UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 11-K

 

FOR ANNUAL REPORTS OF EMPLOYEE STOCK PURCHASE,

 SAVINGS AND SIMILAR PLANS PURSUANT TO SECTION 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

(Mark One)
x		ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2005
OR
o		TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                       to

 

Commission file number     0-14289

 

GREENE COUNTY BANCSHARES, INC.

401(K) PROFIT SHARING PLAN

(Full Title of Plan)

 

GREENE COUNTY BANCSHARES, INC.

(Issuer of Securities Held Pursuant to Plan)

 

100 North Main Street

Greeneville, Tennessee 37743-4992

(Address of Principal Executive Office of Issuer and of Plan)

 

GREENE COUNTY BANCSHARES, INC.
401(K) PROFIT SHARING PLAN

Financial Statements and Supplemental Schedule

December 31, 2005 and 2004

(With Report of Independent Registered Public Accounting Firm Therein)

GREENE COUNTY BANCSHARES, INC.
401(K) PROFIT SHARING PLAN

Table of Contents

December 31, 2005 and 2004

		Page(s)
Report of Independent Registered Public Accounting Firm		1
Financial Statements:
Statements of Net Assets Available for Benefits		2
Statements of Changes in Net Assets Available for Benefits		3
Notes to Financial Statements		4-7
Supplemental Schedule:
Schedule of Assets (Held at End of Year)		9

 

Report of Independent Registered Public Accounting Firm

Plan Administrator
Greene County Bancshares, Inc. 401(K) Profit Sharing Plan
Greeneville, Tennessee

We have audited the accompanying financial statements of net assets available for benefits of the Greene County Bancshares, Inc. 401(k) Profit Sharing Plan as of December 31, 2005 and 2004, and the related statements of changes in net assets available for benefits for the years then ended. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). 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 consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Association’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. 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 net assets available for benefits of the Plan as of December 31, 2005 and 2004, and the changes in net assts available for benefits for the years then ended, in conformity with accounting principles generally accepted in the United States of America.

Our audits of the Plan’s financial statements as of and for the years ended December 31, 2005 and 2004 were performed for the purpose of forming an opinion on the financial statements taken as a whole. The supplemental schedule of assets held at end of year is presented for the purpose of additional analysis and is not a required part of the basic financial statements, but is supplementary information required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. This supplemental schedule is the responsibility of the Plan’s management. The supplemental schedule has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.

/s/ Dixon Hughes PLLC

Asheville, North Carolina
May 22, 2006

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GREENE COUNTY BANCSHARES, INC.
401(K) PROFIT SHARING PLAN

Statements of Net Assets Available for Benefits

December 31, 2005 and 2004

 

Assets		2005			2004
Investments at fair value:
Investments		$	20,279,154		$	19,078,802
Participant loans		443,354			410,514
		20,722,508			19,489,316
Receivables:
Employer contributions		855,573			704,806
Cash		17			1,822
Net assets available for benefits		$	21,578,098		$	20,195,944

 

The accompanying notes are an integral part of these financial statements.

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GREENE COUNTY BANCSHARES, INC.
401(K) PROFIT SHARING PLAN

Statements of Changes in Net Assets Available for Benefits

For the Years Ended December 31, 2005 and 2004

 

		2005			2004
Additions:
Net appreciation in fair value of investments		$	344,668		$	1,250,770
Dividends and interest		860,220			497,570
		1,204,888			1,748,340
Contributions:
Participants		902,122			772,723
Employer		855,573			704,806
Rollovers		215,594			80,862
Total contributions		1,973,289			1,558,391
Total additions		3,178,177			3,306,731
Deductions:
Benefits paid to participants		1,794,336			1,030,154
Administrative expenses		1,687			1,550
Total deductions		1,796,023			1,031,704
Transfers from merged plan		—			766,088
Net increase		1,382,154			3,041,115
Net assets available for benefits:
Beginning of year		20,195,944			17,154,829
End of year		$	21,578,098		$	20,195,944

 

The accompanying notes are an integral part of these financial statements.

