UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (MARK ONE) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2000. OR [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _____________ TO ____________ COMMISSION FILE NUMBER: 000-24235 GUARANTY BANCSHARES, INC. (Exact name of registrant as specified in its charter) TEXAS 75-16516431 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 100 W. ARKANSAS MT. PLEASANT, TEXAS 75455 (Address of principal executive offices, including zip code) 903-572-9881 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [X]Yes [ ] No As of August 14, 2000, there were 3,066,444 shares of the registrant's Common Stock, par value $1.00 per share, outstanding.
GUARANTY BANCSHARES, INC. INDEX TO FORM 10-Q PART I - FINANCIAL INFORMATION PAGE Item 1. Financial Statements Consolidated Balance Sheets.................................... 3 Consolidated Statements of Earnings............................ 4 Condensed Consolidated Statements of Changes in Shareholders' Equity......................................... 5 Condensed Consolidated Statements of Cash Flows................ 6 Consolidated Statements of Comprehensive Income................ 7 Notes to Interim Consolidated Financial Statements............. 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.................................... 10 Item 3. Quantitative and Qualitative Disclosures about Market Risk..... 22 PART II - OTHER INFORMATION Item 1. Legal Proceedings............................................... 22 Item 2. Changes in Securities and Use of Proceeds....................... 22 Item 3. Defaults upon Senior Securities ................................ 22 Item 4. Submission of Matters to a Vote of Security Holders............. 22 Item 5. Other Information............................................... 22 Item 6. Exhibits and Reports on Form 8-K................................ 22 Signatures............................................................... 23 2
PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS GUARANTY BANCSHARES, INC. CONSOLIDATED BALANCE SHEETS (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) <TABLE> <CAPTION> June 30, December 31, 2000 1999 ---------- ------------ (UNAUDITED) <S> <C> <C> ASSETS Cash and due from banks ............................................ $ 13,527 $ 13,102 Interest bearing deposits in other banks ........................... 92 50 ---------- ------------ Total cash and cash equivalents ............................. 13,619 13,152 Federal funds sold ................................................. -- 1,140 Securities available-for-sale ...................................... 86,205 79,761 Loans, net of allowance for loan losses of $2,491 and $2,491 ....... 260,884 252,718 Premises and equipment, net ........................................ 13,510 11,662 Accrued interest receivable ........................................ 3,361 2,735 Other assets ....................................................... 12,493 9,270 ---------- ------------ Total assets ................................................ $ 390,072 $ 370,438 ========== ============ LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities Deposits: Noninterest-bearing .......................................... $ 57,954 $ 56,404 Interest-bearing ............................................. 280,942 272,233 ---------- ------------ Total deposits ............................................ 338,896 328,637 ---------- ------------ FHLB advances ...................................................... 11,553 10,699 Long-term debt ..................................................... 7,000 -- Fed funds purchased ................................................ 2,045 -- Other liabilities .................................................. 2,990 2,606 ---------- ------------ Total liabilities ........................................ 362,484 341,942 ---------- ------------ Shareholders' equity: Preferred stock, $5.00 par value, 15,000,000 shares authorized, none issued ............................................... -- -- Common stock, $1.00 par value, 50,000,000 shares authorized, 3,250,016 issued .......................................... 3,250 3,250 Additional capital ................................................. 12,659 12,659 Retained earnings .................................................. 14,396 13,535 Treasury stock 160,272, and 17,600 shares at cost .................. (1,723) (174) Accumulated other comprehensive income ............................. (994) (774) ---------- ------------ Total shareholders' equity ......................................... 27,588 28,496 ---------- ------------ Total liabilities and shareholders' equity ......................... $ 390,072 $ 370,438 ========== ============ </TABLE> See accompanying notes to consolidated financial statements. 3
GUARANTY BANCSHARES, INC. CONSOLIDATED STATEMENTS OF EARNINGS (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) (UNAUDITED) <TABLE> <CAPTION> THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, ------------------ ------------------- 2000 1999 2000 1999 -------- -------- -------- -------- <S> <C> <C> <C> <C> Interest income: Loans ................................................ $ 5,596 $ 3,933 $ 10,913 $ 7,814 Securities ........................................... 1,442 711 2,756 1,483 Federal funds sold and other temporary investments ... 74 150 118 260 -------- -------- -------- -------- Total interest income ............................. 7,112 4,794 13,787 9,557 Interest expense: Deposits ............................................. 3,633 2,293 7,067 4,514 FHLB advances and federal funds purchased ............ 155 52 275 104 Long-term debt ....................................... 192 -- 211 -- -------- -------- -------- -------- Total interest expense ............................ 3,980 2,345 7,553 4,618 -------- -------- -------- -------- Net interest income ............................... 3,132 2,449 6,234 4,939 Provision for loan losses ............................... 185 70 315 175 -------- -------- -------- -------- Net interest income after provision for loan losses 2,947 2,379 5,919 4,764 Noninterest income: Service charges ...................................... 597 435 1,139 840 Other operating income ............................... 271 213 640 465 Realized (loss) gain on available-for-sale securities -- 7 (34) 12 -------- -------- -------- -------- Total noninterest income .......................... 868 655 1,745 1,317 -------- -------- -------- -------- Noninterest expense: Employee compensation and benefits ................... 1,639 1,226 3,409 2,494 Net bank premises expense ............................ 414 333 831 642 Other operating expenses ............................. 871 738 1,803 1,388 -------- -------- -------- -------- Total noninterest expenses ........................ 2,924 2,297 6,043 4,524 -------- -------- -------- -------- Earnings before income taxes ...................... 891 737 1,621 1,557 Provision for income taxes .............................. 203 180 388 345 -------- -------- -------- -------- Net earnings ...................................... $ 688 $ 557 $ 1,233 $ 1,212 ======== ======== ======== ======== Basic earnings per common share ................... $ 0.22 $ 0.19 $ 0.39 $ 0.42 ======== ======== ======== ======== Diluted earnings per common share ................. $ 0.22 $ 0.19 $ 0.39 $ 0.42 ======== ======== ======== ======== </TABLE> See accompanying notes to consolidated financial statements. 4
