U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-KSB
(Mark One)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- -------- EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended September 30, 1995
------------------
- -------- TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period _____________ to _____________
Commission file number: 0-16657
FIRST GEORGIA HOLDING, INC.
(Name of Small Business Issuer)
Georgia 58-1781773
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification
Number)
1703 Gloucester Street, Brunswick, GA 31521
(Address of principal executive offices)
Registrant's telephone number, including area code: (912) 267-7283
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $1.00
-----------------------------
Check whether the issuer (1) has filed all reports required to be filed by
section 12 or 15(d) of the Exchange Act of 1934 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 60 days. Yes X No
--- ----
Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statement incorporated by reference in Part III of this Form
10-KSB or any amendment to this Form 10-K. [X]
State issuer's revenues for its most recent fiscal year $12,895,153
----------
State the aggregate market value of the voting stock held by non-affiliates of
the registrant as of December 1, 1995:
778,651 Shares of Common Stock, $1.00 par value -- $6,914,421 based
-------------------------------------------------------------------
upon approximate market value of $8.88 per share at December 1, 1995.
---------------------------------------------------------------------
State the number of shares outstanding of each of the issuer's classes of
common stock, as of December 1, 1995:
Common Stock, $1.00 par value -- 1,326,641 shares
-------------------------------------------------
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Company's Proxy Statement (the "Proxy Statement") for
the Annual Meeting of Shareholders scheduled to be held January 22,
1996 are incorporated by reference into Part I and Part III.
Portions of the Company's Annual Report (the "Annual Report") to
Shareholders for the year ended September 30, 1995 are incorporated
by reference into Part I, Part II and Part III.
<PAGE>
FIRST GEORGIA HOLDING, INC.
FORM 10-KSB
INDEX
Part I PAGE
Item 1. Business . . . . . . . . . . . . . . . . . . . 3
Item 2. Description of Properties . . . . . . . . . . . 34
Item 3. Legal Proceedings . . . . . . . . . . . . . . . 35
Item 4. Submission of Matters to a Vote of
Security Holders . . . . . . . . . . . . . . . 35
Part II
Item 5. Market for Common Equity and Related
Stockholder Matters . . . . . . . . . . . . . . 35
Item 6. Management's Discussion and Analysis or Plan
of Operation . . . . . . . . . . . . . . . . . 35
Item 7. Financial Statements . . . . . . . . . . . . . 35
Item 8. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure . . . . 35
Part III
Item 9. Directors, Executive Officers, Promoters and
Control Persons; Compliance with Section 16(a)
of the Exchange Act . . . . .. . . . . . . . . 35
Item 10. Executive Compensation . . . . . . . . . . . . 36
Item 11. Security Ownership of Certain
Beneficial Owners and Management . . . . . . . 36
Item 12. Certain Relationships and Related
Transactions . . . . . . . . . . . . . . . . . 36
Item 13. Exhibits and Reports on Form 8-K . . . . . . . 36
Signatures . . . . . . . . . . . . . . . . . . . . . . 37
Exhibit Index . . . . . . . . . . . . . . . . . . . . 39
<PAGE>
PART I
Item 1. DESCRIPTION OF BUSINESS
Business of the Company
First Georgia Holding, Inc. (the Company), was incorporated as
a Georgia corporation on December 16, 1987, for the purpose of
acquiring all of the issued and outstanding shares of First Georgia Bank,
F.S.B. (formerly known as First Georgia Savings Bank, F.S.B.)(the
Bank) pursuant to a plan of reorganization. The reorganization of the
Bank into a holding company structure became effective on April 30,
1988, and the Bank is now a wholly-owned subsidiary of the Company.
The Company has not engaged in any material operations to
date and management of the Company has no immediate plans to
engage in any non-banking activities.
The holding company structure provides the Company with the
ability to expand and diversify its financial services beyond those
currently offered through the Bank. As a holding company, the
Company has greater flexibility than the Bank to diversify its business
activities, through existing or newly-formed subsidiaries, or through
acquisition or merger. Commencement of non-banking operations by
subsidiaries, if they are organized, will be contingent upon approval by
the Board of Directors of the Company and by regulatory authorities as
appropriate. While the Company has no plans, arrangements,
agreements or understandings regarding diversification through
acquisition or development of other businesses, the Board of Directors
believes that the holding company structure offers significant
advantages.
The Company may, in the future, enter into a management
agreement for the purpose of rendering certain services to the Bank. No
proposal and no terms of such agreement, however, have been
considered as yet and it has not been decided that such an agreement
will be made. Certain restrictions on the total compensation under
management and similar agreements are imposed by federal regulation
and, under certain circumstances, regulatory approval may be required.
Except for the officers of the Bank who presently serve as
officers of the Company, the Company does not have any employees.
The Company's executive office is located at 1703 Gloucester
Street, Brunswick, Georgia 31520. At the present time the Company
does not have any plans to establish additional offices.
<PAGE>
Business of the Bank
- ---------------------
The Bank is a federal stock savings bank headquartered in
Brunswick, Georgia. It was chartered in 1983 and opened for business
on January 31, 1984 with approximately $8.6 million of acquired
deposits.
The Bank's business consists primarily of residential and
consumer lending and retail banking. To a lesser extent the Bank
engages in commercial real estate lending and construction lending.
The Bank's retail banking operation consists of attracting
deposits and making commercial and consumer loans. It attracts
deposits by offering a wide array of banking services, including checking
accounts, overdraft protection, various savings programs, IRAs, and
access to the AVAIL network of automatic teller machines. Similarly,
the Bank offers a full range of commercial loans, including short-term
loans for working capital purposes, seasonal loans, lines of credit,
accounts receivable loans and inventory loans, as well as a full range of
consumer loans, including automobile, boat, home improvement and
other similar loans.
Commercial real estate and construction lending includes
construction and permanent loans on multi-family apartment buildings,
shopping centers, office buildings and other income producing properties
located mainly in the Bank's primary market area.
Effective September 22, 1995, the Bank completed the sale of
its Alma branch, which resulted in a net gain of $122,043. On October
31, 1995, the Bank opened a new full service branch in north Glynn
County to better service that area of the market.
The principal executive offices of the Bank are located at 1703
Gloucester Street, Brunswick, Georgia 31520 and the telephone number
at that address is (912) 267-7283.
Summary of Financial Results
- ----------------------------
First Georgia Holding, Inc. reported Net Income of $1,277,088 in
1995, an increase of $214,911, or 20.23%. This increase in Net Income
came as a result of several factors. First, the Net Interest Income after
Provision for Loan Losses increased a total of $374,382. Other Income
also increased slightly by a total of $70,797. Other expenses decreased
slightly by a total of $17,208. All these factors had a strong positive
effect on the Company's Net Income.
Return on Average Equity and Assets
- -----------------------------------
Return on Average Assets for the year was 0.95%, up 20% from
last year, which was .79%. Return on Average Equity for the year was
11.88% compared to 11.04% for the year ended September 30, 1994.
These increases were again due to the substantial increase in net
income for the Company.
<PAGE>
SELECTED STATISTICAL INFORMATION
The following tables set forth certain selected statistical information
and should be read in conjunction with the consolidated financial statements
of the Company and Bank.
Year Ended
September 30,
----------------------
1995 1994
----------------------
Return on Average Assets 0.95% 0.79%
Return on Average Equity 11.88% 11.04%
Average Equity to Average Assets 8.01% 7.41%
Dividend Payout Ratio 6.38% 8.97%
AVERAGE BALANCE SHEETS
Year Ended
September 30,
--------------------------------
1995 1994
--------------------------------
Cash $ 2,627,902 3,200,073
Interest-bearing deposits in other banks 3,421,075 3,518,187
Investment securities 8,148,300 7,234,187
Loans receivable, net 111,295,104 111,443,635
Real estate acquired in settlement of loans 466,281 364,139
Federal Home Loan Bank stock 1,575,700 1,570,800
Premises and equipment, net 3,614,321 3,952,170
Accrued interest receivable 820,405 805,281
Intangible assets, net 1,558,861 1,734,449
Other assets 902,367 644,834
------------- ------------
$ 134,430,316 134,467,755
============= ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits $ 107,968,855 106,387,471
Federal Home Loan Bank advances 12,948,000 16,023,000
Advance payments by borrowers for
taxes and insurance 78,304 86,294
Other borrowed money 216,000 520,000
Accrued expenses and other liabilities 2,451,189 2,027,880
------------- ------------
123,662,348 125,044,645
------------- ------------
Stockholders' equity:
Common stock 1,326,641 1,103,038
Additional paid in capital 5,786,164 6,106,569
Retained earnings 3,655,163 2,213,503
------------ ------------
10,767,968 9,423,110
------------ ------------
Total liabilities and stockholders' equity $ 134,430,316 134,467,755
============= ============
<PAGE>
INTEREST EARNINGS AND YIELD
Year Ended
September 30,
--------------------------
1995 1994
--------------------------
Interest earned on:
Loans $ 10,871,713 9,714,327
Taxable investment securities 507,009 357,025
Interest-bearing deposits in other banks 247,615 141,845
---------------------------
Total interest income 11,626,337 10,213,197
---------------------------
Interest paid on:
Deposits 5,345,453 4,486,147
Short term debt 12,176 4,030
Long term debt 1,049,728 1,053,564
---------------------------
Total interest expense 6,407,357 5,543,741
---------------------------
NET INTEREST EARNED $ 5,218,980 4,669,456
===========================
Average percentage earned on:
Loans 9.77 % 8.72 %
Taxable investment securities 6.22 4.94
Interest-bearing deposits in other banks 7.24 4.03
Total interest earning assets 9.46 8.36
Average percentage paid on:
Deposits 4.95 4.22
Short term debt 5.90 3.25
Long term debt 6.82 6.76
Total interest bearing liabilities 5.29 4.51
NET YIELD ON INTEREST EARNING ASSETS 4.25 % 3.82 %
============================
"Management's Discussion and Analysis of Financial Condition and
Results of Operations - Yields Earned and Rates Paid" in the Company's Annual
Report is incorporated by reference herein.
<PAGE>
INTEREST DIFFERENTIAL
The following table describes the extent to which changes in volume of interest
earning assets and interest-bearing liabilities and changes in interest rates
have affected the Bank's interest income and expense during the periods
indicated. For each category of interest-earning asset and interest-bearing
liability, information is provided on changes attributable to (a) change in
volume (change in volume multiplied by old rate) and (b) change in rate (change
in rate multiplied by old volume). The net change attributable to the combined
impact of volume and rate has been allocated to both components in proportion to
the relationship of the absolute dollar amounts of the change in each.
Year Ended September 30, 1995
vs. Year Ended September 30, 1994
--------------------------------------
Increase (Decrease) Due To
--------------------------------------
(In Thousands) Total Rate Volume
Interest income:
Loans $ 1,157 1,170 (13)
Taxable investment securities 150 101 49
Interest-bearing deposits in
other banks 106 110 (4)
------ ------- ---------
Total interest-earning
assets 1,413 1,381 32
------- -------- --------
Interest expense:
Deposits 859 791 68
Short term debt 8 14 (6)
Long term debt (4) 191 (195)
-------- ------- --------
Total interest-bearing
liabilities 863 996 (133)
-------- ------ -------
Net interest income $ 550 385 165
======== ====== =======
Year Ended September 30, 1994
vs. Year Ended September 30, 1993
--------------------------------------
Increase (Decrease) Due To
--------------------------------------
(In Thousands) Total Rate Volume
Interest income:
Loans $ (662) (485) (177)
Taxable investment securities 70 55 15
Interest-bearing deposits in
other banks (2) (5) 3
------ -------- -------
Total interest-earning
assets (594) (435) (159)
------- -------- -------
Interest expense:
Deposits (457) (355) (102)
Short term debt (76) (2) (74)
Long term debt 38 (46) 84
-------- ------- --------
Total interest-bearing
liabilities (495) (403) (92)
--------- ------- --------
Net interest income $ (99) (32) (67)
========= ======= ========
<PAGE>
Lending Activities
- -----------------
General
- -------
Thrift institutions are permitted to invest up to 400% of their
capital in commercial real estate loans. Thrift institutions are also
permitted to invest up to 10% of their assets in secured or unsecured
loans for commercial, corporate, business or agricultural purposes.
Institutions may also invest up to 35% of their assets in consumer loans
and up to 10% of their assets in tangible personal property in order to
engage in personal property leasing.
Effective October 19, 1992, the Bank entered into a supervisory
agreement with the Office of Thrift Supervision (OTS). The supervisory
agreement requires the Bank to submit to the OTS a written plan to
improve the Bank's record of compliance with applicable Federal
consumer protection laws and regulations. Specifically the Bank is
required to document its compliance with the Truth in Lending Act, flood
insurance requirements and the Community Reinvestment Act. The
Bank's Compliance Officer is directed to report to the Board of Directors
on the Bank's compliance with these regulations on a quarterly basis.
As of September 30, 1995, the Bank is still subject to, and in compliance
with, the supervisory agreement. None of the Bank's operations was
adversely affected by the agreement.
Loan Portfolio Analysis
- -----------------------
The Bank's net loan portfolio totaled approximately
$110,432,000 at September 30, 1995, representing approximately 83%
of its total assets. On that date, approximately 64% of its total
outstanding loans were secured by mortgages on residential property.
The balance of the Bank's outstanding loans at that date consisted of
commercial real estate loans, construction loans, consumer loans and
commercial loans.
Set forth on the next page is selected data relating to the
composition of the Bank's loan portfolio by type of loan and type of
security on the dates indicated.
<PAGE>
LOAN ANALYSIS
September 30,
-----------------------------------------
(In Thousands) 1995 1994
-----------------------------------------
Loans By:
TYPE OF SECURITY
Real Estate Loans:
Residential:
One-four family:
Conventional $ 64,086 58.03% 63,178 55.62%
FHA-VA 265 0.24% 322 0.28%
Multi-family
conventional 6,560 5.94% 5,731 5.05%
-----------------------------------------
Total residential 70,911 64.21% 69,231 60.95%
Commercial Property 19,555 17.71% 20,206 17.79%
Land development
and other 8,802 7.97% 10,407 9.16%
Less Loans held for sale 0 0.00% 0 0.00%
------------------------------------------
Total real estate loans 99,268 89.89% 99,844 87.91%
Non-real estate loans: 15,136 13.71% 15,934 14.03%
Less: Loans in process (2,868) -2.60% (963) -0.85%
Unearned Interest income (40) -0.04% (52) -0.05%
Allowances for losses (1,004) -0.91% (983) -0.87%
Deferred loan fees (60) -0.05% (201) -0.18%
-------------------------------------------
Total $ 110,432 100.00% 113,579 100.00%
===========================================
TYPE OF LOAN:
Real Estate Loans:
Loans on existing property:
Fixed rate $ 35,238 31.91% 43,449 38.25%
One-year ARM(1) 55,201 49.98% 50,279 44.27%
Three-year ARM 1,224 1.11% 1,533 1.35%
Construction loans 7,605 6.89% 4,583 4.04%
Less: Loans held for sale 0 0.00% 0 0.00%
-------------------------------------------
Total real estate loans 99,268 89.88% 99,844 87.91%
Consumer loans 9,094 8.23% 10,445 9.20%
Commercial loans 6,042 5.47% 5,489 4.83%
Less: Loans in process (2,868) -2.60% (963) -0.85%
Unearned Interest Income (40) -0.04% (52) -0.05%
Allowance for losses (1,004) -0.91% (983) -0.87%
Deferred loan fees (60) -0.05% (201) -0.18%
-------------------------------------------
$ 110,432 100% 113,579 100%
===========================================
(1) An ARM is an adjustable rate mortgage
<PAGE>
LOAN MATURITY SCHEDULE
The following table sets forth certain information at September 30,
1995 regarding the dollar amount of loans maturing in the Bank's portfolio
based on their contractual terms to maturity. Demand loans, loans having no
stated schedule of repayments and no stated maturity, and overdrafts are
reported as due in one year or less. This table does not consider the repricing
of loans to be maturities. Interest rate sensitivity is incorporated herein by
reference from the Management's Discussion and Analysis of Financial Condition
and Results of Operations - Asset/Liability Management from the Annual Report
to Shareholders for 1995.
Maturities
During years
ended Real estate Real estate Commercial
September 30, mortgage construction Consumer and other Total
- --------------------------------------------------------------------------------
(In Thousands)
1996 $ 22,780 5,171 4,651 3,980 36,582
1997 14,836 1,253 1,656 389 18,134
1998 8,875 1,181 1,530 780 12,366
1999-2000 1,253 -- 1,161 893 3,307
2001-2005 8,020 -- 26 -- 8,046
2006-2010 11,462 -- 70 -- 11,532
After 2010 24,437 -- -- -- 24,437
------------------------------------------------------------------
Total $ 91,663 7,605 9,094 6,042 114,404
==================================================================
Less: Loans in process (2,868)
Unearned Interest Income (40)
Allowance for losses (1,004)
Deferred loan fees (60)
--------
$ 110,432
=========
The next table sets forth the dollar amount of all loans due more than
one year after September 30, 1995 which have predetermined interest rates and
which have floating or adjustable interest rates.
Real estate Real estate Commercial
mortgage construction Consumer and other Total
--------------------------------------------------------------
Predetermined
Rates $ 26,062 -- 4,043 791 30,896
Floating or
adjustable
Rates 43,800 2,434 400 1,271 47,905
--------------------------------------------------------------
$ 69,862 2,434 4,443 2,062 78,801
==============================================================
<PAGE>
Lending Policies
- ----------------
Federal regulations limit the amount which federally chartered
thrift institutions may lend in relation to the appraised value of the real
estate securing the loan, as determined by an appraisal at the time of
loan origination. Those regulations permit a maximum loan-to-value
ratio of 100% for real estate loans. The Bank's lending policies
generally limit the maximum loan-to-value ratio on residential mortgage
loans to 95% of the lesser of the appraised value or purchase price.
Multi-family residential and commercial real estate loans and
unimproved real estate loans generally do not exceed 90% of value.
The loan-to-value ratio, maturity and other provisions of the loans made
by the Bank generally reflect the policy of making less than the
maximum loan permissible under applicable regulations in accordance
with sound lending practices, market conditions and underwriting
standards established by the Bank.
In an effort to keep the yields on its loan portfolio and
investments more interest rate sensitive, the Bank has implemented a
number of measures including: (a) generally originating long-term fixed
mortgage loans for brokerage to other financial institutions; (b)
emphasizing origination of ARMs on residential and commercial
properties when market conditions permit; (c) originating construction
loans secured by residential properties generally for a 12-month period
at interest rates determined by reference to the Bank's prime rate; and
(d) originating consumer and commercial loans having either adjustable
rates or relatively short maturities.
Single Family Residential Loans
- -------------------------------
One of the lending activities of the Bank has been the
origination of single family residential loans through its mortgage lending
operation. Through an arrangement with another financial institution,
the Bank brokers substantially all of its fixed rate single family residential
loans. This allows the Bank to offer a broader base of financing
alternatives than would be possible if the Bank were structuring all of its
loans to sell to the Federal Home Loan Mortgage Corporation (FHLMC)
or the Federal National Mortgage Association (FNMA).
