Item 1: Business
Peoples Bancshares of Pointe Coupee Parish, Inc. (the Corporation) was incorporated under the laws of the State of Louisiana in 1983. On December 9, 1983, Peoples Bank and Trust Company (the Bank) was reorganized as a subsidiary of the Corporation. Prior to December 9, 1983, the corporation had no activity. The Corporation is currently engaged, through its subsidiary, in banking and related business. The Bank is the Corporation's principal asset and primary source of income.
The Bank
The Bank incorporated under the State Banking Laws in 1979 and received its charter on March 31, 1980. It is in the business of gathering funds by accepting checking, savings, and other time-deposit accounts and reemploying these by making loans and investing in securities and other interest bearing assets. The Bank is a full service commercial bank. Some of the major services which it provides include checking, NOW accounts, money market investments, money market checking, savings and other time deposits of various types, loans for business, agriculture, real estate, personal use, home improvement, automobile, and a variety of other types of loans and services including letters of credit, safe deposit rental, bank money orders, cashiers checks, credit cards, and wire transfers.
The State of Louisiana and various agencies of Parish (County) Government deposits public funds with the Bank. As of December 31, 2002, $2,109,727 were on deposit representing 5.81% of total deposits outstanding. Of this total, $1,507,602 represented demand deposits, $602,125 were time deposits and $.00 were savings deposits. The weighted average interest rate on these deposits was 1.29%. The maturity of these deposits range from one day to twelve months.
The Bank's general and primary market area is in Pointe Coupee Parish which has a population of approximately 23,000. Population of Pointe Coupee has experienced virtually no growth since inception of the bank.
The Bank faces keen competition from three other banks operating in nine locations throughout the parish. The largest bank in the parish as of December 31, 2002 was Regions Bank of Alabama, New Roads Branch, which had in excess of $50 billion in assets nationwide. Regions Bank of Alabama acquired the former Bank of New Roads in August of 1994. The other banks operating in Pointe Coupee are Guaranty Bank and Trust Company which had total assets of approximately $47 million as of December 31, 2002 and Cottonport Bank, which opened a branch in 1998 with assets of approximately $200 million on December 31, 2002. Additional competition for deposits and loans comes from banks and non-banks (credit unions, brokerage houses, etc.) in Baton Rouge, the capital city of Louisiana, which is 35 miles from New Roads.
Supervision and Regulation
The Bank is subject to regulation and regular examinations by the State Banking Department and by the Federal Deposit Insurance Corporation. Applicable regulations relate to reserves, investments, loans, issuance of securities, establishment of branches and aspects of its operations.
The Corporation is a bank holding company within the meaning of the Bank Holding Company Act of 1956, as amended (the Act), and is thereby subject to the provisions of the Act and to regulation by the Board of Governors of the Federal Reserve System (the Board).
The Act requires the Corporation to file with the Board an annual report containing such information as the Board may require. The Board is authorized by the Act to examine the Corporation and all its activities. The activities that may be engaged in by the Corporation and its subsidiary are limited by the Act to those so closely related to banking or managing or controlling banks, the Board must consider whether its performance by an affiliate of a holding company can reasonably be expected to produce benefits to the public, such as greater convenience, increased competition or gains in efficiency that out-weigh possible adverse effects, such as undue concentration of resources, decreased or unfair competition, conflicts of interest, or unsound banking practices. The Board has adopted regulations implementing the provisions of the Act with respect to the activities of bank holding companies. Such regulations reflect a determination by the Board that the following activities are permissible for bank holding companies: (1) making, for its own account or for the account of others, loans such as would be made, for example, by a mortgage, finance or factoring company; (2) operating as an industrial bank; (3) servicing loans; (4) acting as a fiduciary; (5) acting as an investment trust or a real estate investment trust; (6) leasing personal or real property, where the lease is to serve as the functional equivalent of an extension of credit to the lessee of the property; (7) investing in community welfare corporations or projects; (8) providing bookkeeping and data processing services for a bank holding company and its subsidiaries, or storing and processing certain other banking, financial or related economic data; (9) acting as insurance agent or broker with respect to certain kinds of insurance, principally insurance issued in connection with extensions of credit by the holding company or any of its subsidiaries; (10) underwriting credit life and credit accident and health insurance related to extensions of credit; (11) providing courier services for documents and papers related to banking transactions; (12) providing management consulting advice to non-affiliated banks; and (13) selling money orders, travelers checks and U.S. Savings Bonds. In each case, the Corporation must secure the approval of the Board prior to engaging in any of these activities.
Whether or not a particular non-banking activity is permitted under the Act, the Board is authorized to require a holding company to terminate any activity, or divest itself of any non-banking subsidiary, if in its judgement the activity or subsidiaries would be unsound.
Under the Act the Board's regulations, a bank holding company and its subsidiaries are prohibited from engaging in certain tie-in arrangements in connection with any extension of credit or provision of any property or services.
The Board of Directors of the Corporation has no present plans or intentions to cause the Corporation to engage in any substantial business activity which would be permitted under the Louisiana Act but which is not permitted to the Bank; however, a significant reason for formation of the one-bank holding company is to take advantage of the additional flexibility afforded by that structure if the Board of Directors of the Corporation concludes that such action would be in the best interest of stockholders.
With certain exceptions, the Bank is restricted by Sections 22 and 23A of the Federal Reserve Act and Section 18(j) of the Federal Deposit Insurance Corporation Act from extending credit or making loans to or investments in the Corporation.
Statistical Information
The following tables contain additional information concerning the business and operations of the Registrant and its subsidiary and should be read in conjunction with the Consolidated Financial Statements of the Registrant and Management's Discussion and Analysis of Operations.
