<PAGE>
UNITED STATES 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 AND
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
------------------
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from __________ to __________
Commission File Number: 33-28050-A
First Clayton Bancshares, Inc.
---------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Georgia 58-1823105
- ------------------------------- ----------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
Post Office Box 1250, Clayton, Georgia 30525
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(Address of principal executive offices)
(706) 782-7100
--------------------
(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 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. Yes X No
----- -----
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of November 4, 1996: 400,191
Transitional Small Business Disclosure Format (check one) Yes No X
----- -----
<PAGE>
FIRST CLAYTON BANCSHARES, INC.
AND SUBSIDIARY
- --------------------------------------------------------------------------------
INDEX
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Page No.
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheet - September 30, 1996......................1
Consolidated Statements of Income - Three
Months Ended September 30, 1996 and 1995 and
Nine Months Ended September 30, 1996 and 1995.................2 and 3
Consolidated Statements of Cash Flows - Nine
Months Ended September 30, 1996 and 1995......................4 and 5
Notes to Consolidated Financial Statements.....................6 and 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations............8-10
PART II. OTHER INFORMATION
Item 6 - Exhibits and Reports on Form 8-K............................11
Signatures...........................................................12
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
FIRST CLAYTON BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Assets
- ------
<S> <C>
Cash and due from banks $ 1,605,975
Interest-bearing deposits in banks 3,769
Securities:
Securities held to maturity at cost (fair value $6,555,161) 6,607,259
Securities available for sale, at fair value 4,525,287
Federal funds sold 970,000
Loans 38,984,974
Less allowance for loan losses 341,531
------------
38,642,443
------------
Premises and equipment, net 1,481,705
Other assets 992,248
------------
$ 54,829,686
============
<CAPTION>
Liabilities and Stockholders' Equity
- ------------------------------------
<S> <C>
Deposits
Demand $ 4,892,711
Interest-bearing demand 9,106,331
Savings 3,124,115
Certificates of deposit 32,254,948
------------
Total deposits 49,378,105
Other liabilities 190,579
------------
Total liabilities 49,568,684
------------
Stockholders' equity
Common stock, par value $1; 10,000,000 shares authorized;
427,827 shares issued 427,827
Surplus 3,850,443
Retained earnings 1,456,435
Unrealized loss on securities available for sale, net of tax (18,713)
------------
5,715,992
Less cost of 27,636 shares of treasury stock (454,990)
------------
Total stockholders' equity 5,261,002
------------
$ 54,829,686
============
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
1
<PAGE>
FIRST CLAYTON BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995 AND
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended September 30, Nine Months Ended September 30,
---------------------------------- --------------------------------
1996 1995 1996 1995
--------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Interest income
Interest and fees on loans $ 1,068,542 $ 880,287 $ 2,935,163 $ 2,405,335
Interest on taxable securities 144,621 140,897 469,989 403,959
Interest on nontaxable securities 22,512 15,830 65,980 45,316
Interest on Federal funds sold 16,204 60,243 77,253 140,736
--------------- -------------- -------------- --------------
1,251,879 1,097,257 3,548,385 2,995,346
Interest expense on deposits 574,694 543,434 1,722,493 1,409,169
--------------- -------------- -------------- --------------
Net interest income 677,185 553,823 1,825,892 1,586,177
Provision for loan losses 36,000 19,500 85,999 57,000
--------------- -------------- -------------- --------------
Net interest income after
provision for loan losses 641,185 534,323 1,739,893 1,529,177
--------------- -------------- -------------- --------------
Other operating income
Service charges on deposit accounts 45,930 41,641 144,747 128,719
Securities gains - - 1,241 -
Other income 2,380 10,634 44,343 28,565
--------------- -------------- -------------- --------------
48,310 52,275 190,331 157,284
--------------- -------------- -------------- --------------
Other operating expense
Salaries and other employee benefits 163,544 154,796 491,537 461,439
Occupancy and equipment expenses 69,348 61,542 204,116 178,945
Stationery and supplies 21,699 19,711 71,399 52,644
FDIC assessments 500 (2,136) 1,500 37,357
Directors' fees 16,800 16,200 46,800 48,000