Federally chartered thrift institutions are authorized to make
home loans on which the interest rate, loan balance or maturity may be
adjusted, provided that the adjustments are tied to specified indices.
The rate adjustments are determined by reference to cost of funds and
Treasury securities indices and are limited generally to 1.5-2.0% per
adjustment period and 5-6% over the life of the loan.
Commercial Real Estate Loans
- ------------------------------
Current regulations permit federal institutions to invest up to
400% of their capital in commercial real estate loans. At September 30,
1995, the Bank had 255% of its capital invested in commercial real
estate loans. The commercial real estate loans originated by the Bank
are primarily secured by multi-family apartment buildings, shopping
centers, office buildings and other income-producing properties. The
interest rates on commercial real estate loans presently offered by the
Bank generally adjust every one to three years. The rate is generally
determined by reference to money center banks' prime rates. The Bank
attempts to fund 3-year adjustable rate loans with deposit proceeds of
comparable maturity. The Bank's commercial real estate loans have
various terms, with the payments based on a 15 to 25 year amortization
schedule. The Bank generally requires that such loans have a minimum
debt service coverage of 1.15 and a loan-to-value ratio of not more than
90%.
<PAGE>
Commercial real estate lending entails significant additional
risks compared to residential lending. Commercial real estate loans
typically involve large loan balances to single borrowers or groups of
related borrowers. The payment experience of such loans typically
depends upon the successful operation of the real estate project. These
risks can be significantly affected by supply and demand conditions in
the market for office and retail space and for apartments, and as such
may be subject, to a greater extent than residential real estate loans, to
adverse conditions in the economy. In dealing with these risk factors,
the Bank generally limits itself to a real estate market or to borrowers
with which it is familiar and sells a portion of its commercial real estate
loans. The Bank concentrates on originating commercial real estate
loans secured by properties generally located within its primary market
area, although the Bank will continue, on a limited basis, to originate
commercial real estate loans secured by properties located in other parts
of Georgia and in other states.
Construction Loans
- ------------------
The Bank originates construction loans on single family
residences. Such construction loans generally have a term of 12
months or less. The interest rates charged by the Bank on construction
loans are determined by reference to the prime rate charged by money
center banks and vary depending upon the type of property, the loan
amount and the credit worthiness of the borrower. The Bank generally
requires personal guarantees of payment from the principals of the
borrowing entities for the full amount of the loan, and it is the policy of
the Bank to enforce guarantees in the event of non-payment of the loan.
The Bank also originates construction loans on multi-family and
commercial real estate. The interest rates on such loans presently
offered by the Bank are also determined by reference to the prime rate
charged by money center banks. Multi-family and commercial real
estate construction financing generally exposes the lender to a greater
risk of loss than long-term financing on improved, occupied real estate,
due in part to the fact that the loans are underwritten on projected rather
than historical income and rental results. The Bank's risk of loss on such
loans depends largely upon the accuracy of the initial appraisal of the
property's value at completion of construction and the estimated cost
(including interest) of completion. If either estimate proves to have been
inadequate and the borrower is unable to provide additional funds
pursuant to his or her guarantee, the Bank either may be required to
advance funds beyond the amount originally committed to permit
completion of the development or be confronted at the maturity of the
loan with a project whose value is insufficient to assure full repayment.
The Bank's underwriting criteria are designed to evaluate and to
minimize the risks of each commercial real estate construction loan.
The Bank considers evidence of the financial stability and reputation of
both the borrower and the contractor, the amount of the borrower's cash
equity in the project, independent evaluation and review of the building
costs, local market conditions, pre-construction sales and leasing
information based upon evaluation of similar projects, the use of
independent engineers to examine plans and monitor construction and
the borrower's cash flow projections upon completion. The Bank may
require a performance bond in the amount of the construction contract
based on management's evaluation of the project and the financial
strength of the contractor and also requires personal guaranties of
payment by the principals of any borrowing entity. At September 30,
1995, approximately $7,605,000 of the Bank's loan portfolio consisted of
construction loans.
<PAGE>
Consumer Loans
- --------------
Current regulations permit federal savings institutions to invest
up to 35% of their assets in consumer loans. The Bank currently offers
a wide variety of consumer loans including secured and unsecured
personal loans (such as home improvement loans and loans secured by
savings accounts), automobile, boat and other loans. Total consumer
loans amounted to approximately $9,094,000 at September 30, 1995.
The Bank markets consumer loans in order to provide a full
range of retail banking services to its customers and because of the
shorter term and normally higher interest rates on such loans. The
Bank's underwriting standards for consumer loans include a
determination of the applicant's payment history on other debts and an
assessment of his or her ability to meet existing obligations and to make
payments on the proposed loan. Loan-to-value, cash equity and debt
service-to-income ratios are also generally considered. Risks associated
with consumer loans include, but are not limited to, fraud, deteriorated or
non-existing collateral, general economic downturn, and customer
financial problems.
Commercial Loans
- ----------------
Current regulations authorize federal thrift institutions to make
secured and unsecured loans for commercial, corporate, business and
agricultural purposes, including issuing letters of credit. The aggregate
amount of such loans outstanding generally may not exceed 10% of the
institution's assets.
The Bank makes commercial loans primarily on a secured basis.
Substantially all of such loans to date have interest rates which adjust
with changes in the prime rate charged by money center banks. The
Bank's commercial loans primarily consist of short-term loans for
working capital purposes, seasonal loans, lines of credit, accounts
receivable loans and inventory loans. The Bank customarily requires
personal guaranties of payment by the principals of any borrowing entity
and reviews the financial statements and income tax returns of the
guarantors generally on an annual basis. At September 30, 1995, the
Bank had approximately $6,042,000 outstanding in commercial loans.
Risks associated with these loans can be significant. Risks include, but
are not limited to, fraud, bankruptcy, deteriorated or non-existing
collateral, general economic downturn, and changes in interest rates.
Loan Solicitation and Processing
- --------------------------------
The Bank actively solicits mortgage loan applications from
existing customers, walk-ins, referrals, builders and real estate brokers.
Commercial real estate loan applications are also obtained through
direct solicitation.
<PAGE>
Detailed loan applications are obtained to determine the
borrower's ability to repay, and the more significant items on these
applications are verified through the use of credit reports, financial
statements and confirmations. After analysis of the loan applications
and property or collateral involved, including an appraisal of the property
by independent appraisers approved by the Bank's management, the
lending decision is made in accordance with the underwriting guidelines
of the Bank. With respect to commercial loans, the Bank also reviews
the capital adequacy of the business, the ability of the borrower to repay
the loan and honor its other obligations, and general economic and
industry conditions. All applications for loans greater than $250,000 but
less than $500,000 require the approval of the Bank's Loan Committee,
which consists of the Bank's president and three outside directors. All
loan applications in excess of $500,000 must be approved by the full
Board of Directors.
Loan applicants are promptly notified of the decision of the
Bank, together with the terms and conditions of the decision. In this
regard, the Bank seeks to handle loan processing and origination faster
than its competition. If approved, these terms and conditions include the
amount of the loan, interest rate basis, amortization term, a brief
description of the real estate to be mortgaged to the Bank, notification
that insurance coverage must be maintained to protect the Bank's
interest and any other special conditions.
It is the Bank's policy to obtain a title insurance policy insuring
that the Bank has a valid first lien on the mortgaged real estate and that
the property is free of encumbrances. Borrowers are also to obtain paid
hazard insurance policies prior to closing and, when the property is in a
flood plain as designated by the Department of Housing and Urban
Development, paid flood insurance policies. It is the Bank's policy to
require flood insurance for the full insurable value of the improvements
for any such loan located in a designated flood hazard area. In certain
coastal areas, however, there are limits on the amount of insurance
available. Substantially all borrowers are also required to advance funds
on a monthly basis, together with each payment of principal and interest,
to a mortgage escrow account from which the Bank makes
disbursements for items such as real estate taxes, hazard insurance
premiums and private mortgage insurance premiums. See "Lending
Activities - General" regarding the Bank's recent efforts to ensure
compliance with federal regulations pertaining to flood insurance, Truth-
In-Lending, and the Community Reinvestment Act.
Loan Originations, Sales and Purchases
- ---------------------------------------
It is a policy of the Bank not to originate for its own portfolio
any long term mortgage loans. The Bank instead originates long term
mortgages to be brokered out to various mortgage lenders. The Bank
may sell its commercial real estate and construction loans, generally
retaining a percentage of the loans in its own portfolio. Loan sales
provide additional funds for lending, generate income for the Bank and
generally reduce exposure to interest rate risk. The Bank generally
continues to collect payments on the loans and otherwise to service the
loans sold. The Bank retains a portion of the interest paid by the
borrower on these loans as consideration for its servicing loans sold to
others. At September 30, 1995, the Bank was servicing loan for others
of approximately $7,346,000.
<PAGE>
The Bank has purchased a number of loans in the past, and
intends to consider future purchases of residential mortgage loans as
market conditions warrant. The Bank has also sold loans in the past
and, similarly, intends to consider future sales as conditions warrant.
It is the current intention of management to continue offering
residential fixed rate mortgage loans through the Bank's brokerage
lending arrangement and to continue offering adjustable rate instruments
to be held in the Bank's portfolio.
Loan Commitments
- ----------------
Upon loan approval, short-term commitments of 45 days are
issued to the applicant and in most cases provide for the loan to be
closed at the prevailing rate of interest as of the date of approval. At
September 30, 1995 the Bank had loan commitments outstanding of
approximately $100,000 excluding the undisbursed portion of loans in
process.
Loan Origination Fees
- ----------------------
Beginning October 1, 1988, the Bank prospectively adopted
Statement of Financial Accounting Standards No. 91 "Accounting for
Nonrefundable Fees and Costs Associated with Originating or Acquiring
Loans and Initial Direct Costs of Leases". This standard requires the
Bank to defer and amortize loan origination fees, net of certain direct
origination costs incurred, and, if the commitment is exercised,
recognize such fees over the life of the related loan as a yield
adjustment or, if the commitment expires unexercised, recognize such
fees as income upon expiration of the commitment.
The Bank also receives other fees and charges relating to
existing loans along with late charges and fees collected in connection
with a change in borrower or other loan modifications.
Delinquencies and Asset Classifications
- ----------------------------------------
The Bank's collection procedures provide that when a loan is 15
days past due, the borrower will be contacted by mail and payment
requested. If the delinquency continues, subsequent efforts will be
made to contact the delinquent borrower. In certain instances, the Bank
may modify the loan or grant a limited moratorium on loan payments to
enable the borrower to reorganize his or her financial affairs. If the loan
continues in a delinquent status for 90 days or more, the Bank generally
will initiate foreclosure proceedings, but there is no requirement that the
Bank defer foreclosure proceedings or other enforcement action. Any
property acquired as the result of foreclosure is classified as real estate
acquired in settlement of loans until such time as it is sold or otherwise
disposed of by the Bank to recover its investment.
As a measure of the soundness of a thrift institution's loans,
federal regulatory authorities have developed the concept of asset
classification and have established four categories of problem assets:
"Special Mention," "Substandard," "Doubtful" and "Loss". Assets
designated Special Mention do not require that a bank take any specific
action. For assets classified Substandard or Doubtful, a bank's
examiner is authorized to direct the establishment of a general
allowance for loan losses based on the assets classified and the overall
quality of the bank's asset portfolio. This valuation allowance must be
established in accordance with generally accepted accounting principles.
For assets or portions of assets classified Loss, a bank is required either
to establish specific allowances of 100% of the amount so classified, or
to charge off such amount. These specific allowances or charge offs
must also be established in accordance with generally accepted
accounting principles.
<PAGE>
The Bank is responsible for determining the valuation and
classification of its assets, subject to review by regulatory authorities.
Portions of an asset may be classified in more than one category.
An asset will be designated Special Mention if it does not justify
a classification of Substandard but does constitute undue and
unwarranted credit risk to the Bank. An asset will be classified
Substandard if it is determined to involve a distinct possibility that the
Bank may sustain some loss if deficiencies associated with the loan,
such as inadequate documentation, are not corrected. An asset will be
classified as Doubtful if full collection is highly questionable or
improbable. An asset will be classified as Loss if it is considered
uncollectible, even if a partial recovery may be expected in the future.
The Bank closely monitors its classified loans and actively
attempts to dispose of real estate acquired in settlement of loans. Real
estate acquired through foreclosure is appraised when acquired and is
recorded at the lower of cost or fair market value.
Nonaccrual, Past Due and Restructured Loans
- ----------------------------------------------
The Bank has approximately $2,061,000 of loans in nonaccrual
status at September 30, 1995. The Bank had approximately $2,539,000
of loans in nonaccrual status at September 30, 1994. At September 30,
1995 and 1994 the Bank had loans in the amount of $129,000 and
$383,000 respectively, past due more than 90 days for which interest
was still accruing on a portion of those loans. The Bank has had no
restructured loans. ("Management's Discussion and Analysis of
Financial Condition and Results of Operations - Provision for Loan
Losses" in the Company's Annual Report is incorporated by reference
herein.) Had all nonaccrual loans at September 30, 1995 actually
accrued interest for the full fiscal year, approximately $91,000 of
additional interest income would have been added to fiscal 1995
earnings.
Accrual of interest is discontinued when either principal or
interest become 90 days past due unless, in management's opinion, the
loan is well secured and in the process of collection.
Allowance for Loan Losses
- ---------------------------
For a detailed analysis of the allowance for loan losses,
Management's Discussion and Analysis of Financial Condition and
Results of Operations - Provision for Loan Losses is incorporated by
reference from the Annual Report to Shareholders herein.
The Company has allocated the allowance for possible loan losses
according to the amount deemed to be reasonably necessary to provide
for the possibility of losses being incurred within the categories of loans
set forth in the table below. This allocation is based on management's
evaluation of the loan portfolio under current economic conditions, past
loan loss experience, adequacy and nature of collateral, and such
factors which, in the judgment of management, deserve recognition in
estimating loan losses. Regulatory agencies, as an integral part of their
examination process, periodically review the Company's allowances for
possible losses on loans and real estate acquired through foreclosure
and other nonperforming assets. Such agencies may require the
Company to note additions to the allowance based on their judgments
about information available to them at the time of their examination.
Because the allocation is based on estimates and subjective judgment, it
is not necessarily indicative of the specific amounts or loan categories in
which charge-offs may occur.
<PAGE>
The allocation of the allowance for possible loan losses to the
various loan categories and the ratio of each loan category to total loans
outstanding at September 30, 1995 are presented in the following table.
ALLOCATION OF THE ALLOWANCE FOR LOAN LOSS
September 30, 1995 September 30, 1994
-------------------------- ------------------------
Percent of Percent of
loans in loans in
each category each category
(IN THOUSANDS) Amount to total loans Amount to total loans
---------------------------- ----------------------------
Balance at end of
period applicable to:
Commercial, financial,
and agricultural $ 18 5.28% 23 4.75%
Real estate-construction 52 6.65% 105 4.02%
Real estate-mortgage 386 80.12% 464 82.21%
Consumer 36 7.95% 57 9.02%
Unallocated 512 N/A 334 N/A
------------------------------ -------------------------
$ 1,004 100.00% 983 100.00%
Other
- -----
The Company has no foreign operations and, accordingly, there
are no assets or liabilities attributed to foreign operations.
At September 30, 1995, the Company had no concentration of
loans exceeding 10% of total loans to borrowers engaged in any single
industry.
Investment Activities
- ---------------------
The Bank is required under federal regulations to maintain a
minimum amount of liquid assets and is also permitted to make certain
other securities investments. It is the intention of management to hold
securities with short maturities in the Bank's investment portfolio in order
to enable the Bank to match more closely the interest rate sensitivities of
its assets and liabilities. All of the Bank's investments are subject to
interest rate risk. Since some securities have fixed interest rates, as
interest rates rise the value of the securities falls and as rates decline
the value increases. In addition, mortgage-backed securities are subject
to prepayment risk. As rates fall, prepayments increase and the amount
of the security earning the coupon rate declines.
Investment decisions are made by senior officers of the Bank.
The actions of the officers are within policies established by the Board of
Directors. At September 30, 1995 the investment portfolio totaled
approximately $9,181,000.
<PAGE>
The following table sets forth the amortized cost, approximate
fair value, and weighted average yield of the investment portfolio. The
weighted average yield with respect to maturities is also presented.
INVESTMENT SECURITIES ANALYSIS
Weighted Approximate
Amortized Average Fair
Cost Yield Value
-------------------------------------------------
Septermber 30, 1995:
Investment Securities:
U.S. Government Agencies $ 8,393,161 5.78% 8,228,856
Mortgage-backed Securities:
SBA 787,817 3.32% 840,422
------------------------------------------------
$ 9,180,978 9,069,278
===============================================
Weighted Approximate
Amortized Average Fair
Cost Yield Value
-----------------------------------------------
Septermber 30, 1994:
Investment Securities:
U.S. Government Agencies $ 6,506,427 3.92% 6,252,182
Mortgage-backed Securities:
SBA 1,004,371 3.01% 1,078,928
------------------------------------------------
$ 7,510,798 7,331,110
==============================================
A summary of investment and mortgage-backed securities by maturities
as of September 30, 1995 follows:
Weighted Approximate
Amortized Average Fair
Cost Yield Value
----------------------------------------
Investment Securities:
Within 1 Year $ 100,000 6.73% 100,300
After 1 Year thru 5 Years 4,598,377 4.39% 4,436,290
After 5 Years thru 10 Years 787,817 10.51% 840,422
After 10 Years 3,694,784 7.18% 3,692,266
----------------------------------------
$ 9,180,978 9,069,278
========================================
At September 30, 1995 the Bank had pledged $5,095,000 of its U.S.
Government Agency securities to government and municipal depositors. The Bank
does not have any taxexempt securities, and all of the Bank's securities are
backed by U.S. Government Agencies.
<PAGE>
Retail Banking Activities and Sources of Funds
- -----------------------------------------------
General
- -------
The Bank's retail banking activities consist of attracting deposits
and making consumer and commercial loans. A principal objective of
the Bank is to establish a total banking relationship, including a deposit
relationship as well as a lending relationship, between the Bank and the
customer.
<PAGE>
Savings accounts and other types of deposits generated by the
Bank's retail banking division are the primary source of the Bank's funds
for use in lending and for other general business purposes. In addition
to savings accounts, the Bank derives funds from loan repayments,
FHLB advances, other borrowings and operations. Loan repayments are
a relatively stable source of funds while deposit inflows and outflows
vary widely and are influenced by prevailing interest rates and money
market conditions. Borrowings may be used on a short-term basis to
compensate for reductions in normal sources of funds such as deposit
inflows at less than projected levels and may be used on a longer-term
basis to support expanded lending activities. The Bank's sources of
borrowings have been advances from the FHLB of Atlanta and
obligations under Repurchase Agreements.
