<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-QSB
X QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
----- SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
----- SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
------- ---------
Commission file number 0-13153
HABERSHAM BANCORP
--------------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Georgia 58-1563165
--------------------------------------------------------------------------------
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Highway 441 N., P.O. Box 1980, Cornelia, Georgia 30531
--------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
(706) 778-1000
--------------------------------------------------------------------------------
(Issuer's telephone number, including area code)
--------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
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 the latest practicable date:
2,261,522 shares, common stock, $1.00 par value, as of June 30 1995
Page 1 of 12
<PAGE> 2
Item. 1 Financial Statements
HABERSHAM BANCORP
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
<TABLE>
<CAPTION>
JUNE 30, 1995 DECEMBER 31, 1994
ASSETS (Unaudited)
<S> <C> <C>
Cash and due from banks .................. $ 5,350 $ 4,451
Federal funds sold ....................... 7,310 1,020
Investment securities available for sale
(estimated cost of $35,935 at June 30,
1995 and $30,065 at December 31, 1994... 35,762 28,530
Investment securities held to maturity
(estimated market value of $21,312 at
June 30, 1995, and $21,093 at
December 31, 1994) ..................... 22,159 21,619
Loans .................................... 136,385 100,848
Less: Unearned income ................. (76) (45)
Allowance for loan losses ....... (2,313) (1,744)
-------- --------
Loans, net ........................... 133,996 99,059
-------- --------
Intangible assets ........................ 3,566
Other assets ............................. 9,177 6,648
-------- --------
TOTAL ASSETS ......................... $217,320 $161,327
======== ========
LIABILITIES
Non-interest bearing deposits ............ $ 23,121 $ 17,100
Interest bearing deposits ................ 160,816 124,515
Short-term borrowings .................... 1,235 1,002
Other borrowings ......................... 3,700 1,500
Other liabilities ........................ 4,208 1,359
-------- --------
TOTAL LIABILITIES .................... 193,080 145,476
-------- --------
SHAREHOLDERS' EQUITY (Note 3)
Common stock, $1.00 par value,
10,000,000 shares authorized;
1,750,000 shares issued ................ 2,404 1,750
Additional paid-in capital ............... 8,810 2,446
Retained earnings ........................ 13,808 13,110
Unrealized loss on investment securities
available for sale ..................... (89) (1,013)
Treasury stock (at cost) ................. (693) (442)
-------- --------
TOTAL SHAREHOLDERS' EQUITY ........... 24,240 15,851
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY ............................. $217,320 $161,327
======== ========
</TABLE>
See notes to condensed consolidated financial statements.
2
<PAGE> 3
HABERSHAM BANCORP
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
(dollars in thousands, except per share amounts)
For the (Unaudited) Three-Month Periods Ended June 30, 1995 and 1994
<TABLE>
<CAPTION>
JUNE 30, 1995 JUNE 30, 1994
<S> <C> <C>
INTEREST INCOME
Loans (including fees) ..................... $ 2,671 $ 2,362
Investment securities ...................... 802 680
Other ...................................... 57 36
--------- ---------
TOTAL INTEREST INCOME ................... 3,530 3,078
INTEREST EXPENSE
Deposits ................................... 1,496 1,167
Other ...................................... 36 21
--------- ---------
TOTAL INTEREST EXPENSE .................. 1,532 1,188
NET INTEREST INCOME ........................ 1,998 1,890
Provision for loan losses .................. 7 22
--------- ---------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES ................. 1,991 1,868
Other Income ............................... 248 236
Other Expense .............................. 1,742 1,679
--------- ---------
INCOME BEFORE INCOME TAXES.................. 497 425
Applicable income taxes ................... 92 69
--------- ---------
NET INCOME ................................. 405 356
Dividends .................................. 84 66
Retained earnings at beginning of period.... 13,487 11,965
--------- ---------
Retained earnings at end of period ......... $ 13,808 $ 12,255
========= =========
Per Common and Common Equivalent Share:
NET INCOME ................................. $ .23 $ .21
========= =========
WEIGHTED AVERAGE NUMBER OF COMMON AND
COMMON EQUIVALENT SHARES OUTSTANDING ....... 1,759,733 1,693,635
========= =========
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE> 4
HABERSHAM BANCORP
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
(dollars in thousands, except per share amounts)
