<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
- ----- EXCHANGE ACT OF 1934
For the quarterly period ended SEPTEMBER 30, 1995
OR
- ----- Transition Report Pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934
For the transition period from ________ to ________
Commission File Number 0-11033
GULF SOUTHWEST BANCORP, INC.
(Exact name of registrant as specified in its charter)
TEXAS 76-0045946
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
4200 WESTHEIMER, SUITE 210,
HOUSTON, TEXAS 77027
(Address of principal executive offices) (zip code)
(713) 622-0042
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former name, former address and former fiscal year,
if changed since last report)
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
----- -----
As of November 1, 1995, Registrant had outstanding 1,944,036 shares of its $1.00
par value per share common stock.
1
<PAGE>
PART 1 - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The following financial statements are provided in response to item 1:
2
<PAGE>
PRESENTATION OF FINANCIAL INFORMATION
The consolidated balance sheet as of September 30, 1995 and the consolidated
statements of income for the three and nine months ended September 30, 1995 and
1994 and the consolidated statements of cash flows for the nine months ended
September 30, 1995 and 1994, have been prepared by the Company without audit.
In the opinion of management, all adjustments (which include only normal
recurring adjustments) necessary to present fairly the financial position,
results of operations and cash flows as of September 30, 1995, and for all
periods presented have been made.
Certain information and footnote disclosure normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. The results of operations for the period ended
September 30, 1995 are not necessarily indicative of the operating results of
the full year.
Effective May 1, 1995, the Company consummated its' acquisition of Texas Gulf
Coast Bancorp, Inc. Such acquisition has been accounted for as a purchase.
3
<PAGE>
GULF SOUTHWEST BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(Dollars in thousands)
(Unaudited)
ASSETS
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1995 1994
------------- ------------
<S> <C> <C>
Cash and due from banks $ 26,416 $ 14,962
Time deposits in banks 3,898 1,994
Federal funds sold 52,286 26,950
Investment securities:
Held-to-Maturity 122,016 48,889
Available-for-Sale 31,824 7,963
Loans, net of allowance for
loan losses 230,476 142,396
Bank premises and equipment 8,210 4,621
Accrued interest receivable 3,876 2,009
Other assets 4,872 2,931
Excess of cost of subsidiaries
over equity in net assets
acquired, net of accumulated
amortization 1,216 312
-------- --------
Total Assets $485,090 $253,027
======== ========
</TABLE>
4
<PAGE>
GULF SOUTHWEST BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET (CONTINUED)
(Dollars in thousands)
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1995 1994
-------------- -------------
<S> <C> <C>
Deposits:
Non-interest bearing $118,314 $ 71,984
Interest bearing 312,895 154,081
-------- --------
431,209 226,065
Accrued interest, taxes and
other liabilities 3,597 1,423
Borrowings 3,093 0
Minority Interest 274 0
-------- --------
Total Liabilities 438,173 227,488
-------- --------
Stockholders' Equity:
Common stock 1,978 1,281
Paid-in capital 25,767 8,631
Retained earnings 19,529 16,003
Unrealized securities
gains (losses) 79 (63)
-------- --------
47,353 25,852
Less cost of stock held in treasury:
Common Stock (436) (313)
-------- --------
Total Stockholders' Equity 46,917 25,539
-------- --------
Total Liabilities and
Stockholders' Equity $485,090 $253,027
======== ========
</TABLE>
5
<PAGE>
GULF SOUTHWEST BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(Dollars in thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
SEPTEMBER 30,
---------------------------
1995 1994
------- -------
<S> <C> <C>
Interest Income:
Interest and fees on loans $5,542 $3,095
Investment securities:
Taxable 1,975 821
Non-taxable 247 88
Time deposits with banks 16 20
Federal funds sold 774 268
------ ------
