SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended September 30, 2000
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- or -
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission Number: 1-13712
TECHE HOLDING COMPANY
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(Exact name of Registrant as specified in its Charter)
Louisiana 72-1287456
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(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
211 Willow Street 70538
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(Address of principal executive offices) Zip Code
Registrant's telephone number, including area code: (337) 828-3212
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Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on which Registered
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Common Stock, par value American Stock Exchange
$.01 per share
Securities registered pursuant to Section 12(g) of the Act: None
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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
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not 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-K or any
amendment to this Form 10-K. [X]
The aggregate market value of the voting stock held by non-affiliates
of the Registrant, based on the closing price of the Registrant's Common Stock
as quoted on the American Stock Exchange on December 19, 2000, was $28.6 million
(2,043,187 shares at $14.00 per share).
As of December 19, 2000 there were issued and outstanding 2,502,327
shares of the Registrant's Common Stock.
DOCUMENTS INCORPORATED BY REFERENCE
1. Portions of the Annual Report to Stockholders for the Fiscal Year Ended
September 30, 2000. (Parts I, II and IV)
2. Portions of the Proxy Statement for the 2000 Annual Meeting of
Stockholders. (Part III)
<PAGE>
<TABLE>
<CAPTION>
INDEX
PART I Page
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<S> <C> <C>
Item 1. Business......................................................................... 1
Item 2. Properties....................................................................... 21
Item 3. Legal Proceedings................................................................ 21
Item 4. Submission of Matters to a Vote of Security Holders.............................. 21
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters............ 21
Item 6. Selected Financial Data.......................................................... 21
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations....................................................... 21
Item 7A. Quantitative and Qualitative Disclosures About Market Risk....................... 22
Item 8. Financial Statements and Supplementary Data...................................... 22
Item 9. Changes In and Disagreements with Accountants on Accounting and Financial
Disclosure..................................................................... 22
PART III
Item 10. Directors and Executive Officers of the Registrant............................... 22
Item 11. Executive Compensation........................................................... 22
Item 12. Security Ownership of Certain Beneficial Owners and Management................... 22
Item 13. Certain Relationships and Related Transactions................................... 22
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.................. 22
</TABLE>
<PAGE>
PART I
Teche Holding Company (the "Company" or the "Registrant") may from
time to time make written or oral "forward-looking statements," including
statements contained in the Company's filings with the Securities and Exchange
Commission (including this Annual Report on Form 10-K and the exhibits thereto),
in its reports to stockholders and in other communications by the Company, which
are made in good faith by the Company pursuant to the "safe harbor" provisions
of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements involve risks and uncertainties,
such as statements of the Company's plans, objectives, expectations, estimates
and intentions, that are subject to change based on various important factors
(some of which are beyond the Company's control). The following factors, among
others, could cause the Company's financial performance to differ materially
from the plans, objectives, expectations, estimates and intentions expressed in
such forward-looking statements: the strength of the United States economy in
general and the strength of the local economy in which the Company conducts
operations; the effects of, and changes in, trade, monetary and fiscal policies
and laws, including interest rate policies of the board of governors of the
federal reserve system, inflation, interest rate, market and monetary
fluctuations; the impact of changes in financial services' laws and regulations
(including laws concerning taxes, banking, securities and insurance);
technological changes; and the success of the Company at managing the risks
involved in the foregoing.
The Company cautions that the foregoing list of important factors is
not exclusive. The Company does not undertake to update any forward-looking
statement, whether written or oral, that may be made from time to time by or on
behalf of the Company.
Item 1. Business
-----------------
General
The Company is a Louisiana corporation organized in December 1994 at
the direction of Teche Federal Savings Bank (the "Bank" or "Teche Federal") to
acquire all of the capital stock that the Bank issued in its conversion from the
mutual to stock form of ownership (the "Conversion"). References to the "Bank"
or "Teche Federal" herein, unless the context requires otherwise, refer to the
Company on a consolidated basis.
The Bank is a community-oriented federal savings bank offering a
variety of financial services to meet the local banking needs of St. Mary,
Lafayette, Iberia, St. Martin and Terrebonne Parishes, Louisiana (the "primary
market area"). Teche Federal conducts its business from its main office in
Franklin, Louisiana, and twelve branch offices located in Morgan City, Bayou
Vista, New Iberia (two offices), Lafayette (three offices), Breaux Bridge and
Houma (three offices), and Thibodeaux, Louisiana. Subsequent to the fiscal year
end, the Bank completed construction of a four lane drive-thru facility in
Franklin, Louisiana at an approximate cost of $700,000. Additionally, in the
first quarter of 2000, the Bank expects to complete construction of a $4.5
million retail banking, operations and administrative center located in New
Iberia, Louisiana. The cost of these two projects will be amortized as a charge
against earnings over approximately 45 years.
1
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The Company and the Bank are subject to regulation by the Office of
Thrift Supervision ("OTS"), the Federal Deposit Insurance Corporation ("FDIC")
and the Securities and Exchange Commission ("SEC").
Market Area/Competition
Teche Federal's home office is located in Franklin, St. Mary Parish,
Louisiana, which is approximately 50 miles southeast of Lafayette, 90 miles
south of Baton Rouge and 120 miles west of New Orleans. The limited population
of Franklin and St. Mary Parish (approximately 9,000 and 64,000, respectively)
has, over the years, caused the Bank to expand through the establishment of
branch offices in the contiguous Parishes of Iberia, St. Martin, Lafayette and
Terrebonne.
The local economy is dependent to a certain extent on the oil and
gas, seafood and agricultural (primarily sugar cane) industries. These
industries are cyclical in nature and have a direct impact on the level and
performance of the Bank's loan portfolio. Economic downturns in the past have
caused a decrease in loan originations and an increase in nonperforming assets.
However, the metropolitan Lafayette area, which is the fourth largest city in
Louisiana, has experienced sustained growth and is the home to the University of
Louisiana at Lafayette, several hospitals and various small-to medium-size
businesses, and has provided the Bank with increased lending opportunities.
The Bank encounters strong competition both in the attraction of
deposits and origination of real estate and other loans. Competition comes
primarily from other financial institutions in its primary market area,
including savings banks, commercial banks and savings associations, credit
unions and investment and mortgage brokers in serving its primary market area.
The Bank also originates mortgage loans through its branch offices and
affiliations with mortgage originators, secured by properties throughout its
primary market area and other locations in Louisiana.
Lending Activities
Analysis of Loan Portfolio. Set forth below is selected data relating
to the composition of the Bank's loan portfolio at the dates indicated.
