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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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 June 30, 1998
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ____________
Commission file number 0-18560
The Savannah Bancorp, Inc.
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(Exact name of registrant as specified in its charter)
Georgia 58-1861820
------------------------------- ---------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
25 Bull Street, Savannah, GA 31401
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(Address of principal executive offices) (Zip Code)
912-651-8200
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(Registrant's telephone number, including area code)
N/A
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(Former name, former address and former fiscal year,
if changed since last report.)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 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 _
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of July 15, 1998.
1,734,298 shares of Common Stock, $1.00 par value per share
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<PAGE>
The Savannah Bancorp, Inc.
Form 10-Q Index
June 30, 1998
Part I - FINANCIAL INFORMATION
Page
Item 1. Financial Statements
Consolidated Balance Sheets - June 30, 1998 and December 31, 1997 2
Consolidated Statements of Income
For the Quarter Ended June 30, 1998 and 1997 3
For the Six Months Ended June 30, 1998 and 1997 4
Consolidated Statements of Changes in Shareholders' Equity
For the Six Months Ended June 30, 1998 and 1997 5
Consolidated Statements of Cash Flows
For the Six Months Ended June 30, 1998 and 1997 6
Condensed Notes to Consolidated Financial Statements 7-8
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 8-13
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 2. Changes in Securities 14
Item 3. Defaults Upon Senior S 14
Item 4. Submission of Matters to a Vote of Security Holders 14
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 15
Financial Data Schedules 16-17
1
<PAGE>
<TABLE>
<CAPTION>
The Savannah Bancorp, Inc. and Subsidiary
Consolidated Balance Sheets
(dollars in thousands, except per share data)
(Unaudited)
June 30, December 31,
1998 1997
------------ ------------
Assets
<S> <C> <C>
Cash and due from banks $ 6,100 $ 11,929
Federal funds sold 12,508 13,187
Investment securities available for sale:
U. S. Treasury Securities (amortized cost of $11,105
and $12,141 in 1998 and 1997, respectively) 11,115 12,144
Other taxable investments (amortized cost of $25,889
and $13,782 in 1998 and 1997, respectively) 25,980 13,829
State and municipal investments (amortized cost of
$3,376 in 1998 and 1997, respectively) 3,520 3,527
------------ ------------
Total investment securities available for sale 40,615 29,500
Loans 106,570 106,021
Less allowance for loan losses (1,528) (1,480)
------------ ------------
Net loans 105,042 104,541
Premises and equipment, net 2,893 2,931
Other assets 2,032 1,571
------------ ------------
Total assets $ 169,190 $ 163,659
============ ============
Liabilities
Deposits:
Noninterest-bearing demand $ 19,865 $ 25,896
Interest-bearing demand 28,369 29,121
Savings 4,853 3,953
Money market accounts 24,475 20,203
Time, $100,000 and over 28,003 24,650
Other time deposits 42,781 40,641
------------ ------------
Total deposits 148,346 144,464
Federal funds purchased and securities sold under
agreements to repurchase 3,827 3,250
Other liabilities 1,143 969
------------ ------------
Total liabilities 153,316 148,683
------------ ------------
Shareholders' Equity
Preferred stock, par value $1 per share:
authorized 10,000,000 shares; none issued - -
Common stock, par value $1 per share: authorized
20,000,000 shares; issued 1,782,598
shares in 1998 and 1997 1,783 1,783
Capital surplus 8,924 8,924
Retained earnings 5,394 4,649
Treasury stock, at cost, 52,425 in 1998 and 73,050
in 1997 (379) (504)
Net unrealized holding gains on
available for sale securities 152 124
------------ ------------
Total shareholders' equity 15,874 14,976
------------ ------------
Total liabilities and shareholders' equity $ 169,190 $ 163,659
============ ============
</TABLE>
See the condensed notes to the consolidated financial statements.
