<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] Quarterly Report Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934 for the period ended September
30, 2000
[ ] Transition report under Section 13 or 15(d) of the Exchange
Act for the transition period from _____ to _____
Commission file number: 000-30805
WGNB CORP.
(Exact name of small business issuer as specified in its charter)
Georgia 58-1640130
(State of Incorporation) (I.R.S. Employer Identification No.)
201 Maple Street
P.O. Box 280
Carrollton, Georgia 30117
(Address of principal executive offices)
(770) 832-3557
(Issuer's telephone number, including area code)
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 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 [ ]
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
Class Outstanding at November 9, 2000
----- -------------------------------
Common Stock, $1.25 par value 3,095,455
Transitional Small Business Disclosure Format: Yes [ ] No [X]
<PAGE> 2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The unaudited financial statements of WGNB Corp. (the "Company") are
set forth on the following pages. All adjustments have been made which, in the
opinion of management, are necessary in order to make the financial statements
not misleading.
2
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WGNB CORP.
CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
3
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WGNB CORP.
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 2000
(UNAUDITED)
<TABLE>
<S> <C>
Assets
Cash and cash due from banks, including reserve requirements
of $100,000 $ 10,009,776
Federal funds sold 2,800,000
-------------
Cash and cash equivalents 12,809,776
Securities available for sale 40,955,339
Securities held to maturity 1,000,000
Loans, net 219,687,102
Premises and equipment, net 5,785,377
Accrued interest receivable 2,047,888
Other assets 3,016,799
-------------
$ 285,302,281
=============
Liabilities and Stockholders' Equity
Deposits:
Demand $ 31,888,340
Interest bearing demand 82,767,486
Savings 7,743,031
Time 73,143,030
Time, over $100,000 31,345,944
-------------
Total deposits 226,887,831
Federal Home Loan Bank advances 30,000,000
Other borrowings 500,000
Accrued interest payable 1,743,314
Other liabilities 1,760,799
-------------
Total liabilities 260,891,944
-------------
Stockholders' equity:
Common stock, $1.25 par value, 10,000,000 shares authorized;
3,094,775 shares issued and outstanding 3,868,469
Additional paid-in capital 818,707
Retained earnings 20,289,436
Accumulated comprehensive loss (566,275)
-------------
Total stockholders' equity 24,410,337
-------------
$ 285,302,281
=============
</TABLE>
See accompanying notes to consolidated financial statements.
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WGNB CORP.
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(UNAUDITED)
<TABLE>
<CAPTION>
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
------------- -------------- ------------------------------
2000 1999 2000 1999
---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Interest income:
Interest and fees on loans $5,551,588 $4,264,433 $15,227,797 $12,256,797
Interest on federal funds sold 92,818 80,781 259,786 229,410
Interest on investment securities:
U.S. Treasury -- 11,103 -- 47,980
U.S. Government agencies 425,527 475,774 1,358,764 1,377,002
State, county and municipal 166,711 150,418 524,749 409,119
Other 49,992 12,944 130,043 39,057
---------- ---------- ----------- -----------
Total interest income 6,286,636 4,995,453 17,501,139 14,359,365
---------- ---------- ----------- -----------
Interest expense:
Interest on deposits:
Demand 689,124 603,332 1,975,586 1,616,510
Savings 60,376 60,364 178,781 175,765
Time 1,519,151 1,253,863 4,302,154 3,769,154
Interest on FHLB and other borrowings 487,811 105,998 998,910 317,673
---------- ---------- ----------- -----------
Total interest expense 2,756,462 2,023,557 7,455,431 5,879,102
---------- ---------- ----------- -----------
Net interest income 3,530,174 2,971,896 10,045,708 8,480,263
Provision for loan losses 150,000 75,000 250,000 228,462
---------- ---------- ----------- -----------
Net interest income after provision
for loan losses 3,380,174 2,896,896 9,795,708 8,251,801
---------- ---------- ----------- -----------
Other income:
Service charges on deposit accounts 601,911 349,645 1,363,201 987,998
Miscellaneous 262,504 246,238 753,279 716,017
---------- ---------- ----------- -----------
Total other income 864,415 595,883 2,116,480 1,704,015
---------- ---------- ----------- -----------
Other expenses:
Salaries and employee benefits 1,362,687 1,142,294 3,984,421 3,372,361
