<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-QSB
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Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
--- EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
----------------------
OR
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 333-4304
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NEWNAN HOLDINGS, INC.
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(Exact name of registrant as specified in its charter)
Georgia 58 - 2232785
- ---------------------------------- -----------------
(State or other jurisdiction of (I.R.S. Employment
Incorporation or organization) Identification Number)
19 Jefferson Street
Newnan, Georgia 30263
- --------------------- --------
(Address of principal (Zip Code)
executive office)
Registrant's telephone number, including area code: (770) 253-5017
--------------
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 of shares outstanding of each of the issuer's classes of
common stock, as of November 12, 1996: 1,598,597
<PAGE>
INDEX
Page
----
Part I. Financial Information
- ------------------------------
I. Condensed Consolidated Financial Statements (unaudited)
Condensed Consolidated Balance Sheet as of September 30, 1996 and
March 31, 1996.................................................. 1
Condensed Consolidated Statements of Earnings For The
Three and Six Months Ended September 30, 1996 and 1995.......... 2
Condensed Consolidated Statements of Cash Flows
For The Six Months Ended September 30, 1996 and 1995............ 3 - 4
Notes to Condensed Consolidated Financial Statements............ 5 - 6
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition.............................. 7 - 12
Part II Other Information
-----------------
Schedules Omitted
-----------------
All schedules other than those indicated above are omitted because of the
absence of the conditions under which they are required or because the
information is included in the condensed consolidated financial statements and
related notes.
<PAGE>
<TABLE>
<CAPTION>
NEWNAN HOLDINGS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
September 30 and March 31, 1996
(Unaudited)
September 30 March 31
<S> <C> <C>
ASSETS
Cash and cash equivalents:
Cash and due from banks $ 10,061,175 $ 9,214,902
Interest-bearing deposits in other banks 912,891 524,372
Federal funds sold 5,270,000 0
---------------------------------
Total cash and cash equivalents 16,244,066 9,739,274
Loans held for sale 7,553,987 7,878,878
Investment securities available for sale, at fair value 17,794,988 22,794,000
Mortgage-backed securities held to maturity, at amortized cost, 7,039,537 9,132,552
fair value of $6,986,613 and $9,086,437 at September 30
and March 31, 1996
Loans receivable, net of allowance of $2,808,300 188,514,149 123,072,970
Stock in Federal Home Loan Bank, at cost 1,217,900 1,471,700
Real estate held for development and sale 3,699,158 3,850,722
Premises and equipment, net 4,647,808 2,746,486
Goodwill 5,210,235 0
Other assets 4,023,706 1,323,718
---------------------------------
$255,945,534 $182,010,300
---------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposit accounts $214,590,649 $130,635,333
Advances from the Federal Home Loan Bank 14,170,597 29,488,465
Accrued expenses and other liabilities 4,142,266 1,620,505
---------------------------------
Total liabilities 232,903,512 161,744,303
=================================
Commitments and Contingencies
Stockholders' equity
Common stock, $1.00 par value, 8,000,000 shares authorized; 1,598,597 1,458,307
1,598,597 and 1,458,307 shares issued, 1,587,297 and
1,458,307 shares outstanding, respectively
Additional paid-in capital 7,835,685 5,853,830
Retained earnings, substantially restricted 13,864,849 12,954,052
Treasury stock, at cost (11,300 shares) (231,650) 0
Net unrealized holding losses on investment securities (25,459) (192)
available for sale
Total stockholders' equity 23,042,022 20,265,997
---------------------------------
$255,945,534 $182,010,300
=================================
</TABLE>
See accompanying notes to condensed consolidated financial statements.
