UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR QUARTER ENDED JUNE 30, 1996
Commission file number 2-90033
ASSUMPTION BANCSHARES, INC.
(Exact name of registrant specified in its charter)
Louisiana
(State or other jurisdiction of incorporation or organization)
72-0121470
(I.R.S. Employer Identification No.)
P.O. Box 398
110 Franklin Street
Napoleonville, Louisiana
(Address of principal executive office)
70390
(Zip code)
(504) 369-7269
(Registrant's telephone number, including area code)
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
Number of shares outstanding as of June 30, 1996:
160,000 Common Shares
ASSUMPTION BANCSHARES, INC.
Condensed Consolidated Statements of Condition
June 30, 1996 and December 31, 1995
June 30, December 31,
Assets 1996 1995
__________ ____________
(unaudited)
Cash and due from banks $ 4,472,468 6,293,399
Federal funds sold 4,130,000 5,950,000
_____________ _____________
Cash and cash equivalents 8,602,468 12,243,399
Interest-bearing time deposits 99,000 99,000
Securities:
Held-to-maturity (market value of $14,203,000
and $14,765,000 at June 30, 1996 and
December 31, 1995, respectively) 14,198,008 14,677,589
Available-for-sale (amortized cost of
$21,571,000 and $22,631,000 at
June 30, 1996 and December 31, 1995,
respectively) 21,174,768 22,686,923
Loans 60,689,378 57,086,118
Less allowance for loan losses 1,219,918 1,195,517
_____________ _____________
Net loans 59,469,460 55,890,601
============= =============
Other real estate 31,759 20,717
Bank premises and equipment, net 2,182,353 2,230,281
Accrued interest receivable 850,384 814,196
Other assets 475,722 444,794
_____________ _____________
$ 107,083,922 109,107,500
============= =============
Liabilities and Stockholders' Equity
Deposits:
Noninterest-bearing demand 11,125,664 12,542,093
NOW accounts 17,358,285 20,518,595
Money market accounts 11,020,854 10,699,688
Savings and IRA accounts 22,810,652 22,393,243
Certificates and other time deposits,
$100,000 and over 3,849,571 4,416,000
Other certificates of deposit 30,693,766 28,778,502
_____________ _____________
96,858,792 99,348,121
Accrued interest payable 365,735 340,500
Other liabilities and accrued expenses 261,516 252,980
_____________ _____________
Total liabilities 97,486,043 99,941,601
_____________ _____________
Stockholders' equity:
Common stock 800,000 800,000
Paid-in capital 450,000 450,000
Retained earnings 8,609,499 7,878,785
Net unrealized (loss) gain on securities (261,620) 37,114
_____________ _____________
Total stockholders' equity 9,597,879 9,165,899
_____________ _____________
$ 107,083,922 109,107,500
============= =============
See accompanying notes to condensed consolidated financial
statements.
ASSUMPTION BANCSHARES, INC.
Condensed Consolidated Statements of Income
(Unaudited)
Three months and six months ended June 30, 1996 and 1995
Three months ended Six months ended
June 30, June 30, June 30, June 30,
1996 1995 1996 1995
______ ______ _______ ______
Interest income:
Interest and fees on loans $ 1,384,399 1,175,775 2,698,757 2,282,115
Interest on securities:
Taxable 367,527 477,604 759,755 990,602
Exempt from federal
income taxes 183,704 176,943 367,805 337,133
Interest on federal funds
sold 62,467 44,245 151,652 117,944
Interest on deposits with
banks 1,481 1,481 2,962 3,515
____________ ___________ ___________ ___________
Total interest
income 1,999,578 1,876,048 3,980,931 3,731,309
Interest expense on deposits 804,786 777,341 1,614,355 1,518,426
____________ ___________ ___________ ___________
Net interest income 1,194,792 1,098,707 2,366,576 2,212,883
Provision for loan losses 9,000 9,000 18,000 18,000
____________ ___________ ___________ ___________
Net interest income
after provision
for loan losses 1,185,792 1,089,707 2,348,576 2,194,883
Other income 157,732 124,029 303,763 274,797
Other expenses (856,347) (860,212) (1,740,725)(1,782,657)
____________ ___________ ___________ ___________
Income before
income taxes 487,177 353,524 911,614 687,023
Income tax expense 97,500 84,000 180,900 157,650
____________ ___________ ___________ ___________
Net income $ 389,677 269,524 730,714 529,373
============ =========== =========== ===========
Per share data:
Net income $ 2.44 1.68 4.57 3.31
============ =========== ============ ===========
Number of shares used in
computation 160,000 160,000 160,000 160,000
============ =========== ============ ===========
See accompanying notes to condensed consolidated financial
statements.
