FORM 10QSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
[x] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended _______________________ SEPTEMBER 30, 1996
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT
For the transition period from _____________________________ to
Commission File Number 017851
Bank Corporation of Georgia
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Georgia 581406233
-------------------------------- ----------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) identification number)
4951 Forsyth Road, Macon, Georgia 31210
----------------------------------------
(Address of principal executive offices)
(912) 757-2000
------------------------------------------------
(Issuer's telephone number, including area code)
(Former name, former address, and former fiscal year, if changed since
last report)
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS
Check whether the issuer 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
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
---- ---
State the number of shares outstanding of each of the issuer's classes
of common equity as of September 30, 1996: 2,264,656 shares of Common
Stock, $1.00 par value per share.
<PAGE>
BANK CORPORATION OF GEORGIA
INDEX
Page No.
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets
September 30, 1996, December 31, 1995
and September 30, 1995 3-4
Consolidated Statements of Income
for the Nine Months and Quarters Ended
September 30, 1996 and 1995 5-6
Consolidated Statements of Cash Flows
for the Nine Months and Quarters Ended
September 30, 1996 and 1995 7-8
Notes to Consolidated Financial Statements 9-10
Item 2. Management's Discussion and Analysis 11-12
PART II OTHER INFORMATION 14
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 8K
2
<PAGE>
BANK CORPORATION OF GEORGIA AND SUBS
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1996 AND DECEMBER 31, 1995
<TABLE>
<CAPTION>
September 30, 1996 December 31, 1995
Assets ------------------ -----------------
<S> <C> <C>
Cash & due from banks $10,941,425 $11,352,975
Interest bearing deposits ------- 4,000
Federal Funds sold 16,684,500 13,930,000
Investment securities:
Available for sale 42,582,714 39,292,562
Held to maturity 1,088,103 1,135,448
------------- -------------
Total investment securities 43,670,817 40,428,010
------------- -------------
Loans 196,083,065 181,473,993
Less: Unearned discount (809,686) (931,596)
Allowance for loan losses (2,928,729) (2,652,787)
------------- -------------
Loans, net 192,344,650 177,889,610
------------- -------------
Bank premises and equipment 9,885,762 7,923,759
Accrued interest receivable 1,738,443 2,090,198
Goodwill 949,586 394,439
Other assets 7,160,125 5,645,702
------------- -------------
$283,375,308 $259,658,693
============= =============
Liabilities and Stockholders' Equity
Deposits:
Demand $43,160,819 $37,717,191
Interest bearing deposits 72,915,416 57,505,345
Savings 10,199,449 9,579,184
Time 126,666,838 119,415,019
------------- -------------
Total deposits 252,942,522 224,216,739
------------- -------------
Accounts payable and accruals 2,084,158 2,873,185
Other borrowed money 700,000 6,100,000
Long-term debt 1,500,000 2,770,809
------------- -------------
Total liabilities 257,226,680 235,960,733
------------- -------------
Minority interest in subsidiaries ------- 1,409,943
------------- -------------
Stockholders' equity:
Common stock 2,081,612 3,685,846
Capital surplus 3,059,825 3,004,201
Retained earnings 21,007,191 15,597,970
------------- -------------
Total stockholders' equity 26,148,628 22,288,017
------------- -------------
$283,375,308 $259,658,693
============= =============
</TABLE>
-3-<PAGE>
BANK CORPORATION OF GEORGIA AND SUBS
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1996 AND SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
September 30, 1996 September 30, 1995
Assets ------------------ ------------------
<S> <C> <C>
Cash & due from banks $10,941,425 $8,981,272
Interest bearing deposits ------- 5,000
Federal Funds sold 16,684,500 10,906,671
Investment securities:
Available for sale 42,582,714 41,513,060
Held to maturity 1,088,103 1,635,223
------------- -------------
Total investment securities 43,670,817 43,148,283
------------- -------------
Loans 196,083,065 176,491,862
Less: Unearned discount (809,686) (692,609)
Allowance for loan losses (2,928,729) (2,605,227)