2
<PAGE>
<TABLE>
<CAPTION>
The Savannah Bancorp, Inc. and Subsidiary
Consolidated Statements of Income
(dollars in thousands, except per share data)
(Unaudited)
For the Quarter Ended
June 30,
-----------------------
1998 1997
---------- ----------
<S> <C> <C>
Interest Income
Loans (includes loan fees) $ 2,423 $ 2,105
Investment securities 571 472
Federal funds sold 242 157
---------- ----------
Total interest income 3,236 2,734
---------- ----------
Interest Expense
Deposits 1,487 1,204
Other short-term borrowings 58 37
---------- ----------
Total interest expense 1,545 1,241
---------- ----------
Net Interest Income 1,691 1,493
Provision for loan losses 45 65
---------- ----------
Net interest income after
provision for loan losses 1,646 1,428
---------- ----------
Other Income
Service charges on deposit accounts 111 107
Mortgage origination fees 138 74
Other income 75 46
---------- ----------
Total other income 324 227
---------- ----------
Other Expense
Salaries and employee benefits 646 528
Occupancy expense 95 79
Equipment expense 85 72
Other operating expenses 339 294
---------- ----------
Total other expense 1,165 973
---------- ----------
Income before provision for income taxes 805 682
Provision for income taxes 285 237
---------- ----------
Net income $ 520 $ 445
========== ==========
Net income per share:
Basic $ .30 $ .26
========== ==========
Diluted $ .29 $ .25
========== ==========
</TABLE>
See the condensed notes to the consolidated financial statements.
3
<PAGE>
<TABLE>
<CAPTION>
The Savannah Bancorp, Inc. and Subsidiary
Consolidated Statements of Income
(dollars in thousands, except per share data)
(Unaudited)
For the Six Months Ended
June 30,
-----------------------
1998 1997
---------- ----------
<S> <C> <C>
Interest Income
Loans (includes loan fees) $ 4,804 $ 4,093
Investment securities 1059 918
Federal funds sold 476 274
---------- ----------
Total interest income 6,339 5,285
---------- ----------
Interest Expense
Deposits 2,933 2,358
Other short-term borrowings 104 66
---------- ----------
Total interest expense 3,037 2,424
---------- ----------
Net Interest Income 3,302 2,861
Provision for loan losses 100 115
---------- ----------
Net interest income after
provision for loan losses 3,202 2,746
---------- ----------
Other Income
Service charges on deposit accounts 212 204
Mortgage origination fees 265 134
Other income 151 81
---------- ----------
Total other income 628 419
---------- ----------
Other Expense
Salaries and employee benefits 1,286 1,038
Occupancy expense 185 157
Equipment expense 176 140
Other operating expenses 662 581
---------- ----------
Total other expense 2,309 1,916
---------- ----------
Income before provision for income taxes 1,521 1,249
Provision for income taxes 535 437
---------- ----------
Net income $ 986 $ 812
========== ==========
Net income per share:
Basic $ .58 $ .48
========== ==========
Diluted $ .54 $ .45
========== ==========
</TABLE>
See the condensed notes to the consolidated financial statements.
4
<PAGE>
<TABLE>
<CAPTION>
The Savannah Bancorp, Inc. and Subsidiary
Consolidated Statements of Changes in Shareholders' Equity
(dollars in thousands, except per share data)
(Unaudited)
Net
Unrealized
Holding
Common Capital Retained Treasury Gains (Losses),
Shares Stock Surplus Earnings Stock Net of Tax Total
---------- ------- ------- -------- -------- ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
For the Six Months
Ended June 30, 1997
Balance, December 31, 1996 1,188,408 $ 1,188 $ 9,519 $ 3,136 ($ 554) ($ 3) $ 13,286
Three-for-two stock split 594,190 595 (595) - - - -
Cash dividends - $.06 per share - - - (104) - - (104)
Change in unrealized losses on securities
available for sale, net of tax - - - - - (2) (2)
Reissuance of treasury stock - - - - 50 - 50
Net income - - - 812 - - 812
---------- ------- ------- -------- -------- ------------ --------
Balance at end of period 1,782,598 $ 1,783 $ 8,924 $ 3,844 ($ 504) ($ 5) $ 14,042
========== ======= ======= ======== ======== ============ ========
For the Six Months
Ended June 30, 1998
Balance, December 31, 1997 1,782,598 $ 1,783 $ 8,924 $ 4,649 ($ 504) $ 124 $ 14,976
Cash dividends - $.14 per share - - - (241) - - (241)
Change in unrealized gains on securities
available for sale, net of tax - - - - - 28 28
Reissuance of treasury stock - - - - 125 - 125
Net income - - - 986 - - 986
---------- ------- ------- -------- -------- ---------- --------
