-----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, OQOnIfSUIjY2cf1i186iEJrV+v9GLID98YeqtPNDbjQ9fVV872H05Jh8mSzrvrNZ ciACCHT6myFKrjaLDTv+qg== 0000950134-96-001063.txt : 19960402 0000950134-96-001063.hdr.sgml : 19960402 ACCESSION NUMBER: 0000950134-96-001063 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960401 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN BANCORP INC/LA CENTRAL INDEX KEY: 0000721238 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 720951347 STATE OF INCORPORATION: LA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-11928 FILM NUMBER: 96542245 BUSINESS ADDRESS: STREET 1: 328 E LANDRY ST STREET 2: P O BOX 1579 CITY: OPELOUSAS STATE: LA ZIP: 70571-1579 BUSINESS PHONE: 3189483056 MAIL ADDRESS: STREET 1: P O BOX 1579 CITY: OPELOUSAS STATE: LA ZIP: 70570 10-K 1 FORM 10-K FOR YEAR ENDED DECEMBER 31, 1995 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, 1995 Commission File Number 0-11928 AMERICAN BANCORP, INC. (Exact name of registrant as specified in its charter) Louisiana 72-0951347 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 328 East Landry Street Opelousas, Louisiana 70570 (Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, including area code: (318) 948-3056 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Common Stock, $5.00 Par Value (Title of Class) Indicate by check mark whether the registrant: (l) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] The aggregate market value of the voting stock held by non-affiliates* of the registrant: $1,760,725. The number of shares outstanding of each of the issuer's classes of common stock, as of December 31, 1995: Common Stock, $5.00 Par Value, 120,000 shares outstanding. Documents Incorporated by Reference Portions of the annual shareholders' report for the year ended December 31, 1995 are incorporated by reference into Parts I and II. Portions of the proxy statement for the annual shareholders meeting to be held April 10, 1996 are incorporated by reference into Part III. *For purposes of the computation, shares owned by executive officers, directors, 5% shareholders and shares by non-affiliates whose voting rights have been assigned to directors have been excluded. - 1 - 2 PART I Item 1. Business American Bancorp, Inc. (the Corporation) was incorporated under the laws of the State of Louisiana in 1982. On October 1, 1983, American Bank and Trust Company (the Bank) was reorganized as a subsidiary of the Corporation. Prior to October 1, 1983, the Corporation had no material 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 revenue. The Bank The Bank, incorporated under the State Banking Laws on August 1, 1958 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 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 boxes, bank money orders, wire transfer facilities, and electronic banking facilities. The State of Louisiana, through its various departments and agencies, deposits public funds with the Bank. As of December 31, 1995, $297,000 in certificates of deposit were on deposit representing .53% of total deposits outstanding. The weighted average interest rates on these deposits was 6%. The maturity of these deposits is December 18, 1997. The Bank's general market area is in St. Landry Parish, which has a population of approximately 80,300. Its primary market is Opelousas, which has a population of approximately 19,300, and has experienced little population growth over the past several years. The commercial banking business in St. Landry Parish is highly competitive. The Depository Institutions Deregulation and Monetary Control Act of 1980 and the Garn-St. Germain Depository Institutions Act of 1982 have eliminated most, if not all, substantive distinctions between the services of commercial banks and thrift institutions. The Bank competes with three banks and two savings and loan institutions located in St. Landry Parish. The following is a list of banks and savings associations in this market with the total deposits and assets as of December 31, 1995.
(In thousands of dollars) Assets Deposits --------- --------- American Bank and Trust Company $ 63,070 $ 55,655 St. Landry Bank and Trust Company $ 202,872 $ 173,458 First National Bank of Lafayette $ 769,787 $ 639,662 St. Landry Homestead $ 107,454 $ 93,035 Washington State Bank $ 66,725 $ 56,541 First Federal Savings & Loan $ 53,872 $ 44,291
- 2 - 3 Item 1. Business (continued) In addition to the institutions listed above, further competition is provided by banks and other financial institutions located in Lafayette, Louisiana, which is 20 miles south of Opelousas and Baton Rouge, Louisiana, the state capital, which is 60 miles east of St. Landry Parish. Louisiana Banking Law provides that generally Louisiana banks having capital of one hundred thousand dollars or more may open one or more branch offices within the State or may acquire one or more banks or any or all branches thereof, or both. On July 2, 1986, Louisiana passed an interstate banking law affirmatively permitting Louisiana bank holding companies to immediately acquire out-of-state bank holding companies and banks. On July 1, 1987, bank holding companies located in a fifteen state region were permitted to acquire banks or bank holding companies in Louisiana, and beginning January 1, 1991, out-of-state bank holding companies may acquire banks or bank holding companies provided that the law of the state in which the out-of-state bank holding company has its principal place of business permits Louisiana bank holding companies to acquire banks and bank holding companies in that state. The effect of the new liberalized branching laws and the Louisiana Interstate Banking Law on the Company cannot be predicted at this time, but increased competition is expected. Employees During 1995, the average number of full-time equivalent employees at the Bank was 45. This includes the officers of the Corporation that are listed under Item 1 below. There are no unions or bargaining units that represent the employees of the Bank. The relation between management and employees is considered to be good. Executive Officers The executive officers of the Corporation are as follows:
Years of Officer Name Service Age Position Currently Held - ------------------ -------- --- ----------------------------- Salvador L. Diesi, Sr. 22 65 Chairman of the Board of the Corporation and the Bank; President of the Corporation and the Bank Ronald J. Lashute 23 46 Executive Vice-President and Chief Executive Officer of the Bank and Secretary/Treasurer of the Corporation
- 3 - 4 Item 1. Business (continued) None of the directors and executive officers of the Corporation or the Bank holds a directorship in any company with a class of securities registered under Section 12 of the Securities Exchange Act of 1934, as amended, or subject to the requirements of Section 15(d) of that Act or in any company registered as an investment company under the Investment Company Act of 1940. Salvador L. Diesi, Sr. and Ronald J. Lashute are the nephews of J.C. Diesi. No other family relationships exist among the above named directors or executive officers of the Corporation. Supervision and Regulation The Bank is subject to regulation and regular examinations by the Louisiana Commissioner of Financial Institutions and by the Federal Deposit Insurance Corporation. Applicable regulations relate to reserves, investments, loans, issuance of securities, establishment of branches, and other aspects of its operations. The Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA") further expanded the regulatory and enforcement powers of bank regulatory agencies. Among the significant provisions of FDICIA is the requirement that bank regulatory agencies prescribe standards relating to internal controls, information systems, loan documentation, credit underwriting, interest rate exposure, asset growth, compensation, fees and benefits. FDICIA mandates annual examinations of banks by their primary regulators. 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 of 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 as to be a proper incident thereto. In determining whether a particular activity is a proper incident 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 outweigh 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 non-banking activities of bank holding companies. Such regulations reflect a determination by the Board that certain specified activities are permissible for a bank holding company. An activity not listed in the regulation may be engaged in if, upon application, the Board determines that the activity meets the criteria described in the preceding paragraph. In each case, a bank holding company 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 judgment the activity or subsidiaries would be unsound. - 4 - 5 Item 1. Business (continued) Under the Act and 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. In some cases, the Company must receive the prior approval of the Board in order to repurchase or redeem its outstanding equity securities. With certain exceptions, the Subsidiary Bank is restricted by Sections 22 and 23A of the Federal Reserve Act from extending credit or making loans to or investments in the Company and certain other affiliates as defined in the Federal Reserve Act. Such transactions by the Subsidiary Bank with the Company or any such affiliate are limited in an amount to 10% of the Subsidiary Bank's capital and surplus. Furthermore, loans and extensions of credit are subject to various collateral requirements. The Louisiana bank holding company law, as amended (the "Louisiana Act"), permits bank holding companies to own more than one bank. In addition, a bank holding company and its subsidiaries may not engage in any insurance activity in which a bank may not engage. The Louisiana Commissioner of Financial Institutions is authorized to administer the Louisiana Act and to issue orders and regulations. The Board of Directors of the Corporation have no present plans or intentions to cause the Corporation to engage in any substantial business activity which would be permitted to it under the Act or 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. 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 Financial Condition and Results of Operations. The 1995 Annual Report to Shareholders is incorporated herein by reference under Item 8. Investment Portfolio The following table sets forth the carrying amount of Investment Securities at the dates indicated (in thousands of dollars):
December 31, ----------------------------------------- 1995 1994 1993 -------- -------- -------- Securities held to maturity: U.S. Treasury $ 5,508 $ 5,499 $ 4,299 U.S. Government Agencies 10,997 10,980 8,695 State and Political subdivisions - - 45 -------- -------- -------- $ 16,505 $ 16,479 $ 13,039 ======== ======== ========
- 5 - 6 Item 1. Business (continued)
December 31, ----------------------------------------- 1995 1994 1993 -------- -------- -------- Securities available for sale: Mortgage-backed securities $ 2,342 $ 2,637 $ - U.S. Government Agencies 1,536 497 - State and Political subdivisions 1,263 - - -------- -------- -------- $ 5,141 $ 3,134 $ -0- ======== ======== ========
The following tables set forth the maturities of investment securities at December 31, 1995, 1994, and 1993 and the weighted average yields of such securities (in thousands of dollars):
December 31, 1995 ---------------------------------------------------------------------------------------- After One After Five But Within But Within After Within One Year Five Years Ten Years Ten Years --------------- ----------------- ------------------- ------------------- Amount Yield Amount Yield Amount Yield Amount Yield -------- ------ -------- ------ -------- ------ -------- ------ Securities held to maturities: U.S. Treasury $ 3,499 6.32% $ 2,009 6.18% $ - - % $ - - % U.S. Government Agencies 5,002 5.62 5,495 6.37 500 6.36 - - State and Political Subdivisions* - - - - - - - - ------- ------- ------- ------- Total held to maturity 8,501 5.91% 7,504 6.32% 500 6.36% -0- - % ------- ------- ------- ------- Securities available for sale: U.S. Government Agencies - - % 1,536 6.77% - - % - - % Mortgage-backed securities 183 7.92 1,116 8.92 1,043 8.47 - - State and Political Subdivisions* - - 377 7.85 886 6.58 - - ------- ------- ------- ------- Total available for sale 183 7.92% 3,029 7.69% 1,929 7.59% -0- - % ------- ------- ------- ------- Total securities $ 8,684 5.96% $10,533 6.70% $ 2,429 7.35% $ -0- - % ======= ======= ======= =======
- 6 - 7 Item 1. Business (continued)
December 31, 1994 ------------------------------------------------------------------------------------- After One After Five But Within But Within After Within One Year Five Years Ten Years Ten Years ------------------ ---------------- ---------------- ----------------- Amount Yield Amount Yield Amount Yield Amount Yield ------- ------- ------- ------- ------- ------- ------- ------- Securities held to maturities: U.S. Treasury $ 2,000 4.90% $ 3,499 6.16% $ - - % $ - - % U.S. Government Agencies - - 10,980 6.00 - - - - State and Political Subdivisions* - - - - - - - - ------- ------- ------- ------- $ 2,000 4.90% $14,479 6.08% $ -0- - % $ -0- - % ======= ======= ======= ======= Securities available for sale: U.S. Treasury $ - - % $ - - % $ - - % $ - - % U.S. Government Agencies - - 500 7.87 - - - - State and Political Subdivisions* - - - - - - - - Mortgage-backed securities - - 336 8.81 1,225 8.89 1,073 8.88 ------- ------- ------- ------- $ -0 - % $ 836 8.65% $ 1,225 8.89% $ 1,073 8.88% ======= ======= ======= =======
December 31, 1993 ------------------------------------------------------------------------------------- After One After Five But Within But Within After Within One Year Five Years Ten Years Ten Years ------------------ ---------------- ----------------- ----------------- Amount Yield Amount Yield Amount Yield Amount Yield ------- ------- ------- ------- ------- ------- ------- ------- U.S. Treasury $ 1,799 4.97% $ 2,500 4.81% $ - - % $ - - % U.S. Government Agencies 2,500 5.53 3,089 5.33 1,756 8.80 1,350 8.38 State and Political Subdivisions* - - - - 45 9.00 - - ------- ------- ------- ------- $ 4,299 5.30% $ 5,589 5.09% $ 1,801 8.80% $ 1,350 8.38% ======= ======= ======= =======
* Weighted average yields have been computed on a fully tax-equivalent basis assuming a rate of 34% for 1995, 1994 and 1993. - 7 - 8 Item 1. Business (continued) Loan Portfolio The amounts of loans outstanding at the indicated dates are shown in the following table according to type of loan (in thousands of dollars):
December 31, ----------------------------------------- 1995 1994 1993 -------- -------- -------- Commercial, financial and agricultural $ 6,240 $ 6,543 $ 5,306 Real Estate - Construction 119 325 212 Real Estate - Mortgage 16,473 16,119 17,889 Installment 4,182 4,681 3,637 -------- -------- -------- Total 27,014 27,668 27,044 Less: Allowance for possible loan losses (624) (614) (606) Unearned income - (1) (6) -------- -------- -------- $ 26,390 $ 27,053 $ 26,432 ======== ======== ========
The following table presents information concerning the aggregate amount of nonperforming loans. Nonperforming loans comprise: (a) loans accounted for on a nonaccrual basis; (b) loans contractually past due ninety days or more as to interest or principal payments [but not included in the nonaccrual loans in (a) above]; (c) other loans whose terms have been restructured to provide a reduction or deferral of interest or principal because of a deterioration in the financial position of the borrower [exclusive of loans in (a) or (b) above]; and (d) loans now current where there are serious doubts as to the ability of the borrower to comply with present loan requirement terms (in thousands of dollars):
December 31, ----------------------------------------- 1995 1994 1993 -------- -------- -------- Loans accounted for on a nonaccrual basis $ 114 $ 4 $ 9 Loans contractually past due ninety days or more as to principal or interest, but which were not on non-accrual 10 9 181 Restructured loans which are not on non-accrual - 133 153 -------- -------- -------- 124 146 343 Other real estate and repossessed assets received in complete or partial satisfaction of loan obligations 14 17 146 -------- -------- -------- Total nonperforming assets $ 138 $ 163 $ 489 ======== ======== ========
- 8 - 9 Item 1. Business (continued) As of January 1, 1995, the Company adopted SFAS No. 114, "Accounting by Creditors for Impairment of a Loan," which, as it relates to in-substance foreclosures, requires that a creditor continue to classify these assets as loans in the balance sheet unless the creditor receives physical possession of the collateral. The Company had no in-substance foreclosures at the date of adoption of SFAS No. 114. At December 31, 1995, the recorded investment in loans that were considered to be impaired under SFAS No. 114 was $114,059, with the related allowance for loan losses of $5,901. These loans are included in nonaccrual loans. The effect of nonperforming loans on interest income has not been substantial in the past three years. Had interest been accrued on the nonperforming loans, interest income would have been recorded in the amount of $13,732, $13,846 and $19,747, for the years 1995, 1994, and 1993, respectively. Interest income in the amount of $7,638, $6,707 and $7,558 on nonperforming loans during 1995, 1994 and 1993, respectively, was recorded. At December 31, 1995, 1994 and 1993 there were no significant commitments to lend additional funds to debtors whose loans were considered to be nonperforming. The Bank places loans on nonaccrual when the borrower is no longer able to make periodic interest payments due to a deterioration of the borrowers financial condition. At December 31, 1995, the Bank has an insignificant amount of loans for which payments are current, but the borrowers are experiencing financial difficulties. These loans are subject to constant management attention, and their classification is reviewed on a monthly basis. Summary of Loan Loss Experience The following table summarizes loan balances at the end of each period and average loans based on daily average balances for 1995, 1994, and 1993; changes in the allowance for possible loan losses arising from loans charged off and recoveries on loans previously charged off by loan category; and additions to the allowance which have been charged to expense (in thousands of dollars):
1995 1994 1993 -------- -------- -------- Amount of loans outstanding at end of period $ 27,014 $ 27,667 $ 27,038 ======== ======== ======== Average amount $ 26,748 $ 26,976 $ 26,678 ======== ======== ========
- 9 - 10 Item 1. Business (continued) Allowance for Possible Loan Losses (In thousands of dollars)
Year Ended December 31, ------------------------------------------ 1995 1994 1993 -------- -------- -------- Beginning balance $ 614 $ 606 $ 576 Provision charged against income - 12 36 -------- -------- -------- 614 618 612 -------- -------- -------- Charge-offs: Commercial, financial and agricultural loans - 1 - Real estate mortgage loans - 13 3 Real estate construction loans - - - Installment loans 6 1 7 -------- -------- -------- Total charge-offs 6 15 10 -------- -------- -------- Recoveries: Commercial, financial and agricultural loans 8 8 - Real estate mortgage loans - - - Real estate construction loans - - - Installment loans 8 3 4 -------- -------- -------- 16 11 4 -------- -------- -------- Net charge-offs (recoveries) (10) 4 6 -------- -------- -------- Ending balance $ 624 $ 614 $ 606 ======== ======== ======== Ratio of net charge-offs (recoveries) during the period to average loans outstanding during the period (.04)% .01% .02% ======= ======== ========
The allowance for possible loan losses has been allocated according to the amount deemed to be reasonably necessary to provide for the possibility of losses being incurred within the following categories of loans at the date indicated: Allocation of Allowance for Possible Loan Losses (In thousands of dollars)
December 31, 1995 December 31, 1994 --------------------------- --------------------------- % of Loans % of Loans Outstanding Outstanding to Total to Total Allowance Loans Allowance Loans --------- ----------- --------- ----------- Commercial, financial and agricultural loans $ 134 21.47% $ 126 20.52% Real estate construction 5 0.80 5 0.81 Real estate mortgage loans 400 64.10 400 65.15 Installment loans 85 13.63 83 13.52 ------- ------- ------- ------- $ 624 100.00% $ 614 100.00% ======= ======= ======= =======
- 10 - 11 Item 1. Business (continued) Allocation of Allowance for Possible Loan Losses (continued) (In thousands of dollars)
December 31, 1993 --------------------------- % of Loans Outstanding to Total Allowance Loans --------- ----------- Commercial, financial and agricultural loans $ 119 19.63% Real estate construction 5 0.78 Real estate mortgage loans 401 66.14 Installment loans 81 13.45 ------- ------- $ 606 100.00% ======= ======
Deposits The average amount of deposits, using daily average balances for 1995, 1994, and 1993, is summarized for the periods indicated in the following table (in thousands of dollars):
Year Ended December 31, ------------------------------------------ 1995 1994 1993 -------- -------- -------- Non-interest bearing demand deposits $ 15,707 $ 13,494 $ 12,362 Interest-bearing demand deposits 11,480 11,855 11,249 Savings deposits 8,782 8,775 8,436 Time deposits 15,977 15,154 16,146 -------- -------- -------- $ 51,946 $ 49,278 $ 48,193 ======== ======== ========
Return on equity and assets The ratio of Net Income to Average Shareholders' Equity and to Average Total Assets, and certain other ratios, are as follows:
