SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Fiscal Year Ended December 31, 2002 Commission File
Number 2-84047
Peoples Bancshares of Pointe Coupee Parish, Inc.
(Exact name of registrant as specified in its charter)
Louisiana 72-0995027
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
805 Hospital Road 70760
New Roads, Louisiana (Zip Code)
(Address of principal executive offices)
Registrant's Telephone Number, including area code: (225) 638-3713
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $2.50 Par Value
(Title of Class)
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
State the aggregate market value of the voting stock held by
nonaffiliates of the registrant: $9,296,583
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Common stock, $2.50 Par Value, 308,977 shares outstanding as of March
31, 2003.
Documents Incorporated by Reference
Document Part of Form 10-K
"Consolidated Financial Statements for Part I and Part II
Years Ended December 31, 2002, 2001 and
2000 and Independent Auditors' Report"
Item 1: Business
Peoples Bancshares of Pointe Coupee Parish, Inc. (the Corporation) was
incorporated under the laws of the State of Louisiana in 1983. On December
9, 1983, Peoples Bank and Trust Company (the Bank) was reorganized as a
subsidiary of the Corporation. Prior to December 9, 1983, the corporation
had no activity. The Corporation is currently engaged, through its
subsidiary, in banking and related business. The Bank is the
Corporation's principal asset and primary source of income.
The Bank
The Bank incorporated under the State Banking Laws in 1979 and
received its charter on March 31, 1980. It is in the business of gathering
funds by accepting checking, savings, and other time-deposit accounts and
reemploying these by making loans and investing in securities and other
interest bearing assets. The Bank is a full service commercial bank. Some
of the major services which it provides include checking, NOW accounts,
money market investments, money market checking, savings and other time
deposits of various types, loans for business, agriculture, real estate,
personal use, home improvement, automobile, and a variety of other types of
loans and services including letters of credit, safe deposit rental, bank
money orders, cashiers checks, credit cards, and wire transfers.
The State of Louisiana and various agencies of Parish (County)
Government deposits public funds with the Bank. As of December 31, 2002,
$2,109,727 were on deposit representing 5.81% of total deposits
outstanding. Of this total, $1,507,602 represented demand deposits,
$602,125 were time deposits and $.00 were savings deposits. The weighted
average interest rate on these deposits was 1.29%. The maturity of these
deposits range from one day to twelve months.
The Bank's general and primary market area is in Pointe Coupee Parish
which has a population of approximately 23,000. Population of Pointe
Coupee has experienced virtually no growth since inception of the bank.
The Bank faces keen competition from three other banks operating in
nine locations throughout the parish. The largest bank in the parish as
of December 31, 2002 was Regions Bank of Alabama, New Roads Branch, which
had in excess of $50 billion in assets nationwide. Regions Bank of Alabama
acquired the former Bank of New Roads in August of 1994. The other banks
operating in Pointe Coupee are Guaranty Bank and Trust Company which had
total assets of approximately $47 million as of December 31, 2002 and
Cottonport Bank, which opened a branch in 1998 with assets of approximately
$200 million on December 31, 2002. Additional competition for deposits and
loans comes from banks and non-banks (credit unions, brokerage houses,
etc.) in Baton Rouge, the capital city of Louisiana, which is 35 miles
from New Roads.
Supervision and Regulation
The Bank is subject to regulation and regular examinations by the
State Banking Department and by the Federal Deposit Insurance Corporation.
Applicable regulations relate to reserves, investments, loans, issuance of
securities, establishment of branches and aspects of its operations.
The Corporation is a bank holding company within the meaning of the
Bank Holding Company Act of 1956, as amended (the Act), and is thereby
subject to the provisions of the Act and to regulation by the Board of
Governors of the Federal Reserve System (the Board).
The Act requires the Corporation to file with the Board an annual
report containing such information as the Board may require. The Board is
authorized by the Act to examine the Corporation and all its activities.
The activities that may be engaged in by the Corporation and its
subsidiary are limited by the Act to those so closely related to banking
or managing or controlling banks, the Board must consider whether its
performance by an affiliate of a holding company can reasonably be
expected to produce benefits to the public, such as greater convenience,
increased competition or gains in efficiency that out-weigh possible
adverse effects, such as undue concentration of resources, decreased or
unfair competition, conflicts of interest, or unsound banking practices.
The Board has adopted regulations implementing the provisions of the Act
with respect to the activities of bank holding companies. Such regulations
reflect a determination by the Board that the following activities are
permissible for bank holding companies: (1) making, for its own account or
for the account of others, loans such as would be made, for example, by a
mortgage, finance or factoring company; (2) operating as an industrial
bank; (3) servicing loans; (4) acting as a fiduciary; (5) acting as an
investment trust or a real estate investment trust; (6) leasing personal
or real property, where the lease is to serve as the functional equivalent
of an extension of credit to the lessee of the property; (7) investing in
community welfare corporations or projects; (8) providing bookkeeping and
data processing services for a bank holding company and its subsidiaries,
or storing and processing certain other banking, financial or related
economic data; (9) acting as insurance agent or broker with respect to
certain kinds of insurance, principally insurance issued in connection
with extensions of credit by the holding company or any of its
subsidiaries; (10) underwriting credit life and credit accident and health
insurance related to extensions of credit; (11) providing courier services
for documents and papers related to banking transactions; (12) providing
management consulting advice to non-affiliated banks; and (13) selling
money orders, travelers checks and U.S. Savings Bonds. In each case, the
Corporation must secure the approval of the Board prior to engaging in any
of these activities.
Whether or not a particular non-banking activity is permitted under
the Act, the Board is authorized to require a holding company to terminate
any activity, or divest itself of any non-banking subsidiary, if in its
judgement the activity or subsidiaries would be unsound.
Under the Act the Board's regulations, a bank holding company and its
subsidiaries are prohibited from engaging in certain tie-in arrangements in
connection with any extension of credit or provision of any property or
services.
The Board of Directors of the Corporation has no present plans or
intentions to cause the Corporation to engage in any substantial business
activity which would be permitted under the Louisiana Act but which is not
permitted to the Bank; however, a significant reason for formation of the
one-bank holding company is to take advantage of the additional
flexibility afforded by that structure if the Board of Directors of the
Corporation concludes that such action would be in the best interest of
stockholders.
With certain exceptions, the Bank is restricted by Sections 22 and 23A
of the Federal Reserve Act and Section 18(j) of the Federal Deposit
Insurance Corporation Act from extending credit or making loans to or
investments in the Corporation.
Statistical Information
The following tables contain additional information concerning the
business and operations of the Registrant and its subsidiary and should be
read in conjunction with the Consolidated Financial Statements of the
Registrant and Management's Discussion and Analysis of Operations.
I. Distribution of Assets, Liabilities and Stockholders' Equity
Interest Rates and Interest Differential
(In Thousands)
2002 2001
Amount Amount
Average Earned Yield/ Average Earned Yield/
Balance or Paid Rate Balance or Paid Rate
------- ------- ------ -------- ------- ------
Assets:
Interest earning assets
Loans and Leases $41,275 $ 2,876 6.97% $39,084 $ 3,308 8.46%
Taxable securities 826 48 5.81% 3,175 199 6.27%
Tax exempt securities
(tax equivalent yields) 716 38 8.26% 606 32 8.26%
Federal funds sold and
time deposits with
other banks 3,965 83 2.09% 3,448 138 4.00%
------- ------- ----- ------- ------- ------
Total interest
earning assets $46,782 3,045 6.51% 46,313 3,677 7.94%
------- ------- ----- ------- ------- ------
Non-interest earnings assets:
Cash and due from banks $ 1,465 1,362
Bank premises and equipment 548 577
Other assets 1,225 1,389
Allowance for Loan Losses (712) (731)
------- -------
Total assets $49,308 $48,910
======= =======
LIABILITIES AND
STOCKHOLDERS' EQUITY
Interest bearing Liabilities:
Deposits
Savings account $ 6,363 107 1.68% $ 5,906 172 2.91%
NOW accounts 1,913 98 5.12% 1,786 194 10.86%
Money market
investment accounts 3,935 8 0.20% 4,406 14 0.32%
Other time deposits 16,909 491 2.90% 19,126 1,021 5.34%
Federal funds purchased
and securities sold under
agreements to repurchase 38 1 0.00% 0 0 0.00%
Other borrowed funds 3,971 85 2.14% 1,975 92 4.66%
------ ------- ------ ------ ----- ------
Total interest bearing
Liabilities $33,129 790 2.38% 33,199 1,493 4.50%
------ ------- ------ ------
Non-interest
bearing Liabilities
and stockholders' equity:
Demand deposits $ 9,392 6,757
Other Liabilities 445 557
Stockholders' equity 6,342 8,397
------- -------
Total Liabilities and
stockholders' equity $49,308 $48,910
======= =======
Net interest income $ 2,255 $ 2,184
======= ======
Margin Analysis
Interest Income/earnings assets 6.51% 7.94%
Interest Expense/earnings assets 2.38% 4.50%
------ ------
Net interest income/earnings assets 4.13% 3.44%
====== ======
2002 Compared with 2001 2001 Compared with 2000
Variance due to Variance due to
------------------------- ---------------------------
Volume Rate Net Volume Rate Net
------ ------ ------ ------ ----- -----
INTEREST INCOME
Loans $ 198 (633) (435) $ 577 (687) (130)
Taxable securities (137) (14) (151) (84) (19) (102)
Tax exempt securities 9 - 9 1 (4) (3)
Federal funds sold 18 (73) (55) 93 (41) 51
----- ----- ----- ----- ----- -----
Total interest
earning assets 88 (720) (632) 567 (751) (184)
----- ----- ----- ----- ----- -----
INTEREST EXPENSE
Savings accounts 12 (77) (65) 19 (1) 18
NOW accounts 13 (109) (96) (35) (15) (50)
Money market (2) (4) (6) 4 (3) 1
Other time deposit (107) (423) (530) 126 (58) 68
Federal funds purchased - - - (6) (6) (12)
Other borrowed funds (15) 8 (7) (19) (28) (47)
----- ----- ----- ------ ----- -----
Total interest bearing
liabilities (99) (605) (704) 89 (111) (22)
------ ----- ----- ------ ----- -----
Net interest income $ 187 (115) 72 $ 477 (639) (162)
====== ====== ===== ====== ===== =====
II. Investment Portfolio
FAIR FAIR
COST VALUE COST VALUE
2002 2002 2001 2001
---------- --------- --------- --------
US Treasury Securities
And obligations of other
Governmental entities $ 118,245 121,044 1,418,009 1,424,814
Tax - free municipal bonds 622,500 673,147 670,314 695,848
Mortgage - backed securities 352,907 363,248 562,615 566,923
___________ __________ __________ _________
$ 1,093,652 $1,157,439 2,650,938 2,687,585
=========== ========== ========== ==========
For year ended December 31, 2002
Scheduled Maturity - at fair value
Within One Greater Than Greater Than Greater
Year 1 but within 5 but within than 10
five years ten years years
---------- ----------- ------------ -----------
U.S. Treasury Securities and
obligations of other
governmental entities $ -0- $121,044 $ -0- $ -0-
Tax - free municipal bonds -0- -0- 547,550 125,597
Mortgage - back securities 62,327 -0- 73,558 227,363
$ 62,327 $121,044 $ 621,108 $ 352,960
========== ========= ========= ==========
III. Loan Portfolio
Major Classification of loans are summarized as follows:
(in thousands)
For year ended Dec. 31, 2002 2001
Real Estate $ 9,202 $ 7,539
Commercial 20,629 16,821
Agricultural 5,774 6,281
Individual 6,476 6,397
Other 1,194 570
------- -------
TOTAL LOANS: $43,275 $37,608
Less Unearned Discount - -
------- -------
Net Loans $43,275 $37,608
Loan Analysis of Principal Subject to Rate Change
December 31, 2002
1 Year Over 1 Year Over 5
or Less Less than 5 Years
1. Commercial, Financial,
Agricultural, Real Estate,
Consumer and Other $32,700,160 $ 9,930,758 $ 644,082
Average Rate 6.02% 8.59% 8.63%
Non-performing Loans and Other Problem Assets
It is management's policy to discontinue accrual of interest on loans
where there is reasonable doubt as to collectibility. The policy to place
loans on non-accrual status is to normally discontinue accrual of interest
when the loan is delinquent 90 days or more, or where circumstances
indicate that collection of principal or interest is doubtful, unless the
obligation is secured (1) by mortgage on real estate or pledge of
securities that have a realizable value sufficient to pay the debt in full;
or (2) by guarantee of a financially responsible party. The following
tables presents the non-performing loans and other problem assets at
December 31, 2002 and 2001. Assets acquired through the default of loans
are recorded at the lower of the outstanding loan amount or fair market
value of the assets acquired at the time of foreclosure. Reductions from
outstanding loan amounts to fair market value are charged against the
reserve for possible loan losses. Subsequent adjustments to market
valuations are charged to operating expense.