Software amortization 8,523 8,908 27,658 27,355
Postage expense 13,800 9,369 36,359 28,045
Other operating expense 82,588 53,711 229,031 169,348
--------------- -------------- -------------- --------------
376,802 322,101 1,108,400 1,003,133
--------------- -------------- -------------- --------------
Income before income taxes 312,693 264,497 821,824 683,328
Applicable income taxes 114,022 91,140 281,791 222,463
--------------- -------------- -------------- --------------
Net income $ 198,671 $ 173,357 $ 540,033 $ 460,865
=============== ============== ============== ==============
</TABLE>
2
<PAGE>
FIRST CLAYTON BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995 AND
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------------ -----------------------------
1996 1995 1996 1995
------------- ------------ ------------- ------------
<S> <C> <C> <C> <C>
Per share of common stock based on average
number of shares outstanding during period
Net income $ .50 $ .41 $ 1.31 $ 1.09
============== ============= ============== =============
Average shares outstanding 400,191 424,393 411,321 424,545
============== ============= ============== =============
Cash dividends per share of common stock $ - $ - $ - -
============== ============= ============== =============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
3
<PAGE>
FIRST CLAYTON BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended September 30, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
----------------- ----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 540,033 $ 460,865
----------------- ----------------
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization 97,500 122,013
Provision for loan losses 85,999 57,000
Increase in interest receivable (122,377) (218,108)
Decrease in taxes payable (57,291) (58,338)
Increase (decrease) in interest payable (24,927) 74,448
Securities gains (1,241) -
Other prepaids, deferrals and accruals, net (393) 9,157
----------------- ----------------
Total adjustments (22,730) (13,828)
----------------- ----------------
Net cash provided by operating activities 517,303 447,037
----------------- ----------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of securities available for sale 1,539,947 (2,169,263)
Proceeds from maturities of securities available for sale 552,772 1,201,385
Proceeds from sales of securities available for sale 1,492,656 199,500
Purchase of securities held to maturity (341,987) (2,147,903)
Proceeds from maturities of securities held to maturity 517,843 1,751,388
Net decrease (increase) in Federal funds sold 4,685,000 (2,280,000)
Net (increase) in bank owned deposit (92) (91)
Net increase in loans (8,303,809) (5,027,816)
Purchase of premises and equipment (30,017) (60,052)
----------------- ----------------
Net cash used in investing activities (2,967,581) (8,532,852)
----------------- ----------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in deposits 2,201,673 7,868,920
Purchase of shares for the treasury (411,434) (6,855)
----------------- ----------------
Net cash provided by financing activities 1,790,239 7,862,065
----------------- ----------------
Net decrease in cash and due from banks (660,039) (223,750)
Cash and due from banks, beginning of period 2,266,014 1,183,525
----------------- ----------------
Cash and due from banks, end of period $ 1,605,975 $ 959,775
================= ================
</TABLE>
4
<PAGE>
FIRST CLAYTON BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended September 30, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
---------- -----------
<S> <C> <C>
SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION
Cash paid during period for:
Interest $ 1,747,420 $ 1,334,721
Income taxes 329,854 285,468
NONCASH TRANSACTION
Unrealized gains on securities available for sale $ (74,872) $ (103,519)
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
5
<PAGE>
FIRST CLAYTON BANCSHARES AND SUBSIDIARY
NOTES 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 three and nine month periods ended
September 30, 1996 are not necessarily indicative of the results to be
expected for the full year.
NOTE 2. CURRENT ACCOUNTING DEVELOPMENTS
The Financial Accounting Standards Board has issued SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of", No. 122, "Accounting for Mortgage Servicing
Rights", and No. 123, "Accounting for Stock-Based Compensation", all of
which are effective for financial statements for years beginning after
December 31, 1995 and for transactions after December 31, 1995.
SFAS 121 requires that long-lived assets and certain identifiable
intangibles, including goodwill, be reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. In the event that the sum of the
expected future cash flows is less than the carrying amount of an
impaired long-lived asset, an impairment loss should be recognized. The
adoption of this Statement is not expected to have a material effect on
the earnings or financial condition of the Company.
