SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
-------------------------------------
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________________ to ________________
Commission file number 0-25538
TECHE HOLDING COMPANY
(Exact name of registrant as specified in its charter)
Louisiana 72-128746
(State or other jurisdiction (I.R.S. employer identification no.)
of incorporation or organization)
211 Willow Street, Franklin, Louisiana 70538
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (318) 828-3212
N/A Former name, former address and former fiscal year, if changed since
last report.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No __
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date April 30, 1996.
Class Outstanding
$.01 par value common stock 4,020,500 shares
<PAGE>
TECHE HOLDING COMPANY
FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1996
INDEX
Page
Number
PART I - CONSOLIDATED FINANCIAL INFORMATION OF TECHE
HOLDING COMPANY
Item 1. Financial Statements 1
Item 2. Management's Discussion and Analysis of Financial 6
Condition and Results of Operations
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 10
Item 2. Changes in Securities 10
Item 3. Defaults upon Senior Securities 10
Item 4. Submission of Matters to a Vote of Security Holders 10
Item 5. Other Materially Important Events 10
Item 6. Exhibits and Reports on Form 8-K 11
SIGNATURES
<PAGE>
TECHE HOLDING COMPANY
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
March 31, September 30,
1996 1995*
--------- -------------
ASSETS (unaudited)
<S> <C> <C>
Cash and cash equivalents.................................................... $ 7,870 $ 6,400
Certificates of deposit...................................................... 590 590
Investment securities available-for-sale, at estimated
market value (amortized cost of $21,550 and $200).......................... 21,915 200
Investment securities held-to-maturity (estimated
market value of $0 and $21,820)............................................ -- 21,299
Mortgage-backed securities available-for-sale, at estimated
market value (amortized cost of $30,623 and $5,100)........................ 31,053 5,213
Mortgage-backed securities held-to-maturity (estimated market value of
$0 and $23,492).............................................................. -- 22,910
Loans receivable, net of allowance for loan losses
of $3,066 and $2,966)...................................................... 275,227 257,869
Accrued interest receivable.................................................. 1,782 1,752
Investment in Federal Home Loan Bank stock, at cost.......................... 2,755 2,671
Real estate owned, net....................................................... 116 253
Prepaid expenses and other assets............................................ 456 560
Premises and equipment, at cost less accumulated depreciation................ 4,351 4,135
------- -------
TOTAL ASSETS........................................................... $346,115 $323,852
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits..................................................................... $241,420 233,805
Advances from Federal Home Loan Bank......................................... 42,100 24,200
Advance payments by borrowers for taxes and insurance........................ 1,693 1,935
Accrued interest payable..................................................... 314 327
Accounts payable and other liabilities....................................... 1,184 1,677
------- -------
Total liabilities...................................................... 286,711 261,944
------- -------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value, authorized 5,000,000 shares;
none outstanding......................................................... -- --
Common stock $.01 par value; authorized 10,000,000;
4,093,000 and 4,232,000 issued and outstanding........................... $ 42 $ 42
Additional paid in capital................................................. 41,384 41,324
Retained earnings.......................................................... 24,379 23,555
Unearned Compensation (MSP)................................................ (2,128) (3,083)
Unearned ESOP shares....................................................... (2,917) --
Treasury stock - 138,100 shares............................................ (1,881) --
Unrealized gain on securities available-for-sale, net of
deferred income taxes.................................................... 525 70
------- -------
Total stockholders' equity............................................. 59,404 61,908
------- -------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
CAPITAL............................................................ $346,115 $323,852
======= =======
</TABLE>
- ---------------------
* The consolidated balance sheet at September 30, 1995 has been taken from
the audited balance sheet at that date.
See notes to unaudited consolidated financial statements.
