<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 June 30, 1997
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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FIRST CITIZENS CORPORATION
------------------------------------------------------
(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 August 1, 1997: 1,839,000
Transitional Small Business Disclosure Format (check one) Yes No X
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<PAGE>
INDEX
<TABLE>
<CAPTION>
Page
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<S> <C> <C>
Part I. Financial Information
---------------------
Item 1. Condensed Consolidated Financial Statements (unaudited)
Condensed Consolidated Statement of Financial Condition
as of June 30, 1997 1
Condensed Consolidated Statements of Earnings for the
Three Months Ended June 30, 1997 and 1996 2
Condensed Consolidated Statements of Cash Flows
For The Three Months Ended June 30, 1997 and 1996 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
-----------------
Item 6. Exhibits and Reports on Form 8-K
</TABLE>
Signatures
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>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
FIRST CITIZENS CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statement of Financial Condition
June 30, 1997
(Unaudited)
<TABLE>
<CAPTION>
June 30
----------------
<S> <C>
ASSETS
Cash and due from banks $ 15,572,825
Interest-bearing deposits in other banks 439,337
Federal funds sold 12,600,000
Loans held for sale 9,174,660
Securities available for sale 31,194,655
Securities held-to-maturity at amortized cost, fair value of $3,451,351 3,474,174
Loans receivable, net 246,605,457
Real estate held for development and sale 2,390,049
Premises and equipment, net 6,905,770
Goodwill and other intangibles 7,338,611
Other assets 3,161,721
----------------
Total assets $ 338,857,259
================
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposit accounts $ 280,573,021
Advances from the Federal Home Loan Bank 17,280,091
Other borrowings 19,705
Accrued expenses and other liabilities 8,005,960
----------------
Total liabilities 305,878,777
----------------
Stockholders' equity
Preferred stock, no par value, 8,000,000 shares authorized; none issued -
Common stock, $1 par value, 8,000,000 shares authorized;
1,844,305 shares issued and outstanding 1,844,305
Additional paid-in capital 13,324,030
Retained earnings 17,946,547
Unnrealized gains on securities available for sale, net of tax 95,250
----------------
33,210,132
Less cost of 11,300 shares of treasury stock (231,650)
----------------
Total stockholders' equity 32,978,482
----------------
Total liabilities and stockholders' equity $ 338,857,259
================
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
FIRST CITIZENS CORPORATION AND SUBSIDIARIES
Consolidated Statements of Earnings
For the Three Months Ended June 30, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
--------------- ---------------
<S> <C> <C>
Interest income:
Loans $ 5,883,887 $ 2,772,553
Interest-bearing deposits 22,748 71,151
Taxable securities 503,087 190,695
Nontaxable securities 33,426 -
Federal funds sold 125,350 -
--------------- ---------------
Total interest income 6,568,498 3,034,399
--------------- ---------------
Interest expense:
Deposits 2,669,611 1,392,348
Interest on Federal Home Loan Bank advances 246,835 120,309
Other borrowings 52,455 759
--------------- ---------------
Total interest expense 2,968,901 1,513,416
--------------- ---------------
Net interest income 3,599,597 1,520,983
Provision for loan losses 40,000 -
--------------- ---------------
Net interest income after provision for loan losses 3,559,597 1,520,983
=============== ===============
Other income (losses):
Loan servicing and other loan fees, net 97,788 156,474
Deposit and other service charge income 358,828 189,784
Loss on sale of securities (2,852) -
Gain on sale of loans 264,963 196,228
Gain on sale of real estate acquired in settlement of loans 5,101 -
Gain on sale of real estate held for development and sale 3,322,371 74,244
Other operating income 91,504 33,285
--------------- ---------------
Total other income 4,137,703 650,015
--------------- ---------------
Other expenses:
Salaries and employee benefits 1,392,603 523,162
Occupancy and equipment expenses 402,491 203,454
Federal insurance premiums 26,628 72,162
Data processing costs 91,408 52,473
Goodwill amortization 109,888 -
Other operating expenses 629,691 287,300
--------------- ---------------
Total other expenses 2,652,709 1,138,551
=============== ===============
Earnings before income taxes 5,044,591 1,032,447
Income tax expense 1,816,438 396,456
--------------- ---------------
Net earnings 3,228,153 635,991
=============== ===============
Net earnings per share 1.64 0.40
=============== ===============
Dividends per share .11 .11
=============== ===============
Weighted average common and common equivalent shares $ 1,963,094 $ 1,582,339
=============== ===============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
