<PAGE> 1
U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
----------
For quarter ended September 30, 1996 Commission file number 0-10853
------------------ -------
FIRST BANKING COMPANY OF SOUTHEAST GEORGIA
(Exact name of small business issuer as specified in its charter)
----------
GEORGIA 58-1458268
- ------------------------------- --------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification no.)
40 NORTH MAIN STREET
P.O. BOX 878
STATESBORO, GEORGIA 30459
-------------------------------
(Address of Principal Executive
Offices, including Zip Code)
912-764-6611
-------------------------------
(Issuer's telephone number, including area code)
NOT APPLICABLE
-------------------------------
(Former name, former address
and former fiscal year, if
changed since last report)
----------
Check whether the issuer: (1) has 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 requirement 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.
COMMON STOCK, $1.00 PAR VALUE 3,002,020 SHARES AS OF SEPTEMBER 30, 1996
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<PAGE> 2
FIRST BANKING COMPANY OF SOUTHEAST GEORGIA
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
-----------------------------
(thousands of dollars)
ASSETS
<S> <C> <C>
Cash and Due From Banks $ 15,340 $ 15,005
Interest Bearing Deposits in Other Banks 13,573 12,292
Federal Funds Sold 12,360 8,170
Investment Securities:
Available for Sale (Cost of $76,103 in 1996
and $53,627 in 1995) 75,551 54,015
Held to Maturity (Estimated Market Value
of $20,184 in 1996 and $36,658 in 1995) 19,746 35,778
Loans 225,986 215,996
Less: Unearned Interest (18) (24)
Allowance for Loan Losses (4,227) (3,856)
--------- ---------
Loans, Net 221,741 212,116
--------- ---------
Interest Receivable 5,270 4,957
Premises and Equipment, Net 6,987 5,647
Other Real Estate 306 307
Other Assets 2,493 2,079
--------- ---------
TOTAL ASSETS $ 373,367 $ 350,366
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits:
Demand $ 39,257 $ 38,628
Interest Bearing:
NOW Accounts 56,256 46,256
Money Market Deposit Accounts 40,077 36,267
Savings 13,037 12,599
Time ($100,000 and above) 73,168 75,855
Other Time 101,115 94,878
--------- ---------
Total Deposits 322,910 304,483
Other Borrowed Money 9,195 7,234
Securities Sold Under Agreement to Repurchase 1,200
Interest Payable 3,164 3,218
Other Liabilities 835 1,303
--------- ---------
Total Liabilities 337,304 316,238
--------- ---------
Shareholders' Equity (Note 3):
Common Stock, 3,002,020 Shares Issued and Outstanding 3,002 3,002
Surplus 8,023 8,026
Retained Earnings 25,403 22,844
Net Unrealized Gain/(Loss) on Investment
Securities Available for Sale (365) 256
--------- ---------
Shareholders' Equity 36,063 34,128
--------- ---------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 373,367 $ 350,366
========= =========
</TABLE>
See notes to consolidated financial statements.
1
<PAGE> 3
FIRST BANKING COMPANY OF SOUTHEAST GEORGIA
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>
For the Three Months Ended
September 30,
1996 1995
------------------------
(thousands of dollars)
INTEREST INCOME
<S> <C> <C>
Loans (Including fees) $ 5,998 $ 5,663
Interest Bearing Deposits 154 135
Investments:
U.S. Treasury 331 445
U.S. Government Agencies 880 505
States and Political Subdivisions 238 220
Dividend Income 36 24
Federal Funds Sold 103 74
------- -------
Total Interest Income 7,740 7,066
------- -------
INTEREST EXPENSE
NOW Accounts 439 275
Money Market Deposits Accounts 335 325
Savings 107 100
Time Deposits ($100,000 and above) 1,136 1,101
Other Time Deposits 1,429 1,407
Other 157 104
------- -------
Total Interest Expense 3,603 3,312
------- -------
NET INTEREST INCOME 4,137 3,754
Provision for Loan Losses 169 177
------- -------
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 3,968 3,577
------- -------
NON-INTEREST INCOME
Service Charges on Deposits 491 428
Fees for Trust Services 51 50
Other 60 90
------- -------
Total Non-interest Income 602 568
------- -------
NON-INTEREST EXPENSE
Salaries 1,034 963
Other Personnel Expense 324 311
Occupancy Expense, Net 216 177
Equipment Expense 273 218
Other 1,038 645
------- -------
Total Non-interest Expense 2,885 2,314
------- -------
INCOME BEFORE INCOME TAXES 1,685 1,831
Provision for Income Taxes 549 547
------- -------
NET INCOME $ 1,136 $ 1,284
======= =======
EARNINGS PER COMMON SHARE (NOTE 3) $ .38 $ .43
======= =======
DIVIDENDS PER COMMON SHARE (NOTE 3) $ .15 $ .12
======= =======
AVERAGE NUMBER OF SHARES OUTSTANDING (NOTE 3) 3,002,089 3,002,131
========= =========
</TABLE>
See notes to consolidated financial statements.
