UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-KSB
(Mark One)
(X) ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1996
Commission file number 000-21658
MINDEN BANCSHARES, INC.
(name of small business issuer in its charter)
LOUISIANA
(State or other jurisdiction of incorporation or organization)
72-0980704
(I.R.S. Employer Identification No.)
401 Main Street, Minden, Louisiana 71055
(Address of principal executive offices- Zip code)
(318) 377-4283
Issuer's telephone number
Securities registered under Section 12(b) of the Exchange Act:
None
(Title of each class)
None
Name of each exchange on which registered
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, $2.50 par value
(Title of Class)
Page 1 of 48 Pages
Exhibit Index on Page 41
Check whether the issuer (1) 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.
Yes [ X ] No [ ]
Check if disclosure of delinquent filers in response to item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]
Issuers' revenues for its most recent fiscal year: $19,463,000.
State the aggregate market value of the voting stock held by nonaffiliates
computed by reference to price at which the stock was sold, or the average bid
and asked prices of such stock as of a specified date within the past 60 days:
As of March 11, 1997 - $17,928,768.
State the number of shares outstanding of each of the issuer's classes, of
common equity, as of the latest practical date: As of March 11, 1997 - 280,549
shares Common Stock.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's definitive proxy statement, which will be filed
within 120 days of the end of the registrant's fiscal year, are incorporated by
reference into Part III of this Report.
Transitional Small Business Disclosure Form (check one): Yes [ ] No [ X ]
FORM 10-KSB
INDEX
PART I Page
Item 1. Business 4
Item 2. Properties 16
Item 3. Legal Proceedings None
Item 4. Submission of Matters to a Vote of Security Holders None
PART II
Item 5. Market for Registrant's Common Equity and Related 17
Stockholder Matters
Item 6. Management's discussion and Analysis of Financial
Condition and Results of Operations 17
Item 7. Financial Statements 24
Item 8. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosures None
PART III
Item 9. Directors and Executive Officers of the Registrant 40
Item 10. Executive Compensation 40
Item 11. Security Ownership of Certain Beneficial Owners and
Management 40
Item 12. Certain Relationships and Related Transactions 40
PART IV
Item 13. Exhibits and Reports on Form 8-K 41
Signatures 42
MINDEN BANCSHARES, INC.
FORM 10-KSB
PART I
ITEM 1. BUSINESS
GENERAL
Minden Bancshares, Inc. ("Minden Bancshares"), a business organized under
the laws of Louisiana and a registered bank holding company under the Federal
Bank Holding Company Act of 1956 was organized in 1983 to acquire all of the
stock of Minden Bank & Trust Company ("Minden Bank") pursuant to a
reorganization that was consummated on January 21, 1985.
The principal asset of Minden Bancshares is all of the outstanding stock of
Minden Bank, all of which is owned by Minden Bancshares. As of December 31,
1996, Minden Bancshares had, on a consolidated basis, total assets of
$250,032,000, total deposits of $215,996,000 and total stockholders' equity of
$27,536,000. The principal executive offices of Minden Bancshares and its
wholly owned subsidiary are located at 401 Main Street, Minden, Louisiana
71055.
At December 31, 1996, Minden Bancshares' wholly owned subsidiary, Minden
Bank, had 87 full time and 7 part time employees.
Minden Bancshares and its subsidiary, Minden Bank, derive all of their
income from banking and bank-related services. The holding company structure
serves as a mechanism to enhance Minden Bank's ability to meet its customer's
requirements for financial services and provides flexibility for expansion of
Minden Bancshares' banking business.
SUBSIDIARY ENTITY
Minden Bank is a state-chartered bank organized under the laws of Louisiana
and is a member of the Federal Reserve System. Through its three locations in
Minden, its branch location in Sarepta, Louisiana and its three branches in
Shreveport, Louisiana , (See "ITEM 2 PROPERTIES" for descriptions) Minden Bank
conducts a general banking and trust business. It is a full service bank
offering (i) retail banking services, such as demand, savings and time deposits,
money market checking, lending, safe deposit boxes, money orders, travelers
checks and five ATM locations, (ii) commercial account services which include,
in addition to above, commercial lending, stand-by letters of credit, wire
transfers, and night depository services.
Minden Bank's deposit base is such that the loss of one depositor or a
group of depositors would not have a materially adverse effect on its business
and earnings. Also, the loan portfolio is also diversified so that one industry
or group of related industries does not comprise a material portion of the loan
portfolio. Minden Bank's business is not seasonal.
At December 31, 1996, Minden Bank had total assets and deposits of
$249,997,000 and $216,046,000 respectively.
ACQUISITIONS
On March 24, 1995, Minden Bank acquired three Hibernia National Bank
branches in Shreveport, Louisiana, described under "ITEM 2. PROPERTIES," with
assets totaling approximately $35,400,000 and liabilities totaling approximately
$37,500,000 with the excess $2,100,000 of liabilities over assets being
allocated to deposit based intangibles. The acquisition was accounted for under
the purchase method.
COMPETITION
Minden Bancshares is the largest bank holding company and Minden Bank is
the largest bank headquartered and located in Webster Parish. Through its
banking subsidiary, Minden Bancshares services customers in Webster, Caddo and
surrounding parishes. The Shreveport acquisition discussed above was for Minden
Bank's first facilities located outside Webster Parish.
Banking in the market area served by Minden Bank is highly competitive.
Competition is provided by other financial holding companies and institutions
located in Webster parish and throughout the State of Louisiana, particularly
the Shreveport-Bossier City area. Minden Bancshares and its banking subsidiary,
Minden Bank, not only compete with other bank holding companies and banks, but
with savings and loan associations, insurance companies, finance companies,
credit unions, pension trusts, and other institutions that provide investment
services to the public. Minden Bank anticipates intense competition in the
Shreveport-Bossier City area from the established local, state, regional, and
national banks and bank holding companies.
SUPERVISION AND REGULATION
General
Minden Bancshares is a registered bank holding company subject to
regulation by the FRB under the BHCA. Minden Bancshares is required to file
financial information with the FRB periodically and is subject to periodic
examination by the FRB. The BHCA requires FRB approval for bank acquisitions by
bank holding companies and regulates the activities of bank holding companies.
Minden Bancshares is also subject to regulation by the OFI and must file
periodic information with that state agency. The OFI also conducts periodic
examination of Minden Bancshares.
Minden Bank is a member of the Federal Reserve System and as such, is
subject to the supervision of and is regularly examined by the FRB and the OFI.
The FRB and OFI approve all acquisitions or establishments of additional
branches along with the closing of any existing branches. Minden Bank is also
subject to supervision of and may be examined by the FDIC.
Recent Legislation
In December 1991, the Federal Deposit Insurance Corporation Improvement Act
of 1991 ("FDICIA") was enacted. This act provided for recapitalization of the
Bank Insurance Fund ("BIF") and the Savings Association Insurance Fund ("SAIF")
of which Minden Bank is a member, substantially revised statutory provisions,
including capital standards. FDICIA provided insurance rate structure which
provided lower rates for stronger capitalized banks and banks with higher
supervisory ratings. The BIF became fully funded in 1995 and the SAIF became
fully funded in 1996 thereby reducing BIF and SAIF FDIC premiums. See "FDIC
Insurance Assessments" below.
Monetary Policies
The results of operation of Minden Bancshares and its banking subsidiary
are affected by the credit policies of monetary authorities particularly the
Board of Governors of the Federal Reserve System. The instruments of monetary
policy employed by the Federal Reserve Board include open market operations in
United States Government Securities, changes in the discount rate on member bank
borrowings and changes in reserve requirements against member bank deposits. In
view of changing conditions in the national economy and in the money markets, as
well as the effective action by monetary and fiscal authorities, including the
Federal Reserve System, no prediction can be made as to possible future changes
in interest rates, deposit levels, loan demand or the business and earnings of
Minden Bancshares and its banking subsidiary.
FDIC Insurance Assessments
Minden Bank is subject to FDIC insurance assessments. Effective May 1,
1995, the FDIC revised the BIF assessment rates from 0.23% to 0.4% for the
healthiest banks while retaining 0.31% for the weakest banks when the BIF became
fully funded. The BIF rate schedule was reduced to 0.0% for the healthiest
banks to 0.27% for the weakest banks effective January 1, 1996. SAIF
assessment rates were 0.23% for the healthiest banks to 0.31% for the weakest
banks until October 1, 1996, whereby provisions of the Deposits Insurance Funds
Act of 1996 (Funds ) reduced the rates to 0.0% for the healthiest banks and
0.27% of weakest Oakar SAIF banks. Also, effective October 1, 1996, under the
Funds Act, a one time assessment was made on all SAIF insured institutions and
all BIF insured banks with Oakar deposits to fully fund the SAIF. The Funds Act
also provided for separate assessments under BIF and SAIF effective January 1,
1997, for FICO bond servicing. The FICO assessments under BIF are at the annual
rate of 0.01296% for 1997 and an 0.0648% under SAIF for 1997. Minden Bank had
$3,990,000 of deposits in 1996 and will have $4,469,000 of deposits in 1997
insured under SAIF. Minden Bank's Oakar deposits insured under the SAIF are the
result of the acquisition in 1994 of the Minden branch of the failed Oak Tree
Federal Savings Bank.
Selected Statistical Information
SELECTED FINANCIAL DATA
The following selected financial data is not covered by the auditor's report
and should be read in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operation" which are included later.
Years Ended December 31,
------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
(Dollars in thousands, except per share data)
Operations:
Interest Income $17,255 15,015 11,100 10,599 11,525
Interest Expense 7,420 6,301 4,213 4,195 5,186
------- ------ ------ ------ ------
Net Interest Income 9,835 8,714 6,887 6,404 6,339
Provision for Loan Losses _ _ _ 270 783
------- ------ ------ ------ ------
Net Interest Income After
Provision for Loan Losses 9,835 8,714 6,887 6,134 5,556
Noninterest Income 2,208 1,804 1,128 1,353 1,302
Noninterest Expense 5,359 5,233 3,740 3,721 4,193
------- ------ ------ ------ ------
Income Before Taxes 6,684 5,285 4,275 3,766 2,665
Income Tax Expense 2,073 1,617 1,336 1,214 798
------- ------ ------ ------ ------
Net Income $ 4,611 3,668 2,939 2,552 1,867
======= ====== ====== ====== ======
Per Share:
Earnings Per Share $ 16.43 13.07 10.43 8.84 6.45
Book Value at End of Period<F1> 98.15 85.55 67.74 66.07 58.48
Cash Dividends 3.25 2.75 2.25 1.75 1.30
Total Shares Outstanding
(thousands) 281 281 281 283 289
Balances at End of Period:
Investment Securities $105,231 88,525 90,057 86,417 74,374
Loans,
net of unearned interest 115,346 99,381 66,225 57,728 58,602
Allowance for Possible
Loan Losses 3,306 3,397 3,395 3,354 3,006
Total Assets 250,032 227,011 172,565 163,173 160,854
Deposits 215,996 196,096 145,264 141,002 139,889
Stockholders' Equity 27,536 24,009 19,021 18,671 16,916
Average Balances:
Total Average Assets 241,234 210,199 169,353 163,207 158,310
Total Average Shareholders'
Equity 25,867 21,998 19,380 17,969 16,172
Ratios:
Return on Average Assets 1.91% 1.75% 1.74% 1.56% 1.18%
Return on Average Equity 17.83% 16.67% 15.17% 14.20% 11.54%
Average Stockholders' Equity
to Average Assets 10.72% 10.47% 11.44% 11.01% 10.21%
<F1> These amounts reflect unrealized gains and losses on available for sale
securities in the stockholders' equity section of the balance sheet, required
upon the adoption of FASB 115 in 1994. The book value per share at the end of
1996, 1995 and 1994 without including the unrealized gains and losses on
available for sale securities would have been $97.88, $84.69 and $74.37,
respectively.
