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, 1997
--------------
[ ] TRANSITIONS 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 31520
(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, 1997.
3,052,319
<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, 1997 and September 30, 1996 3
Consolidated Income Statements for the
Three Months Ended March 31, 1997 & 1996 and
Six Months ended March 31, 1997 & 1996. 4
Consolidated Cash Flow Statements for
the Six Months ended March 31, 1997 & 1996. 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 Shareholders 12
Item 5: Other Information 12
PAGE 2
<PAGE>
FIRST GEORGIA HOLDING COMPANY
CONSOLIDATED BALANCE SHEETS
Assets: 03/31/97 09/30/96
----------- -----------
Cash $ 3,770,467 2,956,328
Interest bearing deposits in other banks 2,710,503 2,954,350
Investment securities to be held to maturity 7,210,674 10,325,537
Loans receivable, net 126,057,907 122,431,469
Real estate acquired in settlement of loans 270,000 94,200
Federal Home Loan Bank stock, at cost 1,160,300 1,575,700
Premises and equipment, net 3,069,948 3,334,879
Accrued interest receivable 852,133 852,632
Intangible assets, net 1,085,575 1,276,532
Other assets 906,306 1,113,646
------------ -----------
$ 147,093,813 146,915,273
=========== ===========
Liabilities and Stockholders' Equity
Liabilities:
Deposits $ 120,418,057 121,554,457
Federal Home Loan Bank advances 12,350,000 11,100,000
Advance payments by borrowers for property
taxes and insurance 47,053 60,619
Other borrowed money 92,000 92,000
Accrued expenses and other liabilities 1,719,062 2,192,501
----------- -----------
134,626,172 134,999,577
Stockholders' Equity ----------- -----------
Common stock, $1.00 par value. Authorized
10,000,000 shares; issued and outstanding
3,052,319 shares 3,052,319 2,034,962
Additional paid-in capital 4,223,197 5,239,851
Retained earnings 5,192,125 4,640,883
----------- -----------
12,467,641 11,915,696
----------- -----------
$ 147,093,813 146,915,273
=========== ===========
See accompanying notes to consolidated financial statements.
PAGE 3
<PAGE>
FIRST GEORGIA HOLDING COMPANY
CONSOLIDATED INCOME STATEMENTS
Three Months Ended Six Months Ended
03/31/97 03/31/96 03/31/97 03/31/96
-------- -------- -------- --------
(Dollars in Thousands)
Interest Income:
Loans $ 2,895 2,715 5,774 5,416
Investment securities 144 179 304 331
Other 59 21 138 44
------- ------- ------- -------
Total interest income 3,098 2,914 6,216 5,792
------- ------- ------- -------
Interest Expense:
Deposits 1,514 1,398 3,069 2,831
Advances and other borrowings 174 242 354 461
------- ------- ------- -------
Total interest expense 1,688 1,639 3,423 3,292
------- ------- ------- -------
Net interest income 1,409 1,275 2,793 2,500
Provision for Loan Losses 296 11 306 30
------- ------- ------- -------
Net interest income after
provision for loan losses 1,114 1,264 2,488 2,470
------- ------- ------- -------
Other Income:
Loan fees 126 97 226 164
Deposit service charges 149 137 306 271
Gain on sale of foreclosed property 12 8 12 1
Gain on sale of branch 434 0 434 0
Other operating income 3 11 11 28
------- ------- ------- -------
Total other income 723 253 989 464
------- ------- ------- -------
Other Expenses:
Salaries and employee benefits 583 509 1,148 956
Net occupancy expense 263 239 520 483
Data processing 2 4 4 5
Amortization of intangibles 31 33 64 66
Federal insurance premiums 5 62 72 128
Other operating expenses 298 233 534 448
------- ------- ------- -------
Total other expenses 1,182 1,080 2,342 2,086
------- ------- ------- -------
Income before income taxes 655 437 1,134 848
Income taxes 245 148 420 295
------- ------- ------- -------
Net Income $ 411 289 714 552
======= ======= ======= =======
Income per share of common stock $ 0.13 0.12 0.22 0.26
======= ======= ======= =======
Weighted average number of
shares outstanding 2,385,385 2,341,582 2,208,248 2,164,811
---------- --------- --------- ---------
See accompanying notes to consolidated financial statements
PAGE 4
<PAGE>
FIRST GEORGIA HOLDING COMPANY
CONSOLIDATED CASH FLOW STATEMENTS
SIX MONTHS ENDED MARCH 31,
1997 1996
OPERATING ACTIVITIES: -------------------------------
Net income $ 714,035 552,374
Adjustments to reconcile net income
to net cash provided by operations:
Provision for loan losses 305,932 29,850
Depreciation and amortization 182,763 193,125
Amortization of intangibles 190,957 65,868
Amortization of deferred loan fees (58,912) (15,326)
FHLB Stock Redemption 415,400 -
(Gain)/Loss on sale of REO (11,594) (1,005)
(Increase) Decrease in accrued interest receivable 499 (125,958)