Total Interest Income 8,554 4,292
------ ------
Interest Expense:
Interest bearing deposits 2,875 1,195
Borrowed funds 73 0
------ ------
Total Interest Expense 2,948 1,195
------ ------
Net interest income 5,606 3,097
Provision for possible loan losses 59 0
------ ------
Net interest income after provision
for loan losses 5,547 3,097
------ ------
Non-Interest Income:
Service charges and fees 1,114 639
Other operating income 253 315
Securities gains (losses) 0 0
------ -----
Total Non-Interest Income 1,367 954
------ -----
</TABLE>
6
<PAGE>
GULF SOUTHWEST BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME (CONTINUED)
(Dollars in thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
SEPTEMBER 30,
----------------------------------
1995 1994
--------- --------
<S> <C> <C>
Non-Interest Expense:
Salaries and employee benefits $2,337 $1,188
Furniture, equipment and
occupancy expense 755 405
Other operating expenses 1,509 1,087
------ ------
Total Non-Interest Expense 4,601 2,680
------ ------
Income before income taxes 2,313 1,371
Income taxes 764 346
------ ------
Net Income $1,549 $1,025
====== ======
Per Share:
Net Income $ .80 $ .81
====== ======
Dividends - Common Stock .10 .05
====== =======
Average Number of Shares Outstanding 1,945,838 1,258,636
========= =========
</TABLE>
7
<PAGE>
GULF SOUTHWEST BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME (CONTINUED)
(Dollars in thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
SEPTEMBER 30,
-----------------------------
1995 1994
------ ------
<S> <C> <C>
Interest Income:
Interest and fees on loans $13,837 $ 8,857
Investment securities:
Taxable 4,252 2,243
Non-taxable 518 290
Time deposits with banks 59 40
Federal funds sold 1,702 888
------- -------
Total Interest Income 20,368 12,318
------- -------
Interest Expense:
Interest bearing deposits 6,430 3,564
Borrowed funds 151 0
------- -------
Total Interest Expense 6,581 3,564
------- -------
Net interest income 13,787 8,754
Provision for possible loan losses 99 50
------- -------
Net interest income after provision
for loan losses 13,688 8,704
------- -------
Non-Interest Income:
Service charges and fees 2,700 1,933
Other operating income 648 460
Securities gains (losses) 0 0
------- -------
Total Non-Interest Income 3,348 2,393
------- -------
</TABLE>
8
<PAGE>
GULF SOUTHWEST BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME (CONTINUED)
(Dollars in thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
----------------------------------
1995 1994
--------- ---------
<S> <C> <C>
Non-Interest Expense:
Salaries and employee benefits 5,653 3,588
Furniture, equipment and
occupancy expense 1,891 1,158
Other operating expenses 3,720 2,893
--------- ---------
Total Non-Interest Expense 11,264 7,639
--------- ---------
Income before income taxes 5,772 3,458
Income taxes 1,795 850
--------- --------
Net Income $ 3,977 $ 2,608
========= =========
Per Share:
Net Income $ 2.42 $ 2.07
========= =========
Dividend - Common Stock $ .26 $ .15
========= =========
Average Number of Shares Outstanding 1,642,415 1,258,636
========= =========
</TABLE>
9
<PAGE>
GULF SOUTHWEST BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
------------------------------
1995 1994
------- ------
<S> <C> <C>
Increase (Decrease) in Cash and
Cash Equivalents:
Operating Activities:
Net income $ 3,977 $2,608
Adjustments to Reconcile Net
Income to Net Cash Provided by
Operating Activities:
Provision for loan losses 99 50
Origination of mortgage loans for sale (7,609) 0
Proceeds from mortgage loans sold 7,064 0
Depreciation and amortization,
net of accretions 1,024 624
Provision for losses on real
estate and other assets 110 209
Loss (gain) on sale of real estate
and other assets 5 5
(Increase) decrease in interest
receivable (112) (291)
(Decrease) increase in accrued
interest and other liabilities, taxes
and other 568 780
------- -----
Net Cash Flows From Operating Activities 5,126 3,985
------- ------
</TABLE>
10
<PAGE>
GULF SOUTHWEST BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
---------------------------
1995 1994
------- ------
<S> <C> <C>
Investing Activities:
