UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999
Commission File Number 0-25756
ISB Financial Corporation
(Exact name of registrant as specified in its charter)
Louisiana 72-1280718
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(State or other jurisdiction of incorporation or (I.R.S. Employer
organization) Identification Number)
1101 East Admiral Doyle Drive
New Iberia, Louisiana 70560
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(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (337) 365-2361
Securities registered pursuant of Section 12(b) of the Act: Not Applicable
Securities registered pursuant of Section 12(g) of the Act
Common Stock (par value $1.00 per share)
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(Title of Class)
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 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 by check mark if disclosure of delinquent filers pursuant of Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment of this
Form 10-K. X
As of March 9, 2000, the aggregate market value of the 6,084,734 shares of
Common Stock of the Registrant issued and outstanding on such date, which
excludes 474,003 shares held by all directors and officers of the Registrant as
a group, was approximately $82.9 million. This figure is based on the closing
sale price of $13.625 per share of the Registrant's Common Stock on March 9,
2000.
Number of shares of Common Stock outstanding as of December 31, 1999:
6,558,737
DOCUMENTS INCORPORATED BY REFERENCE
List hereunder the following documents incorporated by reference and the
Part of the Form 10-K into which the document is incorporated. (1) Portions of
the Annual Report to Stockholders for the fiscal year ended December 31, 1999
are incorporated into Part II, Items 5 through 8 of this Form 10-K, (2) Portions
of the definitive proxy statement for the 2000 Annual Meeting of Stockholders to
be filed within 120 days of Registrant's fiscal year end are incorporated into
Part III, Items 9 through 13 of this Form 10-K.
PART 1.
ITEM 1. BUSINESS.
GENERAL
ISB Financial Corporation (the "Company") is a Louisiana corporation
organized in 1994 by Iberia Savings Bank ("Iberia") for the purpose of acquiring
all of the capital stock of Iberia to be issued by Iberia in the conversion (the
"Conversion") of Iberia to stock form, which was completed on April 6, 1995. In
1996, the Company completed the acquisition of Royal Bankgroup of Acadiana,
Inc., ("Royal") and its wholly owned subsidiary, The Bank of Lafayette ("BOL").
Royal was merged into the Company and BOL was merged into Iberia. The two
offices of BOL now operate as branches of Iberia. In October 1996, the Company
completed the acquisition of Jefferson Bancorp, Inc. and its wholly owned
subsidiary, Jefferson Federal Savings Bank. Jefferson Bancorp, Inc. was merged
into the Company and Jefferson Federal Savings Bank operated as a separate
subsidiary of the Company until September 1, 1997, as a state chartered savings
bank under the name of Jefferson Bank ("Jefferson"). In 1997, Jefferson Bank was
merged with and into Iberia Savings Bank. In December 1997, Iberia Savings Bank
changed its name to IBERIABANK and converted to a Louisiana chartered commercial
bank. In 1998, Iberia acquired 17 branch offices from certain banking
subsidiaries of the former First Commerce Corporation ("FCOM"). The only
significant assets of the Company are the capital stock of Iberia, the Company's
loan to an employee stock ownership plan, and cash. To date, the business of the
Company has consisted of the business of Iberia. The Company's common stock
trades on the NASDAQ Stock Market under the symbol "ISBF." At December 31, 1999,
the Company had total assets of $1.4 billion, total deposits of $1.1 billion and
shareholders' equity of $117.2 million.
Iberia is a Louisiana-chartered stock commercial bank conducting business
from its main office located in New Iberia, Louisiana and 43 full-service branch
offices located in New Iberia, Lafayette, Jeanerette, Franklin, Morgan City,
Crowley, Rayne, Kaplan, St. Martinville, Abbeville, Scott, Carencro, Ruston,
Monroe, West Monroe, Gretna, Marrero, River Ridge, New Orleans, Metairie and
Kenner, all of which are in Louisiana. The Bank attracts retail deposits from
the general public and the business community through a variety of deposit
products. Deposits are insured by the Savings Association Insurance Fund
("SAIF"), administered by the Federal Deposit Insurance Corporation ("FDIC"),
within applicable limits.
The Bank is primarily engaged in attracting deposits from the general
public and using those funds to originate loans. Previous to 1996, the Bank's
primary lending emphasis was loans secured by first and second liens on
single-family (one-to-four units) residences located in the Bank's primary
market area. At December 31, 1999, such loans amounted to $266.4 million or
31.6% of the Bank's gross loan portfolio. The Bank has placed recent emphasis on
the origination of consumer and commercial loans. Consumer loans consist of home
equity loans, home equity lines of credit, automobile loans, indirect automobile
loans, loans secured by deposit accounts and other consumer loans. At December
31, 1999, $330.6 million, or 39.2%, of the Bank's gross loans were consumer
loans. Of that amount $179.4 million, or 21.3% of gross loans, were indirect
automobile loans. Commercial loans consist of commercial real estate loans and
commercial business loans. At December 31, 1999, $157.2 million, or 18.7% of
gross loans were secured by commercial real estate and $82.5 million, or 9.8%,
were commercial business loans. The Bank also originates loans for the purpose
of constructing single-family residential units. At December 31, 1999, $6.4
million, or 0.8% of the Bank's loans, were construction loans.
The Company, as a bank holding company, is subject to regulation and
supervision by the Board of Governors of the Federal Reserve System ("FRB"). The
Bank is subject to examination and comprehensive regulation by the Office of
Financial Institutions of the State of Louisiana ("OFI"), which is the Bank's
chartering authority and primary regulator. The Bank is also subject to
regulation by the FDIC, as the administrator of the SAIF, and to certain reserve
requirements established by the Federal Reserve Board. The Bank is a member of
the Federal Home Loan Bank ("FHLB") of Dallas which is one of the 12 regional
banks comprising the FHLB System.
In addition to its deposit gathering and lending activities, the Bank
invests in mortgage-backed securities, substantially all of which are issued or
guaranteed by U.S. Government agencies and government sponsored enterprises, as
well as U.S. Treasury and federal government agency obligations and other
investment securities. At December 31, 1999, the Bank's mortgage-backed
securities amounted to $269.1 million, or 19.7% of total assets and its other
investment securities amounted to $115.8 million, or 8.5% of total assets.
2
LENDING ACTIVITIES
LOAN PORTFOLIO COMPOSITION. The following table sets forth the composition
of the Banks' loans held in portfolio at the dates indicated. (1)
December 31,
-------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
---------------- ----------------- ---------------- ----------------- -------------------
Amount Percent Amount Percent Amount Percent Amount Percent Amount Percent
------ ------- ------ ------- ------ ------- ------ ------- ------ -------
(Dollars in Thousands)
Mortgage loans:
Single-family residential $266,365 31.60% $300,150 39.06% $370,117 56.07% $384,032 66.70% $315,449 78.22%
Construction 6,381 0.76% 7,402 0.96% 7,890 1.20% 7,957 1.38% 7,176 1.78%
-------- ------- -------- ------- -------- ------- -------- ------- -------- -------
Total mortgage loans 272,746 32.36% 307,552 40.02% 378,007 57.27% 391,989 68.08% 322,625 80.00%
-------- ------- -------- ------- -------- ------- -------- ------- -------- -------
Commercial loans:
Business loans 82,485 9.78% 83,237 10.83% 57,620 8.73% 35,894 6.24% 11,165 2.77%
Real estate 157,248 18.65% 117,768 15.33% 50,462 7.64% 25,239 4.38% 15,990 3.96%
-------- ------- -------- ------- -------- ------- -------- ------- -------- -------
Total commercial loans 239,733 28.43% 201,005 26.16% 108,082 16.37% 61,133 10.62% 27,155 6.73%
-------- ------- -------- ------- -------- ------- -------- ------- -------- -------
Consumer loans:
Home equity 91,531 10.86% 73,185 9.52% 34,192 5.18% 21,637 3.76% 15,356 3.81%
Automobile 23,432 2.78% 24,631 3.21% 9,434 1.43% 7,509 1.30% 5,908 1.47%
Indirect automobile 179,350 21.27% 118,529 15.43% 94,282 14.28% 54,935 9.54% 625 0.15%
Credit card loans 6,436 0.76% 4,584 0.60% 4,150 0.63% 4,017 0.70% 3,836 0.95%
Other 29,854 3.54% 38,912 5.06% 31,978 4.84% 34,514 6.00% 27,783 6.89%
-------- ------- -------- ------- -------- ------- -------- ------- -------- -------
Total consumer loans 330,603 39.21% 259,841 33.82% 174,036 26.36% 122,612 21.30% 53,508 13.27%
-------- ------- -------- ------- -------- ------- -------- ------- -------- -------
Total loans receivable 843,082 100.00% 768,398 100.00% 660,125 100.00% 575,734 100.00% 403,288 100.00%
-------- ------- -------- ------- -------- ------- -------- ------- -------- -------
Less:
Allowance for loan losses (8,749) (7,135) (5,258) (4,615) (3,746)
-------- -------- -------- -------- --------
Loans receivable, net $834,333 $761,263 $654,867 $571,119 $399,542
======== ======== ======== ======== ========
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(1) This schedule does not include loans held for sale of $4.8 million, $18.4
million, and $4.4 million at December 31, 1999, 1998 and 1997, respectively.
There were no loans classified as held for sale prior to the year ended
December 31, 1997.