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GREENE COUNTY BANCSHARES, INC.
401(K) PROFIT SHARING PLAN

Notes to Financial Statements

December 31, 2005 and 2004

1.                     Description of Plan

The following brief description of the Greene County Bancshares, Inc. 401(k) Profit Sharing Plan (the”Plan”) provides only general information. Participants should refer to the plan agreement for a more complete description of the Plan’s provisions.

General - The Plan is a defined contribution plan covering all full-time employees, as defined by the Plan, of Greene County Bank and other wholly-owned subsidiaries of Greene County Bancshares, Inc. (“Company”). In November 2003 the Company acquired Independent Bankshares Corporation (“IBC”). The IBC 401(K) Plan was merged into the Greene County Bancshares, Inc. 401(K) Profit Sharing Plan and as a result the assets were transferred in effective April 2, 2004. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”).

Contributions - Eligible employees are permitted to make elective deferrals in any amount up to the maximum percentage allowable not to exceed the limits of Code Sections 401(k), 402(g), 404 and 415. Eligible employees may amend their salary savings agreements to change the contribution percentage on each payroll period during the plan year. The employer has adopted the 401(k) safe harbor provision whereby a non-elective contribution equal to 3% of eligible compensation will be made on behalf of all eligible participants. This 3% non-elective contribution is 100% vested.

In addition, the employer may make a discretionary employer contribution which shall be allocated to each eligible employee in proportion to his or her compensation (as defined by the Plan) as a percentage of the compensation of all eligible employees.

Investment Options - Participants are allowed to direct the investment of their contributions and to change their investment mix at their discretion.

Participant Accounts - Each participant’s account is credited with the participant’s contribution and an allocation of (a) plan earnings, (b) employer non-elective and any employer discretionary contributions (if eligible), and (c) forfeitures of terminated participants’ non-vested accounts (if any). Allocations are based on participant compensation or account balances, as defined. The benefit to which a participant is entitled is the benefit that can be provided from the participant’s vested account.

Vesting - Participants are immediately vested in their voluntary contributions and safe harbor contributions plus actual earnings thereon and are 100 percent vested after two years of service in the profit sharing contributions.

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Participant Loans — Participants may borrow from their vested fund accounts with a $1,000 minimum and a maximum equal to $50,000 or 50 percent of their vested account balance, whichever is less. The loans are secured by the balance in the participant’s account and bear interest at rates that currently range from 3.25 percent to 8.50 percent. The interest rate is fixed for the life of the loan and is generally based on the Prime Rate (plus 1 percent) published in the Wall Street Journal on the first business day of the month in which the loan is originated. Principal and interest is paid ratably through semi-monthly payroll deductions.

Payment of Benefits - After termination of service, a participant may elect to receive a lump-sum amount equal to the value of his or her account, or substantially equal installments or annuities over any period not exceeding the life expectancy of the participant or the life expectancy of the participant and his or her designated beneficiary.

Forfeitures - Forfeitures are to be reallocated to participants in the same manner as employer contributions. At December 31, 2005 and 2004, forfeited non-vested accounts totaled $606 and $8,426, respectively.

Administrative Costs - The Plan’s administrative expenses are paid by either the Plan or the Company, as provided by the plan document.

2.                     Significant Accounting Policies

Basis of Accounting - The financial statements of the Plan are prepared under the accrual method of accounting.

Investments Valuation and Income Recognition - The Plan’s investments are stated at fair value. Quoted market prices are used to value investments such as Company stock. Shares of mutual funds are valued at quoted market prices which represent the fair value of shares held by the Plan at year-end. Participants’ loans are valued at their outstanding balances, which approximate fair value. Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date.

Payment of Benefits - Benefits are recorded when paid.

Estimates - The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions. Those estimates and assumptions affect certain reported amounts and disclosures. Accordingly, actual results could vary from those estimates.

