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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, 1998
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, 1998
Documents Incorporated by Reference
Annual Report to Shareholders for the Year
Ended December 31, 1998 Parts I, II and IV
Definitive Proxy Statement for the 1998
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 five other banks
and two domestic savings and loan institutions aggressively
pursuing loans, deposits and other accounts. Below is a list of
banks and savings institutions having offices in St. Martin Parish
with their total deposits as of December 31, 1998:
Bank Thousands of Dollars
Farmers-Merchants Bank and Trust $112,397
First Louisiana National Bank 52,812
Iberia Bank 12,431
MidSouth National Bank 30,081
St. Martin Bank and Trust 78,488
Teche Bank and Trust Co. 38,097
Teche Federal Savings Bank 25,312
Total parish bank deposits $349,618
========
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 are below defined regulatory limits. The
Bank is 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 1997.
The table below indicates the Bank's capital measures at
December 31, 1998. The bank meets the risk-based capital
guidelines at December 31, 1998 as follows:
Regulatory Bank's
Requirement Capital
Risk-based capital ratios:
Tier 1 4.0% 17.8%
===== =====
Tier 2 - % .9%
===== =====
Total risk-based capital ratio 8.0% 18.7%
===== =====
Additional Financial Information -
Average Balance Sheets:
(in thousands)
December 31,
1998 1997 1996
ASSETS ------ ----- ------
Cash and due from banks $ 1,794 $ 1,725 $ 1,641
Interest-bearing deposits
in banks 135 0 0
Investments securities:
U. S. Treasury securities 524 903 1,058
Federal agency securities 20,001 17,465 16,301
States and political
subdivisions 1,218 1,026 420
Other securities 346 320 278
------ ------ ------
Total investment securities 22,089 19,714 18,057
Federal funds sold 2,486 911 1,315
Loans, net of allowance
for losses 15,038 13,365 11,269
Bank premises, and equipment 712 720 713
Accrued interest receivable 320 303 259
Other real estate owned 230 103 84
Other assets 350 466 351
--------- --------- ---------
Total assets $43,154 $37,307 $33,688
========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits -
Demand $ 6,299 $ 5,709 $ 5,243
NOW and MMDA accounts 6,465 6,511 5,119
Savings 3,718 3,434 3,227
Time (100,000 and over) 10,177 7,440 6,400
Other time 10,504 10,443 10,430
------ ------ ------
Total deposits 37,163 33,537 30,419
Federal funds purchased 3 38 5
Other borrowed funds 1,957 0 0
Securities repurchased 0 26 57
Accrued interest payable 158 141 134
Notes payable - stockholders 0 0 94
Other liabilities &
accrued expense 507 564 281
------ ------ ------
Total liabilities 39,788 34,306 30,990
------ ------ ------
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 1,587 1,222 919
Paid in capital 380 380 380
Total stockholders' equity 3,387 3,022 2,719
Less: Treasury stock, at cost (21) (21) (21)
-------- -------- --------
Net stockholders' equity 3,366 3,001 2,698
-------- -------- --------
Total liabilities and
stockholders' equity $43,154 $37,307 $33,688
======== ======== ========
Additional Financial Information (continued) -
Analysis of Net Interest Earnings Based on Average Amounts
Outstanding:
(in thousands)
Year Ended December 31,
1998 1997 1996
Interest earning assets:
Interest-bearing deposits,
in banks $135 $ 0 $ 0
Interest earned on interest-
bearing deposits 9 0 0
Yield on interest-bearing
deposits 6.7% 0.0% .0%
====== ====== ======
U. S. Treasury and federal agency
securities $20,524 $18,368 $17,359
Interest earned on U. S. Treasury
and federal agency securities 1,190 1,182 1,098
Yield on U. S. Treasury and
federal agency securities 5.8% 6.4% 6.3%
====== ====== ======
Obligations of states and political
subdivisions $1,218 $1,026 $420
Interest earned on obligations of
states and political
subdivisions 53 45 17
Yield on obligations of states and
political subdivisions 4.5% 4.4% 4.1%
====== ====== ======
Other securities $346 $320 $278
Interest/dividends earned
on other securities 15 15 5
Yield on other securities 4.3% 4.5% 1.9%
====== ====== ======
Federal funds sold $ 2,486 $ 911 $1,315
Interest earned on
federal funds sold 132 48 69
Yield on federal funds sold 5.3% 5.3% 5.3%
====== ====== ======
Net loans $15,038 $13,365 $11,269
Interest and fees
earned on net loans 1,483 1,322 1,161
Yield on net loans 9.9% 9.9% 10.3%
====== ====== ======
Total interest earning assets $39,748 $33,990 $30,641
Interest earned on total
interest-earning assets 2,883 2,612 2,351
Yield on total interest-earning
assets 7.3% 7.7% 7.7%
====== ====== ======
Interest bearing liabilities:
NOW and MMDA accounts $6,465 $ 6,511 $5,119
Interest paid on NOW AND MMDA
accounts 141 147 115
Average rate on NOW AND MMDA
accounts 2.3% 2.3% 2.2%
====== ====== ======
Additional Financial Information (continued) -
Analysis of Net Interest Earnings Based on Average Amounts
Outstanding (continued):
(in thousands)
Year Ended December 31,
1998 1997 1996
Savings $ 3,718 $ 3,434 $3,227
Interest paid on savings 74 68 64
Average rate paid on savings 2.0% 2.0% 2.0%
====== ====== ======
Time deposits - $100,000
and over $10,177 $ 7,440 $ 6,400
Interest paid on time deposits,
$100,000 and over 525 387 330
Average rate paid on time deposits,
$100,000 and over 5.2% 5.2% 5.2%
====== ====== ======
Other time deposits $10,503 $10,443 $10,430
Interest paid on other time
deposits 530 526 519
Average rate paid on other time
deposits 5.0% 5.0% 5.0%
====== ====== ======
Federal funds purchase $ 3 $ 38 $ 5
Interest paid on federal funds
purchased - 3 -
Average rate paid on federal funds
purchased 7.6% 6.9% 5.5%
====== ====== ======
Other borrowed funds $1,956 $ - $ -
Interest paid on other borrowed
funds 114 - -
Average rate paid on other
borrowed funds 5.8% 0.0% 0.0%
====== ====== ======
Securities repurchased $ - $ 26 $ 56
Interest paid on securities
repurchased - 2 3
Average rate paid on securities
repurchased 0.0% 6.5% 5.8%
====== ====== ======
Notes payable - stockholders $ - $ - $ 94
Interest paid on notes payable -
stockholders - - 5
Average rate paid on notes
payable - stockholders 0.0% 0.0% 4.9%
====== ====== ======
Total interest bearing
liabilities $32,823 $27,891 25,332
Interest paid on total interest
bearing liabilities 1,384 1,132 1,036
Average rate on total interest
bearing liabilities 4.2% 4.1% 4.1%
====== ====== ======
Net yield on interest-earning
assets (net interest-
earnings divided by total
interest-earning assets 3.8% 4.3% 4.3%
====== ====== ======
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)
1995 v. 1996
Increase (Decrease) Due to
Volume Rate Rate/Volume Total
Interest earnings assets:
Increase (decrease) -
Interest bearing deposits
in banks (27) (27) 27 (27)
U. S. Treasury & Federal
Agency Sec. 176 (29) (5) 142
State and political
subdivisions - - - -
Federal Funds sold (21) (8) 2 (27)
Net loans 49 (22) (1) 26
Total interest earning
assets 177 (86) 23 114
Interest-bearing liabilities:
Increase (decrease) -
NOW and MMDA accounts 3 (5) - (2)
Savings 1 - - 1
Time deposits, $100,000
and over 48 - - 48
Other time deposits 35 29 2 66
Federal funds purchased - - - -
Securities repurchased 2 - - 2
Notes payable - stockholder (9) - - (9)
Total interest-bearing
liabilities 80 24 2 106
Increase (decrease) in net
interest income 97 (110) 21 8
===== ===== ===== =====
1996 v. 1997
Increase (Decrease) Due to
Volume Rate Rate/Volume Total
Interest earnings assets:
Increase (decrease) -
Interest bearing deposits
in banks - - - -
U. S. Treasury & Federal
Agency Sec. 64 17 1 82
State and political
subdivisions - 18 27 45
Federal Funds sold (21) - - (21)
Net loans 216 (45) (8) 163
Total interest earning
assets 259 (10) 20 269
Interest-bearing liabilities:
Increase (decrease) -
NOW and MMDA accounts 31 5 1 37
Savings 4 - - 4
Time deposits, $100,000
and over 54 - - 54
Other time deposits 1 - - 1
Federal funds purchased 3 - (1) 2
Securities repurchased (2) 1 - (1)
Notes payable - stockholder (5) (5) 5 (5)
Total interest-bearing
liabilities 86 1 5 92
Increase (decrease) in net
interest income 173 (11) 15 177
===== ==== ===== =====
1997 v. 1998
Increase (Decrease) Due to
Volume Rate Rate/Volume Total
Interest earnings assets:
Increase (decrease) -
Interest bearing deposits
in banks - - 9 9
U. S. Treasury & Federal
Agency Sec. 138 (110) (13) 15
