U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended March 31, 1997
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Exchange Act
For the transition period from ______ to ______
Commission File Number:
COMMUNITY FIRST BANKING COMPANY
- ------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
GEORGIA 58-2309605
--------------------------------- ---------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
110 Dixie Street
Carrollton, Georgia 30117
(770) 834-1071
-------------------------------------------------------
(Address of Principal Executive Offices and Telephone Number)
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 No X
-------- ---------
<PAGE>
CONTENTS
PART I. FINANCIAL INFORMATION
---------------------
Item 1. Financial Statements
Consolidated Balance Sheets as of December 31, 1996 and March 31, 1997
(unaudited)
Consolidated Statements of Earnings for the Three Months Ended March 31,
1996 and 1997 (unaudited)
Consolidated Statements of Cash Flows for the Three Months Ended March 31,
1996 and 1997 (unaudited)
Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
<PAGE>
<TABLE>
COMMUNITY FIRST BANKING COMPANY
CONSOLIDATED BALANCE SHEETS
<CAPTION>
Unaudited
12/31/96 3/31/97
--------- --------
<S> <C> <C>
ASSETS
Cash and due from banks .......................................... 11,061,383 11,157,499
Interest-bearing deposits in financial institutions .............. 3,355,586 1,035,055
Federal funds sold ............................................... 8,680,000 6,845,000
---------- ----------
Cash & cash equivalents ....................................... 23,096,969 19,037,554
---------- ----------
Securities available for sale .................................... 33,927,243 42,965,769
Securities held to maturity ...................................... 7,764,058 7,137,879
Other investments ................................................ 2,599,741 2,380,641
Mortgage loans held for sale ..................................... 282,488 568,102
Loans, net ....................................................... 269,834,098 277,079,473
Premises & equipment net ......................................... 9,288,592 9,779,953
Accrued interest receivable ...................................... 2,687,472 2,970,897
Other assets ..................................................... 3,050,849 3,643,307
----------- -----------
Total assets .................................................. 352,531,510 365,563,575
=========== ===========
LIABILITIES AND CAPITAL
Deposits:
Demand ......................................................... 15,903,005 21,839,221
Interest-bearing demand ........................................ 47,288,356 49,338,819
Savings ........................................................ 34,076,732 36,828,948
Time ........................................................... 163,257,956 164,877,125
Time, over $100,000 ............................................ 47,230,149 47,265,338
----------- -----------
Total deposits .............................................. 307,756,198 320,149,451
----------- -----------
Federal Home Loan Bank advances .................................. 16,295,186 16,229,969
Subordinated debentures .......................................... 2,000,000 2,000,000
Accrued interest payable & other liabilities ..................... 1,222,603 1,853,020
----------- -----------
Total Liabilities ........................................... 327,273,987 340,232,440
----------- -----------
Capital:
Retained Earnings .............................................. 25,278,036 25,646,436
Net unrealized loss on securities available for sale, net of tax (20,513) (315,301)
---------- ----------
Total capital ............................................... 25,257,523 25,331,135
---------- ----------
----------- -----------
Total liabilities & capital ...................................... 352,531,510 365,563,575
=========== ===========
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
<TABLE>
COMMUNITY FIRST BANKING COMPANY
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
<CAPTION>
Three Months
Ended March 31
1996 1997
--------- ---------
<S> <C> <C>
Interest income:
Interest and fees on loans .............................. 6,098,701 6,240,960
Interest-bearing deposits and federal funds sold ........ 360,615 151,726
Interest and dividends on investment securities:
U.S. Treasury ........................................ 23,218 6,875
U.S. Govt. agency and mortgage-backed ................ 170,639 798,020
State, county & municipals ........................... 1,744 28,153
Other ................................................ 57,115 47,403
--------- ---------
Total Interest Income .............................. 6,712,032 7,273,137
--------- ---------
Interest Expense:
Interest on deposits:
Demand ................................................ 349,445 360,600
Savings .............................................. 207,020 253,239
Time ................................................. 2,730,599 2,922,496
--------- ---------
3,287,064 3,536,335
--------- ---------
Interest on borrowings .................................. 265,666 261,067
--------- ---------
Total interest expense ........................ 3,552,730 3,797,401
--------- ---------
Net interest income ...................... 3,159,302 3,475,736
--------- ---------
Provision for loan losses ............................... 105,000 94,500
--------- ---------
Net interest inc. after provision for loan loss 3,054,302 3,381,236
--------- ---------
Other income:
Service charges on deposits .......................... 509,640 604,616
Miscellaneous ........................................ 159,703 175,794