I. Distribution of Assets, Liabilities and Stockholders' Equity Interest Rates and Interest Differential
II. Investment Portfolio
III. Loan Portfolio
Major Classification of loans are summarized as follows: (in thousands)
For year ended Dec. 31, 2002 2001
Real Estate $ 9,202 $ 7,539 Commercial 20,629 16,821 Agricultural 5,774 6,281 Individual 6,476 6,397 Other 1,194 570 ------- ------- TOTAL LOANS: $43,275 $37,608 Less Unearned Discount - - ------- ------- Net Loans $43,275 $37,608
Loan Analysis of Principal Subject to Rate Change December 31, 2002
1 Year Over 1 Year Over 5 or Less Less than 5 Years
1. Commercial, Financial, Agricultural, Real Estate, Consumer and Other $32,700,160 $ 9,930,758 $ 644,082 Average Rate 6.02% 8.59% 8.63%
Non-performing Loans and Other Problem Assets
It is management's policy to discontinue accrual of interest on loans where there is reasonable doubt as to collectibility. The policy to place loans on non-accrual status is to normally discontinue accrual of interest when the loan is delinquent 90 days or more, or where circumstances indicate that collection of principal or interest is doubtful, unless the obligation is secured (1) by mortgage on real estate or pledge of securities that have a realizable value sufficient to pay the debt in full; or (2) by guarantee of a financially responsible party. The following tables presents the non-performing loans and other problem assets at December 31, 2002 and 2001. Assets acquired through the default of loans are recorded at the lower of the outstanding loan amount or fair market value of the assets acquired at the time of foreclosure. Reductions from outstanding loan amounts to fair market value are charged against the reserve for possible loan losses. Subsequent adjustments to market valuations are charged to operating expense.
2002 2001 -------- -------- NON-ACCRUAL LOANS $278,652 $266,144 Restructured Loans 89,282 89,282
Other Real Estate -0- 114,822 -------- -------- TOTAL NON-ACCRUAL & ORE $369,206 $430,248 ======== ========
Loans Over 90-days past due and still accruing interest:
2002 2001 --------- ----------- Commercial $ -0- $ 21,760 Agriculture 48,195 127,398 Student -0- -0- Consumer 24,158 103,809 Real Estate -0- 36,550 --------- --------- TOTAL OVER 90-DAYS $ 72,353 $ 289,517 ========== ==========
The effect of non-accruing loans on interest income for 2002 was $10,778. The effect of restructured loans on interest income for 2002 was $0.00. Interest recognized on such loans for the year approximated $10,500.
At December 31, 2002, there were no commitments to lend additional funds to debtors whose loans were considered to be non-performing.
All loans listed above are subject to constant attention by management and their progress is reviewed monthly.
At the present time, management does not track loan concentrations by particular industries, but rather by the grouping of types of loan, i.e., Agriculture, Real Estate, Consumer and Commercial. We attempt to avoid any undue concentration in any particular sector.
IV. Summary of Loan Loss Experience
Changes in the allowance for loan losses were as follows:
2002 2001 ----------- -------- Balance, January 1, $ 708,724 825,337 Provision charged to Operations -0- 4,433 Loans charged off (25,469) (153,049) Recoveries 38,744 32,003 ----------- ------- Balance December 31, $ 721,999 708,724 =========== =======
In determining the adequacy of the loan loss reserves, management uses the following formulas: 100% of loans classified loss, 50% of doubtful loans, 5% of substandard loans, 0% of savings loans and government guaranteed loans and 1.5% of all other loan types. This analysis is performed on a quarterly basis.
V. Deposits
Deposits are summarized below: December 31, 2002 2001 -------------------------- Demand deposits accounts $ 7,250,018 $ 7,388,169 NOW accounts 5,558,112 6,310,655 Savings accounts 6,541,412 6,149,171 Time accounts 16,980,177 17,580,358 ------------ ----------- $36,329,719 $37,428,353 ============ ===========
Included in deposits are approximately $5,502,000 and $5,228,500 of certificates of deposit in excess of $100,000 at December 31, 2002 and 2001, respectively.
Certificate of Deposit Maturity and Rate Analysis
As of December 31, 2002:
0-90 91-364 1 Year Over Days Days 5 Years 5 Years
Total Certificates $7,170,310 $7,331,928 $2,477,939 $ -0- of Deposit Average Rate 2.19% 2.52% 3.99% ---
VI. Return on Equity and Assets
ITEM 1: 2002 2001 ----- ------ Return on assets 1.7 1.8 Return on equity 9.5 10.0 Dividend payout ratio .3 .4 Equity to assets ratio 17.6 17.9
VII. Short-Term Borrowings
The bank has established a line-of-credit for approximately $17,750,000 with the Federal Home Loan Bank (FHLB) to provide an additional source of operating capital. The current advances, which totaled $7,003,220 and $2,332,000 at December 31, 2002 and 2001, respectively, bore interest at variable rates ranging from 1.42% to 3.84%.
This line of credit is secured by $435,900 of FHLB stock owned by the Bank and a portion of the loan portfolio. The bank has also utilized $1,620,000 of the line of credit with the FHLB to acquire letters of credit to secure public deposits.
ITEM 2:
ITEM 2: Properties
The main office of the Corporation and Bank are presently located in a two-story office building on State Highway 3131, New Roads, Louisiana. The bank owns one branch located on State Highway 78, Livonia, Louisiana, which is approximately 13 miles from the main office. Additionally, in 1994 the bank purchased from its Other Real Estate portfolio the property directly behind the bank for $75,000. This property was formerly an insurance building and lot. It was acquired in an exchange of properties from Farm Bureau Insurance. All locations are owned free of any mortgages or liens.
ITEM 3:
ITEM 3: Legal Proceedings
There is no threatened or pending litigation against the Corporation, the Bank, or its officers.
ITEM 4:
ITEM 4: Submission of Matters to a Vote of Security Holders
No matters were submitted to a vote of security holders during the fourth quarter of the fiscal year covered by this report.
PART II
ITEM 5:
ITEM 5: Market Price Dividends on the Registrant's Common Equity and Related Stockholder Matters
The primary market area for the Corporation stock is Pointe Coupee Parish with Peoples Bank and Trust Company acting as registrar and transfer agent. There were approximately 575 shareholders of record as of December 31, 2002. The stock of the Corporation is not listed on any security exchange.
Due to lack of an active trading market, the Corporation does not have available information to furnish a high and low sales price on the range of bid and asked quotations for its stock. Based on limited inquiries by management, it is believed that less than 3,000 shares traded in 2002. There can be no assurance that the limited inquiries adequately reflect the marketability of the stock.
In March 2002 Peoples Bancshares declared a special dividend of $.55 per share to all stockholders of record as of March 31, 2002, totaling $169,937. Additionally, In December of 2002, Peoples Bancshares declared a dividend of $.45 per share to all stockholders of record as of November 15, 2002, totaling $139,040.
The Bank, as a state chartered Bank, is subject to the dividend restrictions set forth by the Commissioner. Under such restrictions, the Bank may not, without the prior approval of the Commissioner, declare dividends in excess of the sum of the current year's retained net earnings (as defined) plus the retained net earnings (as defined) from the prior year.
Management, will for the foreseeable future, approach the payment of dividends on an annual basis and according to the profitability of the bank in that particular year, as well as considering the long-term capital needs of the bank in the future.
