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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-K
[X] Annual report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 (fee required)
For the fiscal year ended December 31, 1995
or
[ ] Transition report pursuant to section 13 or 15(d) of the
Securities Exchange Act of 1934 (no fee required)
Commission File Number 2-89561
TECHE BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
Louisiana 72-1008552
(State of incorporation) (I.R.S. Employer Identification No.)
606 S. Main Street, St. Martinville, Louisiana 70582
(Address of principal executive offices) (Zip code)
(318) 394-9726
(Registrant's telephone number, including area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Common Stock, $10.00 par value
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
to Item 405 of Regulation S-K (Section 229.405 of this chapter) 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 to this Form 10-K. [X]
State the aggregate market value of the voting stock held by
nonaffiliates of the Registrant: (Total number of shares held by
nonaffiliated: See Part II, item 5.)
Indicate the number of shares outstanding of each of the
Registrant's classes of common stock, as of the latest practicable
date.
Common Stock, $10 par value, 27,925 shares outstanding as of
December 31, 1995
Documents Incorporated by Reference
Annual Report to Shareholders for the Year
Ended December 31, 1995 Parts I, II and IV
Definitive Proxy Statement for the 1995
Annual Meeting of Shareholders Part IV
FORM 10-K
TECHE BANCSHARES, INC.
PART I
Item 1. Business
General -
Teche Bancshares, Inc. (Company) was organized during 1984 for
the purpose of operating as a one bank holding company. As a
result, Teche Bank and Trust Company (Bank) was acquired by Teche
Bancshares, Inc. in a business combination accounted for as a
pooling of interests. Teche Bancshares, Inc.'s sole source of
income is derived from the earnings and dividends of its
subsidiary, Teche Bank & Trust Company.
Teche Bank and Trust Company is a Louisiana chartered state
bank engaged in the general banking business since September 27,
1969. The Bank's main office is located in the primary business
district of St. Martinville, Louisiana. The Bank has two branches.
One is located on the north side of town on the main thoroughfare.
The other branch is in Coteau, Louisiana. The population of both
areas is largely rural and the economy is based on agriculture,
textiles and tourism.
The City of St. Martinville is located in the south central
part of Louisiana. The Bank's primary market area, the City of St.
Martinville, had a population of 7,965 in 1990. Its general market
area, St. Martin Parish, Louisiana, had a population of 40,214 and
has not experienced substantial population growth over the past
several years.
The community of Coteau is located twelve miles south of St.
Martinville in Iberia Parish. The primary market area of the
Coteau Branch is the six mile circular radius from the branch that
is within Iberia Parish. The population of the primary market area
is approximately 6,450 people. There are no banks or branches of
other financial institutions located within the primary market
area.
Competition -
There are two other banks and one savings and loan in the
Bank's primary market area. Competition for loans and deposits is
intense among the financial institutions in the area.
In the Bank's general market area there are four other banks
and one domestic savings and loan institution aggressively pursuing
loans, deposits and other accounts. Below is a list of banks
headquartered in St. Martin Parish with their total deposits as of
December 31, 1995:
Bank Thousands of Dollars
Teche Bank and Trust Co. $ 30,516
St. Martin Bank and Trust 70,980
Farmers-Merchants Bank and Trust 86,557
First National Bank of St. Martin 44,238
Total parish bank deposits $232,291
========
Regulation -
As a bank holding company, Teche Bancshares, Inc. is subject to
the Bank Holding Company Act of 1956, as amended (the "Act"). The
Act subjects Teche Bancshares, Inc. to supervision and regulation
by the Federal Reserve Board, which includes periodic examinations
and the obligation of Teche Bancshares, Inc. to file semi-annual
and annual reports with the Federal Reserve Board. The Act
requires prior approval by the Federal Reserve Board for
acquisitions of more than 5 percent of the voting shares or
substantially all of the assets of any bank or bank holding
company. The Act prohibits Teche Bancshares, Inc. from engaging in
any business other than banking or bank-related activities
specifically allowed by the Federal Reserve Board. The Act also
prohibits Teche Bancshares, Inc. and its subsidiary from engaging
in certain tie-in arrangements in connection with the extension of
credit, the lease or sale of property or the provision of any
services. Under Title VI of the Financial Institutions, Reform,
Recovery and Enforcement Act of 1989, the Act has been amended to
authorize bank holding companies to acquire savings and thrift
institutions without tandem operations restrictions. Teche
Bancshares, Inc.'s one banking subsidiary ("The Bank") is subject
to a variety of regulations concerning the maintenance of reserves
against deposits, limitations on the rates that can be charged on
loans or paid on deposits, branching, restrictions on the nature
and amounts of loans and investments that can be made and limits on
daylight overdrafts. The Bank is regulated by the Federal Deposit
Insurance Corporation.
The Bank is limited in the amount of dividends they may
declare. Prior approval must be obtained from the appropriate
regulatory authorities before dividends can be paid by the Bank to
Teche Bancshares, Inc. if the amount of adjusted capital, surplus
and retained earnings is below defined regulatory limits. See Item
5 and Note 15 of Notes to Consolidated Financial Statements, which
isincorporated by reference into Item 8 of this Annual Report on
Form 10-K. The Bankis also restricted from extending credit or
making loans to or investments in Teche Bancshares, Inc. and
certain other affiliates as defined in the Federal Reserve Act.
Furthermore, loans and extensions of credit are subject to certain
other collateral requirements.
The Federal Reserve Board has established guidelines with
respect to the maintenance of appropriate levels of capital by
registered bank holding companies and banks.
"Primary capital" for this purpose includes common stock,
surplus, undivided profits, contingency and other capital reserves,
and the allowance for loan losses. "Total capital" consists of
primary capital plus secondary capital, which includes certain
limited-life preferred stock and long-term debt that meets certain
maturity and preference ranking criteria.
In January, 1989, the Federal Reserve Board issued risk-based
capital guidelines to assist in the assessment of the capital
adequacy of bank holding companies and banks. These guidelines
include a new definition of capital and a framework for calculating
risk-weighted assets by assigning assets and off-balance sheet
items to broad risk categories. The risk-based capital guidelines
also establish a schedule for achieving the minimum supervisory
standards and provide for transitional arrangements during a
phase-in-period (beginning year end 1990) to facilitate adoption
and implementation of the measure at the end of 1995.
The table below indicates the Bank's capital measures at
December 31, 1995. The bank meets the risk-based capital
guidelines at December 31, 1995 as follows:
Regulatory Bank's
Requirement Capital
Risk-based capital ratios:
Tier 1 4.0% 17.07%
===== ======
Tier 2 - % 1.09%
===== ======
Total risk-based capital ratio 8.0% 18.16%
===== ======
Additional Financial Information -
Average Balance Sheets:
(in thousands)
December 31,
1995 1994 1993
ASSETS ------ ----- ------
Cash and due from banks $ 1,416 $ 1,282 $ 1,377
Interest-bearing deposits
in banks 390 882 1,016
Investments securities:
U. S. Treasury securities 1,581 1,890 1,356
Federal agency securities 13,067 11,507 10,961
States and political
subdivisions 52 54 54
Other securities 256 157 153
------ ------ ------
Total investment securities 14,956 13,608 12,524
Federal funds sold 1,672 890 3,790
Loans, net of allowance
for losses 10,802 10,344 9,879
Bank premises, and equipment 829 800 594
Accrued interest receivable 250 231 244
Other real estate owned 215 397 643
Other assets 380 365 414
--------- --------- ---------
Total assets $30,910 $28,799 $30,481
========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits -
Demand $ 4,528 $ 4,291 $ 5,528
NOW and MMDA accounts 4,980 5,188 7,260
Savings 3,185 3,614 3,628
Time (100,000 and over) 5,472 4,038 2,299
Other time 9,695 8,763 9,056
------ ------ ------
Total deposits 27,860 25,894 27,771
Federal funds purchased 1 21 1
Securities repurchased 23 83 -
Accrued interest payable 119 82 76
Notes payable - stockholders 280 416 454
Other liabilities &
accrued expense 447 208 201
------ ------ ------
Total liabilities 28,730 26,704 28,503
------ ------ ------
Stockholders' equity:
Common stock ($10 par value,
100,000 shares authorized,
28,125 shares issued
and outstanding) 281 281 281
Surplus 1,139 1,139 1,139
Undivided profits 781 696 579
Total stockholders' equity 2,201 2,116 1,999
Less: Treasury stock, at cost (21) (21) (21)
-------- -------- --------
Net stockholders' equity 2,180 2,095 1,978
-------- -------- --------
Total liabilities and
stockholders' equity $30,910 $28,799 $30,481
======== ======== ========
Additional Financial Information (continued) -
Analysis of Net Interest Earnings Based on Average Amounts
Outstanding:
(in thousands)
Year Ended December 31,
1995 1994 1993
Interest earning assets:
Interest-bearing deposits,
in banks $390 $882 $ 1,016
Interest earned on interest-
bearing deposits 27 69 83
Yield on interest-bearing
deposits 7.0% 7.8% 8.2%
====== ====== ======
U. S. Treasury and federal agency
securities $14,648 $13,397 $12,317
Interest earned on U. S. Treasury
and federal agency securities 957 758 670
Yield on U. S. Treasury and
federal agency securities 6.5% 5.6% 5.4%
====== ====== ======
Obligations of states and political
subdivisions $52 $54 $54
Interest earned on obligations of
states and political
subdivisions 3 3 3
Yield on obligations of states and
political subdivisions 5.3% 5.7% 5.7%
====== ====== ======
Other securities $256 $ - $ -
Interest/dividends earned
on other securities 5 - -
Yield on other securities 2.0% -% -%
====== ====== ======
Federal funds sold $ 1,672 $890 $3,790
Interest earned on
federal funds sold 98 33 110
Yield on federal funds sold 5.8% 3.7% 2.9%
====== ====== ======
Net loans $10,802 $10,344 $9,879
Interest and fees
earned on net loans 1,138 1,055 1,025
Yield on net loans 10.5% 10.2% 10.4%
====== ====== ======
Total interest earning assets $27,820 $25,567 $27,055
Interest earned on total
interest-earning assets 2,229 1,918 1,891
Yield on total interest-earning
assets 8.0% 7.5% 7.0%
====== ====== ======
Interest bearing liabilities:
NOW and MMDA accounts $4,980 $ 5,188 $7,260
Interest paid on NOW AND MMDA
accounts 114 108 149
Average rate on NOW AND MMDA
accounts 2.3% 2.1% 2.1%
====== ====== ======
Additional Financial Information (continued) -
Analysis of Net Interest Earnings Based on Average Amounts
Outstanding (continued):
(in thousands)
Year Ended December 31,
1995 1994 1993
Savings $ 3,185 $ 3,614 $3,628
Interest paid on savings 63 72 74
Average rate paid on savings 2.0% 2.0% 2.0%
====== ====== ======
Time deposits - $100,000
and over $ 5,472 $ 4,038 $ 2,299
Interest paid on time deposits,
$100,000 and over 287 153 75
Average rate paid on time deposits,
$100,000 and over 5.2% 3.8% 3.2%
====== ====== ======
Other time deposits $ 9,695 $ 8,763 $ 9,056
Interest paid on other time
deposits 457 325 358
Average rate paid on other time
deposits 4.7% 3.7% 4.0%
====== ====== ======
Federal funds purchase $ 1 $ 21 $ 1
Interest paid on federal funds
purchased - 1 -
Average rate paid on federal funds
purchased 3.3% 5.4% 3.0%
====== ====== ======
Securities repurchased $ 23 $ 83 $ -
Interest paid on securities
repurchased 1 8 -
Average rate paid on securities
repurchased 5.6% 9.2% -
====== ====== ======
Notes payable - stockholders $ 280 $ 416 $ 454
Interest paid on notes payable -
stockholders 14 21 26
Average rate paid on notes
payable - stockholders 5.1% 5.1% 5.8%
====== ====== ======
Total interest bearing
liabilities $23,636 $22,123 22,698
Interest paid on total interest
bearing liabilities 936 687 682
Average rate on total interest
bearing liabilities 4.0% 3.1% 3.0%
====== ====== ======
Net yield on interest-earning
assets (net interest-
earnings divided by total
interest-earning assets 4.0% 4.8% 4.4%
====== ====== ======
Changes in Interest Income and Expenses -
The following table shows, for the periods indicated, the
change in interest income and interest expense for each major
component of interest-earning assets and interest-bearing
liabilities attributable to (i) changes in volume (change in volume
multiplied by old rate), (ii) changes in rates (change in rate
multiplied by old volume) and (iii) changes in rate/volume (change
in rate multiplied by the change in volume). The change in
interest income or expense attributable to the combination of rate
variance and volume variance is included in the table, but such
amount has also been allocated between, and included in the amounts
shown as, changes due to rate and changes due to volume. The
allocation of the change due to rate/volume variance was made in
proportion to the amounts due solely to rate variance and solely to
volume variance, which amounts are not included in the table.
