<PAGE> 1
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 December 31, 1995
-----------------
OR
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.
<TABLE>
<S> <C>
Class Outstanding at January 31, 1996
-------------------------------- -----------------------------------------
Common Stock, $1.00 Par Value 3,117,200 shares
</TABLE>
Index of Exhibit on Page 18
<PAGE> 2
EAGLE BANCSHARES, INC. AND SUBSIDIARIES
FORM 10-Q
FOR THE QUARTER ENDED DECEMBER 31, 1995
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
Number
<S> <C> <C>
PART I. Financial Information
Item 1. Financial Statements
Consolidated Statements of Financial Condition at
December 31, 1995 and March 31, 1995 3
Consolidated Statements of Income -
Three and Nine Months ended December 31, 1995 and 1994 4
Consolidated Statements of Cash Flows -
Nine months ended December 31, 1995 and 1994 5
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
PART II. Other Information
Item 1. Legal Proceedings 16
Item 2. Changes in Securities 16
Item 3. Defaults upon Senior Securities 16
Item 4. Submission of Matters to a Vote of Security Holders 16
Item 5. Other Information 16
Item 6. Exhibits and Reports on Form 8-K 16
Signatures 17
Index of Exhibits 18
</TABLE>
2
<PAGE> 3
EAGLE BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF
FINANCIAL CONDITION
<TABLE>
<CAPTION>
(Unaudited) DECEMBER 31, March 31,
(in thousands except per share data) 1995 1995
------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets:
Cash and amounts due from banks $ 9,800 $ 6,214
Interest-bearing deposits 6,533 144
Loans receivable held for sale 63,973 41,220
Investment securities available for sale 69,274 20,939
Investment securities held to maturity 53,545 57,599
Loans receivable, net 316,585 303,906
Stock in Federal Home Loan Bank, at cost 7,980 5,984
Premises and equipment 10,472 8,299
Real estate acquired in settlement of loans, net 439 615
Real estate held for development and sale 11,895 6,620
Accrued interest receivable 3,905 2,996
Other assets 3,914 2,781
------------------------------------------------------------------------------------------------------
Total assets $558,315 $457,317
------------------------------------------------------------------------------------------------------
Liabilities and Stockholders' Equity
Liabilities:
Deposits $332,288 $286,315
Advance payments by borrowers for property taxes and insurance 1,197 2,187
Federal Home Loan Bank advances 164,889 119,953
Deferred income taxes 558 441
Drafts outstanding 17,180 10,778
Accrued expenses and other liabilities 5,072 4,007
------------------------------------------------------------------------------------------------------
Total liabilities 521,184 423,681
------------------------------------------------------------------------------------------------------
Stockholders' equity:
Common stock, $1.00 par value, 10,000,000 shares authorized,
3,419,000 and 3,389,000 issued in December and March, respectively 3,419 1,695
Additional paid-in capital 8,283 8,200
Retained earnings, substantially restricted 26,028 25,075
Net unrealized gain on investment securities 651 46
Employee Stock Ownership Plan (ESOP) debt - (11)
Unamortized restricted stock (174) (293)
Treasury stock, 301,800 shares at cost (1,076) (1,076)
------------------------------------------------------------------------------------------------------
Total stockholders' equity 37,131 33,636
------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $558,315 $457,317
------------------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE> 4
EAGLE BANCSHARES, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
(Unaudited) December 31, December 31,
(in thousands except per share data) 1995 1994 1995 1994
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest income:
Interest on loans $ 9,366 $ 6,975 $26,832 $18,668
Interest on mortgage-backed securities 431 465 1,289 1,459
Interest on investment securities and other interest earning
assets 1,136 945 3,442 2,965
------------------------------------------------------------------------------------------------------------------
Total interest income 10,933 8,385 31,563 23,092
------------------------------------------------------------------------------------------------------------------
Interest expense:
Interest on deposits 4,336 2,972 12,289 8,402
Interest on borrowings 1,920 1,107 5,703 2,274
------------------------------------------------------------------------------------------------------------------
Total interest expense 6,256 4,079 17,992 10,676
------------------------------------------------------------------------------------------------------------------
Net interest income 4,677 4,306 13,571 12,416
Provision for loan losses 309 176 363 547
------------------------------------------------------------------------------------------------------------------
Net interest income after provision for loan losses 4,368 4,130 13,208 11,869
------------------------------------------------------------------------------------------------------------------
Other income:
Mortgage production fees 2,413 623 4,964 2,543
Gain on sale of loans - 131 81 737
Gain on sale of real estate held for development 67 - 412 -
Gain on sale of mortgage-backed securities - - - 14
Service charges 206 154 558 446
Miscellaneous 295 421 1,048 1,205
------------------------------------------------------------------------------------------------------------------
Total other income 2,981 1,329 7,063 4,945
------------------------------------------------------------------------------------------------------------------
Other expenses:
Salaries and employee benefits 3,266 2,282 9,017 7,191
Net occupancy expense 578 506 1,610 1,402
Provision for losses on real estate owned - - - 10
Marketing expense 115 103 344 277
Federal insurance premium 188 151 517 447
Data processing 260 201 865 593
Miscellaneous 915 627 2,333 1,950
------------------------------------------------------------------------------------------------------------------
