U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_____________
FORM 10-QSB
(Mark One)
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY
PERIOD ENDED SEPTEMBER 30, 1996
( ) TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM
TO
Commission file number 000-21658
MINDEN BANCSHARES, INC.
(Exact name of small business issuer as specified in its charter)
Louisiana 72-0980704
(State or other jurisdiction of (IRS Employer Identification No.)
Incorporation or organization)
401 Main Street, Minden, Louisiana 71055
(Address of principal executive offices) (Zip Code)
(318) 377-4283
(Registrant's telephone number, including area code)
Check whether the issuer (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Exchange Act of 1934 during
the past 12 months (or for such shorter period that the registrant
was required to file such report,), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date:
280,549 as of October 31, 1996
Transitional Small Business Disclosure Format (Check one):
Yes No X
Page 1 of 28 Pages
Exhibit Index - 25
FORM 10-QSB
INDEX
PART I Page
Item 1. Financial Statements - Minden Bancshares,
Inc. and Subsidiary
Consolidated Balance Sheets as of
September 30, 1996 and December 31, 1995 4
Consolidated Statements of Income for
the Three Months & Nine Months
Ended September 30, 1996 and 1995 5
Consolidated Statements of Cash Flows
for the Nine Months ended September 30,
1996 and 1995 6
Notes to Consolidated Financial
Statements 7-8
Item 2. Management's Discussion and Analysis 9-24
PART II
Item 6. Exhibits and Reports on Form 8-K 25
PART I - Financial Information
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
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MINDEN BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1996 AND DECEMBER 31, 1995
(UNAUDITED)
September December
ASSETS 1996 1995
========== ==========
- -----------------------------------------------------(in thousands, except per share data)
Cash and Cash Equivalents:
Cash and Due From Banks $13,018 $11,121
Federal Funds Sold 16,000 21,500
---------- ----------
Total 29,018 32,621
---------- ----------
Securities
Held to Maturity (Cost) 14,653 14,443
Available for Sale (Fair Value) 79,939 74,082
---------- ----------
Total 94,592 88,525
---------- ----------
Federal Reserve Bank and Federal Home Loan Bank Stock 1,195 1,037
Loans, Less Allowance for Loan Losses of $3,353 & $3,397 110,340 95,984
Accrued Interest Receivable 2,365 2,328
Bank Premises and Equipment 3,130 3,198
Real Estate Owned Other Than Bank Premises 287 376
Other Assets 3,156 2,942
---------- ----------
Total Assets $244,083 $227,011
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------------------
Liabilities:
- ------------
Deposits:
Demand $37,182 $35,698
Savings and Interest-Bearing Demand 74,324 70,510
Time 98,775 89,888
---------- ----------
Total Deposits 210,281 196,096
Securities Sold Under Repurchase Agreement 5,320 5,802
Accrued Interest Payable 838 787
Other Liabilities 793 137
Note Payable 180 180
---------- ----------
Total Liabilities 217,412 203,002
---------- ----------
Stockholders' Equity:
- --------------------------
Common Stock, par value $2.50 per share; 500,000
shares authorized; 309,816 shares issued;
280,549 and 280,658 shares outstanding 775 775
Additional Paid-In Capital 11,205 11,205
Undivided Profits 16,272 13,078
Net Unrealized Gain (Loss) on Available for Sale Securities (284) 239
Treasury Stock-At Cost (1,297) (1,288)
---------- ----------
Total Stockholders' Equity 26,671 24,009
---------- ----------
Total Liabilities and Stockholders' Equity $244,083 $227,011
========== ==========
See accompanying notes.
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
MINDEN BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS & NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(UNAUDITED)
Three Months Nine Months
Ended September 30 Ended September 30
====================== =====================
1996 1995 1996 1995
--------- ---------- ----------- ---------
Interest Income: (in thousands, except per share data)
- --------------------
Interest and Fees on Loans $2,757 $2,312 $7,773 $6,251
Securities:
Held to Maturity (non-taxable) 186 164 555 466
Available for Sale 1,248 1,111 3,506 3,384
Federal Funds Sold 227 338 762 719
Federal Reserve Stock and Other 16 15 51 43
Interest-Bearing Balances with Banks 17 9 76 43
---------- ---------- ---------- ----------
Total Interest Income 4,451 3,949 12,723 10,906
---------- ---------- ---------- ----------
Interest Expense:
- ---------------------
Savings and Interest-Bearing Demand Deposits 542 488 1,570 1,354
Time Deposits 1,278 1,145 3,701 2,975
Securities Sold Under Repurchase Agreement and Other 80 71 224 213
---------- ---------- ---------- ----------
Total Interest Expense 1,900 1,704 5,495 4,542
---------- ---------- ---------- ----------
Net Interest Income 2,551 2,245 7,228 6,364
Provision for Loan Losses 0 0 0 0
---------- ---------- ---------- ----------
Net Interest Income After Provision for Loan Los 2,551 2,245 7,228 6,364
---------- ---------- ---------- ----------
Other Income:
- ------------------
Service Charges 407 373 1,154 977
Trust Department Fees 3 3 38 25
Other Operating Income 146 116 424 276
---------- ---------- ---------- ----------
Total Other Income 556 492 1,616 1,278
---------- ---------- ---------- ----------
Operating Expenses:
- --------------------------
Salaries and Employee Benefits 696 636 2,088 1,716
