<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
OR
_ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period from _____________ to ____________
Commission file number 0-18488
FIRST CHEROKEE BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
GEORGIA 58-1807887
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
</TABLE>
9860 HIGHWAY 92, WOODSTOCK, GEORGIA 30188
(Address of principal executive offices)
770-591-9000
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be 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.
[X] Yes [ ] No
The number of shares outstanding of registrant's common stock par value $1.00
per share at September 30, 1996 was 551,804 shares.
<PAGE>
First Cherokee Bancshares, Inc.
Quarterly Report on Form 10-QSB
For the Quarter Ended September 30, 1996
INDEX
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C>
Part I. Financial Information
Consolidated Financial Statements (unaudited)
Consolidated Balance Sheet at September 30, 1996 2
Consolidated Statements of Earnings (unaudited)
for the nine months ended September 30, 1996 and 1995 3
Consolidated Statements of Earnings (unaudited)
for the three months ended September 30, 1996 and 1995 4
Consolidated Statements of Cash Flows (unaudited)
for the nine months ended September 30, 1996 and 1995 5
Notes to Consolidated Financial Statements (unaudited) 6
Item 2. Management's Discussion and Analysis of Financial Condition 7
and Results of Operations
Part II. Other Information
Item 1. Legal Proceedings 11
Item 2. Changes in Securities 11
Item 3. Defaults Upon Senior Securities 11
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 5. Other Information 11
Item 6. Exhibits and Reports on Form 8-K 11
Item 7. Signatures 14
</TABLE>
1
<PAGE>
FIRST CHEROKEE BANCSHARES, INC.
Consolidated Balance Sheet
September 30, 1996
(Unaudited)
<TABLE>
<S> <C>
ASSETS
Cash & due from banks, including $10,987,274
bearing interest $14,847,399
Federal funds sold 480,000
-----------
Total cash & cash equivalents 15,327,399
Investment securities available for sale,
at fair value 1,808,557
Loans, less allowance for loan losses
of $661,523 57,668,792
Premises and equipment, net 2,015,088
Accrued interest receivable and other assets 5,862,082
-----------
TOTAL ASSETS $82,681,918
-----------
-----------
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Deposits:
Interest-bearing deposits $66,066,215
Noninterest-bearing deposits 9,477,257
-----------
Total deposits 75,543,472
Accrued interest payable and other liabilities 663,628
-----------
TOTAL LIABILITIES 76,207,100
STOCKHOLDERS' EQUITY:
Common stock ($1 par value; 10,000,000
shares authorized, 561,044 shares issued) 561,044
Additional paid-in-capital 5,026,457
Retained earnings 968,706
Treasury Stock (9,240 shares acquired
at cost) (84,000)
Unrealized gains on available for
sale securities, net of tax effect 2,611
-----------
TOTAL STOCKHOLDERS' EQUITY 6,474,818
-----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $82,681,918
-----------
-----------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2
<PAGE>
FIRST CHEROKEE BANCSHARES, INC.
Consolidated Statements of Earnings
(Unaudited)
<TABLE>
<CAPTION>
NINE NINE
MONTHS MONTHS
ENDED ENDED
SEPTEMBER SEPTEMBER
30, 1996 30, 1995
--------- ---------
<S> <C> <C>
INTEREST INCOME:
Interest and fees on loans $4,354,472 $4,401,522
Interest on investment securities 70,369 159,463
Interest on federal funds sold/overnight funds 555,576 401,958
---------- ----------
TOTAL INTEREST INCOME 4,980,417 4,962,943
INTEREST EXPENSE ON DEPOSITS 2,861,168 2,549,639
---------- ----------
NET INTEREST INCOME 2,119,249 2,413,304
Provision for loan losses 94,254 255,471
---------- ----------
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 2,024,995 2,157,833
OTHER INCOME:
Gain on sale of investment securities 0 0
Gain on sales of loans 942,332 1,109,813
Service charges on deposit accounts
and other income 418,498 311,896
---------- ----------
TOTAL OTHER INCOME 1,360,830 1,421,709
OTHER EXPENSE:
Salaries and employee benefits 1,445,893 1,217,061
Occupancy 394,471 370,243
Other operating expense 1,026,447 732,356
---------- ----------
TOTAL OTHER EXPENSE 2,866,811 2,319,660
Gain (Loss) on Sale of Other Assets 5,074 0
EARNINGS BEFORE INCOME TAXES 524,088 1,259,882
INCOME TAXES 197,700 437,000
NET EARNINGS $326,388 $822,882
---------- ----------
---------- ----------
NET EARNINGS PER SHARE (NOTE 2):
PRIMARY $ 0.52 $1.64
---------- ----------
---------- ----------
FULLY DILUTED $0.50 $1.64
---------- ----------
---------- ----------
WEIGHTED AVERAGE NUMBER OF SHARES AND EQUIVALENTS:
PRIMARY 662,324 551,804
---------- ----------
---------- ----------
FULLY DILUTED 662,324 551,804
---------- ----------
---------- ----------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3
<PAGE>
FIRST CHEROKEE BANCSHARES, INC.