GUARANTY BANCHSHARES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DOLLARS IN THOUSANDS) (UNAUDITED) <TABLE> <CAPTION> THREE MONTHS ENDED SIX MONTHS ENDED ------------------- ------------------- JUNE 30, JUNE 30, ------------------- ------------------- 2000 1999 2000 1999 -------- -------- -------- -------- <S> <C> <C> <C> <C> Balance at beginning of period ...................... $ 28,727 $ 24,285 $ 28,496 $ 23,796 Net income .......................................... 688 557 1,233 1,212 Less cash dividends declared on common stock ........ (372) (346) (372) (346) Less purchases of treasury stock .................... (1,549) (116) (1,549) (116) Change in unrealized gain/loss on securities available for sale, net of tax ....... 94 (262) (220) (428) -------- -------- -------- -------- Balance at end of period ............................ $ 27,588 $ 24,118 $ 27,588 $ 24,118 ======== ======== ======== ======== </TABLE> See accompanying Notes to Interim Consolidated Financial Statements. 5
GUARANTY BANCHSHARES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (DOLLARS IN THOUSANDS) (UNAUDITED) <TABLE> <CAPTION> SIX MONTHS ENDED JUNE 30, ------------------- 2000 1999 -------- -------- <S> <C> <C> Net cash provided by operating activities .............................. $ (1,222) $ 1,348 Cash flows from investing activities: Securities available for sale: Purchases .......................................................... (16,243) (8,115) Sales .............................................................. 5,314 5,021 Maturities, calls, and principal repayments ........................ 4,170 4,607 Securities held to maturity: Purchases .......................................................... -- (1,253) Maturities, calls, and principal repayments ........................ -- 994 Net increase in loans .............................................. (8,844) (17,886) Purchases of premises and equipment ................................ (2,241) (950) Proceeds from sale of premises, equipment and other real estate .... 156 71 Net decrease (increase) in federal funds sold ...................... 1,140 (320) -------- -------- Net cash used by investing activities ........................ (16,548) (17,831) -------- -------- Cash flows from financing activities: Change in deposits ................................................. 10,259 18,864 Net change in short-term FHLB advances ............................. 1,000 -- Repayment of long-term FHLB advances ............................... (146) (139) Proceeds from issuance of trust preferred securities ............... 7,000 -- Increase in federal funds purchased ................................ 2,045 -- Purchase of treasury stock ......................................... (1,549) (116) Dividends paid ..................................................... (372) (346) -------- -------- Net cash provided from financing activities .................. 18,237 18,263 -------- -------- Net increase in cash and cash equivalents .................... 467 1,780 Cash and cash equivalents at beginning of period ......................... 13,152 11,721 -------- -------- Cash and cash equivalents at end of period ............................... $ 13,619 $ 13,501 ======== ======== Supplemental disclosures: Cash paid for income taxes .......................................... $ 420 $ 527 Cash paid for interest .............................................. $ 7,193 $ 4,596 Significant non-cash transactions: Transfers from loans to real estate owned ........................... $ 582 $ 67 </TABLE> See accompanying notes to consolidated financial statements. 6
GUARANTY BANCSHARES, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (DOLLARS IN THOUSANDS) (UNAUDITED) <TABLE> <CAPTION> THREE MONTHS SIX MONTHS ENDED JUNE 30, ENDED JUNE 30, ------------------- ------------------- 2000 1999 2000 1999 -------- -------- -------- -------- <S> <C> <C> <C> <C> Net income ..................................................... $ 688 $ 557 $ 1,233 $ 1,212 Other comprehensive income: Unrealized gain/(loss) on available for sale securities arising during the period .............................. 143 (389) (366) (636) Reclassification adjustment for amounts realized on securities sales included in net income ................ -- (7) 34 (12) -------- -------- -------- -------- Net unrealized gain/(loss) ......................... 143 (396) (332) (648) Tax effect ......................................... (49) 134 112 220 -------- -------- -------- -------- Total other comprehensive income .............. 94 (262) (220) (428) -------- -------- -------- -------- Comprehensive income ........................................... $ 782 $ 295 $ 1,013 $ 784 ======== ======== ======== ======== </TABLE> 7
GUARANTY BANCSHARES, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2000 (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED) NOTE 1. BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements include the accounts of Guaranty Bancshares, Inc. (the "Company") and its wholly-owned subsidiaries Guaranty (TX) Capital Trust I and Guaranty Financial Corp., Inc., which wholly owns Guaranty Bank, and one non-bank subsidiary, Guaranty Company. Guaranty Bank has three wholly-owned non-bank subsidiaries, Guaranty Leasing Company, Guaranty Mortgage Company and GB Com, Inc. All significant intercompany balances and transactions have been eliminated in consolidation. The accompanying unaudited consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for a complete presentation of financial position. In the opinion of management, the accompanying unaudited consolidated financial statements reflect all adjustments necessary for a fair presentation of the financial position, results of operations and cash flows of the Company on a consolidated basis, and all such adjustments are of a normal recurring nature. These financial statements and the notes thereto should be read in conjunction with the Company's Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 10, 2000. The Company has consistently followed the accounting policies described in the Annual Report in preparing this Form 10-Q. Operating results for the six months ended June 30, 2000, are not necessarily indicative of the results that may be expected for the year ending December 31, 2000. In preparation of the accompanying unaudited consolidated financial statements, management is required to make estimates and assumptions which are based on information available at the time such estimates and assumptions are made. These estimates and assumptions affect the amounts reported in the accompanying unaudited consolidated financial statements. Accordingly, future results may differ if the actual amounts and events are not the same as the estimates and assumptions of management. The collectibility of loans, fair value of financial instruments and status of contingencies are particularly subject to change. NOTE 2. EARNINGS PER SHARE The following table illustrates the computation of earnings per share ("EPS"): <TABLE> <CAPTION> THREE MONTHS SIX MONTHS ENDED JUNE 30, ENDED JUNE 30, ---------------------- ---------------------- 2000 1999 2000 1999 ---------- ---------- ---------- ---------- <S> <C> <C> <C> <C> Net earnings available to common shareholders ........ $ 688 $ 557 $ 1,233 $ 1,212 Weighted average common shares used in basic EPS ..... 3,145,457 2,898,280 3,188,936 2,898,280 Potential dilutive common shares ..................... -- -- -- -- ---------- ---------- ---------- ---------- Weighted average common and potential dilutive common shares used in dilutive EPS ............. 3,145,457 2,898,280 3,188,936 2,898,280 ========== ========== ========== ========== Basic earnings per common share ...................... $ 0.22 $ 0.19 $ 0.39 $ 0.42 ========== ========== ========== ========== Diluted earnings per common share .................... $ 0.22 $ 0.19 $ 0.39 $ 0.42 ========== ========== ========== ========== </TABLE> 8
NOTE 3. GUARANTEED PREFERED BENEFICIAL INTERESTS IN JUNIOR SUBORDINATED DEBENTURES On March 23, 2000, the Company, in a private placement, issued $7,000,000 (7,000 shares with a liquidation amount of $1,000 per security) of 10.875% Fixed Rate Capital Trust Pass-through Securities ("TruPS") through a newly formed, wholly-owned subsidiary, Guaranty (TX) Capital Trust I (the "Trust"). The Trust invested the total proceeds from the sale of the TruPS in 10.875% Junior Subordinated Deferrable Interest Debentures (the "Debentures") issued by the Company. The net proceeds from the sale of the Debentures will be used to buy back shares of the Company's stock, provide a $1.5 million additional capital contribution to Guaranty Bank and provide for additional working capital to support growth. With certain exceptions, the amount of the principal and any accrued and unpaid interest on the Debentures are subordinated in right of payment to the prior payment in full of all senior indebtedness of the Company. The terms of the Debentures are such that they qualify as Tier I capital under the Federal Reserve Board's regulatory capital guidelines applicable to bank holding companies. Interest on the Debentures is payable semi-annually on March 8 and September 8 of each year, commencing September 8, 2000. The interest is deferrable on a cumulative basis for up to five consecutive years following a suspension of dividend payments on all other capital stock. No principal payments are due until maturity on March 8, 2030. On any March 8 or September 8 on or after March 8, 2010 and prior to maturity, the Debentures are redeemable for cash at the option of the Company, on at least 30 but not more than 60 days notice, in whole or in part, at the redemption prices set forth in the table below, plus accrued interest to the date of redemption. IF REDEEMED DURING IF REDEEMED DURING PERCENTAGE OF 12 MONTHS PERCENTAGE OF 12 MONTHS BEGINNING PRINCIPAL BEGINNING PRINCIPAL MARCH 8, AMOUNT MARCH 31, AMOUNT - -------------------- ------------------ ------------------ ---------------- 2010 105.438% 2016 102.175% 2011 104.894% 2017 101.631% 2012 104.350% 2018 101.088% 2013 103.806% 2019 100.544% 2014 103.263% 2020 and after 100.000% 2015 102.719% Upon the occurrence of certain special events, the Company will have the right to call the securities at par at any time with the permission of the Federal Reserve. These special events include, among other things: 1. A change in the laws or regulations in the United States or any taxing authority to the effect that the Trust becomes subject to federal income tax and the interest paid by the Company is no longer tax deductible. 2. A change in the law by any government agency that would make the Trust an investment company under the Investment Company Act of 1940. 3. A change in the law by any government agency that would cause the Company to not be able to treat the liquidation amount of the debt security as Tier I Capital. 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This Management's Discussion and Analysis includes forward-looking statements. When used in this document, the words or phrases such as, "will likely result," "are expected to," "will continue," "is anticipated," "estimated," "projected," or similar expressions are intended to identify "forward looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks and uncertainties including changes in economic conditions in the Company's market area, changes in policies by regulatory agencies, fluctuations in interest rates, demand for loans in the Company's market area and competition, that could cause actual results to differ materially from historical earnings and those presently anticipated or projected. Factors listed above could affect the Company's financial performance and could cause the Company's results for future periods to differ materially from any statements expressed with respect to future periods. The Company does not undertake, and specifically disclaims any obligation, to publicly revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. GENERAL OVERVIEW Guaranty Bancshares, Inc. (the "Company") is a registered bank holding company that derives substantially all of its revenues and income from the operation of its subsidiary, Guaranty Bank (the "Bank"). The Bank is a full service bank that provides a broad line of financial products and services to small and medium-sized businesses and consumers through ten banking locations in the Texas communities of Mount Pleasant (two offices), Bogata, Commerce, Deport, Paris, Pittsburg, Sulphur Springs, Talco and Texarkana. FINANCIAL OVERVIEW Net earnings available to common shareholders for the six months ended June 30, 2000 were $1.2 million or $0.39 per share compared with $1.2 million or $0.42 per share for the six months ended June 30, 1999, an increase of $21,000 or 1.7%. The increase is due primarily to an increase in net interest income of $1.3 million or 26.2% and an increase in noninterest income of $428,000 or 32.5% offset by an increase in noninterest expense of $1.5 million or 33.6%. These increases are due in part to the growth in loans, in deposits and in other liabilities. Net earnings for the three months ended June 30, 2000 were $688,000 or $0.22 per share compared with $557,000 or $0.19 per share for the three months ended June 30, 1999, an increase of $131,000 or 23.5%. The increase is primarily due to an increase in net interest income and noninterest income partly offset by an increase in noninterest expense. The first six months of year 2000 showed steady growth. Gross loans increased to $263.3 million at June 30, 2000, from $255.2 million at December 31, 1999, an increase of $8.1 million or 3.2%. Total assets increased to $390.1 million at June 30, 2000, compared with $370.4 million at December 31, 1999. The increase of $19.7 million in total assets resulted primarily from the investment of increased deposits of $10.3 million, an increase in federal funds purchased of $2.0 million and the issuance of the debentures of $7.0 million. Total deposits increased to $338.9 million at June 30, 2000 compared to $328.6 million at December 31, 1999, an increase of $10.3 million or 3.1%. There were no debentures outstanding at December 31, 1999. Total shareholders' equity was $27.6 million at June 30, 2000, compared with $28.5 million at December 31, 1999, a decrease of $908,000 or 3.2%. This decrease was due to earnings for the period of $1.2 million offset by the purchase of 142,672 shares of treasury stock at a cost of $1.5 million, the payment of dividends of $372,000 and a decrease in accumulated other comprehensive income of $220,000. 10
