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 June 30, 1996
_
|_| 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.)
2230 SCENIC HIGHWAY, SNELLVILLE, GEORGIA 30278
(Address of Principal Executive Offices) (Zip Code)
(770) 978-3242
(Issuer's Telephone Number, including Area Code)
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 __XX____ No______
APPLICABLE ONLY TO CORPORATE ISSUERS
Class Outstanding at June 30, 1996
---------------------------- ---------------------------------
Common Stock, $.01 Par Value 1,378,746
BUTTON GWINNETT FINANCIAL CORPORATION & SUBSIDIARY
INDEX
Part I. Financial Information Page No.
Consolidated Balance Sheet - June 30, 1996
and June 30, 1995 3
Consolidated Statements of Income - Six Months
Ended June 30, 1996 and 1995 and Three Months
Ended June 30, 1996 and 1995 4
Consolidated Statements of Cash Flows -
Six Months Ended June 30, 1996 and 1995 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 11
Item 6 - Exhibits and reports on Form 8-K 11
<TABLE>
<CAPTION>
BUTTON GWINNETT FINANCIAL CORPORATION & SUBSIDIARY
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
June 30 June 30
ASSETS 1996 1995
<S> <C> <C>
Cash and due from banks $14,586,764 $10,506,984
Bank owned certificates of deposit 200,000 300,000
Investment securities, approximate market value
of $31,723,649 31,505,365 21,771,032
Federal funds sold 14,930,000 17,485,000
Total Cash and Investments 61,222,129 50,063,016
Loans 108,979,084 105,285,174
Less reserve for loan losses (2,058,505) (1,706,422)
Net loans 106,920,579 103,578,752
Premises & equipment, net 3,737,750 4,382,926
Other assets 1,710,213 1,545,084
$173,590,671 $159,569,778
============ ============
LIABILITIES & STOCKHOLDERS' EQUITY
Deposits:
Demand $40,634,937 $35,296,794
Interest-bearing demand 47,257,110 30,730,086
Savings 6,355,808 6,478,913
Time over $100,000 18,447,184 21,646,202
Time under $100,000 41,286,941 48,078,700
Total deposits $153,981,980 $142,230,695
Other liabilities 1,600,279 2,185,963
Total liabilities $155,582,259 $144,416,658
Stockholders' Equity
Common stock $.01 par, 5,000,000 authorized;
1,527,639 shares issued $15,276 $15,275
Surplus 17,774,397 15,166,195
Retained earnings 1,840,272 1,510,263
$19,629,945 $16,691,733
Less cost of shares acquired for the treasury,
148,893 shares 1,621,533 1,538,613
Total stockholders' equity 18,008,412 15,153,120
$173,590,671 $159,569,778
============ ============
</TABLE>
<TABLE>
<CAPTION>
BUTTON GWINNETT FINANCIAL CORPORATION & SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Six Months Ended Three Months Ended
June 30 June 30
1996 1995
Interest income:
<S> <C> <C> <C> <C>
Interest and fees on loans $5,835,753 $5,597,461 $2,931,012 $2,967,130
Int on taxable investments 695,204 508,119 370,709 251,492
Int on nontaxable investments 89,271 102,667 32,269 49,893
Int on bank deposits and
other investments 5,759 7,532 2,863 3,758
Int on Federal Funds Sold 423,221 180,418 223,833 149,057
$7,049,208 $6,396,197 $3,560,686 $3,421,330
Interest expense:
Deposits $2,531,070 $2,102,319 1,284,394 1,195,094
$2,531,070 $2,102,319 $1,284,394 $1,195,094
Net interest income before
provision for loan losses $4,518,138 $4,293,878 2,276,292 2,226,236
Provision for loan loss 150,000 300,000 75,000 150,000
Net interest income $4,368,138 $3,993,878 2,201,292 2,076,236
Other income
Service charges on
deposit accounts $372,998 $351,847 $187,275 $186,316
Gain on sale of
Other Real Estate 40,347 0 40,347 0
Other income 145,552 70,210 68,138 33,390
$558,897 $422,057 $295,760 $219,706
Other expense
Salaries & employee benefits $1,182,500 $1,127,308 $596,921 $572,258
Equipment expense 127,386 120,946 63,504 63,553
Occupancy expense 108,185 105,095 51,242 54,661
Data processing 68,461 63,351 32,604 32,968
FDIC insurance premiums 59,695 119,758 36,216 59,879
Other real estate expenses 508 50,509 611 20,236
Other operating expenses 511,064 502,705 278,702 251,723
$2,057,799 $2,089,672 $1,059,800 $1,055,278
Net income before applicable
income taxes $2,869,236 $2,326,263 $1,437,252 $1,240,664
Applicable income taxes 1,028,964 816,000 529,964 418,000
Net income $1,840,272 $1,510,263 $907,288 $822,664
=========== ========== ========== ==========
Net income per share
of common stock $1.33 $1.09 $0.66 $0.59
=========== =========== =========== ==========
Dividends per share
of common stock $0.50 $0.35 $0.00 $0.35
=========== =========== =========== ==========
</TABLE>
<TABLE>
<CAPTION>
BUTTON GWINNETT FINANCIAL CORPORATION & SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended June 30
1996 1995
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $1,840,272 $1,510,263
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation 125,213 115,939
Provision for loan losses 150,000 300,000
Increase (decrease) in taxes payable 77,155 (16,774)