<TABLE>
<CAPTION>
SELECTED STATISTICAL INFORMATION
CONSOLIDATED AVERAGE BALANCES, INTEREST INCOME/EXPENSE,
YIELDS/RATES, VOLUME AND RATE/VOLUME VARIANCE ANALYSIS
TAXABLE EQUIVALENT BASIS
------------------------
(in thousands)
YEARS ENDED DECEMBER 31,
------------------------
1996 1995
-------------------------- -------------------------
Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate Balance Expense Rate
-------- ------ ------ ------- ------- ------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Earning Assets:
Loans, net of
unearned income <F2> $108,349 10,572 9.76% 87,497 8,664 9.90%
Investment Securities:
Taxable (available for sale) 80,624 4,774 5.92% 77,782 4,593 5.90%
Nontaxable (held to maturity) 14,635 1,032 7.05% 12,404 885 7.13%
Total investment securities 95,259 5,806 6.09% 90,186 5,478 6.07%
-------- ------ ------- ------
Federal funds sold 20,387 1,069 5.24% 18,185 1,043 5.73%
Interest-bearing balances with
other banks 1,887 97 5.14% 1,648 76 4.61%
-------- ------ ------- ------
Total earning assets 225,882 17,544 7.77% 197,516 15,261 7.72%
Allowance for loan losses (3,386) (3,408)
Unrealized gain (loss) on available
for sale securities 27 (826)
Cash and due from banks 9,992 8,070
Other assets 8,719 8,847
-------- -------
Total Assets $241,234 210,199
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing liabilities:
Deposits:
Demand $24,316 604 2.48% 21,674 543 2.50%
Savings 49,802 1,522 3.06% 44,502 1,317 2.95%
Certificates of deposit
less than $100,000
and other time deposits 75,385 3,923 5.20% 66,732 3,249 4.86%
Certificates of deposit
of $100,000 or more 20,442 1,077 5.27% 15,648 900 5.75%
-------- ------ ------- ------
Total interest-bearing deposits 169,945 7,126 4.19% 148,556 6,009 4.04%
Securities sold under agreements
to repurchase 6,300 279 4.43% 6,832 268 3.92%
Notes payable 162 15 9.26% 252 24 9.52%
-------- ------ ------- ------
Total interest-bearing liabilities 176,407 7,420 4.21% 155,640 6,301 4.04%
Noninterest-bearing demand deposits 37,327 31,265
Other liabilities 1,633 1,296
Stockholders' equity 25,867 21,998
-------- -------
Total liabilities and
stockholders' equity $241,234 210,199
======== =======
Net interest income/net interest spread 10,124 3.56% 8,960 3.68%
Net yield on earning assets 4.48% 4.53%
Taxable equivalent adjustment:
Nontaxable (held to maturity)
investment securities 289 246
----- -----
Net interest income 9,835 8,714
===== =====
<F2> Loans on nonaccurual status have been included in the computation
of average balances.
</TABLE>
<TABLE>
<CAPTION>
SELECTED STATISTICAL INFORMATION
CONSOLIDATED AVERAGE BALANCES, INTEREST INCOME/EXPENSE,
YIELDS/RATES, VOLUME AND RATE/VOLUME VARIANCE ANALYSIS
TAXABLE EQUIVALENT BASIS
------------------------
(in thousands)
Variance Increase (Decrease)
Interest Attributable To
Volume Income/Expense -----------------------------------
Increase (Decrease) Increase (Decrease) 1996 1995
----------------------- ------------------- ---------------- ----------------
1996-1995 1995-1994 1996 1995 Volume Rate<F3> Volume Rate<F3>
--------- --------- ---- ---- ------ -------- ------ --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Earning Assets:
Loans, net of
unearned income $20,852 26,376 1,908 2,819 2,061 (153) 2,522 297
Investment Securities:
Taxable (available for sale) 2,842 (2,599) 181 254 165 16 (140) 394
Nontaxable (held to maturity) 2,231 1,951 147 118 159 (12) 143 (25)
-------- -------- ------ ------ ------ ------- ------ -------
Total investment securities 5,073 (648) 328 372 324 4 3 369
Federal funds sold
Interest-bearing balances with other banks 2,202 8,798 26 666 126 (100) 354 312
Total earning assets 239 1,634 21 76 11 10 98 (22)
-------- -------- ------ ------ ------ ------- ------ -------
Allowance for loan losses 28,366 36,160 2,283 3,933 2,522 (239) 2,977 956
-------- -------- ------ ------ ------ ------- ------ -------
Unrealized gain (loss) on available
for sale securities
Cash and due from banks
Other assets
Total Assets
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing liabilities:
Deposits:
Demand $2,642 4,260 61 109 66 (5) 106 3
Savings 5,300 7,146 205 354 152 53 184 170
Certificates of deposit
less than $100,000
and other time deposits 8,653 12,333 674 1,254 419 255 453 801
Certificates of deposit
of $100,000 or more 4,794 2,495 177 233 275 (98) 126 107
-------- -------- ------ ------ ------ ------- ------ -------
Total interest-bearing deposits 21,389 26,234 1,117 1,950 912 205 869 1,081
Securities sold under agreements
to repurchase (532) 3,233 11 140 (21) 32 115 25
Notes payable (90) (90) (9) (2) (8) (1) (7) 5
-------- -------- ------ ------ ------ ------- ------ -------
Total interest-bearing liabilities 20,767 29,377 1,119 2,088 883 236 977 1,111
-------- -------- ------ ------ ------ ------- ------ -------
Noninterest-bearing demand deposits
Other liabilities
Stockholders' equity
Total liabilities and
stockholders' equity
Net increase in net earning assets $7,599 6,783 1,164 1,845 1,639 (475) 2,000 (155)
========= ========= ====== ====== ====== ======= ------- -------
Net yield on earning assets
Taxable equivalent adjustment:
Nontaxable (held to maturity)
investment securities
Net interest income
<F3> The change in interest due to both rate and volume has been allocated
to the rate componet.
</TABLE>
INVESTMENT SECURITIES PORTFOLIO
-------------------------------
The carrying amounts of investment securities held by Minden Bank &
Trust Company ("Minden Bank"), the wholly owned banking subsidiary of Minden
Bancshares, Inc. ("Minden Bancshares") at the dates indicated are
summarized as follows (in thousands):
December 31,
1996 1995 1994
---------- --------- ---------
Held to Maturity:
State and Political Subdivisions $ 14,784 14,443 11,375
---------- --------- ---------
Available for Sale:
U.S. Treasury and Agency 90,334 73,721 81,503
Federal Reserve Bank Stock 1,205 1,037 870
---------- --------- ----------
91,539 74,758 82,373
Unrealized Gains (losses) 113 361 (2,821)
---------- --------- ----------
Total Available for Sale Securities 91,652 75,119 79,552
---------- --------- ----------
Total Investment Securities $ 106,436 89,562 90,927
========== ========= ==========
Minden Bank did not own an aggregate book value of securities in any
one issuer that exceeded 10% of total equity capital.
The following table shows maturities of investment securities (in thou-
sands) at amortized cost held by Minden Bank at December 31, 1996 together
with the weighted average yields:
<TABLE>
<CAPTION>
U.S. Weighted State and Weighted Weighted
Government Average Political Average Other Average
& Treasury Yield Subdivisions Yield<F4> Securities Yield
---------- -------- ------------ -------- ---------- --------
<S> <C> <C> <C> <C> <C>
Due 1 year or less $ 35,036 5.02% 488 7.95% 1,205 5.91%
Due after 1 year
through 5 years 53,068 6.21% 2,628 7.20% _ _
Due after 5 years
through 10 years 665 6.07% 10,733 7.30% _ _
Due after 10 years 1,564 6.35% 935 7.08% _ _
---------- -------- ----------- -------- ---------- --------
Total $ 90,333 5.75% 14,784 7.29% 1,205 5.91%
========== ======== =========== ======== ========== ========
<F4>Computed on taxable equivalent basis.
</TABLE>
LOAN PORTFOLIO
--------------
There are no foreign loans in Minden Bank's loan portfolio. The amount of
loans outstanding for the indicated years are shown in the following table ac-
cording to type of loan (in thousands):
December 31,
1996 1995
------ ------
Commercial, financial and agricultural loans $ 31,567 29,676
Construction loans secured by real estate 3,381 2,722
Other loans secured by real estate 60,025 50,651
Installment and single payment loans 18,143 15,148
Other loans 2,368 1,502
------- -------
Total Loans $115,484 99,699
Less: Unearned income 138 318
Reserve for possible loan losses 3,306 3,397
------- -------
Net Loans $112,040 95,984
======== =======
The following table presents maturities and interest rate sensitivity with
respect to selected loan categories as of December 31, 1996. Maturities, which
are presented in thousands, are based on remaining scheduled repayments of prin-
cipal.
Loan Category Due Over One
------------- One Year Year Through Over
or Less Five Years Five Years Total
-------- ---------- ---------- -------
Commercial, financial and
agricultural $16,007 13,328 2,232 $31,567
Construction loans secured
by real estate 1,074 2,258 49 3,381
------ ------ ----- ------
Total $17,081 15,586 2,281 $34,948
======= ====== ===== =======
Loans due after one year:
Having Predetermined Interest Rates $12,752
Having Floating Interest Rates 5,115
-------
Total $17,867
=======
RISK ELEMENTS IN LOAN PORTFOLIO
-------------------------------
The following table sets forth (in 000's) a presentation of nonperforming
loans held by Minden Bank at December 31, 1996 and December 31, 1995. Nonper-
forming loans comprise: (a) loans on which recognition of interest income has
been discontinued ("nonaccrual loans"); (b) loans contractually past due 90 days
or more as to interest or principal payments which are still accruing interest
("past-due loans"); and (c) loans, the terms of which have been renegotiated to
provide for an extension of the original payment period and/or a reduction or
deferral of interest or principal because of a deterioration in the financial
position of the borrower ("restructured loans").
Nonaccrual Past-Due Restructured
Loans Loans Loans Total
---------- ------- --------- -----
December 31, 1996 $ 355 510 0 $ 865
December 31, 1995 $ 403 174 69 $ 646
In addition to nonperforming loans discussed above, management has identified
other loans for which payments are current that are subject to potential future
classification as nonperforming. As of December 31, 1996, these loans totalled
$501 thousand as compared to $204 thousand at December 31, 1995. Loans are
placed on nonaccrual status by Minden Bank when a loan becomes ninety (90) days
past due unless there is sufficient evidence that it will be brought current in
the very near future. Income on nonaccrual loans is then recognized only to the
extent that cash is received in excess of the required principal payments and if
the future collection of principal is probable. Interest accruals are recorded
on such loans only when they are brought fully current with respect to interest
and principal and when, in the judgment of management, the loans are estimated
to be fully collectible as to both interest and principal. Interest income on
nonaccrual loans which would have been reported on an accrual basis amounted
to approximately $36,000 for the period ended December 31, 1996 and $48,000 for
the period ended December 31, 1995. Interest income on restructured loans inc-
luded in net income amounted to $4,000 during the year ended December 31, 1996
and $17,000 during the year ended December 31, 1995.
