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 March 31, 1996
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1943.
For the transition period from___________ 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 March 31, 1996.
2,023,711
<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
March 31, 1996 and September 30, 1995 3
Consolidated Income Statements for the
Three Months Ended March 31, 1996 & 1995 and
Six Months Ended March 31, 1996 & 1995 4
Consolidated Cash Flow Statements for
the Six Months ended December 31, 1995 & 1994 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 4: Submission of Matters to a Vote of Security Holders 11
Item 6: Other Information 11
<PAGE>
FIRST GEORGIA HOLDING COMPANY
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
Assets: 03/31/96 9/30/95
--------- ---------
Cash $ 3,398 2,544
Interest bearing deposits in other banks 1,476 2,352
Investment securities to be held to maturity 9,360 9,181
Loans receivable, net 120,027 110,432
Real estate acquired in settlement of loans 0 206
Federal Home Loan Bank stock, at cost 1,576 1,576
Premises and equipment, net 3,311 3,388
Accrued interest receivable 877 751
Intangible assets, net 1,342 1,408
Other assets 766 904
--------- ---------
$ 142,133 132,742
========= =========
Liabilities and Stockholders' Equity
Liabilities:
Deposits $ 114,143 106,528
Federal Home Loan Bank advances 14,400 11,948
Advance payments by borrowers for property
taxes and insurance 55 90
Other borrowed money 192 192
Accrued expenses and other liabilities 1,738 2,859
------- --------
130,528 121,617
--------- ---------
Stockholders' Equity
Common stock, $1.00 par value. Authorized
15,000,000 shares; issued and outstanding
2,023,711 shares 2,024 1,990
Additional paid-in capital 5,149 5,123
Retained earnings 4,432 4,012
--------- ---------
11,605 11,125
--------- ---------
$ 142,133 132,742
========= =========
See accompanying notes to consolidated financial statements.
<PAGE>
FIRST GEORGIA HOLDING COMPANY
CONSOLIDATED INCOME STATEMENTS
(Amounts in thousands, except per share data)
Three Months Ended Six Months Ended
03/31/96 03/31/95 03/31/96 03/31/95
---------- ---------- -------- --------
Interest Income:
Loans $ 2,715 2,745 5,417 5,334
Investment securities 179 118 332 228
Other 21 31 44 47
------ ------- ------- ------
Total interest income 2,915 2,894 5,793 5,609
------ ------- ------- ------
Interest Expense:
Deposits 1,398 1,265 2,831 2,426
Advances and other borrowings 242 282 461 560
------ ------- ------ ------
Total interest expense 1,640 1,547 3,292 2,986
------ -------- ------ ------
Net interest income 1,275 1,347 2,501 2,623
Provision for Loan Losses 11 61 30 61
------ ------ ------ ------
Net interest income after
provision for loan losses 1,264 1,286 2,471 2,562
------ ------ ------ ------
Other Income:
Loan fees 97 108 164 194
Gain (Loss) on Sale of Foreclosed
Property 8 (3) 1 (4)
Deposit service charges 137 151 271 309
Other operating income 11 22 28 42
------- ------ ------ ------
Total other income 253 278 464 541
------- ------ ------ ------
Other Expenses:
Salaries and employee benefits 509 469 956 934
Net occupancy expense 239 234 483 470
Data processing 4 6 5 10
Amortization of intangibles 33 35 66 72
Federal insurance premiums 62 75 128 150
Other operating expenses 233 229 450 431
------ ------ ------ ------
Total other expenses 1,080 1,048 2,088 2,067
------ ------ ------- ------
Income before income taxes 437 516 847 1,036
Income taxes 148 200 295 397
------ ------ ------- ------
Net Income $ 289 316 552 639
====== ====== ====== ======
Income per share of common stock $ 0.13 0.16 0.26 0.32
======= ====== ====== ======
Weighted average number of shares
outstanding 1,999,604 1,989,962 1,994,757 1,989,962
---------- --------- --------- ---------
See accompanying notes to consolidated financial statements
<PAGE>
FIRST GEORGIA HOLDING COMPANY
CONSOLIDATED CASH FLOW STATEMENTS
(Amounts in thousands)
SIX MONTHS ENDED MARCH 31,
1996 1995
---------- ----------
OPERATING ACTIVITIES:
Net income $ 552 639
Adjustments to reconcile net income
to net cash provided by operations:
Provision for loan losses 30 61
Depreciation and amortization 259 257
Increase (Decrease) in income taxes payable (224) 91
Increase in interest receivable 126 140
Increase in interest payable 6 68
Increase (decrease) in other assets (137) 225
Increase in accrued expenses and
other liabilities (1,121) (740)
(Gain)/loss on sale of assets 1 (4)
-------- ---------
Net Cash Provided By Operating Activities (508) 737
