<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[x] Quarterly Report Pursuant to Section13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended September 30, 2000
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act OF 1934
Commission file number 0-14379
EAGLE BANCSHARES, INC.
Incorporated in the State of Georgia
IRS Employer Identification Number 58-1640222
Address: 4419 Cowan Road, Tucker, Georgia 30084-4441
Telephone: (770) 908-6690
Securities Registered Pursuant to Section 12(b) of the Act: None
Securities Registered Pursuant to Section 12(g) of the Act: Common
stock, par value $1.00, which is listed on the Nasdaq National Market
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: Common Stock, $1.00 Par Value
Shares Outstanding at October 31, 2000: 5,637,135
Index of Exhibits on Page 38
<PAGE> 2
EAGLE BANCSHARES, INC. AND SUBSIDIARIES
FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 2000
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
Number
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of Financial Condition
at September 30, 2000 and March 31, 2000 ...................................................... 3
Consolidated Statements of Income at Three and
Six Months ended September 30, 2000 and 1999 .................................................. 4
Consolidated Statements of Cash Flows at Six
Months ended September 30, 2000 and 1999 ...................................................... 5
Notes to Consolidated Financial Statements .................................................... 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations .......................................................... 15
PART II. OTHER INFORMATION
Item 1. Legal Proceedings ............................................................................ 35
Item 2. Changes in Securities ........................................................................ 35
Item 3. Defaults upon Senior Securities .............................................................. 35
Item 4. Submission of Matters to a Vote of Security Holders .......................................... 36
Item 5. Other Information ............................................................................ 36
Item 6. Exhibits and Reports on Form 8-K ............................................................. 36
Signatures ................................................................................... 37
Index of Exhibits ............................................................................ 38
</TABLE>
2
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
EAGLE BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
<TABLE>
<CAPTION>
SEPTEMBER 30, March 31,
(dollars in thousands except per share data) 2000 2000
<S> <C> <C>
ASSETS:
Cash and amounts due from banks $ 29,777 $ 28,572
Accrued interest receivable 10,430 8,882
Securities available for sale 214,316 210,644
Investment securities held to maturity 56,565 61,164
Loans held for sale 91,522 49,240
Loans receivable, net 791,670 780,874
Investment in real estate 57,891 44,956
Real estate acquired in settlement of loans, net 1,725 1,521
Stock in Federal Home Loan Bank, at cost 13,295 14,665
Premises and equipment, net 23,225 24,204
Deferred income taxes 4,261 5,468
Other assets 21,017 14,881
-------------------------------
Total assets $ 1,315,694 $ 1,245,071
-------------------------------
LIABILITIES:
Deposits $ 843,518 $ 769,952
Federal Home Loan Bank advances and other borrowings 337,555 362,372
Advance payments by borrowers for property taxes and insurance 1,444 1,076
Guaranteed preferred beneficial interests in debentures (trust preferred
Securities) 28,750 28,750
Accrued expenses and other liabilities 26,972 8,450
-------------------------------
Total liabilities 1,238,239 1,170,600
-------------------------------
STOCKHOLDERS' EQUITY:
Common stock, $1 par value; 10,000,000 shares authorized, 6,238,935 shares
issued at September 30, and March 31, 2000 6,239 6,239
Additional paid-in capital 39,518 39,518
Retained earnings 45,598 44,563
Accumulated other comprehensive income (5,643) (7,477)
Employee Stock Ownership Plan note payable (1,771) (1,886)
Treasury stock, 601,800 shares at cost, at September 30, and March 31, 2000 (6,486) (6,486)
-------------------------------
Total stockholders' equity 77,455 74,471
-------------------------------
Total liabilities and stockholders' equity $ 1,315,694 $ 1,245,071
-------------------------------
</TABLE>
3
<PAGE> 4
EAGLE BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
(dollars in thousands except per share data) SEPTEMBER 30, SEPTEMBER 30,
----------------------------------------------------------------------------------------------------------------------------------
2000 1999 2000 1999
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INTEREST INCOME:
Interest on loans $ 19,880 $16,948 $ 38,929 $33,765
Interest on mortgage-backed securities 2,506 2,151 5,002 4,173
Interest and dividends on securities and other interest-earning assets 2,421 2,340 4,869 4,827
----------------------------------------------------------------------------------------------------------------------------------
Total interest income 24,807 21,439 48,800 42,765
----------------------------------------------------------------------------------------------------------------------------------
INTEREST EXPENSE:
Interest on deposits 10,865 8,851 20,348 18,520
Interest on FHLB advances and other borrowings 4,248 3,448 8,755 6,328
Interest on long-term debt 623 623 1,245 1,245
----------------------------------------------------------------------------------------------------------------------------------
Total interest expense 15,736 12,922 30,348 26,093
----------------------------------------------------------------------------------------------------------------------------------
Net interest income 9,071 8,517 18,452 16,672
PROVISION FOR LOAN LOSSES 500 100 950 400
----------------------------------------------------------------------------------------------------------------------------------
Net interest income after provision for loan losses 8,571 8,417 17,502 16,272
----------------------------------------------------------------------------------------------------------------------------------
NON-INTEREST INCOME:
Mortgage production fees 1,321 1,460 2,562 4,242
Gain on sales of investment in real estate 2,383 1,176 3,525 3,253
Real estate commissions, net 260 203 522 546
Rental income -- -- -- 165
Service charges 834 527 1,633 1,138
Gain on sales of investment securities available for sale -- 19 -- 19
Gain on sales of fixed assets 54 176 52 176
Gain on sales of real estate acquired in settlement of loans 25 99 25 134
Gain on sale of branch -- -- -- 673
Equity in loss in Nextbill.com (280) -- (628) --
Miscellaneous 404 751 1,019 1,198
----------------------------------------------------------------------------------------------------------------------------------
Total non-interest income 5,001 4,411 8,710 11,544
----------------------------------------------------------------------------------------------------------------------------------
NON-INTEREST EXPENSES:
Salaries and employee benefits 4,778 4,907 9,575 11,034
Net occupancy expense 1,281 1,504 2,616 3,026
Data processing expense 751 698 1,536 1,365
Federal insurance premium 98 106 136 287
Marketing expense 601 430 1,237 1,099
Professional services 980 406 1,885 836
Exit costs associated with disposal of wholesale lending group -- -- 1,142 --
Miscellaneous 1,733 1,684 3,685 3,403
----------------------------------------------------------------------------------------------------------------------------------
Total non-interest expenses 10,222 9,735 21,812 21,050
----------------------------------------------------------------------------------------------------------------------------------
Income before income taxes 3,350 3,093 4,400 6,766
INCOME TAX EXPENSE 1,209 846 1,561 2,078
----------------------------------------------------------------------------------------------------------------------------------
NET INCOME $ 2,141 $ 2,247 $ 2,839 $ 4,688
----------------------------------------------------------------------------------------------------------------------------------
EARNINGS PER COMMON SHARE - BASIC $ 0.38 $ 0.40 $ 0.50 $ 0.84
----------------------------------------------------------------------------------------------------------------------------------
EARNINGS PER COMMON SHARE - DILUTED $ 0.38 $ 0.40 $ 0.50 $ 0.83
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
4
<PAGE> 5
EAGLE BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months ended
September 30,
(dollars in thousands) 2000 1999
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 2,839 $ 4,688
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation, amortization and accretion 1,369 1,128
Provision for loan losses 950 400
Provision for losses on real estate acquired in settlement of loans 25 50
(Gain)/loss on sales of securities available for sale -- (19)
(Gain)/loss on sales of real estate acquired in settlement of loans (25) (134)
Gain on sales of investment in real estate (3,525) (3,253)
Gain on sales of premises and equipment (52) (176)
Gain on sale of branch -- (673)
Amortization of restricted stock -- 50
Deferred income tax (benefit)/expense 226 (358)
Proceeds from sales of loans held for sale 252,141 586,003
Originations of loans held for sale (294,423) (513,452)
Changes in assets and liabilities:
(Increase) decrease in accrued interest receivable (1,548) 29
(Increase) decrease in other assets (6,220) 1,813
Increase (decrease) in accrued expense and other liabilities 18,522 (10,683)
--------------------------------------------------------------------------------------------------------------------------------
Net cash (used in) provided by operating activities (29,721) 65,413
--------------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of securities available for sale (9,869) (20,860)
Proceeds from sales of securities available for sale -- 1,807
Purchases of investment securities held to maturity -- (9,884)
Principal payments received on securities available for sale 9,175 14,787
Principal payments received on investment securities held to maturity 2,590 4,701
Proceeds from calls and maturities of securities available for sale -- --
Proceeds from calls and maturities of investment securities held to maturity 2,053 9,067
Loan originations, net of repayments (12,505) (42,742)
Proceeds from sale of real estate acquired in settlement of loans 570 976
Purchases of FHLB stock (3,430) (9,307)
Redemption of FHLB stock 4,800 6,008
Proceeds from sales of premises and equipment, net 252 2,018
Purchase of premises and equipment (728) (3,825)
Additions to investment in real estate (24,414) (11,384)
Proceeds from sales of investment in real estate 15,004 15,014
--------------------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities $ (16,502) $ (43,624)
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE> 6
EAGLE BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
(Unaudited)
<TABLE>
<CAPTION>
Six Months
ended September 30,
(dollars in thousands) 2000 1999
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Net change in time deposits $ 61,826 $ (77,198)
Net change in demand deposit accounts 11,740 (17,665)
Payments related to sale of branch -- (11,859)
Repayment of FHLB advances and other borrowings (380,058) (308,355)
Proceeds from FHLB advances and other borrowings 355,241 385,750
Principal reduction of ESOP debt 115 92
Proceeds from exercise of stock options -- (9)
Retirement of restricted stock -- (50)
Cash dividends paid (1,804) (1,783)
Decrease in advance payments from borrowings for
property taxes and insurance 368 (374)
----------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities 47,428 (31,451)
----------------------------------------------------------------------------------------------------------------------
NET DECREASE IN CASH AND CASH EQUIVALENTS 1,205 (9,662)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 28,572 27,839
----------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 29,777 $ 18,177
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURE OF CASH PAID DURING PERIOD FOR:
Interest $ 9,619 $ 27,474
Income taxes 200 20
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
Acquisition of real estate in settlement on loans 861 470
Loans made to finance real estate acquired in settlement of loans 87 --
Loans made to finance sales of investments in real estate -- 325
Dividends payable 902 890
----------------------------------------------------------------------------------------------------------------------
</TABLE>
6
<PAGE> 7
Eagle Bancshares, Inc. and Subsidiaries
Notes to Interim Unaudited Consolidated Financial Statements
September 30, 2000
A. Corporate Profile
Eagle Bancshares, Inc. (the "Company") is a unitary savings and loan
holding company engaged in community banking, mortgage banking, real estate
development and sales, and mezzanine financing. The Company has three
subsidiaries, Tucker Federal Bank (the "Bank"), Eagle Real Estate Advisors, Inc.
("EREA") and Eagle Bancshares Capital Group, Inc. ("EBCG"). Additionally, the
Company invests in real estate through limited liability companies and
consolidates these affiliates when at least a 50% equity ownership interest
exists.
B. 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, 2000, 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 six month period
ended September 30, 2000, are not necessarily indicative of the results that may
be expected for the fiscal year ending March 31, 2001.
C. 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.
D. Disposal of Wholesale Lending Group
In May 2000, after considering among other things, the historical
profitability, trends in technology, declining margins, business prospects and
exit costs, the Board of Directors authorized management to execute a detailed
plan to exit the wholesale mortgage operation. This plan included informing
personnel, retaining advisors, and determining the cost to dispose of the
operation. The Company entered into an agreement to sell its wholesale
operations to e-Jumbo.com on October 6, 2000. e-Jumbo.com terminated the
agreement because they were unable to arrange necessary financing. Currently
management is negotiating the sale of the operation to other purchasers;
however, there are no binding agreements for such sale at this time.
