<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C 20549
[X] QUARTERLY REPORT UNDER SECTION 13 AND 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended March 31, 1996
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT 1934
For the transition period from _______ to _______
Commission File Number: 0-23890
-------
FIRST STATE CORPORATION
-----------------------
(Exact name of registrant as specified in its charter)
Georgia 58-1439347
- - ------------------------------- --------------------
(State or other jurisdiction of (I.R.S Employer
incorporation or organization) Identification No.)
333 W. Broad Avenue, Albany, Georgia 31703
-------------------------------------------
(Address of principal executive offices)
(912) 432-8000
--------------
(Registrant's telephone number, including area code)
Not Applicable
--------------
(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes __X_____ No
APPLICABLE-ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of March 31, 1996.
3,048,054 SHARES
<PAGE> 2
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
The following financial statements are provided for First State Corporation and
subsidiaries:
A. Consolidated Balance Sheets as of December 31, 1995 and March 31,
1996.
B. Consolidated Statements of Income for the three months ended March
31, 1996 and 1995.
C. Consolidated Statements of Cash Flows for the three months ended
March 31, 1996 and 1995.
The consolidated statements furnished have not been examined by independent
certified public accountants, but, in the opinion of management, reflect all
adjustments (consisting only of normal recurring accruals) necessary for a fair
presentation of the results of operations. Results of operations for the nine
months are not necessarily indicative of the results of operations for the
entire year.
<PAGE> 3
FIRST STATE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1996 AND DECEMBER 31, 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
<S> <C> <C>
ASSETS
Cash and due from banks 21,218 26,130
Interest-bearing deposits in banks 8,136 12,912
Investment securities - held to maturity 43,231 42,388
Investment securities - available for sale 39,396 29,171
Federal funds sold 4,089 10,558
Loans 303,391 299,161
Less allowance for loan losses 5,142 5,037
------- -------
Loans, net 298,249 294,124
------- -------
Premises and equipment, net 10,985 10,905
Other assets 10,548 10,671
------- -------
435,852 436,859
======= =======
LIABILITIES & STOCKHOLDERS' EQUITY
Deposits
Noninterest bearing demand 79,996 85,362
Interest-bearing demand 100,352 101,615
Savings 26,306 24,850
Time, $100,000 and over 38,028 37,696
Other time 137,232 134,803
------- -------
Total deposits 381,914 384,326
Federal funds purchased and securities
sold under repurchase agreements 4,013 3,474
Debenture bonds and notes payable 0 885
Other liabilities 5,538 5,026
------- -------
Total liabilities 391,465 393,711
Stockholders' Equity
7% cumulative nonvoting preferred
stock, par value $50; 100,000 shares
authorized; 25,929 shares issued
Common stock, par value $1; 10,000,000
shares authorized:3,048,054 and 4,568,690
shares issued 3,048 4,569
Additional paid-in capital 4,416 16,273
Retained earnings 36,847 35,513
Net unrealized gains on available
for sale securities (net of taxes) 76 171
------- -------
44,387 56,526
Less cost of common treasury stock
1,520,856 shares 0 13,378
------- -------
Total stockholders' equity 44,387 43,148
------- -------
435,852 436,859
======= =======
</TABLE>
<PAGE> 4
FIRST STATE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE PERIODS ENDED MARCH 31, 1996 AND 1995
(DOLLARS IN THOUSANDS, EXCEPT EARNINGS PER SHARE)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1996 1995
<S> <C> <C>
INTEREST INCOME
Interest and fees on loans $7,285 $6,681
Interest on investment securities
Taxable 847 1,176
Nontaxable 324 316
Interest on federal funds sold 144 20
Interest on deposits in banks 142 49
------ ------
$8,742 $8,242
------ ------
INTEREST EXPENSE
Interest on deposits $3,325 $2,624
Interest on federal funds purchased
and securities sold under repurchase
agreements 48 47
Interest on other borrowings 6 15
------ ------
$3,379 $2,686
------ ------
Net interest income 5,363 5,556
Provision for loan losses 144 189
Net interest income after
provision for loan losses $5,219 $5,367
------ ------
OTHER INCOME
Service charges on deposit accounts 705 644
Other loan income 675 562
Trust department income 300 265
Gain/loss on security transactions
Other 111 206
------ ------
$1,791 $1,677
------ ------
OTHER EXPENSE
Salaries and employee benefits $2,454 $2,361
Equipment and occupancy, net 750 759
