United States
Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-K
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [Fee Required]
For the fiscal year ended December 31, 1996
[ ] Transition Report pursuant to Section 13 or 15(d) of
the
Securities Exchange Act of 1934 [no fee required] for the
transition period from to .
Commission File Number 0-12774
ASSUMPTION BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
Louisiana
(State or other jurisdiction of incorporation or
organization)
72-0999764
(I.R.S. Employer Identification No.)
P. O. Box 398
110 Franklin Street
Napoleonville, Louisiana 70390
(Address of principal office)
(504) 369-7269
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $5.00 Par Value
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. / /
Aggregate estimated market value of voting stock held by
non-affiliates as of January 15, 1997 (for purposes of this
computation shares held by directors and officers are
excluded):
$ 5,748,000
Number of shares outstanding as of January 15, 1997:
160,000 Common Shares
PART I
Item I - Business
Assumption Bancshares, Inc. (Bancshares) is a Louisiana
business corporation and a one-bank holding company
registered under the Federal Bank Holding Company Act of
1956, as amended. It was formed in 1984 primarily for the
purpose of holding all of the outstanding stock of
Assumption Bank and Trust Company (the Bank), which is
Bancshares' sole subsidiary. The Bank, which was formed in
1933, conducts general commercial banking business
throughout the State of Louisiana with the majority of its
business concentrated in Assumption Parish, western
Ascension Parish and northern Lafourche Parish. Its
principal office and a motor branch are located in
Napoleonville, Louisiana. The Bank operates three other
branch offices, one each in Pierre Part, Labadieville and
LaPlace, Louisiana and an automatic teller machine in Belle
Rose, Louisiana.
The Bank provides the usual services offered by banks of
similar size and in similar markets. The Bank does have
trust powers, but does not have an active trust department.
The Bank competes actively with national and state banks in
Southern Louisiana for all types of loans and deposits. In
addition, the Bank competes for funds with savings and loan
associations, the U.S. Government, credit unions, and other
financial service companies. It competes for loans with
other financial service institutions, such as savings and
loan associations, insurance companies, small loan
companies, credit unions, mortgage companies, and certain
government agencies. The Bank's primary competitors in its
service area are ArgentBank, Iberville Bank, Service
Mortgage Co., Guidry Finance Company and banks and savings
and loans located in Thibodaux, Donaldsonville and LaPlace,
Louisiana.
The Bank does not receive a material portion of its deposits
from any single person. However, as of December 31, 1996,
the Assumption Parish School Board, Assumption Parish
Waterworks District #1, the Assumption Parish Sheriff's
Office, the Assumption Parish Police Jury, the Assumption
Parish Clerk of Court, Assumption General Hospital and four
commercial enterprises accounted for an aggregate of 12% of
the Bank's deposits.
The lending services of the Bank include a broad range of
consumer, real estate and commercial loans. As of December
31, 1996, real estate and home loans represented
approximately 83% of all loans; commercial, financial and
agricultural loans accounted for 4% and individual loans,
which include auto and mobile home loans accounted for 13%.
Bancshares and the Bank employ 51 persons full-time and 6
persons part-time.
The Bank's location in the heart of Louisiana's sugar cane
country subjects it to seasonal variations in business.
Because of the impact of the sugar industry, deposits
typically vary by four to five million dollars during the
course of each fiscal year.
SUPERVISION AND REGULATION
General
Bancshares and the Bank are extensively regulated under both
federal and state laws. To the extent that the following
information describes particular statutory provisions, it is
qualified in its entirety by reference to the particular
statutory and regulatory provisions. Any change in
applicable law or regulation may have a material effect on
the business and prospects of Bancshares.
Bancshares
Bancshares is a bank holding company within the meaning of
the Bank Holding Company Act of 1956, as amended (the Act),
and, as such, is subject to the provisions of the Act and to
regulation and supervision by the Board of Governors of the
Federal Reserve System (the Board). Bancshares is required
to file with the Board annual reports containing such
information as the Board may require pursuant to the Act and
is also subject to periodic examination by the Board.
Under the Act, a bank holding company may not acquire more
than 5% of the voting shares or substantially all the assets
of any bank or another bank holding company without the
prior approval of the Board. The Act also limits the
business in which a bank holding company may engage,
directly or through subsidiaries, to banking, managing or
controlling banks, and furnishing or performing activities
so closely related to banking or managing or controlling
banks as to be a proper incident thereto.
In addition, Bancshares is subject to the Securities
Exchange Act of 1934 and files reports with the Securities
and Exchange Commission under provisions of that Act.
The Bank
Both federal and state laws extensively regulate various
aspects of the banking industry, including requirements
regarding the maintenance of reserves against deposits,
limitations on the rates that can be charged on loans, and
restrictions on the nature and amounts of loans and
investments that can be made.
Banks domiciled in Louisiana having a minimum capitalization
of $100,000 may open one or more branch offices anywhere
within the state and acquire one or more banks located
within the state or any or all branches thereof. A
certificate of authority must be obtained from the
Commissioner of Financial Institutions in connection with
the establishment of a branch office.
Louisiana's reciprocal interstate banking law allows bank
holding companies domiciled in any state to acquire
Louisiana banks and bank holding companies, if the state in
which the holding company is domiciled allows Louisiana
banks and bank holding companies the same opportunities.
As a state bank, the Bank is subject to the supervisory
authority of the Louisiana Commissioner of Financial
Institutions, whose office conducts periodic examinations of
the Bank. As a federally-insured bank, the Bank is also
subject to supervision and regulation by the Federal Deposit
Insurance Corporation. The foregoing regulation is
primarily intended to protect the Bank's creditors and
depositors rather than Bancshares' security holders.
STATISTICAL INFORMATION
The following tables contain additional information
concerning the business operations of Bancshares and the
Bank and should be read in conjunction with Management's
Discussion and Analysis of Financial Condition and Results
of Operations and the consolidated financial statements and
the related notes thereto for the three years ended December
31, 1996, included in Items 7 and 8, respectively.
SECURITIES PORTFOLIO
The Bank adopted the provisions of Statement of Financial
Accounting Standards No. 115, Accounting for Certain
Investments in Debt and Equity Securities (Statement 115) at
December 31, 1993. Under Statement 115, held-to-maturity
securities are those securities which the Bank has the
ability and intent to hold until maturity. Trading
securities are bought and held principally for the purpose
of selling them in the near future. 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 and discounts.
Carrying values of securities at December 31, 1996 and 1995,
are as follows (in thousands of dollars):
1996
___________________________
Held-to- Available-
maturity for-sale Total 1995
________ ________ _____ _____
Mortgage-backed securities $ 3,405 13,406 16,811 20,984
Other U.S. Government agencies - 2,415 2,415 1,482
State and municipal obligations 9,909 4,172 14,081 14,129
Collateralized mortgage obligations 441 346 787 770
_________ _________ _________ _________
$ 13,755 20,339 34,094 37,365
Additional information with respect to the amortized cost,
approximate market value and gross unrealized gains and
losses is included in note 2 to the consolidated financial
statements.
The carrying value and average yield of securities at
December 31, 1996, by contractual maturity are shown below
(in thousands of dollars). Expected maturities will differ
from contractual maturities on securities which may have
call provisions.
Amortized Average
cost yield
____ _____
Held-to-maturity
__________________
State and municipal obligations:
Due after one year through five years $ 501 6.69
Due after five years through ten years 7,071 5.40
Due after ten years 2,337 5.36
___________
9,909
Mortgage-backed securities 3,405 7.92
Collateralized mortgage obligations 441 7.98
___________
Total held-to-maturity $ 13,755
===========
Fair Average
value yield
______ ______
Available-for-sale
Other U.S. Government agencies:
Due in one year or less $ 1,204 7.76
Due after one year through five years 1,118 6.93
Due after five years through ten years 93 6.75
_______
2,415
_______
State and municipal obligations:
Due in one year or less 467 5.62
Due after one year through five years 2,501 5.02
Due after five through ten years 1,204 4.94
_______
4,172
Mortgage-backed securities 13,406 6.69
Collateralized mortgage obligations 346 7.38
_______
Total available-for-sale $ 20,339
=======
The weighted average yields shown above have been computed
by comparing the forward income stream on the securities,
plus or minus the anticipated accretion of discounts or
amortization of premiums, to the amortized cost of the
securities, which is stated at cost, adjusted for previous
amortization or accretion. Average yields on issues of
states and political subdivisions have not been computed on
a tax equivalent basis.
At December 31, 1996, the Bank held no securities issued by
a single issuer which exceeded 10% of stockholders' equity.
At December 31, 1995, the Bank held securities issued by
Assumption Parish totaling $980,000, which exceeded 10% of
stockholders' equity.
LOAN PORTFOLIO
Types of Loans
The amount of loans outstanding by type and concentration is
shown in the following table (in thousands of dollars):
December 31
___________
1996 1995
____ ____
Commercial, financial and agricultural $ 2,680 3,498
Real estate, principally mortgage 50,413 46,695
Individuals 7,738 6,893
________ _______
$ 60,831 57,086
======== =======
Substantially all of the Bank's loans are derived from
borrowers and property located in the local market area
which is largely dependent on the agricultural and chemical
industries. The Bank does not have concentrations of credit
in either of these industries. However, the Bank's
borrowers are all indirectly affected by the economic
performance of these industries.
The loan portfolio contains no foreign loans.
Maturities and Sensitivities of Loans to Changes in Interest
Rates
The following table presents the maturity distribution and
sensitivity to interest rate changes of the loan portfolio
at December 31, 1996 (in thousands of dollars):
Due in Over 1 Over
1 year to 5 5
or less* years years Total
________ _______ ______ ______
Maturity of Loans
Commercial, financial and agricultural $ 652 1,948 80 2,680
Real estate 12,265 36,635 1,513 50,413
Individuals 1,886 5,623 229 7,738
________ ______ ______ ______
$ 14,803 44,206 1,822 60,831
======== ====== ====== ======
Interest Rate Sensitivity
Loans with predetermined rates 10,598 44,206 1,822 56,626
Loans with floating rates 4,205 - - 4,205
________ ______ _____ ______
$ 14,803 44,206 1,822 60,831
======== ====== ===== ======
* Includes demand loans, loans having no stated schedule of
repayments and no stated maturity and overdrafts.
Interest rate sensitivity management is concerned with the
management of the timing and magnitude of repricing assets
compared to liabilities. It is the objective of interest
rate sensitivity management to generate stable growth in net
interest income and to control the risks associated with
interest rate movement. Management regularly reviews
interest rate exposure by utilizing forecasting models to
analyze the impact various interest rate changes would have
on net interest income.
Interest rate sensitivity is defined as the exposure to
fluctuations in market rates of interest earned and paid.
Sensitivity to fluctuations in market rates of interest
occurs when the repricing characteristics of interest-
earning assets and interest-bearing liabilities do not match
within the same period. When the repricing characteristics
do not match, a "gap" is created. The Bank's interest rate
sensitivity on December 31, 1996 is detailed in the
following table. While the table is presented on a
contractual basis, a significant portion of the Bank's
retail deposits do not respond to changes in interest rates
to the degree the unadjusted gap would indicate.
The Bank's experience has indicated that repricing of NOW,
savings and money market accounts does not result in changes
of the same magnitude as changes in general market rates.
In addition, these categories have historically been very
stable sources of funds to the Bank, which would indicate a
much longer implicit maturity than their contractual
availability.
