<PAGE>
1
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 PERIOD ENDED MARCH 31, 1998
Commission File Number: 33-28514-A
----------
BRYAN BANCORP OF GEORGIA, INC.
-------------------------------------------------------------------------------
(exact name of small business issuer as specified in its charter)
GEORGIA 58-1835646
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
9971 Ford Avenue, Richmond Hill, Georgia 31324
- ---------------------------------------- ------------------------------------
(Address of principal executive offices) (Zip code)
(912) 756-4444
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(Registrant's telephone number, including area code)
Not Applicable
- --------------------------------------------------------------------------------
(Former name,former address and former fiscal year,if changed since last report)
Check whether the registrant (1) filed all reports to be filed by section 13 or
15(d) of the Securities Exchange Act of 1934 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 issuer's classes of common stock,
as of the latest practicable date:
Common Stock, $1.00 Par Value - 506,508 shares as of May 11, 1998
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Transitional Small Business Disclosure Format:
Yes No X
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Page 1 of 11 Pages
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2
INDEX
BRYAN BANCORP OF GEORGIA, INC. AND SUBSIDIARY
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheet - March 31, 1998
Consolidated Statements of Income and Comprehensive Income - Three
Months Ended March 31, 1998 and 1997
Consolidated Statements of Cash Flows - Three Months Ended March 31,
1998 and 1997
Notes to Consolidated Financial Statements - March 31, 1998
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
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3
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
- ----------------------------
BRYAN BANCORP OF GEORGIA, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET - (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
March 31, 1998
----------------
ASSETS
<S> <C>
Cash and due from banks $ 3,388,764
Interest-bearing deposits with other banks 495,000
Federal funds sold 2,290,000
Investment securities available for sale 8,928,534
Investment securities held to maturity (estimated market
value of $3,991,465 ) 3,863,684
Loans 48,996,679
Less allowance for loan losses (625,255)
----------------
Loans, net 48,371,424
Interest receivable 467,141
Premises and equipment, net 1,196,411
Other assets 255,262
----------------
Total assets $ 69,256,220
================
LIABILITIES
Deposits:
Noninterest-bearing $ 9,128,632
Interest-bearing 48,285,640
----------------
Total deposits 57,414,272
Federal Home Loan Bank advances 3,583,750
Other borrowed funds 100,000
Interest payable 177,711
Dividends payable 506,508
Other liabilities 164,649
----------------
Total liabilities 61,946,890
----------------
SHAREHOLDERS' EQUITY
Common stock - par value $1 per share;
authorized 10,000,000 shares;
issued 532,258 shares 532,258
Additional paid-in capital 5,052,465
Retained earnings 2,246,561
Accumulated other comprehensive income (loss) (604)
----------------
7,830,680
Less 25,750 shares of treasury stock- at cost (521,350)
----------------
Total shareholders' equity 7,309,330
----------------
Total liabilities and shareholders' equity $ 69,256,220
================
</TABLE>
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4
BRYAN BANCORP OF GEORGIA, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME - (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------------------
1998 1997
------------ ------------
INTEREST INCOME:
<S> <C> <C>
Loans $ 1,250,907 $ 1,120,321
Investment securities:
Taxable 136,293 90,621
Tax-exempt 43,617 38,686
Federal funds sold 24,146 29,039
Deposits in other banks 9,921 171
------------ ------------
Total interest income 1,464,884 1,278,838
------------ ------------
INTEREST EXPENSE:
Deposits 574,444 501,654
Federal Home Loan Bank advances 38,754 6,856
Other borrowed funds 6,029 931
------------ ------------
Total interest expense 619,227 509,441
------------ ------------
NET INTEREST INCOME 845,657 769,397
PROVISION FOR LOAN LOSSES 45,000 45,000
------------ ------------
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 800,657 724,397
------------ ------------
NONINTEREST INCOME:
Service charges on deposit accounts 79,009 93,460
Mortgage origination fees 59,760 17,853
Other service charges and fees 26,063 25,320
Net realized loss on sales of available
for sale securities (675)
Gain on sale of property 57,401
Other 35,506 50,255
------------ ------------
257,739 186,213
------------ ------------
NONINTEREST EXPENSES:
Salaries and employee benefits 341,452 283,061
Occupancy 20,848 22,187