2
<PAGE> 4
FIRST BANKING COMPANY OF SOUTHEAST GEORGIA
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>
For the Nine Months Ended
September 30,
1996 1995
--------------------------
(thousands of dollars)
INTEREST INCOME
<S> <C> <C>
Loans (Including fees) $17,487 $15,941
Interest Bearing Deposits 456 573
Investments:
U.S. Treasury 1,069 1,378
U.S. Government Agencies 2,557 1,249
States and Political Subdivisions 738 641
Dividend Income 108 106
Federal Funds Sold 311 156
------- -------
Total Interest Income 22,726 20,044
------- -------
INTEREST EXPENSE
NOW Accounts 1,357 862
Money Market Deposits Accounts 937 968
Savings 313 282
Time Deposits ($100,000 and above) 3,350 2,757
Other Time Deposits 4,327 3,707
Other 433 296
------- -------
Total Interest Expense 10,717 8,872
------- -------
NET INTEREST INCOME 12,009 11,172
Provision for Loan Losses 630 535
------- -------
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 11,379 10,637
------- -------
NON-INTEREST INCOME
Service Charges on Deposits 1,414 139
Fees for Trust Services 140 1,300
Other 310 266
------- -------
Total Non-interest Income 1,864 1,705
------- -------
NON-INTEREST EXPENSE
Salaries 3,016 2,809
Other Personnel Expense 919 921
Occupancy Expense, Net 582 500
Equipment Expense 742 684
Other 2,493 2,188
------- -------
Total Non-interest Expense 7,752 7,102
------- -------
INCOME BEFORE INCOME TAXES 5,491 5,240
Provision for Income Taxes 1,683 1,606
------- -------
NET INCOME $ 3,808 $ 3,634
======= =======
EARNINGS PER COMMON SHARE (NOTE 3) $ 1.27 $ 1.21
======= =======
DIVIDENDS PER COMMON SHARE (NOTE 3) $ .45 $ .36
======= =======
AVERAGE NUMBER OF SHARES OUTSTANDING (NOTE 3) 3,002,117 3,002,131
========= =========
</TABLE>
See notes to consolidated financial statements.
3
<PAGE> 5
FIRST BANKING COMPANY OF SOUTHEAST GEORGIA
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
<TABLE>
<CAPTION>
September 30,
1996 1995
----------------------
(thousands of dollars)
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net Income $3,808 $ 3,634
Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities:
Provision for Depreciation 593 499
Provision for Loan Losses 630 535
(Gain) Loss on Sale of Other Real Estate (3) 5
Gain on Call of Securities (7) (3)
Gain on Sale of Equipment (1) (6)
Net Accretion of Premiums and Discounts on Securities (449) (85)
Changes in Assets and Liabilities:
Increase in Interest Receivable (313) (1,373)
(Increase) Decrease in Other Assets (96) 44
Increase (Decrease) in Interest Payable (54) 786
Increase (Decrease) in Other Liabilities (468) 244
------ ------
Net Cash Provided by Operating Activities 3,640 4,280
------ ------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net Increase in Interest Bearing Deposits
in Other Banks (1,281) (482)
Net (Increase) Decrease in Federal Funds Sold (4,190) 280
Available-for-Sale Securities:
Proceeds from Maturity 39,574 16,701
Purchases (61,736) (17,786)
Held-to-Maturity Securities:
Proceeds from Maturity 20,023 3,683
Purchases (3,849) (17,544)
Net Increase in Loans (10,452) (18,356)
Purchases of Premises and Equipment (1,934) (1,459)
Proceeds from Sale of Equipment 2 7
Proceeds from Sale of Other Real Estate 202 7
------- -------
Net Cash Used in Investing Activities (23,641) (34,949)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Net Increase in Deposits 18,427 28,354
Advances from the Federal Home Loan Bank 7,076 2,565
Repayment of Other Borrowed Money (5,115) (1,815)
Securities Sold Under Agreements to Repurchase 1,200
Purchase and Retirement of Common Stock (3)
Dividends Paid (1,249) (958)
------- -------
Net Cash Provided by Financing Activities 20,336 28,146
------- -------
INCREASE (DECREASE) IN CASH AND DUE FROM BANKS 335 (2,523)
