UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
[ ] 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 registrant 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)
Indicate by check mark whether the registrant: (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 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
issuer's classes of common stock, as of the latest practical
date.
Class Outstanding at April 30, 2000
______________________________ ____________________________
Common Stock, $1.00 par value 37,793,162
<PAGE>
GOLD BANC CORPORATION, INC.
INDEX TO 10-Q FOR THE QUARTERLY
PERIOD ENDED MARCH 31, 2000
PAGE
PART I: FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
Consolidated Balance Sheets at
March 31, 2000 and December 31, 1999
(unaudited) 1
Consolidated Statements of Earnings -
Three months ended March 31, 2000
and March 31, 1999 (unaudited) 2
Consolidated Statements of Cash Flows -
Three months ended March 31, 2000 and March 31,
1999 (unaudited) 3
Notes to Consolidated Financial Statements 4
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS 7
PART II: OTHER INFORMATION
ITEM 1: LEGAL PROCEEDINGS 11
ITEM 2: CHANGES IN SECURITIES AND USE OF PROCEEDS 12
ITEM 3: DEFAULTS UPON SENIOR SECURITIES 12
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS 12
ITEM 5: OTHER INFORMATION 12
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K 12
SIGNATURES 13
<PAGE>
PART I
FINANCIAL INFORMATION
GOLD BANC CORPORATION, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
(UNAUDITED)
MARCH 31, 2000 DEC. 31, 1999
(Restated)
ASSETS
Cash and due from banks $ 83,348 $ 99,159
Federal funds sold and
interest-bearing
deposits 12,749 29,457
Total cash and cash
equivalents 96,097 128,616
Investment securities:
Held-to-maturity 8,224 7,878
Available-for-sale 452,161 438,264
Trading 6,146 9,245
Total investment
securities 466,531 455,387
Mortgage and student
loans held for sale, net 151,456 149,560
Loans, net 1,677,076 1,644,250
Premises and equipment,
net 60,591 62,960
Goodwill, net 49,051 47,576
Accrued interest and
other assets 58,361 62,392
Total assets $2,559,163 $2,550,741
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits $2,028,995 $2,006,154
Securities sold
under agreements
to repurchase 60,413 50,990
Federal funds purchased
and other short-term
borrowings 64,348 127,628
FHLB and other long-term
borrowings 130,446 90,523
Guaranteed preferred
beneficial interests
in Company's
debentures 82,549 82,549
Accrued interest and
other liabilities 26,662 25,849
Total liabilities 2,393,413 2,383,693
Stockholders' equity:
Preferred stock,
no par value;
50,000,000 shares
authorized, no
shares issued - -
Common stock, $1.00
par value,
50,000,000
shares authorized, 38,271 37,873
38,271,162 issued at
March 31, 2000
and 37,872,725 issued
and outstanding at
December 31, 1999
Additional paid-in
capital 75,512 72,371
Retained earnings 70,118 71,218
Accumulated other
comprehensive income
(loss) (10,247) (11,239)
Unearned compensation (4,175) (3,175)
169,479 167,048
Treasury stock -
478,000 shares at cost (3,729) -
Total stockholders'
equity 165,750 167,048
Total liabilities and
stockholders' equity $2,559,163 $2,550,741
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>
GOLD BANC CORPORATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE THREE MONTHS ENDED
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
MARCH 31, 2000 MARCH 31, 1999
(Restated)
Interest income:
Loans, including fees $42,135 $34,828
Investment securities 6,968 6,100
Other 1,203 1,225
50,306 42,153
Interest expense:
Deposits 20,676 17,887
Borrowings and other 5,413 3,191
26,089 21,078
Net interest income 24,217 21,075
Provision for loan losses 661 1,145
Net interest income
after provision for
loan losses 23,556 19,930
Other income:
Service fees 2,929 2,418
Net gains on sale of mortgage
loans 1,777 299
Net securities gains (loss) (30) 237
Investment trading fees and
commissions 615 976
Other 3,013 1,988
8,304 5,918
Other expense:
Salaries and employee benefits 10,967 8,769
Net occupancy expense 2,170 1,506
Depreciation expense 1,325 1,287
