-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KG5+PPRHWQAvMw1ORNBWQxKHhrLEI1L8bB0bGraUXAWb4Xi7hQoZ5myhGhokcTUn iBUaWHG5ufuqc0o39QO2tQ== 0000950144-95-003211.txt : 19951119 0000950144-95-003211.hdr.sgml : 19951119 ACCESSION NUMBER: 0000950144-95-003211 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951114 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: GREENE COUNTY BANCSHARES INC CENTRAL INDEX KEY: 0000764402 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 621222567 STATE OF INCORPORATION: TN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-14289 FILM NUMBER: 95591900 BUSINESS ADDRESS: STREET 1: MAIN & DEPOT STREET CITY: GREENEVILLE STATE: TN ZIP: 37744-1120 BUSINESS PHONE: 6156395111 MAIL ADDRESS: STREET 1: P O BOX 1120 CITY: GREENEVILLE STATE: TN ZIP: 37744-1120 10-Q 1 GREENE COUNTY BANCSHARES, INC. FORM 10-Q 09-30-95 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 For Quarter ended September 30, 1995 Commission File Number 0-14289 GREENE COUNTY BANCSHARES, INC. ------------------------------ (Exact name of Registrant as specified in its charter) Tennessee 62-1222567 - ----------------------------- --------------------------------- State or other jurisdiction of (IRS Employer Identification incorporated or organization) Number) Main & Depot Street Greeneville, Tennessee 37743 - ----------------------------- --------------------------------- (Address of principal (Zip Code) executive offices) Registrant's telephone number, including area code 615/639-5111 ---------------- 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. Yes X No ---- ---- Indicate the number or shares outstanding of each of the Issuers classes of common stock as of the latest practicable date: 447,453. Total number of sequentially-numbered pages 15 ---- 1 2 PART 1 - FINANCIAL INFORMATION Item 1. Financial Statements The unaudited condensed consolidated financial statements of the Registrant and its wholly-owned subsidiaries are as follows: Condensed Consolidated Balance Sheets - September 30 1995 and December 31, 1994. Condensed Consolidated Statements of Earnings - For the three months ended September 30, 1995 and 1994 and for the nine months ended September 30, 1995 and 1994. Condensed Consolidated Statement of Changes in Shareholders' Equity for the nine months ended September 30, 1995. Condensed Consolidated Statements of Cash Flows - For the nine months ended September 30, 1995 and 1994. Notes to Condensed Consolidated Financial Statements. 2 3 GREENE COUNTY BANCSHARES,INC. AND SUBSIDIARIES Consolidated Balance Sheets September 30, 1995 and December 31, 1994
(Unaudited) * September 30, December 31, 1995 1994 ASSETS (In Thousands) -------- -------- Cash and Due from Banks $ 12,737 $ 15,086 Federal Funds sold 9,500 3,550 Securities available-for-sale 33,381 38,109 Securities held-to-maturity (with a market value of $34,379 on September 30, 1995 and $32,215 on December 31, 1994). 34,106 32,265 Loans 284,976 244,700 Less: Allowance for Loan Losses 3,880 3,447 -------- -------- Net Loans 281,096 241,253 -------- -------- Bank Premises and Equipment, Net of Accumulated Depreciation 7,939 7,042 Other Assets 10,287 8,220 -------- -------- $389,046 $345,525 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Deposits $335,646 $298,162 Federal funds purchased and Securities sold under agreements to repurchase 4,774 3,879 Other Borrowings 3,509 3,688 Other Liabilities 3,282 2,606 -------- -------- Total Liabilities 347,211 308,335 -------- -------- STOCKHOLDERS' EQUITY Common Stock, par value $10, authorized 1,000,000 shares; issued and outstanding 447,453 and 442,444 shares on September 30, 1995 and December 31, 1994, respectively 4,474 4,424 Surplus 3,716 2,915 Retained Earnings 33,653 30,442 Net unrealized holding gains (losses) on available-for-sale securities (8) (591) -------- -------- Total Stockholders' Equity 41,835 37,190 -------- -------- $389,046 $345,525 ======== ========
* Condensed from Audited Financial Statements. See accompanying notes to Consolidated Financial Statements(Unaudited) 3 4 GREENE COUNTY BANCSHARES,INC. AND SUBSIDIARIES Consolidated Statements of Earnings Three Months Ended September 30, 1995 and 1994 and Nine Months Ended September 30, 1995 and 1994 (UNAUDITED)
