SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported)
December 31, 1996
ARISTAR, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 1-3521 95-4128205
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
8900 Grand Oak Circle, Tampa, Florida 33637-1050
(Address of principal executive offices)
Registrant's telephone number, including area code
(813) 632-4500
<PAGE> 2
Item 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Business Acquired.
Included after the signature page of this report as follows:
Page
Index to Consolidated Financial Statements of
Blazer Financial Corporation 1
Report of Independent Certified Public Accountants 2
Consolidated Statement of Financial Condition at
December 31, 1996 3
Consolidated Statement of Operations for the year
ended December 31, 1996 4
Consolidated Statement of Changes in Stockholder's Equity
for the year ended December 31, 1996 5
Consolidated Statement of Cash Flows for the year
ended December 31, 1996 6
Notes to Consolidated Financial Statements 7-18
[Items 7(b) and (c) are not amended hereby.]
<PAGE> 3
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Amendment No. 1 to the Current Report on Form
8-K to be signed on its behalf by the undersigned thereunto duly authorized.
ARISTAR, INC.
By:
/s/ James A. Bare
James A. Bare
Executive Vice President and Chief
Financial Officer (Chief Accounting Officer)
Date: March 12, 1997
<PAGE>
<PAGE> 4
BLAZER FINANCIAL CORPORATION
Table of Contents
Page
Report of Independent Certified Public Accountants 2
Consolidated Statement of Financial Condition at
December 31, 1996 3
Consolidated Statement of Operations for the year ended
December 31, 1996 4
Consolidated Statement of Changes in Stockholder's Equity
for the year ended December 31, 1996 5
Consoldiated Statement of Cash Flows for the year ended
December 31, 1996 6
Notes to Consolidated Financial Statements 7-18
<PAGE>
<PAGE> 5
Report of Independent Certified Public Accountants
To the Board of Directors and Stockholder
of Blazer Financial Corporation
In our opinion, the accompanying consolidated statement of
financial condition and the related consolidated statement of
operations, of changes in stockholder's equity and of cash flows
present fairly, in all material respects, the financial position
of Blazer Financial Corporation and its subsidiaries at December
31, 1996, and the results of their operations and their cash flows
for the year in conformity with generally accepted accounting
principles. 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 audit. We
conducted our audit of these statements in accordance with
generally accepted auditing standards which require that we plan
and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by
management, and evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable
basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Tampa, Florida
February 14, 1997
<PAGE> 6
<PAGE>
Blazer Financial Corporation and Subsidiaries
Consolidated Statement of Financial Condition
December 31, 1996
(Dollars in thousands)
Assets
<TABLE>
<S> <C>
Cash and due from banks $ 43
Money market accounts 1,472
Cash and cash equivalents 1,515
Time deposit accounts 15,174
Investment securities 9,741
Total investments 24,915
Loans 233,525
Less:
Allowance for loan losses (5,936)
Unearned interest and fees (3,253)
Net loans 224,336
Property and equipment, net 224
Accrued interest receivable 1,880
Deferred tax asset 1,965
Excess of cost over equity of acquired companies,
net of accumulated amortization of $603 1,678
Other assets 94
Total assets $ 256,607
Liabilities and Stockholder's Equity
Deposits:
Certificates of deposit $100,000 and over $ 10,674
Other interest-bearing deposits 136,406
Total deposits 147,080
Accrued interest payable 801
Credit lines - affiliate 67,577
Accounts payable - affiliate 1,167
Income taxes payable - affiliate 410
Other liabilities 579
Note payable 4,200
Total liabilities 221,814
Commitments and contingent liabilities (Notes 3, 12 and 13)
Stockholder's equity:
Common stock, $1 par value; authorized - 10,000 shares;
issued and outstanding - 1,000 shares 1
Additional paid-in capital 7,948
Net unrealized holding gain (loss) on investment
securities (net of taxes) (36)
Retained earnings 26,880
Total stockholder's equity 34,793
Total liabilities and stockholder's equity $ 256,607
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE> 7
Blazer Financial Corporation and Subsidiaries
Consolidated Statement of Operations
For the Year Ended December 31, 1996
(Dollars in thousands)
<TABLE>
<S> <C>
Interest income:
Loans, including fees $ 24,740
Investment securities and interest-bearing deposits 1,547
Total interest income 26,287
Interest expense:
Deposits 9,232
Other 2,589
Total interest expense 11,821
Net interest income 14,466
Provision for loan losses 456
Net interest income after provision for loan losses 14,010
