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 December 31, 1996
[ ] 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
December 31, 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
December 31, 1996 and September 30, 1996 3
Consolidated Income Statements for the
Three Months Ended December 31, 1996 & 1995 4
Consolidated Cash Flow Statements for
the Nine Months ended December 31, 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: 12/31/96 9/30/96
------------ -----------
Cash $ 3,168,808 2,956,328
Interest bearing deposits in other banks 7,117,207 2,954,350
Investment securities to be held
to maturity 8,921,199 10,325,537
Loans receivable, net 123,906,340 122,431,469
Real estate acquired in
settlement of loans 65,000 94,200
Federal Home Loan Bank stock, at cost 1,160,300 1,575,700
Premises and equipment, net 3,326,203 3,334,879
Accrued interest receivable 904,661 852,632
Intangible assets, net 1,243,598 1,276,532
Other assets 737,455 1,113,646
------------ ------------
$ 150,550,771 146,915,273
============ ============
Liabilities and Stockholders' Equity
Liabilities:
Deposits $ 125,397,298 121,554,457
Federal Home Loan Bank advances 10,600,000 11,100,000
Advance payments by borrowers for
property taxes and insurance 32,245 60,619
Other borrowed money 92,000 92,000
Accrued expenses and other liabilities 2,372,820 2,192,501
------------- ------------
138,494,363 134,999,577
------------- ------------
Stockholders' Equity
Common stock, $1.00 par value.
Authorized 15,000,000 shares; issued
and outstanding 2,034,962 shares 2,034,962 2,034,962
Additional paid-in capital 5,239,851 5,239,851
Retained earnings 4,781,595 4,640,883
------------ ------------
12,056,408 11,915,696
------------ ------------
$ 150,550,771 146,915,273
============ ============
See accompanying notes to consolidated financial statements.
<PAGE>
FIRST GEORGIA HOLDING COMPANY
CONSOLIDATED INCOME STATEMENTS
Three Months Ended
12/31/96 12/31/95
---------- ----------
Interest Income:
Loans $ 2,878,821 2,701,524
Investment securities 160,392 152,971
Other 79,385 23,687
---------- ----------
Total interest income 3,118,598 2,878,182
---------- ----------
Interest Expense:
Deposits 1,555,457 1,433,800
Advances and other borrowings 179,126 218,801
---------- ----------
Total interest expense 1,734,583 1,652,601
---------- ----------
Net interest income 1,384,015 1,225,581
Provision for Loan Losses 10,408 18,990
---------- ----------
Net interest income after provision
for loan losses 1,373,607 1,206,591
---------- ----------
Other Income:
Loan fees 100,543 66,696
Deposit service charges 156,878 133,282
Other operating income 7,950 17,580
---------- ----------
Total other income 265,371 217,558
---------- ----------
Other Expenses:
Salaries and employee benefits 564,287 447,141
Net occupancy expense 257,064 243,581
Data processing 2,149 1,581
Amortization of intangibles 32,934 32,934
Loss on sale of foreclosed property - 6,719
Federal insurance premiums 67,586 66,249
Other operating expenses 235,917 214,736
---------- ----------
Total other expenses 1,159,937 1,012,941
---------- ----------
Income before income taxes 479,041 411,208
Income taxes 175,536 147,423
---------- ----------
Net Income $ 303,505 263,785
========== ==========
Income per share of common stock $ 0.14 0.13
========== ==========
Weighted average number of shares outstanding 2,034,962 1,989,962
See accompanying notes to consolidated financial statements
<PAGE>
FIRST GEORGIA HOLDING COMPANY
CONSOLIDATED CASH FLOW STATEMENTS
THREE MONTHS ENDED DECEMBER 31,
1996 1995
-------------------------------
OPERATING ACTIVITIES:
Net income $ 303,505 263,785
Adjustments to reconcile net income
to net cash provided by operations:
Provision for loan losses 10,408 18,990
Depreciation and amortization 98,468 95,865
Amortization of intangibles 32,934 32,934
Amortization of deferred loan fees (56,405) (13,418)
FHLB Stock Redemption 415,400 -
(Gain)/Loss on sale of assets 0 6,719
(Increase) Decrease in accrued interest
receivable (52,029) (93,170)
Increase (decrease) in other assets 376,191 (52,290)
Increase (decrease) in advance payments
by borrowers for property taxes
and insurance (28,374) (27,449)
Increase (decrease) in accrued
expenses and liabilities 180,319 (678,835)
-------------------------------
Net Cash Provided By Operating
Activities 1,280,417 (446,869)
-------------------------------
INVESTING ACTIVITIES:
Principal payments received on
mortgage-backed securities 406,435 135,454
Maturities of investment securities 998,750 0
Purchase of investment securities 0 (400,000)
Loan originations, net of principal
repayments (1,493,314) (3,780,043)
Purchase of Premesis and equipment (90,639) (81,506)
Proceeds from the sale of real
estate acquired in settlement of loans 93,640 199,115
-------------------------------
Net Cash Used By Investing Activities (85,128) (3,926,980)
-------------------------------
FINANCING ACTIVITIES:
Net increase (decrease) in deposits 3,842,841 1,564,588
(Repayments of) Proceeds from other
borrowings 0 0
Proceeds from FHLB Advances 0 6,350,000
Repayments of FHLB Advances (500,000) (4,500,000)
Cash Dividends paid (162,793) (132,664)
-------------------------------
New Cash Provided by Financing
Activities 3,180,048 3,281,924
-------------------------------
Increase In Cash And Cash Equivalents 4,375,337 (1,091,925)
Cash and Cash equivalents at beginning
of year 5,910,678 4,895,678
-------------------------------
Cash and cash equivalents at end
of quarter $ 10,286,015 3,803,753
===============================
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 December 31, 1996 and September
30, 1995. Also included are the results of its
operations and changes in financial position for the
three months ended December 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,
1996.
