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 June 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 August 1, 1998:
$.01 par value common stock 414,357 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 31, 1998 and
June 30, 1998 (unaudited) 1
Statements of Income for the Three Months Ended
June 30, 1997 and 1998 (unaudited) 2
Statement of Cash Flows for the Three Months
Ended June 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 9-14
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 15
Item 2. Changes in Securities 15
Item 3. Defaults in Senior Securities 15
Item 4. Submission of matters to a vote of security holders 15
Item 5. Other Information 15
Item 6(a). Exhibits 16
Item 6(b). Reports on Form 8-K 16
SIGNATURES 17
<PAGE>
GUTHRIE SAVINGS, INC.
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
Consolidated Statements of Financial Condition
<TABLE>
<CAPTION>
June 30,
March 31, 1998
ASSETS 1998 (unaudited)
------------ ------------
<S> <C> <C>
Cash and cash equivalents
Interest bearing $ 2,995,502 $ 4,800,940
Non-interest bearing 311,917 385,191
Held-to-maturity investment securities 3,900,000 1,800,000
Available-for-sale investment securities 2,174,751 2,190,415
Mortgage-backed securities held to maturity 12,615,162 12,643,319
Loans receivable, net 25,573,437 25,955,531
Loans held-for-sale 81,757 0
Accrued income receivable 262,853 257,326
Real estate owned and other
repossessed property, net 10,500 10,500
Office properties and equipment, net 569,093 615,757
Prepaid expenses and other assets 131,926 109,953
------------ ------------
$ 48,626,898 $ 48,768,932
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Deposits $ 35,537,831 $ 35,598,485
FHLB line of credit and advances 5,196,000 5,196,000
Advances from borrowers for taxes and insurance 48,988 80,765
Deferred income 50,824 48,656
Accrued expenses and other liabilities 109,081 60,335
Income taxes
Deferred 121,206 122,330
Current 26,840 63,489
------------ ------------
41,090,770 41,170,060
------------ ------------
Stockholders' Equity
Preferred stock, $.01 par value; 1,000,000
shares authorized, no shares outstanding 0 0
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 4,649,363
Treasury Stock, at cost (97,668 shares at March 31,1998
and 100,768 shares at June 30, 1998) (1,447,775) (1,505,319)
Unamortized stock acquired by Employee Stock Ownership Plan (267,865) (267,865)
Unamortized stock acquired by Management Stock Bonus Plan (103,490) (92,852)
Net unrealized gain (loss) on available-for-sale securities (3,443) (1,603)
------------ ------------
Total Stockholders' Equity 7,536,128 7,598,872
------------ ------------
$ 48,626,898 $ 48,768,932
============ ============
</TABLE>
Page 1
<PAGE>
GUTHRIE SAVINGS, INC.
Consolidated Statements of Income
<TABLE>
<CAPTION>
Three Months ended
June 30,
-----------------------
1997 1998
---------- ----------
(Unaudited) (Unaudited)
<S> <C> <C>
INTEREST INCOME
Interest on loans $533,632 $579,028
Interest and dividends
on investment securities 182,835 121,782
Interest on mortgage-
backed securities 216,640 208,628
-------- --------
Total interest income 933,107 909,438
-------- --------
INTEREST EXPENSE
Deposits 378,382 385,206
Borrowed money 102,986 67,405
-------- --------
Total interest expense 481,368 452,611
-------- --------
Net interest income 451,739 456,827
PROVISION FOR LOSSES
ON LOANS 874 4,321
-------- --------
Net interest income
after provision for loan losses 450,865 452,506
-------- --------
NON-INTEREST INCOME
Service charges and late fees 44,468 43,072
Other income 6,841 3,713
Gain (loss) from real estate operations 3,196 2,153
-------- --------
54,505 48,938
-------- --------
NON-INTEREST EXPENSE
Compensation and related expenses 150,717 154,945
Occupancy expense 12,743 13,757
Professional fees 24,619 48,973
Federal insurance premium 5,437 5,377
Data processing 23,537 22,579
Bank charges 13,592 13,673
Other expense 64,358 68,230
-------- --------
295,003 327,534
-------- --------
Income before income taxes 210,367 173,910
INCOME TAX EXPENSE 79,850 66,100
-------- --------
Net income $130,517 $107,810
======== ========
BASIC:
Earning per share $ .33 $ .28
======== ========
Weighted average common shares
outstanding 390,072 382,721
======== ========
DILUTED:
Earnings per share $ .33 $ .27
======== ========
Weighted average common shares
outstanding 400,821 395,938
======== ========
DIVIDENDS PER SHARE $ -- $ --
======== ========
</TABLE>
Page 2
<PAGE>
GUTHRIE SAVINGS, INC.
