1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OF 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OF 15 (d) OF THE
SECURITIES EXCHANGE AT OF 1934
For the transition period from____________ to____________
Commission File Number 0-21165
FIRST ALLEN PARISH BANCORP, INC.
--------------------------------
(Exact name of Registrant as specified in its Charter)
Delaware 72-1331593
------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
222 South Tenth Street - Oakdale, Louisiana 71463
------------------------------------------- -------
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (318)335-2031
-------------
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by section 13 of 15 (d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES (X) NO ( )
Indicate the number of shares outstanding of each of the issuer's
common stock as of the latest practicable date.
Class Outstanding at June 30, 1998
- --------------------------- ----------------------------
Common Stock, .01 par value 264,506
2
FIRST ALLEN PARISH BANCORP, INC.
TABLE OF CONTENTS
Page
Part I - FINANCIAL INFORMATION
Item 1: Financial Statements
Consolidated statements of financial condition 3
Consolidated statements of income 4-5
Consolidated statements of cash flows 6-9
Notes to consolidated financial statements 10-12
Item 2: Management's Discussion and Analysis of
Financial Condition and Results of Operations 13-18
Part II - OTHER INFORMATION 19
Signatures 20
3
FIRST ALLEN PARISH BANCORP, INC. AND SUBSIDIARY
Consolidated Statements of Financial Condition
June 30, 1998 and December 31, 1997
June 30, 1998
(Unaudited) December 31, 1997
------------- -----------------
ASSETS
Cash and cash equivalents
Interest-bearing $ 1,777,860 $ 1,297,774
Non-interest bearing 130,935 586,468
Mortgage-backed and related
securities-held-to-maturity 11,891,872 11,668,946
Mortgage-backed and related
securities-available-for-sale,
estimated market value 5,330,359 5,478,291
Loans receivable, net 13,924,373 13,645,908
Accrued interest receivable 245,924 229,363
Other receivables 103,570 62,895
Federal Home Loan Bank stock, 259,300 259,300
at cost
Premises and equipment, at cost,
less accumulated depreciation 362,131 262,447
Other assets 101,948 27,795
--------- ----------
Total assets $34,128,272 $33,519,187
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits $29,056,329 $28,656,542
Advances by borrowers for taxes
and insurance 29,471 23,212
Federal income taxes:
Current 79,510 54,956
Deferred 139,053 135,398
Accrued liabilities 37,851 27,620
Dividends Payable 39,676 39,676
Deferred income 46,292 47,065
---------- ----------
Total liabilities 29,428,182 28,984,469
STOCKHOLDERS' EQUITY
Serial preferred stock (.01 par value,
100,000 shares authorized, none
issued or outstanding)
Common stock (.01 par value, 900,000
shares authorized, 264,506 shares
issued and outstanding) 2,666 2,645
Additional paid-in capital 2,380,038 2,314,066
Retained earnings (substantially
restricted) 2,469,075 2,405,441
Unrealized gain(loss) on securities
available-for-sale 22,881 (2,284)
Unearned employee stock (174,570) (185,150)
ownership plan
----------- -----------
Total stockholders' equity 4,700,090 4,534,718
----------- -----------
Total liabilities and
stockholder' equity $34,128,272 $33,519,187
=========== ===========
See accompanying notes to consolidated financial statements.
