UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1997
__ TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE EXCHANGE ACT For the
transition period from _________________________ to _________________
Commission File Number: 0-28936
GOLD BANC CORPORATION, INC.
(Exact name of small business issuer as specified in its charter)
Kansas 48-1008593
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
11301 Nall Avenue, Leawood, Kansas 66211
(Address of principal executive office) (Zip code)
(913) 451-8050
(Registrant's telephone number, including area code)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for past 90 days. Yes X No __
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practical date.
Class Outstanding at July 31, 1997
- ----------------------------------- ------------------------------
Common Stock, $1.00 par value 4,300,000
<PAGE>
GOLD BANC CORPORATION, INC.
INDEX TO 10-QSB FOR THE QUARTERLY
PERIOD ENDED JUNE 30, 1997
PAGE
----
PART I: FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS 1
Consolidated Balance Sheets at June 30, 1997 (unaudited)
and December 31, 1996 1
Consolidated Statements of Earnings - Six months ended June 30,
1997 and June 30, 1996 (unaudited) 2
Consolidated Statements of Earnings - Three months ended June
30, 1997 and June 30, 1996 (unaudited) 3
Consolidated Statements of Cash Flows - Six months ended June
30, 1997 and June 30, 1996 (unaudited) 4
Notes to Consolidated Financial Statements 5
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS 7
PART II: OTHER INFORMATION
ITEM 1: LEGAL PROCEEDINGS 10
ITEM 2: CHANGES IN SECURITIES 10
ITEM 3: DEFAULTS UPON SENIOR SECURITIES 10
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS 10
ITEM 5: OTHER INFORMATION 11
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K 11
SIGNATURES 12
<PAGE>
PART I
FINANCIAL INFORMATION
GOLD BANC CORPORATION, INC. AND SUBSIDIARIES
Consolidated Balance Sheet
(In thousands)
June 30, 1997 Dec. 31, 1996
------------- -------------
(unaudited)
Assets
--------
Cash and due from banks $ 11,838 $ 12,380
Federal funds sold and interest-bearing deposits 7,443 8,891
----------- ------------
Total cash and cash equivalents 19,281 21,271
----------- ------------
Investment Securities:
Held-to-maturity securities 25 25
Available-for-sale securities 57,236 64,551
Other 2,587 2,076
----------- ------------
Total investment securities 59,848 66,652
---------- ------------
Loans, net 230,104 200,096
Premises and equipment, net 12,167 11,977
Deferred taxes 775 678
Accrued interest and other assets 4,423 3,935
----------- -------------
Total Assets $ 326,598 $ 304,609
=========== =============
Liabilities and Stockholders' Equity
------------------------------------
Liabilities:
Deposits $ 263,291 $ 255,656
Securities sold under agreements to repurchase 26,400 10,050
Federal funds purchased, long-term debt and 3,416 6,878
other borrowings
Accrued interest and other liabilities 2,027 1,884
------------ -------------
Total liabilities 295,134 274,468
------------ -------------
Stockholders' equity:
Preferred stock, 7,500,000 shares authorized, no - -
shares issued
Common stock, $1.00 par value, 7,500,000 shares
authorized, 4,300,000 shares issued and
outstanding 4,300 4,300
Additional paid-in capital 16,768 16,768
Retained earnings 10,981 9,704
Unrealized loss on available-for-sale
securities, net (488) (355)
Unearned compensation (276) (276)
------------- -------------
Total stockholders' equity 31,464 30,141
------------- -------------
$ 326,598 $ 304,609
============ ============
<PAGE>
GOLD BANC CORPORATION, INC. AND SUBSIDIARIES
Consolidated Statements of Earnings
For The Six Months Ended
(In thousands, except per share data)
(unaudited)
June 30, 1997 June 30, 1996
-------------- --------------
Interest Income:
Loans, including fees $ 9,948 $ 7,983
Investments securities 1,803 2,006
Other 223 316
------------- ----------
11,974 10,305
Interest expense:
Deposits 5,702 5,341
Borrowings and Other 512 649
------------- -----------
6,214 5,990
------------- -----------
Net interest income 5,760 4,315
Provision for loan losses 255 60
------------- -----------
Net interest income after provision
for loan losses 5,505 4,255
Other income:
Service fees 327 298
Net gains on sale of mortgage loans 289 699
Net securities losses (13) --
Net gain on sale of other assets 197 4
Other 146 172
------------ ------------
946 1,173
Other expense:
Salaries and employee benefits 2,313 2,605
Net occupancy expense 809 620
Federal deposit insurance premiums 54 80
Other 1,084 1,036
------------ ------------