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Three Months Ended June 30,
1997 1998
----------- -----------
(Unaudited) (Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 130,517 $ 107,810
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 7,898 6,899
FHLB Stock dividend (10,900) (12,700)
Decrease (increase) in accrued interest receivable (26,497) 5,527
Increase (decrease) in accrued and deferred
income taxes 62,145 36,649
Increase (decrease) in accrued expenses 920 (48,746)
Origination of loans held-for-sale 0 (293,050)
Sale of loans held-for-sale 0 472,858
Gain (loss) on sales of loans held-for-sale 0 (3,047)
Amortization of premiums and discounts
on investments and loans 271 (2,647)
Amortization of deferred gain on sale of real estate owned (3,197) (2,168)
Provision for losses on loans and real estate owned 874 4,321
Amortization related to ESOP and MSBP 10,113 10,638
(Increase) decrease in other assets (8,816) 21,973
----------- -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 163,328 304,317
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Net loan (originations) and principal payments
on loans held for investment (1,004,909) (468,421)
Principal repayments on mortgage-backed securities-
held to maturity 256,869 493,753
Acquisition of mortgage-backed investment securities-
held to maturity 0 (527,940)
Acquisition of held to maturity investment securities 0 (300,000)
Maturity of held to maturity investment securities 0 2,400,000
Acquisition of fixed assets (2,052) (53,563)
----------- -----------
NET CASH PROVIDED (USED)
BY INVESTING ACTIVITIES (750,092) 1,543,829
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in deposits 164,667 56,333
Net increase (decrease) in escrow accounts 37,503 31,777
Proceeds from FHLB advance 3,300,000 0
Repayments of FHLB advance (2,200,000) 0
Purchase of treasury stock (574,029) (57,544)
----------- -----------
NET CASH PROVIDED (USED)
BY FINANCING ACTIVITIES $ 728,141 $ 30,566
----------- -----------
</TABLE>
Page 3
<PAGE>
Consolidated Statements of Cash Flow (Continued)
<TABLE>
<CAPTION>
<S> <C> <C>
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS $ 141,377 $1,878,712
BEGINNING CASH AND CASH EQUIVALENTS 522,829 3,307,419
---------- ----------
ENDING CASH AND CASH EQUIVALENTS $ 664,206 $5,186,131
========== ==========
SUPPLEMENTAL DISCLOSURES Cash paid for:
Interest on deposits and advances $ 477,949 $ 458,581
Income taxes 17,703 73,000
</TABLE>
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 three month period ended June 30, 1998
are not necessarily indicative of the results which may be expected for
the year ending March 31, 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 31, 1998 and
June 30, 1998 is as follows:
<TABLE>
<CAPTION>
Carrying Value
------------------------- Market Value
March 31, June 30, June 30,
1998 1998 1998
----------- ----------- -----------
<S> <C> <C> <C>
Held-to-maturity:
Bonds, notes and debentures:
Government Agency Securities $ 3,900,000 $ 1,800,000 $ 1,802,954
----------- ----------- -----------
Total held-to-maturity $ 3,900,000 $ 1,800,000 $ 1,802,954
=========== =========== ===========
Available-for-sale:
Debt securities:
Government Agency Securities $ 1,500,000 $ 1,500,000 $ 1,497,415
Net unrealized loss (5,549) (2,585) 0
----------- ----------- -----------
1,494,451 1,497,415 1,497,415
----------- ----------- -----------
Equity securities:
Stock in Federal Home Loan Bank 680,300 693,000 693,000
----------- ----------- -----------
680,300 693,000 693,000
----------- ----------- -----------
Total available-for-sale $ 2,174,751 $ 2,190,415 $ 2,190,415