ASSUMPTION BANCSHARES, INC.
Condensed Consolidated Statements of Changes in Stockholders'
Equity
(Unaudited)
Six months ended June 30, 1996 and 1995
Net
unrealized
gain Total
Common Paid-in Retained (loss) on stockholders'
stock capital earnings securities equity
______ ________ _________ __________ ___________
Balances at
December 31, 1994 $ 800,000 450,000 7,217,554 (551,837) 7,915,717
Net income for six
months ended
June 30, 1995 - - 529,373 - 529,373
Change in net
unrealized gain
(loss) on
securities - - - 438,432 438,432
Balances at
June 30, 1995 $ 800,000 450,000 7,746,927 (113,405) 8,883,522
========= ========= ========== ========= =========
Balances at
December 31, 1995 800,000 450,000 7,878,785 37,114 9,165,899
Net income for six
months ended
June 30, 1996 - - 730,714 - 730,714
Change in net
unrealized gain
(loss) on
securities - - - (298,734) (298,734)
Balances at _________ _________ ___________ __________ __________
June 30, 1996 $ 800,000 450,000 8,609,499 (261,620) 9,597,879
========= ========= =========== ========== ==========
See accompanying notes to condensed consolidated financial
statements.
ASSUMPTION BANCSHARES, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Six months ended June 30, 1996 and 1995
1996 1995
_____ _____
Cash flows from operating activities:
Net income $ 730,714 529,373
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 110,700 101,725
Provision for loan losses 18,000 18,000
Net gain on sale of securities available-
for-sale (7,496) (2,964)
Gain on sale of other assets acquired in
settlement of loans (6,698) -
(Increase) decrease in accrued interest
receivable (36,188) 27,513
Increase in accrued interest payable 25,235 85,436
Increase in other assets and other
liabilities 131,783 21,072
___________ ___________
Net cash provided by operating
activities 966,050 780,155
___________ ___________
Cash flows from investing activities:
Proceeds from sales of securities available-
for-sale 1,749,568 5,215,291
Maturities of and principal payments
on securities held-to-maturity 477,076 1,079,048
Purchases of securities available-for-sale (2,780,211) (489,531)
Maturities of and principal payments
on securities available-for-sale 2,099,890 828,258
Purchases of securities held-to-maturity - (2,323,160)
Loans originated, net of principal
collections (3,650,961) (2,394,299)
Proceeds from sales of other real estate 49,758 64,913
Capital expenditures (62,772) (292,116)
____________ ___________
Net cash (used) provided by investing
activities (2,117,652) 1,688,404
____________ ___________
Cash flows from financing activities:
Net decrease in demand deposits, NOW accounts,
money market accounts and savings accounts (3,838,164) (5,549,550)
Net increase in certificates of deposit and
other time deposits of $100,000 and
over 1,348,835 565,764
____________ ___________
Net cash used in financing activities (2,489,329) (4,983,786)
____________ ___________
Net decrease in cash and cash
equivalents (3,640,931) (2,515,227)
Cash and cash equivalents at beginning of period 12,243,399 10,446,119
____________ ___________
Cash and cash equivalents at end of period $ 8,602,468 7,930,892
============ ===========
Supplemental disclosures:
Interest paid $ 1,589,120 1,432,990
============ ==========
Income taxes paid $ 195,000 95,000
============ ==========
See accompanying notes to condensed consolidated financial
statements.
ASSUMPTION BANCSHARES, INC.
Notes to Condensed Consolidated Financial Statements
Six months ended June 30, 1996 and 1995
The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with generally
accepted accounting principles for interim financial information
and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted
accounting principles. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating
results for the six-month period ended June 30, 1996, are not
necessarily indicative of the results that may be expected for
the year ending December 31, 1996. For further information,
refer to the audited consolidated financial statements and notes
included in Assumption Bancshares' annual report on Form 10-K for
the year ended December 31, 1995.