Occupancy Expense 99 98 387 272
Furniture and Equipment Expense 78 60 191 174
Other Operating Expenses 436 366 1,122 1,083
FDIC Insurance 0 46 26 228
Stationery, Supplies and Printing 74 96 144 276
---------- ---------- ---------- ----------
Total Operating Expense 1,383 1,302 3,958 3,749
---------- ---------- ---------- ----------
Income Before Income Taxes 1,724 1,435 4,886 3,893
Income Taxes 536 443 1,510 1,196
---------- ---------- ---------- ----------
Net Income $1,188 $992 $3,376 $2,697
========== ========== ========== ==========
Earnings Per Share $4.23 $3.54 $12.03 $9.61
========== ========== ========== ==========
Dividends Declared Per Share $0.00 $0.00 $0.65 $0.50
========== ========== ========== ==========
</TABLE>
<TABLE>
<S> <C> <C>
MINDEN BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(UNAUDITED)
========= =========
1996 1995
--------- ---------
Cash Flows from Operating Activities: (in thousands)
- ----------------------------------------------
Net Income $3,376 $2,697
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Depreciation and Amortization 253 227
(Gain) Loss on Sale of ORE (18) (13)
(Increase) Decrease in Accrued Interest Receivable (37) (80)
Write-down on Real Estate Owned Other than Bank Premises 0 4
(Increase) Decrease in Other Assets (51) (2,031)
Increase (Decrease) in Accrued Interest Payable 51 350
Increase (Decrease) in Other Liabilities 656 589
---------- --------
Total Adjustments 854 (954)
---------- --------
Net Cash Provided (Used) by Operating Activities 4,230 1,743
Cash Flows from Investing Activities:
- ---------------------------------------------
Proceeds from Sales and Maturities of Investment Securities 42,680 12,554
Purchase of Investment Securities (49,698) (8,887)
Proceeds from Sales of ORE 190 47
Purchase of three branches-property 0 (1,050)
Purchase of Equipment (78) (250)
Net (Increase) Decrease in Loans (14,439) (28,973)
---------- --------
Net Cash (Used) by Investing Activities (21,345) (26,559)
Cash Flows from Financing Activities:
- ----------------------------------------------
Dividends Paid (182) (140)
Net Increase (Decrease) in Demand Deposits 1,484 12,210
Net Increase (Decrease) in Savings and Interest-Bearing
Demand Deposits 3,814 14,901
Net Increase (Decrease) in Time Deposits 8,887 20,564
Net Increase (Decrease) in Securities Sold Under
Repurchase Agreements (482) (2,129)
Purchase of Treasury Stock (9) (9)
---------- --------
Net Cash Provided by Financing Activities 13,512 45,397
---------- --------
Net Increase (Decrease) in Cash and Cash Equivalents (3,603) 20,581
Cash and Cash Equivalents at Beginning of Period 32,621 11,658
---------- --------
Cash and Cash Equivalents at End of Period $29,018 $32,239
========== ========
Cash Payments: Interest $5,444 $4,175
========== ========
Income Taxes $1,457 $1,050
========== ========
See accompanying notes.
</TABLE>
MINDEN BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Unaudited)
September 30, 1996
1. Basis of Presentation
The unaudited interim consolidated financial statements of
Minden Bancshares, Inc. and subsidiary are prepared in accordance
with generally accepted accounting principles for interim financial
information except as described below:
On March 24, 1995, Minden Bank & Trust Company ("Minden
Bank"), wholly owned subsidiary of Minden Bancshares, Inc. ("the
Company"), acquired three branches in Shreveport, Louisiana, from
Hibernia National Bank ("Hibernia"), formerly Pioneer Bank & Trust
Company ("Pioneer"). The U. S. Justice Department required the
disposal of these three Pioneer branches before it would approve
the merger of Hibernia and Pioneer. The acquisition was recorded
as follows:
ASSETS ($Thousands)
Cash on Hand $ 1,088
Available for Investment 12,041
Net loans 21,166
Facilities and equipment 1,120
Other assets 2,147
-------
Total Assets $37,562
=======
LIABILITIES
Non-interest bearing deposits $ 5,884
Interest bearing deposits 30,060
-------
Total Deposits $35,944
Securities sold under
repurchase agreements 1,483
Other liabilities 135
-------
Total Liabilities $37,562
=======
The acquisition was recorded and is being reported as a
purchase of assets and not as the purchase of a business due to the
unavailability of prior financial reporting and inadequate branch
accounting records maintained by Pioneer.
In the opinion of management, all adjustments (consisting only
of normal recurring adjustments) necessary for a fair presentation
of the financial position and the results of operations for the
interim periods presented have been included.
2. Statement of Cash Flows
For purposes of the Consolidated Statements of Cash Flows, the
Company has defined cash equivalents as those amounts included in
the balance sheets captions Cash and due from banks and Federal
funds sold. Cash flows from loans and deposits of the Company's
bank subsidiary are reported on a net basis.
3. Investment Securities
The specific identification method is used to determine
realized gains and losses on sales of investment securities which
is included in other operating income.
Debt securities available for sale are carried at fair market
value by means of valuation account in accordance with SFAS 115.
At September 30, 1996, the fair market value of securities
available for sale was $431 thousand less than amortized cost and
at December 31, 1995, the fair market value of securities available
for sale was $362 thousand more than amortized cost.