------------- -------------
Loans, net 192,344,650 173,194,026
------------- -------------
Bank premises and equipment 9,885,762 7,795,674
Accrued interest receivable 1,738,443 2,158,873
Goodwill 949,586 400,327
Other assets 7,160,125 5,446,222
------------- -------------
$283,375,308 $252,036,348
============= =============
Liabilities and Stockholders' Equity
Deposits:
Demand $43,160,819 $32,472,976
Interest bearing deposits 72,915,416 54,880,257
Savings 10,199,449 9,907,338
Time 126,666,838 120,771,106
------------- -------------
Total deposits 252,942,522 218,031,677
------------- -------------
Accounts payable and accruals 2,084,158 2,672,286
Other borrowed money 700,000 6,370,809
Long-term debt 1,500,000 2,500,000
------------- -------------
Total liabilities 257,226,680 229,574,772
------------- -------------
Minority interest in subsidiaries ------- 1,270,925
------------- -------------
Stockholders' equity:
Common stock 2,081,612 3,529,846
Capital surplus 3,059,825 14,256,954
Retained earnings 21,007,191 3,403,851
------------- -------------
Total stockholders' equity 26,148,628 21,190,651
------------- -------------
$283,375,308 $252,036,348
============= =============
</TABLE>
-4-<PAGE>
BANK CORPORATION OF GEORGIA AND SUBS
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
Nine Months Ended Nine Months Ended
September 30, 1996 September 30, 1995
------------------ ------------------
<S> <C> <C>
Interest income:
Interest and fees on loans $15,289,812 $13,899,308
Interest on federal funds sold 717,907 459,946
Interest on investment securities 2,358,689 2,450,606
------------ -----------
Total interest income 18,366,408 16,809,860
------------ -----------
Interest expense:
Interest on NOW and money market accounts 1,615,208 1,432,096
Interest on savings and time deposits 5,607,880 5,213,971
Other borrowings 401,689 300,583
------------ -----------
Total interest expense 7,624,777 6,946,650
------------ -----------
Net interest income 10,741,631 9,863,210
Provision for possible loan losses 373,000 355,004
------------ -----------
Net interest income after provision for
possible loan losses 10,368,631 9,508,206
------------ -----------
Other operating income:
Service charge on deposit accounts 1,165,165 1,034,367
Securities gains (losses) (6,581) 1,477
Gain on sale of SBA loans 120,889 23,930
Other 764,129 738,918
------------ -----------
Total other operating income 2,043,602 1,798,692
------------ -----------
Other operating expenses:
Salaries and employee benefits 4,915,193 4,514,768
Occupancy 711,367 595,382
Equipment 608,562 594,063
Other operating expense 3,023,377 2,423,874
------------ -----------
Total operating expenses 9,258,499 8,128,087
------------ -----------
Earnings before income taxes and
minority interests 3,153,734 3,178,811
Income tax expense (benefit) 674,009 694,300
------------ -----------
Earnings before minority interests 2,479,725 2,484,511
Minority interests 46,913 262,466
------------ -----------
Net earnings $2,432,812 $2,222,045
============ ===========
</TABLE>
-5-<PAGE>
BANK CORPORATION OF GEORGIA AND SUBS
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996 AND SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended
September 30, 1996 September 30, 1995
------------------ ------------------
<S> <C> <C>
Interest income:
Interest and fees on loans $5,215,706 $4,726,962
Interest on federal funds sold 414,542 144,131
Interest on investment securities 792,983 815,409
---------- ----------
Total interest income 6,423,231 5,686,502
---------- ----------
Interest expense:
Interest on NOW and money market accounts 607,807 485,320
Interest on savings and time deposits 1,913,734 1,849,285
Other borrowings 342,675 110,612
---------- ----------
Total interest expense 2,864,216 2,445,217
---------- ----------
Net interest income 3,559,015 3,241,285
Provision for possible loan losses 111,000 110,002
---------- ----------
Net interest income after provision for
possible loan losses 3,448,015 3,131,283
---------- ----------
Other operating income:
Service charge on deposit accounts 393,652 363,055
Securities gains (losses) ------- -------
Gain on sale of SBA loans 115,150 23,930
Other 332,906 204,130
---------- ----------
Total other operating income 841,708 591,115
---------- ----------
Other operating expenses:
Salaries and employee benefits 1,755,606 1,583,864
Occupancy 287,911 219,840
