<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-QSB
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 December 31, 1996
-----------------
OR
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 333-4304
---------
FIRST CITIZENS CORPORATION
(Formerly Newnan Holdings, Inc.)
---------------------------------------------
(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 February 13, 1997: 1,617,542
<PAGE>
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C>
Part I. Financial Information
- -----------------------------
I. Condensed Consolidated Financial Statements (unaudited)
Condensed Consolidated Balance Sheets as of December 31, 1996 and
March 31, 1996........................................................ 1
Condensed Consolidated Statements of Earnings For The
Three and Nine Months Ended December 31, 1996 and 1995................ 2
Condensed Consolidated Statements of Cash Flows
For The Nine Months Ended December 31, 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
</TABLE>
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>
FIRST CITIZENS CORPORATION
Condensed Consolidated Balance Sheets
December 31 and March 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
December 31 March 31
<S> <C> <C>
ASSETS
Cash and cash equivalents:
Cash and due from banks $ 11,214,925 $ 9,214,902
Interest-bearing deposits in other banks 1,393,388 524,372
Federal funds sold 2,860,000 0
------------------------------------------
Total cash and cash equivalents 15,468,313 9,739,274
Loans held for sale 7,526,855 7,878,878
Investment securities available for sale, at fair value 17,096,353 22,794,000
Mortgage-backed securities held to maturity, at amortized cost,
fair value of $5,658,962 and $9,086,437 at December 31
and March 31, 1996 5,417,392 9,132,552
Loans receivable, net of allowance of $2,848,000 193,759,382 123,072,970
Stock in Federal Home Loan Bank, at cost 1,217,900 1,471,700
Real estate held for development and sale 3,407,838 3,850,722
Premises and equipment, net 4,534,096 2,746,486
Goodwill 5,146,338 0
Other assets 3,713,539 1,323,718
------------------------------------------
$ 257,288,006 $ 182,010,300
==========================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposit accounts $ 213,275,716 $ 130,635,333
Advances from the Federal Home Loan Bank 16,632,005 29,488,465
Accrued expenses and other liabilities 3,271,562 1,620,505
------------------------------------------
Total liabilities 233,179,283 161,744,303
------------------------------------------
Commitments and Contingencies
Stockholders' equity
Common stock, $1.00 par value, 8,000,000 shares authorized;
1,599,312 and 1,458,307 shares issued, 1,588,012 and
1,458,307 shares outstanding, respectively 1,599,312 1,458,307
Additional paid-in capital 7,845,691 5,853,830
Retained earnings, substantially restricted 14,846,954 12,954,052
Treasury stock, at cost (11,300 shares) (231,650) 0
Net unrealized holding losses on investment securities
available for sale 48,416 (192)
------------------------------------------
Total stockholders' equity 24,108,723 20,265,997
------------------------------------------
$ 257,288,006 $ 182,010,300
==========================================
</TABLE>
See accompanying notes to condensed consolidated financial statements.