Debt securities held to maturity are carried at cost, adjusted
for the amortization of premiums and accretion of discount. The
amortized cost and estimated market value of securities held to
maturity at September 30, 1996, and December 31, 1995, are as
follows:
Securities Held to Maturity
($Thousands)
Gross Gross Estimated
Book Unrealized Unrealized Market
Value Gains Losses Value
------ ----------- ----------- ---------
September 30, 1996 14,653 150 157 14,646
December 31, 1995 14,443 90 55 14,478
4. Earnings per Common Share
The earnings per common share are computed by dividing the net
income for the interim periods by the weighted average number of
common shares outstanding. The weighted average number of shares
outstanding in the third quarter, 1996, and 1995, were 280,573 and
280,665 respectively, and for the first nine months of 1996 and
1995, were 280,623 and 280,704 respectively.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
<TABLE>
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MINDEN BANCSHARES, INC. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS
CONSOLIDATED INCOME SUMMARY
AND SELECTED FINANCIAL DATA
(in thousands, except per share and ratio data)
Three Months Ended Nine Months Ended
September 30 September 30
============================ ==========================
1996 1995 1996 1995
-------------- ------------ ------------ ------------ ----------------------------
Interest income $4,451 $3,949 $12,723 $10,906
Interest expense 1,900 1,704 5,495 4542
-------------- ------------ ------------ ------------
Net interest income 2,551 2,245 7,228 6,364
Provision for possible loan losses 0 0 0 0
-------------- ------------ ------------ ------------
Net interest income after provision 2,551 2,245 7,228 6,364
Noninterest income 556 492 1,616 1278
Noninterest expense 1,383 1,302 3,958 3749
-------------- ------------ ------------ ------------
Income before taxes 1,724 1,435 4,886 3,893
Income tax expense 536 443 1,510 1,196
-------------- ------------ ------------ ------------
Net Income $1,188 $992 $3,376 $2,697
============== ============ ============ ============
Earnings per share <F1> $4.23 $3.54 $12.03 $9.61
Dividends declared per share $0.00 $0.00 $0.65 $0.50
Average shares outstanding 280.6 280.7 280.6 280.7
Book value per share $95.07 $83.43 $95.07 $83.43
Selected Quarter End Balances:
Loans $113,694 $95,198
Deposits $210,281 $192,939
Debt $5,500 $5,579
Equity $26,671 $23,415
Total Assets $244,083 $223,444
Selected Average Balances:
Loans $112,298 $92,189 $106,523 $84,382
Deposits $210,238 $189,335 $204,429 $174,699
Debt $6,745 $6,745 $6,738 $7,100
Equity $26,419 $22,993 $25,377 $22,150
Total Assets $245,015 $220,433 $238,040 $205,064
Selected Ratios (%)
Return on average assets 1.92% 1.79% 1.89% 1.76%
Return on average equity 17.84% 17.12% 17.72% 16.28%
Net interest margin (taxable equivalent) 4.52% 4.34% 4.45% 4.42%
Tier 1 risk-based capital 22.16% 17.53%
Total risk-based capital 23.43% 18.82%
Tier 1 Leverage 10.25% 9.65%
<F1> Earnings per share is based on the weighted average number of shares outstanding in the resp
</TABLE>
OVERVIEW
The Company's third quarter 1996 net income totaled $1,188
thousand, ($4.23 per share) up 20 percent from $992 thousand ($3.54
per share) in the third quarter, 1995. For the first nine months
of 1996, net income was $3,376 thousand ($12.03 per share) up 25
percent from $2,697 thousand ($9.61 per share) in the first nine
months of 1995.
The return on average assets was 1.92 percent for the third
quarter, 1996, an increase of 7 percent from the third quarter,
1995 of 1.79 percent. For the first nine months of 1996, the
return on average assets was 1.89 percent as compared to 1.76
percent for the same period last year.
The return on average equity was 17.84 percent for the third
quarter, 1996, an increase of 4 percent over the third quarter,
1995 of 17.12 percent. For the first nine months of 1996, the
return on average equity was 17.72 percent as compared to 16.28
percent in the prior year.
The 1996 third quarter earnings benefited from a 14 percent
increase in net interest income, a 13 percent increase in other
income and was detrimented by a 6 percent increase in noninterest
expense when compared to the 1995 third quarter. The first nine
months of 1996 earnings benefited from a 14 percent increase in net
interest income over the prior year period, a 26 percent increase
in noninterest income while being detrimented by 6 percent increase
in noninterest expense.
Total assets at September 30, 1996 increased to $244,083
thousand, up 9 percent from a year ago and up 8 percent from
December 31, 1995.
RESULTS OF OPERATIONS
<TABLE>
<S> <C> <C> <C> <C>
NET INTEREST INCOME
Third Quarter Nine Months
========================= =========================
1996 1995 1996 1995
(in thousands) ----------- ------------ ----------- ------------
Total Interest Income $4,451 $3,949 $12,723 $10,906
Total Interest Expense 1,900 1,704 5,495 4,542
----------- ------------ ----------- ------------
Net Interest Income 2,551 2,245 7,228 6,364
Taxable-Equivalent Adjustment
to Interest Income 73 65 215 188
----------- ------------ ----------- ------------
Net Interest Income-
Taxable Equivalent Basis <F2> $2,624 $2,310 $7,443 $6,552
=========== ============ =========== ============
AVERAGE BALANCES (in thousands):
Interest-Earning Assets <F3> $230,088 $205,436 $222,802 $192,513
=========== ============ =========== ============
Interest-Bearing Liabilities $179,347 $162,799 $174,704 $152,062
Interest-Free Funds 50,741 42,637 48,098 40,451
----------- ------------ ----------- ------------
Total Investible Funds $230,088 $205,436 $222,802 $192,513
=========== ============ =========== ============
AVERAGE INTEREST RATES (fully taxable): <F2>
Yield On:
Interest-Earning Assets <F3> 7.80% 7.63% 7.74% 7.57%
Interest-Bearing Liabilities 4.20% 4.15% 4.19% 3.99%
----------- ------------ ----------- ------------
Spread on Interest-Bearing Funds 3.60% 3.48% 3.55% 3.58%
Contribution of Interest-Free Funds 0.91% 0.86% 0.90% 0.84%
----------- ------------ ----------- ------------
Net Yield on Interest-Earning Assets 4.52% 4.34% 4.45% 4.42%
=========== ============ =========== ============
<F2> Reflects adjustment to the net interest income amount included in the Statement of
Income to permit comparisons of yields on tax-exempt and taxable assets.
<F3> Based upon amortized cost of all investment securities. Adjustments to fair market
value for available-for-sale investment securities amounted to a negative $296
thousand for the third quarter, 1996, and $39 thousand positive for the first nine
months, 1996 as compared to a positive $123 thousand for the third quarter, 1995,
and a positive $1,841 thousand for the first nine months of 1995.
