<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- ---- EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1995
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- ---- EXCHANGE ACT OF 1934
For the transition period from ............... to.....................
Commission file number 0-14379
-----------
EAGLE BANCSHARES, INC.
------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Georgia 58-1640222
------------------------------- ----------------
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
4305 Lynburn Drive, Tucker, Georgia 30084-4441
---------------------------------------- ----------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(770)-908-6690
-------------------------------------------------------
(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 ISSUERS INVOLVED
IN BANKRUPTCY PROCEEDINGS DURING
THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes No NOT APPLICABLE
----- -----
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at October 31, 1995
- ----------------------------- -------------------------------
Common Stock, $1.00 Par Value 1,556,100 shares
<PAGE>
EAGLE BANCSHARES, INC. AND SUBSIDIARIES
FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 1995
TABLE OF CONTENTS
Page
Number
PART I. Financial Information
Item 1. Financial Statements
Consolidated Statements to Financial Condition
at September 30, 1995 and March 31, 1995 3
Consolidated Statements of Income - Three and
Six Months ended September 30, 1995 and 1994 4
Consolidated Statements of Cash Flows - Three months
ended September 30, 1995 and 1994 5
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
PART II. Other Information
Item 1. Legal Proceedings 15
Item 2. Changes in Securities 15
Item 3. Defaults upon Senior Securities 15
Item 4. Submission of Matters to a Vote of
Security Holders 15
Item 5. Other Information 15
Item 6. Exhibits and Reports on Form 8-K 15
Signatures 16
Index of Exhibits 17
2
<PAGE>
EAGLE BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF
FINANCIAL CONDITION
<TABLE>
<CAPTION>
(Unaudited)
- ----------- SEPTEMBER 30, March 31,
(in thousands except per share data) 1995 1995
- --------------------------------------------------------------------------
<S> <C> <C>
Assets:
Cash and amounts due from banks $ 9,586 $ 6,214
Interest-bearing deposits 7,225 144
Loans receivable held for sale 65,572 41,220
Investment securities available for sale 19,767 20,939
Investment securities held to maturity 56,022 57,599
Loans receivable, net 335,348 303,906
Stock in Federal Home Loan Bank, at cost 6,753 5,984
Premises and equipment 9,861 8,299
Real estate acquired in settlement of
loans, net 541 615
Real estate held for development and sale 8,419 6,620
Accrued interest receivable 3,350 2,996
Other assets 5,749 2,781
- --------------------------------------------------------------------------
Total assets $528,193 $457,317
- --------------------------------------------------------------------------
Liabilities and Stockholders' Equity
Liabilities:
Deposits $327,660 $286,315
Advance payments by borrowers for
property taxes and insurance 1,786 2,187
Federal Home Loan Bank advances 137,014 119,953
Deferred income taxes 610 441
Drafts outstanding 20,845 10,778
Accrued expenses and other liabilities 4,581 4,007
- --------------------------------------------------------------------------
Total liabilities 492,496 423,681
- --------------------------------------------------------------------------
Stockholders' equity:
Common stock, $1.00 par value,
10,000,000 shares authorized,
1,707,000 and 1,694,500 issued in
September and March, respectively 1,707 1,695
Additional paid-in capital 8,298 8,200
Retained earnings, substantially restricted 26,625 25,075
Net unrealized gain on investment securities 357 46
Employee Stock Ownership Plan (ESOP) debt - (11)
Unamortized restricted stock (214) (293)
Treasury stock, 150,900 shares at cost (1,076) (1,076)
- --------------------------------------------------------------------------
Total stockholders' equity 35,697 33,636
- --------------------------------------------------------------------------
Total liabilities and stockholders' equity $528,193 $457,317
- --------------------------------------------------------------------------
</TABLE>
3
<PAGE>
EAGLE BANCSHARES, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
(Unaudited) Three Months Ended Six Months Ended
- ----------- September 30, September 30,
(in thousands except per share data) 1995 1994 1995 1994
- ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest income:
Interest on loans $ 9,090 $6,085 $17,466 $11,693
Interest on mortgage-backed securities 419 483 858 994
Interest on investment securities and
other interest earning assets 1,129 1,105 2,306 2,020