/TABLE
4
FIRST ALLEN PARISH BANCORP, INC. AND SUBSIDIARY
Consolidated Statements of Income
For the three months ended June 30, 1998 and 1997
(Unaudited)
1998 1997
------------ ------------
INTEREST INCOME
Loans receivable:
First mortgage loans $228,154 $207,230
Consumer and other loans 83,392 74,218
Mortgage-backed and related 277,351 265,793
securities
Other interest earning assets 22,472 25,651
-------- --------
Total interest income 611,369 572,892
-------- --------
INTEREST EXPENSE
Deposits 309,287 302,849
Borrowed funds 4,079 4,197
-------- --------
Total interest expense 313,366 307,046
-------- --------
Net interest income 298,003 265,846
PROVISION (RECOVERY) LOAN LOSSES 2,644
-------- --------
Net interest income after
provision (recovery)
from loan losses 298,003 268,490
-------- --------
NONINTEREST INCOME
Service charges on deposits 61,884 45,355
Insurance commissions earned 2,317 254
Loan origination and servicing fees 6,901 9,047
Net other real estate expenses (151)
Gain on foreclosed real estate 98
Other operating revenues 3,959 8,520
-------- --------
Total noninterest income 75,061 63,123
-------- --------
NONINTEREST EXPENSES
Compensation and employee benefits 163,962 103,320
Occupancy and equipment expenses 17,134 18,762
SAIF deposit insurance premiums 4,397 4,209
Stationery and printing 21,927 14,142
Data processing 26,118 14,148
Other expenses 58,720 49,634
-------- -------
Total noninterest expenses 292,253 204,215
-------- --------
Income before income taxes 80,811 127,398
INCOME TAX EXPENSE 46,771 42,187
-------- --------
NET INCOME $34,040 $ 85,211
======== ========
Net earnings per common share:
Primary and fully diluted $0.14 $0.35
Weighted average number of shares ======== ========
outstanding
Primary and fully diluted 245,463 244,404
/TABLE
5
FIRST ALLEN PARISH BANCORP, INC. AND SUBSIDIARY
Consolidated Statements of Income
For the six months ended June 30, 1998 and 1997
(Unaudited)
1998 1997
------------ -----------
INTEREST INCOME
Loans receivable:
First mortgage loans $462,029 $436,315
Consumer and other loans 157,819 121,596
Mortgage-backed and related
securities 538,525 528,012
Other interest earning assets 42,193 48,001
--------- ---------
Total interest income 1,200,566 1,133,924
--------- ---------
INTEREST EXPENSE
Deposits 616,473 579,983
Borrowed funds 6,602 19,733
--------- ---------
Total interest expense 623,075 599,716
--------- ---------
Net interest income 577,491 534,208
PROVISION (RECOVERY) LOAN LOSSES 1,424
--------- ---------
Net interest income after
provision recovery)
from loan losses 577,491 535,632
--------- ---------
NONINTEREST INCOME
Service charges on deposits 111,180 94,068
Insurance commissions earned 3,569 2,969
Loan origination and servicing
fees 16,303 18,062
Net other real estate expenses (420) (363)
Gain on foreclosed real estate 201
Other operating revenues 10,274 12,694
--------- ---------
Total noninterest income 140,906 127,631
--------- ---------
NONINTEREST EXPENSES
Compensation and employee
benefits 278,677 202,101
Occupancy and equipment expenses 35,821 34,319
SAIF deposit insurance premiums 8,799 8,470
Stationery and printing 38,441 27,385
Data processing 42,989 29,511
Other expenses 127,204 114,772
--------- ---------
Total noninterest expenses 531,931 416,558
--------- ---------
Income before income taxes 186,466 246,705
INCOME TAX EXPENSE 83,156 83,887
--------- ---------
NET INCOME $103,310 $ 162,818
========= =========
Net earnings per common share:
Primary and fully diluted $0.42 $0.67
Weighted average number of shares
outstanding ========= =========
Primary and fully diluted 245,463 244,404
/TABLE
6
FIRST ALLEN PARISH BANCORP, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows
For the three months ended June 30, 1998 and 1997
(Unaudited)
1998 1997
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 34,040 $ 85,211
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation of premises
and equipment 9,066 8,962
Provision for loan losses (2,644)
Gain on sale of foreclosed real estate (98)
Premium amortization net of
discount accretion (6,888) (11,288)
Deferred income taxes 7,553 1,401
Stock dividend on FHLB Stock (3,700) (3,877)
Changes in assets and liabilities
Increase in accrued
interest receivable (24,550) (572)
Decrease in other receivable 116,493
(Increase) decrease in other
assets 45,778 (29,161)
Increase (decrease) in accrued
liabilities 1,318 (25,839)
Increase in current
income taxes payable 41,172 8,644
Decrease in deferred
income (1,591) (1,400)
------- -------
Total adjustments 184,651 (55,872)
Net cash provided (used) by
operating activities 218,691 29,339
------- ------
CASH FLOWS FROM INVESTING ACTIVITIES
Net decrease (increase) in mortgage-
backed and related securities 49,850 (80,035)
Sale of investment securities 3,677
Net increase in loans made to
customers (113,674) (465,433)
Purchase of property and equipment (48,542) (4,821)
------- -------
Net cash used by
investing activities (12,366) (546,612)
------- -------
(continued)
See accompanying notes to consolidated financial statements.
