<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
QUARTERLY REPORT UNDER SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended: June 30, 1998 Commission File Number: 0-16187
------------- -------
GRANDBANC, INC.
--------------
(Exact name of small business issuer as specified in its charter)
Maryland 52-1332050
- -------------------------------- ------------------------------------
(State or other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
1800 Rockville Pike, Rockville, Maryland
----------------------------------------------
20852 (Address of principal executive offices)
(301) 770-1300
-----------------
(Issuer's telephone number, including area code)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 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
--- ---
At July 31, 1998, there were 4,049,655 shares of Common Stock, par
value $.10 per share outstanding.
Transitional Small Business Disclosure Format
YES NO X
--- ---
<PAGE>
TABLE OF CONTENTS
-----------------
PART I - FINANCIAL INFORMATION PAGE
- ------------------------------ ----
Item 1 - Consolidated Financial Statements
Consolidated Balance Sheets..................................1
Consolidated Statements of Income............................2
Consolidated Statements of Shareholders' Equity..............3
Consolidated Statements of Changes in Cash Flows ............4
Notes to Consolidated Financial Statements.................5-9
Item 2 - Management's Discussion and Analysis
Financial Condition .....................................10-12
Results of Operations....................................12-13
PART II - OTHER INFORMATION
- ---------------------------
Items 1 - 5..........................................................14
Item 6 - Exhibits and Reports on Form 8-K............................14
SIGNATURES...........................................................15
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
GRANDBANC, INC
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Cash and Due from banks $ 2,863 $ 2,460
Federal funds sold 449 2,837
---------------------------
Total cash and cash equivalents 3,312 5,297
Securities available-for-sale 10,412 3,395
Securities held-to-maturity 5,440 10,970
Loans, net of unearned discount and loan fees 73,354 77,446
Less: Allowance for loan losses (1,204) (1,702)
---------------------------
Loans, net 72,150 75,744
Bank premises and equipment, net 1,877 1,971
Accrued income receivable 579 603
Prepaid expenses and other assets 1,121 1,061
Deferred income taxes 1,998 2,057
Intangible assets 1,258 1,338
Other real estate owned 857 1,435
---------------------------
Total Assets $ 99,004 $ 103,871
===========================
Liabilities and Shareholders' Equity
Liabilities
Deposits:
Demand $ 10,456 $ 9,933
Interest checking 11,251 8,559
Savings 13,196 16,120
Time 52,090 54,086
---------------------------
Total Deposits 86,993 88,698
Securities sold under agreement to repurchase
and other borrowed funds 3,844 7,198
Other liabilities 433 490
---------------------------
Total Liabilities 91,270 96,386
===========================
Shareholders' Equity
Common stock 405 404
Surplus 10,962 10,928
Retained earnings (3,633) (3,747)
Accumulated comprehensive income:
Unrealized holding loss on securities available-for-sale -- (100)
---------------------------
Total Shareholders' Equity 7,734 7,485
---------------------------
Total Liabilities and Shareholders' Equity $ 99,004 $ 103,871
===========================
Book Value per Share $ 1.91 $ 1.85
===========================
Actual Shares Outstanding 4,050 4,041
===========================
</TABLE>
See notes to condensed consolidated financial statements.