- ----------------------------------------------------------------------------------
Total interest income 10,638 7,673 20,630 14,707
- ----------------------------------------------------------------------------------
Interest expense:
Interest on deposits 4,171 2,776 7,953 5,430
Interest on borrowings 1,916 720 3,783 1,167
- ----------------------------------------------------------------------------------
Total interest expense 6,087 3,496 11,736 6,597
- ----------------------------------------------------------------------------------
Net interest income 4,551 4,177 8,894 8,110
Provision for loan losses 54 189 54 371
- ----------------------------------------------------------------------------------
Net interest income after provision for
loan losses 4,497 3,988 8,840 7,739
- ----------------------------------------------------------------------------------
Other income:
Mortgage production fees 1,486 851 2,551 1,920
Service charges 195 153 352 292
Gain on sale of real estate held for
development and sale 345 - 345 -
Gain on sale of loans 81 535 81 606
Gain on sale of mortgage-backed
securities - - - 14
Miscellaneous 332 401 753 784
- ----------------------------------------------------------------------------------
Total other income 2,439 1,940 4,082 3,616
- ----------------------------------------------------------------------------------
Other expenses:
Salaries and employee benefits 3,047 2,403 5,751 4,909
Net occupancy expense 533 441 1,032 896
Marketing expense 127 89 229 175
Federal insurance premium 169 152 329 296
Data processing 339 202 605 392
Miscellaneous 820 735 1,418 1,332
- ----------------------------------------------------------------------------------
Total other expenses 5,035 4,022 9,364 8,000
- ----------------------------------------------------------------------------------
Income before income taxes 1,901 1,906 3,558 3,355
Income tax expense 641 727 1,231 1,277
- ----------------------------------------------------------------------------------
Net income $ 1,260 $1,179 $ 2,327 $ 2,078
- ----------------------------------------------------------------------------------
Net income per share $0.81 $0.75 $1.50 $1.33
- ----------------------------------------------------------------------------------
</TABLE>
4
<PAGE>
EAGLE BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
(Unaudited)
- -----------
(in thousands)
- --------------
Six Months ended September 30, 1995 1994
- ---------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 2,327 $ 2,078
Adjustments to reconcile net income to
net cash used in operating activities:
Depreciation, amortization and accretion 599 416
Provision for loan losses 54 371
Provision for losses on real estate owned - 10
Loss (gain) on sale of real estate
held for development and sale (345) -
Loss (gain) on sale of real estate
acquired in settlement of loans (39) (7)
Gain on sale of loans (81) (606)
Gain on sale of mortgage-backed
securities - (14)
Amortization of restricted stock award 79 149
Amortization of deferred loan fees (814) (917)
Proceeds from sale of loans
receivable held for sale 186,729 172,473
Originations of loans held for sale (211,000) (163,389)
Changes in assets and liabilities:
(Increase) decrease in accrued
interest receivable (354) (679)
Decrease (increase) in other assets (3,173) (3,517)
Increase (decrease) in drafts outstanding 10,067 3,807
Increase (decrease) in accrued expense
and other liabilities 743 (603)
- ---------------------------------------------------------------------------
Net cash provided by (used in) operating
activities $ (15,208) $ 9,572
- ---------------------------------------------------------------------------
Cash flows from investing activities:
Purchase of investment securities
available for sale - (9,112)
Proceeds from sale of investment
securities available for sale - 5,123
Purchases of investment securities
held to maturity - (22,192)
Principle payments received on investments
available for sale 1,183 2,594
Principle payments received on investments
held to maturity 1,659 812
Proceeds from maturities of investment
securities held to maturity - 2,000
Proceeds from maturities of investment
securities available for sale 464 -
Loan originations, net of repayments (30,907) (43,386)
Purchases of loans receivable - (2,268)
Proceeds from sale of loans receivable - 2,804
Proceeds from sale of real estate
acquired in settlement of loans 173 516
Purchases of FHLB stock (1,048) -
Redemption of FHLB stock 279 -
Purchase of premises and equipment (2,039) (1,037)
Additions to real estate held for
development and sale (1,454) -
- ----------------------------------------------------------------------------
Net cash (used in) provided by $ (31,690) $ (64,146)