1
<PAGE>
TECHE HOLDING COMPANY
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS)
<TABLE>
<CAPTION>
For Three Months For the Six Months
Ended March 31, Ended March 31,
------------------------ --------------------------
1996 1995 1996 1995
------ ------ ------- ------
INTEREST INCOME
<S> <C> <C> <C> <C>
Interest and fees on loans.................... $5,529 $4,950 $10,823 $9,819
Interest and dividends on investments......... 451 407 891 916
Interest on mortgage-backed securities........ 471 380 917 540
Other interest income......................... 29 10 59 24
----- ----- ------ ------
6,480 5,747 12,690 11,299
----- ----- ------ ------
INTEREST EXPENSE:
Deposits...................................... 2,899 2,690 5,818 5,304
Advances from Federal Home Loan Bank.......... 389 475 705 783
----- ----- ----- -----
3,288 3,165 6,523 6,087
----- ----- ----- -----
NET INTEREST INCOME............................. 3,192 2,582 6,167 5,212
PROVISION FOR LOAN LOSSES....................... 75 90 150 180
----- ----- ----- -----
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES..................... 3,117 2,492 6,017 5,032
----- ----- ----- -----
NON-INTEREST INCOME:
Service charges and other..................... 314 225 660 428
Gain on sale of real estate owned............. 5 29 6 30
Other income.................................. 52 28 93 66
----- ----- ----- -----
TOTAL NON-INTEREST INCOME....................... 371 282 759 524
----- ----- ----- -----
GAIN (LOSS) ON SALE OF SECURITIES............... 3 -- 72 (844)
NON-INTEREST EXPENSE:
Compensation and employee benefits............ 1,072 771 2,079 1,509
Occupancy expense............................. 354 265 704 509
Marketing and professional.................... 145 127 282 240
Other operating expenses...................... 588 358 1,063 711
----- ----- ----- -----
Total non-interest expense.................. 2,159 1,521 4,128 2,969
----- ----- ----- -----
INCOME BEFORE INCOME TAXES...................... 1,332 1,253 2,720 1,743
INCOME TAXES.................................... 453 426 931 573
----- ----- ----- -----
NET INCOME...................................... $ 879 $ 827 $1,789 $1,170
===== ===== ===== =====
EARNINGS PER COMMON SHARE....................... $ .23 N/A $ .46 N/A
DIVIDENDS DECLARED PER
COMMON SHARE.................................. $ .125 N/A $ .25 N/A
</TABLE>
See notes to unaudited consolidated financial statements.
2
<PAGE>
TECHE HOLDING COMPANY
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
For the Six Months
Ended March 31,
----------------------
1996 1995
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net income ............................................................ $ 1,789 $ 1,170
Adjustments to reconcile net income to net cash provided by
operating activities:
Accretion of discount and amortization of premium on investments (364) (306)
and mortgage-backed securities....................................
Provision for loan losses........................................... 150 180
(Gain) Loss on sale of securities................................... (72) 844
Depreciation........................................................ 168 117
Accretion of deferred loan fees and other........................... (98) (121)
Accretion of discounts on loans..................................... (103) (186)
Other items - net................................................... 241 (138)
------- -------
Net cash provided by operating activities....................... 1,711 1,560
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of investment securities available for sale...................... (160) -
Purchase of mortgage-backed securities available-for-sale................. (8,093) -
Purchase of mortgage-backed securities held-to-maturity................... - (14,946)
Purchase of investment securities held-to-maturity........................ (220) (7,370)
Proceeds from maturities of investment securities
held to maturity....................................................... - 1,000
Principal repayments on mortgaged-backed securities
available-for-sale..................................................... 3,747 360
Principal repayments on mortgage-backed securities
held-to-maturity....................................................... 1,966 536
Loans originated, net of repayments....................................... (17,417) (10,672)
Investment in FHLB stock.................................................. (84) (474)
Proceeds from sale of real estate owned................................... 137 27
Purchase of premises and equipment........................................ (384) (875)
Loan origination fees received............................................ 110 116
Sales of mortgage-backed securities available-for-sale.................... - 1,406
Sales of investment securities available-for-sale......................... 542 12,282
------- -------
Net cash used in investing activities.................................. (19,856) (18,610)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposits................................................ 7,615 40,614
Net increase (decrease) in FHLB advances................................ 17,900 (23,800)
Net decrease in advance payments by borrowers for
taxes and insurance................................................... (242) (182)
Dividends paid.......................................................... (1,452) -
Repurchase of common stock for MSP...................................... (2,325) -
Purchase of common stock for treasury................................... (1,881) -
------- -------
Net cash provided by financing activities........................... 19,615 16,632
------- -------
NET INCREASE (DECREASE) IN CASH........................................... 1,470 (418)
------- -------
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD............................ 6,400 6,604
------- -------
CASH AND CASH EQUIVALENTS, END OF YEAR.................................... $ 7,870 $ 6,186
======= =======
</TABLE>
See notes to unaudited consolidated financial statements.
