<PAGE>
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
[_] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
GOLDEN ISLES FINANCIAL HOLDINGS, INC.
-------------------------------------------------------------------
Name of Registrant as Specified in Its Charter)
__________________________________________________________
(Name of Persons(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
________________________________________________________________________________
(2) Aggregate number of securities to which transaction applies:
________________________________________________________________________________
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
________________________________________________________________________________
(4) Proposed maximum aggregate value of transaction: _________________________
(5) Total fee paid: __________________________________________________________
[_] Fee paid previously with preliminary materials: _______________________
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1. Amount Previously Paid: _____________________________________________
2. Form, Schedule or Registration Statement No.: _______________________
3. Filing Party: _______________________________________________________
4. Date Filed: _________________________________________________________
<PAGE>
GOLDEN ISLES FINANCIAL HOLDINGS, INC.
3811 Frederica Road
St. Simons Island, Georgia 31522
June 15, 2000
Dear Shareholder:
On behalf of the Board of Directors, I am pleased to invite you to attend
our Annual Meeting of Shareholders to be held on July 18, 2000 in Brunswick,
Georgia at the time and place shown in the attached notice. As we do at the
meeting every year, in addition to considering the matters described in the
proxy statement, we will review our 1999 business results and other matters of
interest to our shareholders. The meeting should be interesting and informative.
We hope that you will attend the meeting in person, but even if you plan to
do so, we encourage you to please vote your shares ahead of time by using the
enclosed proxy card. This will ensure that your Golden Isles stock will be
represented at the meeting. If you attend the meeting and prefer to vote in
person, you may do so. The attached proxy statement explains more about proxy
voting. Please read it carefully. Every shareholder's vote is important, whether
you own a few shares or many.
We look forward to your participation in the annual meeting process.
Sincerely,
/s/ Jimmy D. Veal
-----------------------
Jimmy D. Veal
Treasurer and Secretary
<PAGE>
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
OF GOLDEN ISLES FINANCIAL HOLDINGS, INC.
DATE: Tuesday, July 18, 2000
TIME: 10:00 a.m.
PLACE: Stellar Conference Center
125 Venture Drive
Interstate 95 and Exit 38
Brunswick, Georgia 31525
MATTERS TO BE VOTED ON:
PROPOSAL I: Election of ten directors
Any other matter that may be properly brought before the meeting.
Only shareholders of record at the close of business on June 1, 2000 are
entitled to notice of and to vote at the meeting or any adjournments thereof.
Your vote is important. Please complete, sign, date and return your proxy card
promptly in the enclosed envelope.
By Order of the Board of Directors
/s/ Jimmy D. Veal
----------------------------
Jimmy D. Veal
Treasurer and Secretary
St. Simons Island, Georgia
June 15, 2000
<PAGE>
GOLDEN ISLES FINANCIAL HOLDINGS, INC.
3811 Frederica Road
St. Simons Island, Georgia 31522
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD
July 18, 2000
This proxy statement is furnished to the shareholders of Golden Isles
Financial Holdings, Inc. in connection with the solicitation of proxies by its
Board of Directors to be voted at the 2000 Annual Meeting of Shareholders and at
any adjournments thereof (the "Annual Meeting"). The Annual Meeting will be
held on Tuesday, July 18, 2000, Stellar Conference Center, 125 Venture Drive, I-
95 and Exit 38, Brunswick, Georgia 31525, at 10:00 a.m. local time.
This proxy statement and the accompanying proxy card were mailed or given
to shareholders on or about June 15, 2000.
As used in this proxy statement, the terms "GIFH", Company, we, our, and us
all refer to Golden Isles Financial Holdings, Inc. and its subsidiaries.
VOTING
General
The securities which can be voted at the Annual Meeting consist of Golden
Isles Financial Holdings' $1.00 par value common stock ("GIFH Stock"), with each
share entitling its owner to one vote on each matter submitted to the
stockholders. The record date for determining the holders of Golden Isles
Financial Holdings stock who are entitled to notice of and to vote at the Annual
Meeting is June 1, 2000. On the record date, 2,470,300 shares of Golden Isles
Financial Holdings stock were outstanding and eligible to be voted.
Quorum and Vote Required
The presence, in person or by proxy, of one-third of the outstanding shares
of Golden Isles Financial Holdings stock is necessary to constitute a quorum at
the Annual Meeting. In determining whether a quorum exists at the Annual Meeting
for purposes of all matters to be voted on, all votes "for" or "against" as well
as all abstentions (including votes to withhold authority to vote) will be
counted.
<PAGE>
In voting for the proposal to elect ten directors (Proposal No. 1), you may
vote in favor of all nominees or withhold your votes as to all or as to specific
nominees. The vote required to approve Proposal No. 1 is governed by Georgia
law and is a plurality of the votes cast by the holders of shares entitled to
vote, provided a quorum is present. Votes withheld and broker non-votes will
not be counted and will have no effect.
If all ten directors are elected, the directors and executive officers of
GIFH will hold 649,642 shares of GIFH Stock, or approximately 26.30% of all
outstanding stock, and we believe that all of those shares will be voted in
favor of management's nominees for director.
Proxies
All properly executed proxy cards delivered pursuant to this solicitation
and not revoked will be voted at the Annual Meeting in accordance with the
directions given. In voting by proxy with regard to the election of directors,
you may vote in favor of all nominees, withhold your votes as to all nominees or
withhold your votes as to specific nominees. You should specify your choices on
the proxy card. If no specific instructions are given with regard to the
matters to be voted upon, the shares represented by a signed proxy card will be
voted "for" the proposals listed on the proxy card. If any other matters
properly come before the Annual Meeting, the persons named as proxies will vote
upon such matters according to their judgment.
All proxy cards delivered pursuant to this solicitation are revocable at
any time before they are voted by giving written notice to our Secretary, Jimmy
D. Veal at 3811 Frederica Road, St. Simons Island, Georgia 31522, by delivering
a later dated proxy card, or by voting in person at the Annual Meeting.
All expenses incurred in connection with the solicitation of proxies will
be borne by the Company. Solicitation may take place by mail, telephone,
telegram, or personal contact by our directors, officers and regular employees
of the Company without additional compensation.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
Our Board of Directors presently consists of nine members, six of whom are
non-employee directors. The Company's bylaws provide that the Board of
Directors shall consist of not less than three nor more than twenty-five
persons, with the exact number to be fixed and determined from time to time by
resolution of the Board of Directors, or by resolution of the shareholders at
any annual or special meeting of shareholders. The Board of Directors voted at
its May 16, 2000 meeting to set the number of directors at ten for the Company's
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<PAGE>
ensuing year. The term of office for directors is one year or until the next
Annual Meeting and thereafter until their successors are elected and qualified.
The Board has nominated the following persons for submission to the
shareholders for election for a one-year term expiring at the 2001 annual
meeting or until their successors are elected and qualified.
Name Age Position with the Company
---- --- -------------------------
C. Ray Acosta 59 Director
James M. Fiveash 69 Director
L. McRee Harden 44 Director
Michael D. Hodges 46 Director; President of the Company;
President of First Bank of Brunswick
Russell C. Jacobs, Jr. 64 Director
Claude Kermit Keenum 64 Director
Michael J. Kistler 48 Shareholder
Jimmy D. Veal 51 Director
Charles K. Werk 49 Director
J. Thomas Whelchel 65 Director; Chief Executive Officer
Each of the nominees, except Mr. Kistler, is currently a director of the
Company, and has been nominated by the Board to serve an additional term.
The Board of Directors unanimously recommends that you vote "FOR" the
proposal to elect the ten nominees named above.
Each of the nominees has consented to serve if elected. If any nominee
should be unavailable to serve for any reason, the Board may designate a
substitute nominee (in which event the persons named as proxies will vote the
shares represented by all valid proxy cards for the election of such substitute
nominee), allow the vacancy to remain open until a suitable candidate is
located, or reduce the number of directors.
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<PAGE>
Information as of December 31, 1999 about each of the nominees is set forth
below. Their ownership of Golden Isles Financial Holdings stock is set forth in
the table on pages 33 and 34.
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
Board of Directors
Charles R. Acosta. Mr. Acosta has been employed by Georgia Power Company
since 1964. He has been Region Manager for the Coastal Region, a 10-county
service area, since 1993. Prior to that, he was District Manager for the
Brunswick District from 1977 to 1993. Mr. Acosta is Past President and Campaign
Chairman of the United Way of Brunswick and Glynn County, and past Chairman of
the Brunswick and Glynn County Development Authority. Mr. Acosta was one of the
original directors of the Company and served as a director of the Company from
1987 to 1994. He also served as a director of the Bank from 1990 to 1994. Mr.
Acosta was reelected as a director of the Company at the 1997 Annual Meeting of
Shareholders.
James M. Fiveash. Mr. Fiveash initially served as a director of the Company
from 1989 until his resignation in 1994, and was elected as a director of the
Company at the 1997 Annual Meeting of Shareholders. Mr. Fiveash is retired, and
serves as part-time president of The Fiveash Company, which is in the business
of renting trucking terminals.
L. McRee Harden. Mr. Harden has been a director of the Company since July
1988, a director of the Bank since February 1990. Mr. Harden is the Secretary
and Treasurer of Friendly Express, Inc., a company which operates a chain of
approximately 65 convenience stores in south Georgia and Florida.
Michael D. Hodges. Mr. Hodges has been a director of the Company since 1991
and a director of the Bank since June 1990. On February 20, 1997, Mr. Hodges
became President and CEO of the Bank. He is also President of the Company. Prior
to that, he had been Senior Vice President of the Bank since June 1990, with
principal responsibilities for the Bank's loan portfolio.
Russell C. Jacobs, Jr. Mr. Jacobs has been a director of the Company since
July 1988, a director of the Bank since February 1990. He also has been a Vice
Chairman of the Bank since July 1995. Mr. Jacobs is self-employed as an agent
for the Equitable Financial Companies, and as a registered representative with
Equico Securities, Inc. Mr. Jacobs holds both the Chartered Life Underwriter
("CLU") and Chartered Financial Consultant ("CHFC") designations.