2002 2001
-------- --------
NON-ACCRUAL LOANS $278,652 $266,144
Restructured Loans 89,282 89,282
Other Real Estate -0- 114,822
-------- --------
TOTAL NON-ACCRUAL & ORE $369,206 $430,248
======== ========
Loans Over 90-days past due and still accruing interest:
2002 2001
--------- -----------
Commercial $ -0- $ 21,760
Agriculture 48,195 127,398
Student -0- -0-
Consumer 24,158 103,809
Real Estate -0- 36,550
--------- ---------
TOTAL OVER 90-DAYS $ 72,353 $ 289,517
========== ==========
The effect of non-accruing loans on interest income for 2002 was
$10,778. The effect of restructured loans on interest income for 2002 was
$0.00. Interest recognized on such loans for the year approximated $10,500.
At December 31, 2002, there were no commitments to lend additional
funds to debtors whose loans were considered to be non-performing.
All loans listed above are subject to constant attention by management
and their progress is reviewed monthly.
At the present time, management does not track loan concentrations by
particular industries, but rather by the grouping of types of loan, i.e.,
Agriculture, Real Estate, Consumer and Commercial. We attempt to avoid any
undue concentration in any particular sector.
IV. Summary of Loan Loss Experience
Changes in the allowance for loan losses were as follows:
2002 2001
----------- --------
Balance, January 1, $ 708,724 825,337
Provision charged to Operations -0- 4,433
Loans charged off (25,469) (153,049)
Recoveries 38,744 32,003
----------- -------
Balance December 31, $ 721,999 708,724
=========== =======
In determining the adequacy of the loan loss reserves, management uses
the following formulas: 100% of loans classified loss, 50% of doubtful
loans, 5% of substandard loans, 0% of savings loans and government
guaranteed loans and 1.5% of all other loan types. This analysis is
performed on a quarterly basis.
V. Deposits
Deposits are summarized below:
December 31,
2002 2001
--------------------------
Demand deposits accounts $ 7,250,018 $ 7,388,169
NOW accounts 5,558,112 6,310,655
Savings accounts 6,541,412 6,149,171
Time accounts 16,980,177 17,580,358
------------ -----------
$36,329,719 $37,428,353
============ ===========
Included in deposits are approximately $5,502,000 and $5,228,500 of
certificates of deposit in excess of $100,000 at December 31, 2002 and
2001, respectively.
Certificate of Deposit Maturity and Rate Analysis
As of December 31, 2002:
0-90 91-364 1 Year Over
Days Days 5 Years 5 Years
Total Certificates $7,170,310 $7,331,928 $2,477,939 $ -0-
of Deposit
Average Rate 2.19% 2.52% 3.99% ---
VI. Return on Equity and Assets
ITEM 1: 2002 2001
----- ------
Return on assets 1.7 1.8
Return on equity 9.5 10.0
Dividend payout ratio .3 .4
Equity to assets ratio 17.6 17.9
VII. Short-Term Borrowings
The bank has established a line-of-credit for approximately
$17,750,000 with the Federal Home Loan Bank (FHLB) to provide an additional
source of operating capital. The current advances, which totaled
$7,003,220 and $2,332,000 at December 31, 2002 and 2001, respectively, bore
interest at variable rates ranging from 1.42% to 3.84%.
This line of credit is secured by $435,900 of FHLB stock owned by the
Bank and a portion of the loan portfolio. The bank has also utilized
$1,620,000 of the line of credit with the FHLB to acquire letters of credit
to secure public deposits.
ITEM 2: Properties
The main office of the Corporation and Bank are presently located in a
two-story office building on State Highway 3131, New Roads, Louisiana. The
bank owns one branch located on State Highway 78, Livonia, Louisiana, which
is approximately 13 miles from the main office. Additionally, in 1994 the
bank purchased from its Other Real Estate portfolio the property directly
behind the bank for $75,000. This property was formerly an insurance
building and lot. It was acquired in an exchange of properties from Farm
Bureau Insurance. All locations are owned free of any mortgages or liens.
ITEM 3: Legal Proceedings
There is no threatened or pending litigation against the Corporation,
the Bank, or its officers.
ITEM 4: Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders during the
fourth quarter of the fiscal year covered by this report.
PART II
ITEM 5: Market Price Dividends on the Registrant's Common Equity and
Related Stockholder Matters
The primary market area for the Corporation stock is Pointe Coupee
Parish with Peoples Bank and Trust Company acting as registrar and transfer
agent. There were approximately 575 shareholders of record as of December
31, 2002. The stock of the Corporation is not listed on any security
exchange.
Due to lack of an active trading market, the Corporation does not have
available information to furnish a high and low sales price on the range of
bid and asked quotations for its stock. Based on limited inquiries by
management, it is believed that less than 3,000 shares traded in 2002.
There can be no assurance that the limited inquiries adequately reflect the
marketability of the stock.
In March 2002 Peoples Bancshares declared a special dividend of $.55
per share to all stockholders of record as of March 31, 2002, totaling
$169,937. Additionally, In December of 2002, Peoples Bancshares declared a
dividend of $.45 per share to all stockholders of record as of November 15,
2002, totaling $139,040.
The Bank, as a state chartered Bank, is subject to the dividend
restrictions set forth by the Commissioner. Under such restrictions, the
Bank may not, without the prior approval of the Commissioner, declare
dividends in excess of the sum of the current year's retained net earnings
(as defined) plus the retained net earnings (as defined) from the prior
year.
Management, will for the foreseeable future, approach the payment of
dividends on an annual basis and according to the profitability of the bank
in that particular year, as well as considering the long-term capital needs
of the bank in the future.
ITEM 6: Selected Financial Data
Condensed Consolidated Statement of Income
For Year Ended Dec. 31, 2002 2001 2000 1999 1998
---------- --------- --------- --------- ---------
Interest Income 3,045,272 3,676,403 3,859,137 3,387,916 3,465,179
Interest Expense 789,861 1,492,736 1,513,905 1,091,748 1,131,970
Net Interest Income 2,255,411 2,183,667 2,345,232 2,296,168 2,333,209
Credit(Provisions)for
Loan Losses -0- (4,433) -0- 57,629 46,000
Other non-interest income
and expenses net (946,326) (892,405) (958,162) (1,049,184) (1,004,289)
Income Tax
(Expense) benefit (429,759) (425,182) (472,658) (416,321) (452,387)
Net Income (Loss) 879,326 861,647 914,412 888,292 922,533
Per Share:
Net (Income) 2.85 2.79 $2.96 $2.88 $2.99
Cash Dividend 308,977 308,977 $293,528 $262,430 $262,288
Book Value-End of Year 30.09 28.18 26.35 24.08 22.41
Selected Ratios
Loans to Assets 81.81 77.11 74.40 77.70 71.17
Loans to Deposits 119.12 100.50 95.46 99.64 87.83
Deposits to Assets 68.68 76.74 77.94 77.98 81.03
Capital to Deposits 25.59 23.27 21.20 24.27 20.85
ITEM 7: Management Discussion and Analysis of Financial Condition
and Results of Operation
Peoples Bancshares of Pointe Coupee Parish, Inc., (Bancshares) is a
one bank holding company whose sole subsidiary is Peoples Bank and Trust
Company of Pointe Coupee Parish, Inc., (the Bank). All items discussed
below are attributable to the activities of the Bank unless otherwise
stated. This section should be read in conjunction with the consolidated
financial statements and related notes and the tables presented in an
earlier section of this report.
FINANCIAL REVIEW
Summary
Bancshares consolidated net income for 2002 was $879,326. This
represents a Return on Average Assets of 1.78%, which we believe is a good
return. This is in comparison to 1.79% for 2001 and 2.07% in 2000.
