UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[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
OR
[ ] 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: 000-24235
GUARANTY BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
TEXAS 75-16516431
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
100 W. ARKANSAS
MT. PLEASANT, TEXAS 75455
(Address of principal executive offices, including zip code)
903-572-9881
(Registrant's telephone number, including area code)
Indicate by check mark 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. [X] Yes [ ] No
As of May 10, 1999, there were 2,898,280 shares of the registrant's Common
Stock, par value $1.00 per share, outstanding.
<PAGE>
GUARANTY BANCSHARES, INC. AND SUBSIDIARIES
INDEX TO FORM 10-Q
PART I - FINANCIAL INFORMATION
Page
Item 1. Financial Statements
Consolidated Balance Sheets as of March 31, 1999
(unaudited) and December 31, 1998........................... 2
Consolidated Statements of Earnings for the
Three Months Ended March 31, 1999 and 1998 (unaudited)...... 4
Consolidated Statement of Changes in Shareholders' Equity..... 5
Consolidated Statements of Cash Flows for the Three
Months Ended March 31, 1999 and 1998 (unaudited)............ 6
Consolidated Statements of Comprehensive Income for
the Three Months Ended March 31, 1999 and 1998
(unaudited)................................................. 7
Notes to Interim Consolidated Financial Statements............ 8
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations..................................... 10
Item 3. Quantitative and Qualitative Disclosures about Market Risk...... 23
PART II - OTHER INFORMATION
Item 1. Legal Proceedings............................................... 24
Item 2. Changes in Securities and Use of Proceeds....................... 24
Item 3. Defaults upon Senior Securities ................................ 24
Item 4. Submission of Matters to a Vote of Security Holders............. 24
Item 5. Other Information............................................... 24
Item 6. Exhibits and Reports on Form 8-K................................ 24
Signatures............................................................... 25
1
<PAGE>
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
GUARANTY BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN
THOUSANDS)
March 31, Dec. 31,
1999 1998
--------- ---------
(Unaudited)
ASSETS
Cash and due from banks .............................. $ 10,094 $ 11,721
Federal funds sold ................................... 13,705 10,090
Securities:
Available-for-sale ................................. 42,172 44,305
Held-to-maturity ................................... 7,172 7,062
-------- --------
Total securities ................................. 49,344 51,367
-------- --------
Loans, net of allowance for loan losses of $1,560
and $1,512 ......................................... 195,488 184,374
Premises and equipment, net .......................... 7,460 7,032
Accrued interest receivable .......................... 2,368 2,331
Other assets ......................................... 6,076 5,991
-------- --------
Total assets ..................................... $284,535 $272,906
======== ========
2
<PAGE>
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing ................................ $ 43,071 $ 47,360
Interest-bearing ................................... 210,639 194,965
-------- --------
Total deposits ................................... 253,710 242,325
-------- --------
Borrowed Funds ....................................... 3,911 3,980
Other liabilities .................................... 2,629 2,805
-------- --------
Total liabilities ................................ 260,250 249,110
-------- --------
Shareholders' equity:
Preferred stock .................................... -- --
Common stock ....................................... 2,898 2,898
Additional capital ................................. 9,494 9,494
Retained earnings .................................. 11,837 11,181
Accumulated other comprehensive income ............. 56 223
-------- --------
24,285 23,796
Less common stock held in treasury--at cost .......... -- --
-------- --------
Total shareholders' equity ....................... 24,285 23,796
-------- --------
Total liabilities and shareholders' equity ....... $284,535 $272,906
======== ========
See accompanying Notes to Interim Consolidated Financial Statements
3
<PAGE>
GUARANTY BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31,
-------------------
1999 1998
------- -------
Interest income:
Loans ................................................. $3,881 $3,447
Securities ............................................ 772 895
Federal funds sold and other temporary investments .... 110 139
------ ------
Total interest income ............................... 4,763 4,481
Interest expense ........................................ 2,273 2,232
------ ------
Net interest income ................................. 2,490 2,249
Provision for loan losses ............................... 105 370
------ ------
Net interest income after provision for loan losses . 2,385 1,879
------ ------
Noninterest income:
Service charges ....................................... 405 287
Other operating income ................................ 252 875
Realized gain on available-for-sale securities ........ 5 --
Realized gain on held-to-maturity securities .......... -- --
------ ------
Total noninterest income ............................ 662 1,162
------ ------
Noninterest expense:
Employee compensation and benefits .................... 1,268 1,082
Net bank premises expense ............................. 309 286
Other operating expenses .............................. 650 658
------ ------
Total noninterest expenses .......................... 2,227 2,026
------ ------
Earnings before income taxes ........................ 820 1,015
Provision for income taxes .............................. 165 295
------ ------
Net earnings available to common shareholders ....... $ 655 $ 720
====== ======
Basic earnings per common share ..................... $ 0.23 $ 0.28
====== ======
Diluted earnings per common share ................... $ 0.23 $ 0.28
====== ======
See accompanying Notes to Interim Consolidated Financial Statements.