--------- ---------
INVESTING ACTIVITIES:
Purchase of investment securities 0 814
Principal collected on loan securities 241 102
Loans originated 40,500 39,330
Purchase of premises and equipment 116 16
Proceeds from sale of real estate 584 142
Purchase of FHLB stock 0 0
Proceeds from sale of MBS's 0 0
Proceeds from maturity of investments 0 1,000
------ -------
Net Cash Used By Investing Activities 41,441 41,404
------ -------
FINANCING ACTIVITIES:
Net change in deposit accounts 7,616 8,125
Proceeds from FHLB advances 17,100 3,500
Repayment of FHLB advances 13,648 2,500
Net change in borrowings 2,452 (1,300)
Cash Dividends paid 0 80
Change in escrow (35) (11)
-------- --------
New Cash Provided by Financing Activities 40,781 12,894
-------- --------
Increase In Cash And Cash Equivalents 855 (646)
Cash and Cash equivalents at beginning of year 2,543 3,321
------- --------
Cash and cash equivalents at end of quarter $ 3,398 2,675
======= ========
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 March 31,
1996 and September 30, 1995. Also included are the results of its operations
for the three months ended March 31, 1996 and 1995 and changes in financial
position for the six months ended March 31, 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 5.24% and 13.49% at March 31, 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 March 31, 1996 of the Bank's
equity capital under generally accepted accounting principles to regulatory
capital.
First Georgia Bank
Stockholder's Equity 11,678,000
Less:
Intangible Assets 1,375,000
------------
10,336,000
Plus:
Qualifying intangible assets 1,342,000
------------
Core Capital 11,678,000
Plus:
Supplemental Capital 1,014,000
------------
Risk-based Capital 12,692,000
============
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 March 31, 1996 the Bank met all three capital
requirements.
The Bank's regulatory capital and the required minimum amounts, at
March 31, 1996 are summarized as follows:
<PAGE>
(Dollar Amounts in Thousands)
Required Excess
Bank Capital Minimum Amount (Deficiency)
--------------- ---------------- --------------
% $ % $ % $
--------------- ---------------- --------------
Tangible Capital: 7.34 10,336 1.50 2,132 5.84 8,204
Core Capital: 8.22 11,678 3.00 4,264 5.22 7,414
Risk-based Capital: 9.83 12,692 8.00 10,328 1.83 2,364
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 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 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 March 31, 1996, the Bank's Tier 1 risk-based capital ratio was
9.05%. 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 March
31, 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 decreased $29,580 or 1.08% for the quarter
ended March 31, 1996, compared for the same quarter ended March 31, 1995.
This small decrease is the result of a decrease in the average rate earned on
loans, which was 9.50% in 1995 compared to 9.38% for the quarter ended
March 31, 1996. For the six month period ended March 31, 1996, interest
income was up 1.55%, or $82,523 over the same period in 1995. The average
rates earned on loans for the six months ended March 31, 1996 was 9.42%
compared to 9.17% for the same period ended March 31, 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 $60,684 or 51.51% for the
quarter and $103,755, or 45.56%, for the six months ended March 31, 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 0.70%, or $20,390 for the quarter ended March 31, 1996 and
3.28%, or $183,874 for the six months ended March 31, 1996 over the respective
periods last year.
INTEREST EXPENSE
Interest on deposits increased $132,192 or 10.45% for the three month
period ended March 31, 1996 over the same period ended March 31, 1995.
The six month period ended March 31, 1996 shows a 16.71%, or $405,374,
increase over the six month period ended March 31, 1995. Although the rates
paid on deposits did decrease from one year to the next, the Bank saw a
considerable increase in the volume of deposits. Interest on advances and other
borrowings decreased $40,424, or 14.32% over the comparable three month
periods and $98,941, or 17.68% over the same six month periods. The Bank
has been able to pay off some high rate advances as they matured and, when
needed, replaced them with advances carrying a lower rate. Total interest
expense increased $91,768, or 5.93% for the quarter ended March 31, 1996 and
$306,433 or 10.26% for the six month period ended March 31, 1996 over the
the applicable periods last year.