4,260 4,341
------------ ------------
Earnings before income taxes 2,191 1,087
Income taxes 785 372
------------ ------------
Net earnings $ 1,406 $ 715
============ ============
Earnings per share (Note 2) $ .33 $ .36
------------ ------------
Weighted average common shares outstanding 4,300,000 2,001,825
----------- ------------
<PAGE>
GOLD BANC CORPORATION, INC. AND SUBSIDIARIES
Consolidated Statements of Earnings
For The Three Months Ended
(In thousands, except per share data)
(unaudited)
June 30, 1997 June 30, 1996
-------------- --------------
Interest income:
Loans, including fees $ 5,191 $ 4,140
Investments securities 857 811
Other 104 315
------------ -----------
6,152 5,266
Interest expense:
Deposits 2,875 2,688
Borrowings and Other 287 314
------------- -----------
3,162 3,002
------------- -----------
Net interest income 2,990 2,264
Provision for loan losses 150 30
------------- -----------
Net interest income after provision
for loan losses 2,840 2,234
Other income:
Service fees 167 149
Net gains on sale of mortgage loans 172 346
Net securities losses - -
Net loss on sale of other assets 198 4
Other 64 52
------------ ------------
601 551
Other expense:
Salaries and employee benefits 1,184 1,350
Net occupancy expense 397 279
Federal deposit insurance premiums 28 31
Other 566 588
------------ ------------
2,175 2,248
------------ ------------
Earnings before income taxes 1,266 537
Income taxes 462 175
------------ ------------
Net earnings $ 804 $ 362
============ ============
Earnings per share (Note 2) $ .19 $ .18
------------ ------------
Weighted average common shares outstanding 4,300,000 2,000,033
----------- ------------
<PAGE>
GOLD BANC CORPORATION, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the Six Months Ended
(In thousands)
(unaudited)
June 30, June 30,
1997 1996
---- ----
Cash flows from operating activities:
Net earnings $1,406 $715
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Provision for loan losses 255 60
Net losses on sales of available-for-sale
securities 13 --
Depreciation and amortization, net of
accretion 384 246
Gain on sale of assets, net (197) (4)
Net decrease in mortgage loans held for
sale (127) 3,812
Other changes:
Accrued interested receivable and other
assets (646) (3,483)
Accrued interest payable and other
liabilities 142 154
----- -------
Net cash provided by operating
activities 1,230 1,500
------ -------
Cash flows from investing activities:
Net increase in loans (30,136) (21,874)
Principal collections and proceeds from sales and
maturities of available-for-sale securities 18,435 12,871
Purchases of available-for-sale securities (11,650) (17,999)
Net additions to premises and equipment (541) (1,557)
Proceeds from sale of other assets 277 4
------ --------
Net cash used in investing activities (23,615) (28,555)
-------- --------
Cash flows from investing activities:
Increase in deposits 7,635 14,732
Net increase (decrease) in short-term borrowings 13,051 2,254
Proceeds from long-term debt -- (7,000)
Principal payments on long-term debt (162) 6,425
Dividends paid (129) --
Purchase of treasury stock -- --
Proceeds from sale of treasury stock -- (132)
-------- --------
Net cash provided (used) by financing
activities 20,395 16,279
Decrease in cash and cash equivalents (1,990) (10,776)
Cash and cash equivalents, beginning of year 21,271 23,223
------- ------
Cash and cash equivalents, end of quarter $19,281 $12,448
======== ======
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of presentation.
The accompanying consolidated financial statements have been prepared in
accordance with the instructions for Form 10-QSB. The consolidated financial
statements should be read in conjunction with the audited financial statements
included in the Company's 1996 Annual Report on Form 10-KSB.
The consolidated financial statements include the accounts of the
Company's subsidiaries, Exchange National Bank, Citizens State Bank, and
Provident Bank, f.s.b. (the "Banks"). All significant intercompany
balances and transactions have been eliminated.
The consolidated financial statements as of June 30, 1997, and for the six
months ended June 30, 1997 and 1996 are unaudited but include all adjustments
(consisting only of normal recurring adjustments) which the Company considers
necessary for a fair presentation of financial position and results of
operations for those periods. The Consolidated Statements of Earnings for the
six months ended June 30, 1997 are not necessarily indicative of the results
that will be achieved for the entire year.