Deposits
- ---------
Savings deposits in the Bank at September 30, 1995 and 1994,
including accrued interest payable, were represented by the various
types of programs described as follows:
<PAGE>
DEPOSITS AT SEPTEMBER 30, 1995
Percentage
Weighted Balance of
Type of Minimum Average (Dollars in Total
Account Term Amount Rate thousands) Deposits
- --------------------------------------------------------------------------------
Easy Checking -- -- $ 1,721 1.62%
Commercial checking $ -- -- 2,919 2.74%
Now Accounts 750 2.41% 11,569 10.86%
Super NOW and MMDA 1,000 2.78% 2,345 2.20%
Statement Savings 100 2.45% 4,713 4.42%
Certificates of
deposit accounts:
Jumbo
certificates 30 days to
5 years 99,000 5.34% 12,530 11.76%
Other time
deposits
3 month 3-5 months 1,000 5.35% 2,638 2.48%
6 month 6-11 months 1,000 4.84% 2,705 2.54%
1 year 12-17 months 500 6.18% 22,872 21.47%
1.5 years 18-23 months 500 5.53% 260 0.24%
2 years 24-29 months 500 6.40% 8,691 8.16%
2.5 years 30-35 months 500 5.26% 1,909 1.79%
3 years 36-41 months 500 6.44% 2,476 2.32%
3.5 years 42-47 months 500 5.42% 81 0.08%
4 years 48-59 months 500 6.26% 4,674 4.39%
5 years 60 months 500 6.90% 8,779 8.24%
18 month IRA 18 months 500 6.07% 14,758 13.85%
Other 30 day 500 2.73% 888 0.83%
--------- --------- -----------
5.14% $ 106,528 100%
========= ========= ===========
Savings deposits at September 30, 1994, including accrued interest
payable, are represented on the next page.
<PAGE>
DEPOSITS AT SEPTEMBER 30, 1994
Percentage
Weighted Balance of
Type of Minimum Average (Dollars in Total
Account Term Amount Rate thousands) Deposits
- --------------------------------------------------------------------------------
Easy Checking $ 2,144 2.07%
Commercial checking $ -- -- 3,051 2.95%
Now Accounts 750 2.31% 13,684 13.23%
Super NOW and MMDA 1,000 2.48% 4,106 3.97%
Statement Savings 100 2.38% 6,122 5.92%
Certificates of
deposit accounts:
Jumbo
certificates 30 days to
5 years 100,000 4.71% 11,220 10.85%
Other time deposits
30 day 1 month 500 3.26% 1,358 1.31%
91-182 days 3-6 months 500 4.05% 4,220 4.08%
183 days-1year 6-12 months 500 4.80% 14,964 14.47%
1.5-2 years 18-24 months 500 5.12% 11,160 10.79%
2.5-3 years 30-36 months 500 6.05% 5,032 4.87%
3.5-5years 42-60 months 500 6.07% 12,598 12.18%
18 month IRA 18 months 100 5.44% 13,748 13.30%
-------------------------------------
4.45% $ 103,407 100%
====================================
<PAGE>
The Bank has a number of different programs designed to
attract both short-term and long-term savings of the general public. The
programs include commercial demand deposits (checking), NOW
accounts, money market deposits accounts (MMDA), traditional
passbook savings, time deposits in a minimum amount of $100,000
(Jumbo Certificates), other certificates of deposits and individual
retirement accounts (IRAs).
The minimum amount required to open a certificate of deposit
for other than retirement accounts varies from $500 to $100,000,
depending on the type of deposit. Rates on certificates of deposit are
determined weekly by the Bank, based upon local market rates, national
money market rates and yields on assets of the same maturity.
The variety of deposit accounts offered by the Bank allows it to
be competitive in obtaining new funds, although the threat of
disintermediation (the flow of funds away from the Bank into direct
investment vehicles, such as mutual funds and government and
corporate securities) still exists. The ability of the Bank to attract and
retain deposits and the Bank's cost of funds have been, and will continue
to be, significantly affected by capital and money market conditions.
The Bank attempts to control the flow of deposits by pricing its
accounts to remain generally competitive with other financial institutions
in its market area.
The Bank has generated Jumbo Certificates from both local
individuals and businesses and from out-of-town individuals and
businesses who have ties to its market area. In addition, the Bank
accepts public deposits. The Bank responds to requests for rate
information but does not accept deposits for which a broker's
commission must be paid. As with other deposits, rates on Jumbo
Certificates are set in a manner to be competitive in the Bank's market
area.
The following table sets forth the composition of deposits,
excluding accrued interest payable, by type and interest rate at the dates
indicated.
<PAGE>
DEPOSITS BY TYPE
September 30,
-------------------------------------
1995 1994 1993
-------------------------------------
Access accounts: (In thousands)
Commercial checking
- 0.00% $ 4,640 5,195 4,310
NOW account - 2.50% 11,569 13,684 13,433
Super NOW Account -
variable rate -- -- --
Money Market deposit
account - variable
rate 2,345 4,106 5,413
Statement savings - 2.45% 4,713 6,122 5,542
Certificates of deposit:
2.75% - 5.00% 10,134 40,759 33,910
5.01% - 7.00% 52,078 29,701 31,249
7.01% - 9.00% 20,993 3,673 10,744
9.01% - 11.00% 56 167 1,652
---------------------------------------
Subtotal 106,528 103,407 106,253
---------------------------------------
Accrued interest 527 372 482
---------------------------------------
Total $ 107,055 103,779 106,735
=======================================
TIME DEPOSIT MATURITIES
Balances at September 30,
----------------------------------------------------------------
Interest Remainder There-
Rates 1995 1996 1997 1998 after Total
- --------------------------------------------------------------------------------
(in thousands)
2.75% - 5.00% $ 4,367 5,046 710 1 10 10,134
5.01% - 7.00% 7,760 18,569 12,897 8,276 4,576 52,078
7.01% - 9.00% 171 14,801 3,970 866 1,185 20,993
9.01% - 11.00% 56 -- -- -- -- 56
----------------------------------------------------------------
$ 12,354 38,416 17,577 9,143 5,771 83,261
=================================================================
JUMBO CD MATURITIES
September 30,
Maturity 1995
-------------- ----------------
(in thousands)
Three Months or Less $ 201
Three to Six Months 200
Six to Twelve Months 6,454
Over Twelve Months 5,675
------------
Total $ 12,530
============
Early withdrawal from a certificate of deposit subjects the depositor to
an early withdrawal penalty.
<PAGE>
AVERAGE DEPOSIT BY TYPE
September 30, 1995 September 30, 1994
----------------------- -------------------------
Average Weighted Average Weighted
Balance Avg. Rate Balance Avg. Rate
----------------------------- --------------------------
NOW's $ 13,314 2.41% $ 14,400 2.31%
MMDA's 3,214 2.78% 4,628 2.48%
Savings 5,328 2.45% 5,837 2.38%
Time Deposits 86,113 5.57% 81,522 4.78%
------------------------------ -------------------------
Total Average
Deposits $ 107,969 4.95% $ 106,387 4.22%
=============================== =========================
Loan Repayments
- ----------------
In addition to regularly scheduled repayments, loans are prepaid
in full as properties are sold, or are refinanced by the Bank or other
lenders, or are satisfied in full by the borrower. Loan repayments
constitute a major source of funding for the Bank.
Borrowings
- ----------
Savings deposits are the primary source of funds for the Bank's
lending and investment activities and for its general business purposes.
The Bank has, however, used advances from the FHLB of Atlanta and
other borrowings to supplement its supply of lendable funds. Advances
from the FHLB are typically secured by a portion of the Bank's first
mortgage loans. A summary of the Bank's borrowings from the FHLB is
set forth below:
Due during
year ending Interest
September 30, Rates 1995 1994
- ------------------------------------------ -----------------------------------
1995 4.78% to 6.25% $ -- 5,300,000
1996 4.98% to 8.55% 4,448,000 4,948,000
1997 4.93% to 8.45% 4,000,000 3,500,000
1998 5.43% to 7.27% 2,000,000 1,500,000
1999 6.76% 1,000,000 1,000,000
2002 7.90% 500,000 500,000
----------------------------------
$ 11,948,000 16,748,000
The FHLB System functions as a central reserve bank providing credit
for savings institutions. As a member of the FHLB of Atlanta, the Bank
is required to own capital stock in the FHLB of Atlanta and is authorized
to apply for advances on the security of its home mortgage loans and
other assets (primarily, securities which are obligations of, or are
guaranteed by, the United States) provided certain standards related to
creditworthiness have been met.
The FHLB offers several different credit programs each with its
own interest rate and term. It prescribes the acceptable uses for
advances as well as size limitations. The FHLB periodically reviews its
credit limitations and standards. Under its current policies, the FHLB
limits its advances based on a member institution's net worth or the
FHLB's assessment of the institution's creditworthiness.
<PAGE>
The Company has also established a line of credit with a
Georgia financial institution in the amount of $1,000,000. The interest
rate floats at one-half percent over the prime rate. The Company
pledged all of the outstanding stock in the Bank as collateral for the line.
As of September 30, 1995, $ 192,000 was outstanding and the proceeds
have been invested in the Bank.
The following table sets forth certain information regarding
borrowings by the Bank at the end of and during the periods indicated:
FEDERAL HOME LOAN BANK ADVANCES
At September 30,
-------------------------------------------
1995 1994 1993
-------------------------------------------
Balance outstanding $ 11,948,000 16,748,000 15,448,000
Weighted average rate 7.10% 6.56% 6.94%
Maximum amount of short term
borrowings outstanding at any
month end 4,448,000 5,300,000 4,120,000
Approximate average short-term
borrowings outstanding 2,157,000 125,000 2,341,000
Approximate weighted average
paid on short-term borrowings (1) 5.56% 7.43% 6.94%
- --------------------------------------------------------------------------------
[FN]
(1) The average method used is the average end of month totals.
Employees
- ----------
At September 30, 1995, the Bank employed 75 full-time
employees. Management considers relations with its employees to be
excellent. The Bank currently maintains a comprehensive employee
benefits program including, among other benefits, hospitalization and
major medical insurance, life insurance, dental insurance, long term
disability, a 401(k) plan and educational assistance. Management
considers these benefits to be generally competitive with those offered
by competing financial institutions in its market area. The Bank's
employees are not represented by any collective bargaining group.
Competition
- -----------
The Bank's primary market area is southeastern Georgia. The
Bank competes for loans primarily through referrals and quality of the
services it provides to borrowers and home builders. It competes for
savings by offering depositors a wide variety of savings accounts,
checking accounts, NOW accounts, convenient office locations, tax-
deferred retirement programs and other services.
<PAGE>
Federal deregulation of financial institutions has contributed to
the dramatic increase in competition for savings dollars between savings
institutions and other types of investment vehicles, such as money
market mutual funds, U.S. Treasury securities and municipal bonds, and
also due to an increase in competition with commercial banks for loans,
checking accounts and other types of financial services. In addition,
large conglomerates and investment banking firms have entered the
market for financial services. Accordingly, the Bank, like other
institutions, faces increased competition in the future in attracting and
retaining customers for the services it offers.
Supervision and Regulation
--------------------------
Savings and Loan Holding Company Regulation
- --------------------------------------------
The Company is a registered holding company under the
Savings and Loan Holding Company Act set forth in Section 10 of the
Home Owners Loan Act (the "SLHCA") and the Georgia Bank Holding
Company Act and is regulated under such acts by the OTS and by the
Georgia Department of Banking and Finance (the "Georgia
Department"), respectively. As a savings and loan holding company,
the Company is required to file with the OTS an annual report and such
additional information as the OTS may require pursuant to the SLHCA.
The OTS may also conduct examinations of the Company and each of
its subsidiaries.
Savings and loan holding companies and their subsidiaries are
prohibited from engaging in any activity or rendering any services for or
on behalf of their savings institution subsidiaries for the purpose or with
the effect of evading any law or regulation applicable to the institution.
This restriction is designed to prevent the use of holding company
affiliates to evade requirements of the SLHCA that are designed to
protect the holding company's savings institution subsidiaries. A unitary
holding company, that is, a holding company that owns only one insured
institution whose subsidiary institution satisfies the qualified thrift lender
test, is not restricted to the statutorily prescribed list of permissible
activities, and the SLHCA imposes no limits on direct or indirect non-
savings institution subsidiary operations.
The SLHCA makes it unlawful for any savings and loan holding
company, directly or indirectly, or through one or more subsidiaries or
one or more transactions, to acquire control of another savings
association or another savings and loan holding company without prior
approval from the OTS. An acquisition by merger, consolidation or
purchase of assets of such an institution or holding company or of
substantially all of the assets of such an institution or holding company is
also prohibited without prior OTS approval. When considering an
application for such an acquisition, the OTS takes into consideration the
financial and managerial resources and future prospects of the
prospective acquiring company and the institution involved. This
includes consideration of the competence, experience, and integrity of
the officers, directors, and principal shareholders of the acquiring
company and savings institution. In addition, the OTS considers the
effect of the acquisition on the institution, the insurance risk to the
Savings Association Insurance Fund ("SAIF") or the Bank Insurance
Fund ("BIF"), as the case may be, and the convenience and needs of
the community to be served.
<PAGE>
The OTS may not approve an acquisition that would result in the
formation of certain types of interstate holding company networks. The
OTS is precluded from approving an acquisition that would result in the
formation of a multiple holding company controlling institutions in more
than one state unless the acquiring company or one of its savings
institution subsidiaries is authorized to acquire control of an institution or
to operate an office in the additional state pursuant to a supervisory
acquisition authorized under Section 13(k) of the Federal Deposit
Insurance Act or unless the statutes of the state in which the institution
to be acquired is located permits such an acquisition.
On March 16, 1994, the Georgia legislature adopted the
"Georgia Interstate Banking Act," which provides that effective July 1,
1995, (a) interstate acquisitions by institutions located in Georgia are
permitted in states which also allow national interstate acquisitions, and
(b) interstate acquisitions of institutions located in Georgia are permitted
by institutions located in states which also allow national interstate
acquisitions; provided, however, that if the board of directors of a
Georgia savings and loan institution or holding company adopts a
resolution to except such thrift or holding company from being acquired
pursuant to the provisions of the Georgia Interstate Banking Act and
properly files a certified copy of such resolution with the Georgia
Department, such Georgia savings and loan institution or holding
company may not be acquired by an institution located outside of the
State of Georgia.
Savings and loan holding companies are allowed to acquire or to
retain as much as 5% of the voting shares of a savings institution or
savings and loan holding company without regulatory approval.
As of the date of this filing, the Company believes it is in
compliance with all statutes, regulations and rules promulgated or
enforced by the OTS and the Georgia Department.
Federal Securities Laws
- -----------------------
The Company is subject to various federal securities laws,
including the Securities Act of 1933 (the "1933 Act") and the Securities
Exchange Act of 1934 (the "1934 Act"). The 1933 Act regulates the
distribution or public offering of securities, while the 1934 Act regulates
trading in securities that are already issued and outstanding. Both Acts
provide civil and criminal penalties for misrepresentations and omissions
in connection with the sale of securities, and the 1934 Act also prohibits
market manipulation and insider trading.
The Company files annual, quarterly and current reports with the
Securities and Exchange Commission. In addition, the Company and its
directors, executive officers and 5% shareholders are subject to certain
additional reporting requirements, including requirements governing the
submission of proxy statements and reports of beneficial ownership of
the Company's securities.
<PAGE>
As of the date of this filing, the Company believes it is in
compliance with all statutes, regulations and rules promulgated or
enforced by the Securities and Exchange Commission.
Bank Regulation
- ---------------
The Bank is a federal savings bank organized under the laws of
the United States subject to examination by the OTS. The OTS
regulates all areas of the Bank's banking operations including reserves,
loans, mergers, payment of dividends, interest rates, establishment of
branches, and other aspects of operations.
The Bank is also insured and regulated by the Federal Deposit
Insurance Corporation (the "FDIC"). The major functions of the FDIC
with respect to insured thrift institutions include paying depositors to the
extent provided by law in the event an insured bank is closed without
adequately providing for payment of the claims of depositors and
preventing the continuance or development of unsound and unsafe
banking practices.
Subsidiary institutions of a savings and loan holding company
are subject to certain restrictions imposed by the Federal Reserve Act
on any extension of credit to the holding company or any of its
subsidiaries, on investment in the stock or other securities thereof, and
on the taking of such stock or securities as collateral for loans to any
borrower. In addition, a holding company and its subsidiaries are
prohibited from engaging in certain tie-in arrangements in connection
with any extension of credit or provision of any property or services.
As of the date of this filing, the Bank believes it is in compliance
with all statutes, regulations and rules promulgated or enforced by the
OTS, the FDIC and the Georgia Department.
Capital Requirements
- --------------------
For a detailed discussion of the Bank's capital requirements, see
"Item 6 - Management's Discussion and Analysis - Liquidity and Capital
Resources," which is incorporated by reference to the section of the
same heading in the Company's 1995 Annual Report to Shareholders.
<PAGE>
Deposit Insurance Premiums
- ---------------------------
On November 2, 1992, the FDIC adopted a new system of risk-
based insurance assessment, that went into effect in January 1993, and
on June 25, 1993, the FDIC made this system permanent effective
January 1, 1994. Under this rule, each depository institution is assigned
to one of the three groups, well-capitalized, adequately capitalized or
undercapitalized, based on its capital ratios and is further assigned to
one of three subgroups within its capital category based on an
evaluation of the risk posed by the institution to its insurance fund. In
January 1996, deposit insurance premiums for most banks insured by
the Bank Insurance Fund ("BIF") will be decreased, while those for
savings associations and federal savings banks insured by the Savings
Association Insurance Fund ("SAIF") will remain unchanged at $0.23 to
$0.31 per $100 of domestic deposits. The disparity is the result of BIF
being over capitalized and SAIF being under-capitalized. This could
change if pending legislation to recapitalized SAIF is enacted into law
(see discussion below). Under the current premium schedule, the
highest rated BIF-insured banks will pay nothing but the statutory annual
minimum fee of $2,000 for FDIC insurance, and rates for all other banks
will be reduced by $0.04 per $100. However, the FDIC has maintained
the existing range of risk-related SAIF premiums for 1996. The rule
provides that well-capitalized institutions will pay assessment rates
ranging from 23 to 29 basis points, depending upon the subgroup to
which they are assigned. Adequately capitalized institutions will pay
from 26 to 30 basis points, and undercapitalized institutions will pay from
29 to 31 basis points. The Bank is a financially sound, well-capitalized
institution which has been assigned to Subgroup 1A. Accordingly, the
Bank is assessed a deposit insurance premium of .23% per annum.
Legislation is currently being proposed in the United States
Congress, which among other things, would require members of the
Savings Association Insurance Fund (SAIF) to pay a special assessment
to recapitalize the fund and thereafter merge the SAIF into the Bank
Insurance Fund (BIF). While negotiation of specific provisions of the
proposed legislation is ongoing between the House and the Senate
Banking Committees, it is anticipated that the SAIF recapitalization will
occur in early 1996. Under the proposed legislation, SAIF members will
pay the special assessment to recapitalize their fund based on their
insured deposits held on March 31, 1995. The amount of the
assessment is to be determined by the Federal Deposit Insurance
Corporation and is expected to be approximately 85 basis points per
$100 of SAIF insured deposits. Based on the proposed legislation and
the Company's level of insured deposits held on March 31, 1995, the
Company anticipates a charge against earnings of approximately
$953,000 for the special assessment. Such charge will be recorded as
determined by the final legislation.