-1-
<PAGE>
FIRST CITIZENS CORPORATION
Consolidated Statements of Earnings
For the Three and Nine Months Ended December 31, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
Three Months Nine Months
1996 1995 1996 1995
<S> <C> <C> <C> <C>
INTEREST AND DIVIDEND INCOME:
LOANS $ 4,634,479 $ 2,925,765 $ 11,126,389 $ 8,600,188
Interest-bearing deposits 93,281 32,835 272,279 69,480
Investment securities available for sale 271,740 83,493 505,373 285,224
Mortgage-backed securities 95,356 125,765 340,084 380,207
----------------------------------------------------------------
Total interest and dividend income 5,094,856 3,167,858 12,244,125 9,335,099
----------------------------------------------------------------
INTEREST EXPENSE:
Interest on deposits 2,164,568 1,432,991 5,289,717 4,091,387
Interest on borrowed funds 202,970 206,028 458,016 821,648
----------------------------------------------------------------
Total interest expense 2,367,538 1,639,019 5,747,733 4,913,035
----------------------------------------------------------------
Net interest income 2,727,318 1,528,839 6,496,392 4,422,064
Provision for loan losses 105,000 0 125,000 10,000
----------------------------------------------------------------
Net interest income after provision for loan losses 2,622,318 1,528,839 6,371,392 4,412,064
----------------------------------------------------------------
OTHER INCOME (LOSSES):
Loan servicing and other loan fees, net 131,697 134,107 404,733 417,488
Deposit and other service charge income 294,258 175,206 708,598 493,680
Gain on sale of loans 285,143 202,778 662,182 469,091
Gain on sale of real estate acquired in foreclosure 157,441 - - 157,441 - -
Gain on sale of real estate held for 428,091 307,702 1,052,261 1,296,576
development and sale
Other operating income 38,681 4,374 117,097 76,243
----------------------------------------------------------------
Total other income 1,335,311 824,167 3,102,312 2,753,078
----------------------------------------------------------------
GENERAL AND ADMINISTRATIVE EXPENSES:
Compensation and related benefits 1,031,597 554,122 2,336,081 1,594,756
Office properties and equipment 320,177 189,898 811,402 582,273
Federal insurance premiums 58,846 68,599 975,806 202,149
Amortization of Goodwill 63,897 - - 92,729 - -
Other operating expenses 578,807 370,914 1,341,568 1,031,070
----------------------------------------------------------------
Total general and administrative expenses 2,053,324 1,183,533 5,557,586 3,410,248
----------------------------------------------------------------
Earnings before income taxes 1,904,305 1,169,473 3,916,118 3,754,894
Income tax expense 750,003 423,233 1,513,940 1,436,775
----------------------------------------------------------------
Net earnings $ 1,154,302 $ 746,240 $ 2,402,178 $ 2,318,119
----------------------------------------------------------------
Net earnings per share
Primary $ 0.67 $ 0.51 $ 1.47 $ 1.60
================================================================
Fully-diluted $ 0.67 $ 0.51 $ 1.45 $ 1.60
================================================================
Dividends per share $ 0.11 $ 0.08 $ 0.33 $ 0.23
================================================================
Weighted average common and common equivalent shares outstanding
Primary 1,719,545 1,446,856 1,638,410 1,446,856
================================================================
Fully-diluted 1,722,348 1,446,856 1,650,914 1,446,856
================================================================
</TABLE>
See accompanying notes to condensed consolidated financial statements.
-2-
<PAGE>
FIRST CITIZENS CORPORATION
Consolidated Statements of Cash Flows
For the Nine Months Ended December 31, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 2,402,178 $ 2,318,042
Adjustments to reconcile net income to net cash (used in)
provided by operating activities:
Provision for loan losses 125,000 10,000
Depreciation 314,645 229,474
Other amortization and (accretion), net 36,153 20,245
Net gain on sale of loans (662,182) (469,091)
Origination of loans held for sale (38,728,460) (31,491,480)
Proceeds from sale of loans 39,080,483 31,886,762
Net gain on sale of real estate (1,052,261) (1,296,576)
(Increase) decrease in other assets (349,052) (22,271)
(Decrease) increase in accrued expenses and other liabilities 298,643 (96,350)
-----------------------------------
Net cash provided by operating activities 1,465,147 1,088,755
-----------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities of investment securities available for sale 23,526,541 6,500,000
Purchases of investment and mortgage-backed securities held to maturity - -
Proceeds from redemption of stock in Federal Home Loan Bank 253,800 677,300
Purchases of investment securities available for sale (1,985,532) (500,000)
Proceeds from call of investments available for sale 1,500,000 - -
Principal payments received on mortgage-backed securities held to maturity 3,715,160 203,902
Increase in loans, net (12,897,539) 3,387
Increase in real estate acquired in settlement of loans 3,655 (3,479)
Proceeds from sales of real estate 1,491,490 4,394,923
Purchase of premises and equipment (90,048) (296,159)
Acquistion of Southside Financial Group, net of cash and cash equivalents acquired (4,538,715) - -
-----------------------------------
Net cash provided by investing activities 10,978,812 10,979,874
-----------------------------------
</TABLE>
-3-
<PAGE>
FIRST CITIZENS CORPORATION
Consolidated Statements of Cash Flows
For the Nine Months Ended December 31, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposit accounts $ 7,694,230 $ 9,747,485
Net increase (decrease) in other borrowings (13,711,993) (20,475,156)
Purchase of treasury stock (231,650) - -
Dividends (509,276) (346,399)
Stock options exercised 43,769 25,127
----------------------------------
Net cash provided by financing activities (6,714,920) (11,048,943)
----------------------------------
Net increase (decrease) in cash and cash equivalents 5,729,039 1,019,686
Cash and cash equivalents at beginning of year 9,739,274 8,598,252
----------------------------------
Cash and cash equivalents at end of year $ 15,468,313 $ 9,617,938
==================================
Supplemental disclosures of cash paid during the year for:
Interest $ 5,758,784 $ 4,883,726
==================================
Income taxes $ 1,502,042 $ 2,012,000
==================================
Noncash financing activities
Stock issued to acquire Southside Financial Group, Inc. $ 2,089,097 $- -
==================================
</TABLE>
See accompanying notes to condensed consolidated financial statements.