7
FIRST ALLEN PARISH BANCORP, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows (continued)
For the three months ended June 30, 1998 and 1997
(Unaudited)
1998 1997
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net (increase) in demand deposits, NOW
accounts, passbook savings accounts,
and certificates of deposits 227,901 916,808
Net (increase) in advances by
borrowers for taxes and insurance 2,459 (3,774)
--------- ---------
Net cash provided by
financing activities 230,360 913,034
--------- ---------
Net increase in cash and
cash equivalents 436,685 395,761
CASH AND CASH EQUIVALENTS,
beginning of period 1,472,110 1,847,270
--------- ---------
CASH AND CASH EQUIVALENTS,
end of period $1,908,795 $2,243,031
========== ==========
Supplemental Disclosures
Cash paid for:
Interest on deposits, advances,
and other borrowings $ 310,498 $ 307,357
Income taxes 39,748 40,649
Change in unrealized gain (loss)
on securities available
for sale (10,472) (8,429)
See accompanying notes to consolidated financial statements.
8
FIRST ALLEN PARISH BANCORP, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows
For the six months ended June 30, 1998 and 1997
(Unaudited)
1998 1997
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 103,310 $ 162,818
Adjustments to reconcile net
income to net cash provided
by operating activities:
Depreciation of premises
and equipment 19,159 17,925
Provision for loan losses (1,424)
Gain on sale of foreclosed
real estate (201)
Premium amortization net of
discount accretion 4,568 2,616
Deferred income taxes 5,599 5,420
Stock dividend on FHLB Stock (7,400) (7,477)
Changes in assets and liabilities
(Increase) decrease in accrued
interest receivable (16,561) 983
Increase in other receivables (40,675)
(Increase) decrease in other
assets 6,673 (65,994)
Decrease in advance payable,
Federal Home Loan Bank (1,200,000)
Increase(decrease) in accrued
liabilities 10,321 (26,351)
Increase in current
income taxes payable 24,554 39,424
Decrease) in deferred
income (773) (462)
--------- ---------
Total adjustments 5,465 (1,235,541)
Net cash provided
(used) by operating
activities 108,775 (1,072,723)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Net decrease (increase) in mortgage-
backed and related securities (74,994) 294,263
Sale of investment securities 3,700 7,377
Net increase in loans made to
customers (300,132) (943,308)
Purchase of property and equipment (118,842) (11,611)
--------- ---------
Net cash used by
investing activities (490,268) (653,279)
--------- ---------
(continued)
See accompanying notes to consolidated financial statements.
