U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES AND EXCHANGE ACT OF 1934
For Quarter Ended Commission File Number
March 31, 1996 0-12979
Bank of Gonzales Holding Company, Inc.
(Exact name of small business issuer as specified in its charter)
Louisiana 72-0967503
(State or other jurisdiction (I.R.S. Employer Identification
of incorporation or Number)
organization)
P. O. Box 1089, Gonzales, Louisiana 70707-1089
(Address of principal executive offices)
Issuer's telephone number, including area code 504 / 621 - 7200
Check whether the issuer (1) filed all reports required
to be filed by Section 13 or 15(d) of the Exchange Act
during the past 12 months, and (2) has been subject to
such filing requirements for the past 90 days.
Yes ( X ) No ( )
State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date:
Number of
Class of Common Stock Shares Outstanding As of
Common, No Par Value 541,611 April 24, 1996
BANK OF GONZALES HOLDING COMPANY, INC.
INDEX
PART I--FINANCIAL INFORMATION
Consolidated Statements of Financial Condition -
March 31, 1996 and December 31, 1995
Consolidated Statements of Income - Three Months
Ended March 31, 1996 and 1995
Consolidated Statements of Cash Flows - Three
Months Ended March 31, 1996 and 1995
Notes to Consolidated Financial Statements
Management's Discussion and Analysis of Financial
Condition and Results of Operations
PART II--OTHER INFORMATION
Item 1 Legal Proceedings
Item 6 Exhibits and Reports on Form 8-K
Signatures
BANK OF GONZALES HOLDING COMPANY, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION - (Unaudited)
March 31, December 31,
1996 1995
(In thousands of dollars)
ASSETS
Cash and due from banks $ 4,611 $ 5,068
Federal funds sold 1,239 2,634
Cash and cash equivalents 5,850 7,702
Interest-bearing deposits in banks 1,000 1,300
Securities available-for-sale, at
fair value 40,027 40,416
Securities held-to-maturity, fair
values of $16,140 at March 31,
1996 and $12,266 at December 31,
1995 16,346 12,343
Loans receivable, net of allowance
for loan losses of $1,371 at
March 31, 1996 and $1,417 at
December 31, 1995 58,253 58,156
Premises and equipment 2,068 2,289
Foreclosed real estate 310 290
Accrued interest receivable 746 788
Deferred tax asset 863 794
Other assets 386 357
Total assets $125,849 $124,435
LIABILITIES
Deposits
Noninterest-bearing demand deposits $ 21,650 $ 21,651
Interest-bearing demand, NOW's and
MMDA's 19,318 20,039
Savings 21,353 20,711
Time deposits $100,000 and more 7,595 7,085
Other time deposits 39,581 38,694
Total deposits 109,497 108,180
Advance from Federal Home Loan Bank 4,218 3,260
Accrued interest payable 251 201
Other liabilities 539 359
Total liabilities 114,505 112,000
SHAREHOLDERS' EQUITY
Common stock, no par value -
10,000,000 shares authorized,
561,801 shares issued and out-
standing at March 31, 1996 and
December 31, 1995 13,227 13,227
Retained earnings (deficit) (1,435) (606)
Treasury stock, at cost - 20,190
shares (485) (485)
Unrealized appreciation on securities
available-for-sale, net of tax of
$19 at March 31, 1996 and $154 at
December 31, 1995 37 299
Total shareholders' equity 11,344 12,435
Total liabilities and share-
holders' equity $125,849 $124,435
BANK OF GONZALES HOLDING COMPANY, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME - (Unaudited)
Three Months Ended March 31,
1996 1995
(In thousands of dollars,
except per share data)
Interest income
Loans receivable $ 1,578 $ 1,594
Taxable investment securities 841 804
Tax-exempt investment securities 14 5
Federal funds sold 40 13
Interest-bearing deposits in other
banks 17 4
Other - 1
TOTAL INTEREST INCOME 2,490 2,421
Interest expense
Deposits 771 703
Other 63 57
TOTAL INTEREST EXPENSE 834 760
NET INTEREST INCOME 1,656 1,661
Provision for loan losses 12 10
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 1,644 1,651
Other income
Service charges on deposit accounts 290 290
Other service charges and fees 11 12
Other 34 32
TOTAL OTHER INCOME 335 334
Other expense
Salaries and employee benefits 652 484
Net occupancy expense 83 77
Equipment expense 77 80