Cash and Cash Equivalents
For purposes of the condensed consolidated statements of cash
flows, cash and cash equivalents represent cash and due from
banks and federal funds sold.
Securities
The Bank classifies its securities in one of three categories:
trading, available-for-sale, or held-to-maturity. Trading
securities are bought and held principally for the purpose of
selling them in the near future. Held-to-maturity securities are
those securities in which the Bank has the ability and intent to
hold the security until maturity. All other securities not
included in trading or held-to-maturity are classified as
available-for-sale.
Trading and available-for-sale securities are recorded at fair
value. Held-to-maturity securities are recorded at amortized
cost, adjusted for the amortization or accretion of premiums or
discounts. Unrealized holding gains and losses on trading
securities are included in earnings. Unrealized holding gains
and losses, net of the related tax effect, on the available-for-
sale securities are excluded from earnings and are reported as a
separate component of stockholders' equity until realized.
Transfers of securities between categories are recorded at fair
value at the date of transfer. Unrealized holding gains and
losses are recognized in earnings for transfers into trading
securities. Unrealized holding gains or losses associated with
transfers of securities from held-to-maturity to available-for
sale are recorded as a separate component of stockholders'
equity. The unrealized holding gains or losses included in the
separate component of equity for securities transferred from
available-for-sale to held-to-maturity are maintained and
amortized into earnings over the remaining life of the security
as an adjustment to yield in a manner consistent with the
amortization or accretion of premium or discount on the
associated security.
A decline in the market value of any available-for-sale or held-
to-maturity security below cost that is deemed other than
temporary results in a charge to earnings resulting in the
establishment of a new cost basis for the security.
Premiums and discounts are amortized or accreted over the life of
the related held-to-maturity security as an adjustment to yield
using the effective interest method. Interest income is
recognized when earned. Realized gains
(Continued)
ASSUMPTION BANCSHARES, INC.
Notes to Condensed Consolidated Financial Statements
and losses for securities classified as available-for-sale and
held-to-maturity are included in earnings and are derived using
the specific identification method for determining the cost of
securities sold.
Accounting by Creditors for Impairment of a Loan
During the first quarter of 1995, the Bank adopted Statement of
Financial Accounting Standards No. 114, Accounting by Creditors
for Impairment of a Loan (SFAS No. 114) and Statement of
Financial Accounting Standards No. 118, Accounting by Creditors
for Impairment of a Loan - Income Recognition and Disclosures
(SFAS No. 118). The Bank adopted the provisions of SFAS No. 114
and SFAS No. 118 to all of its loans, except for its consumer
installment loans which are collectively evaluated for
impairment. Pursuant to SFAS No. 114 and SFAS No. 118, a loan is
considered to be impaired when it is probable that a creditor
will be unable to collect principal and interest amounts due
according to the contractual terms of the loan agreement. When a
loan is impaired, the measurement of its impairment can be
determined in one of three ways, as follows: (1) the present
value of the expected cash flows of the loan discounted at the
loan's original effective interest rate, (2) the observable
market price of the impaired loan, or (3) the fair value of the
collateral of a collateral-dependent loan. The amount by which
the recorded investment in the loan exceeds the measure of the
impaired loan is recognized by recording a valuation allowance
with a corresponding charge to the provision for possible credit
losses. The effect of adopting SFAS No. 114 and SFAS No. 118 on
the Bank's financial condition and results of operations was
immaterial.
At June 30, 1996, impaired loans, all of which were on
nonaccrual, totaled $527,000, of which $94,000 required a total
impairment allowance of $50,000. The average recorded investment
in impaired loans was approximately $704,000 and $629,000 during
the six months and three months ended June 30, 1996,
respectively. The Bank recognized no interest income on those
impaired loans in the first half of 1996. For all impaired
loans, the impairment amount was measured using the fair value of
the underlying collateral.
Earnings Per Share
Earnings per share have been computed on the basis of the
weighted average number of shares outstanding.
Subsequent Event
On July 17, 1996, the Board of Directors of Assumption
Bancshares, Inc. declared a $1.50 per share dividend.