Data processing expense 177 164
FDIC Insurance 7 198
Stationery and supplies 106 102
Amortization of intangible assets 59 59
Legal fees 63 52
Telephone and telegraph 90 94
Other operating expenses 780 587
------ ------
$4,486 $4,376
------ ------
Income before taxes 2,524 2,668
APPLICABLE INCOME TAXES 763 764
------ ------
NET INCOME $1,761 $1,904
====== ======
Per share of common stock
Net Income 0.58 0.62
</TABLE>
<PAGE> 5
FIRST STATE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
MARCH 31, 1996 AND MARCH 31, 1995
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income 1,761 1,904
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 382 368
Provision for loan losses 144 188
Provision for deferred taxes (benefits) (9) (20)
Increase in taxes payable 809 812
(Decrease) in interest payable (5) (66)
(Increase) decrease in interest receivable 245 (194)
Other prepaids, deferrals and accruals, net 75 (225)
------- ------
Total adjustments 1,641 863
------- ------
Net cash provided by operatiing activities 3,402 2,767
------- ------
CASH FLOWS FROM INVESTING ACTIVITIES
Change in interest bearing deposits
with banks 4,776 993
Proceeds from maturities of securities held to maturity 3,008 1,700
Proceeds from maturities of securities held for sale 989 1,963
Purchase of securities held to maturity (4,411)
Purchase of securities held for sale (11,287) (976)
Decrease in federal funds sold 6,469 2,284
Decrease in loans (4,269) (9,246)
Purchase of premises and equipment (403) (598)
------- ------
Net cash provided by (used in) investing activities (5,128) (3,880)
------- ------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (decrease) in deposits (2,412) (4,021)
(Decrease) in federal funds purchased and
securities sold under repurchase agreements 538 3,150
Principal payments on debt (885) (1,265)
Dividends paid (427) (305)
------- ------
Net cash provided by (used in) financing activities (3,186) (2,441)
------- ------
Net increase (decrease) in cash and due from banks (4,912) (3,554)
Cash and due from banks at beginning of period 26,130 29,081
------- ------
Cash and due from banks at end of period 21,218 25,527
======= ======
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest on deposits and other borrowings 3,383 2,752
</TABLE>
<PAGE> 6
FIRST STATE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- - --------------------------------------------------------------------------------
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF FINANCIAL STATEMENT PRESENTATION
First State Corporation is a multi-bank holding company whose
business is presently conducted by its wholly-owned
subsidiaries, First State Bank and Trust Company of Albany,
Georgia and subsidiary and First State Bank and Trust Company of
Cordele, Georgia. The Company provides a full range of banking
services to individual and corporate customers in its primary
market area of southwest Georgia. The Company and its
subsidiaries are subject to the regulations of certain Federal
and state agencies and are periodically examined by certain
regulatory authorities.
The accounting and reporting policies of the Company conform to
generally accepted accounting principles and general practices
within the financial services industry. In preparing the
financial statements, management is required to make estimates
and assumptions that affect the reported amounts of assets and
liabilities as of the date of the balance sheet and revenues and
expenses for the period. Actual results could differ from those
estimates.
The consolidated financial statements include the accounts of
the Company and its subsidiaries. Significant intercompany
transactions and accounts are eliminated in consolidation.
Assets held by the Banks in a fiduciary or agency capacity are
not assets of the Banks and are not included in the financial
statements.
The principles which significantly affect the determination of
financial position, results of operations and cash flows are
summarized below.
<PAGE> 7
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- - --------------------------------------------------------------------------------
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
CASH AND CASH EQUIVALENTS
For purposes of reporting cash flows, cash and due from banks
includes cash on hand and amounts due from banks (including cash
items in process of clearing). Cash flows from loans originated
by the Company, deposits, interest-bearing deposits and Federal
funds purchased and sold are reported net.
The Company maintains amounts due from banks which, at times,
may exceed Federally insured limits. The Company has not
experienced any losses in such accounts.