=========== =========== ===========
</TABLE>
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 31, 1998 and June 30, 1998 is as follows:
<TABLE>
<CAPTION>
Carrying Value
--------------------------- Market Value
March 31, June 30, June 30,
1998 1998 1998
------------ ------------ ------------
<S> <C> <C> <C>
Mortgage-Backed Securities (Held-to-Maturity):
GNMA-ARM's $ 2,875,329 $ 2,657,556 $ 2,722,276
FNMA-ARM's 1,302,822 1,287,237 1,313,566
FHLMC-ARM's 1,216,788 1,173,672 1,175,872
FHLMC-fixed rate 1,257,818 1,227,941 1,254,803
GNMA-fixed rate 310,058 224,856 235,229
FNMA-fixed rate 551,302 1,047,602 1,052,461
Collateralized mortgage obligation
-Govt. Agency 4,989,740 4,919,180 5,095,188
------------ ------------ ------------
12,503,857 12,538,044 12,849,395
Unamortized premiums 119,158 113,039
Unearned discounts (7,853) (7,764)
------------ ------------ ------------
Total Mortgage-Backed Securities
(Held-to-Maturity) $ 12,615,162 $ 12,643,319 $ 12,849,395
============ ============ ============
</TABLE>
Page 6
<PAGE>
5. Loan Receivable, Net
A summary of the Bank's loans receivable at March 31, 1998 and June 30,
1998 is as follows:
<TABLE>
<CAPTION>
March 31, June 30,
1998 1998
------------ ------------
<S> <C> <C>
Mortgage loans:
Secured by one to four family residences $ 18,758,433 $ 18,902,730
Secured by other properties 1,763,895 2,359,307
Construction loans 2,097,800 1,359,600
Other 727,864 1,198,666
------------ ------------
23,347,992 23,820,303
Less:
Unearned discounts and loan fees (72,674) (67,282)
Undisbursed loan proceeds (1,092,005) (1,038,101)
Allowance for loan losses (273,254) (276,658)
------------ ------------
Total mortgage loans 21,910,059 22,438,262
------------ ------------
Consumer and other loans:
Loans on deposits 560,014 349,082
Home equity and second mortgage 1,267,008 1,270,231
Other 1,923,108 1,968,137
------------ ------------
3,750,130 3,587,450
Less:
Undisbursed loan proceeds (6,770) 0
Allowances for loan losses (79,982) (70,181)
------------ ------------
Total consumer and other loans 3,663,378 3,517,269
------------ ------------
Net Loans Receivable $ 25,573,437 $ 25,955,531
============ ============
</TABLE>
A summary of the Bank's allowance for loan losses for the periods
indicated is as follows:
<TABLE>
<CAPTION>
Three Months Ended
June 30,
------------------------------
1997 1998
-------- --------
<S> <C> <C>
Balance, beginning $376,692 $353,236
Provision charged
to operations 874 4,321
Loans charged off,
net of recoveries (2,467) (10,718)
-------- --------
$375,099 $346,839
======== ========
</TABLE>
Page 7
<PAGE>
6. Real Estate Owned or in Judgement, Including In-Substance Foreclosures
and Other Repossessed Property:
March 31, June 30,
1998 1998
------- -------
Real estate acquired by foreclosure $10,500 $10,500
Other repossed assets 0 0
Allowance for loss 0 0
------- -------
Total $10,500 $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 June 30, 1998, the Bank had outstanding commitments to fund real
estate loans of $962,100. Of the commitments outstanding June 30, 1998,
$603,000 was committed to fund three new construction loans with rates
of 7 1/2% to 7 3/4%. Commitments for three fixed rate loans amounted to
$203,400 with rates ranging from 7% to 9%. The balance of the
commitments outstanding June 30, 1998, $155,700 was to fund two 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 reflects 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 nonvested 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 June 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.