1
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (continued)
GRANDBANC, INC
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
For Six Months Ended For Three Months Ended
June 30, June 30,
------------------------------------------------------------
1998 1997 1998 1997
------------------------------------------------------------
<S> <C> <C> <C> <C>
INTEREST INCOME:
Interest and fees on loans $ 3,571 $ 3,490 $ 1,761 $ 1,769
Interest on federal funds sold and repurchase agreement 160 85 91 59
Interest on Securities 367 525 175 239
------------------------------------------------------------
Total interest income 4,098 4,100 2,027 2,067
------------------------------------------------------------
INTEREST EXPENSE:
Interest on deposits 1,867 1,888 929 947
Interest on securities sold under agreements to
repurchase and other borrowed funds 160 152 68 75
------------------------------------------------------------
Total interest expense 2,027 2,040 997 1,022
------------------------------------------------------------
NET INTEREST INCOME 2,071 2,060 1,030 1,045
PROVISION FOR LOAN LOSSES 10 8 -- 8
------------------------------------------------------------
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 2,061 2,052 1,030 1,037
------------------------------------------------------------
OTHER INCOME
Service charges 169 147 90 65
Other 149 88 100 48
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Total other income 318 235 190 113
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OTHER EXPENSES
Salaries and employee benefits 892 999 430 512
Occupancy 378 360 186 162
Equipment 122 107 62 87
Other operating expenses 814 611 411 323
------------------------------------------------------------
Total other expense 2,206 2,077 1,089 1,084
------------------------------------------------------------
Income Before Applicable Income Taxes 173 210 131 66
Income Taxes 59 -- 41 --
------------------------------------------------------------
Net Income $ 114 $ 210 $ 90 $ 66
============================================================
Other Comprehensive Income, net of tax
Net unrealized gain on investments available for sale,
net of taxes $ 40 $ 13 $ 8 $ 3
============================================================
Comprehensive Income $ 154 $ 223 $ 98 $ 69
============================================================
Basic Net Income Per Common Share $ 0.03 $ 0.05 $ 0.02 $ 0.02
============================================================
Diluted Net Income Per Common Share $ 0.03 $ 0.05 $ 0.02 $ 0.02
============================================================
Weighted Average Shares Outstanding 4,048 4,041 4,049 4,041
============================================================
Adjusted Weighted Average Shares Outstanding 4,230 4,160 4,273 4,162
============================================================
</TABLE>
2
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (continued)
GRANDBANC, INC
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(in thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
Common
Stock Unrealized
Shares Common Retained Gain (Loss)
Outstanding Stock Surplus Earnings On Securities Total
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1996 3,926 $ 393 $10,405 $(4,597) $ (180) $ 6,021
Net income for the six months
ended June 30, 1997 -- -- -- 210 -- 210
Common stock issuance 115 11 523 -- -- 534
Change in unrealized holding gain
(loss) on securities available for sale -- -- -- -- 33 33
---------------------------------------------------------------------------------
Balance at June 30, 1997 4,041 $ 404 $10,928 $(4,387) $ (147) $ 6,798
=================================================================================
Balance at December 31, 1997 4,041 $ 404 $10,928 $(3,747) $ (100) $ 7,485
Net income for the six months
ended June 30, 1998 -- -- -- 114 -- 114
Common stock issuance 9 1 34 -- -- 35
Change in unrealized holding gain
(loss) on securities available for sale -- -- -- -- 100 100
---------------------------------------------------------------------------------
Balance at June 30, 1998 4,050 $ 405 $10,962 $(3,633) $ -- $ 7,734
=================================================================================
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (continued)
GRANDBANC, INC
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
For Six Months Ended
June 30,
---------------------------------
1998 1997
---------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 114 $ 210
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 94 109
Net amortization of securities (16) (2)
Amortization of intangibles 80 62
Provision for loan losses 10
Other real estate owned-write downs 10
(Benefit) provision for deferred income taxes 59
Change in assets and liabilities:
Accrued income receivable, other assets and other real estate (36) (903)
Accrued expenses and other liabilities (57) 24
---------------------------------
Net cash provided (used) by operating activities 258 (500)
---------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net (increase) decrease in federal funds sold 2,388 (1,081)
Proceeds from maturities/principal payments on
available for sale securities 1,536 1,000
Proceeds from maturities/principal payments on
held to maturity securities 5,530 2,205
Proceeds from maturity of time deposit -- 1,300
Purchases of available for sale securities (8,422) (177)
Purchases of held to maturity securities -- (2,600)
Net (increase) decrease in loans 3,594 (838)
Purchases of bank premises and equipment -- (322)
Proceeds from sale of foreclosed property and other assets 578 --
---------------------------------
Net cash provided (used) by investing activities 5,204 (513)
---------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in deposits (1,705) 1,691
Net increase in federal funds purchased and
other short-term borrowings (3,354) --
Proceeds from issuance of common stock -- 534
---------------------------------
Net cash provided (used) by financing activities (5,059) 2,225
---------------------------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 403 1,212
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 2,460 2,455
---------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 2,863 $ 3,667
=================================
Interest Paid $ 2,014 $ 1,948
=================================
</TABLE>
<PAGE>
GrandBanc, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
June 30, 1998
Note 1 - Organization
GrandBanc, Inc. (the "Corporation"), is a Maryland bank holding company. The
Corporation's operations primarily consist of managing the operations of
GrandBank, its wholly owned subsidiary. GrandBank (the "Bank") is a community
oriented commercial bank. It provides a full range of banking services to
small-to-medium sized businesses, professionals, and individuals in its primary
market that encompasses the metropolitan Washington D.C. area including suburban
Maryland and northern Virginia. The Bank, in addition to its headquarters in
Rockville, has branch offices in Bethesda and Germantown, Maryland and
Alexandria, Virginia. The Corporation's other wholly owned subsidiary, Facility
Holdings, Inc., a Virginia corporation, was established in the first quarter of
1998 and owns the real property of the Corporation located in Alexandria,
Virginia. The Corporation and Bank are subject to the regulations of certain
Federal and State agencies and undergoes periodic examinations by those
regulatory agencies.
