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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 June 30, 2000
[ ] 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,
2000
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GREAT GUARANTY BANCSHARES, INC.
FORM 10-QSB
JUNE 30, 2000
INDEX
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PAGE
REFERENCE
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PART I - FINANCIAL INFORMATION 1
ITEM 1. FINANCIAL STATEMENTS 1
Consolidated Balance Sheet as of June 30, 2000 1
Consolidated Statements of Income for the six months
and for the three months ended June 30, 2000 and 1999 2
Consolidated Statements of Cash Flows for the six months
ended June 30, 2000 and 1999 3
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS 5
Material Changes in Financial Condition 5
Six Months Ended June 30, 2000 Compared with Six Months
Ended June 30, 1999 5
June 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 JUNE 30, 2000
(UNAUDITED)
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ASSETS
Cash and due from banks $ 2,155,643
Interest-bearing deposits with banks 421,232
Federal Funds Sold 0
Investments securities - available for sale 10,418,790
Investment in restricted equity securities 250,700
Loans, net of allowance for loan losses of $386,691 29,813,848
Properties and equipment, net 462,997
Accrued interest receivable 422,121
Other Assets 55,124
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TOTAL ASSETS $ 44,000,455
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LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Demand deposits $ 6,342,277
NOW accounts 8,261,819
Savings deposits 7,234,059
Time deposits, $100,000 and over 2,856,977
Other time deposits 14,942,326
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Total deposits $ 39,637,458
Notes Payable 859,124
Accrued expenses and other liabilities 237,227
Dividends Payable 71,687
Income Taxes Payable 93,234
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Total liabilities $ 40,898,730
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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 deficit (160,535)
Accumulated Other Comprehensive Income (224,516)
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Total shareholders' equity $ 3,101,725
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 44,000,455
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GREAT GUARANTY BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
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Six Months Ended June 30, Three Months Ended June 30,
2000 1999 2000 1999
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INTEREST INCOME
Interest and fees on loans $ 1,334,523 $ 1,050,925 $ 714,492 $ 543,375
Interest on investment securities 356,475 403,144 180,576 190,028
Interest on Federal Funds sold 54,563 15,767 23,218 8,286
Interest on Deposits with Banks 20,440 51,550 9,531 21,983
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Total interest income $ 1,766,001 $ 1,521,386 $ 927,817 $ 763,672
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INTEREST EXPENSE
Interest on notes payable 35,277 41,930 18,202 18,952
Interest on deposits 609,698 549,600 312,978 270,361
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Total interest expense $ 644,975 $ 591,530 $ 331,180 $ 289,313
------------ ------------ ------------ ------------
NET INTEREST INCOME $ 1,121,026 $ 929,856 $ 596,637 $ 474,359
PROVISION FOR LOAN LOSSES 62,000 19,500 39,000 13,000
------------ ------------ ------------ ------------
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES $ 1,059,026 $ 910,356 $ 557,637 $ 461,359
------------ ------------ ------------ ------------
NON INTEREST INCOME
Service charges on deposit accounts $ 133,574 $ 135,066 $ 62,804 $ 65,024
Other service charges and fees 11,875 20,352 6,249 18,981
Net investment securities gains (losses) 0 491 0 0
Other income 22,609 10,907 9,369 2,500
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$ 168,058 $ 166,816 $ 78,422 $ 86,505
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NON INTEREST EXPENSE
Salaries and employee benefits $ 408,542 $ 438,782 $ 209,880 $ 210,707
Occupancy expense 109,848 101,640 58,360 52,165
Data processing 45,542 47,877 22,247 23,238
Legal fees 5,837 3,306 4,975 2,070
Other expense 205,524 239,450 101,648 127,821
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$ 775,293 $ 831,055 $ 397,110 $ 416,001
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INCOME BEFORE INCOME TAXES $ 451,791 $ 246,117 $ 238,949 $ 131,863
INCOME TAX EXPENSE 155,800 83,680 83,800 44,834
------------ ------------ ------------ ------------
NET INCOME $ 295,991 $ 162,437 $ 155,149 $ 87,029
OTHER COMPREHENSIVE INCOME, NET OF TAX
UNREALIZED HOLDING LOSSES ARISING
DURING PERIOD (14,808) (160,439) (1,200) (156,811)
------------ ------------ ------------ ------------
COMPREHENSIVE INCOME $ 281,183 $ 1,998 $ 153,949 $ (69,782)
============ ============ ============ ============
PER COMMON SHARE DATA:
NET INCOME $ 2.06 $ 1.13 $ 1.08 $ .61
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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)
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Six months ended June 30,
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2000 1999
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CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 295,991 $ 162,437
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 53,829 55,312
Provision for loan losses 62,000 19,500
Deferred tax (17,306) 38,240
