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 September 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 September 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
September 30, 1998 and December 31, 1997
September 30, 1998
(Unaudited) December 31, 1997
------------------ -----------------
ASSETS
Cash and cash equivalents
Interest-bearing $ 938,581 $ 1,297,774
Non-interest bearing 541,059 586,468
Mortgage-backed and related securities -
held-to-maturity 10,602,844 11,668,946
Mortgage-backed and related securities -
available-for-sale, estimated market
value 6,613,474 5,478,291
Loans receivable, net 14,640,159 13,645,908
Accrued interest receivable 251,214 229,363
Other receivables 136,835 62,895
Federal Home Loan Bank stock, at cost 263,200 259,300
Premises and equipment, at cost, less
accumulated depreciation 451,118 262,447
Other assets 29,082 27,795
----------- -----------
Total assets $34,467,566 $33,519,187
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits $29,366,889 $28,656,542
Advances by borrowers for taxes
and insurance 23,996 23,212
Federal income taxes:
Current 33,981 54,956
Deferred 137,387 135,398
Accrued liabilities 45,217 27,620
Dividends payable 39,676
Deferred income 46,313 47,065
----------- -----------
Total liabilities 29,653,783 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 2,384,799 2,314,066
Retained earnings (substantially
restricted) 2,575,409 2,405,441
Unrealized gain(loss) on securities
available-for-sale 20,189 (2,284)
Unearned employee stock ownership
plan (169,280) (185,150)
----------- -----------
Total stockholders' equity 4,813,783 4,534,718
----------- -----------
Total liabilities and
stockholders' equity $34,467,566 $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 September 30, 1998 and 1997
(Unaudited)
1998 1997
------------ ------------
INTEREST INCOME
Loans receivable:
First mortgage loans $254,153 $234,623
Consumer and other loans 74,667 64,002
Mortgage-backed and related securities 263,161 266,153
Other interest earning assets 22,558 23,232
-------- --------
Total interest income 614,539 588,010
-------- --------
INTEREST EXPENSE
Deposits 316,413 313,049
Borrowed funds - 4,135
-------- --------
Total interest expense 316,413 317,184
-------- --------
Net interest income 298,126 270,826
PROVISION (RECOVERY) LOAN LOSSES - (1,336)
-------- --------
Net interest income after recovery from
loan losses 298,126 272,162
-------- --------
NONINTEREST INCOME
Service charges on deposits 62,854 49,082
Insurance commissions earned 1,844 4,450
Loan origination and servicing fees 18,692 9,705
Net other real estate income(expenses) 579 (958)
Gain on foreclosed real estate - (92)
Other operating revenues 3,541 6,634
-------- --------
Total noninterest income 87,510 68,821
-------- --------
NONINTEREST EXPENSES
Compensation and employee benefits 122,459 111,758
Occupancy and equipment expenses 19,888 14,780
SAIF deposit insurance premiums 4,341 4,279
Stationery and printing 16,538 10,572
Data processing 18,309 14,276
Other expenses 46,279 57,405
-------- --------
Total noninterest expenses 227,814 213,070
Income before income taxes 157,822 127,913
-------- --------
INCOME TAX EXPENSE 51,488 44,814
-------- --------
NET INCOME $106,334 $83,099
======== ========
Net earnings per common share:
Primary and fully diluted $0.43 $0.34
Weighted average number of shares
outstanding ======== ========
Primary and fully diluted 246,903
244,463
See accompanying notes to consolidated financial statements.
