UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the quarterly period ended September 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the transition period from ___________________ to
____________________
Commission File Number 0-24468
Guthrie Savings, Inc.
(Exact name of registrant as specified in its charter)
Oklahoma 73-1452383
(State or other jurisdiction of IRS Employer
incorporation or organization) Identification Number
120 NORTH DIVISION, GUTHRIE, OKLAHOMA 73044 (Address and Zip
Code of principal executive offices)
(405) 282-2201
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registration (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 [ ]
The number of shares outstanding of each of the issuer's classes of common
stock, as of November 9, 1998:
$.01 par value common stock 402,257 shares
(Class) (Outstanding)
<PAGE>
GUTHRIE SAVINGS, INC.
INDEX
Page Number
PART I - FINANCIAL INFORMATION
Item 1.Financial Statements
Statements of Financial Condition as of March 30, 1998 and
September 30, 1998 (unaudited) 1
Statements of Income for the Three and Six Months Ended
September 30, 1997 and 1998 (unaudited) 2
Statement of Cash Flows for the Six Months
Ended September 30, 1997 and 1998 (unaudited) 3-4
Notes to Financial Statements 5-8
Item 2.Management's Discussion and Analysis of Financial
Condition and Results of Operations 9-13
PART II - OTHER INFORMATION
Item 1.Legal Proceedings 14
Item 2.Changes in Securities 14
Item 3.Defaults in Senior Securities 14
Item 4.Submission of matters to a vote of security holders 14
Item 5.Other Information 14
Item 6(a). Exhibits 14
Item 6(b). Reports on Form 8-K 14
SIGNATURES 15
<PAGE>
GUTHRIE SAVINGS, INC.
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
Consolidated Statements of Financial Condition
<TABLE>
<CAPTION>
September 30,
March 31, 1998
ASSETS 1998 (unaudited)
------ ---- -----------
<S> <C> <C>
Cash and cash equivalents
Interest bearing $ 2,995,502 $ 4,954,535
Non-interest bearing 311,917 382,615
Held-to-maturity investment securities 3,900,000 1,300,000
Available-for-sale investment securities 2,174,751 2,214,934
Mortgage-backed securities held to maturity 12,615,162 12,470,589
Loans receivable, net 25,573,437 25,050,198
Loans held-for-sale 81,757 110,267
Accrued income receivable 262,853 257,453
Real estate owned and other
repossessed property, net 10,500 --
Office properties and equipment, net 569,093 657,031
Prepaid expenses and other assets 131,926 123,852
------------ ------------
$ 48,626,898 $ 47,521,474
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Liabilities
Deposits $ 35,537,831 $ 35,179,741
FHLB line of credit and advances 5,196,000 4,500,000
Advances from borrowers for taxes and insurance 48,988 118,303
Deferred income 50,824 48,051
Dividend payable -- 203,190
Accrued expenses and other liabilities 109,081 85,832
Income taxes
Deferred 121,206 126,669
Current 26,840 (17,299)
------------ ------------
41,090,770 40,244,487
------------ ------------
Stockholders' Equity
Preferred stock, $.01 par value; 1,000,000
shares authorized, no shares outstanding -- --
Common stock, $.01 par value; 3,000,000 shares
authorized, 515,125 shares issued and outstanding 5,151 5,151
Additional paid-in capital 4,811,997 4,811,997
Retained income (substantially restricted) 4,541,553 4,555,060
Treasury Stock, at cost 97,668 shares at March 31, 1998
and 112,868 shares at September 30, 1998 (1,447,775) (1,750,619)
Unamortized stock acquired by Employee Stock Ownership Plan (267,865) (267,865)
Unamortized stock acquired by Management Stock Bonus Plan (103,490) (82,214)
Net unrealized gain (loss) on available-for-sale securities (3,443) 5,477
------------ ------------
7,536,128 7,276,987
------------ ------------
$ 48,626,898 $ 47,521,474
============ ============
</TABLE>
Page 1
<PAGE>
GUTHRIE SAVINGS, INC.
