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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
Commission File No. 0-27448
GOLDEN ISLES FINANCIAL HOLDINGS, INC.
(Exact name of small business issuer as specified in its charter)
Georgia 58-1756713
(State of Incorporation) (I.R.S. Employer Identification No.)
3811 Frederica Road, St. Simons Island, Georgia 31522
(Address of Principal Executive Offices)
(912) 638-0667
(Issuer's Telephone Number, Including Area Code)
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last
Report)
Check whether the issuer (1) 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 issuer was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.
Yes X No
APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding
of each of the issuer's classes of common equity as of the latest practicable
date.
Common Stock, no par value per share: 2,505,500 shares issued and 2,445,800
shares outstanding as of September 30, 2000.
Transitional Small Business Disclosure Format:
Yes No X
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
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<TABLE>
<CAPTION>
GOLDEN ISLES FINANCIAL HOLDINGS,INC. Three Months Ended
CONSOLIDATED INCOME STATEMENTS September 30,
2000 1999
(unaudited) (unaudited)
<S> <C> <C>
Interest income
Interest and fees on loans $ 2,709,296 $ 2,127,163
Interest and dividends on taxable securities 313,073 340,744
Other interest income 110,391 121,441
------------ ------------
Total interest income 3,132,760 2,589,348
------------
Interest expense
Interest on deposits 1,593,204 1,259,119
Interest on other borrowings 181,627 91,325
------------ ------------
Total interest expense 1,774,831 1,350,444
Net interest income 1,357,929 1,238,904
Provision for possible loan losses 75,000 1,310,000
------------ ------------
Net interest income after provision
for loan losses 1,282,929 (71,096)
------------ ------------
Other income
Income from origination of mortgage loans,
less related expenses 40,290 33,426
Service charges on deposit accounts 115,930 106,863
Net realized gain on sales of securities 0 0
Gain (loss) on sale of real estate 63,650 (3,097)
Other 57,950 27,030
------------ ------------
Total other income 277,820 164,222
------------ ------------
Other expense
Salaries and employee benefits 595,109 533,268
Equipment and occupancy expense 173,121 138,131
Advertising and business development 53,624 33,048
Legal and professional 84,930 65,412
Supplies and printing 66,331 50,770
Other operating expenses 154,376 121,633
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Total other expense 1,127,491 942,262
------------ ------------
Income before income tax 433,258 (849,136)
------------
Applicable income tax 147,333 (288,878)
------------ ------------
Net income 285,925 (560,258)
------------ ------------
Other comprehensive income, net of tax:
Net unrealized holding losses arising during period 134,066 (170,136)
------------ ------------
Comprehensive income $ 419,991 ($730,394)
============ ============
Net Income per share - Basic $ 0.12 ($0.22)
Net Income per share - Diluted $ 0.12 ($0.22)
Average shares outstanding 2,452,203 2,494,277
</TABLE>
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<TABLE>
<CAPTION>
GOLDEN ISLES FINANCIAL HOLDINGS,INC. Nine Months Ended
CONSOLIDATED INCOME STATEMENTS September 30,
2000 1999
(unaudited) (unaudited)
<S> <C> <C>
Interest income
Interest and fees on loans $7,729,250 $6,228,109
Interest and dividends on taxable securities 937,097 984,992
Other interest income 254,744 285,296
----------- -----------
Total interest income 8,921,091 7,498,397
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Interest expense
Interest on deposits 4,377,336 3,646,007
Interest on other borrowings 428,843 278,208
----------- -----------
Total interest expense 4,806,179 3,924,215
Net interest income 4,114,912 3,574,182
Provision for possible loan losses 225,000 1,450,000
----------- -----------
Net interest income after provision
for loan losses 3,889,912 2,124,182
----------- -----------
Other income
Income from origination of mortgage loans,
less related expenses 125,965 129,178
Service charges on deposit accounts 348,501 300,481
Net realized gain on sales of securities 0 2,240
Gain (loss) on sale of real estate 60,114 9,027
Other 111,224 55,543
----------- -----------
Total other income 645,804 496,469
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Other expense
Salaries and employee benefits 1,782,553 1,520,130
Equipment and occupancy expense 463,196 416,857
Advertising and business development 121,737 87,237