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 7.69% and 3.94% at
December 31, 1996 and September 30, 1996,
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 1997.
CAPITAL RESOURCES
The following is a reconciliation at December
31, 1996 of the Bank's equity capital under generally
accepted accounting principles to regulatory capital.
First Georgia Bank
Stockholder's Equity 12,036,000
Less:
Intangible Assets 1,244,000
----------
10,792,000
Plus:
Qualifying intangible assets 1,244,000
----------
Core Capital 12,036,000
Plus:
Supplemental Capital 958,000
----------
Risk-based Capital 12,994,000
==========
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 December 31, 1996, the Bank met all
three capital requirements.
<PAGE>
The Bank's regulatory capital and the required
minimum amounts at December 31, 1996 are summarized as
follows:
(Dollar Amounts in Thousands)
Required Excess
Bank Capital Minimum Amount (Deficiency)
------------- -------------- ---------------
% $ % $ % $
------------- -------------- ---------------
Tangible Capital: 7.23 10,792 1.50 2,239 5.73 8,553
Core Capital: 8.00 12,036 4.00 6,019 5.34 6,017
Risk-based Capital: 10.44 12,994 8.00 9,959 2.44 3,035
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 December 31, 1996, the Bank's Tier 1 risk-
based capital ratio was 9.67%. 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 December 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 increased $240,416, or 8.35% for
the period ended December 31, 1996 as compared to the
same period in 1995. Interest income on loans
increased $177,297 or 6.56% for the quarter ended
December 31, 1996, compared for the same quarter ended
December 31, 1995. Average loan balances were up over
$111,500,000 at December 31, 1996 as compared to
December 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. Other interest income for the quarter
ended December 31, 1996 increased $55,698, or 235.14%
over the same quarter ended December 31, 1995 because
of an increase in interest earning deposits of over
$4,000,000. The Bank is attracting several new
deposits from the local community, as can be seen in
the increase in deposit balances of over $3,000,000.
INTEREST EXPENSE
Interest Expense increased $81,982 (4.96%) for
quarter ended December 31, 1996 compared to December
31, 1995. Interest on deposits increased $121,657
(8.48%) for the three month period ended December 31,
1996 over the same period ended December 31, 1995.
Average deposits increased over $18,000,000 from
December 31, 1995 to December 31, 1996, which caused
the increase in interest expense. However, 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 $39,675 (18.13%) over the
comparable three month periods.
NET INTEREST INCOME
Net Interest Income increased $158,434, or
12.93% for the quarter ended December 31, 1996 over
December 31, 1995. 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.
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 $8,582, or
45.19% for the quarter ended December 31, 1996 as
compared with the corresponding period ended December
31, 1995. Net Interest Income after Provision for
Loan Losses for the quarter ended December 31, 1996
increased $167,016, or 13.84% from the same period
last year.
<PAGE>
OTHER INCOME
Other Income for the quarter increased $47813, a
21.98% difference from the same quarter the previous
year. Fees collected on loans increased $33,847, or
50.75% for the three months ended December 31, 1996 as
compared to the three months ended December 31, 1995.
Deposit fees also increased by $23,596, or 17.70% over
the same period mentioned above. Management has
emphasized the importance of generating and collecting
fee income from loans and deposits. Other income
decreased $9,630, as a result of decreases in several
small areas.
OTHER EXPENSES
Other expenses increased $146,996 (14.51%) for
the quarter ended December 31, 1996 as compared to
December 31, 1995. The Bank has opened a new branch
in the local Wal-Mart Supercenter, and with that comes
several start up costs. Salaries and employee
benefits increased $117,146,or 26.20% for the three
month period ended December 31, 1996 over the three
month period ended December 31, 1995. This increase
is attributable to the new staff at the new office, a
cost nonexistent in 1995. Occupancy expense increased
$13,483, or 5.54% for the quarter ended December 31,
1996 as compared to the same period in 1995. Mostly
new equipment had to be installed at the new office,
causing this increase. The Bank did not incur any
loss in the sale of its foreclosed assets, resulting
in a decrease of $6,719 for the three month period
ending December 31, 1996 compared to December 31,
1995. Micellaneous expense increased $21,181 (9.86%)
over the quarter ended December 31, 1996 as compared
to December 31, 1995. Many small expenses associated
with the new branch, such as advertising, office
supplies, and consulting fees, are the reasons for
this increase. The Bank accrued $175,536 in income
taxes for the quarter ended December 31, 1996, an
increase of $39,720 (15.06%) over the same quarter in
1995.
FINANCIAL CONDITION
ASSETS
Loan volume shows a steady increasing trend of
$1,474,871 or 1.20% for the three month period from
September 30, 1995 to December, 1996. Even with
strong competition in a tight loan market, loans
showed strong growth. As of December 31, 1996,
interest bearing deposits increased $4,162,857
(140.91%). This high balance is the result of growth
in the bank's deposit portfolio.
LIABILITIES
Deposits have increased substantially,
$3,842,841 or 3.16% for the three month period
beginning September 30, 1995. With this excess cash,
the Bank has been able to pay off Federal Home Loan
Bank Advances in the amount of $500,000, a 4.50% 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
On December 15, 1996, the Company paid a
$0.08 per share dividend to shareholders
of record as of December 1, 1996.
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 consummated in the
second quarter of 1997.
The Bank opened a new branch in the local
Wal-Mart Supercenter in October 1996.
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. The
branch has far exeeded Management's
estimates for deposit balances.
<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: 01/29/97 BY: G. FRED COOLIDGE III
----------- ---------------------
Senior Vice President
Chief Financial Officer
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0
0
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