<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
Mark One
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES AND
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
-------------
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from __________ to __________
Commission File Number: 333-12293
First Georgia Community Corp.
-------------------------------------
(Exact name of small business issuer as specified in its charter)
Georgia 58-2261088
- ------------------------------- ----------------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
150 Covington Street, Jackson, Georgia 30233
--------------------------------------------------
(Address of principal executive offices)
(770) 504-1090
---------------------------------
(Issuer's telephone number)
N/A
-------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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
--- ---
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by court. Yes No
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of August 1, 1998: 758,458; $5 par value.
Transitional Small Business Disclosure Format (Check One) Yes No X
--- ---
1
<PAGE>
FIRST GEORGIA COMMUNITY CORP.
AND SUBSIDIARY
- -------------------------------------------------------------------------------
INDEX
-----
Page
----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheet - June 30, 1998........................3
Consolidated Statements of Operations and Comprehensive
Loss - Three Months Ended June 30, 1998 and 1997
and Six Months Ended June 30, 1998 and 1997......................4
Consolidated Statement of Cash Flows - Six
Months Ended June 30, 1998 and 1997..............................5
Notes to Consolidated Financial Statements........................6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations..............8
PART II.OTHER INFORMATION
Item 4 - Submission of Matters to a Vote of Security Holders........14
Item 6 - Exhibits and Reports on Form 8-K...........................14
Signatures..........................................................15
2
<PAGE>
PART I - FINANCIAL INFORMATION
FINANCIAL STATEMENTS
FIRST GEORGIA COMMUNITY CORP. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
JUNE 30, 1998
(Unaudited)
Assets
------
Cash and due from banks $ 1,092,892
Federal funds sold 5,670,000
Securities available-for-sale, at fair value 3,049,445
Loans 16,849,012
Less allowance for loan losses 262,000
------------
Loans, net 16,587,012
------------
Premises end equipment 2,262,385
Other assets 251,125
------------
Total assets $ 28,912,859
============
Liabilities and Stockholders' Equity
------------------------------------
Deposits
Demand $ 4,698,131
Interest-bearing demand 10,027,150
Savings 823,268
Time 6,280,177
------------
Total deposits 21,828,726
Other liabilities 131,798
------------
Total liabilities 21,960,524
------------
Commitments and contingent liabilities
Stockholders' equity
Common stock, par value $5; 10,000,000 shares authorized;
758,458 shares issued and outstanding 3,792,290
Capital surplus 3,754,816
Accumulated deficit (595,901)
Accumulated other comprehensive income 1,130
------------
Total stockholders' equity 6,952,335
------------
Total liabilities and stockholders' equity $ 28,912,859
============
The accompanying notes are an integral part of these consolidated financial
statements.
3
<PAGE>
FIRST GEORGIA COMMUNITY CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS
THREE MONTHS ENDED JUNE 30, 1998 AND 1997
AND SIX MONTHS ENDED JUNE 30, 1998 AND 1997
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
----------------------- ---------------------
1998 1997 1998 1997
-------- -------- --------- ---------
<S> <C> <C> <C> <C>
Interest Income
Loans $ 356,932 $ - $ 574,560 $ -
Taxable securities 46,996 - 83,821 -
Federal funds sold 45,213 64,911 105,323 99,896
----------- ----------- ----------- -----------
Total Interest Income 449,141 64,911 783,704 99,896
----------- ----------- ----------- -----------
Interest expense
Deposits 146,907 - 244,836 -
Other borrowings - 1,425 - 8,991
----------- ----------- ----------- -----------
Total Interest expense 146,907 1,425 244,836 8,991
----------- ----------- ----------- -----------
Net Interest income 302,234 63,486 518,868 92,705
Provision for loan losses 100,000 - 190,000 -
----------- ----------- ----------- -----------
Net Interest income after
