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, 2000
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[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number: 0-25808
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GREAT AMERICAN BANCORP, INC.
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Delaware 52-1923366
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State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification Number)
1311 S. Neil St., P.O. Box 1010, Champaign, IL 61824-1010
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(Address of principal executive offices) (Zip Code)
(217) 356-2265
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(Registrant's telephone number, including area code)
At July 31, 2000, the Registrant had 1,076,915 shares of Common Stock
outstanding, for ownership purposes, which excludes 975,835 shares held as
treasury stock.
Table of Contents
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
Condensed Consolidated Income Statements
Condensed Consolidated Statements of Cash Flows
Notes to Condensed Consolidated Financial Statements
Item 2. Management's Discussion and Analysis or
Plan of Operation
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security
Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
Great American Bancorp, Inc. and Subsidiary
Condensed Consolidated Balance Sheets
As of June 30, 2000 and December 31, 1999
(unaudited, in thousands)
June 30, 2000 Dec. 31, 1999
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ASSETS
Cash and due from banks $ 5,047 $ 5,560
Interest-bearing demand deposits 2,864 4,453
--------------------------------
Cash and cash equivalents 7,911 10,013
Investment securities
Available for sale 2,972 2,977
Held to maturity 3,277 3,463
--------------------------------
Total investment securities 6,249 6,440
Loans 131,839 128,431
Allowance for loan losses (823) (703)
--------------------------------
Net loans 131,016 127,728
Premises and equipment 7,043 7,188
Federal Home Loan Bank stock 859 767
Other assets 2,176 2,173
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Total assets $ 155,254 $ 154,309
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LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits
Noninterest bearing $ 9,719 $ 8,565
Interest bearing 113,066 114,280
--------------------------------
Total deposits 122,785 122,845
Federal Home Loan Bank Advances 10,000 8,000
Other liabilities 1,725 1,693
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Total liabilities 134,510 132,538
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Commitments and Contingent Liabilities
(continued)
Great American Bancorp, Inc. and Subsidiary
Condensed Consolidated Balance Sheets (Continued)
As of June 30, 2000 and December 31, 1999
(unaudited, in thousands)
June 30, 2000 Dec. 31, 1999
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STOCKHOLDERS' EQUITY
Preferred stock, $0.01 par value
Authorized and unissued --
1,000,000 shares -- --
Common stock, $0.01 par value
Authorized -- 7,000,000 shares
Issued and outstanding -- 2,052,750 shares 21 21
Additional paid-in-capital 19,996 19,968
Retained earnings -- substantially restricted 16,775 16,521
Accumulated other comprehensive loss (16) (13)
--------------------------------
36,776 36,497
Less:
Treasury stock, at cost - 940,835 and
829,035 shares (15,537) (14,019)
Unallocated employee stock ownership plan
shares - 30,368 and 40,986 shares (304) (410)
Unearned incentive plan shares - 14,153 and
20,626 shares (191) (297)
--------------------------------
(16,032) (14,726)
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Total stockholders' equity 20,744 21,771
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Total liabilities and
stockholders' equity $ 155,254 $ 154,309
================================
See notes to condensed consolidated financial statements.
Great American Bancorp, Inc. and Subsidiary
Condensed Consolidated Income Statements
For the Six Months Ended June 30, 2000 and 1999
(unaudited, in thousands except per share data)
2000 1999
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Interest income:
Loans $ 5,216 $ 5,016
Investment securities
Taxable 226 58
Tax exempt 7 18
Deposits with financial
institutions and other 139 382
--------------------------------
Total interest income 5,588 5,474
--------------------------------
Interest expense:
Deposits 2,449 2,398
Other 217 249
--------------------------------
Total interest expense 2,666 2,647
--------------------------------
Net interest income 2,922 2,827
Provision for loan losses 150 273
--------------------------------
Net interest income after
provision for loan losses 2,772 2,554
--------------------------------
Noninterest income:
Brokerage commissions 95 76
Insurance sales commissions 372 341
Service charges on deposit accounts 273 267
Loan servicing fees 10 9
Other customer fees 72 77
Other income 5 12
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Total noninterest income 827 782
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(continued)
Great American Bancorp, Inc. and Subsidiary
Condensed Consolidated Income Statements (Continued)
For the Six Months Ended June 30, 2000 and 1999
(unaudited, in thousands except share data)
2000 1999
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Noninterest expense:
Salaries and employee benefits 1,512 1,478
Net occupancy expenses 341 304
Equipment expenses 296 211
Data processing fees 40 30
Deposit insurance expense 13 36
Printing and office supplies 135 136
Legal and professional fees 105 172
Directors and committee fees 49 51
Insurance expense 22 25
Marketing and advertising expenses 87 85
Other expenses 182 190
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Total noninterest expense 2,782 2,718
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Income before income tax 817 618
Income tax expense 322 254
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Net income $ 495 $ 364
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Per Share Data:
Earnings
Basic:
Net income $ 0.45 $ 0.30
================================
Average number of shares 1,111,979 1,230,722
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Diluted:
Net income $ 0.44 $ 0.29
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Average number of shares 1,130,405 1,270,685
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Dividends $ 0.22 $ 0.22
================================
See notes to condensed consolidated financial statements.