Balances of non-accrual loans and related income recognized have
been included for computational purposes. Yields of tax exempt
securities have not been computed on a tax equivalent basis.
Year Ended December 31,
(dollars in thousands)
1992 v. 1993
Increase (Decrease) Due to
Volume Rate Rate/Volume Total
Interest earnings assets:
Increase (decrease) -
Interest bearing deposits
in banks (99) 7 (4) (96)
U. S. Treasury & Federal
Agency Sec. 89 (65) (9) 15
State and political
subdivisions - - - -
Federal Funds sold 58 (13) (10) 35
Net loans 30 (69) (2) (41)
---- ---- ----- ----
Total interest
earning assets 78 (140) (25) (87)
---- ---- ----- ---
Interest-bearing liabilities:
Increase (decrease) -
NOW and MMDA accounts 22 (80) (9) (67)
Savings 8 (41) (3) (36)
Time deposits, $100,000
and over (10) (27) 3 (34)
Other time deposits (9) (115) 2 (122)
Federal funds purchased - - - -
Securities repurchased - - - -
Notes payable - stockholder - (8) - (8)
---- ---- ----- ---
Total interest-bearing
liabilities 11 (271) (7) (267)
---- ---- ----- ---
Increase (decrease) in net
interest income 67 131 (18) 180
===== ===== ===== =====
1993 v. 1994
Increase (Decrease) Due to
Volume Rate Rate/Volume Total
Interest earnings assets:
Increase (decrease) -
Interest bearing deposits
in banks (11) (4) 1 (14)
U. S. Treasury & Federal
Agency Sec. 59 27 2 88
State and political
subdivisions - - - -
Federal Funds sold (83) 30 (23) (76)
Net loans 51 (20) (1) 30
---- ---- ----- ---
Total interest earning
assets 16 33 (21) 28
---- ---- ----- ---
Interest-bearing liabilities:
Increase (decrease) -
NOW and MMDA accounts (41) - - (41)
Savings 1 - 1 2
Time deposits, $100,000
and over 54 14 10 78
Other time deposits (10) (24) 1 (33)
Federal funds purchased 1 - - 1
Securities repurchased - - 7 7
Notes payable - stockholder (2) (3) - (5)
---- ---- ----- ---
Total interest-bearing
liabilities 3 (13) 19 9
---- ---- ----- ---
Increase (decrease) in net
interest income 13 46 (40) 19
===== ==== ===== =====
1994 v. 1995
Increase (Decrease) Due to
Volume Rate Rate/Volume Total
Interest earnings assets:
Increase (decrease) -
Interest bearing deposits
in banks (38) (7) 4 (41)
U. S. Treasury & Federal
Agency Sec. 70 121 11 202
State and political
subdivisions - - - -
Federal Funds sold 29 19 16 64
Net loans 47 31 1 79
Total interest earning
assets 108 164 32 304
Interest-bearing liabilities:
Increase (decrease) -
NOW and MMDA accounts (4) 10 - 6
Savings (9) - - (9)
Time deposits, $100,000
and over 55 57 20 132
Other time deposits 34 88 9 131
Federal funds purchased (1) - - (1)
Securities repurchased (6) (3) 2 (7)
Notes payable - stockholder (7) - - (7)
Total interest-bearing
liabilities 62 152 31 245
Increase (decrease) in net
interest income 46 12 1 59
===== ===== ===== =====
Interest Sensitivity -
The Company's policy for interest-rate sensitivity management
is to control the exposure of net interest income to interest rate
movements. The relationship or gap between repricing dates of
interest-earning assets and interest-bearing liabilities must be
actively monitored and flexible enough to take advantage of
changes in market rates. The Company follows such a policy and
responds to market change by adjusting the structure of the assets
and liabilities repricing within comparable time intervals. This
enables the Company to respond to the volatility of interest rates,
and thereby capitalize on profit opportunities while minimizing
adverse changes in earnings.
The following table reflects the year-end position (in
thousands) of the Company's interest-earning assets and
interest-bearing liabilities which can either reprice or mature
within the designated time periods. The interest sensitivity gaps
can vary day-to-day and are not necessarily a reflection of the
future. In addition, certain assets and liabilities within the
same designated time period may nonetheless reprice at different
times and at different levels.
After 1
Within Year But After 5 Non-interest
1 year Within 5 Years Earnings Total
ASSETS
Cash and due
from banks $ - $ - $ - $ 1,108 $ 1,108
Securities available
for sale 6,215 3,464 2,263 - 11,942
Securities held
to maturity 2,210 2,367 696 - 5,273
Other securities - - 258 - 258
Federal funds sold 2,800 - - - 2,800
Loans 4,941 4,212 1,382 238 10,773
Other assets - - - 1,315 1,315
------- ------- ------ ------- -------
Total assets $16,166 $10,043 $4,599 $ 2,661 $33,469
======= ======= ====== ======= =======
LIABILITIES AND STOCKHOLDER'S EQUITY
Demand deposits $ - $ - $ - $ 5,282 $ 5,282
Interest-bearing deposits:
NOW and MMDA's 2,645 4,153 - - 6,798
Savings 1,281 1,920 - - 3,201
Time, $100,000
and over 4,438 817 - - 5,255
Other time 9,400 579 - - 9,979
Other liabilities 151 - - 270 421
Stockholder's equity - - - 2,533 2,533
------- ------- ------ ------- -------
Total liabilities and
stockholder's
equity $17,915 $ 7,469 $ - $ 8,085 $33,469
======= ======= ====== ======= =======
Interest rate
sensitivity gap $(1,749) $ 2,574 $4,599 $(5,424)
======= ======= ====== =======
Investment Portfolio -
The following table indicates the composition of the Company's
investments (in thousands) at December 31, 1995, 1994 and 1993 and
shows the maturity distribution by carrying amount and yield (not
on a taxable equivalent basis) of the Company's investment
portfolio at December 31:
1995
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
Securities available for sale:
U.S. Government and
Agency Securities $ 2,922 $ 9 $ (2) $ 2,929
Mortgage-backed
securites 8,995 50 (32) 9,013
------- --- ---- ------
Totals 11,917 59 (34) 11,942
Securities held to maturity:
U.S. Government
and Agency
Securities 813 3 - 816
State and Municipal
Securities 208 - (8) 200
Mortgage-backed
Securities 4,252 34 (27) 4,259
------- --- ---- ------
Totals 5,273 37 (35) 5,275
Other Securities 258 - - 258
Less: Reserve for
unrealized loss
on corporate stock - - - -
------- --- ---- ------
Totals 258 - - 258
Total securities $17,448 $96 $(69) $17,475
========= ==== ===== ========
Investment Portfolio (Continued) -
(in thousands)
1994
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
Securities available for sale:
U.S. Government and
Agency Securities $ 4,952 $ 3 $ (130) $ 4,825
Mortgage-backed
securites 6,315 9 (250) 6,074
------- --- ---- -------
Totals 11,267 12 (380) 10,899
Securities held to maturity:
U.S. Government
and Agency
Securities 2,943 - (23) 2,920
State and Municipal
Securities 55 - - 55
Mortgage-backed
Securities 1,217 - (53) 1,164
------- --- ---- -------
Totals 4,215 - (76) 4,139
Other Securities 257 - - 257
Less: Reserve for
unrealized loss
on corporate stock (4) - - (4)
------- --- ---- -------
Totals 253 - - 253
Total securities $15,735 $12 $(456) $15,291
========= ==== ====== ========
Investment Portfolio (Continued) -
(in thousands)
1993
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
Securities available for sale:
U.S. Government and
Agency Securities $ - $ - $ - $ -
Mortgage-backed
securites $ - $ - $ - $ -
------- ---- ---- ------
Totals $ - $ - $ - $ -
Securities held to maturity:
U.S. Government
and Agency
Securities 9,122 161 - 9,283
State and Municipal
Securities 54 2 - 56
Mortgage-backed
Securities 4,321 72 (39) 4,354
------ ---- ---- ------
Totals 13,497 235 (39) 13,693
Other Securities 156 - - 152
Less: Reserve for
unrealized loss
on corporate stock (4) - - -
------ ---- ---- ------
Totals 152 - - 152
Total securities $13,649 $235 $(39) $13,845
========= ==== ===== ========
Investment Portfolio (Continued) -
1995
Due After Due After
Due in One Year Five Years
One Year But Before But Before Due After
or Less Five Years Ten Years Ten Years
Securities available for sale:
U.S. Government and
Agency Securities $1,498 $ 927 $ 504 $ -
Mortgage-backed
securities 4,717 2,538 1,220 539
------ ----- ----- -----
Totals 6,215 3,465 1,724 539
Securites to be held to maturity:
U.S. Government and
Agency Securities 213 600 - -
State and municipal
securities - 208 - -
Mortgage-backed
securities 1,997 1,559 589 107
------ ----- ----- -----
Totals 2,210 2,367 589 107
Other securities - - - 259
Total $8,425 $5,832 $2,313 $905
======= ======= ======= ======
Weighted Average Yield
Securities available for sale:
U.S. Government and
Agency Securities 5.6% 6.2% 6.9% -
====== ====== ====== ======
Mortgage-backed
securities 6.7% 7.2% 6.3% 8.4%
====== ====== ====== ======
Securities to be held to maturity:
U.S. Government and
Agency Securities 5.5% 7.0% - -
====== ====== ====== ======
State and municipal
securities - 4.0% - -
====== ====== ====== ======
Mortgage-backed
securities 5.7% - 6.9% 1.0%
====== ====== ====== ======
Other securities - - - 2.0%
====== ====== ====== ======
Yields on tax exempt obligations have not yet been computed on a
tax-equivalent basis.
Loan Portfolio Information -
Types of Loans: 1995 1994 1993 1992 1991*
Real estate loans $ 5,858 $ 6,710 $ 5,420 $ 5,353 $ 5,697
Commercial and
industrial loans 2,412 1,779 1,854 1,825 1,617
Personal and
consumer loans 2,702 2,679 2,649 2,362 2,399
All other loans 24 39 13 5 3
------ ------ ----- ----- -----
Totals 10,996 11,207 9,936 9,545 9,716
Less: Unearned income (62) (59) (73) (92) (120)
Allowance for
loan losses (161) (180) (181) (193) (305)
------ ------ ----- ----- -----
Net loans $10,773 $10,968 $ 9,682 $ 9,260 $ 9,291
======= ======= ======= ======= =======
*During 1991, the bank reclassified loans to more closely reflect
the regulatory reporting requirements.