</TABLE>
Net Interest Income
The Company's net interest income for the 1996 third quarter
was $2,551 thousand, an increase of 14 percent from $2,245 thousand
in the 1995 third quarter. Net interest income for the first nine
months of 1996, was $7,228 thousand, an increase of 14 percent over
the first nine months of 1995 of $6,364 thousand. Increases in
loan and deposit volume have contributed to the increase in net
interest income for both periods of 1996 over 1995.
Average Interest-Earning Assets
Average interest-earning assets were $230,088 thousand for the
1996 third quarter, $24,652 thousand higher than the 1995 third
quarter. For the first nine months of 1996, interest earning
assets averaged $222,802 thousand, an increase of 16 percent over
the prior year of $192,513 thousand. Average loans increased by
$20,109 thousand for third quarter, 1996, over the prior year, and
by $22,141 thousand in the first nine months of 1996 over the first
nine months, 1995. Average investment securities increased by
$9,753 during the third quarter, 1996 over the prior year and by
$4,652 during the first nine months, 1996 over 1995. During the
third quarter, 1996, average Federal funds sold decreased by $6,502
thousand from the prior year and increased by $2,684 thousand in
the first nine months, 1996 over the prior year period.
Average Interest-Bearing Liabilities
Average interest-bearing liabilities for the 1996 third
quarter were $179,347 thousand, compared to $162,799 thousand for
the same period last year, and were $174,704 for the first nine
months of 1996 as compared to $152,062 for the prior year. Average
time deposits for the 1996 third quarter were $97,487, an average
of $10,112 thousand over the same period last year and average time
deposits for the first nine months, 1996 were $94,673 thousand as
compared to $152,062 thousand in the prior year period. Average
savings and interest-bearing demand deposits for the 1996 third
quarter were $75,115 thousand, an increase of $6,436 thousand over
the same period last year, and were $73,293 thousand in the first
nine months, 1996 as compared to $64,795 in the prior year period.
Net Yield on Interest-Earning Assets
The net yield on interest-earning assets was 4.52 percent in
the third quarter of 1996, an increase of 18 basis points from 4.34
percent in the same period last year, and was 4.45 percent in the
first nine months, 1996 as compared to the prior year periods of
4.42 percent. The major contributing factors have been the
continued deposit growth accompanied by a favorable loan growth.
Management expects that the net yield on earning assets will
remain constant or increase slightly during the balance of 1996.
PROVISION FOR LOAN LOSSES
The Company made no provision for loan losses in 1996 or 1995.
Management does not anticipate any provision for loan losses
during 1996. A discussion of the Company's loan portfolio, net
charge-off and recoveries, and allowances for loan losses appears
on pages 15 - 18.
<TABLE>
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OTHER INCOME
Third Quarter First Nine Months
========================== ==========================
1996 1995 1996 1995
(in thousands) ------------ ------------ ------------ ------------
Service Charges $407 $373 $1,154 $977
Trust Fees 3 3 38 25
Other Operating Income 146 116 424 276
------------ ------------ ------------ ------------
Total Other Income $556 $492 $1,616 $1,278
============ ============ ============ ============
</TABLE>
Other income for the 1996 third quarter was $556 thousand, up
$64 thousand from the same period last year. For the first nine
months of 1996, other income was $1,616 thousand, an increase of
$338 thousand over the same period last year.
The increase in other income for both periods of 1996 over
1995 have resulted from increased volume and fee structures.
<TABLE>
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OPERATING EXPENSES
Third Quarter First Nine Months
========================== ==========================
1996 1995 1996 1995
(in thousands) ------------ ------------ ------------ ------------
Salaries and Employee Benefits $696 $636 $2,088 $1,716
Occupancy Expense 99 98 387 272
Furniture and Equipment Expense 78 60 191 174
Other Operating Expenses 436 366 1,122 1083
FDIC Insurance 0 46 26 228
Stationary, Supplies and Printing 74 96 144 276
------------ ------------ ------------ ------------
Total Operating Expenses $1,383 $1,302 $3,958 $3,749
============ ============ ============ ============
</TABLE>
Operating expenses for the 1996 third quarter were $1,383
thousand, up from $1,302 thousand in the 1995 third quarter, an
increase of $81 thousand. Operating expenses for the first nine
months of 1996 were $3,958 thousand, an increase of $209 thousand
from $3,749 thousand in the comparable period last year. The
increase in operating expenses in the third quarter and the first
nine months, 1996 as compared to the same periods in the prior year
were due to the acquisition of the three Shreveport, Louisiana
branches in March, 1995, along with continued growth.
Salaries and employee benefits in the 1996 third quarter were
$696 thousand, compared to $636 thousand in the same period last
year. Salaries and employee benefits in the 1996 first nine months
were $2,088 thousand as compared to $1,716 thousand in the same
period last year. The increases for both periods in 1996 over
1995, were due to staffing of the three Shreveport branches
acquired in March, 1995 along with increased main office support
staff.
Occupancy expense and furniture and equipment expense for the
1996 third quarter were $177 thousand as compared to $158 thousand
for the same period last year. Occupancy expense and furniture and
equipment expense for the 1996 first nine months were $578 thousand
as compared to $446 thousand for the same period last year. The
increase in the third quarter 1996 as compared to the third
quarter, 1995 was due to equipment replacement and upgrades. The
increase in the first nine months 1996 over 1995 was due to
replacement of main office heating and air conditioning system in
the first quarter, 1996.
Other operating expenses were $436 thousand for the 1996 third
quarter as compared to $366 thousand for the same period last year.
Other operating expenses in the 1996 first nine months were $1,122
thousand as compared to $1,083 thousand for the same period last
year. The increases for both periods are attributable primarily to
increased shareholder advalorem assessment for 1996.
The decreases in FDIC insurance for both periods is due to
lower rates established in second half of 1995.
