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EXHIBIT 13.1
[LOGO]
________________________________________________________________________________
1995 ANNUAL REPORT
AMERICAN BANCORP, INC.
POST OFFICE BOX 1579
OPELOUSAS, LOUISIANA 70570
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NATURE OF BUSINESS
American Bancorp, Inc. is a one-bank holding company whose sole
subsidiary is American Bank and Trust Company, a commercial bank whose general
business is that of providing banking services to the Opelousas, Louisiana
area. The Bank serves the needs of the area through 46 employees at six
banking locations. The main office is located at the corner of Landry Street
and Union Street in Opelousas. Branch banking-offices are located in the
parish of St. Landry in the communities of Lawtell, Krotz Springs, Port Barre
and an office on Creswell Lane in South Opelousas. In addition, the Bank has a
branch located on Moss Street, in Lafayette, Louisiana.
MARKET PRICE AND DIVIDENDS DECLARED
DIVIDENDS
YEAR QUARTER HIGH LOW PER SHARE
---- ------- ---- --- ---------
1995 First $ 25 $ 20 $ -
Second 25 20 -
Third 25 20 -
Fourth 25 20 .85
1994 First $ 30 $ 15 $ -
Second 30 15 -
Third 30 15 -
Fourth 30 15 .65
Note: The primary market area for American Bancorp, Inc.'s common stock is the
Opelousas, Louisiana area with American Bank and Trust Company acting as
registrar and transfer agent. There were approximately 572 shareholders of
record at December 31, 1995.
Source of market price - American Bank & Trust Company acts as the
transfer agent for the Company. The stock is thinly traded and the price
ranges are based on stated sales price to the transfer agent, which does not
represent all sales.
ANNUAL SHAREHOLDERS' MEETING
The annual meeting of the shareholders of American Bancorp, Inc. will
be held on April 10, 1996 in the Board of Directors Room at the Operations
Center located at 328 East Landry Street, Opelousas, Louisiana.
FORM 10-K ANNUAL REPORT
American Bancorp, Inc. files an annual report with the Securities and
Exchange Commission on Form 10-K. A copy of the report filed on Form 10-K will
be sent free of charge to any shareholder by writing to: Ronald J. Lashute,
Chief Executive Officer and Executive Vice-President, American Bank and Trust
Company, Post Office Box 1579, Opelousas, Louisiana 70570.
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FINANCIAL SUMMARY
(In thousands of dollars except per share data and ratios)
1995 1994 1993
---- ---- ----
FOR THE YEAR
Net income . . . . . . . . . . . . . . . . . . . . $ 963 $ 962 $ 725
Return on average shareholders' equity . . . . . . 15.46% 17.96% 15.76%
Return on average total assets . . . . . . . . . . 1.64% 1.75% 1.37%
AT YEAR END
Total assets . . . . . . . . . . . . . . . . . . . $ 63,070 $ 65,141 $ 51,746
Total earning assets . . . . . . . . . . . . . . . $ 55,080 $ 55,190 $ 46,398
Total loans . . . . . . . . . . . . . . . . . . . $ 26,390 $ 27,053 $ 26,432
Total deposits . . . . . . . . . . . . . . . . . . $ 55,655 $ 59,230 $ 46,676
Total shareholders' equity . . . . . . . . . . . . $ 6,785 $ 5,818 $ 4,934
Common shares outstanding . . . . . . . . . . . . 120,000 120,000 120,000
PER SHARE
Net income . . . . . . . . . . . . . . . . . . . . $ 8.03 $ 8.02 $ 6.04
Book value . . . . . . . . . . . . . . . . . . . . $ 56.55 $ 48.49 $ 41.12
Cash dividends declared . . . . . . . . . . . . . $ .85 $ .65 $ .50
CAPITAL RATIOS
Total risk-based capital ratio . . . . . . . . . . 23.17% 19.76% 19.21%
Leverage ratio . . . . . . . . . . . . . . . . . . 11.36% 10.38% 9.31%
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C O N T E N T S
PAGE
Financial Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
A Message to the Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 - 27
Independent Auditors' Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Consolidated balance sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 and 30
Consolidated statements of income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Consolidated statements of changes in shareholders' equity . . . . . . . . . . . . . . . . . . . . 33 and 34
Consolidated statements of cash flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 and 36
Notes to consolidated financial statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 - 55
Officers and directors of American Bank and Trust Company . . . . . . . . . . . . . . . . . . . . . 56
Officers and directors of American Bancorp, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . 57
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TO THE SHAREHOLDERS
Fiscal year 1995 was a remarkably good year for American Bancorp, Inc.
and American Bank & Trust Co., its sole subsidiary. Net income for the year was
$963,456 or $8.03 per share. The company's return on average assets for 1995
was 1.64% and return on average equity was 15.46%. Both of these ratios rank
American Bank & Trust Co. among the top performing banks in the Southeast.
American Bancorp's average assets during 1995 were $58,733,000, an
increase of $3,870,000 or 7.05% over 1994. The company's leverage capital
ratio increased to 11.35% from 10.38% exceeding all regulatory requirements to
be considered a well capitalized bank. Dividends declared in 1995 represented
an increase of 31% over dividends paid in 1994.
Two significant factors in the bank's successful financial performance
were a healthy net interest margin of 5.79%, and the high quality of assets. At
December 31, 1995, nonperforming assets totaled .2% of average assets and the
bank had a net recovery of charged off loans of $10,000.
Having completed another successful year and exceeding goals set by
the board of Directors and Management, we look forward to expanding our
services through improved technology to meet the banking needs of our
customers. We will continue to offer these services with our traditional
personalized approach.
Management is optimistic that the bank will continue to operate in a
profitable and safe manner. We will achieve this using the same prudent and
sound banking practice as in the past.
We appreciate the loyalty and support of the shareholders, directors
and employees of the bank, and look forward to your continued support and
interest.
/s/ SALVADOR L. DIESI, SR.
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Salvador L. Diesi, Sr., Chairman of the Board
and President
/s/ RONALD J. LASHUTE
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Ronald J. Lashute, Chief Executive Officer and
Executive Vice-President
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
SUMMARY OF OPERATIONS FOR THE LAST FIVE YEARS
(In thousands of dollars except per share data and ratios)
YEAR ENDED DECEMBER 31,
------------------------------------------------------------
1995 1994 1993 1992 1991
------------------------------------------------------------
Operating Data:
Net interest income . . . . . . . . . . . . . $ 3,065 $ 2,567 $ 2,442 $ 2,450 $ 2,056
Provision for possible loan
losses . . . . . . . . . . . . . . . . . . - 12 36 36 (26)
Net income . . . . . . . . . . . . . . . . . 963 962 725 809 506
Per share data:
Weighted average number of
shares outstanding . . . . . . . . . . . 120,000 120,000 120,000 120,000 120,000
Net income . . . . . . . . . . . . . . . . . $ 8.03 $ 8.02 $ 6.04 $ 6.75 $ 4.22
Cash dividends declared . . . . . . . . . . . .85 .65 .50 - -
Book value at end of year . . . . . . . . . . 56.55 48.49 41.12 35.58 24.62
Balance sheet totals:
Average assets . . . . . . . . . . . . . . . $ 58,733 $ 54,863 $ 52,937 $ 52,461 $ 52,891
Average shareholders' equity . . . . . . . . 6,230 5,356 4,599 3,852 2,922
Relationship between significant
financial ratios:
Percentage of net income
to average total assets . . . . . . . . 1.64% 1.75% 1.37% 1.54% .95%
Percentage of net income
to average shareholders'
equity . . . . . . . . . . . . . . . . 15.46% 17.96% 15.76% 21.01% 17.32%
Percentage of dividends
declared per common share
to net income per common
share . . . . . . . . . . . . . . . . . 10.59% 8.10% 8.28% .00% .00%
Percentage of average share-
holders' equity to average
total assets . . . . . . . . . . . . . 10.60% 9.76% 8.69% 7.34% 5.52%
Tier 1 risk-based capital ratio . . . . . . . 21.92% 18.51% 17.96% 15.89% 15.13%
Total risk-based capital ratio . . . . . . . 23.17% 19.76% 19.21% 17.14% 16.63%
Leverage ratio . . . . . . . . . . . . . . . 11.36% 10.38% 9.31% 8.13% 7.30%
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Management's discussion and analysis of financial condition and
results of operations should be read in conjunction with the accompanying
financial statements and notes.
OVERVIEW
The Company reported net income of $963,456 in 1995 compared to
$962,484 in 1994 and $724,503 in 1993. However, interest income has steadily
increased over the last three years. The primary increase has been in interest
income on loans and investment securities. The interest on these items
increased $710,376 in 1995 and $122,531 in 1994. Interest expense also
increased in 1995 after being fairly constant for the last two years. The
increase for 1995 was $210,831, while there was a decrease of $14,855 from 1993
to 1994. The most significant change on the income statement was in provision
for income taxes. The Company had been in the position of having net operating
losses available for carryfoward. All such losses were realized in 1994 and,
consequently, the Company went from a tax benefit to a tax expense in 1995.
The tax benefit in 1994 was $56,432 while the tax provision for 1995 was
$449,793.
Average total assets continue to increase. These assets have grown
3.6% and 7.1% in 1994 and 1995, respectively. This increase is a result of a
steady growth of non-interest bearing demand deposits. These deposits
increased $1,132,000 in 1994 or 9.2% and $2,213,000 in 1995 or 16.4%.
The year end balance sheet reflects a slight drop of $652,962 in loans
due to a reduction in loan demand. In addition, total deposits decreased
$3,575,452 which contributed to a decline of $2,070,642 in total assets in
comparing 1995 to 1994. A portion of this decrease is attributed to a fiscal
agent agreement with a public body that has seasonal variations in their
deposits. For the same period there was an increase of $967,185, in
stockholders' equity.
STATEMENT OF INCOME ANALYSIS
Net interest income on a taxable-equivalent basis was $3.1 million in
1995, an increase of $.553 million, or 21.8% compared in 1994. In 1994, net
interest income was $2.5 million, an increase of $.139 million, or 5.8% over
the prior year. The net interest margin for 1995 was 5.79% compared to 5.09%
in 1994 and 5.02% for 1993. Table 1 summarizes average balances, income and
average yields on earning assets and expense and average rates paid on interest
bearing liabilities. Table 2 analyzes the change in net interest income for
the two most recent annual intervals.
The increase in average balances in securities available for sale and
securities held to maturity had a positive effect on the net interest margin
for the year ended December 31, 1995. The increase in average rates on loans
and securities held to maturity also had a significant impact on the increase
in the net interest margin form 1994 to 1995. The increase in the average rate
of $.532 million on earning assets was offset by an increase of $.184 million
in interest expense related to the Company's cost of funds.
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PROVISION FOR POSSIBLE LOAN LOSSES. The provision for possible loan losses was
$-0- in 1995, $12,000 in 1994 and $36,000 in 1993. As a percentage of
outstanding loans, the allowance for possible loans losses was 2.31%, 2.22% and
2.24% at December 31, 1995, 1994 and 1993, respectively. The annual provision
is determined by the level of net charge offs, the size of the loan portfolio,
the level of nonperforming loans, anticipated economic conditions, and review
of financial condition of specific customers.
NON-INTEREST INCOME. There have been immaterial variances in most non-interest
income accounts for the three year period ended 1995. However, from 1993 to
1994 the effect of an increase in service charges resulted in an increase in
income of approximately $32,000. Other non-interest income was below normal in
1993 due to the expensing of the remaining cost basis of an obsolete computer
system. The Bank's management realizes that non-interest income will become
increasingly important as deregulation continues to impact the net interest
margin; therefore, we are continuously evaluating new opportunities for fee
revenues through proper pricing of services and the development of new sources
of non-interest revenue.