3
CONTRACTUAL MATURITIES. The following table sets forth the scheduled
contractual maturities of the Banks' loans held to maturity at December 31,
1999. Demand loans, loans having no stated schedule of repayments and no stated
maturity and overdraft loans are reported as due in one year or less. The
amounts shown for each period do not take into account loan prepayments and
normal amortization of the Banks' loan portfolio held to maturity.
Commercial
---------------------------------------------------------------
Construction Real Estate Business Total
------------ ----------- -------- -----
(Dollars in Thousands)
Amounts due in:
One year or less $ 5,601 $ 46,435 $ 45,464 $ 97,500
After one year through five years 780 88,404 29,249 118,433
After five years -- 22,409 7,772 30,181
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Total $ 6,381 $ 157,248 $ 82,485 $ 246,114
========= ============= ============= ===========
Interest rate terms on amounts
Due after one year:
Fixed rate $ -- $ 100,450 $ 33,257 $ 133,707
Adjustable rate 780 10,363 3,764 14,907
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Total $ 780 $ 110,813 $ 37,021 $ 148,614
========= ============= ============= ===========
Scheduled contractual amortization of loans does not reflect the expected
term of the bank's loan portfolio. The average life of loans is substantially
less than their contractual terms because of prepayments and due-on-sale
clauses, which give the Bank the right to declare a conventional loan
immediately due and payable in the event, among other things, that the borrower
sells the real property subject to the mortgage and the loan is not repaid. The
average life of mortgage loans tends to increase when current mortgage loan
rates are higher than rates on existing mortgage loans and, conversely, decrease
when rates on existing mortgage loans are lower than current mortgage loans
rates (due to refinancings of adjustable-rate and fixed-rate loans at lower
rates). Under the latter circumstances, the weighted average yield on loans
decreases as higher-yielding loans are repaid or refinanced at lower rates.
The lending activities of Iberia are subject to written underwriting
standards and loan origination procedures established by the Bank's Board of
Directors and management. Applications for residential mortgage loans are taken
by one of the Banks' mortgage executives, while the Banks' designated consumer
lenders have primary responsibility for taking consumer loan applications and
its commercial lending officers have primary responsibility for taking
commercial business and commercial real estate loan applications. The Bank's
loan originators will take loan applications at any of the Banks' offices and,
on occasion, outside of the Banks' offices at the customer's convenience. The
process of underwriting all residential mortgage, consumer and construction
loans and obtaining appropriate documentation, such as credit reports,
appraisals and other documentation is centralized. The credit analysis
department is responsible for overseeing the underwriting of all commercial
business and commercial real estate loans. The Bank generally requires that a
property appraisal be obtained in connection with all new mortgage loans.
Property appraisals generally are performed by an independent appraiser from a
list approved by the Bank's Board of Directors. The Bank requires that title
insurance or a title opinion (other than with respect to home equity loans) and
hazard insurance be maintained on all security properties and that flood
insurance be maintained if the property is within a designated flood plain.
Residential mortgage loan applications are primarily developed from
advertising, referrals from real estate brokers and builders, existing customers
and walk-in customers. Commercial real estate and commercial business loan
applications are obtained primarily from previous borrowers, direct
solicitations by the Bank's personnel, as well as referrals. Consumer loans
originated by the Bank are obtained primarily through existing customers,
automobile dealerships and walk-in customers who have been made aware of the
Bank's programs by advertising and other means.
4
Applications for residential mortgage loans typically are approved by
certain designated officers or, if the loan amount exceeds $240,000 by a
combination of certain designated officers. If a loan is over $750,000, it must
also be approved by the Loan Committee of the Bank's Board of Directors. Certain
designated officers of the Bank have limited authority to approve commercial
loans not exceeding specified levels, the officers may combine their individual
limits and approve loans up to $1.0 million. Loans in excess of $1.0 million but
less than $8.0 million must be approved by the Bank's Commercial Loan Committee
made up of members of the Board of Directors. Commercial loans in excess of $8.0
million must be approved by the full Board of Directors. Certain designated
officers approve consumer loans up to $40,000 unsecured and $80,000 secured.
Consumer loans up to $200,000 unsecured and $500,000 secured must be approved by
certain combinations of Bank officers. Consumer loans over $200,000 unsecured
and $500,000 secured must be approved by the Board of Directors Loan Committee.
SINGLE-FAMILY RESIDENTIAL LOANS. Substantially all of the Bank's
single-family residential mortgage loans consist of conventional loans.
Conventional loans are loans that are neither insured by the Federal Housing
Administration ("FHA") or partially guaranteed by the Department of Veterans
Affairs ("VA"). The vast majority of the Bank's single-family residential
mortgage loans are secured by properties located in Southwestern Louisiana and
the greater New Orleans area and are originated under terms and documentation
which permit their sale to the Federal Home Loan Mortgage Corporation ("FHLMC")
or Federal National Mortgage Association ("FNMA"). Since 1996, the Bank has
decided to sell, or hold for sale, the majority of all conforming fixed-rate
loan originations into the secondary market and retain adjustable-rate loan
originations in its portfolio.
Fixed-rate loans generally have maturities ranging from 15 to 30 years and
are fully amortizing with monthly loan payments sufficient to repay the total
amount of the loan with interest by the end of the loan term. The Bank's
fixed-rate loans generally are originated under terms, conditions and
documentation which permit them to be sold to U.S. Government sponsored
agencies, such as the FHLMC and the FNMA, and other investors in the secondary
market for mortgages. At December 31, 1999, $147.4 million, or 54.1%, of the
Bank's single-family residential mortgage and construction loans were fixed-rate
loans.
The adjustable-rate loans currently offered by the Bank have interest rates
which adjust on an annual basis from the closing date of the loan or an annual
basis commencing after an initial fixed-rate period of three, five or ten years
in accordance with a designated index, plus a margin. During 1996, the Bank
changed its index to the one year constant maturity treasury ("CMT") from the
National Median Cost of Funds for SAIF-Insured Institutions for all new
adjustable-rate single-family residential loan originations. The Bank's
adjustable-rate single-family residential real estate loans generally have a cap
of 2% on any increase or decrease in the interest rate at any adjustment date,
and include a specified cap on the maximum interest rate over the life of the
loan, which cap generally is 4% to 6% above the initial rate. The Bank's
adjustable-rate loans require that any payment adjustment resulting from a
change in the interest rate of an adjustable-rate loan be sufficient to result
in full amortization of the loan by the end of the loan term and, thus, do not
permit any of the increased payment to be added to the principal amount of the
loan, or so-called negative amortization. At December 31, 1999, $125.3 million
or 45.9% of the Bank's single-family residential mortgage and construction loans
were adjustable-rate loans.
Adjustable-rate loans decrease the risks associated with changes in
interest rates but involve other risks, primarily because as interest rates
increase the loan payment by the borrower increases to the extent permitted by
the terms of the loan, thereby increasing the potential for default. Moreover,
as with fixed-rate loans, as interest rates increase, the marketability of the
underlying collateral property may be adversely affected by higher interest
rates.
For conventional residential mortgage loans held in the portfolio and also
for those loans originated for sale in the secondary market, the Bank's maximum
loan-to-value ratio generally is 95%, and is based on the lesser of sales price
or appraised value. Generally on loans with a loan-to-value ratio of over 80%,
private mortgage insurance ("PMI") is required in an amount which reduces the
Bank's exposure to 80% or less.
In November 1994, in order to assist low- to moderate- income families
achieve home ownership, Iberia implemented a program whereby it will provide
100% financing to certain low-to moderate- income homebuyers in Iberia's market
area. Such loans are structured as a 30-year ARM with respect to 90% of the
value with the remaining necessary funds (including closing costs) being
provided through a five-year fixed rate second mortgage loan. No PMI is required
to be obtained with respect to loans originated under this program. Iberia has
developed its 100% financing loan product in an effort to address the home
buying needs of lower income residents. Due to the absence, or limited amount,
of equity with respect to such loans and the absence of PMI, this product may be
deemed to involve greater risk than Iberia's typical single-family residential
mortgage loans. However, the
5
individual loans in this program generally are relatively small, with balances
generally less than $50,000. At this time, Iberia anticipates that the aggregate
balance of loans originated under this program will not exceed $10.0 million. As
of December 31, 1999, such loans amounted to $4.9 million, or 0.6%, of the
Bank's total loan portfolio. To date, Iberia has not experienced any significant
delinquency problems with respect to loans originated under this program.
CONSTRUCTION LOANS. Substantially all of the Bank's construction loans have
consisted of loans to construct single-family residences extended to individuals
where the Bank has committed to provide a permanent mortgage loan upon
completion of the residence. As of December 31, 1999, the Bank's construction
loans amounted to $6.4 million, or 0.8%, of the Bank's total loan portfolio. The
Bank's loans are underwritten as construction/permanent loans, with one set of
documents and one closing for both the construction and the long-term portions
of such loans. The Bank's construction loans typically provide for a
construction period not exceeding 12 months, generally have loan-to-value ratios
of 80% or less of the appraised value upon completion and generally do not
require the amortization of principal during the construction phase. Upon
completion of construction, the loans convert to permanent residential mortgage
loans. Loan proceeds are disbursed in stages after inspections of the project
indicate that such disbursements are for costs already incurred and which have
added to the value of the project. The Bank also will originate ground or land
loans to individuals to purchase a building lot on which he intends to build his
primary residence.
