<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 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)
(225)638-8621
(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 JUNE 30,
1999
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GREAT GUARANTY BANCSHARES, INC.
FORM 10-QSB
JUNE 30, 1999
INDEX
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION PAGE
REFERENCE
---------
<S> <C>
ITEM 1. FINANCIAL STATEMENTS 1
Consolidated Balance Sheets as of June 30, 1999 1
Consolidated Statements of Income for the six months
and for the quarters ended June 30, 1999 and 1998 2
Consolidated Statements of Cash Flows for the six months ended
June 30, 1999 and 1998 3
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION 5
Material Changes in Financial Condition 5
Six Months Ended June 30, 1999 Compared with Six Months Ended
June 30, 1998 5
June 30, 1999 Compared with December 31, 1998 5
Loan Loss Provision 6
Income Taxes 6
PART II - OTHER INFORMATION 6
ITEM 1. LEGAL PROCEEDINGS 6
ITEM 2. YEAR 2000 READINESS DISCLOSURE 6
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 7
SIGNATURES 8
EXHIBIT INDEX 9
</TABLE>
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
GREAT GUARANTY BANCSHARES, INC.
CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Cash and due from banks $ 1,881,677
Interest-bearing deposits with banks 1,453,386
Federal Funds Sold 0
Investments securities - available for sale 12,219,715
Restricted investments in equity securities 233,400
Loans, net of allowance for loan losses of $269,861 24,439,048
Properties and equipment, net 528,276
Accrued interest receivable 388,085
Other Assets 51,495
------------
TOTAL ASSETS $ 41,195,082
============
LIABILITIES AND SHAREHOLDER'S EQUITY
LIABILITIES
Demand deposits $ 5,839,324
NOW accounts 6,878,703
Savings deposits 7,850,259
Time deposits, $100,000 and over 1,801,347
Other time deposits 14,773,324
------------
Total deposits $ 37,142,957
Notes Payable 992,082
Accrued expenses and other liabilities 196,062
Federal Funds Purchased 0
Income Taxes Payable 45,440
------------
Total liabilities $ 38,376,541
------------
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 (540,117)
Unrealized gain (loss) on securities available for
sale, net of tax of($66,000) (128,118)
------------
Total shareholders' equity $ 2,818,541
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 41,195,082
============
</TABLE>
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GREAT GUARANTY BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended June 30, Three Months Ended June 30,
1999 1998 1999 1998
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans $1,050,925 $1,033,200 $ 543,375 $ 518,323
Interest on investment securities 403,144 429,924 190,028 201,437
Interest on Federal Funds sold 15,767 56,761 8,286 31,318
Interest on Deposits with Banks 51,550 25,222 21,983 19,724
---------- ---------- ---------- ----------
Total interest income $1,521,386 $1,545,107 $ 763,672 $ 770,802
---------- ---------- ---------- ----------
INTEREST EXPENSE
Interest on notes payable 41,930 52,238 18,952 26,208
Interest on deposits 549,600 546,755 270,361 275,439
---------- ---------- ---------- ----------
Total interest expense $ 591,530 $ 598,993 $ 289,313 $ 301,647
---------- ---------- ---------- ----------
NET INTEREST INCOME $ 929,856 $ 946,114 $ 474,359 $ 469,155
PROVISION (CREDIT) FOR LOAN LOSSES 19,500 19,788 13,000
8,788
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES $ 910,356 $ 926,326 $ 461,359 $ 460,367
NON INTEREST INCOME
Service charges on deposit accounts $ 142,864 $ 162,362 $ 72,822 $ 84,146
Other service charges and fees 12,554 5,681 11,183 2,661
Net investment securities gains (losses) 491 0 0 0
Other income 8,861 10,434 454 337
---------- ---------- ---------- ----------
$ 164,770 $ 178,477 $ 84,459 $ 87,144
---------- ---------- ---------- ----------
NON INTEREST EXPENSE
Salaries and employee benefits $ 438,782 $ 443,210 $ 210,707 $ 227,361
Occupancy expense 101,640 110,176 52,165 55,652
Data processing 98,719 95,583 48,838 49,253
Legal fees 3,306 8,375 2,070 6,325
Other expense 186,562 149,244 100,175 77,405
---------- ---------- ---------- ----------
$ 829,009 $ 806,588 $ 413,955 $ 415,996
---------- ---------- ---------- ----------
INCOME BEFORE INCOME TAXES
AND EXTRAORDINARY ITEMS $ 246,117 $ 298,215 $ 131,863 $ 131,515
INCOME TAX EXPENSE 83,680 101,393 44,834 44,715
