FORM 10-QSB
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 JUNE 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 0-17851
Bank Corporation of Georgia
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Georgia 58-1406233
- -------------------------------- ----------------------
(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 June 30, 1996: 2,272,574 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
June 30, 1996, December 31, 1995
and June 30, 1995 3-4
Consolidated Statements of Income
for the Six Months and Quarters Ended
June 30, 1996 and 1995 5-6
Consolidated Statements of Cash Flows
for the Six Months and Quarters Ended
June 30, 1996 and 1995 7-8
Notes to Consolidated Financial Statements 9-11
Item 2. Management's Discussion and Analysis
12-15
PART II OTHER INFORMATION 16
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
2
<PAGE>
BANK CORPORATION OF GEORGIA AND SUBS
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1996 AND DECEMBER 31, 1995
June 30, 1996 December 31, 1995
------------- -----------------
Assets
------
Cash & due from banks $11,865,303 $11,352,975
Interest bearing deposits ------- 4,000
Federal Funds sold 17,475,529 3,930,000
Investment securities:
Available for sale 43,938,154 39,292,562
Held to maturity 88,103 1,135,448
------------ ------------
Total investment securities 44,026,257 40,428,010
------------ ------------
Loans 190,928,773 181,473,993
Less: Unearned discount (834,028) (931,596)
Allowance for loan losses (2,835,306) (2,652,787)
------------ ------------
Loans, net 187,259,439 177,889,610
------------ ------------
Bank premises and equipment 9,506,476 7,923,759
Accrued interest receivable 2,153,881 2,090,198
Goodwill 957,269 394,439
Other assets 6,250,151 5,645,702
------------ ------------
$279,494,305 $259,658,693
============ ============
Liabilities and Stockholders' Equity
- ------------------------------------
Deposits:
Demand $38,650,552 $37,717,191
Interest bearing deposits 68,292,234 57,505,345
Savings 10,260,147 9,579,184
Time 125,867,745 119,415,019
------------ -----------
Total deposits 243,070,678 224,216,739
------------ -----------
Accounts payable and accruals 1,827,446 2,873,185
Other borrowed money 6,700,000 6,100,000
Long-term debt 2,500,000 2,770,809
------------ -----------
Total liabilities 254,098,124 235,960,733
------------ -----------
Minority interest in subsidiaries ------- 1,409,943
------------ -----------
Stockholders' equity:
Common stock 2,081,612 3,685,846
Capital surplus 14,428,007 3,004,201
Retained earnings 8,886,562 15,597,970
------------ -----------
Total stockholders' equity 25,396,181 22,288,017
------------ -----------
$279,494,305 $259,658,693
============ ============
3<PAGE>
BANK CORPORATION OF GEORGIA AND SUBS
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1996 AND JUNE 30, 1995
June 30, 1996 June 30, 1995
------------- -------------
Assets
------
Cash & due from banks $11,865,303 $12,752,529
Interest bearing deposits ------- 5,000
Federal Funds sold 17,475,529 7,479,767
Investment securities:
Available for sale 43,938,154 46,029,819
Held to maturity 88,103 1,883,422
------------ ------------
Total investment securities 44,026,257 47,913,241
------------ ------------
Loans 190,928,773 171,520,964
Less: Unearned discount (834,028) (763,946)
Allowance for loan loss (2,835,306) (2,516,313)
------------ ------------
Loans, net 187,259,439 168,240,705
------------ ------------
Bank premises and equipment 9,506,476 8,270,584
Accrued interest receivable 2,153,881 2,071,581
Goodwill 957,269 406,214
Other assets 6,250,151 4,694,220
------------ ------------
$279,494,305 $251,833,841
============ ============
Liabilities and Stockholders' Equity
- ------------------------------------
Deposits:
Demand $38,650,552 $32,574,348
Interest bearing deposits 68,292,234 55,271,648
Savings 10,260,147 10,651,910
Time 125,867,745 118,877,164
------------ ------------
Total deposits 243,070,678 217,375,070
------------ ------------
Accounts payable and accruals 1,827,446 3,085,071
Other borrowed money 6,700,000 6,913,617
Long-term debt 2,500,000 2,500,000
------------ ------------
Total liabilities 254,098,124 229,873,758
------------ ------------
Minority interest in subsidiaries ------- 1,176,204
------------ ------------
Stockholders' equity:
Common stock 2,081,612 3,529,846
Capital surplus 14,428,007 14,256,954
Retained earnings 8,886,562 2,997,079
------------ ------------
Total stockholders' equity 25,396,181 20,783,879
------------ ------------
$279,494,305 $251,833,841
============ ============
4<PAGE>
BANK CORPORATION OF GEORGIA AND SUBS
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND JUNE 30, 1995
<TABLE>
<CAPTION>
Six Months Ended Six Months Ended
June 30, 1996 June 30, 1995
---------------- ----------------
<S> <C> <C>
Interest income:
Interest and fees on loans $10,074,106 $9,172,346
Interest on federal funds sold 303,365 315,815
