<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14a INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
Great Guaranty Bancshares, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------------------
(3) Filing Party:
-----------------------------------------------------------------------
(4) Date Filed:
-----------------------------------------------------------------------
<PAGE> 2
GREAT GUARANTY BANCSHARES, INC.
175 NEW ROADS STREET
NEW ROADS, LOUISIANA 70760
NOTICE OF 1998 ANNUAL MEETING OF SHAREHOLDERS
To the shareholders of Great Guaranty Bancshares, Inc.:
PLEASE TAKE NOTICE that the 1998 Annual Meeting of Shareholders of Great
Guaranty Bancshares, Inc. will be held at the offices of Guaranty Bank & Trust
Company, 175 New Roads Street, New Roads, Louisiana on Wednesday, October 7,
1998 at 10:00 a.m. The Annual Meeting is being held to consider and act upon:
(1) the election of seven (7) persons to the Board of Directors to serve
until the 1999 Annual Meeting of Shareholders or until each of their successors
is duly elected and qualified; and
(2) such other business as may properly come before the Annual Meeting or
any adjournment thereof.
The Board of Directors has FIXED THE CLOSE OF BUSINESS ON AUGUST 12, 1998
as the record date for the determination of shareholders entitled to notice of,
and to vote at, the Annual Meeting. You are cordially invited to attend the
Annual Meeting, but if you do not expect to attend, PLEASE EXECUTE, DATE AND
RETURN the enclosed proxy card in the enclosed postage-paid envelope as soon as
possible to ensure that your shares will be voted at the Annual Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ HUMPHREY T. OLINDE, JR.
Humphrey T. Olinde, Jr.
Chairman of the Board
New Roads, Louisiana
September 4, 1998
IMPORTANT
TO ASSURE YOUR REPRESENTATION AT THE MEETING, PLEASE DATE, SIGN AND MAIL
PROMPTLY THE ENCLOSED PROXY FOR WHICH A RETURN ENVELOPE IS PROVIDED.
<PAGE> 3
GREAT GUARANTY BANCSHARES, INC.
175 NEW ROADS STREET
NEW ROADS, LOUISIANA 70760
PROXY STATEMENT
INTRODUCTION
The accompanying Proxy is solicited on behalf of the Board of Directors of
Great Guaranty Bancshares, Inc., a Louisiana corporation ("Bancshares"), for use
at the 1998 Annual Meeting of Shareholders of Bancshares, (the "Annual Meeting")
to be held at 10:00 a.m. on Wednesday, October 7, 1998, at the offices of
Guaranty Bank & Trust Company, 175 New Roads Street, New Roads, Louisiana, and
any postponements or adjournments thereof. This Proxy Statement is being
furnished in connection with the Annual Meeting. Bancshares anticipates that
this Proxy Statement and the accompanying Proxy will be first sent or given to
shareholders of Bancshares on approximately August 7, 1998.
Shareholders are being asked at the Annual Meeting to elect the seven (7)
persons identified below to the Bancshares Board of Directors to serve until the
1999 Annual Meeting of Shareholders or until their successors are duly elected
and qualified.
The Board of Directors has fixed the close of business on August 12, 1998
as the record date (the "Record Date") for the determination of the shareholders
entitled to notice of, and to vote at, the Annual Meeting. On the Record Date,
Bancshares had issued and outstanding and entitled to vote 143,374 shares of its
common stock, $7.50 par value (The "Common Stock"). The Common Stock is the only
outstanding class of voting securities of Bancshares. Each outstanding share of
Common Stock will be entitled to one vote on each matter considered at the
Annual Meeting. There is no cumulative voting. The enclosed form of Proxy
provides a means for a shareholder to vote for all the nominees listed for
director or to withhold authority to vote for one or more of those nominees. Any
shareholder giving a Proxy has the power to revoke it at any time before it is
exercised by providing written notice of revocation to the Secretary of
Bancshares or by filing a Proxy of a later date with the Secretary of
Bancshares. The holders of a majority of the total voting power of the
outstanding shares of Common Stock as of the Record Date, whether present in
person or represented by proxy, will constitute a quorum for the transaction of
business at the Annual Meeting. The shares held by each shareholder who signs
and returns the enclosed form of Proxy will be counted for purposes of
determining the presence of a quorum at the Annual Meeting, whether or not the
shareholder abstains on all or any matter to be acted on at the Annual Meeting.
Unless the shareholder specifies otherwise, a Proxy in the accompanying form
which is properly executed and returned will be voted FOR the election as
directors of the nine nominees listed in this Proxy Statement.
The cost of preparing, assembling, printing and mailing this Proxy
Statement, the form of Proxy, and the Notice of Annual Meeting of Shareholders
will be paid by Bancshares. In addition to solicitation by use of the mail,
solicitation of Proxies may also be made personally by directors, officers and
employees of Bancshares, and no additional compensation will be paid to such
individuals for the solicitation services.
The principal executive offices of Bancshares are located at 175 New Roads
Street, New Roads, Louisiana 70760, and its telephone number is (504) 638-8621.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of June 30, 1998, the following persons were known by Bancshares to be
the beneficial owners of more than five (5%) percent of the outstanding share of
voting securities of Bancshares:
<TABLE>
<CAPTION>
Name and Address of
Title of Class Beneficial Owner Shares Beneficially Owned Percent of Class
-------------- ------------------- ------------------------- ----------------
<S> <C> <C> <C>
Common Stock H.T. Olinde, Jr.(1) 12,488 8.71%
P.O. Box 440
New Roads, La. 70760
</TABLE>
- ----------
(1) Includes shares voted by Mr. Olinde but owned by Brown Brokerage Co. (369
shares) and B. Olinde & Sons (3,036 shares).
<PAGE> 4
SECURITY OWNERSHIP OF MANAGEMENT
The following table indicates the beneficial ownership as of June 30,1 998,
of Bancshares voting securities by (i) each director and each nominee for
director of Bancshares, (ii) the chief executive officer of Guaranty Bank &
Trust Co., the wholly owned subsidiary and principal asset of Bancshares
("Guaranty Bank"), and (iii) all directors, nominees for director and executive
officers of Bancshares and Guaranty Bank as a group:
<TABLE>
<CAPTION>
Name and Position Shares Beneficially Owned Percent of Class
<S> <C> <C>
Joseph L. Dabadie, Director 606 *
Dr. Donald Doucet 0 **
Craig A. Major, Director 436 *
Sylvester Muckleroy 0 **
H. T. Olinde, Jr., Director 12,488 8.71%
J. Layne Orillion, Director 150 *
F. Gregory Roy, Director 348 *
Daniel R. Domingue, Jr., Chief
Executive Officer of Guaranty Bank 312 *
Directors and Executive Officers as a
group of (7) persons 14,806 10.03%
</TABLE>
- ----------
* less than 1.0%
** in accordance with Louisiana law, not less than 133 shares will be
purchased upon election as director.
ELECTION OF DIRECTORS
The number of directors to be elected at the meeting to constitute the
Board of Directors has been fixed at seven (7), each to be elected for a term of
one year and to serve until the next annual meeting of shareholders or until
their successors shall be elected and qualified. The enclosed form of Proxy
confers discretionary authority with respect to the election of directors, but
no authority under the Proxy will be exercised to vote for the election of any
person as a director, other than the persons named in this Proxy Statement who
have been nominated by the present Board of Directors, unless for some reason
not presently known, one or more of such nominees should become unavailable. In
such event, it is intended that the Proxy would be voted for a substitute
nominee or nominees who would be designated by the Board of Directors prior to
the shareholders' meeting. In order to be elected a director, a nominee must
receive a plurality of the votes cast by the holders of Common Stock.
Of the nominees for director, Messrs Dabadie, Major, Olinde, Orillion and
Roy are present directors of Bancshares, and each of the nominees was elected by
shareholders' vote at the meeting of shareholders held on August 10, 1993; none
of Messrs. Doucet, and Muckleroy have previously served as director of
Bancshares. The name and age, principal occupation or employment, and other data
regarding each nominee, based on information received from the respective
nominees, are set forth below:
Joseph L. Dabadie, Jr., age 71, has been a director since 1993. Mr. Dabadie
retired from the U.S. Army in 1988 with the rank of Brigadier General, and since
his retirement has worked as a safety director for Reliable Production, Inc.
Dr. Donald Doucet, age 41, is a nominee for director. Dr. Doucet has been a
practicing physician since 1985 specializes in Internal Medicine.
Craig A. Major, age 51, has been a director since 1993. Mr. Major has been
a cattle rancher for over twenty- five years and is the owner of Major's Truck
Stop since 1991. Mr. Major oversees various family real-estate investments as
well as his own.
Sylvester Muckleroy, age 73, is a nominee for director. Mr. Muckleroy
retired from the Pointe Coupee Parish School Board in 1988. Mr. Muckleroy is the
Mayor of the City of New Roads and is currently serving his second term.
H.T. Olinde, Jr., age 70, was a founder of Guaranty Bank in 1957 and serves
as Chairman of the Board. Mr. Olinde served as a director from 1957 until his
resignation in 1984 and was re-elected director in 1993. Mr. Olinde is a
shareholder and executive officer of B. Olinde & Sons, Inc., which owns and
operates retail furniture stores, a wholesale beer distributorship, and various
property interests.