-4-
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
FIRST CITIZENS CORPORATION
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 on 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 nine months
ended December 31, 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 $8,006 $8,275
===================
Net income $2,489 $2,893
===================
Net income per share $ 1.45 $ 1.68
===================
</TABLE>
4. PROPOSED BUSINESS COMBINATION.
On October 21, 1996, the Company announced the signing of a definitive
agreement to merge with Tara Bankshares Corporation ("Tara"). The proposed
acquisition is subject to approval of Tara shareholders and appropriate
regulatory agencies. The subsidiary of Tara, Tara State Bank, will continue
to operate as a separate state-chartered commercial bank. Under terms of
the definitive agreement, the purchase price will be $15.00 per share with
each stockholder of Tara controlling 100,000 or more shares having the
election to receive all or part of their consideration in stock of the
Company and shareholders controlling 3,500 or more shares of Tara having
the election to receive up to 50% of their consideration in Company stock,
provided that no more than 227,608 shares of Company stock will be issued
in the merger. If these elections do not result in at least half of the
total merger consideration being payable in stock of the Company, then the
balance of Company stock not so elected shall be divided among all Tara
shareholders eligible to receive Company stock and the amount of cash to be
received shall be reduced accordingly.
As of September 30, 1996, total assets of Tara approximated $60.4 million
and stockholders' equity approximated $6.3 million.
- 6 -
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
Total assets at December 31, 1996 were $257.3 million, an increase of $75.3
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 $12.9 million due to increases in
construction loans. Deposit accounts increased $7.7 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 December 31, 1996 the Banks had cash and due from banks of $11.2 million,
interest bearing deposits in other banks of $1.4 million, and federal funds sold
of $2.9 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 December 31, 1996, the Banks had, in addition to amounts
already borrowed, a combined credit availability of $33.4 million.
REGULATORY CAPITAL REQUIREMENTS
Banking regulations require the Company to maintain minimum capital levels in
relation to assets. At December 31, 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
December 31, 1996 are as follows:
<TABLE>
<CAPTION>
Regulatory
Actual Requirement
--------------------------------
<S> <C> <C>
Leverage 7.4% 4.00%
Core 10.8% 4.00%
Risk Based 11.8% 8.00%
</TABLE>
- 7 -
<PAGE>
In conjunction with the Southside Acquisition, the Company's two banking
subsidiaries, First Citizens Bank (formerly Newnan Savings Bank) and First
Citizens Bank of Fayette County (formerly Citizens Bank and Trust of Fayette
County) each paid a special dividend to the Company 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
NINE MONTHS ENDED DECEMBER 31, 1996 AND 1995
Net income for the nine months ended December 31, 1996 was $2,402,178, an
increase of $84,059 from net income of $2,318,119 for the same period in 1995.