<TABLE>
<CAPTION>
At September 30,
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2000 1999 1998 1997 1996
-------------------- --------------- ------------------- ------------------- -------------------
Percent Percent Percent Percent Percent
Amount of Total Amount of Total Amount of Total Amount of Total Amount of Total
------ -------- ------ -------- ------ -------- ------ -------- ------ --------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Residential real
estate mortgage loans:
One- to four-family....$310,505 79.47% $296,602 85.43% $301,071 86.20% $310,306 88.38% $288,109 89.89%
Construction/
permanent loans...... 10,821 2.77 4,620 1.33 3,873 1.11 2,381 .68 3,215 1.00
Multi-family........... 1,186 .30 1,318 .38 1,934 .55 2,839 .81 3,006 .94
Commercial real
estate loans........... 5,465 1.40 5,207 1.50 6,261 1.79 6,897 1.97 7,346 2.29
Land loans............... 8,173 2.09 5,501 1.58 1,604 .46 2,634 .75 2,844 .89
Consumer loans:
Loans on savings
accounts............. 4,960 1.27 5,166 1.49 5,881 1.69 5,984 1.70 5,657 1.76
Other.................. 49,624 12.70 28,767 8.29 28,643 8.20 20,049 5.71 10,343 3.23
-------- ------ -------- ------ -------- ------ -------- ------ -------- ------
Total loans....... 390,734 100.00% 347,181 100.00% 349,267 100.00% 351,090 100.00% 320,520 100.00%
====== ====== ====== ====== ======
Less:
Allowance for
loan losses.......... 3,630 3,537 3,515 3,355 3,182
Deferred loan
fees, net............ 592 658 580 860 1,122
-------- -------- -------- --------- --------
Net loans........$386,512 $342,986 $345,172 $346,875 $316,216
======== ======== ======== ======= ========
</TABLE>
2
<PAGE>
Loan Maturity Tables. The following table sets forth the maturity of
the Bank's residential construction and commercial real estate loan portfolio at
September 30, 2000. The table does not include prepayments or scheduled
principal repayments. Adjustable-rate loans are shown as maturing based on
contractual maturities.
Residential
Construction/ Commercial
Permanent Real Estate
--------- -----------
Amounts due:
1 year or less...................... $ - $ 721
-------- ------
After 1 year:
1 year to 5 years................. - 384
More than 5 years................. 10,821 4,360
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Total due after
September 30, 2000......... 10,821 5,465
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Total amount due................ $ 10,821 $5,465
======== ======
The following table sets forth the dollar amount of all loans due
after September 30, 2001, which have pre-determined interest rates and which
have floating or adjustable interest rates.
Floating or
Fixed Adjustable
Rates Rates (1) Total
----- --------- -----
(In Thousands)
Residential construction........ $ 9,481 $1,340 $10,821
Commercial real estate.......... 1,726 3,739 5,465
------- ------ ------
Total..................... $11,207 $5,079 $16,286
======= ====== ======
One- to Four-Family Residential Loans. The primary lending activity
of Teche Federal is the origination of one- to four-family owner-occupied,
residential mortgage loans, secured by property located in the Bank's primary
market area.
Teche Federal generally originates single-family owner occupied
residential mortgage loans in amounts up to 80% of the lower of the appraised
value or selling price of the property securing the loan. The Bank also
originates such loans in amounts up to 95% of the lower of the appraised value
or selling price of the mortgaged property, provided that private mortgage
insurance is provided on the amount in excess of 80% of the lesser of the
appraised value or selling price.
3
<PAGE>
The Bank offers fixed-rate and adjustable-rate mortgage loans with
terms of up to 30 years, which amortize monthly. Interest rates charged on
mortgage loans are competitively priced based on market conditions and the
Bank's cost of funds. The Bank originates and holds most of its fixed-rate
mortgage loans as long term investments. Most loans are originated in
conformance with the Federal Home Loan Mortgage Corporation ("FHLMC") and the
Federal National Mortgage Association ("FNMA") guidelines and can therefore be
sold in the secondary market should management deem it necessary. The Bank
originated $13.6 million of fixed-rate mortgage loans during the year ended
September 30, 2000.
The Bank also offers home equity loans on single family residences.
At September 30, 2000, home equity mortgage loans totaled $33.5 million. While
the Bank does offer adjustable rate home equity lines of credit, the majority of
the home equity portfolio have fixed rates with a maximum term of 30 years. A
variety of home equity loan programs are offered including combined loan to
values up to 125.00% of collateral, however, such loans are generally for
shorter terms. Creditworthiness, capacity, and loan to value are the primary
factors considered during underwriting. To offset additional credit risk and
higher combined loan to values, the Bank reduces loan terms and increases loan
yields.
Residential Construction/Permanent Loans. The Bank's construction
loans have primarily been made to finance the construction of single-family
owner occupied residential properties and, to a limited extent, single family
housing for sale by contractors. Construction/permanent loans generally are made
to customers of the Bank in its primary market area. The Bank offers
construction/permanent loans in amounts up to 80% of the appraised value of the
property securing the loan. Loan proceeds are disbursed in increments as
construction progresses and as inspections warrant. Construction/permanent loans
to individuals generally do not pay off at completion of the construction phase,
but are automatically transferred to the Bank's one- to four-family residential
portfolio. These single-family residential loans are structured to allow the
borrower to pay interest only on the funds advanced for the construction for a
period of up to nine months at the end of which time the loan converts to a
permanent mortgage.
Multi-Family and Commercial Real Estate Loans. The Bank has
historically originated a limited amount of loans secured by multi-family and
commercial real estate, including non-owner occupied residential multi-family
dwelling units (more than four units), as well as professional office buildings
and apartment complexes.
The Bank generally originates multi-family and commercial real
estate loans up to 80% of the appraised value of the property securing the loan
depending upon the type of collateral. The Bank's philosophy to originate
commercial real estate and multi-family loans only to borrowers known to the
Bank and on properties in its market area. The multi-family and commercial real
estate loans in the Bank's portfolio generally consist of fixed-rate and ARMs
which were originated at prevailing market rates for terms up to 15 years.
Loans secured by multi-family and commercial real estate are
generally larger and involve a greater degree of risk than one- to four-family
residential mortgage loans. Of primary concern in multi- family and commercial
real estate lending is the borrower's creditworthiness, the feasibility and cash
flow potential of the project, and the outlook for successful operation or
management of the properties. As a result, repayment of such loans may be
subject to a greater extent than residential real estate loans to adverse
conditions in the real estate market or the economy. In accordance with the
Bank's classification of assets policy and procedure, the Bank requests annual
financial statements on major loans secured by multi-family and commercial real
estate. At September 30, 2000 the aggregate balance of the five largest
4
<PAGE>
multi-family and commercial real estate loans totaled $6.7 million with no
single loan larger than $742,206.
Land Loans. At September 30, 2000, the Bank had $8.2 million invested
in residential lot loans to individuals.
Consumer Loans. The Bank also offers loans in the form of loans
secured by deposits, home equity loans, automobile loans, mobile home loans,
credit card loans and unsecured personal consumer loans. Federal regulations
allow the Bank to make secured and unsecured consumer loans of up to 35% of the
Bank's assets.
Loans secured by deposits at the Bank are made up to 100% of the
deposit. At September 30, 2000, the Bank had $5.0 million of loans secured by
deposits.
Teche Federal also originates automobile and mobile home loans. At
September 30, 2000, $5.4 million and $6.4 million consisted of automobile and
mobile home loans, respectively.
The Bank has a credit card program whereby customers are offered
revolving credit through Teche Federal credit cards which are serviced by a
third-party vender. At September 30, 2000, such credit cards had a balance of
$1.6 million.
Consumer loans tend to be originated at higher interest rates than
conventional residential mortgage loans and for shorter terms which benefits the
Bank's interest rate risk management. However, consumer loans generally involve
more risk than first mortgage one- to four-family residential real estate loans.