Equipment and data processing 55,315 45,824
Other 195,247 170,454
------------ ------------
612,862 521,526
------------ ------------
INCOME BEFORE INCOME TAXES 445,534 389,084
PROVISION FOR INCOME TAXES 136,600 117,560
------------ ------------
NET INCOME $ 308,934 $ 271,524
============ ============
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX:
Unrealized gains (losses) on securities:
Unrealized holding gains (losses)
arising during period 5,805 (21,345)
Less reclassification adjustment for losses
included in net income 0 425
------------ ------------
Other comprehensive income (loss) 5,805 20,920)
------------ ------------
Comprehensive income $ 314,739 $ 250,604
============ ============
Basic earnings per share $ 0.61 $ 0.54
Diluted earnings per share $ 0.59 $ 0.53
</TABLE>
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5
BRYAN BANCORP OF GEORGIA, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS - (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------------------
1998 1997
------------- -------------
OPERATING ACTIVITIES:
<S> <C> <C>
Net income $ 308,934 $ 271,524
Adjustments to reconcile net income
to cash provided by operating activities:
Depreciation 31,776 21,024
Amortization and accretion, net 302 866
Provision for loan losses 45,000 45,000
Net realized loss on available for sale securities 675
Gain on sale of property (57,401)
Changes in:
Interest receivable (16,277) 486
Other assets (24,507) 52,577
Interest payable (32,579) (37,539)
Other liabilities 36,224 81,083
------------- -------------
Net cash provided by operating activities 291,472 435,696
------------- -------------
INVESTING ACTIVITIES:
Net decrease in time deposits in other banks 495,000
Net (increase) decrease in federal funds sold (2,252,000) 4,180,000
Proceeds from sale of investment securities:
Available for sale securities 199,250
Proceeds from maturities of investment securities:
Available for sale securities 2,335,714 1,016,733
Purchase of investment securities:
Available for sale securities (1,950,000) (1,698,203)
Held to maturity securities (515,900) (23,500)
Net increase in loans (802,802) (1,522,936)
Proceeds from sale of property 358,896
Additions to premises and equipment (36,019) (20,817)
------------- -------------
Net cash used for investing activities (2,367,111) 2,130,527
------------- -------------
FINANCING ACTIVITIES:
Net increase (decrease) deposits 1,434,187 (1,794,990)
Proceeds from Federal Home Loan Advances 2,000,000
Repayment of Federal Home Loan Bank advances (6,250)
Net increase (decrease) in other borrowings (30,000) 74,172
Exercise of stock options 39,720
Acquisition of treasury stock (12,500) (4,000)
------------- -------------
Net cash provided (used) by financing activities 3,425,157 (1,724,818)
------------- -------------
Increase in cash and cash equivalents 1,349,518 841,405
Cash and cash equivalents - beginning 2,039,246 2,296,408
------------- -------------
Cash and cash equivalents - ending $ 3,388,764 $ 3,137,813
============= =============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Income Taxes $ 140,500 $ 115,000
============= =============
Interest $ 651,806 $ 546,980
============= =============
</TABLE>
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6
BRYAN BANCORP OF GEORGIA, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (UNAUDITED)
MARCH 31, 1998
NOTE 1 - BASIS OF PRESENTATION
----------------------------------
The accompanying unaudited financial statements of Bryan Bancorp of
Georgia, Inc. and subsidiary have been prepared in accordance with
generally accepted accounting principles for interim financial information
and with the instructions to form 10-QSB. Accordingly, they do not include
all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the three month period ended March 31, 1998 are not necessarily
indicative of the results that may be expected for the year ended December
31, 1998. For further information, refer to the consolidated financial
statements and footnotes thereto included in the Company's annual report on
form 10-KSB for the year ended December 31, 1997.
Certain amounts in the quarter ended March 31, 1997 consolidated financial
statements have been reclassified to conform to the quarter ended March 31,
1998 presentation.
NOTE 2 - EARNINGS PER SHARE
---------------------------
Earnings per share has been calculated in accordance with the provisions of
Statement of Financial Accounting Standards (SFAS) No. 128 "Earnings Per
Share" issued by the Financial Accounting Standards Board. SFAS No. 128
requires presentation of earnings per share on a basic computation and a
diluted computation. The basic computation divides net income by only the
weighted average number of common shares outstanding for the year and the
diluted computation gives effect to all diluted common shares that were
outstanding during the year.