9
FIRST ALLEN PARISH BANCORP, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows (continued)
For the six months ended June 30, 1998 and 1997
(Unaudited)
1998 1997
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in demand deposits, NOW
accounts, passbook savings accounts,
and certificates of deposits 399,787 2,496,310
Net increase (decrease) in advances by
borrowers for taxes and insurance 6,259 (1,582)
--------- ---------
Net cash provided by
financing activities 406,046 2,494,728
--------- ---------
Net increase in cash and
cash equivalents 24,553 768,726
CASH AND CASH EQUIVALENTS, beginning
of period 1,884,242 1,474,305
--------- ---------
CASH AND CASH EQUIVALENTS, end
of period $1,908,795 $2,243,031
=========== ==========
Supplemental Disclosures
Cash paid for:
Interest on deposits, advances,
and other borrowings $ 616,075 $ 599,716
Income taxes 78,087 40,649
Change in unrealized gain (loss)
on securities available for sale 8,851 (611)
See accompanying notes to consolidated financial statements.
10
FIRST ALLEN PARISH BANCORP, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Unaudited)
(1) First Allen Parish Bancorp, Inc.
--------------------------------
First Allen Parish Bancorp, Inc. (the "Corporation")
was incorporated under the laws of the State of Delaware for
the purpose of becoming the savings and loan holding company
of First Federal Savings and Loan Association of Allen
Parish (the "Association") in connection with the
Association's conversion from a federally chartered mutual
savings association to a federally chartered stock savings
association, pursuant to its Plan of Conversion. On August
9, 1996, the Corporation commenced a Subscription and
Community Offering of its shares in connection with the
conversion of the Association ( the "Offering" ). The
Offering was consummated and the Corporation acquired the
Association on September 27, 1996. It should be noted that
the Corporation had no assets prior to the conversion and
acquisition on September 27, 1996.
The accompanying consolidated financial statements as
of and for the three months ended and six months ended June
30, 1998, include the accounts of the Corporation and the
Association.
(2) Stock Plans
-----------
Employee Stock Ownership Plan (ESOP)
------------------------------------
All employees meeting age and service requirements are
eligible to participate in an ESOP established on January
1, 1996. Contributions made by the Association to the ESOP
are allocated to participants by a formula based on
compensation. Participant benefits become 100 percent vested
after five years. The ESOP purchased 21,160 shares in the
Association's conversion.
Stock Option and Incentive Plan
-------------------------------
On, April 30, 1998, the Shareholders of First Allen
Parish Bancorp, Inc. approved the Stock Option and
Incentive Plan. The Stock Option and Incentive Plan
provides for awards of Stock Options, stock appreciation
rights and limited stock appreciation rights. Each award
shall be on such terms and conditions, consistent with the
Stock Option and Incentive Plan and applicable OTS
Regulations, as the committee administering the Stock
Option and Incentive Plan may determine. Stock options were
approved for the Chief Executive Officer, 6613 units; one
person in the executive group, 2645 units; and five persons
on the non-executive director group, 13,225 units; a total
of 22,483 shares of the Corporation's common stock are
reserved for issuance by the corporation under the Stock
Option and Incentive Plan. The Corporation may determine to
reacquire shares in the open market for purposes of
fulfilling it's obligations under the Stock Option and
Incentive Plan, or may alternatively issue additional shares
for this purpose.
11
FIRST ALLEN PARISH BANCORP, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Unaudited)
Recognition and Retention Plan
------------------------------
On April 30, 1998, the Shareholders of First Allen
Parish Bancorp, Inc. approved the Recognition and Retention
Plan(RRP). The RRP provides for the awards of shares of
common stock to five non-employee directors and one
employee director that were eligible at December 31, 1997 to
participate under the terms and conditions approved by the
RRP Committee. The RRP Committee is comprised of two
non-employee directors approved by the Board of Directors of
the Corporation. Stock awards were approved for the
Corporations Chief Executive Officer, 2,645 shares and to
the Corporation's five non-employee directors, 7,935
shares. A total of 10,580 shares of common stock will be
used to fund the RRP Plan. These shares may be either
authorized but unissued shares or issued shares
heretofore or hereafter reacquired by the Corporation in the
open market and held as Treasury Shares.