Repossessed collateral for a defaulted loan may not provide an adequate source
of repayment of the outstanding loan balance as a result of damage, loss or
depreciation, and the remaining deficiency often does not warrant further
substantial collection efforts against the borrower. In addition, loan
collections are dependent on the borrower's continuing financial stability, and
thus are more likely to be adversely affected by job loss, divorce, illness or
personal bankruptcy. Further, the application of various state and federal laws,
including federal and state bankruptcy and insolvency law, may limit the amount
which may be recovered. These loans may also give rise to defenses by the
borrower against the Bank and a borrower may be able to assert against the Bank
claims and defenses which it has against the seller of the underlying
collateral. In underwriting consumer loans, the Bank considers the borrower's
credit history, an analysis of the borrower's income and ability to repay the
loan, and the value of the collateral.
Loans-to-One Borrower. Savings associations cannot make any loans to
one borrower in an amount that exceeds in the aggregate 15% of unimpaired
capital and retained income on an unsecured basis and an additional amount equal
to 10% of unimpaired capital and retained income if the loan is secured by
readily marketable collateral (generally, financial instruments, not real
estate) or $500,000, whichever is higher. The Bank's maximum loan-to-one
borrower limit was approximately $6.9 million as of September 30, 2000.
5
<PAGE>
Non-Performing and Problem Assets
General. Teche Federal's primary market area is dependent, to a
certain extent, on the oil and gas, seafood and agricultural (primarily sugar
cane) industries. These industries are cyclical in nature and have a direct
impact on the level and performance of the Bank's loan portfolio. In the
mid-1980s, after sharp increases in interest rates, oil prices fell, causing
severe economic problems in Louisiana and the Bank's primary market area. During
this time, the Bank experienced a sharp increase in non-performing assets and
real estate owned ("REO"). The Bank's primary market area has, to a certain
extent, diversified somewhat since the mid-1980's, however, management continues
to monitor its loan portfolio for appropriate underwriting standards.
Non-Performing Assets and Delinquencies. When a borrower fails to
make a required payment on a loan and does not cure the delinquency promptly,
the loan is classified as delinquent. In this event, the normal procedure
followed by the Bank is to make contact with the borrower at prescribed
intervals in an effort to bring the loan to a current status. In most cases,
delinquencies are cured promptly. If a delinquency is not cured, the Bank
normally, subject to any required prior notice to the borrower, commences
foreclosure proceedings, in which the property may be sold. In foreclosure sale,
the Bank may acquire title to the property through foreclosure, in which case
the property so acquired is offered for sale and may be financed by a loan
involving terms more favorable to the borrower than those normally offered. Any
property acquired as a result of foreclosure or by deed in lieu of foreclosure
is classified as real estate owned until such time as it is sold or otherwise
disposed of by the Bank to recover its investment. Any real estate acquired in
settlement of loans is initially recorded at the estimated fair value at the
time of acquisition and is subsequently reduced by additional allowances which
are charged to earnings if the estimated fair value of the property declines
below its initial value. Subsequent costs directly relating to development and
improvement of property are capitalized (not to exceed fair value), whereas
costs related to holding property are expensed.
The Bank's general policy is to place a loan on nonaccrual status
when the loan becomes 90 days delinquent or otherwise demonstrates other risks
of collectibility. Interest on loans that are contractually 90 days or more past
due is reserved through an allowance account. The allowance is established by a
charge to interest income equal to all interest previously accrued, and interest
is subsequently recognized only to the extent cash payments are received until,
in management's judgment, the borrower's ability to make periodic interest and
principal payments is back to normal, in which case the loan is returned to
accrual status.
The following table sets forth information regarding non-accrual
loans, real estate owned ("REO"), and loans that are 90 days or more delinquent
but on which the Bank was accruing interest at the dates indicated and
restructured loans. There are no restructured loans other than those included in
the table.
6
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<TABLE>
<CAPTION>
At September 30,
------------------------------------------------------
2000 1999 1998 1997 1996
--------- ------- -------- --------- --------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
Loans accounted for on a non-accrual basis:
Mortgage loans:
Permanent loans secured by one- to four-family
residences ................................. $ 793 $ 609 $ 640 $ 1,028 $544
All other mortgage loans ..................... 76 - - - -
Consumer ....................................... 144 51 83 88 15
--------- ------- -------- --------- ----
Total ..................................... $ 1,013 $ 660 $ 723 $ 1,116 $559
========= ======= ======== ========= ====
Accruing loans which are contractually past
due 90 days or more:
Mortgage loans:
Permanent loans secured by one- to four-family
residences ................................. - - - - -
All other mortgage loans ..................... - - - - -
Consumer ....................................... - - - - -
--------- ------- -------- --------- ----
Total ..................................... $ - $ - $ - $ - $ -
========= ======= ======== ========= ====
Total non-performing loans ...................... $ 1,013 $ 660 $ 723 $ 1,116 $559
========= ======= ======== ========= ====
Real estate owned ............................... $ 232 $ 178 $ 331 $ 33 $ 46
========= ======= ======== ========= ====
Total non-performing assets ..................... $ 1,245 $ 838 $ 1,054 $ 1,149 $605
========= ======= ======== ========= ====
Total non-performing loans to total loans
outstanding before allowance .................. .28% .19% .20% .31% .17%
========= ======= ======== ========= ====
Total non-performing loans to total assets ...... .21% .15% .18% .27% .15%
========= ======= ======== ========= ====
Total non-performing assets to total assets ..... .26% .19% .26% .28% .16%
========= ======= ======== ========= ====
</TABLE>
Interest income that would have been recorded on loans accounted for
on a non-accrual basis under the original terms of such loans was not
significant for the year ended September 30, 2000.
The following table sets forth the types and dollar amounts of the
Bank's loans which were more than 60 days delinquent as of September 30, 2000:
At
September 30, 2000
------------------
(In Thousands)
Residential mortgage loans....................... $942
Commercial real estate loans..................... --
Land loans....................................... 14
Consumer loans................................... 191
Real Estate Owned. Real estate acquired by the Bank as the result of
foreclosure or by deed in lieu of foreclosure is classified as real estate owned
until it is sold. When property is acquired it is recorded at the fair value at
the date of foreclosure. At September 30, 2000, the Bank had REO with a net
balance of $232,000.
7
<PAGE>
Allowances for Loan Losses and Real Estate Owned. It is management's
policy to provide for losses on loans in its loan portfolio and foreclosed REO.
A provision for loan losses is charged to operations based on management's
evaluation of the losses that may be incurred in the Bank's loan portfolio. Such
evaluation, which includes a review of all loans of which full collectibility of
interest and principal may not be reasonably assured, considers, among other
matters, the estimated net realizable value of the underlying collateral.
Management will continue to review the entire loan portfolio to
determine the extent, if any, to which further additional loss provisions may be
deemed necessary. There can be no assurance that the allowance for losses will
be adequate to cover losses which may in fact be realized in the future and that
additional provisions for losses will not be required.
8
<PAGE>
Allocation of Allowance for Loan Losses. The following table sets
forth the allocation of the Bank's allowance for loan losses by loan category
and the percent of loans in each category to total loans receivable at the dates
indicated. The portion of the loan loss allowance allocated to each loan
category does not represent the total available for losses which may occur
within the loan category since the total loan loss allowance is a valuation
reserve applicable to the entire loan portfolio.