SFAS 122 requires mortgage banking enterprises to recognize as a
separate asset the rights retained to service mortgage loans for third
parties. These assets are to be based on the fair value of the mortgage
servicing rights and mortgage loans, if practicable to estimate.
Otherwise, the entire cost of purchasing or originating these loans
should be allocated to mortgage loans. The adoption of this Statement
is not expected to have a material effect on the earnings or financial
condition of the Company.
6
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 2. CURRENT ACCOUNTING DEVELOPMENTS (Continued)
SFAS 123 establishes financial accounting and reporting standards for
stock-based employee compensation plans. The statement defines a fair
value based method of accounting for employee compensation plans and
encourages the adoption of all plans. However, the statement allows
previous methods of accounting for compensation plans to be utilized
with additional disclosures required. The adoption of this Statement is
not expected to have a material effect on the earnings or financial
condition of the Company.
7
<PAGE>
FIRST CLAYTON BANCSHARES, INC. AND SUBSIDIARY
ITEM 2. 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.
Financial Condition
As of September 30, 1996, the Company continued to experience significant growth
in total loans as total loans increased approximately $2,989,000 from June 30,
1996. During the same period, total assets and total deposits increased by
$2,535,000 and $2,242,000, respectively. The increase in total assets, loans,
and deposits for the nine month period ended September 30, 1996 was 4.2%, 26.7%,
and 4.7%, respectively.
The significant increase in total loans since December 31, 1995 of $8,220,000
has been funded by an increase in deposits of $2,202,000, a decrease in Federal
funds of $4,685,000, and a decrease in securities of $755,000 plus net earnings
to date. The growth experienced by the Company is attributable to the changes in
the local banking community and management's continued marketing efforts.
Liquidity
As of September 30, 1996, the liquidity ratio was 23.59%, which is below the
Company's target ratio of 30%. The decrease in liquidity ratio is related to the
significant increase in loans during the period. However, the Company has
available lines of credit to meet any unforeseen liquidity needs. 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
The minimum capital requirements for banks and bank holding companies require a
leverage capital to total assets ratio of at least 4%, core capital to
risk-weighted assets ratio of at least 4% and total capital to risk-weighted
assets of 8%.
Selected financial information relating to the Bank's minimum capital
requirements for the period ended September 30, 1996 is as follows:
Leverage capital ratio 9.82 %
Risk-based capital ratios:
Core capital 16.13 %
Total capital 17.17 %
The capital ratios of the Bank are adequate and in compliance with the minimum
regulatory requirements.
8
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations for the Three Months Ended September 30, 1996 and 1995
Net interest income for the three months ended September 30, 1996 increased
22.3% to $677,000, compared to $555,000 for the same period in 1995. Interest
income increased by $155,000 or 14.1% while interest expense increased by
$31,000 or 5.8%. The increase in interest income is primarily attributable to an
increase in loans of approximately $8,678,000, compared to September 30, 1995.
The increase in interest income was partially offset by an increase in interest
expense related to an increase in interest-bearing deposits of $5,823,000 or
15.1% as compared to September 30, 1995.
The provision for loan losses increased for the three month period ended
September 30, 1996, by $16,500 over the comparable period in 1995. The allowance
for loan losses as a percentage of total loans was .88% and 1.10% at September
30, 1996 and December 31, 1995, respectively. Management believes that the
allowance for loan losses is adequate to absorb anticipated loan losses.
Results of Operations for the Nine Months Ended September 30, 1996 and 1995
Net interest income for the nine month period ended September 30, 1996 increased
by $240,000 or 15.1% over the comparable period in 1995. Interest income
increased by $553,000 or 18.5% while interest expense increased by $313,000 or
22.2%. The increase in net interest income is primarily attributable to the
increase in loans as discussed above.
The provision for loan losses increased for the nine month period ended
September 30, 1996 by $29,000, as compared to September 30, 1995. Net
charge-offs for the nine months ended September 30, 1996 were $84,000.
