-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NhzxG34AdRowcsv+UHYe24l/JpSFd5zKG28jh8f/CpQwLwQLC5qFEwn3fs1oI+eO wtTOIpFGlQSQMaqirlb/dQ== 0001003297-00-000056.txt : 20000331 0001003297-00-000056.hdr.sgml : 20000331 ACCESSION NUMBER: 0001003297-00-000056 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000330 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PEOPLES BANCSHARES OF POINTE COUPEE PARISH INC CENTRAL INDEX KEY: 0000720026 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 720875048 STATE OF INCORPORATION: LA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: SEC FILE NUMBER: 002-84047 FILM NUMBER: 585930 BUSINESS ADDRESS: STREET 1: PO DRAWER 747 STREET 2: 805 HOSPITAL RD CITY: NEW ROADS STATE: LA ZIP: 70760 BUSINESS PHONE: 2256383713 MAIL ADDRESS: STREET 1: PO DRAWER 747 STREET 2: 805 HOSPITAL RD CITY: NEW ROADS STATE: LA ZIP: 70760 10-K405 1 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, 1999 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 12 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: $7,440,863 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, 2000. Documents Incorporated by Reference Document Part of Form 10-K "Consolidated Financial Statements for Part I and Part II Years Ended December 31, 1999, 1998 and 1997 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, 1999, $1,576,860 were on deposit representing 5.14% of total deposits outstanding. Of this total, $1,501,818 represented demand deposits and $75,042 were time deposits. The weighted average interest rate on these deposits was 4.47%. The maturity of these deposits range from fifteen days to twelve months. The Bank's general and primary market area is in Pointe Coupee Parish which has a population of approximately 25,000. Population of Pointe Coupee has experienced little growth since inception of the bank. The Bank faces keen competition from three other banks operating in nine locations throughout the parish. At present time, Peoples Bank has approximately the same asset base as Guaranty Bank. The largest bank in the parish as of December 31, 1999 was Regions Bank of Alabama, New Roads Branch, which had in excess of $40 billion in assets nationwide. Regions Bank of Alabama acquired the former Bank of New Roads in August of 1994, and it operated as a separate bank until the summer of 1995, at which time it was merged into the Regions Bank of Louisiana system. Regions Bank of Louisiana was merged into Regions Bank of Alabama during 1998. The other banks operating in Pointe Coupee are Guaranty Bank and Trust Company which had total assets of approximately $41 million as of December 31, 1999 and Cottonport Bank, which opened a branch in 1998 with assets of approximately $140 million on December 31, 1999. 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) 1999 1998 Amount Amount Average Earned Yield/ Average Earned Yield/ Balance or Paid Rate Balance or Paid Rate Assets: ------- ------- ------ -------- ------- ------ - ------ Interest earning assets Loans and Leases $ 30,891 $ 2,950 9.55% $ 30,435 $3,006 9.88% Taxable securities 4,207 282 6.70% 5,114 313 6.12% Tax exempt securities (tax equivalent yields) 645 38 8.98% 759 46 9.00% Federal funds sold and time deposits with other banks 2,363 118 4.99% 1,892 100 5.29% --------- ------- ----- ------- ------- ----- - ------ Total interest earning assets $ 38,106 3,388 8.89 38,200 3,465 9.07% --------- ------- ----- ------- ------- ----- - ------ Non-interest earnings assets: Cash and due from banks $ 1,554 1,745 Bank premises and equipment 650 670 Other assets 862 777 Allowance for Loan Losses (828) (873) --------- ------- Total assets $ 40,344 $ 40,519 ========= ======= LIABILITIES AND STOCKHOLDERS' EQUITY Interest bearing Liabilities: Deposits Savings account $ 6,335 173 2.73% $ 5,930 162 2.73% NOW accounts 2,826 95 3.36% 4,508 155 3.44% Money market investment accounts 1,012 22 2.34% 1,025 24 2.34% Other time deposits 16,176 773 4.78% 15,291 751 4.91% Federal funds purchased and securities sold under agreements to repurchase 30 2 6.67% 300 18 6.00% Other borrowed funds 468 27 5.77% 428 22 5.14% --------- ------ ------ ------ ----- ------- Total interest bearing Liabilities $ 26,847 1,092 4.07% 27,482 1,132 4.12% --------- ------ ------- ------ Non-interest bearing Liabilities and stockholders' equity: Demand deposits $ 7,282 6,416 Other Liabilities 383 350 Stockholders' equity 5,832 6,271 --------- ------- Total Liabilities and stockholders' equity $ 40,344 $ 40,519 ========= ====== Net interest income $ 2,296 $2,333 ====== ====== Margin Analysis Interest Income/earnings assets 8.89% 9.07% Interest Expense/earnings assets 4.07% 4.12% ------ ----- Net interest income/earnings assets 4.82% 4.95% ====== =====
1999 Compared with 1998 1998 Compared with 1997 Variance due to Variance due to ----------------------------- --------------------------- Rate/ Rate/ Volume Rate Volume Total Volume Rate Volume Total ------ ------ ------- ------ ------ ------ ------ ------ INTEREST INCOME Loan and Leases $ 45 (101) (2) (58) $472 ($117) ($21) $334 Taxable securities (56) 30 (5) (31) 162) (7) 2 (167) Tax exempt securities (tax equivalent yield) (10) - - (10) -- 1 -- 1 Federal funds sold and time deposits with other banks 25 (6) (1) 18 (71) (7) 3 (75) ----- ----- ----- ----- ------ ----- ----- ----- Total interest earning assets 4 (77) (8) (81) 239 (130) (16) 93 INTEREST EXPENSE Savings accounts 11 -- -- 11 -- 3 -- 3 NOW accounts (59) (4) 1 (62) (14) (5) -- (19) Money market investment accounts (2) -- -- (2) (6) (1) -- (7) Other time deposit 43 (20) (1) 22 (36) 13 -- (23) Federal funds purchased and securities sold under agreements to repurchase (16) 2 (2) (16) 17 -- -- 17 Other borrowed funds -- 3 -- 3 -- 22 22 ----- ----- ------ ----- ------ ----- ----- ----- Total interest bearing liabilities (23) (19) (2) (44) (39) 10 22 (7) Net interest income $ 27 (58) (6) (37) $278 ($140) ($38) $100 ===== ====== ===== ===== ===== ======= ====== =====
I. Investment Portfolio For year ended December 31, 1999
Govt. U.S. Agency/ Total Fair Year Treasury Mtg. Munie Costs Value Within one year $ - $1,500,999 $ 35,475 $1,536,469 $1,517,238 After one year but within 5 yrs $ - $2,766,032 $ 92,847 $2,858,879 $2,792,038 After 5 yrs but within 10 yrs $ - $ 98,567 $ 98,567 $ 95,977 After 10 yrs $ 573,926 $400,910 $ 974,836 $ 957,160 Total $ - $4,840,952 $627,799 $5,468,751 $5,362,413 Avg. Yield - 5.85% 5.49% % of Portfolio - 88.52% 11.48%