During the quarter ended June 30, 2000, the Company recorded $1,142,000
in pre-tax charges related to the exiting from its wholesale mortgage operation.
These charges included: cost of the transaction, severance and termination
related accruals, write-off of certain tangible assets with no ongoing benefit
to the Company and certain contract termination fees. The following table shows
the related charges and the remaining balance.
7
<PAGE> 8
<TABLE>
<CAPTION>
Utilized in Remaining Balance
(dollars in thousands) Pre-tax fiscal 2001 September 30, 2000
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Transaction costs $ 100,000 $ 50,000 $ 50,000
Severance and termination accruals 175,000 -- 175,000
Write-off of tangible assets 479,000 -- 479,000
Contract termination fees 388,000 148,000 240,000
-----------------------------------------------------------------------------------------------------------
Total related charges $1,142,000 $198,000 $944,000
-----------------------------------------------------------------------------------------------------------
</TABLE>
E. Computation Of Per Share Earnings
Basic earnings per share are calculated with the weighted average
number of common shares outstanding during each period. Diluted earnings per
common share are based on the weighted average number of common shares
outstanding during each period, plus common share equivalents calculated for
stock options and restricted stock outstanding using the treasury stock method.
In the calculation of basic and diluted earnings per share, net income
is identical. Below is a reconciliation for the three month periods ended
September 30, 2000 and 1999, of the difference between average basic common
shares outstanding and average diluted common shares outstanding.
<TABLE>
<CAPTION>
(dollars in thousands except per share data) THREE MONTHS ENDED
SEPT. 30, 2000 Sept. 30, 1999
-----------------------------------
<S> <C> <C>
Basic
Net income $2,141 $2,247
-----------------------------------
Average common shares 5,637 5,560
-----------------------------------
Earnings per common share - basic $ 0.38 $ 0.40
-----------------------------------
Diluted
Net income $2,141 $2,247
-----------------------------------
Average common shares - basic 5,637 5,560
Incremental shares outstanding 33 117
Average common shares - diluted 5,670 5,677
-----------------------------------
Earnings per common share - diluted $ 0.38 $ 0.40
-----------------------------------
</TABLE>
8
<PAGE> 9
Below is a reconciliation for the six month periods ended September 30,
2000 and 1999, of the difference between average basic common shares outstanding
and average diluted common shares outstanding.
<TABLE>
<CAPTION>
(dollars in thousands except per share data) SIX MONTHS ENDED
SEPT. 30, 2000 Sept. 30, 1999
-----------------------------------
<S> <C> <C>
Basic
Net income $2,839 $4,688
-----------------------------------
Average common shares 5,637 5,560
-----------------------------------
Earnings per common share - basic $ 0.50 $ 0.84
-----------------------------------
Diluted
Net income $2,839 $4,688
-----------------------------------
Average common shares - basic 5,637 5,560
Incremental shares outstanding 35 120
Average common shares - diluted 5,672 5,680
-----------------------------------
Earnings per common share - diluted $ 0.50 $ 0.83
-----------------------------------
</TABLE>
F. Accumulated Other Comprehensive Income
SFAS No. 130, "Reporting Comprehensive Income," establishes standards
for the reporting and displaying of other comprehensive income. Comprehensive
income is defined as the change in equity from all transactions other than those
with stockholders. Other comprehensive income includes the change in net
unrealized gains or losses on certain debt and equity securities, foreign
currency transactions, and minimum pension liability adjustments. The Company's
comprehensive income consists of net income and unrealized gains and losses on
securities available for sale, net of income taxes.
Comprehensive income for the three and six month period ended September
30, 2000 and 1999 is calculated as follows:
<TABLE>
<CAPTION>
(dollars in thousands) THREE MONTHS ENDED SIX MONTHS ENDED
-----------------------------------------------------------
SEPT. 30, Sept. 30, SEPT. 30, Sept. 30,
2000 1999 2000 1999
-----------------------------------------------------------
<S> <C> <C> <C> <C>
Unrealized gains (losses), net, recognized in other accumulated
comprehensive income:
Before income tax $ 3,782 ($2,254) $ 2,815 ($6,995)
Income tax 1,349 (856) 981 (2,655)
Net of income tax $ 2,433 ($1,398) $ 1,834 ($4,340)
Amounts reported in net income:
Gains on sales of securities available for sale $ -- $ 19 $ -- $ 19
Net accretion (amortization) on securities available for sale 78 (14) 163 (49)
-----------------------------------------------------------
Reclassification adjustment 78 5 163 (30)
Income tax (expense) benefit (30) (2) (62) 11
-----------------------------------------------------------
Reclassification adjustment, net of tax 48 3 101 (19)
Amounts reported in other accumulated comprehensive income:
Unrealized gains (losses) arising during period, net of tax 2,481 (1,395) 1,935 (4,359)
Less reclassification adjustment, net of tax 48 3 101 (19)
-----------------------------------------------------------
Unrealized gains (losses), net, recognized in other accumulated
comprehensive income, net 2,433 (1,398) 1,834 (4,340)
Net income 2,141 2,247 2,839 4,688
-----------------------------------------------------------
Total comprehensive income $ 4,574 $ 849 $ 4,673 $ 348
-----------------------------------------------------------
</TABLE>
9
<PAGE> 10
G. Industry Segments
SFAS No. 131, "Disclosures About Segments of an Enterprise and Related
Information," requires disclosure of certain information related to the
Company's reportable operating segments. The reportable operating segments were
determined based on management's internal reporting approach. The reportable
segments consist of: community banking, mortgage banking, real estate
development and sales, and mezzanine financing. The community banking segment
offers a wide array of banking services to individual and corporate customers
through 15 branch offices and over the Internet. The Company earns interest
income from loans made to customers and interest and dividend income from
investments in certain debt and equity securities. The community-banking segment
also recognizes fees related to deposit services, lending, and other services
provided to customers. The mortgage-banking segment originates residential
mortgage loans through community bank branches, retail loan production offices
and over the Internet. During the quarter, the Company purchased residential
mortgage loans from correspondents through a wholesale lending operation. The
mortgage-banking segment generates revenues through origination and processing
fees, interest on residential mortgage loans and selling substantially all of
the servicing rights for fixed rate residential mortgage loans to investors. The
real estate development and sales segment performs real estate development
activities in the Atlanta metropolitan area by investing in and developing land
for residential subdivisions as well as by developing residential condominiums.
The real estate development and sales segment also provides third party
brokerage services for the Bank and for unaffiliated third parties. The
mezzanine financing segment provides mezzanine financing to small- and
medium-sized businesses that is not readily available from traditional
commercial banking sources. The mezzanine financing segment generates revenues
through interest, fees on loans and equity participation arrangements. No
transactions with a single customer contributed 10% or more to the Company's
total revenue.
10
<PAGE> 11
The results for each reportable segment are included in the following table:
<TABLE>
<CAPTION>
Real Estate
THREE MONTHS ENDED: Community Mortgage Development Mezzanine
Banking Banking and Sales Financing Other Eliminations Consolidated
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
(dollars in thousands)
-----------------------------------------------------------------------------------------------------------------------------------
SEPTEMBER 30, 2000:
-----------------------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME (EXPENSE) $ 8,430 $ 224 $ (13) $ 648 $ (176) $ (42) $ 9,071
NET NON-INTEREST (EXPENSE) INCOME (5,414) (1,187) 1,803 (354) (111) 42 (5,221)
DEPRECIATION ON PREMISES AND EQUIPMENT 653 83 11 -- 4 -- 751
INCOME TAX EXPENSE (BENEFIT) 884 (408) 716 118 (101) -- 1,209
NET INCOME 1,834 (757) 1,074 176 (186) -- 2,141
PROVISION FOR LOAN LOSSES 298 202 -- -- -- -- 500
TOTAL ASSETS 1,220,703 113,799 66,984 17,995 15,543 (119,330) 1,315,694
EXPENDITURES FOR ADDITIONS TO PREMISES
AND EQUIPMENT 380 5 -- -- -- -- 385
TOTAL REVENUES FROM EXTERNAL CUSTOMERS 23,311 3,100 2,665 395 337 -- 29,808
INTERSEGMENT REVENUES 1,716 15 13 2 252 -- 1,998
-----------------------------------------------------------------------------------------------------------------------------------
September 30, 1999:
-----------------------------------------------------------------------------------------------------------------------------------
Net interest income (expense) $ 8,766 $ (140) $ 19 $ 381 $ (470) $ (39) $ 8,517
Net non-interest (expense) income (3,854) (2,441) 901 16 15 39 (5,324)
Depreciation on premises and equipment 546 139 9 -- 4 -- 685
Income tax expense (benefit) 1,390 (912) 368 159 (159) -- 846
Net income 3,447 (1,694) 552 238 (296) -- 2,247
Provision for loan losses 75 25 -- -- -- -- 100
Total assets 1,175,046 197,424 30,867 18,293 15,014 (249,053) 1,187,591
Expenditures for additions to premises
and equipment 1,657 114 -- -- -- -- 1,771
Total revenues from external customers 19,714 4,158 1,498 358 315 -- 26,043
Intersegment revenues 3,815 87 (84) 88 253 -- 4,159
</TABLE>
11
<PAGE> 12
The results for each reportable segment are included in the following table:
<TABLE>
<CAPTION>
Real Estate
THREE MONTHS ENDED: Community Mortgage Development Mezzanine
Banking Banking and Sales Financing Other Eliminations Consolidated
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
-----------------------------------------------------------------------------------------------------------------------------------
(dollars in thousands)
-----------------------------------------------------------------------------------------------------------------------------------
SEPTEMBER 30, 2000:
NET INTEREST INCOME (EXPENSE) $ 17,262 $ 408 $ (15) $ 1,385 $ (501) $ (87) $ 18,452
NET NON-INTEREST (EXPENSE) INCOME (10,777) (3,644) 2,247 (814) (201) 87 (13,102)
DEPRECIATION ON PREMISES AND EQUIPMENT 1,312 165 26 -- 9 -- 1,512
INCOME TAX EXPENSE (BENEFIT) 1,894 (1,208) 893 228 (246) -- 1,561
NET INCOME 3,857 (2,244) 1,339 343 (456) -- 2,839
PROVISION FOR LOAN LOSSES 734 216 -- -- -- -- 950
TOTAL ASSETS 1,220,703 113,799 66,984 17,995 15,543 (119,330) 1,315,694
EXPENDITURES FOR ADDITIONS TO PREMISES
AND EQUIPMENT 787 12 -- -- -- -- 799
TOTAL REVENUES FROM EXTERNAL CUSTOMERS 46,431 5,604 4,080 800 595 -- 57,510
INTERSEGMENT REVENUES 2,969 31 31 17 381 -- 3,429
-----------------------------------------------------------------------------------------------------------------------------------
September 30, 1999:
-----------------------------------------------------------------------------------------------------------------------------------
Net interest income (expense) $ 16,973 $ 1 $ (70) $ 775 $ (934) $ (73) $ 16,672
Net non-interest (expense) income (8,670) (3,887) 2,904 9 65 73 (9,506)
Depreciation on premises and equipment 1,094 269 16 -- 8 -- 1,363
Income tax expense (benefit) 2,306 (1,372) 1,134 314 (304) -- 2,078
Net income 5,627 (2,544) 1,700 470 (565) -- 4,688
Provision for loan losses 370 30 -- -- -- -- 400
Total assets 1,175,046 197,424 30,867 18,293 15,014 (249,053) 1,187,591
Expenditures for additions to premises
and equipment 3,631 230 -- -- -- -- 3,861
Total revenues from external customers 39,488 10,191 3,992 600 607 -- 54,878
Intersegment revenues 7,550 240 39 284 518 -- 8,631
</TABLE>
12
<PAGE> 13
H. Recent Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities". This statement establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts and for hedging activities. It requires
that an entity recognize all derivatives as either assets or liabilities in the
balance sheet and measure those instruments at fair value. This statement could
increase volatility in earnings and other comprehensive income. Adoption of this
statement is not expected to have a material impact on the Company's financial
position or results of operation.
