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 March 31, 2003
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 March 31, 2003.
TECHE BANCSHARES, INC.
TABLE OF CONTENTS
FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2003
PART I - FINANCIAL INFORMATION:
Item 1. Financial Statements
Consolidated balance sheets
Consolidated statements of income
Consolidated statements of changes in stockholders' equity
Consolidated statements of cash flows
Note to consolidated financial statements
Item 2. Management's discussion and analysis of financial condition
and results of operations
Item 3. Quantitative and Qualitative Disclosures about Market
Risk
Item 4. Controls and Procedures
PART II - OTHER INFORMATION:
Item 1 - Legal proceedings
Item 2 - Changes in securities and Use of Proceeds
Item 3 - Defaults upon senior securities
Item 4 - Submission of matters to a vote of security holders
Item 5 - Other information
Item 6 - Exhibits and reports on Form 8-K
SIGNATURE
CERTIFICATIONS
ACT 906 CERTIFICATIONS
TECHE BANCSHARES, INC. AND SUBSIDIARY
St. Martinville, Louisiana
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
March 31, 2003 and December 31, 2002
(Dollars in Thousands)
March 31, December 31,
2003 2002
ASSETS
Cash and due from banks $2,410 $2,354
Interest - bearing deposits with banks 2,232 2,401
Securities Available for Sale at mkt value 26,454 25,400
Securities Held To Maturity (Market Value
of $202 and $1,105, respectively) 200 1,101
Other securities at cost 526 524
Federal funds sold 6,700 2,425
Loans, net of allowance for loan losses
of $357 and $341, respectively) 29,697 30,197
Bank premises, furniture, and equipment 733 759
Accrued interest receivable 268 311
Other real estate owned 145 151
Other assets 82 62
----------------------
Total assets $69,447 $65,685
======================
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits -
Non-interest demand $8,096 $9,191
Interest bearing -
NOW and MMDA accounts 18,542 13,163
Savings 4,998 4,645
Time, $100 and over, 12,529 13,610
Other time 12,364 12,101
----------------------
Total deposits 56,529 52,710
Accrued interest payable 95 153
FHLB Borrowings 7,254 7,290
Other liabilities and accrued expenses 170 182
----------------------
Total liabilities 64,048 60,335
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 3,831 3,742
----------------------
5,256 5,167
Less: 200 shares of treasury stock (19) (19)
Market Value Allowance on
AFS Bonds 162 202
----------------------
Total stockholders' equity 5,399 5,350
----------------------
Total liabilities and stockholders' equity $69,447 $65,685
======================
The accompanying notes are an integral part of this statement.
TECHE BANCSHARES, INC. AND SUBSIDIARY
St. Martinville, Louisiana
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended March 31, 2003 and 2002;
(Dollars in Thousands except Earnings per Share)
Three Months Ended
March 31, March 31,
2003 2002
Interest income:
Interest and fees on loans $559 $598
Interest on investment securities -
U.S. government securities 158 178
State and political subdivisions 20 8
Interest on interest-bearing deposits
in banks 2 2
Dividends on equity securities 6 8
Interest on federal funds sold 17 13
----------------------
Total interest income 762 807
Interest expense:
Interest on deposits $192 $300
Interest on borrowed funds 105 96
----------------------
Total interest expense 297 396
----------------------
Net interest income 465 411
Provision for Credit Losses 15 10
----------------------
Net interest income after provision 450 401
----------------------
Other income:
Service charges on deposit accounts 85 80
Other income and charges 28 28
----------------------
Total other income 113 108
Other expenses:
Salaries and employee benefits 215 217
Occupancy expense 54 62
Other operating expenses 165 132
----------------------
Total other expenses 434 411
----------------------
Income before income taxes 129 98
Income taxes 40 31
----------------------
Net income $89 $ 67
======================
Net income per share of common stock $3.17 $2.42
======================
Average shares outstanding 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 Three Months Ended March 31, 2003 and 2002
Unrealized
Gain (Loss)
Common Stock on
Treas. Stk AFS
Surplus Securities Total
Balances, January 1, 2003 $5,148 $202 $5,350
Net income three months 89 89
Change in Unrealized AFS (40) (40)
------- ------ ------
Balances, March 31, 2003 $5,237 $ 162 $5,399
======= ====== ======
