UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20429
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from to
Commission File number 000-25267
Oconee Financial Corporation
----------------------------
(Exact name of registrant as specified in its charter)
Georgia 58-2442250
- ------------------------ -----------------------------------
(State of Incorporation) (I.R.S. Employer Identification No.)
35 North Main Street
Watkinsville, Georgia 30677
- ------------------------ ----------------------------
(Address of principal (Zip Code)
executive offices)
706-769-6611
------------------
(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 subjected to
such filing requirements for the past 90 days.
YES XX NO
-- --
Common stock, par value $10 per share: 179,979 shares
outstanding as of May 11, 2000
<PAGE>
OCONEE FINANCIAL CORPORATION AND SUBSIDIARY
INDEX
<TABLE>
<CAPTION>
Page No.
<S> <S> <C> <C>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheet (unaudited) at March 31, 2000 3
Consolidated Statements of Earnings (unaudited) for the Three
Months Ended March 31, 2000 and 1999 4
Consolidated Statements of Comprehensive Income (unaudited)
for the Three Months Ended March 31, 2000 and 1999 5
Consolidated Statements of Cash Flows (unaudited) for the Three
Months Ended March 31, 2000 and 1999 6
Notes to Financial Statements (unaudited) 7-8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9-11
PART II OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 2. Changes in Securities 12
Item 3. Defaults Upon Senior Securities 12
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12
</TABLE>
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
OCONEE FINANCIAL CORPORATION AND SUBSIDIARY
Consolidated Balance Sheet
March 31, 2000
(Unaudited)
<TABLE>
<CAPTION>
Assets
<S> <C>
Cash and due from banks $ 7,003,810
Federal funds sold 4,590,000
Investment securities available for sale
(amortized cost of $ 40,765,210) 39,270,458
Mortgage loans held for sale 963,471
Loans 99,342,905
Less: Allowance for loan losses (1,522,641)
----------------
Loans, net 97,820,264
----------------
Premises and equipment, net 1,847,211
Accrued interest receivable and other assets 3,649,961
----------------
Total Assets $ 155,145,175
================
Liabilities and Stockholders' Equity
Liabilities:
Deposits:
Noninterest-bearing $ 19,894,003
Interest-bearing 120,228,960
----------------
Total Deposits 140,122,963
Securities sold under repurchase agreements 930,925
Accrued interest payable and other liabilities 731,232
----------------
Total Liabilities 141,785,120
Stockholders' equity:
Common stock, $10 par value;
authorized 300,000 shares;
issued and outstanding 180,000 shares 1,799,790
Additional paid-in capital 4,247,150
Retained earnings 8,240,459
Unrealized gain (loss) on investment securities, net of tax (927,344)
----------------
Total stockholders' equity 13,360,055
----------------
Total liabilities and stockholders' equity $ 155,145,175
================
</TABLE>
See accompanying notes to financial statements.
-3-
<PAGE>
OCONEE FINANCIAL CORPORATION AND SUBSIDIARY
Consolidated Statements of Earnings
For Each of the Three Months Ended March 31, 2000 and 1999
(Unaudited)
<TABLE>
<CAPTION>
2000 1999
-------------- --------------
<S> <C> <C>
Interest Income:
Loans $ 2,378,062 $ 1,864,910
Investment securities:
Tax exempt 208,092 202,998
Taxable 387,275 291,789
Federal funds sold and other 103,000 85,022
-------------- --------------
Total interest income 3,076,429 2,444,719
-------------- --------------
Interest Expense:
Deposits 1,314,120 984,959
Other 8,515 5,809
-------------- --------------
Total interest expense 1,322,635 990,768
-------------- --------------
Net interest income 1,753,794 1,453,951
Provision for loan losses 51,900 12,600
-------------- --------------
Net interest income after provision for loan losses 1,701,894 1,441,351
-------------- --------------
Other Income:
Service charges on deposit accounts 185,619 173,631
Securities gains (losses), net 0 8,838
Other operating income 162,504 177,665
-------------- --------------
Total other income 348,123 360,134
-------------- --------------
Other Expense:
Salaries and other personnel expense 786,045 602,903
Net occupancy and equipment expense 179,312 139,683
Other operating expense 337,091 367,104
-------------- --------------
Total other expense 1,302,448 1,109,690
-------------- --------------
Earnings before income taxes 747,569 691,795
Income taxes 208,879 208,232
-------------- --------------
Net earnings $ 538,690 $ 483,563
============== ==============
Earnings per common share based on average outstanding
shares of 179,979 in 2000 and 180,000 in 1999: $ 2.99 $ 2.69
============== ==============
</TABLE>
See accompanying notes to financial statements.
