SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
F O R M 10 - Q
Quarterly Report Under Section 13 or 15 (d)
of the Securities Exchange Act of 1934.
For Quarter Ended JUNE 30, 1996 Commission File Number 0-10929
GUARANTY BANCSHARES HOLDING CORPORATION
(Exact name of registrant as specified in its charter)
LOUISIANA 72-0933277
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
P. O. BOX 2208, MORGAN CITY, LOUISIANA 70381
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 504-384-2813
NOT APPLICABLE
(Former name, former address and former fiscal year
if changed since last report.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No .
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Common Stock, $5 par value, 206,124 shares outstanding as of June 30, 1996
Common Stock, no par value, 166,901 shares outstanding as of June 30, 1996
I N D E X
PART I - Financial Information
Financial Statements
Consolidated Statement of Condition
June 30, 1996, and December 31, 1995 3
Consolidated Statement of Income -
Quarters Ended June 30, 1996, and 1995 4
Consolidated Statement of Cash Flows -
Quarters Ended June 30, 1996 and 1995 5
Consolidated Statement of Changes in
Stockholders' Equity 6
Notes to Consolidated Financial Statements 7
Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
Signature 15
Exhibit Index 17
GUARANTY BANCSHARES HOLDING CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENT OF CONDITION
June 30 December
1996 31, 1995
(in thousands)
(Unaudited)
ASSETS
Cash and due from banks $ 1,880 $ 3,230
Investment securities available for sale 5,155 5,197
Investment securities held to maturity
(Estimated market value $12,448,000 and 12,477 10,964
$10,980,000, respectively)
Federal funds sold 2,000 3,325
Loans 38,653 34,547
Less: Allowance for loan losses 509 505
Net Loans 38,144 34,042
Premises and equipment 2,101 2,083
Other real estate 64 65
Other assets 1,436 1,339
Total Assets $63,257 $60,245
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits $53,634 $50,770
Obligation under capital lease 1,594 1,632
Notes payable 1,582 1,681
Other liabilities 627 500
Total Liabilities 57,437 54,583
Commitments and contingent liabilities (Note 2) - -
Stockholders' Equity
$2.70 Cumulative Preferred stock; 145,001
shares authorized, issued and outstanding 3,481 3,481
$.50 Cumulative Preferred stock, 64,999 shares
authorized, 21,900 issued and outstanding 107 107
Class A Common stock; $5 par value; 210,000
shares authorized and outstanding 1,050 1,050
Class B Common stock; no par value; 210,000
shares authorized, 170,877 issued and
outstanding 17 17
Capital surplus 2,039 2,039
Accumulated deficit (860) (1,023)
Treasury Stock (16) (16)
Unrealized gain on securities
available for sale 2 7
Total Stockholders' Equity 5,820 5,662
Total Liabilities and Stockholders' Equity $63,257 $60,245
======= =======
GUARANTY BANCSHARES HOLDING CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENT OF INCOME
THREE MONTHS ENDED
JUNE 30
1996 1995
(IN THOUSANDS, EXCEPT
PER SHARE DATA)
(UNAUDITED)
INTEREST INCOME
Interest and fees on loans $ 885 $ 881
Interest on federal funds sold 48 26
Interest on investment securities:
Taxable income 203 234
Non-Taxable income 9 5
Total Interest Income 1,145 1,146
INTEREST EXPENSE
Interest on deposits 414 409
Interest on capital lease 40 42
Interest on note payable 28 31
Total Interest Expense 482 482
Net Interest Income 663 664
Provision (recovery) from reserve
for loan losses 0 0
Net Interest Income after Provision (recovery)
from reserve for loan losses 663 664
Other operating income 69 86
Operating expenses 642 598
Income before income tax expense 90 152
Income tax expense 32 55
Net income 58 97
Dividends required for preferred stock (101) (101)
Net income (loss) available for common
stockholders $ (43) $ (4)
======= =======
Earnings (loss) per common share $(.12) $(.01)
Weighted average common shares ======= =======