Consolidated Statements of Earnings
(Unaudited)
<TABLE>
<CAPTION>
THREE THREE
MONTHS MONTHS
ENDED ENDED
SEPTEMBER SEPTEMBER
30, 1996 30, 1995
--------- ---------
<S> <C> <C>
INTEREST INCOME:
Interest and fees on loans $1,467,862 $1,590,384
Interest on investment securities 28,092 52,401
Interest on federal funds sold/overnight funds 171,371 183,573
---------- ----------
TOTAL INTEREST INCOME 1,667,325 1,826,358
INTEREST EXPENSE ON DEPOSITS 938,215 969,639
---------- ----------
NET INTEREST INCOME 729,110 856,719
Provision for loan losses 28,589 107,001
---------- ----------
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 700,521 749,718
OTHER INCOME:
Gain on sale of investment securities 0 0
Gain on sales of loans 185,639 310,371
Service charges on deposit accounts
and other income 146,258 105,428
---------- ----------
TOTAL OTHER INCOME 331,897 415,799
OTHER EXPENSE:
Salaries and employee benefits 461,127 414,482
Occupancy 138,534 127,803
Other operating expense 415,655 255,638
---------- ----------
TOTAL OTHER EXPENSE 1,015,316 797,923
Gain (Loss) on Sale of Other Assets 5,074 0
EARNINGS BEFORE INCOME TAXES 22,176 367,594
INCOME TAXES 7,100 133,000
NET EARNINGS $15,076 $234,594
---------- ----------
---------- ----------
NET EARNINGS PER SHARE (NOTE 2):
PRIMARY $0.05 $0.47
---------- ----------
---------- ----------
FULLY DILUTED $0.03 $0.47
---------- ----------
---------- ----------
WEIGHTED AVERAGE NUMBER OF SHARES AND EQUIVALENTS:
PRIMARY 662,324 551,804
---------- ----------
---------- ----------
FULLY DILUTED 662,324 551,804
---------- ----------
---------- ----------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4
<PAGE>
FIRST CHEROKEE BANCSHARES, INC.
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
NINE NINE
MONTHS MONTHS
ENDED ENDED
SEPTEMBER SEPTEMBER
30, 1996 30, 1995
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
NET EARNINGS $ 326,388 $ 822,882
ADJUSTMENTS TO RECONCILE NET EARNINGS TO NET CASH
PROVIDED (USED) IN OPERATING ACTIVITIES:
Depreciation, amortization and accretion 98,010 139,925
Provision for loan losses 94,254 255,471
Securities gains 0 0
Change in accrued interest payable and
other liabilities 81,102 384,851
Change in accrued interest receivable and
other assets (176,686) (2,012,597)
----------- -----------
TOTAL ADJUSTMENTS 96,680 (1,232,350)
----------- -----------
NET CASH PROVIDED (USED) BY OPERATING
ACTIVITIES 423,068 (409,468)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of investment securities (992,757) 0
Proceeds from sale of investment securities 0 0
Proceeds from maturities and calls of
investment securities available for sale 205,298 (40,661)
Net change in loans (3,526,533) (8,583,828)
Purchases of premises and equipment (108,708) (50,738)
----------- -----------
NET CASH USED BY INVESTING ACTIVITIES (4,422,700) (8,675,227)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net change in deposits (577,529) 17,810,117
----------- -----------
NET CASH PROVIDED (USED) BY FINANCING
ACTIVITIES (577,529) 17,810,117
NET CHANGE IN CASH AND CASH EQUIVALENTS (4,577,161) 8,725,422
BEGINNING CASH AND CASH EQUIVALENTS 19,904,560 8,084,965
----------- -----------
ENDING CASH AND CASH EQUIVALENTS $15,327,399 $16,810,387
NONCASH INVESTING ACTIVITIES:
CHANGE IN UNREALIZED GAIN ON SECURITIES
AVAILABLE FOR SALE, NET OF TAX EFFECT $(4,330) $90,668
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
INTEREST PAID $ 2,868,635 $ 2,544,891
INCOME TAXES PAID $ 278,000 $ 507,500
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5
<PAGE>
FIRST CHEROKEE BANCSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
September 30, 1996
NOTE (1) - BASIS OF PRESENTATION
The consolidated financial statements include the accounts of First Cherokee
Bancshares, Inc. (the "Company") and its wholly-owned subsidiary, First National
Bank of Cherokee (the "Bank"). All significant accounts have been eliminated in
consolidation. Certain prior period amounts have been reclassified to conform
with current year presentation.