INVESTMENTS IN SECURITIES
The Company's investments in securities are classified and
accounted for as follows:
SECURITIES AVAILABLE FOR SALE
Securities classified as available for sale are those debt
securities that the Company intends to hold for an indefinite
period of time, but not necessarily to maturity. Any decision
to sell a security classified as available for sale would be
based on various factors, including significant movements in
interest rates, changes in the maturity mix of the Company's
assets and liabilities, liquidity needs, regulatory capital
considerations and other similar factors. Securities
available for sale are carried at fair value. Unrealized
gains or losses are reported as increases or decreases in
stockholders' equity, net of the related deferred tax effect.
Realized gains or losses, determined on the basis of the cost
of specific securities sold, are included in earnings.
<PAGE> 8
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- - --------------------------------------------------------------------------------
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
SECURITIES HELD TO MATURITY
Securities classified as held to maturity are those debt
securities the Company has both the intent and ability to hold
to maturity regardless of changes in market conditions,
liquidity needs or changes in general economic conditions.
These securities are carried at cost adjusted for amortization
of premium and accretion of discount, computed by the interest
method over their contractual lives. The sale of a security
within three months or its maturity date or after collection
of at least 85 percent of the principal outstanding at the
time the security was acquired is considered a maturity for
purposes of classification and disclosure.
A decline in the fair value below cost of any available for sale
or held to maturity security that is deemed other than temporary
is charged to earnings resulting in the establishment of a new
cost basis for the security.
<PAGE> 9
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- - --------------------------------------------------------------------------------
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
LOANS AND INTEREST INCOME
Loans are stated at principal amounts outstanding less unearned
income and the allowance for loan losses. Interest income on
loans is credited to income based on the principal amount
outstanding at the respective rate of interest except for add on
interest on certain instalment loans for which interest is
recognized on the sum-of-the-months method.
Accrual of interest income is discontinued on loans when, in the
opinion of management, collection of such interest income
becomes doubtful. When a loan is placed on nonaccrual status,
all interest previously accrued but not collected is reversed
against current interest income. Accrual of interest on such
loans is resumed when, in management's judgment, the collection
of interest and principal becomes probable.
Fees on loans and costs incurred in origination of loans are
recognized at the time the loan is placed on the books. Because
loan fees are not significant and the majority of loans have
maturities of one year or less, the results on operations are
not materially different than the results which would be
obtained by accounting for loan fees and costs in accordance
with generally accepted accounting principles.
The allowance for loan losses is established through a provision
for loan losses charged to expense. Loans are charged against
the allowance for loan losses when management believes that
collectibility of the principal is unlikely. The allowance is
an amount that management believes will be adequate to absorb
estimated losses on existing loans that may become
uncollectible, based on evaluation of the collectibility of
loans and prior loss experience. This evaluation also takes
into consideration such factors as changes in the nature and
volume
<PAGE> 10
of the loan portfolio, overall portfolio quality, review of
specific problem loans and current economic conditions that may
affect the borrower's ability to pay. Certain estimates are
susceptible to change in the near term. Such estimates include
the creditworthiness of significant borrowers and the collateral
value of delinquent loans. While management uses the best
information available to make its evaluation, future adjustments
to the allowance may be necessary if there are significant
changes in economic conditions. In addition, regulatory
agencies, as an integral part of their examination process,
periodically review the Company's allowance for loan losses, and
may require the Company to record additions to the allowance
based on their judgment about information available to them at
the time of their examinations.
<PAGE> 11
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- - --------------------------------------------------------------------------------
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
LOANS AND INTEREST INCOME (CONTINUED)
Impaired loans are measured based on the present value of
expected future cash flows discounted at the loan's effective
interest rate or, as a practical expedient, at the loan's
observable market price or the fair value of the collateral if
the loan is collateral dependent. A loan is impaired when it is
probable the creditor will be unable to collect all contractual
principal and interest payments due in accordance with the terms
of the loan agreement. Accrual of interest on an impaired loan
is discontinued when management believes, after considering
collection efforts and other factors, that the borrower's
financial condition is such that collection of interest is
doubtful. Cash collections on impaired loans are credited to
the loans receivable balance, and no interest income is
recognized on those loans until the principal balance has been
collected.