Increase (decrease) in other assets 207,340 137,003
Increase (decrease) in advance payments
by borrowers for property taxes and insurance (13,566) (35,287)
Increase (decrease) in accrued expenses and
liabilities (473,439) (1,121,150)
----------------------------
Net Cash Provided By Operating Activities 1,459,415 (320,506)
----------------------------
INVESTING ACTIVITIES:
Principal payments received on
mortgage-backed securities 527,091 220,647
Maturities of investment securities 2,589,063 0
Purchase of investment securities 0 (400,000)
Loan originations, net of principal repayments (4,185,215) (9,985,984)
Purchase of Premesis and equipment (154,406) (115,674)
Proceeds from the sale of premesis and equipment 235,283
Proceeds from the sale of real estate 148,254 584,359
----------------------------
Net Cash Used By Investing Activities (839,930) (9,696,652)
----------------------------
FINANCING ACTIVITIES:
Net increase (decrease) in deposits (1,136,400) 7,615,513
(Repayments of) Proceeds from other borrowings 0 0
Proceeds from FHLB Advances 1,750,000 4,850,000
Repayments of FHLB Advances (500,000) (2,398,000)
Net Proceeds from stock options - 60,151
Cash Dividends paid (162,793) (132,664)
----------------------------
New Cash Provided by Financing Activities (49,193) 9,995,000
----------------------------
Increase In Cash And Cash Equivalents 570,292 (22,158)
Cash and Cash equivalents at beginning of year 5,910,678 4,895,678
----------------------------
Cash and cash equivalents at end of quarter $ 6,480,970 4,873,520
============================
See accompanying notes to consolidated financial statements
PAGE 5
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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, 1997 and
September 30, 1996. Also included are the results of its operations and
changes in financial position for the three months ended March 31, 1997 &
1996, and for the six months ended March 31, 1997 & 1996 . 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, 1996.
(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 6
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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 4.04% and 3.94% at March 31,
1997 and September 30, 1996, respectively. The Bank used a portion of
its liquid assets to facilitate the sale of its Hinesville Branch, but
Management expects the liquidity ratio to return to normal levels in
the next quarter.
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 1997.
CAPITAL RESOURCES
The following is a reconciliation at March 31, 1997 of the Bank's equity
capital under generally accepted accounting principles to regulatory capital:
First Georgia Bank
Stockholders' Equity 12,452,000
Less:
Intangible Assets 1,086,000
-----------
11,366,000
Plus:
Qualifying intangible assets 1,086,000
-----------
Core Capital 12,452,000
Plus:
Supplemental Capital 999,000
-----------
Risk-based Capital 13,451,000
===========
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, 1997, the Bank met all three
capital requirements.
The Bank's regulatory capital and the required minimum amounts at March
31, 1997 are summarized as follows:
PAGE 7
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(Dollar Amounts in Thousands)
Required Excess
Bank Capital Minimum Amount (Deficiency)
--------------------- ---------------- ----------------
% $ % $ % $
--------------------- ---------------- ----------------
Tangible Capital: 7.78 11,366 1.50 2,193 6.28 9,173
Core Capital: 8.46 12,452 4.00 5,890 4.46 6,562
Risk-based Capital: 10.52 13,451 8.00 10,226 2.52 3,225
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
Undercapita -------------- ------------- 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, 1997, the Bank's Tier 1 risk-based capital ratio was 9.74%.
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,
1997. 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 8
<PAGE>
RESULTS OF OPERATIONS
INTEREST INCOME
Interest Income increased $183,505, or 6.30%, for the period ended March
31, 1997 as compared to the same period in 1996. Interest income on loans
increased $180,024 or 6.63%, for the quarter ended March 31, 1997, compared
for the same quarter ended March 31, 1996. Average loan balances were up
approximately $7,800,000 at March 31, 1997 as compared to March 31, 1996.
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. Interest on Investment securities
decreased $34,840, or 19.52% for the quarter and $27,419, or 8.27% for the six
month period ended March 31, 1997 as compared to the same period in 1996.
