##### 



Exhibit 13.1 2003 ANNUAL REPORT AMERICAN BANCORP, INC. POST OFFICE BOX 1819 OPELOUSAS, LOUISIANA 70571-1819




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##### 



Nature of Business American Bancorp, Inc. is a one-bank holding company whose sole subsidiary
is American Bank & 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 45 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 DividendsYear
    
    Quarter
    
    High
    
    Low
    
    Per Share2003
    
    
    First
    
    $
    88
    
    
    $
    88
    
    
    $
    Second
    
    
    89
    
    
    
    89
    
    
    
    Third
    
    
    91
    
    
    
    91
    
    
    
    Fourth
    
    
    92
    
    
    
    92
    
    
    
    2.002002
    
    
    First
    
    $
    79
    
    
    $
    79
    
    
    $
    Second
    
    
    79
    
    
    
    79
    
    
    
    Third
    
    
    85
    
    
    
    85
    
    
    
    Fourth
    
    
    89
    
    
    
    89
    
    
    
    2.40
 Note: The primary market area for American Bancorp, Inc.s common stock is the
Opelousas, Louisiana area with American Bank & Trust Company acting as
registrar and transfer agent. There were approximately 503 shareholders of
record at December 31, 2003. 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 14, 2004 in the Board of Directors Room at the Operations Center
located at 321 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 & Trust
Company, Post Office Box 1819, Opelousas, Louisiana 70571-1819. - 1 -




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FINANCIAL SUMMARY
(In thousands of dollars except per share data and ratios) 2003
    
    2002
    
    2001FOR THE YEARNet income
    
    $
    975
    
    
    $
    1,277
    
    
    $
    1,136Return on average shareholders equity
    
    
    7.02
    %
    
    
    9.80
    %
    
    
    9.59
    %Return on average total assets
    
    
    1.00
    %
    
    
    1.38
    %
    
    
    1.35
    %AT YEAR ENDTotal assets
    
    $
    100,858
    
    
    $
    99,719
    
    
    $
    91,590Total earning assets
    
    $
    92,637
    
    
    $
    90,056
    
    
    $
    83,525Total loans
    
    $
    39,305
    
    
    $
    39,931
    
    
    $
    37,146Total deposits
    
    $
    85,629
    
    
    $
    84,778
    
    
    $
    78,688Total shareholders equity
    
    $
    14,070
    
    
    $
    13,632
    
    
    $
    12,265Common shares outstanding
    
    
    115,987
    
    
    
    116,183
    
    
    
    116,589PER SHARENet income
    
    $
    8.41
    
    
    $
    10.98
    
    
    $
    9.71Book value
    
    $
    121.30
    
    
    $
    117.34
    
    
    $
    105.20Cash dividends declared
    
    $
    2.00
    
    
    $
    2.40
    
    
    $
    2.00CAPITAL RATIOSTotal risk-based capital ratio
    
    
    29.61
    %
    
    
    28.24
    %
    
    
    28.41
    %Leverage ratio
    
    
    13.97
    %
    
    
    13.78
    %
    
    
    14.14
    %
 - 2 -




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C O N T E N T S PageFinancial Summary
    
    
    2Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    4-28Independent Auditors Report
    
    
    29Consolidated balance sheets
    
    30 and 31Consolidated statements of income
    
    
    32Consolidated statements of changes in shareholders equity
    
    34 and 35Consolidated statements of cash flows
    
    36 and 37Notes to consolidated financial statements
    
    
    39-59Selected quarterly financial data (unaudited)
    
    
    60Officers and directors of American Bank & Trust Company
    
    
    61Officers and directors of American Bancorp, Inc.
    
    
    62
 - 3 -




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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 31,2003
    
    2002
    
    2001
    
    2000
    
    1999Operating Data:Interest income
    
    $
    4,425
    
    
    $
    5,060
    
    
    $
    5,326
    
    
    $
    5,210
    
    
    $
    4,819Interest expense
    
    
    701
    
    
    
    988
    
    
    
    1,530
    
    
    
    1,545
    
    
    
    1,511Net interest income
    
    
    3,724
    
    
    
    4,072
    
    
    
    3,796
    
    
    
    3,665
    
    
    
    3,308Provision for possible loan
losses
    
    
    42
    
    
    
    42
    
    
    
    42
    
    
    
    11
    
    
    
    Net interest income after
provision for loan losses
    
    
    3,682
    
    
    
    4,030
    
    
    
    3,754
    
    
    
    3,654
    
    
    
    3,308Non-interest income
    
    
    734
    
    
    
    732
    
    
    
    665
    
    
    
    695
    
    
    
    693Non-interest expense
    
    
    3,188
    
    
    
    3,070
    
    
    
    2,904
    
    
    
    2,720
    
    
    
    2,512Net income before taxes
    
    
    1,228
    
    
    
    1,692
    
    
    
    1,515
    
    
    
    1,629
    
    
    
    1,489Provision for income taxes
    
    
    253
    
    
    
    415
    
    
    
    379
    
    
    
    426
    
    
    
    403Net income
    
    $
    975
    
    
    $
    1,277
    
    
    $
    1,136
    
    
    $
    1,203
    
    
    $
    1,086Per share data:Weighted average number of
shares outstanding
    
    
    116,010
    
    
    
    116,310
    
    
    
    117,016
    
    
    
    117,673
    
    
    
    117,884Net income
    
    $
    8.41
    
    
    $
    10.98
    
    
    $
    9.71
    
    
    $
    10.23
    
    
    $
    9.21Cash dividends declared
    
    $
    2.00
    
    
    $
    2.40
    
    
    $
    2.00
    
    
    $
    1.70
    
    
    $
    1.45Book value at end of year
    
    $
    121.30
    
    
    $
    117.34
    
    
    $
    105.20
    
    
    $
    94.16
    
    
    $
    80.75Selected year-end balances:Loans
    
    $
    39,305
    
    
    $
    39,931
    
    
    $
    37,751
    
    
    $
    32,659
    
    
    $
    28,832Deposits
    
    $
    85,629
    
    
    $
    84,778
    
    
    $
    78,688
    
    
    $
    71,318
    
    
    $
    70,434Equity
    
    $
    14,070
    
    
    $
    13,632
    
    
    $
    12,265
    
    
    $
    11,076
    
    
    $
    9,505Total assets
    
    $
    100,858
    
    
    $
    99,719
    
    
    $
    91,590
    
    
    $
    82,760
    
    
    $
    80,232Selected average balances:Average assets
    
    $
    97,090
    
    
    $
    92,851
    
    
    $
    83,859
    
    
    $
    77,954
    
    
    $
    76,452Average shareholders equity
    
    $
    13,898
    
    
    $
    13,032
    
    
    $
    11,846
    
    
    $
    10,104
    
    
    $
    9,536Selected ratios:Return on average assets
    
    
    1.00
    %
    
    
    1.38
    %
    
    
    1.35
    %
    
    
    1.54
    %
    
    
    1.42
    %Return on average shareholders
equity
    
    
    7.02
    %
    
    
    9.80
    %
    
    
    9.59
    %
    
    
    11.91
    %
    
    
    11.38
    %Efficiency ratio
    
    
    71.51
    %
    
    
    63.90
    %
    
    
    65.10
    %
    
    
    62.39
    %
    
    
    62.79
    %Dividend payout to net income
per share
    
    
    23.78
    %
    
    
    21.83
    %
    
    
    20.60
    %
    
    
    16.62
    %
    
    
    15.74
    %Average equity/average assets
    
    
    14.31
    %
    
    
    14.04
    %
    
    
    14.13
    %
    
    
    12.96
    %
    
    
    12.47
    %Tier 1 risk-based capital ratio
    
    
    28.36
    %
    
    
    26.99
    %
    
    
    27.16
    %
    
    
    29.00
    %
    
    
    28.57
    %Total risk-based capital ratio
    
    
    29.61
    %
    
    
    28.24
    %
    
    
    28.41
    %
    
    
    30.25
    %
    
    
    29.82
    %Leverage ratio
    
    
    13.97
    %
    
    
    13.78
    %
    
    
    14.14
    %
    
    
    14.14
    %
    
    
    13.11
    %
 - 4 -




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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 $975,480 in 2003 compared to $1,277,235
in 2002 and $1,135,999 in 2001. Interest income decreased in 2003 and 2002
after having increased in 2001. The decrease for 2003 was $.636 million and
$.266 million from 2001 to 2002. Interest expense decreased in 2003 and 2002.
The decrease for 2003 was $.288 million and a decrease of $.266 million from
2001 to 2002. Net income before taxes decreased in 2003 by $.464 million from
2002. It increased $.141 million from 2001 to 2002. Overall net income had
been fairly consistent over the prior two year period, however, the low
interest yield on investments negatively impacted net income in 2003. Average total assets continue to increase. These assets have grown 5%,
11% and 8% in 2003, 2002 and 2001, respectively. This increase is a result of
the growth in all categories of deposits, except for time deposits, in 2003 as
compared to 2002 and the growth of savings deposits and time deposits in 2002.
Average non-interest bearing demand deposits increased $2.980 million in 2003
or 10% over the 2002 balance and an increase of $1.710 million in 2002 or 6%
over the 2001 balance. Average interest bearing demand deposits increased
$1.383 million in 2003 or 10% over the 2002 balance and an increase of $2.517
million in 2002 or 23% over the 2001 balance. Average savings deposits
increased $.220 million in 2003 or 2% over the 2002 balance and an increase of
$1.184 million in 2002 or 11% over the 2001 balance. Average time deposits
decreased $1.242 million or 5% in 2003 from the 2002 amounts and increased
$1.918 million or 9% in 2002 over the 2001 amounts. The year end balance sheet reflects an increase of $1.138 million or 1% in
total assets. Federal funds sold decreased $1.175 million or 11% from 2002.
Securities available for sale reflected an increase of $4.886 million or 13%
from 2002. During the same period, net loans decreased by $.627 million or 2%.
In addition, total deposits increased $.851 million or 1% in comparing 2003 to
2002. For the same period, there was an increase of $.437 million in
stockholders equity or 3% in comparing 2003 to 2002. STATEMENT OF INCOME ANALYSIS Net interest income on a taxable-equivalent basis was $3.990 million in
2003, a decrease of $.346 million, or 8% compared to 2002. In 2002, net
interest income was $4.336 million, an increase of $.307 million or 8% over the
prior year. The net interest margin for 2003 was 4.4% compared to 5.1% in 2002
and 5.2% for 2001. 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. - 5 -




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The increase in the average balances of loans and short-term investments
and securities available for sale had a positive effect on the change in net
interest margin from 2002 to 2003. However, this effect was negated by the
decrease in average rates of short-term investments, loans, securities
available for sale, and securities held to maturity. The decrease in the
average rates on demand, time and savings deposits also had a positive impact
on the change in the net interest margin from 2002 to 2003. Provision for Possible Loan Losses. The provision for possible loan losses was
$42,000 in 2003, 2002 and 2001. As a percentage of outstanding loans, the
allowance for possible loans losses was 2% at December 31, 2003, 2002 and 2001.
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. Non-interest income increased $2,453 or less than 1% from
2002 to 2003. There was an increase of $67,296 or 10% from 2001 to 2002. 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. Non-interest expense increased $118,548 or 4% in 2003
from 2002. The increase from 2001 to 2002 was $165,437 or 6%. There were no
major increases in any category of non-interest expense from 2002 to 2003. In
comparing 2002 to 2001, there were only immaterial variances between years.
These increases are mainly due to increases in overall salaries and insurance
expense for the three year period. Income Taxes. The Company recorded income tax expense of $252,850 in 2003
compared to $415,208 in 2002 and $379,210 in 2001. Income tax expenses
decreased $162,358 in 2003 or 39%. There was an increase in 2002 of $35,998 or
10% over 2001. Net future deductible temporary differences at December 31, 2003 was
$153,583. The allowance for loan losses represents $60,432 and the deferred
executive compensation represents $86,296 of the future deductible temporary
differences. The provision for possible loan losses which contributed to the
allowance has been recognized as expense for financial reporting purposes but
is not deductible for federal income tax purposes until the loans are charged
off. The deferred executive compensation is an expense for financial reporting
purposes but is not deductible until actually paid. Valued at the 34% federal
statutory tax rate, the net future deductible amounts, if ultimately
recognized, would generate tax benefits of $153,583. The primary deferred
liability as of December 31, 2003 is related to accumulated depreciation in the
amount of $76,658. The deferred tax related to unrealized appreciation and
loss on available for sale securities is reflected in shareholders equity. The
net deferred tax asset of $76,925 is included in other assets at December 31,
2003. - 6 -




