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, 1999
Commission File Number 0-11928
AMERICAN BANCORP, INC.
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
LOUISIANA 72-0951347
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(State or other jurisdiction of (I R S Employer I. D. Number)
incorporation or organization)
328 EAST LANDRY STREET, OPELOUSAS, LA 70571-1579
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(Address of principal executive office) (Zip Code)
(318) 948-3056
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(Registrant's telephone number, including area code)
NOT APPLICABLE
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(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-------117,729 shares as of July 30, 1999
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AMERICAN BANCORP, INC.
(PARENT COMPANY ONLY)
BALANCE SHEET
June 30, 1999 and 1998
(In Thousands)
1999 1998
------- -------
ASSETS
Cash on deposit with subsidiary 31 39
Investment in subsidiary 9,471 8,921
Dividend receivable 0 0
Due from subsidiary 41 55
------- -------
TOTAL ASSETS $ 9,543 $ 9,015
======= =======
LIABILITIES
Federal income taxes payable 35 49
Other liabilities 0 0
------- -------
TOTAL LIABILITIES $ 35 $ 49
------- -------
SHAREHOLDERS' EQUITY
Net unrealized gain (loss) on securities
available for sale, net of tax (208) 107
Common stock, $5 par value; authorized
10,000,000 shares; issued 120,000 shares;
117,729 and 118,807 shares outstanding,
respectively 600 600
Surplus 2,150 2,150
Retained earnings 7,094 6,173
Treasury stock, 2,271 and 1,193 shares at cost,
respectively (128) (64)
------- -------
TOTAL SHAREHOLDERS' EQUITY $ 9,508 $ 8,966
------- -------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $ 9,543 $ 9,015
======= =======
3
AMERICAN BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
June 30, 1999 and 1998
(In Thousands)
1999 1998
--------- ---------
ASSETS
Cash and Due From Banks 5,531 4,401
Interest Bearing Deposits 1,587 1,190
Securities Held to Maturity 4,393 8,502
Securities Available for Sale 28,059 21,087
Federal Funds Sold 6,672 975
Loans - Net of allowance for loan losses 26,354 28,771
Bank Premises and Equipment 1,083 1,167
Other Real Estate 0 0
Accrued Interest Receivable 602 623
Deferred Tax Asset 111 0
Other Assets 501 458
--------- ---------
TOTAL ASSETS $ 74,893 $ 67,174
========= =========
LIABILITIES
Deposits:
Non-Interest Bearing 23,205 18,126
Interest Bearing 41,856 39,753
--------- ---------
Total Deposits 65,061 57,879
Accrued Interest Payable 138 130
Deferred Income Tax Liability 0 23
Other Liabilities 186 176
--------- ---------
TOTAL LIABILITIES $ 65,385 $ 58,208
--------- ---------
SHAREHOLDERS' EQUITY
Unrealized Gain (Loss) on Securities
Available for Sale, net of tax (208) 107
Common Stock, $5 par value; authorized 10,000,000
shares; issued 120,000 shares;
117,729 and 118,807 shares outstanding,
respectively 600 600
Surplus 2,150 2,150
Retained Earnings 7,094 6,173
Treasury stock, 2,271 and 1,193 shares at cost,
respectively (128) (64)
--------- ---------
TOTAL SHAREHOLDERS' EQUITY $ 9,508 $ 8,966
--------- ---------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $ 74,893 $ 67,174
========= =========
See Notes to Financial Statements.
4
AMERICAN BANCORP, INC.