(3) Basis of Preparation
--------------------
The accompanying unaudited consolidated financial
statements were prepared in accordance with instructions for
Form 10-Q. To the extent that information and footnotes
required by generally accepted accounting principles for
complete financial statements are contained in the audited
financial statements included in the Association's audit
report for the year ended December 31, 1997, such
information and footnotes have not been duplicated herein.
In the opinion of management, all adjustments, consisting
only of normal recurring accruals, which are necessary
for the fair presentation of the interim financial
statements have been included. The statements of earnings
for the three month and six month period ended June 30, 1998
are not necessarily indicative of the results which may be
expected for the entire year.
(4) Earnings Per Share
------------------
On September 27, 1996, 264,506 shares of the
Corporation's stock were issued, including 21,160 shares
issued to the ESOP. In addition 22,483 shares of the
Corporations common stock has been reserved for issuance by
the Corporation under the Stock Option and Incentive Plan,
and 10,580 shares of common stock were awarded to the Chief
Executive Officer and non-employee directors under the
Recognition and Retention Plan. Earnings per share amounts
for the three month period and six month period ended June
30, 1998 are based upon an average of 245,463 shares. The
shares issued to the Employee Stock Ownership Plan (ESOP)
are not included in this computation until they are
allocated to plan participants. Standards under APB-25 and
FAS-123 were followed to compute average shares for the
stock options and stock awards granted.
12
FIRST ALLEN PARISH BANCORP, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements (Continued)
(Unaudited)
(5) Stockholders' Equity and Stock Conversion
-----------------------------------------
The Association converted from a federally chartered
mutual savings association to a federally chartered stock
savings association pursuant to its Plan of Conversion which
was approved by the Association's members on September 18,
1996. The conversion was effective on September 27, 1996
and resulted in the issuance of 264,506 shares of common
stock (par value $0.01) at $10 per share for a gross sales
price of $2,645,060. Costs related to conversion (primarily
underwriters' commissions, printing, and professional fees)
approximated $272,131 and were deducted to arrive at the net
proceeds of $2,372,929. The Corporation established an
employee stock ownership trust which purchased 21,160 shares
of common stock of the Corporation at the issuance price of
$10 per share with funds borrowed from the holding company.
13
FIRST ALLEN PARISH BANCORP, INC. AND SUBSIDIARY
Management's Discussion and Analysis
of Financial Condition and Results of Operations
General
- -------
First Allen Parish Bancorp, Inc. (the "Corporation") was
incorporated under the laws of the state of Delaware to become a
savings and loan holding company with First Federal Savings and
Loan Association of Allen Parish (the "Association") of Oakdale,
Louisiana, as its subsidiary. The Corporation was incorporated
at the direction of the Board of Directors of the Association,
and on September 27, 1996, acquired all of the capital stock of
the Association upon its conversion from mutual to stock form
(the "conversion"). Prior to the conversion, the Corporation did
not engage in any material operations and at September 30, 1996,
had no significant assets other than the investment in the
capital stock of the Association, the First Allen Parish Bancorp
loan to the employee stock ownership plan (ESOP), representing a
portion of the net proceeds from the conversion retained at the
holding company level and investments in mortgage backed
securities.
First Federal Savings and Loan Association of Allen Parish
was originally founded in 1962 as a federally chartered mutual
savings and loan association located in Oakdale, Louisiana. On
September 18, 1996, the Association members voted to convert the
Association to a federal stock institution. The Association
conducts its business through its main office in Oakdale,
Louisiana and a Loan Production Office(LPO) located in Oberlin,
Louisiana. A full-service branch is also currently under
construction to replace the LPO in Oberlin, Louisiana and the
Association expects to open for operations effective October 1,
1998. Deposits are insured by the Savings Association Insurance
Fund (SAIF) to the maximum allowable.