III. Loan Portfolio Major Classification of loans are summarized as follows: (in thousands) For year ended Dec. 31, 1999 1998 Real Estate $5,502 $4,766 Commercial 11,085 9,673 Agricultural 6,442 7,619 Individual 6,934 6,785 Other 589 279 ------ ------ TOTAL LOANS: 30,552 29,122 Less Unearned Discount - - ------ ------ Net Loans 30,552 29,122 Loan Analysis of Principal Subject to Rate Change December 31, 1999 1 Year Over 1 Year Over 5 or Less Less than 5 Years 1. Commercial, Financial, Agricultural, Real Estate, Consumer and Other $16,663,607 $10,474,695 $3,097,922 Non-Accrual 315,579 Average Rate 9.23% 9.31% 9.33% 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, 1999 and 1998. 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. 1999 1998 NON-ACCRUAL LOANS $315,579 $103,312 Restructured Loans 89,282 89,582 Other Real Estate 144,522 181,925 -------- -------- TOTAL NON-ACCRUAL & ORE $549,383 $374,819 ======== ======== Loans Over 90-days past due and still accruing interest: 1999 1998 Commercial $ 117,467 $ -0- Agriculture -0- -0- Student 10,622 7,700 Consumer -0- -0- Real Estate 281,310 ------- ------- TOTAL OVER 90-DAYS $ 409,399 7,700 ======== ======== The effect of non-accruing loans on interest income for 1999 was $5,509. The effect of restructured loans on interest income for 1999 was $1,340. At December 31, 1999, 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 theirprogress is reviewed monthly. At the present time, management does not track loan concentrations by particularindustries, 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: 1999 1998 Balance, January 1, 852,171 846,958 Provision charged to Operations (57,629) (46,000) Loans charged off (33,424) (38,571) Recoveries 40,427 89,784 -------- -------- Balance December 31, 801,545 852,171 ======= ======= 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, 1999 1998 Demand deposits accounts $ 5,700,546 $ 6,967,973 NOW accounts 3,357,482 4,427,077 Savings accounts 6,021,428 6,313,596 Time accounts 15,582,544 15,447,867 ------------ ------------ $30,662,000 $33,156,513 ============= ============= Included in deposits are approximately $4,383,000 and $4,266,000 of certificates of deposit in excess of $100,000 at December 31, 1999 and 1998, respectively. Certificate of Deposit Maturity and Rate Analysis As of December 31, 1999: 0-90 91-364 1 Year Over Days Days 5 Years 5 Years Total Certificates $6,334,523 $7,654,791 $1,593,230 $ -0- of Deposit Average Rate 4.71% 5.22% 5.27% --- ITEM 2: Properties The main office of the Corporation and Bank are presently located in a two-storyoffice 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, in1994 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, 1999. 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 1999. There can be no assurance that the limited inquiries adequately reflect the marketability of the stock. In March 1999 Peoples Bancshares declared a special dividend of $.50 per share to all stockholders of record as of March 31, 1999, totaling $154,289. Additionally, In December of 1999, Peoples Bancshares declared a dividend of $.35 per share to all stockholders of record as of November 30, 1999, totaling $108,142. 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, 1999 1998 1997 1996 1995 Interest Income 3,387,916 3,465,179 3,371,808 3,268,130 3,211,553 Interest Expense 1,091,748 1,131,970 1,139,117 1,115,370 1,004,653 Net Interest Income 2,296,168 2,333,209 2,232,691 2,152,760 2,206,900 Credit (Provision for Loan Losses) 57,629 46,000 -0- 32,000 32,000 Other non-interest income and expenses net (1,049,184) (1,004,289) (853,166) (836,731) (846,548) Income Tax (Expense) benefit (416,321) (452,387) (465,439) (442,004) (469,001) Net Income (Loss) 888,292 922,533 914,086 906,025 923,351 Per Share: Net (Income) $2.88 $2.99 $2.96 $2.94 $2.99 Cash Dividend $262,430 $262,288 $200,575 $200,575 $154,289 Book Value-End of Year 24.08 22.41 20.21 17.90 15.72 Selected Ratios Loans to Asset 77.70 71.17 71.52 58.69 56.38 Loans to Deposits 99.64 87.83 85.47 68.51 65.71 Deposits to Assets 77.98 81.03 83.69 85.66 85.80 Capital to Assets 18.92 16.90 15.85 14.02 13.86 Capital to Deposits 24.27 20.85 18.95 16.36 16.16 Return on Avg. Assets 2.26 2.27 2.32 2.34 2.64 Return on Avg. Equity 12.31 14.70 15.82 17.42 20.77 Dividend Payout Ratio .30 .28 .22 .22 .17
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. Year 2000 --------- As a result of planning and preparation, the Y2K date changeover was met without any problems. Costs directly attributable to Y2K Compliance was less than $7,000. Merger Discussions Terminated ----------------------------- All merger discussions between Peoples Bancshares and Great Guaranty Bancshares ceased in the second quarter of 1999. FINANCIAL REVIEW Summary Bancshares consolidated net income for 1999 was $888,292. This represents a Return on Average Assets of 2.26%, which we believe is a good return. This is in comparison to 2.27% for 1998 and 2.32% in 1997. 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) elimination of loan loss provisions. In 1999, charge-offs were $33,424 as compared to $38,571 in 1998, while at the same time we reduced the reserve by $57,629 and recovered $40,427. Provisions for 1998 were $-0- and recoveries were $35,538 The prospects for 2000 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 2000. Other Income and Expenses - ------------------------- Other Income, excluding loan related income, increased $ 81,499 or 16.01% in 1999 as compared to 1998. The increase was due to a difference in fee income and rental income. Other expenses, excluding interest expense increased by $126,394 or 8.35% in 1999 as compared to 1998. Salaries and employee benefits increased $62,806 or 7.60%. 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, 1999 decreased $2,494,048 or 7.52% as compared to year end 1998. Non-interest bearing deposits increased $1,266,962 or 18.18% and interest bearing deposits decreased $1,227,086 or 4.69%. Total loans excluding loan reserves increased $1,430,119 or 4.91% and cost of investment securities increased $444,551 or 8.85%. The increase in loans was concentrated primarily in commercial and real estate loans. The increase in loans along with the decrease in deposits accounted for the decrease in the federal funds purchased. 