SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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 June 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 file number 0-25538
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TECHE HOLDING COMPANY
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(Exact name of registrant as specified in its charter)
Louisiana 72-128746
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(State or other jurisdiction of (I.R.S. employer identification no.)
incorporation or organization)
211 Willow Street, Franklin, Louisiana 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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N/A
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Former name, former address and former fiscal year,
if changed since last report.
Indicate by check [x] 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 August 9, 2000.
Class Outstanding
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$.01 par value common stock 2,503,477
<PAGE>
TECHE HOLDING COMPANY
FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 2000
INDEX
Page
Number
------
PART I - CONSOLIDATED FINANCIAL INFORMATION
Item 1. Financial Statements 1
Item 2. Management's Discussion and Analysis of Financial 6
Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk 9
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 Information 10
Item 6. Exhibits and Reports on Form 8-K 10
SIGNATURES 11
<PAGE>
TECHE HOLDING COMPANY
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
At At
June 30, September 30,
2000 1999*
--------------- ----------------
(unaudited)
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 10,157 $ 10,292
Securities available-for-sale, at estimated
market value (amortized cost of $59,007 and $64,832) 57,006 63,460
Securities held to maturity 2,874 --
Loans receivable, net of allowance for loan losses
of $3,584 and $3,537) 373,844 342,986
Accrued interest receivable 1,933 2,159
Investment in Federal Home Loan Bank stock, at cost 5,345 4,229
Real estate owned, net 197 178
Prepaid expenses and other assets 713 621
Premises and equipment, at cost less accumulated depreciation 10,193 10,340
------- -------
TOTAL ASSETS $462,262 $434,265
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits $308,670 $303,084
Advances from Federal Home Loan Bank 102,792 78,682
Advance payments by borrowers for taxes and insurance 1,398 1,578
Accrued interest payable 260 432
Accounts payable and other liabilities 1,353 1,722
Deferred income taxes 285 67
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Total liabilities 414,758 385,565
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COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value, 10,000,000 shares
authorized; 4,232,000 shares issued 42 42
Preferred stock, 5,000,000 shares authorized;
none issued -- --
Additional paid in capital 42,171 42,153
Retained earnings 32,794 30,928
Unearned ESOP shares (1,505) (1,754)
Unearned Compensation (MSP) (126) (390)
Treasury stock - 1,724,000 and 1,496,000 shares, at cost (24,571) (21,387)
Unrealized (loss) on securities available-for-sale, net of
deferred income taxes (1,301) (892)
------- -------
Total stockholders' equity 47,504 48,700
------- -------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $462,262 $434,265
======= =======
</TABLE>
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* The consolidated balance sheet at September 30, 1999 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 Nine Months
Ended June 30 Ended June 30,
---------------------------- ----------------------------
2000 1999 2000 1999
---------------------------- ----------------------------
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans $ 7,188 $ 6,519 $20,792 $19,839
Interest and dividends on investments 1,144 957 3,324 2,225
Other interest income 55 88 142 418
------- ------- ------- -------
8,387 7,564 24,258 22,482
------- ------- ------- -------
INTEREST EXPENSE:
Deposits 3,274 3,156 9,676 9,421