State and political
subdivisions 8 1 - 9
Federal Funds sold 83 - - 83
Net loans 166 - - 166
Total interest earning
assets 395 (109) (4) 282
Interest-bearing liabilities:
Increase (decrease) -
NOW and MMDA accounts (1) (7) - (8)
Savings 6 - - 6
Time deposits, $100,000
and over 142 - - 142
Other time deposits 3 - - 3
Federal funds purchased (2) - - (2)
Securities repurchased (2) (2) 2 (2)
Notes payable - stockholder - - - -
Total interest-bearing
liabilities 146 (9) 2 139
Increase (decrease) in net
interest income 249 (100) (6) 143
===== ===== ===== =====
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 $ - $ - $ - $ 1,574 $ 1,574
Int. Bearing deposits
in banks 74 - - - 74
Securities available
for sale 3,705 9,408 5,220 - 18,334
Securities held
to maturity 3,785 1,475 324 - 5,583
Other securities - - - 354 354
Federal funds sold 1,500 - - - 1,500
Loans 5,959 5,234 5,150 11 16,354
Other assets - - - 1,510 1,510
------- ------- ------ ------- -------
Total assets $ 15,023 $16,117 $10,694 $3,449 $45,283
======= ======= ====== ======= =======
LIABILITIES AND STOCKHOLDER'S EQUITY
Demand deposits $ - $ - $ - $ 6,795 $ 6,795
Interest-bearing deposits:
NOW and MMDA's 2,024 4,720 - - 6,744
Savings 1,078 2,515 - - 3,593
Time, $100,000
and over 9,208 1,131 - - 10,339
Other time 8,598 2,028 - - 10,626
Other borrowed
funds 119 552 2,589 - 3,260
Other liabilities - - - 348 348
Stockholder's equity - - - 3,578 3,578
------- ------- ------ ------- -------
Total liabilities and
stockholder's
equity $21,027 $10,946 $2,589 $10,721 $45,283
======= ======= ====== ======= =======
Interest rate
sensitivity gap $(6,004) $ 5,171 $8,105 $(7,272)
======= ======= ====== =======
Investment Portfolio -
The following table indicates the composition of the Company's
investments (in thousands) at December 31, 1998, 1997 and 1996 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:
1998
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
Securities available for sale:
U.S. Government and
Agency Securities $ 2,399 $ 17 $ - $ 2,416
Mortgage-backed
securities 15,771 152 (5) 15,918
------ --- ---- ------
Totals 18,170 169 (5) 18,334
Securities held to maturity:
U.S. Government
and Agency
Securities 206 - - 206
State and Municipal
Securities 1,273 27 - 1,300
Mortgage-backed
Securities 4,104 7 - 4,111
------- --- ---- ------
Totals 5,583 34 - 5,617
Other Securities 354 - - 354
------- --- ---- ------
Totals 354 - - 354
Total securities $24,107 $203 $ (5) $24,305
========= ==== ===== ========
1997
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
Securities available for sale:
U.S. Government and
Agency Securities $ 3,322 $ 35 $ (1) $ 3,356
Mortgage-backed
securities 11,258 154 (10) 11,402
------- --- ---- ------
Totals 14,580 189 (11) 14,758
Investment Portfolio (Continued) -
(in thousands)
Securities held to maturity:
U.S. Government
and Agency
Securities 383 - - 383
State and Municipal
Securities 1,176 18 - 1,194
Mortgage-backed
Securities 2,918 16 (13) 2,921
------- --- ---- ------
Totals 4,477 34 (13) 4,498
Other Securities 343 - - 343
------- --- ---- ------
Totals 343 - - 343
Total securities $19,400 $223 $(24) $19,599
========= ==== ===== =======
1996
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
Securities available for sale:
U.S. Government and
Agency Securities $ 1,194 $ 2 $ (2) $ 1,194
Mortgage-backed
securities 12,654 95 (29) 12,720
------- --- ---- ------
Totals 13,848 97 (31) 13,914
Securities held to maturity:
U.S. Government
and Agency
Securities 687 1 (1) 687
State and Municipal
Securities 538 1 (1) 538
Mortgage-backed
Securities 3,535 19 (20) 3,534
------- --- ---- ------
Totals 4,760 21 (22) 4,759
Other Securities 286 - - 286
------- --- ---- ------
Totals 286 - - 286
Total securities $18,894 $118 $(53) $18,959
========= ==== ===== ========
Investment Portfolio (Continued) -
1998
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 $ - $ 2,416 $ 375 $ -
Mortgage-backed
securities 2,748 10,504 864 1,427
------ ----- ----- -----
Totals 2,748 12,920 1,239 1,427
Securities to be held to maturity:
U.S. Government and
Agency Securities 206 - - -
State and municipal
securities 200 793 280 -
Mortgage-backed
securities 3,471 588 - 45
------ ----- ----- -----
Totals 3,877 1,381 280 45
Other securities - - - 354
Total $6,625 $ 14,301 $1,519 $1,826
======= ======= ======= ======
Weighted Average Yield
Securities available for sale:
U.S. Government and
Agency Securities 0.0% 6.0% 6.6% 0.0%
====== ====== ====== =====
Mortgage-backed
securities 6.0% 6.7% 6.6% 6.3%
====== ====== ====== =====
Securities to be held to maturity:
U.S. Government and
Agency Securities - - - -
====== ====== ====== ======
State and municipal
securities 4.0% 4.5% 4.2% -
====== ====== ====== ======
Mortgage-backed
securities 7.1 % 7.1% - 1.0%
====== ====== ====== ======
Other securities - - - 4.3%
====== ====== ====== ======
Yields on tax exempt obligations have not yet been computed on a
tax-equivalent basis.
Loan Portfolio Information -
Types of Loans: 1998 1997 1996 1995 1994
Real estate loans $ 7,032 $ 8,474 $ 7,292 $ 5,858 $ 6,710
Commercial and
industrial loans 7,128 2,560 2,630 2,412 1,779
Personal and
consumer loans 2,381 2,897 3,006 2,702 2,679
All other loans 33 12 27 24 39
------ ------ ----- ----- -----
Totals 16,574 13,943 12,955 10,996 11,207
Less: Unearned income (47) (65) (88) (62) (59)
Allowance for
loan losses (173) (171) (158) (161) (180)
------ ------ ----- ----- -----
Net loans $16,354 $13,707 $12,709 $10,773 $10,968
======= ======= ======= ======= =======
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
1998 less five Years Ten Years
Real estate $7,032 $ 747 $1,895 $2,508 $1,882
Commercial and
industrial 7,128 4,177 2,205 675 71
Personal and
consumer 2,381 1,233 1,134 14 -
All other 33 33 - - -
-------- -------- ------- ------ ------
Totals $16,574 $ 6,190 $5,234 $3,197 $1,953
======== ======== ======= ====== ======
All loans due after one year are at predetermined interest rates.
Non-accrual, Past Due, Restructured and Impaired Loans:
(in thousands)
December 31, December 31,
1998 1997
Non-accrual loans $ 11 $ 25
===== =====
Restructured loans $ - $ -
===== =====
Impaired loans $ - $ -
===== =====
Accruing loans past due 90 days or more
at year end $ 49 $ 42
===== =====
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
$223,904 as of December 31, 1998.
At December 31, 1998, 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 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,
1998 1997
Balance, beginning of year $ 171 $ 158
Provision added to operations - 10
--- ---
Charge-offs:
Installment loans - 2
Commercial loans 11 1
--- ---
Total Charge off's 11 3
Recoveries:
Installment loans 5 1
Commercial loans 8 5
--- ---
Total Recoveries 13 6
Net allowance activity 2 13
Balance, end of year $ 173 $ 171
===== =====
Ratio of allowance activity during the period
to average loans outstanding during the
period .01% .10%
===== =====
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 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 borrower's ability to pay.
Management approximates that the amount of charge-offs during
the next full year of operation will be as follows:
(in thousands)
Real estate loans $ -
Commercial & industrial -
Personal & consumer 3
All other loans -
------
Total $ 3
======
Deposits -
See analysis of net interest earnings for average deposits
and average rate paid. Non-interest bearing demand deposits have
not been included in the net interest earnings, because they do not
pay interest. Therefore, the average interest rate paid would be
zero. The average balances for the past three years can be found
on the average balance sheets.
Maturities of Time Certificates over $100,000 or More:
December Three Over Three Over Six Over
31, Months Through Through Twelve
1998 or less Six Twelve Months
Time Certificates
- $100,000
or more $10,339 $3,016 $2,222 $3,970 $1,131
====== ====== ====== ====== ======
Return on Average Equity and Assets -
December 31, December 31, December 31,
1998 1997 1996
Return on average assets 0.9% 1.0% 1.0%
===== ===== =====
Return on average equity 11.4% 11.9% 12.1%
===== ===== =====
Dividend payout ratio 10.8% 11.6% 11.6%
===== ===== =====
Equity to asset ratio 7.8% 8.4% 8.0%
===== ===== =====
Capital adequacy ratio 8.3% 9.1% 8.4%
===== ===== =====
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, 1998.