NON-INTEREST EXPENSE. In comparing 1995 to 1994, the only significant variance
was a reduction in other expense of $47,229 due primarily to a reduction in
FDIC assessments. The other categories in non-interest expense experienced
normal variation between 1995, 1994 and 1993.
INCOME TAXES. The Company recorded income tax expense of $449,793 in 1995 as
compared to a benefit of $(56,432) in 1994. Effective January 1, 1992, the
Company adopted Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes." Due to limitations related to the valuation of
deferred tax assets, there was no cumulative effect adjustment at adoption.
During 1994, the Bank recorded a deferred tax benefit equal to its deferred tax
asset. The Bank's net deferred tax asset at December 31, 1994 was fully
supported by the Bank's carryback potential, plus one year of future expected
earnings. At December 1995, all available carrybacks had been utilized
resulting in the income tax expense of $449,793.
This change in accounting principle enabled the Company to more
clearly reflect the impact of net operating loss carryforwards on results of
operations. Previously, these tax benefits were required to be reported as
extraordinary income. The only income tax expense paid for 1994 and 1993 was
related to alternative minimum tax calculations.
BALANCE SHEET AND CAPITAL FUNDS ANALYSIS
Investment securities are a major use of funds by the Bank. The
balance at December 31, 1995 was $21,645,540 which represented a $2,032,057 or
10.36% increase from the $19,613,483 balance outstanding at December 31, 1994.
Investment securities serve several purposes. A portion of investment
securities provides liquidity or secondary reserves, which management can use
if necessary to meet loan demand or deposit withdrawals. Investment securities,
especially obligations of state and political subdivisions, provide for
schools, road construction, sewers, and various other projects. The Bank
invests a portion of these funds in the market area as a service to the
community in which it operates. The remainder of these funds is invested in
obligations of the United States Government or its agencies. It is
management's policy to minimize risk in investments and provide liquidity by
investing in short-term maturities with quality ratings. While a substantial
portion of the investment portfolio is pledged on public deposits (55%), this
is slightly less than 1994 pledged percentage of 56%. The amount of pledged
securities have been fairly constant for the last three years and management
anticipates this source of deposits will remain relatively constant in the
future.
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On January 1, 1994, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 115, "Accounting for Certain Investments in
Debt and Equity Securities," which requires the classification of securities
into one of three categories: trading, available for sale or held to maturity.
Management determines the appropriate classification of debt securities at the
time of purchase and re-evaluates this classification periodically.
Prior to January 1, 1994, the Company classified securities as held
for sale (available for sale) and investment securities (held to maturity)
based on criteria which did not differ significantly from that required by the
new standard. Held for sale securities were recorded at the lower of cost or
fair value.
In December 1995, the Financial Accounting Standards Board issued "A
Guide to Implementation of Statement 115 on Accounting for Certain Investments
in Debt and Equity Securities" (Guide). This guide provided for a one time
opportunity to reclassify securities without impairing the individual
classifications. The Company elected to leave all investment classifications
as previously recorded on acquisition. The Company will continue to determine
the appropriate classification at the time of purchase.
The Bank's primary use of funds is to meet loan demand. Loans, net of
unearned income, were $27,014,350 at December 31, 1995, compared to $27,667,312
at December 31, 1994. This $652,962 or 2.36% decrease is the result of weak
loan demand in the market area.
The Bank attracts deposits from consumers and businesses, and also
utilizes its access to the money markets to purchase funds to support the asset
side of the balance sheet. The two primary sources of funds may be classified
as "interest-bearing deposits" and "non-interest bearing deposits."
"Interest-bearing deposits" consist of time deposits, savings accounts, NOW
accounts and Money Market deposit accounts. The largest source of
"non-interest bearing deposits" is demand deposits, which consist of gross
demand deposits less reciprocal balances with our correspondent banks.
As of December 31, 1995, total deposits decreased $3,575,452 or 6.04%
from December 31, 1994. The most significant changes in deposits from 1994 to
1995 were increases in non-interest bearing demand deposit accounts of
$937,334, a 5.86% increase, and net decreases in NOW accounts of $4,390,847, a
percentage decrease of 25.92%. This decrease is attributable to the Bank
becoming the fiscal agent for a public body which experiences seasonal
variations in their deposit account.
Shareholders' equity increased $967,186 or 16.62% from December 31,
1994 to December 31, 1995. The equity or book value of the Bank is the
shareholders' investment in the Bank resulting from the sale of stock and the
accumulation of earnings retained by the Bank. The strength of the Bank and
its ability to grow depends to a great extent on management's ability to
maintain a corresponding growth in shareholders' equity.
We declared cash dividends in the amount of $102,000 or $.85 per share
in 1995 and $78,000 or $.65 per share in 1994 and $ .50 per share in 1993.
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NONPERFORMING ASSETS AND PAST DUE LOANS. Nonperforming assets are loans
carried on a nonaccrual basis, those classified as restructed loans (loans with
below-market interest rates or other concessions due to the deteriorated
financial condition of the borrower), repossessed real estate, property in the
process of being repossessed and repossessed movable property. A loan is
placed on nonaccrual when, in management's judgment, the borrower's financial
condition has deteriorated to the point that his ability to service the
principal and/or interest is in doubt. At that time, any accrued interest on
the loan is reversed and accruing of interest is discontinued. The Company's
nonperforming assets consist primarily of repossessed real estate and loans
secured by real estate.
Nonperforming assets at December 31, 1995 were $137,363, a decrease of
$25,170 from December 31, 1994. The most significant decrease in nonperforming
loans from 1993 to 1994 was in the loans contractually past due 90 days or more
as to principal or interest, but which are not in the nonaccrual category.
This resulted primarily from one borrower who was experiencing financial
difficulty at December 31, 1993, but subsequent to year end, the loan was paid
off by the borrower. Other real estate and repossessed assets decreased $2,944
from the prior year balance to $13,800 at December 31, 1995. The Bank has
experienced a continual drop in other real estate over the last three years.
Management anticipates this favorable trend to continue.
As of January 1, 1995, the Company adopted SFAS No. 114, "Accounting
by Creditors for Impairment of a Loan," which, as it relates to in-substance
foreclosures, requires that a creditor continue to classify these assets as
loans on the balance sheet unless the creditor receives physical possession of
the collateral. The Company had no in- substance foreclosures in 1995 or 1994.
At December 31, 1995, the recorded investment in loans that were considered to
be impaired under SFAS No. 114 was $83,884, with the related reserve for
possible loan losses of $5,901. These loans are included in nonaccrual loans
in Table 7.
LIQUIDITY. Liquidity is the ability to ensure that adequate funds are
available to satisfy contractual liabilities, fund operations, meet withdrawal
requirements of depositors, and provide for customers' credit needs in a timely
manner. The liquidity position of the Bank is founded on a stable base of core
deposits. The primary source of liquidity for the Bank is its short-term
investments. The Bank has overnight funds lines with correspondent banks
providing additional sources of liquidity. Securities available for sale also
provide a major source of liquidity to the Bank, as do the cash flows from
repayments and maturities of its loan portfolio. The franchise from which the
Bank operates allows access to a broad base of retail customers, and management
has been successful at attracting additional deposits when a continuing need
for further funding has arisen. The Bank's core deposit base is supplemented
by public fund time deposits and federal funds obtained through correspondent
relationships.
At the Parent Company (American Bancorp, Inc.) level, cash is needed
to fund operations and to pay dividends. During December 31, 1995, the Parent
Company received $102,000 from the Bank in partial settlement for the use of a
net operating loss that had been incurred by the Parent. These funds were used
to pay dividends to stockholders.
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The purpose of liquidity management is to assure that the Bank has the
ability to raise funds to support asset growth, meet deposit withdrawal,
maintain reserve requirements and otherwise operate the Bank on a continuing
basis. Liquidity for the Bank is provided by the acquisition of additional
funds in the form of deposits, borrowing such as federal funds, investment
maturities and sales and loan maturities and repayments.
In recognition of the increased pace of deregulation and increasing
competition, the Bank will continue to increase its competitive position in the
area to assure the availability of funds. The Bank's reputation, capital
position and base of deposits will help to insure flexibility and liquidity.
CAPITAL ADEQUACY. The management of capital is a continuous process which
consists of providing capital for anticipated growth of the Bank. An
evaluation of capital adequacy cannot be made solely in terms of total capital
or related ratios. A more comprehensive indication of financial strength is
management's ability to generate capital through the retention of earnings.
The Bank's main source of capital during the last several years has been
cumulative earnings derived through profitable operations.
In 1992, the Federal Deposit Insurance Corporation (FDIC) issued
regulations for the classification of banks based on their capital levels
pursuant to the Federal Deposit Insurance Corporation Improvement Act passed by
Congress in 1991. The rules place each bank into one of the nine risk
categories for assessing risk-based deposit premiums based on capital ratios
and on other supervisory information. Three capital categories are used for
capital ratios ranging from "well capitalized" to "undercapitalized." The
regulations define "well capitalized" banks as those bank with at least 6% Tier
1 risk-based capital ratio, 10% total risk-based capital ratio and a 5%
leverage ratio. Banks are also assigned to one of three supervisory subgroups
ranging from "healthy" to "substantial supervisory concern." The Bank is
included in the top rating categories for both capital ratios and the
supervisory subgroup. At December 31, 1995, the Bank had a Tier 1 risk-based
capital ratio of 21.9% and 23.2% total risk-based capital ratio. The leverage
ratio has increased to 11.36% at December 31, 1995. The Bank presently meets
or exceeds all required risk-based capital standards and anticipates no
difficulty in maintaining those standards.
FAIR VALUES OF FINANCIAL INSTRUMENTS. Statement of Financial Accounting
Standards No. 107, "Disclosures About Fair Values of Financial Instruments"
requires disclosure of estimated fair values of financial instruments.
Financial instruments are defined as cash and contractual rights and
obligations that require settlement, directly or indirectly, in cash. Note 14
to the consolidated financial statements provides information regarding the
fair values of financial instruments as of December 31, 1995.
INTEREST RATE SENSITIVITY. Interest rate risk is the potential impact of
changes in interest rates on net interest income and results from mismatches in
repricing opportunities of assets and liabilities over a period of time.
Static Gap analysis is used to estimate the effects of changing interest rates
and various balance sheet strategies on the level of net interest income.
Management may alter the mix of floating and fixed rate assets and liabilities,
change pricing schedules, and adjust maturities through sales and purchases of
securities available for sale. Table 14 presents the Bank's interest rate
sensitivity position at December 31, 1995.
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This profile, usually referred to as a Gap analysis, is based on a
point in time and may not be meaningful because assets and liabilities must be
categorized according to contractual maturities and repricing periods rather
than estimating these characteristics, as is done in simulation models. Also,
the Gap analysis does not consider subsequent changes in interest rate levels
or spreads between asset and liability categories. Although Table 14
indicates that the Company is liability-sensitive (interest-bearing liabilities
exceed earning assets) up to one year, this may not be true in practice. The 1
- - 30 day deposit category includes NOW, money market and savings accounts which
have indeterminate maturities. The rates paid on these core deposits, which
account for 59.3% of interest-bearing funds, do not necessarily reprice in a
direct relationship to changes in interest rate.
In addition to core deposits, which serve to lessen the volatility of
net interest income in changing rate conditions, the Company's loan portfolio
contains fixed-rate commercial loans that have actual maturities and cash flows
that vary with the level of interest rates. These earning assets are reported
in the after one year category, when in fact a portion of these balances may be
subject to repricing within one year or less. Depending on market interest
rates, actual cash flows from these loans will vary from the contractual
maturities due to payoffs and refinancing activity.
