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 QUARTER ENDED MARCH 31, 1997
Commission file number 2-90033
ASSUMPTION BANCSHARES, INC.
(Exact name of registrant specified in its charter)
Louisiana
(State or other jurisdiction of incorporation or organization)
72-0121470
(I.R.S. Employer Identification No.)
P.O. Box 398
110 Franklin Street
Napoleonville, Louisiana
(Address of principal executive office)
70390
(Zip code)
(504) 369-7269
(Registrant's telephone number, including area code)
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
Number of shares outstanding as of March 31, 1997:
160,000 Common Shares
Independent Auditors' Review Report
The Board of Directors
Assumption Bancshares, Inc.:
We have reviewed the accompanying condensed consolidated statement of
condition of Assumption Bancshares, Inc. and subsidiary as of March 31, 1997,
and the related condensed consolidated statements of income, changes in
stockholders' equity and cash flows for the three-month periods ended
March 31, 1997 and 1996. These condensed consolidated financial statements
are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted 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 modifications that
should be made to the condensed consolidated financial statements referred to
above for them to be in conformity with generally accepted accounting
principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated statement of condition of Assumption Bancshares,
Inc. and subsidiary as of December 31, 1996, and the related consolidated
statements of operations, stockholders' equity and cash flows for the year
then ended (not presented herein); and in our report dated January 11, 1997,
we expressed an unqualified opinion on those consolidated financial
statements. In our opinion, the information set forth in the accompanying
condensed consolidated statement of condition as of December 31, 1996, is
fairly stated, in all material respects, in relation to the consolidated
statement of condition from which it has been derived.
KPMG PEAT MARWICK LLP
New Orleans, Louisiana
May 1, 1997
ASSUMPTION BANCSHARES, INC.
Condensed Consolidated Statements of Condition
March 31, 1997 and December 31, 1996
<TABLE>
<CAPTION>
March 31, December 31,
Assets 1997 1996
------ ---- ----
(Unaudited)
<S> <C> <C>
Cash and due from banks $ 6,808,142 4,266,633
Federal funds sold 10,555,000 10,400,000
------------- -------------
Cash and cash equivalents 17,363,142 14,666,633
Interest-bearing time deposits 99,000 99,000
Securities:
Held-to-maturity (market value of $13,620,000
and $13,988,000 at March 31, 1997 and
December 31, 1996, respectively) 13,491,244 13,754,817
Available-for-sale (amortized cost of $19,777,000
and $20,356,000 at March 31, 1997 and
December 31, 1996, respectively) 19,621,227 20,339,424
Loans 59,475,573 60,830,935
Less allowance for loan losses 1,197,607 1,190,245
------------- -------------
Net loans 58,277,966 59,640,690
Other real estate 30,194 30,194
Bank premises and equipment, net 2,035,637 2,092,022
Accrued interest receivable 763,850 850,752
Other assets 385,617 328,650
------------- -------------
$ 112,067,877 111,802,182
============= =============
Liabilities and Stockholders' Equity
------------------------------------
Deposits:
Noninterest-bearing demand 15,352,359 14,294,965
NOW accounts 19,262,991 19,740,118
Money market accounts 9,758,136 10,583,829
Savings and IRA accounts 21,370,604 21,573,867
Certificates and other time deposits, $100,000
and over 4,693,021 4,327,416
Other certificates of deposit 30,808,596 30,857,553
------------- -------------
101,245,707 101,377,748
Accrued interest payable 367,341 368,598
Other liabilities and accrued expenses 377,651 220,702
------------- -------------
Total liabilities 101,990,699 101,967,048
Stockholders' equity:
Common stock 800,000 800,000
Paid-in capital 450,000 450,000
Retained earnings 8,929,408 8,595,789
Net unrealized loss on securities (102,230) (10,655)
------------- -------------
Total stockholders' equity 10,077,178 9,835,134
------------- -------------
$ 112,067,877 111,802,182
============= =============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
ASSUMPTION BANCSHARES, INC.