2. Earnings per common share.
Earnings per common share are based upon the weighted average number of
common shares outstanding during the periods.
3. Stock options.
On April 7, 1997, the Company granted options to certain officers of the
Company to purchase a total of 70,500 shares of the Company's Common Stock at
the fair market value of the Company's stock on that date.
4. Pending acquisitions.
The Company announced on July 14, 1997, the signing of an agreement to
acquire Farmers Bancshares of Oberlin, Inc., Oberlin, Kansas and its subsidiary,
Farmers National Bank, through a combination cash and tax-free exchange of
stock. At June 30, 1997, Farmers National Bank had total assets of $51.8
million, deposits of $44.0 million and loans of $28.0 million. The transaction
is expected to close in the third quarter of 1997 and be accounted for as a
purchase under Generally Accepted Accounting Principles.
The Company announced on April 17, 1997, the signing of an agreement to
acquire Peoples Bancshares, Inc., Clay Center, Kansas and its subsidiary,
Peoples National Bank, through a tax-free exchange of stock. Required regulatory
approvals have been received and the transaction is expected to close in August,
1997. The transaction will be accounted for as a pooling of interests.
5. Subsequent Events.
On July 31, 1997 the Company declared a quarterly dividend in the amount
of $.03 per share to shareholders of record as of August 29, 1997, payable on
September 12, 1997.
6. Legal proceedings.
On April 28, 1997 Exchange Bank was named a defendant in the case
captioned, ANDERSON, ET AL. VS. OLATHE BANK, ET AL., Case No. 97 C 5574 in the
<PAGE>
District Court of Johnson County, Kansas. The plaintiffs allege that they
invested in entities owned and controlled by individuals subject to claims by
the Attorney General of the State of Kansas alleging consumer protection
violations. The plaintiffs allege the defendants were contacted by the
plaintiff's and allegedly provided false information, engaged in a joint effort
to mislead, and were negligent with respect to references sought by the
plaintiffs. Plaintiffs further allege that they relied to their detriment on
those representations in deciding to invest. In addition to Exchange Bank,
defendants include three Kansas banks, three bank officers of the defendant
banks, the National Business Opportunity Bureau, and a New York attorney. The
petition does not differentiate between these defendants in its assertions
concerning the role allegedly played by each in contributing to plaintiff's
alleged losses. The claim is brought on behalf of a class of over 2,400 persons
who claim to have invested $15,000 or more each. There is no allegation that
specifies the amount of damages plaintiffs contend that they sustained. Exchange
Bank has denied any liability and is vigorously contesting the allegations made
against it. The Company is not yet in a position to determine whether the
expenses and losses, if any, in connection with this action will be material.
7. New Accounting Pronouncement.
In February 1997, the Financial Accounting Standards Board issued
Statement No. 128, "Earnings Per Share" which revises the calculation and
presentation provisions of Accounting Principles Board Opinion 15 and related
interpretations. Statement No. 128 is effective for the Company's fiscal year
ending December 31, 1997. Retroactive application will be required. The
Company believes the adoption of Statement No. 128 will not have a significant
effect on its reported earnings per share.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
The Company's net income was $1.4 million for the six months ended June 30,
1997, compared to net income of $715,000 for the six months ended June 30, 1996,
yielding an annualized return on average assets ("ROA") of .90% for the six
months ended June 30, 1997, compared to 0.54% for the six months ended June 30,
1996. Return on average common stockholders' equity ("ROE") for the six months
ended June 30, 1997 and 1996 was 9.18% and 12.84%, respectively. The primary
reason for the earnings increase for the first half of 1997 over 1996 was
greater interest income through an improved net interest margin coupled with
greater loan volume.
FINANCIAL CONDITION
Total assets were $326.6 million at June 30, 1997, an increase of $22.0
million from December 31, 1996. Total average assets were $311.1 million for the
six months ended June 30, 1997, compared to $264.9 million for the six months
ended June 30, 1996. Average interest-earning assets were $287.6 million for the
six months ended June 30, 1997 and $245.9 million for the six months ended June
30, 1996. Assets increased during the first half of 1997 due to loan growth
during the period of $30.0 million, primarily at Exchange National Bank's
Leawood and Shawnee, Kansas locations.