RESULTS OF OPERATIONS INTEREST INCOME Interest income for the six months ended June 30, 2000 was $13.8 million, an increase of $4.2 million or 44.3% compared with the six months ended June 30, 1999. The increase in interest income was due primarily to higher interest income on loans and securities. Average loans were $259.0 million for the six months ended June 30, 2000, compared with $194.6 million for the six months ended June 30, 1999, an increase of $64.4 million or 33.1%. Average securities were $84.2 million for the six months ended June 30, 2000, compared with $49.4 million for the six months ended June 30, 1999, an increase of $34.8 million or 70.4%. Interest income for the three months ended June 30, 2000 was $7.1 million, an increase of $2.3 million or 48.4% compared with the three months ended June 30, 1999. Growth in the average volume of interest-earning assets was a result in part, of the acquisition of First American and an increase in the average yield earned on interest-earnings assets during the three and six-months period ended June 30, 2000. INTEREST EXPENSE Interest expense on deposits and other interest-bearing liabilities was $7.6 million for the six months ended June 30, 2000, compared with $4.6 million for the six months ended June 30, 1999, an increase of $3.0 million or 63.6%. The increase in interest expense was due primarily to a 43.1% increase in average interest-bearing liabilities to $297.8 million for the six months ended June 30, 2000, from $208.1 million for the six months ended June 30, 1999. The increase is also due to a rise in average interest rate paid on interest-bearing liabilities from 4.50% for the six months ended June 30, 1999 to 5.10% for the six months ended June 30, 2000. Interest expense was $4.0 million for the three months ended June 30, 2000, compared with $2.3 million for the three months ended June 30, 1999, an increase of $1.7 million or 69.7%. The increase for the comparable three-month periods was also due to increases in average balances and average interest rates of interest-bearing liabilities. NET INTEREST INCOME Net interest income was $6.2 million for the six months ended June 30, 2000 compared with $4.9 million for the six months ended June 30, 1999, an increase of $1.3 million or 26.2%. The increase in net interest income resulted primarily from growth in average interest-earning assets to $347.3 million for the six months ended June 30, 2000, from $254.7 million for the six months ended June 30, 1999, an increase of $92.6 million or 36.4%. Net interest income was $3.1 million for the three months ended June 30, 2000, compared with $2.4 million for the three months ended June 30, 1999, an increase of $683,000 or 27.9%. The net interest margin decreased from 3.83% to 3.57% for the three months ended June 30, 2000 and from 3.93% to 3.61% for the six months ended June 30, 2000 compared to the same three and six-month period ended June 30,1999. This decrease can be attributed to the fact that the percentage growth in average interest-bearing liabilities exceeded the percentage growth in average interest-earning assets causing the ratio of average interest-earning assets to average interest-bearing liabilities to decrease. Additionally, the average rate paid on interest-bearing liabilities increased at a faster rate than the average rate earned on interest-earning assets due to the Bank's negative gap position and the rising interest rate environment. The Company's net interest income is affected by changes in the amount and mix of interest-earning assets and interest-bearing liabilities, referred to as a "volume change." It is also affected by changes in yields earned on interest-earning assets and rates paid on interest-bearing deposits and other borrowed funds, referred to as a "rate change." The following tables set forth, for each category of interest-earning assets and interest-bearing liabilities, the average amounts outstanding, the interest earned or paid on such amounts, and the average rate earned or paid for the three and six months ended June 30, 2000 and 1999, respectively. The tables also set forth the average rate earned on total interest-earning assets, the average rate paid on total interest-bearing liabilities, the net interest spread and the net interest margin for the same periods. The net interest spread is the difference between the average rate earned on total interest-earning assets less the average rate paid on total interest-bearing liabilities. The net interest margin is net interest income as a percentage of average interest-earning assets. 11
<TABLE> <CAPTION> THREE MONTHS ENDED JUNE 30, -------------------------------------------------------------- 2000 1999 ------------------------------ ------------------------------ AVERAGE INTEREST AVERAGE AVERAGE INTEREST AVERAGE OUTSTANDING EARNED/ YIELD/ OUTSTANDING EARNED/ YIELD/ BALANCE PAID RATE BALANCE PAID RATE ----------- -------- ------- ----------- -------- ------- (Dollars in thousands) (Unaudited) <S> <C> <C> <C> <C> <C> <C> Interest-earning assets: Loans: Commercial and industrial ................................... $ 65,998 $ 1,422 8.67% $ 62,209 $ 1,215 7.92% Agriculture ................................................. 8,293 202 9.80% -- -- Real estate-mortgage and construction .............................................. 158,509 3,263 8.28% 115,540 2,220 7.79% Installment and other ....................................... 27,285 657 9.68% 21,363 487 9.25% Fees on loans ............................................... -- 52 -- 11 Securities .................................................. 87,601 1,442 6.62% 47,593 711 6.06% Federal funds sold .......................................... 5,081 73 5.78% 10,474 124 4.80% Interest-bearing deposits in other financial institutions .............................. 23 1 4.36% 2,006 26 5.26% ----------- -------- ----------- -------- Total interest-earning assets ............................... 352,790 7,112 8.11% 259,185 4,794 7.50% Less allowance for loan losses ................................... (2,476) (1,530) ----------- ----------- Total interest-earning assets, net of allowance .............................. 350,314 257,655 Non-earning assets: Cash and due from banks ...................................... 11,543 9,135 Premises and equipment ....................................... 13,316 7,581 Interest receivable and other assets ........................................... 