Condensed Consolidated Statements of Income
(Unaudited)
Three months ended March 31, 1997 and 1996
1997 1996
---- ----
Interest income:
Interest and fees on loans $ 1,359,199 1,314,358
Interest on securities:
Taxable 326,316 392,228
Exempt from federal income taxes 182,160 184,101
Interest on federal funds sold 140,083 89,185
Interest on deposits with banks 1,465 1,481
----------- ----------
Total interest income 2,009,223 1,981,353
Interest expense on deposits 804,376 809,569
----------- ----------
Net interest income 1,204,847 1,171,784
Provision for loan losses 9,000 9,000
----------- ----------
Net interest income after provision
for loan losses 1,195,847 1,162,784
Other income 137,941 146,031
Other expenses (884,169) (884,378)
----------- ----------
Income before income taxes 449,619 424,437
Income tax expense 116,000 83,400
----------- ----------
Net income $ 333,619 341,037
=========== ==========
Per share data:
Net income $ 2.09 2.13
=========== ==========
Number of shares used in computation 160,000 160,000
=========== ==========
See accompanying notes to condensed consolidated financial statements.
ASSUMPTION BANCSHARES, INC.
Condensed Consolidated Statements of Changes in Stockholders' Equity
(Unaudited)
Three months ended March 31, 1997 and 1996
<TABLE>
<CAPTION> Net
unrealized Total
Common Paid-in Retained gain (loss) stockholders'
stock capital earnings on securities equity
----- ------- -------- ------------- ------
<S> <C> <C> <C> <C> <C>
Balances at December 31, 1995 $ 800,000 450,000 7,878,785 37,114 9,165,899
Net income for three months
ended March 31, 1996 - - 341,037 - 341,037
Change in net unrealized
gain (loss) on securities - - - (174,351) (174,351)
--------- ------- --------- -------- ---------
Balances at March 31, 1996 $ 800,000 450,000 8,219,822 (137,237) 9,332,585
========= ======= ========= ======== =========
Balances at December 31, 1996 800,000 450,000 8,595,789 (10,655) 9,835,134
Net income for three months
ended March 31, 1997 - - 333,619 - 333,619
Change in net unrealized loss
on securities - - - (91,575) (91,575)
--------- ------- --------- -------- ---------
Balances at March 31, 1997 $ 800,000 450,000 8,929,408 (102,230) 10,077,178
========= ======= ========= ======== =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
ASSUMPTION BANCSHARES, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Three months ended March 31, 1997 and 1996
1997 1996
Cash flows from operating activities:
Net income $ 333,619 341,037
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 56,385 55,350
Provision for loan losses 9,000 9,000
Net gain on sale of securities - (7,760)
Decrease in accrued interest receivable 86,902 13,546
Increase (decrease) in accrued interest
payable (1,257) 43,270
Increase in other assets and other
liabilities 147,157 207,930
----------- ----------
Net cash provided by operating
activities 631,806 662,373
----------- ----------
Cash flows from investing activities:
Proceeds from sales of securities available-
for-sale - 1,749,568
Maturities of and principal payments
on securities held-to-maturity 263,573 151,688
Purchases of securities available-for-sale - (2,780,211)
Maturities of and principal payments
on securities available-for-sale 579,447 916,751
Loans originated, net of principal
collections 1,352,141 (1,678,985)
Proceeds from sales of other real estate 1,583 8,672
Capital expenditures - (14,315)
----------- ----------
Net cash provided by (used in)
investing activities 2,196,744 (1,646,832)
----------- ----------
Cash flows from financing activities:
Net decrease in demand deposits, NOW accounts,
money market accounts and savings accounts (448,689) (2,143,547)
Net increase in certificates of deposit and
other time deposits of $100,000 and over 316,648 689,278
----------- ----------
Net cash used in financing activities (132,041) (1,454,269)
----------- ----------
Net increase (decrease) in cash and
cash equivalents 2,696,509 (2,438,728)
Cash and cash equivalents at beginning of
period 14,666,633 12,243,399
----------- ----------
Cash and cash equivalents at end of period $17,363,142 9,804,671
=========== ==========
Supplemental disclosures -
interest paid $ 805,633 766,299
=========== ==========
See accompanying notes to condensed consolidated financial statements.
