U.S. Securities and Exchange Commission
Washington, D.C. 20549
----------
FORM 10Q
[x] QUARTERLY REPORT UNDER SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 2000
OR
[_] TRANSITION REPORT UNDER SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
----------
Commission File No. 0-24023
TEJAS BANCSHARES, INC.
State of Organization IRS Employer Identification
Texas No. 75-1950688
905 S. Fillmore, Suite 701
Amarillo, Texas 79101
Registrant's telephone number: 806-373-7900
----------
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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.
(1) Yes __X__ No _____ (2) Yes __X__ No _____
As of June 30, 2000, 13,415,267 shares of the Registrant's common stock were
outstanding.
<PAGE>
TEJAS BANCSHARES, INC.
INDEX
Page
Part I. Financial Information
Item 1: Financial Statements:
Condensed Consolidated Balance Sheets
at June 30, 2000 and December 31, 1999 1
Condensed Consolidated Statements of Operations and Comprehensive
Income for the three-month and six-month periods ended
June 30, 2000 and 1999 2
Condensed Consolidated Statements of Cash Flows for the
six-month periods ended June 30, 2000 and 1999 3
Notes to Condensed Consolidated Financial Statements 4
Item 2: Management's Discussion and Analysis of Financial Condition
And Results of Operations 6
Part II. Other Information 13
Signatures 14
<PAGE>
TEJAS BANCSHARES, INC. AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
TEJAS BANCSHARES, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets (Unaudited)
June 30, 2000 and December 31, 1999
ASSETS
June 30, December 31,
2000 1999*
------------- -------------
Cash and due from banks $ 16,306,690 $ 20,711,268
Federal funds sold 940,000 4,350,000
Securities available-for-sale 6,545,458 6,723,147
Loans 298,209,294 262,247,493
Less allowance for loan losses (5,429,247) (4,524,678)
------------- -------------
Loans, net 292,780,047 257,722,815
------------- -------------
Bank premises and equipment, net 5,117,159 4,353,326
Accrued interest receivable 5,015,471 3,234,949
Net deferred tax asset 1,995,344 1,719,300
Other assets 313,276 226,591
------------- -------------
TOTAL ASSETS $ 329,013,445 $ 299,041,396
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits
Demand - noninterest bearing $ 73,573,193 $ 70,029,027
Demand - interest bearing 89,201,783 89,490,720
Time and savings 103,415,218 92,447,906
------------- -------------
Total deposits 266,190,194 251,967,653
------------- -------------
Federal funds purchased 12,800,000 --
Accrued interest payable 1,380,867 879,291
Federal income taxes payable 95,245 206,181
Other liabilities 745,257 627,507
------------- -------------
Total liabilities 281,211,563 253,680,632
------------- -------------
STOCKHOLDERS' EQUITY
Common stock 13,415,267 13,418,017
Paid-in capital 26,515,193 26,532,993
Retained earnings 8,129,809 5,743,180
Accumulated other comprehensive income (11,187) (6,426)
Deferred directors' compensation (247,200) (327,000)
------------- -------------
Total stockholders' equity 47,801,882 45,360,764
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 329,013,445 $ 299,041,396
============= =============
* Condensed from audited financial statements.
These condensed financial statements should be read only in connection
with the accompanying notes to the condensed financial statements.