Goodwill amortization expense 534 398
Consolidation/repositioning/
pooling expense 10,849 -
Other 6,679 5,483
32,524 17,443
Earnings (loss)before
income taxes (664) 8,405
Income tax expense 121 3,058
Net earnings (loss) $( 785) $ 5,347
Net earnings (loss) per share
- basic and diluted $ (0.02) $ 0.14
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>
GOLD BANC CORPORATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED
(IN THOUSANDS)
(UNAUDITED)
MARCH 31, MARCH 31,
2000 1999
(RESTATED)
Cash flows from operating activities:
Net earnings (loss) $ (785) $ 5,347
Adjustments to reconcile net earnings
to net cash provied by (used in)
operating activities, net of purchase
acquisitions:
Provision for loan losses 661 1,145
(Gains) losses on sales of securities 30 (177)
Amortization of investment securities'
premiums, net of accretion 124 116
Depreciation 1,325 1,287
Amortization of goodwill 534 398
(Gain) loss on sale of assets, net 833 (399)
Net (increase) decrease in trading
securities (3,099) (557)
Unrealized loss on trading securities -- 37
Net (increase) in mortgage
loans held for sale (1,896) (13,829)
Other changes:
Accrued interest receivable and
other assets 4,030 (4,276)
Accrued interest payable and other
liabilities 2,271 3,800
Net cash provided by (used in)
operating activities 10,226 (7,108)
Cash flows from investing activities:
Net increase in loans (33,487) (39,544)
Principal collections and proceeds
from maturities of held-to-maturity
securities 1,576 2,077
Principal collections and proceeds
from sales and maturities of
available-for-sale securities 17,176 688,511
Purchases of available-for-sale
securities (31,538) (700,474)
Purchases of held-to-maturity
securities - (1,006)
Net additions to premises and
equipment (1,138) (2,370)
Cash paid for acquisitions, net
of cash received - (5,317)
Proceeds from sale of other assets 815 62
Net cash used in investing
activities (46,596) (58,061)
Cash flows from financing activities:
Increase in deposits 22,842 28,581
Net increase (decrease) in
short-term borrowings (53,857) 38,146
Net increase (decrease) in
FHLB and other
long-term borrowings 38,923 (8,697)
Proceeds from issue of
common stock 26 175
Purchase of treasury stock (3,729) -
Dividends paid (354) (344)
Net cash provided by financing
activities 3,851 57,861
Decrease in cash and
cash equivalents (32,519) (7,308)
Cash and cash equivalents, beginning
of year 128,616 158,880
Cash and cash equivalents, end of
period $ 96,097 $ 151,572
SUPPLEMENTAL SCHEDULE OF NON-CASH FINANCING ACTIVITIES:
Issuance of common stock for
acquisitions $ 393 $ -
Non-cash activities related to
purchase acquisitions:
Increase in land, buildings,
and equipment - 1,264
Increase in long-term
borrowings $ - $ 515
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
<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-Q. The
consolidated financial statements should be read in conjunction
with the audited financial statements included in the Company's
1999 Annual Report on Form 10-K.
The consolidated financial statements include the accounts
of the Company's subsidiaries, Gold Bank N.A., Provident Bank,
f.s.b., Citizens Bank of Tulsa, People First Bank (Oklahoma),
American Heritage Bank (Oklahoma), American Bank (Florida),
People First Bank (Kansas) and First Business Bank of Kansas
City, N.A. (the "Banks"), Midwest Capital Management, Inc., The
Trust Company, CompuNet Engineering, Inc. All significant
intercompany balances and transactions have been eliminated. 1999
results have been restated to reflect the effects of three
pooling of interests acquisitions completed in the first quarter
of 2000.
The December 31, 1999 consolidated balance sheet has been
restated using the audited balance sheet of the Company and the
three pooling of interests acquisitions completed in the first
quarter of 2000. The consolidated financial statements as of
March 31, 2000 and for the three months ended March 31, 2000 and
1999 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 its operations and its cash flows for those periods.
