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United States
Securities and Exchange Commission
Washington, D.C. 20549
Form 10-K
x Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934
Special Report which contains only financial statements for the fiscal year
ended pursuant to Rule 15d-2
Commission File Number: 0-22269
GS Financial Corp.
Exact Name of Registrant as specified in charter
Louisiana 72-1341014
State or Other Jurisdiction IRS Employer ID Number
of Incorporation or Organization
3798 Veterans Blvd.
Metairie, LA 70002
(Address of Principal Executive Offices)
Registrant's Telephone Number: (504) 457-6220
Securities registered pursuant to Section 12(b) of the Act:
Not Applicable
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.01 per share
Indicate by check 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 December 31, 1996, there were 0 shares of the Registrant's Common stock
outstanding as the Registrant had not completed its initial public offering.
The Registrant's initial public offering was completed on April 1, 1997. As
of May 8, 1997 there were 3,438,500 shares of the Registrant's common stock,
par value $.01 per share, issued and outstanding. The information presented
in this Form 10-K at December 31, 1996 and 1995 and for the twelve months ended
December 31, 1996, 1995 and 1994 is for the Registrant's wholly owned
subsidiary, Guaranty Savings & Homestead Association.
DOCUMENTS INCORPORATED BY REFERENCE:
Not Applicable
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
GS FINANCIAL CORP.
May 8, 1997 By:/s/Donald C. Scott
Donald C. Scott
President and Chief
Executive Officer
and Chairman of the Board
Name Title Date
/s/Donald C. Scott President, Chief Executive May 8, 1997
Donald C. Scott Officer and Chairman of the Board
(principal executive officer)
/s/ Glenn R. Bartels Chief Accounting Officer May 8, 1997
Glenn R. Bartels (principal financial and
accounting officer)
/s/ J. Scott Key Director May 8, 1997
J. Scott Key
/s/ M. D. Paine, Jr. Director May 8, 1997
M.D. Paine Jr.
GUARANTY SAVINGS AND
HOMESTEAD ASSOCIATION
December 31, 1996
Audits of Financial Statements
December 31, 1996
and
December 31, 1995
C O N T E N T S
Independent Auditor's Report 1
Statements of Financial Condition 2-3
Statements of Income 4-5
Statements of Changes in Equity 6
Statements of Cash Flows 7-9
Notes to Financial Statements 10-32
The Board of Directors
Guaranty Savings and Homestead Association
Independent Auditor's Report
We have audited the accompanying statements of financial condition of GUARANTY
SAVINGS AND HOMESTEAD ASSOCIATION as of December 31, 1996 and 1995, and the
related statements of income, changes in equity capital and cash flows for the
years ended December 31, 1996, 1995 and 1994. These financial statements are
the responsibility of the Association's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presenetation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of GUARANTY SAVINGS AND HOMESTEAD
ASSOCIATION as of December 31, 1996 and 1995, and the results of its operations
and its cash flows for the years ended December 31, 1996, 1995 and 1994 in
conformity with generally accepted accounting principles.
A Professional Accounting Corporation
January 23, 1997
GUARANTY SAVINGS AND HOMESTEAD ASSOCIATION
STATEMENTS OF FINANCIAL CONDITION
ASSETS
_____December31,______
_1996____ __1995__
CASH AND CASH EQUIVALENTS
Cash and Amounts Due from
Depository Institutions $ 328,566 $ 861,991
Interest-Bearing Deposits
in Other Banks 1,212,089 243,186
Federal Funds Sold 6,050,000 1,250,000
--------- ---------
Total Cash and Cash Equivalents 7,590,655 2,355,177
INVESTMENT SECURITIES
Securities Held-to-Maturity
Fair Value of $30,440,028 in 1995) 30,100,334
Securities Available-for-Sale,
at Fair Value 23,566,071 3,259,475
---------- ----------
Total Investment Securities 23,566,071 33,359,809
---------- ----------
Mortgage-Backed Securities
(Fair Value of $7,295,745 and
$6,305,035) at December 31, 1995
and December 31, 1994, respectively 7,520,394 6,367,347
Loans, Net 44,125,404 39,888,418
Accrued Interest Receivable 536,386 506,820
Premises and Equipment, Net 2,752,273 2,670,581
Foreclosed Real Estate, Net 23,971
Real Estate Held-for-Investment 93,175 94,763
Stock in Federal Home Loan Bank,
at Cost 728,100 686,900
Prepaid Income Tax - Current 398,109 22,346
Deferred Charges 24,177 22,630
Other Assets 215,021 40,983
---------- ----------
Total Assets $ 87,549,765 $86,039,745
=========== ==========
LIABILITIES AND EQUITY CAPITAL
_____December31,______
_1996____ __1995__
LIABILITIES
Deposits $ 61,420,982 $ 60,945,112
Advance Payments by Borrowers
for Taxes and Insurance 431,593 506,442
Deferred Income Tax 715,082 297,610
Other Liabilities 202,830 344,215
---------- ----------
Total Liabilities 62,770,487 62,093,379
EQUITY CAPITAL
Retained Earnings 23,862,144 23,457,486
Unrealized Gain on Securities
Available-for-Sale, Net of
Applicable Deferred Income Tax 917,134 488,880
---------- ----------
Total Equity Capital 24,779,278 23,946,366
Total Liabilities and Equity Capital$ 87,549,765 $86,039,745
=========== ==========
GUARANTY SAVINGS AND HOMESTEAD ASSOCIATION
STATEMENTS OF INCOME
For The Years Ended
December 31,
1996 1995 1994
----------- ---------- ----------
INTEREST INCOME
Loans Receivable $3,720,880 $3,702,893 $3,730,490
Investment Securities 1,688,503 2,027,959 1,825,773
Mortgage Backed Securities 435,612 379,700 389,268
Dividends on Federal Home
Loan Bank Stock 41,454 42,776 29,647
Other Interest Income 229,162 106,767 59,557
----------- ---------- ----------
Total Interest Income 6,115,611 6,260,095 6,034,735
----------- ---------- ----------
INTEREST EXPENSE
Deposits 2,679,068 2,663,904 2,407,008
Advances from Federal
Home Loan Bank 1,336
----------- ---------- ----------
Total Interest Expense 2,679,068 2,663,904 2,408,344
----------- ---------- ----------
NET INTEREST INCOME BEFORE
PROVISION FOR LOAN LOSSES 3,436,543 3,596,191 3,626,391
PROVISION FOR LOAN LOSSE 58,606 12,107 20,785
