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 September 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 70582
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 September 30, 2003.
TECHE BANCSHARES, INC.
TABLE OF CONTENTS
FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 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
September 30, 2003 and December 31, 2002
(Dollars in Thousands)
Sept. 30, December 31,
2003 2002
ASSETS
Cash and due from banks $1,774 $2,354
Interest-bearing deposits with banks 1,833 2,401
Securities Available for Sale at mkt value 27,208 25,400
Securities Held To Maturity (Market Value
of $456 and $1,105, respectively) 470 1,101
Other securities at cost 585 524
Federal funds sold 5,900 2,425
Loans, net of allowance for loan losses
of $387 and $341, respectively) 28,694 30,197
Bank premises, furniture, and equipment 765 759
Accrued interest receivable 266 311
Other real estate owned 134 151
Other assets 268 62
----------------------
Total assets $67,897 $65,685
======================
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits -
Non-interest demand 8,214 $9,191
Interest bearing -
NOW and MMDA accounts 15,902 13,163
Savings 4,774 4,645
Time, $100 and over, 12,961 13,610
Other time 13,101 12,101
----------------------
Total deposits 54,952 52,710
Accrued interest payable 74 153
Federal Home Loan Borrowings 7,109 7,290
Other liabilities and accrued expenses 291 182
----------------------
Total liabilities 62,427 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 3,952 3,742
----------------------
5,377 5,167
Less: 200 shares of treasury stock (19) (19)
Market Value Allowance on
AFS Bonds 112 202
----------------------
Total stockholders' equity 5,470 5,350
----------------------
Total liabilities and stockholders' equity $67,897 $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
Nine Months Ended September 30, 2003 and 2002;
(Dollars in Thousands except Earnings per Share and Average Shares)
Three Months Ended Nine Months Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2003 2002 2003 2002
Interest income:
Interest and fees on loans $553 $627 $1,689 $1,834
Interest on investment securities -
U.S. government's 88 211 358 588
State/political sub's 22 13 62 32
Dividends on equities 5 6 10 11
Interest on balances from banks 4 9 17 24
Interest on federal funds 13 11 45 35
--------------------------------------------
Total interest income 685 877 2,181 2,524
Interest expense:
Interest on deposits $168 $261 $ 547 $ 829
Interest on fed funds purchased - - - -
Interest on borrowed funds 103 101 311 293
--------------------------------------------
Total interest expense 271 362 858 1,122
--------------------------------------------
Interest inc. before provision 414 515 1,323 1,402
Provision for Credit Losses 15 13 45 33
--------------------------------------------
Net interest income 399 502 1,278 1,369
--------------------------------------------
Other income:
Service charges deposits 90 94 261 267
Gain on Sale of Securities - - - 9
Other income and charges 29 26 75 83
--------------------------------------------
Total other income 119 120 336 359
Other expenses:
Salaries/employee benefits 216 225 647 662
Occupancy expense 55 59 169 182
Other operating expenses 187 134 503 409
--------------------------------------------
Total other expenses 458 418 1,319 1,253
--------------------------------------------
Income before income taxes 60 204 295 475
Income taxes 13 67 85 154
--------------------------------------------
Net income $ 47 $137 $210 $321
Net income per share $1.68 $4.92 $ 7.53 $11.50
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 Nine Months Ended September 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 nine months 210 - 210
Change in Unrealized AFS (90) (90)
------ ------ ------
Balances, September 30, 2003 $5,358 $ 112 $5,470
====== ====== ======
Balances, January 1, 2002 $4,742 $146 $4,888
Net income nine months 321 - 321
Change in Unrealized AFS 57 57
------ ------ ------
Balances, September 30, 2002 $5,063 $ 203 $5,266
====== ====== ======
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 Nine Months Ended September 30, 2003 and 2002
Sept. 30, Sept. 30,
2003 2002
Cash flows from operating activities:
Net income $210 $321
Adjustments to reconcile net income
to net cash provided by
operating activities -
Depreciation of bank premises 78 89
Provision for Credit Losses 45 33
Write down of other real estate owned 18 18
(Inc)dec accrued int receivable 45 22
(Inc) dec other assets (206) (72)
Inc(dec) accrued interest payable (79) (100)