investing activities
- ---------------------------------------------------------------------------
</TABLE>
5
<PAGE>
EAGLE BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
(Unaudited)
- -----------
(in thousands)
- --------------
<TABLE>
<CAPTION>
Six Months ended September 30, 1995 1994
- --------------------------------------------------------------
<S> <C> <C>
Cash flows from financing activities:
Net change in time deposits $ 44,095 $ 15,999
Net change in demand deposit accounts (2,750) 4,932
Repayment of FHLB advances and other
borrowings (136,545) (65,471)
Proceeds from FHLB advances and other
borrowings 153,606 96,835
Dividends paid (775) (639)
Principal reduction of ESOP debt 11 79
Proceeds from exercise of stock options 110 37
Increase (decrease) in advance payments
from borrowers for property taxes and
insurance (401) 226
- --------------------------------------------------------------
Net cash (used in) provided by
financing activities 57,351 51,998
- --------------------------------------------------------------
Net (decrease) increase in cash and
cash equivalents 10,453 (2,576)
Cash and cash equivalents at beginning
of year 6,358 7,858
- --------------------------------------------------------------
Cash and cash equivalents at end of
period $ 16,811 $ 5,282
- --------------------------------------------------------------
- --------------------------------------------------------------
Supplemental disclosure of cash paid
during period for:
- --------------------------------------------------------------
Interest $ 11,763 $ 6,686
- --------------------------------------------------------------
Income taxes $ 932 $ 1,490
- --------------------------------------------------------------
Supplemental schedule of noncash
investing and financing activities:
- --------------------------------------------------------------
Acquisition of real estate in
settlement on loans $ 280 $ 203
- --------------------------------------------------------------
Loans made to finance real estate $ 340 $ 575
- --------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements
6
<PAGE>
EAGLE BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
A. BASIS OF PRESENTATION:
The accompanying unaudited consolidated financial statements have been prepared
in accordance with the instructions for preparation of the Securities and
Exchange Commission Form 10-Q. Accordingly, they do not include all of the
information and disclosures required for fair presentation in accordance with
generally accepted accounting principles. These financial statements should
therefore be read in conjunction with management's discussion and analysis of
financial condition and results of operations included in this report and the
complete annual report for the year ended March 31, 1995, which has been filed
with the Company's most recent Form 10-K. In the opinion of management, all
eliminations and normal recurring adjustments considered necessary for fair
presentation have been included. Operating results for the three and six month
period ended September 30, 1995, are not necessarily indicative of the results
that may be expected for the fiscal year ending March 31, 1996.
B. RECLASSIFICATION OF PRIOR PERIOD AMOUNTS:
Certain reclassifications have been made in the Company's financial statements
for the prior fiscal period to conform to the classifications used in the
financial statements for the current fiscal period.
C. RECENT ACCOUNTING PRONOUNCEMENTS
In May 1993, the Financial Accounting Standards Board issued Statement of
Accounting Standards ("SFAS") No. 114, "Accounting by Creditors for Impairment
of a Loan". For fiscal years beginning after December 15, 1994, SFAS 114
requires impaired loans to be measured based on the present value of expected
cash flows discounted at the loan's effective interest rate, or at the loan's
observable market price or at the fair value of the collateral if the loan is
collateral dependent. A valuation allowance equivalent to the amount of the
impairment is required for all loans determined to be impaired. In October 1994,
the Financial Accounting Standards Board issued Statement of Accounting
Standards No. 118, "Accounting by Creditors for Impairment of a Loan-Income
Recognition and Disclosures," which amends certain requirements of SFAS 114
regarding interest income recognition on impaired loans and clarifies related
disclosure requirements. SFAS No. 118 is to be implemented concurrently with
SFAS No. 114. The Company adopted SFAS 114 and SFAS 118 on April 1, 1995, and
there was no impact to the consolidated financial statements. For further
information see the Impaired Loan Schedule in Management's Discussion and
Analysis of Financial Condition and Results of Operation.
