UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 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 October 31, 2000, the Registrant had 1,048,500 shares of Common Stock
outstanding, for ownership purposes, which excludes 1,004,250 shares held as
treasury stock.
Table of Contents
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Condensed Balance Sheets
Consolidated Condensed Income Statements
Consolidated Condensed Statements of Cash Flows
Item 2. Management's Discussion and Analysis or
Plan of Operation
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities and Use of Proceeds
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 September 30, 2000 and December 31, 1999
(unaudited, in thousands)
September 30, 2000 Dec. 31, 1999
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ASSETS
Cash and due from banks $ 6,078 $ 5,560
Interest-bearing demand deposits 4,378 4,453
--------------------------------
Cash and cash equivalents 10,456 10,013
Investment securities
Available for sale 2,988 2,977
Held to maturity 3,212 3,463
--------------------------------
Total investment securities 6,200 6,440
Loans 131,838 128,431
Allowance for loan losses (803) (703)
--------------------------------
Net loans 131,035 127,728
Premises and equipment 6,914 7,188
Federal Home Loan Bank stock 874 767
Other assets 2,109 2,173
--------------------------------
Total assets $ 157,588 $ 154,309
================================
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits
Noninterest bearing $ 11,831 $ 8,565
Interest bearing 112,047 114,280
--------------------------------
Total deposits 123,878 122,845
Federal Home Loan Bank Advances 12,000 8,000
Other liabilities 1,594 1,693
--------------------------------
Total liabilities 137,472 132,538
--------------------------------
Commitments and contingent liabilities
(Continued)
Great American Bancorp, Inc. and Subsidiary
Condensed Consolidated Balance Sheets (Continued)
As of September 30, 2000 and December 31, 1999
(unaudited, in thousands)
September 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
Paid-in-capital 20,014 19,968
Retained earnings -- substantially restricted 16,911 16,521
Accumulated other comprehensive loss (7) (13)
---------------------------------
36,939 36,497
Less:
Treasury stock, at cost - 1,004,250 and
829,035 shares (16,427) (14,019)
Unallocated employee stock ownership plan
shares - 25,058 and 40,986 shares (251) (410)
Unearned incentive plan shares - 10,490 and
20,626 shares (145) (297)
--------------------------------
(16,823) (14,726)
--------------------------------
Total stockholders' equity 20,116 21,771
--------------------------------
Total liabilities and
stockholders' equity $ 157,588 $ 154,309
================================
See notes to condensed consolidated financial statements.
Great American Bancorp, Inc. and Subsidiary
Condensed Consolidated Income Statements
For the Nine Months Ended September 30, 2000 and 1999
(unaudited, in thousands except share data)
2000 1999
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Interest income:
Loans $ 7,919 $ 7,573
Investment securities
Taxable 337 147
Tax exempt 13 24
Deposits with financial
institutions and other 208 516
--------------------------------
Total interest income 8,477 8,260
--------------------------------
Interest expense:
Deposits 3,718 3,644
Other 391 355
--------------------------------
Total interest expense 4,109 3,999
--------------------------------
Net interest income 4,368 4,261
Provision for loan losses 225 423
--------------------------------
Net interest income after
provision for loan losses 4,143 3,838
--------------------------------
Noninterest income:
Brokerage commissions 147 116
Insurance sales commissions 569 477
Service charges on deposit accounts 414 418
Loan servicing fees 14 14
Other customer fees 111 106
Other income 6 14
--------------------------------
Total noninterest income 1,261 1,145
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(Continued)
Great American Bancorp, Inc. and Subsidiary
Condensed Consolidated Income Statements (Continued)
For the Nine Months Ended September 30, 2000 and 1999
(unaudited, in thousands except share data)
2000 1999
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Noninterest expense:
Salaries and employee benefits $ 2,274 $ 2,184
Net occupancy expenses 498 466
Equipment expenses 450 317
Data processing fees 65 87
Deposit insurance expense 19 54
Printing and office supplies 204 209
Legal and professional fees 172 244
Directors and committee fees 74 76
Insurance expense 33 37
Marketing and advertising expenses 133 133
Other expenses 252 305
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Total noninterest expense 4,174 4,112
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Income before income tax 1,230 871
Income tax expense 488 360
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Net income $ 742 $ 511
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Per Share Data:
Earnings
Basic:
Net income $ 0.68 $ 0.42
================================
Average number of shares 1,083,651 1,219,635
================================
Diluted:
Net income $ 0.67 $ 0.41
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Average number of shares 1,100,245 1,255,084
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Dividends $ 0.33 $ 0.33
================================
See notes to condensed consolidated financial statements.