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<PAGE>
Claude Kermit Keenum. Mr. Keenum has been a director of the Company since
July 1988, a director of the Bank since February 1990. He was the Superintendent
of the Glynn County School System from 1980 to 1989 and the Superintendent of
the Cobb County School System in metropolitan Atlanta from 1989 to 1992. Mr.
Keenum was most recently President of Southeastern Communication Systems, Inc.
and Keenum's Educational Services, Inc., and is now retired.
Michael J. Kistler. Mr. Kistler obtained his Juris Doctorate from the
Thomas M. Cooley Law School in Lansing, Michigan in 1976 and practiced law until
1980. Mr. Kistler currently develops real estate with a company he formed in
1982, Development Associates, Inc. located in Savannah, Georgia. Development
Associates, Inc. focuses on conventional investment property acquisitions,
acquiring properties in Georgia and Alabama. Mr. Kistler has not served on the
Board in the past.
Jimmy D. Veal. Mr. Veal has been a Vice Chairman of the Company since July
1995. He has been a director of the Company since June 1987 and
Secretary/Treasurer of the Company since September 1992. He has been a Vice
Chairman of the Bank since July 1995, a director of the Bank since July 1990. He
is owner of a hotel on Jekyll Island, Georgia.
Charles K. Werk. Mr. Werk is the CEO of Coastal Sleeve Label, Inc., located
in Brunswick, Georgia. Additionally, Mr. Werk is the owner of Trans Link Motor
Express, Inc., a transportation and distribution company located in Albany,
Georgia, and has owned and operated various operating companies in the printing,
warehousing and food manufacturing industries. Prior to his experience with
operating companies, Mr. Werk spent fifteen years in the Investment Banking and
Commercial Banking Industry with various institutions including SunTrust Bank,
Manufacturers Hanover, Melon Bank, and First Chicago. Mr. Werk received his
Bachelor's Degree from The University of Georgia and an MBA Degree in Finance
from Georgia State University. Mr. Werk serves on the Board of Trustees of
Coastal Georgia Community College and is a member of Wesley United Methodist
Church. Mr. Werk resides on St. Simons Island, Georgia with his wife, Eva, and
daughter, Christina.
J. Thomas Whelchel. Mr. Whelchel has been the Chairman and CEO of the
Company since October 17, 1996. Prior to that, Mr. Whelchel was a Vice Chairman
of the Company between July 1995 and October 1996. From July 1988 through July
1995, he served as President of the Company. Mr. Whelchel has been a director of
the Company since July 1988, and Chairman and a director of the Bank since
February 1990. He is a senior partner in the Brunswick law firm of Whelchel,
Brown, Readdick and Bumgartner.
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<PAGE>
Executive Officers
Michael D. Hodges, Jimmy D. Veal and J. Thomas Whelchel are the only
executive officers of Golden Isles Financial Holdings and were previously
reported on as nominees for election as directors.
None of the directors hold directorships in any reporting company other
than Golden Isles Financial Holdings, Inc. There are no family relationships
among directors, executive officers, or persons nominated or chosen by the
Company to become directors or executive officers of the Company.
DESCRIPTION OF BUSINESS
Business Overview
Golden Isles Financial Holdings, Inc. (the "Company" or "GIFH") was
incorporated under the laws of the State of Georgia on September 8, 1987, but
conducted only organizational activities until its initial public offering
closed on January 31, 1990. Upon the approval of its application by the Board of
Governors of the Federal Reserve System (the "Federal Reserve") under the
Federal Bank Holding Company Act of 1956, as amended (the "Federal Bank Holding
Company Act"), the Company became a bank holding company. The Company used the
proceeds of the offering to acquire all of the capital stock of The First Bank
of Brunswick (the "Bank"), a de novo bank chartered by the State of Georgia.
The Bank opened for business on July 2, 1990, to engage in a general
commercial banking business in its office in Brunswick (Glynn County), Georgia.
Since that date, the Bank has engaged in a general commercial banking business,
emphasizing the banking needs of individuals and small-to medium sized
businesses in its primary service area. In 1995, the Bank opened a second full
service office in St. Simons Island, Georgia.
Beginning May 31, 1994, the Company conducted a secondary public offering
of securities (the "Secondary Offering") pursuant to which GIFH offered for sale
a minimum of 769,832 and a maximum of 1,538,462 units (the "Units") at a price
of $6.50 per Unit. Each Unit consisted of one share of Common Stock of GIFH and
one non-detachable Class A Warrant to purchase one share of the Common Stock.
Each Class A Warrant expired on May 31, 1998, and entitled the holder to
purchase an additional share of the Common Stock at a price of $7.25 if
exercised on or before May 31, 1996, $8.25 if exercised on or before May 31,
1997, and $9.50 if exercised on or before May 31, 1998. The Secondary Offering
closed as of March 31, 1995. GIFH accepted subscriptions for a total of 897,230
Units, and received total proceeds in connection with such subscriptions
amounting to $5,831,995. The proceeds were held in escrow until May 11, 1995,
when $5,500,000 was released from
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escrow to GIFH. The balance of the proceeds held in escrow was released to GIFH
on July 25, 1995. In 1996, the Company received $53,077 pursuant to the exercise
of 7,321 Class A warrants at $7.25 per share. In 1997, no Class A warrants were
exercised, so the Company received no money therefrom. In 1998, 149,970 shares
were exercised from these warrants at $9.50 each. The Company received
$1,424,715 from the exercise of these warrants and incurred $9,837 in related
expense. Unexercised warrants expired May 31, 1998 and the former units are now
shares of common stock traded on the NASDAQ national market under the symbol
GIFH.
Business Operations
The Holding Company (GIFH)
GIFH owns 100% of the capital stock of the Bank. The principal role of
GIFH is to supervise and coordinate the activities of its subsidiary and to
provide the subsidiary with capital. GIFH derives all of its income from
dividends from its subsidiary and any interest it earns on funds it holds.
The First Bank of Brunswick (the Bank)
The Bank conducts a general commercial and retail banking business,
emphasizing in its marketing the Bank's local management and ownership. The
Bank accepts demand, savings, and time deposits of individuals, partnerships and
corporations and offers commercial and retail checking accounts, Super NOW
accounts, money market accounts, individual retirement accounts and certificates
of deposit. The Bank makes various types of level term and installment loans,
both personal and commercial, and makes and services long-term mortgage loans as
well as individual and business loans. The Bank acts as an issuing agent for
U.S. savings bonds, traveler's checks, money orders and cashier's checks, and it
offers collection teller services, including wire transfer services. The Bank
also offers safe deposit boxes and a night depository facility. The Bank
provides these services from its main office in Brunswick, Georgia, and its
branch in St. Simons Island, Georgia. Bank deposits are insured by the Federal
Deposit Insurance Corporation ("FDIC"), up to applicable limits.
The Bank derives many of its customers from and conducts a significant
portion of its business transactions within a primary service area encompassing
the mainland of Glynn County and St. Simons Island, Georgia. The population of
Glynn County was 61,807 in 1987, 64,737 in 1990 and is projected to reach 74,546
by the year 2000. Total dwelling units are expected to increase from 24,085 in
1987 to 31,182 in the year 2000. The area includes well-known resort,
retirement and convention destinations, with local industry oriented towards
tourism and leisure activities. In addition, the economy of Glynn County is
fairly
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diversified, the top five industries ranked by total employment being: a pulp
mill, seafood processing, restaurants, hotel/motels and chemical processing. The
local economy is also supported by the Federal Law Enforcement Training Center
(the "Center") in Brunswick, which processed approximately 19,350 law
enforcement officers in 1996. The Center employs approximately 1,600 people.
Management expects the relatively high level of growth and commercial
activity in Glynn County to continue, providing a favorable environment for the
Company's operating subsidiary. However, there is no assurance that population
growth and ongoing economic development will continue, or that the subsidiaries
will be able to exploit the growth and development profitably.
The Bank competes with other commercial banks, savings and loan
associations, credit unions, mortgage banking companies, consumer finance
companies, securities brokerage firms, insurance companies, money market mutual
funds, and other financial institutions. As of December 31, 1999, there were a
total of eight (8) FDIC-insured institutions operating in the Glynn County
markets. Management estimates that as of December 31, 1999, FDIC-insured
deposits in Glynn County totaled approximately $1 billion, with the Bank having
approximately 10% of such deposits.
In general terms, federal interstate banking laws (discussed in Supervision
and Regulation, below), as well as other federal and state laws, have caused and
will continue to cause increased competition from both conventional banking
institutions and other businesses offering financial services and products
within the financial services industry in Georgia. Many of the financial
institutions operating in Georgia have substantially greater financial resources
and offer certain services, such as trust services, that the Bank does not
expect to provide in the near future. By virtue of the greater total
capitalization of such institutions, they have substantially higher lending
limits than the Bank and substantial advertising and promotional budgets. To
compete, the Bank relies on specialized services, responsive handling of its
customers and personal contacts by officers, directors and staff.
Employees.
As of December 31, 1999, GIFH and its subsidiaries employed the equivalent
of 51 full-time employees. Management believes that its employee relations are
good. There are no collective bargaining agreements covering any of the
employees.
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<PAGE>
Competition.
The banking industry is highly competitive. Banks generally compete with
other financial institutions through the banking products and services offered,
the pricing of services, the level of service provided, the convenience and
availability of services, and the degree of expertise and the personal manner in
which services are offered. The Bank encounters competition from most of the
financial institutions in the Bank's primary service area. In the conduct of
certain areas of its banking business, the Bank also competes with credit
unions, consumer finance companies, insurance companies, money market mutual
funds and other financial institutions, some of which are not subject to the
same degree of regulation and restrictions imposed upon the Bank. Management
believes that competitive pricing and personalized service will provide it with
a method to compete effectively in the primary service area.
The decrease in service charges on deposit accounts of $94,000 or 17.60% to
$440,000 in 1999 from $534,000 in 1998 resulted from a promotional lower fee
structure implemented in 1999 on certain types of transaction accounts as an
effort to compete for those type deposit accounts and a decrease in fees earned
on overdrafts. The decrease in other noninterest income was attributable
previously to other real estate owned transactions.