Equipment 223,612 207,111
Other operating expense 797,278 757,687
---------- ----------
Total operating expenses 3,064,407 2,768,502
---------- ----------
Earnings before income taxes and
minority interests 1,225,316 953,896
Income tax expense (benefit) 458,700 222,100
---------- ----------
Earnings before minority interests 766,616 731,796
Minority interests ------- 103,490
---------- ----------
Net earnings $766,616 $628,306
========== ==========
</TABLE>
-6-<PAGE>
BANK CORPORATION OF GEORGIA AND SUBS
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
Nine Months Ended Nine Months Ended
September 30, 1996 September 30, 1995
------------------ ------------------
<S> <C> <C>
Cash flows from operating activities:
Net income $2,432,812 $2,222,045
Adjustments to reconcile net earnings
to net cash provided by operating activities:
Depreciation 528,042 468,356
Amortization and accretion, net (93,132) (134,466)
Minority interests in earnings (loss)
of subsidiary 46,913 262,466
Provision for loan and real estate
owned losses 373,000 355,004
Loss (gain) on sale of investment 6,581 (1,477)
Change in:
Other assets (808,936) (624,899)
Other liabilities (789,027) 677,342
---------- ----------
Net cash flows provided by operating activities 1,696,253 3,224,371
---------- ----------
Cash flows from investing activities:
Proceeds from maturities of investment
securities 3,138,586 18,278,191
Proceeds from sales of investment
securities 9,578,063 2,419,696
Purchase of investment securities (16,993,532) (19,957,167)
Net increase in loans (14,828,040) (16,564,885)
Purchases of premises and equipment (2,490,045) (845,043)
----------- -----------
Net cash flows used in investing activities (21,594,968) (16,669,208)
----------- -----------
Cash flows from financing activities:
Net increase in deposits 28,725,783 6,338,982
Repayment of other borrowings (13,200,000) (542,808)
Proceeds from other borrowings 6,800,000 1,642,808
Dividends paid ------- (191,161)
Purchase of treasury stock (109,819) -------
Proceeds from issuance of common stock 21,701 -------
---------- ----------
Net cash flows provided by financing activities 22,237,665 7,247,821
---------- ----------
Net increase in cash and cash equivalents 2,338,950 (6,197,016)
Cash and cash equivalents at beginning of period 25,286,975 26,089,959
---------- ----------
Cash and cash equivalents at end of period 27,625,925 19,892,943
========== ==========
</TABLE>
-7-<PAGE>
BANK CORPORATION OF GEORGIA AND SUBS
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996 AND SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended
September 30, 1996 September 30, 1995
------------------ ------------------
<S> <C> <C>
Cash flows from operating activities:
Net income $766,616 $628,306
Adjustments to reconcile net earnings
to net cash provided by operating
activities:
Depreciation 206,533 166,352
Amortization and accretion, net (27,322) 5,887
Minority interests in earnings (loss)
of subsidiary ------- 103,490
Provision for loan and real estate
owned losses 111,000 110,002
Loss (gain) on sale of investment ------- -----
Change in:
Other assets (496,863) (439,803)
Other liabilities 256,712 (412,785)
--------- ---------
Net cash flows provided by operating activities 816,676 161,449
--------- ---------
Cash flows from investing activities:
(8,769)
Proceeds from maturities of investment
securities 313,962 4,242,307
Proceeds from sales of investment
securities 4,005,000 427,800
Purchase of investment securities (3,895,407) -------
Net increase in loans (5,196,211) (5,063,323)
Purchases of premises and equipment (585,819) (36,900)
--------- ---------
Net cash flows provided by (used in)
investing activities (5,358,475) (430,116)
---------- ---------
Cash flows from financing activities:
Net increase in deposits 9,871,844 656,607
Repayment of other borrowings (7,000,000) (542,808)
Dividends paid ------- (189,485)
Purchase of treasury stock (44,952) -------
---------- ---------
Net cash flows provided by (used in) financing 2,826,892 (75,686)
---------- ---------
Net increase in cash and cash equivalents (1,714,907) (344,353)
Cash and cash equivalents at beginning of period 29,340,832 20,237,296
---------- ----------
Cash and cash equivalents at end of period 27,625,925 19,892,943
========== ==========
</TABLE>
-8-<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The financial statements included herein have been prepared by
