<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
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
-----------------------
[ ] 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.)
Village Shopping Center, Hwy. 441
Post Office Box 1250, Clayton, Georgia 30525
--------------------------------------------
(Address of principal executive offices)
(706) 782-7100
---------------------------
(Issuer's telephone number)
N/A
--------------------------------------------------------------------------
(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 May 1, 1997: 400,391
Transitional Small Business Disclosure Format (Check One) Yes No X
----- -----
<PAGE>
FIRST CLAYTON BANCSHARES, INC.
AND SUBSIDIARY
INDEX
-----
<TABLE>
<CAPTION>
Page No.
--------
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
Consolidated Balance Sheet - March 31, 1997............... 1
Consolidated Statements of
Income - Three Months Ended March 31, 1997 and 1996...... 2
Consolidated Statements of
Cash Flows - Three Months Ended March 31, 1997 and 1996.. 3 and 4
Notes to Consolidated Financial Statements................ 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations........... 6-9
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.................. 10
Signatures................................................ 11
</TABLE>
<PAGE>
PART 1 - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
FIRST CLAYTON BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
MARCH 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Assets
- ------
<S> <C>
Cash and due from banks $ 2,485,684
Interest-bearing deposits in banks 3,829
Federal funds sold 1,300,000
Securities available-for-sale, at fair value 7,230,264
Securities held-to-maturity, at cost (fair value $4,666,596) 4,701,204
Loans 45,399,025
Less allowance for loan losses 458,580
------------------
Loans, net 44,940,445
------------------
Premises and equipment 1,435,631
Other assets 1,176,221
------------------
Total assets $ 63,273,278
==================
Liabilities and Stockholders' Equity
- ------------------------------------
Deposits
Demand $ 5,526,730
Interest-bearing demand 9,019,030
Savings 2,839,527
Time deposits 40,184,551
------------------
Total deposits 57,569,838
Other liabilities 271,398
------------------
Total liabilities 57,841,236
------------------
Stockholders' equity
Common stock, par value $1; 10,000,000 shares authorized;
427,827 shares issued 427,827
Capital surplus 3,850,443
Retained earnings 1,657,816
Unrealized (loss) on securities available-for-sale, net of tax (52,854)
------------------
5,883,232
Less cost of 27,436 shares of treasury stock 451,190
------------------
Total stockholders' equity 5,432,042
------------------
Total liabilities and stockholders' equity $ 63,273,278
==================
</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 MARCH 31, 1997 AND 1996
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
------------------ ----------------
<S> <C> <C>
Interest income
Loans $ 1,175,884 $ 915,337
Taxable securities 152,921 163,337
Nontaxable securities 25,060 20,906
Federal funds sold 8,462 45,443
Interest-bearing deposits in banks 30 30
------------------ ----------------
Total interest income 1,362,357 1,145,053
Interest expense on deposits 665,052 581,037
------------------ ----------------
Net interest income 697,305 564,016
Provision for loan losses 32,500 25,000
------------------ ----------------
Net interest income after provision for
loan losses 664,805 539,016
------------------ ----------------
Other income 75,813 66,513
------------------ ----------------
Other expenses
Salaries and other employee benefits 217,057 159,846
Occupancy and equipment expenses 71,259 67,004
Other operating expenses 158,439 123,133
------------------ ----------------
Total other expenses 446,755 349,983
------------------ ----------------
Income before income taxes 293,863 255,546
Income tax expense 101,963 81,512
------------------ ----------------
Net income $ 191,900 $ 174,034
================== ================
Net income per share of common stock based on weighted
average number of shares outstanding during period $ 0.48 $ 0.41
================== ================
Weighted average shares outstanding 400,391 424,393
================== ================
Cash dividends per share of common stock $ - $ -
================== ================
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
2
<PAGE>
FIRST CLAYTON BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
------------------ ----------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 191,900 $ 174,034
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation 33,750 41,948
Provision for loan losses 32,500 25,000
Increase in interest receivable (44,517) (160,833)
Increase in interest payable 18,488 5,366
Gain on sale of securities available-for-sale (1,730) -
Other operating activities (20,783) (7,300)
------------------ ----------------
Net cash provided by operating activities 209,608 78,215
------------------ ----------------
INVESTING ACTIVITIES
Purchases of securities available-for-sale (1,589,179) (1,006,252)
Proceeds from sale of securities available-for-sale 501,105 448,490
Proceeds from maturities of securities available-for-sale 197,899 (341,987)
Proceeds from maturities of securities held-to-maturity 602,508 309,633
Net (increase) decrease in Federal funds sold (930,000) 2,734,418
Net increase in interest-bearing deposits in banks (30) (30)