Prior to making a commitment to fund a construction loan, the Bank requires
an appraisal of the property by an independent state-licensed or qualified
appraiser approved by the Board of Directors. In addition, during the term of
the construction loan, the project periodically is inspected by an independent
inspector.
Construction financing is generally considered to involve a higher degree
of risk of loss than long-term financing on improved, owner-occupied real
estate. Risk of loss on a construction loan is dependent largely upon the
accuracy of the initial estimate of the property's value at completion of
construction or development and the estimated cost (including interest) of
construction. During the construction phase, a number of factors could result in
delays and cost overruns. If the estimate of value proves to be inaccurate, the
Bank may be confronted, at or prior to the maturity of the loan, with a project,
when completed, having a value which is insufficient to assure full repayment.
Loans on lots may run the risk of adverse zoning changes, environmental or other
restrictions on future use.
COMMERCIAL REAL ESTATE LOANS. The Bank has increased its investment in
commercial real estate loans from $16.0 million, or 4.0% of the total loan
portfolio at December 31, 1995, to $157.2 million, or 18.7% of the total loan
portfolio, at December 31, 1999. The increase in commercial real estate loans
reflects, in part, the Bank's focused efforts to originate such loans in its
market area, as well as the acquisition of certain commercial real estate loans
acquired from BOL and FCOM. The Bank intends to continue to expand its
involvement in commercial real estate lending and to continue to moderately
increase the amount of such loans in the Bank's portfolio. The Bank expects it
will continue to grant such loans primarily to small and medium sized businesses
located in the Banks' primary market area, a portion of the market that the Bank
believes has been underserved in recent years. The types of properties securing
the Bank's commercial real estate loans include strip shopping centers,
professional office buildings, small retail establishments and warehouses, all
of which are located in the Bank's market area. As of December 31, 1999, the
Bank's largest commercial real estate loan had a balance of $6.7 million. Such
loan is secured by two office buildings in the Bank's market area and is
performing in accordance with its terms.
The Bank's commercial real estate loans generally are adjustable-rate loans
indexed to the New York Prime Rate, as quoted in The Wall Street Journal, plus a
margin. Generally, fees of 50 basis points to 2% of the principal loan balances
are charged to the borrower upon closing. The Bank's underwriting standards
generally provide for terms of up to 10 years with amortization of principal
over the term of the loan and loan-to-value ratios of not more than 75%.
Generally, the Bank obtains personal guarantees of the principals as additional
security for any commercial real estate loans.
The Bank evaluates various aspects of commercial real estate loan
transactions in an effort to mitigate risk to the extent possible. In
underwriting these loans, consideration is given to the stability of the
property's cash flow history, future operating projections, current and
projected occupancy, position in the market, location and physical condition. In
recent periods, the Bank has also generally imposed a debt coverage ratio (the
ratio of net cash from operations before payment of debt service to debt
service) of not less than 120%. The underwriting analysis also includes credit
checks and a review of the financial condition of the borrower and guarantor, if
applicable. An appraisal report is prepared by a state licensed or certified
appraiser (generally MAI qualified) commissioned by the
6
Bank to substantiate property values for every commercial real estate loan
transaction. All appraisal reports are reviewed by the Bank prior to the closing
of the loan. On occasion the Bank also retains a second independent appraiser to
review an appraisal report.
Commercial real estate lending entails different and significant risks when
compared to single-family residential lending because such loans often involve
large loan balances to single borrowers and because the payment experience on
such loans is typically dependent on the successful operation of the project or
the borrower's business. These risks can also be significantly affected by
supply and demand conditions in the local market for apartments, offices,
warehouses or other commercial space. The Bank attempts to minimize its risk
exposure by limiting such lending to proven businesses, only considering
properties with existing operating performance which can be analyzed, requiring
conservative debt coverage ratios, and periodically monitoring the operation and
physical condition of the collateral.
COMMERCIAL BUSINESS LOANS. The Bank originates commercial business loans on
a secured and, to a lesser extent, unsecured basis. The Bank's commercial
business loans generally are made to small to mid-size companies located in the
Bank's primary market area and are made for a variety of commercial purposes. At
December 31, 1999, the Bank's commercial business loans amounted to $82.5
million or 9.8% of the Bank's gross loan portfolio. The Bank has placed emphasis
on the origination of commercial real estate and commercial business loans.
Commercial real estate and commercial business loans generally have higher
yields and shorter repayment periods than single-family residential loans.
The Bank's commercial business loans may be structured as term loans or
revolving lines of credit. Commercial business loans generally have a term of
ten years or less and adjustable or variable rates of interest based upon the
New York Prime Rate. The Bank's commercial business loans generally are secured
by equipment, machinery, real property or other corporate assets. In addition,
the Bank generally obtains personal guarantees from the principals of the
borrower with respect to all commercial business loans. The Bank also provides
commercial loans structured as advances based upon perfected security interests
in accounts receivable and inventory. Generally the Bank will advance amounts
not in excess of 85.0% of accounts receivable, provided that such accounts have
not aged more than 90 days. In such cases, payments are made directly to the
Bank and the Bank generally maintains in escrow 2.0% to 100.0% of the amounts
received. As of December 31, 1999, the Bank's largest commercial business loan
had a principal balance of $5.9 million. Such loan is secured by deposit
accounts, equipment, and general intangibles and has performed in accordance
with its terms since origination.
CONSUMER LOANS. The Bank offers consumer loans in order to provide a full
range of retail financial services to its customers. At December 31, 1999,
$330.6 million, or 39.2%, of the Bank's total loan portfolio was comprised of
consumer loans. The Bank originates substantially all of such loans in its
primary market areas.
The largest component of the Bank's consumer loan portfolio consists of
indirect automobile loans. These loans are originated by the automobile
dealerships and applications are facsimiled to Bank personnel for approval or
denial. The Bank relies on the dealerships, in part, for loan qualifying
information. To that extent, there is risk inherent in indirect automobile loans
apart from the ability of the consumer to repay the loan, that being fraud
perpetrated by the automobile dealership. To limit its exposure, the Bank has
limited its dealings with automobile dealerships which have demonstrated
reputable behavior in the past. At December 31, 1999, $179.4 million, or 21.3%,
of the Bank's total loan portfolio were indirect automobile loans.
At December 31, 1999, the Bank's remaining consumer loan portfolio was
comprised of home equity loans, educational loans, loans secured by deposits at
the Bank, mobile home loans, direct automobile loans, credit card loans and
other consumer loans. At December 31, 1999, the Bank had $91.5 million or 10.9%
of home equity loans. The Bank has not emphasized originations of mobile home
loans in recent years due to, among other things, management's perception that
such loans generally are riskier than certain other consumer loans, such as home
equity loans, and single-family mortgage loans. The Bank also offers direct
automobile loans, loans based on its VISA and MasterCard credit cards and other
consumer loans. At December 31, 1999, the Bank's direct automobile loans
amounted to $23.4 million, or 2.8%, of the Bank's total loan portfolio. The
Bank's VISA and MasterCard credit card loans totaled $6.4 million, or 0.8%, of
the Bank's total loan portfolio at such date. The Bank's other personal consumer
loans amounted to $29.9 million, or 3.5% of the Bank's total loan portfolio at
such date.
LOANS-TO-ONE-BORROWER LIMITATIONS. The Louisiana Banking Laws impose
limitations on the aggregate amount of loans that a Louisiana chartered
commercial bank can make to any one borrower. Under these laws, the permissible
amount of loans-to-one borrower may not exceed 20% of the sum of the bank's
capital stock and surplus
7
on an unsecured basis. On a secured basis, the permissible amount of
loans-to-one borrower may not exceed one-half the sum of the bank's capital
stock and unimpaired surplus. At December 31, 1999, Iberia's limit on unsecured
loans-to-one borrower was $18.3 million. At December 31, 1999, Iberia's five
largest loans or groups of loans-to-one borrower ranged from $5.0 million to
$9.9 million, and all of such loans were performing in accordance with their
terms.
ASSET QUALITY
GENERAL. As a part of the Bank's efforts to improve asset quality, it has
developed and implemented an asset classification system. All of the Bank's
assets are subject to review under the classification system. All assets of the
Bank are periodically reviewed and the classifications are reviewed by the Loan
Committee of the Board of Directors on at least a quarterly basis.
When a borrower fails to make a required payment on a loan, the Bank
attempts to cure the deficiency by contacting the borrower and seeking payment.
Contacts are generally made 30 days after a payment is due. In most cases,
deficiencies are cured promptly. If a delinquency continues, late charges are
assessed and additional efforts are made to collect the loan. While the Bank
generally prefers to work with borrowers to resolve such problems, when the
account becomes 90 days delinquent, the Bank may institute foreclosure or other
proceedings, as necessary, to minimize any potential loss.
Loans are placed on non-accrual status when, in the judgment of management,
the probability of collection of interest is deemed to be insufficient to
warrant further accrual. When a loan is placed on non-accrual status, previously
accrued but unpaid interest is deducted from interest income. See Note 4 of the
Notes to Consolidated Financial Statements.