The Association has been, and intends to continue to be, a
community-oriented financial institution offering selected
financial services to meet the needs of the communities it
serves. The Association attracts deposits from the general
public and historically has used such deposits, together with
other funds, to originate loans secured by real estate, including
one- to four-family residential mortgage loans, commercial real
estate loans, land loans, construction loans and loans secured by
other properties. The Association also originates consumer and
other loans consisting primarily of loans secured by automobiles,
manufactured homes, loans secured by deposits (share loans) and
lines of credit.
The most significant outside factors influencing the
operations of the Association and other financial institutions
include general economic conditions, competition in the local
market place and the related monetary and fiscal policies of
agencies that regulate financial institutions. More specifically,
the cost of funds primarily consisting of insured deposits is
influenced by interest rates on competing investments and general
market rates of interest, while lending activities are influenced
by the demand for real estate financing and other types of loans,
which in turn is affected by the interest rates at which such
loans may be offered and other factors affecting loan demand and
funds availability.
14
Deposits of the Association are currently insured by the
SAIF of the FDIC. The FDIC also maintains another insurance
fund, the Bank Insurance Fund, which primarily insures commercial
bank deposits. Applicable law requires that both the SAIF and
BIF funds be recapitalized to a ratio of 1.25% of reserves to
deposits, and the FDIC announced that the BIF reached the
required reserve ratio during May 1995. The SAIF, however, was
not expected to achieve that reserve ratio before 2002. Due to
the disparity in reserve ratios, on November 14, 1995, the FDIC
reduced annual assessments for BIF-insured institutions to the
legal minimum of $2,000 while SAIF-insured institutions pay
assessments at the rated of 6.4 cents per $100 of deposits.
In September 1996, Congress enacted legislation to
recapitalize the SAIF by a one-time assessment on all
SAIF-insured deposits held as of March 31, 1995. The assessment
was 65.7 basis points per $100 in deposits, payable by November
30, 1996. For the Association, the assessment resulted in a
one-time charge to earnings during the three months ended
September 30, 1996 in the amount of $170,020 or ($112,213 when
adjusted for taxes), based on the Association's deposits on March
31, 1995 of $25,878,177. In addition, beginning January 1,
1997, pursuant to the legislation, interest payments on bonds
("FICO Bonds") issued in the late 1980s by the Financing
Corporation ("FICO") to recapitalize the now defunct Federal
Savings and Loan Insurance Corporation are being paid jointly by
BIF-insured institutions and SAIF insured institutions. The FICO
assessment is 1.29 basis points per $100 in BIF deposits and 6.44
basis points per $100 in SAIF deposits. Beginning January 1,
2000, the FICO interest payments will be paid pro rata by banks
and thrifts based on deposits (approximately 2.4 basis points per
$100 in deposits). The BIF and SAIF will be merged on January 1,
1999, provided the bank and savings association charters are
merged by that date. In that event, pro-rata FICO sharing will
begin on January 1, 1999.
While the legislation has reduced the disparity between
premiums paid on BIF deposits and SAIF deposits, and has relieved
the thrift industry of a portion of the contingent liability
represented by the FICO bonds, the premium disparity between
SAIF-insured institutions, such as the Association, and
BIF-insured institutions will continue until at least January 1,
1999. Under the legislation, the Association anticipates that
its ongoing annual SAIF premiums will be approximately $17,000.
Legislation recently passed by Congress contains a provision
that repealed the tax bad debt reserve available to Thrifts
including the percentage of taxable income method for tax years
beginning after December 31, 1995. The Association had to change
to the experience method of computing is's bad debt reserve. The
legislation required a Thrift to recapture the portion of its bad
debt reserve that exceeds the base year reserve, defined as the
tax reserve as of the last taxable year beginning after 1988. As
allowed by this legislation, First Federal has deferred the
recapture of this income until December 31, 1998.
