FORM 10-QSB
U. S. Securities and Exchange Commission
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
For the quarterly period ended June 30, 1996
-------------
[ ] TRANSITIONS REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1943.
For the transition period frame to _________
Commission file number 0-16657
FIRST GEORGIA HOLDING, INC.
Georgia 58-1781773
- ---------------------------- ----------------------
(State or other jurisdiction (I.R.S. Employer
or incorporation or organization) Identification Number)
1703 Gloucester Street
Brunswick, Georgia 31521
(912) 267-7283
(Issuer's telephone number)
Check whether the issuer (1) has filed all reports required to be
filed by section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes X No
------ ------
Number of shares of Common Stock outstanding as of June 30, 1996.
2,034,961
<PAGE>
PART I
FINANCIAL INFORMATION
The consolidated financial statements of First Georgia Holding,
Inc. filed as a part of this report are as follows:
Page
Consolidated Balance Sheets as of
June 30, 1996 and September 30, 1995 3
Consolidated Income Statements for the
Three Months Ended June 30, 1996 & 1995 and
Nine Months Ended June 30, 1996 & 1995 4
Consolidated Cash Flow Statements for
the Nine Months ended June 30, 1996 & 1995 5
Notes to Consolidated Financial Statements 6
Management's Discussion and Analysis of
Consolidated Statements of Financial
Condition and Results of Operations 7
PART II
OTHER INFORMATION
Item 5: Other Information 11
<PAGE>
FIRST GEORGIA HOLDING COMPANY
CONSOLIDATED BALANCE SHEETS
Assets: 06/30/96 9/30/95
------------ ---------
Cash $ 2,529 2,543
Interest bearing deposits in other banks 4,075 2,352
Investment securities to be held to maturity 9,402 9,181
Loans receivable, net 120,343 110,432
Real estate acquired in settlement of loans 20 206
Federal Home Loan Bank stock, at cost 1,576 1,576
Premises and equipment, net 3,217 3,388
Accrued interest receivable 847 751
Intangible assets, net 1,309 1,408
Other assets 703 904
-------- ---------
$ 144,022 132,742
============ ===========
Liabilities and Stockholders' Equity
Liabilities:
Deposits $ 118,877 106,528
Federal Home Loan Bank advances 11,600 11,948
Advance payments by borrowers for property
taxes and insurance 68 90
Other borrowed money 92 192
Accrued expenses and other liabilities 1,430 2,859
-------- ---------
132,066 121,617
Stockholders' Equity
Common stock, $1.00 par value. Authorized
15,000,000 shares; issued and outstanding
2,023,711 shares 2,035 1,990
Additional paid-in capital 5,163 5,123
Retained earnings 4,757 4,012
-------- --------
11,955 11,125
--------- ---------
$ 144,022 132,742
============ =========
[FN]
See accompanying notes to consolidated financial statements.
<PAGE>
FIRST GEORGIA HOLDING COMPANY
CONSOLIDATED INCOME STATEMENTS
Three Months Ended Nine Months Ended
06/30/96 06/30/95 06/30/96 06/30/95
----------- ---------- ---------- ---------
Interest Income:
Loans $ 2,754 2,735 8,170 8,069
Investment securities 179 126 510 353
Other 28 97 72 144
------ ------ ------ -------
Total interest income 2,961 2,958 8,753 8,566
Interest Expense:
Deposits 1,389 1,410 4,220 3,836
Advances and other
borrowings 217 265 678 825
------- ------- ------- -------
Total interest expense 1,605 1,675 4,897 4,661
------- ------- -------- -------
Net interest income 1,355 1,282 3,856 3,905
Provision for Loan Losses 12 16 42 76
------ ------- ------- ------
Net interest income after
provision for loan losses 1,344 1,267 3,814 3,829
-------- -------- ------- ------
Other Income:
Loan fees 107 107 270 301
Gain (Loss) on Sale of
Foreclosed Property 0 1 1 (3)
Deposit service charges 131 144 401 453
Other operating income 20 31 48 73
-------- ------- ------ -----
Total other income 257 282 721 824
-------- ------- ------ -----
Other Expenses:
Salaries and employee
benefits 524 481 1,480 1,415
Net occupancy expense 245 223 728 693
Data processing 1 4 7 14
Amortization of intangibles 33 36 99 107
Federal insurance premiums 62 75 190 225
Other operating expenses 241 257 688 688
------- ------- ------ -------
Total other expenses 1,106 1,075 3,192 3,143
------- ------- ------ -------
Income before income taxes 495 473 1,343 1,510
Income taxes 169 179 465 577
------- ------ ------ ------
Net Income $ 325 294 878 933
======= ====== ====== ======
Income per share of
common stock $ 0.16 0.16 0.16 0.16
======= ====== ====== ======
Weighted average number
of shares outstanding 2,026 1,990 2,005 1,990
See accompanying notes to consolidated financial statements.