<TABLE>
<CAPTION>
At September 30,(1)
--------------------------------------------------------------------------------------------------------------
2000 1999 1998 1997 1996
--------------------- ------------------------ ------------------- ------------------- --------------------
Percent of Percent of Percent of Percent of Percent of
Loans to Loans to Loans to Loans to Loans to
Amount Total Loans Amount Total Loans Amount Total Loans Amount Total Loans Amount Total Loans
---- ----------- ------ ----------- ------ ----------- ------ ----------- ------ -----------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
At end of year
allocated to:
One- to four-family... $2,742 79.47% $2,664 85.43% $2,600 86.20% $2,558 88.38% $2,426 89.89%
Multi-family and
commercial
real estate......... 121 1.70 121 1.88 246 2.34 437 2.78 414 3.23
Construction.......... 16 2.77 15 1.33 24 1.11 26 .68 25 1.00
Consumer and
other loans......... 751 16.06 737 11.36 645 10.35 334 8.16 317 5.88
------ ------ ------ ------ ------ ------ ------ ------- ------ ------
Total allowance(1).... $3,630 100.00% $3,537 100.00% $3,515 100.00% $3,355 100.00% $3,182 100.00%
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
</TABLE>
----------------------
(1) Includes specific reserves for assets classified as loss.
9
<PAGE>
Analysis of the Allowance for Loan Losses. The following table sets
forth information with respect to the Bank's allowance for loan losses for the
periods indicated:
<TABLE>
<CAPTION>
At September 30,
-----------------------------------------------------------------
2000 1999 1998 1997 1996
--------- --------- --------- --------- ---------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C>
Total loans outstanding, net ............ $ 386,512 $ 342,986 $ 345,172 $ 346,875 $ 316,216
========= ========= ========= ========= =========
Average loans outstanding ............... $ 382,173 $ 340,540 $ 349,769 $ 336,509 $ 283,962
========= ========= ========= ========= =========
Allowance balances (at beginning of year) $ 3,537 $ 3,515 $ 3,355 $ 3,182 $ 2,966
--------- --------- --------- --------- ---------
Provision ............................... 120 150 180 240 300
--------- --------- --------- --------- ---------
Charge offs:
Residential real estate mortgage loans:
One- to four-family units ........... (23) (60) (56) (7) (28)
Construction loans .................... - - - - -
Multi-family and commercial
real estate loans ................... - - - - -
Land loans ............................ - - - - -
Other ................................. (66) (112) (8) (69) (59)
--------- --------- --------- --------- ---------
Total charge-offs ................. (89) (172) (64) (76) (87)
Recoveries
Residential real estate mortgage loans:
One- to four-family units ........... 19 38 18 9 3
Construction loans .................... - - - - -
Multi-family and commercial
real estate loans .................. - - 22 - -
Land loans ............................ - - - - -
Other ................................. 43 6 4 - -
--------- --------- --------- --------- ---------
Total recoveries .................. 62 44 44 9 3
--------- --------- --------- --------- ---------
Net (charge-offs) ..................... (27) (128) (20) (67) (84)
--------- --------- --------- --------- ---------
Allowance balance (at end of year) ...... $ 3,630 $ 3,537 $ 3,515 $ 3,355 $ 3,182
========= ========= ========= ========= =========
Allowance for loan losses to total loans
outstanding before allowance .......... .93% 1.02% 1.01% .96% 1.00%
Net loans charged off as a percent of
average loans outstanding before ........ .01% .04% .01% .02% .03%
allowance
</TABLE>
Investment Activities
General. To supplement lending activities, the Company invests in
residential mortgage-backed securities, including collateralized mortgage
obligations ("CMO's"), investment securities and interest- bearing deposits.
These investments have historically consisted of investment securities issued by
U.S.
10
<PAGE>
government agencies and government-sponsored corporations. Such securities can
serve as collateral for borrowings and, through repayments and maturities, as a
source of liquidity.
The Company is authorized to invest in various types of assets,
including U.S. Treasury obligations, securities of various federal agencies and
government-sponsored corporations, including securities issued by FHLMC, FNMA,
and the Government National Mortgage Association, securities of state and
municipal governments, deposits at the FHLB of Dallas, certificates of deposit
of federally insured institutions, certain bankers' acceptances and federal
funds. Subject to various restrictions, the Company also has the authority to
invest in commercial paper, corporate debt and/or equity securities and ARM
funds, the assets of which conform to the investments that federally chartered
savings institutions are otherwise authorized to make directly.
The Company's investments in mortgage-backed securities and CMO's
includes securities issued by government agencies, private issuers and financial
institutions. At September 30, 2000, the Company's investment in CMO's did not
include any residual interest or interest-only or principal-only securities. As
a matter of policy, the Company does not invest in residual interests of CMO's
or interest-only and principal-only securities. The CMO's held by the Company at
September 30, 2000 consisted of floating rate and fixed rate tranches.
Generally, private issued CMO's tend to have greater prepayment and credit risk
than those issued by government agencies or government-sponsored corporations,
such as the FHLMC, FNMA and GNMA, because they often are secured by jumbo loans.
At September 30, 2000, the Bank had CMO's with an aggregate estimated market
value of $22.2 million, all of which were privately issued. To minimize the risk
of private issued CMO's, the Bank only purchases those CMOs rated AA or better
by one of the rating agencies.
The following table sets forth the carrying value of the Company's
investment portfolio, short- term investments and FHLB stock at the dates
indicated.
At September 30,
----------------------------
2000 1999 1998
------- ------- -------
(In Thousands)
Investment securities issued by U.S. ..
Government agencies and corporations $ 3,385 $ 4,375 $ 4,478
FHLB Stock ............................ 5,781 4,229 3,884
Mortgage-backed securities ............ 30,949 26,277 26,526
CMO's ................................. 22,181 32,042 4,694
Municipal obligations ................. 93 201 246
Equity securities ..................... 601 565 825
------- ------- -------
Total investment and mortgage-backed
securities ...................... 62,990 67,689 40,653
Interest-bearing deposits ............. 860 1,829 5,260
------- ------- -------
Total investments .................. $63,850 $69,518 $45,913
======= ======= =======
11
<PAGE>
Investment Portfolio Maturities. The following table sets forth
certain information regarding the amortized cost, carrying value, market value,
weighted average yields and maturities of the Bank's investment and
mortgage-backed securities portfolio at September 30, 2000.
<TABLE>
<CAPTION>
As of September 30, 2000
----------------------------------------------------------------------------------------------------------------
One Year or Less One to Five Years Five to Ten Years More than Ten Years Total Investments
------------------ ------------------ ------------------- ------------------- --------------------------------
Amortized Average Amortized Average Amortized Average Amortized Average Amortized Average Carrying Market
Cost Yield Cost Yield Cost Yield Cost Yield Cost Yield Value Value
------ ------- ------ ------ ------ ------ ------ ------ ------ ------ ----- -----
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investment
Securities
available
for sale.......... $3,391 6.20% $ -- --% $ -- --% $ -- --% $ 3,391 6.20% $ 3,385 $ 3,385
Mortgage-
backed
Securities
available
for sale(1)....... 1,174 6.35% 5,275 6.20 92 7.54 24,879 6.24 31,420 6.24 30,949 30,949
CMO's held to
maturity(1)....... -- -- -- -- -- -- 2,601 8.01 2,574 8.01 2,574 2,607
CMO's available
for sale(1)....... -- -- -- -- -- -- 20,654 6.39 20,654 6.39 19,607 19,607
FHLB Stock.......... -- -- -- -- -- -- -- -- 5,781 6.50 5,781 5,781
Municipal
Obligations(2).... -- -- 93 5.06 -- -- -- -- 93 5.06 93 93
Equity Securities... -- -- -- -- -- -- -- -- 539 -- 601 601
------ --------- -------- ------- -------- ------- -------
Total......... $4,565 6.24% $ 5,368 6.18% $ 92 7.54% $48,134 6.40% $ 64,452 6.33% $62,990 $63,023
====== ========= ======= ======= ======== ======= =======
</TABLE>
---------------------------
(1) Does not assume prepayments.