The company adopted Statement of Financial Accounting Standards No. 115,
"Accounting for Certain Investments in Debt and Equity Securities" ("SFAS No.
115") as of March 1994. In conjunction with the adoption of SFAS No. 115, the
Company classified all investments in equity securities and certain mortgage-
backed securities as available for sale. Pursuant to SFAS No. 115, the Company
has presented such investments and mortgage-backed securities at estimated fair
value with the unrealized gain or (losses) on such securities, net of income
7
<PAGE>
taxes, disclosed as a separate component of shareholders' equity. In October
1995, the Financial Accounting Standards Board ("FASB") voted to allow
reclassification of any portion of an enterprises' held-to-maturity debt
security portfolio without "tainting". Without this FASB action, "tainting"
could cause all held-to-maturity securities to be reclassified as available-for-
sale. The decision was made during the FASB's process of issuing the FASB
Special Reports, A Guide to Implementation of Statement 115. The Guide clarifies
certain aspects of Statement 115, and as a result, the FASB deemed the one-time
window as necessary. The reclassification "window" opens concurrent with
implementation of the Guide, but no later than December 31, 1995, regardless of
an enterprises year end. Implementation can occur no earlier than release of the
Guide, expected to be mid-November 1995. The Company's management is currently
evaluating the impact a one-time reclassification associated with SFAS No. 115
will have on its financial statements.
In May 1995, the Financial Accounting Standards Board issued SFAS No. 122,
"Accounting for Mortgage Servicing Rights," as an amendment to SFAS No. 65,
"Accounting for Certain Mortgage Banking Activities". SFAS No. 122 addresses the
accounting for purchased and originated mortgage servicing rights and is
effective for fiscal years beginning after December 15, 1995. SFAS No. 122
requires that a mortgage banking enterprise recognize as a separate asset rights
to service mortgage loans for others regardless of whether their servicing
rights are acquired through either the purchase or origination of mortgage
loans. The statement also requires that the mortgage banking enterprise assess
its capitalized mortgage servicing rights for impairment based upon the fair
value of those rights purchased before adoption of SFAS No. 122. Impairment
should be recognized through a valuation allowance. The Company's mortgage
banking segment, PrimeEagle Mortgage generates revenues through fees for various
services including application and origination as well as through the gain or
loss on sale of loans to third parties and from the sale of mortgage servicing
rights. Service release premiums are the largest component of mortgage
production fees. Fluctuations in the value of servicing rights impact
management's decision to retain or sell servicing. SFAS No. 122 does not have an
effect on the Company's financial statements as substantially all of its
permanent loans are sold on a servicing released basis.
D. PROPOSED LEGISLATION
There is proposed legislation before the Congress regarding the merging of the
Bank Insurance Fund (BIF) and the Savings Association Insurance Fund (SAIF). The
Associations deposits are insured by the SAIF. The current legislation, which if
enacted, would result in a one-time assessment of approximately 85-90 basis
points to be charged on SAIF deposits prior to the merger of the funds. If
current legislation is enacted, based on the Company's deposit base at September
30, 1995, management estimates the assessment would be approximately $2.7
million to $2.9 million. Based on an effective tax rate of 38%, the impact to
the financial statements would be approximately $1.7 million to $1.8 million.
Any assessment will depend on enactment of final legislation which is expected
to occur by December 31, 1995.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
-----------------------------------------------------------------------
OF OPERATIONS
- -------------
LIQUIDITY AND CAPITAL RESOURCES
The Company's Asset and Liability Committee manages liquidity to ensure that
there is sufficient cash flow to satisfy demands for credit, deposit withdrawals
and other Company needs. Traditional sources of liquidity include deposits,
FHLB advances and payments on loans. Savings deposits are highly dependent upon
market and other conditions largely outside the Company's control; while loan
principal repayments are a relatively stable source of funds. The Company's
deposits increased 14.4% during the quarter from $286,315,000 at March 31, 1995
to $327,660,000 at September 30, 1995. This increase was primarily in
certificates of deposit with maturities of one year or less.