This drop is due to several investments maturing during the current fiscal
year. Other interest income for the quarter ended March 31, 1997 increased
$38,321, or 186.11% over the same quarter ended March 31, 1996 and $94,019, or
212.34% for the six month periods ending March 31, 1997 and 1996. Ending
balances in interest bearing deposits in other banks for the period were down
because of the sale of the Hinesville branch on March 7, 1997. However, the
average balances for the period were up substantially.
INTEREST EXPENSE
Interest Expense increased $48,626 (2.97%) for the quarter ended March
31, 1997 compared to March 31, 1996. For the six month period ending March
31, 1997, Interest expense increased $130,607 (3.97%) for the same period in
1996. Interest on deposits increased $116,137 (8.31%) for the three month
period ended March 31, 1997 over March 31, 1996 and $237,794 (8.40%) for the
six month period ended March 31, 1997 over March 31, 1996. Average deposits
increased approximately $7,800,000 from March 31, 1996 to March 31, 1997,
despite selling over $6,000,000 of deposits with the Hinesville branch. This
increase in funds enabled the Bank to repay its maturing Federal Home Loan
Bank Advances rather than renewing them.. High deposit balances have
eliminated the need for any additional borrowings. Consequently, interest on
advances and other borrowings decreased $67,511 (27.90%) over the comparable
three month periods and $107,187 (23.26%) over the comparable six month
periods.
NET INTEREST INCOME
Net Interest Income increased $134,879, or 10.58% for the quarter and
$293,314, or 11.73% for the six month period ended March 31, 1997 over March
31, 1996. Increases in loan balances and interest earning deposits offset the
increases in deposit balances enough to produce a favorable net interest
margin. Management believes this growth will continue throughout fiscal 1997.
PAGE 9
<PAGE>
<PAGE>
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. With
the sale of the Hinesville branch, the Bank allocated approximately
$298,000 of the proceeds to the loan loss provision. As a result of this
allocation, the provision for loan losses expense increased $284,664
(2,621.22%) for the quarter ended March 31, 1997 and $276,082 (924.90%)
for the six month period ended March 31, 1997 as compared to the same
periods last year. Net Interest Income after Provision for Loan Losses
for the quarter ended March 31, 1997 decreased $149,785, or 11.85% from
the same period last year because of the increased allocation. For the
six month period ended March 31, 1997, Net Interest Income after Provision
for Loan Losses increased $17,232, or 0.70% over the same period last year.
OTHER INCOME
Other Income for the quarter increased $470,702, a 186.27% difference
from the same quarter the previous year, and $525,229, or 113.31% for the six
month period ending March 31, 1997, as compared to March 31, 1996. The
primary area of increase was the Gain on the sale of the Hinesville Branch,
which was $433,945. Fees collected on loans also increased $28,638, or 29.50%
for the three months ended March 31, 1997 and $62,485, or 38.15% for the six
months ended March 31, 1997 as compared to the same periods ended March 31,
1996. Deposit fees also increased by $11,387, or 8.29% for the quarter ended
March 31, 1997 over the quarter ended March 31, 1996. For the six month
period ended March 31, 1997, Deposit fees were up $34,983, or 12.93% over the
six months ended March 31, 1996. Management has emphasized the importance of
generating and collecting fee income from loans and deposits.
OTHER EXPENSES
Other expenses increased $102,137 (9.46%) for the quarter ended March
31, 1997 and 255,847 (12.26%) for the six month period ended March 31, 1997.
Salaries and employee benefits increased $74,343, or 14.60% for the three
month period ended March 31, 1997 and $191,489, or 20.03% for the six month
period ended March 31, 1997 over the comparable periods in 1996. This
increase is attributable to the staff at the new Wal-Mart Supercenter office,
a cost nonexistent in 1996. Occupancy expense increased $23,620, or 9.87% for
the quarter ended March 31, 1997 and $37,103, or 7.69% for the six month
period ended March 31, 1997 as compared to the same periods in 1996.
The Bank absorbed the special SAIF Insurance adjustment at the end of
1996, and the new insurance premium, which is substantially lower, took
effect in the second quarter. Therefore, Federal Insurance Premiums decreased
$57,211, or 92.56% for the quarter and $55,874, or 43.63% for the six month
period ended March 31, 1997 as compared to the same periods in 1996.
Management does not foresee another special assessment, therefore this smaller
premium should stay in effect.
