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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(b) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1997.
or
[_] TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(b) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _______________ TO
_______________.
Commission file number: 333-10909
FORSYTH BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
Georgia 58-2231953
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
501 Tri-County Plaza, Highways 9 and 20, Cumming, Georgia 30130
(Address of principal executive offices, including zip code)
(770) 886-9500
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last
report)
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.
(1) Yes X No___ (2) Yes ___ No X
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Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
800,000 shares of common stock, no par value per share, issued and outstanding
as of March 31, 1997
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FORSYTH BANCSHARES, INC.
INDEX
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PART I FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited).......................... 2
Consolidated Statement of Condition
as of March 31, 1997...................................... 2
Consolidated Statement of Income for the Quarter
Ended March 31, 1997...................................... 4
Consolidated Statement of Cash Flows for the
Quarter Ended March 31, 1997.............................. 5
Notes to Condensed Consolidated Financial Statements...... 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations....................... 8
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.......................... 11
Signatures.......................................................... 12
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PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
FORSYTH BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CONDITION
AS OF MARCH 31, 1997
(UNAUDITED)
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ASSETS
Cash and due from banks................... $ 907,660
Federal Funds Sold........................ 12,360,000
Investment Securities-Available for Sale.. 3,004,450
Investment Securities--Held to Maturity... 996,415
Loans, net of unearned income............. 3,180,731
Less: allowance for loan losses.......... 32,000
Net Loans................................. 3,148,731
Premises and equipment, net............... 425,199
Other assets.............................. 203,878
-----------
Total Assets......................... $21,046,334
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LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits
Non-interest bearing demand..... $ 1,597,666
Interest bearing:
Demand.......................... 537,959
Savings......................... 141,128
Time, 100,000 and over.......... 3,717,693
Other time...................... 2,631,188
Insured Money Market............ 4,738,064
Total Deposits.................. 13,363,698
Other Liabilities............... 64,619
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Total Liabilities.......... $13,428,317
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Stockholders' Equity:
Common Stock..................................... 7,960,341
Retained Earnings................................ (342,324)
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Total Liabilities and Stockholders' Equity.. $21,046,334
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See accompanying notes to financial statements.
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FORSYTH BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF INCOME
FOR THE QUARTER ENDED MARCH 31, 1997
(UNAUDITED)
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Interest Income:
Loans, including fees................................. $ 35,877
Federal funds sold.................................... 110,230
Investment Securities-Taxable......................... 17,079
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Total Interest Income............................ 163,186
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Interest Expense:
Time Deposits......................................... 34,682
Other deposits........................................ 13,153
Other expense......................................... 6,993
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Total Interest Expense................................ 54,828
---------
Net Interest Income................................... 108,358
Provision for loan losses............................. 32,000
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Net Interest Income after provision................... 76,358
Non-interest income:
Service Charge income................................. 250
Overdrafts and NSF fees............................... 914
Other................................................. 4,370
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Total Non-interest income........................ 5,534
Non-interest expenses:
Salaries and employment expense....................... 121,735
Occupancy and equipment............................... 42,276
Other expenses........................................ 81,835
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Total Non-Interest Expense............................ 245,846
Income (Loss) before taxes............................ (163,954)
Income taxes.......................................... --
---------
Net Income (Loss)................................ $(163,954)
=========
Earnings per common share:
Weighted average number of common shares outstanding.. 800,000
Net Income (Loss) per common share.................... $(.20)
=========
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See accompanying notes to financial statements.
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FORSYTH BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE QUARTER ENDED MARCH 31, 1997
(UNAUDITED)
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Cash flow from operating activities:
Net loss........................................... $ (163,954)
Adjustments to reconcile net loss to net cash
used by operating activities:
Depreciation, Amortization and accretion........... 18,478
Provision for loan losses.......................... 32,000
Change in:
Accrued interest receivable and other assets....... (101,990)
Accrued interest payable and other liabilities..... 52,846
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Net cash used by operating activities.............. (162,620)
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Cash flows from investing activities:
Purchases held to maturity and available for sale.. 4,001,693
Net change in loans................................ 3,180,731
Purchase of premises and equipment................. 135,278
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Net cash used by investing activities.............. 7,317,702
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Cash flows from financing activities:
Net change in deposits............................. 13,363,648
Proceeds from issuance of common stock............. 7,960,341
Repayment of line of credit........................ 615,000
Redemption of organizational shares................ (50)
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Net cash provided by financing activities.......... 20,708,989
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Net change in cash and cash equivalents............ 13,228,668
Cash and cash equivalents at beginning of period... 38,993
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Cash and cash equivalents at end of period......... $13,267,660
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See accompanying notes to financial statements.