4
<PAGE>
GUARANTY BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
ACCUMULATED
OTHER TOTAL
COMPRE- COMMON SHARE-
PREFERRED COMMON ADDITIONAL RETAINED HENSIVE STOCK IN HOLDERS'
STOCK STOCK CAPITAL EARNINGS INCOME TREASURY EQUITY
---------- -------- ---------- --------- ----------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1997 .......... $ 827 $ 2,548 $ 5,396 $ 7,480 $ 19 $ (20) $ 16,250
Sale of treasury stock .............. -- -- -- -- -- 20 20
Dividends
Preferred - $0.45 per share ..... -- -- -- (74) -- -- (74)
Common - $0.22 per share ........ -- -- -- (566) -- -- (566)
Net change in unrealized gain
on available-for-sale
securities, net of tax of $114 .. -- -- -- -- 223 -- 223
Net earnings for the year ........... -- -- -- 2,400 -- -- 2,400
-------- -------- -------- -------- -------- -------- --------
Balance at December 31, 1997 ........ $ 827 $ 2,548 $ 5,396 $ 9,240 $ 242 $ -- $ 18,253
Purchase of treasury stock .......... -- -- -- -- -- (2) (2)
Sale of treasury stock .............. -- -- -- -- -- 2 2
Purchase of preferred stock ......... (827) -- -- -- -- -- (827)
Sale of common stock ................ -- 350 4,098 -- -- -- 4,448
Dividends
Preferred - $0.23 per share ..... -- -- -- (37) -- -- (37)
Common - $0.24 per share ........ -- -- -- (696) -- -- (696)
Net change in unrealized gain
on available-for-sale
securities, net of tax of $10 ... -- -- -- -- (19) -- (19)
Net earnings ........................ -- -- -- 2,674 -- -- 2,674
-------- -------- -------- -------- -------- -------- --------
Balance at December 31, 1998 ........ $ -- $ 2,898 $ 9,494 $ 11,181 $ 223 $ -- $ 23,796
======== ======== ======== ======== ======== ======== ========
Purchase of treasury stock .......... -- -- -- -- -- -- --
Sale of treasury stock .............. -- -- -- -- -- -- --
Purchase of preferred stock ......... -- -- -- -- -- -- --
Sale of common stock ................ -- -- -- -- -- -- --
Dividends
Preferred - $0.00 per share ..... -- -- -- -- -- -- --
Common - $0.00 per share ........ -- -- -- -- -- -- --
Rounding ............................ -- -- -- 1 -- -- 1
Net change in unrealized gain
on available-for-sale
securities, net of tax of
$85(1) .......................... -- -- -- -- (167) -- (167)
Net earnings(1) ..................... -- -- -- 655 -- -- 655
-------- -------- -------- -------- -------- -------- --------
Balance at March 31, 1999(1) ........ $ -- $ 2,898 $ 9,494 $ 11,837 $ 56 $ -- $ 24,285
======== ======== ======== ======== ======== ======== ========
</TABLE>
(1) Unaudited
See accompanying Notes to Interim Consolidated Financial Statements.
5
<PAGE>
GUARANTY BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
----------------------------
1999 1998
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net earnings ................................................ $ 655 $ 720
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation ................................................ 160 136
Amortization of premiums, net of (accretion) of
discounts on securities ................................... 73 37
Net realized (gain) on available-for-sale securities ........ (5) --
Provision for loan loss ..................................... 105 370
Gain on sale of premises, equipment and other real estate ... (11) (3)
Write down of ORE and repossessed assets .................... -- 15
Proceeds from sale of loans ................................. -- 1,967
Increase in accrued interest receivable and other assets .... (142) (343)
(Decrease) increase in accrued interest and other liabilities (90) 404
-------- --------
Net cash provided by operating activities .............. 745 3,303
Cash flows from investing activities:
Purchases of held-to-maturity securities .................... (708) --
Proceeds from sales, maturities and repayments of
available-for-sale securities ............................. 4,445 5,042
Purchases of available-for-sale securities .................. (2,627) (2,434)
Proceeds from maturities and repayments of held-to-maturity
securities ................................................ 593 2,925
Net increase in loans ....................................... (11,219) (7,638)
Purchases of premises and equipment ......................... (588) (139)
Proceeds from sale of premises, equipment and other
real estate ............................................... 31 19
Net increase in federal funds sold .......................... (3,615) (5,175)
-------- --------
Net cash used by investing activities .................. (13,688) (7,400)
Cash flows from financing activities:
Change in deposits .......................................... 11,385 2,197
Repayment of borrowings ..................................... (69) --
Purchase of treasury stock .................................. -- (2)
-------- --------
Net cash provided from financing activities ............ 11,316 2,195
-------- --------
Net decrease in cash and cash equivalents .............. (1,627) (1,902)
Cash and cash equivalents at beginning of period ................ 11,721 9,750
-------- --------
Cash and cash equivalents at end of period ...................... $ 10,094 $ 7,848
======== ========
</TABLE>
See accompanying Notes to Interim Consolidated Financial Statements.
6
<PAGE>
GUARANTY BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(DOLLARS IN THOUSANDS)
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31,
-------------------
1999 1998
------ -----
Net earnings ............................................ $ 655 $ 720
Other comprehensive income, net of tax:
Unrealized (losses) gains on securities:
Unrealized (losses) gains arising during the period ... (167) 8
----- -----
Comprehensive income .................................... $ 488 $ 728
===== =====
See accompanying Notes to Interim Consolidated Financial Statements.
7
<PAGE>
GUARANTY BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1999
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)
(1) BASIS OF PRESENTATION
The consolidated financial statements include the accounts of Guaranty
Bancshares, Inc. ("the Company") and its wholly-owned subsidiary Guaranty
Financial Corp., Inc. which wholly owns Guaranty Bank and one non-bank
subsidiary, Guaranty Company. Guaranty Bank has two non-bank subsidiaries,
Guaranty Leasing Company and GB Com, Inc. All significant intercompany balances
and transactions have been eliminated in consolidation.
The accompanying unaudited consolidated financial statements have been
prepared in accordance with the rules and regulations of the Securities and
Exchange Commission. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, the statements reflect all
adjustments necessary for a fair presentation of the financial position, results
of operations and cash flows of the Company on a consolidated basis, and all
such adjustments are of a normal recurring nature. These financial statements
and the notes thereto should be read in conjunction with the Company's Annual
Report on Form 10-K filed with the Securities and Exchange Commission on March
12, 1999. Operating results for the three month period ended March 31, 1999, are
not necessarily indicative of the results that may be expected for the year
ending December 31, 1999.
