FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES
EXCHANGE ACT of 1934
For the quarterly period ended March 31, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES
EXCHANGE ACT of 1934
Commission File Number 0-15003
GRENADA SUNBURST SYSTEM CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 64-0723929
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2000 Gateway, Grenada, Mississippi 38902-0947
(Address of principal executive offices) (ZIP Code)
(601) 226-1100
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
-------- --------
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Grenada Sunburst System Corporation has only one class of common stock
authorized. At April 30, 1994, there were 15,000,000 shares of $1 par value
common stock authorized, and 9,492,975 shares issued and outstanding.
<PAGE>2
XXX BEGIN PAGE 2 HERE XXX
GRENADA SUNBURST SYSTEM CORPORATION
INDEX
------
PART I. Financial Information
----------------------
Item 1. Financial Statements
Consolidated Balance Sheets, March 31, 1994,
December 31, 1993 and March 31, 1993........................3
Consolidated Statements of Income, quarters ended
March 31, 1994 and 1993 and December 31, 1993...............5
Consolidated Statements of Changes in Stockholders'
Equity, three months ended March 31, 1994 and 1993..........7
Consolidated Statements of Cash Flows, three months
ended March 31, 1994 and 1993...............................8
Notes to Consolidated Financial Statements.................10
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations........................11
PART II. Other Information
------------------
Item 6. Exhibits and Reports on Form 8-K...........................32
Exhibit Index..............................................33
</PAGE>
<PAGE>3
XXX BEGIN PAGE 3 HERE XXX
PART I
FINANCIAL INFORMATION
GRENADA SUNBURST SYSTEM CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
<TABLE>
XXX BEGIN TABLE HERE XXX
<CAPTION>
Mar. 31, Dec.31, Mar. 31,
1994 1993 1993
--------- --------- ---------
<S> <C> <C> <C>
Cash and demand balances with banks $ 138,601 133,889 135,049
Interest bearing deposits with banks 670 28 5,028
Securities available for sale 133,023 120,101 29,700
Investment securities (Market value of
approximately $290,512, $301,240,
and $389,196) 282,054 287,945 372,674
Mortgage-backed securities (Market
value of approximately $168,162,
$170,815 and $261,884) 168,408 167,532 257,042
Mortgages held for resale 41,768 73,956 34,605
Federal funds sold and securities
purchased under agreements to resell 40,500 25,000 34,626
Loans 1,597,741 1,569,547 1,482,850
Less:
Unearned income 8,228 9,007 10,626
Allowance for credit losses 33,094 32,749 30,845
---------- --------- ----------
Net loans 1,556,419 1,527,791 1,441,379
Premises and equipment, net 49,218 48,738 49,367
Other real estate 4,480 5,185 9,484
Accrued interest receivable 17,847 18,262 19,022
Other assets 30,214 27,771 25,848
--------- ---------- ---------
Total Assets $ 2,463,202 2,436,198 2,413,824
========= ========== ==========
LIABILITIES
Deposits
Demand:
Non-interest bearing $ 410,169 419,641 347,847
Interest bearing 625,661 607,472 629,644
Savings 176,051 165,814 138,441
Time, $100,000 and over 244,008 247,538 239,640
Other time 760,125 759,342 832,720
--------- --------- ---------
Total deposits 2,216,014 2,199,807 2,188,292
Federal funds purchased and securities
sold under agreements to repurchase 27,585 30,542 30,570
Other borrowed funds 15,704 12,941 13,634
Accrued interest payable 8,900 8,939 9,112
Other liabilities 16,988 9,897 12,402
--------- --------- ---------
Total Liabilities 2,285,191 2,262,126 2,254,010
STOCKHOLDERS' EQUITY
Common stock, $1.00 par value, 15,000,000
authorized, 9,492,975 shares issued at
March 31, 1994, December 31, 1993 and
March 31, 1993 9,493 9,493 9,493
Paid in capital 31,842 31,842 31,842
Surplus 71,123 71,123 71,123
Undivided profits 65,553 61,614 47,356
-------- -------- --------
Total Stockholders' Equity 178,011 174,072 159,814
-------- -------- --------
Commitments and contingent liabilities
Total Liabilities and
Stockholders' Equity $ 2,463,202 2,436,198 2,413,824
========= ========= =========
The accompanying notes are an integral part of the consolidated financial
statements.
</TABLE>
</PAGE>
<PAGE>4
XXX BEGIN PAGE 4 HERE XXX
GRENADA SUNBURST SYSTEM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(In thousands except per share data)
<TABLE>
XXX BEGIN TABLE HERE XXX
<CAPTION>
Quarter Ended
--------------------------------
Mar. 31, Dec. 31, Mar. 31,
1994 1993 1993
-------- -------- --------
<S> <C> <C> <C>
INTEREST INCOME
Loans including fees $ 31,767 32,142 27,178
Deposits with banks 4 0 104
Mortgages held for resale 944 1,142 1,000
Federal funds sold and securities
purchased under agreements to resell 221 73 195
Securities:
Taxable 5,871 6,354 6,810
Exempt from federal taxes 1,250 1,308 1,412
Dividends 433 376 410
------- ------- -------
Total Interest Income 40,490 41,395 37,109
INTEREST EXPENSE
Deposits:
Demand 3,595 3,620 3,408
Time, $100,000 and over 1,955 2,026 1,815
Other time and savings 8,688 8,958 8,718
Federal funds purchased and securities
sold under agreements to repurchase 217 215 230
Other borrowed funds 258 259 114
------- ------- -------
Total Interest Expense 14,713 15,078 14,285
------- ------- -------
Net interest income 25,777 26,317 22,824
Provision for credit losses 800 1,315 2,085
------- ------- -------
Net interest income after
provision for credit losses 24,977 25,002 20,739
NON-INTEREST INCOME
Service charges on deposit accounts 4,261 4,524 3,762
Other service charges,
commissions, and fees 2,556 2,810 2,524
Investment securities, net (86) (106) (221)
Fees from fiduciary activities 483 441 477
Other 194 214 588
------- ------- -------
Total Non-Interest Income 7,408 7,883 7,130
NON-INTEREST EXPENSE
Salaries 10,636 10,822 9,172
Employee benefits 2,263 1,809 1,801
Net occupancy expense 1,790 1,892 1,529
Furniture and equipment expense 1,874 1,948 1,665
FDIC deposit insurance expense 1,213 1,188 1,076
Other 5,835 5,448 5,360
------- ------- -------
Total Non-Interest Expense 23,611 23,107 20,603
------- ------- -------
Income before income taxes and
cumulative effect of a change
in accounting principle 8,774 9,778 7,266
Income taxes 2,752 3,103 2,136
------- ------- -------
Income before cumulative effect of
a change in accounting principle 6,022 6,675 5,130
Cumulative effect on prior years of
a change to a different method of
accounting for income taxes 0 0 781
------- ------- -------
Net Income $ 6,022 6,675 5,911
======= ======= =======
EARNINGS PER SHARE:
Income before cumulative effect
of a change in accounting principle $ 0.63 0.71 0.56
Cumulative effect of a change
in accounting principle $ 0.00 0.00 0.08
Net Income $ 0.63 0.71 0.64
DIVIDENDS PER SHARE $ 0.20 0.20 0.15
The accompanying notes are an integral part of the consolidated financial
statements.