PREMISES AND EQUIPMENT
Premises and equipment are stated at cost less accumulated
depreciation, computed principally on the straight-line method
over the following estimated useful lives:
<TABLE>
<CAPTION>
YEARS
-----
<S> <C>
Buildings 10-40
Equipment 5-20
Leasehold improvements 7-15
</TABLE>
<PAGE> 12
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- - --------------------------------------------------------------------------------
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
OTHER REAL ESTATE OWNED
Other real estate owned (OREO) represents properties acquired
through foreclosure or other proceedings. OREO is held for sale
and is recorded at the lower of the recorded amount of the loan
or fair value of the properties less estimated costs of
disposal. Any write-down to fair value at the time of transfer
to OREO is charged to the allowance for loan losses. Property
is evaluated regularly to ensure the recorded amount is
supported by its current fair value, and valuation allowances to
reduce the carrying amount to fair value less estimated costs to
dispose are recorded as necessary. Subsequent decreases in fair
value and increases in fair value, up to the value established
at foreclosure, are recognized as charges or credits to
noninterest expense. OREO is reported net of allowance for
losses in the Company's financial statements.
INTANGIBLE ASSETS
Intangible assets, arising from excess of purchase price over
net assets acquired of purchased banks, are being amortized on
the straight-line method over various periods not exceeding 25
years.
INCOME TAXES
The Company and its subsidiaries file a consolidated income tax
return. Each subsidiary provides for income taxes based on its
contribution to income taxes (benefits) of the consolidated
group.
Provisions for income taxes are based on amounts reported in the
consolidated statements of income after exclusion of nontaxable
income such as interest on state and municipal securities and
include deferred taxes on temporary differences in the
recognition of income and expense for tax and financial
statement purposes.
<PAGE> 13
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- - --------------------------------------------------------------------------------
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INCOME TAXES (CONTINUED)
Deferred taxes are provided on a liability method whereby
deferred tax assets are recognized for deductible temporary
differences, and operating loss and tax credit carryforwards
and deferred tax liabilities are recognized for taxable
temporary differences. Temporary differences are the
differences between the reported amounts of assets and
liabilities and their tax bases. Deferred tax assets are
reduced by a valuation allowance when, in the opinion of
management, it is more likely than not that some portion or
all of the deferred tax assets will not be realized. Deferred
tax assets and liabilities are adjusted for the effect of
changes in tax laws on the date of enactment.
<PAGE> 14
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- - --------------------------------------------------------------------------------
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
PROFIT-SHARING PLAN
Profit-sharing plan costs are funded as accrued and are based
on a percentage of individual employee's salary, not to exceed
the amount that can be deducted for Federal income tax
purposes.
PENSION PLAN
The Company has a defined benefit pension plan covering
substantially all employees. The Company's policy is to fund
accrued pension costs.
EARNINGS PER SHARE
Earnings per share are calculated on the basis of the weighted
average number of shares outstanding.
TRUST DEPARTMENT
Trust income is included in the accompanying consolidated
financial statements on the cash basis in accordance with
established industry practices. Reporting of such fees on the
accrual basis would have no material effect on reported
income. Assets of the Trust Department are not included in
these financial statements because they are not assets of the
Company.
<PAGE> 15
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- - --------------------------------------------------------------------------------
NOTE 2. CAPITAL REQUIREMENTS
The minimum capital requirements "to be well capitalized" and
the actual capital ratios for the Company at March 31, 1996, and
December 31, 1995, are as follows:
--Actual Ratio--
<TABLE>
<CAPTION>
March December Regulatory
31, 1996 31, 1995 Minimum
<S> <C> <C> <C>
Tier 1 Leverage Ratio 9.91% 9.70% 5.00%
Tier 1 Risk Based Capital Ratio 15.81% 14.38% 6.00%
Total Risk Based Capital Ratio 17.07% 15.63% 10.00%
</TABLE>
<PAGE> 16
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Three months ended March 31, 1996 compared to the three months ended March 31,
1995
RESULTS OF OPERATIONS
INTEREST INCOME
Interest income during the three months ended March 31, 1996 was $8,742,000 as
compared to $8,242,000 earned during the three months ended March 31, 1995.
This is an increase of $500,000 or 6.07%. Interest and fees on net loans
increased by $604,000 or 9.04% primarily due to an increase in loans
outstanding from $271,992,000 to $298,249,000. The higher loan volume offset
by with a slightly lower yield on loans provided the increase of $604,000.
Interest income on taxable securities decreased by $329,000 or 27.98%. This
decrease is primarily due to a shift of earning assets from investment
securities to the loan portfolio. Interest income on federal funds sold
increased by $124,000 and interest earned on deposits in banks increased by
$93,000 during this same comparative period.