provision for loan losses 202,234 63,486 328,868 92,705
----------- ----------- ----------- -----------
Other operating income 49,929 - 88,183 -
----------- ----------- ----------- -----------
Other expenses
Salaries and employee benefits 150,051 44,042 278,033 89,119
Occupancy and equipment expenses 48,382 6,524 91,503 6,524
Other operating expenses 122,852 23,418 210,430 29,351
----------- ----------- ----------- -----------
Total other expenses 321,285 73,984 579,988 124,994
----------- ----------- ----------- -----------
Net loss before Income taxes (69,122) (10,498) (162,915) (32,289)
Income tax expense - - - -
----------- ----------- ----------- -----------
Net loss (69,122) (10,498) (162,915) (32,289)
----------- ----------- ----------- -----------
Other comprehensive Income:
Unrealized gains on securities
available-for-sale arising during period 1,589 - 1,589 -
----------- ----------- ----------- -----------
Comprehensive loss $ (67,533) $ (10,498) $(161,326) $ (32,289)
=========== =========== =========== ===========
Basis and diluted losses
per common share $ (0.09) $ (10,498) $ (0.21) $ (32,289)
=========== =========== =========== ===========
Weighted average shares outstanding 758,458 1 758,458 1
=========== =========== =========== ===========
Cash dividends per common share $ - $ - $ - $ -
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
4
<PAGE>
FIRST GEORGIA COMMUNITY CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1998 AND 1997
(Unaudited)
<TABLE>
<CAPTION>
1998 1997
------------- -------------
<S> <C> <C>
OPERATING ACTIVITIES
Net loss $ (162,915) $ (32,289)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization 57,743 -
Provision for loan losses 190,000 -
Increase in interest receivable (123,964) -
Increase in interest payable 38,021 -
Other operating activities 56,477 (15,049)
------------- -------------
Net cash provided by (used in) operating activities 55,362 (47,338)
------------- -------------
INVESTING ACTIVITIES
Purchases of securities available-for-sale (2,018,300) -
Proceeds from sales of securities available-for-sale 500,000 -
Proceeds from maturities of securities available-for-sale 499,935 -
Net increase in Federal funds sold (1,350,000) (6,070,000)
Net increase in loans (10,731,990) -
Purchase of premises and equipment (93,768) (1,092,852)
------------- -------------
Net cash used in investing activities (13,194,123) (7,162,852)
------------- -------------
FINANCING ACTIVITIES
Net increase in deposits 12,663,636 -
Net proceeds from stock subscriptions - 7,069,128
Repayment of other borrowings - (315,800)
------------- -------------
Net cash provided by financing activities 12,663,636 6,753,328
------------- -------------
Net decrease in cash and due from banks (475,125) (456,862)
Cash and due from banks, beginning of period 1,568,017 466,097
------------- -------------
Cash and due from banks, end of period $ 1,092,892 $ 9,235
============= =============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during period for:
Interest $ 206,815 $ 6,991
Income taxes $ - $ -
NONCASH TRANSACTION
Net unrealized gains on securities available-for-sale $ (1,589) $ -
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
5
<PAGE>
FIRST COMMUNITY CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1. BASIS OF PRESENTATION
The consolidated financial information included herein is unaudited;
however, such information reflects all adjustments (consisting solely
of normal recurring adjustments) which are, in the opinion of
management, necessary for a fair statement of results for the interim
period.
The results of operations for the six month period ended June 30, 1998
are not necessarily indicative of the results to be expected for the
full year.
NOTE 2. CURRENT ACCOUNTING DEVELOPMENTS
The adoption of the provisions of SFAS No. 125, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities" that became effective on January 1, 1998 did not have a
material effect on the Company's financial statements.
The adoption of SFAS No. 128, "Earnings Per Share", that became
effective as of December 31, 1997 had no effect on the calculation of
losses per common share for the three and six months ended June 30,
1997.
The adoption of SFAS No. 130, "Reporting Comprehensive Income", that
became effective on January 1, 1998 required the Company to report
comprehensive income in the Company's Statements of Operations and
Comprehensive Loss.
