UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
For the quarterly period ended June 30, 2002
Commission file Number 2-89561
Teche Bancshares, Inc.
Louisiana 72-1008552
(State or other jurisdiction of (I.R.S Employer
incorporation or organization) Identification No.)
606 South Main Street, St. Martinville, Louisiana 70582
(Address of principal executive offices)
Registrant's telephone number, including area code:
(337) 394-9726
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 ( )
Indicated the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practical date.
Common Stock, $10 Par Value - 27,925 shares as of June 30, 2002.
TECHE BANCSHARES, INC. AND SUBSIDIARY
St. Martinville, Louisiana
(UNAUDITED)
CONSOLIDATED BALANCE SHEETS
June 30, 2002 and December 31, 2001
(Dollars in Thousands)
June 30, December 31,
2002 2001
ASSETS
Cash and due from banks $1,575 $2,257
Interest-bearing deposits with banks 1,746 2,036
Securities Available for Sale at mkt value 17,678 16,353
Securities Held To Maturity (Market Value
of $413 and $2,916, respectively) 404 2,906
Other securities at cost 489 484
Federal funds sold 1,300 2,775
Loans, net of allowance for loan losses
of $320 and $300, respectively) 31,830 28,869
Bank premises, furniture, and equipment 819 867
Accrued interest receivable 287 313
Other real estate owned 163 174
Other assets 205 177
----------------------
Total assets $56,496 $57,211
======================
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits -
Non-interest demand 7,717 $6,918
Interest bearing -
NOW and MMDA accounts 7,346 10,463
Savings 4,687 3,963
Time, $100 and over, 11,884 11,544
Other time 12,788 12,525
----------------------
Total deposits 44,422 45,413
Accrued interest payable 151 211
Federal Home Loan Borrowings 6,448 6,529
Other liabilities and accrued expenses 328 169
----------------------
Total liabilities 51,349 52,322
Stockholders' equity
Common stock ($10 par value, 100,000
shares authorized, 28,125 shares
issued and outstanding) 281 281
Surplus 1,144 1,144
Retained earnings 3,521 3,337
----------------------
4,946 4,762
Less: 200 shares of treasury stock (19) (19)
Market Value Allowance on
AFS Bonds 220 146
----------------------
Total stockholders' equity 5,147 4,889
----------------------
Total liabilities and stockholders' equity $56,496 $57,211
======================
The accompanying notes are an integral part of this statement.
TECHE BANCSHARES, INC. AND SUBSIDIARY
St. Martinville, Louisiana
(UNAUDITED)
CONSOLIDATED STATEMENTS OF INCOME
Six Months Ended June 30, 2002 and 2001;
(Dollars in Thousands except Earnings per Share and Average Shares)
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
2002 2001 2002 2001
Interest income:
Interest and fees on loans $609 $638 $1,206 $1,280
Interest on investment securities -
U.S. government's 199 246 377 500
State/political sub's 11 7 19 17
Dividends on equities 3 3 5 7
Interest on balances from banks 7 12 16 16
Interest on federal funds 12 40 24 82
--------------------------------------------
Total interest income 841 946 1,647 1,902
Interest expense:
Interest on deposits $268 $406 $568 $791
Interest on fed funds purchased - - - -
Interest on borrowed funds 96 80 191 150
--------------------------------------------
Total interest expense 364 486 759 941
--------------------------------------------
Interest inc. before provision 477 460 888 961
Provision for Credit Losses 10 11 20 21
--------------------------------------------
Net interest income 467 449 868 940
--------------------------------------------
Other income:
Service charges deposits 93 88 173 170
Gain on sale of Securities 9 - 9 -
Other income and charges 28 19 56 43
--------------------------------------------
Total other income 130 107 238 213
Other expenses:
Salaries/employee benefits 221 220 438 428
Occupancy expense 60 60 122 118
Other operating expenses 143 131 274 257
--------------------------------------------
Total other expenses 424 411 834 803
--------------------------------------------
Income before income taxes 173 145 272 350
Income taxes 57 48 88 115
--------------------------------------------
Net income $116 $ 97 $184 $235
Net income per share $4.17 $3.46 $6.59 $ 8.42
Average shares outstanding 27,925 27,925 27,925 27,925
The accompanying notes are an integral part of this statement.