In June 1999, the FASB issued SFAS No.137,"Accounting for Derivative
Instruments and Hedging Activities Deferral of Effective Date of FASB Statement
No. 133", deferring the effective date of FASB Statement No. 133 to all fiscal
quarters of fiscal years beginning after June 15, 2000.
In June 2000, SFAS No. 133 was amended by SFAS No. 138 "Accounting for
Certain Derivative Instruments and Certain Hedging Activities". SFAS No. 138
addresses a limited number of issues causing implementation difficulties for
numerous entities that apply SFAS No. 133.
I. Treasury Stock
During the quarter ended September 30, 1999, the Company's Board of
Directors approved a stock repurchase program. The plan authorized the Company
to purchase up to 300,000 shares of its common stock on the open market. As of
March 31, 2000, the Company had repurchased 300,000 shares with a cost of
approximately $5,410,000.
J. Real Estate Investment Trust
On April 30, 1999, TFB Management, Inc., TFB Management (NC), Inc., and
TFB Management (RE), Inc., were incorporated as Delaware corporations. The Bank
is the 100% owner of TFB Management, Inc., which is the 100% owner of TFB
Management (NC), Inc., which is the 100% owner of TFB Management (RE), Inc. TFB
Management (RE), Inc. was formed to qualify as a Real Estate Investment Trust
("REIT") under the Internal Revenue Code. This three-tier structure was utilized
to reduce the Company's effective tax rate.
K. A Warning About Forward-Looking Information
This filing contains forward-looking statements. We may also make
written forward-looking statements in our periodic reports to the Securities and
Exchange Commission, in our proxy statements, in our offering circulars and
prospectuses, in press releases and other written materials and in oral
statements made by our officers, directors or employees to third parties.
Statements that are not historical facts, including statements about our beliefs
and expectations, are forward-looking statements. These statements are based on
beliefs and assumptions of management and on information currently available to
such management. Forward-looking statements include statements preceded by,
followed by or that include the words "believes," "expects," "plans,"
"estimates" or similar expressions. Forward-looking statements speak only as of
the date they are made, and we undertake no obligation to update publicly any of
them in light of new information or future events.
Forward-looking statements involve inherent risks and uncertainties. We
caution you that a number of important factors could cause actual results to
differ materially from those contained in any forward-looking statement. Such
factors include, but are not limited to, the following: competitive pressures
among depository and other financial institutions may increase significantly;
changes in the interest rate environment may reduce margins; general economic or
business conditions may lead to a
13
<PAGE> 14
deterioration in credit quality or a reduced demand for credit; legislative or
regulatory changes, including changes in accounting standards, may adversely
affect the business in which the Company is engaged; changes may occur in the
securities markets; and competitors of the Company may have greater financial
resources and develop products that enable such competitors to compete more
successfully than the Company.
Management believes these forward-looking statements are reasonable;
however, undue reliance should not be placed on such forward-looking statements,
which are based on current expectations.
Forward-looking statements are not guarantees of performance. They
involve risks, uncertainties and assumptions. The future results and shareholder
values of the Company may differ materially form those expressed in the
forward-looking statements contained in this report. Many of the factors that
will determine these results and values are beyond the Company's ability to
control or predict.
14
<PAGE> 15
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
SUMMARY FINANCIAL DATA
(dollars in thousands except per share data)
<TABLE>
<CAPTION>
% Change
QUARTER ENDED Sept. 30, 2000 from
SEPT. 30, June 30, Sept. 30, June 30, Sept. 30,
For the quarter: 2000 2000 1999 2000 1999
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net income $ 2,141 $ 698 $ 2,247 206.73% (4.72)%
Per common share:
Net income per common share - basic 0.38 0.12 0.40 216.67% (5.00)%
Net income per common share - diluted 0.38 0.12 0.40 216.67% (5.00)%
Dividends declared 0.16 0.16 0.16 -- --
Book value per share 13.74 13.09 13.21 4.97% 4.01%
Average common shares outstanding - basic 5,637 5,637 5,560 -- 1.38%
Average common shares outstanding - diluted 5,670 5,675 5,677 (0.09)% (0.12)%
Profitability ratios: (%)
Return on average assets 0.67% 0.22% 0.74% 204.55% (9.46)%
Return on average equity 11.28% 3.80% 12.33% 196.84% (8.52)%
Efficiency ratio 72.64% 88.54% 75.30% (17.96)% (3.53)%
Net interest margin - taxable equivalent 3.12% 3.28% 3.10% (4.88)% 0.65%
Equity to assets 5.89% 5.79% 6.19% 1.73% (4.85)%
At quarter end:
Loans held for sale $ 91,522 $ 78,926 $ 148,819 15.96% (38.50)%
Loans receivable, net 791,670 784,223 665,772 0.95% 18.91%
Allowance for loan losses 7,710 7,504 7,125 2.75% 8.21%
Assets 1,315,694 1,273,237 1,187,591 3.33% 10.79%
Deposits 843,518 794,504 772,270 6.17% 9.23%
FHLB advances and other borrowings 337,555 355,072 298,947 (4.93)% 12.91%
Stockholders' equity 77,455 73,783 73,465 4.98% 5.43%
<CAPTION>
SIX MONTHS ENDED
SEPT. 30, Sept. 30,
For the six months: 2000 1999 % Change
-----------------------------------------
<S> <C> <C> <C>
Net income $ 2,839 $ 4,688 (39.44)%
Per common share:
Net income per common share - basic 0.50 0.84 (40.48)%
Net income per common share - diluted 0.50 0.83 (39.76)%
Dividends declared 0.32 0.32 --
Average common shares outstanding - basic 5,637 5,560 1.38%
Average common shares outstanding - diluted 5,672 5,680 (0.14)%
Profitability ratios: (%)
Return on average assets 0.45% 0.77% (41.56)%
Return on average equity 7.61% 12.79% (40.50)%
Efficiency ratio 80.30% 74.60% 7.64%
Net interest margin - taxable equivalent 3.20% 3.04% 5.26%
</TABLE>
15
<PAGE> 16
Overview
The Company's net income for the quarter ended September 30, 2000, was
$2,141,000 or $0.38 per diluted share, compared with $2,247,000 or $0.40 per
diluted share for the same quarter last year. Net income for the current six
month period decreased $1,849,000 or 39.44% to $2,839,000 or $0.50 per diluted
share, compared to $4,688,000 or $0.84 per diluted share for the same period
last year. The decrease is primarily attributable to one time charges associated
with exiting the wholesale mortgage operation and a decline in mortgage
production fees.
Of the total $2,141,000 in net income or $0.38 per diluted share, the
community banking operation accounted for $1,834,000 or $0.32 per diluted share;
Eagle Real Estate Advisors, the real estate development and sales business,
comprised $1,074,000 or $0.19 per diluted share; Eagle Bancshares Capital Group,
the mezzanine financing unit, contributed $176,000 or $0.03 per diluted share;
and Prime Eagle Mortgage Corporation, the mortgage banking group, accounted for
a loss of $757,000 or $0.13 per diluted share. Other operations accounted for a
loss of $186,000 or $0.03 per diluted share.
Segment Discussion
Mortgage Banking
For the quarter ended September 30, 2000, the Company's mortgage
banking operations resulted in losses of $757,000 or $0.13 per diluted share
compared to losses of $1,694,000 or $0.30 per diluted share for the same quarter
last year. For the six months ended September 30, 2000 the Company's mortgage
banking activities resulted in losses of $2,244,000, compared with $2,544,000,
in the same period a year ago.
The Company entered into an agreement to sell its wholesale mortgage
banking operation to e-jumbo.com, based in Boston, Massachusetts. On October 6,
2000, e-jumbo.com terminated the agreement because they were unable to secure
financing to support the business. Management is currently negotiating to sell
the division to other purchasers, however, no definitive agreements have been
signed. The sale of the wholesale group will allow management to concentrate on
building the Company's community banking franchise in Atlanta as well as its
Internet banking business.
The sale of the Company's wholesale mortgage banking group is a part of
the strategy to exit commodity businesses. The Company's strategy for mortgage
banking includes negotiating strategic alliances to reduce fixed expenses and
interest rate risk associated with the origination and sale of mortgage loans.
Community Banking
For the quarter ended September 30, 2000, the Company's community
banking operations resulted in income of $1,834,000 or $0.32 per diluted share
versus income of $3,447,000 or $0.61 per diluted share, for the same quarter one
year ago. For the six months ended September 30, 2000, the Company's community
banking activities resulted in income of $3,857,000, compared with $5,627,000 in
the same period a year ago. The decline in earnings for the September 2000
quarter compared to the September 1999 quarter is primarily due to the gain on
the sale of the Towne Lake Branch and related deposits resulting in a before tax
gain of $673,000 in the prior year as well as an increase in non-interest
expense of $5,414,000 for the September 2000 quarter from $3,854,000 for the
same quarter last year. Net interest income, after provision, declined to
$8,430,000 for the September 2000 quarter from $8,766,000 for the September 1999
quarter and the Bank's efficiency ratio declined to 68.87% from 52.27%. The
Bank's salaries and employee benefits increased to $3,171,000 for the September
2000 quarter from $2,431,000 for the same quarter one year ago. This was
attributable to the reversal of certain bonus accruals in the September 1999
quarter.
16
<PAGE> 17
The Bank effected a reorganization in May 2000 to retool the Company
for the new economy. The Bank's current combination of high-tech and high-touch
financial solutions position Eagle to grow market share in Atlanta while
unlocking the potential of e-commerce business. The Bank is co-branding Tucker
Federal Bank and justrightbank.com to be Atlanta's click-and-mortar bank.
Management will continue to emphasize cash management and its focus on being the
bank of choice for small businesses. As trusted agents, Tucker Federal Bank
("TFB") and justrightbank.com ("JRB") will utilize NextBill.com's electronic
bill presentment and payment software to help their customers make the
transition from paper to electronic billing.
Real Estate Development and Sales
For the quarter ended September 30, 2000, Eagle Real Estate Advisors
generated income of $1,074,000 or $0.19 per diluted share versus income of
$552,000 or $0.10 per diluted share for the same quarter last year. For the six
months ended September 30, 2000, Eagle Real Estate Advisors generated income of
$1,339,000 compared with $1,700,000 in the same period a year ago. In the
September 2000 quarter gains on the sale of investment in real estate were
$2,383,000 versus $1,176,000 for the September 1999 quarter. Lot sales for the
September 2000 quarter numbered 120 compared to 73 in the same quarter last
year.
Mezzanine Financing
For the quarter ended September 30, 2000, Eagle Bancshares Capital
Group generated income of $176,000 or $0.03 per diluted share, versus income of
$238,000 or $0.04 per diluted share for the same quarter last year. For the six
months ended September 30, 2000, Eagle Bancshares Capital Group generated income
of $343,000 compared with $470,000 in the same period a year ago. The decline is
principally due to accounting for the Company's ownership in NextBill.com using
the equity method and recognizing a loss of $280,000 and $628,000 for the
quarter and six months ended September 30, 2000. NextBill.com is a company that
provides electronic bill presentment and payment services.
EARNINGS ANALYSIS
INTEREST RATE AND MARKET RISK
The normal course of business activity exposes the Company to interest
rate risk. Interest rate risk is managed within an overall asset and liability
framework for the Company. The principal objectives of asset and liability
management are to guide the sensitivity of net interest spreads to potential
changes in interest rates and to enhance profitability in ways that promise
sufficient reward for recognized and controlled risk. Funding positions are kept
within predetermined limits designed to ensure that risk-taking is not excessive
and that liquidity is properly managed. The Company employs sensitivity analysis
in the form of a net interest income simulation to help characterize the market
risk arising from changes in interest rates. In addition, fluctuations in
interest rates usually result in changes in the fair market value of the
Company's financial instruments, cash flows and net interest income. The
Company's interest rate risk position is managed by the Asset Liability
Committee ("ALCO"). ALCO's objective is to optimize the Company's financial
position, liquidity and net interest income, while remaining within the Board of
Director's approved interest rate risk limits.