1
<PAGE>
TEJAS BANCSHARES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
and Comprehensive Income (Unaudited)
Three-month and six-month periods ended June 30, 2000 and 1999
<TABLE>
<CAPTION>
Three-month periods ended Six-month periods ended
June 30, June 30,
------------------------------ ------------------------------
2000 1999 2000 1999
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INTEREST INCOME AND FEES
Interest and fees on loans $ 6,397,240 $ 4,036,309 $ 12,041,844 $ 7,948,268
Interest and dividends on
investment securities 99,962 97,298 193,942 197,633
Interest on federal funds sold 9,850 347,245 87,942 691,471
------------ ------------ ------------ ------------
Total interest income 6,507,052 4,480,852 12,323,728 8,837,372
INTEREST EXPENSE 2,353,807 1,289,306 4,281,036 2,597,659
------------ ------------ ------------ ------------
Net interest income 4,153,245 3,191,546 8,042,692 6,239,713
PROVISION FOR LOAN LOSSES 450,000 330,000 900,000 660,000
------------ ------------ ------------ ------------
Net interest income after provision
for loan losses 3,703,245 2,861,546 7,142,692 5,579,713
OTHER OPERATING INCOME
Service charges 429,527 274,849 828,158 522,207
Other 206,952 161,085 377,882 277,880
------------ ------------ ------------ ------------
Total other operating income 636,479 435,934 1,206,040 800,087
OTHER OPERATING EXPENSES
Salaries and employee benefits 1,129,529 963,859 2,325,501 1,894,653
Depreciation 176,434 99,283 302,313 195,340
Advertising 88,388 64,349 189,214 145,120
Occupancy expense 112,918 102,823 207,339 207,486
Federal Deposit Insurance Corporation
premiums, net 12,370 5,672 24,345 11,018
Professional fees 38,910 47,060 91,320 89,850
Supplies, stationary and office expenses 204,414 98,862 343,099 183,864
Taxes other than on income and salaries 75,000 23,088 150,468 45,588
Data processing 224,444 227,462 480,476 431,303
Postage 43,449 43,590 98,574 87,102
Other 279,391 229,101 519,981 431,649
------------ ------------ ------------ ------------
Total other operating expenses 2,385,247 1,905,149 4,732,630 3,722,973
------------ ------------ ------------ ------------
Earnings before income taxes 1,954,477 1,392,331 3,616,102 2,656,827
INCOME TAXES 664,522 473,392 1,229,473 903,321
------------ ------------ ------------ ------------
NET EARNINGS 1,289,955 918,939 2,386,629 1,753,506
OTHER COMPREHENSIVE INCOME
Change in unrealized gains (losses)
on securities, net of tax (6,990) (11,042) (4,761) (20,019)
------------ ------------ ------------ ------------
COMPREHENSIVE INCOME $ 1,282,965 $ 907,897 $ 2,381,868 $ 1,733,487
============ ============ ============ ============
NET EARNINGS PER SHARE-Basic $ 0.10 $ 0.07 $ 0.18 $ 0.13
============ ============ ============ ============
NET EARNINGS PER SHARE-Diluted $ 0.09 $ 0.07 $ 0.18 $ 0.13
============ ============ ============ ============
</TABLE>
These condensed financial statements should be read only in connection
with the accompanying notes to the condensed financial statements.
2
<PAGE>
TEJAS BANCSHARES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows (Unaudited)
Six-month periods ended June 30, 2000 and 1999
<TABLE>
<CAPTION>
Six-month periods
ended June 30,
------------------------------
2000 1999
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings $ 2,386,629 $ 1,753,506
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation 302,313 195,340
Deferred income taxes (273,591) (36,366)
Amortization of deferred directors' compensation 55,200 53,400
Provision for loan losses 900,000 660,000
Amortization of premium or (accretion) of
discount relating to investment securities, net (3,246) 11,312
Changes in:
Accrued interest receivable (1,780,522) (787,818)
Other assets (86,685) (93,381)
Accrued interest payable 501,576 169,473
Federal income taxes payable (110,936) (66,994)
Other liabilities 117,750 151,475
------------ ------------
Net cash provided by operating activities 2,008,488 2,009,947
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from maturities and pay-downs on
securities available-for-sale 2,836,367 1,448,172
Purchases of securities available-for-sale (2,662,646) (1,107,391)
Change in loans to customers (35,957,232) (17,378,961)
Expenditures for bank premises and equipment (1,066,146) (984,459)
------------ ------------
Net cash used by investing activities (36,849,657) (18,022,639)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in deposits 14,222,541 8,346,283
Net increase in federal funds purchased 12,800,000 --
Proceeds from the exercise of stock options 4,050 26,499
------------ ------------
Net cash provided by financing activities 27,026,591 8,372,782
------------ ------------
Net decrease in cash and cash equivalents (7,814,578) (7,639,910)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 25,061,268 50,113,175
------------ ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 17,246,690 $ 42,473,265
============ ============
</TABLE>
SUPPLEMENTAL DISCLOSURE OF CASH-FLOW INFORMATION
During the six-months ended June 30, 2000, pursuant to the Company's Directors'
Stock Compensation Plan, 4,100 shares of common stock (total value of $24,600)
were forfeited by directors for missed meetings.
These condensed financial statements should be read only in connection
with the accompanying notes to the condensed financial statements.
3
<PAGE>
TEJAS BANCSHARES, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)
(1) General
See the Summary of Significant Accounting Policies included in the
consolidated financial statements in the Company's report on Form 10K.
