<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
/ / Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
Commission file number 000-22487
GREAT GUARANTY BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
72-0493576
LOUISIANA (I.R.S. Employer
(State of Incorporation) Identification Number)
175 NEW ROADS STREET
NEW ROADS, LOUISIANA 70760
(Address of principal executive offices)
(504)638-5641
(Registrant's telephone number, including area code)
Check 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 preceding
12 months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the past
90 days. YES NO X
---- ----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 143,374 SHARES AS OF JUNE 30,
1998
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GREAT GUARANTY BANCSHARES, INC.
FORM 10-QSB
JUNE 30, 1998
INDEX
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<CAPTION>
PART I - FINANCIAL INFORMATION PAGE
REFERENCE
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<S> <C> <C>
ITEM 1. FINANCIAL STATEMENTS 1
Consolidated Balance Sheets as of June 30, 1998 1
Consolidated Statements of Income for the six months
and for the quarters ended June 30, 1998 and 1997 2
Consolidated Statements of Cash Flows for the six months ended June 30,
1998 and 1997 3
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION 5
Material Changes in Financial Condition 5
Six Months Ended June 30, 1998 Compared with Six Months Ended
June 30, 1997 5
June 30, 1998 Compared with December 31, 1997 6
Loan Loss Provision 6
Income Taxes 6
PART II - OTHER INFORMATION 6
ITEM 1. LEGAL PROCEEDINGS 6
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. 7
SIGNATURES 7
EXHIBIT INDEX 8
</TABLE>
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
GREAT GUARANTY BANCSHARES, INC.
CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 1998
(UNAUDITED)
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<S> <C>
ASSETS
Cash and due from banks $ 2,066,773
Interest-bearing deposits with banks 1,311,470
Federal Funds Sold 1,450,000
Investments securities - available for sale 12,680,191
Restricted investments in equity securities 220,600
Loans, net of allowance for loan losses of $260,175 23,010,235
Properties and equipment, net 658,939
Accrued interest receivable 356,293
Other Assets 169,563
------------
TOTAL ASSETS $ 41,924,064
============
LIABILITIES AND SHAREHOLDER'S EQUITY
LIABILITIES
Demand deposits $ 6,915,540
NOW accounts 5,240,625
Savings deposits 8,269,634
Time deposits, $100,000 and over 1,972,809
Other time deposits 15,282,412
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Total deposits $ 37,681,020
Notes Payable 1,280,620
Accrued expenses and other liabilities 258,461
Federal Funds Purchased 0
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Total liabilities $ 39,220,101
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SHAREHOLDER'S EQUITY
Common stock - $7.50 par value, 500,000 shares
authorized, 143,374 shares issued and outstanding 1,075,305
Capital surplus 2,411,471
Retained deficit (814,419)
Unrealized gain (loss) on securities available for
sale, net of tax of ($25,763) 31,606
------------
Total shareholders' equity $ 2,703,963
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 41,924,064
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GREAT GUARANTY BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended June 30, Three Months Ended June 30,
1998 1997 1998 1997
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<S> <C> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans $ 1,033,200 $ 961,624 $ 518,323 $ 506,791
Interest on investment securities 429,924 633,717 201,437 315,978
Interest on Federal Funds sold 56,761 15,834 31,318 2,958
Interest on Deposits with Banks 25,222 20,758 19,724 7,136
----------- ----------- ----------- -----------
Total interest income $ 1,545,107 $ 1,631,933 $ 770,802 $ 832,863
----------- ----------- ----------- -----------
INTEREST EXPENSE
Interest on notes payable 52,238 187,283 26,208 71,409
Interest on deposits 546,755 526,098 275,439 264,759
----------- ----------- ----------- -----------
Total interest expense $ 598,993 $ 713,381 $ 301,647 $ 336,168
----------- ----------- ----------- -----------
NET INTEREST INCOME $ 946,114 $ 918,552 $ 469,155 $ 496,695
PROVISION (CREDIT) FOR LOAN LOSSES 19,788 (14,500) 8,788 (14,500)
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES $ 926,326 $ 933,052 $ 460,367 $ 511,195
NON INTEREST INCOME