--------- ---------
Total other income ............................ 669,343 780,410
--------- ---------
Salaries and related benefits ........................ 1,527,675 1,803,292
Occupancy and equipment .............................. 370,916 466,626
Depository insurance premiums ........................ 152,998 11,798
Other operating ...................................... 1,030,778 1,323,421
--------- ---------
Total other expenses ........................... 3,082,367 3,605,137
--------- ---------
Earnings before income tax expense ............. 641,278 556,509
Income tax expense ...................................... 197,617 188,110
------- -------
Net Earnings ............................. 443,661 368,400
========= =========
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
<TABLE>
COMMUNITY FIRST BANKING COMPANY
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
<CAPTION>
Three Months Ended March 31
1996 1997
--------- -------
<S> <C> <C>
Net earnings ...................................................................... 443,661 368,400
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation, amortization and accretion ........................................ 284,075 335,833
Provision for loan losses ....................................................... 105,000 94,500
(Gain) or loss on sales of premises and equipment, net .......................... 25,848 (8,290)
Change in:
Mortgage loans held for sale .................................................. 1,909,904 (285,615)
Accrued interest receivable ................................................... (112,811) (283,424)
Other assets .................................................................. (658,893) (587,249)
Accrued interest payable ...................................................... 236,757 126,698
Accrued expenses and other liabilities ........................................ 610,886 503,719
--------- -------
Net cash provided by operating activities .................................. 2,844,427 264,572
--------- -------
Cash flows from investing activities:
Proceeds from maturities of securities available for sale ....................... 47,823 533,512
Proceeds from maturities of securities held to maturity ......................... 641,306 626,181
Purchases of other investments .................................................. (138,248) -
Maturities of other investments ................................................. 219,100 -
Purchases of securities available for sale ...................................... (11,099,698) (9,866,827)
Net change in loans ............................................................. 4,654,684 (7,339,876)
Proceeds from sales of real estate .............................................. 8,905 -
Proceeds from sales of premises and equipment ................................... 40,000 8,290
Purchases of premises and equipment ............................................. (856,015) (841,312)
---------- -----------
Net cash (used) in investing activities .................................... (6,710,148) (16,652,027)
---------- -----------
Cash flows from financing activities:
Net change in demand and savings deposits ....................................... 2,139,122 10,738,900
Net change in time deposits ..................................................... (740,235) 1,654,357
Payment of FHLB advances ........................................................ (65,218) (65,217)
--------- ----------
Net cash provided by financing activities ................................... 1,333,669 12,328,040
---------- ----------
Net change in cash and cash equivalents ..................................... (2,532,052) (4,059,415)
---------- ----------
Cash and cash equivalents at beginning of year .................................... 34,057,178 23,096,969
---------- ----------
Cash and cash equivalents at quarter end .......................................... 31,525,126 19,037,554
========== ==========
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
COMMUNITY FIRST BANKING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1. NATURE OF BUSINESS
Community First Banking Company (the "Company") was incorporated in the State of
Georgia on March 12, 1997, for the purpose of becoming a holding company to own
all of the outstanding capital stock of Carrollton Federal Bank, FSB (the
"Savings Bank"), an existing federally chartered stock savings bank which is
100% owned by CF Mutual Holdings (the "Mutual Holding Company"). Upon
consummation of the Conversion and Reorganization (see Note 3. below), the
Company will become the unitary holding company for the Savings Bank. A
subscription offering of the Company's common stock commenced on May 14, 1997
and the expiration date for submitting stock order forms was June 17, 1997 at
12:00 noon, Eastern Daylight Time.
NOTE 2. BASIS OF PRESENTATION
For purposes of this Form 10-Q, the financial statements and management's
discussion and analysis of financial condition and results of operations are
presented for the Mutual Holding Company since the Company was not active during
any of the periods presented. The accompanying unaudited consolidated financial
statements (except for statements of financial condition at December 31, 1996,
which are audited) have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-Q of Regulation S-X. Accordingly, they do not include
all of the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all
adjustments (none of which were other than normal recurring accruals) necessary
for a fair presentation of the financial position and results of operations for
the periods presented have been included.