Maturities and Sensitivities of Loans to Changes in Interest Rates
(in thousands)
Repricing Repricing Repricing Repricing
in one After one After five After
Year or But Before but Before Ten
1995 less five Years Ten Years
Real estate $5,858 $1,989 $2,486 $1,261 $122
Commercial and
industrial 2,412 1,681 731 - -
Personal and
consumer 2,702 1,610 1,092 - -
All other 24 24 - - -
-------- -------- ------- ------ ------
Totals $10,996 $5,304 $4,309 $1,261 $122
======== ======== ======= ====== ======
Non-accrual, Past Due and Restructured Loans:
(in thousands)
December 31, December 31,
1995 1994
Non-accrual loans $238 $ 7
===== =====
Restructured loans $ 58 $282
===== =====
Accruing loans past due 90 days or more
at year end $ 26 $ 63
===== =====
The Bank's policy is to place loans on non-accrual whenever
it appears that interest will not be collected. Management's list
of potential problem loans indicated a principal balance of
$410,005 as of December 31, 1995.
At December 31, 1995, management believes that potential
problem loans with credit problems have been adequately reserved
for in the allowance for loan loss accounts.
The Bank has taken an aggressive approach to consumer
lending yet management is still very conservative in making credit
decisions. Management feels that large commercial loans have been
the Bank's largest problem through the 1980's. Management feels
that by increasing the Bank's consumer loan base, it can spread
risk in the loan portfolio and increase loan demand and profit
margin at the same time.
Summary of Loan Loss Experience:
December 31,
1995 1994
Balance, beginning of year $ 180 $ 181
Charge-offs:
Installment loans 6 14
Commercial loans 15 -
--- ---
Total Charge off's 21 14
Recoveries:
Real estate loans - -
Installment loans 1 3
Commercial loans 1 10
--- ---
Total Recoveries 2 13
Net charge-offs 19 1
Balance, end of year $ 161 $ 180
===== =====
Ratio of net charge-offs during the period
to average loans outstanding during the
period .01% .01%
===== =====
In determining the adjustments charged in operations,
management considered the overall risk of loan losses in its loan
portfolio, as well as considering the potential losses that might
be incurred on specific loans.
Management does not allocate its allowance for loan loss by
asset category; however, in determining the balance of the
allowance for loan loss account, management considers the various
risks inherent with the Bank's loan portfolio, as well as specific
risk of certain loans. The allowance for loans losses is
established through a provision for loan losses charged to
expenses. Loans are charged against the allowance for loan losses
when management believes that the collectibility of the principal
is unlikely. The allowance is an amount that management believes
will be adequate to absorb possible losses on existing loans
that may become uncollectible, based on evaluations of the
collectibility of loans and prior loan loss experience. The
evaluations take into consideration such factors as changes in the
nature and volume of the loan portfolio, overall portfolio
quality, review of specific problems loans and current economic
conditions that may affect the borrower's ability to pay.
Deposits -
See analysis of net interest earnings for average deposits
and average rate paid.
Maturities of Time Certificates over $100,000 or More:
December Three Over Three Over Six Over
31, Months Through Through Twelve
1995 or less Six Twelve Months
Time Certificates
- $100,000
or more $5,255 $1,475 $1,587 $1,376 $817
====== ====== ====== ====== ====
Return on Average Equity and Assets -
December 31, December 31, December 31,
1995 1994 1993
Return on average assets 1.0% .9% 1.4%
===== ===== =====
Return on average equity 15.4% 11.7% 25.8%
===== ===== =====
Dividend payout ratio 10.4% 14.2% 8.3%
===== ===== =====
Equity to asset ratio 7.1% 7.3% 6.5%
===== ===== =====
Capital adequacy ratio 8.0% 6.7% 7.1%
===== ===== =====
Item 2. Properties
The main banking house is made of concrete and brick and has
3,200 square feet of working area. The main banking house and
concrete parking lot are situated on three adjoining pieces of
property on the outskirts of St. Martinville, Louisiana.
The Bank also owns a piece of property on the outskirts of St.
Martinville, Louisiana, on which they have a branch made of
concrete and brick which has 1,660 square feet of working area.
The Coteau Branch is constructed of brick with 1,170
square feet of working area. None of these properties carry a
mortgage.
Item 3. Legal Proceedings
The Company is not involved in any legal actions.
Item 4. Submission of Matters to a Vote of Security Holders
There were no matters submitted to a vote of security holders,
through the solicitation of proxies or otherwise during the fourth
quarter for calendar year ended December 31, 1995.
FORM 10-K
TECHE BANCSHARES, INC.
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters
Teche Bancshares, Inc.'s stock is not listed on any security
exchange, and is not registered with the National Association of
Security Dealers. Due to the lack of an active trading market, the
Company does not have available information to furnish the high and
low sales price on the range of bid and asked quotations for
its stock. However, based upon stock sales during the fourth
quarter of 1995, it is believed that the stock of the Company
trades for approximately $70.00 per share. There can be no
assurance that the limited inquiries adequately reflect the high
and low bids on prices for the Holding Company's stock.
At December 31, 1995, Teche Bancshares, Inc. had approximately
396 stock-holders.
Teche Bancshares, Inc. paid a dividend of $1.25 per share in
1995, 1994, and 1993. Future dividends paid by the Holding Company
will depend upon the Bank's ability to pay dividends, which is
restricted by applicable federal and state statutes.
Teche Bank & Trust Company is a Louisiana state banking
corporation. Applicable Louisiana law prohibits a state bank from
paying a dividend if its surplus remaining after payment of the
dividend would be less than half the aggregate par value of its
outstanding stock. In addition, a state bank is required
to obtain the prior approval of the Louisiana Commissioner of
Financial Institutions before declaring or paying a dividend in a
given year if the total of all dividends declared and paid by the
state bank during the year would exceed the total of its
net profit for that year combined with the net profit from the
immediately preceding year.
Item 6. Selected Financial Data
(in thousands except per share)
1995 1994 1993 1992 1991
Investment
securities $17,474 $15,368 $13,650 $13,753 $ 8,632
Loans 10,773 10,968 9,682 9,261 9,292
Deposits 30,516 29,165 27,334 27,008 24,114
Stockholders
equity 2,533 1,965 1,997 1,611 1,236
Operating
revenues 2,551 2,179 2,125 2,189 2,494
Net interest
income 1,288 1,223 1,209 1,028 998
(Recovery of)
provision for
loan losses - - - (100) -
Net income 337 246 421 403 70
Earnings
per share 12.07 8.81 15.09 14.44 2.52
Total assets 33,470 31,816 29,875 29,313 26,226
Cash dividend:
Per share 1.25 1.25 1.25 1.00 .25
Total 35 35 35 28 7
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of
Operations
1995 IN REVIEW
Our net income for the years ended December 31, 1995, 1994 and
1993 was $337,024, $245,877 and $421,134, respectively. Net income
for 1995 increased by $91,147 from $245,877 in 1994. Net income
decreased by $175,257 in 1994 from $421,134 for the year ended
1993. Earnings per common share were $12.07 for 1995, $8.81 for
1994 and $15.09 for 1993. Return on average assets and return on
equity was 1.0% and 15.4% for 1995. Return on average assets and
return on equity was .9% and 11.7% for 1994. For 1993, return on
average assets was 1.4% and return on equity was 25.8%.
Highlights for 1995 were as follows:
1. We increased our customer base by purchasing a branch bank in
Coteau, LA. Our Coteau branch opened for operations on July 17,
1995 receiving overwhelming acceptance. The Coteau branch offers
ATM service and Saturday Banking to residents of that community.
2. During 1995 we were the first to introduce 24-Hour Voice
Response service to our community through our 394-TECH (8324) line.
Now customers of Teche Bank & Trust Company can obtain balance,
checks cleared and deposit information on their accounts 24 hours
a day. Our voice line service has received widespread acceptance
with several thousand incoming phone inquires each month.
3. With the purchase of our Coteau Branch we added our second ATM
to serve our customers. Usage of our Teche-24 ATM in St.
Martinville continues to increase and as the result has caused
other financial institutions in our community to follow by
installing ATM's.
4. We continue to be the only financial institution in St.
Martinville offering Saturday banking, ATM services and a voice
response line. We are marketing these services together as
competitive advantages over the other financial institutions in St.
Martinville.
EARNINGS ANALYSIS
Net Interest income
Net interest income was $1,287,894 in 1995 compared to $1,223,496
in 1994, an increase of $64,398. We were able to increase our net
interest income for the year ended 1995 as a result of growth in
the bank's total assets. After several years of low growth, we
have begun to experience growth in the bank's total assets.
Net interest income for 1994 was $1,223,496, compared to $1,208,740
in the prior year, an improvement of $14,756. Despite the rapid
increase in interest rates that occurred in 1994 we were able to
improve our net interest income that year by closely monitoring the
rate that we paid for deposits.
Provision for Loan Losses
The provision for loan losses is the amount charged against current
earnings which management believes is necessary to maintain the
allowance at an adequate level at the time the charge is taken,
considering the watch list trends, net charge-off experience, size
of the loan portfolio and general economic conditions and trends.
It has not been necessary to add to our provision for loan losses
since 1990. In 1992 we transferred $100,000 of the excess that we
had carried in our reserve to income. During 1995, 1994 and 1993
we maintained our reserve for loan loss account at a level that was
adequate without making any additions to the provision account.
The allowance for loan losses at December 1995 was $160,762 or
1.47% of gross loans.
Other Income
Other income was $322,247 for 1995 as compared to $260,433 in 1994.
The majority of the increase in other income was due to a recovery
of approximately $40,000 of the loss from the sale of Louisiana
Agricultural Finance (LAFA) Bonds. In 1991, we sold the LAFA bonds
that we owned realizing a loss of approximately $200,000. Since
that time we have been listed in the class action suit that was
filed against Executive Life, the issuer of the bond. In 1995, we
received our share of the funds that were available for the
reimbursement on the loss incurred.
Other income was $260,433 for 1994 as compared to $234,744 in 1993.
The majority of the increase in other income was in service charges
on deposit accounts. Service charges on deposit accounts was
$213,369 for 1994 compared to $197,124 in 1993. This increase was
the result of continued monitoring of our NSF charges waived. We
have reduced the number and instances of NSF charges waived by
limiting the authority to waive charges to our executive
management.
Other Expenses
Other expenses were $1,122,806 for 1995 compared to $1,098,462 in
1994. The increase in other expenses was the result of increases
in salaries and employee benefits, occupancy expense, and net other
real estate losses. Salaries and benefits and occupancy expense
increased due to the addition of the Coteau branch and the
additional expenses associated with operating that location. Net
other real estate losses were incurred to reduce our other real
estate owned. We sold several properties during 1995 that we had
held for over five years. The increase in expenses was partially
reduced by a decrease in FDIC insurance for the year.
Other expenses were $1,098,462 in 1994 compared to $1,023,169 in
1993. The increase in other expense was the result of increases in
salaries and employee benefits, net other real estate losses, and
other operating expenses. The increase in salaries and employee
benefits was due to an increase in the compensation of our
employees. Other operating expenses increased due to increases in
advertising and consulting fees. Advertising increased due to the
addition of the ATM and the marketing associated with starting an
ATM program. Consulting fees increased because we committed to a
17 month consulting contract with some outside consultants to help
us in developing a strategic plan, asset/liability management and
developing a marketing plan.
FINANCIAL CONDITION ANALYSIS
Investments
During the first quarter of 1994 the Company adopted Statement of
Financial Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities" (SFAS 115). This
pronouncement provides guidance regarding the appropriate
classification of debt and equity securities in a company's balance
sheet and also provides for the recognition of unrealized holding
gains and losses as a result of changes in the fair value of
securities available for sale. The carrying value of securities
held to maturity continues to be amortized cost. Securities
available for sale are now carried at their estimated fair value in
accordance with SFAS 115.
The carrying value of securities available for sale at the end of
1995 was adjusted upward by $25,468 to reflect an increase in
market value over their amortized cost at that date. Securities
held to maturity had a market value in excess of carrying
value of $1,395 at year end. Management considers the increase in
value of the securities portfolio to be temporary in nature.
As a result of increases in the general level of market interest
rates during 1994, the carrying value of securities available for
sale at December 31, 1994 reflected a net unrealized loss of
$367,278. The amortized cost of securities held to maturity was
less than estimated fair value by $76,062 at that date. The
decline in value of the securities portfolio was temporary.