Net (increase) decrease in time deposits
in banks (1,904) (850)
Proceeds from the maturities of held-to-
maturity investment securities 14,576 2,583
Proceeds from the maturities of available-
for-sale investment securities 9,850 6,500
Purchase of held-to-maturity
investment securities (20,458) (17,078)
Purchase of available-for-sale
investment securities (13,664) (1,489)
Net decrease (increase) in loans (8,976) (12,047)
Rebates paid to customers (816) (366)
Recoveries of loans charged-off 181 186
Proceeds from sale of premises
and equipment 18 8
Capital expenditures (441) (887)
Proceeds from sale of real estate
and other loan related assets 194 228
-------- --------
Net Cash From Investing Activities (21,440) (23,212)
-------- --------
</TABLE>
11
<PAGE>
GULF SOUTHWEST BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
------------------------------
1995 1994
------ -------
<S> <C> <C>
Financing Activities:
Net increase (decrease) in deposits 24,118 (3,595)
Dividends paid (257) (37)
Purchase Treasury stock (123) (189)
Repayment of borrowings (364) 0
------- -------
Net Cash Flows from Financing Activities 23,374 (3,821)
------- -------
Net Increase (decrease) in Cash
and Cash Equivalents 7,060 (23,048)
Cash and Cash Equivalents at
Beginning of Period 41,912 52,822
Net cash received in acquisition of banks 29,730 0
------- -------
Cash and Cash Equivalents at
End of Period $78,702 $29,774
======= =======
For the nine months ended September 30:
Interest paid $ 6,571 $ 3,610
======= =======
Income taxes paid $ 1,147 $ 189
======= =======
</TABLE>
12
<PAGE>
GULF SOUTHWEST BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
----------------
1995 1994
------ ------
<S> <C> <C>
Non-Cash Transactions:
Foreclosed properties transferred
to other real estate and loan
related assets $ 481 $280
======= ====
Bank loans for other real estate
and loan related assets sold $ 302 $665
======= ====
Issuance of 696,205 shares of
common stock for the issued
and outstanding common stock
of Texas Gulf Coast Bancorp, Inc. $17,833 $ 0
======= ====
</TABLE>
13
<PAGE>
GULF SOUTHWEST BANCORP, INC. AND SUBSIDIARIES
NOTE TO FINANCIAL STATEMENTS
September 30, 1995
(Unaudited)
Note 1 - Acquisition and Merger
On May 1, 1995, the Company through its wholly owned subsidiary Gulf Southwest
Nevada Bancorp, Inc. acquired all of the outstanding common stock of Texas Gulf
Coast Bancorp, Inc. by issuing 696,205 shares of Gulf Southwest Bancorp, Inc.
common stock plus cash of $52,231 for fractional shares and shares held by
dissenting shareholders to effect the merger. The business combination was
accounted for as a purchase transaction.
The operations of Texas Gulf Coast Bancorp, Inc. since May 1, 1995, are included
in the accompanying financial statements. If Texas Gulf Coast Bancorp, Inc. and
its subsidiaries had been combined with the Company for the entire nine months
of the current year and the first nine months of the preceding year, results of
operations would have been as follows:
<TABLE>
<CAPTION>
PRO FORMA
NINE MONTHS ENDED SEPTEMBER 30,
--------------------------------
1995 1994
-------- --------
(In thousands, except per share)
<S> <C> <C>
Net interest income $16,723 $14,972
Net income $ 4,480 3,213
Net income per share $ 2.30 1.64
</TABLE>
The accompanying balance sheet at September 30, 1995, includes the assets and
liabilities (restated from historical cost to fair values) of Texas Gulf Coast
Bancorp, Inc.
14
<PAGE>
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
ANALYSIS OF STATEMENT OF INCOME
Effective May 1, 1995, the Company consummated its acquisition of Texas Gulf
Coast Bancorp, Inc. Such acquisition has been accounted for as a purchase.
The following analysis discusses material changes in the results of operations
for the third quarter of 1995 compared to the third quarter of 1994 and the
first nine months of 1995 as compared to the first nine months of 1994. The
Company recorded earnings of $1,549,000 in the third quarter of 1995 and
$3,977,000 in the first nine months of 1995 compared to $1,025,000 in the third
quarter of 1994 and $2,608,000 in the first nine months of 1994.