Real estate acquired by the Bank as a result of foreclosure or by
deed-in-lieu of foreclosure and loans deemed to be in-substance foreclosed under
GAAP are classified as real estate owned until sold. Pursuant to SOP 92-3 issued
by the AICPA in April 1992, which provides guidance on determining the balance
sheet treatment of foreclosed assets in annual financial statements for periods
ending on or after December 15, 1992, there is a rebuttable presumption that
foreclosed assets are held for sale and such assets are recommended to be
carried at the lower of fair value minus estimated costs to sell the property,
or cost (generally the balance of the loan on the property at the date of
acquisition). After the date of acquisition, all costs incurred in maintaining
the property are expenses and costs incurred for the improvement or development
of such property are capitalized up to the extent of their net realizable value.
The Bank's accounting for its real estate owned complies with the guidance set
forth in SOP 92-3.
Under GAAP, the Bank is required to account for certain loan modifications
or restructurings as "troubled debt restructurings." In general, the
modification or restructuring of a debt constitutes a troubled debt
restructuring if the Bank for economic or legal reasons related to the
borrower's financial difficulties grants a concession to the borrower that the
Bank would not otherwise consider under current market conditions. Debt
restructurings or loan modifications for a borrower do not necessarily always
constitute troubled debt restructurings, however, and troubled debt
restructurings do not necessarily result in non-accrual loans. The Bank had no
troubled debt restructuring as of December 31, 1999. See the table below under
"Non-Performing Assets and Troubled Debt Restructurings."
8
NON-PERFORMING ASSETS AND TROUBLED DEBT RESTRUCTURINGS. The following table
sets forth information relating to the Bank's non-performing assets and troubled
debt restructurings at the dates indicated.
December 31,
----------------------------------------------------------------
1999 1998 1997 1996 1995
----------- ------------ ----------- ------------ --------------
(Dollars in Thousands)
Non-accrual loans:
Mortgage loans:
Single-family $ 208 $ 481 $ 1,698 $ 892 $ 788
Construction -- -- -- -- --
Commercial Loans:
Business 215 259 -- 407 --
Real Estate 1,078 -- 30 190 30
Consumer loans: 429 439 419 1,002 597
----------- ---------- ----------- ---------- -----------
Total non-accrual loans 1,930 1,179 2,147 2,491 1,415
----------- ---------- ----------- ---------- -----------
Accruing loans 90 days or more past due:
Mortgage loans:
Single-family 593 1,407 -- -- --
Construction -- -- -- -- --
Commercial Loans:
Business 74 370 -- -- --
Real Estate 22 1,898 -- -- --
Consumer loans 514 883 3 69 53
----------- ---------- ----------- ---------- -----------
Total past due 90 days or more 1,203 4,558 3 69 53
----------- ---------- ----------- ---------- -----------
Total non-performing loans 3,133 5,737 2,150 2,560 1,468
Foreclosed property 185 384 473 978 561
----------- ---------- ----------- ---------- -----------
Total non-performing assets $ 3,318 $ 6,121 $ 2,623 $ 3,538 $ 2,029
----------- ---------- ----------- ---------- -----------
Performing troubled debt restructurings $ -- $ -- $ -- $ 176 $ 186
----------- ---------- ----------- ---------- -----------
Total non-performing assets and
troubled debt restructurings $ 3,318 $ 6,121 $ 2,623 $ 3,714 $ 2,215
=========== ========== =========== ========== ===========
Non-performing loans to total loans 0.37% 0.74% 0.33% 0.45% 0.37%
Total non-performing assets to total assets 0.24% 0.44% 0.28% 0.38% 0.33%
Total non-performing assets and troubled debt
restructurings to total assets 0.24% 0.44% 0.28% 0.40% 0.36%
9
OTHER CLASSIFIED ASSETS. Federal regulations require that the Bank
classifies its assets on a regular basis. In addition, in connection with
examinations of insured institutions, federal examiners have authority to
identify problem assets and, if appropriate, classify them. There are three
classifications for problem assets: "substandard," "doubtful" and "loss."
Substandard assets have one or more defined weaknesses and are characterized by
the distinct possibility that the insured institution will sustain some loss if
the deficiencies are not corrected. Doubtful assets have the weaknesses of
substandard assets with the additional characteristic that the weaknesses make
collection or liquidation in full, on the basis of currently existing facts,
conditions and values questionable, and there is a high possibility of loss. An
asset classified loss is considered uncollectible and of such little value that
continuance as an asset of the institution is not warranted.
At December 31, 1999, the Bank had $10.5 million of assets classified
substandard, $751,000 of assets classified doubtful, and no assets classified
loss. At such date, the aggregate of the Bank's classified assets amounted to
0.83% of total assets.
ALLOWANCE FOR LOAN LOSSES. The Bank's policy is to establish reserves for
estimated losses on delinquent loans when it determines that losses are expected
to be incurred on such loans and leases. The allowance for losses on loans is
maintained at a level believed adequate by management to absorb potential losses
in the portfolio. Management's determination of the adequacy of the allowance is
based on an evaluation of the portfolio, past loss experience, current economic
conditions, volume, growth and composition of the portfolio, and other relevant
factors. The allowance is increased by provisions for loan losses, which are
charged against income. As shown in the table below, at December 31, 1999, the
Bank's allowance for loan losses amounted to 279.3% and 1.0% of the Bank's
non-performing loans and gross loans receivable, respectively.
Effective December 21, 1993, the FDIC, in conjunction with the Office of
the Comptroller of the Currency, the OTS and the Federal Reserve Board, issued
the Policy Statement regarding an institution's allowance for loan and lease
losses. The Policy Statement, which reflects the position of the issuing
regulatory agencies and does not necessarily constitute GAAP, includes guidance
(i) on the responsibilities of management for the assessment and establishment
of an adequate allowance and (ii) for the agency's examiners to use in
evaluating the adequacy of such allowance and the policies utilized to determine
such allowance. The Policy Statement also sets forth quantitative measures for
the allowance with respect to assets classified substandard and doubtful and
with respect to the remaining portion of an institution's loan portfolio.
Specifically, the Policy Statement sets forth the following quantitative
measures which examiners may use to determine the reasonableness of an
allowance: (i) 50% of the portfolio that is classified doubtful; (ii) 15% of the
portfolio that is classified substandard; and (iii) for the portions of the
portfolio that have not been classified (including loans designated special
mention), estimated credit losses over the upcoming 12 months based on facts and
circumstances available on the evaluation date. While the Policy Statement sets
forth this quantitative measure, such guidance is not intended as a "floor" or
"ceiling".
10
The following table sets forth the activity in the Bank's allowance for
loan losses during the periods indicated.
Year Ended December 31,
-----------------------------------------------------------------------
1999 1998 1997 1996 1995
------------ ------------- ------------- --------------- --------------
(Dollars in Thousands)
Allowance at beginning of period $ 7,135 $ 5,258 $ 4,615 $ 3,746 $ 3,831
Allowance from acquisition -- 1,392 -- 1,114 13
Provisions 2,836 903 1,097 156 239
Charge-offs:
Mortgage loans:
Single-family 71 2 50 46 55
Construction -- -- -- -- --
Commercial 148 43 191 61 4
Consumer loans 1,714 818 562 509 371
----------- ----------- ----------- ------------- --------------
Total charge-offs 1,933 863 803 616 430
----------- ----------- ----------- ------------- --------------
Recoveries:
Mortgage loans:
Single-family 37 36 79 39 15
Construction -- -- -- -- --
Commercial 94 175 55 43 --
Consumer loans 580 234 215 133 78
----------- ----------- ----------- ------------- --------------
Total recoveries 711 445 349 215 93
----------- ----------- ----------- ------------- --------------
Net charge-offs (1,222) (418) (454) (401) (337)
----------- ----------- ----------- ------------- --------------
Allowance at end of period $ 8,749 $ 7,135 $ 5,258 $ 4,615 $ 3,746
=========== =========== =========== ============= ==============
Allowance for loan losses to total
non-performing loans at end of
period 279.25% 124.39% 244.56% 185.27% 255.18%
Allowance for loan losses to total
loans at end of period 1.04% 0.93% 0.79% 0.80% 0.93%
Net charge-offs to average loans 0.15% 0.06% 0.07% 0.09% 0.09%
11
The following table presents the allocation of the allowance for loan
losses to the total amount of loans in each category listed at the dates
indicated.
December 31,
-------------------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
---------------- ----------------- ---------------- ----------------- -------------------
Amount Percent Amount Percent Amount Percent Amount Percent Amount Percent
------ ------- ------ ------- ------ ------- ------ ------- ------ -------
(Dollars in Thousands)
Single-family residential $ 1,278 31.60% $ 1,529 39.06% $ 1,448 56.07% $ 2,002 66.70% $ 2,194 78.22%
Construction 46 0.76% 38 0.96% 84 1.20% 72 1.38% 107 1.78%
Commercial business 342 9.78% 1,897 10.83% 1,356 8.73% 817 6.24% 134 2.77%
Commercial real estate 4,599 18.65% 1,663 15.33% 660 7.64% 502 4.38% 176 3.96%
Consumer 2,484 39.21% 2,008 33.82% 1,710 26.36% 1,222 21.30% 1,135 13.27%
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total allowance for loan
losses $ 8,749 100.00% $ 7,135 100.00% $ 5,258 100.00% $ 4,615 100.00% $ 3,746 100.00%
======= ======= ======= ======= ======= ======= ======= ======= ======= =======
12
Management of the Bank presently believes that its allowance for loan
losses is adequate to cover any potential losses in the Bank's loan portfolio.