The Company uses a simulation modeling process to measure interest rate
risk and evaluate potential strategies. The Company's net interest income
simulation includes all financial assets and liabilities. This simulation
measures both the term risk and basis risk in the Company's asset and
liabilities. The simulation also captures the option characteristics of
products, such as caps and floors on floating rate loans, the right to pre-pay
mortgage loans without penalty and the ability of customers to withdraw deposits
on demand. These options are modeled through the use of primarily historical
17
<PAGE> 18
customer behavior and statistical analysis. These simulations incorporate
assumptions regarding balance sheet growth, asset and liability mix, pricing and
maturity characteristics of the existing and projected balance sheets. Other
interest rate-related risks such as prepayment, basis and option risk are also
considered. Simulation results quantify interest rate risk under various
interest rate scenarios. Management then develops and implements appropriate
strategies. The Board of Directors regularly reviews the overall interest rate
risk position and asset and liability management strategies.
The Company uses four standard scenarios - rates unchanged, expected
rates, rising rates, and declining rates - in analyzing interest rate
sensitivity. The expected scenario is based on the Company's projected future
interest rates, while the rising and declining rate scenarios cover a 200 basis
points upward and downward rate ramp. The Company closely monitors each scenario
to manage interest rate risk.
Management estimates the Company's annual net interest income would
increase approximately $506,652 or 1.64%, and decrease approximately $851,109 or
2.76% in the rise of and declining rate scenerios, versus the projection under
unchanged rates. A fair market value analysis of the Company's balance sheet
calculated under an instantaneous 100 basis point increase in rates over
September 30, 2000, estimates a $11,834,000 or 11.51% percent decrease in market
value. The Company estimates a like decrease in rates would increase market
value $5,385,000 or 5.24% percent. These changes in market value represent less
than 5.0% of the total carrying value of total assets at quarter-end. These
simulated computations should not be relied upon as indicative of actual future
results. Further, the computations do not contemplate certain actions that
management may undertake in response to future changes in interest rates.
In fiscal 2001, the Company will continue to face term risk and basis
risk and may be confronted with several risk scenarios. If interest rates rise,
net interest income may actually increase, if deposit rates lag increases in
market rates. The Company could, however, experience significant pressure on net
interest income if there is a substantial increase in deposit rates relative to
market rates. A declining interest rate environment might result in a decrease
in loan rates, while deposit rates remain relatively stable which could also
create significant risk to net interest income.
Net Interest Income - Quarterly Analysis
Net interest income increased by $554,000 or 6.50% to $9,071,000 in the
quarter ended September 30, 2000, from $8,517,000 for the same quarter last
year. The net interest spread (the difference between the yield earned on
interest-earning assets and the cost of interest-bearing liabilities) increased
6 basis points to 2.93% from 2.87% in the same period last year. The yield on
interest-earning assets increased 70 basis points to 8.42% from 7.72% while the
cost of interest-bearing liabilities increased 64 basis points to 5.49% from
4.85%.
Interest income received on loans increased $2,932,000 or 17.30% to
$19,880,000 for the quarter ended September 30, 2000, from $16,948,000 for the
same quarter last year. The increase in interest received on loans was primarily
attributable to an increase in the yield on loans during the quarter ended
September 30, 2000. The yield on loans increased 88 basis points to 8.91% for
the September 2000 quarter compared to 8.03% in the same quarter last year.
Interest received on mortgage-backed securities increased $355,000 or 16.50% to
$2,506,000 for the quarter ended September 30, 2000, from $2,151,000 in the same
quarter last year. Interest received on securities increased $81,000 or 3.46% to
$2,421,000 for the September 2000 quarter from $2,340,000 in the same quarter
last year.
Interest expense increased $2,814,000 or 21.78% to $15,736,000 for the
September 2000 quarter from $12,922,000 in the same quarter last year. This is
primarily the result of an increase in the
18
<PAGE> 19
cost of the Company's interest-bearing liabilities coupled with an increase in
deposits. Interest expense on deposits increased $2,014,000 or 22.75% to
$10,865,000 from $8,851,000 in the same period in the prior year. The cost of
deposits increased 89 basis points to 5.60% during the quarter from 4.71% in the
prior year. Interest expense on FHLB advances and other borrowings increased
$800,000 or 23.20% to $4,248,000 for the September 2000 quarter from $3,448,000
in the September 1999 quarter. The Bank's cost of FHLB advances and other
borrowings increased 15 basis points to 4.99% from 4.84% in the same period in
the prior year. The Bank utilizes short term FHLB advances to fund construction
loans and loans held for sale. Interest expense on trust preferred securities
was $623,000 for the September 2000 and 1999 quarters.
Net Interest Income - Six Month Analysis
Net interest income increased by $1,780,000 or 10.68% to $18,452,000
during the six months ended September 30, 2000, from $16,672,000 for the same
period last year. The net interest spread (the difference between the yield
earned on interest-earning assets and the cost of interest-bearing liabilities)
increased 14 basis points to 2.98% from 2.84% in the same period last year. The
improvement is primarily attributable to the increase in the yield on
interest-earning assets resulting from a change in the loan mix. The yield on
interest-earning assets increased 64 basis points to 8.35% from 7.71% while the
cost of interest-bearing liabilities increased 50 basis points to 5.37% from
4.87%.
Interest income received on loans increased $5,164,000 or 15.29% to
$38,929,000 for the six months ended September 30, 2000, from $33,765,000 for
the same period last year. The increase in interest received on loans was
primarily attributable to an increase in originations of higher yielding loans.
The yield on loans increased 80 basis points to 8.83% for the six months
compared to 8.03% in the same period last year. Interest received on
mortgage-backed securities increased $829,000 or 19.87% to $5,002,000 for the
six months ended September 30, 2000 from $4,173,000 in the same period one year
ago. Interest received on securities increased $42,000 or 0.87% to $4,869,000 in
the September 2000 quarter from $4,827,000 in the prior period.
Interest expense increased $4,255,000 or 16.31% to $30,348,000 for the
six months ended September 30, 2000, from $26,093,000 in the same period one
year ago. This is primarily the result of an increase in the cost of the
Company's interest-bearing liabilities. Interest expense on deposits increased
$1,828,000 or 9.87% to $20,348,000 from $18,520,000 in the same period in the
prior year. The cost of deposits increased 65 basis points to 5.41% during the
period from 4.76% in the prior period. Interest expense on FHLB advances and
other borrowings increased $2,427,000 or 38.35% to $8,755,000 for the September
2000 quarter from $6,328,000 in the same period last year. The Bank's cost of
FHLB advances and other borrowings increased 22 basis points to 5.01% from 4.79%
in the same period in the prior year. The Bank utilizes short term FHLB advances
to fund construction loans and loans held for sale. Interest expense on trust
preferred securities was $1,245,000 for the six months ended September 30, 2000
and 1999.
19
<PAGE> 20
The following tables reflect the average balances, the interest income
or expense and the average yield and cost of funds of the Company's interest
earning assets and interest bearing liabilities during the quarter and six
months ended September 30, 2000 and 1999:
AVERAGE BALANCE SHEET
<TABLE>
<CAPTION>
Three months ended September 30,
2000 1999
AVERAGE YIELD/ Average Yield/
(dollars in thousands) BALANCE INTEREST COST Balance Interest Cost
<S> <C> <C> <C> <C> <C> <C> <C>
------------------------------------------------------------------------------------------------------------------------------
Earning Assets
------------------------------------------------------------------------------------------------------------------------------
Loans receivable(1) $ 811,671 $18,288 9.01% $ 668,947 $14,188 8.48%
Loans held for sale 80,749 1,592 7.89% 175,052 2,760 6.31%
Mortgage-backed securities 148,216 2,506 6.76% 131,816 2,151 6.53%
FHLB stock 13,715 267 7.79% 11,109 210 7.56%
Taxable investments(2) 53,370 839 6.29% 68,595 1,097 6.40%
Tax-exempt investment securities(2) 75,189 1,429 7.60% 63,208 1,183 7.49%
Interest earning deposits and Federal funds 4,597 86 7.48% 1,423 28 7.87%
------------------------------------------------------------------------------------------------------------------------------
Total interest earning assets 1,187,507 25,007 8.42% 1,120,150 21,617 7.72%
------------------------------------------------------------------------------------------------------------------------------
Non-interest earning assets 99,760 98,175
------------------------------------------------------------------------------------------------------------------------------
Total assets $ 1,287,267 $ 1,218,325
------------------------------------------------------------------------------------------------------------------------------
Interest-bearing liabilities
Savings accounts $ 32,849 $ 120 1.46% $ 35,657 $ 162 1.82%
Checking 99,919 846 3.39% 108,854 883 3.24%
Money market 75,175 937 4.99% 88,590 856 3.86%
Certificates of deposit 568,484 8,962 6.31% 517,981 6,950 5.37%
------------------------------------------------------------------------------------------------------------------------------
Total deposits 776,427 10,865 5.60% 751,082 8,851 4.71%
------------------------------------------------------------------------------------------------------------------------------
FHLB advances and other borrowings 340,694 4,248 4.99% 285,062 3,448 4.84%
Trust preferred securities 28,750 623 8.67% 28,750 623 8.67%
------------------------------------------------------------------------------------------------------------------------------
Total interest bearing liabilities 1,145,871 15,736 5.49% 1,064,894 12,922 4.85%
------------------------------------------------------------------------------------------------------------------------------
Non-interest bearing deposits 54,304 54,146
Non-interest bearing liabilities 11,199 26,410
Stockholders' equity 75,893 72,875
------------------------------------------------------------------------------------------------------------------------------
Total liabilities and equity $ 1,287,267 $ 1,218,325
------------------------------------------------------------------------------------------------------------------------------
Net interest rate spread $ 9,271 2.93% $ 8,695 2.87%
Taxable-equivalent adjustment (200) (178)
Net interest income, actual $ 9,071 $ 8,517
Net interest earning assets/net interest margin $ 41,636 3.12% $ 55,256 3.10%
Interest earning assets as a percentage of
interest bearing liabilities 103.63% 105.19%
------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Non-accrual loans are included in average balances and income
on such loans, if recognized, is recorded on a cash basis.
(2) The yield for investment securities classified for sale is
computed using historical amortized cost balances.