Great American Bancorp, Inc. and Subsidiary
Condensed Consolidated Income Statements
For the Quarter Ended June 30, 2000 and 1999
(unaudited, in thousands except share data)
2000 1999
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Interest income:
Loans $ 2,626 $ 2,501
Investment securities
Taxable 113 20
Tax exempt 3 10
Deposits with financial
institutions and other 78 186
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Total interest income 2,820 2,717
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Interest expense:
Deposits 1,244 1,193
Other 108 134
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Total interest expense 1,352 1,327
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Net interest income 1,468 1,390
Provision for loan losses 75 150
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Net interest income after
provision for loan losses 1,393 1,240
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Noninterest income:
Brokerage commissions 45 51
Insurance sales commissions 155 131
Service charges on deposit accounts 139 136
Loan servicing fees 6 4
Other customer fees 38 42
Other income 5 12
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Total noninterest income 388 376
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(Continued)
Great American Bancorp, Inc. and Subsidiary
Condensed Consolidated Income Statements (Continued)
For the Quarter Ended June 30, 2000 and 1999
(unaudited, in thousands except share data)
2000 1999
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Noninterest expense:
Salaries and employee benefits 757 738
Net occupancy expenses 179 155
Equipment expenses 150 104
Data processing fees 20 15
Deposit insurance expense 7 18
Printing and office supplies 70 65
Legal and professional fees 54 82
Directors and committee fees 24 25
Insurance expense 11 13
Marketing and advertising expenses 49 45
Other expenses 99 95
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Total noninterest expense 1,420 1,355
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Income before income tax 361 261
Income tax expense 145 109
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Net income $ 216 $ 152
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Per Share Data:
Earnings
Basic:
Net income $ 0.20 $ 0.12
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Average number of shares 1,087,899 1,235,404
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Diluted:
Net income $ 0.20 $ 0.12
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Average number of shares 1,104,494 1,273,221
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Dividends $ 0.11 $ 0.11
================================
See notes to condensed consolidated financial statements.
Great American Bancorp, Inc. and Subsidiary
Condensed Consolidated Statements of Cash Flows
For the Six Months Ended June 30, 2000 and 1999
(unaudited, in thousands)
2000 1999
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Operating Activities:
Net income $ 495 $ 364
Adjustments to reconcile net
income to net cash provided
by operating activities:
Provision for loan losses 150 273
Depreciation and amortization 338 265
Amortization of deferred loan fees (7) (8)
Deferred income tax 47 (44)
Investment securities amortization, net 1 --
Employee stock ownership plan
compensation expense 136 168
Incentive plan expense 104 110
Net change in:
Other assets (71) 40
Other liabilities 45 (320)
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Net cash provided by
operating activities 1,238 848
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Investing Activities:
Purchases of securities available for sale -- (1,000)
Purchases of securities held to maturity -- (3,002)
Proceeds from maturities of securities
held to maturity 100 1,450
Proceeds from maturities of securities
available for sale -- 1,000
Proceeds from principal repayments of
mortgage-backed securities 85 --
Purchase of Federal Home Loan Bank stock (92) (31)
Net change in loans (3,431) (5,156)
Purchase of premises and equipment (172) (90)
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Net cash used by
investing activities (3,510) (6,829)
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(continued)
Great American Bancorp, Inc. and Subsidiary
Condensed Consolidated Statements of Cash Flows (Continued)
For the Six Months Ended June 30, 2000 and 1999
(unaudited, in thousands)
2000 1999
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Financing Activities:
Net change in:
Noninterest-bearing demand, interest-
bearing demand and savings deposits 1,418 147
Certificates of deposit (1,478) (2,238)
Short-term borrowings -- 500
FHLB advances 2,000 --
Cash dividends (252) (252)
Purchase of treasury stock (1,518) (1,043)
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Net cash provided (used) by
financing activities 170 (2,886)
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Net Change in Cash and Cash Equivalents (2,102) (8,867)
Cash and Cash Equivalents, Beginning
of Period 10,013 21,815
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Cash and Cash Equivalents, End of
Period $ 7,911 $ 12,948
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Additional Cash Flows Information
Interest paid $ 2,664 $ 2,399
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Income tax paid $ 240 $ 419
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See notes to condensed consolidated financial statements.