Other noninterest income 245
Noninterest expenses:
Salaries and wages 2,998
Occupancy and equipment 660
Amortization of excess cost over
equity of companies acquired 57
Other 2,487
Total noninterest expenses 6,202
Income before income taxes 8,053
Intercompany charge in lieu of income taxes 3,132
Net Income $ 4,921
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE> 8
<PAGE>
Blazer Financial Corporation and Subsidiaries
Consolidated Statement of Changes in Stockholder's Equity
For the Year Ended December 31, 1996
(Dollars in thousands)
<TABLE>
Net
Unrealized
Holding Gain
Additional (Loss) on
Common Paid-in Investment Retained
Stock Capital Securities Earnings Total
<S> <C> <C> <C> <C> <C>
Balance at
January 1, 1996 $1 7,948 (23) 21,959 29,885
Net income 4,921 4,921
Net unrealized holding
loss on investment
securities (13) (13)
Balance at December 31,
1996 $ 1 $ 7,948 $ (36) $ 26,880 $ 34,793
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE> 9
<PAGE>
Blazer Financial Corporation and Subsidiaries
Consolidated Statement of Cash Flows
For the Year Ended December 31, 1996
(Dollars in thousands)
<TABLE>
<S> <C>
Operating activities
Net income $ 4,921
Reconciliation of net income to net cash
provided by operating activities:
Provision for loan losses 456
Depreciation and amortization 129
Net accretion of discount on assets acquired
and liabilities assumed (1,302)
(Increase) decrease in assets:
Accrued interest receivable (270)
Deferred tax asset 117
Other assets 41
Increase (decrease) in liabilities:
Accrued interest payable (77)
Income taxes payable - affiliate 496
Accounts payable - affiliate (2,114)
Other liabilities (4)
Net cash provided by operating activities 2,393
Investing activities
Purchases of investment securities
and time deposit accounts (12,860)
Proceeds from maturities of investment
securities and time deposit accounts 12,031
Net increase in loans (39,081)
Purchases of property and equipment (121)
Net cash used in investing activities (40,031)
Financing activities
Net proceeds - note payable 4,200
Net proceeds - credit lines - affiliate 46,258
Net decrease in deposits (14,581)
Net cash provided by financing activities 35,877
Net decrease in cash and cash equivalents (1,761)
Cash and cash equivalents
Beginning of year 3,276
End of year $ 1,515
Supplemental disclosures:
Interest paid $ 11,572
Intercompany payment in lieu of income taxes $ 5,508
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE> 10
1. Summary of Significant Accounting Policies:
Blazer Financial Corporation (the "Company") is a wholly-owned subsidiary
of Aristar, Inc. ("Aristar"). Aristar acquired the Company on December
31, 1996 from its affiliate, Great Western Bank ("GWB"). Prior to this
date, the Company was an indirect wholly-owned subsidiary of GWB. The
ultimate parent company both prior to and after the acquisition of the
Company by Aristar is Great Western Financial Corporation ("Great
Western").
The Company is engaged in the industrial banking business through its two
wholly-owned subsidiaries, First Community Industrial Bank ("FCIB"), with
seven bank branches in Colorado, and Great Western Thrift and Loan
("GWTL"), with four bank branches in Utah. The Company's accounting and
reporting policies conform with generally accepted accounting principles
and general practices of the banking industry. The following is a
description of the more significant accounting and reporting policies.
Principles of Consolidation
The consolidated financial statements include the accounts of Blazer
Financial Corporation and its subsidiaries, all of which are wholly-owned,
after elimination of all material intercompany balances and transactions.
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
disclosure of 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.
Investment Securities
Debt and equity securities are classified as available-for-sale and are
reported at fair value, with unrealized holding gains and losses excluded
from earnings and reported, net of taxes, as a separate component of
stockholder's equity.
Gains and losses on investment securities are recorded when realized on a
specific identity basis. Investment security transactions are recorded
using trade-date accounting.
Loans
Loans are stated at the principal amount outstanding. Interest income on
loans is accrued principally using constant yield methods. All loan fees
and directly related lending costs are deferred and amortized as an
adjustment to yield over the contractual life of the related loans.
Unearned interest and fees are comprised primarily of unamortized loan
origination and other fees, net of related costs.
<PAGE> 11
Loans are placed on nonaccrual status and interest is not recorded
currently if payment in full of principal or interest is not expected or
when the payment of principal or interest is more than 90 days past due.