ASSUMPTION BANCSHARES, INC.
Notes to Condensed Consolidated Financial Statements
Three months ended March 31, 1997 and 1996
The condensed consolidated financial statements reflect all adjustments which
are, in the opinion of management, necessary for a fair presentation of
financial position and results of operations for the interim periods
presented. All adjustments are of a normal recurring nature.
Cash and Cash Equivalents
For purposes of the condensed consolidated statements of cash flows, cash and
cash equivalents represent cash and due from banks and federal funds sold.
Securities
The Bank classifies its securities in one of three categories: trading,
available-for-sale, or held-to-maturity. Trading securities are bought and
held principally for the purpose of selling them in the near future. Held-
to-maturity securities are those securities in which the Bank has the ability
and intent to hold the security until maturity. All other securities not
included in trading or held-to-maturity are classified as available-for-sale.
Trading and available-for-sale securities are recorded at fair value. Held-
to-maturity securities are recorded at amortized cost, adjusted for the
amortization or accretion of premiums or discounts. Unrealized holding gains
and losses on trading securities are included in earnings. Unrealized
holding gains and losses, net of the related tax effect, on the available-
for-sale securities are excluded from earnings and are reported as a separate
component of stockholders' equity until realized. Transfers of securities
between categories are recorded at fair value at the date of transfer.
Unrealized holding gains and losses are recognized in earnings for transfers
into trading securities. Unrealized holding gains or losses associated with
transfers of securities from held-to-maturity to available-for sale are
recorded as a separate component of stockholders' equity. The unrealized
holding gains or losses included in the separate component of equity for
securities transferred from available-for-sale to held-to-maturity are
maintained and amortized into earnings over the remaining life of the
security as an adjustment to yield in a manner consistent with the
amortization or accretion of premium or discount on the associated security.
A decline in the market value of any available-for-sale or held-to-maturity
security below cost that is deemed other than temporary results in a charge
to earnings resulting in the establishment of a new cost basis for the
security.
Premiums and discounts are amortized or accreted over the life of the related
held-to-maturity security as an adjustment to yield using the effective
interest method. Interest income is recognized when earned. Realized gains
and losses for securities classified as available-for-sale and held-to-
maturity are included in earnings and are derived using the specific
identification method for determining the cost of securities sold.
Accounting by Creditors for Impairment of a Loan
Pursuant to Statement of Financial Accounting Standards No. 114, Accounting
by Creditors for Impairment of a Loan (SFAS No. 114) and Statement of
Financial Accounting Standards No. 118, Accounting by Creditors for
Impairment of a Loan - Income Recognition and Disclosures (SFAS No. 118), a
loan is considered to be impaired when it is probable that a creditor will be
unable to collect principal and interest amounts due according to the
contractual terms of the loan agreement. When a loan is impaired, the
measurement of its impairment can be determined in one of three ways, as
follows: (1) the present value of the expected cash flows of the loan
discounted at the loan's original effective interest rate, (2) the observable
market price of the impaired loan, or (3) the fair value of the collateral of
a collateral-dependent loan. The amount by which the recorded investment in
the loan exceeds the measure of the impaired loan is recognized by recording
a valuation allowance with a corresponding charge to the provision for
possible credit losses.
At March 31, 1997, the recorded investment in loans that is considered to be
impaired under SFAS No. 114 was $651,000, all of which were on nonaccrual,
for which the related allowance for possible credit losses was $115,000. The
average recorded investment in impaired loans during the first quarter of
1997 was approximately $777,000. The Bank has recognized $7,600 interest
income on those impaired loans in the first quarter of 1997. For all
impaired loans, the impairment amount was measured using the fair value of
the underlying collateral.
Earnings Per Share
Earnings per share have been computed on the basis of the weighted average
number of shares outstanding.
Reclassification
Certain reclassifications were made to the condensed consolidated financial
statements of prior periods to conform with the 1997 presentation.
ASSUMPTION BANCSHARES, INC.
