UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2002
----------------------
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
---------------- ----------------
Commission File Number: 0-25808
----------------------------------------
GREAT AMERICAN BANCORP, INC.
----------------------------
Delaware 52-1923366
- ----------------------------------------------------------------
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
- ---------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(217) 356-2265
- ---------------------------------------------------------------
(Registrant's telephone number, including area code)
At April 30, 2002, the Registrant had 850,327 shares of Common Stock
outstanding, for ownership purposes, which excludes 1,202,423 shares held as
treasury stock.
Transitional Small Business Disclosure Format (Check One): Yes No X
--- ---
Table of Contents
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
Condensed Consolidated Statements of Income
Condensed Consolidated Statements of Cash Flows
Notes to Condensed Consolidated Financial Statements
Item 2. Management's Discussion and Analysis or
Plan of Operation
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security
Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
Great American Bancorp, Inc. and Subsidiary
Condensed Consolidated Balance Sheets
As of March 31, 2002 and December 31, 2001
(Unaudited, in thousands except share data)
March 31, 2002 Dec. 31, 2001
-----------------------------------------------------------------------------
ASSETS
Cash and due from banks $ 6,282 $ 4,832
Interest-bearing demand deposits 14,764 6,334
--------------------------------
Cash and cash equivalents 21,046 11,166
Held-to-maturity securities 1,843 2,056
Mortgage loans held for sale 1,595 2,343
Loans, net of allowance for loan losses
of $1,102 and $1,040 in 2002 and 2001,
respectively 136,728 143,063
Premises and equipment 6,299 6,362
Federal Home Loan Bank stock 1,182 1,166
Interest receivable 781 789
Cash surrender value of life insurance 256 251
Insurance premiums receivable 220 204
Deferred income taxes 81 81
Mortgage servicing rights 101 51
Goodwill 485 485
Other 356 328
--------------------------------
Total assets $ 170,973 $ 168,345
================================
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits
Noninterest-bearing deposits $ 12,075 $ 11,890
Interest-bearing deposits
Savings, NOW and money market 52,152 46,300
Time 66,769 69,350
--------------------------------
Total deposits 130,996 127,540
Federal Home Loan Bank advances 19,000 20,500
Deferred compensation - directors 592 648
Advances from borrowers for taxes
and insurance 511 319
Accrued postretirement benefit obligation 222 211
Accrued real estate taxes 171 136
Premiums due insurance companies 121 101
Dividend payable 94 95
Income taxes payable 250 23
Interest payable 83 91
Other 201 122
--------------------------------
Total liabilities 152,241 149,786
--------------------------------
Commitments and Contingent Liabilities
(continued)
Great American Bancorp, Inc. and Subsidiary
Condensed Consolidated Balance Sheets (Continued)
As of March 31, 2002 and December 31, 2001
(Unaudited, in thousands except share data)
March 31, 2002 Dec. 31, 2001
- -----------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
Preferred stock, $0.01 par value
Authorized and unissued --
1,000,000 shares $ -- $ --
Common stock, $0.01 par value
Authorized -- 7,000,000 shares
Issued and outstanding -- 2,052,750 shares 21 21
Additional paid-in-capital 20,166 20,165
Retained earnings 18,247 17,838
--------------------------------
38,434 38,024
Treasury stock, at cost
Common: 2002 - 1,197,273 shares,
2001 - 1,185,583 shares (19,633) (19,393)
Unearned incentive plan shares:
2002 - 4,769 shares,
2001 - 5,010 shares (69) (72)
--------------------------------
Total stockholders' equity 18,732 18,559
--------------------------------
Total liabilities and
stockholders' equity $ 170,973 $ 168,345
================================
See notes to condensed consolidated financial statements.