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 of 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 - 1999, 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 2000 continue to be encouraging. Our capital base continued to grow in 1999; our loan loss reserve is adequate; our net income was extremely good with a Return on Average Assets of 2.26%; loan delinquencies continue to be manageable, although there was an increase in delinquencies over 1998; and classified assets have remained at a manageable level. ECONOMIC CONDITIONS Current economic conditions are slightly above average compared to the previous (5) five years, but are certainly not great. Our asset/liability management strategy helped produced good margins in 1999. 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 80 Direct 30,638 9.916 Stephen P. David 42 Direct 4,122 1.334 President and CEO of Peoples Indirect 19,577 6.336 Bancshares of Pointe Coupee and Peoples Bank & Trust Company Frank Ned Foti 64 Direct 24,561 7.949 C. E. Hebert, III 56 Direct 5,588 1.809 Junies W. Hurst 88 Direct 3,888 1.258 Clyde Walker Kimball 58 Direct 5,014 1.623 Camille N. Laborde 72 Direct 5,028 1.627 Norris A. Melancon, Jr. 72 Direct 20,491 6.632 Thomas W. Montgomery, III 60 Direct 3,588 1.161 Joseph Major Thibaut 46 Direct 600 .194 Indirect 1,000 .324 Rodney Fontaine 48 Direct 500 .162 Indirect 1,96 .634 Maurice Picard 52 Direct 400 .129 ------ ------ All Directors and Principal Direct 104,418 33.795 Officers as a Unit (12 Persons) Indirect 22,537 7.294 MANAGEMENT OF THE BANK AND BANCSHARES Employees On December 31, 1999, there were twenty full time employees. This includes the officers of the Corporation and Bank listed below: Officers Name Age Position Currently Held Stephen P. David 42 President and CEO of Peoples Bancshares and Peoples Bank and Trust Company Joyce A. York 52 Vice President and Cashier of Peoples Bank R. Blain Houston 27 Loan Officer of Peoples Bank Robin Cashio 49 Branch Manager of Peoples Bank Kenneth R. Ramagos 44 Assistant Vice - President and Loan Officer of Peoples Bank Melissa Laborde 36 Loan Review Officer of Peoples Bank Mary Posey 41 Loan Collections Officer Annie LeBlanc 66 Customer Account Officer 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 42. 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. Dates prior to that time reflects service as a Director of the Bank. 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 & Vice President York) had direct cash compensation of $200,920, $190,732, and $181,400 excluding board fees, but including bonuses in 1999, 1998, and 1997, 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 1999. 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 1999 totaled $16,201. The accrued amount at year end totaled $591,712. 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 director his 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 the director. The Bank also maintains a supplemental executive retirement plan with its president. Upon retirement, 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. The Board of Directors of Bancshares held twelve (12) regular scheduled meetings during 1999. 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 1999, and a loan committee which met nineteen (19) times during the year. The Board of Directors held no special meeting during 1999. The Bank also has an audit committee and executive committee which did not meet during 1999. 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 $500 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, 2000, 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, 2000 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. Suchloans are made only with the approval of the Board of Directors. At no time in 1999 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 1999 and 1998 of $1,441,636 and $1,382,362 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/ Joseph M. Thibaut, Sr. Joseph M. Thibaut, Sr. 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/ Junies W. Hurst Stephen P. David Junies W. Hurst 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 /s/ Maurice Picard Rodney G. Fontaine Maurice Picard Director Director Peoples Bancshares of Pointe Coupee Parish, Inc. & Subsidiary [LOGO] 1999 Financial Statements PEOPLES BANCSHARES OF POINTE COUPEE PARISH, INC. AND SUBSIDIARY CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1999 AND 1998 C O N T E N T S --------------- Page Independent Auditors' Report 1 - ----------------------------- Consolidated Financial Statements - --------------------------------- Consolidated statements of financial condition 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 statements of financial condition of Peoples Bancshares of Pointe Coupee Parish, Inc. and Subsidiary as of December 31, 1999 and 1998, 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, 1999. 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 generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the 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, 1999 and 1998, and the results of their operations and their cash flows for each of the years during the three year period ended December 31, 1999, in conformity with generally accepted accounting principles. Postlehwaite & Netterville Baton Rouge, Louisiana January 21, 2000 PEOPLES BANCSHARES OF POINTE COUPEE PARISH, INC. AND SUBSIDIARY NEW ROADS, LOUISIANA CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION DECEMBER 31, 1999 AND 1998 A S S E T S 1999 1998 ------------- ------------- Cash and due from banks $ 738,632 $ 1,691,500 Interest-bearing deposits in other banks 394,000 394,000 Federal funds sold 1,625,000 4,025,000 Securities available-for-sale 5,362,413 5,085,042 Loans, less allowances for loan losses of $801,545 and $852,171 at December 31, 1999 and 1998, respectively 29,750,258 28,269,513 Accrued interest receivable 564,920 513,129 Bank premises and equipment, net of accumulated depreciation 626,639 673,598 Foreclosed real estate 144,522 176,925 Other assets 116,297 87,751 ------------- ------------- TOTAL ASSETS $ 39,322,681 $ 40,916,458 ============= ============== The accompanying notes are an integral part of these consolidated financial statements.
