<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, 1999
[ ] 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)
72-0919109
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 [X] NO [ ]
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 MARCH 31,
1999
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GREAT GUARANTY BANCSHARES, INC.
FORM 10-QSB
MARCH 31, 1999
INDEX
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<CAPTION>
PART I - FINANCIAL INFORMATION PAGE
REFERENCE
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ITEM 1. FINANCIAL STATEMENTS 1
Consolidated Balance Sheets as of March 31, 1999 1
Consolidated Statements of Income for the three months
ended March 31, 1999 and 1998 2
Consolidated Statements of Cash Flows for the three months
ended March 31, 1999 and 1998 3
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION 5
Material Changes in Financial Condition 5
Three Months Ended March 31, 1999 Compared with Three Months Ended
March 31, 1998 5
March 31, 1999 Compared with December 31, 1998 6
Loan Loss Provision 6
Income Taxes 6
PART II - OTHER INFORMATION 6
ITEM 1. LEGAL PROCEEDINGS 6
ITEM 2. YEAR 2000 READINESS DISCLOSURES 6
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 7
SIGNATURES 8
EXHIBIT INDEX 9
</TABLE>
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
GREAT GUARANTY BANCSHARES, INC.
CONSOLIDATED BALANCE SHEET
AS OF MARCH 31, 1999
(UNAUDITED)
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<S> <C>
ASSETS
Cash and due from banks $ 1,567,368
Interest-bearing deposits with banks 1,651,869
Federal Funds Sold 625,000
Investments securities - available for sale 13,643,734
Restricted investments in equity securities 230,300
Loans, net of allowance for loan losses of $274,861 23,278,965
Properties and equipment, net 549,255
Accrued interest receivable 331,196
Other Assets 58,075
------------
TOTAL ASSETS $ 41,935,762
============
LIABILITIES AND SHAREHOLDER'S EQUITY
LIABILITIES
Demand deposits $ 5,967,270
NOW accounts 7,176,939
Savings deposits 7,806,708
Time deposits, $100,000 and over 2,102,340
Other time deposits 14,669,763
------------
Total deposits $ 37,723,020
Notes Payable 1,024,054
Accrued expenses and other liabilities 299,759
Federal Funds Purchased 0
Income Taxes Payable 605
------------
Total liabilities $ 39,047,438
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SHAREHOLDER'S EQUITY
Common stock - $7.50 par value, 500,000 shares
authorized, 143,374 shares issued and outstanding $ 1,075,305
Capital surplus 2,411,471
Retained deficit (627,146)
Unrealized gain (loss) on securities available for
sale, net of tax of ($14,781) 28,693
------------
Total shareholders' equity $ 2,888,323
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 41,935,762
============
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GREAT GUARANTY BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
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<CAPTION>
Three Months Ended Mar. 31,
1999 1998
-------- --------
<S> <C> <C>
Interest and fees on loans $507,550 $514,877
Interest on investment securities 213,116 228,487
Interest on Federal Funds sold 7,481 25,443
Interest on Deposits with Banks 29,567 5,498
-------- --------
Total interest income $757,714 $774,305
-------- --------
INTEREST EXPENSE
Interest on notes payable 22,978 26,030
Interest on deposits 279,239 271,316
-------- --------
Total interest expense $302,217 $297,346
-------- --------
NET INTEREST INCOME $455,497 $476,959
PROVISION (CREDIT) FOR LOAN LOSSES 6,500 11,000
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES $448,997 $465,959
NON INTEREST INCOME
Service charges on deposit accounts $ 70,042 $ 78,216
Other service charges and fees 1,371 3,020
Net investment securities gains (losses) 491 0
Other income 8,407 10,097
-------- --------
$ 80,311 $ 91,333
-------- --------
NON INTEREST EXPENSE
Salaries and employee benefits $228,075 $215,849
Occupancy expense 49,475 54,524
Data processing 49,881 46,330
Legal fees 1,236 2,050
Other expense 86,386 71,839
-------- --------
$415,054 $390,592
-------- --------
INCOME BEFORE INCOME TAXES
AND EXTRAORDINARY ITEMS $114,254 $166,700
INCOME TAX EXPENSE 38,846 56,678
-------- --------
NET INCOME BEFORE EXTRAORDINARY
ITEMS $ 75,408 $110,022
EXTRAORDINARY ITEM
0 0
-------- --------
NET INCOME $ 75,408 $110,022
======== ========
PER COMMON SHARE DATA:
NET INCOME $ .53 $ .77
-------- --------
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,
---------------------------
1999 1998
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 75,408 $ 110,022
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 26,917 31,305
Provision for loan losses 6,500 11,000
Deferred tax 38,240 56,678
Stock dividends received (3,200) (3,200)