DISTRIBUTION OF ASSETS, LIABILITIES AND STOCKHOLDERS' EQUITY; INTEREST
RATES AND INTEREST DIFFERENTIAL
(Dollars in thousands)
1996 1995 1994
_________________________ ________________________ _________________________
Daily Amount Daily Amount Daily Amount
average earned Average average earned Average average earned Average
balance or paid rate balance or paid rate balance or paid rate
_______ ________ ______ _______ _______ ______ ________ ________ _______
Assets:
Interest-earning assets:
Loans<F1> $ 60,078 5,510 9.17% $ 54,072 4,819 8.91% $ 47,904 4,259 8.89%
Taxable securities 21,828 1,436 6.58 26,439 1,801 6.81 36,142 2,178 6.03
Tax-exempt
securities<F2> 13,869 740 5.34 13,644 709 5.20 9,862 490 4.97
Federal funds sold 4,683 244 5.21 2,797 164 5.86 4,032 146 3.62
Deposits with
other banks 99 6 6.06 99 6 6.06 99 5 5.05
________ ______ ______ ______ ______ ______
Total interest-
earning assets 100,557 7,936 7.89 97,051 7,499 7.73 98,039 7,078 7.22
______ ______ ______
Noninterest-earning assets:
Cash and due from banks 4,545 4,524 3,932
Bank premises and
equipment 2,171 2,210 1,839
Other assets 1,223 1,343 1,932
Allowance for loan losses (1,222) (1,116) (1,104)
_______ ________ _________
107,274 104,012 104,638
_______ ________ _________
Liabilities:
Interest-bearing liabilities:
Deposits:
NOW 17,657 421 2.38 18,166 485 2.6 719,225 439 2.28
Savings and IRA 22,591 761 3.37 23,096 827 3.5 824,087 793 3.29
Money market 10,395 232 2.23 10,892 260 2.3 911,850 295 2.49
Certificates of
deposit and other
time deposits,
$100,000 and over 3,925 205 5.22 3,571 187 5.2 43,237 112 3.46
Other certificates
of deposit 30,527 1,591 5.21 27,712 1,339 4.83 26,856 890 3.31
Fed funds purchased 8 1 6.25 441 26 5.90 805 40 4.97
_______ _______ ________ ______ _______ ______
Total interest-bearing
liabilities 85,103 3,211 3.77 83,878 3,124 3.72 86,060 2,569 2.99
_______ ______ _______
Noninterest-bearing liabilities:
Demand deposits 11,898 10,912 10,111
Other liabilities 723 491 386
Stockholders' equity 9,550 8,731 8,081
________ _________ _________
$ 107,274 $ 104,012 $ 104,638
======== ========= =========
Net interest income/average
earning assets $ 4,725 4.70% $4,375 4.51% $4,509 4.60%
====== ===== ===== ===== ======= ======
1996 compared with 1995 1995 compared with 1994
________________________ ________________________
Variance due to Variance due to
________________ _______________
Rate/ Rate/
Volume Rate volume Total Volume Rate volume Total
______ ____ _______ _______ _______ _____ _______ ______
Assets:
Interest-earning assets:
Loans<F1> 535 140 16 691 548 10 1 560
Taxable securities (314) (62) 11 (345) (548) 283 (76) (378)
Tax-exempt
securities<F2> 12 19 - 31 188 22 9 219
Federal funds sold 111 (18) (13) 80 (44) 91 (28) 19
Deposits with
other banks - - - 0 - 1 - 1
_______ ______ ______ ______ ______ ______ ______ ______
Total interest-
earning assets 344 79 15 437 107 407 (94) 421
______ ______ ______ ______ ______ ______ _______ ______
Noninterest-earning assets:
Cash and due from banks
Bank premises and
equipment
Other assets
Allowance for loan losses
Liabilities:
Interest-bearing liabilities:
Deposits:
NOW (14) (51) 1 (64) (24) 74 (4) 46
Savings and IRA (18) (49) 1 (66) (33) 69 (3) 34
Money market (12) (17) 1 (28) (24) (12) 1 (35)
Certificates of
deposit and other
time deposits,
$100,000 and over 19 - - 18 12 58 6 75
Other certificates
of deposit 136 105 11 252 28 408 13 449
Fed funds purchased (26) 2 (2) (26) (18) 7 (3) (14)
_______ ______ ______ _______ _____ _____ ____ _____
Total interest-bearing
liabilities 85 (10) 12 87 (59) 604 10 555
______ _______ _______ _______ _____ ______ ______ ______
Noninterest-bearing liabilities:
Demand deposits
Other liabilities
Stockholders' equity
Net interest income/average
earning assets 259 89 2 350 166 (197) (104) (134)
======= ====== ===== ====== ====== ====== ====== =======
Notes:
<F1> Loans on which interest accruals have been stopped are included in
the daily average balances of loans outstanding.
<F2> Not taxable equivalent.
The table indicates the Bank is liability sensitive (a
negative gap) at December 31, 1996 for periods 1-90 days and
91-365 days, and is asset sensitive (a positive gap) for the
period over one year or fixed. A positive gap indicates
more interest-earning assets are subject to repricing than
interest-bearing liabilities in a given period. Conversely,
a negative gap indicates more interest-bearing liabilities
are subject to repricing earlier than interest-earning
assets. In an environment of increasing interest rates, a
positive gap implies that earnings would be expected to
increase as the volume of repricing assets exceeds repricing
liabilities. In contrast, a negative gap implies that
earnings would be expected to decrease in an environment of
increasing interest rates. It should be noted that this
presents the Bank's overall position for a single day, which
may not be indicative of its position in the future.
Interest Rate Sensitivity
1-90 91-365 Over 1
days days year Total
________ _______ ________ _______
Loans $ 8,457 6,346 46,028 60,831
Securities 5,901 2,929 25,264 34,094
Federal funds sold 10,400 - - 10,400
Interest-bearing deposits - 99 - 99
___________ __________ __________ __________
Total earning assets 24,758 9,374 71,292 105,424
___________ __________ __________ __________
NOW and savings accounts 33,894 - - 33,894
Money market accounts 10,584 - - 10,584
Certificates of deposit and
IRA accounts 24,187 14,549 3,869 42,605
___________ ___________ __________ _________
Total interest-bearing
liabilities 68,665 14,549 3,869 87,083
___________ ___________ __________ _________
Gap $(43,907) (5,175) 67,423 18,341
=========== =========== ========== =========
Cumulative gap $(43,907) (49,082) 18,341
=========== =========== ==========
Cumulative gap/total
earning assets (41.65)% (46.56)% 17.40%
=========== =========== ==========
Risk Elements
The following table sets forth the past due and nonaccrual
loans (in thousands of dollars):
December 31
___________
1996 1995
_____ _____
Loans past due 90 days or more $ 100 135
==== ====
Nonaccrual loans $ 850 853
==== ====
The amount of additional interest income on nonaccrual
loans, which would have been recognized during 1996 and
1995, had the related loans been performing according to
their original terms was not material. The income
recognized on the cash basis on loans in nonaccrual status
was approximately $53,000 and $48,500 for 1996 and 1995,
respectively.
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.
Potential Problem Loans
Management has identified approximately $230,000 of
potential problem loans, which are loans for which payments
are contractually current but the borrowers are currently
experiencing financial difficulties at December 31, 1996,
which are not otherwise identified as past due or
nonaccrual.
SUMMARY OF LOAN LOSS EXPERIENCE
The following table summarizes the activity in the allowance
for loan losses arising from loans charged-off, recoveries
of loans previously charged-off, and additions to the
allowance charged to income (in thousands of dollars):
Years ended
December 31
1996 1995
----- -----
Balance of the allowance for loan
losses at beginning of year $ 1,196 1,104
_____ _____
Loans charged-off:
Commercial, financial and agricultural 11 3
Real estate 57 25
Individuals 65 59
_____ _____
133 87
_____ _____
Recoveries on loans previously charged-off:
Commercial, financial and agricultural 44 9
Real estate 26 17
Individuals 21 17
_____ ______
91 43
_____ ______
Net loans charged-off 42 44
Provision charged to income 36 136
_____ ______
Balance of the allowance for loan
losses at end of year $ 1,190 1,196
===== ======
Ratio of net charge-offs during the year to
average loans outstanding during the year 0.07% 0.08%
===== ======
Allowance for Loan Losses and Nonperforming Loans
Management considers the allowance for loan losses adequate
to cover losses on the loans outstanding as of each
reporting date. It must be emphasized, however, that the
determination of the allowance for loan losses, using the
Bank's procedures and methods, rests upon various judgments
and assumptions. The factors which influence management's
judgment in determining the level of the allowance for loan
losses and the amount which is charged to operating expenses
are: (1) past loan loss experience; (2) composition of the
loan portfolio; (3) evaluation of potential future losses;
(4) current economic conditions; (5) specific identification
and anticipation of problem and nonperforming loans, and (6)
other relevant factors affecting loans. No assurance can be
given that the Bank will not, in any particular period,
sustain loan losses which are sizable in relation to the
amount reserved or that subsequent evaluations of the loan
portfolio, in light of conditions and factors then
prevailing, will not require significant changes in the
allowance for loan losses. In addition, various regulatory
agencies, as an integral part of their examination process,
periodically review the Bank's allowance for loan losses.
Such agencies may require the Bank to recognize additions to
the allowance based on their judgment about information
available to them at the time of their examinations.
The following is an allocation of the allowance for loan
losses by related categories of loans and the percentage of
loans in each category to total loans (in thousands of
dollars):
December 31
____________
1996 1995
____ ____
Commercial, financial and
agricultural $ 52 4.4% $ 73 6.1%
Real estate 987 82.9 978 81.8
Individuals 151 12.7 145 12.1
_____ _____ ______ ______
$ 1,190 100.0% $ 1,196 100.0%
===== ====== ====== ======
DEPOSITS
The daily average amounts and average rates paid on deposits
are summarized below (in thousands of dollars):
December 31
____________
1996 1995
____ ____
Noninterest-bearing demand $ 11,898 - % $ 10,912 - %
NOW accounts 17,657 2.4 18,166 2.7
Money market accounts 10,395 2.2 10,892 2.4
Savings and IRA accounts 22,591 3.4 23,096 3.6
Certificates of deposit and
other time deposits, $100,000
and over 3,925 5.2 3,571 5.2
Other certificates of deposit 30,527 5.2 27,712 4.8
------ === ------ ===
$ 96,993 $ 94,349
====== ======
Remaining maturities of deposits of $100,000 or more at
December 31, 1996, are summarized as follows (in thousands
of dollars):
Over 3
Within through Over 12
3 months 12 months months total
________ _________ _______ ______
Certificates of deposit,
and other time deposits,
$100,000 and over $ 2,999 1,128 200 4,327
======= ======== ======= =======
The Bank has no foreign deposits.
RETURN ON EQUITY AND ASSETS
The following table shows the return on assets (net income
divided by average total assets), return on equity (net
income divided by average equity), dividend payout ratio
(dividends declared per share divided by net income per
share) and equity to assets ratio (average equity divided by
average total assets) for each year indicated.