----------- ---------- ----------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 3,377,937 3,584,084 3,605,606
----------- ---------- ----------
NON INTEREST INCOME
Late Charges 38,925 38,334 44,395
Loan Prepayment Charges 36,922
Loss on Disposal of Fixed
Assets (6,168)
Loss on Sale of Loans (363) (10,168)
Loss on Sale of Investments (100,464)
Gain on Sale of Foreclosed
Real Estate 7,325 11,181 10,065
Other Income 36,522 19,393 27,373
----------- ---------- ----------
Total Other Income (18,055) 62,740 108,587
----------- ---------- ----------
GUARANTY SAVINGS AND HOMESTEAD ASSOCIATION
STATEMENTS OF INCOME (Continued)
For The Years Ended
December 31,
1996 1995 1994
NON INTEREST EXPENSE
Compensation and
Employee Benefits 1,579,084 1,556,906 1,439,178
Advertising 38,401 36,812 12,862
Office Supplies,
Telephone and Postage 82,641 79,423 85,820
Net Occupancy Expense 249,368 212,342 252,168
SAIF Recapitalization Premium 413,324
Federal Insurance Premiums 139,835 147,435 154,372
Data Processing Expense 67,374 68,873 57,961
Provision for Losses on
Foreclosed Real Estate 7,371
Real Estate Owned
Expense - Net 3,924 85 (3,218)
Other 180,558 192,760 183,990
----------- ---------- ----------
Total Other Expenses 2,754,509 2,294,636 2,190,504
----------- ---------- ----------
INCOME BEFORE FEDERAL
INCOME TAX EXPENSE 605,373 1,352,188 1,523,689
INCOME TAX EXPENSE 200,715 479,841 529,404
----------- ---------- ----------
NET INCOME $ 404,658 $ 872,347 $ 994,285
=========== =========== ==========
GUARANTY SAVINGS AND HOMESTEAD ASSOCIATION
STATEMENTS OF CHANGES IN EQUITY CAPITAL
For The Years Ended December 31, 1996 and 1995
Unrealized
Gain on Securities
Available-for-
Sale Net of
Applicable Total
Retained Deferred Equity
Earnings Income Tax Capital
BALANCES AT DECEMBER 31, 1993 $ 21,590,854 $309,715 $1,900,569
Net Income -
Year Ended December 31, 1994 994,285 994,285
Reduction in Unrealized Gain
on Securities (56,245) (56,245)
------------ --------- ----------
BALANCES AT DECEMBER 31, 1994 22,585,139 253,470 22,838,609
Net Income -
Year Ended December 31, 1995 872,347 872,347
Increase in Unrealized Gain
on Securities 235,410 235,410
------------ --------- ----------
BALANCES AT DECEMBER 31, 1995 23,457,486 488,880 23,946,366
Net Income - 404,658 404,658
Increase in Unrealized Gain
on Securities 428,254 428,254
------------ --------- ----------
BALANCE AT DECEMBER 31, 1996 $ 23,862,144 $ 917,134$24,779,278
========== ======== ==========
GUARANTY SAVINGS AND HOMESTEAD ASSOCIATION
STATEMENTS OF CASH FLOWS
For The Years Ended
December 31
1996 1995 1994
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 404,658 $ 872,347 $ 994,285
Adjustments to Reconcile
Net Income to Net Cash
Provided by Operating Activities:
Depreciation 125,331 128,009 107,559
Discounts Accretion Net
of Premium Amortization (331,488) (857,480) (753,117)
Provision for Losses 58,606 12,107 28,156
Gain on Sale of Real Estate
Held-for-Investment (14,237)
Loss on Sale of Loans 10,168
Loss on Disposal of Fixed Assets 6,168
(Gain) on Sale of Foreclosed
Real Estate (7,325) (11,181) (10,065)
Loss on Sale of Investments 100,464
(Increase) Decrease in Prepaid
Income Taxes - Current (375,763) 1,630 45,563
Deferred Income Tax 197,893 18,829 26,858
Changes in Operating Assets
and Liabilities:
(Increase) Decrease in
Accrued Interest Receivable (29,566) (11,252) 7,625
(Increase) Decrease in
Deferred Charges (1,547) 4,495 (4,014)
Increase (Decrease) in
Other Liabilities (141,385) 280,762 2,328
(Increase) Decrease in
Other Assets (174,038) 1,817 34,945
--------- ------- ---------
Net Cash Provided by
Operating Activities (174,160) 446,251 476,054
--------- ------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Net Decrease (Increase)
in Time Deposits 113,308 (3,918)
Purchase of Held-to-Maturity
Securities (31,810,501)(38,200,000)
Proceeds from Maturities of
Held-to-Maturity Securities 34,800,000 40,516,754
Proceeds from Sale of Held
to-Maturity Securities 6,888,437
Purchase of Available
- -for-Sale Securities (20,457,787) (2,138,845) (1,800,000)
Proceeds from Maturities
of Available
- -for-Sale Securities 25,000,000 2,800,000 2,453,444
GUARANTY SAVINGS AND HOMESTEAD ASSOCIATION
STATEMENTS OF CASH FLOWS
For The Years Ended
December 31,
1996 1995 1994
Purchases of Mortgage-
Backed Securities (3,064,968) (865,769) (980,000)
Proceeds from Maturities
of Mortgage-Backed
Securities 1,907,583 563,427 1,028,302
(Purchase) of ARM
Mutual Fund (753,717) (301,942)
Proceeds from Sales of
Loans and Investment
Securities 26,917
Loan (Originations) or
Principal Repayments - Net(4,295,593) 141,472 578,932
Purchases of Premises
and Equipment (201,134) (255,449) (1,618,914)
Proceeds from Sales
of Foreclosed Real Estate 46,457 82,605 245,428
Investment in Foreclosed
Real Estate (15,161) (58,069) (242,240)
Non-Cash Dividend - FHLB (41,200) (42,600) (29,400)
Investment in Real Estate
Held-for-Investment (4,300)
Proceeds from Sale of Real
Estate Held-for-Investment 73,794
---------- ---------- -----------
Net Cash Provided by
Investing Activities 5,008,617 3,027,637 2,049,099
---------- ---------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Net (Decrease) in Deposits 475,870 (3,697,034) (2,789,999)
Net Increase (Decrease) in
Advance Payments by
Borrowers for Taxes
and Insurance (74,849) (41,829) 1,965
---------- ---------- -----------
Net Cash (Used in)
Financing Activities 401,021 (3,738,863) (2,788,034)
---------- ---------- -----------
NET CASH EQUIVALENTS 5,235,478 (264,975) (262,881)
CASH AND CASH EQUIVALENTS
Beginning of Year 2,355,177 2,620,152 2,883,033
---------- ---------- -----------
CASH AND CASH EQUIVALENTS
End of Year $ 7,590,655 $ 2,355,177 $ 2,620,152
========= ========= =========
GUARANTY SAVINGS AND HOMESTEAD ASSOCIATION
STATEMENTS OF CASH FLOWS
For The Years Ended
December 31,
1996 1995 1994
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash Paid During the
Year for:
Interest $ 2,679,068 $ 2,663,904 $2,408,343
Income Taxes 270,400 459,353 469,265