Loans
Loans, net of allowance for loan losses and unearned discount, were
$10,772,900 at December 31, 1995. Net loans decreased by $194,854
from $10,967,754 at the end of 1994. During the past several
years, economic conditions in the market served by Teche Bank have
resulted in limited opportunities to make quality commercial loans
and accordingly competition has been fierce between financial
institutions for loans.
At December 31, 1994, loans, net of allowance for loan losses and
unearned discount, were $10,967,754. This was an improvement of
$1,285,853 over $9,681,901 at the end of 1993. Average loans
during the year 1994 were $10,343,604, up approximately
$464,684 from 1993.
Deposits
At December 31, 1995 total deposits were $30,515,803. Total
deposits increased during the year due to the addition of the
Coteau branch and to growth attributed to the offering of our ATM,
Voice line and Saturday Banking services.
At December 31, 1994 total deposits were $29,164,741, an increase
of $1,830,314 over that of the prior year end balance. Average
deposits for the year ended 1994 were $25,892,864 as compared to
$27,770,980 in 1993. The increase in deposits at year end was due
to having the public fund deposits of the St. Martin Parish
Sheriff's Department property tax collections. These funds were
distributed to the various public bodies during the first quarter
of 1995. In 1993 we had the contract for the deposits of the St.
Martin Parish School Board. During the third quarter of 1993,
our contract for those funds matured and according to schedule they
went to another local financial institution. Therefore, our
average deposits decreased for the year ended 1994.
Time deposits of $100,000 and greater were $5,254,671 at the end of
1995, an increase of $932,300 over that of the prior year. The
majority of the increase was due to increases in Public Funds from
bids won during the year. We bid aggressively to get Public Funds
when we can earn a spread on these incremental funds. We continue
to hold $1,000,000 in jumbo certificates from the state of
Louisiana that were added in 1994 as noted below. Rates on these
funds are still attractive compared to alternatives for funding.
Time deposits of $100,000 and greater were $4,322,371 at the end of
1994, an increase of $2,064,375 over that of the prior year. The
majority of the increase in jumbo certificates in 1994 was the
result of $1,000,000 in certificates that we picked up from the
State of Louisiana. When the state's rates were attractive, we
opted to sell certificates to the state and invest the proceeds in
investments.
Asset/Liability Management
The objective of asset/liability management is to maximize net
interest income while balancing liquidity and capital needs and
minimizing interest rate risk. The Asset/Liability Committee
(ALCO) develops and reviews strategies which assist in the
achievement of the Bank's goals. Strategies may include purchases
and sales of securities to alter maturities and yields, and changes
in the mix of earning assets and funding sources.
Changes in interest rates create interest rate risk. Interest rate
risk is measured each month by using a static gap analysis. Based
on the results of this model the ALCO committee determines the
appropriate strategies and goals to follow.
Liquidity is needed to meet the cash requirements for deposit
withdrawals and the funding of loans. A stable base of funding
sources and an adequate level of assets readily convertible into
cash provide liquidity. In order to maintain adequate
liquidity, management attempts to ladder the maturities and cash
flows of its investment portfolio so that cash flows will be
available each year to reinvest or to meet the liquidity demands of
the bank.
Credit Risk Management
Teche Bancshares, Inc. manages its credit risk by maintaining high
credit underwriting standards and providing an adequate allowance
for loan losses. We concentrate our lending to areas within our
geographic market in order to keep the cost of managing assets low
and in order to be informed of developments affecting our credits.
Our credit underwriting standards emphasize cash flow and repayment
ability and ensure that loans are properly structured and
collateralized. An adequate allowance for loan losses provides for
losses inherent in the loan portfolio.
Nonperforming Assets
Nonaccrual loans and other real estate owned are included in
nonperforming assets. As of December 31, 1995, nonperforming
assets were $350,913 a decrease of $67,097 from 1994.
Nonperforming assets at December 31, 1994 were $418,010 a decrease
of $292,985 from 1993. Nonaccrual loans at December 31, 1995, 1994
and 1993 were $238,294, $6,858 and $15,132, respectively. Other
real estate owned was $112,619, $411,152 and $695,863 at December
31, 1995, 1994 and 1993, respectively. The improvement in
nonperforming assets was accomplished by selling other real estate
owned.
Watch List
The Bank's watch list includes loans which, for management
purposes, have been identified as requiring a higher level of
monitoring. These loans require monitoring due to conditions
which, if not corrected, could increase credit risk. Watch list
loans totaled $410,005 and $424,764 at December 31, 1995 and 1994.
Capital and Dividends
The Company's risk based capital ratios at December 31, 1995
significantly exceeded the minimum regulatory guidelines. The
Company's leverage ratio was 7.52% and risk based capital was
18.16%, well above the regulatory minimums of 3%-5% and 8%. The
Company's capital to asset ratio including the effect on capital of
mark to market changes in value of investments was 7.56% at
December 31, 1995. Teche Bancshares, Inc.'s sole source of funds
from which to pay dividends to stockholders is Teche Bank & Trust
Company. During 1995 Teche Bank & Trust Company declared and paid
a dividend to Teche Bancshares, Inc. of $191,406. Of this sum,
$156,000 was used to repay principal and interest on notes payable
to stockholders and $34,906 was paid to stockholders in the form of
a dividend.
Fourth Quarter Results
Net income for the fourth quarter of 1995, 1994, and 1993 was
$96,781, $11,229, and $65,123, respectively. The increase in
income for the quarter as compared to the same quarter of the prior
year was due to the recovery of part of the loss that was
previously experienced on the LAFA bond. Income before income tax
for the quarter ended December 31, 1995 was $122,302 as compared to
$63,605 for the same quarter ended 1994.
Item 8. Financial Statements and Supplementary Data
The audited financial statements of Teche Bancshares, Inc. are
presented on pages 28 to 61.
TECHE BANCSHARES, INC.
AND SUBSIDIARY
Financial Report
Years Ended December 31, 1995 and 1994
TABLE OF CONTENTS
Page
INDEPENDENT AUDITOR'S REPORT 1
FINANCIAL STATEMENTS
Consolidated balance sheets 2
Consolidated statements of income 3
Consolidated statements of changes in stockholders' equity 4
Consolidated statements of cash flows 5
Notes to consolidated financial statements 6-26
SUPPLEMENTARY INFORMATION
Consolidated schedules of other operating expenses 28
Consolidating schedules -
Consolidating balance sheet 30
Consolidating statement of income 31
Consolidating statement of cash flows 32
INDEPENDENT AUDITOR'S REPORT
The Board of Directors
Teche Bancshares, Inc. and Subsidiary
St. Martinville, Louisiana
We have audited the accompanying consolidated balance sheets of
Teche Bancshares, Inc. and Subsidiary as of December 31, 1995 and
1994, and the related consolidated statements of income, changes in
stockholders' equity and cash flows for each of the three years in
the period ended December 31, 1995. These financial statements are
the responsibility of the Bank's management. Our responsibility is
to express an opinion on these financial statements based on our
audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining on a test basis evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of Teche Bancshares, Inc. and Subsidiary as of
December 31, 1995 and 1994, and the consolidated results of its
operations and its cash flows for each of the three years in the
period ended December 31, 1995, in conformity with generally
accepted accounting principles.
Our audits were made primarily to form an opinion on the basic
consolidated financial statements, as stated in the preceding
paragraph. The supplementary information contained on pages 28-32
is presented for purposes of additional analysis and, although not
required for a fair presentation of consolidated financial
position, results of operations, and cash flows, was subjected to
the audit procedures applied in the audits of the basic
consolidated financial statements. In our opinion, the
supplementary information is fairly presented in all material
respects in relation to the basic consolidated financial statements
taken as a whole.
Darnall, Sikes, Kolder, Frederick & Rainey
A Corporation of Certified Public Accountants
Breaux Bridge, Louisiana
January 25, 1996
TECHE BANCSHARES, INC. AND SUBSIDIARY
Consolidated Balance Sheets
December 31, 1995 and 1994
(in thousands)
1995 1994
ASSETS
Cash and due from banks $ 1,108 $ 3,019
Interest-bearing deposits in banks - 882
Securities available for sale 11,943 10,900
Securities to be held to maturity 5,273 4,215
Other securities 259 254
Federal funds sold 2,800 -
Loans, net of allowance for loan losses
and unearned discount on loans 10,773 10,968
Bank premises, furniture,
fixtures and equipment 744 668
Accrued interest receivable 269 252
Other real estate owned 113 411
Deferred tax asset - 76
Other assets 188 171
--------- ---------
Total assets $33,470 $31,816
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits -
Non-interest demand $ 5,282 $ 4,379
Interest bearing -
NOW and MMDA accounts 6,799 8,006
Savings 3,201 3,453
Time, $100,000 and over 5,255 4,322
Other time 9,979 9,005
--------- --------
Total deposits 30,516 29,165
Accrued interest payable 111 78
Notes payable - stockholders 151 292
Federal funds purchased - 200
Other liabilities and accrued expenses 159 115
--------- --------
Total liabilities 30,937 29,850
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 1,110 808
Less: 200 shares (225 in 1994)
of treasury stock (19) (21)
Allowance for unrealized loss
on marketable equity securities - (4)
Net unrealized gain (loss)
on securities available for sale,
net of tax of $8 in 1995
and $125 in 1994 17 (242)
--------- --------
Total stockholders' equity 2,533 1,965
Total liabilities and
stockholders' equity $33,470 $31,816
=========== ===========
The accompanying notes are an integral part of this statement.
TECHE BANCSHARES, INC. AND SUBSIDIARY
Consolidated Statements of Income
Years Ended December 31, 1995, 1994 and 1993
1995 1994 1993
INTEREST INCOME
Interest and fees on loans $1,138 $1,055 $1,025
Interest on investment securities:
Interest on securities
available for sale 677 547 -
Interest on securities
to be held to maturity 280 211 670
Obligations of state and
political subdivisions 3 3 3
Interest and dividends
on other securities 5 - -
Interest on federal funds sold 98 33 110
Interest on deposits in banks 27 69 82
----- ----- -----
Total interest income 2,228 1,918 1,890
INTEREST EXPENSE
Interest on deposits 920 657 656
Federal funds purchased - 1 -
Interest on securities repurchased 1 8 -
Other interest 5 8 -
Stockholder loans 14 21 26
----- ----- -----
Total interest expense 940 695 682
Net interest income before
recovery of possible
loan losses 1,288 1,223 1,208
PROVISION FOR POSSIBLE LOAN LOSSES - - -
----- ----- -----
Net interest income after
recovery of possible
loan losses 1,288 1,223 1,208
OTHER INCOME
Service charges on
deposit accounts 228 213 197
Commissions income 25 23 25
ATM income 8 1 -
Recovery of investment loss 40 - -
Other operating revenue 21 23 13
----- ----- -----
Total other income 322 260 235
Income before other expenses 1,610 1,483 1,443
OTHER EXPENSES
Salaries and employee benefits 541 491 463
Occupancy expenses 175 158 160
Furniture and equipment expenses 24 21 18
Data processing expenses 41 35 37
Net loss on security transactions 3 - -
Net other real estate loss 36 25 4
Other operating expenses 303 367 341
----- ----- -----
Total other expenses 1,123 1,097 1,023
Income before income taxes 487 386 420
INCOME TAXES BENEFIT (EXPENSE) (150) (140) 1
----- ------ -----
Net Income $ 337 $ 246 $ 421
======= ======= =======
Earnings per share $12.07 $8.81 $15.09
======= ======= =======
The accompanying notes are an integral part of this statement.