The unaudited condensed consolidated financial statements included herein
were prepared from the books of the Company in accordance with generally
accepted accounting principles and reflect all adjustments (consisting of
normal recurring accruals) which are, in the opinion of management,
necessary to a fair statement of the results of operations and financial
position for the interim periods. Such financial statements generally
conform to the presentation reflected in the Company's Annual Report to
Stockholders. The current interim period reported herein is included in the
fiscal year subject to independent audit at the end of that year and is not
necessarily an indication of the expected results for the fiscal year.
(2) Net Earnings Per Share
The following is a reconciliation of the numerators and the denominators of
the basic and diluted earnings per share computations for net income for
the three-month and six-month periods ended June 30.
<TABLE>
<CAPTION>
2000 1999
----------------------------------------- -----------------------------------------
Income Shares Per share Income Shares Per share
numerator denominator amount numerator denominator amount
---------- ---------- ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Six-months ended June 30:
Basic EPS $2,386,629 13,415,101 $ 0.18 $1,753,506 13,401,577 $ 0.13
Effect of dilutive
stock options -- 209,859 -- 216,609
---------- ---------- ---------- ----------
Diluted EPS $2,386,629 13,624,960 $ 0.18 $1,753,506 13,618,186 $ 0.13
========== ========== ========== ==========
Three-months ended June 30:
Basic EPS $1,289,955 13,415,098 $ 0.10 $ 918,939 13,404,935 $ 0.07
Effect of dilutive
stock options -- 209,859 -- 216,609
---------- ---------- ---------- ----------
Diluted EPS $1,289,955 13,624,957 $ 0.09 $ 918,939 13,621,544 $ 0.07
========== ========== ========== ==========
</TABLE>
(3) Incentive Stock Plan
On May 19, 1998, the Company's stockholders approved the Tejas Bancshares,
Inc. 1998 Incentive Stock Plan (the Plan). The Plan's objectives are to
attract, retain and provide incentive to employees, officers and directors
and to increase overall shareholder value. The number of shares reserved
for issuance under the plan is 1,333,333. The Plan provides for the grant
of both incentive stock options and non-qualified stock options as well as
the grant of restricted stock, stock appreciation rights, dividend
equivalent rights, stock awards and other stock-based awards. During the
six months ended June 30, 2000 the Company
4
<PAGE>
granted 5,000 in shares under incentive stock options to certain employees
and officers at the option price of $6.00, which is the fair market value
of the common stock of the Company as determined by a majority of the
disinterested directors of the Company.
(4) New Banking Center
During the first quarter of 2000, the Company opened a new banking center
at 45th and Coulter in Amarillo.
This information is an integral part of the accompanying
condensed consolidated financial statements.
5
<PAGE>
TEJAS BANCSHARES, INC. AND SUBSIDIARIES
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations - Three-Month and Six-Month Periods Ended June 30, 2000 as
Compared to the Three-Month and Six-Month Periods Ended June 30, 1999:
Earnings
Tejas Bancshares, Inc. and subsidiaries (the Company) reported net earnings for
the three-month period ended June 30, 2000 of $1,289,955 as compared to earnings
of $918,939 for the three-month period ended June 30, 1999. The Company's net
earnings were $2,386,629 for the six-month period ended June 30, 2000 as
compared earnings of $1,753,506 for the six-month period ended June 30, 1999.
The increase in earnings for 2000 was primarily the result of improved net
interest income as a result of growth in earning assets. The return on average
assets for the six-month period ended June 30, 2000 and 1999 was 1.53% and
1.40%, respectively, and return on average equity was 10.27% and 8.32%,
respectively.
Net Interest Income
The largest component of operating income is net interest income, which is the
difference between the income earned on assets and interest paid on deposits.
Net interest income is determined by the rates earned on the Company's
interest-earning assets and the rates paid on its interest-bearing liabilities,
the relative amounts of interest-earning assets and interest-bearing
liabilities, and the degree of mismatch and the maturity and repricing
characteristics of its interest-earning assets and interest-bearing liabilities.
During the six-month periods ended June 30, 2000 and 1999 net interest income
was $8,042,692, and $6,239,713, respectively. The increase in net interest
income from 1999 to 2000 of $1,802,979 (28.90%) is primarily due to an increase
in average interest-earning assets of approximately $56,516,000, net of an
increase in average interest-bearing liabilities of approximately $43,133,000.