ITEM 6:
ITEM 6: Selected Financial Data
ITEM 7:
ITEM 7: Management Discussion and Analysis of Financial Condition and Results of Operation
Peoples Bancshares of Pointe Coupee Parish, Inc., (Bancshares) is a one bank holding company whose sole subsidiary is Peoples Bank and Trust Company of Pointe Coupee Parish, Inc., (the Bank). All items discussed below are attributable to the activities of the Bank unless otherwise stated. This section should be read in conjunction with the consolidated financial statements and related notes and the tables presented in an earlier section of this report.
FINANCIAL REVIEW
Summary
Bancshares consolidated net income for 2002 was $879,326. This represents a Return on Average Assets of 1.78%, which we believe is a good return. This is in comparison to 1.79% for 2001 and 2.07% in 2000.
Several factors contributed to this continued success. The most important factors were: 1) good interest rate margins; 2) a low level of classified assets; and 3) low loan loss provisions.
In 2002, charge-offs were $25,469 as compared to $153,049 in 2001. Recoveries for 2002 were $38,744 and provisions were -0-. Provisions for 2001 were $4,443 and recoveries were $32,003.
The prospects for 2003 remain encouraging. The bank continues to note financial stability and deem our reserves as adequate. As a result, the projections for income are good. Additionally, Peoples Bank is deemed to be a well capitalized institution within the guidelines of the FDIC.
However, we still remain conservative in our view of the economy and current management will maintain that philosophy throughout 2003.
Other Income and Expenses
Other Income, excluding loan related income, decreased $ 66,407 or 8.24% in 2002 as compared to 2001, whereas there were no loan sales in 2002.
Other expenses, excluding interest expense decreased by $12,486 or ..74% in 2002 as compared to 2001. Other operating expenses accounted for the net decrease in other expenses.
Income Taxes
Bancshares files a consolidated federal income tax return. Deferred income taxes are provided using the liability method on items of income or expenses recognized in different time periods for financial statement and income tax purposes.
Statement of Condition
Total deposits as of December 31, 2002 decreased $1,098,634 or 2.94% as compared to year end 2001. Non-interest bearing deposits decreased $138,150 or 1.87% and interest bearing deposits decreased $960,484 or 3.2%. Total loans excluding loan reserves increased $5,666,552 or 15.07% and carrying value of investment securities decreased $1,530,146 or 56.93%. The increase in loans was concentrated primarily in commercial loans.
Liquidity Management
The purpose of liquidity management is to assure the corporation's ability, at an acceptable cost, to raise funds to support asset growth, meet deposit withdrawals, and otherwise operate the Corporation on a continuing basis. The overall liquidity position of the bank is insured by acquisition of additional funds in the form of time deposits, borrowings such as Federal Funds, Federal Home Loan Bank borrowings, and the sale or maturing of investments.
In management's opinion, there are no known trends, commitments or uncertainties that will or should have a material effect on deposits or the liquidity position. Additionally, no trends or events were cited by the regulatory authorities.
Capital Adequacy
The management of capital is a continuous process which consists of providing capital for the current position and the anticipated future growth of the Corporation. The purposes of capital are to serve as a source of funds, protect depositors against losses, and provide a measure of reassurance to the public that the community's needs will continue to be served. Since capital serves a multiplicity of purposes, the evaluation of capital adequacy cannot be made solely in terms of total capital or related ratios.
Traditionally, the source of additional capital has been retained earnings. Due to strong earnings from 1990 - 2002, and large recoveries of charged-off loans, our capital ratio is at an acceptable level. As such, retained earnings should continue to provide needed capital. Additionally, we will concentrate on the following to provide for our capital needs:
1. Increase non-interest income and reduce non-interest expenses 2. Maintain an adequate interest rate spread 3. Actively pursue previous charged-off loans for recoveries 4. Manage our growth rate
Furthermore, the prospects for 2003 continue to be encouraging. Our capital base continued to grow in 2002; our loan loss reserve is adequate; our net income was extremely good with a Return on Average Assets of 1.78%; loan delinquencies continue to be manageable; and classified assets have remained at a manageable level.
ECONOMIC CONDITIONS
Current economic conditions are about average compared to the previous (5) five years, but are certainly not great. Our asset/liability management strategy helped produced good margins in 2002. However, our strategies remain conservative; therefore, we are positioned as interest rates continue to fluctuate.
Item 8:
Item 8: Financial Statements (following on next pages)
Item 9:
Item 9: Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None
PART III
Item 10:
Item 10: Directors and Executive Officers
Directors of Bancshares are identified in the following table:
Type of Percent Name Stock Amount of Principal Occupation Age Ownership Owned Total
Joseph Jefferson David 83 Direct 30,638 9.916
Stephen P. David 45 Direct 4,522 1.464 President and CEO of Peoples Indirect 19,557 6.330 Bancshares of Pointe Coupee and Peoples Bank & Trust Company
Frank Ned Foti 67 Direct 24,561 7.949
C. E. Hebert, III 59 Direct 5,588 1.809
Clyde Walker Kimball 61 Direct 5,014 1.623
Camille N. Laborde 75 Direct 5,028 1.627
Norris A. Melancon, Jr. 75 Direct 20,491 6.632 Indirect 200 .065
Thomas W. Montgomery, III 63 Direct 3,588 1.161
Joseph Major Thibaut 49 Direct 600 .194 Indirect 1,000 .324
Rodney Fontaine 51 Direct 1,480 .479
Maurice Picard 55 Direct 400 .129 ------- ------
All Directors and Principal Direct 101,910 32.983 Officers as a Unit (11 Persons) Indirect 20,757 6.718
MANAGEMENT OF THE BANK AND BANCSHARES
Employees
On December 31, 2002 there were twenty-two full time employees. This includes the officers of the Corporation and Bank listed below:
Officers
Name Age Position Currently Held
Stephen P. David 45 President and CEO of Peoples Bancshares and Peoples Bank and Trust Company
Joyce A. York 55 Senior Vice President and Cashier of Peoples Bank
Robin Cashio 52 Branch Manager of Peoples Bank
Kenneth R. Ramagos 47 Assistant Vice President and Loan Officer of Peoples Bank
Melissa Laborde 39 Loan Review Officer of Peoples Bank
Mary Posey 44 Loan Officer and Loan Collections Officer
Annie LeBlanc 69 Customer Account Officer
Belinda LeJeune 41 Assistant Cashier
Deborah F. Strate 41 Administrative Assistant
Ms. York has been with Peoples Bank since inception. Mr. David was elected an officer of the Bank in December of 1983.