INCOME TAXES
In the 1996 third quarter, the Company recorded income tax
expense of $536 thousand, compared to $443 thousand for the same
period last year. In the 1996 first nine months income tax expense
was $1,510 thousand as compared to $1,196 thousand in the same
period last year.
The effective tax rate was 31.1 percent for the 1996 third
quarter as compared to 30.9 percent for the same period last year.
The effective tax rate was 30.9 percent for the first nine months
of 1996, as compared to 30.7 percent for the same period last year.
The higher effective tax rate in both periods of 1996, as compared
to the same period last year reflects difference in the composition
of the Company's pre-tax income in both years.
RECENT ACCOUNTING PRONOUNCEMENTS
In March of 1995, the Financial Accounting Standard Board
(FASB) issued SFAS No. 121, Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of,
effective for fiscal years beginning after December 15, 1995. SFAS
121 requires that impairment losses be recorded on long-lived
assets used in operations, including related goodwill. SFAS 121
also addresses the accounting for long-lived assets which are to be
disposed of. Management does not expect the effect of SFAS 121 to
be material.
In May of 1995, the Financial Accounting Standard Board (FASB)
issued FAS No. 122, Accounting for Mortgage Servicing Rights,
effective for fiscal years beginning after December 15, 1995. SFAS
122 will not have an effect on the operating results of Minden
Bancshares because neither it nor its subsidiary bank provides this
type of service.
CREDIT PORTFOLIO
Loan Portfolio
The Company's loans outstanding, totaled $113,694 thousand at
September 30, 1996 as compared to $95,198 thousand at September 30,
1995 and $99,381 thousand at December 31, 1995. The increases over
both prior periods have been due to increased loan demand.
The following table sets forth the loan classifications at
September 30, 1996, December 31, 1995, and September 30, 1995:
Sept. 30, Dec 31, Sept. 30,
1996 1995 1995
(in thousands) =========== ========== ==========
Commercial, Financial and Agricultural Loans $30,819 $29,676 $30,208
Construction Loans Secured by Real Estate 3,338 2,722 1,775
Other Loans Secured by Real Estate 59,706 50,651 48,552
Installment and Single Payment Loans 17,916 15,148 14,429
Other Loans 2,101 1,502 602
----------- ---------- ----------
Total Loans 113,880 99,699 95,566
Less Unearned Discount 186 318 368
----------- ---------- ----------
Total Loans Net of Unearned Discount $113,694 $99,381 $95,198
=========== ========== ==========
Non-performing Assets
The following table sets forth the non-performing assets at
September 30, 1996, December 31, 1995 and September 30, 1995:
Sept. 30, Dec. 31, Sept. 30,
1996 1995 1995
(in thousands) ========== ========== ==========
Non-Accrual Loans $418 $403 $428
Past-Due Loans 340 174 839
Restructured Loans 0 69 65
---------- ---------- ----------
Total Non-performing Loans 758 646 1,332
Other Real Estate Owned 287 376 605
---------- ---------- ----------
Total Non-performing Assets $1,045 $1,022 $1,937
========== ========== ==========
In addition to the non-performing loans discussed above,
management has identified other loans for which payments are
current that are subject to potential future classification as
nonperforming. As of September 30, 1996, these loans totaled $216
thousand as compared to $285 thousand a year ago and $204 thousand
at December 31, 1995.
Loans are placed on non-accrual status when they become ninety
(90) days past due unless there is sufficient evidence that they
will be brought current in the very near future. When loans are
placed on non-accrual status, all accrued interest is reversed
against earnings. Past due loans are those loans past due 90 days
or more on which there is sufficient evidence that they will be
brought current in the very near future. Restructured loans are
those on which the original terms have been renegotiated to provide
for an extension of the original payment period and/or a reduction
or deferral of interest-principal due to deterioration in the
financial position of the borrower.
Non-accrual loans are returned to accrual status only when
they are brought fully current with respect to interest and
principal and management estimates the loans to be fully
collectible as to interest and principal. Interest income on
non-accrual loans which would have reported on an accrual basis
would have amounted to $11 thousand for the 1996 third quarter and
$10 thousand for the 1995 third quarter. Interest income on
non-accrual loans which would have been reported on an accrual
basis would have amounted to $34 thousand for the first nine months
of 1996, and $40 thousand for the first nine months of 1995. There
was no interest income on restructured loans included in net income
in the 1996 third quarter while $4 thousand was included in net
income for the 1995 third quarter. Interest income on
restructured loans included in net income amounted to $4 thousand
for the first nine months of 1996, and $11 thousand for the first
nine months of 1995.
Other real estate owned represents properties acquired as loan
satisfactions which are recorded at the lower of the investment in
the loan with respect to which the assets were acquired, or the
fair value of each property, with the initial write-downs charged
to the reserve for loan losses. Subsequent write-downs of such
properties are reflected as such on the income statement and gains
and losses on disposal are accordingly reflected on the income
statement. Other real estate currently includes former branch
located at 324 Homer Road which was closed January 4, 1995. The
former branch was capitalized at its depreciated value of $241
thousand and was written down to $150 thousand in the fourth
quarter, 1995.
Allowance for Loan Losses
The allowance for loan losses is available to absorb potential
credit losses from the entire loan portfolio. The appropriate
level of the allowance is based on analyses of the loan portfolio
and reflects an amount which, in management's judgment, is adequate
to provide for potential losses. The analyses include
consideration of such factors as the risk rating of individual
credits, the size and diversity of the portfolio, particularly in
terms of industry, economic and political conditions, prior loss
experience and results of periodic credit reviews of the portfolio.
Based upon the results of these analyses, the allowance for losses
is increased, from time to time, by charges to income to the extent
management considers appropriate.
The accompanying table reflects the activity in the allowance
for loan losses for the three months ended September 30, 1996, and
1995, and nine months ended September 30, 1996, and 1995.