For the (Unaudited) Six-Month Periods Ended June 30, 1995 and 1994
<TABLE>
<CAPTION>
JUNE 30, 1995 JUNE 30, 1994
<S> <C> <C>
INTEREST INCOME
Loans (including fees) ..................... $ 5,207 $ 4,772
Investment securities ...................... 1,584 1,312
Other ...................................... 98 78
--------- ---------
TOTAL INTEREST INCOME ................... 6,889 6,162
INTEREST EXPENSE
Deposits ................................... 2,848 2,307
Other ...................................... 105 47
--------- ---------
TOTAL INTEREST EXPENSE .................. 2,953 2,354
NET INTEREST INCOME ........................ 3,936 3,808
Provision for loan losses .................. 14 74
--------- ---------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES ................. 3,922 3,734
Other Income ............................... 498 456
Other Expense .............................. 3,474 3,306
--------- ---------
INCOME BEFORE INCOME TAXES.................. 946 884
Applicable income taxes ................... 164 148
--------- ---------
NET INCOME ................................. 782 736
Dividends ................................. 84 66
Retained earnings at beginning of period.... 13,110 11,585
--------- ---------
Retained earnings at end of period ......... $ 13,808 $ 12,255
========= =========
Per Common and Common Equivalent Share:
NET INCOME ................................. $ .44 $ .44
========= =========
WEIGHTED AVERAGE NUMBER OF COMMON AND
COMMON EQUIVALENT SHARES OUTSTANDING ....... 1,759,807 1,691,630
========= =========
</TABLE>
See notes to condensed consolidated financial statements.
4
<PAGE> 5
HABERSHAM BANCORP
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
For the (Unaudited) Six-Month Periods Ended June 30, 1995 and 1994
<TABLE>
<CAPTION>
JUNE 30, JUNE 30,
CASH FLOWS FROM OPERATING ACTIVITIES: 1995 1994
<S> <C> <C>
Net Income ........................................ $ 782 $ 736
Adjustments to reconcile net income to
net cash provided by operating activities:
Provision for loan losses ..................... 14 74
Net loss(gain) on sale of investment securities 5 (5)
Net loss on other real estate owned ........... 100 30
Depreciation .................................. 264 288
Changes in assets and liabilities, net of effects
of purchase of Security State Bank:
Increase in other assets ...................... (408) (83)
Increase in other liabilities ................. 74 95
------- -------
Net cash provided by operating activities ......... 831 1,135
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment securities available for sale:
Proceeds from maturity ............................ 1,535 4,192
Proceeds from sale ................................ 2,825 1,618
Purchases ......................................... (5,147) (13,847)
Investment securities held to maturity:
Proceeds from maturity ............................ 3,326 1,837
Purchases ......................................... (3,275) (4,511)
Net decrease in loans .............................. (3,230) 6,674
Proceeds from sale of other real estate ............ 3 46
Net additions of premises and equipment ............ (193) (82)
Cash and cash equivalents acquired upon acquisition
of Security State Bank, net of cash payments ...... 5,103
------- -------
Net cash used by investing activities................ 947 (4,073)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposits .......................... 3,050 4,022
Net increase in short-term borrowings ............. 233 237
Net increase (decrease) in other borrowings ....... 2,200 (1,000)
Sale of treasury stock ............................ 12 55
Cash Dividends .................................... (84) (66)
------- -------
Net cash provided by financing activities ......... 5,411 3,248
------- -------
Increase in cash and cash equivalents ............... 7,189 310
CASH AND CASH EQUIVALENTS: BEGINNING OF PERIOD ...... 5,471 8,070
------- -------
CASH AND CASH EQUIVALENTS: END OF PERIOD ............ $12,660 $ 8,380
======= =======
</TABLE>
5
<PAGE> 6
<TABLE>
<S> <C> <C>
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING ACTIVITY:
Other real estate acquired through loan foreclosures.. $ 280 $ 51
Loan made to sell other real estate .................. 16
Unrealized gain (loss) on investment securities
available for sale ................................... 1,401 (1,108)
</TABLE>
The Company purchased all of the capital stock of Security Bancorp, Inc. on
June 30, 1995 in exchange for 612,516 shares of Company stock and a liability
of $1,990,269 to be paid in cash in July 1995. In conjunction with the
acquisition, liabilities were assumed as follows:
<TABLE>
<CAPTION>
(in thousands)
<S> <C>
Fair value of assets acquired ................. $ 49,242
Purchase price ................................ (9,257)
--------
Liabilities assumed ........................... $ 39,985
========
</TABLE>
See notes to condensed consolidated financial statements.