SUMMARY OF LOAN LOSS EXPERIENCE
-------------------------------
The following table summarizes the balance in the allowance for loan losses
of Minden Bank at the end of each period, changes in the allowance arising from
charge-offs and recoveries by category and the provision charged to expense for
the fiscal years ended December 31, 1996 and December 31, 1995:
Years Ended December 31,
1996 1995
------ ------
(Amounts are in 000's)
Balance at beginning of period $3,397 3,395
Charge-Offs - All Domestic
Commercial, financial & agricultural 78 20
Real Estate - construction _ _
Real Estate - mortgage 10 67
Installment loans to individuals 156 100
Lease financing _ _
Foreign _ _
------ ------
Total 244 187
------ ------
Recoveries-All Domestic
Commercial, financial & agricultural _ 39
Real Estate - construction _ _
Real Estate - mortgage 85 94
Installment loans to individuals 68 56
Lease financing _ _
Foreign _ _
------ ------
Total 153 189
------ ------
Net charge-offs (recoveries) 91 (2)
Additions charged to operations _ _
Balance at end of period $3,306 3,397
====== ======
Ratio of net charge-offs during the period
to average loans outstanding during the period 0.08% 0.00%
The reserve of Minden Bank is based upon management's analysis of the
portfolio and current and expected economic conditions. This analysis includes a
study of loss experience, internal loan reviews, a review of delinquencies, and
an estimate of the possibility of loss in view of the risk characteristics of
the portfolio. In addition, since 1989, management has attempted to maintain its
reserve in an amount equal to or greater than its nonperforming assets. This
objective has been achieved with the reserve account being 2.87% and 3.41% of
total loans at December 31, 1996 and 1995, respectively.
ALLOCATION OF RESERVE FOR POSSIBLE LOAN LOSSES
----------------------------------------------
Management has allocated the reserve for possible loan losses according to
amounts deemed reasonably necessary to provide for possible losses within the
categories of loans set forth in the table below. In determining the allocation,
management reviews loans monthly taking into consideration each borrower's
ability to repay, repayment record, past credit history and underlying
collateral values before classifying a loan to our watch list as (1) watch list,
(2) sub-standard, or (3) non-accural. Specific reserves are allocated to the
loans placed on the watch list based upon individual factors. All other loans
are assigned a 3% loss factor except to the extent loans are not secured by cash
or the government. Because the allocation is based on estimates and subjective
judgment, it is not necessarily indicative of the special amounts or loan
categories in which charge-offs may ultimately occur. The amount of the reserve
applicable to each category and the percentage of loans in each category to
loans are presented below.
For the Years Ended December 31,
1996 1995
----------------- ---------------
(amounts are in 000's)
% of % of
Loans in Loans in
Amount Category Amount Category
------ -------- ------ --------
Commercial, financial
and agricultural $ 893 27% 1,019 30%
Construction loans
secured by real estate 99 3% 102 3%
Other loans secured by
real estate 1,719 52% 1,732 51%
Installment and single payment 529 16% 510 15%
Foreign _ _ _ _
Other 66 2% 34 1%
------ ---- ----- ----
Total $3,306 100% 3,397 100%
====== ==== ===== ====
OTHER INTEREST-BEARING ASSETS
-----------------------------
There were no other "nonperforming interest-bearing assets" held by Minden
Bank at December 31, 1996 or 1995.
DEPOSITS - AVERAGE BALANCES AND AVERAGE RATES PAID
------------------------------------------------------
The daily average amounts of deposits (in 000's) together with the rates
paid on such deposits are presented below for the periods indicated:
Years Ended December 31,
1996 1995
------- -------
Noninterest-bearing demand deposits $37,327 31,265
Rate Paid 0% 0%
Interest-bearing demand deposits $24,316 21,674
Rate Paid 2.48% 2.50%
Savings Deposits $49,802 44,502
Rate Paid 3.06% 2.95%
Time Deposits $95,827 82,380
Rate Paid 5.22% 5.04%
Total interest-bearing deposits $169,945 148,556
Total deposits $207,272 179,821
Average Rate Paid 3.44% 3.34%
MATURITIES SCHEDULE FOR TIME CERTIFICATES OF DEPOSITS OVER $100,000
---------------------------------------------------------------------
Maturity schedules for time certificates of deposit of more than $100,000
are presented below (in 000's) for the dates indicated:
Year Ended
December 31, Average
1996 Rate
------- ------
3 months or less $15,309 5.15%
Over 3 months through 12 months 5,161 5.16%
Over 12 months 1,476 5.78%
------- ------
Total outstanding $21,946 5.20%
======= ======
RETURN ON EQUITY AND ASSETS
---------------------------
The following table presents the net income, average assets, average
equity, return on assets (net income divided by average assets), return on
equity (net income divided by average equity) and equity to assets ratio
(average equity divided by average assets) for the periods indicated:
Years Ended December 31,
1996 1995
-------- --------
(amounts in 000's)
Net Income $ 4,611 3,668
Average Assets $ 241,234 210,199
Average Equity $ 25,867 21,998
Return on Average Assets 1.91% 1.75%
Return on Average Equity 17.83% 16.67%
Dividend Payment Ratio 19.77% 21.05%
Average Equity to Average
Assets Ratio 10.72% 10.47%
ITEM 2. PROPERTIES
Minden Bank has seven banking locations including the main office, which
are all owned by Minden Bank.
The main office of Minden Bank is presently located in a two-story office
building at 401 Main Street, Minden, Louisiana. The premises consist of
approximately 22,000 total square feet of office space, all of which is occupied
by Minden Bank.
Minden Bank has two branches in the City of Minden. They are located and
described as follows:
1. 200 Homer Road. The former Webster Bank main office consists of
approximately 7,000 total square feet office space all of which is
occupied by Minden Bank.
2. 1316 Sibley Road. The former Webster Bank branch consists of
approximately 3,500 square feet of office space of which all is
occupied by Minden Bank.
Minden Bank also has a branch located on Louisiana Highway 7, Sarepta,
Louisiana 71071, which is approximately 25 miles northwest of the City of
Minden. The premises in Sarepta consist of approximately 1,500 square feet of
office space of which all is occupied by Minden Bank.
The three Shreveport branches are located and described as follows:
1. 6250 Hearne Avenue. This branch consists of approximately 3,400 total
square feet of office space all of which is occupied by Minden Bank.
2. 1633 North Market Street. This branch consists of approximately 4,500
total square feet of office space all of which is occupied by Minden
Bank. Our commercial lending department for the Shreveport area
market is currently housed at the North Market branch.
3. 3400 Line Avenue. This branch consists of approximately 1,600 total
square feet of office space all of which is occupied by Minden Bank.
PART II
ITEM 5. MARKET FOR MINDEN BANCSHARES' COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS
Minden Bancshares' Common Stock is not traded on any exchange and there is
no established public trading market. The transfer of stock represents a
process between buyers and sellers and prices of stock are not always reported
to Minden Bancshares' management. During the first quarter of 1995, there were
three transfers totaling 393 shares at prices reported of $66.00 per share.
During the second quarter of 1995, there were twenty-two transfers totaling
1,218 shares at prices reported of $66.00 per share. During the third quarter
of 1995, there were two transfers totaling 365 shares at prices reporting of
$66.00 per share. There were no transfers during the fourth quarter 1995.
Minden Bancshares purchased into Treasury 142 shares from four shareholders in
the first quarter 1995 and fourteen shares from one shareholder in the third
quarter 1995 all at the price of $60.00 per share. During the first quarter
1996, there was one transfer for 200 shares for which no price was reported.
During the second quarter of 1996, there were five transfers totaling 811 shares
of which the price of one transfer of 94 shares for which price was reported of
$76.00. There was one transfer in the third quarter of 1996 of 147 shares at a
reported price of $85.00. There was one transfer in the fourth quarter of 1996
of 316 shares for which no price was reported. Minden Bancshares purchased into
Treasury 31 shares from one shareholder for $76.00 in the second quarter 1996
and 78 shares from one shareholder for $80.00 in the third quarter 1996.
Minden Bancshares declared and paid semi-annual dividends during 1996 and
1995 as listed.
1996 1995
----- -----
First half $ .65 $ .50
Second half 2.60 2.25
----- -----
Totals $3.25 $2.75
===== =====
Minden Bancshares has paid semi-annual dividends each year since its
acquisition of Minden Bank in 1985 and Minden Bank paid dividends for at least
twenty consecutive years prior to 1985. It is the present intention of Minden
Bancshares' Board of Directors to continue the dividend payments; however,
future dividends must necessarily depend on earnings, financial condition,
appropriate legal restrictions and other factors relevant at the time the Board
of Directors considers its dividend policy.
At December 31, 1996, Minden Bancshares had approximately 467 shareholders
of record.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following analysis should be read in conjunction with Minden Bancshares
historical financial statements, notes and charts appearing elsewhere herein.
FINANCIAL PERFORMANCE OVERVIEW
------------------------------
Two key measures of profitability used by the banking industry are return
on average assets (ROA) and return on average equity (ROE). For the year ended
December 31, 1996, Minden Bancshares ROA was 1.91% compared to 1.75% for the
year ended December 31, 1995 and 1.74% for the year ended December 31, 1994.
ROE, a measure of the effective use of shareholders' investment, was 17.83% in
1996, compared to 16.67% in 1995 and 15.17% in 1994. Minden Bancshares' results
for both ROE and ROA for the years 1996, 1995 and 1994 compare favorably to the
ROA and ROE of banks of similar size.
Another financial indicator used in the banking industry is net interest
margin which is a measure that demonstrates the effectiveness of a bank in
managing the yield derived from earning assets. Net interest margin is the net
yield which earnings from interest represent on total average earning assets.
Key factors affecting net interest margin are the level of interest rates, the
amount of noninterest-bearing funds supporting earning assets, net interest
spread (which is defined as the difference between the annualized yield on
average earning assets on a tax equivalent basis and the annualized rate on
funds) and the level of earning assets which may be affected by nonaccrual and
restructured loans.
The following table sets forth the net interest margin and net interest
spread on a tax equivalent basis for Minden Bancshares on a consolidated basis
for the years ended December 31, 1996, 1995 and 1994:
Years Ended December 31,
1996 1995 1994
----- ----- -----
Net Interest Margin - Tax Equivalent 4.48% 4.53% 4.41%
Net Interest Spread - Tax Equivalent 3.56% 3.68% 3.68%
The decrease in Minden Bank's net interest margin for the period ended
December 31, 1996 is due to decreased interest rates on loans and Federal funds
sold accompanied by deposit growth in certificates of deposit, higher interest
bearing deposits. The increase in Minden Bank's net interest margin for the
period ended December 31, 1995 was due to increased loan growth and increased
noninterest-bearing deposits.