Three Months Nine Months Ended Ended September 30 September 30 (Dollars in thousands except per share) 1995 1994 1995 1994 ------------------------------------- ---- ---- ---- ---- Interest Income: Interest and Fees on Loans $ 7,106 $ 5,032 $19,902 $13,832 Interest on Investment Securities 1,024 955 3,082 3,285 Interest on Federal Funds Sold 92 76 381 165 ------- ------- ------- ------- Total Interest Income 8,222 6,063 23,365 17,282 Interest Expense: Interest on Deposits 3,371 2,015 9,335 5,662 Interest on Short Term Borrowings 104 117 325 306 ------- ------- ------- ------- Total Interest Expense 3,475 2,132 9,660 5,968 ------- ------- ------- ------- Net Interest Income 4,747 3,931 13,705 11,314 Provision for Loan Losses 182 105 493 277 ------- ------- ------- ------- Net Interest Income after Provision for Loan Losses 4,565 3,826 13,212 11,037 ------- ------- ------- ------- Other Income: Income from Fiduciary Activities 10 11 28 41 Service Charges on Deposit Accounts 430 415 1,326 1,248 Security Gains(Losses) 0 33 6 (35) Other Income 180 89 734 300 ------- ------- ------- ------- 620 548 2,094 1,554 Other Expenses: Salaries and Employee Benefits 1,632 1,195 4,396 3,396 Premises and Fixed Assets Expense 483 293 1,247 864 Other Operating Expenses 641 849 2,353 2,354 ------- ------- ------- ------- 2,756 2,337 7,996 6,614 ------- ------- ------- ------- Earnings Before Income Taxes 2,429 2,037 7,310 5,977 Income Taxes 933 786 2,763 2,193 ------- ------- ------- ------- Net income $ 1,496 $ 1,251 $ 4,547 $ 3,784 ------- ------- ------- ------- Average Number of Shares 446,282 442,253 445,110 442,253 Per Share of Common Stock: Net Earnings $ 3.35 $ 2.83 $ 10.22 $ 8.56 ------- ------- ------- ------- Dividends $ 1.00 $ 0.88 $ 3.00 $ 2.64 ------- ------- ------- -------
See accompanyning notes to Consolidated Financial Statements(Unaudited) 4 5 GREENE COUNTY BANCSHARES, INC. CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 (In thousands)
Net Unrealized Depreciation on Available Common Retained for sale Stock Surplus Earnings Securities Total ----- ------- -------- ---------- ----- January 1, 1995 $4,424 $2,915 $30,442 $ (591) $37,190 Issuance of 5,009 shares 50 801 - - 851 Net income - - 4,547 - 4,547 Change in unrealized depreciation, - - - 583 583 net of tax Dividends paid - - (1,336) - (1,336) ------ ------ ------- ------- ------- September 30, 1995 $4,474 $3,716 $33,653 $ (8) $41,835 ====== ====== ======= ======= =======
See accompanying notes to Condensed Consolidated Financial Statements(Unaudited). 5 6 GREENE COUNTY BANCSHARES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED 9/30/95 AND 9/30/94 (In Thousands)
Nine Months Ended Sept 30, Sept 30, 1995 1994 ---- ---- NET CASH PROVIDED BY OPERATING ACTIVITIES: Net Income $ 4,547 $ 3,784 Adjustments to reconcile net income to net cash provided by operating activities: Provision for Loan Losses 493 277 Provision for Depreciation & Amortization 500 387 Amortization of investment security discounts, net of accretion 256 828 Increase in interest receivable (852) (347) Decrease in unearned income (372) (1,214) Increase in other assets (2,067) (943) Increase in Accrued Interest Payable and other 3,069 8,384 ------- ------- Net cash provided by operating activities 5,574 11,156 ------- ------- CASH FLOWS FROM INVESTING ACTIVITIES: Net (increase) decrease of securities and federal funds (3,063) 12,341 Net increase in loans (39,843) (30,236) Proceeds (improvements) other real estate owned and other (1,751) 1,020 Fixed assets additions (1,160) (911) ------- ------- Net cash used by investing activities (45,817) (17,786) ------- ------- CASH FLOWS FROM FINANCING ACTIVITIES: Net increase in demand deposits, NOW, money market and savings accounts 37,484 16,629 Cash dividends paid (1,336) (1,168) Increase (decrease) in securities sold under agreements to repurchase 895 (1,680) Proceeds from issuances of common stock 851 14 ------- ------- Net cash provided by financing activities 37,894 13,795 ------- ------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (2,349) 7,165 CASH AND CASH EQUIVALENTS AT JANUARY 1, 1995 15,086 11,020 ------- ------- CASH AND CASH EQUIVALENTS AT SEPTEMBER 30, 1995 $12,737 $18,185 ======= =======
See accompanying notes to Condensed Consolidated Financial Statements(Unaudited) 6 7 GREENE COUNTY BANCSHARES, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1-PRINCIPLES OF CONSOLIDATION AND PRESENTATION The consolidated financial statements include the accounts of Greene County Bancshares, Inc. (the "Company") and its wholly owned subsidiaries, Greene County Bank and American Fidelity Bank. All material intercompany balances and transactions have been eliminated in the consolidation. SUMMARY OF ACCOUNTING POLICIES The accompanying Condensed Consolidated Financial Statements have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. In the opinion of management, the accompanying financial statements contain all adjustments, consisting only of normal recurring accruals, necessary to summarize fairly the consolidated financial position of the Company as of September 30, 1995 and the results of operations, stockholders' equity and cash flows for the periods presented. 2-ALLOWANCE FOR LOAN LOSSES Transactions in the Allowance for Loan Losses were as follows:
Nine Months Ended September 30, (In thousands) 1995 1994 -------------- ---- ---- Balance, January 1 $3,447 $2,962 Add(Deduct): Losses charged to allowance (436) (1,067) Recoveries credited to allowance 376 522 Provision for loan losses 493 277 ------ ------ Balance, September 30 $3,880 $2,694 ====== ======
7 8 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following is management's discussion and analysis of financial condition and results of operations of Greene County Bancshares, Inc. and Subsidiaries (the "Company") for the nine month periods and three month periods ended as of September 30, 1995 and 1994 respectively. The Company is not aware of any recommendations by the bank regulatory authorities which if implemented would have a material effect on the issuer's liquidity, capital resources or operations. Earnings Greene County Bancshares, Inc. earnings for the three months and nine months ended September 30, 1995 were $1,496,000 and $4,547,000, respectively. This represents a 19.6 % and a 20.2% increase when compared to $1,251,000 and $3,784,000 earnings for the respective periods in 1994. Net Interest Income The largest source of earnings for the Company is net interest income, which is the difference between interest income on interest bearing assets and interest paid on deposits and other interest-bearing liabilities. The primary factors which affect net interest income are changes in volume and yields of earning assets and interest-bearing liabilities, and the ability to respond to changes in interest rates through asset/liability management. During the three and nine months ended September 30, 1995, net interest income after provision for loan losses, was $4,565,000 and $13,212,000, respectively, as compared to $3,826,000 and $11,037,000 for the same periods in 1994, increases of 19.3% and 19.7%, respectively. The increases are primarily attributable to an increase in volume of earning assets and only small increases in the effective rates paid on interest bearing deposits. Loans produced the largest component of interest income, contributing $7,106,000 and $19,902,000 for the three and nine months ended September 30, 1995, respectively, as compared to $5,032,000 and $13,832,000 for the same periods in 1994, representing increases of 41.2% and 43.9%, respectively. The increases are attributable to both rate and volume increases of earning assets. Earnings on securities and federal funds sold provided the balance of interest income, producing $1,116,000 and $3,463,000 for the three and nine month periods ended September 30, 1995, respectively, as compared to $1,031,000 and $3,450,000 for the same periods in 1994. 8 9 Total interest expense for the Company increased 62.3% and 61.9% during the three and nine month periods ended September 30, 1995, respectively, as compared to the same periods in 1994. Interest expense consisted primarily of interest paid on deposits which totaled $3,475,000 and $9,660,000 during the three and nine months ended September 30, 1995, respectively, as compared to $2,132,000 and $5,968,000 for the same periods in 1994. The cost of interest bearing liabilities increased due to both rate and volume increases. The deregulation of interest rates has given banks more opportunity to attract deposits and has created a public which is more interest rate sensitive. As a result, banks are paying interest on a continually increasing portion of their deposit base. The Company's ability to maintain a favorable spread between interest income and interest expense is a major factor in generating earnings; therefore, it is necessary to effectively manage earning assets and interest- bearing liabilities. As the percentage of interest-bearing deposits compared to total deposits increases and rates become more competitive, it becomes increasingly more difficult to maintain the Company's spread. Non-interest Income and Expense Income that is not related to interest-bearing assets, consisting primarily of service charges, commissions and fees, has become more important as increases in levels of interest-bearing deposits make it more difficult to maintain net interest income spreads. Total other income for the three and nine month periods ended September 30, 1995 was $620,000 and $2,094,000, respectively, as compared to $548,000 and $1,554,000 for the same periods in 1994. The increases of 13.1% and 34.8% resulted in part from an increase in service charges on deposit accounts and commissions earned. Control of operating expenses is also an important aspect in managing net income. Operating expenses include personnel, occupancy, and other expenses such as data processing, printing and supplies, legal and professional fees, postage, Federal Deposit Insurance Corporation ("FDIC") assessment, etc.. Total other operating expenses were $2,429,000 and $7,310,000 for the three and nine month periods ended September 30, 1995, respectively, as compared to $2,037,000 and $5,977,000 for the same periods in 1994. Personnel costs are the primary element of the Company's other operating expenses. During the three and nine months ended September 30, 1995 salaries and benefits represented $1,632,000 and $4,396,000 of other operating expenses, respectively. This was an increase of $437,000 and $1,000,000 or 36.6% and 29.4% over the same periods in 1994. These increases were due to opening new branches requiring increased staff levels, and increased employee benefit costs, including health insurance and pension costs. 