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
1999 1998 LIABILITIES Deposits: Noninterest-bearing $ 5,701,011 $ 6,967,973 Interest-bearing 24,961,454 26,188,540 ------------- ------------- Total deposits 30,662,465 33,156,513 Other borrowed funds 1,000,000 628,000 Accrued interest payable 114,376 100,369 Other liabilities 105,442 115,937 ------------- ------------- Total liabilities 31,882,283 34,000,819 ------------- ------------- COMMITMENTS AND CONTINGENCIES - - STOCKHOLDERS' EQUITY Common stock; $2.50 par value; 1,000,000 shares authorized; 309,677 shares issued; and 308,977 and 308,577 shares Outstanding at December 31, 1999 and 1998, respectively 774,193 774,193 Capital surplus 1,530,320 1,525,808 Retained earnings 5,214,344 4,588,482 Accumulated other comprehensive income (70,183) 40,156 ------------- ------------- 7,448,674 6,928,639 Less: 700 shares and 1,100 shares held in treasury at December 31, 1999 and 1998, respectively - at cost (8,276) (13,000) ------------- ------------- Total stockholders' equity 7,440,398 6,915,639 ------------- ------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 39,322,681 $ 40,916,458 ============= =============
PEOPLES BANCSHARES OF POINTE COUPEE PARISH, INC. AND SUBSIDIARY NEW ROADS, LOUISIANA CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
1999 1998 1997 ------------- ------------- -------------- INTEREST INCOME Interest on loans $ 2,949,718 $ 3,006,132 $ 2,671,661 Interest on available-for-sale securities 319,632 358,338 525,504 Interest on federal funds sold 98,125 76,353 128,333 Interest on deposits in other banks 20,441 24,356 46,310 ------------- ------------- -------------- Total interest income 3,387,916 3,465,179 3,371,808 ------------- ------------- -------------- INTEREST EXPENSE Interest on deposits 1,062,992 1,092,939 1,138,820 Interest on federal funds purchased 1,863 18,085 297 Interest on other borrowed funds 26,893 20,946 - ------------- ------------- -------------- 1,091,748 1,131,970 1,139,117 ------------- ------------- -------------- NET INTEREST INCOME 2,296,168 2,333,209 2,232,691 Provision (credit) for loan losses (57,629) (46,000) - ------------- ------------- -------------- NET INTEREST INCOME AFTER PROVISION (CREDIT) FOR LOAN LOSSES 2,353,797 2,379,209 2,232,691 ------------- ------------- -------------- NON-INTEREST INCOME Service charges on deposit accounts 136,122 122,414 125,120 Other service charges and fees 364,313 321,839 315,775 Net realized gains on sales of available-for-sale securities 8,587 2,505 14,973 Other income 81,468 62,233 168,152 ------------- ------------- -------------- Total other income 590,490 508,991 624,020 ------------- ------------- -------------- 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, 1999, 1998, AND 1997
1999 1998 1997 ---------- ------------ ---------- NON-INTEREST EXPENSES Salaries and employee benefits $ 889,118 $ 826,312 $ 846,795 Occupancy expenses 166,605 160,318 148,939 Data processing expenses 104,024 107,173 72,783 Deposit insurance premiums 17,621 17,022 14,787 Other operating expenses 462,306 402,455 393,882 Total other expenses 1,639,674 1,513,280 1,477,186 ---------- ------------ ---------- INCOME BEFORE INCOME TAX EXPENSE 1,304,613 1,374,920 1,379,525 Income tax expense 416,321 452,387 465,439 ---------- ------------ ---------- NET INCOME 888,292 922,533 914,086 OTHER COMPREHENSIVE INCOME Unrealized holding gains (losses) arising during the period, net of taxes (101,752) 21,145 11,888 Less: reclassification adjustment for realized gains (8,587) (2,505) (523) ----------- ------------ ----------- (110,339) 18,640 11,365 ----------- ------------ ------------ COMPREHENSIVE INCOME $ 777,953 $ 941,173 $ 925,451 ============ ============ ============ Per common share data: Net income $ 2.88 $ 2.99 $ 2.96 ============ ============ ============ Cash dividends $ 0.85 $ 0.85 $ 0.65 ============ ============ ============ Average number of shares outstanding 308,777 308,577 308,577 ============ ============ ============ 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, 1999, 1998, AND 1997
Common Stock -------------------------- Capital Shares Amount Surplus ----------- ----------- ------------ Balance at December 31, 1996 309,677 $ 774,193 $ 550,808 Net income - - - Net change in unrealized gain (loss) on available-for-sale securities, net of deferred income taxes of $5,854 - - - Cash dividends paid - - - Board designated transfer from retained earnings to capital surplus - - 975,000 --------- ----------- ------------ Balance at December 31, 1997 309,677 774,193 1,525,808 Net income - - - Net change in unrealized gain (loss) on available-for-sale securities, net of deferred income taxes of $9,602 - - - Cash dividends paid - - - --------- ----------- ------------ Balance at December 31, 1998 309,677 774,193 1,525,808 Net income - - - Net change in unrealized gain (loss) on available-for-sale securities, net of deferred income taxes of $56,841 - - - Sale of 400 shares of common stock held in the treasury - - 4,512 Cash dividends paid - - - --------- ----------- ------------ Balance at December 31, 1999 309,677 $ 774,193 $ 1,530,320 ========= =========== ============ The accompanying notes are an integral part of these consolidated financial statements.
Accumulated Other Total Retained Comprehensive Treasury Stock Stockholders' Earnings Income Shares Amount Equity ------------- ----------- -------- ---------- ------------ Balance at December 31, 1996 $ 4,189,726 $ 10,151 1,100 $ (13,000) $ 5,511,878 Net income 914,086 - - - 914,086 Net change in unrealized gain (loss) on available-for-sale securities, net of deferred income taxes of $5,854 - 11,365 - - 11,365 Cash dividends paid (200,575) - - - (200,575) Board designated transfer from retained earnings to capital surplus (975,000) - - - - ------------- ----------- -------- ---------- ------------ Balance at December 31, 1997 3,928,237 21,516 1,100 (13,000) 6,236,754 Net income 922,533 - - - 922,533 Net change in unrealized gain (loss) on available-for-sale securities, net of deferred income taxes of $9,602 - 18,640 - - 18,640 Cash dividends paid (262,288) - - - (262,288) ------------- ----------- -------- ---------- ------------ Balance at December 31, 1998 4,588,482 40,156 1,100 (13,000) 6,915,639 Net income 888,292 - - - 888,292 Net change in unrealized gain (loss) on available-for-sale securities, net of deferred income taxes of $56,841 - (110,339) - - (110,339) Sale of 400 shares of common stock held in the treasury - - (400) 4,724 9,236 Cash dividends paid (262,430) - - - (262,430) ------------- ----------- -------- ---------- ------------ Balance at December 31, 1999 $ 5,214,344 $ (70,183) 700 $ (8,276) $ 7,440,398 ============= =========== ========= =========== =============
PEOPLES BANCSHARES OF POINTE COUPEE PARISH, INC. AND SUBSIDIARY NEW ROADS, LOUISIANA CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