5
FIRST ALLEN PARISH BANCORP, INC. AND SUBSIDIARY
Consolidated Statements of Income
For the nine months ended September 30, 1998 and 1997
(Unaudited)
1998 1997
----------- -----------
INTEREST INCOME
Loans receivable:
First mortgage loans $716,182 $670,938
Consumer and other loans 232,486 185,598
Mortgage-backed and related securities 801,686 794,165
Other interest earning assets 64,751 71,233
--------- ---------
Total interest income 1,815,105 1,721,934
--------- ---------
INTEREST EXPENSE
Deposits 932,886 893,032
Borrowed funds 6,602 23,868
--------- ---------
Total interest expense 939,488 916,900
--------- ---------
Net interest income 875,617 805,034
--------- ---------
PROVISION (RECOVERY) LOAN LOSSES - (2,760)
--------- ---------
Net interest income after recovery
from loan losses 875,617 807,794
--------- ---------
NONINTEREST INCOME
Service charges on deposits 174,034 143,150
Insurance commissions earned 5,413 7,419
Loan origination and servicing fees 34,995 27,767
Net other real estate income(expenses) 159 (1,321)
Gain on foreclosed real estate - 109
Other operating revenues 13,815 19,328
--------- ---------
Total noninterest income 228,416 196,452
--------- ---------
NONINTEREST EXPENSES
Compensation and employee benefits 401,136 313,859
Occupancy and equipment expenses 55,709 49,099
SAIF deposit insurance premiums 13,140 12,749
Stationery and printing 54,979 37,957
Data processing 61,298 43,787
Other expenses 173,483 172,177
--------- ---------
Total noninterest expenses 759,745 629,628
--------- ---------
Income before income taxes 344,288 374,618
INCOME TAX EXPENSE 134,644 128,700
--------- ---------
NET INCOME $209,644 $ 245,918
========= =========
Net earnings per common share:
Primary and fully diluted $.85 $1.01
Weighted average number of shares
outstanding Primary and fully diluted ========= =========
246,903 244,463
See accompanying notes to consolidated financial statements.
</TABLE
6
FIRST ALLEN PARISH BANCORP, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows
For the three months ended September 30, 1998 and 1997
(Unaudited)
1998 1997
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 106,334 $ 83,099
--------- ---------
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation of premises and equipment 9,067 8,963
Provision for loan losses - (1,336)
Loss on sale of foreclosed real estate - 92
Premium amortization net of discount
accretion (1,808) 26,661
Deferred income taxes (3,610) 1,890
Stock dividend on FHLB Stock (3,900) (3,923)
Compensation from stock awards 50,784 -
Deferred compensation 8,100 2,700
Changes in assets and liabilities
Increase in other receivables (33,265) -
(Increase) decrease in other assets (7,960) 41,907
Increase in accrued liabilities 7,276 17,958
Increase (decrease) in current
income taxes payable (45,529) 23,476
Increase (decrease) in deferred
income 21 (630)
-------- --------
Total adjustments (20,824) 117,758
-------- --------
Net cash provided by
operating activities 85,510 200,857
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Net increase in mortgage-backed
and related securities (27,576) (31,300)
Sale of investment securities - 3,823
Net decrease in loans made to customers (694,119) (2,602)
Purchase of property and equipment (98,055) (4,544)
-------- --------
Net cash used by
investing activities (819,750) (34,623)
-------- --------
(continued)
7
FIRST ALLEN PARISH BANCORP, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows (continued)
For the three months ended September 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 310,560 154,516
Net decrease in advances by
borrowers for taxes and insurance (5,475) (8,974)
---------- ----------
Net cash provided by
financing activities 305,085 145,542
---------- ----------
Net increase(decrease) in cash
and cash equivalents (429,155) 311,776
CASH AND CASH EQUIVALENTS, beginning of
period 1,908,795 2,243,031
---------- ----------
CASH AND CASH EQUIVALENTS, end of period $1,479,640 $2,554,807
========== ==========
Supplemental Disclosures
Cash paid for:
Interest on deposits, advances, and
other borrowings $ 317,516 $ 292,445
Income taxes 78,090 80,742
Transfers from loans to real estate
acquired through foreclosure - 33,345
Change in unrealized gain (loss) on
securities available for sale 13,622 3,652
See accompanying notes to consolidated financial statements.