-1-
<PAGE>
<TABLE>
<CAPTION>
NEWNAN SAVINGS BANK, FSB AND SUBSIDIARIES
Consolidated Statements of Earnings
For the Three and Six Months Ended September 30, 1996 and 1995
(Unaudited)
Three Months Six Months
1996 1995 1996 1995
<S> <C> <C> <C> <C>
INTEREST AND DIVIDEND INCOME:
Loans $3,719,357 $ 2,897,854 $ 6,491,910 $ 5,674,423
Interest-bearing deposits 107,847 14,404 178,998 36,645
Investment securities available for sale 171,140 85,654 233,633 201,731
-------------------------------------------------------
Mortgage-backed securities 116,526 127,681 244,728 254,422
-------------------------------------------------------
Total interest and dividend income 4,114,870 3,125,593 7,149,269 6,167,221
-------------------------------------------------------
INTEREST EXPENSE:
Interest on deposits 1,732,801 1,375,610 3,125,149 2,658,396
Interest on borrowed funds 133,978 280,935 255,046 615,620
-------------------------------------------------------
Total interest expense 1,866,779 1,656,545 3,380,195 3,274,016
-------------------------------------------------------
Net interest income 2,248,091 1,469,048 3,769,074 2,893,205
Provision for loan losses 20,000 10,000 20,000 10,000
-------------------------------------------------------
Net interest income after provision for
loan losses 2,228,091 1,459,048 3,749,074 2,883,205
-------------------------------------------------------
OTHER INCOME (LOSSES):
Loan servicing and other loan fees, net 116,562 147,618 273,036 283,381
Deposit and other service charge income 224,556 159,612 414,340 318,474
Gain on sale of loans 180,811 165,368 377,039 266,313
Gain on sale of real estate held for
development and sale 549,926 196,725 624,170 988,874
Other operating income 45,131 44,312 78,416 71,869
-------------------------------------------------------
Total other income 1,116,986 713,635 1,767,001 1,928,911
-------------------------------------------------------
GENERAL AND ADMINISTRATIVE EXPENSES:
Compensation and related benefits 781,322 518,829 1,304,484 1,040,634
Office properties and equipment 287,771 209,606 491,225 392,375
Federal insurance premiums 844,798 67,512 916,960 133,550
Amortization of Goodwill 28,832 0 28,832 0
Other operating expenses 422,988 329,396 762,761 660,156
-------------------------------------------------------
Total general and administrative expenses 2,365,711 1,125,343 3,504,262 2,226,715
-------------------------------------------------------
Earnings before income taxes 979,366 1,047,340 2,011,813 2,585,401
Income tax expense 367,481 423,336 763,937 1,013,542
-------------------------------------------------------
Net earnings $ 611,885 $ 624,004 $ 1,247,876 $ 1,571,859
=======================================================
Net earnings per share
Primary $0.37 $0.43 $0.78 $1.09
=======================================================
Fully-diluted $0.37 $0.43 $0.77 $1.09
=======================================================
Dividends per share $0.11 $0.07 $0.22 $0.15
=======================================================
Weighted average common and common
equivalent shares outstanding
Primary 1,633,460 1,445,756 1,597,842 1,445,756
=======================================================
Fully-diluted 1,653,842 1,445,756 1,615,197 1,445,756
=======================================================
</TABLE>
See accompanying notes to condensed consolidated financial statements.