CASH AND DUE FROM BANKS AT BEGINNING OF YEAR 15,005 14,350
------- -------
CASH AND DUE FROM BANKS AT END OF PERIOD $15,340 $11,827
======= =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid (received) during the year for:
Interest $10,771 $ 8,085
Income Taxes 1,978 1,521
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING ACTIVITIES:
Other Real Estate Acquired through Loan Foreclosure $ 275 106
Loans granted to facilitate the Sale of Other Real Estate 77 142
Change in Net Unrealized Gain (Loss) on
Investment Securities Available for Sale (621) 798
</TABLE>
See notes to consolidated financial statements.
4
<PAGE> 6
FIRST BANKING COMPANY OF SOUTHEAST GEORGIA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. BASIS OF PRESENTATION
The consolidated financial statements of First Banking Company of Southeast
Georgia (the "Company") include the financial statements of First Bulloch
Bank & Trust Company, Metter Banking Company and First National Bank of
Effingham (see Note 5), wholly-owned subsidiaries. Intercompany balances and
transactions have been eliminated in consolidation.
The consolidated statements contained in this report are unaudited but
reflect all adjustments, consisting only of normal recurring accruals, which
are, in the opinion of management, necessary to a fair statement of the
results for the interim period reflected. 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 applicable rules and regulations of the Securities and Exchange
Commission. The results of operations for the interim period reported herein
are not necessarily indicative of results to be expected for the full year.
The consolidated financial statements included herein should be read in
conjunction with the financial statements and notes thereto, and the
Independent Auditors' Report included in the Company's Annual Report on Form
10-KSB for the fiscal year ended December 31, 1995.
2. ACCOUNTING POLICIES
Reference is made to the accounting policies of the Company described in the
notes to consolidated financial statements contained in the Company's Annual
Report on Form 10-KSB for the year ended December 31, 1995. The Company has
followed those policies in preparing this report.
3. COMMON STOCK
At the Company's Annual Meeting of Shareholders held on April 25, 1996, the
shareholders approved a proposal to amend the Articles of Incorporation to
increase the number of authorized shares from 5,000,000 to 10,000,000. The
par value of First Banking's common stock is $1 and, as of May 3, 1996
10,000,000 shares were authorized.
The Banks may pay dividends to First Banking in any year up to 50% of the
previous year's net income without the approval of the Georgia Department of
Banking and Finance, or $2,337,396 in 1996.
Effective May 15, 1995, the Company declared an 8-for-5 stock split of its
common stock effected in the form of a 60 percent stock dividend. All
references to number of shares and to per share amounts have been
retroactively adjusted to reflect the split.
4. EARNINGS PER SHARE
Net Income per share of common stock is based on the weighted average number
of shares of common stock outstanding during each period, after restating
for the stock split (see Note 3).
5
<PAGE> 7
5. MERGER
Effective August 27, 1996, the Company consummated its merger of First
National Bank of Effingham ("Effingham Bank") into the Company. The Company
exchanged 340,309 shares of its common stock and cash of approximately
$2,800 for all of the outstanding common stock and options to acquire common
stock of FNB Banchsares, Inc.("FNB"), parent company of the Effingham Bank.
The merger was accounted for as a pooling-of-interests. The financial
statements of the Company for all periods presented have been restated to
include FNB and the Effingham Bank.