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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
General
The Company's principal asset is its ownership of the Bank. Accordingly,
the Company's results of operations are primarily dependent upon the results of
operations of the Bank. The Bank's activities consist of attracting deposits
from the general public and applying those funds to the origination of
commercial, consumer and real estate loans (including commercial loans
collateralized by real estate). The Bank's profitability depends primarily on
net interest income, which is the difference between interest income generated
from interest-earning assets (i.e., loans and investments) less the interest
expense incurred on interest-bearing liabilities (i.e., customer deposits and
borrowed funds). Net interest income is affected by the relative amounts of
interest-earning assets and interest-bearing liabilities, and the interest rate
paid and earned on these balances. Net interest income is dependent upon the
Bank's interest rate spread, which is the difference between the average yield
earned on its interest-earning assets and the average rate paid on its interest-
bearing liabilities. When interest-earning assets approximates or exceeds
interest-bearing liabilities, any positive interest rate spread will generate
interest income. The interest rate spread is impacted by interest rates, deposit
flows and loan demand. Additionally, and to a lesser extent, the Bank's
profitability is affected by such factors as the level of noninterest income and
expenses, the provision for loan losses and the effective tax rate. Noninterest
income consists primarily of service charges on deposit accounts and loan
origination fees and other fees charged to bank customers. Noninterest expenses
consist of compensation and benefits, occupancy-related expenses and other
operating expenses.
During 1998, The Company discontinued the operations of its consumer
finance subsidiary, First Credit Service Corporation ("FCC") and disposed of its
assets. For purposes of Management's Discussion and Analysis of Financial
Condition and Results of operations, the results of operations from continuing
operations have been presented on a comparable basis for 1999 and 1998. The
results of discontinued operations for 1998 have not been presented. Also,
statistical disclosure required by Exchange Act Guide 3 has been presented only
for continuing operations.
Results From Continuing Operations For Years Ended December 31, 1999 and 1998
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 the Bank's ability
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to obtain an adequate spread between the rate earned on interest-earning assets
and the rate paid on interest-bearing liabilities. Thus, the key performance
measure for net interest income is the interest margin or net yield, which is
net interest income divided by average earning assets.
Net Interest Income
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 and Federal funds sold.
Interest-bearing liabilities consist of deposits and other borrowings.
The Company's net interest margin decreased 21 basis points to 4.11% in
1999 as compared to 4.32% in 1998. The yield on average interest-earning assets
decreased 59 basis points or 6.44% to 8.57% in 1999 as compared to 9.16% in
1998. The interest rate paid on average interest-bearing liabilities decreased
37 basis points to 5.25% in 1999 as compared to 5.62% in 1998. Net interest
income was $4,908,000 in 1999, as compared to $4,743,000 in 1998, representing
an increase of $165,000 or 3.48%. The decrease in the yield on interest-earning
assets offset by a decrease in the rate paid on interest-bearing liabilities
resulted in a decrease in net interest income of $520,000. This decrease in net
interest income was offset by an increase of $685,000 generated on an increase
in volume of interest-earning assets over interest-bearing liabilities in 1999.
Average interest-earning assets increased $9,577,000 or 8.71% to
$119,492,000 in 1999 from $109,915,000 in 1998. Average loans increased
$6,797,000; average investments increased $1,643,000; average Federal funds sold
increased $1,429,000; and average interest-bearing deposits in banks decreased
$292,000. The increase in average interest-earning assets was funded by an
increase of $9,077,000 or 9.45%, in average deposits to $105,134,000 in 1999
from $96,057,000 in 1998. Although, average interest-bearing deposits increased
$7,915,000 in 1999 from 1998, a significant amount of time deposits with an
average rate of 5.71% shifted to interest-bearing demand deposits with an
average rate of 4.03%. As a result of this shift in deposits, interest paid on
average deposits increased by only $129,000 or 2.67% to $4,964,000 in 1999 as
compared to $4,835,000 in 1998. Approximately 9.43% and 9.11% of the average
deposits were noninterest-bearing deposits in 1999 and 1998, respectively.
Allowance for Loan Losses
The allowance for loan losses represents a reserve for potential losses in
the loan portfolio. The adequacy of the allowance for loan losses is evaluated
periodically based
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on a review of all significant loans, with a particular emphasis on nonaccruing,
past due and other loans that management believes require attention.
The provision for loan losses is a charge to earnings in the current period
to replenish the allowance and maintain it at a level management has determined
to be adequate. The provision for loan losses charged to earnings amounted to
$1,470,000 in 1999 as compared to $886,000 in 1998, representing an increase of
65.91% in the provision. The significant increase in the provision in 1999
resulted from the replenishment of $736,000 for net charge-offs during the year
and the addition of $734,000 to cover an increase in average loans of $6,797,000
during the year from the prior year and to cover an increase in nonperforming
loans of approximately $938,000. The allowance for loan losses as a percentage
of total loans outstanding amounted to 2.60% at December 31, 1999 as compared to
2.01% at December 31, 1998.
The determination of the amounts allocated for loan losses is based upon
management's judgment concerning factors affecting loan quality and assumptions
about the local and national economy. Management considers the year-end
allowances adequate to cover potential losses in the loan portfolio.
Noninterest Income
Noninterest income amounted to $698,000 and $817,000 for the years ended
December 31, 1999 and 1998, respectively. As a percent of total average assets,
noninterest income decreased from .70% in 1998 to .56% in 1999.
Following is a summary of noninterest income for the years ended December
31, 1999 and 1998.
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
Noninterest income
Income from origination of mortgage loans, 170,000 $ 96,000
less related expenses
Service charges on deposit accounts 440,000 534,000
Net realized gain on sales of securities 8,000 -
Other 80,000 187,000
----------- -----------
Total noninterest income $ 698,000 $ 817,000
=========== ===========
</TABLE>
During 1998, the Company reorganized its mortgage banking activities within
the Bank. This activity in the mortgage loan area continued to expand through
1999 as indicated by an increase of $74,000 in income from the origination of
mortgage loans, less related expenses.
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The decrease in service charges on deposit accounts of $94,000 or 17.60% to
$440,000 in 1999 from $534,000 in 1998 resulted from a promotional lower fee
structure implemented in 1999 on certain types of transaction accounts as an
effort to compete for those type deposit accounts and a decrease in fees earned
on overdrafts. The decrease in other noninterest income was attributable
previously to other real estate owned transactions.
Noninterest Expense
Noninterest expense amounted to $3,704,000 and $3,327,000 for the years
ended December 31, 1999 and 1998, respectively, representing an increase of
$377,000 or 11.33%. As a percent of total average assets, noninterest expense
amounted to 2.95% in 1999 as compared to 2.84% in 1998.
Following is a summary of noninterest expense for the years ended December
31, 1999 and 1998.
<TABLE>
<CAPTION>
1999 1998
------------- -------------
<S> <C> <C>
Noninterest expense
Salaries and employee benefits $ 2,085,000 $ 1,745,000
Equipment and occupancy expense 559,000 550,000
Advertising and business development 160,000 155,000
Legal and professional 220,000 217,000
Supplies and printing 154,000 150,000
Other operating expenses 526,000 510,000
------------- -------------
Total noninterest expense $ 3,704,000 $ 3,327,000
============= =============
</TABLE>
Salaries and employee benefits increased $340,000 to $2,085,000 in 1999
from $1,745,000 in 1998, representing an increase of 19.48%. The increase in
salaries and employee benefits is the result of an increase in the average
number of full-time equivalent employees of the Bank from 43 in 1998 to 50 in
1999, a 16.28% increase. The Bank opened a separate mortgage origination
department in late 1998 and added 2 employees and a commissioned salesperson in
1999, resulting in salaries and employee benefits of $133,000 for 1999. Other
additional employees were necessary to support the growth of the Bank. All other
noninterest expenses increased $37,000, or 2.34%, during 1999.
For the year ended December 31, 1999, the Company realized net income from
continuing operations of $275,000 as compared to net income from continuing
operations of $856,000 for the year ended December 31, 1998. After recording a
net loss of $128,000 from discontinued operations and a gain of $357,000 from
disposal of assets of the discontinued business segment, the Company realized
net income of $1,085,000 for the year ended December 31, 1998. Net income from
continuing operations decreased
-13-
<PAGE>
$581,000, or 67.87%, in 1999, primarily due to an additional provision for loan
losses in the 3rd quarter of $1,210,000. As previously discussed, this provision
was necessary to replenish loan losses and to provide for an increase in
nonperforming loans.
Liquidity and Capital Resources
Liquidity management involves the matching of the cash flow requirements of
customers who may be either depositors desiring to withdraw funds or borrowers
needing assurance that sufficient funds will be available to meet their credit
needs and the ability of the Company to meet those needs. The Company seeks to
meet liquidity requirements primarily through management of short-term
investments (principally Federal funds sold) and monthly amortizing loans.
Another source of liquidity is the repayment of maturing single payment loans.
Also, the Bank maintains relationships with correspondent banks which could
provide funds on short notice, if needed.
The liquidity and capital resources of the Company and the Bank are
monitored on a periodic basis by state and Federal regulatory authorities. As
determined under guidelines established by these regulatory authorities, the
Bank's liquidity ratio at December 31, 1999 was considered satisfactory. At that
date, the Bank's short-term investments were adequate to cover any reasonable
anticipated immediate need for funds. The Company was aware of no events or
trends likely to result in a material change in their liquidity. During 1999,
the Company's capital decreased $248,000 to $13,215,000 at December 31, 1999 as
compared to $13,463,000 at December 31, 1998. Capital increased by retaining net
earnings of $76,000 (after payment of cash dividends of $199,000) and the
addition of $211,000 in capital from the exercise of stock options and the
vesting of restricted stock. After recording an increase in unrealized losses on
securities available for sale of $535,000, total capital decreased by $248,000.
At December 31, 1999, the Company had no binding commitments outstanding
for capital expenditures. However, the Company estimates that expenditures for
completion of banking facilities and purchase of equipment will amount to
approximately $1,500,000 in 2000.
In accordance with risk capital guidelines issued by the Federal Reserve
Board, the Company is required to maintain a minimum standard of total capital
to weighted risk assets of 8%. Additionally, all member banks must maintain
"core" or "Tier 1" capital of at least 4% of total assets ("leverage ratio").