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TABLE 1
SUMMARY OF CONSOLIDATED NET INTEREST INCOME
Fully taxable equivalent basis (In thousands)
1995
--------------------------------------------------
AVERAGE AVERAGE
BALANCE INTEREST RATE
------- -------- -------
ASSETS
Short-term investments $ 4,930 $ 271 5.50%
Loans, net of unearned income (1) (2) 26,748 2,573 9.62
Securities available for sale (3) 3,843 312 8.12
Securities held to maturity 17,779 1,087 6.11
-------- --------
Total interest earning assets 53,300 4,243 7.96%
Allowance for possible loan losses (621) -------- -------
Cash and due from banks 3,815
Other assets 2,239
--------
Total assets $ 58,733
========
LIABILITIES
Interest-bearing demand deposits $ 11,480 $ 217 1.89%
Savings deposits 8,782 239 2.72
Time deposits 15,977 700 4.38
Short-term borrowings 17 2 11.76
-------- --------
Total interest-bearing liabilities/interest expense 36,256 1,158 3.19%
Non-interest bearing demand deposits 15,707 -------
Other liabilities 540
--------
Total liabilities 52,503
SHAREHOLDERS' EQUITY
Shareholders' equity 6,230
--------
Total liabilities and shareholders' equity $ 58,733
========
Total interest expense related to earning assets 2.17%
-------
Net interest income $ 3,085
========
Net interest margin 5.79%
=======
(1) Interest income earned on nontaxable investment securities and certain
loans are exempt from taxation. However, an adjustment has been made for
the tax preference item related to nontaxable securities purchased after
December 31, 1982. An incremental tax rate of 34% is used to compute the
taxable equivalent adjustment for 1995, 1994, and 1993.
(2) For purposes of yield computations, non-accrual loans are included in
loans outstanding.
(3) Yield computations are based on historical cost of securities available
for sale.
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1994 1993
-------------------------------------------- --------------------------------------------
AVERAGE AVERAGE AVERAGE AVERAGE
BALANCE INTEREST RATE BALANCE INTEREST RATE
------- -------- ------- ------- -------- -------
$ 6,609 $ 272 4.12% $ 7,077 $ 285 4.03%
26,976 2,281 8.46 26,678 2,162 8.10
2,905 257 8.85 - - 0.00
13,257 670 5.05 13,953 908 6.51
-------- -------- -------- --------
49,747 3,480 7.00% 47,708 3,355 7.03%
-------- ------ -------- ------
(614) (589)
3,567 1,647
2,163 4,171
-------- --------
$ 54,863 $ 52,937
======== ========
$ 11,855 $ 218 1.84% $ 11,249 $ 233 2.07%
8,775 239 2.72 8,436 237 2.81
15,154 491 3.24 16,146 492 3.05
- - 0.00 - - 0.00
-------- -------- -------- --------
35,784 948 2.65% 35,831 962 2.68%
------ ------
13,494 12,362
229 145
-------- --------
49,507 48,338
5,356 4,599
-------- --------
$ 54,863 $ 52,937
======== ========
1.91% 2.02%
------ ------
$ 2,532 $ 2,393
======== ========
5.09% 5.02%
====== ======
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15
TABLE 2
RATE/VOLUME ANALYSIS
Fully taxable equivalent basis (In thousands)
YEAR ENDED DECEMBER 31,
-------------------------------------------
1995/1994
-------------------------------------------
INCREASE (DECREASE)
DUE TO CHANGE IN: (1)
--------------------------
AVERAGE AVERAGE NET
BALANCE RATE CHANGE
------- ------- -------
Interest income:
Short-term investments . . . . . . . . . . . . . . . . . . . $ (81) $ 80 $ (1)
Loans, net of unearned income (2) . . . . . . . . . . . . . (21) 313 292
Securities available for sale (3) . . . . . . . . . . . . . 80 (25) 55
Securities held to maturity . . . . . . . . . . . . . . . . 253 164 417
------- ------- -------
Total interest income . . . . . . . . . . . . . . . . . . 231 532 763
------- ------- -------
Interest expense:
Demand deposits . . . . . . . . . . . . . . . . . . . . . . (6) 5 (1)
Savings deposits . . . . . . . . . . . . . . . . . . . . . . - - -
Time deposits . . . . . . . . . . . . . . . . . . . . . . . 31 178 209
Short-term borrowing . . . . . . . . . . . . . . . . . . . . 1 1 2
------- ------- -------
Total interest expense . . . . . . . . . . . . . . . . . 26 184 210
------- ------- -------
Taxable-equivalent net interest income . . . . . . . . . . . . $ 205 $ 348 $ 553
======= ======= =======
(1) The change in interest due to both rate and volume has been allocated to
rate and volume changes in proportion to the relationship of the absolute
dollar amounts of the change in each.
(2) Non-accrual loans are included in loans outstanding.
(3) Yield computations are based on historical cost of securities available
for sale.
-14-
16
YEAR ENDED DECEMBER 31,
- -------------------------------------------
1994/1993
- -------------------------------------------
INCREASE (DECREASE)
DUE TO CHANGE IN: (1)
- --------------------------
AVERAGE AVERAGE NET
BALANCE RATE CHANGE
- ------- ------- -------
$ (19) $ 6 $ (13)
25 94 119
128 129 257
(40) (198) (238)
- ------- ------- -------
94 31 125
- ------- ------- -------
12 (27) (15)
9 (7) 2
(31) 30 (1)
- - -
- ------- ------- -------
(10) (4) (14)
- ------- ------- -------
$ 104 $ 35 $ 139
======= ======= =======
-15-
17
TABLE 3
SECURITIES PORTFOLIO
(In thousands)
DECEMBER 31, 1995 DECEMBER 31, 1994
------------------------------------ ------------------------------------
HELD TO AVAILABLE HELD TO AVAILABLE
MATURITY FOR SALE TOTAL MATURITY FOR SALE TOTAL
-------- --------- -------- -------- --------- --------
U.S. Treasury . . . . . . . . . . $ 5,508 $ - $ 5,508 $ 5,499 $ - $ 5,499
U.S. Government and
Agencies . . . . . . . . . . . . 10,997 1,536 12,533 10,980 497 11,477
Mortgage-Backed
Securities . . . . . . . . . . . - 2,342 2,342 - 2,637 2,637
State and Political
Subdivisions . . . . . . . . . . - 1,263 1,263 - - -
-------- -------- -------- -------- -------- --------
$ 16,505 $ 5,141 $ 21,646 $ 16,479 $ 3,134 $ 19,613
======== ======== ======== ======== ======== ========
-16-
18
TABLE 4
MATURITY DISTRIBUTION AND SECURITIES PORTFOLIO YIELDS
(In thousands)
AFTER AFTER
ONE BUT FIVE BUT
WITHIN ONE WITHIN FIVE WITHIN TEN
YEAR AMT. YIELD YEARS AMT. YIELD YEARS AMT. YIELD
---------- ----- ----------- ----- ---------- -----
December 31, 1995:
Held to maturity:
U.S. Treasury . . . . . . . . . . . $ 3,499 6.32% $ 2,009 6.18% $ - - %
U.S. Government
and Agencies . . . . . . . . . . 5,002 5.62 5,495 6.37 500 6.36
------- ----- ------- ----- ------- -----
Total held to
maturity . . . . . . . . . 8,501 5.91% 7,504 6.32% 500 6.36%
------- ----- ------- ----- ------- -----
Available for sale:
U.S. Government
and Agencies . . . . . . . . . . - -% 1,536 6.77% - - %
Mortgage-Backed
Securities . . . . . . . . . . . 183 7.92 1,116 8.92 1,043 8.47
State and
Political
Subdivisions . . . . . . . . . . - - 377 7.85 886 6.58%
------- ----- ------- ----- ------- -----
Total
available
for sale . . . . . . . . . 183 7.92% 3,029 7.69% 1,929 7.59
------- ----- ------- ----- ------- -----
Total
securities . . . . . . . . $ 8,684 5.96% $10,533 6.70% $ 2,429 7.35%
======= ===== ======= ===== ======= =====
-17-
19
AFTER TEN TOTAL
YEARS AMT. YIELD AMOUNT YIELD
---------- ----- ------ -----
$ - - % $ 5,508 6.27%
- - 10,997 6.03
------- ----- ------- ------
-0- 0.00% 16,505 6.11%
------- ----- ------- ------
- - % 1,536 6.78%
- - 2,342 8.64
- - 1,263 6.95
------- ----- ------- ------
-0- 0.00% 5,141 7.66%
------- ----- ------- ------
$ -0- 0.00% $21,646 6.47%
======= ===== ======= ======
-18-
20
TABLE 5
LOAN PORTFOLIO
The amounts of loans outstanding for the three years ended December 31, 1995
are shown in the following table according to type of loan (in thousands).
1995 1994 1993
--------- --------- ---------
Commercial, financial and agricultural . . . . . . . . . $ 6,240 $ 6,543 $ 5,306
Real Estate - Construction . . . . . . . . . . . . . . . 119 325 212
Real Estate - Mortgage . . . . . . . . . . . . . . . . . 16,473 16,119 17,889
Installment . . . . . . . . . . . . . . . . . . . . . . . 4,182 4,681 3,637
--------- --------- ---------
Total . . . . . . . . . . . . . . . . . . . . . . 27,014 27,668 27,044
Less:
Allowance for possible loan losses . . . . . . . . . . (624) (614) (606)
Unearned income . . . . . . . . . . . . . . . . . . . . - (1) (6)
--------- --------- ---------
$ 26,390 $ 27,053 $ 26,432
========= ========= =========
________________________________________________________________________________
TABLE 6
LOAN MATURITY AND INTEREST RATE SENSITIVITY
The following table shows the amount of commercial, financial and agricultural
loans, real estate-construction loans and real estate mortgage loans, exclusive
of 1-4 family residential loans, outstanding as of December 31, 1995 which,
based on remaining scheduled repayments of principal, are due in the amounts
indicated. Also, the amounts due after one year are classified according to
the sensitivity to the changes in interest rates (in thousands).
ONE YEAR OVER ONE
OR TO OVER
LESS (1) 5 YEARS 5 YEARS TOTAL
-------- -------- -------- --------
Maturity of Loans:
Commercial, financial and
agricultural . . . . . . . . . . . . . $ 2,928 $ 2,103 $ 1,641 $ 6,672
Real Estate - mortgage and
construction . . . . . . . . . . . . . 493 4,109 2,460 7,062
-------- -------- -------- --------
Total . . . . . . . . . . . . . . . . $ 3,421 $ 6,212 $ 4,101 $ 13,734
======== ======== ======== ========
Interest Rate Sensitivity of Loans:
With predetermined interest rates . . . . $ 1,064 $ 4,306 $ 168 $ 5,538
With floating interest rates (2) . . . . 2,357 1,906 3,933 8,196
-------- -------- -------- --------
Total . . . . . . . . . . . . . . . . $ 3,421 $ 6,212 $ 4,101 $ 13,734
======== ======== ======== ========
(l) Includes demand loans, loans having no stated schedule of repayments
and no stated maturity, and overdrafts.
(2) The floating interest rate loans generally fluctuate according to a
formula based on a prime rate.
-19-
21
TABLE 7
NONPERFORMING ASSETS
Nonperforming assets include nonaccrual loans, loans which are contractually 90
days past due, restructured loans, and foreclosed assets. Restructured loans
are loans which, due to a deteriorated financial condition of the borrower,
have a below-market yield. Interest payments received on nonperforming loans
are applied to reduce principal if there is doubt as to the collectibility of
the principal; otherwise, these receipts are recorded as interest income.
Certain nonperforming loans are current as to principal and interest payments
that are classified as nonperforming because there is a question concerning
full collectilibity of both principal and interest.
Nonperforming assets totaled $137,363 at year ended 1995, a $25,170 (15.5%)
decrease from the prior year. Nonperforming assets totaling $162,533 at
December 31, 1994 was down $326,742 (67%) from December 31, 1993. The
composition of nonperforming assets for the past three years are illustrated
below.