20
<PAGE> 21
AVERAGE BALANCE SHEET
<TABLE>
CAPTION>
Six months ended September 30,
2000 1999
AVERAGE YIELD/ Average Yield/
(dollars in thousands) BALANCE INTEREST COST Balance Interest Cost
-----------------------------------------------------------------------------------------------------------------------------------
Earning Assets
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Loans receivable(1) $ 813,800 $36,260 8.91% $ 652,507 $27,782 8.52%
Loans held for sale 68,274 2,669 7.82% 188,335 5,983 6.35%
Mortgage-backed securities 148,243 5,002 6.75% 129,491 4,173 6.45%
FHLB stock 14,249 552 7.75% 10,120 381 7.53%
Taxable investments(2) 54,263 1,706 6.29% 71,805 2,334 6.50%
Tax-exempt investment securities(2) 75,083 2,860 7.62% 65,322 2,428 7.43%
Interest earning deposits and Federal funds 4,338 152 7.01% 1,553 46 5.92%
-----------------------------------------------------------------------------------------------------------------------------------
Total interest earning assets $ 1,178,250 $49,201 8.35% $ 1,119,133 $43,127 7.71%
-----------------------------------------------------------------------------------------------------------------------------------
Non-interest earning assets 95,441 103,691
-----------------------------------------------------------------------------------------------------------------------------------
Total assets $ 1,273,691 $ 1,222,824
-----------------------------------------------------------------------------------------------------------------------------------
Interest-bearing liabilities
-----------------------------------------------------------------------------------------------------------------------------------
Savings accounts $ 33,286 $ 245 1.47% $ 36,541 $ 351 1.92%
Checking 98,967 1,655 3.34% 117,917 1,918 3.25%
Money market 69,412 1,610 4.64% 89,265 1,763 3.95%
Certificates of deposit 551,115 16,838 6.11% 534,946 14,488 5.42%
-----------------------------------------------------------------------------------------------------------------------------------
Total deposits $ 752,780 $20,348 5.41% $ 778,669 $18,520 4.76%
-----------------------------------------------------------------------------------------------------------------------------------
FHLB advances and other borrowings 349,196 8,755 5.01% 264,034 6,328 4.79%
Trust preferred securities 28,750 1,245 8.66% 28,750 1,245 8.66%
-----------------------------------------------------------------------------------------------------------------------------------
Total interest bearing liabilities $ 1,130,726 $30,348 5.37% $ 1,071,453 $26,093 4.87%
-----------------------------------------------------------------------------------------------------------------------------------
Non-interest bearing deposits 54,542 53,617
Non-interest bearing liabilities 13,779 24,423
Stockholders' equity 74,644 73,331
-----------------------------------------------------------------------------------------------------------------------------------
Total liabilities and equity $ 1,273,691 $ 1,222,824
-----------------------------------------------------------------------------------------------------------------------------------
Net interest rate spread $18,853 2.98% $17,034 2.84%
Taxable-equivalent adjustment (401) (362)
Net interest income, actual $18,452 $16,672
Net interest earning assets/net interest margin $ 47,524 3.20% $ 47,680 3.04%
Interest earning assets as a percentage of
interest bearing liabilities 104.20% 104.45%
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Non-accrual loans are included in average balances and income on such loans,
if recognized, is recorded on a cash basis.
(2) The yield for investment securities classified for sale is computed using
historical amortized cost balances.
Non-Interest Income
Non-interest income increased by $397,000 or 8.62% to $5,001,000 for
the quarter ended September 30, 2000, from $4,604,000 for the same period last
year. Non-interest income decreased by $3,403,000 or 28.09% to $8,710,000 for
the six months ended September 30, 2000, from $12,113,000 for the same period
last year. Mortgage production fees have traditionally been the largest
component of non-interest income and such fees for the September 2000 quarter
decreased $139,000 or 9.52% to $1,321,000 compared to $1,460,000 in the same
period last year. For the six months ended September 30, 2000, mortgage
production fees decreased $1,680,000 or 39.60% to $2,562,000 compared to
$4,242,000 for the same period last year. The decrease is primarily due to a
decline in the volume of loans sold in secondary market. The volume of loans
sold in the secondary market decreased by $333,862,000 or 56.97% to $252,141,000
during the six months ended September 30, 2000, from $586,003,000 during the
same period last year. The dollar amount of loans originated and sold fluctuates
based on the demand for mortgages in the Company's market. The margin received
on loan sales fluctuates due to changes in the general interest rate
environment.
-21-
<PAGE> 22
The following table shows mortgage production fees, the dollar amount
of permanent mortgage loans sold in the secondary market and the margin earned
on those loans for the periods indicated:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPT.30, SIX MONTHS ENDED
(dollars in thousands) SEPT.30, SEPT.30,
2000 1999 2000 1999
--------- --------- ---------- ----------
<S> <C> <C> <C> <C>
Fees $ 1,321 $ 1,460 $ 2,562 $ 4,242
Dollar volume sold $143,267 $261,263 $252,141 $586,003
Margin earned 0.92% 0.56% 1.02% 0.72%
</TABLE>
Non-interest income generated from the Company's real estate
subsidiary, Eagle Real Estate Advisors includes gains on the sale of real estate
and real estate commissions. Revenues from these sources increased by $1,264,000
or 91.66% to $2,643,000 for the quarter ended September 30, 2000, compared to
$1,379,000 for the same period last year. Gain on the sales of real estate and
real estate commissions increased $248,000 or 6.53% to $4,047,000 for the six
months ended September 30, 2000, compared to $3,799,000 for the same period last
year. In the quarter ended September 30, 2000, $811,000 is attributable to the
sale of 2.069 acres that were purchased in January 2000 and resold on September
29, 2000. Additionally, $544,000 is attributable to the sale of 6.15 acres that
were purchased in January 2000 and resold on September 27, 2000. In the quarter
ended June 30, 1999, $1,268,000 is attributable to the sale of the Company's
Barnes and Noble Store. In the quarter ended September 30, 1999, $495,000 is
attributable to the sale of 50.103 acres purchased and resold in August 1999. In
addition, during the September 2000 quarter, 120 lots were sold compared to 73
lots in the same quarter last year. For the six months ended September 30, 2000,
174 lots were sold compared to 112 lots for the same period last year.
Service charges increased $307,000 or 58.25% to $834,000 in the quarter
ended September 30, 2000, compared to $527,000 in the same period one year ago.
In addition, for the six months ended September 30, 2000, service charges
increased $495,000 or 43.50% to $1,633,000 compared to $1,138,000 for the same
period last year. The increase in service fees is attributable to the
introduction of new deposit products by the Bank that are designed to increase
fees received from service charges.
In the quarter ended March 31, 2000, the Company made a strategic
investment in an electronic bill presentment and payment ("EBPP") company,
NextBill.com. It is the Company's intention to participate in the EBPP
marketplace through its ownership in NextBill.com and services offered by its
Internet site justrightbank.com. During the quarter ended September 30, 2000,
the Company recorded a loss of $280,000 in connection with its investment in
NextBill.com. Additionally, for the six months ended September 30, 2000, the
Company recorded a loss of $628,000 in connection with its investment.
Gains on sales of fixed assets decreased $122,000 or 69.32% to $54,000
during the quarter ended September 30, 2000, from $176,000 for the same period
last year. During the six months ended September 30, 2000, gains on sales of
fixed assets decreased $124,000 or 70.45% to $52,000 from $176,000 during the
same period one year ago. Gains on sales of real estate acquired in settlement
of loans decreased $74,000 or 74.75% to $25,000 in the September 2000 quarter
from $99,000 during the same period one year ago. For the six months ended
September 30, 2000 gains on sales of real estate acquired in settlement of loans
decreased $109,000 or 81.34% to $25,000 from $134,000 during the same period one
year ago.
Miscellaneous non-interest income decreased $347,000 or 46.21% to
$404,000 during the quarter ended September 30, 2000, from $751,000 for the same
period last year. Miscellaneous non-interest income decreased $179,000 or 14.94%
to $1,019,000 during the six months ended September 30, 2000, from $1,198,000
during the same period one year ago.
22
<PAGE> 23
On September 25, 2000, the Company sold its branch location on Memorial
Drive in DeKalb, County. The sale of the Memorial Drive branch location
generated a gain of $59,000. The Company closed the Memorial Drive branch on
June 30, 1999. On June 30, 1999, the Company sold its Towne Lake branch in
Cherokee County. The sale of the Towne Lake deposits of $11,589,000 and branch
location generated a gain of $673,000.
Non-Interest Expense
Non-interest expense increased by $294,000 or 2.96% to $10,222,000 for
the quarter ended September 30, 2000, from $9,928,000 for the same period last
year. In addition, for the six months ended September 30, 2000, non-interest
expense increased $193,000 or 0.89% to $21,812,000 from $21,619,000 for the same
period last year.
Salaries and employee benefits decreased $129,000 or 2.63% to
$4,778,000 for the quarter ended September 30, 2000, from $4,907,000 for the
same period last year. For the six months ended September 30, 2000, salaries and
employee benefits decreased $1,459,000 or 13.22% to $9,575,000 from $11,034,000
for the same period one year ago. This decrease is due to the Company's
continuing strategic efforts to improve efficiency through a reduction of force.
Occupancy expense decreased $223,000 or 14.83% to $1,281,000 in the quarter
ended September 30, 2000, from $1,504,000 for the same period last year as a
result of the sale of properties. Occupancy expense decreased $410,000 or 13.55%
to $2,616,000 in the six months ended September 30, 2000, from $3,026,000 for
the same period last year. Data processing expenses increased $53,000 or 7.59%
to $751,000 in the quarter ended September 30, 2000, from $698,000 for the same
period last year. During the six months ended September 30, 2000, data
processing expense increased $171,000 or 12.53% to $1,536,000 from $1,365,000
for the same period one year ago. This increase is primarily attributable to
enhancements associated with the Bank's Internet site, justrightbank.com and
electronic banking services. Marketing expense increased $171,000 or 39.77% to
$601,000 for the quarter ended September 30, 2000, from $430,000 for the same
period last year. Marketing expense increased $138,000 or 12.56% to $1,237,000
for the six months ended September 30, 2000, from $1,099,000 for the same period
one year ago. Professional services expense increased $574,000 or 141.38% to
$980,000 in the quarter ended September 30, 2000, from $406,000 in the same
period last year. During the six months ended September 30, 2000, professional
services expense increased $1,049,000 or 125.48% to $1,885,000 from $836,000
during the same period last year. This increase is largely attributable to legal
expenses incurred in connection with the Prime lawsuits.
During the quarter ended June 30, 2000, the Company recorded $1,142,000
in pre-tax charges related to the pending exit from its wholesale mortgage
operation. These charges included: cost of the transaction, severance and
termination related accruals, write-off of certain tangible assets with no
ongoing benefit to the Company and certain termination fees. During the quarter
ended September 30, 2000, the Company utilized $50,000 in transactions costs and
$148,000 in termination fees.
Miscellaneous expenses increased $49,000 or 2.91% to $1,733,000 for the
quarter ended September 30, 2000, from $1,684,000 for the same period last year.
For the six months ended September 30, 2000, miscellaneous expense increased
$282,000 or 8.29% to $3,685,000 from $3,403,000 for the same period last year.
BALANCE SHEET ANALYSIS
Investment Securities
During the six months ended September 30, 2000, investment securities
decreased to $270,881,000 from $271,808,000 at March 31, 2000 and increased from
$266,380,000 at September 30, 1999, respectively. The Company classifies its
securities in one of three categories: trading, available for sale, or held to
maturity. The Company reports the effect of the change in fair value of
securities classified as available for sale as a separate component of equity,
net of income
23
<PAGE> 24
taxes. The Company has no trading securities.
The investment securities portfolio at September 30, 2000, was
comprised of $56,565,000 of investment securities held to maturity at amortized
cost compared to $61,164,000 and $64,522,000 at March 31, 2000 and September 30,
1999, respectively. The Company has the ability and it is management's intent to
hold these securities to maturity for investment purposes. In addition,
investment securities available for sale had an estimated market value of
$214,316,000 at September 30, 2000 compared to $210,644,000 and $201,858,000 at
March 31, 2000 and September 30, 1999, respectively. Securities available for
sale had a net unrealized loss as shown in the Company's stockholders' equity
section of $5,643,000 at September 30, 2000 versus a net unrealized loss of
$7,477,000 at March 31, 2000 and $4,623,000 at September 30, 1999.
The Company holds no investment securities by any single issuer, other
than those issued by an agency of the United States government, which equaled or
exceeded 10% of stockholders' equity at September 30, 2000, March 31, 2000 or
September 30, 1999.