Stephen P. David, Director, CEO, and President of Bancshares and the Bank, age 45. Mr. David joined the Bank on August 3, 1981 and has held many positions, including, Loan Officer; Assistant Vice President; Senior Loan Officer; Senior Vice-President and Assistant Secretary to the Board of Directors prior to being named to his current post on February 1, 1990.
Bancshares was formed in 1983 and became the Bank's sole shareholder on December 27, 1983, at which time all directors of the Bank became directors of Bancshares.
Joseph Jefferson David is the father of Stephen P. David.
Item 11:
Item 11: Executive Compensation
a) Remuneration of Directors and Officers:
All Executive Officers (President David & Senior Vice President York) had direct cash compensation of $224,812, $212,919, and $206,420 excluding board fees, but including bonuses in 2002, 2001, and 2000, respectively.
On September 17, 1981, the Board of Directors of the Bank approved a profit sharing plan which conforms to the Internal Revenue Code, Section 401(a). All employees who have been employed by the Bank for a period of six months or more; who are 25 years of age; and who have at least 1,000 hours of service annually may participate in the profit sharing plan. No contributions were made to the plan in 2002.
In January 1990 the Board of Directors approved a 401(k) savings plan which conforms to the Internal Revenue Code. All employees who have been employed by the bank for a period of six months or more were eligible to participate in the plan. Contributions by the bank in 2002 totaled $13,795. The accrued amount at year end totaled $368,221.
The Bank has a deferred compensation plan available to its directors. At present only two directors are participating. Upon retirement, the Bank will pay the directors their deferred compensation plus interest, which accrues at the "low Wall Street rate", in 15 equal annual installments beginning the month after retirement. Upon pre-retirement death, the bank will pay his designated beneficiaries the greater of $8,400 a year for 15 years or his deferred compensation and accrued interest. The bank is the owner and beneficiary of an insurance policy on the life of each director.
The Bank also maintains two supplemental executive retirement plan with its president. On one plan, the president will receive $25,000 per year for 20 years, beginning immediately. The bank is the owner and beneficiary of an insurance policy on the life of the president. If employment is terminated "without cause" prior to retirement, the bank will pay the president his accrued benefit, which is based on the number of months of completed service since January, 1996. On the other plan, the president will receive a percentage of his income (salary and bonus) based on the previous five year period preceding retirement. The percentage is determined by multiplying 1.5% by the number of years of employment with the bank. The bank is the owner and beneficiary of an insurance policy on the life of the president.
The Board of Directors of Bancshares held twelve (12) regular scheduled meetings during 2002. The Board of Directors of the Bank held twelve (12) regularly scheduled meetings. The Bank has a personnel committee which met one (1) times during 2002, and a loan committee which met thirteen (13) times during the year. The Board of Directors held no special meeting during 2002. The Bank also has an audit committee and executive committee. The audit committee met with the independent C.P.A. firm of Postlethwaite & Netterville one (1) time during 2002. The executive committee did not meet in 2002.
The Board of Directors of Bancshares and the Bank do not have a nomination committee.
Directors of Bancshares receive no remuneration for serving in that capacity. Each director of the Bank received a fee of $525 for each regular board meeting. Members of each committee receive $75 per meeting attended.
Item 12:
Item 12: Security Ownership of Certain Beneficial Owners and Management
As of March 31, 2003, Peoples Bancshares had authorized 1,000,000 shares of common stock and of this amount, 308,977 shares were outstanding. Additionally, as of this date, Peoples Bancshares had authorized but unissued 500,000 shares of Series A Preferred stock and 500,000 shares of Series B Preferred stock.
As of March 31, 2003 the management of Bancshares knew of no other person or group that owned 5% or more of the outstanding stock of Bancshares other than Mr. N. A. Melancon, Jr., with 20,491 shares representing 6.632%; Mr. Frank N. Foti with 24,561 shares representing 7.949%; Mr. J. Jeff David with 30,638 shares representing 9.916% and William C. David* with 19,477 shares representing 6.304%.
*William C. David has granted a Proxy Authority to his brother, Stephen P. David.
Item 13:
Item 13: Certain Relationships & Related Transactions
b) Transactions with Management:
From time to time the Bank has extended credit to its Officers and Directors and to businesses in which Officers and Directors own an interest; and the Bank intends to continue this policy because of the deposits, business and the income that these activities generate for the Bank. Such loans are made only with the approval of the Board of Directors.
At no time in 2002 did these transactions exceed 10% of the equity capital, except for those matters noted below.
All directors and officers as a group had total loans outstanding at year end 2002 and 2001 of $1,733,141 and $1,339,399 respectively.
PART IV
Item 14:
Item 14: EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
A. (1) Financial Statements
The financial statements are listed under Part II, Item 8 of this Report
(2) Financial Statement Schedules
The financial statement schedules are listed under Part II, Item 8 of this Report.
B. Reports on Form 8-K
None
C. Exhibits
None
Signatures
Pursuant to the requirements of Section 13 of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the under signed, thereunto duly authorized.
PEOPLES BANCSHARES OF POINTE COUPEE PARISH, INC.
By:/s/ Rodney G. Fontaine _________________________________ Rodney G. Fontaine Chairman
Pursuant to the Requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:
/s/ Joseph Jefferson David /s/ Clyde Walker Kimball ________________________________ ______________________________ Joseph Jefferson David Clyde Walker Kimball Director Director
/s/ Frank Ned Foti /s/ Camille N. LaBorde ________________________________ ______________________________ Frank Ned Foti Camille N. LaBorde Director Director
/s/ Norris A. Melancon, Jr. /s/ C. E. Hebert, III ________________________________ ______________________________ Norris A. Melancon, Jr. C. E. Hebert, III Director Director and Secretary
/s/ Stephen P. David /s/ Maurice Picard ________________________________ ______________________________ Stephen P. David Maurice Picard President/CEO and Director Director
/s/ Thomas W. Montgomery, III /s/ Joseph Major Thibaut ________________________________ ______________________________ Thomas W. Montgomery, III Joseph Major Thibaut Director Director
/s/ Rodney G. Fontaine ________________________________ Rodney G. Fontaine Director
Peoples Bancshares of Pointe Coupee Parish, Inc. & Subsidiary
[LOGO]
2002 Financial Statements
PEOPLES BANCSHARES OF POINTE COUPEE PARISH, INC. AND SUBSIDIARY
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002 AND 2001
C O N T E N T S
Page
Independent Auditors' Report 1
Consolidated Financial Statements
Consolidated Balance Sheets 2 - 3
Consolidated Statements of Operations and Comprehensive Income 4 - 5
Consolidated Statements of Changes in Stockholders' Equity 6 - 7
Consolidated Statements of Cash Flows 8 - 9
Notes to Consolidated Financial Statements 10 - 31
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders Peoples Bancshares of Pointe Coupee Parish, Inc. New Roads, Louisiana
We have audited the accompanying consolidated balance sheets of Peoples Bancshares of Pointe Coupee Parish, Inc. and Subsidiary as of December 31, 2002 and 2001, and the related consolidated statements of operations and comprehensive income, changes in stockholders' equity and cash flows for each of the years during the three year period ended December 31, 2002. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Peoples Bancshares of Pointe Coupee Parish, Inc. and Subsidiary as of December 31, 2002 and 2001, and the results of their operations and their cash flows for each of the years during the three year period ended December 31, 2002, in conformity with accounting principles generally accepted in the United States of America.