Net increase in loans (3,194,717) (2,332,893)
Purchase of premises and equipment (11,491) (14,592)
------------------ ----------------
Net cash used in investing activities (4,423,905) (203,213)
------------------ ----------------
FINANCING ACTIVITIES
Net increase (decrease) in deposits 4,996,071 (694,384)
------------------ ----------------
Net cash provided by (used in) financing activities 4,996,071 (694,384)
------------------ ----------------
Net increase (decrease) in cash and due from banks 781,774 (819,382)
Cash and due from banks, beginning of period 1,703,910 2,266,014
------------------ ----------------
Cash and due from banks, end of period $ 2,485,684 $ 1,446,632
================== ================
</TABLE>
3
<PAGE>
FIRST CLAYTON BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
------------------ ----------------
<S> <C> <C>
SUPPLEMENTAL DISCLOSURES
Cash paid for:
Interest $ 646,564 $ 575,671
Income taxes $ 47,548 $ 73,104
NONCASH TRANSACTIONS
Unrealized losses on securities available-for-sale $ 62,012 $ 44,001
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
4
<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 month period ended March 31,
1997 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. 128,
Earnings Per Share. SFAS No. 128 establishes standards for computing
and presenting earnings per share (EPS) and applies to entities with
publicly held common stock or potential common stock. This Statement
simplifies the standards for computing earnings per share previously
found in APB Opinion No. 15, Earnings per Share, and makes them
comparable to International EPS standards. It replaces the
presentation of primary EPS with a presentation of basic EPS. It also
requires dual presentation of basic and diluted EPS on the face of the
income statement for all entities with complex capital structures and
requires a reconciliation of the numerator and denominator of the
basic EPS computation to the numerator and denominator of the diluted
EPS computation. The effective date of this Statement is for
financial statements issued for periods ending after December 15,
1997. The adoption of this Statement is not expected to have a
material effect on the earnings per share amount that is disclosed in
these quarterly financial statements.
5
<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 March 31, 1997, the Company reported growth in assets of approximately
$5,200,000 or 8.95% as compared to December 31, 1996. Total loans increased by
$3,176,000 or 7.52% for the three months ended March 31, 1997. This increase was
funded by an increase in total deposits of $4,996,000 or 9.50% during the same
period. Other interest-earning assets increased by $1,157,000 or 9.58% as
compared to December 31, 1996.
Liquidity
As of March 31, 1997, the liquidity ratio was 22.81% compared to 30.77% at March
31, 1996. This is below the Bank's target ratio of 30%. Liquidity is measured
by the ratio of net cash, Federal funds sold and securities to net deposits and
short-term liabilities. The decrease in the liquidity ratio is related to the
significant increase in loans totaling $12,296,000 since March 31, 1996. The
Company, however, has lines of credit available to meet any unforeseen liquidity
needs. The Bank has established a relationship with the Federal Home Loan Bank
of Atlanta which provides funding for loan growth on an as needed basis.
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 at least 8%.
Selected financial information relating to the Bank's minimum capital
requirements for the period ended March 31, 1997 is as follows:
<TABLE>
<S> <C>
Leverage capital ratio 8.90%
Risk-based capital ratios:
Core capital 15.14%
Total capital 16.39%
</TABLE>
6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(Continued)
Results of Operations
Net interest income increased $133,000 or 23.63% for the three months ended
March 31, 1997 compared to the same period in 1996. The net increase consists
of an increase in interest income of $217,000 or 18.98% less an increase in
interest expense of $84,000 or 14.46% for the three month period. The
significant increase in interest income is due primarily to the growth in the
loan portfolio of 37.14% from March 31, 1996 to March 31, 1997. Interest-
bearing deposits increased during the same period by $8,635,000 or 19.89%. The
net interest margin increased 14 basis points to 4.87% during the period ended
March 31, 1997 from 4.73% at March 31, 1996.
The Company's provision for loan losses increased by $7,500 or 30% during the
three months ended March 31, 1997 as compared to the same period in 1996. The
allowance for loan losses at March 31, 1997 was $458,580 or 1.01% of total
outstanding loans compared to 1.12% at March 31, 1996. Based on management's
evaluation, the reserve is adequate to absorb anticipated loan losses at
March 31, 1997.
The following table furnishes information on the loan loss reserve for the
current three month reporting period and the same period for 1996.
<TABLE>
<CAPTION>
1997 1996
------------------------
(Dollars in Thousands)
------------------------
<S> <C> <C>
Beginning balance $ 445 $ 339
Less charge-offs
Commercial loans (1) -
Consumer loans (18)
Plus recoveries
Consumer loans - 5
Plus provision 33 25
--------- -------
Balance, end of period $ 459 $ 369
========= =======
</TABLE>
The loan loss reserve for the Company is evaluated monthly and adjusted to
reflect the risk in the portfolio.