1999 1998 1997 ------------ ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 888,292 $ 922,533 $ 914,086 Adjustments to reconcile net income to net cash provided by operating activities: Gain on sales of other real estate (9,297) (2,950) (823) Loss (gain) on sales of other assets 526 3,760 (119,980) Net realized gains from sales and maturities of available-for-sale securities (8,587) (2,505) (14,973) Net accretion of investment security discounts/ amortization of investment security premiums 6,815 12,270 3,262 Provision (credit) for loan losses (57,629) (46,000) - Provision for foreclosed real estate 4,500 - - Depreciation 62,200 60,714 55,718 Net changes in operating assets and liabilities: Accrued interest receivable (51,791) 24,617 19,012 Other assets 28,296 (44,204) 9,585 Accrued interest payable 14,007 4,474 2,485 Other liabilities (10,495) 31,220 39,877 ------------ ------------ ------------ Net cash provided by operating activities 866,837 963,929 908,249 ------------ ------------ ------------ CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sales and maturities of available-for-sale securities 2,282,152 6,139,493 6,740,227 Purchases of available-for-sale securities (2,724,932) (4,011,896) (4,546,187) Net decrease in interest-bearing deposits in other banks - 99,000 590,000 Net decrease (increase) in federal funds sold 2,400,000 (3,225,000) 2,950,000 Net increase in loans (1,447,140) (1,122,940) (5,101,067) Proceeds from sales of other assets 4,968 12,650 131,382 Proceeds from sales of other real estate owned 56,450 18,000 10,000 Proceeds from sales of bank premises and equipment - - 300 Purchases of bank premises and equipment (15,961) (49,212) (73,569) ------------ ------------ ------------ Net cash provided by (used in) investing activities 555,537 (2,139,905) 701,086 ------------ ------------ ------------ 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, 1999, 1998, AND 1997
1999 1998 1997 ------------ ------------- ------------- CASH FLOWS FROM FINANCING ACTIVITIES Net increase (decrease ) in noninterest-bearing demand deposit accounts, savings accounts, and NOW accounts $ (2,628,725) $ 498,561 $ 131,840 Net increase (decrease) in time deposits 134,677 (261,872) (973,601) Net increase in other borrowed funds 372,000 628,000 - Proceeds from sales of treasury stock 9,236 - - Dividends paid (262,430) (262,288) (200,575) ------------ ------------- ------------- Net cash provided by (used in) financing activities (2,375,242) 602,401 (1,042,336) ------------ ------------- ------------- Net increase (decrease) in cash and due from banks (952,868) (573,575) 566,999 Cash and due from banks - beginning of year 1,691,500 2,265,075 1,698,076 ------------ ------------- ------------- Cash and due from banks - end of year $ 738,632 $ 1,691,500 $ 2,265,075 ============= ============= ============= Supplemental disclosures of cash flow information Cash paid for interest $ 1,077,741 $ 1,127,496 $ 1,136,632 ============= ============= ============= Cash paid for income taxes $ 398,793 $ 468,120 $ 424,671 ============= ============= ============= The accompanying notes are an integral part of these consolidated financial statements.
PEOPLES BANCSHARES OF POINTE COUPEE PARISH, INC. AND SUBSIDIARY NEW ROADS, LOUISIANA NOTES TO 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 generally accepted accounting principles 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, savings deposits, and certificates of deposits, and its primary lending products are agriculture, commercial, business, real estate, and consumer loans. Use of estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and 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. PEOPLES BANCSHARES OF POINTE COUPEE PARISH, INC. AND SUBSIDIARY NEW ROADS, LOUISIANA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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. Loans receivable Loans receivable 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-offs, the allowance for loan losses, and any deferred fees or costs on originated loans and unamortized premiums or discounts on purchased loans. 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. The allowance for loan losses is increased by charges to income and decreased by charge-offs (net of recoveries). Management's periodic evaluation of the adequacy of the allowance is based on the Bank's past loan loss experience, known and inherent risks in the portfolio, adverse situations that may affect the borrower's ability to repay, the estimated value of any underlying collateral, and current economic conditions. PEOPLES BANCSHARES OF POINTE COUPEE PARISH, INC. AND SUBSIDIARY NEW ROADS, LOUISIANA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 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. 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. PEOPLES BANCSHARES OF POINTE COUPEE PARISH, INC. AND SUBSIDIARY NEW ROADS, LOUISIANA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Cash and cash equivalents For purposes of presentation in the consolidated statements of cash flows, cash and cash equivalents are defined as those amounts included in the balance sheet caption "cash and due from banks." Off-balance sheet financial instruments In the ordinary course of business, the Bank has entered into off-balance sheet financial instruments consisting of commitments to extend credit, commercial letters of credit, and standby letters of credit. Such financial instruments are recorded in the financial statements when they are funded or related fees are incurred or received. 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. PEOPLES BANCSHARES OF POINTE COUPEE PARISH, INC. AND SUBSIDIARY NEW ROADS, LOUISIANA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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: Loans receivable - 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. 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 1998 and 1997 consolidated financial statements have been reclassified to conform with the current year presentation. PEOPLES BANCSHARES OF POINTE COUPEE PARISH, INC. AND SUBSIDIARY NEW ROADS, LOUISIANA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 2. INVESTMENT SECURITIES Debt and equity securities have been classified in the consolidated statements of financial condition according to management's intent. Securities classified as available-for- sale consisted of the following:
December 31, 1999 Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value ------------- --------- ---------- U.S. Treasury securities and obligations of other governmental entities $ 3,964,294 $ 1,278 $ 84,904 $ 3,880,668 Mortgage-backed securities 1,126,057 23 22,735 1,103,345 Other 378,400 - - 378,400 ------------- --------- ---------- $ 5,468,751 $ 1,301 $ 107,639 $ 5,362,413 ============= ========= ========== December 31, 1998 Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value ------------- --------- ---------- U.S. Treasury securities and obligations of other governmental entities $ 3,251,067 $ 62,009 $ 1,479 $ 3,311,597 Mortgage-backed securities 1,421,533 3,295 2,983 1,421,845 Other 351,600 - - 351,600 ------------- --------- ---------- $ 5,024,200 $ 65,304 $ 4,462 $ 5,085,042 ============= ========= ===========