/s/ Postlethwaite & Netterille - ------------------------------ POSTLETHWAITE & NETTERVILLE
Baton Rouge, Louisiana March 3, 2003
PEOPLES BANCSHARES OF POINTE COUPEE PARISH, INC. AND SUBSIDIARY NEW ROADS, LOUISIANA
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting and reporting policies of Peoples Bancshares of Pointe Coupee Parish, Inc. (Bancshares) and its subsidiary conform to accounting principles generally accepted in the United States of America and to the prevailing practices within the banking industry. A summary of significant accounting policies is as follows:
Basis of presentation
The consolidated financial statements include the accounts of Bancshares and its wholly owned subsidiary, Peoples Bank and Trust Company (the Bank). All significant intercompany accounts and transactions have been eliminated in consolidation.
Nature of operations
Substantially all of the assets, liabilities, and operations presented in the consolidated financial statements are attributable to Peoples Bank and Trust Company. The Bank provides a variety of banking services to individuals and businesses primarily in and around Pointe Coupee Parish, Louisiana. Its primary deposit products are demand deposits accounts and certificates of deposits, and its primary lending products are commercial, agriculture, real estate, and consumer loans.
Use of estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
The determination of the adequacy of the allowance for loan losses is based on estimates that are particularly susceptible to significant changes in the economic environment and market conditions. In connection with the determination of the estimated losses on loans, management obtains independent appraisals for significant collateral.
The Bank's loans are generally secured by specific items of collateral including real property, consumer assets, and business assets. Although the Bank has a diversified loan portfolio, a substantial portion of its debtors' ability to honor their contracts is dependent on local economic conditions and the agricultural industry.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Use of estimates (continued)
While management uses available information to recognize losses on loans, further reductions in the carrying amounts of loans may be necessary based on changes in local economic conditions. In addition, regulatory agencies, as an integral part of their examination process, periodically review the estimated losses on loans. Such agencies may require the Bank to recognize additional losses based on their judgments about information available to them at the time of their examination. Because of these factors, it is reasonably possible that the estimated losses on loans may change materially in the near term. However, the amount of the change that is reasonably possible cannot be estimated.
Investment securities
The Bank's investments in securities are classified as available- for-sale securities and consist of bonds, notes, and debentures that are available to meet the Bank's operating needs. These securities are reported at fair value as determined by quoted market prices.
Unrealized holding gains and losses, net of tax, on available-for- sale securities are reported as a net amount in other comprehensive income. Gains and losses on the sale of investment securities are determined using the specific-identification method. Realized gains (losses) on the sales and maturities of investment securities are classified as non-interest income and reported as a reclassification adjustment in other comprehensive income.
Interest-bearing deposits in other banks
Interest-bearing deposits in other banks mature within one year and are carried at cost, which approximates market.
Loans
Loans that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off are reported at their outstanding principal adjusted for any charge-off's, the allowance for loan losses, and any deferred fees or costs on originated loans. Interest is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized as an adjustment of the related loan yield using the interest method.
The accrual of interest on impaired loans is discontinued when, in management's opinion, the borrower may be unable to meet payments as they become due. When interest accrual is discontinued, all unpaid accrued interest is reversed. Interest income is subsequently recognized only to the extent cash payments are received, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. Loans are charged-off if management considers the collection of principal and interest to be doubtful.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Allowance for loan losses
The allowance for loan losses is maintained at a level which, in management's judgment, is adequate to absorb credit losses inherent in the loan portfolio. The amount of the allowance is based on management's evaluation of the collectibility of the loan portfolio, including the nature of the portfolio, credit concentrations, trends in historical loss experience, specific impaired loans, and economic conditions.
A loan is considered impaired when, based on current information and events, it is probable that the Bank will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the borrower's prior payment record, and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan by loan basis for commercial and construction loans by either the present value of expected future cash flows discounted at the loan's effective interest rate, the loan's obtainable market price, or the fair value of the collateral if the loan is collateral dependent. Past-due status is determined based on contractual terms.
Large groups of smaller balance homogeneous loans are collectively evaluated for impairment. Accordingly, the Bank does not separately identify consumer and residential loans for impairment disclosures. Because of uncertainties associated with the regional economic conditions, collateral values, and future cash flows on impaired loans, it is reasonably possible that management's estimate of loan losses inherent in the loan portfolio and the related allowance may change materially in the near term. The allowance is increased by a provision for loan losses, which is charged to expense and reduced by charge-off's, net of recoveries.
Foreclosed real estate
Real estate properties acquired through, or in lieu of, loan foreclosure are to be sold and are initially recorded at fair value at the date of foreclosure, establishing a new cost basis. After foreclosure, valuations are periodically performed by management, and the real estate is subsequently carried at the lower of carrying amount or fair value, less cost to sell. Revenue and expenses from operations and changes in the valuation allowance are included in loss on foreclosed real estate.
Bank premises and equipment
Land is carried at cost. Bank premises and equipment are stated at cost less accumulated depreciation, which is computed using straight-line and accelerated methods over the estimated useful lives of the assets, which range from 3 to 30 years.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Income taxes
Provisions for income taxes are based on taxes payable or refundable for the current year (after exclusion of non-taxable income such as interest on state and municipal securities) and deferred taxes on temporary differences between the amount of taxable income and pretax financial income and between the tax bases of assets and liabilities and their reported amounts in the financial statements. Deferred tax assets and liabilities are included in the financial statements at currently enacted income tax rates applicable to the period in which the deferred tax assets and liabilities are expected to be realized or settled as prescribed in Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes.