Several factors contributed to this continued success. The most
important factors were: 1) good interest rate margins; 2) a low level of
classified assets; and 3) low loan loss provisions.
In 2002, charge-offs were $25,469 as compared to $153,049 in 2001.
Recoveries for 2002 were $38,744 and provisions were -0-. Provisions for
2001 were $4,443 and recoveries were $32,003.
The prospects for 2003 remain encouraging. The bank continues to note
financial stability and deem our reserves as adequate. As a result, the
projections for income are good. Additionally, Peoples Bank is deemed to
be a well capitalized institution within the guidelines of the FDIC.
However, we still remain conservative in our view of the economy and
current management will maintain that philosophy throughout 2003.
Other Income and Expenses
Other Income, excluding loan related income, decreased $ 66,407 or
8.24% in 2002 as compared to 2001, whereas there were no loan sales in
2002.
Other expenses, excluding interest expense decreased by $12,486 or
..74% in 2002 as compared to 2001. Other operating expenses accounted for
the net decrease in other expenses.
Income Taxes
Bancshares files a consolidated federal income tax return. Deferred
income taxes are provided using the liability method on items of income or
expenses recognized in different time periods for financial statement and
income tax purposes.
Statement of Condition
Total deposits as of December 31, 2002 decreased $1,098,634 or 2.94%
as compared to year end 2001. Non-interest bearing deposits decreased
$138,150 or 1.87% and interest bearing deposits decreased $960,484 or 3.2%.
Total loans excluding loan reserves increased $5,666,552 or 15.07% and
carrying value of investment securities decreased $1,530,146 or 56.93%.
The increase in loans was concentrated primarily in commercial loans.
Liquidity Management
The purpose of liquidity management is to assure the corporation's
ability, at an acceptable cost, to raise funds to support asset growth,
meet deposit withdrawals, and otherwise operate the Corporation on a
continuing basis. The overall liquidity position of the bank is insured by
acquisition of additional funds in the form of time deposits, borrowings
such as Federal Funds, Federal Home Loan Bank borrowings, and the sale or
maturing of investments.
In management's opinion, there are no known trends, commitments or
uncertainties that will or should have a material effect on deposits or the
liquidity position. Additionally, no trends or events were cited by the
regulatory authorities.
Capital Adequacy
The management of capital is a continuous process which consists of
providing capital for the current position and the anticipated future
growth of the Corporation. The purposes of capital are to serve as a
source of funds, protect depositors against losses, and provide a measure
of reassurance to the public that the community's needs will continue to be
served. Since capital serves a multiplicity of purposes, the evaluation of
capital adequacy cannot be made solely in terms of total capital or related
ratios.
Traditionally, the source of additional capital has been retained
earnings. Due to strong earnings from 1990 - 2002, and large recoveries of
charged-off loans, our capital ratio is at an acceptable level. As such,
retained earnings should continue to provide needed capital. Additionally,
we will concentrate on the following to provide for our capital needs:
1. Increase non-interest income and reduce non-interest expenses
2. Maintain an adequate interest rate spread
3. Actively pursue previous charged-off loans for recoveries
4. Manage our growth rate
Furthermore, the prospects for 2003 continue to be encouraging. Our
capital base continued to grow in 2002; our loan loss reserve is adequate;
our net income was extremely good with a Return on Average Assets of 1.78%;
loan delinquencies continue to be manageable; and classified assets
have remained at a manageable level.
ECONOMIC CONDITIONS
Current economic conditions are about average compared to the previous
(5) five years, but are certainly not great. Our asset/liability
management strategy helped produced good margins in 2002. However, our
strategies remain conservative; therefore, we are positioned as interest
rates continue to fluctuate.
Item 8: Financial Statements (following on next pages)
Item 9: Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None
PART III
Item 10: Directors and Executive Officers
Directors of Bancshares are identified in the following table:
Type of Percent
Name Stock Amount of
Principal Occupation Age Ownership Owned Total
Joseph Jefferson David 83 Direct 30,638 9.916
Stephen P. David 45 Direct 4,522 1.464
President and CEO of Peoples Indirect 19,557 6.330
Bancshares of Pointe Coupee and
Peoples Bank & Trust Company
Frank Ned Foti 67 Direct 24,561 7.949
C. E. Hebert, III 59 Direct 5,588 1.809
Clyde Walker Kimball 61 Direct 5,014 1.623
Camille N. Laborde 75 Direct 5,028 1.627
Norris A. Melancon, Jr. 75 Direct 20,491 6.632
Indirect 200 .065
Thomas W. Montgomery, III 63 Direct 3,588 1.161
Joseph Major Thibaut 49 Direct 600 .194
Indirect 1,000 .324
Rodney Fontaine 51 Direct 1,480 .479
Maurice Picard 55 Direct 400 .129
------- ------
All Directors and Principal Direct 101,910 32.983
Officers as a Unit (11 Persons) Indirect 20,757 6.718
MANAGEMENT OF THE BANK AND BANCSHARES
Employees
On December 31, 2002 there were twenty-two full time employees. This
includes the officers of the Corporation and Bank listed below:
Officers
Name Age Position Currently Held
Stephen P. David 45 President and CEO of Peoples Bancshares
and Peoples Bank and Trust Company
Joyce A. York 55 Senior Vice President and Cashier of
Peoples Bank
Robin Cashio 52 Branch Manager of Peoples Bank
Kenneth R. Ramagos 47 Assistant Vice President and
Loan Officer of Peoples Bank
Melissa Laborde 39 Loan Review Officer of Peoples Bank
Mary Posey 44 Loan Officer and
Loan Collections Officer
Annie LeBlanc 69 Customer Account Officer
Belinda LeJeune 41 Assistant Cashier
Deborah F. Strate 41 Administrative Assistant
Ms. York has been with Peoples Bank since inception. Mr. David was
elected an officer of the Bank in December of 1983.
Stephen P. David, Director, CEO, and President of Bancshares and the
Bank, age 45. Mr. David joined the Bank on August 3, 1981 and has held many
positions, including, Loan Officer; Assistant Vice President; Senior Loan
Officer; Senior Vice-President and Assistant Secretary to the Board of
Directors prior to being named to his current post on February 1, 1990.
Bancshares was formed in 1983 and became the Bank's sole shareholder
on December 27, 1983, at which time all directors of the Bank became
directors of Bancshares.
Joseph Jefferson David is the father of Stephen P. David.
Item 11: Executive Compensation
a) Remuneration of Directors and Officers:
All Executive Officers (President David & Senior Vice President York)
had direct cash compensation of $224,812, $212,919, and $206,420 excluding
board fees, but including bonuses in 2002, 2001, and 2000, respectively.
On September 17, 1981, the Board of Directors of the Bank approved a
profit sharing plan which conforms to the Internal Revenue Code, Section
401(a). All employees who have been employed by the Bank for a period of
six months or more; who are 25 years of age; and who have at least 1,000
hours of service annually may participate in the profit sharing plan. No
contributions were made to the plan in 2002.
In January 1990 the Board of Directors approved a 401(k) savings plan
which conforms to the Internal Revenue Code. All employees who have been
employed by the bank for a period of six months or more were eligible to
participate in the plan. Contributions by the bank in 2002 totaled $13,795.
The accrued amount at year end totaled $368,221.
The Bank has a deferred compensation plan available to its directors.
At present only two directors are participating. Upon retirement, the Bank
will pay the directors their deferred compensation plus interest, which
accrues at the "low Wall Street rate", in 15 equal annual installments
beginning the month after retirement. Upon pre-retirement death, the bank
will pay his designated beneficiaries the greater of $8,400 a year for 15
years or his deferred compensation and accrued interest. The bank is the
owner and beneficiary of an insurance policy on the life of each director.
The Bank also maintains two supplemental executive retirement plan
with its president. On one plan, the president will receive $25,000 per
year for 20 years, beginning immediately. The bank is the owner and
beneficiary of an insurance policy on the life of the president. If
employment is terminated "without cause" prior to retirement, the bank will
pay the president his accrued benefit, which is based on the number of
months of completed service since January, 1996. On the other plan, the
president will receive a percentage of his income (salary and bonus) based
on the previous five year period preceding retirement. The percentage
is determined by multiplying 1.5% by the number of years of employment with
the bank. The bank is the owner and beneficiary of an insurance policy on
the life of the president.
The Board of Directors of Bancshares held twelve (12) regular
scheduled meetings during 2002. The Board of Directors of the Bank held
twelve (12) regularly scheduled meetings. The Bank has a personnel
committee which met one (1) times during 2002, and a loan committee which
met thirteen (13) times during the year. The Board of Directors held no
special meeting during 2002. The Bank also has an audit committee and
executive committee. The audit committee met with the independent C.P.A.
firm of Postlethwaite & Netterville one (1) time during 2002. The executive
committee did not meet in 2002.
The Board of Directors of Bancshares and the Bank do not have a
nomination committee.
Directors of Bancshares receive no remuneration for serving in that
capacity. Each director of the Bank received a fee of $525 for each regular
board meeting. Members of each committee receive $75 per meeting attended.
Item 12: Security Ownership of Certain Beneficial Owners and Management
As of March 31, 2003, Peoples Bancshares had authorized 1,000,000
shares of common stock and of this amount, 308,977 shares were outstanding.
Additionally, as of this date, Peoples Bancshares had authorized but
unissued 500,000 shares of Series A Preferred stock and 500,000 shares of
Series B Preferred stock.
As of March 31, 2003 the management of Bancshares knew of no other
person or group that owned 5% or more of the outstanding stock of
Bancshares other than Mr. N. A. Melancon, Jr., with 20,491 shares
representing 6.632%; Mr. Frank N. Foti with 24,561 shares representing
7.949%; Mr. J. Jeff David with 30,638 shares representing 9.916% and
William C. David* with 19,477 shares representing 6.304%.
*William C. David has granted a Proxy Authority to his brother,
Stephen P. David.
Item 13: Certain Relationships & Related Transactions
b) Transactions with Management:
From time to time the Bank has extended credit to its Officers and
Directors and to businesses in which Officers and Directors own an
interest; and the Bank intends to continue this policy because of the
deposits, business and the income that these activities generate for the
Bank. Such loans are made only with the approval of the Board of
Directors.