Great American Bancorp, Inc. and Subsidiary
Notes to Condensed Consolidated Financial Statements
1. Background Information
Great American Bancorp, Inc. (the "Company") was incorporated on February 23,
1995 and on June 30, 1995 acquired all of the outstanding shares of common
stock of First Federal Savings Bank of Champaign-Urbana, (the "Bank") upon the
Bank's conversion from a federally chartered mutual savings bank to a
federally chartered stock savings bank. The Company purchased 100% of the
outstanding capital stock of the Bank using 50% of the net proceeds from the
Company's initial stock offering which was completed on June 30, 1995. The
Company began trading on the NASDAQ Stock Market on June 30, 1995 under the
symbol "GTPS".
2. Statement of Information Furnished
The accompanying unaudited consolidated financial statements have been
prepared in accordance with Form 10-QSB instructions and Item 310(b) of
Regulation S-B, and, in the opinion of management, contain all adjustments
necessary to present fairly the financial position as of June 30, 2000 and
December 31, 1999, the results of operations for the six months ended and
three months ended June 30, 2000 and 1999, and the cash flows for the six
months ended June 30, 2000 and 1999. All adjustments to the financial
statements were normal and recurring in nature. These results have been
determined on the basis of generally accepted accounting principles.
Reclassifications of certain amounts in the 1999 financial statements have
been made to conform to the 2000 presentation. The results of operations for
the six months ended June 30, 2000 are not necessarily indicative of the
results to be expected for the entire fiscal year.
The Company adopted Statement of Financial Accounting Standards No. 130,
"Reporting Comprehensive Income," ("SFAS No. 130") in 1998. At June 30, 2000
and June 30, 1999, the amounts to be disclosed by the Company under SFAS No.
130 are considered immaterial and are therefore not shown in the accompanying
financial statements.
The consolidated financial statements are those of the Company and the Bank.
These consolidated financial statements should be read in conjunction with the
audited financial statements and notes thereto included in the Company's 1999
Annual Report to Shareholders.
PART I -- Item 2.
GREAT AMERICAN BANCORP, INC.
Management's Discussion and Analysis
or Plan of Operation
General
The Company is the holding company for the Bank. The Bank operates a wholly
owned subsidiary, Park Avenue Service Corporation ("PASC"). PASC offers full
service brokerage activities through Scout Brokerage Services, Inc., a
subsidiary of United Missouri Bank, and also engages in the sale of fixed-rate
and variable-rate tax deferred annuities. PASC also operates the GTPS
Insurance Agency which offers a variety of insurance products, including life,
health, automobile, and property and casualty insurance.
Forward-Looking Information
In addition to historical information, this 10-QSB may include certain
forward-looking statements based on current management expectations. The
Company's actual results could differ materially from those management
expectations. Factors that could cause future results to vary from current
management expectations include, but are not limited to, general economic
conditions, legislative and regulatory changes, monetary and fiscal policies
of the federal government, changes in tax policies, rates and regulations of
federal, state and local tax authorities, changes in interest rates, deposit
flows, the cost of funds, demand for loan products, demand for financial
services, competition, changes in the quality or composition of the Company's
loan and investment portfolios, changes in accounting principles, policies or
guidelines, and other economic, competitive, governmental and technological
factors affecting the Company's operations, markets, products, services and
prices. Further description of the risks and uncertainties to the business
are included in detail under the caption: Liquidity and Capital Resources.
Financial Condition
The Company's total assets increased from $154.31 million at December 31, 1999
to $155.25 million at June 30, 2000. The increase in total assets was
primarily due to an increase in loans. Net loans increased from $127.73
million at December 31, 1999 to $131.02 million at June 30, 2000. The
increase in loans was due primarily to an increase in residential and
commercial mortgage loans. The loan growth was funded by a decrease in
interest-bearing demand deposits and additional advances from the Federal Home
Loan Bank ("FHLB").
Total deposits decreased $60,000 from $122.85 million at December 31, 1999 to
$122.79 million at June 30, 2000. Noninterest-bearing deposits increased by
$1.15 million, while interest-bearing deposits decreased by $1.21 million
during the first six months of 2000.
FHLB advances increased by $2.00 million from December 31, 1999 to June 30,
2000 due to short-term advances entered into in June 2000. The rate on these
advances was 6.85% and the advances matured in July 2000. Also in July 2000,
the Company borrowed $4.00 million in FHLB advances with $2.00 million
maturing in September 2000 at a rate of 6.90% and $2.00 million maturing in
October at a rate of 6.82%.