However, future adjustments to this allowance may be necessary, and the Bank's
results of operations could be adversely affected if circumstances differ
substantially from the assumptions used by management in making its
determinations in this regard.
INVESTMENT IN MORTGAGE-BACKED SECURITIES
As of December 31, 1999, the Bank's mortgage-backed securities amounted to
$269.1 million, or 19.7% of total assets. At the time of their respective
acquisitions, BOL and Jefferson provided $4.2 million and $106.8 million,
respectively, of mortgage-backed securities. The Bank's mortgage-backed
securities portfolios provides a means of investing in housing-related mortgage
instruments without the costs associated with originating mortgage loans for
portfolio retention and with limited credit risk of default which arises in
holding a portfolio of loans to maturity. Mortgage-backed securities (which also
are known as mortgage participation certificates or pass-through certificates)
represent a participation interest in a pool of single-family or multi-family
mortgages. The principal and interest payments on mortgage-backed securities are
passed from the mortgage originators, as servicer, through intermediaries
(generally U.S. Government agencies and government-sponsored enterprises) that
pool and repackage the participation interests in the form of securities, to
investors such as the Banks. Such U.S. Government agencies and
government-sponsored enterprises, which guarantee the payment of principal and
interest to investors, primarily include the FHLMC, the FNMA and the Government
National Mortgage Association ("GNMA"). The Bank also invests to a limited
degree in certain privately issued, credit enhanced mortgage-backed securities
rated AA or above by national securities rating agencies.
The FHLMC is a public corporation chartered by the U.S. Government and
owned by the 12 FHLBs and federally insured savings institutions. The FHLMC
issues participation certificates backed principally by conventional mortgage
loans. The FHLMC guarantees the timely payment of interest and the ultimate
return of principal on participation certificates. The FNMA is a private
corporation chartered by the U.S. Congress with a mandate to establish a
secondary market for mortgage loans. The FNMA guarantees the timely payment of
principal and interest on FNMA securities. FHLMC and FNMA securities are not
backed by the full faith and credit of the United States, but because the FHLMC
and the FNMA are U.S. Government-sponsored enterprises, these securities are
considered to be among the highest quality investments with minimal credit
risks. The GNMA is a government agency within the Department of Housing and
Urban Development which is intended to help finance government-assisted housing
programs. GNMA securities are backed by FHA-insured and VA-guaranteed loans, and
the timely payment of principal and interest on GNMA securities are guaranteed
by the GNMA and backed by the full faith and credit of the U.S. Government.
Because the FHLMC, the FNMA and the GNMA were established to provide support for
low- and middle-income housing, there are limits to the maximum size of loans
that qualify for these programs which limit currently is $240,000.
Mortgage-backed securities typically are issued with stated principal
amounts, and the securities are backed by pools of mortgages that have loans
with interest rates that are within a range and have varying maturities. The
underlying pool of mortgages can be composed of either fixed-rate or
adjustable-rate loans. As a result, the risk characteristics of the underlying
pool of mortgages, (i.e., fixed-rate or adjustable rate) as well as prepayment
risk, are passed on to the certificate holder. The life of a mortgage-backed
pass-through security thus approximates the life of the underlying mortgages.
The Bank's mortgage-backed securities include interests in collateralized
mortgage obligations ("CMOs"). CMOs have been developed in response to investor
concerns regarding the uncertainty of cash flows associated with the prepayment
option of the underlying mortgagor and are typically issued by governmental
agencies, governmental sponsored enterprises and special purpose entities, such
as trusts, corporations or partnerships, established by financial institutions
or other similar institutions. A CMO can be collateralized by loans or
securities which are insured or guaranteed by the FNMA, the FHLMC or the GNMA.
In contrast to pass-through mortgage-backed securities, in which cash flow is
received pro rata by all security holders, the cash flow from the mortgages
underlying a CMO is segmented and paid in accordance with a predetermined
priority to investors holding various CMO classes. By allocating the principal
and interest cash flows from the underlying collateral among the separate CMO
classes, different classes of bonds are created, each with its own stated
maturity, estimated average life, coupon rate and prepayment characteristics.
The regular interests of some CMOs are like traditional
13
debt instruments because they have stated principal amounts and traditionally
defined interest-rate terms. Purchasers of certain other CMOs are entitled to
the excess, if any, of the issuers cash inflows, including reinvestment
earnings, over the cash outflows for debt service and administrative expenses.
These CMOs may include instruments designated as residual interests, which
represent an equity ownership interest in the underlying collateral, subject to
the first lien of the investors in the other classes of the CMO. Certain
residual CMO interests may be riskier than many regular CMO interests to the
extent that they could result in the loss of a portion of the original
investment. Moreover, cash flows from residual interests are very sensitive to
prepayments and, thus, contain a high degree of interest-rate risk. At December
31, 1999, the Bank's investment in CMOs amounted to $146.7 million, all of which
consisted of regular interests. As of December 31, 1999, the Bank's CMOs did not
include any residual interests or interest-only or principal-only securities. As
a matter of policy, the Bank does not invest in residual interests of CMOs or
interest-only and principal-only securities.
Mortgage-backed securities generally yield less than the loans which
underlie such securities because of their payment guarantees or credit
enhancements which offer nominal credit risk. In addition, mortgage-backed and
related securities are more liquid than individual mortgage loans and may be
used to collateralize borrowings of the Bank in the event that the Bank
determine to utilize borrowings as a source of funds. Mortgage-backed securities
issued or guaranteed by the FNMA or the FHLMC (except interest-only securities
or the residual interests in CMOs) are weighted at no more than 20.0% for
risk-based capital purposes, compared to a weight of 50.0% to 100.0% for
residential loans.
As of December 31, 1999, $185.5 million of the Bank's mortgage-backed
securities were classified as available for sale and $83.6 million were
classified as held to maturity. Mortgage-backed securities which are held to
maturity are carried at cost, adjusted for the amortization of premiums and the
accretion of discounts using a method which approximates a level yield, while
mortgage-backed securities available for sale are carried at current market
value. During the fourth quarter of 1999 the Company transferred $198.9 million
of mortgage-backed securities from the held to maturity classification to
available for sale upon the initial application of FASB Statement No. 133,
Accounting for Derivative Instruments and Hedging Activities. The
reclassification resulted in a fair value adjustment of $5.7 million and a
decrease in equity, net of taxes, of $3.7 million. See Notes 1 and 3 of the
Notes to Consolidated Financial Statements.
The actual maturity of a mortgage-backed security may be less than its
stated maturity due to prepayments of the underlying mortgages. Prepayments that
are faster than anticipated may shorten the life of the security and adversely
affect its yield to maturity. The yield is based upon the interest income and
the amortization of any premium or discount related to the mortgage-backed
security. In accordance with GAAP, premiums and discounts are amortized over the
estimated lives of the loans, which decrease and increase interest income,
respectively. The prepayment assumptions used to determine the amortization
period for premiums and discounts can significantly affect the yield of the
mortgage-backed security, and these assumptions are reviewed periodically to
reflect actual prepayments. Although prepayments of underlying mortgages depend
on many factors, including the type of mortgages, the coupon rate, the age of
mortgages, the geographical location of the underlying real estate
collateralizing the mortgages and general levels of market interest rates, the
difference between the interest rates on the underlying mortgages and the
prevailing mortgage interest rates generally is the most significant determinant
of the rate of prepayments.
During periods of rising mortgage interest rates, if the coupon rates of
the underlying mortgages are less than the prevailing market interest rates
offered for mortgage loans, refinancings generally decrease and slow the
prepayment of the underlying mortgages and the related securities. Conversely,
during periods of falling mortgage interest rates, if the coupon rates of the
underlying mortgages exceed the prevailing market interest rates offered for
mortgage loans, refinancing generally increases and accelerates the prepayment
of the underlying mortgages and the related securities. Under such
circumstances, the Bank may be subject to reinvestment risk because to the
extent that the Bank's mortgage-related securities amortize or prepay faster
than anticipated, the Bank may not be able to reinvest the proceeds of such
repayments and prepayments at a comparable rate.
14
OTHER INVESTMENT SECURITIES
The Bank's other investments in investment securities consist primarily of
securities issued by the U.S. Government and federal agency obligations. As of
December 31, 1999, the Bank's investment securities available for sale, other
than mortgage-backed securities, amounted to $107.7 million, net of gross
unrealized losses of $5.2 million, and its investment securities held to
maturity amounted to $1.9 million. At the time of their respective acquisitions,
BOL and Jefferson provided $2.0 million and $57.5 million, respectively, of
investment securities. The Bank attempts to maintain a high degree of liquidity
in its investment securities portfolio and generally does not invest in
securities with average lives exceeding five years.
The following table sets forth information regarding the Bank's investment
securities at the dates indicated.