Page 9
<PAGE>
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 10
<PAGE>
Results of Operations: Comparison of the three months ended June 30, 1997 and
1998.
Net income for the three months ended June 30, 1997 compared to the
three months ended June 30, 1998 decreased $22,707 or 17.40%. This decrease was
due to a combination of factors which include, called investments, paid off
borrowed money, and an increase in expenses attributable to Year 2000 costs..
Net interest income before provision for losses on loans, for the three
months ended June 30, 1998 increased $5,088 or 1.13% compared to the three
months ended June 30, 1997, from $451,739 to $456,827. This increase was mainly
due to an increase in interest on loans offset by the increased cost of
deposits. Interest income on loans increased $45,396 or 8.51% for the quarter
ended June 30, 1998 due to an increase in loan originations. Interest expense on
deposits for the three months ended June 30, 1997 compared to the three months
ended June 30, 1998 increased by $6,824 or 1.80% due to a slight increase in
certificates of deposit. Interest income on investments and mortgage backed
securities decreased $69,065 or 17.29% 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 $35,581. Borrowings were paid down as
securities matured or were called.
Provision for loan losses increased from $874 for the three months
ended June 30, 1997 to $4,321 for the three months ended June 30, 1998. This
increase was based on management's evaluation of the adequacy of the allowance
for loan losses.
Non-interest income decreased $5,567 or 10.21% from $54,505 for the
three months ended June 30, 1997 to $48,938 for the three months ended June 30,
1998. This decrease was due to a decrease in service charges and late fees of
$1,395 during the three months ended June 30, 1998 compared to the three months
ended June 30, 1997. There was also a decrease in gain from real estate
operations of $1,043 from $3,196 for the three months ended June 30, 1997 to
$2,153 for the same period ended June 30, 1998. This decrease was due to lower
amortization of deferred gain on sales of real owned property due to a loan
pay-off in the three months ended June 30, 1997. Other income for the three
months ended June 30, 1997 compared to the three months ended June 30, 1998
decreased $3,128. This was mainly attributable to refunds on credit life
insurance due to early pay-offs of consumer loans.
Non-interest expense increased $32,531 or 11.03% from $295,003 for the
three months ended June 30, 1997 to $327,534 for the three months ended June 30,
1998. The primary reason for the increase in non-interest expense is because of
an increase in professional fees of $24,354 for the three months ended June 30,
1997 compared to the three months ended June 30, 1998 from $24,619 to $48,973.
This is due to year end reporting costs being billed and paid more timely during
the current year. Compensation and related expenses are up $4,228 for the three
months ended June 30, 1997 compared to the three months ended June 30, 1998. Due
to Year 2000 expenses, other expense increased $3,872 or 6.02% for the three
months ended June 30, 1997 compared to the three months ended June 30, 1998 from
$64,358 to $68,230.
Income tax expense decreased $13,750 or 17.22% from $79,850 for the
three months ended June 30, 1997 to $66,100 for the three months ended June 30,
1998, due to lower pre-tax income.
Earnings Per Share:
Effective with the quarter ended December 31, 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
Page 11
<PAGE>
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. 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, to be installed in August 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 June 30, 1998. Management
manages its liquidity ratio to meet its funding needs for deposit outflows, loan
principal disbursements, operating expenses, and
Page 12
<PAGE>
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 June 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 meet current
liquidity needs. Besides the line of credit the Bank has $5,196,000 in
adjustable rate advances at the Federal Home Loan Bank of Topeka outstanding at
June 30, 1998.
These term borrowings from the Federal Home Loan Bank of Topeka are
part of a strategy to increase current income and match the balance sheet
position. Funds from the borrowings have been used to purchase Collateralized
Mortgage Obligations with similar base rates and reprice dates to insure that
the spread on the earnings and cost are in place for the estimated term of the
securities.