The results of operations for the three months and nine months ended
September 30, 1996 and 1995 include the consolidated FNB results of
operations prior to the consummation date as follows:
Three months ended September 30, 1996 and 1995 (in thousands):
<TABLE>
<CAPTION>
Total Revenue Net Income (Loss)
--------------------- -------------------
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Company $6,589 $6,585 $1,158 $1,163
FNB 1,753 1,049 (22) 121
------ ------ ------ ------
Combined $8,342 $7,634 $1,136 $1,284
====== ====== ====== ======
</TABLE>
Nine months ended September 30, 1996 and 1995:
<TABLE>
<CAPTION>
Total Revenue Net Income
--------------------- ------------------
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Company $20,895 $18,938 $3,512 $3,336
FNB 3,695 2,841 296 328
------- ------- ------ ------
Combined $24,590 $21,779 $3,808 $3,664
======= ======= ====== ======
</TABLE>
A reconciliation of consolidated total revenues, net income, and net
income per share as previously reported with restated amounts for the three
months and nine months ended September 30, 1995 is as follows:
Three months ended September 30, 1995:
<TABLE>
<CAPTION>
Net Income
Total Net Per Common
Revenues Income Share
---------- ---------- ------------
<S> <C> <C> <C>
Company, as previously
reported $6,585 $1,163 $0.43
FNB 1,049 121
------ ------
Company, as restated $7,634 $1,284 0.43
====== ======
</TABLE>
Nine months ended September 30, 1995:
<TABLE>
<CAPTION>
Net Income
Total Net Per Common
Revenues Income Share
<S> <C> <C> <C>
Company, as previously
reported $18,938 $3,336 $1.25
FNB 2,841 328
------- ------
Company, as restated $21,779 $3,664 1.21
======= ======
</TABLE>
6
<PAGE> 8
FIRST BANKING COMPANY OF SOUTHEAST GEORGIA
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 1996
This discussion relates to the consolidated financial condition and
results of operations of First Banking Company of Southeast Georgia (the
"Company") and its wholly-owned subsidiaries, First Bulloch Bank & Trust Company
("Bulloch Bank"), Metter Banking Company ("Metter Bank") and First National Bank
of Effingham ("Effingham Bank"), (the "Banks"). Since the Company has no
subsidiaries other than the Banks and no activities other than those of the
Banks, the following narrative refers to the operations of the Banks.
The Company acquired the Effingham Bank on August 27, 1996 through the
merger of FNB Bancshares, Inc. ("FNB") with and into the Company. The Company
issued 340,309 shares of common stock and approximately $2,800 in cash in the
merger. The financial statements appearing herein and the discussion and
analysis set forth below reflect the combined operations of the Company and FNB.
See Note 5 of Notes to Consolidated Financial Statements.
FINANCIAL CONDITION
The Company functions as the sole owner of three commercial banks, and
its financial condition should be examined in terms of trends in sources and
uses of funds. The Company's primary use of funds historically comes from loan
demand. Loans outstanding have increased $10,452,000 or 4.8% since year-end.
Investment securities and interest bearing deposits in other banks have
increased $5,504,000 (6.1%) and $1,281,000 (10.4%), respectively, while federal
funds sold have increased $4,190,000 (51.3%) since year-end.
Total assets have increased $23,001,000 (6.6%) since year-end, while total
funds (deposits plus Other Borrowed Money) have increased $20,388,000 (6.5%).
Total deposits have increased $18,427,000 (6.1%) since year-end, and Other
Borrowed Money has increased $1,961,000 (27.1%). Demand deposits have increased
$629,000 (1.6%), and savings deposits (including NOW accounts and the liquid
money market accounts) have increased $14,248,000 (15.0%). Time deposits over
$100,000 have decreased approximately $2,687,000 (3.5%), while other time
deposits have increased approximately $6,237,000 (6.6%).
7
<PAGE> 9
The increase in savings deposits is directly attributable to one new public
fund NOW account obtained through competitive bid and opened on January 2, 1996.
At September 30, 1996 this account reflected a balance of $13,757,000. Because
state banking regulations require this account to be secured by the pledging of
investment securities to the public entity, additional investment securities
were purchased in an amount adequate to satisfy the regulatory pledging
requirement, thus accounting for the increase in investment securities since
year-end. The decrease in time deposits $100,000 and over is the result of a
run-off of such deposits from governmental entities, which are placed as a
result of competitive bid. The increase of $6,237,000 in other time deposits is
primarily the result of the growth of such deposits at the Effingham Bank.
