1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended June 30, 1998
Commission File Number 0-11928
AMERICAN BANCORP, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
LOUISIANA 72-0951347
- ------------------------------- -----------------------------
(State or other jurisdiction of (I R S Employer I. D. Number)
incorporation or organization)
328 EAST LANDRY STREET, OPELOUSAS, LA 70571-1579
- --------------------------------------- ----------
(Address of principal executive office) (Zip Code)
(318) 948-3056
----------------------------------------------------
(Registrant's telephone number, including area code)
NOT APPLICABLE
-----------------------------------------------------------------
(Former name, address, fiscal year, if changed since last report)
Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter periods that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days. YES X NO
----- -----
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date.
Common stock, $5 Par Value-------118,507 shares as of July 27, 1998
2
AMERICAN BANCORP, INC.
(PARENT COMPANY ONLY)
BALANCE SHEET
June 30, 1998 and 1997
(In Thousands)
ASSETS 1998 1997
- ------ ------- ------
Cash on deposit with subsidiary 39 4
Investment in Subsidiary 8,921 8,138
Dividend Receivable 0 0
Due From Subsidiary 55 32
------- ------
TOTAL ASSETS $ 9,015 $8,174
======= ======
LIABILITIES
Federal Income Taxes Payable 49 26
Other Liabilities 0 0
------- ------
TOTAL LIABILITIES $ 49 $ 26
------- ------
SHAREHOLDERS' EQUITY
Net Unrealized Gain (Loss) on Securities
Available for Sale , net of tax 107 65
Common Stock, $5 par value; authorized
10,000,000 shares; issued 120,000 shares; 600 600
118,807 and 120,000 shares outstanding,
respectively
Surplus 2,150 2,150
Retained Earnings 6,173 5,333
Treasury stock, 1,193 shares at cost (64) 0
------- ------
TOTAL SHAREHOLDERS' EQUITY 8,966 8,148
------- ------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $ 9,015 $8,174
======= ======
3
AMERICAN BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
June 30, 1998 and 1997
(In Thousands)
1998 1997
ASSETS -------- -------
Cash and Due From Banks 4,401 4,656
Interest Bearing Deposits 1,190 694
Securities Held to Maturity 8,502 15,713
Securities Available for Sale 21,087 11,639
Federal Funds Sold 975 2,600
Loans - Net of allowance for loan losses 28,771 26,565
Bank Premises and Equipment 1,167 1,265
Other Real Estate 0 14
Accrued Interest Receivable 623 567
Deferred Tax Asset 0 0
Other Assets 458 449
-------- -------
TOTAL ASSETS $ 67,174 $64,162
======== =======
LIABILITIES
Deposits:
Non-Interest Bearing 18,126 16,975
Interest Bearing 39,753 38,783
-------- -------
Total Deposits 57,879 55,758
Accrued Interest Payable 130 121
Deferred Income Tax Liability 23 12
Other Liabilities 176 123
-------- -------
TOTAL LIABILITIES $ 58,208 $56,014
-------- -------
SHAREHOLDERS' EQUITY
Net Unrealized Gain (Loss) on Securities
Available for Sale, net of tax 107 65
Common Stock, $5 par value; authorized
10,000,000 shares; issued 120,000 shares; 600 600
118,807 and 120,000 shares outstanding,
respectively
Surplus 2,150 2,150
Retained Earnings 6,173 5,333
Treasury stock, 1,193 shares at cost (64) 0
-------- -------
TOTAL SHAREHOLDERS' EQUITY $ 8,966 $ 8,148
-------- -------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $ 67,174 $64,162
======== =======
See Notes to Financial Statements.
4
AMERICAN BANCORP, INC.
