<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
Mark one
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 1998
--------------------
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE ACT
For the transition period from ___________ to ___________
Commission File Number: 33-23062
Eufaula BancCorp, Inc.
- ---------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Delaware 63-0989868
- ---------------------------------- --------------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
Post Office Box 1269, Eufaula, Alabama 36072
- ---------------------------------------------------------------------------
Address of principal executive offices
(334) 687-3581
--------------
(Issuer's Telephone Number)
N/A
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(Former name, former address and former fiscal
year, if changed since last report)
Check whether the issuer (1) filed all reports required to filed by Section 13
or 15 (d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports) and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
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APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes
of common equity, as of common equity, as of June 30, 1998-----2,620,773
---------------------------
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EUFAULA BANCCORP, INC. AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
Part I. Page No.
<S> <C> <C>
Item 1. Financial Information
Consolidated Balance Sheet--June 30, 1998 3
Consolidated Statements of Income & Comprehensive Income
six months ending June 30, 1998 and 1997. 4
Consolidated Statements of Income & Comprehensive Income
three months ending June 30, 1998 and 1997. 5
Consolidated Statements of Cash Flows;
Six Months ended June 30, 1998 and 1997 6
Note to Consolidated Financial Statements 7
Item 2. Management's discussion and analysis of financial 8 & 9
condition and results of operations. Six months
ending June 30, 1998 and 1997.
Signature Page 10
Part II. Other Information
Item 4. Any matter submitted to the security holders for a vote 11
Item 6. Exhibits and reports on Form 8-K
(a) Exhibits: 12
Loan Composition Summary
Loans over 90 days past due and non accrual loans
Allowance for Loan Loss analysis
(b) Report of Form 8-K
NONE
</TABLE>
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<PAGE>
Item 1 - Part 1 - Financial Information
EUFAULA BANCCORP, INC. & SUBSIDIARIES
Consolidated Balance Sheet
June 30, l998
(unaudited)
(Dollars in Thousands)
<TABLE>
<CAPTION>
ASSETS
- ------
<S> <C>
Cash & Due from Banks $ 7553
Interest bearing deposits in banks 1967
Investment Securities:
Held to maturity 8779
Available for Sale at est. market value 19236
Federal Funds Sold 3200
Loans 113350
Less Allowance for loan losses 958
--------
112392
Premises & Equipment, Net 4275
Intangible Assets 1430
Other Assets 4187
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TOTAL ASSETS $ 163019
========
LIABILITIES & STOCKHOLDERS' EQUITY
- -----------------------------------------------
Deposits:
Non interest-bearing demand $ 24888
Interest-bearing Demand 45769
Savings 5011
Time Deposits 61373
--------
TOTAL DEPOSITS $ 137041
Federal Funds Purchased 3325
Other Borrowings 2500
Other Liabilities 1455
TOTAL LIABILITIES $ 144321
STOCKHOLDERS' EQUITY
Common Stock, par value $15,000,000
shares authorized: 2,620,773 shares issued 2621
Surplus 6238
Retained Earnings 9817
Accumulated other comprehensive income 22
--------
Total Equity $ 18698
--------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 163019
========
</TABLE>
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<PAGE>
CONSOLIDATED STATEMENTS OF INCOME & COMPREHENSIVE INCOME
Six Months Ended June 30, l998 and June 30, l997
(unaudited)
(Dollars in Thousands, except per share amounts)
<TABLE>
<CAPTION>
Interest Income 1998 1997
<S> <C> <C>
Interest & fees on loans $ 4482 $ 2943
Interest on Federal Funds Sold 96 36
Interest on interest-bearing deposits 18 292
Interest on taxable securities 582 593
Interest on not-taxable securities 224 239
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$ 5402 $ 4103
Interest Expense
Interests on deposits $ 2331 $ 1624
Interest on Federal Funds Purchased/
Other Borrowed Funds 97 98
Net interest income $ 2974 $ 2381
Provision for loan losses 275 77
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Net interest income after
provision for loan losses $ 2699 $ 2304
Other Operating Income
Service Charges on deposit accounts 372 384
Security Gains 0 5
Other Income 377 194
---------- ----------
749 583
Other operating expenses
Salaries & Other Employee Benefits $ 1621 $ 1163
Occupancy & Equipment expenses 430 293
Other operating expense 1021 723
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$ 3072 $ 2179
Income before taxes $ 376 $ 708
Applicable Income Taxes 109 231
Net Income after Taxes $ 267 $ 477
========== ==========
Other comprehensive income, net of tax:
Unrealized holding gains (losses) arising during period 24 56
Less: reclassification adjustment for gains included in net
income ---- (3)
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Comprehensive Income $ 291 $ 530
Income per common share - Basic $.10 $.23
Income per common share - Diluted $.10 $.21
Average Shares outstanding 2,620,773 2,087,683
Cash dividends per share of common stock $.072 $.069
</TABLE>
The accompanying note is an integral part of these consolidated financial
statements.