TECHE BANCSHARES, INC. AND SUBSIDIARY
Consolidated Statements of Changes in Stockholders' Equity
Years Ended December 31, 1995, 1994 and 1993
(in thousands)
Allowance Unrealized
Loss on Gain (Loss)
Common Stk Marketable on
Treas. Stk Equity AFS
Surplus Securities Securities Total
BALANCES,
DECEMBER 31, 1992 $1,614 $(4) - $1,610
Net income 421 - - 421
Cash Dividend,
$1.25 per share (35) - - (35)
------- ----- ------ -------
BALANCES,
DECEMBER 31, 1993 $2,000 $(4) - $1,996
Net income 246 - - 246
Cash Dividend,
$1.25 per share (35) - - (35)
Cumulative effect of application
of statement of Financial Accounting
Standards No. 115 "Accounting for
Certain Investments in Debt and
Equity Securities" - - 154 154
Unrealized loss on
securities available
for sale - - (396) (396)
------- ----- ------ -------
BALANCES,
DECEMBER 31, 1994 $2,211 $(4) (242) $1,965
Net income 337 - - 337
Cash Dividend,
$1.25 per share (35) - - (35)
Sale of 25 shares
Treasury Stock 2 - - 2
Net change in unrealized gain
on AFS securities - - 259 259
Sale of Marketable
Securities - 4 - 4
------- ----- ------ -------
BALANCES,
DECEMBER 31, 1995 $2,515 $ - 17 $2,532
====== ===== ====== =======
The accompanying notes are an integral part of this statement.
TECHE BANCSHARES, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows
Years Ended December 31, 1995, 1994 and 1993
1995 1994 1993
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 337 $ 246 $ 421
Adjustments to reconcile
net income to net cash provided by
operating activities:
Depreciation of bank
premises and equipment 87 74 69
Devaluation of other
real estate owned - - 25
(Gain) loss on other
real estate owned 38 22 (24)
(Increase) decrease in:
other assets (18) 9 17
deferred tax asset 76 (62) (14)
accrued interest receivable (17) (40) 21
accrued interest payable 33 17 (117)
other liabilities (157) 60 (4)
----- ----- -----
Net cash provided
by operating activities 379 326 394
----- ----- -----
CASH FLOWS FROM INVESTING ACTIVITIES
Net decrease in interest-bearing
deposits in banks 882 - 494
(Increase) decrease in
federal funds sold (2,800) 625 1,125
Proceeds from sales of
securities available for sale 4,045 4,830 -
Proceeds from maturities of
securities available for sale 1,941 - -
Proceeds from maturities of
securities held to maturity 1,272 - -
Purchases of securities
to be held to maturity (2,330) (2,290) -
Purchases of securities
available for sale (6,770) (4,500) -
Decrease in investment securities - - 103
Net (increase) decrease
in loans 194 (1,286) (421)
Capital expenditures for
bank premises and equipment (161) (96) (19)
(Increase) decrease in
other real estate owned 260 261 (151)
----- ----- -----
Net cash provided by
(used in)investing
activities (3,467) (2,456) 1,131
------- ------- -----
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in -
Demand deposits 903 114 (726)
NOW and MMDA (1,207) (419) 1,673
Savings deposits (251) (224) 97
Time deposits, $100,000 and over 932 2,064 (17)
Other time deposits 974 294 (701)
Federal funds purchased - 200 -
Dividends paid (35) (35) (35)
Decrease in treasury stock 2 - -
Decrease in notes
payable - stockholders (141) (133) (29)
----- ----- -----
Net cash provided by
financing activities 1,177 1,861 262
------- ------- -----
Net increase (decrease) in
cash and cash equivalents (1,911) (269) 1,787
CASH AND CASH EQUIVALENTS,
beginning of year 3,019 3,288 1,501
CASH AND CASH EQUIVALENTS,
end of year $ 1,108 $ 3,019 $ 3,288
======= ======= =======
CASH PAID DURING THE YEAR
Interest $ 90 $ 678 $ 799
====== ======= =======
Income taxes $ 153 $ 14 $ -
====== ======= =======
The accompanying notes are an integral part of this statement.
TECHE BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(1) Summary of Significant Accounting Policies
A. Principles of Consolidation
The accompanying consolidated financial statements
dated December 31, 1995, 1994 and 1993, include the
accounts of Teche Bancshares, Inc. (Company) and Teche
Bank and Trust Company (Bank), its wholly-owned
subsidiary. Intercompany transactions and balances have
been eliminated in consolidation.
B. Nature of Operations
Teche Bank and Trust Company is a Louisiana
chartered state bank engaged in the general banking
business since September 27, 1969. The Bank's main
office is located in the primary business district of St.
Martinville, Louisiana. The Bank also has two branches.
One is located on the north side of town on the main
thoroughfare. The other branch is located in Coteau,
Louisiana, which is in Iberia Parish. This branch was
opened in 1995. The population of both areas is largely
rural and the economy is based on agriculture, textiles
and tourism.
The City of St. Martinville and the Town of Coteau are
both located in the south central part of Louisiana. The
Bank's primary market area is the City of St. Martinville
and its general market area is St. Martin Parish,
Louisiana.
C. Basis of Accounting
The accompanying financial statements have been
prepared in accordance with generally accepted accounting
principles and in conformity with practices within the
banking industry.
D. Cash and Cash Equivalents
For the purposes of the Statements of Cash Flows, the
Company considers all highly liquid debt instruments
purchased with a maturity of three months or less to be
cash equivalents. Cash, cash equivalents and due from
banks at December 31 included the following:
1995 1994 1993
Cash and due
from banks $1,108 $3,019 $3,288
========== ========== ==========
E. Investment Securities
The Bank's investments in securities are classified
in three categories and accounted for as follows:
Trading Securities -
Government Bonds held principally for resale in the
near term and mortgage-backed securities held for sale in
conjunction with the Bank's mortgage banking activities
are classified as trading securities and recorded at
their fair values. Unrealized gains and losses on
trading securities are included in other income.
Securities Available for Sale -
Securities available for sale consist of bonds,
notes, debentures and certain equity securities not
classified as trading securities nor as securities to be
held to maturity.
Securities to be Held to Maturity -
Bonds, notes and debentures for which the Bank has
the positive intent and ability to hold to maturity are
reported at cost, adjusted for amortization of premiums
and accretion of discounts which are recognized in
interest income using the interest method over the period
to maturity.
At December 31, 1995 and 1994, the Bank did not own
any trading securities.
Declines in the fair value of individual
held-to-maturity securities below their costs that are
other than temporary result in write-downs of the
individual securities to their fair value. The related
write-downs will be included in earnings as realized
losses.
Unrealized holding gains and losses, net of tax, on
securities available for sale are reported as a net
amount in a separate component of shareholders' equity
until realized.
Gains and losses on the sale of securities available
for sale are determined using the specific-identification
method.
F. Loans, Allowance for Loan Losses and Interest Income
Loans are stated at the amount of unpaid principal
reduced by unearned discount and an allowance for loan
losses. Unearned discount on installment loans is
recognized as income over the terms of the loans by the
sum-of-months digits method which approximates the
interest method. Interest on other loans is calculated
and accrued by using the simple interest method on daily
balances of the principal amount outstanding.
The allowance for loan losses is established through
a provision for loan losses charged to expenses. Loans
are charged against the allowance for loan losses when
management believes that the collectibility of the
principal is unlikely. The allowance is an amount that
management believes will be adequate to absorb possible
losses on existing loans that may become uncollectible,
based on evaluations of the collectibility of loans and
prior loan loss experience. The evaluations take into
consideration such factors as changes in the nature and
volume of the loan portfolio, overall portfolio quality,
review of specific problem loans and current economic
conditions that may affect the borrowers' ability to pay.
Accrual of interest is discontinued on a loan when
management believes, after considering economic and
business conditions and collection efforts, that the
borrowers' financial condition is such that collection of
interest is doubtful.
G. Loan Origination Fees and Costs
The Bank charges minimal loan fees and direct
origination costs. These charges are recognized as
income at the time the loan is made.
H. Bank Premises, Furniture, Fixtures and Equipment
Bank premises, furniture, fixtures and equipment are
carried at historical cost less accumulated depreciation.
For book purposes, depreciation is computed using the
straight-line method over the estimated useful lives of
the assets which range from three to thirty-three years.
For income tax purposes, depreciation of assets acquired
prior to January 1, 1981, is calculated on the
straight-line method and depreciation of assets acquired
after December 31, 1980, is calculated using the
Accelerated Cost Recovery (ACRS) or Modified Accelerated
Cost Recovery (MACRS) System of the Internal Revenue
Service. Maintenance and repairs which do not extend
the life of banking premises and equipment are charged to
operating expenses.
I. Other Real Estate Owned
Assets acquired through the default of loans are
recorded at the lower of the outstanding loan amounts
plus accrued interest or fair market value of the assets
acquired. Reductions from outstanding loan amounts to
fair market value are charged against the reserve for
possible loan losses. Subsequent valuation reductions,
if any, are charged to operating expenses.
J. Income Taxes
Provisions for income taxes are based on amounts
reported in the statements of income (after exclusion of
non-taxable income such as interest on state and
municipal securities) and include deferred taxes on
temporary differences in the recognition of income and
expense for tax and financial statement purposes.
Deferred taxes are computed as prescribed in Financial
Accounting Standards Board (FASB) Statement No. 109,
Accounting for Income Taxes.
K. Post-Retirement Health Care and Life Insurance Benefits
The Bank does not pay the costs of providing
continuing health care and life insurance benefits for
its retired employees. Those benefits for retirees are
made available and are provided through an insurance
company whose monthly premiums are paid by the retired
employee.
L. Compensated Absences
Employees of the bank are entitled to paid vacation
depending upon length of service. Vacation must be taken
in the year accrued and cannot be carried over. Sick
leave accumulates on a monthly basis according to the
years of service and is available for employees when
needed. However, it does not vest nor is it payable at
termination of employment. The bank's policy is to
recognize the costs of compensated absences when actually
paid to employees.
M. Financial Instruments
In the ordinary course of business the Company has
entered into off balance sheet financial instruments
consisting of commitments to extend credit, commercial
letters of credit and standby letters of credit. Such
financial instruments are recorded in the financial
statements when they become payable.
The following methods and assumptions were used by
the Bank in estimating fair values of financial
instruments as disclosed herein:
Cash and cash equivalents -- The carrying amount of
cash and short-term instruments approximate their
fair value.
Securities to be held to maturity and securities
available for sale -- Fair values for investment
securities are based on quoted market process.
Loans receivable -- Fair values for variable and
fixed rate loans are estimated using discounted cash
flow analyses, using interest rates currently being
offered for loans with similar terms to borrowers of
similar credit quality.
Deposit liabilities -- The fair values disclosed for
demand deposits are, by definition, equal to the
amount payable on demand at the reporting date (that
is, their carrying amounts). The carrying amounts
of variable-rate, fixed-term money market accounts
and certificates of deposit approximate their fair
values at the reporting date. Fair values for
fixed-rate certificates of deposit are estimated
using a discounted cash flow calculation that
applies interest rates currently being offered on
certificates to a schedule of aggregated expected
monthly maturities on time deposits.
Accrued interest -- The carrying amounts of accrued
interest approximate their fair values.
Off-balance-sheet instruments -- Fair values for
off-balance-sheet lending commitments are based on
fees currently charged to enter into similar
agreements, taking into account the remaining terms
of the agreements and the counterparties' credit
standing.
N. Prior Year Reclassification
Certain previously reported amounts have been
reclassified to enhance comparability with 1995 report
classifications.