Note 2 - Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the six-month period ended June 30, 1998
are not necessarily indicative of the results that may be expected for the year
ending December 31, 1998. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Company's Annual
Report on Form 10-KSB for the year ended December 31, 1997.
Note 3 - Recently Adopted Accounting Standards
In June 1997, the FASB issued SFAS No. 130, Reporting Comprehensive Income,
which establishes standards for reporting and displaying comprehensive income
and its components (revenues, expenses, gains and losses) in financial
statements. In addition, SFAS No. 130 requires the Company to classify items of
other comprehensive income by their nature in a separate financial statement or
as a component of the statement of operations or the statement of shareholders'
equity and display the accumulated balance of other comprehensive income
separately in the shareholders' equity section of the statement of financial
condition. The Corporation adopted SFAS No. 130 on January 1, 1998 as required.
5
<PAGE>
NOTES TO CONDENSED FINANCIAL STATEMENTS
Note 4. Securities
(in thousands)
<TABLE>
<CAPTION>
June 30, 1998
- ------------------------------------------------------------------------------------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
-----------------------------------------------------------------
<S> <C> <C> <C> <C>
Securities Available-for-Sale
U.S. Treasury $ -- $ -- $ -- $ --
U.S. Government Agencies and Corporations 7,011 12 (13) 7,010
Mortgage-Backed Securities 2,947 -- (2) 2,945
Other Securities 399 58 -- 457
-----------------------------------------------------------------
Total $10,357 $ 70 $ (15) $10,412
=================================================================
Securities Held-to-Maturity
U.S. Government Agencies and Corporations $ 3,439 $ 15 $ (8) $ 3,446
Mortgage-Backed Securities 2,001 41 -- 2,042
-----------------------------------------------------------------
Total $ 5,440 $ 56 $ (8) $ 5,488
=================================================================
<CAPTION>
December 31, 1997
- ------------------------------------------------------------------------------------------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
-----------------------------------------------------------------
<S> <C> <C> <C> <C>
Securities Available-for-Sale
U.S. Treasury $ -- $ -- $ -- $ --
U.S. Government Agencies and Corporations 3,005 7 (8) 3,004
Mortgage-Backed Securities -- -- -- --
Other Securities 391 -- -- 391
-----------------------------------------------------------------
Total $ 3,396 $ 7 $ (8) $ 3,395
=================================================================
Securities Held-to-Maturity
U.S. Government Agencies and Corporations $ 8,642 $ 27 $ (14) $ 8,655
Mortgage-Backed Securities 2,328 50 -- 2,378
-----------------------------------------------------------------
Total $10,970 $ 77 $ (14) $11,033
=================================================================
</TABLE>
6
<PAGE>
NOTES TO CONDENSED FINANCIAL STATEMENTS
Note 5. Loans
(in thousands)
June 30, December 31,
For The Periods Ended 1998 1997
- --------------------------------------------------------------------------------
Commercial $ 21,168 $ 21,684
Real Estate-Construction 327 434
Real Estate-Mortgage 44,630 47,149
Consumer 4,067 4,501
Credit Card Receivable 3,326 3,810
--------------------------
Gross loans 73,518 77,578
--------------------------
Less: Deferred loan fees and
unearned discount (164) (132)
--------------------------
Loans, net of unearned discount and
deferred loan fees 73,354 77,446
--------------------------
Allowance for loan losses (1,204) (1,702)
--------------------------
Loans, net $ 72,150 $ 75,744
==========================
7
<PAGE>
NOTES TO CONDENSED FINANCIAL STATEMENTS
Note 6. Allowance for Loan Losses
(in thousands)
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
----------------------------- -------------------------
For the Periods Ended 1998 1997 1998 1997
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance at beginning of period $ 1,324 $ 794 $ 1,702 $ 1,016
Provision charged to expense -- -- 10 8
Charge-offs:
Commercial and other 49 -- 154 220
Consumer 107 5 113 18
Real Estate -- -- 285 --
--------------------------------------------------------------
Total Charge-offs 156 5 552 238
Recoveries:
Commercial and other 36 28 43 30
Consumer -- 7 1 8
Real Estate -- -- -- --
--------------------------------------------------------------
Total Recoveries 36 35 44 38
Net Charge-Offs (Recoveries) 120 (30) 508 200
--------------------------------------------------------------
Balance at end of period $ 1,204 $ 824 $ 1,204 $ 824
==============================================================
Average Total Loans (1) 75,341 74,792 75,540 74,462
Total Loans at Period End (1) 73,354 74,309 73,354 74,309
Ratio of net charge-offs (recoveries)
to average total loans 0.16% -0.04% 0.67% 0.27%
Ratio of allowance for
loan losses to total
loans at period end 1.64% 1.11% 1.64% 1.11%
</TABLE>
(1) Total Loans are reported net of unearned income.