<TABLE>
<S> <C> <C> <C> <C>
Third Quarter First Nine Months
===================== ====================
1996 1995 1996 1995
(in thousands) ---------- --------- --------- ---------
Balance at Beginning of Period $3,353 $3,409 $3,396 $3,395
Charge-Offs
Commercial, Financial and Agricultural 0 20 78 20
Real Estate - Construction 0 0 0 0
Real Estate - Mortgage 0 0 0 67
Installment Loans to Individuals 60 43 93 68
---------- --------- --------- ---------
Total 60 63 171 155
---------- --------- --------- ---------
Recoveries
Commercial Financial and Agricultural 0 13 0 34
Real Estate - Construction 0 0 0 0
Real Estate - Mortgage 32 14 74 74
Installment Loans to Individuals 29 22 55 47
---------- --------- --------- ---------
Total 61 49 129 155
---------- --------- --------- ---------
Net Recoveries (Charge-Offs) 1 (14) (42) 0
Additions Charged to Operations 0 0 0 0
---------- --------- --------- ---------
Balance at End of Period $3,354 $3,395 $3,354 $3,395
========== ========= ========= =========
</TABLE>
The following table reflects the allowance coverage ratios at
September 30, 1996, December 31, 1995 and September 30, 1995.
Sept. 30, Dec. 31, Sept. 30,
For the Quarter Ended: 1996 1995 1995
---------- --------- ---------
Allowance for Loan Losses to:
Loans at Period-End 2.95% 3.42% 3.57%
Average Loans (Nine Months) 2.99% 3.51% 4.02%
Non-performing Loans 442.48% 525.85% 254.88%
Non-performing Assets 320.96% 332.39% 175.27%
Total Net Charge-Offs (annualized) to:
Loans at Period-End 0.00% 0.00% (0.06%)
Average Loans (Nine Months) 0.00% 0.00% (0.06%)
Allowance for Loan Losses 0.12% (0.06%) (1.65%)
Management deems its allowance for loan losses at September
30, 1996, to be adequate. Although the Company considers that it
has sufficient reserves to absorb losses that may currently exist
in the portfolio but are not yet identifiable, the precise loss
content of the loan portfolio is less definable when the prospects
for the economy are uncertain. The Company anticipates that
industry regulators will continue to advocate strong reserves for
loan losses at banking corporations. Due to continuing economic
uncertainties and regulatory considerations, the Company will
continue to reassess the adequacy of its allowance for loan losses
and make provisions accordingly.
CAPITAL
Total stockholders' equity at September 30, 1996, was $26,671
thousand, up from $24,009 thousand at December 31, 1995 and $23,415
thousand at September 30, 1995. Stockholders' equity at September
30, 1996, reflects negative impact of $284 thousand for net
unrealized losses on securities available for sale.
Risk-Based Capital Ratios
In January, 1989, the Federal Reserve Board ("FRB") issued
risk-based capital guidelines which require banking organizations
to maintain certain ratios of "Qualifying Capital" to
"risk-weighted assets." "Qualifying Capital" is classified into
Tier 1 and Tier 2 Capital. Tier 1 Capital applicable to the
Company consists only of common equity. Tier 2 Capital applicable
to the Company consists only of qualifying allowance for loan
losses. The amount of Tier 2 Capital may not exceed Tier 1
Capital. In calculating "risk-weighted assets", certain risk
percentages, as specified by the FRB, are applied to particular
categories of both on- and off-balance sheet assets. Effective
December 31, 1992, the guidelines require that banking
organizations maintain a minimum ratio of Tier 1 Capital to
risk-weighted assets of 4 percent and a minimum ratio of Tier 1 and
Tier 2 Capital ("Total Capital") to risk-weighted assets of 8
percent (the "final risk-based guidelines"). At September 30,
1996, the Company's Tier 1 Capital to risk-weighted assets ratio
was 22.16 percent and the Total Capital to risk-weighted assets
ratio was 23.43 percent.
Leverage Ratios
The Tier 1 leverage ratio is defined as Tier 1 Capital (as
defined under the risk-based capital guidelines) divided by average
total assets (net of allowance for loan losses). The minimum
leverage ratio is 3 percent for banking organizations that do not
anticipate significant growth and that have well-diversified risk,
excellent asset quality, high liquidity and good earnings. Other
banking organizations are expected to have ratios of at least 4
percent to 5 percent, depending upon their particular condition and
growth plans. Higher capital ratios could be required if warranted
by the particular circumstances, or risk profile, of a given
banking organization. The FRB has not advised the Company of any
specific minimum Tier 1 leverage ratio applicable to it.
The table which follows sets for the Company's Tier 1 and Tier
2 Capital, risk weighted assets, including off balance sheet items,
and the Company's risk-based capital ratios under the final
guidelines as well as Tier 1 leverage ratios.
Capital and Ratios
Sept. 30, Dec 31, Sept. 30,
1996 1995 1995
(in thousands), except ratios ========= ========= =========
Tier 1 Capital
Common Stockholders' Equity $24,983 $21,661 $21,278
Tier 2 Capital
Reserve for Possible Loan Losses $1,434 $1,628 $1,567
--------- --------- ---------
Total Qualifying Capital $26,417 $23,289 $22,845
========= ========= =========
Risk Weighted Assets $112,762 $126,390 $121,403
Tier 1 Capital Ratio 22.16% 17.14% 17.53%
Total Capital Ratio 23.43% 18.43% 18.82%
Tier 1 Leverage Ratio 10.25% 9.52% 9.65%
Common Stock Dividends
For the third quarters of 1996 and 1995, the Board of
Directors of the Company declared no dividends. Dividends declared
by the Board of Directors were $0.65 and $0.50 for the first nine
months of 1996 and 1995 respectively. Future dividend policies
will be determined by the Board of Directors in light of earnings
and financial condition of the Company and its subsidiary and other
factors, including applicable governmental regulations and
policies.