(2) Yields on municipal obligations have not been computed on a tax equivalent
basis.
12
<PAGE>
Sources of Funds
General. Deposits are the major source of the Bank's funds for
lending and other investment purposes. Teche Federal also derives funds from
amortization and prepayment of loans and mortgage- backed securities, maturities
of investment securities and operations. Scheduled loan principal and interest
payments are a relatively stable source of funds, while deposit inflows and
outflows and loan prepayments are significantly influenced by general interest
rates and market conditions. Teche Federal also utilizes advances from the FHLB
of Dallas.
Deposits. Consumer and commercial deposits are attracted principally
from within the Bank's primary market area through the offering of a broad
selection of deposit instruments including regular savings, demand and NOW
accounts and certificates of deposit. Deposit account terms vary according to
the minimum balance required, the time period the funds must remain on deposit
and the interest rate, among other factors.
The interest rates paid by the Bank on deposits can be set daily at
the direction of senior management. Senior management determines the interest
rate to offer the public on new and maturing accounts. Senior management obtains
the interest rates being offered by other financial institutions within its
market area. This data along with a report showing the dollar value of
certificates of deposit maturing is reviewed and interest rates are determined.
Non-interest bearing demand accounts constituted $18.7 million, or
6.0% of the Bank's deposit portfolio at September 30, 2000. Money market
accounts and NOW accounts constituted $36.7 million, or 11.8% of the Bank's
deposit portfolio at September 30, 2000. Regular savings accounts constituted
$21.9 million, or 7.1% of the Bank's deposit portfolio at September 30, 2000.
Certificates of deposit constituted $219.2 million or 70.7% of the deposit
portfolio, including $50.6 million of which had balances of $100,000 and over.
As of September 30, 2000, the Bank had no brokered deposits.
Certificate Accounts of $100,000 and Above. Teche Federal maintains
a policy of offering higher interest rates on certificates with larger balances.
As a result, to some extent, Teche Federal customers tend to consolidate
accounts to earn the highest possible interest. This enables the Bank to
effectively compete in the marketplace, reduce the number of accounts and
associated costs, and increase, to some extent the number of accounts with
balances of $100,000. The following table indicates the amount of the Bank's
certificates of deposit of $100,000 or more by time remaining until maturity as
of September 30, 2000.
Certificates
of Deposit
---------- Weighted
(In Thousands) Interest Rate
-------------
Maturity Period:
---------------
3 months or less........................ $ 8,025 5.23%
Over 3 through 6 months................. 7,532 5.56
Over 6 through 12 months................ 13,721 6.01
Over 12 months.......................... 21,322 6.34
-------
Totals.................................. $50,600 5.96
=======
13
<PAGE>
Borrowings
Deposits are the primary source of funds of the Bank's lending and
investment activities and for its general business purposes. The Bank may obtain
advances from the FHLB of Dallas to supplement its supply of lendable funds.
Advances from the FHLB of Dallas are typically secured by a pledge of the Bank's
stock in the FHLB of Dallas and a portion of the Bank's first mortgage loans and
certain other assets. The Bank, if the need arises, may also access the Federal
Reserve Bank discount window to supplement its supply of lendable funds and to
meet deposit withdrawal requirements. At September 30, 2000, Teche Federal had
$111.9 million in advances outstanding from the FHLB of Dallas.
The following table sets forth certain information regarding the
Bank's short term advances at or for the years ended on the dates indicated:
<TABLE>
<CAPTION>
At or For the Year Ended September 30,
--------------------------------------
2000 1999 1998
------- ------- -------
(Dollars in Thousands)
<S> <C> <C> <C>
FHLB advances:
Average balance outstanding........................ $52,500 $39,100 $35,700
Maximum amount outstanding at any
month-end during the year....................... 60,700 47,300 38,100
Balance outstanding at end of year................. 57,500 44,300 34,500
Weighted average interest rate during the year..... 6.00% 5.00% 5.23%
Weighted average interest rate at end of year...... 6.60% 4.93% 4.85%
</TABLE>
Subsidiary Activity
The only subsidiary of the Company is Teche Federal Savings Bank.
As of September 30, 2000, the Bank had one subsidiary: Family
Investment Services, Inc. ("FISI") and the net book value of the Bank's
investment in stock, unsecured loans and conforming loans in its service
corporation was $114,672. FISI was inactive at September 30, 2000.
Personnel
As of September 30, 2000, the Bank had 156 full-time and 53
part-time employees. None of the Bank's employees is represented by a collective
bargaining group. The Bank believes that its relationship with its employees is
good.
Regulation
Set forth below is a brief description of all materials laws and
regulations which relate to the regulation of the Bank and the Company. The
description does not purport to be complete and is qualified in its entirety by
reference to applicable laws and regulations.
14
<PAGE>
Holding Company Regulation
General. The Company is a unitary savings and loan holding company
subject to regulatory oversight by the OTS. As such, the Company is required to
register and file reports with the OTS and is subject to regulation and
examination by the OTS. In addition, the OTS has enforcement authority over the
Company and its non-savings association subsidiaries, should such subsidiaries
be formed, which also permits the OTS to restrict or prohibit activities that
are determined to be a serious risk to the subsidiary savings association. This
regulation and oversight is intended primarily for the protection of the
depositors of the Bank and not for the benefit of stockholders of the Company.
The Company is also required to file certain reports with, and otherwise comply
with, the rules and regulations of the OTS and the SEC.
Financial Modernization. On November 12, 1999, the President signed
into law the Gramm-Leach-Bliley Financial Services Modernization Act of 1999
(the "GLB Act"), which repealed the prohibitions against bank affiliations with
securities and insurance firms. The GLB Act authorizes qualifying bank holding
companies to become financial holding companies and thereby affiliate with
securities firms and insurance companies and engage in other activities that are
financial in nature. The GLB Act defines financial in nature to include
securities underwriting, dealing and market making; sponsoring mutual funds and
investment companies; insurance underwriting and agency; merchant banking
activities, and activities that the Federal Reserve Board has determined to be
closely related to banking. A qualifying national bank also may engage, subject
to limitations on investment, in activities that are financial in nature, other
than insurance underwriting, insurance company portfolio investment, real estate
development, and real estate investment, through a financial subsidiary of the
bank.