Net Income per share
Net income per share of common stock has been computed on the basis of the weighted average number of shares of common stock outstanding.
Comprehensive income
Comprehensive income is the change in stockholders' equity during the period from transactions and other events and circumstances from non-owner sources. Comprehensive income includes the change in unrealized gains (losses), net of taxes, on available-for-sale securities during the period.
Cash and cash equivalents
For purposes of presentation in the consolidated statements of cash flows, cash and cash equivalents include cash and balances due from banks and federal funds sold.
Credit related financial information
In the ordinary course of business, the Bank has entered into commitments to extend credit, including commercial letters of credit and standby letters of credit. Such financial instruments are recorded when they are funded.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Fair values of financial instruments
Statement of Financial Accounting Standards (SFAS) No. 107, Disclosures about Fair Value of Financial Instruments, requires disclosure of fair value information about financial instruments, whether or not recognized in the balance sheet. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. In that regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, could not be realized in immediate settlement of the instruments from its disclosure requirements. Accordingly, the aggregate fair value amounts presented do not represent the underlying value of Bancshares.
The following methods and assumptions were used by Bancshares in estimating its fair value disclosures for financial instruments:
Cash and cash equivalents - the carrying amounts of cash and cash equivalents approximate their fair values.
Interest-bearing deposits in other banks - fair values for interest-bearing deposits in other banks are estimated using a discounted cash flow analysis that applies interest rates currently being offered on certificates to a schedule of aggregated contractual maturities on such time deposits.
Investment securities - fair values for investment securities are based on quoted market prices, where applicable. If quoted market prices are not available, fair values are based on quoted market prices of comparable instruments.
Loans - for variable-rate loans that reprice frequently and have no significant change in credit risk, fair values are based on carrying values. Fair values for certain mortgage loans (i.e., one-to-four family residential), credit card loans, and other consumer loans are based on quoted market prices of similar loans sold in conjunction with securitization transactions, adjusted for differences in loan characteristics. Fair values for commercial real estate and commercial loans are estimated using discounted cash flow analyses, using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality. Fair values for impaired loans are estimated using discounted cash flow analyses or underlying collateral values, where applicable.
Deposit liabilities - the fair values disclosed for demand deposits are, by definition, equal to the amount payable on demand at the reporting date (that is, their carrying amounts). The carrying amounts of variable-rate, fixed-term money market accounts and certificates of deposit approximate their fair values at the reporting date. Fair values for fixed-rate certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on time deposits.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Fair values of financial instruments (continued)
The following methods and assumptions were used by Bancshares in estimating its fair value disclosures for financial instruments:
Short-term borrowings - the carrying amounts of other short- term borrowings maturing within 90 days approximate their fair values. Fair values of other short-term borrowings are estimated using discounted cash flow analyses based on the incremental borrowing rates for similar types of borrowing arrangements.
Accrued interest - the carrying amounts of accrued interest approximate their fair values.
Off-balance sheet instruments - fair values for off-balance sheet lending commitments are based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties' credit standing.
Reclassification
Certain amounts in the 2001 and 2000 consolidated financial statements have been reclassified to conform with the current year presentation.
2. INVESTMENT SECURITIES
Debt and equity securities have been classified in the consolidated balance sheets according to management's intent. Securities classified as available-for-sale consisted of the following at December 31, 2002:
Amortized Unrealized Unrealized Fair Cost Gains Losses Value ---------- --------- ---------- ---------- U.S. Treasury securities and obligations of other governmental entities $ 118,245 $ 2,799 $ - $ 121,044 Tax-free municipal bonds 622,500 50,647 - 673,147 Mortgage-backed securities 352,907 10,582 241 363,248 ---------- --------- ---------- ---------- $1,093,652 $ 64,028 $ 241 $1,157,439 ========== ========= ========== ==========
2. INVESTMENT SECURITIES (continued)
Securities classified as available-for-sale consisted of the following at December 31, 2001:
Amortized Unrealized Unrealized Fair Cost Gains Losses Value --------- ---------- ---------- ---------- U.S. Treasury securities and obligations of other governmental entities $1,418,009 $11,668 $ 4,863 $1,424,814 Tax-free municipal bonds 670,314 29,950 4,416 695,848 Mortgage-backed securities 562,615 4,783 475 566,923 --------- ---------- ---------- ---------- $2,650,938 $46,401 $ 9,754 $2,687,585 ========== ========= ========== ==========
The amortized costs and estimated market values of debt securities at December 31, 2002, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because borrowers have the right to call or prepay obligations with or without call or prepayment penalties.
Amortized Fair Cost Value ---------- ---------- Within one year $ - $ - Greater than one but within five years 118,245 121,044 Greater than five but within ten years 502,500 547,550 Greater than ten years 120,000 125,597 ---------- ---------- 740,745 794,191 Mortgage-backed securities 352,907 363,248 ---------- ---------- $1,093,652 $1,157,439 ========== ==========
Investment securities with carrying values of approximately $914,000 and $195,400 at December 31, 2002 and 2001, respectively, were pledged to secure public deposits and for other purposes as required or permitted by law.
3. LOANS
The components of loans in the consolidated balance sheets at December 31, 2002 and 2001, were as follows:
2002 2001 ------------ ------------- Agricultural loans $ 5,774,399 $ 6,280,542 Commercial loans 20,629,054 16,820,986 Real estate loans 9,202,418 7,538,708 Consumer loans 6,476,205 6,397,315 Overdrafts 824,525 255,157 Other 368,030 315,371 ------------ ------------- 43,274,631 37,608,079 Less: allowance for loan losses ( 721,999) ( 708,724) ------------ ------------- Loans, net $ 42,552,632 $ 36,899,355 ============ ============
Changes in the allowance for loan losses during the years ended December 31, 2002, 2001, and 2000 were as follows:
2002 2001 2000 ------------ ----------- ----------- Balance - beginning of year $ 708,724 $ 825,337 $ 801,545 Provision (credit) for loan losses - 4,433 - Loans charged-off ( 25,469) ( 153,049) ( 37,871) Recoveries 38,744 32,003 61,663 ------------ ----------- ----------- Balance - end of year $ 721,999 $ 708,724 $ 825,337 ============ =========== ===========
At December 31, 2002 and 2001, the total recorded investment in loans on nonaccrual amounted to approximately $279,000 and $226,000, respectively, and the total recorded investment in loans past due ninety days or more and still accruing interest amounted to approximately $72,353 and $289,517, respectively. At December 31, 2002 and 2001, the total recorded investment in impaired loans, all of which had allowances determined in accordance with SFAS No. 114 and No. 118, amounted to approximately $368,000 and 315,000, respectively. The average recorded investment in impaired loans during 2002 and 2001 was approximately $324,000 and $331,000, respectively, and the total allowances for loan losses related to these impaired loans was approximately $46,500 and $31,100, at December 31, 2002 and 2001, respectively. The Bank is not committed to lend additional funds to debtors whose loans have been modified.