Realized gains on sales of securities during the years ended December 31, 1999, 1998, and 1997 were as follows: 1999 1998 1997 U.S. Treasury securities and obligations of other governmental entities $ 8,587 $ 2,505 $ 7,582 Mortgage-backed securities - - 7,391 --------- --------- --------- $ 8,587 $ 2,505 $ 14,973 ========= ========== ========= PEOPLES BANCSHARES OF POINTE COUPEE PARISH, INC. AND SUBSIDIARY NEW ROADS, LOUISIANA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 2. INVESTMENT SECURITIES (continued) The amortized costs and estimated market values of debt securities at December 31, 1999, 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 $1,536,469 $ 1,517,239 Greater than one but within five years 2,858,880 2,792,037 Greater than five but within ten years 98,566 95,977 Greater than ten years 974,836 957,160 ---------- ----------- $5,468,751 $ 5,362,413 ========== =========== Investment securities with carrying values of approximately $2,250,860 and $2,110,000 at December 31, 1999 and 1998, 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 statements of financial condition were as follows: 1999 1998 (in thousands) (in thousands) --------- ---------- Agricultural loans $ 6,442 $ 7,619 Commercial loans 11,085 9,673 Real estate loans 5,502 4,766 Consumer loans 6,934 6,785 Other 589 279 --------- ---------- 30,552 29,122 Less: allowance for loan losses ( 802) ( 852) --------- ---------- Loans, net $ 29,750 $ 28,270 ========= ========== PEOPLES BANCSHARES OF POINTE COUPEE PARISH, INC. AND SUBSIDIARY NEW ROADS, LOUISIANA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 3. LOANS (continued) Changes in the allowance for loan losses during the years ended December 31, 1999, 1998, and 1997 were as follows: 1999 1998 1997 ---------- ---------- ----------- Balance - beginning of year $ 852,171 $ 846,958 $ 920,601 Provision credited to operations ( 57,629) ( 46,000) - Loans charged-off ( 33,424) ( 38,571) ( 109,181) Recoveries 40,427 89,784 35,538 ---------- ---------- ----------- Balance - end of year $ 801,545 $ 852,171 $ 846,958 ========== ========== =========== Impairment of loans having recorded investments of $404,860 at December 31, 1999, and $192,894 at December 31, 1998, has been recognized in conformity with SFAS No. 114, Accounting by Creditors for Impairment of a Loan, as amended by SFAS No. 118. The average recorded investment in impaired loans during 1999 and 1998 was approximately $205,570 and $320,000, respectively. The total allowances for loan losses related to these loans was $22,500 at both December 31, 1999 and 1998. Interest income on impaired loans, which is recognized when cash payments are received, totalled approximately $7,000, $8,000, and $10,000 during the years ended December 31, 1999, 1998, and 1997, respectively. The Bank transferred approximately $24,024 and $187,468 of real estate acquired in settlements of loans to other real estate owned and other assets during the years ended December 31, 1999 and 1998, respectively. The Bank is not committed to lend additional funds to debtors whose loans have been modified. PEOPLES BANCSHARES OF POINTE COUPEE PARISH, INC. AND SUBSIDIARY NEW ROADS, LOUISIANA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 4. BANK PREMISES AND EQUIPMENT Major classifications of bank premises and equipment are summarized as follows: 1999 1998 Land $ 100,081 $ 100,081 Buildings and improvements 883,473 876,819 Equipment 509,233 513,844 ------------ ------------ 1,492,787 1,490,744 Less: accumulated depreciation ( 866,148) ( 817,146) ------------ ------------ $ 626,639 $ 673,598 ============ ============ Depreciation expense amounted to $62,200, $60,714, and $55,718 during the years ended December 31, 1999, 1998, and 1997, respectively. 5. DEPOSITS Deposits are summarized below: 1999 1998 ------------ ------------ Demand deposit accounts $ 5,701,011 $ 6,967,973 NOW accounts 3,357,017 4,427,077 Savings accounts 6,021,428 6,313,596 Time accounts 15,582,544 15,447,867 ------------ ------------ $30,662,000 $33,156,513 ============ ============ At December 31, 1999, the scheduled maturities of all outstanding certificates of deposit were as follows: During the year ending December 31, Amount ----------- 2000 $13,989,313 2001 1,053,796 2002 380,793 2003 158,642 ------------ $15,582,544 ============ PEOPLES BANCSHARES OF POINTE COUPEE PARISH, INC. AND SUBSIDIARY NEW ROADS, LOUISIANA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 5. DEPOSITS (continued) Included in deposits are approximately $4,383,000 and $4,266,000 of certificates of deposit in excess of $100,000 at December 31, 1999 and 1998, respectively. Interest expense on such deposits was approximately $239,627, $198,000, and $200,000 during the years ended December 31, 1999, 1998, and 1997, respectively. 6. OTHER BORROWED FUNDS The Bank has established a line-of-credit for approximately $4,250,000 with the Federal Home Loan Bank (FHLB) to provide an additional source of operating capital. The current advances, which totalled $1,000,000 and $628,000 at December 31, 1999 and 1998, respectively, bore interest at 6.000% and 5.275% at December 31, 1999 and 1998, respectively. This line of credit is secured by $378,400 of FHLB stock owned by the Bank and all wholly-owned residential (1-4 units) first mortgage loans. 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, 1999, 1998, and 1997 were as follows:
1999 1998 1997 ------------------------ ------------------------ ------------------------- Amount % Amount % Amount % ----------- -------- ------------- ------- ------------ -------- Income before income tax expense $1,304,613 100.0% $ 1,374,920 100.0% $ 1,379,525 100.0% =========== ======== ============ ======= ============ ======== Income tax expense at statutory rate $ 443,568 34.0% $ 467,473 34.0% $ 469,039 34.0% Tax-exempt interest income and nondeductible interest cost (9,220) ( 0.7 ) (29,348) ( 2.1 ) (12,077) ( 0.9 ) Other (18,027) ( 1.4 ) 14,262 1.0 8,477 0.6 ----------- -------- ------------- ------- ------------ -------- $ 416,321 31.9% $ 452,387 32.9% $ 465,439 33.7% =========== ======== ============ ======= ============ ========
PEOPLES BANCSHARES OF POINTE COUPEE PARISH, INC. AND SUBSIDIARY NEW ROADS, LOUISIANA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 7. INCOME TAXES (continued) The components of income tax expense during the years ended December 31, 1999, 1998, and 1997 were as follows: 1999 1998 1997 ---------- --------- --------- Current tax expense $ 384,604 $ 449,201 $ 470,991 Deferred tax expense (benefit) 31,717 3,186 (5,552) ---------- --------- ---------- $ 416,321 $ 452,387 $ 465,439 ========== ========= ========== 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, 1999 and 1998: 1999 1998 ------------ ---------- Depreciation ($ 129,370) ($137,708) Stock dividends ( 8,974) - Unrealized gains on securities - ( 20,686) ------------ ---------- Gross deferred tax liability ( 138,344) ( 158,394) ------------ ---------- Reserve for loan losses 77,901 124,123 Write-downs of foreclosed property 20,793 13,290 Unrealized losses on securities 36,155 - Deferred compensation 27,510 19,872 ------------ ---------- Gross deferred tax assets 162,359 157,285 Less: deferred tax asset valuation allowance - - ------------ ---------- Net deferred tax asset (liability) $ 24,015 ($ 1,109) ============ =========== 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 $16,200, $13,300, and $13,800 during the years ended December 31, 1999, 1998, and 1997, respectively. PEOPLES BANCSHARES OF POINTE COUPEE PARISH, INC. AND SUBSIDIARY NEW ROADS, LOUISIANA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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 20 years. 