Loans Transferred to
Foreclosed Real Estate
During the Year 68,957 13,700
Premises and Equipment
(Former Branch Location)
Transferred to Real Estate
Held-for-Investment at Cost
Netof Accumulated Depreciation 94,763
Unrealized Gain on Securities
Available-for-Sale Credited
to Equity Capital as a
Result of the Adoption
of SFAS 115 1,389,597 740,728 384,046
NOTE A
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BUSINESS
The Association provides financial services primarily to
individuals, and is subject to competition from other financial
institutions. The Association is also subject to the regulations
of certain Federal and State agencies and undergoes periodic
examinations by those regulatory authorities.
BASIS OF FINANCIAL STATEMENT PRESENTATION
The financial statements have been prepared in conformity
with generally accepted accounting principles. In preparing the
financial statements, management is required to make estimates
and assumptions that affect the reported amounts of assets and
liabilities as of the date of the statement of financial
condition and revenues and expenses for the year. Actual
results could differ significantly from those estimates.
Material estimates that are particularly susceptible
to significant change relate to the determination of the allowance for losses on
loans and valuation of real estate acquired in connection with foreclosures or
in satisfaction of loans. Management independently determines the allowance for
losses on loans based on an evaluation of the loan history and the condition of
the underlying properties. In connection with the determination of the
allowances for losses on foreclosed real estate, management obtains independent
appraisals for all properties.
While management uses available information to recognize
losses on loans and foreclosed real estate, future additions to the allowances
may be necessary based on changes in local economic conditions. In addition,
regulatory agencies, an integral part of their examination process,
periodically review the Association's allowances for losses on loans and
foreclosed real estate. Such agencies may require the Association to
recognize additions to the allowances based on their judgments about
information available to them at the time of their examination.
INVESTMENT SECURITIES
At December 31, 1994, the Association adopted Statement of
Financial Accounting Standards (SFAS) 115, "Accounting for Certain Investments
in Debt and Equity Securities." SFAS 115 requires the classification of
securities into one of three categories: Trading, Available-for-Sale or Held-
NOTE A
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
to-Maturity. Management determines the appropriate classification of debt
securities at the time of purchase and reevaluates this classification
periodically.
Investment securities that management has the ability and
intent to hold to maturity are classified as held-to-maturity and carried at
cost, adjusted for amortization of premium and accretion of discounts using
the interest method. Marketable securities classified as available-for-sale
are carried at fair value in 1995 and 1994. Unrealized gains and losses on
securities available-for-sale are recognized as direct increases or decreases
in equity capital effective December 31, 1994, in accordance with the adoption
of SFAS 115. Cost of securities sold is recognized using the specific
identification method.
NOTE A
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
MORTGAGE-BACKED SECURITIES
Mortgage-backed securities represent participating interests
in pools of first mortgage loans originated and serviced by issuers of the
securities. Mortgage-backed securities are carried at unpaid principal
balances, adjusted for unamortized premiums and unearned discounts. Premiums
and discounts are amortized using the interest method over the remaining
period to contractual maturity. Management intends and has the ability to
hold such securities to maturity. Should any be sold, cost of securities sold
is determined using the specific identification method.
LOANS
Loans are stated at unpaid principal balances, less the
allowance for loan losses and net deferred loan fees.
Loan origination and commitment fees, as well as certain
direct origination costs, are deferred and amortized as a yield adjustment
over the contractual lives of the related loans using the interest method.
Loans are placed on nonaccrual when principal or interest is
delinquent for 90 days or more. Any unpaid interest previously accrued on
those loans is reversed from income, and thereafter interest is recognized
only to the extent of payments received.
The allowance for loan losses is maintained at a level
which, in management's judgment, is adequate to absorb probable losses
inherent in the loan portfolio. The amount of the allowance is based on
management's evaluation of the collectibility of the loan portfolio,
including the nature of the portfolio, credit concentrations, trends in
historical loss experience, specific impaired loans, and economic conditions.
The allowance is increased by a provision for loan losses, which is charged
to expense, and reduced by charge-offs, net of recoveries. Changes in the
allowance relating to impaired loans are charged or credited to the provision
for loan losses.
PROPERTY AND EQUIPMENT
Office property and equipment are carried at cost.
Depreciation is computed using the straight-line method, over the estimated
useful lives of those properties and equipment acquired prior to 1981.
Property and equipment acquired after 1986 are depreciated
under the Modified Accelerated Cost Recovery System. The depreciation under
these methods does not differ materially from that calculated in accordance
with generally accepted accounting principles.
When these assets are retired or otherwise disposed of, the
cost and related accumulated depreciation or amortization is removed from the
accounts, and any resulting gain or loss is reflected in income for the
period.