CAPITAL RESOURCES
The Banks are required to maintain minimum amounts of capital to total
"risk-weighted" assets, as defined by the banking regulators. At September 30,
1996, the Banks were required to have minimum Tier 1 and Total Risk-Based
Capital ratios of 4% and 8%, respectively, and a leverage ratio of at least 3%.
At that date the Banks' actual ratios were as follows:
<TABLE>
<CAPTION>
Bulloch Bank Metter Bank Effingham Bank
------------ ----------- --------------
<S> <C> <C> <C>
Tier 1 Risk-based Capital ratio 18.4% 15.0% 8.7%
Total Risk-based Capital ratio 19.7 16.3 9.9
Leverage ratio 10.5 9.8 6.5
</TABLE>
These ratios qualify the Bulloch Bank and the Metter Bank for the
"well-capitalized" classification and the Effingham Bank for the "adequately
capitalized" classification as defined by the banking regulators. The Company's
ratio of shareholders' equity to total assets was 9.7% at September 30, 1996 and
at December 31, 1995.
LIQUIDITY
The percentage of net loans to total funds was 68.0% at September 30,
1996 and 69.3% at December 31, 1995. At September 30, 1996 the Banks had
$41,273,000 in cash and cash equivalents as compared with $35,467,000 at
December 31, 1995. The Banks' liquidity policies typically require that the
ratio of cash and certain short-term investments to net
8
<PAGE> 10
withdrawable deposit accounts be at least 20.0%. At September 30, 1996, all of
the Banks exceeded this ratio. The liquidity of the Company and the Banks is
considered adequate to repay deposits and other obligations, meet expected loan
demand and pay dividends.
Presented below is an interest rate sensitivity analysis of the Company at
September 30, 1996.
9
<PAGE> 11
Interest Rate Sensitivity Analysis - September 30, 1996
<TABLE>
<CAPTION>
Term to Repricing or Maturity
----------------------------------------------------------------------
Over Three Over One Over Five
Less Than Months through Year through years and
Three Months One Year Five years Insensitive Total
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Interest Earning Assets:
Interest Bearing
Deposits in Other
Banks $ 13,573 $ 13,573
Investment Securities 9,838 $ 26,401 $ 42,672 $ 16,386 95,297
Federal Funds Sold 12,360 12,360
Loans 106,853 49,333 52,449 17,333 225,968
-------- -------- -------- -------- --------
Total Interest
Earning Assets 142,624 75,734 95,121 33,719 347,198
Noninterest Earning
Assets 26,169 26,169
-------- -------- -------- -------- --------
TOTAL ASSETS $142,624 $ 75,734 $ 95,121 $ 59,888 $373,367
======== ======== ======== ======== ========
Interest Bearing Liabilities:
Interest Bearing
Deposits $148,995 $102,843 $ 31,815 $283,653
Other Borrowed Money 222 744 3,955 $ 4,274 9,195
Repurchase Agreements 1,200 1,200
-------- -------- -------- -------- --------
Total Interest
Bearing Liabilities 149,217 104,787 35,770 4,274 294,048
Interest Free Deposits 39,257 39,257
Other Interest Free
Liabilities and Equity 40,062 40,062
-------- -------- -------- -------- --------
TOTAL LIABILITIES
AND EQUITY $149,217 $104,787 $ 35,770 $ 83,593 $373,367
======== ======== ======== ======== ========
Net Interest Rate
Sensitivity Gap $ (6,593) $(29,053) 59,351 ($23,705)
Cumulative gap $ (6,593) $(35,646) 23,705
Net Interest Rate
Sensitivity Gap as
a Percent of Interest
Earning Assets (4.6) (38.4) 62.4 (70.3)
Cumulative Gap as a
Percent of Cumulative
Interest Earning Assets (4.6) (16.3) 7.6
</TABLE>
10
<PAGE> 12
RESULTS OF OPERATIONS
INTEREST INCOME
Total interest income increased $2,682,000 (13.4%) in the first nine
months of 1996 as compared to the first nine months of 1995 and increased
$674,000 (9.5%) in the third quarter of 1996 as compared to the third quarter of
1995. Interest on loans increased $1,546,000 (9.7%) in the first nine months of
1996 as compared to the first nine months of 1995 and increased $335,000 (5.9%)
in the third quarter of 1996 as compared to the third quarter of 1995, as a
result of an increase of $22,083,000 in the year-to-date average balance of
loans outstanding from September 30, 1995 to September 30, 1996 offset by a
nominal decrease in yield on the loan portfolio for that period. Interest on
investments increased $1,098,000 (32.6%) in the first nine months of this year
as compared to the first nine months of 1995 and increased $291,000 (24.4%) in
the third quarter of 1996 from the third quarter of 1995, primarily as a result
of an increase in the average balance of the investment portfolio of $25,248,000
offset by a nominal decrease in yield from 6.5% to 6.4%.