Accrued interest earned is reversed at the time such loans become
nonaccrual loans. Instalment loans are charged off when they become five
payments past due. Loans are classified as restructured when concessions,
extended maturities or reduced interest rates have been granted because of
the debtor's inability to meet the original terms. Interest income on
restructured loans is recognized on the accrual basis at the restructured
interest rate.
Allowance for Losses on Loans
The allowance for loan losses is increased by provisions for loan losses
charged to expense and reduced by loans charged off, net of recoveries.
The provisions for loan losses are determined based on management's
evaluation of past loan loss experience, current economic conditions, the
composition and size of the portfolio and reviews and evaluations of
specific loans. The allowance for loan losses is maintained at a level
considered adequate by management to provide for potential losses inherent
in the existing loan portfolio.
Fair Values of Financial Instruments
Quoted market prices are used, where available, to estimate the fair value
of financial instruments. Because no quoted market prices exist for a
significant portion of the Company's financial instruments, market value
is estimated using comparable market prices for similar instruments or
using management's estimates of appropriate discount rates and cash flows
for the underlying asset or liability. A change in management's
assumptions could significantly affect these estimates; accordingly, the
Company's market value estimates are not necessarily indicative of the
value which would be realized upon disposition of the financial
instruments.
The following methods and assumptions were used by the Company in
estimating its fair value disclosures for financial instruments:
Investment securities: Fair values for investment securities are based
on quoted market prices, where available. If quoted market prices are
not available, fair values are based on quoted market prices of
comparable instruments.
Loans receivable: The approximate fair value of loans is estimated by
discounting the future cash flows using current rates at which similar
loans would be made with similar maturities to borrowers with similar
credit ratings. The fair value is not adjusted for the value of
potential loan renewals from existing borrowers.
Deposit liabilities: The fair values disclosed for fixed-rate savings
certificates of deposit are estimated using a discounted cash flow
calculation that applies interest rates currently being offered on
certificates to a schedule of aggregated expected maturities on time
deposits. The fair values disclosed for savings and money market
accounts are, by definition, equal to the amount payable on demand at
the reporting date.
<PAGE> 12
Credit lines - affiliate: The carrying amount reported in the statement
of financial condition for the credit lines - affiliate approximates its
fair value because substantially all the balance bears interest at a
variable rate.
Note payable: The carrying amount reported in the statement of financial
condition for the note payable approximates its fair value given its
callable feature.
Property and Equipment
Property, equipment and leasehold improvements are stated at cost, net of
accumulated depreciation and amortization. Depreciation provisions are
computed principally using the straight-line method and are charged to
operating expense over the estimated useful lives of the assets. Costs of
major additions and improvements are capitalized. Expenditures for
maintenance and repairs are charged to operations as incurred.
Excess of Cost Over Equity of Companies Acquired
The excess of cost over the fair value of net assets of companies acquired is
amortized on a straight-line basis, generally over periods of up to 40 years.
Income Taxes
The Company is included in the consolidated Federal and State income tax
returns filed by Great Western. Currently payable income taxes will be
remitted to Great Western. Federal income taxes are allocated between Great
Western and its subsidiaries in proportion to the respective contribution to
consolidated income or loss, while state taxes are allocated on a separate
return basis.
Taxes on income are determined using the liability method as prescribed by
Statement of Financial Accounting Standards No. 109 "Accounting for Income
Taxes" (FAS 109). This approach requires the recognition of deferred tax
assets and liabilities for the expected future tax consequences of events that
have been recognized in the Company's financial statements or tax returns. In
estimating future tax consequences, FAS 109 requires the consideration of all
expected future events other than enactments of changes in the tax law or
rates.
Statement of Cash Flows
For purposes of reporting cash flows, the Company considers all highly liquid
investments with a maturity of three months or less when purchased to be cash
equivalents. At December 31, 1996, cash equivalents include cash and due from
banks and money market accounts. The adjustment recorded in the Statement of
Changes in Stockholder's Equity for related net realized holding gains
(losses) on investment securities is a noncash transaction and is not included
in the Statement of Cash Flows.
<PAGE> 13
<PAGE>
2. Investment Securities:
The amortized cost, unrealized holding gains or losses and approximate
fair value of investment securities at December 31, 1996 are as follows
(in thousands):
<TABLE>
Amortized Unrealized Holding Approximate
Cost Gains Losses Fair Value
<S> <C> <C> <C> <C>
U.S. Government agency
securities $ 1,800 $ 1 $ 15 $ 1,786
Federal Home Loan Bank
stock 1,433 1,433
Structured notes 2,348 50 2,298
Corporate bonds 1,593 19 1,574
Certificates of deposit 15,174 15,174
Obligations of states and
political subdivisions 555 24 579
Mutual fund investments 2,071 2,071
Total $ 24,974 $ 25 $ 84 $ 24,915
</TABLE>
Included in investment securities at December 31, 1996 are various
structured notes issued by governmental and quasi-governmental agencies.
