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 September 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 October 30, 1998
2
AMERICAN BANCORP, INC.
(PARENT COMPANY ONLY)
BALANCE SHEET
September 30, 1998 and 1997
(In Thousands)
ASSETS 1998 1997
- ------- ------- -------
Cash on deposit with subsidiary 24 4
Investment in subsidiary 9,380 8,422
Dividend receivable 0 0
Due from subsidiary 44 47
------- -------
TOTAL ASSETS $ 9,448 $ 8,473
======= =======
LIABILITIES
- -------------
Federal income taxes payable 38 41
Other liabilities 0 0
------- -------
TOTAL LIABILITIES $ 38 $ 41
------- -------
SHAREHOLDERS' EQUITY
- ----------------------
Net unrealized gain (loss) on securities
available for sale, net of tax 303 90
Common stock, $5 par value; authorized
10,000,000 shares; issued 120,000 shares;
118,507 and 120,000 shares outstanding,
respectively 600 600
Surplus 2,150 2,150
Retained earnings 6,438 5,592
Treasury stock, 1,493 shares at cost (81) 0
------- -------
TOTAL SHAREHOLDERS' EQUITY $ 9,410 $ 8,432
------- -------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $ 9,448 $ 8,473
======= =======
3
AMERICAN BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
September 30, 1998 and 1997
(In Thousands)
1998 1997
ASSETS --------- ---------
Cash and Due From Banks 4,173 4,065
Interest Bearing Deposits 892 694
Securities Held to Maturity 7,502 15,204
Securities Available for Sale 22,453 11,771
Federal Funds Sold 2,375 2,450
Loans - Net of allowance for loan losses 28,283 27,462
Bank Premises and Equipment 1,129 1,246
Other Real Estate 0 14
Accrued Interest Receivable 687 653
Deferred Tax Asset 0 0
Other Assets 466 476
--------- ---------
TOTAL ASSETS $67,960 $64,035
========= =========
LIABILITIES
Deposits:
Non-Interest Bearing 19,214 17,292
Interest Bearing 38,876 37,997
--------- ---------
Total Deposits 58,090 55,289
Accrued Interest Payable 128 115
Deferred Income Tax Liability 121 24
Other Liabilities 211 175
--------- ---------
TOTAL LIABILITIES $58,550 $55,603
--------- ---------
SHAREHOLDERS' EQUITY
Unrealized Gain (Loss) on Securities
Available for Sale, net of tax 303 90
Common Stock, $5 par value; authorized
10,000,000 shares; issued 120,000 shares;
118,507 and 120,000 shares outstanding,
respectively 600 600
Surplus 2,150 2,150
Retained Earnings 6,438 5,592
Treasury stock, 1,493 shares at cost (81) 0
--------- ---------
TOTAL SHAREHOLDERS' EQUITY $9,410 $8,432
--------- ---------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $67,960 $64,035
========= =========
See Notes to Financial Statements.
4
AMERICAN BANCORP, INC.
(PARENT COMPANY ONLY)
INCOME STATEMENT
For the Nine Month Periods Ended September 30, 1998 and 1997
(In Thousands)
1998 1997
----- -----
INCOME FROM SUBSIDIARY
Dividends $ 55 $ 0
OPERATING EXPENSES
Other Expenses 7 1
Interest Expense 0 0
----- -----
TOTAL EXPENSES $ 7 $ 1
----- -----
Earnings (loss) before income tax benefit
and equity in undistributed earnings of
subsidiary $ 48 ($ 1)
Income tax (benefit) 0 0
----- -----
Earnings (loss) before equity in undistributed
earnings of subsidiary $ 48 ($ 1)
Equity in undistributed earnings of
subsidiary 725 744
----- -----
Net Income $ 773 $ 743
===== =====
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AMERICAN BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
For the Nine Month Periods Ended September 30, 1998 and 1997
(In Thousands)
INCREASE
1998 1997 (DECREASE)
INTEREST INCOME: ------- ------- -------
Interest and fees on loans $ 1,993 $ 1,930 63
Interest on investment securities:
Taxable 1,125 1,125 0
Tax-Exempt 155 107 48
Other Interest 216 191 25
------- ------- -------
TOTAL INTEREST INCOME $ 3,489 $ 3,353 136
------- ------- -------
INTEREST EXPENSE:
Interest on deposits 1,073 1,046 27
Interest on short-term borrowings 2 0 2
------- ------- -------
TOTAL INTEREST EXPENSE $ 1,075 $ 1,046 29
------- ------- -------
NET INTEREST INCOME $ 2,414 $ 2,307 107
