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, 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 30078
(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, 1997
- ---------------------------- ---------------------------------
Common Stock, $.01 Par Value 1,360,764
BUTTON GWINNETT FINANCIAL CORPORATION & SUBSIDIARY
INDEX
Part I. Financial Information Page No.
Consolidated Balance Sheet - June 30, 1997
and June 30, 1996 3
Consolidated Statements of Income - Six Months
Ended June 30, 1997 and 1996 and Three Months
Ended June 30, 1997 and 1995 4
Consolidated Statements of Cash Flows -
Six Months Ended June 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 & SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
June 30 June 30
ASSETS 1997 1996
<S> <C> <C>
Cash and due from banks $10,926,809 $14,586,764
Bank owned certificates of deposit 500,000 200,000
Investment securities, approximate market
value of $36,127,911 36,072,724 31,505,365
Federal funds sold 13,825,000 14,930,000
Total Cash and Investments 61,324,533 61,222,129
Loans 126,671,045 108,979,084
Less reserve for loan losses (2,462,436) (2,058,505)
Net loans 124,208,609 106,920,579
Premises & equipment, net 3,959,318 3,737,750
Other assets 2,502,212 1,710,213
$191,994,672 $173,590,671
============ ============
LIABILITIES & STOCKHOLDERS' EQUITY
Deposits:
Demand $ 48,501,346 $ 40,634,937
Interest-bearing demand 60,008,180 47,257,110
Savings 5,228,549 6,355,808
Time over $100,000 19,609,459 18,447,184
Time under $100,000 36,353,380 41,286,941
Total deposits $169,700,914 $153,981,980
Other liabilities 1,458,637 1,600,279
Total liabilities $171,159,551 $155,582,259
Stockholders' Equity
Common stock $.01 par, 5,000,000 authorized;
1,527,639 shares issued $ 15,276 $ 15,276
Surplus 15,531,529 17,774,397
Retained earnings 7,447,911 1,840,272
$ 22,994,716 $ 19,629,945
Less cost of shares acquired for the treasury,
166,875 shares 2,159,595 1,621,533
Total stockholders' equity 20,835,121 18,008,412
$191,994,672 $173,590,671
============ ============
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<TABLE>
<CAPTION>
BUTTON GWINNETT FINANCIAL CORPORATION & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Six Months Ended Three Months Ended
June 30 June 30
1997 1996 1997 1996
Interest income:
<S> <C> <C> <C> <C>
Interest and fees on loans $6,470,294 $5,835,753 $3,279,512 $2,931,012
Interest on taxable investments 930,665 695,204 499,855 370,709
Interest on nontaxable investments 78,555 89,271 37,247 32,269
Interest on bank deposits and
other investments 14,153 5,759 7,578 2,863
Interest on Federal Funds Sold 333,513 423,221 124,929 223,833
$7,827,180 $7,049,208 $3,949,121 $3,560,686
Interest expense:
Deposits $2,608,977 $2,531,070 $1,283,501 $1,284,394
$2,608,977 $2,531,070 $1,283,501 $1,284,394
Net interest income before provision $5,218,203 $4,518,138 $2,665,620 $2,276,292
for loan losses
Provision for loan loss 130,000 150,000 55,000 75,000
Net interest income $5,088,203 $4,368,138 $2,610,620 $2,201,292
Other income
Service charges on deposit accounts $ 377,343 $ 372,998 $ 192,779 $ 187,275
Gain on sale of ORE 0 40,347 0 40,347
Other income 142,127 145,552 58,454 68,138
$ 519,470 $ 558,897 $ 251,233 $ 295,760
Other expense
Salaries & employee benefits $1,255,185 $1,182,500 $ 647,875 $ 596,921
Equipment expense 110,512 127,386 51,873 63,504
Occupancy expense 112,490 108,185 68,037 51,242
Other operating expenses 499,221 639,728 267,933 348,133
$1,977,408 $2,057,799 $1,035,718 $1,059,800
Net income before applicable
income taxes $3,630,265 $2,869,236 $1,826,135 $1,437,252
Applicable income taxes 1,298,910 1,028,964 653,910 529,964
Net income $2,331,355 $1,840,272 $1,172,225 $ 907,288
=========== =========== =========== ==========
Net income per share of common stock $ 1.60 $ 1.33 $ 0.82 $ 0.66
=========== =========== =========== ==========
Dividends per share of common stock $ 0.60 $ 0.50 $ 0.00 $ 0.00
=========== =========== =========== ==========
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<TABLE>
<CAPTION>
BUTTON GWINNETT FINANCIAL CORPORATION & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended
June 30
1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net Income $2,331,355 $1,840,272
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation 88,829 125,213
Provision for loan losses 130,000 150,000
Increase in taxes payable 3,433 77,155
(Increase) in interest receivable (167,806) (78,027)
(Decrease) in interest payable (84,704) (126,608)
Other prepaids, deferrals and accruals, net (75,770) 870,811
Total adjustments ($106,018) $1,018,544
Net cash provided by operating activities $2,225,337 $2,858,816
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of investment securities (6,223,441) (8,978,805)
Proceeds from the maturity of investment 2,155,000 3,385,000
securities
Purchase of bank owned certificate of deposit (500,000) 0
Purchases of premises and equipment, net (428,028) (14,768)
(Increase) in loans, net (6,770,070) (6,372,006)
Decrease in federal funds sold, net 7,690,000 4,695,000
Net cash (used in) investing activities ($4,076,539) ($7,285,579)
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in deposits, net $4,464,124 $13,177,862
Cash paid for treasury stock (928,599) (56,420)
Proceeds from exercise of stock options 235,940 0
Cash dividends paid to shareholders (816,518) (690,243)
Net cash provided by financing activities $2,954,947 $12,431,199
Net increase in cash and due from banks $1,103,745 $ 8,004,436
Cash and due from banks, beginning of period 9,823,064 6,582,328
Cash and due from banks, ending of period $10,926,809 $14,586,764
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest $ 2,693,681 $ 2,657,678
Income taxes $ 1,335,477 $ 1,028,964
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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 six months ended and three
months ended June 30, 1997 are not necessarily indicative of the results to be
expected for the full year.