Total stockholders' equity decreased $1.03 million, or 4.7%, from $21.77
million at December 31, 1999 to $20.74 million at June 30, 2000. Book value
per outstanding voting share increased from $17.79 at December 31, 1999 to
$18.66 at June 30, 2000. The decrease in stockholders' equity is summarized as
follows (in thousands):
Stockholders' equity, December 31, 1999 $ 21,771
Net income 495
Purchase of treasury stock (1,518)
Dividends declared (241)
Incentive plan shares allocated 104
ESOP shares allocated 136
Increase in unrealized loss on securities
available for sale, net of income tax effect (3)
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Stockholders' equity, June 30, 2000 $ 20,744
======
Results of Operations
Comparison of Six Month Periods Ended June 30, 2000 and 1999
Net income was $495,000 for the six months ended June 30, 2000,
compared to $364,000 for the six months ended June 30, 1999. This
represents a $131,000, or 36.0% increase. Basic earnings per share
were $0.45 for the six months ended June 30, 2000, compared to $0.30
for the six months ended June 30, 1999. Diluted earnings per
share were $0.44 for the first six months in 2000, compared to $0.29 for the
first six months in 1999.
Net income increased during 2000 primarily due to increases in net interest
income and brokerage and insurance sales commissions, and a reduction in the
provision for loan losses.
Net interest income was $2.92 million for the six months ended June 30, 2000,
compared to $2.83 million for the same period in 1999. Interest income was
$5.59 million for the six months ended June 30, 2000, compared to $5.47
million for the same period in 1999, primarily the result of an increase in
interest income on loans as well as an increase in investment securities
income. Interest income on loans during the first six months in 2000 was
$5.22 million, $200,000, or 4.0%, greater than the $5.02 million recorded in
1999.
The increase in interest income on loans was due to higher average total loans
in 2000. Average total loans for the six months ended June 30, 2000 were
$129.70 million, compared to $124.01 million for the same period in 1999, an
increase of $5.69 million, or 4.6%. The majority of the increase in average
total loans was in mortgage loans. Total mortgage loans averaged $109.80
million for the six months ended June 30, 2000, compared to $100.60 million
for the six months ended June 30, 1999, an increase of $9.20 million, or 9.1%.
This growth primarily occurred in one-to-four family and multi-family
residential loans, and in commercial mortgage loans.
Average total commercial loans were $6.92 million for the six months ended
June 30, 2000, compared to $9.11 million for the same period in 1999, a
decrease of $2.19 million, or 24.0%. The decline in average total commercial
loans was due to an $800,000 charge-off recorded in the fourth quarter of 1999
and several smaller payoffs. The $800,000 charged-off related to loans to one
borrower who filed bankruptcy in early 1999. The remaining balance of these
loans is $358,000 and is secured by business assets and guaranteed by the
owner. Repayment of the remaining balance is expected from the sale of
business assets and personal assets of the borrower. Average total consumer
loans were $11.19 million during the six months ended June 30, 2000, an
increase of $300,000, or 2.8%, above the $10.89 million average total balance
during the same period in 1999. The average yield on loans was 8.14% for the
six months ended June 30, 2000, compared to 8.23% for the six months ended
June 30, 1999.
Interest income on investment securities increased from $76,000 for the six
months ended June 30, 1999 to $233,000 for the same period in 2000, due to an
increase in average total investment securities and an increase in the yield
on U.S. Agency securities. Total investment securities, including Federal
Home Loan Bank ("FHLB") stock, averaged $7.10 million for the six months ended
June 30, 2000, compared to $2.85 million for the same period in 1999.
Interest income on deposits with financial institutions and other decreased
from $382,000 for the six months ended June 30, 1999 to $139,000 for the six
months ended June 30, 2000 due to a reduction in balances maintained at other
institutions. The average total balance of deposits with financial
institutions and other decreased from $16.77 million for the six months ended
June 30, 1999 to $5.01 million for the six months ended June 30, 2000, a
decrease of $11.76 million, or 70.13%. The average yield on investment
securities increased from 5.44% for the six months ended June 30, 1999 to
6.60% for the same period in 2000. The average yield on deposits with
financial institutions and other increased from 4.59% for the six months ended
June 30, 1999 to 5.58% for the same period in 2000.
Interest expense increased by $20,000, from $2.65 million for the six months
ended June 30, 1999 to $2.67 million for the same period in 2000. The
increase was mainly attributable to an increase in interest paid on deposits,
which increased $50,000 from $2.40 million for the six months ended June 30,
1999 to $2.45 for the same period in 2000. Average total interest-bearing
deposits increased from $113.69 million in the first six months of 1999 to
$114.14 million during the same period in 2000, an increase of $450,000.
Growth in NOW and IMMA accounts, and in certificates of deposit with
maturities of 18 months, 2 years and 4 years, was offset mainly by declines in
the balances of certificates of deposit with maturities of one year or less.
The average rates on deposits were 4.31% and 4.25% for the six months ended
June 30, 2000 and 1999, respectively. Average borrowings for the six months
ended June 30, 2000 were $8.86 million, compared with $10.01 million for the
six months ended June 30, 1999.
Net interest income as a percent of average interest earning assets was
4.17% for the six months ended June 30, 2000 versus 4.00% for the
same period in 1999. The spread between the yield on interest earning
assets and the rate on interest bearing liabilities was 3.61% and 3.42%
for the six months ended June 30, 2000 and 1999, respectively.