<PAGE>
FIRST GEORGIA HOLDING COMPANY
CONSOLIDATED CASH FLOW STATEMENTS
NINE MONTHS ENDED JUNE 30,
1996 1995
--------- -------
OPERATING ACTIVITIES:
Net income $ 878 933
Adjustments to reconcile net income
to net cash provided by operations:
Provision for loan losses 42 76
Depreciation and amortization 288 279
Amortization of intangibles 99 107
Amortization of deferred loan fees (34) (124)
(Gain)/Loss on sale of assets (1) 3
Increase (decrease) in accrued interest receivable (96) (55)
Increase (decrease) in other assets 201 (386)
Increase (decrease) in advance payments by borrowers for
property taxes and insurance (22) 5
Increase (decrease) in accrued expenses and liabilities (1,430) 125
--------- -------
Net Cash Provided By Operating Activities (76) 965
--------- -------
INVESTING ACTIVITIES:
Principal payments received on mortgage-backed securities 349 267
Maturities of investment securities 100 1,000
Purchase of investment securities (670) (2,544)
Loan originations, net of principal repayments (10,316) (3,625)
Purchase of Premesis and equipment (117) (211)
Proceeds from the sale of real estate acquired in
settlement of loans 584 605
--------- --------
Net Cash Used By Investing Activities (10,069) (4,507)
--------- --------
FINANCING ACTIVITIES:
Net increase (decrease) in deposits 12,349 11,941
(Repayments of) Proceeds from other borrowings (100) (1,048)
Proceeds from FHLB Advances 7,350 3,500
Repayments of FHLB Advances (7,698) (5,800)
Net Proceeds from stock options 85 0
Cash Dividends paid (133) (80)
-------- -------
New Cash Provided by Financing Activities 11,853 8,513
-------- -------
Increase In Cash And Cash Equivalents 1,709 4,970
Cash and Cash equivalents at beginning of year 4,896 4,038
-------- -------
Cash and cash equivalents at end of quarter $ 6,605 9,008
=========== =======
See accompanying notes to consolidated financial statements.
<PAGE>
FIRST GEORGIA HOLDING, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) BASIS OF PRESENTATION
In the opinion of management, the accompanying unaudited
consolidated financial statements contain all adjustments
necessary to present fairly the financial position of First
Georgia Holding, Inc. as of June 30, 1996 and September 30, 1995.
Also included are the results of its operations for the three
months ended June 30, 1996 and 1995 and changes in financial
position for the nine months ended June 30, 1996 and 1995. The
results of operations for the interim periods presented are not
necessarily indicative of the results to be expected for the full
year.
For further information, refer to the consolidated financial
statements and footnotes thereto included in the Bank's Annual
Report to Shareholders, incorporated by reference into the
Company's Form 10-KSB for the year ended September 30, 1995.
(2) EARNINGS PER SHARE
Earnings per common share were computed using the weighted
average number of shares outstanding during the period as shown on
the face of the Consolidated Income Statements.
<PAGE>
FIRST GEORGIA HOLDING, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY
First Georgia Bank (the Bank) has traditionally maintained
levels of liquidity above 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 equal to a monthly average of
5% of withdrawable savings and short-term borrowings. The Bank's
liquidity level was 5.75% and 13.49% at June 30, 1996 and
September 30, 1995, respectively.
The Bank's operational needs, demand for loan disbursements,
and savings withdrawals can be met by loan principal, interest
payments received, new deposits, and excess liquid assets.
Significant loan demand, deposit withdrawal, increased
delinquencies, and increased real estate acquired in settlement of
loans (REO) could alter this condition. Management does not
foresee any liquidity problems for 1996.
CAPITAL RESOURCES
The following is a reconciliation at June 30, 1996 of the
Bank's equity capital under generally accepted accounting
principles to regulatory capital.