NOTE A
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
FORECLOSED REAL ESTATE
Foreclosed real estate includes formally foreclosed
property. At the time of foreclosure, foreclosed real estate is recorded at
the lower of the Association's cost or the asset's fair value, less estimated
selling costs, which becomes the property's new basis. Costs incurred in
maintaining foreclosed real estate are included in income (loss) or foreclosed
real estate.
REAL ESTATE HELD-FOR-INVESTMENT
Real estate held-for-investment consists of a former branch
location and is carried at amortized costs.
INCOME TAXES
Effective January 1, 1994, the Association adopted SFAS 109,
"Accounting for Income Taxes." Under SFAS 109, the liability method is used
in accounting for income taxes.
Income taxes are provided for the tax effects of the
transactions reported in the financial statements and consist of taxes currently
due plus deferred taxes related to differences between the basis of assets and
liabilities for financial and income tax reporting. The deferred tax assets and
liabilities represent the future tax return consequences of those differences,
which will either be taxable or deductible when the assets and liabilities are
recovered or settled.
Financial Institutions are exempt from Louisiana income tax.
PENSION PLAN
The Association has a Simplified Employee Pension (SEP) plan
covering substantially all employees. It is the policy of the Association to
fund the plan at a percentage, based on annual profits, of total compensation
of plan participants, not to exceed the maximum allowable for Federal income
tax purposes.
STATEMENTS OF CASH FLOWS
The Association considers all cash and amounts due from
depository institutions, interest-bearing deposits in other banks and Federal
funds sold to be cash equivalents for purposes of the statements of cash flows.
NON-DIRECT RESPONSE ADVERTISING COSTS
The Association expenses advertising costs as incurred.
Advertising cost were $38,401 and $36,812 at December 31, 1996 and 1995,
respectively.
NOTE B
INVESTMENT SECURITIES
As discussed in Note A, the Association adopted SFAS 115
December 31, 1994. Prior to December 31, 1994, the Association classified
securities as held-for-sale securities (available-for-sale) and investment
securities (held-to-maturity) based on criteria which did not differ
significantly from that required by SFAS 115.
Securities available-for-sale consist of the following:
Gross Gross
Amortized Unrlzed Unrlzed Fair
Cost Gains Losses Value
December 31, 1996
U. S. Government
and Federal Agencies $ 21,085,564 $ 436,757$ 3,845 $21,518,476
Adjustable Rate Mortgage
Mutual Fund 1,055,660 1,440 1,054,220
FHLMC Common Stock 35,250 958,125 993,375
----------- ---------- ------ ---------
22,176,474 1,394,882 5,285 23,566,071
========== ========= ===== ==========
Securities held-to-maturity consist of the following:
Gross Gross
Amortized Unrlzed Unrlzed Fair
Cost Gains Losses Value
December 31, 1995
U. S. Government
and Federal Agencies $ 30,100,334 $ 366,733 $ 27,039 $ 30,440,028
December 31, 1994:
U. S. Government
and Federal Agencies $ 32,306,999 $ 22,727 $583,910 $ 31,745,816
NOTE B
INVESTMENT SECURITIES (Continued)
Securities available-for-sale consist of the following:
Gross Gross
Amortized Unrlzed Unrlze Fair
Cost Gain Losses Value
December 31, 1995
U. S. Government
and Federal Agencies $ 2,181,555 $ 24,478 $ $ 2,206,033
Adjustable Rate Mortgage
Mutual Fund 301,942 301,942
FHLMC Common Stock 35,250 716,250 751,500
--------- ------- -------- ---------
$ 2,518,747 740,728 $ $3,259,475
The following is a summary of maturities of securities held
to-maturity and available-for-sale.
December 31, 1996
Securities Securities
Held-to-Maturity Available-for-Sale
Amortized Amortized
Cost Fair Value Cost FairValue
Amounts Maturing in:
One Year or Less $ - $ - $ 6,386,785 $ 7,356,193
After One Year
Thru Five Years - - 12,288,693 12,525,097
After Five Years
Thru Ten Years - - 3,500,996 3,684,781
$ - $ - $ 22,176,474 $ 23,566,071
NOTE B
INVESTMENT SECURITIES (Continued)
December 31, 1995
Securities Securities
Held-to-Maturity Available-for-Sale
Amortized Amortized
Cost Fair Value Cost Fair Value
Amounts Maturing in:
One Year or Less$ 17,617,589 $ 17,674,403 $ 1,520,466 $ 2,238,881
After One Year
Thru Five Years 11,184,051 11,357,438 799,131 811,844
After Five Years
Thru Ten Years 1,298,694 1,408,187 199,150 208,750
----------- ----------- ---------- ----------
$ 30,100,334 $ 30,440,028 $ 2,518,747 $ 3,259,475
========== ========== ========= =========
The Association is holding various securities in the amount of $5,208,672
which are callable from 1997 to 1999.
Accrued interest receivable on available-for-sale investment
securities at December 31, 1996 was $310,849. Accrued interest receivable on
available-for-sale and held-to-maturity investment securities at December 31,
1995 was $23,180 and $262,300. Accrued interest receivable on available-for-
sale and held-to-maturity investment securities at December 31, 1994 was
$23,180 and $238,040, respectively.
During 1996, the Association sold investment securities
held-to-maturity with a book value of $6,988,900 for $6,888,437. This
resulted in a loss of $100,463. During 1995 and 1994, the Association had no
sales of securities available-for-sale.
During 1996, the Association transferred securities from the
held-to-maturity category to the available-for-sale category. The amortized
costs of the transferred securities was $18,650,134 and the related unrealized
gain was $184,708. There were no securities transferred between classifications
during 1995 and 1994.
Included in other assets are two equity securities being
carried at cost of $27,288. The fair market value for these securities
approximate cost.