1995 1994 1993
---------- ---------- ----------
Nonperforming loans:
Loans on nonaccrual . . . . . . . . . . . . . . . . . $ 114,059 $ 3,722 $ 9,104
Loans contractually past due 90
days or more as to principal or
interest, but which are not on
nonaccrual . . . . . . . . . . . . . . . . . . . . 9,504 9,377 180,451
Restructured loans which are not
on nonaccrual . . . . . . . . . . . . . . . . . . . - 132,690 153,415
---------- ---------- ----------
123,563 145,789 342,970
Other real estate and repossessed
assets received in complete or
partial satisfaction of loan
obligations . . . . . . . . . . . . . . . . . . . . 13,800 16,744 146,305
---------- ---------- ----------
Total nonperforming assets . . . . . . . . . . . $ 137,363 $ 162,533 $ 489,275
========== ========== ==========
At December 31, 1995, the Bank has loans outstanding to multiple numbers of
borrowers engaged in the medical industry and the legal profession. The loans
to the medical industry totaled $4,478,739, while the loans to the legal
profession were $3,103,320. There were no significant nonperforming loans
outstanding in these two concentrations.
-20-
22
TABLE 8
ALLOWANCE FOR POSSIBLE LOAN LOSSES
(In Thousands)
YEAR ENDED DECEMBER 31,
----------------------------------------------
1995 1994 1993
------ ------ ------
Beginning balance . . . . . . . . . . . . . . . . . . . . . $ 614 $ 606 $ 576
------ ------ ------
Provision charged against income . . . . . . . . . . . . . -0- 12 36
------ ------ ------
Charge-offs:
Commercial, financial and agricultural loans . . . . . . - 1 -
Real estate mortgage loans . . . . . . . . . . . . . . . - 13 3
Real estate construction loans . . . . . . . . . . . . . - - -
Installment loans . . . . . . . . . . . . . . . . . . . . 6 1 7
------ ------ ------
Total charge-offs . . . . . . . . . . . . . . . . . . 6 15 10
------ ------ ------
Recoveries:
Commercial, financial and agricultural loans . . . . . . 8 8 -
Real estate mortgage loans . . . . . . . . . . . . . . . - - -
Real estate construction loans . . . . . . . . . . . . . - - -
Installment loans . . . . . . . . . . . . . . . . . . . . 8 3 4
------ ------ ------
Total recoveries . . . . . . . . . . . . . . . . . . 16 11 4
------ ------ ------
Net charge-offs (recoveries) . . . . . . . . . . . . . . . (10) 4 6
------ ------ ------
Ending balance . . . . . . . . . . . . . . . . . . . . . . $ 624 $ 614 $ 606
====== ====== ======
Ratio of net charge-offs (recoveries) during
the period to average loans outstanding
during the period . . . . . . . . . . . . . . . . . . . . (.04)% .01% .02%
====== ====== ======
-21-
23
TABLE 9
ALLOCATION FOR POSSIBLE LOAN LOSSES
(In thousands)
The allowance for possible loan losses has been allocated according to the
amount deemed to be reasonably necessary to provide for the possibility of
losses being incurred within the following categories of loans at the date
indicated.
DECEMBER 31, 1995 DECEMBER 31, 1994
------------------------------- --------------------------------
% OF LOANS % OF LOANS
OUTSTANDING OUTSTANDING
TO TOTAL TO TOTAL
ALLOWANCE LOANS ALLOWANCE LOANS
--------- ----------- --------- -----------
Commercial, financial and
agricultural loans . . . . . . . . . . . $ 134 21.47% $ 126 20.52%
Real estate construction . . . . . . . . . 5 0.80 5 0.81
Real estate mortgage loans . . . . . . . . 400 64.10 400 65.15
Installment loans . . . . . . . . . . . . . 85 13.63 83 13.52
-------- ------- ------- -------
$ 624 100.00% $ 614 100.00%
======== ======= ======= =======
DECEMBER 31, 1993
----------------------------------
% OF LOANS
OUTSTANDING
TO TOTAL
ALLOWANCE LOANS
--------- -----------
Commercial, financial and
agricultural loans . . . . . . . . . . . . . . . . . . . . $ 119 19.63%
Real estate construction . . . . . . . . . . . . . . . . . . 5 0.78
Real estate mortgage loans . . . . . . . . . . . . . . . . . 401 66.14
Installment loans . . . . . . . . . . . . . . . . . . . . . . 81 13.45
------- -------
$ 606 100.00%
======= =======
-22-
24
TABLE 10
DEPOSITS
The following table presents the average balance and an average rate paid on
deposits (in thousands):
DECEMBER 31,
-------------------------------------------------------------------------
1995 1994 1993
------------------- -------------------- -------------------
AVERAGE AVERAGE AVERAGE AVERAGE AVERAGE AVERAGE
BALANCE RATE BALANCE RATE BALANCE RATE
-------- ------- -------- ------- -------- -------
Non-interest bearing
demand deposits . . . . . . . . . $ 15,707 - % $ 13,494 - % $ 12,362 - %
Interest bearing
demand deposits . . . . . . . . . 11,480 1.89 11,855 1.84 11,249 2.07
Savings deposits . . . . . . . . . 8,782 2.72 8,775 2.72 8,436 2.81
Time deposits . . . . . . . . . . . 15,977 4.38 15,154 3.24 16,146 3.05
-------- -------- --------
Total . . . . . . . . $ 51,946 $ 49,278 $ 48,193
======== ======== ========
________________________________________________________________________________
TABLE 11
CERTIFICATES OF DEPOSIT OF $100,000 OR MORE, MATURITY DISTRIBUTION
The following table provides the maturities of time certificates of deposit of
the Bank in amounts of $100,000 or more (in thousands):
DECEMBER 31,
------------------------------------------
1995 1994 1993
-------- -------- --------
Maturing in:
3 months or less . . . . . . . . . . . . . . . . . . . . . . . $ 601 $ 1,204 $ 1,455
Over 3 months less than 6 months . . . . . . . . . . . . . . . 800 667 400
Over 6 months less than 12 months . . . . . . . . . . . . . . 550 - -
Over 12 months . . . . . . . . . . . . . . . . . . . . . . . . 814 497 414
-------- -------- --------
Total . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,765 $ 2,368 $ 2,269
======== ======== ========
-23-
25
TABLE 12
RISK-BASED CAPITAL
(In thousands)
DECEMBER 31,
--------------------------------
1995 1994
-------- --------
Risk-weighted assets . . . . . . . . . . . . . . . . . . . . . . . . . $ 30,441 $ 30,751
======== ========
Capital:
Tier I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,671 $ 5,693
Tier II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 381 384
-------- --------
Total capital . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,052 $ 6,077
======== ========
Ratios:
Tier I capital to risk-weighted assets . . . . . . . . . . . . . . . 21.92% 18.51%
Tier II capital to risk-weighted assets . . . . . . . . . . . . . . 1.25 1.25
-------- --------
Total capital to risk-weighted assets . . . . . . . . . . . . . . 23.17% 19.76%
======== ========
Leverage - Tier I capital to total
average assets . . . . . . . . . . . . . . . . . . . . . . . . . 11.36% 10.38%
======== ========
________________________________________________________________________________
TABLE 13
RETURN ON EQUITY AND ASSETS
The following table shows consolidated operating and capital ratios for each of
the last three years:
YEARS ENDED DECEMBER 31,
---------------------------------------
1995 1994 1993
------ ------ ------
Return on average total assets . . . . . . . . . . . . . . . 1.64% 1.75% 1.37%
Return on average shareholders' equity . . . . . . . . . . . 15.46% 17.96% 15.76%
Dividend payout ratio . . . . . . . . . . . . . . . . . . . 10.59% 8.10% 8.28%
Average equity to average assets ratio . . . . . . . . . . . 10.60% 9.76% 8.69%
-24-
26
TABLE 14
INTEREST RATE SENSITIVITY
(In thousands)
BY REPRICING DATES AT DECEMBER 31, 1995
--------------------------------------------------------------------------
NON-
0-90 91-180 181-365 AFTER INTEREST
DAYS DAYS DAYS 1 YEAR BEARING TOTAL
-------- --------- --------- --------- --------- ----------
ASSETS
Federal funds sold . . . . . . . . . $ 6,350 $ - $ - $ - $ - $ 6,350
Interest bearing
deposits with banks . . . . . . . 396 99 99 100 - 694
Investment securities . . . . . . . 2,245 500 3,631 15,270 - 21,646
Loans . . . . . . . . . . . . . . . 10,927 2,833 4,433 8,197 - 26,390
Other assets . . . . . . . . . . . . - - - - 7,990 7,990
-------- --------- --------- --------- --------- ----------
$ 19,918 $ 3,432 $ 8,163 $ 23,567 $ 7,990 $ 63,070
-------- --------- --------- --------- --------- ----------
SOURCES OF FUNDS
NOW, money market
and savings
deposits . . . . . . . . . . . . $ 12,960 $ - $ 10,000 $ - $ - $ 22,960
Time deposits
$100,000 or more . . . . . . . . 601 800 550 814 - 2,765
Other time deposits . . . . . . . . 4,172 3,715 3,242 1,871 - 13,000
Non-interest bearing
demand . . . . . . . . . . . . . - - - - 16,929 16,929
Other liabilities . . . . . . . . . - - - - 630 630
Shareholders' equity . . . . . . . . - - - - 6,786 6,786
-------- --------- --------- --------- --------- ----------
17,733 4,515 13,792 2,685 24,345 63,070
-------- --------- --------- --------- --------- ----------
Interest rate
sensitivity gap . . . . . . . . . . $ 2,185 $ (1,083) $ (5,629) $ 20,882 $ (16,355)
======== ========= ========= ========= =========
Cumulative interest
rate sensitivity gap . . . . . . . . $ 2,185 $ 1,102 $ (4,527) $ 16,355 $ -0-
======== ========= ========= ========= =========
Cumulative interest
rate sensitivity gap
as a percent of
total assets . . . . . . . . . . . . 3.46% 1.75% (7.18)% 25.93%
======== ========= ========= =========
-25-
27
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Directors
American Bancorp, Inc.
Opelousas, Louisiana
We have audited the accompanying consolidated balance sheets of American
Bancorp, Inc. and subsidiary as of December 31, 1995 and 1994, the related
consolidated statements of income, changes in shareholders' equity and cash
flows for each of the three years in the period ended December 31, 1995. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these 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 American Bancorp,
Inc. and subsidiary as of December 31, 1995 and 1994, and the consolidated
results of their operations and their cash flows for each of the three years in
the period ended December 31, 1995, in conformity with generally accepted
accounting principles.
As discussed in Note 1, the Company changed its method of accounting for debt
securities in 1994. As discussed in Note 10, the Company changed its method of
accounting for income taxes in 1992.
/s/ BROUSSARD, POCHE, LEWIS & BREAUX
Lafayette, Louisiana
January 19, 1996
-26-
28
AMERICAN BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1995 AND 1994
ASSETS 1995 1994
------------ -------------
Cash and due from banks . . . . . . . . . . . . . . . . . . . . . . . $ 5,533,738 $ 7,806,323
Short-term investments:
Federal funds sold . . . . . . . . . . . . . . . . . . . . . . . . 6,350,000 6,050,000
Interest-bearing deposits with banks . . . . . . . . . . . . . . . 694,000 2,474,000
------------ -------------
7,044,000 8,524,000
Securities held to maturity (estimated
market values $16,619,377 and $16,040,184,
respectively) . . . . . . . . . . . . . . . . . . . . . . . . . . 16,504,999 16,479,444
Securities available for sale . . . . . . . . . . . . . . . . . . . . 5,140,541 3,134,039
Loans, net of unearned income ($45 and
$1,299, respectively) . . . . . . . . . . . . . . . . . . . . . . 27,014,350 27,667,312
Less: allowance for possible loan losses . . . . . . . . . . (624,122) (614,310)
------------ -------------
26,390,228 27,053,002
Bank premises and equipment . . . . . . . . . . . . . . . . . . . . . 1,435,446 1,375,140
Other real estate, net of allowances of
$99,000 and $185,026, respectively . . . . . . . . . . . . . . . . 13,800 16,743
Accrued interest receivable . . . . . . . . . . . . . . . . . . . . . 551,527 429,703
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 456,009 322,536
------------ -------------
$ 63,070,288 $ 65,140,930
============ ============
See Notes to Consolidated Financial Statements.