Great American Bancorp, Inc. and Subsidiary
Condensed Consolidated Income Statements
For the Quarter Ended September 30, 2000 and 1999
(unaudited, in thousands except share data)
2000 1999
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Interest income:
Loans $ 2,703 $ 2,557
Investment securities
Taxable 111 89
Tax exempt 6 6
Deposits with financial
institutions and other 69 134
--------------------------------
Total interest income 2,889 2,786
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Interest expense:
Deposits 1,269 1,246
Other 174 106
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Total interest expense 1,443 1,352
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Net interest income 1,446 1,434
Provision for loan losses 75 150
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Net interest income after
provision for loan losses 1,371 1,284
--------------------------------
Noninterest income:
Brokerage commissions 52 40
Insurance sales commissions 197 136
Service charges on deposit accounts 141 151
Loan servicing fees 4 5
Other customer fees 39 29
Other income 1 2
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Total noninterest income 434 363
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(Continued)
Great American Bancorp, Inc. and Subsidiary
Condensed Consolidated Income Statements (Continued)
For the Quarter Ended September 30, 2000 and 1999
(unaudited, in thousands except share data)
2000 1999
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Noninterest expense:
Salaries and employee benefits $ 762 $ 706
Net occupancy expenses 157 162
Equipment expenses 154 106
Data processing fees 25 57
Deposit insurance expense 6 18
Printing and office supplies 69 73
Legal and professional fees 67 72
Directors and committee fees 25 25
Insurance expense 11 12
Marketing and advertising expenses 46 48
Other expenses 70 115
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Total noninterest expense 1,392 1,394
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Income before income tax 413 253
Income tax expense 166 106
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Net income $ 247 $ 147
================================
Per Share Data:
Earnings
Basic:
Net income $ 0.24 $ 0.12
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Average number of shares 1,027,420 1,197,694
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Diluted:
Net income $ 0.24 $ 0.12
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Average number of shares 1,040,352 1,224,700
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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 Nine Months Ended September 30, 2000 and 1999
(unaudited, in thousands)
2000 1999
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Operating Activities:
Net income $ 742 $ 511
Adjustments to reconcile net
income to net cash provided
by operating activities:
Provision for loan losses 225 423
Depreciation and amortization 508 398
Amortization of deferred loan fees (14) (5)
Deferred income tax -- (67)
Investment securities amortization
(accretion), net -- 1
Employee stock ownership plan
compensation expense 208 248
Incentive plan expense 149 165
Net gain on sale of premises and
equipment -- (2)
Net change in:
Other assets 32 20
Other liabilities (85) (301)
--------------------------------
Net cash provided by
operating activities 1,765 1,391
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Investing Activities:
Purchases of securities available for sale -- (3,000)
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 paydowns of
mortgage-backed securities 150 24
Purchase of Federal Home Loan Bank stock (107) (31)
Net change in loans (3,518) (6,031)
Purchase of premises and equipment (202) (184)
Proceeds from sale of premises
and equipment -- 2
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Net cash used by
investing activities (3,577) (9,772)
--------------------------------
(continued)
Great American Bancorp, Inc. and Subsidiary
Condensed Consolidated Statements of Cash Flows (Continued)
For the Nine Months Ended September 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 2,405 (747)
Certificates of deposit (1,372) 69
FHLB advances 4,000 --
Other short-term borrowings -- (2,000)
Cash dividends (370) (401)
Purchase of treasury stock (2,408) (1,522)
--------------------------------
Net cash provided (used) by
financing activities 2,255 (4,601)
--------------------------------
Net Change in Cash and Cash Equivalents 443 (12,982)
Cash and Cash Equivalents, Beginning
of Period 10,013 21,815
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Cash and Cash Equivalents, End of
Period $ 10,456 $ 8,833
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Additional Cash Flows Information
Interest paid $ 4,089 $ 4,003
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Income tax paid $ 335 $ 518
================================
See notes to condensed consolidated financial statements.