(2) INCOME PER COMMON SHARE
Income per common share was computed based on the following:
FOR THE THREE MONTHS ENDED
MARCH 31,
--------------------------
1999 1998
---------- ----------
Net earnings available to common shareholders ..... $ 655 $ 720
Weighted average common shares used in basic EPS .. 2,898,280 2,548,280
Potential dilutive common shares .................. -- --
---------- ----------
Weighted average common and potential dilutive
common shares used in dilutive EPS ............ 2,898,280 2,548,280
========== ==========
Basic earnings per common share ................... $ 0.23 $ 0.28
========== ==========
Diluted earnings per common share ................. $ 0.23 $ 0.28
========== ==========
8
<PAGE>
GUARANTY BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
MARCH 31, 1999
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)
COMPREHENSIVE INCOME
Effective January 1, 1998, the Company has adopted Financial Accounting
Standards No. 130, Reporting Comprehensive Income, which requires the reporting
of comprehensive income in addition to net income from operations. Comprehensive
income is a more inclusive financial reporting methodology which includes
disclosure of certain financial information that historically has not been
recognized in the calculation of net earnings.
The tax effects for components of comprehensive income are as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
-----------------------------------------------------------------------
1999 1998
-------------------------------- --------------------------------
BEFORE TAX NET OF BEFORE TAX NET OF
TAX (EXPENSE)/ TAX TAX (EXPENSE)/ TAX
AMOUNT BENEFIT AMOUNT AMOUNT BENEFIT AMOUNT
-------------------------------- --------------------------------
<S> <C> <C> <C> <C> <C> <C>
Unrealized (losses) gains on
securities arising during the
period............................. $ (252) $ 85 $(167) $ 12 $ (4) $ 8
-------------------------------- --------------------------------
Other comprehensive income.......... $ (252) $ 85 $(167) $ 12 $ (4) $ 8
================================ ================================
</TABLE>
9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Guaranty Bancshares, Inc. (the "Company") is a registered bank holding
company that derives substantially all of its revenues and income from the
operation of its subsidiary, Guaranty Bank (the "Bank"). The Bank is a full
service bank that provides a broad line of financial products and services to
small and medium-sized businesses and consumers through seven banking locations
in the Texas communities of Mount Pleasant (two offices), Bogata, Deport, Paris,
Talco and Texarkana. Certain of the matters discussed in this Form 10-Q,
including matters discussed under the caption "Management's Discussion and
Analysis of Financial Condition and Results of Operations," may constitute
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995, and as such may involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance
or achievements of the Company to be materially different from future results,
performance or achievements expressed or implied by such forward-looking
statements. The words "expects," "estimates," "anticipates," "intends," "plans,"
"believes," "seek," "will," "would," "should," "projected," "contemplated" and
similar expressions are intended to identify such forward-looking statements.
The Company's actual results or experience may differ materially from
the results anticipated in such forward-looking statements due to a variety of
factors, including, but not limited to: (i) the effects of the Internal Revenue
Service's examination regarding the Company's leveraged leasing transactions;
(ii) the effects of future economic conditions; (iii) governmental monetary and
fiscal policies, as well as legislative and regulatory changes, (iv) the risks
of changes in interest rates on the level and composition of deposits, loan
demand and the values of loan collateral, securities and interest rate
protection agreements, as well as interest rate risks; (v) the effects of
competition from other commercial banks, thrifts, mortgage banking firms,
insurance companies, money market and other mutual funds and other financial
institutions operating in the Company's market areas and elsewhere, including
competitors offering banking products and services by mail, telephone, computer
and the Internet; (vi) the failure of assumptions underlying the establishment
of reserves for loan losses and estimations of values of collateral and various
financial assets and liabilities and that technological changes, including Year
2000 data systems compliance issues are more difficult or expensive than
anticipated; and (vii) other uncertainties set forth in the Company's other
public reports and filings and public statements. All written or oral
forward-looking statements attributable to the Company are expressly qualified
in their entirety by these cautionary statements.
OVERVIEW
Net earnings available to common shareholders for the three months ended
March 31, 1999, were $655,000 or $0.23 per share compared to $720,000 or $0.28
per share for the three months ended March 31, 1998, a decrease of 9.0%. While
aided by an increase in net interest income, due to a 11.4% growth in average
earning assets, the decrease in net earnings was due in part to a gain on the
sale of approximately $2.0 million in principal amount of mortgage loans that
were originally purchased in 1991 at a discount from the Resolution Trust
Corporation("RTC") recorded in March 1998. The Company sold the mortgage loans
at par, which resulted in a gain of $444,000, net of $230,000 in taxes expensed
as a result of the sale. The Company did not have a gain from the sale of loans
in the first three months of 1999. The gain on the sale of the loans in 1998 was
partially offset by an additional provision for loan losses of $340,000 in the
first quarter of 1998. Accordingly, after giving effect to these transactions,
10
<PAGE>
core earnings available to common shareholders were $655,000 or $0.23 per share
for the first three months of 1999 compared to $616,000 or $0.24 per share for
the first three months of 1998, a 6.3% increase in net core earnings.
The three month period ended March 31, 1999 showed steady growth. Total
loans increased to $197.0 million at March 31, 1999, from $185.9 million at
December 31, 1998, an increase of $11.1 million or 6.0%. Total assets were
$284.5 million at March 31, 1999, compared with $272.9 million at December 31,
1998. The increase of $11.6 million in total assets resulted primarily from an
increase in total deposits to $253.7 million at March 31, 1999, from $242.3
million at December 31, 1998, an increase of $11.4 million or 4.7%, and an
increase in shareholders equity of $489,000. Common shareholders' equity was
$24.3 million at March 31, 1999, compared with $23.8 million at December 31,
1998, an increase of $489,000 or 2.1%. This increase was due to net earnings for
the period of $655,000 less a decrease in accumulated other comprehensive income
of $167,000.