Balance at end of period 1,782,598 $ 1,783 $ 8,924 $ 5,394 ($ 379) $ 152 $ 15,874
========== ======= ======= ======== ======== ========== ========
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
The Savannah Bancorp, Inc. and Subsidiary
Consolidated Statements of Cash Flows
(dollars in thousands)
(Unaudited)
For the Six Months Ended
June 30,
------------------------
Operating Activities 1998 1997
----------- -----------
<S> <C> <C>
Net income $ 986 $ 812
Adjustments to reconcile net income to cash
Provided by operating activities:
Provision for loan losses 100 115
Depreciation of premises and equipment 163 126
Amortization of investment securities discount-net 41 180
Deferred tax benefit (23) (13)
Increase in accrued interest receivable (341) (176)
Increase in prepaid expenses and other assets (114) (16)
Increase (decrease) in accrued interest payable 59 (36)
Increase in other liabilities 115 113
----------- -----------
Net cash provided by operating activities 986 1,105
----------- -----------
Investing Activities
Net decrease in federal funds sold 679 7,580
Purchases of investment securities (13,111) (4,068)
Proceeds from maturities of investment securities 2,000 2,000
Net increase in loans made to customers (601) (7,419)
Capital expenditures (125) (311)
----------- -----------
Net cash used in investing activities (11,158) (2,218)
----------- -----------
Financing Activities
Net decrease in demand, savings, and money market
accounts (1,611) (694)
Net increase in certificates of deposit 5,493 1,399
Net increase in securities sold under agreements to
repurchase 582 704
Net (decrease) increase in federal funds purchased (5) 429
Reissuance of treasury stock 125 50
Dividend payments (241) (104)
----------- -----------
Net cash provided by financing activities 4,343 1,784
----------- -----------
(Decrease) Increase in Cash and Cash Equivalents (5,829) 671
Cash and cash equivalents at beginning of year 11,929 6,015
----------- -----------
Cash and cash equivalents at end of period $ 6,100 $ 6,686
=========== ===========
</TABLE>
See the condensed notes to the consolidated financial statements.
6
<PAGE>
The Savannah Bancorp, Inc. and Subsidiary
Condensed Notes to Consolidated Financial Statements
(Unaudited)
Note 1 - Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Article S-X.
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 six month period ended June 30, 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.
Note 2 - Shareholders' Equity
On January 26, 1997, the Company's Board of Directors declared a three-for-two
stock split payable February 24, 1997 to shareholders of record on February 7,
1997.
Note 3 - Shares Used in Computing Net Income Per Share
Net income per diluted share is computed using the weighted average number of
common and dilutive common equivalent shares outstanding during the periods. The
diluted weighted average shares outstanding were 1,817,000 and 1,793,000 for the
second quarters of 1998 and 1997, respectively. They included 99,000 and 85,000
common equivalent shares in 1998 and 1997, respectively. The diluted weighted
average shares outstanding were 1,815,000 and 1,789,000 for the first six months
of 1998 and 1997, respectively. They included 101,000 and 83,000 common
equivalent shares in 1998 and 1997, respectively.
Note 4 - Change in Accounting Standard
In February of 1997, The Financial Accounting Standards Board issued Statement
of Financial Accounting Standard ("SFAS") No. 128, "Earnings Per Share" which
replaced the prior methodology for calculating and presenting earnings per
share. Under SFAS No. 128, primary earnings per share have been replaced with a
presentation of basic earnings per share, and fully diluted earnings per share
have been replaced with diluted earnings per share. Basic earnings per share
excludes dilution and is computed by dividing income available to common
shareholders by the weighted average number of common shares outstanding for the
period. Diluted earnings per share are computed similarly to fully diluted
earnings per share. The statement became effective beginning in the Company's
financial statements for the year ended December 31, 1997, including restatement
of historical earnings per share presented in such financial statements.
7
<PAGE>
Earnings per share for the second quarter and six months ended June 30, 1997
have been restated to show basic and diluted earnings per share.