NET INTEREST INCOME
Net interest income increased 81.0% in the third quarter of 1995 when compared
to the same period of 1994 and increased by 57.5% during the first nine months
of 1995 as compared to the first nine months of 1994. The net interest income
of Texas Gulf Coast accounted for 88.2% and 72.9% of the increases for the third
quarter and first nine months, respectively.
Disregarding the acquisition of Texas Gulf Coast Bancorp, net interest income
increased 9.5% and 15.6% for the third quarter of 1995 and the first nine months
of 1995, respectively. The increase of $295,000 for the third quarter of 1995
over the third quarter of 1994 resulted from an increase of $706,000 (16.5%) in
interest income on earning assets offset by an increase of $411,000 (34.4%) in
interest expense. The increase of $1,365,000 for the first nine months of 1995
over the comparable period in 1994 resulted from an increase of $2,226,000
(18.1%) in interest income offset by an increase of $861,000 (24.2%) in interest
expense. Increases in earning assets and deposits were the primary reasons for
the increases in interest income and interest expense for both periods in 1995
as compared to the comparable periods in 1994.
The Company's subsidiary banks (the "Subsidiary Banks") attempt to adjust the
rates paid or earned on interest bearing liabilities and interest earning assets
to maintain a consistent net interest margin to the extent possible.
PROVISION FOR POSSIBLE LOAN LOSSES
The provision for possible loan losses increased by $59,000 for the third
quarter of 1995 compared to the second quarter of 1994 and increased by $49,000
for the first nine months of 1995 as compared to the same period in 1994. The
increase in the third quarter provision was completely attributable to the
acquisition of Texas Gulf Coast Bancorp. The provision for possible loan losses
for the first nine months of 1995 was offset by $102,000 in net losses charged
to the allowance as compared with net losses of $150,000 for the same period in
1994. The ratio of the allowance for possible loan losses to outstanding loans
was 1.20% on
15
<PAGE>
September 30, 1995; as compared to 1.35% on September 30, 1994. The allowance
is $912,000 more at September 30, 1995 than it was on the comparable date a year
earlier, all of which is attributable to the banks acquired May 1, 1995.
It is the policy of the Subsidiary Banks to maintain a level in the allowance
for possible loan losses that is adequate to cover the loan losses sustained
plus provide for any future possible losses on problem loans. The adequacy of
the allowance is continually monitored and management considers the current
level to be appropriate based on an evaluation of the Subsidiary Banks' loan
portfolios. The transactions in the allowance for possible loan losses were as
follows:
<TABLE>
<CAPTION>
FOR THE NINE MONTHS
ENDED SEPTEMBER 30,
------------------------------
1995 1994
------------- ------------
<S> <C> <C>
Loans outstanding at period end $233,274,000 $144,282,000
============ ============
Allowance at beginning of period $ 2,063,000 $ 1,986,000
------------ ------------
Allowance of acquired banks 738,000 0
------------ ------------
Provision charged to expense 99,000 50,000
------------ ------------
Loans charged off:
Commercial and industrial $ (129,000) $ (164,000)
Real estate (14,000) (101,000)
Installment (140,000) (71,000)
------------ ------------
Total (283,000) (336,000)
------------ ------------
Loans recovered:
Commercial and industrial 83,000 152,000
Real estate 55,000 30,000
Installment 43,000 4,000
------------ ------------
Total 181,000 186,000
------------ ------------
Net Loans recovered (charged off) (102,000) (150,000)
------------ ------------
Allowance at end of period $ 2,798,000 $ 1,886,000
============ ============
Ratios:
Allowance as a percent of
loans outstanding 1.20% 1.35%
============ ============
Allowance as a percent of
nonperforming loans 79.1% 73.8%
============ ============
</TABLE>
Non-Accrual loans and past due loans (90 days or more) totaled $3,150,000 and
$389,000, respectively, at September 30, 1995, as compared to $2,355,000 and
$201,000, respectively, at September 30, 1994.