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 1998, it is believed that the stock of the Company
trades for approximately $80.00 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, 1998, Teche Bancshares, Inc. had approximately
371 stockholders.
Teche Bancshares, Inc. paid a dividend of $1.50 per share in
1998 and 1997. In 1996, the bank paid $1.35 per share. 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)
1998 1997 1996 1995 1994
Investment
securities $24,271 $19,578 $18,961 $17,474 $15,368
Loans 16,354 13,707 12,709 10,773 10,968
Deposits 38,097 33,721 32,375 30,516 29,165
Stockholders
equity 3,878 3,242 2,847 2,533 1,965
Operating
revenues 3,247 2,933 2,665 2,551 2,179
Net interest
income 1,497 1,476 1,310 1,288 1,223
Provision for
loan losses - (10) - - -
Net income 387 363 325 337 246
Earnings
per share 13.87 12.98 11.65 12.07 8.81
Total assets 45,283 37,305 33,552 33,470 31,816
Cash dividend:
Per share 1.50 1.50 1.35 1.25 1.25
Total 42 41 38 35 35
Item 7. Managements's Discussion and Analysis of Financial
Condition and Results of Operations
1998 IN REVIEW
Our net income for the years ended December 31, 1998, 1997 and 1996
was $387,395, $362,550, and $325,387, respectively. Net income
increased $24,845 in 1998 from $362,550 for the year ended 1997.
Net income for 1997 increased $37,163 from $325,387 in 1996.
Earnings per common share were $13.87 for 1998, $12.98 for 1997,
and $11.65 for 1996. Return on average assets and return on equity
was .9% and 11.4% for 1998. Return on average assets and return on
equity was 1.0% and 11.9% for 1997. For 1996, return on average
assets and return on equity was 1.0% and 12.1%.
Highlights for 1998 were as follows:
1. For the year ended 1998, we increased our average total assets
by 15.6 percent. Average loans increased 12.5% over the
average of 1997. This positive trend marks the seventh
consecutive year of asset growth for Teche Bank.
2. This year we were the first bank in the parish and one of only
a few in Louisiana, to offer image checking statements. This
innovation offers convenience to our customers and enhances
our ability to provide superior customer service.
3. During 1998, we converted our main application computer
software to a year 2000 ready version provided by our software
vendor. The successful conversion was the culmination of five
months of planning and work.
4. After three years of operations, our Coteau office continues
to be a thriving source of growth and profitability for the
bank. We have once again exceeded our projections and
expectations for this office and are excited about the future
of this location.
EARNINGS ANALYSIS
Net interest Income
The largest source of operating revenue for the Company is net
interest income. Net interest income represents the difference
between total interest income earned on earning assets and total
interest expense paid on interest-bearing liabilities. The amount
of interest income is dependent upon many factors including the
volume and mix of earning assets, the general level of interest
rates and the dynamics of changes in interest rates. The cost of
funds necessary to support earning assets varies with the volume
and mix of interest-bearing liabilities and the rates paid to
attract and retain such funds.
During the year ended 1998, we borrowed $3,300,000 in amortizing
advances from the Federal Home Loan Bank. These fixed rate
advances were used to offset fixed rate loans that were made over
the last several years. These funds give us the ability to extend
the maturities of our liabilities to better match our liabilities
with our long-term assets. The average rate obtained on all
advances borrowed was 5.61%.
Net interest income was $1,496,636 in 1998, compared to $1,466,454
in 1997. This change represents an increase of $30,182 over the
previous year. We were able to increase our net interest income
for the year ended 1998 because of growth in the bank's total loans
and investments.
Net interest income was $1,466,454 in 1997, compared to $1,309,536
in 1996 an increase of $156,918 over the previous year. We were
able to increase our net interest income for the year ended 1997 as
the result of growth in the bank's total loans.
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.
During 1998, no addition was made to our reserve for loan losses.
During 1997, we added $9,999 to our reserve for loan losses.
During 1996 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 loss at December 1998
was $172,802 or 1.05% of gross loans.
Other Income
Other income was $363,528 for 1998 as compared to $321,136 in 1997.
The increase in other income was mostly due to reductions in the
amount of deposit account charge-offs, an increase in income from
service charges on demand deposit accounts and a book gain from the
sale of other real estate owned.
Other income was $321,136 for 1997 as compared to $314,406 in 1996.
The majority of the change in other income was due to an increase
in commissions on credit life insurance.
Other Expenses
Other expenses were $1,311,240 for 1998 compared to $1,268,905 in
1997. The increase in other expense was the result of increases in
salaries and employee benefits, occupancy expenses, data processing
expenses and other real estate expenses. Salaries and employee
benefits increased due to compensation increases made at the end of
1997. The increase in occupancy expenses and data processing
expenses was due to depreciation and maintenance on the purchase of
a new check sorter and image capture system in the fourth quarter
of 1998. Other real estate expenses increased due to the
maintenance of a commercial building that we owned for the entire
year of 1998.
Other expenses were $1,268,905 for 1997 compared to $1,160,908 in
1996. The increase in other expense was the result of increases in
salaries and employee benefits, and other operating expenses.
Salaries and benefits expense increased due to compensation
increases made at the end of 1996. Other operating expenses
increased due to increases in directors fees, correspondent bank
charges and a provision to charge down other real estate owned.
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" (FAS 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 FAS 115.
The carrying value of securities available for sale at the end of
1998 was adjusted upward $163,841 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 $33,797
at year end. Management considers the increase in value of the
securities portfolio to be temporary in nature.
The carrying value of securities available for sale at the end of
1997 was adjusted upward by $178,374 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
$21,410 at year end. Management considers the increase in value of
the securities portfolio to be temporary in nature.
Loans
At December 31, 1998, loans, net of allowance for loan losses and
unearned discount, were $16,353,968. This was an increase of
$2,647,104 over $13,706,864 at the end of 1997. Average loans
during the year 1998 were $15,037,962 up approximately $1,673,012
from 1997.
Loans, net of allowance for loan losses and unearned discount, were
$13,706,864 at December 31, 1997. Net loans increased $997,962
from $12,708,902 at the end of 1996. Average loans during the year
1997 were $13,364,950 up approximately $2,096,344 from 1996.
FINANCIAL CONDITION ANALYSIS
Deposits
At December 31, 1998 total deposits were $38,097,084 an increase of
$4,376,456 over that of the prior year end balance. Average
deposits for the year ended 1998 were $37,162,877 as compared to
$33,537,170 in 1997. Average deposits are up due to growth in our
local economy and growth from some of our larger depositors.
At December 31, 1997 total deposits were $33,720,628 an increase of
$1,345,085. Average deposits for the year ended 1997 were
$33,537,170 as compared to $30,418,843 in 1996. Average deposits
are up due to the growth of the Coteau Branch, and growth
attributed to the offering of our ATM's, Voice line and Saturday
Banking services. We did not have as much public fund deposits
this year as we had in the prior year.
Time deposits of $100,000 and greater were $10,339,041 at the end
of 1998, an increase of $2,551,311 over that of the prior year.
The increase was due to increases in Public Funds from bids won
during the year and from growth from several of our larger
depositors. 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. Rates on these funds are still attractive
compared to alternatives for funding.
Time deposits of $100,000 and greater were $7,787,730 at the end of
1997, an increase of $726,138 over that of the prior year. The
increase was due to increases in Public Funds from bids won during
the year and from general growth in deposits.
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, 1998, nonperforming
assets were $240,276, a decrease of $14,433 from 1997. As of
December 31, 1997, nonperforming assets were $254,709, a decrease
of $39,353 from 1996. Nonaccrual loans at December 31, 1998, 1997
and 1996 were $10,556, $24,988, and $238,843, respectively. Other
real estate owned was $229,720, $229,721 and $55,219 at December
31, 1998, 1997 and 1996, respectively. The improvement in
nonperforming assets was accomplished through the reduction in non-
accrual loans. Additionally, we sold one piece of other real
estate for $10,000 that was being carried on our books at $1.
This transaction provided us with a book gain of $9,999 and a tax
loss of $23,621.
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 $223,904 and $230,951 at December 31, 1998 and 1997,
respectively.
Capital and Dividends
The Company's risk based capital ratios at December 31, 1998
significantly exceeded the minimum regulatory guidelines. The
Company's leverage ratio was 7.9% and risk based capital was 18.7%,
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 7.9% at December 31,
1998. Teche Bancshares, Inc.'s sole source of funds from which to
pay dividends to stockholders is Teche Bank & Trust Company.
During 1998 Teche Bank & Trust Company declared and paid a dividend
to Teche Bancshares, Inc. of $41,887 which was paid to stockholders
in the form of a dividend.