NET INTEREST INCOME. Net interest income for the nine months ended December 31,
1996 increased $2,074,328, or 46.91% from the same period in 1995. In general,
net interest income has increased due to growth resulting from the Southside
Acquisition. Interest income increased $2,909,026 to $12,244,125. For 1996, the
average yield earned on loans receivable increased from 8.68% in 1995 to 9.16%
for 1996 while average yields on mortgage backed securities held to maturity
increased from 5.32% to 5.90%. The average yield on interest earning assets
increased from 8.36% for 1995 to 8.73% for 1996. Average earning assets
increased from $148.9 million in 1995 to $187.1 million in 1996. This growth
accounted for approximately $2,397,000 of the $2,909,000 increase in interest
income, with the remaining $572,000 increase being the result of the increase in
average yields.
Interest expense increased $834,698 or 16.99% 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 4.99% in 1995 to 4.76% in 1996. Average interest bearing liabilities have
grown from $131.1 million in 1995 to $160.9 million in 1996. Average noninterest
bearing deposits have increased from $9.4 million to $19.0 million, which
allowed the Company to further reduce its borrowings and increase its net
interest income.
Net interest margin was 4.63% in 1996 compared to 3.96% 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 December 31, 1996,
management made a $125,000 provision for loan losses. At December 31, 1996 the
allowance for loan losses was 1.40% of total loans compared to 1.05% at March
31, 1996. The allowance for loan losses as a percentage of nonperforming loans
as of December 31, 1996 was 91.28% compared to 192.29% at March 31, 1996. The
ratio of nonperforming loans as a percentage of total loans was 1.53% at
-8-
<PAGE>
December 31, 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.
At December 31, 1996 and March 31, 1996, nonaccrual, past due, and restructured
loans were as follows (all December 31, March 31, dollars in thousands):
<TABLE>
<CAPTION>
December 31, March 31,
1996 1996
<S> <C> <C>
Total nonaccruing loans $3,120 $ 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 the ability of the
borrower to comply with loan repayment terms $ 223 $ 982
</TABLE>
From March 31, 1996 to December 31, 1996 the total of nonaccruing and past due
loans (loans 90 days or more delinquent) increased $2,407,000 to $3,120,000
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 $759,000 to $223,000. The primary reason for the increase in past due
loans results from the Southside Acquisition. At December 31, 1996, loans
acquired through the acquisition totaling $1,519,000 were past due. Of these
loans, loans to three borrowers totaling $1,446,000 have characteristics for
which management questions the collectibility of principal and interest.
Specific reserves totaling $595,000 have been allocated against these loans. In
addition to these loans, past due loans also included seven first mortgage loans
totaling $967,000 secured by single family dwellings, two construction loans for
single family dwellings totaling $188,000, two commercial loans totaling
$197,000, and one loan in the amount of $112,000 secured by undeveloped real
estate, with the remaining $210,000 past due loans consisting of approximately
fifty loans of smaller balances, none of which exceeded $25,000. In total,
management has allocated $823,000 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 December 31, 1996, the Company had identified $4,251,000
in impaired loans which consisted of the nonaccrual loans identified above and
the $1,131,000 loan mentioned previously. A total of $823,000 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
-9-
<PAGE>
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.
Information regarding certain loans and allowance for loan loss data through
December 31, 1996 is as follows (all dollars in thousands):
<TABLE>
<CAPTION>
Nine Months Ended
December 31
1996 1995
--------------------------------
<S> <C> <C>
Average amount of loans outstanding $161,875 $132,082
================================
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 78 39
Installment 22 5
--------------------------------
100 44
--------------------------------
Loans recovered
Commercial and financial 0 0
Construction 0 0
Real Estate 3 4
Installment 3 7
--------------------------------
6 11
--------------------------------
Net chargeoffs (recoveries) 94 33
--------------------------------
Additions to allowance charged to operating expense 125 15
during period
Additions to allowance resulting from acquisition of
Southside Financial Group, Inc. 1,446 0
--------------------------------
Balance of allowance for loan losses at end of period $ 2,848 $ 1,417
================================
Ratio of net loans charged off during the period to average
loans outstanding 0.06% 0.03%
================================
</TABLE>
OTHER INCOME. Other income increased $349,234 to $3,102,312. The largest item
contributing to this increase is a $214,918 growth in deposit and other service
charge income with $125,912 of the increase resulting from the Southside
Acquisition and the remaining $88,286 resulting from increases in the deposit
base. Gain on sale of loans increased $193,091 or 41.16% due to an increase of
$7.2 million in the volume of loans sold. Gain on sale of real estate acquired
through foreclosure increased to $157,441 and is attributable to recognition of
gains previously deferred when the Company financed the sale of a foreclosed
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<PAGE>
commercial building in which the buyer of the property did not make a sufficient
down payment to allow recognition of the gain. During the quarter ended December
31, 1996, the loan was paid off which allowed the Company to recognize the
deferred gains.