-2-
<PAGE>
<TABLE>
<CAPTION>
NEWNAN HOLDINGS, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the Six Months Ended September 30, 1996 and 1995
(Unaudited)
1996 1995
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 1,247,876 $ 1,571,879
Adjustments to reconcile net income to net cash (used in)
provided by operating activities:
Provision for loan losses 20,000 10,000
Depreciation 183,502 145,469
Other amortization and (accretion), net 7,123 13,804
Net gain on sale of loans (377,039) (266,313)
Origination of loans held for sale (23,278,762) (20,876,124)
Proceeds from sale of loans 23,603,653 19,945,745
Net gain on sale of real estate (624,170) (988,874)
(Increase) decrease in other assets (659,219) 134,837
(Decrease) increase in accrued expenses and other liabilities 1,169,347 548,431
--------------------------
Net cash (used in) provided by operating activities 1,292,311 238,854
--------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities of investment securities available for sale 21,487,332 6,500,000
Purchases of investment and mortgage-backed securities held to
maturity 0 (500,000)
Proceeds from redemption of stock in Federal Home Loan Bank 500,100 0
Purchases of investment securities available for sale 0 0
Proceeds from call of investments available for sale 500,000 649,800
Principal payments received on mortgage-backed securities held to
maturity 2,093,015 163,555
Increase in loans, net (7,832,449) (3,337,350)
Increase in real estate acquired in settlement of loans (125,080) 26,100
Proceeds from sales of real estate 900,814 4,008,232
Purchase of premises and equipment (72,617) (223,850)
Acquistion of Southside Financial Group, net of cash and cash
equivalents acquired (4,538,715) 0
--------------------------
Net cash (used in) investing activities 12,912,400 7,286,487
--------------------------
</TABLE>
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<PAGE>
NEWNAN HOLDINGS, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the Six Months Ended September 30, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposit accounts $ 9,009,163 $ 9,972,582
Net increase (decrease) in other borrowings (16,173,401) (13,310,984)
Purchase of treasury stock (231,650) 0
Dividends (337,079) (216,191)
Stock options exercised 33,048 14,377
---------------------------
Net cash provided by financing activities (7,699,919) (3,540,216)
---------------------------
Net increase (decrease) in cash and cash equivalents 6,504,792 3,985,125
Cash and cash equivalents at beginning of year 9,739,274 8,598,252
---------------------------
Cash and cash equivalents at end of year $ 16,244,066 $ 12,583,377
===========================
Supplemental disclosures of cash paid during the year for:
Interest $ 3,824,079 $ 3,231,839
===========================
Income taxes $ 1,062,042 $ 1,055,000
===========================
Noncash financing activities
Stock issued to acquire Southside Financial Group, Inc. $ 2,089,097 $ 0
===========================
</TABLE>
See accompanying notes to condensed consolidated financial statements.
-4-
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
NEWNAN HOLDINGS, INC. AND SUBSIDIARIES
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with the instructions to Form 10-Q and therefore
do not include all information and footnotes required for fair presentation
of financial position, results of operations, and changes in financial
position in conformity with generally accepted accounting principles. All
adjustments and recurring entries which, in the opinion of management, are
required for a fair presentation of financial position and results of
operations for the periods covered by this report have been included.
Certain reclassifications have been made to prior financial statements to
conform to current classifications.
2. CURRENT ACCOUNTING DEVELOPMENTS
The Financial Accounting Standards Board has issued SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of", No. 122, "Accounting for Mortgage Servicing
Rights", and No. 123, "Accounting for Stock-Based Compensation", all of
which are effective for financial statements for years beginning after
December 31, 1995 and for transactions after December 31, 1995.
SFAS 121 requires that long-lived assets and certain identifiable
intangibles, including goodwill, will be reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an
asset may not be recoverable. In the event that the sum of the expected
future cash flows is less than the carrying amount of an impaired long-lived
asset, an impairment loss should be recognized. The adoption of the
Statement is not expected to have a material effect on the earnings or
financial condition of the Company.
SFAS 122 requires mortgage banking enterprises to recognize as a separate
asset the rights retained to service mortgage loans for third parties. These
assets are to be based on the fair value of the mortgage servicing rights
and mortgage loans, if practicable to estimate. Otherwise, the entire cost
of purchasing or originating these loans should be allocated to mortgage
loans. The adoption of this Statement is not expected to have a material
effect of the earnings or financial condition of the Company.
SFAS 123 establishes financial accounting and reporting standards for stock-
based employee compensation plans. The statement defines a fair value based
method for accounting for employee compensation plans and encourages the
adoption of all plans. However, the statement allows previous methods of
accounting for compensation plans to be utilized with additional disclosures
required. The adoption of this Statement is not expected to have a material
effect on the earnings or financial condition of the Company.