Legal and professional 193,461 160,168
Supplies and printing 162,511 114,735
Other operating expenses 417,976 384,478
----------- -----------
Total other expense 3,141,434 2,683,605
----------- -----------
Income before income tax 1,394,282 (62,954)
----------- -----------
Applicable income tax 476,215 (20,033)
----------- -----------
Net income 918,067 (42,921)
----------- -----------
Other comprehensive income, net of tax:
Net unrealized holding losses arising during period 89,139 (395,730)
----------- -----------
Comprehensive income $1,007,206 ($438,651)
=========== ===========
Net Income per share - Basic 0.37 ($0.02)
Net Income per share - Diluted 0.37 ($0.02)
Average shares outstanding 2,480,375 2,484,465
</TABLE>
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<TABLE>
<CAPTION>
GOLDEN ISLES FINANCIAL HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS September 30, December 31,
2000 1999
ASSETS (unaudited) (audited)
<S> <C> <C>
Cash and due from banks $ 3,345,866 $ 4,017,512
Interest-bearing deposits in banks 220,886 13,888
Federal funds sold 6,966,000 6,945,000
Securities available for sale, at fair value 19,654,036 18,878,399
Other investments, at cost 582,700 366,400
Loans 113,219,093 98,246,349
Less allowance for loan losses 2,726,441 2,559,153
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Loans, net 110,492,652 95,687,196
------------------------------
Property and equipment,net 4,230,247 3,408,237
Other assets 2,920,876 3,080,575
------------------------------
Total Assets $ 148,413,263 $ 132,397,207
==============================
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Non-interest bearing demand $ 11,268,784 $ 10,316,942
Interest-bearing demand 24,168,977 27,531,519
Savings 2,836,582 2,511,320
Time, $100,000 and over 22,087,500 19,529,633
Other time 62,280,907 52,853,492
------------------------------
Total Deposits 122,642,750 112,742,906
------------------------------
Federal Home Loan Bank borrowings 11,493,493 5,888,829
Other Liabilities 623,750 550,780
------------------------------
Total liabilities 134,759,993 119,182,515
------------------------------
Shareholders' Equity:
Common stock, no par value
50 million shares authorized, 2,505,500 shares
issued and 2,505,500 shares outstanding 12/31/99
and 2,445,800 shares outstanding 9/30/2000 1,094,338 1,094,338
Capital Surplus 11,720,940 11,693,718
Retained earnings 1,521,346 800,904
Treasury stock, at cost, 59,700 shares - 9/30/2000 (398,225)
Accumulated other comprehensive loss (285,129) (374,268)
------------------------------
Total Shareholders' Equity 13,653,270 13,214,692
------------------------------
Total Liabilities and Shareholders' Equity $ 148,413,263 $ 132,397,207
==============================
</TABLE>
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GOLDEN ISLES FINANCIAL HOLDINGS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
2000 1999
<S> <C> <C>
OPERATING ACTIVITIES
Net Income $ 918,067 ($42,921)
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 213,298 216,544
Provision for loan losses 225,000 1,450,000
Net gain on sale of other real estate 60,114 9,027
Net change in other prepaids and accruals 126,635 (1,307,610)
----------------------------
Net cash provided by (used in) operating activities 1,543,114 325,040
----------------------------
INVESTING ACTIVITIES
Increase in interest-bearing deposits in banks (206,998)
Increase in Federal funds sold (21,000) (1,581,538)
Available for sale securities:
Proceeds from maturities and paydowns 343,171 9,356,635
Purchases (983,750) (10,506,445)
Purchase of FHLB stock (216,300)
Increase in loans, net (15,030,456) (2,836,847)
Purchases of premises and equipment (1,035,308) (78,751)
----------------------------
Net cash provided (used in) investing activities (17,150,641) (5,646,946)
----------------------------
FINANCING ACTIVITIES
Net increase in deposits 9,899,844 5,470,593
Net increase (decrease) in FHLB borrowings 5,604,664 (395,336)
Dividends paid to stockholders (197,624) (198,677)
Proceeds from exercise of stock options 167,636
Purchase of treasury stock (398,225)
Vesting of restricted stock, net 27,222 27,873
----------------------------
Net cash provided by (used in) financing activities 14,935,881 5,072,089
----------------------------
Net increase (decrease) in cash and due from banks (671,646) (249,817)
Cash and due from banks at beginning of period 4,017,512 3,131,141
----------------------------
Cash and due from banks at end of period $ 3,345,866 $ 2,881,324
============================
</TABLE>
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GOLDEN ISLES FINANCIAL HOLDINGS, INC.