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3.                     Investments

The Plan’s investments are held by a bank administered trust fund. Investments that represent five percent or more of the Plan’s net assets at December 31:

 

 

During 2005 and 2004 the Plan’s investments (including gains and losses on investments bought and sold, as well as held during the year) appreciated in value as follows:

 

4.                     Tax Status

The Plan obtained its latest determination letter dated December 17, 1996, in which the Internal Revenue Service stated that the Plan, as then designed, was in compliance with the applicable requirements of the Internal Revenue Code (“IRC”). The Plan has been amended since receiving the determination letter. However, the Plan administrator believes that the Plan is designed and is currently being operated in compliance with the applicable requirements of the Internal Revenue Code.

5.                     Plan Termination

Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. In the event of Plan termination, participants would become 100% vested in their employer contributions.

6.                     Related Party Transactions

Certain Plan investments are shares of mutual funds managed by American Funds Group. American Funds Group is the record-keeper as defined by the Plan and, therefore, these transactions qualify as party-in-interest transactions.

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7.                     Risks and Uncertainties

The Plan invests in various investment securities. Investment securities are exposed to various risks such as interest rate, market, and credit risk. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investments securities will occur in the near term and that such changes could materially affect participants’ account balances and the amounts reported in the statement of net assets available for benefits.

8.                     Reconciliation of Financial Statements to Form 5500

The following is a reconciliation of net assets available for benefits per the accompanying financial statements to Schedule H of Form 5500.

 

The following is a reconciliation of employer contributions per the financial statements for the year ended December 31, 2005 to Schedule H of Form 5500.

 

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GREENE COUNTY BANCSHARES, INC.
401(K) PROFIT SHARING PLAN

Schedule of Assets (Held at End of Year)
Form 5500, Schedule H, Part IV, Line 4i

December 31, 2005

EIN:  62-1222567
Plan Number 001

(a)		(b) Identity of Issue, Borrower, Lessor or Similar Party		(c) Description of Investment Including Maturity Date, Rate of Interest, Collateral, Par or Maturity Value		(d) Cost**		(e) Current Value
*		American Funds Group		American Balanced Fund, 178,888 shares				$3,184,203
*		American Funds Group		Capital World Growth and Income Fund,
				35,156 shares				1,284,253
*		American Funds Group		The Growth Fund of America, 62,253  Shares				1,909,928
*		American Funds Group		Intermediate Bond Fund of America,
				85,202 shares				1,145,970
*		American Funds Group		New Perspective Fund, 105,720 shares				3,008,798
*		American Funds Group		Washington Mutual Investors Fund,
				210,930 shares				6,490,315
*		American Funds Group		The Cash Management Trust of America
				Fund, 1,182,720 shares				1,182,720
		AIM Advisors		Mid Cap Core Equity Fund, 5,322 shares				152,043
		PIMCO Funds		PIMCO Small Cap Value Fund, 18,047  shares				521,565
		Templeton Global Advisors		Templeton Foreign Fund, 48,534 shares				615,405
		PIMCO Funds		PIMCO Total Return, 47,892 shares				502,867
*		Greene County Bancshares		Common Stock, 10,274 shares				281,087
		Participant loans		Loans with interest rates from 3.25% to
				.50%, maturing through October 20277				443,354
								$20,722,508

 

* Party-in-interest
** Cost information omitted for participate directed investments.

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EXHIBITS

The following documents are filed as exhibits to this Form 11-K:

23.   Consent of Dixon Hughes PLLC.

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SIGNATURES

The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the 401(K) Profit Sharing Plan Committee of Greene County Bancshares, Inc. has duly caused this annual report to be signed on behalf of the Plan by the undersigned hereunto duly authorized.

		GREENE COUNTY BANCSHARES, INC.
		401(K) PROFIT SHARING PLAN
		By:		The Greene County Bancshares, Inc.
				401(K) Profit Sharing Plan Committee
Date: June 27, 2006		By:		/s/ Steve Ottinger
				Steve Ottinger

 

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