(PARENT COMPANY ONLY)
INCOME STATEMENT
For the Six Month Periods Ended June 30, 1999 and 1998
(In Thousands)
1999 1998
---- ----
INCOME FROM SUBSIDIARY
Dividends from bank subsidiary $ 50 $ 50
OPERATING EXPENSES
Directors fees 6 0
Other expenses 0 3
---- ----
TOTAL EXPENSES 6 3
---- ----
Earnings before income tax
and equity in undistributed earnings of
subsidiary 44 47
Provision for income taxes 0 0
---- ----
Earnings before equity in undistributed
earnings of subsidiary 44 47
Equity in undistributed earnings of
subsidiary 526 461
---- ----
Net Income $570 $508
==== ====
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AMERICAN BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
For the Six Month Periods Ended June 30, 1999 and 1998
(In Thousands)
INCREASE
1999 1998 (DECREASE)
INTEREST INCOME: ------- ------- ---------
Interest and fees on loans $ 1,199 $ 1,310 (111)
Interest on investment securities:
Taxable 744 750 (6)
Tax-Exempt 153 89 64
Other Interest 271 174 97
------- ------- -------
TOTAL INTEREST INCOME 2,367 2,323 44
------- ------- -------
INTEREST EXPENSE:
Interest on deposits 739 711 28
Interest on short-term borrowings 0 2 (2)
------- ------- -------
TOTAL INTEREST EXPENSE 739 713 26
------- ------- -------
NET INTEREST INCOME 1,628 1,610 18
Provision for possible loan losses 0 0 0
------- ------- -------
Net Interest Income after provision for
possible loan losses 1,628 1,610 18
------- ------- -------
NON-INTEREST INCOME:
Service charges on deposit accounts 274 240 34
Investment securities gains (losses) 0 0 0
Other 48 46 2
------- ------- -------
TOTAL NON-INTEREST INCOME 322 286 36
------- ------- -------
NON-INTEREST EXPENSE:
Salaries and Employee Benefits 600 567 33
Net Occupancy Expense 243 276 (33)
Net cost of operation of O.R.E.O. (41) 3 (44)
Other 358 326 32
------- ------- -------
TOTAL NON-INTEREST EXPENSE 1,160 1,172 (12)
------- ------- -------
INCOME BEFORE INCOME TAXES 790 724 66
Provision for income taxes 220 216 4
------- ------- -------
NET INCOME $ 570 $ 508 62
======= ======= =======
Net income per share of common stock $ 4.83 $ 4.27 $ 0.56
======= ======= =======
See Notes to Consolidated Financial Statements
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AMERICAN BANCORP, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
For the Six Month Periods Ended June 30, 1999 & 1998
(In Thousands)
ACCUMULATED
OTHER
STOCK RETAINED COMPREHENSIVE TREASURY COMPREHENSIVE
AMOUNT SURPLUS EARNINGS INCOME STOCK INCOME TOTAL
------ ------- -------- ------ ------- ------- -------
Balance 12/31/97 $ 600 $ 2,150 $ 5,665 $ 100 $ (2) $ 0 $ 8,513
Comprehensive income
Net Income (Loss) -- 508 -- -- 508 508
Other comprehensive income,
net of tax:
Change in Unrealized gains (losses)
on securities available for sale -- -- 7 -- 7 7
-------
Total comprehensive income -- -- -- -- $ 515
=======
Purchase of treasury stock -- -- -- (62) (62)
Dividends paid -- 0 -- -- 0
------- ------- ------- ------- ------- -------
Balance , June 30, 1998 $ 600 $ 2,150 $ 6,173 $ 107 $ (64) $ 8,966
======= ======= ======= ======= ======= =======
Balance 12/31/98 $ 600 $ 2,150 $ 6,524 $ 256 $ (85) $ 0 $ 9,445
Comprehensive income
Net Income (Loss) -- 570 -- -- 570 570
Other comprehensive income,
net of tax:
Change in Unrealized gains (losses)
on securities available for sale -- -- (464) -- (464) (464)
-------
Total comprehensive income -- -- -- -- $ 106
=======
Purchase of treasury stock -- -- -- (43) (43)
Dividends paid -- 0 -- -- 0
------- ------- ------- ------- ------- -------
Balance, June 30, 1999 $ 600 $ 2,150 $ 7,094 $ (208) $ (128) $ 9,508
======= ======= ======= ======= ======= =======
See Notes to Consolidated Financial Statements
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AMERICAN BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Month Periods Ended June 30, 1999 and 1998
1999 1998
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OPERATING ACTIVITIES
Net income $ 570 $ 508
Adjustments to reconcile net income to net cash
provided by operating activities:
Premium amortization, net of accretion on
investment securities (9) 6
Depreciation 66 88
(Gain) loss on disposal of assets 0 0
(Increase) decrease in assets:
Write down of other real estate owned 0 7
Accrued interest receivable 7 (3)
Other assets (2) 21
Increase (decrease) in liabilities:
Accrued interest payable (6) 10
Other liabilities 61 68
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Net cash provided by operating activities $ 687 $ 705
-------- --------
INVESTING ACTIVITIES
Proceeds from sales & maturities of available for sale securities $ 2,500 $ 1,203
Proceeds from sales & maturities of held to maturity securities 3,991 5,700
Purchases of available for sale securities (8,727) (10,090)
Purchases of held to maturity securities (1,196) 0
(Increase) decrease in loans 1,108 (936)
Net decrease (increase) in other real estate 0 0
Purchases of property & equipment (36) (28)
Other (5) (16)
-------- --------
Net cash provided by (used in) investing activities $ (2,365) $ (4,167)
-------- --------
FINANCING ACTIVITIES
Increase (decrease) in demand deposits, transaction
accounts and savings (279) 1,471
Increase (decrease) in time deposits 1,521 551
Dividends paid 0 0
Purchase of treasury stock (44) (62)
-------- --------
Net cash provided by (used in) financing activities $ 1,198 $ 1,960
-------- --------
Increase (decrease) in cash and cash equivalents $ (480) $ (1,502)
Cash and cash equivalents at beginning of year 14,270 8,068
-------- --------
Cash and cash equivalents at end of period $ 13,790 $ 6,566
======== ========
Cash payments for:
Interest expense $ 744 $ 703
======== ========
Income taxes $ 170 $ 183
======== ========
See Notes to Consolidated Financial Statements
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AMERICAN BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1999
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 $570,000 for the first half of 1999
compared to $508,000 for the same period of 1998. On a per share basis, net
income was $4.83 for the first half of 1999 compared to $4.27 for the same
period of 1998. The Company recorded a provision for possible loan losses of $0
for the six months ended June 30, 1999 and 1998, respectively. Net interest
income increased 1.1% to $1,628,000 for the first half of 1999 compared to
$1,610,000 for the same period of 1998.