FIRST CITIZENS CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the Three Months Ended June 30, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
----------------- -----------------
<S> <C> <C>
Operating Activities
Net earnings $ 3,228,153 $ 635,991
Adjustments to reconcile net earnings to net cash (used in)
provided by operating activities:
Provision for loan losses 40,000 -
Depreciation 151,507 82,726
Amortization and accretion, net 109,888 (7,162)
Loss on sale of securities available for sale 2,852 -
Gain on sale of loans (264,963) (196,228)
Net (increase) decrease in loans held for sale (951,026) 5,315,140
Gain on sale of other real estate owned (5,101) -
Gain on sale of real estate held for development (3,322,371) (74,244)
(Increase) decrease in accrued interest receivable (94,379) 34,330
Increase (decrease) in accrued interest payable 69,714 (25,039)
Other operating activities 1,032,980 3,140
----------------- -----------------
Net cash (used in) provided by operating activities (2,746) 5,768,654
----------------- -----------------
Investing activities
Proceeds from maturities of securities available for sale 2,019,433 -
Proceeds from maturities of securities held to maturity 675,383 21,129,790
Purchases of securities available for sale (5,996,639) -
Proceeds from sales of securities available for sale 4,719,614 -
Net (increase) decrease in interest-bearing deposits in banks 1,232,188 (6,076,269)
Net increase in Federal funds sold (4,780,000) -
Net increase in loans (9,438,699) (3,738,118)
Purchase of real estate - (67,184)
Proceeds from sales of real estate held for development 4,223,850 239,177
Proceeds from sale of other real estate owned 58,201 -
Purchase of premises and equipment (13,078) (47,709)
Proceeds from redemption of FHLB stock - 500,100
Proceeds from sales of premises and equipment - 1,895
----------------- -----------------
Net cash (used in) provided by investing activities $ (7,299,747) $ 11,941,682
----------------- -----------------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
FIRST CITIZENS CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the Three Months Ended June 30, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
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<S> <C> <C>
Financing activities
Net increase in deposit accounts $ 10,773,984 $ 1,081,659
Repayment of notes payable (18,243) (16,891)
Net decrease in Federal Home Loan Bank advances (487,253) (21,314,172)
Net decrease in other borrowings (1,112,287) -
Increase in advance payments by borrowers for
property taxes and insurance - 129,496
Dividends paid (201,231) (160,535)
Proceeds from stock options exercised 54,098 12,887
----------------- -----------------
Net cash provided by (used in) financing activities 9,009,068 (20,267,556)
----------------- -----------------
Net increase (decrease) in cash and due from banks 1,706,575 (2,557,220)
Cash and due from banks at beginning of period 13,866,250 9,214,902
----------------- -----------------
Cash and due from banks at end of period $ 15,572,825 $ 6,657,682
----------------- -----------------
Supplemental disclosures of cash paid during the period for:
Interest 2,899,187 1,538,455
----------------- -----------------
Income taxes $ - $ 302,042
----------------- -----------------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
FIRST CITIZENS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with the instructions to
Form 10-QSB and therefore do not include all information and
footnotes required for fair presentation of financial position,
results of operations, and changes in cash flows 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.
The results of operations for the three month period ended June 30,
1997 are not necessarily indicative of the results to be expected for
the full year.
Certain reclassifications have been made to prior financial
statements to conform to current classifications.
Note 2. CURRENT ACCOUNTING DEVELOPMENTS
The Financial Accounting Standards Board has issued SFAS No. 128
"Earnings Per Share". SFAS No. 128 establishes standards for
computing and presenting earnings per share (EPS) and applies to
entities with publicly held common stock or potential common stock.
This Statement simplifies the standards for computing earnings per
share previously found in APB Opinion No. 15, Earnings Per Share, and
makes them comparable to international EPS standards. It replaces the
presentation of primary EPS with a presentation of basic EPS. It also
requires dual presentation of basic and diluted EPS on the face of
the income statement for all entities with complex capital structures
and requires a reconciliation of the numerator and denominator of the
basic EPS computation to the numerator and denominator of the diluted
EPS computation. The effective date of this Statement is for
financial statements issued for periods ending after December 15,
1997. The adoption of this Statement is not expected to have a
material effect on earnings per share.