</TABLE>
</PAGE>
<PAGE>5
XXX BEGIN PAGE 5 HERE XXX
GRENADA SUNBURST SYSTEM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 1994 AND 1993
(In thousands)
<TABLE>
XXX BEGIN TABLE HERE XXX
<CAPTION>
Common Paid in Undivided
Stock Capital Surplus Profits Total
------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
Balances January 1, 1993 $9,047 22,953 71,123 42,615 145,738
Net income 5,911 5,911
Net unrealized gain
on equity securities 219 219
Cash dividend declared (1,424) (1,424)
Stock issued in exchange
for net assets of Eastover
Bank for Savings 439 8,734 9,173
Stock issued under compensation
plan 7 155 162
Unearned compensation 35 35
------ ------ ------ ------- -------
Balances March 31, 1993 $9,493 31,842 71,123 47,356 159,814
====== ====== ====== ======= =======
Balances January 1, 1994 $9,493 31,842 71,123 61,614 174,072
Net income 6,022 6,022
Net unrealized loss on
securities available
for sale, net of tax (191) (191)
Cash dividend declared (1,899) (1,899)
Unearned compensation 7 7
------ ------ ------ ------ -------
Balances March 31, 1994 $9,493 31,842 71,123 65,553 178,011
====== ====== ====== ====== =======
The accompanying notes are an integral part of the consolidated financial
statements.
</TABLE>
</PAGE>
<PAGE>6
XXX BEGIN PAGE 6 HERE XXX
GRENADA SUNBURST SYSTEM CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31,
(In thousands)
<TABLE>
XXX BEGIN TABLE HERE XXX
<CAPTION>
1994 1993
------- -------
<S> <C> <C>
Net cash flows from operating activities:
Net income $ 6,022 5,911
Adjustments to reconcile net income
to net cash provided by operating activities:
Amortization of goodwill and intangible assets 213 215
Depreciation and amortization of premises and equipment 1,240 1,149
Net accretion of investment securities (276) (573)
Accretion of loan fees and discounts (779) (360)
Provision for possible credit losses 800 2,085
Net (increase) decrease in mortgages held for resale 32,188 28,467
Other real estate provision 133 233
Gains on sales of other real estate (40) (70)
Losses from sales of premises and equipment (135) (2)
Decrease in interest receivable 415 398
Decrease in interest payable (39) (466)
Losses on sales of securities, net 86 221
Other, net 4,445 (2,740)
------- ------
Net cash provided by operating activities 44,273 34,468
Cash flows from investing activities:
Net decrease in interest-bearing deposits with banks (642) 15,002
Net increase in federal funds sold and securities
purchased under agreements to resell (15,500) (34,626)
Purchases of securities available for sale (19,880) 0
Principal prepayments on securities available for sale 19,223 0
Purchases of securities held to maturity (37,707) (59,206)
Maturities of securities held to maturity 24,664 9,603
Principal prepayments on securities held to maturity 6,933 770
Purchases of mortgage-backed securities held to maturity (33,689) (26,309)
Sales of mortgage-backed securities 0 16,749
Principal prepayments of mortgage-backed securities 32,546 22,730
Net increase in loans (28,840) (25,393)
Net increase in premises and equipment (1,764) (1,172)
Proceeds from sale of premises and equipment 186 2
Proceeds from sales of other real estate 796 1,002
Net cash received from Eastover acquisition 0 35,922
-------- --------
Net cash used by investing activities (53,674) (44,926)
Cash flows from financing activities:
Net increase in demand and savings accounts 18,953 25,031
Net decrease in other deposits (2,747) (9,519)
Net increase (decrease) in federal funds purchased
and securities sold under agreements to repurchase (2,957) 4,906
Net increase (decrease) in other borrowed money 2,763 (284)
Cash dividends paid (1,899) (1,424)
-------- --------
Net cash provided by financing activities 14,113 18,710
-------- --------
Net increase in cash and due from banks 4,712 8,252
Cash and due from banks at the beginning of the period 133,889 126,797
-------- --------
Cash and due from banks at the end of the period $138,601 135,049
======== ========
Unrealized gain on equity securities $ 0 219
Unrealized (loss) on securities
available for sale (192) 0
Securities transferred to the available
for sale category from the held to
maturity category 12,266 0
The accompanying notes are an integral part of the consolidated financial
statements.
</TABLE>
</PAGE>
<PAGE>7
XXX BEGIN PAGE 7 HERE XXX
GRENADA SUNBURST SYSTEM CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Three Months Ended March 31, 1994 and 1993
1. The accompanying unaudited consolidated financial statements have been
prepared in accordance with the accounting policies in effect as of December
31, 1993, as set forth in the annual consolidated financial statements of
Grenada Sunburst System Corporation and subsidiaries ("GSSC", or the
"Company"). In the opinion of management, all adjustments necessary for a
fair presentation of the condensed consolidated financial statements have
been included and are of a normal recurring nature.
2. The results of operations for the three-month period ended March 31,
1994 are not necessarily indicative of the results to be expected for the
full year.
3. Per share data is based on weighted average shares of common stock
outstanding of 9,492,975 for the quarter ended March 31, 1994 and 9,201,559
for the quarter ended March 31, 1993.
4. Effective March 1, 1993, GSSC, through its wholly owned Mississippi
banking subsidiary, Sunburst Bank, acquired selected net assets of Eastover
Bank for Savings ("Eastover") in a transaction accounted for as a purchase.
Had the acquisition occurred on January 1, 1993, for the three months ended
March 31, 1993, net interest income for the Company would have increased by
approximately $3,140,000, net income would have increased by approximately
$897,000, and earnings per share would have increased by approximately $.08
per share.
5. Effective January 1, 1994, GSSC adopted Financial Accounting Standards
Board ("FASB") SFAS No. 115, "Accounting for Certain Investments in Debt and
Equity Securities". This statement requires investments to be classified in
three categories and to be accounted for as follows: (i) debt securities
which the Company has the positive intent and ability to hold to maturity are
classified as held-to-maturity and reported at amortized cost; (ii) debt and
equity securities that are bought and held principally for the purpose of
selling them in the near term are classified as trading securities and
reported at fair value, with unrealized gains and losses included in
earnings; and (iii) debt and equity securities not classified as either held-
to-maturity securities or trading securities are classified as available-for-
sale securities and reported at fair value, with unrealized gains and losses
excluded from earnings and reported as a deduction from stockholders' equity.