NET INTEREST INCOME
Net Interest income decreased $71,378 or 5.30% for the quarter ended
March 31, 1996 over March 31, 1995. Net Interest income decreased
$122,559 or 4.67% for the six months ended March 31, 1996 over March 31,
1995. This decrease is the result of an increase in deposit balances for which
the increase in interest rates on loans could not compensate.
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 $49,712 for the quarter ended March 31, 1996 as compared with the
corresponding period ending March 31, 1995 and $30,722 for the six month
period ended March 31, 1996 with respect with the same period in 1995. Net
Interest Income after Provision for Loan Losses for the quarter ended March
31, 1996 decreased $21,666, or 1.69% from the same period last year. For the
six month period ended March 31, 1996 decreased $91,837 as compared to the
same period in 1995.
<PAGE>
OTHER INCOME
Other Income for the quarter dropped $25,569, a 9.19% difference
from the same quarter the previous year, and for the six month period ending
March 31, 1996, a 14.41% ($78,086) drop occurred from the same six month
period in 1995. When the Bank sold its Alma branch last September and
opened its new North Brunswick Office, the Bank had to absorb the loss of loan
and deposit fees from Alma while the new office slowly builds its loan and
deposit base. As a result, loan fees have dropped ($11,119 for the quarter and
$30,280 for the six month period) and deposit fees have decreased ($13,442 for
the quarter and $38,739 for the quarter). Gains from the sale of real estate
increased $10,876 for the quarter ended March 31, 1996 over March 31, 1995
and $5,151 for the six month period ended March 31, 1996 over March 31,
1995. As the quality of the loan portfolio increases and credit risk decreases,
the Bank has not had to incur many losses in this area.
OTHE EXPENSES
Other expenses increased $31,648 (3.02%) for the quarter ended
March 31, 1996 as compared to March 31, 1995. For the six month period,
other expenses increased $18,811, or 0.91% from March 31, 1996 to the
comparable period ending March 31, 1995. The main area of this increase is
in the area of employee salaries and benefits. Two mortgage brokers have come
to First Georgia to aid the bank in offering a broader line of financial
products. Their salaries are mitigated by the loan fees they generate. Net
income for the quarter ended March 31,1996 decreased $27,385 or 8.67% from
quarter ended March 31, 1996, and 486,856 or 13.59% for the respective six month
periods.
FINANCIAL CONDITION
ASSETS
Loan volume has increased substantially, $9,594,440 or 8.69% for
the six month period from September 30, 1995 to March 1, 1996. Even with
strong competition in a tight loan market, loans showed strong growth. As of
March 31, 1996, no real estate was held by the institution. As the Bank
increases in size, Management has been able to maintain a high level of quality
in its assets.
LIABILITIES
Deposits increased $7,615,513 or 7.15% and Federal Home Loan Bank
advances also increased $2,452,000 or 20.52% for the six month period ended
March 31, 1996. The Bank has seen a marked increase in deposits despite the
competition in the community from other banks for these funds. As loans
grew at a fast pace, the Bank increased its borrowings to help fund these loans.
<PAGE>
PART II
ITEM 4. Submission of Matters to a Vote of Security Holders
The Shareholders Annual Meeting of First Georgia Holding
Company held on January 22, 1996 was conducted with the following votes:
I. The appointment of independent auditors for the fiscal year 1996.
For 1,152,183
Against -0-
Abstain -------------
1,152,183
II. To ratify the 1995 Stock Incentive Plan
For 1,123,301
Against 25,582
Abstain -0-
-------------
1,152,183
III. To ratify the Company's Employee Stock Purchase Plan
For 1,027,016
Against 23,692
Abstain 3,300
-------------
1,054,008
IV. The election of Class I Directors; B.W. Bowie, Terry K. Driggers,
and Roy K. Hodnett
For 1,152,033
Against -0-
Abstain 150
-------------
1,152,183
ITEM 5. Other Information
The Company issued a 50% stock dividend, effectively
accounted as a 3-for-2 stock split. The split was declared for all shareholders
of record as of February 12, 1996 and was paid on February 29, 1996.
<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: 04/26/96 BY: G. FRED COOLIDGE
G. Fred Coolidge III
Senior Vice President
Chief Financial Officer
<PAGE>
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<CIK> 0000826491
<NAME> FIRST GEORGIA HOLDING, INC.
<MULTIPLIER> 1,000
<S> <C> <C>
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