UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended Commission File No. 000-25905-01
September 30, 2002
GUARANTY CAPITAL TRUST I
Delaware 54-6422391
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1658 State Farm Blvd., Charlottesville, VA 22911
(Address of Principal Executive Offices)
(434) 970-1100
(Issuer's Telephone Number, Including Area Code)
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 (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes _X_ No___
As of November 1, 2002, the Registrant had 8,537 shares of its Common
Stock outstanding.
* This Form 10-QSB also covers 276,000 shares of the Registrant's $1.75
Convertible Preferred Securities and the Guarantee with respect thereto.
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements. (See Note Below)
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
Guaranty Capital Trust I (the "Trust") is a statutory business trust
formed under the Delaware Business Trust Act, as amended, pursuant to a trust
agreement, as amended by an amended and restated declaration of trust (the
"Declaration"), and the filing of a certificate of trust with the Delaware
Secretary of State on November 21, 1997. The Trust exists for the exclusive
purposes of (i) issuing and selling trust securities consisting of $1.75
Convertible Preferred Securities (the "Preferred Securities") and common
securities (the "Common Securities," and together with the Preferred Securities,
the "Trust Securities"), representing undivided beneficial ownership interests
in the assets of the Trust, (ii) investing the proceeds from such issuance in
Junior Subordinated Debt Securities (the "Junior Subordinated Debt Securities")
of Guaranty Financial Corporation, a Virginia corporation (the "Corporation"),
and (iii) engaging in only those other activities necessary, advisable or
incidental thereto. The Trust's sole assets are $7,113,425 principal amount of
Junior Subordinated Debt Securities, and payments under the Junior Subordinated
Debt Securities are the sole revenues of the Trust. Ownership of the Trust is
evidenced by $6,900,000 aggregate liquidation amount of Preferred Securities and
by $213,425 aggregate liquidation amount of Common Securities, all of which are
held by the Corporation, as of May 5, 1998. The Trust makes distributions on the
Trust Securities to the extent it receives distributions from the Corporation on
the Junior Subordinated Debt Securities. Distributions on the Trust Securities
are guaranteed by the Corporation, but only to the extent that the Trust has
available funds to pay such distributions. Each Preferred Security is
convertible into a number of shares of the Corporation's common stock, $1.25 par
value, which trades on the Nasdaq National Market under the symbol "GSLC," at
the option of the holder at any time prior to repayment of the Preferred
Security either at redemption or maturity, and subject to the Corporation's
right to terminate the convertibility of the Preferred Securities.
On May 5, 1998, the Trust invested the proceeds from the sale and
issuance of the Trust Securities in the Junior Subordinated Debt Securities. The
Trust's ability to pay distributions to the holders of the Preferred Securities
is dependent on its receipt of distributions on the Junior Subordinated Debt
Securities from the Corporation. Therefore, upon the receipt by the Trust of
payments from the Corporation, the Trust will pass through such payments to the
holders of the Preferred Securities.
2
In December 1999, the Corporation repurchased 33,000 of the Preferred
Securities. Additionally, the Corporation repurchased 2,500 shares of the
Preferred Securities in January 2000.
In October 2000, both the Corporation and its primary operating
subsidiary, Guaranty Bank, entered into a written agreement with the Federal
Reserve Bank of Richmond ("FRB") and the Bureau of Financial Institutions of the
Commonwealth of Virginia ("BFI"). The agreement provides that neither the
Corporation nor Guaranty Bank shall declare or pay any dividends without the
prior written approval of the FRB and the BFI. Dividend income from Guaranty
Bank is the sole source of revenue of the Corporation. The interest payments on
the Junior Subordinated Debt Securities are the sole revenues of the Trust. The
Trust makes distributions on the Trust Securities to the extent that it receives
distributions from the Corporation on the Junior Subordinated Debt Securities.
On October 18, 2002, the FRB and the BFI terminated the written
agreement. Accordingly, Guaranty Bank is no longer required to obtain approval
by the FRB and the BFI to pay dividends to the Corporation in an amount
sufficient for the Corporation to make its interest payment on the Junior
Subordinated Debt Securities.
ITEM 3. Controls and Procedures
Disclosure Controls and Procedures
The Trust maintains disclosure controls and procedures that are
designed to provide assurance that information required to be disclosed by the
Trust in the reports that it files or submits under the Securities Exchange Act
of 1934 is recorded, processed, summarized and reported within the time periods
required by the Securities and Exchange Commission. Within the 90 day period
prior to the filing of this report, an evaluation of the effectiveness of the
design and operation of the Trust's disclosure controls and procedures was
carried out under the supervision and with the participation of management,
including the Trust's Administrative Trustees. Based on and as of the date of
such evaluation, the aforementioned trustees concluded that the Trust's
disclosure controls and procedures were effective. In addition, there were no
significant changes to the Trust's internal controls or in other factors that
could significantly affect those controls subsequent to the date of the most
recent evaluation by the Trust's Administrative Trustees.
NOTE: Because the Trust is a special purpose financing entity with no
separate business operations and the only assets of the Trust are the Junior
Subordinated Debt Securities, the Trust does not believe that financial
statements for the Trust are meaningful. Accordingly, financial statements and
related financial information have not been included in this Form 10-QSB. For
further information concerning the Corporation, including financial statements
and other financial information, see the Corporation's Annual Report on Form
10-KSB for the year ended December 31, 2001, and the Corporation's Quarterly
Reports on Form 10-QSB for the quarters ended March 31, 2002, June 30, 2002 and
September 30, 2002, as filed with the Securities and Exchange Commission, copies
of which may be obtained from the Corporate Secretary of the Corporation at 1658
State Farm Boulevard, Charlottesville, Virginia 22911.
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PART II
OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 2. Changes in Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
None.
(b) Reports on Form 8-K.
None.
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
GUARANTY CAPITAL TRUST I
(Registrant)
Date: November 14, 2002 /s/ William E. Doyle, Jr.
-----------------------------------
Name: William E. Doyle, Jr.
Title: Administrative Trustee
(as principal executive officer and
on behalf of the Registrant)
Date: November 14, 2002 /s/ Thomas F. Crump
------------------------------------
Name: Thomas F. Crump
Title: Administrative Trustee
(as principal financial officer)
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CERTIFICATIONS
I, William E. Doyle, Jr., certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Guaranty
Capital Trust I;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the filing
date of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about
the effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's ability
to record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves
management or other employees who have a significant role in the
registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: November 14, 2002 /s/ William E. Doyle, Jr.
--------------------------------------
William E. Doyle, Jr.
Administrative Trustee
CERTIFICATIONS
I, Thomas F. Crump, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Guaranty
Capital Trust I;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the filing
date of this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about
the effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's ability
to record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves
management or other employees who have a significant role in the
registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
Date: November 14, 2002 /s/ Thomas F. Crump
-------------------------------------
Thomas F. Crump
Administrative Trustee