NOTE TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
================================================================================
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting and reporting policies of Golden Isles Financial
Holdings, Inc. ("the Company") conform to generally accepted
accounting principles and to general practices within the banking
industry. The interim consolidated financial statements included
herein are unaudited, but reflect all adjustments which, in the
opinion of management, are necessary for a fair presentation of the
consolidated financial position and results of operations for the
interim periods presented. All adjustments reflected in the interim
financial statements are of a normal, recurring nature. Such financial
statements should be read in conjunction with the financial statements
and notes thereto and the report of the independent auditors included
in the Company's Form 10-KSB Annual Report for the year ended December
31, 1999. The results of operations for the nine months ended
September 30, 2000 are not necessarily indicative of the results to be
expected for the full year.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
Liquidity is the Company's ability to meet all deposit withdrawals
immediately, while also providing for the credit needs of customers. The
September 30, 2000 consolidated financial statements evidence a fair liquidity
position as total cash, interest-bearing deposits and Federal funds sold
amounted to $10.5 million, representing 7.1% of total assets. Investment
securities amounted to $19.7 million, representing 13.2% of total assets. These
securities provide a secondary source of liquidity since they can be converted
into cash in a timely manner. The Company's ability to maintain and expand its
deposit base and borrowing capabilities would provide an additional source of
liquidity. For the nine month period ended September 30, 2000, total deposits
increased from $112.7 million to $122.6 million, and borrowings from the Federal
Home Loan Bank increased from $5.9 million to $11.5 million. Management closely
monitors and maintains appropriate levels of interest- earning assets and
interest-bearing liabilities so that maturities of assets are such that adequate
funds are provided to meet customer withdrawals and loan demand. Available
funding sources are also closely monitored. There are no trends, demands,
commitments, events or uncertainties that will result in or are reasonably
likely to affect the Company's liquidity position in any material way.
The Company is subject to various regulatory capital requirements
administered by the federal and state banking agencies. Failure to meet minimum
capital requirements can initiate certain mandatory and possibly additional
discretionary, actions by regulators that, if undertaken, could have a direct
material effect on the financial statements. Under capital adequacy guidelines
and the regulatory framework for prompt corrective action, the Company must meet
specific capital guidelines that involve quantitative measures of the assets,
liabilities, and certain off-balance sheet items as calculated under regulatory
accounting practices. The Company's capital amounts and classification are also
subject to qualitative judgments by the regulators about components, risk
weightings and other factors.
Quantitative measures established by regulation to ensure capital adequacy
require the Company to maintain minimum amounts and ratios of total and Tier 1
capital to risk-weighted assets and of Tier 1 capital to average assets.
Management believes, as of September 30, 2000, the Company meets all capital
adequacy requirements to which it is subject and should be categorized as well
capitalized under the regulatory framework for prompt corrective action.
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RESULTS FROM OPERATIONS
The Company's results of operations are determined by its ability to
effectively manage interest income and expense, to minimize loan and investment
losses, to generate noninterest income and to control noninterest expense. Since
interest rates are determined by market forces and economic conditions beyond
the control of the Company, the ability to generate net interest income is
dependent upon its ability to obtain an adequate spread between the rate earned
on interest-earning assets and the rate paid on interest-bearing liabilities.
The primary component of consolidated earnings is net interest income, or
the difference between interest income on interest-earning assets and interest
paid on interest-bearing liabilities. The net interest margin is net interest
income expressed as a percentage of average interest-earning assets.
Interest-earning assets consist of loans, investment securities,
interest-bearing deposits in banks, and Federal funds sold. Interest-bearing
liabilities consist of deposits and other borrowings.
The net interest margin was 4.07% and 4.05% during the nine months ended
September 30, 2000 and 1999, respectively, or an increase of 2 basis points. The
increase is due primarily to an increase in the volume and yield on loans offset
by an increase in the cost of funds. Average loans increased from $88.7 million
for the first nine months of 1999 with a yield of 9.39% to $106.8 million for
the first nine months of 2000 with a yield of 9.66%. The yield on average
earning assets was 8.93% and 8.49% during the nine months ended September 30,
2000 and 1999, respectively. Cost of funds increased to 5.64% for the nine
months ended September 30, 2000 as compared to 5.26% for the nine months ended
September 30, 1999. This increase in cost of funds is due to a general increase
in interest rates and high cost of funds in the local market area.