</PAGE>
<PAGE>8
XXX BEGIN PAGE 8 HERE XXX
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GSSC reported net income of $6,022,076 for the quarter ended March 31,
1994, an increase of $110,904 from the $5,911,172 reported for the quarter
ended March 31, 1993. Earnings per share, before the cumulative effect of a
change in accounting principle, for the first three months of 1994 were $.63
compared to $.56 for the first three months of 1993. The effect of the
adoption of SFAS No. 109, "Accounting for Income Taxes" in 1993 accounted for
$.08 of the first quarter 1993 earnings per share on net income of $.64.
During the first quarter of 1993, the Company acquired approximately $400
million in selected assets and liabilities from Eastover in a transaction
accounted for as a purchase. Accordingly, the results of operations of this
acquisition are included in the consolidated financial statements only from
the acquisition date (March 1, 1993), which affects the comparability of the
consolidated financial statements. Net interest income before provision for
credit losses was up $2,952,672 or 12.94% for the quarter ended March 31,
1994, when compared to the same period in 1993. The provision for credit
losses decreased $1,285,000 for the three months ended March 31, 1994,
compared to the three months ended March 31, 1993. Non-interest income
increased $509,961 for the same period while non-interest expense increased
$3,239,163.
The return on average assets (ROA) for the first quarter of 1994 was
1.00% compared to 1.01% for the same time in 1993. The return on average
equity (ROE) was 13.82% for the first quarter of 1994 compared to 14.32% for
the first quarter of 1993.
The following provides management's discussion of the consolidated
financial condition and results of operations of GSSC, focusing on those
factors that have had the most significant impact for the first three months
of 1994. This commentary should be read in conjunction with the accompanying
financial statements.
</PAGE>
<PAGE>9
XXX BEGIN PAGE 9 HERE XXX
RESULTS OF OPERATIONS
Contribution to Earnings Per Share
(Fully Taxable Equivalent)
<TABLE>
XXX BEGIN TABLE HERE XXX
<CAPTION>
Quarter
ended March 31,
---------------
1994 1993
------ ------
<S> <C> <C>
Net interest income - FTE $ 2.80 2.57
Provision for credit losses 0.08 0.23
------ ------
Net interest income after provision
for credit losses - FTE 2.72 2.34
Service charges on deposit accounts 0.45 0.41
Other service charges, commissions and fees 0.27 0.27
Investment securities gains (losses), net (0.01) (0.02)
Fees from fiduciary services 0.05 0.05
Other 0.02 0.08
------ ------
Total non-interest income 0.78 0.79
Adjusted gross income after provision
for credit losses - FTE 3.50 3.13
Salaries 1.12 1.00
Employee benefits 0.24 0.20
Occupancy expense, net of rental income 0.19 0.17
Furniture and equipment expense 0.20 0.18
Other 0.74 0.70
------ ------
Total non-interest expense 2.49 2.25
Income before income taxes (FTE) and
cumulative effect of a change in accounting
principle 1.01 0.88
Applicable income taxes - FTE 0.38 0.32
------ ------
Income before cumulative effect of a change
in accounting principle 0.63 0.56
Cumulative effect of a change in method
of accounting for income taxes 0.00 0.08
------ ------
Net income $ 0.63 0.64
====== ======
Assumed tax rate of 35% for 1994 and 1993.
</TABLE>
</page>
<PAGE>10
XXX BEGIN PAGE 10 HERE XXX
NET INTEREST INCOME
Net interest income (NII) is the largest component of the Company's
income and represents the amount by which interest and fee income on earning
assets exceeds the cost of deposits and other borrowed funds. The Company's
long-term objective is to manage those earning assets and interest-bearing
liabilities to provide the largest possible amount of income while balancing
interest rate, credit, liquidity and capital risk.
Net interest income was up $3.0 million or 12.94% for the first quarter
of 1994 compared to the same period in 1993 due to a 14.99% increase in
average earning assets. The acquisition of approximately $374 million in
earning assets from Eastover on March 1, 1993, accounted for approximately
84% of the increase in average earning assets for the first three months of
1994. The net interest spread decreased 14 basis points to 4.26% for the
quarter ended March 31, 1994, from 4.40% for the quarter ended March 31,
1993. The prime lending rate for bank loans declined periodically to 6.00%
early in 1993 from 6.50% early in 1992. The prime lending rate increased in
March of 1994 to 6.25%. This prime rate decrease in 1992 and 1993 was the
primary factor in the decrease in yield on the loan portfolio to 8.18% for
the quarter ended March 31, 1994, from 8.53% for the quarter ended March 31,
1993. Approximately 39% of the Company's loans earn interest that fluctuates
with this prime lending rate. At March 31, 1994, $605 million in loans or
37% of the bank subsidiaries' loan portfolios are subject to reprice during
the next quarter. This decline in yield on the largest component of earning
assets for the banks was more than offset by a decline in the cost of funds.
Average deposits increased by $280.9 million or 12.19% from the first
quarter of 1993 to the first quarter of 1994. The acquisition of
approximately $396 million in deposits from Eastover on March 1, 1993, caused
approximately 92% of the increase in average deposits for the first quarter
of 1994. The cost of interest bearing deposits decreased 32 basis points from
the first quarter of 1993 to the first quarter of 1994. Average other
borrowings were up by $2.2 million to $42.1 million for the quarter ended
March 31, 1994, from $39.9 million for the same period in 1993, and the rate
paid for this source of funds increased to 4.47% in 1994 from 3.45% in 1993.
The emphasis in management of the investment portfolio for 1994
continues to be to improve the liquidity and quality of the portfolio,
provide a relatively stable source of income and balance interest rate and
credit risk. As loan demand has improved, funds have been redeployed, and
securities as a percentage of earning assets at March 31, 1994, decreased to
25.86% as compared to 29.89% a year earlier.
</PAGE>
<PAGE>11
XXX BEGIN PAGE 11 HERE XXX
Net Interest Income Summary
(dollars in thousands)
<TABLE>
XXX BEGIN TABLE HERE XXX
<CAPTION>
Three months
ended Mar.31,
1994 1993
------- -------
<S> <C> <C>
Interest income $ 40,490 37,109
Taxable equivalent adjustments:
State, county and municipal:
Notes 50 42
Bonds 653 740
Dividends 140 139
------- -------
Total adjustments 843 921
Interest income - FTE 41,333 38,030
Interest expense 14,713 14,285
------- -------
Net interest income - FTE $ 26,620 23,745
======= =======
Net interest margin - FTE 4.81% 4.93%
======= =======
Average earning
assets (millions) $ 2,230.7 1,939.9
======= =======
Assumed tax rate of 35% for 1994 and 1993.