<PAGE> 5
J. Layne Orillion, age 51, has been a director since 1993. Mr. Orillion is
President and owner of Lo-Vac, Inc., which he founded in 1982.
F. Gregory Roy, age 46, has been a director since 1993. Mr. Roy has been a
50% owner of P & G Roy Farms, Inc., has been farming since 1978.
EXECUTIVE OFFICERS
Bancshares has no executive officers or employees. The executive officers
of Guaranty Bank during the year ended December 31, 1997, and through June 30,
1998, unless otherwise indicated are as follows:
Beverly B. David, age 54, is a Vice-President and head of bank operations
and has served in that capacity since 1989. Mrs. David also serves as the bank's
Cashier and Security Officer.
Daniel R. Domingue, Jr., age 53, has served as the Bank's President and
Chief Executive Officer and as a director of Guaranty Bank since 1994. Prior to
joining Guaranty Bank, Mr. Domingue served for five years as a President and
Chief Executive Officer of Bank of Lafayette. Mr. Domingue has been in banking
for over twenty-four years.
R. Keith Miller, age 47, served during 1997 as Executive Vice President and
as the Bank's Senior Lending Officer. Prior thereto, Mr. Miller had been an
executive officer since joining Guaranty Bank in 1982. Mr. Miller resigned from
Guaranty Bank, effective February 23, 1998.
J. Wade O'Neal, age 41, has been employed by Guaranty Bank for eighteen
years and has since 1989, served as Vice President and head of Loan
Administration. Mr. O'Neal was named Senior Vice President and Senior Lending
Officer in April 1998. Mr. O'Neal also serves as the Bank's Compliance Officer
and Secretary to the Board of Guaranty Bank and as Treasurer of Bancshares.
Larry J. Roberts, age 58, served during 1997 as Senior Vice President and
Chief Financial Officer and was employed by Guaranty Bank for twenty-six years
prior to his retirement from Guaranty Bank, effective April 17, 1998. Mr.
Roberts also served as Secretary to the Board of Guaranty Bank and as Treasurer
of Bancshares.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Various directors and executive officers of Guaranty Bank and Bancshares,
and their respective family members and affiliated firms were customers of and
have had transactions with Guaranty Bank during the past two years in the
ordinary course of business. Similar transactions may be expected to take place
in the ordinary course of business in the future. All outstanding loans and
commitments included in such transactions were made on substantially the same
terms, including interest rates and collateral, as those prevailing at the time
from comparable transactions with other persons and did not, in the opinion of
management, involve more than normal risks of collectibility or present other
unfavorable features.
Since the beginning of 1996, no transaction between Guaranty Bank or
Bancshares and any executive officer, director, nominee for director or holder
of more than 5% of the capital stock of Bancshares has involved an amount in
excess of $60,000 except as indicated below, for which transactions the
following information is provided: (i) name of the person; (ii) relationship to
Bancshares/Guaranty Bank; (iii) nature of the transaction and (iv) the amount
involved in the transaction.
(i) Craig A. Major; (ii) director of Bancshares; (iii) personal loans to or
endorsed by Mr. Major; (iv) a total of $61,599.60 outstanding at June 30, 1998,
with $9,431.40 in available commitments.
(i) F. Gregory Roy; (ii) director of Bancshares; (iii) loans and lines of
credit commitments to Mr. Roy and affiliated entities; (iv) a total of
$629,830.29 outstanding at June 30, 1998 with $68,494.87 in available
commitments.
MEETINGS AND COMMITTEES
During the year ended December 31, 1997, twelve (12) regular meetings of
the Board of Directors were held. All nominees for re-election attended at least
75% of such meetings. Directors receive no compensation for their service on the
Board of Directors or any committees thereof.
<PAGE> 6
The Board of Directors has no nominating, compensation or similar
committees performing such functions at this time. All of the current members of
the Board of Directors presently serve on the Audit Committee. The Audit
Committee met one (1) time in 1997. The function of the Audit Committee is to
review the engagement of the independent accountants and the scope and timing of
the audit and non-audit services to be rendered by independent accountants;
review with the independent accountants and management, Bancshares policies and
procedures with respect to internal auditing, accounting and financial controls;
review the report of the independent accountants upon completion of their audit;
and make reports to the full Board of Directors on its activities.
EXECUTIVE COMPENSATION
Daniel R. Domingue, Jr., serves as the authorized representative of
Bancshares and as President and Chief Executive Officer of Guaranty Bank. No
executive officer or employee of Bancshares or Guaranty Bank earned aggregate
compensation during the year 1997 exceeding $100,000.
<TABLE>
<CAPTION>
Name of Individual and Position Year Salary Bonus Other
<S> <C> <C> <C> <C>
Daniel R. Domingue, Jr. 1995 $75,000 $ 7,500 $ 7,125(l)
Guaranty Bank President and CEO 1996 $75,000 $15,000 $ 8,250(l)
1997 $75,000 $ 7,500 $10,990(l)
</TABLE>
- ----------
(l) Includes living allowance, Bank's 401(k) matching contribution and
incentive and vacation compensation.
401(k) Plan. Under Guaranty Bank's 401(k) Plan, officers and employees of
the Bank may make contributions to the Plan with pre-tax salary reductions. The
Bank matches contributions up to three (3%) percent of the contributing
employee's gross salary.
AUDITOR SERVICES
Postlethwaite & Netterville is the accounting firm selected by the Board of
Directors for 1998. A representative of the firm will not be present at the 1998
Annual Meeting of Shareholders.
SHAREHOLDER PROPOSALS
Any shareholder's proposal to be considered by Bancshares for inclusion in
the 1999 Annual Meeting of Shareholders proxy material must be submitted in
accordance with applicable regulations of the Securities and Exchange Commission
and received by Bancshares at its principal executive offices no later than
May 6, 1999.
OTHER MATTERS
The Board of Directors knows of no other matters which may properly or are
likely to be brought before the meeting. However, if any matters are properly
brought before the meeting, the persons named in the enclosed Proxy will vote
thereon as the Board of Directors recommends.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ F. GREGORY ROY
F. Gregory Roy, Secretary
New Roads, Louisiana
September 4, 1998
<PAGE> 7
GREAT GUARANTY BANCSHARES, INC.
NEW ROADS, LOUISIANA
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996
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<PAGE> 8
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<PAGE> 9
C O N T E N T S
<TABLE>
<CAPTION>
Page
----
<S> <C>
INDEPENDENT AUDITORS' REPORT 1
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
December 31, 1997 and 1996 2 - 3
CONSOLIDATED STATEMENTS OF INCOME
Years ended December 31, 1997, 1996 and 1995 4 - 5
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Years ended December 31, 1997, 1996 and 1995 6 - 7
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended December 31, 1997, 1996 and 1995 8 - 9
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 10 - 30
</TABLE>
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<PAGE> 10
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<PAGE> 11
[P&N LETTERHEAD]
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
Great Guaranty Bancshares, Inc.
New Roads, Louisiana
We have audited the accompanying consolidated statements of financial condition
of Great Guaranty Bancshares, Inc. and Subsidiary as of December 31, 1997 and
1996, and the related consolidated statements of income, changes in
stockholders' equity and cash flows for each of the years during the three year
period ended December 31, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Great Guaranty
Bancshares, Inc. and Subsidiary as of December 31, 1997 and 1996, and the
results of their operations and their cash flows for each of the years during
the three year period ended December 31, 1997 in conformity with generally
accepted accounting principles.
/s/ POSTLETHWAITE & NETTERVILLE
Baton Rouge, Louisiana
February 25, 1998
-1-
<PAGE> 12
[THIS PAGE IS INTENTIONALLY LEFT BLANK]
<PAGE> 13
GREAT GUARANTY BANCSHARES, INC.
NEW ROADS, LOUISIANA
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
DECEMBER 31, 1997 AND 1996
ASSETS
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
Cash and due from banks $ 2,008,689 $ 2,406,805
Interest-bearing deposits with banks 198,000 1,288,571
Federal funds sold 1,125,000 --
Investment Securities
Available-for-sale 14,277,636 19,761,011
Investments in restricted equity securities 214,200 202,100
Loans receivable, net of allowance for loan losses
of $238,371 and $254,819, respectively 22,443,067 16,823,712
Accrued interest receivable 329,130 355,583
Premises and equipment, net 680,119 664,854
Other assets 90,739 547,695
----------- -----------
TOTAL ASSETS $41,366,580 $42,050,331
=========== ===========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
-2-
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<PAGE> 14
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
1997 1996
------------ ------------
<S> <C> <C>
LIABILITIES
Demand deposits $ 6,735,334 $ 6,304,731
NOW deposits 5,388,446 5,053,484
Savings deposits 8,165,704 9,168,044
Time deposits, $100,000 and over 1,799,852 1,168,073
Other time deposits 15,012,896 14,539,820
------------ ------------
Total deposits 37,102,232 36,234,152
Notes payable 1,339,252 4,376,531
Accrued expenses and other liabilities 135,568 168,587
Federal funds purchased and securities sold
under agreements to repurchase 240,659 700,000
Dividends payable 35,843 --
------------ ------------
Total liabilities 38,853,554 41,479,270
------------ ------------
COMMITMENTS AND CONTINGENCIES -- --
STOCKHOLDERS' EQUITY
Preferred stock-Series A, no par; 500,000 shares authorized;
-0- and 24,462 shares issued and outstanding, respectively -- 126,037
Preferred stock-Series B, no par; 2,000,000 shares authorized;
-0- and 21,559 shares issued and outstanding, respectively -- 111,080
Common Stock - $7.50 par value, 500,000 shares
authorized; 143,374 shares issued and outstanding 1,075,305 1,075,305
Additional paid-in capital 2,411,471 2,411,471
Accumulated deficit (1,011,241) (3,151,760)
Net unrealized gain (loss) on securities available-for-sale,
net of tax of $19,314 and ($552), respectively 37,491 (1,072)
------------ ------------
Total stockholders' equity 2,513,026 571,061
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 41,366,580 $ 42,050,331
============ ============
</TABLE>
-3-
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<PAGE> 15
GREAT GUARANTY BANCSHARES, INC.