Year ended
December 31
___________
1996 1995
____ _____
Return on assets 1.06% 1.04%
Return on equity 11.86 12.34
Dividend payout ratio 36.72 38.63
Equity to assets ratio 8.90 8.39
===== =====
Item 2 - Properties
The principal properties of Bancshares and the Bank
(collectively, the Company), are its main offices located at
110 Franklin Street, Napoleonville, Louisiana, a motor
branch in Napoleonville, Louisiana, an automatic teller
machine (ATM) in Belle Rose, Louisiana, and branch offices
in Pierre Part and Labadieville, Louisiana. The Bank owns
all of these properties with no encumbrances. The Bank also
owns certain leasehold improvements associated with its
LaPlace branch.
Item 3 - Legal Proceedings
The Company is a party to various ordinary routine legal
proceedings incidental to its business, none of which it is
believed by management, after consulting with counsel, will
have a material effect on the financial position or results
of operations of either Bancshares or the Bank.
Item 4 - Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders
during the fourth quarter of the fiscal year covered by this
report.
Item 4a - Executive Officers of the Registrant
The executive officers of Bancshares and the Bank are Joseph
H. Montero and Harold F. Templet. Mr. Montero, 62, is the
President and Chief Executive Officer of Bancshares and the
Bank and has served as an executive officer of the Bank
since 1971. Mr. Templet, 50, has been an executive officer
of the Bank since 1981; he currently serves as Bancshares'
Secretary and Treasurer and the Bank's Senior Vice
President.
PART II
Item 5 - Market Price of, and Dividends on, the Registrant's
Common Equity andRelated Stockholder Matters
The primary market area for Bancshares' common stock is the
Assumption Parish area. There is no established trading
market for the common stock. The limited number of
transactions that have come to the attention of management
during the past two years have occurred at prices ranging
from $27 to $42 per share. No assurance can be given that
this range of prices per share represents the actual market
value of Bancshares' common stock.
The approximate number of holders of record of each class of
Bancshares' equity securities as of December 31, 1996, was
as follows:
Title of Class Number of Record Holders
_______________ _________________________
Common stock, $5 par value 732
Bancshares' declared annual dividends to its stockholders of
$416,000 ($2.60 per share) during each of 1996 and 1995.
Future dividends are dependent upon the future earnings
of Bancshares and management's discretion.
Item 6 - Selected Financial Data
Selected financial data of Bancshares and the Bank for each
of the years in the five-year period ended December 31,
1996, is shown below. The selected financial data should
be read in conjunction with Management's Discussion and
Analysis of Financial Condition and Results of Operations
and the consolidated financial statements and the related
notes thereto for the three years ended December 31, 1996,
included in Items 7 and 8, respectively (dollars in
thousands, except per share data).
SELECTED FINANCIAL DATA
1996 1995 1994 1993 1992
____ ____ ____ ____ ____
Interest income:
Interest and fees
on loans $ 5,510 4,819 4,259 4,169 4,520
Interest on securities 2,176 2,510 2,668 3,008 3,554
Other 250 170 151 164 153
________ ________ ________ ________ ______
Total interest
income 7,936 7,499 7,078 7,341 8,227
Interest expense (3,211) (3,125) (2,569) (2,832) (3,601)
________ ________ ________ _________ _______
Net interest
income 4,725 4,374 4,509 4,509 4,626
Provision for possible
loan losses (36) (136) (60) (321) (446)
________ ________ _________ _________ _______
Net interest income
after provision for
possible loan losses 4,689 4,238 4,449 4,188 4,180
________ ________ _________ _________ _______
Other income 587 637 531 662 330
Other expenses (3,723) (3,582) (3,539) (3,241) (3,101)
________ ________ _________ _________ _______
Income before
income taxes 1,553 1,293 1,441 1,609 1,409
Income tax expense 420 216 275 496 432
________ ________ _________ _________ _______
Income before
cumulative effect
of change in
accounting
principle 1,133 1,077 1,166 1,113 977
Cumulative effect of
change in accounting
for income taxes - - - 54 -
________ ________ _________ _________ _______
Net income $ 1,133 1,077 1,166 1,167 977
Per share data:
Income before cumulative
effect of change in
accounting principle $ 7.08 6.73 7.29 6.95 6.11
======== ========= ========= ========= ========
Cumulative effect of
change in accounting
for income taxes $ - - - .34 -
Net income $ 7.08 6.73 7.29 7.29 6.11
======== ========= ========= ======== ========
Dividends declared $ 2.60 2.60 2.25 2.50 1.75
======== ========= ========= ======== ========
1996 1995 1994 1993 1992
_______ ________ _______ ________ _______
Number of shares
used in
computations 160,000 160,000 160,000 160,000 160,000
========= ========= ========= ========= ========
Total securities $ 34,094 37,365 42,676 48,669 45,142
========= ========= ========= ========= ========
Total loans $ 60,831 57,086 50,576 43,559 42,889
========= ========= ========= ========= ========
Total assets $ 111,802 109,108 106,426 105,843 107,728
========= ========= ========= ========= ========
Item 7 - Management's Discussion and Analysis of Financial
Condition and Results of Operations
The following discussion focuses primarily on the Bank and
should be read in conjunction with the consolidated
financial statements, the related notes thereto, and other
financial information presented herein.
Overview of 1996 Performance
The Bank recorded consolidated net income of $1,133,000 or
$7.08 per share in 1996 as compared to a net income of
$1,077,000 or $6.73 per share in 1995, and a net income of
$1,166,000 or $7.29 per share in 1994. Equity capital was
8.90% and 8.40% of assets as of December 31, 1996 and 1995,
respectively.
The Bank's net income increased slightly in 1996 due
primarily to two factors. First, net interest income
increased from $4,374,000 in 1995 to $4,725,000 in 1996.
Loan demand in the Bank's trade area has increased
significantly since early 1994. The resulting growth in the
loan portfolio has helped the Bank achieve a higher yield on
earning assets. This increase in income earned was
partially offset by higher balances of interest-bearing
liabilities. The Bank's net interest margin increased from
4.51% in 1995 to 4.70% in 1996.
Secondly, as a result of the continued low level of charge-
offs experienced by the Bank, the provision for loan losses
was $36,000 in 1996, as compared to $136,000 in 1995. The
growth in the loan portfolio over the past years resulted in
an increase in the provision during 1995.
The factors described above which contributed to the
increase in net income during 1996 are offset by an increase
in other expenses from $3,582,000 in 1995 to $3,723,000 in
1996. The increase is due primarily to a $203,000 increase
in legal and consulting fees as a result of the merger
negotiations discussed below.
The Bank's effective income tax rate increased to
approximately 26% during 1996, up from approximately 17% in
1995. Although the Bank's tax exempt income earned on state
and municipal obligations remained consistent, the tax
exempt income as a percentage of total income decreased. In
addition, professional fees related to the merger
negotiations discussed below of approximately $180,000 are
not deductible for tax purposes. These two factors
increased the Bank's effective income tax rate and income
tax expense for 1996.
Liquidity and Capital Resources
The Bank's deposits increased approximately $2,030,000 at
December 31, 1996 as compared to December 31, 1995. Equity
as a percentage of year-end assets increased from 8.04% at
December 31, 1995 to 8.90% at December 31, 1996. Net
earnings of $1,133,000 for the year ended December 31, 1996,
offset by a decrease in the fair value of securities
classified as available-for-sale of $48,000, and dividends
of $416,000 resulted in a net increase in stockholders'
equity of $669,000. The increase in cash and cash
equivalents was due primarily to the increase in deposits,
and the normal cycle of cash flow by the agricultural
customers in the Bank's trade area.
In prior years, fluctuating interest rates and competitive
forces in the financial services industry have intensified
the need for management and matching of maturities of
various assets and liabilities. During the recent past,
interest rates earned on loans and newly-acquired securities
have generally stabilized. However, elimination of rate
ceilings and maturity restrictions on a major segment of the
Bank's interest-bearing deposit accounts, the introduction
of money market accounts and the general deregulation of the
financial services industry have intensified competition for
funds, resulting in the need for management of all
maturities. This process involves maintaining liquidity and
controlling interest sensitivity. The goal of liquidity
management is to ensure funds are available for customer
needs. Interest sensitivity management attempts to match
shifts in earning asset yields with interest paying
liability rates.
Increased competition for funds and loans have created risks
for institutions without adequate liquidity and favorable
opportunities for those which have their resources
structured to take advantage of income opportunities as they
appear. The Bank has an aggregate of approximately $38
million of cash and due from banks, federal funds sold,
securities and loans maturing within one year. Management
believes the Bank currently has sufficient liquidity.
Further liquidity may be provided for the Bank, should the
need arise, by acquiring additional deposits and through
borrowing from the federal funds market or through the use
of repurchase agreements.
The dividends declared and paid in 1996, 1995 and 1994 were
$2.60, $2.60, and $2.25 per share, respectively. The
continuation of the dividend is dependent upon the future
profitability of the Bank. While management expects the
Bank to be profitable in the future, future profitability
cannot be predicted with certainty.
The Federal Reserve Board has adopted a risk-based capital
measure which is applicable to bank holding companies and
banks. The guidelines for measuring compliance with the
risk-based capital require a minimum total capital standard
of 8% at December 31, 1996, of which 4.00% must consist of
"core" capital (common stockholders' equity). At December
31, 1996, the Bank was in compliance with the risk-based
capital requirements having a core capital ratio of 17.69%
and a total capital ratio of 18.94%. Management is not
aware of any recommendations by regulatory authorities which
are reasonably likely to have a material effect on the
Bank's liquidity, capital resources or operations.
Securities
Securities which totaled $34,094,000 at December 31, 1996,
decreased approximately $3,271,000 or 9% from 1995. During
1996, the Bank experienced loan growth of approximately
$3,700,000 which was funded primarily through sales and
maturities of investments. 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 Bank adopted the provisions of Statement of Financial
Accounting Standards No. 115, Accounting for Certain
Investments in Debt and Equity Securities (Statement 115) at
December 31, 1993. Under Statement 115, held-to-maturity
securities are those securities which the Bank has the
ability and intent to hold until maturity. Trading
securities are bought and held principally for the purpose
of selling them in the near future. The Bank has not
established a trading portfolio. 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 and discounts.
During November 1995, the Financial Accounting Standards
Board (FASB) issued a "A Guide to Implementation of
Statement 115 on Accounting for Certain Investments in Debt
and Equity Securities" (Implementation Guide). In
accordance with the Implementation Guide, the Bank
reclassified securities with an amortized cost of
$10,899,000 and a net unrealized gain of $14,600 from held-
to-maturity to available-for-sale as of December 31, 1995.
After the reclassification, the carrying value of securities
available-for-sale included $37,000 in net unrealized
losses, net of taxes, as of December 31, 1995.
As of December 31, 1996, securities with a fair value of
$20,339,000 have been identified as available-for-sale.
Falling bond prices caused a decrease in the market values
of these securities during 1996. Amortized cost of
securities classified as available-for-sale exceeded their
fair market value by $16,000. Included in other assets at
December 31, 1996, is $5,000 to reflect the tax effect of
unrealized holding losses. A net unrealized loss on
securities of $11,000 is included in stockholders' equity at
December 31, 1996. Management considers the unrealized
losses in the securities portfolio to be temporary in
nature.
Allowance and Provision for Loan Losses
The provision for loan losses was $36,000 in 1996, compared
to $136,000 in 1995, respectively. This relatively low
provision is due to the continued low level of charge-offs
experienced by the Bank. The higher provision in 1995 was a
result of the growth of the loan portfolio over the past
years. The Bank's allowance for loan losses as a percentage
of gross loans was 1.96% and 2.09% at December 31, 1996 and
1995, respectively. The provision for loan losses is based
upon management's evaluation of the loan portfolio and the
prevailing local economy. Management continues to evaluate
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 relating to these and
other credits in the portfolio.