8
FIRST ALLEN PARISH BANCORP, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows
For the nine months ended September 30, 1998 and 1997
(Unaudited)
1998 1997
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 209,644 $ 245,918
---------- ----------
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation of premises and
equipment 28,226 26,888
Provision for loan losses - (2,760)
Gain on sale of foreclosed real
estate - (109)
Premium amortization net of
discount accretion 2,760 35,809
Deferred income taxes 1,989 7,310
Stock dividend on FHLB stock (11,300) (11,400)
Compensation from stock awards 50,784 -
Deferred compensation 8,100 8,100
Changes in assets and liabilities
Increase in other receivables (73,940) -
Increase in other assets (1,287) (24,087)
Decrease in advance payable,
Federal Home Loan Bank - (1,200,000)
Increase (decrease) in accrued
liabilities 17,597 (8,393)
Increase (decrease) in current
income taxes payable (20,975) 62,900
Decrease in deferred income (752) (1,092)
---------- ----------
Total adjustments 1,202 (1,106,834)
---------- ----------
Net cash provided (used) by
operating activities 210,846 (860,916)
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Net decrease (increase) in mortgage-backed
and related securities (119,131) 252,013
Sale of investment securities 3,700 11,200
Net increase in loans made to
customers (994,251) (945,910)
Purchase of property and equipment (216,897) (16,155)
---------- ----------
Net cash used by
investing activities (1,326,579) (698,852)
(continued)
See accompanying notes to consolidated financial statements.
9
FIRST ALLEN PARISH BANCORP, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows (continued)
For the nine months ended September 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 710,347 2,650,826
Net increase (decrease) in advances by
borrowers for taxes and insurance 784 (10,556)
---------- ----------
Net cash provided by
financing activities 711,131 2,640,270
---------- ----------
Net increase (decrease) in
cash and cash equivalents (404,602) ,080,502
CASH AND CASH EQUIVALENTS, beginning of
period 1,884,242 1,474,305
---------- ----------
CASH AND CASH EQUIVALENTS, end of
period $1,479,640 $2,554,807
========== ==========
Supplemental Disclosures
Cash paid for:
Interest on deposits, advances,
and other borrowings $ 933,591 $ 892,161
Income taxes 156,177 121,391
Transfers from loans to real estate
acquired through foreclosure - 33,245
Change in unrealized gain (loss) on
securities available for sale 22,473 3,041
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 nine months ended
September 30, 1998, include the accounts of the Corporation
and the Association.
(2) 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 conversions.
(3) 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 Corporations'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)
(4) 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, l997 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
Corporation's Chief Executive Officer, 2645 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.
(5) 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 nine month periods ended September 30, 1998
are not necessarily indicative of the results which may be
expected for the entire year.
(6) 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 additon, 22,483 shares of the
Corporation under the Stock Option and Incentive Plan, and
10,580 shares of common stock were awared 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 nine month period ended
September 30, 1998 are based upon an average of 246,903
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)
(7) 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 currently under construction
to replace the LPO in Oberlin, Louisiana and the Association
expects to open for operations effective November 23, 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 rate 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 it'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
$34.5 milllion as of September 30, 1998, an increase of $948,000
as compared to December 31, 1997. At September 30, 1998, total
stockholders' equity was $4.8 million, an increase of $279,000
when compared to stockholders' equity at December 31, 1997. The
increase in stockholders' equity was a result of increases in
loans and deposits and net income earned during the nine months
ending September 30, 1998.
Interest-bearing and non-interest bearing deposits and
investment securities decreased to $1.74 million at September 30,
1998 from $2.14 million at December 31, 1997, a decrease of
$400,000. Mortgage backed securities increased slightly to a
total of $17.2 million at September 30, 1998, from a total of
$17.1 million as of December 31, 1997.
Loans receivable increased to $14.6 million on September 30,
1998 from $13.6 million on December 31, 1997, an increase of $1
million.
Deposits totaled $29.4 million on September 30, 1998 and
$28.7 million on December 31, 1997, an increase of $700,000.
Other liabilities remained relatively unchanged from
December 31, 1997 to September 30, 1998.
Comparison of Operating Results for the Three Months Ended
- ----------------------------------------------------------
September 30, 1998 and 1997
- ---------------------------
General. Net income increased $23,000 to a total of
$106,000 for the three months ended September 30, 1998 from
$83,000 for the three months ended September 30, 1997. This
increase was due to increased net interest income after
provision(recovery) from loan losses of $26,000 and increased
noninterest income of $19,000 offset by a $15,000 increase in
noninterest expense and $7,000 increase in income taxes.
Net Interest Income. Total net interest income increased
$26,000 or 12.2% to $298,000 for the three months ended September
30, 1998 from $272,000 for the three months ended September 30,
1997. This increase was primarily the result of an increase in
income earned on loans receivable.