7
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(Continued)
The following table is a summary of nonaccrual, past due and restructured debt.
<TABLE>
<CAPTION>
March 31, 1997
----------------------------------------------
Past Due
Nonaccural 90 Days Restructured
Loans Still Accruing Debt
----------- --------------- ------------
(Dollars in Thousands)
----------------------------------------------
<S> <C> <C> <C>
Real estate loans $ 6 $ - $ -
Commercial loans - - -
Consumer loans 89 - -
----------- -------------- ------------
Total $ 95 $ - $ -
=========== ============== ============
March 31, 1996
----------------------------------------------
Past Due
Nonaccural 90 Days Restructured
Loans Still Accruing Debt
----------- -------------- ------------
(Dollars in Thousands)
----------------------------------------------
Real estate loans $ 436 $ 7 $ -
Commercial loans - - -
Consumer loans - 16 -
----------- -------------- ------------
Total $ 436 $ 23 $ -
=========== ============== ============
</TABLE>
Loans classified for regulatory purposes as loss, doubtful, substandard, or
special mention that have not been included in the table above 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 of any information which causes management to have serious doubts as to
the ability of such borrowers to comply with the loan repayment loans.
Other operating income for the three months ended March 31, 1997 increased by
$9,300 or 13.98%. The increase in other operating income is primarily due to an
increase in credit life income of $5,400 which is attributable to the growth in
loans and an increase of $3,350 in early redemption penalties.
Other operating expenses increased by approximately $97,000 or 27.65% for the
three month period ending March 31, 1997 compared to the same period in 1996.
The increase is due primarily to an increase in salaries and employee benefits
of $57,000 which can be attributed to an increase of three full time employees.
The increase is also due to an increase of $17,000 in consulting fees incurred
by the Bank and an increase in convention and meeting expenses of $6,500
compared to 1996. The increase in full time employees is directly related to the
increase in loans and deposits.
8
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
(Continued)
Income tax expense increased by $20,000 for the three months ended March 31,
1997 compared to the three months ended March 31, 1996. The effective tax rate
for the period in 1997 was 35% compared to 32% for the same period in 1996. The
increase in the effective tax rate is primarily related to the increase in state
income taxes.
Net income increased for the three months ended March 31, 1997 by $18,000
compared to the same period in 1996. The increase in net income is attributable
to the continued growth in interest-earning assets, particularly higher yielding
loans.
The Company is not aware of any other known trends, events or uncertainties,
other than the effect of events as described above, that will have or that are
reasonably likely to have a material effect on its liquidity, capital resources
or operations. The Company is also not aware of any current recommendations by
the regulatory authorities which, if they were implemented, would have such an
effect.
9
<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.
10
<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: /s/ John R. Martin
------------------------ ---------------------------
President and Chairman
DATE: BY: /s/ J. Mark Smith
------------------------ ---------------------------
Chief Executive Officer and Principal
Financial and Accounting Officer of
First Clayton Bank & Trust Company
11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 2,485,684
<INT-BEARING-DEPOSITS> 3,829
<FED-FUNDS-SOLD> 1,300,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 7,230,264
<INVESTMENTS-CARRYING> 4,701,204
<INVESTMENTS-MARKET> 4,666,596
<LOANS> 45,399,025
<ALLOWANCE> 458,580
<TOTAL-ASSETS> 63,273,278
<DEPOSITS> 57,569,838
<SHORT-TERM> 0
<LIABILITIES-OTHER> 271,398
<LONG-TERM> 0
0
0
<COMMON> 427,827
<OTHER-SE> 5,004,215
<TOTAL-LIABILITIES-AND-EQUITY> 63,273,278
<INTEREST-LOAN> 1,175,884
<INTEREST-INVEST> 177,981
<INTEREST-OTHER> 8,492
<INTEREST-TOTAL> 1,362,357
<INTEREST-DEPOSIT> 665,052
<INTEREST-EXPENSE> 665,052
<INTEREST-INCOME-NET> 697,305
<LOAN-LOSSES> 32,500
<SECURITIES-GAINS> 1,730
<EXPENSE-OTHER> 446,755
<INCOME-PRETAX> 293,863
<INCOME-PRE-EXTRAORDINARY> 191,900
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 191,900
<EPS-PRIMARY> .48
<EPS-DILUTED> .48
<YIELD-ACTUAL> 4.87
<LOANS-NON> 95,000
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 444,936
<CHARGE-OFFS> 18,856
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 458,580
<ALLOWANCE-DOMESTIC> 458,580
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 458,580
</TABLE>