Member banks operating at or near the 4% capital level are expected to have
well-diversified risks, including no undue interest rate risk exposure,
excellent control systems, good earnings, high asset quality, and well managed
on- and off-balance sheet activities; and, in general, be considered strong
banking organizations with a composite 1 rating under the CAMEL rating system of
-14-
<PAGE>
banks. For all but the most highly rated banks meeting the above conditions, the
minimum leverage ratio is to be 4% plus an additional 100 to 200 basis points.
The following table summarizes the regulatory capital levels of the
Company at December 31, 1999.
<TABLE>
<CAPTION>
Actual Required Excess
------------------------- ------------------------- -------------------------
Amount Percent Amount Percent Amount Percent
------------- ----------- ------------- ---------- -------------------------
(Dollars in Thousands)
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Leverage capital $ 13,589 10.8 % $ 5,020 4.0 % $ 8,569 6.8 %
Risk-based capital:
Core capital 13,589 14.6 3,716 4.0 9,873 10.6
Total capital 14,768 15.9 7,432 8.0 7,336 7.9
</TABLE>
The Bank also met its individual regulatory capital requirements at
December 31, 1999.
SELECTED STATISTICAL INFORMATION OF
GOLDEN ISLES FINANCIAL HOLDINGS, INC.
The following statistical information should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operation" and the financial statements and related notes included elsewhere in
this Annual Report and in the documents incorporated herein by reference.
-15-
<PAGE>
Average Balances and Net Income Analysis From Continuing Operations
The following tables set forth the amount of the Company's interest income
or interest expense from continuing operations for each category of interest-
earning assets and interest-bearing liabilities and the average interest rate
for total interest-earning assets and total interest-bearing liabilities, net
interest spread and net yield on average interest-earning assets. Federally tax-
exempt income is presented on a taxable-equivalent basis assuming a 34% Federal
tax rate.
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------------------------------------------
1999 1998
------------------------------------- --------------------------------------
Average Average
Interest Yield/ Interest Yield/
Average Income/ Rate Average Income/ Rate
Balance Expense Paid Balance Expense Paid
------------ ----------- ------------ ------------- ----------- ------------
(Dollars in Thousands)
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Interest-earning assets:
Loans, net of unearned interest $ 90,765 $ 8,569 9.44 % $ 83,968 $ 8,516 10.14 %
Investment securities, taxable 22,017 1,334 6.06 20,374 1,254 6.15
Federal funds sold 6,586 329 5.00 5,157 276 5.35
Interest-bearing deposits in banks 124 7 5.65 416 24 5.77
------------ ----------- ------------- -----------
Total interest-earning
assets 119,492 10,239 8.57 109,915 10,070 9.16
------------ ----------- ------------- -----------
Noninterest-earning assets:
Cash 3,022 2,144
Allowance for loan losses (2,007) (1,281)
Unrealized gain (loss) on
available for sale securities (120) 175
Other assets 5,117 6,272
------------ -------------
6,012 7,310
------------ -------------
Total assets $ 125,504 $ 117,225
============ =============
</TABLE>
-16-
<PAGE>
Average Balances and Net Income Analysis From Continuing Operations (Continued)
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------------------------------------
1999 1998
------------------------------------ ------------------------------------
Average Average
Interest Yield/ Interest Yield/
Average Income/ Rate Average Income/ Rate
Balance Expense Paid Balance Expense Paid
------------- ----------- ---------- ------------ ----------- -----------
(Dollars in Thousands)
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing liabilities:
Savings and interest-bearing demand $ 28,154 $ 1,136 4.03 % $ 18,462 $ 732 3.96 %
deposits
Time deposits 67,065 3,828 5.71 68,842 4,103 5.96
Other borrowings 6,237 367 5.88 5,812 352 6.06
Notes payable - - - 1,596 140 8.75
------------ ---------- ----------- ----------
Total interest-bearing
liabilities 101,456 5,331 5.25 94,712 5,327 5.62
------------ ---------- ----------- ----------
Noninterest-bearing liabilities and
stockholders'
equity:
Demand deposits 9,915 8,753
Other liabilities 719 1,373
Stockholders' equity 13,414 12,387
------------ -----------
Total noninterest-bearing
liabilities
and stockholders' equity 24,048 22,513
------------ -----------
Total liabilities and
stockholders' equity $ 125,504 $ 117,225
============ ===========
Interest rate spread 3.32 % 3.54 %
======= =======
Net interest income $ 4,908 $ 4,743
========== ==========
Net interest margin 4.11 % 4.32 %
======= =======
</TABLE>
-17-
<PAGE>
Rate and Volume Analysis From Continuing Operations
The following table reflects the changes in net interest income from
continuing operations resulting from changes in interest rates and from asset
and liability volume. Federally tax-exempt interest is presented on a
taxable-equivalent basis assuming a 34% Federal tax rate. The change in interest
attributable to rate has been determined by applying the change in rate between
years to average balances outstanding in the later year. The change in interest
due to volume has been determined by applying the rate from the earlier year to
the change in average balances outstanding between years. Thus, changes that are
not solely due to volume have been consistently attributed to rate.
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------------------------------------------------------
1999 vs. 1998 1998 vs. 1997
--------------------------------------- --------------------------------------
Increase Changes Due To Increase Changes Due To
------------------------ -----------------------
(Decrease) Rate Volume (Decrease) Rate Volume
-------------- ---------- ------------- ------------- --------- -------------
(Dollars in Thousands)
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Increase (decrease) in:
Income from earning assets:
Interest and fees on loans $ 53 $ (636) $ 689 $ 778 $ 56 $ 722
Interest on taxable securities 80 (21) 101 275 (24) 299
Interest on Federal funds 53 (23) 76 109 (7) 116
Deposits in banks (17) - (17) 14 1 13
---------- -------- ---------- ---------- -------- ----------
Total interest income 169 (680) 849 1,176 26 1,150
---------- -------- ---------- ---------- -------- ----------
Expense from interest-bearing liabilities:
Interest on savings and interest-
bearing demand deposits 404 20 384 379 211 168
Interest on time deposits (275) (169) (106) 199 13 186
Interest on other borrowings 15 (11) 26 113 (23) 136
Interest on debt (140) - (140) (123) 6 (129)
---------- -------- ---------- ---------- -------- ----------
Total interest expense 4 (160) 164 568 207 361
---------- -------- ---------- ---------- -------- ----------
Net interest income $ 165 $ (520) $ 685 $ 608 $ (181) $ 789
========== ======== ========== ========== ======== ==========
</TABLE>
-18-
<PAGE>
Asset/Liability Management
It is the objective of the Company to manage assets and liabilities to
provide a satisfactory, consistent level of profitability within the framework
of established cash, loan investment, borrowing and capital policies. Certain of
the officers of the Company are responsible for monitoring policies and
procedures that are designed to ensure acceptable composition of the
asset/liability mix, stability and leverage of all sources of funds while
adhering to prudent banking practices. It is the overall philosophy of
management to support asset growth primarily through growth of core deposits of
all categories made by individuals, partnerships and corporations. Management of
the Company seeks to invest the largest portion of the Company's assets in
commercial, consumer and real estate loans.
The Company's asset/liability mix is monitored on a daily basis. A
monthly report reflecting interest-sensitive assets and interest-sensitive
liabilities is prepared and presented to the Company's Board of Directors. The
objective of this policy is to control interest-sensitive assets and liabilities
so as to minimize the impact of substantial movements in interest rates on the
Company's earnings.
As of December 31, 1999, the Company's cumulative one-year interest
rate sensitivity gap ratio was 86%. This indicates that the Company's
interest-bearing liabilities will reprice during this period at a rate slightly
faster than the Company's interest-earning assets. Certain assumptions regarding
the interest sensitivity of these assets and liabilities have been incorporated
into this analysis. The Company believes that it has positioned itself to
maintain its net interest margin in the event of changes in interest rates.
There can be no assurance, however, that this strategy will be successful.
The following table sets forth the distribution of the repricing of the
Company's earning assets and interest-bearing liabilities as of December 31,
1999, the interest rate sensitivity gap (i.e., interest rate sensitive assets
less interest rate sensitive liabilities), the cumulative interest rate
sensitivity gap ratio (i.e., interest rate sensitive assets divided by interest
rate sensitive liabilities) and the cumulative sensitivity gap ratio. The table
also sets forth the time periods in which earning assets and liabilities will
mature or may reprice in accordance with their contractual terms. However, the
table does not necessarily indicate the impact of general interest rate
movements on the net interest margin since the repricing of various categories
of assets and liabilities is subject to competitive pressures and the needs of
the Bank's customers. In addition, various assets and liabilities indicated as
repricing within the same period may in fact reprice at different times within
such period and at different rates.
-19-
<PAGE>
Asset/Liability Management (Continued)
<TABLE>
<CAPTION>
At December 31, 1999
-----------------------------------------------------------------
Maturing or Repricing Within
-----------------------------------------------------------------
Zero to Three One
Three Months to Year to Over
Months One Year Five Years Five Years Total
----------- -------------- ----------- ----------- ------------
(Dollars in Thousands)
-----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Earning assets:
Interest-bearing deposits in banks $ 14 $ - $ - $ - $ 14
Federal funds sold 6,945 - - - 6,945
Investment securities 366 - 9,967 9,479 19,812
Loans 60,162 11,501 21,598 4,985 98,246
---------- ----------- ---------- ---------- -----------
67,487 11,501 31,565 14,464 125,017
---------- ----------- ---------- ---------- -----------
Interest-bearing liabilities:
Interest-bearing demand deposits 27,532 - - - 27,532
Savings 2,511 - - - 2,511
Certificates less than $100,000 14,281 28,908 9,400 264 52,853
Certificates, $100,000 and over 5,556 11,947 1,922 105 19,530
Other borrowings 90 514 2,742 2,543 5,889
---------- ----------- ---------- ---------- -----------
49,970 41,369 14,064 2,912 108,315
---------- ----------- ---------- ---------- -----------
Interest rate sensitivity gap $ 17,517 $ (29,868) $ 17,501 $ 11,552 $ 16,702
========== =========== ========== ========== ===========
Cumulative interest rate sensitivity gap $ 17,517 $ (12,351) $ 5,150 $ 16,702
========== =========== ========== ==========
Interest rate sensitivity gap ratio 1.35 0.28 2.24 4.97
========== =========== ========== ==========
Cumulative interest rate sensitivity gap ratio 1.35 0.86 1.05 1.15
========== =========== ========== ==========
</TABLE>
The Company manages the mix of asset and liability maturities in an
effort to control the effects of changes in the general level of interest rates
on net interest income. Except for its effect on the general level of interest
rates, inflation does not have a material impact on the Company due to the rate
variability and short-term maturities of its earning assets. In particular,
approximately 73% of the loan portfolio is comprised of loans which mature or
reprice within one year or less. Mortgage loans, primarily with five to fifteen
year maturities, are also made on a variable rate basis with rates being
adjusted every one to five years.