The results of operations for the three months ended March 31, 1997 are not
necessarily indicative of the results of operations that may be expected for the
year ended December 31, 1997. For further information, refer to the audited
consolidated financial statements and footnotes thereto for the year ended
December 31, 1996, included in the Prospectus of the Company dated May 14,1997.
NOTE 3. PLAN OF CONVERSION
On February 11, 1997, the Boards of Directors of the Savings Bank and the Mutual
Holding Company adopted a Plan of Conversion and Reorganization (the "Plan").
Pursuant to the Plan, (i) the Mutual Holding Company will convert to an Interim
Mutual and simultaneously will merge with and into the Savings Bank, pursuant to
which the Mutual Holding Company will cease to exist and the shares of Savings
Bank Common Stock held by the Mutual Holding Company will be canceled, and (ii)
Interim CFB will then merge with and into the Savings Bank. As a result of the
merger of Interim CFB with and into the Savings Bank, the Savings Bank will
become a wholly owned subsidiary of the Company operating under the name
"Carrollton Federal Bank". The Plan was approved by (1) the Office of Thrift
Supervision on May 12, 1997, (2) an affirmative vote of a majority of the total
number of votes eligible to be cast by members of the Mutual Holding Company at
the members' meeting held on June 19, 1997, and (3) holders of one hundred
percent of the shares of the outstanding Savings Bank Common Stock at the
Stockholders' Meeting held on June 19, 1997.
NOTE 4. EARNINGS PER SHARE
Earnings per share for the three month periods ended March 31, 1997 have not
been presented in the consolidated statements of earnings because the Company
had not converted to stock form and the Company had not completed its stock
offering at any time during these periods.
NOTE 5. RECENTLY ISSUED ACCOUNTING STANDARDS
During February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, "Earnings Per Share" (SFAS 128), SFAS
128 simplifies current standards by eliminating the presentation of primary
earnings per share (EPS) and requiring the presentation of basic EPS, which
includes no potential common shares and thus no dilution. The statement also
requires entities with complex capital structures to present basic and diluted
EPS on the face of the income statement and also eliminates the modified
treasury stock method of computing potential common shares. The Statement is
effective for financial statements issued for periods ending after December 15,
1997, including interim periods. Early application is not permitted. Upon
adoption, restatement of all prior-period EPS data prescribed is required. Based
upon the current capital structure of the Company, this Statement will have no
effect on the EPS calculation.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
COMPARISON OF FINANCIAL CONDITION AT MARCH 31, 1997 AND DECEMBER 31, 1996
Mutual Holding Company consolidated assets at March 31, 1997 grew approximately
3.7% to $366 million from $353 million at December 31, 1996. Total loans grew
$7.5 million, or 2.8%, from December 31, 1996 through March 31, 1997. The
increase in loans were primarily commercial installment loans ($9 million),
commercial line of credit loans ($2 million), and indirect lending automobile
loans ($1 million). Mortgage loans decreased $5 million during the first quarter
1997. Available for sale securities increased by 26.6% to $43 million.
Securities purchased were FHLMC ($2 million), FNMA ($5 million) and FHLB ($2.5
million) bonds. Cash and cash equivalents decreased $4 million.
The net asset growth was primarily funded through an increase in deposits of
approximately $12 million, or 4%, from $308 million at December 31, 1996 to $320
million at March 31, 1997. Of the growth in deposits during the first quarter of
1997, $7 million came from the four Wal-Mart branches opened in 1996.
The Savings Bank continued to exceed all regulatory capital requirements at
March 31, 1997.
COMPARISON OF RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1997
AND 1996
Net earnings totaled approximately $368,400 through March 31, 1997 as compared
to $443,661 for the three months ended March 31, 1996. Return on average assets
and return on average equity for the three months ended March 31, 1997 were .43%
and 6.08% on an annualized basis as compared to .53% and 7.09% for the
three-month period ended March 31, 1996. The decreases over the prior year
primarily are due to increased data processing fees related to the increased
transaction account activity in 1997 as well as an increase in occupancy
expenses due to the Company's opening of four Wal-Mart branches during the last
three quarters of 1996.
Net interest income increased 12.7% to $3.4 million at March 31, 1997 as
compared to $3.1 million through March 31, 1996. This increase was a result of
the continuing change in the mix of the loan portfolio from mortgage loans into
higher yielding commercial and consumer loans.