The level of nonperforming assets, which includes other real
estate and nonaccrual loans, increased to approximately
$880,000 at December 31, 1996 compared to $874,000 and
$681,000 at December 31, 1995 and 1994, respectively. This
increase in nonperforming assets is not the result of a
single borrower; rather, it is due to several residential
and commercial real estate loans being placed on nonaccrual
status during 1995. As a percentage of total loans plus
foreclosed assets, nonperforming assets were 1.4%, 1.5%, and
1.3% at December 31, 1996, 1995 and 1994, respectively.
Management does not believe there has been an overall
deterioration in asset quality as a result of these changes.
Net Interest Income
The primary factors which impact net interest income are the
gross amount and mix of interest-earning assets and
interest-bearing liabilities, their respective yields, and
relative sensitivity to changes in market interest rates.
Net interest income in 1996 was $4,725,000, up from
$4,374,000 in 1995 and $4,509,000 in 1994. Although
interest rates increased during 1995 and remained stable
during 1996, the Bank's yield on loans increased slightly
during the current year. The Bank's yields on loans have
traditionally lagged the current interest rate environment.
The continued growth in the loan portfolio since early 1994
has also helped the Bank achieve a higher yield on earning
assets. During 1996, the Bank also experienced increased
balances in its deposit liabilities with stable rates
compared to 1995. The net result is an increase in the
Bank's net interest margin for 1996. The table entitled
Distribution of Assets, Liabilities and Stockholders'
Equity; Interest Rates and Interest Differential appearing
under the heading Statistical Information in Item 1 above
reveals how increasing volumes of interest-earning assets,
increasing rates earned on the loan portion of those assets
combined with higher volumes of interest-bearing liabilities
than the previous year resulted in a $351,000 higher net
interest income when compared with 1995.
Other Income
Other income in 1996 was $587,000, down from the 1995 amount
of $637,000, and up slightly from $531,000 in 1994. The
fluctuations in other income for 1996, 1995 and 1994 are
primarily due to recognition of approximately $31,000 of
interest on prior year income tax refunds received in 1995,
rental income received on other real estate in 1995,
security losses in 1994 and changes in service charges
earned on deposit accounts.
Other Expenses
Other expenses in 1996 totaled $3,723,000, up from
$3,582,000 in 1995 and $3,539,000 in 1994. The increase is
due primarily to a $203,000 increase in legal and consulting
fees relating to the merger negotiations discussed below.
The Bank also experienced an increase in its ad valorem
taxes and taxes assessed on capital as a result of
consistent increases in capital over the past years and
reassessments of the Bank's value by the respective taxing
authorities. These increases are partially offset by a
decrease in the Bank's FDIC premiums. During 1995, the Bank
Insurance Fund (BIF) administered by the FDIC, became fully
funded and, as a result, the Bank's FDIC insurance premiums
decreased from approximately $50,000 per quarter to $500 per
quarter. Expenses to maintain other real estate also
decreased during 1996 due to the Bank's low level of
foreclosures.
Other expenses increased from $3,539,000 in 1994 to
$3,582,000 in 1995 primarily due to an increase in salaries
and employee benefits expense. Salaries and employee
benefits increased $87,000 during 1995 due to the addition
of three new employees, as well as an increase in pension
costs.
Income Taxes
Note 8 to the consolidated financial statements includes a
reconciliation of income tax expense for the years ended
December 31, 1996, 1995, and 1994 to the expected income tax
expense, based on the statutory federal income tax rate of
34%. Tax-exempt interest of $746,000, $721,000 and $501,000
was earned during 1996, 1995 and 1994, respectively.
Although there was a slight increase in 1996, the tax exempt
income as a percentage of total income decreased. In
addition, professional fees of approximately $180,000
related to the merger negotiations discussed below are not
deductible for tax purposes. These two factors increased
the Bank's effective income tax rate for 1996.
Fair Value of Financial Instruments
The Bank adopted the provisions of Statement of Financial
Accounting Standards No. 107, Disclosures About Fair Value
of Financial Instruments (Statement 107) at December 31,
1995. Under Statement 107, the Bank has disclosed fair
value information for its financial instruments. Refer to
note 11 to the consolidated financial statements for further
detail.
The fair value of financial instruments is based upon quoted
market prices or management's best estimate of the values at
which the instruments could be exchanged in a transaction
between willing parties. Estimates of fair values are based
on present value and other valuation techniques, which are
significantly affected by the assumptions used, including
discount rates and estimates of future cash flows. As such,
the derived fair value estimates may not be realizable in an
immediate settlement of the instruments.
It is not management's intention to immediately dispose of a
significant portion of its financial instruments; thus, any
unrealized gains or losses should not be interpreted as a
forecast of future earnings and cash flows.
Effect of Inflation
Inflation is not a material factor affecting the Bank's
business. General operating expenses such as salaries and
employee benefits are, however, subject to normal
inflationary pressures.
Effects of Financial Accounting Standards Issued but not
Adopted
In June 1996, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standard No. 125,
Accounting for Transfers and Servicing of Financial Assets
and Extinguishments of Liabilities (Statement 125).
Statement 125 is applicable to transfers and servicing of
financial assets and extinguishments of liabilities
occurring after the effective date and is to be applied
prospectively. The effective date is January 1, 1997 for
certain provisions of Statement 125 and January 1, 1998 for
the remaining provisions. This Statement provides
accounting and reporting standards for transfers and
servicing of financial assets and extinguishments of
liabilities based on consistent application of a financial-
components approach that focuses on control. It
distinguishes transfers of financial assets that are sales
from transfers that are secured borrowings. Management of
the Bank does not expect that adoption of Statement 125 will
have a material impact on the Bank's financial position,
results of operations, or liquidity.
Merger Negotiations
On November 20, 1996, the Boards of Directors of Assumption
Bancshares, Inc. and ArgentBank announced that they have
unanimously approved a Definitive Agreement which provides
for the merger of Assumption Bank and Trust, a wholly-owned
subsidiary of Assumption Bancshares, Inc. with ArgentBank
for $21.5 million, or approximately $134 per share, payable
in a combination of cash and ArgentBank common stock. The
transaction is subject to regulatory and shareholder
approvals and the satisfaction of certain other conditions.
ArgentBank is headquartered in Thibodaux, Louisiana and
operates in Lafourche, Terrebonne and Assumption parishes.
Item 8 - Financial Statements and Supplementary Data
Index to Financial Statements
Independent Auditors' Report
Consolidated Statements of Condition as of December 31, 1996
and 1995
Consolidated Statements of Operations for the years ended
December 31, 1996, 1995 and 1994
Consolidated Statements of Stockholders' Equity for the
years ended December 31, 1996, 1995 and 1994
Consolidated Statements of Cash Flows for the years ended
December 31, 1996, 1995 and 1994
Notes to Consolidated Financial Statements for the years
ended December 31, 1996, 1995 and 1994
All schedules have been omitted because they are not
applicable or the required information is presented in the
consolidated financial statements or notes thereto.
Independent Auditors' Report
The Board of Directors
Assumption Bancshares, Inc.:
We have audited the accompanying consolidated statements of
condition of Assumption Bancshares, Inc. and subsidiary as
of December 31, 1996 and 1995, and the related consolidated
statements of operations, stockholders' equity and cash
flows for each of the years in the three-year period ended
December 31, 1996. These consolidated financial statements
are the responsibility of the Company's management. Our
responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that
we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the consolidated financial statements
referred to above present fairly, in all material respects,
the financial position of Assumption Bancshares, Inc. and
subsidiary at December 31, 1996 and 1995, and the results of
their operations and their cash flows for each of the years
in the three- year period ended December 31, 1996, in
conformity with generally accepted accounting principles.
/s/ KPMG PEAT MARWICK LLP
KPMG PEAT MARWICK LLP
New Orleans, Louisiana
January 11, 1997
ASSUMPTION BANCSHARES, INC.
AND SUBSIDIARY
Consolidated Statements of Condition
December 31, 1996 and 1995
Assets 1996 1995
______ ____ ____
Cash and due from banks $ 4,266,633 6,293,399
Federal funds sold 10,400,000 5,950,000
____________ ___________
Cash and cash equivalents 14,666,633 12,243,399
Interest-bearing time deposits 99,000 99,000
Securities:
Held-to-maturity (market values of
$13,988,010 and $14,765,181
at December 31, 1996 and 1995,
respectively) 13,754,817 14,677,589
Available-for-sale (amortized cost
of $20,355,567 and $22,630,690
at December 31, 1996 and 1995,
respectively) 20,339,424 22,686,923
Loans 60,830,935 57,086,118
Less allowance for loan losses 1,190,245 1,195,517
____________ ___________
59,640,690 55,890,601
Other real estate 30,194 20,717
Bank premises and equipment, net 2,092,022 2,230,281
Accrued interest receivable 850,752 814,196
Other assets 328,650 444,794
____________ ___________
$ 111,802,182 109,107,500
ASSUMPTION BANCSHARES, INC.
AND SUBSIDIARY
Consolidated Statements of Condition, continued
1996 1995
______ ______
Liabilities and Stockholders' Equity
____________________________________
Deposits:
Noninterest-bearing deposits $ 14,294,965 12,542,093
Interest-bearing deposits 87,082,783 86,806,028
____________ __________
101,377,748 99,348,121
Accrued interest payable 368,598 340,500
Other liabilities and accrued expenses 220,702 252,980
____________ __________
Total liabilities 101,967,048 99,941,601
____________ ___________
Stockholders' equity:
Common stock - $5 par value. Authorized
1,000,000 shares; issued and outstanding
160,000 shares in 1996 and 1995 800,000 800,000
Paid-in capital 450,000 450,000
Retained earnings 8,595,789 7,878,785
Unrealized gain (loss) on securities,
net of income taxes (10,655) 37,114
______________ ___________
Total stockholders' equity 9,835,134 9,165,899
______________ ___________
Commitments $ 111,802,182 109,107,500
============== ============
See accompanying notes to consolidated financial statements.
ASSUMPTION BANCSHARES, INC.
AND SUBSIDIARY
Consolidated Statements of Operations
Years ended December 31, 1996, 1995 and 1994
1996 1995 1994
_____ _____ _____
Interest income:
Interest and fees on loans $ 5,510,430 4,818,574 4,258,766
Interest on securities:
Taxable 1,436,440 1,800,819 2,177,923
Exempt from federal income taxes 739,605 709,192 489,820
Interest on federal funds sold 243,989 163,735 146,561
Interest on deposits with banks 5,956 6,510 4,810
_____________ __________ __________
Total interest income 7,936,420 7,498,830 7,077,880
Interest expense on deposits 3,210,932 3,124,468 2,568,689
_____________ __________ __________
Net interest income 4,725,488 4,374,362 4,509,191
Provision for loan losses 36,000 136,000 60,000
____________ __________ __________
Net interest income after
provision for loan losses 4,689,488 4,238,362 4,449,191
____________ __________ __________
Other income:
Service charges on customer accounts 442,916 422,508 382,879
Securities gains (losses) 7,496 (9,318) (48,997)
Other 136,537 223,327 197,340
____________ ___________ __________
586,949 636,517 531,222
Other expenses 3,723,389 3,581,629 3,539,335
____________ ___________ ___________
Income before income taxes 1,553,048 1,293,250 1,441,078
Income tax expense 420,044 216,019 274,859
____________ ___________ ___________
Net income $ 1,133,004 1,077,231 1,166,219
============ =========== ===========
Per share data:
Net income $ 7.08 6.73 7.29
============ =========== ===========
Number of shares used in computations 160,000 160,000 160,000
============ =========== ===========
See accompanying notes to consolidated financial statements.