Total other expenses 5,322 3,870 14,686 11,870
------------------------------------------------------------------------------------------------------------------
Income before income taxes 2,027 1,589 5,585 4,944
Income tax expense 594 585 1,825 1,862
------------------------------------------------------------------------------------------------------------------
Net income $ 1,433 $ 1,004 $ 3,760 $ 3,082
------------------------------------------------------------------------------------------------------------------
Primary earnings per share of common stock:
Net Income $ .45 $ .33 $ 1.18 $ 1.00
------------------------------------------------------------------------------------------------------------------
Fully diluted earnings per share of common stock:
Net Income $ .44 $ .33 $ 1.18 $ 1.00
------------------------------------------------------------------------------------------------------------------
</TABLE>
4
<PAGE> 5
EAGLE BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
(Unaudited)
(in thousands)
Nine Months ended December 31, 1995 1994
--------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 3,760 $ 3,082
Adjustments to reconcile net income to net cash used in
operating activities:
Depreciation, amortization and accretion 899 727
Provision for loan losses 363 547
Provision for losses on real estate owned - 10
Loss (gain) on sale of real estate held for development and (412) -
sale (51) (7)
Loss (gain) on sale of real estate acquired in settlement of (81) (737)
loans - (14)
Gain on sale of loans 119 189
Gain on sale of mortgage-backed securities (1,315) (1,378)
Amortization of restricted stock award 335,557 240,352
Amortization of deferred loan fees (358,229) (228,664)
Proceeds from sale of loans receivable held for sale
Originations of loans held for sale (909) (1,154)
Changes in assets and liabilities: (1,418) (1,534)
(Increase) decrease in accrued interest receivable 6,402 (2,682)
Decrease (increase) in other assets
Increase (decrease) in drafts outstanding 1,182 334
Increase (decrease) in accrued expense
and other liabilities
--------------------------------------------------------------------------------------------------
Net cash provided by (used in) operating activities $ (14,133) $ 9,071
--------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Purchase of investment securities available for sale (47,583) (9,112)
Proceeds from sale of investment securities
available for sale - 5,123
Purchases of investment securities held to maturity - (27,139)
Principle payments received on investments
available for sale 1,770 2,701
Principle payments received on investments
held to maturity 2,198 1,220
Proceeds from maturities of investment securities
held to maturity - 5,999
Proceeds from maturities of investment securities
available for sale 464 -
Loan originations, net of repayments (10,602) (92,453)
Purchases of loans receivable (1,705) (2,268)
Proceeds from sale of loans receivable - 14,988
Proceeds from sale of real estate acquired in
settlement of loans 405 516
Purchases of FHLB stock (2,416) (2,270)
Redemption of FHLB stock 420 601
Purchase of premises and equipment (2,910) (2,135)
Additions to real estate held for development and sale (4,863) (3,395)
--------------------------------------------------------------------------------------------------
Net cash (used in) provided by investing activities $ (64,822) $ (107,624)
--------------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE> 6
EAGLE BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
<TABLE>
<CAPTION>
(Unaudited)
(in thousands)
Nine Months ended December 31, 1995 1994
------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from financing activities:
Net change in time deposits $ 48,359 $ 25,989
Net change in demand deposit accounts (2,386) 4,187
Repayment of FHLB advances and other borrowings (187,864) (119,858)
Proceeds from FHLB advances and other borrowings 232,800 191,252
Dividends paid (1,182) (1,010)
Principal reduction of ESOP debt 11 112
Proceeds from exercise of stock options 182 36
Increase (decrease) in advance payments from borrowers
for property taxes and insurance (990) 531
------------------------------------------------------------------------------------------------------
Net cash (used in) provided by financing activities $ 88,930 $ 101,239
------------------------------------------------------------------------------------------------------
Net (decrease) increase in cash and cash equivalents 9,975 2,686
Cash and cash equivalents at beginning of year 6,358 7,858
------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 16,333 $ 10,544
------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------
Supplemental disclosure of cash paid during period for:
------------------------------------------------------------------------------------------------------
Interest $ 17,841 $ 10,458
------------------------------------------------------------------------------------------------------
Income taxes $ 1,707 $ 2,148
------------------------------------------------------------------------------------------------------
Supplemental schedule of noncash investing and financing
activities:
------------------------------------------------------------------------------------------------------
Acquisition of real estate in settlement on loans $ 297 $ 235
------------------------------------------------------------------------------------------------------
Loans made to finance real estate $ 475 $ 575
------------------------------------------------------------------------------------------------------
Tranfer of investment securities from held to maturity to
available for sale $ 1,977 $ -
------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements
6
<PAGE> 7
EAGLE BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO INTERIM UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 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 nine
month period ended December 31, 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.