The GLB Act repeals the "unitary savings and loan holding company
exemption" from the restrictions imposed by the Home Owners' Loan Act on the
business activities of savings and loan holding companies. However, the GLB Act
grandfathers from this provision companies that were already unitary savings and
loan holding companies before May 4, 1999 or that result from an internal
reorganization of such preexisting unitary holding companies. Since the Company
was a unitary savings and loan holding company before May 4, 1999, it qualifies
as a grandfathered unitary savings and loan holding company. Grandfathered
unitary savings and loan holding companies have no restrictions on their
activities at the holding company level. However, non-grandfathered unitary
savings and loan holding companies may engage only in activities authorized for
savings and loan holding companies under the Home Owners' Loan Act and in
banking, securities, insurance and merchant banking activities permitted for
financial holding companies under the GLB Act.
The GLB Act imposes significant new financial privacy obligations
and reporting requirements on all financial institutions, including federal
savings associations. Specifically, the statute, among other things, will
require financial institutions (a) to establish privacy policies and disclose
them to customers both at the commencement of a customer relationship and on an
annual basis and (b) to permit customers to opt out of a financial institution's
disclosure of financial information to nonaffiliated third parties. The federal
financial regulators have promulgated final regulations implementing these
provisions, which will become effective July 1, 2001.
The GLB Act also enacts significant changes to the Federal Home Loan
Bank System. The GLB Act expands the permissible uses of Federal Home Loan Bank
advances by community financial institutions (under $500 million in assets) to
include funding loans to small businesses, small farms and
15
<PAGE>
small agri-businesses. In addition, the GLB Act makes membership in a regional
Federal Home Loan Bank voluntary for federal savings associations.
Activities Restrictions. As a grandfathered unitary savings and loan
holding company under the GLB Act, the Company is generally not subject to any
restrictions on its business activities or those of its non-savings institution
subsidiaries. However, if the Company were to fail to meet the Qualified Thrift
Lender Test, then it would become subject to the activities restrictions of the
Home Owners' Loan Act applicable to multiple holding companies. See "Regulation
of the Bank -- Qualified Thrift Lender Test."
If the Company were to acquire control of another savings
association, it would lose its grandfathered status under the GLB Act and its
business activities would be restricted to certain activities specified by OTS
regulation, which include performing services and holding properties used by a
savings institution subsidiary, certain activities authorized for savings and
loan holding companies as of March 5, 1987, and nonbanking activities
permissible for bank holding companies pursuant to the Bank Holding Company Act
of 1956 (the "BHC Act") or authorized for financial holding companies pursuant
to the GLB Act. Furthermore, no company may acquire control of the Company
unless the acquiring company was a unitary savings and loan holding company on
May 4, 1999 (or became a unitary savings and loan holding company pursuant to an
application pending as of that date) or the acquiring company is only engaged in
activities that are permitted for multiple savings and loan holding companies or
for financial holding companies under the BHC Act as amended by the GLB Act.
Regulation of the Bank
General. As a federally chartered, SAIF-insured savings association,
the Bank is subject to extensive regulation by the OTS and the FDIC. Lending
activities and other investments must comply with various federal statutory and
regulatory requirements. The Bank is also subject to certain reserve
requirements promulgated by the Federal Reserve Board.
The OTS, in conjunction with the FDIC, regularly examines the Bank
and prepares reports for the consideration of the Bank's Board of Directors on
any deficiencies that they find in the Bank's operations. The Bank's
relationship with its depositors and borrowers is also regulated to a great
extent by federal law, especially in such matters as the ownership of savings
accounts and the form and content of the Bank's mortgage documents.
The Bank must file reports with the OTS and the FDIC concerning its
activities and financial condition, in addition to obtaining regulatory
approvals prior to entering into certain transactions such as mergers with or
acquisitions of other savings institutions. This regulation and supervision
establishes a comprehensive framework of activities in which an institution can
engage and is intended primarily for the protection of the SAIF and depositors.
The regulatory structure also gives the regulatory authorities extensive
discretion in connection with their supervisory and enforcement activities and
examination policies, including policies with respect to the classification of
assets and the establishment of adequate loan loss reserves for regulatory
purposes. Any change in such regulations, whether by the OTS, the FDIC or the
Congress could have a material adverse impact on the Company, the Bank and their
operations.
Insurance of Deposit Accounts. The FDIC administers two separate
deposit insurance funds. Generally, the Bank Insurance Fund (the "BIF") insures
the deposits of commercial banks and the SAIF
16
<PAGE>
insures the deposits of savings institutions. The FDIC is authorized to increase
deposit insurance premiums if it determines such increases are appropriate to
maintain the reserves of either the SAIF or BIF or to fund the administration of
the FDIC. In addition, the FDIC is authorized to levy emergency special
assessments on BIF and SAIF members. The FDIC has set the deposit insurance
assessment rates for SAIF-member institutions for the first six months of 2000
at 0% to .027% of insured deposits on an annualized basis, with the assessment
rate for most savings institutions set at 0%.
Regulatory Capital Requirements. OTS capital regulations require
savings institutions to meet three capital standards: (1) tangible capital equal
to 1.5% of total adjusted assets, (2) a leverage ratio (core capital) equal to
at least 3% of total adjusted assets for savings associations that receive the
highest supervision rating for safety and soundness and 4% of total adjusted
assets for all other associations, and (3) a risk-based capital requirement
equal to 8.0% of total risk-weighted assets. The Bank's capital levels can be
found at Note 17 to the Consolidated Financial Statements included as Exhibit 13
to this report.
Savings associations with a greater than "normal" level of interest
rate exposure will, in the future, be subject to a deduction for an interest
rate risk ("IRR") component may be from capital for purposes of calculating
their risk-based capital requirement. See "-- Net Portfolio Value Analysis."
The Bank is not under any agreement with regulatory authorities nor
is it aware of any current recommendations by the regulatory authorities which,
if they were to be implemented, would have a material effect on liquidity,
capital resources or operations of the Bank or the Company.
Net Portfolio Value Analysis - Interest Rate Risk. The Bank is
subject to interest rate risk to the degree that its interest-bearing
liabilities, primarily deposits with short- and medium-term maturities, mature
or reprice at different rates than our interest-earning assets. Although having
liabilities that mature or reprice less frequently on average than assets will
be beneficial in times of rising interest rates, such an asset/liability
structure will result in lower net income during periods of declining interest
rates, unless offset by other factors.
The Bank believes it is critical to manage the relationship between
interest rates and the effect on its net portfolio value ("NPV"). This approach
calculates the difference between the present value of expected cash flows from
assets and the present value of expected cash flows from liabilities, as well as
cash flows from off-balance sheet contracts. The Bank manages assets and
liabilities within the context of the marketplace, regulatory limitations and
within its limits on the amount of change in NPV which is acceptable given
certain interest rate changes.
The OTS requires all regulated thrift institutions to calculate the
estimated change in the institution's NPV assuming instantaneous parallel shifts
in the Treasury yield curve of 100 to 300 basis points either up or down in 100
basis point increments. The NPV is defined as the present value of expected cash
flows from existing assets less the present value of expected cash flows from
existing liabilities plus the present value of net expected cash inflows from
existing off-balance sheet contracts.