RESULTS OF OPERATIONS
---------------------
Minden Bancshares' net income increased in each of its last three years.
Net income for Minden Bancshares was $4,611,000 for the year ended December 31,
1996, an increase of $943,000 or 25.71% over net income of $3,668,000 in 1995
which increased by $729,000 or 24.80% over net income for 1994. The increase in
1996 net income of 25.71% over 1995 is due to an entire year's operation on the
three Shreveport branches accompanied by increased loan and deposit growth. The
increase in net income for 1995 of 24.80% over net income for 1994 was the
result of the acquisition of the three Shreveport branches on March 24, 1995 and
loan and deposit growth.
The following is a comparison of per share earnings of Minden Bancshares
for the years ended December 31, 1996, 1995 and 1994 which reflects the change
in net income:
12 Months Ended December 31,
1996 1995 1994
---- ---- ----
Earnings Per Share: $16.43 13.07 10.43
NET INTEREST INCOME (TAX EQUIVALENT BASIS)
------------------------------------------
Net interest income, the difference between interest income and interest
expense, is the prime component of Minden Bancshares' earnings. During 1996, tax
equivalent net interest income was $10,124,000 on average earning assets of
$225,882,000 which represents a net interest margin of 4.48% compared to 4.53%
on tax equivalent net interest income of $8,960,000 on average earning assets of
$197,516,000 for 1995. The $1,164,000 or 12.99% increase in tax equivalent net
interest income in 1996 was attributable to an entire year's operation of the
three Shreveport branches acquired March 24, 1995 along with increased loan
demand and deposit growth.
In 1995, tax equivalent net interest income of Minden Bancshares was
$8,960,000, an increase of $1,845,000 or 25.93% over the previous year of 1994.
The increase of 25.93% in net interest income for 1995 when compared to the
prior year was attributable to the acquisition of three Shreveport branches on
March 24, 1995 along with increased loan demand.
NET YIELD ON EARNING ASSETS/SPREAD
----------------------------------
Minden Bancshares' net interest income is influenced by changes in interest
rates as well as volume.
Average earning assets of Minden Bancshares consisting of loans, taxable
and nontaxable investment securities, federal funds sold and interest-bearing
balances due from banks, for 1996 increased $28,366,000 or 14.36% over 1995.
The yield on interest-earning assets increased to 7.77% during 1996 from
7.72% during 1995 mainly from an entire year's operation of the three Shreveport
branches acquired March 24, 1995 along with increased loan demand.
Average interest-bearing liabilities increased $20,767,000 or approximately
13.34% during 1995 when compared to the prior year. The average cost of these
funds increased from 4.04% in 1995 to 4.21% in 1996. Net interest margin
decreased to 4.48% in 1996 from 4.53% in 1995.
During 1995, average earning assets increased $36,160,000 or 22.41% when
compared to average earning assets of approximately $161,356,000 for the prior
year. Average interest-bearing liabilities increased $29,377,000 or 23.27%
during 1994 when compared to average interest-bearing liabilities of
$126,263,000 for 1994. Net interest margin increased to 4.53% for 1995 when
compared to net interest margin of 4.41% for 1994. The increase in net interest
margin during 1995 was mainly due to the acquisition of the three Shreveport
branches on March 24, 1995 along with increased loan demand.
EARNING ASSETS
--------------
Average assets at Minden Bancshares increased during each of the last three
fiscal years. During 1996, average assets increased $31,035,000 or 14.76% from
1995. In 1995, average assets increased $40,846,000 or 24.12% from 1994.
Average earning assets of Minden Bancshares, consisting of loans, taxable
and nontaxable investment securities, federal funds sold and interest-bearing
balances due from banks increased over the last three fiscal years. In 1996,
average earning assets of Minden Bancshares increased $28,366,000 or 14.36% over
1995. During 1995, average earning assets increased by $36,160,000 or 22.41%
over average earning assets in 1994.
Consolidated average earning assets of Minden Bancshares increased in 1996
by $28,366,000, which resulted from continued growth. Average loans increased
$20,852,000 in 1996 to $108,349,000 as compared to an increase of $26,376,000 in
1995 to $87,497,000. The following table summarizes loan activities for the
periods indicated:
For The Years Ended December 31,
1996 1995 1994
---------- -------- --------
(dollars in 000's)
Average Loans $ 108,349 87,497 61,121
Dollar Change 20,852 26,376 2,303
Percent Change 23.83% 43.15% 3.92%
Interest $ 10,572 8,664 5,845
Dollar Change 1,908 2,819 189
Percent Change 22.02% 48.23% 3.34%
Yield 9.76% 9.90% 9.56%
Change (0.14%) 0.34% (0.61%)
Minden Bank's investment portfolio is another primary source of earnings.
Securities purchased are primarily low risk and are purchased as long term
investments. Management maintains the portfolio to provide marketability and
risk diversification. Securities transactions are not entered into in
anticipation of taking gains on short term price movements. In addition,
restructuring activities are infrequent and are carried out in conjunction with
a prudent overall business plan which does not result in a pattern of gains
being realized and losses being deferred on investment securities.
Average investment securities increased in 1996 after having shown a
slight decrease in 1995. As Minden Bank's average earning assets increased
significantly in 1996, the amounts in investment securities increased by a
lessor amount due to loan funding requirements. Average investment
securities decreased slightly in 1995 due to loan funding requirements and
increases in amount of Federal Funds sold and interest bearing balances with
banks. Available funds were used by management to purchase taxable and tax-
exempt securities in 1996 and 1995.
The following table summarizes investment activities for the periods
indicated:
For The Years Ended December 31,
1996 1995 1994
---- ---- ----
(dollars in 000's)
Investment Securities
(Average Balances at Amortized Cost)
U.S. Treasury & Other $42,345 45,372 45,864
U.S. Government Agencies 38,279 32,410 34,517
State and Political Subdivisions 14,635 12,404 10,453
------ ------ ------
Total $95,259 90,186 90,834
======= ====== ======
Dollar Increase (decrease) $ 5,073 (648) 11,012
Percent Increase (decrease) 5.63% (0.71%) 13.80%
Interest Income
U.S. Treasury & Other $ 2,654 2,675 2,544
U.S. Government Agencies 2,120 1,918 1,795
State and Political Subdivisions 743 639 539
-------- ----- -----
Total $5,517 5,232 4,878
======== ===== =====
Portfolio Yield 5.79% 5.80% 5.37%
Portfolio Yield - Tax Equivalent 6.09% 6.07% 5.62%
Federal funds sold, another major component of average earning assets,
increased to $20,387,000 or 12.10% in 1996 from $18,185,000 for the prior year.
The yield on federal funds sold decreased to 5.24% for 1996 from 5.73% for the
prior year.
INTEREST-BEARING DEPOSITS
-------------------------
Average noninterest-bearing deposits increased to $37,327,000 in 1996, an
increase of $6,062,000 or 19.39% over the prior year. In 1996, average interest-
bearing deposits increased to $169,945,000, a $21,389,000 or 14.40% increase
over the prior year.
The following table reflects average interest-bearing deposit activities
for the periods indicated:
For the Years Ended December 31,
1996 1995 1994
-------- -------- --------
(dollars in 000's)
Average Interest-Bearing Demand $ 24,316 21,674 17,414
Dollar Change 2,642 4,260 843
Percent Change 12.19% 24.46% 5.09%
Interest Expense $ 604 543 434
Dollar Change 61 109 5
Percent Change 11.23% 25.12% 1.17%
Yield 2.48% 2.50% 2.49%
Change (0.02%) 0.01% (0.10%)
Average Savings Deposits $ 49,806 44,502 37,356
Dollar Change 5,304 7,146 2,994
Percent Change 11.92% 19.13% 8.71%
Interest Expense $ 1,522 1,317 963
Dollar Change 205 354 33
Percent Change 15.57% 36.76% 3.55%
Yield 3.06% 2.95% 2.58%
Change 0.11% 0.37% (0.13%)
Average Other Time Deposits $ 95,827 82,380 67,552
Dollar Change 13,447 14,828 (1,431)
Percent Change 16.32% 21.95% (2.07%)
Interest Expense $ 5,000 4,149 2,662
Dollar Change 851 1,487 (65)
Percent Change 20.51% 55.86% (2.39%)
Yield 5.22% 5.04% 3.94%
Change 0.18% 1.10% (0.01%)
PROVISION FOR LOAN LOSSES
-------------------------
The provision for loan losses is the charge made against earnings to keep
the allowance for possible loan losses at a level management considers adequate
considering the nature of the loan portfolio and current economic conditions in
the marketplace. Management estimates the required allowance for possible loan
losses and the provision thereto by taking into consideration current economic
trends, changes in the character and size of the loan portfolio, nonperforming
loans, past loss experience, the ability of borrowers to repay based upon
financial statements and sources of cash flow, repayment performance and
history, underlying collateral values securing loans and other factors which
deserve recognition in estimating credit losses.
No provision was charged to income in 1996 or 1995. Net charge-offs for
1996 increased by $93,000 to $91,000 when compared to net recoveries of $2,000
for 1995. Management was of the belief that no provision for 1996 was needed
although loans had increased by $15,965,000 to $115,346,000 from $99,381,000 at
December 31, 1995. The reserve for loan losses was $3,306,000 or 2.87% of total
loans outstanding as of December 31, 1996 compared to $3,397,000 or 3.42% of
total loans outstanding as of December 31, 1995.
The net loan recoveries in 1995 were $2,000 as compared to net loan
recoveries in 1994 of $41,000. Net recoveries as a percentage of average loans
for 1995 was 0.00% as compared to 0.07% for 1994. The net loans outstanding at
December 31, 1995 increased by $33,156,000 to $99,381,000 when compared to net
loans outstanding at December 31, 1994 of $66,225,000. The reserve for possible
loan losses at December 31, 1995 increased by $2,000 to $3,397,000 when compared
to December 31, 1994.
The following table summarizes provision and allowance activities for the
periods indicated:
For the Years Ended December 31,
1996 1995 1994
---------- -------- --------
(dollars in 000's)
Loans, Net $ 115,346 99,381 66,225
Allowance for Possible Loan Losses 3,306 3,397 3,395
Percent of Loans 2.87% 3.42% 5.13%
Provision for Possible Loan Losses $ 0 0 0
Net Charge-Offs (recoveries) $ 91 (2) (41)
Percent of Average Loans 0.08% (0.00%) (0.07%)
NONACCRUAL AND NONPERFORMING LOANS
----------------------------------
On December 31, 1996, loans on nonaccrual status totalled $355,000, 0.31%
of total loans net of unearned discount. For the years ended December 31, 1995
and 1994, nonaccrual loans totalled $403,000 and $677,000, respectively. Loans
past due 90 days or more accruing interest (nonperforming loans) totalled
$510,000 as of December 31, 1996 compared to $174,000 and $154,000 for the years
ended December 31, 1995 and 1994, respectively.