Securities Available for Sale Securities Held to Maturity
-------------------------------------------- ------------------------------
Weighted
Average Amortized Fair Amortized Fair
Yield Cost Value Cost Value
------------ ---------------- -------------- --------------- --------------
Within one year or less 6.32% $ 10,009 $ 10,020 $ 455 $ 455
One through five years 5.83% 34,863 33,707 555 555
After five through ten years 6.02% 67,992 63,956 675 675
Over ten years 7.20% -- -- 204 204
------------ ----------- ------------ -----------
Subtotal 112,864 107,683 1,889 1,889
Mortgage-backed 6.36% 191,167 185,474 83,604 80,995
Marketable equity security 5.73% 6,318 6,231 -- --
------------ ----------- ------------ -----------
Totals $ 310,349 $ 299,388 $ 85,493 $ 82,884
============ =========== ============ ===========
15
SOURCES OF FUNDS
GENERAL. The Bank's principal source of funds for use in lending and for
other general business purposes has traditionally come from deposits obtained
through the Bank's branch offices. The acquisitions of Jefferson and BOL
provided $288.3 million of deposits used to help fund the Bank's loan growth.
The Bank also derives funds from short-term and long-term borrowings,
amortization and prepayments of outstanding loans and mortgage-related
securities, and from maturing investment securities. Loan repayments are a
relatively stable source of funds, while deposit inflows and outflows are
significantly influenced by general interest rates and money market conditions.
DEPOSITS. The Banks' current deposit products include savings accounts, NOW
accounts, MMDA, certificates of deposit ranging in terms from 30 days to seven
years and noninterest-bearing personal and business checking accounts.
The Bank's deposit products also include Individual Retirement Account
("IRA") certificates and Keogh accounts. The Bank's deposits are obtained
primarily from residents in its primary market area. The Bank attracts local
deposit accounts by offering a wide variety of accounts, competitive interest
rates, and convenient branch office locations and service hours. The acquisition
of BOL helped Iberia double its market share in the greater Lafayette market.
The acquisition of Jefferson established the Company in a new market, the
greater New Orleans area. The FCOM acquisition helped Iberia gain the number two
market share in the greater Lafayette market and establish the Company, with a
number two market share, in a new market, the greater Monroe area. The Bank
utilizes traditional marketing methods to attract new customers and savings
deposits, including print and broadcast advertising and direct mailings.
However, the Bank does not solicit funds through deposit brokers nor does it pay
any brokerage fees if it accepts such deposits. The Bank participates in the
regional ATM network known as CIRRUS.
The Bank has been competitive in the types of accounts and in interest
rates it has offered on its deposit products but does not necessarily seek to
match the highest rates paid by competing institutions. With the significant
decline in interest rates paid on deposit products, the Bank in recent years has
experienced disintermediation of deposits into competing investment products.
See generally Note 7 of the Notes to Consolidated Financial Statements.
16
The following table sets forth certain information relating to the Bank's
deposits at the dates indicated. Years prior to 1998 do not include deposits
acquired in the branch acquisition from FCOM, as that acquisition did not take
place until 1998.
December 31,
--------------------------------------------------------------------------------
1999 1998 1997
--------------------------- ------------------------- --------------------------
Average Average Average
Average Rate Average Rate Average Rate
Balance Paid Balance Paid Balance Paid
--------------- ----------- ------------- ----------- ------------- ------------
(Dollars In Thousands)
Interest bearing demand
deposits $ 279,328 2.26% $ 196,254 2.45% $ 141,212 2.63%
Savings deposits 131,824 2.03% 114,934 2.21% 115,882 2.54%
Time deposits 618,582 5.10% 517,952 5.35% 477,325 5.51%
-------------- ------------ ------------
Total interest
bearing deposits 1,029,734 3.93% 829,140 4.23% 734,419 4.49%
Noninterest-bearing
demand deposits 116,097 0.00% 69,670 0.00% 37,647 0.00%
-------------- ------------ ------------
Total deposits $ 1,145,831 3.53% $ 898,810 3.90% $ 772,066 4.27%
============== ============= ============
The following table shows large-denomination ($100,000 and over)
certificates of deposit by remaining maturities.
December 31,
--------------------------------------------------
1999 1998 1997
-------------- ----------------------- -----------
(Dollars In Thousands)
Certificates of deposit:
3 months or less $ 23,963 $ 1,909 $ 19,610
Over 3-12 months 69,885 21,006 46,755
Over 12-36 months 28,982 82,493 21,405
More than 36 months 1,708 25,223 5,958
-------- -------- --------
Total $124,538 $130,631 $ 93,728
======== ======== ========
17
BORROWINGS. The Bank may obtain advances from the FHLB of Dallas upon the
security of the common stock it owns in that bank and certain of its residential
mortgage loans and securities held to maturity, provided certain standards
related to creditworthiness have been met. Such advances are made pursuant to
several credit programs, each of which has its own interest rate and range of
maturities.
The Company's short-term borrowings are comprised of advances from the
Federal Home Loan Bank ("FHLB") of Dallas. At December 31, 1999, total
short-term borrowing were $83.0 million. These advances were used to fund net
decreases in deposits and to fund loan growth. The weighted average rate on
short-term borrowings was 5.7% at December 31, 1999. At December 31, 1999, the
Company's long-term borrowings were comprised of fixed rate advances from the
Federal Home Loan Bank and a long-term note payable from Union Planters.
Long-term borrowings increased $6.4 million, or 14.1%, to $52.1 million at
December 31, 1999, compared to $45.6 million at December 31, 1998, which was
partially offset by normal amortization payments. The increase in long-term
borrowings was due to a new long-term note payable from Union Planters, which is
variable rate based on the Wall Street Prime. See Notes 8 and 9 of the Notes of
Consolidated Financial Statements.
SUBSIDIARIES
Iberia has only one active, wholly owned subsidiary, Iberia Financial
Services, LLC. ("Iberia Services"). At December 31, 1999, Iberia's equity
investment in Iberia Services was $1.5 million and Iberia Services had total
assets of $1.6 million. For the years ended December 31, 1999 and 1998, Iberia
Services had total revenue of $859,000 and $957,000, respectively and net income
of $280,000 in 1999 and $72,000 in 1998. See Note 1 of the Notes to Consolidated
Financial Statements. The business of Iberia Services consists of acting as a
broker for the sale of annuities and certain other securities to the general
public. Iberia Services has one wholly owned subsidiary, Finesco, LLC., which
the Bank acquired in January 1995 and which business consists of insurance
premium financing.
COMPETITION
The Bank faces strong competition both in attracting deposits and
originating loans. Its most direct competition for deposits has historically
come from other savings institutions, credit unions and commercial banks located
in its market area including many large financial institutions that have greater
financial and marketing resources available to them. In addition, during times
of high interest rates, the Bank has faced additional significant competition
for investors' funds from short-term money market securities, mutual funds and
other corporate and government securities. The ability of the Bank to attract
and retain savings deposits depends on its ability to generally provide a rate
of return, liquidity and risk comparable to that offered by competing investment
opportunities.
The Bank experiences strong competition for loan originations principally
from other savings institutions, commercial banks and mortgage banking
companies. The Bank competes for loans principally through the interest rates
and loan fees it charges, the efficiency and quality of services it provides
borrowers and the convenient locations of its branch office network. Competition
may increase as a result of the continuing reduction of restrictions on the
interstate operations of financial institutions.
EMPLOYEES
The Bank had 497 full-time employees and 68 part-time employees as of
December 31, 1999. None of these employees is represented by a collective
bargaining agreement. The Bank believes that it enjoys excellent relations with
its personnel.
18
SUPERVISION AND REGULATION
GENERAL. The banking industry is extensively regulated under both federal
and state law. The Company is subject to regulation under the Bank Holding
Company Act of 1956 (BHCA) and to supervision by the FRB. The BHCA requires the
Company to obtain the prior approval of the FRB for bank and non-bank
acquisitions and prescribes certain limitations in connection with acquisitions
and the non-banking activities of the Company. The Bank is subject to regulation
and examination by the OFI and by the FDIC and also subject to certain
requirements established by the FRB.
The Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA)
further expanded the regulatory and enforcement powers of bank regulatory
agencies. Among the significant provisions of FDICIA is the requirement that
bank regulatory agencies prescribe standards relating to internal controls,
information systems, loan documentation, credit underwriting, interest rate
exposure, asset growth, compensation, fees and benefits. FDICIA mandates annual
examinations of banks by their primary regulators.
The banking industry is affected by the monetary and fiscal policies of the
FRB. An important function of the FRB is to regulate the national supply of bank
credit to moderate recessions and to curb inflation. Among the instruments of
monetary policy used by the FRB to implement its objectives are: open-market
operations in U.S. Government securities, changes in the discount rate and the
federal funds rate (which is the rate banks charge each other for overnight
borrowings) and changes in reserve requirements on bank deposits.
FINANCIAL MODERNIZATION LEGISLATION. On November 12, 1999, the
Gramm-Leach-Bliley Act of 1999 (the "GLB Act") was signed into law. The GLB Act
includes a number of provisions intended to modernize and to increase
competition in the American financial services industry, including authority for
bank holding companies to engage in a wider range of nonbanking activities,
including securities underwriting and general insurance activities. Under the
GLB Act, a bank holding company that elects to become a financial holding
company may engage in any activity that the FRB, in consultation with the
Secretary of the Treasury, determines by regulation or order is (i) financial in
nature, (ii) incidental to any such financial activity, or (iii) complementary
to any such financial activity and does not pose a substantial risk to the
safety or soundness of depository institutions or the financial system
generally. The GLB Act specifies certain activities that are deemed to be
financial in nature, including lending, exchanging, transferring, investing for
others, or safeguarding money or securities; underwriting and selling insurance;
providing financial, investment, or economic advisory services; underwriting,
dealing in or making a market in, securities; and any activity currently
permitted for bank holding companies by the FRB under section 4(c)(8) of the
Holding Company Act. A bank holding company may elect to be treated as a
financial holding company only if all depository institution subsidiaries of the
holding company are and continue to be well-capitalized and well-managed and
have at least a satisfactory rating under the Community Reinvestment Act.