Great American Bancorp, Inc. and Subsidiary
Notes to 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 National Market System 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 September 30, 2000
and December 31, 1999, the results of operations for the nine months ended and
three months ended September 30, 2000 and 1999, and the cash flows for the
nine months ended September 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. The
results of operations for the nine months ended September 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 September 30,
2000 and September 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 captions: Liquidity and Capital Resources.
Financial Condition
The Company's total assets increased from $154.31 million at December 31, 1999
to $157.59 million at September 30, 2000, an increase of $3.28 million, or
2.1%. The increase was primarily due to an increase in loans. Net loans
increased $3.31 million, or 2.6%, from $127.73 million at December 31, 1999 to
$131.04 million at September 30, 2000. The increase in loans was due
primarily to an increase in residential mortgage loans offset by a decrease in
commercial loans. Residential mortgage loans increased $5.41 million, or
7.7%, from $70.38 million at December 31, 1999 to $75.79 million at September
30, 2000. Commercial loans decreased $2.23 million, or 28.7%, from $7.75
million at December 31, 1999 to $5.52 million at September 30, 2000. The loan
growth was funded by an increase in total deposits and additional advances
from the Federal Home Loan Bank ("FHLB").
Total deposits increased $1.03 million, from $122.85 million at December 31,
1999 to $123.88 million at September 30, 2000. Noninterest-bearing deposits
increased by $3.26 million, while interest-bearing deposits decreased by $2.23
million during the first nine months of 2000.
FHLB advances totaled $12.00 million at September 30, 2000, an increase of
$4.00 million, from the $8.00 million borrowed at December 31, 1999. The
advances at September 30, 2000 included $5.00 million originated in 1998
maturing in 2008, callable in October, 2001 at 4.30%, $6.00 million originated
in the third quarter of 2000 maturing in October 2000 at 6.87% and $1.00
million maturing in October 2004, callable in October 2000 at 5.50%. The
$1.00 million callable advance was called in October 2000. In October 2000,
the Company borrowed $7.00 million to replace advances matured or called in
October. These new borrowings include a $3.00 million adjustable rate advance
which matures in October 2002, a $1.50 million fixed rate advance maturing in
April, 2001 at 6.74%, a $1.50 million adjustable rate advance maturing in
October, 2001 and a $1.00 million fixed rate advance maturing in November,
2000 at 6.90%.