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. FINANCIAL INSTRUMENTS The Bank is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. 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 statements of financial condition. The contract or notional amounts of these instruments reflect the extent of the Bank's involvement in particular classes of financial instruments. The Bank's exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit is represented by the contractual notional amount of those instruments. The Bank uses the same credit policies in making commitments and conditional obligations as it does for financial instruments recorded on its balance sheet. Unless noted otherwise, the Bank does not require collateral or other security to support financial instruments with credit risk. 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 Bank evaluates each customer's creditworthiness on a case-by-case basis. The amount of collateral obtained, if it is deemed necessary by the Bank upon extension of credit, is based on management's credit evaluation of the counterparty. Collateral held varies but may include accounts receivable; inventory; property, plant and equipment; and income-producing commercial properties. At December 31, 1999, unfunded loan commitments totalled approximately $3,400,000. PEOPLES BANCSHARES OF POINTE COUPEE PARISH, INC. AND SUBSIDIARY NEW ROADS, LOUISIANA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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, 1999, commitments under standby letters of credit totalled approximately $332,000. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. 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 1999, 1998, or 1997. The estimated fair values of Bancshares's financial instruments at December 31, 1999 and 1998 were as follows (in thousands):
1999 1998 ------------------ ---------------------- 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 $ 2,758 $ 2,758 $ 6,111 $ 6,111 Securities available-for-sale 5,362 5,362 5,085 5,085 Loans receivable (net) 29,750 29,650 28,270 28,283 Accrued interest receivable 565 565 513 513 Financial liabilities: Deposit liabilities 30,662 30,597 33,157 33,234 Other borrowed funds 1,000 1,000 628 628 Accrued interest payable 114 114 100 100
PEOPLES BANCSHARES OF POINTE COUPEE PARISH, INC. AND SUBSIDIARY NEW ROADS, LOUISIANA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 10. RELATED PARTY TRANSACTIONS 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 1999, 1998, and 1997 with respect to loans to officers and directors of the Bank is as follows: 1999 1998 1997 ----------- ----------- ----------- Balance - beginning of year $1,382,362 $1,213,533 $ 915,967 Additions 1,705,025 897,008 869,256 Payments (1,645,751) (728,179) (571,690) ----------- ----------- ----------- Balance - end of year $1,441,636 $1,382,362 $1,213,533 =========== =========== =========== Included in deposits are deposits from directors, officers, their immediate families, and related companies. These accounts totalled approximately $1,262,252 and $1,809,000 at December 31, 1999 and 1998, 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. At December 31, 1999, the Bank could not declare any additional dividends without the approval of the Commissioner. 12. REGULATORY MATTERS The Bank is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary actions, by regulators that, if undertaken, could have a direct material effect on the Bank's financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank's assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Bank's capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios (set forth in the table 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, as of December 31, 1999, that the Bank meets all capital adequacy requirements to which it is subject. PEOPLES BANCSHARES OF POINTE COUPEE PARISH, INC. AND SUBSIDIARY NEW ROADS, LOUISIANA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 12. REGULATORY MATTERS (continued) The most recent notification from the Federal Deposit Insurance Corporation (as of December 31, 1998) 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 (on the following page). There are no conditions or events since that notification that management believes have changed the institution's category. The Bank's actual capital amounts and ratios as of December 31, 1999 and 1998 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, 1999: Total capital (to risk-weighted assets) $ 5,497,335 21.1% $2,082,080 >/=8.0% $ 2,602,600 >/=10.0% Tier I capital (to risk-weighted assets) 5,167,672 19.9% 1,041,040 >/=4.0% 1,561,560 >/=6.0% Tier I capital (to average assets) 5,167,672 12.7% 1,632,120 >/=4.0% 2,040,150 >/=5.0% As of December 31, 1998: Total capital (to risk-weighted assets) $ 5,962,572 23.0% $2,072,880 >/=8.0% $ 2,626,400 >/=10.0% Tier I capital (to risk-weighted assets) 5,634,272 21.7% 1,036,440 >/=4.0% 1,575,840 >/=6.0% Tier I capital (to average assets) 5,634,272 13.9% 1,617,600 >/=4.0% 2,022,000 >/=5.0%
PEOPLES BANCSHARES OF POINTE COUPEE PARISH, INC. AND SUBSIDIARY NEW ROADS, LOUISIANA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 13. SIGNIFICANT GROUP CONCENTRATIONS OF CREDIT RISK Most of the Bank's business activity is with customers located within Pointe Coupee Parish. Investments in state and municipal securities involve governmental entities within the Bank's market area. As of December 31, 1999, 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, 1999, 1998, and 1997 were as follows: 1999 1998 1997 --------- -------- --------- Director fees $ 79,350 $ 60,000 $ 64,600 ========= ======== ========= Professional fees $ 76,750 $ 70,250 $ 69,375 ========= ======== ========= 15. BANK ONLY FINANCIAL STATEMENTS STATEMENTS OF FINANCIAL CONDITION DECEMBER 31, 1999 AND 1998
ASSETS 1999 1998 ------------ ------------ Cash and due from banks $ 738,632 $ 1,691,500 Interest bearing deposits in other banks 394,000 394,000 Federal funds sold 1,625,000 4,025,000 Securities available-for-sale 4,908,211 4,537,811 Loans, less allowances for loan losses of $801,545 and $852,171 at December 31, 1999 and 1998, respectively 29,750,258 28,269,513 Bank premises and equipment, net 626,639 673,598 Accrued interest receivable 561,379 509,126 Foreclosed real estate 144,522 176,925 Other assets 114,348 94,518 ------------ ------------ Total assets $38,862,989 $40,371,991 ============ ============ LIABILITIES AND STOCKHOLDER'S EQUITY Liabilities: Deposits Noninterest-bearing $ 7,579,135 $ 7,064,431 Interest-bearing 24,961,454 26,188,540 ------------ ------------ Total deposits 32,540,589 33,252,971 Due to parent company - 600,000 Other borrowed funds 1,000,000 628,000 Accrued interest payable 114,376 100,369 Other liabilities 105,442 115,247 ------------ ------------ Total liabilities 33,760,407 34,696,587 ------------ ------------ 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 2,225,808 2,225,808 Retained earnings 2,167,671 2,634,271 Accumulated other comprehensive income (65,090) 41,132 ------------ ------------ Total stockholder's equity 5,102,582 5,675,404 ------------ ------------ Total liabilities and stockholder's equity $38,862,989 $40,371,991 ============ ============