NONINTEREST INCOME
------------------
Noninterest income consists primarily of service charges, trust department
fees and other fees and commissions. During 1996, noninterest income increased
by $404,000 to $2,208,000, or 22.39% over 1995, due to increased fees for
services provided. During 1995, noninterest income increased by $676,000 to
1,804,000 or 59.92% from 1994. The increase in noninterest income of $676,000
for 1995 was due to the acquisition of the Shreveport branches, increased fees
for services rendered and not having been detrimented by the loss on sale of
securities experienced in 1994.
NONINTEREST EXPENSE
-------------------
This category of expense includes salaries, employee benefits, occupancy
expense, furniture and equipment expense and other expenses. Total noninterest
expenses (total operating expenses) for 1996 amounted to $5,359,000, a $126,000
or 2.35% increase over total operating expenses for 1995. The increase in total
operating expenses in 1996 over 1995 was attributable in some instances to an
entire year's operation of the Shreveport branches whereas there are reductions
in 1996 from 1995 due to start up expenses for the Shreveport branches for
expense categories. Although there was an increase in noninterest expenses,
there was a reduction in FDIC insurance premiums as the result of rate
decreases.
Total operating expenses for 1995 were $5,233,000, an increase of
$1,493,000 or 39.92% when compared to total operating expenses for 1994. The
increase in total operating expenses in 1995 as compared to 1994 was
attributable to the Shreveport branches acquisition while the reduction in FDIC
insurance was due to rate decreases.
LIQUIDITY
---------
A key to success as a community bank is to maintain adequate liquidity in
order to satisfy customer needs in a satisfactory response time. To achieve this
goal, Minden Bank monitors 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, Minden Bank 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 at Minden Bank averaged 52.27% during 1996
compared to 48.66% in 1995 and 42.12% in 1994. Average federal funds sold were
$20,387,000, $18,185,000 and $9,387,000, respectively during 1996, 1995 and
1994. Additionally, at December 31, 1996, Minden Bank had investment securities
with an amortized cost of $106,322,000, of which $36,729,000 or 34.55% mature
within one year, $55,696,000 or 52.38% mature within two to five years, and
$13,897,000 or 13.07% mature in over five years. Additional sources of liquidity
which are available, are borrowing from the Federal Reserve Bank as a member
bank and the purchase of federal funds on a daily basis from other banks. Minden
Bancshares does not anticipate any events which will require liquidity beyond
that which is available from the above referenced sources.
INTEREST RATE SENSITIVITY
-------------------------
The interest rate sensitivity of Minden Bancshares' assets and liabilities
provides an indication of the extent to which Minden Bancshares' net interest
income may be affected by interest rate movements. An indicator of the rate
sensitivity structure of a financial institution's balance sheet is the
difference between its interest rate sensitive assets and interest rate
sensitive liabilities which is referred to as the "Gap". The table below
presents Minden Bancshares' Gap position at December 31, 1996:
<TABLE>
<CAPTION>
After 3 After 6
Within Within Within After Year End
3 Months 6 Months 12 Months One Year Balance
---------- -------- --------- -------- ----------
(dollars in 000's)
<S> <C> <C> <C> <C> <C>
Earning Assets:
Loans $ 50,339 9,237 10,044 45,864 $ 115,484
Securities available for sale 26,729 4,632 10,417 49,874 91,652
Securities held to maturity 330 58 100 14,296 14,784
All other 10,744 _ _ _ 10,744
---------- -------- --------- -------- ----------
Total Earning Assets $ 88,142 13,927 20,561 110,034 $ 232,664
---------- -------- --------- -------- ---------
Funding Sources:
Time deposits $ 40,579 19,324 19,348 20,117 $ 99,368
Other interest-bearing deposits 78,431 _ _ _ 78,431
Short-term debt 90 _ _ _ 90
Securities sold under agreements
to repurchase 5,418 _ _ _ 5,418
Noninterest-bearing sources _ _ _ 49,357 49,357
---------- --------- -------- -------- ----------
Total Funding Sources $ 124,518 19,324 19,348 69,474 $ 232,664
---------- --------- -------- -------- ----------
Gap Summary:
Periodic net earning assets $ (36,376) (5,397) 1,213 40,560 $ _
---------- --------- -------- -------- ----------
Cumulative net earning assets $ (36,376) (41,773) (40,560) - $ -
========== ========== ======== ======== ==========
Periodic net earning assets/
Total earning assets (15.63%) (2.32%) 0.52% 17.43% _
Cumulative ratio of earning assets
to interest-bearing liabilities (15.63%) (17.95%) (17.43%) _ -
</TABLE>
This table is based upon a point in time and may not always be meaningful
because it is based upon the earliest possible maturity or repricing and not
what may be a normal change in our interest rates. Also, this table does not
consider subsequent changes in interest rate structures or spreads between asset
and liability categories. Interest rate changes do not always occur equally to
interest-earning assets and interest-bearing liabilities. Interest rates on
interest-bearing demand deposits, "Now", money market and savings accounts which
may be immediately adjusted may not change in proportion to changes in interest
rates. Management believes that Minden Bancshares' asset and liability mix is
adequately positioned to adjust to interest rate changes.
CAPITAL ADEQUACY
----------------
Risk based capital guidelines issued by the Federal Reserve Board became
effective March 15, 1989. The guidelines require minimum levels of capital based
upon a risk rating of the contingent obligations. A minimum of 8% of total
capital to risk adjusted assets will be required, of which one half of the 8%
must consist primarily of tangible common shareholders equity ("Tier 1
Capital"). At December 31, 1996, Minden Bancshares' Tier 1 capital ratio was
22.29% and its total risk based capital ratio was 23.56% under the most
restrictive, fully phased in, risk based guidelines.
In addition, effective September 7, 1990, the Federal Reserve Board
implemented an additional 3% minimum Tier 1 leverage ratio (the "Leverage
Ratio") to be maintained in conjunction with the risk based capital standard.
The Leverage Ratio gauges the amount of Tier 1 capital (less certain intangibles
including goodwill) to total average assets (less certain intangibles including
goodwill). At December 31, 1996, Minden Bancshares' Leverage Ratio was 10.28%.
The Federal Reserve Board can require a bank to maintain a Leverage Ratio
greater than 3% if, in its opinion, the bank is anticipating significant growth
or is operating with less than well diversified risks.
INFLATION
---------
Inflation has a significant impact on the growth of total assets in the
banking industry. It requires increases in equity capital at higher than normal
rates in order to maintain an appropriate equity to asset ratio. Minden
Bancshares presently has the intent and ability to maintain proper equity to
asset ratios primarily by periodically adjusting its pricing of services and
banking products to take into consideration current costs. The consolidated
financial statements and related financial data of Minden Bancshares have been
prepared in accordance with generally accepted accounting principles which
requires the measurement of financial position and operating results in terms of
historical dollars without considering changes in the relative purchasing power
of money over time due to inflation.
RECENT ACCOUNTING PRONOUNCEMENTS
--------------------------------
In March of 1995, the Financial Accounting Standards 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 Standards Board (FASB) issued SFAS
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 provide this type of service.
In October of 1995, the Financial Accounting Standards Board (FASB)
issued SFAS No. 123, Accounting for Stock-Based Compensation, effective for
transactions entered into after December 15, 1995. SFAS 123 establishes a fair
value method of accounting for stock-based compensation plans. It encourages
entities to adopt the fair value method of accounting but permits the continued
usage of APB Opinion No. 25 Accounting for Stock Issued to Employees, for all
arrangements under which employees receive shares of stock or other equity
instruments of the employer or the employer incur liabilities to employees in
amounts based on the price of its stock that are appropriate for APB No. 25
reporting. Since the options granted under the "Stock Incentive Plan" are
appropriate for APB No. 25, management will continue to utilize APB No. 25
accounting which will not affect operations or earnings. There are pro forma
disclosure requirements under SFAS 123 regarding earnings per share computations
should those amounts become material.
In June of 1996, the Financial Accounting Standards Board (FASB)
issued SFAS 125, Accounting for Transfers and Servicing of Financial Assets and
Extinguishment of Liabilities, effective for transactions occurring after
December 31, 1996. SFAS 125 provides for fair value accounting for assets
transferred with the retention of some right(s) of ownership and for liabilities
disposed of for which all liabilities are not extinguished until a later date.
Any application to SFAS 125 will be immaterial in the Bank's current operations
and will not require accounting acknowledgment or disclosure.
ITEM 7. FINANCIAL STATEMENTS
January 9, 1997
The Board of Directors and Stockholders
Minden Bancshares, Inc. and Subsidiary
Minden, Louisiana
INDEPENDENT AUDITOR'S REPORT
----------------------------
We have audited the accompanying consolidated balance sheets of Minden
Bancshares, Inc. and Subsidiary as of December 31, 1996 and 1995, and the
related consolidated statements of income, changes in stockholders' equity, and
cash flows for each of the three years in the period ended December 31, 1996.
These consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
consolidated financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Minden
Bancshares, Inc. and Subsidiary as of December 31, 1996 and 1995, and the
consolidated results of its operations and its cash flows for each of the three
years in the period ended December 31, 1996, in conformity with generally
accepted accounting principles.
HEARD, McELROY & VESTAL, L.L.P.
Certified Public Accountants
Shreveport, Louisiana
MINDEN BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
December 31, 1996 and 1995
ASSETS 1996 1995
------ ---- ----
(in thousands, except per share data)
Cash and cash equivalents:
Cash and due from banks - Note 2 $ 14,907 11,121
Federal funds sold 8,500 21,500
--------- ---------
23,407 32,621
Investment securities - Note 3
U.S. Treasury 39,841 42,406
U.S. Government agencies 50,606 31,676
Obligations of state and
political subdivisions 14,784 14,443
--------- ---------
105,231 88,525
Federal Reserve Bank and FHLB stock 1,205 1,037
Loans, less allowance for loan losses
of $3,306 and $3,397 - Notes 4 and 8 112,040 95,984
Accrued interest receivable 2,178 2,328
Bank premises and equipment - Note 5 3,093 3,198
Real estate owned
other than bank premises - Note 14 217 376
Other Assets - Notes 6 and 12 2,661 2,942
--------- ---------
TOTAL ASSETS $250,032 227,011
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
LIABILITIES:
Deposits:
Noninterest bearing $ 38,197 35,698
Interest bearing - Note 11 177,799 160,398
--------- ---------
Total Deposits 215,996 196,096
Securities sold under
repurchase agreement 5,418 5,802
Accrued interest payable 860 787
Other liabilities 132 137
Note payable - Note 10 90 180
--------- ---------
Total Liabilities 222,496 203,002
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, respectively 775 775
Additional paid-in capital 11,205 11,205
Undivided profits - Note 7 16,778 13,078
Treasury stock-at cost-shares
29,267-1996 and 29,158-1995 (1,297) (1,288)
Net unrealized appreciation on
AFS securities net of taxes
of $39-1996 and $123-1995 75 239
--------- ---------
Total Stockholders' Equity 27,536 24,009
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $250,032 227,011
========= =========
The accompanying notes are an integral part of the financial statements.