3
<PAGE>
TECHE HOLDING COMPANY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - PRINCIPLES OF CONSOLIDATION
The consolidated financial statements as of and for the three and six
month periods ended March 31, 1996 include the accounts of Teche
Holding Company (the "Corporation") and its subsidiary, Teche Federal
Savings Bank (the "Bank") which, as discussed in Note 3, became the
wholly owned subsidiary of the Corporation on April 17, 1995. The
Corporation's business is conducted principally through the Bank. All
significant intercompany accounts and transactions have been eliminated
in consolidation.
NOTE 2 - BASIS OF PRESENTATION
The accompanying consolidated financial statements were prepared in
accordance with instructions for Form 10-Q and, therefore, do not
include all information necessary for a complete presentation of
consolidated financial condition, results of operations, and cash flows
in conformity with generally accepted accounting principles. However,
all adjustments, consisting of normal recurring accruals, which, in the
opinion of management, are necessary for a fair presentation of the
consolidated financial statements have been included. The results of
operations for the periods ended March 31, 1996 are not necessarily
indicative of the results which may be expected for the entire fiscal
year or any other period.
NOTE 3 - CONVERSION FROM MUTUAL SAVINGS BANK TO STOCK SAVINGS BANK AND
FORMATION OF SAVINGS AND LOAN HOLDING COMPANY
On April 17, 1995, the Bank consummated its conversion from a federally
chartered mutual savings bank to a stock savings bank pursuant to a
Plan of Conversion (the "Conversion") via the issuance of common stock.
In connection with the Conversion, the Corporation sold 4,232,000
shares of common stock which, after giving effect to offering expenses
of $1.0 million and 332,000 shares issued to the Bank's Employee Stock
Ownership Plan ("ESOP"), resulted in net proceeds of $38.0 million.
Pursuant to the Conversion, the Bank transferred all of its outstanding
shares to a newly organized holding company, Teche Holding Company, in
exchange for 50% of the net proceeds.
Upon consummation of the Conversion, the preexisting liquidation rights
of the depositors of the Bank were unchanged. Specifically, such rights
were retained and will be accounted for by the Bank for the benefit of
such depositors in proportion to their liquidation interests as of the
Eligibility Record Date.
NOTE 4 - EARNINGS PER SHARE
Earnings per share for the three and six month periods ended March 31,
1996 are calculated by dividing the net earnings for the periods by the
average shares outstanding of 3,884,000 shares for the three months
ended March 31, 1996 and 3,906,000 shares for the six months ended
March 31, 1996.
4
<PAGE>
NOTE 5 - SECURITIES RECLASSIFICATION
On November 15, 1995, the Financial Accounting Standards Board ("FASB")
issued implementation guidance with respect to SFAS No. 115 "Accounting
for Certain Investments in Debt and Equity Securities." This guidance
allowed a company to reassess its designation of securities as
held-to-maturity and, if deemed appropriate, make a one time
reclassification of held-to-maturity securities between November 15,
1995 and December 31, 1995. During this period, the Bank reclassified
mortgage-backed and investment securities with an amortized cost of
$42.0 million and a net unrealized gain of $1,018,000 ($672,000 net of
income taxes) from securities held-to-maturity to securities
available-for-sale.
NOTE 5 - RECENT ACCOUNTING PRONOUNCEMENTS
Effective October 1, 1995, the Bank adopted FASB Statement Nos. 114,
"Accounting by Creditors for Impairment of a Loan" and 118, "Accounting
by Creditors for Impairment of a Loan - Income Recognition and
Disclosures." The provision of these statements are applicable to all
loans, uncollateralized as well as collateralized, except for large
groups of smaller-balance homogeneous loans that are collectively
evaluated for impairment and loans that are measured at fair value or
at the lower of cost or fair value. Additionally, such provisions apply
to all loans that are renegotiated in troubled debt restructurings
involving a modification of terms.