Insider Loans
- --------------
FDIC regulations which became effective May 18, 1992, placed
limitations on mortgage and educational loans made to executive
officers, directors and principal shareholders of bank holding companies,
national banks, and state non-member banks under the Federal
Reserve's Regulation O ("Regulation O"), and authorize such banks to
make limited "other purpose" loans to executive officers. The Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 provides
that these restrictions on extensions of credit to executive officers,
directors and principal shareholders apply to savings associations in the
same manner and to the same extent as if the savings association were
a bank.
<PAGE>
The Federal Reserve has amended Regulation O to place
ceiling restrictions on the amount and terms of the loans from a bank to
its executive officers, directors and principal shareholders, and to any
company controlled by a bank's insiders, at 100% of capital and
unimpaired surplus, with an exception in the case of banks and thrifts
with less than $100 million in assets, which may lend up to 200% of
capital and unimpaired surplus.
The Bank has not made loans to its executive officers, directors
and principal shareholders in excess of 100% of capital and unimpaired
surplus. Moreover, all extensions of credit made to insiders of the Bank
(a) are made in the ordinary course of business, (b) are made on
substantially the same terms, including interest rates and collateral, as
those prevailing at the time for comparable transactions with other
persons, (c) do not involve more than a normal risk of collectibility or
present other unfavorable features, and (d) are otherwise in compliance
with the requirements of Regulation O.
Acquisition of SAIF Institutions
- --------------------------------
The FDIC, the OCC, and the OTS have promulgated regulations
allowing Bank Insurance Fund ("BIF") institutions to consolidate or
merge with, or acquire assets or liabilities of, institutions insured by the
Savings Association Insurance Fund ("SAIF"), and vice versa. The
regulations require that the primary regulator of the acquiring, assuming,
or resulting institution approve the transaction.
CRA and Fair Lending
- --------------------
On April 19, 1995, the federal bank regulatory agencies
adopted revisions to the regulations promulgated pursuant to the
Community Reinvestment Act (the "CRA"), which are intended to set
distinct assessment standards for financial institutions. The revised
regulation contains three evaluation tests: (i) a lending test which will
compare the institution's market share of loans in low- and moderate-
income areas to its market share of loans in its entire service area and
the percentage of a bank's outstanding loans to low- and moderate-
income areas or individuals, (ii) a services test which will evaluate the
provision of services that promote the availability of credit to low- and
moderate-income areas, and (iii) an investment test, which will evaluate
an institution's record of investments in organizations designed to foster
community development, small- and minority-owned businesses and
affordable housing lending, including state and local government
housing or revenue bonds. The regulation is designed to reduce the
paperwork requirements of the current regulations and provide
regulators, institutions and community groups with a more objective and
predictable manner with which to evaluate the CRA performance of
financial institutions. The rule will be effective on January 1, 1996 at
which time evaluation under streamlined procedures will begin for
institutions with assets of less than $1 billion. Until the regulators
release guidelines for examiners that interpret the rules, it is unclear
what effect, if any, these regulations will have on the Bank.
<PAGE>
Congress and various federal agencies (including, in addition to
the bank regulatory agencies, the Department of Housing and Urban
Development, the Federal Trade Commission and the Department of
Justice) (collectively the "Federal Agencies") responsible for
implementing the nation's fair lending laws have been increasingly
concerned that prospective home buyers and other borrowers are
experiencing discrimination in their efforts to obtain loans. In recent
years, the Department of Justice has filed suit against financial
institutions, which it determined had discriminated, seeking fines and
restitution for borrowers who allegedly suffered from discriminatory
practices. Most, if not all, of these suits have been settled (some for
substantial sums) without a full adjudication of merits.
On March 8, 1994, the Federal Agencies, in an effort to clarify
what constitutes lending discrimination and to specify the factors the
agencies will consider in determining if lending discrimination exists,
announced a joint policy statement detailing specific discriminatory
practices prohibited under the Equal Credit Opportunity Act and the Fair
Housing Act. In the policy statement, three methods of proving lending
discrimination were identified: (I) overt evidence of discrimination, when
a lender blatantly discriminates on a prohibited basis, (ii) evidence of
disparate treatment, when a lender treats applicants differently based on
a prohibited factor even where there is no showing that the treatment
was motivated by prejudice or a conscious intention to discriminate
against a person, and (iii) evidence of disparate impact, when a lender
applies a practice uniformly to all applicants, but the practice has a
discriminatory effect, even where such practices are neutral on their
face and are applied equally, unless the practice can be justified on the
basis of business necessity.
Legislation
- -----------
Bills are regularly introduced in the United States Congress
which contain wide-ranging proposals for altering the structures,
regulations, and competitive relationships of the nation's financial
institutions. It cannot be predicted whether or what form any proposed
legislation will be adopted or the extent to which the business of the
Company may be affected by such legislation.
Federal Income Taxation
- -----------------------
The Bank, like other thrift institutions, is generally taxed
in the same manner as other corporations. As a "domestic building and
loan association" under the Internal Revenue Code of 1986, as amended
(the Code), however, the Bank is allowed to establish a reserve for bad
debts and is permitted to deduct additions to that reserve with respect to
"qualifying real property loans" using one of two alternative methods.
"Qualifying real property loans" are, in general, loans secured by
an interest in improved real property. For each tax year, a qualifying
thrift institution may compute the addition to its bad debt reserve for
qualifying real property loans using the most favorable of the following
two methods: (a) a method based on an institution's actual loss
experience (the experience method); or (b) a method based on a
specified percentage of an institution's taxable income (the "percentage
of taxable income method"). The addition to the reserve for non-
qualified loans (i.e., all loans other than qualifying real property loans)
must be computed under the experience method.
The deduction for reserves for bad debts otherwise allowable
under the percentage of taxable income method is eliminated entirely if
at least 60% of the thrift institution's assets do not fall into certain
designated categories. Also, the bad debt deduction determined under
the percentage of taxable income method cannot exceed the amount
necessary to increase the balance at the close of the taxable year of the
reserve for losses on qualifying real property loans to 6% of such loans
outstanding at such time. As of September 30, 1995, this ratio was less
than 6% for the Bank. In addition, the bad debt deduction is further
limited to an amount by which 12% of the savings accounts exceed the
sum of the retained earnings and reserves at the beginning of year.
<PAGE>
Under the experience method the annual bad debt reserve
deduction for qualifying real property loans is determined by reference to
the greater of a six year moving average of the Bank's actual losses or
an amount determined with respect to the Bank's bad debt reserve for a
base year.
Pursuant to the percentage of taxable income method, a
qualifying thrift institution may deduct up to a maximum of 8% of the
qualifying institution's taxable income, computed before certain
modifications and such deductions.
If the Bank's reserve for loan losses on qualifying real property
loans exceeds the amount that would have been allowed under the
experience method, and if the Bank makes distributions to its
shareholders that are considered to be withdrawals from that excess bad
debt reserve, then amounts withdrawn will be included in the Bank's
taxable income. The amount considered to be withdrawn by a
distribution will be the amount of the distribution plus the amount
necessary to pay the Bank's tax with respect to the withdrawal.
Dividends paid out of the Bank's current or accumulated earnings and
profits as calculated for federal income tax purposes will not be
considered to result in withdrawals from the Bank's bad debt reserves.
Distributions in excess of the Bank's current or accumulated earnings
and profits, distributions in redemption of stock, and distributions in
partial or complete liquidation of the Bank will be considered to result in
withdrawals from the Bank's bad debt reserves.
Depending on the composition of its items of income and
expense, a thrift institution may be subject to the corporate alternative
minimum tax. A thrift institution must pay an alternative minimum tax
equal to the amount (if any) by which 20% of the alternative minimum
taxable income (AMTI), as reduced by an exemption varying with ATMI,
exceeds the regular tax due. In general, AMTI equals regular taxable
income (adjusted as described below) increased by certain items of tax
preference, including depreciation deductions for property placed in
service before January 1, 1987 in excess of that allowable for alternative
minimum tax purposes, tax-exempt interest on most private activity
bonds issued after August 7, 1986 (reduced by any related interest
expense disallowed or regular tax purposes), and the amount of the bad
debt reserve deduction claimed in excess of the deduction that would
have been allowed under the experience method. The adjustments to
regular taxable income in determining AMTI, includes, among other
things, basing depreciation deductions on the alternative depreciation
system for property placed in service after December 31, 1986
increased by 75% of the excess of the adjusted current earnings ("ACE")
over ATMI (computed without the ACE adjustment and without the
alternative tax net operating loss adjustment). AMTI may be reduced
only up to 90% by net operating loss carryovers, but alternative
minimum tax paid can be credited against regular tax due in later years.
<PAGE>
Georgia Income Tax
- ------------------
Beginning January 1, 1984, savings institutions became subject
to standard Georgia corporate taxes which are deductible in determining
federal taxable income.
<PAGE>
Item 2. DESCRIPTION OF PROPERTIES
The executive office of the Company and Bank is located at
1703 Gloucester Street, Brunswick, Georgia 31520, and its telephone
number at that office is (912) 267-7283. The Bank also has six full-
service branch offices. The following table sets forth the addresses of
the aforementioned offices, their net book value and the expiration dates
of the leases applicable to the offices not owned by the Bank.
Effective September 22, 1995, the Bank completed the sale of
its Alma branch, which resulted in a net gain of $122,043.
Office Lease Expiration Date Net Book Value
- ------- --------------------- -------------------
Executive Office
- ----------------
1703 Gloucester Street
Brunswick, GA 31520 owned $904,694
Full Service Offices
- --------------------
Altama Avenue Office
4510 Altama Avenue
Brunswick, GA 31520 7/28/2007 ---
Demere Village
2461 Demere Road
St. Simons Island, GA
31522 owned $241,218
North Brunswick Office
2001 Commercial Drive
South
Brunswick, GA 31525 6/27/97 ---
Waycross-Plant
1010 Plant Avenue
Waycross, GA 31501 owned $206,429
Blackshear
129 Highway 82 East
Blackshear, GA 31516 owned $30,354
Hinesville
404 South Main
Hinesville, GA 3131 owned $206,430
<PAGE>
Item 3. LEGAL PROCEEDINGS
Neither the Company nor the Bank is a party to, nor is any of
their property the subject of, any material pending legal proceedings,
other than ordinary routine litigation incidental to their business, and no
such proceedings are known to be contemplated by governmental
authorities.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable
PART II
Item 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Information concerning common stock, shareholders and
dividends appears in the Annual Report under the heading "Shareholder
Information" and is incorporated by reference herein.
Item 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Management's discussion and analysis of the Company's
financial condition and its results of operations appears in the Annual
Report under the heading "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and is incorporated by
reference herein.
Item 7. FINANCIAL STATEMENTS
The consolidated financial statements of the Company and the
Bank as of September 30, 1995 and 1994 and for each of the years in
the three year period ended September 30, 1995, and the report issued
thereon by the Company's independent certified public accountants,
appear in the Annual Report and are incorporated herein by reference.
Item 8. CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
Item 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND
CONTROL PERSONS; Compliance with Section 16(a)
of the Exchange Act
Information concerning the Company's and the Bank's Directors
and Executive Officers appears in the Proxy Statement under the
heading "Election of Directors" and "Executive Officers" and is
incorporated by reference herein.
<PAGE>
Item 10. EXECUTIVE COMPENSATION
Information concerning the compensation of the Company's and
the Bank's Management appears in the Proxy Statement under the
heading "Executive Compensation" and is incorporated by reference
herein.
Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information concerning beneficial owners of more than 5% of
the Company's common stock appears in the Proxy Statement under the
heading "Ownership of Stock - Principal Holders of Stock" and is
incorporated by reference herein.
Information concerning the common stock owned by the
Company's management appears in the Proxy Statement under the
heading "Ownership of Stock - Stock Owned by Management" and is
incorporated by reference herein.
Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information concerning certain relationships and related
transactions appears in the Proxy Statement under the heading
"Executive Compensation - Certain Other Transactions" and is
incorporated by reference herein.
Item 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The list of documents set forth on the Exhibit Index that
immediately follows the last signature page hereof is
incorporated herein by reference, and such documents are filed as
exhibits to this report on Form 10-KSB.
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the year ended
September 30, 1995.
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
FIRST GEORGIA HOLDING, INC.
(Registrant)
BY: HENRY S. BISHOP
Henry S. Bishop
President
Date: DECEMBER 29, 1995
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person
whose signature appears below constitutes and appoints Henry S.
Bishop and G.F. Coolidge III, and each of them, the person's attorneys-
in-fact, each with full power of substitution, for the person in his or her
name, place and stead, in any and all capacities, to sign any
amendment to this Report on form 10-KSB, and to file the same, with
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission and hereby ratifies and confirms
all that each of said attorneys-in-fact, or his or her substitute or
substitutes, may do or cause to be done by virtue hereof.
<PAGE>
In accordance with the Securities Exchange Act of 1934, this report has
been signed by the following persons on behalf of the Registrant in the
capacities and on the dates indicated.
Signatures Title Date
- ------------- ------------- ------------
HENRY S. BISHOP President and Director
Henry S. Bishop (principal executive officer) December 29, 1995
B.W. BOWIE Director December 29, 1995
B.W. Bowie
TERRY DRIGGERS Director December 29, 1995
Terry Driggers
ROY K. HODNETT
Roy K. Hodnett Director December 29, 1995
HUBERT W. LANG, JR.
Hubert W. Lang, Jr. Director December 29, 1995
E. RAYMOND MOCK
E. Raymond Mock Director December 29, 1995
JAMES D. MOORE
James D. Moore Director December 29, 1995
D. LAMONT SHELL
D. Lamont Shell Director December 29, 1995
G.F. COOLIDGE III
G.F. Coolidge III Chief Financial Officer
(principal financial and
accounting officer) December 29, 1995
<PAGE>
EXHIBIT INDEX
Exhibit No. Document Sequentially Numbered
- ------------ ---------------- ---------------------
Page
----------
3.(i) Articles of Incorporation of First
Georgia Holding, Inc. incorporated
herein by reference to Appendix B to
the Proxy Statement and Prospectus
included in the Registration Statement
on Form S-4 (SEC No. 33-19150),
filed December 18, 1987 ("Form S-4"),
as amended on December 31, 1987
("Amendment No. 1") First Georgia
Savings Bank, F.S.B. is now known as
First Georgia Bank, F.S.B N/A
3.(ii) Amended By-Laws of First Georgia
Holding, Inc. incorporated by reference
to Exhibit 3(ii) of the Form 10-KSB for
the year ended September 30, 1994
(the "1994 10-KSB") N/A
*10.1 First Georgia Holding, Inc. 1995 Stock [Appendix A
Incentive Plan of the Proxy
Statement]
*10.2 First Georgia Holding, Inc. Employee [Appendix B
Stock Purchase Plan of the Proxy
Statement]
*10.3 Qualified 401 (k) Standardized Profit
Sharing Plan, Adoption Agreement,
First Georgia Savings Bank, F.S.B.,
incorporated herein by reference to
Exhibit 10.3 of the Form 10-K for the
year ended September 30, 1992 (the
"1992 10-K") N/A
*10.4 Qualified Retirement Plan, Basic Plan
Document, First Georgia Savings
Bank, F.S.B., incorporated herein by
reference to Exhibit 10.4 of the 1992
10-K N/A
<PAGE>
13 First Georgia Holding, Inc. 1995
Annual Report 41
21 Subsidiaries of First Georgia Holding,
Inc. incorporated by reference to
Exhibit 21.6 of the Form 10-KSB for
the year ended September 30, 1993
(the "1993 10-KSB) N/A
23 Consent of KPMG Peat Marwick LLP 42
24 A Power of Attorney is set forth on the
signature pages to this Form 10-KSB 37
99.1 The Company's Proxy Statement for
the Annual Meeting of Shareholders
(the "Proxy")to be held January 22,
1996, incorporated by reference to the
Proxy filed December 14, 1995. N/A
* The indicated exhibit is a compensatory plan required to be filed as an
exhibit to this Form 10-KSB.6
ANNUAL REPORT
FIRST GEORGIA:
ITS MISSION AND MARKETS
First Georgia Holding, Inc. owns 100% of the stock of First Georgia
Bank, F.S.B. The Bank is federally chartered and began operations
in January 1984. First Georgia develops and provides a full range
of financial services encompassing retail banking, real estate,
commercial and consumer lending, and a host of related financial
products. With the opening of a new branch in October 1995, the
Bank currently operates seven full service offices in four Georgia
counties.
First Georgia's PRIMARY MISSION is to maximize stockholder
value in a prudent manner. We will concentrate on the following
principles.
We will maintain high levels of asset quality through conservative
lending policies, a vigorous comprehensive credit administration
system and a diversified portfolio of earning assets. Interest rate
risk will be thoroughly evaluated and controlled.
Our long-term goals for return on equity and assets will be set at
the upper levels of peer bank comparisons. We will strive to
maintain a strong capital base supported by adequate loan loss
reserves.
We will continue to attract and retain exceptional people. We will
deliver the best quality customer service available in the banking
industry. This high level of personal service is what separates us
from our competitors.
Our officers and employees will be encouraged to provide
leadership and support in civic and economic development
activities. We will also strive to assess and serve the credit needs
of each community in which we are located.
We are committed to the overall success of First Georgia. The
proper implementation of these principles will continue to
maximize the value of the Company.
<PAGE>
PRESIDENT'S MESSAGE
Dear Stockholders:
It gives me a great deal of pleasure to report the results of our
performance this past year. Net Income was $1,277,088 compared to
$1,062,177 last year. This represents a 20% increase over last year and
the most profitable year in the history of our Company.
The strengthening of our net interest margin and the continued pressure
on controlling expenses were primary factors leading to our increased
profitability.
We continue to have exciting things happening at First Georgia. A
major event occurred this year when we opened a new full service
office on Highway 341 west of Brunswick under the capable leadership
of Fred Alexander. We expect this office to be one of the most
profitable in our system. This new office will serve a large number of
Glynn County families that have not previously had a convenient
financial institution.
I am pleased to have had Elzie Jacobs come on board to manage the
Altama Office in September of this year. Elzie brings with him thirty-two
years of lending experience in Glynn County. We are excited about the
contribution he will make to our Bank.
I am also pleased to report that on December 15, 1995 the Board of
Directors declared a $0.10 per share dividend which represents a 67%
increase over the dividend we paid last year. This dividend was paid to
shareholders of record as of December 1, 1995.
As you can see our Company is doing extremely well even in the face of
increased intense competition. I feel as though we have the finest staff
of professionals in our area committed to providing the best financial
services available anywhere.
Please accept my thanks for your continued support of First Georgia as
we look forward to the challenges ahead for 1996.
Sincerely,
HENRY S. BISHOP
Henry S. Bishop
President
<PAGE>
On this page in the Annual Report to Shareholders, four graphs are
displayed representing the following financial data in approximately the
same location.
Net Income
1993 $ 878,393
1994 1,062,177
1995 1,277,088
Return on Average Assets Dividend to Stockholders
1993 0.64% 1993 $43,972
1994 0.79% 1994 61,560
1995 0.95% 1995 79,598
Stockholders' Equity
1993 $ 8,899,379
1994 9,927,496
1995 11,124,086
<PAGE>
FIRST GEORGIA HOLDING, INC.