The OTS provides an interest rate sensitivity report of NPV to all
institutions that file with the OTS a Consolidated Maturity & Rate Schedule
("CMR") as a part of the institution's quarterly Thrift Financial Report. The
OTS simulation model uses a discounted cash flow analysis and an option-based
pricing approach to measuring the interest rate sensitivity of NPV. The OTS
model estimates the economic value of each type of asset, liability, and
off-balance sheet contract under the assumption that
17
<PAGE>
the Treasury yield curve shifts instantaneous and parallel up and down 100 to
300 basis points in 100 basis points increments. The OTS allows thrifts with
under $1 billion in total assets to use the results of their interest rate
sensitivity model, which is based on information provided by the institution, to
estimate the sensitivity of NPV.
The OTS model utilizes an option-based pricing approach to estimate
the sensitivity of mortgage loans. The most significant embedded option in these
types of assets is the prepayment option of the borrowers. The OTS model uses
various price indications and prepayment assumptions to estimate sensitivity of
mortgage loans.
In the OTS model, the value of deposit accounts appears on the asset
and liability side of the NPV analysis. In estimating the value of certificates
of deposit accounts ("CD"), the liability portion of the CD is represented by
the implied value when comparing the difference between the CD face rate and
available wholesale CD rates. On the asset side of the NPV calculation, the
value of the "customer relationship" due to the rollover of retail CD deposits
represents an intangible asset in the NPV calculation.
Other deposit accounts such as NOW accounts, money market demand
accounts, passbook accounts, and non-interest-bearing accounts also are included
on the asset and liability side of the NPV calculation in the OTS model. These
accounts are valued at 100% of the respective account balances on the liability
side. On the asset side of the analysis, the value of the "customer
relationship" of the various types of deposit accounts is reflected as a deposit
intangible.
The NPV sensitivity of borrowed funds is estimated by the OTS model
based on a discounted cash flow approach.
The OTS uses, as a critical point, a change of plus or minus 200
basis points in order to set its "normal" institutional results and peer
comparisons. A resulting change in NPV of more than 2% of the estimated market
value of its assets will require the institution to deduct from its capital 50%
of that excess change. The rules provide that the OTS will calculate the IRR
component quarterly for each institution. The greater the change, positive or
negative, in NPV, the more interest rate risk is assumed to exist with the
institution. The following table lists the Bank's latest percentage change in
NPV assuming an immediate change of plus or minus 100, 200, and 300 basis points
from the level of interest rates at September 30, 2000.
18
<PAGE>
NPV as % of PV
Net Portfolio Value of Assets
----------------------------------- -------------------
Change NPV
in Rates $ Amount $Change(1) %Change(2) Ratio(3) Change(4)
-------- -------- ---------- ---------- -------- ---------
(Dollars in Thousands)
+300 bp 27,381 -20,962 -43% 6.17% -392
+200 bp 34,916 -13,427 -28 7.66 -243
+100 bp 41,914 -6,429 -13 8.97 -112
0 bp 48,343 10.09
-100 bp 51,862 3,519 7 10.62 53
-200 bp 52,064 3,721 8 10.53 43
-300 bp 51,324 2,981 6 10.25 16
----------------
(1) Represents the excess (deficiency) of the estimated NPV assuming the
indicated change in interest rates minus the estimated NPV assuming
no change in interest rates.
(2) Calculated as the amount of change in the estimated NPV divided by
the estimated NPV assuming no change in interest rates.
(3) Calculated as the estimated NPV divided by average total assets.
(4) Calculated as the excess (deficiency) of the NPV ratio assuming the
indicated change in interest rates over the estimated NPV ratio
assuming no change in interest rates.
September 30, September 30,
2000 1999
-------------- --------------
*** RISK MEASURES: 200 BP RATE SHOCK ***
Pre-Shock NPV Ratio: NPV as % of PV of Assets..... 10.09% 10.89%
Exposure Measure: Post-Shock NPV Ratio............ 7.66% 7.41%
Sensitivity Measure: Change in NPV Ratio.......... -243 bp -348 bp
*** CALCULATION OF CAPITAL COMPONENT ***
Change in NPV as % of PV of Assets................ 2.80% 3.86%
Interest Rate Risk Capital Component ($000)....... $ 0 $ 0
As the table shows, increases in interest rates would result in net
decreases in the Bank's NPV, while decreases in interest rates will result in
smaller net increases in the Bank's NPV. (The Bank's NPV decreases by 28% if
interest rates increase by 200 basis points.) Certain shortcomings are inherent
in the methodology used in the above table. Modeling changes in NPV requires the
making of certain assumptions that may tend to oversimplify the manner in which
actual yields and costs respond to changes in market interest rates. First, the
models assume that the composition of the Bank's interest sensitive assets and
liabilities existing at the beginning of a period remains constant over the
period being measured. Second, the models assume that a particular change in
interest rates is reflected uniformly across the yield
19
<PAGE>
curve regardless of the duration to maturity or repricing of specific assets and
liabilities. Accordingly, although the NPV measurements do provide an indication
of the Bank's interest rate risk exposure at a particular point in time, such
measurements are not intended to provide a precise forecast of the effect of
changes in market interest rates on the Bank's net interest income.
In times of decreasing interest rates, the value of fixed-rate
assets could increase in value and the lag in repricing of interest rate
sensitive assets could be expected to have a positive effect on the Bank.
Dividend and Other Capital Distribution Limitations. The OTS imposes
various restrictions or requirements on the ability of savings institutions to
capital distributions including cash dividends.
A savings association that is a subsidiary of a savings and loan
holding company, such as the Bank, must file an application or a notice with the
OTS at least 30 days before making a capital distribution. Savings associations
are not required to file an application for permission to make a capital
distribution and need only file a notice if the following conditions are met:
(1) they are eligible for expedited treatment under OTS regulations, (2) they
would remain adequately capitalized after the distribution, (3) the annual
amount of capital distribution does not exceed net income for that year to date
added to retained net income for the two preceding years, and (4) the capital
distribution would not violate any agreements between the OTS and the savings
association or any OTS regulations. Any other situation would require an
application to the OTS.
In addition, the OTS could prohibit a proposed capital distribution
if, after making the distribution, by any institution, which would otherwise be
permitted by the regulation, if the OTS determines that the distribution would
constitute an unsafe or unsound practice.
A federal savings institutions is prohibited from making a capital
distribution if, after making the distribution the savings institution would be
unable to meet any one of its minimum regulatory capital requirements. Further,
a federal savings institution cannot distribute regulatory capital that is
needed for its liquidation account.
Qualified Thrift Lender Test. The Home Owners' Loan Act ("HOLA"), as
amended, requires savings institutions to meet a QTL test. If the Bank maintains
an appropriate level of Qualified Thrift Investments (primarily residential
mortgages and related investments, including certain mortgage-backed securities)
("QTIs") and otherwise qualifies as a QTL, it will continue to enjoy full
borrowing privileges from the FHLB of Dallas. The required percentage of QTIs is
65% of portfolio assets (defined as all assets minus intangible assets, property
used by the institution in conducting its business and liquid assets equal to
10% of total assets). Certain assets are subject to a percentage limitation of
20% of portfolio assets. In addition, savings associations may include shares of
stock of the FHLBs, FNMA and FHLMC as qualifying QTIs. The FDICIA also amended
the method for measuring compliance with the QTL test to be on a monthly basis
in nine out of every 12 months, as opposed to on a daily or weekly average of
QTIs. As of September 30, 2000, the Bank was in compliance with its QTL
requirement with 90.6% of its assets invested in QTIs.