(2) Investment Securities
The carrying amounts of investment securities as
shown in the consolidated balance sheets of the Bank and
their approximate fair values at December 31 were as
follows:
(in thousands)
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
(in thousands)
Securities available for sale:
December 31, 1995 -
U.S. Government and
agency securities $ 2,923 $ 9 $ (2) $ 2,930
Mortgage-backed
securities 8,995 50 (32) 9,013
------- --- ------ -------
$11,918 $59 $(34) $11,943
======= === ====== =======
Securities available for sale:
December 31, 1994 -
U.S. Government and
agency securities $ 4,952 $ 3 $(130) $ 4,825
Mortgage-backed
securities 6,316 9 (250) 6,075
------- --- ------ -------
$11,268 $12 $(380) $10,900
======= === ====== =======
Securities to be held to maturity:
December 31, 1995 -
U.S. Government and
agency securities $ 813 $ 3 $ - $ 816
State and municipal
securities 208 - (8) 200
Mortgage-backed
securities 4,252 34 (27) 4,257
------- --- ------ -------
$ 5,273 $37 $ (35) $ 5,275
======= === ====== =======
(in thousands)
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
Securities to be held to maturity:
December 31, 1994 -
U.S. Government and
agency securities $ 2,943 $ - $ (23) $ 2,920
State and municipal
securities 55 - - 55
Mortgage-backed
securities 1,217 - (53) 1,164
------- --- ------ -------
$ 4,215 $ - $ (76) $ 4,139
======= === ====== =======
Investment securities carried at approximately $6,074,384
at December 31, 1995 and $7,503,336 at December 31, 1994 were
pledged to secure public deposits and for other purposes
required or permitted by law.
Gross realized gains and losses on sales of investment
securities for the years ended December 31, were as follows:
(in thousands)
1995 1994
Gross realized gains:
Mortgage backed securities $ 7 $ -
Other securities 2 -
--- ----
Total realized gains $ 9 $ -
=== ====
Gross realized losses:
U.S. government & agency securities $ 8 $ -
Other securities 4 -
--- ----
Total realized losses $12 $ -
=== ====
The maturities of debt securities at December 31, 1995
were as follows: (in thousands)
Securities to be Securities
Held to Maturity Available for Sale
---------------- ----------------
Amortized Fair Amortized Fair
Cost Value Cost Value
--------- ----- -------- -----
Due in one year or less $2,210 $2,210 $ 6,207 $ 6,215
Due from one to five
years 2,367 2,397 3,456 3,465
Due from five to ten
years 589 587 1,733 1,724
Due after ten years 107 81 522 539
------ ------ ------- -------
$5,273 $5,275 $11,918 $11,943
====== ====== ======= =======
(3) Other Securities
Other securities at December 31 consist of the following
stock in industry-related financial institutions:
1995 1994
Shares Amount Shares Amount
Federal Home Loan
Bank Dallas 1,085 $108,500 1,010 $101,000
Louisiana Independent
Bancshares, Inc. 600 150,000 600 150,000
Lavest, Inc. - - 125 100
American Pacific Minerals, Ltd. - - 4,000 6,000
Less: Unrealized loss on marketable
equity securities - - - (3,600)
-------- ------
$258,500 $253,500
======== ========
These securities are valued at cost.
(4) Loans
Major classifications of loans are as follows:
(in thousands)
1995 1994
Real estate loans $ 5,857 $ 6,710
Commercial and industrial loans 2,413 1,779
Personal and consumer loans 2,702 2,679
All other loans (including overdrafts) 24 40
------- -------
10,996 11,208
Less: Unearned discount (62) (60)
Allowance for loan losses (161) (180)
------- -------
Loans, net $10,773 $10,968
======= =======
Concentrations of credit risk arising from financial
instruments exist in relation to certain groups of customers.
A group concentration arises when a number of counterparties
have similar economic characteristics that would cause their
ability to meet contractual obligations to be similarly
affected by changes in economic or other conditions. The Bank
does not have a significant exposure to any individual
customer or counterparty. A geographic concentration arises
because the Bank operates primarily in the south central part
of Louisiana.
The amount of credit risk (which approximates carrying
value) represents the maximum accounting loss that would be
recognized at the reporting date if counterparties failed
completely to perform as contracted and any collateral or
security proved to be of no value. The bank has experienced
little difficulty in accessing collateral (described in Note
17) when required.
Loans on which the accrual of interest has been
discontinued or reduced amounted to $238,294 and $6,858 at
December 31, 1995 and 1994, respectively. If interest on those
loans had been accrued, such income would have approximated
$4,964, $517 and $481 for 1995, 1994 and 1993 respectively.
The Bank did not recognize any interest income on nonaccrual
loans during 1995.
Changes in the allowance for loan losses are as follows:
(in thousands)
1995 1994 1993
Balance, beginning of period $180 $181 $192
Provision added to operations - - -
Loans charged off (21) (14) (19)
Recoveries 2 13 8
---- ---- ----
Balance, end of period $161 $180 $181
==== ==== ====
Management is of the opinion that the allowance for loan
losses account at December 31, 1995 is sufficient to cover any
possible loan losses.
(5) Bank Premises, Furniture, Fixtures and Equipment
The following is a summary of fixed assets and
accumulated depreciation as of December 31, 1995 and 1994:
(in thousands)
1995 1994
Land $ 266 $ 256
Bank buildings and improvements 748 668
Furniture, fixtures and equipment 549 490
----- -----
1,563 1,414
===== =====
Accumulated depreciation
and amortization (819) (746)
----- -----
$ 744 $ 668
===== =====
Depreciation expense for the periods ended December 31,
1995, 1994 and 1993, amounted to $85,479, $74,012 and $68,317,
respectively.
(6) Other Real Estate Owned
Other real estate owned consists of real estate acquired
through the foreclosure of loans. It is valued at the lower
of its fair value or recorded investment in the related loan
at the date of foreclosure. Other real estate owned at
December 31, 1995 and 1994 is composed of the following:
(in thousands)
1995 1994
Other real estate owned,
acquisition value $ 151 $ 618
Less: Allowance for other
real estate losses (38) (207)
----- -----
Net value $ 113 $ 411
===== =====
Changes in the allowance for losses on other real estate
are as follows:
(in thousands)
1995 1994 1993
Balances, beginning of period $ 207 $ 215 $ 190
Provision charged to operations - - 25
Sales of properties (169) (8) -
----- ----- -----
Balances, end of period $ 38 $ 207 $ 215
===== ===== =====
(7) Notes payable - Stockholders
(in thousands)
1995 1994
Note bearing interest at 5%,
unsecured, due on demand $151 $292
==== ====
Additional information regarding the amount of interest
expense associated with this note payable is contained in Note
14.
(8) Contingent Liabilities and Commitments
A. The consolidated financial statements do not reflect
various commitments and contingent liabilities which
arise in the normal course of business and which involve
elements of credit risk, interest rate risk and liquidity
risk. These commitments and contingent liabilities are
described in Note 17 - Financial Instruments.
B. The Bank is not involved in any legal actions arising
from normal business activities.
(9) Concentration of Credit
All of the Bank's loans, commitments, and standby letters
of credit have been granted to customers in the Bank's market
area as described in Note 1, Item B. The concentration of
credit by type of loan is set forth in Note 4. Investments in
state and municipal securities also involve governmental
entities within the Bank's market area. The Bank, as a matter
of policy, does not extend credit to any single borrower or
group of related borrowers in excess of $697,000.
(10) Operating Lease
Teche Bancshares leases an automobile under an operating
lease agreement. Lease expense for 1995, 1994, and 1993 was
$5,400. The following is a schedule of minimum rental
payments for the next five years:
Year Ended December 31, Total
1996 $5,400
1997 5,400
1998 5,400
1999 5,400
2000 5,400
(11) Income Taxes
The Bank utilizes FASB Statement 109 to account for
income taxes.
The components of income tax expense for the years ended
December 31, 1995, 1994 and 1993 are as follows:
(in thousands)
1995 1994 1993
Income taxes currently payable:
Federal $(102) $(77) $(14)
Deferred tax asset (liability) due
to timing differences (48) (63) 15
----- ---- -----
Total income tax benefit
(expense) $(150) $(140) $ 1
===== ===== =====
The effective tax rate of 30.8 percent in 1995, 36.3
percent in 1994, and .19 percent in 1993 differ from the
statutory rate of 34 percent principally because of the
utilization of net operating loss carryforwards and temporary
differences giving rise to deferred taxes.
A reconciliation of income tax expense at the statutory
rate to the effective rate follows:
Percent of Earnings
Before Taxes
1995 1994 1993
Computed at the expected statutory
rate 34.0% 34.0% 34.0%
Temporary differences giving rise
to deferred tax amounts 9.8 16.4 3.5
Net operating loss carryforwards - (3.0) (35.0)
Investment tax credit - (10.0) (.31)
Temporary difference recognized
this year (12.2) - -
Other (.8) (1.1) (2.0)
----- ----- -----
Income tax expense-effective rate 30.8% 36.3% .19%
===== ===== =====
Temporary differences giving rise to the deferred tax
amounts consist primarily of the excess of allowance for loan
losses for tax purposes over the amount for financial
reporting purposes, write-downs in carrying value of certain
assets for financial reporting purposes, and the excess of
accumulated depreciation for tax purposes over accumulated
depreciation for financial reporting purposes.
Amounts for deferred tax assets and liabilities are as
follows:
(in thousands)
1995 1994
Deferred tax asset $ - $ 125
Deferred tax liability (106) (48)
----- -----
Net deferred tax asset (liability) $(106) $ 76
===== =====
(12) Earnings Per Share
Earnings per share amounts are computed based on the
weighted average number of shares actually outstanding. The
number of shares used in the computations was 27,925 in 1995
and 27,900 in 1994 and 1993.
(13) Pension Plan
The Bank has a non-contributory, money-purchase pension
plan that covers any employee that has completed one (1) year
of service and has attained age 21. Pension costs include
certain service costs, which are accrued and funded currently.
Pension expenses charged to operations in 1995, 1994 and 1993
were $32,875, $38,362 and $32,873, respectively.
(14) Related Party Transactions
A. At December 31, 1995 and 1994, certain officers,
directors and related companies were indebted to the Bank in
the aggregate amount of $637,078 and $831,893, respectively.
These loans were made at prevailing interest rates.
B. The Bank has notes payable to stockholders in the
aggregate amount of $150,836 at December 31, 1995 and $292,263
at December 31, 1994, as previously disclosed in Note 7. The
note accrues interest at a rate of 5% of principal and accrued
interest. Interest expense of $14,245, $21,016 and $26,120
was incurred during 1995, 1994 and 1993, respectively, with
$393 of said interest remaining accrued and payable at
December 31, 1995.
(15) Regulatory Restrictions
Banking regulations limit the amount of dividends that
may be paid without prior approval of the Bank's regulatory
agency. Prior approval shall be required if the total of all
dividends declared and paid by the Bank during any one year
would exceed the total of its net profits of that year
combined with the net profits from the immediate preceding
year.
(16) Change of Accounting Method
During 1994, the Bank changed its method of accounting
for investment securities to conform with new requirements of
Financial Accounting Standards Board Statement No. 115
"Accounting for Certain Investments in Debt and Equity
Securities." The effect of this change was to decrease assets
in 1994 by $242,403 and decrease stockholders equity by
$242,403.
(17) Financial Instruments
The Bank is a party to financial instruments with
off-balance-sheet risk in the normal course of business to
meet the financing needs of its customers and to reduce its
own exposure to fluctuations in interest rates. These
financial instruments include commitments to extend credit,
credit card arrangements, and standby letters of credit.
Those instruments involve, to varying degrees, elements of
credit and interest-rate risk in excess of the amount
recognized in the statement of financial position. The
contract or notional amounts of those instruments reflect the
extent of the Bank's involvement in particular classes of
financial instruments.
The Bank's exposure to credit loss in the event of
nonperformance by the other party to the financial instruments
for commitments to extend credit is presented by the
contractual notional amount of those instruments. The Bank
uses the same credit policies in making commitments and
conditional obligations as it does for on-balance-sheet
instruments. Credit risk represents the accounting loss that
would be recognized at the reporting date if counterparties
failed completely to perform as contracted. The credit risk
amounts are equal to the contractual amounts, assuming that
the amounts are fully advanced and that, in accordance with
the requirements of FASB Statement No. 105, "Disclosure of
Information about Financial Instruments with Off-Balance-Sheet
Risk and Financial Instruments with Concentrations of Credit
Risk," collateral or other security is of no value. The
bank's policy is to require customers to provide collateral
prior to the disbursement of approved loans. Collateral is
either in the form of a security interest or a mortgage on the
underlying property.