Service charges on deposit accounts $ 162,362 $ 147,381 $ 84,146 $ 66,950
Other service charges and fees 5,681 5,983 2,661 4,047
Net investment securities gains (losses) 0 0 0 0
Other income 10,434 9,752 337 9,792
----------- ----------- ----------- -----------
$ 178,477 $ 163,116 $ 87,144 $ 80,789
----------- ----------- ----------- -----------
NON INTEREST EXPENSE
Salaries and employee benefits $ 443,210 $ 451,508 $ 227,361 $ 235,320
Occupancy expense 110,176 111,350 55,652 56,508
Data processing 95,583 71,294 49,253 35,926
Legal fees 8,375 66,374 6,325 60,774
Other expense 149,244 266,213 77,405 172,630
----------- ----------- ----------- -----------
$ 806,588 $ 966,739 $ 415,996 $ 561,158
----------- ----------- ----------- -----------
INCOME BEFORE INCOME TAXES
AND EXTRAORDINARY ITEMS $ 298,215 $ 129,429 $ 131,515 $ 30,826
INCOME TAX EXPENSE 101,393 39,000 44,715 4,812
----------- ----------- ----------- -----------
NET INCOME BEFORE EXTRAORDINARY
ITEMS $ 196,822 $ 90,429 $ 86,800 $ 26,014
EXTRAORDINARY ITEM-GAIN FROM LITIGATION
NET OF TAX OF $458,688 0 1,759,017 0 1,759,017
----------- ----------- ----------- -----------
NET INCOME $ 196,822 $ 1,849,446 $ 86,800 $ 1,785,031
=========== =========== ----------- -----------
PER COMMON SHARE DATA:
NET INCOME $ 1.37 $ 12.90 $ .61 $ 12.45
----------- ----------- ----------- -----------
AVERAGE SHARES OUTSTANDING 143,374 143,374 143,374 143,374
=========== =========== ----------- -----------
</TABLE>
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GREAT GUARANTY BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED) PAGE 1 OF 2
<TABLE>
<CAPTION>
Six months ended June 30,
1998 1997
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CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 196,822 $ 1,849,446
Adjustments to reconcile net income to net
cash provided by operating activities:
Extraordinary Item (gross amount) 0 (2,217,705)
Depreciation 64,422 55,601
Provision for loan losses 19,788 14,500
Deferred tax 101,393 497,688
Stock dividends received (6,400) (5,800)
Net investment securities (gains) losses 0 1,263
(Increase) decrease in accrued income and other assets (207,380) (18,907)
Increase (decrease) in accrued expenses and other liabilities 122,893 107,801
----------- -----------
Net cash provided by (used in) operating activities $ 291,538 $ 283,887
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CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales/maturities of investment securities
Available for sale $ 2,591,560 $ 1,311,367
Purchase of investment securities
Available for sale (1,000,000) (893,210)
Net change in:
Interest bearing deposits with banks (1,113,470) 892,571
Federal Funds Sold (325,000) 0
Loans (586,956) (3,725,267)
Purchase of equipment and building improvements (43,242) (29,475)
----------- -----------
Net cash (used in) provided by investing activities $ (477,108) $(2,444,014)
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</TABLE>
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GREAT GUARANTY BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(CONTINUED)
(UNAUDITED) PAGE 2 OF 2
<TABLE>
<CAPTION>
Six months ended June 30,
1998 1997
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<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in non-interest-bearing
demand, savings and NOW accounts $ 136,315 $ 872,417
Net increase (decrease) in time deposit 442,473 354,511
Payments on stockholder notes payable 0 (200,000)
Payments on other notes payable (58,632) (1,546,271)
Net change in federal funds purchased and
Repurchase Agreement Sold (240,659) 550,000
Proceeds from litigation - extraordinary item 0 2,217,705
Redemption of preferred stock 0 (237,117)
Dividends Paid (35,843) 0
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Net cash provided by (used in) financing activities $ 243,654 $ 2,011,245
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NET INCREASE (DECREASE) IN CASH
AND DUE FROM BANKS 58,084 (148,882)
CASH AND DUE FROM BANKS AT BEGINNING
OF PERIOD 2,008,689 2,406,805
----------- -----------
CASH AND DUE FROM BANKS AT END
OF PERIOD $ 2,066,773 $ 2,257,923
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION
Cash paid during the year for:
Interest $ 594,092 $ 719,333
=========== ===========
Income taxes $ 20,000 $ 0
=========== ===========
</TABLE>
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<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
MATERIAL CHANGES IN FINANCIAL CONDITION.