Total assets were $74,893,000 at June 30, 1999, an increase of $7,719,000
from June 30, 1998. Loans decreased by $2,417,000 or 8.4% from $28,771,000 at
June 30, 1998 to $26,354,000 at June 30, 1999. Deposits increased by $7,182,000
or 12.4% from $57,879,000 at June 30, 1998 to $65,061,000 at June 30, 1999.
RESULTS OF OPERATIONS
NET INTEREST INCOME. Net interest income for the six months ended June 30,
1999 totaled $1,628,000, a $18,000 increase from the same period in 1998.
Factors contributing to this increase include an increase in the average balance
of investment securities and federal funds sold. This positive effect was
partially negated by a decrease in the average balance of loans. The overall
effect of volume and rate changes on net interest income during the six month
period ended June 30, 1999 was favorable.
PROVISION FOR POSSIBLE LOAN LOSSES. The Company recorded no provision for
possible loan losses for both the first six months of 1999 and 1998. 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 2.20% and 2.06% at June 30, 1999 and 1998,
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. For the first half of 1999 noninterest income increased
$36,000 or 12.6% compared to the same period of 1998.
Service charges on deposit accounts increased by $34,000 or 14.2% compared to
the same period of 1998. Part of this increase is the result of an increase in
deposit accounts for the first half of 1999.
There were no securities gains in the six month periods ended June 30, 1999 and
1998.
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NONINTEREST EXPENSE. For the first half of 1999 noninterest expense
decreased $12,000 or 1% compared to the same period in 1998.
Salaries and employee benefits , the largest component of noninterest expense,
increased by $33,000 or 5.8% for the first half of 1999 as compared to the
same period in 1998. This increase was attributed to an overall increase in
salaries as well as an increase in the employee medical insurance .
Other non-interest expense increased by $32,000 or 9.8% for the first half of
1999 as compared to the same period of 1998. Included in this increase was an
increase in data processing expenses of $10,000 or 28.5% for the first half of
1999 compared to the same period of 1998. 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 formed the "Y2K (Year 2000) Steering Committee" in 1997 to address
the Year 2000 issue. The objective of this committee was to detail a plan of
action for conversion of its computer applications to Year 2000 compliant
applications, to ensure compliance with all "Federal Financial Institutions
Examination Council" regulations regarding the Year 2000 by the end of the
second quarter 1999, and to ensure uninterrupted service to its customers. The
Bank has undertaken an extensive awareness campaign both internally and
externally in an effort to maintain heightened awareness of Year 2000
implications by its employees, Board of Directors, suppliers, and customers.
The Bank developed a comprehensive inventory and risk assessment plan to
identify all systems and processes which could potentially be effected by the
century date change. Because core processing systems are acquired from third
party vendors, the Bank has very little control over the remediation of these
systems. However, the Bank has maintained close contact with its core system and
all other vendors identified in the inventory and risk assessment, complying
with FFIEC guidelines regarding assessment of the status of these third party
vendor's Year 2000 readiness efforts. As of March 31, 1999, all of the Bank's
core processing systems have been replaced or upgraded with Year 2000 compliant
systems and software. These systems and processes have been tested.
INCOME TAXES. The Company recorded provisions for income taxes of $220,000
for the six month period ended June 30, 1999 as compared to $216,000 for the
same period of 1998. 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 $26,354,000 at June 30, 1999; down by $2,417,000 or
8.4% from June 30, 1998.