Great American Bancorp, Inc. and Subsidiary
Condensed Consolidated Statements of Income
For the Three Months Ended March 31, 2002 and 2001
(Unaudited, in thousands except share data)
2002 2001
- ----------------------------------------------------------------------------
Interest income
Loans $ 2,657 $ 2,687
Available-for-sale securities -- 49
Held-to-maturity securities 32 45
Deposits with banks and other 49 117
--------------------------------
Total interest income 2,738 2,898
--------------------------------
Interest expense
Deposits 949 1,290
Federal Home Loan Bank advances 225 216
Other 7 10
--------------------------------
Total interest expense 1,181 1,516
--------------------------------
Net interest income 1,557 1,382
Provision for loan losses 60 36
--------------------------------
Net interest income after
provision for loan losses 1,497 1,346
--------------------------------
Noninterest income
Insurance sales commissions 462 319
Brokerage commissions 32 36
Customer service fees 125 126
Other service charges and fees 44 42
Sale of mortgage loans, net of commissions 106 --
Loan servicing fees 4 3
Other 7 1
--------------------------------
Total noninterest income 780 527
--------------------------------
(continued)
Great American Bancorp, Inc. and Subsidiary
Condensed Consolidated Statements of Income (Continued)
For the Three Months Ended March 31, 2002 and 2001
(Unaudited, in thousands except share data)
2002 2001
- ----------------------------------------------------------------------------
Noninterest expense
Salaries and employee benefits $ 835 $ 795
Net occupancy expense 139 155
Equipment expense 126 155
Data processing fees 19 19
Deposit insurance premium 6 6
Printing and office supplies 68 76
Legal and professional fees 48 56
Directors and committee fees 25 25
Insurance expense 14 13
Marketing and advertising expense 46 39
Other 120 95
--------------------------------
Total noninterest expense 1,446 1,434
--------------------------------
Income before income tax 831 439
Income tax expense 327 178
--------------------------------
Net income $ 504 $ 261
================================
Per Share Data:
Earnings
Basic:
Net income $ 0.59 $ 0.26
================================
Average number of shares 854,737 985,535
================================
Diluted:
Net income $ 0.55 $ 0.26
================================
Average number of shares 917,420 1,000,561
================================
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 Three Months Ended March 31, 2002 and 2001
(Unaudited, in thousands)
2002 2001
- ----------------------------------------------------------------------------
Operating Activities
Net income $ 504 $ 261
Items not requiring (providing) cash
Depreciation expense 117 149
Amortization of goodwill -- 11
Provision for loan losses 60 36
Amortization of loan servicing rights 3 1
Amortization of deferred loan fees (4) (5)
Deferred income taxes -- (6)
Federal Home Loan Bank stock dividends (16) (18)
Employee stock ownership plan
compensation expense -- 74
Incentive plan expense 4 19
Net gains on sales of loans (106) --
Loans originated for sale (4,360) --
Proceeds from sales of loans 5,161 --
Net gain on sale of premises and equipment (4) --
Changes in:
Accrued interest receivable 8 22
Income taxes receivable -- 116
Prepaid expenses and other assets (49) 42
Interest payable (8) 9
Other liabilities 89 (4)
Income taxes payable 227 62
--------------------------------
Net cash provided by
operating activities 1,626 769
--------------------------------
Investing Activities
Net (originations) collections of loans 6,279 (783)
Purchase of premises and equipment (54) (24)
Proceeds from sales of premises and equipment 4 --
Proceeds from maturities of held-to-maturity
securities -- 425
Proceeds from paydowns of mortgage backed
securities 213 116
Purchase of Federal Home Loan Bank stock -- (17)
--------------------------------
Net cash provided (used) by
investing activities 6,442 (283)
--------------------------------
(continued)
Great American Bancorp, Inc. and Subsidiary
Condensed Consolidated Statements of Cash Flows (Continued)
For the Three Months Ended March 31, 2002 and 2001
(Unaudited, in thousands)
2002 2001
- ----------------------------------------------------------------------------
Financing Activities:
Net increase (decrease) in demand deposits,
money market, NOW and savings accounts 6,037 (240)
Net increase (decrease) in certificates
of deposits (2,581) 1,981
Repayment of Federal Home Loan Bank advances (3,500) (2,000)
Proceeds from Federal Home Loan Bank advances 2,000 6,500
Dividends paid (96) (110)
Purchase of treasury stock (240) (754)
Net increases in advances from borrowers
for taxes and insurance 192 209
--------------------------------
Net cash provided by
financing activities 1,812 5,586
--------------------------------
Increase in Cash and Cash Equivalents 9,880 6,072
Cash and Cash Equivalents, Beginning
of Period 11,166 10,643
--------------------------------
Cash and Cash Equivalents, End of
Period $ 21,046 $ 16,715
================================
Supplemental Cash Flows Information
Interest paid $ 1,189 $ 1,507
================================
Income taxes paid (net of refunds) $ 100 $ --
================================
See notes to condensed consolidated financial statements.
