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 March 31, 1997
_
|_| 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, GA 30278
(Address of Principal Executive Offices) (Zip Code)
(770) 978-3242
(Issuer's Telephone Number, including Area Code)
(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 __XX____ No______
APPLICABLE ONLY TO CORPORATE ISSUERS
Class Outstanding at March 31, 1997
- ---------------------------- ---------------------------------
Common Stock, $.01 Par Value 1,360,864
BUTTON GWINNETT FINANCIAL CORPORATION & SUBSIDIARIES
INDEX
Part I. Financial Information Page No.
Consolidated Balance Sheet - March 31, 1997 3
Consolidated Statements of Income - Three Months
Ended March 31, 1997 and 1996 4
Consolidated Statements of Cash Flows -
Three Months Ended March 31, 1997 and 1996 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>
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
March 31 March 31
1997 1996
ASSETS
<S> <C> <C>
Cash and due from banks $ 11,246,999 $ 8,294,208
Bank owned certificates of deposit 500,000 200,000
Investment securities, approximate
market value of $36,165,178 36,298,581 29,765,340
Federal funds sold 15,225,000 17,880,000
Total Cash and Investments 63,270,580 56,139,548
Loans 119,842,304 103,067,470
Less reserve for loan losses (2,407,118) (2,005,745)
Net loans 117,435,186 101,061,725
Premises & equipment, net 3,999,236 3,800,307
Other assets 2,281,806 2,597,302
$186,986,808 $163,598,882
============ ============
LIABILITIES & STOCKHOLDERS' EQUITY
Deposits:
Demand $ 44,853,742 $ 36,317,342
Interest-bearing demand 62,009,423 41,998,769
Savings 5,783,069 6,456,125
Time over $100,000 17,068,473 18,320,868
Time under $100,000 34,817,369 41,468,520
Total deposits $164,533,076 $144,561,624
Other liabilities 2,789,736 1,910,889
Total liabilities $167,322,812 $146,472,513
Stockholders' Equity
Common stock $.01 par,
5,000,000 authorized;
1,527,639 shares issued $ 15,276 $ 15,276
Surplus 14,359,304 17,774,397
Retained earnings 7,447,911 932,984
$ 21,822,491 $ 18,722,657
Less cost of shares acquired
for the treasury,
166,775 shares 2,157,495 1,596,288
Total stockholders' equity 19,664,996 17,126,369
$186,987,808 $163,598,882
============ ============
</TABLE>
<TABLE>
<CAPTION>
BUTTON GWINNETT FINANCIAL CORPORATION & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended
March 31 March 31
1997 1996
Interest income:
<S> <C> <C>
Interest and fees on loans $ 3,190,782 $ 2,904,741
Interest on taxable investments 430,810 324,495
Interest on nontaxable investments 41,308 57,002
Interest on bank deposits and
other investments 6,575 2,896
Interest on Federal Funds Sold 208,584 199,388
$ 3,878,059 $ 3,488,522
Interest expense:
Deposits $ 1,325,476 $ 1,246,676
$ 1,325,476 $ 1,246,676
Net interest income before provision $ 2,552,583 $ 2,241,846
for loan losses
Provision for loan loss 75,000 75,000
Net interest income $ 2,477,583 $ 2,166,846
Other income
Service charges on deposit accounts $ 184,564 $ 185,723
Other income 83,673 77,414
$ 268,237 $ 263,137
Other expense
Salaries & employee benefits $ 607,310 $ 585,579
Equipment expense 58,639 63,882
Occupancy expense 43,482 56,943
Other operating expenses 232,259 291,595
$ 941,690 $ 997,999
Net income before applicable
income taxes $ 1,804,130 $ 1,431,984
Applicable income taxes 645,000 499,000
Net income $ 1,159,130 $ 932,984
=========== ===========
Net income per share of common stock $ 0.80 $ 0.68
=========== ===========
Dividends per share of common stock $ 0.60 $ 0.50
=========== ===========
</TABLE>
<TABLE>
<CAPTION>
BUTTON GWINNETT FINANCIAL CORPORATION & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended
March 31 March 31
1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net Income $ 1,159,130 $ 932,984
Adjustments to reconcile net income
to net cash provided by
operating activities
Depreciation 45,883 62,656
Provision for loan losses 75,000 75,000
Increase (decrease) in taxes payable 645,000 499,000
(Increase) decrease in
interest receivable (64,735) 33,554
Increase (decrease) in interest payable (47,638) (58,254)
Other prepaids, deferrals and
accruals, net 694,030 (307,448)
Total adjustments 1,347,540 304,508
Net cash provided by
operating activities 2,506,670 1,237,492
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of investment securities (5,189,298) (5,478,780)
Proceeds from the maturity of
investment securities 895,000 1,625,000
Purchase of bank owned
certificate of deposit (500,000) 0
Purchases of premises and
equipment, net (425,000) (14,768)
Increase (decrease) in loans, net 58,354 (438,152)
(Increase) decrease in federal
funds sold, net 6,290,000 1,745,000
Net cash (used in)
investing activities 1,129,056 (2,561,700)
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in deposits, net (704,714) 3,757,506
Cash paid for treasury stock (926,499) (31,175)
Proceeds from exercise of stock options 390,537 0
Adjustments to Capital Surplus (154,597) 0
Cash dividends paid to shareholders (816,518) (690,243)
Net cash provided by
financing activities (2,211,791) 3,036,088
Net increase in cash and
due from banks $ 1,423,935 $ 1,711,880
Cash and due from banks,
beginning of period 9,823,064 6,582,328
Cash and due from banks,
ending of period $ 11,246,999 $ 8,294,208
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest $ 1,373,114 $ 1,304,930
Income taxes $ 0 $ 0
</TABLE>
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 three months ended March 31, 1997
are not necessarily indicative of the results to be expected for the
full year.