16
<PAGE>
NON-PERFORMING ASSETS
All loans which cause management to have doubt as to the borrower's ability to
substantially comply with present loan repayment terms are included in the
schedule of non-performing loans.
Non-performing loans consist of loans on which interest is not being accrued and
loans which are 90 days or more past due as to principal and/or interest payment
and not yet in a non-accruing status. The policy of the Subsidiary Banks is to
continue to accrue interest on loans which are 90 days or more past due if
periodic payments are being made on the loans. If a loan is classified as past
due and payments then resume on the loan, it continues to be classified as past
due until all past due amounts are paid.
The following table discloses information regarding non-performing assets for
the indicated periods:
<TABLE>
<CAPTION>
SEPTEMBER 30,
-----------------------
1995 1994
---------- ---------
<S> <C> <C>
Non-accrual loans $3,150,000 $2,355,000
Past due 90 days or more 389,000 201,000
---------- ----------
Total 3,539,000 2,556,000
Other real estate owned 2,081,000 731,000
---------- ----------
Total non-performing assets $5,620,000 $3,287,000
========== ==========
</TABLE>
Included in the totals of non-accrual loans and past due loans at September 30,
1995 are $1,630,000 in non-accrual loans and $12,000 in past due loans resulting
from the acquisition of Texas Gulf Coast Bancorp. In addition, $756,000 in
other real estate was owned by the banks acquired in conjunction with the Texas
Gulf Coast Bancorp acquisition.
NON-INTEREST INCOME
Total non-interest income increased by 43.3% for the third quarter of 1995 as
compared to the third quarter of 1994 and increased 39.9% for the first nine
months of 1995 compared to 1994. The components included in non-interest income
for the indicated periods are as follows:
<TABLE>
<CAPTION>
FOR THE QUARTER
ENDED SEPTEMBER 30,
------------------------
1995 1994
------------ ----------
<S> <C> <C>
Service charges and fees $ 1,114,000 $ 639,000
Other operating income 253,000 315,000
Securities transactions 0 0
------------ ----------
Total non-interest income $ 1,367,000 $ 954,000
============ ==========
</TABLE>
17
<PAGE>
NON-INTEREST INCOME (CONTINUED)
<TABLE>
<CAPTION>
FOR THE NINE MONTHS
ENDED SEPTEMBER 30,
------------------------
1995 1994
---------- ---------
<S> <C> <C>
Service charges and fees $2,700,000 $1,933,000
Other operating income 648,000 460,000
Securities transactions 0 0
---------- ----------
Total non-interest income $3,348,000 $2,393,000
========== ==========
</TABLE>
The total of the various service charges and fees earned by the Company and
Subsidiary Banks for the third quarter and the first nine months of 1995
increased by 74.3% and 39.7%, respectively, as compared to the comparable
periods of 1994. Other operating income decreased by 19.7% for the third
quarter of 1995 as compared to third quarter of 1994 and increased by 40.9% for
the first nine months of 1995 as compared to 1994.
The increases in service charges and fees are completely attributable to the
acquisition of Texas Gulf Coast Bancorp. Disregarding the acquisition of Texas
Gulf Coast, other operating income decreased by $181,000 and $18,000 for the
third quarter and the first nine months of 1995, respectively, as compared to
the same periods in 1994.
The Company maintains a policy of constantly monitoring and evaluating service
charges and fees to ensure that the fees charged reflect the cost of service
provided and remain competitive with other financial institutions located in the
Subsidiary Banks' market area.