-4-
<PAGE>
OCONEE FINANCIAL CORPORATION AND SUBSIDIARY
Consolidated Statements of Comprehensive Income
For the Three Months Ended March 31, 2000 and 1999
(Unaudited)
<TABLE>
<CAPTION>
2000 1999
-------------- --------------
<S> <C> <C>
Net earnings $ 538,690 483,563
Other comprehensive income, net of tax:
Unrealized gains (losses) on securities availble for sale:
Holding gains (losses) arising during period, net of tax
of ($116,924) and ($86,832) (191,094) (141,915)
Reclassification adjustments for (gains) losses included
in net earnings, net of tax of $0 and $3,358 0 5,480
-------------- --------------
Total other comprensive income (loss) (191,094) (136,435)
-------------- --------------
Comprehensive income $ 347,596 347,128
============== ==============
</TABLE>
See accompanying notes to financial statements.
-5-
<PAGE>
OCONEE FINANCIAL CORPORATION AND SUBSIDIARY
Consolidated Statements of Cash Flows
For Each of the Three Months Ended March 31, 2000 and 1999
(Unaudited)
<TABLE>
<CAPTION>
2000 1999
----------------- -----------------
Cash flows from operating activities:
<S> <C> <C>
Net earnings $ 538,690 $ 483,563
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Provision for loan losses 51,900 12,600
Depreciation, amortization and accretion 68,447 61,374
Change in assets and liabilities:
Interest receivable and other assets (133,803) (247,159)
Interest payable and other liabilities (99,629) (157,239)
Mortgage loans held for sale 903,919 327,761
----------------- -----------------
Net cash used by operating activities 1,329,524 480,900
----------------- -----------------
Cash flows from investing activities:
Proceeds from maturities and paydowns of
investment securities held to maturity 0 496,162
Proceeds from maturities and paydowns of
investment securities available for sale 634,044 1,667,057
Purchases of investment securities held to maturity 0 (1,458,433)
Purchases of investment securities available for sale (2,950,769) (507,188)
Net changes in loans (6,011,013) (3,242,396)
Purchases of premises and equipment (294,406) (26,072)
----------------- -----------------
Net cash used by investing activities (8,622,144) (3,070,870)
----------------- -----------------
Cash flows from financing activities:
Net change in deposits 3,595,754 (2,154,607)
Net change in securities sold under repurchase agreements 65,017 177,803
Dividends paid (899,970) (720,000)
Purchase and retirement of stock (2,160) 0
----------------- -----------------
Net cash provided by financing activities 2,758,641 (2,696,804)
----------------- -----------------
Net increase (decrease) in cash and cash equivalents (4,533,979) (5,286,774)
Cash and cash equivalents at beginning of period 16,127,789 14,305,840
----------------- -----------------
Cash and cash equivalents at end of period $ 11,593,810 $ 9,019,066
================= =================
Supplemental cash flow information:
Cash paid for interest $ 766,718 $ 650,765
</TABLE>
See accompanying notes to financial statements.
-6-
<PAGE>
OCONEE FINANCIAL CORPORATION AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Unaudited)
(1) Basis of Presentation
The financial statements include the accounts of Oconee Financial
Corporation (the "Corporation") and its wholly-owned subsidiary, Oconee
State Bank (the "Bank"). All significant intercompany accounts and
transactions have been eliminated in consolidation.
The consolidated financial information furnished herein reflects all
adjustments which are, in the opinion of management, necessary to
present a fair statement of the results of operations and financial
position for the periods covered herein. All such adjustments are of a
normal recurring nature.
(2) Cash and Cash Equivalents
For presentation in the financial statements, cash and cash equivalents
include cash on hand and amounts due from banks.
(3) Comprehensive Income
In 1997, the Financial Accounting and Standards Board issued Statement
of Financial Accounting Standards No. 130, "Reporting Comprehensive
Income" (SFAS 130"). SFAS 130 established standards for the reporting
and display of comprehensive income and its components in a full set of
general-purpose financial statements. The Bank has elected to present
comprehensive income in a separate statement of comprehensive income.