-5-
<PAGE>
3. BUSINESS COMBINATION
On August 22, 1996 the Company acquired all of the outstanding common stock
of Southside Financial Group, Inc. ("Southside"), the holding company parent
of Citizens Bank and Trust of Fayette County, Georgia. The Company issued
136,990 shares of its common stock and $13,716,878 in cash in exchange for
all of the outstanding common shares of Southside. The excess of the
purchase price over the fair value of the net assets acquired totaled
$5,239,072 and is being amortized using the straight-line method over a 20-
year period. This transaction was accounted for as a purchase and,
therefore, is not included in the Company's results of operations or
statements of financial position prior to the date of acquisition. The pro
forma impact on the Company's results of operations for the six months ended
September 30, 1996 and 1995 had the purchase transaction been consummated as
of April 1, 1995, would have been as follows (dollars in thousands except
per share amounts):
<TABLE>
<CAPTION>
1996 1995
---------------
<S> <C> <C>
Net interest income $5,279 $4,989
===============
Net income $1,335 $1,868
===============
Net income per share $ 0.79 $ 1.18
===============
</TABLE>
-6-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
Total assets at September 30, 1996 were $255.9 million, an increase of $73.9
million from March 31. The increase is mainly attributable to the acquisition
of Southside Financial Group, Inc. ("Southside Acquisition") which was
consummated on August 22, 1996. On that date, the fair value of the total
assets of Southside totaled $92 million. Excluding the impact of the Southside
acquisition, loans receivable increased $7.8 million due to increases in
construction loans. Deposit accounts increased $9.0 million excluding the
deposits assumed in connection with the acquisition.
The increase in assets resulting from the Southside Acquisition was offset in
part by the repayment in the first quarter of the fiscal year of $20.5 million
in short term advances from the Federal Home Loan Bank with proceeds received
from the maturity of an investment security of approximately the same amount.
The security had been classified as available for sale at March 31, 1996.
LIQUIDITY
Liquidity management involves the matching of the cash flow requirements of
customers for the withdrawal of funds or the funding of loan originations, and
the ability of the Company's banks to meet those requirements. Management
monitors and maintains appropriate levels of assets and liabilities so that
maturities of assets are such that adequate funds are provided to meet estimated
customer withdrawals and loan requests.
At September 30, 1996 the Banks' had cash and due from banks of $10.0 million,
interest bearing deposits in other banks of $0.9 million, and federal funds sold
of $5.3 million. Additionally, the Banks have $17.8 million in securities
available for sale which could be sold to meet any liquidity needs. The Banks
are also members of the Federal Home Loan Bank of Atlanta and are able to obtain
advances if needed. At September 30, 1996, the Banks had, in addition to
amounts already borrowed, a combined credit availability of $35.8 million.
REGULATORY CAPITAL REQUIREMENTS
Banking regulations require the Company to maintain minimum capital levels in
relation to assets. At September 30, 1996, the Company's capital ratios were
considered adequate based on regulatory minimum capital requirements. The
minimum capital requirements and the actual capital ratios for the Company at
September 30, 1996 are as follows:
<TABLE>
<CAPTION>
Regulatory
Actual Requirement
---------------------
<S> <C> <C>
Leverage 8.98% 4.00%
---------------------
Core 12.69% 4.00%
--------------------
Risk Based 13.72% 8.00%
</TABLE>
-7-
<PAGE>
In conjunction with the Southside acquisition, Newnan Savings Bank and Citizens
Bank and Trust each paid a special dividend to Newnan Holdings, Inc. to fund the
purchase of shares of Southside acquired for cash. Subsequent to making their
respective dividends, both banks continue to meet all required capital
requirements.
Management is not aware of any other current recommendations by the regulatory
authorities, events or trends, which, if they were to be implemented, would have
a material effect on the Bank's liquidity, capital resources, or operations.
RESULTS OF OPERATIONS
SIX MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
Net income for the six months ended September 30, 1996 was $1,247,876, a decline
of $323,983 from net income of $1,571,859 for the same period in 1995.