The following table sets forth the average consolidated balance sheets of the
Company for the six-month periods ended June 30, 2000 and 1999 along with an
analysis of net interest earnings for each major category of interest-earning
assets and interest-bearing liabilities, the average yield or rate paid on each
category and net yield on interest-earning assets:
6
<PAGE>
<TABLE>
<CAPTION>
2000 1999
----------------------------------------- --------------------------------------
Average Total Average Average Total Average
Balance(1) Interest Rate Balance(1) Interest Rate
------------- ------------- ------- ------------- ------------- -------
<S> <C> <C> <C> <C> <C> <C>
INTEREST-EARNING ASSETS
Loans
Commercial and agricultural $ 145,740,587 $ 6,289,834 8.68% $ 106,207,450 $ 4,423,067 8.40%
Real estate - mortgage 103,190,352 4,458,172 8.69% 73,543,594 2,898,191 7.95%
Installment loans to individuals 27,642,844 1,293,838 9.41% 13,734,935 627,010 9.21%
------------- ------------- ---- ------------- ------------- ----
Total loans 276,573,783 12,041,844 8.76% 193,485,979 7,948,268 8.28%
Securities taxable 6,642,302 193,942 5.87% 7,105,826 197,633 5.61%
Federal funds sold and other
interest-earning assets 3,140,604 87,942 5.63% 29,248,619 691,471 4.77%
------------- ------------- ---- ------------- ------------- ----
Total interest-earning assets 286,356,689 12,323,728 8.65% 229,840,424 8,837,372 7.75%
NONINTEREST-EARNING ASSETS
Cash and due from banks 21,384,517 17,850,986
Other assets 11,098,061 7,043,791
Less: allowance for loan losses (4,915,196) (3,815,715)
------------- -------------
Total $ 313,924,071 $ 250,919,486
============= =============
INTEREST-BEARING
LIABILITIES
Interest-bearing demand $ 36,482,561 $ 376,029 2.07% $ 33,492,551 $ 264,392 1.59%
Money market deposits 55,770,956 1,059,059 3.82% 45,875,673 659,767 2.90%
Other savings deposits 5,871,644 66,508 2.28% 4,858,688 48,568 2.02%
Time deposits 90,223,036 2,522,731 5.62% 68,746,766 1,624,932 4.77%
Federal funds purchased 7,758,242 256,709 6.65% -- -- --
------------- ------------- ---- ------------- ------------- ----
Total interest-bearing
liabilities 196,106,439 4,281,036 4.39% 152,973,678 2,597,659 3.42%
NONINTEREST-BEARING
LIABILITIES AND STOCK-
HOLDERS' EQUITY
Demand deposits 68,919,174 54,387,698
Other 2,156,664 1,308,925
Stockholders' equity 46,741,794 42,249,185
------------- -------------
Total $ 313,924,071 $ 250,919,486
============= =============
Net interest income $ 8,042,692 $ 6,239,713
============= =============
Net yield on earning assets 5.65% 5.47%
==== ====
</TABLE>
(1) For purposes of these computations, nonaccruing loans are included in the
daily average loan amounts outstanding.
7
<PAGE>
Other Operating Income and Expenses
Other operating income for the three and six-month periods for 2000 and 1999
increased by $200,545 (46.00%) and $405,953 (50.74%), respectively, because of
increased activity on deposit accounts. Other operating expenses increased
during the three and six-month periods for 2000 and 1999 by $480,098 (25.20%)
and $1,009,657 (27.12%), respectively. The increase was attributable to the
overall growth of the Company, including a significant increase in employees
from 1999 to 2000 and increases in costs to conduct banking operations,
primarily data processing, depreciation, franchise tax, supplies and office
expense.
Securities Portfolio
The objective of the Company in its management of the investment portfolio is to
maintain a portfolio of high quality, relatively liquid investments with
competitive returns. During the first six-month period of 2000, the weighted
average yield on taxable securities was 5.87% as compared to 5.61% during 1999.
The Company primarily invests in U.S. Treasury securities and other U.S.
government agency obligations and mortgage-backed securities.
The amortized cost and estimated fair values of the major classifications of
available-for-sale securities at June 30, 2000 and December 31, 1999 were as
follows:
June 30, 2000 December 31, 1999
----------------------- -----------------------
Amortized Amortized
Cost Market Cost Market
---------- ---------- ---------- ----------
Treasury securities $2,178,012 $2,171,125 $2,203,191 $2,199,312
Government agencies 1,816,082 1,810,253 1,826,368 1,817,992
Mortgage backed securities 1,352,638 1,348,405 1,487,649 1,490,168
Other securities 1,215,675 1,215,675 1,215,675 1,215,675
---------- ---------- ---------- ----------
Total securities $6,562,407 $6,545,458 $6,732,883 $6,723,147
========== ========== ========== ==========
Loan Portfolio
At June 30, 2000, December 31, 1999, and June 30, 1999 net loans accounted for
89.0%, 86.2%, and 77.7%, respectively, of total assets.