Fourth Quarter Results
Net income for the fourth quarter of 1998, 1997, and 1996 was
$80,466, $83,933, and $101,262, respectively. The decrease in
income for the quarter was mostly due to depreciation and expenses
associated with the conversion of our computer software and
installation of our new check sorter and image system. Income
before income tax for the quarter ended December 31, 1998 was
$123,636 as compared to $114,452 for the same quarter ended 1997.
Year 2000 Preparation
Teche Bancshares, Inc. relies on automation to manage information.
Since the earliest days of electronic computers, programmers have
used two digits to represent the year in date fields (YYMMDD). In
the 1960s when this convention became standard, the two-digit
representation made economic sense because it economized computer
memory and saved storage space. The Year 2000 problem exists
because a two-digit representation of the year will be interpreted
in many applications to mean the year 1900, not 2000, unless the
date or program logic is modified. Without modification, many date
sensitive software applications will provide illogical or erroneous
data.
We have inventoried our software, hardware and environmental
systems. We have identified those critical systems that needed
modification in our business and remediated the affected programs.
We have replaced our check sorter with a new check sorter and image
system. We have updated our main application computer software to
one provided by our software vendor that is year 2000 ready. We
have performed testing on all critical systems and have determined
that they are year 2000 ready. The total expenditures associated
with the purchase of the new check sorter and the conversion of our
main application software were $236,000. These expenditures were
capital in nature and will be depreciated over a five year period.
We anticipate that the further expenditures necessary to become
year 2000 ready will be approximately $10,000. These expenditures
will be primarily for new personal computers and software
associated with non-critical ancillary systems.
We have considered the effect of the year 2000 on our major
customers. We are maintaining a list of major customers and
monitoring their progress. We will be considering the progress of
our major customers in our calculation of the reserve for loan loss
throughout the year 1999.
We are in the process of preparing a contingency plan for dealing
with possible worst case scenarios. This plan should be complete
by June 30, 1999 and will be continually updated from that date to
year end.
Item 8. Financial Statements and Supplementary Data
The audited financial statements of Teche Bancshares, Inc. are
presented on pages 29 to 63.
TECHE BANCSHARES, INC.
AND SUBSIDIARY
Financial Report
Years Ended December 31, 1998 and 1997
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 6-29
SUPPLEMENTARY INFORMATION
Consolidated schedules of other operating expenses 31
Consolidating schedules -
Consolidating balance sheet 33
Consolidating statement of income 34
Consolidating statement of cash flows 35
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, 1998 and
1997, 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, 1998. These consolidated 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 consolidated 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 consolidated financial statements referred
to above present fairly, in all material respects, the financial
position of Teche Bancshares, Inc. and Subsidiary as of December
31, 1998 and 1997, and the results of its operations and its cash
flows for each of the three years in the period ended December 31,
1998, in conformity with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on
the consolidated financial statements taken as a whole. The
supplementary information contained on pages 30-35 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 consolidated financial statements. In
our opinion, the supplementary information is fairly presented in
all material respects in relation to the consolidated financial
statements taken as a whole.
Kolder, Champagne, Slaven, & Rainey, LLC
A Corporation of Certified Public Accountants
Breaux Bridge, Louisiana
January 19, 1999
TECHE BANCSHARES, INC. AND SUBSIDIARY
Consolidated Balance Sheets
December 31, 1998 and 1997
(in thousands)
1998 1997
ASSETS
Cash and due from banks $ 1,574 $ 1,629
Interest bearing deposits w/banks 74 3
Securities available for sale 18,333 14,758
Securities to be held to maturity 5,583 4,477
Other securities 354 343
Federal funds sold 1,500 1,050
Loans, net of allowance for loan losses
and unearned discount on loans 16,354 13,707
Bank premises, furniture,
fixtures and equipment 808 674
Accrued interest receivable 357 314
Other real estate owned 230 230
Other assets 116 120
--------- ---------
Total assets $45,283 $37,305
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits -
Non-interest demand $ 6,795 $ 6,637
Interest bearing -
NOW and MMDA accounts 6,744 5,523
Savings 3,593 3,591
Time, $100,000 and over 10,339 7,788
Other time 10,626 10,182
--------- --------
Total deposits 38,097 33,721
Accrued interest payable 164 137
Other borrowed funds 3,260 0
Other liabilities and accrued expenses 184 205
--------- --------
Total liabilities 41,705 34,063
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 2,064 1,719
Less: 200 shares
of treasury stock (19) (19)
Accumulated other
comprehensive income 108 117
--------- --------
Total stockholders' equity 3,578 3,242
Total liabilities and
stockholders' equity $45,283 $37,305
=========== ==========
The accompanying notes are an integral part of this statement.
TECHE BANCSHARES, INC. AND SUBSIDIARY
Consolidated Statements of Income
Years Ended December 31, 1998, 1997 and 1996
1998 1997 1996
INTEREST INCOME
Interest and fees on loans $1,483 $1,322 $1,162
Interest on investment securities:
Interest on securities
available for sale 913 894 791
Interest on securities
to be held to maturity 277 288 307
Obligations of state and
political subdivisions 54 45 17
Interest and dividends
on other securities 15 15 5
Interest on federal funds sold 132 48 69
Interest on deposits in banks 9 - -
----- ----- -----
Total interest income 2,883 2,612 2,351
INTEREST EXPENSE
Interest on deposits 1,269 1,127 1,028
Federal funds purchased - 3 1
Interest on borrowed funds 114 - -
Interest on securities repurchased - 2 3
Other interest 3 4 5
Stockholder loans - - 4
----- ----- -----
Total interest expense 1,386 1,136 1,041
Net interest income before
recovery of possible
loan losses 1,497 1,476 1,310
PROVISION FOR POSSIBLE LOAN LOSSES - (10) -
----- ----- -----
Net interest income after
recovery of possible
loan losses 1,497 1,466 1,310
OTHER INCOME
Service charges on
deposit accounts 272 258 256
Commissions income 34 30 21
ATM income 13 10 9
Net gain on security transactions 2 2 4
Net other real estate gain 10 - -
Other operating revenue 32 21 24
----- ----- -----
Total other income 363 321 314
Income before other expenses 1,860 1,787 1,624
OTHER EXPENSES
Salaries and employee benefits 677 645 600
Occupancy expenses 194 184 187
Furniture and equipment expenses 36 35 35
Data processing expenses 39 33 34
Net other real estate expense 10 3 1
Other operating expenses 355 368 304
----- ----- -----
Total other expenses 1,311 1,268 1,161
Income before income taxes 549 519 463
INCOME TAXES BENEFIT (EXPENSE) (162) (156) (138)
----- ------ -----
Net Income $ 387 $ 363 $ 325
======= ======= =======
Net income per share
of common stock $13.87 $12.98 $11.65
======= ======= =======
Average shares outstanding 27,925 27,925 27,925
======= ======= =======
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, 1998, 1997 and 1996
(in thousands)
Accumulated
Common Stk Other
Treas. Stk Retained Comprehensive
Surplus Earnings Income Total
------- ----- ------ -------
BALANCES,
DECEMBER 31, 1995 $1,405 $1,110 17 $2,532
Net income - 325 - 325
Other Comprehensive Income,
Net of income tax of $23
Unrealized gain on securities,
net of reclassification
adjustment of $0 - - 27 27
------- ----- ------ -------
Total Comprehensive Income - 325 27 352
Cash Dividend,
$1.35 per share - (37) - (37)
------- ----- ------ -------
BALANCES,
DECEMBER 31, 1996 $1,405 $1,398 $ 44 $2,847
------- ----- ------ -------
Net income - 363 - 363
Other Comprehensive Income,
Net of income tax of $61
Unrealized gain on securities,
net of reclassification
adjustment of $0 - - 73 73
------- ----- ------ -------
Total Comprehensive Income - 363 73 436
Cash Dividend,
$1.50 per share - (41) - (41)
------- ----- ------ -------
BALANCES,
DECEMBER 31, 1997 $1,405 $1,720 $117 $3,242
------- ----- ------ -------
Net income - 387 - 387
Other Comprehensive Income,
Net of income tax of $56
Unrealized gain on securities,
net of reclassification
adjustment of $1 - - (10) (10)
------- ----- ------ -------
Total Comprehensive Income - 387 (10) 377
Cash Dividend,
$1.50 per share - (41) - (41)
------- ----- ------ -------
BALANCES,
DECEMBER 31, 1998 $1,405 $2,066 $107 $3,578
====== ===== ====== =======
The accompanying notes are an integral part of this statement.