-27-
29
LIABILITIES AND SHAREHOLDERS' EQUITY 1995 1994
------------ ------------
LIABILITIES
Deposits:
Non-interest bearing demand deposits . . . . . . . . . . . . . $ 16,929,190 $ 15,991,856
Interest bearing deposits:
NOW accounts . . . . . . . . . . . . . . . . . . . . . . . . 12,552,285 16,943,132
Money Market accounts . . . . . . . . . . . . . . . . . . . 1,893,000 1,653,698
Savings . . . . . . . . . . . . . . . . . . . . . . . . . . 8,514,812 8,944,038
Time deposits $100,000 or more . . . . . . . . . . . . . . . 2,765,217 2,368,332
Other time deposits . . . . . . . . . . . . . . . . . . . . 13,000,214 13,329,114
------------ ------------
Total deposits . . . . . . . . . . . . . . . . . . . . . 55,654,718 59,230,170
Accrued interest payable . . . . . . . . . . . . . . . . . . . . . 103,274 80,033
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . 526,797 12,414
------------ ------------
Total liabilities . . . . . . . . . . . . . . . . . . . . 56,284,789 59,322,617
------------ ------------
SHAREHOLDERS' EQUITY
Common stock, $5 par value; 10,000,000
shares authorized; 120,000 shares
issued and outstanding . . . . . . . . . . . . . . . . . . . . 600,000 600,000
Surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,150,000 2,150,000
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . 3,930,436 3,068,980
Available for sale, net of tax of $54,123
and $344, respectively . . . . . . . . . . . . . . . . . . . . 105,063 (667)
------------ ------------
Total shareholders' equity . . . . . . . . . . . . . . . . 6,785,499 5,818,313
------------ ------------
$ 63,070,288 $ 65,140,930
============ ============
-28-
30
AMERICAN BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1995 1994 1993
----------- ----------- -----------
Interest income:
Interest and fees on loans . . . . . . . . . . . . . $ 2,569,393 $ 2,315,178 $ 2,210,477
Interest on investment securities-
Taxable . . . . . . . . . . . . . . . . . . . . . 1,349,650 925,036 903,726
Tax-exempt . . . . . . . . . . . . . . . . . . . 32,560 1,013 4,493
Federal funds sold . . . . . . . . . . . . . . . . . 220,667 104,249 61,991
Deposits with banks . . . . . . . . . . . . . . . . 50,014 168,490 223,411
----------- ----------- -----------
Total interest income . . . . . . . . . . . . 4,222,284 3,513,966 3,404,098
Interest expense:
Interest on deposits . . . . . . . . . . . . . . . . 1,157,705 946,874 961,729
----------- ----------- -----------
Net interest income . . . . . . . . . . . . . . . . . . 3,064,579 2,567,092 2,442,369
Provision for possible loan losses . . . . . . . . . . - 12,000 36,000
----------- ----------- -----------
Net interest income after provision . . . . . . . . . .
for possible loan losses . . . . . . . . . . . . . . 3,064,579 2,555,092 2,406,369
----------- ----------- -----------
Non-interest income:
Service charges on deposit accounts . . . . . . . . 554,024 567,645 535,792
Other . . . . . . . . . . . . . . . . . . . . . . . 123,376 125,862 64,968
----------- ----------- -----------
Total non-interest income . . . . . . . . . . 677,400 693,507 600,760
----------- ----------- -----------
Non-interest expense:
Salary and employee benefits . . . . . . . . . . . . 1,166,288 1,150,031 1,134,756
Net occupancy expense . . . . . . . . . . . . . . . 314,064 306,142 332,921
Equipment expense . . . . . . . . . . . . . . . . . 237,132 219,430 215,797
Net cost (revenue) from other
real estate . . . . . . . . . . . . . . . . . . . (4,737) (2,268) (24,760)
Other . . . . . . . . . . . . . . . . . . . . . . . 615,983 669,212 609,468
----------- ----------- -----------
Total non-interest expense . . . . . . . . . . 2,328,730 2,342,547 2,268,182
----------- ----------- -----------
Income before income taxes . . . . . . . . . . . . . . 1,413,249 906,052 738,947
Provision for income taxes . . . . . . . . . . . . . . 449,793 (56,432) 14,444
----------- ----------- -----------
Net income . . . . . . . . . . . . . . . . . $ 963,456 $ 962,484 $ 724,503
=========== =========== ===========
Net income per common share . . . . . . . . . . . . . . $ 8.03 $ 8.02 $ 6.04
=========== =========== ===========
See Notes to Consolidated Financial Statements.
-29-
31
AMERICAN BANCORP, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
COMMON STOCK
SHARES AMOUNT SURPLUS
------- --------- ----------
Balance, December 31, 1992 . . . . . . . . 120,000 $ 600,000 $2,150,000
Net income for 1993 . . . . . . . . . . . . - - -
Dividends paid in 1993 . . . . . . . . . . - - -
------- --------- ----------
Balance, December 31, 1993 . . . . . . . . 120,000 600,000 2,150,000
Net income for 1994 . . . . . . . . . . . . - - -
Dividends paid in 1994 . . . . . . . . . . - - -
Net unrealized appreciation on
securities available for sale,
net of tax of $344 . . . . . . . . . . . - - -
------- --------- ----------
Balance, December 31, 1994 . . . . . . . . 120,000 600,000 2,150,000
Net income for 1995 . . . . . . . . . . . . - - -
Dividends paid in 1995 . . . . . . . . . . - - -
Net unrealized appreciation on
securities available for sale,
net of tax of $54,123 . . . . . . . . . - - -
------- --------- ----------
Balance, December 31, 1995 . . . . . . . . 120,000 $ 600,000 $2,150,000
======= ========= ==========
See Notes to Consolidated Financial Statements.
-30-
32
NET UNREALIZED
APPRECIATION
ON SECURITIES
AVAILABLE RETAINED
FOR SALE EARNINGS TOTAL
-------------- ------------ -----------
$ - $ 1,519,993 $ 4,269,993
- 724,503 724,503
- (60,000) (60,000)
----------- ------------ -----------
- 2,184,496 4,934,496
- 962,484 962,484
- (78,000) (78,000)
(667) - (667)
----------- ------------ -----------
(667) 3,068,980 5,818,313
- 963,456 963,456
- (102,000) (102,000)
105,730 - 105,730
----------- ------------ -----------
$ 105,063 $ 3,930,436 $ 6,785,499
=========== ============ ===========
-31-
33
AMERICAN BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1995 1994 1993
----------- ----------- -----------
OPERATING ACTIVITIES
Net income . . . . . . . . . . . . . . . . . . . $ 963,456 $ 962,484 $ 724,503
Adjustments to reconcile net income
to net cash provided by operating
activities:
Provision for loan losses . . . . . . . . . . - 12,000 36,000
Premium amortization, net of
discount accretion on investment
securities . . . . . . . . . . . . . . . . (9,863) (3,144) 14,945
Depreciation . . . . . . . . . . . . . . . . 177,106 174,281 175,435
(Gain) loss on sale of assets . . . . . . . . 2,943 (938) 29,317
(Increase) decrease in assets:
Accrued interest receivable . . . . . . . (121,824) (151,669) 142,812
Other assets . . . . . . . . . . . . . . . (134,918) 121,759 (48,805)
Increase (decrease) in liabilities:
Accrued interest payable . . . . . . . . . 23,241 17,978 (31,951)
Other liabilities . . . . . . . . . . . . 460,259 (60,951) 51,791
----------- ----------- -----------
Net cash provided by operating
activities . . . . . . . . . . . . . 1,360,400 1,071,800 1,094,047
----------- ----------- -----------
INVESTING ACTIVITIES
Proceeds from sales and maturities
of available for sale securities . . . . . . 384,850 985,660 -
Proceeds from sales and maturities
of held to maturity securities . . . . . . . 6,500,000 3,422,153 8,716,278
Purchase of available for sale
securities . . . . . . . . . . . . . . . . . (2,234,432) (500,000) -
Purchase of held to maturity
securities . . . . . . . . . . . . . . . . . (6,511,313) (10,479,766) (5,490,034)
(Increase) decrease in loans . . . . . . . . . . 662,774 (632,529) (1,169,601)
Purchases of property and equipment . . . . . . (237,411) (49,183) (356,683)
Proceeds from the sale of assets . . . . . . . . - - 70,110
----------- ----------- -----------
Net cash used in investing
activities . . . . . . . . . . . . . . (1,435,532) (7,253,665) 1,770,070
----------- ----------- -----------
See Notes to Consolidated Financial Statements.
-32-
34
1995 1994 1993
----------- ----------- -----------
FINANCING ACTIVITIES
Increase (decrease) in liabilities:
Demand deposits, transaction
accounts and savings . . . . . . . . . . . (3,643,438) 11,403,263 813,894
Time deposits . . . . . . . . . . . . . . . . 67,985 1,150,605 (3,134,260)
Dividends paid . . . . . . . . . . . . . . . . . (102,000) (78,000) (60,000)
----------- ----------- -----------
Net cash provided by (used in)
financing activities . . . . . . . . . (3,677,453) 12,475,868 (2,380,366)
----------- ----------- -----------
Increase (decrease) in cash and cash
equivalents . . . . . . . . . . . . . . . . . . (3,752,585) 6,294,003 483,751
Cash and cash equivalents at
beginning of year . . . . . . . . . . . . . . . 16,330,323 10,036,320 9,552,569
----------- ----------- -----------
Cash and cash equivalents at end
of year . . . . . . . . . . . . . . . . . . . . $12,577,738 $16,330,323 $10,036,320
=========== =========== ===========
SUPPLEMENTAL DISCLOSURES
Cash payments for:
Interest expense . . . . . . . . . . . . . . $ 1,134,464 $ 928,896 $ 993,680
=========== =========== ===========
Income taxes . . . . . . . . . . . . . . . . $ 8,003 $ 6,886 $ 14,444
=========== =========== ===========
-33-
35
AMERICAN BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Accounting Policies
American Bancorp, Inc. (the Corporation) and its subsidiary, American
Bank and Trust Company (the Bank), follow generally accepted
accounting principles and reporting practices applicable to the
banking industry. Descriptions of significant accounting policies
are summarized below:
Consolidation:
The consolidated financial statements include the accounts of the
respective parent Corporation and its subsidiary. All significant
intercompany accounts and transactions have been eliminated.
Use of estimates:
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the amounts reported in
the consolidated financial statements and accompanying notes.
Actual results could differ from those estimates.
Securities:
At January 1, 1994, the Bank adopted Statement of Financial
Accounting Standards (SFAS) No. 115, "Accounting for Certain
Investments in Debt and Equity Securities." SFAS No. 115 requires
the classification of securities into one of three categories:
trading, available for sale, or held to maturity.
Management determines the appropriate classification of debt
securities at the time of purchase and re- evaluates this
classification periodically. Trading account securities are held
for resale in anticipation of short-term market movements. Debt
securities are classified as held to maturity when the Bank has
the positive intent and ability to hold the securities to
maturity. Securities not classified as held to maturity or
trading are classified as available for sale.
Trading account securities are carried at market value and are
included in short-term investments. Gains and losses, both
realized and unrealized, are reflected in earnings. Held to
maturity securities are stated at amortized cost. Available for
sale securities are stated at fair value, with unrealized gains
and losses, net of tax, reported in a separate component of
shareholders' equity.