Earnings per share amounts for 1997 have been restated to give effect to
the application of this new standard.
The following data shows the amounts used in computing earnings per share
and the effect on income and the weighted average number of shares of
dilutive potential common stock.
<TABLE>
<CAPTION>
Quarter Ended March 31,
------------------------
1998 1997
------------------------
Income available to common shareholders:
<S> <C> <C>
Used in basic earnings per share $ 308,934 $ 271,524
========= ==========
Used in diluted earnings per share $ 308,934 $ 271,524
========= ==========
Weighted average number of common
shares used in basic earnings per share 502,541 504,480
Effect of dilutive securities:
Stock options 17,000 12,129
--------- ----------
Weighted average number of common
and dilutive potential common shares
used in diluted earnings per share 519,541 516,609
========= ==========
</TABLE>
<PAGE>
7
BRYAN BANCORP OF GEORGIA, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (UNAUDITED)
MARCH 31, 1998
NOTE 3 - MERGER
---------------
On February 10, 1998, the Company signed a definitive agreement to merge
with The Savannah Bancorp, Inc., a bank holding company that owns The
Savannah Bank located in Savannah, Georgia. This merger would result in The
Savannah Bancorp, Inc. acquiring all of the Company's outstanding stock in
a business combination accounted for as a pooling of interest. Upon
consummation of this merger, which is subject to regulatory and shareholder
approvals, shareholders of the Company would receive 1.85 shares of stock
in The Savannah Bancorp, Inc. in exchange for each share of the Company's
stock.
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8
Item 2. Management's Discussion and Analysis of Financial Condition and
------------------------------------------------------------------
Results of Operation
--------------------
Liquidity and Capital Resources
The goal of liquidity management is to ensure the availability of adequate funds
to meet the loan demand and the deposit withdrawal needs of the Bank's
customers. This is achieved through maintaining a combination of sufficient
liquid assets, core deposit growth, and unused capacity to purchase funds in the
money markets. With ample funds for lending being supplied primarily by core
deposit growth, the company has considerable liquidity and funding flexibility.
The company meets most of its daily liquidity needs through the management of
cash and federal funds sold. The company continues in a liquid position with
approximately $2.3 million invested in daily federal funds sold and
approximately $3.4 million in cash and due from banks at March 31, 1998. As a
result of increase in deposits and long term borrowings from the Federal Home
Loan Bank, the company's cash and cash equivalents plus federal funds sold
increased approximately $3.6 million at March 31, 1998 compared to December 31,
1997.
Management monitors the company's asset and liability positions in order to
maintain a balance between rate sensitive assets and rate sensitive liabilities
and, at the same time, maintain sufficient liquid assets to meet expected
customer needs for loans and for withdrawal of deposits.
The company has the ability on a short-term basis to borrow funds from other
financial institutions. In addition to a credit line with the Federal Home Loan
Bank which allows advances up to seventy-five percent of the book value of
one-to-four family first mortgage loans, the company has federal funds line of
credit arrangements aggregating $4 million.
There are no trends, demands, commitments, events or uncertainties that will
result in or are reasonably likely to result in the company's liquidity
increasing or decreasing in any material way.
The company's total assets increased from $65.5 million at December 31, 1997 to
$69.3 million at March 31, 1998, representing an increase of $3.8 million or
5.8%. Loans increased $.8 million or 1.7% and deposits increased $1.4 million or
2.6% during the first quarter of 1998.
Shareholder's equity at March 31, 1998 was $7.3 million or 10.55% of total
assets. The company declared a $1.00 per share cash dividend during the first
quarter of 1998, payable April 1, 1998 to shareholders of record as of March 21,
1998.
The company repurchased 500 shares of its own common stock during the first
quarter of 1998 at a cost of $25 per share. There were 4,000 stock options
exercised during the quarter at a price of $9.93 per share. Management
anticipates that capital will be adequate to sustain the company's anticipated
1998 growth.
