FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_
|X| QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
_
|_| TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE
ACT
For the transition period from _______ to ________
Commission file number 33-13714-A
BUTTON GWINNETT FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
GEORGIA 58-1766331
(State or Other Jurisdiction of (I.R.S Employer
Incorporation or Organization) Identification No.)
PO BOX 1230, 150 S. PERRY STREET, LAWRENCEVILLE, GA 30246-1230
(Address of Principal Executive Offices) (Zip Code)
(770) 963-6665
(Issuer's Telephone Number, including Area Code)
2230 SCENIC HIGHWAY, SNELLVILLE, GEORGIA 30278
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act during the past 12 months
(or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Yes ______ No ______
APPLICABLE ONLY TO CORPORATE ISSUERS
Class Outstanding at September 30, 1995
Common Stock, $.01 Par Value 1,382,537
BUTTON GWINNETT FINANCIAL CORPORATION & SUBSIDIARIES
INDEX
Part I. Financial Information Page No.
Consolidated Balance Sheet - September 30, 1995 3
Consolidated Statements of Income - Nine Months
Ended September 30, 1995 and 1994 and Three Months
Ended September 30, 1995 and 1994 4
Consolidated Statements of Cash Flows -
Nine Months Ended September 30, 1995 and 1994 5
Notes To Consolidated Financial Statements 6
Management's Discussion and Analysis of
Financial Condition and Results of
Operations 7 - 9
Part II. Other Information
Item 4 - Any matter submitted to the
security holders for a vote 10
Item 6 - Exhibits and reports on Form 8-K 10
Signatures 11
BUTTON GWINNETT FINANCIAL CORPORATION & SUBSIDIARY
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
September 30
1995
ASSETS
Cash and due from banks $ 8,905,860
Bank owned certificates of deposit 300,000
Investment securities, approximate market value
of $24,562,520 24,606,147
Federal funds sold 20,755,000
Total Cash and Investments 54,567,007
Loans 103,030,388
Less reserve for loan losses (1,844,976)
Net loans 101,185,412
Premises & equipment, net 4,295,061
Other assets 1,534,730
TOTAL ASSETS $161,582,210
LIABILITIES & STOCKHOLDERS' EQUITY
Deposits:
Demand $ 34,049,866
Interest-bearing demand 37,357,869
Savings 6,295,483
Certificates of deposit 66,467,045
Total deposits $144,170,263
Other liabilities 1,442,464
Total liabilities $145,612,727
Stockholders' Equity
Common stock $.01 par, 5,000,000 authorized;
1,527,539 shares issued $ 15,275
Surplus 15,166,196
Retained earnings 2,353,125
$ 17,534,596
Less cost of shares acquired for the treasury,
145,002 shares (1,565,113)
Total stockholders' equity 15,969,483
TOTAL LIABILITIES $161,582,210
BUTTON GWINNETT FINANCIAL CORPORATION & SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended Nine Months Ended
September 30 September 30
1995 1994 1995 1994
Interest income:
Interest & fees on loans $2,962,512 $2,143,630 $ 8,559,973 $6,098,102
Interest on taxable investments 609,543 313,102 1,305,612 865,374
Interest on tax free investments 56,596 51,291 159,263 155,699
$3,628,651 $2,508,023 $10,024,848 $7,119,175
Interest expense:
Deposits $1,375,597 $ 746,480 $ 3,477,916 $2,162,745
$1,375,597 $ 746,480 $ 3,477,916 $2,162,745
Net interest income before
provision for loan losses $2,253,054 $1,761,543 $ 6,546,932 $4,956,430
Provision for loan loss $ 150,000 55,000 450,000 120,000
Net interest income $2,103,054 $1,706,543 $ 6,096,932 $4,836,430
Other income
Service charges on
deposit accounts $ 195,200 $ 150,676 $ 523,241 $ 445,658
Other income $ 30,214 42,435 124,230 216,712
$ 225,414 $ 193,111 $ 647,471 $ 662,370
Other expense
Salaries & employee benefits $ 557,707 $ 460,973 $1,684,285 $1,375,649
Occupancy and equipment expense $ 149,967 152,902 376,008 440,261
Other operating expenses $ 311,932 301,066 1,048,985 1,075,347
$1,019,606 $ 914,941 $3,109,278 $2,891,257
Net income before applicable
income taxes $1,308,862 $ 984,713 $3,635,125 $2,607,543
Applicable income taxes $ 466,000 345,500 1,282,000 895,000
Net income $ 842,862 $ 639,213 $2,353,125 $1,712,543
Net income per share of
common stock $ 0.61 $ 0.44 $ 1.70 $ 1.18
Dividends per share of
common stock $ 0.00 $ 0.00 $ 0.35 $ 0.30
BUTTON GWINNETT FINANCIAL CORPORATION & SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOW
(UNAUDITED)
Nine Months Ended
September 30
1995 1994
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $2,353,125 $1,712,543
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation 207,944 83,551
Provision for loan losses 450,000 120,000
(Increase) decrease in accrued interest receivable (31,812) (166,894)
Increase (decrease) in accrued interest payable 404,556 (10,060)
Other prepaids and accruals, net 292,702 461,029
Total adjustments $1,323,390 $ 487,626
Net cash provided by operating activities $3,676,515 $2,200,169
CASH FLOWS FROM INVESTING ACTIVITIES
Decrease in bank owned CD's $ 0 $1,099,000
Purchases of investment securities (6,309,533) (8,437,036)
Proceeds from the maturity of investment securities 5,365,000 1,355,000
Purchases of premises and equipment, net (41,255) 16,074
Increase in loans, net (15,871,401) (5,703,821)
(Increase) decrease in federal funds sold, net (17,810,000) 8,800,000
Net cash (used in) investing activities ($34,667,189)($2,870,783)
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in deposits, net $33,118,818 $4,407,948
Purchase of Treasury Stock (823,736) (49,072)
Cash dividends paid to shareholders (484,658) (436,508)
Exercise stock options 0 13,562
Net cash provided by financing activities $31,810,424 $3,935,930
Net increase in cash and due from banks $ 819,750 $3,265,316
Cash and due from banks, beginning of period 8,086,110 4,459,457
Cash and due from banks, ending of period $ 8,905,860 $7,724,773
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest $ 3,073,360 $2,172,806
Income taxes $ 1,389,874 $ 959,367
See Notes to Consolidated Financial Statements
BUTTON GWINNETT FINANCIAL CORPORATION & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1. Basis of Presentation
The financial information included herein is unaudited; however,
such information reflects all adjustments (consisting solely of normal
recurring adjustments) which are, in the opinion of management,
necessary for a fair statement of results for the interim periods.