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BALANCE SHEET AND CAPITAL FUNDS ANALYSIS Investment securities are a major use of funds by the Bank. The balance
at December 31, 2003 was $44,207,304 which represented a $4,382,176 or 11%
increase from the $39,825,128 balance outstanding at December 31, 2002.
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 are 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. A substantial portion
of the investment portfolio is pledged on public deposits, 29% at December 31,
2003, this is less than the 2002 pledged percentage of 34%. The amount of
public funds on deposit has decreased slightly during the past year and
management anticipates this source of deposits will not grow substantially in
the future. The Banks primary use of funds is to meet loan demand. Loans, net of
unearned income, were $39,971,689 at December 31, 2003, compared to $40,558,225
at December 31, 2002, a $586,536 or 1% decrease. 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, 2003, total deposits increased $850,659 or 1% from
December 31, 2002. The most significant change in deposits from 2002 to 2003
was the increase in interest bearing deposit accounts of $566,051 or 1%. Shareholders equity increased $437,307 or 3% from December 31, 2002 to
December 31, 2003. Retained earnings increased $743,506 or 7% in 2003. The
accumulated other comprehensive income decreased $288,911 from December 31,
2002 to December 31, 2003 due to the effect of interest rate reductions on the
investment portfolio. 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 $231,974 or $2.00 per share in
2003 and $278,839 or $2.40 per share in 2002. Dividends of $233,248 or $2.00
per share were declared in 2001. There were 196 shares of treasury stock purchased in 2003. This brings
the total shares of treasury stock owned to 4,013 with a cost of $262,705. - 7 -




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Nonperforming Assets and Past Due Loans. Nonperforming assets are loans
carried on a nonaccrual basis, those classified as restructured 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 a small number of installment loans. Nonperforming assets at December 31, 2003 were $12,473. This was an
increase of $9,023 or 262% in non-performing assets from 2002 to 2003. The
Bank has experienced no activity in other real estate for the three year period
ended December 31, 2003. Management anticipates this favorable trend to
continue. Loans are considered to be impaired when it is probable that all amounts
due in accordance with the contractual terms will not be collected. Included
in nonaccrual loans are loans that are considered to be impaired, which totaled
$12,473 at December 31, 2003 and $3,450 at December 31, 2002. The allowance
for loan losses related to these loans was $-0- and $-0- at December 31, 2003
and 2002, respectively. 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 fund 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 2003, the Parent Company received
$240,000 from the Bank in dividends. The majority of these funds were used to
pay dividends to stockholders and to repurchase outstanding Company stock. 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 - 8 -




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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. Regulations applicable to state banks and their holding companies
prescribe minimum capital levels. These levels are based on established
guidelines which relate required capital standards to both risk-weighted assets
(risk-based capital ratios) and total assets (leverage ratio). In accordance
with risk-based guidelines, assets and off-balance-sheet financial instruments
are assigned weights to measure their levels of risk. The total Tier 1
risk-based capital ratio for the Bank was 28.36% at year end 2003 and 26.99% at
year end 2002. Leverage ratios were 13.97% and 13.78% at December 31, 2003 and
2002, respectively. 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 13
to the consolidated financial statements provides information regarding the
fair values of financial instruments as of December 31, 2003. Market Risk. Market risk is the effect that interest rate changes in market
interest rates have on a banks earnings and its underlying economic value.
Changes in interest rates affect a banks earnings by changing its net interest
income and the level of other sensitive income and operating expenses. The
underlying economic value of the Companys assets, liabilities, and off-balance
sheet instruments also are affected by changes in interest rates. These
changes occur because the present value of future cash flows, and in some cases
the cash flows themselves, change when interest rates change. The combined
effects of the changes in these present values reflect the change in the Banks
underlying economic value. Table 14 presents the Banks Interest Rate Sensitivity Analysis. The
table is prepared utilizing present value calculations. Present value is the
future cash flows of a financial instrument, or portfolio of financial
instruments, discounted to the present. The discount rate is constructed by
the use of the build-up approach or the risk premium approach. The build-up approach views the discount rate as consisting of four
components. They are risk-free rate, credit risk, operating expense, and
prepayment option price. Risk-free rate forms the foundation of the discount
rate and is derived from the Treasury yield curve. The credit risk component
is the annualized yield needed to cover the loss of value expected over the
entire life of a portfolio. The operating expense component represents an
annualized cost rate derived from operating expense allocations. This
component is used to adjust the risk-free rate in order to compensate for
operating expenses. The prepayment option price is the final component, and
represents a basis point adjustment to the risk-free rate to reflect the value
of imbedded prepayment options. The risk premium approach views the discount rate as the sum of two
components: the risk-free rate, and a risk premium. The risk-free rate is the
same as defined above. The risk premium is the annualized yield needed to
cover the risk reflected in - 9 -




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##### 



the portfolio. This risk premium incorporates all
forms of risk in a single spread to the Treasury yield curve. Consistent with
an entry rate concept of selecting a discount rate, the marginal pricing rate
for each account serves as the basis for determining an appropriate risk
premium to the Treasury yield curve. This risk premium is calculated by
subtracting the value on the Treasury yield curve which corresponds to the
average maturity of the account from the accounts marginal pricing rate. The build-up approach is used for loans, deposits, and short-term
borrowing. The risk premium approach is used for securities and short-term
investments. The cash flows for all assets and liabilities are estimated based upon
reasonable assumptions on the time remaining until maturity, repricing
frequency, decay factors, and prepayment rates. These assumptions are either
based on historical trends or available industry accepted information. The effect of an increase of 200 basis points, as reflected in Table 14,
from the December 31, 2003 rates would be a reduction of $1.251 million or 8%
in total market value of stockholders equity. A decrease of 200 basis points
from December 31, 2003 would result in an increase of $.646 million or 4%
increase in the market value of the stockholders equity. The effect on earnings is also reflected in Table 14. A 200 basis point
increase on the projected assets and liabilities outstanding as of December 31,
2004 would result in an increase in net interest income of $.139 million or a
4% increase. A 200 basis point decrease in the assets and liabilities
projected at December 31, 2004 would have the opposite effect and would result
in a decrease of net interest income in the amount of $.263 million or 7%. Computation of prospective effects of hypothetical interest rate changes
are based on many assumptions, including relative levels of market interest
rates, loan prepayments, and deposits decay. They should not be relied upon as
indicative of actual results. Further, the computations do not contemplate
certain actions that management could undertake in response to changes in
interest rates. The Bank does not invest in derivatives and has none in its securities
portfolio. Impact of Inflation and Changing Prices. The consolidated financial statements
and related financial data presented herein have been prepared in accordance
with generally accepted accounting principles, which generally require the
measurement of financial position and operating results in terms of historical
dollars, without considering changes in relative purchasing power over time due
to inflation. Unlike most industrial companies, virtually all of the Companys
assets and liabilities are monetary in nature. As a result, interest rates
generally have a more significant impact on the Companys performance than does
the effect of inflation. Interest rates do not necessarily move in the same
direction or in the same magnitude as the prices of goods and services, since
such prices are affected by inflation to a larger extent than interest rates. - 10 -




---



##### 



Forward-Looking Statements. Statements in this report that are not historical
facts should be considered forward-looking statements with respect to the
Company. Forward-looking statements of this type speak only as of the date of
this report. By nature, forward-looking statements involve inherent risk and
uncertainties. Various factors, including, but not limited to, unforeseen
local, regional, national or global events, economic conditions, asset quality,
interest rates, loan demand, changes in business or consumer spending,
borrowing or savings habits, competition, stock price volatility, government
monetary policy, changes in laws and regulations and changes in the assumptions
used in making the forward-looking statements, could cause actual results to
differ materially from those contemplated by the forward-looking statements.
The Company undertakes no obligation to update or revise forward-looking
statements to reflect subsequent circumstances, events or information or for
any other reason. - 11 -




---



##### 



TABLE 1
SUMMARY OF CONSOLIDATED NET INTEREST INCOME
Fully taxable equivalent basis (In thousands) 2003
    
    2002Average
    
    
    
    
    
    Average
    
    Average
    
    
    
    
    
    AverageBalance
    
    Interest
    
    Rate
    
    Balance
    
    Interest
    
    RateASSETSShort-term investments
    
    $
    9,572
    
    
    $
    100
    
    
    
    1.04
    %
    
    $
    7,795
    
    
    $
    119
    
    
    
    1.53
    %Loans, net of unearned
income (1) (2)
    
    
    39,995
    
    
    
    2,831
    
    
    
    7.08
    
    
    
    38,959
    
    
    
    2,996
    
    
    
    7.69Securities available for
sale (1) (3)
    
    
    38,602
    
    
    
    1,701
    
    
    
    4.41
    
    
    
    36,954
    
    
    
    2,109
    
    
    
    5.71Securities held to
maturity
    
    
    1,810
    
    
    
    59
    
    
    
    3.26
    
    
    
    2,205
    
    
    
    100
    
    
    
    4.54Total interest
earning assets
    
    
    89,979
    
    
    
    4,691
    
    
    
    5.21
    %
    
    
    85,913
    
    
    
    5,324
    
    
    
    6.20
    %Allowance for possible
loan losses
    
    
    (649
    )
    
    
    
    
    
    
    
    
    
    
    (618
    )Cash and due from banks
    
    
    4,927
    
    
    
    
    
    
    
    
    
    
    
    4,823Other assets
    
    
    2,833
    
    
    
    
    
    
    
    
    
    
    
    2,733Total assets
    
    $
    97,090
    
    
    
    
    
    
    
    
    
    
    $
    92,851LIABILITIESInterest bearing demand
deposits
    
    $
    15,058
    
    
    $
    136
    
    
    
    .90
    %
    
    $
    13,675
    
    
    $
    151
    
    
    
    1.10
    %Savings deposits
    
    
    11,779
    
    
    
    110
    
    
    
    .93
    
    
    
    11,559
    
    
    
    168
    
    
    
    1.45Time deposits
    
    
    23,353
    
    
    
    455
    
    
    
    1.95
    
    
    
    24,595
    
    
    
    669
    
    
    
    2.72Short-term borrowings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total interest
bearing liabilities
    
    
    50,190
    
    
    
    701
    
    
    
    1.40
    %
    
    
    49,829
    
    
    
    988
    
    
    
    1.98
    %Non-interest bearing
demand deposits
    
    
    31,804
    
    
    
    
    
    
    
    
    
    
    
    28,824Other liabilities
    
    
    1,198
    
    
    
    
    
    
    
    
    
    
    
    1,166Total liabilities
    
    
    83,192
    
    
    
