SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
(X) Annual Report Pursuant To Section 13 or 15 (d) of the Securities
Exchange Act of 1934(Fee Required)
For the fiscal year ended December 31, 1995
Commission file number: 0-10929
or
Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
GUARANTY BANCSHARES HOLDING CORPORATION
(exact name of registrant as specified in its charter)
Louisiana 72-0933277
(State of incorporation) (I.R.S. Employer Identification No.)
1201 Brashear Avenue, Morgan City, Louisiana 70380
(address of principal executive offices and zip code)
Registrant's telephone number, including area code: (504) 384-2813
SECURITIES REGISTERED PURSUANT TO SECTION 12 (b) OF THE ACT:
None
SECURITIES REGISTERED PURSUANT TO SECTION 12 (g) OF THE ACT:
Title of each class:
Class A Common Stock, $5.00 par value
Class B Common Stock, No par value
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.
Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. (X)
State the aggregate market value of the voting stock held by
nonaffiliates of the Registrant: (Total number of shares held by non-
affiliates: See Part II, Item 5.)
Indicate the number of shares outstanding of each of the Registrant's
classes of common stock as of the latest practicable date.
Class A Common Stock, $5 Par Value, 210,000 shares outstanding as of
March 10, 1996
Class B Common Stock, No Par Value, 170,877 shares outstanding as of
March 10, 1996
Documents Incorporated by Reference
Annual Report to Shareholders for the
Year Ended December 31, 1995 Parts I, II and IV
PART I
Item 1. Business
Guaranty Bancshares Holding Corporation (Bancshares) was
incorporated under the laws of the State of Louisiana in 1982. On
January 13, 1983, Guaranty Bank & Trust Company of Morgan City (the
Bank) was reorganized pursuant to a Reorganization and Merger
Agreement (the Merger) whereby the Bank was merged into a
subsidiary of Bancshares with the effect that the Bank became a
wholly owned subsidiary of Bancshares. Prior to January 13, 1983,
Bancshares had no material activity. Bancshares is currently
engaged, through the Bank, in banking and related business. The
Bank is Bancshares' principal asset and source of revenue, and
since Bancshares is a one bank holding company, it shares a common
directorship with the Bank.
The Bank
The Bank was organized in 1966 under the laws of the State of
Louisiana and is a full service commercial bank in the business of
gathering deposits and employing these funds by extending credit
and investing in securities and other income earning assets.
The Bank has no material concentration of deposits from any
single customer or group of customers except that approximately
eight percent of the Bank's total deposits at December 31, 1995
were those of public bodies, including parish and municipal
districts. Deposits of public bodies in excess of amounts insured
by the Federal Deposit Insurance Corporation (the F.D.I.C.) are
secured by pledges of certain of the Bank's securities against the
deposit amounts. Management of the Bank has no reason to believe
that the loss of several of these public deposit accounts would
have a materially adverse effect upon the operations of the Bank
or the soundness of its deposit base although there has been a
recent trend for these bodies to invest excess funds directly in
the securities market rather than in interest bearing bank deposits
with the Bank and competing local financial institutions. No
significant portion of its loans is concentrated within a single
industry or group of related industries, except that approximately
15.3 percent of the loans are in the oil field services and
maritime support and transportation industries and 25.9 percent are
in real estate related activities. There are no material seasonal
factors that would have any adverse effect on the Bank. The Bank
does not rely on foreign sources of funds or income.
The Bank's general market area is in East St. Mary Parish,
Louisiana, which has a population of approximately 35,000.
Economic activity in the area is diversified, with emphasis
on manufacturing, oil and gas, agriculture and maritime support and
distribution services. Commercial banking in the marketing area
served by the Bank is highly competitive. The Bank competes with
three banks and three savings and loan institutions located in East
St. Mary Parish. Following is a list of the banks headquartered
in the market area with total deposits and assets as of December
31, 1995.
DEPOSITS ASSETS
(dollars in thousands)
First National Bank in
St. Mary Parish $214,563 54.4% $241,301 52.9%
MC Bank & Trust Company 76,335 19.3 91,462 20.0
Guaranty Bank & Trust Company
of Morgan City 50,783 12.9 60,245 13.2
Patterson State Bank 52,882 13.4 63,474 13.9
TOTAL $394,563 100.0% $456,482 100.0%
Further competition is provided by other banks located in St.
Mary Parish and by banks and other financial institutions,
including savings and loan associations, insurance companies,
finance companies, credit unions, factors and pension trusts
located elsewhere in Louisiana, principally institutions in
Lafayette, Houma, Baton Rouge and New Orleans, all of whose
advertising media cover the Bank's market area.
Interest rates on loans are substantially the same among banks
operating in the market area served. Competition among banks for
loans is generally governed by such factors as loan terms, other
than interest charges, restrictions on borrowers, compensating
balances, and other services offered by the Bank.
Employees
Bancshares has no employees (active officers of Bancshares are
employed by the Bank). As of March 11, 1996 the Bank had 31 full-
time employees and 1 part-time employee. There are no unions or
bargaining units which represent the employees. The Bank considers
its relationship with its employees to be excellent. Employee
benefit programs provided by the Bank include group life and health
insurance, paid vacations and sick leave.
Supervision and Regulation
The Bank is subject to regulation and regular examinations by
the Louisiana Office of Financial Institutions and by the Federal
Deposit Insurance Corporation (FDIC). Applicable regulations
relate to reserves, investments, loans, issuance of securities,
branching, and other aspects of its operations.
Bancshares is a bank holding company within the meaning of the
Bank Holding Company Act of 1956, as amended (the Act), and is
thereby subject to the provisions of the Act and to regulations by
the Board of Governors of the Federal Reserve System (the Board).
Bancshares is required to file with the Board annual reports
and other information regarding its business operations and those
of its subsidiaries. It is also subject to examination by the
Board and is required to obtain Board approval prior to acquiring,
direct or indirectly, ownership or control of any voting shares of
any bank if, after such acquisition, it would own or control,
directly or indirectly, more than 5% of the voting stock of such
bank, unless it already owns a majority of the voting stock of such
bank. Furthermore, a bank holding company is, with limited
exceptions, prohibited from acquiring direct or indirect ownership
or control of more than 5% of the voting stock of any company which
is not a bank or a bank holding company, and must engage only in
the business of banking or managing or controlling banks or
furnishing services to or performing services for its subsidiary
banks. One of the exceptions to this prohibition is the ownership
of shares of a company the activities of which the Board has
determined to be so closely related to banking or managing or
controlling banks as to be a proper incident thereto.
Whether or not a particular non-banking activity is permitted
under the Act, the Board is authorized to require a holding company
to terminate any activity, or divest itself of any non-banking
subsidiary, if in its judgment the activity or subsidiary would be
unsound.
In addition to the limitations of Louisiana law with respect
to the ownership of banks described below, the ownership or control
of voting shares of a second bank by a bank holding company, is
restricted by the Bank Holding Company Act unless the prior
approval of the Federal Reserve Board is obtained.
Bancshares is also subject to provisions of the Louisiana Bank
Holding Company Act which permits acquisitions of banks or bank
holding companies. Other provisions of the Act prohibit
subsidiaries of a bank holding company from engaging in any
business other than those closely related to banking. The
Louisiana Office of Financial Institutions is authorized to
administer the Louisiana Act by the issuance of orders and
regulations. At present, prior approval of the Commissioner of
Financial Institutions would not be required for the formation and
operation of a non-bank subsidiary of Bancshares if its activities
meet the requirements of the Louisiana Act.
The Bank is subject to regulation and supervision, of which
regular bank examinations are a part, by the Louisiana Office of
Financial Institutions. The Bank is a member of the FDIC which
currently insures the deposits of each member bank to a maximum of
$100,000 per depositor. For this protection, each bank pays a
semi-annual statutory assessment and is subject to the rules and
regulations of the FDIC. The Bank is not a member of the Federal
Reserve System. However, upon consummation of the Merger,
Bancshares became an "affiliate" of the Bank within the meaning of
the Federal Reserve Act and the Federal Deposit Insurance Act which
impose restrictions on loans by the Bank to Bancshares, investments
by the Bank in the stock or securities of Bancshares, and on the
use of such stock or securities as collateral security for loans
by the Bank to any borrower. Bancshares is also subject to certain
restrictions with respect to engaging in the business of issuing,
flotation, underwriting, public sale and distribution of
securities.
The Board of Directors of Bancshares has no present plans or
intentions to cause Bancshares to engage in any substantial
business activity which would be permitted to it under the Act or
the Louisiana Act but which is not permitted to the Bank; however,
a significant reason for formation of the one-bank holding company
was to take advantage of the additional flexibility afforded by the
structure if the Board of Directors concludes that such action
would be in the best interest of its shareholders.
Regulatory Matters
At periodic intervals, both Louisiana Department of Financial
Institutions examiners and the FDIC routinely examine Bank's
financial statements as part of their legally prescribed oversight
of the Banking industry. Based on these examinations, the
regulators can direct that the Bank's financial statements be
adjusted in accordance with their findings. The regulators have
not proposed adjustments to the Bank's financial statements in
prior years. However, in view of the increasingly uncertain
regulatory environment in which the Bank now operates, the extent,
if any, to which a forthcoming regulatory examinations may
ultimately result in adjustments to the 1995 financial statements
cannot presently be determined.
Statistical Information
The following tables contain additional information concerning
the business and operations of Bancshares and its subsidiaries and
should be read in conjunction with the Consolidated Financial
Statements of the Registrant and Management's Discussion and
Analysis of Financial Condition and Results of Operations.
I. DISTRIBUTION OF ASSETS, LIABILITIES AND STOCKHOLDERS' EQUITY:
INTEREST RATES AND INTEREST DIFFERENTIAL
The information called for in this item is included in
Bancshares' Annual Report to Shareholders on page 13 and is
incorporated herein by reference.
II. INVESTMENT PORTFOLIO
Carrying values of securities held are as follows (in
thousands of dollars):
December 31
1995 1994 1993
Held to Maturity
U.S. Treasury $ 1,997 $ 3,156 $ 5,762
U.S. Agencies and
Corporations 8,255 5,943 10,747
States and Political
Subdivisions 692 366 28
Other Investments 20 29 365
$10,964 $ 9,494 $16,902
Available for Sale
U.S. Agencies and
Corporations $ 4,704
Other Investments 493
$ 5,197
Carrying values, maturities and average yields of securities held
are as follows (in thousands of dollars):
December 31, 1995
Amortized Average Market
Cost Yield Value
Held to Maturity
U.S. Treasury
Due within one year $ 1,997 4.7% $ 1,999
U.S. Agencies and
Corporations
Due within one year 4,968 5.6 4,959
One to five years 3,072 5.3 3,070
Five to ten years 92 10.9 97
After ten years 123 8.0 126
8,255 5.6 8,252
States and Political
Subdivisions
Due within one year 31 5.7 31
One to five years 250 5.6 257
Five to ten years 411 5.7 421
692 5.7 709
Other Investments
One to five years 20 18.0 20
$10,964 5.5% $10,980
Available for Sale
U.S. Agencies and
Corporations
Due within one year $ 500 4.1 499
One to five years 3,505 6.0 3,515
Over ten years 688 6.7 690
4,693 5.9 4,704
Other Investments
Over ten years 493 4.3 493
$ 5,186 5.7% $ 5,197
December 31, 1994
Amortized Average Market
Cost Yield Value
Held to Maturity
U.S. Treasury
Due within one year $ 3,156 5.3% $ 3,128
U.S. Agencies and
Corporations
Due within one year 4,505 5.8 4,488
One to five years 1,078 4.8 1,041
Five to ten years 214 9.4 216
After ten years 146 8.3 136
5,943 5.8 5,881
States and Political
Subdivisions
Due within one year 9 7.3 9
One to five years 96 5.6 95
Five to ten years 261 5.6 251
366 5.6 355
Other Investments
One to five years 29 18.0 29
$ 9,494 5.7% $ 9,393
Available for Sale
U.S. Treasury
Due within one year $ 1,500 4.6% $ 1,499
U.S. Agencies and
Corporations
Due within one year 950 5.2 922
One to five years 3,510 5.9 3,534
Over ten years 774 5.5 763
5,234 5.7 5,219
Other Investments
Over ten years 472 2.6 472
$ 7,206 5.3% $ 7,190
The weighted average yields shown have been computed by
relating the forward income stream on the investments, plus or
minus the anticipated accretion of discounts or amortization of
premiums, to the book value of the securities. This in turn is
stated at cost, adjusted for previous amortization or accretion.
Average yields on issues of states and political subdivisions have
not been computed on a tax equivalent basis.
III. LOAN PORTFOLIO
A. Types of Loans
The amount of loans outstanding is shown in the
following table according to type and concentration of
loans (in thousands of dollars):
December 31
1995 1994 1993
Commercial, financial
and agricultural $24,166 $24,652 $ 23,650
Real estate:
Construction 2,594 3,070 419
Mortgage 2,189 3,066 3,558
Installment 5,603 4,022 4,335
34,552 34,810 31,962
Less unearned income 6 35 74
$34,546 $34,775 $31,888
The loan portfolio contains no foreign loans.