Advances from Federal Home Loan Bank 1,632 900 4,117 2,668
Other borrowed money -- -- -- 112
------- ------- ------- -------
4,906 4,056 13,793 12,201
------- ------- ------- -------
NET INTEREST INCOME 3,481 3,508 10,465 10,281
PROVISION FOR LOAN LOSSES 30 30 90 120
------- ------- ------- -------
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 3,451 3,478 10,375 10,161
------- ------- ------- -------
NON-INTEREST INCOME:
Service charges and other 1,412 1,077 3,805 3,134
Gain on sale of real estate owned -- 68 54 84
Gain on sale of fixed assets -- -- 85 --
Other income 58 47 174 86
------- ------- -------- -------
TOTAL NON-INTEREST INCOME 1,470 1,192 4,118 3,304
------- ------- ------- -------
Gain on sale of securities -- 8 -- 10
NON-INTEREST EXPENSE:
Compensation and employee benefits 1,657 1,519 4,987 4,452
Occupancy expense 777 710 2,280 2,032
Marketing and professional 258 278 800 725
Other operating expenses 740 799 2,234 2,212
------- ------- ------- -------
TOTAL NON-INTEREST EXPENSE 3,432 3,306 10,301 9,421
------- ------- ------- -------
INCOME BEFORE INCOME TAXES 1,489 1,372 4,192 4,054
INCOME TAXES 527 480 1,446 1,419
------- ------- ------- -------
NET INCOME $ 962 $ 892 $ 2,746 $ 2,635
======= ======= ======= =======
BASIC EARNINGS PER COMMON SHARE $ 0.41 $ 0.34 $ 1.17 $ 0.98
DILUTED EARNINGS PER COMMON SHARE $ 0.41 $ 0.33 $ 1.16 $ 0.96
SHARES OUTSTANDING FOR EPS CALCULATIONS
BASIC 2,322,000 2,590,000 2,353,000 2,688,000
DILUTED 2,342,000 2,672,000 2,370,000 2,746,000
</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 Nine Months
Ended June 30,
------------------------
2000 1999
--------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $2,746 $2,635
Adjustments to reconcile net income to net cash provided by
operating activities:
Provision for loan losses 90 120
Depreciation 825 657
Accretion of deferred loan fees and other (31) (28)
Accretion of discounts on loans (60) (213)
Other items - net 485 (297)
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Net cash provided by operating activities 4,055 2,874
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of investment securities available for sale (1,995) (39,785)
Proceeds from maturities of investment securities available for sale 1,020 12,678
Principal repayments on mortgage-backed securities available
for sale 6,860 15
Loans (originated) repaid, net (30,857) 8,044
Investment in FHLB stock (1,116) (240)
Purchase of premises and equipment (1,273) (2,168)
Sales of investment securities available-for-sale -- 269
Net decrease in certificates of deposit -- 658
Purchase of mortgage-backed securities held to maturity (3,416) --
Proceeds of sales of premises and equipment 595 --
Principal repayments on mortgage-backed securities held to maturity 542 --
------- -------
Net cash used in investing activities (29,640) (20,529)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposits 5,586 19,286
Net (decrease) increase in FHLB advances 24,110 7,599
Net (decrease) increase in advance payments by borrowers for
taxes and insurance (180) (243)
Dividends paid (882) (1,018)
Purchase of common stock for treasury (3,184) (9,220)
Borrowings under loan agreement -- 6,767
Repayments of borrowings under loan agreement -- (7,114)
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Net cash provided by financing activities 25,450 16,057
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NET DECREASE IN CASH (135) (1,598)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 10,292 10,680
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CASH AND CASH EQUIVALENTS, END OF PERIOD $10,157 $9,082
======= =======
</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 nine
month periods ended June 30, 2000 and 1999 include the accounts of
Teche Holding Company (the "Company") and its subsidiary, Teche Federal
Savings Bank (the "Bank"). The Company'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 period ended June 30, 2000 are not necessarily
indicative of the results which may be expected for the entire fiscal
year or any other period.