Year Ended December 31, ------------------------------------------ 1995 1994 1993 -------- -------- -------- Percentage of net income to: Average total assets 1.64% 1.75% 1.37% Average shareholders' equity 15.46% 17.96% 15.76% Percentage of dividends declared per common share to net income per common share 10.59% 8.10% 8.28% Percentage of average shareholders' equity to daily average total assets 10.60% 9.76% 8.69%
- 11 - 12 Item 1. Business (continued) Short-Term Borrowing The Corporation's short-term borrowing and the average interest rate thereon at the end of the last three years, are as follows (in thousands of dollars):
Year Ended December 31, ------------------------------------------ 1995 1994 1993 -------- -------- -------- Balance at December 31 $ - $ - $ - Weighted average interest rate at year end - % - % - % Maximum amount outstanding at any month's end $ - $ - $ - Average amount outstanding during the year $ - $ - $ - Weighted average interest rate during the year - % - % - %
The Corporation's short-term note payable was completely paid in 1992. The note was scheduled to mature in 1993. Item 2. Properties The main office of the Corporation and the Bank are presently located at 328 East Landry Street, Opelousas, Louisiana, in the downtown business district. The Bank leases three branch sites. The building in which the main office is located is free of all mortgages. For information with respect to the Corporation obligations under its lease commitments, see Note 11 to the Consolidated Financial Statements, which are incorporated herein by reference under Item 8. Item 3. Legal Proceedings The Corporation is not involved in any legal actions; however, there are presently pending by the Bank a number of legal proceedings. It is the opinion of management that the resulting liability, if any, from these actions and other pending claims will not materially affect the consolidated financial statements. Item 4. Submission of Matters to a Vote of Security Holders No matters were submitted during the fourth quarter of the fiscal year covered by this report to a vote of security holders, through the solicitation of proxies or otherwise. - 12 - 13 PART II Item 5. Market for Registrant's Common Stock and Related Security Holder Matters MARKET PRICE AND DIVIDENDS DECLARED
Dividends Year Quarter High Low Per Share ------ --------- ------ ------ ----------- 1995 First $ 25 $ 20 $ - Second 25 20 - Third 25 20 - Fourth 25 20 .85 1994 First $ 30 $ 15 $ - Second 30 15 - Third 30 15 - Fourth 30 15 .65
Note: The primary market area for American Bancorp, Inc.'s common stock is the Opelousas, Louisiana area with American Bank and Trust Company acting as registrar and transfer agent. There were approximately 572 shareholders of record at December 31, 1995. Source of market price - American Bank & Trust Company acts as the transfer agent for the Company. The stock is thinly traded and the price ranges are based on stated sales price to the transfer agent, which does not represent all sales. RESTRICTIONS ON CASH DIVIDENDS PAYABLE BY THE REGISTRANT: The only source of funds by the Company to pay dividends is dividends paid by the Subsidiary Bank, the payment of which is restricted by applicable federal and state statutes. Federal bank regulatory authorities have authority under the Financial Institutions Supervisory Act to prohibit a bank from engaging in an unsafe or unsound practice. The payment of a dividend by the Bank could, depending upon the financial condition of the Bank and other factors be deemed an unsafe or unsound practice. Applicable Louisiana law prohibits a state bank subsidiary from paying a dividend if its surplus remaining after payment of the dividend would be less than half the aggregate par value of its outstanding stock. In addition, a state bank subsidiary is required to obtain the prior approval of the Commissioner of Financial Institutions of Louisiana before declaring or paying a dividend in a given year if the total of all dividends declared or paid during that year would exceed the total of its net profits for that year combined with the net profits from the immediately preceding year. - 13 - 14 Item 6. Selected Financial Data The information called for by Item 6 is included in Registrant's Annual Report on page 5 in the Section titled "Summary of Operations for the Last Five Years" and is incorporated herein by reference. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations The information called for by Item 7 is included in the Registrant's Annual Report in the section titled "Management's Discussion and Analysis of Operations" and is incorporated herein by reference. Item 8. Financial Statements and Supplementary Data The following consolidated financial statements of the Registrant and its subsidiary included on pages 28 through 55 in the Annual Report are incorporated herein by reference: Consolidated Balance Sheets - December 31, 1995 and 1994 Consolidated Statements of Income - Years Ended December 31, 1995, 1994, and 1993 Consolidated Statements of Shareholders' Equity - Years Ended December 31, 1995, 1994, and 1993 Consolidated Statements of Cash Flows - Years Ended December 31, 1995, 1994, and 1993 Notes to Consolidated Financial Statements Item 9. Disagreements in Accounting and Financial Disclosure There have been no disagreements with an independent accountant on any matter of accounting principles or practice, financial disclosure, auditing scope or procedure. PART III Item 10. Directors and Executive Officers With the exception of identification of executive officers of the Corporation, the information called for by Item 10 is omitted pursuant to General Instruction G(3) and is included in Registrant's definitive Proxy Statement filed pursuant to Section 14(a). Executive officers of the Corporation are identified in Item 1, "Executive Officer," included in Part I of this report. Item 11. Management Remuneration and Transactions The information called for by this item is included in Registrant's definitive Proxy Statement filed pursuant to Section 14(a) of the Securities Exchange Act of 1934 and is incorporated herein by reference. - 14 - 15 Item 12. Security Ownership of Certain Beneficial Owners and Management The information called for by this item is included in Registrant's definitive Proxy Statement filed pursuant to Section 14(a) of the Securities Exchange Act of 1934 and is incorporated herein by reference. Item 13. Certain Relationships and Related Transactions The information called for by this item is included in Registrant's definitive Proxy Statement filed pursuant to Section 14(a) of the Securities Exchange Act of 1934 and is incorporated herein by reference. PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K (a) 1. Financial Statements The following consolidated financial statements of American Bancorp, Inc. and Subsidiary, included in pages 28 through 55 of the Registrant's Annual Report are incorporated by reference in Item 8: Consolidated Balance Sheets - December 31, 1995 and 1994 Consolidated Statements of Income - Years Ended December 31, 1995, 1994 and 1993 Consolidated Statements of Shareholders' Equity - Years Ended December 31, 1995, 1994 and 1993 Consolidated Statements of Cash Flows - Years Ended December 31, 1995, 1994 and 1993 Notes to Consolidated Financial Statements (a) 2. Financial Statement Schedules The Schedules to the consolidated financial statements required by Article 9, and all other schedules to the financial statements of the Registrant required by Article 9 of Regulation S-X are not required under the related instructions or are inapplicable and therefore have been omitted. (a) 3. Exhibits (13) 1995 Annual Report to Shareholders (23) Proxy Statement for Annual Meeting of Shareholders to be held on April 10, 1996 (24) Consent of Independent Auditors - 15 - 16 Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K (continued) (b) Reports on Form 8-K None (c) Exhibits The response to this portion of Item 14 is submitted as a separate section of this report. (d) Financial Statement Schedules The response to this portion of Item 14 is submitted as a separate section of this report. - 16 - 17 Signatures Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. American Bancorp, Inc. (Registrant) By: /s/ SALVADOR L. DIESI, SR. ------------------------------ Salvador L. Diesi, Sr., Chairman of the Board of the Corporation and the Bank; President of the Corporation and the Bank Dated: 3/28/96 ------------------------------ 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/ SALVADOR L. DIESI, SR. /s/ JOSEPH J. ARTALL - ------------------------------------- -------------------------------- Salvador L. Diesi, Sr., Chairman of Joseph J. Artall, Director the Board of the Corporation and the Bank; President of the Corporation and the Bank /s/ RONALD J. LASHUTE /s/ WALTER J. CHAMPAGNE, JR. - ------------------------------------- -------------------------------- Ronald J. Lashute, Executive Vice- Walter J. Champagne, Jr., Director President and Chief Executive Officer of the Bank; Secretary/Treasurer of the Corporation /s/ J.C. DIESI -------------------------------- J.C. Diesi, Director - 17 - 18 EXHIBIT INDEX
Number Description ---------- ----------------------------------- 13.1 1995 Annual Report to shareholders of American Bancorp, Inc. 23.1 1995 Proxy Statement for annual meeting of shareholders. 24.1 Consent of Independent Auditors
- 18 - EX-13.1 2 ANNUAL REPORT TO SHAREHOLDERS 1 EXHIBIT 13.1 [LOGO] ________________________________________________________________________________ 1995 ANNUAL REPORT AMERICAN BANCORP, INC. POST OFFICE BOX 1579 OPELOUSAS, LOUISIANA 70570 2 NATURE OF BUSINESS American Bancorp, Inc. is a one-bank holding company whose sole subsidiary is American Bank and Trust Company, a commercial bank whose general business is that of providing banking services to the Opelousas, Louisiana area. The Bank serves the needs of the area through 46 employees at six banking locations. The main office is located at the corner of Landry Street and Union Street in Opelousas. Branch banking-offices are located in the parish of St. Landry in the communities of Lawtell, Krotz Springs, Port Barre and an office on Creswell Lane in South Opelousas. In addition, the Bank has a branch located on Moss Street, in Lafayette, Louisiana. MARKET PRICE AND DIVIDENDS DECLARED
DIVIDENDS YEAR QUARTER HIGH LOW PER SHARE ---- ------- ---- --- --------- 1995 First $ 25 $ 20 $ - Second 25 20 - Third 25 20 - Fourth 25 20 .85 1994 First $ 30 $ 15 $ - Second 30 15 - Third 30 15 - Fourth 30 15 .65
Note: The primary market area for American Bancorp, Inc.'s common stock is the Opelousas, Louisiana area with American Bank and Trust Company acting as registrar and transfer agent. There were approximately 572 shareholders of record at December 31, 1995. Source of market price - American Bank & Trust Company acts as the transfer agent for the Company. The stock is thinly traded and the price ranges are based on stated sales price to the transfer agent, which does not represent all sales. ANNUAL SHAREHOLDERS' MEETING The annual meeting of the shareholders of American Bancorp, Inc. will be held on April 10, 1996 in the Board of Directors Room at the Operations Center located at 328 East Landry Street, Opelousas, Louisiana. FORM 10-K ANNUAL REPORT American Bancorp, Inc. files an annual report with the Securities and Exchange Commission on Form 10-K. A copy of the report filed on Form 10-K will be sent free of charge to any shareholder by writing to: Ronald J. Lashute, Chief Executive Officer and Executive Vice-President, American Bank and Trust Company, Post Office Box 1579, Opelousas, Louisiana 70570. -1- 3 FINANCIAL SUMMARY (In thousands of dollars except per share data and ratios)
1995 1994 1993 ---- ---- ---- FOR THE YEAR Net income . . . . . . . . . . . . . . . . . . . . $ 963 $ 962 $ 725 Return on average shareholders' equity . . . . . . 15.46% 17.96% 15.76% Return on average total assets . . . . . . . . . . 1.64% 1.75% 1.37% AT YEAR END Total assets . . . . . . . . . . . . . . . . . . . $ 63,070 $ 65,141 $ 51,746 Total earning assets . . . . . . . . . . . . . . . $ 55,080 $ 55,190 $ 46,398 Total loans . . . . . . . . . . . . . . . . . . . $ 26,390 $ 27,053 $ 26,432 Total deposits . . . . . . . . . . . . . . . . . . $ 55,655 $ 59,230 $ 46,676 Total shareholders' equity . . . . . . . . . . . . $ 6,785 $ 5,818 $ 4,934 Common shares outstanding . . . . . . . . . . . . 120,000 120,000 120,000 PER SHARE Net income . . . . . . . . . . . . . . . . . . . . $ 8.03 $ 8.02 $ 6.04 Book value . . . . . . . . . . . . . . . . . . . . $ 56.55 $ 48.49 $ 41.12 Cash dividends declared . . . . . . . . . . . . . $ .85 $ .65 $ .50 CAPITAL RATIOS Total risk-based capital ratio . . . . . . . . . . 23.17% 19.76% 19.21% Leverage ratio . . . . . . . . . . . . . . . . . . 11.36% 10.38% 9.31%
-2- 4 C O N T E N T S
PAGE Financial Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 A Message to the Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Management's Discussion and Analysis of Financial Condition and Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 - 27 Independent Auditors' Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Consolidated balance sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 and 30 Consolidated statements of income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Consolidated statements of changes in shareholders' equity . . . . . . . . . . . . . . . . . . . . 33 and 34 Consolidated statements of cash flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 and 36 Notes to consolidated financial statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 - 55 Officers and directors of American Bank and Trust Company . . . . . . . . . . . . . . . . . . . . . 56 Officers and directors of American Bancorp, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . 57
-3- 5 TO THE SHAREHOLDERS Fiscal year 1995 was a remarkably good year for American Bancorp, Inc. and American Bank & Trust Co., its sole subsidiary. Net income for the year was $963,456 or $8.03 per share. The company's return on average assets for 1995 was 1.64% and return on average equity was 15.46%. Both of these ratios rank American Bank & Trust Co. among the top performing banks in the Southeast. American Bancorp's average assets during 1995 were $58,733,000, an increase of $3,870,000 or 7.05% over 1994. The company's leverage capital ratio increased to 11.35% from 10.38% exceeding all regulatory requirements to be considered a well capitalized bank. Dividends declared in 1995 represented an increase of 31% over dividends paid in 1994. Two significant factors in the bank's successful financial performance were a healthy net interest margin of 5.79%, and the high quality of assets. At December 31, 1995, nonperforming assets totaled .2% of average assets and the bank had a net recovery of charged off loans of $10,000. Having completed another successful year and exceeding goals set by the board of Directors and Management, we look forward to expanding our services through improved technology to meet the banking needs of our customers. We will continue to offer these services with our traditional personalized approach. Management is optimistic that the bank will continue to operate in a profitable and safe manner. We will achieve this using the same prudent and sound banking practice as in the past. We appreciate the loyalty and support of the shareholders, directors and employees of the bank, and look forward to your continued support and interest. /s/ SALVADOR L. DIESI, SR. - ---------------------------------------------- Salvador L. Diesi, Sr., Chairman of the Board and President /s/ RONALD J. LASHUTE - ---------------------------------------------- Ronald J. Lashute, Chief Executive Officer and Executive Vice-President -4- 6 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS SUMMARY OF OPERATIONS FOR THE LAST FIVE YEARS (In thousands of dollars except per share data and ratios)
YEAR ENDED DECEMBER 31, ------------------------------------------------------------ 1995 1994 1993 1992 1991 ------------------------------------------------------------ Operating Data: Net interest income . . . . . . . . . . . . . $ 3,065 $ 2,567 $ 2,442 $ 2,450 $ 2,056 Provision for possible loan losses . . . . . . . . . . . . . . . . . . - 12 36 36 (26) Net income . . . . . . . . . . . . . . . . . 963 962 725 809 506 Per share data: Weighted average number of shares outstanding . . . . . . . . . . . 120,000 120,000 120,000 120,000 120,000 Net income . . . . . . . . . . . . . . . . . $ 8.03 $ 8.02 $ 6.04 $ 6.75 $ 4.22 Cash dividends declared . . . . . . . . . . . .85 .65 .50 - - Book value at end of year . . . . . . . . . . 56.55 48.49 41.12 35.58 24.62 Balance sheet totals: Average assets . . . . . . . . . . . . . . . $ 58,733 $ 54,863 $ 52,937 $ 52,461 $ 52,891 Average shareholders' equity . . . . . . . . 6,230 5,356 4,599 3,852 2,922 Relationship between significant financial ratios: Percentage of net income to average total assets . . . . . . . . 1.64% 1.75% 1.37% 1.54% .95% Percentage of net income to average shareholders' equity . . . . . . . . . . . . . . . . 15.46% 17.96% 15.76% 21.01% 17.32% Percentage of dividends declared per common share to net income per common share . . . . . . . . . . . . . . . . . 10.59% 8.10% 8.28% .00% .00% Percentage of average share- holders' equity to average total assets . . . . . . . . . . . . . 10.60% 9.76% 8.69% 7.34% 5.52% Tier 1 risk-based capital ratio . . . . . . . 21.92% 18.51% 17.96% 15.89% 15.13% Total risk-based capital ratio . . . . . . . 23.17% 19.76% 19.21% 17.14% 16.63% Leverage ratio . . . . . . . . . . . . . . . 11.36% 10.38% 9.31% 8.13% 7.30%
-5- 7 Management's discussion and analysis of financial condition and results of operations should be read in conjunction with the accompanying financial statements and notes. OVERVIEW The Company reported net income of $963,456 in 1995 compared to $962,484 in 1994 and $724,503 in 1993. However, interest income has steadily increased over the last three years. The primary increase has been in interest income on loans and investment securities. The interest on these items increased $710,376 in 1995 and $122,531 in 1994. Interest expense also increased in 1995 after being fairly constant for the last two years. The increase for 1995 was $210,831, while there was a decrease of $14,855 from 1993 to 1994. The most significant change on the income statement was in provision for income taxes. The Company had been in the position of having net operating losses available for carryfoward. All such losses were realized in 1994 and, consequently, the Company went from a tax benefit to a tax expense in 1995. The tax benefit in 1994 was $56,432 while the tax provision for 1995 was $449,793. Average total assets continue to increase. These assets have grown 3.6% and 7.1% in 1994 and 1995, respectively. This increase is a result of a steady growth of non-interest bearing demand deposits. These deposits increased $1,132,000 in 1994 or 9.2% and $2,213,000 in 1995 or 16.4%. The year end balance sheet reflects a slight drop of $652,962 in loans due to a reduction in loan demand. In addition, total deposits decreased $3,575,452 which contributed to a decline of $2,070,642 in total assets in comparing 1995 to 1994. A portion of this decrease is attributed to a fiscal agent agreement with a public body that has seasonal variations in their deposits. For the same period there was an increase of $967,185, in stockholders' equity. STATEMENT OF INCOME ANALYSIS Net interest income on a taxable-equivalent basis was $3.1 million in 1995, an increase of $.553 million, or 21.8% compared in 1994. In 1994, net interest income was $2.5 million, an increase of $.139 million, or 5.8% over the prior year. The net interest margin for 1995 was 5.79% compared to 5.09% in 1994 and 5.02% for 1993. Table 1 summarizes average balances, income and average yields on earning assets and expense and average rates paid on interest bearing liabilities. Table 2 analyzes the change in net interest income for the two most recent annual intervals. The increase in average balances in securities available for sale and securities held to maturity had a positive effect on the net interest margin for the year ended December 31, 1995. The increase in average rates on loans and securities held to maturity also had a significant impact on the increase in the net interest margin form 1994 to 1995. The increase in the average rate of $.532 million on earning assets was offset by an increase of $.184 million in interest expense related to the Company's cost of funds. -6- 8 PROVISION FOR POSSIBLE LOAN LOSSES. The provision for possible loan losses was $-0- in 1995, $12,000 in 1994 and $36,000 in 1993. As a percentage of outstanding loans, the allowance for possible loans losses was 2.31%, 2.22% and 2.24% at December 31, 1995, 1994 and 1993, respectively. The annual provision is determined by the level of net charge offs, the size of the loan portfolio, the level of nonperforming loans, anticipated economic conditions, and review of financial condition of specific customers. NON-INTEREST INCOME. There have been immaterial variances in most non-interest income accounts for the three year period ended 1995. However, from 1993 to 1994 the effect of an increase in service charges resulted in an increase in income of approximately $32,000. Other non-interest income was below normal in 1993 due to the expensing of the remaining cost basis of an obsolete computer system. The Bank's management realizes that non-interest income will become increasingly important as deregulation continues to impact the net interest margin; therefore, we are continuously evaluating new