(PARENT COMPANY ONLY)
INCOME STATEMENT
For the Six Month Periods Ended June 30, 1998 and 1997
(In Thousands)
1998 1997
---- -----
INCOME FROM SUBSIDIARY
Dividends $ 50 $ 0
OPERATING EXPENSES
Other Expenses 3 1
Interest Expense 0 0
---- -----
TOTAL EXPENSES $ 3 $ 1
---- -----
Earnings (loss) before income taxes
and equity in undistributed earnings of
subsidiary $ 47 ($ 1)
Income tax (benefit) 0 0
---- -----
Earnings (loss) before equity in undistributed
earnings of subsidiary $ 47 ($ 1)
Equity in undistributed earnings of
subsidiary 461 485
---- -----
Net Income $508 $ 484
==== =====
5
AMERICAN BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
For the Six Month Periods Ended June 30, 1998 and 1997
(In Thousands)
INCREASE
1998 1997 (DECREASE)
INTEREST INCOME: ------ ------- ----------
Interest and fees on loans $1,310 $ 1,273 37
Interest on investment securities:
Taxable 750 732 18
Tax-Exempt 89 67 22
Other Interest 174 140 34
------ ------- -----
TOTAL INTEREST INCOME $2,323 $ 2,212 111
------ ------- -----
INTEREST EXPENSE:
Interest on deposits $ 711 $ 698 13
Interest on short-term borrowings 2 0 2
------ ------- -----
TOTAL INTEREST EXPENSE $ 713 $ 698 15
------ ------- -----
NET INTEREST INCOME $1,610 $ 1,514 96
Provision for possible loan losses 0 0 0
------ ------- -----
Net Interest Income after provision for
possible loan losses $1,610 $ 1,514 96
------ ------- -----
NON-INTEREST INCOME:
Service charges on deposit accounts $ 240 $ 244 (4)
Investment securities gains (losses) 0 0 0
Other 46 45 1
------ ------- -----
TOTAL NON-INTEREST INCOME $ 286 $ 289 (3)
------ ------- -----
NON-INTEREST EXPENSE:
Salaries and Employee Benefits $ 567 $ 547 20
Net Occupancy Expense 276 279 (3)
Net cost of operation of O.R.E.O 3 (5) 8
Other 326 291 35
------ ------- -----
TOTAL NON-INTEREST EXPENSE $1,172 $ 1,112 60
------ ------- -----
INCOME BEFORE INCOME TAXES $ 724 $ 691 33
Provision for income taxes 216 207 9
------ ------- -----
NET INCOME $ 508 $ 484 24
====== ======= =====
Net income per share of common stock $ 4.27 $ 4.03 $0.24
====== ======= =====
See Notes to Consolidated Financial Statements
6
AMERICAN BANCORP, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
For the Six Month Periods Ended June 30, 1998 & 1997
(In Thousands)
NET
UNREALIZED
GAINS(LOSS) COMMON RETAINED TREASURY
SECURITIES STOCK SURPLUS EARNINGS STOCK TOTAL
---------- ------- ------- -------- -------- -------
Balance 12/31/96 $ 57 $ 600 $ 2,150 $ 4,849 $ 0 $ 7,656
Net Income (Loss) 484 484
Cash Dividends 0 0
Change in Unrealized
Gains/Losses on Securities 8 8
------- ------- ------- ------- ------- -------
Balance 6/30/97 $ 65 $ 600 $ 2,150 $ 5,333 $ 0 $ 8,148
======= ======= ======= ======= ======= =======
Balance 12/31/97 $ 100 $ 600 $ 2,150 $ 5,665 ($ 2) $ 8,513
Net Income (Loss) 508 508
Cash Dividends 0 0
Change in Unrealized
Gains/Losses on Securities 7 7
Purchase of treasury stock (62) (62)
------- ------- ------- ------- ------- -------
Balance 6/30/98 $ 107 $ 600 $ 2,150 $ 6,173 ($ 64) $ 8,966
======= ======= ======= ======= ======= =======
7
AMERICAN BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Month Periods Ended June 30, 1998 and 1997
1998 1997
-------- --------
OPERATING ACTIVITIES
Net income $ 508 $ 484
Adjustments to reconcile net income to net cash
provided by operating activities:
Premium amortization,net of accretion on
investment securities 6 7
Depreciation 88 99
Provision for loan losses 0 0
Write down of other real estate 7 0
Gain on sale of other real estate 0 0
(Gain) loss on sale of assets 0 3
Decrease (increase) in accrued interest receivable (3) 1
Increase (decrease) in accrued interest payable 10 2
Increase (decrease) in other liabilities 68 22
Decrease (increase) in other asset 21 10
-------- --------
Net cash provided by operating activities $ 705 $ 628
-------- --------
INVESTING ACTIVITIES