6
<PAGE> 7
HABERSHAM BANCORP
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. Basis of Presentation
The condensed financial 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 periods 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 periods reported herein
are not necessarily indicative of results to be expected for the full year.
The condensed consolidated financial statements included herein should be read
in conjunction with the Company's 1994 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, 1994.
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 fiscal year ended December 31, 1994. The Company
has consistently followed those policies in preparing this report.
3. Common Stock
Effective May 15, 1995, the Company declared a 5 for 1 stock split of its
common stock effected in the form of a 400% stock dividend. In addition,
effective April 15, 1995, the Company changed the par value of its common stock
from $2.50 to $1.00 per share and increased the number of authorized shares of
common stock to 10,000,000 shares. All references to share and per share
amounts have been retroactively adjusted to reflect the split. Also
retroactively, $875,000 has been charged to Additional Paid-In Capital and
credited to Common Stock to reflect the stock split and the change in par
value.
4. Earnings Per Share
Net income per share is computed based on the weighted average number of common
and common equivalent shares outstanding during the periods.
5. Acquisition
Effective June 30, 1995, the Company consummated its acquisition of Security
Bancorp, Inc. ("Security") by agreeing to exchange 612,516 shares of its common
stock and a payment of $1,990,269 in cash for the outstanding shares of
Security common stock in a merger of Security with and into the Company. The
Company had previously acquired 5% of the outstanding shares of Security.
7
<PAGE> 8
The total purchase price including expenses is expected to total approximately
$9,257,000. The merger was accounted for as a purchase and the operations of
Security will be included in the Company's operations after June 30, 1995.
Intangible assets consisting of core deposits of $416,000 and goodwill of
$3,084,000 were recorded in connection with the merger and will be amortized
over a five and twenty-five year period, respectively. The following presents
pro forma income statement information for the three and six months ended June
30, 1995 and 1994 assuming the merger occurred on January 1, and April 1, 1995
and 1994, respectively (in thousands, except per share amounts):
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
1995 1994 1995 1994
------ ------ ------ ------
<S> <C> <C> <C> <C>
Total Revenues $4,879 $4,289 $9,534 $8,577
Net income $ 433 $ 405 $ 851 $ 863
Net income per common share $ .18 $ .18 $ .36 $ .37
</TABLE>
The pro forma financial information presented above does not purport to be
indicative of either the results of operations that would have occured had the
acquisition taken place on the indicated dates or of future consolidated
results of operations.
Item. 2 Management's Discussion and Analysis of Financial Condition and
Results of Operations.
HABERSHAM BANCORP
Organization
Habersham Bancorp (the "Company") owns all of the outstanding stock of
Habersham Bank (the "Habersham Bank"), Security State Bank ("Security Bank"),
and The Advantage Group, Inc. The Advantage Group, Inc. is a non-bank
subsidiary which provides certain management consulting advice to depository
institutions. Management's discussion and analysis, which follows, relates to
Habersham Bank, Security Bank, and The Advantage Group, Inc., as the Company
does not have any other significant separate operations.