During the first nine months of 1996, interest on federal funds sold
increased $155,000 (99.2%) from the first nine months of 1995 and increased
$29,000 (39.4%) in the third quarter of 1996 as compared to the third quarter of
1995. Interest on Interest-bearing Deposits in Other Banks decreased $117,000
(20.4%) during the first nine months of 1996 from the first nine months of 1995
and increased $19,000 (14.1%) in the third quarter of 1996 from the third
quarter of 1995. These short-term investments are the two means of investing any
excess cash from day to day. The net increase in the combined income of Federal
Funds Sold and Interest-bearing deposits in other banks is the result of an
increase of $2,636,000 in the combined year-to-date average balance offset by a
decrease in the weighted average yield from 6.0% to 5.4%.
INTEREST EXPENSE
During the first nine months of 1996, total interest expense increased
$1,845,000 (20.8%) from the first nine months of 1995 and increased $291,000
(8.8%) in the third quarter of 1996 from the third quarter of 1995. Interest on
deposits increased $1,708,000 (19.9%) in
11
<PAGE> 13
the first nine months of 1996 from the first nine months of 1995 and increased
$238,000 (7.4%) in the third quarter of this year from the third quarter of
1995. This increase is attributable to an increase in the average balance of
interest bearing deposits of $40,166,000 as well as a nominal increase in the
cost of funds from 4.9% to 5.0%. Interest on Other Borrowed Money increased
$137,000 (46.3%) in the first nine months of 1996 from the first nine months of
1995 and increased $53,000 (51.4%) in the third quarter of 1996 as compared to
the third quarter of 1995. This increase is the result of an increase of
$3,166,000 in the average balance outstanding of Other Borrowed Money at a lower
average interest rate of 6.5% from 7.3%.
PROVISIONS FOR LOAN LOSSES
Provisions for loan losses for the first nine months of 1996 increased
$95,000 (17.7%) from the first nine months of 1995 and decreased $8,000 (4.2%)
in the third quarter of 1996 from the third quarter of 1995. After considering
the credit worthiness of the loan portfolios, it is the opinion of the
management of the Banks that the allowance for loan losses is adequate. At
September 30, 1996 the allowance for loan losses was 1.9% of outstanding loans
less unearned interest.
Nonperforming loans were $1,709,000 at September 30, 1996 and $1,668,000 at
December 31, 1995. These loans included those on a nonaccrual status of $730,000
and $549,000, respectively, accruing loans contractually past due at least 90
days of $409,000 and $368,000, respectively, and restructured loans of $570,000
and $751,000, respectively. Net loans charged off totaled $258,000 during the
first nine months of 1996 as compared to $181,000 during the first nine months
of 1995.
NONINTEREST INCOME AND EXPENSE
Noninterest income increased $159,000 (9.2%) in the first nine months
of 1996 from the first nine months of 1995 and increased $34,000 (6.0%) in the
third quarter of 1996 from the third quarter of 1995. These increases are
primarily a result of an increase in service charges on deposit accounts of
$114,000 during the first nine months of 1996 from the first nine months of 1995
and of $63,000 during the third quarter of 1996 as compared to the third
12
<PAGE> 14
quarter of 1995, as a result of increases in the per item NSF service charge as
well as an increase in the overall volume of accounts subject to other account
service charges. The increase in other non-interest income for the first nine
months of 1996 is a result of increases of $20,000 in credit life and A & H
insurance commissions, $28,600 in income from long-term mortgage loans, which
are acquired by other banks on a non-recourse basis concurrent with the closing
of each loan, and other smaller increases in ATM transaction fee income and safe
deposit box rental income offset by a $17,000 decrease in life insurance
commission income. The increase of $34,000 in non-interest income during the
third quarter of 1996 from the third quarter of 1995 is primarily the result of
the $63,000 increase in service charges on deposit accounts previously discussed
offset by decreases in credit life and A & H commissions, safe deposit box
rental income and life insurance commissions.