opportunities for fee revenues through proper pricing of services and the development of new sources of non-interest revenue. NON-INTEREST EXPENSE. In comparing 1995 to 1994, the only significant variance was a reduction in other expense of $47,229 due primarily to a reduction in FDIC assessments. The other categories in non-interest expense experienced normal variation between 1995, 1994 and 1993. INCOME TAXES. The Company recorded income tax expense of $449,793 in 1995 as compared to a benefit of $(56,432) in 1994. Effective January 1, 1992, the Company adopted Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes." Due to limitations related to the valuation of deferred tax assets, there was no cumulative effect adjustment at adoption. During 1994, the Bank recorded a deferred tax benefit equal to its deferred tax asset. The Bank's net deferred tax asset at December 31, 1994 was fully supported by the Bank's carryback potential, plus one year of future expected earnings. At December 1995, all available carrybacks had been utilized resulting in the income tax expense of $449,793. This change in accounting principle enabled the Company to more clearly reflect the impact of net operating loss carryforwards on results of operations. Previously, these tax benefits were required to be reported as extraordinary income. The only income tax expense paid for 1994 and 1993 was related to alternative minimum tax calculations. BALANCE SHEET AND CAPITAL FUNDS ANALYSIS Investment securities are a major use of funds by the Bank. The balance at December 31, 1995 was $21,645,540 which represented a $2,032,057 or 10.36% increase from the $19,613,483 balance outstanding at December 31, 1994. Investment securities serve several purposes. A portion of investment securities provides liquidity or secondary reserves, which management can use if necessary to meet loan demand or deposit withdrawals. Investment securities, especially obligations of state and political subdivisions, provide for schools, road construction, sewers, and various other projects. The Bank invests a portion of these funds in the market area as a service to the community in which it operates. The remainder of these funds is invested in obligations of the United States Government or its agencies. It is management's policy to minimize risk in investments and provide liquidity by investing in short-term maturities with quality ratings. While a substantial portion of the investment portfolio is pledged on public deposits (55%), this is slightly less than 1994 pledged percentage of 56%. The amount of pledged securities have been fairly constant for the last three years and management anticipates this source of deposits will remain relatively constant in the future. -7- 9 On January 1, 1994, the Company adopted Statement of Financial Accounting Standards (SFAS) No. 115, "Accounting for Certain Investments in Debt and Equity Securities," which requires the classification of securities into one of three categories: trading, available for sale or held to maturity. Management determines the appropriate classification of debt securities at the time of purchase and re-evaluates this classification periodically. Prior to January 1, 1994, the Company classified securities as held for sale (available for sale) and investment securities (held to maturity) based on criteria which did not differ significantly from that required by the new standard. Held for sale securities were recorded at the lower of cost or fair value. In December 1995, the Financial Accounting Standards Board issued "A Guide to Implementation of Statement 115 on Accounting for Certain Investments in Debt and Equity Securities" (Guide). This guide provided for a one time opportunity to reclassify securities without impairing the individual classifications. The Company elected to leave all investment classifications as previously recorded on acquisition. The Company will continue to determine the appropriate classification at the time of purchase. The Bank's primary use of funds is to meet loan demand. Loans, net of unearned income, were $27,014,350 at December 31, 1995, compared to $27,667,312 at December 31, 1994. This $652,962 or 2.36% decrease is the result of weak loan demand in the market area. The Bank attracts deposits from consumers and businesses, and also utilizes its access to the money markets to purchase funds to support the asset side of the balance sheet. The two primary sources of funds may be classified as "interest-bearing deposits" and "non-interest bearing deposits." "Interest-bearing deposits" consist of time deposits, savings accounts, NOW accounts and Money Market deposit accounts. The largest source of "non-interest bearing deposits" is demand deposits, which consist of gross demand deposits less reciprocal balances with our correspondent banks. As of December 31, 1995, total deposits decreased $3,575,452 or 6.04% from December 31, 1994. The most significant changes in deposits from 1994 to 1995 were increases in non-interest bearing demand deposit accounts of $937,334, a 5.86% increase, and net decreases in NOW accounts of $4,390,847, a percentage decrease of 25.92%. This decrease is attributable to the Bank becoming the fiscal agent for a public body which experiences seasonal variations in their deposit account. Shareholders' equity increased $967,186 or 16.62% from December 31, 1994 to December 31, 1995. The equity or book value of the Bank is the shareholders' investment in the Bank resulting from the sale of stock and the accumulation of earnings retained by the Bank. The strength of the Bank and its ability to grow depends to a great extent on management's ability to maintain a corresponding growth in shareholders' equity. We declared cash dividends in the amount of $102,000 or $.85 per share in 1995 and $78,000 or $.65 per share in 1994 and $ .50 per share in 1993. -8- 10 NONPERFORMING ASSETS AND PAST DUE LOANS. Nonperforming assets are loans carried on a nonaccrual basis, those classified as restructed loans (loans with below-market interest rates or other concessions due to the deteriorated financial condition of the borrower), repossessed real estate, property in the process of being repossessed and repossessed movable property. A loan is placed on nonaccrual when, in management's judgment, the borrower's financial condition has deteriorated to the point that his ability to service the principal and/or interest is in doubt. At that time, any accrued interest on the loan is reversed and accruing of interest is discontinued. The Company's nonperforming assets consist primarily of repossessed real estate and loans secured by real estate. Nonperforming assets at December 31, 1995 were $137,363, a decrease of $25,170 from December 31, 1994. The most significant decrease in nonperforming loans from 1993 to 1994 was in the loans contractually past due 90 days or more as to principal or interest, but which are not in the nonaccrual category. This resulted primarily from one borrower who was experiencing financial difficulty at December 31, 1993, but subsequent to year end, the loan was paid off by the borrower. Other real estate and repossessed assets decreased $2,944 from the prior year balance to $13,800 at December 31, 1995. The Bank has experienced a continual drop in other real estate over the last three years. Management anticipates this favorable trend to continue. As of January 1, 1995, the Company adopted SFAS No. 114, "Accounting by Creditors for Impairment of a Loan," which, as it relates to in-substance foreclosures, requires that a creditor continue to classify these assets as loans on the balance sheet unless the creditor receives physical possession of the collateral. The Company had no in- substance foreclosures in 1995 or 1994. At December 31, 1995, the recorded investment in loans that were considered to be impaired under SFAS No. 114 was $83,884, with the related reserve for possible loan losses of $5,901. These loans are included in nonaccrual loans in Table 7. LIQUIDITY. Liquidity is the ability to ensure that adequate funds are available to satisfy contractual liabilities, fund operations, meet withdrawal requirements of depositors, and provide for customers' credit needs in a timely manner. The liquidity position of the Bank is founded on a stable base of core deposits. The primary source of liquidity for the Bank is its short-term investments. The Bank has overnight funds lines with correspondent banks providing additional sources of liquidity. Securities available for sale also provide a major source of liquidity to the Bank, as do the cash flows from repayments and maturities of its loan portfolio. The franchise from which the Bank operates allows access to a broad base of retail customers, and management has been successful at attracting additional deposits when a continuing need for further funding has arisen. The Bank's core deposit base is supplemented by public fund time deposits and federal funds obtained through correspondent relationships. At the Parent Company (American Bancorp, Inc.) level, cash is needed to fund operations and to pay dividends. During December 31, 1995, the Parent Company received $102,000 from the Bank in partial settlement for the use of a net operating loss that had been incurred by the Parent. These funds were used to pay dividends to stockholders. -9- 11 The purpose of liquidity management is to assure that the Bank has the ability to raise funds to support asset growth, meet deposit withdrawal, maintain reserve requirements and otherwise operate the Bank on a continuing basis. Liquidity for the Bank is provided by the acquisition of additional funds in the form of deposits, borrowing such as federal funds, investment maturities and sales and loan maturities and repayments. In recognition of the increased pace of deregulation and increasing competition, the Bank will continue to increase its competitive position in the area to assure the availability of funds. The Bank's reputation, capital position and base of deposits will help to insure flexibility and liquidity. CAPITAL ADEQUACY. The management of capital is a continuous process which consists of providing capital for anticipated growth of the Bank. An evaluation of capital adequacy cannot be made solely in terms of total capital or related ratios. A more comprehensive indication of financial strength is management's ability to generate capital through the retention of earnings. The Bank's main source of capital during the last several years has been cumulative earnings derived through profitable operations. In 1992, the Federal Deposit Insurance Corporation (FDIC) issued regulations for the classification of banks based on their capital levels pursuant to the Federal Deposit Insurance Corporation Improvement Act passed by Congress in 1991. The rules place each bank into one of the nine risk categories for assessing risk-based deposit premiums based on capital ratios and on other supervisory information. Three capital categories are used for capital ratios ranging from "well capitalized" to "undercapitalized." The regulations define "well capitalized" banks as those bank with at least 6% Tier 1 risk-based capital ratio, 10% total risk-based capital ratio and a 5% leverage ratio. Banks are also assigned to one of three supervisory subgroups ranging from "healthy" to "substantial supervisory concern." The Bank is included in the top rating categories for both capital ratios and the supervisory subgroup. At December 31, 1995, the Bank had a Tier 1 risk-based capital ratio of 21.9% and 23.2% total risk-based capital ratio. The leverage ratio has increased to 11.36% at December 31, 1995. The Bank presently meets or exceeds all required risk-based capital standards and anticipates no difficulty in maintaining those standards. FAIR VALUES OF FINANCIAL INSTRUMENTS. Statement of Financial Accounting Standards No. 107, "Disclosures About Fair Values of Financial Instruments" requires disclosure of estimated fair values of financial instruments. Financial instruments are defined as cash and contractual rights and obligations that require settlement, directly or indirectly, in cash. Note 14 to the consolidated financial statements provides information regarding the fair values of financial instruments as of December 31, 1995. INTEREST RATE SENSITIVITY. Interest rate risk is the potential impact of changes in interest rates on net interest income and results from mismatches in repricing opportunities of assets and liabilities over a period of time. Static Gap analysis is used to estimate the effects of changing interest rates and various balance sheet strategies on the level of net interest income. Management may alter the mix of floating and fixed rate assets and liabilities, change pricing schedules, and adjust maturities through sales and purchases of securities available for sale. Table 14 presents the Bank's interest rate sensitivity position at December 31, 1995. -10- 12 This profile, usually referred to as a Gap analysis, is based on a point in time and may not be meaningful because assets and liabilities must be categorized according to contractual maturities and repricing periods rather than estimating these characteristics, as is done in simulation models. Also, the Gap analysis does not consider subsequent changes in interest rate levels or spreads between asset and liability categories. Although Table 14 indicates that the Company is liability-sensitive (interest-bearing liabilities exceed earning assets) up to one year, this may not be true in practice. The 1 - - 30 day deposit category includes NOW, money market and savings accounts which have indeterminate maturities. The rates paid on these core deposits, which account for 59.3% of interest-bearing funds, do not necessarily reprice in a direct relationship to changes in interest rate. In addition to core deposits, which serve to lessen the volatility of net interest income in changing rate conditions, the Company's loan portfolio contains fixed-rate commercial loans that have actual maturities and cash flows that vary with the level of interest rates. These earning assets are reported in the after one year category, when in fact a portion of these balances may be subject to repricing within one year or less. Depending on market interest rates, actual cash flows from these loans will vary from the contractual maturities due to payoffs and refinancing activity. -11- 13 TABLE 1 SUMMARY OF CONSOLIDATED NET INTEREST INCOME Fully taxable equivalent basis (In thousands)
1995 -------------------------------------------------- AVERAGE AVERAGE BALANCE INTEREST RATE ------- -------- ------- ASSETS Short-term investments $ 4,930 $ 271 5.50% Loans, net of unearned income (1) (2) 26,748 2,573 9.62 Securities available for sale (3) 3,843 312 8.12 Securities held to maturity 17,779 1,087 6.11 -------- -------- Total interest earning assets 53,300 4,243 7.96% Allowance for possible loan losses (621) -------- ------- Cash and due from banks 3,815 Other assets 2,239 -------- Total assets $ 58,733 ======== LIABILITIES Interest-bearing demand deposits $ 11,480 $ 217 1.89% Savings deposits 8,782 239 2.72 Time deposits 15,977 700 4.38 Short-term borrowings 17 2 11.76 -------- -------- Total interest-bearing liabilities/interest expense 36,256 1,158 3.19% Non-interest bearing demand deposits 15,707 ------- Other liabilities 540 -------- Total liabilities 52,503 SHAREHOLDERS' EQUITY Shareholders' equity 6,230 -------- Total liabilities and shareholders' equity $ 58,733 ======== Total interest expense related to earning assets 2.17% ------- Net interest income $ 3,085 ======== Net interest margin 5.79% =======
(1) Interest income earned on nontaxable investment securities and certain loans are exempt from taxation. However, an adjustment has been made for the tax preference item related to nontaxable securities purchased after December 31, 1982. An incremental tax rate of 34% is used to compute the taxable equivalent adjustment for 1995, 1994, and 1993. (2) For purposes of yield computations, non-accrual loans are included in loans outstanding. (3) Yield computations are based on historical cost of securities available for sale. -12- 14
1994 1993 -------------------------------------------- -------------------------------------------- AVERAGE AVERAGE AVERAGE AVERAGE BALANCE INTEREST RATE BALANCE INTEREST RATE ------- -------- ------- ------- -------- ------- $ 6,609 $ 272 4.12% $ 7,077 $ 285 4.03% 26,976 2,281 8.46 26,678 2,162 8.10 2,905 257 8.85 - - 0.00 13,257 670 5.05 13,953 908 6.51 -------- -------- -------- -------- 49,747 3,480 7.00% 47,708 3,355 7.03% -------- ------ -------- ------ (614) (589) 3,567 1,647 2,163 4,171 -------- -------- $ 54,863 $ 52,937 ======== ======== $ 11,855 $ 218 1.84% $ 11,249 $ 233 2.07% 8,775 239 2.72 8,436 237 2.81 15,154 491 3.24 16,146 492 3.05 - - 0.00 - - 0.00 -------- -------- -------- -------- 35,784 948 2.65% 35,831 962 2.68% ------ ------ 13,494 12,362 229 145 -------- -------- 49,507 48,338 5,356 4,599 -------- -------- $ 54,863 $ 52,937 ======== ======== 1.91% 2.02% ------ ------ $ 2,532 $ 2,393 ======== ======== 5.09% 5.02% ====== ======
-13- 15 TABLE 2 RATE/VOLUME ANALYSIS Fully taxable equivalent basis (In thousands)
YEAR ENDED DECEMBER 31, ------------------------------------------- 1995/1994 ------------------------------------------- INCREASE (DECREASE) DUE TO CHANGE IN: (1) -------------------------- AVERAGE AVERAGE NET BALANCE RATE CHANGE ------- ------- ------- Interest income: Short-term investments . . . . . . . . . . . . . . . . . . . $ (81) $ 80 $ (1) Loans, net of unearned income (2) . . . . . . . . . . . . . (21) 313 292 Securities available for sale (3) . . . . . . . . . . . . . 80 (25) 55 Securities held to maturity . . . . . . . . . . . . . . . . 253 164 417 ------- ------- ------- Total interest income . . . . . . . . . . . . . . . . . . 231 532 763 ------- ------- ------- Interest expense: Demand deposits . . . . . . . . . . . . . . . . . . . . . . (6) 5 (1) Savings deposits . . . . . . . . . . . . . . . . . . . . . . - - - Time deposits . . . . . . . . . . . . . . . . . . . . . . . 31 178 209 Short-term borrowing . . . . . . . . . . . . . . . . . . . . 1 1 2 ------- ------- ------- Total interest expense . . . . . . . . . . . . . . . . . 26 184 210 ------- ------- ------- Taxable-equivalent net interest income . . . . . . . . . . . . $ 205 $ 348 $ 553 ======= ======= =======
(1) The change in interest due to both rate and volume has been allocated to rate and volume changes in proportion to the relationship of the absolute dollar amounts of the change in each. (2) Non-accrual loans are included in loans outstanding. (3) Yield computations are based on historical cost of securities available for sale. -14- 16
YEAR ENDED DECEMBER 31, - ------------------------------------------- 1994/1993 - ------------------------------------------- INCREASE (DECREASE) DUE TO CHANGE IN: (1) - -------------------------- AVERAGE AVERAGE NET BALANCE RATE CHANGE - ------- ------- ------- $ (19) $ 6 $ (13) 25 94 119 128 129 257 (40) (198) (238) - ------- ------- ------- 94 31 125 - ------- ------- ------- 12 (27) (15) 9 (7) 2 (31) 30 (1) - - - - ------- ------- ------- (10) (4) (14) - ------- ------- ------- $ 104 $ 35 $ 139 ======= ======= =======
-15- 17 TABLE 3 SECURITIES PORTFOLIO (In thousands)
DECEMBER 31, 1995 DECEMBER 31, 1994 ------------------------------------ ------------------------------------ HELD TO AVAILABLE HELD TO AVAILABLE MATURITY FOR SALE TOTAL MATURITY FOR SALE TOTAL -------- --------- -------- -------- --------- -------- U.S. Treasury . . . . . . . . . . $ 5,508 $ - $ 5,508 $ 5,499 $ - $ 5,499 U.S. Government and Agencies . . . . . . . . . . . . 10,997 1,536 12,533 10,980 497 11,477 Mortgage-Backed Securities . . . . . . . . . . . - 2,342 2,342 - 2,637 2,637 State and Political Subdivisions . . . . . . . . . . - 1,263 1,263 - - - -------- -------- -------- -------- -------- -------- $ 16,505 $ 5,141 $ 21,646 $ 16,479 $ 3,134 $ 19,613 ======== ======== ======== ======== ======== ========
-16- 18 TABLE 4 MATURITY DISTRIBUTION AND SECURITIES PORTFOLIO YIELDS (In thousands)
AFTER AFTER ONE BUT FIVE BUT WITHIN ONE WITHIN FIVE WITHIN TEN YEAR AMT. YIELD YEARS AMT. YIELD YEARS AMT. YIELD ---------- ----- ----------- ----- ---------- ----- December 31, 1995: Held to maturity: U.S. Treasury . . . . . . . . . . . $ 3,499 6.32% $ 2,009 6.18% $ - - % U.S. Government and Agencies . . . . . . . . . . 5,002 5.62 5,495 6.37 500 6.36 ------- ----- ------- ----- ------- ----- Total held to maturity . . . . . . . . . 8,501 5.91% 7,504 6.32% 500 6.36% ------- ----- ------- ----- ------- ----- Available for sale: U.S. Government and Agencies . . . . . . . . . . - -% 1,536 6.77% - - % Mortgage-Backed Securities . . . . . . . . . . . 183 7.92 1,116 8.92 1,043 8.47 State and Political Subdivisions . . . . . . . . . . - - 377 7.85 886 6.58% ------- ----- ------- ----- ------- ----- Total available for sale . . . . . . . . . 183 7.92% 3,029 7.69% 1,929 7.59 ------- ----- ------- ----- ------- ----- Total securities . . . . . . . . $ 8,684 5.96% $10,533 6.70% $ 2,429 7.35% ======= ===== ======= ===== ======= =====
-17- 19
AFTER TEN TOTAL YEARS AMT. YIELD AMOUNT YIELD ---------- ----- ------ ----- $ - - % $ 5,508 6.27% - - 10,997 6.03 ------- ----- ------- ------ -0- 0.00% 16,505 6.11% ------- ----- ------- ------ - - % 1,536 6.78% - - 2,342 8.64 - - 1,263 6.95 ------- ----- ------- ------ -0- 0.00% 5,141 7.66% ------- ----- ------- ------ $ -0- 0.00% $21,646 6.47% ======= ===== ======= ======
-18- 20 TABLE 5 LOAN PORTFOLIO The amounts of loans outstanding for the three years ended December 31, 1995 are shown in the following table according to type of loan (in thousands).