Under current regulations, the Association is required to maintain liquid assets
at five percent or more of its net withdrawable deposits plus short-term
borrowings (due in one year or less). The Association has traditionally
maintained liquidity levels above the regulatory minimum and management
anticipates this trend will continue. At September 30, 1995, the Association's
liquidity ratio was 5.11%.
Beginning April 1, 1995, the Company formed an operating subsidiary, PrimeEagle
Mortgage and consolidated all real estate lending activities into this business
unit. This business unit generates revenues by originating construction loans,
permanent mortgage loans and Small Business Administration loans (SBA). The
permanent mortgage and SBA loans are sold to investors. Permanent originations
increased 29% to $211 million compared to $163 million for the same six month
period last year. The Company manages the funding requirements of these loans
primarily with short term advances from the FHLB. In addition, outstanding
commitments to originate loans, exclusive of the undisbursed portion of loans in
process, increased to approximately $22.3 million at September 30, 1995 from
$5.7 million at March 31, 1995.
9
<PAGE>
REGULATORY CAPITAL
The Financial Institution Reform, Recovery, and Enforcement Act (FIRREA) of 1989
established minimum capital requirements for thrift institutions. FIRREA
requires savings and loan associations to have core capital of at least 3% of
total assets and tangible capital of at least 1.5% of total assets.
Additionally, institutions are required to meet a risk-based capital requirement
consisting of 8% of the value of risk weighted assets. At September 30, 1995
the Association's regulatory capital and the required minimum amount according
to FIRREA are summarized as follows:
<TABLE>
<CAPTION>
Regulatory Required Excess
Capital Capital Capital
- ---------------------------------------------------
<S> <C> <C> <C>
Tangible Capital $31,671 $ 7,818 $23,853
Core Capital $31,671 $15,648 $16,023
Risk-based Capital $35,094 $30,707 $ 4,387
- ---------------------------------------------------
</TABLE>
RESULTS OF OPERATIONS
Net income for the three and six months ended September 30, 1995 was $1,260,000
and $2,327,000 compared to $1,179,000 and $2,078,000 for the same period ended
September 30, 1994. The increase in net income is attributable to an increase
in net interest income, as a result of a 44% increase in loans, a declining
interest spread and a reduced provision for loan losses. Net interest income
increased 14% for the six month period ending September 30, 1995, to $8,840,000
from $7,739,000 for the same period ending September 30, 1994.
10
<PAGE>
NET INTEREST SPREAD
A major factor influencing the profitability of the Company is the difference
between the interest earned on assets and the interest paid on liabilities. This
is referred to as the "net interest spread". The Company's net interest spread
changes due to the repricing of assets and liabilities at different times in the
economic cycle. Since this time last year the Company's net interest spread
decreased 85 basis points to 3.68% for the period ended September 30, 1995 from
4.53% for the same period ended September 30, 1994.
The decreasing trend in the Company's net interest spread was anticipated by
management as the cost of interest bearing liabilities increased beginning in
early 1995. The overall interest earned on interest earning assets increased 30
basis points from 8.86% for the six months ended September 30, 1994 to 9.16% for
the same period ended September 30, 1995. Additionally, the cost of interest
bearing liabilities increased 115 basis points from 4.33% for the six months
ended September 30, 1994 to 5.48% for the six months ended September 30, 1995.
The following table summarizes the net interest spread for the periods
indicated.