RESULTS OF OPERATIONS
Interest Income
Interest income for the three months ended March 31, 1999, was $4.8
million, an increase of $282,000 or 6.3% from the three months ended March 31,
1998. The increase in interest income was due primarily to higher interest
income on loans. Average loans were $190.7 million for the three months ended
March 31, 1999, compared with $161.4 million for the three months ended March
31, 1998, an increase of $29.3 million or 18.2%. Internal growth accounted for
all of the $29.3 million increase in average loans. Average securities were
$51.2 million for the three months ended March 31, 1999, compared with $55.0
million for the three months ended March 31, 1998, a decrease of $3.8 million or
6.9%.
Interest Expense
Interest expense on deposits and other interest-bearing liabilities was
$2.3 million for the three months ended March 31, 1999, compared with $2.2
million for the three months ended March 31, 1998, an increase of $41,000 or
1.8%. The increase in interest expense was due primarily to an increase in
average interest-bearing liabilities, to $205.6 million for the three months
ended March 31, 1999, from $182.0 million for the three months ended March 31,
1998, an increase of $23.7 million or 13.0%. The increase is mitigated by a
decrease in average interest rates from 4.97% in 1998 to 4.48% for the first
three months in 1999.
Net Interest Income
Net interest income was $2.5 million for the three months ended March 31,
1999, compared with $2.2 million for the three months ended March 31, 1998, an
increase of $241,000 or 10.7%. The increase in net interest income resulted
primarily from growth in average earning assets to $250.9 million for the three
months ended March 31, 1999, from $225.3 million for the three months ended
March 31 1998, an increase of $25.6 million or 11.4%.
11
<PAGE>
The Company's net interest income is affected by changes in the amount and
mix of interest-earning assets and interest-bearing liabilities, referred to as
a "volume change." It is also affected by changes in yields earned on
interest-earning assets and rates paid on interest-bearing deposits and other
borrowed funds, referred to as a "rate change." The following table sets forth,
for each category of interest-earning assets and interest-bearing liabilities,
the average amounts outstanding, the interest earned or paid on such amounts,
and the average rate earned or paid for the three months ended March 31, 1999
and 1998. The table also sets forth the average rate earned on total
interest-earning assets, the average rate paid on total interest-bearing
liabilities, and the net interest margin on average total interest-earning
assets for the same periods.
12
<PAGE>
<TABLE>
<CAPTION>
Three months ended March 31,
--------------------------------------------------------------------------
1999 1998
---------------------------------- ----------------------------------
Average Interest Average Average Interest Average
Outstanding Earned/ Yield/ Outstanding Earned/ Yield/
Balance Paid Rate Balance Paid Rate
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS: (Dollars in thousands)
Interest-earning assets:
Loans:
Commercial and industrial ............ $ 58,230 $ 1,163 8.10% $ 45,720 $ 945 8.38%
Real estate-mortgage and construction. 111,495 2,217 8.06 93,912 1,983 8.56
Installment and other................. 20,989 501 9.68 21,743 519 9.68
Securities .............................. 51,227 772 6.11 55,046 895 6.59
Federal funds sold ...................... 6,936 83 4.85 8,862 139 6.36
Interest-bearing deposits in other
financial institutions................. 1,980 27 5.53 --- --- ---
--------- --------- ----- --------- --------- -----
Total interest-earning assets.......... 250,857 $ 4,763 7.70% 225,283 $ 4,481 8.07%
--------- ----- --------- -----
Less allowance for loan losses........... (1,525) (1,174)
--------- ---------
Total interest-earning assets,
net of allowance................ 249,332 224,109
Nonearning assets:
Cash and due from banks................... 8,682 8,649
Premises and equipment ................... 7,226 6,276
Interest receivable and other assets...... 9,321 6,419
Other real estate owned................... 135 725
--------- ---------
Total assets .................... $ 274,696 $246,178
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Interest-bearing liabilities:
NOW, savings, and money market
accounts ........................... $ 65,569 $ 512 3.17% $ 59,235 $ 525 3.59%
Time Deposits......................... 136,085 1,709 5.09 122,734 1,707 5.64
-------- --------- ----- --------- -------- -----
Total interest-bearing deposits.. 201,654 2,221 4.47 181,969 2,232 4.97
Other borrowed funds.................. 3,995 52 5.28 --- --- --
-------- --------- ----- --------- -------- -----
Total interest-bearing liabilities.... 205,649 2,273 4.48% 181,969 2,232 4.97%
--------- ----- -------- -----
Noninterest-bearing liabilities:
Demand deposits ...................... 42,249 42,347
Accrued interest, taxes and other
liabilities......................... 2,556 3,095
--------- ---------
Total liabilities ............... 250,454 227,411
Shareholders' equity ....................... 24,242 18,767
--------- ---------
Total liabilities and
shareholders' equity ............ $ 274,696 $ 246,178
========= =========
Net interest income ........................ $ 2,490 $ 2,249
========= =========
Net interest spread ........................ 3.22% 3.10%
==== ====
Net interest margin ........................ 4.03% 4.05%
==== ====
</TABLE>
13
<PAGE>
The following table presents the dollar amount of changes in interest
income and interest expense for the major components of interest-earning assets
and interest-bearing liabilities and distinguishes between the increase
(decrease) related to outstanding balances and the volatility of interest rates.
For purposes of this table, changes attributable to both rate and volume which
can be segregated have been allocated.