NEW ROADS, LOUISIANA
PAGE 1 OF 2
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans $ 2,017,513 $ 1,671,939 $ 1,485,824
Interest on investment securities 1,185,028 1,210,354 1,456,679
Interest on federal funds sold 35,485 105,250 53,622
Interest on deposits with banks 29,856 61,860 1,044
----------- ----------- -----------
Total interest income 3,267,882 3,049,403 2,997,169
----------- ----------- -----------
INTEREST EXPENSE
Interest on deposits 1,072,050 959,466 919,507
Interest on notes payable 266,465 396,691 311,423
Interest on federal funds purchased
and securities sold under agreements to repurchase 17,141 -- --
----------- ----------- -----------
Total interest expense 1,355,656 1,356,157 1,230,930
----------- ----------- -----------
NET INTEREST INCOME 1,912,226 1,693,246 1,766,239
Provision (credit) for loan losses (14,500) (15,000) (23,106)
----------- ----------- -----------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 1,926,726 1,708,246 1,789,345
----------- ----------- -----------
NON-INTEREST INCOME
Service charges on deposit accounts 305,781 342,481 342,179
Other service charges and fees 22,229 27,738 16,078
Other income 22,869 25,617 11,149
----------- ----------- -----------
Total non-interest income 350,879 395,836 369,406
----------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
-4-
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<PAGE> 16
GREAT GUARANTY BANCSHARES
NEW ROADS, LOUISIANA
PAGE 2 OF 2
CONSOLIDATED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995
<TABLE>
<CAPTION>
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
NON-INTEREST EXPENSES
Salaries and employee benefits $ 914,462 $ 887,540 $ 885,009
Occupancy expense 234,281 227,632 200,996
Data processing fees 103,215 87,501 77,686
Loan processing fees 91,722 83,489 76,453
Legal fees 103,254 107,884 319,105
Other expense 383,487 379,773 435,313
----------- ----------- -----------
Total non-interest expense 1,830,421 1,773,819 1,994,562
----------- ----------- -----------
INCOME BEFORE TAXES AND EXTRAORDINARY
ITEM 447,184 330,263 164,189
Income tax expense 131,215 113,192 (331,126)
----------- ----------- -----------
INCOME BEFORE EXTRAORDINARY ITEM 315,969 217,071 495,315
EXTRAORDINARY ITEM
Gain on forgiveness of debt (net of income tax of $294,953) 1,922,752 -- --
----------- ----------- -----------
NET INCOME 2,238,721 217,071 495,315
Premium paid on redemption of preferred stock 62,359 -- --
----------- ----------- -----------
NET INCOME AVAILABLE FOR COMMON
SHAREHOLDERS $ 2,176,362 $ 217,071 $ 495,315
=========== =========== ===========
PER COMMON SHARE DATA:
Income before extraordinary item $ 1.77 $ 1.51 $ 3.45
Extraordinary item 13.41 -- --
----------- ----------- -----------
NET INCOME PER COMMON SHARE $ 15.18 $ 1.51 $ 3.45
=========== =========== ===========
Average shares outstanding 143,374 143,374 143,374
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
-5-
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<PAGE> 17
GREAT GUARANTY BANCSHARES, INC.
NEW ROADS, LOUISIANA
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
Preferred Stock
-------------------------------------------------------
Series A Series B
------------------------ -------------------------
Shares Amount Shares Amount
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1994 -- $ -- 42,896 $ 219,200
Net income -- -- -- --
Preferred stock issued -- -- 3,125 17,917
Exchange of Class B stock (voting)
for Class A stock (non-voting) 24,462 126,037 (24,462) (126,037)
Change in unrealized gain (loss) on
securities available-for-sale -- -- -- --
--------- --------- --------- ---------
BALANCE, DECEMBER 31, 1995 24,462 126,037 21,559 111,080
Net income -- -- -- --
Change in unrealized gain (loss) on
securities available-for-sale -- -- -- --
--------- --------- --------- ---------
BALANCE, DECEMBER 31, 1996 24,462 126,037 21,559 111,080
Net income -- -- -- --
Redemption of preferred stock
at premium (24,462) (126,037) (21,559) (111,080)
Dividends declared -- -- -- --
Change in unrealized gain (loss)
on securities available-for-sale -- -- -- --
--------- --------- --------- ---------
BALANCE, DECEMBER 31, 1997 -- $ -- -- $ --
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
-6-
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<PAGE> 18
<TABLE>
<CAPTION>
Unrealized
Gain (Loss)
Common Stock Additional on Securities Total
--------------------------- Paid-in Accumulated Available- Stockholders'
Shares Amount Capital Deficit For-Sale Equity
----------- ----------- ----------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1994 143,374 $ 1,075,305 $ 2,411,471 $(3,864,146) $ (40,071) $ (198,241)
Net income -- -- -- 495,315 -- 495,315
Preferred stock issued -- -- -- -- -- 17,917
Exchange of Class B stock (voting)
for Class A stock (non-voting) -- -- -- -- -- --
Change in unrealized gain (loss) on
securities available-for-sale -- -- -- -- 129,825 129,825
----------- ----------- ----------- ----------- ----------- -----------
BALANCE, DECEMBER 31, 1995 143,374 1,075,305 2,411,471 (3,368,831) 89,754 444,816
Net income -- -- -- 217,071 -- 217,071
Change in unrealized gain (loss) on
securities available-for-sale -- -- -- -- (90,826) (90,826)
----------- ----------- ----------- ----------- ----------- -----------
BALANCE, DECEMBER 31, 1996 143,374 1,075,305 2,411,471 (3,151,760) (1,072) 571,061
Net income -- -- -- 2,238,721 -- 2,238,721
Redemption of preferred stock
at premium -- -- -- (62,359) -- (299,476)
Dividends declared -- -- -- (35,843) -- (35,843)
Change in unrealized gain (loss)
on securities available-for-sale -- -- -- -- 38,563 38,563
----------- ----------- ----------- ----------- ----------- -----------
BALANCE, DECEMBER 31, 1997 143,374 $ 1,075,305 $ 2,411,471 $(1,011,241) $ 37,491 $ 2,513,026
=========== =========== =========== =========== =========== ===========
</TABLE>
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<PAGE> 19
GREAT GUARANTY BANCSHARES, INC.
BATON ROUGE, LOUISIANA
PAGE 1 OF 2
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 2,238,721 $ 217,071 $ 495,315
Adjustments to reconcile net income to net
cash provided by (used in) operating activities
Depreciation 121,111 119,589 114,029
Provision for loan losses (14,500) (15,000) (23,106)
Deferred income tax expense (benefit) 131,215 113,192 (331,126)
Extraordinary item (1,922,752) -- --
Net amortization on investment premium\discounts 43,422 (4,708) 36,180
Write down of other real estate -- -- 46,128
Stock dividends received (12,100) (11,500) (11,400)
Net gain on sale of other real estate -- (24,204) (9,308)
Net investment securities gains (15,046) (4,293) --
(Increase) decrease in accrued income and other assets 119,115 (894) 107,522
(Decrease) in accrued expenses and other liabilities (33,019) (56,150) (1,495,570)
----------- ----------- -----------
Net cash provided by (used in) operating activities 656,167 333,103 (1,071,336)
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales/maturities/principal
paydowns of investment securities:
Held-to-maturity -- -- 5,200,201
Available-for-sale 9,937,654 9,044,870 --
Purchase of investment securities
Held-to-maturity -- -- (3,423,951)
Available-for-sale (4,497,700) (8,413,250) --
Net change in:
Interest-bearing deposits with banks 1,090,571 (1,288,571) 392,000
Federal funds sold (1,125,000) 1,825,000 (1,125,000)
Loans (5,604,855) (2,077,466) (2,854,106)
Purchase of equipment and building improvements (136,376) (79,595) (151,058)
Proceeds from sale of other real estate -- 195,281 374,000
----------- ----------- -----------
Net cash used in investing activities (335,706) (793,731) (1,587,914)
----------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
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<PAGE> 20
GREAT GUARANTY BANCSHARES, INC.