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 June 30, 1998 cash and cash
equivalents were $5,186,131 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 13
<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 June 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 $ 6,985 14.32%
Required 975 2.00%
-------- -------
Excess $ 6,010 12.32%
======== =======
Core capital:
Actual $ 6,985 14.32%
Required 1,951 4.00%
-------- -------
Excess $ 5,034 10.32%
======== =======
Risk-based capital:
Actual $ 7,218 33.27%
Required 1,736 8.00%
--------- -------
Excess $ 5,482 25.27%
========= =======
Page 14
<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
At the annual meeting held July 15, 1998, the following items were
submitted to a vote of stockholders:
1. H. Stephen Ochs and Keith Camerer were elected as directors. The
results of the vote are as follows:
Votes for Votes Withheld
--------- --------------
H. Stephen Ochs 355,386 0
Keith Camerer 355,186 200
William L. Cunningham, A.R. Powell, Jr., and James V. Seamans continue
as directors of the Company.
2. Ratification of Regier Carr & Monroe, L.L.P. as the Company's
auditors for the fiscal 1999 year.
Votes for 355,386
Votes against 0
Votes Abstaining 0
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.
Page 15
<PAGE>
Item 6.(a) Exhibit 11-Statement 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
Not applicable
Page 16
<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 August 07, 1998 By /s/ William L. Cunningham
--------------------- -------------------------------------
William L. Cunningham
President and Chief Executive Officer
(Duly Authorized Representative)
Date August 07, 1998 By /s/ Kimberly D. Walker
---------------------- ----------------------
Kimberly D. Walker
Treasurer
(Principal Financial and Accounting Officer)
EXHIBIT 11
<PAGE>
EXHIBIT 11
STATEMENT REGARDING COMPUTATION OF EARNINGS PER SHARE
Three Months Ended
June 30,
-----------------------------
1997 1998
----------- ------------
Computation Basic Earnings Per Share:
Weighted average common shares outstanding:
Average share issued 515,125 515,125
Less:Average unallocated ESOP shares (30,908) (26,787)
Less:Unearned MSBP shares (10,179) (7,122)
Less:Average Treasury shares (83,966) (98,495)
----------- -----------
Weighted average shares outstanding 390,072 382,721
========== ===========
Computation Diluted Earnings Per Share:
Weighted average shares
outstanding (per above basic EPS) 390,072 382,721
Plus:Dilutive effect of MSBP shares 1,434 1,288
Plus:Dilutive effect of Stock options 9,314 11,929
----------- ----------
Diluted weighted average shares outstanding 400,820 395,938
============ ===========
Net earnings $ 130,517 $ 107,810
=========== ==========
Earning per share:
Basic $ .33 $ .28
============= =========
Diluted $ .33 $ .27
============= =========
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> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> JUN-30-1998
<CASH> 385
<INT-BEARING-DEPOSITS> 4,801
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 2,190
<INVESTMENTS-CARRYING> 14,443
<INVESTMENTS-MARKET> 14,652
<LOANS> 26,302
<ALLOWANCE> 347
<TOTAL-ASSETS> 48,769
<DEPOSITS> 35,598
<SHORT-TERM> 2,196
<LIABILITIES-OTHER> 376
<LONG-TERM> 3,000
0
0
<COMMON> 5
<OTHER-SE> 7,594
<TOTAL-LIABILITIES-AND-EQUITY> 48,769
<INTEREST-LOAN> 579
<INTEREST-INVEST> 330
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 909
<INTEREST-DEPOSIT> 385
<INTEREST-EXPENSE> 453
<INTEREST-INCOME-NET> 457
<LOAN-LOSSES> 4
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 328
<INCOME-PRETAX> 174
<INCOME-PRE-EXTRAORDINARY> 174
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 108
<EPS-PRIMARY> .28
<EPS-DILUTED> .27
<YIELD-ACTUAL> 3.24
<LOANS-NON> 434
<LOANS-PAST> 0
<LOANS-TROUBLED> 873
<LOANS-PROBLEM> 916
<ALLOWANCE-OPEN> 353
<CHARGE-OFFS> 7
<RECOVERIES> 1
<ALLOWANCE-CLOSE> 347
<ALLOWANCE-DOMESTIC> 347
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 234
</TABLE>
