<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 March 31, 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 APRIL 30,
1998
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GREAT GUARANTY BANCSHARES, INC.
FORM 10-QSB
MARCH 31, 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 March 31, 1998 1
Consolidated Statements of Income for the three
months ended March 31, 1998 and 1997 2
Consolidated Statements of Cash Flows for the three months ended March 31,
1998 and 1997 3
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION 5
Material Changes in Financial Condition 5
Three Months Ended March 31, 1998 Compared with Three Months Ended
March 31, 1997 5
March 31, 1997 Compared with December 31, 1997 6
Loan Loss Provision 6
Income Taxes 6
PART II - OTHER INFORMATION 6
ITEM 1. LEGAL PROCEEDINGS 6
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. 7
SIGNATURES 7
EXHIBIT INDEX 8
</TABLE>
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
GREAT GUARANTY BANCSHARES, INC.
CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 1998
(UNAUDITED)
<TABLE>
ASSETS
<S> <C>
Cash and due from banks $ 1,772,366
Interest-bearing deposits with banks 1,189,000
Federal Funds Sold 1,950,000
Investments securities - available for sale 13,221,351
Restricted investments in equity securities 217,400
Loans, net of allowance for loan losses of $249,186 22,318,269
Properties and equipment, net 678,086
Accrued interest receivable 351,828
Other Assets 200,285
----------------
TOTAL ASSETS $ 41,898,585
================
LIABILITIES AND SHAREHOLDER'S EQUITY
LIABILITIES
Demand deposits $ 6,899,924
NOW accounts 5,390,078
Savings deposits 8,568,684
Time deposits, $100,000 and over 1,711,253
Other time deposits 15,095,770
----------------
Total deposits $ 37,665,709
Notes Payable 1,310,325
Accrued expenses and other liabilities 287,157
Federal Funds Purchased 0
Total liabilities $ 39,263,191
----------------
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 (901,219)
Unrealized gain (loss) on securities available for
sale, net of tax of ($25,763) 49,837
----------------
Total shareholders' equity $ 2,635,394
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 41,898,585
================
</TABLE>
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GREAT GUARANTY BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Mar. 31,
1998 1997
------------------------------
<S> <C> <C>
Interest and fees on loans $514,877 $454,833
Interest on investment securities 228,487 317,739
Interest on Federal Funds sold 25,443 12,876
Interest on Deposits with Banks 5,498 13,622
-------- --------
Total interest income $774,305 $799,070
-------- --------
INTEREST EXPENSE
Interest on notes payable 26,030 115,874
Interest on deposits 271,316 261,339
-------- --------
Total interest expense $297,346 $377,213
-------- --------
NET INTEREST INCOME $476,959 $421,857
PROVISION (CREDIT) FOR LOAN LOSSES 11,000 0
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES $465,959 $421,857
NON INTEREST INCOME
Service charges on deposit accounts $ 78,216 $ 70,534
Other service charges and fees 3,020 1,936
Net investment securities gains (losses) 0 9,897
Other income 10,097 0
-------- --------
$ 91,333 $ 82,367
-------- --------
NON INTEREST EXPENSE
Salaries and employee benefits $215,849 $216,188
Occupancy expense 54,524 54,842
Data processing 46,330 35,368
Legal fees 2,050 5,600
Other expense 71,839 93,583
-------- --------
$390,592 $405,581
-------- --------
INCOME BEFORE INCOME TAXES
AND EXTRAORDINARY ITEMS $166,700 $ 98,643
INCOME TAX EXPENSE 56,678 34,188
-------- --------
NET INCOME BEFORE EXTRAORDINARY
ITEMS $110,022 $ 64,455
EXTRAORDINARY ITEM 0 0
-------- --------
NET INCOME $110,022 $ 64,455
======== ========
PER COMMON SHARE DATA:
NET INCOME $ .77 $ .45
-------- --------
AVERAGE SHARES OUTSTANDING 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>
Three months ended Mar. 31,
------------------------------
1998 1997
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 110,022 $ 64,455
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 31,305 27,440
Provision for loan losses 11,000 0
Deferred tax 56,678 34,188
Net amortization in investment premium/discount 0 10,573
Stock dividends received (3,200) (2,900)
Net investment securities (gains) losses 0 (9,897)
(Increase) decrease in accrued income and other assets (140,086) 10,089
Increase (decrease) in accrued expenses and other liabilities 151,589 163,222
----------- -----------
Net cash provided by (used in) operating activities $ 217,308 $ 297,170
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales/maturities of investment securities
Available for sale $ 1,019,795 $ 1,872,253
Purchase of investment securities
Available for sale 0 (1,362,775)
Net change in:
Interest bearing deposits with banks (64,000) 496,571
Federal Funds Sold (1,752,000) (300,000)
Loans 113,798 (2,189,491)
Purchase of equipment and building improvements (29,272) (13,623)
----------- -----------
Net cash (used in) provided by investing activities $ (711,679) $(1,497,065)
----------------------------
</TABLE>
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GREAT GUARANTY BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(CONTINUED)
(UNAUDITED) PAGE 2 OF 2
<TABLE>
<CAPTION>
Three months ended Mar. 31,
------------------------------
1998 1997
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<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in non-interest-bearing
demand, savings and NOW accounts $ 569,202 $ 1,746,831
Net increase (decrease) in time deposit (5,725) 122,223
Payments on other notes payable (28,927) (18,414)
Net change in federal funds purchased and
Repurchase Agreement Sold (240,659) (700,000)
Dividends Paid (35,843) 0
----------- -----------
Net cash provided by (used in) financing activities 258,048 1,150,640
----------- -----------
NET INCREASE (DECREASE) IN CASH
AND DUE FROM BANKS (236,323) (49,255)
CASH AND DUE FROM BANKS AT BEGINNING
OF PERIOD 2,008,689 2,406,805
----------- -----------
CASH AND DUE FROM BANKS AT END
OF PERIOD $ 1,772,366 $ 2,357,550
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION
Cash paid during the year for:
Interest $ 290,888 $ 325,532
============================
Income taxes $ 20,000 $ 0
============================
</TABLE>
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<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
MATERIAL CHANGES IN FINANCIAL CONDITION.
THREE MONTHS ENDED MARCH 31, 1998 COMPARED WITH THREE MONTHS ENDED MARCH 31,
1997.
Balance Sheet
Total Assets at March 31, 1998 were $42.0 million compared to $43.0 million
at March 31, 1997. Total loans increased to $22.3 million at March 31, 1998 from
$19.0 million at March 31, 1997, while securities decreased to $13.2 million
from $19.1 million and deposits decreased to $37.7 million from $38.1 million as
of those respective dates. Shareholders' equity in Bancshares increased to $2.7
million at March 31, 1998 from $566 thousand at March 31, 1997, principally as a
result of cash received in June, 1997 on resolution of litigation. Bancshares'
shareholders' equity in its wholly owned bank subsidiary, Guaranty Bank & Trust
Company ("Guaranty Bank"), was $2.7 million at March 31, 1998, down from $3.5
million at March 31, 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 three months ended March 31, 1998 was $110 thousand compared
to $64 thousand during the same period in 1997. Interest income decreased to
$774 thousand for the three month period ended March 31, 1998 compared to $799
thousand for the same period in 1997. Non-interest income totaled $91 thousand
for the three month period, compared to $82 thousand for the same period in
1997. Interest expense decreased to $297 thousand during the three months ended
March 31, 1998, down from $377 thousand during the same period in 1997, due
primarily to decreased deposits, while non-interest expense decreased to $391
thousand from $406 thousand during those periods.
Subsequent Events
In August 1997, Guaranty Bank and Bancshares received approval from their
primary regulators, the Louisiana Office of Financial Institutions, the FDIC and
the Federal Reserve Bank of Atlanta, of a "Capital Plan" for the payment by
Guaranty Bank of dividends during 1997 and 1998 to Bancshares as part of a plan
to pay Bancshares' indebtedness and dividends to Bancshares' shareholders. The
Capital Plan limits payment of dividends to Bancshares to the amount by which
Guaranty Bank's Tier 1 Capital exceeds 6%. The 6% limitation allowed a dividend
of $1,316 million during 1997.
Dividends by Guaranty Bank to Bancshares during 1997 were applied by
Bancshares as follows: (i) $50,000 in August to pay an installment on
Bancshares' note and cover legal expenses, (ii) $1.2 million in October to
reduce the balance of Bancshares' indebtedness to $165,000 and (iii) $36,000 in
December 1997 for a dividend ($.25 per share) to Bancshares' shareholders.
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<PAGE> 8
MARCH 31, 1998 COMPARED WITH DECEMBER 31, 1997
Balance Sheet
Total assets increased to $42.0 million at March 31, 1998, an increase of
1.5% from $41.4 million at December 31, 1997. Total loans decreased by $125
thousand, or .5%, to $22.3 million at March 31, 1998 compared to $22.4 million
at December 31, 1997, while securities declined $1.1 million to $13.2 million at
March 31, 1998, down from 14.3 million at December 31, 1997, primarily as a
result of securities that were called without reinvestment of the proceeds in
new securities.