Nonaccrual loans were $62,000 and $24,000 at September 30, 1996 and 1995,
respectively, and loans past due 90 days and still accruing interest were
$121,000 and $64,000 for the same periods. Management believes that the
allowance for loan losses is adequate to absorb anticipated loan losses.
Loans classified for regulatory purposes as loss, doubtful, substandard, or
special mention do not represent or result from trends or uncertainties which
management reasonably expects will materially impact future operating results,
liquidity, or capital resources. These classified loans do not represent
material credits about which management is aware which causes management to have
serious doubts as to the ability of such borrowers to comply with the loan
repayment terms.
Other income increased $33,000 or 21.0% for the nine month period ended
September 30, 1996 as compared to 1995. Service charges on deposit accounts
accounted for $16,000 of the total increase in other income. During 1996 the
Bank began charging a surcharge fee for foreign ATM transactions which generated
an additional $9,000.
9
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Other operating expenses for the nine month period ended September 30, 1996
increased by $105,000 or 10.5% over the comparable period in 1995. The most
significant increases in other operating expenses were personnel expenses,
occupancy and equipment expenses, stationery and supplies, postage expense, and
other expenses. The increase in personnel expenses of $30,000 includes an
increase of two full-time equivalent employees as compared to September 30,
1995. The increase in occupancy and equipment expenses includes increases in
depreciation and maintenance expenses. In 1996, the Company entered into a
consulting agreement to provide certain services to the Company. The increase in
other operating expenses related to this agreement amounted to approximately
$29,000. The majority of the other increases were related to the increase in
loans and deposits.
Income tax expense at September 30, 1996, has increased by $59,000 over the same
period in 1995. Through September 30, 1996, the effective tax rate is
approximately 34.3% as compared to 32.6% at September 30, 1995. The increase in
the effective tax rate includes state income taxes at September 30, 1996 of
$14,000.
Net income for the nine month period ended September 30, 1996, increased by
$79,000 or 17.2% when compared to the nine month period ended September 30,
1995. The subsidiary bank continues to experience substantial growth in loans,
which has enabled the Company to increase interest income and net income.
10
<PAGE>
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
27. Financial Data Schedule
(b) Reports on Form 8-K.
None.
11
<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 CLAYTON BANCSHARES, INC.
DATE: ______________ BY: _____________________________________
John Martin, President and Chairman
DATE: ______________ BY: _____________________________________
J. Mark Smith, Chief Executive Officer
of First Clayton Bank & Trust and Director
12
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 1,605,975
<INT-BEARING-DEPOSITS> 3,769
<FED-FUNDS-SOLD> 970,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 4,525,287
<INVESTMENTS-CARRYING> 6,607,259
<INVESTMENTS-MARKET> 6,555,161
<LOANS> 38,984,974
<ALLOWANCE> 341,531
<TOTAL-ASSETS> 54,829,686
<DEPOSITS> 49,378,105
<SHORT-TERM> 0
<LIABILITIES-OTHER> 190,579
<LONG-TERM> 0
0
0
<COMMON> 427,827
<OTHER-SE> 4,833,175
<TOTAL-LIABILITIES-AND-EQUITY> 54,829,686
<INTEREST-LOAN> 2,935,163
<INTEREST-INVEST> 535,969
<INTEREST-OTHER> 77,253
<INTEREST-TOTAL> 3,548,385
<INTEREST-DEPOSIT> 1,722,493
<INTEREST-EXPENSE> 1,722,493
<INTEREST-INCOME-NET> 1,825,892
<LOAN-LOSSES> 85,999
<SECURITIES-GAINS> 1,241
<EXPENSE-OTHER> 1,108,400
<INCOME-PRETAX> 821,824
<INCOME-PRE-EXTRAORDINARY> 821,824
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 540,033
<EPS-PRIMARY> 1.31
<EPS-DILUTED> 0
<YIELD-ACTUAL> 3.76
<LOANS-NON> 62,000
<LOANS-PAST> 121,000
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 355,461
<CHARGE-OFFS> 56,930
<RECOVERIES> 7,000
<ALLOWANCE-CLOSE> 341,531
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 341,531
</TABLE>