The amortized cost of debt securities classified as held to
maturity or available for sale is adjusted for amortization of
premiums and accretion of discounts to maturity or, in the case of
mortgage-backed securities, over the estimated life of the
security. Amortization, accretion and accruing interest are
included in interest income on securities. Realized gains and
losses, and declines in value judged to be other than temporary,
are included in net securities gains. The cost of securities sold
is determined on the specific identification method.
-34-
36
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Loans:
Loans that management has the intent and ability to hold for the
foreseeable future or until maturity or pay-off are reported at
their outstanding principal adjusted for any charge-offs, the
allowance for loan losses and unearned income. Interest on loans
and accretion of unearned income are computed by methods which
approximate a level rate of return on recorded principal.
Loan fees and costs associated with originating loans are
recognized in the period in which they originate as the amounts
involved are immaterial to the basic financial statements. The
Company has adopted the policy of deferring all material loan fees
and costs associated with originating loans as required by
Statement of Financial Accounting Standards No. 91.
Commercial loans are placed in nonaccrual status when, in
management's opinion, there is doubt concerning full
collectibility of both principal and interest. All commercial
nonaccrual loans are considered to be impaired in accordance with
SFAS No. 114, "Accounting by Creditors for Impairment of a Loan."
Consumer loans are generally charged off when any payment of
principal or interest is more than 120 days delinquent. Interest
payments received on nonaccrual loans are applied to principal if
there is doubt as to the collectibility of the principal;
otherwise, these receipts are recorded as interest income. A loan
remains in nonaccrual status until it is current as to principal
and interest, and the borrower demonstrates its ability to fulfill
the contractual obligation.
Allowance for possible loan losses:
The allowance for possible loan losses is maintained to provide
for possible losses inherent in the loan portfolio. On January 1,
1995, the Company adopted SFAS No. 114, as amended by SFAS No.
118, "Accounting for Creditors for Impairment of a Loan - Income
Recognition and Disclosures." In accordance with SFAS No. 114,
the 1995 allowance for possible loan losses related to loans that
are identified as impaired is based on discounted cash flows using
the loan's initial effective interest rate or the fair value of
the collateral for certain collateral dependent loans. Prior to
1995, the allowance for possible loan losses related to these
loans was based on undiscounted cash flows or the fair value of
the collateral for collateral dependent loans.
The allowance is based on management's estimate of future losses;
actual losses may vary from the current estimate. The estimate is
reviewed periodically, taking into consideration the risk
characteristics of the loan portfolio, past loss experience,
general economic conditions and other factors which deserve
current recognition. As adjustments to the estimate of future
losses become necessary, they are reflected as a provision
(positive or negative) for possible loan losses in current-period
earnings. However, because factors such as loan growth, the
future collectibility of loans and the amounts and timing of
future cash flows expected to be received on impaired loans are
uncertain, the level of future provisions (positive or negative),
if any, generally cannot be predicted. Actual loan losses are
deducted from and subsequent recoveries are added to the reserve.
-35-
37
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Bank premises and equipment:
Bank premises and equipment are stated at cost less accumulated
depreciation. Depreciation is computed primarily by the
straight-line method. Useful lives utilized for purposes of
computing depreciation are as follows: buildings, 10 to 30 years;
furniture and equipment, 3 to 10 years. Maintenance, repairs and
minor improvements are charged to operating expenses. Gains or
losses on dispositions are reflected currently in the Statement of
Income.
Other real estate:
Other real estate owned includes real estate and other collateral
acquired upon the default of loans or loans classified as
in-substance foreclosures. Other real estate is recorded at the
fair value of the assets acquired less estimated selling costs.
Losses arising from the initial reduction of the outstanding loan
amount to fair value are deducted from the allowance for possible
loan losses. A valuation reserve for other real estate is
maintained for subsequent valuation adjustments on a specific
property basis. Income and expenses associated with other real
estate prior to sale are included in current earnings.
In accordance with SFAS No. 114, a loan is classified as
in-substance foreclosure when the Company has taken possession of
the collateral regardless of whether formal foreclosure
proceedings take place. There were no in-substance foreclosures
for the years ended December 31, 1995 or 1994.
The net revenue from other real estate includes net revenue from
operation of other real estate of $5,230, $3,330 and $9,069 as of
December 31, 1995, 1994 and 1993, respectively.
Income taxes:
The Company files a consolidated federal income tax return with
the subsidiary Bank. The Company accounts for income taxes using
the liability method. Temporary differences occur between the
financial reporting and tax bases of assets and liabilities.
Deferred tax assets and liabilities are recorded for these
differences based on enacted tax rates and laws that will be in
effect when the differences are expected to reverse.
-36-
38
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Cash and cash equivalents:
Cash and cash equivalents include cash and due from banks, federal
funds sold and interest bearing deposits in banks.
Recent pronouncements:
In March 1995, the Financial Accounting Standards Board (FASB)
issued SFAS No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed of." This
statement requires impairment losses to be recorded on long-lived
assets used in operations when indicators of impairment are
present and the undiscounted cash flows estimated to be generated
by those assets are less than the assets' carrying amount. SFAS
No. 121 also addressed the accounting for long-lived assets that
are expected to be disposed of. SFAS No. 121 is effective for
fiscal years beginning after December 15, 1995. The adoption of
this statement will not have a material impact on the Company's
consolidated financial statements.
The FASB has also issued SFAS No. 122, "Accounting for Mortgage
Servicing Rights and Excess Servicing Receivables and for
Securitization of Mortgages Loans." The new statement amends
Statement No. 65, "Accounting for Certain Mortgage Banking
Activities," and primarily eliminates the distinction between
purchased mortgage servicing rights and mortgage servicing rights
on loans originated by the financial institution. SFAS No. 122 is
effective for fiscal years beginning after December 15, 1995. The
adoption of this statement will not have a material impact on the
Company's consolidated financial statements.
In October 1995, the FASB issued SFAS No. 123, "Accounting for
Stock-Based Compensation." This statement establishes financial
accounting and reporting standards for stock-based employee
compensation plans and is effective for fiscal years beginning
after December 31, 1995. The adoption of this statement will not
have a material impact on the Company's consolidated financial
statements.
Reclassifications:
Certain amounts in the 1994 and 1993 financial statements have
been reclassified to conform with the financial statement
presentation for 1995 for comparability. These reclassifications
had no effect on net income as previously reported for the 1994
and 1993 fiscal years.
Note 2. Restrictions on Cash and Due From Bank Accounts
The Bank is required to maintain average reserve balances by the
Federal Reserve Bank. The average amount of these reserve balances
was $484,000 and $471,000 for the years ended December 31, 1995 and
1994, respectively.
-37-
39
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 3. Investment Securities
The carrying amounts of investment securities as shown in the
consolidated balance sheets of the Bank and their approximate market
values at December 31 were as follows:
DECEMBER 31, 1995
----------------------------------------------------------------
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
------------ ------------ ------------ ------------
Securities held to maturity:
U.S. Treasury Securities . . . . . $ 5,507,763 $ 57,641 $ 2,841 $ 5,562,563
U.S. Government and Agencies . . . 10,997,236 86,368 26,790 11,056,814
------------ ------------ ------------ ------------
$ 16,504,999 $ 144,009 $ 29,631 $ 16,619,377
============ ============ ============ ============
Securities available for sale:
Mortgage-Backed Securities . . . . $ 2,247,622 $ 100,366 $ 6,300 $ 2,341,688
U.S. Government and Agencies . . . 1,500,000 35,834 - 1,535,834
State and Political Subdivisions . 1,233,733 29,286 - 1,263,019
------------ ------------ ------------ ------------
$ 4,981,355 $ 165,486 $ 6,300 $ 5,140,541
============ ============ ============ ============
DECEMBER 31, 1994
----------------------------------------------------------------
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
------------ ------------ ------------ ------------
Securities held to maturity:
U.S. Treasury Securities . . . . . $ 5,499,016 $ 6 $ 85,429 $ 5,413,593
U.S. Government and Agencies . . . 10,980,428 14,347 368,184 10,626,591
------------ ------------ ------------ ------------
$ 16,479,444 $ 14,353 $ 453,613 $ 16,040,184
============ ============ ============ ============
Securities available for sale:
Mortgage-Backed Securities . . . . $ 2,635,050 $ 22,386 $ 20,428 $ 2,637,008
U.S. Government and Agencies. . . 500,000 - 2,969 497,031
------------ ------------ ------------ ------------
$ 3,135,050 $ 22,386 $ 23,397 $ 3,134,039
============ ============ ============ ============
-38-
40
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Securities with book values of $11,938,802 and $11,011,732 at December
31, 1995 and 1994, respectively, were pledged to secure public
deposits and other transactions as required by law.
There were no gross-realized gains or gross-realized losses on sales
of securities for the fiscal years ended December 31, 1995, 1994 or
1993.
The maturities of investment securities at December 31, 1995 were as
follows:
SECURITIES TO BE HELD
TO MATURITY
-------------------------------
AMORTIZED FAIR
YEARS TO MATURITY COST VALUE
------------ ------------
Less than one . . . . . . . . . . . . . . . . . . . . . . . . . $ 8,501,356 $ 4,996,619
Greater than one but less than five . . . . . . . . . . . . . . 7,503,643 10,593,803
Greater than five but less than ten . . . . . . . . . . . . . . 500,000 1,022,656
Greater than ten . . . . . . . . . . . . . . . . . . . . . . . . - -
------------ ------------
$ 16,504,999 $ 16,613,078
============ ============
SECURITIES AVAILABLE
FOR SALE
--------------------------------
AMORTIZED FAIR
YEARS TO MATURITY COST VALUE
------------- ------------
Less than one . . . . . . . . . . . . . . . . . . . . . . . . . $ 173,932 $ 183,290
Greater than one but less than five . . . . . . . . . . . . . . 2,943,887 3,028,163
Greater than five but less than ten . . . . . . . . . . . . . . 1,863,536 1,929,088
Greater than ten . . . . . . . . . . . . . . . . . . . . . . . . - -
------------- ------------
$ 4,981,355 $ 5,140,541
============= ============
-39-
41
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 4. Loans
Major classifications of subsidiary bank's loan portfolio at
December 31, are as follows:
1995 1994 1993
----------- ----------- -----------
Commercial, financial and
agricultural . . . . . . . . . . . . . . $ 6,239,611 $ 6,542,510 $ 5,306,258
Real estate construction . . . . . . . . . 119,530 325,136 212,272
Real estate mortgage . . . . . . . . . . . 16,472,824 16,119,511 17,888,614
Installment . . . . . . . . . . . . . . . . 4,182,430 4,681,454 3,636,650
----------- ----------- -----------
27,014,395 27,668,611 27,043,794
Unearned income . . . . . . . . . . . . . . (45) (1,299) (5,668)
----------- ----------- -----------
Net loans . . . . . . . . . . . . . . . 27,014,350 27,667,312 27,038,126
Allowance for possible loan
losses . . . . . . . . . . . . . . . . . (624,122) (614,310) (605,653)
----------- ----------- -----------
$26,390,228 $27,053,002 $26,432,473
=========== =========== ===========
The following is a summary of loans classified by type at December
31, 1995:
Commercial, financial and
agricultural . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,239,611
Real estate construction . . . . . . . . . . . . . . . . . . . . . . . . . 119,530
Real estate mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,505,836
-----------
Total commercial . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,864,977
-----------
Residential mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,966,988
Installment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,182,430
-----------
11,149,418
Less unearned income . . . . . . . . . . . . . . . . . . . . . . . . . . . (45)
-----------
Total consumer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,149,373
-----------
Total loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $27,014,350
===========
-40-
42
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following summarizes the non-performing elements of the loan portfolio and
total foreclosed assets at December 31:
1995 1994 1993
----------- ----------- -----------
Nonperforming loans:
Loans on nonaccrual . . . . . . . . . . . . . . . $ 114,059 $ 3,722 $ 9,104
Loans contractually past
due 90 days or more as
to principal or interest,
but which are not on
nonaccrual . . . . . . . . . . . . . . . . . . 9,504 9,377 180,451
Restructured loans which
are not on nonaccrual . . . . . . . . . . . . - 132,690 153,415
----------- ----------- -----------
123,563 145,789 342,970
Other real estate and
repossessed assets received
in complete or partial
satisfaction of loan
obligations . . . . . . . . . . . . . . . . . . . 13,800 16,743 146,305
----------- ----------- -----------
Total nonperforming assets . . . . . . . . . . . $ 137,363 $ 162,532 $ 489,275
=========== =========== ===========
As discussed in Note 1, the Company adopted SFAS No. 114 effective January 1,
1995. The adoption of SFAS No. 114 did not have a material impact on the
financial condition or operating results of the Company. At December 31, 1995,
the recorded investment in loans that were considered to be impaired under SFAS
No. 114 was $114,059. Included in this amount was $83,884 of impaired loans
for which the related allowance for loan losses was $5,901 and $30,175 of
impaired loans that do not have an allowance for loan losses. The average
recorded investment in impaired loans during the year ended December 31, 1995
was approximately $125,000. Interest payments received on impaired loans are
applied to principal if there is doubt as to the collectibility of the
principal; otherwise, these receipts are recorded as interest income. For the
year ended December 31, 1995, the Company recognized interest income on
impaired loans of $7,638.