Proceeds from sales & maturities of available for sale securities $ 1,203 $ 496
Proceeds from sales & maturities of held to maturity securities 5,700 2,800
Purchases of available for sale securities (10,090) (3,469)
Purchases of held to maturity securities 0 (2,986)
(Increase) decrease in loans (936) 1,747
Net decrease (increase) in other real estate 0 0
Purchases of property & equipment (28) (30)
Other (16) (9)
-------- --------
Net cash provided (used) by investing activities ($ 4,167) ($ 1,451)
-------- --------
FINANCING ACTIVITIES
Increase (decrease) in demand deposits, transaction
accounts and savings 1,471 (3,585)
Increase (decrease) in time deposits 551 (23)
Dividends paid 0 0
Purchase of treasury stock (62) 0
-------- --------
Net cash provided (used) by financing activities $ 1,960 ($ 3,608)
-------- --------
Increase (decrease) in cash and cash equivalents ($ 1,502) ($ 4,431)
Cash and cash equivalents at beginning of year 8,068 12,381
-------- --------
Cash and cash equivalents at end of period $ 6,566 $ 7,950
======== ========
Cash payments for:
Interest expense $ 703 $ 696
======== ========
Income taxes $ 183 $ 214
======== ========
See Notes to Consolidated Financial Statements
8
AMERICAN BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1998
NOTE 1 - A BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have
been prepared in accordance with generally accepted principles of
accounting for instructions to Form 10-Q and Article 10 of Regulations
S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all
adjustments ( consisting of normal recurring accruals ) considered
necessary for a fair presentation have been included.
NOTE 2 - IMPAIRED LOANS
On January 1, 1995 the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 114, "Accounting by Creditors for
Impairment of a Loan." The adoption of SFAS No. 114 did not have a
material impact on the financial condition or operating results of the
Company. 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.
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 had no in-substance foreclosures in foreclosed assets to
transfer to nonperforming loans and no related reserve for losses to
transfer to the reserve for possible loan losses.
9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Management's Discussion presents a review of the major factors and trends
affecting the performance of the Company and its bank subsidiary and should be
read in conjunction with the accompanying consolidated financial statements and
notes.
OVERVIEW
The Company reported net income of $ 508,000 for the first six months of
1998 compared to $ 484,000 for the same period of 1997. On a per share basis,
the income was $ 4.27 for the first half of 1998 compared to $ 4.03 for the same
period of 1997. The Company recorded a provision for possible loan losses of $ 0
for the six months ended June 30, 1998 and 1997, respectively. Net interest
income increased 6.3 % to $ 1,610,000 for the first half of 1998 compared to
$ 1,514,000 for the same period of 1997.
Total assets were $ 67,174,000 at June 30, 1998, an increase of $ 3,012,000
or 4.7 % from June 30, 1997. Loans increased by $ 2,206,000 or 8.3 % from
$ 26,565,000 at June 30, 1997 to $ 28,771,000 at June 30, 1998. Deposits also
increased $ 2,121,000 or 3.8 % to $ 57,879,000 at June 30, 1998.
RESULTS OF OPERATIONS
NET INTEREST INCOME. Net interest income for the six months ended June 30,
1998 totaled $ 1,610,000, a $ 96,000 increase from the same period in 1997.
Factors contributing to this increase include an increase in the average balance
of securities and loans as well as an increase in the average rate earned on
both of these assets. This positive effect was partially negated by an increase
in the average balance of savings deposits. The overall effect of volume and
rate changes on net interest income during the first half of 1998 was favorable.
