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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2000
Commission File No. 0-27448
GOLDEN ISLES FINANCIAL HOLDINGS, INC.
(Exact name of small business issuer as specified in its charter)
Georgia 58-1756713
(State of Incorporation) (I.R.S. Employer Identification No.)
3811 Frederica Road, St. Simons Island, Georgia 31522
(Address of Principal Executive Offices)
(912) 638-0667
(Issuer's Telephone Number, Including Area Code)
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last
Report)
Check whether the issuer (1) filed all reports required to be filed by section
13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the issuer was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.
Yes X No
APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding
of each of the issuer's classes of common equity as of the latest practicable
date.
Common Stock, no par value per share: 2,465,300 shares issued and outstanding
as of June 30, 2000.
Transitional Small Business Disclosure Format:
Yes No X
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
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GOLDEN ISLES FINANCIAL HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
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June 30, December 31,
2000 1999
ASSETS (Unaudited) (Audited)
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<S> <C> <C>
Cash and due from banks $ 2,812,851 $ 4,017,512
Interest-bearing deposits in banks 83,129 13,888
Federal funds sold 3,893,000 6,945,000
Securities available for sale, at fair value 19,607,403 18,878,399
Other investments, at cost 582,700 366,400
Loans 112,875,301 98,246,349
Less allowance for loan losses 2,729,922 2,559,153
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Loans, net 110,145,379 95,687,196
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Property and equipment, net 3,868,595 3,408,237
Other assets 2,885,887 3,080,575
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Total Assets $ 143,878,944 $ 132,397,207
============== ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Non-interest bearing demand $ 11,913,259 $ 10,316,942
Interest-bearing demand 25,177,237 27,531,519
Savings 2,421,258 2,511,320
Time, $100,000 and over 18,834,694 19,529,633
Other time 59,908,526 52,853,492
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Total Deposits 118,254,974 112,742,906
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Federal Home Loan Bank borrowings 11,582,993 5,888,829
Other Liabilities 687,998 550,780
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Total liabilities 130,525,965 119,182,515
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Shareholders' Equity:
Common stock, no par value
50 million shares authorized, 2,505,500 shares
issued and 2,505,500 shares outstanding 12/31/99
and 2,465,300 shares outstanding 6/30/2000 1,094,338 1,094,338
Capital Surplus 11,711,866 11,693,718
Retained earnings 1,235,420 800,904
Treasury stock, at cost, 40,200 shares - 6/30/2000 (269,450) -
Accumulated other comprehensive loss (419,195) (374,268)
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Total Shareholders' Equity 13,352,979 13,214,692
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Total Liabilities and Shareholders' Equity $ 143,878,944 $ 132,397,207
============== ===============
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GOLDEN ISLES FINANCIAL HOLDINGS, INC.
CONSOLIDATED INCOME STATEMENTS
<TABLE>
<CAPTION>
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Three Months Ended June 30,
2000 1999
(Unaudited) (Unaudited)
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<S> <C> <C>
Interest income
Interest and fees on loans $ 5,019,954 $ 4,100,946
Interest and dividends on taxable securities 624,024 644,248
Other interest income 144,353 163,855
Total interest income 5,788,331 4,909,049
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Interest expense
Interest on deposits 2,784,132 2,386,888
Interest on other borrowings 247,216 186,883
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Total interest expense 3,031,348 2,573,771
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Net interest income 2,756,983 2,335,278
Provision for possible loan losses 150,000 140,000
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Net interest income after provision
for loan losses 2,606,983 2,195,278
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Other income
Income from origination of mortgage loans,
less related expenses 85,675 95,752
Service charges on deposit accounts 236,975 193,618
Other 45,334 40,637
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Total other income 367,984 332,247
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Other expense
Salaries and employee benefits 1,187,444 986,862
Equipment and occupancy expense 290,075 278,726
Advertising and business development 68,113 54,189
Legal and professional 108,531 94,756
Supplies and printing 96,180 63,965
Other operating expenses 263,600 262,845
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Total other expense 2,013,943 1,741,343
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Income before income tax 961,024 786,182
Applicable income tax 328,882 268,845
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Net income 632,142 517,337
Other comprehensive income, net of tax:
Net unrealized holding gains (losses) arising during period - -
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Comprehensive income $ 632,142 $ 517,337
============== ===============
Income per share - Basic $ 0.25 $ 0.21
Income per share - Diluted 0.25 0.21
Average shares outstanding 2,483,531 2,482,953
</TABLE>
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GOLDEN ISLES FINANCIAL HOLDINGS, INC.