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FORSYTH BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying financial statements include the accounts of Forsyth
Bancshares, Inc. (the "Company") and its wholly-owned subsidiary, The Citizens
Bank of Forsyth County (the "Bank"). Certain information and footnote
disclosures normally included in consolidated financial statements prepared in
accordance with generally accepted accounting principles have been omitted,
although the Company believes that the disclosures are adequate to make the
information presented not misleading. In the opinion of management, the
information furnished in the condensed consolidated financials reflects all
adjustments necessary to fairly represent the Company's financial position,
results of operations and cash flows for such interim periods. Management
believes that all interim period adjustments are of a normal recurring nature.
The financial statements for the three months ended March 31, 1997 are
unaudited and have been prepared pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted and
should be read in conjunction with the audited consolidated financial statements
and notes thereto included in the Company's Annual Report on Form 10-K for the
year ended December 31, 1996.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash Flows
For purposes of reporting cash flows, cash consists of cash in vault,
cash items, amounts due from banks and federal funds sold.
Organizational Costs
Costs incurred for the organization of the Company and the Bank (consisting
primarily of legal, accounting, consulting, and incorporation fees) are being
capitalized and will have amortized over a period not to exceed five years.
Pre-Opening Expenses
Costs incurred for overhead and other operating expense are included in the
current period's operating results.
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Net Loss Per Common Share
Net loss per common share is calculated by dividing net loss by the
weighted average number of common shares outstanding during the period.
3. RELATED PARTY TRANSACTIONS
On August 1, 1996, the Company executed a line of credit agreement with a
bank to fund its organization, offering and pre-opening expenses. This
unsecured line of credit had an established maturity date of August 1, 1997 and
accrued interest payable quarterly at the lenders' prime rate of interest. The
line of credit was fully funded at $650,000 upon the Company's breaking escrow
and was satisfied and paid in full on January 21, 1997. Each organizer had
guaranteed a pro rata share of the line of credit.
4. PREFERRED STOCK
Shares of preferred stock may be issued from time to time in one or more
series as may be established by resolution of the board of directors of the
Company. Each resolution shall include the number of shares issued,
preferences, dividend provisions, special rights and limitations as determined
by the board of directors.
5. INCOME TAXES
At December 31, 1996, the Company had a net operating loss carryforward
for tax purposed of approximately $11,000, which will expire in the year 2011 if
not previously utilized. No income tax expense or benefit was recorded for the
period ended March 31, 1997, due to the loss carryforward.
6. COMMITMENTS
The Company entered into an operating lease on the building and premises
which serve as the main office of the Company and the Bank on February 9, 1996.
The inception of the lease was the earlier of the occupation of the building or
receipt of final regulatory approval. The minimum lease payment related to the
lease are for the years 1997 through 2000 and are $67,500, 69,525, 71,611, and
73,759, respectively. The lease is renewable at the end of the term at
prevailing market rates and also contains and option to purchase the premises
and facility.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The Company was incorporated under the laws of Georgia on February 14, 1996
for the purpose of organizing its wholly owned subsidiary, the Bank. On
February 3, 1997, the Bank opened for business, and the Company acquired 100% of
its capital stock. Total stock sales of 800,000 shares of the Company's common
stock, no par value per share, resulted in a total of $8,000,000 in
stockholders' capital. The Bank was capitalized at $6,500,000 as required by
the Department of Banking and Finance of the State of Georgia (the "DBF") and
the Federal Deposit Insurance Corporation (the "FDIC").
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During 1996, the Company and the Bank were in the process of organizing and
obtaining the necessary regulatory approvals prior to the Bank's opening for
business. Preliminary approval to charter the Bank was issued in July 1996 by
the DBF and the FDIC. Final approval to operate as a bank holding company was
received on November 25, 1996 by the Federal Reserve Bank of Atlanta. On January
30, 1997, the Bank received final approval and a permit to begin business from
the DBF and the FDIC and opened for business on February 3, 1997.
The Bank operates as a commercial bank offering standard banking services
in the Cumming, Forsyth County, Georgia area. The Bank is a local community
bank catering to the needs of small-to medium-sized businesses and local
customers who desire the atmosphere of community banking, rather than the larger
banks in the area. The Bank offers a variety of checking, savings, time
accounts, commercial and consumer loans, safe deposit boxes and other banking
services.
The Company's net loss as of March 31, 1997 was $ (163,954). Pre-opening
losses were approximately $342,324 bringing the total loss as of March 31, 1997
to approximately ($506,278). Pre-opening losses consisted of salary expense,
occupancy expense and other necessary organizational expenses. Losses incurred
since the Bank's opening consist of losses in the normal course of business.
