<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 September 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 SEPTEMBER
30, 1998
<PAGE> 2
GREAT GUARANTY BANCSHARES, INC.
FORM 10-QSB
SEPTEMBER 30, 1998
INDEX
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION PAGE
REFERENCE
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<S> <C>
ITEM 1. FINANCIAL STATEMENTS 1
Consolidated Balance Sheets as of September 30, 1998 1
Consolidated Statements of Income for the nine months
and for the quarters ended September 30, 1998 and 1997 2
Consolidated Statements of Cash Flows for the nine months ended September 30,
1998 and 1997 3
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION 5
Material Changes in Financial Condition 5
Nine Months Ended September 30, 1998 Compared with Nine Months Ended
September 30, 1997 5
September 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>
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
GREAT GUARANTY BANCSHARES, INC.
CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C>
ASSETS
Cash and due from banks $ 1,759,145
Interest-bearing deposits with banks 2,744,083
Federal Funds Sold 1,025,000
Investments securities - available for sale 13,226,780
Restricted investments in equity securities 223,800
Loans, net of allowance for loan losses of $274,263 21,691,199
Properties and equipment, net 602,100
Accrued interest receivable 325,155
Other Assets 139,484
------------
TOTAL ASSETS $ 41,736,746
============
LIABILITIES AND SHAREHOLDER'S EQUITY
LIABILITIES
Demand deposits $ 6,157,295
NOW accounts 6,044,379
Savings deposits 8,007,885
Time deposits, $100,000 and over 2,080,458
Other time deposits 15,012,073
------------
Total deposits $ 37,302,090
Notes Payable 1,250,598
Accrued expenses and other liabilities 340,307
Federal Funds Purchased 0
------------
Total liabilities $ 38,892,995
------------
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 (731,556)
Unrealized gain (loss) on securities available for
sale, net of tax of ($25,763) 88,531
------------
Total shareholders' equity $ 2,843,751
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 41,736,746
============
</TABLE>
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GREAT GUARANTY BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended Sept. 30, Three Months Ended Sept. 30,
1998 1997 1998 1997
----------------------------- ----------------------------
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans $ 1,549,310 $ 1,416,030 $ 516,110 $ 454,405
Interest on investment securities 626,738 929,643 196,814 295,926
Interest on Federal Funds sold 90,268 22,954 33,507 7,120
Interest on Deposits with Banks 58,075 25,631 32,853 4,873
----------- ----------- ----------- -----------
Total interest income $ 2,324,391 $ 2,394,258 $ 779,284 $ 762,324
----------- ----------- ----------- -----------
INTEREST EXPENSE
Interest on notes payable 76,956 260,636 24,718 73,353
Interest on deposits 834,443 797,459 287,688 271,361
----------- ----------- ----------- -----------
Total interest expense $ 911,399 $ 1,058,095 $ 312,406 $ 344,714
----------- ----------- ----------- -----------
NET INTEREST INCOME $ 1,412,992 $ 1,336,163 $ 466,878 $ 417,610
PROVISION (CREDIT) FOR LOAN LOSSES 24,288 (14,500) 4,500 0
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES $ 1,388,704 $ 1,350,663 $ 462,378 $ 417,610
NON INTEREST INCOME
Service charges on deposit accounts $ 239,301 $ 228,009 $ 76,939 $ 80,628
Other service charges and fees 7,635 9,612 1,954 3,629
Net investment securities gains (losses) 0 (1,263) 0 (1,263)
Other income 11,094 9,854 660 102
----------- ----------- ----------- -----------
$ 258,030 $ 246,212 $ 79,553 $ 83,096
----------- ----------- ----------- -----------
NON INTEREST EXPENSE
Salaries and employee benefits $ 675,381 $ 688,828 $ 232,171 $ 237,320