NON-INTEREST EXPENSE
Non-interest expenses increased 71.7% for the third quarter of 1995 over the
third quarter of 1994 and increased 47.5% for the first nine months of 1995
compared to the first nine months of 1994. The totals were as follows:
<TABLE>
<CAPTION>
FOR THE QUARTER
ENDED SEPTEMBER 30,
----------------------
1995 1994
---------- ----------
<S> <C> <C>
Salaries and employee benefits $2,337,000 $1,188,000
Furniture, equipment and occupancy
expense 755,000 405,000
Other operating expenses 1,509,000 1,087,000
---------- ----------
Total non-interest expenses $4,601,000 $2,680,000
========== ==========
</TABLE>
18
<PAGE>
NON-INTEREST EXPENSE (CONTINUED)
<TABLE>
<CAPTION>
FOR THE NINE MONTHS
ENDED SEPTEMBER 30,
-----------------------
1995 1994
----------- ----------
<S> <C> <C>
Salaries and employee benefits $ 5,653,000 $3,588,000
Furniture, equipment and occupancy
expense 1,891,000 1,158,000
Other operating expenses 3,720,000 2,893,000
----------- ----------
Total non-interest expenses $11,264,000 $7,639,000
=========== ==========
</TABLE>
Salaries and benefits are the most significant operating expenses of the
Company. Of the 96.7% and 57.6% increases for the third quarter and the first
nine months of 1995, respectively, over the comparable periods of 1994, the
acquisition of Texas Gulf Coast Bancorp accounted for approximately 94% of each
of such increases.
Furniture, equipment and occupancy expense increased by 86.4% for the third
quarter of 1995 over the same quarter of 1994 and increased by 63.3% for the
first nine months of 1995 as compared to the first nine months of 1994. Of the
$350,000 and $733,000 increases for the third quarter and first nine months of
1995, respectively, the occupancy expenses attributable to the acquisition of
Texas Gulf Coast Bancorp totaled $348,000 and $618,000, respectively.
Disregarding the acquisition of Texas Gulf Coast, other operating expenses
decreased 23.0% for the third quarter of 1994 and 8.7% for the first nine months
of 1995 when compared to the same periods in 1994. The major components of
other operating expenses are legal and accounting fees, data processing,
supplies and advertising expenses. Also included are expenses related to real
estate held for sale and other loan-related assets acquired through foreclosure;
although for 1995 these expenses represent a minimal amount of the total.
ANALYSIS OF BALANCE SHEET
EARNING ASSETS
When comparing the total of earning assets at September 30, 1995, to the total
at December 31, 1994, earning assets increased 92.5%. Included in the
$213,042,000 increase are earning assets previously held by Texas Gulf Coast
Bancorp totaling $202,321,000. The remaining increase is attributable to
increases of $10,123,000, $6,340,000, and $1,904,000 in loans, investment
securities and time deposits in banks, respectively; partially offset by a
decrease of $7,650,000 in federal funds sold.
Included in the total of earning assets at September 30, 1995 are loans totaling
$3,150,000 which are on a non-accrual status. This compares to non-accrual
loans totaling $2,355,000 and $1,215,000 at September 30, 1994 and December 31,
1994, respectively. The acquisition of Texas Gulf Coast Bancorp accounts for
$1,630,000 in non-accrual loans at September 30,1995.
19
<PAGE>
DEPOSITS
The most important funding source for earning asset growth is deposits. Total
deposits increased by 90.8% from December 31, 1994 to September 30, 1995.
Included in the $205,144,000 increase are deposits totaling $198,657,000
associated with the acquisition of Texas Gulf Coast Bancorp. Disregarding the
Texas Gulf Coast Bancorp acquisition, deposits increased by $6,487,000, or 2.9%,
from the level at December 31, 1994. Non-interest bearing deposits represent
27.4% of total deposits at September 30, 1995 as compared to 31.8% at December
31, 1994.
CAPITAL
Shareholders' equity totaled $46,917,000 at September 30, 1995 as compared to
$25,539,000 at December 31, 1994. Included in the total at September 30, 1995
is equity totaling approximately $20,793,000 attributable to the acquisition of
Texas Gulf Coast Bancorp. The ratio of shareholders' equity to total assets was
9.7% on September 30, 1995, as compared to 10.1% on December 31, 1994 and 10.1%
on September 30, 1994.