The Consolidated Statements of Earnings for the three months
ended March 31, 2000 are not necessarily indicative of the
results to be expected for the entire year. Certain
reclassifications have been made to prior year's financial
statements to conform to the current year's presentation.
2. Earnings per common share.
Earnings per share are computed in accordance with SFAS No.
128, Earnings per Share. Basic earnings per share is based upon
the weighted average number of common shares outstanding during
the periods presented. Diluted earnings per share includes the
effects of all potentially dilutive common shares outstanding
during each period. Employee stock options are the Company's
only potential common share equivalent.
<PAGE>
The shares used in the calculation of basic and diluted
income per share for the three months ended March 31, 2000 and
1999 are shown below (in thousands):
2000 1999
Weighted average common shares outstanding 37,829 37,356
Stock options 51 281
Weighted average common shares and
Common share equivalents outstanding 37,880 37,637
3. Guaranteed Preferred Beneficial Interests in Company's
Debentures.
On June 9, 1999, GBCI Capital Trust II (the "Trust"), a
Delaware business trust formed by the Company, completed the sale
of $37.6 million of 9.12% Preferred Securities (the "Preferred
Securities"). The Trust also issued Common Securities to the
Company and used the net proceeds from the offering to purchase a
like amount of 9.12% Junior Subordinated Deferrable Interest
Debentures (the "Debentures") of the Company. The Debentures are
the sole assets of the Trust and are eliminated, along with the
related earnings statement effects, in the consolidated financial
statements. The Company used the proceeds from the sale of the
Debentures to retire certain debt and for general corporate
purposes. Total expenses associated with the offering
approximating $1.5 million were included in other assets and are
being amortized on a straight-line basis over the life of the
debentures.
The Preferred Securities accrue and pay distributions
quarterly at an annual rate of 9.12% of the stated liquidation
amount of $25 per Preferred Security. The Company has fully and
unconditionally guaranteed all of the obligations of the Trust.
The guaranty covers the quarterly distributions and payments on
liquidation or redemption of the Preferred Securities, but only
to the extent of funds held by the Trust.
The Preferred Securities are mandatorily redeemable upon the
maturity of the Debentures on June 30, 2029 or upon earlier
redemption as provided in the Indenture. The Company has the
right to redeem the Debentures, in whole or in part on or after
June 30, 2004 at a redemption price specified in the Indenture
plus any accrued but unpaid interest to the redemption date.
4. Comprehensive Income.
Comprehensive income was $207 thousand and $4.9 million for
the three months ended March 31, 2000 and 1999, respectively.
The difference between comprehensive income and net earnings
presented in the Consolidated Statement of Earnings is attributed
solely to unrealized gains and losses on available-for-sale
securities.
5. Acquisitions.
On March 2, 2000, the Company issued 9,540,048 shares of
common stock to acquire CountryBanc Holding Company of Edmond,
Oklahoma ("CountryBanc"), a multi-bank holding company
that operated two Oklahoma state banks and one Kansas
state bank. The total value of the CountryBanc acquisition
was $76 million in a stock-for-stock, tax free exchange,
which was accounted for as a pooling of interests. As of
March 31, 2000, CountryBanc had total assets of
approximately $552.6 million.
On March 6, 2000, the Company issued 2,708,565 shares of
common stock to acquire First Business Bank of Kansas City, N.A.
("First Business Bank"), which is located in the heart of
the popular Country Club Plaza area. The acquisition was
approximately $20 million in a stock-for-stock, tax free
exchange. The transaction was accounted for as a pooling of
interests except for the 14% minority interest held by third
parties in First Business Bank. The acquisition of the
minority interests of 14% was accounted for as a purchase.
As of March 31, 2000, First Business Bank had total assets
of approximately $130.7 million.
<PAGE>
On March 20, 2000, the Company issued 8,319,131 shares of common
stock to acquire American Bancshares, Inc. of Bradenton, Florida
("American Bancshares"), owner of American Bank. American
Bank is one of the largest community banks on the west coast
of Florida. The acquisition was approximately $55 million in
a stock-for-stock, tax free exchange which was accounted
for as a pooling of interests. As of March 31, 2000, American
Bancshares had total assets of approximately $471.6 million.