At no time in 2002 did these transactions exceed 10% of the
equity capital, except for those matters noted below.
All directors and officers as a group had total loans outstanding at
year end 2002 and 2001 of $1,733,141 and $1,339,399 respectively.
PART IV
Item 14: EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
A. (1) Financial Statements
The financial statements are listed under Part II, Item 8
of this Report
(2) Financial Statement Schedules
The financial statement schedules are listed under Part II,
Item 8 of this Report.
B. Reports on Form 8-K
None
C. Exhibits
None
Signatures
Pursuant to the requirements of Section 13 of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the under signed, thereunto duly authorized.
PEOPLES BANCSHARES OF POINTE COUPEE
PARISH, INC.
By:/s/ Rodney G. Fontaine
_________________________________
Rodney G. Fontaine
Chairman
Pursuant to the Requirements of the Securities Exchange Act of 1934,
this report has been signed by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:
/s/ Joseph Jefferson David /s/ Clyde Walker Kimball
________________________________ ______________________________
Joseph Jefferson David Clyde Walker Kimball
Director Director
/s/ Frank Ned Foti /s/ Camille N. LaBorde
________________________________ ______________________________
Frank Ned Foti Camille N. LaBorde
Director Director
/s/ Norris A. Melancon, Jr. /s/ C. E. Hebert, III
________________________________ ______________________________
Norris A. Melancon, Jr. C. E. Hebert, III
Director Director and Secretary
/s/ Stephen P. David /s/ Maurice Picard
________________________________ ______________________________
Stephen P. David Maurice Picard
President/CEO and Director Director
/s/ Thomas W. Montgomery, III /s/ Joseph Major Thibaut
________________________________ ______________________________
Thomas W. Montgomery, III Joseph Major Thibaut
Director Director
/s/ Rodney G. Fontaine
________________________________
Rodney G. Fontaine
Director
Peoples Bancshares of
Pointe Coupee Parish, Inc.
& Subsidiary
[LOGO]
2002 Financial Statements
PEOPLES BANCSHARES OF POINTE COUPEE
PARISH, INC. AND SUBSIDIARY
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002 AND 2001
C O N T E N T S
Page
Independent Auditors' Report 1
Consolidated Financial Statements
Consolidated Balance Sheets 2 - 3
Consolidated Statements of Operations and Comprehensive Income 4 - 5
Consolidated Statements of Changes in Stockholders' Equity 6 - 7
Consolidated Statements of Cash Flows 8 - 9
Notes to Consolidated Financial Statements 10 - 31
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
Peoples Bancshares of Pointe Coupee Parish, Inc.
New Roads, Louisiana
We have audited the accompanying consolidated balance sheets of
Peoples Bancshares of Pointe Coupee Parish, Inc. and Subsidiary as of
December 31, 2002 and 2001, and the related consolidated statements
of operations and comprehensive income, changes in stockholders'
equity and cash flows for each of the years during the three year
period ended December 31, 2002. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements based
on our audits.
We conducted our audits in accordance with auditing standards
generally accepted in the United States of America. Those standards
require that we plan and perform the audits to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial
position of Peoples Bancshares of Pointe Coupee Parish, Inc. and
Subsidiary as of December 31, 2002 and 2001, and the results of their
operations and their cash flows for each of the years during the
three year period ended December 31, 2002, in conformity with
accounting principles generally accepted in the United States of
America.
/s/ Postlethwaite & Netterille
- ------------------------------
POSTLETHWAITE & NETTERVILLE
Baton Rouge, Louisiana
March 3, 2003
PEOPLES BANCSHARES OF POINTE COUPEE PARISH, INC. AND SUBSIDIARY
NEW ROADS, LOUISIANA
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2002 AND 2001
A S S E T S
2002 2001
------------- ------------
Cash and due from banks $ 1,356,047 $ 1,669,591
Federal funds sold 4,375,000 4,875,000
------------- ------------
Cash and cash equivalents 5,731,047 6,544,591
Interest-bearing deposits in other banks 1,495,000 890,000
Securities available-for-sale 1,157,439 2,687,585
Federal Home Loan Bank Stock, at cost 435,900 423,200
Loans, less allowances for loan losses of $721,999
and $708,724 at December 31, 2002 and 2001,
respectively 42,552,632 36,899,355
Accrued interest receivable 461,228 461,284
Bank premises and equipment, net of
accumulated depreciation 529,521 560,598
Other assets 532,628 305,367
------------- ------------
TOTAL ASSETS $ 52,895,395 $48,771,980
============= ============
L I A B I L I T I E S A N D S T O C K H O L D E R S' E Q U I T Y
2002 2001
------------ ------------
LIABILITIES
Deposits:
Noninterest-bearing $ 7,250,019 $ 7,388,169
Interest-bearing 29,079,700 30,040,184
------------ ------------
Total deposits 36,329,719 37,428,353
Other borrowed funds 7,003,220 2,332,000
Accrued interest payable 85,913 144,494
Other liabilities 179,960 158,812
------------ ------------
Total liabilities 43,598,812 40,063,659
------------ ------------
COMMITMENTS AND CONTINGENCIES - -
STOCKHOLDERS' EQUITY
Common stock; $2.50 par value; 1,000,000 shares authorized;
309,677 shares issued; and 308,977 shares outstanding 774,193 774,193
Capital surplus 1,530,320 1,530,320
Retained earnings 6,958,247 6,387,898
Accumulated other comprehensive income 42,099 24,186
------------ ------------
9,304,859 8,716,597
Less: 700 shares held in treasury - at cost (8,276) (8,276)
------------ ------------
Total stockholders' equity 9,296,583 8,708,321
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 52,895,395 $ 48,771,980
============ ============
The accompanying notes are an integral part of these consolidated financial statements.
PEOPLES BANCSHARES OF POINTE COUPEE PARISH, INC. AND SUBSIDIARY
NEW ROADS, LOUISIANA
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
YEARS ENDED DECEMBER 31, 2002, 2001, AND 2000
2002 2001 2000
------------ ----------- -------------
INTEREST INCOME
Interest and fees on loans $ 2,876,168 $ 3,307,850 $ 3,437,670
Interest on available-for-sale securities 86,062 230,717 334,928
Interest on federal funds sold 38,965 131,605 74,994
Interest on deposits in other banks 44,077 6,231 11,545
------------ ----------- -------------
Total interest income 3,045,272 3,676,403 3,859,137
------------ ----------- -------------
INTEREST EXPENSE
Interest on deposits 704,152 1,401,522 1,363,628
Interest on federal funds purchased 776 258 12,197
Interest on other borrowed funds 84,933 90,956 138,080
------------ ----------- -------------
789,861 1,492,736 1,513,905
------------ ----------- -------------
NET INTEREST INCOME 2,255,411 2,183,667 2,345,232
Provision for loan losses - 4,433 -
------------ ----------- -------------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 2,255,411 2,179,234 2,345,232
------------ ----------- -------------
NON-INTEREST INCOME
Service charges on deposit accounts 166,032 162,094 161,247
Other service charges and fees 452,237 388,593 394,498
Net gain on sales of loans - 174,101 20,736
Net realized gains on sales of
available-for-sale securities - 2,729 -
Other income 121,531 78,690 131,538
------------ ----------- -------------
Total other income 739,800 806,207 708,019
------------ ----------- -------------
The accompanying notes are an integral part of these consolidated financial statements.
PEOPLES BANCSHARES OF POINTE COUPEE PARISH, INC. AND SUBSIDIARY
NEW ROADS, LOUISIANA
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
YEARS ENDED DECEMBER 31, 2002, 2001, AND 2000
2002 2001 2000
---------- ----------- ------------
NON-INTEREST EXPENSES
Salaries and employee benefits $ 889,566 $ 879,466 $ 899,353
Occupancy expenses 170,828 170,421 153,630
Data processing expenses 98,046 94,762 95,342
Other operating expenses 527,686 553,963 517,856
---------- ----------- ------------
Total other expenses 1,686,126 1,698,612 1,666,181
---------- ----------- ------------
INCOME BEFORE INCOME
TAX EXPENSE 1,309,085 1,286,829 1,387,070
Income tax expense 429,759 425,182 472,658
---------- ----------- ------------
NET INCOME 879,326 861,647 914,412
OTHER COMPREHENSIVE INCOME
Unrealized holding gains arising during
the period, net of taxes 17,913 16,230 80,868
Less: reclassification adjustment for
realized gains - (2,729) -
---------- ----------- ------------
17,913 13,501 80,868
---------- ----------- ------------
COMPREHENSIVE INCOME $ 897,239 $ 875,148 $ 995,280
========== =========== ============
Per common share data:
Net income $ 2.85 $ 2.79 $ 2.96
========== =========== ============
Cash dividends $ 1.00 $ 1.00 $ 0.95
========== =========== ============
Average number of shares outstanding 308,977 308,977 308,777
========== =========== ============
The accompanying notes are an integral part of these consolidated financial statements.
PEOPLES BANCSHARES OF POINTE COUPEE PARISH, INC. AND SUBSIDIARY
NEW ROADS, LOUISIANA
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 2002, 2001, AND 2000
Accumulated
Other Total
Common Stock Capital Retained Comprehensive Treasury Stock Stockholders'
Shares Amount Surplus Earnings Income Shares Amount Equity
------- -------- ---------- ---------- --------- ---- -------- ----------
Balance at December 31, 1999 309,677 $774,193 $1,530,320 $5,214,344 $(70,183) 700 $(8,276) $7,440,398
Net income - - - 914,412 - - - 914,412
Net change in unrealized gain (loss)
on available-for-sale securities,
net of deferred income taxes
of $41,659 - - - - 80,868 - - 80,868
Cash dividends paid - - - (293,528) - - - (293,528)
------- -------- ---------- ---------- --------- ---- -------- ----------
Balance at December 31, 2000 309,677 774,193 1,530,320 5,835,228 10,685 700 (8,276) 8,142,150
Net income - - - 861,647 - - - 861,647
Net change in unrealized gain on
available-for-sale securities,
net of deferred income taxes
of $6,957 - - - - 13,501 - - 13,501
Cash dividends paid - - - (308,977) - - - (308,977)
------- -------- ---------- ---------- --------- ---- -------- ----------
Balance at December 31, 2001 309,677 774,193 1,530,320 6,387,898 24,186 700 (8,276) 8,708,321
Net income - - - 879,326 - - - 879,326
Net change in unrealized gain on
available-for-sale securities,
net of deferred income taxes
of $9,227 - - - - 17,913 - - 17,913
Cash dividends paid - - - (308,977) - - - (308,977)
------- -------- ---------- ---------- --------- ---- -------- ----------
Balance at December 31, 2002 309,677 $774,193 $1,530,320 $6,958,247 $ 42,099 700 $(8,276) $9,296,583
======= ======== ========== ========== ========= ==== ======== ==========
The accompanying notes are an integral part of these consolidated financial statements.