National banks are also authorized by the GLB Act to engage, through
"financial subsidiaries," in any activity that is permissible for a financial
holding company (as described above) and any activity that the Secretary of the
Treasury, in consultation with the FRB, determines is financial in nature or
incidental to any such financial activity, except (i) insurance underwriting,
(ii) real estate development or real estate investment activities (unless
otherwise permitted by law), (iii) insurance company portfolio investments and
(iv) merchant banking. The authority of a national bank to invest in a financial
subsidiary is subject to a number of conditions, including, among other things,
requirements that the bank must be well-managed and well-capitalized (after
deducting from capital the bank's outstanding investments in financial
subsidiaries). The GLB Act also provides that state banks may invest in
financial subsidiaries (assuming they have the requisite investment authority
under applicable state law) subject to the same conditions that apply to
national bank investments in financial subsidiaries.
The GLB Act also adopts a number of consumer protections, including
provisions intended to protect privacy of bank customers' financial information
and provisions requiring disclosure of ATM fees imposed by banks on customers of
other banks.
Most of the GLB Act's provisions have delayed effective dates and require
the adoption of implementing regulations to implement the statutory provisions.
At this time, the Company has not determined whether it will become a financial
holding company in order to utilize the expanded powers offered by the GLB Act,
and the Bank
19
is unable to predict the impact of the GLB Act's financial subsidiary provisions
and consumer protections on its operations.
FEDERAL AND STATE TAXATION
GENERAL. The Company and the Bank are subject to the generally applicable
corporate tax provisions of the Code, and the Bank is subject to certain
additional provisions of the Code which apply to financial institutions. The
following discussion of federal taxation is intended only to summarize certain
pertinent federal income tax matters and is not a comprehensive discussion of
the tax rules applicable to the Bank.
FISCAL YEAR. The Company and the Bank and its subsidiary file a
consolidated federal income tax return on the basis of a fiscal year ending on
December 31.
BAD DEBT RESERVES. Prior to the Small Business Job Protection Act of 1996,
the bad debt deduction was the primary distinguishing factor between a thrift
and a bank for tax purposes. Thrifts computed their bad debt deduction under (a)
the percentage of taxable income method, or (b) the experience method. Under the
1996 Act, the special thrift bad debt reserve calculations under the percentage
of taxable income method were repealed for years beginning after December 31,
1995. As a result, a large thrift (with total assets exceeding $500 million) was
required to change from the reserve method to the specific charge-off method of
computing its bad debt deduction. Because of the change in methods, the
difference between the balances in the thrift bad debt reserve and the
calculated bank reserve (generally the 1987 base year reserve) must be
recaptured into taxable income over a six-year period beginning in 1996, subject
to the residential loan requirement described below. The recapture requirement
would be suspended for each of the two successive taxable years beginning after
January 1, 1996 in which Iberia originates an amount of certain kinds of
residential loans in which the aggregate are equal to or greater than the
average of the principal amounts of such loans made by Iberia during its six
taxable years preceding 1996. As of December 31, 1999 Iberia has 4 years of
recapture remaining in the amount of $1.8 million.
As discussed above, large institutions, such as Iberia, must determine
their bad debt deduction using the specific charge-off method. Its expense in
any given year will therefore equal the balance of loans charged off, net of any
recoveries during that year.
At December 31, 1999, the federal income tax reserves included $14.8
million for which no provision for federal income taxes has been made. If this
portion of retained earnings is used in the future for any purpose other than to
absorb bad debts, it will be added to future taxable income.
DISTRIBUTIONS. If Iberia distributes cash or property to its stockholders,
and the distribution is treated as being from its accumulated bad debt reserves,
the distribution will cause Iberia to have additional taxable income. A
distribution is deemed to have been made from accumulated bad debt reserves to
the extent that (a) the reserves exceed the amount that would have been
accumulated on the basis of actual loss experience, and (b) the distribution is
a "non-qualified distribution." A distribution with respect to stock is a
non-dividend distribution to the extent that, for federal income tax purposes,
(i) it is in redemption of shares, (ii) it is pursuant to a liquidation of the
institution, or (iii) in the case of a current distribution, together with all
other such distributions during the taxable year, it exceeds the institution's
current and post-1951 accumulated earnings and profits. The amount of additional
taxable income created by a nondividend distribution is an amount that when
reduced by the tax attributable to it is equal to the amount of the
distribution.
INCOME TAX. The maximum federal corporate tax rate is 35%. The Code also
imposes an alternative minimum tax at a rate of 20%. The alternative minimum tax
generally applies to a base of regular taxable income plus certain tax
preferences ("alternative minimum taxable income" or "AMTI") and is calculated
on the AMTI in excess of an exemption amount. The alternative minimum tax is
assessed to the extent that it exceeds the tax on regular taxable income. The
Code provides that an item of tax preference is the excess of the bad debt
deduction allowable for a taxable year pursuant to the percentage of taxable
income method over the amount allowable under the experience method. Other items
of tax preference that constitute AMTI include (a) tax-exempt interest on newly
issued (generally, issued on or after August 8, 1986) private activity bonds
other than certain qualified bonds and (b)
20
75% of the excess (if any) of (i) adjusted current earnings as defined in the
Code, over (ii) AMTI (determined without regard to this preference and prior to
reduction by net operating losses).
NET OPERATING LOSS CARRYOVERS. A financial institution may carry back net
operating losses ("NOLs") to the preceding three taxable years and forward to
the succeeding 15 taxable years. This provision applies to losses incurred in
taxable years beginning after 1986. At December 31, 1999 the Company had a
federal net operating loss carryover of $1.0 million, which was assumed by the
Company in the acquisition of Royal Bankgroup.
CAPITAL GAINS AND CORPORATE DIVIDENDS-RECEIVED DEDUCTIONS. Corporate net
capital gains are taxed at a maximum rate of 35%. The corporate
dividends-received deduction is 80% in the case of dividends received from
corporations with which a corporate recipient does not file a consolidated tax
return, and corporations which own less than 20% of the stock of a corporation
distributing a dividend may deduct only 70% of dividends received or accrued on
their behalf. However, a corporation may deduct 100% of dividends from a member
of the same affiliated group of corporations.
OTHER MATTERS. Federal legislation is introduced from time to time that
would limit the ability of individuals to deduct interest paid on mortgage
loans. Individuals are currently not permitted to deduct interest on consumer
loans. Significant increases in tax rates or further restrictions on the
deductibility of mortgage interest could adversely affect the Bank.
The Company's consolidated federal income tax returns for the tax years
ended 1996, 1997 and 1998 are open under the statute of limitations and are
subject to review by the IRS. In addition, the partial year 1996 federal tax
returns of Royal Bankgroup and Jefferson Bancorp are also considered open under
the statute of limitations and are subject to review by the IRS.
STATE TAXATION
Louisiana does not permit the filing of consolidated income tax returns.
The Company is subject to the Louisiana Corporation Income Tax based on its
separate Louisiana taxable income, as well as franchise taxes. The Corporation
Income Tax applies at graduated rates from 4% upon the first $25,000 of
Louisiana taxable income to 8% on all Louisiana taxable income in excess of
$200,000. For these purposes, "Louisiana taxable income" means net income which
is earned within or derived from sources within the State of Louisiana, after
adjustments permitted under Louisiana law including a federal income tax
deduction and an allowance for net operating losses, if any. The Bank is not
subject to the Louisiana income or franchise taxes. However, the Bank is subject
to the Louisiana Shares Tax which is imposed on the assessed value of its stock.
The formula for deriving the assessed value is to calculate 15% of the sum of
(a) 20% of the company's capitalized earnings, plus (b) 80% of the company's
taxable stockholders' equity, and to subtract from that figure 50% of the
company's real and personal property assessment. Various items may also be
subtracted in calculating a company's capitalized earnings.
STRATEGIC FOCUS
On February 17, 2000, the Company announced information regarding its
strategic direction and focus. The Company also provided guidance to the
investment community regarding current comfort ranges for operating Earnings Per
Share figures for years 2000 and 2001.
A copy of the Company's press release with respect to this information is
attached hereto as Exhibit No. 99.1, which is incorporated herein by reference.
The Company intends to provide to the investment community in the future
additional guidance with respect to its anticipated performance. The Company
will disclose any material change in the previously disclosed information or in
the material assumptions on which such information was based.
21
ITEM 2. PROPERTIES.
The following table sets forth certain information relating to the Bank's
offices at December 31, 1999.