14,117 8,431 Other real estate owned ...................................... 312 133 ----------- ----------- Total assets .......................................... $ 389,602 $ 282,935 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Interest-bearing liabilities: NOW, savings, and money market accounts ......................................... $ 96,728 $ 984 4.09% $ 67,468 $ 557 3.35% Time deposits ............................................... 188,442 2,649 5.65% 137,341 1,736 5.13% ----------- -------- ----------- -------- Total interest-bearing deposits ............................................. 285,170 3,633 5.12% 204,809 2,293 4.54% FHLB advances and federal funds purchased.................... 11,236 155 5.55% 3,872 52 5.45% Long-term debt .............................................. 7,000 192 11.03% -- -- -- ----------- -------- ----------- -------- Total interest-bearing liabilities .......................................... 303,406 $ 3,980 5.28% 208,681 $ 2,345 4.56% -------- -------- Noninterest-bearing liabilities: Demand deposits ............................................. 56,101 47,326 Accrued expenses and other liabilities ...................... 2,542 2,674 ----------- ----------- Total liabilities ....................................... 362,049 258,681 Shareholders' equity ............................................. 27,553 24,254 ----------- ----------- Total liabilities and shareholders' equity ................................ $ 389,602 $ 282,935 =========== =========== Net interest income ............................................... $ 3,132 $ 2,449 ======== ======== Net interest spread ............................................... 2.83% 2.94% -------- -------- Net interest margin ............................................... 3.57% 3.83% -------- -------- </TABLE> 12
<TABLE> <CAPTION> SIX MONTHS ENDED JUNE 30, ------------------------------------------------------------------- 2000 1999 --------------------------------- -------------------------------- AVERAGE INTEREST AVERAGE AVERAGE INTEREST AVERAGE OUTSTANDING EARNED/ YIELD/ OUTSTANDING EARNED/ YIELD/ BALANCE PAID RATE BALANCE PAID RATE ----------- -------- ------- ----------- -------- ------- (Dollars in thousands) (Unaudited) <S> <C> <C> <C> <C> <C> <C> ASSETS Interest-earning assets: Loans: Commercial and industrial .............................. $ 66,912 $ 2,815 8.46% $ 59,671 $ 2,378 8.08% Agriculture ............................................ 8,508 410 9.69% -- Real estate-mortgage and construction ........................................ 156,223 6,347 8.17% 113,813 4,426 7.89% Installment and other .................................. 27,367 1,286 9.45% 21,117 988 9.49% Fees on loans .......................................... -- 55 -- 22 Securities ............................................. 84,183 2,756 6.58% 49,396 1,483 6.09% Federal funds sold ..................................... 4,129 117 5.70% 8,714 207 4.82% Interest-bearing deposits in other financial institutions ......................... 19 1 4.36% 1,980 53 5.43% ----------- -------- ----------- -------- Total interest-earning assets .......................... 347,341 13,787 7.98% 254,691 9,557 7.61% Less allowance for loan losses .............................. (2,477) (1,528) ----------- ----------- Total interest-earning assets, net of allowance ......................... 344,864 253,163 Non-earning assets: Cash and due from banks ................................. 12,248 8,940 Premises and equipment .................................. 12,807 7,568 Interest receivable and other assets ...................................... 13,062 9,329 Other real estate owned ................................. 231 134 ----------- ----------- Total assets ..................................... $ 383,212 $ 279,134 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Interest-bearing liabilities: NOW, savings, and money market accounts .................................... $ 95,064 $ 1,913 4.05% $ 66,932 $ 1,069 3.24% Time deposits .......................................... 188,296 5,154 5.50% 137,217 3,445 5.09% ----------- -------- ----------- -------- Total interest-bearing deposits ........................................ 283,360 7,067 5.02% 204,149 4,514 4.48% FHLB advances and federal funds purchased ............ 10,556 275 5.24% 3,933 104 5.36% Long-term debt ...................................... 3,846 211 11.03% -- -- -- ----------- -------- ----------- -------- Total interest-bearing liabilities ..................................... 297,762 $ 7,553 5.10% 208,082 $ 4,618 4.50% -------- -------- Noninterest-bearing liabilities: Demand deposits ........................................ 55,131 44,085 Accrued expenses and other liabilities .................................. 2,367 2,631 ----------- ----------- Total liabilities .................................. 355,260 254,798 Shareholders' equity ........................................ 27,952 24,336 ----------- ----------- Total liabilities and shareholders' equity ........................... $ 383,212 $ 279,134 =========== =========== Net interest income .......................................... $ 6,234 $ 4,939 ======== ======== Net interest spread .......................................... 2.88% 3.11% -------- -------- Net interest margin .......................................... 3.61% 3.93% -------- -------- </TABLE> 13
The following tables present the dollar amount of changes in interest income and interest expense for the major components of interest-earning assets and interest-bearing liabilities and distinguishes between the increase (decrease) related to outstanding balances and the volatility of interest rates. For purposes of these tables, changes attributable to both rate and volume that can be segregated have been allocated (dollars in thousands): <TABLE> <CAPTION> THREE MONTHS ENDED JUNE 30, ------------------------------ 2000 VS. 1999 ------------------------------ INCREASE (DECREASE) DUE TO ------------------- VOLUME RATE TOTAL -------- -------- --------- (UNAUDITED) <S> <C> <C> <C> Interest-earning assets: Loans ............................................. $ 1,247 $ 416 $ 1,663 Securities ........................................ 609 122 731 Federal funds sold ................................ (63) 12 (51) Interest-bearing deposits in other financial institutions ......................... (25) -- (25) -------- -------- --------- Total increase (decrease) in interest income . 1,768 550 2,318 -------- -------- --------- Interest-bearing liabilities: NOW, savings, and money market accounts ....................................... 248 179 427 Time deposits ..................................... 666 247 913 FHLB advances and federal funds purchased ......... 100 3 103 Long-term debt .................................... 192 -- 192 -------- -------- --------- Total increase (decrease) in interest expense . 1,206 429 1,635 -------- -------- --------- Increase (decrease) in net interest income ... $ 562 $ 121 $ 683 ======== ======== ========= </TABLE> 14