THREE MONTHS ENDED MARCH 31,
-------------------------------
1999 VS. 1998
-------------------------------
INCREASE (DECREASE)
DUE TO
-------------------
VOLUME RATE TOTAL
------- ------- -------
(Dollars in thousands)
Interest-earning assets:
Loans ............................... $ 627 $ (193) $ 434
Securities .......................... (62) (61) (123)
Federal funds sold .................. (30) (26) (56)
Interest-bearing deposits in other
financial institutions ........... 27 -- 27
------- ------ ------
Total increase (decrease) in
interest income................ 562 (280) 282
------- ------ ------
Interest-bearing liabilities:
NOW, savings and money market accounts 56 (69) (13)
Time Deposits........................ 186 (184) 2
Other borrowed funds................. 52 -- 52
------- ------ ------
Total increase (decrease) in
interest expense............... 294 (253) 41
------- ------ ------
Increase (decrease) in net interest
income ............................. $ 268 $ (27) $ 241
======= ====== ======
14
<PAGE>
Provision and Allowance for Loan Losses
In originating loans, the Company recognizes that credit losses will be
experienced and the risk of loss will vary with, among other things, general
economic conditions, the type of loan being made, the creditworthiness of the
borrower over the term of the loan and, in the case of a collateralized loan,
the quality of the collateral for such loan. The Company maintains an allowance
for loan losses based upon, among other things, historical experience, the
volume and type of lending conducted by the Company, the amount of nonperforming
assets, regulatory policies, generally accepted accounting principles, general
economic conditions, and other factors related to the collectibility of loans in
the Company's portfolio. In addition to unallocated allowances, specific
allowances are provided for individual loans when ultimate collection is
considered questionable by management after reviewing the current status of
loans which are contractually past due and considering the net realizable value
of the collateral for the loan.
Management actively monitors the Company's asset quality and provides
specific loss allowances when necessary. Loans are charged-off against the
allowance for loan losses when appropriate. Although management believes it uses
the best information available to make determinations with respect to the
allowance for loan losses, future adjustments may be necessary if economic
conditions differ from the assumptions used in making the initial
determinations. As of March 31, 1999, the allowance for loan losses amounted to
$1.6 million or 0.79% of total loans. The allowance for loan losses as a
percentage of nonperforming loans was 128.61% at March 31, 1999.
Provisions for loan losses are charged to income to bring the total
allowance for loan losses to a level deemed appropriate by management of the
Company based on such factors as historical experience, the volume and type of
lending conducted by the Company, the amount of nonperforming assets, regulatory
policies, generally accepted accounting principles, general economic conditions,
and other factors related to the collectibility of loans in the Company's
portfolio.
The provision for loan losses for the three months ended March 31, 1999,
was $105,000 compared with $370,000 for the three months ended March 31, 1998.
The first quarter 1998 provision included an extraordinary charge to the
provision of $340,000 done in order to get the reserve for loan losses to a
level management believed to be adequate based on loan growth, loan quality,
prior charge-off experience and local economic conditions. The first quarter
1999 provision is deemed adequate by management based on a continued low net
loan charge-off to average loans ratio of 0.03% as of March 31, 1999, and a low
nonperforming assets to total loans and other real estate ratio of 0.69% as of
March 31, 1999. For the three months ended March 31, 1999, net charge-offs were
$57,000.
15
<PAGE>
Set forth below is an analysis of the allowance for loan losses for the
three months ended March 31, 1999:
THREE MONTHS
ENDED
MARCH 31, 1999
--------------
(Dollars in
thousands)
Average loans outstanding ................................. $ 190,714
---------
Gross loans outstanding at end of period .................. $ 197,048
---------
Allowance for loan losses at beginning of period .......... 1,512
Provision for loan losses ................................. 105
Charge-offs:
Commercial and industrial ............................. (4)
Real estate ........................................... --
Consumer .............................................. (73)
Recoveries:
Commercial and industrial ............................. 9
Real estate ........................................... 1
Consumer .............................................. 10
---------
Net loan (charge-offs) recoveries ......................... (57)
---------
Allowance for loan losses at end of period ................ $ 1,560
=========
Ratio of allowance to end of period loans ................. 0.79%
Ratio of net charge-offs to average loans ................. 0.03%
Ratio of allowance to end of period nonperforming loans ... 128.61%
Noninterest Income
The Company's primary sources of recurring noninterest income are
service charges on deposit accounts and fee income. Excluding a $674,000
nonrecurring gain from the sale of loans in March 1998, noninterest income for
the quarter ended March 31, 1999 increased to $662,000 from $488,000 for the
quarter ended March 31, 1998, an increase of $174,000 or 35.7%. The gain on sale
of loans was recorded in March 1998, when the Company sold approximately $2.0
million of loans originally purchased at a discount in June 1991 from the RTC.
The following table presents, for the periods indicated, the major categories of
noninterest income:
THREE MONTHS ENDED
MARCH 31,
------------------
1999 1998
------- ------
(Dollars in thousands)
Service charges on deposit accounts ................ $ 405 $ 287
Fee income.......................................... 117 153
Fiduciary income ................................... 17 16
Gain on sale of loans............................... -- 674
Other noninterest income ........................... 118 32
Realized gain on securities ........................ 5 --
------ ------
Total noninterest income ....................... $ 662 $1,162
====== ======
16
<PAGE>
After excluding the nonrecurring gain on the sale of loans, the increase
in noninterest income from March 31, 1998 to March 31, 1999, resulted primarily
from an increase in service charges on deposit accounts and fee income due to an
increase in the number of deposit accounts. Additionally, the Company's
increased emphasis on fee based services resulted in greater income from check
cashing, ATM fees, appraisal fees and wire transfer fees.
Noninterest Expenses
Noninterest expenses totaled $2.2 million for the three months ended March
31, 1999 compared with $2.0 million for the three months ended March 31, 1998,
an increase of $201,000 or 9.9%. The following table presents, for the periods
indicated, the major categories of noninterest expenses:
THREE MONTHS ENDED
MARCH 31,
-------------------
1999 1998
------- -------
(Dollars in thousands)
Employee compensation and benefits ... $ 1,268 $ 1,082
------- -------
Non-staff expenses:
Net bank premises expense ........ 309 286
Office and computer supplies...... 51 60
Legal and professional fees....... 101 102
Advertising....................... 42 53
Postage .......................... 34 31
FDIC insurance ................... 7 6
Other ............................ 415 406
------- -------
Total non-staff expenses .... 959 944
------- -------
Total noninterest expenses .. $ 2,227 $ 2,026
======= =======
Employee compensation and benefits expense for the three months ended
March 31, 1999, was $1.3 million, an increase of $186,000 or 17.2% over the $1.1
million for the same period in 1998. The increase was due primarily to normal
salary increases and additional staff placement in the Texarkana, Mt. Pleasant
and Paris locations to handle customer growth. The Company has hired and begun
training staff for its new Pittsburg, Texas location scheduled to open in May
1999 (See "--Subsequent Events"). The number of full-time equivalent employees
was 135.5 at March 31, 1999, compared with 124.5 at March 31, 1998, an increase
of 8.8%.