The Bank accrued $244,810 in income taxes for the quarter ended March
31 1997, an increase of $96,511 (65.22%) over the same quarter in 1996. For
the six month period, the Bank accrued 420,346 in income taxes as of March 31
1997, an increase of $124,953 (42.30%) over the same period in 1996.
PAGE 10
<PAGE>
FINANCIAL CONDITION
ASSETS
Loan volume shows a steady increasing trend of $3,626,438 or 2.96% for
the six month period from September 30, 1996 to March 31, 1997. Even with
strong competition in a tight loan market, loans showed strong growth.
Interest bearing deposits in other banks decreased $243,847, or 8.25% over the
six month period ending March 31, 1997, due primarily to using substantial
cash reserves to fund the sale of the Hinesville Branch. This high balance is
the result of growth in the bank's deposit portfolio.
LIABILITIES
Deposits decreased $1,136,400, or 0.93% from September 30, 1996 to March
31, 1997. The bank sold $6,354,840 with the Hinesville branch, so deposits in
the remaining branches have increased significantly. With the drop in
deposits, the Bank has increased its borrowing from the Federal Home Loan
Bank by $1,250,000, a 11.26% increase. Despite intense competition for the
loan and deposit business in Glynn County, the Bank has been able to grow at a
sustainable rate.
PAGE 11
<PAGE>
<PAGE>
PART II
ITEM 4. Submission of Matters to a Vote of Shareholders
First Georgia Holding, Inc. held its annual shareholders meeting
on January 21, 1997. The matters voted upon were as follows:
Election of the Following Directors: Henry S. Bishop, Hubert W.
Lang, Jr., and E. Raymond Mock, Jr.
For 1,710,014
Against 9,047
---------------
Abstain 1,719,061
Appointment of KPMG Peat Marwick LLP as the Company's independent
auditors for the fiscal year ending September 30, 1997.
For 1,719,061
Against --
---------------
1,719,061
ITEM 5. Other Information
On February 28, 1997, the Company effected a 50% stock dividend
in the form of a 3-for-2 stock split to shareholders of record as
of January 31, 1997.
The Bank closed the sale of the Hinesville Branch to a financial
institution in that market.
PAGE 12
<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:______________________ BY:G. FRED COOLIDGE III
---------------------
G. Fred Coolidge III
Senior Vice President
Chief Financial Officer
PAGE 13
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> SEP-30-1997 SEP-30-1997
<PERIOD-END> MAR-31-1997 MAR-31-1997
<CASH> 3,770 3,770
<INT-BEARING-DEPOSITS> 2,710 2,710
<FED-FUNDS-SOLD> 0 0
<TRADING-ASSETS> 0 0
<INVESTMENTS-HELD-FOR-SALE> 0 0
<INVESTMENTS-CARRYING> 7,211 7,211
<INVESTMENTS-MARKET> 7,158 7,158
<LOANS> 126,058 126,058
<ALLOWANCE> 999 999
<TOTAL-ASSETS> 147,094 147,094
<DEPOSITS> 120,418 120,418
<SHORT-TERM> 1,750 1,750
<LIABILITIES-OTHER> 1,719 1,719
<LONG-TERM> 10,600 10,600
0 0
0 0
<COMMON> 3,052 3,052
<OTHER-SE> 9,415 9,415
<TOTAL-LIABILITIES-AND-EQUITY> 147,094 147,094
<INTEREST-LOAN> 2,895 5,774
<INTEREST-INVEST> 143 304
<INTEREST-OTHER> 58 138
<INTEREST-TOTAL> 3,098 6,216
<INTEREST-DEPOSIT> 1,514 3,069
<INTEREST-EXPENSE> 1,688 3,423
<INTEREST-INCOME-NET> 1,409 2,793
<LOAN-LOSSES> 295 306
<SECURITIES-GAINS> 0 0
<EXPENSE-OTHER> 1,182 2,342
<INCOME-PRETAX> 655 1,134
<INCOME-PRE-EXTRAORDINARY> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 411 714
<EPS-PRIMARY> 0.13 0.23
<EPS-DILUTED> 0.13 0.22
<YIELD-ACTUAL> 9.12 9.14
<LOANS-NON> 1,715 1,715
<LOANS-PAST> 0 0
<LOANS-TROUBLED> 270 270
<LOANS-PROBLEM> 0 0
<ALLOWANCE-OPEN> 958 958
<CHARGE-OFFS> 273 273
<RECOVERIES> 17 17
<ALLOWANCE-CLOSE> 999 999
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<ALLOWANCE-UNALLOCATED> 999 999
</TABLE>