TECHE BANCSHARES, INC. AND SUBSIDIARY
St. Martinville, Louisiana
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(UNAUDITED)
For the Six Months Ended June 30, 2002 and 2001
Unrealized
Common Gain (Loss)
Stock, on
Treasury & AFS
Surplus Securities Total
Balances, January 1, 2002 $4,743 $146 $4,889
Net income six months 184 - 184
Change in Unrealized AFS 74 74
------ ------ ------
Balances, June 30, 2002 $4,927 $ 220 $5,147
====== ====== ======
Balances, January 1, 2001 $4,379 $ 16 $4,395
Net income six months 235 - 235
Change in Unrealized AFS 130 130
------ ------ ------
Balances, June 30, 2001 $4,614 $ 146 $4,760
====== ====== ======
The accompanying notes are an integral part of this statement.
TECHE BANCSHARES, INC. AND SUBSIDIARY
St. Martinville, Louisiana
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the Six Months Ended June 30, 2002 and 2001
June 30, June 30,
2002 2001
Cash flows from operating activities:
Net income $184 $235
Adjustments to reconcile net income
to net cash provided by
operating activities -
Depreciation of bank premises 59 49
Provision for Credit Losses 20 21
Write down of other real estate owned 12 11
(Inc)dec accrued int receivable 26 67
(Inc) dec other assets (28) (162)
Inc(dec) accrued interest payable (60) (16)
Inc(dec) other liabilities 159 128
Net cash provided by operating ----------------------
activities 372 333
Cash flows from investing activities:
Dec(inc) in interest bearing deposits in banks 290 (947)
Dec(inc) in federal funds 1,475 (1,250)
Dec(inc) in investment securities 1,246 1,035
Net dec (inc) in loans (2,981) (1,651)
Capital expenditures premises & equip (12) (113)
----------------------
Net cash used in investing activities 18 (2,926)
Cash flows from financing activities:
Net increase (decrease) in -
Demand deposits 799 (513)
NOW and MMDA (3,117) (1,624)
Savings deposits 722 44
Time deposits $100,000 and over 341 1,621
Other time deposits 263 947
Federal Home Loan Borrowings (80) 1,101
----------------------
Net cash provided by financing activities (1,072) 1,576
Net increase in cash and cash equivalents (682) (1,017)
Cash and cash equivalents, beginning 2,257 2,714
Cash and cash equivalents, end of period $1,575 $1,697
Cash paid during the period:
Interest $820 $958
Income Taxes $ 55 $142
The accompanying notes are an integral part of this statement.
TECHE BANCSHARES, INC.
NOTES TO FINANCIAL STATEMENTS
June 30, 2002
The information furnished reflects all normal, recurring adjustments
which are, in the opinion of management, necessary for a fair statement of
Teche Bancshares, Inc. and its subsidiary for the six (6) months ended June
30, 2002. Results for the interim period presented are not necessarily
indicative of results which may be expected for any other interim period or
for the year as a whole.
TECHE BANCSHARES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS FOR THE QUARTER ENDED JUNE 30, 2002.
Liquidity
Liquidity is the ability to insure that adequate funds are available to
satisfy contractual liabilities, fund operations, meet withdrawal
requirements of depositors and provide for customer's credit needs in a
timely manner. Our primary source of liquidity is our core deposits. We
supplement our core deposits with a line of credit with one of our
correspondent banks, public fund time deposits, repurchase agreements with
correspondent banks and a line of credit with the Federal Home Loan Bank. Our
sources of liquidity are adequate to fund the loan demand that we are
experiencing.
The primary source of funding for the parent company is dividends from the
Bank. Management believes the parent's current sources of funds are
sufficient to meet its liquidity needs for the foreseeable future.