Bank Corporation of Georgia (BCG), without audit, pursuant to
the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures
normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed
or omitted pursuant to such rules and regulations, although BCG
believes that the disclosures contained herein are adequate to
make the information presented not misleading. In the opinion of
management, the information furnished in the condensed
consolidated financial statements reflects all adjustments which
are ordinary in nature and necessary to present fairly BCG's
financial position, results of operations and changes in
financial position for such interim period. These financial
statements should be read in conjunction with BCG's financial
statements and the notes thereto as of December 31, 1995,
included in BCG's annual report on Form 10KSB for the year ended
December 31, 1995. Bank Corporation of Georgia is a bank holding
company whose business is primarily conducted by its wholly-owned
banking subsidiaries First South Bank, N. A. ("FSB"), Ameribank,
N. A. ("Ameribank"), and Effingham Bank & Trust ("Effingham").
The accounting principles followed by Bank Corporation of Georgia
and its subsidiaries, and the methods of applying those
principles conform with generally accepted accounting principles
and with general practices within the banking industry, where
applicable.
BCG's consolidated financial statements include the accounts of
the parent company and its subsidiaries. All significant
intercompany accounts and transactions have been eliminated in
consolidation.
Investment securities are classified and accounted for according
to Statement of Financial Accounting Standards ("SFAS") No. 115,
"Accounting for Certain Investments in Debt and Equity
Securities," adopted by the Company January 1, 1994.
Pursuant to SFAS 115 investments are classified and accounted for
as follows:
Debt securities that BCG has the positive intent and ability to
hold to maturity are classified as held-to-maturity and reported
at amortized cost.
Debt and equity securities that are bought and held principally
for the purpose of selling them in the near term are classified
as trading securities and reported at fair value, with unrealized
gains and losses included in earnings.
Debt and equity securities not classified as either
held-to-maturity securities or trading securities are classified
as available-for-sale securities and reported at fair value, with
unrealized gains and losses excluded from earnings and reported
in a separate component of shareholders' equity.
Prior to adoption of SFAS 115 all securities were carried at cost
adjusted for amortization of premiums and accretions of
discounts, as required by SFAS 12, "Accounting for Certain
Marketable Securities." For the three months ended and the nine
months ended September 30, 1996 substantially all of BCG's
securities were in the available-for-sale security portfolio.
-9-<PAGE>
Interest income on loans is recognized in a manner that results
in a level yield on the principal amount outstanding.
Statement of Financial Accounting Standards ("SFAS") No. 91
"Accounting for Nonrefundable Fees and Cost Associated with
Originating and Acquiring Loans and Initial Direct Costs of
Leases," issued in December, 1986, generally requires deferral
and amortization of loan fees and direct costs over the life of
the related loan.
Since January 1, 1987, BCG has been in compliance with SFAS No.
91. This statement has not had a material impact on the
Company's results of operations.
Effective January 1, 1993, BCG adopted Statement of Financial
Accounting Standards("SFAS") No. 109 in accounting for financial
income tax expense. Previously, BCG accounted for financial
income tax expense under the provisions of SFAS 96. Upon
application of SFAS 109, the future tax consequences of the
differences between the financial reporting and tax bases of the
Company's assets and liabilities resulted in a net deferred tax
asset. A valuation allowance was established for all of the net
deferred tax asset as of January 1, 1993, and accordingly, the
initial adoption of SFAS 109 had no effect on the 1993 financial
statements. At December 31, 1994, after considering the
operating results for 1994 and other matters, the Company reduced
the valuation allowance in order to adjust the net deferred tax
asset to an amount which management believes will more likely
than not be realized. The valuation allowance was reduced at
March 31, June 30, and September 30, 1995 by the tax expense that
would have been recorded on pretax income times the statutory
rate. Therefore, no tax expense was recorded for the first
quarter of 1995.
BCG's provision for loan losses is based upon management's
continuing review and evaluation of the loan portfolio and is
intended to create an allowance adequate to absorb losses on
loans outstanding as of the end of each reporting period. For
individually significant amounts, management's review consists of
evaluations of the financial strength of the borrowers and the
related collateral. The review of groups of loans, which are
individually insignificant, is based upon the delinquency status
of the group, lending policies and previous collections
experience by each category.
Premises and equipment are stated at cost less accumulated
depreciation and amortization. Depreciation is principally
computed on the straightline method over the estimated useful
lives of the assets.