NET INTEREST INCOME. Net interest income for the six months ended September 30,
1996 increased $875,849, or 30.27% from the same period in 1995. Interest
income increased $982,028 to $7,149,269. For 1996, the average yield earned on
loans receivable increased from 8.57% in 1995 to 9.04% for 1996 while average
yields on mortgage backed securities held to maturity increased from 5.32% to
5.86%. The average yield on interest earning assets increased from 8.25% for
1995 to 8.63% for 1996. Average earning assets increased from $149.4 million in
1995 to $165.7 in 1996. This growth accounted for approximately $638,000 of the
$982,000 increase in interest income, with the remaining $344,000 increase being
the result of the increase in average yields.
Interest expense increased $106,179 or 3.24% from 1995. Generally, over the
past twelve months the Company's source of funding for its interest earning
assets has shifted from utilization of Federal Home Loan Bank ("FHLB") advances
to deposits, which typically carry lower rates of interest than do FHLB
advances. The average rate paid on interest bearing liabilities has declined
from 4.97% in 1995 to 4.77% in 1996. Average interest bearing liabilities have
grown from $131.8 million in 1995 to $141.6 million in 1996.
Net interest margin was 4.55% in 1996 compared to 3.87% in 1995.
PROVISION FOR LOAN LOSSES. The provision for loan losses is based on
management's evaluation of economic conditions, size and composition of the loan
portfolio, the historical charge-off experience, the level of nonperforming and
past due loans and other indications derived from reviewing the loan portfolio.
Management conducts such reviews quarterly, determining the level of loan loss
allowances needed so that any provision for loan losses can be made as
necessary. Based on its reviews during the period ended September 30, 1996,
management made a $20,000 provision for loan losses. At September 30, 1996 the
allowance for loan losses was 1.41% of total loans compared to 1.05% at March
31, 1996. The allowance for loan losses as a percentage of nonperforming loans
as of September 30, 1996 was 111.78% compared to 192.29% at March 31, 1996. The
ratio of nonperforming loans as a percentage of total loans was 1.26% at
September 30, 1996 compared to 0.54% at March 31 1996, respectively. Management
believes that the allowance for loan losses is adequate in light of the
collateral position of past due and nonaccruing loans and potential problem
loans.
-8-
<PAGE>
At September 30, 1996 and March 31, 1996, nonaccrual, past due, and restructured
loans were as follows (all dollars in thousands):
<TABLE>
<CAPTION>
September 30, March 31,
1996 1996
<S> <C> <C>
Total nonaccruing loans $2,512 $ 713
Loans contractually past due ninety days or more as to interest $ 0 $ 0
or principal payments and still accruing
Restructured loans $ 0 $ 0
Loans, now current about which there are serious doubts as to $ 293 $ 982
the ability of the borrower to comply with loan repayment
terms
</TABLE>
From March 31, 1996 to September 30, 1996 the total of nonaccruing and past due
loans (loans 90 days or more delinquent) increased $1,799,000 to $2,512,000
while potential problem loans (loans now current about which there are serious
doubts as to the ability of the borrower to comply with loan repayment terms)
declined $689,000 to $293,000. The primary reason for the increase in past due
loans results from the Southside Acquisition. At September 30, 1996, loans
acquired through the acquisition totaling $1,540,000 were past due. Of these
loans, loans to three borrowers totaling $1,430,000 have characteristics for
which management questions the collectibility of principal and interest.
Specific reserves totaling $635,000 have been allocated against these loans. In
addition to these loans, past due loans also included five loans totaling
$653,000 secured by single family dwellings, one loan totaling $68,000 secured
by two residential building lots, with the remaining $361,000 past due loans
consisting of approximately forty loans of smaller balances, none of which
exceeded $25,000. In total, management has allocated $835,000 in specific
reserves against the total nonaccrual loans.
At March 31, 1996 management had recognized one loan in the amount of $1,131,000
as an impaired loan pursuant to SFAS 114 and 118. This loan carried a valuation
allowance of $5,655. At September 30, 1996, the Company had identified
$3,633,000 in impaired loans which consisted of the nonaccrual loans identified
above and the $1,131,000 loan mentioned previously. A total of $835,000 had been
allocated against these loans.
