UNAUDITED)
CONSOLIDATED BALANCE SHEETS
September 30, 1998 and December 31, 1997
(Dollars in Thousands)
Sept. 30, December 31
1998 1997
ASSETS
Cash and due from banks $1,746 $1,633
Securities Available for Sale at mkt value 20,976 14,758
Securities Held To Maturity (Market Value
of $3,510 and $4,498, respectively) 3,476 4,476
Other securities at cost 345 343
Federal funds sold 1,325 1,050
Loans, net of allowance for loan losses
of $168 and $171, respectively) 16,439 13,707
Bank premises, furniture, and equipment 679 674
Accrued interest receivable 378 314
Other real estate owned 230 230
Other assets 207 120
----------------------
Total assets $45,801 $37,305
======================
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits -
Non-interest demand 7,152 $6,636
Interest bearing -
NOW and MMDA accounts 6,072 5,523
Savings 3,726 3,592
Time, $100 and over, 10,811 7,788
Other time 10,703 10,182
----------------------
Total deposits 38,464 33,721
Accrued interest payable 142 137
Federal Home Loan Borrowings 3,297 0
Fed Funds Purchased 0 0
Other liabilities and accrued expenses 355 205
----------------------
Total liabilities 42,258 34,063
Stockholders' equity:
Common stock ($10 par value, 100,000
shares authorized, 28,125 shares
issued and outstanding) 281 281
Surplus 1,143 1,143
Retained earnings 2,026 1,719
----------------------
3,450 3,143
Less: 200 shares of treasury stock (19) (19)
Allowance for unrealized
loss on mkt securities 0 0
Market Value Allowance on
AFS Bonds 112 118
----------------------
Total stockholders' equity 3,543 3,242
----------------------
Total liabilities and stockholders' equity $45,801 $37,305
======================
The accompanying notes are an integral part of this statement.
TECHE BANCSHARES, INC. AND SUBSIDIARY
St. Martinville, Louisiana
(UNAUDITED)
CONSOLIDATED STATEMENTS OF INCOME
Nine Months Ended September 30, 1998 and 1997;
(Dollars in Thousands except Earnings per Share)
Three Months Ended Nine Months Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
1998 1997 1998 1997
Interest income:
Interest and fees on loans $378 $342 $1,080 $973
Interest on investment securities -
U.S. government's 295 295 888 903
State/political sub's 14 13 40 32
Dividends on equities 3 0 6 0
Interest on due from banks 3 0 8 0
Interest on federal funds 34 4 112 38
--------------------------------------------
Total interest income 727 654 2,134 1,946
Interest expense:
Interest on deposits $359 $283 $1,018 $850
Stockholder loans 0 0 0 0
--------------------------------------------
Total interest expense 359 283 1,018 850
--------------------------------------------
Interest inc. before provision 368 371 1,116 1,096
Provision for Credit Losses 0 0 0 10
--------------------------------------------
Net interest income 368 371 1,116 1,086
--------------------------------------------
Other income:
Service charges deposits 65 62 193 192
Gain on sale of ORE 10 6 10 6
Gain on sale of Securities 0 1 2 2
Other income and charges 18 11 64 53
--------------------------------------------
Total other income 93 80 269 253
Other expenses:
Salaries/employee benefits 160 159 490 467
Occupancy expense 56 56 172 161
Loss on sale of ORE 0 5 0 6
Other operating expenses 105 95 298 300
--------------------------------------------
Total other expenses 321 315 960 934
--------------------------------------------
Income before income taxes 140 136 425 405
Income taxes 31 41 118 126
--------------------------------------------
Net income $109 $95 $307 $279
Earnings per share $3.90 $3.39 $10.99 $9.98
The accompanying notes are an integral part of this statement.
TECHE BANCSHARES, INC. AND SUBSIDIARY
St. Martinville, Louisiana
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(UNAUDITED)
For the Nine Months Ended September 30, 1998 and 1997
Allowance for
Unrealized Unrealized
Common Loss on Gain (Loss)
Stock, Marketable on
Treasury & Equity AFS
Surplus Securities Securities Total
Balances, January 1, 1998 $3,124 $0 $118 $3,242
Net income nine months 307 - $307
Change in Unrealized AFS (6) ($6)
------ ------ ------ ------
Balances, September 30, 1998 $3,431 $0 $112 $3,543
====== ====== ====== ======
Balances, January 1, 1997 $2,803 $0 $44 $2,847
Net income nine months 279 - $279
Change in Unrealized AFS 70 $70
------- ------ ------ -------
Balances, September 30, 1997 $3,082 $0 $114 $3,196
======= ====== ====== =======
The accompanying notes are an integral part of this statement.
TECHE BANCSHARES, INC. AND SUBSIDIARY
St. Martinville, Louisiana
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the Nine Months Ended September 30, 1998 and 1997
Sept. 30, Sept. 30,
1998 1997
Cash flows from operating activities:
Net income $307 $279
Adjustments to reconcile net income
to net cash provided by
operating activities -
Depreciation of bank premises 62 63
Provision for Credit Losses 0 10
(Gain) Loss on Other real estate (10) 0
(Gain) Loss on sale of securities (2) (2)
(Inc)dec accrued int recievable (64) (83)
(Inc) dec other assets (87) (89)
Inc(dec) accrued interest payable 4 (14)
Inc(dec) other liabilities 151 153
Net cash provided by operating ----------------------
activities 361 317
Cash flows from investing activities:
Dec(inc) in federal funds (275) 925
Dec(inc) in investment securities (5,225) (76)
Net dec (inc) in loans (2,732) (1,141)
Capital expenditures premises & equip (67) (51)
Acquisition of other real estate 0 (195)
Proceeds from sale of other real estate 10 0
----------------------
Net cash used in investing activities (8,289) (538)
Cash flows from financing activities:
Net increase (decrease) in -
Demand deposits 516 56
NOW and MMDA 549 (797)
Savings deposits 135 256
Time deposits $100,000 and over 3,023 594
Other time deposits 521 (150)
Federal Home Loan Borrowings 3,297 0
Increase in federal funds purchased 0 500
----------------------
Net cash provided by financing activities 8,041 459
Net increase in cash and cash equivalents 113 238
Cash and cash equivalents, beginning 1,633 1,476
Cash and cash equivalents, end of period $1,746 $1,714
Cash paid during the period:
Interest $1,014 $864
Income Taxes $129 $105
The accompanying notes are an integral part of this statement.