Non-staff expenses were $959,000 for the three months ended March 31,
1999, compared with $944,000 for the same period in 1998, an increase of $15,000
or 1.6%. Net bank premises expense increased $23,000 or 8.0% to $309,000.
Other non-staff expenses include director fees, insurance, franchise tax,
telephone expense and other miscellaneous expenses, the combination of which
increased $9,000 or 2.2% to $415,000 as of March 31, 1999.
17
<PAGE>
Income Taxes
Income tax expense decreased approximately $130,000 to $165,000 for the
three months ended March 31, 1999 from $295,000 for the same period in 1998. The
decrease was primarily attributable to the gain on sale of loans the Company
recorded in 1998 of $674,000 creating an additional tax expense during that
period of approximately $230,000. The Company did not have a gain from the sale
of loans in the first quarter of 1999.
FINANCIAL CONDITION
Loan Portfolio
Total loans were $197.0 million at March 31, 1999, an increase of $11.1
million or 6.0% from $185.9 million at December 31, 1998. Loan growth occurred
primarily in 1 to 4 family residential loans, commercial mortgage loans and
commercial loans. Loans comprised 75.2% of total earning assets at March 31,
1999 compared with 74.5% at December 31, 1998.
The following table summarizes the loan portfolio of the Company by
type of loan as of March 31, 1999, and December 31, 1998:
<TABLE>
<CAPTION>
MARCH 31,1999 DECEMBER 31, 1998
----------------------- ------------------------
AMOUNT PERCENT AMOUNT PERCENT
-------- ---------- ---------- -----------
(Dollars in thousands)
<S> <C> <C> <C> <C>
Commercial and industrial ............. $ 60,508 30.71% $ 59,241 31.86%
Real estate:
Construction and land development 3,538 1.80 3,130 1.68
1-4 family residential .......... 55,591 28.21 48,376 26.02
Commercial mortgages ............ 49,905 25.32 47,977 25.81
Farmland ........................ 7,823 3.97 7,258 3.90
Multi-family residential ........ 1,202 0.61 844 0.45
Consumer .............................. 18,481 9.38 19,060 10.28
-------- ------ -------- ------
Total loans ................ $197,048 100.00% $185,886 100.00%
======== ====== ======== ======
</TABLE>
18
<PAGE>
NONPERFORMING ASSETS
Nonperforming assets were $1.4 million at March 31, 1999 compared with
$1.3 million at December 31, 1998, reflecting continued strong asset quality.
The ratio of nonperforming assets to total loans and other real estate was 0.69%
and 0.67% at March 31, 1999, and December 31, 1998, respectively.
The following table presents information regarding nonperforming assets
as of the dates indicated:
MARCH 31, DECEMBER 31,
1999 1998
---------- ------------
(Dollars in thousands)
Nonaccrual loans .............................. $ 361 $ 290
Accruing loans 90 or more days past due ....... 852 $ 866
------ ------
Total nonperforming loans...................... 1,213 1,156
Other real estate ............................. 144 97
------ ------
Total nonperforming assets..................... $1,357 $1,253
====== ======
SECURITIES
Securities totaled $49.3 million at March 31, 1999, a decline of $2.1
million from $51.4 million at December 31, 1998. The decline occurred as
maturing securities were used to fund loans. At March 31, 1999, securities
represented 17.3% of total assets compared with 18.8% of total assets at
December 31, 1998. The yield on average securities for the three months ended
March 31, 1999, was 6.11% compared with 6.59% for the same period in 1998. At
March 31, 1999, securities included $1.1 million in U.S. Treasury securities,
$27.1 million in U.S. Government securities, $17.6 million in mortgage-backed
securities, $1.1 million in equity securities and $2.4 million in municipal
securities. The average life of the securities portfolio at March 31, 1999, was
approximately two years and six months.
PREMISES AND EQUIPMENT
Premises and equipment totaled $7.5 million at March 31, 1999 and $7.0
million at December 31, 1998. The net change shows an increase of $428,000 or
6.1%, in fixed assets. The increase is primarily due to the purchase of land in
Pittsburg, Texas for a new full-service bank to open in May 1999 (See
"--Subsequent Events").
OTHER ASSETS
On July 1, 1998, the Company invested $3.1 million in single insurance
premium policies. Such policies insured the lives of certain key senior
officers. As of March 31, 1999, the net surrender values of these policies
totaled $3.2 million.
19
<PAGE>
DEPOSITS
At March 31, 1999, demand, money market and savings deposits accounted
for approximately 45.9% of total deposits, while certificates of deposit made up
54.1% of total deposits. Noninterest-bearing demand deposits totaled $43.1
million or 17.0% of total deposits at March 31, 1999, compared with $47.4
million or 19.5% of total deposits at December 31, 1998. The average cost of
deposits, including noninterest-bearing demand deposits, was 3.69% for the three
months ended March 31, 1999 compared with 4.04% for the same period in 1998. The
decrease in the average cost of deposits was primarily due to the lower interest
rate environment during the first quarter 1999 compared to the same period in
1998.