SIX MONTHS ENDED JUNE 30, -------------------------------- 2000 VS. 1999 -------------------------------- INCREASE (DECREASE) DUE TO ------------------- VOLUME RATE TOTAL -------- -------- --------- (UNAUDITED) Loans .................................... $ 2,673 $ 426 $ 3,099 Securities ............................... 1,065 208 1,273 Federal funds sold ....................... (108) 18 (90) Interest-bearing deposits in other financial institutions ................ (52) -- (52) -------- -------- --------- Total increase (decrease) in interest income ................................... 3,578 652 4,230 -------- -------- --------- Interest-bearing liabilities: NOW, savings, and money market accounts .............................. 462 382 844 Time deposits ............................ 1,322 387 1,709 FHLB advances and federal funds purchased. 177 (6) 171 Long-term debt ........................... 211 -- 211 -------- -------- --------- Total increase (decrease) in interest expense ........................ 2,172 763 2,935 -------- -------- --------- Increase (decrease) in net interest income $ 1,406 $ (111) $ 1,295 ======== ======== ========= 15
PROVISION FOR LOAN LOSSES Provisions for loan losses are charged to income to bring the total allowance for loan losses to a level deemed appropriate by management of the Company based on such factors as the industry diversification of the Company's commercial loan portfolio, the effect of changes in the local real estate market on collateral values, the results of recent regulatory examinations, the effects on the loan portfolio of current economic indicators and their probable impact on borrowers, the amount of charge-offs for the period, the amount of nonperforming loans and related collateral security, the evaluation of the Company's loan portfolio by Independent Bank Services, L.C. and the annual examination of the Company's financial statements by its independent auditors. The provision for loan losses for the six months ended June 30, 2000, was $315,000 compared with $175,000 for the six months ended June 30, 1999, an increase of $140,000 or 80.0%. The provision for loan losses for the three months ended June 30, 2000, was $185,000 compared with $70,000 for the three months ended June 30, 1999, an increase of $115,000 or 164.3%. The increases were due to the increases in average loans of 30.6% and 33.1% over the comparable three- and six-month periods. Management believes increasing the allowance for loan losses is prudent as total loans, particularly higher-risk commercial, construction, and consumer loans, increase. NONINTEREST INCOME The following table presents, for the periods indicated, the major categories of noninterest income (dollars in thousands): <TABLE> <CAPTION> THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, ------------------ ------------------- 2000 1999 2000 1999 -------- -------- -------- -------- (UNAUDITED) <S> <C> <C> <C> <C> Service charges on deposit accounts ....... $ 597 $ 435 $ 1,139 $ 840 Fee income ................................ 134 114 326 231 Fiduciary income .......................... 18 13 43 30 Other noninterest income .................. 119 86 271 204 Realized gain (loss) on securities ........ -- 7 (34) 12 -------- -------- -------- -------- Total noninterest income ............ $ 868 $ 655 $ 1,745 $ 1,317 ======== ======== ======== ======== </TABLE> The Company's primary sources of recurring noninterest income are service charges on deposit accounts and fee income. Noninterest income for the three and six-months period ended June 30, 2000 increased $213,000, or 32.5%, and $428,000 or 32.5%, respectively, over the same periods ended June 30, 1999. The increase in noninterest income for the three and six-months ended June 30, 2000 was primarily due to an increase in service charges on deposit accounts created by an increase in the number of deposit accounts. Additionally, fee income increased $20,000 or 17.5%, and $95,000 or 41.1% for the three and six-months ended June 30, 2000, over the three and six-months ended June 30, 1999. The increase was primarily due to fee income from the Cash Flow Manager program initiated in September 1999 and additional legal fee income generated from the Company's internal legal counsel. Other noninterest income increased $33,000 or 38.4% and $67,000 or 32.8% during the same periods due primarily to additional earnings generated from the key man life insurance policies that the Company owns. 16
NONINTEREST EXPENSES The following table presents, for the periods indicated, the major categories of noninterest expenses (dollars in thousands): THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, ------------------ ------------------ 2000 1999 2000 1999 -------- -------- -------- -------- (UNAUDITED) Employee compensation and benefits ..... $ 1,639 $ 1,226 $ 3,409 $ 2,494 -------- -------- -------- -------- Non-staff expenses: Net bank premises expense ........... 414 333 831 642 Office and computer supplies ........ 72 94 174 145 Legal and professional fees ......... 176 126 247 227 Advertising ......................... 93 47 162 89 Postage ............................. 35 33 74 67 FDIC insurance ...................... 17 6 33 13 Other ............................... 478 432 1,113 847 -------- -------- -------- -------- Total non-staff expenses ......... 1,285 1,071 2,634 2,030 -------- -------- -------- -------- Total noninterest expenses ....... $ 2,924 $ 2,297 $ 6,043 $ 4,524 ======== ======== ======== ======== Employee compensation and benefits expense increased $413,000, or 33.7%, and $915,000, or 36.7%, for the three and six months ended June 30, 2000 compared to the same periods in 1999. The increase for both the three and six- month periods ended June 30, 2000 was due primarily to normal salary increases and additional staff placement in the Texarkana, Mt. Pleasant, and Paris locations to handle customer growth and the recently opened Sulphur Springs, and Commerce locations. The number of full-time equivalent employees was 185 at June 30, 2000, compared with 146 at June 30, 1999, an increase of 26.7%. Non-staff expenses increased $214,000 or 20.0%, and $604,000 or 29.8%, for the three and six months ended June 30, 2000, compared with the same periods in 1999. Advertising expense increased $46,000 or 97.8% and $73,000 or 82.0% for the three and six-month periods ended June 30, 2000 due to the hiring of an advertising agency and stronger emphasis on Company recognition in its newer markets. Net bank premises expense increased $81,000, or 24.3%, and $189,000, or 29.4%, over the comparable periods due to construction and remodeling projects and the addition of the new Operations Center in Mt. Pleasant, Texas. Other non-staff expenses increased $46,000, or 10.6% and $266,000, or 31.4%, over the comparable three and six-month periods due to the addition of new locations which, among other expenses, resulted in increases in director fees, supplies expense, ATM and debit card expenses, and amortization of goodwill. INCOME TAXES Income tax expense increased $43,000 to $388,000 for the six months ended June 30, 2000 from $345,000 for the same period in 1999. Income tax expense was $203,000 for the three months ended June 30, 2000 compared with $180,000 for the three months ended June 30, 1999, an increase of $23,000. The change in income tax expense is primarily attributable to the change in income before income taxes. The increase is also a result of fewer tax deductions available from the Company's leveraged leasing activities. The income stated on the consolidated statement of earnings differs from the taxable income due to tax-exempt income, the amount of non-deductible interest expense and the amount of other non-deductible expense. 17