It is the policy of the Company to discontinue the accrual of interest income
when, in the opinion of management, collection of such interest becomes
doubtful. This status is accorded such interest when (1) there is a significant
deterioration in the financial condition of the borrower and full repayment of
principal and interest is not expected and (2) the principal or interest is more
than ninety days past due.
Loans classified for regulatory purposes as loss, doubtful, substandard, or
special mention that have not been included in the table above do not represent
or result from trends or uncertainties which management reasonably expects will
materially impact future operating results, liquidity or capital resources.
These classified loans do not represent material credits about which management
is aware of any information which causes management to have serious doubts as to
the ability of such borrowers to comply with the loan repayment terms.
-9-
<PAGE>
Information regarding certain loans and allowance for loan loss data through
September 30, 1996 is as follows (all dollars in thousands):
<TABLE>
<CAPTION>
Six Months Ended September 30
1996 1995
-----------------------------
<S> <C> <C>
Average amount of loans outstanding $ 143,609 $ 132,356
=========================
Balance of allowance for loan losses at beginning of period $ 1,371 $ 1,435
=========================
Loans charged off
Commercial and financial 0 0
Construction 0 0
Real Estate 22 39
Installment 13 5
-------------------------
35 44
-------------------------
Loans recovered
Commercial and financial 0 0
Construction 0 0
Real Estate 3 4
Installment 3 7
-------------------------
6 11
-------------------------
Net chargeoffs (recoveries) 29 33
-------------------------
Additions to allowance charged to operating
expense during period 20 10
Additions to allowance resulting from acquisition of
Southside Financial Group, Inc. 1,446 0
-------------------------
Balance of allowance for loan losses at end of period $ 2,808 $ 1,412
=========================
Ratio of net loans charged off during the period to average
loans outstanding 0.02% 0.02%
=========================
</TABLE>
OTHER INCOME. Other income declined $161,910 to $1,767,001. The largest item
contributing to this decline is a $364,704 decline in the gain on sale of real
estate held for development and sale. During 1995, approximately $1.8 million in
gains from sales of certain tracts of real estate zoned for commercial use were
deferred due to the initial investment of the buyers being insufficient to meet
the requirements under generally accepted accounting principles for recognition
of gain. Gain on sale of loans increased $110,726 or 41.58% due to increased
volume of loans sold. Additionally, deposit and other service charge income
increased $95,866 or 30.10% with $33,213 of the increase resulting from the
Southside Acquisition with the remaining $62,653 due to additional service
charges and overdraft fees earned on checking accounts.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
increased $1,277,547 or 57.38% to $3,504,262. The primary component of this
increase was a $771,000 charge to earnings to
-10-
<PAGE>
reflect the Special Assessment to recapitalize the Savings Association Insurance
Fund ("SAIF"). This assessment was levied against the Company's thrift
subsidiary, Newnan Savings Bank, FSB as of September 30, 1996 and will be paid
during the quarter ended December 31, 1996. Compensation expense increased
$263,850 or 25.35% to $1,304,484. Of the increase, $175,131 results from
additional expense resulting from the Southside Acquisition. Office properties
and equipment increased $98,850 or 25.19% to $491,225 of which $37,618 is
attributable to the Southside Acquisition. The remaining $61,232 is due
primarily to additional depreciation expense resulting from computer equipment
purchased and installed in the quarter ended September 30, 1995.
THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
Net earnings for the three months ended September 30, 1996 were $611,885, a
decline of $12,119 from net earnings of $624,004 for the same period in
1995.
NET INTEREST INCOME. Net interest income for the three months ended September
30, 1996 increased $779,043, or 53.03% from the same period in 1995. Interest
income increased $989,277 or 31.65% to $4,114,870. Average interest earning
assets increased from $149.8 million in 1995 to $184.2 million in 1996, while
average yields increased from 8.34% in 1995 to 8.93% in 1996. The increase in
the amount of average interest earning assets outstanding is attributable to the
Southside acquisition, and accounts for approximately $692,000 of the $989,000
increase in interest income, while $297,000 of the increase is due to the
increase in yields.