outstanding 373,025 374,375
======= =======
GUARANTY BANCSHARES HOLDING CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENT OF INCOME
SIX MONTHS ENDED
JUNE 30
1996 1995
(IN THOUSANDS, EXCEPT
PER SHARE DATA)
(UNAUDITED)
INTEREST INCOME
Interest and fees on loans $1,701 $1,722
Interest on federal funds sold 141 61
Interest on investment securities:
Taxable income 410 480
Non-Taxable income 19 10
Total Interest Income 2,271 2,273
INTEREST EXPENSE
Interest on deposits 822 824
Interest on capital lease 81 85
Interest on note payable 56 62
Total Interest Expense 959 971
Net Interest Income 1,312 1,302
Provision (recovery) from reserve
for loan losses 0 0
Net Interest Income after Provision (recovery)
from reserve for loan losses 1,312 1,302
Other operating income 148 192
Operating expenses 1,207 1,164
Income before income tax expense 253 330
Income tax expense 90 118
Net income 163 212
Dividends required for preferred stock (202) (202)
Net income (loss) available for common
stockholders $ (39) $ 10
===== =====
Earnings (loss) per common share $(.10) $ .03
Weighted average common shares ======= =======
outstanding 373,025 374,375
======= =======
GUARANTY BANCSHARES HOLDING CORPORATION
STATEMENT OF CASH FLOWS
Increase (Decrease) in Cash and Cash Equivalents
SIX MONTHS ENDED
JUNE 30
1996 1995
(IN THOUSANDS)
(UNAUDITED)
Cash flows from operating activities:
Net income $ 163 $ 212
Adjustments to reconcile net income to net cash
provided by operating activities:
Amortization of premium (accretion of discount
on investments), net (98) (121)
Net(Gain) on sale of other real estate owned - (39)
Gain on sale of fixed assets - (7)
Depreciation and amortization 142 141
(Increase) decrease in accrued interest receivable (6) (34)
Increase in accrued interest payable 63 30
Increase (decrease) in accounts payable
and other liabilities 65 41
Net cash provided by operating activities 329 223
Cash flows from investing activities:
(Increase)decrease in federal funds sold 1,325 390
Proceeds from maturities of investment securities 13,856 8,109
Purchase of investment securities (15,250) (7,703)
Net(increase)decrease in loans (4,102) (897)
Proceeds from sale of other real estate owned - 119
Proceeds from sale of premises and equipment - 7
Purchase of premises and equipment (160) (157)
Change in other assets (75) (74)
Net cash provided (used) by investing activities (4,406) (206)
Cash flows from financing activities:
Net increase (decrease) in demand deposits
NOW, savings, and certificates of deposit 2,864 (1,160)
Increase (decrease) of notes payable (99) (77)
Repayments of capital lease obligation (38) (48)
Net cash provided used in financing activities 2,727 (1,285)
Net increase (decrease) in cash and due from banks (1,350) (1,268)
Cash and due from banks, beginning of year 3,230 3,436
Cash and due from banks, end of quarter $1,880 $2,168
====== ======
Supplemental cash flow information:
Interest paid $ 898 $ 941
====== ======
Income taxes paid $ 139 $ 2
====== ======
GUARANTY BANCSHARES HOLDING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS
EQUITY
Unrealized
Gain(Loss)
on Securities
Balance at Available Balance at
Jan.1, 1996 Net Income For Sale June 30,1996
$2.70
Preferred
Stock $ 3,481 - - 3,481
$.50
Preferred
Stock $ 107 - - 107
Class A
Common
Stock $ 1,050 - - 1,050
Class B
Common
Stock $ 17 - - 17
Capital
Surplus $ 2,039 - - 2,039
Accumulated
Deficit $ (1,023) 163 - (860)
Treasury
Stock $ (16) - - (16)
Unrealized
loss on
Securities
available
for sale $ 7 - (5) 2
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The information furnished reflects all adjustments which are,
in the opinion of management, necessary for a fair statement of
results for the six (6) months ended June 30, 1996 and 1995. All
adjustments are considered to be of a recurring nature. Results
for the interim period may not necessarily be indicative of results
for the entire year.