1995 1994 1993 --------- --------- --------- Commercial, financial and agricultural . . . . . . . . . $ 6,240 $ 6,543 $ 5,306 Real Estate - Construction . . . . . . . . . . . . . . . 119 325 212 Real Estate - Mortgage . . . . . . . . . . . . . . . . . 16,473 16,119 17,889 Installment . . . . . . . . . . . . . . . . . . . . . . . 4,182 4,681 3,637 --------- --------- --------- Total . . . . . . . . . . . . . . . . . . . . . . 27,014 27,668 27,044 Less: Allowance for possible loan losses . . . . . . . . . . (624) (614) (606) Unearned income . . . . . . . . . . . . . . . . . . . . - (1) (6) --------- --------- --------- $ 26,390 $ 27,053 $ 26,432 ========= ========= =========
________________________________________________________________________________ TABLE 6 LOAN MATURITY AND INTEREST RATE SENSITIVITY The following table shows the amount of commercial, financial and agricultural loans, real estate-construction loans and real estate mortgage loans, exclusive of 1-4 family residential loans, outstanding as of December 31, 1995 which, based on remaining scheduled repayments of principal, are due in the amounts indicated. Also, the amounts due after one year are classified according to the sensitivity to the changes in interest rates (in thousands).
ONE YEAR OVER ONE OR TO OVER LESS (1) 5 YEARS 5 YEARS TOTAL -------- -------- -------- -------- Maturity of Loans: Commercial, financial and agricultural . . . . . . . . . . . . . $ 2,928 $ 2,103 $ 1,641 $ 6,672 Real Estate - mortgage and construction . . . . . . . . . . . . . 493 4,109 2,460 7,062 -------- -------- -------- -------- Total . . . . . . . . . . . . . . . . $ 3,421 $ 6,212 $ 4,101 $ 13,734 ======== ======== ======== ======== Interest Rate Sensitivity of Loans: With predetermined interest rates . . . . $ 1,064 $ 4,306 $ 168 $ 5,538 With floating interest rates (2) . . . . 2,357 1,906 3,933 8,196 -------- -------- -------- -------- Total . . . . . . . . . . . . . . . . $ 3,421 $ 6,212 $ 4,101 $ 13,734 ======== ======== ======== ========
(l) Includes demand loans, loans having no stated schedule of repayments and no stated maturity, and overdrafts. (2) The floating interest rate loans generally fluctuate according to a formula based on a prime rate. -19- 21 TABLE 7 NONPERFORMING ASSETS Nonperforming assets include nonaccrual loans, loans which are contractually 90 days past due, restructured loans, and foreclosed assets. Restructured loans are loans which, due to a deteriorated financial condition of the borrower, have a below-market yield. Interest payments received on nonperforming loans are applied to reduce principal if there is doubt as to the collectibility of the principal; otherwise, these receipts are recorded as interest income. Certain nonperforming loans are current as to principal and interest payments that are classified as nonperforming because there is a question concerning full collectilibity of both principal and interest. Nonperforming assets totaled $137,363 at year ended 1995, a $25,170 (15.5%) decrease from the prior year. Nonperforming assets totaling $162,533 at December 31, 1994 was down $326,742 (67%) from December 31, 1993. The composition of nonperforming assets for the past three years are illustrated below.
1995 1994 1993 ---------- ---------- ---------- Nonperforming loans: Loans on nonaccrual . . . . . . . . . . . . . . . . . $ 114,059 $ 3,722 $ 9,104 Loans contractually past due 90 days or more as to principal or interest, but which are not on nonaccrual . . . . . . . . . . . . . . . . . . . . 9,504 9,377 180,451 Restructured loans which are not on nonaccrual . . . . . . . . . . . . . . . . . . . - 132,690 153,415 ---------- ---------- ---------- 123,563 145,789 342,970 Other real estate and repossessed assets received in complete or partial satisfaction of loan obligations . . . . . . . . . . . . . . . . . . . . 13,800 16,744 146,305 ---------- ---------- ---------- Total nonperforming assets . . . . . . . . . . . $ 137,363 $ 162,533 $ 489,275 ========== ========== ==========
At December 31, 1995, the Bank has loans outstanding to multiple numbers of borrowers engaged in the medical industry and the legal profession. The loans to the medical industry totaled $4,478,739, while the loans to the legal profession were $3,103,320. There were no significant nonperforming loans outstanding in these two concentrations. -20- 22 TABLE 8 ALLOWANCE FOR POSSIBLE LOAN LOSSES (In Thousands)
YEAR ENDED DECEMBER 31, ---------------------------------------------- 1995 1994 1993 ------ ------ ------ Beginning balance . . . . . . . . . . . . . . . . . . . . . $ 614 $ 606 $ 576 ------ ------ ------ Provision charged against income . . . . . . . . . . . . . -0- 12 36 ------ ------ ------ Charge-offs: Commercial, financial and agricultural loans . . . . . . - 1 - Real estate mortgage loans . . . . . . . . . . . . . . . - 13 3 Real estate construction loans . . . . . . . . . . . . . - - - Installment loans . . . . . . . . . . . . . . . . . . . . 6 1 7 ------ ------ ------ Total charge-offs . . . . . . . . . . . . . . . . . . 6 15 10 ------ ------ ------ Recoveries: Commercial, financial and agricultural loans . . . . . . 8 8 - Real estate mortgage loans . . . . . . . . . . . . . . . - - - Real estate construction loans . . . . . . . . . . . . . - - - Installment loans . . . . . . . . . . . . . . . . . . . . 8 3 4 ------ ------ ------ Total recoveries . . . . . . . . . . . . . . . . . . 16 11 4 ------ ------ ------ Net charge-offs (recoveries) . . . . . . . . . . . . . . . (10) 4 6 ------ ------ ------ Ending balance . . . . . . . . . . . . . . . . . . . . . . $ 624 $ 614 $ 606 ====== ====== ====== Ratio of net charge-offs (recoveries) during the period to average loans outstanding during the period . . . . . . . . . . . . . . . . . . . . (.04)% .01% .02% ====== ====== ======
-21- 23 TABLE 9 ALLOCATION FOR POSSIBLE LOAN LOSSES (In thousands) The allowance for possible loan losses has been allocated according to the amount deemed to be reasonably necessary to provide for the possibility of losses being incurred within the following categories of loans at the date indicated.
DECEMBER 31, 1995 DECEMBER 31, 1994 ------------------------------- -------------------------------- % OF LOANS % OF LOANS OUTSTANDING OUTSTANDING TO TOTAL TO TOTAL ALLOWANCE LOANS ALLOWANCE LOANS --------- ----------- --------- ----------- Commercial, financial and agricultural loans . . . . . . . . . . . $ 134 21.47% $ 126 20.52% Real estate construction . . . . . . . . . 5 0.80 5 0.81 Real estate mortgage loans . . . . . . . . 400 64.10 400 65.15 Installment loans . . . . . . . . . . . . . 85 13.63 83 13.52 -------- ------- ------- ------- $ 624 100.00% $ 614 100.00% ======== ======= ======= =======
DECEMBER 31, 1993 ---------------------------------- % OF LOANS OUTSTANDING TO TOTAL ALLOWANCE LOANS --------- ----------- Commercial, financial and agricultural loans . . . . . . . . . . . . . . . . . . . . $ 119 19.63% Real estate construction . . . . . . . . . . . . . . . . . . 5 0.78 Real estate mortgage loans . . . . . . . . . . . . . . . . . 401 66.14 Installment loans . . . . . . . . . . . . . . . . . . . . . . 81 13.45 ------- ------- $ 606 100.00% ======= =======
-22- 24 TABLE 10 DEPOSITS The following table presents the average balance and an average rate paid on deposits (in thousands):
DECEMBER 31, ------------------------------------------------------------------------- 1995 1994 1993 ------------------- -------------------- ------------------- AVERAGE AVERAGE AVERAGE AVERAGE AVERAGE AVERAGE BALANCE RATE BALANCE RATE BALANCE RATE -------- ------- -------- ------- -------- ------- Non-interest bearing demand deposits . . . . . . . . . $ 15,707 - % $ 13,494 - % $ 12,362 - % Interest bearing demand deposits . . . . . . . . . 11,480 1.89 11,855 1.84 11,249 2.07 Savings deposits . . . . . . . . . 8,782 2.72 8,775 2.72 8,436 2.81 Time deposits . . . . . . . . . . . 15,977 4.38 15,154 3.24 16,146 3.05 -------- -------- -------- Total . . . . . . . . $ 51,946 $ 49,278 $ 48,193 ======== ======== ========
________________________________________________________________________________ TABLE 11 CERTIFICATES OF DEPOSIT OF $100,000 OR MORE, MATURITY DISTRIBUTION The following table provides the maturities of time certificates of deposit of the Bank in amounts of $100,000 or more (in thousands):
DECEMBER 31, ------------------------------------------ 1995 1994 1993 -------- -------- -------- Maturing in: 3 months or less . . . . . . . . . . . . . . . . . . . . . . . $ 601 $ 1,204 $ 1,455 Over 3 months less than 6 months . . . . . . . . . . . . . . . 800 667 400 Over 6 months less than 12 months . . . . . . . . . . . . . . 550 - - Over 12 months . . . . . . . . . . . . . . . . . . . . . . . . 814 497 414 -------- -------- -------- Total . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,765 $ 2,368 $ 2,269 ======== ======== ========
-23- 25 TABLE 12 RISK-BASED CAPITAL (In thousands)
DECEMBER 31, -------------------------------- 1995 1994 -------- -------- Risk-weighted assets . . . . . . . . . . . . . . . . . . . . . . . . . $ 30,441 $ 30,751 ======== ======== Capital: Tier I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,671 $ 5,693 Tier II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 381 384 -------- -------- Total capital . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,052 $ 6,077 ======== ======== Ratios: Tier I capital to risk-weighted assets . . . . . . . . . . . . . . . 21.92% 18.51% Tier II capital to risk-weighted assets . . . . . . . . . . . . . . 1.25 1.25 -------- -------- Total capital to risk-weighted assets . . . . . . . . . . . . . . 23.17% 19.76% ======== ======== Leverage - Tier I capital to total average assets . . . . . . . . . . . . . . . . . . . . . . . . . 11.36% 10.38% ======== ========
________________________________________________________________________________ TABLE 13 RETURN ON EQUITY AND ASSETS The following table shows consolidated operating and capital ratios for each of the last three years:
YEARS ENDED DECEMBER 31, --------------------------------------- 1995 1994 1993 ------ ------ ------ Return on average total assets . . . . . . . . . . . . . . . 1.64% 1.75% 1.37% Return on average shareholders' equity . . . . . . . . . . . 15.46% 17.96% 15.76% Dividend payout ratio . . . . . . . . . . . . . . . . . . . 10.59% 8.10% 8.28% Average equity to average assets ratio . . . . . . . . . . . 10.60% 9.76% 8.69%
-24- 26 TABLE 14 INTEREST RATE SENSITIVITY (In thousands)
BY REPRICING DATES AT DECEMBER 31, 1995 -------------------------------------------------------------------------- NON- 0-90 91-180 181-365 AFTER INTEREST DAYS DAYS DAYS 1 YEAR BEARING TOTAL -------- --------- --------- --------- --------- ---------- ASSETS Federal funds sold . . . . . . . . . $ 6,350 $ - $ - $ - $ - $ 6,350 Interest bearing deposits with banks . . . . . . . 396 99 99 100 - 694 Investment securities . . . . . . . 2,245 500 3,631 15,270 - 21,646 Loans . . . . . . . . . . . . . . . 10,927 2,833 4,433 8,197 - 26,390 Other assets . . . . . . . . . . . . - - - - 7,990 7,990 -------- --------- --------- --------- --------- ---------- $ 19,918 $ 3,432 $ 8,163 $ 23,567 $ 7,990 $ 63,070 -------- --------- --------- --------- --------- ---------- SOURCES OF FUNDS NOW, money market and savings deposits . . . . . . . . . . . . $ 12,960 $ - $ 10,000 $ - $ - $ 22,960 Time deposits $100,000 or more . . . . . . . . 601 800 550 814 - 2,765 Other time deposits . . . . . . . . 4,172 3,715 3,242 1,871 - 13,000 Non-interest bearing demand . . . . . . . . . . . . . - - - - 16,929 16,929 Other liabilities . . . . . . . . . - - - - 630 630 Shareholders' equity . . . . . . . . - - - - 6,786 6,786 -------- --------- --------- --------- --------- ---------- 17,733 4,515 13,792 2,685 24,345 63,070 -------- --------- --------- --------- --------- ---------- Interest rate sensitivity gap . . . . . . . . . . $ 2,185 $ (1,083) $ (5,629) $ 20,882 $ (16,355) ======== ========= ========= ========= ========= Cumulative interest rate sensitivity gap . . . . . . . . $ 2,185 $ 1,102 $ (4,527) $ 16,355 $ -0- ======== ========= ========= ========= ========= Cumulative interest rate sensitivity gap as a percent of total assets . . . . . . . . . . . . 3.46% 1.75% (7.18)% 25.93% ======== ========= ========= =========
-25- 27 INDEPENDENT AUDITORS' REPORT To the Shareholders and Board of Directors American Bancorp, Inc. Opelousas, Louisiana We have audited the accompanying consolidated balance sheets of American Bancorp, Inc. and subsidiary as of December 31, 1995 and 1994, the related consolidated statements of income, changes in shareholders' equity and cash flows for each of the three years in the period ended December 31, 1995. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit 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 American Bancorp, Inc. and subsidiary as of December 31, 1995 and 1994, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 1995, in conformity with generally accepted accounting principles. As discussed in Note 1, the Company changed its method of accounting for debt securities in 1994. As discussed in Note 10, the Company changed its method of accounting for income taxes in 1992. /s/ BROUSSARD, POCHE, LEWIS & BREAUX Lafayette, Louisiana January 19, 1996 -26- 28 AMERICAN BANCORP, INC. CONSOLIDATED BALANCE SHEETS DECEMBER 31, 1995 AND 1994
ASSETS 1995 1994 ------------ ------------- Cash and due from banks . . . . . . . . . . . . . . . . . . . . . . . $ 5,533,738 $ 7,806,323 Short-term investments: Federal funds sold . . . . . . . . . . . . . . . . . . . . . . . . 6,350,000 6,050,000 Interest-bearing deposits with banks . . . . . . . . . . . . . . . 694,000 2,474,000 ------------ ------------- 7,044,000 8,524,000 Securities held to maturity (estimated market values $16,619,377 and $16,040,184, respectively) . . . . . . . . . . . . . . . . . . . . . . . . . . 16,504,999 16,479,444 Securities available for sale . . . . . . . . . . . . . . . . . . . . 5,140,541 3,134,039 Loans, net of unearned income ($45 and $1,299, respectively) . . . . . . . . . . . . . . . . . . . . . . 27,014,350 27,667,312 Less: allowance for possible loan losses . . . . . . . . . . (624,122) (614,310) ------------ ------------- 26,390,228 27,053,002 Bank premises and equipment . . . . . . . . . . . . . . . . . . . . . 1,435,446 1,375,140 Other real estate, net of allowances of $99,000 and $185,026, respectively . . . . . . . . . . . . . . . . 13,800 16,743 Accrued interest receivable . . . . . . . . . . . . . . . . . . . . . 551,527 429,703 Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . 456,009 322,536 ------------ ------------- $ 63,070,288 $ 65,140,930 ============ ============
See Notes to Consolidated Financial Statements. -27- 29
LIABILITIES AND SHAREHOLDERS' EQUITY 1995 1994 ------------ ------------ LIABILITIES Deposits: Non-interest bearing demand deposits . . . . . . . . . . . . . $ 16,929,190 $ 15,991,856 Interest bearing deposits: NOW accounts . . . . . . . . . . . . . . . . . . . . . . . . 12,552,285 16,943,132 Money Market accounts . . . . . . . . . . . . . . . . . . . 1,893,000 1,653,698 Savings . . . . . . . . . . . . . . . . . . . . . . . . . . 8,514,812 8,944,038 Time deposits $100,000 or more . . . . . . . . . . . . . . . 2,765,217 2,368,332 Other time deposits . . . . . . . . . . . . . . . . . . . . 13,000,214 13,329,114 ------------ ------------ Total deposits . . . . . . . . . . . . . . . . . . . . . 55,654,718 59,230,170 Accrued interest payable . . . . . . . . . . . . . . . . . . . . . 103,274 80,033 Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . 526,797 12,414 ------------ ------------ Total liabilities . . . . . . . . . . . . . . . . . . . . 56,284,789 59,322,617 ------------ ------------ SHAREHOLDERS' EQUITY Common stock, $5 par value; 10,000,000 shares authorized; 120,000 shares issued and outstanding . . . . . . . . . . . . . . . . . . . . 600,000 600,000 Surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,150,000 2,150,000 Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . 3,930,436 3,068,980 Available for sale, net of tax of $54,123 and $344, respectively . . . . . . . . . . . . . . . . . . . . 105,063 (667) ------------ ------------ Total shareholders' equity . . . . . . . . . . . . . . . . 6,785,499 5,818,313 ------------ ------------ $ 63,070,288 $ 65,140,930 ============ ============
-28- 30 AMERICAN BANCORP, INC. CONSOLIDATED STATEMENTS OF INCOME YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1995 1994 1993 ----------- ----------- ----------- Interest income: Interest and fees on loans . . . . . . . . . . . . . $ 2,569,393 $ 2,315,178 $ 2,210,477 Interest on investment securities- Taxable . . . . . . . . . . . . . . . . . . . . . 1,349,650 925,036 903,726 Tax-exempt . . . . . . . . . . . . . . . . . . . 32,560 1,013 4,493 Federal funds sold . . . . . . . . . . . . . . . . . 220,667 104,249 61,991 Deposits with banks . . . . . . . . . . . . . . . . 50,014 168,490 223,411 ----------- ----------- ----------- Total interest income . . . . . . . . . . . . 4,222,284 3,513,966 3,404,098 Interest expense: Interest on deposits . . . . . . . . . . . . . . . . 1,157,705 946,874 961,729 ----------- ----------- ----------- Net interest income . . . . . . . . . . . . . . . . . . 3,064,579 2,567,092 2,442,369 Provision for possible loan losses . . . . . . . . . . - 12,000 36,000 ----------- ----------- ----------- Net interest income after provision . . . . . . . . . . for possible loan losses . . . . . . . . . . . . . . 3,064,579 2,555,092 2,406,369 ----------- ----------- ----------- Non-interest income: Service charges on deposit accounts . . . . . . . . 554,024 567,645 535,792 Other . . . . . . . . . . . . . . . . . . . . . . . 123,376 125,862 64,968 ----------- ----------- ----------- Total non-interest income . . . . . . . . . . 677,400 693,507 600,760 ----------- ----------- ----------- Non-interest expense: Salary and employee benefits . . . . . . . . . . . . 1,166,288 1,150,031 1,134,756 Net occupancy expense . . . . . . . . . . . . . . . 314,064 306,142 332,921 Equipment expense . . . . . . . . . . . . . . . . . 237,132 219,430 215,797 Net cost (revenue) from other real estate . . . . . . . . . . . . . . . . . . . (4,737) (2,268) (24,760) Other . . . . . . . . . . . . . . . . . . . . . . . 615,983 669,212 609,468 ----------- ----------- ----------- Total non-interest expense . . . . . . . . . . 2,328,730 2,342,547 2,268,182 ----------- ----------- ----------- Income before income taxes . . . . . . . . . . . . . . 1,413,249 906,052 738,947 Provision for income taxes . . . . . . . . . . . . . . 449,793 (56,432) 14,444 ----------- ----------- ----------- Net income . . . . . . . . . . . . . . . . . $ 963,456 $ 962,484 $ 724,503 =========== =========== =========== Net income per common share . . . . . . . . . . . . . . $ 8.03 $ 8.02 $ 6.04 =========== =========== ===========
See Notes to Consolidated Financial Statements. -29- 31 AMERICAN BANCORP, INC. CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
COMMON STOCK SHARES AMOUNT SURPLUS ------- --------- ---------- Balance, December 31, 1992 . . . . . . . . 120,000 $ 600,000 $2,150,000 Net income for 1993 . . . . . . . . . . . . - - - Dividends paid in 1993 . . . . . . . . . . - - - ------- --------- ---------- Balance, December 31, 1993 . . . . . . . . 120,000 600,000 2,150,000 Net income for 1994 . . . . . . . . . . . . - - - Dividends paid in 1994 . . . . . . . . . . - - - Net unrealized appreciation on securities available for sale, net of tax of $344 . . . . . . . . . . . - - - ------- --------- ---------- Balance, December 31, 1994 . . . . . . . . 120,000 600,000 2,150,000 Net income for 1995 . . . . . . . . . . . . - - - Dividends paid in 1995 . . . . . . . . . . - - - Net unrealized appreciation on securities available for sale, net of tax of $54,123 . . . . . . . . . - - - ------- --------- ---------- Balance, December 31, 1995 . . . . . . . . 120,000 $ 600,000 $2,150,000 ======= ========= ==========
See Notes to Consolidated Financial Statements. -30- 32
NET UNREALIZED APPRECIATION ON SECURITIES AVAILABLE RETAINED FOR SALE EARNINGS TOTAL -------------- ------------ ----------- $ - $ 1,519,993 $ 4,269,993 - 724,503 724,503 - (60,000) (60,000) ----------- ------------ ----------- - 2,184,496 4,934,496 - 962,484 962,484 - (78,000) (78,000) (667) - (667) ----------- ------------ ----------- (667) 3,068,980 5,818,313 - 963,456 963,456 - (102,000) (102,000) 105,730 - 105,730 ----------- ------------ ----------- $ 105,063 $ 3,930,436 $ 6,785,499 =========== ============ ===========