NOTE C
MORTGAGE-BACKED SECURITIES
Mortgage-backed securities consist of the following:
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
December 31, 1996:
FNMA $ 2,980,159 $ 991 $ 77,982 $ 2,903,168
FHLMC 4,540,235 4,208 151,866 $ 4,392,577
--------- ----- ------- ---------
$ 7,520,394 $ 5,199 $ 229,848 $ 7,295,745
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
December 31, 1995:
FNMA $ 1,772,462 $ 3,480 $ 17,224 $ 1,758,718
FHLMC 4,594,885 12,588 61,156 4,546,317
--------- ------ ------ ---------
$ 6,367,347 $16,068 $ 78,380 $ 6,305,035
The amortized cost and fair value of mortgage-backed
securities at December 31, 1996 and December 31, 1995, by contractual maturity,
are shown below. Expected maturities will differ from contractual maturities
because borrowers may have the right to call or prepay obligations without
call or prepayment penalties.
Amortized Fair
Cost Value
December 31, 1996
Mortgage-Backed Securities Maturing:
In One Year or Less $ 87,283 $ 87,883
After One Year Thru Five Years 4,183,311 4,046,976
After Five Years Thru Ten Years 970,858 966,603
After Ten Years 2,278,942 2,194,283
--------- ---------
7,520,394 7,295,745
========= =========
NOTE C
MORTGAGE-BACKED SECURITIES (Continued)
Amortized Fair
Cost Value
December 31,1995
Mortgage-Backed Securities Maturing:
In One Year or Less $ 704,440 $ 709,300
After One Year Thru Five Years 3,118,629 3,091,529
After Five Years Thru Ten Years
After Ten Years 2,544,278 2,504,206
--------- ---------
$ 6,367,347 $ 6,305,035
========= =========
There were no sales of mortgage-backed securities in 1996, 1995 or 1994.
NOTE D
LOANS
Loans at December 31, 1996, and December 31, 1995 are
summarized as follows:
December 31,
1996 1995
Loans Secured by First Mortgages
on Real Estate:
One to Four Family Residential 42,660,324 38,449,360
FHA and VA 510,682 675,223
Construction 297,727
Commercial Real Estate 429,955 484,451
Other 145,376 145,631
---------- ----------
Total Real Estate Loans 44,044,064 39,754,665
Consumer Loans
Second Mortgage 273,484 266,530
Loans on Deposits 183,347 186,460
---------- ----------
44,500,895 40,207,655
Allowance for Loan Losses (382,061) (323,455)
Net Deferred Loan Origination Costs 6,570 4,218
---------- ----------
$44,125,404 $ 39,888,418
========== ==========
NOTE D
LOANS (Continued)
An analysis of the allowance for loan losses as follows:
Years Ended
December 31,
1996 1995
Balance, Beginning of Year $ 323,455 $ 345,348
Provision for Losses 58,606 12,107
Loans Charged Off (34,000)
------- -------
Balance, End of Year $ 382,061 $ 323,455
======= =======
The Financial Accounting Standards Board issued SFAS 114,
"Accounting by Creditors for Impairment of a Loan, as amended by SFAS 118,
"Accounting by Creditors for Impairment of a Loan - Income Recognition and
Disclosures", which is effective for fiscal years beginning after December 15,
1994. This statement establishes standards, including the use of discounted
cash flow techniques, for measuring the impairment of a loan when it is
probable that the contractual terms will not be met.
The Association adopted SFAS 114 on January 1, 1995.
Adoption of this standard had no impact on the Association's net income,
stockholders' equity or total assets.
At December 31, 1996 and December 31, 1995, the Association
had loans totaling approximately $397,719 and $337,867, respectively, for
which impairment had been recognized. The allowance for loan losses related
to these loans totaled $160,400, and $123,400 at December 31, 1996 and December
31, 1995, respectively. During the year ended December 31, 1995, the amount of
interest income that would have been recorded on loans in nonaccrual status at
December 31, 1995, had such loans performed in accordance with their terms, was
approximately $16,881. The actual interest income recorded on these loans
during the year ended December 31, 1995 was approximately $-0-. Such interest
foregonefor the year ended December 31, 1996 was approximately $18,940.
NOTE D
LOANS (Continued)
In the ordinary course of business, the Association has and
expects to continue to have transactions, including borrowings, with its
officers and directors. In the opinion of management, such transactions were
on substantially the same terms, including interest rates and collateral, as
those prevailing at the time of comparable transactions with other persons and
did not involve more than a normal risk of collectibility or present any other
unfavorable features to the Association. Loans to such borrowers are summarized
as follows:
December 31,
1996 1995
Balance, Beginning of Year $ 224,412 $ 383,069
Net (Decrease) Increase (45,312) (158,657)
------- -------
Balance, End of Year $ 179,100 $ 224,412
======= =======
The Association's lending activity is concentrated within
the metropolitan New Orleans area. The economy in the area has been affected
because of the economic decline in oil and gas related businesses. The
Association's major emphasis in lending has been the origination of permanent
single-family dwelling loans, and such loans comprise the majority of the
Association's loan portfolio.
NOTE E
ACCRUED INTEREST RECEIVABLE
Accrued interest receivable at December 31, 1996 and
December 31, 1995 consists of the following:
December 31,
1996 1995
Loans $ 189,424 $ 190,700
Mortgage-Backed Securities 36,113 30,640
Investments and Other 310,849 285,480
------- -------
Totals $ 536,386 $ 506,820
======= =======
NOTE F
PREMISES AND EQUIPMENT
A summary of premises and equipment follows:
December 31,
1996 1995
Land $ 780,616 $ 780,616
Buildings and Improvements 2,063,559 1,900,647
Furniture, Fixture and Equipment 384,101 345,880
Leasehold Improvements
--------- ---------
3,228,276 3,027,143
Accumulated Depreciation and
Amortization (476,003) (356,562)
--------- ----------
$ 2,752,273 $ 2,670,581
Depreciation expense for the years ended December 31, 1996
and 1995 was $119,443 and $128,022, respectively.
NOTE G
FORECLOSED REAL ESTATE
A comparative summary of foreclosed real estate is as
follows:
December 31,
1996 1995
Acquired in Settlement of Loans $ - $ 23,971
Less: Allowance for Losses on
Foreclosed Real Estate
------ ------
$ - $ 23,971
NOTE H
REAL ESTATE HELD-FOR-INVESTMENT
Real estate held-for-investment at December 31, 1996 consists of a former
branch location as summarized below.