NEW ROADS, LOUISIANA
PAGE 2 OF 2
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in non-interest-bearing
demand,savings, and NOW accounts $ (236,777) $ 597,048 $ (698,095)
Net increase (decrease) in time deposits 1,104,855 647,849 (451,547)
Payments on bank notes payable (2,935,000) (700,524) (2,076,117)
Proceeds of issuance of notes payable -- -- 3,800,524
Net advances (repayments) on FHLB line of credit (110,453) (102,490) 1,156,198
Net changes in federal funds purchased and
securities sold - repurchase agreement (459,431) 700,000 --
Redemption of preferred stock (299,476) -- 17,917
Settlement proceeds 2,217,705 -- --
----------- ----------- -----------
Net cash provided by (used in) financing activities (718,577) 1,141,883 1,748,880
----------- ----------- -----------
Net increase (decrease) in cash and due from banks (398,116) 681,255 (910,370)
Cash and due from banks - beginning of year 2,406,805 1,725,550 2,635,920
----------- ----------- -----------
Cash and due from banks - end of year $ 2,008,689 $ 2,406,805 $ 1,725,550
=========== =========== ===========
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $ 1,409,434 $ 1,361,830 $ 1,506,382
=========== =========== ===========
Income taxes $ -- $ -- $ --
=========== =========== ===========
Non-cash investing and financing activities:
Stock dividends - FHLB $ 12,100 $ 11,500 $ 11,400
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
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<PAGE> 21
GREAT GUARANTY BANCSHARES, INC.
NEW ROADS, LOUISIANA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business
Great Guaranty Bancshares (the Company) is a bank holding company whose
principal activity is the ownership and management of its wholly-owned
subsidiary, Guaranty Bank and Trust (the Bank). The Bank generates
commercial (including agricultural), mortgage and consumer loans and
receives deposits from customers located primarily in Pointe Coupee Parish,
Louisiana, and the surrounding area. The Bank operates under a state bank
charter and provides full banking services. As a state bank, the Bank is
subject to regulation by the Louisiana Office of Financial Institutions and
the Federal Deposit Insurance Corporation.
The accounting and reporting policies of Great Guaranty Bancshares, Inc.
and Subsidiary conform to generally accepted accounting principles and the
prevailing practices within the banking industry. A summary of significant
accounting policies is as follows:
Basis of Presentation
The consolidated financial statements include the accounts of
Bancshares and its wholly-owned subsidiary, Guaranty Bank & Trust
Company (the Bank). The Bank operates and extends credit primarily in
and around Pointe Coupee Parish, Louisiana. All significant
intercompany accounts and transactions have been eliminated. Assets
held in an agency or fiduciary capacity are not assets of the Bank
and, accordingly, are not included in the accompanying consolidated
financial statements.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenue
and expenses during the reporting period.
The determination of the adequacy of the allowance for loan losses is
based on estimates that are particularly susceptible to significant
changes in the economic environment and market conditions. In
connection with the determination of the estimated losses on loans,
management obtains independent appraisals for significant collateral.
The Bank's loans are generally secured by specific items of collateral
including real property, consumer assets, and business assets.
Although the Bank has a diversified loan portfolio, a substantial
portion of its debtors' ability to honor their contracts is dependent
on local economic conditions in the agricultural industry.
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<PAGE> 22
GREAT GUARANTY BANCSHARES, INC.
NEW ROADS, LOUISIANA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Use of Estimates (continued)
While management uses available information to recognize losses on
loans, further reductions in the carrying amounts of loans may be
necessary based on changes in local economic conditions. In addition,
regulatory agencies, as an integral part of their examination process,
periodically review the estimated losses on loans. Such agencies may
require the Bank to recognize additional losses based on their
judgments about information available to them at the time of their
examination. Because of these factors, it is reasonably possible that
the estimated losses on loans may change materially in the near term.
However, the amount of the change that is reasonably possible cannot
be estimated.
Investment in Debt Securities
The Bank's investments in debt securities are classified into two
categories and accounted for as follows:
o Securities to be Held-to-Maturity. Consists of bonds, notes, and
debentures for which the Bank has the positive intent and ability
to hold to maturity. These securities are reported at cost,
adjusted for amortization of premiums and accretion of discounts
which are recognized in interest income using the interest method
over the period to maturity.
o Securities Available-for-Sale. Consists of bonds, notes and
debentures that are available to meet the Bank's operating needs.
These securities are reported at fair value as determined by
quoted market prices.
Declines in the fair value of individual held-to-maturity and
available-for-sale securities below their cost that are other than
temporary result in write-downs of the individual securities to their
fair value. The related write-downs are included in earnings as
realized losses.
Unrealized holding gains and losses, net of tax, on securities
available-for-sale are reported as a net amount in a separate
component of stockholders' equity until realized.
Realized gains and losses on the sale of securities are determined
using the specific-identification method.
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<PAGE> 23
GREAT GUARANTY BANCSHARES, INC.
NEW ROADS, LOUISIANA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Loans Receivable
Loans receivable that management has the intent and ability to hold
for the foreseeable future or until maturity or pay-off are reported
at their outstanding principal adjusted for any charge-offs, the
allowance for loan losses, and any deferred fees or costs on
originated loans and unamortized premiums or discounts on purchased
loans.
The accrual of interest on impaired loans is discontinued when, in
management's opinion, the borrower may be unable to meet payments as
they become due. When interest accrual is discontinued, all unpaid
accrued interest is reversed. Interest income is subsequently
recognized only to the extent cash payments are received.
The allowance for loan losses is increased by charges to income and
decreased by charge-offs (net of recoveries). Management's periodic
evaluation of the adequacy of the allowance is based on the Bank's
past loan loss experience, known and inherent risks in the portfolio,
adverse situations that may affect the borrower's ability to repay,
the estimated value of any underlying collateral, and current economic
conditions.
Foreclosed Real Estate
Real estate properties acquired through, or in lieu of, loan
foreclosure are to be sold and are initially recorded at the lower of
the loan value or fair value at the date of foreclosure. After
foreclosure, valuations are periodically performed by management and
the real estate is carried at the lower of carrying amount or fair
value less cost to sell. Revenue and expenses of the real estate and
changes in the valuation allowance are included in loss on foreclosed
real estate.
Bank premises and equipment
Bank premises and equipment are stated at cost less accumulated
depreciation which is computed using either straight-line or
accelerated methods over the estimated useful lives of the assets,
which range from three to 30 years.
Income Taxes
Deferred tax assets and liabilities are reflected at currently enacted
income tax rates applicable to the period in which the deferred tax
assets and liabilities are expected to be realized or settled. As
changes in tax laws or rates are enacted, deferred tax assets and
liabilities are adjusted through the provision for income taxes.
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<PAGE> 24
GREAT GUARANTY BANCSHARES, INC.
NEW ROADS, LOUISIANA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Earnings per share
Earnings per share are calculated on the basis of the weighted average
number of shares outstanding. Preferred stock dividends and premiums
paid for redemptions of preferred stock are deducted from net income
in performing the calculation.
Cash and cash equivalents
For purposes of reporting cash flows, cash and cash equivalents are
defined as those amounts included in the balance sheet caption "Cash
and due from banks."
Off-Balance Sheet Financial Instruments
In the ordinary course of business, the Bank has entered into
off-balance sheet financial instruments consisting primarily of
commitments to extend credit. Such financial instruments are recorded
in the financial statements when they are funded.
Fair Values of Financial Instruments
Statement of Financial Accounting Standards (SFAS) 107, Disclosures
about Fair Value of Financial Instruments, requires disclosure of fair
value information about financial instruments, whether or not
recognized in the balance sheet. In cases where quoted market prices
are not available, fair values are based on estimates using present
value or other valuation techniques. Those techniques are
significantly affected by the assumptions used, including the discount
rate and estimates of future cash flows. In that regard, the derived
fair value estimates cannot be substantiated by comparison to
independent markets and, in many cases, could not be realized in
immediate settlement of the instruments from its disclosure
requirements. Accordingly, the aggregate fair value amounts presented
do not represent the underlying value of Bancshares.
The following methods and assumptions were used by Bancshares in
estimating its fair value disclosures for financial instruments:
Cash and Cash Equivalents - The carrying amounts reported in the
balance sheets for cash and cash equivalents approximate those
assets' fair values.
Interest-bearing deposits in other banks - Fair values for
interest-bearing deposits in other banks are estimated using a
discounted cash flow analysis that applies interest rates
currently being offered on certificates to a schedule of
aggregated contractual maturities on such time deposits.
Investment Securities - Fair values for investment securities are
based on quoted market prices, where applicable. If quoted market
prices are not available, fair values are based on quoted market
prices of comparable instruments.
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<PAGE> 25
GREAT GUARANTY BANCSHARES, INC.
NEW ROADS, LOUISIANA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Fair Values of Financial Instruments (continued)
Loans Receivable - For variable-rate loans that reprice
frequently and have no significant change in credit risk, fair
values are based on carrying values. Fair values for certain
mortgage loans (e.g., one-to-four family residential), credit
card loans, and other consumer loans are based on quoted market
prices of similar loans sold in conjunction with securitization
transactions, adjusted for differences in loan characteristics.
Fair values for commercial real estate and commercial loans are
estimated using discounted cash flow analyses, using interest
rates currently being offered for loans with similar terms to
borrowers of similar credit quality. Fair values for impaired
loans are estimated using discounted cash flow analyses or
underlying collateral values, where applicable.
Deposit liabilities - The fair values disclosed for demand
deposits are, by definition, equal to the amount payable on
demand at the reporting date (that is, their carrying amounts).
The carrying amounts of variable-rate, fixed-term money market
accounts and certificates of deposit approximate their fair
values at the reporting date. Fair values for fixed-rate
certificates of deposit are estimated using a discounted cash
flow calculation that applies interest rates currently being
offered on certificates to a schedule of aggregated expected
monthly maturities on time deposits.