LIQUIDITY MANAGEMENT
The objective of liquidity management is to ensure the
availability of sufficient cash flows to meet all financial
commitments and to capitalize on investment opportunities.
Liquidity management addresses the Company's ability to meet
deposit withdrawals on demand or at contractual maturity, to
service indebtedness and to make new loans and investments as
opportunities arise. The Company monitors and reviews its asset
and liability mix on a routine basis.
The primary sources of liquidity include cash and due from
banks, federal funds sold and investment securities. Additionally,
the bank subsidiary has the ability to borrow and purchase federal
funds on a short term basis from other financial institutions as a
source of liquidity should the need arise.
The loan to deposit ratio averaged 53.41 percent during the
1996 third quarter and 48.69 percent during the 1995 third quarter.
Cash on hand and due from banks averaged $10,876 thousand in the
1996 third quarter and $9,457 thousand in the 1995 third quarter.
Federal Funds sold averaged $17,283 thousand in the 1996 third
quarter and $23,785 thousand in the 1995 third quarter.
At September 30, 1996, investment securities at amortized cost
totaled $95,023 thousand, of which $29,814 thousand or 31.4 percent
mature or reprice within one year, $51,144 thousand mature or
reprice within two to five years, and $13,193 thousand mature in
over five years. The Company does not anticipate any events which
would require liquidity beyond that which is available from the
above referenced sources.
SUPERVISION AND REGULATION
Dividends
Substantially all of the funds used by the Company to pay
dividends to its shareholders are derived from dividends paid to it
by its subsidiary bank, which are subject to certain legal
restrictions. Under Louisiana law, state chartered banks cannot
pay dividends in excess of current year earnings plus undistributed
earnings of the prior year without the prior approval of the
Commissioner of Financial Institutions. Under Federal law,
dividends by state chartered banks in excess of current year
earnings plus undistributed earnings of the two prior years would
require FRB approval.
In addition to the dividend restrictions described above, the
FRB and the Federal Deposit Insurance Corporation ("FDIC") have
authority under the Financial Institutions Supervisory Act to
prohibit or to limit the payment of dividends by banking
organizations they supervise, including the Company and its bank
subsidiary if, in the banking regulators' opinions, payment of a
dividend would constitute an unsafe or unsound practice in light of
the financial condition of the banking organization.
Other
On December 19, 1991, the Federal Deposit Insurance
Corporation Improvement Act of 1991 ("FDICIA") was enacted. Among
other things, FDICIA provided increased funding for the Bank
Insurance Fund ("BIF") of the FDIC by granting authority for
special assessments against insured deposits through a general
risk-based assessment system. FDICIA also contains provisions
limiting activities and business methods of depository
institutions. FDICIA provides for expanded regulation of
depository institutions and their affiliates, including parent
holding companies, by such institutions' appropriate Federal
banking regulator.
Effective November 2, 1992, the FDIC implemented a
transitional risk-related premium system ("RRPS") beginning in
1993. Under the RRPS, each insured institution is assigned to one
of three capital groups and to one of three supervisory subgroups
for purposes of determining the assessment rate. The capital group
assignments are based on "Call Reports" submitted six months in
advance of the assessment period and supervisory subgroup
assignments will be determined from the most recent "Report of
Examination" by the respective agency submitted by quarter ending
three months prior to assessment period.
The FDIC completed the recapitalization of the BIF in May,
1995, and has lowered the rate structure for the stronger
capitalized banks and those with higher supervisory ratings. The
proposed new rates for the BIF are 0.00 percent for the highest
ratings to 0.31 percent for the lowest ratings. The existing SAIF
premium rates which are 0.23 percent to 0.31 percent will be
reduced following the one-time SAIF assessment to fully fund the
SAIF in the fourth quarter, 1996. The portion of Minden Bank's
deposits acquired in the acquisition of the failed Oak Tree Federal
Savings Bank Branch in Minden in August, 1994, are insured through
the SAIF. Minden Bank has the most favorable rates available in
1996, 0.00 percent for BIF and 0.23 percent for SAIF deposits.
Minden Bank's one-time assessment will be $23 thousand for which
provision has already been made in its 1996 financial statements.