The provision for loan losses was $150,000 for the six months ended June 30,
2000 compared to $273,000 for the six months ended June 30, 1999. The higher
provision in 1999 was due to commercial loans to one borrower becoming
nonperforming in late 1998. The balance of these loans was $1.35 million as
of June 30, 1999. In January 1999, this borrower filed Chapter 11, or
business reorganization, bankruptcy. In the second quarter of 1999, the
reorganization plan changed to a liquidation of assets arrangement. Since
March 31, 1999, the Company has collected $192,000 in principal repayments,
and in the fourth quarter of 1999, charged off $800,000 associated with these
loans. The remaining balance of $358,000 is secured by business assets and
guaranteed by the owner. Repayment of this remaining balance is expected from
the sale of business assets of the borrower and personal assets of the
guarantor.
There were $35,000 in loans charged-off, and $5,000 in recoveries in the first
six months of 2000. There were no loans charged off and $3,000 in recoveries
in the first six months of 1999.
Non-performing loans, which are loans past due 90 days or more and
non-accruing loans, totaled $717,000 at June 30, 2000, compared to $1.60
million at June 30, 1999. Non-performing loans at June 30, 2000 consisted of
two residential mortgage loans totaling $114,000, one multi-family mortgage
loan totaling $243,000, three consumer loans totaling $2,000 and the
commercial loans to one borrower previously discussed totaling $358,000. All
of these loans were past due 90 days or more at June 30, 2000, with the
$358,000 in commercial loans in non-accrual status.
The ratio of the Company's allowance for loan losses to total loans was .62%
at June 30, 2000 and .94% at June 30, 1999. Management assesses the adequacy
of the allowance for loan losses based on evaluating known and inherent risks
in the loan portfolio and upon management's continuing analysis of the factors
underlying the quality of the loan portfolio. While management believes that,
based on information currently available, the allowance for loan losses is
sufficient to cover losses inherent in its loan portfolio at this time, no
assurance can be given that the level of the allowance for loan losses will be
sufficient to cover future possible loan losses incurred by the Company or
that future adjustments to the allowance for loan losses will not be necessary
if economic and other conditions differ substantially from the economic and
other conditions used by management to determine the current level of the
allowance for loan losses. Management may in the future increase the level of
the allowance for loan losses as a percentage of total loans and non-
performing loans in the event it increases the level of commercial real
estate, multifamily, or consumer lending as a percentage of its total loan
portfolio. In addition, various regulatory agencies, as an integral part of
their examination process, periodically review the allowance for loan losses.
Such agencies may require the Company to provide additions to the allowance
based upon judgements different from management.
Noninterest income totaled $827,000 for the six months ended June 30, 2000,
compared to $782,000 for the same period in 1999, an increase of
$45,000, or 5.75%. Insurance sales commissions generated by GTPS Insurance
Agency, which totaled $372,000 for the six months ended June 30, 2000 compared
to $341,000 for the same period in 1999, accounted for the majority of the
increase in noninterest income. Commissions generated by Scout Brokerage
Services, Inc. increased from $76,000 for the six months of 1999 to $95,000
for the first six months in 2000.
Noninterest expense was $2.78 million for the first six months of 2000
compared to $2.72 million for the same period in 1999. Increases in equipment
expenses, salaries and benefits expense, and net occupancy expense were offset
by decreases in legal fees, deposit insurance expense, and other expenses.
Total income taxes increased by $68,000, or 26.8% from $254,000 for the
six months ended June 30, 1999 to $322,000 for the same period in
2000 due to the increase in pretax net income. The effective tax rates for
the six months ended June 30, 2000 and 1999, were 39.4% and 41.1%
respectively.
Results of Operations
Comparison of Three Month Periods Ended June 30, 2000 and 1999
Net income for the three months ended June 30, 2000 was $216,000, an increase
of $64,000, or 42.1%, over the $152,000 recorded for the three months ended
June 30, 1999. Basic earnings per share increased from $0.12 for the three
months ended June 30, 1999 to $0.20 for the same period in 2000, and diluted
earnings per share were $0.12 and $0.20 for the three months ended June 30,
1999 and 2000, respectively.
Net income for the second quarter of 2000 was higher due to an increase in net
interest income. The reduction in the provision for loan losses was primarily
offset by an increase in noninterest expense.
Net interest income was $1.47 million for the quarter ended June 30, 2000 and
$1.39 million for the quarter ended June 30, 1999, an increase of $80,000, or
5.8%. Interest income increased 3.8%, or $100,000, from $2.72 million for the
quarter ended June 30, 1999 to $2.82 million for the second quarter of 2000.