Short-term borrowings - The carrying amounts of federal funds
purchased, borrowings under repurchase agreements, and other
short-term borrowings maturing within 90 days approximate their
fair values. Fair values of other short-term borrowings are
estimated using discounted cash flow analyses based on the Bank's
current incremental borrowing rates for similar types of
borrowing arrangements.
Long-term debt - The fair values of the Company's long-term debt
are estimated using discounted cash flow analyses based on the
Company's current incremental borrowing rates for similar types
of borrowing arrangements.
Accrued interest - The carrying amount of accrued interest
payable approximates fair value.
Off-Balance Sheet Instruments - Fair values for off-balance sheet
lending commitments are based on fees currently charged to enter
into similar agreements, taking into account the remaining terms
of the agreements and the counterparties' credit standing.
Reclassification
Certain amounts in the 1996 and 1995 financial statements have been
reclassified to conform with the current year presentation.
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<PAGE> 26
GREAT GUARANTY BANCSHARES, INC.
NEW ROADS, LOUISIANA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. INVESTMENT SECURITIES
<TABLE>
<CAPTION>
December 31, 1997
-----------------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Available-for-Sale
U.S. Treasury & U. S. Agency $ 4,000,000 $ 21,720 $ -- $ 4,021,720
Mortgage-backed securities 8,343,883 79,460 (44,376) 8,378,967
Agency for International
Development bonds 1,876,949 -- -- 1,876,949
------------ ------------ ------------ ------------
$ 14,220,832 $ 101,180 ($ 44,376) $ 14,277,636
============ ============ ============ ============
Restricted Investments in
Equity Securities
Stock in Federal Home
Loan Bank, at cost $ 214,200 $ -- $ -- $ 214,200
============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
December 31, 1996
-----------------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Available-for-Sale
U.S. Treasury & U. S. Agency $ 8,200,023 $ 31,059 $ -- $ 8,231,082
Mortgage-backed securities 9,660,253 15,765 (48,448) 9,627,570
Agency for International
Development bonds 1,902,359 -- -- 1,902,359
------------ ------------ ------------ ------------
$ 19,762,635 $ 46,824 ($ 48,448) $ 19,761,011
============ ============ ============ ============
Restricted Investments in
Equity Securities
Stock in Federal Home
Loan Bank, at cost $ 202,100 $ -- $ -- $ 202,100
============ ============ ============ ============
</TABLE>
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<PAGE> 27
GREAT GUARANTY BANCSHARES, INC.
NEW ROADS, LOUISIANA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. INVESTMENT SECURITIES (continued)
Gross realized gains and losses on sales of available-for-sale securities
were as follows:
<TABLE>
<CAPTION>
Gains Losses
----- ------
<S> <C> <C>
1997 $18,863 $3,823
1996 4,295 --
1995 -- --
</TABLE>
Investments in restricted equity securities consist of stock of the Federal
Home Loan Bank. These investments' fair values are based on the
recoverability of their par value. The Bank is required to maintain an
investment balance in FHLB equal to 5% of its outstanding advances with the
Federal Home Loan Bank (see Note 6). These investments are pledged as
collateral against borrowings from the FHLB.
The amortized cost and estimated market value of debt securities at
December 31, 1997, by contractual maturity, are shown below. Expected
maturities may differ from contractual maturities because borrowers may
have the right to call or prepay obligations with or without call or
prepayment penalties.
<TABLE>
<CAPTION>
Securities Available-for-Sale
-----------------------------
Amortized Fair
Cost Value
----------- -----------
<S> <C> <C>
Due in one year or less $ 1,603,223 $ 1,603,347
Due from one year to five years 3,777,101 3,808,641
Due from five years to ten years -- --
Due after ten years 8,840,508 8,865,648
----------- -----------
$14,220,832 $14,277,636
=========== ===========
</TABLE>
For purposes of the maturity table, mortgage-backed securities, which are
not due at a single maturity date, have been allocated over maturity
groupings based on the weighted-average contractual maturities of
underlying collateral. The mortgage-backed securities may mature earlier
than their weighted-average contractual maturities because of principal
prepayments.
Investment securities with an approximate cost of $1,000,000 and $2,440,000
and an approximate fair value of $1,000,000 and $2,428,000 at December 31,
1997 and 1996, respectively, were pledged to secure public deposits and for
other purposes as required or permitted by law.
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<PAGE> 28
GREAT GUARANTY BANCSHARES, INC.
NEW ROADS, LOUISIANA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. LOANS
The components of loans in the statements of condition at December 31 were
as follows:
<TABLE>
<CAPTION>
(In Thousands)
----------------------
1997 1996
-------- --------
<S> <C> <C>
Commercial $ 939 $ 1,065
Commercial real estate 2,461 2,345
Residential real estate 13,627 9,572
Consumer 3,219 2,731
Agricultural 2,435 1,366
Less: Allowance for loan losses (238) (255)
-------- --------
$ 22,443 $ 16,824
======== ========
</TABLE>
An analysis of the change in the allowance for loan losses follows:
<TABLE>
<CAPTION>
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Balance, beginning of year $ 254,819 $ 261,601 $ 279,961
Loans charged off (3,613) -- (15,802)
Recoveries 1,665 8,218 20,548
Provision (credit) for loan losses (14,500) (15,000) (23,106)
--------- --------- ---------
Balance, end of year $ 238,371 $ 254,819 $ 261,601
========= ========= =========
</TABLE>
The Company had impaired loans of $23,437 at December 31, 1997. In
conformity with FASB Statement 114, as amended by FASB Statement 118, no
loss has been recognized on these loans due to collateral values exceeding
the loan balances. There were no impaired loans or properties acquired
through foreclosures at December 31, 1996.
4. TIME DEPOSITS
At December 31, 1997, the scheduled maturities of time deposits are as
follows: (in thousands)
<TABLE>
<S> <C>
Within 3 months or less $ 5,032
Over 3 months through 12 months 9,861
Over 1 year through 5 years 1,920
Over 5 years --
-------
$16,813
</TABLE>
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<PAGE> 29
GREAT GUARANTY BANCSHARES, INC.
NEW ROADS, LOUISIANA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5. PROPERTIES AND EQUIPMENT
Components of properties and equipment included in the statements of
condition at December 31, 1997 and 1996 were as follows:
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
Cost:
Land $ 276,990 $ 276,990
Bank premises 1,278,978 1,278,978
Furniture and equipment 655,012 518,636
----------- -----------
Total cost 2,210,980 2,074,604
Less: accumulated depreciation (1,530,861) (1,409,750)
----------- -----------
Net book value $ 680,119 $ 664,854
=========== ===========
</TABLE>
Depreciation expense amounted to $121,111, $119,589 and $114,029 for the
years ended December 31, 1997, 1996, and 1995, respectively.
6. NOTES PAYABLE
Long-Term Debt
The Bank periodically borrows funds from the Federal Home Loan Bank under
an Advances, Collateral Pledge and Security Agreement dated April 20, 1994.
Under this agreement, the Bank is eligible to receive advances up to a
maximum amount, based on the value of collateral pledged as determined by
FHLB guidelines. Each advance has a fixed rate, determined as of the date
of the advance and a repayment term of 113-132 months. All advances are
secured by a blanket floating lien on all of the Bank's 1-4 single family
first mortgage loans, Federal Home Loan Bank stock and deposits with the
Federal Home Loan Bank. The carrying amounts and assigned values of
collateral pledged under this agreement are as follows:
<TABLE>
<CAPTION>
December 31, 1997
------------------------------
Carrying Assigned
Amount Value
------------ ------------
<S> <C> <C>
FHLB stock $ 214,200 $ 214,200
Deposits with FHLB 72,140 72,140
1-4 single family first mortgage loans 13,484,238 4,719,483
------------ ------------
$ 13,770,578 $ 5,005,823
============ ============
Maximum advances available (value divided by 110%) $ 4,550,748
Advances outstanding (1,174,252)
------------
Advances available and unused $ 3,376,496
============
</TABLE>
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<PAGE> 30
GREAT GUARANTY BANCSHARES, INC.
NEW ROADS, LOUISIANA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. NOTES PAYABLE (continued)
Advances outstanding under this agreement totalled $1,276,531 at December
31, 1996.
Scheduled future principal payments of advances outstanding as of December
31, 1997 are as follows:
<TABLE>
<S> <C>
1998 $ 125,743
1999 127,463
2000 137,370
2001 148,052
2002 159,568
Thereafter 476,056
----------
$1,174,252
==========
</TABLE>
The weighted average interest rate of all advances outstanding as of
December 31, 1997 was 7.5%. Interest expense on these advances amounted to
$91,786, $99,793 and $86,808 for 1997, 1996 and 1995, respectively.
Demand Notes Payable
The Company owes a note payable to a bank in the principal amount of
$165,000 at December 31, 1997, which is due on demand and bears interest at
the Chase Manhattan Prime rate plus 1%. The interest rate on the note in
effect at December 31, 1997 was 9.5%. Under the terms of this note, if no
demand is made, the note is payable in full on March 31, 1998. Interest is
payable upon maturity. This loan is secured, by a pledge of 100% of the
Subsidiary Bank's common stock. As of December 31, 1996, the Company owed
$2,900,000 under a similar borrowing arrangement with this bank, along with
a note payable to an individual of $200,000.