7
<PAGE> 8
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 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. As of December 31, 1995, the
Company elected to reclassify a debt security from its held-to-maturity
portfolio to available for sale. The security's amortized cost was $1,977,000.
As a result of the reclassification, the Company recorded an unrealized gain of
$102,000.
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.
8
<PAGE> 9
D. PROPOSED LEGISLATION
There is proposed legislation, as part of the Budget Reconciliation Act of
1995, 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 $.80-$.90 per $100 to be charged on SAIF insured
deposits at March 31, 1995. If the assessment were levied at $.85 per $100 of
SAIF insured deposits, management estimates the assessment would decrease the
Company's earning by approximately $1.5 million net of tax. Thereafter, it is
estimated that the level of ongoing premiums paid to the SAIF would be reduced
from the Company's current rate of $.23 per $100 of SAIF insured deposits to
between $0 and $.04 per $100 of SAIF insured deposits, thereby reducing in
future periods the premium payments currently paid by the Company. Assuming the
Company is subject to a premium at the rate of $.04 per $100 of deposits
subsequent to the one-time assessment, the annualized premium reduction would
be approximately $391,000 net of tax based upon December 31, 1995 deposits.
E. RECENT DEVELOPMENTS
On January 5, 1996, the Company filed a registration statement with the
Securities and Exchange Commission covering up to 1,495,000 shares of Common
Stock to be offered in an underwritten public offering. On February 13, 1996,
the Company announced the public offering of 1,300,000 shares of Common Stock
at $16.00 per share on February 12, 1996. The underwritten public offering is
co-managed by Interstate/Johnson Lane Corporation and Morgan Keegan & Co. The
purpose of the equity financing is to provide additional capital to the
Company's subsidiary, Tucker Federal Savings and Loan Association, to fund loan
and deposit growth, to finance possible future acquisitions and for working
capital purposes.
9
<PAGE> 10
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 16.1% from $286,315,000 at March 31,
1995 to $332,288,000 at December 31, 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 December 31, 1995, the Association's
liquidity ratio was 5.34%.
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 56% to $358 million at December 31, 1995 compared to $229 million for
the same nine 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 $19 million
at December 31, 1995 from $5.7 million at March 31, 1995.
10
<PAGE> 11
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 December
31, 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 $32,793 $ 8,231 $24,562
Core Capital $32,793 $16,461 $16,332
Risk-based Capital $36,171 $27,359 $ 8,812
- ------------------------------------------------------------------------------------
</TABLE>
On February 13, 1996, the Company announced the public offering of 1,300,000
shares of Common Stock at $16.00 per share on February 12, 1996. The net
proceeds to the Company from the sale of the Common Stock offered hereby are
estimated to be approximately $19,483,656 ($22,437,906 if the Underwriters'
over-allotment option is exercised in full), after deduction of the offering
expenses payable by the Company. The Company currently intends to contribute
substantially all of the net proceeds to the Association to increase the
Association's capital ratios for the purpose of supporting loan and deposit
growth, to finance possible future acquisitions and for working capital. The
additional Association capital will be leveraged with deposits and advances
from the FHLB to support growth in its loan portfolio.
RESULTS OF OPERATIONS
Net income increased 43% for the quarter and 22% for the nine months ended
December 31, 1995. Net income for the three and nine months ended December 31,
1995 was $1,433,000 and $3,760,000 compared to $1,004,000 and $3,082,000 for
the same period ended December 31, 1994. The increase in net income is
attributable to an increase in net interest income, as well as, non-interest
income. The increase in net interest income is a result of an increase in loans
receivable. Net interest income increased 11% for the nine month period ending
December 31, 1995 to $13,208,000 from $11,869,000 for the same period ending
December 31, 1994. The increase in non-interest income is primarily a result of
an increase in mortgage production fees.