Great American Bancorp, Inc. and Subsidiary
Notes to Condensed Consolidated Financial Statements
1. Background Information
Great American Bancorp, Inc. (the "Company") was incorporated on February 23,
1995 and on June 30, 1995 acquired all of the outstanding shares of common
stock of First Federal Savings Bank of Champaign-Urbana, (the "Bank") upon the
Bank's conversion from a federally chartered mutual savings bank to a
federally chartered stock savings bank. The Company purchased 100% of the
outstanding capital stock of the Bank using 50% of the net proceeds from the
Company's initial stock offering, which was completed on June 30, 1995. The
Company began trading on the Nasdaq National Market on June 30, 1995 under the
symbol "GTPS". On April 23, 2001, the Company began trading on the Nasdaq
SmallCap Market, maintaining the "GTPS" symbol.
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 March 31, 2002 and
December 31, 2001, the results of operations for the three months ended March
31, 2002 and 2001, and the cash flows for the three months ended March 31,
2002 and 2001. All adjustments to the financial statements were normal and
recurring in nature. These results have been determined on the basis of
generally accepted accounting principles. Reclassifications of certain
amounts in the 2001 financial statements have been made to conform to the 2002
presentation. The results of operations for the three months ended March 31,
2002 are not necessarily indicative of the results to be expected for the
entire fiscal year.
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 2001
Annual Report to Shareholders.
PART I -- Item 2.
GREAT AMERICAN BANCORP, INC.
Management's Discussion and Analysis
or Plan of Operation
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.
General
The Company is the holding company for the Bank. The Bank operates a wholly
owned subsidiary, Park Avenue Service Corporation ("PASC"). PASC operates the
GTPS Insurance Agency which offers a variety of insurance products, including
life, health, automobile, and property and casualty insurance. PASC also
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.
Financial Condition
The Company's total assets increased from $168.35 million at December 31, 2001
to $170.97 million at March 31, 2002, an increase of $2.62 million, or 1.6%.
Asset growth occurred primarily in cash and cash equivalents, mainly interest-
bearing demand deposits. Cash and cash equivalents grew from $11.17 million
at December 31, 2001 to $21.05 million at March 31, 2002, an increase of $9.88
million, or 88.5%. Interest-bearing demand deposits grew from $6.33 million
at December 31, 2001 to $14.76 million at March 31, 2002, an increase of $8.43
million, or 133.2%. The increase in cash and cash equivalents is mainly
attributable to proceeds generated from mortgage loan sales, loan repayments
exceeding loan originations, and deposit growth.
Net loans decreased from $143.06 million at December 31, 2001 to $136.73
million at March 31, 2002, a decrease of $6.33 million, or 4.4%. The majority
of the decline in loans occurred in one-to-four-family residential mortgage
loans held for investment and commercial mortgage loans. One-to-four-family
mortgage loans held for investment, which does not include mortgage loans held
for sale, decreased $3.74 million from December 31, 2001 to March 31, 2002
while commercial mortgage loans decreased $1.94 million. One-to-four-family
residential loans held for investment declined during 2002 due mainly to the
Company originating the majority of one-to-four family residential loans as
held for sale. Commercial mortgage loans declined mainly due to two large
loan payoffs.
Total deposits increased $3.46 million, from $127.54 million at December 31,
2001 to $131.00 million at March 31, 2002. Savings, NOW and money market
deposits grew $5.85 million in the first quarter of 2002, while time deposits
decreased by $2.58 million. The decline in time deposits was mainly in
certificates of deposit with one to two year maturities. The growth in
savings, NOW and money market accounts was partly due to customers
transferring matured certificates of deposit into short-term, interest-bearing
demand accounts in anticipation that market interest rates will rise in the
near future. The growth in savings, NOW and money market accounts was also
due to seasonal fluctuations in these accounts.
Federal Home Loan Bank ("FHLB") advances totaled $19.00 million at March 31,
2002 compared to $20.50 million at December 31, 2001. In February 2002, a
$2.00 million FHLB advance with a rate of 4.40% matured. In March 2002, a
$1.50 million advance with a rate of 4.48% was called. The Company borrowed
$2.00 million in fixed rate FHLB advances in March 2002 to replace maturing
and called advances. The new advances include a $1.00 million advance
maturing in March 2003 with a rate of 3.06% and a $1.00 million advance
maturing in September 2003 with a rate of 3.58%.