Consolidated Statements of Income
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
September 30, Septenber 30,
----------------------- -----------------------
1997 1998 1997 1998
--------- -------- --------- ---------
(unaudited) (unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest on loans $ 553,859 $ 574,377 $1,087,490 $1,153,404
Interest and dividends
on investment securities 174,642 129,560 357,478 251,342
Interest on mortgage-
backed securities 199,393 193,244 416,033 401,872
---------- ---------- ---------- ----------
Total interest income 927,894 897,181 1,861,001 1,806,618
---------- ---------- ---------- ----------
INTEREST EXPENSE
Deposits 387,391 387,588 765,773 772,794
Borrowed money 92,910 67,750 195,896 135,155
---------- ---------- ---------- ----------
Total interest expense 480,301 455,338 961,669 907,949
---------- ---------- ---------- ----------
Net interest income 447,593 441,843 899,332 898,669
PROVISION FOR LOSSES
ON LOANS 439 (57) 1,313 4,264
---------- ---------- ---------- ----------
Net interest income after
provision for loan losses 447,154 441,900 898,019 894,405
NON-INTEREST INCOME
Service charges and late fees 46,090 44,753 90,558 87,825
Other income 9,433 5,440 16,274 9,153
Gain (Loss) from real estate operations 769 (1,464) 3,965 689
---------- ---------- ---------- ----------
56,292 48,729 110,797 97,667
---------- ---------- ---------- ----------
NON-INTEREST EXPENSE
Compensation and related expenses 157,366 163,413 308,084 318,359
Occupancy expense 16,417 16,303 29,160 30,060
Professional fees 42,983 39,505 67,601 88,478
Federal insurance premium 5,351 5,361 10,788 10,738
Data processing 20,530 25,502 44,067 48,081
Bank charges 12,671 16,710 26,263 30,382
Other expense 52,887 47,948 117,247 116,177
---------- ---------- ---------- ----------
308,205 314,742 603,210 642,275
---------- ---------- ---------- ----------
Income before income taxes 195,241 175,887 405,606 349,797
INCOME TAX EXPENSE (BENEFIT) 65,900 67,000 145,750 133,100
---------- ---------- ---------- ----------
Net income $ 129,341 $ 108,887 $ 259,856 $ 216,697
---------- ---------- ---------- ----------
BASIC:
Earnings per share $ 0.34 $ 0.29 $ 0.68 $ 0.57
---------- ---------- ---------- ----------
Weighted average common shares
Outstanding 376,765 377,464 383,419 380,093
---------- ---------- ---------- ----------
DILUTED:
Earnings per share $ 0.33 $ 0.28 $ 0.66 $ 0.55
---------- ---------- ---------- ----------
Weighted average common shares
Outstanding 388,488 392,219 394,655 394,078
---------- ---------- ---------- ----------
DIVIDENDS PER SHARE $ 0.50 $ 0.50 $ 0.50 $ 0.50
---------- ---------- ---------- ----------
</TABLE>
Page 2
<PAGE>
GUTHRIE SAVINGS, INC.
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Six Months Ended September 30,
------------------------------
1997 1998
------------- ---------------
(unaudited) (unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 259,856 $ 216,697
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 15,796 13,840
FHLB Stock dividend (22,600) (25,800)
Decrease (increase) in accrued interest receivable 8,975 5,400
Increase (decrease) in accrued and deferred
income taxes 18,046 (44,139)
Increase (decrease) in accrued expenses 17,914 (23,249)
Origination of loans held-for-sale -- (883,450)
Sale of loans held-for-sale -- 950,391
Gain (loss) on sales of loans held-for-sale -- 8,156
Amortization of premiums and discounts
on investments and loans 644 (4,204)
Amortization of deferred gain on sale of real estate owned (3,972) (2,773)
Provision for losses on loans and real estate owned 1,313 4,264
Amortization related to ESOP and MSBP 12,545 21,276
(Increase) decrease in other assets (11,154) 8,074
----------- -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 297,363 244,483
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Net loan (originations) and principal payments on loans
held for investment (1,433,440) 438,348
Principal repayments on mortgage-backed securities
held to maturity 1,606,004 1,177,905
Acquisition of mortgage-backed investment securities
held to maturity -- (1,045,996)
Acquisition of held to maturity investment securities -- (300,000)
Maturity of held to maturity investment securities 2,000,000 2,900,000
Acquisition of fixed assets (2,052) (101,778)
Proceeds from sale of real estate acquired in settlement
of loans -- 8,652
----------- -----------
NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES 2,170,512 3,077,131
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in deposits 225,660 (362,354)
Net increase (decrease) in escrow accounts 75,104 69,315
Proceeds from FHLB advance 6,000,000 --
Repayments of FHLB advance (7,004,000) (696,000)
Purchase of treasury stock (563,525) (302,844)
----------- -----------
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES (1,266,761) (1,291,883)
----------- -----------
</TABLE>
Page 3
<PAGE>
Consolidated Statements of Cash Flow (Continued)
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 1,201,114 2,029,731
BEGINNING CASH AND CASH EQUIVALENTS 522,829 3,307,419
---------- ----------
ENDING CASH AND CASH EQUIVALENTS $1,723,943 $5,337,150
========== ==========
SUPPLEMENTAL DISCLOSURES Cash paid for:
Interest on deposits and advances $ 962,772 $ 913,239
Income taxes $ 127,703 $ 220,788
Page 4
<PAGE>
GUTHRIE SAVINGS, INC.