-20-
<PAGE>
INVESTMENT PORTFOLIO
Types of Investments
The amortized cost and fair value of investments in securities
available for sale at the dates indicated are summarized as follows:
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
-------------- -------------- ------------- ------------
(Dollars in Thousands)
----------------------------------------------------------
<S> <C> <C> <C> <C>
December 31, 1999:
U.S. Government and agency securities $ 16,646 $ 3 $ (534) $ 16,115
Mortgage-backed securities 2,800 - (36) 2,764
------------- ------------- ----------- -----------
$ 19,446 $ 3 $ (570) $ 18,879
============= ============= =========== ===========
December 31, 1998:
U.S. Government and agency securities $ 21,151 $ 243 $ - $ 21,394
Mortgage-backed securities 1,095 3 (1) 1,097
------------- ------------- ----------- -----------
$ 22,246 $ 246 $ (1) $ 22,491
============= ============= =========== ===========
</TABLE>
Other investments consists of Federal Home Loan Bank stock, and it is
carried at cost. The stock is considered a restricted equity investment as it
can only be sold back to the Federal Home Loan Bank or another member bank at
par value. At December 31, 1999 and 1998, the Company's total investment in
Federal Home Loan Bank stock was $366,000 and $552,000, respectively.
-21-
<PAGE>
Maturities
The amounts of investments in securities in each category as of
December 31, 1999 are shown in the following table according to contractual
maturity classifications (1) one year or less, (2) after one year through five
years, (3) after five years through ten years, and (4) after ten years.
<TABLE>
<CAPTION>
U.S. Treasury
and Other U.S.
Government Agencies State and
and Corporations Political Subdivisions
Yield
Amount (1) Amount Yield
-------------- ----------- ------------- -----------
(Dollars in Thousands)
------------------------------------------------------
<S> <C> <C> <C> <C>
Maturity:
One year or less $ - - % $ - - %
After one year through five years 9,967 6.09 - -
After five years through ten years 7,497 6.09 - -
After ten years 1,982 5.78 - -
------------- -------- ------------ ----------
$ 19,446 6.06 % $ - - %
============= ======== ============ ==========
</TABLE>
(1) Yields were computed using coupon interest, adding discount accretion
or subtracting premium amortization, as appropriate, on a ratable basis
over the life of each security. The weighted average yield for each
maturity range was computed using the acquisition price of each
security in that range.
-22-
<PAGE>
LOAN PORTFOLIO
Types of Loans
Management believes that the Company's loan portfolio is adequately
diversified. The loan portfolio contains no foreign or energy-related loans or
significant concentrations in any one industry, with the exception of real
estate mortgage loans, which constituted approximately 79% of the Company's loan
portfolio as of December 31, 1999. The amount of loans outstanding at the
indicated dates is shown in the following table according to type of loans.
December 31,
----------------------------
1999 1998
-------------- -----------
(Dollars in Thousands)
----------------------------
Commercial, financial and agricultural $ 15,197 $ 19,251
Real estate - construction 7,472 6,770
Real estate - mortgage 70,302 58,502
Consumer installment 5,166 6,150
Other 109 101
------------ -------------
98,246 90,774
Allowance for loan losses (2,559) (1,825)
------------ -------------
Loans, net $ 95,687 $ 88,949
============ =============
Total loans as of December 31, 1999 are shown in the following table
according to maturity or repricing opportunities (1) one year or less, (2) after
one year through five years, and (3) after five years.
(Dollars in
Thousands)
------------
Maturity or Repricing Within:
One year or less $ 71,663
After one year through five years 21,598
After five years 4,985
------------
$ 98,246
============
Records were not available to present the above information in each
category listed in the first paragraph above and could not be reconstructed
without undue burden.
-23-
<PAGE>
Types of Loans (Continued)
The following table summarizes loans at December 31, 1999 with the due
dates after one year which (1) have predetermined interest rates and (2) have
floating or adjustable interest rates.
(Dollars in
Thousands)
--------------
Predetermined interest rates $ 26,583
Floating or adjustable interest rates -
--------------
$ 26,583
==============
Nonperforming Loans
The following table presents, at the dates indicated, the aggregate of
nonperforming loans for the categories indicated from continuing operations.
<TABLE>
<CAPTION>
December 31,
---------------------------
1999 1998
------------ -------------
(Dollars in Thousands)
---------------------------
<S> <C> <C>
Loans accounted for on a nonaccrual basis $ 1,809 $ 1,310
Installment loans and term loans contractually past due ninety days or more 392 86
as to interest or principal payments and still accruing
Loans, the terms of which have been renegotiated to provide a reduction 632 499
or deferral of interest or principal because of deterioration in the
financial position of the borrower
</TABLE>
In the opinion of management, any loans classified by regulatory
authorities as doubtful, substandard or special mention that have not been
disclosed above do not (i) represent or result from trends or uncertainties
which management reasonably expects will materially impact future operating
results, liquidity or capital resources, or (ii) represent material credits
about which management is aware of any information which causes management to
have serious doubts as to the ability of such borrowers to comply with the loan
repayment terms. Any loans classified by regulatory authorities as loss have
been charged off.
-24-
<PAGE>
Commitments and Lines of Credit
In the ordinary course of business, the Bank has granted commitments to
extend credit to approved customers. Generally, these commitments to extend
credit have been granted on a temporary basis for seasonal or inventory
requirements and have been approved by the Bank's Board of Directors. The Bank
has also granted commitments to approved customers for standby letters of
credit. These commitments are recorded in the financial statements when funds
are disbursed or the financial instruments become payable. The Bank uses the
same credit policies for these off balance sheet commitments as it does for
financial instruments that are recorded in the consolidated financial
statements. Commitments generally have fixed expiration dates or other
termination clauses and may require payment of a fee. Since many of the
commitment amounts expire without being drawn upon, the total commitment amounts
do not necessarily represent future cash requirements.
Following is a summary of the commitments outstanding at December 31,
1999 and 1998.
1999 1998
-------------- --------------
(Dollars in Thousands)
-------------------------------
Commitments to extend credit $ 12,304 $ 10,248
Standby letters of credit 705 825
------------- -------------
$ 13,009 $ 11,073
============= =============
-25-
<PAGE>
SUMMARY OF LOAN LOSS EXPERIENCE
The provision for possible loan losses is created by direct charges to
operations. Losses on loans are charged against the allowance in the period in
which such loans, in management's opinion, become uncollectible. Recoveries
during the period are credited to this allowance. The factors that influence
management's judgment in determining the amount charged to operating expense are
past loan experience, composition of the loan portfolio, evaluation of possible
future losses, current economic conditions and other relevant factors. The
Company's allowance for loan losses was approximately $2,559,000 at December 31,
1999, representing 2.60% of year-end total loans outstanding, compared with
$1,825,000 at December 31, 1998, which represented 2.01% of year-end total loans
outstanding. The allowance for loan losses is reviewed monthly based on
management's evaluation of current risk characteristics of the loan portfolio,
as well as the impact of prevailing and expected economic business conditions.
Management considers the allowance for loan losses adequate to cover possible
loan losses on the loans outstanding.
Allocation of the Allowance for Loan Losses
The following table sets forth the breakdown of the allowance for loan
losses by loan category for the periods indicated. Management believes the
allowance can be allocated only on an approximate basis. The allocation of the
allowance to each category is not necessarily indicative of future losses and
does not restrict the use of the allowance to absorb losses in any other
category.
<TABLE>
<CAPTION>
At December 31,
-----------------------------------------------------
1999 1998
------------------------- -------------------------
Percent of Percent of
Loans in Loans in
Category Category
to Total to Total
Amount Loans Amount Loans
----------- ------------ ----------- -------------
(Dollars in Thousands)
-----------------------------------------------------
<S> <C> <C> <C> <C>
Commercial, financial,
industrial and agricultural $ 1,756 16 % $ 867 21 %
Real estate 688 79 824 72
Consumer 115 5 122 7
Unallocated - - 12 -
---------- ---------- ---------- -----------
$ 2,559 100 % $ 1,825 100 %
========== ========== ========== ===========
</TABLE>
-26-
<PAGE>
Allocation of the Allowance for Loan Losses (Continued)
The following table presents an analysis of the Company's loan loss
experience from continuing operations and discontinued operations for the
periods indicated:
<TABLE>
<CAPTION>
December 31,
--------------------------
1999 1998
------------ -----------
(Dollars in Thousands)
--------------------------
<S> <C> <C>
Average amount of loans outstanding $ 90,765 $ 83,968
=========== ===========
Balance of reserve for possible loan losses at
beginning of period $ 1,825 $ 1,200
----------- -----------
Charge-offs:
Commercial, financial and agricultural (460) (276)
Real estate (210) (4)
Consumer (134) (132)
Recoveries:
Commercial, financial and agricultural 21 99
Real estate 14 7
Consumer 33 45
----------- -----------
Net charge-offs (736) (261)
----------- -----------
Additions to reserve charged to operating expenses 1,470 886
----------- -----------
Balance of reserve for possible loan losses $ 2,559 $ 1,825
=========== ===========
Ratio of net loan charge-offs to average loans 0.81% 0.31%
=========== ===========
</TABLE>
-27-
<PAGE>
DEPOSITS
Average amount of deposits and average rate paid thereon, classified as
to noninterest-bearing demand deposits, interest-bearing demand and savings
deposits and time deposits, for the periods indicated are presented below.
