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, 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, 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, 1997
- ---------------------------- ---------------------------------
Common Stock, $.01 Par Value 1,359,764
BUTTON GWINNETT FINANCIAL CORPORATION & SUBSIDIARY
INDEX
Part I. Financial Information Page No.
Consolidated Balance Sheet - September 30, 1997
and September 30, 1996 3
Consolidated Statements of Income - Nine Months
Ended September 30, 1997 and 1996 and Three Months
Ended September 30, 1997 and 1996 4
Consolidated Statements of Cash Flows -
Nine Months Ended September 30, 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
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BUTTON GWINNETT FINANCIAL CORPORATION & SUBSIDIARY
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
September 30 September 30
ASSETS 1997 1996
<S> <C> <C>
Cash and due from banks $ 12,018,577 $ 12,388,696
Bank owned certificates of deposit 500,000 0
Investment securities, approximate
market value of $40,011,364 39,853,764 34,114,908
Federal funds sold 10,670,000 15,645,000
Total Cash and Investments 63,042,341 62,148,604
Loans 137,321,124 113,409,377
Less reserve for loan losses (2,503,501) (2,133,184)
Net loans 134,817,623 111,276,193
Premises & equipment, net 3,901,836 3,658,620
Other assets 2,827,652 2,080,771
$204,589,452 $179,164,188
============ ============
LIABILITIES & STOCKHOLDERS' EQUITY
Deposits:
Demand $ 50,512,465 $ 42,326,277
Interest-bearing demand 61,320,792 52,419,516
Savings 4,822,408 5,749,783
Time over $100,000 24,185,913 18,753,089
Time under $100,000 39,990,386 39,185,925
Total deposits $180,831,964 $158,434,590
Other liabilities 1,583,864 1,682,601
Total liabilities $182,415,828 $160,117,191
Stockholders' Equity
Common stock $.01 par,
5,000,000 authorized;
1,527,639 shares issued $15,276 $15,276
Surplus 13,314,604 13,354,771
Retained earnings 11,024,339 7,298,483
$ 24,354,219 $ 20,668,530
Less cost of shares acquired
for the treasury, 167,875 shares 2,180,595 1,621,533
Total stockholders' equity 22,173,624 19,046,997
$204,589,452 $179,164,188
============ ============
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<TABLE>
<CAPTION>
BUTTON GWINNETT FINANCIAL CORPORATION & SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Nine Months Ended Three Months Ended
September 30 September 30
1997 1996 1997 1996
Interest income:
<S> <C> <C> <C> <C>
Interest and fees on loans $10,010,745 $ 8,858,787 $ 3,540,451 $ 3,023,034
Interest on taxable
investments 1,462,329 1,125,705 531,664 430,501
Interest on nontaxable
investments 115,968 136,005 37,413 46,734
Interest on bank deposits
and other investments 21,929 7,705 7,776 1,946
Interest on Fed Funds Sold 527,125 716,444 193,612 293,223
12,138,096 10,844,646 4,310,916 3,795,438
Interest expense:
Deposits 4,110,263 3,880,035 1,501,286 1,348,965
Net interest income
before provision 8,027,833 6,964,611 2,809,630 2,446,473
for loan losses
Provision for loan loss 185,000 225,000 55,000 75,000
Net interest income 7,842,833 6,739,611 2,754,630 2,371,473
Other income
Service charges on
deposit accounts 580,826 564,308 203,483 191,310
Gain on sale of Other
Real Estate 0 40,347 0 0
Other income 199,464 190,304 57,337 44,752
780,290 794,959 260,820 236,062
Other expense
Salaries & employee
benefits 1,891,664 1,770,665 636,479 588,165
Equipment expense 170,310 223,770 59,798 96,384
Occupancy expense 185,043 154,425 72,553 46,240
Other operating expenses 805,003 904,807 305,782 265,079
3,052,020 3,053,667 1,074,612 995,868
Net income before
applicable income taxes 5,571,103 4,480,903 1,940,838 1,611,667
Applicable income taxes 1,994,676 1,602,046 695,766 573,082
Net income 3,576,427 2,878,857 1,245,072 1,038,585
=========== =========== =========== ===========
Net income per share of
common stock $ 2.49 $ 2.09 $ 0.87 $ 0.76
=========== =========== =========== ===========
Dividends per share of
common stock $ 0.60 $ 0.50 $ 0.00 $ 0.00
=========== =========== =========== ===========
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<TABLE>
<CAPTION>
BUTTON GWINNETT FINANCIAL CORPORATION & SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended
September 30
1997 1996
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 3,576,427 $ 2,878,857
Adjustments to reconcile net
income to net cash provided by
operating activities
Depreciation 164,883 218,564
Provision for loan losses 185,000 225,000
Increase in taxes payable 12,499 63,069
(Increase) in interest receivable (168,742) (4,743)
(Decrease) in interest payable (86,412) (59,167)
Other prepaids, deferrals
and accruals, net (167,973) 798,927
Total adjustments ($60,745) $1,241,650
Net cash provided by
operating activities $ 3,515,682 $ 4,120,507
CASH FLOWS FROM INVESTING ACTIVITIES
Decrease in Bank Owned CD's (500,000) 200,000
Purchases of investment securities (15,162,167) (13,973,348)
Proceeds from the maturity
of investment securities 7,312,685 5,770,000
Purchases of premises and
equipment, net (446,601) (28,989)
Increase in loans, net (17,434,083) (10,802,621)
Decrease in fed funds sold, net 10,845,000 3,980,000
Net cash (used in) investing
activities ($15,385,166) ($14,854,958)
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in deposits, net $15,595,174 $17,234,767
Proceeds from exercise of
stock options 235,940 0
Cash paid for treasury stock (949,599) (56,420)
Cash dividends paid to shareholders (816,518) (690,243)
Net cash provided by
financing activities $14,064,997 $16,488,104
Net increase in cash and due
from banks $ 2,195,513 $ 5,753,653
Cash and due from banks,
beginning of period 9,823,064 6,582,328
Cash and due from banks,
ending of period $12,018,577 $12,335,981
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest $ 4,196,495 $ 3,939,202
Income taxes $ 1,924,577 $ 1,692,900
</TABLE>
See Notes to Consolidated Financial Statements
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, 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 & 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, 1997, the Company experienced an increase in total
assets of 9.66%, as compared to December 31, 1996. Total loans increased
$17,373,634 during this period or approximately 14.45%. Deposits increased
$15,595,174 or 9.44% during this period. The increases in total assets,
loans and deposits are attributed to the calling efforts of our commercial
officers, as well as the addition of a commercial loan officer.