Note 2. Current Accounting Developments
The Financial Accounting Standards Board has issued SFAS No. 128,
"Earnings Per Share". SFAS No. 128 establishes standards for
computing and presenting earnings per share (EPS) and applies to
entities with publicly held common stock or potential common stock.
This Statement simplifies the standards for computing earnings per
share previously found in APB Opinion No. 15, Earnings per Share,
and makes them comparable to international EPS standards. It replaces
the presentation of primary EPS with presentation of basic EPS. It
also requires dual presentation of basic and diluted EPS on the face of
the income statement for all entities with complex capital structures
and requires a reconciliation of the numerator and denominator of the
basic EPS computation to the numerator and denominator of the diluted
EPS computation. The effective date of this statement is for financial
statements issued for periods ending after December 15, 1997. the
adoption of this Statement is not expected to have a material effect
on earnings per share.
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 March 31, 1997, the Company experienced an slight increase in total
assets of 0.22%, as compared to December 31, 1996. Total loans decreased
$116,488 during this period or approximately 0.10%%. Deposits decreased
$704,714 or 0.43% during this period.
At year end 1996, The Bank experienced an increase in assets inflating the
balance sheet on a temporary basis. Management expects the bank to grow
loans and assets as the year goes on, but at a slower pace than in 1996, due
to competition and anticipated slower economic growth.
Liquidity
As of March 31, 1997, the liquidity rate was 37.45%, 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 March 31, 1997, the Company's capital
ratios on a combined basis exceeded the required ratios as follows:
Regulatory
Actual Requirement
Leverage capital ratio 10.52% 4.00%
Risk based capital ratios:
Core capital 14.58% 4.00%
Total capital 15.84% 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 three months ended March 31, 1997 increased 13.86%
to $2,552,583 over the $2,241,846 for the same period in 1996. Interest
income for the three month period increased $389,537 or 11.17%, while interest
expense increased $78,800 or 6.32%. The interest income increase was due an
increase in commercial loans and bank investments. The increase in interest
expense is attributed to an increase in interest bearing demand deposits which
are a result of the marketing efforts of the bank.
The provision for loan losses during the three months ended March 31, 1997
remained at $75,000 as compared to the same period in 1996. 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 $5,100 or 1.94% to $268,237 as
compared to $263,137 for the same period 1996. The slight decrease in service
charge on deposit accounts is due to a reduction in the amount of non-
sufficient fees received by The Bank. 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."). There was also an increase in mortgage
loan origination fees and safe deposit box rent as compared to the same period
in 1996.
Total other expenses decreased to $941,690 or 5.64% less than the $997,999
during the first quarter of 1996. The increase in salaries and employee
benefits was due to salary increases and other personnel expenses. The
slight decrease in equipment expense is attributed to a reduction in
depreciation expense; the decrease in occupancy expense is the result of
lower expenses for repairs and maintenance to the bank's branch offices, as
well as an increase in the amount of rental income received. Other operating
expenses decreased by approximately $60,000. There was a decrease of
approximately $40,000 in FDIC Insurance Premiums as compared to the same
period in 1996, due to a refund from the BIF/SAIF funds. Other real estate
expense decreased $20,000 over the prior period which is attributed to a
recovery on expenses from property that was sold during the first quarter.
Net income increased for the three month period ended March 31, 1997 by
$226,146 as compared to the same period in 1996. This increase is attributed
to more efficient operations of the bank and over all growth of earning assets
of the bank.
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>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 11,246,999
<INT-BEARING-DEPOSITS> 500,000
<FED-FUNDS-SOLD> 15,225,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 36,298,581
<INVESTMENTS-MARKET> 36,165,178
<LOANS> 119,842,304
<ALLOWANCE> 2,407,118
<TOTAL-ASSETS> 186,986,808
<DEPOSITS> 164,533,076
<SHORT-TERM> 0
<LIABILITIES-OTHER> 2,789,736
<LONG-TERM> 0
0
0
<COMMON> 15,276
<OTHER-SE> 19,649,720
<TOTAL-LIABILITIES-AND-EQUITY> 186,986,808
<INTEREST-LOAN> 3,190,782
<INTEREST-INVEST> 687,277
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 3,878,059
<INTEREST-DEPOSIT> 1,325,476
<INTEREST-EXPENSE> 1,325,476
<INTEREST-INCOME-NET> 2,552,583
<LOAN-LOSSES> 75,000
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 941,690
<INCOME-PRETAX> 1,804,130
<INCOME-PRE-EXTRAORDINARY> 1,804,130
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,159,130
<EPS-PRIMARY> .85
<EPS-DILUTED> .80
<YIELD-ACTUAL> 8.49
<LOANS-NON> 37,721
<LOANS-PAST> 68,750
<LOANS-TROUBLED> 89,098
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 2,330,733
<CHARGE-OFFS> 0
<RECOVERIES> 1,385
<ALLOWANCE-CLOSE> 2,407,118
<ALLOWANCE-DOMESTIC> 266,000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 2,141,118
</TABLE>