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 September 30, 1998 the
Association had no provision or recovery for loan losses. The
recovery of $1,336 for the three months ended September 30, 1997
was primarily due to recoveries on consumer loans.
16
Non-Interest Income. Non-interest income increased $19,000
to $88,000 for the three months ended September 30, 1998 from
$69,000 for the three months ended September 30, 1997. This
increase was primarily due to a $14,000 increase in service
charges on deposits and an increase of $9,000 in loan origination
and servicing fees offset by a $3,000 decrease in other operating
revenue.
Non-Interest Expense. Non-interest expense increased
$15,000 or 7% to $228,000 for the three months ended September
30, 1998 from $213,000 for the three months ended September 30,
1998. This increase was due to a $10,000 increase in
compensation and employee benefits, a $5,000 increase in
occupancy and equipment expenses a $6,000 increase in stationery
and printing and a $4,000 increase in data processing offset by
an $11,000 decrease in other expenses.
Income Tax Expense. Income tax expense increased $6,000 or
13.3% to a total of $51,000 for the three months ended September
30, 1998 from an income tax expense of $45,000 for the three
months ended September 30, 1997.
17
Comparison of Operating Results for the nine months ended
- ---------------------------------------------------------
September 30, 1998 and 1997.
- ----------------------------
General. Net income decreased $36,000 or 14.6% to $210,000
for the nine months ended September 30, 1998 from $246,000 for
the nine months ended September 30, 1997. This decrease was due
to a $68,000 increase in net interest income and a $32,000
increase in non-interest income offset by a $130,000 increase in
noninterest expenses and a $6,000 increase in income taxes.
Net interest Income. Net interest income increased $68,000,
or 8.4% to $876,000 for the nine months ended September 30, 1998
from $808,000 for the nine months ended September 30, 1997.
Provision for Losses on Loans. The Association experienced
recoveries on loans for which reserves had previously been
established in the amount of $2,760 for the nine months ended
September 30, 1997, as compared to no provision or recovery in
1998.
Non-Interest Income. Non-interest income increased $32,000
or 16.3% to $228,000 for the nine months ended September 30, 1998
from $196,000 for the nine months ended September 30, 1997. This
increase was primarily due to a $31,000 increase in service
charges on deposits and a $7,000 increase in loan origination and
servicing fees offset by a $5,000 decrease in other operating
revenues.
Non-Interest Expense. Non-interest expense increased
$130,000 or 20.6% to $760,000 for the nine months ended September
30, 1998 from $630,000 for the nine months ended September 30,
1997. This increase was primarily due to an $87,000 increase in
compensation and employee benefits, a $7,000 increase in occupany
and equipment expenses, a $17,000 increase in stationery and
printing and a $17,000 increase in data processing..
Income Tax Expenses. Income tax expense increased $6,000 to
$135,000 for the nine months ended September 30, 1998 from
$129,000 for the nine months ended September 30, 1997.
Non-Performing Assets
- ---------------------
At September 30, 1998, non-performing assets were
approximately $155,000 compared to $126,000 on December 31, 1997.
At September 30, 1998, the Association's allowance for loan
losses was 196% 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 September 30, 1998:
Actual Required Excess
Amount/Percent Amount/Percent Amount/Percent
- ----------------------------------------------------------------
Tangible $3,396,000/11.25% $ 1,378,720/4.00% $2,017,280/7.25%
Core Leverage
Capital $3,396,000/11.25% $ 1,378,720/4.00% $2,017,280/7.25%
Risk-Based
Capital $3,960,000/26.82% $1,181,000/8.00% $2,779,000/18.82%
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 September 30, 1998, were 8.17% and
7.86%, 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 September 30, 1998 and 1997 were $1,479,640 and
$2,554,807, respectively. The decrease of $1,075,167 was
primarily due to the increase in loans and construction of the
new full-service branch in Oberlin, Louisiana.
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: November 10, 1998 /s/Charles L. Galligan
----------------- -----------------------------------
Charles L. Galligan, President
and Chief Executive Officer (Duly
Authorized Officer)
Date: November 10, 1998 /s/Betty Jean Parker
----------------- -----------------------------------
Betty J. Parker, Treasurer and
Chief Financial Officer