<TABLE>
<CAPTION>
Six Month Period Ended
September 30,
1995 1994
-----------------------
<S> <C> <C>
Weighted average yield on all interest earning assets 9.16% 8.86%
Weighted average cost of all interest bearing liabilities 5.48% 4.33%
- --------------------------------------------------------------------------------
Net interest spread 3.68% 4.53%
- --------------------------------------------------------------------------------
</TABLE>
OTHER INCOME
Other income increased 13% for the current six month period to $4,082,000
compared to $3,616,000 for the same period ended September 30, 1994. The largest
portion of the Company's non-interest income is generated by mortgage banking
activities and mortgage production fees. Mortgage production fees represented 63
percent of total other income for the six month period ending September 30, 1995
versus 53 percent for the same six month period ended September 30, 1994. These
fees are directly correlated to the volume of loans originated and sold.
Additionally, the ratio of mortgage production fees to loans sold in the
secondary market increased to 137 basis points for the current six month period
from 111 basis points for the same period last year. Loans sold and funded in
the secondary market increased for the first six months of the current year to
$187 million from $172 million for the same period ended September 30, 1994.
During the six month period ended September 30, 1995, the Company recorded a
gain on sale of loans of $81,000. During the six month period ended September
30, 1994, the Company recorded a gain on sale of loans of $606,000 and a gain on
the sale of mortgage-backed securities of $14,000. The gain on sale of loans
recorded during the first six months in 1994, was primarily
11
<PAGE>
attributable to the sale of a multi-family loan acquired from the Resolution
Trust Corporation. In addition, the company recorded gains from the sale of
leases and the guaranteed portion of a SBA loan. Management does not rely on
the sale of loans and mortgage-backed securities as a continuing source of
income.
During the three month period ended September 30, 1995, the Company recorded a
gain of $345,000 on the sale of real estate held for development and sale. The
Company has invested in three projects which are classified as real estate held
for development and sale on the consolidated balance sheet. Two are single
family real estate development projects which are in various phases of
development. One located in Cobb County, Georgia, is a 48 lot subdivision and
development is completed. During the quarter 24 lots were sold and a gain of
$339,000 was recorded. The second is a 325 lot subdivision located in Forsyth
County, Georgia. Phase one of this development is substantially complete. During
the quarter 21 lots in Phase one were sold and a gain of $6,000 was recorded.
The third is a low income housing development in which the Company is a limited
partner. This project was undertaken primarily for the benefit of receiving low
income housing tax credits. These tax credits will reduce tax expense, providing
certain tenant criteria is met, in proportion to the occupancy level of the
project. As of September 30, 1995, this project was completed and was 95%
occupied. The tax credits of $2.5 million will be recognized over the next 10
years.
OTHER EXPENSES
Other expenses increased 17.0% for the six month period ended September 30, 1995
to $9,364,000 compared to $8,000,000 for the comparable period ending September
30, 1994. The increase is in part due to the increase in salaries and benefits
from $4,909,000 for the six months September 30, 1994 to $5,751,000 for the six
months ended September 30, 1995. The increase is caused by the addition of new
loan production staff. In addition, the Company's data processing expense
increased as a result of the growth in the number of checking accounts and the
loan servicing portfolio.
RESERVE FOR LOAN LOSSES
Asset quality at September 30, 1995, showed continuing strength with
nonperforming assets to total assets at 0.23% compared to 0.27% at March 31,
1995. The company set aside an additional $54,000 of additional reserves for
possible loan losses during the quarter ended September 30, 1995 versus $189,000
for the six month period ended September 30, 1994. Loan loss reserves totaled
$3,455,000 at September 30, 1995 and $3,362,000 at March 31, 1995. Management
believes that the reserves for losses on loans are adequate based upon
management's continuing evaluation of the various risks associated with the
Company's loan portfolio. The following table summarizes problem assets for the
periods indicated.