Provision for possible loan losses 0 0 0
------- ------- -------
Net Interest Income after provision for
possible loan losses $ 2,414 $ 2,307 107
------- ------- -------
NON-INTEREST INCOME:
Service charges on deposit accounts 363 367 (4)
Investment securities gains (losses) 0 0 0
Other 63 62 1
------- ------- -------
TOTAL NON-INTEREST INCOME $ 426 $ 429 (3)
------- ------- -------
NON-INTEREST EXPENSE:
Salaries and Employee Benefits $ 860 $ 816 44
Net Occupancy Expense 410 423 (13)
Net cost of operation of O.R.E.O. 3 (6) 9
Other 472 439 33
------- ------- -------
TOTAL NON-INTEREST EXPENSE $ 1,745 $ 1,672 73
------- ------- -------
INCOME BEFORE INCOME TAXES $ 1,095 $ 1,064 31
Provision for income taxes 322 321 1
------- ------- -------
NET INCOME $ 773 $ 743 30
======= ======= =======
Net income per share of common stock $ 6.49 $ 6.19 $ 0.30
======= ======= =======
See Notes to Consolidated Financial Statements
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AMERICAN BANCORP, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY For the
Nine Month Periods Ended September 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) 743 743
Cash Dividends 0 0
Change in Unrealized
Gains/Losses on Securities 33 33
------ ------ ------ ------ ------ ------
Balance 9/30/97 $ 90 $ 600 $2,150 $5,592 $ 0 $8,432
====== ====== ====== ====== ====== ======
Balance 12/31/97 $ 100 $ 600 $2,150 $5,665 ($ 2) $8,513
Net Income (Loss) 773 773
Cash Dividends 0 0
Change in Unrealized
Gains/Losses on Securities 203 203
Purchase of treasury stock (79) (79)
------ ------ ------ ------ ------ ------
Balance 9/30/98 $ 303 $ 600 $2,150 $6,438 ($ 81) $9,410
====== ====== ====== ====== ====== ======
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AMERICAN BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine Month Periods Ended September 30, 1998 and 1997
1998 1997
-------- --------
OPERATING ACTIVITIES
Net income $ 773 $ 743
Adjustments to reconcile net income to net cash
provided by operating activities:
Premium amortization, net of accretion on
investment securities 5 7
Depreciation 128 148
Provision for loan losses 0 0
Gain on sale of other real estate 0 0
Write down of other real estate 7 0
(Gain) loss on sale of assets 0 3
Decrease (increase) in accrued interest receivable (67) (85)
Increase (decrease) in accrued interest payable 8 (4)
Increase (decrease) in other liabilities 201 87
Decrease (increase) in other asset 8 (14)
-------- --------
Net cash provided by operating activities $ 1,063 $ 885
-------- --------
INVESTING ACTIVITIES
Proceeds from sales & maturities of available for sale securities $ 1,997 $ 1,119
Proceeds from sales & maturities of held to maturity securities 6,700 3,300
Purchases of available for sale securities (11,953) (4,178)
Purchases of held to maturity securities 0 (2,986)
(Increase) decrease in loans (448) 849
Net decrease (increase) in other real estate 0 0
Purchases of property & equipment (30) (60)
Other (110) (24)
-------- --------
Net cash provided (used) by investing activities $ (3,844) $ (1,980)
-------- --------
FINANCING ACTIVITIES
Increase (decrease) in demand deposits, transaction
accounts and savings 1,205 (4,186)
Increase (decrease) in time deposits 1,027 109
Dividends paid 0 0
Purchase of treasury stock (79) 0
-------- --------
Net cash provided (used) by financing activities $ 2,153 $ (4,077)
-------- --------
Increase (decrease) in cash and cash equivalents $ (628) $ (5,172)
Cash and cash equivalents at beginning of year 8,068 12,381
-------- --------
Cash and cash equivalents at end of period $ 7,440 $ 7,209
======== ========
Cash payments for:
Interest expense $ 1,067 $ 1,050
======== ========
Income taxes $ 302 $ 313
======== ========
See Notes to Consolidated Financial Statements
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AMERICAN BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 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.