    
    
    
    
    
    
    
    
    79,819SHAREHOLDERS EQUITYShareholders equity
    
    
    13,898
    
    
    
    
    
    
    
    
    
    
    
    13,032Total liabilities and
shareholders
equity
    
    $
    97,090
    
    
    
    
    
    
    
    
    
    
    $
    92,851Total interest expense
related to earning
assets
    
    
    
    
    
    
    
    
    
    
    .78
    %
    
    
    
    
    
    
    
    
    
    
    1.15
    %Net interest income
    
    
    
    
    
    $
    3,990
    
    
    
    
    
    
    
    
    
    
    $
    4,336Net interest margin
    
    
    
    
    
    
    
    
    
    
    4.43
    %
    
    
    
    
    
    
    
    
    
    
    5.05
    %
 - 12 -




---



##### 



2001Average
    
    
    
    
    
    AverageBalance
    
    Interest
    
    Rate$
    5,511
    
    
    $
    221
    
    
    
    4.01
    %35,534
    
    
    
    3,116
    
    
    
    8.7732,422
    
    
    
    2,016
    
    
    
    6.223,408
    
    
    
    206
    
    
    
    6.0476,875
    
    
    
    5,559
    
    
    
    7.23
    %(598
    )4,8352,747$
    83,859$
    11,158
    
    
    $
    196
    
    
    
    1.76
    %10,375
    
    
    
    258
    
    
    
    2.4922,677
    
    
    
    1,076
    
    
    
    4.74
    
    
    
    
    
    
    
    44,210
    
    
    
    1,530
    
    
    
    3.46
    %27,11468972,01311,846$
    83,8591.99
    %$
    4,0295.24
    %
 - 13 -




---



##### 



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 2003, 2002 and 2001.2)
    
    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. - 14 -




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##### 



TABLE 2
RATE/VOLUME ANALYSIS
Fully taxable equivalent basis (In thousands) Year Ended December 31,2003/2002Increase (Decrease)Due to Change in: (1)Average
    
    Average
    
    NetBalance
    
    Rate
    
    ChangeInterest income:Short-term investments
    
    $
    23
    
    
    $
    (42
    )
    
    $
    (19
    )Loans, net of unearned income
    
    
    77
    
    
    
    (242
    )
    
    
    (165
    )Securities available for sale
    
    
    83
    
    
    
    (490
    )
    
    
    (407
    )Securities held to maturity
    
    
    (15
    )
    
    
    (26
    )
    
    
    (41
    )Total interest income
    
    
    168
    
    
    
    (800
    )
    
    
    (632
    )Interest expense:Demand deposits
    
    
    14
    
    
    
    (29
    )
    
    
    (15
    )Savings deposits
    
    
    3
    
    
    
    (61
    )
    
    
    (58
    )Time deposits
    
    
    (29
    )
    
    
    (185
    )
    
    
    (214
    )Short-term borrowing
    
    
    
    
    
    
    
    
    
    
    Total interest expense
    
    
    (12
    )
    
    
    (275
    )
    
    
    (287
    )Taxable-equivalent net interest income
    
    $
    180
    
    
    $
    (525
    )
    
    $
    (345
    )
  (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. - 16 -




---



##### 



Year Ended December 31,2002/2001Increase (Decrease)Due to Change in: (1)Average
    
    Average
    
    NetBalance
    
    Rate
    
    Change$
    63
    
    
    $
    (165
    )
    
    $
    (102
    )282
    
    
    
    (402
    )
    
    
    (120
    )270
    
    
    
    (178
    )
    
    
    92(64
    )
    
    
    (42
    )
    
    
    (106
    )551
    
    
    
    (787
    )
    
    
    (236
    )36
    
    
    
    (81
    )
    
    
    (45
    )23
    
    
    
    (113
    )
    
    
    (90
    )72
    
    
    
    (479
    )
    
    
    (407
    )
    
    
    
    
    
    
    
    131
    
    
    
    (673
    )
    
    
    (542
    )$
    420
    
    
    $
    (114
    )
    
    $
    306
 - 17 -




---



##### 



TABLE 3
SECURITIES PORTFOLIO
(In thousands) December 31, 2003
    
    December 31, 2002Held To
    
    Available
    
    
    
    
    
    Held To
    
    AvailableMaturity
    
    For Sale
    
    Total
    
    Maturity
    
    For Sale
    
    TotalU.S. Treasury
    
    $
    1,600
    
    
    $
    
    
    
    $
    1,600
    
    
    $
    2,104
    
    
    $
    
    
    
    $
    2,104U.S. Government and
Agencies
    
    
    
    
    
    
    17,415
    
    
    
    17,415
    
    
    
    
    
    
    
    16,199
    
    
    
    16,199Mortgage-Backed
Securities
    
    
    
    
    
    
    9,286
    
    
    
    9,286
    
    
    
    
    
    
    
    8,724
    
    
    
    8,724State and Political
Subdivisions
    
    
    
    
    
    
    15,722
    
    
    
    15,722
    
    
    
    
    
    
    
    12,614
    
    
    
    12,614Equity Securities
    
    
    
    
    
    
    184
    
    
    
    184
    
    
    
    
    
    
    
    184
    
    
    
    184$
    1,600
    
    
    $
    42,607
    
    
    $
    44,207
    
    
    $
    2,104
    
    
    $
    37,721
    
    
    $
    39,825
 - 18 -




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##### 



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##### 



TABLE 4
MATURITY DISTRIBUTION AND SECURITIES PORTFOLIO YIELDS
(In thousands) After
    
    
    
    
    
    AfterOne But
    
    
    
    
    
    Five ButWithin One
    
    
    
    
    
    Within Five
    
    
    
    
    
    Within TenYear Amt.
    
    Yield
    
    Years Amt.
    
    Yield
    
    Years Amt.
    
    YieldDecember 31, 2003:Held to maturity:U.S. Treasury
    
    $
    1,600
    
    
    
    3.15
    %
    
    $
    -0-
    
    
    
    
    %
    
    $
    -0-
    
    
    
    
    %Available for sale:U.S. Government
and Agencies
    
    
    501
    
    
    
    5.37
    %
    
    
    13,038
    
    
    
    3.22
    %
    
    
    3,876
    
    
    
    4.74
    %Mortgage-Backed
Securities(2)
    
    
    65
    
    
    
    5.10
    
    
    
    3,051
    
    
    
    2.23
    
    
    
    5,631
    
    
    
    4.51State and
Political
Subdivisions(1)
    
    
    1,276
    
    
    
    5.91
    
    
    
    9,473
    
    
    
    6.44
    
    
    
    4,491
    
    
    
    6.12Equity Securities
    
    
    184
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
available
for sale
    
    
    2,026
    
    
    
    5.21
    %
    
    
    25,562
    
    
    
    4.30
    %
    
    
    13,998
    
    
    
    5.09
    %Total
securities
    
    $
    3,626
    
    
    
    4.30
    %
    
    $
    25,562
    
    
    
    4.30
    %
    
    $
    13,998
    
    
    
    5.09
    %
  (1)
    
    Tax exempt yields are expressed on a fully taxable equivalent basis.(2)
    
    Distributed by contractual maturity without regard to repayment schedules
or projected payments. - 20 -




---



##### 



After Ten
    
    
    
    
    
    TotalYears Amt.
    
    Yield
    
    Amount
    
    Yield$
    -0-
    
    
    
    
    %
    
    $
    1,600
    
    
    
    3.15
    %
    
    
    
    
    %
    
    
    17,415
    
    
    
    3.62
    %539
    
    
    
    6.60
    
    
    
    9,286
    
    
    
    3.89482
    
    
    
    7.28
    
    
    
    15,722
    
    
    
    6.33
    
    
    
    
    
    
    
    184
    
    
    
    1,021
    
    
    
    6.92
    %
    
    
    42,607
    
    
    
    4.66
    %$
    1,021
    
    
    
    6.92
    %
    
    $
    44,207
    
    
    
    4.61
    %
 - 21 -




---



##### 



TABLE 5
LOAN PORTFOLIO The loans outstanding for the three years ended December 31, 2003 are shown in
the following table according to type of loan (in thousands). 2003
    
    2002
    
    2001Commercial, financial and agricultural
    
    $
    8,872
    
    
    $
    8,288
    
    
    $
    6,738Real estate construction
    
    
    937
    
    
    
    1,750
    
    
    
    1,690Real estate mortgage
    
    
    24,101
    
    
    
    24,906
    
    
    
    23,604Installment
    
    
    6,061
    
    
    
    5,614
    
    
    
    5,719Total
    
    
    39,971
    
    
    
    40,558
    
    
    
    37,751Less:Allowance for possible loan losses
    
    
    (667
    )
    
    
    (627
    )
    
    
    (605
    )Unearned income
    
    
    
    
    
    
    
    
    
    
    $
    39,304
    
    
    $
    39,931
    
    
    $
    37,146
 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 installment loans, outstanding as of December 31, 2003 which, based on
remaining scheduled repayments of principal, are due in the amounts indicated.
Also, the amounts are classified according to the sensitivity to the changes in
interest rates (in thousands). One Year
    
    Over Oneor
    
    to
    
    OverLess (1)
    
    5 Years
    
    5 Years
    
    TotalMaturity of Loans:Commercial, financial and
agricultural
    
    $
    6,988
    
    
    $
    1,884
    
    
    $
    
    
    
    $
    8,872Real estate mortgage and
construction
    
    
    5,540
    
    
    
    18,201
    
    
    
    1,297
    
    
    
    25,038Total
    
    $
    12,528
    
    
    $
    20,085
    
    
    $
    1,297
    
    
    $
    33,910Interest Rate Sensitivity of Loans:With predetermined interest rates
    
    $
    6,852
    
    
    $
    20,083
    
    
    $
    1,297
    
    
    $
    28,232With floating interest rates (2)
    
    
    5,676
    
    
    
    2
    
    
    
    
    
    
    
    5,678Total
    
    $
    12,528
    
    
    $
    20,085
    
    
    $
    1,297
    
    
    $
    33,910
  (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. - 22 -




---



##### 



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 that are current as to principal and interest
payments are classified as nonperforming because there is a question concerning
full collectibility of both principal and interest. Nonperforming assets totaled $12,473 at year end 2003, which was an increase of
$9,023 (262%) from December 31, 2002. The composition of nonperforming assets
for the past three years are illustrated below. 2003
    
    2002
    
    2001Nonperforming loans:Loans on nonaccrual
    
    $
    12,473
    
    
    $
    3,450
    
    
    $
    7,740Restructured loans which are not
on nonaccrual
    
    
    
    
    
    
    
    
    
    
    24,459Total nonperforming loans
    
    
    12,473
    
    
    
    3,450
    
    
    
    32,199Other real estate and repossessed
assets received in complete or
partial satisfaction of loan
obligations
    
    
    
    
    
    
    
    
    
    
    Total nonperforming assets
    
    $
    12,473
    
    
    $
    3,450
    
    
    $
    32,199Loans contractually past due 90
days or more as to principal or
interest but which are not on
nonaccrual
    
    $
    -0-
    
    
    $
    3,740
    
    
    $
    15,871
 At December 31, 2003, the Bank has loans outstanding to multiple numbers of
borrowers engaged in the medical industry and the legal profession. Loans to
the medical industry were approximately $6,752,181, while the loans to the
legal profession were approximately $4,224,180. There were no significant
nonperforming loans outstanding in these two concentrations.  - 23 -




---



##### 



TABLE 8
ALLOWANCE FOR POSSIBLE LOAN LOSSES
(In Thousands) Year Ended December 31,2003
    