Occupancy 373,346 359,934 1,083,676 995,720
Other operating 637,903 497,811 1,741,342 1,529,922
---------- ---------- ----------- -----------
Total other expenses 2,373,936 2,000,039 6,809,439 5,898,003
---------- ---------- ----------- -----------
Earnings before income taxes 1,870,653 1,492,740 5,102,749 4,057,813
Income taxes 699,386 542,829 1,831,500 1,458,005
---------- ---------- ----------- -----------
Net earnings $1,171,267 $ 949,911 $ 3,271,249 $ 2,599,808
========== ========== =========== ===========
Basic earnings per share $ .38 $ .30 $ 1.06 $ .83
========== ========== =========== ===========
Diluted earnings per share $ .37 $ .30 $ 1.04 $ .82
========== ========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
5
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WGNB CORP.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(UNAUDITED)
<TABLE>
<CAPTION>
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
--------------------------- ---------------------------
2000 1999 2000 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net earnings $1,171,267 $ 949,911 $3,271,249 $2,599,808
Other comprehensive income (loss), net of tax:
Unrealized gains (losses) on investment
Securities available for sale:
Unrealized gains (losses) arising during 743,332 (581,014) 773,749 (2,317,130)
the period
Associated (taxes) benefit (275,033) 214,975 (286,341) 857,338
Less: Reclassification adjustment for (107) 4,510 (14,079) 19,440
(gains) losses
Associated taxes (benefit) 40 (1,669) 5,209 (7,193)
---------- ---------- ---------- ----------
Other comprehensive income (loss) 468,232 (363,198) 478,538 (1,447,545)
---------- ---------- ---------- ----------
Comprehensive income (loss) $1,639,499 $ 586,713 $3,749,787 $1,152,263
========== ========== ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
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WGNB CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
<TABLE>
<CAPTION>
2000 1999
------------ -----------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 3,271,249 2,599,808
Adjustments to reconcile net earnings to net cash
Provided by operating activities:
Depreciation, amortization and accretion 564,971 540,861
Provision for loan losses 250,000 228,462
Provision for deferred income taxes 55,919 53,722
Loss (gain) on sale of securities available for sale 8,870 (12,247)
Loss (gain) on sale of premises and equipment (15,027) --
Loss (gain) on sale of other real estate -- 5,979
Change in:
Other assets (1,161,272) (1,829,226)
Other liabilities 1,617,083 689,159
------------ -----------
Net cash provided by operating activities 4,591,793 2,276,518
------------ -----------
Cash flows from investing activities:
Proceeds from sales of securities available for sale 560,520 1,261,930
Proceeds from maturities of securities available for sale 2,850,535 8,166,566
Purchases of securities available for sale (2,286,470) (12,596,546)
Net change in loans (38,239,728) (17,348,408)
Proceeds from sale of premises and equipment 31,428 --
Purchases of premises and equipment (689,095) (1,129,095)
Proceeds from sales of other real estate 24,744 112,729
------------ -----------
Net cash used by investing activities (37,748,066) (21,532,824)
Cash flows from financing activities:
Net change in deposits 12,082,430 23,755,031
Federal Home Loan Bank advances 15,000,000 --
Federal Home Loan Bank advance repayment -- 2,000,000
Proceeds from other borrowings 420,000 --
Repayment of other borrowings (270,000) (175,000)
Dividends paid (1,076,788) (967,807)
Issuance of common stock 24,792 26,158
Retirement of common stock (280,029) (608,545)
------------ -----------
Net cash provided by financing activities 25,900,405 20,029,837
Change in cash and cash equivalents (7,255,868) 773,531
Cash and cash equivalents at beginning of period 20,065,644 15,561,652
------------ -----------
Cash and cash equivalents at end of period $ 12,809,776 16,335,183
============ ===========
</TABLE>
See accompanying notes to consolidated financial statements.
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WGNB CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(UNAUDITED)
<TABLE>
<CAPTION>
2000 1999
---------- ----------
<S> <C> <C>
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest $6,810,218 5,993,031
Income taxes 1,960,313
1,416,926
Non-cash investing and financing activities:
Transfer of loans to other real estate 88,918 22,211
Financed sales of other real estate 50,273 --
Change in unrealized gains (losses) on
securities available for sale, net of tax 478,538 (1,447,545)
Change in dividends payable 54,834 (32,863)
</TABLE>
See accompanying notes to consolidated financial statements.