FINANCIAL CONDITION LOAN PORTFOLIO Gross loans were $263.4 million at June 30, 2000, an increase of $8.2 million or 3.2% from $255.2 million at December 31, 1999. Loan growth occurred primarily in 1- 4 family residential loans and construction and land development loans due to the Company's emphasis to have a higher concentration of real estate based loans. Loans comprised 75.3% of total interest-earning assets at June 30, 2000 compared with 75.9% at December 31, 1999. The following table summarizes the loan portfolio of the Company by type of loan as of June 30, 2000 and December 31, 1999 (dollars in thousands): <TABLE> <CAPTION> JUNE 30, 2000 DECEMBER 31, 1999 ----------------- ----------------- AMOUNT PERCENT AMOUNT PERCENT -------- ------- -------- ------- (UNAUDITED) <S> <C> <C> <C> <C> Commercial and industrial ................. $ 61,557 23.37% $ 61,153 23.96% Agriculture ............................... 9,610 3.65 9,102 3.57 Real estate: Construction and land development 8,926 3.39 7,926 3.11 1-4 family residential .......... 92,956 35.30 83,777 32.83 Farmland ........................ 7,845 2.98 7,976 3.13 Non-residential and non-farmland 52,209 19.82 52,303 20.49 Multi-family residential ........ 4,278 1.62 6,239 2.44 Consumer .................................. 25,994 9.87 26,733 10.47 -------- ------- -------- ------- Total loans ........... $263,375 100.00% $255,209 100.00% ======== ======= ======== ======= </TABLE> ALLOWANCE FOR LOAN LOSSES In originating loans, the Company recognizes that it will experience credit losses and the risk of loss will vary with, among other things, general economic conditions, the type of loan being made, the creditworthiness of the borrower over the term of the loan and, in the case of a collateralized loan, the quality of the collateral for such loan. The Company maintains an allowance for loan losses in an amount that it believes is adequate for estimated losses in its loan portfolio. Management determines the adequacy of the allowance through its evaluation of the loan portfolio. In addition to unallocated allowances, specific allowances are provided for individual loans when ultimate collection is considered questionable by management after reviewing the current status of loans which are contractually past due and considering the net realizable value of the collateral for the loan. Loans are charged-off against the allowance for loan losses when appropriate. Although management believes it uses the best information available to make determinations with respect to the allowance for loan losses, future adjustments may be necessary if economic conditions differ from the assumptions used in making the initial determinations. Loans charged-off during the six-month period ended June 30, 2000 increased $252,000 or 164.7% over the same period ended June 30, 1999. This increase is due primarily to the Company's recognition of loan losses associated with loans acquired in the First American acquisition. At June 30, 2000, and June 30, 1999, the allowance for loan losses totaled $2.5 million or 0.95% of gross loans and $1.6 million or 0.77% of gross loans respectively. The allowance for loan losses as a percentage of nonperforming loans was 154.24% at June 30, 2000. 18
Set forth below is an analysis of the allowance for loan losses for the periods indicated (dollars in thousands): <TABLE> <CAPTION> SIX MONTHS SIX MONTHS ENDED ENDED JUNE 30, JUNE 30, 2000 1999 ---------- ---------- (UNAUDITED) <S> <C> <C> Average loans outstanding ............................. $ 259,010 $ 194,601 ========== ========== Gross loans outstanding at end of period .............. $ 263,375 $ 203,652 ========== ========== Allowance for loan losses at beginning of period ...... 2,491 1,512 Provision for loan losses ............................. 315 175 Charge-offs: Commercial and industrial ................... (238) (29) Real estate ................................. (65) -- Consumer .................................... (102) (124) Recoveries: Commercial and industrial ................... 29 13 Real estate ................................. 7 2 Consumer .................................... 54 18 ---------- ---------- Net loan (charge-offs) recoveries ..................... (315) (120) ---------- ---------- Allowance for loan losses at beginning of period ...... $ 2,491 $ 1,567 ========== ========== Ratio of allowance to end of period loans ............. 0.95% 0.77% Ratio of net charge-offs to average loans ............. 0.12% 0.06% Ratio of allowance to end of period nonperforming loans 154.24% 106.31% </TABLE> 19
NONPERFORMING ASSETS Nonperforming assets were $2.1 million at June 30, 2000 compared with $1.1 million at December 31, 1999. Nonaccrual loans increased $672,000 from $443,000 at December 31, 1999 to $1.1 million at June 30, 2000. This increase was due primarily to the addition of one line of credit totaling $703,000 to nonaccrual status during the period. Other real estate increased $434,000 during the same period. This increase is primarily the result of four loans that were foreclosed during the period totaling $470,000. Management anticipates minimal losses on the total of these new nonperforming assets. The ratio of nonperforming assets to total loans and other real estate was 0.81% and 0.43% at June 30, 2000, and December 31, 1999, respectively. The following table presents information regarding nonperforming assets as of the dates indicated (dollars in thousands): JUNE 30, DECEMBER 31, 2000 1999 -------- ------------ (UNAUDITED) Nonaccrual loans ....................................... $ 1,115 $ 443 Accruing loans 90 or more days past due ................ 500 574 -------- ------------ Total nonperforming loans .................... 1,615 1,017 Other real estate ...................................... 