SIX MONTHS ENDED JUNE 30, 1998 COMPARED WITH SIX MONTHS ENDED JUNE 30, 1997.
Balance Sheet
Total Assets at June 30, 1998 were $41.9 million compared to $43.7 million
at June 30, 1997. Total loans increased to $23 million at June 30, 1998 from
$20.5 million at June 30, 1997, while securities decreased to $12.6 million from
$19.3 million and deposits increased to $37.6 million from $37.4 million as of
those respective dates. Shareholders' equity in Bancshares increased to $2.7
million at June 30, 1998 from $2.2 million at June 30, 1997. Bancshares'
shareholders' equity in its wholly owned bank subsidiary, Guaranty Bank & Trust
Company ("Guaranty Bank"), was $2.7 million at June 30, 1998, down from $3.7
million at June 30, 1997, as a result of payment by Guaranty Bank of a dividend
in October, 1997 to Bancshares pursuant to a Capital Plan under which the
dividend was applied by Bancshares, principally, to reduction of outstanding
indebtedness of Bancshares. See "Subsequent Events", below.
Income
The income of Bancshares is ordinarily attributable almost entirely to
dividends on earnings of Guaranty Bank. Consolidated net income of Bancshares is
generally determined by deduction of interest and expenses incurred by
Bancshares from the net income earned by Guaranty Bank.
Income for the six months ended June 30, 1998 was $197 thousand compared to
$90 thousand during the same period in 1997. June, 1997 also recorded
extraordinary income to Bancshares of approximately $2.2 million as a result of
final resolution of litigation. Interest income decreased to $1.545 million for
the six month period ended June 30, 1998 compared to $1.632 million for the same
period in 1997. Non-interest income totaled $178 thousand for the six month
period, compared to $163 million for the same period in 1997. Interest expense
decreased to $599 thousand during the six months ended June 30, 1998, down from
$713 thousand during the same period in 1997, due primarily to reduction of
Bancshares' debt, while non-interest expense decreased to $807 thousand from
$967 thousand during those periods.
Subsequent Events
In August 1997, Guaranty Bank and Bancshares received approval from their
primary regulators, the Louisiana Office of Financial Institutions, the FDIC and
the Federal Reserve Bank of Atlanta, of a "Capital Plan" for the payment by
Guaranty Bank of dividends during 1997 and 1998 to Bancshares as part of a plan
to pay Bancshares' indebtedness and dividends to Bancshares' shareholders. The
Capital Plan limits payment of dividends to Bancshares to the amount by which
Guaranty Bank's Tier 1 Capital exceeds 6%. The 6% limitation allowed a dividend
of $1,316 million during 1997.
Dividends by Guaranty Bank to Bancshares during 1997 were applied by
Bancshares as follows: (i) $50,000 in August to pay an installment on
Bancshares' note and cover legal expenses, (ii) $1.2 million in October to
reduce the balance of Bancshares' indebtedness to $165,000 and (iii) $36,000 in
December 1997 for a dividend ($.25 per share) to Bancshares' shareholders.
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JUNE 30, 1998 COMPARED WITH DECEMBER 31, 1997
Balance Sheet
Total assets increased to $42.0 million at June 30, 1998, an increase of
1.5% from $41.4 million at December 31, 1997. Total loans increased by $567
thousand, or 2.5%, to $23 million at June 30, 1998 compared to $22.4 million at
December 31, 1997, while securities declined $1.6 million to $12.7 million at
June 30, 1998, down from 14.3 million at December 31, 1997, primarily as a
result of securities that were called before maturity and principal pay-downs
received without reinvestment of the proceeds in new securities.
Total deposits increased by $.6 million to $37.7 million at June 30, 1998, a
1.6% increase from $37.1 million at December 31, 1997. Non-interest bearing
deposits increased at a 2.7% rate, compared to a 1.3% growth in interest bearing
deposits. During the first six months of 1998, shareholders' equity in
Bancshares increased to $2.7 million from $2.5 million at December 31, 1997 due
to earnings of Guaranty Bank. During the same periods, Bancshares' equity in
Guaranty Bank increased from $2.5 million at year-end 1997 to $2.7 million at
June 30, 1998.