NOTE 1:
On January 13, 1983, pursuant to a Reorganization and Merger
Agreement, Guaranty Bank & Trust Company of Morgan City (the Bank)
was merged into a subsidiary of Guaranty Bancshares Holding
Corporation (Bancshares) with the effect that the Bank became a
wholly owned subsidiary of Bancshares.
Bancshares has outstanding $2.70 Cumulative Preferred Stock
and Class B, No Par Value Common Stock which were issued in 1988 in
exchange for subordinated debentures issued in 1983 when the
company was formed. Bancshares also has outstanding Class A, $5.00
Par Value, Common Stock which were also issued when the company was
formed. The $.50 Cumulative Preferred Stock is subordinate to the
$2.70 Preferred Stock and were issued for cash in 1989 and 1990.
The Class B common stock does not differ from the Class A
common stock except that Class A common stock has a par value of $5
per share and Class B Common stock has no par value.
The company has acquired, through foreclosure, 3,976 shares of
$2.70 preferred stock, 3,876 shares of Class A, $5.00 par value
common stock and 3,976 shares of Class B, no par value common
stock. The preferred shares were canceled and reverted to
authorized but unissued $.50 preferred stock. The common shares
are held as treasury stock at a total value of $16,000. (See
Capital Resources)
NOTE 2: Contingent Liabilities
As of June 30, 1996, there were $815,600 of letters of credit
outstanding which are not reflected in the consolidated financial
statements. Management does not expect any loss as a result of
these transactions.
GUARANTY BANCSHARES HOLDING CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Summary
For the six months ended June 30 1996, Bancshares earned
$163,000, compared with earnings of $212,000 for the comparable
period in 1995. The primary reasons for the decrease in earnings
were lower non-interest operating income and increased operating
expenses. The subsidiary bank did not make a provision for loan
losses in either period.
Changes in financial position at June 30, 1996, from December
31, 1995 were net increases in investment securities and loans.
Deposits increased $2,864,000. Investments increased $1,742,000.
Loans increased $4,104,000. Notes payable to the Federal Home Loan
Bank of Dallas decreased $99,000 through amortization. These
borrowings are used to match maturities and amortization on certain
loans.
New credit income is the most significant component of
financial operations and is affected by interacting forces,
including changes in investment market interest rates and changes
in volume and mix of interest earning assets and interest bearing
deposits. For the first six months of 1996, net interest income as
a percent of net average earning assets of $56,105,000 was 4.68
percent, down from 4.83 percent for the six months of 1995. The
decrease is attributable to a general decline in interest rates
earned on loans.
Net Operating Results
The following analysis should be read in conjunction with the
accompanying financial statements.
Net interest income increased a net of $10,000. Of this
amount, interest on funds sold increased $80,000. Interest on
loans declined $21,000, while interest earned on securities in-
vestments declined $61,000. Total interest expenses declined
$12,000.
The decrease in loan income is attributable to a $687,000
increase in average loans outstanding, and 0.3 percent decrease in
average yields to 9.5 percent. The decrease in investment income
was the result of a $1,683,000 decrease in average securities
investments and a 0.1 percent increase in average yields.
Interest expense decreased $12,000 from 1995 levels. Average
interest bearing deposits decreased $234,000, while average rates
paid decreased 0.1 percent from 3.8 percent. The subsidiary bank
has borrowed funds from the Federal Home Loan Bank of Dallas to
fund commercial real estate loans which have comparable scheduled
amortizations and maturities.
Investment Securities
Investment securities increased from $16,399,000 as of June
30, 1995 to $17,632,000 at June 30, 1996. This is primarily
attributable to net purchases of U.S. Treasury and U.S. Government
agency securities and by scheduled amortization on mortgage backed
securities. There were no securities sales during the first six
months of 1996.