B. Maturities and Sensitivities of Loans to Changes in Interest
Rates
The following table presents the maturity distribution
and sensitivity to interest rate changes of the loan portfolio
at December 31, 1995 (in thousands of dollars):
DUE IN DUE IN
DUE IN OVER OVER
ONE YEAR ONE TO FIVE
OR FIVE TO TEN
LESS * YEARS YEARS TOTAL
Maturity of Loans
Commercial, financial
and agriculture $10,789 $11,107 $ 2,270 $24,166
Real estate
Construction 1,934 660 0 2,594
Mortgage 316 1,686 187 2,189
Installment 1,313 3,946 344 5,603
$14,352 $17,399 $ 2,801 $34,552
Interest Rate Sensitivity
Loans with Pre-
determined rates $10,043 $11,273 $ 2,077 $23,393
Loans with floating
rates 4,309 6,126 724 11,159
$14,352 $17,399 $ 2,801 $34,552
*Includes demand loans, loans having no stated schedule
of repayments and no stated maturity and overdrafts.
C. Risk Elements
The following table sets forth the nonaccrual, past due
and restructured loans.
December 31
1995 1994 1993
(in thousands)
Interest accruing loans past due
90 days or more:
Commercial, financial and
agricultural $ 0 $ 15 $ 0
Loans secured primarily
by real estate mortgages 0 152 0
Installment 0 1 76
$ 0 $ 168 $ 76
Nonaccrual loans $ 84 $ 30 $ 36
At year end 1995, the loan portfolio contained no loans which
had been restructured.
Loans are placed on nonaccrual status when principal or inter-
est is due and remains unpaid for ninety or more days, unless the
loan is both well secured and in process of collection, or when
management determines that the collateral position in the loan has
deteriorated to a position where collection of principal and inter-
est is questionable.
The Bank recognized approximately $4,000 and $1,000 in
interest income related to these loans in the years ended December
31, 1995 and 1993, respectively. No interest income was recognized
in 1994. Had the loans been accruing interest at their contracted
rates, approximately $4,000, $3,000, and $5,000 of additional
interest income would have been recognized for 1995, 1994 and 1993,
respectively.
Potential Problem Loans
Potential problem loans, i.e. loans which are now current
where there are serious doubts as to the ability of the borrower
to comply with repayment terms, at December 31, 1995, amounted to
$118,000 and are concentrated in private households. No
significant losses are anticipated in these extensions of credit.
At December 31, 1995, there were no loans classified as past
due 90 days or more and on which interest was being accrued.
The following identifies the loans which are accounted for on
a nonaccrual basis as of December 31, 1995 (in thousands):
Nonaccrual Loans:
Private households $84
The maritime, oil field, real estate and service industries
in particular had been adversely affected by the decline in
petroleum related activities in the Bank's market area. The area
has experienced a recovery in this industry in recent years.
Whether the recovery will continue depends on the worldwide
petroleum industry.
The Bank's collateral position in those non-accuring loans is
such that any potential losses which may be sustained will not be
significant.
Loan Concentrations
Following is a summary of gross loans and lease outstanding
as of December 31, 1995, by major industry classifications (in
thousands):
Oil and gas $ 2,778 8.0%
Construction - contractors 2,043 5.9
Manufacturing:
Wood products 695 2.0
Book Binding 250 .7
Other 240 .7
1,185 3.4
Transportation:
Maritime 2,507 7.3
Sanitary Servies 340 1.0
Wholesale and retail trade 4,494 13.0
Real estate 8,932 25.9
Services:
Insurance and Legal 178 .5
Hotel and Motel 1,481 4.3
Health 1,199 3.4
Miscellaneous repair 648 1.9
Membership and religious organizations 193 .6
3,699 10.7
Private households 8,574 24.8
Total $34,552 100.0%
The above table includes unearned income on installment and
real estate loans.
IV. SUMMARY OF LOAN LOSS EXPERIENCE
The following table summarizes the activity in the
allowance for loan losses arising from loans charged off,
recoveries of loans previously charged off, and additions to
the allowance charged to operating expense.
Year ended December 31
1995 1994 1993
(in thousands of dollars)
Total loans outstanding at
December 31, net of unearned
income $34,546 $34,775 $31,888
Daily average amount of loans
outstanding, net of unearned
income $35,112 $34,148 $30,306
Balance of the allowance for loan
losses at beginning of year $ 502 $ 621 $ 546
Loans charged off:
Commercial, financial and
agricultural - - -
Real estate 4 29 28
Installment and credit card 14 6 9
Total charge-offs 18 35 37
Recoveries of loans previously
charged off:
Commercial, financial and
agricultural 17 17 8
Real estate 89 72 96
Installment and credit card 14 7 8
Total recoveries 120 96 112
Net charge-offs
(recoveries) (102) (61) (75)
Additions (credits) to the
allowance charged to expense (100) (180) -
Balance of the allowance for loan
losses at end of year $ 504 $ 502 $ 621
Ratios:
Net charge-offs (recoveries) during
year to average loans outstanding (0.29)% (0.18)% (0.25)%
Net charge-offs (recoveries) to loans
at end of year (0.30)% (0.18)% (0.24)%
Year ended December 31
1995 1994 1993
(in thousands of dollars)
Allowance for loan losses to
average loans 1.44 1.47 2.05
Allowance for loan losses to loans
at year end 1.46 1.44 1.95
Net charge-offs (recoveries)
to allowance for loan losses
at end of year (20.2) (12.2) 12.08
Net charge-offs to provision for
loan losses N/A N/A N/A
Provision For Loan Losses and Non-performing Loans.
Management considers the allowance for possible loan losses
adequate to cover possible losses on the loans outstanding as of each
reporting date. It must be emphasized, however, that the determination
of the level of the allowance for possible loan losses using the Bank's
procedures and methods rests upon various judgments and assumptions.
The factors which influence management's judgment in determining the
level of the allowance for loan losses and the amount which is
charged to operating expenses are: (1) past loan loss experience,
(2) composition of the loan portfolio, (3) evaluation of possible
future losses, (4) current economic conditions, (5) specific
identification and anticipation of problem and non-performing loans, and
(6) other relevant factors affecting loans.
No assurance can be given that the Bank will not in any particular
period sustain loan losses which are sizable in relationship to the
amount reserved or that subsequent evaluations of the loan portfolio,
in light of conditions and factors then prevailing, will not require
significant changes in the allowance for possible loan losses.
The following is an allocation of the allowance for loan losses by
related categories of loans and the percentage of loans in each category
to total loans.
December 31
1995 1994 1993
(dollars in thousands)
Commercial, financial
and agricultural $ 423 83.9% $ 258 51.4% $ 363 74.0%
Real estate
Construction 15 3.0 23 4.6 15 1.3
Mortgage 15 3.0 122 24.3 73 11.0
Installment 51 10.1 99 19.7 170 13.7
$ 504 100.0% $ 502 100.0% $ 621 100.0%
V. DEPOSITS
The daily average amounts of deposits for the years ended are
summarized below:
December 31
1995 1994 1993
(in thousands of dollars)
Demand deposits (non-interest bearing) $ 7,806 $ 8,115 $ 8,649
Savings deposits 7,133 7,961 8,410
NOW accounts 4,852 4,603 4,507
Money market accounts 5,379 4,587 5,413
Other time deposits 24,887 23,073 21,931
$50,057 $48,339 $48,910
Remaining maturities of time deposits of $100,000 or more at
December 31, 1995, are summarized as follows (in thousands of dollars):
AFTER AFTER
THREE SIX
BUT BUT
WITHIN WITHIN WITHIN AFTER
THREE SIX TWELVE TWELVE
MONTHS MONTHS MONTHS MONTHS TOTAL
Certificates of
Deposit $2,477 $ 804 $2,078 $ 267 $5,626
Other time deposits 435 0 730 0 1,165
$2,912 $ 804 $2,808 $ 267 $6,791
The Bank has no material foreign depositors.
VI. RETURN ON EQUITY AND ASSETS
The following table shows the return on assets (net income) divided
by average total assets), return on equity (net income) divided by
average equity), dividend payout ratio (dividends declared per common
share divided by net income per common share), equity to assets ratio
(average equity divided by average total assets), and ratio of earnings
to fixed charges (pre-tax income plus fixed charges divided by fixed
charges) for each period indicated.
Year ended December 31
1995 1994 1993
Return on assets .80% .89% 1.92%
Return on equity 8.79 10.16 23.14
Dividend payout ratio 0 0 0
Equity to assets ratio 9.13 8.79 8.31
Ratio of earnings to fixed charges 701.62 953.76 3,045.00
VII. SHORT-TERM BORROWING
The following table summarized short-term borrowing:
1995 1994 1993
(amounts in thousands
of dollars)
Amount outstanding at December 31, $ - $ - $ -
Weighted average interest rate - - -
Maturity of borrowings at December 31,
Two to 30 days - - -
31 days to one year - - -
One to two years - - -
Maximum amount outstanding at any
month-end during each year - - 450
Average amount outstanding during
each year - - 12
Weighted average interest rate - - 3.0%
Item 2. Properties
Since November 1980 the main offices of the Bank and since 1982 the main
offices of Bancshares have been located in a four-story office building at
1201 Brashear Avenue, Morgan City, Louisiana. The premises consist of
approximately 65,000 total square feet of office space, a parking lot for
280 vehicles, and six drive-in banking stations.
During the second quarter of 1991, the Bank sold its bank building and land
for its approximate book value of $2,800,000 and retained as leasehold
improvements assets with a depreciated book value of approximately $500,000.
These retained assets consist of items used in performance of routine banking
functions such as teller stations, drive-in facilities, vaults, etc.
As part of the agreement, the Bank has leased back approximately 25,000
square feet of usable building space and the land for approximately $320,000
per year. Under the long-term operating lease the minimum term will be 15
years.
See note 16 of the financial statements.
Item 3. Legal Proceedings
Bancshares is not engaged in any legal actions. The Bank is involved
in a number of legal actions in the normal course of its operations. In the
opinion of management, based on a review of such litigation with legal
counsel, the outcome of such actions should not have a material effect upon
the consolidated financial position or results of operations.
Item 4. Matters Submitted to a Vote of Security Holders
No matters were submitted to a vote of security holders during the
fourth quarter of the fiscal year covered by this report.
Part II
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters
The primary market area for Bancshares' stock is the Morgan City and St.
Mary Parish, Louisiana, area. The stock is not listed on any exchange and
is not registered with the National Association of Securities Dealers, Inc.
Due to lack of an actual trading market, Bancshares does not have available
information to furnish the high and low sales prices or the range of bid and
asked quotations for its stock.
Bancshares' subsidiary, Guaranty Bank & Trust Company of Morgan City is
registrar and transfer agent for Bancshares' common stock. There were
approximately 700 stockholders of record at March 10, 1995.
Bancshares paid a $0.675 dividend on its $2.70 cumulative preferred
stock on January 4, 1995. No dividends have been declared or paid on its
$.50 cumulative preferred stock since their issuance. See the Annual Report
to Shareholders, pages 4-12 (Management's Discussion and Analysis of
Financial Condition and Results of Operations).
Non-affiliates hold 240,755, or 63 percent of the 380,877 voting shares
outstanding as of March 11, 1996.
Item 6. Selected Financial Data
The information called for by Item 6 is included in Bancshares' Annual
Report to Shareholders on page 3, in the section titled "Selected
Consolidated Financial Data", and is incorporated herein by reference.
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The information called for by Item 7 is included in Bancshares' Annual
Report on pages 4-12, in the section titled "Management's Discussion and
Analysis of Financial Condition and Results of Operations", and is
incorporated herein by reference.
Item 8. Financial Statements and Supplementary Data
The following consolidated financial statements of Bancshares and its
subsidiaries, included on pages 14-42, in the Annual Report to Shareholders,
are incorporated herein by reference.
Consolidated Statements of Condition - December 31, 1995
and 1994
Consolidated Statements of Income - Years ended
December 31, 1995, 1994, and 1993
Consolidated Statements of Changes in Stockholders'
Equity - Years ended December 31, 1995, 1994, and 1993
Consolidated Statements of Cash Flows - Years ended
December 31, 1995, 1994, and 1993
Notes to Consolidated Financial Statements
Auditors' Report
Item 9. Disagreements on Accounting and Financial Disclosure
There have been no disagreements with Bancshares' or the Bank's
independent certified public accountants on any matter of accounting
principles or practice, financial statement disclosure or auditing scope or
procedure within the twenty-four months prior to December 31, 1995 reported
on Form 8-K.
Part III
Item 10. Directors and Executive Officers of the Registrant
The following table sets forth certain information as of March 11, 1996,
concerning the directors and officers as a group, including their beneficial
ownership of shares of Common Stock of Bancshares as determined in accordance
with Rule 13d-3 of the Securities and Exchange Commission. Unless otherwise
indicated, (i) each person has been engaged in the principal occupation shown
for more than the past five years, and (ii) shares shown as being
beneficially owned are held with sole voting and investment power. The
persons listed are also members of the Board of Directors of Bancshares'
wholly owned subsidiary, Guaranty Bank & Trust Company of Morgan City (the
"Bank").
Year First
Became
Director Shares Percent
Name, Age, and of the Beneficially of
Principal Occupation Bancshares Owned (1) (2) Class (2)
H. W. Bailey (73) 1982 17,666 (3) 4.74%
Retired since 1-1-83.