The increase in interest income was derived from increases in interest on
loans and investment securities offset by a decrease in interest on deposits
with financial institutions and other. Interest income on loans increased
$130,000, or 5.2%, from $2.50 million for the quarter ended June 30, 1999 to
$2.63 million for the same quarter in 2000 due primarily to growth in loans.
Average total mortgage loans were $113.02 million for the second quarter of
2000 compared to $105.42 million in the second quarter of 1999, an increase of
$7.60 million, or 7.2%. Average total commercial loans for the three months
ended June 30, 2000 and June 30, 1999 were $6.02 million and $8.93 million,
respectively. This represents a decrease of $2.91 million, or 32.6%. Average
total consumer loans increased $240,000, or 2.2%, from $10.93 million for the
three months ended June 30, 1999 to $11.17 million for the same period in
2000. The average yield on loans increased from 8.08% for the three months
ended June 30, 1999 to 8.16% for the same period in 2000.
Interest income on investment securities increased from $30,000 for the three
months ended June 30, 1999 to $116,000 for the same period in 2000, due to an
increase in average total investments. Average total investments for the
second quarter of 2000 were $7.11 million, up $4.92 million, or 224.7%, from
$2.19 million for the second quarter of 1999. Interest income on deposits
with financial institutions and other decreased $108,000, or 58.1%, from
$186,000 for the three months ended June 30, 1999 to $78,000 for the three
months ended June 30, 2000. The average balance for the quarter ended June
30, 2000 for deposits with financial institutions and other was $5.35 million
compared to $16.45 million for the same period in 1999, down $11.10 million,
or 67.5%. These deposits were used to fund the growth in loans and
investments. The average yield on investment securities for the three months
ended June 30, 2000 was 6.62%, while the average yield was 5.50% for the same
period in 1999. The average yield on deposits with financial institutions and
other was 5.87% for the three months ended June 30, 2000 and 4.54% for the
three months ended June 30, 1999.
Interest expense increased $20,000, or 1.5%, from $1.33 million for the three
months ended June 30, 1999 to $1.35 million for the same period in 2000. The
increase was mainly due to higher average total deposits in 2000. Average
total deposits increased from $114.12 million for the quarter ended June 30,
1999 to $114.63 million for the quarter ended June 30, 2000, with the biggest
increases in IMMA accounts and two-year and eighteen-month certificates of
deposit. The average yield on total deposits for the three months ended June
30, 2000 was 4.37%, and 4.19% for the three months ended June 30, 1999.
Interest expense on other borrowings decreased by $26,000 from $134,000 for
the three months ended June 30, 1999 to $108,000 for the same period in 2000.
Net interest income as a percent of interest earning assets was 4.16% for the
three months ended June 30, 2000 versus 3.91% for the same period in 1999.
The spread between the yield on interest earning assets and the rate on
interest bearing liabilities was 3.59% and 3.34% for the three months ended
June 30, 2000 and 1999, respectively.
The provision for loan losses was $75,000 for the three months ended June 30,
2000 compared to $150,000 for the three months ended June 30, 1999. The
higher provision in 1999 was primarily due to an increase in the monthly
provision for loan losses, mainly the result of a commercial loan totaling
$1.35 million becoming non-performing in late 1998. The company charged-off
$800,000 of this loan during the fourth quarter of 1999.
Noninterest income increased $12,000, or 3.2%, from $376,000 for the quarter
ended June 30, 1999 to $388,000 for the three months ended June 30, 2000. The
increase was due to higher commission income from insurance activities.
Insurance sales commissions were $155,000 for the quarter ended June 30, 2000
compared to $131,000 for the same period in 1999, an increase of $24,000, or
18.3%.
Noninterest expense was $1.42 million for the three months ended June 30, 2000
compared to $1.36 million for the same period in 1999, an increase of $60,000,
or 4.4%. The increase was primarily due to an increase in equipment expenses,
which rose $46,000 for the three months ended June 30, 2000 compared to the
same period in 1999 mainly due to higher depreciation and maintenance related
to the Company's in-house data processing equipment.
Total income taxes for the three months ended June 30, 2000 were $145,000,
compared to $109,000 recorded for the same period in 1999, an increase of
$36,000, or 33.0%. The effective tax rates for the three months ended June
30, 2000 and 1999, were 40.17% and 41.76%, respectively.
Business Industry Segments
The Company's primary business involves the typical banking services of
generating loans and receiving deposits. Through PASC, the Company also
provides insurance and brokerage services to customers. The following segment
financial information has been derived from the internal profitability
reporting system used by management to monitor and manage the financial
performance of the Company.