MINDEN BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
December 31, 1996, 1995 and 1994
1996 1995 1994
---- ---- ----
(in thousands, except per share data)
INTEREST INCOME:
Interest and fees on loans $10,572 8,664 5,845
Investment securities:
Taxable 4,704 4,539 4,294
Tax-exempt 743 639 539
Federal funds sold 1,069 1,043 377
Federal Reserve stock and other 167 130 45
-------- -------- --------
Total interest income 17,255 15,015 11,100
INTEREST EXPENSE:
Deposits 7,126 6,009 4,059
Securities sold under
repurchase agreement and other 294 292 154
-------- -------- --------
Total interest expense 7,420 6,301 4,213
-------- -------- --------
Net interest income 9,835 8,714 6,887
Provision for loan losses - Note 4 - - -
-------- -------- --------
Net interest income after
provision for loan losses 9,835 8,714 6,887
-------- -------- --------
OTHER INCOME:
Service charges 1,574 1,367 1,070
Insurance commissions 300 189 107
Gain (loss) on investment securities - - (253)
Other operating income 334 248 204
-------- -------- --------
Total other income 2,208 1,804 1,128
OPERATING EXPENSES:
Salaries and employee benefits 2,785 2,489 1,898
Occupancy expense 491 363 331
Furniture and equipment expense 269 218 165
Writedown on real estate owned
other than bank premises - 91 19
FDIC insurance (6) 241 318
Stationery, supplies and printing 518 596 258
Data processing fees 120 210 67
Directors' fees 124 124 133
Other operating expenses 1,058 901 551
-------- -------- --------
Total operating expenses 5,359 5,233 3,740
-------- -------- --------
INCOME BEFORE INCOME TAXES 6,684 5,285 4,275
INCOME TAXES - NOTE 6 2,073 1,617 1,336
-------- -------- --------
NET INCOME $4,611 3,668 2,939
======== ======== ========
EARNINGS PER SHARE $16.43 13.07 10.43
======== ======== ========
The accompanying notes are an integral part of the financial statements.
MINDEN BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
December 31, 1996, 1995 and 1994
<TABLE>
<CAPTION>
Net
Unrealized
Appreciation
Total Additional (Depreciation)
Stockholders' Common Paid-In Undivided Treasury AFS
Equity Stock Capital Profits Stock Securities
------------- ------- ---------- --------- -------- --------------
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1993 $ 18,671 775 11,205 7,875 (1,184) --
- ----------------------------
Net income 2,939 -- -- 2,939 -- --
Cash dividends paid (632) -- -- (632) -- --
Purchase of 1,800 shares
common stock (95) -- -- -- (95) --
Adjustment for effect of a
change in accounting principal
- FASB 115 net of taxes of $345 671 -- -- -- -- 671
Change in unrealized (depreciation)
on AFS securities, net of
taxes of $1,304 (2,533) -- -- -- -- (2,533)
------------- ------- ---------- --------- -------- --------------
Balance at December 31, 1994 $ 19,021 775 11,205 10,182 (1,279) (1,862)
- ----------------------------
Net income 3,668 -- -- 3,668 -- --
Cash dividends paid (772) -- -- (772) -- --
Purchase of 156 shares
common stock (9) -- -- -- (9) --
Change in unrealized appreciation
on AFS securities, net of taxes
of $1,082 2,101 -- -- -- -- 2,101
------------- ------- ---------- --------- -------- --------------
Balance at December 31, 1995 $ 24,009 775 11,205 13,078 (1,288) 239
- ----------------------------
Net income 4,611 -- -- 4,611 -- --
Cash dividends paid (911) -- -- (911) -- --
Purchase of 109 shares common
stock (9) -- -- -- (9) --
Change in unrealized appreciation
on AFS securities, net of taxes
of $84 (164) -- -- -- -- (164)
------------- ------- ---------- --------- -------- --------------
Balance at December 31, 1996 $ 27,536 775 11,205 16,778 (1,297) 75
- ---------------------------- ============= ======= ========== ========= ======== ==============
</TABLE>
The accompanying notes are an integral part of the financial statements.
MINDEN BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
December 31, 1996, 1995 and 1994
1996 1995 1994
--------- -------- --------
(in thousands, except per share data)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 4,611 3,668 2,939
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 405 324 198
Provision for loan losses - - -
Writedown on real estate owned
other than bank premises - 91 19
(Gain) loss on investment securities - - 253
(Gain) on sale of real estate owned other than
bank premises (42) (13) (44)
(Increase) decrease in accrued interest receivable 150 (84) (289)
(Increase) decrease in other assets 69 262 (102)
Increase in accrued interest payable 73 293 66
Increase (decrease) in other liabilities (5) 59 69
--------- -------- --------
Total adjustments 650 932 170
--------- -------- --------
Net cash provided by operating activities 5,261 4,600 3,109
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales and maturities of investment
securities - Note 3 22,698 15,786 24,676
Purchase of investment securities and
Federal Reserve Bank stock - Note 3 (39,324) (11,238) (31,413)
Proceeds from sales of real estate owned
other than bank premises 285 192 247
Purchase of equipment (88) (1,107) (153)
Purchase of other assets - - (166)
Cost of deposit base intangibles - Note 12 - (2,146) -
Net (increase) in loans - Note 12 (16,552) (33,449) (8,592)
--------- -------- --------
Net cash (used) by investing activities (32,981) (31,962) (15,401)
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid (911) (772) (632)
Net increase in noninterest-bearing deposits
- Note 12 2,499 12,531 2,738
Net increase in interest-bearing deposits
- Note 12 17,401 38,301 1,524
Net increase (decrease) in securities sold
under repurchase agreement (384) (1,636) 4,735
Payments on note payable (90) (90) (90)
Purchase of 109, 156 and 1,800 shares treasury stock (9) (9) (95)
--------- -------- --------
Net cash provided by financing activities 18,506 48,325 8,180
--------- -------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (9,214) 20,963 (4,112)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 32,621 11,658 15,770
--------- -------- --------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 23,407 32,621 11,658
========= ======== ========
CASH PAYMENTS:
Interest $ 7,347 6,008 4,147
========= ======== ========
Income taxes $ 1,933 1,531 1,235
========= ======== ========
The accompanying notes are an intgral part of the financial statements.
MINDEN BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1996, 1995 and 1994
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
a. CONSOLIDATION
The accompanying financial statements include the accounts of Minden
Bancshares, Inc. (the Company) and its wholly-owned subsidiary, Minden
Bank and Trust Company (the Bank). The Company was organized as a bank
holding company under Federal Reserve Bank laws on June 27, 1983. The
holding company did not transact any business until 1985. The Bank has
locations in Minden, Sarepta, and Shreveport, Louisiana.
b. USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reported period. Actual results could differ from those
estimates. Material estimates that are particularly susceptible to
significant change relate to the determination of the allowance for
losses on loans and the valuation of real estate acquired in connection
with foreclosures or in satisfaction of loans. In connection with the
determination of the allowances for losses on loans and foreclosed real
estate, management obtains independent appraisals for significant
properties. Most of the Bank's business activity is with customers
located within the Minden/Shreveport, Louisiana area. The loan categories
are detailed in Note 4. The economy of the area is diversified but
depends on timber, agriculture, and oil and gas. Although these areas of
the economy and the economy in general in the area are doing well, it
could decline in the future.
While management uses available information to recognize losses on loans,
future additions to the allowances may be necessary based on changes in
local economic conditions. In addition, regulatory agencies, as an
integral part of their examination process, periodically review the
Bank's allowances for losses on loans and foreclosed real estate. Such
agencies may require the Bank to recognize additions to the allowances
based on their judgments about information available to them at the time
of their examination. Because of these factors, it is reasonably possible
that the allowances for losses on loans may change materially in the near
future.
c. INVESTMENT SECURITIES
The Bank's investments in securities are classified in two categories and
accounted for as follows.
Securities to be held to maturity. Bonds, notes and debentures (municipal
bonds) for which the Bank has the positive intent and ability to hold to
maturity are reported at cost, adjusted for amortization of premiums and
accretion of discounts which are recognized in interest income using the
straight-line method over the period to maturity. This method does not
significantly differ from the interest method.
Securities available for sale. Securities available for sale consist of
bonds, notes and debentures not classified as trading securities nor as
securities to be held to maturity.
Declines in the fair value of individual held to maturity and available
for sale securities below their cost that are other than temporary have
resulted in write-downs of the individual securities to their fair value.
The related write-downs have been included in earnings as realized
losses. There were no write-downs in 1996, 1995 or 1994.
Unrealized holding gains and losses, net of tax, on securities available
for sale are reported as a net amount in a separate component of
stockholders' equity until realized.
Gains and losses on the sale of securities available for sale are
determined using the specific identification method.
MINDEN BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1996, 1995 and 1994
(continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
------------------------------------------------------
d. LOANS AND ALLOWANCE FOR LOAN LOSSES
Loans are stated at the amount of unpaid principal, reduced by unearned
discount and an allowance for loan losses. Unearned discount on certain
installment loans is recognized as income under the rule of seventy-
eights, which approximates interest on the outstanding balance. Interest
on other loans is calculated by using the simple interest method on daily
balances of the principal amount outstanding. The accrual of interest on
loans is usually discontinued when interest is past due by ninety days.
Upon such occurrence, all unpaid accrued interest on such loans is
reversed. The allowance for loan losses is established through a
provision for loan losses charged to expense. Loans are charged against
the allowance for loan losses when management believes that the
collectibility of the principal is unlikely. The allowance is an amount
that management believes will be adequate to absorb possible losses on
existing loans that may become uncollectible, based on evaluations of the
collectibility of loans and prior loan loss experience. The evaluations
take into consideration such factors as changes in the nature and volume
of the loan portfolio, overall portfolio quality, review of specific
problem loans, and current economic conditions that may affect the
borrowers' ability to pay.
e. BANK PREMISES AND EQUIPMENT
Bank premises and equipment are carried at cost less accumulated
depreciation. Depreciation is provided over the estimated useful lives of
the respective assets on the straight-line and accelerated methods of
depreciation. Expenditures for major renewals and betterments of premises
and equipment are capitalized and those for maintenance and repairs are
charged to expense as incurred.
f. INCOME TAXES
Provisions for income taxes are based on taxes payable or refundable for
the current year (after exclusion of nontaxable income such as interest
on state and municipal securities) and deferred taxes on temporary
differences between the amount of taxable income and pretax financial
income and between the tax bases of assets and liabilities and their
reported amounts in the financial statements. Deferred tax assets and
liabilities are included in the financial statements at currently enacted
tax rates applicable to the period in which the deferred tax assets and
liabilities are expected to be realized or settled as prescribed in FASB
Statement No. 109, Accounting for Income Taxes. As changes in tax laws or
rates are enacted, deferred tax assets and liabilities are adjusted
through the provision for income taxes.
g. FEDERAL FUNDS
Federal funds sold are stated at the cash amount loaned to the member
bank. Interest is recognized on a daily basis as the funds are regularly
rolled over.
h. PENSION PLAN
The Bank has a plan whereby a percentage of the eligible employee's
compensation is contributed by the Bank to his individual retirement
account. The percentage is determined annually by the Board of Directors.
For 1996, 1995 and 1994, the percentage was 6%. To be eligible to
participate, an employee must be at least 21 years old and have been
employed by the Bank for two of the preceding five years. Contributions
(in thousands) to this plan in 1996, 1995 and 1994 amounted to
approximately $115, $107 and $86.
i. EARNINGS PER SHARE
Earnings per share are computed using the weighted number of shares
outstanding during each year. The number of weighted average outstanding
shares was 280,623 in 1996, 280,691 in 1995, and 281,842 in 1994.
