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 March 31, 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 March 31, 1998.
TECHE BANCSHARES, INC. AND SUBSIDIARY
St. Martinville, Louisiana
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
March 31, 1998 and December 31, 1997
(Dollars in Thousands)
March 31, December 31
1998 1997
ASSETS
Cash and due from banks $1,825 $1,633
Securities Available for Sale at mkt value 18,213 14,758
Securities Held To Maturity (Market Value
of $3,880 and $4,498, respectively) 3,853 4,476
Other securities at cost 343 343
Federal funds sold 3,000 1,050
Loans, net of allowance for loan losses
of $173 and $171, respectively) 13,677 13,707
Bank premises, furniture, and equipment 662 674
Accrued interest receivable 328 314
Other real estate owned 230 230
Other assets 109 120
----------------------
Total assets $42,240 $37,305
======================
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits -
Non-interest demand $5,424 $6,636
Interest bearing -
NOW and MMDA accounts 7,114 5,523
Savings 3,748 3,592
Time, $100 and over, 10,039 7,788
Other time 10,413 10,182
----------------------
Total deposits 36,738 33,721
Accrued interest payable 127 137
FHLB Borrowings 1,834 0
Other liabilities and accrued expenses 234 205
----------------------
Total liabilities 38,933 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 1,819 1,719
----------------------
3,243 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 83 118
----------------------
Total stockholders' equity 3,307 3,242
----------------------
Total liabilities and stockholders' equity $42,240 $37,305
======================
The accompanying notes are an integral part of this statement.
TECHE BANCSHARES, INC. AND SUBSIDIARY
St. Martinville, Louisiana
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended March 31, 1998 and 1997;
(Dollars in Thousands except Earnings per Share)
Three Months Ended
March 31, March 31,
1998 1997
Interest income:
Interest and fees on loans $342 $318
Interest on investment securities -
U.S. government securities 292 277
State and political subdivisions 13 6
Interest on interest-bearing deposits
in banks 2 0
Dividends on equity securities 0 0
Interest on federal funds sold 33 19
----------------------
Total interest income 682 620
Interest expense:
Interest on deposits $309 $276
Stockholder loans 0 0
----------------------
Total interest expense 309 276
----------------------
Net interest income 373 344
Provision for Credit Losses 0 10
----------------------
Net interest income after provision 373 334
----------------------
Other income:
Service charges on deposit accounts 59 65
Gain on sale of Securities 0 1
Other income and charges 20 23
----------------------
Total other income 79 89
Other expenses:
Salaries and employee benefits 166 153
Occupancy expense 52 50
Loss on sale of other real estate 0 0
Other operating expenses 91 102
----------------------
Total other expenses 309 305
----------------------
Income before income taxes 143 118
Income taxes 44 37
----------------------
Net income $99 $81
Earnings per share $3.55 $2.89
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 Three Months Ended March 31, 1998 and 1997
Allowance
Unrealized Unrealized
Loss on Gain (Loss)
Common Stock Marketable on
Treas. Stk Equity AFS
Surplus Securities Securities
Balances, January 1, 1998 $3,125 $0 $118
Net income three months 99
Change in Unrealized AFS (35)
------- ------ ------
Balances, March 31, 1998 $3,224 $0 $83
======= ====== ======
Balances, January 1, 1997 2,803 $0 $44
Net income three months 81
Change in Unrealized AFS (51)
------- ------ ------
Balances, March 31, 1997 $2,884 $0 ($7)
======= ====== ======
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 Three Months Ended March 31, 1998 and 1997
March 31, March 31,
1998 1997
Cash flows from operating activities:
Net income $99 $81
Adjustments to reconcile net income
to net cash provided by
operating activities -
Depreciation of bank premises 20 20
(Gain) Loss on Other real estate 0 0
(Gain) Loss on sale of securities 0 (1)
Provision for credit losses 0 10
(Inc)dec accrued int receivable (14) (31)
(Inc) dec other assets 10 (2)
Inc(dec) accrued interest payable (9) (19)
Inc(dec) other liabilities 29 (9)
Net cash provided by operating ----------------------
activities 135 49
Cash flows from investing activities:
Dec(inc) in federal funds (1,950) (225)
Dec(inc) in investment securities (2,866) (1,671)
Dec(inc) in other securities 0 (42)
Net dec (inc) in loans 30 (382)
Capital expenditures premises & equip (8) (16)
Proceeds from sale of securities 0 1
Proceeds from sale of other real estate 0 2
----------------------
Net cash used in investing activities (4,794) (2,333)
Cash flows from financing activities:
Net increase (decrease) in -
Demand deposits (1,212) 250
NOW and MMDA 1,591 2,053
Savings deposits 156 118
Time deposits $100,000 and over 2,251 102
Other time deposits 231 698
FHLB Borrowings 1,834 0
----------------------
Net cash provided by financing activities 4,851 3,221
Net increase in cash and cash equivalents 192 937
Cash and cash equivalents, beginning 1,633 1,476
Cash and cash equivalents, end of period $1,825 $2,413
Cash paid during the period:
Interest $319 $295
Income Taxes $0 $0
The accompanying notes are an integral part of this statement.
TECHE BANCSHARES, INC.
NOTES TO FINANCIAL STATEMENTS
March 31, 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 three (3) months ended
March 31, 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 MARCH 31, 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. During 1996, the holding company paid off all of its long-term debt.
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 19.11% and Tier one
capital ratio was 7.66% at March 31, 1998. The bank only risk based capital
ratio was 19.05% and Tier one capital ratio was 7.63%. 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 March 31, 1998, were $24,430 a decrease of $17,941
from December 31, 1997. Loans on which the accrual of interest had been
discontinued at March 31, 1998 totalled $24,550 a decrease of $438 as
compared to the amount at December 31, 1997.
We are actively marketing our other real estate owned. At March 31, 1998
other real estate totalled $229,721 unchanged from December 31, 1997.
Results of Operations
Net Income. Our net income for the three (3) months ended March 31, 1998
was $98,999 up $18,214 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 three (3) months ended March 31,
1998 is up $38,426 as compared to the same period in 1997. The increase in
net interest income was the result of increases in the volume of loans and
investments. The increase in investments was due to the investment of funds
from growth in deposits experienced in the first quarter of 1998. We
invested our excess funds from deposits in investments to increase our yields
over fed funds.
Provision for Loan Losses. Our bad debt reserve totalled $172,628 at March
31, 1998 which represents 1.25% of our gross loans. During the first quarter
of 1998, we did not add to our reserve for loan loss account. Our reserve
for loan loss balance was considered adequate at March 31, 1998.
Other Income. Our other income is down $9,507 when compared to the same
period last year. The decrease was mostly due to a decrease in NSF fee
income.
Other Expenses. Other expenses are up $3,939 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 one
fourth (3/12ths) of the annualized income tax that we anticipate we will
incur. The provision for income tax for the period ended March 31, 1998 was
$44,143 as compared to $37,377 for the same period last year. The increase in
income tax was due to increased income for the current year.
Year 2000 Preparation. We have inventoried our software, hardware and
environmental systems. We have identified those products that will need
modification or replacement. We have committed to updating our Bank
application system and are planning for a November 1998 conversion date. We
are in the process of signing a contract for a new check sorter that will
replace the obsolete sorter that we now own and expect delivery in early
August 1998. We anticipate that the cost of these two products will be
depreciated over a five year period and will not be material to the financial
statements or operations of Teche Banchares, 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.
May 14, 1998 Alcee J. Durand, Jr.
Date President/CEO
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