    2002
    
    2001Beginning balance
    
    $
    627
    
    
    $
    605
    
    
    $
    579Charge-offs:Commercial, financial and agricultural loans
    
    
    
    
    
    
    
    
    
    
    (3
    )Real estate mortgage loans
    
    
    (1
    )
    
    
    (4
    )
    
    
    Real estate construction loans
    
    
    
    
    
    
    
    
    
    
    Installment loans
    
    
    (6
    )
    
    
    (16
    )

    
    
    (15
    )Total charge-offs
    
    
    (7
    )
    
    
    (20
    )
    
    
    (18
    )Recoveries:Commercial, financial and agricultural loans
    
    
    
    
    
    
    
    
    
    
    Real estate mortgage loans
    
    
    
    
    
    
    
    
    
    
    Real estate construction loans
    
    
    
    
    
    
    
    
    
    
    Installment loans
    
    
    5
    
    
    
    
    
    
    
    2Total recoveries
    
    
    5
    
    
    
    -0-
    
    
    
    2Net (charge-offs) recoveries
    
    
    (2
    )
    
    
    (20
    )
    
    
    (16
    )Provision charged against income
    
    
    42
    
    
    
    42
    
    
    
    42Ending balance
    
    $
    667
    
    
    $
    627
    
    
    $
    605Net charge-offs to average loans
    
    
    (.00
    )%
    
    
    (.05
    )%
    
    
    (.05
    )%Year-end allowance to year-end loans
    
    
    1.7
    %
    
    
    1.5
    %
    
    
    1.6
    %
 - 24 -




---



##### 



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, 2003
    
    December 31, 2002% of Loans
    
    
    
    
    
    % of LoansOutstanding
    
    
    
    
    
    Outstandingto Total
    
    
    
    
    
    to TotalAllowance
    
    Loans
    
    Allowance
    
    LoansCommercial, financial and
agricultural loans
    
    $
    166
    
    
    
    22.20
    %
    
    
    156
    
    
    
    20.44
    %Real estate construction
    
    
    11
    
    
    
    2.34
    
    
    
    14
    
    
    
    4.31Real estate mortgage loans
    
    
    266
    
    
    
    60.30
    
    
    
    249
    
    
    
    61.41Installment loans
    
    
    224
    
    
    
    15.16
    
    
    
    208
    
    
    
    13.84$
    667
    
    
    
    100.00
    %
    
    $
    627
    
    
    
    100.00
    %
 December 31, 2001% of LoansOutstandingto TotalAllowance
    
    LoansCommercial, financial and
agricultural loans
    
    $
    113
    
    
    
    17.85
    %Real estate construction
    
    
    8
    
    
    
    4.48Real estate mortgage loans
    
    
    257
    
    
    
    62.53Installment loans
    
    
    227
    
    
    
    15.14$
    605
    
    
    
    100.00
    %
 - 25 -




---



##### 



TABLE 10
DEPOSITS The following table presents the average balance and an average rate paid on
deposits (in thousands): December 31,2003
    
    2002
    
    2001Average
    
    Average
    
    Average
    
    Average
    
    Average
    
    AverageBalance
    
    Rate
    
    Balance
    
    Rate
    
    Balance
    
    RateNon-interest bearing
demand deposits
    
    $
    31,804
    
    
    
    
    %
    
    $
    28,824
    
    
    
    
    %
    
    $
    27,114
    
    
    
    
    %Interest bearing
demand deposits
    
    
    15,058
    
    
    
    .90
    
    
    
    13,675
    
    
    
    1.10
    
    
    
    11,158
    
    
    
    1.76Savings deposits
    
    
    11,779
    
    
    
    .93
    
    
    
    11,559
    
    
    
    1.45
    
    
    
    10,375
    
    
    
    2.49Time deposits
    
    
    23,353
    
    
    
    1.95
    
    
    
    24,595
    
    
    
    2.72
    
    
    
    22,677
    
    
    
    4.74Total
    
    $
    81,994
    
    
    
    
    
    
    $
    78,653
    
    
    
    
    
    
    $
    71,324
 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): 2003
    
    2002
    
    2001Maturing in:3 months or less
    
    $
    6,852
    
    
    $
    6,014
    
    
    $
    4,387Over 3 months less than 6 months
    
    
    1,229
    
    
    
    1,379
    
    
    
    2,413Over 6 months less than 12 months
    
    
    1,204
    
    
    
    729
    
    
    
    511Over 12 months
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    9,285
    
    
    $
    8,122
    
    
    $
    7,311
 - 26 -




---



##### 



TABLE 12
RETURN ON EQUITY AND ASSETS The following table shows consolidated operating and capital ratios for each of
the last three years: December 31,2003
    
    2002
    
    2001Return on average total assets
    
    
    1.00
    %
    
    
    1.38
    %
    
    
    1.35
    %Return on average shareholders equity
    
    
    7.02
    %
    
    
    9.80
    %
    
    
    9.59
    %Dividend payout ratio
    
    
    23.78
    %
    
    
    21.83
    %
    
    
    20.60
    %Average equity to average assets ratio
    
    
    14.31
    %
    
    
    14.04
    %
    
    
    14.13
    %
 TABLE 13
RISK-BASED CAPITAL
(In thousands) December 31,2003
    
    2002Risk-weighted assets
    
    $
    47,814
    
    
    $
    47,404Capital:Tier I
    
    $
    13,559
    
    
    $
    12,793Tier II
    
    
    598
    
    
    
    593Total capital
    
    $
    14,157
    
    
    $
    13,386Ratios:Tier I capital to risk-weighted assets
    
    
    28.36
    %
    
    
    26.99
    %Tier II capital to risk-weighted assets
    
    
    1.25
    
    
    
    1.25Total capital to risk-weighted assets
    
    
    29.61
    %
    
    
    28.24
    %Leverage  Tier I capital to total
average assets
    
    
    13.97
    %
    
    
    13.78
    %
 - 27 -




---



##### 



TABLE 14
INTEREST RATE SENSITIVITY ANALYSIS
DECEMBER 31, 2003
(In thousands) Rate +200 BP
    
    Rate -200 BPForecast
    
    Amount
    
    % Change
    
    Amount
    
    % ChangeEconomic value at risk:Short-term investments
    
    $
    9,125
    
    
    $
    9,123
    
    
    
    -0.01
    
    
    $
    9,125
    
    
    
    0.01Securities
    
    
    44,220
    
    
    
    41,742
    
    
    
    -5.60
    
    
    
    46,228
    
    
    
    4.54Net loans
    
    
    40,741
    
    
    
    39,430
    
    
    
    -3.22
    
    
    
    42,071
    
    
    
    3.26All other assets
    
    
    8,144
    
    
    
    8,144
    
    
    
    0.00
    
    
    
    8,144
    
    
    
    0.00Total assets
    
    $
    102,230
    
    
    $
    98,439
    
    
    
    -3.71
    
    
    $
    105,568
    
    
    
    3.27Deposits
    
    $
    85,884
    
    
    $
    84,188
    
    
    
    -1.98
    
    
    $
    87,893
    
    
    
    2.34Borrowed money
    
    
    486
    
    
    
    481
    
    
    
    -1.03
    
    
    
    491
    
    
    
    1.03Other liabilities
    
    
    611
    
    
    
    (228
    )
    
    
    -137.23
    
    
    
    1,289
    
    
    
    111.03Total
liabilities
    
    
    86,981
    
    
    
    84,441
    
    
    
    -2.92
    
    
    
    89,673
    
    
    
    3.09Equity
    
    
    15,249
    
    
    
    13,998
    
    
    
    -8.20
    
    
    
    15,895
    
    
    
    4.24$
    102,230
    
    
    $
    98,439
    
    
    
    -3.71
    
    
    $
    105,568
    
    
    
    3.27Earnings at risk:January 1 to December 31,
2004 -Short-term
investments
    
    $
    78
    
    
    $
    255
    
    
    
    228.21
    
    
    $
    12
    
    
    
    -83.33Securities
    
    
    1,378
    
    
    
    1,449
    
    
    
    5.14
    
    
    
    1,199
    
    
    
    -12.97Loans and leases
    
    
    2,716
    
    
    
    2,972
    
    
    
    9.40
    
    
    
    2,452
    
    
    
    -9.75Interest income
    
    
    4,172
    
    
    
    4,676
    
    
    
    12.07
    
    
    
    3,663
    
    
    
    -12.19Transaction deposits
    
    
    269
    
    
    
    338
    
    
    
    25.78
    
    
    
    247
    
    
    
    -7.98Certificates of deposit
    
    
    378
    
    
    
    666
    
    
    
    76.06
    
    
    
    157
    
    
    
    -58.58Borrowed money
    
    
    9
    
    
    
    17
    
    
    
    88.89
    
    
    
    6
    
    
    
    -33.33Interest
expense
    
    
    656
    
    
    
    1,021
    
    
    
    55.56
    
    
    
    410
    
    
    
    -37.45Net interest income
    
    $
    3,516
    
    
    $
    3,655
    
    
    
    3.96
    
    
    $
    3,253
    
    
    
    -7.48
 - 28 -




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##### 



BROUSSARD. POCHE. LEWIS & BREAUX. L.L.P.  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,
2003 and 2002, and 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, 2003.
These consolidated 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 auditing standards
generally accepted in the United States of America. 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
consolidated financial position of American Bancorp, Inc. and
subsidiary as of December 31, 2003 and 2002, and the
consolidated results of their operations and their cash flows
for each of the three years in the period ended December 31,
2003, in conformity with accounting principles generally
accepted in the United States of America. /s/ Broussard, Poche, Lewis
& Breaux LLP Crowley, Louisiana
January 21, 2004 - 29 -




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##### 



AMERICAN BANCORP, INC. CONSOLIDATED BALANCE SHEETS  ASSETS
    
    2003
    
    2002Cash and due from banks
    
    $
    5,198,927
    
    
    $
    6,974,153Federal funds sold
    
    
    9,125,000
    
    
    
    10,300,000Total cash and cash equivalents
    
    
    14,323,927
    
    
    
    17,274,153Securities held to maturity (estimated
market values $1,614,161 and $2,147,684,
respectively)
    
    
    1,600,483
    
    
    
    2,104,397Securities available for sale
    
    
    42,606,821
    
    
    
    37,720,731Loans, net of allowance for possible
loan losses of $666,784 and $627,184,
respectively
    
    
    39,304,905
    
    
    
    39,931,041Bank premises and equipment
    
    
    1,826,494
    
    
    
    1,737,027Accrued interest receivable
    
    
    511,966
    
    
    
    570,111Other assets
    
    
    683,404
    
    
    
    381,530$
    100,858,000
    
    
    $

    99,718,990
 See Notes to Consolidated Financial Statements. - 30 -




---



##### 



LIABILITIES AND SHAREHOLDERS' EQUITY
    
    2003
    
    2002LIABILITIESDeposits:Non-interest bearing demand deposits
    
    $
    29,746,499
    
    
    $
    29,461,891Interest bearing deposits
    
    
    55,882,150
    
    
    
    55,316,099Total deposits
    
    
    85,628,649
    
    
    
    84,777,990Accrued interest payable
    
    
    49,455
    
    
    
    75,031Other liabilities
    
    
    1,110,248
    
    
    
    1,233,628Total liabilities
    
    
    86,788,352
    
    
    
    86,086,649SHAREHOLDERS EQUITYCommon stock, $5 par value; 10,000,000
shares authorized; 120,000 shares
issued; 115,987 and 116,183 outstanding,
respectively
    
    
    600,000
    
    
    
    600,000Surplus
    
    
    2,150,000
    
    
    