Loss on impaired assets 179 -
Net cost of operation of foreclosed
real estate 3 3
Investment securities (gains) losses (29) 68
Other 349 365
TOTAL OTHER EXPENSE 1,314 1,077
Income before income taxes 665 908
Income tax expense 221 306
NET INCOME $ 444 $ 602
Net income per common share--based on
weighted average number of shares
outstanding of 541,611 $ 0.82 $ 1.11
BANK OF GONZALES HOLDING COMPANY, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS - (Unaudited)
Three Months Ended March 31,
1996 1995
(In thousands of dollars)
Cash flows from operating activities
Net income $ 444 $ 602
Adjustments to reconcile net income
to net cash provided by operating
activities -
Deferred tax expense 66 293
Provision for loan losses 12 10
Depreciation and amortization 47 58
Net amortization (accretion) of
investment securities (8) 3
Loss (gain) on sales of investment
securities (29) 68
Loss on impaired assets 179 -
Decrease in interest receivable 42 1
(Increase) in other assets (29) (35)
Increase in interest payable 50 37
(Decrease) increase in other
liabilities 180 (52)
Net cash provided by operating activities 954 985
Cash flows from investing activities
Sales of securities available-for-
sale 2,678 3,011
Maturities of securities available-
for-sale 1,675 306
Maturities of securities held-to-
maturity 683 309
Purchase of securities available-for-
sale (4,831) (5,342)
Purchase of securities held-to-maturity (4,179) -
Proceeds from sales of foreclosed real
estate - 84
(Increase) in loans (129) (1,135)
(Increase) decrease in interest-bearing
deposits 300 (300)
Purchase of premises and equipment (5) (37)
Net cash (used) by investing activities (3,808) (3,104)
Cash flows from financing activities
Increase in deposits 1,317 1,282
Dividends paid (1,273) (190)
(Decrease) increase in F.H.L.B.
advance 958 (36)
Net cash provided by financing activities 1,002 1,056
Net (decrease) in cash and cash
equivalents (1,852) (1,063)
Cash and cash equivalents, beginning of
year 7,702 5,584
Cash and cash equivalents, end of
quarter $ 5,850 $ 4,521
Cash paid for income taxes $ 8 $ 16
Cash paid for interest expense $ 784 $ 723
Foreclosed real estate acquired in
satisfaction of loans $ 20 $ 13
BANK OF GONZALES HOLDING COMPANY, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Unaudited)
(1) The interim financial statements are prepared pursuant to
the requirements for reporting on Form 10-QSB. The December
31, 1995 balance sheet data was derived from audited
financial statements but does not include all disclosures
required by generally accepted accounting principles. The
interim financial statements and notes thereto should be
read in conjunction with the financial statements and notes
included in the Company's latest annual report on Form
10-KSB. In the opinion of management, the interim financial
statements reflect all adjustments of a normal recurring
nature necessary for a fair statement of the results for
interim periods. The current period results of operations
are not necessarily indicative of results which ultimately
will be reported for the full year ended December 31, 1996.
(2) On January 1, 1996, the Company adopted Statement of
Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of". Statement No. 121 requires that long-lived
assets and certain identifiable intangibles to be held and
used by the Company be reviewed for impairment whenever
events or changes in circumstances indicate that the
carrying amount may not be recoverable. Measurement of an
impairment loss on these assets is based on fair value. In
addition, long-lived assets and certain identifiable
intangibles to be disposed of are required to be reported at
the lower of carrying amount or fair value less costs to
sell. The adoption of this statement resulted in a charge
to operations for the quarter ended March 31, 1996 of
$179,000 related to certain premises held and used by the
Bank subsidiary. An appraisal of the property indicated a
significant decrease in the market value. The impairment
loss is based on the appraised value.