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------------------
1999 1998
--------------------------- ---------------------------
Amount Rate Amount Rate
-------------- ------------ -------------- ------------
(Dollars in Thousands)
--------------------------------------------------------
<S> <C> <C> <C> <C>
Noninterest-bearing demand deposits $ 9,915 - % $ 8,753 - %
Interest-bearing demand and savings deposits 28,154 4.03 18,462 3.96
Time deposits 67,065 5.71 68,842 5.96
------------- -------------
Total deposits $ 105,134 $ 96,057
============= =============
</TABLE>
The amounts of time certificates of deposit issued in amounts of
$100,000 or more as of December 31, 1999, are shown below by category, which is
based on time remaining until maturity of (1) three months or less, (2) over
three through twelve months and (3) over twelve months.
(Dollars in
Thousands)
--------------
Three months or less $ 5,556
Over three through twelve months 11,947
Over twelve months 2,027
--------------
Total $ 19,530
==============
-28-
<PAGE>
RETURN ON ASSETS AND STOCKHOLDERS' EQUITY
The following rate of return information for the periods indicated is
presented below.
Year Ended December 31,
---------------------------------
1999 1998
-------------- ----------------
Return on assets (1) 0.22 % 0.89 %
Return on equity (2) 2.05 8.76
Dividend payout ratio (3) 72.35 * -
Equity to assets ratio (4) 10.69 10.19
(1) Net income divided by average total assets.
(2) Net income divided by average equity.
(3) Dividends declared per share divided by net income per share.
(4) Average equity divided by average total assets.
* The 1999 dividends of $.08 per share were based on the 1998 earnings of
$1,085,000, or $.45 per share.
-29-
<PAGE>
MARKET FOR COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
Before April 18, 1996, there was no established market in which shares of
GIFH's Common Stock were regularly traded, nor was there any uniformly quoted
prices for such shares. However, on April 18, 1996, the Company Common Stock
began to be traded on the NASDAQ Small Capitalization market (NASDAQ-"GIFH") and
the former Units were traded under the symbol GIFHU. On May 31, 1998 the
warrants attached to the units expired and the trading of the common stock was
consolidated under the one symbol GIFH. The high-low range for trades in the
Company's Common Stock and Units, for each quarter during 1999 and 1998 in which
trades were reported, were as follows:
1998
QUARTER COMMON STOCK UNITS
High Low High Low
1st 9.625 7 12.25 7
2nd 10 9.25 9.5 9
3rd 11 8.75 No Further Trades
4th 10.5 8.5
1999
QUARTER COMMON STOCK UNITS
High Low High Low
1st 10.1875 9.0625 N/A N/A
2nd 9.5625 8.75 N/A N/A
3rd 9.25 8.375 N/A N/A
4th 8.4375 6.50 N/A N/A
GIFH paid dividends in 1999 in the amount of $198,677.00 or 8.0 cents per share.
As discussed in Item 1 above, the Bank's ability to pay dividends is subject to
numerous statutory conditions. Thus, to the extent the source of dividends to be
paid by GIFH is dividends from the Bank, GIFH may or may not pay dividends in
the near future.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
Our Board of Directors conducts regular meetings, generally on a monthly
basis and also conducts some of its business through the five committees
described below. Our Board of Directors met twelve times during the year, and
each director attended at least 75% of the meetings of the full Board and of the
committees on which he serves.
-30-
<PAGE>
Asset and Liability Committee.
The Asset and Liability Committee ("ALCO") assists the Board in adopting
policies regarding the pricing, maturity and makeup of the Company's deposits,
loans and investments. Mr. Jacobs (Chairman), Mr. Hodges, Mr. Veal and Mr.
Whelchel were members of this Committee and met three times during the year.
Audit Committee.
The Audit Committee reviews with our independent accountants the scope and
results of their audit engagement and management letter, consults with
management concerning our accounting methods and the adequacy of our internal
controls, and oversees and reviews our internal auditing procedures. The
objective of the Audit Committee is to present losses by the Company from fraud,
defalcation and/or operating deficiencies. Mr. Harden (Chairman), Mr. Jacobs and
Mr. Fiveash were members of this committee during the year. This committee met
four times during the year.
Committee on Directors.
The Committee on Directors is charged with the responsibility for oversight
of, nominations for, and compensation of the Company's directors and senior
officers. Mr. Acosta, Mr. Jacobs, Mr. Veal, Mr. Hodges, Mr. Whelchel, and Mr.
Keenum (Chairman) were members of this committee during the year. This committee
met two times during the year.
Electronic Data Processing Steering Committee.
The Electronic Data Processing Steering Committee is responsible for
ensuring that Company's compliance with Year 2000 requirements and approval of
major purchases of equipment. Mr. Harden, Mr. Werk, Mr. Hodges, Mr. Whelchel and
Mr. Fiveash (Chairman) were members of this committee during the year. This
committee met three times during the year.
Loan Committee.
The Loan Committee is responsible for reviewing loan applications. Mr.
Fiveash, Mr. Werk, Mr. Acosta, Mr. Hodges, Mr. Whelchel and Mr. Veal (Chairman)
were members of this committee during the year. This committee met 46 times
during the year.
-31-
<PAGE>
DIRECTOR COMPENSATION
Outside directors of the Company receive $500.00 per month. Additionally,
all directors are awarded points for attending board meetings and committee
meetings on the following schedule:
1. 625 points awarded for attending a Board of Director's meeting.
2. 250 points awarded for attending a Director's meeting as Chairman.
3. 125 points awarded for attending a Director's meeting as a member.
At the end of the year the points awarded to a director are divided by the
price of the Company's stock and the number of shares resulting from the
quotient are awarded as stock options under the Company Stock Option Plan to the
director.
STOCK OWNERSHIP
Security Ownership of Certain Beneficial Owners*
The following table sets forth share ownership information as of June 1, 2000
with respect to any person known to GIFH to be a beneficial owner of more than
5% of GIFH's Common Stock. The information as to beneficial ownership was
furnished to GIFH by or on behalf of the persons named. Unless otherwise
indicated, each of the shareholders has sole voting and investment power with
respect to the shares of Common Stock beneficially owned. Percentage ownership
is calculated based on outstanding shares.
Security Ownership of Certain Beneficial Owners*
Name and Address Number of Percent of
of Beneficial Owner Shares Class
(1) Michael J. Kistler 132,420 5.36%
4 Sorghum Lane
Savannah, GA 31411
(2) Charles Werk 154,636 6.26%
203 Medinah
St. Simons Island, GA 31522
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<PAGE>
(3) Leonard W. Golan 125,017 5.06%
840 Walden Lane
Lake Forest, IL 60045
*Information relating to beneficial ownership of Common Stock is based upon
"beneficial ownership" concepts set forth in rules of the SEC under Section
13(d) of the Securities Exchange Act of 1934, as amended (the "Act"). Under such
rule, a person is deemed to be a "beneficial owner" of a security if that person
has or shares "voting power", which includes the power to vote or direct the
voting of such security, or "investment power", which includes the power to
dispose of, or to direct the disposition of, such security. A person is also
deemed to be a beneficial owner of any security of which that person has the
right to acquire beneficial ownership within sixty (60) days. Under the rules,
more than one person may be deemed to be a beneficial owner of the same
securities, and a person may be deemed to be a beneficial owner of securities as
to which he has no beneficial interest. For instance, beneficial ownership
includes spouses, minor children and other relatives residing in the same
household, and trusts, partnerships, corporations or deferred compensation plans
which are affiliated with the principal.
The following table sets forth share ownership information as of June 1, 2000,
with respect to (i) each director and named executive officer of GIFH who
beneficially owns Common Stock, and (ii) all directors and named executive
officers of GIFH as a group. The information as to beneficial ownership was
furnished to GIFH by or on behalf of the persons named. Unless otherwise
indicated, each of the shareholders has sole voting and investment power with
respect to the shares beneficially owned. Percentage ownership is calculated
based on outstanding shares.
Security Ownership of Management*
Percent
Name and Address -------
of Beneficial Owner Number of Shares of Class
------------------- ---------------- --------
L. McRee Harden (1) 23,495 .95%
P.O. Box 2369
Darien, GA 31305
Michael D. Hodges (2) 90,838 3.68%
207 Dunbarton Drive
St. Simons Island, GA 31522
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<PAGE>
Russell C. Jacobs, Jr. (3) 24,769 1.00%
308 Oak Grove Island Drive
Brunswick, GA 31525
C. Kermit Keenum (4) 23,687 .96%
100 Old Mountain Road
Powder Springs, GA 30073
Jimmy D. Veal (5) 92,458 3.74%
290 Osprey
Brunswick, GA 31525
J. Thomas Whelchel (6) 56,999 2.31%
22 Boundary Lane
St. Simons Island, GA 31522
Charles R. Acosta (7) 36,173 1.46%
226 Medinah
St. Simons Island, GA 31522
James M. Fiveash (8) 14,167 .57%
605 King Cotton Row
Brunswick, GA 31525
Charles K. Werk (9) 154,636 6.26%
203 Medinah
St. Simons Island, GA 31522
All Directors and Executive 517,222 20.94
Officers as a Group (9 persons)
*Information relating to beneficial ownership of Common Stock is based upon
"beneficial ownership" concepts set forth in rules of the SEC under Section
13(d) of the Act. Under such rule, a person is deemed to be a "beneficial owner"
of a security if that person has or shares "voting power," which includes the
power to vote or direct the voting of such security, or "investment power,"
which includes the power to dispose of, or to direct the disposition of, such
security. A person is also deemed to be a beneficial owner of any security of
which that person has the right to acquire beneficial ownership within sixty
(60) days. Under the rules, more than one person may be deemed to be a
beneficial owner of the same securities, and a person may be deemed to be a
beneficial owner of securities as to which he has no beneficial interest. For
instance, beneficial ownership includes spouses, minor children and
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<PAGE>
other relatives residing in the same household, and trusts, partnerships,
corporations or deferred compensation plans which are affiliated with the
principal.
(1) Includes 1,250 shares owned by his wife for which he disclaims beneficial
ownership. Also includes the right to acquire 9,745 shares pursuant to
vested options.
(2) Includes the right to acquire 42,160 shares pursuant to vested options.
(3) Includes the right to acquire 9,269 shares pursuant to vested options.
(4) Includes the right to acquire 8,187 shares pursuant to vested options.
(5) Includes the right to acquire 12,518 shares pursuant to vested options and
18,875 shares owned by his two adult sons for which he disclaims beneficial
ownership.