First Georgia Bank
Stockholder's Equity 12,007,000
Less:
Intangible Assets 1,310,000
------------
10,697,000
Plus:
Qualifying intangible assets 1,310,000
------------
Core Capital 12,007,000
Plus:
Supplemental Capital 992,000
------------
Risk-based Capital 12,999,000
============
Current regulations require institutions to keep minimum
regulatory tangible capital equal to 1.5% of adjusted assets,
minimum core capital to adjusted assets of 3% (the leverage
ratio), and risk-based capital to risk-adjusted assets of 8%. The
Office of Thrift Supervision (the OTS) may increase the minimum
core capital, or leverage ratio, based on its assessment of the
institution's risk management systems and the level of total risk
in the individual institution. At June 30, 1996, the Bank met all
three capital requirements.
The Bank's regulatory capital and the required minimum
amounts, at June 30, 1996 are summarized as follows:
<PAGE>
(Dollar Amounts in Thousands)
Required Excess
Bank Capital Minimum Amount (Deficiency)
----------------------- ------------------- ------------------
% $ % $ % $
----------------------- ------------------- ------------------
Tangible Capital: 7.50 10,697 1.50 2,160 6.00 8,537
Core Capital: 8.34 12,007 3.00 4,321 5.34 7,686
Risk-based Capital: 10.66 12,999 8.00 9,755 2.66 3,244
The Federal Deposit Insurance Corporation Improvement Act
(FDICIA) required the Federal banking agencies to take "prompt
corrective action" in respect to institutions that do not meet
minimum capital requirements. Along with the ratios described
above, FDICIA also 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
regulators summarize their minimum requirements for the five
capital tiers established by the FDICIA as follows:
Tier 1 Risk-Based Risk-based Leverage
Capital Ratio Capitalio 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 3%
Significantly
Undercapitalized Less than 8% Less than 4% Less than 3%
Critically Undercapitalized ------------ ------------ 2% or less
An unsatisfactory examination rating may cause an
institution's capitalization category to be lower than suggested
by its actual capital position.
At June 30, 1996, the Bank's Tier 1 risk-based capital ratio
was 9.85%. If a depository institution should fail to meet its
regulatory capital requirements, regulatory agencies can require
submission and funding of a capital restoration plan by the
institution, place limits on its activities, require the raising
of additional capital and, ultimately, require the appointments of
a conservator or receiver for the institution.
The Bank's capital position changed during the quarter ended
June 30, 1996. Total capital as well as tangible capital, core
capital, and risk-based capital continued to increase during the
quarter. The mix of risk-based assets and additional earnings are
the primary factors for this increase.
<PAGE>
RESULTS OF OPERATIONS
INTEREST INCOME
Interest income on loans increased $18,951 or 0.69% for the
quarter ended June 30, 1996, compared for the same quarter ended
June 30, 1995. Average loan balances were up over $12,000,000 at
June 30, 1996 as compared to June 30, 1995. This substantial
increase is the main force behind the increase in interest income.
For the nine month period ended June 30, 1996, interest income
was up 1.26%, or $101,474 over the same period in 1995.
Competition for loans remains strong, and loan demand is still
steady. However, the Bank continues to be selective in the loans
that it makes, as evident by its low real estate foreclosed
balances. Management expects loan demand to maintain healthy
levels because of the level interest rates.
Interest income on investments increased $53,462 or 42.59%
for the quarter and $157,217, or 44.51%, for the nine months ended
June 30, 1996 as compared to the same time last year. The Bank
invested excess cash reserves into several new securities with
excellent rates of returns. Total interest income increased
0.11%, or $3,290 for the quarter ended June 30, 1996 and 2.18%, or
$187,164 for the nine months ended June 30, 1996 over the
respective periods last year.
INTEREST EXPENSE
Interest on deposits decreased $21,409 or 1.52% for the
three month period ended June 30, 1996 over the same period ended
June 30, 1995. The nine month period ended June 30, 1996 shows a
10.01%, or $383,965, increase over the nine month period ended
June 30, 1995. At the beginning of the quarter, the bank reset
its interest rates on demand deposit accounts to a lower rate than
they had been in two years, thus causing a short term drop in
interest expense. This strategy will continue through the fiscal
year. Interest on advances and other borrowings decreased 48,600,
or 18.31% over the comparable three month periods and $147,541, or
17.88% over the same nine month periods. The Bank has been able
to pay off some high rate advances as they matured. High deposit
balances have eliminated the need for any additional borrowings.