Structured notes are securities that typically contain embedded options
such as puts, calls, caps, floors and cash flows that are linked to
indices such as interest rates, prepayment rates and other financial
variables.
The Company currently holds five structured notes in its portfolio. Two
are LIBOR based inverse floating rate instruments and three are step-up
bonds. The notes have call option features at their various repricing
dates.
As of December 31, 1996, all investment securities, except the Federal
Home Loan Bank stock, were deemed to be available-for-sale. As a result,
net unrealized holding losses of $36,000 were recorded as a separate
component of stockholder's equity, net of a deferred tax asset of $23,000.
The Federal Home Loan Bank stock is a restricted security, carried at
cost.
<PAGE> 14
<PAGE>
The following table presents the maturities of the investment securities
at December 31, 1996 (in thousands):
<TABLE>
Amortized Approximate
Cost Fair Value
<S> <C> <C>
Due in one year or less $ 10,736 $ 10,737
Due after one year through five years 13,110 13,027
Due after five years 1,128 1,151
Total $ 24,974 $ 24,915
</TABLE>
Investment securities pledged as collateral for borrowings had a book
value of $1,500,00 and a fair value of $1,458,000 at December 31, 1996.
3. Loans:
Loans at December 31, 1996 are summarized as follows (in thousands):
<TABLE>
<S> <C>
Real estate - residential $ 158,270
Real estate - nonresidential 52,083
Retail instalment contracts 14,691
Other instalment loans 8,481
Less: Unearned interest and fees (3,253)
Total $ 230,272
</TABLE>
Nonperforming loans at December 31, 1996 totaled $849,000; there were no
material outstanding commitments related to the nonperforming loans.
Interest which would have been earned under the original terms on
nonaccrual loans does not significantly differ from actual amounts
recorded.
Neither the Company nor either of its subsidiary banks had outstanding
loans to their directors or their affiliates at December 31, 1996 or at
any time during the year then ended.
The Company is a party to financial instruments with off balance sheet
risk in the normal course of business to meet the financing needs of its
customers. These instruments involve, to varying degrees, elements of
credit risk in excess of the amounts recognized in the Statement of
Financial Condition. Commitments to extend credit totaled $25,921,000 at
December 31, 1996. There were no letters of credit outstanding in 1996.
Commitments to extend credit are agreements to lend to customers as long
as there is no violation of any condition established in the contract.
Commitments generally have fixed expiration dates or other termination
clauses. Since many of the commitments are expected to expire without
being drawn upon, the total commitment amounts do not necessarily
represent future cash requirements. The Company evaluates each customer's
creditworthiness on a case-by-case basis, and the amount of required
collateral is based thereon.
<PAGE> 15
Loans pledged as collateral for borrowings totaled $17,290,000 at December
31, 1996.
The approximate fair value of the Company's loans as of December 31, 1996
is summarized as follows (in thousands):
<TABLE>
Net Book Approximate
Value Fair Value
<S> <C> <C>
Real estate secured loans $ 210,674 $ 207,810
Retail instalment contracts 13,519 13,519
Other instalment loans 9,332 9,724
$ 233,525 $ 231,053
</TABLE>
4. Allowance for Loan Losses:
The following summarizes the activity in the allowance for loan losses for
the year ended December 31, 1996 (in thousands):
<TABLE>
<S> <C>
Balance, January 1 $ 5,430
Provision charged to expense 456
Charge-offs (774)
Recoveries 214
Allowance established on loans purchased 610
Balance, December 31 $ 5,936
<PAGE> 16
</TABLE>
<PAGE>
5. Customer Deposits:
The net book value and approximate fair value of the Company's customer
deposits as of December 31, 1996 are as follows (in thousands):
Net Book Approximate
Value Fair Value
<TABLE>
<S> <C> <C>
Certificates of deposit $100,000
and over $ 10,674 $ 10,714
Certificates of deposit under
$100,000 117,588 117,943
Savings accounts 1,534 1,534
Money market accounts 17,284 17,284
$147,080 $ 147,475
</TABLE>
Maturities of time deposits are $85,855,000 in 1997, $28,891,000 in 1998,
$6,753,000 in 1999 and $6,763,000 thereafter.