Statement No. 114 requires that impaired loans be measured based on the
present value of expected future cash flows discounted at the loan's
effective interest rate or, as a practical expedient, at the loan's
observable market price or the fair value of the collateral if the loan
is collateral dependent, except that loans renegotiated as part of a
troubled debt restructuring subsequent to the adoption of Statement
Nos. 114 and 118 must be measured for impairment by discounting the
total expected cash flow under the renegotiated terms at each loan's
original effective interest rate.
A loan evaluated for impairment pursuant to Statement No. 114 is deemed
to be impaired when, based on current information and events, it is
probable that the Bank will be unable to collect all amounts due
according to the contractual terms of the loan agreement. An
insignificant payment delay, which is defined by the Bank as up to
ninety days, will not cause a loan to be classified as impaired. A loan
is not impaired during the period of delay in payment if the Bank
expects to collect all amounts due, including interest accrued at the
contractual interest rate for the period of delay. Thus, a demand loan
or other loan with no stated maturity is not impaired if the Bank
expects to collect all amounts due, including interest accrued at the
contractual interest rate, during the period the loan is outstanding.
All loans identified as impaired are evaluated independently. The Bank
does not aggregate such loans for evaluation purposes.
The adoption of Statement Nos. 114 and 118 did not have a material
adverse impact on financial condition or operations.
Payments received on impaired loans are applied first to interest
receivable and then to principal.
The FASB has recently issued Statement No. 123 "Accounting for
Stock-Based Compensation" which the Company must adopt in its year
ended September 30, 1997 with earlier adoption permitted. Management is
currently studying the requirements of the Statement but does not
currently anticipate adopting this Statement prior to fiscal year 1997.
5
<PAGE>
TECHE HOLDING COMPANY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
Total assets increased to $346.1 million at March 31, 1996, from $323.9
million at September 30, 1995, reflecting increases in loans, investments and
deposits.
Total loans increased $17.4 million due primarily to loan originations
in excess of repayments.
Investment securities and mortgage backed securities available for sale
increased $47.5 million due to the Company reclassifying all of its
mortgage-backed and investment securities with an amortized cost of $42.0
million from held to maturity to available-for-sale. See Note 5 to the Financial
Statements. Furthermore, the Company utilized excess liquidity to purchase
additional available-for-sale securities.
Investment and mortgage-backed securities decreased $49.2 million
principally due the Company reclassifying such securities as discussed above.
Deposits increased $7.6 million due to increases in demand deposits and
certificates of deposit.
Advances from the Federal Home Loan Bank ("FHLB") increased $17.9
million due to additional funding needed for increased loan originations.
Total stockholders' equity decreased $2.5 million due to stock
repurchases pursuant to a stock repurchase plan coupled with purchases of shares
of the Company's common stock by the Company for a stock compensation plan
adopted by the shareholders at a special meeting in October, 1995. Such decrease
was offset somewhat by earnings during the first six months of fiscal 1995.
Non-performing Assets
The following table sets forth information regarding non-performing
loans and real estate owned. During the periods indicated, the Company had no
restructured loans within the meaning of SFAS No. 15.
<TABLE>
<CAPTION>
At At
March 31, 1996 September 30, 1995
-------------- ------------------
(Dollars in Thousands)
<S> <C> <C>
Total non-performing loans................... $ 729 $ 661
Real estate owned............................ 116 253
---- ---
Total non-performing assets.................. $ 845 $ 914
==== ====
Total non-performing loans to net loans...... .26% .26%
==== ====
Total non-performing loans to total assets... .21% .20%
==== ====
Total non-performing assets to total assets.. .24% .28%
==== ====
Allowance for credit losses to
nonperforming assets....................... 362.8% 324.5%
===== =====
</TABLE>
During the six months ended March 31, 1996, non-performing assets
decreased by $69,000. The decrease was primarily due to the sale of real estate
owned, offset somewhat by an increase in nonperforming loans.