PEOPLES BANCSHARES OF POINTE COUPEE PARISH, INC. AND SUBSIDIARY
NEW ROADS, LOUISIANA
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2002, 2001, AND 2000
2002 2001 2000
----------- ------------ -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 879,326 $ 861,647 $ 914,412
Adjustments to reconcile net income to net cash
provided by operating activities:
Gain on sales of assets (25,038) (3,183) (54,263)
Net realized gains from sales and maturities
of available-for-sale securities - (2,729) -
Net accretion of investment security discounts /
amortization of investment security premiums 4,623 964
Provision for loan losses - 4,433 -
Provision for foreclosed real estate - 9,900 10,200
Depreciation 59,082 61,823 60,580
Net changes in operating assets and liabilities:
Accrued interest receivable 56 160,035 (56,399)
Other assets (351,309) (97,006) (12,260)
Accrued interest payable (58,581) (68,815) 98,933
Other liabilities 21,148 18,003 21,771
----------- ------------ -----------
Net cash provided by operating activities 529,307 936,818 983,938
----------- ------------ -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales and maturities of
available-for-sale securities 1,652,663 9,210,274 1,666,912
Purchases of available-for-sale securities (100,000) (6,340,919) (2,087,801)
Net (increase) decrease in interest-bearing deposits in
other banks (605,000) (890,000) 394,000
Purchase of other stocks (12,700) (20,500) (24,300)
Loan originations and principal collections, net (5,653,277) (1,067,162) (6,860,676)
Expenditures on foreclosed real estate - - (30,129)
Proceeds from sales of foreclosed real estate and other assets 139,859 5,000 863,300
Purchases of bank premises and equipment (28,005) (40,112) (21,167)
Proceeds from sales of bank premises and equipment - 8,100 -
----------- ------------ -----------
Net cash provided by (used in) investing activities (4,606,460) 864,681 (6,099,861)
=========== ============ ===========
The accompanying notes are an integral part of these consolidated financial statements.
PEOPLES BANCSHARES OF POINTE COUPEE PARISH, INC. AND SUBSIDIARY
NEW ROADS, LOUISIANA
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2002, 2001, AND 2000
2002 2001 2000
------------ ----------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in noninterest-bearing demand
deposit accounts, savings accounts, and NOW accounts $ (498,453) $(2,629,068) $ 4,094,440
Net increase (decrease) in time deposits (600,181) 1,651,350 3,649,166
Net increase in other borrowed funds 4,671,220 (39,900) 1,371,900
Dividends paid (308,977) (308,977) (293,528)
------------ ----------- -------------
Net cash provided by (used in) financing activities 3,263,609 (1,326,595) 8,821,978
------------ ----------- -------------
Net increase (decrease) in cash and due from banks (813,544) 474,904 3,706,055
Cash and cash equivalents - beginning of year 6,544,591 6,069,687 2,363,632
------------ ----------- -------------
Cash and cash equivalents - end of year $ 5,731,047 $ 6,544,591 $ 6,069,687
============ =========== =============
Supplemental disclosures of cash flow information
Cash paid for interest $ 848,442 $ 1,561,551 $ 1,414,972
============ =========== =============
Cash paid for income taxes $ 447,561 $ 463,039 $ 466,000
============ =========== =============
The accompanying notes are an integral part of these consolidated financial statements.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting and reporting policies of Peoples Bancshares of
Pointe Coupee Parish, Inc. (Bancshares) and its subsidiary conform
to accounting principles generally accepted in the United States of
America and to the prevailing practices within the banking
industry. A summary of significant accounting policies is as
follows:
Basis of presentation
The consolidated financial statements include the accounts of
Bancshares and its wholly owned subsidiary, Peoples Bank and
Trust Company (the Bank). All significant intercompany accounts
and transactions have been eliminated in consolidation.
Nature of operations
Substantially all of the assets, liabilities, and operations
presented in the consolidated financial statements are
attributable to Peoples Bank and Trust Company. The Bank provides
a variety of banking services to individuals and businesses
primarily in and around Pointe Coupee Parish, Louisiana. Its
primary deposit products are demand deposits accounts and
certificates of deposits, and its primary lending products are
commercial, agriculture, real estate, and consumer loans.
Use of estimates
The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ
from those estimates.
The determination of the adequacy of the allowance for loan
losses is based on estimates that are particularly susceptible to
significant changes in the economic environment and market
conditions. In connection with the determination of the
estimated losses on loans, management obtains independent
appraisals for significant collateral.
The Bank's loans are generally secured by specific items of
collateral including real property, consumer assets, and business
assets. Although the Bank has a diversified loan portfolio, a
substantial portion of its debtors' ability to honor their
contracts is dependent on local economic conditions and the
agricultural industry.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Use of estimates (continued)
While management uses available information to recognize losses
on loans, further reductions in the carrying amounts of loans may
be necessary based on changes in local economic conditions. In
addition, regulatory agencies, as an integral part of their
examination process, periodically review the estimated losses on
loans. Such agencies may require the Bank to recognize additional
losses based on their judgments about information available to
them at the time of their examination. Because of these factors,
it is reasonably possible that the estimated losses on loans may
change materially in the near term. However, the amount of the
change that is reasonably possible cannot be estimated.
Investment securities
The Bank's investments in securities are classified as available-
for-sale securities and consist of bonds, notes, and debentures
that are available to meet the Bank's operating needs. These
securities are reported at fair value as determined by quoted
market prices.
Unrealized holding gains and losses, net of tax, on available-for-
sale securities are reported as a net amount in other
comprehensive income. Gains and losses on the sale of investment
securities are determined using the specific-identification
method. Realized gains (losses) on the sales and maturities of
investment securities are classified as non-interest income and
reported as a reclassification adjustment in other comprehensive
income.
Interest-bearing deposits in other banks
Interest-bearing deposits in other banks mature within one year
and are carried at cost, which approximates market.
Loans
Loans that management has the intent and ability to hold for the
foreseeable future or until maturity or pay-off are reported at
their outstanding principal adjusted for any charge-off's, the
allowance for loan losses, and any deferred fees or costs on
originated loans. Interest is accrued on the unpaid principal
balance. Loan origination fees, net of certain direct origination
costs, are deferred and recognized as an adjustment of the
related loan yield using the interest method.
The accrual of interest on impaired loans is discontinued when,
in management's opinion, the borrower may be unable to meet
payments as they become due. When interest accrual is
discontinued, all unpaid accrued interest is reversed. Interest
income is subsequently recognized only to the extent cash
payments are received, until qualifying for return to accrual.
Loans are returned to accrual status when all the principal and
interest amounts contractually due are brought current and future
payments are reasonably assured. Loans are charged-off if
management considers the collection of principal and interest to
be doubtful.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Allowance for loan losses
The allowance for loan losses is maintained at a level which, in
management's judgment, is adequate to absorb credit losses
inherent in the loan portfolio. The amount of the allowance is
based on management's evaluation of the collectibility of the
loan portfolio, including the nature of the portfolio, credit
concentrations, trends in historical loss experience, specific
impaired loans, and economic conditions.
A loan is considered impaired when, based on current information
and events, it is probable that the Bank will be unable to
collect the scheduled payments of principal or interest when due
according to the contractual terms of the loan agreement.
Factors considered by management in determining impairment
include payment status, collateral value, and the probability of
collecting scheduled principal and interest payments when due.
Loans that experience insignificant payment delays and payment
shortfalls generally are not classified as impaired. Management
determines the significance of payment delays and payment
shortfalls on a case-by-case basis, taking into consideration all
of the circumstances surrounding the loan and the borrower,
including the length of the delay, the borrower's prior payment
record, and the amount of the shortfall in relation to the
principal and interest owed. Impairment is measured on a loan by
loan basis for commercial and construction loans by either the
present value of expected future cash flows discounted at the
loan's effective interest rate, the loan's obtainable market
price, or the fair value of the collateral if the loan is
collateral dependent. Past-due status is determined based on
contractual terms.
Large groups of smaller balance homogeneous loans are
collectively evaluated for impairment. Accordingly, the Bank
does not separately identify consumer and residential loans for
impairment disclosures. Because of uncertainties associated with
the regional economic conditions, collateral values, and future
cash flows on impaired loans, it is reasonably possible that
management's estimate of loan losses inherent in the loan
portfolio and the related allowance may change materially in the
near term. The allowance is increased by a provision for loan
losses, which is charged to expense and reduced by charge-off's,
net of recoveries.
Foreclosed real estate
Real estate properties acquired through, or in lieu of, loan
foreclosure are to be sold and are initially recorded at fair
value at the date of foreclosure, establishing a new cost basis.
After foreclosure, valuations are periodically performed by
management, and the real estate is subsequently carried at the
lower of carrying amount or fair value, less cost to sell.
Revenue and expenses from operations and changes in the valuation
allowance are included in loss on foreclosed real estate.
Bank premises and equipment
Land is carried at cost. Bank premises and equipment are stated
at cost less accumulated depreciation, which is computed using
straight-line and accelerated methods over the estimated useful
lives of the assets, which range from 3 to 30 years.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Income taxes
Provisions for income taxes are based on taxes payable or
refundable for the current year (after exclusion of non-taxable
income such as interest on state and municipal securities) and
deferred taxes on temporary differences between the amount of
taxable income and pretax financial income and between the tax
bases of assets and liabilities and their reported amounts in the
financial statements. Deferred tax assets and liabilities are
included in the financial statements at currently enacted income
tax rates applicable to the period in which the deferred tax
assets and liabilities are expected to be realized or settled as
prescribed in Statement of Financial Accounting Standards No.
109, Accounting for Income Taxes. As changes in tax laws or rates
are enacted, deferred tax assets and liabilities are adjusted
through the provision for income taxes.