The amount of loans outstanding at June 30, 2000 and December 31, 1999 are shown
in the following table according to type of loans:
8
<PAGE>
June 30, December 31,
2000 1999
------------ ------------
Commercial $119,193,358 $ 94,893,660
Agriculture 43,043,279 39,265,713
Real estate
Commercial 71,901,997 80,150,036
1-4 single family 33,479,003 25,750,839
Installment loans to individuals 28,617,781 20,580,564
Student Loans 1,973,877 1,606,681
------------ ------------
Total $298,209,294 $262,247,493
============ ============
Provision and Allowance for Loan Losses
The following table summarizes the loan loss experience for the six-month
periods ended June 30, 2000 and 1999:
2000 1999
----------- -----------
Balance of allowance for loan
losses at the beginning of period $ 4,524,678 $ 3,625,435
Provision charged to operations 900,000 660,000
Charge-offs (4,757) (646,721)
Recoveries 9,326 26,588
----------- -----------
Balance at end of period $ 5,429,247 $ 3,665,302
=========== ===========
The Bank had no significant nonaccrual, past due or restructured loans at June
30, 2000. The charge-offs that occurred during the second quarter of last year
were primarily caused by three credits. Management is not aware of any other
loans in which it has serious doubts as to the ability of such borrower to
comply with present loan repayment terms.
Additions to the allowance for loan losses, which are recorded as the provision
for loan losses on the Company's statements of operations, are made periodically
to maintain the allowance at an appropriate level based on management's analysis
of the potential risk in the loan portfolio. The amount of the provision is a
function of the level of loans outstanding, the level of nonperforming loans,
historical loan-loss experience, the amount of loan losses actually charged off
or recovered during a given period, and current and anticipated economic
conditions. The Company believes that it is conservative in the identification
and charge off of problems and in certain instances, the Company has received
recoveries on loans that were previously charged off.
At June 30, 2000 and December 31, 1999, the allowance for loan losses was
$5,429,247 and $4,524,678, respectively, which represented 1.82% and 1.73% of
outstanding loans at those respective dates.
9
<PAGE>
During the six-month period ended June 30, 2000, the Company recorded provisions
for loan losses of $900,000. The provisions were made in connection with the
analysis discussed above. Because the Company has a very limited loan loss
history, the rapid growth in the loan portfolio and the inherent uncertainties
in lending, management believes that a conservative approach to providing loan
losses is prudent. The allowance is subjective in nature and may be adjusted in
the near term because of changes in economic conditions or review by regulatory
examiners. Management expects that appropriate, additional future provisions
will be made as the loan portfolio grows.
Capital
The Company and The First National Bank of Amarillo (the Bank) are subject to
various regulatory capital requirements administered by banking agencies.
Failure to meet minimum capital requirements can initiate certain mandatory and
possibly additional discretionary actions by regulators that, if undertaken,
could have a direct material effect on the Company's financial statements. Under
capital adequacy guidelines and the regulatory framework for prompt corrective
action, the Company and Bank must meet specific capital guidelines that involve
quantitative measures of the assets, liabilities, and certain off-balance-sheet
items as calculated under regulatory accounting practices. The Company's and
Bank's capital amounts and classification are also subject to qualitative
judgments by the regulators about components, risk weightings and other factors.
Quantitative measures established by regulation to ensure capital adequacy
require the Company and Bank to maintain minimum amounts and ratios (set forth
in the table below) of Total and Tier I Capital (as defined in the regulations)
to risk-weighted assets (as defined), and of Tier I Capital (as defined) to
average assets (as defined). Management believes, as of June 30, 2000, that the
Company and Bank meet all capital adequacy requirements to which they are
subject.
The Company and the Bank exceeded their regulatory capital ratio at June 30,
2000, as set forth in the following table.