15
Financial Condition
- -------------------
Consolidated assets of First Allen Parish Bancorp, Inc. were
$34.13 million as of June 30, 1998, an increase of $61,000 as
compared to December 31, 1997. At June 30, 1998, total
stockholders' equity was $4.7 million, an increase of $170,000
when compared to stockholders' equity at December 31, 1997. The
increase in stockholders' equity was a result of increases in
unrealized gain on securities held available-for- sale and net
income earned during the six months ending June 30, 1998.
Interest-bearing and non-interest bearing deposits and
investment securities increased slightly to $2.17 million at June
30, 1998 from $2.14 million at December 31, 1997. Mortgage
backed securities increased $75,000 to a total of $17.2 million
at June 30 , 1998, from a total of $17.1 million as of December
31, 1997.
Loans receivable increased to $13.9 million on June 30, 1998
from $13.6 million on December 31, 1997, an increase of
$300,000.
Deposits totaled $29.1 million on June 30, 1998 and $28.7
million on December 31, 1997, an increase of $400,000.
Other liabilities increased $44,000 from $328,000 at
December 31, 1997 to $372,000 at June 30, 1998.
Comparison of Operating Results for the Three Months Ended June
- ----------------------------------------------------------------
30, 1998 and 1997
- -----------------
General. Net income decreased $51,000 or 60%, to a total of
$34,000 for the three months ended June 30, 1998 from $85,000 for
the three months ended June 30, 1997. This decrease was
primarily due to the additional compensation expense of
$51,000 recognized by the Corporation for the Recognition and
Retention Plan approved by shareholders on April 30, 1998.
Net Interest Income. Total net interest income increased
$29,000 or 11% to $298,000 for the three months ended June 30,
1998 from $269,000 for the three months ended June 30, 1997.
This increase was primarily the result of an increase in income
earned on loans receivable and mortgage-backed securities offset
by an increase in the average cost of deposits.
Provision for Losses on Loans. The Association maintains an
allowance for loan losses based upon management's periodic
evaluation of known and inherent risk in the loan portfolio, the
Association's past loss experience, adverse situations that may
affect the borrower's ability to repay loans, estimated value of
the underlying collateral and current and expected market
conditions. During the three months ended June 30, 1998 the
Association experienced recoveries on loans for which reserves
had previously been established. The provision and recovery of
- -0- and $2,644 for the three months ended June 30, 1998 and 1997,
respectively were primarily due to losses and recoveries on
consumer loans.
16
Non-Interest Income. Non-interest income increased $12,00,
or 19% to $75,000 for the three months ended June 30, 1998 from
$63,000 for the three months ended June 30, 1997. This increase
was due to a $17,000 increase in service charges on deposits, and
a $2,000 increase in insurance commissions earned offset by a
decrease of $2,000 in loan origination fees and $4,500 decrease
in other operating revenues.
Non-Interest Expense. Non-interest expense increased
$88,000 or 43% to $292,000 for the three months ended June 30,
1998 from $204,000 for the three months ended June 30, 1997.
This increase was primarily due to an increase of $61,000 in
compensation and employee benefits, an $8,000 increase in
stationery and printing, a $12,000 decrease in data processing
and a $9,000 increase in other expenses.
Income Tax Expense. Income tax expense increased $5,000 or
12% to a total of $47,000 for the three months ended June 30,
1998 from an income tax expense of $42,000 for the three months
ended June 30, 1997.
17
Comparison of Operating Results for the six months ended June 30,
- -----------------------------------------------------------------
1998 and 1997.
- --------------
General. Net income decreased $60,000 or 37% to $103,000
for the six months ended June 30, 1998 from $163,000 for the six
months ended June 30, 1997. This decrease was primarily due to
the additional compensation expense of $51,000 recognized by the
Corporation for the Recognition and Retention Plan approved by
the shareholders on April 30, 1998.
Net interest Income. Net interest income increased $43,000,
or 7.7% to $577,000 for the six months ended June 30, 1998 from
$534,000 for the six months ended June 30, 1997.