LOAN LOSS PROVISION
As a result of management's assessment of the adequacy of the allowance for
possible loan losses, Guaranty Bank recorded an increase in it's loan loss
provision of $21.8 thousand at June 30, 1998. The allowance for possible loan
losses at June 30, 1998 was $260 thousand, 1.1% of total loans, compared to $238
thousand, or 1.1% of total loans, at December 31, 1997 and $240 thousand or 1.2%
at June 30, 1997. On a monthly basis, Guaranty Bank management performs an
analysis to determine the adequacy of the reserve for possible loan losses. A
provision of 1% - 1.25% of total loans has been deemed to be adequate. In the
event that a deficiency exists, the Bank will increase the actual loan loss
reserve to a satisfactory level.
INCOME TAXES
Bancshares has a net operating loss carryforward at December 31, 1997 of
approximately $670 thousand after adjustment for gain on receipt of proceeds
from resolution of litigation during 1997. See "Subsequent Events". Bancshares'
management estimates that, beginning in 1999, Bancshares will have no net
operating losses remaining and that it will, therefore, begin to pay federal
income tax during 1999.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Neither Bancshares nor Guaranty Bank is party to any litigation other than
routine litigation arising from regular business activities incident to
furnishing financial services.
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<PAGE> 9
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
(3) (i) Articles of Incorporation. See Exhibit 2.1 to
Form 10-SB filed by Great Guaranty Bancshares,
Inc. April 30, 1997, as amended by Amendment No. 1
filed July 1, 1997, which exhibit is incorporated
herein by reference.
(ii) Bylaws. See Exhibit 2.1 for Form 10-SB filed by
Great Guaranty Bancshares, Inc. April 30, 1997, as
amended by Amendment No. 1 filed July 1, 1997,
which exhibit is incorporated herein by reference.
(4) Instrument defining the rights of Security Holders,
Including Indentures. See Exhibits 3.1 (Form of Stock
Certificate for Common Stock), 3.2 (Stock Redemption
Agreement) and 3.3 (Written Agreement with Federal Reserve
Board) to Form 10-SB filed by Great Guaranty Bancshares,
Inc. April 30, 1997, as amended by Amendment No. 1 filed
July 1, 1997, which exhibits are incorporated herein by
reference.
(27) Financial Data Schedule.
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the period for
which this report is filed.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned thereunto duly
authorized.
GREAT GUARANTY BANCSHARES, INC.
Dated: July 31, 1998 By: /s/Daniel R. Domingue, Jr.
-----------------------------------------
Daniel R. Domingue, Jr.
Authorized Representative
of Great Guaranty Bancshares, Inc. and
President and CEO of Guaranty Bank &
Trust Company
By: /s/J. Wade O'Neal, III
-----------------------------------------
J. Wade O'Neal, III
Acting Chief Financial Officer
of Great Guaranty Bancshares, Inc. and
Senior Vice President of Guaranty Bank &
Trust Company
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<PAGE> 10
EXHIBIT INDEX
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<S> <C>
Exhibit (27) Financial Data Schedule
</TABLE>
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<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 2,066,773
<INT-BEARING-DEPOSITS> 1,311,470
<FED-FUNDS-SOLD> 1,450,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 12,680,191
<INVESTMENTS-CARRYING> 12,680,191
<INVESTMENTS-MARKET> 12,680,191
<LOANS> 23,010,235
<ALLOWANCE> 260,175
<TOTAL-ASSETS> 41,924,064
<DEPOSITS> 37,681,020
<SHORT-TERM> 1,280,620
<LIABILITIES-OTHER> 258,461
<LONG-TERM> 0
0
0
<COMMON> 1,075,305
<OTHER-SE> 1,628,658
<TOTAL-LIABILITIES-AND-EQUITY> 41,924,064
<INTEREST-LOAN> 1,033,200
<INTEREST-INVEST> 429,924
<INTEREST-OTHER> 81,983
<INTEREST-TOTAL> 1,545,107
<INTEREST-DEPOSIT> 546,755
<INTEREST-EXPENSE> 598,993
<INTEREST-INCOME-NET> 946,114
<LOAN-LOSSES> 19,788
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 806,588
<INCOME-PRETAX> 298,215
<INCOME-PRE-EXTRAORDINARY> 196,822
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 196,822
<EPS-PRIMARY> 1.37
<EPS-DILUTED> 1.37
<YIELD-ACTUAL> 0
<LOANS-NON> 22,985
<LOANS-PAST> 263,695
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 0
<CHARGE-OFFS> 184
<RECOVERIES> 2,200
<ALLOWANCE-CLOSE> 0
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