PROVISION FOR POSSIBLE LOAN LOSSES. The Company recorded no provision for
possible loan losses for both the first half of 1998 and 1997. The absence of a
provision is the result of continued improvements in asset quality and low net
charge offs of loans. As a percentage of outstanding loans, the allowance for
possible loan losses was 2.06% and 2.22% at June 30, 1998 and 1997,
respectively. The 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.
NONINTEREST INCOME. There has been immaterial variances in noninterest
income for the six month periods ended June 30, 1998 and 1997.
There were no securities gains in the first six months of 1998 or of 1997.
NONINTEREST EXPENSE. For the first six months of 1998 noninterest expense
increased $ 60,000 or 5.4 % compared to the same period in 1997.
Salaries and employee benefits , the largest component of noninterest expense,
increased by $ 20,000 or 3.7 % for the first six months of 1998 as compared to
the same period in 1997. Other non-interest expense increased by $ 35,000 or
12.0 % for the first half of 1998. Included in this increase was an increase in
advertising and promotion expense of $ 22,000 as compared to the first half of
1997.
INCOME TAXES. The Company recorded provisions for income taxes of $ 216,000
in the first half of 1998 as compared to $ 207,000 in the first half of 1997.
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.
10
FINANCIAL CONDITION
LOANS. Loans were $ 28,771,000 at June 30, 1998; up by $ 2,206,000 or 8.3 %
from June 30, 1997.
TABLE I - COMPOSITION OF LOAN PORTFOLIO
June 30, 1998 June 30, 1997
------------- -------------
Commercial, Financial and Agricultural Loans $ 7,694 $ 6,599
Real Estate Construction Loans 1,110 171
Real Estate Mortgage Loans 15,222 15,347
Consumer Loans 5,122 4,623
Industrial Revenue Bonds 227 428
------- -------
TOTAL LOANS $29,375 $27,168
Allowance for possible loan losses 604 603
Unearned income 0 0
------- -------
$28,771 $26,565
======= =======
SECURITIES HELD TO MATURITY. Securities held to maturity were $ 8,502,000
at June 30, 1998; down by $ 7,211,000 or 45.9 % from June 30, 1997.
SECURITIES AVAILABLE FOR SALE. Securities available for sale were
$ 21,087,000 at June 30, 1998; up by $ 9,448,000 or 81.2 % from June 30, 1997.
TABLE II - INVESTMENT SECURITIES
A comparison of the book value and estimated market value of investment
securities is as follows:
June 30, 1998
---------------------------------------------------
HELD-TO-MATURITY AVAILABLE-FOR-SALE
AMORT MARKET AMORT MARKET
COST VALUE COST VALUE
U.S. Treasury $ 2,994 $ 3,012 $ 3,004 $ 3,018
U.S. Government Agencies 5,508 5,539 9,937 9,963
Mortgaged-backed securities 0 0 2,489 2,538
State & Political Subdivisions 0 0 5,494 5,568
-------- -------- -------- --------
TOTAL $ 8,502 $ 8,551 $ 20,924 $ 21,087
======== ======== ======== ========
June 30, 1997
-----------------------------------------------------
HELD-TO-MATURITY AVAILABLE-FOR-SALE
AMORT MARKET AMORT MARKET
COST VALUE COST VALUE
U.S. Treasury $ 3,690 $ 3,701 $ 1,992 $ 2,001
U.S. Government Agencies 12,023 12,044 4,999 5,016
Mortgaged-backed securities 0 0 1,360 1,419
State & Political Subdivisions 0 0 3,190 3,203
-------- -------- -------- --------
TOTAL $ 15,713 $ 15,745 $ 11,541 $ 11,639
======== ======== ======== ========
11
TABLE III - NONPERFORMING ASSETS
Non-performing 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 that are current as to principal and interest payments are
classified as nonperforming because there is a question concerning full
collectibility of both principal and interest.