12
<PAGE>
NON-ACCRUAL LOANS & REAL ESTATE OWNED
<TABLE>
<CAPTION>
September 30, March 31, March 31, March 31, March 31,
(dollars in thousands) 1995 1995 1994 1993 1992
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Non-accrual loans:
Residential real estate $ 683 603 780 2,057 1,051
Commercial real estate - - - - -
Consumer - - 7 - 87
Leases 10 - - - -
- ---------------------------------------------------------------------------------------------------------------------------
Total 693 603 787 2,057 1,138
- ---------------------------------------------------------------------------------------------------------------------------
Potential problem loans 546 954 - 2,165 -
Loans contractually delinquent 90
days & still accruing - - - - -
Troubled debt restructurings - - - - -
- ---------------------------------------------------------------------------------------------------------------------------
Total problem loans 1,239 1,557 787 4,222 1,138
- ---------------------------------------------------------------------------------------------------------------------------
Real estate owned, net 541 615 671 2,137 3,696
- ---------------------------------------------------------------------------------------------------------------------------
Total problem assets $ 1,781 2,172 1,458 6,359 4,834
- ---------------------------------------------------------------------------------------------------------------------------
Total problem assets/
Total assets .34% .47% .46% 1.98% 1.60%
- ---------------------------------------------------------------------------------------------------------------------------
Loan loss reserve/
Total problem assets 193.99% 154.79% 229.70% 38.06% 18.45%
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
On April 1, 1995, the provisions of SFAS No. 114 and 118 were adopted by the
Company. Under the new standards, the 1995 reserve for loan losses related to
loans that are identified for evaluation in accordance with SFAS No. 114 is
based on discounted cash flows using the loan's initial effective interest rate
or the fair value of the collateral for certain collateralized dependent loans.
The adoption of SFAS No. 114 and 118 required no increase to the reserve for
loan losses and had no impact on net income in the three or six month period
ended September 30, 1995. The table below illustrates the impaired loans and
related amounts included in loan loss reserves at September 30, 1995 and June
30, 1995:
<TABLE>
<CAPTION>
SCHEDULE OF LOAN IMPAIRMENT
Loan Loss Loan Loss
Balance at Reserve at Balance at Reserve at
September 30, September 30, June 30, June 30,
1995 1995 1995 1995
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
Impaired loans, nonaccruing,
with loan loss reserves $693 $105 $ 487 $ 54
- ------------------------------------------------------------------------------------------------------------------------------
Impaired loans, nonaccruing,
with no loan loss reserves 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------
Impaired loans, accruing,
with loan loss reserves 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------
Impaired loans, accruing,
with no loan loss reserves 0 0 0 0
- ------------------------------------------------------------------------------------------------------------------------------
Total $693 $105 $ 487 $ 54
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
13
<PAGE>
A loan is considered impaired when, based on current information and events,
there is reasonable doubt as to the collection of amounts due according to the
contractual terms of the loan agreement. When this doubt exists, cash receipts
are applied under the contractual terms of the loan agreement first to principal
and then to interest income. Once the recorded principal balance has been
reduced to zero, future cash receipts are applied to interest income, to the
extent that any interest has been foregone. Future cash receipts are recorded as
recoveries of any amount previously charged off.
A loan is also considered impaired if its terms are modified in a troubled debt
restructuring after April 1, 1995. For those accruing impaired loans, cash
receipts are typically applied to principal and interest receivable in
accordance with the terms of the restructured loan agreement. Interest income is
recognized on these loans using the accrual method of accounting.
Loans on nonaccrual status are those for which reasonable doubt exists as to the
full, timely collection of interest or principal, generally including loans
which become contractually past due by 90 days or more with respect to interest
or principal. Loans are charged against the loan loss reserves when management
believes that the collection of the principal is unlikely.
Impaired loans are aggregated with other impaired loans that have similar risk
characteristics as a means of measuring the present value of expected future
cash flows. For application of SFAS No. 114 major risk classifications used to
aggregate loans were type of loan, type of collateral, type of borrower and
industry concentration. Excluded from the provisions of SFAS No. 114 are large
groups of smaller-balance homogeneous loans that are collectively evaluated for
impairment. These loans include residential mortgage, residential construction
and consumer loans.
14
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
-----------------
There are no material pending legal proceedings to which the Company,
the Association or any subsidiary is a party or to which any of their
property is subject.