At December 31, 1995, the Bank was exposed to credit risk
on commitments to extend credit having contract amounts of
$1,133,690, summarized as follows:
Commitments to extend credit $ 988,390
Credit Card arrangements -
Standby letters of credit 145,300
----------
$1,133,690
==========
Commitments to extend credit are agreements to lend to a
customer as long as there is no violation of any condition
established in the contract. Commitments generally have fixed
expiration dates or other termination clauses and may require
payment of a fee. Since many of the commitments are expected
to expire without being drawn upon, the total commitment
amounts do not necessarily represent future cash requirements.
The Bank evaluates each customer's creditworthiness on a
case-by-case basis. The amount of collateral obtained, if it
is deemed necessary by the Bank upon extension of credit, is
based on management's credit evaluation of the counterparty.
Collateral held varies but may include accounts receivable;
inventory, property, plant and equipment; and income-producing
commercial properties.
Commitments to extend credit, credit card arrangements,
and standby letters of credit all include exposure to some
credit loss in the event of nonperformance by the customer.
The Bank's credit policies and procedures for credit
commitments and financial guarantees are the same as those for
extensions of credit that are recorded on the consolidated
statements of condition. The Bank does not anticipate any
material losses as a result of the contingent liabilities and
commitments.
The estimated fair values of the Bank's financial
instruments were as follows:
(in thousands)
December 31, 1995
Carrying Fair
Value Value
Financial assets:
Cash and due from banks $ 1,108 $ 1,108
Securities available for sale 11,943 11,943
Securities to be held to maturity 5,273 5,274
Federal funds sold 2,800 2,800
Loans 10,773 10,708
Accrued interest receivable 269 269
December 31, 1995
Carrying Fair
Value Value
Financial liabilities:
Deposit liabilities 30,516 30,523
Accrued interest payable 111 111
Notes payable-stockholders 151 151
Other liabilities 160 160
Off balance sheet instruments:
Commitments to extend credit - 988
Credit card arrangements - -
Stand by letter of credit - 145
(18) Parent Company Only Financial Statements
BALANCE SHEETS
December 31, 1995 and 1994
(in thousands)
1995 1994
ASSETS
Current assets:
Cash $ 2 $ -
Investment in Teche Bank & Trust Co. 2,675 2,258
Other assets 7 -
----- -----
Total assets $2,684 $2,258
====== ======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accrued interest payable $ - $ 1
Notes payable stockholders 151 292
--- ---
Total current liabilities 151 293
--- ---
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 1,110 807
Treasury stock (19) (21)
Unrealized loss on marketable securities - (4)
Unrealized gain (loss) on securities
available for sale, net of tax of
$8,660 and $124,875, respectively 17 (242)
----- -----
Total stockholders' equity 2,533 1,965
----- -----
Total liabilities and
stockholders' equity $2,684 $2,258
====== ======
STATEMENTS OF INCOME
Years Ended December 31, 1995, 1994 and 1993
(in thousands)
1995 1994 1993
Income:
Income from subsidiary $154 $ 77 $253
Interest and dividends on corporate
securities 193 191 198
Other income 7 - -
--- --- ---
Total income 354 268 451
--- --- ---
Operating expenses:
Legal and professional fees 2 1 4
FDIC and state assessments 1 - -
Miscellaneous expense - - -
Interest on stockholder loans 14 21 26
--- --- ---
Total operating expenses 17 22 30
--- --- ---
Net income $337 $246 $421
==== ==== ====
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Years Ended December 31, 1995, 1994 and 1993
(in thousands)
Allowance Unrealized
Loss on Gain (Loss)
Common Stk Marketable on
Treas. Stk Equity AFS
Surplus Securities Securities Total
BALANCES,
DECEMBER 31, 1992 $1,614 $(4) - $1,610
Net income 421 - - 421
Cash Dividend,
$1.25 per share (35) - - (35)
------- ----- ------ -------
BALANCES,
DECEMBER 31, 1993 $2,000 $(4) - $1,996
Net income 246 - - 246
Cash Dividend,
$1.25 per share (35) - - (35)
Cumulative effect of application
of statement of Financial Accounting
Standards No. 115 "Accounting for
Certain Investments in Debt and
Equity Securities" - - 154 154
Unrealized loss on
securities available
for sale - - (396) (396)
------- ----- ------ -------
BALANCES,
DECEMBER 31, 1994 $2,211 $(4) (242) $1,965
Net income 337 - - 337
Cash Dividend,
$1.25 per share (35) - - (35)
Sale of 25 shares
Treasury Stock 2 - - 2
Net change in unrealized gain
on AFS securities - - 259 259
Sale of Marketable
Securities - 4 - 4
------- ----- ------ -------
BALANCES,
DECEMBER 31, 1995 $2,515 $ - 17 $2,532
====== ===== ====== =======
STATEMENTS OF CASH FLOWS
Years Ended December 31, 1995, 1994 and 1993
(in thousands)
1995 1994 1993
Cash flows from operating activities:
Net income $ 337 $ 246 $ 421
Adjustments to reconcile net income to
net cash provided by operating
activities:
Equity in undistributed earnings of
subsidiary bank (154) (77) (253)
Changes in:
Due to subsidiary - - (3)
Other assets (7) - -
Accrued interest payable - - (101)
---- ---- -----
Net cash provided by operating
activities 176 169 64
---- ---- -----
Cash flows from financing activities:
Dividends paid (35) (35) (35)
Decrease in treasury stock 2 - -
Decrease in notes payable (141) (135) (29)
---- ---- ----
Net cash used in financing
activities (174) (170) (64)
---- ----- ----
Net increase (decrease)
in cash 2 (1) -
Cash, beginning of period - 1 1
---- ---- ----
Cash, end of period $ 2 $ - $ 1
==== ==== ====
SUPPLEMENTARY INFORMATION
TECHE BANCSHARES, INC. AND SUBSIDIARY
Consolidated Schedules of Other Operating Expenses
Years Ended December 31, 1995, 1994 and 1993
(in thousands)
1995 1994 1993
Advertising $ 22 $ 21 $ 16
Armored car service 2 2 1
Audits and examinations 18 17 17
ATM expense 20 6 -
Cash short 3 4 15
Club account fees 12 8 8
Collections 2 3 3
Committee fees 3 2 2
Consulting fees 12 38 -
Conventions and seminar 7 11 9
Correspondent bank service charges 27 20 18
Courier service 3 3 2
Directors' fees 45 46 42
Donations 3 2 3
Dues and subscriptions 6 7 7
FDIC and state assessments 8 66 69
Insurance 35 39 42
Lease expense 5 5 5
Legal and professional fees 2 8 16
Miscellaneous 9 7 8
Office expense 31 26 35
Postage and freight 21 20 18
Other taxes and licenses 1 - -
Travel and entertainment 6 6 5
---- ---- ----
$303 $367 $341
==== ==== ====
CONSOLIDATING SCHEDULES
TECHE BANCSHARES, INC. AND SUBSIDIARY
Consolidating Balance Sheet
December 31, 1995
(in thousands)
Teche Teche
Bancshares, Elimination Teche Bank and
Inc. and Entries Bancshares, Trust
Subsidiary Dr (Cr) Inc. Company
ASSETS
Cash and due from banks $ 1,108 $(2) $2 $1,108
Securities available
for sale 11,943 - - 11,943
Securities to be held
to maturity 5,273 - - 5,273
Other securities 259 - - 259
Federal funds sold 2,800 - - 2,800
Loans 10,996 - - 10,996
Less: Allowance for
loan losses (161) - - (161)
Unearned discount
on loans (62) - - (62)
Bank premises, furniture,
fixtures and equipment 744 - - 744
Accrued interest receivable 269 - - 269
Other real estate owned 113 - - 113
Deferred tax asset - - - -
Investment in subsidiary - (2,675) 2,675 -
Other assets 188 (7) 7 188
----- ---- --- -----
Total assets $33,470 $(2,684) $2,684 $33,470
======= ======== ====== =======
LIABILITIES AND STOCKHOLDERS' EQUITY
DEPOSITS
Non-interest demand $ 5,282 $ 2 $ - $ 5,284
Interest-bearing -
NOW and MMDA accounts 6,799 - - 6,799
Savings 3,201 - - 3,201
Time,$100,000 and over 5,255 - - 5,255
Other time 9,979 - - 9,979
------ --- --- ------
Total deposits 30,516 2 - 30,518
Accrued interest payable 110 - - 110
Notes payable - stockholders 151 - 151 -
Other liabilities and
accrued expenses 160 7 - 167
------ --- --- ------
Total liabilities 30,937 9 151 30,795
------ --- --- ------
STOCKHOLDERS' EQUITY
Common stock 281 281 281 281
Surplus 1,144 1,519 1,144 1,519
Retained earnings 1,110 858 1,110 858
Less: 200 shares of
treasury stock (19) - (19) -
Net unrealized gain
on securities
available for
sale, 17 17 17 17
----- ---- ----- -----
Total stockholders'
equity 2,533 2,675 2,533 2,675
----- ----- ----- -----
Total liabilities and
stockholders'
equity $33,470 $2,684 $2,684 $33,470
======= ====== ====== =======
TECHE BANCSHARES, INC. AND SUBSIDIARY
Consolidating Statement of Income
For the Year Ended December 31, 1995
Teche Teche
Bancshares, Elimination Teche Bank and
Inc. and Entries Bancshares, Trust
Subsidiary Dr (Cr) Inc. Company
INTEREST INCOME
Interest and fees
on loans $1,138 $ - $ - $1,138
Interest on investment securities -
Interest on securities
available for sale 677 - - 677
Interest on securities
held to maturity 280 - - 280
State and municipal
obligations 3 - - 3
Interest and dividends on
other securities 5 194 194 5
Interest on federal
funds sold 98 - - 98
Interest on deposits
in banks 27 - - 27
----- --- --- -----
Total interest income 2,228 194 194 2,228
----- --- --- -----
INTEREST EXPENSE
Interest on deposits 920 - - 920
Interest on federal
funds purchased - - - -
Interest on securities
repurchased 1 - - 1
Other interest 5 - - 5
Interest on
stockholder loans 14 - 14 -
--- --- --- ----
Total interest expense 940 - 14 926
--- --- --- -----
Net interest income 1,288 194 180 1,302
----- --- --- -----
OTHER INCOME
Service charges, collection
and exchange charges 228 - - 228
Commissions income 25 - - 25
ATM income 8 - - 8
Recovery of investment loss 40 - - 40
Other operating revenue 21 7 7 21
---- --- --- ----
Total other income 322 7 7 322
---- --- --- ----
Income before other
expenses 1,610 201 186 1,624
OTHER EXPENSES
Salaries and employee
benefit 541 - - 541
Occupancy expenses 175 - - 175
Furniture and equipment 24 - - 24
Data processing expenses 41 - - 41
Net realized loss on sales
of securities 3 - - 3
Net other real estate loss 36 - - 36
Other operating expenses 303 - 3 300
---- ---- ---- -----
Total other expenses 1,123 - 3 1,120
----- ---- ---- -----
Income before income tax
expense and equity
in earnings
of subsidiary 487 201 183 505
INCOME TAX EXPENSE (150) (7) - (157)
------ ---- ---- -----
Income before equity
in earnings
of subsidiary 337 194 183 348
EQUITY IN EARNINGS
OF SUBSIDIARY - 154 154 -
----- ----- ----- -----
Net income $ 337 $ 348 $ 337 $ 348
===== ===== ===== =====
TECHE BANCSHARES, INC. AND SUBSIDIARY
Consolidating Statement of Cash Flows
For the Year Ended December 31, 1995
Teche Teche
Bancshares, Elimination Teche Bank and
Inc. and Entries Bancshares, Trust
Subsidiary Dr (Cr) Inc. Company
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 337 $(348) $ 337 $ 348
Adjustments to reconcile net income to net
cash provided by operating activities -
Equity in earnings
of subsidiary - 154 (154) -
Depreciation of
bank premises
and equipment 87 - - 87
Net loss on other
real estate owned 38 - - 38
Increase in
other assets (18) 7 (7) (18)
Decrease in deferred
tax asset 76 - - 76
Increase in accrued
interest receivable (17) - - (17)
Increase (decrease)
in accrued
interest payable 33 - - 33
Decrease in other
liabilities (157) (7) - (150)
----- --- --- -----
Net cash provided
by operating
activities 379 (194) 176 397
CASH FLOWS FROM INVESTING ACTIVITIES
Decrease in interest
bearing deposits 882 - - 882
Increase in federal
funds sold (2,800) - - (2,800)
Proceeds from sales of
securities available
for sale 4,045 - - 4,045
Proceeds from maturities of securities
available for sale 1,941 - - 1,941
Proceeds from maturities of securities
held to maturity 1,272 - - 1,272
Purchases of securities to
be held to maturity (2,330) - - (2,330)
Purchases of securities
available for sale (6,770) - - (6,770)
Net decrease in loans 195 - - 195
Capital expenditures for bank
premises and equipment (161) - - (161)
Decrease in other
real estate owned 260 - - 260
------ ---- ---- ------
Net cash used in
investing
activities (3,467) - - (3,467)
------ ---- ---- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in -
Demand deposits 903 (2) - 906
NOW and MMDA (1,207) - - (1,207)
Savings deposits (251) - - (251)
Time deposits $100,000
and over 932 - - 932
Other time 974 - - 974
Dividends paid (35) 194 (35) (194)
Decrease in
treasury stock 2 - 2 -
Decrease in notes
payable - stockholders (141) - (141) -
------ ---- ---- -----
Net cash provided
by (used in)
financing
activities 1,177 191 (174) 1,160
------ ---- ---- -----
Net increase (decrease)
in cash
and cash
equivalents (1,911) (2) 2 (1,911)
CASH AND CASH EQUIVALENTS,
beginning of year 3,019 - - 3,019
------- ----- ----- -------
CASH AND CASH EQUIVALENTS,
end of year $ 1,108 $ (2) $ 2 $ 1,108
======= ===== ==== =======
FORM 10-K
TECHE BANCSHARES, INC.