These increases were offset by a $244,315 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.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
increased $2,147,338 or 62.97% to $5,557,586. The primary component of this
increase was a $771,000 charge to earnings to reflect the Special Assessment to
recapitalize the Savings Association Insurance Fund ("SAIF"). This assessment
was levied against the Company's thrift subsidiary, First Citizens Bank
(formerly Newnan Savings Bank, FSB) as of September 30, 1996 and was paid during
the quarter ended December 31, 1996. Compensation expense increased $741,325 or
46.49% to $2,336,081. Of the increase, $489,063 results from additional expense
resulting from the Southside Acquisition while other compensation increased
$322,000 due mostly to mortgage loan origination commissions and other salaries,
the result of expanded mortgage loan operations. Office properties and equipment
increased $229,129 or 39.35% to $582,273 of which $107,229 is attributable to
the Southside Acquisition. Of the remaining $121,900, $28,157 is the result of
increased depreciation expense and $81,330 relates to increased overhead
associated with additional mortgage loan offices opened during fiscal 1996.
Other operating expenses increased $310,498 or 30.11% to $1,341,568, of which
$286,637 is the result of the Southside Acquisition.
THREE MONTHS ENDED DECEMBER 31, 1996 AND 1995
Net earnings for the three months ended December 31, 1996 were $1,154,302, an
increase of $408,062 from net earnings of $746,240 for the same period in 1995.
NET INTEREST INCOME. Net interest income for the three months ended December
31, 1996 increased $1,198,479, or 71.52% from the same period in 1995. Interest
income increased $1,926,998 or 60.83% to $5,094,856. Average interest earning
assets increased from $148.9 million in 1995 to $229.5 million in 1996, while
average yields increased from 8.51% in 1995 to 8.88% in 1996. The increase in
the amount of average interest earning assets outstanding is attributable to the
Southside Acquisition, and accounts for approximately $1,762,000 of the
$1,927,000 increase in interest income, while $165,000 of the increase is due to
the increase in yields.
Interest expense increased $728,529 or 78.39% from 1995. The average balance of
interest bearing liabilities has increased from $129.7 million in 1995 to $199.1
million in 1996 while average rates paid on such liabilities declined from 5.05%
in 1995 to 4.76% in 1996. In addition, average balance of noninterest bearing
deposits increased from $10.1 million to $28.4 million.
For the three months ended December 31, 1996 net interest margin was 4.75% for
1996 compared to 4.11% 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
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<PAGE>
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 December 31, 1996, management made a $125,000 provision for loan loss
during the quarter.
OTHER INCOME. Other income increased $511,144 to $1,335,311. The largest item
contributing to this increase is a $157,441 increase in the gain on sale of real
estate acquired in foreclosure (see discussion under analysis of "Nine Months
Ended December 31, 1996" above). Gain on sale of real estate held for
development and sale increased $120,389 or 39.13%. Additionally, deposit and
other service charge income increased $119,052 or 67.95% with $92,778 of the
increase resulting from the Southside Acquisition.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
increased $869,791 or 73.49% to $2,053,324. Compensation expense increased
$475,475 or 86.17% to $1,031,597, of which $313,932 results from additional
expense resulting from the Southside Acquisition with $166,000 of the increase
resulting from increases resulting from the opening of two additional mortgage
loan offices. Office properties and equipment increased $130,279 or 68.60% to
$320,177 of which $70,612 is attributable to the Southside Acquisition while
$34,000 is due to the additional loan offices. Other expenses increased $207,893
or 56.05% to $578,807, virtually all of which is attributable to the Southside
Acquisition.