TECHE BANCSHARES, INC.
NOTES TO FINANCIAL STATEMENTS
September 30, 1998
The information furnished reflects all normal, recurring adjustments
which are, in the opinion of management, necessary for a fair statement of
Teche Bancshares, Inc. and its subsidiary for the nine (9) months ended
September 30, 1998. Results for the interim period presented are not
necessarily indicative of results which may be expected for any other interim
period or for the year as a whole.
TECHE BANCSHARES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS FOR THE QUARTER ENDED SEPTEMBER 30, 1998.
Liquidity
Liquidity is the ability to insure that adequate funds are available to
satisfy contractual liabilities, fund operations, meet withdrawal
requirements of depositors and provide for customer's credit needs in a
timely manner. Our primary source of liquidity is our core deposits. We
supplement our core deposits with a line of credit with one of our
correspondent banks, public fund time deposits, repurchase agreements with
correspondent banks and a line of credit with the Federal Home Loan Bank. Our
sources of liquidity are adequate to fund the loan demand that we are
experiencing.
The primary source of funding for the parent company is dividends from the
Bank. Management believes the parent's current sources of funds are
sufficient to meet its liquidity needs for the foreseeable future.
Capital Resources and Asset Quality
Our consolidated risk based capital to asset ratio was 18.02% and Tier one
capital ratio was 7.52% at September 30, 1998. The bank only risk based
capital ratio was 17.97% and Tier one capital ratio was 7.50%. Banks are
required to maintain a risk weighted capital to asset ratio of 8% and Tier
one capital ratio of 5%. Our risk based capital ratio and Tier one capital
ratio both exceed the required amount.
Asset quality continues to be satisfactory due to our emphasis on credit
quality in our loan portfolio. Management is of the opinion that we have all
of our problem credits identified and that an adequate allowance has been
made for any potential future losses.
We continuously monitor the quality of our loans. Loans past due 90 days or
greater still accruing at September 30, 1998, were $133,017 an increase of
$90,646 from December 31, 1997. Loans on which the accrual of interest had
been discontinued at September 30, 1998 totalled $522 which is down $24,466
as compared to the amount at December 31, 1997.
We are actively marketing our other real estate owned. At September 30, 1998
other real estate totalled $229,720 which is changed $1 from December 31,
1997. We sold one property during the quarter that had a nominal book value.
Results of Operations
Net Income. Our net income for the nine (9) months ended September 30,
1998 was $306,929 up $28,312 as compared to that of the same period last
year. The increase in income was mostly attributed to an increase in our net
interest income.
Revenue. Our net interest income for the nine (9) months ended September 30,
1998 is up $30,390 as compared to the same period in 1997. During the first
half of the year we have experienced loan growth that has improved our
interest margin. The bank's loan portfolio increased $2,731,949 since the
beginning of the year.
Provision for Loan Losses. Our bad debt reserve totalled $167,894 at
September 30, 1998 which represents 1.01% of our gross loans. During 1998,
we did not add to our reserve for loan loss account. Our reserve for loan
loss balance was considered adequate at September 30, 1998.
Other Income. Our other income is up $16,099 when compared to the same period
last year. The improvement was due to an increase in commission income from
the sale of credit life and A&H insurance and an increase in service charges
on demand deposit accounts attributable to an increase in the volume of
accounts .
Other Expenses. Other expenses are up $25,434 as compared to the same time
last year. Other expenses increased due to increases in Salaries and
employee benefits. Salaries and benefits increased as the result of raises
that were provided in the fourth quarter of 1997.
Provision for Income Tax. A provision is made for income tax to reflect three
fourths (9/12ths) of the annualized income tax that we anticipate we will
incur. The provision for income tax for the period ended September 30, 1998
was $118,359 as compared to $125,616 for the same period last year. The
decrease in income tax was due to the tax benefit accrued from the sale of
other real estate.
Year 2000 Preparation. We have inventoried our software, hardware and
environmental systems. We have identified those products that need
modification or replacement and are in the process of replacing. We have
committed to updating our bank application system to one that is year 2000
compliant and are planning for a December 1998 conversion date. We have
installed a new check sorter that is year 2000 compliant. The effect of these
replacements should not be material to the financial statements or operations
of Teche Bancshares, Inc.
PART II - OTHER INFORMATION
Item #1 Legal proceedings
Inapplicable
Item #2 Changes in Securities
Inapplicable
Item #3 Defaults Upon Senior Securities
Inapplicable
Item #4 Submission of Matters to be a Vote of Securities Holders
Inapplicable
Item #5 Other information
Inapplicable
Item #6 Exhibits and Reports on Form 8-K
Inapplicable
TECHE BANCSHARES, INC.
Pursuant to the requirement of the Securities Exchange Act of 1934, the
Bank has duly caused this quarterly report to be signed on its behalf by the
undersigned thereunto duly authorized.
TECHE BANCSHARES, INC.
Registrant
/s/ Alcee J. Durand, Jr.
November 13, 1998 Alcee J. Durand, Jr.
Date President/CEO
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