Total stockholders' equity decreased $1.65 million, or 7.6%, from $21.77
million at December 31, 1999 to $20.12 million at September 30, 2000 primarily
due to funds used for stock repurchases and dividend payments. Book value per
outstanding voting share increased from $17.79 at December 31, 1999 to $19.19
at September 30, 2000. The decrease in stockholders' equity is summarized as
follows (in thousands):
Stockholders' equity, December 31, 1999 $ 21,771
Net income 742
Purchase of treasury stock (2,408)
Dividends declared (352)
Incentive plan shares allocated 149
ESOP shares allocated 208
Decrease in unrealized loss on securities
available for sale, net of income tax effect 6
------
Stockholders' equity, September 30, 2000 $ 20,116
======
Results of Operations
Comparison of Nine Month Periods Ended September 30, 2000 and 1999
Net income was $742,000 for the nine months ended September 30, 2000, compared
to $511,000 for the nine months ended September 30, 1999. This represents a
$231,000, or 45.2% increase. Basic earnings per share were $0.68 for the nine
months ended September 30, 2000, compared to $0.42 for the nine months ended
September 30, 1999, and diluted earnings per share were $0.67 in 2000,
compared to $0.41 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 $4.37 million for the nine months ended September 30,
2000, compared to $4.26 million for the same period in 1999, an increase of
$107,000, or 2.5%. Interest income was $8.48 million for the nine months
ended September 30, 2000, compared to $8.26 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 nine months in 2000 was $7.92 million, an increase of
$350,000, or 4.6%, from the $7.57 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 nine months ended September 30, 2000
were $130.25 million, compared to $125.23 million for the same period in 1999,
an increase of $5.02, or 4.0%. The majority of the increase in average total
loans was in mortgage loans. Total mortgage loans averaged $112.48 million
for the nine months ended September 30, 2000, compared to $105.10 million for
the same period in 1999, an increase of $7.38 million, or 7.0%. This growth
primarily occurred in one-to-four family and multi-family residential loans,
and in commercial mortgage loans.
Average total commercial loans were $6.48 million in 2000, compared to $9.03
million in 1999, a decrease of $2.55 million, or 28.2%. The decline in
average total commercial loans was mainly due to an $800,000 charge-off
recorded in the fourth quarter of 1999 and a $90,000 charge-off recorded in
the third quarter of 2000, both related to the same borrower, and several
smaller payoffs. The $890,000 total charged-off amount related to loans to
one borrower who filed bankruptcy in early 1999. The remaining balance of
loans to this borrower is $262,000 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 $11.29 million during the nine months ended
September 30, 2000, an increase of $190,000, or 1.7%, from the $11.10 million
average total balance during 1999. The average yield on net loans was 8.17%
for the nine months ended September 30, 2000, compared to 8.16% for the same
period in 1999.
Interest income on investment securities increased from $171,000 for the nine
months ended September 30, 1999 to $350,000 for the same period in 2000, due
to an increase in average total investment securities. Total investment
securities, including FHLB stock, averaged $3.86 million in 1999, compared to
$7.10 million in 2000. Interest income on deposits with financial institutions
and other decreased from $516,000 for the nine months ended September 30, 1999
to $208,000 for the nine months ended September 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 $14.82 million
for the nine months ended September 30, 1999 to $4.84 million for the nine
months ended September 30, 2000, a decrease of $9.98 million, or 67.3%. The
average yield on investment securities increased from 5.93% for the nine
months ended September 30, 1999 to 6.58% for the same period in 2000. The
higher average yield for 2000 reflects investments purchased during mid-to
late 1999 that the Company still maintains in the investment portfolio at
September 30, 2000. These securities replaced lower yielding securities that
matured or were called during 1999. The average yield on deposits with
financial institutions and other increased from 4.66% for the nine months
ended September 30, 1999 to 5.74% for the same period in 2000. The higher
yield in 2000 reflects a rise in short-term interest rates during 2000.
Interest expense increased by $110,000, or 2.8% from $4.00 million for the
nine months ended September 30, 1999 to $4.11 million for the same period in
2000. The increase was mainly attributable to an increase in interest on
deposits, which increased $80,000 from $3.64 million for the nine months ended
September 30, 1999 to $3.72 million for the same period in 2000. Average
total interest-bearing deposits decreased from $114.81 million in the first
nine months of 1999 to $113.47 million during 2000, a decrease of $1.34
million, or 1.2%. Growth in NOW and IMMA accounts, and in certificates of
deposit with maturities of 18 months and 2 years was offset by declines in
savings accounts and certificates of deposit with maturities of six months,
one year, and 2 1/2 years. The average rates on deposits were 4.38% and 4.24%
for the nine months ended September 30, 2000 and 1999, respectively. Average
borrowings for the nine months ended September 30, 2000 were $10.05 million,
compared with $9.46 million for the same period in 1999. The average rate on
other borrowings was 5.21% for the nine months ended September 30, 2000 and
5.01% for the nine months ended September 30, 1999. The increase in the
average rates on deposits and other borrowings in 2000 was due to a general
rise in market interest rates during 2000.