<PAGE>
FIRST CITIZENS CORPORATION AND SUBSIDIARIES
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of certain significant
factors which have affected the Company's financial position and operating
results during the periods included in the accompanying condensed consolidated
financial statements.
FINANCIAL CONDITION
Total assets increased $12.5 million to $338.9 million during the three month
period ending June 30, 1997. This increase is primarily attributable to an
increase in loans receivable of $8.2 million and an increase in Federal funds
sold of $4.8 million. The increase in loans receivable is due to growth in real
estate mortgage loans. To fund the growth in assets, deposits increased $10.8
million during the three months ended June 30, 1997.
LIQUIDITY
Liquidity management involves the matching of the cash flow requirements of
customer withdrawals of funds and the funding of loan originations, and the
ability of the Company's banks to meet those requirements. Management monitors
and maintains appropriate levels of liquidity so that maturities of assets and
deposit growth are such that adequate funds are provided to meet estimated
customer withdrawals and loan requests.
At June 30, 1997, the Banks had cash and due from banks of $15.6 million,
interest bearing deposits in other banks of $.4 million, and Federal funds sold
of $12.6 million. Additionally, the Banks have $31.2 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 June 30, 1997, the Banks had, in addition to amounts
already borrowed, a combined credit availability of $37.7 million.
<PAGE>
REGULATORY CAPITAL REQUIREMENTS
Banking regulations require the Company to maintain minimum capital levels in
relation to assets. At June 30, 1997, 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
June 30, 1997 are as follows:
<TABLE>
<CAPTION>
Regulatory
Actual Requirement
<S> <C> <C>
Leverage 7.98% 4.00%
Core 10.57% 4.00%
Risk Based 11.82% 8.00%
</TABLE>
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 Company's liquidity, capital resources, or operations.
RESULTS OF OPERATIONS
Three Months Ended June 30, 1997 and 1996
Net Interest Income. Net interest income increased $2,079,000 or 136.6% for the
three months ended June 30, 1997 compared to the same period in 1996. This
increase consists of an increase in interest income of $3,534,000 and an
increase in interest expense of $1,455,000. The change is primarily due to the
acquisition of Southside Financial Group, Inc. (Southside) and Tara Bankshares
Corporation (Tara) during the fiscal year ended March 31, 1997. The results of
operations for Southside and Tara are not included in the three month period
ended June 30, 1996.
In addition to the increase related to the acquisition of Southside and Tara,
interest-earning assets have increased by approximately $12.6 million or 4.34%,
compared to March 31, 1997. Interest-bearing liabilities have increased during
the same period by approximately $10.3 million or 3.57%. Net interest margin
increased from 4.11% at June 30, 1996 to 4.84% at June 30, 1997.
<PAGE>
Provision for Loan Losses. The provision for loan losses is based on
management's evaluation of the economic environment, the history of
charged off loans and recoveries, size and composition of the loan portfolio,
nonperforming and past due loans, and other aspects of the loan portfolio.
Management reviews the allowance for loan loss on a quarterly basis and makes
provisions as necessary. A provision of $40,000 was made during the three month
period ending June 30, 1997 based upon this review process. Prior to the
acquisition of Southside in the third calendar quarter of 1996, the Company had
not made a provision in 1996. The allowance for loan loss as a percentage of
total loans was 1.52% at June 30, 1997 compared to 1.54% at March 31, 1997.
Nonperforming loans as a percentage of total loans was 1.25% at June 30, 1997
compared to 1.15% at March 31, 1997. Management believes the allowance for loan
loss at June 30, 1997 is adequate to meet any future losses in the loan
portfolio.
At June 30, 1997 and March 31, 1997, nonaccrual, past due, and restructured
loans were as follows:
<TABLE>
<CAPTION>
June 30, March 31,
1997 1997
--------- -----------
(Dollars in thousands)
<S> <C> <C>
Total nonaccruing loans $ 3,137 $ 2,796
Loans contractually past due ninety days
or more as to interest or principal
payments and still accruing 5 55
Restructured loans 243 156
</TABLE>
The increase in nonaccrual loans from March 31, 1997 to June 30, 1997 consists
of various commercial and real estate mortgage loans. The increase was not
attributable to any one group or individually significant 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.