December 31,
1996 1995
Land $ 70,000 $ 70,000
Building and Improvements 117,528 113,228
------- -------
187,528 183,228
Accumulated Depreciation (94,353) (88,465)
------- -------
93,175 94,763
Allowance for Losses 0 0
------- -------
$ 93,175 $ 94,763
Depreciation expense for the years ended December 31, 1996
and 1995 was $5,888 and $5,694, respectively.
NOTE I
DEPOSITS
DEPOSITS
Deposit account balances at December 31, 1996, and December 31, 1995 are summarized as follows:
Years ended December 31,
Weighted 1996 1995 1994
12/31/96 12/31/95 12/31/94 Amount Percent Amount Percent Amount Percent
Balnce by Interest Rate:
Regular Savings Accou 4.00% 3.25% 3.75% $ 25,088,117 40.85% $ 24,119,701 39.58% $ 26,365,116 40.79%
Certificate of Deposi 5.18% 4.94% 4.24% 36,332,865 59.15 36,825,411 60.42 38,277,060 59.21
$ 61,420,982 100.00% $ 60,945,112 100.00% $ 64,642,176 100.00%
Certificate accounts maturing
Under 12 months $ 29,881,074 82.24% $ 28,164,704 76.48% $ 30,221,752 78.96%
12 monnths to 24 months 4,994,587 13.75 5,994,982 16.28 6,290,857 16.44
24 months to 36 months 1,327,766 3.65 2,272,634 6.17 1,323,374 3.46
36 months to 48 months 109,159 0.30 272,486 0.74 156,452 0.40
48 months to 60 months 20,279 0.06 120,605 0.33 284,625 0.74
$ 36,332,865 100.00% $ 36,825,411 100.00% $ 38,277,060 100.00%
NOTE I
DEPOSITS (Continued)
The aggregate amount of certificates with a minimum balance
of $100,000 was approximately $2,929,156, and $1,053,966 at December 31, 1996
and 1995, respectively.
Interest expense for each of the following periods is as follows:
Years Ended
December 31,
1996 1995 1994
Certificates $1,845,898 $1,784,221 $ 1,509,028
Passbook Savings 833,170 879,683 897,980
2,679,068 2,663,904 2,407,008
The Association held deposits of approximately $1,025,400,
and $917,916 for officers and directors at December 31, 1996 and 1995,
respectively.
NOTE J
FEDERAL INCOME TAXES
As discussed in Note A, the Association adopted SFAS 109
effective January 1, 1994. Prior year financial statements were restated with
no cumulative effect adjustment at adoption required.
The provision for income taxes for 1996, 1995 and 1994
consists of the following:
Years Ended
December 31
1996 1995 1994
Current Federal Tax Expense $ 3,860 $ 439,205 $ 502,545
Deferred Federal Tax Expense 196,855 40,636 26,859
------- ------- -------
$ 200,715 $ 479,841 $ 529,404
NOTE J
FEDERAL INCOME TAXES (Continued)
The provision for Federal income taxes differs from
that computed by applying Federal statutory rates to income (loss) before
Federal income tax expense, as indicated in the following analysis:
December 31,
1996 1995 1994
Expected Tax Provision
at a 34% Rate 205,827 $ 459,740 $ 518,054
Effect of Tax-Exempt Income (2,999) (2,570) (2,228)
Effect of Net Loan and R/E/O
Losses Charged
Directly to Tax
Bad Debt
Reserve 32,497 36,303 35,609
(Decrease) in Deferred Tax
Asset Valuation Allowance (34,610) (13,632) (22,031)
------- ------- -------
$ 200,715 $ 479,841 $ 529,404
======= ======= =======
Deferred tax liabilities have been provided for taxable or
deductible temporary differences related to unrealized gains on available-for
- -sale securities, deferred loan costs, depreciation and non-cash Federal Home
Loan Bank dividends. Deferred tax assets have been provided for taxable or
deductible temporary differences related to the reserves for uncollected
interest and late charges, deferred loan fees, allowance for loan losses, the
allowance for losses on foreclosed real estate and the allowance for losses on
real estate held-for-investment. The net deferred tax assets or liabilities
in the accompanying statements of financial condition include the following
components:
December 31,
1996 1995 1994
Deferred Tax Liabilities (781,466) $(305,310) $ (166,102)
Deferred Tax Assets 141,748 117,675 132,228
Deferred Tax Asset
Valuation Allowance (75,364) (109,975) (123,607)
-------- -------- -------
Net Deferred Tax
Assets or (Liabilities) (715,082) $(297,610) $ (157,481)
======= ======= =======
NOTE J
FEDERAL INCOME TAXES (Continued)
Included in retained earnings at December 31, 1996, and
December 31, 1995 is approximately $3,282,148, and $4,940,983, respectively in
bad debt reserves for which no deferred Federal income tax liability has been
recorded. These amounts represent allocations of income to bad debt deductions
for tax purposes only. Reduction of these reserves for purposes other than tax
bad-debt losses or adjustments arising from carryback of net operating losses
would create income for tax purposes, which would be subject to the then-current
corporate income tax rate. The unrecorded deferred liability on these amounts
was approximately $1,115,930 and $1,679,000 for December 31, 1996 and December
31, 1995.
NOTE K
PENSION PLAN
The Association established a Simplified Employee Pension
(SEP) plan in 1993, covering substantially all employees.
The present plan (SEP) was funded in 1994 at 12% of total
compensation of plan participants. The total expense (contributions) amounted
to $140,425, $127,566 and $125,361 for the years ended December 31, 1996, 1995
and 1994, respectively.
NOTE L
FEDERAL DEPOSIT INSURANCE CORPORATION IMPROVEMENT ACT OF 1991
(FDICIA) AND FINANCIAL INSTITUTIONS REFORM, RECOVERY AND
ENFORCEMENT ACT OF 1989 (FIRREA)
FDICIA was signed into law on December 19, 1991.