NOTE 3 - EARNINGS PER SHARE
Following is a summary of the information used in the computation of
basic and diluted income per common share for the three and nine months
ended June 30, 2000 and 1999.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
June 30, June 30,
------------------------------- -----------------------
2000 1999 2000 1999
------ ------ ------ ------
(In thousands)
<S> <C> <C> <C> <C>
Weighted average number of common
shares outstanding - used in computation
of basic income per common share 2,322 2,590 2,353 2,688
Effective of dilutive securities:
Stock options -- 54 -- 34
MSP stock grants 20 28 17 24
----- ----- ----- -----
Weighted average number of common
shares outstanding plus effect of dilutive
securities - used in computation of diluted
net income per common share 2,342 2,672 2,370 2,746
===== ===== ===== =====
</TABLE>
4
<PAGE>
NOTE 4 - COMPREHENSIVE INCOME
The Corporation adopted Statement of Financial Accounting Standards No. 130
"Reporting Comprehensive Income" ("SFAS 130") effective October 1, 1998. SFAS
130 establishes standards for reporting and display of comprehensive income and
its components. Comprehensive income includes net income and other comprehensive
income which, in the case of the Corporation, only includes unrealized gains and
losses on securities available-for-sale. Following is a summary of the
Corporation's comprehensive income for the nine months ended June 30, 2000 and
1999.
2000 1999
------ ------
Net income $2,746 $2,635
Other comprehensive (loss), net of tax (409) (822)
------ ------
Total Comprehensive Income $2,337 $1,813
====== ======
5
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
The Company may from time to time make written or oral "forward-looking
statements" including statements contained in this Report and in other
communications by the Company which are made in good faith pursuant to the "safe
harbor" provisions of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements, such as statements of the Company's plans,
objectives, expectations, estimates and intentions, involve risks and
uncertainties and 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 economies 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 timely development of and acceptance of new products and
services of the Company and the perceived overall value of these products and
services by users, including the features, pricing and quality compared to
competitors' products and services; the willingness of users to substitute
competitors' products and services for the Company's products and services; the
success of the Company in gaining regulatory approval of its products and
services, when required; the impact of changes in financial services' laws and
regulations (including laws concerning taxes, banking, securities and
insurance); technological changes; acquisitions; changes in consumer spending
and saving habits; and the success of the Company at managing the risks involved
in the foregoing.
Comparison of Financial Condition at June 30, 2000 and September 30, 1999
The Company's total assets at June 30, 2000 and September 30, 1999 totaled
$462.3 million and $434.3 million, respectively, an increase of $28.0 million or
6.5%.
Securities available-for-sale totaled $57.0 million at June 30, 2000, which
represents a decrease of $6.5 million or 10.2% as compared to September 30,
1999, due to maturity of securities during this period.
Loans receivable totaled $373.8 million at June 30, 2000 which represented an
increase of $30.9 million or 9.0% compared to September 30, 1999. This increase
was primarily due to increased loan originations during the period.
Total deposits increased to $308.7 million at June 30, 2000, an increase of $5.6
million or 1.8% as compared to September 30, 1999.
Advances from the Federal Home Loan Bank ("FHLB") increased $24.1 million or
30.6% to $102.8 million at June 30, 2000 from $78.7 million at September 30,
1999, primarily in order to fund loan growth during the period.
Stockholders' equity decreased to $47.5 million at June 30, 2000, from $48.7
million at September 30, 1999, primarily as a result of stock repurchased and
cash dividends paid, offset somewhat by earnings for the nine month period.
During the nine month period, the Company repurchased 227,528 shares at an
average price of $13.95 per share.
6
<PAGE>
Comparison of Operating Results for the Three and Nine Months Ended June 30,
2000 and 1999
Net Income. The Company had net income of $962,000 and $2,746,000 for the three
and nine months ended June 30, 2000 as compared to net income of $892,000 and
$2,635,000 for the three and nine month periods ended June 30, 1999,
respectively. The increases during both periods were due primarily to increased
fee income on deposit accounts.
Total Interest Income. Total interest income increased by $823,000 or 10.9% and
$1,776,000 or 7.9% for the three and nine months ended June 30, 2000,
respectively, as compared to the same periods ending June 30, 1999 due primarily
to an increase in the average balances of loans and investments. The average
yield on loans decreased to 7.72% for the nine months ended June 30, 2000 from
7.78% in 1999, while the average yield on investments increased to 6.51% for the
nine months ended June 30, 2000, from 6.02% in 1999.