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<PAGE>
CONSOLIDATED STATEMENTS OF INCOME & COMPREHENSIVE INCOME
Three Months Ended June 30, l998 and June 30, l997
(unaudited)
(Dollars in Thousands, except per share amounts)
<TABLE>
<CAPTION>
Interest Income 1998 1997
<S> <C> <C>
Interest & fees on loans $ 2409 $ 1620
Interest on Federal Funds Sold 48 13
Interest on interest-bearing deposits 9 281
Interest on taxable securities 296 138
Interest on not-taxable securities 112 119
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$ 2874 $ 2171
Interest Expense
Interests on deposits $ 1244 $ 844
Interest on Federal Funds Purchased/
Other Borrowed Funds 45 67
Net interest income $ 1585 $ 1260
Provision for loan losses 192 47
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Net interest income after
provision for loan losses $ 1393 $ 1213
Other Operating Income
Service Charges on deposit accounts 192 174
Security Gains 0 5
Other Income 226 117
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418 296
Other operating expenses
Salaries & Other Employee Benefits $ 848 $ 593
Occupancy & Equipment expenses 228 151
Other operating expense 493 $ 365
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1569 $ 1109
Income before taxes $ 242 $ 400
Applicable Income Taxes 78 133
Net Income after Taxes $ 164 $ 267
========== ==========
Other comprehensive income, net of tax:
Unrealized holding gains (losses) arising during period --- $ 248
Less: reclassification adjustment for gain included in net
income ----- $ (3)
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Comprehensive Income $ 164 $ 512
Income per common share - Basic $.06 $.13
Income per common share - Diluted $.06 $.12
Average shares outstanding 2,620,773 2,087,683
Cash dividends per share of common stock $.04 $.035
</TABLE>
The accompanying note is an integral part of these consolidated financial
statements.
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<PAGE>
EUFAULA BANCCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
Six Months Ended June 30, 1998 and June 30, l997
(Unaudited)
(Dollars in Thousands)
<TABLE>
<CAPTION>
1998 1997
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CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net Income $ 267 $ 477
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation & amortization 163 99
Provision for loan losses 275 77
Securities gains 0 5
(Increase) decrease in interest receivable 421 28
Increase in interest payable 55 50
Other prepaids, deferrals and accruals, net (446) 193
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Net cash provided by operating activities $ 735 $ 929
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales & maturities of investment
securities $ 3989 $ 7355
Purchase of investment securities (6523) (2005)
Net increase in Federal Funds sold ( 750) (900)
Net (increase) decrease in bank-owned deposits (1967) 250
Net increase in loans (34826) (15179)
Purchase of property & equipment (774) (516)
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Net cash provided by investing activities $(40851) $(10995)
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in deposits $ 32433 $ 6903
Net increase (decrease) in Fed Funds purchased 2725 (700)
Net increase from issue of new stock 6417 -0-
Net increase in other borrowings -0- 3525
Proceeds from exercise of stock options 237 161
Dividends paid (189) (145)
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Net cash used in financing activities $ 41623 $ 9744
Net increase (decrease) in cash and due from banks 1507 (322)
Cash & due from banks, beginning of period 6046 7321
Cash & due from banks, end of period $ 7553 $ 6999
======= =======
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during period for:
Interest $ 2428 $ 1722
</TABLE>
The accompanying note is an integral part of these consolidated
financial statements.
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<PAGE>
EUFAULA BANCCORP, INC. AND SUBSIDIARIES
NOTE TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Basis of Presentation
The financial information included herein is unaudited; however, such
information reflects all adjustments (consisting solely of normal
recurring adjustments) which are, in the opinion of management,
necessary for a fair statement of results for the interim periods.
The results of operations for the six month period ended June 30,
1998, are not necessarily indicative of the results to be expected
for the full year.
All per share amounts have been adjusted to reflect the 3-for-2 stock
split on November 15, 1997.
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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of certain significant
factors which have affected the Company's financial position and operating
results during the periods included in the accompanying consolidated financial
statements.
The Company's quarterly report contains statements that constitute "forward-
looking statements" within the meaning of Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. The words "believe", "estimate", "expect", "intend", "anticipate"" and
similar expressions and variations thereof identify certain of such forward-
looking statements, which speak only as of the dates which they were made. The
Company undertakes no obligation to publicly update or revise any forward-
looking statements, whether as a result of new information, future events, or
otherwise. Readers are cautioned that any such forward-looking statements are
not guarantees of future performance and involve risks and uncertainties, and
that actual results may differ materially from those indicated in the forward-
looking statements as a result of various factors. Readers are cautioned not to
place undue reliance on these forward-looking statements.