Interest on investment securities 1,565,706 1,635,197
------------ -----------
Total interest income 11,943,177 11,123,358
------------ -----------
Interest expense:
Interest on NOW and money market accounts 1,007,401 946,776
Interest on savings and time deposits 3,694,146 3,364,686
Other borrowings 59,014 189,971
------------ -----------
Total interest expense 4,760,561 4,501,433
------------ -----------
Net interest income 7,182,616 6,621,925
Provision for possible loan losses 262,000 245,002
------------ -----------
Net interest income after provision for
possible loan losses 6,920,616 6,376,923
------------ -----------
Other operating income:
Service charge on deposit accounts 771,513 671,312
Securities gains (losses) (6,581) 1,477
Gain on sale of SBA loans 5,739 ----
Other 431,223 534,788
------------ -----------
Total other operating income 1,201,894 1,207,577
------------ -----------
Other operating expenses:
Salaries and employee benefits 3,159,587 2,930,904
Occupancy 423,456 375,542
Equipment 384,950 386,952
Other operating expense 2,226,099 1,666,187
------------ -----------
Total operating expenses 6,194,092 5,359,585
------------ -----------
Earnings before income taxes and
minority interests 1,928,418 2,224,915
Income tax expense (benefit) 215,309 472,200
------------ -----------
Earnings before minority interests 1,713,109 1,752,715
Minority interests 46,913 158,976
------------ -----------
Net earnings $1,666,196 $1,593,739
============ ===========
</TABLE>
5<PAGE>
BANK CORPORATION OF GEORGIA AND SUBS
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE THREE MONTHS ENDED JUNE 30, 1996 AND JUNE 30, 1995
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended
June 30, 1996 June 30, 1995
---------------- ----------------
<S> <C> <C>
Interest income:
Interest and fees on loans $5,575,858 $4,750,688
Interest on federal funds sold 149,852 109,313
Interest on investment securities 850,138 800,757
------------ -----------
Total interest income 6,575,848 5,660,758
------------ -----------
Interest expense:
Interest on NOW and money market accounts 553,107 462,112
Interest on savings and time deposits 2,021,717 1,749,671
Other borrowings 10,651 79,657
------------ -----------
Total interest expense 2,585,475 2,291,440
------------ -----------
Net interest income 3,990,373 3,369,318
Provision for possible loan losses 151,000 115,002
------------ -----------
Net interest income after provision for
possible loan losses 3,839,373 3,254,316
------------ -----------
Other operating income:
Service charge on deposit accounts 462,083 363,782
Securities gains (losses) (6,581) (523)
Gain on sale of SBA loans ------- (100)
Other 163,809 331,833
------------ -----------
Total other operating income 619,311 694,992
------------ -----------
Other operating expenses:
Salaries and employee benefits 1,734,400 1,531,643
Occupancy 245,929 197,987
Equipment 242,060 172,157
Other operating expense 1,526,846 891,049
------------ -----------
Total operating expenses 3,749,235 2,792,836
------------ -----------
Earnings before income taxes and
minority interests 709,449 1,156,472
Income tax expense (benefit) (172,691) 266,900
------------ -----------
Earnings before minority interests 882,140 889,572
Minority interests ------- 75,803
------------ -----------
Net earnings $882,140 $813,769
============ ===========
</TABLE>
6<PAGE>
BANK CORPORATION OF GEORGIA AND SUBS
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND JUNE 30, 1995
<TABLE>
<CAPTION>
Six Months Ended Six Months Ended
June 30, 1996 June 30, 1995
---------------- ----------------
<S> <C> <C>
Cash flows from operating activities:
Net income $1,666,196 $1,593,739
Adjustments to reconcile net earnings
to net cash provided by operating
activities:
Depreciation 321,509 302,004
Amortization and accretion, net (65,810) (140,353)
Minority interests in earnings (loss)
of subsidiary 46,913 158,976
Provision for loan and real estate
owned losses 262,000 245,002
Loss (gain) on sale of investment
securities 6,581 (1,477)
Change in:
Other assets (312,073) (185,096)
Other liabilities (1,045,739) 1,090,127
------------ ------------
Net cash flows provided by operating activities 879,577 3,062,922
------------ ------------
Cash flows from investing activities:
Proceeds from maturities of investment
securities 2,824,624 14,035,884
Proceeds from sales of investment
securities 5,573,063 1,991,896
Purchase of investment securities (13,098,125) (19,957,167)
Net increase in loans (9,631,829) (11,501,562)
Purchases of premises and equipment (1,904,226) (808,143)
----------- -----------
Net cash flows used in investing activities (16,236,493) (16,239,092)
----------- -----------
Cash flows from financing activities:
Net increase in deposits 18,853,939 5,682,375
Repayment of other borrowings (6,200,000) ------
Proceeds from other borrowings 6,800,000 1,642,808
Dividends paid ------- (1,676)
Purchase of treasury stock (64,867) ------