Net Income per share
Net income per share of common stock has been computed on the
basis of the weighted average number of shares of common stock
outstanding.
Comprehensive income
Comprehensive income is the change in stockholders' equity during
the period from transactions and other events and circumstances
from non-owner sources. Comprehensive income includes the change
in unrealized gains (losses), net of taxes, on available-for-sale
securities during the period.
Cash and cash equivalents
For purposes of presentation in the consolidated statements of
cash flows, cash and cash equivalents include cash and balances
due from banks and federal funds sold.
Credit related financial information
In the ordinary course of business, the Bank has entered into
commitments to extend credit, including commercial letters of
credit and standby letters of credit. Such financial instruments
are recorded when they are funded.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Fair values of financial instruments
Statement of Financial Accounting Standards (SFAS) No. 107,
Disclosures about Fair Value of Financial Instruments, requires
disclosure of fair value information about financial instruments,
whether or not recognized in the balance sheet. In cases where
quoted market prices are not available, fair values are based on
estimates using present value or other valuation techniques.
Those techniques are significantly affected by the assumptions
used, including the discount rate and estimates of future cash
flows. In that regard, the derived fair value estimates cannot be
substantiated by comparison to independent markets and, in many
cases, could not be realized in immediate settlement of the
instruments from its disclosure requirements. Accordingly, the
aggregate fair value amounts presented do not represent the
underlying value of Bancshares.
The following methods and assumptions were used by Bancshares in
estimating its fair value disclosures for financial instruments:
Cash and cash equivalents - the carrying amounts of cash and
cash equivalents approximate their fair values.
Interest-bearing deposits in other banks - fair values for
interest-bearing deposits in other banks are estimated using a
discounted cash flow analysis that applies interest rates
currently being offered on certificates to a schedule of
aggregated contractual maturities on such time deposits.
Investment securities - fair values for investment securities
are based on quoted market prices, where applicable. If quoted
market prices are not available, fair values are based on
quoted market prices of comparable instruments.
Loans - for variable-rate loans that reprice frequently and
have no significant change in credit risk, fair values are
based on carrying values. Fair values for certain mortgage
loans (i.e., one-to-four family residential), credit card
loans, and other consumer loans are based on quoted market
prices of similar loans sold in conjunction with securitization
transactions, adjusted for differences in loan characteristics.
Fair values for commercial real estate and commercial 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. Fair values for impaired
loans are estimated using discounted cash flow analyses or
underlying collateral values, where applicable.
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.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Fair values of financial instruments (continued)
The following methods and assumptions were used by Bancshares in
estimating its fair value disclosures for financial instruments:
Short-term borrowings - the carrying amounts of other short-
term borrowings maturing within 90 days approximate their fair
values. Fair values of other short-term borrowings are
estimated using discounted cash flow analyses based on the
incremental borrowing rates for similar types of borrowing
arrangements.
Accrued interest - the carrying amounts of accrued interest
approximate their fair values.
Off-balance sheet instruments - fair values for off-balance
sheet lending commitments are based on fees currently charged
to enter into similar agreements, taking into account the
remaining terms of the agreements and the counterparties'
credit standing.
Reclassification
Certain amounts in the 2001 and 2000 consolidated financial
statements have been reclassified to conform with the current
year presentation.
2. INVESTMENT SECURITIES
Debt and equity securities have been classified in the consolidated
balance sheets according to management's intent. Securities
classified as available-for-sale consisted of the following at
December 31, 2002:
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
---------- --------- ---------- ----------
U.S. Treasury securities and
obligations of other
governmental entities $ 118,245 $ 2,799 $ - $ 121,044
Tax-free municipal bonds 622,500 50,647 - 673,147
Mortgage-backed securities 352,907 10,582 241 363,248
---------- --------- ---------- ----------
$1,093,652 $ 64,028 $ 241 $1,157,439
========== ========= ========== ==========
2. INVESTMENT SECURITIES (continued)
Securities classified as available-for-sale consisted of the following
at December 31, 2001:
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
--------- ---------- ---------- ----------
U.S. Treasury securities and
obligations of other
governmental entities $1,418,009 $11,668 $ 4,863 $1,424,814
Tax-free municipal bonds 670,314 29,950 4,416 695,848
Mortgage-backed securities 562,615 4,783 475 566,923
--------- ---------- ---------- ----------
$2,650,938 $46,401 $ 9,754 $2,687,585
========== ========= ========== ==========
The amortized costs and estimated market values of debt securities
at December 31, 2002, by contractual maturity, are shown below.
Expected maturities may differ from contractual maturities because
borrowers have the right to call or prepay obligations with or
without call or prepayment penalties.
Amortized Fair
Cost Value
---------- ----------
Within one year $ - $ -
Greater than one but within
five years 118,245 121,044
Greater than five but within
ten years 502,500 547,550
Greater than ten years 120,000 125,597
---------- ----------
740,745 794,191
Mortgage-backed securities 352,907 363,248
---------- ----------
$1,093,652 $1,157,439
========== ==========
Investment securities with carrying values of approximately
$914,000 and $195,400 at December 31, 2002 and 2001, respectively,
were pledged to secure public deposits and for other purposes as
required or permitted by law.
3. LOANS
The components of loans in the consolidated balance sheets at
December 31, 2002 and 2001, were as follows:
2002 2001
------------ -------------
Agricultural loans $ 5,774,399 $ 6,280,542
Commercial loans 20,629,054 16,820,986
Real estate loans 9,202,418 7,538,708
Consumer loans 6,476,205 6,397,315
Overdrafts 824,525 255,157
Other 368,030 315,371
------------ -------------
43,274,631 37,608,079
Less: allowance for loan losses ( 721,999) ( 708,724)
------------ -------------
Loans, net $ 42,552,632 $ 36,899,355
============ ============
Changes in the allowance for loan losses during the years ended
December 31, 2002, 2001, and 2000 were as follows:
2002 2001 2000
------------ ----------- -----------
Balance - beginning of year $ 708,724 $ 825,337 $ 801,545
Provision (credit) for loan losses - 4,433 -
Loans charged-off ( 25,469) ( 153,049) ( 37,871)
Recoveries 38,744 32,003 61,663
------------ ----------- -----------
Balance - end of year $ 721,999 $ 708,724 $ 825,337
============ =========== ===========
At December 31, 2002 and 2001, the total recorded investment in
loans on nonaccrual amounted to approximately $279,000 and
$226,000, respectively, and the total recorded investment in loans
past due ninety days or more and still accruing interest amounted
to approximately $72,353 and $289,517, respectively. At December
31, 2002 and 2001, the total recorded investment in impaired loans,
all of which had allowances determined in accordance with SFAS No.
114 and No. 118, amounted to approximately $368,000 and 315,000,
respectively. The average recorded investment in impaired loans
during 2002 and 2001 was approximately $324,000 and $331,000,
respectively, and the total allowances for loan losses related to
these impaired loans was approximately $46,500 and $31,100, at
December 31, 2002 and 2001, respectively. The Bank is not committed
to lend additional funds to debtors whose loans have been modified.
Interest income on impaired loans, which is recognized when cash
payments are received, totalled approximately $10,500, $6,500, and
$5,000 during the years ended December 31, 2002, 2001, and 2000,
respectively.
The Bank transferred $36,000 and $774,308 of real estate acquired
in settlements of loans to other real estate owned and other assets
during the years ended December 31, 2001 and 2000, respectively.
4. BANK PREMISES AND EQUIPMENT
Major classifications of bank premises and equipment at December
31, 2002 and 2001, are summarized as follows:
2002 2001
---------- ----------
Land $ 100,081 $ 100,081
Buildings and improvements 909,560 894,923
Equipment 535,830 522,462
---------- ----------
1,545,471 1,517,466
Less: accumulated depreciation ( 1,015,950) (956,868)
---------- ----------
$ 529,521 $ 560,598
========== ==========
Depreciation expense amounted to $59,082, $61,823, and $60,580
during the years ended December 31, 2002, 2001, and 2000,
respectively.
5. DEPOSITS
Deposits at December 31, 2002 and 2001, are summarized below:
2002 2001
----------- -----------
Demand deposit accounts $ 7,250,018 $ 7,388,169
NOW accounts 5,558,112 6,310,655
Savings accounts 6,541,412 6,149,171
Time accounts 16,980,177 17,580,358
----------- -----------
$36,329,719 $37,428,353
=========== ============
At December 31, 2002, the scheduled maturities of all outstanding
certificates of deposit were as follows:
Year ending
December 31st Amount
------------- ------------
2003 $14,502,238
2004 977,745
2005 105,621
2006 532,363
2007 862,210
$16,980,177
Included in deposits are approximately $5,502,000 and $5,228,500 of
certificates of deposit in excess of $100,000 at December 31, 2002
and 2001, respectively. Interest expense on such deposits was
approximately $149,000, $346,400, and $286,500 during the years
ended December 31, 2002, 2001, and 2000, respectively.
6.OTHER BORROWED FUNDS
The Bank has established a line-of-credit for approximately
$17,750,000 with the Federal Home Loan Bank (FHLB) to provide an
additional source of operating capital. The current advances, which
totalled $7,003,220 and $2,332,000 at December 31, 2002 and 2001,
respectively, bore interest at variable rates ranging from 1.42% to
3.84%, and are scheduled to mature as follows:
Year ending
December 31st Amount
--------------- ---------------
2003 $ 1,750,000
2004 1,000,000
2005 2,753,220
2006 -
2007 500,000
2008 and after 1,000,000
---------------
$ 7,003,220
===============
This indebtedness is secured by $435,900 of FHLB stock owned by the
Bank and a portion of its loan portfolio.
The Bank has utilized $1,620,000 of its line-of-credit with the
Federal Home Loan Bank to acquire letters-of-credit which it has
used to secure public deposits.