ASSUMPTION BANCSHARES, INC.
AND SUBSIDIARY
Consolidated Statements of Stockholders' Equity
Years ended December 31, 1996, 1995 and 1994
Net
unrealized
gain or Total
Common Paid-in Retained (loss) on stockholders'
stock captial earnings securities equity
_________ ________ __________ _________ __________
Balances at January 1, 1994 $ 800,000 450,000 6,411,335 271,185 7,932,520
Net income - - 1,166,219 - 1,166,219
Dividends declared, $2.25 per common share - - (360,000) - (360,000)
Change in unrealized gain (loss) on
securities, net of tax benefit of $423,981 - - - (823,022) (823,022)
___________ ___________ ___________ __________ ___________
Balances at December 31, 1994 800,000 450,000 7,217,554 (551,837) 7,915,717
Net income - - 1,077,231 - 1,077,231
Dividends declared, $2.60 per common share - - (416,000) - (416,000)
Change in unrealized gain (loss) on
securities, net of tax expense of $303,400 - - - 588,951 588,951
___________ ___________ ___________ __________ ___________
Balances at December 31, 1995 800,000 450,000 7,878,785 37,114 9,165,899
Net income - - 1,133,004 - 1,133,004
Dividends declared, $2.60 per common share - - (416,000) - (416,000)
Change in unrealized gain (loss) on
securities, net of tax benefit of $24,608 - - - (47,769) (47,769)
___________ ___________ ___________ __________ ___________
Balances at December 31, 1996 $ 800,000 450,000 8,595,789 (10,655) 9,835,134
=========== =========== =========== ========== ===========
See accompanying notes to consolidated financial statements.
ASSUMPTION BANCSHARES, INC.
AND SUBSIDIARY
Consolidated Statements of Cash Flows
Years ended December 31, 1996, 1995 and 1994
1996 1995 1994
---- ---- ----
Cash flows from operating activities:
Net income $ 1,133,004 1,077,231 1,166,219
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation and amortization 221,400 201,625 199,800
Provision for loan losses 36,000 136,000 60,000
Securities losses (gains) (7,496) 9,318 48,997
Writedown of other real estate - - 63,554
Decrease (increase) in accrued
interest receivable (36,556) 5,620 (46,862)
Increase (decrease) in accrued
interest payable 28,098 147,026 (18,941)
Other 101,776 113,205 11,057
_________ _________ _________
Net cash provided by
operating activities 1,476,226 1,690,025 1,483,824
Cash flows from investing activities:
Proceeds from sales of securities
available-for-sale 1,749,568 5,213,282 11,523,329
Maturities of and principal payments
on securities held-to-maturity 920,267 2,256,336 5,075,055
Purchases of securities available-for-
sale (2,780,211) (489,431) (458,675)
Maturities of and principal payments
on securities available-for-sale 3,315,766 1,503,873 3,250,573
Purchases of securities held-to-
maturity - (2,323,160) (14,780,358)
Loans originated, net of principal
collected (3,840,191) (6,577,548) (7,055,327)
Proceeds from sales of other real
estate 51,323 228,733 -
Capital expenditures (83,141) (384,184) (613,554)
___________ ___________ __________
Net cash used in investing
activities (666,619) (572,099) (3,058,957)
___________ ___________ __________
ASSUMPTION BANCSHARES, INC.
AND SUBSIDIARY
Consolidated Statements of Cash Flows, continued
1996 1995 1994
---- ---- ----
Cash flows from financing activities:
Net increase (decrease) in demand
deposits, NOW accounts, money
market accounts and savings and
IRA accounts $ 716,216 (778,149) 1,712,634
Net increase (decrease) in
certificates of deposit 1,313,411 1,873,503 (981,814)
Dividends paid (416,000) (416,000) (360,000)
_____________ ___________ ___________
Net cash provided by
financing activities 1,613,627 679,354 370,820
_____________ ___________ ___________
Net increase (decrease) in cash
and cash equivalents 2,423,234 1,797,280 (1,204,313)
Cash and cash equivalents at
beginning of year 12,243,399 10,446,119 11,650,432
____________ ___________ ___________
Cash and cash equivalents at
end of year $ 14,666,633 12,243,399 10,446,119
============ =========== ===========
Supplemental disclosures:
Interest paid $ 3,182,834 2,977,442 2,587,630
============ =========== ===========
Income taxes paid $ 340,000 250,000 310,000
============ =========== ===========
See accompanying notes to consolidated financial statements.
ASSUMPTION BANCSHARES, INC.
AND SUBSIDIARY
Notes to Consolidated Financial Statements
December 31, 1996, 1995 and 1994
(1) Summary of Significant Accounting Policies
__________________________________________
(a) Organization
_____________
Assumption Bancshares, Inc. (Bancshares) was incorporated
under the laws of the State of Louisiana in 1984. On July
31, 1984, Assumption Bank and Trust Company (the Bank) was
reorganized as a subsidiary of Bancshares. Prior to July
31, 1984, Bancshares had no significant activity.
Bancshares is currently engaged, through the Bank
subsidiary, in banking activities. The Bank is the
principal asset and primary source of revenue for
Bancshares.
The Bank is subject to competition from other financial
institutions and the regulations of certain government
agencies. The government regulatory authorities
periodically examine the Bank's financial condition and
regulatory compliance.
(b) Basis of Presentation
_____________________
The consolidated financial statements include the financial
statements of Bancshares and the Bank. All significant
intercompany balances and transactions have been eliminated
in consolidation. All references to the "Bank" appearing
hereafter shall mean the consolidated balances of Bancshares
and the Bank.
(c) Securities
__________
The Bank adopted the provisions of Statement of Financial
Accounting Standards No. 115, Accounting for Certain
Investments in Debt and Equity Securities (Statement 115) at
December 31, 1993. Under Statement 115, 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. The Bank has not established a
trading portfolio. Held-to-maturity securities are those
securities in which the Bank has the ability and intent to
hold 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 available-for-sale securities 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
(Continued)
ASSUMPTION BANCSHARES, INC.
AND SUBSIDIARY
Notes to Consolidated Financial Statements
unrealized holding gains or losses included in the separate
component of equity for securities transferred from
available-for-sale to held-for-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 security as an adjustment to yield using
the effective interest method. Interest income is
recognized when earned. Realized gains 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.
(d) Allowance for Loan Losses
_________________________
Management considers the allowance for loan losses adequate
to absorb losses on the loans outstanding as of each
reporting date. The determination of the allowance for loan
losses, using the Bank's procedures and methods, is based
upon various judgments and assumptions. The factors which
influence management's judgment in determining the level of
the allowance for loan losses and the amount which is
charged to operating expenses are: (1) past loan loss
experience; (2) composition of the loan portfolio;
(3) evaluation of potential future losses; (4) current
economic conditions; (5) specific identification and
anticipation of problem and nonperforming loans, and (6)
other relevant factors affecting loans. No assurance can be
given that the Bank will not, in any particular period,
sustain loan losses which are sizable in relation to the
amount reserved or that subsequent evaluations of the loan
portfolio, in light of conditions and factors then
prevailing, will not require significant changes in the
allowance for loan losses. In addition, various regulatory
agencies, as an integral part of their examination process,
periodically review the Bank's allowance for loan losses.
Such agencies may require the Bank to recognize additions to
the allowance based on their judgment about information
available to them at the time of their examinations.
During the first quarter of 1995, the Bank adopted Statement
of Financial Accounting Standard No. 114, Accounting by
Creditors for Impairment of a Loan (Statement 114) and
Statement of Financial Accounting Standards No. 118,
Accounting by Creditors for Impairment of a Loan - Income
Recognition and Disclosures (Statement 118). The Bank
applied the provisions of Statement 114 and Statement 118 to
all of its loans, except for its consumer installment loans
which are collectively evaluated for impairment. Pursuant
to Statement 114 and Statement 118, a loan is considered to
be impaired when,
(Continued)
ASSUMPTION BANCSHARES, INC.
AND SUBSIDIARY
Notes to Consolidated Financial Statements
based on current information and events, it is probable that
the Bank 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 loan
losses. The effect of adopting Statement 114 and Statement
118 on the Bank's financial condition and results of
operations was immaterial.
(e) Other Real Estate
_________________
Other real estate consists of properties that were acquired
through foreclosure or through acceptance of a deed in lieu
of foreclosure. These properties are recorded at the lower
of cost or fair value, net of estimated selling costs. When
a reduction from the carrying value of the loan to the fair
value of the property is required at the time of
foreclosure, the difference is charged to the allowance for
loan losses. Revenues and expenses associated with
operating these properties are recorded during the period in
which they are received or incurred.
The process of determining the appropriate valuation of
other real estate involves judgments and estimates that are
particularly susceptible to change.
(f) Bank Premises and Equipment
___________________________
Bank premises and equipment are stated at cost, less
accumulated depreciation. Depreciation of bank premises and
equipment is calculated using a combination of straight-line
and accelerated methods over the estimated useful lives of
the assets. Estimated useful lives range up to 39 years for
buildings, 3-10 years for furniture and equipment and the
shorter of the lease term or the useful life for leasehold
improvements.
(Continued)
ASSUMPTION BANCSHARES, INC.
AND SUBSIDIARY
Notes to Consolidated Financial Statements
(g) Interest Income on Loans
________________________
Accrual of interest on loans is discontinued when management
believes, after considering economic and business conditions
and collection efforts, that the borrowers' financial
condition is such that collection of interest is doubtful.
(h) Income Taxes
____________
Effective January 1, 1993, the Company adopted the
provisions of Statement of Financial Accounting Standards
No. 109, Accounting for Income Taxes (Statement 109). Under
the asset and liability method of Statement 109, deferred
tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the
financial statement carrying amounts of existing assets and
liabilities and their respective tax bases and operating
loss and tax credit carryforwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those
temporary differences are expected to be recovered or
settled. Under Statement 109, the effect on deferred tax
assets and liabilities of a change in tax rates is
recognized in income in the period that includes the
enactment date.
(i) Pension Plan
____________
The Bank participates in a noncontributory defined-benefit
pension plan organized by the Louisiana Bankers' Association
which covers substantially all employees. Pension costs are
actuarially determined and include the amortization of prior
service costs over the estimated remaining service periods
of the Bank's employees. Funding is based on a review of
the specific requirements and an evaluation of the assets
and liabilities of the defined-benefit pension plan. The
Bank does not provide any postretirement or postemployment
benefits, except for those provided under the pension plan.
(j) Advertising Cost
________________
The costs of advertising are expensed as incurred.
(k) Reclassification
________________
Certain reclassifications were made to the consolidated
financial statements of prior years to conform with the
presentation for 1996.
(Continued)
ASSUMPTION BANCSHARES, INC.