Proceeds from issuance of common
stock 21,701 ------
----------- ----------
Net cash flows provided by financing activities 19,410,773 7,323,507
----------- ----------
Net increase (decrease) in cash and cash
equivalents 4,053,857 (5,852,663)
Cash and cash equivalents at beginning of period 25,286,975 26,089,959
----------- ----------
Cash and cash equivalents at end of period 29,340,832 20,237,296
=========== ==========
</TABLE>
7<PAGE>
BANK CORPORATION OF GEORGIA AND SUBS
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED JUNE 30, 1996 AND JUNE 30, 1995
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended
June 30, 1996 June 30, 1995
------------------ ------------------
<S> <C> <C>
Cash flows from operating activities:
Net income $882,140 $813,769
Adjustments to reconcile net earnings
to net cash provided by operating
activities:
Depreciation 157,850 133,416
Amortization and accretion, net (29,033) (116,352)
Minority interests in earnings (loss)
of subsidiary ------- 75,803
Provision for loan and real estate
owned losses 151,000 115,002
Loss (gain) on sale of investment
securities 6,581 523
Change in:
Other assets (444,081) 401,506
Other liabilities (443,664) 1,035,370
----------- -----------
Net cash flows provided by operating activities 280,793 2,459,037
----------- -----------
Cash flows from investing activities:
Proceeds from maturities of investment
securities 500,000 4,004,000
Proceeds from sales of investment
securities 5,573,063 1,991,896
Purchase of investment securities (978,906) (5,119,458)
Net increase in loans (2,602,502) (4,335,547)
Purchases of premises and equipment (935,103) (618,740)
----------- -----------
Net cash flows provided by (used in)
investing activities 1,556,552 (4,077,849)
----------- -----------
Cash flows from financing activities:
Net increase in deposits 7,062,186 4,105,003
Repayment of other borrowings (6,100,000) -------
Proceeds from other borrowings 6,800,000 1,642,808
Dividends paid ------- -------
Purchase of treasury stock (64,867) -------
Proceeds from issuance of common
stock ------- -------
----------- -----------
Net cash flows provided by financing activities 7,697,319 5,747,811
----------- -----------
Net increase in cash and cash equivalents 9,534,664 4,128,999
Cash and cash equivalents at beginning of period 19,806,168 16,108,297
----------- -----------
Cash and cash equivalents at end of period 29,340,832 20,237,296
=========== ===========
</TABLE>
8<PAGE>
BANK CORPORATION OF GEORGIA
NOTES TO CONSOLIDATED FINANACIAL 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 10-KSB 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"), First South Bank of
Coweta County, N. A. ("Coweta"), First South Bank of Middle
Georgia, N. A. ("Middle Georgia"), 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.
9
<PAGE>
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 six
months ended June 30, 1996 substantially all of BCG's securities
were in the available-for-sale security portfolio.
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 Non-refundable 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.
10
<PAGE>
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 straight-line method over the estimated useful
lives of the assets.
Earnings per share are based upon weighted average outstanding
shares of common stock of 2,195,473 for the six months ended June
30, 1996, and 2,272,574 for the three months ended June 30, 1996.
There are statutory and regulatory requirements applicable to
payment of dividends by the Banks as well as by BCG to its
shareholders. No cash dividends were declared during the three
month period ended June 30, 1996 or the six month period ended
June 30, 1996.
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.
11<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
Earnings Summary
----------------
Net income for the first six months of 1996 was $1,666,196, an
increase of $72,457 over the same period in 1995. The net income
per share for both periods was $.76. Net income for the quarter
ended June 30, 1996 was $882,140, an increase of $68,371 over the
same period in 1995. The net income per share for these two
periods was $.39 and $.38, respectively.
Net interest income for the six months ended June 30, 1996
increased $560,691 or 8.47 percent over the same period in 1995.
Net interest income for the quarter ended June 30, 1996 increased
$621,055 or 18.43 percent over the same period in 1995. These
increases are primarily due to increases in net interest
earning assets and recognition of loan fees over the same period
in 1995.
The net interest margin, as a percentage of earning assets,
decreased to 5.83 percent for the first six months of 1996 as
compared to 6.02 percent for the same period in 1995. For the
quarter ended June 30, 1996, the net interest margin as a percent
of interest earning assets was 6.37 percent versus 5.97 percent
for the same period in 1995.