The following table reflects securities held in the Bank's securities
portfolio for the periods indicated:
INVESTMENT SECURITIES
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
SEPTEMBER 30, March 31, September 30,
(dollars in thousands) 2000 2000 1999
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Investment Securities Held to Maturity:
US Treasury and US Government Agencies $ 11,355 $ 11,406 $ 12,462
Mortgage-backed securities 37,542 39,325 40,606
Corporate bonds 2,962 4,958 4,941
Other debt securities 4,706 5,475 6,513
----------------------------------------------------------------------------------------------------------------
Total $ 56,565 $ 61,164 $ 64,522
----------------------------------------------------------------------------------------------------------------
Securities Available for Sale:
US Treasury and US Government Agencies $ 51,272 $ 50,219 $ 34,369
Mortgage-backed securities 111,422 106,778 104,347
Corporate bonds -- -- 2,012
Equity securities - preferred stock 11,135 11,144 11,618
Other debt securities 40,487 42,503 49,512
----------------------------------------------------------------------------------------------------------------
Total $ 214,316 $ 210,644 $ 201,858
----------------------------------------------------------------------------------------------------------------
Total Investment Securities:
US Treasury and US Government Agencies $ 62,627 $ 61,625 $ 46,831
Mortgage-backed securities 148,964 146,103 144,953
Corporate bonds 2,962 4,958 6,953
Equity securities - preferred stock 11,135 11,144 11,618
Other debt securities 45,193 47,978 56,025
----------------------------------------------------------------------------------------------------------------
Total $ 270,881 $ 271,808 $ 266,380
----------------------------------------------------------------------------------------------------------------
</TABLE>
24
<PAGE> 25
Loan Portfolio and Concentration
LOAN PORTFOLIO MIX
<TABLE>
<CAPTION>
SEPT. 30, % OF GROSS March 31, % of Gross Sept. 30, % of Gross
(dollars in thousands) 2000 LOANS RECV 2000 Loans Recv 1999 Loans Recv
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Real Estate - construction loans
Construction $ 236,726 25.70% $ 236,003 25.50% $ 212,425 26.86%
Acquisition & Development 110,332 11.98% 128,186 13.85% 96,194 12.16%
Real Estate - mortgage loans
Non-Residential 91,373 9.92% 80,982 8.75% 74,336 9.40%
Residential 311,252 33.78% 325,948 35.22% 268,501 33.95%
Home equity and second mortgages 93,230 10.12% 80,131 8.66% 70,534 8.92%
---------------------------------------------------------------------------------------------------------------------------------
Total real estate loans $ 842,913 91.50% $ 851,250 91.98% $ 721,990 91.29%
---------------------------------------------------------------------------------------------------------------------------------
Commercial and consumer loans:
Commercial 32,496 3.53% 29,499 3.19% 25,519 3.23%
Mezzanine 19,382 2.10% 17,835 1.93% 12,319 1.56%
Leases 259 0.03% 802 0.09% 1,788 0.23%
Consumer and other 26,204 2.84% 26,045 2.81% 29,154 3.69%
---------------------------------------------------------------------------------------------------------------------------------
Total commercial and consumer loans 78,341 8.50% 74,181 8.02% 68,780 8.71%
---------------------------------------------------------------------------------------------------------------------------------
Total gross loans receivable $ 921,254 100.00% $ 925,431 100.00% $ 790,770 100.00%
---------------------------------------------------------------------------------------------------------------------------------
Less:
Undisbursed portion of loans in process (122,798) (137,966) (118,155)
Deferred fees and other unearned income 924 600 282
Allowances for loan losses (7,710) (7,191) (7,125)
---------------------------------------------------------------------------------------------------------------------------------
Loans receivable, net $ 791,670 $ 780,874 $ 665,772
=================================================================================================================================
</TABLE>
The loan portfolio increased $10,796,000 or 1.38% to $791,670,000 at
September 30, 2000, compared to $780,874,000 at March 31, 2000 and $125,898,000
or 18.91% compared to $665,772,000 at September 30, 1999. The majority of loan
growth from September 30, 1999 was in construction loans, acquisition and
development loans, residential first mortgages, non-residential real estate
loans and home equity loans.
The community banking group originates primarily construction and
acquisition and development loans, non-residential real estate mortgages,
commercial, consumer and home equity and second mortgage loans in the metro
Atlanta area. Additionally, EBCG has invested $19,382,000 as of September 30,
2000, in mezzanine financing loans. These loan categories increased $11,062,000
or 1.85% to $609,743,000 at September 30, 2000 from $598,681,000 at March 31,
2000, and increased $89,262,000 or 17.15% from $520,481,000 at September 30,
1999. These loans represent 66.19% of gross loans receivable at September 30,
2000, compared to 64.69% and 65.82% March 31, 2000 and September 30, 1999,
respectively. The mortgage-banking group originates single family residential
mortgage loans which are sold to investors. These loans are classified as loans
held for sale pending receipt of investor funds. Loans held for sale increased
$42,282,000 or 85.87% to $91,522,000 at September 30, 2000 from $49,240,000 at
March 31, 2000 and decreased $57,297,000 or 38.50% from $148,819,000 at
September 30, 1999. Both groups contribute to the Company's portfolio of
residential mortgage loans. Residential mortgage loans decreased $14,696,000 or
4.51% to $311,252,000 at September 30, 2000 from $325,948,000 at March 31, 2000
and increased $42,751,000 or 15.92% from $268,501,000 at September 30, 2000.
During fiscal 2000, the Company grew the portfolio of residential mortgage loans
through originations of single-family mortgage loans. Residential first
mortgages are generally believed to be a conservative investment.
25
<PAGE> 26
Non-Performing Assets
At September 30, 2000, the Company had non-accrual loans of $12,977,000
compared to $8,604,000 at March 31, 2000 and $6,436,000 at September 30, 1999.
Interest income not recognized on non-accrual loans amounted to $566,000 and
$349,000 for the same period last year. At September 30, 2000, $7,535,000 or
58.06% of the non-accrual loans were mortgage loans secured by residential real
estate. This compares to $7,004,000 or 81.40% at March 31, 2000 and $5,262,000
or 81.76% at September 30, 1999. Non-accrual construction loans grew to
$1,858,000 or 14.32% at September 30, 2000, from $590,000 or 6.86% at March 31,
2000 and $383,000 or 5.95% at September 30, 1999. This increase in construction
loans is attributable to nine relationships, all of which have balances below
$450,000. Non-accrual non-residential loans increased to $2,698,000 or 20.79% at
September 30, 2000, from $0 at March 31, 2000 and $38,000 or 0.59% at September
30, 1999. In addition, at September 30, 2000, the Asset Classification Committee
(the "ACC") identified $9,356,000 as potential problem loans compared to
$9,517,000 and $2,980,000 of potential problem loans at March 31, 2000 and
September 30, 1999, respectively.
At September 30, 2000, the Bank had one borrower located in the metro
Atlanta area with three non-residential real estate loans totaling $2,296,000.
Two of these loans were identified as non-accrual and one loan was identified as
a potential problem. During the quarter ended September 30, 2000, the borrower
filed for protection under a Chapter 11-reorganization of the Bankruptcy code.
Management believes there is substantial collateral value to fully repay this
obligation when the bankruptcy stay is lifted.
Additionally, at September 30, 2000, the Bank had three borrowers
located in the metro Atlanta area with loans classified as potential problems
totaling $7,440,000 or 79.52% of the potential problem loans. These loans were
current at September 30, 2000. One non-residential mortgage loan totaling
$855,000 was identified as a potential problem due to a lack of current
financial information and concerns regarding the borrower's cash flows. The loan
is current and is performing in accordance with the terms of the note. One line
of credit for construction of single family homes in central Florida totaling
$3,031,000 was identified as a potential problem loan due to operating problems
experienced outside their primary market. They have discontinued those
operations and their credit has been reevaluated. Management expects their
rating to be raised to special mention. The loan is current and is performing in
accordance with the terms of the note. One borrower has two commercial loans
totaling $3,554,000 that were identified by the OTS as potential problem loans.
These loans are current and are performing in accordance with the terms of the
notes.
Real estate owned increased by $204,000 or 13.41% to $1,725,000 at
September 30, 2000, from $1,521,000 at March 31, 2000 and $51,000 or 3.05% from
$1,674,000 at September 30, 1999. Total problem assets as a percent of total
assets increased to 1.83% at September 30, 2000 from 1.58% at March 31, 2000 and
0.93% at September 30, 1999.
The following table reflects non-accrual loans, potential problem loans
and real estate owned as of the dates indicated. Potential problem loans are
those with respect to which management has doubts regarding the ability of the
borrower to comply with current loan repayment terms and have been classified as
such by the ACC, regardless of payment status.
26
<PAGE> 27
NON-ACCRUAL ASSETS, POTENTIAL PROBLEM LOANS and REAL ESTATE OWNED
<TABLE>
<CAPTION>
SEPT. 30, June 30, March 31, Sept. 30,
(dollars in thousands) 2000 2000 2000 1999
--------- -------- --------- ---------
<S> <C> <C> <C> <C>
Non-accrual loans:
Residential real estate-construction $ 1,858 $ 1,195 $ 590 $ 383
Residential real estate-mortgage 7,535 7,638 7,004 5,262
Commercial real estate 2,698 2,525 -- 38
Commercial 316 193 238 95
Commercial leases 119 119 234 120
Consumer and other 451 484 538 538
----------------------------------------------------------------------------------------------------------------------------------
Total non-accrual $12,977 $12,154 $ 8,604 $ 6,436
----------------------------------------------------------------------------------------------------------------------------------
Potential problem loans 9,356 5,091 9,517 2,980
----------------------------------------------------------------------------------------------------------------------------------
Total non-accrual and problem loans $22,333 $17,245 $18,121 $ 9,416
----------------------------------------------------------------------------------------------------------------------------------
Real estate owned, net 1,725 1,600 1,521 1,674
----------------------------------------------------------------------------------------------------------------------------------
Total problem assets $24,058 $18,845 $19,642 $11,090
----------------------------------------------------------------------------------------------------------------------------------
Total problem assets/Total assets 1.83% 1.48% 1.58% 0.93%
----------------------------------------------------------------------------------------------------------------------------------
Total problem assets/Loans receivable, net plus allowance 3.01% 2.38% 2.49% 1.65%
----------------------------------------------------------------------------------------------------------------------------------
Allowance for loan losses/Total problem assets 32.05% 39.82% 36.61% 64.25%
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The following table reflects concentrations of non-accrual, potential
problem loans and real estate owned by geographic location and type.
NON-ACCRUAL ASSETS, POTENTIAL PROBLEM LOANS AND REAL ESTATE OWNED BY LOCATION
AND TYPE
<TABLE>
<CAPTION>
At September 30, 2000 Residential
---------------- Comm'l % of
(dollars in thousands) Const Mtgs R-Estate Comm'l Leases Installment Total Total
Location
----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Non-accrual:
Atlanta, GA $ 707 $ 683 $2,698 $ 316 $ 119 $ 451 $ 4,974 20.57%
Augusta, GA 250 369 -- -- -- -- 619 2.56%
Jacksonville, FL 134 694 -- -- -- -- 828 3.43%
Savannah, GA 140 42 -- -- -- -- 182 0.75%
Charlotte, NC - 143 -- -- -- -- 143 0.59%
All other locations 627 5,604 -- -- -- -- 6,231 25.78%
----------------------------------------------------------------------------------------------------------------------------------
Total non-accrual 1,858 7,535 2,698 316 119 451 12,977 53.68%
----------------------------------------------------------------------------------------------------------------------------------
Potential problem loans:
Atlanta, GA 78 74 1,937 4,236 -- -- 6,325 26.16%
Tampa, FL -- -- 3,031 -- -- -- 3,031 12.54%
----------------------------------------------------------------------------------------------------------------------------------
Total potential problem loans 78 74 4,968 4,236 -- -- 9,356 38.70%
----------------------------------------------------------------------------------------------------------------------------------
Real estate owned:
Atlanta, GA 51 -- 76 -- -- -- 127 0.53%
Augusta, GA -- 260 -- -- -- -- 260 1.08%
Hinesville, GA 180 -- -- -- -- -- 180 0.74%
Aiken, GA 66 -- -- -- -- -- 66 0.27%
All other locations 540 670 -- -- -- -- 1,210 5.00%
----------------------------------------------------------------------------------------------------------------------------------
Total real estate owned(1) 837 930 76 -- -- -- 1,843 7.62%
----------------------------------------------------------------------------------------------------------------------------------
Total problem assets by type $2,773 $8,539 $7,742 $4,552 $ 119 $ 451 $24,176 100.00%
----------------------------------------------------------------------------------------------------------------------------------
% of total problem assets by type 11.47% 35.32% 32.02% 18.83% 0.49% 1.87% 100.00%
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Does not include allowance of $118,000; real estate owned, net equals
$1,725,000.