Noninterest expense increased $650,000 (9.2%) in the first nine months of
1996 compared to the first nine months of 1995 and increased $571,000 (24.7%) in
the third quarter of 1996 as compared to the third quarter of 1995. These
increases are a result of increases in salary and personnel expense of $205,000
and $84,000, respectively, increases in occupancy and equipment expense of
$140,000 and $94,000, respectively, and increases in Other Expense of $650,000
and $393,000, respectively, during the first nine months of 1996 as compared to
the first nine months of 1995 and during the third quarter of 1996 as compared
to the third quarter of 1995. The increases in salary and personnel expense is
primarily the result of increases in staff, while the increases in occupancy and
equipment expense is the result of increases in depreciation expense related to
construction projects and equipment purchases during the year 1995. The increase
in Other Expense is the result of the effects of a rebate on deposit insurance
premiums of $150,000 received from the FDIC in September 1995 as well as legal,
accounting and other costs totaling $361,000 for the first nine months of 1996
and $262,000 for the third quarter of 1996 relating to the merger of the
Effingham bank into the Company.
13
<PAGE> 15
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Neither the Registrant nor either of its subsidiaries is a party to, nor is
any of their property the subject of, any material pending legal
proceedings, other than ordinary routine proceedings incidental to the
business of banks, nor to the knowledge of management are any such
proceedings contemplated or threatened against the Registrant or its
subsidiaries.
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
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits: 27 Financial Data Schedule (for SEC use only)
(b) Reports on Form 8-K: On September 19, 1996, the Registrant filed with
the Securities and Exchange Commission a current report on Form 8-K
(Commission File No. 0-10853) reporting the consummation of the
Company's merger with FNB and acquisition of the Effingham Bank.
14
<PAGE> 16
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
FIRST BANKING COMPANY OF SOUTHEAST GEORGIA
DATE: November 14, 1996 BY:/s/ James Eli Hodges
-------------------- -----------------------------------
JAMES ELI HODGES
PRESIDENT
DATE: November 14, 1996 BY:/s/ Dwayne E. Rocker
-------------------- -----------------------------------
DWAYNE E. ROCKER
SECRETARY-TREASURER
(PRINCIPAL FINANCIAL OFFICER)
15
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF FIRST BANKING COMPANY OF SOUTHEAST GEORGIA FOR THE NINE
MONTHS ENDED SEPTEMBER 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 15,340
<INT-BEARING-DEPOSITS> 13,573
<FED-FUNDS-SOLD> 12,360
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 75,551
<INVESTMENTS-CARRYING> 19,746
<INVESTMENTS-MARKET> 20,184
<LOANS> 225,968
<ALLOWANCE> 4,227
<TOTAL-ASSETS> 373,367
<DEPOSITS> 322,910
<SHORT-TERM> 1,200
<LIABILITIES-OTHER> 3,999
<LONG-TERM> 9,195
0
0
<COMMON> 3,002
<OTHER-SE> 33,061
<TOTAL-LIABILITIES-AND-EQUITY> 373,367
<INTEREST-LOAN> 17,487
<INTEREST-INVEST> 4,472
<INTEREST-OTHER> 767
<INTEREST-TOTAL> 22,726
<INTEREST-DEPOSIT> 10,284
<INTEREST-EXPENSE> 10,717
<INTEREST-INCOME-NET> 12,009
<LOAN-LOSSES> 630
<SECURITIES-GAINS> 6
<EXPENSE-OTHER> 7,752
<INCOME-PRETAX> 5,491
<INCOME-PRE-EXTRAORDINARY> 5,491
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,808
<EPS-PRIMARY> 1.27
<EPS-DILUTED> 1.27
<YIELD-ACTUAL> 4.88
<LOANS-NON> 730
<LOANS-PAST> 409
<LOANS-TROUBLED> 570
<LOANS-PROBLEM> 1,709
<ALLOWANCE-OPEN> 3,856
<CHARGE-OFFS> 354
<RECOVERIES> 96
<ALLOWANCE-CLOSE> 4,227
<ALLOWANCE-DOMESTIC> 4,227
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