The provision for loan losses was $225,000 for the first nine months of
2000 as compared to $1,450,000 for the same period of 1999. The allowance for
loan losses as a percentage of total loans outstanding amounted to 2.4% at
September 30, 2000 as compared to 2.8% at September 30, 1999. The determination
of the amounts allocated for loan losses is based upon management's judgement
concerning factors affecting loan quality and assumptions about the local and
national economy. Management considers the allowance for loan losses at
September 30, 2000 adequate to cover potential losses in the loan portfolio.
The decision to strengthen the reserve for loan losses at September 30,
1999 was based on routine credit review that noted credit deficiencies in a
relatively small number of large loans in the portfolio. Approximately
$1,175,000 of the $1,450,000 nine-month provision for 1999 was attributed to a
few large credit relationships.
Net interest income increased $541,000 or 15.13% during the nine months
ended September 30, 2000 as compared to the nine months ended September 30,
1999. This increase is due primarily to the increase in loan volume and rates as
discussed above.
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Noninterest income for the nine months ended September 30, 2000 and 1999
amounted to $646,000 and $496,000, respectively. Service charges on deposit
accounts increased by $48,000 or 15.98%. This increase in service charges is
reflective of the increase in balances of non-interest bearing deposits which
increased 6.85% from $10,547,000 at September 30, 1999 to $11,269,000 at
September 30, 2000.
Noninterest expense for the nine months ended September 30, 2000 increased
17.06% to $3,141,000 as compared to $2,684,000 for the nine months ended
September 30, 1999. Salaries and employee benefits increased due to the increase
in the number of full-time equivalent employees of 50 at September 30, 1999 to
61 at September 30, 2000. Seven employees were added to staff the North Glynn
Branch which opened in a temporary facility in April 2000. These additional
employees were added during February 2000. Additional expenses for the new
branch were also incurred during 2000 to advertise the branch opening, to
provide supplies, and to operate the branch.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings. As of September 30, 2000, there are no material
pending legal proceedings to which the Company or any of its subsidiaries is a
party or of which any of their property is the subject.
Item 2. Changes in Securities.
(a) None.
(b) None.
Item 3. Defaults Upon Senior Securities. None.
Item 4. Submission of Matters to a Vote of Security Holders.
(a) The annual meeting of shareholders of Golden Isles Financial
Holdings, Inc. was held on Tuesday, July 18, 2000 at 10:00 a.m. at
the Stellar Conference Center, 125 Venture Dr., I-95 and Exit 38,
Brunswick, Georgia 31525 for the purpose of electing directors.
(b) Proxies were solicited pursuant to Regulation 14A under the Exchange
Act.
(c) The sole item voted on at the meeting was the election of directors.
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All directors nominated were elected by the following votes:
FOR AGAINST ABSTAIN
C. Ray Acosta 1,774,134 7,542 0
James M. Fiveash 1,779,876 1,800 0
L. McRee Harden 1,746,600 35,076 0
Michael D. Hodges 1,774,134 7,542 0
Russell C. Jacobs, Jr. 1,779,876 1,800 0
Claude Kermit Keenum 1,779,876 1,800 0
Michael J. Kistler 1,748,400 33,276 0
Jimmy D. Veal 1,774,134 7,542 0
Charles K. Werk 1,746,600 35,076 0
J. Thomas Whelchel 1,774,134 7,542 0
Item 5. Other Information. None
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
Exhibit No: Description
27 Financial Data Schedule
(b) Reports on Form 8-K - There were no reports on Form 8-K filed during
the quarter ended September 30, 2000.
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SIGNATURES
Pursuant to the requirements 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.
GOLDEN ISLES FINANCIAL HOLDINGS, INC.
(Registrant)
Date: November 6, 2000
By: /s/ Sharon D. Hundley
Sharon D. Hundley
Chief Financial Officer
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INDEX TO EXHIBITS
Exhibit Sequential
Number Description Page Number
27 Financial Data Schedule 11