CONSOLIDATED INCOME STATEMENTS
<TABLE>
<CAPTION>
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Six Months Ended June 30,
2000 1999
(Unaudited) (Unaudited)
---------------- ----------------
<S> <C> <C>
Interest income
Interest and fees on loans $ 5,019,954 $ 4,100,946
Interest and dividends on taxable securities 624,024 644,248
Other interest income 144,353 163,855
---------------- ----------------
Total interest income 5,788,331 4,909,049
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Interest expense
Interest on deposits 2,784,132 2,386,888
Interest on other borrowings 247,216 186,883
---------------- ----------------
Total interest expense 3,031,348 2,573,771
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Net interest income 2,756,983 2,335,278
Provision for possible loan losses 150,000 140,000
---------------- ----------------
Net interest income after provision
for loan losses 2,606,983 2,195,278
---------------- ----------------
Other income
Income from origination of mortgage loans,
less related expenses 85,675 95,752
Service charges on deposit accounts 236,975 193,618
Net realized gain on sales of securities - 2,240
Other 45,334 40,637
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Total other income 367,984 332,247
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Other expense
Salaries and employee benefits 1,187,444 986,862
Equipment and occupancy expense 290,075 278,726
Advertising and business development 68,113 54,189
Legal and professional 108,531 94,756
Supplies and printing 96,180 63,965
Other operating expenses 263,600 262,845
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Total other expense 2,013,943 1,741,343
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Income before income tax 961,024 786,182
Applicable income tax 328,882 268,845
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Net income 632,142 517,337
Other comprehensive income, net of tax:
Net unrealized holding losses arising during period - -
---------------- ----------------
Comprehensive income $ 632,142 $ 517,337
================ ================
Income per share - Basic $ 0.25 $ 0.21
Income per share - Diluted 0.25 0.21
Average shares outstanding 2,494,580 2,478,713
</TABLE>
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GOLDEN ISLES FINANCIAL HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
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Six Months Ended June 30,
2000 1999
(Unaudited) (Unaudited)
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<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 632,142 $ 517,337
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 136,027 146,149
Provision for loan losses 150,000 140,000
Net change in other prepaids and accruals 355,050 (273,375)
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Net cash provided by operating activities 1,273,219 530,111
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INVESTING ACTIVITIES
Increase in interest-bearing deposits in banks (69,241) -
(Increase) decrease in Federal funds sold 3,052,000 (5,450,000)
Available for sale securities:
Proceeds from maturities and paydowns 186,673 8,750,252
Purchases (983,750) (9,506,445)
Purchase of FHLB stock (216,300) -
(Increase) decrease in loans, net (14,608,183) 1,045,763
Purchases of premises and equipment (596,385) (3,935)
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Net cash used in investing activities (13,235,186) (5,164,365)
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FINANCING ACTIVITIES
Net increase in deposits 5,512,068 4,852,139
Net increase (decrease) in FHLB borrowings 5,694,164 (305,836)
Dividends paid to stockholders (197,624) (198,677)
Proceeds from exercise of stock options - 99,263
Purchase of treasury stock (269,450) -
Vesting of restricted stock, net 18,148 18,582
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Net cash provided by financing activities 10,757,306 4,465,471
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Net decrease in cash and due from banks (1,204,661) (168,783)
Cash and due from banks at beginning of period 4,017,512 3,131,141
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Cash and due from banks at end of period $ 2,812,851 $ 2,962,358
=================== ==================
</TABLE>
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GOLDEN ISLES FINANCIAL HOLDINGS, INC.
NOTE TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting and reporting policies of Golden Isles Financial
Holdings, Inc. ("the Company") conform to generally accepted accounting
principles and to general practices within the banking industry. The
interim consolidated financial statements included herein are
unaudited, but reflect all adjustments which, in the opinion of
management, are necessary for a fair presentation of the consolidated
financial position and results of operations for the interim periods
presented. All adjustments reflected in the interim financial
statements are of a normal, recurring nature. Such financial statements
should be read in conjunction with the financial statements and notes
thereto and the report of the independent auditors included in the
Company's Form 10-KSB Annual Report for the year ended December 31,
1999. The results of operations for the six months ended June 30, 2000
are not necessarily indicative of the results to be expected for the
full year.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
Liquidity is the Company's ability to meet all deposit withdrawals
immediately, while also providing for the credit needs of customers. The June
30, 2000 consolidated financial statements evidence a fair liquidity position as
total cash, interest-bearing deposits and Federal funds sold amounted to $6.8
million, representing 4.7% of total assets. Investment securities amounted to
$19.6 million, representing 13.6% of total assets. These securities provide a
secondary source of liquidity since they can be converted into cash in a timely
manner. The Company's ability to maintain and expand its deposit base and
borrowing capabilities would provide an additional source of liquidity. For the
six-month period ended June 30, 2000, total deposits increased from $112.7
million to $118.3 million, and borrowings from the Federal Home Loan Bank
increased from $5.9 million to $11.6 million. Management closely monitors and
maintains appropriate levels of interest-earning assets and interest-bearing
liabilities so that maturities of assets are such that adequate funds are
provided to meet customer withdrawals and loan demand. Available funding sources
are also closely monitored. There are no trends, demands, commitments, events or
uncertainties that will result in or are reasonably likely to affect the
Company's liquidity position in any material way.