In April of 1998, the Accounting Standards Executive Committee issued
Statement of Position (SOP) 98-5, "Reporting on the Costs of Start Up
Activities". SOP 98-5 requires that costs of start-up activities and
organization costs be expensed as incurred. SOP 98-5 becomes effective
for financial statements for fiscal years beginning after December 15,
1998. However, early adoption is encouraged for fiscal years in which
financial statements have not been issued. As of June 30, 1998, the
Company had $59,299 of unamortized organization costs which will be
required to be written off upon adoption of SOP 98-5.
The Financial Accounting Standards Board has issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities". SFAS
No. 133 establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments imbedded in other
contracts and for hedging activities. It requires that all derivatives
be recognized as either assets or liabilities at fair value. The
accounting for changes in the fair value of derivative instruments
(gains and losses) depends on the intended use of the derivative.
Designated uses are fair value hedges, cash flow hedges, and foreign
currency hedges. The effective date of this statement is for all fiscal
quarters of fiscal years beginning after June 15, 1999. The Company has
not assessed the impact that this statement will have on the financial
statements.
6
<PAGE>
FIRST COMMUNITY CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 2. CURRENT ACCOUNTING DEVELOPMENTS (Continued)
There are no other recent accounting pronouncements that have had, or
are expected to have, a material effect on the Company's financial
statements.
7
<PAGE>
FIRST COMMUNITY CORP. AND SUBSIDIARY
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 financial position and
operating results of the Company and its bank subsidiary, First Georgia
Community Bank, during the periods included in the accompanying
consolidated financial statements.
Liquidity and Capital Resources
As of June 30, 1998, the liquidity ratio of the Bank, as determined
under guidelines established by regulatory authorities, was
satisfactory.
At June 30, 1998, the capital ratios of the Company and the Bank were
adequate based on regulatory minimum capital requirements. The minimum
capital requirements and the actual capital ratios for the Company and
the Bank are as follows:
Actual
----------------------------
First First
Georgia Georgia
Community Community Regulatory
Corp. Bank Requirement
-------------- ------------- --------------
Leverage capital ratios 28.99 % 25.03 % 4.00 %
Risk-based capital ratios:
Core capital 34.44 29.73 4.00
Total capital 35.75 31.04 8.00
As the Company continues to grow, the capital ratios will decrease
rapidly to levels closer to, but still in excess of regulatory minimum
requirements.
8
<PAGE>
Financial Condition
Following is a summary of the Company's balance sheets for the periods
indicated:
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997 Increase (Decrease)
-------------- ---------------- --------------------------------
(Dollars in Thousands) Amount Percent
----------------------------------- -------------- --------------
<S> <C> <C> <C> <C>
Cash and due from banks $ 1,093 $ 1,568 $ (475) (30.29) %
Securities 3,050 2,029 1,021 50.32
Federal funds sold 5,670 4,320 1,350 31.25
Loans, net 16,587 6,045 10,542 174.39
Premises and equipment 2,262 2,220 42 1.89
Other assets 251 152 99 65.13
-------------- ---------------- --------------
$ 28,913 $ 16,334 $ 12,579 77.01
============== ================ ==============
Deposits $ 21,829 $ 9,165 $ 12,664 138.18 %
Other liabilities 132 55 77 140.00
Stockholders' equity 6,952 7,114 (162) (2.28)
-------------- ---------------- --------------
$ 28,913 $ 16,334 $ 12,579 77.01
============== ================ ==============
</TABLE>
As indicated in the above table, the Company's total assets grew at a rate of
77.01%. This high rate of growth is not uncommon for a de novo bank. Significant
deposit growth of 138.18% was invested in loans, securities, and Federal funds
sold. The Company's loan to deposit ratio has increased from 66.7% at December
31, 1997 to 77.1% at June 30, 1998 as new loan demand was significant during the
first six months of the year.
9
<PAGE>
Results of Operations For The Three Months Ended June 30, 1998 and 1997 and for
the Six Months Ended June 30, 1998 and 1997
Following is a summary of the Company's operations for the periods indicated.