(3) On January 18, 1996, the Company's Board of Directors voted
to merge the Company with Deposit Guaranty Corporation (the
"Acquiror") of Mississippi. The Bank will become a branch
of a subsidiary owned by the Acquiror, and shareholders of
the Company will receive approximately 1.17 shares of the
Acquiror's common stock in exchange for each share of their
Company common stock. The merger is subject to the approval
of the Company's shareholders and appropriate regulatory
authorities. Such approval is expected by June, 1996.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
For a comprehensive review of financial condition and results of
operations of Bank of Gonzales Holding Company, Inc. (the
Company), this discussion and analysis should be reviewed along
with the information and financial statements presented elsewhere
in this report. The Company is a one-bank holding company whose
sole subsidiary is Bank of Gonzales (the Bank).
FINANCIAL CONDITION
The Company's total assets increased during the first three
months of 1996 from $124,435,000 to $125,849,000, a $1,414,000 or
1.1% increase. In order to better understand the reasons for the
overall increase in total assets, and likewise, in liabilities
and shareholders' equity, this discussion will focus on changes
in the significant components of the Company's statement of
financial condition.
Cash and due from banks at March 31, 1996 and December 31, 1995
were $4,611,000 and $5,068,000, respectively, a decrease of
$457,000 or 9.0%. As the largest nonearning asset, management
closely monitors the level of cash on hand and in correspondent
banks as part of the overall asset/liability strategy. In
connection with its asset/liability management, the Bank sells
excess funds to other banks in the form of federal funds
transactions. Federal funds sold at March 31, 1996 and December
31, 1995 were $1,239,000 and $2,634,000, respectively, a
$1,395,000 or 53.0% decrease.
Investment securities were $56,373,000 at March 31, 1996 and
included $40,027,000 which were available-for-sale and
$16,346,000 which were held-to-maturity. At December 31, 1995,
securities available-for-sale and held-to-maturity totaled
$40,416,000 and $12,343,000, respectively. Under FASB 115,
available-for-sale securities are required to be adjusted and
carried at their fair values, with a corresponding increase or
decrease recorded as an unrealized gain or loss in shareholders'
equity, net of any income tax effects. At December 31, 1995, the
total unrealized gain on available-for-sale securities was
$453,000 before any income tax effects. After netting deferred
income taxes of $154,000 against this unrealized gain, a $299,000
net unrealized gain was recorded in shareholders' equity. During
the first quarter of 1996, as interest rates increased slightly,
the unrealized gain was reduced and totaled $56,000 at March 31,
1996. After netting a deferred income tax of $19,000 against
this figure, a $37,000 net unrealized gain was recorded in
shareholders' equity.
Investment securities which are considered as held-to-maturity
are carried at their amortized costs and were $16,346,000 and
$12,343,000 at March 31, 1996 and December 31, 1995,
respectively. The fair values of held-to-maturity securities
were $16,140,000 at March 31, 1996, a $206,000 unrealized loss,
and $12,266,000 at December 31, 1995, a $77,000 unrealized loss.
The values of these securities also decreased as a result of the
slight rise in interest rates.
The Company's primary use of funds is for loan demand. Loans
outstanding at March 31, 1996 and December 31, 1995, net of
unearned income, were $59,624,000 and $59,573,000, respectively,
an increase of $51,000 or 0.1%. Management expects loans to
continue to increase due to the continued strong economic
environment and the Bank's aggressive marketing strategies.
Nonaccrual loans, which are loans on which interest recognition
has been suspended until received because of doubts as to the
borrowers' ability to repay principal or interest, were $215,000
at March 31, 1996 and $299,000 at December 31, 1995. Problem
loans are loans for which payments are presently current, but the
borrowers are experiencing financial difficulties. Loans
classified as problem loans totaled $2.3 million at March 31,
1996 and December 31, 1995. No related parties had any
nonaccrual, past due, or problem loans at March 31, 1996 and
December 31, 1995.
The allowance for possible loan losses was $1,371,000 at March
31, 1996 and $1,417,000 at December 31, 1995. This $46,000
decrease is the result of a $12,000 addition to the allowance for
the first three months of 1996 and net loan charge-offs of
$58,000. Management believes that the allowance for possible
loan losses as of March 31, 1996 is adequate.
The net deferred tax asset was $794,000 at December 31, 1995 and
$863,000 at March 31, 1996. This increase of $69,000 consisted
of a $66,000 deferred income tax expense for the three months
ended March 31, 1996, and a decrease in the deferred tax
liability applicable to the aforementioned unrealized gain on
available-for-sale securities, which was $154,000 at year-end
1995 and $19,000 at March 31, 1996, a $135,000 decrease.