8
<PAGE>
NOTES TO CONDENSED FINANCIAL STATEMENTS
Note 7. Earnings Per Share
(in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
--------------------------------------------------
1998 1997 1998 1997
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Basic earnings per share:
Net income $ 90 $ 66 $ 114 $ 210
Stock and stock equivalents (average shares):
Common shares outstanding 4,049 4,041 4,048 4,041
Stock options - - - -
--------------------------------------------------
Total stock and stock equivalents 4,049 4,041 4,048 4,041
--------------------------------------------------
Basic net income per common share $ 0.02 $ 0.02 $ 0.03 $ 0.05
==================================================
Diluted earnings per share:
Net income $ 90 $ 66 $ 114 $ 210
Stock and stock equivalents (average shares):
Common shares outstanding 4,049 4,041 4,048 4,041
Stock options 224 121 182 119
--------------------------------------------------
Total stock and stock equivalents 4,273 4,162 4,230 4,160
--------------------------------------------------
Diluted net income per common share $ 0.02 $ 0.02 $ 0.03 $ 0.05
==================================================
</TABLE>
9
<PAGE>
Item 2 - Management's Discussion and Analysis
This Management's Discussion and Analysis contains forward-looking statements,
including statements of goals, intentions and expectations, regarding or based
upon general economic conditions, interest rates, developments in national and
local markets, and other matters, and which, by their nature, are subject to
significant uncertainties so that actual future results may differ from those
stated.
Financial Condition
The Corporation's total assets at June 30, 1998 of $99 million reflected a
decrease of $4.9 million or 4.69% from December 31, 1997.
The Corporation's Shareholders' Equity of $7.7 million at June 30, 1998
reflected an increase of $249 thousand or 3.33% from December 31, 1997. The
increase is primarily attributable to earnings from operations of $114 thousand
and a decrease in unrealized holding loss on investment securities of $100
thousand.
Total loans of the Bank at June 30, 1998 of $73.4 million reflected a decrease
of $4.1 million from December 31, 1997. The decrease is primarily due to
prepayments and maturities of loans. In the third and fourth quarters of 1998,
management will direct business development and lending activities toward the
consumer and small business markets in the region in order to develop new loan
relationships and further expand the Bank's existing customer relationships.
Total deposits of the Bank at June 30, 1998 of $86.9 million reflected a
decrease of $1.7 million or 1.92% from December 1997. During the six-month
period ended June 30, 1998, non-interest bearing deposits increased $523
thousand or 5.3% while interest bearing deposits decreased $2.2 million or 2.8%.
At June 30, 1998, non-interest bearing deposits totaled approximately 12.0 % of
total deposits.
The Bank's loan to deposit ratio was 84% at June 30, 1998, compared to 87% at
December 31, 1997.
Investment Activity. The Corporation invests in various types of liquid assets,
- -------------------
including United States Treasury obligations, securities of federal government
agencies and government sponsored entities, certain certificates of deposit,
federal funds and other qualifying liquid investments. During the six-month
period ended June 30, 1998, securities totaling $7.1 million matured or were
called and securities totaling $8.4 million were acquired.