6. Consolidation/Repositioning/Pooling Expense
During the quarter ended March 31, 2000, the Company acquired
the three financial institutions as discussed in footnote #5. Since
the three acquisitions were accounted for as pooling of interests,
the Company expensed the costs associated with the acquisition
during the quarter ended March 31, 2000. The pooling costs were
$10.1 million before income taxes and $7.4 million - net of
income taxes.
During 1999 and the quarter ended March 31, 2000, the Company
incurred consolidation and repositioning expenses. The expenses
were mainly due to the Company consolidating its Kansas banks into
a single statewide organization. Details of the consolidation and
repositioning accrual are as follows (in thousands):
Activity for
Quarter Ended
March 31, 2000
Accrual at Accrual at
Dec. 31, 1999 Expense Paid March 31, 2000
Salaries, benefits and
severance $ 552 $464 $ 532 $ 484
Asset write-downs and
lease abandonments 815 47 245 617
Other repositioning
expenses 480 213 513 180
$1,847 $724 $1,290 $1,281
7. Subsequent Events:
On April 26, 2000 the Board of Directors declared a $0.02
cash dividend on common stock to shareholders of record as of
April 28, 2000, payable on May 10, 2000.
8. Legal proceedings.
Gold Bank (formerly Exchange National Bank) is one of
several named defendants in a number of lawsuits arising out of
the same circumstances. The litigation was brought on behalf of
persons who purchased distributorships from an entity known as
Parade of Toys ("Parade"). Gold Bank was included on trade
reference sheets that listed other banks with whom Parade had
done business. Plaintiffs allege that they contacted the persons
listed on the trade reference sheets and that the trade reference
defendants made false and misleading misrepresentations on which
plaintiffs relied to their detriment. Their current claims
include theories of fraud, negligent misrepresentations, civil
conspiracy, and negligence.
Plaintiffs commenced the litigation in May 1997 as a
putative class action in the District Court of Johnson County,
Kansas. They then obtained an order dismissing the case without
prejudice and, in September 1997, refiled in the United States
District Court for the District of Kansas. After the federal
court denied class certification, plaintiffs filed a second
action on behalf of 670 named plaintiffs. The court ruled that
those claims were misjoined and set a deadline for plaintiffs to
initiate new individual actions or to have their claims dismissed
with prejudice. Plaintiffs then obtained an order from the
federal court dismissing all claims without prejudice and
reinitiated certain of their claims in state court in Johnson
County, Kansas.
Plaintiffs began the process of recommencing the litigation
by filing a separate action for each plaintiff in February 1999.
Gold Bank was named as a defendant in 24 of those individual
actions. Plaintiffs then filed a number of multi-plaintiff
actions. On July 28, 1999, the state court ruled that claims in
the multi-plaintiff actions had been misjoined and that only the
first-named plaintiff in each case could proceed. It gave
plaintiffs until October 28, 1999 to commence new individual
actions or to have their claims dismissed with prejudice.
Plaintiffs have now filed a total of 263 individual actions in
which Gold Bank is a defendant. The majority of these actions
allege damages that range between $18,000 and $26,000.
Gold Bank denies any liability and intends to vigorously
defend these and any additional claims. Neither the Bank nor
its counsel is able to estimate the Bank's potential range of
monetary exposure, if any, or to predict the likely outcome
of these matters.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
Total average assets were $2.6 billion for the three months
ended March 31, 2000, compared to $2.3 billion for the three
months ended March 31, 1999, a 13.0% increase. Assets increased
during 2000 due to internal loan growth.
Total assets were $2.6 billion at March 31, 2000, an
increase of $8.4 million from December 31, 1999. Net loans grew
$34.7 million during the first three months of 2000. Internal
growth produced the increase, with the majority of the increase
originating from the Company's suburban Kansas City locations.