Interest expense increased $210,234 or 12.69% from 1995. The average balance of
interest bearing liabilities has increased from $133.7 million in 1995 to $156.3
million in 1996 while average rates paid on such liabilities declined from 4.95%
in 1995 to 4.78% in 1996.
For the three months ended September 30, 1996 net interest margin was 4.88% for
1996 compared to 3.92% in 1995.
PROVISION FOR LOAN LOSSES. The provision for loan losses is based on
management's evaluation of economic conditions, size and composition of the loan
portfolio, the historical charge-off experience, the level of nonperforming and
past due loans and other indications derived from reviewing the loan portfolio.
Management conducts such reviews quarterly, determining the level of loan loss
allowances needed so that any provision for loan losses can be made as
necessary. Based on its reviews during the period ended September 30, 1996,
management made a $20,000 provision for loan loss during the quarter.
OTHER INCOME. Other income increased $403,351 to $1,116,986. The largest item
contributing to this increase is a $353,201 increase in the gain on sale of real
estate held for development and sale. In 1995, $1.8 million in gains on sales of
certain commercial tracts of land were deferred due to the lack of sufficient
down payment made on the properties. These gains were recognized in the fourth
quarter of fiscal 1996. Additionally, deposit and other service charge income
increased $64,944 or 40.69% with $33,213 of the increase resulting from the
Southside Acquisition with the remaining $31,731 due to additional service
charges and overdraft fees earned on checking accounts.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
increased $1,240,368 or 110.24% to $2,365,711. The primary
component of this increase was the $771,000 charge to earnings to
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<PAGE>
reflect the Special Assessment to recapitalize the Savings Association Insurance
Fund. Compensation expense increased $262,493 or 50.59% to $781,322, of
which $175,131 results from additional expense resulting from the Southside
Acquisition. Office properties and equipment increased $78,165 or 37.29% to
$287,771 of which $37,618 is attributable to the Southside Acquisition. Other
expenses increased $93,592 or 28.48% to $422,988. Of this increase, $70,911 is
attributable to the Southside Acquisition.
-12-
<PAGE>
NEWNAN HOLDINGS, INC. AND SUBSIDIARIES
PART II
Item 1. Legal Proceedings.
None.
Item 2. Changes in securities.
None.
Item 3. Defaults upon Senior Securities.
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
Newnan Holdings, Inc. held a special meeting of stockholders at the
home office of Newnan Savings Bank, FSB on August 21, 1996.
The purpose of the meeting is to consider and vote upon a plan
providing for the reorganization of Newnan Savings Bank, FSB into a
holding company structure. Of the shares represented at the meeting
(908,502 shares or 62.2 %), 903,151 shares voted for the
reorganization, 610 voted against and 4,741 abstained.
Item 5. Other information.
The Company issued a press release dated October 21, 1996 announcing
the proposed merger with Tara Bankshares Corporation, the holding
company parent of Tara State Bank of Riverdale, Georgia. Tara State
Bank has two offices in Clayton County, Georgia and has $60 million in
assets.
Item 6. Exhibits and Reports on Form 8-K.
On July 30, 1996, a Form 8-K, including a press release dated July 16,
1996, was filed to report that the Company's wholly-owned subsidiary,
Jefferson Ventures, Inc., had entered into an agreement with Peachtree
City Holdings, LLC., an affiliate of Peachtree City Development, Corp.
to sell over time approximately 1,400 acres of land in the City of
Newnan, Coweta County, Georgia. The land is part of Jefferson Ventures'
White Oak residential development.