MINDEN BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1996, 1995 and 1994
(continued)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
------------------------------------------------------
j. CASH AND CASH EQUIVALENTS
For purposes of the statement of cash flows, the Bank considers all
cash on hand, demand deposits with other banks, and federal funds sold
to be cash equivalents.
2. CASH AND DUE FROM BANKS
-----------------------
The Bank, as a member of the Federal Reserve System, is required to
maintain certain average reserve balances at the Federal Reserve Bank
and/or in cash on hand. The required balance (in thousands) at December 31,
1996 and 1995 was $1,859 and $1,358.
3. INVESTMENT SECURITIES
---------------------
The carrying amounts of investment securities as shown in the consolidated
balance sheets of the Bank and their approximate fair values at December 31
were as follows:
GROSS Gross
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
--------- ---------- ---------- -------
Securities available for
sale - December 31, 1996 -
U.S. Treasury $ 39,539 347 45 39,841
U.S. Government agency
securities 50,795 100 289 50,606
-------- --- --- ------
$ 90,334 447 334 90,447
======== === === ======
Securities to be held to
maturity - December 31, 1996 -
State and municipal
securities $ 14,784 203 72 14,915
======== === === ======
Securities available for
sale - December 31, 1995 -
U.S. Treasury 41,812 670 76 42,406
U.S. Government agency
securities 31,909 111 344 31,676
------- --- --- ------
$ 73,721 781 420 74,082
======== === === ======
Securities to be held to
maturity - December 31, 1995 -
State and municipal
securities $ 14,443 90 55 14,478
======== === === ======
Assets, principally securities, carried at approximately (in thousands)
$41,234 at December 31, 1996 and $35,262 at December 31, 1995 were pledged
to secure public deposits and for other purposes required or permitted by
law.
Gross proceeds from sales and maturities, and purchases (in thousands), of
securities for 1996 and 1995 are detailed below.
1996 1995
PROCEEDS: ---- ----
Proceeds from available for sale (AFS) securities - $22,515 15,376
maturities
Proceeds from AFS securities - sales ---- ----
Proceeds from held to maturity securities -
maturities and calls 183 410
------ ------
Total $ 22,698 15,786
======== ======
MINDEN BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1996, 1995 and 1994
(continued)
3. INVESTMENT SECURITIES (continued)
---------------------------------
PURCHASES: 1996 1995
-------- --------
Purchases of available for sale securities $ 38,632 7,593
Purchase of Federal Reserve Bank stock 168 167
Purchases of held to maturity securities 524 3,478
-------- --------
Total $ 39,324 11,238
======== ========
Gross losses (in thousands) of $253 were realized on sales of securities
available for sale in 1994. No gains were recognized. No gain or losses
were recognized on the maturities and call of bonds held to maturity in
1996 and 1995.
The scheduled maturities (in thousands) of securities to be held to
maturity and securities available for sale at December 31, 1996 were as
follows:
Securities to be Securities Available
Held to Maturity for Sale
---------------- --------------------
Amortized Fair Amortized Fair
Cost Value Cost Value
------- ------ ---------- -------
Due in one year or less $ 488 490 34,938 34,950
Due from one year to five years 2,663 2,700 53,178 53,278
Due from five to ten years 10,699 10,793 666 645
Due after ten years 934 932 1,552 1,574
------- ------ --------- -------
$ 14,784 14,915 90,334 90,447
======= ====== ========= =======
4. LOANS
-----
Loans (in thousands) at December 31, 1996 and 1995 consisted of the
following:
1996 1995
---------- ---------
Commercial, financial and agricultural $31,567 29,676
Real estate - construction 3,381 2,722
Real estate - mortgage 60,025 50,651
Installment - individuals 18,143 15,148
Other 2,368 1,502
--------- --------
115,484 99,699
Unearned discount (138) (318)
--------- --------
115,346 99,381
Allowance for loan losses (3,306) (3,397)
--------- --------
$112,040 95,984
========= ========
Changes in the allowance for loan losses (in thousands) are summarized as
follows:
1996 1995 1994
------- ------- -------
Beginning balance $3,397 3,395 3,354
Provision charged to operations _ _ _
Loans charged off (244) (180) (218)
Recoveries 153 182 259
------- ------- -------
Ending balance $3,306 3,397 3,395
======= ======= =======
MINDEN BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1996, 1995 and 1994
(continued)
4. LOANS (continued)
-----------------
Commitments to fund loans at December 31, 1996, 1995 and 1994 (in thousands)
amounted to approximately $17,432 - 1996, $19,045 - 1995 and $9,476 - 1994.
Loans on which the accrual of interest has been discontinued amounted (in
thousands) to approximately $355, $403 and $677 at December 31, 1996, 1995
and 1994. Had these loans been current in accordance with their original
terms, related interest income (in thousands) would have approximated $36,
$48 and $59 for 1996, 1995 and 1994. Loans on which the accrual of interest
has been reduced, or whose terms have been otherwise modified, amounted (in
thousands) to approximately $-0-, $69 and $168 at December 31, 1996, 1995
and 1994, respectively.
Loan origination fees and certain direct origination costs are capitalized.
The Bank grants commercial and consumer loans to customers in Minden and
Shreveport, Louisiana and the surrounding area. Although the Banks have a
diversified loan portfolio, a substantial portion of loan repayment is
dependent upon the general business climate in Minden and Shreveport.
5. BANK PREMISES AND EQUIPMENT
---------------------------
Bank premises and equipment (in thousands) at December 31, 1996 and 1995 are
summarized as follows:
Estimated
Useful Lives 1996 1995
-------------- ------- -------
Land $ 988 978
Buildings and improvements 8 - 50 Years 2,881 3,094
Furniture, fixtures and equipment 5 - 15 Years 679 1,474
Vehicles 3 - 5 Years 28 28
------- -------
4,576 5,574
Less - accumulated depreciation 1,483 2,376
------- -------
Bank premises and equipment $3,093 3,198
======= =======
Depreciation (in thousands) charged to operations in 1996, 1995 and 1994
amounted to $193, $188 and $153, respectively.
6. INCOME TAXES
------------
Federal income tax expense (in thousands) for December 31, 1996, 1995 and
1994 is as follows:
1996 1995 1994
------- ------- -------
Currently payable $1,932 1,541 1,340
Deferred (prepaid) 141 76 (4)
------- ------- -------
Income tax expense $ 2,073 1,617 1,336
======= ======= =======
Federal statutory tax rate 34.0% 34.0% 34.0%
Tax-exempt income (3.8) (4.2) (4.2)
Other - net .8 .8 1.5
------- ------- -------
Effective tax rate 31.0% 30.6% 31.3%
======= ======= =======
Included in other assets are deferred federal income taxes (in thousands) of
$564 and $640 at December 31, 1996 and 1995. Cumulative undistributed
earnings (in thousands) of the subsidiary Bank that have been recorded by
the Company, and for which no income taxes have been accrued, amounted to
approximately $11,291 at December 31, 1996. These earnings have been
reinvested in the subsidiary Bank.
MINDEN BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1996, 1995 and 1994
(continued)
6. INCOME TAXES (continued)
------------------------
The deferred tax asset at December 31, 1996 and 1995 consists of the
following:
1996 1995
------ ------
Deferred tax assets: (in thousands)
Reserve for loan losses $ 823 853
ORE write downs 38 38
------ ------
861 891
Deferred tax liability:
Discount on investments (258) (128)
Net unrealized appreciation on securities AFS (39) (123)
------ ------
(297) (251)
------ ------
Net deferred tax assets (based upon 34% tax rate) $ 564 640
====== ======
Management has determined that no valuation allowance is necessary.
7. UNDIVIDED PROFITS
-----------------
At December 31, 1996 and 1995, the Bank's undivided profits were legally
available for dividends. The Bank is subject to various regulatory capital
requirements administered by federal banking agencies. Failure to meet
minimum capital requirements can initiate certain mandatory, and possibly
additional descretionary actions by regulators that, if undertaken, could
have a direct material effect on the Bank's financial statements. Under
capital adequacy guidelines and the regulatory framework for prompt
corrective action, the Bank must meet specific capital guidelines that
involve quantitative measures of the Bank's assets, liabilities, and certain
off-balance-sheet items as calculated under regulatory accounting practices.
The Bank's captial amounts and classification are also subject to qualitative
judgements by the regulators about components, risk weightings, and other
factors.
Quantitative measures established by regulation to ensure capital adequacy
require the Bank to maintain minimum amounts and ratios (set fourth 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 December 31, 1996,
that the Bank meets all capital adequacy requirements to which it is subject.
As of December 31, 1996, the most recent notification from the Office of the
Comptroller of Currency categorized the bank as well capitalized under the
regulatory framework for prompt corrective action. To be categorized as
well capitalized the Bank must maintain minimum total risk-based capital,
Tier I risk-based capital, and Tier I leverage ratios as set forth in the
table. There are no conditions or events since that notification that
management believes has changed in the institutions category.
The Bank's actual capital amounts (in thousands) and ratios are also
presented in the table.
<TABLE>
<CAPTION>
To Be Well Capitalized
Under Prompt
For Capital Corrective
Actual Adequancy Purposes: Action Provisions:
--------------- ------------------- -----------------------
Amount Ratio Amount Ratio Amount Ratio
------- ----- ------- ----- ------- -----
<S> <C> <C> <C> <C> <C> <C>
As of December 31,1996:
Total Captial > > > >
(to Risk Weighted Assets) $27,033 23.6% = $9,328 = 8.0% = $11,600 =10.0%
Tier 1 Captial > > > >
(to Risk Weighted Assets) $25,576 22.3% = $4,664 = 4.0% = $ 6,996 = 6.0%
Tier 1 Captial > > > >
(to Average Assets) $25,576 10.3% = $9,932 = 3.0% = $12,416 = 5.0%
</TABLE>
MINDEN BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1996, 1995 and 1994
(continued)
8. RELATED PARTY TRANSACTIONS
--------------------------
At December 31, 1996 and 1995, certain officers, directors, or companies in
which they have 10% or more beneficial ownership, were indebted to the Bank
in the aggregate amount (in thousands) of $10,557 and $6,827, respectively.
Deposits with the Bank from the above related parties amounted (in
thousands) to $21,952 at December 31, 1996. Below is a summary of the
activity for 1996 and 1995 (in thousands):
1996 1995
------- ------
Beginning balance $6,827 6,821
Additional borrowings 9,669 1,786
Repayments of borrowings 5,939 1,780
------- ------
Ending balance $10,557 6,827
======= ======
The Bank is included in a consolidated federal tax return and records its
liability to the parent, when applicable, for the tax benefits arising from
the parent operating loss.
9. COMMITMENTS AND CONTINGENCIES
-----------------------------
There are outstanding commitments and contingent liabilities on which
management does not anticipate losses. They include, among other things,
commitments to extend credit and letters of credit undertaken in the normal
course of business. Outstanding letters of credit (in thousands) amounted to
$1,244 at December 31, 1996, and $2,688 at December 31, 1995. These
commitments represent off-balance sheet risk to the Bank, with the
contractual notional amount representing the Bank's exposure to credit loss
in the event of nonperformance by the other party to the instruments.