</TABLE>
</PAGE>
<PAGE>12
XXX BEGIN PAGE 12 HERE XXX
The taxable equivalent net interest margin (NIM) is net interest income
plus an adjustment for tax exempt income expressed as a percentage of average
earning assets. The NIM is affected by the net interest spread, level of
interest rates, amount of non-performing assets and the amounts of non-
interest bearing funds supporting earning assets. To maximize and maintain
consistency of earnings, the Company endeavors to monitor and control
interest rate risk. Assuming the current mix and sensitivities of interest
bearing assets and liabilities remain constant and historical relationships
between rates on different products and investments reoccur, a 1% rise in
short term interest rates would cause the Company's NIM to decline 3 basis
points for the succeeding 12 months. A 3% rise would result in a 16 basis
point decline. Conversely, a 1% decline in short term rates would result in
a 3 basis point increase in the Company's NIM. For the quarter ended March
31, 1994, the NIM was 4.81%, down 12 basis points from the 4.93% reported for
the same period a year earlier. Average earning assets increased 14.99% or
$290.8 million for the first quarter of 1994 when compared to the first
quarter of 1993. The tax equivalent yield on average earning assets for the
first quarter of 1994 was 7.48%, down 43 basis points from the 7.91% yield
for the first quarter of 1993.
PROVISION FOR CREDIT LOSSES
In evaluating the adequacy of the allowance for credit losses, among the
issues the Company examines are current economic conditions, results of
quantitative analysis of the quality of commercial loans and commercial real
estate loans, and the historical rate of charge-offs on all loan types.
Various regulatory agencies, as a part of their examination process,
periodically review each of the banks' allowances for losses on loans and
real estate owned. Such agencies may require the banks to adjust the
allowances based on their judgments of information available to them at the
time of their examination.
The provision for credit losses is the amount charged against current
earnings which management believes is necessary to maintain such allowance at
an adequate level at a point in time, after giving consideration to potential
problem credits, the collateral adequacy of loans, net charge-offs, asset
quality measures, size of the loan portfolio and general economic conditions
and trends. The provision for credit losses for the first quarter of 1994
was $800,000, compared to $2,085,000 for the first quarter of 1993. The
provision for the first three months of 1994 reflected a decrease of
$1,285,000, from the provision for the three months ended March 31, 1993.
This provision reflects improvement in the quality of the loan portfolio
while still providing for continued growth. Loans increased 21.7% or $280.9
million from March 31, 1993 to March 31, 1994.
</PAGE>
<PAGE>13
XXX BEGIN PAGE 13 HERE XXX
NON-INTEREST INCOME
One of the Company's key long-term strategies has been to seek
additional sources of non-interest revenue. The growth in non-interest
income has become an increasingly important component of the Company's
profitability, given the uncertainty of future loan demand and increased
competition from nontraditional sources.
Non-interest income includes fees for trust services, mortgage loan
servicing fees, income from broker/dealer services, service charges on
deposit accounts, and many other retail products. Non-interest income for
the first three months of 1994 increased 7.39% or $510,000 compared to the
first three months of 1993.
The rising interest rate environment has slowed the earnings growth in
non-interest income through subsidiaries' earnings. The mortgage company is
a significant contributor to non-interest income, with an increase in revenue
to $1,208,000 for the three months ended March 31, 1994, from $1,057,000 for
the three months ended March 31, 1993. The mortgage servicing portfolio
increased to $831.7 million at March 31, 1994, from $498.6 million at March
31, 1993. The broker/dealer operations also contributed to non-interest
income, with revenue of $508,000 for the three months ended March 31, 1994
compared to $736,000 for the three months ended March 31, 1993. Service
charges on deposit accounts was an area of increased earnings. Revenue from
deposit accounts increased to $4,261,000 for the three months ended March 31,
1994, compared to $3,762,000 for the three months ended March 31, 1993. The
increase in deposit accounts from the Eastover acquisition is a significant
contributor to this increase in service charges on deposit accounts.
NON-INTEREST EXPENSE
During recent years, the banking industry has put an increasing emphasis
on expense control and improving its efficiency and, ultimately, its
profitability. The Company has responded to the need for improved efficiency
by emphasizing its commitment to expense control. The Company's efficiency
ratio for the quarter ended March 31, 1994 was 69.38%. The efficiency ratio
is non-interest expenses divided by tax-equivalent net interest income plus
non-interest income. This compares to an efficiency ratio of 66.48% for the
quarter ended March 31, 1993. The predominant reason for the decline in
effiency is a decrease in net income from the non-bank subsidiaries which is
largely a function of the current interest rate environment. Non-interest
expense increased 15.9% or $3,239,000 for the first three months of 1994
compared to the first three months of 1993. Salaries and benefits, the
single largest component of non-interest expense, increased 17.55% or
$1,926,000, compared to the first three months of 1993. Of this increase,
$1,463,000 is at Sunburst Bank, Mississippi and is largely attributable to
the addition of the Eastover personnel and normal merit increases throughout
the Company. The number of full time equivalent employees for the Company
has increased to 1,707 at March 31, 1994, from 1,650 at March 31, 1993.
Occupancy expense and furniture and equipment expense are up primarily due to
the addition of 29 banking facilities acquired with the Eastover acquisition.
</PAGE>
<PAGE>14
XXX BEGIN PAGE 14 HERE XXX
TAXES
Income tax expense consists of provisions for Federal and state income
taxes. Applicable income taxes were $2,752,000 for the three months ended
March 31, 1994, compared to $2,136,000 for the three months ended March 31,
1993. The statutory Federal income tax rates for 1994 and 1993 were 35%. The
Company's income tax expense as a percentage of pretax income is different
from these statutory tax rates because of the effect of tax-exempt income,
various nondeductible expenses and the impact of alternative minimum taxes,
including carry forward credits. The Company's effective tax rate was 31.37%
for the three months ended March 31, 1994, and 29.39% for the three months
ended March 31, 1993.
The FASB issued SFAS No. 109, "Accounting for Income Taxes," that
superseded SFAS No. 96 and changed the criteria for recognition and
measurement of deferred taxes. The emphasis in accounting for deferred income
taxes changed from an income statement approach to a balance sheet approach,
thereby ensuring the proper accrual of the appropriate asset or liability for
deferred taxes. The Company adopted SFAS No. 109 on January 1, 1993, and
subsequently recorded previously unrecognized tax benefits of $781,000. On
August 10, 1993 the 1993 Tax Act was signed into law. This law involves a
change in the Corporate income tax rate structure. Management has revised
its SFAS No. 109 calculation to incorporate the changes required as a result
of the 1993 Tax Act. The effect of these changes is not material to the
Company's financial condition.