Balances, January 1, 2002 $4,743 $146 $4,889
Net income three months 67 67
Change in Unrealized AFS (30) (30)
------- ------ ------
Balances, March 31, 2002 $4,810 $ 116 $4,926
======= ====== ======
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 Three Months Ended March 31, 2003 and 2002
March 31, March 31,
2003 2002
Cash flows from operating activities:
Net income $89 $ 67
Adjustments to reconcile net income
to net cash provided by
operating activities -
Depreciation of bank premises 25 30
Provision for Loan loss 15 10
Write down of other real estate 5 6
(Inc)dec accrued int receivable 43 17
(Inc) dec other assets (20) 6
Inc(dec) accrued interest payable (58) (54)
Inc(dec) other liabilities (11) 3
Net cash provided by operating ----------------------
activities 88 85
Cash flows from investing activities:
Dec(inc) in interest bearing deposits
in banks 169 145
Dec(inc) in federal funds (4,275) (125)
Dec(inc) in investment securities (193) 1,748
Dec(inc) in other securities (2) (2)
Net dec (inc) in loans 485 (1,096)
Insurance proceeds from Hurricane 9 0
Capital expenditures premises & equip (8) 0
----------------------
Net cash used in investing activities (3,815) 670
Cash flows from financing activities:
Net increase (decrease) in -
Demand deposits (1,095) (117)
NOW and MMDA 5,379 (2,583)
Savings deposits 353 537
Time deposits $100,000 and over (1,081) 861
Other time deposits 263 287
FHLB Borrowings (36) (24)
----------------------
Net cash provided by financing activities 3,783 (1,039)
Net increase in cash and cash equivalents 56 (284)
Cash and cash equivalents, beginning 2,354 2,257
Cash and cash equivalents, end of period $2,410 $1,973
Cash paid during the period:
Interest $450 $450
Income Taxes $0 $0
The accompanying notes are an integral part of this statement.
TECHE BANCSHARES, INC.
NOTES TO FINANCIAL STATEMENTS
March 31, 2003
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 three (3) months ended
March 31, 2003. 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 MARCH 31, 2003.
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 our correspondent
banks, public fund time deposits, 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 19.41% and Tier one
capital ratio was 7.54% at March 31, 2003. The bank only risk based capital
ratio was 19.50% and Tier one capital ratio was 7.58%. 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 monitors our capital ratio and asset
growth to assure that the bank will 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 March 31, 2003, were $21,679 a decrease of $2,563
from December 31, 2002. There was $32,314 of loans on which the accrual of
interest had been discontinued at March 31, 2003.
We are actively marketing our other real estate owned. At March 31, 2003
other real estate totalled $145,144. The one piece of real estate, a
commercial building, that we own is currently under a three year lease with
monthly lease payments of $1,800. We are writing down the value of the
building owned in the amount of $1,957 per month. At the end of the three
year lease, the lessee has an option to purchase the building.
Results of Operations
Net Income. Our net income for the three (3) months ended March 31, 2003 was
$88,635 up $21,144 as compared to that of the same period last year. The
increase in income was mostly attributed to an increase in net interest
income. Net interest income increased as a result of growth of the bank's
assets and deposits. The bank has the contract for the local school board
account until August 1, 2004. The School Board maintains approximately
$10,000,000 on deposit. Much of the increase in net interest income was
attributable to earnings on these deposits.
Revenue. Our net interest income for the three (3) months ended March 31,
2003 is up $49,037 as compared to the same period in 2002. The increase in
net interest income was the result of growth in the bank's total assets and
deposits as previously stated.
Provision for Loan Losses. Our bad debt reserve totalled $356,556 at March
31, 2003 which represents 1.19% of our gross loans. During the first quarter
of 2003, we added $15,000 to our reserve for loan loss account. Our reserve
for loan loss balance was considered adequate at March 31, 2003.
Other Income. Our other income is up $4,901 when compared to the same period
last year. The increase was mostly due to increases in income on demand
deposit accounts due to an increase in the volume of demand deposit accounts
outstanding.