ASSUMPTION BANCSHARES, INC.
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Results of Operations
Net interest income for the six months ended June 30, 1996 was
slightly higher than amounts for the six-month period ended June
30, 1995. The Bank achieved a higher rate on earning assets due
to an increase in the loan portfolio since June 30, 1995. This
increase in income earned was partially offset by higher rates on
and higher balances of interest bearing liabilities. The Bank's
net interest margins were 4.14% and 4.09% at June 30, 1996 and
1995, respectively.
Other expenses at June 30, 1996 totaled $1,741,000, down from
$1,783,000 for the first half of 1995. During 1995, the Bank
Insurance Fund (BIF) administered by the FDIC became fully
funded. As a result, the Bank's FDIC insurance premiums
decreased from $55,000 per quarter to $500 per quarter. This
decrease in other expenses was partially offset by increases in
salaries, employee benefits and legal expenses.
The provision for income taxes is based on management's estimate
of the expected effective tax rate for the entire year.
Liquidity and Capital Resources
Fluctuating interest rates and competitive forces in the
financial services industry have intensified the need for
management of and matching maturities of various assets and
liabilities. This process involves maintaining liquidity and
controlling interest rate sensitivity. The goal of liquidity
management is to ensure funds are available for customer needs.
Interest rate sensitivity management attempts to match shifts in
earning asset yields with interest paying liability rates.
Net earnings for the first six months of 1996 of $731,000
increased the Bank's stockholders' equity while the unrealized
losses on securities classified as available-for-sale reduced
stockholders' equity by $299,000, resulting in a net increase in
equity for the first six months of 1996 of $432,000. Management
is not aware of any recommendations by regulatory authorities or
other matters which are reasonably likely to have a material
effect on the Bank's capital resources, liquidity or operations.
Securities, comprised primarily of obligations of states and
municipalities and government guaranteed mortgage-backed
securities, represented 33% and 34% of total assets at June 30,
1996 and December 31, 1995, respectively. The securities
portfolio is managed with the primary objective of generating
interest income while maintaining an appropriate level of asset
liquidity and controlling the Bank's net interest rate risk
position.
The market value of the securities portfolio at June 30, 1996 was
98.9% of book value, compared to 100.4% at December 31, 1995.
Management does not anticipate any significant effect on future
earnings, liquidity or capital resources as a result of the
amounts of unrealized gains or unrealized losses in the
securities portfolio.
(Continued)
ASSUMPTION BANCSHARES, INC.
Management's Discussion and Analysis of
Financial Condition and Results of Operations
Securities Available-for-Sale
As of June 30, 1996, available-for-sale securities includes
securities with an aggregate amortized cost of $21,571,000 and a
market value of $21,175,000.
Falling bond prices caused a decrease in the market values of
these securities during the first half of 1996. Management
considers the unrealized losses in the securities portfolio to be
temporary in nature. A net unrealized loss, net of tax,
$262,000, is included as a separate component of stockholders'
equity at June 30, 1996. The net unrealized loss before taxes
included gross unrealized gains of $128,000 and gross unrealized
losses of $390,000. Stockholders' equity reflected net
unrealized losses, net of tax, of $137,000 at the end of last
quarter and $113,000 at June 30, 1995.
Asset Quality
Nonperforming assets, which include nonaccrual loans,
restructured loans and foreclosed assets, totaled $559,000 at
June 30, 1996, compared to $912,000 at March 31, 1996, $874,000
at year-end 1995, and $763,000 at June 30, 1995.
As a percentage of total loans plus foreclosed assets,
nonperforming assets were 1.0% at June 30, 1996, compared to 1.3%
at March 31, 1996, 1.5% at year-end 1995, and 1.4% at June 30,
1995.
The following table sets forth the past due and nonaccrual loans
(in thousands of dollars):
June 30,
1996 1995
_______ _______
Loans past due 90 days or more $ 63 244
======= =======
Nonaccrual loans, all of which are impaired:
Real estate $ 527 630
Individual - 1
_______ _______
Total $ 527 631
======= =======
Nonaccrual loans at June 30, 1996 have decreased slightly
compared to June 30, 1995, and are down approximately $368,000
compared to year-end 1995.