C O N S O L I D A T E D
F I N A N C I A L
S T A T E M E N T S
September 30, 1995 and 1994 (With Independent Auditors' Report Thereon)
<PAGE>
<TABLE>
CONSOLIDATED BALANCE SHEETS
First Georgia Holding, Inc. and subsidiary
<CAPTION>
September 30,
Assets --------------------------------------
1995 1994
---------------- -----------
<S> <C> <C>
Cash and cash equivalents $ 2,543,495 3,321,182
Interest bearing deposits in other banks 2,352,183 716,884
Investment securities to be held to
maturity, fair value approximately
$9,069,000 and $7,331,000 at
September 30, 1995 and 1994,
respectively (note 2) 9,180,978 7,510,798
Loans receivable, net (notes 3 and 8) 110,432,233 113,578,674
Real estate acquired in settlement of loans 206,334 240,281
Federal Home Loan Bank stock, at
cost (notes 6 and 8) 1,575,700 1,575,700
Premises and equipment, net (note 4) 3,388,207 3,795,769
Accrued interest receivable (note 5) 751,108 751,217
Intangible assets, net (note 10) 1,408,268 1,680,710
Other assets 903,891 698,815
------------ ----------
Total Assets $132,742,397 133,870,030
Liabilities and Stockholders' Equity
Liabilities:
Deposits (note 7) $106,527,689 103,407,455
Federal Home Loan Bank advances (note 8) 11,948,000 16,748,000
Advance payments by borrowers for property
taxes and insurance 90,238 82,001
Other borrowed money (note 9) 192,000 1,240,000
Accrued expenses and other
liabilities (notes 7, 12, and 13) 2,859,484 2,465,078
------------ -----------
Total liabilities 121,617,411 123,942,534
------------ -----------
Stockholders' Equity (notes 11, 12, and 18):
Common stock, $1.00 par value. Authorized
15,000,000 shares; issued and outstanding
1,326,641 shares 1,326,641 1,326,641
Additional paid-in capital 5,786,164 5,786,164
Retained earnings 4,012,181 2,814,691
---------- ------------
Total stockholders' equity 11,124,986 9,927,496
---------- ------------
Commitments and contingencies (notes 3, 11, 13, and 19)
Total Liabilities and
Stockholders' Equity $132,742,397 133,870,030
=========== ===========
<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF OPERATIONS
First Georgia Holding, Inc., and subsidiary
<CAPTION>
Years Ended September 30,
-------------------------
1995 1994 1993
------------ ---------- ---------
<S> <C> <C> <C>
Interest Income:
Loans $ 10,871,713 9,714,327 10,376,344
Mortgage-backed securities 29,920 37,607 65,085
Investment securities 477,089 319,418 222,053
Other 247,615 141,845 144,055
---------- --------- ----------
Total interest income 11,626,337 10,213,197 10,807,537
---------- ---------- ----------
Interest Expense:
Deposits (note 7) 5,345,453 4,486,147 4,943,076
Advances and other borrowings 1,061,904 1,057,594 1,096,303
---------- ---------- ----------
Total interest expense 6,407,357 5,543,741 6,039,379
---------- ---------- ----------
Net interest income 5,218,980 4,669,456 4,768,158
Provision for Loan Losses (note 3) 214,142 39,000 171,000
--------- --------- ---------
Net interest income after provision for
loan losses 5,004,838 4,630,456 4,597,158
--------- --------- ---------
Other Income:
Loan fees 451,199 422,821 276,996
Deposit service charges 601,059 625,944 748,859
Gain on sale of branch (note 14) 122,043 - -
Other operating income 94,515 149,254 69,414
--------- --------- ---------
Total other income 1,268,816 1,198,019 1,095,269
--------- --------- ---------
Other Expenses:
Salaries and employee benefits (note 15) 1,932,837 1,979,302 1,861,124
Net occupancy expense 904,659 857,201 747,077
Data processing 15,143 16,093 51,067
Amortization of intangibles 143,304 143,304 161,828
Loss on sale of foreclosed property 17,969 52,821 44,498
Loss on sale of premises and equipment - - 390,402
Federal insurance premiums 281,033 267,500 300,000
Other operating expenses 929,306 925,238 1,039,038
--------- --------- ---------
Total other expenses 4,224,251 4,241,459 4,595,034
--------- --------- ---------
Income before income taxes
and cumulative effect of a change
in accounting principle 2,049,403 1,587,016 1,097,393
Income Tax Expense (note 12) 772,315 524,839 435,000
--------- --------- ---------
Income Before Cumulative Effect
of a Change In Accounting Principle 1,277,088 1,062,177 662,393
Cumulative effect at October 1, 1992
of a change in accounting for income
taxes (note 12) -- -- 216,000
--------- --------- ---------
Net Income $ 1,277,088 1,062,177 878,393
Income per share before cumulative
effect of a change in accounting principle $ 0.94 0.78 0.50
Cumulative effect of change in
accounting principle - - 0.17
---------- -------- -----
Net income per share and common share
equivalent (note 17) $ 0.94 0.78 0.67
============ ====== =====
Weighted average common shares
outstanding and common share equivalents 1,362,596 1,364,911 1,319,141
<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
First Georgia Holding, Inc., and subsidiary
<CAPTION>
Years Ended September 30, 1995, 1994, and 1993
----------------------------------------------
Additional
Common Paid-in Retained
Stock Capital Earnings Total
------- ---------- -------- -------
<S> <C> <C> <C> <C>
Balance, September 30, 1992 $ 1,319,141 5,766,164 979,653 8,064,958
Net income - - 878,393 878,393
Cash dividends, $.05 per share - - (43,972) (43,972)
----------- --------- ---------- ---------
Balance, September 30, 1993 1,319,141 5,766,164 1,814,074 8,899,379
Exercise of stock
options (note 16) 7,500 20,000 - 27,500
Net income - - 1,062,177 1,062,177
Cash dividends, $.07 per share - - (61,560) (61,560)
----------- -------- ---------- ---------
Balance, September 30, 1994 1,326,641 5,786,164 2,814,691 9,927,496
Net Income - - 1,277,088 1,277,088
Cash dividends, $.06 per share - - (79,598) (79,598)
----------- --------- --------- ---------
Balance, September 30, 1995 $ 1,326,641 5,786,164 4,012,181 11,124,986
=========== ========= ========= ==========
<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
First Georgia Holding, Inc. and subsidiary
<CAPTION>
Years Ended September 30,
1995 1994 1993
----------- --------- --------
<S> <C> <C> <C>
Operating Activities
Net income $ 1,277,088 1,062,177 878,393
Adjustments to reconcile net
income to net cash provided by
operating activities:
Provision for loan losses 214,142 39,000 171,000
Depreciation and amortization,
net of accretion 425,849 413,326 401,094
Amortization of intangibles 143,304 143,304 161,828
Amortization of deferred loan fees (106,755) (161,878) (176,336)
Federal Home Loan Bank stock dividends - (38,600) (87,200)
Gain on sale of branch (122,043) - -
Loss on sale of premises and equipment - - 390,402
Loss on sale of real estate acquired in
settlement of loans 17,969 52,821 44,498
Deferred income tax expense 29,959 31,173 10,000
(Increase) Decrease in accrued
interest receivable (20,244) 124,365 218,244
(Increase) Decrease in other assets (205,076) (151,062) 148,314
Increase (Decrease) in advance payments
by borrowers for property taxes and
insurance 8,237 (39,664) (141,840)
Increase in accrued expenses and other
liabilities 364,447 351,834 249,373
--------- --------- ----------
Net cash provided by
operating activities 2,026,877 1,826,796 2,267,770
--------- --------- ---------
Investing Activities
Principal payments received on
mortgage-backed securities 311,364 422,510 457,273
Maturities of investment securities 1,000,000 - 3,000,000
Purchase of investment securities (3,030,598) (916,030) (3,592,472)
Loan originations, net of principal
repayments (1,575,594) (99,718) 3,723,981
Purchase of premises and equipment (260,405) (74,375) (578,384)
Proceeds from sale of real estate
acquired in settlement of loans 1,380,599 397,314 1,034,372
Proceeds from sale of premises and
equipment 21,008 152,307 44,317
---------- -------- ---------
Net cash (used in) provided by
investing activities $ (2,153,626) (117,992) 4,089,087
---------- ------- ---------
<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS (Cont'd.)
First Georgia Holding, Inc. and subsidiary
<CAPTION>
Years Ended September 30,
-------------------------
1995 1994 1993
----------- ----------- ----------
<S> <C> <C> <C>
Financing Activities
Net increase (decrease) in deposits $ 9,780,378 (2,845,978) (9,284,595)
Net liabilities of branch assumed by
purchaser, net of gain (2,868,419) - -
(Repayments of) Proceeds from other
borrowed money (1,048,000) 940,000 200,000
Proceeds from FHLB advances 4,000,000 7,800,000 6,270,000
Repayment of FHLB advances (8,800,000) (6,500,000) (4,620,000)
Net proceeds from exercise of
stock options - 27,500 -
Dividends paid (79,598) (61,560) (43,972)
--------- ---------- ---------
Net cash provided by (used in)
financing activities 984,361 (640,038) (7,478,567)
--------- --------- ---------
Increase (decrease) in cash and
cash equivalents 857,612 1,068,766 (1,121,710)
Cash and cash equivalents
at beginning of year 4,038,066 2,969,300 4,091,010
---------- ---------- ---------
Cash and cash equivalents
at end of year $ 4,895,678 4,038,066 2,969,300
========= ========= =========
Supplemental disclosure of cash paid
during year for:
Interest $ 6,252,000 5,654,000 5,759,000
Income taxes $ 538,000 978,000 84,000
=========== ========= =========
</TABLE>
Supplemental disclosure of non-cash investing activities:
Loans receivable of approximately $1,365,000, $191,000, and
$1,414,000 were transferred to real estate acquired in settlement of
loans during the years ended September 30, 1995, 1994, and 1993,
respectively.
During the year ended September 30, 1995, there were no sales of real
estate acquired in settlement of loans which were financed by loans from
the Bank. Sales of real estate acquired in settlement of loans totaling
approximately $127,000 and $409,000 for the years ended September
30, 1994 and 1993, respectively, were financed by the Bank.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
First Georgia Holding, Inc. (the Company) was incorporated on
December 16, 1987 for the purpose of acquiring all of the issued and
outstanding stock of First Georgia Bank, F.S.B. (the Bank). The
accounting and reporting policies of First Georgia Holding, Inc. and
subsidiary conform to generally accepted accounting principles. The
following is a description of the more significant of those policies which
the Company follows in preparing and presenting its consolidated
financial statements.
(A) PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the
Company and the Bank. All significant intercompany balances and
transactions have been eliminated in consolidation.
(B) INVESTMENT SECURITIES TO BE HELD TO MATURITY
Effective September 30, 1994, the Company adopted Statement of
Financial Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities" (Statement 115). Under
Statement 115, the Company has classified all its securities as held to
maturity securities. Held to maturity securities are those securities that
the Company has the positive ability and intent to hold until maturity.
Held to maturity securities are recorded at amortized cost adjusted for
the amortization or accretion of premiums and discounts. Premiums
and discounts are amortized or accreted over the life of the related
investment security using a method which approximates level yield.
(C) LOANS AND THE ALLOWANCE FOR LOAN LOSSES
The Bank extends credit to customers throughout its market area with a
concentration in real estate mortgage loans. The real estate loan
portfolio is substantially secured by properties located throughout
Southeast Georgia. Although the Bank has a diversified loan portfolio, a
substantial portion of its borrowers' ability to repay such loans is
dependent upon the economy in the Bank's market area.
Additions to the allowance for loan losses are charged to operations
based upon management's evaluation of the potential losses in its loan
portfolio. This evaluation considers the estimated value of the
underlying collateral and such other factors as, in management's
judgment, deserve recognition under existing economic conditions.
While management uses the best information available to make
evaluations, future adjustments to the allowance may be necessary if
conditions differ substantially from the assumptions used in making the
evaluations. In addition, various regulatory agencies, as an integral part
of their examination process, periodically review the Bank's allowances
for losses on loans and real estate acquired in settlement of loans. Such
agencies may require the Bank to recognize additions to the allowances
based on their judgments of information available to them at the time of
their examination.
Interest income on loans is recognized on a level yield basis. Interest
accrual is discontinued when a loan becomes 90 days delinquent unless,
in management's opinion, the loan is well secured and is in process of
collection.
(D) LOAN ORIGINATION AND COMMITMENT FEES
Loan origination fees, net of certain direct origination costs, are deferred
and amortized on a basis that approximates level yield over the
contractual lives of the underlying loans. In addition, fees for a
commitment to originate or purchase loans are offset against direct loan
origination costs incurred to make such commitments. The net amounts
are deferred and, if the commitment is exercised, recognized over the
life of the related loan as a yield adjustment or, if the commitment
expires unexercised, recognized as income upon expiration of the
commitment.
<PAGE>
(E) REAL ESTATE ACQUIRED IN SETTLEMENT OF LOANS
Real estate acquired in settlement of loans represents real estate
acquired through foreclosure and is reported at lower of cost or fair
value, adjusted for estimated selling costs. Fair value is determined on
the basis of current appraisals, comparable sales, and other estimates of
value obtained principally from independent sources. Any excess of the
loan balance at the time of foreclosure over the fair value of the real
estate held as collateral is recorded as a loan loss. Gain or loss on sale
and any subsequent permanent decline in fair value is recorded in
income.
(F) PREMISES AND EQUIPMENT
Premises and equipment are carried at cost less accumulated
depreciation. Depreciation is provided on a straight-line basis over the
estimated useful lives of the related assets.
(G) INCOME TAXES
The Company files consolidated income tax returns with its subsidiary.
In February 1992, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standards 109, "Accounting
for Income Taxes" (Statement 109). Statement 109 required a change
from the deferred method of accounting for income taxes to the asset
and liability method. Under the asset and liability method of Statement
109, deferred tax assets and liabilities are recognized for the temporary
differences between the financial reporting basis and the tax basis of the
Company's assets and liabilities at enacted tax rates expected to be in
effect when such amounts are realized or settled. Under Statement 109,
deferred tax assets and liabilities are adjusted for the effect of changes
in tax rates in the period of change.
Effective October 1, 1992, the Company adopted Statement 109 and
has reported the cumulative effect of that change in the method of
accounting for income taxes in the fiscal 1993 consolidated statement of
operations.
(H) STATEMENT OF CASH FLOWS
For the purposes of the statement of cash flows, the Company considers
cash on hand and in banks and investments with a maturity of three
months or less, at purchase, to be cash equivalents.
(I) RECENT ACCOUNTING PRONOUNCEMENTS
In December 1991, the FASB issued Statement Of Financial Accounting
Standards No. 107 (SFAS 107), "Disclosures About Fair Value of
Financial Instruments," which requires all entities
to disclose the fair value of financial instruments, both assets and
liabilities recognized and not recognized in the statement of financial
position, for which it is practicable to estimate fair value.
The provisions of SFAS 107 are effective for financial statements issued
by the Company for fiscal years ending after December 15, 1995.
During 1993, the FASB issued SFAS 114, "Accounting by Creditors for
Impairment of a Loan". In 1994 the FASB issued SFAS 118,
"Accounting by Creditors for Impairment of a Loan-Income Recognition
and Disclosures," which amends certain provisions of SFAS 114. SFAS
114 and 118 require impaired loans to be measured based on the
present value of expected future cash flows, discounted at the loan's
effective interest rate, or at the loan's observable market price, or the
fair value of the collateral if the loan is collateral dependent, beginning in
fiscal 1996. SFAS 114 and 118 may be adopted prior to fiscal 1996,
and the initial adoption is required to be reflected prospectively. The
Company did not elect early adoption of SFAS 114 and 118 and has not
yet determined the actual impact of SFAS 114 and 118 on its financial
statements. However, based on the Company's current accounting
policies, the impact of SFAS 114 and 118 is not anticipated to be
significant.
<PAGE>
(2) INVESTMENT SECURITIES
Investment securities to be held to maturity consist of the following:
Approximate
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
--------- ----------- ---------- -----------
September 30, 1995:
U.S. Government
Agencies $ 8,393,161 29,449 193,754 8,228,856
Mortgage-backed
securities - SBA 787,817 52,605 - 840,422
----------- ------ -------- ---------
$ 9,180,978 82,054 193,754 9,069,278
=========== ====== ======= =========
Approximate
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
--------- ---------- ---------- -----------
September 30, 1994:
U.S. Government
Agencies $ 6,506,427 - 254,245 6,252,182
Mortgage-backed
securities - SBA 1,004,371 74,557 - 1,078,928
----------- ------- ------- ---------
$ 7,510,798 74,557 254,245 7,331,110
=========== ====== ======= =========
A summary of investment and mortgage-backed securities by maturity
as of September 30, 1995 follows:
Approximate
Amortized Fair
Cost Value
--------- -----------
Within 1 Year $ 100,000 100,300
After 1 Year through 5 Years 4,598,377 4,436,290
After 5 Years through 10 Years 787,817 840,422
After 10 Years 3,694,784 3,692,266
--------- ---------
$9,180,978 9,069,278
========== =========
The Company did not sell any investments during 1995, 1994, or 1993.
At September 30, 1995 and 1994, the Company had pledged
$5,095,000 and $2,865,000, respectively, of its U.S. Government
Agency securities to government and municipal depositors.
<PAGE>
(3) LOANS RECEIVABLE
Loans receivable at September 30, are summarized as follows:
1995 1994
------------- ---------------
Real estate mortgage loans $ 91,663,176 95,184,585
Real estate construction loans 7,605,089 4,660,405
Consumer loans 9,093,850 10,443,868
Commercial and other loans 6,041,835 5,488,650
----------- -----------
114,403,950 115,777,508
Less:
Undisbursed portion of loans in process 2,868,215 962,728
Deferred loan fees 59,500 201,143
Unearned interest income 40,433 51,905
Allowance for loan losses 1,003,569 983,058
----------- -----------
$110,432,233 113,578,674
============ ===========
An analysis of the activity in the allowance for loan losses is as follows:
1995 1994 1993
---------- ---------- ----------
Balance at beginning of year $ 983,058 968,784 1,040,196
Provision for loan losses 214,142 39,000 171,000
Recoveries 84,482 113,055 208,971
Losses charged to allowance (278,113) (137,781) (451,383)
--------- ---------- -----------
Balance at end of year $1,003,569 983,058 968,784
========= ========== ==========
As of September 30, 1995 and 1994, outstanding loan commitments,
exclusive of the undisbursed portion of loans in process amounted to
approximately $100,000 and $3,347,000 respectively, with variable
interest rates and $1,460,000 and $304,000, respectively, in fixed
interest rates. The Bank is also committed to extend standby letters of
credit amounting to approximately $572,000 and $205,000, respectively,
at September 30, 1995 and 1994. In addition, customers of the Bank
have the ability to borrow approximately $974,000 and $1,032,000,
respectively at September 30, 1995 and 1994, under existing credit card
agreements. It is the opinion of management that such commitments do
not involve more than the normal risk of loss.