11
<PAGE> 12
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 79 basis points to 3.67% for the period ended
December 31, 1995 from 4.46% for the same period ended December 31, 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 25
basis points from 8.92% for the nine months ended December 31, 1994 to 9.17%
for the same period ended December 31, 1995. Additionally, the cost of
interest bearing liabilities increased 104 basis points from 4.46% for the nine
months ended December 31, 1994 to 5.50% for the nine months ended December 31,
1995.
The following table summarizes the net interest spread for the periods
indicated.
<TABLE>
<CAPTION>
Nine Month Period Ended
December 31,
1995 1994
-----------------------
<S> <C> <C>
Weighted average yield on all interest earning assets 9.17% 8.92%
Weighted average cost of all interest bearing liabilities 5.50% 4.46%
---------------------------------------------------------------------------------------------
Net interest spread 3.67% 4.46%
---------------------------------------------------------------------------------------------
</TABLE>
OTHER INCOME
Other income increased 43% for the current nine month period to $7,063,000
compared to $4,945,000 for the same period ended December 31, 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
70% of total other income for the nine month period ending December 31, 1995
versus 51% for the same nine month period ended December 31, 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 148 basis points for the current nine month
period from 106 basis points for the same period last year. Loans sold and
funded in the secondary market increased for the first nine months of the
current year to $336 million from $240 million for the same period ended
December 31, 1994.
12
<PAGE> 13
During the nine month period ended December 31, 1995, the Company recorded a
gain on sale of loans of $81,000. During the nine month period ended December
31, 1994, the Company recorded a gain on sale of loans of $737,000 and a gain
on the sale of mortgage-backed securities of $14,000. The gain on sale of
loans recorded during the first nine months in 1994, was primarily 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, leases and mortgage-backed securities as a continuing source of
income.
During the nine month period ended December 31, 1995, the Company recorded a
gain of $412,000 on the sale of real estate held for development and sale. The
Company has invested in four 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 nine months ended December 31, 1995, 25
lots were sold and a gain of $355,000 was recorded. The second is a 323 lot
subdivision located in Forsyth County, Georgia. Phase One of this development
is substantially complete. During the quarter 31 lots in Phase One were sold
and a gain of $57,000 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
December 31, 1995, this project was completed and was 100% occupied. The tax
credits of $2.6 million will be recognized over the next 10 years. In addition,
the Company and an unaffiliated third party formed BN Development Company LLC
for the purpose of acquiring a commercial lot and developing and leasing a
30,000 square foot Barnes & Noble, Inc. superstore. Upon completion of
construction, BN Development Company LLC will purchase and lease the facility
to Barnes & Noble.
OTHER EXPENSES
Other expenses increased 24% for the nine month period ended December 31, 1995
to $14,686,000 compared to $11,870,000 for the comparable period ending
December 31, 1994. The increase is in part due to the increase in salaries and
benefits from $7,191,000 for the nine months ended December 31, 1994 to
$9,017,000 for the nine months ended December 31, 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.
13
<PAGE> 14
RESERVE FOR LOAN LOSSES
At December 31, 1995, the Association had total problem assets of $4,864,000
compared to problem assets of $2,172,000 at March 31, 1995. Nonperforming
assets increased to $2,712,000 at December 31, 1995 from $1,218,000 at March
31, 1995. Potential problem loans increased from $954,000 at March 31, 1995 to
$2,152,000 at December 31, 1995. The increase in potential problem loans
results primarily from the classification of six equipment leases to one
borrower with an aggregate amount of $1,900,000. The Association set aside
$309,000 of additional reserves for possible loan losses during the quarter
ended December 31, 1995 and $363,000 for the nine month period ended December
31, 1995. The Association set aside $176,000 and $547,000 for the quarter and
nine months ended December 31, 1994. Loan loss reserves totaled $3,752,000 at
December 31, 1995 versus $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.
NON-ACCRUAL LOANS & REAL ESTATE OWNED
<TABLE>
<CAPTION>
December 31, 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 $2,273 603 780 2,057 1,051
Commercial real estate - - - - -
Consumer - - 7 - 87
Leases - - - - -
-----------------------------------------------------------------------------------------------------------------
Total $2,273 603 787 2,057 1,138
-----------------------------------------------------------------------------------------------------------------
Potential problem loans 2,152 954 - 2,165 -
Loans contractually delinquent
90 days & still accruing - - - - -
Troubled debt restructurings - - - - -
-----------------------------------------------------------------------------------------------------------------
Total problem loans 4,425 1,557 787 4,222 1,138
-----------------------------------------------------------------------------------------------------------------
Real estate owned, net 439 615 671 2,137 3,696
-----------------------------------------------------------------------------------------------------------------
Total problem assets $4,864 2,172 1,458 6,359 4,834
-----------------------------------------------------------------------------------------------------------------
Total problem assets/
Total assets .87% .47% .46% 1.98% 1.60%
-----------------------------------------------------------------------------------------------------------------
Loan loss reserve/
Total problem assets 77.13% 154.79% 229.70% 38.06% 18.45%
-----------------------------------------------------------------------------------------------------------------
</TABLE>
14
<PAGE> 15
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.