Executive Vice President
and Chief Administrative
Officer of McDermott, Inc.
(offshore construction)
Brooks Blakeman (49) 1988 34,070 (4) 9.13%
Chairman of the Board
Bancshares and the Bank
Vice President and General
Manager of Frank's Casing
Crews, Inc. (oilfield services)
Vincent Cannata (81) 1982 22,343 (5) 5.99%
President of Cannata's
Super Market, Inc.
Randolph Cullom (58) 1990 200 -
President and Chief Executive
Officer of Bancshares and the
Bank
Frank J. Domino, Sr. (76) 1982 5,280 (6) 1.42%
President of Frank's Motor
Co., Inc. (auto sales);
Secretary and Treasurer of
Domino Developers, Inc.
(home construction)
Conley J. Dutreix (48) 1993 200 -
Executive Vice President of
Bancshares and the Bank;
Director of the Bank
since 1992.
Anthony J. Guarisco, Sr. (85) 1982 37,542 10.06%
President of Guarisco
Enterprises, Inc., (holding
company for subsidiaries
engaged in diesel fuel
distribution, shell sales
and transport and real
estate); President of
Guarisco Evans Shopping
Center, Inc.
Wiley Magee (52) 1982 4,304 1.15%
Secretary to the Board
Bancshares and the Bank
President of Morgan City
Supply, Inc. (wholesale
and retail hardware)
Lee A. Ringeman (66) 1989 1,931 (7) -
Executive vice President
and Chief Financial Officer
since 1990.
All executive officers and
directors of Bancshares and the
bank 123,566 33.13%
(1) Except as noted below, all shares of Bancshares' stock set forth above
constitute direct beneficial ownership by such director with full voting
and investment power. Except as indicated above, no person owns more
than five percent of the outstanding shares of Bancshares' stock. The
address of each director is c/o Guaranty Bank & Trust Company of Morgan
City, Post Office Box 2208, Morgan City, Louisiana 70381.
(2) Includes aggregate of Class A Common stock and Class B Common stock.
Percent of class omitted where less than one percent.
(3) Includes 7,700 shares in the name of Bailey Estate.
(4) Includes 33,870 shares held by the Blakeman Trust over which Mr.
Blakeman shares voting powers.
(5) Includes 6,910 shares in the name of Cannata's Super Market, Inc. over
which Mr. Cannata shares voting and investment power.
(6) Includes 60 shares in the name of Mr. Domino's wife.
(7) Includes 1,186 shares held jointly with Mrs. Ringeman and 32 shares held
jointly with Mr. Ringeman's grandson.
None of the directors of Bancshares holds a directorship in any company
with a class of securities registered under Section 12 of the Securities
Exchange Act of 1934, as amended, or subject to the requirements of Section
15(d) of that Act or in any company registered as an investment company under
the Investment Company Act of 1940, as amended.
Bank directors received compensation at the rate of $250 for each
regular directors meeting attended, $100 for committee meetings attended, and
a $1,500 fee for serving as a director. No fees were paid for service on
Bancshares' Board.
No family relationships exist among the above named directors or the
executive officers of Bancshares or the Bank.
Executive Officers
The executive officers of Bancshares and the Bank, as of March 11, 1996, are
as follows:
Name Age Position Currently Held
Brooks Blakeman 49 Chairman of the Board of
Bancshares and the Bank
Randolph Cullom 58 President and Chief Executive
Officer of Bancshares and the
Bank
Wiley Magee 52 Secretary of the Board of
Bancshares and the Bank
Lee A. Ringeman 66 Executive Vice President and
Chief Financial Officer of
Bancshares and the Bank
Conley Dutreix 48 Executive Vice President of
the Bank and Assistant
Secretary of the Board of
Directors of Bancshares and
the Bank
Each executive officer has been an officer or director of Bancshares and
the Bank for five years or more.
Item 11. Executive Compensation
Cash Compensation
The following table sets forth the aggregate cash compensation paid by
the Bank for services rendered in all capacities during the fiscal years
ended December 31, 1993, 1994 and 1995, with respect to each executive
officer whose total cash compensation exceeded $100,000.
Active officers of Bancshares are also officers of the Bank and receive
no annual compensation from Bancshares.
SUMMARY COMPENSATION TABLE
Annual Compensation
Name and Other All
Principal Annual Other
Position Year Salary Bonus(1) Compensation(2) Compensation(3)
Randolph
Cullom 1995 $90,000 $26,785 $ 4,500 $ 765
President 1994 90,000 20,000 4,250 529
and Chief 1993 90,000 30,000 4,500 529
Executive
Officer of
Bancshares
and the Bank
(1) Mr. Cullom has an employment contract with the Bank whereby
his initial base annual salary is $90,000. In addition to the
annual salary, he is entitled to a non-cumulative annual cash
bonus of $300.00 for each basic point of return on average
annual assets, up to a maximum of $30,000.00. Return on
average annual assets is defined as the after tax earnings
before any bonuses. The bonus earned in 1994 was paid in 1995
and 1995 was paid in 1996. Also as part of his employment
agreement, in the event Mr. Cullom is terminated without good
cause, he shall be entitled to receive one year annual salary
as severance pay.
(2) Represents director fees.
(3) The Bank paid approximately $765, in term life insurance
premiums on behalf of Mr. Cullom in 1995 and $529 in each of
the years 1994, and 1993, respectively. This group policy has
no cash surrender value.
The Bank has instituted an unqualified defined benefit
retirement program for three of its executive officers, as follows:
Name and Annual Planned
Principal Pre-Retirement Retirement Retirement
Position Death Benefit(1) Benefit(2) Date - Age
Randolph Cullom $487,250 $50,000 2002 - 65
President and
Chief Executive
Officer
Lee A. Ringeman 292,350 30,000 2000 - 70
Executive Vice
President
Conley J. Dutreix 292,350 50,000 2012 - 65
Executive Vice
President
(1) Benefits payable to the participant's named beneficiaries.
(2) Benefits payable monthly for life, 15 years certain.
These benefits are funded by single premium life insurance
policies on the lives of the participants. The policies are owned
by the Bank and the proceeds from death benefits are payable to the
Bank. Projected December 31, 1996 death benefits are as follows:
Mr. Cullom - $835,000, Mr. Ringeman - $317,000, and Mr. Dutreix -
$377,000.
If the Bank terminates a participant's employment prior to his
planned retirement date for cause, the participant shall not be
entitled to any benefits. If employment is terminated prior to his
planned retirement date, other than by death or discharge for
cause, the Bank shall pay to the participant an amount which is the
actuarial equivalent of his annual retirement benefit, computed in
accordance with the agreement.
If a participant's employment is terminated within twenty four
(24) months following a change in control of the Bank, the
participant will be entitled to the benefits set forth in the
preceding paragraph with the respective benefits being increased
in amount by fifty (50%) percent.
Bancshares and the Bank have no established policy or practice
with respect to providing personal benefits to officers, directors
or principal stockholders. Although the Bank pays for civic and
social club memberships for certain officers, the aggregate annual
value per person of such benefits is considerably less than $2,500.
Neither Bancshares nor the Bank has any other remuneration,
pension or retirement plans in effect. The Bank provides health
and life insurance coverage for all employees.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
Principal Shareholders
The persons named below were, to the knowledge of Bancshares,
the only persons as of March 11, 1996, who beneficially owned more
than 5% of the outstanding Guaranty Bancshares Holding Corporation
Class A and Class B Common stock. Beneficial ownership consists
of sole voting and investment power.
Name and Address Amount and Nature of Percent
of Beneficial Owner Beneficial Ownership (1) of Class
Brooks Blakeman 34,070 (2) 9.13%
Post Office Box 2208
Morgan City, Louisiana 70381
Vincent Cannata 22,343 (3) 5.99%
Post Office Box 2208
Morgan City, Louisiana 70381
Anthony J. Guarisco, Sr. 37,542 10.06%
Post Office Box 2208
Morgan city, Louisiana 70381
(1) Determined in accordance with Rule 13d-3 under the Securities
Exchange Act of 1934 based upon information furnished by the
persons listed or contained in filings made by them with the
Securities and Exchange Commission.
(2) Includes 33,870 shares held by the Blakeman Trust over which
Mr. Blakeman shares voting powers.
(3) Includes 6,910 shares in the name of Cannata's Super Market,
Inc. over which Mr. Cannata shares voting and investment
power.
Item 13. Certain Relationships and Related Transactions
During 1995 the Bank engaged in banking transactions in the
ordinary course of business with directors and officers of
Bancshares and the Bank, and their affiliates, and expects to have
such transactions in the future. In the opinion of Management, all
such transactions were on substantially the same terms, including
interest rates and collateral on loans, as those prevailing at the
same time for comparable transactions with others and did not
involve more than normal risk of collectibility or present other
unfavorable features.
Part IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K
(a) 1. Financial Statements
The following consolidated financial statements of
Guaranty Bancshares Holding Corporation and
Subsidiaries, included on pages 14-42 of the
Bancshares Annual Report to Shareholders are
incorporated by reference in Item 8:
Consolidated Statements of Condition - December 31,
1995, 1994, and 1993
Consolidated Statements of Income - Years ended
December 31, 1995, 1994, and 1993
Consolidated Statements of Cash Flows - Years ended
December 31, 1995, 1994, and 1993
Notes to Consolidated Financial Statements
Independent Auditors' Report
(a) 2. Financial Statements Schedules
All schedules have been omitted because they are not
applicable or the required information is presented in
the consolidated statements or notes thereto.
(a) 3. Exhibits
(3) Articles of incorporation and by-laws*
(4) Instruments defining the rights of security holders,
including indentures*
(10) Material contracts*
(11) Computation of earnings per share
(12) Statement regarding computation of ratios
(13) Annual Report to Shareholders
(24) Consent of Darnall, Sikes, Kolder, Fredericks, &
Rainey
(27) Financial Data Schedule
*Incorporated by reference to Bancshares' registration
statement on Form S-14, registration number 2-79378.
(b) Reports on Form 8-K
No reports on Form 8-K were filed by Bancshares during
the quarter ended December 31, 1995.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
GUARANTY BANCSHARES HOLDING CORPORATION
(Registrant)
By: /s/ Randolph Cullom
Randolph Cullom, President and
Chief Executive Officer
Dated: March 28, 1996
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed by the following persons on
behalf of the Registrant and in the capacities and on the dates
indicated.
/s/ Randolph Cullom
Brooks Blakeman, Chairman of the Randolph Cullom, President
Board and Chief Executive
Officer
/s/ Wiley Magee
Wiley Magee, Secretary H. W. Bailey, Director
Treasurer and Director
/s/ Vincent Cannata /s/ Conley J. Dutreix
Vincent Cannata, Director Conley J. Dutreix,
Assistant Secretary and
Director
/s/ Anthony J. Guarisco, Sr. /s/ Frank J. Domino, Sr.
Anthony J. Guarisco, Sr., Frank J. Domino, Sr.,
Director Director
/s/ Lee A. Ringeman
Lee A. Ringeman, Executive Vice
President and Chief Financial
Officer, Director
EXHIBIT 11
GUARANTY BANCSHARES HOLDING CORPORATION
COMPUTATION OF EARNINGS (LOSS) PER SHARE
1995 1994 1993
Number of shares - beginning of year 380,877 380,877 380,877
Issued during year -0- -0- -0-
Number of shares - end of year 380,877 380,877 380,877
Weighted average number of shares
outstanding 373,728 374,375 374,375
NOTE: Weighted average calculated based upon actual number of days
outstanding for each share, exclusive of 7,852 shares held in
treasury.
EXHIBIT 12
STATEMENT REGARDING COMPUTATION OF RATIOS
1995 1994 1993
(Dollars in Thousands)
Pre-tax earnings 740 $ 794 $ 589
Total fixed charges:
Interest on notes payable 123 93 20
- - -
Total $ 863 $ 887 $ 609
Fixed charges $ 123 $ 93 $ 20
Ratio of earnings to fixed charges 701.63% 953.76 3,045.00%
To Our Fellow Stockholders,
With sincere sorrow and regret I must inform you that Mr.
Murray P. Ordogne, one of the founders and a director of Guaranty
Bancshares and Guaranty Bank, died on February 28, 1996. Mr.
Ordogne was a loyal supporter of the Company and the source of
valuable advice to his fellow board members and officers. He gave
freely of his time and contributed much to the success of the
organization. His contributions will be missed by all those he
touched.
In 1996 we celebrate the 30th anniversary of Guaranty Bank &
Trust Company. We enter this anniversary year with good feelings
about accomplishments of the last 30 years and optimism about our
future. These successes are a direct result of the Guaranty's
dedicated employees, directors, and supporting stockholders.
Throughout this past year your company achieved significant
progress toward its goal of expanding into those nearby markets
with which we are familiar and which offer potential controlled
growth and increased earnings. Asset growth for the sake of size
is nonproductive. Profitable asset growth affords the opportunity
to spread fixed expenses over a larger base of earning assets and
to achieve reductions in unit costs for certain variable expenses.
With this objective, we opened a branch office in Lafayette in
April 1995. This venture has proved to be very successful, both
loan and deposit growth have exceeded earlier projections.