Notes to Consolidated Financial Statements
(Unaudited)
1. Basis of Presentation
The accompanying unaudited financial statements were prepared in
accordance with the instructions for Form 10-QSB and, accordingly, do
not include all information and disclosures necessary to present
financial condition, results of operations and cash flows of Guthrie
Savings, Inc. (the "Company") and its wholly-owned subsidiary, Guthrie
Federal Savings Bank (the "Bank") in conformity with generally accepted
accounting principles. However, all normal recurring adjustments have
been made which, in the opinion of management; are necessary for the
fair presentation of the financial statements.
The results of operation for the six month period ended September 30,
1998 are not necessarily indicative of the results which may be
expected for the year ending March 30, 1999.
2. Mutual - To - Stock Conversion
On February 8, 1994, the Board of Directors of the Bank adopted a Plan
of Conversion to convert from a state chartered mutual savings and loan
association to a federally chartered stock savings bank with the
concurrent formation of Guthrie Savings, Inc. to act as a holding
company of the Bank (the "Conversion").
At the date of conversion, October 11, 1994, the Company completed the
sale of 515,125 shares of common stock, $.01 par value, through
concurrent subscription and community offerings at $10.00 per share.
Included in the total shares outstanding are 41,210 shares which were
purchased by the Bank's ESOP at $10.00 per share. Net proceeds from the
conversion, after recognizing conversion expenses and underwriting
costs of $382,975 were $4,768,275. From the net proceeds, the company
used $2,384,138 to purchase all of the capital stock of the Bank and
$412,100 to fund the purchase of 41,210 shares of the company stock by
the ESOP.
Subsequent to the conversion, neither the Bank nor the Company may
declare or pay cash dividends on any of their shares of common stock if
the effect would be to reduce stockholders' equity below applicable
regulatory capital requirements or if such declaration and payment
would otherwise violate regulatory requirements. Additionally, the Bank
may not declare or pay a cash dividend to the Company if the effect
would cause the net worth of the Bank to be reduced below the amount
required for the liquidation account (amounting to $3,410,000 as of
date of conversion).
.
Page 5
<PAGE>
3. Investment Securities
A summary of the Bank's investment securities as of March 30, 1998 and
September 30, 1998 is as follows:
Carrying Value Market Value
--------------------------- --------------
March 31, September 30, September 30,
1998 1998 1998
----------- ----------- -----------
Held-to-maturity:
Bonds, notes and debentures:
Government Agency Securities $ 3,900,000 $ 1,300,000 $ 1,308,954
----------- ----------- -----------
Total held-to-maturity $ 3,900,000 $ 1,300,000 $ 1,308,954
----------- ----------- -----------
Available-for-sale:
Debt securities:
Government Agency Securities $ 1,500,000 $ 1,500,000 $ 1,508,834
Net unrealized gain (loss) (5,549) 8,834 -
----------- ----------- -----------
$ 1,494,451 $ 1,508,834 $ 1,508,834
----------- ----------- -----------
Equity securities:
Stock in Federal Home Loan Bank 680,300 706,100 706,100
----------- ----------- -----------
680,300 706,100 706,100
----------- ----------- -----------
Total available-for-sale $ 2,174,751 $ 2,214,934 $ 2,214,934
----------- ----------- -----------
4. Mortgage-Backed Securities
All of the Bank's mortgage-backed securities are classified as
held-to-maturity. A summary of the Bank's mortgage-backed securities as
of March 30, 1998 and September 30, 1998 is as follows:
<TABLE>
<CAPTION>
Carrying Value Market Value
----------------------------- ------------
March 31, September 30, September 30,
1998 1998 1998
------------ ------------ ------------
<S> <C> <C> <C>
Mortgage-Backed Securities(Held-to-Maturity):
GNMA-ARM's $ 2,875,329 $ 2,468,225 $ 2,505,249
FNMA-ARM's 1,302,822 1,196,146 1,222,732
FHLMC-ARM's 1,216,788 1,115,190 1,123,206
FHLMC-fixed rate 1,257,818 1,122,232 1,167,198
GNMA-fixed rate 310,058 211,285 221,610
FNMA-fixed rate 551,302 1,395,765 1,423,864
Collateralized mortgage obligation
-Government Agency 4,989,740 4,849,561 4,963,871
------------ ------------ ------------
12,503,857 12,358,404 12,627,730
Unamortized premiums 119,158 119,100
Unearned discounts (7,853) (6,915) --
------------ ------------ ------------
Total Mortgage-Backed Securities
(Held-to-Maturity) $ 12,615,162 $ 12,470,589 $ 12,627,730
============ ============ ============
</TABLE>
Page 6
<PAGE>
5. Loans Receivable, Net
A summary of the Bank's loans receivable at March 30, 1998 and
September 30, 1998 is as follows:
March 31, September 30,
1998 1998
------------- -------------
Mortgage loans:
Secured by one to four family residences $ 18,758,433 $ 18,237,782
Secured by other properties 1,763,895 1,878,540
Construction loans 2,097,800 2,205,400
Other 727,864 1,138,690
------------ ------------
23,347,992 23,460,412
Less:
Unearned discounts and loan fees (72,674) (65,938)
Undisbursed loan proceeds (1,092,005) (1,629,019)
Allowance for loan losses (273,254) (276,657)
------------ ------------
Total mortgage loans 21,910,059 21,488,798
------------ ------------
Consumer and other loans:
Loans on deposits 560,014 376,599