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<PAGE> 31
GREAT GUARANTY BANCSHARES, INC.
NEW ROADS, LOUISIANA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7. INCOME TAXES
The Company and the subsidiary Bank file a consolidated income tax return.
The reasons for the differences between the statutory federal income tax
rates and the effective tax rates applied to income before income taxes and
extraordinary item are summarized as follows:
<TABLE>
<CAPTION>
1997 % 1996 % 1995 %
--------- ---- --------- ---- --------- -----
<S> <C> <C> <C> <C> <C> <C>
Tax based on statutory rate $ 152,043 34.0% $ 112,289 34.0% $ 55,824 34.0%
Tax exempt interest -- -- (485) (.1) (1,943) (1.2)
Effect of tax brackets -- -- -- -- (9,763) (5.9)
Change in valuation allowance -- -- -- -- (375,244) (228.6)
Other (20,828) (4.7) 1,388 .4 -- --
--------- ---- --------- ---- --------- -----
$ 131,215 29.3% $ 113,192 34.3% ($331,126) (201.7)%
========= ==== ========= ==== ========= =====
</TABLE>
In accordance with Statement of Financial Accounting Standards No. 109,
deferred income taxes are provided on the tax effect of changes in
temporary differences. Deferred tax assets are subject to a valuation
allowance if their realization is less likely than not. Deferred tax assets
(liabilities) which are included in other assets (net) on the accompanying
statements of condition are comprised of the following at December 31, 1997
and 1996:
<TABLE>
<CAPTION>
1997 1996
--------- ---------
<S> <C> <C>
Unrealized investment gains - available-for-sale $ (19,314) $ --
Stock dividends received on investments (12,988) (8,874)
Allowance for loan losses (205,107) (200,048)
--------- ---------
Gross deferred tax liability (237,409) (208,922)
--------- ---------
Unrealized investment losses - available-for-sale -- 552
Net operating loss carryforward 228,487 662,016
Depreciation on premises and equipment 4,111 8,650
Business credit carryforwards and other 36,009 9,379
--------- ---------
Gross deferred tax asset 268,607 680,597
Valuation allowance -- --
--------- ---------
268,607 680,597
--------- ---------
Net deferred tax asset $ 31,198 $ 471,675
========= =========
</TABLE>
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<PAGE> 32
GREAT GUARANTY BANCSHARES, INC.
NEW ROADS, LOUISIANA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7. INCOME TAXES (continued)
The consolidated provision for income taxes is summarized as follows:
<TABLE>
<CAPTION>
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Taxes payable currently $ 5,557 $ -- $ --
Deferred tax expense (benefit) 125,658 113,192 (331,126)
--------- --------- ---------
$ 131,215 $ 113,192 ($331,126)
========= ========= =========
</TABLE>
At December 31, 1997, the Company has available net operating loss
carryforwards of approximately $670,000 which begin to expire in 2002.
8. RELATED PARTIES
Certain officers and directors, and companies in which they have 10 percent
or more beneficial ownership, were indebted to the Bank in the aggregate
amounts of $1,379,818 and $763,650 at December 31, 1997 and 1996,
respectively. During 1997 and 1996, $1,709,609 and $593,568 of new loans
were made, and loan repayments totaled $1,093,441 and $584,196,
respectively.
9. CONTINGENCIES AND COMMITMENTS
The Bank's financial statements do not reflect various commitments and
contingent liabilities which arise in the normal course of business and
which involve elements of credit risk, interest rate risk and liquidity
risk. These commitments and contingent liabilities are further described in
Note 15 - Financial Instruments.
The Company and its subsidiary are parties to litigation and claims arising
in the normal course of business. Management, after consultation with legal
counsel, believes that the liabilities, if any, arising from such
litigation and claims will not be material to the Company.
10. EXTRAORDINARY GAIN
For the past several years, the Company has been a plaintiff in an action
seeking declaration of the amount, if any, due under promissory notes held
by a defendant creditor comprised of a group of individuals, including
stockholders of the Company. These notes evidenced advances originally made
to Great Guaranty Bancshares in 1987-88. In its reconventional demand, the
defendant sought judgment on the notes and, in the alternative, 90% of the
capital stock of the holding company in exchange for cancellation of the
notes. After trial on the merits in August 1994, the defendant's
alternative demand for delivery of holding company stock in exchange for
cancellation of indebtedness was denied, but judgment for approximately
$3.6 million was awarded against the holding company on the notes. The
trial court's judgment was appealed by both parties.
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<PAGE> 33
GREAT GUARANTY BANCSHARES, INC.
NEW ROADS, LOUISIANA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
10. EXTRAORDINARY GAIN (continued)
In 1995 the Company delivered to the defendants the judgment amount, with
reservation of all rights on appeal. In December 1996, the appellate court
modified the trial court's judgment and reduced the amount due to the
defendant to approximately $1.8 million.
In April 1997, the Supreme Court of Louisiana reviewed the appellate
court's ruling and re-affirmed.
The extraordinary gain recognized in the accompanying statement of income
results from the forgiveness of the debt equal to the unpaid principal
amount of the original notes payable plus accrued interest, less the amount
ultimately declared as payable to the holders of the notes. Also included
in the extraordinary gain is related interest income on the excess of the
delivery amount over the ultimate amount due to the defendant plus related
court costs.
The gain is tax effected to the extent of taxable amounts. Some of the gain
was applied retroactively, thereby utilizing tax benefits of previous years
that had previously expired. The tax effect of $294,953 consists of
amortization of deferred tax assets representing net operating losses
carried forward.
11. SIGNIFICANT GROUP CONCENTRATION OF CREDIT RISK
All of the Bank's loans and commitments have been granted to customers in
the Bank's market area and the concentrations of credit by type of loan are
set forth in Note 3. The distribution of commitments to extend credit
approximates the distribution of loans outstanding. Commitments to extend
credit were granted primarily to agricultural and commercial borrowers.
Although the Bank has a diversified loan portfolio, a substantial portion
of its debtors' ability to honor their contracts is dependent upon the
agribusiness economic sector.
12. REGULATORY MATTERS
The Bank is subject to various regulatory capital requirements administered
by the federal banking agencies. Failure to meet minimum capital
requirements can initiate certain mandatory and possibly additional
discretionary actions by regulators that, if undertaken, could have a
direct material effect on the Bank's financial statements. Under capital
adequacy guidelines and the regulatory framework for prompt corrective
action, the Bank must meet specific capital guidelines that involve
quantitative measures of the Bank's assets, liabilities and certain
off-balance sheet items as calculated under regulatory accounting
practices. The Bank's capital amounts and classification are also subject
to qualitative judgments by the regulators about components, risk
weightings, and other factors.
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<PAGE> 34
GREAT GUARANTY BANCSHARES, INC.
NEW ROADS, LOUISIANA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
12. REGULATORY MATTERS (continued)
Quantitative measures established by regulation to ensure capital adequacy
require the Bank to maintain minimum amounts and ratios (set forth in the
table below) of total and Tier I capital (as defined in the regulations) to
risk-weighted assets (as defined), and of Tier I capital (as defined) to
average assets (as defined).
In addition to these minimum capital levels which are standard for all
banks under the authority of the FDIC, the Bank is required to maintain a
minimum Tier I to Average Assets ratio of 6% (rising to 7% in 1999). This
higher standard is required as a condition to the FDIC and the Louisiana
Office of Financial Institution granting permission for a dividend to the
holding company of $1,521,865 in 1997. However, year-end audit adjustments
to amortize deferred tax assets caused the Bank to fall below the 6% Tier 1
capital level. Management has discussed this matter with the FDIC and the
Louisiana Office of Financial institution and believes the Bank will come
to compliance in early 1998.
As of December 31, 1997, the most recent notification from the Office of
the Comptroller of the Currency categorized the Bank as well capitalized
under the regulatory framework for prompt corrective action. To be
categorized as well capitalized, the Bank must maintain minimum total
risk-based, Tier I risk-based, and Tier I leverage ratios as set forth in
the table. There are no conditions or events since that notification that
management believes have changed the institution's category.
The Bank's actual capital amounts (in thousands) and ratios as of December
31, 1997 and 1996 are also presented in the table.
<TABLE>
<CAPTION>
To Be Well
Capitalized Under
For Capital Prompt Corrective
Actual Adequacy Purposes: Action Provisions:
---------------- ---------------------- -----------------------
Amount Ratio Amount Ratio Amount Ratio
------ ----- ------ ----------- ------ ------------
<S> <C> <C> <C> <C> <C> <C>
As of December 31, 1997:
Total Capital
(to Risk Weighted Assets) $2,689 13.3% $1,617 > or = 8.0% $2,021 > or = 10.0%
Tier I Capital
(to Risk Weighted Assets) 2,451 12.1% 808 > or = 4.0% 1,213 > or = 6.0%
Tier I Capital
(to Average Assets) 2,451 5.8% 1,678 > or = 4.0% 2,098 > or = 5.0%
As of December 31, 1996:
Total Capital
(to Risk Weighted Assets) 3,701 19.2% 1,543 > or = 8.0% 1,928 > or = 10.0%
Tier I Capital
(to Risk Weighted Assets) 3,460 17.9% 771 > or = 4.0% 1,157 > or = 6.0%
Tier I Capital
(to Average Assets) 3,460 8.4% 1,655 > or = 4.0% 2,068 > or = 5.0%
</TABLE>
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<PAGE> 35
GREAT GUARANTY BANCSHARES, INC.