15. BANK ONLY FINANCIAL STATEMENTS STATEMENTS OF OPERATIONS YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
1999 1998 1997 INTEREST INCOME Interest on loans $2,949,718 $3,006,132 $2,671,661 Interest on available-for-sale securities 293,416 326,163 525,504 Interest on federal funds sold 98,125 76,353 128,333 Interest on deposits in other banks 20,441 24,356 46,310 ----------- ----------- ----------- Total interest income 3,361,700 3,433,004 3,371,808 ----------- ----------- ----------- INTEREST EXPENSE Interest on deposits 1,062,992 1,092,939 1,138,820 Other borrowed funds 26,893 20,946 - Loan from parent company 15,107 13,516 - Interest on federal funds purchased 1,863 18,085 297 ----------- ----------- ----------- Total interest expense 1,106,855 1,145,486 1,139,117 ----------- ----------- ----------- NET INTEREST INCOME 2,254,845 2,287,518 2,232,691 Provision (credit) for loan losses (57,629) (46,000) - ----------- ----------- ----------- NET INTEREST INCOME AFTER PROVISION (CREDIT) FOR LOAN LOSSES 2,312,474 2,333,518 2,232,691 ----------- ----------- ----------- NONINTEREST INCOME Service charges on deposit accounts 136,122 122,414 125,120 Other service charges and fees 364,313 321,839 315,775 Net realized gains on sales of available-for-sale securities 8,587 2,505 14,973 Other income 81,468 62,233 168,152 ----------- ----------- ----------- 590,490 508,991 624,020 ----------- ----------- -----------
15. BANK ONLY FINANCIAL STATEMENTS STATEMENTS OF FINANCIAL OPERATIONS YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
1999 1998 1997 ----------- ----------- ----------- NONINTEREST EXPENSES Salaries and employee benefits $ 889,118 $ 826,312 $ 846,795 Occupancy expenses 166,605 160,318 148,939 Data processing expenses 104,024 107,173 72,783 Deposit insurance premiums 17,621 17,022 14,787 Other operating expenses 414,549 389,888 390,139 ----------- ----------- ----------- 1,591,917 1,500,713 1,473,443 ----------- ----------- ----------- INCOME BEFORE INCOME TAX EXPENSE 1,311,047 1,341,796 1,383,268 Income tax expense 423,607 444,426 465,439 ----------- ----------- ----------- NET INCOME 887,440 897,370 917,829 OTHER COMPREHENSIVE INCOME Unrealized holding gains (losses) arising during the period, net of taxes (97,635) 22,121 - Less: reclassification adjustment for realized gains (8,587) (2,505) (14,973) ----------- ----------- ----------- (106,222) 19,616 (14,973) ----------- ----------- ----------- COMPREHENSIVE INCOME $ 781,218 $ 916,986 $ 902,856 ========== =========== ===========
16. PARENT ONLY FINANCIAL STATEMENTS STATEMENTS OF FINANCIAL CONDITION DECEMBER 31, 1999 AND 1998 ASSETS
1999 1998 ---------- ---------- Cash in subsidiary bank $1,878,124 $ 96,458 Securities available-for-sale 454,202 547,231 Accrued interest receivable 3,541 4,003 Due from subsidiary bank - 600,000 Other assets 2,624 503 Investment in subsidiary bank 5,102,582 5,675,404 ---------- ---------- Total assets $7,441,073 $6,923,599 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES Due to subsidiary bank $ 675 $ 6,767 Other liabilities - 1,193 ---------- ---------- Total liabilities 675 7,960 ---------- ---------- STOCKHOLDERS' EQUITY Common stock; $2.50 par value; 1,000,000 shares authorized; 309,677 shares issued; and 308,977 and 308,577 shares outstanding at December 31, 1999 and 1998, respectively 774,193 774,193 Capital surplus 1,530,320 1,525,808 Retained earnings 5,214,344 4,588,482 Accumulated other comprehensive income (70,183) 40,156 ---------- ---------- 7,448,674 6,928,639 Less: 700 shares and 1,100 shares held in treasury at December 31, 1999 and 1998, respectively - at cost (8,276) (13,000) ---------- ---------- Total stockholders' equity 7,440,398 6,915,639 ---------- ---------- Total liabilities and stockholders' equity $7,441,073 $6,923,599 =========== ===========
16. PARENT ONLY FINANCIAL STATEMENTS STATEMENTS OF OPERATIONS YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
1999 1998 1997 ----------- ----------- ----------- INCOME Interest on available-for-sale securities $ 26,216 $ 32,175 $ - Interest on loan to subsidiary 15,107 13,516 - Dividends from subsidiary 1,354,040 1,473,394 208,000 ----------- ----------- ----------- 1,395,363 1,519,085 208,000 ----------- ----------- ----------- EXPENSES 47,757 12,567 3,743 ----------- ----------- ----------- INCOME BEFORE EQUITY (DEFICIT) IN UNDISTRIBUTED EARNINGS OF SUBSIDIARY 1,347,606 1,506,518 204,257 Equity (deficit) in undistributed earnings of subsidiaries (466,600) (576,024) 709,829 ----------- ----------- ----------- INCOME BEFORE INCOME TAX EXPENSE (BENEFIT) 881,006 930,494 914,086 Income tax expense (benefit) (7,286) 7,961 - ----------- ----------- ----------- NET INCOME 888,292 922,533 914,086 OTHER COMPREHENSIVE INCOME Unrealized holding gains (losses) arising during the period, net of taxes (101,752) 21,145 11,888 Less: reclassification adjustment for realized gains (8,587) (2,505) (523) ----------- ----------- ----------- (110,339) 18,640 11,365 ----------- ----------- ----------- COMPREHENSIVE INCOME $ 777,953 $ 941,173 $ 925,451 =========== =========== ===========
16. PARENT ONLY FINANCIAL STATEMENTS STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
1999 1998 1997 ------------ ------------ ----------- CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 888,292 $ 922,533 $ 914,086 Adjustments to reconcile net income to net cash Provided by operating activities: Net accretion of investment security discounts / Amortization of investment security premiums 1,404 - - Decrease (increase) in accrued interest receivable 462 (4,003) - Increase (decrease) in other liabilities (7,285) 7,457 - Undistributed earnings of subsidiaries 466,600 576,024 (709,829) ------------ ------------ ----------- Net cash provided by operating activities 1,349,473 1,502,011 204,257 ------------ ------------ ----------- CASH FLOWS FROM INVESTING ACTIVITIES Purchases of available-for-sale securities - (5,085,242) - Proceeds from maturities of available-for-sale securities 85,387 4,537,035 - Advancement of funds to subsidiary - (600,000) - Repayment of funds from subsidiary 600,000 - - ------------ ------------ ----------- Net cash provided by (used in) investing activities 685,387 (1,148,207) - ------------ ------------ ----------- CASH FLOWS FROM FINANCING ACTIVITIES Dividends paid (262,430) (262,288) (200,575) Proceeds from sales of treasury stock 9,236 - - ------------ ------------ ----------- Net cash used in financing activities (253,194) (262,288) (200,575) ------------ ------------ ----------- Increase in cash 1,781,666 91,516 3,682 Cash - beginning of year 96,458 4,942 1,260 ------------ ------------ ----------- Cash - end of year $ 1,878,124 $ 96,458 $ 4,942 ============ ============ ============
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