27
<PAGE> 28
Loan Impairment
Impaired loans amounted to $2,562,000 at September 30, 2000, an
increase of $2,264,000 or 759.73% from $298,000 at March 31, 2000 and $2,370,000
or 1234.38% from $192,000 at September 30, 1999. A loan is considered impaired
when a loan is classified as non-accrual and based on current information, it is
probable the Company will not receive all amounts due in accordance with the
contractual terms of the loan agreement. Impaired loans exclude residential
mortgages, construction loans secured by first mortgage liens, and groups of
small homogeneous loans. At September 30, 2000, March 31, 2000 and September 30,
1999, the valuation allowance related to these impaired loans was $363,000,
$133,000 and $39,000, respectively, which is included in the allowance for loan
losses as presented in the table on the following page. At September 30, 2000,
March 31, 2000 and September 30, 1999, all impaired loans had a related loan
loss allowance. During the six months ended September 30, 2000, the Company had
no charge-offs related to impaired loans. During the six months ended September
30, 1999, the Company charged-off $251,000 related to impaired loans. For the
quarter and six months ended September 30, 2000, the average recorded investment
in impaired loans was $2,560,000 and $2,492,000 compared to $258,000 and
$372,000 for the same periods a year ago.
Allowance for Loan Losses
The Company set aside $500,000 and $100,000, respectively, of
additional allowances for possible loan losses during the quarter ended
September 30, 2000 and 1999. During the six months ended September 30, 2000, the
Company set aside $950,000 compared to $400,000 for the same period last year.
At September 30, 2000, allowances represented 0.95% of average loans outstanding
for the quarter and six months ended September 30, 2000, compared to 1.07% and
1.09% for the same periods last year. During the quarter and six months ended
September 30, 2000, the Company charged-off $484,000 and $829,000, respectively,
compared to $352,000 and $878,000 for the same periods one year ago. In the
quarter and six months ended September 30, 2000, net charge-offs represented
0.14% and 0.11% of average loans outstanding, compared to 0.14% and 0.19% for
the same periods last year. Loan loss allowances totaled $7,710,000 at September
30, 2000 compared to $7,191,000 and $7,125,000 at March 31, 2000 and September
30, 1999, respectively. Loan loss allowances to total problem assets decreased
to 32.05% at September 30, 2000 from 36.61% at March 31, 2000 and 64.25% at
September 30, 1999. An allocation of the allowance for loan losses has been made
according to the respective amounts deemed necessary to provide for the
possibility of incurred losses within the various loan categories. Although
other relevant factors are considered, the allocation is primarily based on
previous charge-off experience adjusted for risk characteristic changes among
each category. Additional allowance amounts are allocated by evaluating the loss
potential of individual loans that management has considered impaired. The
allowance for loan loss allocation is based on subjective judgment and
estimates, and therefore is not necessarily indicative of the specific amounts
or loan categories in which charge-offs may ultimately occur. Management
believes that the allowance for losses on loans are adequate based upon
management's evaluation of, among other things, estimated value of the
underlying collateral, loan concentrations, specific problem loans, and economic
conditions that may affect the borrowers' ability to repay and such other
factors which, in management's judgment, deserve recognition under existing
economic conditions. While management uses available information to recognize
losses on loans, future additions to the allowances may be necessary based on
changes in economic conditions and composition of the Company's loan portfolio.
The following tables provide an analysis of the allowance for losses.
28
<PAGE> 29
ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-----------------------------------------------------
(dollars in thousands) 2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Allowance for loan losses, beginning of quarter $ 7,504 $ 7,251 $ 7,191 $ 7,345
Charge-offs:
Real estate - construction 62 10 66 10
Real estate - mortgage 136 54 218 117
Consumer and other 286 25 537 29
Commercial -- 258 8 470
Commercial leases -- 5 -- 252
-------------------------------------------------------------------------------------------------------------------------------
Total charge-offs $ 484 $ 352 $ 829 $ 878
-------------------------------------------------------------------------------------------------------------------------------
Recoveries 190 126 398 258
-------------------------------------------------------------------------------------------------------------------------------
Net charge-offs 294 226 431 620
Provision for loan losses 500 100 950 400
-------------------------------------------------------------------------------------------------------------------------------
Allowance for loan losses, end of quarter 7,710 7,125 7,710 7,125
-------------------------------------------------------------------------------------------------------------------------------
Average loans receivable, net, outstanding for the period $811,671 $668,947 $813,800 $652,507
-------------------------------------------------------------------------------------------------------------------------------
Ratio of net charge-offs to average loans receivable, net 0.14% 0.14% 0.11% 0.19%
-------------------------------------------------------------------------------------------------------------------------------
Allowance to average loans receivable, net 0.95% 1.07% 0.95% 1.09%
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Investment in Real Estate
As a unitary thrift holding company, the Company is permitted to invest
in real estate projects. The majority of the Company's investment in real estate
is land to be developed or in process of development for residential
subdivisions. In addition, the Company is also developing a condominium project.
As of September 30, 2000, the Company has ownership interest in 13 real estate
projects located in metropolitan Atlanta.
On each real estate project, the Company capitalizes costs related to
the purchase price of the land and the expenses associated with the development
phase. Until the development phase is completed the investment and associated
asset balance of the project increases. When development is completed and sales
of lots or condominiums are closed, the Company's recorded investment in each
project decreases. The Company's investment in real estate increased $12,935,000
or 28.77% to $57,891,000 from $44,956,000 at March 31, 2000 and $30,974,000 or
115.07% from $26,917,000 at September 30, 1999.
The increase in investment in real estate from March 31, 2000 is
primarily attributable to an increase in costs associated with the construction
phase of the Company's high-rise condominium project, The Phoenix on Peachtree.
In October 1999, the Company and an unaffiliated third party formed The Phoenix
on Peachtree, LLC and purchased 0.90 acres of land in Fulton County, the city of
Atlanta, Georgia. Construction of the condominiums is progressing as planned and
currently there are contracts to sell 63.1% of the units. The Company has
received a 10% non-refundable earnest money deposit associated with each
contract.
In addition, the increase in investment in real estate from September
30, 1999 is primarily attributable to The Phoenix on Peachtree, as well as, the
addition of two new development projects. In November 1999, the Company and an
unaffiliated third party formed Eagle Mason Mill Development, LLC and purchased
16 acres of land in DeKalb County, Georgia, for the purpose of developing an
81-lot single-family residential community. As of September 30, 2000, the
Company is in the process of developing all 81 lots.
Additionally, in January 2000, the Company and an unaffiliated third
party formed Eagle White Columns Development, LLC and purchased 54 developed
residential lots and 217 acres in Fulton County, Georgia, surrounding and
fronting an existing award winning 18 hole Tom Fazio signature golf course. The
LLC plans to develop the acreage into single-family residential lots. As of
September 30, 2000, the Company has sold 32 lots from the previously developed
inventory of 54 lots and 40 lots, which were developed from the acreage
purchased.
For information on the gain on the sale of real estate see
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Non-interest Income".
The following table reflects the individual projects' investment in
real estate:
29
<PAGE> 30
The following tables reflect the individual projects' investment in
real estate and associated debt:
<TABLE>
<CAPTION>
INVESTMENTS IN REAL ESTATE % Change
Sept. 30, 2000 from
SEPT. 30, March 31, Sept. 30, March 31, Sept. 30,
(dollars in thousands) 2000 2000 2000 1999 1999
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Union Hill, LLC $ 1,053 $ 1,764 $ 2,465 (40.31)% (57.28)%
Rivermoore Park, LLC 9,683 9,929 11,845 (2.48)% (18.25)%
Lebanon Road, LLC -- -- 1,019 -- (100.00)%
Windsor Parkway Development, LLC 723 1,805 4,445 (59.95)% (83.75)%
Johnson Road Development, LLC 1,276 1,857 1,966 (31.29)% (35.10)%
Eagle Roswell Road Development, LLC -- -- 2,336 -- (100.00)%
Eagle Hicks Lower Roswell Development, LLC -- -- 2,841 -- (100.00)%
Riverside Road Development, LLC 2,108 1,566 -- 34.61% 100.00%
The Phoenix on Peachtree, LLC 13,956 4,134 -- 237.59% 100.00%
Eagle Mason Mill Development, LLC 9,245 8,262 -- 11.90% 100.00%
Eagle Timm Valley Development, LLC -- 1,815 -- (100.00)% --
Eagle Acworth II Development, LLC 359 603 -- (40.46)% 100.00%
Eagle Acworth III Development, LLC 2,324 2,182 -- 6.51% 100.00%
Eagle White Columns Development, LLC 8,257 11,039 -- (25.20)% 100.00%
Eagle Atlanta Road Development, LLC 2,835 -- -- 100.00% 100.00%
Eagle Lavista Development, LLC 1,739 -- -- 100.00% 100.00%
Fayetteville Village, LLC 4,333 -- -- 100.00% 100.00%
--------------------------------------------------------------------------------------------------------------------------------
Total $57,891 $44,956 $26,917 28.77% 115.07%
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Deposits
Deposits are the Company's primary funding source. Total deposits
increased by $73,566,000 or 9.55% to $843,518,000 from $769,952,000 at March 31,
2000 and $71,248,000 or 9.23% from $772,270,000 at September 30, 1999. The Bank
uses traditional marketing methods to attract new customers. Its deposit network
is serviced from its branches located in metro Atlanta and Internet banking
site, justrightbank.com. The increase in deposits was primarily in certificates
of deposits which
30
<PAGE> 31
increased $61,826,000 or 11.88% to $582,066,000 at September 30, 2000 from
$520,240,000 at March 31, 2000 and $75,980,000 or 15.01% from $506,086,000 at
September 30, 1999. Demand deposits including noninterest-bearing,
interest-bearing, savings and money market accounts increased $11,740,000 or
4.70% to $261,452,000 at September 30, 2000, compared to $249,712,000 at March
31, 2000 and decreased $4,732,000 or 1.78% from $266,184,000 at September 30,
1999. The weighted average interest rate on deposits increased to 5.33% at
September 30, 2000 from 4.62% and 4.26% at March 31, 2000 and September 30,
1999, respectively.
For the periods indicated, deposits are summarized by type and
remaining term as follows:
DEPOSIT MIX
<TABLE>
<CAPTION>
SEPT. 30, March 31, Sept. 30,
(dollars in thousands) 2000 2000 1999
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Demand deposits:
Noninterest-bearing deposits $50,139 $ 53,085 $57,020
Interest-bearing deposits 92,078 97,769 90,002
Money market accounts 89,089 65,530 84,703
Savings accounts 30,146 33,328 34,459
---------------------------------------------------------------------------------------------------------
Total demand deposits 261,452 249,712 266,184
---------------------------------------------------------------------------------------------------------
Time deposits:
Maturity one year or less 422,267 379,324 367,288
Maturity greater than one year through two years 55,715 47,547 55,707
Maturity greater than two years through three years 44,070 46,039 32,472
Maturity greater than three years 60,014 47,330 50,619
---------------------------------------------------------------------------------------------------------
Total time deposits 582,066 520,240 506,086
---------------------------------------------------------------------------------------------------------
Total deposits $843,518 $769,952 $772,270
---------------------------------------------------------------------------------------------------------
</TABLE>
The weighted average interest rate on time deposits at September 30,
2000, March 31, 2000 and September 30, 1999 was 6.33%, 5.67% and 5.39%,
respectively.