Six Months Ended June 30, 2000
(unaudited, in thousands)
Insurance/
Banking Brokerage
Services Services Company Eliminations Total
------------------------------------------------------------------------------
Interest income $ 5,588 -- 5,588 -- 5,588
Interest expense 2,666 -- 2,666 -- 2,666
Other income 442 467 909 (82) 827
Net income 423 72 495 -- 495
Total assets 155,174 950 156,124 (870) 155,254
Six Months Ended June 30, 1999
(unaudited, in thousands)
Insurance/
Banking Brokerage
Services Services Company Eliminations Total
------------------------------------------------------------------------------
Interest income $ 5,474 -- 5,474 -- 5,474
Interest expense 2,647 -- 2,647 -- 2,647
Other income 433 417 850 (68) 782
Net income 305 59 364 -- 364
Total assets 154,042 961 155,003 (694) 154,309
Three Months Ended June 30, 2000
(unaudited, in thousands)
Insurance/
Banking Brokerage
Services Services Company Eliminations Total
------------------------------------------------------------------------------
Interest income $ 2,820 -- 2,820 -- 2,820
Interest expense 1,352 -- 1,352 -- 1,352
Other income 208 200 408 (20) 388
Net income 201 15 216 -- 216
Three Months Ended June 30, 1999
(unaudited, in thousands)
Insurance/
Banking Brokerage
Services Services Company Eliminations Total
------------------------------------------------------------------------------
Interest income $ 2,717 -- 2,717 -- 2,717
Interest expense 1,327 -- 1,327 -- 1,327
Other income 211 182 393 (17) 376
Net income 106 46 152 -- 152
Liquidity and Capital Resources
The Bank's primary sources of funds are deposits and principal and
interest payments on loans. While maturities and scheduled amortization
of loans are predictable sources of funds, deposit flows and mortgage
prepayments are greatly influenced by general interest rates, economic
conditions, and competition. The Office of Thrift Supervision ("OTS"), the
Company's and the Bank's primary regulator, requires the Bank to maintain
minimum levels of liquid assets. Currently, the required ratio is 4%. The
Bank's liquidity ratios were 7.22% and 8.27% at June 30, 2000 and December 31,
1999, respectively, well above the required minimum.
A review of the Consolidated Statements of Cash Flows included in the
accompanying financial statements shows that the Company's cash and cash
equivalents ("cash") decreased $2.10 million for the six months ended June 30,
2000, compared to a decrease of $8.87 million for the six months ended June
30, 1999. During the six months ended June 30, 2000, cash was primarily
provided from earnings, and increases in noninterest-bearing and interest-
bearing demand and savings deposits and FHLB advances. During that period
cash was primarily used to fund loans, a decrease in certificates of deposit,
to purchase treasury stock and for dividends.
During the six months ended June 30, 1999, cash was primarily provided from
earnings and maturities of securities. During 1999, cash was primarily used
to fund security purchases, loan originations, and deposit withdrawals,
purchase treasury stock, and to pay dividends.
The Company's primary investment activity during the six months ended June 30,
2000 was the origination of loans. During the six months ended June 30, 2000
and June 30, 1999, the Company originated mortgage loans in the amounts of
$13.82 million and $11.42 million, respectively, commercial loans in the
amounts of $3.82 million and $3.94 million, respectively, and consumer loans
in the amounts of $5.23 million and $4.69 million, respectively.
As of June 30, 2000, the Company had outstanding commitments (including
undisbursed loan proceeds) of $3.54 million. The Company anticipates it will
have sufficient funds available to meet its current loan origination
commitments. Certificates of deposit which are scheduled to mature in
one year or less from June 30, 2000 totaled $47.23 million. Management
believes a significant portion of such deposits will remain with the
Company.
At June 30, 2000, the Bank exceeded all of its regulatory capital requirements
with tangible capital and core capital both at $9.42 million or 6.51% of total
adjusted tangible assets, core capital at $9.42 million or 6.51% of adjusted
total assets, and risk-based capital at $10.19 million or 11.72% of total
risk-weighted assets. The required ratios are 1.5% for tangible capital to
tangible assets, 2% for core capital to total adjusted tangible assets, 4.0%
for core capital to adjusted total assets and 8.0% for risk-based capital to
risk-weighted assets.
Current Accounting Issues
During 1998, the Financial Accounting Standards Board ("FASB") issued
Statement No. 133, "Accounting for Derivative Instruments and Hedging
Activities." This Statement requires companies to record derivatives on the
balance sheet at their fair value. Statement No. 133 also acknowledges that
the method of recording a gain or loss depends on the use of the derivative.
The new Statement applies to all entities. If hedge accounting is elected
by the entity, the method of assessing the effectiveness of the hedging
derivative and the measurement approach of determining the hedge's
ineffectiveness must be established at the inception of the hedge.
Statement No. 133 amends Statement No. 52 and supercedes Statements No. 80,
105 and 119. Statement No. 107 is amended to include the disclosure
provisions about the concentrations of credit risk from Statement No. 105.
Several Emerging Issues Task Force consensuses are also changed or modified by
the provisions of Statement No. 133.