---------- ---------- ---------- ----------
NET INCOME BEFORE EXTRAORDINARY
ITEMS $ 162,437 $ 196,822 $ 87,029 $ 86,800
EXTRAORDINARY ITEM 0 0 0 0
---------- ---------- ---------- ----------
NET INCOME $ 162,437 $ 196,822 $ 87,029 $ 86,800
========== ========== ========== ==========
PER COMMON SHARE DATA:
NET INCOME $ 1.13 $ 1.37 $ .61 $ .60
---------- ---------- ---------- ----------
AVERAGE SHARES OUTSTANDING 143,374 143,374 143,374 143,374
========== ========== ========== ==========
</TABLE>
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GREAT GUARANTY BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED) PAGE 1 OF 2
<TABLE>
<CAPTION>
Six months ended June 30,
----------------------------
1999 1998
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 162,437 $ 196,822
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 55,312 64,422
Provision for loan losses 19,500 19,788
Deferred tax 38,240 101,393
Stock dividends received (6,300) (6,400)
Net investment securities (gains) losses (491) 0
(Increase) decrease in accrued income and other assets (89,192) (207,380)
Increase (decrease) in accrued expenses and other liabilities (45,539) 122,893
----------- -----------
Net cash provided by (used in) operating activities $ 133,967 $ 291,538
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales/maturities of investment securities
Available for sale $ 4,136,617 $ 2,591,560
Purchase of investment securities
Available for sale (2,000,000) (1,000,000)
Net change in:
Interest bearing deposits with banks 722,245 (1,113,470)
Federal Funds Sold 0 (325,000)
Loans (2,562,173) (586,956)
Purchase of equipment and building improvements (11,374) (43,242)
----------- -----------
Net cash (used in) provided by investing activities $ 285,315 $ (477,108)
----------- -----------
</TABLE>
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GREAT GUARANTY BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(CONTINUED)
(UNAUDITED) PAGE 2 OF 2
<TABLE>
<CAPTION>
Six months ended June 30,
----------------------------
1999 1998
----------- -----------
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in non-interest-bearing
demand, savings and NOW accounts $ 291,133 $ 136,315
Net increase (decrease) in time deposit (369,826) 442,473
Payments on notes payable (63,145) (58,632)
Net change in federal funds purchased and
Repurchase Agreement Sold (600,000) (240,659)
Dividends Paid (35,843) (35,843)
Income Taxes Payable 45,440 0
----------- -----------
Net cash provided by (used in) financing activities $ (732,241) $ 243,654
----------- -----------
NET INCREASE (DECREASE) IN CASH
AND DUE FROM BANKS (312,959) 58,084
CASH AND DUE FROM BANKS AT BEGINNING
OF PERIOD 2,194,636 2,008,689
----------- -----------
CASH AND DUE FROM BANKS AT END
OF PERIOD $ 1,881,677 $ 2,066,773
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION
Cash paid during the year for:
Interest $ 601,666 $ 594,092
=========== ===========
Income taxes $ 4,000 $ 20,000
=========== ===========
</TABLE>
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<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
MATERIAL CHANGES IN FINANCIAL CONDITION.
SIX MONTHS ENDED JUNE 30, 1999 COMPARED WITH SIX MONTHS ENDED JUNE 30,
1998.
Balance Sheet
Total Assets at June 30, 1999 were $41.2 million compared to $41.9 million
at June 30, 1998. Total loans increased to $24.4 million at June 30, 1998 from
$23 million at June 30, 1998, while securities decreased to $12.2 million from
$12.7 million and deposits decreased to $37.1 million from $37.7 million as of
those respective dates. Shareholders' equity in Bancshares increased to $2.8
million at June 30, 1999 from $2.7 million at June 30, 1998. Bancshares'
shareholders' equity in its wholly owned bank subsidiary, Guaranty Bank & Trust
Company ("Guaranty Bank"), was $2.8 million at June 30, 1998, an increase from
$2.7 million at June 30, 1998, as a result of the earnings Guaranty Bank less
dividend payments by Guaranty Bank to Bancshares and a change from an unrealized
gain to an unrealized loss in available for sale securities.
Income
The income of Bancshares is ordinarily attributable almost entirely to
dividends on earnings of Guaranty Bank. Consolidated net income of Bancshares is
generally determined by deduction of interest and expenses incurred by
Bancshares from the net income earned by Guaranty Bank.