Accumulated other comprehensive income is solely related to the net of
tax effect of unrealized gains and losses on securities available for
sale.
(4) Holding Company Formation
On December 15, 1998, the Bank's shareholders approved a Plan of
Reorganization and Agreement of Merger (the "Plan"), providing for
conversion of the Bank to a holding company form of operation whereby
the Corporation became the parent of the Bank. The holding company
conversion was completed successfully on January 1, 1999. As a result
of the conversion, each share of Bank stock was exchanged for one share
of Oconee Financial Corporation stock.
-7-
<PAGE>
OCONEE FINANCIAL CORPORATION AND SUBSIDIARY
Notes to Consolidated Financial Statements (Continued)
(Unaudited)
(5) Implementation of Recent Accounting Pronouncements
The Corporation adopted Statement of Financial Accounting Standards No.
133, "Accounting for Derivative Instruments and Hedging Activities",
(SFAS No. 133") during the third quarter of 1999. As allowed by SFAS
No. 133, an entity may transfer any held to maturity security into the
available for sale or trading category without calling into question
the entity's intent to hold other securities to maturity in the future.
The result of the transfer of held to maturity securities to the
available for sale category was to increase stockholders' equity
approximately $22,000 which represented the net effect of the
unrealized gain associated with the held to maturity investments
transferred. There were no other financial statement effects associated
with the implementation of SFAS No. 133.
-8-
<PAGE>
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
For Each of the Three Months in the Periods Ended
March 31, 2000 and 1999
Forward-Looking Statement
This discussion contains forward-looking statements under the private
Securities Litigation Reform Act of 1995 that involve risk and uncertainties.
Although the Corporation believes that the assumptions underlying the
forward-looking statements contained in the discussion are reasonable, any of
the assumptions could be inaccurate, and therefore, no assurance can be made
that any of the forward-looking statements included in this discussion will be
accurate. Factors that could cause actual results to differ from results
discussed in forward-looking statements include, but are not limited to:
economic conditions (both generally and in the markets where the Corporation
operates); competition from other providers of financial services offered by the
Corporation; government regulations and legislation; changes in interest rates;
material unforeseen changes in the financial stability and liquidity of the
Corporation's credit customers, all of which are difficult to predict and which
may be beyond the control of the Corporation. The Corporation undertakes no
obligation to revise forward-looking statements to reflect events or changes
after the date of this discussion or to reflect the occurrence of unanticipated
events.
Financial Condition
Total assets at March 31, 2000 were $155,145,175, representing a
$3,006,607 (1.98%) increase from December 31, 1999. Deposits increased
$3,595,754 (2.63%) from December 31, 1999. Loans increased $6,012,628 (6.44%).
The allowance for loan losses at March 31, 2000 totaled $1,522,641 compared to
the December 31, 1999 total of $1,469,126, representing 1.53% of total loans at
March 31, 2000, compared to 1.57% at December 31, 1999. Cash and cash
equivalents decreased $4,533,979 from December 31, 1999.
The total of nonperforming assets, which includes nonaccruing loans,
other real estate owned, repossessed collateral and loans for which payments are
more than 90 days past due were $117,019 at March 31, 2000, representing an
increase of $38,611 (49.24%) from December 31, 1999. There were no related party
loans which were considered nonperforming at March 31, 2000.
The Corporation's subsidiary bank was most recently examined by its
primary regulatory authority in October of 1999. There were no recommendations
by the regulatory authority that in management's opinion will have material
effects on the Company's liquidity, capital resources or operations.
-9-
<PAGE>
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS, continued
For the Three Months in the Period Ended
March 31, 2000 and 1999
Results of Operations
Net interest income increased $299,843 (20.62%) in the first three
months of 2000 compared to the same period for 1999. Interest income for the
first three months of 2000 was $3,076,429, representing an increase of $631,710
(25.84%) over the same period in 1999. Interest expense for the first three
months of 2000 increased $331,867 (33.50%) compared to the same period in 1999.
The increase in net interest income during the first three months of 2000
compared to the same period in 1999 is primarily attributable to the increase in
the volume of loans.
The Bank analyzes its allowance for loan losses on a monthly basis. As
of March 31, 2000, that analysis indicated an allowance reserve surplus of
$1,036,732. Due to this surplus, the Bank has provided the budgeted provision
for 2000. It is management's belief that the allowance for loan losses is
adequate to absorb possible losses in the portfolio.