A savings association that does not meet a QTL test must either
convert to a bank charter or comply with the following restrictions on its
operations: (i) the savings association may not engage in any new activity or
make any new investment, directly or indirectly, unless such activity or
investment is permissible for a national bank; (ii) the branching powers of the
savings association shall be restricted to those of a national bank; (iii) the
savings association shall not be eligible to obtain any advances from its
20
<PAGE>
FHLB; and (iv) payment of dividends by the savings association shall be subject
to the rules regarding payment of dividends by a national bank. Upon the
expiration of three years from the date the savings association ceases to be a
QTL, it must cease any activity and not retain any investment not permissible
for a national bank and immediately repay any outstanding FHLB advances (subject
to safety and soundness considerations).
Item 2. Description of Properties
-----------------------------------
Properties
The Bank operates from its main office located at 211 Willow Street,
Franklin, Louisiana and twelve branch offices. The Bank's total investment in
office property and equipment is $17.0 million with a net book value of $11.4
million at September 30, 2000. The Bank currently operates automated teller
machines at most of its branch offices.
Item 3. Legal Proceedings
--------------------------
Neither the Company nor its subsidiaries are involved in any pending
legal proceedings, other than routine legal matters occurring in the ordinary
course of business, which in the aggregate involve amounts which are believed by
management to be immaterial to the consolidated financial condition or results
of operations of the Company.
Item 4. Submission of Matters to a Vote of Security-Holders
------------------------------------------------------------
None.
PART II
Item 5. Market for Common Equity and Related Stockholder Matters
-----------------------------------------------------------------
Information relating to the market for Registrant's common equity
and related stockholder matters appears under "Market and Dividend Information"
in the Registrant's Annual Report to Stockholders for the fiscal year ended
September 30, 2000 ("Annual Report") on page 3, and is incorporated herein by
reference.
Item 6. Selected Financial Data
--------------------------------
The above-captioned information appears under "Selected Financial
Information" in the Annual Report on page 2, and is incorporated herein by
reference.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations
--------------------------------------------------------------------------------
The above-captioned information appears under Management's
Discussion and Analysis of Financial Condition and Results of Operations in the
Annual Report on pages 4 through 9 and is incorporated herein by reference.
21
<PAGE>
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
-------------------------------------------------------------------
See Net Portfolio Value Analysis on pages 17 through 20 of this
Annual Report on Form 10-K.
Item 8. Financial Statements and Supplementary Data
----------------------------------------------------
The Consolidated Financial Statements of Teche Holding and its
subsidiaries, together with the report thereon by Deloitte & Touche, LLP appears
in the Annual Report on pages 10 through 28 and are incorporated herein by
reference.
Item 9. Changes In and Disagreements with Accountants on Accounting and
Financial Disclosure
--------------------------------------------------------------------------------
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
------------------------------------------------------------
The information contained under the section captioned "Proposal I -
Election of Directors" at pages 4 to 8 of the Registrant's definitive proxy
statement for the Registrant's Annual Meeting of Stockholders to be held on
January 20, 2001 (the "Proxy Statement"), which was filed with the Commission on
December 11, 2000 and incorporated herein by reference. See also "Item 1.
Business of the Bank -- Personnel" included herein.
Item 11. Executive Compensation
--------------------------------
The information relating to executive compensation is incorporated
herein by reference to the Proxy Statement at pages 8 through 11.
Item 12. Security Ownership of Certain Beneficial Owners and Management
------------------------------------------------------------------------
The information relating to security ownership of certain beneficial
owners and management is incorporated herein by reference to the Proxy Statement
at pages 3 through 5.
Item 13. Certain Relationships and Related Transaction
-------------------------------------------------------
The information relating to certain relationships and related
transactions is incorporated herein by reference to the Proxy Statement on pages
18 and 19.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
-------------------------------------------------------------------------
(a) The following documents are filed as a part of this report:
(1) Financial Statements of the Company are incorporated by reference to the
following indicated pages of the Annual Report.
22
<PAGE>
PAGE
----
Independent Auditors' Report............................................ 10
Consolidated Balance Sheets as of September 30, 2000 and 1999........... 11
Consolidated Statements of Income For the Years Ended
September 30, 2000, 1999 and 1998..................................... 12
Consolidated Statements of Stockholders' Equity
for the Years Ended September 30, 2000, 1999 and 1998................. 13
Consolidated Statements of Cash Flows for the Years Ended
September 30, 2000, 1999 and 1998..................................... 14-15
Notes to Consolidated Financial Statements.............................. 16-28
The remaining information appearing in the Annual Report is not
deemed to be filed as part of this report, except as expressly provided herein.
(2) All schedules are omitted because they are not required or
applicable, or the required information is shown in the consolidated financial
statements or the notes thereto.
(3) Exhibits
(a) The following exhibits are filed as part of this report.
3.1 Articles of Incorporation of Teche Holding Company*
3.2 Bylaws of Teche Holding Company*
4.0 Stock Certificate of Teche Holding Company*
10.1 Form of Teche Federal Savings Bank Management Stock Plan**
10.2 Form of Teche Holding Company 1995 Stock Option Plan**
11.0 Statement regarding computation of earnings per share
(see Note 13 to the Notes to Consolidated Financial
Statements in the Annual Report)
13.0 Annual Report to Stockholders for the fiscal year ended
September 30, 2000 21.0Subsidiary of the Registrant
(see "Item 1 Business - Subsidiary Activity" herein)
23.0 Independent Auditors' Consent
27.0 Financial Data Schedule***
(b) Reports on Form 8-K.
None.
* Incorporated herein by reference into this document from the
Exhibits to Form S-1, Registration Statement, initially filed with
the Commission on December 16, 1994, Registration No. 33-87486.
** Incorporated herein by reference into this document from the
Exhibits to the Registrant's Form 10-K for the fiscal year ended
September 30, 1995, filed with the Commission.
*** Only in electronic filing.
23
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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
Dated: December 28, 2000 By: /s/Patrick O. Little
-------------------------------------
Patrick O. Little
President, Chief Executive
Officer and Director
(Duly Authorized Representative)
Pursuant to the requirement of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on December 28, 2000.
<TABLE>
<CAPTION>
<S> <C>
By: /s/Patrick O. Little By: /s/J. L. Chauvin
-------------------------------------------- ---------------------------------------------
Patrick O. Little J. L. Chauvin
President, Chief Executive Officer Vice President and Treasurer
and Director (Principal Financial Officer)
(Principal Executive Officer)
By: /s/W. Ross Little By:
-------------------------------------------- ---------------------------------------------
W. Ross Little Robert Earl Mouton
Chairman of the Board Director
By: /s/Mary Coon Biggs By: /s/Christian L. Olivier
-------------------------------------------- ---------------------------------------------
Mary Coon Biggs Christian L. Olivier
Director Director
By: /s/Virginia Kyle Hine By: /s/W. Ross Little, Jr.
-------------------------------------------- ---------------------------------------------
Virginia Kyle Hine W. Ross Little, Jr.
Director Director and Secretary
By: /s/Henry L. Friedman By: /s/Thomas F. Kramer, M.D.
-------------------------------------------- ---------------------------------------------
Henry L. Friedman Thomas F. Kramer, M.D.
Director Director
By: /s/Donelson T. Caffery, Jr.
--------------------------------------------
Donelson T. Caffery, Jr.
Director
</TABLE>