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Results of Operations
Net interest income for the three month period ended March 31, 1997 was
slightly higher than amounts for the three-month period ended March 31, 1996.
The Bank achieved a higher rate on earning assets due to an increase in the
loan portfolio since March 31, 1995. This increase in income earned was
offset by higher balances on interest bearing liabilities. The Bank's net
interest margins were 4.07% and 4.17% at March 31, 1997 and 1996,
respectively.
The first quarter 1997 provision for loan losses was $9,000, consistent with
the first quarter of 1996. This relatively low provision is due to the
continued low level of charge-offs experienced by the Bank. Net charge offs
for the three months ended March 31, 1997 were $1,600. Additionally, the
Bank's allowance for loan losses as a percentage of gross loans has remained
consistent at 2.01% and 1.96% at March 31, 1997 and December 31, 1996,
respectively. Management evaluates the adequacy of the allowance for loan
losses on an ongoing basis and believes, based on its analysis, that the
allowance is adequate to absorb losses in the portfolio.
Changes in the total allowance for loan losses for the three months ended
March 31, 1997 and 1996 were as follows:
Three months ended
1997 1996
---- ----
Balance at beginning of period $ 1,190,245 1,195,517
Charge-offs (14,345) (21,514)
Recoveries 12,707 23,636
----------- ---------
Net recoveries (charge-offs) (1,638) 2,122
Provision for loan losses 9,000 9,000
----------- ---------
Balance at end of period $ 1,197,607 1,206,639
=========== =========
Other expenses at March 31, 1997 totaled $884,000, consistent with the first
quarter 1996.
The provision for income taxes is based on management's estimate of the
expected effective tax rate for the entire year.
Liquidity and Capital Resources
Fluctuating interest rates and competitive forces in the financial services
industry have intensified the need for management of and matching maturities
of various assets and liabilities. This process involves maintaining
liquidity and controlling interest rate sensitivity. The goal of liquidity
management is to ensure funds are available for customer needs. Interest
rate sensitivity management attempts to match shifts in earning asset yields
with interest paying liability rates.
Net earnings for the first quarter 1997 of $334,000 increased the Bank's
stockholders' equity while the unrealized losses on securities classified as
available-for-sale increased by $92,000, resulting in a net increase in
equity for the first three months of 1997 of $242,000. Management is not
aware of any recommendations by regulatory authorities or other matters which
are reasonably likely to have a material effect on the Bank's capital
resources, liquidity or operations.
Securities, comprised primarily of obligations of states and municipalities
and government guaranteed mortgage-backed securities, represented 30% of
total assets at March 31, 1997 and DecemberE31, 1996. The securities
portfolio is managed with the primary objective of generating interest income
while maintaining an appropriate level of asset liquidity and controlling the
Bank's net interest rate risk position.
The market value of the securities portfolio at March 31, 1997 was 100.4% of
book value, compared to 100.7% at December 31, 1996. Management does not
anticipate any significant effect on future earnings, liquidity or capital
resources as a result of the amounts of unrealized gains or unrealized losses
in the securities portfolio.
Securities Available-for-Sale
As of March 31, 1997, management has classified securities with an aggregate
amortized cost of $19,777,000 and a market value of $19,621,000 as available-
for-sale.
Falling bond prices caused a decrease in the market values of these
securities during the first quarter. Management considers the unrealized
losses in the securities portfolio to be temporary in nature. A net
unrealized loss, net of tax, decreased stockholdersO equity by $102,000 at
March 31, 1997. The net unrealized loss before taxes included gross
unrealized gains of $158,000 and gross unrealized losses of $313,000.
StockholdersO equity reflected net unrealized losses, net of tax, of $11,000
at December 31, 1996 and $137,000 at March 31, 1996.
Asset Quality
Nonperforming assets, which include nonaccrual loans, restructured loans and
foreclosed assets, totaled $681,000 at March 31, 1997, compared to $775,000
at March 31, 1996, $880,000 at year-end 1996, and $1,242,000 at September 30,
1996.
As a percentage of total loans plus foreclosed assets, nonperforming assets
were 1.1% at March 31, 1997, compared to 1.3% a year ago, 1.4% at year-end
1996, and 2.0% at September 30, 1996.