Home equity and second mortgage 1,267,008 1,235,736
Other 1,923,108 2,021,012
------------ ------------
3,750,130 3,633,347
Less:
Undisbursed loan proceeds (6,770) --
Allowance for loan losses (79,982) (71,947)
------------ ------------
Total consumer and other loans 3,663,378 3,561,400
------------ ------------
Net Loans Receivable $ 25,573,437 $ 25,050,198
============ ============
A summary of the Bank's allowance for loan losses for the periods
indicated is as follows:
Three Months Ended Six Months Ended
September 30, September 30,
---------------------- ----------------------
1997 1998 1997 1998
--------- --------- --------- ---------
Balance, beginning $ 375,099 $ 346,839 $ 376,692 $ 353,236
Provision charged
to operations 439 (57) 1,313 4,264
Loans charged off,
net of recoveries (7,821) 1,823 (10,288) (8,895)
--------- --------- --------- ---------
$ 367,717 $ 348,605 $ 367,717 $ 348,605
========= ========= ========= =========
Page 7
<PAGE>
6. 7.Real Estate Owned or in Judgement and Other Repossessed Property:
March 31, September 30,
1998 1998
------- ------
Real estate acquired by foreclosure $10,500 $ --
Other repossed assets -- --
Allowance for loss -- --
------- ------
Total $10,500 $ --
======= ======
7. Financial Instruments With Off Balance-Sheet Risk/Commitments
The bank is a party to financial instruments with off-balance-sheet
risk in the normal course of business to meet the financial needs of
its customers and to reduce its own exposure to fluctuations in
interest rates. These financial instruments include commitments to
extend credit and commitments to sell investments. These instruments
involve, to varying degrees, elements of credit and interest rate risk
in excess of the amount recognized in the Statement of Financial
Condition. The contract or notional amounts of those instruments
reflect the extent of involvement the Bank has in particular classes of
financial instruments.
The Bank's exposure to credit loss in the event of non-performance by
the other party to the financial instrument for loan commitments is
represented by the contractual notional amount of those instruments.
The Bank uses the same credit policies in making commitments as it does
for on-balance-sheet instruments.
At September 30, 1998, the Bank had outstanding commitments to fund
real estate loans of $494,000. Of the commitments outstanding September
30, 1998, $35,000 was committed to fund one adjustable rate loan at
6.25%. The balance of the commitments outstanding September 30, 1998,
$459,000 was to fund four fixed rate loans held-for-sale.
8. Earnings Per Share
Basic earnings per share is computed by dividing income available to
common stockholders by the weighted-average number of common shares
outstanding for the period. Diluted earnings per share reflect the
potential dilution that could occur if securities or other contracts to
issue common stock (potential common stock) were exercised or converted
to common stock. For the periods presented potential common stock
includes outstanding stock options and non-vested stock awarded under
the Management Stock Bonus Plan.
Page 8
<PAGE>
Guthrie Savings, Inc.
Part I - Financial Information
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations
Guthrie Savings, Inc. (the Company) may from time to time make written
or oral "forward-looking statements", including statements contained in the
Company's filings with the Securities and Exchange Commission (including this
report on Form 10-QSB), in its reports to stockholders and in other
communications by the Company, which are made in good faith by the Company
pursuant to the "safe harbor" provisions of the Private Securities Litigation
Reform Act of 1995.
These forward-looking statements involve risks and uncertainties, such
as statements of the Company's plans, objectives, expectations, estimates and
intentions, that are subject to change based on various important factors (some
of which are beyond the Company's control). The following factors, among others,
could cause the Company's financial performance to differ materially from the
plans, objectives, expectations, estimates and intentions expressed in
forward-looking statements: the strength of the United States economy in general
and the strength of the local economies in which the Company conducts
operations; the effects of, and changes in, trade, monetary and fiscal policies
and laws, including interest rate policies of the Board of Governors of the
Federal Reserve System, inflation, interest rate and market and monetary
fluctuations; the timely development of and acceptance of new products and
services of the company and the perceived overall value of these products and
services by users, including the features, pricing and quality compared to
competitors' products and services; the willingness of users to substitute
competitors' products and services for the Company's products and services; the
success of the Company in gaining regulatory approval of its products and
services, when required; the impact of changes in financial services' laws and
regulations (including laws concerning taxes, banking, securities and
insurance); technological changes, acquisitions; changes in consumer spending
and saving habits; and the success of the Company at managing the risks
described above involved in the foregoing.