6. Notes Payable:
Note Payable
The Company has a note payable to the Federal Home Loan Bank of Seattle
("FHLB") in the amount of $4,200,000. On a specified day each quarter,
upon giving the Company a five business day written notice, FHLB has the
option to terminate the advance at par. Under the credit agreement, which
matures December 3, 2001, interest is payable monthly and determined using
a fixed annual interest rate of 4.98%. Interest expense on the above
debt was approximately $15,000 in 1996.
Credit lines
On August 16, 1996, the Company obtained a revolving credit line of
$2,685,000 from FHLB by investing $300,000 in FHLB stock. Under the
revolving credit line, which expires August 15, 1997, interest is payable
monthly and equal to FHLB's cash management rate (7.20% at December 31,
1996). At December 31, 1996, there were no outstanding borrowings under
the line of credit. Interest expense in 1996 related to the borrowings on
the revolving credit line was approximately $14,000.
Throughout 1996, the Company had an arrangement with GWB for a $75 million
revolving credit line which was to expire on December 31, 1998. Under the
revolving credit line, interest was payable monthly at a rate equal to
GWB's
30-day commercial paper rate plus .25% (5.70% at December 31, 1996).
At December 31, 1996, outstanding borrowings under this line of credit
totaled $62,077,000.
<PAGE> 17
The Company also had a 9.60% $5,500,000 note payable to GWB dated July 10,
1990 and due July 1997.
Interest expense related to the above affiliated debt was $2,589,000 in
1996.
Effective December 31, 1996, both the GWB line of credit and the note
payable to GWB were replaced by a revolving credit line with Aristar at
substantially the same terms as the GWB revolving credit line, except that
the new line will bear interest at Aristar's weighted-average commercial
paper rate.
6. Restrictions on Dividends:
The amount of dividends which the Company may pay is limited because of
limitations placed on its two bank subsidiaries by applicable laws and
regulations. FCIB, incorporated under the laws of Colorado, may pay
dividends without regulatory approval only to the extent that the total of
all dividends declared in a year do not exceed the total of its net profit
of that year combined with its retained net profits of the two preceding
years. Additionally, Colorado law requires the maintenance of adequate
capital levels. GWTL, incorporated under the laws of Utah, may pay
dividends only to the extent of its net profits, subject to a 90% of net
profits limitation until the retained earnings equal 100% of capital
stock. The FDIC imposes no dollar limit on dividends paid by state-chartered
Companies but requires maintenance of adequate capital levels.
7. Regulatory Capital Adequacy:
The Company's two bank subsidiaries are subject to various regulatory
capital requirements administered by the federal banking agencies.
Failure to meet minimum capital requirements can initiate certain
mandatory-and possibly additional discretionary-actions by regulators
that, if undertaken, could have a direct material effect on the Company's
financial statements. Under capital adequacy guidelines and the
regulatory framework for prompt corrective action, each Bank must meet
specific capital guidelines that involve quantitative measures of the
Bank's assets, liabilities, and certain off-balance sheet items as
calculated under regulatory accounting practices. The Bank's capital
amounts and classification are also subject to qualitative judgments by
the regulators about components, risk weightings, and other factors.
Quantitative measures established by regulation to ensure capital adequacy
require the Company to maintain minimum amounts and ratios (set forth in
the table below) of total and Tier I capital to risk-weighted assets, and
of Tier I capital to average assets (as defined in the regulations).
Management believes, as of December 31, 1996, that both of its bank
subsidiaries meet all capital adequacy requirements to which they are
subject.
As of December 31, 1996, the most recent notification from the Federal
Deposit Insurance Corporation categorized both of the Company's bank
subsidiaries as well capitalized under the regulatory framework for prompt
corrective action. To be categorized as well capitalized, the Company
must maintain minimum total risk-based, Tier I risk-based, Tier I leverage
ratios as set forth in the following tables. Each bank's actual capital
amounts and ratios are also presented in the tables. There are no
conditions or events since that notification that management believes have
changed the banks' category.