Guaranty Bancshares' consolidated net income totaled $477,000,
down slightly from $508,000 in 1994. Bancshares' 1993 net income
totaled $1,079,000, including $674,000 from a change in income tax
treatment and 1992 earnings of $574,000 included $489,000 in
extraordinary items related to refunds of prior years' income
taxes. Without these one-time occurrences, our operating earnings
for the last five years show a very positive trend.
1995 1994 1993 1992 1991
$477,000 $508,000 $405,000 $108,000 $135,000
Net interest income, the primary source of earnings, reached
$2,576,000, up 4.6 percent from 1994 and 8.2 percent over 1993.
This increase was the result of a higher proportion of interest
earning assets, better interest margins, and greater average loans
outstanding at higher yields.
The Bank made no provision for loan losses in 1993, 1994, or
1995 and, considering the high quality of the loan portfolio, re-
covered $100,000 from the allowance for loan losses in 1995 and
$180,000 in 1994. In 1995 net recoveries of previously charged off
loans exceeded current charge offs by $102,000. Over the last
three years, the Bank has had net recoveries of over $238,000.
Total assets at year end were down slightly from prior year
levels, however, average assets for 1995 were $2,557,000 or 4.5
percent over 1994. Asset quality measures in 1995 followed similar
improvements in 1994 and 1993. The Bank had no accruing loans past
due 90 days or more and had $84,000 of non-accruing loans. These
loans, which represent only 0.2 percent of loans outstanding at
year end, are well collateralized and borrowers are experiencing
what we consider short term cash flow difficulties. No losses are
anticipated on these loans.
Non interest operating expenses which had trended lower since
1991 increased $66,000 in 1995 over 1994. This entire increase is
attributed to the new branch facility which was opened in April.
We anticipate more mergers, acquisitions, and de novo competi-
tion in the financial arena. We expect the bulk of this expansion
will come from the larger money center banks and the growing
regional institutions. Our goal is to study and watch our market
and competition and to act quickly to meet our customers needs as
they develop.
Our strategies for 1996 and future years are to provide
quality financial products at competitive prices, to identify
emerging consumer and business needs and to develop products which
will fulfill those growing markets profitably.
It is the ability to better understand and more quickly
respond to the individual needs of our banking customer that will
set Guaranty apart from the larger regional and remotely managed
banking organization. As true community bankers and lenders, we
are closer to our customers and shareholders to whom we are ulti-
mately responsible. We believe this special relationship and our
ability to respond quickly to our customers needs will assure
continuing success in this very competitive marketplace. With this
I express our sincere appreciation for your allowing us to continue
serving you and your financial needs.
Sincerely,
Brooks Blakeman
Chairman of the Board
<TABLE>
GUARANTY BANCSHARES HOLDING CORPORATION AND SUBSIDIARIES
--------------------------------------------------------
SELECTED CONSOLIDATED DATA
--------------------------
(In thousands of dollars, except per share data)
<CAPTION>
Years Ended December 31
------------------------------------------------------------
1995 1994 1993 1992 1991
Operating data: ----------------------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Total interest income $4,539 $4,110 $3,871 $ 4,082 $ 4,805
=========== =========== =========== =========== ===========
Net interest income $2,576 $2,463 $2,380 $ 2,092 $ 1,964
Recovery (provision) from
(for) loan losses 100 180 - (20) 100
Other non-interest income 343 364 445 344 410
Non-interest operating
expense 2,279 2,213 2,236 2,275 2,290
Income taxes 263 286 184 34 49
----------- ----------- ----------- ----------- -----------
Income before
extraordinary items and
change in accounting
principle 477 508 405 108 135
Extraordinary items and
change in accounting
principle - - 674 489 516
----------- ----------- ----------- ----------- ----------
Net income $ 477 $ 508 $1,079 $ 597 $ 651
=========== =========== =========== =========== ===========
Per common share data:
Net income loss before
extraordinary items and
change in accounting
principle $ - $ - $ - $ (.79) $ (.73)
Extraordinary items and change
in accounting principle - - 1.80 1.30 1.35
Net income .20 .28 1.80 0.51 .62
dividends .675 2.70 - - -
Number of common shares
outstanding 380,877 380,877 380,877 380,877 380,877
Weighted average of common
shares outstanding 373,728 374,375 374,375 376,504 380,877
Selected statements of
condition items:
Year end balances:
Total assets $60,245 $60,687 $54,952 $58,419 $55,030
Investment securities 10,963 9,494 16,902 21,932 15,031
Securities available
for sale 5,167 7,190
Loans, net of unearned
income 34,546 34,775 31,888 27,665 31,930
Total deposits 50,770 51,498 47,053 52,251 47,518
Notes payable 1,681 1,854 581 - 807
10% subordinated
debentures, net - - - - 668
Stockholders' equity 5,662 5,179 4,780 4,094 3,592
</TABLE>
GUARANTY BANCSHARES HOLDING CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Guaranty Bancshares Holding Corporation's (Bancshares) net
operating income for 1995 was $477,000, compared with $508,000 in
1994, and $405,000 in 1993, before the $674,000 cumulative effect
of adopting Statement of Financial Accounting Standards No. 109
"Accounting for Income Taxes",. Net income of $477,000 in 1995
compares with $508,000 in 1994 and $1,079,000 in 1993. Earnings
per common share were $.20, $.28 and $1.80 for 1995, 1994 and 1993,
respectively. Return on average assets was 0.80% for the current
year, 0.89% for 1994 and 1.92% for 1993. Return on average equity
was 8.79% in 1995, 10.16% in 1994, and 23.1% in 1993.
At December 31, 1995 Bancshares and its subsidiaries had total
assets of $60,245,000 and deposits of $50,770,000, compared with
assets and deposits of $60,687,000 and $51,498,000 in 1994 and
$54,952,000 and $47,053,000 in 1993. Total assets and deposits
were lower at year end 1995 from 1994 because the subsidiary Bank
chose not to compete for higher interest bearing certificates of
deposit.
Bancshares' principal subsidiary, Guaranty Bank & Trust Company
operates three banking offices in East St. Mary Parish and
Lafayette Parish, Louisiana, with 32 full time and 1 part time
employee.
Net interest income was $2,576,000, 4.6% and 8.2% higher than in
1994 and 1993. Other income was $343,000 in 1995, down from
$364,000 in 1994 and $445,000 in 1993. Non performing loans at
December 31, 1995 were $84,000, up from $30,000 in 1994 and
amounted to less than 0.2% of outstanding loans. Foreclosed real
estate at December 31, 1995 was $65,000, compared with $80,000 in
1994 and $34,000 in 1993. The allowance for loan losses was 1.46%
of loans as of December 31, 1995 versus 1.44% in 1994 and 1.95% in
1993. Recoveries from previously charged off loans exceeded 1995
charge offs by $102,000. At December 31, 1995, Bancshares'
leverage ratio was 9.5% and stockholders' equity as a percent of
total assets was 9.4%. The risk-based capital ratio was 11.7%.
Management's discussion and analysis of financial condition and
results of operations should be read in conjunction with the
accompanying consolidated financial statements, related notes, and
the consolidated selected financial data presented in this report.
NET OPERATING RESULTS
Bancshare' consolidated net interest income was $2,576,000 in 1995,
compared with $2,463,000 in 1994 and $2,380,000 in 1993. These
increases were primarily due to changes in the level of loans out-
standing, offset by higher interest paid on other time deposits and
borrowed funds. Daily average interest earning assets increased
$2,621,000 and interest bearing liabilities increased $2,337,000.
Average rates earned increased 0.4% while average rates paid in-
creased 0.5% from 1994 levels. During 1994 rates earned increased
0.4% while average rates paid increased 0.3% from 1993.
The increase in average interest earning assets in 1995 was
primarily in loans and funds sold. Average loans increased
$964,000 over 1994 while average funds sold increased $1,339,000
This shift in investment emphasis was begun in 1993 when the Bank
began actively soliciting loans and emphasizing business develop-
ment.
The increase in average interest bearing liabilities was in money
market accounts and in other time deposits, primarily certificates
of deposit, and in borrowing from the Federal Home Loan Bank of
Dallas. The banking industry created a favorable interest rate
market and some of the deposits which had sought better rates
outside of the industry returned. Also, the Bank actively sought
to retain deposits in order to fund loans.
The capital lease initiated in June 1991 was outstanding for the
entire years 1995, 1994 and 1993. This capital lease is related
to the sale/lease back transactions on the Bank's office building.
(See note 16 to the financial statements.)
Changes in the composition of the deposit structure and generally
higher rates paid on certificates of deposit increased the amount
paid on deposits by $295,000, following $91,000 increase in 1994
from 1993 levels.
Interest on the demand notes payable increased $29,000 from 1994.
This is the result of increased Bank borrowing from the Federal
Home Loan Bank of Dallas to fund commercial real estate loans which
have comparable scheduled amortizations.
As indicated in the following table, average balances of Bancshares
available funds have followed 1994 trends. Average available funds
increased $2,028,000 in 1995 following increases of $385,000 in
1994 and a $1,054,000 decline in 1993. Average assets in 1992 were
distorted because of the ususual surge of hurricane damage related
funds which flowed through the community in late 1992.
<TABLE>
TOTAL AVAILABLE FUNDS (In Thousands of Dollars)
<CAPTION>
1995 1994 1993
-------------------- ---------------------- ----------------------
DAILY DAILY DAILY
AVERAGE AVERAGE AVERAGE
BALANCE % BALANCE % BALANCE %
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Savings and NOW accounts $11,985 22.4 $12,564 24.4 $12,917 25.3
Money market investment accounts 5,379 10.1 4,587 8.9 5,413 10.6
Other time deposits 18,183 34.0 15,674 30.4 15,906 31.1
Certificates of deposit of
$100,000 or more 6,704 12.5 7,399 14.4 6,025 11.8
Federal funds purchased - - - - 12 -
Investment in capital lease 1,678 3.1 1,759 3.4 1,832 3.6
Notes payable and 10%
subordinated debentures 1,768 3.3 1,377 2.7 336 .7
--------- --------- --------- --------- --------- ---------
Total interest bearing
liabilities 45,697 85.4 43,360 84.2 42,441 83.1
Demand deposits 7,806 14.6 8,115 15.8 8,649 16.9
--------- --------- --------- --------- --------- ---------
Total available funds $53,503 100.0% $51,475 100.0% $51,090 100.0%
========= ======== ========= ========= ========= =========
</TABLE>
During 1995, available yields in investment securities increased,
loan demand increased, and the Bank's average loan yields were
slightly higher. Interest differentials increased as the compo-
sition of earning assets changed and the ratio of interest earning
assets as a percent of average total assets increased from 1994
levels.
PROVISION FOR LOAN LOSSES AND NON-PERFORMING LOANS
The provision for loan losses is the expense recorded to maintain
the allowance for loan losses at a level which in management's
judgment will be adequate to absorb probable losses in existing
loans which may become uncollectible.
The allowance for loan losses as a percentage of loans, less un-
earned income, outstanding at year-end is as follows:
Provision
For
Allowance Allowance Net Loans (Recovered
Loans For Loan As A % Of Charged Off From) Loan
Outstanding Losses Loans (Recovered) Losses
1995 $ 34,546 $ 504 1.46% $ (102) $ (100)
1994 34,775 502 1.44% (61) (180)
1993 31,888 621 1.95% (75) -
Considering the low level of non-performing loans and delinqen-
cies, the Bank recovered $100,000 from the allowance for loan
losses in 1995 and $180,000 in 1994 and made no provision for loan
losses in 1993. Non-performing loans on non-accrued status in-
creased $54,000 to approximately $84,000 at year end 1995, compared
with $30,000 and $36,000 at December 31, 1994 and 1993, respec-
tively.
At any given date, the amount of the allowance for loan losses will
be less than the total of loans outstanding to borrowers who are
experiencing varying degrees of financial difficulty. This is
because experience has shown that the probability of all these
loans becoming completely uncollectible is remote. Therefore,
management determines a lesser amount which is believed to be
sufficient to absorb loan losses.
The evaluation of our loan portfolio to establish the allowance
level includes specific review of all loans criticized during
internal reviews, by regulatory examination and all delinquent
loans. Management considers the allowance for loan losses adequate
to cover losses on the loans outstanding as of each reporting date.
It must be emphasized that the determination of the allowance for
loan losses using the Bank's procedures and methods rests upon
various judgments and assumptions. The factors which influence
management's judgment in determining the level of the allowance for
loan losses and the amount which is charged to operating expenses
are: (1) past loan loss experience, (2) composition of the loan
portfolio, (3) evaluation of future losses, (4) current economic
conditions, (5) specific identification and anticipation of
problem and non-performing loans, and (6) other relevant factors
affecting loans.
No assurance can be given that the Bank will not in any particular
period sustain loan losses which are sizable in relation to the
amount reserved or that subsequent evaluations of the loan port-
folio, in light of conditions and factors then prevailing, will not
require significant changes in the allowance for loan losses.
OTHER INCOME
Other operating income was approximately $343,000 during 1995,
compared with $364,000 in 1994 and $445,000 in 1993. There were
no securities gains in 1995 or 1994, following $37,000 in 1993.
Gains on the sale of repossessed property contributed approximately
$6,000 to the level of other operating income in 1994 compared with
$91,000 in 1993. Service charges on deposit accounts continued to
decline slightly from 1994 and 1993 levels. The slight increase
in insurance commissions and other service charges and fees was
primarily attributable to a recovery in consumer loan activity.
