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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, 2000
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
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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
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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, 2000
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GREAT GUARANTY BANCSHARES, INC.
FORM 10-QSB
SEPTEMBER 30, 2000
INDEX
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PART I - FINANCIAL INFORMATION PAGE
REFERENCE
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ITEM 1. FINANCIAL STATEMENTS 1
Consolidated Balance Sheet as of September 30, 2000 1
Consolidated Statements of Income for the nine months
and for the three months ended September 30, 2000 and 1999 2
Consolidated Statements of Cash Flows for the nine months ended
September 30, 2000 and 1999 3
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS 5
Material Changes in Financial Condition 5
Nine Months Ended September 30, 2000 Compared with Nine Months Ended
September 30, 1999 5
September 30, 2000 Compared with December 31, 1999 5
Loan Loss Provision 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 7
EXHIBIT INDEX 8
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
GREAT GUARANTY BANCSHARES, INC.
CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 2000
(UNAUDITED)
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ASSETS
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Cash and due from banks $ 1,915,863
Interest-bearing deposits with banks 128,501
Federal Funds Sold 225,000
Investments securities - available for sale 9,800,962
Investment in restricted equity securities 200,000
Loans, net of allowance for loan losses of $412,667 31,599,394
Properties and equipment, net 457,766
Accrued interest receivable 493,623
Other Assets 65,150
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TOTAL ASSETS $ 44,886,259
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LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Demand deposits $ 6,094,626
NOW accounts 7,066,191
Savings deposits 6,834,553
Time deposits, $100,000 and over 3,521,887
Other time deposits 15,350,339
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Total deposits $ 38,867,596
Notes Payable 824,246
Accrued expenses and other liabilities 247,988
Federal Funds Purchased and Repurchase Agreement Sold 1,459,233
Income Taxes Payable 140,242
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Total liabilities $ 41,539,305
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SHAREHOLDERS' 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
Accumulated surplus 9,916
Accumulated Other Comprehensive Income (149,738)
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Total shareholders' equity $ 3,346,954
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 44,886,259
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GREAT GUARANTY BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
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<CAPTION>
Nine Months Ended Sept. 30, Three Months Ended Sept. 30,
2000 1999 2000 1999
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<S> <C> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans $ 2,107,349 $ 1,624,959 $ 775,739 $ 585,430
Interest on investment securities 523,445 581,937 166,970 178,793
Interest on Federal Funds sold 65,377 20,402 10,814 4,635
Interest on Deposits with Banks 25,083 69,965 4,643 18,415
------------ ------------ ------------ ------------
Total interest income $ 2,721,254 $ 2,297,263 $ 958,166 $ 787,273
------------ ------------ ------------ ------------
INTEREST EXPENSE
Interest on notes payable 48,920 56,236 15,779 18,353
Interest on Federal Funds Purchased and
Repurchase Agreement Sold 12,923 5,175 10,787 1,128
Interest on deposits 945,960 814,429 336,262 264,829
------------ ------------ ------------ ------------
Total interest expense $ 1,007,803 $ 875,840 $ 362,828 $ 284,310
------------ ------------ ------------ ------------
NET INTEREST INCOME $ 1,713,451 $ 1,421,423 $ 595,338 $ 502,963
PROVISION FOR LOAN LOSSES 86,000 45,700 24,000 26,200
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES $ 1,627,451 $ 1,375,723 $ 571,338 $ 476,763
NON INTEREST INCOME
Service charges on deposit accounts $ 200,051 $ 208,277 $ 66,477 $ 73,211
Other service charges and fees 27,404 46,623 7,491 8,673
Net investment securities gains (losses) (547) 491 (547) 0
Other income 18,883 6,843 1,399 2,138
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$ 245,791 $ 262,234 $ 74,820 $ 84,022
------------ ------------ ------------ ------------
NON INTEREST EXPENSE
Salaries and employee benefits $ 601,511 $ 636,924 $ 192,969 $ 198,142
Occupancy expense 170,829 159,378 60,981 57,738
Data processing 66,823 70,297 21,281 22,420
Legal fees 5,931 4,928 94 1,622
Other expense 315,706 341,848 110,182 102,398
------------ ------------ ------------ ------------
$ 1,160,800 $ 1,213,375 $ 385,507 $ 382,320
------------ ------------ ------------ ------------
INCOME BEFORE INCOME TAXES $ 712,442 $ 424,582 $ 260,651 $ 178,465
INCOME TAX EXPENSE 246,000 144,358 90,200 60,678
------------ ------------ ------------ ------------
NET INCOME $ 466,442 $ 280,224 $ 170,451 $ 117,787
OTHER COMPREHENSIVE INCOME, NET OF TAX
UNREALIZED HOLDING GAINS (LOSSES) ARISING DURING
PERIOD 59,970 (159,542) 74,778 897
------------ ------------ ------------ ------------
COMPREHENSIVE INCOME $ 526,412 $ 120,682 $ 245,229 $ 118,684
============ ============ ============ ============
PER COMMON SHARE DATA:
NET INCOME $ 3.25 $ 1.95 $ 1.19 $ .82
------------ ------------ ------------ ------------
AVERAGE SHARES OUTSTANDING 143,374 143,374 143,374 143,374
============ ============ ============ ============
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GREAT GUARANTY BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED) PAGE 1 OF 2
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<CAPTION>
Nine months ended Sept. 30,
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2000 1999
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CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 466,442 $ 280,224
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 80,904 83,621
Provision for loan losses 86,000 45,700
Deferred tax (24,174) 38,240
Stock dividends received (14,900) (9,300)
Net gain on sale of ORE (8,997) (2,046)
Net investment securities (gains) losses 547 (491)
Income Taxes Payable 164,288 9,118
(Increase) decrease in accrued income and other assets (145,507) (62,824)
Increase (decrease) in accrued expenses and other liabilities 67,969 (3,239)
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Net cash provided by operating activities $ 672,572 $ 379,003
