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, 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 June 30, 2003.
TECHE BANCSHARES, INC.
TABLE OF CONTENTS
FORM 10-Q FOR THE QUARTER ENDED JUNE 30, 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
(UNAUDITED)
CONSOLIDATED BALANCE SHEETS
June 30, 2003 and December 31, 2002
(Dollars in Thousands)
June 30, December 31,
2003 2002
ASSETS
Cash and due from banks $2,514 $2,354
Interest-bearing deposits with banks 2,062 2,401
Securities Available for Sale at mkt value 28,141 25,400
Securities Held To Maturity (Market Value
of $201 and $1,105, respectively) 200 1,101
Other securities at cost 529 524
Federal funds sold 6,125 2,425
Loans, net of allowance for loan losses
of $372 and $341, respectively) 29,486 30,197
Bank premises, furniture, and equipment 781 759
Accrued interest receivable 258 311
Other real estate owned 139 151
Other assets 213 62
----------------------
Total assets $70,448 $65,685
======================
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits -
Non-interest demand 7,757 $9,191
Interest bearing -
NOW and MMDA accounts 19,869 13,163
Savings 4,762 4,645
Time, $100 and over, 11,942 13,610
Other time 13,011 12,101
----------------------
Total deposits 57,341 52,710
Accrued interest payable 93 153
Federal Home Loan Borrowings 7,182 7,290
Other liabilities and accrued expenses 296 182
----------------------
Total liabilities 64,912 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 3,906 3,742
----------------------
5,331 5,167
Less: 200 shares of treasury stock (19) (19)
Market Value Allowance on
AFS Bonds 224 202
----------------------
Total stockholders' equity 5,536 5,350
----------------------
Total liabilities and stockholders' equity $70,448 $65,685
======================
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, 2003 and 2002;
(Dollars in Thousands except Earnings per Share and Average Shares)
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
2003 2002 2003 2002
Interest income:
Interest and fees on loans $578 $609 $1,136 $1,206
Interest on investment securities -
U.S. government's 112 199 270 377
State/political sub's 21 11 41 19
Dividends on equities 2 3 5 5
Interest on balances from banks 6 7 12 16
Interest on federal funds 16 12 33 24
--------------------------------------------
Total interest income 735 841 1,497 1,647
Interest expense:
Interest on deposits $188 $268 $380 $568
Interest on fed funds purchased - - - -
Interest on borrowed funds 104 96 208 191
--------------------------------------------
Total interest expense 292 364 588 759
--------------------------------------------
Interest inc. before provision 443 477 909 888
Provision for Credit Losses 15 10 30 20
--------------------------------------------
Net interest income 428 467 879 868
--------------------------------------------
Other income:
Service charges deposits 86 93 171 173
Gain on sale of Securities - 9 - 9
Other income and charges 19 28 47 56
--------------------------------------------
Total other income 105 130 218 238
Other expenses:
Salaries/employee benefits 216 221 432 438
Occupancy expense 60 60 114 122
Other operating expenses 151 143 315 274
--------------------------------------------
Total other expenses 427 424 861 834
--------------------------------------------
Income before income taxes 106 173 236 272
Income taxes 31 57 72 88
--------------------------------------------
Net income $ 75 $116 $164 $184
Net income per share $2.68 $4.17 $5.85 $ 6.59
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, 2003 and 2002
Unrealized
Common Gain (Loss)
Stock, on
Treasury & AFS
Surplus Securities Total
Balances, January 1, 2003 $5,148 $202 $5,350
Net income six months 164 - 164
Change in Unrealized AFS 22 22
------ ------ ------
Balances, June 30, 2003 $5,312 $ 224 $5,536
====== ====== ======
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
====== ====== ======
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, 2003 and 2002
June 30, June 30,
2003 2002
Cash flows from operating activities:
Net income $164 $184
Adjustments to reconcile net income
to net cash provided by
operating activities -
Depreciation of bank premises 50 59
Provision for Credit Losses 30 20
Write down of other real estate owned 11 12
(Inc)dec accrued int receivable 53 26
(Inc) dec other assets (151) (28)
Inc(dec) accrued interest payable (60) (60)
Inc(dec) other liabilities 115 159
Net cash provided by operating ----------------------
activities 212 372
Cash flows from investing activities:
Dec(inc) in interest bearing deposits in banks 339 290
Dec(inc) in federal funds (3,700) 1,475
Dec(inc) in investment securities (1,818) 1,246
Dec(inc) in other securities (4) -
Net dec (inc) in loans 681 (2,981)
Insurance Proceeds from Hurricane 9 -
Capital expenditures premises & equip (82) (12)
----------------------
Net cash used in investing activities (4,575) 18
Cash flows from financing activities:
Net increase (decrease) in -
Demand deposits (1,435) 799
NOW and MMDA 6,706 (3,117)
Savings deposits 117 722
Time deposits $100,000 and over (1,667) 341
Other time deposits 910 263
Federal Home Loan Borrowings (108) (80)
----------------------
Net cash provided by financing activities 4,523 (1,072)
Net increase in cash and cash equivalents 160 (682)
Cash and cash equivalents, beginning 2,354 2,257
Cash and cash equivalents, end of period $2,514 $1,575
Cash paid during the period:
Interest $648 $820
Income Taxes $120 $ 55
The accompanying notes are an integral part of this statement.
TECHE BANCSHARES, INC.
NOTES TO FINANCIAL STATEMENTS
June 30, 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 six (6) months ended June
30, 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 JUNE 30, 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 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 19.53% and Tier one
capital ratio was 7.58% at June 30, 2003. The bank only risk based capital
ratio was 19.42% and Tier one capital ratio was 7.54%. 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, 2003, were $162,906 an increase of
$138,664 from December 31, 2002. Loans on which the accrual of interest had
been discontinued at June 30, 2003 totalled $32,314.
We own one piece of other real estate. At June 30, 2003 other real estate
totalled $139,272. 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 six (6) months ended June 30, 2003 was
$163,468 down $20,422 as compared to that of the same period last year. The
decrease in net income was mostly attributed to legal costs associated with
the going private transaction that we are pursuing.
Revenue. Our net interest income for the six (6) months ended June 30, 2003
is up $10,968 as compared to the same period in 2002. Net interest income
increased as the 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. Total interest income decreased $150,658. The decrease was mostly
due to lower rates received on loans and investments. Total interest expense
decreased $171,628. This decrease in interest expense should continue as our
certificates of deposit renew.
Provision for Loan Losses. Our bad debt reserve totalled $371,632 at June 30,
2003 which represents 1.24% of our gross loans. During the first half of
2003, we added $30,000 to our reserve for loan loss account. We increased
our allowance for loan losses to set aside reserves in the event that our
loan losses increase due to uncertainties in the economy. Our reserve for
loan loss balance was considered adequate at June 30, 2003.
Other Income. Our other income decreased $20,684 as compared to the same
period last year. The decrease was mostly due to a decrease 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 $26,101 as compared to the same time
last year. The majority of the change in other expenses 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
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, 2003 was $72,142
as compared to $87,537 for the same period last year. Income tax expense
decreased due to a decrease in 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 July 29, 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 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.
August 11, 2002 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
August 11, 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
August 11, 2003
Date
TECHE BANCSHARES, INC.
ACT 906 CERTIFICATION
I, Alcee J. Durand, Jr., certify that the attached financial statements
for the period ending June 30, 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
August 11, 2003
Date
TECHE BANCSHARES, INC.
ACT 906 CERTIFICATION
I, Brian E. Friend, certify that the attached financial statements for
the period ending June 30, 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
August 11, 2003
Date