</PAGE>
<PAGE>15
XXX BEGIN PAGE 15 HERE XXX
FINANCIAL CONDITION
LOANS
The banks' loan portfolio represents the largest single component of the
Company's earning asset base. Average loans outstanding increased 21.73%
over the March 31, 1993, level. Of the $290.1 million increase in average
loans, $158.4 million is attributable to the Eastover acquisition and $131.7
million is attributable to growth. The majority of this growth occurred in
the real estate secured and commercial and industrial categories. In
addition, modest growth was experienced in the consumer sector. As a general
practice, floating rate mortgages are held within the loan portfolio and
fixed rate loans are packaged for sale and are hedged to guard against
interest rate swings.
CREDIT QUALITY AND CREDIT RISK MANAGEMENT
Inherent in the business of providing financing alternatives to our
customers are the risks involved in extending credit. Management believes
that strong credit policies and guidelines, good underwriting, and constant
supervision and servicing are needed to insure a sound and profitable loan
portfolio. These are the primary factors that control risk and thereby
insure safety and profitability for our depositors and stockholders. Risk
reduction is achieved through diversity in the portfolio as to type,
geographic location, industry and borrower. Policies are determined by
carefully evaluating current economic, financial, regulatory and market
factors based on the objectives and strategies of the Company. The Company
has in place a structured policy that quickly identifies problem credits,
monitors their performance, and provides reasonable estimates of the possible
credit loss, if any, relating to the loans. The Asset Quality Group
continuously monitors the entire loan portfolio, classifying problem
credits, estimating loss exposure, and determining systematically the level
of risks and necessary level of provision for credit losses.
In order to manage the credit risk of the commercial, single family
mortgage and installment loan portfolios, loans and blocks of loans are
internally assigned a grade ranging from A to F, depending on the financial
condition, the status of payments or collateral on the loans. Grades are
assigned at the inception of the loans, reviewed regularly by the assigned
loan officer and by the Asset Quality personnel. The preponderance of the
Banks' loans are rated C, denoting standard and acceptable risk.
The allowance for credit losses reflects management's judgment as to the
level considered appropriate to absorb potential losses in the portfolio
based on a review of factors that include individual loans, historical loss
experience, economic conditions, trends, and other factors. The adequacy of
the allowance is reviewed frequently. Since the first quarter 1993, the
allowance for credit losses has increased $2.2 million or 7.29% to $33.1
million, including a $4.9 million reserve transferred with the purchase of
the Eastover assets. Management believed that it was prudent to continue to
increase the allowance, given the uncertainty surrounding national and state
economics and its commitment to sound, conservative banking practices. The
allowance currently approximates 2.08% of total loans outstanding compared to
2.10% a year earlier. Because the current economic recovery is predicted to
produce only modest economic growth at both national and state levels during
1994, management will continue to take a prudent approach to evaluating the
adequacy of the allowance for credit losses.
</PAGE>
<PAGE>16
XXX BEGIN PAGE 16 HERE XXX
Credit Experience Summary
(dollars in thousands)
<TABLE>
XXX BEGIN TABLE HERE XXX
<CAPTION>
Three months
ended March 31,
1994 1993
------ ------
<S> <C> <C>
Allowance for credit losses:
Beginning balance $ 32,749 24,412
Reserves of acquired banks 0 4,934
Provision for loan losses 800 2,085
Net charge-offs 455 586
------ ------
Ending Balance $ 33,094 30,845
====== ======
Allowance to loans
(net of unearned) 2.082% 2.095%
Net charge-offs to average
loans (net of unearned)
annualized 0.116% 0.184%
</TABLE>
A measure of asset quality in the financial industry is the level of
non-performing assets in the portfolio. Non-performing assets consist of
loans or securities on which interest is no longer accruing (non-accrual),
certain restructured loans where the interest rate or other terms have been
renegotiated, and other real estate that includes in-substance foreclosures.
The following table sets forth information concerning the non-performing
assets of the Company.
</PAGE>
<PAGE>17
XXX BEGIN PAGE 17 HERE XXX
Non-Performing Assets
(dollars in thousands)
<TABLE>
XXX BEGIN TABLE HERE XXX
March 31, March 31,
1994 1993
-------- --------
<S> <C> <C>
Non-accrual loans $ 4,341 5,897
Past due loans * 3,267 3,373
Restructured loans 487 1,964
-------- --------
Total non-performing loans 8,095 11,234
Foreclosed real estate 4,407 9,400
Other assets 261 101
-------- --------
Total non-performing assets $ 12,763 20,735
======== ========
Allowance for credit losses $ 33,094 30,845
======== ========
Non-performing loans to total loans
(net of unearned) 0.509% 0.763%
Non-performing loans plus foreclosed
real estate and other assets to
total loans (net of unearned) 0.803% 1.414%
Non-performing loans plus foreclosed
real estate and other assets
excluding past due loans to
total loans (net of unearned) 0.597% 1.185%
Non-performing loans to allowance 24.46% 36.42%
* Loans that are 90 days or more past due as to principal and/or
interest and not yet on non-accrual status.
</TABLE>
</PAGE>
<PAGE>18
XXX BEGIN PAGE 18 HERE XXX
INTEREST RATE SENSITIVITY
Interest rate sensitivity is a function of the repricing characteristics
of the Company's portfolio of earning assets and liabilities. The Company's
Asset Liability Management Committee ("Asset Liability Committee"), manages
its interest rate sensitivity to control exposure of net interest income to
risks associated with interest rate movements and maturities of interest-
earning assets and interest-bearing liabilities and to achieve consistent
growth in net interest income. The Company attempts to maximize earnings by
managing the one-year "gap," the difference between interest-earning assets
and interest-bearing liabilities maturing or repricing in one year or less.
As of March 31, 1994, the Company had a one-year liability sensitive gap
(i.e., an excess of liabilities over assets maturing or repricing within one
year) of $222.8 million or 9.04%. Management believes that this range can be
effectively managed against interest rate movements while allowing sufficient
flexibility to take advantage of opportunities presented by varying interest
rate environments. The following table summarizes the Company's gap position
at March 31, 1994.