As it relates to in-substance foreclosures, SFAS No. 114 requires that a
creditor continue to follow loan classification on the balance sheet unless the
creditor receives physical possession of the collateral. The Company has had
no in- substance foreclosures for any of the periods presented.
Interest income in the amount of $13,732 for 1995, $13,846 for 1994 and $19,747
for 1993 would have been recorded on nonperforming loans if they had been
classified as performing. The Company recorded $7,638, $6,707 and $7,558 of
interest income on nonperforming loans during 1995, 1994 and 1993,
respectively.
-41-
43
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following is a summary of the allowance for loan losses for the
three years ended December 31, 1995:
1995 1994 1993
----------- ----------- -----------
Balance, beginning of year . . . . . . . . . . $ 614,310 $ 605,653 $ 575,892
Provisions charged to operating
expense . . . . . . . . . . . . . . . . . . - 12,000 36,000
Recoveries on loans . . . . . . . . . . . . . 15,382 11,177 3,691
Loans charged off . . . . . . . . . . . . . . (5,570) (14,520) (9,930)
----------- ----------- -----------
Balance, end of year . . . . . . . . . . . . . $ 624,122 $ 614,310 $ 605,653
=========== =========== ===========
Note 5. Related Party Transactions
In the ordinary course of business, loans have been made to
directors and executive officers and their associates. Such loans
to these related parties were made on substantially the same terms,
including interest rates and collateral, as those prevailing at the
time for comparable transactions with other persons. Loans to these
related parties were approximately $1,169,728 and $1,113,642 at
December 31, 1995 and 1994, respectively. The following provides an
analysis of the activity with respect to loans to related parties:
Balance at January 1, 1995 . . . . . . . . . . $ 1,113,642
New loans made . . . . . . . . . . . . . . . . 1,836,503
Repayment on loans . . . . . . . . . . . . . . (1,780,417)
-----------
Balance at December 31, 1995 . . . . . . . . . $ 1,169,728
===========
Note 6. Bank Premises and Equipment
Bank premises and equipment, at cost, consisted of the following as
of December 31:
1995 1994 1993
----------- ----------- -----------
Land . . . . . . . . . . . . . . . . . . . . . $ 384,387 $ 384,387 $ 384,387
Premises and leasehold
improvements . . . . . . . . . . . . . . . 1,781,317 1,779,258 2,268,894
Furniture and equipment . . . . . . . . . . . 1,151,645 1,077,041 881,248
----------- ----------- -----------
3,317,349 3,240,686 3,534,529
Less accumulated depreciation
and amortization . . . . . . . . . . . . . 1,881,903 1,865,546 2,034,291
----------- ----------- -----------
Total . . . . . . . . . . . . . . . . . . $ 1,435,446 $ 1,375,140 $ 1,500,238
=========== =========== ===========
Depreciation and amortization expense included in non-interest
expense was $177,106 in 1995, $174,281 in 1994, and $175,435 in
1993.
-42-
44
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 7. Concentrations of Credit Risk
All of the Bank's loans, commitments and standby letters of credit
have been granted to customers in the Bank's market area of South
Louisiana. Investments in state and municipal securities also
involve governmental entities within the Bank's market area. The
concentrations of credit by type of loan are set forth in Note 4.
The distribution of commitments to extend credit approximates the
distribution of loans outstanding. Standby letters of credit were
granted primarily to commercial borrowers. The Bank, as a matter of
policy, does not extend credit to any single borrower or group of
related borrowers in excess of $1,375,000.
At December 31, 1995, the Bank has loans outstanding to multiple
numbers of borrowers engaged in the medical industry and the legal
profession. The loans to the medical industry totaled $4,478,739,
while the loans to the legal profession were $3,103,320. There were
no significant nonperforming loans outstanding in these two
concentrations.
Note 8. Earnings Per Share
The earnings per share computation are based on 120,000 weighted
average number of shares outstanding during each year.
Note 9. Employee Benefit Plan
The Bank maintains a 401(k) Savings Plan available to employees with
over one year of service. The Bank matches 50% of the salary
deferral, up to a maximum of 2% of compensation, which becomes vested
after five years of service. Total contributions to the plan by the
Bank were $11,201 for 1995 and $11,187 for 1994. The Bank entered
into a non-qualified deferred compensation plan for certain
executives of the Company in 1995. The total deferred compensation
expense for 1995 was $3,147.
-43-
45
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 10. Income Taxes
The Company adopted SFAS No. 109 effective January 1, 1992. As
permitted by SFAS No. 109, prior year financial statements were
not restated. Income tax expense includes amounts currently
payable and amounts deferred to or from other years as a result of
differences in the timing of recognition of income and expense for
financial reporting and deferral tax purposes. The components of
income tax expense are as follows:
1995 1994 1993
----------- ------------ -----------
Current federal income tax
expense . . . . . . . . . . . . . . . . $ 429,877 $ - $ 14,444
Deferred federal income tax
expense (benefit) . . . . . . . . . . . 19,916 (56,432) -
----------- ------------ -----------
$ 449,793 $ (56,432) $ 14,444
=========== ============ ===========
The reconciliation of the federal statutory income tax rate to the
Company's effective rate is summarized as follows for the years
ended December 31:
1995 1994 1993
-------------------- -------------------- --------------------
AMOUNT RATE AMOUNT RATE AMOUNT RATE
-------- ----- --------- ------- --------- ------
Tax based on
federal
statutory rate . . . . $480,505 34.0% $ 308,058 34.0% $ 251,242 34.0%
Effect of tax-
exempt income . . . . (81,919) (5.8) (19,055) (2.1) (22,165) (3.0)
Other . . . . . . . . . . 51,207 3.6 (67,922) (7.5) 61,316 8.3
Net operating
loss utilized . . . . - - (277,513) (30.6) (275,949) (37.3)
-------- ----- --------- ------- --------- ------
$449,793 31.8% $ (56,432) (6.2)% $ 14,444 2.0%
======== ===== ========= ======= ========= ======
-44-
46
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Deferred tax assets and liabilities included in other assets or
other liabilities at December 31 consist of the following:
1995 1994
----------- -----------
Deferred tax assets:
Allowance for loan losses . . . . . . . . . . . . . . . $ 14,022 $ 14,022
Foreclosed assets . . . . . . . . . . . . . . . . . . . 32,640 62,909
Other . . . . . . . . . . . . . . . . . . . . . . . . . 4,069 6,585
Investment tax credit carryforward . . . . . . . . . . . 61,938 61,938
----------- -----------
Total deferred tax assets . . . . . . . . . . . . . . 112,669 145,454
----------- -----------
Deferred tax liabilities:
Net unrealized appreciation
on available for sale securities . . . . . . . . . . 54,123 344
Accumulated depreciation . . . . . . . . . . . . . . . . 14,215 27,084
----------- -----------
Total deferred tax liabilities . . . . . . . . . . . 68,338 27,428
----------- -----------
Deferred tax assets, net of deferred
tax liabilities . . . . . . . . . . . . . . . . . . . . 44,331 118,026
Deferred tax valuation reserve . . . . . . . . . . . . . . (61,938) (61,938)
----------- -----------
Total net deferred tax asset (liability) . . . . . . $ (17,607) $ 56,088
=========== ===========
Management estimates realizability of the net deferred tax asset
based on the Company's ability to generate taxable income in the
future. A deferred tax valuation reserve is established, if
needed, to limit the net deferred tax asset to its realizable
value. Investment tax credits are available for carryforward in
the amount of $61,938 and expire throughout the years 1995 through
2000.
Note 11. Lease Commitments
The Corporation leases land, buildings, and equipment under
cancelable and noncancelable leases. The leased properties are
used primarily for banking purposes.
Future minimum payments, by year and in the aggregate, for
noncancelable operating leases with initial or remaining terms of
one year or more consisted of the following at December 31, 1995:
YEAR ENDING AMOUNT
----------- -----------
1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 58,538
1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . 48,038
1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,588
1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,734
-----------
Total future minimum lease payments . . . . . . . . . . . . $ 137,898
===========
-45-
47
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
All leases contain options to extend the lease term upon expiration
and will probably be exercised.
The total rental expense on operating leases for the years ended
December 31, 1995, 1994, and 1993, amount to $58,538, $54,756 and
$56,956, respectively.
Two of the bank's branch offices are leased from corporations in
which some of the lessors' shareholders are directors of the bank.
Note 12. Other Operating Expenses
The composition of other operating expenses for each of the three
years for the period ended December 31 are as follows:
1995 1994 1993
---------- ---------- ----------
FDIC and Louisiana assessments . . . . . . $ 71,669 $ 115,652 $ 115,621
Office supplies . . . . . . . . . . . . . 68,812 64,456 58,494
Postage . . . . . . . . . . . . . . . . . 57,043 51,493 51,572
Other insurance . . . . . . . . . . . . . 31,638 45,481 54,952
ATM expenses . . . . . . . . . . . . . . . 28,466 45,246 39,839
Director fees . . . . . . . . . . . . . . 61,100 49,200 40,250
Legal services . . . . . . . . . . . . . . 9,977 12,632 13,928
Other . . . . . . . . . . . . . . . . . . 287,278 285,052 234,812
---------- ---------- ----------
$ 615,983 $ 669,212 $ 609,468
========== ========== ==========
-46-
48
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 13. American Bancorp, Inc. (Parent Company Only)
The following financial statements of American Bancorp, Inc.
(Parent Company Only) include the Bank under the equity method of
accounting.