The accompanying unaudited interim consolidated financial statements reflect all
adjustments which, in the opinion of management, are necessary to present fairly
the Company's financial position as of September 30, 1996, and the results of
its operations and its cash flows for the nine-month period then ended. All such
adjustments are normal and recurring in nature. The financial statements
included herein should be read in conjunction with the consolidated financial
statements and the notes thereto and the report of independent accountants
included in the Company's 1995 Annual Report on Form 10-KSB.
NOTE (2) - NET EARNINGS PER SHARE
Net earnings per share are based on the weighted average number of shares
outstanding during each year including consideration of stock options and stock
warrants, which represent common stock equivalents. It is assumed that all
dilutive common stock equivalents are exercised at the beginning of the year and
that the proceeds are used to purchase shares of the Company's common stock. The
average market price during each period is used to compute equivalent shares
assumed to be acquired for primary earnings per share, whereas period end prices
are used for fully diluted per share amounts. The resulting difference in the
calculation of primary and fully diluted earnings per share is due to the
application of the modified treasury stock method, which is applied in instances
in which dilutive common stock equivalents exceed 20% of the outstanding common
stock.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
The following narrative should be read in conjunction with the Company's
consolidated financial statements and the notes thereto.
FINANCIAL CONDITION
Assets of the Company increased $1.5 million during the third quarter of 1996 as
compared to a decrease of $2.2 million during the second quarter of 1996 and an
increase of $4.1 million during the third quarter of 1995. The increase is due
to normal growth.
While the Company had a profitable quarter, earnings were substantially lower
than those the Company has recorded in the last several years. The average yield
on earning assets for the first nine months of 1996 decreased to 9.94% as
compared to 10.39% for the first nine months of 1995. The decrease was due to a
higher level of nonperforming loans in 1996 than 1995 as well as lower interest
rates. Many of the Bank's loan products are tied to the prime interest rate
which is lower in 1996 than 1995. The average cost of funds on interest-bearing
deposits increased for the first three quarters of 1996 to 5.69%, as compared to
5.62% for the first three quarters of 1995, primarily as a result of competition
in the Bank's immediate market area. Consequently, the net interest spread for
the first three quarters of 1996 decreased to 4.25% compared to 4.77% for the
first three quarters of 1995.
Loans increased from $54.1 million at September 30, 1995 to $54.2 million at
December 31, 1995, and $57.7 million at September 30, 1996. Management
anticipates loan production will continue to increase during the remainder of
the year. The following table presents major classifications of loans at
September 30, 1996:
<TABLE>
<CAPTION>
% OF
TOTAL
TOTAL LOAN
LOANS PORTFOLIO
----- ---------
<S> <C> <C>
Commercial $12,094,514 20.74%
SBA - unguaranteed 11,516,680 19.74%
Real estate - mortgage 20,936,356 35.89%
Real estate - construction 9,502,101 16.29%
Installment and other consumer 4,280,664 7.34%
----------- -------
Total loans 58,330,315 100.00%
Less: Allowance for loan losses (661,523)
-----------
Total net loans $57,668,792
</TABLE>
7
<PAGE>
Total deposits were $75.5 million at September 30, 1996 compared to $76.1
million at December 31, 1995 and $74.8 million at September 30, 1995. As
mentioned previously, certain large rate-sensitive certificates of deposit are
being allowed to mature in order to improve the mix of deposits and cost of
funds. Accordingly, total deposits may decrease during the remainder of 1996.