<PAGE> 18
First Community Industrial Bank
<TABLE>
To Be Well
Capitalized Under
For Capital Prompt Corrective
Actual Adequacy Purposes: Action Provisions:
(000's) Amount Ratio Amount Ratio Amount Ratio
<S> <C> <C> <C> <C> <C> <C>
As of December 31, 1996:
Total Capital
(to Risk Weighted
Assets) $46,749 30.5% >$12,270 >8.0% >$15,342 >10.0%
Tier I Capital
(to Risk Weighted
Assets) $44,791 29.2% >$ 6,137 >4.0% >$ 9,205 > 6.0%
Tier I Capital
(to Average
Assets) $44,791 22.7% >$ 5,924 >3.0% >$ 9,874 > 5.0%
</TABLE>
Great Western Thrift and Loan
To Be Well
Capitalized Under
For Capital Prompt Corrective
Actual Adequacy Purposes: Action Provisions:
(000's) Amount Ratio Amount Ratio Amount Ratio
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
As of December 31, 1996:
Total Capital
(to Risk Weighted
Assets) $ 7,949 16.9% >$3,756 > 8.0% >$4,694 >10.0%
Tier I Capital
(to Risk Weighted
Assets) $ 7,360 15.7% >$1,877 > 4.0% >$2,817 > 6.0%
Tier I Capital
(to Average
Assets) $ 7,360 12.8% >$1,730 > 3.0% >$2,883 > 5.0%
</TABLE>
<PAGE> 19
8. Noninterest Expense - Other:
Components of other noninterest expense for the year ended
December 31, 1996 are listed below (in thousands):
[S] [C]
Expenses related to real estate owned $ 19
FDIC and state Company assessments 48
Data processing services 328
Advertising 368
Other 1,724
Total $ 2,487
9. Intercompany Charge in Lieu of Income Taxes:
The components of intercompany charge in lieu of income taxes for the year
ended December 31, 1996 are as follows (in thousands):
[S] [C]
Current
Federal $ 2,673
State 486
Deferred (27)
Total $ 3,132
Intercompany charge in lieu of income taxes, 38.9% of income before income
taxes, varies from the statutory Federal income tax rate of 35.0%
primarily because of the 3.9% effect of State income taxes, net of Federal
benefit.
Deferred tax assets at December 31, 1996 totaled $1,965,000 and relate
primarily to the allowance for loan losses and net unrealized holding loss
on investment securities.<PAGE>
<PAGE> 20
10. Retirement and Savings Plans:
Substantially all of the Company's employees are covered by Great
Western's non-contributory defined benefit pension plan. Accumulated plan
benefits and annual pension expense are based upon a percentage of
employee salaries. Due to the Company's participation in a multi employer
defined benefit plan, information as to separate company participant
assets and vested benefits is not presented.
The Company's employees participate in Great Western's employee savings
plan, which allows employees to defer part of their pretax compensation
until retirement. Great Western's contributions equal 50% of the
contributions made by employees up to 6% plus annual discretionary
amounts, if any, as determined by Great Western's management.
The Company's employees also participate in Great Western's postretirement
benefit plans which provide medical and dental health benefits to retired
employees who meet certain eligibility requirements. In addition, nominal
group life insurance is provided. The accumulated postretirement benefit
obligation and related expense are derived from an allocation formula
based on the Company's total participants and the Plan's total
participants.
Total benefits expense allocated from GWB for the above and certain other
benefits was $341,000 for the year ended December 31, 1996.
11. Transactions with Related Parties:
Aristar provides supervisory, accounting and administrative resources to
the Company at no cost. Aristar also provides data processing services to
the Company. In 1996, data processing service fees paid to Aristar
totaled $328,000 . Management does not believe the Company's operating
results would be materially different if operated on a stand alone basis.
12. Leases:
At December 31, 1996, the Company leased office space for its branch
offices. Under operating leases that have initial or remaining
noncancelable lease terms in excess of one year, approximate aggregate
annual minimum rentals are $328,900 in 1997, $283,100 in 1998, $128,500 in
1999, $91,700 in 2000; $66,400 in 2001; and $2,600 thereafter. Rent
expense for 1996 was $383,000.
<PAGE> 21
<PAGE>
13. Commitments and Contingencies:
The Company is routinely involved in litigation incidental to its
business. It is management's opinion that the aggregate liability arising
from the disposition of all such pending litigation will not have a
material adverse effect on the Company.
14. Approximate Fair Values of Financial Instruments:
A summary of the approximate fair value of the Company's financial
instruments as of December 31, 1996, as compared to their carrying values,
is set forth in the following table (in thousands):
Carrying Approximate
Value Fair Value
<TABLE>
<S> <C> <C>
Investment securities (Note 2) $ 24,915 $ 24,915
Loans (Note 3) 233,525 213,053
Customer deposits (Note 5) 147,080 147,475
Notes payable (Note 6) 71,777 71,777
</TABLE>
See Note 1 and the referenced Notes for additional information.