Other expenses for the three months of 2000 increased $192,758 (17.37%)
compared to the first three months in 1999. The net increase is primarily
attributable to additional salary and benefits expense as a result of opening
two new branches during 1999.
Year 2000 Compliance
The Bank did not experience any material disruptions in its operations
or activities as a result of the so-called "Year 2000" problem. Nor did the Bank
incur material expenses in correcting perceived or suspected Year 2000 problems.
In addition, the Bank is not aware that any of its suppliers or customers has
experienced any material disruptions in their operations or activities.
The Bank does not expect to encounter any such problems in the
foreseeable future, although it continues to monitor its computer operations for
signs or indications of such problems and will do so through future identified
critical dates in 2000 and 2001. The Bank has developed contingency plans for
back up systems and business functions should any technical problems be
encountered. Specific guidelines have been established in case critical systems
or communications interruptions occur. Assignments have been established, as
well as step-by-step instructions should any system or process malfunction.
Based on information currently available, management does not believe that the
Bank will incur significant additional costs for Year 2000 issues.
-10-
<PAGE>
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS, continued
For the Three Months Ended March 31, 2000
Capital
The following tables present Oconee State Bank's regulatory capital position at
March 31, 2000:
Risk-Based Capital Ratios
Tier 1 Tangible Capital, Actual 13.1%
Tier 1 Tangible Capital minimum requirement 4.0%
------
Excess 9.1%
======
Total Capital, Actual 14.3%
Total Capital minimum requirement 8.0%
------
Excess 6.3%
======
Leverage Ratio
Tier 1 Tangible Capital to adjusted total assets
(Leverage Ratio) 9.5%
Minimum leverage requirement 3.0%
------
Excess 6.5%
======
-11-
<PAGE>
PART II. OTHER INFORMATION
OCONEE FINANCIAL CORPORATION AND SUBSIDIARY
Item 1. Legal Proceedings
-----------------
None
Item 2. Changes in Securities and Use of Proceeds
-----------------------------------------
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) Exhibits
Exhibit 27 - Financial Data Schedule (for SEC use only)
(b) Reports on Form 8-K
None
-12-
<PAGE>
OCONEE FINANCIAL CORPORATION AND SUBSIDIARY
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.
OCONEE FINANCIAL CORPORATION
By: /s/ B. Amrey Harden
-------------------------------------
B. Amrey Harden, President and C.E.O.
(Principal Executive Officer)
Date: May 11, 2000
------------------------------------
By: /s/ Jerry K. Wages
-------------------------------------
Jerry K. Wages
Executive Vice-President and C.F.O.
(Principal Accounting Officer)
Date: May 11, 2000
------------------------------------
-13-
<PAGE>
EXHIBITS INDEX
--------------
Exhibit No. Description
- ----------- -----------
27 Financial Data Schedule (for SEC use only)
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 7,003,810
<INT-BEARING-DEPOSITS> 100,000
<FED-FUNDS-SOLD> 4,590,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 39,270,458
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 99,342,905
<ALLOWANCE> 1,522,641
<TOTAL-ASSETS> 155,145,175
<DEPOSITS> 140,122,963
<SHORT-TERM> 930,925
<LIABILITIES-OTHER> 731,232
<LONG-TERM> 0
0
0
<COMMON> 1,799,790
<OTHER-SE> 11,560,265
<TOTAL-LIABILITIES-AND-EQUITY> 155,145,175
<INTEREST-LOAN> 2,378,062
<INTEREST-INVEST> 595,367
<INTEREST-OTHER> 103,000
<INTEREST-TOTAL> 3,076,429
<INTEREST-DEPOSIT> 1,314,120
<INTEREST-EXPENSE> 1,322,635
<INTEREST-INCOME-NET> 1,753,794
<LOAN-LOSSES> 51,900
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 1,302,448
<INCOME-PRETAX> 747,569
<INCOME-PRE-EXTRAORDINARY> 747,569
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 538,690
<EPS-BASIC> 2.99
<EPS-DILUTED> 2.99
<YIELD-ACTUAL> 5.23
<LOANS-NON> 77,018
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,469,126
<CHARGE-OFFS> 3,153
<RECOVERIES> 4,768
<ALLOWANCE-CLOSE> 1,522,641
<ALLOWANCE-DOMESTIC> 1,522,641
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