</PAGE>
<PAGE>19
XXX BEGIN PAGE 19 HERE XXX
INTEREST RATE SENSITIVITY
(dollars in thousands)
<TABLE>
XXX BEGIN TABLE HERE XXX
<CAPTION>
3 Months 3 to 12 1 to 5 5 to 10 10 Years
or Less Months Years Years and over Total
-------- -------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Interest Earning Assets:
Deposits with banks $ 670 0 0 0 0 670
Fed. funds sold 20,500 0 0 0 0 20,500
Sec. purchased under 20,000 0 0 0 0 20,000
agreement to resell
Securities:
Available for sale 133,023 0 0 0 0 133,023
Mortgage-backed 20,130 26,725 109,900 11,653 0 168,408
Investment 21,802 53,501 154,205 24,795 27,751 282,054
Mortgages held
for resale 41,768 0 0 0 0 41,768
Loans 563,119 457,548 430,004 85,500 61,570 1,597,741
-------- -------- -------- ------- ------- ---------
Total Earning Assets $ 821,012 537,774 694,109 121,948 89,321 2,264,164
======== ======== ======== ======= ======= =========
Interest Bearing Liabilities :
Deposits:
Demand $ 62,566 563,095 0 0 0 625,661
Savings 0 176,051 0 0 0 176,051
Time < $100,000 245,204 308,748 204,689 1,484 0 760,125
Time > $100,000 117,080 81,230 45,438 260 0 244,008
Fed. funds purchased 0 0 0 0 0 0
Securities sold under
repurchase agreements 27,585 0 0 0 0 27,585
Other borrowed funds 0 0 2,629 13,076 0 15,705
-------- -------- -------- ------- ------- ---------
Total Interest Bearing
Liabilities $ 452,435 1,129,124 252,756 14,820 0 1,849,135
======== ========= ======== ======= ======= =========
Net Repricing Gap 368,577 (591,350) 441,353 107,128 89,321 415,029
Net Repricing Gap/
Total Assets 14.96% (24.01%) 17.92% 4.35% 3.63% 16.85%
Cumulative Gap 368,577 (222,773) 218,580 325,708 415,029 0
Cumulative Gap/
Total Assets 14.96% (9.04%) 8.87% 13.22% 16.85% 0.00%
</TABLE>
</PAGE>
<PAGE>20
XXX BEGIN PAGE 20 HERE XXX
LIQUIDITY
Liquidity is the ability to raise cash quickly when funds are needed.
The needs for liquidity are best met by a strong customer base, the ability
to readily purchase funds from reliable sources, and the ability to liquidate
short term marketable securities. GSSC has historically funded its liquidity
requirements with funds generated from operations, including new deposits and
proceeds from the repayments of loans and investments. The Company also
enhances liquidity by the retention of earnings and adequate capital. The
Asset Liability Committee sets minimum liquidity requirements and monitors
the Company's adherence to these goals on a monthly basis.
Core deposits expressed as a percentage of total assets were 79.90% at
March 31, 1994, and 80.73% at March 31, 1993. Volatile liabilities, defined
as the sum of time deposits over $100,000, foreign deposits, federal funds
purchased and securities sold under agreements to repurchase, interest-
bearing demand notes issued to the US Treasury, and other liabilities for
borrowed money, as a percentage of total assets were 11.00% at March 31,
1994, compared to 11.19% at March 31, 1993. Temporary investments as a
percentage of total assets decreased to 7.15% at March 31, 1994, compared to
8.03% at March 31, 1993. The Company's volatile liability dependence ratio,
(which compares volatile liabilities less temporary investments to net loans,
plus lease-financing receivable and investment securities with remaining
maturities or earliest repricing opportunities of less than one year,
including equity securities), was 4.65% at March 31, 1994, compared to 3.85%
at March 31, 1993.
SECURITIES
The securities portfolio is the second largest component of the
Company's earning asset base. When securities are purchased, primarily debt
securities, they are classified as investment securities and are carried at
cost adjusted for amortization of premiums and accretion of discounts, if the
Company has the intention to hold such securities on a long-term basis or
until maturity. If it is the Company's intention at the time of purchase to
sell securities prior to maturity, such securities are classified as trading
securities and are carried at fair value with unrealized gains or losses
included in earnings. At March 31, 1994, the Company held no securities in
its trading portfolio. Debt and equity securities not classified as either
held-to-maturity or trading securities are classified as available for sale
and reported at fair value, with unrealized gains and losses excluded from
earnings and reported as a deduction from stockholders' equity. Also, from
time to time, the Company may identify securities that it intends to use as a
part of its asset/liability strategy to respond to changes in interest rate
and/or prepayment risk or to increase liquidity or regulatory capital. At
identification date, these securities are also transferred to available-for-
sale and subsequently carried at fair value. At March 31, 1994, the Company
had $133 million in the available-for-sale category with an unrealized loss
of $191,000, net of taxes which has been deducted from stockholders' equity.
</PAGE>
<PAGE>21
XXX BEGIN PAGE 21 HERE XXX
The Company acquired, in the purchase of selected net assets of
Eastover, $121.9 million in investment securities, of which $16.8 million in
mortgage-backed US Government agency securities were sold within three weeks
after the March 1, 1993, acquisition date. Securities decreased 11.51% or
$76 million from March 31, 1993, to March 31, 1994. Management takes a
conservative approach in the investment portfolio by changing the mix and
maturity as it reinvests maturing securities. This has been done by
increasing the percentage of Treasury and agency securities and by decreasing
holding of other securities while shortening average maturities. In
addition, the average balance of the investment in corporate securities has
increased from the first quarter of 1993. These investments consist
principally of adjustable rate money market preferred instruments. The
following table reflects the mix of the investment portfolio, including
securities available for sale, for the quarters ended March 31, 1994, and
1993, in thousands.
<TABLE>
XXX BEGIN TABLE HERE XXX
<CAPTION>
1994 1993
Average Average
Balance % Balance %
------- ------ -------- ------
<S> <C> <C> <C> <C>
US Treasuries $ 107,262 18.83% 130,248 23.21%
Securities of other US
government agencies and corp. 311,854 54.74% 248,417 44.26%
Obligations of states and
political subdivisions 73,234 12.86% 83,433 14.87%
Other securities 35,261 6.19% 57,523 10.25%
Corporate securities 42,091 7.38% 41,608 7.41%
------- ------- ------- -------
Total securities $ 569,702 100.00% 561,229 100.00%
======= ======= ======= =======
</TABLE>
</PAGE>
<PAGE>22
XXX BEGIN PAGE 22 HERE XXX
DEPOSITS
Managing the mix and repricing alternatives of invested funds is an
important factor affecting the NIM. Strategies for managing the cost and
source of funds have to be flexible enough to meet needs in a changing
interest rate environment. Management's strategy has been to increase core
deposits as a percentage of total funds sources and to reduce the Company's
dependence on more volatile short-term borrowings. Average interest-bearing
deposit liabilities as a percentage of average funds sources were 80.50% for
the three months ended March 31, 1994, compared to 82.12% for the three
months ended March 31, 1993. Average non-interest bearing deposits increased
$84.9 million or 27.4% for the same period.
Average certificates of deposit increased by $75.7 million for the three
months ended March 31, 1994, compared to the same period in 1993. The average
rate paid on these certificates of deposit decreased to 3.64% for the three
months ended March 31, 1994, from 4.00% for the three months ended March 31,
1993. The total cost of interest-bearing liabilities has averaged 3.22% and
3.51% for the three months ending March 31, 1994, and 1993, respectively.