NEW ROADS, LOUISIANA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
13. RESTRICTIONS ON DIVIDENDS
The Bank is subject to certain restrictions on the amount of dividends that
it may declare without prior regulatory approval. The amount that the Bank
may declare in any one year is equal to one-half of the current year's
earnings, exclusive of non-recurring items. At December 31, 1997, there is
no amount available for dividends.
14. EMPLOYEE BENEFITS
The Bank maintains a 401(k) plan for its employees, which allows them to
make contributions to the plan with pre-tax salary reductions. The Bank
matches contributions dollar for dollar up to three percent of employees'
gross salary. Contributions to the plan were $23,809, $22,831 and $10,348
for 1997, 1996, and 1995, respectively.
15. FINANCIAL INSTRUMENTS
The Bank is a party to financial instruments with off-balance sheet risk in
the normal course of business to meet the financing needs of its customers.
These financial instruments include commitments to extend credit, standby
letters of credit and financial guarantees. Those instruments involve, to
varying degrees, elements of credit and interest-rate risk in excess of the
amount recognized in the statement of financial position. The contract or
notional amounts of those instruments reflect the extent of the Bank's
involvement in particular classes of financial instruments.
The Bank's exposure to credit loss in the event of nonperformance by the
other party to the financial instrument for commitments to extend credit,
standby letters of credit, and financial guarantees written is represented
by the contractual notional amount of those instruments. The Bank uses the
same credit policies in making commitments and conditional obligations as
it does for on-balance-sheet instruments. Unless otherwise noted, the Bank
does not require collateral or other security to support financial
instruments with credit risk.
Commitments to Extend Credit and Financial Guarantees. Commitments to
extend credit are agreements to lend to a customer as long as there is no
violation of any condition established in the contract. Commitments
generally have fixed expiration dates or other termination clauses and may
require payment of a fee. Since many of the commitments are expected to
expire without being drawn upon, the total commitment amounts do not
necessarily represent future cash requirements. The Bank's experience has
been that approximately 90 percent of loan commitments are drawn upon by
customers. The Bank evaluates each customer's creditworthiness on a
case-by-case basis. The amount of collateral obtained, if it is deemed
necessary by the Bank upon extension of credit, is based on management's
credit evaluation of the counter-party. Collateral held varies but may
include accounts receivable; inventory; property, plant, and equipment; and
income-producing commercial properties.
The Bank has not been required to perform on any financial guarantees
during the past two years. The Bank has not incurred any losses on its
commitments in either 1997 or 1996.
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<PAGE> 36
GREAT GUARANTY BANCSHARES, INC.
NEW ROADS, LOUISIANA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
15. FINANCIAL INSTRUMENTS (continued)
The estimated fair values of the Company's financial instruments were as
follows:
<TABLE>
<CAPTION>
December 31, 1997 December 31, 1996
------------------- -------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
-------- ------- -------- -------
(in thousands) (in thousands)
<S> <C> <C> <C> <C>
Financial assets:
Cash and due from banks,
interest-bearing deposits with
banks, and federal funds sold $ 3,332 $ 3,332 $ 3,695 $ 3,695
Securities available-for-sale 14,278 14,278 19,761 19,761
Restricted equity securities 214 214 202 202
Loans receivable 22,443 22,791 16,824 16,564
Accrued interest receivable 329 329 356 356
Financial liabilities:
Deposit liabilities 37,102 37,165 36,234 36,265
Short-term borrowings 241 241 700 700
Long-term debt 1,174 1,281 1,285 1,345
Bank note payable -- -- 2,900 2,900
Off-balance sheet instruments:
Commitments to extend credit -- -- -- --
Credit card arrangements -- -- -- --
</TABLE>
A summary of the Bank's commitments and contingent liabilities at December
31, 1997, is as follows:
<TABLE>
<CAPTION>
Notional
Amount
----------
<S> <C>
Commitments to extend credit $2,238,671
Credit card arrangements 304,915
</TABLE>
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<PAGE> 37
GREAT GUARANTY BANCSHARES, INC.
NEW ROADS, LOUISIANA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
16. BANK ONLY STATEMENTS OF FINANCIAL CONDITION
STATEMENTS OF FINANCIAL CONDITION
DECEMBER 31, 1997 AND 1996
ASSETS
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
Cash and due from banks $ 2,008,689 $ 2,406,805
Interest-bearing deposits with banks 198,000 1,288,571
Federal funds sold 1,125,000 --
Investment securities - available-for-sale 14,277,636 19,761,011
Restricted investments in equity securities 214,200 202,100
Loans, net of allowance for loan losses 22,443,067 16,823,712
Properties and equipment, net 680,119 664,854
Accrued interest receivable 329,130 355,583
Other assets 59,543 279,644
----------- -----------
TOTAL ASSETS $41,335,384 $41,782,280
=========== ===========
</TABLE>
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<PAGE> 38
GREAT GUARANTY BANCSHARES, INC.
NEW ROADS, LOUISIANA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
16. BANK ONLY STATEMENTS FINANCIAL OF CONDITION (continued)
STATEMENTS OF FINANCIAL CONDITION
DECEMBER 31, 1997 AND 1996
LIABILITIES AND STOCKHOLDER'S EQUITY
<TABLE>
<CAPTION>
1997 1996
------------ ------------
<S> <C> <C>
LIABILITIES
Demand deposits $ 6,777,740 $ 6,307,152
NOW deposits 5,388,446 5,053,484
Savings deposits 8,165,704 9,168,044
Time deposits, $100,000 and over 1,799,852 1,168,073
Other time deposits 15,012,896 14,539,820
------------ ------------
Total deposits 37,144,638 36,236,573
Notes payable 1,174,252 1,276,531
Accrued expenses and other liabilities 287,365 110,111
Federal funds purchased and securities sold
under agreements to repurchase 240,659 700,000
------------ ------------
Total liabilities 38,846,914 38,323,215
------------ ------------
COMMITMENTS AND CONTINGENT LIABILITIES -- --
STOCKHOLDER'S EQUITY
Common stock - $7.50 par value
Authorized - 200,000 shares; issued
and outstanding - 96,242 shares 721,815 721,815
Additional paid-in capital 4,965,350 4,958,601
Accumulated deficit (3,236,186) (2,220,279)
Net unrealized gain (loss) on securities
available for sale, net of tax of $19,314
and ($552), respectively 37,491 (1,072)
------------ ------------
Total stockholder's equity 2,488,470 3,459,065
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 41,335,384 $ 41,782,280
============ ============
</TABLE>
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<PAGE> 39
GREAT GUARANTY BANCSHARES, INC.
NEW ROADS, LOUISIANA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
17. PARENT ONLY FINANCIAL STATEMENTS
CONDENSED STATEMENTS OF FINANCIAL CONDITION
DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
ASSETS
Cash in subsidiary bank $ 42,406 $ 2,421
Investment in subsidiary 2,488,470 3,459,065
Dividends receivable -- --
Deferred tax asset 186,260 395,185
----------- -----------
Total Assets $ 2,717,136 $ 3,856,671
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accrued interest payable $ 3,267 $ 58,476
Due to subsidiary bank -- 127,134
Notes payable 165,000 3,100,000
Accrued dividends payable 35,843 --
----------- -----------
Total Liabilities 204,110 3,285,610
----------- -----------
Preferred stock - Series A, no par; 500,000 shares authorized;
-0- and 24,462 shares issued and outstanding, respectively -- 126,037
Preferred stock - Series B, no par; 2,000,000 shares authorized;
-0- and 21,559 shares issued and outstanding, respectively -- 111,080
Common stock - $7.50 par value; 500,000 shares
authorized; 143,374 shares issued and outstanding 1,075,305 1,075,305
Additional paid-in capital 2,411,471 2,411,471
Accumulated deficit (1,011,241) (3,151,760)
Net unrealized gain (loss) on securities AFS 37,491 (1,072)
----------- -----------
Total Stockholders' Equity 2,513,026 571,061
----------- -----------
Total Liabilities and Stockholders' Equity $ 2,717,136 $ 3,856,671
=========== ===========
</TABLE>
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<PAGE> 40
GREAT GUARANTY BANCSHARES, INC.
NEW ROADS, LOUISIANA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
17. PARENT ONLY FINANCIAL STATEMENTS (continued)
CONDENSED STATEMENTS OF INCOME
YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995
<TABLE>
<CAPTION>
Years ended December 31,
---------------------------------------------
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
INCOME
Dividends received from Subsidiary Bank $ 1,521,865 $ 990,694 $ 350,639
----------- ----------- -----------
EXPENSES
Interest expense 174,679 296,488 224,249
Legal fees 82,721 92,230 300,534
Other expenses 25,365 572 28,889
----------- ----------- -----------
282,765 389,290 553,672
----------- ----------- -----------
INCOME (LOSS) BEFORE EQUITY IN
UNDISTRIBUTED EARNINGS
OF SUBSIDIARY 1,239,100 601,404 (203,033)
----------- ----------- -----------
Equity in undistributed earnings
of subsidiary (1,015,908) (516,692) 509,003
----------- ----------- -----------
INCOME BEFORE TAXES AND
EXTRAORDINARY GAIN 223,192 84,712 305,970
----------- ----------- -----------
Income tax expense (benefit) (92,777) (132,359) (189,345)
----------- ----------- -----------
INCOME BEFORE EXTRAORDINARY
GAIN 315,969 217,071 495,315
----------- ----------- -----------
EXTRAORDINARY GAIN
(Net of income tax) 1,922,752 -- --
----------- ----------- -----------
NET INCOME $ 2,238,721 $ 217,071 $ 495,315
=========== =========== ===========
</TABLE>
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<PAGE> 41
GREAT GUARANTY BANCSHARES, INC.