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<PAGE> 9
WGNB CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE (1) BASIS OF PRESENTATION
The consolidated financial statements include the accounts of WGNB Corp. (the
"Company") and its wholly-owned subsidiaries, West Georgia National Bank (the
"Bank") and West Georgia Credit Services, Inc. (the "Finance Company"). All
significant inter-company accounts have been eliminated in consolidation. In
some cases, certain prior period amounts have been reclassified to conform with
current year presentation.
The accompanying unaudited interim consolidated financial statements reflect all
adjustments which, in the opinion of management, are necessary to present fairly
the Company's financial position as of September 30, 2000, and the results of
its operations and its cash flows for the nine-month period then ended. All such
adjustments are normal and recurring in nature. The financial statements
included herein should be read in conjunction with consolidated financial
statements and the related notes and the report of independent accountants
included in the Company's initial filing on form 10-SB which included the
results of operations for the years ended December 31, 1999 and 1998.
NOTE (2) NET EARNINGS PER SHARE
Basic earnings per share is based on the weighted average number of common
shares outstanding during the period while the effects of potential common
shares outstanding during the period are included in diluted earnings per share.
The average market price during the year is used to compute equivalent shares.
All net earnings per share amounts have been restated to conform to the
provisions of SFAS No. 128.
Reconciliation of the amounts used in the computation of both "basic earnings
per share" and "diluted earnings per share for the periods ended September 30,
2000 and September 30, 1999 are as follows:
<TABLE>
<CAPTION>
For the nine months ended September 30, 2000
Net Earnings Common Shares Earnings
(Numerator) (Denominator) per Share
------------ ------------- ---------
<S> <C> <C> <C>
Basic earnings per share $3,271,249 3,099,700 $1.06
Effect of dilutive securities - Stock Options 34,933 (.02)
---------- ---------- -----
Diluted earnings per share $3,271,249 3,134,633 $1.04
========== ========== =====
<CAPTION>
For the nine months ended September 30, 1999
Net Earnings Common Shares Earnings
(Numerator) (Denominator) per Share
------------ ------------- ---------
<S> <C> <C> <C>
Basic earnings per share $2,599,808 3,125,374 $ .83
Effect of dilutive securities - Stock Options 0 34,380 (.01)
---------- ---------- -----
Diluted earnings per share $2,599,808 3,159,754 $ .82
========== ========== =====
</TABLE>
9
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
FORWARD LOOKING STATEMENTS
This report may contain certain "forward-looking statements" including
statements concerning plans, objectives, future events or performance and
assumptions and other statements that are not statements of historical fact. The
Company cautions readers that the following important factors, among others,
could cause the Company's actual results to differ materially from the
forward-looking statements contained in this report: (i) the effect of changes
in laws and regulations, including federal and state banking laws and
regulations, with which the Company and its subsidiaries must comply, and the
associated costs of compliance with such laws and regulations either currently
or in the future as applicable; (ii) the effect of changes in accounting
policies and practices, as may be adopted by the regulatory agencies as well as
by the Financial Accounting Standards Board, or of changes in the Company's
organization, compensation and benefit plans; (iii) the effect on the Company's
competitive position within its market area of the increasing consolidation
within the banking and financial services industries, including the increased
competition from larger regional and out-of-state banking organizations as well
as non-bank providers of various financial services; (iv) the effect of changes
in interest rates; and (v) the effect of changes in the business cycle and
downturns in local, regional or national economies. The Company cautions that
the foregoing list of important factors is not exclusive.
RESULTS OF OPERATIONS
Quarters and nine months ended September 30, 2000 and 1999
OVERVIEW
Net earnings for the nine months ended September 30, 2000 was $3.3
million, which represented an increase of $671,000 or 26 percent compared to the
nine months ended September 30, 1999. Net earnings per common share increased 28
percent from $1.06 per share to $.83 per share when comparing the same two
periods. Net earnings for the third quarter ended September 30, 2000 was $1.17
million compared to $950,000 for the third quarter of 1999. The third quarter of
2000 earnings established another record quarterly net income for the Company.
The improved operating results are attributable to loan growth of $38.2 million
since the beginning of 2000. This loan growth resulted in an increase of net
interest income of over $1.57 million or 18 percent when comparing the first
nine months of 2000 with the same period in 1999. Additionally, non-interest
income has improved by 24 percent or $412,000 when comparing the same periods.