<TABLE>
<CAPTION>
To Be Well
Capitalized Under
For Capital Prompt Corrective
Actual Adequacy Purposes Action Provisions
---------------------- ------------------------ -------------------------
Amount Ratio Amount Ratio Amount Ratio
----------- ------ ----------- ------- ------------ --------
<S> <C> <C> <C> <C> <C> <C>
To Risk Weighted Assets:
Total Capital:
Tejas Bancshares, Inc. $51,438,000 17.88% $23,021,000 >/=8.0% N/A
The Bank 50,622,000 17.59% 23,020,000 >/=8.0% 28,775,000 >/=10.0%
Tier I Capital:
Tejas Bancshares, Inc. $47,819,000 16.62% $11,511,000 >/=4.0% N/A
The Bank 47,002,000 16.33% 11,510,000 >/=4.0% 17,265,000 >\= 6.0%
To Quarterly Average Assets
Tier I Capital:
Tejas Bancshares, Inc. $47,819,000 14.75% $12,969,000 >/=4.0% N/A
The Bank 47,002,000 14.50% 12,968,000 >/=4.0% 16,210,000 >/= 5.0%
</TABLE>
10
<PAGE>
Liquidity Management
Liquidity management involves monitoring the Company's sources and uses of funds
in order to meet its day-to-day cash flow requirements while maximizing profits.
Liquidity represents the ability of a Company to convert assets into cash or
cash equivalents without significant loss and to raise additional funds by
increasing liabilities. Liquidity management is made more complicated because
different balance sheet components are subject to varying degrees of management
control. For example, the timing of maturities of the investment portfolio is
very predictable and subject to a high degree of control at the time investment
decisions are made. However, net deposit inflows and outflows are far less
predictable and are not subject to nearly the same degree of control.
The Company has maintained a level of liquidity that is adequate to provide the
necessary cash requirements. The Company's uses federal funds as its primary
source of liquidity. Average federal funds sold were $3,141,000 and $29,249,000
during the six-month period ended June 30, 2000 and 1999, respectively. Average
federal funds purchased were $7,758,000 during the six-month period ended June
30, 2000. No federal funds were purchased in the same period in 1999. The
Company has $40,000,000 in funds purchased lines available from correspondent
banks of which $12,800,000 was used as of June 30, 2000. Management also has
lined out potential purchasers of loans as a tool to maintain liquidity. The
Company has numerous loan participations with other parties, primarily financial
institutions. Loan participations are a common commercial banking arrangements
whereby the Company sells, on a nonrecourse basis, a portion of a loan to
another party or parties. These arrangements spread the risk between or among
the parties and provide liquidity to the Company while reducing risk. Although
no formal agreements or commitments exist, management believes that additional
loan participations could readily be sold for liquidity purposes, if necessary.
Management regularly reviews the liquidity position of the Company and has
implemented internal policies which establish guidelines for sources of
asset-based liquidity. Management believes that the continued growth in the
deposit base will enable the Company to meet its long-term liquidity needs.
11
<PAGE>
Deposits and Other Interest-Bearing Liabilities
Average total deposits were $257,267,371 and $207,361,376 during the six-month
periods for 2000 and 1999, respectively. Average interest-bearing deposits were
$188,348,197 in 2000 as compared to $152,973,678 in 1999.
The average daily amount of deposits and rates paid on deposits are summarized
for the six-months ended June 30, 2000 and 1999 as indicated in the following
table:
2000 1999
-------------------- ---------------------
Amount Rate Amount Rate
------------ ---- ------------ ----
Deposits
Noninterest-bearing demand $ 68,919,174 0.00% $ 54,387,698 0.00%
Interest-bearing demand 36,482,561 2.07% 33,492,551 1.59%
Money market deposits 55,770,956 3.82% 45,875,673 2.90%
Other savings deposits 5,871,644 2.28% 4,858,688 2.02%
Time deposits 90,223,036 5.62% 68,746,766 4.77%
------------ ------------
Total $257,267,371 $207,361,376
============ ============
12
<PAGE>
TEJAS BANCSHARES, INC. AND SUBSIDIARIES
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27 Financial Data Schedule for June 30, 2000
(b) Reports on Form 8-K
No Form 8-K was filed with the SEC during the quarter ended June
30, 2000.
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TEJAS BANCSHARES, INC. AND SUBSIDIARIES
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant has
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
TEJAS BANCSHARES, INC.
DATE: August 10, 2000 BY: /s/ Donald E. Powell
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Donald E. Powell,
Chief Executive Officer
DATE: August 10, 2000 BY: /s/ Jack Hall
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Jack Hall, Chief Financial Officer
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