A provision of $28,589 was added to the Allowance for Loan and Lease Losses
during the third quarter of 1996, bringing total provisions for the year to
$94,254. The provisions are primarily attributable to the increased level of
nonperforming loans at September 30, 1996 compared to September 30, 1995. (See
Nonaccrual, Past Due, and Restructured Loans). The allowance had a balance of
$661,523 at September 30, 1996, representing 1.13% of loans. Chargeoffs were
$132,828 while recoveries were $14,391, resulting in net chargeoffs of $118,436
during the first three quarters of 1996. Management believes this allowance is
adequate to cover possible loan losses. Additionally, a safety and soundness
examination performed by the Office of the Comptroller of the Currency ("OCC")
during the third quarter of 1996 found the allowance to be adequate. The
following table presents the activity in the allowance for loan losses for the
first three quarters of 1996. At September 30, 1996, the Bank had one loan that
required a specific allocation of $25,000; the remainder of the allowance at
that date was unallocated.
TABLE 1
FIRST CHEROKEE BANCSHARES, INC.
ANALYSIS OF THE ALLOWANCE FOR LOAN LOSSES
<TABLE>
<S> <C>
Balance, December 31, 1995 $685,706
Chargeoffs (132,828)
Recoveries 14,391
Provision for Loan Losses 94,254
--------
Balance, September 30, 1996 $661,523
--------
--------
</TABLE>
NONACCRUAL, PAST DUE AND RESTRUCTURED LOANS
At September 30, 1996, the Bank had sixteen loans classified as nonaccrual
totaling $1,513,157. Twelve loans in the amount of $219,543 are secured by
vehicles, equipment or inventory while the remaining loans are secured by real
estate. The nonaccrual loans are either greater than ninety days delinquent as
of September 30, 1996 or are classified as nonaccrual by management because the
collection of interest from the borrower is doubtful. A specific reserve of
$25,000 has been allocated on one real estate loan in the amount of $661,593. No
material loss is anticipated on the other nonaccrual loans so no additional
specific reserves or writedowns are considered necessary at this time. If
interest income on the total nonaccrual loans had been accrued, such income
would have approximated $170,000 as of September 30, 1996. Interest income on
such loans, recorded only when received, was approximately $28,000 during the
third quarter of 1996. As of September 30, 1996, the Bank had three properties
classified as Other Real Estate Owned, totaling $1,137,380. Two of the
8
<PAGE>
properties, representing 89% of the balance, are under contract and are expected
to close by the end of 1996. The ratio of loans past due 30 days or more to
total loans was 3.47% at September 30, 1996 compared to 1.23% at September 30,
1995. There were no loans past due greater than 90 days that were on accrual
status as of September 30, 1996 or September 30, 1995. Additionally, there were
no restructured loans as of September 30, 1996 or September 30, 1995.
LIQUIDITY
The Company's primary sources of funds are increases in deposits, loan
repayments, and sales and maturities of investments. Liquidity refers to the
ability of the Company to meet its cash flow requirements and fund its
commitments. The Company manages the levels, types, and maturities of earning
assets in relation to the sources available to fund current and future needs to
ensure that adequate funding will be available at all times. The Company
monitors its compliance with regulatory liquidity requirements and anticipates
that funding requirements will be satisfactorily met.
CAPITAL RESOURCES
At September 30, 1996, consolidated stockholders' equity was $6,474,818 or 7.83%
of total assets compared to $5,899,169 or 7.21% of total assets at September 30,
1995. The Company's common stock had a book value of $11.54 per share at
September 30, 1996 (adjusted for the 10% stock dividend declared on January 17,
1996 and paid on April 1, 1996), compared to $11.76 book value per share at
September 30, 1995. At the end of the second quarter of 1996, the Company had
approximately 650 stockholders of record.
The Bank and the Company are subject to the capital requirements of the OCC and
the Federal Reserve Bank (the "FRB"). The OCC and FRB have adopted risk-based
capital guidelines for all national banks and holding companies, respectively.