Internal loan growth was funded through an increase in deposits
and additional short-term and long-term Federal Home Loan Bank
(FHLB) borrowings. The allowance for loan losses increased to
$26.7 million at March 31, 2000 from $26.0 million at December
31, 1999. The allowance represented 1.44% and 1.43% of total
loans as of March 31, 2000 and December 31, 1999, respectively.
For the three months ended March 31, 2000, the Company's
annualized return on average assets ("ROA") was (0.12%), compared
to 0.94% for the three months ended March 31, 1999. Return on
average common stockholders' equity ("ROE") for the three months
ended March 31, 2000 and 1999 was (1.80%) and 12.83%,
respectively.
Cash and cash equivalents and investment securities totaled
$562.6 million, or 22.0% of total assets at March 31, 2000,
compared to $584 million, or 22.9%, at December 31, 1999. At
March 31, 2000, the Company's leverage, Tier 1 risk-based
capital, and total risk-based capital ratios were 7.38%, 9.32%,
and 11.77%, 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 March 31, 2000, the Company had risk-
weighted assets of $1.99 billion.
During the second quarter of 1999, the Company issued $37.6
million of 9.12% Guaranteed Preferred Junior Subordinated
Debentures (Junior Subordinated Debentures). Proceeds from the
issuance were used to repay $11 million in correspondent bank
debt and the remaining amount was to be used for acquisitions and
general corporate purposes. The Company established a line of
credit in the amount of $25 million with a correspondent bank
during the third quarter of 1998. As of March 31, 2000, the line
of credit had a balance of $14 million.
Management believes that cash generated from its operations,
from its Junior Subordinated Debentures and from its
correspondent bank facility will be sufficient to meet its cash
requirements for acquisitions, internal growth and general
operations in the foreseeable future.
<PAGE>
RESULTS OF OPERATIONS
NET INTEREST INCOME
Total interest income for the three months ended March 31,
2000 was $50.3 million, a $8.2 million or a 19.4% increase over
the three months ended March 31, 1999. The increase during the
quarter was primarily the result of internal loan growth.
Average total earning assets increased $231.7 million or 25.3% to
$2.3 billion at March 31, 2000, compared to $2.1 billion at March
31, 1999.
Total interest expense for the three months ended March 31,
2000 was $26.1 million, a $5.0 million or a 23.8% increase over
the three months ended March 31, 1999. The increase was the
result of greater average deposits, an increase in borrowings and
the Junior Subordinated Debentures. Average total interest-
bearing liabilities increased by $232.6 million or 12.6% to $2.08
billion during the three months ended March 31, 2000 compared to
$1.84 billion at March 31, 1999, primarily due to acquisitions,
more interest bearing deposits, the increased level of borrowings
and the Junior Subordinated Debentures.
Net interest income was $24.2 million for the three months
ended March 31, 2000, compared to $21.1 million for the same
period in 1999, an increase of 14.9%. The Company's net interest
margin increased from 4.07% for the three months ended March 31,
1999 to 4.21% for the three months ended March 31, 2000 primarily
due to the higher loan volumes and yields.
PROVISIONS FOR LOAN LOSSES
The provision for loan losses for the three months ended
March 31, 2000, was $661,000, compared to $1.1 million for the
comparable 1999 period. The allowance represented 1.44% and
1.43% of total loans as of March 31, 2000 and December 31, 1999,
respectively. The Company monitors its allowance for loan losses
to total loans ratio on a monthly basis in order to maintain a
ratio within internally defined guidelines of 1.15% to 1.65%.
OTHER INCOME
Other income for the three months ended March 31, 2000 was
$8.3 million, an increase of $2.4 million, or 40.3% over the same
period last year. The increase in other income resulted from an
increase in fee based income from acquired nonbank subsidiaries
providing trust fees, mortgage loan income, computer sales and
service fees and investment management fees.