6
<PAGE>
Comparison of Earnings for the Three and Six Months Ended March 31, 1996 and
1995
Net Income. Net income for the three and six months ended March 31,
1996 increased $52,000 or 6.3% and $619,000 or 52.9%, respectively, over the
same periods ended March 31, 1995. The increase during the three month period
was due primarily to an increase in net interest income offset somewhat by an
increase in total non-interest expenses. The increase over the prior six month
period ended March 31, 1995 was due primarily to a loss of $844,000 on the sale
of securities during the quarter ended December 31, 1994 which was not present
in the first six months of fiscal 1995.
Total Interest Income. Interest Income increased $73,000 or 12.8% and
$1,391,000 or 12.3% during the three and six month periods, respectively, due to
an increase in both the average balances of the loan and mortgage-backed
securities portfolios due to the investment of proceeds from the Conversion and
increased loan demand.
Total Interest Expense. Interest expense increased $123,000 or 3.9% and
$436,000 or 7.2% during the three and six month periods, respectively, primarily
to an increase in the cost of deposits due to an increase in market interest
rates and the Bank emphasizing longer term deposit products. Such increases were
offset somewhat by a decrease in interest paid on advances from the FHLB.
Net Interest Income. Net interest income increased $610,000 or 23.6%
and $955,000 or 18.3% for the three and six month periods ending March 31, 1996,
respectively, as compared to the same periods ended March 31, 1995. These
increases were the result of total interest income increasing more rapidly than
total interest expense due to the factors mentioned earlier.
Provision for Loan Losses. The provision for loan losses remained
relatively stable, decreasing $15,000 and $30,000, respectively, due to the
leveling of nonperforming loans.
Management periodically estimates the likely level of losses to
determine whether the allowance for loan losses is adequate to absorb possible
losses in the existing portfolio. Based on these estimates, an amount is charged
or credited to the provision for loan losses and credited or charged to the
allowance for loan losses in order to adjust the allowance to a level determined
to be adequate to absorb anticipated future losses.
Management's judgment as to the level of losses on existing loans
involves the consideration of current and anticipated economic conditions and
their potential effects on specific borrowers, an evaluation of the existing
relationships among loans, known and inherent risks in the loan portfolio and
the present level of the allowance, results of examination of the loan portfolio
by regulatory agencies and management's internal review of the loan portfolio.
In determining the collectibility of certain loans, management also considers
the fair value of any underlying collateral.
Non-interest Income. Non-interest income increased by $89,000 and
$235,000 during the three and nine month periods ending March 31, 1996,
respectively, as compared to the three and six month periods ending March 31,
1995. These increases were due primarily to the increase in service fee income
associated with increased demand account volume.
Non-interest Expense. Non-interest expense increased $638,000 and
$1,159,000, respectively, due to increased compensation costs and new products
offered by the Bank and the continued expansion of office facilities. Expenses
increased as a result of increased costs of being a public company and higher
compensation expense, including the cost of stock benefit plans (costing
$226,000 and $418,000 for the three and six months ended March 31, 1996,
respectively) adopted in connection with the Bank's
7
<PAGE>
mutual to stock conversion. The Company became subject to the Louisiana "Share
Tax" beginning January 1, 1996, and accrued approximately $150,000 through March
31, 1996. Both the shares tax and the stock compensation plans were not present
during the three months ended March 31, 1995 as the Bank had not yet completed
the Conversion.
Gain (Loss) on Sale of Securities. The Company recognized gains of
$3,000 and $72,000 in the sale of securities during the three and six months
ended March 31, 1996, respectively, compared to no activity during the three
months ended March 31, 1995 and a loss of $844,000 during the six months ended
March 31, 1995 due to the sale of $14.5 million of its "available for sale"
portfolio.
Income Tax Expense. Income tax expense increased due to an increase in
income before income taxes during the periods.