The Company cautions that these important factors are not exclusive.
The Company does not undertake to update any forward-looking statement, whether
written or oral, that may be made from time to time by on behalf of the Company.
General:
Guthrie Savings, Inc. (the "Company") was organized in May 1994 as the
holding company for Guthrie Federal Savings Bank (the "Bank"). The Company
issued its common stock in a Subscription and Community Offering in connection
with the conversion of Guthrie Federal Savings Bank from a federally chartered
mutual savings and loan association to a federally chartered stock savings bank
and the issuance of all of the Bank's outstanding capital stock to the Company.
The Offering closed on October 11, 1994 with the issuance of 515,125 shares of
common stock in Guthrie Savings, Inc.
Apart from the operations of the Bank, the Company did not engage in
any significant operations during the quarter ended September 30, 1998. The Bank
is primarily engaged in the business of accepting deposits from the general
public and using these funds to originate traditional real estate loans on
one-to-four family dwellings along with consumer loans. When deposit inflows
exceeds loan demand, the Bank will also purchase mortgage-backed securities and
investment securities.
Management Strategy:
Management's strategy has been to enhance earnings and profitability
and increase capital while maintaining asset quality. The Bank's lending
strategy has historically focused on the origination of traditional one-to-four
family mortgage loans with the primary emphasis on single family residences in
the Logan County area. Its secondary focus has been on consumer loans, second
mortgage loans and deposit loans and when available funds exceed loan demand,
the purchase of mortgage-backed securities and investment securities. This
focus, along with the adherence to underwriting standards, is designed to reduce
the risk of loss on the loan portfolio. The lack of diversification in its loan
portfolio structure does increase the Bank's portfolio concentration risk by
making the value of the portfolio more susceptible to declines in real estate
values in its market area. Management has made an effort to mitigate this risk
through the acquisition of mortgage-backed securities.
Page 9
<PAGE>
Results of Operations: Comparison of the three months ended September 30, 1997
and 1998 and the six months ended September 30, 1997 and 1998.
Net income decreased $20,454 or 15.81% from $129,341 for the three
months ended September 30, 1997 to $108,887 for the three months ended September
30, 1998. This decrease was due to a combination of factors that include, called
investments, paid off borrowed money, and an increase in data expenses
attributable to Year 2000 costs.
Net income decreased $43,159 or 16.61% from $259,856 for the six months
ended September 30, 1997 to $216,697 for the six months ended September 30,
1998. This decrease is due to the same combination of factors as stated for the
above three-month period.
Net interest income before provision for losses on loans, for the three
months ended September 30, 1998 decreased $5,750 or 1.28% compared to the three
months ended September 30, 1997, from $447,593 to $441,843. This decrease was
mainly due to a decrease in interest on investment securities offset by a
decrease in interest on borrowed money and an increase in interest income on
loans. Interest income on investments and mortgage-backed securities decreased
$51,231 or 13.70% due to securities maturing or being called. This decrease in
investment interest income was offset by a decrease in interest expense on
borrowed money of $25,160. Borrowings were paid down as securities matured or
were called. Interest income on loans increased $20,518 or 3.70% for the quarter
ended September 30, 1998 compared to the quarter ended September 30, 1997 due to
an increase in loan originations.
Net interest income before provision for losses on loans, for the six
months ended September 30, 1998 compared to the six months ended September 30,
1997 remained fairly constant with a slight decrease of $663. Interest income
for the six months ended September 30, 1998 compared to the six months ended
September 30, 1997 decreased $54,383 or 2.92%. This decrease was due to a
decrease in investment interest income, due to matured and called securities,
offset by an increase in loan interest income. Investment interest income
decreased $120,297 while interest on loans increased $65,914. The other
contributing factor to the slight decrease in net interest income for the
six-month period is the decrease in interest expense on borrowed money of
$60,741. This decrease is attributable to borrowed money being repaid as
investment securities matured or paid off. There was an increase in interest on
deposits of $7,021; this increase was due to an increase in deposit balances.
Provision for loan losses decreased from $439 for the three months
ended September 30, 1997 to $(57) for the three months ended September 30, 1998.
This decrease was based on management's evaluation of the allowance for loan
losses.
The provision for losses on loans increased for the six months ended
September 30, 1998 $2,951 or 224.75% from $1,313 for the six months ended
September 30, 1997 to $4,264 for the six months ended September 30, 1998. This
increase was based on management's evaluation of the adequacy of the allowance
for loan losses.
Non-interest income decreased $7,563 or 13.44% from $56,292 for the
three months ended September 30, 1997 to $48,729 for the three months ended
September 30, 1998. This decrease was due to a decrease in service charges and
late fees of $1,337 during the three months ended September 30, 1998 compared to
the three months ended September 30, 1997. There was also a decrease in gain
from real estate operations of $2,233 from $769 for the three months ended
September 30, 1997 to ($1,464) for the same period ended September 30, 1998.