Net investment securities (gains) losses (491) 0
(Increase) decrease in accrued income and other assets (38,884) (140,086)
Increase (decrease) in accrued expenses and other liabilities 58,159 151,589
----------- -----------
Net cash provided by (used in) operating activities $ 162,649 $ 217,308
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales/maturities of investment securities
Available for sale $ 2,869,409 $ 1,019,795
Purchase of investment securities
Available for sale (2,000,000) 0
Net change in:
Interest bearing deposits with banks 523,762 (64,000)
Federal Funds Sold (625,000) (1,752,000)
Loans (1,389,090) 113,798
Purchase of equipment and building improvements (3,958) (29,272)
----------- -----------
Net cash (used in) provided by investing activities $ (624,877) $ (711,679)
----------- -----------
</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,
---------------------------
1999 1998
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<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in non-interest-bearing
demand, savings and NOW accounts $ 673,764 $ 569,202
Net increase (decrease) in time deposit (172,393) (5,725)
Payments on other notes payable (31,173) (28,927)
Net change in federal funds purchased and
Repurchase Agreement Sold (600,000) (240,659)
Income Taxes Payable 605 0
Dividends Paid (35,843) (35,843)
---------- ----------
Net cash provided by (used in) financing activities (165,040) (258,048)
---------- ----------
NET INCREASE (DECREASE) IN CASH
AND DUE FROM BANKS (627,268) (236,323)
CASH AND DUE FROM BANKS AT BEGINNING
OF PERIOD 2,194,636 2,008,689
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CASH AND DUE FROM BANKS AT END
OF PERIOD $1,567,368 $1,772,366
========== ==========
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION
Cash paid during the year for:
Interest $ 309,851 $ 290,888
========== ==========
Income taxes $ 4,000 $ 20,000
========== ==========
</TABLE>
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
MATERIAL CHANGES IN FINANCIAL CONDITION.
THREE MONTHS ENDED MARCH 31, 1999 COMPARED WITH THREE MONTHS ENDED MARCH
31, 1998.
Balance Sheet
Total Assets at March 31, 1999 were $41.935 million compared to $41.899
million at March 31, 1998. Total loans increased to $23.2 million at March 31,
1999 from $22.3 million at March 31, 1998, while securities increased to $13.6
million from $13.2 million and deposits increased to $37.723 million from
$37.666 million as of those respective dates. Shareholders' equity in Bancshares
increased to $2.9 million at March 31, 1999 from $2.6 million at March 31, 1998.
Bancshares' shareholders' equity in its wholly owned bank subsidiary, Guaranty
Bank & Trust Company ("Guaranty Bank"), was $2.8 million at March 31, 1999, an
increase from $2.7 million at March 31, 1998, as a result of the earnings of
Guaranty Bank less dividend payments by Guaranty Bank to Bancshares of $255,000
which allowed Bancshares to payoff all outstanding debts.
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, 1999 was $75 thousand compared
to $110 thousand during the same period in 1998. Interest income decreased to
$758 thousand for the three month period ended March 31, 1999 compared to $774
thousand for the same period in 1998, primarily as a result of a decline in
market yields and large principal paydowns on mortgage backed securities.
Non-interest income totaled $80 thousand for the three month period, compared to
$91 thousand for the same period in 1998. Interest expense increased to $302
thousand during the three months ended March 31, 1999, down from $297 thousand
during the same period in 1998, due primarily to an increase in NOW account
deposits, while non-interest expense increased to $415 thousand from $391
thousand during those periods.
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MARCH 31, 1999 COMPARED WITH DECEMBER 31, 1998
Balance Sheet
Total assets decreased $35 thousand to $41.936 million at March 31, 1999, a
decrease of .084% from $41.971 million at December 31, 1998. Total loans
increased by $1.4 million, or 6.31%, to $23.3 million at March 31, 1999 compared
to $21.9 million at December 31, 1998, while securities declined $.9 million to
$13.6 million at March 31, 1999, down from 14.5 million at December 31, 1998,
primarily as a result of large principal paydowns on mortgage backed securities.
Total deposits increased by $.5 million to $37.7 million at March 31, 1999,
a 1.3% increase from $37.2 million at December 31, 1998. Non-interest bearing
deposits decreased at a 3.2% rate, compared to a 2.2% growth in interest bearing
deposits. During the first three months of 1999, shareholders' equity in
Bancshares increased $72 thousand to $2.9 million at March 31, 1999 due to
earnings of Guaranty Bank.