    2,150,000Retained earnings
    
    
    11,087,003
    
    
    
    10,343,497Accumulated other comprehensive income,
net of tax of $255,180 and $404,013,
respectively
    
    
    495,350
    
    
    
    784,261Treasury stock, 4,013 and 3,817 shares
at cost, respectively
    
    
    (262,705
    )
    
    
    (245,417
    )Total shareholders equity
    
    
    14,069,648
    
    
    
    13,632,341$
    100,858,000
    
    
    $
    99,718,990
 - 31 -




---



##### 



AMERICAN BANCORP, INC. CONSOLIDATED STATEMENTS OF INCOME  2003
    
    2002
    
    2001Interest income:Interest and fees on loans
    
    $
    2,831,080
    
    
    $
    2,996,396
    
    
    $
    3,116,156Interest on investment securities-
Taxable
    
    
    983,977
    
    
    
    1,443,378
    
    
    
    1,544,133Tax-exempt
    
    
    509,466
    
    
    
    501,953
    
    
    
    445,174Federal funds sold
    
    
    100,265
    
    
    
    118,716
    
    
    
    210,759Deposits with banks
    
    
    
    
    
    
    129
    
    
    
    10,152Total interest income
    
    
    4,424,788
    
    
    
    5,060,572
    
    
    
    5,326,374Interest expense:Interest on deposits
    
    
    700,651
    
    
    
    988,417
    
    
    
    1,529,594Net interest income
    
    
    3,724,137
    
    
    
    4,072,155
    
    
    
    3,796,780Provision for possible loan losses
    
    
    42,000
    
    
    
    42,000
    
    
    
    42,000Net interest income after provision
for possible loan losses
    
    
    3,682,137
    
    
    
    4,030,155
    
    
    
    3,754,780Non-interest income:Service charges on deposit accounts
    
    
    574,502
    
    
    
    579,220
    
    
    
    575,157Other
    
    
    160,000
    
    
    
    152,829
    
    
    
    89,596Total non-interest income
    
    
    734,502
    
    
    
    732,049
    
    
    
    664,753Non-interest expense:Salary and employee benefits
    
    
    1,648,729
    
    
    
    1,638,701
    
    
    
    1,485,574Net occupancy expense
    
    
    336,027
    
    
    
    315,149
    
    
    
    326,033Equipment expense
    
    
    300,643
    
    
    
    269,228
    
    
    
    304,377Other
    
    
    902,910
    
    
    
    846,683
    
    
    
    788,340Total non-interest expense
    
    
    3,188,309
    
    
    
    3,069,761
    
    
    
    2,904,324Income before income taxes
    
    
    1,228,330
    
    
    
    1,692,443
    
    
    
    1,515,209Provision for income taxes
    
    
    252,850
    
    
    
    415,208
    
    
    
    379,210Net income
    
    $
    975,480
    
    
    $
    1,277,235
    
    
    $
    1,135,999Net income per common share
    
    $
    8.41
    
    
    $
    10.98
    
    
    $
    9.71
 See Notes to Consolidated Financial Statements. - 32 -




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##### 



This page intentionally left blank. - 33 -




---



##### 



AMERICAN BANCORP, INC. CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY  Common
    
    StockShares
    
    Amount
    
    SurplusBalance, December 31, 2000
    
    
    120,000
    
    
    $
    600,000
    
    
    $
    2,150,000Comprehensive incomeNet income for 2001
    
    
    
    
    
    
    
    
    
    
    Other comprehensive income:Change in unrealized holding gains
on securities available for sale,
net of tax of $197,078
    
    
    
    
    
    
    
    
    
    
    Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    Purchase of treasury stock
    
    
    
    
    
    
    
    
    
    
    Dividends paid in 2001
    
    
    
    
    
    
    
    
    

    
    Balance, December 31, 2001
    
    
    120,000
    
    
    
    600,000
    
    
    
    2,150,000Comprehensive incomeNet income for 2002
    
    
    
    
    
    
    
    
    
    
    Other comprehensive income:Change in unrealized holding gains
on securities available for sale,
net of tax of $404,013
    
    
    
    
    
    
    
    
    
    
    Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    Purchase of treasury stock
    
    
    
    
    
    
    
    
    
    
    Dividends paid in 2002
    
    
    
    
    
    
    
    
    
    
    Balance, December 31, 2002
    
    
    120,000
    
    
    
    600,000
    
    
    
    2,150,000Comprehensive incomeNet income for 2003
    
    
    
    
    
    
    
    
    
    
    Other comprehensive income:Change in unrealized holding gains
on securities available for sale,
net of tax of $255,180
    
    
    
    
    
    
    
    
    
    
    Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    Purchase of treasury stock
    
    
    
    
    
    
    
    
    
    
    Dividends paid in 2003
    
    
    
    
    
    
    
    
    
    
    Balance, December 31, 2003
    
    
    120,000
    
    
    $
    600,000
    
    
    $
    2,150,000
 See Notes to Consolidated Financial Statements. - 34 -




---



##### 



AccumulatedOtherRetained
    
    Comprehensive
    
    Treasury
    
    ComprehensiveEarnings
    
    Income
    
    Stock
    
    Income
    
    Total$
    8,442,150
    
    
    $
    18,946
    
    
    $
    (134,637
    )
    
    $
    
    
    
    $
    11,076,4591,135,999
    
    
    
    
    
    
    
    
    
    
    
    1,135,999
    
    
    
    1,135,999
    
    
    
    363,616
    
    
    
    
    
    
    
    363,616
    
    
    
    363,616
    
    
    
    
    
    
    
    
    
    
    $
    1,499,615
    
    
    
    
    
    
    
    
    
    
    
    (78,106
    )
    
    
    
    
    
    
    (78,106
    )(233,248
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (233,248
    )9,344,901
    
    
    
    382,562
    
    
    
    (212,743
    )
    
    $
    
    
    
    
    12,264,7201,277,435
    
    
    
    
    
    
    
    
    
    
    
    1,277,435
    
    
    
    1,277,435
    
    
    
    401,699
    
    
    
    
    
    
    
    401,699
    
    
    
    401,699
    
    
    
    
    
    
    
    
    
    
    $
    1,679,134
    
    
    
    
    
    
    
    
    
    
    
    (32,674
    )
    
    
    
    
    
    
    (32,674
    )(278,839
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (278,839
    )10,343,497
    
    
    
    784,261
    
    
    
    (245,417
    )
    
    
    
    
    
    
    13,632,341975,480
    
    
    
    
    
    
    
    
    
    
    $
    975,480
    
    
    
    975,480
    
    
    
    (288,911
    )
    
    
    
    
    
    
    (288,911
    )
    
    
    (288,911
    )
    
    
    
    
    
    
    
    
    
    
    $
    686,569
    
    
    
    
    
    
    
    
    
    
    
    (17,288
    )
    
    
    
    
    
    
    (17,288
    )(231,974
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (231,974
    )$
    11,087,003
    
    
    $
    495,350
    
    
    $
    (262,705
    )
    
    
    
    
    
    $
    14,069,648
 - 35 -




---



##### 



AMERICAN BANCORP, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS  2003
    
    2002
    
    2001OPERATING ACTIVITIESNet income
    
    $
    975,480
    
    
    $
    1,277,435
    
    
    $
    1,135,999Adjustments to reconcile net income
to net cash provided by operating
activities:Discount accretion, net of
amortization, on investment
securities
    
    
    (158,793
    )
    
    
    (255,481
    )
    
    
    (175,623
    )Depreciation
    
    
    180,320
    
    
    
    166,873
    
    
    
    180,899Amortization of software
    
    
    51,026
    
    
    
    47,842
    
    
    
    Provision for loan loss
    
    
    42,000
    
    
    
    42,000
    
    
    
    (Gain) loss on disposal of assets
    
    
    1,510
    
    
    
    533
    
    
    
    255(Increase) decrease in assets:Accrued interest receivable
    
    
    58,145
    
    
    
    13,255
    
    
    
    82,425Other assets
    
    
    (49,902
    )
    
    
    33,064
    
    
    
    (34,376
    )Increase (decrease) in liabilities:Accrued interest payable
    
    
    (25,575
    )
    
    
    (55,697
    )
    
    
    (28,032
    )Other liabilities
    
    
    40,583
    
    
    
    505,249
    
    
    
    112,638Net cash provided by operating
activities
    
    
    1,114,794
    
    
    
    1,775,073
    
    
    
    1,274,185INVESTING ACTIVITIES(Increase) decrease in interest bearing
deposits with banks
    
    
    
    
    
    
    99,000
    
    
    
    199,000Proceeds from sales and maturities of
securities available for sale
    
    
    23,062,300
    
    
    
    17,830,577
    
    
    
    15,719,666Proceeds from maturities of securities
held to maturity
    
    
    500,000
    
    
    
    1,800,000
    
    
    
    3,100,000Purchases of securities available for
sale
    
    
    (28,223,428
    )
    
    
    (19,633,109
    )
    
    
    (18,973,841
    )Purchases of securities held to
maturity
    
    
    
    
    
    
    (1,603,203
    )
    
    
    (510,859
    )(Increase) decrease in loans
    
    
    584,135
    
    
    
    (2,827,514
    )
    
    
    (5,065,400
    )Purchases of property and equipment
    
    
    (345,276
    )
    
    
    (194,703
    )
    
    
    (401,835
    )Other
    
    
    (229,019
    )
    
    
    (11,738
    )
    
    
    171,462Net cash used in investing
activities
    
    
    (4,651,288
    )
    
    
    (4,540,690
    )
    
    
    (5,761,807
    )
 (continued) - 36 -




---



##### 



2003
    
    2002
    
    2001FINANCING ACTIVITIESIncrease (decrease) in demand
deposits, transaction accounts
and savings
    
    
    1,922,768
    
    
    
    6,220,984
    
    
    
    3,769,639Increase (decrease) in time deposits
    
    
    (1,087,238
    )
    
    
    (115,801
    )
    
    
    3,599,814Dividends paid
    
    
    (231,974
    )
    
    
    (278,839
    )
    
    
    (233,248
    )Purchase of treasury stock
    
    
    (17,288
    )
    
    
    (32,674
    )
    
    
    (78,106
    )Net cash provided by
financing activities
    
    
    586,268
    
    
    
    5,793,670
    
    
    
    7,058,099Increase (decrease) in cash and cash
equivalents
    
    
    (2,950,226
    )
    
    
    3,028,053
    
    
    
    2,570,477Cash and cash equivalents at
beginning of year
    
    
    17,274,153
    
    
    
    14,246,100
    
    
    
    11,675,623Cash and cash equivalents at end
of year
    
    $
    14,323,927
    
    
    $
    17,274,153
    
    
    $
    14,246,100SUPPLEMENTAL DISCLOSURESCash payments for:Interest expense
    
    $
    726,226
    
    
    $
    1,044,114
    
    
    $
    1,557,626Income taxes
    
    $
    271,986
    
    
    $
    501,052
    
    
    $
    353,188
 See Notes to Consolidated Financial Statements. - 37 -




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##### 



AMERICAN BANCORP, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1. Accounting Policies  American Bancorp, Inc. (the Company) and its subsidiary, American Bank
& 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:Description of business:  The Company is a bank holding company headquartered in Opelousas,
Louisiana, operating principally in the community banking business
segment by providing banking services to commercial and retail
customers through its wholly owned subsidiary, the Bank.The Bank is community oriented and focuses primarily on offering
competitive commercial and consumer loan and deposit services to
individuals and small to middle market businesses.  Comprehensive income:  Comprehensive income includes net income and other comprehensive
income which, in the case of the Company, includes only unrealized
gains and losses on securities available for sale.  Consolidation:  The consolidated financial statements include the accounts of the
respective parent Company and its subsidiary. All significant
intercompany accounts and transactions have been eliminated.  Cash and cash equivalents:  For the purpose of reporting cash flows, cash and cash equivalents
include cash on hand, amounts due from banks, and federal funds sold.
Generally, federal funds are purchased or sold for one-day periods.  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. - 39 -