In June, 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities." The Statement establishes accounting and reporting
standards for derivative instruments (including certain derivative instruments
imbedded in other contracts). The statement is effective for fiscal years
beginning after June 15, 1999. The financial impact of the adoption has not been
determined. However, the effect of the adoption of the statement is not expected
to be material.
Note 5 - Reporting of Comprehensive Earnings
Total comprehensive income is defined as net income and all other changes in
equity. The Company reported total comprehensive income, net of tax, for the
quarters ended June 30, 1998 and 1997 of $531,000 and $590,000, respectively.
Adjustments to total comprehensive net income, net of tax, for the second
quarter of 1998 and 1997 included net gains of $11,000 and $145,000,
respectively. The Company's total comprehensive income, net of tax, for the six
months ended June 30, 1998 and 1997 was $1,014,000 and $810,000. Adjustments to
total comprehensive net income, net of tax, for the first six months included
net gains of $28,000 in 1998 and net losses of $2,000 in 1997. These changes
reflect a market value increase and decrease in available-for-sale securities
for the quarters and the six months ended June 30, 1998 and 1997.
Note 6 - Pending Merger
On February 10, 1998, the Company signed a definitive agreement to merge with
Bryan Bancorp of Georgia, Inc. ("Bryan"), a bank holding company for Bryan Bank
& Trust Company. Bryan is located in Richmond Hill and Bryan County
approximately twenty miles south of Savannah. The Company intends to acquire
Bryan in a tax-free stock-for-stock merger, to be accounted for as a pooling of
interests, by issuing shares of common stock of the Company. The merger
agreement specifies that each share of Bryan stock will be exchanged for 1.85
shares of the Company's stock. The value of the stock to be issued is
approximately $24 million based on the $25.50 per share market value on the day
prior to the announcement. The consummation of the merger is contingent upon the
transaction qualifying for pooling of interests accounting treatment and is
subject to customary closing conditions, including regulatory and shareholder
approvals. The merger is expected to be consummated in the fourth quarter of
1998.
Item 2. - Management's Discussion and Analysis of Financial Condition
and Results of Operations
For a comprehensive presentation of The Savannah Bancorp, Inc.'s financial
condition at June 30, 1998 and December 31, 1997 and results of operations for
the quarters ended June 30, 1998 and 1997, the following analysis should be
reviewed along with other information including the Company's December 31, 1997
Annual Report on Form 10-KSB.
8
<PAGE>
Liquidity and Interest Rate Sensitivity Management
The objectives of funds management include maintaining adequate liquidity and
reasonable harmony between the repricing of sources and uses of funds on
interest- sensitive assets and liabilities. 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.
The Company will fund anticipated loan growth through normal core deposit growth
and investment maturities and/or sales. The Bank is a member of the Federal Home
Loan Bank of Atlanta (FHLB) and has access to borrowings in excess of $10.0
million by pledging qualifying residential real estate loans under a blanket
float lien agreement. The FHLB will also lend against unpledged investment
securities of approximately $15 million. In addition, the Bank has $6.5 million
of unused short-term federal funds borrowing lines available from correspondent
banks.
Certificates of deposit over $100,000 include rate sensitive deposits primarily
to local individuals and businesses and no brokered deposits These certificates
are considered to be core deposit funds. Most are on an automatic renewing basis
for 6 - 12 months and have been acquired and retained primarily through
relationships and service. The Bank has done no advertising of higher rates to
attract deposits and has consistently set its deposit rates with very little
premium above the regional bank competition in our market area.
During the fourth quarter of 1997, the bank opened its fourth office at the
Island Towne Centre. This office is located in Chatham County, approximately six
miles east of downtown Savannah. The Bank plans to open its fifth office in
Savannah's primary medical care area of town in September of 1998. These new
offices along with the offices opened in 1990, 1992, and 1995, are expected to
provide continued core deposit growth as well as commercial and consumer loan
growth.
A continuing objective of asset liability management is to maintain a high level
of variable-rate assets, including variable-rate loans and shorter-maturity
investments, to balance an increase in market-sensitive liabilities.
Interest-sensitivity management and its effects on the net interest margin
require analyses and actions which take into consideration volumes repriced and
the timing and magnitude of their change.