For the periods indicated, interest expense on deposits is summarized
as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------------------------------------------
(dollars in thousands) 2000 1999 2000 1999
-------------------------------------------------------
<S> <C> <C> <C> <C>
Interest-bearing deposits $ 841 $ 677 $ 1,620 $ 1,700
Money market accounts 936 922 1,597 1,705
Savings accounts 114 155 239 344
Time deposits 8,974 7,097 16,892 14,771
-----------------------------------------------------------------------------------------------------
Total $10,865 $8,851 $20,348 $18,520
-----------------------------------------------------------------------------------------------------
</TABLE>
31
<PAGE> 32
Borrowings
The FHLB system functions as an allowance credit facility for thrift
institutions and certain other member institutions. The Bank utilizes advances
from the FHLB to fund a portion of its assets. At September 30, 2000, advances
were $245,900,000 compared to $292,500,000 at March 31, 2000. At September 30,
2000, the weighted average interest rate on these borrowings increased to 5.79%
compared to 5.65% at March 31, 2000. In addition, EREA utilizes borrowings from
third parties to fund real estate activities. Third party borrowings related to
real estate activities increased $21,472,000 or 108.79% to $41,210,000 at
September 30, 2000 from $19,738,000 at March 31, 2000. At September 30, 2000,
the weighted average interest rate on third party borrowings related to real
estate activities was 9.65% compared to 8.97% at March 31, 2000.
Liquidity and Capital Resources
Liquidity Management
The Asset and Liability Committee ("ALCO") manages the Company's
liquidity needs to ensure there is sufficient cash flow to satisfy demand for
credit and deposit withdrawals, to fund operations and to meet other Company
obligations and commitments on a timely and cost effective basis. Deposits
provide a significant portion of the Company's cash flow needs and continues to
provide a relatively stable, low cost source of funds. The Company's other
primary funding source was provided by advances from the Federal Home Loan Bank.
The liquidity requirement may vary from time to time (between 4% and 10%)
depending upon economic conditions and savings plans of all member savings
institutions. Under current regulations, the Bank is required to maintain liquid
assets of not less than 4% of the liquidity base at the end of the preceding
calendar quarter. At September 30, 2000, the Company's liquidity ratio was
7.40%.
At September 30, 2000, the Company had commitments to originate loans
of approximately $19,397,000 and commitments to sell mortgage loans of
approximately $21,480,000. The Company is committed to loan funds on unused
variable rate lines of credit of $61,189,000 at September 30, 2000. In addition,
the Company has issued $7,476,000 in letters of credit at September 30, 2000.
The Company's funding sources for these commitments include loan repayments,
deposits and FHLB advances.
Beginning April 1, 1995, the Bank formed an operating subsidiary,
PrimeEagle. This business unit generates revenues by originating permanent
mortgage loans. Substantially all fixed rate permanent mortgage loans are sold
to investors. Permanent mortgage loan originations decreased $219,029,000 or
42.66% to $294,423,000 for the six months ended September 30, 2000, compared to
$513,452,000 for the same period last year. The Company manages the funding
requirements of these loans primarily with short-term advances from the FHLB and
deposits.
Cash Flows from Operating Activities
For the six months ended September 30, 2000, cash used by operating
activities was $29,721,000 as compared to cash provided of $65,413,000 for same
period last year. The primary reason is timing differences from the sale of
loans held for sale versus originations of loans held for sale. During the six
months ended September 30, 2000, the Company originated $294,423,000 of loans
held for sale and sold $252,141,000 of loans held for sale. This resulted in a
$42,282,000 use of cash. This compares to the same period last year, when the
Company originated $513,452,000 of loans held for sale and sold $586,003,000 of
loans held for sale, resulting in a $72,551,000 source of cash.
Cash Flows from Investing Activities
During the six months ended September 30, 2000, the Company used cash
of $16,502,000 for investing activities compared to $43,624,000 for the same
period last year. In the six months ended September 30, 2000, loan originations,
net of repayments used cash of $12,505,000 compared to
32
<PAGE> 33
$42,742,000 in the same period last year. During the six months ended September
30, 2000, the Company purchased $9,869,000 in securities classified as available
for sale. Comparatively, the Company purchased $20,860,000 in securities
classified as available for sale and $9,884,000 in investment securities held to
maturity in the same period last year. The Company generated cash flows from
calls and maturities of investment securities held to maturity of $2,053,000
during the six months ended September 30, 2000, compared to $9,067,000 in the
same period last year. In addition, in the six months ended September 30, 1999,
the Company received proceeds from the sale of securities available for sale of
$1,807,000. Principal payments on securities available for sale and investment
securities held to maturity were $9,175,000 and $2,590,000 during the six months
ended September 30, 2000. Principal payments on securities available for sale
and investment securities held to maturity were $14,787,000 and $4,701,000
during the same period last year. During the six months ended September 30,
2000, the Company invested an additional $24,414,000 into real estate projects
and received proceeds of $15,004,000. During the six months ended September 30,
1999, the Company invested cash of $11,384,000 in real estate projects and
received proceeds of $15,014,000.
Cash Flows from Financing Activities
Cash provided by financing activities during the six months ended
September 30, 2000, was $47,428,000 compared to cash used of $31,451,000 during
the same period one year ago. The increase in the Company's deposits is the most
significant factor. Deposits increased by $73,566,000 during the six months
ended September 30, 2000, as compared to a decrease of $107,395,000 during the
same period last year. The Company borrowed $355,241,000 from the FHLB and
repaid $380,058,000 during the six months. This compares to borrowings of
$385,750,000 and repayments of $308,355,000 during the same period last year.
The Company paid cash dividends to its shareholders of $1,804,000 and $1,783,000
for the six months ended September 30, 2000 and 1999, respectively.
Capital
The Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA") established five capital categories for financial institutions. The
OTS places each federally chartered thrift institution into one of five
categories: well capitalized, adequately capitalized, under capitalized,
significantly under capitalized, and critically under capitalized. These
classifications are based on the Bank's level of risk based capital, leverage
ratios and its supervisory ratings. FDICIA defines "well capitalized" banks as
entities having a total risk based capital ratio of 10% or higher, a tier one
risk based capital ratio of 6% or higher and a leveraged ratio of 5% or higher.
At September 30, 2000, the Bank was classified as "well capitalized" under the
OTS regulations that implement the FDICIA provisions described above.
33
<PAGE> 34
The following table reflects the Bank's minimum regulatory capital
requirements, actual capital and the level of excess capital by category. The
Bank has historically maintained capital substantially in excess of the minimum
requirement. During the year ended March 31, 2000, the Bank paid the Company
cash dividends of $6,500,000. During the quarter ended June 30, 2000, the
Company contributed capital of $1,000,000 to the Bank.
<TABLE>
<CAPTION>
REGULATORY CAPITAL
---------------------------------------------------------------------------------------------------------
Actual Requirement Excess
(dollars in thousands) Amount % Amount % Amount %
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
SEPTEMBER 30, 2000
RISK-BASED RATIOS:
TIER 1 CAPITAL $71,658 9.15 $31,322 4.00 $40,336 5.15
TOTAL CAPITAL 78,530 10.03 62,644 8.00 15,886 2.03
TIER 1 LEVERAGE 71,658 5.79 49,522 4.00 22,136 1.79
TANGIBLE EQUITY 71,658 5.57 19,309 1.50 52,349 4.07
---------------------------------------------------------------------------------------------------------
March 31, 2000
Tier 1 capital $69,061 9.12 $30,280 4.00 $38,781 5.12
Total capital 75,794 10.01 60,559 8.00 15,235 2.01
Tier 1 leverage 69,061 5.75 48,050 4.00 21,011 1.75
Tangible equity 69,061 5.51 18,803 1.50 50,258 4.01
---------------------------------------------------------------------------------------------------------
September 30, 1999
Tier 1 capital $72,930 10.17 $28,698 4.00 $44,232 6.17
Total capital 79,766 11.12 57,396 8.00 22,370 3.12
Tier 1 leverage 72,930 6.21 46,950 4.00 25,980 2.21
Tangible equity 72,930 6.37 17,183 1.50 55,747 4.87
---------------------------------------------------------------------------------------------------------
</TABLE>
34
<PAGE> 35
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In November 1992, after acquiring certain assets from the Resolution
Trust Corporation, including various real estate loans, and four mortgage
origination offices, the Bank entered into an Operating Agreement (the
"Agreement") with two individuals and a corporation controlled by them
(collectively, the "Plaintiffs") to assist in the management of the Bank's newly
formed Prime Lending Division ("Prime"). The individual Plaintiffs became
employees of the Bank and their corporation was to be paid a percentage of the
net pretax profits of Prime. In mid-1997, a disagreement arose with respect to
the allocation of expenses to Prime for purposes of calculating the net pretax
profits of Prime. Plaintiffs filed suit on December 5, 1997 alleging, among
other things, that the Bank had improperly calculated net pretax profits under
the Agreement since April 1997. In January 1998, the Bank terminated the
employment of the two individuals "for cause," terminated the Agreement and
filed an Answer and Counterclaim.
The Complaint as amended seeks, among other things (i) a declaration
the Agreement was terminated "without cause" and that, pursuant to a purchase
option in the Agreement, Plaintiffs therefore have the right to purchase the
"assets" of Prime at 75% of fair market value; (ii) a declaration that the term
"assets," as used in connection with the Plaintiffs' alleged purchase option,
includes all outstanding loans that were originated by Prime at the time of
their termination without having to net against the loans any corresponding
liability incurred by the Bank in connection with these loans; (iii) alleged
lost wages, benefits and other payments totaling approximately $4.6 million;
(iv) alleged consequential damages in excess of $20 million, which represents
the amount Plaintiffs believe another bank would have paid for the Prime Lending
loan origination business and the net "assets" as Plaintiffs have defined them;
and (v) unspecified punitive damages and attorneys fees.
By Order of November 1, 2000, the trial court granted summary judgment
in favor of Tucker Federal with respect to Plaintiffs' claims for punitive
damages, holding that the only substantive claims of Plaintiffs remaining for
trial are those founded on alleged breach of contract. The court also determined
that genuine issues of material fact exist with respect to Tucker Federal's
counterclaim against Plaintiffs.
The Bank strongly denies Plaintiffs' entitlement to any relief and
believes the Bank's Counterclaim has merit. The Bank believes, among other
things, that Plaintiffs were properly terminated for cause, that Plaintiffs have
no rights with respect to the purchase option, and that even if the purchase
option were applicable, Plaintiffs would have no right to purchase any loans,
but only certain tangible and intangible assets of the Bank, the value of which
is estimated to be in the $1-2 million range. The Counterclaim, as amended,
seeks compensatory damages presently estimated to total approximately $500,000
as well as punitive damages and attorneys fees.
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
35
<PAGE> 36
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
Shareholders who wish to present a proposal on matters appropriate for
Shareholder action in accordance with rules and regulations of the Securities
and Exchange Commission at the 2001 Annual Meeting of Shareholders ("2001 Annual
Meeting") are required to provide notice to the Corporate Secretary of their
intent to do so on or before March 1, 2001. The notice must provide the
information (set forth in the Bylaws of the Company) set forth in applicable
rules and regulations of the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934, as amended. This deadline applies to all
shareholder proposals sought to be considered at the 2001 Annual Meeting.
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
36
<PAGE> 37
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 20, 2000 /s/ Conrad J. Sechler, Jr.
------------------------------------
Conrad J. Sechler, Jr.
Chairman of the Board, President and
Principal Executive Officer
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 20, 2000 /s/ Richard B. Inman, Jr.
-----------------------------------
Richard B. Inman, Jr.
Director, Secretary and Treasurer
Date: November 20, 2000 /s/ Conrad J. Sechler, Jr.
-----------------------------------
Conrad J. Sechler, Jr.
Chairman of the Board and President
Date: November 20, 2000 /s/ LuAnn Durden
-----------------------------------
LuAnn Durden
Chief Financial Officer
37
<PAGE> 38
EAGLE BANCSHARES, INC.
INDEX OF EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description Page No.
------- ----------- --------
<S> <C> <C>
11 Computation of per share earnings 39
27 Financial Data Schedule
(FOR SEC USE ONLY)
</TABLE>
38