Total deposits increased by $.6 million to $37.7 million at March 31, 1998,
a 1.6% increase from $37.1 million at December 31, 1997. Non-interest bearing
deposits increased at a 2.5% rate, compared to a 1.3% growth in interest bearing
deposits. During the first three months of 1998, shareholders' equity in
Bancshares increased to $2.7 million from $2.5 million at December 31, 1997 due
to earnings of Guaranty Bank. During the same periods, Bancshares' equity in
Guaranty Bank increased from $2.5 million at year-end 1997 to $2.7 million at
March 31, 1998.
LOAN LOSS PROVISION
As a result of management's assessment of the adequacy of the allowance for
possible loan losses, Guaranty Bank recorded an increase in it's loan loss
provision of $11 thousand at March 31, 1998. The allowance for possible loan
losses at March 31, 1997 was $249 thousand, 1.1% of total loans, compared to
$238 thousand, or 1.1% of total loans, at December 31, 1997 and $255 thousand or
1.3% at March 31, 1997. On a monthly basis, Guaranty Bank management performs an
analysis to determine the adequacy of the reserve for possible loan losses. A
provision of 1% - 1.25% of total loans has been deemed to be adequate. In the
event that a deficiency exists, the Bank will increase the actual loan loss
reserve to a satisfactory level.
INCOME TAXES
Bancshares has a net operating loss carryforward at December 31, 1997 of
approximately $670 thousand after adjustment for gain on receipt of proceeds
from resolution of litigation during 1997. See "Subsequent Events". Bancshares'
management estimates that, beginning in 1999, Bancshares will have no net
operating losses remaining and that it will, therefore, begin to pay federal
income tax during 1999.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Neither Bancshares nor Guaranty Bank is party to any litigation other than
routine litigation arising from regular business activities incident to
furnishing financial services.
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<PAGE> 9
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
(3) (i) Articles of Incorporation. See Exhibit 2.1 to
Form 10-SB filed by Great Guaranty Bancshares,
Inc. April 30, 1997, as amended by Amendment No. 1
filed July 1, 1997, which exhibit is incorporated
herein by reference.
(ii) Bylaws. See Exhibit 2.1 for Form 10-SB filed by
Great Guaranty Bancshares, Inc. April 30, 1997, as
amended by Amendment No. 1 filed July 1, 1997,
which exhibit is incorporated herein by reference.
(4) Instrument defining the rights of Security Holders,
Including Indentures. See Exhibits 3.1 (Form of Stock
Certificate for Common Stock), 3.2 (Stock Redemption
Agreement) and 3.3 (Written Agreement with Federal Reserve
Board) to Form 10-SB filed by Great Guaranty Bancshares,
Inc. April 30, 1997, as amended by Amendment No. 1 filed
July 1, 1997, which exhibits are incorporated herein by
reference.
(27) Financial Data Schedule.
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the period for
which this report is filed.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned thereunto duly
authorized.
GREAT GUARANTY BANCSHARES, INC.
Dated: May 14, 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
- 8 -
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 1,772,366
<INT-BEARING-DEPOSITS> 1,189,000
<FED-FUNDS-SOLD> 1,950,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 13,221,351
<INVESTMENTS-CARRYING> 13,221,351
<INVESTMENTS-MARKET> 13,221,351
<LOANS> 22,318,269
<ALLOWANCE> 249,186
<TOTAL-ASSETS> 41,955,263
<DEPOSITS> 37,665,709
<SHORT-TERM> 1,310,325
<LIABILITIES-OTHER> 287,157
<LONG-TERM> 0
0
0
<COMMON> 1,075,305
<OTHER-SE> 1,616,767
<TOTAL-LIABILITIES-AND-EQUITY> 41,955,263
<INTEREST-LOAN> 514,878
<INTEREST-INVEST> 228,487
<INTEREST-OTHER> 30,941
<INTEREST-TOTAL> 774,305
<INTEREST-DEPOSIT> 271,316
<INTEREST-EXPENSE> 297,346
<INTEREST-INCOME-NET> 476,959
<LOAN-LOSSES> 11,000
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 390,591
<INCOME-PRETAX> 166,700
<INCOME-PRE-EXTRAORDINARY> 110,022
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 110,02
<EPS-PRIMARY> .76
<EPS-DILUTED> .76
<YIELD-ACTUAL> 0
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 0
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 0
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