7. INCOME TAXES
The source and tax effect of items reconciling income tax expense
to the amount computed by applying the federal income tax rates in
effect to income before income tax expense for the years ended
December 31, 2002, 2001, and 2000 were as follows:
2002 2001 2000
-------------------- -------------------- ------------------
Amount % Amount % Amount %
---------- ------ ---------- ------ ----------- ------
Income before income
tax expense $1,309,085 100.0% $1,286,829 100.0% $1,387,070 100.0%
========== ====== ========== ====== ========== ======
Income tax expense at
statutory rate $ 445,089 34.0% $ 437,522 34.0% $ 471,604 34.0%
Tax-exempt interest income
and nondeductible
interest cost ( 12,216) (0.9) ( 9,722) ( 0.7 ) ( 9,438) ( 0.7 )
Other ( 3,114) (0.3) ( 2,618) ( 0.2 ) 10,492 0.8
---------- ------ ---------- ------ ----------- ------
$ 429,759 32.8% $ 425,182 33.1% $ 472,658 34.1%
========== ====== ========== ====== ========== ======
7. INCOME TAXES (continued)
The components of income tax expense during the years ended
December 31, 2002, 2001, and 2000 were as follows:
2002 2001 2000
---------- ---------- ----------
Current tax expense $ 426,069 $ 403,235 $ 486,253
Deferred tax expense (benefit) 3,690 21,947 (13,595)
---------- ---------- ----------
$ 429,759 $ 425,182 $ 472,658
========== ========== ==========
Bancshares records deferred income taxes on the tax effect of
temporary differences. Deferred tax assets are subject to a
valuation allowance if their realization is less than fifty percent
probable. Deferred tax assets (liabilities) were comprised of the
following at December 31, 2002 and 2001:
2002 2001
---------- ----------
Depreciation ($108,024) ($107,006)
Stock dividends ( 28,567) ( 24,247)
Unrealized gains on securities ( 21,688) ( 12,461)
---------- ----------
Gross deferred tax liability ( 158,279) ( 143,714)
---------- ----------
Reserve for loan losses 79,409 79,409
Write-downs of foreclosed property 18,924 27,627
Deferred compensation 57,970 47,619
---------- ----------
Gross deferred tax assets 156,303 154,655
Less: deferred tax assetvaluation allowance - -
---------- ----------
Net deferred tax asset (liability) ($ 1,976) $ 10,941
========== ==========
8. EMPLOYEE BENEFITS
The Bank maintains a 401(k) savings plan for which the majority of
its employees are eligible. The employer contributes to the plan
based on the discretion of the Board of Directors. The Bank matches
50% of employee contributions up to 6% of each employee's salary.
The Bank recognized expenses relating to this plan of approximately
$14,000, $16,000, and $16,700 during the years ended December 31,
2002, 2001, and 2000, respectively.
8. EMPLOYEE BENEFITS (continued)
The Bank maintains a deferred compensation agreement with several
directors. Upon retirement, the Bank will pay the directors their
deferred compensation plus interest. The Bank is the owner and
beneficiary of several insurance policies covering the lives of
these directors.
The Bank also maintains a supplemental executive retirement plan
agreement with its president. Upon retirement, or in the event of
death, the president, or his designated beneficiary, will receive
the benefit over a 20 year period. The Bank is the owner and
beneficiary of an insurance policy covering the life of the
president. If employment is terminated "without cause" prior to
retirement, the Bank will pay the president his accrued benefit,
which is based on the number of months of completed service since
January, 1996.
9. OFF-BALANCE SHEET ACTIVITIES
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. These financial instruments include commitments
to extend credit and standby letters of credit. These instruments
involve, to varying degrees, elements of credit and interest rate
risk in excess of the amount recognized in the consolidated balance
sheets.
The Bank's exposure to credit loss is represented by the
contractual amount of these commitments. The Bank uses the same
credit policies in making commitments and conditional obligations
as it does for financial instruments recorded on its balance
sheets.
Commitments to Extend Credit
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
the 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 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 customer. At December
31, 2002, unfunded loan commitments totalled approximately
$3,283,000.
Unfunded commitments under commercial lines-of-credit, revolving
credit lines and overdraft protection agreements are
commitments for possible future extensions of credit to existing
customers. These lines-of-credit are uncollateralized and
usually do not contain a specified maturity date and may not be
drawn upon to the total extent to which the Bank is committed.
9. FINANCIAL INSTRUMENTS (continued)
Commitments to Extend Credit (continued)
Standby letters of credit are conditional commitments issued by
the Bank to guarantee the performance of a customer to a third
party. Those guarantees are primarily issued to support public
and private borrowing arrangements, including commercial paper,
bond financing, and similar transactions. At December 31, 2002,
commitments under standby letters of credit totalled
approximately $187,000. The credit risk involved in issuing
letters of credit is essentially the same as that involved in
extending loan facilities to customers. The Bank generally
holds collateral supporting these commitments if deemed
necessary. Because these instruments have fixed maturity dates,
they do not generally present any significant liquidity risk to
the Bank.
The Bank has not been required to perform on any financial
guarantees during the past three years. The Bank did not incur
any losses on such commitments during either 2002, 2001, or
2000.
The estimated fair values of Bancshares's financial instruments at
December 31, 2002 and 2001, were as follows (in thousands):
2002 2001
------------------ ---------------
Carrying Fair Carrying Fair
Amount Value Amount Value
Financial assets:
Cash and due from banks, interest
bearing deposits in other banks,
and federal funds sold $ 7,226 $ 7,226 $ 7,435 $ 7,435
Securities available-for-sale 1,157 1,157 2,688 2,688
Loans receivable (net) 42,553 42,553 36,899 37,262
Accrued interest receivable 461 461 461 461
Financial liabilities:
Deposit liabilities 36,330 36,505 37,428 37,585
Other borrowed funds 7,003 7,031 2,332 2,332
Accrued interest payable 86 86 144 144
10. RELATED PARTY TRANSACTION
In the ordinary course of business, certain officers and directors
of the Bank and companies in which they have 10% or more beneficial
ownership maintain a variety of banking relationships with the
Bank. An analysis of activity during 2002, 2001, and 2000 with
respect to loans to officers and directors of the Bank is as
follows:
2002 2001 2000
----------- ----------- -----------
Balance - beginning of year $ 1,339,399 $ 1,353,120 $ 1,441,636
Additions 1,260,682 1,380,886 492,406
Payments ( 866,940) (1,394,607) ( 580,922)
----------- ----------- -----------
Balance - end of year $ 1,733,141 $ 1,339,399 $ 1,353,120
=========== =========== ===========
Included in deposits are deposits from directors, officers, their
immediate families, and related companies. These accounts totalled
approximately $1,573,000 and $1,499,000 at December 31, 2002 and
2001, respectively.
11. RESTRICTIONS OF RETAINED EARNINGS
The Bank, as a state chartered Bank, is subject to the dividend
restrictions set forth by the Commissioner. Under such
restrictions, the Bank may not, without the prior approval of the
Commissioner, declare dividends in excess of the sum of the current
year's retained net earnings (as defined) plus the retained net
earnings (as defined) from the prior year. The Bank can declare,
without the approval of the Commissioner, dividends totalling
$417,658 more than its retained net earnings during the year ending
December 31, 2003.
12. MINIMUM REGULATORY CAPITAL MATTERS
Both the Company and the Bank are 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 Company's and the Bank's financial statements. Under capital
adequacy guidelines and the regulatory framework for prompt
corrective action, the Company and the Bank must meet specific
capital guidelines that involve quantitative measures of their
assets, liabilities, and certain off-balance sheet items as
calculated under regulatory accounting practices. The capital
amounts and classification are also subject to qualitative
judgments by the regulators about components, risk weightings, and
other factors. Prompt corrective action provisions are not
applicable to bank holding companies.
Quantitative measures established by regulation to ensure capital
adequacy require the Company and the Bank to maintain minimum
amounts and ratios (set forth in the table on the following page)
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, that as of
December 31, 2002 and 2001, both the Company and the Bank meets all
capital adequacy requirements to which it is subject.
12. REGULATORY MATTERS (continued)
The most recent notification from the Federal Deposit Insurance
Corporation (as of September 30, 2001) categorized the Bank as well
capitalized under the regulatory framework for prompt corrective
action. To remain as well capitalized the Bank must maintain
minimum total risk-based, Tier I risk-based, and Tier I leverage
ratios as set forth in the table below. There are no conditions or
events since that notification that management believes have
changed the institution's category.
Capital amounts and ratios as of December 31, 2002 and 2001, are
presented below:
To be well
For capital capitalized under
adequacy prompt corrective
Actual purposes action provisions
---------------- ----------------- --------------------
Amount Ratio Amount Ratio Amount Ratio
--------- ------ --------- -------- --------- --------
As of December 31, 2002:
Total capital (to risk-weighted assets):
Consolidated $9,757,690 25.1% 3,111,183 >/= 8.0% N/A N/A
Bank only 6,759,000 17.4% 3,111,280 >/= 8.0% 3,889,100 >/= 10.0%
Tier I capital (to risk-weighted assets):
Consolidated 9,243,049 23.8% 1,555,092 >/= 4.0% N/A N/A
Bank only 6,271,000 16.1% 1,555,640 >/= 4.0% 2,333,460 >/= 6.0%
Tier I capital (to average assets):
Consolidated 9,243,049 17.5% 2,110,012 >/= 4.0% N/A N/A
Bank only 6,271,000 11.9% 2,108,360 >/= 4.0% 2,635,450 >/= 5.0%
As of December 31, 2001:
Total capital (to risk-weighted assets):
Consolidated 9,141,611 25.4% 2,874,880 >/= 8.0% N/A N/A
Bank only 6,302,783 17.6% 2,873,040 >/= 8.0% 3,591,300 >/= 10.0%
Tier I capital (to risk-weighted assets):
Consolidated 8,692,411 24.2% 1,437,440 >/= 4.0% N/A N/A
Bank Only 5,853,870 16.3% 1,436,520 >/= 4.0% 2,154,780 >/= 6.0%
Tier I capital (to average assets):
Consolidated 8,692,411 17.8% 1,957,280 >/= 4.0% N/A N/A
Bank only 5,853,870 12.0% 1,952,720 >/= 4.0% 2,440,900 >/= 5.0%
13. SIGNIFICANT GROUP CONCENTRATIONS OF CREDIT RISK
Most of the Bank's business activity is with customers located
within Pointe Coupee Parish. As of December 31, 2002, the Bank's
receivables from, guarantees of, and obligations from agriculture
loans made to sugar cane, cotton, and wheat farmers were considered
a concentration. These loans are generally secured by assets or
farm crops, and a large majority of these loans are 90% guaranteed
by the Farm Service Agency. The loans are expected to be repaid
from cash flow or proceeds from the sale of crops. Loan losses
arising from lending transactions with farmers compare favorably
with the Bank's loan loss experience on its loan portfolio as a
whole.