LIQUIDITY AND CAPITAL RESOURCES
Under current Office of Thrift Supervision ("OTS") regulations, the
Bank must have core capital equal to 3% of total assets and risk-based capital
equal to 8% of risk-weighted assets, of which 1.5% must be tangible capital,
excluding goodwill. In measuring the Bank's compliance with its regulatory
capital requirements, the Bank must deduct from its regulatory capital
calculation investments in, and advances to subsidiaries engaged in activities
not permissible for national banks. The Bank has no such subsidiaries. The OTS
has proposed amending its regulations in such a manner that would increase the
core capital requirements for most thrift institutions from 3% to 4% or 5%,
depending upon the institutions financial condition and other factors. Although
the final form of the regulation cannot be foreseen, if adopted as proposed, the
Bank would expect its core capital requirements to increase to at least 4%.
On March 31, 1996, the Bank was in compliance with its three regulatory capital
requirements as follows:
<TABLE>
Amount Percent
------ -------
(In thousands)
<S> <C> <C>
Tangible capital.............................................. $ 41,586 12.0%
Tangible capital requirement.................................. 5,163 1.5
--------- -------
Excess over requirement....................................... $ 36,423 10.5%
========= =======
Core capital.................................................. $ 41,586 12.0%
Core capital requirement...................................... 10,326 3.0
--------- -------
Excess over requirement....................................... $ 31,260 9.0%
========= =======
Risk based capital............................................ $ 43,448 24.5%
Risk based capital requirement................................ 14,152 8.0
--------- -------
Excess over requirement....................................... $ 29,296 16.5%
========= =======
</TABLE>
Management believes that under current regulations, the Bank will
continue to meet its minimum capital requirements in the foreseeable future.
Events beyond the control of the Bank, such as increased interest rates or a
downturn in the economy in areas in which the Bank operates could adversely
affect future earnings and as a result, the ability of the Bank to meet its
future minimum capital requirements.
8
<PAGE>
The Bank's liquidity is a measure of its ability to fund loans, pay
withdrawals of deposits, and other cash outflows in an efficient, cost effective
manner. The Bank's primary source of funds are deposits and scheduled
amortization and prepayment of loan and mortgage-backed principal. During the
past several years, the Bank has used such funds primarily to fund maturing time
deposits, pay savings withdrawals, fund lending commitments, purchase new
investments, and increase liquidity. The Bank is currently able to fund its
operations internally but has, in the past, borrowed funds from the Federal Home
Loan Bank of Dallas. As of March 31, 1996, such borrowed funds totaled $42.1
million. Loan payments, maturing investments and mortgage-backed security
prepayments are greatly influenced by general interest rates, economic
conditions and competition.
The Bank is required under federal regulations to maintain certain
specified levels of "liquid investments", which include certain United States
government obligations and other approved investments. Current regulations
require the Bank to maintain liquid assets of not less than 5% of its net
withdrawable accounts plus short term borrowings. Short term liquid assets must
consist of not less than 1% of such accounts and borrowings, which amount is
also included within the 5% requirement. Those levels may be changed from time
to time by the regulators to reflect current economic conditions. The Bank has
maintained liquidity in excess of regulatory requirements. Furthermore, from
time to time, the Bank utilizes FHLB advances to the extent necessary to
maintain its liquidity.
Additional Key Operating Ratios
<TABLE>
<CAPTION>
At or For the Three Months Ended At or For the Six Months Ended
March 31, March 31,
-------------------------------- ------------------------------
1996(1) 1995(1) 1996 (1) 1995
-------- -------- ---------- -------
(Dollars in Thousands)
(Unaudited)
<S> <C> <C> <C> <C>
Return on average assets................ 1.05% 1.11% 1.08% 0.80%
Return on average equity................ 5.81% 15.11% 5.86% 10.87%
Average Interest rate spread............ 3.09% 3.27% 2.97% 3.35%
Average Net interest margin............. 3.91% 3.54% 3.81% 3.61%
Tangible book value per share........... $14.51 (4) N/A (2) $14.63 (2) N/A (2)
Earnings per common share(3)............ $ .23 N/A (2) $ .46 N/A (2)
</TABLE>
- ----------------
(1) The ratios for the three-month period are annualized.
(2) There were no shares outstanding prior to the completion of the Company's
initial public offering on April 17, 1995.