OTHER OPERATING EXPENSES
Other operating expenses totaled $2,279,000 in 1995, compared with
$2,213,000 in 1994, a $66,000 increase, following a $24,000
decrease in 1994 from 1993. The following Analysis of Other
Operating Expenses details the major categories of other operating
expenses. Personnel expense, which normally comprises approxi-
mately one-half of non-interest expenses, totaled $1,036,000
compared with $972,000 in 1994, and a $82,000 increase from 1993.
This increase is attributable to the Bank opening a new facility.
Expenses related to other real estate and repossessed property, net
of rental income on these properties, increased $1,000, following
the sale of a 34 acre parcel acquired late in 1994 and the
acquisition of an unoccupied building in 1995. There were no real
estate market value adjustments in 1995, 1994 or 1993. Aggregate
related expenses, such as taxes, insurance and losses on sales of
these properties, totaled $10,000 in 1995, compared with $12,000
in 1994, and $10,000 in 1993. Rental income on these properties
totaled $1,000 in 1995, $4,000 in 1994, and $6,000 in 1993.
Professional fees and services, primarily legal and accounting
fees, increased $4,000 to $132,000 in 1995 following an $32,000
decrease in 1994 from 1993.
<TABLE>
ANALYSIS OF OTHER OPERATING EXPENSES (In Thousands of Dollars)
<CAPTION>
1995/1994 1994/1993
Change Change
----------------- -----------------
1995 1994 1993 Amount % Amount %
-------- -------- -------- ----------------- -----------------
Salaries and employee
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
benefits $ 1,036 $ 972 $ 954 $ 64 7 $ 18 2
Expenses related to
other real estate and
repossessed property,
net of rental income
on these properties 9 8 4 1 12 4 100
Net occupancy expense 432 426 456 6 1 (30) (7)
Equipment and computer
expense 204 193 182 11 6 11 6
Professional fees and
services 132 128 160 4 3 (32) (20)
Advertising and public
relations 38 35 38 3 9 (3) (8)
Stationery and supplies 39 42 41 (3) (7) 1 2
FDIC and other insurance 89 141 146 (52) (37) (5) (3)
Directors fees 91 64 75 27 42 (11) (15)
Other operating expenses 209 204 181 5 2 23 13
-------- -------- -------- -------- --------
$ 2,279 $ 2,213 $ 2,237 $ 66 3 $ (24) (1)
======== ======== ======== ======== ======== ======== ========
</TABLE>
LIQUIDITY AND CAPITAL RESOURCES
Principal components of Bancshares' funds management program are
the maintenance of adequate liquidity and the management of rate
sensitive assets and liabilities. These strategies are designed
to integrate sources and investment of funds to assure the Bank's
ability to meet effectively the requirements of customers for loan
and deposit withdrawals. Liquidity management attempts to match
the sources and uses of funds, while interest sensitivity
management attempts to stabilize net interest income during periods
of changing interest rates.
Some liquidity is assured by maintaining marketable assets which
may immediately be converted into cash, by receipt of loan
repayments, and by the maturity of other earning assets. Liquidity
from liabilities results from the generation of new deposits as
well as short-term purchases of federal funds.
The Bank has $9,959,000 in loans outstanding, including demand
loans with no stated repayments and no stated maturity, scheduled
to mature in 1996 and another $9,903,000 floating rate loans which
reprice annually or more frequently. In addition $9,500,000 of
investment securities will mature in 1996 and another $5,206,000
of floating rate debt securities will reprice within one year.
Federal funds sold amounted to $3,325,000 on December 31, 1995.
These funds sold can immediately be converted to cash without
interest or principal penalty.
Capital adequacy depends on a variety of interacting factors,
including asset quality, liquidity, economic conditions in the
market served and strength of management. Bancshares' ratio of
stockholders' equity to assets and to total deposits at December
31, 1995, 1994, and 1993 are as follows (in thousands of dollars):
1995 1994 1993
Stockholders' equity $ 5,662 $ 5,179 $ 4,780
Total assets 60,245 60,687 54,952
Total deposits 50,770 51,498 47,053
Ratio of stockholders'
equity to:
Total assets 9.4% 8.5% 8.7%
Total deposits 11.2% 10.1% 10.2%
Bancshares does not have immediate plans for expansion through
acquisitions of other banks or financial institutions, or commit-
ments for significant capital expenditures.
A new form of capital measurement, risk-based capital, was imple-
mented by regulatory authorities in recent years. Under this
measure, distinctions are made according to the relative risks
incurred among the various items on and off of the balance sheet.
Under regulatory guidelines, for Guaranty Bancshares, Tier 1
capital represents the sum of stockholders' equity. Total capital
represents Tier 1 capital plus the allowance for loan losses,
subject to limitations defined by regulatory authorities. These
are usually expressed as a percentage of risk-weighted assets.
Risk-weighted assets are the total of assets and off-balance sheet
items which have been weighted based upon risk factors assigned by
the regulatory authorities. Banks and bank holding companies are
considered to be well capitalized with total capital of 10% and
Tier 1 capital of not less than 6%.
Selected capital adequacy measures for Bancshares and Guaranty Bank
are as follows as of December 31, 1995:
Risk-based capital
GUARANTY GUARANTY
BANCSHARES BANK
Tier 1 10.71% 10.67%
Total capital 11.66% 11.62%
Leverage ratio 9.53% 9.49%
Bancshares paid a $.675 dividend on its $2.70 cumulative preferred
stock, on January 4, 1995. No dividends have been declared or paid
on its $.50 cumulative preferred stock since their issuance. As
a result, accumulated and unpaid dividends are as follows:
$2.70 Preferred stock, dividends
accumulated from January 13, 1990
through January 13, 1996 $2,446,892
$.50 Preferred stock, dividends
accumulated from January 13, 1990
through January 13, 1996 69,375
$2,516,267
Bancshares' primary source of income is dividends from the Bank.
FUTURE FINANCIAL ACCOUNTING AND INCOME TAX MATTERS
The Financial Accounting Standards Board issued SFAS No.109
(Accounting for Income Taxes) which pronouncement requires an asset
and liability approach to account for the effects of income taxes
that result from a company's activities during the current and
preceding years. The pronouncement supersedes the deferral method
of accounting for income taxes. The principal changes in
accounting treatment are differences resulting from net operating
loss carryforwards, tax credit carryforwards, differences due to
book and tax depreciation differences, and basis differences in the
reserve for loan losses. Bancshares' implementation of this change
in accounting treatment resulted in the $674,000 change in
accounting principle reflected in the 1993 statement of income.
EFFECTS OF INFLATION
Due to our size, Bancshares is not required to make price level
disclosures in our financial statements. Although the rate of
inflation has stabilized in recent years, the long-term effects of
previous years continue to impact the Bank's operations. However,
since most of the assets and liabilities of a financial institution
are monetary in nature, changes in interest rates have a much more
significant impact on performance than the effects of general
levels of inflation. Inflation does impact the growth of total
assets in the banking industry and the need to retain earnings to
increase and maintain equity at appropriate capital/asset ratios.
REGULATORY MATTERS
At periodic intervals, examiners from the Louisiana Department of
Financial Institutions and the FDIC routinely examine the Bank's
financial statements as part of their legally prescribed oversight
of the banking industry. Based on these examinations, the
regulators can direct that the Bank's financial statements be
adjusted in accordance with their findings. The regulators have
not proposed significant adjustments to the Bank's financial
statements in prior years. Although no adjustments are
anticipated, in view of the increasingly uncertain regulatory
environment in which the Bank now operates, the extent, if any, of
such adjustments to the 1995 financial statements cannot presently
be determined.
MANAGEMENT STATEMENT
The accompanying financial statements and related financial data
were prepared by management, which is responsible for the integrity
and objectivity of the data presented, including amounts that must
necessarily be based on judgments and estimates. The financial
statements were prepared in conformity with generally accepted
accounting principles, and in situations where acceptable
alternative accounting principles exist, management selected the
method which was appropriate in the circumstances. All financial
information contained in this annual report is consistent with that
in the financial statements.
Management depends upon Guaranty Bancshares' system of internal
control in meeting its responsibilities for reliable financial
statements. In management's opinion, these systems provide
reasonable assurance that assets are safeguarded and that
transactions are properly recorded and executed in accordance with
management's authorization. Judgments are required to assess and
balance the relative cost and expected benefits of these controls.
As an integral part of the systems of internal control, Guaranty
Bancshares maintains a professional staff which conducts
operational and special reviews and coordinates audit coverage with
the independent certified public accountants.
The financial statements have been examined by Darnall, Sikes,
Kolder, Frederick & Rainey, independent certified public
accountants, whose independent professional opinion on management's
financial statements appears in the financial statements.
The Audit Committee of the Board of Directors, composed solely of
outside directors, may meet periodically with the independent
certified public accountants and management to review the work of
each and ensure that each is properly discharging its
responsibilities. The independent certified public accountants
have free access to the Committee, to discuss the results of their
audit work and their evaluations of the adequacy of internal
controls and the quality of financial reporting.
GUARANTY BANCSHARES HOLDING CORPORATION AND
GUARANTY BANK & TRUST COMPANY OF MORGAN CITY
BOARD OF DIRECTORS
H.W. Bailey Anthony J. Guarisco
Retired Executive President
Vice President Guarisco Enterprises, Inc.
McDermott, Inc. Morgan City, Louisiana
New Orleans, Louisiana
Brooks Blakeman Wiley Magee
Chairman of the Board Secretary to the Board
Guaranty Bancshares Holding Guaranty Bancshares
Corporation and Guaranty Holding Corporation and
Bank & Trust Company Guaranty Bank & Trust
Vice President and Company
General Manager President
Frank's Casing Crews, Inc. Morgan City Supply, Inc.
Lafayette, Louisiana Morgan City, Louisiana
Vincent Cannage Murray Ordogne
President Owner
Cannata's Supermarket, Inc. Morgan City Motel
Morgan City, Louisiana Morgan City, Louisiana
Randolph Cullom Lee A. Ringeman
President and Chief Executive Vice President
Executive Officer and Chief Financial
Guaranty Bancshares Holding Officer
Corporation and Guaranty Guaranty Bancshares
Bank & Trust Company Holding Corporation and
Morgan City, Louisiana Guaranty Bank & Trust
Company
Morgan City, Louisiana
Frank J. Domino
President
Frank's Motor Company, Inc. Benny A. Blakeman
Morgan City, Louisiana Retired Clerk of Court
St. Mary Parish
Morgan City, Louisiana
Conley J. Dutreix Director Emeritus
Assistant Secretary to the Guaranty Bank & Trust
Board of Guaranty Bancshares Company
Holding Corporation and
Guaranty Bank & Trust Company
Executive Vice President and
Chief Lending Offier of
Guaranty Bank & Trust Company
GUARANTY BANK & TRUST COMPANY
OFFICERS
Brooks Blakeman, Chairman of the Board
Randolph Cullom, President and Chief Executive Officer
Wiley Magee, Secretary to the Board
Conley J. Dutreix, Executive Vice President and Assistant Secretary
to the Board
Lee A. Ringeman, Executive Vice President and Cashier
J. Michael Bourgeois, Vice President
Elsie R. Gaudet, Vice President and Security Officer
Lennis J. Simoneaux, Assistant Vice President
Kelly Watson, Banking Officer
Christine A. Dragna, Assistant Cashier
GUARANTY BANCSHARES HOLDING CORPORATION
OFFICERS
Brooks Blakeman, Chairman of the Board
Randolph Cullom, President and
Chief Executive Officer
Wiley Magee, Secretary-Treasurer
Lee A. Ringeman, Executive Vice President
and Chief Financial Officer
Conley Dutreix, Assistant Secretary
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors and Stockholders
of Guaranty Bancshares Holding Corporation
Morgan City, Louisiana
We have audited the consolidated statements of financial
condition of Guaranty Bancshares Holding Corporation and
Subsidiaries as of December 31, 1995 and 1994, and the related
consolidated statements of income, changes in stockholders' equity,
and cash flows for the years ended December 31, 1995, 1994 and
1993. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion
on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstate-
ment. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the consolidated finan-
cial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred
to above present fairly, in all material respects, the financial
position of Guaranty Bancshares Holding Corporation and Subsidia-
ries as of December 31, 1995, and 1994 and the results of their
operations and their cash flows for the years ended December 31,
1995, 1994 and 1993 in conformity with generally accepted account-
ing principles.