-31- 33 AMERICAN BANCORP, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
1995 1994 1993 ----------- ----------- ----------- OPERATING ACTIVITIES Net income . . . . . . . . . . . . . . . . . . . $ 963,456 $ 962,484 $ 724,503 Adjustments to reconcile net income to net cash provided by operating activities: Provision for loan losses . . . . . . . . . . - 12,000 36,000 Premium amortization, net of discount accretion on investment securities . . . . . . . . . . . . . . . . (9,863) (3,144) 14,945 Depreciation . . . . . . . . . . . . . . . . 177,106 174,281 175,435 (Gain) loss on sale of assets . . . . . . . . 2,943 (938) 29,317 (Increase) decrease in assets: Accrued interest receivable . . . . . . . (121,824) (151,669) 142,812 Other assets . . . . . . . . . . . . . . . (134,918) 121,759 (48,805) Increase (decrease) in liabilities: Accrued interest payable . . . . . . . . . 23,241 17,978 (31,951) Other liabilities . . . . . . . . . . . . 460,259 (60,951) 51,791 ----------- ----------- ----------- Net cash provided by operating activities . . . . . . . . . . . . . 1,360,400 1,071,800 1,094,047 ----------- ----------- ----------- INVESTING ACTIVITIES Proceeds from sales and maturities of available for sale securities . . . . . . 384,850 985,660 - Proceeds from sales and maturities of held to maturity securities . . . . . . . 6,500,000 3,422,153 8,716,278 Purchase of available for sale securities . . . . . . . . . . . . . . . . . (2,234,432) (500,000) - Purchase of held to maturity securities . . . . . . . . . . . . . . . . . (6,511,313) (10,479,766) (5,490,034) (Increase) decrease in loans . . . . . . . . . . 662,774 (632,529) (1,169,601) Purchases of property and equipment . . . . . . (237,411) (49,183) (356,683) Proceeds from the sale of assets . . . . . . . . - - 70,110 ----------- ----------- ----------- Net cash used in investing activities . . . . . . . . . . . . . . (1,435,532) (7,253,665) 1,770,070 ----------- ----------- -----------
See Notes to Consolidated Financial Statements. -32- 34
1995 1994 1993 ----------- ----------- ----------- FINANCING ACTIVITIES Increase (decrease) in liabilities: Demand deposits, transaction accounts and savings . . . . . . . . . . . (3,643,438) 11,403,263 813,894 Time deposits . . . . . . . . . . . . . . . . 67,985 1,150,605 (3,134,260) Dividends paid . . . . . . . . . . . . . . . . . (102,000) (78,000) (60,000) ----------- ----------- ----------- Net cash provided by (used in) financing activities . . . . . . . . . (3,677,453) 12,475,868 (2,380,366) ----------- ----------- ----------- Increase (decrease) in cash and cash equivalents . . . . . . . . . . . . . . . . . . (3,752,585) 6,294,003 483,751 Cash and cash equivalents at beginning of year . . . . . . . . . . . . . . . 16,330,323 10,036,320 9,552,569 ----------- ----------- ----------- Cash and cash equivalents at end of year . . . . . . . . . . . . . . . . . . . . $12,577,738 $16,330,323 $10,036,320 =========== =========== =========== SUPPLEMENTAL DISCLOSURES Cash payments for: Interest expense . . . . . . . . . . . . . . $ 1,134,464 $ 928,896 $ 993,680 =========== =========== =========== Income taxes . . . . . . . . . . . . . . . . $ 8,003 $ 6,886 $ 14,444 =========== =========== ===========
-33- 35 AMERICAN BANCORP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1. Accounting Policies American Bancorp, Inc. (the Corporation) and its subsidiary, American Bank and Trust Company (the Bank), follow generally accepted accounting principles and reporting practices applicable to the banking industry. Descriptions of significant accounting policies are summarized below: Consolidation: The consolidated financial statements include the accounts of the respective parent Corporation and its subsidiary. All significant intercompany accounts and transactions have been eliminated. 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 amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Securities: At January 1, 1994, the Bank adopted Statement of Financial Accounting Standards (SFAS) No. 115, "Accounting for Certain Investments in Debt and Equity Securities." SFAS No. 115 requires the classification of securities into one of three categories: trading, available for sale, or held to maturity. Management determines the appropriate classification of debt securities at the time of purchase and re- evaluates this classification periodically. Trading account securities are held for resale in anticipation of short-term market movements. Debt securities are classified as held to maturity when the Bank has the positive intent and ability to hold the securities to maturity. Securities not classified as held to maturity or trading are classified as available for sale. Trading account securities are carried at market value and are included in short-term investments. Gains and losses, both realized and unrealized, are reflected in earnings. Held to maturity securities are stated at amortized cost. Available for sale securities are stated at fair value, with unrealized gains and losses, net of tax, reported in a separate component of shareholders' equity. The amortized cost of debt securities classified as held to maturity or available for sale is adjusted for amortization of premiums and accretion of discounts to maturity or, in the case of mortgage-backed securities, over the estimated life of the security. Amortization, accretion and accruing interest are included in interest income on securities. Realized gains and losses, and declines in value judged to be other than temporary, are included in net securities gains. The cost of securities sold is determined on the specific identification method. -34- 36 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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-offs, the allowance for loan losses and unearned income. Interest on loans and accretion of unearned income are computed by methods which approximate a level rate of return on recorded principal. Loan fees and costs associated with originating loans are recognized in the period in which they originate as the amounts involved are immaterial to the basic financial statements. The Company has adopted the policy of deferring all material loan fees and costs associated with originating loans as required by Statement of Financial Accounting Standards No. 91. Commercial loans are placed in nonaccrual status when, in management's opinion, there is doubt concerning full collectibility of both principal and interest. All commercial nonaccrual loans are considered to be impaired in accordance with SFAS No. 114, "Accounting by Creditors for Impairment of a Loan." Consumer loans are generally charged off when any payment of principal or interest is more than 120 days delinquent. Interest payments received on nonaccrual loans are applied to principal if there is doubt as to the collectibility of the principal; otherwise, these receipts are recorded as interest income. A loan remains in nonaccrual status until it is current as to principal and interest, and the borrower demonstrates its ability to fulfill the contractual obligation. Allowance for possible loan losses: The allowance for possible loan losses is maintained to provide for possible losses inherent in the loan portfolio. On January 1, 1995, the Company adopted SFAS No. 114, as amended by SFAS No. 118, "Accounting for Creditors for Impairment of a Loan - Income Recognition and Disclosures." In accordance with SFAS No. 114, the 1995 allowance for possible loan losses related to loans that are identified as impaired is based on discounted cash flows using the loan's initial effective interest rate or the fair value of the collateral for certain collateral dependent loans. Prior to 1995, the allowance for possible loan losses related to these loans was based on undiscounted cash flows or the fair value of the collateral for collateral dependent loans. The allowance is based on management's estimate of future losses; actual losses may vary from the current estimate. The estimate is reviewed periodically, taking into consideration the risk characteristics of the loan portfolio, past loss experience, general economic conditions and other factors which deserve current recognition. As adjustments to the estimate of future losses become necessary, they are reflected as a provision (positive or negative) for possible loan losses in current-period earnings. However, because factors such as loan growth, the future collectibility of loans and the amounts and timing of future cash flows expected to be received on impaired loans are uncertain, the level of future provisions (positive or negative), if any, generally cannot be predicted. Actual loan losses are deducted from and subsequent recoveries are added to the reserve. -35- 37 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Bank premises and equipment: Bank premises and equipment are stated at cost less accumulated depreciation. Depreciation is computed primarily by the straight-line method. Useful lives utilized for purposes of computing depreciation are as follows: buildings, 10 to 30 years; furniture and equipment, 3 to 10 years. Maintenance, repairs and minor improvements are charged to operating expenses. Gains or losses on dispositions are reflected currently in the Statement of Income. Other real estate: Other real estate owned includes real estate and other collateral acquired upon the default of loans or loans classified as in-substance foreclosures. Other real estate is recorded at the fair value of the assets acquired less estimated selling costs. Losses arising from the initial reduction of the outstanding loan amount to fair value are deducted from the allowance for possible loan losses. A valuation reserve for other real estate is maintained for subsequent valuation adjustments on a specific property basis. Income and expenses associated with other real estate prior to sale are included in current earnings. In accordance with SFAS No. 114, a loan is classified as in-substance foreclosure when the Company has taken possession of the collateral regardless of whether formal foreclosure proceedings take place. There were no in-substance foreclosures for the years ended December 31, 1995 or 1994. The net revenue from other real estate includes net revenue from operation of other real estate of $5,230, $3,330 and $9,069 as of December 31, 1995, 1994 and 1993, respectively. Income taxes: The Company files a consolidated federal income tax return with the subsidiary Bank. The Company accounts for income taxes using the liability method. Temporary differences occur between the financial reporting and tax bases of assets and liabilities. Deferred tax assets and liabilities are recorded for these differences based on enacted tax rates and laws that will be in effect when the differences are expected to reverse. -36- 38 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Cash and cash equivalents: Cash and cash equivalents include cash and due from banks, federal funds sold and interest bearing deposits in banks. Recent pronouncements: In March 1995, the Financial Accounting Standards Board (FASB) issued SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of." This statement requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets' carrying amount. SFAS No. 121 also addressed the accounting for long-lived assets that are expected to be disposed of. SFAS No. 121 is effective for fiscal years beginning after December 15, 1995. The adoption of this statement will not have a material impact on the Company's consolidated financial statements. The FASB has also issued SFAS No. 122, "Accounting for Mortgage Servicing Rights and Excess Servicing Receivables and for Securitization of Mortgages Loans." The new statement amends Statement No. 65, "Accounting for Certain Mortgage Banking Activities," and primarily eliminates the distinction between purchased mortgage servicing rights and mortgage servicing rights on loans originated by the financial institution. SFAS No. 122 is effective for fiscal years beginning after December 15, 1995. The adoption of this statement will not have a material impact on the Company's consolidated financial statements. In October 1995, the FASB issued SFAS No. 123, "Accounting for Stock-Based Compensation." This statement establishes financial accounting and reporting standards for stock-based employee compensation plans and is effective for fiscal years beginning after December 31, 1995. The adoption of this statement will not have a material impact on the Company's consolidated financial statements. Reclassifications: Certain amounts in the 1994 and 1993 financial statements have been reclassified to conform with the financial statement presentation for 1995 for comparability. These reclassifications had no effect on net income as previously reported for the 1994 and 1993 fiscal years. Note 2. Restrictions on Cash and Due From Bank Accounts The Bank is required to maintain average reserve balances by the Federal Reserve Bank. The average amount of these reserve balances was $484,000 and $471,000 for the years ended December 31, 1995 and 1994, respectively. -37- 39 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 3. Investment Securities The carrying amounts of investment securities as shown in the consolidated balance sheets of the Bank and their approximate market values at December 31 were as follows:
DECEMBER 31, 1995 ---------------------------------------------------------------- AMORTIZED UNREALIZED UNREALIZED FAIR COST GAINS LOSSES VALUE ------------ ------------ ------------ ------------ Securities held to maturity: U.S. Treasury Securities . . . . . $ 5,507,763 $ 57,641 $ 2,841 $ 5,562,563 U.S. Government and Agencies . . . 10,997,236 86,368 26,790 11,056,814 ------------ ------------ ------------ ------------ $ 16,504,999 $ 144,009 $ 29,631 $ 16,619,377 ============ ============ ============ ============ Securities available for sale: Mortgage-Backed Securities . . . . $ 2,247,622 $ 100,366 $ 6,300 $ 2,341,688 U.S. Government and Agencies . . . 1,500,000 35,834 - 1,535,834 State and Political Subdivisions . 1,233,733 29,286 - 1,263,019 ------------ ------------ ------------ ------------ $ 4,981,355 $ 165,486 $ 6,300 $ 5,140,541 ============ ============ ============ ============
DECEMBER 31, 1994 ---------------------------------------------------------------- AMORTIZED UNREALIZED UNREALIZED FAIR COST GAINS LOSSES VALUE ------------ ------------ ------------ ------------ Securities held to maturity: U.S. Treasury Securities . . . . . $ 5,499,016 $ 6 $ 85,429 $ 5,413,593 U.S. Government and Agencies . . . 10,980,428 14,347 368,184 10,626,591 ------------ ------------ ------------ ------------ $ 16,479,444 $ 14,353 $ 453,613 $ 16,040,184 ============ ============ ============ ============ Securities available for sale: Mortgage-Backed Securities . . . . $ 2,635,050 $ 22,386 $ 20,428 $ 2,637,008 U.S. Government and Agencies. . . 500,000 - 2,969 497,031 ------------ ------------ ------------ ------------ $ 3,135,050 $ 22,386 $ 23,397 $ 3,134,039 ============ ============ ============ ============
-38- 40 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Securities with book values of $11,938,802 and $11,011,732 at December 31, 1995 and 1994, respectively, were pledged to secure public deposits and other transactions as required by law. There were no gross-realized gains or gross-realized losses on sales of securities for the fiscal years ended December 31, 1995, 1994 or 1993. The maturities of investment securities at December 31, 1995 were as follows:
SECURITIES TO BE HELD TO MATURITY ------------------------------- AMORTIZED FAIR YEARS TO MATURITY COST VALUE ------------ ------------ Less than one . . . . . . . . . . . . . . . . . . . . . . . . . $ 8,501,356 $ 4,996,619 Greater than one but less than five . . . . . . . . . . . . . . 7,503,643 10,593,803 Greater than five but less than ten . . . . . . . . . . . . . . 500,000 1,022,656 Greater than ten . . . . . . . . . . . . . . . . . . . . . . . . - - ------------ ------------ $ 16,504,999 $ 16,613,078 ============ ============
SECURITIES AVAILABLE FOR SALE -------------------------------- AMORTIZED FAIR YEARS TO MATURITY COST VALUE ------------- ------------ Less than one . . . . . . . . . . . . . . . . . . . . . . . . . $ 173,932 $ 183,290 Greater than one but less than five . . . . . . . . . . . . . . 2,943,887 3,028,163 Greater than five but less than ten . . . . . . . . . . . . . . 1,863,536 1,929,088 Greater than ten . . . . . . . . . . . . . . . . . . . . . . . . - - ------------- ------------ $ 4,981,355 $ 5,140,541 ============= ============
-39- 41 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 4. Loans Major classifications of subsidiary bank's loan portfolio at December 31, are as follows:
1995 1994 1993 ----------- ----------- ----------- Commercial, financial and agricultural . . . . . . . . . . . . . . $ 6,239,611 $ 6,542,510 $ 5,306,258 Real estate construction . . . . . . . . . 119,530 325,136 212,272 Real estate mortgage . . . . . . . . . . . 16,472,824 16,119,511 17,888,614 Installment . . . . . . . . . . . . . . . . 4,182,430 4,681,454 3,636,650 ----------- ----------- ----------- 27,014,395 27,668,611 27,043,794 Unearned income . . . . . . . . . . . . . . (45) (1,299) (5,668) ----------- ----------- ----------- Net loans . . . . . . . . . . . . . . . 27,014,350 27,667,312 27,038,126 Allowance for possible loan losses . . . . . . . . . . . . . . . . . (624,122) (614,310) (605,653) ----------- ----------- ----------- $26,390,228 $27,053,002 $26,432,473 =========== =========== ===========
The following is a summary of loans classified by type at December 31, 1995: Commercial, financial and agricultural . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,239,611 Real estate construction . . . . . . . . . . . . . . . . . . . . . . . . . 119,530 Real estate mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,505,836 ----------- Total commercial . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,864,977 ----------- Residential mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,966,988 Installment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,182,430 ----------- 11,149,418 Less unearned income . . . . . . . . . . . . . . . . . . . . . . . . . . . (45) ----------- Total consumer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,149,373 ----------- Total loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $27,014,350 ===========
-40- 42 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The following summarizes the non-performing elements of the loan portfolio and total foreclosed assets at December 31:
1995 1994 1993 ----------- ----------- ----------- Nonperforming loans: Loans on nonaccrual . . . . . . . . . . . . . . . $ 114,059 $ 3,722 $ 9,104 Loans contractually past due 90 days or more as to principal or interest, but which are not on nonaccrual . . . . . . . . . . . . . . . . . . 9,504 9,377 180,451 Restructured loans which are not on nonaccrual . . . . . . . . . . . . - 132,690 153,415 ----------- ----------- ----------- 123,563 145,789 342,970 Other real estate and repossessed assets received in complete or partial satisfaction of loan obligations . . . . . . . . . . . . . . . . . . . 13,800 16,743 146,305 ----------- ----------- ----------- Total nonperforming assets . . . . . . . . . . . $ 137,363 $ 162,532 $ 489,275 =========== =========== ===========
As discussed in Note 1, the Company adopted SFAS No. 114 effective January 1, 1995. The adoption of SFAS No. 114 did not have a material impact on the financial condition or operating results of the Company. At December 31, 1995, the recorded investment in loans that were considered to be impaired under SFAS No. 114 was $114,059. Included in this amount was $83,884 of impaired loans for which the related allowance for loan losses was $5,901 and $30,175 of impaired loans that do not have an allowance for loan losses. The average recorded investment in impaired loans during the year ended December 31, 1995 was approximately $125,000. Interest payments received on impaired loans are applied to principal if there is doubt as to the collectibility of the principal; otherwise, these receipts are recorded as interest income. For the year ended December 31, 1995, the Company recognized interest income on impaired loans of $7,638. As it relates to in-substance foreclosures, SFAS No. 114 requires that a creditor continue to follow loan classification on the balance sheet unless the creditor receives physical possession of the collateral. The Company has had no in- substance foreclosures for any of the periods presented. Interest income in the amount of $13,732 for 1995, $13,846 for 1994 and $19,747 for 1993 would have been recorded on nonperforming loans if they had been classified as performing. The Company recorded $7,638, $6,707 and $7,558 of interest income on nonperforming loans during 1995, 1994 and 1993, respectively. -41- 43 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The following is a summary of the allowance for loan losses for the three years ended December 31, 1995:
1995 1994 1993 ----------- ----------- ----------- Balance, beginning of year . . . . . . . . . . $ 614,310 $ 605,653 $ 575,892 Provisions charged to operating expense . . . . . . . . . . . . . . . . . . - 12,000 36,000 Recoveries on loans . . . . . . . . . . . . . 15,382 11,177 3,691 Loans charged off . . . . . . . . . . . . . . (5,570) (14,520) (9,930) ----------- ----------- ----------- Balance, end of year . . . . . . . . . . . . . $ 624,122 $ 614,310 $ 605,653 =========== =========== ===========
Note 5. Related Party Transactions In the ordinary course of business, loans have been made to directors and executive officers and their associates. Such loans to these related parties were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons. Loans to these related parties were approximately $1,169,728 and $1,113,642 at December 31, 1995 and 1994, respectively. The following provides an analysis of the activity with respect to loans to related parties: Balance at January 1, 1995 . . . . . . . . . . $ 1,113,642 New loans made . . . . . . . . . . . . . . . . 1,836,503 Repayment on loans . . . . . . . . . . . . . . (1,780,417) ----------- Balance at December 31, 1995 . . . . . . . . . $ 1,169,728 ===========
Note 6. Bank Premises and Equipment Bank premises and equipment, at cost, consisted of the following as of December 31:
1995 1994 1993 ----------- ----------- ----------- Land . . . . . . . . . . . . . . . . . . . . . $ 384,387 $ 384,387 $ 384,387 Premises and leasehold improvements . . . . . . . . . . . . . . . 1,781,317 1,779,258 2,268,894 Furniture and equipment . . . . . . . . . . . 1,151,645 1,077,041 881,248 ----------- ----------- ----------- 3,317,349 3,240,686 3,534,529 Less accumulated depreciation and amortization . . . . . . . . . . . . . 1,881,903 1,865,546 2,034,291 ----------- ----------- ----------- Total . . . . . . . . . . . . . . . . . . $ 1,435,446 $ 1,375,140 $ 1,500,238 =========== =========== ===========
Depreciation and amortization expense included in non-interest expense was $177,106 in 1995, $174,281 in 1994, and $175,435 in 1993. -42- 44 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 7. Concentrations of Credit Risk All of the Bank's loans, commitments and standby letters of credit have been granted to customers in the Bank's market area of South Louisiana. Investments in state and municipal securities also involve governmental entities within the Bank's market area. The concentrations of credit by type of loan are set forth in Note 4. The distribution of commitments to extend credit approximates the distribution of loans outstanding. Standby letters of credit were granted primarily to commercial borrowers. The Bank, as a matter of policy, does not extend credit to any single borrower or group of related borrowers in excess of $1,375,000. At December 31, 1995, the Bank has loans outstanding to multiple numbers of borrowers engaged in the medical industry and the legal profession. The loans to the medical industry totaled $4,478,739, while the loans to the legal profession were $3,103,320. There were no significant nonperforming loans outstanding in these two concentrations. Note 8. Earnings Per Share The earnings per share computation are based on 120,000 weighted average number of shares outstanding during each year. Note 9. Employee Benefit Plan The Bank maintains a 401(k) Savings Plan available to employees with over one year of service. The Bank matches 50% of the salary deferral, up to a maximum of 2% of compensation, which becomes vested after five years of service. Total contributions to the plan by the Bank were $11,201 for 1995 and $11,187 for 1994. The Bank entered into a non-qualified deferred compensation plan for certain executives of the Company in 1995. The total deferred compensation expense for 1995 was $3,147. -43- 45 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 10. Income Taxes The Company adopted SFAS No. 109 effective January 1, 1992. As permitted by SFAS No. 109, prior year financial statements were not restated. Income tax expense includes amounts currently payable and amounts deferred to or from other years as a result of differences in the timing of recognition of income and expense for financial reporting and deferral tax purposes. The components of income tax expense are as follows:
1995 1994 1993 ----------- ------------ ----------- Current federal income tax expense . . . . . . . . . . . . . . . . $ 429,877 $ - $ 14,444 Deferred federal income tax expense (benefit) . . . . . . . . . . . 19,916 (56,432) - ----------- ------------ ----------- $ 449,793 $ (56,432) $ 14,444 =========== ============ ===========
The reconciliation of the federal statutory income tax rate to the Company's effective rate is summarized as follows for the years ended December 31:
1995 1994 1993 -------------------- -------------------- -------------------- AMOUNT RATE AMOUNT RATE AMOUNT RATE -------- ----- --------- ------- --------- ------ Tax based on federal statutory rate . . . . $480,505 34.0% $ 308,058 34.0% $ 251,242 34.0% Effect of tax- exempt income . . . . (81,919) (5.8) (19,055) (2.1) (22,165) (3.0) Other . . . . . . . . . . 51,207 3.6 (67,922) (7.5) 61,316 8.3 Net operating loss utilized . . . . - - (277,513) (30.6) (275,949) (37.3) -------- ----- --------- ------- --------- ------ $449,793 31.8% $ (56,432) (6.2)% $ 14,444 2.0% ======== ===== ========= ======= ========= ======
-44- 46 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Deferred tax assets and liabilities included in other assets or other liabilities at December 31 consist of the following:
1995 1994 ----------- ----------- Deferred tax assets: Allowance for loan losses . . . . . . . . . . . . . . . $ 14,022 $ 14,022 Foreclosed assets . . . . . . . . . . . . . . . . . . . 32,640 62,909 Other . . . . . . . . . . . . . . . . . . . . . . . . . 4,069 6,585 Investment tax credit carryforward . . . . . . . . . . . 61,938 61,938 ----------- ----------- Total deferred tax assets . . . . . . . . . . . . . . 112,669 145,454 ----------- ----------- Deferred tax liabilities: Net unrealized appreciation on available for sale securities . . . . . . . . . . 54,123 344 Accumulated depreciation . . . . . . . . . . . . . . . . 14,215 27,084 ----------- ----------- Total deferred tax liabilities . . . . . . . . . . . 68,338 27,428 ----------- ----------- Deferred tax assets, net of deferred tax liabilities . . . . . . . . . . . . . . . . . . . . 44,331 118,026 Deferred tax valuation reserve . . . . . . . . . . . . . . (61,938) (61,938) ----------- ----------- Total net deferred tax asset (liability) . . . . . . $ (17,607) $ 56,088 =========== ===========
Management estimates realizability of the net deferred tax asset based on the Company's ability to generate taxable income in the future. A deferred tax valuation reserve is established, if needed, to limit the net deferred tax asset to its realizable value. Investment tax credits are available for carryforward in the amount of $61,938 and expire throughout the years 1995 through 2000. Note 11. Lease Commitments The Corporation leases land, buildings, and equipment under cancelable and noncancelable leases. The leased properties are used primarily for banking purposes. Future minimum payments, by year and in the aggregate, for noncancelable operating leases with initial or remaining terms of one year or more consisted of the following at December 31, 1995:
YEAR ENDING AMOUNT ----------- ----------- 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 58,538 1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . 48,038 1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,588 1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,734 ----------- Total future minimum lease payments . . . . . . . . . . . . $ 137,898 ===========
-45- 47 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS All leases contain options to extend the lease term upon expiration and will probably be exercised. The total rental expense on operating leases for the years ended December 31, 1995, 1994, and 1993, amount to $58,538, $54,756 and $56,956, respectively. Two of the bank's branch offices are leased from corporations in which some of the lessors' shareholders are directors of the bank. Note 12. Other Operating Expenses The composition of other operating expenses for each of the three years for the period ended December 31 are as follows:
1995 1994 1993 ---------- ---------- ---------- FDIC and Louisiana assessments . . . . . . $ 71,669 $ 115,652 $ 115,621 Office supplies . . . . . . . . . . . . . 68,812 64,456 58,494 Postage . . . . . . . . . . . . . . . . . 57,043 51,493 51,572 Other insurance . . . . . . . . . . . . . 31,638 45,481 54,952 ATM expenses . . . . . . . . . . . . . . . 28,466 45,246 39,839 Director fees . . . . . . . . . . . . . . 61,100 49,200 40,250 Legal services . . . . . . . . . . . . . . 9,977 12,632 13,928 Other . . . . . . . . . . . . . . . . . . 287,278 285,052 234,812 ---------- ---------- ---------- $ 615,983 $ 669,212 $ 609,468 ========== ========== ==========
-46- 48 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 13. American Bancorp, Inc. (Parent Company Only) The following financial statements of American Bancorp, Inc. (Parent Company Only) include the Bank under the equity method of accounting. BALANCE SHEETS
DECEMBER 31, ------------------------------ 1995 1994 ----------- ----------- ASSETS Cash on deposit with subsidiary . . . . . . . . . . . . . $ 1,533 $ 4,117 Investment in subsidiary . . . . . . . . . . . . . . . . 6,776,482 5,692,014 Due from American Bank . . . . . . . . . . . . . . . . . 427,962 122,182 ----------- ----------- Total assets . . . . . . . . . . . . . . . . . . . . . $ 7,205,977 $ 5,818,313 =========== =========== LIABILITIES Accrued income taxes payable . . . . . . . . . . . . . . $ 420,477 $ -0- ----------- ----------- Total liabilities . . . . . . . . . . . . . . . . . . . 420,477 -0- ----------- ----------- SHAREHOLDERS' EQUITY Common stock: $5 par value, 10,000,000 shares authorized; 120,000 shares issued and outstanding . . . . . . . . . . . . . . . . 600,000 600,000 Surplus . . . . . . . . . . . . . . . . . . . . . . . . . 2,150,000 2,150,000 Retained earnings . . . . . . . . . . . . . . . . . . . . 3,930,437 3,068,980 Net unrealized loss on securities available for sale, net of tax of $54,123 and $344, respectively . . . . . . . . . . . . . . . . 105,063 (667) ----------- ----------- Total shareholders' equity . . . . . . . . . . . . 6,785,500 5,818,313 ----------- ----------- Total liabilities and shareholders' equity . . . . $ 7,205,977 $ 5,818,313 =========== ===========
-47- 49 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS American Bancorp, Inc. (Parent Company Only) STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, ------------------------------------------ 1995 1994 1993 ---------- ---------- ----------- Income: Dividends from bank subsidiary . . . . . . . . . . . . . . . $ - $ - $ 62,500 Other income . . . . . . . . . . . . . . . . . . . . . . . . - - - ---------- ---------- ----------- -0- -0- 62,500 ---------- ---------- ----------- Expenses: Interest on note payable . . . . . . . . . . . . . . . . . . - - - Other expenses . . . . . . . . . . . . . . . . . . . . . . . 5,880 814 1,565 ---------- ---------- ----------- 5,880 814 1,565 ---------- ---------- ----------- Earnings before income taxes and equity in undistributed earnings of subsidiary . . . . . . . . . . . . . . . . . . . (5,880) (814) 60,935 Provision for income taxes . . . . . . . . . . . . . . . . . . (9,400) (200,182) - ---------- ---------- ----------- Earnings before equity in undistributed earnings of subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . (15,280) 199,368 60,935 Equity in undistributed earnings of subsidiary . . . . . . . . . . . . . . . . . . . 978,737 763,116 663,568 ---------- ---------- ----------- Net income . . . . . . . . . . . . . . . . . . . . . . . $ 963,457 $ 962,484 $ 724,503 ========== ========== ===========
-48- 50 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS American Bancorp, Inc. (Parent Company Only) STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, ----------------------------------------- 1995 1994 1993 ---------- ---------- ---------- OPERATING ACTIVITIES Net income . . . . . . . . . . . . . . . . . $ 963,457 $ 962,484 $ 724,503 Adjustments to reconcile net income to net cash provided by operating activities: Equity in undistributed earnings of subsidiary . . . . . . . (978,737) (763,116) (663,568) Increase in income taxes payable . . . 420,477 - - Increase in other assets . . . . . . . (305,781) (122,182) - ---------- ---------- ---------- Net cash provided by operating activities . . . . . . 99,416 77,186 60,935 ---------- ---------- ---------- FINANCING ACTIVITIES Dividends paid to shareholders . . . . . . . (102,000) (78,000) (60,000) ---------- ---------- ---------- Net cash provided by financing activities . . . . . . (102,000) (78,000) (60,000) ---------- ---------- ---------- Increase (decrease) in cash and cash equivalents . . . . . . (2,584) (814) 935 Cash and cash equivalents at beginning of year . . . . . . . . . . . . . . 4,117 4,931 3,996 ---------- ---------- ---------- Cash and cash equivalents at end of year . . . . . . . . . . . . . . . . . $ 1,533 $ 4,117 $ 4,931 ========== ========== ==========
Note 14. Financial Instruments Generally accepted accounting principles require disclosure of fair value information about financial instruments for which it is practicable to estimate fair value, whether or not the financial instruments are recognized in the financial statements. When 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. The derived fair value estimates cannot be substantiated through comparison to independent markets and, in many cases, could not be realized in immediate settlement of the instrument. Certain financial instruments and all non-financial instruments are excluded from these disclosure requirements. -49- 51 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Further, the disclosures do not include estimated fair values for items which are not financial instruments but which represent significant value to the Bank, among them, core deposit intangibles, loan servicing rights and other fee-generating businesses. Accordingly, the aggregate fair value amounts presented do not represent the underlying value of the Company. The carrying amount of cash and short-term investments and demand deposits approximates the estimated fair value of these financial instruments. The estimated fair value of securities is based on quoted market prices, dealer quotes and prices obtained from independent pricing services. The estimated fair value of loans and interest bearing deposits is based on present values using applicable risk-adjusted spreads to the appropriate yield curve to approximate current interest rates applicable to each category of these financial instruments. Interest rates were not adjusted for changes in credit risk of performing commercial loans for which there are no known credit concerns. Management segregates loans into appropriate risk categories and believes the risk factor embedded in the interest rates results in a fair valuation of these loans on an entry-value basis. Variances between the carrying amount and the estimated fair value of loans reflect both credit risk and interest rate risk. The Bank is protected against changes in credit risk by the allowance for possible loan losses of $624,122. The fair value estimates presented are based on information available to management as of December 31, 1995. Although management is not aware of any factors that would significantly affect the estimated fair value amounts, these amounts have not been revalued for purposes of these financial statements since that date. Therefore, current estimates of fair value may differ significantly from the amounts presented. None of the assets or liabilities included in the table below are held for trading purposes. The Bank issues financial instruments in the normal course of business to meet the financing needs of its customers and to reduce exposure to fluctuations in interest rates. These financial instruments include commitments to extend credit and letters of credit and involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized on the balance sheet. -50- 52 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CARRYING FAIR AMOUNT VALUE ----------- ----------- ASSETS Cash and short-term investments . . . . . . . . . . . $12,577,738 $12,577,738 Securities held to maturity . . . . . . . . . . . . . $16,504,999 $16,613,078 Securities available for sale . . . . . . . . . . . . $ 5,140,541 $ 5,140,541 Commercial loans . . . . . . . . . . . . . . . . . . $15,864,977 $15,860,928 Consumer loans . . . . . . . . . . . . . . . . . . . $11,149,373 $11,193,917 LIABILITIES Demand deposits . . . . . . . . . . . . . . . . . . . $16,929,190 $16,929,190 NOW accounts . . . . . . . . . . . . . . . . . . . . $12,552,285 $12,928,854 Money market accounts . . . . . . . . . . . . . . . . $ 1,893,000 $ 1,902,465 Savings . . . . . . . . . . . . . . . . . . . . . . . $ 8,514,812 $ 8,940,552 Time Deposits . . . . . . . . . . . . . . . . . . . . $15,765,431 $15,734,675
Commitments to extend credit are legally binding, conditional agreements generally having fixed expiration or termination dates and specified interest rates and purposes. These commitments generally require customers to maintain certain credit standards. Collateral requirements and long-to-value ratios are the same as those for funded transactions and are established based on management's credit assessment of the customer. Commitments may expire without being drawn upon. Therefore, the total commitment amount does not necessarily represent future funding requirements. The Bank's experience has been that most loan commitments are drawn upon by customers. The Bank issues letters of credit and financial guarantees (standby letters of credit) whereby it agrees to honor certain financial commitments in the event its customers are unable to perform. The majority of the standby letters of credit consist of performance guarantees. Management conducts regular reviews of all outstanding standby letters of credit, and the results of these reviews are considered in assessing the adequacy of the Bank's reserve for possible loan losses. The Bank has not incurred any losses in its commitments in 1995 or 1994. Management does not anticipate any material losses related to these instruments. A summary of the notional amounts of the Bank's financial instruments with off-balance-sheet risk at December 31, 1995 follows:
NOTIONAL FAIR AMOUNT VALUE ---------- ---------- Commitments to extend credit . . . . . . . . . . . . . . . $3,657,383 $ (117,036) Credit card arrangements . . . . . . . . . . . . . . . . . $1,010,652 $ (45,479) Standby letters of credit . . . . . . . . . . . . . . . . $ 38,277 $ (1,500)