This decrease is due in most part to the loss on sale of a piece of real estate
owned property in the September 30, 1998 period. Other income for the three
months ended September 30, 1997 compared to the three months ended September 30,
1998 decreased $3,993. The decrease was mainly due to an Internal Revenue
Service refund of interest, in the amount $2,541, that occurred in the
three-month period ended September 30, 1997.
Non-interest income for the six-month period ended September 30, 1998
was down $13,130 or 11.85% from $110,797 for the six months ended September 30,
1997 to $97,667 for the six-months ended September 30, 1998. This decrease was
due to a decrease in service charges and late fees of $2,733 during the
six-months ended September 30, 1998 compared to the six-months ended September
30, 1997. There was also a decrease in gain from real estate operations of
$3,276 from $3,965 for the six-months ended September 30, 1997 to $689 for the
same period ended September 30, 1998. Again this is mostly due to the loss on
sale of a piece of real estate owned property. Other income for the six months
ended September 30, 1997 compared to the six-months ended September 30, 1998
decreased $7,121. This was the result of refunds
Page 10
<PAGE>
on credit life insurance due to early pay-off of consumer loans during the
six-month period ended September 30, 1998. Also attributable was the interest on
the Internal Revenue Service refund for the six-month period ended September 30,
1997.
Non-interest expense increased $6,537 or 2.12% from $308,205 for the
three months ended September 30, 1997 to $314,742 for the three months ended
September 30, 1998. The primary reason for this increase is due to increased
data processing fees of $4,972 due to new equipment support charges from the
data center. Compensation and related expense are up $6,047, due to increased
costs of medical insurance, ESOP related expenses, and employee training
expenses. Professional fees for the three months ended September 30, 1998
compared to the three months ended September 30, 1997 decreased $3,478,
attributed to year end reporting costs being billed and paid in the June quarter
of the current year.
Non-interest expense for the six months ended September 30, 1998
compared to the six months ended September 30, 1997 increased $39,065 or 6.48%
from $603,210 to $642,275. This increase is mainly attributed to an increase in
professional fees of $20,877 or 30.88%. The increase in professional fees is due
to consultations dealing with Oklahoma Tax Commission audit and a business plan
analysis. Compensation and related expenses are up $10,275 for the six-month
period; reasons are the same as for the related three-month period above. Data
processing costs are up $4,014 again due to the increased new equipment support
charges.
Income tax expense increased $1,100 or 1.67% from $65,900 for the three
months ended September 30, 1997 to $67,000 for the same period ended September
30, 1998. This increase is due to the anticipated use of all the state tax loss
carryforward; therefore for the current year a nominal percentage has been added
for a state tax accrual. Income tax expense decreased $12,650 or 8.68%, from
$145,750 for the six months ended September 30, 1997 to $133,100 for the six
months ended September 30, 1998, due to lower pre-tax income.
Earnings Per Share:
Effective with the quarter ended December 30, 1997, the Company adopted
the provisions of Statement of Financial Accounting Standards No. 128, Earnings
per Share. The Statement is to be applied to financial statements issued for
periods ending after December 15, 1997, including interim periods; earlier
application is not permitted. The Statement requires restatement of all
prior-period earnings per share (EPS) data presented.
FAS No. 128 simplifies the standards for computing EPS and makes them
comparable to international EPS standards. It replaces the presentation of
primary EPS with a presentation of basic EPS. It also requires presentation of
basic and diluted EPS on the face of the income statement for all entities with
complex capital structures. Basic EPS excluded dilution and is computed by
dividing income available to common stockholders by the weighted-average number
of common shares outstanding for the period. Diluted EPS reflects the potential
dilution that could occur if securities or other contracts to issue common stock
were exercised or converted into common stock or resulted in the issuance of
common stock that then shared in the earnings of the company. Diluted EPS is
computed similarly to the previously presented fully diluted earnings per share.
Year 2000 Issue
A great deal of information has been dissemated about the global
computer crash that may occur in the year 2000. Many computer programs that can
only distinguish the final two digits of the year entered (a common programming
practice in earlier years) are expected to read entries for the year 2000 as the
year 1900 and compute payment, interest or delinquency. Rapid and accurate data
processing is essential to the operation of the Bank. Data processing is also
essential to most other financial institutions and many other companies.
The most significant data processing applications of the Bank that
could be affected by this problem are provided by a third party service bureau.