This increase is primarily attributable to service charges on overdraft checking
accounts.
NET INTEREST INCOME
When comparing the first nine months of 2000 to the same period in
1999, the 18 percent increase in net interest income was the result of a $3.1
million or 22 percent increase in interest income and a $1.6 million or 27
percent increase in interest expense. The net interest margin for the nine
months year to date for 2000 is 5.40 percent compared to 5.31 percent for the
same year to date period in 1999. The average year to date yield on earning
assets in 2000 is 9.28 percent and for 1999 was 8.90 percent. The comparative
cost of funds was 4.09 percent in 2000 and 3.73 percent in 1999. Net interest
income improved over $1.5 million or 18 percent comparing the two nine-month
periods. Year to date average earning assets have increased approximately $37
million, while average interest-bearing liabilities increased $34 million.
NON-INTEREST INCOME AND EXPENSE
Non-interest income for the first nine months of 2000 increased
$412,000 or 24 percent compared to the first nine months of 1999. Service
charges on deposit accounts increased $375,000 or 38 percent during 2000
compared to the first nine months of 1999. This increase was due primarily to
increased income from non-sufficient funds charges.
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<PAGE> 11
Non-interest expense increased $911,000 or 15 percent in the first
three quarters of 2000 compared to the same period in 1999. Salaries and
employee benefits increased $612,000, an 18 percent increase over the first nine
months of 1999. The increase was primarily due to additional staffing
requirements in the operations and lending departments in the Bank. The Bank
increased its full time equivalent employee count from 102 in September of 1999
to 118 in September of 2000. The increase is also attributable to higher pay
rates for employees due to annual raises and increased profit sharing accruals
due to higher earnings.
Occupancy and other operating expenses increased $300,000 or 12 percent
from 1999 to 2000. Increased depreciation expense attributable to operations and
retail delivery equipment and software purchases accounted for $84,000 of the
increase. These fixed assets purchases were placed in service in late 1999 in
preparation for year 2000 compliance. In addition, retail delivery tools such as
a new accounts platform, temporary facilities for the Bank's anticipated "Mirror
Lake" branch, and additional ATM sites in the Bank's market area were purchased
to increase the Bank's retail presence in its growing market. Other operating
expenses have increased due to cost associated with the Company's registration
statement, fees associated with its bounce protection product, fees incurred in
connection with ATM networks and supplies expense connected with increase
operational volume.
INCOME TAXES
Income tax expense for the first nine months was $ 1.8 million in 2000
compared to $1.5 million in 1999. The effective tax rates for each of the
periods ended September 30, 2000 and 1999 were 36 percent.
PROVISION AND ALLOWANCE FOR POSSIBLE LOAN AND LEASE LOSSES
The adequacy of the allowance for loan and lease losses is determined
through management's informed judgment concerning the amount of risk inherent in
the Company's loan and lease portfolios. This judgment is based on such factors
as the change in levels of non-performing and past due loans and leases,
historical loan loss experience, borrowers' financial condition, concentration
of loans to specific borrowers and industries, estimated values of underlying
collateral, and current and prospective economic conditions. The allowance for
loan and lease losses at September 30, 2000 was $2.7 million or 1.20 percent of
total loans compared to $2.28 million or 1.24 percent of total loans at December
31, 1999. Management believes that the allowance for loan losses is adequate to
absorb possible loss in the loan portfolio. However, the risk associated with
loan growth and the slowing economy has caused management to favor higher loan
loss provisions for the remainder of 2000.
NON-PERFORMING ASSETS AND PAST DUE LOANS
Non-performing assets, comprised of real estate owned, non-accrual
loans and loans for which payments are more than 90 days past due, totaled
$631,000 at September 30, 2000 compared to $672,000 at September 30, 1999.
Non-performing assets as a percentage of total loans and real estate owned at
September 30, 2000 and September 30, 1999 were 0.3 percent and 0.4 percent,
respectively.
The Company has a loan review function that continually monitors
selected loans for which general economic conditions or changes within a
particular industry could cause the borrowers financial difficulties. The loan
review function also identifies loans with high degrees of credit or other
risks. The focus of loan review as well as management is to maintain a low level
of non-performing assets and return current non-performing assets to earning
status. Management is unaware of any known trends, events or uncertainties that
will have or that are reasonably likely to have a material effect on liquidity,
capital resources or operations.
