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 June 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 June 30, 1998.
TECHE BANCSHARES, INC. AND SUBSIDIARY
St. Martinville, Louisiana
(UNAUDITED)
CONSOLIDATED BALANCE SHEETS
June 30, 1998 and December 31, 1997
(Dollars in Thousands)
June 30, December 31
1998 1997
ASSETS
Cash and due from banks $1,712 $1,633
Securities Available for Sale at mkt value 18,440 14,758
Securities Held To Maturity (Market Value
of $3,483 and $4,498, respectively) 3,461 4,476
Other securities at cost 345 343
Federal funds sold 2,000 1,050
Loans, net of allowance for loan losses
of $177 and $171, respectively) 15,378 13,707
Bank premises, furniture, and equipment 699 674
Accrued interest receivable 356 314
Other real estate owned 230 230
Other assets 189 120
----------------------
Total assets $42,810 $37,305
======================
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits -
Non-interest demand 6,205 $6,636
Interest bearing -
NOW and MMDA accounts 6,074 5,523
Savings 3,864 3,592
Time, $100 and over, 10,534 7,788
Other time 10,435 10,182
----------------------
Total deposits 37,112 33,721
Accrued interest payable 157 137
Federal Home Loan Borrowings 1,830 0
Fed Funds Purchased 0 0
Other liabilities and accrued expenses 296 205
----------------------
Total liabilities 39,395 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 1,917 1,719
----------------------
3,341 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 93 118
----------------------
Total stockholders' equity 3,415 3,242
----------------------
Total liabilities and stockholders' equity $42,810 $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
Six Months Ended June 30, 1998 and 1997;
(Dollars in Thousands except Earnings per Share)
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
1998 1997 1998 1997
Interest income:
Interest and fees on loans $361 $313 $702 $631
Interest on investment securities -
U.S. government's 300 331 594 608
State/political sub's 13 13 26 19
Dividends on equities 3 0 3 0
Interest on balances from banks 3 0 5 0
Interest on federal funds 44 14 77 34
--------------------------------------------
Total interest income 724 671 1,407 1,292
Interest expense:
Interest on deposits $349 $291 $659 $567
Stockholder loans 0 0 0 0
--------------------------------------------
Total interest expense 349 291 659 567
--------------------------------------------
Interest inc. before provision 375 380 748 725
Provision for Credit Losses 0 0 0 10
--------------------------------------------
Net interest income 375 380 748 715
--------------------------------------------
Other income:
Service charges deposits 69 65 127 130
Gain on sale of ORE 0 0 0 0
Gain on sale of Securities 1 1 2 1
Other income and charges 26 18 46 41
--------------------------------------------
Total other income 96 84 175 172
Other expenses:
Salaries/employee benefits 163 155 330 308
Occupancy expense 64 56 115 106
Loss on sale of ORE 0 0 0 0
Other operating expenses 102 104 193 205
--------------------------------------------
Total other expenses 329 315 638 619
--------------------------------------------
Income before income taxes 142 149 285 268
Income taxes 43 46 87 84
--------------------------------------------
Net income $99 $103 $198 $184
Earnings per share $3.54 $3.70 $7.09 $6.59
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 Six Months Ended June 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 six months 198 - $198
Change in Unrealized AFS (25) ($25)
------ ------ ------ ------
Balances, June 30, 1998 3,322 $0 $93 $3,415
====== ====== ====== ======
Balances, January 1, 1997 $2,803 $0 $44 $2,847
Net income six months 0 - $0
Change in Unrealized AFS 29 $29
------ ------ ------ ------
Balances, June 30, 1997 2,803 $0 $73 $2,876
====== ====== ====== ======
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 Six Months Ended June 30, 1998 and 1997
June 30, June 30,
1998 1997
Cash flows from operating activities:
Net income $198 $184
Adjustments to reconcile net income
to net cash provided by
operating activities -
Depreciation of bank premises 39 42
Provision for Credit Losses 0 10
(Gain) Loss on Other real estate 0 0
(Gain) Loss on sale of securities (2) (1)
(Inc)dec accrued int receivable (42) (83)
(Inc) dec other assets (68) (63)
Inc(dec) accrued interest payable 20 1
Inc(dec) other liabilities 91 84
Net cash provided by operating ----------------------
activities 236 174
Cash flows from investing activities:
Dec(inc) in federal funds (950) 600
Dec(inc) in investment securities (2,692) (1,389)
Net dec (inc) in loans (1,671) (897)
Capital expenditures premises & equip (64) (41)
Proceeds from sale of other real estate 0 3
----------------------
Net cash used in investing activities (5,377) (1,724)
Cash flows from financing activities:
Net increase (decrease) in -
Demand deposits (431) 423
NOW and MMDA 551 671
Savings deposits 272 176
Time deposits $100,000 and over 2,746 235
Other time deposits 252 183
Federal Home Loan Borrowings 1,830 0
Increase in federal funds purchased 0 500
----------------------
Net cash provided by financing activities 5,220 2,188
Net increase in cash and cash equivalents 79 638
Cash and cash equivalents, beginning 1,633 1,476
Cash and cash equivalents, end of period $1,712 $2,114
Cash paid during the period:
Interest $639 $566
Income Taxes $86 $70
The accompanying notes are an integral part of this statement.