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##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Securities:  Management determines the appropriate classification of debt
securities (trading, available for sale, or held to maturity) at the
time of purchase and re-evaluates this classification periodically.
Securities classified as trading account assets are held for sale 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.Securities classified as trading account assets are carried at market
value and are included in short-term investments. Gains and losses,
both realized and unrealized, are reflected in earnings as other
operating income. Securities classified as held to maturity are
stated at amortized costs. Securities classified as available for
sale are stated at fair value, with unrealized gains and losses, net
of tax, reported in shareholders equity and included in other
comprehensive income.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 using the level-yield method. Realized gains and losses,
and declines in value judged to be other than temporary, are included
in net securities gains (losses). The cost of securities sold is
determined based on the specific identification method.  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.The Company considers a loan to be impaired when, based upon current
information and events, it believes it is probable that the Company
will be unable to collect all amounts due according to the
contractual terms of the loan agreement. The Companys impaired
loans include troubled debt restructurings, performing and
nonperforming loans, in which full payment of principal or interest
is not expected. The Company calculates a reserve required for
impaired loans based on the expected future cash flows discounted at
the loans effective interest rate, or at the loans observable
market price or the fair value of its collateral. - 40 -




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##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Generally, loans other than consumer loans, which become 90 days
delinquent are either in the process of collection through
repossession or foreclosure or alternatively, are deemed currently
uncollectible. Loans deemed currently uncollectible are charged off
against the allowance account. As a matter of policy, loans are
placed on a nonaccrual basis where doubt exits as to collectibility.  Allowance for possible loan losses:  The allowance for possible loan losses is maintained to provide for
possible losses inherent in the loan portfolio. The allowance
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.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 warrant current
recognition. As adjustments to the estimate of future losses become
necessary, they are reflected as a provision for possible loan losses
in current-period earnings. Actual loan losses are deducted from,
and subsequent recoveries are added to, the allowance.  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.  Foreclosed assets:  Foreclosed assets include real estate and other collateral acquired
upon the default of loans. Foreclosed assets and excess bank-owned
property are recorded at the fair value of the assets less estimated
selling costs. Losses arising from the initial reduction of an
outstanding loan amount to fair value are deducted from the allowance
for loan losses. Losses arising from the transfer of bank premises
and equipment to excess bank-owned property are charged to expense.
A valuation reserve for foreclosed assets and excess bank-owned
property is maintained for subsequent valuation adjustments on a
specific-property basis. Income and expenses associated with
foreclosed assets and excess bank-owned property prior to sale are
included in current earnings. - 41 -




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##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Income taxes:  The Company files a consolidated federal income tax return with the
subsidiary Bank. The Company accounts for income taxes using the
asset and liability method. Under this method, deferred tax assets
and liabilities are based on the temporary differences between the
financial reporting basis and tax basis of the Companys assets and
liabilities at enacted tax rates expected to be in effect when such
amounts are realized or settled.  Segment information:  FASB No. 131, Disclosures About Segments of an Enterprise and
Related Information, was effective for 1998. This statement
established standards for reporting information about a companys
operating segments using a management approach. The statement
requires that reportable segments be identified based upon those
revenue-producing components for which separate financial information
is produced internally and are subject to evaluation by the chief
operating decision maker in deciding how to allocate resources to
segments.The Company has evaluated its potential operating segments against
the criteria specified in the statement and has determined that no
operating segment disclosures are required in 2003, 2002, and 2001.  New and pending accounting:  The Company adopted in 2002 the following new accounting
pronouncements and will adopt in 2003 the following pending
accounting pronouncements. In general, the effect of those adopted
in 2002 were not significant to the Companys consolidated financial
statements.In September 2001, the FASB issued No. 142, Goodwill and Other
Intangible Assets. This statement addresses financial accounting
and reporting for acquired goodwill and other intangible assets and
supersedes APB Opinion No. 17, Intangible Assets. It addresses how
intangible assets that are acquired individually or with a group of
other assets should be accounted for in financial statements upon
their acquisition. This statement also addresses how goodwill and
other intangible assets should be accounted for after they have been
initially recognized in the financial statements. All provisions of
this statement are effective for fiscal years beginning after
December 15, 2001. The adoption of SFAS No. 142 did not have a
material impact on the financial condition or operating results of
the Company.The FASB issued No. 143, Accounting for Asset Retirement
Obligations. This statement addresses financial accounting and
reporting for obligations associated with the retirement of tangible
long-lived assets and the associated asset retirement costs. The
effective date of this statement is for fiscal years beginning after
June 15, 2002. The adoption of SFAS No. 143 did not expected to have
a material impact on the financial condition or operating results of
the Company. - 42 -




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##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  The FASB issued No. 144, Accounting for the Impairment or Disposal
of Long-Lived Assets. This statement addresses financial accounting
and reporting for the impairment or disposal of long-lived assets.
The effective date of the statement is for fiscal years beginning after
December 15, 2001. The adoption of SFAS No. 144 did not have a
material impact on the financial condition or operating results of
the Company.The FASB issued No. 145, Recession of FASB Statements No. 4, 44, and
64, Amendment of FASB Statement No. 13, and Technical Corrections.
This statement rescinds various FASB Statements and will have no
impact on the financial condition or operating results of the
Company.The FASB issued No. 146, Accounting for Costs Associated with Exit
or Disposal Activities. This statement addresses financial
accounting and reporting for costs associated with exit or disposal
activities and will have no impact on the financial condition or
operating results of the Company.The FASB issued No. 147, Acquisitions of Certain Financial
Institutions. This statement requires acquisitions to be recorded
using the purchase method and identifying intangible assets. The
adoption of this statement will not have a material impact on the
financial condition or operating results of the Company.The FASB issued No. 148, Accounting for Stock-Based Compensation.
This statement provides for a change to fair value based method of
accounting for stock-based employee compensation and will not have an
impact on the financial condition or operating results of the
Company.The FASB issued No. 149, Amendment of Statement 133 on Derivative
Instruments and Hedging Activities. This statement amends and
clarifies financial accounting and reporting for derivative
instruments. The adoption of this statement had no impact on the
financial condition or operating results of the Company.The FASB issued No. 150, Accounting for Certain Financial
Instruments with Characteristics of Both Liabilities or Equity.
This statement establishes standards for how an issuer classifies and
measures certain financial instruments with characteristics of both
liabilities and equity. The adoption of this statement had no impact
on the financial condition or operating results of the Company.  Reclassifications:  Certain amounts in the 2002 and 2001 financial statements have been
reclassified to conform with the financial statement presentation for
2003 for comparability. These reclassifications had no effect on net
income as previously reported for the 2002 and 2001 fiscal years. - 43 -




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##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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
$1,097,000 and $907,000 for the years ended December 31, 2003 and 2002,
respectively. 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, 2003Amortized
    
    Unrealized
    
    Unrealized
    
    FairCost
    
    Gains
    
    Losses
    
    ValueSecurities held to
maturity:U.S. Treasury
Securities
    
    $
    1,600,483
    
    
    $
    13,678
    
    
    $
    -0-
    
    
    $
    1,614,161
 December 31, 2003Amortized
    
    Unrealized
    
    Unrealized
    
    FairCost
    
    Gains
    
    Losses
    
    ValueSecurities available
for sale:Mortgage-Backed
Securities
    
    $
    9,201,747
    
    
    $
    158,210
    
    
    $
    73,900
    
    
    $
    9,286,057U.S. Government
and Agencies
    
    
    17,413,965
    
    
    
    92,600
    
    
    
    92,223
    
    
    
    17,414,342State and
Political
Subdivisions
    
    
    15,056,179
    
    
    
    697,300
    
    
    
    31,457
    
    
    
    15,722,022Equity Securities
    
    
    184,400
    
    
    
    
    
    
    
    
    
    
    
    184,400$
    41,856,291
    
    
    $
    948,110
    
    
    $
    197,580
    
    
    $
    42,606,821
 December 31, 2002Amortized
    
    Unrealized
    
    Unrealized
    
    FairCost
    
    Gains
    
    Losses
    
    ValueSecurities held to
maturity:U.S. Treasury
Securities
    
    $
    2,104,397
    
    
    $
    43,287
    
    
    $
    -0-
    
    
    $
    2,147,684
 - 44 -




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##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS December 31, 2002Amortized
    
    Unrealized
    
    Unrealized
    
    FairCost
    
    Gains
    
    Losses
    
    ValueSecurities available
for sale:Mortgage-Backed
Securities
    
    $
    8,480,917
    
    
    $
    258,730
    
    
    $
    15,360
    
    
    $
    8,724,287U.S. Government
and Agencies
    
    
    15,937,404
    
    
    
    261,321
    
    
    
    
    
    
    
    16,198,725State and
Political
Subdivisions
    
    
    11,929,736
    
    
    
    683,583
    
    
    
    
    
    
    
    12,613,319Equity Securities
    
    
    184,400
    
    
    
    
    
    
    
    
    
    
    
    184,400$
    36,532,457
    
    
    $
    1,203,634
    
    
    $
    15,360
    
    
    $
    37,720,731
  Securities with market values of $12,994,436 and $13,442,036 at
December 31, 2003 and 2002, 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, 2003, 2002 or 2001.  The maturities of investment securities at December 31, 2003 were as
follows: Securities to be Heldto MaturityAmortized
    
    FairYears to Maturity
    
    Cost
    
    ValueLess than one
    
    $
    1,600,483
    
    
    $
    1,614,161Greater than one but less than five
    
    
    
    
    
    
    Greater than five but less than ten
    
    
    
    
    
    
    Greater than ten
    
    
    
    
    
    
    $
    1,600,483
    
    
    $
    1,614,161
 Securities AvailableFor SaleAmortized
    
    FairYears to Maturity
    
    Cost
    
    ValueLess than one
    
    $
    2,017,942
    
    
    $
    2,026,565Greater than one but less than five
    
    
    25,131,613
    
    
    
    25,561,519Greater than five but less than ten
    
    
    13,739,337
    
    
    
    13,997,595Greater than ten
    
    
    967,399
    
    
    
    1,021,142$
    41,856,291
    
    
    $
    42,606,821
 - 45 -




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##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 4. Loans  Major classifications of subsidiary Banks loan portfolio at December
31, are as follows: 2003
    
    2002Commercial, financial and agricultural
    
    $
    8,872,790
    
    
    $
    8,288,405Real estate construction
    
    
    936,442
    
    
    
    1,749,590Real estate mortgage
    
    
    24,101,078
    
    
    
    24,906,169Installment
    
    
    6,060,851
    
    
    
    5,614,06139,971,161
    
    
    
    40,558,225Unearned income
    
    
    
    
    
    
    Net loans
    
    
    39,971,161
    
    
    
    40,558,225Allowance for possible loan
losses
    
    
    (666,784
    )
    
    
    (627,184
    )$
    39,304,377
    
    
    $
    39,931,041
  The following is a summary of loans classified by type at December 31,
2003 and 2002: 2003
    
    2002Commercial, financial and agricultural
    
    $
    8,872,790
    
    
    $
    8,288,405Real estate construction
    
    
    936,442
    
    
    
    1,749,590Real estate mortgage
    
    
    9,463,954
    
    
    