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- ---------------------------------------------
As of June 30, 1998, Eufaula BancCorp, Inc.'s total assets had increased 41%
over June of 1997, from $115,268,000 to $163,019,000. In the asset category
total investments decreased 3.4% from $34,353,000 in June of 1997 to $33,182,000
in June of 1998. This decrease in the investment portfolio was necessitated by
the loan growth of the branch operations of Southern Bank of Commerce. Net
loans increased from $66,614,000 in June of 1997 to $112,392,000 in June of
1998, a 69% increase. Neither the Montgomery nor the Huntsville branches of
Southern Bank of Commerce were operational in June of 1997 and in June of 1998
the Montgomery operation had total loans of $18,044,000 and Huntsville had total
loans of $14,480,000. In addition, the Florida subsidiary, First American Bank
of Walton County had loans increase from $20,645,000 to $36,380,000. Goodwill
decreased 6% from $1,509,000 to $1,430,000 and no additional goodwill has been
placed on the books since the purchase of First American Bank of Walton County.
Total Deposits increased 41% from $97,200,000 to $137,041,000. Again, the
majority of this increase comes from the branch operations that became fully
functional in the fall of 1997 and spring of 1998. Deposits in Montgomery in
June of 1998 totaled $13,367,000 and in Huntsville $5,134,000. Deposits
increased at First American Bank of Walton County from $29,067,000 in June of
1997, to $49,808,000 in June of 1998.
Total Capital increased 64% from $11,403,000 in June of 1997 to $18,698,000 in
June of 1998. The largest part of the increase in capital was due to a stock
issue, on April 27, 1998, of 492,857 shares of stock, with net proceeds of
$13.02 per share for a total capital injection of $6,417,000. This increase in
capital was needed because of the rapid growth in assets at both the Montgomery
and Huntsville operations and in the First American Bank of Walton County. The
stock issue came out at $14.00 a share and is currently trading in the $14.50
range.
The growth of the branch operations at both Southern Bank of Commerce and First
American Bank of Walton County has been very expensive and has had a substantial
impact on the earnings for the first six months of 1998. Total interest income
at $5,402,000 is up 32% over interest income for June 30, 1997, of $4,103,000.
Noninterest income is $749,000 up 28% from the $583,000 in noninterest income
for the first six months of 1997. Total income of $6,151,000 was up 30% over
mid-year 1997 total income of $4,686,000.
Total interest expense at $2,428,000 is up 41% over the $1,722,000 for the first
six months of 1997. Salaries and benefits at $1,621,000 are up 39% over the
$1,163,000 in salaries and benefits through the first six months of 1997. The
increase in interest expense is the result of the deposit gathering functions of
the two operations in Montgomery and Huntsville. The salaries and benefits are
also due to the increased personnel that have been hired in these operations at
both executive and
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<PAGE>
staffing levels. The Huntsville operation, which opened during the second
quarter of 1998, had to be completely staffed with a cadre of one president, two
vice-presidents, and several staff people. As a result of the tremendous loan
growth that Eufaula BancCorp has experienced and of our commitment to keep a
loan loss reserve at a minimum of 1%, our monthly loan loss contribution is
presently $80,000 for the entire holding company. Therefore, the provision for
loan losses for the first six months of 1998, is up $198,000.00 or 257%.
LIQUIDITY
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As of June 30, 1998, the liquidity ratio was 25 %. Liquidity is measured by the
ratio of net cash, short-term and marketable securities to net deposits and
short-term liabilities. Management believes that this ratio is adequate to meet
the liquidity needs of the Bank.
CAPITAL
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Both the leverage capital ratio and the risk-based capital ratio are well above
the minimum requirements.
YEAR 2000
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Management has consistently committed to ensure the Institution's daily
operations suffer little or no impact from the century date change. The
Institution has applied due diligence throughout the Y2K remediation process,
following the guidelines contained in the series of FFIEC Interagency
Statements.
To date, the Institution, through an established Y2K Committee, has completed
the following major activities in preparation for moving into the testing phase
of the Y2K remediation project:
With the help of a third party consulting firm, a comprehensive Inventory & Risk
Assessment matrix has been developed.
An extensive internal and external awareness campaign has been undertaken. The
campaign includes not only the initial awareness-raising efforts, but continues
with proactive ongoing activities to maintain heightened awareness of Y2K
implications.
Because the Institution has acquired its core systems from a highly regarded
third party, it has relatively little direct control over the renovation
process. However, the Institution contacted the core system vendor and all
other vendors identified in the inventor following the FFIEC guidelines to
assess the status of these vendors' Y2K readiness efforts.