Under the terms of the agreement, the purchaser has 120 days to cause
appropriate surveys to be made delineating the usable acreage and to
complete its due diligence. Subject to due diligence, the initial
purchase of 400 acres under the contract is scheduled to occur by late
December 1996. The purchaser will have eight years within which to
purchase the balance of the property. However, the price of the
property will escalate 1.75% per calendar quarter over that period. The
purchase agreement further provides that Jefferson Ventures, Inc. has
the right to cause the
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<PAGE>
purchaser to purchase the balance of the property on an accelerated basis,
provided that the price will be discounted 16% during the first two years of the
contract, 12% during years 3 through 5, and 6% after the fifth year of the
contract.
On September 6, the Company filed a Form 8-K to report that Newnan Holdings,
Inc. had completed its reorganization into a holding company structure and in
turn had completed its acquisition of Southside Financial Group, Inc., the
holding company parent of Citizens Bank and Trust of Fayette County. This Form
8-K was amended on November 5, 1996 to include required disclosure of historical
financial statements of Southside Financial Group, Inc. and proforma financial
statements of Newnan Holdings, Inc.
-14-
<PAGE>
SIGNATURES
Pursuant to the requirements 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.
NEWNAN HOLDINGS, INC.
AND SUBSIDIARIES
(Registrant)
------------------------------
Date: November 14, 1996 /s/Douglas J. Hertha
------------------------------
Douglas J. Hertha
Vice President
Chief Financial Officer
Date: November 14, 1996 /s/ Robert T. Marks
------------------------------
Robert T. Marks
Chief Accounting Officer
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 6-MOS 6-MOS
<FISCAL-YEAR-END> MAR-31-1997 MAR-31-1996
<PERIOD-START> APR-01-1996 APR-01-1995
<PERIOD-END> SEP-30-1996 SEP-30-1995
<CASH> 10,061 1,904
<INT-BEARING-DEPOSITS> 913 10,669
<FED-FUNDS-SOLD> 5,270 0
<TRADING-ASSETS> 0 0
<INVESTMENTS-HELD-FOR-SALE> 7,554 6,401
<INVESTMENTS-CARRYING> 7,040 9,470
<INVESTMENTS-MARKET> 17,795 3,816
<LOANS> 19,322 127,793
<ALLOWANCE> 2,808 1,412
<TOTAL-ASSETS> 255,946 168,064
<DEPOSITS> 214,591 127,791
<SHORT-TERM> 5,758 12,651
<LIABILITIES-OTHER> 4,142 2,132
<LONG-TERM> 8,413 7,511
0 0
0 0
<COMMON> 1,599 1,446
<OTHER-SE> 21,443 16,533
<TOTAL-LIABILITIES-AND-EQUITY> 255,946 168,064
<INTEREST-LOAN> 6,492 5,674
<INTEREST-INVEST> 478 456
<INTEREST-OTHER> 179 37
<INTEREST-TOTAL> 7,149 6,167
<INTEREST-DEPOSIT> 3,125 2,658
<INTEREST-EXPENSE> 3,380 3,274
<INTEREST-INCOME-NET> 3,769 2,893
<LOAN-LOSSES> 20 10
<SECURITIES-GAINS> 0 0
<EXPENSE-OTHER> 3,504 2,227
<INCOME-PRETAX> 1,248 1,572
<INCOME-PRE-EXTRAORDINARY> 1,248 1,572
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 1,248 1,572
<EPS-PRIMARY> 0.78 1.09
<EPS-DILUTED> 0.77 1.09
<YIELD-ACTUAL> 4.55 3.87
<LOANS-NON> 2,512 825
<LOANS-PAST> 0 0
<LOANS-TROUBLED> 0 0
<LOANS-PROBLEM> 293 1,212
<ALLOWANCE-OPEN> 1,371 1,435
<CHARGE-OFFS> 35 44
<RECOVERIES> 6 11
<ALLOWANCE-CLOSE> 2,808<F1> 1,412
<ALLOWANCE-DOMESTIC> 2,808 1,412
<ALLOWANCE-FOREIGN> 0 0
<ALLOWANCE-UNALLOCATED> 1,973 1,153
<FN>
<F1>Allowance added through acquisition totaled $1,446 in 1996.
</FN>
</TABLE>