LOAN LOSS PROVISION
As a result of management's assessment of the adequacy of the allowance for
possible loan losses, Guaranty Bank recorded a loan loss provision of $6.5
thousand at March 31, 1999. The allowance for possible loan losses at March 31,
1999 was $275 thousand, 1.18% of total loans, compared to $274 thousand, or
1.25% of total loans, at December 31, 1998 and $249 thousand or 1.1% at March
31, 1998. On a monthly basis, Guaranty Bank management performs an analysis to
determine the adequacy of the reserve for possible loan losses. Management is
projecting a provision of 1.25% for year end 1999 in order to be prepared for
possible problems associated with Y2K.
INCOME TAXES
Bancshares had a net operating loss carryforward at December 31, 1998 of
approximately $38 thousand. That loss carryforward was used in the first quarter
of 1999. Bancshares will, therefore, be taxable for the remaining year.
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.
ITEM 2. YEAR 2000 READINESS DISCLOSURE
Bancshares and Guaranty Bank's Board of Directors and Senior Management is
responsible for the overall process and assurances that sufficient resources are
available to ensure the success of the Year 2000 effort and the business
resumption contingency plan. Guaranty Bank established a Year 2000 Project Team
to deal with the issues of Y2K and delegated responsibilities to the team for
coordinating Y2K initiatives.
The objective of Bancshares and Guaranty Bank is be Y2K ready by December
31, 1999 within the regulatory guidelines with minimal impact to the bank's
customers and operations. Guaranty Bank has identified all mission critical
components of Y2K related directly and indirectly to its operations. In the
process the bank has:
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o Completed the Assessment Inventory and Renovation Phase, replacing
and/or upgrading all personal computers, modems, and hardware which
were not Y2K ready. This was completed March 1998.
o Performed testing on software that is used to ensure correct date
related calculations, correct related decisions, correct date related
sorting, and correct date related reporting.
o Contacted third party vendors to follow their Y2K projects to make
sure there will be no disruption to services they provide to the bank.
The bank has worked with its vendors and has completed testing to
ensure progress toward Y2K readiness. Testing with the bank's major
vendor has determined there are no related issues outstanding as of
November 1998. Continued testing will be done to ensure this status.
o Developed a bank wide Y2K Business Resumption Contingency Plan so
there will be no disruption of banking services to its customers or
business partners. This plan will be tested by the end of June 1999.
To date the bank has incurred costs of approximately $67,651 and
anticipates no more that $10,000 in additional costs for its Y2K efforts.
The bank has determined that the potential consequences of Year 2000 will
not have a material effect on its business, results of operations, or financial
condition and the bank and Bancshares will be Y2K ready.
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.
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<PAGE> 10
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 4, 1999 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
Treasurer of Great Guaranty Bancshares, Inc.
and Secretary of Guaranty Bank & Trust
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
------- -----------
<S> <C>
Exhibit (27) Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 1,567,368
<INT-BEARING-DEPOSITS> 1,651,869
<FED-FUNDS-SOLD> 625,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 13,643,734
<INVESTMENTS-CARRYING> 13,643,734
<INVESTMENTS-MARKET> 13,643,734
<LOANS> 23,278,965
<ALLOWANCE> 274,861
<TOTAL-ASSETS> 41,935,762
<DEPOSITS> 37,723,020
<SHORT-TERM> 1,024,054
<LIABILITIES-OTHER> 299,759
<LONG-TERM> 0
0
0
<COMMON> 1,075,305
<OTHER-SE> 1,813,018
<TOTAL-LIABILITIES-AND-EQUITY> 41,935,702
<INTEREST-LOAN> 507,550
<INTEREST-INVEST> 213,116
<INTEREST-OTHER> 37,048
<INTEREST-TOTAL> 757,714
<INTEREST-DEPOSIT> 279,239
<INTEREST-EXPENSE> 302,217
<INTEREST-INCOME-NET> 455,497
<LOAN-LOSSES> 6,500
<SECURITIES-GAINS> 491
<EXPENSE-OTHER> 415,054
<INCOME-PRETAX> 114,254
<INCOME-PRE-EXTRAORDINARY> 75,408
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 75,408
<EPS-PRIMARY> .53
<EPS-DILUTED> .53
<YIELD-ACTUAL> 0
<LOANS-NON> 15,664
<LOANS-PAST> 348,965
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 0
<CHARGE-OFFS> 5,213
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 0
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