Occupancy expense 166,033 173,543 55,857 62,193
Data processing 142,162 107,916 46,579 36,622
Legal fees 13,468 73,939 5,093 7,565
Other expense 225,926 295,461 76,682 29,247
----------- ----------- ----------- -----------
$ 1,222,970 $ 1,339,687 $ 416,382 $ 372,947
----------- ----------- ----------- -----------
INCOME BEFORE INCOME TAXES
AND EXTRAORDINARY ITEMS $ 423,764 $ 257,188 $ 125,549 $ 127,759
INCOME TAX EXPENSE 144,080 77,156 42,687 38,156
----------- ----------- ----------- -----------
NET INCOME BEFORE EXTRAORDINARY
ITEMS $ 279,684 $ 180,032 $ 82,862 $ 89,603
EXTRAORDINARY ITEM-GAIN FROM LITIGATION
NET OF TAX OF $458,688 0 1,759,017 0 0
----------- ----------- ----------- -----------
NET INCOME $ 279,684 $ 1,939,049 $ 82,862 $ 89,603
=========== =========== ----------- -----------
PER COMMON SHARE DATA:
NET INCOME $ 1.95 $ 13.52 $ .58 $ .62
----------- ----------- ----------- -----------
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>
Nine months ended Sept. 30,
----------------------------
1998 1997
----------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 279,684 $ 1,939,049
Adjustments to reconcile net income to net
cash provided by operating activities:
Extraordinary Item (gross amount) 0 (2,217,705)
Depreciation 96,558 83,387
Provision for loan losses 24,288 (14,500)
Deferred tax 144,080 497,688
Stock dividends received (9,600) (8,900)
Net investment securities (gains) losses 0 1,263
(Increase) decrease in accrued income and other assets (188,849) 65,222
Increase (decrease) in accrued expenses and other liabilities 204,770 334,442
----------- -----------
Net cash provided by (used in) operating activities $ 550,931 $ 679,946
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales/maturities of investment securities
Available for sale $ 4,111,591 $ 4,125,093
Purchase of investment securities
Available for sale (3,009,695) (893,210)
Net change in:
Interest bearing deposits with banks (2,546,083) 991,571
Federal Funds Sold 100,000 (950,000)
Loans 727,580 (4,355,394)
Purchase of equipment and building improvements (18,569) (68,345)
----------- -----------
Net cash (used in) provided by investing activities $ (635,176) $(1,150,285)
----------- -----------
</TABLE>
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<PAGE> 6
GREAT GUARANTY BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(CONTINUED)
(UNAUDITED) PAGE 2 OF 2
<TABLE>
<CAPTION>
Nine months ended Sept. 30,
------------------------------
1998 1997
------------------------------
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in non-interest-bearing
demand, savings and NOW accounts $ (79,925) $ 95,444
Net increase (decrease) in time deposit 279,782 520,037
Payments on stockholder notes payable 0 (200,000)
Payments on other notes payable (88,654) (1,581,401)
Net change in federal funds purchased and
Repurchase Agreement Sold (240,659) (700,000)
Proceeds from litigation - extraordinary item 0 2,217,705
Redemption of preferred stock 0 (237,117)
Dividends Paid (35, 843) 0
----------- -----------
Net cash provided by (used in) financing activities $ (165,299) $ 114,668
----------- -----------
NET INCREASE (DECREASE) IN CASH
AND DUE FROM BANKS (249,544) (355,671)
CASH AND DUE FROM BANKS AT BEGINNING
OF PERIOD 2,008,689 2,406,805
----------- -----------
CASH AND DUE FROM BANKS AT END
OF PERIOD $ 1,759,145 $ 2,051,134
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION
Cash paid during the year for:
Interest $ 890,150 $ 1,042,426
============================
Income taxes $ 20,000 $ 0
============================
</TABLE>
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<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
MATERIAL CHANGES IN FINANCIAL CONDITION.
NINE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED WITH NINE MONTHS ENDED
SEPTEMBER 30, 1997.