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.
At December 31, 1995, the recorded investment in loans that are considered to
be impaired under Statement 114 was $1,887,000 of which all are on an accrual
basis. The related reserve for loan loss is $281,000. At December 31, 1995, the
Company had no loans considered to be impaired that were on a nonaccrual basis
or with no related loan loss reserves. For the three and nine month period
ended December 31, 1995, the average recorded investment in impaired loans was
$1,884,000 and $1,413,000, respectively. The Company recognized interest income
from impaired loans of $61,000 and $111,000 for the three and nine month
periods ended December 31, 1995.
15
<PAGE> 16
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
(27) Financial Data Schedule (for SEC use only)
Reports on Form 8-K
None
16
<PAGE> 17
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: February 14, 1996 /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: February 14, 1996 /s/ Richard B. Inman, Jr.
-------------------------
Richard B. Inman, Jr.
Secretary and Treasurer,
Principal Financial
and Accounting Officer
Date: February 14, 1996 /s/ Conrad J. Sechler, Sr.
--------------------------
Conrad J. Sechler, Sr.
Chairman of the Board
17
<PAGE> 18
EAGLE BANCSHARES, INC.
INDEX OF EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description Page No.
- ------- ----------- --------
<S> <C> <C>
11 Computation of per share earnings 19
27 Financial Data Schedule (for SEC use only)
</TABLE>
18
<PAGE> 1
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 December
31, 1995.
<TABLE>
<CAPTION>
Three months ending December 31, 1995
-------------------------------------
Primary Fully Diluted
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net income per share: $ 0.45 $ 0.44
- --------------------------------------------------------------------------------------------------------------
Weighted average number of common shares
outstanding 3,113,939 3,113,939
Increase due to assumed exercise of
dilutive stock options 94,934 108,563
- --------------------------------------------------------------------------------------------------------------
Adjusted weighted average number of
common and common equivalent shares
outstanding 3,208,873 3,222,502
- --------------------------------------------------------------------------------------------------------------
</TABLE>
The following computations set forth the calculation of primary earnings per
share and fully diluted earnings per share for the nine months ending December
31, 1995.
<TABLE>
<CAPTION>
Nine months ending December 31, 1995
------------------------------------
Primary Fully Diluted
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net income per share: $ 1.18 $ 1.18
- --------------------------------------------------------------------------------------------------------------
Weighted average number of common shares
outstanding 3,104,589 3,104,589
Increase due to assumed exercise of
dilutive stock options 70,974 89,519
- --------------------------------------------------------------------------------------------------------------
Adjusted weighted average number of
common and common equivalent shares
outstanding 3,175,563 3,194,108
- --------------------------------------------------------------------------------------------------------------
</TABLE>
19
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-START> APR-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 9,800
<INT-BEARING-DEPOSITS> 6,533
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 69,274
<INVESTMENTS-CARRYING> 53,545
<INVESTMENTS-MARKET> 55,160
<LOANS> 316,585
<ALLOWANCE> 3,752
<TOTAL-ASSETS> 558,315
<DEPOSITS> 332,288
<SHORT-TERM> 0
<LIABILITIES-OTHER> 5,072
<LONG-TERM> 0
0
0
<COMMON> 3,419
<OTHER-SE> 33,712
<TOTAL-LIABILITIES-AND-EQUITY> 558,315
<INTEREST-LOAN> 26,832
<INTEREST-INVEST> 3,442
<INTEREST-OTHER> 1,289
<INTEREST-TOTAL> 31,563
<INTEREST-DEPOSIT> 12,289
<INTEREST-EXPENSE> 17,992
<INTEREST-INCOME-NET> 13,208
<LOAN-LOSSES> 363
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 14,686
<INCOME-PRETAX> 5,585
<INCOME-PRE-EXTRAORDINARY> 5,585
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,760
<EPS-PRIMARY> 1.18
<EPS-DILUTED> 1.18
<YIELD-ACTUAL> 9.17
<LOANS-NON> 2,273
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 2,152
<ALLOWANCE-OPEN> 3,362
<CHARGE-OFFS> 37
<RECOVERIES> 64
<ALLOWANCE-CLOSE> 3,752
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