TABLE I - COMPOSITION OF LOAN PORTFOLIO
June 30, June 30,
1999 1998
------- -------
Commercial, Financial and Agricultural Loans $ 6,489 $ 7,694
Real Estate Construction Loans 750 1,110
Real Estate Mortgage Loans 14,874 15,222
Consumer Loans 4,815 5,122
Industrial Revenue Bonds 20 227
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TOTAL LOANS $26,948 $29,375
Allowance for possible loan losses 594 604
Unearned income 0 0
------- -------
$26,354 $28,771
======= =======
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SECURITIES HELD TO MATURITY. Securities held to maturity were $4,393,000
at June 30, 1999; down by $4,109,000 or 48.3% from June 30, 1998.
SECURITIES AVAILABLE FOR SALE. Securities available for sale were
$28,059,000 at June 30, 1999; up by $6,972,000 or 33.1% from June 30, 1998.
TABLE II - INVESTMENT SECURITIES
A comparison of the book value and estimated market value of investment
securities is as follows:
June 30, 1999
-------------------------------------------
HELD-TO-MATURITY AVAILABLE-FOR-SALE
AMORT MARKET AMORT MARKET
COST VALUE COST VALUE
U.S. Treasury $ 3,393 $ 3,394 $ 3,506 $ 3,526
U.S. Government Agencies 1,000 1,004 11,468 11,331
Mortgaged-backed securities 0 0 6,431 6,314
State & Political Subdivisions 0 0 6,872 6,791
Equity Securities 0 0 97 97
------- ------- ------- -------
TOTAL $ 4,393 $ 4,398 $28,374 $28,059
======= ======= ======= =======
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
======= ======= ======= =======
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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.
Nonperforming assets totaled $21,000 at June 30, 1999, a $228,000 (91.6%)
decrease from June 30, 1998. The composition of nonperforming assets are
illustrated below:
June 30, June 30,
Non-Performing Loans: 1999 1998
----- -----
Loans on Non-Accrual $ 13 $ 238
Restructured loans which are not
on non-accrual 8 11
----- -----
Total nonperforming loans 21 249
Other Real Estate and repossessed assets
received in complete or partial
satisfaction of loan obligation 0 0
----- -----
TOTAL NONPERFORMING ASSETS $ 21 $ 249
===== =====
Loans past due 90 days or more as to
principal or interest, but not on $ 72 $ 2
non-accrual ===== =====
TABLE IV - ANALYSIS OF ALLOWANCE FOR LOAN LOSSES
June 30, June 30,
1999 1998
----- -----
Beginning balance $ 596 $ 600
Charge-offs:
Commercial, financial and agricultural loans 2 --
Real estate - construction loans -- --
Real estate - mortgage loans -- --
Installment loans to individuals 1 3
----- -----
Total charge-offs 3 3
----- -----
Recoveries:
Commercial, financial and agricultural loans -- --
Real estate - construction loans -- --
Real estate - mortgage loans -- --
Installment loans to individuals 1 7
----- -----
Total recoveries 1 7
----- -----
Net (charge-offs) recovery (2) 4
----- -----
Provision charged against income -- --
----- -----
Balance at end of period $ 594 $ 604
===== =====
Ratio of net (charge-offs) recoveries during the period to average loans
outstanding during the period 0.00% 0.01%
===== =====
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.
June 30, 1999 June 30, 1998
-------------------------------------------
% OF LOANS % OF LOANS
TO TOTAL TO TOTAL
AMOUNT LOANS AMOUNT LOANS
------ ------ ------ ------
Commercial, financial and
agricultural loans $ 142 24% $ 121 26%
Real estate - construction loans 18 3% 12 4%
Real estate - mortgage loans 327 55% 242 52%
Consumer loans 107 18% 223 17%
Industrial revenue bonds 0 0% 6 1%
------ ------ ------ ------
$ 594 100% $ 604 100%
====== ====== ====== ======
DEPOSITS. As of June 30, 1999 total deposits have increased by $7,182,000
or 12.4% from June 30, 1998. Noninterest bearing deposits increased by
$5,079,000 or 28% from June 30, 1998 to June 30, 1999. Interest bearing deposits
increased by $2,103,000 or 5.3% from June 30, 1998 to June 30, 1999.
CAPITAL. Shareholders' equity totaled $9,508,000 at June 30, 1999,
compared to $8,966,000 at June 30, 1998. 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 1999 1998
(Bank subsidiary) ----- -----
Risk-based capital:
Tier 1 risk-based capital ratio 29.69% 26.65%
Total risk-based capital ratio 30.94% 27.90%
Leverage ratio 12.82% 13.00%
INSIDERS. Directors, executive officers and 10 % shareholders and their
related interest had loans outstanding totaling $ 1,699,000 at June 30, 1999.
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)
August 6, 1999 /s/ SALVADOR L. DIESI
- -------------------- ---------------------------------------
DATE Salvador L. Diesi
Chairman of the Board/President
August 6, 1999 /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