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, 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 September 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 - September 30, 1996
and September 30, 1995 3
Consolidated Statements of Income - Nine Months
Ended September 30, 1996 and 1995 and Three Months
Ended September 30, 1996 and 1995 4
Consolidated Statements of Cash Flows -
Nine Months Ended September 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)
September 30 September 30
ASSETS 1996 1995
<S> <C> <C>
Cash and due from banks $12,335,981 $8,905,860
Bank owned certificates of deposit 0 300,000
Investment securities, approximate
market value of $33,943,626 34,114,908 24,606,147
Federal funds sold 15,645,000 20,755,000
Total Cash and Investments 62,095,889 54,567,007
Loans 113,409,379 103,030,388
Less reserve for loan losses (2,133,184) (1,844,976)
Net loans 111,276,195 101,185,412
Premises & equipment, net 3,658,620 4,295,061
Other assets 1,802,016 1,534,730
$178,832,720 $161,582,210
============ ============
LIABILITIES & STOCKHOLDERS' EQUITY
Deposits:
Demand $41,930,572 $34,049,866
Interest-bearing demand 52,419,516 37,357,869
Savings 5,749,783 6,295,483
Time over $100,000 18,753,089 19,993,749
Time under $100,000 39,185,925 46,473,296
Total deposits $158,038,885 $144,170,263
Other liabilities 1,746,838 1,442,464
Total liabilities $159,785,723 $145,612,727
Stockholders' Equity
Common stock $.01 par,
5,000,000 authorized;
1,527,639 shares issued $15,276 $15,275
Surplus 17,774,397 15,166,196
Retained earnings 2,878,857 2,353,125
$20,668,530 $17,534,596
Less cost of shares acquired for
the treasury,
148,893 shares 1,621,533 1,565,113
Total stockholders' equity 19,046,997 15,969,483
$178,832,720 $161,582,210
============ ============
</TABLE>
<TABLE>
<CAPTION>
BUTTON GWINNETT FINANCIAL CORPORATION & SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Nine Months Ended Three Months Ended
September 30 September 30
1996 1995 1996 1995
<S> <C> <C> <C>
<C>
Interest income:
Interest and fees on loans $8,858,787 $8,559,973 $3,023,034
$2,962,512
Interest on taxable investments 1,125,705 788,535 430,501
280,416
Interest on nontaxable investments 136,005 159,263 46,734
56,596
Interest on bank deposits and
other investments 7,705 11,398 1,946
3,866
Interest on Federal Funds Sold 716,444 505,679 293,223
325,261
$10,844,646 $10,024,848 $3,795,438 $3,628,651
Interest expense:
Deposits $3,880,035 $3,477,916 1,348,965
1,375,597
$3,880,035 $3,477,916 $1,348,965 $1,375,597
Net interest income before provision $6,964,611 $6,546,932 2,446,473
2,253,054
for loan losses
Provision for loan loss 225,000 450,000 75,000
150,000
Net interest income $6,739,611 $6,096,932 2,371,473
2,103,054
Other income
Service charges on deposit accounts $564,307 $523,241 $191,309
$171,394
Gain on sale of Other Real Estate 40,347 0 0
0
Other income 190,304 124,230 44,752
54,020
$794,958 $647,471 $236,061 $225,414
Other expense
Salaries & employee benefits $1,770,665 $1,684,284 $588,165
$556,976
Equipment expense 223,770 215,864 96,384
94,918
Occupancy expense 154,425 160,144 46,240
55,049
Data processing 104,430 95,953 35,969
32,602
FDIC insurance premiums 89,599 220,278 29,904
100,520
Other real estate expenses 1,047 11,206 539
(39,303)
Other operating expenses 722,012 721,549 210,948
218,844
$3,065,948 $3,109,278 $1,008,149 $1,019,606
Net income before applicable
income taxes $4,468,621 $3,635,125 $1,599,385
$1,308,862
Applicable income taxes 1,589,764 1,282,000 560,800
466,000
Net income $2,878,857 $2,353,125 $1,038,585
$842,862
=========== =========== ===========
===========
Net income per share of common stock $2.09 $1.70 $0.76
$0.61
=========== =========== ===========
===========
Dividends per share of common stock $0.50 $0.35 $0.00
$0.00
=========== =========== ===========
===========
</TABLE>
<TABLE>
<CAPTION>
BUTTON GWINNETT FINANCIAL CORPORATION & SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended
September 30
1996 1995
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $2,878,857
$2,353,125
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation 218,564
207,944
Provision for loan losses 225,000
450,000
Increase (decrease) in taxes payable 63,069
(24,774)
(Increase) decrease in interest receivable (4,743)
(31,812)
Increase (decrease) in interest payable (59,167)
404,556
Other prepaids, deferrals and accruals, net 798,927
317,476
Total adjustments $1,241,650
$1,323,390
Net cash provided by operating activities $4,120,507
$3,676,515
CASH FLOWS FROM INVESTING ACTIVITIES
Decrease in Bank Owned CD's 200,000
0
Purchases of investment securities (13,973,348)
(6,309,533)
Proceeds from the maturity of investment 5,770,000
5,365,000
securities
Purchases of premises and equipment, net (28,989)
(41,255)
Increase in loans, net (10,802,621)
(15,871,401)
(Increase) decrease in federal funds sold, net 3,980,000
(17,810,000)
Net cash (used in) investing activities ($14,854,958)
($34,667,189)
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in deposits, net $17,234,767
$33,118,818
Cash paid for treasury stock (56,420)
(823,736)
Cash dividends paid to shareholders (690,243)
(484,658)
Net cash provided by financing activities $16,488,104
$31,810,424
Net increase in cash and due from banks $5,753,653
$819,750
Cash and due from banks, beginning of period 6,582,328
8,086,110
Cash and due from banks, ending of period $12,335,981
$8,905,860
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest $3,939,202
$3,073,360
Income taxes $1,692,900
$1,389,874
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 nine months ended and