Total stockholders' equity increased $173,000, from $18.56 million at December
31, 2001 to $18.73 million at March 31, 2002. Book value per outstanding
voting share increased from $21.40 at December 31, 2001 to $21.90 at March 31,
2002. The increase in stockholders' equity is summarized as follows (in
thousands):
Stockholders' equity, December 31, 2001 $ 18,559
Net income 504
Purchase of treasury stock (240)
Dividends declared (95)
Incentive plan shares allocated 4
------
Stockholders' equity, March 31, 2002 $ 18,732
======
Results of Operations
Comparison of Three Month Periods Ended March 31, 2002 and 2001
Net income of $504,000 for the three months ended March 31, 2002 was $243,000
or 93.1% higher than the $261,000 recorded for the three months ended March
31, 2001. Basic earnings per share were $0.59 for the three months ended
March 31, 2002, compared to $0.26 for the three months ended March 31, 2001.
Diluted earnings per share were $0.55 for the first quarter in 2002, compared
to $0.26 for the first quarter of 2001.
Net income increased in 2002 due to growth in net interest income and
noninterest income, offset by increases in the provision for loan losses, non-
interest expense, and income tax expense.
Net interest income increased $175,000, or 12.7%, from $1,382,000 for the
three months ended March 31, 2001 to $1,557,000 for the same period in 2002.
Interest income declined $160,000, or 5.5%, from $2,898,000 for the three
months ended March 31, 2001 to $2,738,000 for the first quarter of 2002.
Interest expense decreased $335,000, or 22.1%, from $1,516,000 in 2001 to
$1,181,000 in 2002.
Interest income from deposits with banks and other declined $68,000, or 58.1%,
from $117,000 for the first quarter of 2001 to $49,000 for the first quarter
of 2002. The majority of these deposits are overnight funds, which were
affected by the sharp decline in market interest rates during 2001. During
2001, the Federal Open Market Committee, or "FOMC", the Federal Reserve
Board's governing body that establishes the Federal funds rate and the
discount rate, lowered these key market interest rates 11 times for a total of
475 basis points. The FOMC has not adjusted market rates since the last
reduction in December 2001. The average balance of deposits with banks and
other increased from $8.61 million during the first quarter of 2001 to $10.06
million during the same period in 2002. However, the average yield on
deposits with banks and other decreased from 5.51% for the first quarter of
2001 to 1.98% for the first quarter of 2002.
Interest income from investment securities also decreased in 2002, from
$94,000 for the first three months in 2001 to $32,000 for the same period in
2002, a decrease of $62,000, or 66.0%. The Company did not maintain
available-for-sale securities during the first quarter of 2002, compared to an
average balance of $3.02 million in 2001. The available-for-sale securities
held in 2001 were all U.S. Agency securities that were called in the second
and third quarters of 2001. Interest income from held-to-maturity securities
declined from $45,000 for the three months ended March 31, 2001 to $32,000 for
the same period in 2002, mainly due to a decline in the average balance of
these investments. The total average balance of held-to-maturity securities
declined from $2.70 million during the first quarter of 2001 to $1.96 million
during the first quarter of 2002. Held-to-maturity securities were comprised
mainly of mortgage-backed securities in 2002 and 2001. The average yield on
investment securities decreased from 6.67% for the first three months of 2001
to 6.63% for the first three months of 2002.
Interest income from loans was $2,657,000 for the first quarter of 2002,
$30,000 less than the $2,687,000 recorded for the first three months of 2001.
Interest income from loans declined in 2002 due to a lower average yield,
which was a result of declining interest rates during 2001. The prime rate,
the rate used by financial institutions in establishing the majority of loan
offering rates, declined from a high of 9.50% in January 2001 to 4.75% in
December 2001. The prime rate has not changed in 2002. The average yield on
the Company's loans decreased from 8.25% for the first quarter of 2001 to
7.67% for the first quarter of 2002. The total average balance of loans,
including mortgage loans held for sale, was $8.46 million higher in 2002,
increasing from $132.10 million in 2001 to $140.56 million in 2002. The
increase in total average loan balances occurred mainly in one-to-four-family
residential mortgage, construction, commercial, and revolving home equity
loans.
Total average one-to-four-family residential mortgage loans, including
mortgage loans held for sale, were $81.33 million for the three months ended
March 31, 2002, compared to $77.55 million for the three months ended March
31, 2001, an increase of $3.78 million, or 4.9%. This growth occurred
primarily in 15 and 30 year fixed rate home loans originated for sale.