Darnall, Sikes, Kolder, Frederick & Rainey
A Corporation of Certified Public Accountants
Morgan City, Louisiana
January 12, 1996
<TABLE>
GUARANTY BANCSHARES HOLDING CORPORATION AND
SUBSIDIARIES
Consolidated Statements of Financial Condition
December 31, 1995 and 1994
<CAPTION>
1995 1994
ASSETS
<S> <C> <C>
CASH AND DUE FROM BANKS $ 3,229,648 $ 3,435,866
FEDERAL FUNDS SOLD 3,325,000 2,640,000
INVESTMENT SECURITIES
Securities held to maturity
(market value $10,980,000
and $9,393,000, respectively) 10,963,516 9,493,656
Securities available for sale, at market 5,196,792 7,189,984
Total investment securities 16,160,308 16,683,640
LOANS 34,552,371 34,810,619
Less: Allowance for loan losses 503,826 502,145
Unearned income 6,795 35,553
Total net loans 34,041,750 34,272,921
OTHER REAL ESTATE 64,682 80,000
BANK PREMISES AND EQUIPMENT 2,083,415 2,176,467
ACCRUED INTEREST RECEIVABLE 375,810 360,482
OTHER ASSETS 963,977 1,037,765
TOTAL ASSETS $60,244,590 $60,687,141
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
DEPOSITS
Non-interest bearing deposits $ 8,418,740 $ 8,289,121
NOW account deposits 5,404,616 4,882,892
Money market investment accounts 6,842,230 4,663,666
Savings deposits 7,147,835 7,603,436
Other time deposits 17,330,796 17,871,452
Certificates of deposits of
$100,000 or more 5,625,997 8,187,058
Total deposits 50,770,214 51,497,625
Notes payable 1,681,446 1,854,169
Obligation under capital lease 1,631,734 1,723,339
Accrued interest payable 135,287 124,101
Other liabilities 363,896 308,913
Total liabilities 54,582,577 55,508,147
COMMITMENTS AND CONTINGENCIES - -
STOCKHOLDERS' EQUITY
$2.70 cumulative preferred stock 3,481,115 3,497,320
$.50 cumulative preferred stock 107,310 107,310
Class A common stock 1,050,000 1,050,000
Class B common stock 17,088 17,088
Capital surplus 2,039,004 2,039,004
Accumulated deficit (1,023,669) (1,504,893)
Treasury stock (15,835) (15,835)
Net unrealized gain (loss) on securities
available for sale 7,000 (11,000)
Total stockholders' equity 5,662,013 5,178,994
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $60,244,590 $60,687,141
=========== ===========
The accompanying notes are an integral part of this statement.
</TABLE>
<TABLE>
GUARANTY BANCSHARES HOLDING CORPORATION AND
SUBSIDIARIES
Consolidated Statements of Income
Years Ended December 31, 1995, 1994 and 1993
<CAPTION>
1995 1994 1993
INTEREST INCOME
<S> <C> <C> <C>
Interest and fees on loans $ 3,430,339 $ 3,285,524 $ 2,988,138
Interest on investment securities:
U. S. Treasury securities 256,200 221,301 254,811
Obligations of U. S. agencies and corporations 616,860 493,449 511,402
Obligations of states and political subdivisions 22,312 8,610 3,573
Other investments 25,070 16,528 16,561
Interest on federal funds sold and time
deposits with banks 188,458 84,242 96,109
Total interest income 4,539,239 4,109,654 3,870,594
INTEREST EXPENSE
Interest on deposit accounts 1,673,166 1,377,954 1,286,848
Interest on federal funds purchased - - 345
Interest on capital lease 167,840 175,891 183,223
Interest on notes payable 121,957 93,082 19,753
Total interest expense 1,962,963 1,646,927 1,490,169
Net interest income 2,576,276 2,462,727 2,380,425
RECOVERY FROM LOAN LOSSES 100,000 180,000 -
Net interest income after recovery
from loan losses 2,676,276 2,642,727 2,380,425
OTHER INCOME
Service charges on deposit accounts 204,908 231,685 236,833
Insurance commissions, other service
charges and fees 54,061 54,967 52,163
Other operating income 83,711 77,439 119,128
Net investment securities gain - - 37,307
Total other income 342,680 364,091 445,431
OPERATING EXPENSES 2,278,787 2,213,202 2,236,646
Net income before income tax expense and
change in accounting principle 740,169 793,616 589,210
INCOME TAX EXPENSE
Current 96,046 4,622 5,888
Deferred 166,954 280,878 178,112
263,000 285,500 184,000
Net income before change in
accounting principle 477,169 508,116 405,210
CHANGE IN ACCOUNTING PRINCIPLE
Cumulative effect to December 31, 1992 of application of
Statement of Financial Accounting Standards No. 109
"Accounting for Income Taxes" - - 674,000
Net income 477,169 508,116 1,079,210
DIVIDENDS REQUIRED FOR PREFERRED STOCK (402,453) (404,275) (404,275)
NET INCOME AVAILABLE FOR COMMON STOCKHOLDERS $ 74,716 $ 103,841 $ 674,935
======== ========= =========
Income per common share before change
in accounting principle $ - $ - -
======== ========= =========
Income per common share after change
in accounting principle $ .20 $ .28 $ 1.80
======== ========= =========
Weighted average common shares outstanding 373,728 374,375 374,375
======== ========= =========
The accompanying notes are an integral part of this statement.
</TABLE>
<TABLE>
GUARANTY BANCSHARES HOLDING CORPORATION AND SUBSIDIARIES
Consolidated Statements of Changes in Stockholders' Equity
Years Ended December 31, 1995, 1994 and 1993
<CAPTION>
$2.70 Cumulative Preferred $.50 Cumulative Preferred
Number of Shares Number of Shares
Authorized Issued Amount Authorized Issued Amount
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1993 145,676 145,676 $3,497,320 64,324 21,900 $107,310
Net income - - - - - -
Cash dividends:
$2.70 preferred stock - - - - - -
Balance at December 31, 1993 145,676 145,676 3,497,320 64,324 21,900 107,310
Net income - - - - - -
Cash dividends:
$2.70 preferred stock - - - - - -
Change in net unrealized (loss) on
securities available for sale - - - - - -
Balance at December 31, 1994 145,676 145,676 3,497,320 64,324 21,900 107,310
Net income - - - - - -
Acquisition of treasury stock:
675 shares $2.70 cumulative preferred
stock (675) (675) (16,205) 675 - -
Change in net unrealized gain on
securities available for sale - - - - - -
Balance at December 31, 1995 145,001 145,001 $3,481,115 64,999 21,900 $107,310
======= ======= ========== ====== ====== ========
The accompanying notes are an integral part of this statement.
</TABLE>
<TABLE>
Gain (Loss)
on
Class A Common Class B Common Securities
Number of Shares Number of Shares Capital Accumulated Treasury Available
Authorized Issued Amount Authorized Issued Amount Surplus Deficit Stock For Sale
<CAPTION>
<C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
210,000 210,000 $1,050,000 210,000 170,877 $17,088 $2,039,004 $(2,600,561) $(15,835) $ -
- - - - - - - 1,079,210 - -
- - - - - - - (393,325) - -
210,000 210,000 1,050,000 210,000 170,877 17,088 2,039,004 (1,914,676) (15,835) -
- - - - - - - 508,116 - -
- - - - - - - (98,333) - -
- - - - - - - - - (11,000)
210,000 210,000 1,050,000 210,000 170,877 17,088 2,039,004 (1,504,893) (15,835) (11,000)
- - - - - - - 477,169 - -
- - - - - - - 4,055 - -
- - - - - - - - - 18,000
210,000 210,000 $1,050,000 210,000 170,877 $17,088 $2,039,004 $(1,023,669) $(15,835) $ 7,000
======== ======= ========== ======= ======= ======= ========== ============ ========= =======
</TABLE>
<TABLE>
GUARANTY BANCSHARES HOLDING CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Years Ended December 31, 1995, 1995 and 1994
<CAPTION>
1995 1995 1994
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C> <C>
Net income $ 477,169 $ 508,116 $ 1,079,210
Adjustments to reconcile net income to
net cash provided by operating activities:
Gain on sales of investment securities - - 37,307
Amortization of premium (accretion of
discount) on investments (234,681) (42,311) 72,971
Recovery from loan losses (100,000) (180,000) -
Gain on sale of fixed assets (9,495) (8,294) -
Gain on sale of other real estate (38,892) (5,846) (2,850)
Gain on sale of repossessed property - - (91,337)
Depreciation and amortization 302,965 274,605 273,982
(Increase) decrease in accrued interest
receivable (15,329) (7,537) 17,325
Increase (decrease) in accrued interest
payable 11,186 34,369 (23,982)
Increase (decrease) in other liabilities 54,993 (338,586) 89,413
Net cash provided by
operating activities 447,916 234,516 1,452,039
CASH FLOWS FROM INVESTING ACTIVITIES
(Increase) decrease in federal funds sold (685,000) (1,540,000) 775,000
Proceeds from sales of investment securities - - 1,666,917
Proceeds from maturities of investment
securities 20,542,000 12,979,412 16,439,635
Purchase of investment securities 19,776,840) (12,693,828) (13,892,828)
Net (increase) decrease in loans 231,171 (3,006,098) (4,147,160)
Proceeds from sales of other real estate and
repossessed property 149,903 43,000 621,300
(Purchase) sale of interest-bearing deposits - 515,000 1,084,809
Proceeds from sales of premises and equipment 6,500 26,000 -
Purchase of bank premises and equipment (180,268) (58,034) (95,609)
Changes in other assets 50,138 187,029 (54,946)
Net cash provided (used) by
investing activities 337,604 (3,547,519) 2,397,118
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in demand deposits,
NOW accounts and savings accounts 2,374,307 (180,520) (2,954,548)
Net increase (decrease) in certificates of
deposit (3,101,717) 4,624,921 (2,243,188)
Proceeds from notes payable - 1,400,000 600,000
Repayment of notes payable (172,723) (127,243) (18,588)
Repayments of capital lease obligation (91,605) (76,218) (68,995)
Net cash provided (used) by financing
activities (991,738) 5,640,940 (4,685,319)
Net increase (decrease) in cash, cash
equivalents and due from banks (206,218) 2,327,937 (836,162)
CASH, CASH EQUIVALENTS AND DUE FROM BANKS,
beginning of year 3,435,866 1,107,929 1,944,091
CASH, CASH EQUIVALENTS AND DUE FROM BANKS,
end of year $ 3,229,648 $ 3,435,866 $ 1,107,929
============ ============ ============
Supplemental Cash Flow Information:
Interest paid $ 1,951,777 $ 1,612,558 $ 1,514,151
============ ============ ============
The accompanying notes are an integral part of this statement.
</TABLE>
GUARANTY BANCSHARES HOLDING CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(1) Summary of Significant Accounting Policies
The accounting and reporting policies of Guaranty
Bancshares Holding Corporation (Bancshares) and its
subsidiaries conform with generally accepted accounting
principles and general practices followed in the banking
industry. The principles which significantly affect the
determination of financial position, results of operations and
cash flows are summarized below:
A. Basis of Accounting
The consolidated financial statements include the
accounts of Bancshares and its wholly-owned
subsidiaries. Significant intercompany accounts and
transactions are eliminated.
B. Investment Securities
On January 1, 1994, Bancshares adopted Statement
of Financial Accounting Standards (SFAS) No. 115
"Accounting for Certain Investments in Debt and
Equity Securities." SFAS No. 115 requires the
classification of securities into one of three
categories: trading, available for sale or held to
maturity.
Securities which Bancshares has the intent and
ability to hold for the long-term or until maturity
are classified as held to maturity or held for
investment. These securities are stated at cost,
adjusted for amortization of premiums and accretion
of discounts using either the interest method or
straight-line method, which produces approximately
the same results. Realized gains or losses are
recognized at the time of sale or call of a security
and are shown as a separate component of other income
in the consolidated statements of income.
Securities which may be sold in response to
changes in interest rates, liquidity needs or
asset/liability management strategies are classified
as held for sale. These securities are stated at
market. Adjustments to market are shown as a
separate component of stockholders' equity.
Interest earned on investment securities is
included in interest income. Also included in
interest income are amortization of premiums and
accretion of discounts on investment securities which
were computed using the straight-line method.
C. Loans
Interest income on commercial, real estate,
mortgage and installment loans is accrued based on
the principal amounts outstanding.
Nonperforming loans consist of nonaccrual loans
and restructured loans. Loans past due 90 days or
more are considered to be performing until placed on
nonaccrual status. Loans are placed on nonaccrual
status when, in the opinion of management, there is
sufficient uncertainty as to timely collection of
reported earnings of some or all of the contractual
interest. When a loan is placed on nonaccrual
status, interest accrued but not collected is usually
reversed against interest income. Generally, any
payments received on nonaccrual loans are first
applied to reduce outstanding principal amounts.
Loans are not reclassified as accruing until interest
and principal payments are brought current and future
payments are reasonably assured.
D. Allowance for Loan Losses
The allowance for loan losses is established
through a provision for loan losses charged to
expense. The allowance represents an amount which,
in management's judgement, will be adequate to absorb
probable losses on existing loans that may become
uncollectible. Management's judgement in determining
the adequacy of the allowance is based on evaluations
of the collectibility of loans. Ultimate losses may
vary from the current estimates. These estimates are
reviewed periodically and, as adjustments become
necessary, they are reported in earnings in the
periods in which they become known. These
evaluations take into consideration such factors as
changes in the nature and volume of the loan
portfolio, current economic conditions that may
affect the borrower's ability to pay, overall
portfolio quality, and review of specific problem
loans. Loans are charged against the allowance for
loan losses when management believes that
collectibility of the principal is unlikely.