three months ended September 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 September 30, 1996, the Company experienced an increase in
total assets of 12.33%, as compared to December 31, 1995. Total
loans increased $10,757,616 during this period or approximately
10.48%. Deposits increased $17,234,766 or 12.24% 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 September 30, 1996, the liquidity ratio was 38.03%, 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 September 30, 1996, the Company's capital ratio
levels exceeded the required ratios as follows:
Regulatory
Actual Requirement
Leverage capital ratio 10.65% 4.00%
Risk based capital ratios:
Core capital 14.93% 4.00%
Total capital 16.18% 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 nine months ended September 30, 1996 increased
6.28% to $6,964,611 over the $6,546,932 for the same period in 1995; and
the increase for the three month period ending September 30, 1996 was
$193,419 or 8.58% as compared to the same period in 1995. Interest
income for the nine month period increased $819,708 or 8.18%, while
interest expense increased $402,119 or 11.56%. For the three month period,
interest income increased $166,787 or 4.59%; interest expense for the three
month period decreased approximately $26,632 or 1.96% 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 for the nine month period is attributed to
an increase in interest bearing deposits which are a result of the marketing
efforts of the bank; while the decrease in this same category for the three
month period is a result of an increase in Money Market accounts rather than
in Certificates of Deposit.
Management decreased the provision for loan losses during the nine months
ended September 30, 1996 to $225,000 as compared to $450,000 for the same
period in 1995; the three month period ending September 30, 1996 also
reflects a decrease of $75,000 from the three months period ending
September 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 $147,487 or 22.78% to $794,958
as compared to $647,471 for the same nine month period 1995. During the
three months ended September 30, 1996 and 1995, total other income increased
to $236,061 from $225,414, or 4.7% for the same period. The increase in service
charge for the nine months ended and three months ended September 30, 1996 is
a result of increase in volume on commercial checking accounts, consumer
service charges, non-sufficient funds charges and ATM withdrawal fees.
The nine month increase of $40,347 represents the gain on sale of other
real estate, which had been foreclosed. The nine month 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 and safe deposit box rent as compared
to the same period in 1995. A decrease in other income for the three months
ended is related to permanent origination fees.
Total other expenses decreased slightly as compared to the nine month and
three month periods ending September 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 and equipment repairs;
the decrease in occupancy expense for the nine and three month period 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 nine and three months ended
September 30, 1995. Other real estate expense decreased $10,000 under
the nine month period and $40,000 under the three month period, as
renovation expenses were incurred during 1995 on foreclosed property
which was sold that same year. The slight decrease in other expenses
for the nine month period is attributed to advertising expense.
Net income increased for the nine month period ended September 30, 1996
by $844,496 as compared to the same period in 1995; while net income
increased $290,523 or 22.20% to $1,599,385 for the three month period
ending September 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.
None
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>
<C>
<PERIOD-TYPE> 3-MOS 6-MOS
9-MOS
<FISCAL-YEAR-END> DEC-31-1996
DEC-31-1996 DEC-31-1996
<PERIOD-END> MAR-31-1996
JUN-30-1996 SEP-30-1996
<CASH> 8294208
14586764 785846
<INT-BEARING-DEPOSITS> 200000
200000 0
<FED-FUNDS-SOLD> 17880000
14930000 15645000
<TRADING-ASSETS> 0
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0 0
<INVESTMENTS-CARRYING> 29765340
31505365 34114908
<INVESTMENTS-MARKET> 29721851
31723649 33943626
<LOANS> 103067470
108979084 113409379
<ALLOWANCE> 2005745
2058505 2133184
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173590671 178832720
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<LIABILITIES-OTHER> 1910889
1600279 1746838
<LONG-TERM> 0
0 0
<COMMON> 15276
15276 15276
0
0 0
0
0 0
<OTHER-SE> 17111093
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<TOTAL-LIABILITIES-AND-EQUITY> 163598882
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<INTEREST-INVEST> 583781
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<INTEREST-OTHER> 0
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<INTEREST-TOTAL> 3488522
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<INTEREST-DEPOSIT> 1246676
2531070 3880035
<INTEREST-EXPENSE> 1246676
2531070 3880035
<INTEREST-INCOME-NET> 2241846
4518138 6739611
<LOAN-LOSSES> 75000
150000 225000
<SECURITIES-GAINS> 0
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<EXPENSE-OTHER> 997999
2057799 3065948
<INCOME-PRETAX> 1431984
2869236 4468621
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<CHANGES> 0
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<NET-INCOME> 932984
1840272 2878857
<EPS-PRIMARY> .68
1.33 2.09
<EPS-DILUTED> .65
1.28 2.01
<YIELD-ACTUAL> 8.59
8.49 8.41
<LOANS-NON> 136005
42569 20113
<LOANS-PAST> 0
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