OTHER EXPENSE
Other expense for the three months ended March 31, 2000 was
$32.5 million, an increase of $15.1 million, or 86.5% over the
same period last year. This increase was due to the
consolidation/repositioning/pooling expenses, increased salaries
and benefits expenses, occupancy expense and other non-interest
expenses. Most of these increases were related to recent
acquisitions. The Company's overall efficiency ratio decreased
during the first three months of 2000 to 100% compared to 64.6%
for the first three months in 1999 due to the consolidation/
repositioning/pooling expenses.
<PAGE>
INCOME TAX EXPENSE
Income tax expense for the three months ended March 31, 2000
and March 31, 1999 was $121,000 and $3.1 million, respectively.
The effective tax rates for those periods were 30.6% and 36.4%,
respectively, after adjusting for the one-time pooling costs.
The first quarter's effective tax rate for 2000 compared to the
year to date 1999 effective tax rate declined due to a greater
volume of tax-free investments and lower state and local taxes.
ACCOUNTING AND FINANCIAL REPORTING
The Financial Accounting Standards Board (FASB) issued SFAS
No. 131, Disclosures about Segments of an Enterprise and Related
Information, in June 1998. SFAS No. 131 requires that public
enterprises report financial and descriptive information about
their reportable operating segments. Operating segments are
components of an enterprise about which separate financial
information is available that is evaluated regularly by
management. SFAS No. 131 is effective for fiscal years beginning
after December 15, 1998. The adoption of the standard is not
expected to have a significant impact on the financial statements
of the Company.
The Financial Accounting Standards Board (FASB) issued SFAS
No. 133, Accounting for Derivative Instruments and Hedging
Activities in June 1998. SFAS No. 133 establishes accounting and
reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts, and for
hedging activities. It requires that an entity recognize all
derivatives as either assets or liabilities in the statement of
financial position and measure those instruments at fair value.
This Statement is effective for all fiscal quarters of fiscal
years beginning after June 15, 2000. Management believes
adoption of SFAS No. 133 will not have a material effect on the
Company's financial position or results of operations, nor will
adoption require additional capital resources.
<PAGE>
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Asset/liability management refers to management's efforts to
minimize fluctuations in net interest income caused by interest
rate changes. This is accomplished by managing the repricing of
interest rate sensitive interest-earning assets and interest-
bearing liabilities. An interest rate sensitive balance sheet
item is one that is able to reprice quickly, through maturity or
otherwise. Controlling the maturity or repricing of an
institution's liabilities and assets in order to minimize
interest rate risk is commonly referred to as gap management.
Close matching of the repricing of assets and liabilities will
normally result in little change in net interest income when
interest rates change. A mismatched gap position will normally
result in changes in net interest income as interest rates
change.
Along with internal gap management reports, the Company and
the Banks use an asset/liability modeling service to analyze each
Bank's current gap position. The system simulates the Banks'
asset and liability base and projects future net interest income
results under several interest rate assumptions. The Company
strives to maintain an aggregate gap position such that changes
in interest rates will not affect net interest income by more
than 10% in any twelve-month period. The Company has not engaged
in derivative transactions for its own account.
The following table indicates that, at March 31, 2000, in
the event of a sudden and sustained increase in prevailing market
rates, the Companies net interest income would be expected to
increase, while a decrease in rates would indicate a decrease in
income.
Changes in Interest Net Interest Percent
Rates Income Actual Change Change Actual
200 basis point rise $97,219,100 $2,971,700 3.2%
100 basis point rise $96,042,800 $1,795,400 1.9%
Base Rate Scenario $94,247,400 --- ---
100 basis point decline $92,434,100 ($1,813,300) (1.9%)
200 basis point decline $90,802,800 ($3,444,600) (3.7%)
YEAR 2000
The Company has not experienced any difficulties or problems in
relation to the Year 2000. While the Company does not expect to
encounter any difficulties or problems in the future, the Company
has a contingency plan in place to deal with the Year 2000.