An analysis of investment securities follows (in thousands).
Amortized Unrealized Market
Cost Gain Loss Value
June 30, 1996
Held to Maturity
U. S. Treasury Securities $ 1,251 $ - $ 2 $ 1,249
Obligations of U.S.
Agencies and Corporations 10,545 4 33 10,516
Obligations of states and
political subdivisions 666 5 35 668
Other Investments 15 - - 15
Total $12,477 $ 9 $ 38 $12,448
======= ==== ===== =======
Available for Sale
Obligations of U.S.
Agencies and Corporations $ 4,649 $ 11 $ 8 $ 4,652
Other investments 503 - - 503
Total $ 5,152 $ 11 $ 8 $ 5,155
======= ==== ==== =======
December 31, 1995
Held to Maturity
U. S. Treasury Securities $ 1,997 $ 2 $ - $ 1,999
Obligations of U.S.
Agencies and Corporations 8,255 8 11 8,252
Obligations of states and
political subdivisions 692 17 - 709
Other Investments 20 - - 20
Total $10,964 $ 27 $ 11 $10,980
======= ===== ==== =======
Available for Sale
Obligations of U.S.
Agencies and Corporations $ 4,693 $ 14 $ $ 4,704
Other investments 472 - - 493
Total $ 5,186 $ 14 $ 3 $ 5,197
======= ====== ==== =======
June 30, 1995
Held to Maturity
U. S. Treasury Securities $ 4,949 $ 1 $ 5 $ 4,945
Obligations of U.S.
Agencies and Corporations 5,837 9 43 5,803
Obligations of states and
political subdivisions 362 6 - 368
Other Investments 24 - - 24
Total $11,172 $ 16 $ 48 $11,140
======= ====== ==== =======
Available for Sale
Obligations of U.S.
Agencies and Corporations $ 4,749 $ 10 $ 14 $ 4,745
Other investments 482 - - 482
Total $ 5,231 $ 10 $ 14 $ 5,227
======= ====== ==== =======
An analysis of the market value of the investment portfolio by
maturity periods at June 30, 1996 follows (in thousands):
Amortized Market
Cost Value
Within one year $ 11,083 $11,073
One to five years 4,826 4,815
Five to ten years 461 462
After ten years 1,259 1,253
Total $ 17,629 $ 17,603
========= =======
Maturities of mortgage backed securities are classified by
contractual (stated) maturity dates. Expected maturities will
differ from contractual maturities because borrowers have the
right to call or prepay obligations.
Investment securities with a carrying value of approximately
$8,106,000, $6,882,000, and $7,179,000 at June 30, 1996, December
31, 1995 and June 30, 1995, respectively, were pledged to secure
public deposits as required by law.
Deposits
A summary of the deposits as of June 30, 1996, December 31,
and June 30, 1995 is as follows:
June 30 December 31 June 30
1996 1995 1995
(in thousands)
Demand Deposits $ 9,023 $ 8,419 $ 7,779
NOW Accounts 5,361 5,405 4,687
Money Market
Investment Accts. 6,342 6,842 4,839
Savings Deposits 6,596 7,148 7,083
Other Time Deposits 19,413 17,330 19,193
Certificates of Dep.
of $100,000 or
more 6,899 5,626 6,757
$53,634 $50,770 $50,338
======= ======= =======
Non-interest bearing demand deposits at June 30, 1996
increased $1,244,000 from June 30, 1995. As interest rates paid
on money market investment accounts remained low, depositors
transferred funds to higher yielding certificates of deposits
which had become more competitive with non-bank related institutions.
Certificates of deposits of $100,000 or more to commercial entities
increased $137,000 while public fund certifiates of deposit of
$100,000 or more increased only $5,000.
The Bank has insignificant foreign and no brokered deposits.
Short Term Borrowings
The Bank had no significant short term borrowings in 1996 or
1995.