<PAGE>
Information regarding certain loans and allowance for loan loss data through
June 30, 1997 and 1996 is as follows:
<TABLE>
<CAPTION>
Three Months Ended
June 30,
------------------------------------------
1997 1996
-------------------- -------------------
(Dollars in thousands)
<S> <C> <C>
Average amount of loans outstanding $ 245,284 $ 124,917
Balance of allowance for loan losses at beginning of period $ 3,739 $ 1,372
Loans charged off
Commercial and financial - -
Construction - -
Real estate - -
Installment 15 10
-------------------- -------------------
15 10
-------------------- -------------------
Loans recovered
Commercial and financial 35 -
Construction - -
Real estate 5 1
Installment 4 1
-------------------- -------------------
44 2
-------------------- -------------------
Net charge-offs (recoveries) (29) 8
-------------------- -------------------
Additions to allowance charged to operating expense during period 40 -
-------------------- -------------------
Balance of allowance for loan losses at end of period 3,808 1,364
-------------------- -------------------
Ratio of net loans charged off during the period to average
loans outstanding - .01%
==================== ===================
</TABLE>
Other Income. Other income increased by approximately $3.5 million for the three
month period ended June 30, 1997 as compared to the same period in 1996. The
primary reason for the increase was the realization of $3.3 million on the sale
of real estate held for development and sale. The comparable gain for the same
period in 1996 was only $74,000. This significant increase over the prior year
is due to the sale of 400 acres, or approximately 26% of the remaining real
estate held for development and sale.
The other significant increase in other income was an increase of approximately
$169,000 in deposit and other service charge income. This increase is directly
related to the acquisitions of Southside and Tara.
<PAGE>
Other Expenses. Other expenses increased $1,514,000 during the three months
ended June 30, 1997 as compared to the same period in 1996. Salaries and
employee benefits increased $869,000, of which $558,000 is attributable to the
acquisition of Southside and Tara. The remaining $311,000 is due to additional
staffing and normal salary increases. Occupancy and equipment costs increased
$199,000, of which $158,000 is due to merger-related growth. The remaining
$40,000 is due to increased overhead related to the opening of additional
mortgage offices. As a result of the acquisitions, goodwill was recognized by
the bank subsidiaries. Amortization of goodwill for the three months ended June
30, 1997 was $110,000. Other operating expenses increased $452,000.
Approximately $297,000 is related to the acquisitions.
<PAGE>
PART II - Other Information
Item 1. Legal Proceedings.
None.
Item 2. Changes in securities.
None.
Item 3. Defaults upon Senior Securities.
Not applicable.
Item 4. Submission to Matters to a Vote of Security Holders.
None.
Item 5. Other information.
None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
27. Financial Data Schedule.
(b) Reports on Form 8-K.
None.
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant has
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
FIRST CITIZENS CORPORATION
(Registrant)
--------------------------
Date: /s/ Tom Moat
--------------------------
Tom Moat
Chief Executive Officer
Date: /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>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> APR-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 15,573
<INT-BEARING-DEPOSITS> 439
<FED-FUNDS-SOLD> 12,600
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 31,195
<INVESTMENTS-CARRYING> 3,474
<INVESTMENTS-MARKET> 3,451
<LOANS> 250,414
<ALLOWANCE> 3,808
<TOTAL-ASSETS> 338,857
<DEPOSITS> 280,573
<SHORT-TERM> 20
<LIABILITIES-OTHER> 8,006
<LONG-TERM> 0
0
0
<COMMON> 1,844
<OTHER-SE> 31,271
<TOTAL-LIABILITIES-AND-EQUITY> 338,857
<INTEREST-LOAN> 5,884
<INTEREST-INVEST> 536
<INTEREST-OTHER> 148
<INTEREST-TOTAL> 6,568
<INTEREST-DEPOSIT> 2,670
<INTEREST-EXPENSE> 2,969
<INTEREST-INCOME-NET> 3,599
<LOAN-LOSSES> 40
<SECURITIES-GAINS> (3)
<EXPENSE-OTHER> 2,653
<INCOME-PRETAX> 5,045
<INCOME-PRE-EXTRAORDINARY> 5,045
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,228
<EPS-PRIMARY> 1.65
<EPS-DILUTED> 1.64
<YIELD-ACTUAL> 4.84
<LOANS-NON> 3,137
<LOANS-PAST> 5
<LOANS-TROUBLED> 243
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 3,739
<CHARGE-OFFS> 15
<RECOVERIES> 44
<ALLOWANCE-CLOSE> 3,808
<ALLOWANCE-DOMESTIC> 3,808
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