(3) Earnings per share are not annualized. The average number of shares
outstanding during the three months and six months ended March 31, 1996 was
$3,884,000 and 3,906,000.
(4) The number of shares issued and outstanding as of March 31, 1996, was
4,093,900.
9
<PAGE>
TECHE HOLDING COMPANY AND SUBSIDIARY
PART II
ITEM 1. LEGAL PROCEEDINGS
Neither the Corporation nor the Bank was engaged in any legal
proceeding of a material nature at March 31, 1996. From time
to time, the Corporation is a party to legal proceedings in
the ordinary course of business wherein it enforces its
security interest in loans.
ITEM 2. CHANGES IN SECURITIES
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The annual meeting of stockholders of the Corporation was held
on January 25, 1995, and the following items were presented:
Election of Directors W. Ross Little, Mary Coon Biggs, and
Thomas F. Kramer for terms of three years ending in 1999.
W. Ross Little received 3,294,319 votes and 3,450 votes were
withheld. Mary Coon Biggs received 3,294 votes and 3,275
votes were withheld. Thomas F. Kramer received 3,294,344
votes and 3,425 votes were withheld.
Ratification of the appointment of Deloitte & Touche LLP as
the Corporation's auditors for the 1996 fiscal year. Deloitte
& Touche LLP was ratified as the Corporation's auditors with
3,249,064 votes for, 300 votes against, and 7,225 abstentions.
ITEM 5. OTHER MATERIALLY IMPORTANT EVENTS
Potential One-Time Assessment. Currently, the Bank pays an
insurance premium to the Federal Deposit Insurance Corporation
("FDIC") equal to .23% of its total deposits. In August, 1995,
the FDIC announced that it will lower the insurance premium
for members of the Bank Insurance Fund ("BIF"), primarily
commercial banks, to a range of between 0.04% and 0.31% of
deposits, with the result that most commercial banks will pay
the lowest rate of 0.04%. This reduction in insurance premiums
for BIF members could place Savings Association Insurance Fund
("SAIF") members, primarily savings associations, such as the
Bank, at a material competitive disadvantage to BIF members
and, for the reasons set forth below, could have a material
adverse effect on the results of operations and financial
condition of the Bank in future periods.
The disparity in insurance premiums between those required for
the Bank and BIF members could allow BIF members to attract
and retain deposits at a lower effective cost than that
possible for the Bank and put competitive pressure on the Bank
to raise its interest rates paid on deposits thus increasing
its cost of funds and possibly reducing net
10
<PAGE>
interest income. The resultant competitive disadvantage could
result in the Bank losing deposits to BIF members who have a
lower cost of funds and are therefore able to pay higher rates
of interest on deposits. Although the Bank has other sources
of funds, these other sources may have higher costs than those
of deposits.
Several alternatives to mitigate the effect of the BIF/SAIF
insurance premium disparity have recently been proposed by the
U.S. Congress, federal regulators, industry lobbyists and the
Administration. One plan that has gained support of several
sponsors would require all SAIF member institutions, including
the Bank, to pay a one-time fee of up to 85 basis points on
the amount of deposits held by the member institution to
recapitalize the SAIF. If this proposal is enacted by
Congress, the effect would be to immediately reduce the
capital of the SAIF-member institutions by the amount of the
fee, and such amount would be immediately charged to earnings,
unless the institutions are permitted to amortize the expense
of the fee over a period of years. Management of the Bank is
unable to predict whether this proposal or any similar
proposal will be enacted or whether ongoing SAIF premiums will
be reduced to a level equal to that of BIF premiums.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
None.
(b) Reports on Form 8-K
None.
11
<PAGE>
TECHE HOLDING COMPANY AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TECHE HOLDING COMPANY
Date: May 15, 1996 By: /s/ Patrick O. Little, Jr.
---------------------------
Patrick O. Little, Jr.
President and Chief Executive Officer
(Principal Executive Officer)
Date: May 15, 1996 By: /s/ J. L. Chauvin
------------------
J. L. Chauvin
Senior Vice President and
Chief Financial Officer
(Principal Officer)
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