TECHE BANCSHARES, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows
Years Ended December 31, 1998, 1997 and 1996
1998 1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 387 $ 363 $ 325
Adjustments to reconcile
net income to net cash provided by
operating activities:
Depreciation of bank
premises and equipment 89 85 85
(Gain) loss on other
real estate owned (9) - 3
(Increase) decrease in:
other assets 4 21 39
accrued interest receivable (43) (45) 1
accrued interest payable 9 2 24
other liabilities (4) 10 21
----- ----- -----
Net cash provided
by operating activities 433 436 498
----- ----- -----
CASH FLOWS FROM INVESTING ACTIVITIES
Increase in interest-bearing
deposits in banks (71) (3) -
(Increase) decrease in
federal funds sold (450) 175 1,575
Proceeds from sales of
securities available for sale 1,200 400 800
Proceeds from maturities of
securities available for sale 8,361 250 1,925
Proceeds from maturities of
securities held to maturity 4,776 6,718 5,830
Purchases of securities
to be held to maturity (4,625) (2,953) (3,023)
Purchases of securities
available for sale (14,415) (4,949) (6,976)
Net (increase) decrease
in loans (2,647) (998) (1,936)
Capital expenditures for
bank premises and equipment (223) (51) (48)
(Increase) decrease in
other real estate owned 1 (175) 52
Proceeds from the sale of
other real estate owned 10 - -
----- ----- -----
Net cash provided by
(used in)investing
activities (8,083) (1,586) (1,801)
------- ------- -----
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in -
Demand deposits 159 962 393
NOW and MMDA 1,220 (506) (770)
Savings deposits 2 335 55
Time deposits, >= $100,000 1,451 727 1,806
Other time deposits 1,544 (172) 375
Proceeds from long-term debt 3,325 - -
Repayment of long-term debt (65) - -
Dividends paid (41) (42) (37)
Decrease in notes
payable - stockholders - - (151)
----- ----- -----
Net cash provided by
financing activities 7,595 1,304 1,671
------- ------ -----
Net increase (decrease) in
cash and cash equivalents (55) 154 368
CASH AND CASH EQUIVALENTS,
beginning of year 1,630 1,476 1,108
CASH AND CASH EQUIVALENTS,
end of year $ 1,575 $ 1,630 $ 1,476
======= ======= =======
CASH PAID DURING THE YEAR
Interest $1,377 $ 1,133 $ 1,017
====== ======= =======
Income taxes $ 204 $ 170 $ 117
====== ======= =======
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, 1998, 1997 and 1996, 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 Coteau Community
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. Use of Estimates
The preparation of financial statements in conformity
with generally accepted accounting principles requires
management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the
date of the consolidated financial statements and the
reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those
estimates.
D. Accounting Changes
During 1998, the Bank adopted Financial Accounting
Standards Board (FASB) Statements No. 128, Earnings per
Share, and Statement No. 131, Reporting Comprehensive
Income. Both of these Statements require restatement;
however, the Statements only affect the presentation of
information and have no effect on net income or on
retained earnings.
E. 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.
F. Cash and Cash Equivalents
For the purposes of presentation in the Consolidated
Statements of Cash Flows, cash and cash equivalents are
defined as those amounts included in the balance sheet
caption "cash and due from banks". Cash, cash
equivalents and due from banks at December 31 included
the following:
1998 1997 1996
Cash and due
from banks $1,574 $1,630 $1,476
========== ========== ==========
The Bank maintains cash balances at several banks.
Accounts at each institution are insured by the Federal
Deposit Insurance Corporation up to $100,000. The Bank
had deposits at institutions and agency federal funds
exceeding the insured amount by approximately $1,339,000.
G. 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.
At December 31, 1998 and 1997, the Bank did not own
any trading securities.
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.
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.
Unrealized holding gains and losses, net of tax, on
available for sale securities are reported as a net
amount in other comprehensive income.
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.
Premiums and discounts are recognized in interest
income using the interest method over the period to
maturity.
Gains and losses on the sale of securities available
for sale are determined using the specific-identification
method.
H. 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.
I. 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.
J. 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.
K. Other Real Estate Owned
Real estate properties acquired through or in lieu
of loan foreclosure are initially recorded at the lower
of the Bank's carrying amount or fair value less
estimated selling cost at the date of foreclosure. Any
write-downs based on the asset's fair value at the date
of acquisition are charged to the allowance for loan
losses. After foreclosure, these assets are carried at
the lower of their new cost basis or fair value less cost
to sell. Costs of significant property improvements are
capitalized, whereas costs related to holding property
are expensed as well as any interest costs. Valuations
are periodically performed by management, and any
subsequent write-downs are recorded as a charge to
operations, if necessary, to reduce the carrying value of
a property to the lower of its cost or fair value less
cost to sell.
L. 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.
M. 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.
N. 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.
O. Financial Instruments
In the ordinary course of business the Bank 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 prices.
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.
Other borrowed funds - The fair value of the Bank's
other borrowed funds was estimated using discounted
cash flow analyses based on the Bank's current
incremental borrowing rates for similar types of
borrowing arrangements.
Other liabilities - The carrying amounts of other
liabilities 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.
(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, 1998 -
U.S. Government and
agency securities $ 2,399 $17 $ - $ 2,416
Mortgage-backed
securities 15,770 152 (5) 15,918
------- --- ------ -------
$18,170 $169 $(5) $18,334
======= === ====== =======
Securities available for sale:
December 31, 1997 -
U.S. Government and
agency securities $ 3,322 $35 $ (1) $ 3,356
Mortgage-backed
securities 11,258 154 (10) 11,402
------- --- ------ -------
$14,580 $189 $(11) $14,758
======= === ====== =======
(in thousands)
Securities to be held to maturity:
December 31, 1998 -
U.S. Government and
agency securities $ 206 $ - $ - $ 206
State and municipal
securities 1,273 27 - 1,300
Mortgage-backed
securities 4,104 7 - 4,111
------- --- ------ -------
$ 5,583 $34 $ - $ 5,617
======= === ====== =======
Securities to be held to maturity:
December 31, 1997 -
U.S. Government and
agency securities $ 383 $ 1 $ - $ 384
State and municipal
securities 1,176 17 - 1,193
Mortgage-backed
securities 2,918 16 (13) 2,921
------- --- ------ -------
$ 4,477 $34 $ (13) $ 4,498
======= === ====== =======
Investment securities carried at approximately $4,789,000
at December 31, 1998 and $4,447,750 at December 31, 1997 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)
1998 1997
Gross realized gains:
Mortgage backed securities $ 1 $ 2
Other securities - 2
--- ----
Total realized gains $ 1 $ 4
=== ====
Gross realized losses:
U.S. government & agency securities $ - $ -
Mortgage-backed securities - -
Other securities - -
--- ----
Total realized losses $ - $ -
=== ====
The maturities of debt securities at December 31, 1998
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 $3,877 $3,883 $ 2,721 $ 2,748
Due from one to five
years 1,381 1,409 12,813 12,920
Due from five to ten
years 280 284 1,222 1,239
Due after ten years 45 41 1,414 1,427
------ ------ ------- -------
$5,583 $5,617 $18,170 $18,334
====== ====== ======= =======
For purposes of the maturity table, mortgage-backed
securities, which are not due at a single maturity date, have
been allocated over maturity groupings based on the weighted-
average contractual maturities of underlying collateral. The
mortgage-backed securities may mature earlier than their
weighted-average contractual maturities because of principal
prepayments.
(3) Other Securities
Other securities at December 31 consist of the following
stock in industry-related financial institutions:
1998 1997
Shares Amount Shares Amount
Federal Home Loan
Bank Dallas 2,040 $204,000 1,926 $192,600
Louisiana Independent
Bancshares, Inc. 600 150,000 600 150,000
-------- ------
$354,000 $342,600
======== ========
These securities are valued at cost. The stock in
Federal Home Loan Bank of Dallas is considered to be a
restricted security and is required to be maintained.
(4) Loans
Major classifications of loans are as follows:
(in thousands)
1998 1997
Real estate loans $ 7,032 $ 8,474
Commercial and industrial loans 7,128 2,560
Personal and consumer loans 2,381 2,897
All other loans (including overdrafts) 33 12
------- -------
16,574 13,943
Less: Unearned discount (47) (65)
Allowance for loan losses (173) (171)
------- -------
Loans, net $16,354 $13,707
======= =======
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 Bank also has a concentration in real
estate loans.
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
16) when required.
Loans on which the accrual of interest has been
discontinued or reduced amounted to $10,556 and $24,988 at
December 31, 1998 and 1997, respectively. If interest on those
loans had been accrued, such income would have approximated
$1,135, $2,250 and $24,801 for 1998, 1997 and 1996
respectively. The Bank did not recognize any interest income
on nonaccrual loans during 1998.