At September 30, 1995 and 1994, the Bank had nonaccrual loans
aggregating approximately $2,061,000 and $2,539,000, respectively.
The effects of carrying nonaccrual loans during 1995, 1994, and 1993
resulted in a reduction of interest income of approximately $91,000,
$119,000, and $126,000, respectively.
At September 30, 1995 and 1994, the Bank had no loans held for sale.
<PAGE>
(3) LOANS RECEIVABLE (CONT'D)
The Bank has made loans in the normal course of business to directors
and executive officers for various purposes. These loans have been
made on substantially the same terms, including interest rate and
collateral, as those prevailing at the time for comparable transactions
with other persons, and did not involve more than the normal credit risk
or present other unfavorable features. The following sets forth
information regarding loans receivable from directors and executive
officers:
Balance at September 30, 1994 $ 3,728,020
Net increase in balance due to changes
in directors 1,390,410
Repayments (3,422,458)
New borrowings 2,742,769
-------------
Balance at September 30, 1995 $ 4,438,741
=============
As of September 30, 1995, 1994, and 1993, the Bank was servicing
loans for others aggregating approximately $7,346,000, $3,205,000, and
$4,779,000, respectively.
(4) PREMESIS AND EQUIPMENT
Premises and equipment at September 30 are summarized as follows:
1995 1994
--------------- -----------
Land $ 730,464 711,956
Buildings and improvements 2,083,675 2,239,907
Building under capital lease 372,902 372,902
Furniture, equipment, and automobiles 2,185,636 2,141,683
------------ -----------
5,372,677 5,466,448
Less accumulated depreciation
and amortization 1,984,470 1,670,679
----------- ---------
Premises and equipment, net $ 3,388,207 3,795,769
======== =========
(5) ACCRUED INTEREST RECEIVABLE
Accrued interest receivable at September 30 is summarized as follows:
1995 1994
------------ ------------
Loans 690,731 705,604
Investment securities 53,331 31,062
Mortgage-backed securities 7,046 14,551
---------- ----------
751,108 751,217
========== ==========
(6) INVESTMENTS REQUIRED BY LAW
Investment in stock of a Federal Home Loan Bank is carried at cost and
is required of those institutions who utilize its services. No ready
market exists for the stock, and it has no quoted market value.
<PAGE>
(7) DEPOSITS
Deposits are summarized at September 30 as follows:
<TABLE>
<CAPTION>
1995 1994
------------------- ---------------
Weighted Weighted
Balance Average Rate Balance Average Rate
---------- ------------- ---------- ------------
<S> <C> <C> <C> <C>
Negotiable orders of withdrawal $ 16,208,479 2.41% 18,879,802 2.31%
Money market deposit accounts 2,344,735 2.78% 4,105,715 2.48%
Savings deposits 4,713,420 2.45% 6,121,921 2.38%
Time deposits:
Six-month money market certificates 3,558,025 3.45% 5,578,481 2.87%
Certificates greater than
six months 67,172,895 6.17% 57,502,072 5.44%
Jumbo certificates 12,530,135 5.34% 11,219,464 4.71%
----------- ------ ----------- -------
106,527,689 5.14% 103,407,455 4.45%
=========== ====== =========== ======
Interest expense on deposits is summarized as follows:
1995 1994 1993
-------------- -------------- -----------
Negotiable orders of withdrawal $ 329,557 335,806 411,676
Money market deposit accounts 86,840 113,324 165,569
Savings deposits 132,734 138,543 166,608
Time deposits:
Six-month money market certificates 186,451 171,095 253,557
Certificates greater than six months 3,928,004 3,194,256 3,247,755
Jumbo certificates 710,217 556,200 721,765
--------- --------- ----------
5,373,803 4,509,224 4,966,930
Less:
Early withdrawal penalties 28,350 23,077 23,854
--------- --------- ---------
$ 5,345,453 4,486,147 4,943,076
========== ========= =========
</TABLE>
Eligible deposit accounts are insured up to $100,000 by the Savings
Association Insurance Fund (SAIF) of the Federal Deposit Insurance
Corporation (FDIC).
Legislation is currently being proposed in the United States Congress,
which among other things, would require members of the Savings
Association Insurance Fund (SAIF) to pay a special assessment to
recapitalize the fund and thereafter merge the SAIF into the Bank
Insurance Fund (BIF). While negotiation of specific provisions of the
proposed legislation is ongoing between the House and the Senate
Banking Committees, it is anticipated that the SAIF recapitalization will
occur in early 1996. Under the proposed legislation, SAIF members will
pay the special assessment to recapitalize their fund based on their
insured deposits held on March 31, 1995. The amount of the
assessment is to be determined by the Federal Deposit Insurance
Corporation and is expected to be approximately 85 basis points per
$100 of SAIF insured deposits. Based on the proposed legislation and
the Company's level of insured deposits held on March 31, 1995, the
Company anticipates a charge against earnings of approximately
$953,000 for the special assessment. Such charge will be recorded as
determined by the final legislation.
At September 30, 1995 the rates on deposits were as follows:
Negotiable order of withdrawal 2.5 %
Money market deposit account 2.8
Savings account 2.6
Time deposits 2.75-9.0
<PAGE>
7) DEPOSITS (CONT'D)
Accrued interest payable on all deposits at September 30, 1995 and
1994 was $527,338 and $371,928, respectively, and is included in
accrued expenses and other liabilities in the accompanying consolidated
financial statements.
As of September 30, 1995, and 1994, the Bank had no brokered
deposits.
The amount and maturities of all time deposits at September 30, 1995
are as follows:
Year ending
September 30, Amount
- ---------------------- -------------
1996 $ 45,124,810
1997 20,022,547
1998 9,696,581
1999 6,929,930
2000 1,467,459
After 2000 19,728
------------------
$ 83,261,055
==========
(8) FEDERAL HOME LOAN BANK ADVANCES
Advances from the Federal Home Loan Bank at September 30 are
summarized as follows:
Due during
year ending Interest
September 30, Rates 1995 1994
- -------------------- --------------------- --------------- -----------
1995 4.78% to 6.25% $ -- 5,300,000
1996 4.98% to 8.55% 4,448,000 4,948,000
1997 4.93% to 8.45% 4,000,000 3,500,000
1998 5.43% to 7.27% 2,000,000 1,500,000
1999 6.76% 1,000,000 1,000,000
2002 7.90% 500,000 500,000
--------------- ------------
$11,948,000 16,748,000
=============== ===========
The weighted average interest rate on Federal Home Loan Bank
advances was 7.10% and 6.58% at September 30, 1995 and 1994,
respectively.
The Bank has the ability to borrow additional funds from the Federal
Home Loan Bank. The advances and any future borrowings are
collateralized by certain qualifying real estate loans under a security
agreement with the Federal Home Loan Bank. Additionally, all stock of
the Federal Home Loan Bank is pledged as collateral for the advances.
(9) OTHER BORROWED MONEY
The Company has a $1.0 million revolving line of credit with a financial
institution expiring in May 1998 at an interest rate of prime plus one-half
percent. The Company has pledged the outstanding stock of the Bank as
collateral for the line of credit. At September 30, 1995 and 1994,
$192,000 and $240,000, respectively, were outstanding.
On September 14, 1994 the Company sold securities under an
agreement to repurchase the same securities. The securities sold were
FNMA and FHLB floating rate notes which were carried at a book value
of $1,055,000 and a market value of $1,007,250, plus approximately
$7,200 of accrued interest receivable at September 30, 1994. The
agreement, which was for $1 million at a rate of 6%, matured and was
settled on October 28, 1994. At no point during the agreement did the
Company relinquish any control of the underlying securities.
<PAGE>
(10) INTANGIBLE ASSETS
Intangible assets at September 30 are summarized as follows:
1995 1994
------------------ ---------------
Customer deposit base $ 1,964,909 2,131,902
Cost in excess of net
assets acquired 615,847 668,581
----------------- -------------
2,580,756 2,800,483
Less accumulated
amortization 1,172,488 1,119,773
----------------- -------------
$ 1,408,268 1,680,710
================= =============
In fiscal year 1988, the Company acquired eight branches of another
financial institution. The acquisition was accounted for using the
purchase method of accounting and resulted in cost (fair value of
liabilities assumed) in excess of tangible net assets acquired of
$3,435,970, of which $2,614,708 has been allocated to the customer
deposit base and $821,262 to cost in excess of assets acquired. Such
amounts are being amortized on a straight-line method over the
estimated life (19 years) of the customer deposit base acquired. Four of
the previously eight acquired branches have been sold, three in 1991
and one in 1995. Accordingly, the unamortized intangible assets
associated with the sold branches were expensed upon sale.
(11) STOCKHOLDER'S EQUITY AND REGULATORY MATTERS
The Federal Deposit Insurance Corporation Improvement Act of 1991
(FDICIA) was signed into law on December 19, 1991. Regulations
implementing the prompt corrective action provisions of FDICIA became
effective on December 19, 1992. In addition to the prompt corrective
action requirements, FDICIA includes significant changes to the legal
and regulatory environment for insured depository institutions including
reductions in insurance coverage for certain kinds of deposits, increased
supervision by the Federal regulatory agencies, increased reporting
requirements for insured institutions, and new regulations concerning
internal controls, accounting and operations.
The prompt corrective action regulations define specific capital
categories based on an institution's capital ratios. The capital
categories, in declining order, are "well capitalized," "adequately
capitalized," "undercapitalized," "significantly undercapitalized," and
"critically undercapitalized." Institutions categorized as
"undercapitalized" or worse are subject to certain restrictions, including
the requirement to file a capital plan with its primary Federal regulator,
prohibitions on the payment of dividends and management fees,
restrictions on executive compensation, and increased supervisory
monitoring, among other things. Other restrictions may be imposed on
the institution either by its primary Federal regulator or by the Federal
Deposit Insurance Corporation, including requirements to raise
additional capital, sell assets, or sell the entire institution. Once an
institution becomes "critically undercapitalized," it must generally be
placed in receivership or conservatorship within 90 days.
To be considered "well capitalized," an institution must generally have a
leverage ratio of at least 5%, a Tier 1 risk-based capital ratio of at least
6%, and a total risk-based capital ratio of at least 10%. An institution is
deemed to be "critically undercapitalized" if it has a tangible equity ratio
of 2% or less.
While the Office of Thrift Supervision (OTS) and the Financial
Institutions Reform Recovery and Enforcement Act of 1989 (FIRREA)
minimum capital requirements were not changed by FDICIA, an OTS
regulated thrift rating will be determined using thresholds associated with
the above capital categories. OTS minimum capital requirements are
1.5% tangible capital, 3% core capital, and 8% risk-based capital.
Therefore, an OTS-regulated thrift could meet all three of its OTS
minimum capital requirements yet still be "undercapitalized" for
purposes of prompt corrective action under FDICIA.
<PAGE>
(11) STOCKHOLDERS' EQUITY AND REGULATORY MATTERS (CONT'D)
At September 30, 1995, the Bank was in compliance with all such capital
requirements. The following table summarizes the regulatory capital
requirements and the Bank's regulatory capital at September 30, 1995.
Minimum required
regulatory capital
Regulatory Capital under FIRREA
---------------------- ------------------------
% of %of
Amount assets Amount assets
----------- ------ ---------- -----------
Tangible $ 9,902,000 7.54% 1,991,000 1.50%
Core 11,310,000 8.52% 3,982,000 3.00%
Risk-based 12,314,000 11.66% 8,452,000 8.00%
At September 30, 1995, the Bank's tangible, core, and risk-based
regulatory capital exceeded the minimum required regulatory capital
under FIRREA by $7,911,000 (unaudited), $7,328,000 (unaudited) and
$3,862,000 (unaudited), respectively; furthermore, the Bank was
categorized as "well capitalized" under the aforementioned FDICIA
requirements.
A reconciliation of stockholder's equity of the Bank as disclosed in note
18 to regulatory capital amounts at September 30, 1995 follows:
Tangible Core Risk-based
----------- ---------- -----------
(unaudited)
Stockholders' equity
as reported in Note 18 $11,310,000 11,310,000 11,310,000
Less qualifying intangible assets (1,408,000) -- --
Plus general loan loss reserves -- -- 1,004,000
---------- ---------- ----------
$ 9,902,000 11,310,000 12,314,000
========= ========== ==========
Effective October 19, 1992, the Bank entered into a supervisory
agreement with the OTS. The agreement requires the Bank to submit to
the OTS a written plan to improve the Bank's record of compliance with
applicable federal consumer protection laws and regulations.
<PAGE>
(12) INCOME TAXES
As discussed in note 1(g), the Company adopted Statement 109 as of
October 1, 1992. The cumulative effect of this change in accounting for
income taxes of $216,000 has been determined as of October 1, 1992
and reported separately in the statement of operations for the year
ended September 30, 1993.
The components of income tax expense attributable to income from
continuing operations are as follows:
1995 1994 1993
---------- --------- --------
Federal: Current $ 742,356 493,666 390,000
Deferred 29,959 31,173 10,000
-------- ------- -------
772,315 524,839 400,000
State: Current - - 35,000
-------- ------- -------
$ 772,315 524,839 435,000
======== ======= =======
The difference between the actual total provision for income taxes and
income taxes computed at the Federal statutory rate of 34% is as
follows:
1995 1994 1993
--------- -------- ---------
Computed "expected" tax expense $ 696,797 539,585 373,114
Increase (Decrease) resulting from:
Amortization of intangibles 10,574 10,574 -
Tax exempt income (8,298) (8,182) -
State taxes, net of Federal income tax benefit - - 23,100
Purchase adjustments, net - - 30,174
Other, net 73,242 (17,138) 8,612
--------- -------- -------
$ 772,315 524,839 435,000
========= ======== =======
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities as of
September 30, 1995 and 1994 are presented below:
1995 1994
--------- -------
Deferred tax assets:
Allowance for loan losses $ 315,000 313,358
Deferred loan fees 22,586 76,354
------- --------
Total gross deferred tax assets 337,586 389,712
Less valuation allowance - -
------- --------
Net deferred tax assets 337,586 389,712
------- --------
Deferred tax liabilities:
Depreciation 146,319 168,486
FHLB stock dividends 240,379 240,379
------- -------
Total deferred tax liabilities 386,698 408,865
Net deferred tax liabilities $ (49,112) (19,153)
========== =======
<PAGE>
(12) INCOME TAXES (CONT'D)
In assessing the realizability of deferred tax assets, management
considers whether it is more likely than not that some portion or all of the
deferred tax assets will not be realized. The ultimate realization of
deferred tax assets is dependent upon the generation of future taxable
income during the periods in which those temporary differences become
deductible. Management considers the scheduled reversal of deferred
tax liabilities, projected future taxable income, and tax planning
strategies in making the assessment.
Under the Internal Revenue Code ("Code") the Company is allowed a
special bad debt deduction related to additions to tax bad debt reserves
established for the purpose of absorbing losses. The provisions of the
Code permit the Company to deduct from taxable income an allowance
for bad debts based on the greater of a percentage of taxable income
before such deductions or actual loss experience. Retained earnings at
September 30, 1995 include approximately $265,000 for which no
deferred Federal income tax liability has been recognized. The amounts
represent an allocation of income for bad debt deductions for tax
purposes only. Reduction of amounts so allocated for purposes other
than tax bad debt losses or adjustments arising from carry back of net
operating losses would create income for tax purposes only, which would
be subject to the then current corporate income tax rate.
(13) LEASES
On September 28, 1987, the Bank entered into a sale-leaseback of one
of its branches. The facility has been capitalized and the related
obligation is recorded in other liabilities in the accompanying financial
statements based on the present value of future minimum lease
payments. The lease term expires August 28, 2007.
The present value of future minimum capital lease payments as of
September 30, 1995, are:
Year ending
September 30,
- ----------------------
1996 $ 39,348
1997 39,348
1998 39,348
1999 39,348
2000 39,348
2001 and later years 275,436
------------
Total minimum lease payments 472,196
Less amount representing
interest at 10% 197,801
------------
Present value of future minimum
capital lease payments $ 274,375
==========
The Bank also leases various office equipment under operating leases
expiring through 1998. Rental expense for these operating leases
approximated $16,000, $22,000, and $40,000, for the years ended
September 30, 1995, 1994, and 1993, respectively.
(14) SALE OF BRANCH
Effective September 22, 1995, the Bank completed the sale of its Alma
branch, which had deposits of $6,660,144, loans receivable of
$3,247,943, and net premises and equipment of $270,163. This
transaction resulted in a gain of $122,043 which is reported separately in
the accompanying consolidated statement of operations.
<PAGE>
(15) EMPLOYEE BENEFIT PLANS
Effective October 1, 1992, the Company adopted a 401(k) Profit Sharing
Plan, (the Plan) which covers substantially all of its employees. The
Company matches 50% of employee contributions
to the Plan, up to 3% of an employee's salary. The Company
contributed $28,852, $30,517, and $30,106 to the Plan in 1995, 1994,
and 1993, respectively.
Effective September 30, 1995, the Company adopted an Employee
Stock Purchase Plan which covers substantially all of its employees.
The Company buys its stock in the open market for the employees.
Employees pay 85% of the price at which the Company buys the stock.
(16) STOCK OPTION PLAN
The Company has a nonqualified Stock Option Plan (the Option Plan).
The numbers of shares of stock subject to the Option Plan is 232,849.
The shares will be available for future issuance upon the exercise of
stock options to be granted to officers and key employees of the
Company under the Option Plan. The following is a summary of activity
in the Stock Option Plan for the periods indicated.
Such amounts have been adjusted to reflect a 50% stock dividend
effectively accounted for as a 3 for 2 stock split declared in fiscal 1994.
1995 1994 1993
----------- -------- ---------
Options outstanding at beginning of period $ 102,849 110,349 110,349
Options granted 130,000 - 80,349
Options canceled - - (80,349)
Options exercised - (7,500) -
--------- -------- --------
Options outstanding at end of period $ 232,849 102,849 110,349
========= ======== =======
Option prices per share:
Options granted during period $6.50-7.15 - $3.67
Options canceled - - $4.67
Options exercised - $3.67 -
Options outstanding at end of period $2.17-7.15 $2.17-3.67 $2.17-3.67
At September 30, 1995, 132,849 of the options can be exercised.
(17) NET INCOME PER SHARE
Net income per share is based on weighted average shares and share
equivalents of 1,362,596, 1,364,911, and 1,319,141 during the years
ended September 30, 1995, 1994 and 1993, respectively. The dilutive
effect of stock options has been considered in the computation of
equivalent shares and is included from the respective dates of grant.
Net income per share and weighted average shares and equivalent
shares outstanding have been retroactively restated to reflect the 50%
stock dividend effectively accounted for as a 3 for 2 stock split that
occurred during fiscal 1994.
<PAGE>
(18) CONDENSED FINANCIAL INFORMATION OF FIRST GEORGIA HOLDING, INC.
(PARENT ONLY)
First Georgia Holding, Inc., was organized December 16, 1987. The
following represents parent company only condensed financial information.