Net Book Value of
Property
and Leasehold
Owned or Improvements at Deposits at
Location Leased December 31, 1999 December 31, 1999
-------- ------ ----------------- -----------------
(In Thousands)
1101 E. Admiral Doyle Drive, New Iberia Owned $ 4,150 $ 187,842
1427 W. Main Street, Jeanerette Owned 190 26,000
403 N. Lewis Street, New Iberia Owned 337 46,229
1205 Victor II Boulevard, Morgan City Owned 329 18,233
1820 Main Street, Franklin (1) Leased 75 6,796
301 E. St. Peter Street, New Iberia Owned 980 20,740
700 Jefferson Street, Lafayette Owned 276 18,173
576 N. Parkerson Avenue, Crowley Owned 424 29,745
200 E. First Street, Kaplan Owned 128 24,282
1012 The Boulevard, Rayne Owned 173 9,085
500 S. Main Street, St. Martinville Owned 271 11,799
1101 Veterans Memorial Drive, Abbeville Leased 4 6,985
150 Ridge Road, Lafayette Owned 69 7,451
2130 W. Kaliste Saloom, Lafayette Owned 1,075 18,699
2110 W. Pinhook Road, Lafayette Owned 2,769 75,073
2602 Johnston Street, Lafayette (1) Leased 320 13,790
2240 Ambassador Caffery, Lafayette Leased 123 5,011
4510 Ambassador Caffery, Lafayette Leased 125 1,998
2723 W. Pinhook Road Leased 140 1,716
1011 Fourth Street, Gretna Owned 619 61,371
3929 Veterans Blvd., Metairie Leased -- 24,713
9300 Jefferson Hwy., River Ridge Owned 470 36,714
2330 Barataria Boulevard, Marrero Owned 306 37,446
4626 General De Gaulle, New Orleans Owned 230 12,727
111 Wall Boulevard, Gretna Owned 277 19,231
1820 Barataria Blvd., Marrero Owned 154 2,341
4041 Williams Blvd., Kenner Leased 147 2,521
805 Bernard Road, Carenero Owned 253 24,578
200 Westgate Road, Scott Owned 24 25,828
463 Heyman Blvd., Lafayette Owned 296 31,724
1820 Moss St., Lafayette Owned 287 26,095
420 E. Kaliste Saloom, Lafayette Leased 69 22,695
4010 West Congress St., Lafayette Owned 1,073 24,768
3710 Ambassador Caffery, Lafayette Leased 17 20,243
3500 Desiard St., Monroe Owned 267 24,762
One Stella Mill Road, West Monroe Owned 1,657 26,070
2348 Sterlington Road, Monroe Leased -- 13,281
5329 Cypress St., West Monroe Owned 65 19,406
1900 Jackson St., Monroe Owned 114 7,887
305 South Vienna, Ruston Owned 631 35,924
2810 Louisville Ave., Monroe Leased 43 7,483
1327 North Trenton St., Ruston Owned 179 13,530
2907 Cypress St., West Monroe Owned 40 14,281
8019 Desiard St., Monroe Owned 165 34,748
---------- -----------
$ 19,341 $ 1,100,014
========== ===========
22
ITEM 3. LEGAL PROCEEDINGS.
The Company and the Bank are not involved in any pending legal proceedings
other than nonmaterial legal proceedings occurring in the ordinary course of
business.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
PART II.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The information required herein, to the extent applicable, is incorporated
by reference on the inside front cover page of the Registrant's 1999 Annual
Report to Stockholders ("Annual Report").
ITEM 6. SELECTED FINANCIAL DATA.
The information required herein is incorporated by reference from pages 8
and 9 of the Registrant's 1999 Annual Report.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
The information required herein is incorporated by reference from pages 10
through 21 of the Registrant's 1999 Annual Report.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.
The information required hereon is incorporated by reference from pages 18
through 20 of the Registrant's 1999 Annual Report.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The information required herein is incorporated by reference from pages 22
through 51 of the Registrant's 1999 Annual Report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not applicable.
PART III.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The information required herein is incorporated by reference from the
Registrant's definitive proxy statement for the 2000 Annual Meeting of
Stockholders ("Proxy Statement").
ITEM 11. EXECUTIVE COMPENSATION.
The information required herein is incorporated by reference from the
Registrant's Proxy Statement.
23
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information required herein is incorporated by reference from the
Registrant's Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information required herein is incorporated by reference from the
Registrant's Proxy Statement.
PART IV.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a) Documents Filed as Part of this Report.
(1) The following financial statements are incorporated by reference
from Item 8 hereof (see Exhibit No. 13):
Report of Independent Auditors
Consolidated Balance Sheets as of December 31, 1999 and 1998.
Consolidated Statements of Income for the Fiscal Periods Ended
December 31, 1999, 1998 and 1997.
Consolidated Statements of Changes in Shareholders' Equity for
the Fiscal Periods Ended December 31, 1999, 1998 and 1997.
Consolidated Statements of Cash Flows for the Fiscal Periods
Ended December 31, 1999, 1998 and 1997.
Notes to Consolidated Financial Statements.
(2) All schedules for which provision is made in the applicable
accounting regulation of the SEC are omitted because of the
absence of conditions under which they are required or because
the required information is included in the consolidated
financial statements and related notes thereto.
(3) The following exhibits are filed as part of this Form 10-K, and
this list includes the Exhibit Index.
Exhibit Index
-------------
Exhibit No. 3.1. Articles of Incorporation - incorporated herein by reference to Registration
Statement on Form S-1 (File No. 33-96598).
Exhibit No. 3.2. Bylaws - incorporated herein by reference to Registration Statement on Form S-1 (File
No. 33-96598).
Exhibit No. 4.1. Stock Certificate - incorporated herein by reference to Registration Statement on
Form S-8 (File No. 33-93210).
Exhibit No. 10.1. Employee Stock Ownership Plan - incorporated herein by reference to Registration
Statement on Form S-1 (File No. 33-96598).
Exhibit No. 10.2. Profit Sharing Plan and Trust - incorporated herein by reference to Registration
Statement on Form S-8 (File No. 33-93210).
Exhibit No. 10.3. Employment Agreement with Larrey G. Mouton - incorporated herein by reference to
Exhibit 10.3 to Registrant's Quarterly Report on Form 10-Q for the fiscal quarter
ended June 30, 1999.
Exhibit No. 10.4. Employment Agreement with Daryl G. Byrd - incorporated herein by reference to Exhibit
10.4 to Registrant's Quarterly Report on Form
10-Q for the fiscal quarter ended June 30, 1999.
Exhibit No. 10.5. Indemnification Agreement with Daryl G. Byrd and Michael Brown.
Exhibit No. 10.6. Severance Agreement with James R. McLemore, Jr. and Donald P. Lee - incorporated
herein by reference to Registration Statement on Form S-8 (File No. 33-93210).
Exhibit No. 10.7 1996 Stock Option Plan - incorporated herein by reference to Exhibit 10.1 to
Registration Statement on Form S-8 (File No. 333-28859).
24
Exhibit No. 10.8. 1999 Stock Option Plan - incorporated herein by reference to Registrant's definitive
proxy statement dated March 19, 1999.
Exhibit No. 10.9. Recognition and Retention Plan - incorporated herein by reference to Registrant's
definitive proxy statement dated April 16, 1996.
Exhibit No. 10.10. Supplemental Stock Option Plan.
Exhibit No. 13. 1999 Annual Report to Stockholders - Except for those portions of the Annual Report
to Stockholders for the year ended December 31, 1999, which are expressly
incorporated herein by reference, such Annual Report is furnished for the information
of the Commission and is not to be deemed "filed" as part of this Report.
Exhibit No. 21. Subsidiaries of the Registrant - reference is made to "Item 1. Business" for the
required information.
Exhibit No. 23. Consent of Castaing, Hussey, Lolan & Dauterieve LLP.
Exhibit No. 27. Financial Data Schedule (SEC use only)
Exhibit No. 99.1 Press Release dated February 17, 2000 - Regarding the Company's strategic focus
25
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
ISB FINANCIAL CORPORATION
Date: March 30, 2000 By: /s/ Daryl G. Byrd
------------------------------
President and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dated indicated.
NAME TITLE DATE
---- ----- ----
/s/ Larrey G. Mouton Chief Executive Officer and Director March 30, 2000
- ------------------------------------
Larrey G. Mouton
/s/ James R. McLemore, Jr. Senior Vice President and Chief Financial Officer March 30, 2000
- ------------------------------------
James R. McLemore, Jr.
(Principal Financial Officer)
/s/ Marilyn Burch Senior Vice President and Controller March 30, 2000
- ------------------------------------
Marilyn Burch
(Principal Accounting Officer)
/s/ Daryl G. Byrd President and Director March 30, 2000
- ------------------------------------
Daryl G. Byrd
/s/ Emile J. Plaisance Chairman of the Board March 30, 2000
- ------------------------------------
Emile J. Plaisance
/s/ Elaine D. Abell Director March 30, 2000
- ------------------------------------
Elaine D. Abell
/s/ Harry V. Barton, Jr. Director March 30, 2000
- ------------------------------------
Harry V. Barton, Jr.
/s/ Ernest P. Breaux, Jr. Director March 30, 2000
- ------------------------------------
Ernest P. Breaux, Jr.
/s/ Cecil C. Broussard Director March 30, 2000
- ------------------------------------
Cecil C. Broussard
/s/ William H. Fenstermaker Director March 30, 2000
- ------------------------------------
William H. Fenstermaker
/s/ Richard F. Hebert Director March 30, 2000
- ------------------------------------
Richard F. Hebert
/s/ Ray Himel Director March 30, 2000
- ------------------------------------
Ray Himel
/s/ E. Stewart Shea, III Director March 30, 2000
- ------------------------------------
E. Stewart Shea, III
26