9 10 Other operating expenses during the three and nine month periods ended September 30, 1995 were $1,124,000 and $3,600,000, a decrease of $18,000 and an increase of $400,000, respectively, from the same periods in 1994. Loans At September 30, 1995, loans, net of unearned income and allowance for loan losses, were $281.1 million compared to $241.3 million for the same period in 1994. This increase is primarily due to increases in commercial lending. Nonaccrual Loans increased by $236,382 during the nine months period ended September 30, 1995. This change is deemed to be immaterial by management. Provision and Allowance for Loan Losses Because the loan portfolio represents the Company's largest earning asset, the Company continually monitors the quality of its loan portfolio. Greene County Bancshares, Inc. operates in a diverse economy of manufacturing and agriculture and, accordingly, most loans are made to commercial enterprises or consumers who are directly supported by these enterprises. During the three and nine months period ended September 30, 1995, Greene County Bancshares, Inc. charged- off $173,000 and $436,000 in loans, and recovered $90,000 and $376,000 in charged-off loans, respectively. All loans identified by management or regulatory authorities as losses are charged-off against the allowance for loan losses. All other loans classified for regulatory purposes do not require disclosure since in management's opinion they do not (i) represent or result from trends or uncertainties which management expects to materially impact future operating results, liquidity or capital resources, or (ii) represent material credits which cause management to have serious doubts as to the ability of such borrowers to comply with the loan repayment terms. The Company's allowance for loan losses increased to $3,880,000 at September 30, 1995 from $2,694,000 for the same period in 1994. This increase is due to an overall increase in the total loan portfolio. Investments The Company maintains an investment portfolio to provide liquidity and earnings. Investments at September 30, 1995 with a carrying value of $67.5 million had a market value of $67.8 million. During the same period in 1994, investments totaled $76.4 million with a market value of $76.4 million. This decrease was used to fund increases in the loan portfolio. 10 11 In 1993, the Financial Accounting Standards Board ("FASB") issued Statement Financial Accounting Standards No. 115 (SFAS 115), "Accounting for Certain Investments in Debt and Equity Securities." SFAS 115 requires that investments in certain debt and equity securities be classified as either Held to Maturity (reported at amortized cost), Trading (reporting at fair value with unrealized gains and losses included in earnings), or Available for Sale (reported at fair value with unrealized gains and losses excluded from earnings and reported as a separate component of stockholders' equity). SFAS 115 was required to be implemented for fiscal years beginning after December 15, 1993. Management adopted SFAS 115 on January 1, 1994 and currently classifies a portion of the portfolio as available for sale. Deposits The funds to support the Company's asset growth have been provided by increased deposits, which amounted to $335.6 million at September 30, 1995. This represents a 18.2% increase from the deposits at September 30, 1994 of $283.9 million. The increase is primarily the result of Greene County Bancshares, Inc. aggressive efforts to attract new time deposit customers, along with the opening of new branches. Stockholders' Equity and Capital Adequacy Sufficient levels of capital are necessary to sustain growth and absorb losses. The Company exceeds all regulatory capital requirements. The Company's primary source of new capital is undivided profits. The Federal Reserve Board, the FDIC and other agencies which regulate financial institutions have adopted capital adequacy standards applicable to financial institutions. These standards are intended to reflect the degree of risk associated with both on and off balance sheet items and to assure that even those institutions that invest predominately in low risk assets, maintain a certain minimum level of capital. The following table provides the Company's best collective understanding of the regulatory capital requirements as currently published. These understandings are based upon regulations, guidelines and interpretations now in effect or proposed, all of which are subject to change. 11 12