Changes in the allowance for loan losses are as follows:
(in thousands)
1998 1997 1996
Balance, beginning of period $171 $158 $161
Provision added to operations - 10 -
Loans charged off (11) (3) (9)
Recoveries 13 6 6
---- ---- ----
Balance, end of period $173 $171 $158
==== ==== ====
Management is of the opinion that the allowance for loan
losses account at December 31, 1998 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, 1998 and 1997:
(in thousands)
1998 1997
Land $ 266 $ 266
Bank buildings and improvements 768 761
Furniture, fixtures and equipment 750 635
----- -----
1,784 1,662
===== =====
Accumulated depreciation
and amortization (977) (988)
----- -----
$ 808 $ 674
===== =====
Depreciation expense for the periods ended December 31,
1998, 1997 and 1996, amounted to $89,314, $85,413, and
$84,826, 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, 1998 and 1997 is composed of the following:
(in thousands)
1998 1997
Other real estate owned,
acquisition value $ 230 $ 263
Less: Allowance for other
real estate losses - (33)
----- -----
Net value $ 230 $ 230
===== =====
Changes in the allowance for losses on other real estate
are as follows:
(in thousands)
1998 1997 1996
Balances, beginning of period $ 33 $ 13 $ 38
Provision charged to operations - 20 -
Sales of properties (33) - (25)
----- ----- -----
Balances, end of period $ - $ 33 $ 13
===== ===== =====
(7) Deposits
The aggregate amount of short-term jumbo time deposits,
each with a minimum denomination of $100,000, was
approximately $10,339,041 and $7,787,730 in 1998 and 1997
respectively.
At December 31, 1998, the scheduled maturities of
time deposits are as follows: (in thousands)
Year Ended December 31, Maturities
1999 $17,806
2000 2,488
2001 597
2002 51
2003 and thereafter 23
------
$20,965
======
Members of the board of directors had $3,448,827 of
deposits at December 31, 1998.
(8) Other Borrowed Funds
Teche Bank has borrowed monies from the Federal Home Loan
Bank of Dallas (FHLB) in the form of (5) advances. All
advances are secured by approximately $3,300,000 of mortgage
loans and mortgage-backed securities. At December 31, 1998,
the Bank had approximately $831,000 of unused lines of credit
with FHLB to be drawn upon as needed.
1998 1997
(in thousands)
Note payable to FHLB, fixed
interest at 5.82%, payable
in equal monthly installments
of $5 through March 1, 2008 $ 472 $ -
Note payable to FHLB, fixed
interest at 5.93%, payable
in equal monthly installments
of $3 through February 1, 2008
with a balloon payment of $421
payable on February 20, 2008 495 -
Note payable to FHLB, fixed
interest at 5.93%, payable
in equal monthly installments
of $7 through March 1, 2013 799 -
Note payable to FHLB, fixed
interest at 5.45%, payable
in equal monthly installments
of $6 through September 1, 2013
with a balloon payment of $699
payable on September 23, 2013 998 -
Note payable to FHLB, fixed
interest at 5.26%, payable
in equal monthly installments
of $4 through October 1, 2013 496 -
------ ------
$3,260 $ -
====== ======
Following are maturities of long-term debt:
(in thousands)
Amount
1999 $ 119
2000 126
2001 134
2002 142
2003 150
2004 - 2008 1,251
2009 - 2013 1,338
------
3,260
======
(9) 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 16 - Financial Instruments.
B. The Bank is not involved as a defendant in any legal
actions arising from normal business activities.
(10) 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.
(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, 1998, 1997 and 1996 are as follows:
(in thousands)
1998 1997 1996
Income taxes currently payable:
Federal $ 154 $ 171 $ 128
Deferred tax asset (liability) due
to timing differences 8 (15) 10
----- ---- -----
Total income tax expense $ 162 $ 156 $ 138
===== ===== =====
The effective tax rate of 29.3 percent in 1998, 30.2
percent in 1997, and 29.7 percent in 1996 differ from the
statutory rate of 34 percent principally because of
temporary differences between tax purposes and financial
reporting purposes.
A reconciliation of income tax expense at the statutory
rate to the effective rate follows:
Percent of Earnings
Before Taxes
1998 1997 1996
Computed at the expected statutory
rate 34.0% 34.0% 34.0%
Temporary differences giving rise
to deferred tax amounts 1.3 (2.8) 2.1
Temporary difference recognized
this year (1.6) - (10.1)
Other (4.4) (1.0) 3.7
----- ----- -----
Income tax expense-effective rate 29.3% 30.2% 29.7%
===== ===== =====
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 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)
1998 1997
Deferred tax asset $ - $ 11
Deferred tax liability (155) (164)
----- -----
Net deferred tax asset (liability) $(155) $(153)
===== =====
(12) Net income per share of common stock
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 1998,
1997 and 1996.
(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 1998, 1997 and 1996
were $59,353, $44,038, and $42,614, respectively.
(14) Related Party Transactions
A. At December 31, 1998 and 1997, certain officers,
directors and related companies were indebted to the Bank in
the aggregate amount of $1,137,211 and $1,432,691,
respectively. These loans were made at prevailing interest
rates.
B. The Bank had notes payable to stockholders in the
aggregate amount of $150,836 at December 31, 1995. The notes
were paid out during the year ended December 31, 1996.
Accordingly there was no interest expense during the year
ended December 31, 1997 or December 31, 1998. The note
accrued interest at a rate of 5% of principal and accrued
interest. Interest expense of $4,636 was incurred during
1996.
C. The Bank leases an automobile from one of the directors
in the amount of approximately $6,000 per year.
D. The Bank paid director fees to members of the board of
directors in the amount of $70,400, $55,600, and $42,900 for
1998, 1997 and 1996, respectively.
(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.
The Bank is subject to various regulatory capital
requirements administered by the federal banking agencies.
Failure to meet minimum capital requirements can initiate
certain mandatory and possibly additional discretionary
actions by regulators that, if undertaken, could have a direct
material effect on the Bank's financial statements. Under
capital adequacy guidelines and the regulatory framework for
prompt corrective action, the Bank must meet specific capital
guidelines that involve quantitative measures of the Bank's
assets, liabilities, and certain off-balance-sheet items as
calculated under regulatory accounting practices. The Bank's
capital amounts and classification are also subject to
qualitative judgements by the regulators about components,
risk weightings, and other factors.
Quantitative measures established by regulation to ensure
capital adequacy require the Bank to maintain minimum amounts
and ratios (set forth in the table below) of total and Tier I
capital (as defined in the regulations) to risk-weighted
assets (as defined), and of Tier I capital (as defined) to
average assets (as defined). Management believes, as of
December 31, 1998, that the Bank meets all capital adequacy
requirements to which it is subject.
As of December 31, 1998, the bank was categorized as well
capitalized under the regulatory framework for prompt
corrective action. To be categorized as well capitalized the
Bank must maintain a minimum total risk based, Tier I risk-
based, and Tier I leverage ratios as set forth in the table.
There are no conditions or events since that time that
management believes have changed the institution's category.
The Bank's actual capital amounts and ratios are also
presented in the table.