Inc(dec) other liabilities 110 262
Net cash provided by operating ----------------------
activities 221 573
Cash flows from investing activities:
Dec(inc) in interest bearing deposits in banks 568 (532)
Dec(inc) in federal funds (3,475) (75)
Dec(inc) in investment securities (1,267) (5,615)
Purchase of Other Securities (61) (37)
Net dec (inc) in loans 1,458 (2,920)
Capital expenditures premises & equip 9 (12)
Capital expenditures for bank premises & equip (93) -
----------------------
Net cash used in investing activities (2,861) (9,191)
Cash flows from financing activities:
Net increase (decrease) in -
Demand deposits (977) (862)
NOW and MMDA 2,738 5,456
Savings deposits 129 489
Time deposits $100,000 and over (649) 1,619
Other time deposits 1,000 336
Federal Home Loan Borrowings (181) 866
----------------------
Net cash provided by financing activities 2,060 8,628
Net increase in cash and cash equivalents (580) 10
Cash and cash equivalents, beginning 2,354 2,257
Cash and cash equivalents, end of period $1,774 $2,267
Cash paid during the period:
Interest $ 937 $1,222
Income Taxes $180 $109
The accompanying notes are an integral part of this statement.
TECHE BANCSHARES, INC.
NOTES TO FINANCIAL STATEMENTS
September 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 nine (9) months ended
September 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.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS FOR THE QUARTER ENDED SEPTEMBER 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 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 19.70% and Tier one
capital ratio was 7.92% at September 30, 2003. The bank only risk based
capital ratio was 19.54% and Tier one capital ratio was 7.85%. Banks are
required to maintain a risk based capital 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 September 30, 2003, were $112,351 an increase of
$88,109 from December 31, 2002. Loans on which the accrual of interest had
been discontinued at September 30, 2003 totalled $63,318.
We own one piece of other real estate. At September 30, 2003 other real
estate totalled $133,400. 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 nine (9) months ended September 30, 2003
was $210,270 down $110,921 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 and a decrease in our
net interest income for the period.
Revenue. Our net interest income for the nine (9) months ended September 30,
2003 is down $91,285 as compared to the same period in 2002. Total interest
income decreased $343,157. The decrease was due to lower interest rates
received on loans and investments. Total interest expense decreased
$263,541. The decline in interest expense seems to be slowing as some
depositors are opting for longer maturities at renewal to obtain higher
rates.
Provision for Loan Losses. Our bad debt reserve totalled $386,632 at
September 30, 2003 which represents 1.33% of our gross loans. During the
nine months of 2003, we added $45,000 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 September 30, 2003.
Other Income. Other income was down $22,440 as compared to the same period
last year. The decrease was mostly due to a decrease in the amount of NSF
fees collected and a decrease in the sale of credit life and disability
insurance.
Other Expenses. Other expenses are up $66,250 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 three
fourths (9/12ths) of the annualized income tax that we anticipate we will
incur. The provision for income tax for the period ended September 30, 2003
was $85,191 as compared to $154,245 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 October 24, 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 Form 10-Q 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.
TECHE BANCSHARES, INC.
PART II - OTHER INFORMATION
Item #1 Legal proceedings
Inapplicable
Item #2 Changes in Securities and Use of Proceeds
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.
Alcee J. Durand, Jr.
President
October 24, 2003
Date
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
October 24, 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
October 24, 2003
Date
TECHE BANCSHARES, INC.
ACT 906 CERTIFICATION
I, Alcee J. Durand, Jr., certify that the attached financial statements
for the period ending September 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
October 24, 2003
Date
TECHE BANCSHARES, INC.
ACT 906 CERTIFICATION
I, Brian E. Friend, certify that the attached financial statements for
the period ending September 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
October 24, 2003
Date