E. Depreciation
Premises and equipment are stated at cost, less
accumulated depreciation and amortization of
$1,578,835 and $1,267,321 at December 31, 1995 and
1994, respectively. For book purposes, depreciation
and amortization are included in occupancy equipment
expenses and are computed on the straight line basis
over the useful lives of the assets which range from
three to forty years. For income tax purposes,
depreciation of assets acquired prior to January 1,
1981, is calculated on the straight-line method and
depreciation of assets acquired after December 31,
1980, is calculated using the Accelerated Cost
Recovery (ACRS) or Modified Accelerated Costs
Recovery (MACRS) System of the Internal Revenue
Service. Maintenance and repairs which do not extend
the life of banking premises and equipment are
charged to operating expenses.
F. Foreclosed Assets
Property acquired through foreclosure is stated
at the lower of the recorded amount of the loan for
which the foreclosed asset served as collateral or
the current fair market value. Fair value is the
anticipated sales price of the assets, based upon
independent appraisals and other relevant factors.
When a reduction of the carrying value to the fair
value is required at the time the loan is
reclassified as a foreclosed asset, the difference is
charged to the allowance for loan losses. Any
subsequent reductions are charged to nonperforming
assets expense. Revenues and expenses associated
with operating or disposing of foreclosed assets are
recorded during the period in which they are
incurred.
G. Income Taxes
Bancshares and its subsidiaries file a
consolidated federal income tax return. The Company
has adopted SFAS 109, "Accounting for Income Taxes",
to account for deferred income taxes. Deferred taxes
are computed based on the tax liability or benefit in
future years of the reversal of temporary differences
in the recognition of income or deduction of expenses
between financial and tax reporting purposes. The
principal items resulting in the differences are net
operating loss carryforwards, tax credit carryforwards,
differences due to book and tax depreciation differences,
and basis difference in the reserve for loan losses.
The net difference between tax expense and taxes currently
payable is reflected in the statement of financial
condition as deferred taxes. Deferred tax assets and/or
liabilities are classified as current and noncurrent based
on the classification of the related asset or liability
for financial reporting purposes, or based on the expected
reversal date for deferred taxes that are not related to
an asset or liability. This change in accounting
principle was appropriately reflected in the 1993
statement of income.
H. Cash Equivalents
For purposes of the Statements of Cash Flows, the
Bank considers cash equivalents to be "cash and due
from banks."
I. Earnings Per Common Share
Income for primary earnings per share is adjusted
for preferred stock dividends. Earnings per share
are computed based on the weighted average number of
common shares outstanding.
J. Use of Estimates
The preparation of financial statements in
conformity with generally accepted accounting
principles requires management to make estimates and
assumptions that affect the reported amounts of
assets and liabilities and disclosures on contingent
assets and liabilities at the date of the financial
statements and the reported amounts of revenues and
expenses during the reporting period. Actual results
could differ from those estimates.
(2) Cash and Due From Banks
The Bank is required to maintain average reserve balances
with the Federal Reserve Bank. "Cash and due from banks" in
the consolidated statements of financial condition include
amounts so restricted of $241,000 and $206,000 at December 31,
1995 and 1994, respectively.
(3)Investment Securities
In May 1993, the Financial Accounting Standards Board
issued Statement No. 115, "Accounting for Certain Investments
in Debt and Equity Securities." This standard addresses the
accounting and reporting for investments in equity securities
which have readily determinable fair values and for all
investments in debt securities. Adoption of the new standard
was required for fiscal years beginning after December 15,
1993. Bancshares adopted this statement effective January 1,
1994.
Neither Bancshares nor its subsidiaries engage in
securities trading activities.
An analysis of the amortized cost and market value of the
investment portfolio by maturity periods at December 31, 1995
follows (in thousands):
Amortized Market
Cost Value
Due within one year $ 7,496 $ 7,489
Due from one to five years 6,847 6,861
Due from five to ten years 503 518
Due after ten years 1,304 1,309
Total investment securities $16,150 $16,177
A summary of securities classified as held to maturity and
available for sale at amortized cost and approximate market
values follows (in thousands):
Amortized Cost Maturing
Within One to 5-10 Over
1 Yr 5 Yrs Yrs 10 Yrs Total
December 31, 1995:
Held to maturity
U. S. Treasury
securities $1,997 $ - $ - $ - $ 1,997
Obligations of
U. S. agencies
and corporations4,968 3,072 92 123 8,255
Obligations of
states and
political
subdivisions 31 250 411 - 692
Other investments - 20 - - 20
TOTAL $6,996 $3,342 $ 503 $ 123 $10,964
Gross Approx.
Unrealized Market
Gains Losses Value
December 31, 1995:
Held to maturity
U. S. Treasury securities $ 2 $ - $ 1,999
Obligations of U. S.
agencies and corporations 8 11 8,252
Obligations of states and
political subdivisions 17 - 709
Other investments - - 20
TOTAL $ 27 $ 11 $10,980
====== ====== =======
Amortized Cost Maturing
Amortized Cost Maturing
Within One to 5-10 Over
1 Yr 5 Yrs Yrs 10 Yrs Total
Available for sale
Obligations of
U. S. agencies
and
corporations $ 500 $3,505 $ - $ 688 $ 4,693
Other
investments - - - 493 493
TOTAL $ 500 $3,505 $ - $1,181 $ 5,186
====== ====== ====== ====== =======
Gross Approx.
Unrealized Market
Gains Losses Value
Available for sale
Obligations of U. S.
agencies and corporations $ 14 $ 3 $4,704
Other Investments - - 493
TOTAL $ 14 $ 3 $5,197
====== ====== ======
Amortized Cost Maturing
Within One to 5-10 Over
1 Yr 5 Yrs Yrs 10 Yrs Total
December 31, 1994:
Held to maturity
U. S. Treasury
securities $3,156 $ - $ - $ - $3,156
Obligations
of U. S.
agencies and
corporations 4,505 1,078 214 146 5,943
Obligations of
states and
political
subdivisions 9 96 261 - 366
Other
investments - 29 - - 29
TOTAL $7,670 $1,203 $ 475 $ 146 $9,494
====== ====== ====== ====== ======
Gross Approx.
Unrealized Market
Gains Losses Value
December 31, 1994:
Held to maturity
U. S. Treasury
securities $ - $ 28 $3,128
Obligations
of U. S.
agencies and
corporations 5 67 5,881
Obligations of
states and
political
subdivisions - 11 355
Other investments - - 29
TOTAL $ 5 $ 106 $9,393
====== ====== ======
Amortized Cost Maturing
Within One to 5-10 Over
1 Yr 5 Yrs Yrs 10 Yrs Total
Available for sale
U. S. Treasury
securities $1,500 $ - $ - $ - $1,500
Obligations of
U. S. agencies
and
corporations 950 3,510 - 774 5,234
Other
investments - - - 472 472
TOTAL $2,450 $3,510 $ - $1,246 $7,206
====== ====== ====== ====== ======
Gross Approx.
Unrealized Market
Gains Losses Value
Available for sale
U. S. Treasury
securities $ - $ 1 $1,499
Obligations of
U. S. agencies
and corporations 11 26 5,219
Other investments - - 472
TOTAL $ 11 $ 27 $7,190
====== ====== ======
Investment securities with aggregate carrying values of
approximately $6,882,000 and $5,994,000 at December 31, 1995
and 1994, respectively, were pledged to secure public deposits
as required by law.
Maturities of mortgage-backed securities are included in
obligations of U.S. agencies and corporations and are
classified by contractual (stated) maturity dates. Expected
maturities may differ from contractual maturities because
borrowers may have the right to call or prepay obligations
with or without call or prepayment penalties. During 1995,
$75,000 of mortgage-backed securities were paid out prior to
maturity.
(4)Loans
Major classifications of loans at December 31, 1995 and
1994 are as follows:
December 31,
1995 1994
Commercial, financial and
agricultural $26,762,289 $27,721,641
Real estate 2,189,211 3,066,572
Installment 5,600,871 4,022,406
34,552,371 34,810,619
Less: Unearned income (6,795) (35,553)
$34,545,576 $34,775,066
=========== ===========
The Bank has had transactions, in the ordinary course of
business, with officers and directors of Bancshares and of the
Bank, their immediate families and companies of which the
directors are principal owners. All such transactions were
on substantially the same terms, including interest rates and
collateral on loans, as those prevailing at the same time for
comparable transactions with others and did not involve more
than normal risk of collectibility or present other
unfavorable features. Loans to these persons and the related
activity for 1995 are summarized as follows:
Balance, January 1, 1995 $1,457,428
Additions 547,572
Payments and persons no longer with the bank (276,538)
Balance, December 31, 1995 $1,728,462
==========
A summary of transactions in the allowance for loan losses
follows:
Year Ended December 31,
1995 1994 1993
Balance, beginning of year$ 502,145 $ 620,795 $ 545,754
Losses charged to allowance (17,526) (34,944) (37,504)
Recoveries credited to
allowance 119,207 96,294 112,545
Recovery credited to
expense (100,000) (180,000) -
========== ========== =========
The Bank had non-performing loans on non-accrual status
aggregating approximately $84,000 at December 31, 1995 and
$30,000 at December 31, 1994. During the years ended December
31, 1995 and December 31, 1993, the Bank recognized
approximately $4,000 and $1,000, respectively in interest
income related to these loans. No interest income was
recognized in 1994. Had all the non-performing loans during
the years been accruing interest at their contracted rates,
approximately $4,000, $3,000 and $5,000 of additional interest
income would have been recognized for 1995, 1994 and 1993,
respectively.
(5) Bank Premises and Equipment
Major classification of these assets at December 31, 1995
and 1994 are summarized as follows:
1995 1994
Land $ 10,000 $ -
Buildings 652,526 583,026
Leased assets and improvements 1,976,310 1,976,310
Furniture and equipment 1,023,414 884,452
3,662,250 3,443,788
Accumulated depreciation and
amortization 1,578,835 1,267,321
$2,083,415 $2,176,467
========== ==========
Depreciation and amortization amounted to $302,965,
$274,605, and $273,982 for 1995, 1994 and 1993, respectively.
(6) Deposits
A summary of interest expense on deposit accounts follows:
Year Ended December 31,
1995 1994 1993
NOW accounts $ 111,664 $ 112,841 $ 113,267
Money market investment
accounts 142,802 118,670 140,271
Savings deposits 205,396 240,710 254,577
Other time and certificates
of deposits 1,213,304 905,733 778,733
$1,673,166 $1,377,954 $1,286,848
========== ========== ==========
Interest expense on certificates of deposits of $100,000
or more for 1995, 1994 and 1993 was approximately $349,000,
$307,000, and $212,000, respectively.
(7) Notes Payable
Notes payable to the Federal Home Loan
Bank of Dallas, secured by all first
mortgage documents relating to one-to-four
family residential dwellings in the amount
of $5,014,000.
1995 1994
120 monthly installments, 5.9 percent $ 485,563 $ 530,897
96 monthly installments, 7.34 percent 1,195,883 1,323,272
$1,681,446 $1,854,169
========== ==========
Maturities of long-term debt are as follows:
1996 $ 201,396
1997 215,885
1998 231,426
1999 248,096
2000 265,976
thereafter 518,667
$1,681,446
==========
(8) Stockholders' Equity
On October 31, 1988 Bancshares exchanged approximately 85
percent of its then outstanding 10% subordinated debentures
for Class B common stock and $2.70 cumulative preferred stock.
Bancshares sold 14,700 shares of $.50 cumulative preferred
stock and 14,700 shares of Class B common stock in 1989 and
7,200 shares of $.50 cumulative preferred stock and Class B
common stock in 1990 (some of which was sold to Directors of
Bancshares). Dividends required on the cumulative preferred
stock at year end are deducted from the net income to reflect
the net income applicable to common shareholders. No
dividends may be paid on common stock until all unpaid
dividends on preferred stock have been paid. The Board of
Directors declared a $.675 dividend on the $2.70 preferred
stock, paid on January 4, 1995.
The holders of the preferred stock have no voting rights.
In the event of any liquidation or dissolution of Bancshares,
the $2.70 preferred stock shareholders are entitled to receive
$27.00 per share, plus accrued and unpaid dividends to the
date of payment, before any distribution may be made to the
holders of the $.50 preferred or common stock and the $.50
preferred stockholders are entitled to receive $5.00 per
share, plus accrued and unpaid dividends to the date of
payment, before any distribution may be made to the holders
of the common stock. The $2.70 cumulative preferred stock is
redeemable in whole or in part at the Company's option
beginning in 1995, providing that all cumulative dividends
have been paid.
The Class B common stock does not differ from the Class
A common stock except that Class A common stock has a par
value of $5 per share and Class B common stock has no par
value.