Three Months Ended
June 30,
1998 1997
----------------- -----------------
(Dollars in Thousands)
-------------------------------------
Interest income $ 449 $ 65
Interest expense 147 1
Net interest income 302 64
Provision for loan losses 100 -
Other income 50 -
Other expenses 321 74
Net loss (69) (10)
Six Months Ended
June 30,
-------------------------------------
1998 1997
----------------- -----------------
(Dollars in Thousands)
-------------------------------------
Interest income $ 764 $ 100
Interest expense 245 7
Net interest income 519 93
Provision for loan losses 190 -
Other income 88 -
Other expenses 580 125
Net loss (163) (32)
10
<PAGE>
As indicated in the above tables, the Company's net interest income was $302,000
and $519,000 for the three and six month periods in 1998. The Company's net
interest margin increased to 5.69% during the first six months of 1998 as
compared to 5.66% for the previous year. The increase in net interest income is
due primarily to the increased volume of average interest-earning assets.
The provision for loan losses was $100,000 and $190,000 for the three and six
month periods in 1998. These amounts are due exclusively to the loan growth. The
Company's allowance for loan losses amounted to 1.55% at June 30, 1998 as
compared to 1.18% at December 31, 1997. The allowance for loan losses is
maintained at a level that is deemed appropriate by management to adequately
cover all known and inherent risks in the loan portfolio. Management's
evaluation of the loan portfolio includes a continuing review of loan loss
experience, current economic conditions which may affect the borrower's ability
to repay and the underlying collateral value.
Information with respect to nonaccrual, past due and restructured loans at June
30, 1998 and 1997 is as follows:
<TABLE>
<CAPTION>
June 30,
---------------------------------
1998 1997
--------------- ---------------
(Dollars in Thousands)
---------------------------------
<S> <C> <C>
Nonaccrual loans $ - $ -
Loans contractually past due ninety days or more as to interest
or principal payments and still accruing - -
Restructured loans - -
Loans, now current about which there are serious doubts as to the
ability of the borrower to comply with loan repayment terms - -
Interest income that would have been recorded on nonaccrual
and restructured loans under original terms - -
Interest income that was recorded on nonaccrual and restructured loans - -
</TABLE>
It is the policy of the Bank 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, unless the loan is both well-secured and in the process of
collection.
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.
11
<PAGE>
Information regarding certain loans and allowance for loan loss data through
June 30, 1998 is as follows:-
<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------
1998
----------------
(Dollars in
Thousands)
----------------
<S> <C>
Average amount of loans outstanding $ 11,492
================
Balance of allowance for loan losses at beginning of period $ 72
================
Loans charged off
Commercial and financial $ -
Real estate mortgage -
Instalment -
----------------
-
----------------
Loans recovered
Commercial and financial -
Real estate mortgage -
Instalment -
----------------
-
----------------
Net charge-offs -
----------------
Additions to allowance charged to operating expense during period 190
----------------
Balance of allowance for loan losses at end of period $ 262
================
Ratio of net loans charged off during the period to
average loans outstanding -%
================
</TABLE>
Other income was $50,000 and $88,000 for the three and six month periods ended
June 30, 1998, consisting primarily of service charges on deposit accounts and
ATM fees.
Other expenses were $321,000 and $580,000 for the three and six month periods
June 30, 1998. Salaries and employee benefits of $150,000 and $278,000 were the
largest component of total other expenses.
The Company has recorded no provision for income taxes due to cumulative net
operating losses.
The Company was still in its organizational stage as of June 30, 1997.
Therefore, a comparative analysis with June 30, 1998 is not presented.