Regulations implementing the prompt corrective action provisions of FDICIA
became effective on December 19, 1992. In addition to the prompt corrective
action requirements, FDICIA includes significant changes to the legal and
regulatory environment for insured depository institutions, including
reductions in insurance coverage for certain kinds of deposits, increased
supervision by the Federal regulatory agencies, increased reporting requirements
for insured institutions, and new regulations concerning internal controls,
accounting and operations.
FIRREA was signed into law on August 9, 1989. Regulations
for savings institutions' minimum capital requirements went into effect on
December 7, 1989. In addition to its capital requirements, FIRREA includes
provisions for changes in the Federal regulatory structure for institutions,
including a new deposit insurance system, increased deposit insurance premiums,
and restricted investment activities with respect to noninvestments grade
corporate debt and certain other investments. FIRREA also increases the
required ration of housing-related assets in order to qualify as a savings
institution.
NOTE L
FEDERAL DEPOSIT INSURANCE CORPORATION IMPROVEMENT ACT OF1991 (FDICIA) AND
FINANCIAL INSTITUTIONS REFORM, RECOVERY AND ENFORCEMENT ACT OF 1989 (FIRREA)
(Continued)
The regulations require institutions to have a minimum
regulatory tangible capital equal to 1.5% of adjusted total assets, a minimum
4% core/leverage capital ratio, a minimum 4% tier 1 risk-based ratio, and a
minimum 8% total risk-bases capital ratio to be considered "adequately
capitalized." An institution is deemed to be "critically undercapitalized"
if it has a tangible equity ratio of 2% or less. The ability to include
qualifying supervisory goodwill for purposes of the core/leverage capital and
tangible capital was phased out by July 1, 1995.
The following table sets out the Association's various
regulatory capital categories at December 31, 1996, December 31, 1995 and 1994.
1996 199
Dollars % Dollars %
(Thousands) (Thousands)
Tangible Capital $ 23,862 27.26% $ 23,457 27.26%
Tangible Equity $ 23,862 27.26% $ 23,457 27.26%
Core/Leverage Capital $ 23,862 27.26% $ 23,457 27.26%
Tier 1 Risk-Based Capital$ 23,862 78.46% $ 23,680 92.80%
Total Risk-Bases Capital $ 24,084 79.19% $ 23,680 91.75%
NOTE M
REGULATORY CAPITAL
The following is a reconciliation of generally accepted accounting principles
(GAAP) net income and capital to regulatory capital for the Association. The
following reconciliation also compares the capital requirements as computed to
the minimum capital requirements for the Association.
Net Income Capital
for the Year Ended as of
December 31, 1996 December 31, 1996
(In Thousands)
Per GAAP $405 $24,779
Total Assets $87,550
Capital Ratio 28.30%
NOTE M
REGULATORY CAPITAL (Continued)
Core/ Tier 1 Total
Tangible Tangible Leverage Risk-Based RiskBased
Capital Equity Equity Capital Capital
Per GAAP $24,779 $24,779 $24,779 $24,779 $24,779
Assets Required
to be Deducted
Unrealized Gain
on Securities
Available-for-Sale (917) (917) (917) (917) (917)
General Valuation
Allowance 222
------ ------ ------ ------ -------
Regulatory Capital
Measure $23,862 $23,862 $23,862 $23,862 $24,084
Adjusted Total
Assets $87,550 $87,550 $87,550
Risk-Weighted
Assets $30,412 $30,412
Capital Ratio 27.26% 27.26% 27.26% 78.46% 79.19%
Required Ratio 1.50% 2.00% 3.00% 4.00% 8.00%
Required Capital $1,313 $2,627 $2,434
Excess Capital $22,549 $21,235 $21,650
Net Income Capital
Year Ended as of
December 31, 1995 December 31, 1995
(In Thousands)
Per GAAP $ 872 $23,946
Total Assets $86,040
Capital Ratio 27.83%
NOTE M
REGULATORY CAPITAL (Continued)
Core/ Tier 1 Total
Tangible Tangible Leverage Risk-Based RiskBased
Capital Equity Equity Capital Capital
Per GAAP $23,946 $23,946 $23,946 $23,946 $23,946
Assets Required
to be Deducted
Unrealized Loss
on Securities
Available-for-Sale (489) (489) (489) (489) (489)
Other (467)
General Valuation
Allowance 200
Regulatory Capital
Measure $23,457 $23,457 $23,457 $23,457 $23,190
Adjusted Total
Assets $86,040 $86,040 $86,040
Risk-Weighted
Assets $25,275 $25,275
Capital Ratio 27.35% 27.35% 27.35% 92.81% 93.60%
Required Ratio 1.50% 2.00% 3.00% 4.00% 8.00%
Required Capital $ 1,291 $ 2,581 $ 2,022
Excess Capital $22,166 $20,876 $21,635
NOTE N
COMMITMENTS AND CONTINGENCIES
In the normal course of business, the Association has
various outstanding commitments and contingent liabilities that are not
reflected in the accompanying financial statements. The principal commitments
of the Association are as follows:
Loan Commitments:
Outstanding mortgage loan commitments as of December 31,
1996 and 1995 were approximately $258,680 and $318,460, respectively. These
commitments normally extended for thirty days, are for first mortgage loans at
a fixed rate ranging from 7.75% to 9%.
NOTE N
COMMITMENTS AND CONTINGENCIES (Continued)
Investment Commitments:
Outstanding commitments to purchase investment securities as
of December 31, 1996 were $-0- and as of December 31, 1995 were approximately
$300,000.
SAIF Commitment:
During 1995, legislation was proposed by Congress to
recapitalize the Savings Association Insurance Fund (SAIF). The Association
paid $413,324 in December, 1996.
NOTE O
FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK
The Association is a party to financial instruments with
off-balance sheet risk in the normal course of business to meet the financing
needs of its customers. These financial instruments consist of commitments to
extend credit. These instruments involve, to varying degrees, elements of
credit and interest rate risk in excess of the amounts recognized in the
statements of financial condition.
The Association's exposure to credit loss in the event of
nonperformance by the other party to these financial instruments for commitments
to extend credit is represented by the contractual notional amount of those
instruments (see Note N). The Association uses the same credit policies
making commitments as it does for on-balance sheet instruments.