Income for the six months ended June 30, 1999 was $162 thousand compared to
$197 thousand during the same period in 1999. Interest income decreased to $1.52
million for the six month period ended June 30, 1999 compared to $1.54 million
for the same period in 1998. Non-interest income totaled $165 thousand for the
six month period, compared to $178 thousand for the same period in 1998.
Interest expense decreased to $591 thousand during the six months ended June 30,
1999, down from $599 thousand during the same period in 1998. Non-interest
expense increased to $829 thousand from $807 thousand during those periods.
JUNE 30, 1999 COMPARED WITH DECEMBER 31, 1998
Balance Sheet
Total assets decreased to $41.2 million at June 30, 1999, a decrease of
1.8% from $41.97 million at December 31, 1998. Total loans increased by $2.5
million, or 11.4%, to $24.4 million at June 30, 1999 compared to $21.9 million
at December 31, 1998 primarily as a result of an increase in agricultural
lending. Securities declined $2.3 million to $12.2 million at June 30, 1999,
down from 14.5 million at December 31, 1998, primarily as a result of a need to
fund loans.
Total deposits decreased by $78 thousand to $37.1 million at June 30, 1999,
a .2% decrease from $37.2 million at December 31, 1998. Non-interest bearing
deposits decreased at a 5.2% rate, compared to a .8% growth in interest bearing
deposits. During the first six months of 1999, shareholders' equity in
Bancshares remained at $2.8 million due to a change from an unrealized gain to
an unrealized loss on available for sale securities which neutralized the
earnings of Guaranty Bank for the six months.
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<PAGE> 8
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 $19.5
thousand at June 30, 1999. The reserve for possible loan losses at June 30, 1999
was $270 thousand, 1.10% of total loans, compared to $274 thousand, or 1.25% of
total loans, at December 31, 1998 and $260 thousand or 1.12% at June 30, 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
reserve 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 is, therefore, taxable for the remainder of 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.
ITEM 2. YEAR 2000 READINESS DISCLOSURE
Bancshares and Guaranty Bank's Boards of Directors and Senior Management
are 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 to 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:
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 of 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.
Continued testing will be done to ensure this status.
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<PAGE> 9
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 addresses the cash and liquidity needs of
the bank.
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.
To date the bank has incurred costs of approximately $74 thousand in its
Y2K efforts and anticipates no other major expenses.
Focus for the rest of 1999 will be customer awareness.
Guaranty Bank and Great Guaranty Bancshares are 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: July 30, 1999 By: /s/ J. WADE O'NEAL, III
-----------------------------
J. Wade O'Neal, III
Authorized Representative
of Great Guaranty Bancshares,
Inc. and President and CEO of
Guaranty Bank & Trust Company
By: /s/ BEVERLY B. DAVID
-----------------------------
Beverly B. David
Assistant Treasurer
of Great Guaranty Bancshares,
Inc. and Senior Vice
President of Guaranty Bank &
Trust Company
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<PAGE> 11
EXHIBIT INDEX
Exhibit (27) Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 1,881,677
<INT-BEARING-DEPOSITS> 1,453,386
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 12,219,715
<INVESTMENTS-CARRYING> 12,219,715
<INVESTMENTS-MARKET> 12,219,715
<LOANS> 24,439,048
<ALLOWANCE> 269,861
<TOTAL-ASSETS> 41,195,082
<DEPOSITS> 37,142,957
<SHORT-TERM> 992,082
<LIABILITIES-OTHER> 196,062
<LONG-TERM> 0
0
0
<COMMON> 1,075,305
<OTHER-SE> 1,743,236
<TOTAL-LIABILITIES-AND-EQUITY> 41,195,082
<INTEREST-LOAN> 1,050,925
<INTEREST-INVEST> 403,144
<INTEREST-OTHER> 67,317
<INTEREST-TOTAL> 1,521,386
<INTEREST-DEPOSIT> 549,600
<INTEREST-EXPENSE> 591,530
<INTEREST-INCOME-NET> 929,856
<LOAN-LOSSES> 19,500
<SECURITIES-GAINS> 491
<EXPENSE-OTHER> 829,009
<INCOME-PRETAX> 246,117
<INCOME-PRE-EXTRAORDINARY> 162,437
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 162,437
<EPS-BASIC> 1.13
<EPS-DILUTED> 1.13
<YIELD-ACTUAL> 0
<LOANS-NON> 15,832
<LOANS-PAST> 337,571
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 0
<CHARGE-OFFS> 26,109
<RECOVERIES> 3,955
<ALLOWANCE-CLOSE> 0
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