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CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales/maturities of investment securities
Available for sale $ 1,218,822 $ 5,332,352
Purchase of investment securities
Available for sale (500,000) (2,000,000)
Proceeds from sales of Equity Securities 54,500 0
Net change in:
Interest bearing deposits with banks 663,907 1,213,203
Federal Funds Sold (225,000) (550,000)
Loans (6,113,279) (4,111,513)
Purchase of equipment and building improvements (64,367) (12,723)
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Net cash used in investing activities $ (4,965,417) $ (128,681)
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GREAT GUARANTY BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(CONTINUED)
(UNAUDITED) PAGE 2 OF 2
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<CAPTION>
Nine months ended Sept. 30,
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2000 1999
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CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in non-interest-bearing demand,
savings and NOW accounts $ 848,525 $ 55,851
Net increase (decrease) in time deposit 1,950,051 (7,295)
Payments on notes payable (102,707) (95,504)
Net change in federal funds purchased and
Repurchase Agreement Sold 1,459,233 (600,000)
Dividends Paid (107,531) (35,843)
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Net cash provided by (used in) financing activities $ 4,047,571 $ (682,791)
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NET DECREASE IN CASH AND DUE FROM BANKS (245,274) (432,469)
CASH AND DUE FROM BANKS AT BEGINNING
OF PERIOD 2,161,137 2,194,636
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CASH AND DUE FROM BANKS AT END
OF PERIOD $ 1,915,863 $ 1,762,167
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SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION
Cash paid during the year for:
Interest $ 991,721 $ 878,081
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Income taxes $ 120,000 $ 101,000
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</TABLE>
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
MATERIAL CHANGES IN FINANCIAL CONDITION.
NINE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED WITH NINE MONTHS ENDED
SEPTEMBER 30, 1999.
Balance Sheet
Total Assets at September 30, 2000 were $44.9 million compared to $41.4
million at September 30, 1999. Total loans increased to $31.6 million at
September 30, 2000 from $25.96 million at September 30, 1999, while securities
decreased to $9.8 million from $11 million. Deposits increased to $38.9 million
from $37.3 million as of those respective dates. Shareholders' equity in
Bancshares increased to $3.3 million at September 30, 2000 from $2.9 million at
September 30, 1999. Bancshares' shareholders' equity in its wholly owned bank
subsidiary, Guaranty Bank & Trust Company ("Guaranty Bank"), was $3.3 million at
September 30, 2000, an increase from $2.9 million at September 30, 1999, as a
result of the earnings of Guaranty Bank less dividend payments by Guaranty Bank
to Bancshares.
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 expenses incurred by Bancshares from the
net income earned by Guaranty Bank.
Income for the nine months ended September 30, 2000 was $466 thousand
compared to $280 thousand during the same period in 1999. Interest income
increased by $424 thousand for the nine month period ended September 30, 2000
compared to the same period in 1999 as a result of increased loan volume.
Non-interest income totaled $245.8 thousand for the nine month period, compared
to $262 thousand for the same period in 1999. Interest expense increased to
$1.008 million during the nine months ended September 30, 2000, an increase from
$876 thousand during the same period in 1999, due to increased NOW account and
time deposits as well as an increase in rates on time deposits. Non-interest
expense decreased to $1.16 million from $1.21 million during those periods.
SEPTEMBER 30, 2000 COMPARED WITH DECEMBER 31, 1999
Balance Sheet
Total assets increased to $44.9 million at September 30, 2000, an increase
of 11.9% from $40.1 million at December 31, 1999. Total loans increased by $6
million, or 23.6%, to $31.6 million at September 30, 2000 compared to $25.6
million at December 31, 1999. Securities declined $659 thousand to $9.8 million
at September 30, 2000, down from $10.5 million at December 31, 1999.
Total deposits increased to $38.9 million at September 30, 2000, a 7.8%
increase from $36.07 million at December 31, 1999. Non-interest bearing deposits
increased at a 2.9% rate, compared to a 8.7% growth in interest bearing
deposits. Deposits increased primarily as a result of management's decision to
increase deposits in order to grow loans. During the first nine months of 2000,
shareholders' equity in Bancshares increased to $3.3 million, an increase of
$456 thousand, due primarily to the earnings of Guaranty Bank.
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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 $86
thousand for the nine month period ended September 30, 2000. The reserve for
possible loan losses totaled $412.7 thousand at September 30, 2000, 1.29% of
total loans, compared to $333 thousand, or 1.29% of total loans, at December 31,
1999 and $296 thousand or 1.14% at September 30, 1999. On a monthly basis,
Guaranty Bank management performs an analysis to determine the adequacy of the
reserve for possible loan losses.
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 was 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 and completed "baseline" and "future" date testing to
establish a model for later test comparisons to ensure that the
programs were computed correctly. There were no Y2K problems found.
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.
o Conducted point to point and end to end testing with the Federal
Reserve. Testing was completed December 1998. There were no Y2K errors
found during testing.
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.
To date the bank has incurred costs of approximately $94 thousand in its
Y2K efforts.
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The potential consequences of Year 2000 had no material effect on the
Bank's business, results of operations, or financial condition as of September
30, 2000, and the Bank is ready for any potential problems that will arise with
critical dates in the year 2000.
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: November 13, 2000 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
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EXHIBIT
NUMBER DESCRIPTION
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(27) Financial Data Schedule
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