(6) Includes 25 shares owned by Mr Whelchel's daughter and 1,500 owned by his
wife for which he disclaims beneficial ownership, and 23,221 shares
pursuant to vested options.
(7) Includes the right to acquire 5,547 shares pursuant to vested options.
(8) Includes 6,000 shares owned individually by Mr. Fiveash and 1,250 shares
deemed beneficially owned by him in custodian accounts for a minor child.
Also includes the right to acquire 6,917 shares pursuant to vested options.
(9) Includes 1,000 shares owned his wife for which he disclaims beneficial
ownership.
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<PAGE>
Executive Compensation
The following table is a summary of compensation paid during the past three
years to the individual serving as the Company's CEO during 1999 and any other
executive officer who during 1999 earned in excess of $100,000 in annual salary
and bonus.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
Restricted/1/ Securities
Other Annual Stock Underlying LTIP All Other
Name and Position Year Salary Bonus Compensation Awards Options/SARS(#) Payouts Compensation
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
J. Thomas Whelchel 1999 ----- ---- ----- ----- 7,825/4/ ----- 6,000/7/
CEO --------------------------------------------------------------------------------------------------------------
1998 ----- ---- ----- ----- 14,006/4/ ----- 1,500/7/
--------------------------------------------------------------------------------------------------------------
1997 91,872/5/ ---- ----- ----- ----- ----- -----
------------------------------------------------------------------------------------------------------------------------------------
Michael D. Hodges 1999 130,000 ---- ----- ----- 1,668/4/ ----- 3,300/6/
President --------------------------------------------------------------------------------------------------------------
First Bank of 1998 130,000 ---- ----- ----- 10,368/4/ ----- 2,995/6/
Brunswick --------------------------------------------------------------------------------------------------------------
1997 120,919 ---- ----- ----- ----- ----- -----
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
___________________________________
/1/ In the event that the Company declares a dividend on its outstanding
shares of Common Stock, then such dividend will be equally applicable to the
restricted stock reported in this column.
/2/ The aggregate number of shares of restricted stock held by J. Thomas
Whelchel as of December 31, 1999, is 10,325 shares and the value of such shares
is $39,825 based on the terms of the following vesting schedule. Under the terms
of the award of these restricted shares to Mr. Whelchel in 1995 ("1995
Restricted Stock") one-seventh of such shares (1,475) became vested on July 25,
1996; another one-seventh became vested on July 25, 1997; and an additional one-
seventh of such shares will vest on July 25 of each year thereafter until all
such shares have vested. If at any time Mr. Whelchel becomes neither a director
nor an executive officer of the Company or any subsidiary of the Company, then
he shall forfeit any shares of 1995 Restricted Stock which has not already
vested at the time of the event which triggers such forfeiture.
/3/ The aggregate number of shares of restricted stock held by Michael D.
Hodges as of December 31, 1999, is 2,390 shares and the value of such shares is
$11,462, based on the following schedule. Of the shares of restricted stock, 775
were awarded to Mr. Hodges in 1994 ("1994 Restricted Stock"), all of which vest
upon the earlier of (i) five years from August 17, 1994, the date the shares
were granted to Mr. Hodges or (ii) a change in control in the ownership of the
Company through the acquisition of more than 50% of the Company's outstanding
stock by a third party. Mr. Hodges will forfeit the 1994 Restricted Stock if he
is not employed by either the Company or one of its subsidiaries on August 16,
1999, unless Mr. Hodges' employment is termination because of the sale of the
Company or a subsidiary through which Mr. Hodges is employed and Mr. Hodges is
not offered other employment within the Company of one of its subsidiaries.
Under the terms of the award of 1,615 shares of restricted stock awarded to Mr.
Hodges in 1995 ("1995 Restricted Stock"), one-seventh of such shares (230
shares) became vested on July 25, 1996; another one-seventh became vested on
July 25, 1997; and an additional one-seventh of such shares will vest on July 25
of each year thereafter until all such shares have vested. If at any time Mr.
Hodges becomes neither a director nor an executive officer of the Company or any
subsidiary of the Company, then he shall forfeit any shares of 1995 Restricted
Stock which has not already vested at the time of the event which triggers such
forfeiture.
/4/ These options are incentive stock options which have been granted
pursuant to that certain Golden Isles Financial Holdings, Inc. 1995 Stock Option
Plan adopted by the Company on July 25, 1995 (the "1995 Plan"). The 1995 Plan
provides for the granting of certain options that are intended to qualify as
incentive stock options within the meaning of Section 422(b) of the Internal
Revenue Code, as well as certain nonstatutory stock options that are not
intended to qualify as incentive stock
-36-
<PAGE>
options within the meaning of Section 422(b) of the Internal Revenue Code. These
options may be exercised at any time before the earlier of (i) within ten (10)
years from the date of the grant of the option or (ii) the date upon which the
optionee ceases to be an employee of the Company; provided, however, that if the
Optionee's employment with the Company is terminated for any reason other than
(a) optionee's death or disability, (b) optionee's voluntary termination of his
employment with the Company's consent, or (c) termination of optionee's
employment by the Company for cause, then, in such event, optionee may exercise
these incentive stock options for up to three months after termination of his
employment (but in no even later than ten (10) years from the date of the grant
of the option).
/5/ Mr. Whelchel served as acting CEO of the Company without a written
agreement, and the compensation committee of the Board agreed to compensate Mr.
Whelchel for his time spent as CEO of the Company. The amount stated as his
salary for 1997 is the amount settled upon by the compensation committee.
/6/ These amounts represent the Company's matching contribution to the
Company 401(k) plan for Mr. Hodges in 1998 and 1999.
/7/ These amounts represent director's fees paid to Mr. Whelchel in 1998
and 1999.
Executive Employment Agreements.
On February 20, 1997, the Bank and Michael D. Hodges entered into an
employment agreement ("Hodges Agreement") summarizing the terms of Mr. Hodges'
employment with the Bank. Pursuant to the Hodges Agreement, Mr. Hodges is to
serve as President and Chief Executive Officer of the Bank. Mr. Hodges' base
salary was set at $125,000 per year, subject to possible increases. The Hodges
Agreement provides that Mr. Hodges is entitled to bonuses and other benefits
including an automobile. The Bank may terminate Mr. Hodges' employment with the
Bank with or without cause. However, if Mr. Hodges is dismissed from his
employment for reasons other than for cause, the Bank shall for a period of one
year following his termination continue to pay him his then current base salary.
The initial term of the Hodges Agreement was through February 20, 1999, and
thereafter, is annually renewed for successive one-year periods unless either
party gives 90-days notice of non-renewal.
Mr. Whelchel served as CEO of the Company beginning October 17, 1996, and
throughout the period covered by this report without any written employment
agreement, but with the understanding, however, that the compensation committee
of the Board would determine the sum to be paid to him for his services. The
recommendation by the compensation committee was approved by the full Board, and
the compensation paid to Mr. Whelchel as disclosed in the Summary Compensation
Table. Mr. Whelchel is continuing to serve as CEO of the Company with no
compensation.
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<PAGE>
Restricted Stock, Stock Options And Stock Warrants.
In August 1994, the Company granted 9,260 shares of restricted stock to
four key employees. Of the above shares, 8,100 were forfeited in 1997, and the
remaining 1,160 shares vested in August 1999. In July 1995, the Company granted
62,570 shares of restricted stock to eight directors. In 1997, 22,558 of these
shares were forfeited. In December 1998, the Company granted 4,000 shares of
restricted stock to two directors. All of the remaining 44,012 shares will be
fully vested by the end of the seventh year from the date of the grant. The cost
of the restricted stock is being amortized on the straight-line method over the
applicable vesting periods. The amortization expense on restricted stock was
$37,164 and $32,466 for the years ended December 31, 1999 and 1998,
respectively, and the same amounts were credited to capital surplus.
Stock Options.
The Company has options outstanding under three stock option plans. The
1991 Incentive Stock Option Plan ("Plan A") and the 1991 Nonstatutory Stock
Option Plan ("Plan B") were discontinued in 1995 and replaced by the 1995 Stock
Option Plan (the "1995 Plan".) Options granted under the two prior plans at the
date of replacement by the 1995 Plan remain outstanding and can be exercised
during the terms of the option agreements unless such options are forfeited by
the optionee. The option price for shares granted under Plan A were at least
equal to the fair value of such shares on the date granted unless the optionee
was a restricted shareholder, in which case the options price was at least equal
to 110% of the fair value of the shares on the date granted. The option price
for shares of common stock to be issued under Plan B was determined by the
Board, but under no circumstances could the option price be less than the fair
value of the shares on the date granted.
Options granted under the 1995 Plan are one of two types: (i) those which
qualify for treatment as incentive stock options under Section 422 of the
Internal Revenue Code of 1986, as amended ("Incentive Stock Options") or (ii)
those which do not so qualify ("Nonqualified Options"). The 1995 Plan provides
that not more than 250,000 shares in the aggregate be issued for Incentive Stock
Options and Nonqualified Options. The exercise price of an Incentive Stock
Option shall not be less than the fair value at the date of grant. The fair
value shall be determined from the trading price on a national securities
exchange, NASDAQ, or over-the-counter markets, if so traded. If not so traded,
the Board will determine the fair value based upon recent sales reported to the
Company. The exercise price of a Nonqualified Option shall be determined by the
Board on the date granted.
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<PAGE>
Warrants to Purchase Common Stock
In 1994, the Company initiated a public secondary stock offering to sell
1,538,462 units at a price of $6.50 per unit. Each unit consisted of one share
of common stock and one Class A Warrant to purchase common stock. Each of the
Class A Warrants expired in three years and entitled the holder to purchase an
additional share of common stock at a price of $7.25 in year one, $8.25 in year
two and $9.50 in year three. The public offering was closed in 1995 following
the sale of 897,230 units. After deducting related stock offering and issue
expense, net proceeds of $5,456,457 were credited to paid-in capital. During
1998, warrants to purchase 149,970 shares of common stock were exercised at a
price of $9.50 per share. All proceeds were credited to paid-in capital, net of
related expenses. On May 31, 1998, the remaining warrants outstanding expired.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
Name Shares Value Number of securities Value of Unexercised in-
acquired on Realized (#) underlying Unexercised the-money options SARs
exercise (#) Options/SARS at FY-End at FY-End
(Exercisable/Unexercisable) (Exercisable/Unexercisable)
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
J. Thomas Whelchel ----- ----- 23,221/0/2/ $ 0/0/1/
-------------------------------------------------------------------------------------------------------------------
Michael D. Hodges ----- ----- 42,160/0/3/ $38,904/0/1/
-------------------------------------------------------------------------------------------------------------------
</TABLE>
No stock options were exercised by the listed individuals and there were no
outstanding SARs during fiscal year 1999.