To be "adequately capitalized," all national banks are expected to maintain a
minimum ratio of total capital (after deductions) to risk-weighted assets of 8%
(of which at least 4% must consist of Tier 1 Capital, as defined).
The following table sets forth information with respect to the Bank's capital
ratios at September 30, 1996 and 1995 compared to minimum ratios required by
regulation. The Company's capital ratios are similar to those of the Bank and
exceed the minimum risk-weighted requirements of the FRB.
9
<PAGE>
FIRST CHEROKEE BANCSHARES, INC.
CAPITAL CALCULATIONS
TABLE 2
<TABLE>
<CAPTION>
9/30/96 9/30/95
(Bank Only) (Bank Only)
---------------------------------------------
Amount Amount
(IN 000'S) RATIO (IN 000'S) RATIO
---------- ----- ---------- -----
<S> <C> <C> <C> <C>
RISK-BASED CAPITAL RATIOS:
Tier 1 Capital per regulations $5,875 9.45% $5,286 10.39%
Minimum Requirement per
regulations 2,488 4.00% 2,381 4.00%
------ ------ ------ ------
Excess $3,387 5.45% $2,905 6.39%
Tier 1 and Tier 2 Capital $6,537 10.51% $5,977 11.34%
Total Capital Minimum
Requirement 4,976 8.00% 4,763 8.00%
------ ------ ------ ------
Excess $1,561 2.51% $1,214 3.34%
LEVERAGE RATIOS:
Tier 1 Capital $5,875 7.11% $5,286 8.61%
Minimum Requirement per
regulations 3,249 4.00% 3,273 4.00%
------ ------ ------ ------
Excess $2,626 3.11% $2,013 4.61%
</TABLE>
RESULTS OF OPERATIONS
The Company recognized net earnings of $326,388 for the nine months ended
September 30, 1996. In comparison, net earnings for the nine months ending
September 30, 1995 were $822,882. Actual earnings for the first three quarters
of 1996 are significantly less than projected. The primary reason for the
decrease in net earnings continues to be the increase of costs relative to the
increase in nonperforming assets. Additionally, the Bank was assessed a special
one-time fee of approximately $84,000 by the Federal Deposit Insurance
Corporation ("FDIC") that was accrued as of September 30, 1996. The assessment
represents the Bank's portion of the recapitalization of the Savings Association
Insurance Fund ("SAIF") according to the recently enacted Deposit Insurance
Funds Act of 1996.
Net interest income for the first nine months of 1996 was $2,119,249 as compared
to $2,413,304 for the first nine months of 1995. Interest income on loans has
been adversely impacted due to the
10
<PAGE>
increased level of nonperforming loans. The annualized ratio of operating
expenses to average assets has deteriorated from 4.24% for the nine months of
1995 to 4.70% for the first nine months of 1996. (The ratio would have been
4.56% excluding the special SAIF assessment mentioned previously.) The
deterioration is primarily due to the increase of costs, such as legal fees,
relative to resolving problem assets. While management expects this ratio to
improve during the fourth quarter of 1996, no assurance can be given that it
will do so.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings - None
Item 2. Changes in Securities - 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 filed in accordance with Item 601 of
Regulation S-B: 27 Financial Data Schedule
b. The Company has not filed any reports on Form 8-K during
the nine months ended September 30, 1996.
c. Computation of Earnings Per Share.
Item 7. Signatures - attached
11
<PAGE>
COMPUTATION OF EARNINGS PER SHARE
(Unaudited)
<TABLE>
<CAPTION>
Nine months ended
September 30
1996 1995**
---- ------
<S> <C> <C>
PRIMARY EARNINGS PER SHARE
Earnings: Net earnings $ 326,388 $822,882
Excess proceeds invested in U.S.
government securities @ 5.27% 19,209 0*
--------- --------
Net earnings available to common stock 345,597 822,882
Shares: Weighted average number of common
shares outstanding 551,804 551,804
Additional shares assuming conversion of:
Stock warrants 196,350 0*
Stock options 24,531 0*
Less 20% limitation (110,361) 0*
--------- --------
Average common shares and equivalents outstanding 662,324 551,804
Primary earnings per share $0.52 $1.64
FULLY DILUTED EARNINGS PER SHARE
Earnings: Net earnings $326,388 $822,882
Excess proceeds invested in U.S.