PART II (CONTINUED)
Item (9) Disagreements on Accounting and Financial Disclosure
There were no reporting disagreements on any matter of
accounting principle or financial statement disclosure.
FORM 10-K
TECHE BANCSHARES, INC
PART III
Item (10) Directors and Executive Officers of the Registrant
- -------------------------------------------------------------
Directors
- ----------
Number of
Shares Owned Ownership as
Beneficially a Percent
Including Direct of Total
Name and Title and Term as and Indirect Outstanding
Address Age Occupation Director Ownership Shares
- -------- --- ---------- -------- ------------ -----------
Tilden A. Bonin, Jr.
St. Martinville, LA
60 Painting Sept., 1969 1,576 5.6%
Contractor to Present
James B. Bulliard, Sr.
St. Martinville, LA
60 Owner & GM Sept., 1969 3,312 11.9%
Manager Food to Present
Processor
Harris J. Champagne, Sr.
St. Martinville, LA
78 Retired Sept., 1969 1,088 3.9%
to Present
Gaston L. Dautreuil, Jr.
St. Martinville, LA
65 Owner Sept., 1969 2,656 9.5%
Electrical to Present
Contractor
Larry C. Degeyter
St. Martinville, LA
54 Owner, June, 1981 619 2.2%
Building to Present
Contractor
Alcee J. Durand, Jr.
St. Martinville, LA
37 President March, 1991 722 2.6%
Banking to Present
Item 10. Directors and Executive Officers of the Registrant
(continued)
Directors (continued)
- ----------
Number of
Shares Owned Ownership as
Beneficially a Percent
Including Direct of Total
Name and Title and Term as and Indirect Outstanding
Address Age Occupation Director Ownership Shares
- -------- --- ---------- -------- ------------ -----------
George R. Eastin, Jr.
St. Martinville, LA
55 Manager Aug., 1985 - -
Oil to June, 1995
Company
John A. Foti (Deceased)
St. Martinville, LA
77 Self-Employed Sept., 1969 798 2.8%
Optometrist to Oct., 1995
Charles A. Fuselier
St. Martinville, LA
53 Sheriff June, 1981 376 1.3%
to Present
Hubert Hulin, Sr.
St. Martinville, LA
77 Retired June, 1981 1,800 6.5%
to Present
Lawrence P. Melancon
St. Martinville, LA
78 Retired Sept., 1969 708 2.5%
to Present
Murphy Oubre
St. Martinville, LA
69 Rice Sept., 1969 824 3.0%
Farmer to Present
Item 10. Directors and Executive Officers of the Registrant
(continued)
Directors (continued)
- ----------
Number of
Shares Owned Ownership as
Beneficially a Percent
Including Direct of Total
Name and Title and Term as and Indirect Outstanding
Address Age Occupation Director Ownership Shares
- -------- --- ---------- -------- ------------ -----------
Stanley D. Stockstill
St. Martinville, LA
81 Retired March, 1982 511 1.8%
to Present
Darnell E. Fontenot
New Iberia, LA
57 Owner, Aug., 1995 100 .4%
Mobile to Present
Home Co.
Mr. George Eastin, Jr. resigned from the board in June of 1995. He
was replaced by Mr. Darnell E. Fontenot in August of 1995. Dr.
John Foti passed away in October of 1995. He was not replaced.
(continued)
FORM 10-K
TECHE BANCSHARES, INC.
PART III (CONTINUED)
Executive Officers and Significant Employees
- --------------------------------------------
Other
Office
Held
Name Age Title with Bank Occupation
- -------------- ---- ------- --------- ----------
Alcee J. Durand, Jr. 37 President/ - Banker more
CEO than 5 years
Brian Friend 36 Cashier - CPA, Banker
Vice-President less than
5 years
Charles M. Durand 33 Vice- - Banker more
President than 5 years
Jackie C. Leblanc 42 Assistant - Banker more
Vice President than 5 years
Jean L. Potier 52 Assistant - Banker more
Vice-President than 5 years
Rodney A. Viator 57 Assistant - Banker more
Vice-President than 5 years
Family Relationships
No family relationships exist between any members of the Board
of Directors other than the following:
Board Members Relationship
--------------------------------------- -----------------
Charles A. Fuselier and Stanley D. Stockstill Nephew and Uncle
Item (11) Executive Compensation - Cash Compensation
Number in Cash
Group Group Title Compensation
- --------- ------------- ------------
1 President/CEO $65,629
2 Vice-President 73,126
3 Assistant Vice-Presidents 71,722
Compensation Pursuant to Plans
The Bank has a non-contributory money purchase pension plan
that covers any employee that has completed one year of service and
has attained age 21. The Bank contributes 10 percent of an
employee's annual salary to the plan. During 1995, the Bank
contributed $32,875 to the Plan on behalf of all officers and
employees.
Item (12) Security Ownership of Certain Beneficial Owners and Mgmt
Security Ownership of Certain Beneficial Owners:
Title of Type of Country of Amount Percent
Name and Address Class Ownership Citizenship Owned of Class
- ---------------- ----- --------- ----------- ------ -------
Tilden A. Bonin, Jr.
St. Martinville, LA
Common Stock U.S.A. 1,576 5.6%
James B. Bulliard, Jr.
St. Martinville, LA
Common Stock U.S.A. 3,312 11.9%
Gaston L. Dautreuil, Jr.
St. Martinville, LA
Common Stock U.S.A. 2,656 9.5%
Hubert Hulin, Sr.
St. Martinville, LA
Common Stock U.S.A. 1,800 6.5%
Security Ownership of Management:
Title of Type of Shares Percent
Group Class Ownership Owned of Class
- ---------------------- ----- --------- ----- --------
Directors and Officers Common Stock 14,292 51.2%
Item (13) Certain Relationship and Related Transactions
From time to time in the ordinary course of its business, the
Bank has extended credit to its Officers and Directors and to
businesses in which its Officers and Directors own an interest.
The Bank intends to continue this policy because of the business
deposits and income that these activities generate for the Bank.
Such loans are made only with the approval of the Board of
Directors; are judged by the same credit guidelines and standards
as are applied to loans of a comparable nature made to others; are
made on substantially the same terms, including interest rates,
collateral and repayment terms as those prevailing at the
time for comparable transactions with others; and do not involve
more than the normal risk of collectibility or present other
unfavorable features.
Largest
Aggregate Amt.
Outstanding Amount Average
Relation Year Ending Outstanding Interest
Name to Company 12/31/95 as of 12/31/95 Rate
- ------------ ---------- --------- -------------- ------
Tilden A. Bonin, Jr.
Director $ 30,899 $ 18,596 9.10%
Gaston L. Dautreuil, Jr.
Director 326,291 278,772 8.95%
Larry C. Degeyter
Director 257,676 241,614 8.45%
Alcee J. Durand, Jr.
Director 22,500 20,000 9.75%
George R. Eastin, Jr.
Director 23,167 - 6.35%
John A. Foti
Director 47,730 - 8.75%
Charles Fuselier
Director 82,496 47,597 9.40%
Lawrence Melancon
Director 43,630 30,497 7.25%
Darnell Fontenot
Director 237,678 - 10.75%
Total outstanding at December 31, 1995 $637,076
========
FORM 10-K
TECHE BANCSHARES, INC.
PART IV
Item (14) Exhibits, Financial Statement Schedules and Reports on
Form 8-K
1. Financial Statements
The financial statements, including notes, are listed
in the index to the financial statements filed as part
of this annual report.
2. Exhibits
3. Reports on Form 8-K
No reports on Form 8-K were filed by Bancshares during
quarter ended December 31, 1995.
Page
Number Exhibit Number
------ -------------------------------------- -------
(3) Articles of Incorporation of Registrant as
currently in effect incorporated herein by
reference to Exhibit 3 Registrant Registration
Statement on Form S-14, filed February 21, 1984
(11) Computation of Earnings Per Share 48
(12) Computation of Ratios
(21) Subsidiary of Registrant 69
(24) Consent of Experts and Council -
(22) Subsidiaries of the Registrant
- ----- ------------------------------
Teche Bank and Trust Company Louisiana
FORM 10-K
TECHE BANCSHARES, INC.
PART IV (CONTINUED)
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.
TECHE BANCSHARES, INC.
Date: March 27, 1996 By:/s/ Alcee J. Durand, Jr.
----------------------- ---------------------
Alcee J. Durand, Jr.
President/Secretary
Pursuant to the requirements of the Securities Exchange Act of
1934, thisreport has been signed below by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated.
By:/s/Tilden A. Bonin,Jr. By:/s/Darnell Fontenot
__________________________ __________________________
Tilden A. Bonin, Jr Date Darnell Fontenot Date
Director Director
By:/s/James B. Bulliard, Sr. By:/s/Charles A. Fuselier
__________________________ __________________________
James B. Bulliard, Sr.Date Charles A. Fuselier Date
Director Director
By:/s/Harris J. Champagne, Sr.By:/s/Darnell Fontenot
__________________________ __________________________
Harris J. Champagne, Sr.Date Hubert Hulin, Sr. Date
Director Director
By:/s/Gaston L. Dautreuil,Jr. By:/s/Lawrence P. Melancon
__________________________ __________________________
Gaston L. Dautreuil, Jr.Date Lawrence P. Melancon Date
Director Director
By:/s/Larry C. Degeyter By:/s/Murphy Oubre
__________________________ __________________________
Larry C. Degeyter Date Murphy Oubre Date
Director Director
By:/s/Alcee J. Durand, Jr. By:/s/Stanley D. Stockstill
__________________________ __________________________
Alcee J. Durand, Jr. Date Stanley D. Stockstill Date
Director Director