Commitments to extend credit are agreements to lend to a customer as long as
there is no violation of any condition established in the contract. They
generally have fixed expiration dates and require payment of a fee. Since
many commitments are expected to expire without being drawn upon, the total
commitments do not represent future cash requirements. The Bank evaluates
each customer's credit worthiness on a case-by-case basis, and obtains an
amount of collateral it deems sufficient.
10. NOTE PAYABLE
------------
The Company incurred debt to finance the purchase of its own common stock
(treasury stock). A summary of the debt (in thousands) is detailed below:
1996 1995
---- ----
Bank One, interest at Chase Manhattan Bank prime,
principal due $90 thousand per year; interest due
semi-annually $ 90 180
==== ====
The debt is secured by 16,500 shares of stock in Minden Bank and Trust
Company. The note will mature in 1997 with the remaining balance of $90,000
being paid.
11. TIME DEPOSITS
-------------
Time deposits (in thousands) of $100,000 or more amounted to $21,946 at
December 31, 1996 and $17,726 at December 31, 1995. Maturities (in millions)
over five years: $82,207 - 1997, $13,162 - 1998, $3,989 - 1999, $-0- - 2000,
and $-0- - 2001.
MINDEN BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1996, 1995 and 1994
(continued)
12. ACQUISITION
-----------
The Bank completed its purchase of three branches of Hibernia National Bank
in Shreveport, Louisiana as of March 24, 1995. Total assets acquired were
approximately $35.4 million, consisting of (in millions) cash $13.7, loans
$20.6 and fixed assets $1.1. Liabilities acquired were approximately $37.5
million consisting of deposits (in millions) of $35.9 and other liabilities
of $1.6 million. The Bank paid approximately $2.1 million in excess of
assets acquired and this amount was allocated to deposit based intangibles
and is being amortized over 15 years. Amortization (in thousands) included
in the income statement for 1996 and 1995 is $143 and $110 respectively. The
deposit base intangible net of amortization is included in other assets.
The Bank is in the process of acquiring First Federal Savings Bank (FFSB) in
Shreveport, Louisiana. An agreement was signed on January 23, 1997 to
acquire FFSB and the purchase is anticipated to be completed during the
second quarter of 1997. FFSB has assets of $36.481 million and liabilities
of $33.051 million.
The Bank is paying $5,411,200 cash for FFSB and will account for the
transaction as a purchase. The purchase price is $1,981,200 over book value.
The purchase is anticipated to be funded out of current operations.
13. FAIR VALUE OF FINANCIAL INSTRUMENTS
-----------------------------------
Statement of Financial Accounting Standards No. 107, Disclosures About Fair
Value of Financial Instruments (Statement 107), requires that the Company
disclose estimated fair values for its financial instruments. Fair value
estimates, methods, and assumptions are set forth below for its financial
instruments.
a. INVESTMENT SECURITIES
The fair value of investment securities, except certain agency and state
and municipal securities, is estimated based on bid prices published in
financial newspapers or bid quotations received from securities dealers.
The fair value of certain agency and state and municipal securities is
not readily available through market sources other than dealer quota-
tions, so fair value estimates are based on quoted market prices of simi-
lar instruments, adjusted for differences between the quoted instruments
and the instruments being valued. The carrying value and estimated fair
value of investment securities at December 31, 1996 and 1995, are dis-
closed in Note 3.
b. LOANS
Fair values are estimated for portfolios of loans that have similar
financial characteristics. Loans are segregated by type and maturity.
Each loan category is further segmented into fixed and adjustable rate
interest terms.
The fair value of performing loans is calculated by discounting scheduled
cash flows through the estimated maturity using estimated market discount
rates that reflect the credit and interest rate risk inherent in the
loan. The estimate of maturity is based on the company's historical exp-
erience with repayments for each loan classification, modified, as re-
quired, by an estimate of the effect of current economic and lending
conditions. For purposes of estimating fair value, loans with a remain-
ing maturity of three months or less and adjustable rate loans are as-
sumed to be carried at approximate fair value due to repricing at current
market rates.
Fair value for significant nonperforming loans is based on recent exter-
nal appraisals. If appraisals are not available, estimated cash flows are
discounted using a rate commensurate with the risk associated with the
estimated cash flows. Assumptions regarding credit risk, cash flows and
discount rates are judgmentally determined using available market inform-
ation and specific borrower information. The following table presents
information on loans (in thousands):
MINDEN BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1996, 1995 and 1994
(continued)
13. FAIR VALUE OF FINANCIAL INSTRUMENTS (continued)
-----------------------------------------------
1996 1995
------------------ ------------------
Book Estimated Book Estimated
Value Fair Value Fair
(Gross) Value (Gross) Value
-------- -------- ------- ---------
Loans $115,346 116,415 99,381 100,528
======== ======== ======= =========
c. DEPOSIT LIABILITIES
Under Statement 107, the fair value of deposits with no stated maturity,
such as noninterest-bearing demand deposits, savings, and interest-
bearing transaction accounts is equal to the amount payable on demand as
of December 31, 1996 and 1995. The fair value of certificates of deposit
is based on the discounted value of contractual cash flows. The discount
rate is estimated using the rates currently offered for deposits of simi-
lar remaining maturities. The following table presents information on
deposits (in thousands):
1996 1995
------------------ ------------------
Estimated Estimated
Book Fair Book Fair
Value Value Value Value
-------- -------- ------- ---------
Noninterest-bearing demand $ 38,197 38,197 35,698 35,698
Savings and
interest-bearing demand 78,431 78,431 70,511 70,511
Certificates of deposit 99,368 99,573 89,887 90,179
-------- -------- ------- ---------
$215,996 216,201 196,096 196,388
======== ======== ======= =========
d. OTHER CATEGORIES OF FINANCIAL INSTRUMENTS
The carrying amounts of cash and due from banks, federal funds sold,
accrued interest receivable and payable, securities sold under agreements
to repurchase, and note payable approximate fair value because of the
short maturities or periodic repricing of these instruments.
e. LIMITATIONS
Fair value estimates are made at a specific point in time, based on re-
levant market information and information about the financial instrument.
These estimates do not reflect any premium or discount that could result
from offering for sale at one time the Company's entire holdings of
particular financial instruments. Because no market exists for a
significant portion of the Company's financial instruments, fair value
estimates are based on judgments regarding future expected loss experi-
ence, current economic conditions, risk characteristics of various finan-
cial instruments, and other factors. These estimates are subjective in
nature and involve uncertainties and matters of significant judgment and
therefore cannot be determined with precision. Changes in assumptions
could significantly affect the estimates.
Fair value estimates are based on existing on-and off-balance sheet
financial instruments without attempting to estimate the value of
anticipated future business and the value of assets and liabilities that
are not considered financial instruments.
14. OTHER REAL ESTATE
-----------------
Other real estate owned represents property acquired through foreclosure or
deeded in lieu of foreclosure on loans on which the borrowers have defaulted
as to payment of principal and interest. Amounts are carried at the lower of
cost of acquisition or the asset's fair value less estimated costs to sell.
Reductions in the balance at the date of acquisition are charged to the
allowance for loan losses. Any subsequent write-downs to reflect current
fair value are charged to noninterest expense. There were no allowances for
possible write-downs at December 31, 1996 or 1995. The Bank implemented FASB
Statement No. 114, Accounting by Creditors for Impairment of a Loan, in
1995. No significant change occurred due to this pronouncement as impaired
loans are deemed immaterial and no specific reserve is allocated to them.
PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information as to the Directors and Executive Officers of the
Registrant is shown under the caption "Information Concerning Directors and
Nominees" on pages 3 through 6 of the Proxy Statement relating to the Annual
meeting of shareholders to be held on April 8, 1997, and is incorporated by
reference to this Report.
ITEM 10. EXECUTIVE COMPENSATION
The information set forth under the caption "Directors Fees" on page 7 of
the Proxy Statements relating to the Annual Meeting of Shareholders to be held
on April 8, 1997, and the information set forth under the caption "Executive
Compensation" on pages 8 and 9 of such Proxy Statement is incorporated by
reference to this Report.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information set forth under the caption "Voting Securities and
Principal Holders Thereof" on pages 2 and 3 of the Proxy Statement relating to
the Annual Meeting of Shareholders to be held on April 8, 1997, is incorporated
by reference to this Report.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information set forth under the caption "Transactions and Relations
with Directors and Associates and Affiliates of Directors" on page 10 of the
Proxy Statement relating to the Annual meeting of Shareholders to be held on
April 8, 1997, is incorporated by reference to this Report.
PART IV
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) The exhibits listed below, as required by Item 601 of Regulation S-B,
have been filed or are being filed as a part of this Report.
Exhibit
Number Exhibit
3 (i) Articles of Incorporation as amended, of the Registrant, filed
on August 14, 1996, at Exhibit 3(I) to Form 10-QSB for the
quarterly period ended June 30, 1996, is incorporated by
reference
3 (ii) By-Laws of the Registrant filed on May 14, 1996, at Exhibit
3(ii) to Form 10-QSB for the quarterly period ended March 31,
1996, is incorporated by reference
4 (i) The instrument(s) defining the rights of holders of equity
securities of the Registrant are the By-Laws listed at 3(ii)
above.
21 List of Subsidiaries
27 Financial Data Schedule
(b) Reports on Form 8-K
None
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
MINDEN BANCSHARES, INC.
(Registrant)
March 28, 1997 Jack E. Byrd, Jr.
Director,
President and Chief
Executive Officer
Pursuant to requirements of the Securities Act of 1934, this report has been
signed below by the following persons on behalf of the Registrant and in the
capacities and on the dates indicated:
Harry E. McInnis, Jr. James D. Madden
Director and Director
Chairman of the Board March 28, 1997
March 28, 1997
Don D. Moore S. Douglas Madden
Director and Vice Chairman Director
of the Board March 28, 1997
March 27, 1997
John W. Montgomery R. Thad Andress
Director Director
Secretary March 28, 1997
March 28, 1997
Joe E. Ratcliff Don L. Brice
Director Director
March 28, 1997 March 28, 1997
Howard G. Spillers Dr. Edward D. Brown
Director Director
March 28, 1997 March 28, 1997
Dr. Gary G. Daniel R. E. (Mike) Woodard, III
Director Director
March 28, 1997 March 28, 1997
Hal K. Jackson Robert W. Hines, Jr.
Director Vice President and
March 28, 1997 Chief Financial Officer
March 28, 1997
LIST OF SUBSIDIARIES
EXHIBIT 21
Subsidiaries of Minden Bancshares, Inc.
State of
Name Incorporation
Minden Bank & Trust Company Louisiana
Minden Bank & Trust Company, the only subsidiary of Minden Bancshares,
Inc. is a wholly-owned subsidiary.
FINANCIAL DATA SCHEDULE
EXHIBIT 27
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
DECEMBER 31, 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> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
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<INT-BEARING-DEPOSITS> 2,244
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<INVESTMENTS-MARKET> 14,915
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0
0
<COMMON> 775
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<INTEREST-INCOME-NET> 9,835
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<INCOME-PRETAX> 6,684
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<EXTRAORDINARY> 0
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<LOANS-NON> 355
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