    9,595,206Total commercial
    
    
    19,273,186
    
    
    
    19,633,201Residential mortgage
    
    
    14,637,124
    
    
    
    15,310,963Installment
    
    
    6,060,851
    
    
    
    5,614,061Total consumer
    
    
    20,697,975
    
    
    
    20,925,024Total loans
    
    $
    39,971,161
    
    
    $
    40,558,225
 - 46 -




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##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  The following summarizes the nonperforming elements of the loan
portfolio and total foreclosed assets at December 31: 2003
    
    2002
    
    2001Nonperforming loans:Loans on nonaccrual
    
    $
    12,473
    
    
    $
    3,450
    
    
    $
    7,740Restructured loans which are
not on nonaccrual
    
    
    
    
    
    
    
    
    
    
    24,459Total nonperforming loans
    
    
    12,473
    
    
    
    3,450
    
    
    
    32,199Other real estate and repossessed
assets received in complete or
partial satisfaction of loan
obligations
    
    
    
    
    
    
    
    
    
    
    Total nonperforming assets
    
    $
    12,473
    
    
    $
    3,450
    
    
    $
    32,199Loans contractually past due 90
days or more as to principal or
interest but which are not on
nonaccrual
    
    $
    -0-
    
    
    $
    3,740
    
    
    $
    15,871
  At December 31, 2003, the recorded investment in loans that were
considered to be impaired under SFAS No. 114 was $12,473. The related
allowance for loan losses was $-0- for impaired loans. The average
recorded investment in impaired loans during the year ended December
31, 2003 was approximately $4,000. 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, 2003, the Company
did not recognize interest income on impaired loans.Interest income in the amount of $400 for 2003, $200 for 2002 and $500
for 2001 would have been recorded on nonperforming loans if they had
been classified as performing. The Company recorded $-0-, $-0- and
$-0- of interest income on nonperforming loans during 2003, 2002 and
2001, respectively.The following is a summary of the allowance for loan losses for the
three years ended December 31, 2003: 2003
    
    2002
    
    2001Balance, beginning of year
    
    $
    627,184
    
    
    $
    605,191
    
    
    $
    579,481Provisions charged to operating
expense
    
    
    42,000
    
    
    
    42,000
    
    
    
    42,000Recoveries on loans
    
    
    5,237
    
    
    
    
    
    
    
    1,614Loans charged off
    

    
    (7,637
    )
    
    
    (20,007
    )
    
    
    (17,904
    )Balance, end of year
    
    $
    666,784
    
    
    $
    627,184
    
    
    $
    605,191
 - 47 -




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##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 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 $2,385,428 and $2,523,755 at December 31,
2003 and 2002, respectively. The following provides an analysis of the
activity with respect to loans to related parties: Balance at January 1, 2003
    
    $
    2,523,755New loans made
    
    
    2,392,942Repayment on loans
    
    
    (2,531,269
    )Balance at December 31, 2003
    
    $
    2,385,428
 Note 6. Bank Premises and Equipment  Bank premises and equipment, at cost, consisted of the following as of
December 31: 2003
    
    2002
    
    2001Land
    
    $
    459,386
    
    
    $
    459,386
    
    
    $
    459,386Premises and leasehold
improvements
    
    
    2,138,874
    
    
    
    2,324,340
    
    
    
    2,235,452Furniture and equipment
    
    
    1,490,773
    
    
    
    1,389,792
    
    
    
    1,469,9944,089,033
    
    
    
    4,173,518
    
    
    
    4,164,832Less accumulated depreciation
and amortization
    
    
    2,262,539
    
    
    
    2,436,491
    
    
    
    2,394,217Total
    
    $
    1,826,494
    
    
    $
    1,737,027
    
    
    $
    1,770,615
  Depreciation and amortization expense included in non-interest expense
was $231,346 in 2003, $214,715 in 2002, and $180,899 in 2001. - 48 -




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##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 7. Deposits  Deposit account balances at December 31, 2003 and 2002, are summarized
as follows: 2003
    
    2002Non-interest bearing
    
    $
    29,746,499
    
    
    $
    29,461,891Interest bearing demand
    
    
    20,326,268
    
    
    
    19,894,656Savings deposits
    
    
    12,498,429
    
    
    
    11,276,751Time deposits under $100,000
    
    
    13,772,424
    
    
    
    16,022,200Time deposits over $100,000
    
    
    9,285,029
    
    
    
    8,122,492$
    85,628,649
    
    
    $
    84,777,990
  Time deposits maturing in years ending December 31, as of December 31,
2003: 2004
    
    $
    19,988,7242005
    
    
    2,235,7822006
    
    
    561,5962007
    
    
    271,351$
    23,057,453
  The Bank held related party deposits of approximately $2,918,000 and
$3,100,000 at December 31, 2003 and 2002. Note 8. 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 3% of compensation for 2003, 2002 and 2001, which
becomes vested over a six year period. Total contributions to the plan
by the Bank were $23,942 for 2003, $21,148 for 2002 and $19,612 for
2001. The Bank has a non-qualified deferred compensation benefit plan
for certain executives of the Company. The total deferred compensation
expense for 2003, 2002 and 2001 was $60,766, $41,587 and $50,712,
respectively. Note 9. Lease Commitments  The Company leases land, buildings, and equipment under cancelable and
noncancelable leases. The leased properties are used primarily for
banking purposes. - 49 -




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##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  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, 2003: Year Ending
    
    Amount2004
    
    $
    43,7712005
    
    
    38,0712006
    
    
    38,0712007
    
    
    38,0712008
    
    
    28,071Total future minimum lease payments
    
    $
    186,055
  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, 2003, 2002, and 2001, amount to $48,871, $47,271 and
$60,380, respectively.One of the Banks branch offices is leased from a corporation which is
owned by a shareholder and director of the Bank. Lease expense related
to this property totaled $23,071 for 2003 and $22,071 for 2002 fiscal
years. Note 10. Other Operating Expenses  The composition of other operating expenses for each of the three years
for the period ended December 31 are as follows: 2003
    
    2002
    
    2001FDIC and Louisiana assessments
    
    $
    34,343
    
    
    $
    34,332
    
    
    $
    31,109Advertising
    
    
    66,107
    
    
    
    97,112
    
    
    
    79,464Office supplies
    
    
    84,758
    
    
    
    85,047
    
    
    
    87,878Postage
    
    
    60,722
    
    
    
    63,459
    
    
    
    58,994Insurance
    
    
    9,092
    
    
    
    11,448
    
    
    
    8,811ATM expenses
    
    
    51,476
    
    
    
    46,596
    
    
    
    41,800Director fees
    
    
    80,800
    
    
    
    104,050
    
    
    
    101,200Other
    
    
    515,612
    
    
    
    404,639
    
    
    
    379,084$
    902,910
    
    
    $
    846,683
    
    
    $
    788,340
 - 50 -




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##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 11. Income Taxes  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
federal tax purposes. The components of income tax expense are as
follows: 2003
    
    2002
    
    2001Current federal income tax
expense
    
    $
    264,030
    
    
    $
    447,952
    
    
    $
    392,420Deferred federal income tax
expense (benefit)
    
    
    (11,180
    )
    
    
    (32,744
    )
    
    
    (13,210
    )$
    252,850
    
    
    $
    415,208
    
    
    $
    379,210Included in shareholders equity:Deferred tax expense
(benefit) related to the
change in net unrealized
gain (loss) on securities
available for sale
    
    $
    255,180
    
    
    $
    404,013
    
    
    $
    187,318
  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: 2003
    
    2002
    
    2001Amount
    
    Rate
    
    Amount
    
    Rate
    
    Amount
    
    RateTax based on
federal
statutory
rate
    
    $
    417,632
    
    
    
    34.0
    %
    
    $
    575,431
    
    
    
    34.0
    %
    
    $
    515,171
    
    
    
    34.0
    %Effect of tax-exempt income
    
    
    (173,218
    )
    
    
    (14.1
    )
    
    
    (170,664
    )
    
    
    (10.1
    )
    
    
    (151,359
    )
    
    
    (10.0
    )Other
    
    
    8,436
    
    
    
    .7
    
    
    
    10,441
    
    
    
    .6
    
    
    
    15,398
    
    
    
    1.0$
    252,850
    
    
    
    20.6
    %
    
    $
    415,208
    
    
    
    24.5
    %
    
    $
    379,210
    
    
    
    25.0
    %
 - 51 -




---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Deferred income taxes are based on differences between the basis of
assets and liabilities for financial statement purposes and tax
reporting purposes. The tax effects of the cumulative temporary
differences which create deferred tax assets and liabilities are as
follows: 2003
    
    2002Deferred tax assets:Allowance for loan losses
    
    $
    60,432
    
    
    $
    46,152Deferred executive compensation
    
    
    86,296
    
    
    
    65,636Other
    
    
    6,855
    
    
    
    6,426Total deferred tax assets
    
    
    153,583
    
    
    
    118,214Deferred tax liabilities:Accumulated depreciation
    
    
    76,658
    
    
    
    52,469Total deferred tax liabilities
    
    
    76,658
    
    
    
    52,469Net deferred tax asset
    
    $
    76,925
    
    
    $
    65,745
  Management estimates realizability of a 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. Note 12. Earnings Per Share  The earnings per share computations are based on weighted average
number of shares outstanding during each year of 116,010, 116,310 and
117,016 for the years ended December 31, 2003, 2002 and 2001,
respectively. Note 13. 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. 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. - 52 -




---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  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 $666,784 at December 31, 2003.The fair value estimates presented are based on information available
to management as of December 31, 2003. 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. (In Thousand)Carrying
    
    FairAmount
    
    ValueASSETSCash and cash equivalents
    
    $
    14,324
    
    
    $
    14,324Securities held to maturity
    
    $
    1,600
    
    
    $
    1,614Securities available for sale
    
    $
    42,607
    
    
    $
    42,607Loans
    
    $
    39,972
    
    
    $
    40,741LIABILITIESDemand deposits
    
    $
    29,746
    
    
    $
    29,746Interest bearing demand
    
    $
    20,326
    
    
    $
    20,326Savings
    
    $
    12,498
    
    
    $
    12,498Time deposits
    
    $
    23,057
    
    
    $
    23,161
 - 53 -




---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Commitments to extend credit are legally binding, conditional
agreements generally having fixed expiration dates or termination
clauses, specified interest rates and purposes and may require payment
of a fee. These commitments generally require customers to maintain
certain credit standards. Collateral requirements and loan-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. Outstanding loan commitments
at December 31, 2003 were $7,096,143 and $4,499,946 at December 31,
2002.  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 letters of credit balance was $656,587 and $727,050
at December 31, 2003 and 2002, respectively. The Bank has not incurred
any losses in its commitments in 2002 or 2001. Management does not
anticipate any material losses related to these instruments. The
Banks policy for obtaining collateral, and the nature of such
collateral, is essentially the same as that involved in making
commitments to extend credit.  The estimated fair values of off-balance-sheet financial instruments
are not material. A summary of the notional amounts of the Banks
financial instruments with off-balance-sheet risk at December 31, 2003
and 2002 are as follows: 2003
    
    2002Commitments to extend credit
    
    $
    7,096,143
    
    
    $
    4,869,378Credit card arrangements
    
    $
    3,881,281
    
    
    $
    3,357,733Standby letters of credit
    
    $
    656,587
    
    
    $
    727,050
 Note 14. 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, 2003, that the
Bank could declare without the approval of the Commissioner of
Financial Institutions, amounted to $1,706,532. 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, 2003, the Bank is required to have minimum Tier 1 risk-based, Tier
1 leverage - 54 -