Average construction loans increased from $1.19 million for the first three
months of 2001 to $3.74 million for the same period 2002, an increase of $2.55
million. The majority of this increase was due to one construction loan for a
church.
Total average commercial loans were $9.13 million for the three months ended
March 31, 2002, compared to $7.05 million for the same period in 2001, an
increase of $2.08 million, or 29.5%. The increase in average total commercial
loans was due mainly to one large commercial loan entered into in late 2002.
Average total consumer loans, which includes revolving home equity loans, were
$12.66 million during the three months ended March 31, 2002, increasing $1.46
million from the $11.20 million total average balance during the first quarter
of 2001. The total average balance of revolving home equity loans increased
by $1.56 million.
Interest expense decreased by $335,000, or 22.1%, from $1,516,000 for the
three months ended March 31, 2001 to $1,181,000 for the same period in 2002,
mainly interest expense on deposits. Interest expense on deposits declined
$341,000, or 26.4%, from $1,290,000 for the quarter ended March 31, 2001 to
$949,000 for the quarter ended March 31, 2002. This decrease was primarily in
interest expense on certificates of deposit, which declined $290,000 in 2002.
Interest expense on certificates of deposit was $788,000 in the first quarter
of 2002 compared to $1,078,000 for the first quarter of 2001. The decline in
certificates of deposit interest expense was due to a reduction in the total
average balance of certificates and a decrease in the average rate. Total
average certificates of deposit declined from $72.11 million in the first
quarter of 2001 to $67.50 million in the first quarter of 2002. The decline
in average certificates of deposit was primarily in the eighteen month to two-
year maturity categories, offset by increases in the total average balances of
shorter-term certificates, those maturing in one year or less. Because of the
significant decline in market interest rates during 2001, many customers moved
maturing certificates to shorter-term certificates or into demand or savings
accounts. The average rate on certificates of deposit declined from 6.06% for
the first quarter of 2001 to 4.73% for the first quarter of 2002. Part of
this decline was due to the shift in the mix of certificates to shorter-term
maturities, which usually carry a lower rate. Also, with the declining rate
environment during 2001, the Company lowered offering rates for new and
renewing certificates.
Interest expense on interest-bearing demand and savings deposits also declined
in 2002, from $212,000 for the quarter ended March 31, 2001 to $161,000 for
the quarter ended March 31, 2002, a decline of $51,000, or 24.1%. The Company
lowered rates paid on demand and savings accounts due to the decline in
general market interest rates during 2001. The average balance of interest-
bearing demand and savings accounts increased $8.41 million, or 21.2%, from
$39.74 million in the first quarter of 2001 to $48.15 million for the same
period in 2002.
Interest expense on FHLB advances increased from $216,000 for the first
quarter of 2001 to $225,000 for the three months ended March 31, 2002 due to
an increase in the average balance of funds borrowed. The average balance of
FHLB advances was $19.40 million for the first quarter of 2002 compared to
$16.70 million for the same period in 2001. The average rate on FHLB advances
decreased from 5.25% for the three months ended March 31, 2001 to 4.70% for
the first quarter of 2002.
The provision for loan losses was $60,000 for the quarter ended March 31, 2002
compared to $36,000 for the quarter ended March 31, 2001. The higher
provision in 2002 was due to an increase in the monthly provision based on the
Company's analysis of the loan portfolio and the adequacy of the allowance for
loan losses during the quarter. The Company increased the monthly provision
in 2002 primarily due to increased lending in commercial and consumer loan
categories. 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.
During the first quarter of 2002, the Company had no loan charge-offs, but
collected $2,000 in recoveries. There was $7,000 in loans charged-off and
$2,000 in recoveries in the first quarter of 2001.
Non-performing loans, which are loans past due 90 days or more and
non-accruing loans, totaled $340,000 at March 31, 2002, compared to $359,000
at March 31, 2001. Non-performing loans at March 31, 2002 consisted of three
residential mortgage loans totaling $279,000, and five consumer loans totaling
$61,000. All of these loans were past due 90 days or more at March 31, 2002,
with one consumer loan totaling $9,000 in non-accrual status.
The ratio of the Company's allowance for loan losses to total loans was .80%
at March 31, 2002 and .68% at March 31, 2001.
Noninterest income totaled $780,000 for the three months ended March 31,
2002, compared to $527,000 for the same period in 2001, an increase of
$253,000, or 48.0%. This increase was mostly due to commissions generated by
GTPS Insurance Agency and net gains from the sale of mortgage loans, net of
commissions. Insurance sales commissions increased $143,000, or 44.8%, from
$319,000 reported for the first quarter in 2001 to $462,000 for the first
quarter in 2002, primarily due to commissions generated from new customers.