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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 $773,000 for the first nine months of
1998 compared to $743,000 for the same period of 1997. On a per share basis, the
net income was $6.49 for the first nine months of 1998 compared to $6.19 for the
same period of 1997. The Company recorded a provision for possible loan losses
of $0 for the nine months ended September 30, 1998 and 1997, respectively. Net
interest income increased 4.6% to $2,414,000 for the first nine months of 1998
compared to $2,307,000 for the same period of 1997.
Total assets were $67,960,000 at September 30, 1998, an increase of
$3,925,000 from September 30, 1997. Loans increased by $821,000 or 3% from
$27,462,000 at September 30, 1997 to $28,283,000 at September 30, 1998. Deposits
increased by $2,801,000 or 5.1% from $55,289,000 at September 30, 1997 to
$58,090,000 at September 30, 1998.
RESULTS OF OPERATIONS
NET INTEREST INCOME. Net interest income for the nine months ended
September 30, 1998 totaled $2,414,000, a $107,000 increase from the same period
in 1997. Factors contributing to this increase include an increase in the
average balance of loans and of investment securities. This positive effect was
partially negated by an increase in the average balance of time deposits and
savings deposits. The overall effect of volume and rate changes on net interest
income during the nine month period ended September 30, 1998 was favorable.
PROVISION FOR POSSIBLE LOAN LOSSES. The Company recorded no provision for
possible loan losses for both the first nine months 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 2.09% and 2.13% at September 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 nine month periods ended September 30, 1998 and 1997.
There were no securities gains in the nine month periods ended September 30,
1998 and 1997.
NONINTEREST EXPENSE. For the first nine months of 1998 noninterest expense
increased $73,000 or 4.4% compared to the same period in 1997.
Salaries and employee benefits, the largest component of noninterest expense,
increased by $44,000 or 5.4% for the first nine months of 1998 as compared to
the same period in 1997.
Other non-interest expense increased by $33,000 or 7.5% for the first nine
months of 1998 as compared to the same period of 1997. Included in this increase
was an increase in advertising and promotion expense of $32,000 (68%) as
compared to the same period of 1997. Also, included in this increase was a data
processing expense increase of $7,000 (15%) for the first nine months of 1998
compared to the same period of 1997. This increase was primarily due to expenses
related to continued improvements in technology and Year 2000 compliance.
The Company expects to continue incurring charges related to Year 2000
compliance; however, these costs have not been material to date and are not
expected to have a material impact on the Company's earnings in the future.
The Company has adopted a Year 2000 plan in early 1997 which is managed by
senior management of the Company. The Company will ascertain that all of the
software, whether purchased from vendors or developed in house, will comply with
the effect of the Year 2000 on computer systems. It is the intention of the
Company to have all of the computer systems certified for Year 2000 compliancy
by December 31, 1998.
10
INCOME TAXES. The Company recorded provisions for income taxes of $322,000
for the nine month period ended September 30, 1998 as compared to $321,000 for
the same period 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.
FINANCIAL CONDITION
LOANS. Loans were $28,283,000 at September 30, 1998; up by $821,000 or 3%
from September 30, 1997.
TABLE I - COMPOSITION OF LOAN PORTFOLIO
Sept. 30, 1998 Sept. 30, 1997
-------------- --------------
Commercial, Financial and Agricultural Loans $ 7,465 $ 7,251
Real Estate Construction Loans 77 342
Real Estate Mortgage Loans 15,944 15,302
Consumer Loans 5,207 4,778
Industrial Revenue Bonds 194 388
------- -------
TOTAL LOANS $28,887 $28,061
Allowance for possible loan losses 604 599
Unearned income 0 0
------- -------
$28,283 $27,462
======= =======
SECURITIES HELD TO MATURITY. Securities held to maturity were $7,502,000
at September 30, 1998; down by $7,702,000 or 50.7% from September 30, 1997.
SECURITIES AVAILABLE FOR SALE. Securities available for sale were
$22,453,000 at September 30, 1998; up by $10,682,000 or 90.7% from September 30,
1997.