The following table sets forth the past due and nonaccrual loans (in
thousands of dollars):
March 31,
1997 1996
------ ------
Loans past due 90 days or more $ 61 142
Nonaccrual loans, all of which are impaired:
Real estate 542 731
Individual 109 -
$ 651 731
Nonaccrual loans at March 31, 1997 have decreased slightly compared to
MarchE31, 1996, and were down approximately $199,000 compared to year-end
1996.
Loans are placed on nonaccrual status when managementOs assessment of the
borrowersO financial condition indicates that collection of interest is
doubtful. In making this determination, management considers current
economic and business conditions, the nature of the collateral, collection
efforts and regulatory guidelines.
Management has identified approximately $228,000 of potential problem loans,
which are loans for which payments are contractually current but the
borrowers are currently experiencing financial difficulties at March 31,
1997, which are not otherwise identified as past due or nonaccrual.
The allowance for possible loan losses as a percent of nonperforming loans
was 184%, 140%, 99%, and 165% at March 31, 1997, December 31, 1996, September
30, 1996, and March 31, 1996, respectively. Management has determined that
the allowance for possible loan losses at March 31, 1997, is adequate to
cover losses inherent in its loan portfolio.
The amount of additional interest income on nonaccrual loans, which would
have been recognized for the three months ended March 31, 1997 and 1996, had
the related loans been performing according to their original terms was not
material. Interest income recognized on the cash basis on loans in
nonaccrual status was approximately $7,600 and $16,500 for the three months
ended MarchE31, 1997 and 1996, respectively.
Pending Merger
On November 20, 1996, the Boards of Directors of Assumptions Bancshares, Inc.
and ArgentBank announced that they had unanimously approved a Definitive
Agreement which provides for the merger of Assumption Bank and Trust Company,
a wholly-owned subsidiary of Assumption Bancshares, Inc., with ArgentBank for
$21.5 million, or approximately $134 per share, payable in a combination of
cash and ArgentBank common stock. The transaction is subject to regulatory
and shareholder approvals and the satisfaction of certain other conditions.
ArgentBank is headquartered in Thibodaux, Louisiana and operates in
Lafourche, Terrebonne and Assumption parishes.
PART II
Items 1 through 5 are not applicable.
Item 6. Exhibits and Reports on Form 8-K. No Form 8-K was required to be
filed during the quarter ended March 31, 1997.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
/s/ Joseph H. Montero
--------------------------------
Joseph H. Montero
President and
Chief Executive Officer
Date: May , 1997
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 6,808
<INT-BEARING-DEPOSITS> 99
<FED-FUNDS-SOLD> 10,555
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 19,621
<INVESTMENTS-CARRYING> 13,491
<INVESTMENTS-MARKET> 13,620
<LOANS> 59,476
<ALLOWANCE> 1,198
<TOTAL-ASSETS> 112,068
<DEPOSITS> 101,246
<SHORT-TERM> 0
<LIABILITIES-OTHER> 745
<LONG-TERM> 0
0
0
<COMMON> 800
<OTHER-SE> 9,277
<TOTAL-LIABILITIES-AND-EQUITY> 112,068
<INTEREST-LOAN> 1,359
<INTEREST-INVEST> 508
<INTEREST-OTHER> 142
<INTEREST-TOTAL> 2,009
<INTEREST-DEPOSIT> 804
<INTEREST-EXPENSE> 804
<INTEREST-INCOME-NET> 1,205
<LOAN-LOSSES> 9
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 884
<INCOME-PRETAX> 450
<INCOME-PRE-EXTRAORDINARY> 334
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 334
<EPS-PRIMARY> 2.09
<EPS-DILUTED> 2.09
<YIELD-ACTUAL> 7.76
<LOANS-NON> 651
<LOANS-PAST> 61
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 228
<ALLOWANCE-OPEN> 1,190
<CHARGE-OFFS> 14
<RECOVERIES> 13
<ALLOWANCE-CLOSE> 1,198
<ALLOWANCE-DOMESTIC> 1,198
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
