<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 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 SEPTEMBER
30, 1999
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GREAT GUARANTY BANCSHARES, INC.
FORM 10-QSB
SEPTEMBER 30, 1999
INDEX
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION PAGE
REFERENCE
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<S> <C> <C>
ITEM 1. FINANCIAL STATEMENTS 1
Consolidated Balance Sheets as of September 30, 1999 1
Consolidated Statements of Income for the nine months
and for the quarters ended September 30, 1999 and 1998 2
Consolidated Statements of Cash Flows for the nine months ended
September 30, 1999 and 1998 3
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION 5
Material Changes in Financial Condition 5
Nine Months Ended September 30, 1999 Compared with Nine Months Ended
September 30, 1998 5
September 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>
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
GREAT GUARANTY BANCSHARES, INC.
CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 1999
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Cash and due from banks $ 1,762,167
Interest-bearing deposits with banks 962,428
Federal Funds Sold 550,000
Investments securities - available for sale 11,024,877
Restricted investments in equity securities 236,400
Loans, net of allowance for loan losses of $296,496 25,962,188
Properties and equipment, net 501,316
Accrued interest receivable 368,037
Other Assets 47,220
------------
TOTAL ASSETS $ 41,414,633
============
LIABILITIES AND SHAREHOLDER'S EQUITY
LIABILITIES
Demand deposits $ 5,990,148
NOW accounts 6,997,485
Savings deposits 7,345,371
Time deposits, $100,000 and over 2,517,652
Other time deposits 14,419,549
------------
Total deposits $ 37,270,205
Notes Payable 959,723
Accrued expenses and other liabilities 238,362
Federal Funds Purchased 0
Income Taxes Payable 9,118
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Total liabilities $ 38,477,408
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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 (422,330)
Unrealized gain (loss) on securities available for
sale, net of tax of $65,538 (127,221)
------------
Total shareholders' equity $ 2,937,225
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 41,414,633
============
</TABLE>
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GREAT GUARANTY BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended Sept. 30, Three Months Ended Sept. 30,
1999 1998 1999 1998
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans $ 1,639,285 $ 1,549,310 $ 588,360 $ 516,110
Interest on investment securities 581,937 626,738 178,793 196,814
Interest on Federal Funds sold 20,402 90,268 4,635 33,507
Interest on Deposits with Banks 69,965 58,075 18,415 32,853
-------------- -------------- -------------- --------------
Total interest income $ 2,311,589 $ 2,324,391 $ 790,203 $ 779,284
-------------- -------------- -------------- --------------
INTEREST EXPENSE
Interest on notes payable 61,411 76,956 19,481 24,718
Interest on deposits 814,429 834,443 264,829 287,688
-------------- -------------- -------------- --------------
Total interest expense $ 875,840 $ 911,399 $ 284,310 $ 312,406
-------------- -------------- -------------- --------------
NET INTEREST INCOME $ 1,435,749 $ 1,412,992 $ 505,893 $ 466,878
PROVISION (CREDIT) FOR LOAN LOSSES 45,700 24,288 26,200 4,500
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES $ 1,390,049 $ 1,388,704 $ 479,693 $ 462,378
NON INTEREST INCOME
Service charges on deposit accounts $ 222,263 $ 239,301 $ 79,399 $ 76,939
Other service charges and fees 14,213 7,635 1,659 1,954
Net investment securities gains (losses) 491 0 0 0
Other income 8,895 11,094 34 660
-------------- -------------- -------------- --------------
$ 245,862 $ 258,030 $ 81,092 $ 79,553
-------------- -------------- -------------- --------------
NON INTEREST EXPENSE
Salaries and employee benefits $ 636,924 $ 675,381 $ 198,142 $ 232,171
Occupancy expense 159,378 166,033 57,738 55,857
Data processing 145,903 142,162 47,184 46,579
Legal fees 4,928 13,468 1,622 5,093
Other expense 264,196 225,926 77,634 76,682
-------------- -------------- -------------- --------------
$ 1,211,329 $ 1,222,970 $ 382,320 $ 416,382
-------------- -------------- -------------- --------------
INCOME BEFORE INCOME TAXES
AND EXTRAORDINARY ITEMS $ 424,582 $ 423,764 $ 178,465 $ 125,549
INCOME TAX EXPENSE 144,358 144,080 60,678 42,687
-------------- -------------- -------------- --------------
NET INCOME BEFORE EXTRAORDINARY
ITEMS $ 280,224 $ 279,684 $ 117,787 $ 82,862
EXTRAORDINARY ITEM 0 0 0 0
-------------- -------------- -------------- --------------
NET INCOME $ 280,224 $ 279,684 $ 117,787 $ 82,862
============== ============== ============== ==============
PER COMMON SHARE DATA:
NET INCOME $ 1.95 $ 1.95 $ .82 $ .58
-------------- -------------- -------------- --------------
AVERAGE SHARES OUTSTANDING 143,374 143,374 143,374 143,374
============== ============== ============== ==============
</TABLE>
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GREAT GUARANTY BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED) PAGE 1 OF 2
<TABLE>
<CAPTION>
Nine months ended Sept. 30,
----------------------------
1999 1998
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 280,224 $ 279,684
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 83,621 96,558
Provision for loan losses 45,700 24,288
Deferred tax 38,240 144,080
Stock dividends received (9,300) (9,600)
Net investment securities (gains) losses (491) 0
(Increase) decrease in accrued income and other assets (64,870) (188,849)
Increase (decrease) in accrued expenses and other liabilities (3,239) 204,770
----------- -----------
Net cash provided by (used in) operating activities $ 369,885 $ 550,931
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales/maturities of investment securities
Available for sale $ 5,332,352 $ 4,111,591
Purchase of investment securities
Available for sale (2,000,000) (3,009,695)
Net change in:
Interest bearing deposits with banks 1,213,203 (2,546,083)
Federal Funds Sold (550,000) 100,000
Loans (4,111,513) 727,580
Purchase of equipment and building improvements (12,723) (18,569)
----------- -----------
Net cash (used in) provided by investing activities $ (128,681) $ (635,176)
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</TABLE>
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GREAT GUARANTY BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(CONTINUED)
(UNAUDITED) PAGE 2 OF 2
<TABLE>
<CAPTION>
Nine months ended Sept. 30,
----------------------------
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 $ 55,851 $ (79,925)
Net increase (decrease) in time deposit (7,295) 279,782
Payments on notes payable (95,504) (88,654)
Net change in federal funds purchased and
Repurchase Agreement Sold (600,000) (240,659)
Dividends Paid (35,843) (35,843)
Income Taxes Payable 9,118 0
----------- -----------
Net cash provided by (used in) financing activities $ (673,673) $ (165,299)
----------- -----------
NET INCREASE (DECREASE) IN CASH
AND DUE FROM BANKS (432,469) (249,544)
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 $ 1,762,167 $ 1,759,145
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION
Cash paid during the year for:
Interest $ 878,081 $ 890,150
=========== ===========
Income taxes $ 101,000 $ 20,000
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</TABLE>
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<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
MATERIAL CHANGES IN FINANCIAL CONDITION.