Total Interest Expense. Total interest expense increased 21.0% and 13.0% for the
three and nine month periods primarily due to an increase in deposits and
advances from the Federal Home Loan Bank.
Net Interest Income. Net interest income remained relatively stable, decreasing
slightly for the three months ended June 30, 2000 and increasing 1.8% for the
nine months ended June 30, 2000, as compared to the same periods ended June 30,
1999.
Provision for Loan Losses. The provision for loan losses was unchanged for the
three months ended June 30, 2000 and decreased $30,000 for the nine months ended
June 30, 2000, as compared to the same period in 1999.
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. Total non-interest income increased $278,000 and $814,000
for the three and nine month periods ended June 30, 2000, primarily due to
increased service charges.
Non-interest Expense. Total non-interest expense increased $126,000 and
$880,000, respectively, during the three and nine months ended June 30, 2000, as
compared to the same periods in 1999 due primarily to increases in compensation
and employee benefits and occupancy expense. Occupancy expense increased during
the periods due to the opening of a new branch office in Lafayette, Louisiana.
Income Tax Expense. Income taxes remained relatively stable as a percentage of
income before income taxes.
7
<PAGE>
Liquidity and Capital Resources
Under current Office of Thrift Supervision ("OTS") regulations, the Bank is
required to maintain certain levels of capital. At June 30, 2000, the Bank was
in compliance with its three regulatory capital requirements as follows:
Amount Percent
------ -------
(In thousands)
Tangible capital $41,889 9.06%
Tangible capital requirement 9,245 2.00
------- ----
Excess over requirement $32,644 7.06%
======= ====
Core capital $41,889 9.06%
Core capital requirement 18,490 4.00
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Excess over requirement $23,399 5.06%
======= ====
Risk based capital $45,207 17.03%
Risk based capital requirement 21,231 8.00
------- -----
Excess over requirement $23,976 9.03%
======= =====
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.
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. The Bank also utilizes
advances from the Federal Home Loan Bank of Dallas for its investment and
lending activities. As of June 30, 2000, such borrowed funds totaled $102.8
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 4% of its net withdrawable accounts
plus short term borrowings. This level 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.
8
<PAGE>
Quantitative and Qualitative Disclosures About Market Risk
There have been no material changes from the information regarding market risk
disclosed under the heading "Asset and Liability Management" in the Company's
Annual Report for the year ended September 30, 1999.
Key Operating Ratios
<TABLE>
<CAPTION>
At or For the Three Months Ended At or For Nine Months Ended
June 30, June 30,
2000(1) 1999(1) 2000(1) 1999(1)
------- ------- ------- -------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Return on average assets .85% .85% .82% .84%
Return on average equity 8.19% 7.05% 7.77% 6.88%
Average interest rate spread 2.60% 2.92% 2.72% 2.82%
Nonperforming assets to total assets .35% .28% .35% .28%
Nonperforming loans to total loans .42% .38% .42% .38%
Average net interest margin 3.17% 3.47% 3.26% 3.40%
Tangible book value per share $18.93 $17.62 $18.93 $17.62
</TABLE>
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(1) Annualized where appropriate.
9
<PAGE>
TECHE HOLDING COMPANY AND SUBSIDIARIES
PART II
ITEM 1. LEGAL PROCEEDINGS
Neither the Company nor the Bank was engaged in any legal proceeding
of a material nature at June 30, 2000. From time to time, the Company
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
Not applicable.
ITEM 5. OTHER MATERIALLY IMPORTANT EVENTS
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
27 Financial Data Schedule*
(b) Reports on Form 8-K
None.
---------------------------------
* Electronic filing only.
10
<PAGE>
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: August 8, 2000 By: /s/ Patrick O. Little
-------------------------------------------
Patrick O. Little
President and Chief Executive Officer
(Principal Executive Officer)
Date: August 8, 2000 By: /s/ J. L. Chauvin
-------------------------------------------
J. L. Chauvin
Vice President and Chief Financial Officer
(Principal Accounting Officer)