Earnings per share are based upon weighted average outstanding
shares of common stock of 2,215,415 for the nine months ended
September 30, 1996, and 2,264,656 for the three months ended
September 30, 1996. There are statutory and regulatory
requirements applicable to payment of dividends by the Banks as
well as by BCG to its shareholders. A cash dividend of $.10 per
share was declared on August 28, 1996 to stockholders of record
on September 15, 1996, payable October 1, 1996.
-10-<PAGE>
Statement of Financial Accounting Standards ("SFAS") No. 95
"Statement of Cash Flows," issued in November, 1987, generally
requires a statement of cash flows as part of a full set of
financial statements for all business enterprises in place of a
statement of changes in financial position. For purposes of the
Statement of Cash Flows, BCG considers cash and cash equivalents
to include cash on hand and amounts due from banks and federal
funds sold.
MANAGEMENT'S DISCUSSION AND ANALYSIS
Earnings Summary
----------------
Net income for the first nine months of 1996 was $2,432,812, an
increase of $211,000 over the same period in 1995. The net
income per share for the nine months ended September 30, 1996 and
1995 was $1.10 and $1.07, respectively. Net income for the
quarter ended September 30, 1996 was $766,616, an increase of
$138,000 over the same period in 1995. The net income per share
for these two periods was $.34 and $.30, respectively. Net
interest income for the nine months ended September 30, 1996
increased $878,000 or 8.9 percent over the same period in 1995.
Net interest income for the quarter ended September 30, 1996
increased $317,000 or 9.8 percent over the same period in 1995.
These increases are primarily due to an increase in net interest
earning assets over the same period in 1995.
The net interest margin, as a percentage of earning assets,
decreased to 5.75 percent for the first nine months of 1996 as
compared to 5.93 percent for the same period in 1995. For the
quarter ended September 30, 1996, the net interest margin as a
percent of interest earning assets was 5.58 percent versus 5.66
percent for the same period in 1995. Non-interest income for the
nine month period ended September 30, 1996 increased $245,000 or
13.6 percent from 1995 to 1996. Non-interest income for the
quarter ended September 30, 1996 increased by $251,000 or
42.4 percent over the same period in 1995. These increases were
primarily the result of increases in gains on sales of SBA loans
and gains on sales of other loans.
Non-interest expense increased by $1,130,000 in the first nine
months of 1996 from the same period in 1995, an increase of 13.9
percent. Non-interest expense increased by $296,000 during the
quarter ended September 30, 1996, an increase of 10.7 percent
over the same period in 1995. These increases were primarily
due to an increase in salaries and employee benefits and merger
related expenses. During 1996, the Company acquired one branch
and opened two new branch offices, which resulted in an increase
in operating expenses over the same periods in 1995.
Additionally, during the second quarter of 1996, Effingham Bank &
Trust merged with BCG, and various expenses related to the
merger were recognized in that period.
-11-
<PAGE>
For the first nine months of 1996, return on equity was 13.1
percent on an annualized basis versus 14.6 percent for the same
period a year earlier. For the quarter ended September 30, 1996,
return on equity was 11.9 percent on an annualized basis versus
12.0 percent for the same period in 1995. The decline in return
on equity was related to several factors, among which were the
cessation of tax benefits related to net operating losses from
Ameribank and the costs associated with the 3 branch
acquisitions/openings mentioned above.
Risk Elements
-------------
The allowance for loan losses at September 30, 1996 was
$2,928,729 or 10.4 percent and 12.4 percent higher
than at December 31, 1995 and September 30, 1995, respectively.
At September 30, 1996, the allowance represented 1.49 percent of
total loans as compared with 1.46 percent at December 31, 1995
and 1.48 percent at September 30, 1995. At September 30, 1996
non-performing loans represented .19% of total loans as compared
with .56% at December 31, 1995 and .48% at September 30, 1995.
The allowance for loan losses as a percentage of non-performing
loans was 769% at September 30, 1996 as compared with 263% at
December 31, 1995 and 310% at September 30, 1995.
Capital Resources
-----------------
Shareholders' equity of $26,148,628 at September 30, 1996
increased 23.4 percent over the same period in 1995 resulting in
book value per outstanding common of share of $11.55 compared to
$10.55 at December 31, 1995 and $10.17 at September 30, 1995.
Capital for BCG is above regulatory requirements, with GAAP
equity of 9.23 percent of total assets at September 30, 1996.
The increases in shareholders' equity was primarily the result of
earnings and the issuance of approximately $1.8 million of BCG
stock to former Americorp stockholders in March, 1996.