LIQUIDITY
The Company's Asset/Liability Management Policy is intended to maintain
adequate liquidity for the Company. Liquidity involves the Company's ability to
raise funds to support asset growth or reduce assets to meet deposit withdrawals
and other payment obligations, to maintain reserve requirements and otherwise to
operate the Company on an ongoing basis. The Company's liquidity needs are
primarily met by growth in core deposits. Although access to purchased funds
from correspondent banks is available and has been utilized on occasion to take
advantage of investment opportunities, the Company does not rely on these
external funding sources. The cash and federal funds sold position, supplemented
by amortizing investments along with payments and maturities within the loan
portfolio, have historically created an adequate liquidity position.
The Company's cash flows are composed of three classifications: cash
flows from operating activities, cash flows from investing activities, and cash
flows from financing activities. Net cash provided by operating activities was
$745,000 and $3.3 million for the three months ended March 31, 1999 and 1998,
respectively. The decrease was due primarily to the proceeds from the sale of
loans in the first quarter 1998 of $2.0 million. The Company did not have any
sale of loans in the first quarter of 1999.
Net cash (used) by investing activities was $(13.7) million and $(7.4)
million for the three months ended March 31, 1999 and 1998, respectively. During
the three months ended March 31, 1999, the Company funded more loans than it did
in the three months ended March 31, 1998.
Net cash provided by financing activities was $11.3 million and $2.2
million for the three months ended March 31, 1999 and 1998, respectively. The
difference was due primarily to a larger net increase in deposits of $11.4 in
1999 as compared to a net increase of $2.2 million in 1998.
CAPITAL RESOURCES
Total shareholders' equity as of March 31, 1999, was $24.3 million, an
increase of $489,000 or 2.1% compared with shareholders' equity of $23.8 million
at December 31, 1998. The increase was due to net earnings for the period of
$655,000 offset by the decrease in accumulated other comprehensive income of
$167,000.
Both the Board of Governors of the Federal Reserve System ("Federal
Reserve"), with respect to the Company, and the Federal Deposit Insurance
Corporation, with respect to the Bank, have established certain minimum
risk-based capital standards that apply to bank holding companies and federally
insured banks, respectively. The Company's risk-based capital ratios remain
above the levels required for the Company to be designated as "well capitalized"
on March 31, 1999, with Tier 1 capital, total risk-based capital and leverage
capital ratios of 12.02%, 12.80% and 8.76%, respectively. The Bank's risk-based
capital ratios
20
<PAGE>
remain above the levels required for the Bank to be designated as "well
capitalized" on March 31, 1999, with Tier-1 capital, total risk-based capital
and leverage capital ratios of 11.46%, 12.24% and 8.36%, respectively.
YEAR 2000 COMPLIANCE
GENERAL. The Year 2000 risk involves computer programs and computer
software that are not able to perform without interruption into the Year 2000.
If computer systems do not correctly recognize the date change from December 31,
1999, to January 1, 2000, computer applications that rely on the date field
could fail or create erroneous results. Such erroneous results could affect
interest, payment or due dates or cause the temporary inability to process
transactions, send invoices or engage in similar normal business activities. If
these issues are not addressed by the Company, its suppliers and its borrowers,
there could be a material adverse impact on the Company's financial condition or
results of operations.
STATE OF READINESS. The Company formally initiated its Year 2000 project
and plan in August 1997 to insure that its operational and financial systems
will not be adversely affected by Year 2000 problems. The Company has formed a
Year 2000 project team, and the Board of Directors and management are supporting
all compliance efforts and allocating the necessary resources to ensure
completion. An inventory of all systems and products (including both information
technology ("IT") and non-informational technology ("non-IT") systems) that
could be affected by the Year 2000 date change has been developed, verified and
categorized as to their importance to the Company and an assessment of all
mission critical IT and mission critical non-IT systems has been completed. This
assessment involved inputting test data which simulates the Year 2000 date
change into such IT systems and reviewing the system output for accuracy. The
Company's assessment of mission critical non-IT systems involved reviewing such
systems to determine whether they were date dependent. Based on such assessment,
the Company believes that none of its mission critical non-IT systems are date
dependent. The software for the Company's systems is provided through service
bureaus and software vendors. The Company has contacted all of its third party
vendors and software providers and is requiring them to demonstrate and
represent that the products provided are or will be Year 2000 compliant and has
planned a program of testing compliance. The Company's item processing software
provider, which performs substantially all of the Company's data processing
functions, has stated that its software is Year 2000 compliant and pursuant to
applicable regulatory guidelines the Company is currently producing testing
scenarios to verify this assertion. In addition, the Company's compliance
efforts regarding Year 2000 issues were reviewed by the FDIC in January 1999.
Except as discussed above, the Company has completed the following phases
of its Year 2000 plan: (i) recognizing Year 2000 issues and (ii) assessing the
impact of Year 2000 issues on the Company's mission critical systems. The
Company is in the process of upgrading, testing and implementing the
mission-critical systems for Year 2000 compliance.
COSTS OF COMPLIANCE. Management does not expect that the cost of bringing
the Company's systems into Year 2000 compliance will have a material adverse
effect on the Company's financial condition, results of operations or liquidity.
The Company has budgeted $50,000 to address Year 2000 issues. As of March 31,
1999, the Company has not incurred any significant costs in relation to Year
2000. The largest potential risk to the Company concerning Year 2000 is the
malfunction of its data
21
<PAGE>
processing system. In the event its data processing system does not function
properly, the Company is prepared to perform functions manually. The Company
believes it is in compliance with regulatory guidelines regarding Year 2000
compliance, including the timetable for achieving compliance.