Net interest income as a percent of average interest earning assets was 4.13%
for the nine months ended September 30, 2000 versus 3.99% for the same period
in 1999. The spread between the yield on interest earning assets and the rate
on interest bearing liabilities was 3.56% and 3.43% for the nine months ended
September 30, 2000 and 1999, respectively.
The provision for loan losses was $423,000 for the nine months ended September
30, 1999 and $225,000 for the nine months ended September 30, 2000. The
higher provision in 1999 was due to higher levels of non-performing loans
during the 1999 period. The higher levels of non-performing loans during the
1999 period was primarily due to $1.35 million in commercial loans to one
borrower which became non-performing during the fourth quarter of 1998. In
the first quarter of 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 $198,000 in principal repayments. In the fourth
quarter of 1999 the Company charged-off $800,000 associated with these loans
and an additional $90,000 was charged-off during the third quarter of 2000.
The remaining balance of $262,000 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 $131,000 in loans charged-off, and $6,000 in recoveries in the
first nine months of 2000. The $131,000 in loans charged-off included $90,000
related to the commercial borrower discussed above, $26,000 in loans to two
separate commercial borrowers and $15,000 in loans to five consumer borrowers.
There were no loans charged-off in the nine months ended September 30, 1999
and recoveries totaled $5,000.
Non-performing loans, which are loans past due 90 days or more and
non-accruing loans, totaled $314,000 at September 30, 2000, compared to $1.53
million at September 30, 1999. The amount at September 30, 1999 included the
$1.35 million in commercial loans to one borrower previously discussed.
Non-performing loans at September 30, 2000 consisted of two residential
mortgage loans totaling $35,000, four consumer loans totaling $17,000 and the
commercial loans to one borrower previously discussed totaling $262,000. All
of these loans are past due 90 days or more at September 30, 2000, with the
$262,000 in commercial loans in non-accrual status.
The ratio of the Company's allowance for loan losses to total loans was 0.61%
at September 30, 2000 and 1.05% at September 30, 1999 and 255.7% and 45.9% as
a percentage of non-performing loans. 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 $1.26 million for the nine months ended September
30, 2000, compared to $1.15 million for the same period in 1999, an increase
of $116,000, or 10.1%. Insurance sales commissions generated by GTPS
Insurance Agency accounted for a majority of the increase in noninterest
income. Insurance sales commissions increased $92,000 from $477,000 for the
nine months ended September 30, 1999 to $569,000 for the same period in 2000.
Commissions generated by Scout Brokerage Services, Inc. increased $31,000
from $116,000 for the first nine months of 1999 to $147,000 for the first nine
months in 2000.
Noninterest expense was $4.17 million for the nine months ended September 30,
2000, compared to $4.11 million for the same period in 1999. Increases in
equipment expense, salaries and benefits expense, and net occupancy expense
were offset by decreases in legal fees, deposit insurance expense, data
processing expense, and other expenses.
Total income taxes increased by $128,000, or 35.6% from $360,000 for the nine
months ended September 30, 1999 to $488,000 for the same period in 2000 due to
the increase in pretax net income. The effective tax rates for the nine
months ended September 30, 2000 and 1999, were 39.7% and 41.3%, respectively.
Results of Operations
Comparison of Three Month Periods Ended September 30, 2000 and 1999
Net income for the three months ended September 30, 2000 was $247,000, an
increase of $100,000, or 68.0%, above the $147,000 recorded for the three
months ended September 30, 1999. Basic earnings per share increased from
$0.12 for the three months ended September 30, 1999 to $0.24 for the same
period in 2000, and diluted earnings per share were $0.24 and $0.12 for the
three months ended September 30, 2000 and 1999, respectively.
Net income for the third quarter of 2000 was higher due primarily to an
increase in interest income. Increases in noninterest income and a reduction
in the provision for loan losses were offset by increases in interest expense
and income tax expense.