Set forth below are pertinent capital ratios for the Company and
the Banks as of September 30, 1996:
<TABLE>
<CAPTION>
First Bank
South Corporation
Minimum Capital Requirement Bank Ameribank Effingham of Georgia
- --------------------------- ------ --------- --------- -----------
<S> <C> <C> <C> <C>
Tier 1 Capital to Risk-
based Assets: 4.00% <F1> 10.89% 10.30% 14.25% 10.91%
Total Capital to Risk-
based Assets: 8.00% <F2> 12.14% 11.53% 15.27% 12.14%
Leverage Ratio (Tier 1
Capital to Total Assets):
3.00% <F3> 8.48% 7.88% 8.87% 8.32%
<FN>
<F1> Minimum for "Well Capitalized" Banks = 8%
<F2> Minimum for "Well Capitalized" Banks = 10%
<F3> Minimum for "Well Capitalized" Banks = 6%
-12-<PAGE>
Liquidity and Interest Rate Sensitivity
---------------------------------------
Liquidity management involves the ability to meet cash flow requirements
of customers who may be depositors making withdrawals or borrowers
needing credit funding. BCG's cash flows are generated from interest and
fee income, as well as from loan repayments, deposit acquisition, and
maturities or sales of investments. BCG's liquidity needs are provided
for primarily through short-term securities, and the maturing of loans.
Federal funds sold represent the BCG's primary source of immediate
liquidity and were maintained at a level adequate to meet immediate
needs. Federal funds averaged $16,391,390 and $6,689,051 for the nine
months ended September 30, 1996 and 1995, respectively. Federal funds
averaged $17,080,015 and $9,193,219 for the three months ended September
30, 1996 and 1995, respectively. Maturities in BCG's loan and investment
portfolios are monitored regularly to avoid matching short-term deposits
with long-term loans and investments. Other assets and liabilities are
also monitored to provide the proper balance between liquidity, safety,
and profitability. This monitoring process must be continuous due to the
constant flow of cash which is inherent in a financial institution.
BCG actively manages its interest rate sensitive assets and liabilities
to reduce the impact of interest rate fluctuations. At September 30,
1996, BCG's rate sensitive liabilities exceeded rate sensitive assets due
within one year by $27.2 million.
BCG manages its liquidity through the volatility of its deposits and
patterns in loan demand, its current liquidity position, its ability to
control funding needs and potential sources of funds. As part of
managing liquidity, the Company monitors its loan to deposit ratio on a
daily basis. The target ratio is 85 percent. At September 30, 1996 the
ratio was 77.52 percent.
BCG experienced a net increase in cash and cash equivalents, its primary
source of liquidity, of $2,338,950 during the first nine months of 1996.
Operating activities provided $1,696,253 of funds. Adjustments to net
income for non-cash expenses of depreciation, amortization, and provision
for loan losses are included in this amount as a net provision of funds.
Investing activities used $21,594,968 of funds, primarily due to an
increase in loans and net purchases of investment securities during the
nine month period. Financing activities provided net cash of $22,237,665
due to an increase in deposit accounts during the nine months ended
September 30, 1996.
FASB STATEMENTS
---------------
The Financial Accounting Standards Board (the "FASB") recently issued
Statement No. 121, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed of." SFAS 121 establishes
accounting standards for the impairment of long-lived assets, certain
identifiable intangibles, and goodwill related to those assets to be held
and used and for long-lived assets and certain identifiable intangibles
to be disposed of SFAS 121 is effective for financial statements for
fiscal years beginning after December 15, 1995 and with early adoption
permitted. Presently, BCG is unable to determine the impact that
adoption of SFAS 121 will have on the consolidated financial statements,
but management anticipates that the impact will not be material.
-13-<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
-----------------
Neither Bank Corporation of Georgia nor its subsidiaries is a
party to any pending legal proceedings which Management believes
would have a material effect upon the operations or financial
condition of Bank Corporation of Georgia.
Item 2. Changes in Securities - 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 Not applicable.
Item 6. Exhibits and Reports on Form 8K Not applicable.
(a) Exhibits. Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K. Not applicable
-14-<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.
Date: November 13, 1996
-------------------
BANK CORPORATION OF GEORGIA
/s/ James R. McLemore, Jr.
James R. McLemore, Jr.
Treasurer
(Principal Financial Officer)
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