(Increase) decrease in interest receivable (78,027) 27,780
Increase (decrease) in interest payable (126,608) 300,289
Other prepaids, deferrals and accruals, net 870,811 1,112,705
Total adjustments $1,018,544 $1,839,939
Net cash provided by operating activities $2,858,816 $3,350,202
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of investment securities (8,978,805) (89,418)
Proceeds from the maturity of investment 3,385,000 1,980,000
securities
Purchases of premises and equipment, net (14,768) (37,115)
Increase in loans, net (6,372,006) (18,140,151)
(Increase) decrease in federal funds sold, net 4,695,000 (14,540,000)
Net cash (used in) investing activities ($7,285,579) ($30,826,684)
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in deposits, net $13,177,862 $31,179,250
Cash paid for treasury stock (56,420) (797,236)
Cash dividends paid to shareholders (690,243) (484,658)
Net cash provided by financing activities $12,431,199 $29,897,356
Net increase in cash and due from banks $8,004,436 $2,420,874
Cash and due from banks, beginning of period 6,582,328 8,086,110
Cash and due from banks, ending of period $14,586,764 $10,506,984
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest $2,657,678 $1,802,030
Income taxes $1,028,964 $860,774
See Notes to Consolidated Financial Statements
</TABLE>
BUTTON GWINNETT FINANCIAL CORPORATION & SUBSIDIARY
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 six months ended and
three months ended June 30, 1996 are not necessarily
indicative of the results to be expected for the full year.
BUTTON GWINNETT FINANCIAL CORPORATION & SUBSIDIARY
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 June 30, 1996, the Company experienced an increase in total
assets of 9.04%, as compared to December 31, 1995. Total loans
increased $6,327,321 during this period or approximately 6.16%.
Deposits increased $13,177,861 or 9.36% 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 calling efforts of our commercial officers.
Liquidity
As of June 30, 1996, the liquidity ratio was 38.46%, 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 company to maintain minimum
capital to assets. At June 30, 1996, the Company's capital ratio
levels exceeded the required ratios as follows:
Regulatory
Actual Requirement
Leverage capital ratio 10.37% 4.00%
Risk based capital ratios:
Core capital 14.72% 4.00%
Total capital 15.97% 8.00%
BUTTON GWINNETT FINANCIAL CORPORATION & SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations
Net interest income for the six months ended June 30, 1996
increased 5.22% to $4,518,138 over the $4,293,878 for the same
period in 1995; and the increase for the three month period
ending June 30, 1996 was $50,056 or 2.25% as compared to the same
period in 1995. Interest income for the six month period
increased $653,011 or 10.21%, while interest expense increased
$428,751 or 20.39%. For the three month period, interest income
increased $139,356 or 4.07%; interest expense for the three month
period increased approximately $89,300 or 7.47% over the same
period. The interest income increase was due to an overall
increase in earning assets, specifically in the areas of
commercial loans and bank investments. The increase in interest
expense is attributed to an increase in interest bearing deposits
which are a result of the marketing efforts of the bank.
Management decreased the provision for loan losses during the six
months ended June 30, 1996 to $150,000 as compared to $300,000
for the same period in 1995; the three month period ending
June 30, 1996 also reflects a decrease of $75,000 from the three
months period ending June 30, 1995. The determination of the
amounts allocated for loan losses is based upon management's
judgment concerning factors affecting loan quality and
assumptions about the local and national economy.
Total other income increased approximately $136,840 or 32.42% to
$558,897 as compared to $422,057 for the same six month period
in 1995. During the three months ended June 30, 1996 and 1995,
total other income increased to $295,760 from $219,706 or 34.62%.
The increase in service charge is a result of increase in volume
on commercial checking accounts, consumer service charges, non-
sufficient funds charges and ATM withdrawal fees. The increase
of $40,347 represents the gain on sale of other real estate,
which had been foreclosed. The increase in other income is
primarily due to fee income received on the sale of mutual funds,
annuities, etc. by a third party ("Invest Corp."). Another
factor which caused an increase in other income is interest
collected on proceeds from the sale of a piece of property owned
by the company for a potential branch site. There was also an
increase in mortgage loan origination fees and safe deposit box
rent as compared to the same period in 1995.