Allowance for Loan Losses and Non-Performing Loans and Other Real
Estate
The allowance for loan losses was 1.32 percent of loans
outstanding at June 30, 1995, compared with 1.46 percent at
December 31, 1995 and 1.42 percent at June 30, 1995. The Bank did
not make a provision to the reserve for loan losses during the
first six months of 1996 or 1995.
1996 1995
Balance at January 1, $505,000 $502,000
(Recovery) Provision for loan losses - -
Recoveries credited to the allowance 6,000 17,000
511,000 519,000
Losses charged to the allowance 2,000 13,000
Balance at June 30 $509,000 $506,000
======== ========
Indicative of improving conditions in the local economy, the
following schedule shows non-performing loans on non-accrual
status and repossessed and foreclosed real estate.
June 30 December 31 June 30
1996 1995 1995
Non-accrual loans $82,000 $ 84,000 $ 95,000
Foreclosed real estate 64,000 65,000 64,000
Management believes the Bank has adequate reserves to provide
for possible future loan losses.
Other Income
Other operating income aggregated to $148,000 for the first
six months of 1996 compared with $192,000 in 1995. There was no
trading account activity in 1996 or 1995.
Six Months Ending
June 30
1996 1995
Service charges on deposit accounts $ 95,000 $101,000
Other service charges and fees 35,000 29,000
Other operating income 18,000 62,000
Total $148,000 $192,000
======== ========
1995 other operating income included a $39,000 gain on sale of
repossessed real estate.
Operating Expenses
Other operating expenses totaled $1,207,000 for the first six
months of 1996, compared with $1,164,000 for 1995, a $43,000
increase, primarily due to accounting and legal fees relating to an
unsuccessful stock exchange offer.
Personnel expenses totaled $534,000 for the period, compared
with $512,000 in 1995. In 1996, expenses related to other real
estate and repossessed property totaled to $2,000, in 1995, these
expenses, net of rental income on these properties, totaled $7,000.
These expenses represent related taxes, maintenance and insurance.
FDIC and other insurance expenses decreased $53,000 primarily as
a result of reduced FDIC deposit insurance assessments.
A summary of other operating expenses is as follows:
Six Months 1996
Ending Over
June 30, (Under)
1996 1995 1995
(In Thousands)
Salaries and benefits $ 534 $ 512 $ 22
Expenses related to other real
estate and repossessed
properties, net of rental
income on these properties 2 7 (5)
Net occupancy expenses 209 214 (5)
Equipment and computer expenses 94 105 (11)
Professional fees and services 149 60 89
FDIC and other insurance 19 72 (53)
Other 200 194 6
$1,207 $1,164 $ 43
====== ===== =====
Income Taxes
Income taxes were accrued at the U. S. federal tax rate.
Liquidity
The term "liquidity" generally refers to the ability of a
company to generate adequate amount of cash to meet its needs. For
a bank, "liquidity" represents its ability to meet timely the
demand for funds used to honor checks, to pay maturing time
deposits, to fund increases in loan demand and to satisfy other
commitments. Unless it borrows funds, a bank's source of funds are
generally its core deposits and its retained earnings.
At June 30, 1996 and 1995, the Bank's gross loans-to-deposits
ratios were 72.1 percent and 70.9 percent, respectively. Loans
increased $2,955,000 from 1995 levels. Significant to the
loan-to-deposit ratio computation, deposits increased $3,296,000
as of June 30, 1996 from 1995. The Bank has no brokered deposits.
As a bank holding company, the ability of Bancshares to pay
its obligations is wholly dependent upon the receipt of dividends
and tax benefits from the Bank.
Capital Resources
At June 30, 1996, stockholders' equity amounted to $5,820,000
compared with $5,399,000 at June 30, 1995 and $5,662,000 at
December 31, 1995.