To Be Well
Capitalized Under
For Capital Prompt Corrective
Actual Adequacy Purposes Action Provision
Amount Ratio Amount Ratio Amount Ratio
As of December 31, 1998:
Total Capital
(to risk weighted
assets)
$3,685 18.7% $1,574 >=8% $1,967 >=10%
Tier I Capital
(to risk weighted
assets)
$3,512 17.8% $ 787 >=4% $ 1,180 >= 6%
Tier I Capital
(to average
assets
$3,512 7.9% $1,805 >=4% $2,256 >= 5%
As of December 31, 1997:
Total Capital
(to risk weighted
assets)
$3,296 19.4% $1,358 >=8% $1,698 >=10%
Tier I Capital
(to risk weighted
assets)
$3,124 18.4% $ 679 >=4% $1,019 >= 6%
Tier I Capital
(to average
assets
$3,124 8.4% $1,492 >=4% $1,865 >= 5%
(16) 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, 1998, the Bank was exposed to credit risk
on commitments to extend credit having contract amounts of
$2,279,481, summarized as follows: (in thousands)
Commitments to extend credit $ 2,156
Credit Card arrangements -
Standby letters of credit 123
--------
$ 2,279
========
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 credit worthiness 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
balance sheets. 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)
Carrying Fair
Value Value
December 31, 1998:
Financial assets:
Cash and due from banks, interest
bearing deposits with banks, and
Federal funds sold $ 3,149 $ 3,149
Securities available for sale 18,334 18,334
Securities to be held to maturity 5,583 5,617
Loans 16,354 16,253
Accrued interest receivable 357 357
Financial liabilities:
Deposit liabilities 38,097 38,135
Accrued interest payable 164 164
Other borrowed funds 3,260 3,267
Other liabilities 184 184
Off balance sheet instruments:
Commitments to extend credit - 2,156
Credit card arrangements - -
Stand by letter of credit - 123
December 31, 1997:
Financial assets:
Cash and due from banks, interest
bearing deposits with banks, and
Federal funds sold $ 2,683 $ 2,683
Securities available for sale 14,759 14,759
Securities to be held to maturity 4,477 4,498
Loans 13,708 13,622
Accrued interest receivable 314 314
Financial liabilities:
Deposit liabilities 33,721 33,754
Accrued interest payable 137 137
Other liabilities 205 205
Off balance sheet instruments:
Commitments to extend credit - 1,273
Credit card arrangements - -
Stand by letter of credit - 205
(17) Parent Company Only Financial Statements
BALANCE SHEETS
December 31, 1998 and 1997
(in thousands)
1998 1997
ASSETS
Current assets:
Cash $ 1 $ 1
Investment in Teche Bank & Trust Co. 3,568 3,232
Other assets 9 9
----- -----
Total assets $3,578 $3,242
====== ======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities: $ - $ -
--- ---
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 2,064 1,719
Treasury stock (19) (19)
Accumulated other comprehensive income 108 117
----- -----
Total stockholders' equity 3,578 3,242
----- -----
Total liabilities and
stockholders' equity $3,578 $3,242
====== ======
STATEMENTS OF INCOME
Years Ended December 31, 1998, 1997 and 1996
(in thousands)
1998 1997 1996
Income:
Income from subsidiary $345 $321 $136
Interest and dividends on corporate
securities 42 42 193
Other income 1 1 2
--- --- ---
Total income 388 364 331
--- --- ---
Operating expenses:
Legal and professional fees - - -
FDIC and state assessments 1 1 1
Miscellaneous expense - - -
Interest on stockholder loans - - 5
--- --- ---
Total operating expenses 1 1 6
--- --- ---
Net income $387 $363 $325
==== ==== ====
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Years Ended December 31, 1998, 1997 and 1996
(in thousands)
Accumulated
Common Stk Other
Treas. Stk Retained Comprehensive
Surplus Earnings Income Total
------- ----- ------ -------
BALANCES,
DECEMBER 31, 1995 $1,405 $1,110 17 $2,532
Net income - 325 - 325
Other Comprehensive Income,
Net of income tax of $23
Unrealized gain on securities,
net of reclassification
adjustment of $0 - - 27 27
------- ----- ------ -------
Total Comprehensive Income - 325 27 352
Cash Dividend,
$1.35 per share - (37) - (37)
------- ----- ------ -------
BALANCES,
DECEMBER 31, 1996 $1,405 $1,398 $ 44 $2,847
------- ----- ------ -------
Net income - 363 - 363
Other Comprehensive Income,
Net of income tax of $61
Unrealized gain on securities,
net of reclassification
adjustment of $0 - - 73 73
------- ----- ------ -------
Total Comprehensive Income - 363 73 436
Cash Dividend,
$1.50 per share - (41) - (41)
------- ----- ------ -------
BALANCES,
DECEMBER 31, 1997 $1,405 $1,720 $117 $3,242
------- ----- ------ -------
Net income - 387 - 387
Other Comprehensive Income,
Net of income tax of $56
Unrealized gain on securities,
net of reclassification
adjustment of $1 - - (10) (10)
------- ----- ------ -------
Total Comprehensive Income - 387 (10) 377
Cash Dividend,
$1.50 per share - (41) - (41)
------- ----- ------ -------
BALANCES,
DECEMBER 31, 1998 $1,405 $2,066 $107 $3,578
====== ===== ====== =======
STATEMENTS OF CASH FLOWS
Years Ended December 31, 1998, 1997 and 1996
(in thousands)
1998 1997 1996
Cash flows from operating activities:
Net income $ 387 $ 363 $ 325
Adjustments to reconcile net income to
net cash provided by operating
activities:
Equity in undistributed earnings of
subsidiary bank (345) (321) (136)
Changes in:
Due to subsidiary - - -
Other assets (1) (1) (2)
Accrued interest payable - - -
---- ---- -----
Net cash provided by operating
activities 41 41 187
---- ---- ----
Cash flows from financing activities:
Dividends paid (41) (41) (37)
Decrease in notes payable - - (151)
---- ---- ----
Net cash used in financing
activities (41) (41) (188)
---- ----- ----
Net increase (decrease)
in cash - - (1)
Cash, beginning of period 1 1 2
---- ---- ----
Cash, end of period $ 1 $ 1 $ 1
==== ==== ====
(18) Year 2000 (unaudited)
The Bank relies on automation to manage information.
Since the earliest days of electronic computers, programmers
have used two digits to represent the year in date fields
(YYMMDD). In the 1960s when this convention became standard,
the two-digit representation made economic sense because it
economized computer memory and saved storage space. The Year
2000 problem exists because a two-digit representation of the
year will be interpreted in many applications to mean the year
1900, not 2000, unless the date or program logic is modified.
Without modification, many date sensitive software
applications will provide illogical or erroneous data.
The Bank is utilizing both internal and external
resources to identify, test and correct systems for "year
2000" compliance. It is anticipated that, for all critical
systems, testing and program changes will be completed by June
30, 1999. Management has assessed the "year 2000" compliance
expense and related potential effect on the Bank's earnings,
and the board has determined that approximately $250,000 in
total will be expended on the year 2000 project. During the
year ended December 31, 1998, $236,000 was expended on the
purchase of a new check sorter and the conversion of the
Bank's main application software. These costs were primarily
capital expenditures which will be depreciated over the next
several years. The Bank has addressed its known internal
risks (computer hardware and software) and has considered the
effect of the year 2000 on their major customers. The Bank is
maintaining a list of major customers and is monitoring their
progress. The Bank is in the process of preparing a
contingency plan for addressing possible worst case scenarios.
This plan should be complete by June 30, 1999 and will be
continually updated from that date to year-end.
SUPPLEMENTARY INFORMATION
TECHE BANCSHARES, INC. AND SUBSIDIARY
Consolidated Schedules of Other Operating Expenses
Years Ended December 31, 1998, 1997 and 1996
(in thousands)
1998 1997 1996
Advertising $ 21 $ 20 $ 23
Armored car service 4 4 4
Audits and examinations 18 18 18
ATM expense 23 21 22
Cash short 3 4 4
Club account fees 20 18 15
Collections 2 3 2
Committee fees 3 2 2
Conventions and seminar 9 7 10
Correspondent bank service charges 34 38 28
Courier service 3 2 3
Directors' fees 70 56 43
Donations 3 4 3
Dues and subscriptions 3 4 5
FDIC and state assessments 19 18 12
Insurance 29 33 32
Lease expense 6 6 5
Legal and professional fees 4 8 1
Miscellaneous 6 10 10
Office expense 44 36 32
Postage and freight 21 27 23
Other taxes and licenses 1 1 1
Travel and entertainment 9 7 6
ORE Devaluation - 21 -
---- ---- ----
$355 $368 $303
==== ==== ====
CONSOLIDATING SCHEDULES
TECHE BANCSHARES, INC. AND SUBSIDIARY
Consolidating Balance Sheet
December 31, 1998
(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 $ 1,574 $(1) $1 $1,574
Interest bearing deposits 74 - - 74
Securities available
for sale 18,333 - - 18,333
Securities to be held
to maturity 5,583 - - 5,583
Other securities 354 - - 354
Federal funds sold 1,500 - - 1,500
Loans 16,574 - - 16,574
Less: Allowance for
loan losses (173) - - (173)
Unearned discount
on loans (47) - - (47)
Bank premises, furniture,
fixtures and equipment 808 - - 808
Accrued interest receivable 357 - - 357
Other real estate owned 230 - - 230
Investment in subsidiary - (3,568) 3,568 -
Other assets 116 (9) 9 116
----- ---- --- -----
Total assets $45,283 $(3,577) $3,577 $45,283
======= ======== ====== =======
LIABILITIES AND STOCKHOLDERS' EQUITY
DEPOSITS
Non-interest demand $ 6,795 $ - $ - $ 6,795
Interest-bearing -
NOW and MMDA accounts 6,744 - - 6,744
Savings 3,593 - - 3,593