Material Changes in Financial Condition
The Company's total assets increased by $56 million to $217 million, up
from $161 million at December 31, 1994. The increase reflects the Company's
acquisition of Security Bancorp, Inc. ("Security"), Canton, Ga as of June 30,
1995. The Company consummated its acquisition of Security and its wholly owned
subsidiary, Security Bank, by agreeing to exchange 612,516 shares of its common
stock and a payment of $1,990,269 in cash for the outstanding shares of
Security common stock in a merger of Security with and into the Company. The
Company had previously acquired 5% of the outstanding shares of Security. The
total purchase price including expenses is expected to total approximately
$9,257,000. The merger was accounted for as a purchase and the operations of
Security will be included in the Company's operations after June 30, 1995.
Intangible assets consisting of core deposits of $416,000 and goodwill of
$3,084,000 were recorded in connection with the merger and will be amortized
over a five and twenty-five year period, respectively.
8
<PAGE> 9
As of June 30, 1995, Security had total assets of approximately $46 million
consisting of approximately $33 million in loans, $5.7 million in investments,
$5.3 million in cash and cash equivalents, and $2 million in other assets.
Liabilities of Security consisted of deposits of $39 million and other
liabilities of $1 million, and equity of $5.8 million.
The remaining changes in the balance sheet at June 30, 1995 as compared to
December 31, 1994, are gererally a result of the growth of Habersham Bank that
includes an increase in loans and deposits of approximately $3 million.
At June 30, 1995, loans over 90 day days past due and nonaccrual loans
totaled $824,000 or .60% of gross outstanding loans, as compared to $764,839 or
.76% at December 31, 1994. The balance of the allowance for loan losses is in
accordance with the internal calculation of the allowance for loan losses and
accounts for factors such as classified and past due loans as well as portfolio
growth and diversification. There were no significant writeoffs during the
second quarter of 1995.
Effective May 15, 1995, the Company declared a 5 for 1 stock split of its
common stock effected in the form of a 400% stock dividend. In addition,
effective April 15, 1995, the Company changed the par value of its common stock
from $2.50 to $1.00 per share and increased the number of authorized shares of
common stock to 10,000,000 shares. All references to share and per share
amounts have been retroactively adjusted to reflect these events.
Material Changes in Results of Operations
Total interest income for the second quarter of 1995 increased $452,000 or
14.7%, when compared to the second quarter of 1994. Interest income for the
first half of 1995 increased $727,000 or 11.8% as compared to the first half of
1994.
Interest income from loans for the second quarter of 1995 increased
$309,000 or 13.08% when compared to the second quarter of 1994. Interest
income from loans for the first half of 1995 increased $435,000 or 9.12% due to
an increase in loan yields to 9.9% for the first half of 1995 when compared to
the first half of 1994. These increases were primarily due to an increase in
loan yields of 8.84% for the first half of 1994 in addition to an increase in
Habersham Bank's loan portfolio of approximately $3.2 million.
Interest income from investments for the second quarter of 1995 increased
$122,000 or 17.94%, when compared to the second quarter of 1994. Interest
income from investments increased $272,000 or 20.73%, as compared to the first
half of 1994. Yields on securities increased to 5.93% for the first half of
1995 as compared to 5.60% for the first half of 1994.
Interest expense for the second quarter of 1995 increased $344,000 or
28.9%, when compared to the second quarter of 1994. Interest expense for the
first half of 1995 increased $599,000 or 25.45%, when compared to the first
half of 1994. These increases are due primarily to an increase in rates
offered on deposits from an average of 3.73% during the first half of 1994
verses an average of 4.69% during the first half of 1995.
9
<PAGE> 10
Other interest expense for the second quarter of 1995 increased $15,000 or
71.43% when compared to the second quarter of 1994, and other interest expense
for the first half of 1995 increased $58,000 or 123.4% when compared to the
first half of 1994 due to an additional Federal Home Loan Bank Advance of $2.2
million in January 1995.
Net interest income for the second quarter of 1995 increased $108,000
or 5.71% when compared to the second quarter of 1994. Net interest income
increased approximately $128,000 or 3.36% for the first half of 1995 when
compared to the first half of 1994. These increases are a result of the
increases in interest income, offset by the increases in interest expense,
described above.