Commitments to extend credit are agreements to lend to a
customer as long as there is no violation of any condition established in the
contract. Commitments generally have fixed expiration dates or other
termination clauses and may require payment of a fee. Since many of the
commitments are expected to expire without being drawn upon, the total
commitment amount does not necessarily represent future cash requirements.
The Association evaluates each customer's creditworthiness on a case-by-case
basis. The amount and type of collateral obtained varies and is based on
management's credit evaluation of the counterparty.
NOTE P
CONCENTRATION OF CREDIT RISK
The Association has deposits in another financial
institution for more than the insured limit. The Association is required to
keep a minimum compensating balance of approximately $250,000.
NOTE Q
DISCLOSURE ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
On January 1, 1995, the Association adopted SFAS 107,
"Disclosures about Fair Value of Financial Instruments", which requires the
disclosure of fair value information about financial instruments, whether or
not recognized in the statement of financial conditon, for which it is
practicable to estimate the value. Quoted market prices, when available, are
used as the measure of fair value. In cases where quoted market prices are
not available, fair values are based on present value estimates or other
valuation techniques. These derived fair values are significantly affected
by assumptions used, principally the timing of future cash flows and the
discount rates. Because assumptions are inherently subjective in nature, the
estimated fair values cannot be substantiated by comparison to independent
market quotes and, in many cases, the estimated fair values would not
necessarily be realized in an immediate sale or settlement of the instrument.
The disclosure requirements of SFAS 107 exclude certain financial instruments
and all nonfinancial instruments. Accordingly, the aggregate fair value amounts
presented do not represent management's estimation of the underlying value of
the Association.
The following methods and assumptions were used to estimate
the fair value of each class of financial instruments for which it is
practicable to estimate the value:
The carrying amount of cash and short term investments
approximate the fair value.
For investment securities and mortgage-backed securities fair
value is based on quoted market prices.
For mortgage loan receivables the fair values are based on
discounted cash flows using current rates at which similar loans with
similar maturities would be made to borrowers with similar credit risk.
The fair value of savings deposits is equal to the amount
payable at the date of the financial statements.
For certificates of deposit, fair value is estimated based on
current rates for deposits of similar remaining maturities.
The fair value of loan commitments is estimated using fees
that would be charged to enter similar agreements, taking into
account (1) the remaining terms of the agreement, (2) the
creditworthiness of the borrowers, and (3) for fixed rate
commitments, the difference between current interest rates and
committed rates.
NOTE Q
DISCLOSURE ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)
Estimated fair values of the financial instruments are as
follows:
December 31, 1996 December 31, 1995
Carrying Fair Carrying Fair
Amount Value Amount Value
Financial Assets
Cash and Short-Term
Investment $ 7,590,000 $ 7,590,000 $ 2,355,000 $ 2,355,000
Investment Securities 23,566,000 23,998,000 33,360,000 33,700,000
Mortgage-Backed Securities 7,520,000 7,295,000 6,367,000 6,305,000
Loans (Net of Loan
Allowance) 44,125,000 46,628,000 39,888,000 42,907,000
Financial Liabilities
Deposits 61,421,000 63,007,000 60,945,000 60,913,000
Unrecognized Financial
Instruments
Commitments to Extend
Credit $ 258,680 276,000 318,000 332,000
Unfunded Construction Loan
Commitment $ 211,000 $ 213,000
NOTE R
ADOPTION OF PLAN OF CONVERSION
On October 10, 1996, the Board of Directors of GUARANTY
SAVINGS AND HOMESTEAD ASSOCIATION adopted a Plan of Conversion (the "Plan"),
which proposes the conversion of the Association from a Louisiana-chartered
mutual savings and loan association to a Louisiana-chartered stock savings and
loan association to be known as "Guaranty Savings and Homestead Association"
(the "Association", in its mutual or stock form, as the sense of the reference
requires) and the concurrent issuance of its capital stock to G S Financial
Corporation ("the newly formed Holding Company").
NOTE R
ADOPTION OF PLAN OF CONVERSION (Continued)
The Plan provides that non-transferable subscription rights
to purchase Common Stock will be offered first to Eligible Account Holders of
record as of the Eligibility Record Date, then to Tax-Qualified Employee Stock
Benefit Plans, then to Supplemental Eligible Account Holders, if applicable,
then to Other Members, and then to Directors, Officers and Employees. Shares
of Common Stock remaining unsold after the Subscription Offering, if any, will
be offered for sale to the public through a Community Offering and/or Syndicated
Community Offering, as determined by the Board of Directors of the Holding
Company and the Association in their sole discretion. The common stock will be
offered at a price to be determined by the Board of Directors based upon an
appraisal to be made by an independent appraisal firm. The exact number of
shares to be offered will be determined by the Board of Directors in
conjunction with the determination of the price at which the shares will be
sold. The costs of issuing the common stock will be deferred and deducted
from the sale proceeds. The Association had incurred $169,625 stock issuance
costs as of December 31, 1996. If the conversion is not completed, deferred
costs will be charged to operations.
In accordance with OTS Regulations, at the time that the
Association converts from a mutual savings and loan association to a stock
savings and loan association, the Association will establish a liquidation
account with an initial balance equal to the Association's retained earnings
as of the date of the latest balance sheet appearing in the prospectus. The
liquidation account will be maintained for the benefit of eligible holders
who continue to maintain their accounts at the Association after the Conversion.
The liquidation account will be reduced annually to the extent that eligible
account holders have reduced their qualifying deposits. Subsequent increases
will not restore an eligible account holder's interest in the liquidation
account. In the event of a complete liquidation of the Association, and only
in such event, each account holder will be entitled to receive a distribution
from the liquidation account in an amount proportionate to the adjusted
qualifying account balances then held. The Association may not pay dividends
if those dividends would reduce retained earnings below the required
liquidation account amount.
See accompanying notes and auditor's report.
2
9
GUARANTY SAVINGS AND HOMESTEAD ASSOCIATION
NOTES TO FINANCIAL STATEMENTS
For The Years Ended December 31, 1996 and 1995
23
34