The Company sold $5.11 million in one-to-four-family residential loans in the
first quarter of 2002, recording gains of $106,000, which includes both the
cash gains on the sale of loans totaling $53,000 and the gains from
capitalizing mortgage servicing rights of $53,000. The Company had no loan
sales during the first quarter of 2001.
Noninterest expense was $1,446,000 for the first quarter of 2002, $12,000
higher than the $1,434,000 recorded for the first quarter of 2001, mainly the
result of increases in salaries and employee benefits expense and other
expenses, offset by reductions in net occupancy and equipment expenses.
Salaries and employee benefits increased $40,000, or 5.0%, from $795,000 for
the first three months of 2001 to $835,000 for the first three months of 2002,
due primarily to normal salary raises. Other expenses increased by $25,000,
from $95,000 for the quarter ended March 31, 2001 to $120,000 for the quarter
ended March 31, 2002, partly due to costs associated with the Company's debit
card program implemented in late 2001. Also, service charges related to check
processing and loan expenses tied mainly to the Company's revolving home
equity product were higher in 2002. Net occupancy expenses were lower in 2002
due mainly to reductions in utilities expense and snow removal charges.
Equipment expenses were lower in 2002 due to a reduction in depreciation
expense.
Total income taxes were $327,000 for the period ended March 31, 2002 and
$178,000 for the same period in 2001. The effective tax rate for the three
months ended March 31, 2002 and 2001, were 39.4% and 40.5% 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.
Three Months Ended March 31, 2002
(unaudited, in thousands)
Insurance/
Banking Brokerage
Services Services Company Eliminations Total
- ------------------------------------------------------------------------------
Interest income $ 2,738 $ -- $ 2,738 $ -- $ 2,738
Interest expense 1,181 -- 1,181 -- 1,181
Noninterest income 306 494 800 (20) 780
Net income 385 119 504 -- 504
Total assets 171,251 1,198 172,449 (1,476) 170,973
Three Months Ended March 31, 2001
(unaudited, in thousands)
Insurance/
Banking Brokerage
Services Services Company Eliminations Total
- ------------------------------------------------------------------------------
Interest income $ 2,898 $ -- $ 2,898 $ -- $ 2,898
Interest expense 1,516 -- 1,516 -- 1,516
Noninterest income 182 355 537 (10) 527
Net income 182 79 261 -- 261
Total assets 165,711 1,013 166,724 (1,037) 165,687
Liquidity and Capital Resources
The Bank's primary sources of funds are deposits and principal and interest
payments on loans. While maturities and scheduled amortization of loans are
predictable sources of funds, deposit flows and mortgage prepayments are
greatly influenced by general interest rates, economic conditions, and
competition. OTS regulations require the Bank to maintain sufficient
liquidity to ensure its safe and sound operation.
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 $9.88 million for the three months ended March
31, 2002, compared to an increase of $6.07 million for the three months ended
March 31, 2001. During the three months ended March 31, 2002, cash was
primarily provided from earnings, proceeds from sales of one-to-four-family
residential mortgage loans, loan repayments in excess of loan originations, an
increase in demand, money market, NOW and savings accounts, and proceeds from
FHLB advances. During this quarter, cash was primarily used to fund
originations of loans held for sale, a decrease in certificates of deposit,
the repayment of FHLB advances and to purchase treasury stock.
During the three months ended March 31, 2001, cash was primarily provided from
earnings, proceeds from maturities of securities, an increase in certificates
of deposit, and FHLB advances. During this quarter, cash was primarily used
to fund loans, a decrease in demand, money market NOW and savings accounts,
the repayment of FHLB advances and to purchase treasury stock.
The Company's primary investment activity during the three months ended March
31, 2002 was the origination of loans, including mortgage loans held for sale.
During the three months ended March 31, 2002 and March 31, 2001, the Company
originated mortgage loans in the amounts of $5.86 million and $4.09 million,
respectively, commercial loans in the amounts of $2.63 million and $2.31
million, respectively, and consumer loans in the amounts of $2.92 million and
$1.83 million, respectively.
As of March 31, 2002, the Company had outstanding commitments (including
undisbursed loan proceeds) of $2.85 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 March 31, 2002, totaled $47.60 million. Management believes
a significant portion of such deposits will remain with the Company.