AND SUBSIDIARY
Notes to Consolidated Financial Statements
(l) Use of Estimates
________________
Management of the Bank has made a number of estimates and
assumptions relating to the reporting of assets and
liabilities and the disclosure of contingent assets and
liabilities to prepare these financial statements in
conformity with generally accepted accounting principles.
Actual results could differ from those estimates.
(m) Earnings per Share
__________________
Earnings per share have been computed on the basis of the
weighted average number of shares of common stock
outstanding during the year.
(n) Statements of Cash Flows
________________________
For purposes of the consolidated statements of cash flows,
the Bank considers due from banks and federal funds sold to
be cash equivalents.
(2) Securities
__________
The amortized cost, gross unrealized holding gains, gross
unrealized holding losses and fair value of held-to-maturity
and available-for-sale securities by major security type at
December 31, 1996 and 1995, were as follows:
Gross Gross
Amortized unrealized unrealized Fair
1996 cost gains losses value
____ ___________ ___________ __________ __________
Held-to-maturity:
Mortgage-backed
securities $ 3,404,847 55,659 (23,915) 3,436,591
State and municipal
obligations 9,909,065 166,409 (80,845) 9,994,629
Collateralized
mortgage
obligations 440,905 115,885 - 556,790
____________ ___________ ____________ ____________
Total held-to-
maturity 13,754,817 337,953 (104,760) 13,988,010
____________ ___________ ____________ _____________
(Continued)
ASSUMPTION BANCSHARES, INC.
AND SUBSIDIARY
Notes to Consolidated Financial Statements
Gross Gross
Amortized unrealized unrealized Fair
1996 cost gains losses value
____ ___________ ___________ __________ __________
Available-for-sale:
Mortgage-backed
securities $ 13,489,693 75,198 (158,857) 13,406,034
Other U.S.
Government
agencies 2,411,155 34,253 (30,551) 2,414,857
State and municipal
obligations 4,166,230 36,440 (30,844) 4,171,826
Collateralized
mortgage
obligations 288,489 58,218 - 346,707
____________ ___________ ____________ _____________
Total available-
for-sale 20,355,567 204,109 (220,252) 20,339,424
____________ ___________ ____________ _____________
Total securities $ 34,110,384 542,062 (325,012) 34,327,434
============ =========== ============ =============
1995
____
Held-to-maturity:
Mortgage-backed
securities $ 4,252,551 81,325 (23,588) 4,310,288
State and municipal
obligations 9,970,032 152,595 (160,637) 9,961,990
Collateralized
mortgage
obligations 455,006 37,897 - 492,903
____________ ___________ ____________ _____________
Total held-to-
maturity 14,677,589 271,817 (184,225) 14,765,181
____________ ___________ ____________ _____________
Available-for-sale:
Mortgage-backed
securities 16,748,075 121,091 (137,987) 16,731,179
Other U.S.
Government
agencies 1,420,185 70,755 (9,263) 1,481,677
State and municipal
obligations 4,174,676 32,747 (48,128) 4,159,295
Collateralized
mortgage
obligations 287,754 27,018 - 314,772
____________ ___________ ____________ _____________
Total available-
for-sale 22,630,690 251,611 (195,378) 22,686,923
____________ ___________ ____________ _____________
Total securities $ 37,308,279 523,428 (379,603) 37,452,104
========== ======= ========= ==========
(Continued)
ASSUMPTION BANCSHARES, INC.
AND SUBSIDIARY
Notes to Consolidated Financial Statements
The amortized cost and fair values of securities at December
31, 1996, by remaining contractual maturity are shown below
(in thousands of dollars). Expected maturities will differ
from contractual maturities on mortgage-backed securities
and other securities which may have prepayment provisions.
Amortized Fair
cost value
__________ _______
Held-to-maturity:
Due after one year through five years $ 501 504
Due after five years through ten years 7,071 7,135
Due after ten years 2,337 2,356
Mortgage-backed securities and
collateral mortgage obligations 3,846 3,993
________ ________
Total held-to-maturity 13,755 13,988
________ ________
Available-for-sale:
Due in one year or less 1,639 1,671
Due after one year through five years 3,631 3,619
Due after five years through ten years 1,307 1,297
Mortgage-backed securities and
collateral mortgage obligations 13,778 13,752
________ ________
Total available-for-sale 20,355 20,339
________ ________
Total securities $ 34,110 34,327
======== ========
During November 1995, the Financial Accounting Standards
Board (FASB) issued "A Guide to Implementation of Statement
115 on Accounting for Certain Investments in Debt and Equity
Securities" (Implementation Guide). In accordance with the
Implementation Guide, the Bank reclassified securities with
an amortized cost of $10,899,000 and a net unrealized gain
of $14,600, from the held-to-maturity category to the
available-for-sale category as of December 31, 1995.
During 1996, 1995 and 1994, gross gains of $10,001 $40,457
and $55,929, respectively, were realized on sales of
securities. Gross losses of $2,505, $49,775 and $104,926
were realized on sales during 1996, 1995 and 1994,
respectively.
Securities having a carrying value of approximately
$17,678,000 and $21,609,000 at December 31, 1996 and 1995,
respectively, were pledged to secure public deposits as
required by law.
At December 31, 1996, the Bank held no securities issued by
a single issuer which exceeded 10% of stockholders' equity.
At December 31, 1995, the Bank held securities issued by
Assumption Parish totaling $980,000, which exceeded 10% of
stockholders' equity.
(Continued)
ASSUMPTION BANCSHARES, INC.
AND SUBSIDIARY
Notes to Consolidated Financial Statements
(3) Loans and Allowance for Loan Losses
____________________________________
A summary of the types of loans follows:
1996 1995
____ ____
Commercial, financial and
agricultural $ 2,680,514 3,497,583
Real estate 50,412,576 46,695,271
Individuals 7,737,845 6,893,264
____________ ___________
$ 60,830,935 57,086,118
============ ===========
A summary of the changes in the allowance for loan losses
for 1996, 1995 and 1994 follows:
1996 1995 1994
____ ____ ____
Balance at beginning of year $ 1,195,517 1,103,823 1,129,774
Provision charged to income 36,000 136,000 60,000
____________ __________ __________
1,231,517 1,239,823 1,189,774
____________ __________ __________
Loans charged-off (133,053) (87,602) (140,623)
Recoveries on loans charged-off 91,781 43,296 54,672
____________ __________ ___________
Net loans charged-off (41,272) (44,306) (85,951)
____________ __________ ___________
Balance at end of year $ 1,190,245 1,195,517 1,103,823
============ ========== ===========
The Bank had loans of approximately $850,000 and $853,000 on
nonaccrual at December 31, 1996 and 1995, respectively. The
amount of additional interest income on nonaccrual loans,
which would have been recognized for 1996, 1995 and 1994,
had the related loans been performing according to their
original terms was not material. Interest income recognized
on the cash basis on loans in nonaccrual status was
approximately $53,000, $48,500 and $39,000 for 1996, 1995
and 1994, respectively.
At December 31, 1996 and 1995, impaired loans, all of which
were on nonaccrual, totaled $850,000 and $853,000, requiring
a total impairment allowance of $235,000 and $235,000,
respectively. The average recorded investment in impaired
loans was approximately $791,000 and $768,000 during the
year ended December 31, 1996 and 1995, respectively. For
all impaired loans, the impairment amount was measured using
the fair value of the underlying collateral.
For purposes of the consolidated statements of cash flows,
noncash investing and financing transactions include other
real estate and assets acquired in settlement of loans of
approximately $54,000, $23,000, and $58,000 during 1996,
1995 and 1994, respectively.
ASSUMPTION BANCSHARES, INC.
AND SUBSIDIARY
Notes to Consolidated Financial Statements
The Bank has extended loans, in the ordinary course of
business, to officers and directors of Bancshares and the
Bank, their immediate families and companies in which the
directors are principal owners. In the opinion of
management, such transactions are on substantially the same
terms as those prevailing at the time for comparable
transactions with others. The amount of loans to these
persons and their interests and the related activity for
1996 and 1995 is summarized as follows:
1996 1995
____ ____
Balance at beginning of year $ 1,888,846 1,056,766
Additions 2,691,550 4,618,705
Payments and renewals (2,350,380) (3,786,625)
____________ ___________
Balance at year end $ 2,230,016 1,888,846
============ ===========
(4) Bank Premises and Equipment
___________________________
Bank premises and equipment are summarized as follows:
Accumulated
Cost depreciation Net
____ ____________ ___
December 31, 1996:
Land $ 256,532 - 256,532
Banking houses 1,699,888 (715,368) 984,520
Leasehold improvements 108,198 (102,420) 5,778
Furniture and fixtures 2,769,461 (1,924,269) 845,192
__________ ___________ __________
$4,834,079 (2,742,057) 2,092,022
========== =========== ==========
December 31, 1995:
Land 256,532 - 256,532
Banking houses 1,678,007 (667,967) 1,010,040
Leasehold improvements 108,198 (68,280) 39,918
Furniture and fixtures 2,708,200 (1,784,409) 923,791
__________ ___________ __________
$ 4,750,937 (2,520,656) 2,230,281
========== =========== ==========
(Continued)
ASSUMPTION BANCSHARES, INC.
AND SUBSIDIARY
Notes to Consolidated Financial Statements
(5) Pension Plan
____________
The Bank participates in a noncontributory defined-benefit
pension plan organized by the Louisiana Bankers'
Association, which covers substantially all of its
employees. The following table sets forth the plan's funded
status and amounts recognized in the Bank's consolidated
statements of condition at December 31, 1996 and 1995.
1996 1995
____ ____
Pension benefit obligation:
Accumulated benefit obligations:
Vested $ 2,154,571 1,866,974
Nonvested 110,123 165,697
____________ __________
2,264,694 2,032,671
Additional benefits based on
estimated future salary levels 435,876 440,659
___________ __________
Projected benefit obligation 2,700,570 2,473,330
Plan assets at fair value 2,343,655 2,134,586
___________ __________
Plan assets less than projected
benefit obligation (356,915) (338,744)
Unrecognized net asset being amortized
over 14 years 446,115 387,737
___________ __________
Prepaid pension cost included in
other assets $ 89,200 48,993
=========== ==========
Plan assets for the defined benefit pension plan consist
primarily of common stocks, corporate bonds, U.S. Government
obligations and cash equivalents.
Net pension expense for 1996, 1995 and 1994 included the
following:
1996 1995 1994
____ ____ _____
Service cost - benefits earned
during the period $ 57,211 53,927 61,063
Interest cost on projected
benefit obligation 175,574 163,421 151,513
Actual return on plan assets (192,975) (303,418) 29,188
Amortization of transition assets 8,783 136,132 (202,234)
_________ ________ _________
Net pension expense $ 48,593 50,062 39,530
========= ======== =========
(Continued)
ASSUMPTION BANCSHARES, INC.
AND SUBSIDIARY
Notes to Consolidated Financial Statements
Assumptions used in determining the pension expense for the
years ended December 31, 1996, 1995 and 1994 were:
1996 1995 1994
____ ____ ____
Discount rate 7.50% 8.05% 7.25%
Rates of increase in compensation
levels 3.50 3.50 4.00
Expected long-term rate of return on
assets 9.00 9.00 9.00
====== ====== ======
(6) Deposits
_________
A summary of deposit accounts at December 31, 1996 and 1995
follows:
1996 1995
---- ----
Noninterest-bearing $ 14,294,965 12,542,093
Interest-bearing:
NOW accounts 19,740,118 20,518,595
Money market accounts 10,583,829 10,699,688
Savings and IRA accounts 21,573,867 22,393,243
Certificates of deposit
$100,000 and over 3,650,360 3,577,697
Other certificates of deposit 30,857,553 28,778,502
Other time deposits $100,000
and over 677,056 838,303
____________ ___________
87,082,783 86,806,028
____________ ___________
$ 101,377,748 99,348,121
============ ===========
Interest expense related to certificates of deposit and
other time deposits, $100,000 and over totaled $204,731,
$185,470, and $105,364 during 1996, 1995 and 1994,
respectively.