The Institution undertook an aggressive review of its customers, identifying
those it believed could have their business operations affected by the century
date change. These customers have been approached, and the Institution is
engaged in active discussions with them regarding Y2K remediation.
Management at both the senior management and board levels understands the
implications of the century date change, and has been actively engaged in
monitoring the progress of the Y2K readiness activities. Senior managers
participate in a Y2K team, with monthly reports to the board.
During the Assessment Phase, the Institution established a high-level plan that
required completing its Y2K test plan by June 30, 1998. This document was
reviewed by the Board on July 14, 1998.
The Institution plans to complete Y2K testing in a time frame consistent with
that required by the FFIEC, meaning by the end of the first quarter of 1999.
The cost associated with Y2K is anticipated being no more than $50,000.00.
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<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
DATE: March 31, 1998 EUFAULA BANCCORP, INC.
----------------
BY: /s/ Greg Faison
-------------------------
Greg Faison, President
BY: /s/ Gloria A. Hagler
-------------------------
Gloria A. Hagler, Secretary/Treasurer
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<PAGE>
PART II - OTHER INFORMATION
Item 4. Any matter submitted to the security holders for a vote.
The Annual meeting of the Shareholders of Eufaula BancCorp, Inc., was
held on May 12, 1998. At the meeting, the following was voted on:
1. Greg Faison was elected as a Director to serve for a term of three
years or until his successor has been elected and qualified. 1,734,432 voted for
the election of Mr.Faison. The following continue to serve as Directors of the
Company:
Janis Biggers
Michael C. Dixon
Robert M. Dixon
Thomas Harris
James J. Jaxon, Jr.
Frank McRight
2. The Company's auditors, Mauldin & Jenkins, LLC, were ratified to serve
as the Company's Independent Auditors for 1998.
1,732,232 voted for the ratification
2,200 voted against the ratification
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
Loan Composition Summary
Loans over 90 days past due and non accrual loans
Allowance for Loan Losses analysis
(b) Report on Form 8-K.
NONE
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<PAGE>
EXHIBIT 3(a)
3a The composition of loans is summarized as follows:
1998 1997
---- ----
Commercial, Financial $13044 $13774
Agricultural 3281 2907
Real Estate-Construction 15587 3603
Real Estate-Mortgage 61779 33328
Consumer 19683 13506
Other 176 368
TOTAL 113550 67486
Unearned Discount (200) (187)
Allowance for loan losses (958) (686)
NET LOANS $112392 $66613
3c-1 The following is a schedule of non accrual loans and loans past due 90
days and over:
June 30
1998 1997
---- ----
Past due non accrual Past due nonaccrual
90 days or 90 days or
more more
Real Estate Loans 51 3 0
Installment Loans 13 8 37 0
Commercial Loans 10 0
3c-2 Non accrual loans were not material to the total amount of loans
outstanding.
4a Changes in the allowance for loan losses for June 30, 1998 and
1997 were as follows:
1998 1997
---- ----
Balance, beginning of year 762 655
Provision charged to operations 275 77
Loans charged off (89) (53)
Recoveries 10 7
Balance 6-30 958 686
1998 1997
---- ----
Charge offs Recoveries Charge offs Recoveries
Installment Loans 89 10 20 7
Credit Cards & Related
Plans 3
Commercial and All Other
Loans 1
TOTALS 89 10 24 7
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 7,553
<INT-BEARING-DEPOSITS> 1,967
<FED-FUNDS-SOLD> 3,200
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 19,236
<INVESTMENTS-CARRYING> 8,779
<INVESTMENTS-MARKET> 0
<LOANS> 113,350
<ALLOWANCE> 958
<TOTAL-ASSETS> 163,019
<DEPOSITS> 137,041
<SHORT-TERM> 5,825
<LIABILITIES-OTHER> 1,455
<LONG-TERM> 0
0
0
<COMMON> 2,621
<OTHER-SE> 16,077
<TOTAL-LIABILITIES-AND-EQUITY> 163,019
<INTEREST-LOAN> 4,482
<INTEREST-INVEST> 806
<INTEREST-OTHER> 114
<INTEREST-TOTAL> 5,402
<INTEREST-DEPOSIT> 2,331
<INTEREST-EXPENSE> 97
<INTEREST-INCOME-NET> 2,974
<LOAN-LOSSES> 275
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 3,072
<INCOME-PRETAX> 376
<INCOME-PRE-EXTRAORDINARY> 267
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 267
<EPS-PRIMARY> .10
<EPS-DILUTED> .10
<YIELD-ACTUAL> 7.42
<LOANS-NON> 59
<LOANS-PAST> 13
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 762
<CHARGE-OFFS> 89
<RECOVERIES> 10
<ALLOWANCE-CLOSE> 958
<ALLOWANCE-DOMESTIC> 958
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