Statement No. 137 amended the effective date of Statement No. 133 to fiscal
years beginning after June 15, 2000. The Statement may not be applied
retroactively to financial statements of prior periods. The adoption of the
Statement will have no material impact on the Corporation's financial
condition or result of operations.
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings
The Company is involved in various legal actions incident to
its business, none of which is believed by management to be
material to the financial condition of the Company.
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 of stockholders held on April 25, 2000,
the Company's stockholders approved the following items:
1. Elected Clinton C. Atkins to a three-year term as director:
Broker
For Withheld Non-Votes
----- -------- ---------
Number 975,183 22,818 0
Percent 97.7% 2.3% 0%
2. Elected Ronald Kiddoo to a three-year term as director:
Broker
For Withheld Non-Votes
----- -------- ---------
Number 976,333 21,668 0
Percent 97.8% 2.2% 0%
3. Approved the appointment of OLIVE, LLP, as independent
auditors of Great American Bancorp, Inc., for the fiscal
year ending December 31, 2000:
Broker
For Against Abstain Non-Votes
----- ------- ------- ---------
Number 981,594 13,208 3,200 0
Percent 98.4% 1.3% 0.3% 0%
The following directors held terms of office which continued
after the meeting:
Dr. Morgan Powell
Mr. George Rouse
Mr. Jack Troxell
Item 5. Other Information
Not Applicable
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
3.1 Certificate of Incorporation of Great American
Bancorp, Inc.*
3.2 By-laws of Great American Bancorp, Inc.*
11.0 Computation of earnings per share (filed herewith)
27.0 Financial Data Schedule (filed herewith)
b. Report on Form 8-K
1. On April 14, 2000, the Registrant filed a Current
Report on Form 8-K reporting information under
Items 5 and 7, incorporating by reference press
releases dated April 12, 2000 and April 11, 2000,
relating to the Registrant's unaudited results for the
three months ended March 31, 2000, and the announcement
of a 5% stock repurchase program.
_______________
* Incorporated herein by reference into this document from Form
S-1 Registration Statement, as amended, filed on March 24, 1995,
Registration No. 33-90614.
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.
Great American Bancorp, Inc.
Dated: August 11, 2000 /s/ George R. Rouse
----------------------- ----------------------------
George R. Rouse
President and
Chief Executive Officer
Dated: August 11, 2000 /s/ Jane F. Adams
-------------------------- ----------------------------
Jane F. Adams
Chief Financial Officer,
Secretary and Treasurer
Exhibit 11.0
Earnings per share (unaudited)
Earnings per share (EPS) were computed as follows
(dollar amounts in thousands except share data):
Six Months Ended
June 30, 2000
-------------------------------
Weighted
Average Per-Share
Income Shares Amount
-------------------------------
Basic Earnings Per Share
Income available to common stockholders $ 495 1,111,979 $ 0.45
Effect of Dilutive Securities
Unearned incentive plan shares 18,426
-------------------------------
Diluted Earnings Per Share
Income available to common stockholders
and assumed conversion $ 495 1,130,405 $ 0.44
===============================
Options to purchase 187,601 shares of common stock at $14.21 were outstanding
at June 30, 2000, but were excluded from the computation of the diluted
earnings per share because the options exercise price was greater than the
average market price of the common shares.
Six Months Ended
June 30, 1999
-------------------------------
Weighted
Average Per-Share
Income Shares Amount
-------------------------------
Basic Earnings Per Share
Income available to common stockholders $ 364 1,230,722 $ 0.30
Effect of Dilutive Securities
Stock options 7,603
Unearned incentive plan shares 32,360
-------------------------------
Diluted Earnings Per Share
Income available to common stockholders
and assumed conversion $ 364 1,270,685 $ 0.29
===============================
Three months ended
June 30, 2000
-------------------------------
Weighted
Average Per-Share
Income Shares Amount
-------------------------------
Basic Earnings Per Share
Income available to common stockholders $ 216 1,087,899 $ 0.20
Effect of Dilutive Securities
Unearned incentive plan shares 16,595
-------------------------------
Diluted Earnings Per Share
Income available to common stockholders
and assumed conversion $ 216 1,104,494 $ 0.20
===============================
Options to purchase 187,601 shares of common stock at $14.21 were outstanding
at June 30, 2000, but were excluded from the computation of the diluted
earnings per share because the options exercise price was greater than the
average market price of the common shares.
Three months ended
June 30, 1999
-------------------------------
Weighted
Average Per-Share
Income Shares Amount
-------------------------------
Basic Earnings Per Share
Income available to common stockholders $ 152 1,235,404 $ 0.12
Effect of Dilutive Securities
Stock options 7,356
Unearned incentive plan shares 30,461
-------------------------------
Diluted Earnings Per Share
Income available to common stockholders
and assumed conversion $ 152 1,273,221 $ 0.12
===============================