Note 2. Current Accounting Developments
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 June 30, 1997, the Company experienced an increase in total assets of
2.91%, as compared to December 31, 1996. Total loans increased $6,707,507
during this period or approximately 5.58%. Deposits increased $4,464,124 or
2.70% 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 June 30, 1997, the liquidity ratio was 35.16%, 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, 1997, the Company's capital ratio levels exceeded the required
ratios as follows:
Regulatory
Actual Requirement
Leverage capital ratio 10.85% 4.00%
Risk based capital ratios:
Core capital 14.72% 4.00%
Total capital 15.98% 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, 1997 increased 15.49% to
$5,218,203 over the $4,518,138 for the same period in 1996; and the increase
for the three month period ending June 30, 1997 was $389,328 or 17.10% as
compared to the same period in 1996. Interest income for the six month period
increased $777,972 or 11.04%, while interest expense increased $77,907 or
3.08%. For the three month period, interest income increased $388,435 or
10.91%; interest expense for the three month period decreased slightly by $893
or .07% 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, 1997 to $130,000 as compared to $150,000 for the same period in 1996;
the three month period ending June 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 $39,000 or 7.05% to $519,470 as
compared to $558,897 for the same six month period 1996. During the three
months ended June 30, 1997 and 1996, total other income decreased to $251,233
from $295,760 or 15.06%. 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 decrease of
$40,347, as compared to 1996, represents the gain on sale of other real
estate, which had been foreclosed. The decrease 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 a decrease in mortgage loan
origination fees as compared to the same period in 1996.
Total other expenses decreased to $1,977,408 or 3.91% less than the $2,057,799
during the first six months of 1997. Total other expenses decreased slightly
from $1,059,800 to $1,035,718 or 2.27% for the three months ending June 30,
1997. The increase in salaries and employee benefits was due to salary
increases and other personnel expenses, as well as the addition of a
commercial loan officer. The slight decrease in equipment expense is
attributed to an reduction in depreciation expense; the increase in occupancy
expense for the six 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 six month period is attributed to Other Real
Estate expense which decreased $25,000 over the prior period which is
attributed to a recovery on expenses from property that was sold during the
first quarter. There was a decrease of approximately $68,000 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 $43,000. The
decrease in other operating expenses for the three month period is primarily
due to a $25,000 reduction in FDIC expense and a reduction of legal expenses
of approximately $52,000.
Net income increased for the six month period ended June 30, 1997 by $491,083
as compared to the same period in 1996; while net income increased $264,937
or 29.20% for the three month period ending June 30, 1997. 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 21, 1997 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, 1997;
(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:
846,042 shares
(1) Votes cast for 845,020
Votes cast against 1,022
(2) Votes cast for 839,845
Votes cast against 3,112
Votes abstained 3,445
Item 6 - Exhibits and reports on Form 8-K.
(a) Exhibits.
Exhibit 27 - Financial Data Schedule.
(b) Reports on Form 8-K.
None.
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 10,926,809
<INT-BEARING-DEPOSITS> 500,000
<FED-FUNDS-SOLD> 13,825,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 36,072,724
<INVESTMENTS-MARKET> 36,127,911
<LOANS> 126,671,045
<ALLOWANCE> 2,462,436
<TOTAL-ASSETS> 191,994,672
<DEPOSITS> 169,700,914
<SHORT-TERM> 0
<LIABILITIES-OTHER> 1,458,637
<LONG-TERM> 0
<COMMON> 15,276
0
0
<OTHER-SE> 20,819,845
<TOTAL-LIABILITIES-AND-EQUITY> 191,994,672
<INTEREST-LOAN> 6,470,294
<INTEREST-INVEST> 1,356,886
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 7,827,180
<INTEREST-DEPOSIT> 2,608,977
<INTEREST-EXPENSE> 2,608,977
<INTEREST-INCOME-NET> 5,218,203
<LOAN-LOSSES> 130,000
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 1,977,408
<INCOME-PRETAX> 3,630,265
<INCOME-PRE-EXTRAORDINARY> 3,630,265
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,331,355
<EPS-PRIMARY> 1.71
<EPS-DILUTED> 1.60
<YIELD-ACTUAL> 8.56
<LOANS-NON> 46,225
<LOANS-PAST> 0
<LOANS-TROUBLED> 73,888
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 2,330,733
<CHARGE-OFFS> 1,400
<RECOVERIES> 3,103
<ALLOWANCE-CLOSE> 2,462,436
<ALLOWANCE-DOMESTIC> 266,000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 2,196,436
</TABLE>