Total other expenses decreased to $2,057,799 or 1.53% less than
the $2,089,672 during the first six months of 1996. Total other
expenses increased slightly from $1,055,278 to $1,059,800 or .43%
for the three months ending June 30, 1996. The increase in
salaries and employee benefits was due to additional employees
added to the staff over the same period in 1995. The slight
increase in equipment expense is attributed to an increase in
depreciation expense; the increase in occupancy expense for the
six month period is the result of repairs and maintenance to the
bank's branch offices; while there is a slight decrease in
occupancy expense for the three month period, which is attributed
to rental income that is net of occupancy expense; and the small
increase in data processing fees is due to the additional number
of accounts. There was a decrease of approximately $60,000 and
$23,600 in FDIC Insurance Premiums as compared to the six and
three months ended June 30, 1995. Other real estate expense
decreased $50,000 under the six month period and $19,600 under
the three month period, as renovation expenses were incurred
during 1995 on foreclosed property which was sold that same year.
The increase in other operating expenses for the six and three
month period is primarily for legal expenses.
Net income increased for the six month period ended June 30, 1996
by $542,973 as compared to the same period in 1995; while net
income increased $196,588 or 15.85% to $1,437,252 for the three
month period ending June 30, 1996. The increase is attributed to
more efficient operations of the bank, as well as an 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.
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
Vice President and
Secretary-Treasurer
(Principal Financial Officer)
Item 4 - Any matter submitted to the security holders for a vote.
The annual shareholders meeting was held on April 15, 1996
for the following purposes:
(1) To elect directors of the Company to serve until their
successors are duly elected and qualified;
(2) To ratify the selection of Mauldin & Jenkins as
independent public accountants for the fiscal year
ending December 31, 1996;
(3) To consider such other business as may properly come
before the Annual Meeting or any adjournments thereof.
Total shares represented at the meeting were:
1,058,131 shares
(1) Votes cast for 1,057,783
Votes cast against 348
(2) Votes cast for 1,043,516
Votes cast against 9,642
Votes abstained 4,973
Item 6 - Exhibits and reports on Form 8-K
(a) Exhibits.
None.
(a) Reports on Form 8-K.
None.
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1996
<PERIOD-END> MAR-31-1996 JUN-30-1996
<CASH> 8294208 14586764
<INT-BEARING-DEPOSITS> 200000 200000
<FED-FUNDS-SOLD> 17880000 14930000
<TRADING-ASSETS> 0 0
<INVESTMENTS-HELD-FOR-SALE> 0 0
<INVESTMENTS-CARRYING> 29765340 31505365
<INVESTMENTS-MARKET> 29721851 31723649
<LOANS> 103067470 108979084
<ALLOWANCE> 2005745 2058505
<TOTAL-ASSETS> 163598882 173590671
<DEPOSITS> 144561624 153981980
<SHORT-TERM> 0 0
<LIABILITIES-OTHER> 1910889 1600279
<LONG-TERM> 0 0
<COMMON> 15276 15276
0 0
0 0
<OTHER-SE> 17111093 17993136
<TOTAL-LIABILITIES-AND-EQUITY> 163598882 173590671
<INTEREST-LOAN> 2904741 5835753
<INTEREST-INVEST> 583781 1213455
<INTEREST-OTHER> 0 0
<INTEREST-TOTAL> 3488522 7049208
<INTEREST-DEPOSIT> 1246676 2531070
<INTEREST-EXPENSE> 1246676 2531070
<INTEREST-INCOME-NET> 2241846 4518138
<LOAN-LOSSES> 75000 150000
<SECURITIES-GAINS> 0 0
<EXPENSE-OTHER> 997999 2057799
<INCOME-PRETAX> 1431984 2869236
<INCOME-PRE-EXTRAORDINARY> 1431984 2869236
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 932984 1840272
<EPS-PRIMARY> .68 1.33
<EPS-DILUTED> .65 1.28
<YIELD-ACTUAL> 8.59 8.49
<LOANS-NON> 136005 42569
<LOANS-PAST> 0 67320
<LOANS-TROUBLED> 0 90100
<LOANS-PROBLEM> 0 0
<ALLOWANCE-OPEN> 1953189 1953189
<CHARGE-OFFS> 24981 54712
<RECOVERIES> 2537 10028
<ALLOWANCE-CLOSE> 2005745 2058505
<ALLOWANCE-DOMESTIC> 230000 224000
<ALLOWANCE-FOREIGN> 0 0
<ALLOWANCE-UNALLOCATED> 1775745 1834505