Allowance for Loan Losses. The allowance for loan losses at June 30, 1998 was
- -------------------------
$1.2 million or 1.64% of total loans outstanding, compared to $1.7 million or
2.2% of total loans outstanding at December 31, 1997. Net charge-offs during the
six-month period ended June 30, 1998 totaled $508 thousand.
At June 30, 1998, the allowance for loan losses was 57 % of non-performing loans
compared to 61% at December 31, 1997. In management's opinion the allowance for
loan losses as of June 30, 1998 was adequate to cover potential losses that can
be anticipated at this time based on current risks and knowledge of the
portfolio.
10
<PAGE>
Non-performing Loans and Assets. The Bank's non-performing assets totaling $2.9
- -------------------------------
million consist of non-accrual loans and foreclosed real estate. The percentage
of non-performing assets to total assets decreased to 3.0% at June 30, 1998 from
4.06% at December 31, 1997.
Non-performing loans totaled $2.1 million at June 30, 1998 compared to $2.8
million at December 31, 1997. Non-performing loans at June 30, 1998 consist of
non-accrual loans totaling $2.8 million.
At June 30, 1998, foreclosed real estate was $857 thousand compared to $1.4
million at December 31, 1997. The decrease of $543 thousand is primarily the
result of sales of foreclosed property during the six months ended June 30,
1998. Generally, the Bank evaluates the fair value of each property owned
annually. These evaluations may be appraisals or other market studies. At June
30, 1998, management believes the carrying amounts for foreclosed real estate
approximate fair value.
Loans past due 90 days or more and still accruing interest totaled $294 thousand
at June 30, 1998. This amount consists of real estate, commercial and credit
card balances.
Short-term debt. The Corporation's short-term debt of $1.9 million at June 30,
- ---------------
1998 reflects a decrease of $50 thousand compared to December 31, 1997 due to
principal payments. Short-term borrowings of the Bank at June 30, 1998 decreased
to $1.7 million from $3.7 million at December 31, 1998. Current short-term
borrowings represent securities sold under agreement to repurchase. This product
was developed to meet the overnight investment needs of the Bank's commercial
customers. Under the repurchase agreement program, available customer balances
are invested overnight in an uninsured account in the Bank. Available balances
are determined by the investable balances of the Bank's sweep account commercial
customers.
Long-term debt. Long-term debt of the Corporation at June 30, 1998 of $200
- --------------
thousand reflected a decrease of $1.3 million compared to December 31, 1997.
During the six-month period ended June 30, 1998, the Corporation retired $1.3
million of a $1.5 million note to an unaffiliated bank, by transferring the real
property owned by the Corporation located in Alexandria, Virginia to its newly
formed subsidiary, Facility Holdings, Inc.. GrandBank holds a note by Facility
Holdings, Inc. and pays rent to Facility Holdings, Inc. for leased space in the
building on the property. The same unaffiliated bank continues to hold a note
from the Corporation in the amount of $200,000. Interest is payable monthly to
GrandBank and the unaffiliated bank. Principal is due to both banks October 1,
1999.
Liquidity. The Bank's liquidity position, those assets invested in cash, federal
- ---------
funds, and obligations of the U.S. Government, its agencies and sponsored
entities classified as available for sale, totaling $13.7 million, reflected an
increase of $5.0 million or 58% from December 31, 1997. The increase consists
primarily of an increase of investment securities available for sale of $7.1
million. Fed funds sold decreased by $2.4 million. The increase in investment in
available for sale securities is primarily due to prepayments and maturities of
loans and a shift from fed funds to higher yield assets. Funds available through
the Bank's sources of short-term borrowing, asset maturities, and
available-for-sale securities are considered adequate to meet current needs.
However, the Bank continues to evaluate the asset and liability mix to ensure
that adequate liquidity is maintained.
11
<PAGE>
Stockholders' Equity. Stockholders' equity of $7.7 million at June 30, 1998
- --------------------
increased $249 thousand from December 31, 1997. The increase results primarily
from earnings of $114 thousand for the period and a decrease of $100 thousand in
net unrealized holding loss in the six-month period ended June 30, 1998,
compared to December 31, 1997.