513 79 -------- ------------ Total nonperforming assets ................... $ 2,128 $ 1,096 ======== ============ SECURITIES Securities totaled $86.2 million at June 30, 2000, an increase of $6.4 million from $79.8 million at December 31, 1999. At June 30, 2000, securities represented 22.1% of total assets compared with 21.5% of total assets at December 31, 1999. The yield on average securities for the six months ended June 30, 2000, was 6.58% compared with 6.09% for the same period in 1999. At June 30, 2000, securities included $28.6 million in U.S. Government securities, $28.6 million in mortgage-backed securities, $18.7 million in collateralized mortgage obligations, $1.6 million in equity securities, and $8.7 million in municipal securities. The average life of the securities portfolio at June 30, 2000, was approximately four years, however, all of the Company's securities are classified as available-for-sale. PREMISES AND EQUIPMENT Premises and equipment totaled $13.5 million at June 30, 2000 and $11.7 million at December 31, 1999 reflecting an increase of $1.8 million, or 15.4%. The increase is primarily due to the capitalized construction cost incurred for the Mt. Pleasant Operations Center, the new full-service bank location in Pittsburg, Texas, and major remodeling projects in the Sulphur Springs, Commerce, and Mt. Pleasant, Texas locations. OTHER ASSETS On July 1, 1998, the Company invested $3.1 million in single insurance premium policies, which insure the lives of certain senior officers of the Company. As of June 30, 2000, and December 31, 1999, the net surrender values of these policies totaled $4.0 million and $3.9 million respectively. Goodwill recorded in connection with the First American acquisition in September 1999, the Deport acquisition in 1992 and the Bogata acquisition in 1993 totaled $3.1 million at June 30, 2000, and at December 31, 1999. The Company's investment in Guaranty Leasing Company, a wholly-owned non-bank subsidiary of Guaranty Bank increased from $382,000 at December 31, 1999 to $2.8 million at 20
June 30, 2000. This increase is the result of acquiring a 2.5% ownership in an Aircraft Finance Trust, a special-purpose business trust formed to acquire, finance, refinance, own, lease, sublease, sell, and maintain aircraft. DEPOSITS At June 30, 2000, demand, money market and savings deposits accounted for approximately 45.2% of total deposits, while certificates of deposit made up 54.8% of total deposits. Total deposits increased $10.3 million or 3.1% from December 31, 1999 to June 30, 2000. This increase came primarily from an increase in money market accounts of $6.0 million or 11.8% due to an attractive yield on the Company's Premier Money Market account, and an increase in certificates of deposits of $4.3 million or 2.4% due to the offering of competitive yields on these deposits. Noninterest-bearing demand deposits totaled $58.0 million or 17.1% of total deposits at June 30, 2000, compared with $56.4 million or 17.2% of total deposits at December 31, 1999. The average cost of deposits, including noninterest-bearing demand deposits, was 4.20% for the six months ended June 30, 2000 compared with 3.65% for the same period in 1999. LIQUIDITY The Company's asset/liability management policy is intended to maintain adequate liquidity for the Company. Liquidity involves the Company's ability to raise funds to support asset growth or reduce assets to meet deposit withdrawals and other payment obligations, to maintain reserve requirements and otherwise to operate the Company on a continuing basis. The Company's liquidity needs are primarily met by growth in core deposits. Although access to purchased funds from correspondent banks is available and has been utilized on occasion to take advantage of investment opportunities, the Company does not continually rely on these external funding sources. The cash and federal funds sold position, supplemented by amortizing investments along with payments and maturities within the loan portfolio, has historically created an adequate liquidity position. The Company's cash flows are composed of three classifications: cash flows from operating activities, cash flows from investing activities, and cash flows from financing activities. As summarized in the unaudited condensed consolidated statements of cash flows, the most significant transactions which affected the Company's level of cash and cash equivalents, cash flows, and liquidity during the first six months of 2000 were the net increase in loans of $8.8 million, securities purchases of $16.2 million, securities sales of $5.3 million, securities calls, maturities, and principal repayments of $4.2 million, the net increase in deposits of $10.3 million, and proceeds from the issuance of long-term debt of $7.0 million. CAPITAL RESOURCES Total shareholders' equity as of June 30, 2000, was $27.6 million, a decrease of $908,000 or 3.2% compared with shareholders' equity of $28.5 million at December 31, 1999. This decrease was due to earnings for the period of $1.2 million offset by the purchase of 142,672 shares of treasury stock at a cost of $1.5 million, the payment of dividends of $372,000 and a decrease in accumulated other comprehensive income of $220,000. Both the Board of Governors of the Federal Reserve System ("Federal Reserve"), with respect to the Company, and the Federal Deposit Insurance Corporation ("FDIC"), with respect to the Bank, have established certain minimum risk-based capital standards that apply to bank holding companies and federally insured banks, respectively. As of June 30, 2000, the Company's Tier 1 risk-based capital, total risk-based capital and leverage capital ratios were 11.65%, 12.57%, and 8.22%, respectively. As of June 30, 2000, the Bank's risk-based capital ratios remain above the levels required for the Bank to be designated as "well capitalized" by the FDIC with Tier 1 risk-based capital, total risk-based capital and leverage capital ratios of 10.05%, 10.97%, and 7.09%, respectively. 21
YEAR 2000 PREPAREDNESS The Company successfully completed the Year 2000 changeover without any problems in its core business processes. The Company has confirmed normal business operations across all products and markets on a sustained basis. While management believes it is unlikely, problems associated with non-compliant third parties could still occur. Management will continue to monitor all business processes and relationships with third parties during 2000 to ensure that all processes continue to function properly. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. There have been no material changes in the market risk information disclosed in the Company's Form 10-K for the year ended December 31, 1999. See Form 10-K, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations - Interest Rate Sensitivity and Liquidity." 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) The following documents are filed as part of this Quarterly Report on Form 10Q: (1) Exhibits - The following exhibits are filed as a part of this Quarterly Report on Form 10Q: 11 Statement regarding computation of earnings per share 27 Financial Data Schedule. (b) Reports on Form 8-K No report on Form 8-K was filed by Guaranty Bancshares, Inc., during the three months June 30, 2000. 22
SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. GUARANTY BANCSHARES, INC. (Registrant) Date: August 14, 2000 By: /S/ ARTHUR B. SCHARLACH Arthur B. Scharlach, Jr. President (Principal Executive Officer) Date: August 14, 2000 By: /S/ CLIFTON A. PAYNE Clifton A. Payne Senior Vice President and Chief Financial Officer (Principal Financial Officer) 23
INDEX TO EXHIBITS EXHIBIT NUMBER DESCRIPTION PAGE NUMBER - ------------ ----------- ----------- 11 Statement regarding computation Reference is hereby made of earnings per share to Note 2 of Notes to unaudited Consolidated Financial Statements on page 8 hereof. 27 Financial Data Schedule 25 24