September 30,
----------------------------
CONDENSED BALANCE SHEETS 1995 1994
------------ -------------
Assets
Cash $ 7,486 27,616
Investment in subsidiary (note 11) 11,309,500 10,219,605
---------- ----------
Total assets $ 11,316,986 10,247,221
========== ===========
Liabilities and Stockholders' Equity
Liabilities
Accounts payable $ - 79,725
Other borrowed money (note 9) 192,000 240,000
Stockholders' Equity
Common stock 1,326,641 1,326,641
Additional paid-in-capital 5,786,164 5,786,164
Retained earnings 4,012,181 2,814,691
--------- ----------
Total liabilities and stockholders' equity $ 11,316,986 10,247,221
========== ==========
Years ended
September 30,
----------------------------------
CONDENSED STATEMENT OF OPERATIONS 1995 1994 1993
----------- ----------- ----------
Dividends from bank subsidiary $ 215,000 84,000 43,972
Expenses (27,807) (25,249) (11,800)
--------- ------- ------
Income before equity in undistributed income
of bank subsidiary 187,193 58,751 32,172
Equity in undistributed income of bank
subsidiary 1,089,895 1,003,426 846,221
--------- ---------- -------
Net income $ 1,277,088 1,062,177 878,393
========= ========== =======
<PAGE>
(18) CONDENSED FINANCIAL INFORMATION OF FIRST GEORGIA HOLDING, INC.
(PARENT ONLY)
<TABLE>
<CAPTION>
CONDENSED STATEMENT OF CASH FLOWS
Cash flows from operating activities:
<S> <C> <C> <C>
Net income $ 1,277,088 1,062,177 878,393
Adjustments to reconcile net income to net
cash provided by operating activities:
Equity in undistributed income of
bank subsidiary (1,089,895) (1,003,426) (846,221)
(Decrease) Increase in accounts payable (79,725) 62,925 11,800
---------- ----------- --------
Net cash provided by operating activities 107,468 121,676 43,972
---------- ----------- --------
Cash flows used in investing activities-investment
in bank subsidiary - - (200,000)
---------- ----------- ---------
Cash flows from financing activities:
Dividends paid on common stock (79,598) (61,560) (43,972)
Net proceeds from exercise of stock options - 27,500 -
Repayments of other borrowed money (48,000) (60,000) -
Proceeds from other borrowed money - - 200,000
----------- -------- ---------
Cash flows (used in) provided by
financing activities (127,598) (94,060) 156,028
----------- --------- ---------
(Decrease) Increase in cash and cash equivalents (20,130) 27,616 -
Cash and cash equivalents at beginning of year 27,616 - -
----------- -------- ---------
Cash and cash equivalents at end of year $ 7,486 27,616 -
=========== ======== =========
</TABLE>
The primary source of funds available to the parent company to pay
shareholder dividends and other expenses is dividends from its
subsidiary bank. Regulatory agencies impose restrictions on the
amounts of dividends that may be declared by the subsidiary bank and
requires maintenance of minimum capital amounts (see note 11). The
amount of cash dividends available from the subsidiary bank for
payment in 1996, upon regulatory approval, is approximately
$3,862,000. As a result, at September 30, 1995, approximately
$7,448,000 of the parent company's investment in the Bank was
restricted as to dividend payments from the Bank to the parent company
under the foregoing regulatory limitations.
(19) COMMITMENTS AND CONTINGENCIES
The Bank is involved in various claims and legal actions arising in the
ordinary course of business. In the opinion of management, the ultimate
disposition of these matters will not have a material adverse effect on
the Bank's financial position.
<PAGE>
The Board of Directors and Stockholders
First Georgia Holding, Inc.
Brunswick, Georgia
We have audited the accompanying consolidated balance sheets of First
Georgia Holding, Inc.
and subsidiary as of September 30, 1995 and 1994, and the related
consolidated statements of operations, stockholders' equity, and cash
flows for each of the years in the three-year period ended September
30, 1995. These consolidated financial statements are the responsibility
of the Company's management. Our responsibility is to express an
opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those
standards require that we plan and perform the audit to obtain
reasonable assurance about
whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the consolidated financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of First
Georgia Holding, Inc. and subsidiary at September 30, 1995 and 1994,
and the results of their operations and their cash flow for each of the
years in the three-year period ended September 30, 1995, in conformity
with generally accepted accounting principles.
KPMG PEAT MARWICK LLP
KPMG Peat Marwick LLP
Atlanta, Georgia
November 3, 1995
<PAGE>
SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA
FIRST GEORGIA HOLDING, INC. AND SUBSIDIARY
Selected consolidated financial data is presented below as of and for
each of the years in the five-year period ended September 30, 1995.
(Dollars in thousands, except per share data)
September 30,
------------------------------------------------------
1995 1994 1993 1992 1991
--------- --------- ---------- --------- ---------
BALANCE SHEET DATA:
Total assets $ 132,742 133,870 133,105 139,587 144,806
Loans receivable, net $ 110,432 113,579 113,420 118,084 122,680
Total investments $ 9,181 7,511 7,070 7,001 8,526
Deposits $ 106,528 103,407 106,736 115,739 125,024
Borrowings $ 12,140 17,988 15,748 13,898 9,948
Stockholders' equity $ 11,125 9,927 8,899 8,065 7,448
Book value per share $ 8.39 7.48 6.75 6.11 5.65
Number of shares
outstanding 1,326,641 1,326,641 1,319,141 1,319,141 1,319,141
Year Ended
September 30,
------------------------------------------------
1995 1994 1993 1992 1991
-------- ------ ------- ------- --------
INCOME STATEMENT DATA:
Interest income $ 11,626 10,213 10,807 12,008 15,214
Interest expense 6,407 5,544 6,039 7,318 10,829
--------- ------- -------- -------- -------
Net interest income 5,219 4,669 4,768 4,690 4,385
Provision for loan losses 214 39 171 300 1,216
Other income 1,268 1,145 1,051 1,308 1,319
Other expense 4,224 4,188 4,551 4,706 5,985
-------- -------- ------- -------- -------
Income (loss) before
income taxes and cumulative
effect of a change in
acounting principle 2,049 1,587 1,097 992 (1,497)
Income tax expense (benefit) 772 525 435 375 (275)
--------- -------- -------- -------- -------
Income (loss) before
cumulative effect of a
change in accounting
principle 1,277 1,062 662 617 (1,222)
Cumulative effect of a change
in accounting principle - - 216 - -
-------- -------- -------- ------- -------
Net income (loss) $ 1,277 1,062 878 617 (1,222)
======== ========= ======== ======= ======
Income (loss) per share before
cumulative effect of a change
in accounting principle $ 0.94 0.78 0.50 0.47 (0.93)
Cumulative effect of a change
in accounting principle - - 0.17 - -
------- ------ ------ ------ ------
Net income (loss) per share $ 0.94 0.78 0.67 0.47 (0.93)
======= ====== ====== ====== =======
At or For
Year Ended
September 30,
---------------------------------------
1995 1994 1993 1992 1991
------ ----- ------- ----- -------
Other Data:
Net income to average assets 0.95% 0.79% 0.64% 0.43% (.74%)
Net income to average equity 11.88% 11.04% 10.36% 7.96% (15.17%)
Average equity to average assets 8.01% 7.41% 6.53% 5.66% 4.52%
Number of full-service offices 6 7 7 7 7
<PAGE>
GENERAL
First Georgia Holding, Inc. (the Company) was organized in 1987 to
acquire the outstanding common stock of First Georgia Bank, F.S.B.
(the Bank or First Georgia). On April 30, 1988, the Company became
the sole shareholder of the Bank and issued its stock to the former Bank
shareholders. Management's Discussion and Analysis which follows,
relates primarily to the Bank since the Company has not had material
operations since it was organized.
First Georgia's net income depends on (a) its net interest income, which
is the difference between its interest income from loans and investments
and its interest expense on deposits and borrowings, (b) its non-interest
income, which consists principally of fee income generated by First
Georgia's retail banking operations, and (c) its non-interest expenses,
such as employee salaries and benefits. Interest income on loans and
investments (yield) is a function of the average balances outstanding
during the period and the average rates earned. Interest expense (cost
of funds) is a function of the average amount of deposits and borrowings
outstanding during the period and average rates paid on such deposits
and borrowings. Retail banking fee income, consisting mainly of
recurring fees collected for deposit-related services rendered by the
Bank, varies with the volume of the Bank's retail banking business.
Non-interest expenses vary primarily with the number of employees,
expansion of facilities and inflation.
Capital Resources
The following is a reconciliation at September 30, 1995 of the Bank's
equity capital under generally accepted accounting principles to
regulatory capital.
First Georgia Bank
Stockholder's equity $ 11,310,000
Less:
Intangible assets 1,408,000
---------------
TANGIBLE CAPITAL 9,902,000
---------------
Plus:
Qualifying intangible assets 1,408,000
---------------
CORE CAPITAL 11,310,000
---------------
Plus:
General allowance for loan losses 1,004,000
--------------
RISK-BASED CAPITAL $ 12,314,000
================
Current regulations require savings institutions to have minimum
regulatory tangible capital equal to 1.5% of adjusted assets, minimum
core capital to adjusted assets of 4% (the leverage ratio), and risk-based
capital to risk-adjusted assets of 8.0%. The minimum core capital or
leverage ratio also may be increased by the Office of Thrift Supervision
(the OTS) based on its assessment of the institution's risk management
systems and the level of overall risk in the individual institution. At
September 30, 1995, the Bank was in compliance with its minimum
capital requirements.
The Bank's regulatory capital and the required minimum amounts, at
September 30, 1995, are summarized on the next page.
Bank Required Excess
Capital Minimum Amount (Deficiency)
------------- ----------------- -------------
% $ % $ % $
----- --------- ----- ---------- ----- ----------
TANGIBLE CAPITAL 7.54 9,902,000 1.50 1,991,000 6.04 7,911,000
CORE CAPITAL 8.52 11,310,000 4.00 3,982,000 4.52 7,328,000
RISK-BASED CAPITAL 11.66 12,314,000 8.00 8,452,000 3.66 3,862,000
As of September 30, 1995, the Bank exceeded all the required minimum
capital amounts as demonstrated by the chart above. The Bank had
strong earnings during the year which helped to strengthen its capital
position. The Company secured a line of credit from another financial
institution for an amount not to exceed 1.0 million dollars. At September
30, 1995 the Company had $192,000 outstanding on that line at prime
plus one-half percent, which it used to purchase two additional shares of
stock from the Bank in prior years. The Company secured this line of
credit with all the outstanding stock of the Bank.
The Federal Deposit Insurance Corporation Improvement Act (FDICIA)
requires the Federal banking agencies to take "prompt corrective action"
with respect to institutions that do not meet minimum capital
requirements. In addition to the ratios described above, FDICIA
introduced an additional capital measurement, the Tier 1 risk-based
capital ratio. The Tier 1 ratio is the ratio of Tier 1 or core capital to total
risk-adjusted assets. FDICIA establishes five capital tiers: "well
capitalized," "adequately capitalized," "undercapitalized," "significantly
undercapitalized," and "critically undercapitalized." The five capital tiers
established by FDICIA and the regulator's minimum requirements for
each are summarized below.
Total Risk-Based Tier 1 Risk-Based Leverage
Capital Ratio Capital Ratio Ratio
----------------- ----------------- ----------
Well capitalized . . . 10% or above 6% or above 5 % or above
Adequately capitalized . . 8% or above 4% or above 4 % or above
Undercapitalized . . . . Less than 8% Less than 4% Less than 4%
Significantly
undercapitalized . . . . Less than 6% Less than 3% Less than 3%
Critically
undercapitalized . . . . . -- -- 2% or less
An institution may be deemed to be in a capitalization category lower
than is indicated by its capital position based on safety and soundness
considerations other than capital levels.
At September 30, 1995, the Bank's total risk-based ratio, tier 1 risk-
based ratio and leverage ratio were 11.66%, 10.71%, and 8.52%,
respectively, placing the Bank in the well capitalized category under
FDICIA for each ratio.
LIQUIDITY
First Georgia has traditionally maintained levels of liquidity in
excess of levels required by regulatory authorities. As a member of the Federal
Home Loan Bank system, the Bank is required to maintain a daily
average balance of cash and eligible liquidity investments in an amount
equal to a monthly average of 5% of withdrawable savings and short
term borrowings. The Bank's liquidity level was 13.49% and 7.34% at
September 30, 1995 and 1994, respectively.
<PAGE>
The Bank's operational needs, demand for loan disbursements and
savings withdrawals can be met by loan principal and interest payments,
new deposits and excess liquid assets. While significant loan demand,
deposit withdrawal, increased delinquencies and increased foreclosed
properties could alter this condition, the Bank has sufficient borrowing
capacity through Federal Home Loan Bank advances and other short
term borrowings to manage such an occurrence. Management does not
foresee any liquidity problems for 1996.
ASSET/LIABILITY MANAGEMENT
First Georgia has implemented a program of asset/liability management
to limit the Bank's vulnerability to material and prolonged increases in
interest rates (interest rate risk). The principal determinant of the
exposure of the Bank's earnings to interest rate risk is the difference in
the time between interest rate adjustments or maturities on interest-
earning assets and interest rate adjustments or maturities of interest-
bearing liabilities. If the maturities of the Bank's assets and liabilities
were perfectly matched and if the interest rates earned on its assets and
paid on its liabilities moved concurrently, which is not the case, the
impact on net interest income of rapid increases or decreases in interest
rates would be minimized. The Bank's asset/liability management policy
seeks to increase the adjustability of the interest rates earned on its
assets and paid on its liabilities and to match the maturities of its
interest-earning assets and interest-bearing liabilities so that the Bank
will be able to restructure and reprice its asset portfolio in a relatively
short period to correspond to changes in its cost and flow of funds. The
Bank's policy also seeks to encourage the flow of deposits into longer
term certificates during periods of lower interest rates and to emphasize
shorter term accounts during periods of high rates. During fiscal 1995,
the Bank actively managed its interest rate risk by limiting its lending to
short-term fixed rate balloon notes or adjustable rate loans and
lengthening the maturity on its deposits.
It is a policy of First Georgia not to originate for its own portfolio any long
term mortgage loans. This allows First Georgia to better match the
maturities of its assets and liabilities, thereby limiting interest rate risk.
Similarly, the Bank emphasizes the origination of commercial real estate
loans, construction loans, consumer loans and commercial loans with
either adjustable rates or short maturities.
The interest rate sensitivity of the Bank's assets and liabilities provides
an indication of the extent to which the Bank's net interest income may
be affected by interest rate movements. The concept of interest rate
sensitivity recognizes that certain assets and liabilities have interest
rates that are subject to change prior to maturity. One method of
measuring the impact of interest rate changes on net interest income is
to measure, in a number of time frames, the interest sensitivity gap by
subtracting interest rate sensitive liabilities from interest rate sensitive
assets. A gap is considered positive when the amount of interest rate
sensitive assets exceeds the amount of interest rate sensitive liabilities,
and is considered negative when the amount of interest rate sensitive
liabilities exceeds the amount of interest rate sensitive assets.
Generally, during a period of rising interest rates, a negative gap would
adversely affect net interest income while a positive gap would result in
an increase in net interest income, while conversely during a period of
falling interest rates, a negative gap would result in an increase in net
interest income and a positive gap would negatively affect net interest
income. To the extent that the gaps are close to zero, net interest
income can be considered to be relatively immune from interest rate
movements. The following table sets forth the Bank's interest-earning
assets and interest-bearing liabilities at September 30, 1995. The
information presented, however, may not be indicative of actual future
trends of net interest income in rising or declining interest rate
environments.
<PAGE>
(in thousands)
Over One Over Five Over Ten Over
One Year Through Through Through Twenty
or Less Five Years Ten Years Twenty Years Years
---------- ---------- --------- ------------ ------
INTEREST-EARNING
ASSETS (IEA'S):
Taxable investments $ 6,568 100 - - 2,513
Interest earning deposits 2,352 - - - -
Loans 77,707 29,607 1,371 3,164 2,555
-------- ------- -------- -------- -------
Total 86,627 29,707 1,371 3,164 5,068
-------- ------- -------- -------- ------
INTEREST-BEARING
LIABILITIES (IBL'S):
Savings deposits 4,713 - - - -
Other time deposits 45,922 37,326 13 - -
Demand deposits 13,914 - - - -
Debt 4,640 7,000 500 - -
-------- ------- ------- ------ ------
Total 69,189 44,326 513 - -
-------- ------- ------ ------ ------
Interest
sensitivity gap $ 17,438 (14,619) 858 3,164 5,068
========= ========= ======== ======== ======
Cumulative gap $ 17,438 2,819 3,677 6,841 11,909
========= ========= ======= ======== ======
Ratio of IEA's to IBL's 1.25 0.67 2.67 - -
======== ======== ======= ======= ======
Cumulative ratio of
IEA's to IBL's 1.25 1.02 1.03 1.06 1.10
======== ======== ======= ======= ======
COMPARISON OF YEARS ENDED SEPTEMBER 30, 1995 AND 1994
Results of Operations
- ----------------------------------------------------------------
GENERAL
First Georgia Holding, Inc. reported Net Income of $1,277,088 in 1995,
an increase of $214,911, or 20.23%. This increase in Net Income came
as a result of several factors. First, the Net Interest Income after
Provision for Loan Losses increased a total of $374,382. Other Income
also increased slightly by a total of $70,797. Other expenses decreased
slightly by a total of $17,208. All these coming together had a strong
positive effect on the Company's Net Income.
INTEREST INCOME
Total Interest Income increased $1,413,140 for the year, or 13.84%.
The major portion of the rise in Interest Income was in loans where Total
Interest Income from Loans increased $1,157,386 or 11.91%. While
Average Loans remained virtually unchanged from the previous year,
the yields earned on the various loans increased. Mortgage-backed
Securities Interest Income decreased again principally because of fewer
mortgage-backed securities held by the Bank. Investment Securities
Income increased substantially by a total of $157,671 or 49.36%
because of shifting of excess funds to investments in government
agencies. These investments, however, carry a variable rate of interest
that will tend to move slower than other rates. Management feels that
such investments are prudent because they tend to protect the Bank
from wide interest rate swings. Other Interest Income increased
significantly, by $105,770 or 74.57% for the year. The Bank held a large
amount of cash in its Federal Home Loan Bank Overnight Account for
the funding of the sale of the Alma branch. This large balance, over six
million dollars near the end of the year, generated a substantial amount
of interest income.
<PAGE>
INTEREST EXPENS
Total Interest Expense increased $863,616, or 15.58% for the year. The
increase is attributable to an increase in average deposits of over a
million dollars and an increase in the weighted average rate paid on
deposits from 4.22% in 1994 to 4.80% in 1995. Increased competition
for deposits in the area contributed to the higher interest rates the Bank
was willing to pay depositors. Interest Expense on Borrowings rose a
modest $4,310 or 0.41%. These borrowings were in the form of
advances from the Federal Home Loan Bank.
YIELDS EARNED AND RATES PAID
Net interest income is affected by (a) the difference between rates of
interest earned on interest-earning assets and rates of interest paid on
interest-bearing liabilities (interest rate spread) and (b) the relative
amounts of interest-earning assets and interest-bearing liabilities. When
interest-earning assets approximate or exceed interest-bearing liabilities,
any positive interest rate spread will generate net interest income.