-51- 53 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 15. Regulatory Matters The Bank is subject to the dividend restrictions set forth by the Louisiana Commissioner of Financial Institutions. Under such restrictions, the Bank may not, without the prior approval of the Commissioner of Financial Institutions, declare dividends in excess of the sum of the current year and prior year earnings less dividends paid during these periods. The dividends as of December 31, 1995, that the Bank could declare without the approval of the Commissioner of Financial Institutions, amounted to $1,839,221. The Bank is also required to maintain minimum amounts of capital to total "risk weighted" assets, as defined by the banking regulators. At December 31, 1995, the Bank is required to have minimum Tier 1 and Total capital ratios of 4% and 8%, respectively. The Bank's actual ratios at that date were 21.9% and 23.2%, respectively. The Bank's leverage ratio were 11.36% and 10.38% as of December 31, 1995 and 1994, respectively. Under Section 18J of the Federal Deposit Insurance Act, which is subject to Section 23A of the Federal Reserve Act, the Bank cannot make loans, extensions of credit, repurchase agreements, investments, and advances, which exceed 10 percent of its capital stock and surplus, to an affiliate. Under these regulations, the Bank has $275,000 of net assets which can be loaned or advanced to any affiliate. Note 16. Contingencies In the ordinary course of business, the Bank has various outstanding commitments and contingent liabilities that are not reflected in the accompanying consolidated financial statements. In addition, the Bank is a defendant in certain claims and legal actions arising in the ordinary course of business. In the opinion of management, after consultation with legal counsel, the ultimate disposition of these matters is not expected to have a material adverse effect on the consolidated financial condition of the Bank. -52- 54 OFFICERS AND DIRECTORS OF AMERICAN BANK AND TRUST COMPANY CHAIRMAN OF THE BOARD AND PRESIDENT Salvador L. Diesi, Sr. CHIEF EXECUTIVE OFFICER AND EXECUTIVE VICE-PRESIDENT Ronald J. Lashute SENIOR VICE-PRESIDENT Walter J. Champagne, Jr. VICE-PRESIDENTS Charlene Louviere Joan T. Muller, Chief Angel Powell Financial Officer, Peter Strawitz, III Cashier ASSISTANT VICE-PRESIDENTS David Gremillion Dawn D. Stolzenthaler ASSISTANT CASHIERS Cindy Andrus Sally Hooks Elaine D. Ardoin Cindy Melancon Audrey Cormier Bonnie Pavy Bernadine Hargroder Audrey Thibodeaux DIRECTORS Joseph J. Artall Salvador L. Diesi, Sr. Walter J. Champagne, Jr. Alvin Haynes II Attaway Darbonne Charles Jagneaux J.C. Diesi Sylvia Sibille OFFICES LOCATED IN OPELOUSAS KROTZ SPRINGS LAFAYETTE PORT BARRE LAWTELL -53- 55 OFFICERS AND DIRECTORS OF AMERICAN BANCORP, INC. CHAIRMAN OF THE BOARD AND PRESIDENT Salvador L. Diesi, Sr. SECRETARY/TREASURER Ronald J. Lashute BOARD OF DIRECTORS OCCUPATION AND MAIN AFFILIATION Joseph J. Artall Farmer. Walter J. Champagne, Jr. General Merchandising and Agriculture Walter J. Champagne Company. J.C. Diesi Automobile Dealer; Diesi Pontiac-Cadillac-Buick, Inc. Salvador L. Diesi, Sr. Chairman of the Board and President, American Bancorp, Inc. and American Bank & Trust Company; Wholesale Beer Distributor, Premium Brands, Inc.; Gas Station, Convenience Store, and Video Poker; Little Capitol of Louisiana, Inc.; Commercial real estate, farming interest; and Attorney at Law. Ronald J. Lashute Chief Executive Officer of American Bank & Trust Company and Secretary/Treasurer of American Bancorp, Inc. -54- EX-23.1 3 PROXY STATEMENT 1 EXHIBIT 23.1 AMERICAN BANCORP, INC. PROXY STATEMENT FOR ANNUAL MEETING TO BE HELD APRIL 10, 1996 GENERAL The accompanying proxy is solicited by and on behalf of the Board of Directors of American Bancorp, Inc. (the Corporation), for use at the annual meeting of shareholders to be held April 10, 1996, at the time and place set forth in the accompanying Notice of Meeting. The principal executive offices of the Corporation and its wholly-owned subsidiary, American Bank & Trust Company (the Bank) are located at 328 East Landry Street, Opelousas, Louisiana 70570. The date on which this Proxy Statement and the enclosed form of proxy were first sent to shareholders is approximately March 27, 1996. Only shareholders of record at the close of business on February 29, 1996, are entitled to notice of and to vote at the meeting. On that date, the Corporation had outstanding 120,000 shares of common stock, each of which is entitled to one vote on all matters presented to the shareholders at the meeting. To the knowledge of the Corporation, all persons beneficially owning more than five percent (5%) of its outstanding voting securities are listed in the section entitled "Shareholders Owning 5% or More of Outstanding Shares" on page 8 of this Proxy Statement. The shares represented by any proxy in the enclosed form, if it is properly executed and received at or prior to the meeting, will be voted in accordance with the specifications made thereon. Proxies received on which no specification is made will be voted for election as directors of the five nominees named herein and in favor of the remaining proposals as set forth on the enclosed proxy. Proxies are revocable by written notice to the Secretary of the Board of Directors, Ronald J. Lashute, at any time prior to their exercise or by submitting a later dated proxy. Written revocations of proxy may be presented in person or mailed to: Ronald J. Lashute, Executive Vice-President and Chief Executive Officer, American Bank & Trust Company, P. O. Box 1579, Opelousas, Louisiana 70571-1579. Proxies will be deemed revoked by attendance and voting at the annual meeting. All expenses of preparing, printing, and mailing the proxy and all materials used in solicitation will be borne by the Corporation. Proxies also may be solicited in person or by telephone or telegraph by directors, officers, and other employees of the Corporation or the Bank, none of whom will receive additional compensation for such services, but who may be reimbursed for any actual expenses incurred, which is estimated not to exceed the aggregate sum of $2,000. The Corporation also may request brokerage houses, custodians, and nominees, if any such persons are listed as record owners of the Corporation's common stock, to forward these materials to the beneficial owners of the stock held of record by them and pay the reasonable expenses of such persons for forwarding the material. 2 SECURITY OWNERSHIP OF MANAGEMENT The five members of the Board of Directors of the Corporation and the two executive officers of the Corporation (both of whom also serve on the Board of Directors), as a group own, directly or indirectly, 49,571 (41.3%) shares of the common stock of the Corporation. See "Election of Directors" for the stock ownership of individual directors. ELECTION OF DIRECTORS The Articles of Incorporation of the Corporation provide that the number of directors will be set by the Bylaws. The Bylaws provide for a board of not less than five nor more than twenty directors. The Bylaws currently set the Board of Directors at five members. The information below lists each nominee for director of the Corporation, each of whom currently serves as a director, setting forth his address, age, principal occupation or employment, and amount and percentage of beneficial ownership of common stock of the Corporation as of February 29, 1996. Each person listed below has been named as a nominee for election as director at the meeting to which this Proxy Statement relates. Directors are elected to hold office until the next annual meeting of shareholders unless they sooner become disqualified, or until such time as their successors are elected and have qualified. Unless otherwise indicated, all nominees have been with the same organization in essentially the same position as listed below for the past five years, and the nominees beneficially own, with sole voting and investment power, the shares listed below. The nominees, except Ronald J. Lashute, are also members of the Board of Directors of the Corporation's subsidiary, American Bank & Trust Company. The year listed under the heading "First Elected Director" indicates the year in which the nominee or director was first elected as a director of the Bank prior to formation of the Corporation or the year in which the nominee or director was first elected as a director of the Corporation. Those persons listed on the table below, except Ronald J. Lashute, first became directors of the Corporation on June 30, 1982. Ronald J. Lashute has been an executive officer of the Corporation and the Bank since 1990. See "Executive Officers." None of the directors of the Corporation holds a directorship in any other company with a class of securities registered under Section 12 of the Securities Exchange Act of 1934 as amended, or subject to the requirements of Section 15(d) of that Act or in any company registered as an investment company under the Investment Company Act of 1940. -2- 3
SHARES BENEFICIALLY FIRST OWNED AS OF PRINCIPAL OCCUPATION ELECTED FEBRUARY 29, 1996 NAME AGE OR EMPLOYMENT DIRECTOR NUMBER PERCENTAGE - ------------------------------------------------------------------------------------------------------------------------ Joseph J. Artall 89 Farmer 1958 4,620 3.9% P. O. Box 486 Melville, LA 71353 Walter J. Champagne, Jr. 75 Walter J. Champagne Co., 1958 2,045 1.7% P. O. Box 8 (Gen. Merchandising & Port Barre, LA 70577 Agric.) Vice-Pres./Bank J.C. Diesi (1,3) 75 Diesi Pontiac-Cadillac- 1958 11,606 9.7% 148 W. Smiley Street Buick, Inc., (Automobile Opelousas, LA 70570 Dealer & Service) Salvador L. Diesi, Sr. 65 Chairman of the Board and 1973 30,872 25.7% (1,2,3,4) President, American 1355 Dietlein Blvd. Bancorp, Inc. and Opelousas, LA 70570 American Bank & Trust Company; Wholesale Beer Distributor, Premium Brands, Inc.; Gas Station, Convenience Store, and Video Poker; Little Capitol of Louisiana, Inc.; Commercial real estate, farming interest; and Attorney at Law Ronald J. Lashute 46 Executive Vice-President 1994 428 .3% (2,3) and Chief Executive 2057 Jasmine Drive Officer of the Bank and Opelousas, LA 70570 Secretary, Treasurer of the Corporation ------- ------ Total for directors (five persons) 49,571 41.3% ======= ======
(1) J.C. Diesi is Salvador L. Diesi's uncle. (2) Executive Officer of the Corporation who participates in major policy making functions. (3) Ronald J. Lashute is a cousin of Salvador L. Diesi, Sr. and a nephew of J.C. Diesi. (4) Of the 30,872 shares, 16,000 shares (13.3% of the Corporation's outstanding common stock) are owned by the Diesi Family Trust. Mr. Salvador L. Diesi, Sr. is the trustee of The Diesi Family Trust and has sole voting authority with respect to the shares of the Corporation's common stock held by the said trust. See "Shareholder's Owning 5% or More of Outstanding Shares." -3- 4 If elected by the shareholders to serve as the Corporation's Board of Directors, the nominees listed above plan to direct the Chairman of the Board of the Corporation, as the sole shareholder of the Bank, to vote the stock of the Bank owned by the Corporation in favor of the following persons to serve as the Board of Directors of the Bank: Joseph J. Artall, Walter J. Champagne, Jr., J. C. Diesi, Salvador L. Diesi, Charles Jagneaux, Alvin Haynes, II, Sylvia Sibille and Attaway Darbonne. Each of these persons has served on the Board of Directors of the Bank for the past year. PROPOSAL TO AMEND THE ARTICLES OF INCORPORATION OF THE CORPORATION The Corporation's Board of Directors recommends that the shareholders approve a proposal to amend Article VI of the Articles of Incorporation of the Corporation. Such an amendment will require the affirmative vote of not less than two-thirds of the total number of shares outstanding, or 80,000 shares. A copy of the proposed amendment is attached as Exhibit A hereto. A summary of the amendment, the effect of the amendment and the reasons the Board has recommended its adoption follow. Currently, the Articles of Incorporation of the Corporation require the affirmative vote of two-thirds of the total shares entitled to vote to approve an amendment of the Articles or a merger, consolidation, transfer of corporate assets or dissolution of the corporation. The proposed amendment would not affect that vote requirement for a dissolution or for most amendments to the Articles of Incorporation. It would, however, increase the vote required to approve a merger, consolidation or transfer of corporate assets, and it would also increase the vote required to amend the provision of the Articles that sets the required vote for those events. The required vote would be increased from two-thirds of the outstanding shares entitled to vote to 75% of the outstanding shares entitled to vote. Louisiana corporate law provides that a merger, consolidation or sale of assets requiring shareholder approval must be approved by at least two-thirds of the voting power present at the meeting at which such action is considered, or by such larger or smaller vote as the Articles may require. The Corporation's Articles have already increased the vote to more than is required by Louisiana law (as the Articles currently require approval by two-thirds of the total outstanding stock rather than just two-thirds of the voting power present at the meeting). The proposed amendment would increase the vote required even further. Although the Board is proposing the suggested increase in the vote required to approve a merger, consolidation or transfer of assets as a protection against hostile acquisitions and unfair second-step combinations as discussed below, the directors currently own or control more than 40% of the stock of the Corporation, and the directors could, therefore, block a merger, consolidation or transfer of assets with which it did not agree under the current Articles (which require approval of such transactions by affirmative vote of two-thirds of the total shares entitled to vote). Thus, the current Articles may already provide (at least with the current stock ownership of the directors) incentive for any potential acquiror to negotiate with the Board. The proposed amendment may not be required to serve that purpose. Moreover, if the proposed amendment is adopted, Chairman of the Board and President Sal Diesi, who owns or controls over 25% of the Corporation's stock, will be able to block a merger, consolidation or transfer of assets transaction himself, even if all the other shareholders of the Corporation would be in favor of such transaction. -4- 5 Uninvited tender offers or other unilateral, unsolicited attempts to acquire control of companies, if successful, may be followed by a second-step merger or other corporate change that eliminates or changes the interest of minority shareholders who did not sell their stock in the first step. Under certain circumstances, the federal securities laws may regulate disclosure of various aspects of these transactions, but do not purport to govern their substance. While dissenting shareholders may have statutory rights to receive the "fair cash value" of their shares in connection with certain business combinations, efforts to pursue those legal rights may involve costly and protracted litigation. The Board believes that substantial inequities can befall the remaining shareholders after a company has come under the control of another party which then proceeds to accomplish a business combination by merger or otherwise. The terms of the second-step business combination may not assure fair treatment of minority shareholders. Moreover, in the current banking climate in Louisiana, recently there have been for the first time in many years several attempts to acquire community banks and holding companies by hostile acquisitions, through tender offers and other means. Acquisitions by such processes often do not maximize the value obtained by the shareholders. The Board believes that, by requiring an increased shareholder vote for a merger, consolidation or transfer of assets, hostile acquisitions and unfair second-step business combinations may be discouraged. The increased vote requirement may increase the likelihood that a potential acquiror would negotiate with the Board rather than acquire a stock position in the Corporation by tender offer followed by a second-step merger or attempt to acquire the Corporation by other hostile means. The Board believes that it may be in a better position than the individual shareholders of the Corporation to negotiate effectively on behalf of all the shareholders to maximize the value that would be received in an acquisition since the Board is likely to be more knowledgeable than any individual shareholder in assessing the business and prospects of the Corporation and its subsidiary Bank. Accordingly, the Board is of the view that negotiations between the Board and a purchaser and an increased shareholder vote to approve a merger or other acquisition would increase the likelihood that shareholders would receive a higher price for their shares from anyone desiring to obtain control of the Corporation. This proposal is not made as a result of any specific effort known to the Board to accumulate the Corporation's securities or to obtain control of the Corporation. The proposal is raised at this time because of the recent resurgence of hostile acquisitions or attempts at hostile acquisitions of community banks in Louisiana. The proposed amendment may have a chilling effect on bids for acquisition of control of the Corporation. For example, having to negotiate with the Board may make it more costly for a purchaser to acquire control of the Corporation. This may decrease the likelihood that a tender offer will be made and, as a result, may adversely affect those shareholders who would desire to participate in a tender offer. A potential purchaser of stock seeking to obtain control may be discouraged from purchasing stock because a 75% shareholder vote would be required in order to change or eliminate the provisions of Article VI. Another effect of the provisions of Article VI could be to give veto power to the holders of a minority of the voting power of the Corporation with respect to a merger, consolidation or sale of assets that a majority of shareholders believe to be desirable and beneficial. To the extent that tender offers and other takeover attempts are discouraged, shareholders will not have the opportunity to dispose of their shares at a price which is often substantially higher than that prevailing in the market. Moreover, since there may otherwise be no market for the stock of the Corporation, to the extent that tender offers and takeover attempts are discouraged, shareholders may not be able to sell their shares at all. -5- 6 Louisiana law provides in certain cases of hostile acquisitions that some protections must be afforded to minority shareholders, such as minority shareholder approval of the transaction and elimination of any price disparity in a second-step transaction, but there is no guaranty that these protections would apply to any specific transaction. The Articles of Incorporation do not contain other provisions that the Board believes have substantial anti- takeover effects. The Board has no current intention to recommend other amendments with an anti-takeover effect, although it may determine at a later date, to do so. Provisions of the Louisiana Business Corporation Law designed to provide protections to shareholders in the event of hostile acquisition attempts or unfair second-step combinations may be available or applicable to the Corporation under certain circumstances. One such statute is the Fair Price Protection Statute. This statute requires a "supermajority" vote (in excess of that required by the current or proposed Articles of the Corporation) for certain business combinations (including mergers) with interested shareholders (generally 10% or greater shareholders) or their affiliates unless certain specific criteria are met, some of which have to do with testing the fairness of the price offered for Corporation shares. The statute by its terms may not apply to the Corporation unless the Corporation specifically opts into it. If the statute does apply, the Board can opt out of it under certain circumstances. Another such statute is the Control Share Acquisition Act, which provides that persons who acquire stock of certain Louisiana corporations in excess of certain specified thresholds will have voting rights with respect to such stock only to the extent that such voting rights are authorized by the shareholders. The Board can opt out of this statute as well. This is not intended to be an exhaustive or complete discussion of the possible protections or anti-takeover measures that might be available or applicable by operation of law to the Corporation or its shareholders. Rather, this discussion is intended to inform the shareholders that some protections may be applicable even in the absence of anti-takeover provisions in the Corporation's Articles or Bylaws. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" THE PROPOSED AMENDMENT TO ARTICLE VI OF THE ARTICLES OF INCORPORATION OF THE CORPORATION. PROPOSAL TO RATIFY SECTION 2.3(b) OF THE BYLAWS OF THE CORPORATION Section 2.3(b) of the Bylaws of the Corporation provides that any shareholder or shareholders holding in the aggregate two-thirds of the total voting power of the Corporation may request that the Secretary of the Corporation call a special meeting of shareholders. Louisiana corporate law provides that special meetings of shareholders may be called upon the request of any shareholder or shareholders holding in the aggregate one-fifth (or such lesser or greater proportion as may be fixed in the Articles or in a bylaw adopted by the shareholders) of the total voting power. The Corporation increased that requirement in its initial Bylaws, which were adopted by the incorporator of the Corporation and ratified by the directors. The provision requiring two-thirds of the total voting power to request a special shareholders meeting be called was in place when the shareholders of American Bank & Trust Company voted to become shareholders of the Corporation in the holding company reorganization. For this reason, the Board believed that the Bylaw was effective as a bylaw adopted by the shareholders. A recent judicial decision involving similar facts but involving a different corporation, however, has cast doubt on whether or not the Bylaw is effective. In order to resolve any question on that matter, the Board has determined to ask the shareholders to ratify Section 2.3(b) of the Bylaws. The Board is not aware that any shareholder(s) have or intend to request the call of a special meeting. -6- 7 Section 2.3(b) of the Bylaws would make it more difficult for an acquiror to require that a special meeting of shareholders be called in order to change the Board of Directors or amend the Articles of Incorporation or for any other purpose. Such a provision may work to discourage unfriendly or hostile acquisition attempts. The overall effect of both the proposal to amend Article VI of the Articles of Incorporation and the proposal to ratify Section 2.3(b) of the Bylaws is to render more difficult the accomplishment of mergers or the assumption of control by a principal shareholder, and thus to make more difficult the removal of management. The provision would, however, also make it difficult for the current shareholders to require that a special meeting of shareholders be called for any purpose, including a purpose that may be in the best interests of the Bank. Of course, the provision does not prohibit the Board from calling a special meeting at the request of the holders of fewer than two-thirds of the outstanding stock of the Corporation; it merely provides that it is not mandatory that a special meeting be called at the request of the holders of fewer than two-thirds of the outstanding stock of the Corporation. The Board does not believe that the Corporation's Bylaws contain other provisions that are generally deemed to have an anti-takeover effect, and the Board has no current intention to recommend such provisions, although it may determine at a later date to do so. It should be noted that the directors currently own or control over 40% of the stock of the Corporation. As a result, if the Bylaw provision is ratified by the vote of the shareholders (or otherwise deemed to be effective), the directors would be able to defeat any movement by shareholders to call a special meeting of shareholders if they voted for any reason to do so. Shareholders who wish to propose an action but do not have sufficient shares to require that a special meeting be called can act by written consent as authorized in the Articles of the Corporation. The Board has operated since the incorporation of the Corporation with the view that Section 2.3(b) of the Bylaws is effective. If the shareholders fail to ratify the provision at this meeting, the Board may continue to take the position that Section 2.3(b) is effective, unless an interested party successfully challenges that position. The Bylaws provide that they can be amended or repealed by the Board at any regular or special meeting or by the shareholders at any annual or special meeting. The shareholder vote required to amend the Bylaws would be a majority of the voting power present at the meeting at which the amendment was considered. If the shareholders ratify Section 2.3(b), it may not be amended by the Board without further shareholder action. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE "FOR" RATIFYING SECTION 2.3(B) OF THE BYLAWS OF THE CORPORATION. Copies of the Articles of Incorporation and the Bylaws of the Corporation are available for inspection at the main office of the Corporation. -7- 8 SHAREHOLDERS OWNING 5% OR MORE OF OUTSTANDING SHARES The following table sets forth as of February 29, 1996, information concerning the beneficial ownership of voting stock of American Bancorp, Inc., by persons who are known to the Corporation to be beneficial owners of 5% or more of the Corporation's outstanding shares of voting common stock:
PERCENTAGE AMOUNT AND OF CLASS NAME AND ADDRESS OF NATURE OF BENEFICIAL OF SHARES TITLE OF CLASS BENEFICIAL OWNER OWNERSHIP OWNED - --------------------------------------------------------------------------------------------------------- Common stock Salvador L. Diesi, Sr. 30,872 shares 25.7% 1355 Dietlein Blvd. Direct and Indirect (1) Opelousas, LA 70570 Common stock J.C. Diesi 11,606 shares 9.7% 148 W. Smiley St. Direct Opelousas, LA 70570
(1) Mr. Salvador L. Diesi, Sr. directly owns 5,282 shares or 4.40% of the outstanding shares of the Corporation. In addition, he owns 9,590 shares, which is equal to 8% of the outstanding shares of the Corporation, indirectly, through his associations with his business. Mr. Salvador L. Diesi, Sr. is also the trustee of the Diesi Family Trust. The Trust owns 16,000 or 13.3% of the outstanding shares of the Corporation. The Trust is for the benefit of the grandchildren of Frank (a former director of the Bank) and Marie Diesi. BOARD MEETINGS AND COMMITTEES During 1995, the Board of Directors of the Corporation held a total of four regular and special meetings. All of the directors, except Mr. Joe Artall, attended seventy-five percent or more of the aggregate number of meetings of the Board of Directors of the Corporation. Mr. Artall attended two of the four meetings. During 1995, the Board of Directors of the Bank held a total of twelve regular and special meetings. All of the directors of the Bank attended seventy-five percent or more of the aggregate number of meetings of the Board of Directors of the Bank and committees of the Board of Directors of the Bank on which they serve. The Board of Directors of the Corporation has no committees. The Board of Directors of the Bank has established the following committees: The Loan Discount Committee reviews and approves all large loans. This committee met nine (9) times in 1995 and is composed of Salvador L. Diesi, Sr., Chairman, J.C. Diesi, Charles Jagneaux, Alvin Haynes, II, Walter J. Champagne, Jr. and Attaway Darbonne. The Audit Committee, composed of Walter J. Champagne, Jr., Sylvia Sibille and Joseph J. Artall, met one (1) time in 1995. The duties of the Audit Committee include, but are not limited to the following: 1. Review the Bond Portfolio, Time and Savings Deposits, Demand Deposits and Loan Portfolio. -8- 9 2. Analyze the Statement of Condition and the Statement of Income and Expenses. 3. Review the audit report of the external auditors, F.D.I.C. and State Examiners Reports. 4. Review the Bank's insurance policies including the Blanket Bond and Liability Policy. 5. Report results of its review to the Board of Directors. EXECUTIVE OFFICERS The Executive Officers of the Corporation are as follows:
NAME AGE POSITION CURRENTLY HELD - ---------------------------------------------------------------------------------------------------- Salvador L. Diesi, Sr. 65 Chairman of the Board of the Corporation and the Bank since April 14, 1993 and President of the Corporation and the Bank since April 13, 1983. Ronald J. Lashute 46 Secretary/Treasurer of the Corporation and Executive Vice-President and Chief Executive Officer of the Bank since March 1990; Director of the Corporation since December 1994.
Executive Officers are chosen by the Board of Directors to hold office at the pleasure of the Board. Mr. Salvador L. Diesi, Sr. has been an officer of the Corporation and the Bank for more than five years. Mr. Ronald Lashute has been on the staff of the Corporation and, prior to its formation, the Bank for 22 years. The family relationships among the executive officers of the Corporation are indicated in the list of directors. See "Election of Directors." COMPENSATION AND OTHER TRANSACTIONS DIRECTORS FEES Directors of the Corporation receive no compensation for their services. In 1995, each director of the Bank received a board fee of $300 per month for the months of January and February, and $400 per month for the months of March through December. In addition, each director of the Bank received a cash bonus of $3,000 in 1995. Directors serving on the Bank's Loan Discount Committee received $50 per meeting attended in 1995. The Bank's Audit Committee met once in 1995. The Chairman of the Audit Committee received $200 for attending that meeting. Other members of the Audit Committee who attended the meeting received $100. -9- 10 COMPENSATION The following table sets forth all compensation paid, distributed or accrued for the account of the persons listed below for the fiscal year ended December 31, 1995 by the Bank to the Executive Officers of the Corporation and the Bank.
SUMMARY COMPENSATION TABLE ANNUAL COMPENSATION NAME AND SALARY AND PRINCIPAL DIRECTOR BONUS OTHER ANNUAL ALL OTHER POSITION YEAR FEES($) ($)(1) COMPENSATION($)(2) COMPENSATION($) - ----------------------------------------------------------------------------------------------- Salvador L. Diesi, 1995 32,590 (4) 3,100 - 276 (3) Sr., Chairman of 1994 33,690 (4) 2,500 - 1,581 (3) the Board and 1993 33,478 (4) 2,500 - 1,849 (3) President of the Corporation and the Bank Ronald J. Lashute 1995 71,615 (5) 5,683 - 2,639 (8) Executive Vice- 1994 69,286 (6) 4,962 - 291 (3) President and 1993 64,960 (7) 4,615 - 305 (3) Chief Executive Officer of the Bank and Secre- tary/Treasurer of the Corporation
(1) The Bank had a cash bonus plan in 1995, 1994, and 1993, whereby a bonus was declared by the Board of Directors. The total amount of the Bonus paid to all eligible employees of the Bank was $50,364, $38,160, and $34,493, respectively, for those years. In addition, cash bonuses of $3,000 in 1995 and $2,500 in 1994 and 1993, were paid to each director of the Bank. Cash bonuses to the Executive Officers of the Bank are noted in the table above. (2) No amounts for perquisites and other personal benefits, such as company automobiles, which may accrue to the named executive officers and which, in the opinion of management, are job related and appropriate in connection with the conduct of the Corporation's and the Bank's affairs, are shown. The aggregate amount of such compensation does not exceed 10% of the total of annual salary or bonus reported for the named executive officer. (3) These figures represent term life insurance premiums paid by the Bank. (4) This amount includes $540 that was contributed by the Bank for the account of Mr. Diesi in accordance with the terms of a 401(k) Plan established by the Bank for the benefit of its employees in January 1993 (the 401(k) Plan). -10- 11 (5) This amount includes $1,303 that was contributed by the Bank for the account of Mr. Lashute in accordance with the terms of the 401(k) Plan. (6) This amount includes $1,359 that was contributed by the Bank for the account of Mr. Lashute in accordance with the terms of the 401(k) Plan. (7) This amount includes $1,236 that was contributed by the Bank for the account of Mr. Lashute in accordance with the terms of the 401(k) Plan. (8) This amount includes $2,363 of deferred compensation accrued under a supplemental executive retirement plan established by the Bank on September 1, 1995. This amount also includes $276 in term life insurance premiums paid by the Bank. COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT Section 16(a) of the Securities Exchange Act of 1934 requires officers, directors and beneficial owners of more than 10% of the outstanding shares of the Corporation to file with the Securities and Exchange Commission (the SEC) certain reports describing their stock ownership and changes in their stock ownership. They must also furnish the Corporation with copies of these forms. Based solely on its review of the copies of such forms received by it and written representations from certain reporting persons that they have complied with the relevant filing requirements, the Corporation believes that filing requirements under Section 16(a) were met on a timely basis. LEGAL PROCEEDINGS No director, officer or affiliate of the Corporation, or owner of more than five (5%) of the outstanding shares of the Corporation, is a party adverse to the Corporation or its subsidiary in any currently pending legal proceeding, nor does any such party have a material interest adverse to the Corporation or the Bank in any currently pending legal proceeding. OTHER TRANSACTIONS The Bank has had, and expects to have in the future, banking transactions in the ordinary course of business with directors, officers and principal stockholders of the Corporation and of the Bank and their associates, affiliates or members of their immediate families. The transactions have been and will continue to be made on the same terms, including interest rates and collateral on loans, as those prevailing at the same time for comparable transactions with others and not involving more than the normal risk of collectibility or presenting other unfavorable features. In addition, the Bank has had other transactions, as indicated below, with certain directors of the Bank. Such transactions were made in the ordinary course of business and were on terms competitive with those existing in the community at the time made. -11- 12 The Bank is obligated under a lease for the South Branch location with Little Capitol of Louisiana, Inc., which corporation is owned by Salvador L. Diesi, Sr. and a trust set up by Frank (a former director of the Bank) and Marie Diesi for the benefit of their grandchildren. For the year ended December 31, 1995, the Bank paid Little Capitol of Louisiana, Inc. $18,000 under the terms of the lease. The initial lease expired on May 31, 1992, but was renewed through May 31, 1997. During 1995, the Bank had its vehicles repaired at Diesi Pontiac-Cadillac-Buick, Inc. and paid an aggregate amount of $2,329 for such repairs. Also in 1995, the Bank purchased a car for $26,169 and a truck for $15,261 from Diesi Pontiac-Cadillac-Buick, Inc. Mr. J.C. Diesi, a Director of the Corporation, is an owner of the car dealership. RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS Broussard, Poche', Lewis & Breaux has served as the Corporation's independent Certified Public Accountants for the fiscal years ending December 31, 1986 to 1995. At the 1996 Annual Shareholders Meeting, the following resolution will be subject to ratification by a simple majority vote of shares represented at the meeting: RESOLVED, That the selection of Broussard, Poche', Lewis & Breaux, as the independent Certified Public Accountants of American Bancorp, Inc. and its sole subsidiary, American Bank and Trust Company, for the fiscal year ending December 31, 1996, is hereby ratified. If ratification is not achieved, the selection of an independent Certified Public Accountant will be reconsidered and made by the Board of Directors. Even if selection is ratified, the Board of Directors reserves the right, and in its discretion, may direct the appointment of any other independent Certified Public Accounting firm at any time if the Board decided that such a change would be in the best interests of the Corporation and its shareholders. A representative of Broussard, Poche', Lewis & Breaux is expected to attend the Annual Shareholder's Meeting with the opportunity to make a statement, if desired, and is expected to be available to respond to shareholder's inquiries. SHAREHOLDER PROPOSALS Shareholders who desire to present a proposal for inclusion in the proxy material relating to the 1997 annual meeting of shareholders of American Bancorp, Inc. must forward such proposals to Ronald Lashute at the address listed on the first page of this Proxy Statement in time to arrive at the Corporation prior to November 29, 1996. -12- 13 OTHER MATTERS QUORUM AND VOTING OF PROXIES The presence, in person or by proxy, of a majority of the outstanding shares of common stock of the Corporation is necessary to constitute a quorum. If a quorum is present, the vote of a majority of the shares present or represented by proxy will decide all questions properly brought before the meeting, except that directors will be elected by plurality vote and amendment of the Articles of Incorporation requires approval of two-thirds of the total shares outstanding (or 80,000 shares). All proxies received in the form enclosed will be voted as specified, and, in the absence of instruction to the contrary, will be voted FOR the election of the nominees named above, FOR the amendment of Article VI of the Corporation's Articles of Incorporation, FOR the ratification of Section 2.3(b) of the Corporation's Bylaws and FOR the ratification of independent Certified Public Accountants. The Corporation does not know of any matters to be presented at the annual meeting other than those mentioned above. However, if any other matters properly come before the meeting or any adjournment thereof, it is the intention of the persons named on the enclosed proxy to vote the shares represented by them in accordance with their best judgment, unless authority to do so is withheld. ADDITIONAL CORPORATE INFORMATION ANY SHAREHOLDER MAY, BY WRITTEN REQUEST, OBTAIN WITHOUT CHARGE AN ADDITIONAL COPY OF THE CORPORATION'S 1995 ANNUAL REPORT OR A COPY OF THE CORPORATION'S FORM 10-K AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. REQUESTS SHOULD BE ADDRESSED TO RONALD LASHUTE, EXECUTIVE VICE-PRESIDENT AND CHIEF EXECUTIVE OFFICER, AMERICAN BANK AND TRUST COMPANY, P. O. BOX 1579, OPELOUSAS, LOUISIANA 70571-1579. -13- 14 EXHIBIT A TO PROXY STATEMENT OF AMERICAN BANCORP, INC. CURRENT ARTICLE VI OF ARTICLES OF INCORPORATION OF AMERICAN BANCORP, INC. If shareholder action or approval is required by law in connection with the amendment of these Articles or any merger, consolidation, transfer of corporate assets or dissolution of or involving the corporation, such action or approval shall be taken or given only upon the affirmative vote of not less than two-thirds of the number of shares entitled to vote on the particular question. PROPOSED ARTICLE VI OF THE ARTICLES OF INCORPORATION OF AMERICAN BANCORP, INC. ARTICLE VI If shareholder action or approval is required by law in connection with the amendment of these Articles (except as provided in the second paragraph of this Article VI) or dissolution of or involving the corporation, such action or approval shall be taken or given only upon the affirmative vote of not less than two-thirds of the total number of shares entitled to vote on the particular question. If shareholder action or approval is required by law in connection with any merger, consolidation or transfer of corporate assets of or involving the corporation, or in connection with an amendment of this second paragraph of Article VI of these Articles of Incorporation, such action or approval shall be taken or given only upon the affirmative vote of not less than 75% of the total number of shares entitled to vote on the particular question. -14- EX-24.1 4 CONSENT OF INDEPENDENT AUDITORS 1 EXHIBIT 24.1 [BROUSSARD, POCHE, LEWIS & BREAUX LETTERHEAD] CONSENT OF INDEPENDENT AUDITORS As Independent Auditors, we hereby consent to the incorporation by reference in this Form 10-K of American Bancorp, Inc. for the years ended December 31, 1995, 1994 and 1993, of our report dated January 19, 1996, which appears on Pages 28 through 55 of the annual report to shareholders. /s/ BROUSSARD, POCHE, LEWIS & BREAUX Lafayette, Louisiana January 19, 1996 EX-27 5 FINANCIAL DATA SCHEDULE
9 1,000 U.S. DOLLARS YEAR DEC-31-1995 DEC-31-1995 1 5,534 694 6,350 0 5,141 16,505 16,619 27,014 624 63,070 55,655 0 630 0 0 0 600 6,185 63,070 2,569 1,382 271 4,222 1,158 1,158 3,064 0 0 615 1,413 1,413 0 0 963 8.03 0 5.79 114 9 0 0 614 5 15 624 0 0 624
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