Time,$100,000 and over10,339 - - 10,339
Other time 10,626 - - 10,626
------ --- --- ------
Total deposits 38,097 - - 38,097
Accrued interest payable 164 - - 164
Other borrowed funds 3,260 - - 3,260
Other liabilities and
accrued expenses 184 10 - 194
------ --- --- ------
Total liabilities 41,705 10 - 41,715
------ --- --- ------
STOCKHOLDERS' EQUITY
Common stock 281 281 281 281
Surplus 1,144 1,519 1,144 1,519
Retained earnings 2,064 1,660 2,064 1,660
Less: 200 shares of
treasury stock (19) - (19) -
Net unrealized gain
on securities
available for
sale, 108 108 108 108
----- ---- ----- -----
Total stockholders'
equity 3,578 3,568 3,578 3,568
----- ----- ----- -----
Total liabilities and
stockholders'
equity $45,283 $3,242 $3,242 $45,283
======= ====== ====== =======
TECHE BANCSHARES, INC. AND SUBSIDIARY
Consolidating Statement of Income
For the Year Ended December 31, 1998
Teche Teche
Bancshares, Elimination Teche Bank and
Inc. and Entries Bancshares, Trust
Subsidiary Dr (Cr) Inc. Company
INTEREST INCOME
Interest and fees
on loans $1,483 $ - $ - $1,483
Interest on investment securities -
Interest on securities
available for sale 913 - - 913
Interest on securities
held to maturity 277 - - 277
State and municipal
obligations 54 - - 54
Interest and dividends on
other securities 15 43 43 15
Interest on federal
funds sold 132 - - 132
Interest on deposits
in banks 9 - - 9
----- --- --- -----
Total interest income 2,883 43 43 2,883
----- --- --- -----
INTEREST EXPENSE
Interest on deposits 1,269 - - 1,269
Interest on federal
funds purchased - - - -
Interest on borrowed funds 114 - - 114
Interest on securities
repurchased - - - -
Other interest 3 - - 3
--- --- --- ----
Total interest expense 1,386 - - 1,386
--- --- --- -----
Net interest income 1,497 43 43 1,497
Provision for loan losses - - - -
----- --- --- -----
Net interest income after
provision for loan
losses 1,497 - - 1,497
OTHER INCOME
Service charges, collection
and exchange charges 272 - - 272
Commissions income 34 - - 34
ATM income 13 - - 13
Recovery of investment loss 2 - - 2
Net other real estate gain 10 - - 10
Other operating revenue 32 - - 32
---- --- --- ----
Total other income 363 - - 363
---- --- --- ----
Income before other
expenses 1,860 43 43 1,860
OTHER EXPENSES
Salaries and employee
benefit 677 - - 677
Occupancy expenses 194 - - 194
Furniture and equipment 36 - - 36
Data processing expenses 39 - - 39
Net other real estate exp. 10 - - 10
Other operating expenses 355 - 1 356
---- ---- ---- -----
Total other expenses 1,311 - 44 1,312
----- ---- ---- -----
Income before income tax
expense and equity
in earnings
of subsidiary 549 43 44 550
INCOME TAX EXPENSE (162) - - (162)
------ ---- ---- -----
Income before equity
in earnings
of subsidiary 387 43 44 388
EQUITY IN EARNINGS
OF SUBSIDIARY - 345 345 -
----- ----- ----- -----
Net income $ 387 $ 388 $ 388 $ 388
===== ===== ===== =====
TECHE BANCSHARES, INC. AND SUBSIDIARY
Consolidating Statement of Cash Flows
For the Year Ended December 31, 1998
Teche Teche
Bancshares, Elimination Teche Bank and
Inc. and Entries Bancshares, Trust
Subsidiary Dr (Cr) Inc. Company
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 387 $(388) $ 387 $ 388
Adjustments to reconcile net income to net
cash provided by operating activities -
Equity in earnings
of subsidiary - 345 (345) -
Depreciation of
bank premises
and equipment 89 - - 89
Net loss on other
real estate owned (9) - - (9)
Decrease in
other assets 4 - - 4
Increase in accrued
interest receivable (43) - - (43)
Increase (decrease)
in accrued
interest payable 9 - - 9
Increase in other
liabilities (4) - - (4)
----- --- --- -----
Net cash provided
by operating
activities 433 (43) 42 434
CASH FLOWS FROM INVESTING ACTIVITIES
Increase in interest-bearing
deposits in banks (71) - - (71)
Increase in federal
funds sold (450) - - (450)
Proceeds from sales of
securities available
for sale 1,200 - - 1,200
Proceeds from maturities of securities
available for sale 8,361 - - 8,361
Proceeds from maturities of securities
held to maturity 4,776 - - 4,776
Purchases of securities to
be held to maturity (4,625) - - (4,625)
Purchases of securities
available for sale (14,415) - - (14,415)
Net increase in loans (2,647) - - (2,647)
Capital expenditures for bank
premises and equipment (223) - - (223)
Decrease in other
real estate owned 1 - - 1
Proceeds from the sale of
other real estate owned 10 - - 10
------ ---- ---- ------
Net cash used in
investing
activities (8,083) - - (8,083)
------ ---- ---- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in -
Demand deposits 159 - - 159
NOW and MMDA 1,220 - - 1,220
Savings deposits 2 - - 2
Time deposits $100,000
and over 1,451 - - 1,451
Other time 1,544 - - 1,544
Proceeds from long-term
debt 3,325 - - 3,325
Repayment of long-term
debt (65) - - (65)
Dividends paid (41) 43 (42) (42)
------ ---- ---- -----
Net cash provided
by (used in)
financing
activities 7,595 43 (42) 7,594
------ ---- ---- -----
Net increase (decrease)
in cash
and cash
equivalents (55) - - (55)
CASH AND CASH EQUIVALENTS,
beginning of year 1,630 (1) 1 1,630
------- ----- ----- -------
CASH AND CASH EQUIVALENTS,
end of year $ 1,575 $ (1) $ 1 $ 1,575
======= ===== ==== =======
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
63 Retired Sept., 1969 1,544 5.5%
to Present
James B. Bulliard, Sr.
St. Martinville, LA
63 Owner & GM Sept., 1969 3,436 12.3%
Manager Food to Present
Processor
Gaston L. Dautreuil, Jr.
St. Martinville, LA
68 Owner Sept., 1969 2,767 9.9%
Electrical to Present
Contractor
Larry C. Degeyter
St. Martinville, LA
57 Owner, June, 1981 728 2.6%
Building to Present
Contractor
Alcee J. Durand, Jr.
St. Martinville, LA
41 President March, 1991 890 3.1%
Banking to Present
Charles A. Fuselier
St. Martinville, LA
57 Sheriff June, 1981 403 1.4%
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
- -------- --- ---------- -------- ------------ -----------
Hubert Hulin, Sr.
St. Martinville, LA
80 Retired June, 1981 1,800 6.4%
to Present
Lawrence P. Melancon
St. Martinville, LA
83 Retired Sept., 1969 708 2.5%
to Present
Murphy Oubre
St. Martinville, LA
72 Rice Sept., 1969 824 2.9%
Farmer to Present
Stanley D. Stockstill
St. Martinville, LA
84 Retired March, 1982 511 1.8%
to Present
Darnell E. Fontenot
New Iberia, LA
60 Owner, Aug., 1996 220 .7%
Mobile to Present
Home Co.
Harris J. Champagne, Jr.
New Iberia, LA
36 Insurance October, 1996 192 .6%
Sales to Present
Melvin Douet
St. Martinville, LA
53 Owner, June, 1996 365 1.3%
Douet to Present
Motors, Inc.
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. 40 President/ - Banker more
CEO than 5 years
Brian Friend 39 Cashier - CPA, Banker
Vice-President more than
5 years
Charles M. Durand 36 Vice- - Banker more
President than 5 years
Ave Laperouse 41 Assistant - Banker less
Vice President than 5 years
Jackie C. Leblanc 45 Assistant - Banker more
Vice President than 5 years
Jean L. Potier 55 Assistant - Banker more
Vice-President than 5 years
Al Viator 44 Assistant - Banker more
Vice-President than 5 years
Ruth Sweeney 50 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 $77,178
2 Vice-President 83,992
5 Assistant Vice-Presidents 139,247
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 1998, the Bank
contributed $59,353 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. 1,544 5.5%
James B. Bulliard, Jr.
St. Martinville, LA
Common Stock U.S.A. 3,436 12.3%
Gaston L. Dautreuil, Jr.
St. Martinville, LA
Common Stock U.S.A. 2,767 9.9%
Hubert Hulin, Sr.
St. Martinville, LA
Common Stock U.S.A. 1,800 6.4%
Security Ownership of Management:
Title of Type of Shares Percent
Group Class Ownership Owned of Class
- ---------------------- ----- --------- ----- --------
Directors and Officers Common Stock 14,388 51.5%
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 12/31/98 as of 12/31/98 Rate
- ------------ ---------- --------- -------------- ------
Tilden A. Bonin, Jr.
Director $107,070 $ 101,780 8.43%
Harris Champagne, Jr.
Director 13,483 7,076 8.99%
Gaston L. Dautreuil, Jr.
Director 216,318 109,592 7.15%
Larry C. Degeyter
Director 314,479 54,882 8.45%
Melvin P. Douet
Director 383,800 267,590 9.75%
Alcee J. Durand, Jr.
Director 66,136 45,022 7.40%
Charles Fuselier
Director 594,738 531,433 10.50%
Lawrence Melancon
Director 28,687 15,030 7.00%
Stanley D. Stockstill
Director 5,230 4,806 12.90%
Total outstanding at December 31, 1998 $1,137,211
=========
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, 1998.
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 50
(12) Computation of Ratios 19
(13) Annual Report to Security Holders 29-65
(21) Subsidiary of Registrant 73
(23) 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 30, 1999 By:/s/ Alcee J. Durand, Jr.
----------------------- ---------------------
Alcee J. Durand, Jr.
President/Secretary
Pursuant to the requirements of the Securities Exchange Act of
1934, this report 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, Jr.By:/s/Hubert Hulin, Sr.
__________________________ __________________________
Harris J. Champagne, Jr.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/Melvin Douet By:/s/Stanley D. Stockstill
__________________________ __________________________
Melvin Douet Date Stanley D. Stockstill Date
Director Director
By:/s/Alcee J. Durand, Jr.
__________________________
Alcee J. Durand, Jr. Date
Director