Interest-free funds supported 17.71% of average earning assets for the first
three months of 1994 compared to 16.00% for the first three months of 1993.
CAPITAL ADEQUACY
Strong capitalization is fundamental to the successful operation of a
banking organization. The Company seeks to maintain a level of capital
flexible enough for profitable growth opportunities, consistent with
management's goal of building stockholder value, and to provide stability in
uncertain economic conditions. Indicators of adequate capital are
represented by average equity to assets, average equity to net loans, risk-
based capital ratios and leverage ratios. The Company's equity to asset
ratio at March 31, 1994, was 7.25%, up from the 7.08% reported at March 31,
1993, and the equity to loan ratio was 11.23% and 11.69% for March 31, 1994,
and 1993, respectively. The Company's total risk-based capital ratio as of
March 31, 1994, was 11.87% and the leverage ratio was 7.22%. These capital
ratios were in excess of the required 8.00% total risk-based capital ratio
and the 3.00% required leverage ratio.
</PAGE>
<PAGE>23
XXX BEGIN PAGE 23 HERE XXX
Selected Capital Information
For the three months ended March 31,
(dollars in thousands)
<TABLE>
XXX BEGIN TABLE HERE XXX
<CAPTION>
1994 1993
--------- ---------
<S> <C> <C>
Capital:
Common stock $ 9,493 9,493
Surplus 102,965 102,965
Undivided profits 65,821 47,356
Allowance for credit losses 33,094 30,845
Market valuation adjustment on
securities available for sale 268 241
--------- ---------
Total primary capital 211,641 190,900
========= =========
Total assets $ 2,463,202 2,413,823
========= =========
Ratio of primary capital to adjusted assets * 8.464% 7.808%
*Adjusted assets are total assets gross of allowance for credit
losses and market valuation of securities.
1994 1993
--------- ---------
Tier I:
Common stockholders' equity $ 112,458 112,458
Undivided profits and capital reserves 65,821 47,597
Less:
Goodwill (1,853) (2,169)
Net unrealized loss on securities
available for sale (268) (241)
--------- ---------
Total Tier I capital 176,158 157,645
--------- ---------
Tier II:
Allowance for credit losses 20,905 19,500
--------- ---------
Total Tier II capital 20,905 19,500
--------- ---------
Total qualifying capital 197,063 177,145
========= =========
Risk-weighted assets 1,634,525 1,525,476
Risk-weighted off-balance sheet exposure 25,678 23,166
--------- ---------
Total risk-weighted assets and
off-balance sheet exposure $ 1,660,203 1,548,642
========= =========
Ratios:
Tier I capital ratio 10.61% 10.18%
Minimum Tier I capital ratio 4.00% 4.00%
Total capital ratio 11.87% 11.44%
Minimum total capital ratio 8.00% 8.00%
Leverage ratio 7.22% 7.39%
Minimum leverage ratio 3.00% 3.00%
</TABLE>
</PAGE>
<PAGE>24
XXX BEGIN PAGE 24 HERE XXX
RECENT DEVELOPMENTS
In May of 1993, the FASB issued SFAS No. 114, "Accounting by Creditors
for Impairment of a Loan". This statement requires that impaired loans that
are within the scope of SFAS No. 114 be measured on the present value of
expected future cash flows, discounted at the loan's effective interest rate
or at the loan's observable market price or the fair value of the collateral
if the loan is collateral dependent. This statement amends FASB SFAS No. 5,
"Accounting for Contingencies" and FASB SFAS No. 15, "Accounting by Debtors
and Creditors for Troubled Debt Restructurings". SFAS No. 114 applies to
financial statements for fiscal years beginning after December 15, 1994. The
Company has not made a determination as to the effect of the adoption of
this statement on the financial condition of the Company.
</PAGE>
<PAGE>25
XXX BEGIN PAGE 25 HERE XXX
GRENADA SUNBURST SYSTEM CORPORATION AND SUBSIDIARIES
DISTRIBUTION OF ASSETS,
LIABILITIES AND STOCKHOLDERS' EQUITY
INTEREST RATES AND INTEREST DIFFERENTIAL
FOR THE THREE MONTHS ENDING MARCH 31, 1994
(dollars in thousands)
<TABLE>
XXX BEGIN TABLE HERE XXX
<CAPTION>
Average Yield/
Balance Interest Rate
--------- -------- ------
<S> <C> <C> <C>
ASSETS
Interest earning assets:
Loans (1) (2) $1,573,644 128,724 8.18%
Mortgage loans held for sale 58,892 3,776 6.41
U.S. Treasury securities 107,262 4,955 4.62
Securities of other U.S. Government
agencies & corporations 311,854 15,977 5.12
Obligations of state and political
subdivisions (3) 73,234 7,825 10.68
Other securities 35,261 2,411 6.84
Corporate securities 42,091 2,383 5.66
Interest-bearing deposits with banks 462 18 3.90
Federal funds sold and securities
purchased with resell agreements 27,954 862 3.08
-------- ------ -----
Total interest earning assets/
interest income (3) 2,230,654 166,931 7.48
Cash and due from banks 138,769
Other assets 100,452
Allowance for credit losses (33,159)
Market value adjustment on
securities available for sale (78)
---------
Total $2,436,638
=========
</TABLE>
</PAGE>
<PAGE>26
XXX BEGIN PAGE 26 HERE XXX
GRENADA SUNBURST SYSTEM CORPORATION AND SUBSIDIARIES
DISTRIBUTION OF ASSETS,
LIABILITIES AND STOCKHOLDERS' EQUITY
INTEREST RATES AND INTEREST DIFFERENTIAL
FOR THE THREE MONTHS ENDING MARCH 31, 1994
(dollars in thousands)
<TABLE>
XXX BEGIN TABLE HERE XXX
<CAPTION>
Average Yield/
Balance Interest Rate
--------- -------- ------
<S> <C> <C> <C>
LIABILITIES AND
STOCKHOLDERS' EQUITY
Interest bearing liabilities:
Demand deposits $ 628,353 14,581 2.32%
Savings 170,012 4,111 2.42
IRA/KEOGH 143,062 7,497 5.24
Certificates of deposit 863,175 31,451 3.64
Federal funds purchased & securities
sold under agreements to repurchase 28,425 847 2.98
Other borrowings 13,660 1,033 7.56
--------- ------- -----
Total interest-bearing liabilities
/interest expense 1,846,687 59,520 3.22
Non-interest bearing demand 395,136
Other liabilities 18,118
---------
Total liabilities 2,259,941
Stockholders' equity 176,697
---------
Total $2,436,638
=========
Net interest income (3) 107,411
-------
Net yield on interest earning assets (3) 4.26
Tax equivalent adjustments:
Loans 202
Obligations of state & political subdivisions 2,614
Corporate securities 558
-------
Total tax equivalent adjustment 3,374
-------
Net interest income $104,037
=======
(1) Non-accruing loans are included in average loans; however, no income is
recognized on these loans.