---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  capital, and Total capital ratios of 4%, 4% and 8%, respectively. The
Banks actual ratios at that date were 28.36%, 13.97%, and 29.61%,
respectively. At December 31, 2002, the Banks actual ratios were
26.99%, 13.78%, and 28.24%, 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. Such loans must be collateralized by assets with market
values of 100% to 130% of loan amounts, depending upon the nature of
the collateral.As of December 31, 2003 and 2002, the most recent notifications from
the Federal Deposit Insurance Corporation categorized the Bank as well
capitalized under the regulatory framework for prompt action. To be
categorized as well capitalized, the Bank must maintain minimum Total
risk-based, Tier 1 risk-based, and Tier 1 leverage ratios as indicated
above. There are no conditions or events since those notifications that
management believes have changed the Banks category. - 55 -




---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 15. 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 31,2003
    
    2002ASSETSCash on deposit with subsidiary
    
    $
    9,278
    
    
    $
    49,438Investment in subsidiary
    
    
    14,054,884
    
    
    
    13,577,418Due from subsidiary
    
    
    6,190
    
    
    
    14,145Total assets
    
    $
    14,070,352
    
    
    $
    13,641,001LIABILITIESAccrued income taxes payable
    
    $
    704
    
    
    $
    8,660Total liabilities
    
    
    704
    
    
    
    8,660SHAREHOLDERS EQUITYCommon stock: $5 par value, 10,000,000
shares authorized; 120,000 shares
issued; 115,987 and 116,183 shares
outstanding, respectively
    
    
    600,000
    
    
    
    600,000Surplus
    
    
    2,150,000
    
    
    
    2,150,000Retained earnings
    
    
    11,087,003
    
    
    
    10,343,497Net unrealized gain (loss) on securities
available for sale, net of tax of
$255,180 and $404,013, respectively
    
    
    495,350
    
    
    
    784,261Treasury stock, 4,013 and 3,817 shares
at cost, respectively
    
    
    (262,705
    )
    
    
    (245,417
    )Total shareholders equity
    
    
    14,069,648
    
    
    
    13,632,341Total liabilities and shareholders equity
    
    $
    14,070,352
    
    
    $
    13,641,001
 - 56 -




---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS American Bancorp, Inc. (Parent Company Only) STATEMENTS OF INCOME Years Ended December 31,2003
    
    2002
    
    2001Income:Dividends from subsidiary
    
    $
    240,000
    
    
    $
    350,000
    
    
    $
    321,300Expenses:Directors fees
    
    
    12,200
    
    
    
    12,000
    
    
    
    12,000Other expenses
    
    
    18,698
    
    
    
    919
    
    
    
    1,12630,898
    
    
    
    12,919
    
    
    
    13,126Earnings before income taxes
and equity in undistributed
earnings of subsidiary
    
    
    209,102
    
    
    
    337,081
    
    
    
    308,174Provision for income taxes
    
    
    
    
    
    
    
    
    
    
    Earnings before equity in
undistributed earnings of
subsidiary
    
    
    209,102
    
    
    
    337,081
    
    
    
    308,174Equity in undistributed
earnings of subsidiary
    
    
    766,378
    
    
    
    940,154
    
    
    
    827,825Net income
    
    $
    975,480
    
    
    $
    1,277,235
    
    
    $
    1,135,999
 - 57 -




---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS American Bancorp, Inc. (Parent Company Only) STATEMENTS OF CASH FLOWS Years Ended December 31,2003
    
    2002
    
    2001OPERATING ACTIVITIESNet income
    
    $
    975,480
    
    
    $
    1,277,235
    
    
    $
    1,135,999Adjustments to reconcile netincome to net cash provided
by operating activities:Equity in undistributed
earnings of subsidiary
    
    
    (766,378
    )
    
    
    (939,954
    )
    
    
    (827,825
    )(Increase) decrease in
other assets
    
    
    7,955
    
    
    
    53,028
    
    
    
    (39,160
    )Increase (decrease) in
income taxes payable
    
    
    (7,955
    )
    
    
    (53,028
    )
    
    
    39,160Net cash provided by
operating activities
    
    
    209,102
    
    
    
    337,281
    
    
    
    308,174INVESTING ACTIVITIESPurchase of treasury stock
    
    
    (17,288
    )
    
    
    (32,674
    )
    
    
    (78,106
    )Net cash used in investing
activities
    
    
    (17,288
    )
    
    
    (32,674
    )
    
    
    (78,106
    )FINANCING ACTIVITIESDividends paid to shareholders
    
    
    (231,974
    )
    
    
    (278,839
    )
    
    
    (233,248
    )Net cash used in
financing activities
    
    
    (231,974
    )
    
    
    (278,839
    )
    
    
    (233,248
    )Increase (decrease) in cash
and cash equivalents
    
    
    (40,160
    )
    
    
    25,768
    
    
    
    (3,180
    )Cash and cash equivalents at
beginning of year
    
    
    49,438
    
    
    
    23,670
    
    
    
    26,850Cash and cash equivalents at
end of year
    
    $
    9,278
    
    
    $
    49,438
    
    
    $
    23,670
 - 58 -




---



##### 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 16. Concentrations of Credit Risk  Substantially, 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, 2003, 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 were approximately
$6,752,181, while the loans to the legal profession were approximately
$4,224,180. There were no significant nonperforming loans outstanding
in these two concentrations. Note 17. 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. - 59 -




---



##### 



Selected Quarterly Financial Data (Unaudited)
(Dollars in thousands, except per share data) 2003IV
    
    III
    
    II
    
    IInterest income
    
    $
    1,106
    
    
    $
    1,066
    
    
    $
    1,101
    
    
    $
    1,162Interest expense
    
    
    155
    
    
    
    164
    
    
    
    183
    
    
    
    199Net interest income
    
    
    951
    
    
    
    902
    
    
    
    918
    
    
    
    963Provision for possible loan losses
    
    
    10
    
    
    
    11
    
    
    
    10
    
    
    
    11Net interest income after provision for
possible loan losses
    
    
    941
    
    
    
    891
    
    
    
    908
    
    
    
    952Non-interest income, excluding securities
gains
    
    
    154
    
    
    
    184
    
    
    
    167
    
    
    
    168Net securities gains
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Non-interest expense
    
    
    868
    
    
    
    745
    
    
    
    764
    
    
    
    760Income before income tax expense
    
    
    227
    
    
    
    330
    
    
    
    311
    
    
    
    360Income tax expense
    
    
    38
    
    
    
    69
    
    
    
    63
    
    
    
    83Net income
    
    $
    189
    
    
    $
    261
    
    
    $
    248
    
    
    $
    277Earnings per common share
    
    $
    1.64
    
    
    $
    2.25
    
    
    $
    2.13
    
    
    $
    2.39Market price of common stockHigh
    
    $
    92
    
    
    $
    91
    
    
    $
    89
    
    
    $
    88Low
    
    $
    92
    
    
    $
    91
    
    
    $
    89
    
    
    $
    88Close
    
    $
    92
    
    
    $
    91
    
    
    $
    89
    
    
    $
    88Average shares outstanding
    
    
    115,987
    
    
    
    115,987
    
    
    
    115,989
    
    
    
    116,079
 2002IV
    
    III
    
    II
    
    IInterest income
    
    $
    1,231
    
    
    $
    1,283
    
    
    $
    1,301
    
    
    $
    1,261Interest expense
    
    
    230
    
    
    
    239
    
    
    
    239
    
    
    
    280Net interest income
    
    
    1,001
    
    
    
    1,044
    
    
    
    1,062
    
    
    
    981Provision for possible loan losses
    
    
    10
    
    
    
    11
    
    
    
    10
    
    
    
    11Net interest income after provision for
possible loan losses
    
    
    991
    
    
    
    1,033
    
    
    
    1,052
    
    
    
    970Non-interest income, excluding securities
gains
    
    
    162
    
    
    
    164
    
    
    
    159
    
    
    
    185Net securities gains
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Non-interest expense
    
    
    890
    
    
    
    702
    
    
    
    717
    
    
    
    715Income before income tax expense
    
    
    263
    
    
    
    495
    
    
    
    494
    
    
    
    440Income tax expense
    
    
    47
    
    
    
    126
    
    
    
    129
    
    
    
    113Net income
    
    $
    216
    
    
    $
    369
    
    
    $
    365
    
    
    $
    327Earnings per common share
    
    $
    1.87
    
    
    $
    3.17
    
    
    $
    3.14
    
    
    $
    2.81Market price of common stockHigh
    
    $
    89
    
    
    $
    85
    
    
    $
    79
    
    
    $
    79Low
    
    $
    89
    
    
    $
    85
    
    
    $
    79
    
    
    $
    79Close
    
    $
    89
    
    
    $
    85
    
    
    $
    79
    
    
    $
    79Average shares outstanding
    
    
    116,183
    
    
    
    116,250
    
    
    
    116,286
    
    
    
    116,519
 - 60 -




---



##### 



OFFICERS AND DIRECTORS OF
AMERICAN BANK & TRUST COMPANY CHAIRMAN OF THE BOARD AND PRESIDENT
Salvador L. Diesi, Sr. CHIEF EXECUTIVE OFFICER AND EXECUTIVE VICE-PRESIDENT
Ronald J. Lashute VICE-PRESIDENTS Charlene
G. Louviere
Angel D. Powell
Mark J. LeBlanc
    
    George H. Comeau, Chief
Financial Officer and
Cashier
 ASSISTANT VICE-PRESIDENTS David
Gremillion
J. Karla Manuel
    
    Christopher Choate
 ASSISTANT CASHIERS Elaine
D. Ardoin
Julie D. Valin
Sally K. Hooks
Cindy A. Whitmore
    
    B. Hennig
Beryl F. Bergeron
Stephanie A. Richard
 DIRECTORS Jasper
J. Artall, Sr.
J.C. Diesi
Salvador L. Diesi, Sr.
    
    Alvin A. Hayes, II
Charles R. Jagneaux
 OFFICES LOCATED IN OPELOUSAS
LAFAYETTE
LAWTELL
    
    KROTZ SPRINGS
PORT BARRE
 - 61 -




---



##### 



OFFICERS AND DIRECTORS OF
AMERICAN BANCORP, INC. CHAIRMAN OF THE BOARD AND PRESIDENT
Salvador L. Diesi, Sr. CHIEF EXECUTIVE OFFICER, AND
SECRETARY AND TREASURER
Ronald J. Lashute CHIEF FINANCIAL OFFICER
George H. Comeau BOARD OF DIRECTORS
    
    OCCUPATION AND MAIN AFFILIATIONJasper J. Artall, Sr.
    
    Farmer.J.C. Diesi
    
    President of Diesi Pontiac-Cadillac-Buick, Inc.Salvador L. Diesi, Sr.
    
    Chairman of the Board and President of
American Bancorp, Inc. and American
Bank & Trust Company; Investor in and Operator of Little Capital of
Louisiana, Inc. (Gas Station, Convenience Store and Video Poker); Commercial
real estate investor; Investor in Farming Interest; and Attorney at Law.Alvin A. Haynes, II
    
    President of Williams Funeral Home, Inc.;
President of Williams Progressive
Insurance Company; President of
Haynes
Family Funerals, Inc.; Owner of
Flowers Galore.Charles R. Jagneaux
    
    Clerk of Court of St. Landry Parish.Ronald J. Lashute
    
    Chief Executive Officer and Executive
Vice President of American Bank &
Trust Company and Chief Executive
Officer, and Secretary and Treasurer
of American Bancorp, Inc.
 - 62 -