Interest income on impaired loans, which is recognized when cash payments are received, totalled approximately $10,500, $6,500, and $5,000 during the years ended December 31, 2002, 2001, and 2000, respectively.
The Bank transferred $36,000 and $774,308 of real estate acquired in settlements of loans to other real estate owned and other assets during the years ended December 31, 2001 and 2000, respectively.
4. BANK PREMISES AND EQUIPMENT
Major classifications of bank premises and equipment at December 31, 2002 and 2001, are summarized as follows:
2002 2001 ---------- ---------- Land $ 100,081 $ 100,081 Buildings and improvements 909,560 894,923 Equipment 535,830 522,462 ---------- ---------- 1,545,471 1,517,466 Less: accumulated depreciation ( 1,015,950) (956,868) ---------- ---------- $ 529,521 $ 560,598 ========== ==========
Depreciation expense amounted to $59,082, $61,823, and $60,580 during the years ended December 31, 2002, 2001, and 2000, respectively.
5. DEPOSITS
Deposits at December 31, 2002 and 2001, are summarized below:
2002 2001 ----------- ----------- Demand deposit accounts $ 7,250,018 $ 7,388,169 NOW accounts 5,558,112 6,310,655 Savings accounts 6,541,412 6,149,171 Time accounts 16,980,177 17,580,358 ----------- ----------- $36,329,719 $37,428,353 =========== ============
At December 31, 2002, the scheduled maturities of all outstanding certificates of deposit were as follows:
Year ending December 31st Amount ------------- ------------ 2003 $14,502,238 2004 977,745 2005 105,621 2006 532,363 2007 862,210 $16,980,177
Included in deposits are approximately $5,502,000 and $5,228,500 of certificates of deposit in excess of $100,000 at December 31, 2002 and 2001, respectively. Interest expense on such deposits was approximately $149,000, $346,400, and $286,500 during the years ended December 31, 2002, 2001, and 2000, respectively.
6.OTHER BORROWED FUNDS
The Bank has established a line-of-credit for approximately $17,750,000 with the Federal Home Loan Bank (FHLB) to provide an additional source of operating capital. The current advances, which totalled $7,003,220 and $2,332,000 at December 31, 2002 and 2001, respectively, bore interest at variable rates ranging from 1.42% to 3.84%, and are scheduled to mature as follows:
Year ending December 31st Amount --------------- --------------- 2003 $ 1,750,000 2004 1,000,000 2005 2,753,220 2006 - 2007 500,000 2008 and after 1,000,000 --------------- $ 7,003,220 ===============
This indebtedness is secured by $435,900 of FHLB stock owned by the Bank and a portion of its loan portfolio.
The Bank has utilized $1,620,000 of its line-of-credit with the Federal Home Loan Bank to acquire letters-of-credit which it has used to secure public deposits.
7. INCOME TAXES
The source and tax effect of items reconciling income tax expense to the amount computed by applying the federal income tax rates in effect to income before income tax expense for the years ended December 31, 2002, 2001, and 2000 were as follows:
7. INCOME TAXES (continued)
The components of income tax expense during the years ended December 31, 2002, 2001, and 2000 were as follows:
2002 2001 2000 ---------- ---------- ---------- Current tax expense $ 426,069 $ 403,235 $ 486,253 Deferred tax expense (benefit) 3,690 21,947 (13,595) ---------- ---------- ---------- $ 429,759 $ 425,182 $ 472,658 ========== ========== ==========
Bancshares records deferred income taxes on the tax effect of temporary differences. Deferred tax assets are subject to a valuation allowance if their realization is less than fifty percent probable. Deferred tax assets (liabilities) were comprised of the following at December 31, 2002 and 2001:
2002 2001 ---------- ---------- Depreciation ($108,024) ($107,006) Stock dividends ( 28,567) ( 24,247) Unrealized gains on securities ( 21,688) ( 12,461) ---------- ---------- Gross deferred tax liability ( 158,279) ( 143,714) ---------- ---------- Reserve for loan losses 79,409 79,409 Write-downs of foreclosed property 18,924 27,627 Deferred compensation 57,970 47,619 ---------- ---------- Gross deferred tax assets 156,303 154,655 Less: deferred tax assetvaluation allowance - - ---------- ---------- Net deferred tax asset (liability) ($ 1,976) $ 10,941 ========== ==========
8. EMPLOYEE BENEFITS
The Bank maintains a 401(k) savings plan for which the majority of its employees are eligible. The employer contributes to the plan based on the discretion of the Board of Directors. The Bank matches 50% of employee contributions up to 6% of each employee's salary. The Bank recognized expenses relating to this plan of approximately $14,000, $16,000, and $16,700 during the years ended December 31, 2002, 2001, and 2000, respectively.
8. EMPLOYEE BENEFITS (continued)
The Bank maintains a deferred compensation agreement with several directors. Upon retirement, the Bank will pay the directors their deferred compensation plus interest. The Bank is the owner and beneficiary of several insurance policies covering the lives of these directors.
The Bank also maintains a supplemental executive retirement plan agreement with its president. Upon retirement, or in the event of death, the president, or his designated beneficiary, will receive the benefit over a 20 year period. The Bank is the owner and beneficiary of an insurance policy covering the life of the president. If employment is terminated "without cause" prior to retirement, the Bank will pay the president his accrued benefit, which is based on the number of months of completed service since January, 1996.
9. OFF-BALANCE SHEET ACTIVITIES
The Bank is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. These instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated balance sheets.
The Bank's exposure to credit loss is represented by the contractual amount of these commitments. The Bank uses the same credit policies in making commitments and conditional obligations as it does for financial instruments recorded on its balance sheets.
Commitments to Extend Credit
Commitments to extend credit are agreements to lend to a customer, as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require the payment of a fee. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The amount of collateral obtained, if it is deemed necessary by the Bank upon extension of credit, is based on management's credit evaluation of the customer. At December 31, 2002, unfunded loan commitments totalled approximately $3,283,000.