(9) Operating Expenses
Details of operating expenses are as follows:
1995 1994 1993
Salaries and employee
benefits $1,035,568 $ 971,555 $ 954,032
Expenses related to other
real estate and
repossessed property,
net of rental income on
these properties 9,162 7,875 4,280
Net occupancy expense 432,538 426,224 456,439
Equipment and computer
expense 204,004 193,233 182,245
Professional fees and
services 131,828 128,352 159,705
FDIC and other insurances 89,536 140,606 145,575
Directors' fees 90,677 64,000 75,000
Advertising and public
relations 37,639 34,778 38,177
Stationery and supplies 38,557 42,418 40,516
Other operating expenses 209,278 204,161 180,677
$2,278,787 $2,213,202 $2,236,646
========== ========== ==========
(10)Income Taxes
The actual tax expense differs from the "expected" tax
expense (computed by applying the U. S. federal corporate tax
rate of 34 percent in 1995, 1994 and 1993 to earnings before
income taxes) as follows:
1995 1994 1993
Computed "expected" tax
expense $ 251,657 $ 269,829 $ 200,315
Increase (decrease) in tax
resulting from:
Tax-exempt interest (7,586) (2,927) (1,215)
Non-deductible
interest expense 809 1,274 57
Net operating loss
carryforwards
utilized to offset
income tax
expense (248,950) (207,175) (221,663)
Discount accretion 6,559 (15,467) -
Other, net (2,489) (45,534) 22,506
Total tax expense $ -0- $ -0- $ -0-
========= ========= =========
An analysis of deferred income taxes follows:
1995 1994 1993
Depreciation expense for
tax reporting in excess
of amount for financial
reporting $ (412) $ 34,712 $ 16,608
Provision for loan losses
for financial reporting
less than (in excess of)
amount for tax reporting 34,000 61,200 (51,028)
Other real estate gain
(write-offs) for financial
statement reporting in
excess of amount for tax
reporting - - 21,628
Other, net 13,208 1,137 (9,546)
Capitalized leases (15,931) (18,668) (21,145)
Recognition of tax benefit
of net operating loss
carryforward for
financial statement
purposes limited to the
amount of deferred tax
credits 136,089 202,497 221,595
Total deferred income
taxes $ 166,954 $ 280,878 $ 178,112
========= ========= =========
At December 31, 1995, Bancshares has net operating loss
carryforwards of approximately $124,000 for income tax
purposes. These carryforwards, if not utilized to offset
taxable income, will expire in years through 2005.
(11) Commitment and Contingent Liabilities
In the normal course of business, the Bank has outstanding
commitments and letters of credit which are not reflected in
the consolidated financial statements. At December 31, 1995
and 1994, letters of credit outstanding totaled $838,950 and
$814,500, respectively. Management does not expect any loss
as a result of these transactions.
(12) Regulatory Matters
At periodic intervals, both the State Office of Financial
Institutions examiners and the FDIC routinely examine the
Bank's financial statements as part of their legally
prescribed oversight responsibility of the Banking industry.
Based on these examinations, the regulators can direct that
the Bank's financial statements be adjusted in accordance with
their findings.
The regulators have not proposed significant adjustments
to the Bank's financial statements in prior years. However,
in view of the increasingly uncertain regulatory environment
in which the Bank now operates, the extent, if any, to which
a forthcoming regulatory examination may ultimately result in
adjustments to the 1995 financial statements cannot presently
be determined.
(13) Parent Company
Summarized financial information for Bancshares (parent
company only) follows:
A. Statements of Condition
1995 1994
Assets:
Cash $ 11,971 $ 113,665
Investment in 100 percent
of the outstanding common
stock of subsidiaries 5,641,127 5,158,143
Other assets 8,915 5,519
$ 5,662,013 $ 5,277,327
=========== ===========
Liabilities:
Dividends payable $ - $ 98,333
Stockholders' equity:
$2.70 cumulative preferred
stock 3,481,115 3,497,320
$.50 cumulative preferred
stock 107,310 107,310
Class A common stock 1,050,000 1,050,000
Class B common stock 17,088 17,088
Capital surplus 2,039,004 2,039,004
Accumulated deficit (1,023,669) (1,504,893)
Treasury stock (15,835) (15,835)
Net unrealized loss on
securities available
for sale 7,000 (11,000)
5,662,013 5,178,994
$ 5,662,013 $ 5,277,327
=========== ===========
B. Statements of Operations
1995 1994 1993
Dividends received from
subsidiaries $ 12,150 $115,000 $ 489,884
Other income 426 224 1,585
Other expenses (382) (1,209) (455)
Income before equity
in undistributed
earnings of
subsidiaries and
income tax benefit 12,194 114,015 491,014
Equity in undistributed
earnings of subsidiaries 464,975 394,101 588,196
Net income $477,169 $508,116 $1,079,210
======== ======== ==========
C. Statements of Cash Flows
1995 1995 1994
Cash flows from operating
activities:
Net income $ 477,169 $ 508,116 $1,079,210
Adjustments to
reconcile net
income to net cash
used in operating
activities:
(Increase) decrease
in undistributed
earnings of
subsidiaries (477,135) (394,091) (683,280)
Net cash
provided
by operating
activities 34 114,025 395,930
Cash flows from investing
activities:
Change in other
assets (3,396) (3,147) (7)
Cash flows from financing
activities:
Dividends paid (98,332) (393,325) -
Net increase
(decrease)
in cash (101,694) (282,447) 395,923
Cash, beginning of year 113,665 396,112 189
Cash, end of year $ 11,971 $ 113,665 $ 396,112
========= ========= ==========
Bancshares' primary source of working capital is dividends
from the Bank. At December 31, 1995, approximately $859,000
of the Bank's net assets were available for dividends to
Bancshares without seeking regulatory approval.
(14) Concentration of Credit Risk
The Bank grants commercial and individual loans to
customers throughout the state. Although the Bank has a
diversified loan portfolio, a substantial portion of its
debtors' ability to honor their contracts is dependent upon
the local economy.
The Bank maintains its cash in bank deposits at high
credit quality financial institutions. The balances, at
times, may exceed federally insured limits.
(15) Financial Instruments with Off-Balance-Sheet Risk
In the normal course of business, Guaranty Bank is a party
to financial instruments which are not recorded in the
consolidated financial statements. These financial
instruments include commitments to extend credit and letters
of credit.
Loan commitments and lines of credit represent Bank
commitments to lend funds at specific rates, with fixed
expiration or review dates and for specific purposes. These
commitments are agreements to fund loans if all conditions in
the agreement are met. For overdraft lines of credit, the
Bank has the right to change or terminate the terms and
conditions of the credit agreement at any time with
appropriate notice.
Since many commitments and unused overdraft lines of
credit are never actually drawn upon, the unfunded amounts do
not necessarily represent future funding requirements. The
Bank evaluates each customer's credit worthiness on an
individual basis. The amounts of collateral obtained, if any,
upon extension of credit is based on the credit worthiness of
the customer. The Bank uses the same credit policies in
making conditional obligations as it does for on-balance sheet
instruments.
The Bank's exposure to credit loss in the event of
nonperformance by the other party to the financial instrument
for letters of credit is represented by the contract or
notional amount of those instruments. Letters of credit are
conditional commitments issued by the Bank to guarantee
performance to a third party.
Financial instruments whose contract amounts represent
credit risk:
Letters of credit $ 838,960
Unused overdraft lines of credit 160,000
Loan commitments 4,033,000
(16) Leases
During the year ended December 31, 1991, the Bank entered
into a sale and leaseback agreement with regard to the bank
building and the grounds on which it is located. Under the
agreement, the Bank leased back a portion of the building for
a term of fifteen years which is accounted for as a capital
lease. Also, the Bank leased the grounds on which the
building is located for a term of fifteen years. The lease
of the grounds is accounted for as an operating lease.
The future minimum lease payments under the capitalized
lease and the present value of the net minimum lease payments
as of December 31, 1995, are as follows:
December 31,
1996 $ 252,744
1997 252,744
1998 252,744
1999 252,744
2000 252,744
Thereafter 1,390,097
Total minimum lease payments 2,653,817
Less amount representing interest 1,022,083
Present value of minimum lease payments
including current maturities of
$84,202 $1,631,734
==========
The following is a schedule by year of future minimum
rental payments under the operating lease as of December 31,
1995:
December 31,
1996 $135,696
1997 135,696
1998 67,848
$339,240
========
Although the term of the lease is (15) fifteen years, the
rental payments are to be made over (7 1/2) seven and one-half
years. Half of the rental payments are expensed and half are
recorded as prepaid rent to be amortized over the last (7 1/2)
seven and one-half years of the lease. Rent expense is
approximately $67,848 for each of the years ended December 31,
1995, 1994 and 1993, and $305,493, and $237,845 are included
in other assets at December 31, 1995 and 1994, respectively.
(17) Fair Value of Financial Instruments
Generally accepted accounting principles require
disclosure of fair value information about financial
instruments for which it is practicable to estimate fair
value, whether or not the financial instruments are recognized
in the financial statements. When quoted market prices are not
available, fair values are based on estimates using present
value or other valuation techniques. Those techniques are
significantly affected by the assumptions used, including the
discount rate and estimates of future cash flows. The derived
fair value estimates cannot be substantiated through
comparison to independent markets and, in many cases, could
not be realized in immediate settlement of the instrument.
Certain financial instruments and all non-financial
instruments are excluded from these disclosure requirements.
Further, the disclosures do not include estimated fair values
for items which are not financial instruments but which
represent significant value to the Bank, among them, core
deposit intangibles, loan servicing rights and other fee-
generating businesses. Accordingly, the aggregate fair value
amounts presented do not represent the underlying value of the
Bank.
The carrying amount of cash, short-term investments,
demand deposits and short-term borrowings approximates the
estimated fair value of these financial instruments. The
estimated fair value of securities and off-balance-sheet
instruments is based on quoted market prices or dealer quotes.
The estimated fair value of loans is estimated by discounting
the future cash flows using the current rates at which similar
loans would be made to borrowers with similar credit ratings
and for the same remaining maturities. The estimated fair
value of deposits, savings accounts and certain money market
deposits is the amount payable on demand at the reporting
date. The estimated fair value of fixed-maturity certificates
of deposit is estimated using the rates currently offered for
deposits of similar remaining maturities. Rates currently
available to the Bank for debt with similar terms and
remaining maturities are used to estimate fair value of
existing debt. The estimated fair values of commitments to
extend credit and all types of letters of credit were
established using the fees currently charged to enter into
similar agreements. The aggregate fair value of these
commitments and letters of credit was immaterial.
The estimated fair values of the Bank's financial
instruments at December 31, 1995 follows (in thousands):
Carrying Fair
Amount Value
ASSETS
Cash and due from banks and
short term investments $ 6,555 $ 6,555
Securities available for sale 5,186 5,197
Securities held to maturity 10,964 10,980
Loans, net of unearned income
and the allowance for loan
losses 34,042 35,324
LIABILITIES
Deposits 50,770 49,425
Long-term debt and obligation
under capital lease 3,313 3,400
(18) Subsequent Event
By board resolution dated February 12, 1996, the Company
approved a plan of reorganization. As part of the
reorganization, the Articles of Incorporation will be amended
as follows:
1. The authorized number of shares of common stock
(no par value) will be changed from 210,000 shares to
1,500,000 shares.
2. Each issued share of $2.70 cumulative preferred
stock will be changed into shares of class B common
stock (no par value, designated simply as common).
3. Each issued share of $.50 cumulative preferred
stock will be changed into shares of common stock (no
par value).
Also, the board resolved to declare and pay a dividend to
the holders of record of $2.70 cumulative preferred shares on
the day before the effective date of the plan of
reorganization. These dividends will be effective only if the
plan of reorganization becomes effective.
Should the reorganization become effective, the Company
will borrow a maximum of $1,000,000, secured by the Company's
shares of Guaranty Bank & Trust Company of Morgan City.
The plan of reorganization adopted and recommended by the
board is to become effective upon approval by 80% of the
shareholders. The plan of reorganization will be presented
to the shareholders for vote in April, 1996. Subsequent to
the approval by the shareholders, the United States Federal
Reserve Bank and the State of Louisiana Office of Financial
Institutions must approve the plan of reorganization.
To the Board of Directors and Stockholders
of Guaranty Bancshares Holding Corporation
Morgan City, Louisiana
We consent to the inclusion of our report dated January 12,
1996, with respect to the consolidated balance sheets as of
December 31, 1995 and 1994, and the related consolidated statements
of income, changes in stockholders' equity, and cash flows for the
years ended December 31, 1995, and 1994, and 1993, which report
appears in the 1995 Annual Report of Guaranty Bancshares Holding
Corporation.
Darnall, Sikes, Kolder, Frederick & Rainey
Morgan City, Louisiana
March 18, 1996
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<ARTICLE> 9
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<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 3230
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 3325
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 5197
<INVESTMENTS-CARRYING> 10964
<INVESTMENTS-MARKET> 10980
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<ALLOWANCE> 504
<TOTAL-ASSETS> 60245
<DEPOSITS> 50770
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<LIABILITIES-OTHER> 499
<LONG-TERM> 3313
<COMMON> 1067
0
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<OTHER-SE> 1007
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<INTEREST-LOAN> 3430
<INTEREST-INVEST> 920
<INTEREST-OTHER> 189
<INTEREST-TOTAL> 4539
<INTEREST-DEPOSIT> 1673
<INTEREST-EXPENSE> 1963
<INTEREST-INCOME-NET> 2576
<LOAN-LOSSES> (100)
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 2279
<INCOME-PRETAX> 740
<INCOME-PRE-EXTRAORDINARY> 477
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 477
<EPS-PRIMARY> .20
<EPS-DILUTED> .20
<YIELD-ACTUAL> 4.8
<LOANS-NON> 84
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 118
<ALLOWANCE-OPEN> 502
<CHARGE-OFFS> 18
<RECOVERIES> 120
<ALLOWANCE-CLOSE> 504
<ALLOWANCE-DOMESTIC> 504
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