(Continued)
ASSUMPTION BANCSHARES, INC.
AND SUBSIDIARY
Notes to Consolidated Financial Statements
(7) Other Expenses
______________
Details of other expenses are as follows:
1996 1995 1994
____ ____ ____
Salaries and employee benefits $ 1,835,239 1,797,053 1,709,801
Repairs and maintenance 284,207 277,247 241,800
Depreciation 221,400 201,625 199,800
Stationery and supplies 180,960 195,577 190,886
Occupancy 154,767 149,663 142,037
Data processing 17,889 19,930 17,753
Professional services 386,965 202,413 162,420
Directors' fees 107,250 91,550 91,600
FDIC insurance and state
assessments 24,198 130,024 239,968
Taxes, other than on income 113,252 88,026 75,017
Telephone 68,138 79,683 83,378
Postage 59,720 60,000 61,783
Other real estate 3,892 29,004 93,544
Conventions and seminars 29,200 30,261 43,796
Advertising and marketing 109,341 104,934 92,297
Other 126,971 124,639 93,455
___________ _________ __________
$ 3,723,389 3,581,629 3,539,335
=========== ========= ===========
(8) Income Taxes
____________
Income tax expense for the years ended December 31, 1996,
1995 and 1994 consists of:
1996 1995 1994
____ ____ ____
Income from continuing operations:
Current $ 366,060 253,850 292,560
Deferred 53,984 (37,831) (17,701)
__________ _________ _________
420,044 216,019 274,859
Deferred tax expense (benefit)
recorded in stockholders'
equity for unrealized gains
(losses) on securities
available-for-sale (24,608) 303,400 (423,981)
___________ _________ __________
$ 395,436 519,419 (149,122)
=========== ========= ==========
ASSUMPTION BANCSHARES, INC.
AND SUBSIDIARY
Notes to Consolidated Financial Statements
Total income tax expense differed from the amounts computed
by applying the U.S. federal income tax rates to income
before income taxes as a result of the following:
1996 1995 1994
____ ____ ____
U.S. federal income tax rate 34% 34% 34%
Computed "expected" income tax $ 528,036 439,884 474,432
Increase (decrease) in income taxes
resulting from:
Tax-exempt interest (258,182)(249,440) (173,066)
Non-deductible professional fees 61,200 - -
Other, net 88,990 25,575 (26,507)
__________ ________ __________
Total income tax expense $ 420,044 216,019 274,859
========== ======== ==========
The tax effects of temporary differences that give rise to
the net deferred tax asset at December 31, 1996 and 1995 are
presented below:
1996 1995
____ ____
Deferred tax assets:
Allowance for possible loan losses $ 278,951 266,635
Unrealized losses on securities
available-for-sale 5,488 -
Other real estate due to writedowns 21,608 21,608
Minimum tax credit carryforward - 19,438
Other 488 3,316
___________ __________
Total deferred tax assets 306,535 310,997
___________ __________
Deferred tax liabilities:
Unrealized gains on securities
available-for-sale - 19,120
Bank premises and equipment, principally
due to differences in cost basis and
depreciation 77,867 60,367
Securities, principally due to differences
cost basis and discount accretion 90,553 76,953
Pension, principally due to accrual for
tax and not financial reporting purposes 31,135 18,201
___________ __________
Total deferred tax liabilities 199,555 174,641
___________ __________
Net deferred tax asset $ 106,980 136,356
=========== ==========
No valuation allowance was recorded against the deferred tax
asset because management believes that it is more likely
than not that the net deferred tax asset will be realized in
full.
ASSUMPTION BANCSHARES, INC.
AND SUBSIDIARY
Notes to Consolidated Financial Statements
(9) Parent Company Condensed Financial Information
_______________________________________________
Summarized financial information for Assumption Bancshares,
Inc. (parent company only) follows:
Balance Sheets
--------------
Assets December 31,
------ ------------
1996 1995
---- ----
Cash $ 704 1,854
Investment in 100% of the outstanding
common stock of bank subsidiary 9,834,430 9,164,045
_________ _________
$ 9,835,134 9,165,899
========== =========
Liabilities and Stockholders' Equity
____________________________________
Stockholders' equity:
Common stock 800,000 800,000
Paid-in capital 450,000 450,000
Retained earnings 8,595,789 7,878,785
Unrealized gain (loss) on securities,
net of income taxes (10,655) 37,114
___________ __________
$ 9,835,134 9,165,899
=========== ==========
Statements of Operations
________________________
Years ended December 31,
________________________
1996 1995 1994
---- ---- ----
Equity in net income
of bank subsidiary $ 1,135,154 1,077,756 1,167,955
Assessments from state banking
commission (2,150) (525) (1,736)
____________ __________ __________
Net income $ 1,133,004 1,077,231 1,166,219
============ ========== =========
(Continued)
ASSUMPTION BANCSHARES, INC.
AND SUBSIDIARY
Notes to Consolidated Financial Statements
Statements of Cash Flows
------------------------
Years ended December 31,
------------------------
1996 1995 1994
---- ---- ----
Net income $ 1,133,004 1,077,231 1,166,219
Adjustments to reconcile net income
to net cash used by operating
activities:
Equity in net income of
bank subsidiary (1,135,154) (1,077,756) (1,167,955)
___________ ___________ ___________
Net cash used by operating
activities (2,150) (525) (1,736)
___________ ___________ ___________
Cash used in financing activities -
dividends paid to shareholders (416,000) (416,000) (360,000)
___________ ____________ __________
Cash provided by investing activities -
dividends received from subsidiary 417,000 416,000 364,000
___________ ____________ __________
Net increase (decrease) in cash (1,150) (525) 2,264
Cash at beginning of year 1,854 2,379 115
___________ ____________ ___________
Cash at end of year $ 704 1,854 2,379
=========== ============ ===========
Bancshares' primary source of working capital is dividends
from the Bank. Certain restrictions exist under Federal law
regarding the ability of the subsidiary bank to transfer
funds to Bancshares in the form of cash dividends. In
addition, regulatory authorities also consider the adequacy
of the Bank's capital in relation to its assets and other
considerations. Therefore, such capital adequacy may limit
the availability of undistributed earnings by a varying
amount.
(10) Commitments
-----------
The Bank is a party to financial instruments with off-
balance-sheet risk which are executed in the normal course
of business to meet the financing needs of its customers.
These financial instruments include commitments to extend
credit and standby letters of credit. These instruments
involve, to varying degrees, elements of credit and interest
rate (market) risk in addition to the amounts reflected in
the accompanying consolidated statements of condition.
The Bank's exposure to loss in the event of nonperformance
by the other parties to these financial instruments is
limited to the contractual amount of such instruments. The
Bank employs the same credit policies in making commitments
and conditional obligations as it does for on-balance-sheet
instruments.
(Continued)
ASSUMPTION BANCSHARES, INC.
AND SUBSIDIARY
Notes to Consolidated Financial Statements
Financial instruments whose contract amounts represent
credit risk as of December 31, 1996 and 1995 are as follows:
1996 1995
---- ----
Commitments to extend credit $ 3,530,235 4,185,759
Stand-by letters of credit 923,807 1,016,624
___________ __________
$ 4,454,042 5,202,383
=========== ==========
Commitments to extend credit are agreements to extend credit
to a customer under certain terms and conditions.
Commitments generally have fixed expiration dates of less
than one year and other termination clauses and may require
payment of a fee. Since some of the commitments are
expected to expire without being drawn upon, the total
commitment amounts do not necessarily represent future cash
requirements. The Bank evaluates each customer's
creditworthiness on an individual basis. The amount of
collateral required, if deemed necessary by the Bank upon
extension of credit, is based on management's evaluation of
the creditworthiness of the counterparty, and the terms of
the agreement. Collateral held varies, but generally
includes: accounts receivable, inventory, property, plant,
and equipment, and real estate.
Standby letters of credit are conditional commitments issued
by the Bank to guarantee the performance of a customer to a
third party. The credit risk involved in issuing letters of
credit is essentially the same as that involved in extending
loan facilities to customers. Letters of credit can be
secured by cash or non-cash items. Those secured by non-
cash items are backed by a note signed by the customer.
(11) Fair Value of Financial Instruments
-----------------------------------
Statement of Financial Accounting Standards No. 107,
Disclosures About Fair Value of Financial Instruments
(Statement 107), requires the disclosure of estimated fair
values for financial instruments. Quoted market prices, if
available, are utilized as an estimate of the fair value of
financial instruments. Because no quoted market prices
exist for a significant part of the Bank's financial
instruments, the fair value of such instruments has been
derived based on management's assumptions with respect to
future economic conditions, the amount and timing of future
cash flows and estimated discount rates. Different
assumptions could significantly affect these estimates.
Additionally, these estimates are only indicative of
individual financial instruments' values and should not be
considered an indication of the fair value of the Bank taken
as a whole.
(Continued)
ASSUMPTION BANCSHARES, INC.
AND SUBSIDIARY
Notes to Consolidated Financial Statements
The estimated fair value of financial instruments at
December 31, 1996 is as follows (in thousands of dollars):
Carrying Fair
Amount Value
------ -----
Financial assets:
Cash and cash equivalents $ 14,667 14,667
Interest-bearing deposits 99 99
Securities:
Held-to-maturity 13,755 13,988
Available-for-sale 20,339 20,339
Loans receivable, net 59,641 60,584
Financial liabilities - deposits 101,378 101,414
========= =======
The following methods and assumptions were used to estimate
the fair value of each class of financial instrument:
Cash and cash equivalents: The carrying amounts reported in
the consolidated balance sheet for cash and short-term
instruments approximate those assets' fair values. The
Bank's investment in interest-bearing deposits with
maturities of greater than three months are quoted at market
value.
Securities: Fair values for investment securities are based
on quoted market prices or dealer quotes.
Loans: For loans with maturities of three months or less,
fair value is considered to approximate carrying value. The
fair value of other loans is estimated by discounting the
future cash flows using the current rates at which similar
loans would be made to borrowers with similar credit ratings
for the same remaining maturities.
Deposits: The carrying value for all deposits without fixed
maturities, and for time deposits with maturities of three
months or less, is considered to approximate fair value.
The fair value for time deposits greater than $100,000 with
maturities greater than three months as well as time
deposits less than $100,000 is based upon the appropriate
discount rate for similar pools. The fair value of demand
deposits is the amount payable on demand, and is not
adjusted for any value derived from retaining those deposits
for an expected future period of time. That component,
commonly referred to as deposit base intangible, was not
estimated at December 31, 1996 and is not considered in the
fair value amounts nor is it recorded as an intangible asset
in the statement of condition.
(Continued)
ASSUMPTION BANCSHARES, INC.