Certain other organizational expenses were capitalized and will be amortized
over a five year period.
Net interest income for the quarter ended March 31, 1997 was $108,358
before the loan loss allocation and $76,358 after the loan loss allocation.
Interest earning assets at March 31, 1997 consisted primarily of federal funds
sold at $12,360,000, U.S. treasuries and agencies totaling $4,000,865 and total
loans of $3,180,731.
Interest income for the quarter ended March 31, 1997 was $163,186, which
consisted of federal funds sold income of $110,230, loan income of $35,877 and
investment securities income at $17,079.
Interest expense for the quarter ended March 31, 1997 consisted primarily
of interest on time deposits at $34,682 and other interest bearing deposit
expense at $13,153. Interest expense on the line of credit for the quarter
ended March 31, 1997 was $6,990.
Non-interest income for the quarter ended March 31, 1997 was $5,534.
Accounts opened generally reflect service charges in the following month.
Because the Bank opened on February 3, 1997, many of the accounts did not
receive service charges.
Non-interest expense for quarter ended March 31, 1997 of $245,846 consisted
primarily of salary and employment expense of $121,735 and $42,276,
respectively. Other expenses of $81,835 were incurred in the normal course of
banking business.
The Bank currently employs twelve full-time employees consisting of four
officers, two customer service representatives, three tellers, one loan
secretary, one loan operations assistant and one general overall operations
assistant.
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At March 31, 1997, the bank reflected no past due loans and as of that
date has no chargeoffs and recoveries in the loan portfolio. There have been no
gains or losses on securities sales.
Reserve for loan losses have been allocated at 1% of total loans and
rounded to the nearest thousand. As of March 31, 1997, allocations to loan loss
totaled $32,000.
At March 31, 1997, the liquidity ratio and the dependency ratio for the
Bank were 118.24% and -74.70%, respectively. The loan to deposit ratio and
ratio of stockholders' equity to total assets at March 31, 1997 were
approximately 21% and 34.38%, respectively. Capital ratios are within
regulatory guidelines. At March 31, 1997, federal funds sold were $12,360,000.
Requirements by regulators now include the monitoring of risk-based capital
guidelines for banks and holding companies that are designed to make capital
requirements more sensitive to differences in risk profiles and account for off-
balance sheet items. The current guidelines require all bank holding companies
and federally regulated banks to maintain a minimum total capital ratio of 8%,
of which at least 4% must be Tier 1 capital. Tier 1 capital includes common
stockholders' equity, qualifying perpetual preferred stock and minority
interests in equity accounts of consolidated subsidiaries and excludes goodwill
and most other intangibles and the allowances for loans and lease losses. Tier
2 capital includes the excess of any preferred stock not included in Tier 1
capital, mandatory convertible securities, hybrid capital instruments,
subordinated debt, intermediate term-preferred stock and general reserves for
loan and lease losses up to 1.25% of risk-weighted assets.
At March 31, 1997, the Company and the Bank had risk-weighted assets of
$6,704,000, with $6,205,000, $32,000 and $6,237,000 designated as Tier 1, Tier 2
and total risk-based capital, respectively. The Tier 1 capital ratio and total
risk-based ratio at March 31, 1997 was approximately 114% and 115%,
respectively.
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PART II
OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
27 Financial Data Schedule
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SIGNATURES
Pursuant to the requirements of Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FORSYTH BANCSHARES, INC.
Date: May 12, 1997 By: /s/ David H. Denton
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David H. Denton
President and Chief Executive Officer
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EXHIBIT INDEX
27 Financial Data Schedule
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<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE MARCH
31, 1997 10-Q FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 907,660
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 12,360,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 3,004,450
<INVESTMENTS-CARRYING> 996,415
<INVESTMENTS-MARKET> 0
<LOANS> 3,180,731
<ALLOWANCE> 32,000
<TOTAL-ASSETS> 21,046,334
<DEPOSITS> 13,363,698
<SHORT-TERM> 0
<LIABILITIES-OTHER> 64,619
<LONG-TERM> 0
0
0
<COMMON> 7,960,341
<OTHER-SE> 0
<TOTAL-LIABILITIES-AND-EQUITY> 21,046,334
<INTEREST-LOAN> 35,877
<INTEREST-INVEST> 127,309
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 163,186
<INTEREST-DEPOSIT> 54,828
<INTEREST-EXPENSE> 0
<INTEREST-INCOME-NET> 108,358
<LOAN-LOSSES> 32,000
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 245,846
<INCOME-PRETAX> (163,954)
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (163,954)
<EPS-PRIMARY> (.20)
<EPS-DILUTED> 0
<YIELD-ACTUAL> 0
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 0
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 0
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