Provision for Losses on Loans. The Association established
a provision for loan loss of -0- for the six months ended June
30, 1998 and a recovery of $1,424 for the six months ended June
30, 1997. The recoveries of $1,424 for the six months ended June
30, 1998 were due to recoveries on consumer loans.
Non-Interest Income. Non-interest income increased $13,000
or 10.2% to $141,000 for the six months ended June 30, 1998 from
$128,000 for the six months ended June 30, 1997. This increase
was due to a $17,000 increase in service charges on deposits,
offset by a $2,000 decrease in loan origination and servicing
fees, and a $2,000 decrease in other operating revenues.
Non-Interest Expense. Non-interest expense increased
$115,000 or 27.7% to $532,000 for the six months ended June 30,
1998 from $417,000 for the six months ended June 30, 1997. This
increase was due to $77,000 increase in compensation and employee
benefits, an $11,000 increase in stationery and printing, a
$13,000 increase in data processing and a $13,000 increase in
other expenses.
Income Tax Expenses. Income tax expense remained unchanged
for the six months ended June 30, 1998 from the six months ended
June 30, 1997.
Non-Performing Assets
- ---------------------
At June 30, 1998, non-performing assets were approximately
$194,000 compared to $126,000 on December 31, 1997. At June 30,
1998, the Association's allowance for loan losses was 155% of non
performing loans compared to 239% at December 31, 1997.
Loans are considered non-performing when the collection of
principal and/or interest is not probable, or in the event
payments are more than 90 days delinquent.
18
Capital Resources
- -----------------
The Association is subject to three capital to asset
requirements in accordance with Office of Thrift Supervision
(OTS) regulations. The following table is a summary of the
Association's regulatory capital requirements versus actual
capital as of June 30, 1998:
Actual Required Excess
Amount/Percent Amount/Percent Amount/Percent
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Tangible $3,671,000/11.01% $1,333,000/4.00% $2,338,000/ 7.01%
Core Leverage
Capital $3,671,000/11.01% $1,333,000/4.00% $2,333,000/ 7.01%
Risk-Based
Capital $3,832,000/26.73% $1,147,000/8.00% $2,685,000/18.73%
Liquidity
- ---------
The Association's principal sources of funds are deposits,
principal and interest payments on loans, deposits in other
insured institutions, and investment securities. While scheduled
loan repayments and maturing investments are relatively
predictable, deposit flows and early loan payments are more
influenced by interest rates, general economic conditions and
competition. Additional sources of funds may be obtained from the
Federal Home Loan Bank of Dallas by utilizing numerous available
products to meet funding needs.
The Association is required to maintain minimum levels of
liquid assets as defined by regulations. The required percentage
is currently five percent of net withdrawable savings deposits
and borrowings payable on demand or in one year or less. The
Association has maintained its liquidity ratio at levels
exceeding the minimum requirement. The eligible liquidity ratios
at December 31, 1997, and June 30, 1998, were 8.17% and 9.11%,
respectively.
For purposes of the cash flows, all short-term investments
with a maturity of three months or less at date of purchase are
considered cash equivalents. Cash and cash equivalents for the
periods ended June 30, 1998 and 1997 were $1.9 million and $2.2
million respectively. The decrease was primarily due to the
reduction in growth of deposits at June 30, 1998 as related to
June 30, 1997.
19
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other information
None
Item 6. Exhibits and Reports on Form 8-K
Exhibits:
27 - Financial Data Schedule
Reports on Form 8-K:
None.
20
SIGNATURES
Pursuant to the requirement 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.
First Allen Parish Bancorp,
Inc.
Registrant
Date: August 12, 1998 /s/Charles L. Galligan
--------------- ----------------------
Charles L. Galligan, President
and Chief Executive Officer
(Duly Authorized Officer)
Date: August 12, 1998 /s/Betty Jean Parker
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Betty J. Parker, Treasurer and
Chief Financial Officer