Net interest income was $1.45 million for the quarter ended September 30, 2000
and $1.43 million for the quarter ended September 30, 1999. Interest income
increased 3.6%, or $100,000, from $2.79 million for the quarter ended
September 30, 1999 to $2.89 million for the third 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
$140,000, or 5.5%, from $2.56 million for the quarter ended September 30, 1999
to $2.70 million for the same quarter in 2000, due mainly to growth in loans.
Average total net loans for the three months ended September 30, 2000 were
$130.49 million, compared to $126.36 million for the same period in 1999, an
increase of $4.13 million, or 3.3%. The majority of the increase was in
mortgage loans. Total mortgage loans averaged $114.27 million for the three
months ended September 30, 2000, compared to $107.27 million for the three
months ended September 30, 1999, an increase of $7.00 million, or 6.5%. This
growth primarily occurred in one-to-four family and multi-family residential
loans, and in commercial mortgage loans.
Average total commercial loans for the three months ended September 30, 2000
and September 30, 1999 were $5.60 million and $8.87 million, respectively.
This represents a decrease of $3.27 million, or 36.9%. Average total consumer
loans were only slightly lower in 2000. Average total consumer loans were
$11.50 million for the quarter ended September 30, 2000, compared to $11.51
million for the quarter ended September 30, 1999. The average yield on loans
increased from 8.03% for the three months ended September 30, 1999 to 8.24%
for the same period in 2000.
Interest income on investment securities increased from $95,000 for the three
months ended September 30, 1999 to $117,000 for the same period in 2000, due
to an increase in average total investments. Average total investments for
the third quarter of 2000 were $7.10 million, up $1.23 million, or 21.0%, from
$5.87 million for the third quarter of 1999. Interest income on deposits with
financial institutions and other decreased $65,000, or 48.5%, from $134,000
for the three months ended September 30, 1999 to $69,000 for the three months
ended September 30, 2000. The average balance for the quarter ending
September 30, 2000 for deposits with financial institutions and other was
$4.51 million compared to $10.92 million for the same time period in 1999, a
decrease of $6.41 million, or 58.7%. These deposits were used to fund the
growth in loans and investments. The average yield on investment securities
for the three months ending September 30, 2000 was 6.55%, while the average
yield was 6.42% for the same time period in 1999. The higher average yield
for 2000 reflects investments purchased during mid-to late 1999 that the
Company still maintains in the investment portfolio at September 30, 2000.
These securities replaced lower yielding securities that matured or were
called during 1999. The average yield on deposits with financial institutions
and other was 6.09% for the three months ending September 30, 2000 and 4.87%
for the three months ending September 30, 1999. The higher yield in 2000
reflects a rise in short-term interest rates during 2000.
Interest expense increased $90,000, or 6.7%, from $1.35 million for the three
months ended September 30, 1999 to $1.44 million for the same period in 2000.
The increase was mainly due to increased interest expense on other borrowings.
Interest expense on other borrowings increased by $68,000 due to FHLB advances
maintained during the third quarter of 2000.
Average total interest-bearing deposits decreased $4.93 million, or 4.2%, from
$117.06 million for the quarter ended September 30, 1999 to $112.13 million
for the quarter ended September 30, 2000 mainly due to a decline in average
total certificates of deposit. Average total certificates of deposit
decreased $4.54 million, or 5.9%, from $77.13 million for the three months
ended September 30, 1999 to $72.59 million for the same time period in 2000.
The average rate on total interest-bearing deposits for the three months ended
September 30, 2000 was 4.50% and 4.22% for the three months ended September
30, 1999. The increases in the average rates on deposits in 2000 was due to a
general rise in market interest rates during 2000.
Net interest income as a percent of interest earning assets was 4.05% for the
three months ended September 30, 2000 versus 3.97% for the same period in
1999. The spread between the yield on interest earning assets and the rate on
interest bearing liabilities was 3.48% and 3.44% for the three months ended
September 30, 2000 and 1999, respectively.