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
----------------------------------
(11) Computation of per share earnings
Reports on Form 8-K
None
15
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
EAGLE BANCSHARES, INC.
(Registrant)
Date: November 14, 1995 /s/ Conrad J. Sechler, Sr.
--------------------------
Conrad J. Sechler, Sr.
Chairman of the Board,
Chief Executive Officer
and Duly Authorized
Representative
Pursuant to the requirements of the Securities Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant in
the capacities and on the dates indicated.
Date: November 14, 1995 /s/ Zelma B. Martin
--------------------
Zelma B. Martin
Principal Financial and
Accounting Officer
Date: November 14, 1995 /s/ Conrad J. Sechler, Sr.
--------------------------
Conrad J. Sechler, Sr.
Chairman of the Board
16
<PAGE>
EXHIBIT 11
EAGLE BANCSHARES, INC.
Statement re: Computation of per share earnings
The following computations set forth the calculation of primary earnings per
share and fully diluted earnings per share for the three months ending September
30, 1995.
<TABLE>
<CAPTION>
Three months ending September 30, 1995
----------------------------------------
Primary Fully Diluted
<S> <C> <C>
- --------------------------------------------------------------------------------
Net income per share: $ 0.81 $ 0.81
- --------------------------------------------------------------------------------
Weighted average number of common
shares outstanding 1,556,100 1,556,100
Increase due to assumed exercise of
dilutive stock options 33,556 43,282
- --------------------------------------------------------------------------------
Adjusted weighted average number of
common and common equivalent
shares outstanding 1,589,656 1,599,382
- --------------------------------------------------------------------------------
</TABLE>
The following computations set forth the calculation of primary earnings per
share and fully diluted earnings per share for the six months ending September
30, 1995.
<TABLE>
<CAPTION>
Six months ending September 30, 1995
--------------------------------------
Primary Fully Diluted
<S> <C> <C>
- ------------------------------------------------------------------------------
Net income per share: $ 1.50 $ 1.50
- ------------------------------------------------------------------------------
Weighted average number of common
shares outstanding 1,549,944 1,549,944
Increase due to assumed exercise of
dilutive stock options 27,863 37,329
- --------------------------------------------------------------------------------
Adjusted weighted average number of
common and common equivalent
shares outstanding 1,577,807 1,587,278
- --------------------------------------------------------------------------------
</TABLE>
The dilutive effect of common stock equivalents on earnings per share is less
than 3% for the three months and six months ending September 30, 1995;
therefore, simple weighted average shares outstanding are used in computing
earnings per share.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-START> APR-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 9,586
<INT-BEARING-DEPOSITS> 7,225
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 19,767
<INVESTMENTS-CARRYING> 56,022
<INVESTMENTS-MARKET> 57,230
<LOANS> 335,348
<ALLOWANCE> 3,455
<TOTAL-ASSETS> 528,193
<DEPOSITS> 327,660
<SHORT-TERM> 0
<LIABILITIES-OTHER> 4,581
<LONG-TERM> 0
<COMMON> 1,707
0
0
<OTHER-SE> 33,990
<TOTAL-LIABILITIES-AND-EQUITY> 528,193
<INTEREST-LOAN> 17,466
<INTEREST-INVEST> 2,306
<INTEREST-OTHER> 858
<INTEREST-TOTAL> 20,630
<INTEREST-DEPOSIT> 7,953
<INTEREST-EXPENSE> 11,736
<INTEREST-INCOME-NET> 8,840
<LOAN-LOSSES> 54
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 9,364
<INCOME-PRETAX> 3,558
<INCOME-PRE-EXTRAORDINARY> 3,558
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,327
<EPS-PRIMARY> 1.50
<EPS-DILUTED> 1.50
<YIELD-ACTUAL> 9.16
<LOANS-NON> 693
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 546
<ALLOWANCE-OPEN> 3,362
<CHARGE-OFFS> 17
<RECOVERIES> 56
<ALLOWANCE-CLOSE> 3,455
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