Capital Adequacy and Regulatory Requirements. At June 30, 1998, the Bank's ratio
- --------------------------------------------
of Tier I capital to total average assets equaled 7.5%, which exceeded the
minimum leverage capital ratio of 4% by 3.5%. The Tier I capital to risk
weighted assets ratio was 9.1% which exceeded the minimum required ratio of 4%
by 5.1%. The Bank's total capital to risk-weighted assets ratio at June 30, 1998
was 10.3% which exceeded the minimum required ratio of 8% by 2.3%.
RESULTS OF OPERATIONS
For the quarter ended June 30, 1998, the corporation had net income of $90
thousand, compare with $66 thousand for the quarter ended June 30, 1997. For the
six-month period ended June 30, 1998, the Corporation had net income of $114
thousand, compared to $210 thousand for the six-month period ended June 30,
1997, representing a decrease of $96 thousand. The decrease is primarily
attributable to income tax expense totaling $59 thousand.
Earnings per share were $.03 for the six months ended June 30, 1998, compared to
$0.05 for the period ended June 30, 1997.
Net Interest Income. Net interest income is the difference between interest
- -------------------
income on earning assets and interest expense on interest bearing deposits and
borrowings. Net interest income for the six-month period ended June 30, 1998 of
$2.1 million reflected an increase of $11 thousand or .53%, compared to the
six-month period ended June 30, 1997. Interest income for the six-month period
ended June 30, 1998 was $4.1 million, representing a decrease of $2 thousand or
.05% from the six-month period ended June 30, 1997. Interest expense of $2
million for the period ended June 30, 1998 reflected a decrease of $13 thousand
or .63%.
The average yield on interest earning assets for the six-month period ended June
30, 1998, was 8.89%, compared to 8.68% for the six-month period ended June 30,
1997. The average cost of funds for the six-month period ended June 30, 1998,
was 4.20%, compared to 4.14% for the same period in 1997. Additionally, the net
interest margin was 4.80% for the period ended June 30, 1998, compared to 4.67%
for the corresponding period in 1997.
Provision for Loan Losses. There was a provision for loan losses in the amount
- -------------------------
of $10 thousand during the six-month period ended June 30, 1998.
Noninterest Income. Non-interest income for the six-month period ended June 30,
- ------------------
1998, was $318 thousand, compared to $235 thousand for the six-month period
ended June 30, 1997, representing an increase of $83 thousand or 35.3%.
Noninterest Expense. Non-interest expense for the six-month period ended June
- -------------------
30, 1998 of $2.2 million reflected an increase of $129 thousand or 6.2%,
compared to the six-month period ended June 30, 1997. Salaries and benefits
decreased by $107 thousand or 10.7%. Occupancy and equipment increased by $33
thousand or 7.1%. Other operating expenses increased by $203 thousand or 33.2%
compared to the same period in 1997. This increase was attributable primarily to
data processing systems enhancements which were implemented during the second
quarter of
12
<PAGE>
1997 in order to expand products and services offered by the Bank and to improve
the efficiency of operations. Also, the implementation of the Bank's credit card
program during the third quarter of 1997 has affected the increase in other
operating costs.
Applicable Income Tax. The income tax expense of $59 thousand reflects the
- ---------------------
amount of the deferred tax asset realized during the six-month period ended June
30, 1998.
13
<PAGE>
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings N/A
Item 2 - Changes in Securities N/A
Item 3 - Defaults Upon Senior Securities N/A
Item 4 - Submission of Matters to a Vote of Security Holders N/A
Item 5 - Other Information N/A
Item 6 - Exhibits and Reports on Form 8-K.
A. Exhibits
(11) "Computation of Earnings per Common Share" is presented as
Note 7 on Page 9.
(27) Financial Data Schedule: Filed herewith.
B. Reports on Form 8-K
None
14
<PAGE>
SIGNATURES
----------
In accordance with the requirements of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
GRANDBANC, INC.
(Registrant)
Date: August 14, 1998 /s/ Steven K. Colliatie
--------------- --------------------------------
Steven K. Colliatie
President and Chief Executive Officer
Date: August 14, 1998 /s/ Domingo Rodriguez
--------------- ---------------------------------
Domingo Rodriguez
Executive Vice President and CFO
15
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from the Form
10-QSB for the period ended June 30, 1998, and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<CIK> 0000719488
<NAME> GRANDBANC, INC.
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 2,863
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0
0
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</TABLE>