BALANCE SHEETS
DECEMBER 31,
------------------------------
1995 1994
----------- -----------
ASSETS
Cash on deposit with subsidiary . . . . . . . . . . . . . $ 1,533 $ 4,117
Investment in subsidiary . . . . . . . . . . . . . . . . 6,776,482 5,692,014
Due from American Bank . . . . . . . . . . . . . . . . . 427,962 122,182
----------- -----------
Total assets . . . . . . . . . . . . . . . . . . . . . $ 7,205,977 $ 5,818,313
=========== ===========
LIABILITIES
Accrued income taxes payable . . . . . . . . . . . . . . $ 420,477 $ -0-
----------- -----------
Total liabilities . . . . . . . . . . . . . . . . . . . 420,477 -0-
----------- -----------
SHAREHOLDERS' EQUITY
Common stock: $5 par value, 10,000,000
shares authorized; 120,000 shares
issued and outstanding . . . . . . . . . . . . . . . . 600,000 600,000
Surplus . . . . . . . . . . . . . . . . . . . . . . . . . 2,150,000 2,150,000
Retained earnings . . . . . . . . . . . . . . . . . . . . 3,930,437 3,068,980
Net unrealized loss on securities
available for sale, net of tax of $54,123
and $344, respectively . . . . . . . . . . . . . . . . 105,063 (667)
----------- -----------
Total shareholders' equity . . . . . . . . . . . . 6,785,500 5,818,313
----------- -----------
Total liabilities and shareholders' equity . . . . $ 7,205,977 $ 5,818,313
=========== ===========
-47-
49
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
American Bancorp, Inc. (Parent Company Only)
STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31,
------------------------------------------
1995 1994 1993
---------- ---------- -----------
Income:
Dividends from bank subsidiary . . . . . . . . . . . . . . . $ - $ - $ 62,500
Other income . . . . . . . . . . . . . . . . . . . . . . . . - - -
---------- ---------- -----------
-0- -0- 62,500
---------- ---------- -----------
Expenses:
Interest on note payable . . . . . . . . . . . . . . . . . . - - -
Other expenses . . . . . . . . . . . . . . . . . . . . . . . 5,880 814 1,565
---------- ---------- -----------
5,880 814 1,565
---------- ---------- -----------
Earnings before income taxes
and equity in undistributed
earnings of subsidiary . . . . . . . . . . . . . . . . . . . (5,880) (814) 60,935
Provision for income taxes . . . . . . . . . . . . . . . . . . (9,400) (200,182) -
---------- ---------- -----------
Earnings before equity in
undistributed earnings of
subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . (15,280) 199,368 60,935
Equity in undistributed
earnings of subsidiary . . . . . . . . . . . . . . . . . . . 978,737 763,116 663,568
---------- ---------- -----------
Net income . . . . . . . . . . . . . . . . . . . . . . . $ 963,457 $ 962,484 $ 724,503
========== ========== ===========
-48-
50
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
American Bancorp, Inc. (Parent Company Only)
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31,
-----------------------------------------
1995 1994 1993
---------- ---------- ----------
OPERATING ACTIVITIES
Net income . . . . . . . . . . . . . . . . . $ 963,457 $ 962,484 $ 724,503
Adjustments to reconcile net
income to net cash provided
by operating activities:
Equity in undistributed
earnings of subsidiary . . . . . . . (978,737) (763,116) (663,568)
Increase in income taxes payable . . . 420,477 - -
Increase in other assets . . . . . . . (305,781) (122,182) -
---------- ---------- ----------
Net cash provided by
operating activities . . . . . . 99,416 77,186 60,935
---------- ---------- ----------
FINANCING ACTIVITIES
Dividends paid to shareholders . . . . . . . (102,000) (78,000) (60,000)
---------- ---------- ----------
Net cash provided by
financing activities . . . . . . (102,000) (78,000) (60,000)
---------- ---------- ----------
Increase (decrease) in cash
and cash equivalents . . . . . . (2,584) (814) 935
Cash and cash equivalents at
beginning of year . . . . . . . . . . . . . . 4,117 4,931 3,996
---------- ---------- ----------
Cash and cash equivalents at
end of year . . . . . . . . . . . . . . . . . $ 1,533 $ 4,117 $ 4,931
========== ========== ==========
Note 14. Financial Instruments
Generally accepted accounting principles require disclosure of
fair value information about financial instruments for which it is
practicable to estimate fair value, whether or not the financial
instruments are recognized in the financial statements. When
quoted market prices are not available, fair values are based on
estimates using present value or other valuation techniques.
Those techniques are significantly affected by the assumptions
used, including the discount rate and estimates of future cash
flows. The derived fair value estimates cannot be substantiated
through comparison to independent markets and, in many cases,
could not be realized in immediate settlement of the instrument.
Certain financial instruments and all non-financial instruments
are excluded from these disclosure requirements.
-49-
51
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Further, the disclosures do not include estimated fair values for
items which are not financial instruments but which represent
significant value to the Bank, among them, core deposit
intangibles, loan servicing rights and other fee-generating
businesses. Accordingly, the aggregate fair value amounts
presented do not represent the underlying value of the Company.
The carrying amount of cash and short-term investments and demand
deposits approximates the estimated fair value of these financial
instruments. The estimated fair value of securities is based on
quoted market prices, dealer quotes and prices obtained from
independent pricing services. The estimated fair value of loans
and interest bearing deposits is based on present values using
applicable risk-adjusted spreads to the appropriate yield curve to
approximate current interest rates applicable to each category of
these financial instruments.
Interest rates were not adjusted for changes in credit risk of
performing commercial loans for which there are no known credit
concerns. Management segregates loans into appropriate risk
categories and believes the risk factor embedded in the interest
rates results in a fair valuation of these loans on an entry-value
basis.
Variances between the carrying amount and the estimated fair value
of loans reflect both credit risk and interest rate risk. The
Bank is protected against changes in credit risk by the allowance
for possible loan losses of $624,122.
The fair value estimates presented are based on information
available to management as of December 31, 1995. Although
management is not aware of any factors that would significantly
affect the estimated fair value amounts, these amounts have not
been revalued for purposes of these financial statements since
that date. Therefore, current estimates of fair value may differ
significantly from the amounts presented. None of the assets or
liabilities included in the table below are held for trading
purposes.
The Bank issues financial instruments in the normal course of
business to meet the financing needs of its customers and to
reduce exposure to fluctuations in interest rates. These
financial instruments include commitments to extend credit and
letters of credit and involve, to varying degrees, elements of
credit and interest rate risk in excess of the amount recognized
on the balance sheet.
-50-
52
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CARRYING FAIR
AMOUNT VALUE
----------- -----------
ASSETS
Cash and short-term investments . . . . . . . . . . . $12,577,738 $12,577,738
Securities held to maturity . . . . . . . . . . . . . $16,504,999 $16,613,078
Securities available for sale . . . . . . . . . . . . $ 5,140,541 $ 5,140,541
Commercial loans . . . . . . . . . . . . . . . . . . $15,864,977 $15,860,928
Consumer loans . . . . . . . . . . . . . . . . . . . $11,149,373 $11,193,917
LIABILITIES
Demand deposits . . . . . . . . . . . . . . . . . . . $16,929,190 $16,929,190
NOW accounts . . . . . . . . . . . . . . . . . . . . $12,552,285 $12,928,854
Money market accounts . . . . . . . . . . . . . . . . $ 1,893,000 $ 1,902,465
Savings . . . . . . . . . . . . . . . . . . . . . . . $ 8,514,812 $ 8,940,552
Time Deposits . . . . . . . . . . . . . . . . . . . . $15,765,431 $15,734,675
Commitments to extend credit are legally binding, conditional
agreements generally having fixed expiration or termination dates
and specified interest rates and purposes. These commitments
generally require customers to maintain certain credit standards.
Collateral requirements and long-to-value ratios are the same as
those for funded transactions and are established based on
management's credit assessment of the customer. Commitments may
expire without being drawn upon. Therefore, the total commitment
amount does not necessarily represent future funding requirements.
The Bank's experience has been that most loan commitments are
drawn upon by customers.
The Bank issues letters of credit and financial guarantees
(standby letters of credit) whereby it agrees to honor certain
financial commitments in the event its customers are unable to
perform. The majority of the standby letters of credit consist of
performance guarantees. Management conducts regular reviews of
all outstanding standby letters of credit, and the results of
these reviews are considered in assessing the adequacy of the
Bank's reserve for possible loan losses. The Bank has not
incurred any losses in its commitments in 1995 or 1994.
Management does not anticipate any material losses related to
these instruments.
A summary of the notional amounts of the Bank's financial
instruments with off-balance-sheet risk at December 31, 1995
follows:
NOTIONAL FAIR
AMOUNT VALUE
---------- ----------
Commitments to extend credit . . . . . . . . . . . . . . . $3,657,383 $ (117,036)
Credit card arrangements . . . . . . . . . . . . . . . . . $1,010,652 $ (45,479)
Standby letters of credit . . . . . . . . . . . . . . . . $ 38,277 $ (1,500)
-51-
53
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 15. Regulatory Matters
The Bank is subject to the dividend restrictions set forth by the
Louisiana Commissioner of Financial Institutions. Under such
restrictions, the Bank may not, without the prior approval of the
Commissioner of Financial Institutions, declare dividends in
excess of the sum of the current year and prior year earnings less
dividends paid during these periods. The dividends as of December
31, 1995, that the Bank could declare without the approval of the
Commissioner of Financial Institutions, amounted to $1,839,221.
The Bank is also required to maintain minimum amounts of capital
to total "risk weighted" assets, as defined by the banking
regulators. At December 31, 1995, the Bank is required to have
minimum Tier 1 and Total capital ratios of 4% and 8%,
respectively. The Bank's actual ratios at that date were 21.9%
and 23.2%, respectively. The Bank's leverage ratio were 11.36%
and 10.38% as of December 31, 1995 and 1994, respectively.
Under Section 18J of the Federal Deposit Insurance Act, which is
subject to Section 23A of the Federal Reserve Act, the Bank cannot
make loans, extensions of credit, repurchase agreements,
investments, and advances, which exceed 10 percent of its capital
stock and surplus, to an affiliate. Under these regulations, the
Bank has $275,000 of net assets which can be loaned or advanced to
any affiliate.
Note 16. Contingencies
In the ordinary course of business, the Bank has various
outstanding commitments and contingent liabilities that are not
reflected in the accompanying consolidated financial statements.
In addition, the Bank is a defendant in certain claims and legal
actions arising in the ordinary course of business. In the
opinion of management, after consultation with legal counsel, the
ultimate disposition of these matters is not expected to have a
material adverse effect on the consolidated financial condition of
the Bank.
-52-
54
OFFICERS AND DIRECTORS OF
AMERICAN BANK AND TRUST COMPANY
CHAIRMAN OF THE BOARD AND PRESIDENT
Salvador L. Diesi, Sr.
CHIEF EXECUTIVE OFFICER AND EXECUTIVE VICE-PRESIDENT
Ronald J. Lashute
SENIOR VICE-PRESIDENT
Walter J. Champagne, Jr.
VICE-PRESIDENTS
Charlene Louviere Joan T. Muller, Chief
Angel Powell Financial Officer,
Peter Strawitz, III Cashier
ASSISTANT VICE-PRESIDENTS
David Gremillion Dawn D. Stolzenthaler
ASSISTANT CASHIERS
Cindy Andrus Sally Hooks
Elaine D. Ardoin Cindy Melancon
Audrey Cormier Bonnie Pavy
Bernadine Hargroder Audrey Thibodeaux
DIRECTORS
Joseph J. Artall Salvador L. Diesi, Sr.
Walter J. Champagne, Jr. Alvin Haynes II
Attaway Darbonne Charles Jagneaux
J.C. Diesi Sylvia Sibille
OFFICES LOCATED IN
OPELOUSAS KROTZ SPRINGS
LAFAYETTE PORT BARRE
LAWTELL
-53-
55
OFFICERS AND DIRECTORS OF
AMERICAN BANCORP, INC.
CHAIRMAN OF THE BOARD AND PRESIDENT
Salvador L. Diesi, Sr.
SECRETARY/TREASURER
Ronald J. Lashute
BOARD OF DIRECTORS OCCUPATION AND MAIN AFFILIATION
Joseph J. Artall Farmer.
Walter J. Champagne, Jr. General Merchandising and Agriculture
Walter J. Champagne Company.
J.C. Diesi Automobile Dealer; Diesi
Pontiac-Cadillac-Buick, Inc.
Salvador L. Diesi, Sr. Chairman of the Board and President,
American Bancorp, Inc. and American
Bank & Trust Company; Wholesale Beer
Distributor, Premium Brands, Inc.;
Gas Station, Convenience Store, and
Video Poker; Little Capitol of
Louisiana, Inc.; Commercial real
estate, farming interest; and
Attorney at Law.
Ronald J. Lashute Chief Executive Officer of American
Bank & Trust Company and
Secretary/Treasurer of American Bancorp, Inc.
-54-