Liquidity
As of September 30, 1997, the liquidity ratio was 33.95%, 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, 1997, the Company's capital ratio levels exceeded
the required ratios as follows:
Regulatory
Actual Requirement
Leverage capital ratio 10.84% 4.00%
Risk based capital ratios:
Core capital 14.57% 4.00%
Total capital 15.82% 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, 1997 increased
15.27% to $8,027,833 over the $6,964,611 for the same period in 1996; and
the increase for the three month period ending September 30, 1997 was
$363,157 or 14.84% as compared to the same period in 1996. Interest income
for the nine month period increased $1,293,450 or 11.93%, while interest
expense increased $230,228 or 5.93%. For the three month period, interest
income increased $515,479 or 13.58%; interest expense for the three month
period increased by $152,322 or 11.29% 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 nine months
ended September 30, 1997 to $185,000 as compared to $225,000 for the same
period in 1996; the three month period ending September 30, 1997 also
reflects a decrease of $20,000 from the three months period ending
June 30, 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 decreased approximately $15,000 or 1.85% to $780,290 as
compared to $794,959 for the same nine month period in 1996. During the
three months ended September 30, 1997 and 1996, total other income
increased to $260,820 from $236,062 or 10.49%. The increase in service
charge, for the nine months ended and three months ended, is a result of
increase in volume on commercial checking accounts, consumer service
charges and ATM withdrawal fees. The decrease of $40,347, as compared to
1996, represents the gain on sale of other real estate, which had been
foreclosed. The increase in other income, during the nine months and three
months ended, 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 rental
income as compared to these same periods in 1996.
Total other expenses decreased slightly to $3,052,020 or .05% less than the
$3,053,667 during the first nine months of 1997. Total other expenses
increased from $995,868 to $1,074,612 or 7.91% for the three months ending
September 30, 1997. During the nine months ended and three months ended,
salaries and employee benefits increased was due to salary increases and
other personnel expenses, as well as the addition of a commercial loan
officer. The decrease in equipment expense is attributed to an reduction
in depreciation expense; the increase in occupancy expense for the nine
month period and three month period is the result of repairs and
maintenance to the bank's branch offices. The decrease in other operating
expenses for the nine month period is attributed to a decrease of
approximately $78,000 in FDIC Insurance Premiums as compared to the same
period in 1996, due to a refund from the BIF/SAIF funds and the reduction
of the quarterly BIF Assessment Fee. There was also a decrease in legal
fees of approximately $21,000. The increase in other operating expenses
for the three month period is primarily due to an increase in professional
expenses of approximately $30,000 and advertising expense of $11,000.
Net income increased for the nine month period ended September 30, 1997 by
$697,570 or 24.23% as compared to the same period in 1996; while net income
increased $206,487 or 19.88% for the three month period ending
September 30, 1997. The increase is attributed to an the increase in
deposit and loan relationships, as well as more efficient operations 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: 11/10/97 By: /s/
Glenn S. White
President
(Principal Executive Officer)
Date: 11/10/97 By: /s/
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.
Exhibit 27 - Financial Data Schedule.
(a) Reports on Form 8-K.
None.
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 12,018,577
<INT-BEARING-DEPOSITS> 500,000
<FED-FUNDS-SOLD> 10,670,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 39,853,764
<INVESTMENTS-MARKET> 40,011,364
<LOANS> 137,321,124
<ALLOWANCE> 2,503,501
<TOTAL-ASSETS> 204,589,452
<DEPOSITS> 180,831,964
<SHORT-TERM> 0
<LIABILITIES-OTHER> 1,583,864
<LONG-TERM> 0
0
0
<COMMON> 15,276
<OTHER-SE> 22,158,348
<TOTAL-LIABILITIES-AND-EQUITY> 204,589,452
<INTEREST-LOAN> 10,010,745
<INTEREST-INVEST> 2,127,351
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 12,138,096
<INTEREST-DEPOSIT> 4,110,263
<INTEREST-EXPENSE> 4,110,263
<INTEREST-INCOME-NET> 8,027,833
<LOAN-LOSSES> 185,000
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 3,052,020
<INCOME-PRETAX> 5,571,103
<INCOME-PRE-EXTRAORDINARY> 5,571,103
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,576,427
<EPS-PRIMARY> 2.63
<EPS-DILUTED> 2.49
<YIELD-ACTUAL> 8.56
<LOANS-NON> 30,742
<LOANS-PAST> 76,921
<LOANS-TROUBLED> 66,959
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 2,330,733
<CHARGE-OFFS> 17,471
<RECOVERIES> 5,239
<ALLOWANCE-CLOSE> 2,503,501
<ALLOWANCE-DOMESTIC> 232,000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 2,271,501
</TABLE>