12
<PAGE>
Capability of Data Processing Software to Accommodate the Year 2000
- -------------------------------------------------------------------
Like many financial institutions, the Company relies upon computers for the
daily conduct of their business and for data processing generally. There is
concern among industry experts that commencing on January 1, 2000, computers
will be unable to "read" the new year and that there may be widespread computer
malfunctions. On August 5, 1998, the Company's data processing service center
sold certain assets and liabilities, consisting primarily of its core data
processing operations to InterCept Group, located in Norcross, Georgia. The
change in the Company's data service provider will require the Company to
undergo a conversion of its data processing system. At this time, management of
the Company is evaluating its data processing options. Due to the significance
of the year 2000 issue and additional regulatory concern over the required
computer conversion, a decision on available data processing options will be
made very soon. Management is in the process of evaluating the costs associated
with the conversion, but believes any additional costs will not have a
significant impact on the Company's financial statements. The Company is
currently evaluating two data service providers, both of which are Year 2000
compliant. The Company has engaged qualified independent consultants to monitor
the Year 2000 compliance. Management also believes that the Company will be able
to meet all regulatory timetable guidelines relating to the year 2000 issue,
although there can be no assurances in this regard.
The Company is not aware of any known trends, events or uncertainties, other
than the effect of events as described above, that will have or that are
reasonably likely to have a material effect on its liquidity, capital resources
or operations. The Company is also not aware of any current recommendations by
the regulatory authorities which, if they were implemented, would have such an
effect.
13
<PAGE>
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
(a) The annual meeting of the stockholders of the Company was held
on April 23, 1998.
(b) The following directors were elected at the meeting to serve
terms for the upcoming year:
Rick Ballard Joey McClelland
Charles Carter Alex Pollack
John Coleman Bob Ryan
Dan Fears, Jr. Herb Warren
Bill Jones George Weaver
Harry Lewis
(c)(1) Mauldin & Jenkins, LLC was approved as the Company's certified
public accountants.
(c)(2) A stock option plan for John Coleman, President, was approved.
(c)(3) A stock option plan for the directors was approved.
(c)(4) A stock option plan for key employees and officers was
approved.
The shares represented at the meeting (492,015 or 64.87%).
<TABLE>
<CAPTION>
Item (b) Item (c)(1) Item (c)(2) Item (c)(3) Item (c)(4)
# of # of # of # of # of
Shares Shares Shares Shares Shares
-------------- -------------- -------------- -------------- ---------------
<S> <C> <C> <C> <C> <C>
For 486,465 491,365 491,365 491,365 491,365
Withheld authority 5,550 - - - -
Abstained - 650 650 650 650
-------------- -------------- -------------- -------------- ---------------
Total 492,015 492,015 492,015 492,015 492,015
============== ============== ============== ============== ===============
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
27. Financial Data Schedule.
(b) Reports on Form 8-K.
None.
14
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
FIRST GEORGIA COMMUNITY CORP.
(Registrant)
DATE: BY: /s/ John L. Coleman
----------------------- ----------------------------------------
John L. Coleman. President and C.E.O.
(Principal Executive Officer)
DATE: BY: /s/ Elaine S. Kendrick
----------------------- ----------------------------------------
Elaine S. Kendrick, Secretary and Treasurer
(Principal Financial and Accounting Officer)
15
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 1,092,892
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 5,670,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 3,049,445
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 16,849,012
<ALLOWANCE> 262,000
<TOTAL-ASSETS> 28,912,859
<DEPOSITS> 21,828,726
<SHORT-TERM> 0
<LIABILITIES-OTHER> 131,798
<LONG-TERM> 0
0
0
<COMMON> 3,792,290
<OTHER-SE> 3,160,045
<TOTAL-LIABILITIES-AND-EQUITY> 28,912,859
<INTEREST-LOAN> 574,560
<INTEREST-INVEST> 83,821
<INTEREST-OTHER> 105,323
<INTEREST-TOTAL> 763,704
<INTEREST-DEPOSIT> 244,836
<INTEREST-EXPENSE> 244,836
<INTEREST-INCOME-NET> 518,868
<LOAN-LOSSES> 190,000
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 579,966
<INCOME-PRETAX> (162,915)
<INCOME-PRE-EXTRAORDINARY> (162,915)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (162,915)
<EPS-PRIMARY> (.21)
<EPS-DILUTED> (.21)
<YIELD-ACTUAL> 5.69
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 72
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 262
<ALLOWANCE-DOMESTIC> 262
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