Bancshares has paid only one $2.70 and one 67.5 cents dividend
on its $2.70 preferred stock and has not declared or paid dividends
on its $.50 preferred stock since their issuance. As a result
accumulated and unpaid dividends are as follows:
$2.70 Preferred Stock, Dividends accumulated
from January 13, 1990 through July 13, 1996 $2,643,000
$.50 Preferred Stock, dividends accumulated
from January 13, 1990 through July 13, 1996 75,000
$2,718,000
==========
ITEM 4
The annual meeting was originally scheduled for June 17, 1996
and a notice of that meeting, a proxy statement dated May 23, 1996,
and a proxy were mailed to each of Bancshares' shareholders on May
24, 1996. However, the annual meeting originally scheduled for June
17, 1996 was postponed by means of a "Notice of Postponement of Annual
Meeting of Shareholders Originally Scheduled for June 17, 1996",
which Notice was mailed to the Shareholders of Bancshares on June
13, 1996.
The annual shareholder meeting originally scheduled for June
17, 1996 was postponed because Cari Investment Company (CIC), a
shareholder of Bancshares, issued a letter and proxy statement to
the shareholders of Bancshares. CIC's letter and proxy statement
urged the shareholders of Bancshares to vote for certain nominees
that CIC recommended in lieu of nominees recommended to the
shareholders by Bancshares. CIC's proxy statement also urged the
shareholders of Bancshares to reject the Plan of Recapitalization
that Bancshares' Board of Directors had asked the shareholders to
approve. The Board of Directors of Bancshares therefore determined
that it was in the best interests of Bancshares and its
shareholders to postpone the annual meeting of shareholders in
order to give the shareholders time to review the proxy materials
and other communications of both Bancshares and CIC. The Board
believed that this lengthened review period would facilitate
informed shareholder decisions regarding the respective positions
of Bancshares and CIC as set forth in such proxy materials and
communications.
After these events occurred, Bancshares and CIC engaged each
other in certain legal actions in which each party asserted its
respective position regarding the election of directors of
Bancshares and the Plan of Recapitalization proposed by the
management of Bancshares, as follows: On June 7, 1996 Bancshares
filed a Complaint of Injunctive Relief against CIC in the United
States District Court for the Eastern District of Louisiana seeking
to prevent CIC from issuing CIC's proxy statement which Bancshares
believed contained false or misleading information. The court
denied Bancshares' request for a temporary restraining order
granting such relief. On June 17, 1996 CIC filed a Petition for
Injunctive Relief against Bancshares in the 16th Judicial District
Court for the Parish of St. Mary, State of Louisiana, seeking to
prevent Bancshares from postponing the annual meeting of
shareholders scheduled for that day. The court denied CIC's
request for a temporary restraining order granting the relief that
CIC requested. On June 20, 1996 CIC filed a Supplemental and
Amending Petition for Extraordinary and Injunctive Relief to add a
claim for Quo Warranto relief to its previously filed Petition.
The court denied the relief sought by CIC after a trial on the
merits. On July 3, 1996 CIC filed a petition for Writ of Quo
Warranto Relief against directors Randolph Cullom, Conley J.
Dutreix, and Lee A. Ringeman. On July 17, 1996 the court denied
the relief sought by CIC after a trial on the merits.
Subsequent to these legal actions, Bancshares and its Board of
Directors and CIC determined that it was in the best interests of
Bancshares and its shareholders to resolve their disputes regarding
the operation and management of Bancshares. Accordingly, the Board
of Directors of Bancshares approve an agreement between Bancshares
and CIC that represents a compromise between their respective
positions. The annual shareholders meeting has been tentatively
rescheduled for Septemer 16, 1996.
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.
/s/Lee A. Ringeman
Lee A. Ringeman
Executive Vice President
Chief Financial Officer
DATE: August 13, 1996
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.
____________________
Lee A. Ringeman
Executive Vice President
Chief Financial Officer
DATE: August 13, 1996
PART II
Item 6: Exhibits and Reports on Form 8-K
a. Exhibit No. 11. Computation of Earnings Per
Common Share
b. The Registrant has not filed any Reports on Form
8-K during the first quarter of 1996.