TECHE BANCSHARES, INC.
NOTES TO FINANCIAL STATEMENTS
June 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 six (6) months ended June
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 JUNE 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 18.30% and Tier one
capital ratio was 7.79% at June 30, 1998. The bank only risk based capital
ratio was 18.25% and Tier one capital ratio was 7.76%. 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 June 30, 1998, were $34,633 an decrease of $7,738
from December 31, 1997. Loans on which the accrual of interest had been
discontinued at June 30, 1998 totalled $24,210 which is down $778 as compared
to the amount at December 31, 1997.
We are actively marketing our other real estate owned. At June 30, 1998
other real estate totalled $229,721 which is unchanged from December 31,
1997.
Results of Operations
Net Income. Our net income for the six (6) months ended June 30, 1998 was
$197,956 up $13,983 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 six (6) months ended June 30, 1998
is up $33,077 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 $1,670,902 since the beginning
of the year.
Provision for Loan Losses. Our bad debt reserve totalled $176,897 at June 30,
1998 which represents 1.13% of our gross loans. During the first half of
1998, we did not add to our reserve for loan loss account. Our reserve for
loan loss balance was considered adequate at June 30, 1998.
Other Income. Our other income is up $3,139 when compared to the same period
last year. The increase was mostly due to an increase in commission income
from the sale of credit life and A&H insurance.
Other Expenses. Other expenses are up $19,087 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
half (6/12ths) of the annualized income tax that we anticipate we will incur.
The provision for income tax for the period ended June 30, 1998 was $86,814
as compared to $83,662 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
have ordered a new check sorter to replace our current obsolete one and are
anticipating an install date of September 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
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.
August 14, 1998 Alcee J. Durand, Jr.
Date President/CEO
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 1512
<INT-BEARING-DEPOSITS> 200
<FED-FUNDS-SOLD> 2000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 18440
<INVESTMENTS-CARRYING> 3461
<INVESTMENTS-MARKET> 3483
<LOANS> 15555
<ALLOWANCE> 177
<TOTAL-ASSETS> 42810
<DEPOSITS> 37112
<SHORT-TERM> 0
<LIABILITIES-OTHER> 453
<LONG-TERM> 1830
0
0
<COMMON> 281
<OTHER-SE> 3134
<TOTAL-LIABILITIES-AND-EQUITY> 42810
<INTEREST-LOAN> 702
<INTEREST-INVEST> 628
<INTEREST-OTHER> 77
<INTEREST-TOTAL> 1407
<INTEREST-DEPOSIT> 659
<INTEREST-EXPENSE> 0
<INTEREST-INCOME-NET> 659
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 2
<EXPENSE-OTHER> 638
<INCOME-PRETAX> 285
<INCOME-PRE-EXTRAORDINARY> 285
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 198
<EPS-PRIMARY> 7.09
<EPS-DILUTED> 7.09
<YIELD-ACTUAL> 3.62
<LOANS-NON> 24
<LOANS-PAST> 35
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 171
<CHARGE-OFFS> 0
<RECOVERIES> 6
<ALLOWANCE-CLOSE> 177
<ALLOWANCE-DOMESTIC> 177
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