The Bank has developed a plan to evaluate and test critical systems as they
relate to the year 2000 issues and the Bank's service center. The Bank is
evaluating their internal data processing applications and is in the process of
updating all computer terminals and installing a network system. The Bank has
estimated the cost of addressing the Year 2000 issue to be approximately
$100,000, consisting of $60,000 for new bank computer equipment, $30,000
relating to service bureau fees and approximately $10,000 for various other
training and consulting fees. As of September 30, 1998, the Bank has expended
$37,000 for upgraded computer equipment. This expenditure is all capitalized and
will be depreciated over a three year period. Data processing costs of $5,400
associated with Year 2000 expenses have been expensed as of September
Page 11
<PAGE>
30, 1998 and will continue for an eighteen month period through the end of 1999.
Expenses relating to training costs for the Year 2000 have been $3,500 as of
September 30, 1998. The bank's data service center currently has a target date
of not later than December 31, 1998 for external and internal testing of
modifications to critical systems. This testing is to include testing of
interfaces between the Bank computer network, installed in October 1998, and the
data service center. If there is a problem with the service center or the Bank
relating to the year 2000 issue the Bank would likely experience significant
data processing delays, mistakes or failures. These delays, mistakes or failures
could have a significant adverse impact on the financial condition and results
of operation of the Bank.
Liquidity and Capital Resources:
The Bank is required under applicable federal regulations to maintain
specified levels of "liquid" investments in qualifying types of U. S.
Government, federal agency and other investments having maturities of five years
or less. Current Office of Thrift Supervision ("OTS") regulations require that
the bank maintain liquid assets of not less than 4% of its average daily balance
of net withdrawable deposit accounts and borrowings payable in one year or less.
The Bank is in compliance with all liquidity ratios as of September 30, 1998.
Management manages its liquidity ratio to meet its funding needs for deposit
outflows, loan principal disbursements, operating expenses, and disbursements of
payments collected from borrowers for taxes and insurance. The Bank also manages
its liquidity ratio to meet its asset/liability management objectives.
The Bank's primary sources of funds are deposits, amortization and
prepayment of loans and mortgage-backed securities, maturities of investment
securities and funds provided by operations. In addition the Bank may borrow
funds from time to time from the Federal Home Loan Bank of Topeka. At September
30, 1998 the Bank had $0 borrowed on its line of credit from the Federal Home
Loan Bank. The available line of credit currently is set at $3,000,000 with an
adjustable interest rate. The Bank draws against the line to met current
liquidity needs. Besides the line of credit the Bank has $4,500,000 in
adjustable rate advances at the Federal Home Loan Bank of Topeka outstanding at
September 30, 1998.
Scheduled loan repayments and maturing investment securities are a
relatively predictable source of funds. However, savings deposit flows and
prepayments of loans and mortgage-backed securities are influenced significantly
by changes in market interest rates, economic conditions and competition.
Management strives to manage the pricing of its deposits to maintain the
required projected cash needs. In some instances though, advances and lines of
credit provide lower incremental costs of funds than pricing deposits to attract
the new funds.
The Bank invests its excess funds in overnight deposits with the
Federal Home Loan Bank of Topeka, which generally provides liquidity to meet
lending requirements and savings withdrawal funding requirements. When
warranted, cash in excess of immediate funding needs is invested into
longer-term investments and mortgage-backed securities which typically earn a
higher yield than overnight deposits, some of which may also qualify as liquid
investments under current OTS regulations. At September 30, 1998 cash and cash
equivalents were $5,337,150 up from $3,307,419 at March 31, 1998. The primary
reason for this increase is due to investment securities and mortgage backed
securities being called in. These excess funds are being used to fund new loan
originations and pay off maturing advances.
Page 12
<PAGE>
The Bank is required to maintain specified amounts of capital pursuant
to the Financial Institutions Reform, Recovery and Enforcement Act of 1989
("FIRREA") and regulations promulgated by OTS thereunder. The capital standards
generally require the maintenance of regulatory capital sufficient to meet a
tangible capital requirement, a core capital requirement, and a risk-based
capital requirement. These standards require financial institutions to have
minimum regulatory capital equal to 2.0% of tangible assets; minimum core
capital equal to 4.0% of adjusted tangible assets; and risk-based capital equal
to 8.0% of risk-based assets. At September 30, 1998 the Bank's capital
requirements and actual capital under the OTS regulations are as follows:
Amount Percent
(thousands) of Assets
----------- ---------
Tangible capital:
Actual 6,671 14.18%
Required 941 2.00%
---------- ------
Excess 5,730 12.18%
---------- ------
Core capital:
Actual 6,671 14.18%
Required 1,882 4.00%
---------- ------
Excess 4,789 10.18%
---------- ------
Risk-based capital:
Actual 6,907 32.79%
Required 1,685 8.00%
---------- ------
Excess 5,222 24.79%
---------- ------
Page 13
<PAGE>
GUTHRIE SAVINGS, INC.
Part II - Other Information
Item 1. Legal Proceedings
Not applicable
Item 2. Changes in Securities
Not applicable
Item 3. Defaults upon Senior Securities
Not applicable
Item 4. Submission of Matters to a Vote of Security Holders
The annual meeting was held July 15, 1998, the items submitted to a
vote of the stockholders and the results of this vote were presented
in the June 30, 1998 10-QSB.