The provision for loan losses was $75,000 for the three months ended September
30, 2000 and $150,000 for the three months ended September 30, 1999. The
higher provision in 1999 was primarily due to an increase in the monthly
provision for loan losses during 1999, mainly the result of higher non-
performing loans due primarily to a commercial loan totaling $1.35 million
which became non-performing in late 1998. The Company charged-off $800,000 of
this loan during the fourth quarter of 1999, and an additional $90,000 during
the third quarter of 2000. Total charge-offs for the three months ended
September 30, 2000 were $96,000, with $1,000 in recoveries. There were no
loans charged-off in the three months ended September 30, 1999 and recoveries
totaled $1,000.
Noninterest income increased $71,000, or 19.6%, from $363,000 for the quarter
ended September 30, 1999 to $434,000 for the three months ended September 30,
2000. The increase was due to higher commission income from insurance
activities. Insurance sales commissions were $197,000 for the quarter ended
September 30, 2000 compared to $136,000 for the same period in 1999, an
increase of $61,000, or 44.9%.
Noninterest expense was $1.39 million for the quarter ended September 30, 2000
the same total as reported for the quarter ended September 30, 1999.
Increases in salaries and benefits expense as well as equipment expense were
offset by primarily by reductions in data processing expense and other
expenses.
Total income taxes for the three months ended September 30, 2000 were
$166,000, compared to $106,000 recorded for the same period in 1999, an
increase of $60,000, or 56.6%. The effective tax rates for the three months
ended September 30, 2000 and 1999, were 40.2% and 41.9%, 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.
Nine Months Ended September 30, 2000
(unaudited, in thousands)
Insurance/
Banking Brokerage
Services Services Company Eliminations Total
- ------------------------------------------------------------------------------
Interest income $ 8,477 -- 8,477 -- 8,477
Interest expense 4,109 -- 4,109 -- 4,109
Noninterest income 676 716 1,392 (131) 1,261
Net income 626 116 742 -- 742
Total assets 157,505 929 158,434 (846) 157,588
Nine Months Ended September 30, 1999
(unaudited, in thousands)
Insurance/
Banking Brokerage
Services Services Company Eliminations Total
- ------------------------------------------------------------------------------
Interest income $ 8,260 -- 8,260 -- 8,260
Interest expense 3,999 -- 3,999 -- 3,999
Noninterest income 631 593 1,224 (79) 1,145
Net income 447 64 511 -- 511
Total assets 152,897 986 153,883 (686) 153,197
Three Months Ended September 30, 2000
(unaudited, in thousands)
Insurance/
Banking Brokerage
Services Services Company Eliminations Total
- ------------------------------------------------------------------------------
Interest income $ 2,889 -- 2,889 -- 2,889
Interest expense 1,443 -- 1,443 -- 1,443
Noninterest income 233 249 482 (48) 434
Net income 204 43 247 -- 247
Three Months Ended September 30, 1999
(unaudited, in thousands)
Insurance/
Banking Brokerage
Services Services Company Eliminations Total
- ------------------------------------------------------------------------------
Interest income $ 2,786 -- 2,786 -- 2,786
Interest expense 1,352 -- 1,352 -- 1,352
Noninterest income 198 176 374 (11) 363
Net income 142 5 147 -- 147
Liquidity and Capital Resources
The Bank's primary sources of funds are deposits, FHLB advances 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 7.30% and 8.27% at September 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") increased $443,000 for the nine months ended September
30, 2000, compared to a decrease of $12.98 million for the nine months ended
September 30, 1999. During the nine months ended September 30, 2000, cash was
primarily provided from earnings, increases in noninterest-bearing and
interest-bearing demand and savings deposits, as well as FHLB advances.
During that period cash was primarily used to fund loans, a decrease in
cetificates of deposit, to purchase treasury stock, and for dividends.