Bank holding companies and their bank subsidiaries are required to maintain
certain capital ratios. The Federal Reserve Board's guidelines classify capital
into two tiers, referred to as Tier 1 and Tier 2. Tier 1 capital consists of
common and qualifying preferred shareholders' equity less goodwill. Tier 2
capital consists of mandatory convertible debt, preferred stock not qualifying
as Tier 1, qualifying subordinated debt and the allowance for loan losses up to
1.25% of risk-weighted assets. The minimum ratio for the sum of Tier 1 and Tier
2 to risk weighted assets is 8.0%, at least one-half of which should be in the
form of Tier 1 capital. At September 30, 1995, core capital (Tier 1) and total
capital (Tier 1 and Tier 2) as a percentage of risk-weighted assets was 19.15%
and 20.32%, respectively. The Subsidiary Banks at September 30, 1995 had core
capital of 18.46% and total capital of 19.64% as a percentage of risk weighted
assets.
In addition to the foregoing ratios, bank holding companies are required to
maintain a minimum ratio of core capital to total assets (hereinafter referred
to as the "Leverage Ratio") of at least 3.0%. At September 30, 1995, the
Company's Leverage Ratio was 9.48%. A similar leverage ratio applicable to the
Subsidiary Banks has been adopted by the FDIC. At September 30, 1995, the
Subsidiary Banks' ratio was 9.05%.
LIQUIDITY AND CAPITAL COMMITMENTS
Liquidity is the ability of the Company and its Subsidiary Banks to meet their
short-term needs for cash arising from demands such as operating expenses,
withdrawal of deposits and demand for loans. The liquidity of the Company is
primarily provided by dividends and payments for Federal income taxes from the
Subsidiary Banks and interest on time deposits in financial institutions.
20
<PAGE>
LIQUIDITY AND CAPITAL COMMITMENTS (CONTINUED)
The Subsidiary Banks' liquidity is primarily provided by maturing loans,
deposits, cash, short-term investments, time deposits in other banks, federal
funds sold and profits. With bank regulators critically reviewing liquidity,
the Company has adopted a policy of maintaining a minimum liquidity level of 20%
as measured by the FDIC formula, at the Subsidiary Banks. As of September 30,
1995, the liquidity level of the Subsidiary Banks was 47.9%.
The Company believes that both it and the Subsidiary Banks have sufficient
capital and financial resources to meet its current and anticipated capital
commitments.
Under restrictive loan covenants, Gulf Southwest Nevada Bancorp, Inc., a wholly
owned subsidiary of the Company may not pay dividends to the Company in excess
of its net earnings. To date, this loan convenant has not materially restricted
the liquidity of the Company and is not anticipated to do so in the future.
21
<PAGE>
PART 2 - OTHER INFORMATION
Item 1. Legal proceedings.
Not applicable
Item 2. Changes in securities.
Not applicable
Item 3. Defaults upon senior securities.
Not applicable
Item 4. Submission of matters to a vote of security holders.
Not applicable
Item 5. Other information.
Not applicable
Item 6. Exhibits and reports on Form 8-K.
No reports on Form 8-K were filed with the Securities and Exchange
Commission during the fiscal quarter ended September 30, 1995.
Exhibit 27 -- Financial Data Schedule
22
<PAGE>
EXHIBIT INDEX
Exhibit number and description
(2) Plan of acquisition, reorganization, arrangement, liquidation or
succession. *)
(4) Instruments defining the rights of security holders, including
indentures. *)
(10) Material contracts. *)
(11) Statement re computation of per share earnings. *)
(15) Letter re unaudited interim financial information. *)
(18) Letter re change in accounting principles. *)
(19) Report furnished to security holders. *)
(22) Published report regarding matters submitted to vote of security
holder. *)
(23) Consent of experts and counsel. *)
(24) Power of attorney. *)
(27) Financial data schedule.
. Exhibit 27. Financial Data Schedule
(99) Additional exhibits. *)
*) Not applicable.
23
<PAGE>
SIGNATURES
Pursuant to the requirements 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.
GULF SOUTHWEST BANCORP, INC.
Date: November 9, 1995 BY: /s/ J. W. Lander, Jr.
--------------------------------
J. W. Lander, Jr., Chairman
Date: November 9, 1995 BY: /s/ J. W. Lander, III
--------------------------------
J. W. Lander, III, President
(principal financial and chief
accounting officer)
24
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<PERIOD-START> JAN-01-1995
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