Other Expenses. Other expenses are up $22,659 as compared to the same time
last year. The majority of the increase in expense was due to an increase in
other operating expenses. Other operating expenses increased mostly due to
an increase in legal expenses paid by the Holding Company. The Company has
retained counsel to advise us with a going private and subchapter S
transaction that will allow the bank to reduce the cost burden that the
Sarbanes-Oxley Act has created.
Provision for Income Tax. A provision is made for income tax to reflect one
fourth (3/12ths) of the annualized income tax that we anticipate we will
incur. The provision for income tax for the period ended March 31, 2003 was
$40,843 as compared to $30,708 for the same period last year. The increase in
income tax was due to increased income for the current year.
TECHE BANCSHARES, INC.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Inapplicable under the Small Business Issuer Criteria.
TECHE BANCSHARES, INC.
ITEM 4. CONTROLS AND PROCEDURES
An evaluation of disclosure controls and procedures was performed by
Alcee J. Durand, Jr. and Brian E. Friend on May 5, 2003. On this date they
reviewed the accounting processes, procedures and workpapers involved in
gathering and compiling the information provided in this Form 10-Q. The
workpapers and accompanying Financial Statements will be forwarded to our
Independent Auditors for their review prior to filing with the Securities and
Exchange Commission. It is the conclusion of Alcee J. Durand, Jr. and Brian
E. Friend that sufficient controls exist to provide for the accurate
reporting of financial information.
There have been no changes in internal controls or other factors that
could significantly affect internal controls subsequent to the date of the
evaluation. There were no significant deficiencies or material weaknesses
requiring corrective action.
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.
May 5, 2003 Alcee J. Durand, Jr.
Date President/CEO
TECHE BANCSHARES, INC.
CERTIFICATION
I, Alcee J. Durand, Jr., certify that:
1. I have reviewed this quarterly report on Form 10-q of Teche Bancshares,
Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, not misleading with respect to the period
covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:
a. designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
b. evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date
of this quarterly report (the "Evaluation Date"); and
c. presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons
performing the equivalent function):
a. all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b. any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
TECHE BANCSHARES, INC.
CERTIFICATION
Page 2
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies
and material weaknesses.
TECHE BANCSHARES, INC.
Registrant
/s/ Alcee J. Durand, Jr.
Alcee J. Durand, Jr.
President
May 5, 2003
Date
TECHE BANCSHARES, INC.
CERTIFICATION
I, Brian E. Friend, certify that:
1. I have reviewed this quarterly report on Form 10-q of Teche Bancshares,
Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary
to make the statements made, not misleading with respect to the period
covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
we have:
a. designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
b. evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date
of this quarterly report (the "Evaluation Date"); and
c. presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons
performing the equivalent function):
a. all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b. any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
TECHE BANCSHARES, INC.
CERTIFICATION
Page 2
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant deficiencies
and material weaknesses.
TECHE BANCSHARES, INC.
Registrant
/s/ Brian E. Friend
Brian E. Friend
Teche Bank & Trust Company
Vice President & Cashier
May 5, 2003
Date
TECHE BANCSHARES, INC.
ACT 906 CERTIFICATION
I, Alcee J. Durand, Jr., certify that the attached financial statements
for the period ending March 31, 2003, fully comply with the requirements of
sections 13(a) or 15(d) of the Exchange Act and the statements fairly
represent, in all material respects, the financial condition and results of
operations of Teche Bancshares, Inc.
TECHE BANCSHARES, INC.
Registrant
/s/ Alcee J. Durand, Jr.
Alcee J. Durand, Jr.
President
May 5, 2003
Date
TECHE BANCSHARES, INC.
ACT 906 CERTIFICATION
I, Brian E. Friend, certify that the attached financial statements for
the period ending March 31, 2003, fully comply with the requirements of
sections 13(a) or 15(d) of the Exchange Act and the statements fairly
represent, in all material respects, the financial condition and results of
operations of Teche Bancshares, Inc.
TECHE BANCSHARES, INC.
Registrant
/s/ Brian E. Friend
Brian E. Friend
Teche Bank & Trust Company
Vice President & Cashier
May 5, 2003
Date