The distribution of commitments to extend credit approximates the
distribution of loans outstanding. Commercial and standby letters
of credit were granted primarily to commercial borrowers.
The contractual amounts of credit-related financial instruments,
such as commitments to extend credit and letters of credit,
represent the amounts of potential accounting loss should the
contract be fully drawn upon, the customer default, and the value
of any existing collateral become worthless.
14. SUPPLEMENTAL EXPENSE ITEMS
Supplemental expense items during the years ended December 31,
2002, 2001, and 2000 were as follows:
2002 2001 2000
---------- ---------- ----------
Director fees $ 93,025 $ 98,725 $ 93,025
========== ========== ==========
Professional fees $ 77,400 $ 76,235 $ 76,690
========== ========== ==========
PEOPLES BANCSHARES OF POINTE COUPEE PARISH, INC. AND SUBSIDIARY
NEW ROADS, LOUISIANA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
15. BANK ONLY FINANCIAL STATEMENTS
STATEMENTS OF FINANCIAL CONDITION
DECEMBER 31, 2002 AND 2001
ASSETS
2002 2001
------------ -------------
Cash and due from banks $ 1,356,047 $ 1,669,591
Federal funds sold 4,375,000 4,875,000
------------ -------------
Cash and cash equivalents 5,731,047 6,544,591
Interest bearing deposits in other banks 1,495,000 890,000
Securities available-for-sale 1,127,227 2,598,460
Federal Home Loan Bank Stock, at cost 435,900 423,200
Loans, less allowances for loan losses of $721,999 and $708,724
at December 31, 2002 and 2001, respectively 42,552,632 36,899,355
Bank premises and equipment, net 529,521 560,598
Accrued interest receivable 461,065 460,813
Other assets 532,628 308,654
------------ -------------
Total assets $ 52,865,020 $ 48,685,671
============ =============
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities:
Deposits
Noninterest-bearing $ 10,202,887 $ 10,133,839
Interest-bearing 29,079,700 30,040,184
------------ -------------
Total deposits 39,282,587 40,174,023
Other borrowed funds 7,003,220 2,332,000
Accrued interest payable 85,913 144,494
Other liabilities 179,715 158,229
------------ -------------
Total liabilities 46,551,435 42,808,746
------------ -------------
Stockholder's equity:
Common stock; $2.50 par value; 1,000,000 shares authorized;
309,677 shares issued and outstanding 774,193 774,193
Capital surplus 3,475,808 3,475,808
Undivided profits 2,021,527 1,603,869
Accumulated other comprehensive income 42,057 23,055
------------ -------------
Total stockholder's equity 6,313,585 5,876,925
------------ -------------
Total liabilities and stockholder's equity $ 52,865,020 $ 48,685,671
============ =============
PEOPLES BANCSHARES OF POINTE COUPEE PARISH, INC. AND SUBSIDIARY
NEW ROADS, LOUISIANA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
15. BANK ONLY FINANCIAL STATEMENTS (continued)
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
YEARS ENDED DECEMBER 31, 2002, 2001, AND 2000
2002 2001 2000
------------ ----------- ---------
INTEREST INCOME
Interest and fees on loans $ 2,876,168 $ 3,307,850 3,437,670
Interest on available-for-sale securities 82,737 224,373 313,749
Interest on federal funds sold 38,965 131,605 74,994
Interest on deposits in other banks 44,077 6,231 11,545
------------ ----------- ---------
Total interest income 3,041,947 3,670,059 3,837,958
------------ ----------- ---------
INTEREST EXPENSE
Interest on deposits 704,152 1,401,522 1,363,628
Other borrowed funds 84,933 90,956 138,080
Interest on federal funds purchased 776 258 12,197
------------ ----------- ---------
Total interest expense 789,861 1,492,736 1,513,905
------------ ----------- ---------
NET INTEREST INCOME 2,252,086 2,177,323 2,324,053
Provision for loan losses - 4,433 -
------------ ----------- ---------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 2,252,086 2,172,890 2,324,053
------------ ----------- ---------
NONINTEREST INCOME
Service charges on deposit accounts 166,032 162,094 161,247
Other service charges and fees 452,237 388,593 394,498
Net gain on sales of loans - 174,101 20,736
Net realized gains on sales of
available-for-sale securities - 2,729 -
Other income 121,531 78,690 131,538
------------ ----------- ---------
739,800 806,207 708,019
------------ ----------- ---------
PEOPLES BANCSHARES OF POINTE COUPEE PARISH, INC. AND SUBSIDIARY
NEW ROADS, LOUISIANA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
15. BANK ONLY FINANCIAL STATEMENTS (continued)
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
YEARS ENDED DECEMBER 31, 2002, 2001, AND 2000
2002 2001 2000
------------ ------------- ------------
NONINTEREST EXPENSES
Salaries and employee benefits $ 889,566 $ 879,466 $ 899,353
Occupancy expenses 170,828 170,421 153,630
Data processing expenses 98,046 94,762 95,342
Other operating expenses 511,029 532,469 504,300
------------ ------------- ------------
1,669,469 1,677,118 1,652,625
------------ ------------- ------------
INCOME BEFORE INCOME
TAX EXPENSE 1,322,417 1,301,979 1,379,447
Income tax expense 429,759 425,182 470,046
------------ ------------- ------------
NET INCOME 892,658 876,797 909,401
OTHER COMPREHENSIVE INCOME
Unrealized holding gains (losses) arising
during the period, net of taxes 19,002 13,890 76,984
Less: reclassification adjustment for
realized gains - (2,729) -
------------ ------------- ------------
19,002 11,161 76,984
------------ ------------- ------------
COMPREHENSIVE INCOME $ 911,660 $ 887,958 $ 986,385
============ ============= ============
PEOPLES BANCSHARES OF POINTE COUPEE PARISH, INC. AND SUBSIDIARY
NEW ROADS, LOUISIANA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
16. PARENT ONLY FINANCIAL STATEMENTS
BALANCE SHEETS
DECEMBER 31, 2002 AND 2001
ASSETS
2002 2001
-------------- -------------
Cash in subsidiary bank $ 2,952,868 $ 2,745,670
Securities available-for-sale 30,212 89,125
Accrued interest receivable 163 471
Investment in subsidiary bank 6,313,585 5,876,925
-------------- -------------
Total assets $ 9,296,828 $ 8,712,191
============== =============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Due to subsidiary bank $ - $ 3,287
Other liabilities 245 583
-------------- -------------
Total liabilities 245 3,870
-------------- -------------
STOCKHOLDERS' EQUITY
Common stock; $2.50 par value; 1,000,000 shares authorized;
309,677 shares issued; and 308,977 shares outstanding 774,193 774,193
Capital surplus 1,530,320 1,530,320
Retained earnings 6,958,247 6,387,898
Accumulated other comprehensive income 42,099 24,186
-------------- -------------
9,304,859 8,716,597
Less: 700 shares held in treasury - at cost (8,276) (8,276)
-------------- -------------
Total stockholders' equity 9,296,583 8,708,321
-------------- -------------
Total liabilities and stockholders' equity $ 9,296,828 $ 8,712,191
============== =============
PEOPLES BANCSHARES OF POINTE COUPEE PARISH, INC. AND SUBSIDIARY
NEW ROADS, LOUISIANA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
16. PARENT ONLY FINANCIAL STATEMENTS (continued)
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
YEARS ENDED DECEMBER 31, 2002, 2001, AND 2000
2002 2001 2000
----------- ------------- ---------
INCOME
Interest on available-for-sale securities $ 3,325 $ 6,344 $ 21,179
Interest on loan to subsidiary - - -
Dividends from subsidiary 475,000 1,100,000 -
----------- ------------- ---------
478,325 1,106,344 21,179
----------- ------------- ---------
EXPENSES 16,657 21,494 13,556
----------- ------------- ---------
INCOME BEFORE EQUITY (DEFICIT)
IN UNDISTRIBUTED EARNINGS
OF SUBSIDIARY 461,668 1,084,850 7,623
Equity (deficit) in undistributed earnings
of subsidiary 417,658 (223,203) 909,401
----------- ------------- ---------
INCOME BEFORE INCOME
TAX EXPENSE 879,326 861,647 917,024
Income tax expense - - 2,612
----------- ------------- ---------
NET INCOME 879,326 861,647 914,412
OTHER COMPREHENSIVE INCOME
Unrealized holding gains (losses) arising
during the period, net of taxes 17,913 16,230 80,868
Less: reclassification adjustment for
realized gains - (2,729) -
----------- ------------- ---------
17,913 13,501 80,868
----------- ------------- ---------
COMPREHENSIVE INCOME $ 897,239 $ 875,148 $995,280
=========== ============= =========
PEOPLES BANCSHARES OF POINTE COUPEE PARISH, INC. AND SUBSIDIARY
NEW ROADS, LOUISIANA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
16. PARENT ONLY FINANCIAL STATEMENTS (continued)
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2002, 2001, AND 2000
2002 2001 2000
----------- -------------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 879,326 $ 861,647 $ 914,412
Adjustments to reconcile net income to net cash
provided by operating activities:
Net accretion of investment security discounts /
amortization of investment security premiums 464 824 712
Decrease (increase) in other assets - 629 (629)
Decrease in accrued interest receivable 308 242 2,828
Increase (decrease) in other liabilities (3,064) - 2,612
Undistributed earnings of subsidiaries (417,658) 223,203 (909,401)
----------- -------------- --------------
Net cash provided by operating activities 459,376 1,086,545 10,534
----------- -------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from maturities of available-for-sale securities 56,799 44,653 328,319
----------- -------------- --------------
Net cash provided by investing activities 56,799 44,653 328,319
----------- -------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends paid (308,977) (308,977) (293,528)
----------- -------------- --------------
Net cash used in financing activities (308,977) (308,977) (293,528)
----------- -------------- --------------
Increase in cash 207,198 822,221 45,325
Cash - beginning of year 2,745,670 1,923,449 1,878,124
----------- -------------- --------------
Cash - end of year $2,952,868 $ 2,745,670 $ 1,923,449
=========== ============== ==============