Beginning in January, 1997 the BIF will be assessed $1.29 per $100
of deposits and SAIF will be assessed at $6.44 per $100 of deposits
in addition to any other assessments which may occur.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
MINDEN BANCSHARES, INC. AND SUBSIDIARY
Consolidated Net Interest Income and Average Balances
Three Months Ended September 30, 1996 and 1995
(Thousands)
1996 1995
=============================== ================================
Average Rate Average Rate
Balance Interest (Annualized) Balance Interest (Annualized)
-------- -------- ----------- -------- -------- ------------
ASSETS
Interest Bearing Balances Due from Banks $1,423 $18 5.02% $417 $6 5.71%
Federal Funds Sold 17,283 227 5.21% 23,785 338 5.64%
Investment Securities <F4> 97,899 1,506 6.10% 88,146 1,275 5.74%
Federal Reserve Bank and
Federal Home Loan Bank Stocks 1,185 16 5.36% 899 18 7.94%
Loans 112,298 2,757 9.74% 92,189 2,312 9.95%
-------- ------- -------- -------
Total Interest-
Earning Assets <F4> 230,088 $4,524 7.80% 205,436 $3,949 7.63%
Allowance for Loan Losses (3,360) (3,416)
Cash and Due from Banks 9,453 9,040
Other Assets <F4> 8,834 9,373
-------- --------
Total Assets <F4> $245,015 $220,433
======== ========
LIABILITIES
Savings and Interest-
Bearing Demand $75,115 $542 2.86% $68,679 $488 2.82%
Time Deposits 97,487 1,278 5.20% 87,375 1,145 5.20%
-------- ------- -------- -------
Total Interest-
Bearing Deposits 172,602 1,820 4.18% 156,054 1,633 4.15%
Securities Sold Under
Repurchase Agreements 6,565 76 4.59% 6,475 65 3.98%
Long-Term Debt 180 4 8.91% 270 6 8.81%
-------- ------- -------- -------
Total Interest-
Bearing Liabilities 179,347 $1,900 4.20% 162,799 $1,704 4.15%
Demand Deposits 37,636 33,281
Other Liabilities 1,613 1,360
-------- --------
Total Liabilities 218,596 197,440
-------- --------
STOCKHOLDERS' EQUITY
Common Stockholders' Equity 26,419 22,993
-------- --------
Total Liabilities and
Stockholders' Equity <F4> $245,015 $220,433
======== ========
SPREAD ON INTEREST-BEARING FUNDS 3.60% 3.48%
NET INTEREST INCOME AND NET
YIELD ON INTEREST-EARNING ASSETS $2,624 4.52% $2,245 4.34%
======= =======
<F4> Based upon amortized cost of investment securities
Taxable equivalent earnings
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
MINDEN BANCSHARES, INC. AND SUBSIDIARY
Consolidated Net Interest Income and Average Balances
Nine Months Ended September 30, 1996 and 1995
(Thousands)
1996 1995
================================ ================================
Average Rate Average Rate
Balance Interest (Annualized) Balance Interest (Annualized)
-------- -------- ------------ -------- -------- ------------
ASSETS
Interest Bearing Balances Due from Bank $1,874 $75 5.33% $1,311 $41 4.18%
Federal Funds Sold 19,376 762 5.24% 16,692 719 5.76%
Investment Securities <F5> 93,892 4,277 6.07% 89,240 3,850 5.77%
Federal Reserve Bank and
Federal Home Loan Bank Stocks 1,137 51 5.98% 888 45 6.78%
Loans 106,523 7,773 9.72% 84,382 6,251 9.90%
-------- -------- -------- --------
Total Interest-
Earning Assets <F5> 222,802 $12,938 7.74% 192,513 10,906 7.57%
Allowance for Loan Losses (3,398) (3,411)
Cash and Due from Banks 9,837 7,578
Other Assets <F5> 8,799 8,384
-------- --------
Total Assets <F5> $238,040 $205,064
======== ========
LIABILITIES
Savings and Interest-
Bearing Demand $73,293 $1,570 2.85% $64,795 $1,354 2.79%
Time Deposits 94,673 3,701 5.21% 80,167 2,975 4.96%
-------- -------- -------- --------
Total Interest-
Bearing Deposits 167,966 5,271 4.18% 144,962 4,329 3.99%
Securities Sold Under
Repurchase Agreements 6,558 213 4.33% 6,830 195 3.82%
Long-Term Debt 180 11 8.25% 270 18 8.91%
-------- -------- -------- --------
Total Interest-
Bearing Liabilities 174,704 $5,495 4.19% 152,062 $4,542 3.99%
Demand Deposits 36,463 29,737
Other Liabilities 1,496 1,115
-------- --------
Total Liabilities 212,663 182,914
-------- --------
STOCKHOLDERS' EQUITY
Common Stockholders' Equity <F5> 25,377 22,150
-------- --------
Total Liabilities and
Stockholders' Equity <F5> $238,040 $205,064
======== ========
SPREAD ON INTEREST-BEARING FUNDS 3.55% 3.58%
NET INTEREST INCOME AND NET
YIELD ON INTEREST-EARNING ASSETS $7,443 4.45% $6,364 4.42%
======== ========
<F5> Based upon amortized cost of investment securities
Taxable equivalent earnings
</TABLE>
PART II - Other Information
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
11 Computation of earnings per share
(This computation is provided in Note 4 to the
Financial Statements on Page 8 and Page 9 under
Management's Discussion and Analysis)
(1) 27 Financial Data Schedule
(b) Reports on Form 8-K
None
SIGNATURES
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 hereunto duly authorized.
MINDEN BANCSHARES, INC.
November 13, 1996 BY: s/ Jack E. Byrd, Jr.
Jack E. Byrd, Jr.
President and CEO
November 13, 1996 BY: s/ Robert W. Hines, Jr.
Robert W. Hines, Jr.
Vice-President and
Chief Financial Officer
Financial Data Schedule
EXHIBIT 27
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
SEPTEMBER 30, 1996 FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<EXCHANGE-RATE> 1
<CASH> 13,018
<INT-BEARING-DEPOSITS> 1,327
<FED-FUNDS-SOLD> 16,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 79,939
<INVESTMENTS-CARRYING> 14,653
<INVESTMENTS-MARKET> 14,646
<LOANS> 113,694
<ALLOWANCE> 3,354
<TOTAL-ASSETS> 244,083
<DEPOSITS> 210,281
<SHORT-TERM> 0
<LIABILITIES-OTHER> 5,320
<LONG-TERM> 180
0
0
<COMMON> 775
<OTHER-SE> 25,896
<TOTAL-LIABILITIES-AND-EQUITY> 244,083
<INTEREST-LOAN> 7,773
<INTEREST-INVEST> 4,112
<INTEREST-OTHER> 838
<INTEREST-TOTAL> 12,723
<INTEREST-DEPOSIT> 5,271
<INTEREST-EXPENSE> 5,495
<INTEREST-INCOME-NET> 7,228
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 3,958
<INCOME-PRETAX> 4,886
<INCOME-PRE-EXTRAORDINARY> 3,376
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,376
<EPS-PRIMARY> 12.03
<EPS-DILUTED> 12.03
<YIELD-ACTUAL> 4.45
<LOANS-NON> 418
<LOANS-PAST> 340
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 216
<ALLOWANCE-OPEN> 3,396
<CHARGE-OFFS> 171
<RECOVERIES> 129
<ALLOWANCE-CLOSE> 3,354
<ALLOWANCE-DOMESTIC> 3,354
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