The provision for loan losses was $95,000 and $90,000 for the quarters ended
March 31, 1997 and 1996, respectively. Nonperforming assets decreased from $6.4
million at December 31, 1996 to $6.1 million at March 31, 1997. Net charge-offs
totaled $248,000 through March 31, 1997 as compared to $99,000 through March 31,
1996.
Noninterest income increased slightly from $669,343 for the quarter ended March
31, 1996 to $780,410 for the quarter ended March 31, 1997. Noninterest expense
increased 14.1% from $3.1 million for the three-month period ended March 31,
1996 to $3.6 million through March 31, 1997. This increase is primarily due to
increases in salaries and employee benefits and occupancy expenses associated
with the Savings Bank's opening of the four Wal-Mart branches during the last
three quarters of 1996.
Depository insurance premiums decreased from $152,998 for the quarter ended
March 31, 1996 to $11,798 for the quarter ended March 31, 1997. This was due to
the re-capitalization of the SAIF insurance fund during the 3rd quarter of 1996.
This recapitalization of the SAIF fund will enable the Bank to recognize a
substantial reduction in deposit insurance premiums going forward.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Substantially all of the Mutual Holding Company's capital is held at the Savings
Bank level. The Savings Bank's liquidity and capital resources at March 31, 1997
remained relatively unchanged from December 31, 1996. The Savings Bank
anticipates that it will have sufficient funds available to meet its current
commitments. The following table sets forth the Savings Bank's capital position
relative to the various minimum Office of Thrift Supervision and FDIC capital
regulatory requirements to which it is currently subject.
March 31, 1997
--------------
Percent of
Amount Assets
(Dollars in thousands)
Tangible Capital ........................... $23,790 6.56%
Tangible minimum capital requirement ....... $ 5,441 1.5%
------- ----
Excess ................................... $18,349 5.06%
======= ====
Core capital ............................... $23,790 6.56%
Minimum core capital requirement ........... 10,883 3.00%
------- ----
Excess ................................... $12,907 3.56%
======= ====
Total risk-based capital ................... $25,672 10.26%
Total minimum risk-based capital requirement $20,011 8.00%
------- ----
Excess ................................... $ 5,661 2.26%
======= ====
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibit is filed herewith:
Exhibit 27 Financial Data Schedule
(b) No reports on Form 8-K were filed during the quarter ended March
31, 1997.
<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.
COMMUNITY FIRST BANKING CO.
Date: June , 1997 /s/ Gary D. Dorminey
--------------------------
Gary D. Dorminey
President
(Principal Executive Officer)
Date: June , 1997 /s/ C. Lynn Gable
-------------------------
C. Lynn Gable
Chief Financial Officer
(Principal Financial Officer)
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1997
<CASH> 11,157,499
<INT-BEARING-DEPOSITS> 1,035,055
<FED-FUNDS-SOLD> 6,845,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 42,965,769
<INVESTMENTS-CARRYING> 7,137,879
<INVESTMENTS-MARKET> 7,013,023
<LOANS> 280,618,601
<ALLOWANCE> 2,448,497
<TOTAL-ASSETS> 365,563,575
<DEPOSITS> 320,149,451
<SHORT-TERM> 10,800,000
<LIABILITIES-OTHER> 1,853,020
<LONG-TERM> 7,429,969
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITIES-AND-EQUITY> 365,563,575
<INTEREST-LOAN> 6,240,960
<INTEREST-INVEST> 1,032,177
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 7,273,137
<INTEREST-DEPOSIT> 3,536,335
<INTEREST-EXPENSE> 3,797,401
<INTEREST-INCOME-NET> 3,475,736
<LOAN-LOSSES> 94,500
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 3,605,137
<INCOME-PRETAX> 556,509
<INCOME-PRE-EXTRAORDINARY> 556,509
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 368,400
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<YIELD-ACTUAL> 4.25
<LOANS-NON> 5,595,207
<LOANS-PAST> 5,595,207
<LOANS-TROUBLED> 1,591,000
<LOANS-PROBLEM> 1,678,000
<ALLOWANCE-OPEN> 2,601,120
<CHARGE-OFFS> 307,473
<RECOVERIES> 58,850
<ALLOWANCE-CLOSE> 2,442,497
<ALLOWANCE-DOMESTIC> 2,442,497
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