Loans are placed on nonaccrual status when management's
assessment of the borrowers' financial condition indicates that
collection of interest is doubtful. In making this
determination, management considers current economic and business
conditions, the nature of the collateral, collection efforts and
regulatory guidelines.
Management has identified approximately $118,000 of potential
problem loans, which are loans for which payments are
contractually current but the borrowers are presently
experiencing financial difficulties at June 30, 1996, which are
not otherwise identified as past due or nonaccrual.
(Continued)
ASSUMPTION BANCSHARES, INC.
Management's Discussion and Analysis of
Financial Condition and Results of Operations
The provision for loan losses for the first six months of 1996
was $18,000, consistent with the first six months of 1995. This
relatively low provision is due to the continued low level of
charge-offs experienced by the Bank. Net recoveries for the six
months ended June 30, 1996 were $6,400. Additionally, the Bank's
allowance for loan losses as a percentage of gross loans has
remained consistent at 2.01% and 2.09% at June 30, 1996 and
December 31, 1995, respectively. Management evaluates the
adequacy of the allowance for loan losses on an ongoing basis and
believes, based on its analysis, that the allowance is adequate
to absorb losses in the portfolio.
Changes in the total allowance for loan losses for the six months
ended June 30, 1996 and 1995 were as follows:
Six months ended
1996 1995
______ ______
Balance at beginning of period $ 1,195,517 1,103,823
Charge-offs (44,650) (52,612)
Recoveries 51,051 22,514
___________ ___________
Net recoveries (charge-offs) 6,401 (30,098)
Provision for loan losses 18,000 18,000
__________ ___________
Balance at end of period $ 1,219,918 1,091,725
========== ===========
Ratio of net charge-offs (recoveries)
during the period to average loans
outstanding during the period (.01)% .06%
========== ===========
The allowance for possible loan losses as a percent of
nonperforming loans was 231%, 165%, 140% and 173% at June 30,
1996, March 31, 1996, December 31, 1995, and June 30, 1995,
respectively. Management has determined that the allowance for
possible loan losses at June 30, 1996, is adequate to cover
losses inherent in its loan portfolio.
The amount of additional interest income on nonaccrual loans,
which would have been recognized for the six months ended June
30, 1996 and 1995, had the related loans been performing
according to their original terms, approximates $23,400 and
$28,000, respectively. No income was recognized during 1996 and
1995 on these loans.
PART II
Items 1 through 3 are not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
(a) The annual meeting of the shareholders of Assumption Bancshares,
Inc. (the "Meeting") was held on May 15, 1996.
(b) Election of Directors:
Nominees Elected: For Authority Withheld
F.N. Carrier, Jr. 98,321 1,580
Ridley J. Gros, Phd. 95,624 804
Leonard C. Guedry, Jr. 91,075 850
Robert J. Tregre 94,192 820
Other Nominees:
J. Wilfred Daigle, Jr. 59,856
Jess J. Waguespack 60,432
Charles J. Melancon 59,903
Lee H. Cafiero, Jr. 49,156
Other directors whose term of office continued after the meeting:
Parick E. Cancienne, Sr.
Joseph H. Montero
Clarence J. Savoie, II
Stanley S. Sternfels
Nelson A. Cox, Sr., M.D.
Felix H. Savoie, Jr.
Nicess P. Templet
John E. Thibaut
Risley C. Triche
(c) Shareholder Proposal
Mr. Jess J. Waguespack presented the following proposal for action at
the Meeting.
RESOLVED, that the last sentence of Section 3.5 of the By-laws, which
provides "The provisions of this Section 3.5 shall not apply to persons
who were also members of the Board of Directors of Assumption Bank and
Trust Company on March 9, 1983" should be deleted, effective for all
candidates that may be elected or appointed after the 1996 shareholders
meeting.
The shareholder proposal was defeated by the following vote:
Number of shares voted against: 85,737
Number of shares voted for: 63,255
Number of shares abstaining: 4,105
Item 5. Not applicable.
Item 6. Exhibits and Reports on Form 8-K. No Form 8-K was
required to be filed during the quarter ended June 30, 1996.
SIGNATURE
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.
/s/ Joseph H. Montero
______________________
Joseph H. Montero,
President and Chief
Executive Officer
Date: August 13, 1996