<PAGE>
PART II
OTHER INFORMATION
ITEM 1: LEGAL PROCEEDINGS
Gold Bank (formerly Exchange National Bank) is one of
several named defendants in a number of lawsuits arising out of
the same circumstances. The litigation was brought on behalf of
persons who purchased distributorships from an entity known as
Parade of Toys ("Parade"). Gold Bank was included on trade
reference sheets that listed other banks with whom Parade had
done business. Plaintiffs allege that they contacted the persons
listed on the trade reference sheets and that the trade reference
defendants made false and misleading misrepresentations on which
plaintiffs relied to their detriment. Their current claims
include theories of fraud, negligent misrepresentations, civil
conspiracy, and negligence.
Plaintiffs commenced the litigation in May 1997 as a
putative class action in the District Court of Johnson County,
Kansas. They then obtained an order dismissing the case without
prejudice and, in September 1997, refiled in the United States
District Court for the District of Kansas. After the federal
court denied class certification, plaintiffs filed a second
action on behalf of 670 named plaintiffs. The court ruled that
those claims were misjoined and set a deadline for plaintiffs to
initiate new individual actions or to have their claims dismissed
with prejudice. Plaintiffs then obtained an order from the
federal court dismissing all claims without prejudice and
reinitiated certain of their claims in state court in Johnson
County, Kansas.
Plaintiffs began the process of recommencing the litigation
by filing a separate action for each plaintiff in February 1999.
Gold Bank was named as a defendant in 24 of those individual
actions. Plaintiffs then filed a number of multi-plaintiff
actions. On July 28, 1999, the state court ruled that claims in
the multi-plaintiff actions had been misjoined and that only the
first-named plaintiff in each case could proceed. It gave
plaintiffs until October 28, 1999 to commence new individual
actions or to have their claims dismissed with prejudice. Plaintiffs
have now filed a total of 263 individual actions in which Gold Bank
is a defendant. The majority of these actions allege damages that
range between $18,000 and $26,000.
Gold Bank denies any liability and intends to vigorously
defend these and any additional claims. Neither the Bank
nor its counsel is able to estimate the Bank's potential
range of monetary exposure, if any, or to predict the
likely outcome of these matters.
<PAGE>
ITEM 2: CHANGES IN SECURITIES AND USE OF PROCEEDS
On June 9, 1999, GBCI Capital Trust II (the "Trust"), a
Delaware business trust formed by the Company, completed the sale
of $37.6 million of 9.12% Preferred Securities (the "Preferred
Securities") in a registered offering made through an
underwriting group led by Advest, Inc. and U.S. Bancorp Piper
Jaffray, Inc.
The Trust also issued Common Securities to the Company and
used the net proceeds from the offering to purchase a like amount
of 9.12% Junior Subordinated Deferrable Interest Debentures (The
"Debentures") of the Company. In connection with the offering the
Company and the Trust registered a total of $40.3 million of
Preferred Securities on a Form S-3 Registration Statement
(Registration Nos. 333-76623 and 333-76623-01). Total expenses
associated with the offering were approximately $1.5 million,
including $1.3 million in underwriting discounts and an advisory
fee paid to Advest, Inc. As of March 31, 2000, the Company had
used the net proceeds from the sale of the Debentures to repay
approximately $11.0 million of corporate indebtedness and the
remaining amount was to be used for acquisitions and general
corporate purposes.
ITEM 3: DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
None
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-K
27. Financial Data Schedule
(b) REPORTS ON FORM 8-K
The Company filed the following five Current Reports on
Form 8-K during the first quarter of 2000:
(1) Form 8-K filed on January 5, 2000, reporting
under Item 5 and 7.
(2) Form 8-K filed on January 26, 2000, reporting
under Item 5 and 7.
(3) Form 8-K filed on January 26, 2000, reporting
under Item 5 and 7.
(4) Form 8-K filed on March 3, 2000, reporting under
Item 5 and 7.
(5) Form 8-K filed on March 20, 2000, reporting under
Items 5 and 7.
(6) Form 8-K filed on March 23, 2000, reporting under
Items 5 and 7.
(7) Form 8-K filed on May 2, 2000, reporting under
Items 5 and 7.
<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: May 15, 2000 By:/s/ David Phillips
David Phillips
Principal Accounting Officer
(Authorized officer and
principal financial officer of the
registrant)
<PAGE>
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