The Company does not have any Long Term Incentive Plans in effect.
/1/ Dollar values have been calculated by determining the difference
between the estimated fair market value of the Company's common stock at March
3, 2000 ($6.00) and the exercise prices of the options.
/2/ On January 18, 1996, options on 1,390 at $6.00 per share were awarded
to Mr. Whelchel as compensation with respect to his services as a director. In
1998 he was granted options on 3,836 shares at $9.36 per share, 2,500 shares at
$9.54 per share, 2,500 shares at $9.71 per share, 2,500 shares at $9.17 per
share and 2,670 shares at $9.64 per share. The 7,825 options granted in 1999
are listed in the table on the following page.
/3/ Michael D. Hodges has the right to acquire 42,160 shares of the
Company's common stock pursuant to stock options issued by the Company to Mr.
Hodges. Of the 42,160 stock options, 18,750 are exercisable at the price of
$4.00 per share, 1,003 are exercisable at the price of $4.60 per share, 1,408
are exercisable at the price of $6.25 per share, 6,921 are exercisable at the
purchase price of $6.50 per share, 2,042 are exercisable at the price of $6.00
per share, 5,000 shares are exercisable at $7.60 per share, 3,165 shares are
exercisable at $9.36 per share and 2,203 shares are exercisable at $9.64 per
share. The 1,668 options granted in 1999 are listed in the table on the
following page.
-39-
<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
(Individual Grants)
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------
Name Number of Securities Percent of Total Exercise or Expiration
Underlying Options/SARs Options/SARs Base Price Date
Granted (#) Granted to Employees ($/share)
in Fiscal Year
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CEO - J. Thomas Whelchel 2,500 $9.49 1/27/09
---------------------------------------------------------------------------------------------------------
385 $9.40 4/01/09
---------------------------------------------------------------------------------------------------------
569 $9.23 6/30/09
---------------------------------------------------------------------------------------------------------
3,000 $9.16 7/21/09
---------------------------------------------------------------------------------------------------------
658 $8.36 9/30/09
---------------------------------------------------------------------------------------------------------
713 $6.84 12/15/09
-----
---------------------------------------------------------------------------------------------------------
Total 7,825 9.9%
---------------------------------------------------------------------------------------------------------
Michael D. Hodges 265 $9.40 4/01/09
---------------------------------------------------------------------------------------------------------
406 $9.23 6/30/09
---------------------------------------------------------------------------------------------------------
449 $8.36 9/30/09
---------------------------------------------------------------------------------------------------------
548 $6.84 12/15/09
-----
----------------------------------------------------------------------------------------------------------
Total 1,668 2.1%
----------------------------------------------------------------------------------------------------------
</TABLE>
OTHER COMPENSATION AND BENEFIT PLANS
The Company provides a 401(k) plan for qualified employees to defer up to
10% of their salary with matching contributions from the Company made at the
discretion of the Board of Directors.
TRANSACTIONS WITH THE COMPANY
During 1999, the Bank loaned funds to certain of GIFH's executive officers
and directors or to businesses in which such persons had an interest. All such
loans were: (a) in the ordinary course of business, (b) on substantially the
same terms, including interest rates and collateral, as those prevailing at the
time for comparable transactions with other persons, and (c) did not involve
more than the normal risk of collectibility or present other unfavorable
features.
-40-
<PAGE>
LEGAL PROCEEDINGS
There are no "material" pending legal proceedings, other than ordinary
routine litigation incidental to the business of the Company, to which the
Company or any of its subsidiaries is a party or of which any of their property
is subject. Material proceedings are defined as claims for damages where the
amount involved, exclusive of interest and cost, exceeds ten percent of the
current assets of the Company and its subsidiaries on a consolidated basis.
During the previous five years, no director or executive officer was the
subject of a legal proceeding (as defined below) that is material to an
evaluation of the ability or integrity of any director or executive officer. A
"legal proceeding" includes: (a) any bankruptcy petition filed by or against any
business of which such person was a general partner or executive prior to that
time; (b) any conviction in a criminal proceeding or subject to a pending
criminal proceeding (excluding traffic violations and other minor offenses); (c)
any order, judgment, or decree of any court of competent jurisdiction, or any
Federal or State authority permanently or temporarily enjoining, barring,
suspending or otherwise limiting his involvement in any type of commodities
business, securities or banking activities; and (d) any finding by a court of
competent jurisdiction (in a civil action), the Securities and Exchange
Commission or the Commodity Futures Trading Commission of a violation of a
federal or state securities or commodities law (such finding having not been
reversed, suspended or vacated).
COMPLIANCE WITH SECTION 16(A) OF THE 1934 ACT
Based solely upon a review of Forms 3 and 4 and amendments thereto
furnished to the Company under Rule 16a-3(d) during 1999 and Form 5 and
amendments thereto furnished to the Company during 1999, no person who, at any
time during 1999, was a director, officer or beneficial owner of more than 10%
of any class of equity securities of the Company failed to file on a timely
basis any reports required by Section 16(a) during the 1999 fiscal year or
previously, except Director Whelchel was late in filing on Form 5.
INDEPENDENT PUBLIC ACCOUNTANTS
The firm of Mauldin & Jenkins, LLC, Albany, Georgia, has served as our
independent accountants each year since 1996, and we consider them to be well
qualified. Our Board of Directors has selected Mauldin & Jenkins, LLC to serve
as our independent accountants for the fiscal year ending December 31, 2000.
Representatives of that firm will be present at the Annual Meeting and will have
the opportunity to make a statement if they desire to do so. They will be
available to answer your questions at that time.
-41-
<PAGE>
SHAREHOLDER PROPOSALS FOR 2000 MEETING
Shareholder proposals that are intended to be presented at our 2001 Meeting
of Shareholders must be received by us no later than February 1, 2001, in order
to be included in our proxy statement and related proxy materials for that
meeting. Any such proposal must comply with the rules and regulations of the
Securities and Exchange Commission.
OTHER MATTERS WHICH MAY COME BEFORE THE ANNUAL MEETING
Our Board of Directors knows of no matters other than those referred to in
the accompanying Notice of Annual Meeting of Shareholders which may properly
come before the Annual Meeting. However, if any other matter should be properly
presented for consideration and voting at the Annual Meeting or any adjournments
thereof, it is the intention of the persons named as proxies on the enclosed
form of proxy card to vote the shares represented by all valid proxy cards in
accordance with their judgment of what is in Golden Isles Financial Holdings'
best interest.
ANNUAL REPORTS
Upon receipt of a written request, we will furnish, without charge, any
owner of common stock of the company a copy of its annual report to the
Securities and Exchange Commission on Form 10-K (the "10-K") for the fiscal year
ended December 31, 1999, including financial statements and the schedules
thereto. Copies of exhibits to the 10-K are also available upon specific request
and payment of a reasonable charge for reproduction. Such requests should be
directed to the Secretary of the Company at the address indicated on the front
of the proxy statement.
-42-
<PAGE>
GOLDEN ISLES FINANCIAL HOLDINGS, INC.
3811 Frederica Road
St. Simons Island, Georgia 31522
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby acknowledges receipt of the Notice of the Annual
Meeting of Shareholders and Proxy Statement and does hereby appoint J. Thomas
Whelchel and Jimmy D. Veal, and each of them, with full powers of substitution,
as proxies of the undersigned, to represent the undersigned and to vote all
shares of GOLDEN ISLES FINANCIAL HOLDINGS, INC. common stock which the
undersigned would be entitled to vote if personally present at the Annual
Meeting of Shareholders of Golden Isles Financial Holdings, Inc. to be held
Tuesday, July 18, 2000, at 10:00 a.m. local time, at Stellar Conference Center,
125 Venture Drive, I-95 and Exit 38, Brunswick, Georgia 31525, and at any
adjournment or postponement thereof, with all the powers (other than the power
to revoke the proxy or vote in a manner not authorized by the exceeded form of
proxy) which the undersigned would have if personally present at such meeting,
to act in their discretion upon any other matter or matters which may properly
be brought before the meeting, and to appear and vote all the shares of common
stock which the undersigned may be entitled to vote.
PROPOSAL I: To elect the ten nominees listed below to serve as directors for
the following year:
_____FOR all nominees listed below _____WITHHOLD AUTHORITY to
(except as marked to the contrary below), vote for all nominees listed below.
C. Ray Acosta Claude Kermit Keenum
James M. Fiveash Michael J. Kistler
L. McRee Harden Jimmy D. Veal
Michael D. Hodges Charles K. Werk
Russell C. Jacobs, Jr. J. Thomas Whelchel
INSTRUCTIONS: To withhold your vote for any individual nominee, strike a line
through the nominee's name in the list above.
UNLESS OTHERWISE MARKED, THIS PROXY WILL BE VOTED AS IF MARKED FOR ALL NOMINEES
---
LISTED ABOVE.
The Board of Directors recommends a vote FOR the election of the above nominees
to the Board of Directors.
(Continued on Reverse Side)
If other matters properly come before the meeting, the persons named herein as
proxy shall have the discretionary authority to vote with respect to such
matters after considering the recommendations of management.
Please sign below, date and return promptly in the enclosed, self-addressed
stamped envelope. When shares are held by joint tenants, both should sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such. If the signatory is a corporation, please sign the full
corporate name by an authorized officer.
DATE: _______________________________, 2000.
INDIVIDUALS: ENTITIES: (Please Print)
______________________________________ ________________________________
Name (Please print) By:
______________________________________ ________________________________
Signature Signature
______________________________________ ________________________________
Name of Joint Tenant or Tenant-In- Position
Common if any (Please Print)
______________________________________ ________________________________
Signature of Joint Tenant or Tenant-
In-Common, if any