At March 31, 2002, the Bank exceeded all of its regulatory capital
requirements with tangible capital and core capital both at $10.25 million or
6.29% of total adjusted tangible assets, core capital at $10.25 million or
6.29% of adjusted total assets, and risk-based capital at $11.35 million or
11.68% 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
In September 2001, SFAS No. 142 "Goodwill and Other Intangible Assets" was
issued effective for the first period of all fiscal years beginning after
December 13, 2001, with early adoption permitted for entities with fiscal
years beginning after March 15, 2001. SFAS No. 142 addresses how acquired
intangible assets should be accounted for in financial statements upon their
acquisition, and also how goodwill and other intangible assets should be
accounted for after they have been initially recognized in the financial
statements. In general, non-goodwill intangible assets are to be amortized in
accordance with their estimated useful lives. In addition, amortization of
goodwill has been eliminated, with capitalized goodwill now being subjected to
at least an annual assessment for impairment. A two-step process is to be
used to determine, first whether an impairment exists, and then whether an
adjustment is required. SFAS No. 142 was effective for the Company for the
fiscal quarter beginning January 1, 2002. The Company adopted SFAS No. 142
and performed the initial impairment assessment as of January 1, 2002. There
was no impairment of goodwill as of January 1, 2002.
In July 2001, SFAS No. 143, "Accounting for Asset Retirement Obligations" was
issued. SFAS No. 143 establishes standards for accounting and reporting of
obligations associated with the retirement of tangible long-lived assets and
associated asset retirement costs. SFAS No. 143 is effective beginning June
15, 2002. The adoption of this Statement is not expected to have an impact on
the Company.
In October 2001, SFAS No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets" was issued. Under SFAS No. 144, long-lived assets to be
sold within one year must be separately identified and carried at the lower of
carrying value or fair value less costs to sell.
Long-lived assets expected to be held longer than one year are subject to
depreciation and must be written down to fair value upon impairment. Long-
lived assets no longer expected to be sold within one year, such as some
foreclosed real estate, must be written down to the lower of current fair
value or fair value at the date of foreclosure adjusted to reflect
depreciation since acquisition. SFAS No. 144 must be implemented by January
1, 2002. The adoption of this Statement did not have an impact on the
Company.
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings
The Company is involved in various legal actions incident to its
business, none of which is believed by management to be material to the
financial condition of the Company.
Item 2. Changes in Securities
Not applicable
Item 3. Defaults Upon Senior Securities
Not applicable
Item 4. Submission of Matters to a Vote of Security Holders
None
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)
b. Report on Form 8-K
1. On January 11, 2002, the registrant filed a Current Report on
Form 8-K reporting information under items 5 and 7, incorporating by reference
a press release dated January 11, 2002 relating to the Company's announcement
that the 2002 Annual Meeting of Stockholders would be held on April 23, 2002.
2. On January 15, 2002, the Registrant filed a Current Report on
Form 8-K reporting information under Items 5 and 7, incorporating by reference
a press release dated January 15, 2002, relating to the Registrant's unaudited
results for the year ended December 31, 2001.
_______________
* 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
In accordance with the requirements of the Securities Exchange Act of
1934, the registrant caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
Great American Bancorp, Inc.
Dated: May 13, 2002 /s/ George R. Rouse
----------------------- ----------------------------
George R. Rouse
President and
Chief Executive Officer
Dated: May 13, 2002 /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):
Three Months Ended
March 31, 2002
-------------------------------
Weighted
Average Per Share
Income Shares Amount
-------------------------------
Basic Earnings Per Share
Income available to common stockholders $ 504 854,737 $ 0.59
Effect of Dilutive Securities
Stock options 57,251
Unearned incentive plan shares 5,432
-------------------------------
Diluted Earnings Per Share
Income available to common stockholders
and assumed conversion $ 504 917,420 $ 0.55
===============================
Three Months Ended
March 31, 2001
-------------------------------
Weighted
Average Per Share
Income Shares Amount
-------------------------------
Basic Earnings Per Share
Income available to common stockholders $ 261 985,535 $ 0.26
Effect of Dilutive Securities
Stock options 8,323
Unearned incentive plan shares 6,703
-------------------------------
Diluted Earnings Per Share
Income available to common stockholders
and assumed conversion $ 261 1,000,561 $ 0.26
===============================
1
16