Unfunded commitments under commercial lines-of-credit, revolving credit lines and overdraft protection agreements are commitments for possible future extensions of credit to existing customers. These lines-of-credit are uncollateralized and usually do not contain a specified maturity date and may not be drawn upon to the total extent to which the Bank is committed.
9. FINANCIAL INSTRUMENTS (continued)
Commitments to Extend Credit (continued)
Standby letters of credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support public and private borrowing arrangements, including commercial paper, bond financing, and similar transactions. At December 31, 2002, commitments under standby letters of credit totalled approximately $187,000. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. The Bank generally holds collateral supporting these commitments if deemed necessary. Because these instruments have fixed maturity dates, they do not generally present any significant liquidity risk to the Bank.
The Bank has not been required to perform on any financial guarantees during the past three years. The Bank did not incur any losses on such commitments during either 2002, 2001, or 2000.
The estimated fair values of Bancshares's financial instruments at December 31, 2002 and 2001, were as follows (in thousands):
2002 2001 ------------------ --------------- Carrying Fair Carrying Fair Amount Value Amount Value Financial assets: Cash and due from banks, interest bearing deposits in other banks, and federal funds sold $ 7,226 $ 7,226 $ 7,435 $ 7,435 Securities available-for-sale 1,157 1,157 2,688 2,688 Loans receivable (net) 42,553 42,553 36,899 37,262 Accrued interest receivable 461 461 461 461
Financial liabilities: Deposit liabilities 36,330 36,505 37,428 37,585 Other borrowed funds 7,003 7,031 2,332 2,332 Accrued interest payable 86 86 144 144
10. RELATED PARTY TRANSACTION
In the ordinary course of business, certain officers and directors of the Bank and companies in which they have 10% or more beneficial ownership maintain a variety of banking relationships with the Bank. An analysis of activity during 2002, 2001, and 2000 with respect to loans to officers and directors of the Bank is as follows:
2002 2001 2000 ----------- ----------- ----------- Balance - beginning of year $ 1,339,399 $ 1,353,120 $ 1,441,636 Additions 1,260,682 1,380,886 492,406 Payments ( 866,940) (1,394,607) ( 580,922) ----------- ----------- ----------- Balance - end of year $ 1,733,141 $ 1,339,399 $ 1,353,120 =========== =========== ===========
Included in deposits are deposits from directors, officers, their immediate families, and related companies. These accounts totalled approximately $1,573,000 and $1,499,000 at December 31, 2002 and 2001, respectively.
11. RESTRICTIONS OF RETAINED EARNINGS
The Bank, as a state chartered Bank, is subject to the dividend restrictions set forth by the Commissioner. Under such restrictions, the Bank may not, without the prior approval of the Commissioner, declare dividends in excess of the sum of the current year's retained net earnings (as defined) plus the retained net earnings (as defined) from the prior year. The Bank can declare, without the approval of the Commissioner, dividends totalling $417,658 more than its retained net earnings during the year ending December 31, 2003.
12. MINIMUM REGULATORY CAPITAL MATTERS
Both the Company and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary actions, by regulators that, if undertaken, could have a direct material effect on the Company's and the Bank's financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of their assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. Prompt corrective action provisions are not applicable to bank holding companies.
Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios (set forth in the table on the following page) of total and Tier I capital (as defined in the regulations) to risk- weighted assets (as defined), and of Tier I capital (as defined) to average assets (as defined). Management believes, that as of December 31, 2002 and 2001, both the Company and the Bank meets all capital adequacy requirements to which it is subject.
12. REGULATORY MATTERS (continued)
The most recent notification from the Federal Deposit Insurance Corporation (as of September 30, 2001) categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To remain as well capitalized the Bank must maintain minimum total risk-based, Tier I risk-based, and Tier I leverage ratios as set forth in the table below. There are no conditions or events since that notification that management believes have changed the institution's category.
Capital amounts and ratios as of December 31, 2002 and 2001, are presented below:
13. SIGNIFICANT GROUP CONCENTRATIONS OF CREDIT RISK
Most of the Bank's business activity is with customers located within Pointe Coupee Parish. As of December 31, 2002, the Bank's receivables from, guarantees of, and obligations from agriculture loans made to sugar cane, cotton, and wheat farmers were considered a concentration. These loans are generally secured by assets or farm crops, and a large majority of these loans are 90% guaranteed by the Farm Service Agency. The loans are expected to be repaid from cash flow or proceeds from the sale of crops. Loan losses arising from lending transactions with farmers compare favorably with the Bank's loan loss experience on its loan portfolio as a whole.
The distribution of commitments to extend credit approximates the distribution of loans outstanding. Commercial and standby letters of credit were granted primarily to commercial borrowers.
The contractual amounts of credit-related financial instruments, such as commitments to extend credit and letters of credit, represent the amounts of potential accounting loss should the contract be fully drawn upon, the customer default, and the value of any existing collateral become worthless.
14. SUPPLEMENTAL EXPENSE ITEMS
Supplemental expense items during the years ended December 31, 2002, 2001, and 2000 were as follows:
2002 2001 2000 ---------- ---------- ---------- Director fees $ 93,025 $ 98,725 $ 93,025 ========== ========== ========== Professional fees $ 77,400 $ 76,235 $ 76,690 ========== ========== ==========
PEOPLES BANCSHARES OF POINTE COUPEE PARISH, INC. AND SUBSIDIARY NEW ROADS, LOUISIANA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
15. BANK ONLY FINANCIAL STATEMENTS
PEOPLES BANCSHARES OF POINTE COUPEE PARISH, INC. AND SUBSIDIARY NEW ROADS, LOUISIANA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
15. BANK ONLY FINANCIAL STATEMENTS (continued)
PEOPLES BANCSHARES OF POINTE COUPEE PARISH, INC. AND SUBSIDIARY NEW ROADS, LOUISIANA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
15. BANK ONLY FINANCIAL STATEMENTS (continued)
PEOPLES BANCSHARES OF POINTE COUPEE PARISH, INC. AND SUBSIDIARY NEW ROADS, LOUISIANA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
16. PARENT ONLY FINANCIAL STATEMENTS
PEOPLES BANCSHARES OF POINTE COUPEE PARISH, INC. AND SUBSIDIARY NEW ROADS, LOUISIANA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
16. PARENT ONLY FINANCIAL STATEMENTS (continued)
PEOPLES BANCSHARES OF POINTE COUPEE PARISH, INC. AND SUBSIDIARY NEW ROADS, LOUISIANA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
16. PARENT ONLY FINANCIAL STATEMENTS (continued)