Non-interest income for the six month period ended June 30, 1996
decreased approximately $6,000 from 1995 to 1996. Non-interest
income for the quarter ended June 30, 1996 decreased by $76,000
11 percent over the same period in 1995. The decrease was
primarily the result of a decline in loan sale gains, offset
by increases in service charges on deposit accounts.
Non-interest expense increased by $834,507 in the first six
months of 1996 from the same period in 1995, an increase of 15.6
percent. Non-interest expense increased by $956,399 during the
quarter ended June 30, 1996, an increase of 34.2 percent over
the same period in 1995. These increases were primarily due to
an increase in salaries and employee benefits over the same
periods in 1995 as well as the recognition of approximately
$500,000 of merger related expenses associated with the
acquisition of Effingham Bank & Trust in the second quarter
of 1996. The acquisition was accounted for as a pooling-of-
interests.
12
<PAGE>
For the first six months of 1996, return on equity was 13.66
percent on an annualized basis versus 16.32 percent for the same
period a year earlier. For the quarter ended June 30, 1996,
return on equity was 14.02 percent on an annualized basis versus
16.15 percent for the same period in 1995. These decreases in
return on equity were primarily due to increases in tax expense
caused by the cessation of tax benefits related to net operating losses
from Ameribank incurred in prior years.
Risk Elements
-------------
The allowance for loan losses at June 30, 1996 was $2,835,306 or
6.88 percent and 12.68 percent higher than at December 31, 1995
and June 30, 1995, respectively. At June 30, 1996, the allowance
represented 1.49 percent of total loans as compared with 1.46
percent at December 31, 1995 and 1.47 percent at June 30, 1995.
At June 30, 1996 non-performing loans represented .53% of total
loans as compared with .56% at December 31, 1995 and .21% at June
30, 1995. The allowance for loan losses as a percentage of non-
performing loans was 278% at June 30, 1996 as compared with 263%
at December 31, 1995 and 684% at June 30, 1995.
Capital Resources
-----------------
Shareholders' equity of $25,396,181 at June 30, 1996 increased
22.19 percent over the same period in 1995 resulting in book
value per outstanding common of share of $11.18 compared to
$10.54 at December 31, 1995 and $9.96 at June 30, 1995. Capital
for BCG is above regulatory requirements, with GAAP equity of
9.09 percent of total assets at June 30, 1996. The increases in
shareholders' equity was primarily the result of earnings and
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 June 30, 1996:
<TABLE>
<CAPTION>
Middle
Minimum Capital Requirement FSB Coweta Georgia Ameribank Effingham BCG
- --------------------------- --- ------ ------- --------- --------- ---
<S> <C> <C> <C> <C> <C> <C>
Tier 1 Capital to Risk-based 10.52% 13.09% 12.28% 11.01% 12.25% 11.06%
Assets: 4.00% <F1>
Total Capital to Risk-based 11.77% 14.14% 13.12% 12.26% 13.31% 12.25%
Assets: 8.00% <F2>
Leverage Ratio (Tier 1 Capital 7.04% 10.98% 10.43% 7.99% 8.23% 8.28%
to Total Assets): 3.00% <F3>
<FN>
<F1> Minimum for "Well Capitalized" Banks = 6%
<F2> Minimum for "Well Capitalized" Banks = 10%
<F3> Minimum for "Well Capitalized" Banks = 5%
</FN>
</TABLE>
13
<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 $13,940,989 and
$7,044,725 for the six months ended June 30, 1996 and 1995,
respectively. Federal funds averaged $14,827,372 and $8,692,167
for the three months ended June 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 June 30, 1996, BCG's rate sensitive liabilities exceeded rate
sensitive assets due within one year by $ 17.9 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 June 30, 1996 the ratio was 78.55 percent.
BCG experienced a net increase in cash and cash equivalents, its
primary source of liquidity, of $4,053,857 during the first six
months of 1996. Operating activities provided $879,577 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
$16,236,493 of funds, primarily due to an increase in loans and
purchases of investment securities during the six month period.
Financing activities provided net cash of $19,410,773 due to an
increase in deposit accounts during the six months ended June 30,
1996.
14<PAGE>
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.
15
<PAGE>
BANK CORPORATION OF GEORGIA
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 8-K
--------------------------------
(a) Exhibits. Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K:
Form 8-K reporting date - June 14, 1996
Item Reported - Item 5, Other Events
Item 7(c)(i), letter from Bank Corporation of
Georgia to former shareholders of
Effingham Bank & Trust dated
June 14, 1994
16
<PAGE>
BANK CORPORATION OF GEORGIA
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: August 14, 1996
----------------------------
BANK CORPORATION OF GEORGIA
/s/ James R. McLemore, Jr.
James R. McLemore, Jr.
Treasurer
(Principal Financial Officer and
Principal Accounting Officer)
17
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