INTEREST EXPENSE
Interest expense for the three months ended March 31, 1996 was $3,379,000 as
compared to $2,686,000 for the three months ended March 31, 1995. This
increase of $693,000 or 25.8% is a result of a slightly higher yield paid on
interest paying liabilities and an overall increase in interest bearing
deposits of $23,665,000 from March 31, 1995 to March 31, 1996. The largest
increase in interest bearing deposits came in time deposits $100,000 and over
which increased from $22,973,000 to $38,028,000 as of March 31, 1996.
PROVISION FOR LOAN LOSSES
The provision for losses on loans for the three months ended March 31, 1996 was
$144,000 as compared to $189,000 for the three months ended March 31, 1995. The
performance of the loan portfolio allows the $45,000 smaller provision while
maintaining the allowance for loan losses at levels deemed acceptable by
management.
<PAGE> 17
OTHER INCOME
For the three months ended March 31, 1996, other income was $1,791,000 as
compared to $1,677,000 for the three months ended March 31, 1995. This
increase of $114,000 or 6.80% resulted from an increase of $61,000 in service
charges on deposit accounts, $113,000 increase in other loan income, $35,000
increase in trust department income and a decline of $95,000 in other income.
The decrease of $95,000 in other income is attributable to a nonrecurring
refund received in 1995 representing rebates from insurance companies for the
sale of their product.
OTHER EXPENSES
Other noninterest expenses were $4,486,000 for the three months ended March 31,
1996, as compared to $4,376,000 for the three months ended March 31, 1995.
This represents an increase of $110,000 or 2.51%. Salaries and benefits for
the three months ended March 31, 1996, were $2,454,000 as compared to
$2,361,000 for the three months ended March 31, 1995. This is an increase
of $93,000 or 3.94%. FDIC insurance for the three months ended March 31, 1996,
was $7,000 compared to $198,000 for the three months ended March 31, 1995, due
to the roll back of insurance premiums payable to FDIC.
Other operating expenses were $780,000 for the three months ended March
31,1996, as compared to $587,000 for the three months ended March 31, 1995.
This $193,000 or 32.88% increase is primarily attributable to an increase of
$81,000 for services used for consultants services used in the revamping of
trust department procedures and policies. Consultant services purchased for
the trust department should be completed during the second quarter of 1996.
NET INCOME
Net income for the first quarter of 1996 was $1,761,000 as compared to
$1,904,000 during the first quarter of 1995. Earnings per share were $0.58
compared to $0.62. This decrease in net income was attributable primarily to
a decrease in net interest income resulting from a slight decrease in net
interest margin as anticipated.
FINANCIAL CONDITION
Total assets at March 31, 1996 were $435,852,000 as compared to $436,859,000 at
December 31, 1995 representing a decrease of $1,007,000. Net loans increased
by $4,125,000 during the first quarter of 1996.
<PAGE> 18
On March 31, 1996, total deposits were $381,914,000 as compared to $384,326,000
at December 31, 1995. This decrease of $2,412,000 was in noninterest bearing
demand deposits. The Company showed slight increases in savings, time deposits
$100,000 & over, and other time deposits during the first quarter of 1996.
First State Corporation had no debt as of March 31, 1996.
CAPITAL RESOURCES
On March 31, 1996, total stockholders' equity was $44,387,000 as compared to
$43,148,000 on December 31, 1995. On March 31, 1996, total capital represented
10.18% of total assets. At March 31, 1996, the Company had a tier one leverage
ratio of 9.91%, a tier one risk based capital ratio of 15.81%, and total
risk base ratio of 17.07%.
During the first quarter of 1996, the Company elected to retire the treasury
stock held as of December 31, 1995.
The Company regularly evaluates business combination opportunities and conducts
due diligence activities in connection with possible business combinations. As
a result, business combination discussions and, in some cases, negotiations
take place, and future business combinations involving cash, debt or equity
securities may be expected. Any future business combination or series of
business combinations that the Company might undertake may be material, in
terms of assets acquired or liabilities assumed, to the Company's financial
condition.