The increase in deposits of $1,317,000 consisted of an increase
in time deposits of $1,397,000, a 3.1% increase, and a decrease
in demand, savings, NOW's and MMDA's of $80,000, or 0.1%.
Additional advances from the Federal Home Loan Bank to fund long-
term residential mortgages were received in the first quarter of
1996. The total advances payable to the Federal Home Loan Bank
were $4,218,000 and $3,260,000 at March 31, 1996 and December 31,
1995, a net increase of $958,000.
Shareholders' equity decreased by $1,091,000 during the first
quarter of 1996 from $12,435,000 at year-end 1995 to $11,344,000
at March 31, 1996. This decrease was the result of a decrease in
the net unrealized gain on investment securities
available-for-sale, as discussed above, of $262,000, and an
increase of $829,000 in the retained earnings deficit. The
retained earnings deficit at year-end 1995 of $606,000 increased
to $1,435,000 at March 31, 1996 through net income of $444,000
and dividends declared of $1,273,000.
RESULTS OF OPERATIONS
Net income for the first quarter of 1996 was $444,000 or $0.82
per average share outstanding. Net income for the first quarter
of 1995 was $602,000 or $1.11 per average share outstanding.
This $158,000 decrease in 1996 as compared to 1995 is due to
changes in several areas as follows:
Net interest income is the Company's principal source of revenue
and is measured by the difference between interest income earned
on loans and investments and interest expense incurred on
deposits and other borrowings. The Company's net interest income
for the first three months of 1996 decreased by only $5,000 as
compared to the same period in 1995. With careful monitoring of
interest-earning assets and interest-bearing liabilities through
its asset/liability management program, management is able to
adjust for any changes in interest rates in order to maximize
profits during periods of favorable (i.e. anticipated) movements
in rates, and minimize adverse effects during periods of
unfavorable (i.e. unanticipated) movements in rates.
The provision for possible loan losses replenishes the allowance
for possible loan losses to a level that is considered adequate
by management to absorb potential losses. The adequacy of the
allowance is determined through an evaluation of the loan
portfolio, loan loss experience, and economic conditions. The
provision for the three months ended March 31, 1996 and 1995 was
$12,000 and $10,000.
Total other income was $335,000 and $334,000 for the three months
ended March 31, 1996 and 1995, respectively. Total other expense
was $1,314,000 and $1,077,000 for the quarters ended March 31,
1996 and 1995, respectively, a $237,000 increase. Salaries and
employee benefits, a component of total other expense, increased
by $168,000 due primarily to the severance of a senior officer of
the Bank. The officer's contingent severance agreement required
the Bank to pay him twice his annual salary upon his release
following a change in control. The change in control came about
when the Company's Board of Directors voted to merge with Deposit
Guaranty Corporation of Mississippi. The merger is subject to
shareholder and regulatory approval which is expected by June,
1996. Another component of total other expense is the loss on
impaired assets. As a result of adopting FASB Statement 121,
"Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of", the Company recognized a
loss of $179,000 related to certain premises held and used by the
Bank.
Income tax expense for the quarters ended March 31, 1996 and 1995
was $221,000 and $306,000, respectively, a decrease of $85,000.
The deferred expense portion of income tax expense was $66,000 in
1996 and $293,000 in 1995. The current expense portion of
$155,000 in 1996 and $13,000 in 1995 represents an estimate of
the alternative minimum tax to be paid with the filing of the
Federal income tax returns.
PART II--OTHER INFORMATION
Item 1. Legal Proceedings
Legal proceedings involving the Bank are limited to
proceedings arising from normal business activities,
none of which are considered material.
Item 6. Exhibits and Reports on Form 8-K
(a) Part II Exhibits:
(27) Financial Data Schedule
(b) The Company has not filed any reports on Form 8-K
during the quarter ended March 31, 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.
BANK OF GONZALES HOLDING COMPANY, INC.
s/D. Dale Gaudet
D. Dale Gaudet, President
Date:May 2, 1996 s/Rachel P. Cherco
Rachel P. Cherco, Controller