(2) Includes loan fees in both interest income and the calculation of the
yield on loans.
(3) Tax equivalent adjustments are calculated assuming a 35% tax rate for
1994 and 1993.
</TABLE>
</PAGE>
<PAGE>27
XXX BEGIN PAGE 27 HERE XXX
GRENADA SUNBURST SYSTEM CORPORATION AND SUBSIDIARIES
DISTRIBUTION OF ASSETS,
LIABILITIES AND STOCKHOLDERS' EQUITY
INTEREST RATES AND INTEREST DIFFERENTIAL
FOR THE THREE MONTHS ENDING MARCH 31, 1993
(dollars in thousands)
<TABLE>
XXX BEGIN TABLE HERE XXX
<CAPTION>
Average Yield/
Balance Interest Rate
--------- -------- ------
<S> <C> <C> <C>
ASSETS
Interest earning assets:
Loans (1) (2) $1,290,382 110,100 8.53%
Mortgage loans held for sale 52,046 3,998 7.68
U.S. Treasury securities 130,248 6,940 5.33
Securities of other U.S. Government
agencies & corporations 248,417 16,038 6.46
Obligations of state and political
subdivisions (3) 83,433 8,924 10.70
Other securities 57,523 4,044 7.03
Corporate securities 41,608 2,259 5.43
Interest-bearing deposits with banks 9,140 413 4.52
Federal funds sold and securities
purchased with resell agreements 27,055 779 2.88
--------- ------ -----
Total interest earning assets/
interest income (3) 1,939,852 153,495 7.91
Cash and due from banks 126,427
Other assets 89,464
Allowance for credit losses (26,829)
Market value adjustment on
securities available for sale (457)
---------
Total $2,128,457
=========
</TABLE>
</PAGE>
<PAGE>28
XXX BEGIN PAGE 28 HERE XXX
GRENADA SUNBURST SYSTEM CORPORATION AND SUBSIDIARIES
DISTRIBUTION OF ASSETS,
LIABILITIES AND STOCKHOLDERS' EQUITY
INTEREST RATES AND INTEREST DIFFERENTIAL
FOR THE THREE MONTHS ENDING MARCH 31, 1993
(dollars in thousands)
<TABLE>
XXX BEGIN TABLE HERE XXX
<CAPTION>
Average Yield/
Balance Interest Rate
--------- -------- ------
<S> <C> <C> <C>
LIABILITIES AND
STOCKHOLDERS' EQUITY
Interest bearing liabilities:
Demand deposits $ 561,725 13,820 2.46%
Savings 130,280 3,596 2.76
IRA/KEOGH 129,087 7,487 5.80
Certificates of deposit 787,473 31,531 4.00
Federal funds purchased & securities
sold under agreements to repurchase 32,697 920 2.81
Other borrowings 7,249 457 6.30
--------- ------- -----
Total interest-bearing liabilities
/interest expense 1,648,511 57,811 3.51
Non-interest bearing demand 310,284
Other liabilities 18,869
---------
Total liabilities 1,977,664
Stockholders' equity 150,793
---------
Total $2,128,457
=========
Net interest income (3) 95,684
-------
Net yield on interest earning assets (3) 4.40
Tax equivalent adjustments:
Loans 169
Obligations of state & political subdivisions 2,958
Corporate securities 556
-------
Total tax equivalent adjustment 3,683
-------
Net interest income $92,001
=======
(1) Non-accruing loans are included in average loans; however, no income is
recognized on these loans.
(2) Includes loan fees in both interest income and the calculation of the
yield on loans.
(3) Tax equivalent adjustments are calculated assuming a 35% tax rate for
1994 and 1993.
</TABLE>
</PAGE>
<PAGE>29
XXX BEGIN PAGE 29 HERE XXX
PART II
OTHER INFORMATION
Item 4. Submission of Matters to Vote of Security Holders
(a) The Annual Meeting of Stockholders of GSSC was held April 18, 1994.
(b) The following three directors were elected at the meeting to hold office
for a term of three years:
Withhold
Approve Disapprove Authority
--------- ----------- ----------
J. Russell Flowers 6,967,907 665 9,282
John T. Keeton 6,963,989 665 13,200
Robert E. Kennington, II 6,967,992 665 9,197
No broker non-votes were submitted at the Company's Annual Meeting of
Stockholders.
The term of office of the following five directors continued after the
meeting:
James T. Boone
E. Hayes Branscome
Milton J. Womack
J. M. Robertson, Jr.
J. H. Tabb
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
See Exhibit Index on page 30 hereof
(b) Reports on Form 8-K
There were no reports filed on Form 8-K during the calendar
quarter ended March 31, 1994.
</PAGE>
<PAGE>30
XXX BEGIN PAGE 30 HERE XXX
EXHIBIT INDEX
Item 6. Exhibits and Reports on Form 8-K
(a) 3. Exhibits:
3.1 Certificate of Incorporation (filed as Exhibit 3.1 to the
Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1992, and incorporated herein by reference)
3.2 Bylaws, as amended (filed as Exhibit 3.2 to the Company's
Annual Report on Form 10-K for the year ended December 31, 1992,
and incorporated herein by reference)
10.1 Equity Share Bonus Plan and Participation Agreement, as amended
(filed as Exhibit 10.1 to the Company's Annual Report on Form
10-K for the year ended December 31, 1991, and incorporated
herein by reference)
10.2 Deferred Compensation Agreement (filed as Exhibit 10.2 to the
Company's Annual Report on Form 10-K for the year ended December
31, 1991, and incorporated herein by reference)
10.3 Management Incentive Compensation Plans (filed as Exhibit 10.3
to the Company's Annual Report on Form 10-K for the year ended
December 31, 1991, and incorporated herein by reference)
10.4 Form of Executive Employment Contracts (filed as Exhibit 10.4 to
the Company's Annual Report on Form 10-K for the year ended
December 31, 1991, and incorporated herein by reference)
10.5 Purchase and Assumption Agreement among Eastover Bank for
Savings and Grenada Sunburst System Corporation and Sunburst
Bank, Mississippi dated July 22, 1992, (filed as Appendix H of
the Company's Registration Statement on Form S-4 (Reg. No. 33-
53170) and incorporated herein by reference)
</PAGE>
<PAGE>31
XXX BEGIN PAGE 31 HERE XXX
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.
GRENADA SUNBURST SYSTEM CORPORATION
(Registrant)
Date May 13, 1994
----------------
/s/ D. L. Holland
--------------------------------------------
D. L. Holland, Treasurer and Chief Financial
Officer (Principal Financial and Accounting
Officer and Officer Duly Authorized to sign
on Behalf of Registrant)