LIQUIDITY
Management of the Company's liquidity position involves the understanding and
matching of the customer's cash flow needs. This includes the depositor's
desire to withdraw funds, as well as the borrower's needing assurance of the
ability to fund their credit needs. The Company meets needs primarily through
the management of its short-term investments. Another source of liquidity is
the repayment of installment and single payment loans. Should the need arise,
the Company also maintains relationship's with several correspondent banks that
can provide funds on short notice.
<PAGE> 19
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings
There are no material pending proceedings to which the Company is a party
or to which any of its properties are subject; nor are there material
proceedings known to the Company to be contemplated by any governmental
authority; nor are there material proceedings known to the Company, pending or
contemplated, in which any associate of the foregoing, is a party or has an
interest adverse to the Company.
First State Bank & Trust Company, Albany, Georgia ("FSB Albany") is
involved in an appeal of litigation filed by shareholder and former trust
beneficiary, Frederick D. Ledbetter, in which Mr. Ledbetter alleges that FSB
Albany breached its fiduciary duties to him in connection with a revocable
trust that he established with FSB Albany. After the United States District
Court for the Middle District of Georgia granted summary judgement in favor of
FSB Albany on all counts and dismissed Mr. Ledbetter's complaint, Mr. Ledbetter
filed a notice of appeal to the United States Court of Appeals for the Eleventh
Circuit. Oral argument of the appeal is scheduled for November 29, 1995.
Reference is made to the Company's Form 10-K for the year ended December
31, 1994 for additional information concerning this litigation.
ITEM 2. Changes in Securities.
None
ITEM 3. Defaults Upon Senior Securities.
None
ITEM 4. Submission of Matters to a Vote of Security Holders.
None
ITEM 5. Other Information.
On March 19, First State Bank and Trust Company signed a
definitive agreement with First Union National Bank of Georgia to
purchase the two existing First Union branches located in Dougherty
County, Albany, Georgia. The transaction involves the purchase of
approximately 90 million dollars in deposits, the two branch
facilities(fixed assets) in Dougherty County, and certain other assets
of First Union(excluding loans).
<PAGE> 20
This transaction is expected to be completed during the latter part of
this year. It is anticipated the impact on earnings for this
transaction will be immaterial and create little dilution in earnings
per share.
ITEM 6. Exhibits and reports on Form 8-K
A. Exhibits - 27 Financial Data Schedule (for SEC use only)
B. There have been no reports filed on Form 8-K for the quarter ended March
31, 1996.
<PAGE> 21
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FIRST STATE CORPORATION
5-9-96 /s/ Douglas E. Wren
_____________________ ___________________________
Date Douglas E. Wren,
President & Chief Operating Officer
5-9-96 /s/ Robert E. Lee
______________________ ___________________________
Date Robert E. Lee,
Senior Vice President and
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF FIRST STATE CORPORATION FOR THE PERIOD ENDING MARCH 31,
1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 21,218,000
<INT-BEARING-DEPOSITS> 8,136,000
<FED-FUNDS-SOLD> 4,089,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 39,396,000
<INVESTMENTS-CARRYING> 43,231,000
<INVESTMENTS-MARKET> 0
<LOANS> 303,391,000
<ALLOWANCE> 5,142,000
<TOTAL-ASSETS> 435,852,000
<DEPOSITS> 381,914,000
<SHORT-TERM> 4,013,000
<LIABILITIES-OTHER> 5,538,000
<LONG-TERM> 0
0
0
<COMMON> 3,048,000
<OTHER-SE> 41,239,000
<TOTAL-LIABILITIES-AND-EQUITY> 435,852,000
<INTEREST-LOAN> 7,285,000
<INTEREST-INVEST> 1,313,000
<INTEREST-OTHER> 144,000
<INTEREST-TOTAL> 8,742,000
<INTEREST-DEPOSIT> 3,325,000
<INTEREST-EXPENSE> 3,379,000
<INTEREST-INCOME-NET> 5,363,000
<LOAN-LOSSES> 144,000
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 4,486,000
<INCOME-PRETAX> 2,524,000
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,761,000
<EPS-PRIMARY> .58
<EPS-DILUTED> .58
<YIELD-ACTUAL> 1.81
<LOANS-NON> 1,670,000
<LOANS-PAST> 306,000
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 5,037,000
<CHARGE-OFFS> 92,000
<RECOVERIES> 54,000
<ALLOWANCE-CLOSE> 5,142,000
<ALLOWANCE-DOMESTIC> 144,000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