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<PAGE>
FIRST CITIZENS CORPORATION
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.
None.
Item 5. Other information.
The Company issued a press release dated January 14, 1997 announcing
that it had changed its name from Newnan Holdings, Inc. to First
Citizens Corporation. A Form 10C was filed on January 9, 1997 to
reflect this change.
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 had 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 was scheduled to occur by
late December 1996. An extension has been granted until March 1997.
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 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, 1996 the Company filed a Form 8-K to report that it.
had completed its
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<PAGE>
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.
On November 6, 1996 the Company filed a Form 8-K to report that it had
signed a letter of intent to merge with Tara Bankshares Corporation,
the parent of Tara State Bank of Riverdale, Georgia. Tara State Bank
has two offices in Clayton County Georgia and has $60 million in
assets.
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<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.
FIRST CITIZENS CORPORATION.
(Registrant)
---------------------------
Date: February 13, 1997 /s/ Tom Moat
---------------------------
Tom Moat
Chief Executive Officer
Date: February 13, 1997 /s/Douglas J. Hertha
---------------------------
Douglas J. Hertha
Vice President
Chief Financial and Accounting Officer
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 9-MOS 9-MOS
<FISCAL-YEAR-END> MAR-31-1997 MAR-31-1996
<PERIOD-START> APR-01-1996 APR-01-1995
<PERIOD-END> DEC-31-1996 DEC-31-1995
<CASH> 11,215 5,951
<INT-BEARING-DEPOSITS> 1,393 3,667
<FED-FUNDS-SOLD> 2,860 0
<TRADING-ASSETS> 0 0
<INVESTMENTS-HELD-FOR-SALE> 7,527 5,076
<INVESTMENTS-CARRYING> 5,417 9,426
<INVESTMENTS-MARKET> 17,096 3,812
<LOANS> 196,607 124,650
<ALLOWANCE> 2,848 1,417
<TOTAL-ASSETS> 257,288 160,656
<DEPOSITS> 213,276 127,566
<SHORT-TERM> 8,558 5,806
<LIABILITIES-OTHER> 3,272 1,912
<LONG-TERM> 8,074 7,192
0 0
0 0
<COMMON> 1,599 1,447
<OTHER-SE> 22,509 17,158
<TOTAL-LIABILITIES-AND-EQUITY> 257,288 160,656
<INTEREST-LOAN> 11,126 8,600
<INTEREST-INVEST> 845 665
<INTEREST-OTHER> 272 69
<INTEREST-TOTAL> 12,244 9,335
<INTEREST-DEPOSIT> 5,290 4,091
<INTEREST-EXPENSE> 5,747 4,913
<INTEREST-INCOME-NET> 6,496 4,422
<LOAN-LOSSES> 125 10
<SECURITIES-GAINS> 0 0
<EXPENSE-OTHER> 5,557 3,410
<INCOME-PRETAX> 3,916 3,754
<INCOME-PRE-EXTRAORDINARY> 3,916 3,754
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 2,402 2,318
<EPS-PRIMARY> 1.47 1.60
<EPS-DILUTED> 1.45 1.60
<YIELD-ACTUAL> 4.63 3.96
<LOANS-NON> 3,120 951
<LOANS-PAST> 0 0
<LOANS-TROUBLED> 0 0
<LOANS-PROBLEM> 223 1,258
<ALLOWANCE-OPEN> 1,371 1,435
<CHARGE-OFFS> 100 44
<RECOVERIES> 6 11
<ALLOWANCE-CLOSE> 2,848<F1> 1,417
<ALLOWANCE-DOMESTIC> 2,848 1,417
<ALLOWANCE-FOREIGN> 0 0
<ALLOWANCE-UNALLOCATED> 2,025 1,161
<FN>
<F1>Allowance added through acquisition totaled $1,446 in 1996.
</FN>
</TABLE>