Total interest expense decreased $70,009, or 4.18% for the quarter
ended June 30, 1996 and increased $236,424 or 5.07% for the nine
month period ended June 30, 1996 over the applicable periods last
year.
NET INTEREST INCOME
Net Interest income increased $73,299, or 5.72% for the
quarter ended June 30, 1996 over June 30, 1995. Net Interest
income decreased $49,260 or 1.26% for the nine months ended June
30, 1996 over March 31, 1995. Again the short term gain and long
term loss are the implementation of a new deposit pricing strategy
in April of 1996. Management feels this strategy will continue to
produce positive results.
PROVISION FOR LOAN LOSSES
Management's evaluation of the risk elements in the loan
portfolio is the basis for the provision for loan losses. 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, and current economic
conditions that might affect a borrower's ability to pay. Review
of specific problem loans, regulatory examinations, historical
charge-off experience, and levels of nonperforming and past due
loans are other elements considered. Management reviews these
factors frequently and determines if the level of loan loss
allowances is adequate. The provision for loan losses expense
decreased $3,732 for the quarter ended June 30, 1996 as compared
with the corresponding period ending June 30, 1995 and $34,454 for
the nine month period ended June 30, 1996 with respect with the
same period in 1995. Net Interest Income after Provision for Loan
Losses for the quarter ended June 30, 1996 increased $77,031, or
6.08% from the same period last year. For the nine month period
ended June 30, 1996 net interest income after the loan loss
provision decreased $14,806, or .39% as compared to the same
period in 1995.
<PAGE>
OTHER INCOME
Other Income for the quarter dropped $25,045, an 8.87%
difference from the same quarter the previous year, and for the
nine month period ending June 30, 1996, a 12.52% ($103,113) drop
occurred from the same nine month period in 1995. Deposit fees
were down $12,818 (8.93%) for the quarter and 51,548 (11.38%) for
the nine month period ending June 30, 1996 as compared to
comparable periods last year, as the bank is still rebuilding its
deposit base which was transferred with the sale of the Alma
Office. Other Operating Income decreased $10,822 (35.09%) for the
quarter and $25,031(34.20%) for the nine month period as the
result of decreases in several small areas.
OTHER EXPENSES
Other expenses increased $30,581 (2.84%) for the quarter
ended June 30, 1996 as compared to June 30, 1995. For the nine
month period, other expenses increased $49,392, or 1.57% from June
30, 1996 to the comparable period ending June 30, 1995. While
several areas, such as Federal Insurance Premiums and Data
Processing, saw substantial decreases, employee salaries and
benefits showed substantial increases. Additional personnel have
been hired as the bank continues to grow, and costs associated
with our eight month old branch continue to be absorbed. Net
income for the quarter ended June 30, 1996 increased $31,454 or
10.70% from quarter ended June 30, 1995, and decreased 55,402 or
5.94% for the respective nine month periods.
FINANCIAL CONDITION
ASSETS
Loan volume has increased substantially, $9,910,777 or
8.97% for the nine month period from September 30, 1995 to June
30, 1996. Even with strong competition in a tight loan market,
loans showed strong growth. As of June 30, 1996, interest bearing
deposits increased $1,723,144. This high balance is the result of
growth in the bank's deposit portfolio.
LIABILITIES
Deposits have increased substantially, $12,348,908 or
11.59% since September 30, 1995. With this excess cash, the Bank
has been able to pay off Federal Home Loan Bank Advances in the
amount of $348,000, a 2.91% drop. The bank was also able to make
a $100,000 principal payment on its outstanding line of credit,
which resulted in a 52.08% drop. Despite intense competition for
the loan and deposit business in Glynn County, the Bank has been
able to grow at a sustainable rate.
<PAGE>
PART II
ITEM 5. Other Information
The Bank has signed a letter of intent to sell the
Hinesville Branch to a financial institution in that market.
Management expects the sale to be consummated before the end of
the fiscal year.
The Bank will also be opening a new branch in the Wal-Mart Supercenter
in the first quarter of the next fiscal year. This branch will give the Bank a
branch in a huge market area of the county, and will establish First
Georgia's branch network as one of the best in the area.
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange
Act, the registrant caused this report to be signed
on its behalf by the undersigned, thereunto duly
authorized.
DATE: 08/05/96 BY: G. FRED COOLIDGE
G. Fred Coolidge III
Senior Vice President
Chief Financial Officer
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