June 30, 1998 June 30, 1997
------------- -------------
Non-Performing Loans:
Loans on Non-Accrual $ 238 $ 403
Restructured loans which are not
on non-accrual 11 14
---------- ----------
Total nonperforming loans 249 417
Other Real Estate and repossessed assets
received in complete or partial
satisfaction of loan obligation 0 14
---------- ----------
TOTAL NONPERFORMING ASSETS $ 249 $ 431
========== ==========
Loans past due 90 days or more as to
principal or interest, but not on
non-accrual $ 2 $ 4
========== ==========
Nonperforming assets totaled $ 249,000 at June 30, 1998, a $ 182,000 (42.2 %)
decrease.
TABLE IV - ANALYSIS OF ALLOWANCE FOR LOAN LOSSES
June 30, 1998 June 30, 1997
------------- -------------
Beginning balance $ 600 $ 614
Charge-offs:
Commercial, financial and agricultural loans -- --
Real estate - construction loans -- --
Real estate - mortgage loans -- --
Installment loans to individuals 3 11
-------- --------
Total charge-offs 3 11
-------- --------
Recoveries:
Commercial, financial and agricultural loans -- --
Real estate - construction loans -- --
Real estate - mortgage loans -- --
Installment loans to individuals 7 --
-------- --------
Total recoveries 7 0
-------- --------
Net (charge-offs) recovery 4 (11)
-------- --------
Provision charged against income -- --
-------- --------
Balance at end of period $ 604 $ 603
======== ========
Ratio of net (charge-offs) recoveries during the period to
average loans outstanding during the period 0.01% -0.04%
======== ========
The present level of the allowance for loan losses is considered adequate to
absorb future potential loan losses. In making this determination, management
considered asset quality, the level of net loan charge-offs, as well as current
economic conditions and market trends.
12
TABLE V - ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES
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.
June 30, 1998 June 30, 1997
------------------------------ -------------------------------
% OF LOANS % OF LOANS
TO TOTAL TO TOTAL
AMOUNT LOANS AMOUNT LOANS
------------------------------ -------------------------------
Commercial, financial and
agricultural loans $ 121 20% $ 109 18%
Real estate - construction loans 12 2% 4 1%
Real estate - mortgage loans 242 40% 254 42%
Installment loans 223 37% 227 38%
Industrial revenue bonds 6 1% 9 1%
-------- --------
$ 604 100% $ 603 100%
======== ========
DEPOSITS. As of June 30, 1998 total deposits have increased by $ 2,121,000
or 4.0 % from June 30, 1997. Noninterest bearing deposits increased by
$ 1,151,000 or 6.8 % from June 30, 1997 to June 30, 1998. Interest bearing
deposits increased by $ 970,000 or 2.5 % from June 30, 1997 to June 30, 1998.
CAPITAL. Shareholders' equity totaled $ 8,966,000 at June 30, 1998,
compared to $ 8,148,000 at June 30, 1997. The increase is primarily the result
of net income over the most recent 12 months. Risk-based capital and leverage
ratios for the Company and the bank subsidiary exceed the ratios required for
the designation as a "well-capitalized" institution under regulatory guidelines.
TABLE VI - CAPITAL RATIOS
June 30,
-----------------
AMERICAN BANK & TRUST COMPANY 1998 1997
(Bank subsidiary) ------ ------
Risk-based capital:
Tier 1 risk-based capital ratio 26.65% 26.32%
Total risk-based capital ratio 27.90% 27.57%
Leverage ratio 13.00% 12.60%
INSIDERS. Directors, executive officers and 10 % shareholders and their
related interest had loans outstanding totaling $ 1,711,000 at June 30, 1998.
CONTINGENT LIABILITIES. In the normal course of business, the bank becomes
involved in legal proceedings. It is the opinion of management that the
resulting liability, if any, for pending litigation is negligible.
13
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized to sign on behalf of the registrant.
AMERICAN BANCORP, INC.
----------------------
(Registrant)
August 10, 1998 /s/ SALVADOR L. DIESI
- ------------------------ -------------------------------
DATE Salvador L. Diesi
Chairman of the Board/President
August 10, 1998 /s/ RONALD J. LASHUTE
- ------------------------ -------------------------------
DATE Ronald J. Lashute
Secretary/Treasurer
of the Board
14
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
------- ------------
27 Financial Data Schedule