TABLE II - INVESTMENT SECURITIES
A comparison of the book value and estimated market value of investment
securities is as follows:
September 30, 1998
-------------------------------------------------
HELD-TO-MATURITY AVAILABLE-FOR-SALE
AMORT MARKET AMORT MARKET
COST VALUE COST VALUE
U.S. Treasury $ 2,495 $ 2,526 $ 3,510 $ 3,569
U.S. Government Agencies 5,007 5,049 9,435 9,533
Mortgaged-backed securities 0 0 2,700 2,753
State & Political Subdivisions 0 0 6,252 6,501
Equity Securities 0 0 97 97
------- ------- ------- -------
TOTAL $ 7,502 $ 7,575 $21,994 $22,453
======= ======= ======= =======
September 30, 1997
-----------------------------------------------
HELD-TO-MATURITY AVAILABLE-FOR-SALE
AMORT MARKET AMORT MARKET
COST VALUE COST VALUE
U.S. Treasury $ 3,691 $ 3,707 $ 1,993 $ 2,007
U.S. Government Agencies 11,513 11,562 4,999 5,029
Mortgaged-backed securities 0 0 1,245 1,306
State & Political Subdivisions 0 0 3,397 3,429
------- ------- ------- -------
TOTAL $15,204 $15,269 $11,634 $11,771
======= ======= ======= =======
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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 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.
Non-Performing Loans: Sept. 30, 1998 Sept. 30, 1998
-------------- ---------------
Loans on Non-Accrual $188 $351
Restructured loans which are not
on non-accrual 10 14
---- ----
Total nonperforming loans 198 365
Other Real Estate and repossessed assets
received in complete or partial
satisfaction of loan obligation 0 14
---- ----
TOTAL NONPERFORMING ASSETS $198 $379
==== ====
Loans past due 90 days or more as to
principal or interest, but not on $ 24 $ 4
non-accrual ==== ====
Nonperforming assets totaled $198,000 at September 30, 1998, a $181,000 (47.8%)
decrease.
TABLE IV - ANALYSIS OF ALLOWANCE FOR LOAN LOSSES
Sept. 30, 1998 Sept. 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 5 16
----- -----
Total charge-offs 5 16
----- -----
Recoveries:
Commercial, financial and agricultural loans -- --
Real estate - construction loans -- --
Real estate - mortgage loans -- --
Installment loans to individuals 9 1
----- -----
Total recoveries 9 1
----- -----
Net (charge-offs) recovery 4 (15)
----- -----
Provision charged against income -- --
----- -----
Balance at end of period $ 604 $ 599
===== =====
Ratio of net (charge-offs) recoveries during the period to average loans
outstanding during the period 0.01% -0.05%
===== =====
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.
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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.
September 30, 1998 September 30, 1997
---------------------------------------------------------
% OF LOANS % OF LOANS
TO TOTAL TO TOTAL
AMOUNT LOANS AMOUNT LOANS
---------- ---------- ---------- ----------
Commercial, financial and
agricultural loans $117 25% $117 19%
Real estate - construction loans 1 1% 4 1%
Real estate - mortgage loans 250 55% 247 41%
Consumer loans 233 18% 227 38%
Industrial revenue bonds 3 1% 4 1%
---- ---- ---- ----
$604 100% $599 100%
==== ==== ==== ====
DEPOSITS. As of September 30, 1998 total deposits have increased by
$2,801,000 or 5.1% from September 30, 1997. Noninterest bearing deposits
increased by $1,922,000 or 11.1% from September 30, 1997 to September 30, 1998.
Interest bearing deposits increased by $879,000 or 2.3% from September 30, 1997
to September 30, 1998.
CAPITAL. Shareholders' equity totaled $9,410,000 at September 30, 1998,
compared to $8,432,000 at September 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
- ----------------
September 30,
-----------------------
AMERICAN BANK & TRUST COMPANY 1998 1997
(Bank subsidiary) -----------------------
Risk-based capital:
Tier 1 risk-based capital ratio 27.66% 26.13%
Total risk-based capital ratio 28.91% 27.39%
Leverage ratio 13.40% 12.97%
INSIDERS. Directors, executive officers and 10% shareholders and their
related interest had loans outstanding totaling $1,282,000 at September 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.
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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)
November 5, 1998
- -------------------------------- /s/ Salvador L. Diesi
DATE -------------------------------------
Salvador L. Diesi
Chairman of the Board/President
November 3, 1998
- -------------------------------- /s/ Ronald J. Lashute
DATE -------------------------------------
Ronald J. Lashute
Secretary/Treasurer of the
Board
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INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
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27 Financial Data Schedule