The Company is subject to various regulatory capital requirements
administered by the federal and state banking agencies. Failure to meet minimum
capital requirements can initiate certain mandatory and possibly additional
discretionary, actions by regulators that, if undertaken, could have a direct
material effect on the financial statements. Under capital adequacy guidelines
and the regulatory framework for prompt corrective action, the Company must meet
specific capital guidelines that involve quantitative measures of the assets,
liabilities, and certain off-balance sheet items as calculated under regulatory
accounting practices. The Company's capital amounts and classification are also
subject to qualitative judgments by the regulators about components, risk
weightings and other factors.
Quantitative measures established by regulation to ensure capital adequacy
require the Company to maintain minimum amounts and ratios of total and Tier 1
capital to risk-weighted assets and of Tier 1 capital to average assets.
Management believes, as of June 30, 2000, the Company meets all capital adequacy
requirements to which it is subject and should be categorized as well
capitalized under the regulatory framework for prompt corrective action.
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RESULTS FROM OPERATIONS
The Company's results of operations are determined by its ability to
effectively manage interest income and expense, to minimize loan and investment
losses, to generate noninterest income and to control noninterest expense. Since
interest rates are determined by market forces and economic conditions beyond
the control of the Company, the ability to generate net interest income is
dependent upon its ability to obtain an adequate spread between the rate earned
on interest-earning assets and the rate paid on interest-bearing liabilities.
The primary component of consolidated earnings is net interest income, or
the difference between interest income on interest-earning assets and interest
paid on interest-bearing liabilities. The net interest margin is net interest
income expressed as a percentage of average interest-earning assets. Interest-
earning assets consist of loans, investment securities, interest-bearing
deposits in banks, and Federal funds sold. Interest-bearing liabilities consist
of deposits and other borrowings.
The net interest margin was 4.23% and 4.06% during the six months ended
June 30, 2000 and 1999, respectively, or an increase of 17 basis points. The
increase is due primarily to an increase in the volume and yield on loans.
Average loans increased from $87.7 million for the first six months of 1999 with
a yield of 9.43% to $103.6 million for the first six months of 2000 with a yield
of 9.74%. The yield on average earning assets was 9.00% and 8.54% during the six
months ended June 30, 2000 and 1999, respectively. Cost of funds increased to
5.56% for the six months ended June 30, 2000 as compared to 5.30% for the six
months ended June 30, 1999. This increase in cost of funds is due to a general
increase in interest rates and high cost of funds in the local market area.
The provision for loan losses was $150,000 for the first six months of
2000 as compared to $140,000 for the same period of 1999. The allowance for loan
losses as a percentage of total loans outstanding amounted to 2.4% at June 30,
2000 as compared to 1.9% at June 30, 1999. The determination of the amounts
allocated for loan losses is based upon management's judgement concerning
factors affecting loan quality and assumptions about the local and national
economy. Management considers the allowance for loan losses at June 30, 2000
adequate to cover potential losses in the loan portfolio.
Net interest income increased $422,000 or 18.06% during the six months
ended June 30, 2000 as compared to the six months ended June 30, 1999. This
increase is due primarily to the increase in loan volume and rates as discussed
above.
Noninterest income for the six months ended June 30, 2000 and 1999 amounted
to $368,000 and $332,000, respectively. Service charges on deposit accounts
increased by $43,000 or 22.40%. This increase in service charges is reflective
of the increase in balances of non-interest bearing deposits which increased
15.99% from $10,271,000 at June 30, 1999 to $11,913,000 at June 30, 2000.
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Noninterest expense for the six months ended June 30, 2000 increased 15.66%
to $2,014,000 as compared to $1,741,000 for the six months ended June 30, 1999.
Salaries and employee benefits increased due to the increase in the number of
full-time equivalent employees of 50 at June 30, 1999 to 57 at June 30, 2000.
Seven employees were added to staff the North Glynn Branch which opened in a
temporary facility in April 2000. These additional employees were added during
February 2000. Additional expenses for the new branch were also incurred during
2000 to advertise the branch opening, to provide supplies, and to operate the
branch.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings. As of June 30, 2000, there are no material pending
legal proceedings to which the Company or any of its subsidiaries is a party or
of which any of their property is the subject.
Item 2. Changes in Securities.
(a) None.
(b) None.
Item 3. Defaults Upon Senior Securities. None.
Item 4. Submission of Matters to a Vote of Security Holders. None.
Item 5. Other Information. None
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
Exhibit No: Description
27 Financial Data Schedule
(b) Reports on Form 8-K - There were no reports on Form 8-K filed during
the quarter ended June 30, 2000.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
GOLDEN ISLES FINANCIAL HOLDINGS, INC.
(Registrant)
Date: August 14, 2000
By: /s/ Sharon D. Hundley
Sharon D. Hundley
Chief Financial Officer
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INDEX TO EXHIBITS
Exhibit Sequential
Number Description Page Number
27 Financial Data Schedule 11