NINE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED WITH NINE MONTHS ENDED
SEPTEMBER 30, 1998.
Balance Sheet
Total Assets at September 30, 1999 were $41.4 million compared to $41.7
million at September 30, 1998. Total loans increased to $25.9 million at
September 30, 1999 from $21.7 million at September 30, 1998, while securities
decreased to $11.0 million from $13.2 million and deposits decreased to $37.2
million from $37.3 million as of those respective dates. Shareholders' equity in
Bancshares increased to $2.9 million at September 30, 1999 from $2.8 million at
September 30, 1998. Bancshares' shareholders' equity in its wholly owned bank
subsidiary, Guaranty Bank & Trust Company ("Guaranty Bank"), was $2.9 million at
September 30, 1999, an increase from $2.8 million at September 30, 1998, as a
result of the earnings of 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 nine months ended September 30, 1999 was $280 thousand
compared to $279.7 thousand during the same period in 1998. Interest income
decreased by $12.8 thousand for the nine month period ended June 30, 1999
compared to the same period in 1998. Non-interest income totaled $245.9 thousand
for the nine month period, compared to $258 thousand for the same period in
1998. Interest expense decreased to $875.8 thousand during the nine months ended
September 30, 1999, down from $911 thousand during the same period in 1998.
Non-interest expense decreased to $1.21 million from $1.22 million during those
periods.
SEPTEMBER 30, 1999 COMPARED WITH DECEMBER 31, 1998
Balance Sheet
Total assets decreased to $41.4 million at September 30, 1999, a decrease of
1.3% from $41.97 million at December 31, 1998. Total loans increased by $4
million, or 18.2%, to $25.9 million at September 30, 1999 compared to $21.9
million at December 31, 1998 primarily as a result of an increase in
agricultural lending. Securities declined $3.5 million to $11 million at
September 30, 1999, down from $14.5 million at December 31, 1998, primarily as a
result of a need to fund loans.
Total deposits increased slightly to $37.3 million at September 30, 1999, a
.2% increase from $37.2 million at December 31, 1998. Non-interest bearing
deposits decreased at a 3.4% rate, compared to a .7% growth in interest bearing
deposits. During the first nine months of 1999, shareholders' equity in
Bancshares increased to $2.9 million, an increase of $100 thousand, due to a
change from an unrealized gain to an unrealized loss on available for sale
securities and the earnings of Guaranty Bank for the nine 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 provision for loan losses of
$45.7 thousand at September 30, 1999. The reserve for possible loan losses
totaled $296.5 thousand at September 30, 1999, 1.14% of total loans, compared to
$274 thousand, or 1.25% of total loans, at December 31, 1998 and $274 thousand
or 1.26% at September 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 $75 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: September 27, 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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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
27 Financial Data Schedule
</TABLE>
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<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 1,762,167
<INT-BEARING-DEPOSITS> 962,428
<FED-FUNDS-SOLD> 550,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 11,024,877
<INVESTMENTS-CARRYING> 11,024,877
<INVESTMENTS-MARKET> 11,024,877
<LOANS> 25,962,188
<ALLOWANCE> 296,496
<TOTAL-ASSETS> 41,414,633
<DEPOSITS> 37,270,205
<SHORT-TERM> 959,723
<LIABILITIES-OTHER> 238,362
<LONG-TERM> 0
0
0
<COMMON> 1,075,305
<OTHER-SE> 1,861,920
<TOTAL-LIABILITIES-AND-EQUITY> 41,414,633
<INTEREST-LOAN> 1,639,285
<INTEREST-INVEST> 581,937
<INTEREST-OTHER> 90,367
<INTEREST-TOTAL> 2,311,589
<INTEREST-DEPOSIT> 814,429
<INTEREST-EXPENSE> 875,840
<INTEREST-INCOME-NET> 1,435,749
<LOAN-LOSSES> 45,700
<SECURITIES-GAINS> 491
<EXPENSE-OTHER> 1,211,329
<INCOME-PRETAX> 424,582
<INCOME-PRE-EXTRAORDINARY> 280,224
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 280,224
<EPS-BASIC> 1.95
<EPS-DILUTED> 1.95
<YIELD-ACTUAL> 0
<LOANS-NON> 15,832
<LOANS-PAST> 250,019
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 0
<CHARGE-OFFS> 26,109
<RECOVERIES> 3,381
<ALLOWANCE-CLOSE> 0
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