RISKS RELATED TO THIRD PARTIES. The impact of Year 2000 noncompliance by
third parties with which the Company transacts business cannot be accurately
gauged. The Company identified its largest dollar depositors (aggregate deposits
over $100,000) and loan customers ($150,000 or more) and, based on information
available to the Company, conducted a preliminary evaluation to determine which
of those customers are likely to be affected by Year 2000 issues. In addition,
corporate borrowers have been contacted and assessed by their respective lending
officers and scored on a scale of one, two or three, with three being the least
affected by Year 2000 issues. A corporate borrower which received a rating of
one or two was subsequently contacted to assess Year 2000 readiness efforts. To
the extent a problem is identified with respect to a customer, the Company
intends to monitor the customer's progress in resolving such problem. In the
event that Year 2000 noncompliance adversely affects borrowers, the Company may
be required to charge-off the loan to such borrowers. For a discussion of
possible effects of such charge-offs, see "Contingency Plans" below. In the
event that Year 2000 noncompliance causes depositors to withdraw funds, the
Company plans to maintain additional cash on hand. The Company relies on the
Federal Reserve for electronic fund transfers and check clearing and understands
that the Federal Reserve has certified its systems to be Year 2000 compliant and
continues to test product upgrades. With respect to its borrowers, the Company
includes in its loan documents a Year 2000 disclosure form and an addendum to
the loan agreement in which the borrower represents and warrants its Year 2000
compliance to the Company.
CONTINGENCY PLANS. The Company is in the process of finalizing its
contingency planning with respect to the Year 2000 date change and believes that
if its own systems should fail, the Company could convert to a manual entry
system for a period of up to three months without significant losses. The
Company believes that any mission critical system could be recovered and
operating within three to five days. In the event that the Federal Reserve is
unable to handle electronic funds transfers and check clearing, the Company does
not expect the impact to be material to its financial condition or results of
operations as long as the Company is able to utilize an alternative funds
transfer and clearing source. As part of its contingency planning, the Company
has reviewed its loan customer base and the potential impact on capital of Year
2000 noncompliance. Based upon such review, using what it considers to be a
reasonable worst case scenario, the Company has assumed that certain of its
commercial borrowers whose businesses are most likely to be affected by Year
2000 noncompliance would be unable to repay their loans, resulting in
charge-offs of loan amounts in excess of collateral values. If such were the
case, the Company believes that it is unlikely that its exposure would exceed
$100,000, although there are no assurances that this amount will not be
substantially higher. Management does not believe that this amount is material
enough for the Company to adjust its current methodology for making provisions
to the allowance for loan losses. In addition, the Company plans to maintain
additional cash on hand to meet any unusual deposit withdrawal activity.
22
<PAGE>
SUBSEQUENT EVENTS
On April 9, 1999 the Company received approval from the Texas Department
of Banking and the Federal Deposit Insurance Corporation to open a new
full-service banking facility in Pittsburg, Texas. Property was purchased and
the bank is scheduled to open in temporary quarters in May 1999.
On April 16, 1999 the Company entered into an Agreement and Plan of
Reorganization (the "Merger Agreement") with First American Financial
Corporation("First American") whereby First American will merge into the
Company. First American is headquartered in Sulphur Springs, Texas, is the
parent company for First American Bank, N.A. and First American Mortgage Company
and operates banks in the communities of Sulphur Springs and Commerce, Texas.
The Merger Agreement, which is subject to the approval of the shareholders of
First American and various regulatory authorities, provides for the aggregate
consideration of $6.9 million in the Company's Common Stock and cash in exchange
for all of the outstanding shares of First American's stock. It is anticipated
that the transaction will be complete in the third quarter of 1999. At March 31,
1999, First American had $69.2 million in total assets, $39.8 million in loans
and $57.0 million in deposits.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
There have been no material changes in the market risk information
disclosed in the Company's Form 10-K for the year ended December 31, 1998. See
Form 10-K, Item 7, "Management's Discussion and Analysis of Financial Condition
and Results of Operations - Interest Rate Sensitivity and Liquidity."
23
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not applicable
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
(a) Not applicable
(b) Not applicable
(c) Not applicable
(d) Not applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable
ITEM 5. OTHER INFORMATION
Not applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibit is filed with this report:
Exhibit 27. Financial Data Schedule
(b) No reports on Form 8-K were filed by the Company during the three
months ended March 31, 1999.
24
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GUARANTY BANCSHARES, INC.
(Registrant)
Date: May 12, 1999 By: /s/ ARTHUR B. SCHARLACH
Arthur B. Scharlach
President
(Principal Executive Officer)
Date: May 12, 1999 By: /s/ CLIFTON A. PAYNE
Clifton A. Payne
Senior Vice President and Chief
Financial Officer
(Principal Financial Officer)
25
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Description
- ------- -----------
27 Financial Data Schedule
26
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 8,114
<INT-BEARING-DEPOSITS> 1,980
<FED-FUNDS-SOLD> 13,705
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 42,172
<INVESTMENTS-CARRYING> 7,172
<INVESTMENTS-MARKET> 7,265
<LOANS> 197,048
<ALLOWANCE> 1,560
<TOTAL-ASSETS> 284,535
<DEPOSITS> 253,710
<SHORT-TERM> 284
<LIABILITIES-OTHER> 2,629
<LONG-TERM> 3,627
0
0
<COMMON> 2,898
<OTHER-SE> 21,387
<TOTAL-LIABILITIES-AND-EQUITY> 284,535
<INTEREST-LOAN> 3,881
<INTEREST-INVEST> 772
<INTEREST-OTHER> 110
<INTEREST-TOTAL> 4,763
<INTEREST-DEPOSIT> 2,221
<INTEREST-EXPENSE> 2,273
<INTEREST-INCOME-NET> 2,490
<LOAN-LOSSES> 105
<SECURITIES-GAINS> 5
<EXPENSE-OTHER> 2,227
<INCOME-PRETAX> 820
<INCOME-PRE-EXTRAORDINARY> 655
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 655
<EPS-PRIMARY> 0.23
<EPS-DILUTED> 0.23
<YIELD-ACTUAL> 7.70
<LOANS-NON> 361
<LOANS-PAST> 852
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,512
<CHARGE-OFFS> 77
<RECOVERIES> 20
<ALLOWANCE-CLOSE> 1,560
<ALLOWANCE-DOMESTIC> 1,560
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 263
</TABLE>