The results of operations for the nine months ended
September 30, 1995 are not necessarily indicative of the results to
be expected for the full year.
Note 2. Adoption of New Accounting Principle
On January 1, 1995, the Company adopted Statement of Financial
Accounting Standard "SFAS" No. 114, "Accounting by Creditors for the
Impairment of a Loan." SFAS No. 114 generally requires impaired
loans to be measured on the present value of expected future cash
flows discounted at the loan's effective interest rate, at the
loan's observable market price or at the fair value of the collateral
if the loan is collateral dependent. A loan is impaired when it
is probable the creditor will be unable to collect all contractual
principal and interest payments due in accordance with the terms of
the loan agreement. The adoption of SFAS 114 did not have a material
effect on the Company's consolidated financial statements.
BUTTON GWINNETT FINANCIAL CORPORATION & SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of certain
significant factors which have affected the Company's financial
position and operating results during the periods included in
the accompanying consolidated financial statements.
Financial Condition
As of September 30, 1995, the Company experienced an increase in
total assets of 27.43%, as compared to December 31, 1994. Total
loans increased $15,421,401 during this period or approximately
17.98%. Deposits increased $33,118,818 or 29.82% during this period.
The increases in total assets, loans and deposits are attributed to
the improvement in the stability of the local economy, as well as the
addition of three commercial officers to the staff.
Liquidity
As of September 30, 1995, the liquidity rate was 36.12%, which
management considers to be adequate to meet the Company's funding
needs. Liquidity is measured by the ratio of net cash, short-term
and marketable securities to net deposits and short-term liabilities.
Capital
Banking regulations require the banks and bank holding companies to
maintain minimum capital ratios to assets. At September 30, 1995,
the Company's capital ratios on a combined basis exceeded the required
ratios as follows:
Regulatory
Actual Requirement
Leverage capital ratio 9.88% 4.00%
Risk based capital ratios:
Core capital 13.50% 4.00%
Total capital 14.75% 8.00%
BUTTON GWINNETT FINANCIAL CORPORATION & SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations
Net interest income for the nine months ended September 30, 1995
increased 32.09% to $6,546,932 over the $4,956,430 for the same period
in 1994. Interest income for the nine month period increased $2,905,673
or 40.81%, while interest expense increased $1,315,171 or 60.81%. The
interest income increase was due to the significant increase in
commercial loans that were produced by the commercial officers.
The increase in interest expense is attributed to the increase in
new interest bearing deposit accounts that have been opened as a
result of the calling efforts of the commercial officers.
Management increased the provision for loan losses during the nine
months ended September 30, 1995 to $450,000 as compared to $120,000 for
the same period in 1994, primarily due to the increase in the amount of
total loans outstanding. Based on management's assessment of the
economic environment and prior charge-off and collection history, the
reserve for loan loss is considered adequate to absorb future losses
inherent in the portfolio.
Total other income decreased approximately $14,899 or 2.25% to $647,471
as compared to $662,370 for the same period 1994. The increase in
service charge is a result of increase in volume primarily from
commercial checking accounts, which are subject to analysis charges.
The decrease in other income is due to the reduction in rental income
earned on other real estate during the same period in 1994. There was
also a decrease in the amount of origination fees earned during the same
period in 1994.
Total other expenses increased to $3,109,278 or 7.54% over the
$2,891,257 during the nine months ended September 30, 1994. The increase
in salaries and employee benefits was due to an addition of
approximately nine employees to the staff over the same period in 1994.
Occupancy and equipment expense decreased due to the closing of a branch
office, of which rental expense was incurred during 1994.
Net income increased for the nine month period ended September 30, 1995
by $640,582 as compared to the same period in 1994. The increase is
attributed to more efficient operations of the bank, improvement in the
local economy and the increase in deposit and loan relationships.
The Company is not aware of any known trends, events or uncertainties,
other than the effect of events as described above, that will have or
that are reasonably likely to have a material effect on its liquidity,
capital resources or operations. The Company is also not aware of any
current recommendations by the regulatory authorities which, if they
were implemented, would have such an effect.
Item 4 - Any matter submitted to the security holders for a vote.
None
Item 6 - Exhibits and reports on Form 8-K
(a) Exhibits.
None.
(a) Reports on Form 8-K.
None.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
BUTTON GWINNETT FINANCIAL CORPORATION
Date: ____________ By:___________________________________
Glenn S. White
President
(Principal Executive Officer)
Date: ___________ By:___________________________________
Andrew R. Pourchier
Executive Vice President and
Secretary-Treasurer
(Principal Financial Officer)
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