FINANCIAL CONDITION
OVERVIEW
Total assets were $285 million at September 30, 2000, an increase of
$31 million or 12 percent from December 31, 1999, which equates to an annual
growth rate of approximately 16 percent if asset growth continued on its current
pace.
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ASSETS AND FUNDING
At September 30, 2000 earning assets totaled $270 million, an increase
of more than $37 million from December 31, 1999. The mix of interest earning
assets has changed slightly since the beginning of 2000. Loans increased to 83
percent and investment securities and federal funds decreased to 17 percent of
earning assets at September 30, 2000. This is compared to loans of 79 percent
and investments of 21 percent of earning assets at December 31, 1999.
At September 30, 2000, interest-bearing deposits increased $10.6
million compared to December 1999. Non-interest-bearing deposits increased $1.4
million in the first nine months of 2000 and totaled $31.9 million at September
30, 2000. Federal Home Loan Bank advances increased $15 million in the first
nine months of 2000 and totaled $30 million at September 30, 2000. At September
30, 2000, deposits represented 86 percent and Federal Home Bank advances
represented 13 percent of interest-bearing liabilities.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities totaled $4.6 million for the
nine months ended September 30, 2000. Net cash used by investing activities
totaling $37.7 million consisted primarily of a $38.2 million increase in loans
outstanding. The loans were funded by a $12.1 increase in deposits and a $15.0
million increase in Federal Home Loan Bank advances. The remainder of the
funding was from cash generated in previous periods. The decrease in cash and
cash equivalents for the year to date at September 30, 2000 was $7.3 million.
Total stockholders' equity at September 30, 2000, was 8.56 percent of
total assets compared to 8.65 percent at December 31, 1999. The decrease in the
capital percentage is attributed to a $31 million increase in total assets since
December 31, 1999. Nearly all the asset growth was in loans.
At September 30, 2000, WGNB Corp. was in compliance with various
regulatory capital requirements administered by federal and state banking
agencies. The following is a table representing WGNB Corp.'s consolidated
Tier-1, tangible capital, and risk-based capital.
<TABLE>
<CAPTION>
SEPTEMBER 30, 2000
---------------------------------------------------------------------------------------------------------------------------
ACTUAL REQUIRED EXCESS
AMOUNT % AMOUNT % AMOUNT %
---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Total capital (to risk-
weighted assets) $27,660 12.58% $17,589 8.00% $10,071 4.58%
Tier 1 capital (to risk-
weighted assets) 24,977 11.36% 8,794 4.00% 16,183 7.36%
Tier 1 capital (to
average assets) 24,977 9.74% 11,365 4.00% 13,771 5.74%
</TABLE>
12
<PAGE> 13
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are no material, pending legal proceedings to which the Company
or any of its subsidiaries is a party or of which any of their property is the
subject.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
(a) Not applicable.
(b) Not applicable.
(c) Not Applicable.
(d) Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are filed as part of this Report:
<TABLE>
<S> <C>
3.1 Amended and Restated Articles of Incorporation (Incorporated
by reference to Exhibit 3.1 to the Company's Registration
Statement on Form 10-SB filed June 14, 2000 (the "Form
10-SB").
3.2 Amended and Restated Bylaws (Incorporated by reference to
Exhibit 3.2 to the Form 10-SB).
4.1 See exhibits 3.1 and 3.2 for provisions of Company's Articles
of Incorporation and Bylaws Defining the Rights of
Shareholders.
4.2 Specimen certificate representing shares of Common Stock
(Incorporated by reference to Exhibit 4.2 to the Form 10-SB).
4.3 Rights Agreement dated as of February 12, 1997 between the
Company and SunTrust Bank, Atlanta (Incorporated by reference
to Exhibit 4.3 to the Form 10-SB).
27 Financial Data Schedule (for SEC use only)
</TABLE>
13
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(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended September
30, 2000.
14
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SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934,
the Company has caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Dated: November 10, 2000
WGNB CORP.
By: /s/ L. Leighton Alston
------------------------------------
L. Leighton Alston
President and CEO
By: /s/ Steven J. Haack
------------------------------------
Steven J. Haack
Treasurer
Principal Financial Officer
15