NEW ROADS, LOUISIANA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
17. PARENT ONLY FINANCIAL STATEMENTS (continued)
CONDENSED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995
<TABLE>
<CAPTION>
Years ended December 31,
---------------------------------------------
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 2,238,721 $ 217,071 $ 495,315
Adjustments to reconcile net
income to cash (used in) provided
by operating activities:
Extraordinary item (1,922,752) -- --
Equity in undistributed earnings
of subsidiary 1,015,908 516,692 (509,003)
Changes in operating assets and liabilities:
Dividends receivable -- 114,000 --
Accrued interest payable (55,210) (21,220) (1,532,722)
Income tax benefit derived from tax
loss generated (92,777) (132,359) (189,345)
----------- ----------- -----------
Cash (used in) provided by operating activities 1,183,890 694,184 (1,735,755)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of notes payable -- -- 3,800,524
Principal payments on notes payable (2,935,000) (700,524) (2,076,117)
Proceeds from issuance of preferred stock -- -- 17,917
Redemption of preferred stock (299,476) -- --
Settlement received 2,217,705 -- --
Payments on amounts due subsidiary (127,134) -- --
----------- ----------- -----------
Cash (used in) provided by financing activities (1,143,905) (700,524) 1,742,324
----------- ----------- -----------
Net increase (decrease) in cash 39,985 (6,340) 6,569
Cash - beginning of year 2,421 8,761 2,192
----------- ----------- -----------
Cash - end of year $ 42,406 $ 2,421 $ 8,761
=========== =========== ===========
Supplemental disclosure of cash flow information:
Cash paid for:
Interest $ 229,889 $ 317,707 $ 1,677,364
=========== =========== ===========
Income taxes $ -- $ -- $ --
=========== =========== ===========
</TABLE>
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<PAGE> 42
GREAT GUARANTY BANCSHARES, INC.
P.O. BOX 10
NEW ROADS, LOUISIANA 70760
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
THE UNDERSIGNED HEREBY APPOINTS H.T. OLINDE, JR. AND F. GREGORY ROY AS PROXIES,
EACH WITH THE POWER TO APPOINT HIS SUBSTITUTE, AND HEREBY AUTHORIZES THEM TO
REPRESENT AND TO VOTE, AS DESIGNED BELOW, ALL THE SHARES OF COMMON STOCK OF
GREAT GUARANTY BANCSHARES HELD OF RECORD BY UNDERSIGNED ON AUGUST 12, 1998, AT
THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON OCTOBER 7, 1998 OR ANY
ADJOURNMENT THEREOF
Please sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, as executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or authorized officer. If a
partnership, please sign in partnership name by authorized person.
(PLEASE DATE AND SIGN ON REVERSE)
I PLAN TO ATTEND MEETING: [ ] YES [ ] NO
This proxy when properly executed will be voted in the manner directed herein by
the undersigned stockholder. If no direction is made, this proxy will be voted
for Proposals 1 and 2. Account Number: ________________ # of Shares ____________
1. ELECTION OF DIRECTORS:
FOR all nominees listed (except as marked to the contrary) ________
WITHHOLD AUTHORITY to vote for all nominees listed ________________
Joseph L. Dabadie, Dr. Donald Doucet, Craig A. Major, Sylvester Muckleroy,
H. T. Olinde, Jr., J. Layne Orillion, F. Gregory Roy. (Instruction: To
withhold authority to vote for any individual nominee, write that nominee's
name(s) on the space provided below.)
__________________________________________________________________________
2. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
For ________ Against ________ Abstain ________
Dated: ____________________________________________________________________
Signature: ________________________________________________________________
Signature if held jointly: ________________________________________________
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
<PAGE> 43
[GREAT GUARANTY BANCSHARES, INC. LETTERHEAD]
September 4, 1998
Dear Shareholder:
The annual shareholder meeting of Great Guaranty Bancshares, Inc., will be held
October 7, 1998 at 10:00 a.m. in the Board Room of Guaranty Bank and Trust
Company, 175 New Roads Street, New Roads, La. Enclosed you will find the notice
of annual shareholder meeting, a proxy statement and a prospectus on the
consolidated operations of Great Guaranty Bancshares and Guaranty Bank. Please
date, sign and mail promptly the enclosed proxy ballet for which a return
envelope is provided.
The main purpose of the meeting is to elect Directors for the next year. We are
pleased to announce the nomination of two new individuals to serve on the Board
of Directors together with the Directors currently serving. The new nominees are
Dr. Donald Doucet and Mr. Sylvester Muckleroy. We believe these new members will
contribute much to the success of the bank and Bancshares. We encourage you to
vote FOR these new members.
1997 was a significant year for Great Guaranty Bancshares, Guaranty Bank and
more importantly for our shareholders. The long running dispute with the 400
Group and other related legal matters were resolved with the decision by the
Louisiana Supreme Court. The decision upheld the rights of the shareholders to
retain all of their original interest in Great Guaranty Bancshares and Guaranty
Bank.
Another significant event which the Board of Directors was extremely pleased to
announce was the payment of dividends to shareholders. The first dividend
payment in fifteen years was made to the shareholders in January 1998.
Circumstances permitting, it is the intention of the Board of Directors to
continue to pay future dividends to shareholders.
The vision of Guaranty Bank is simple and straightforward and remains the same
as it has always been; top revenue growth, sound credit policy, solid expense
control and a balance of products and services that offer the greatest value to
the customer. Through this vision we believe the ultimate winners will be our
shareholders.
In setting our vision, it is appropriate for us at the end of each day, to
understand our primary fiduciary responsibility is to our shareholders and our
employees and our broader responsibility is to our customers and the community.
You can be sure that your Board of Directors will choose that course which best
serves our shareholders, employees, customers and the community we serve.
We thank you, our shareholders for the confidence and support over the years.
Your confidence and support have preserved Guaranty Bank as a thriving local
community bank owned by local shareholders. With your continued support, we
intend to build an even stronger financial organization which you can be proud
of.
Very truly yours,
/s/ HUMPHREY T. OLINDE, JR. /s/ JOSEPH L. DABADIE, JR.
- ------------------------------------------- -------------------------------
HUMPHREY T. OLINDE, JR., CHAIRMAN JOSEPH L DABADIE, JR., DIRECTOR
/s/ J. LAYNE ORILLION /s/ CRAIG A. MAJOR
- ------------------------------------------- -------------------------------
J. LAYNE ORILLION, DIRECTOR CRAIG A. MAJOR, DIRECTOR
/s/ DANIEL R. DOMINGUE, JR. /s/ F. GREGORY ROY
- ------------------------------------------- -------------------------------
DANIEL R. DOMINGUE, JR., PRESIDENT AND CEO, F. GREGORY ROY, DIRECTOR
GUARANTY BANK & TRUST CO.
<PAGE> 44
[GUARANTY BANK AND TRUST COMPANY LETTERHEAD]
September 4, 1998
Dear Shareholder of Great Guaranty Bancshares:
There has been much talk lately and there is more to come regarding the Year
2000 or the "millennium bug". The big question is will January 1, 2000 be
doomsday for computer systems? The problem is there are some computers and
computer chips that are not programmed to read dates after the year 1999. This
may render many computers unable to read the date change and function properly.
This means that all businesses, organizations and individuals that rely on
computers must ensure that their computers and computer systems will and can
function properly with the change into the next century.
Guaranty Bank and Great Guaranty Bancshares are keenly aware of the importance
of meeting the Year 2000 challenge. We established a Year 2000 Project Team in
June 1997 to address this issue and to coordinate initiatives to be Year 2000
compliant. We have a plan in place that is examining every aspect of our
operations as well as all of the vendors that support us. This plan was
developed last year to ensure that all our computer systems and all our sources
of support would be Year 2000 compliant well ahead of time.
We have completed our assessment and inventory phase of our systems and vendors.
The renovation phase of our technology and equipment was completed in the first
quarter of this year. Our goal is to complete the validation phase by the end of
the fourth quarter 1998. The validation phase involves contact with our third
party vendors and following their Year 2000 initiatives to make sure there will
be no disruption to the services they provide us. We will be working with and
testing with our vendors when necessary to ensure progress and successful
completion towards Year 2000 compliance. In addition, we have developed a
contingency plan as a precautionary measure to ensure there will be no
disruption of banking services to our customers in the event of some unforeseen
circumstances.
Rest assured that we are well on our way to a successful completion of
addressing the Year 2000 issues. We have been recognized by our principal
regulatory agencies for the quality of our plan and diligent work. We have also
been told we are much more advanced in the implementation and schedule of our
plan than most other banks.
If you have any questions concerning our Year 2000 project, please contact Ms.
Beverly David, Year 2000 Project Coordinator at 225-638-5605.
Very truly yours,
/s/ DANIEL R. DOMINGUE, JR.
Daniel R. Domingue, Jr.
President/CEO