Other income increased $12,000 or 5.08% for the second quarter of 1995 over
the same period in 1994. Other income increased $42,000 or 9.21% for the
second half of 1995 over the same period in 1994. These increases were due to
increases in service charge activity and trust department fees during the
indicated periods.
Other expenses increased $63,000 or 3.75% for the second quarter of 1995
over the same period in 1994. Other expenses increased $168,000 or 5.08% for
the first half of 1995 over the same period in 1994. These increases were due
to normal increases in employee salaries and benefits and additional expenses
relating to the Company's master card operations of approximately $57,000, and
losses on other real estate owned of approximately $100,000.
Liquidity and Capital Resources
The Habersham Bank's liquidity policy requires that the ratio of cash and
certain short-term investments to net withdrawable deposit accounts be at least
20%. At June 30, 1995, both Habersham Bank and Security Bank exceeded this
ratio.
At June 30, 1995, Habersham Bank and Security Bank were required to have
minimum Tier 1 and total capital ratios of 4% and 8%, respectively. Both banks
actual ratios at that date for both Tier 1 and total capital ratios exceeded
12.6%. Tier 1 leverage ratio at June 30 for both banks' exceeded 9.5%. While
management believes that the current level of internal capital is sufficient
for current and foreseeable needs of the Company, capital needs are continually
evaluated by management.
10
<PAGE> 11
PART II
OTHER INFORMATION
Item 1. Legal Proceedings.
none
Item 2. Changes in securities.
none
Item 3. Defaults upon senior securities.
none
Item 4. Submission of matters to a vote of security holders.
The regular annual meeting of shareholders of the Company was held on
April 15, 1995. Information regarding this meeting is included in the
Company's Quarterly Report on Form 10-QSB for the period ending March 31, 1995.
Item 5. Other information.
none
Item 6. Exhibits and reports on Form 8-K.
(a) Exhibit 27 - Financial Data Schedule (for SEC
purposes only)
(b) none
11
<PAGE> 12
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant has
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
HABERSHAM BANCORP
-----------------
(Registrant)
Date August 10, 1995 /s/ David D. Stovall
------------------ --------------------------
President and
Chief Financial Officer
(for the Registrant and as the
Registrant's principal financial and
accounting officer)
12
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF HABERSHAM BANCORP FOR THE SIX MONTHS ENDED JUNE 30, 1995
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 5,349,647
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 7,310,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 35,762,307
<INVESTMENTS-CARRYING> 22,159,419
<INVESTMENTS-MARKET> 21,312,000
<LOANS> 136,384,499
<ALLOWANCE> 2,388,732
<TOTAL-ASSETS> 217,320,434
<DEPOSITS> 183,936,141
<SHORT-TERM> 1,235,194
<LIABILITIES-OTHER> 7,908,379
<LONG-TERM> 0
<COMMON> 2,403,974
0
0
<OTHER-SE> 21,836,746
<TOTAL-LIABILITIES-AND-EQUITY> 217,320,433
<INTEREST-LOAN> 5,207,383
<INTEREST-INVEST> 1,583,776
<INTEREST-OTHER> 97,478
<INTEREST-TOTAL> 6,888,639
<INTEREST-DEPOSIT> 2,848,659
<INTEREST-EXPENSE> 2,953,609
<INTEREST-INCOME-NET> 3,921,498
<LOAN-LOSSES> 13,532
<SECURITIES-GAINS> (5,293)
<EXPENSE-OTHER> 503,151
<INCOME-PRETAX> 945,162
<INCOME-PRE-EXTRAORDINARY> 945,162
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 781,519
<EPS-PRIMARY> .44
<EPS-DILUTED> .44
<YIELD-ACTUAL> 5.12
<LOANS-NON> 508,000
<LOANS-PAST> 316,000
<LOANS-TROUBLED> 1,280,000
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,744,335
<CHARGE-OFFS> 106,000
<RECOVERIES> 19,000
<ALLOWANCE-CLOSE> 2,312,668
<ALLOWANCE-DOMESTIC> 2,312,668
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