Item 5. Other Information
The Company is currently protesting a notice of additional income tax
due to the State of Oklahoma relating to the taxation of interest
received on certain U.S. Government Securities for the tax years 1994,
1995 and 1996. Management of the Company believes its protest is with
merit; however, if the Company is unsuccessful in its protest the
additional expense to the Company is estimated to be approximately
$80,000.
Item 6. (a) Exhibit regarding computation of Earnings Per Share Included in
exhibit 11 is detail on computation of earnings per share.
Item 6. (b) Reports on Form 8 - K
Form 8-K was filed September 16, 1998 (items 5 and 7). The report
stated that the Registrant announced that its Board of Directors had
declared a special cash dividend of $.50 per share to stockholders of
record as of October 5, 1998. A press release was included as Exhibit
99.
14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GUTHRIE SAVINGS, INC.
Date November 12, 1998 By /s/William L. Cunningham
-------------------- --------------------------------------------
William L. Cunningham
President and Chief Executive Officer
(Duly Authorized Representative)
Date November 12, 1998 By /s/Kimberly D. Walker
-------------------- --------------------------------------------
Kimberly D. Walker
Treasurer
(Principal Financial and Accounting Officer)
15
EXHIBIT 11
<PAGE>
EXHIBIT 11
STATEMENT REGARDING COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
September 30, September 30,
---------------------- ----------------------
1997 1998 1997 1998
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Computation Basic Earnings Per Share:
Weighted average common shares outstanding:
Average share issued 515,125 515,125 515,125 515,125
Less: Average unallocated ESOP shares (30,908) (26,787) (30,908) (26,787)
Less: Unearned MSBP shares (9,784) (6,299) (9,982) (6,710)
Less: Average Treasury shares (97,668) (104,575) (90,817) (101,535)
--------- --------- --------- ---------
Weighted average shares outstanding 376,765 377,464 383,419 380,093
--------- --------- --------- ---------
Computation Diluted Earnings Per Share:
Weighted average shares
Outstanding (per above basic EPS) 376,765 377,464 383,419 380,093
Plus: dilutive effect of MSBP shares 1,517 1,285 1,475 1,286
Plus: dilutive effect of Stock options 10,207 13,470 9,761 12,699
--------- --------- --------- ---------
Diluted weighted average shares outstanding 388,488 392,219 394,655 394,078
========= ========= ========= =========
Net earnings $ 129,341 $ 108,887 $ 259,856 $ 216,697
========= ========= ========= =========
Earnings per shares:
Basic $ 0.34 $ 0.29 $ 0.68 $ 0.57
========= ========= ========= =========
Diluted $ 0.33 $ 0.28 $ 0.66 $ 0.55
========= ========= ========= =========
</TABLE>
Beginning with the completed stock offering date of October 11, 1994, the
Company accounts for the 41,210 shares acquired by the Employee Stock Ownership
Plan ("ESOP") in accordance with Statement of Position 93.6. In accordance with
this statement, shares controlled by the ESOP are not considered in the weighted
average shares outstanding until the shares are committed for allocation.
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION DERIVED FROM THE
QUARTERLY REPORT ON FORM 10-QSB AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL INFORMATION.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> SEP-30-1998
<CASH> 383
<INT-BEARING-DEPOSITS> 4,955
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 2,215
<INVESTMENTS-CARRYING> 13,771
<INVESTMENTS-MARKET> 13,937
<LOANS> 25,398
<ALLOWANCE> 349
<TOTAL-ASSETS> 47,521
<DEPOSITS> 35,180
<SHORT-TERM> 1,500
<LIABILITIES-OTHER> 565
<LONG-TERM> 3,000
0
0
<COMMON> 5
<OTHER-SE> 7,272
<TOTAL-LIABILITIES-AND-EQUITY> 47,521
<INTEREST-LOAN> 1,153
<INTEREST-INVEST> 653
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 1,807
<INTEREST-DEPOSIT> 773
<INTEREST-EXPENSE> 908
<INTEREST-INCOME-NET> 899
<LOAN-LOSSES> 4
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 642
<INCOME-PRETAX> 350
<INCOME-PRE-EXTRAORDINARY> 350
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 217
<EPS-PRIMARY> .57
<EPS-DILUTED> .55
<YIELD-ACTUAL> 3.38
<LOANS-NON> 365
<LOANS-PAST> 0
<LOANS-TROUBLED> 857
<LOANS-PROBLEM> 843
<ALLOWANCE-OPEN> 353
<CHARGE-OFFS> (8)
<RECOVERIES> 4
<ALLOWANCE-CLOSE> 349
<ALLOWANCE-DOMESTIC> 349
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 236
</TABLE>