Savings institutions have traditionally used interest rate spreads as a
measure of net interest income. Another indication of an institution's net
interest income is its "net yield on interest-earning assets" which is net
interest income divided by average interest- earning assets. The
following table sets forth information with respect to weighted average
contractual yields on loans, yields on investments and the cost of funds
on deposits and borrowings for and as of the end of the periods
indicated.
Year Ended At
September 30, September 30,
------------------------- --------------
(in percentages)
1995 1994 1993 1995
----- ----- ----- -----
Weighted average yield on:
Loans 9.31 8.71 8.84 9.96
Taxable investment securities 5.27 3.76 4.28 5.35
Interest earning deposits in
other banks 7.00 3.50 3.39 5.70
Total weighted average yield on
all interest-earning assets 9.06 8.26 8.52 9.69
----- ----- ----- -----
Weighted average rate paid on:
Deposits 4.80 4.22 4.47 5.14
Short term debt 5.90 3.25 4.02 6.62
Long term debt 6.82 6.76 6.97 7.12
Total weighted average rate paid
on all interest-bearing liabilities 5.04 4.55 4.76 5.71
Weighted average interest rate spread
(spread between weighted average yield
on all interest-earning assets and rate
paid on al interest-bearing
liabilities) 4.02 3.71 3.76 3.98
====== ====== ====== =====
Net yield on average interest-earning
assets (net interest income as a
percentage of average interest-earning
assets) 4.04 3.81 3.79 N/A
====== ====== ====== =====
<PAGE>
PROVISION FOR LOAN LOSSES
The provision for loan losses is based on management's evaluation of
the risk elements inherent in the loan portfolio. The elements include
possible declines in the value of collateral due to changing economic
conditions and depreciation over time, size and composition of the loan
portfolio, current economic conditions that might affect a borrower's
ability to pay, review of specific problem loans, findings and
recommendations from regulatory examinations, historical charge-off
experience, and levels of non-performing and past due loans.
Management reviews these elements and determines the level of
allowance for loan losses needed. The $214,142 provision for loan
losses recorded in 1995 represents management's desire to maintain a
prudent level of coverage. At September 30, 1995, the Bank believes
its allowance for loan losses is adequate to provide for future losses.
Table 1 sets forth an analysis of non-accruing and past due loans as of
September 30, 1993 through 1995 while Table 2 provides an analysis of
the allowance for loan losses, showing charge-offs and recoveries by
type of loan as well as the addition to the allowance.
Table 1 ANALYSIS OF NON-ACCRUING AND PAST DUE LOANS
As of September 30,
------------------------------
1995 1994 1993
---------- --------- ---------
Non-accruing Loans (1)
Real estate
Construction $ - - -
First mortgage 1,876,110 2,375,112 2,578,757
Second mortgage 82,918 49,169 63,602
Consumer 101,974 115,094 33,721
----------- --------- ---------
Total non-accruing loans 2,061,002 2,539,375 2,676,080
----------- --------- ---------
Past Due Loans (2)
Real estate
Construction - - -
First mortgage 107,140 382,868 894,435
Second mortgage - - -
Consumer 21,990 - 150,000
---------- --------- ---------
Total past due loans 129,130 382,868 1,044,435
---------- --------- ---------
TOTAL NON-ACCRUING AND PAST DUE LOANS $ 2,190,132 2,922,243 3,720,515
=========== ========= =========
Percentage of total loans 1.98% 2.57% 3.28%
=========== ========= ========
Real estate acquired through foreclosure $ 206,334 240,281 626,212
=========== ========= ========
Total non-accruing and past due loans
and nonperforming assets. $ 2,396,466 3,162,524 4,346,727
=========== ========= =========
-----------------------------------------------------------------------------
(1) Non-accruing loans are loans for which unpaid interest is not
recognized in income.
(2) Past due loans are 90 days or more delinquent for which interest is
still accruing.
<PAGE>
TABLE 2 ANALYSIS OF ALLOWANCE FOR LOAN LOSSES
Year Ended September 30,
--------------------------------
1995 1994 1993
------------ ----------- ------------
Beginning balance $ 983,058 968,784 1,040,196
Loans charged-off:
Real estate construction - - -
Real estate mortgage 177,417 26,416 123,026
Consumer and other 100,696 111,365 328,357
----------- ------------ -----------
Total charge-offs 278,113 137,781 451,383
Recoveries:
Real estate construction - - 65,000
Real estate mortgage 22,632 29,053 3,135
Consumer and other 61,850 84,002 140,836
----------- ----------- ----------
Total recoveries 84,482 113,055 208,971
----------- ----------- ---------
Net charge-offs 193,631 24,726 242,412
Provision charged to operations 214,142 39,000 171,000
------------ ----------- ---------
Balance at end of period $ 1,003,569 983,058 968,784
============ =========== =========
Ratio of net charge-offs to
average loans outstanding 0.17% 0.02% 0.18%
=========== ========== ==========
Ratio of allowance to total loans 0.90% 0.87% 0.84%
=========== ========== ==========
OTHER INCOME
Other Income increased $70,797, or 5.91% for the year. The gain from
the sale of the Alma Branch, totaling $122,043, was the most significant
aspect of Other Income. Loan fees were up $28,378 (6.71%). Part of
this increase came from the settlement of the sale of servicing rights for
certain loans to another institution. Deposit service charges continued to
decrease during the year, falling a total of $24,885. The Bank continued
its efforts to bank only high quality accounts where non-sufficient fund
fees were minimal.
OTHER EXPENSES
Other Expenses decreased $17,208, or 0.41% for the year. This
reduction in Other Expenses occurred in several areas. Salaries and
employee benefits were down $46,465, or 2.35%. The Bank tried to cut
costs here by reassigning the duties of an employee who was leaving to
an existing employee rather than hiring a new person. Loss on the Sale
of Foreclosed Property was down $34,852, or 65.98% because the Bank
was able to keep its foreclosed real estate to a minimum for most of the
year. The Bank acquired a substantial amount of Furniture, Fixtures,
and Equipment, causing Net Occupancy expense to increase $47,458,
or 5.54% for the year. The Bank continued to look for opportunities to
reduce its Other Operating Expenses through better management of its
people and the use of new technology. The Bank continually examines
each phase of its operation for opportunities to reduce expenses. The
Company accrued $772,315 in income tax expense for the year based
on applicable income tax rates at September 30, 1995.
<PAGE>
Financial Condition
- ---------------------------------------
Total Assets of the Company decreased $1,127,633 from September 30,
1994, to September 30, 1995. The Bank as a whole grew enough to
absorb the sale of over $3,000,000 in loans and over $6,000,000 in
deposits as a result of the Alma branch sale. Interest bearing deposits in
other Banks increased $1,635,299 during 1995. An increase in deposits
caused these short term investments to be unusually high at September
30, 1995. Because of high cash balances, the Bank bought an
additional $1,670,180 in investment securities. The objective is to earn
a return on this money while protecting the Bank from adverse interest
rate risk. The Real Estate Acquired in Settlement of Loans decreased
$33,947, or 14.13%. This continued decrease in Real Estate Owned is
representative of Management's commitment to resolve more of its loan
problems. Premises and equipment decreased $407,562 (10.74%), due
in large part to the sale of $270,163 in premises and equipment at the
Alma branch.
As mentioned previously, total deposits increased $3,120,234,
or 3.02%. This increase represents an increase in the local market for
deposits, leading to more attractive rates for depositors. The Bank
repaid $4,800,000, or 28.66%, in Federal Home Loan Bank Advances
due to the increased deposit demand. Other Borrowed Money
decreased $1,048,000 from year end to year end due to increased
liquidity.
COMPARISON OF YEARS ENDED SEPTEMBER 30, 1994 AND 1993
Results of Operations
- --------------------------------------------
GENERAL
First Georgia Holding, Inc. reported Net Income of $1,062,177 in 1994,
an increase of $183,784, or 21%. This increase in Net Income came as
a result of several factors. First, the Net Interest Income after Provision
for Loan Losses increased slightly by a total of $33,298. Other Income
also increased slightly by a total of $94,427. Other expenses decreased
dramatically, or a total of $361,898. All these coming together had a
strong positive effect on the Company's Net Income.
INTEREST INCOME
Total Interest Income decreased $594,340 for the year ended
September 30, 1995, or 5.5%. The major portion of the reduction in
Interest Income was in the area of loans, where Total Interest Income
from Loans decreased $662,017, or 6.4%. Interest on loans decreased
for several reasons. First, Average Loans for the year were actually
down because of low demand and the Alma branch sale, and loan
demand increased only in the fourth quarter. Secondly, even though
rates rose during the latter part of the year, the Average Interest Rate
earned on the loans dropped because of continued payoffs of higher rate
loans during the year. Mortgage-backed Securities Interest Income also
decreased again principally because of fewer
mortgage-backed securities held by the Bank. Investment Securities
Income increased substantially by a total of $175,363 because of shifting
of excess funds to such investments. These investments, however,
carried a variable rate of interest that tended to move slower than other
rates. Management felt that such investments were prudent because
they tend to protect the Bank from wide interest rate swings.
<PAGE>
INTEREST EXPENS
Total Interest Expense decreased $495, 638, or 8.21% for the year. The
decrease was due in part to a continued decrease in the weighted
average interest rate paid on deposits from 4.47% in 1993 to 4.22% in
1994. Additionally, the Bank continued to experience some deposit
runoff in the first part of the year with investors seeking higher returns
for their money. Many of these investors continued to move into mutual
and stock funds. Interest Expense on Borrowings decreased $38,709 or
3.5%. These borrowings were in the form of advances from the Federal
Home Loan Bank and the interest expense continued to decrease once
again because of lower borrowing rates available to the Bank.
OTHER INCOME
Other Income increased $94,427, or 9.0% for the year. The largest area
of increase came from loan fees which were up $145,825. Part of this
substantial increase in Other Income came from additional fees
received for servicing loans for others. Deposit service charges
continued to decrease during the year by a total of $122,915. The Bank
experienced continued runoff of deposits and, at the same time,
continued its efforts to bank only high quality accounts where non-
sufficient fund fees were minimal. The Loss on the Sale of Foreclosed
Property increased $8,323 or 18.7%. Other operating Income increased
$79,840 in part due to Management's continued attention to enhancing
fees for all services rendered.
OTHER EXPENSES
Other Expenses decreased $361,898, or 7.95% for the year. This
reduction in Other Expenses occurred in several areas including Data
Processing Expense, which was down $34,974, Loss on the Sale of
Premises and Equipment which was down $390,402 and Other
Operating Expenses which decreased $113,800. The Bank continued to
look for opportunities to reduce its Other Operating Expenses through
better management of its people and the use of new technology. The
Bank continually examines each phase of its operation for opportunities
to reduce expenses. The Company accrued $479,320 in income taxes
for the year based on applicable income tax rates at September 30,
1994.
<PAGE>
Financial Condition
- -------------------------------------------
Total Assets of the Company increased only slightly, or $765,482 from
September 30, 1993, to September 30, 1994. While the total changed
very little, there were some significant shifts within the various
categories of assets. Cash increased $1,205,072 from year to year.
Unusual cash letter collections caused this amount to be unusually high
at September 30, 1994. The Real Estate Acquired in Settlement of
Loans decreased $385,931, or 61.6%. This continued decrease in Real
Estate Owned is representative of Management's commitment to
resolve more of its loan problems. Total Deposits decreased
$2,845,978, or 2.68%. Once again, the Bank saw some of its deposits
moved into more attractive mutual funds and other stock market
investments. Federal Home Loan Bank Advances were increased by
$1,300,000 or 8.42%. This increase was necessary to help fund the
deposit runoff. Other Borrowed Money increased $940,000 from year
end to year end, representing the Bank's temporary need for cash to
fund both loans and cash letter clearings.
EFFECT OF INFLATION AND CHANGING PRICES
First Georgia's consolidated financial statements and related data
presented herein have been prepared in accordance with generally
accepted accounting principles, which require the measurement of
financial position and operating results in terms of historical dollars,
without considering changes in the relative purchasing power of money
over time due to inflation. Unlike industrial companies, virtually all of
the assets and liabilities of a financial institution are monetary in nature.
As a result, interest rates have a more significant impact on a financial
institution's performance than the effects of general levels of inflation.
Interest rates do not necessarily move in the same direction or in the
same magnitude as the prices of goods and services. Non-interest
expenses, however, do reflect general levels of inflation.
<PAGE>
SHAREHOLDER INFORMATION
A limited trading market has developed in the Company's common stock
which is quoted on the NASDAQ (National Association of Securities
Dealers Automated Quotation) National Market System under the
symbol "FGHC." Set forth below are the high and low sales prices of the
Company's common stock for each full quarterly period since October
1989. Such prices reflect inter-dealer prices, without retail mark-up,
mark-down, or commission, and may not represent
actual transactions.
Quarterly Period High Low
October 1 - December 31, 1991 4 3 1/4
January 1 - March 31, 1992 3 3/4 2 1/4
April 1 - June 30, 1992 5 1/2 3 1/2
July 1 - September 30, 1992 5 1/4 4 1/2
October 1 - December 31, 1992 5 5/8 4 3/4
January 1 - March 31, 1993 6 4 3/4
April 1 - June 30, 1993 6 1/4 5 1/2
July 1 - September 30, 1993 7 1/4 5 1/2
October 1 - December 31, 1993 8 5/8 7 3/4
January 1 - March 31, 1994 9 1/2 8 1/4
April 1 - June 30, 1994 6 3/8 5 1/2
July 1 - September 30, 1994 6 1/4 5 1/2
October 1 - December 31, 1994 6 5 1/4
January 1 - March 31, 1995 7 5 1/4
April 1 - June 30, 1995 7 6 1/4
July 1 - September 30, 1995 9 1/4 6 1/4
At November 1, 1995, the Company had 257 shareholders of record.
The Company paid cash dividends of $0.06 per share in December 1994
and $0.07 per share in December 1993. The primary source of funds
available to the Company is the payment of dividends by the Bank.
Banking regulations limit the amount of dividends that may be paid
without prior approval of the Bank's regulators. Approximately
$3,862,000 was available to be paid as dividends by the Bank to the
Company at September 30, 1995 upon regulatory approval.
<PAGE>
- --------------------------------------------------------------------------------
OFFICES
- --------------------------------------------------------------------------------
1703 Gloucester Street
Brunswick, Georgia 31520
912-267-7283
129 Highway 82, East
Blackshear, Georgia 31516
912-449-4711
4510 Altama Avenue
Brunswick, Georgia 31520
912-267-0010
404 South Main Street
Hinesville, Georgia 31313
912-876-2185
2001 Commercial Drive South
Brunswick, Georgia 31525
912-262-1500
(Opened October 1995)
1010 Plant Avenue
Waycross, Georgia 31501
912-287-2265
2461 Demere Road
St. Simons Island, Georgia 31522
912-638-7118
- --------------------------------------------------------------------------------
OTHER INFORMATION
- --------------------------------------------------------------------------------
TRANSFER AGENT: INDEPENDENT AUDITORS
First Georgia Bank KPMG Peat Marwick LLP
1703 Gloucester Street Suite 2000
Brunswick, Georgia 303 Peachtree Street, N.E.
Atlanta, Georgia 30308
LEGAL COUNSEL: SPECIAL COUNSEL:
James A. Bishop Powell, Goldstein, Frazer & Murphy
Suite 401 Sixteenth Floor
First Federal Plaza 191 Peachtree Street, N.E.
Brunswick, Georgia 31520 Atlanta, Georgia 30303
<PAGE>
- --------------------------------------------------------------------------------
DIRECTORS AND OFFICERS
- --------------------------------------------------------------------------------
- --------------
FIRST GEORGIA
HOLDING, INC.
- -------------
- -----------------------------------------
Officers
- -----------------------------------------
HENRY S. BISHOP
President, Chief Financial Officer
G. FRED COOLIDGE III
Secretary and Treasurer
- ----------------------------------------
Directors
- ----------------------------------------
HENRY S. BISHOP
President, Chief Executive Officer,
First Georgia Holding, Inc.
B.W. BOWIE
Retired Senior Vice President,
General Manager, and Director of Federal Paper
Board Co.
TERRY DRIGGERS
President, Driggers
Construction Co.
ROY K. HODNETT
President, T.H.E, Inc., and
The Island Inn
HUBERT W. LANG
President and Manager, Lang
Building Supply, Inc.
E. RAYMOND MOCK
President, Mock Enterprises,
Inc., Rayette Foods, Inc.,
KTP, Inc.
JAMES D. MOORE
President, J.D. Moore, Inc.
D. LAMONT SHELL
President, Glynn Electric
Supply Co.
- -------------------------------------------
FIRST GEORGIA
ALTAMA
- -------------------------------------------
ELZIE JACOBS
Vice President
- ----------------------------------------------
FIRST GEORGIA
BRUNSWICK
- ----------------------------------------------
HENRY S. BISHOP
President
G. FRED COOLIDGE III
Senior Vice President
Chief Financial Officer
DORIS L. THOMAS
Vice President, Consumer
Lending
MARK A. WESTBERRY
Vice President, Credit
LAURA D. FRIEND
Vice President, Operations Officer
DIANE A. BLAKEBROUGH
Vice President, Internal Auditor
JUDY DIXON
Assistant Vice President
DIANE SHARPE
Loan Officer
GEORGE McMANUS
Loan Officer
JODI TODD
Assistant Vice President
ELI D. MULLIS
Assistant Vice President
- ------------------------------------------------------
FIRST GEORGIA
NORTH BRUNSWICK
- ------------------------------------------------------
FRED ALEXANDER
Vice President
- ------------------------------------------------------
FIRST GEORGIA
HINESVILLE
- -----------------------------------------------------
GERDA M. BENEDIK
Operations Manager
- -----------------------------------------------------
FIRST GEORGIA
ST. SIMONS ISLAND
- -----------------------------------------------------
MEL BAXTER
Vice President, Commercial Lending
JAN WILDSMITH
Assistant Vice President Operations Manager
- -----------------------------------------------------
FIRST GEORGIA
WAYCROSS/BLACKSHEAR
- -----------------------------------------------------
JON TAHLIER
President
LINDA R. WALKER
Assistant Vice President
Operations Manager
PAM TAYLOR
Loan Officer
EXHIBIT 23
INDEPENDENT ACCOUNTANTS' CONSENT
The Board of Directors
First Georgia Holding, Inc.
We consent to incorporation by reference in the registration statements
(No. 33-62245 and No. 33-62249) on Form S-8 of First Georgia Holding, Inc. of
our report dated November 3, 1995, relating to the consolidated balance sheets
of First Georgia Holding, Inc. and subsidiary as of Sepember 30, 1995 and 1994,
and the related consolidated statements of operations, stockholders' equity and
cash flows for each of the years in the three-yer period ended
September 30, 1995, which report apears in the September 30, 1995 annual report
on Form 10-KSB of First Georgia Holding, Inc.
KPMG PEAT MARWICK LLP
Atlanta, Georgia
December 29, 1995
<PAGE>