The company's capital is in excess of the applicable regulatory requirements. At
March 31, 1998 the company's leverage ratio was 10.95% and its tier 1 and total
risk-based capital ratios were 14.77% and 16.02% respectively
<PAGE>
9
Results of Operation
Net interest income for the first quarter of 1998 was $845,657, up approximately
$76,260 or 9.91% over the same quarter of 1997. This increase is primarily
attributable to the growth of the loan portfolio. Management anticipates that
demand for loans will continue strong throughout the remainder of 1998.
Non-interest income totaled $257,739 for the quarter ended March 31, 1998
compared to approximately $186,213 for the same quarter in 1997. This increase
of approximately $71,526 is due primarily to increase in mortgage loan
origination fees of approximately $42,000 and gain on sale of property of
$57,000. Service fees on deposit activity decreased approximately $14,000 as a
result of a decrease in NSF charges.
Non-interest expenses total $612,862 for the quarter ended March 31, 1998
compared to $521,526 for the same quarter in 1997. This increase of $91,336 or
17.5% is due primarily to an increase in salaries and employee benefits. The
company's efficiency ratio (non-interest expense divided by the sum of net
interest income after provision for loan losses and non-interest income) was 58%
for the first quarter of 1998 as compared to 57% for the first quarter of 1997.
Net income for the quarter ended March 31, 1998 was $308,934, an increase of
13.8% compared to $271,524 for the same period in 1997.
<PAGE>
10
PART II. - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits:
No. 2 Agreement and Plan of Merger, dated as of
February 11, 1998, by and between Bryan
Bancorp of Georgia, Inc. and The Savannah
Bancorp, Inc.(included as exhibit 2 to the
Registrant's Form 8-K/A filed on March 3,
1998 and incorporated by reference
herein).
No. 27 Financial Data Schedules (SEC use only)
(b) Reports on Form 8-K:
The Registrant filed a current report on Form 8-K on
February 27, 1998, listing under item five thereof
the joint announcement that the Registrant and The
Savannah Bancorp, Inc. had entered into a definitive
agreement and plan of merger of Registrant into The
Savannah Bancorp, Inc. Attached to that filing as
Exhibit 99 was a news release making that
announcement. On March 3, 1998, Registrant filed its
first amendment to the February 27, 1998 Form 8-K on
Form 8-K/A for the purpose of including as an
additional Exhibit No. 2, under item 7 of Form 8-K/A,
the Agreement of Merger by and between the Registrant
and The Savannah Bancorp, Inc.
<PAGE>
11
SIGNATURES
Pursuant to the requirements of Section 15(d) 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.
BRYAN BANCORP OF GEORGIA, INC.
Date: May 11, 1998 By: /s/ E. James Burnsed
------------ --------------------
E. James Burnsed,
President and Chief Executive Officer
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF BRYAN BANCORP OF GEORGIA, INC. FOR THE PERIOD ENDED
MARCH 31, 1998 , AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 3,388,764
<INT-BEARING-DEPOSITS> 495,000
<FED-FUNDS-SOLD> 2,290,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 8,928,534
<INVESTMENTS-CARRYING> 3,863,684
<INVESTMENTS-MARKET> 3,991,465
<LOANS> 48,996,679
<ALLOWANCE> 625,255
<TOTAL-ASSETS> 69,256,220
<DEPOSITS> 57,414,272
<SHORT-TERM> 265,000
<LIABILITIES-OTHER> 4,267,618
<LONG-TERM> 0
0
0
<COMMON> 532,258
<OTHER-SE> 6,777,072
<TOTAL-LIABILITIES-AND-EQUITY> 69,256,220
<INTEREST-LOAN> 1,250,907
<INTEREST-INVEST> 179,910
<INTEREST-OTHER> 34,067
<INTEREST-TOTAL> 1,464,884
<INTEREST-DEPOSIT> 574,444
<INTEREST-EXPENSE> 619,227
<INTEREST-INCOME-NET> 845,657
<LOAN-LOSSES> 45,000
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 612,862
<INCOME-PRETAX> 308,934
<INCOME-PRE-EXTRAORDINARY> 308,934
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 308,934
<EPS-PRIMARY> .61
<EPS-DILUTED> 0
<YIELD-ACTUAL> 5.08
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 583,432
<CHARGE-OFFS> 9,023
<RECOVERIES> 5,847
<ALLOWANCE-CLOSE> 625,255
<ALLOWANCE-DOMESTIC> 625,255
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