AND SUBSIDIARY
Notes to Consolidated Financial Statements
Commitments to extend credit, standby letters of credit and
letters of credit: Pricing of these financial instruments
is based on the credit quality and relationship, fees,
interest rates, compensating balances and other covenants or
requirements. Many of these commitments are expected to,
and typically do, expire without being drawn upon. Carrying
amounts which are comprised of the unamortized fee income
and, where necessary, reserves for any expected credit
losses from these financial instruments, are immaterial.
Because these instruments are generally priced at the time
they are funded, there is no gain or loss embedded in these
transactions.
(12) Regulatory Capital
------------------
The Bank's regulatory capital is summarized as follows:
1996 1995
---- ----
Tier I capital $ 9,834,430 9,164,045
Tier II capital 695,080 668,606
____________ ___________
Total capital $ 10,529,510 9,832,651
============ ===========
Risk adjusted assets $ 55,606,399 53,488,441
============ ===========
Regulatory Minimums
-------------------
Adequately Well
capitalized capitalized
----------- ------------
Risk-based capital ratios:
Tier I 4% 6% 17.69% 17.13%
Total 8 10 18.94 18.38
Tier I leverage ratio 4 5 9.17 8.64
The Bank's risk-based capital and Tier I leverage ratios
substantially exceed the regulatory required minimums at
December 31, 1996 and 1995.
(13) Pending Merger
--------------
On November 20, 1996, the Boards of Directors of Assumption
Bancshares, Inc. and ArgentBank announced that they have
unanimously approved a Definitive Agreement which provides
for the merger of Assumption Bank and Trust, a wholly-owned
subsidiary of Assumption Bancshares, Inc. with ArgentBank
for $21.5 million, or approximately $134 per share, payable
in a combination of cash and ArgentBank common stock. The
transaction is subject to regulatory and shareholder
approvals and the satisfaction of certain other conditions.
ArgentBank is headquartered in Thibodaux, Louisiana and
operates in Lafourche, Terrebonne and Assumption parishes.
Item 9 - Disagreements on Accounting and Financial Disclosure
----------------------------------------------------
There have been no changes or disagreements with the
Company's independent certified public accountants on any
matter of accounting principles or practice, financial
statement disclosure or auditing scope or procedure within
the twenty-four months prior to December 31, 1996.
PART III
Item 10. Directors and Executive Officers of the Registrant
Information with Respect to Directors
The following table sets forth certain information with respect to each
director of the Company. Each person has been engaged in the principal
occupation shown for the past five years. All of the directors are also
directors of Assumption Bank & Trust Company (the "Bank"), the sole subsidiary
of the Company.
First
Name Age Principal Occupation Elected
- ---- --- or Employment Director
------------- --------
F. N. Carrier, Jr. 81 Retired; Investor 1958
Ridley J. Gros, Phd. 55 Dean, College of Business 1991
Administration, Nicholls State
University
Leonard C. Guedry, Jr. 47 President, Leonard Guedry Insurance 1991
Agency, Inc.; Owner, Guedry Real
Estate Agency
Robert J. Tregre 52 President, Robert's Food Store, Inc. 1991
(Retail Outlet)
Patrick E. Cancienne, Sr.(1) 67 Retired; for more than five years 1982
prior to March 1, 1995 he
served as President, Savoie
Industries, Inc. (sugar cane growers
and processors)
Joseph H. Montero, II 62 President and Chief Executive Officer 1972
of the Company and the Bank
Clarence J. Savoie, II(1) 49 Chairman of the Board of the Company 1987
and the Bank since 1995; President,
C.J. Savoie Consulting Engineers, Inc.
Stanley S. Sternfels 62 President, Economical Wholesale, Inc. 1983
(wholesale grocery company)
Nelson A. Cox, Sr., M.D. 84 Physician; Coroner of Assumption 1965
Parish
Felix H. Savoie, Jr.(1) 65 Attorney at Law; Vice President - 1993
Dugas & LeBlanc Ltd. (sugar cane
growers and processors)
Nicess P. Templet 69 Retired; Investor; Former owner of 1987
Griffin's AG, Inc. (retail grocer)
Risley C. Triche 68 Attorney at Law 1972
________________
(1) Mr. Cancienne, Mr. C. Savoie and Mr. F. Savoie are cousins.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers to file with the Securities and Exchange Commission initial
reports of beneficial ownership, and changes in beneficial ownership, of the
Common Stock. In 1996, Felix H. Savoie, Jr., a director of the Company,
inadvertently failed to file a report required by Section 16(a) of the
Exchange Act reporting one transaction related to the acquisition of shares of
Common Stock.
Item 11. Executive Compensation
Summary of Executive Compensation
The following table provides certain information regarding the
compensation of Joseph H. Montero, II, President and Chief Executive Officer
of the Company and the Bank, for each of the preceding three years.
Summary Compensation Table
Annual Compensation
------------------- Other
Name and Annual
Principal Position Year Salary Bonus Compensation(1)
------------------ ---- ------ ----- ---------------
Joseph H. Montero, II, 1996 $103,555 $4,900 $6,750
President and Chief 1995 103,555 5,300 6,000
Executive Officer 1994 103,555 6,000 6,000
_______________________
(1) Consists of director fees.
________________________
Compensation of Directors
Directors do not receive fees for attending meetings of the Company's
Board. Each director of the Bank receives a fee of $500 per month if present
and $250 per month if not present at the Bank's board meetings. Bank
committee meetings are held from time to time as necessary, and directors,
other than the President and Chief Executive Officer, are paid $100 per
committee meeting attended.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
The following table sets forth certain information concerning the
beneficial ownership of the Common Stock of the Company by (i) each director,
(ii) each executive officer named in the Summary Compensation Table and (iii)
all directors and executive officers of the Company as a group, as of February
28, 1997. Beneficial ownership of the shares of Common Stock has been
determined in accordance with Rule 13d-3 under the Securities Exchange Act of
1934 (the "Exchange Act"). Unless otherwise indicated, all shares shown as
beneficially owned are held with sole voting and investment power.
Name Shares Percent
Common Stock of
Beneficially Class
Owned
F. N. Carrier, Jr. 1,790 1.12%
Ridley J. Gros, Phd. 200 *
Leonard C. Guedry, Jr. 200 *
Robert J. Tregre 400 *
Patrick E. Cancienne, Sr. 1,300 *
Joseph H. Montero, II 2,000 1.25%
Clarence J. Savoie, II 925(1) *
Stanley S. Sternfels 1,250 *
Nelson A. Cox, Sr., M.D. 1,870 1.17%
Felix H. Savoie, Jr. 1,090 *
Nicess P. Templet 978 *
Risley C. Triche 1,293(2) *
All Directors and Executive Officers
as a Group (13 Persons) 13,601 8.50%
_______________________
* Less than one percent.
(1) Includes 60 shares as to which Mr. Savoie shares voting and investment
power.
(2) Includes 50 shares as to which Mr. Triche shares voting and investment
power.
________________________
Management is not aware of any person or group of persons who
beneficially owns more than five percent of the Common Stock.
Item 13. Certain Relationships and Related Transactions
Directors and executive officers of the Company and the Bank and their
associates have been customers of and have had loan transactions with the
Bank, and such transactions are expected to continue in the future. In the
opinion of management, all loans to such persons were made in the ordinary
course of business, were made on substantially the same terms, including
interest rates and collateral, as those prevailing at the time for comparable
transactions with others, and did not involve when made and have not involved
since they were made, more than the normal risk of collectibility or present
other unfavorable features.
PART IV
Item 14 - Exhibits, Financial Statements, Schedules and Reports on Form 8-K
-----------------------------------------------------------------
(a) 1. Financial Statements
--------------------
Independent Auditors' Report
Consolidated Statements of Condition as of December 31, 1996 and 1995
Consolidated Statements of Operations for the years ended
December 31, 1996, 1995, and 1994
Consolidated Statements of Stockholders' Equity for the
years ended December 31, 1996, 1995, and 1994
Consolidated Statements of Cash Flows for the years ended
December 31, 1996, 1995, and 1994
Notes to Consolidated Financial Statements for the years
ended December 31, 1996, 1995, and 1994
2. Financial Statement Schedules
-----------------------------
All schedules have been omitted because they are not
applicable or the required information is presented in the
consolidated financial statements or notes thereto.
3. Exhibits
________
2.1 Agreement and Plan of Merger by and among Argent Bank and
Assumption Bancshares, Inc. and Assumption Bank & Trust
Company.
3(i) Articles of Incorporation of Bancshares (incorporated by
reference to Exhibit 3(i) to Bancshares Form 10-K for
the year ended December 31, 1994.)
3(ii) Bylaws of Bancshares (incorporated by reference to
Exhibit 3(ii) to Bancshares Form 10-K for the year
ended December 31, 1994.
21 Subsidiaries of Bancshares (incorporated by reference to
Bancshares Form 10-K for the year ended December 31, 1994.)
27 Financial Data Schedule.
(b) Reports on Form 8-K
-------------------
No reports on Form 8-K were filed by Bancshares during
the quarter ended December 31, 1996.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, Bancshares duly caused this
report to be signed on its behalf by the undersigned,
thereunto duly authorized.
ASSUMPTION BANCSHARES, INC.
By: /s/ Joseph H. Montero
________________________
Joseph H. Montero
President and Chief Executive Officer
(Principal Executive and Financial
Officer)
Dated: February 19, 1997
Pursuant to the requirements 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 the dates indicated.
Signature Title Date
_________ _____ ____
/s/ Clarence J. Savoie, II
__________________________
Clarence J. Savoie, II Chairman of the Board February 19, 1997
/s/ Patrick E. Cancienne, Sr.
_____________________________
Patrick E. Cancienne, Sr. Director February 19, 1997
/s/ F. N. Carrier, Jr.
_____________________________
F. N. Carrier, Jr. Director February 19, 1997
/s/ Dr. Nelson A. Cox, Sr.
_____________________________
Dr. Nelson A. Cox, Sr. Director February 19, 1997
/s/ Dr. Ridley J. Gros
_____________________________
Dr. Ridley J. Gros Director February 19, 1997
/s/ Felix H. Savoie, Jr.
_____________________________
Felix H. Savoie, Jr. Director February 19, 1997
/s/ Risley C. Triche
_____________________________
Risley C. Triche Director February 19, 1997
/s/ Stanley S. Sternfels
_____________________________
Stanley S. Sternfels Director February 19, 1997
/s/ Joseph H. Montero
_____________________________
Joseph H. Montero Director February 19, 1997
/s/ Leonard C. Guedry, Jr.
_____________________________
Leonard C. Guedry, Jr. Director February 19, 1997
/s/ Robert J. Tregre
_____________________________
Robert J. Tregre Director February 19, 1997
/s/ Nicess P. Templet
_____________________________
Nicess P. Templet Director February 19, 1997
EXHIBIT INDEX
Exhibit
No. Description
_______ ____________
2.1 Agreement and Plan of Merger by and among Argent Bank and
Assumption Bancshares, Inc. and Assumption Bank & Trust
Company.
3(i) Articles of Incorporation of Bancshares (incorporated by
reference to Exhibit 3(i) to Bancshares Form 10-K for the
year ended December 31, 1994.
3(ii) Bylaws of Bancshares (incorporated by reference to Exhibit
3(ii) to Bancshares Form 10-K for the year ended December
31, 1994.
21 Subsidiaries of Bancshares (incorporated by reference to
Bancshares Form 10-K for the year ended December 31, 1994.)
27 Financial Data Schedule.