government securities @ 5.27% 5,912 0*
--------- --------
Net earnings available to common stock 332,300 822,882
Shares: Weighted average number of common
shares outstanding 551,804 551,804
Additional shares assuming conversion of:
Stock warrants 196,350 0*
Stock options 24,531 0*
Less 20% limitation (110,361) 0*
--------- --------
Average common shares and equivalents outstanding 662,324 551,804
Primary earnings per share $0.50 $1.64
</TABLE>
*The effect of common stock equivalents at September 30, 1995 did not result in
material dilution
**Earnings per share calculations for 1995 were not restated to reflect the 10%
stock dividend declared on January 17,1996 and paid on April 1, 1996.
12
<PAGE>
COMPUTATION OF EARNINGS PER SHARE
(Unaudited)
<TABLE>
<CAPTION>
Three months ended
September 30
1996 1995**
---- ------
<S> <C> <C>
PRIMARY EARNINGS PER SHARE
Earnings: Net earnings $ 15,076 $234,594
Excess proceeds invested in U.S.
government securities @ 5.27% 19,209 0*
--------- --------
Net earnings available to common stock 34,285 234,594
Shares: Weighted average number of common
shares outstanding 551,804 551,804
Additional shares assuming conversion of:
Stock warrants 196,350 0*
Stock options 24,531 0*
Less 20% limitation (110,361) 0*
--------- --------
Average common shares and equivalents outstanding 662,324 551,804
Primary earnings per share $0.05 $0.47
FULLY DILUTED EARNINGS PER SHARE
Earnings: Net earnings $15,076 $234,594
Excess proceeds invested in U.S.
government securities @ 5.27% 5,912 0*
--------- --------
Net earnings available to common stock 20,988 234,594
Shares: Weighted average number of common
shares outstanding 551,804 551,804
Additional shares assuming conversion of:
Stock warrants 196,350 0*
Stock options 24,531 0*
Less 20% limitation (110,361) 0*
--------- --------
Average common shares and equivalents outstanding 662,324 551,804
Primary earnings per share $0.03 $0.47
</TABLE>
*The effect of common stock equivalents at September 30, 1995 did not result in
material dilution
**Earnings per share calculations for 1995 were not restated to reflect the 10%
stock dividend declared on January 17, 1996 and paid on April 1, 1996.
13
<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.
FIRST CHEROKEE BANCSHARES, INC.
(Registrant)
DATE: NOVEMBER 8, 1996 BY: /c/ CARL C. HAMES, JR.
------------------------------ ------------------------------
Carl C. Hames, Jr.
President & CEO/Principal
Executive Officer
DATE: NOVEMBER 8, 1996 BY: /c/ KITTY A. KENDRICK
----------------------------- -----------------------------
Kitty A. Kendrick
Principal Financial Officer
14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED
FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 14,847,399
<INT-BEARING-DEPOSITS> 10,987,274
<FED-FUNDS-SOLD> 480,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 1,808,557
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 57,668,792
<ALLOWANCE> 661,523
<TOTAL-ASSETS> 82,681,918
<DEPOSITS> 75,543,472
<SHORT-TERM> 0
<LIABILITIES-OTHER> 663,628
<LONG-TERM> 0
0
0
<COMMON> 561,044
<OTHER-SE> 5,913,774
<TOTAL-LIABILITIES-AND-EQUITY> 6,474,818
<INTEREST-LOAN> 4,354,472
<INTEREST-INVEST> 70,369
<INTEREST-OTHER> 555,576
<INTEREST-TOTAL> 4,980,417
<INTEREST-DEPOSIT> 2,861,168
<INTEREST-EXPENSE> 2,861,168
<INTEREST-INCOME-NET> 2,119,249
<LOAN-LOSSES> 94,254
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 2,866,811
<INCOME-PRETAX> 524,088
<INCOME-PRE-EXTRAORDINARY> 524,088
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 326,388
<EPS-PRIMARY> .52
<EPS-DILUTED> .50
<YIELD-ACTUAL> 9.94
<LOANS-NON> 1,513,157
<LOANS-PAST> 0
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<ALLOWANCE-OPEN> 685,706
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<ALLOWANCE-CLOSE> 661,523
<ALLOWANCE-DOMESTIC> 661,523
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 636,523
</TABLE>