During the nine months ended September 30, 1999, cash was primarily provided
from earnings and maturities of securities. During this period, cash was
primarily used to fund security purchases and loan growth, repay short-term
borrowings, purchase treasury stock, and to pay dividends.
The Company's primary investment activities during the nine months ended
September 30, 2000 was the origination of loans. During the nine months ended
September 30, 2000 and September 30, 1999, the Company originated mortgage
loans in the amounts of $20.01 million and $16.70 million, respectively,
commercial loans in the amounts of $6.79 million and $8.29 million,
respectively, and consumer loans in the amounts of $7.64 million and $7.37
million, respectively.
As of September 30, 2000, the Company had outstanding commitments (including
undisbursed loan proceeds) of $3.30 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 September 30, 2000 totaled $50.81 million. Management
believes a significant portion of such deposits will remain with the
Company.
At September 30, 2000, the Bank exceeded all of its regulatory capital
requirements with tangible capital and core capital both at $9.41 million or
6.34% of total adjusted tangible assets, core capital at $9.41 million or
6.34% of adjusted total assets, and risk-based capital at $10.19 million or
11.47% 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 and Use of Proceeds
Not applicable
Item 3. Defaults Upon Senior Securities
Not applicable
Item 4. Submission of Matters to a Vote of Security
Holders
Not Applicable
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
b. Report on Form 8-K
On July 19, 2000, the Registrant filed a Current Report on
Form 8-K reporting information under Items 5 and 7,
incorporating by reference press releases dated July 12,
2000, relating to the Registrant's unaudited results for the
six months ended June 30, 2000, and the announcement of a 5%
stock repurchase program.
On August 29, 2000, the Registrant filed a Current Report on
Form 8-K reporting information under Items 5 and 7,
incorporating by reference a press release dated August 24,
2000, relating to the completion 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: November 14, 2000 /s/ George R. Rouse
----------------------- ----------------------------
George R. Rouse
President and
Chief Executive Officer
Dated: November 14, 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):
Nine Months Ended
September 30, 2000
-------------------------------
Weighted
Average Per-Share
Income Shares Amount
-------------------------------
Basic Earnings Per Share
Income available to common stockholders $ 742 1,083,651 $ 0.68
Effect of Dilutive Securities
Unearned incentive plan shares 16,594
-------------------------------
Diluted Earnings Per Share
Income available to common stockholders
and assumed conversion $ 742 1,100,245 $ 0.67
===============================
Options to purchase 187,601 shares of common stock at $14.21 were outstanding
at September 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.
Nine Months Ended
September 30, 1999
-------------------------------
Weighted
Average Per-Share
Income Shares Amount
-------------------------------
Basic Earnings Per Share
Income available to common stockholders $ 511 1,219,635 $ 0.42
Effect of Dilutive Securities
Stock options 4,860
Unearned incentive plan shares 30,589
-------------------------------
Diluted Earnings Per Share
Income available to common stockholders
and assumed conversion $ 511 1,255,084 $ 0.41
===============================
Three Months Ended
September 30, 2000
-------------------------------
Weighted
Average Per-Share
Income Shares Amount
-------------------------------
Basic Earnings Per Share
Income available to common stockholders $ 247 1,027,420 $ 0.24
Effect of Dilutive Securities
Unearned incentive plan shares 12,932
-------------------------------
Diluted Earnings Per Share
Income available to common stockholders
and assumed conversion $ 247 1,040,352 $ 0.24
===============================
Options to purchase 187,601 shares of common stock at $14.21 were outstanding
at September 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
September 30, 1999
-------------------------------
Weighted
Average Per-Share
Income Shares Amount
-------------------------------
Basic Earnings Per Share
Income available to common stockholders $ 147 1,197,694 $ 0.12
Effect of Dilutive Securities
Unearned incentive plan shares 27,006
-------------------------------
Diluted Earnings Per Share
Income available to common stockholders
and assumed conversion $ 147 1,224,700 $ 0.12
===============================
Options to purchase 187,601 shares of common stock at $14.21 were outstanding
at September 30, 1999, 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.
1