Capital Resources and Asset Quality
Our consolidated risk based capital to asset ratio was 18.60% and Tier one
capital ratio was 8.77% at June 30, 2002. The bank only risk based capital
ratio was 18.56% and Tier one capital ratio was 8.75%. Banks are required to
maintain a risk weighted capital to asset ratio of 8% and Tier one capital
ratio of 5%. Our risk based capital ratio and Tier one capital ratio both
exceed the required amount. Management is monitoring our capital ratio and
asset growth to assure that the bank will continue to have adequate capital
to support its assets.
Asset quality continues to be satisfactory due to our emphasis on credit
quality in our loan portfolio. Management is of the opinion that we have all
of our problem credits identified and that an adequate allowance has been
made for any potential future losses.
We continuously monitor the quality of our loans. Loans past due 90 days or
greater still accruing at June 30, 2002, were $119,302 a decrease of $74,836
from December 31, 2001. Loans on which the accrual of interest had been
discontinued at June 30, 2002 totalled $32,444.
We own one piece of other real estate. At the present time our other real
estate is leased at the rate of $1,300 per month. The lessee has an option
to purchase the property at the end of the lease. We are writing down our
other real estate $1,957 per month. At June 30, 2001 other real estate
totalled $162,760 which is down $11,744 from December 31, 2001.
Results of Operations
Net Income. Our net income for the six (6) months ended June 30, 2002 was
$183,890 down $51,142 as compared to that of the same period last year. The
decrease in net income was mostly attributed to a decrease in net interest
income from the prior year. Our net interest margin was squeezed at the end
of last year and the beginning of this year as the result of the Federal
Reserve's interest rate decreases. Our margin has started to improve this
year as our higher rate certificates of deposit renew and reprice at lower
rates.
Revenue. Our net interest income for the six (6) months ended June 30, 2002
is down $72,351 as compared to the same period in 2001. The decrease in net
interest income was the result of the Federal Reserve Bank lowering interest
rates during 2001. Total interest income decreased $255,581. The decrease
was mostly due to lower rates received on loans and investments. Total
interest expense decreased $181,730. The effect of the Federal Reserve
Bank's rate reductions was to reprice our loans and investments quicker than
our deposits. We anticipate that as our deposits reprice over the remainder
of the year that our net interest margin will continue to improve.
Provision for Loan Losses. Our bad debt reserve totalled $319,799 at June 30,
2002 which represents .99% of our gross loans. During the first half of
2002, we added $19,998 to our reserve for loan loss account. We increased
our allowance for loan losses to set aside reserves for the increase in loans
that we have experienced. Our reserve for loan loss balance was considered
adequate at June 30, 2002.
Other Income. Our other income was up $24,841 as compared to the same period
last year. The increase was due to a gain on the sale of securities and an
increase in commission income on the sale of credit life and disability
insurance for the first half of the year.
Other Expenses. Other expenses are up $31,059 as compared to the same time
last year. Other expenses increased due to increases in salaries and
employee benefits, occupancy expense and other operating expense. Salaries
and benefits increased as the result of raises that were given in the fourth
quarter of 2001. Occupancy expense increased due to an increase in
depreciation expense from the remodeling of our Coteau office and from new
equipment purchased. The majority of the change in other operating expense
was due to an increase in ad valorem tax.
Provision for Income Tax. A provision is made for income tax to reflect one
half (6/12ths) of the annualized income tax that we anticipate we will incur.
The provision for income tax for the period ended June 30, 2002 was $87,537
as compared to $114,964 for the same period last year. Income tax expense
decreased due to a decrease in income for the current year.
PART II - OTHER INFORMATION
Item #1 Legal proceedings
Inapplicable
Item #2 Changes in Securities
Inapplicable
Item #3 Defaults Upon Senior Securities
Inapplicable
Item #4 Submission of Matters to be a Vote of Securities Holders
Inapplicable
Item #5 Other information
Inapplicable
Item #6 Exhibits and Reports on Form 8-K
Inapplicable
TECHE BANCSHARES, INC.
Pursuant to the requirement of the Securities Exchange Act of 1934, the
Bank has duly caused this quarterly report to be signed on its behalf by the
undersigned thereunto duly authorized.
TECHE BANCSHARES, INC.
Registrant
/s/ Alcee J. Durand, Jr.
July 16, 2002 Alcee J. Durand, Jr.
Date President/CEO