Balance Sheet
Total Assets at September 30, 1998 were $41.7 million compared to $42.4
million at September 30, 1997. Total loans increased to $21.7 million at
September 30, 1998 from $21.2 million at September 30, 1997, while securities
decreased to $13.2 million from $16.6 million and deposits increased to $37.3
million from $36.8 million as of those respective dates. Shareholders' equity in
Bancshares increased to $2.8 million at September 30, 1998 from $2.5 million at
September 30, 1997. Bancshares' shareholders' equity in its wholly owned bank
subsidiary, Guaranty Bank & Trust Company ("Guaranty Bank"), was $2.8 million at
September 30, 1998, down from $3.7 million at September 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 nine months ended September 30, 1998 was $280 thousand
compared to $180 thousand during the same period in 1997. Interest income
decreased to $2.324 million for the nine month period ended September 30, 1998
compared to $2.394 million for the same period in 1997. Non-interest income
totaled $258 thousand for the nine month period, compared to $246 thousand for
the same period in 1997. Interest expense decreased to $911 thousand during the
nine months ended September 30, 1998, down from $1.058 million during the same
period in 1997, due primarily to reduction of Bancshares' debt. Non-interest
expense decreased to $1.223 million from $1.340 million 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 dividends
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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<PAGE> 8
SEPTEMBER 30, 1998 COMPARED WITH DECEMBER 31, 1997
Balance Sheet
Total assets increased to $41.7 million at September 30, 1998, an increase
of .7% from $41.4 million at December 31, 1997. Total loans decreased by $752
thousand, or 3.35%, to $21.7 million at September 30, 1998 compared to $22.4
million at December 31, 1997 primarily as a result of a key lending officer of
Guaranty Bank moving to a newly formed competitor in the community. Securities
declined $1.1 million to $13.2 million at September 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 $.2 million to $37.3 million at September 30,
1998, a .5% increase from $37.1 million at December 31, 1997. Non-interest
bearing deposits decreased at a 9.6% rate, compared to a 2.7% growth in interest
bearing deposits. The decrease of non-interest bearing deposits can be
attributed to the loss of the loans mentioned above and their corresponding
demand deposit balances. During the first nine months of 1998, shareholders'
equity in Bancshares increased to $2.8 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 $2.8
million at September 30, 1998.
LOAN LOSS PROVISION
As a result of management's assessment of the adequacy of the allowance for
possible loan losses, and the recovery of previous charge-offs, Guaranty Bank
recorded an increase in it's loan loss provision of $35.9 thousand at September
30, 1998. The allowance for possible loan losses at September 30, 1998 was $274
thousand, 1.25% of total loans, compared to $238 thousand, or 1.1% of total
loans, at December 31, 1997 and $240 thousand or 1.1% at September 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 1.25% 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: October 30, 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
Exhibit (27) Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 1,759,145
<INT-BEARING-DEPOSITS> 2,744,083
<FED-FUNDS-SOLD> 1,025,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 13,226,780
<INVESTMENTS-CARRYING> 13,226,780
<INVESTMENTS-MARKET> 13,226,780
<LOANS> 21,691,199
<ALLOWANCE> 274,263
<TOTAL-ASSETS> 41,736,746
<DEPOSITS> 37,302,090
<SHORT-TERM> 1,250,598
<LIABILITIES-OTHER> 340,307
<LONG-TERM> 0
0
0
<COMMON> 1,075,305
<OTHER-SE> 1,768,446
<TOTAL-LIABILITIES-AND-EQUITY> 41,736,746
<INTEREST-LOAN> 1,549,310
<INTEREST-INVEST> 626,738
<INTEREST-OTHER> 148,343
<INTEREST-TOTAL> 2,324,391
<INTEREST-DEPOSIT> 834,443
<INTEREST-EXPENSE> 911,399
<INTEREST-INCOME-NET> 1,412,992
<LOAN-LOSSES> 24,288
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 1,222,970
<INCOME-PRETAX> 423,764
<INCOME-PRE-EXTRAORDINARY> 279,684
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 279,684
<EPS-PRIMARY> 1.95
<EPS-DILUTED> 1.95
<YIELD-ACTUAL> 0
<LOANS-NON> 0
<LOANS-PAST> 221,938
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 0
<CHARGE-OFFS> 3,038
<RECOVERIES> 14,643
<ALLOWANCE-CLOSE> 0
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