The increase in net loans from December 31, 1996 to June 30, 1997 was primarily
funded through increases in deposits of $7.6 million, short-term borrowings of
$13.1 million, draws on existing cash reserves of $2.0 million and a reduction
in investment securities of $6.8 million. The allowance for loan losses
increased to $2.75 million at June 30, 1997 from $2.5 million at December 31,
1996. The allowance represented 1.18% and 1.25% of total loans as of June 30,
1997 and December 31, 1996, respectively.
RESULTS OF OPERATIONS
Net Interest Income
Total interest income for the six months ended June 30, 1997 was $12.0
million, a 16.2% increase over the six months ended June 30, 1996. Average total
earning assets increased $32.6 million or 12.8% at June 30, 1997, compared to
December 31, 1996. The increase is primarily the result of loan growth at
Exchange National Bank's office in Leawood, Kansas as well as the continued
growth in loans at the Shawnee branch.
Total interest expense for the first half of 1997 was 3.8% higher than in
the first half of 1996 as a result of the increases in deposits and other
interest-bearing liabilities. Average total interest-bearing liabilities
increased by $42.2 million or 17.9% during the first half of 1997 compared to
the first half of 1996, primarily due to increased volume of time deposits and
short-term borrowings to fund loans originated by Exchange National Bank through
its Leawood and Shawnee locations.
Net interest income was $5.8 million for the six months ended June 30,
1997, compared to $4.3 million for the same period in 1996, an increase of
33.5%. This increase is attributable to significantly greater loan volumes
primarily originated from Exchange National Bank's Leawood and Shawnee, Kansas
locations and a net interest margin for the period of 4.01% compared with 3.57%
for the same period in 1996.
<PAGE>
Provisions for Loan Losses
The provision for loan losses for the six months ended June 30, 1997, was
$255,000, an increase of $195,000, or 325% from the $60,000 provision during the
comparable 1996 period. This increase reflects the Company's objective of
maintaining adequate reserve levels in recognition of significant loan growth.
The allowance represented 1.18% and 1.25% of total loans as of June 30, 1997 and
June 30, 1996, respectively.
Other Income
Other income for the six months ended June 30, 1997, decreased $227,000, or
19.5% from the same period in 1996. This decrease is primarily a result of the
Company's planned decision to reduce its reliance on less profitable secondary
mortgage lending in its overall mortgage lending business.
Other Expense
Other expense decreased slightly by $81,000 for the six months ended June
30, 1997, as compared to the same period in 1996. This decrease was primarily
due to a reduction in salaries and benefits expenses. In the third quarter of
1996, Provident Bank, f.s.b. substantially altered the manner in which it
conducted its mortgage banking business. The changes included a substantial
reduction in personnel that decreased the Company's salaries and employee
benefits expenses. Net occupancy expense increased due to depreciation, property
taxes and utility costs associated with Exchange National Bank's new Leawood
branch. The Company's overall efficiency ratio showed its fourth consecutive
quarter of improvement, ending the second quarter of 1997 at 64.1%, compared to
66.9% for the first quarter of 1997 and 79.8% for the second quarter of 1996.
Income Tax Expense
Income tax expense for the six months ended June 30, 1997 and June 30,
1996 was $785,000 and $372,000, respectively. The effective tax rates for those
periods were 35.8% and 34.2%, respectively.
CAPITAL AND LIQUIDITY
At June 30, 1997, the Company's leverage, Tier 1 risk-based capital, and
total risk-based capital ratios were 10.1%, 12.3% and 13.3%, respectively,
compared to minimum required levels of 4%, 8% and 4%, respectively (subject to
change and the discretion of regulatory authorities to impose higher standards
in individual cases). At June 30, 1997, the Company had risk-weighted assets of
$255.6 million. On July 31, 1997, the Company's Board of Directors declared a
quarterly dividend in the amount of $.03 per common share.
The Company had approximately $7.5 million in cash and short-term
investment grade securities at June 30, 1997 remaining from its initial public
offering completed in the fourth quarter of 1996. Those proceeds are expected to
be used to finance the Company's growth strategy and for general corporate
purposes. The Company established a line of credit in the amount of $10.0
million with a correspondent bank during the first quarter of 1997. No amounts
had been drawn under the line as of June 30, 1997.