Capital Ratio's at September 30, 1995 Required Minimum Company's Ratio Ratio Tier 1 risk-based capital 4.00% 14.86% Total risk-based capital 8.00% 16.24% Leverage Ratio 3.00% 10.75%
The Company believes it was in compliance with all minimum regulatory capital guidelines at September 30, 1995 and continues to be so. Liquidity and Growth Liquidity refers to the ability of the Company to generate sufficient funds to meet its financial obligations and commitments without significantly impacting net interest income. One of the Company's objectives is to maintain a high level of liquidity, and this goal continues to be met. Maintaining liquidity ensures that funds will be available for reserve requirements, customer demand for loans, withdrawal of deposit balances and maturities of other deposits and liabilities. These obligations can be met by existing cash reserves of funds from maturing loans and investments, but in the normal course of business are met by deposit growth. Increased deposits and retained earnings are also the sources for the Company's continued growth of liquidity. During the nine month period ended September 30, 1995, operating activities of the Company provided $5,574,000 of cash flow. Net income of $4,547,000, adjusted for non-cash operating activities, provided the majority of cash generated from operations. Investing activities, predominantly lending, used $48,704,000 of the Company's cash flow. This resulted in a $3,063,000 net increase in the investment portfolio whereas loans originated, net of principal collected, used $39,843,000 in funds. Net cash inflows of $37,894,000 were provided by financing activities. Net deposit growth accounted for $37,484,000 of the increase, along with an increase in securities sold under agreements to repurchase of $895,000, and the sale of common stock of $851,000. Offsetting this increase were the cash dividends paid to shareholders of $1,336,000. 12 13 The Company's liquid assets include investment securities, federal funds sold, and cash and due from banks. These assets represented 26.7% of total deposits at September 30, 1995, a decrease from 33.3% at September 30, 1994. Interest Sensitivity Deregulation of interest rates and short-term, interest-bearing deposits which are more volatile have created a need for shorter maturities of earnings assets. An increasing percentage of commercial and installment loans are being made with variable rates or shorter maturities to increase liquidity and interest rate sensitivity. The difference between interest sensitive asset and interest sensitive liability repricing within time periods is referred to as the interest rate sensitivity gap. Gaps are identified as either positive (interest sensitive assets in excess of interest sensitive liabilities) or negative (interest sensitive liabilities in excess of interest sensitive assets). The Company monitors its interest rate sensitivity gap on a monthly basis to maintain a positive position. 13 14 PART II - OTHER INFORMATION Item 1. Legal Proceedings The Company and its subsidiaries are involved in various claims and legal actions arising in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Company's Consolidated Financial Position or Results of Operations. Item 2. Changes in Securities 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 Exhibit No. Description ---------- ----------- 27 Financial Data Schedule (for Sec Use Only) (b) None. 14 15 Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf the undersigned thereunto duly authorized. Greene County Bancshares, Inc. ------------------------------ Registrant Date: November 13, 1995 /s/ R. Stan Puckett ----------------- ------------------------------ R. Stan Puckett President and CEO Date: November 13, 1995 /s/ Alex Johnson ----------------- ------------------------------- Alex Johnson, Sr.Vice President Chief Financial and Accounting Officer 15 EX-27 2 FINANCIAL DATA SCHEDULE
9 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF GREENE COUNTY BANK FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 9-MOS DEC-31-1995 JAN-01-1995 SEP-30-1995 12,737 0 9,500 0 33,381 34,106 34,379 284,976 3,880 389,046 335,646 4,774 3,282 3,509 4,474 0 0 37,361 389,046 19,902 3,082 381 23,365 9,335 9,660 13,705 493 6 7,996 7,310 7,310 0 0 4,547 10.22 4.55 0 885 1,003 0 0 3,447 436 376 3,880 3,880 0 0
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