Stock dividends received (11,100) (6,300)
Net gain on sale of ORE (8,997) (2,046)
Net investment securities (gains) losses 0 (491)
Income taxes payable 93,106 45,440
(Increase) decrease in accrued income and other assets (63,979) (87,146)
Increase (decrease) in accrued expenses and other liabilities 74,513 (45,539)
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Net cash provided by operating activities $ 478,057 $ 179,407
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CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales/maturities of investment securities
Available for sale $ 526,763 $ 4,136,617
Purchase of investment securities
Available for sale (500,000) (2,000,000)
Net change in:
Interest bearing deposits with banks 371,176 722,245
Federal Funds Sold 0 0
Loans (4,303,733) (2,562,173)
Purchase of equipment and building improvements (42,523) (11,374)
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Net cash (used in) provided by investing activities $ (3,948,317) $ 285,315
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GREAT GUARANTY BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(CONTINUED)
(UNAUDITED)
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Six months ended June 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 $ 2,691,310 $ 291,133
Net increase (decrease) in time deposit 877,128 (369,826)
Payments on notes payable (67,829) (63,145)
Net change in federal funds purchased and
Repurchase Agreement Sold 0 (600,000)
Dividends Paid (35,843) (35,843)
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Net cash provided by (used in) financing activities $ 3,464,766 $ (777,681)
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NET DECREASE IN CASH AND DUE FROM BANKS (5,494) (312,959)
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 $ 2,155,643 $ 1,881,677
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SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION
Cash paid during the year for:
Interest $ 646,946 $ 601,666
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Income taxes $ 80,000 $ 4,000
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
MATERIAL CHANGES IN FINANCIAL CONDITION.
SIX MONTHS ENDED JUNE 30, 2000 COMPARED WITH SIX MONTHS ENDED JUNE 30, 1999.
Balance Sheet
Total Assets at June 30, 2000 were $44 million compared to $41.2 million at
June 30, 1999. Total loans increased to $29.8 million at June 30, 2000 from
$24.4 million at June 30, 1999, while securities decreased to $10.4 million from
$12.2 million. Deposits increased to $39.6 million from $37.1 million as of
those respective dates. Shareholders' equity in Bancshares increased to $3.1
million at June 30, 2000 from $2.8 million at June 30, 1999. Bancshares'
shareholders' equity in its wholly owned bank subsidiary, Guaranty Bank & Trust
Company ("Guaranty Bank"), was $3.1 million at June 30, 2000, an increase from
$2.8 million at June 30, 1999, as a result of the earnings of Guaranty Bank less
dividend payments by Guaranty Bank to Bancshares and an increase in the
unrealized loss on 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 expenses incurred by Bancshares from the
net income earned by Guaranty Bank.
Income for the six months ended June 30, 2000 was $296 thousand compared to
$162.4 thousand during the same period in 1999. Interest income increased to
$1.76 million for the six month period ended June 30, 2000 compared to $1.52
million for the same period in 1999, as a result of increased loan volume.
Non-interest income totaled $168 thousand for the six month period, compared to
$167 thousand for the same period in 1999. Interest expense increased to $645
thousand during the six months ended June 30, 2000, an increase from $592
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 $775 thousand from $831 thousand during those periods.
JUNE 30, 2000 COMPARED WITH DECEMBER 31, 1999
Balance Sheet
Total assets increased $3.9 million to $44 million at June 30, 2000, an
increase of 9.7% from $40.1 million at December 31, 1999. Total loans increased
by $4.2 million, or 16.59%, to $29.8 million at June 30, 2000 compared to $25.6
million at December 31, 1999. Securities declined $41.6 thousand to $10.4
million at June 30, 2000, down from $10.5 million at December 31, 1999.
Total deposits increased by $3.57 million to $39.6 million at June 30, 2000,
a 9.89% increase from $36.07 million at December 31, 1999. Non-interest bearing
deposits increased at a 7.1% rate, compared to a 10.4% 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 six
months of 2000, shareholders' equity in Bancshares increased $209 thousand to
$3.1 million at June 30, 2000 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 loan loss provision of $62
thousand for the six month period ended June 30, 2000. The reserve for possible
loan losses at June 30, 2000 was $386.7 thousand, 1.30% of total loans, compared
to $333 thousand, or 1.30% of total loans, at December 31, 1999 and $270
thousand or 1.10% at June 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 $94,000 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 June 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.
(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: August 14, 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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INDEX TO EXHIBITS
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PAGE NO. DESCRIPTION
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27 Financial Data Schedule
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