<PAGE>
ACCOUNTING AND FINANCIAL REPORTING
In February 1997, the Financial Accounting Standards Board issued
Statement No. 128, "Earnings Per Share" which revises the calculation and
presentation provisions of Accounting Principles Board Opinion 15 and related
interpretations. Statement No. 128 is effective for the Company's fiscal year
ending December 31, 1997. Retroactive application will be required. The
Company believes the adoption of Statement No. 128 will not have a significant
effect on its reported earnings per share.
<PAGE>
PART II
OTHER INFORMATION
ITEM 1: LEGAL PROCEEDINGS
On April 28, 1997 Exchange Bank was named a defendant in the case
captioned, ANDERSON, ET AL. VS. OLATHE BANK, ET AL., Case No. 97 C 5574 in the
District Court of Johnson County, Kansas. The plaintiffs allege that they
invested in entities owned and controlled by individuals subject to claims by
the Attorney General of the State of Kansas alleging consumer protection
violations. The plaintiffs allege the defendants were contacted by the
plaintiff's and allegedly provided false information, engaged in a joint effort
to mislead, and were negligent with respect to references sought by the
plaintiffs. Plaintiffs further allege that they relied to their detriment on
those representations in deciding to invest. In addition to Exchange Bank,
defendants include three Kansas banks, three bank officers of the defendant
banks, the National Business Opportunity Bureau, and a New York attorney. The
petition does not differentiate between these defendants in its assertions
concerning the role allegedly played by each in contributing to plaintiff's
alleged losses. The claim is brought on behalf of a class of over 2,400 persons
who claim to have invested $15,000 or more each. There is no allegation that
specifies the amount of damages plaintiffs contend that they sustained. Exchange
Bank has denied any liability and is vigorously contesting the allegations made
against it. The Company is not yet in a position to determine whether the
expenses and losses, if any, in connection with this action will be material.
ITEM 2: CHANGES IN SECURITIES
None
ITEM 3: DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
On April 30, 1997 the Company held its Annual Meeting of
Stockholders. The following items were submitted for consideration by the
stockholders.
Item 1 - Election of Directors
Two Class I directors, Mr. Keith E. Bouchey and Mr. William
F. Wright, were elected at the Annual Meeting for terms expiring in 2000.
Voting results were as follows:
3,816,981 votes or 88.7% FOR
7,700 votes or 0.2% AGAINST
0 votes or 0.0% ABSTAINED
475,319 votes or 11.1% UNVOTED
Class II Director continuing in office is D. Michael Browne. Mr. Browne's term
expires in 1998.
Class III Directors continuing in office are Michael W. Gullion and William
Wallman. Class III Directors' terms expire in 1999.
Item 2 - Proposal to approve an amendment to the Company's
Articles of Incorporation to increase the number of authorized shares of common
stock from 7,500,000 to 25,000,000 and the number of shares of preferred stock
from 7,500,000 and 25,000,000.
<PAGE>
Results of voting on Item 2 were as follows:
3,595,366 votes or 83.6% FOR
208,077 votes or 4.8% AGAINST
17,195 votes or 0.4% ABSTAINED
479,362 votes or 11.2% UNVOTED
Item 3 - Ratification of appointment of independent auditors. The
Audit Committee recommended the reappointment of KPMG Peat Marwick LLP as the
independent auditors for Company. Item 3 was approved with the following voting
results:
3,803,683 votes or 88.5% FOR
6,450 votes or 0.1% AGAINST
10,505 votes or 0.2% ABSTAINED
479,362 votes or 11.2% UNVOTED
ITEM 5: OTHER INFORMATION
None
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS REQUIRED TO BE FILED BY ITEM 601 OF REGULATION S-B
27. Financial Data Schedule
(b) REPORTS ON FORM 8-K
None
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GOLD BANC CORPORATION, INC.
Date: August 13, 1997 By: /s/ Keith E. Bouchey
--------------------------------
Keith E. Bouchey
Executive Vice President,
Chief Financial Officer,
and Corporate Secretary
(Authorized officer and principal financial officer of the registrant)
<PAGE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND>
EXHIBIT 27
GOLD BANC CORPORATION, INC. AND SUBSIDIARIES
FINANCIAL DATA SCHEDULE
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE CONSOLIDATED FINANCIAL STATEMENTS OF GOLD BANC CORPORATION, INC. AS
OF JUNE 30, 1997.
</LEGEND>
<CIK> 0001015610
<NAME> GOLD BANC CORPORATION, INC.
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<PERIOD-END> Jun-30-1997
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<ALLOWANCE> 2,750
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