The long-term maturity gap and repricing data as of June 30, 1998 is shown in
Table 1 following the Management's Discussion and Analysis section.
Management has policies and procedures in place to measure and report
anticipated net interest income fluctuations based on rising and falling rates.
The Board has specified a maximum risk level of five percent of annualized net
interest income on an immediate
9
<PAGE>
decrease in the prime rate of 200 basis points. The Bank is presently operating
within the specified risk levels.
Financial Condition
For the first six months of 1998, loans increased $.6 million to $106.6 million,
and deposits increased $3.8 million to $148.3 million. The loan to deposit ratio
was 71.8 percent at June 30, 1998 compared to 73.4 percent at December 31, 1997.
Nonperforming assets were $75,000 at June 30, 1998 compared to $185,000 at
December 31, 1997.
Management has continued to classify all investment securities as
available-for-sale since January 1, 1994. Fluctuations in the U. S. Treasury
market rates have caused both decreases and increases in the market value of the
available-for-sale investment portfolio and the related equity valuation
account. Capital ratios for regulatory purposes are not impacted by the net
unrealized holding gains (losses) on available-for-sale securities. Management
has chosen the flexibility to restructure the investment portfolio and to
recognize gains or losses on securities when appropriate.
The Company's lending and investment policies emphasize quality and well-managed
growth. These policies may translate into slower growth in net interest income
and earnings in the short term; however, management believes these policies
result in lower costs and quality earnings and are best for the shareholders and
customers in the long term.
At June 30, 1998, $2.9 million or approximately 18.2 percent of equity capital
was invested in bank premises and equipment. Equity capital was $15.9 million or
9.4 percent of total assets compared to the regulatory minimum of 4.0 percent.
Tier 1 capital is 13.9 percent of risk-weighted assets compared to the
regulatory minimum of 8 percent. The net unrealized holding gains on the
available-for-sale portfolio were $245,000 at June 30, 1998 compared to $200,000
at December 31, 1997.
Results of Operations - Second Quarter, 1998 vs. Second Quarter, 1997
The net income for the second quarter of 1998 was $520,000, or $.29 per diluted
share, compared to $445,000 or $.25 per diluted share in the same period of
1997, an increase of 17 percent in net income and 16 percent in per share
earnings.
Net interest income for the second quarter of 1998 was $1,691,000 compared to
$1,493,000 in 1997, an increase of 13.3 percent. Average interest-earning assets
were up 21.0 percent in 1998 over 1997. The second quarter net yield on
interest-earning assets decreased to 4.23 percent from 4.52 percent in 1997. The
decrease in the net interest margin resulted primarily from the decrease in
investment yields on securities due to lower bond market rates and a lower loan
to deposit ratio of 72 percent at June 30,1998 compared to 79 percent at June
30, 1997.
10
<PAGE>
The provision for loan losses was $45,000 in the second quarter of 1998 compared
to $65,000 for the same period in 1997. Net loan charge-offs totaled $33,000 in
the second quarter of 1998, and there were net charge-offs of $12,000 in the
same period for 1997.
Total other income for the second quarter of 1998 was $324,000 compared to
$227,000 in 1997, an increase of 43 percent. The expansion of the mortgage loan
origination department combined with lower mortgage interest rates accounted for
an increase of $64,000, or 86 percent, in origination fees. Fees on loans sold
to the SBA and an increased volume of ATM transaction fees resulted in higher
other income.
Other expenses were $1,165,000 in the second quarter of 1998 compared to
$973,000 in the second quarter of 1997, an increase of 20 percent. Salaries and
employee benefits increases include three new officer positions, approximately
five new staff positions, and promotional and incentive increases. Increases in
occupancy, equipment and other expenses primarily reflect normal volume and
inflation growth.
The provision for income taxes was $285,000 in the second quarter of 1998
compared to $237,000 in the second quarter of 1997. The effective combined
federal and state income tax provisions were 35.4 percent in 1998 and 34.8
percent in 1997.
Results of Operations - First Six Months, 1998 vs. First Six Months, 1997
The net income for the first six months of 1998 was $986,000, or $.54 per
diluted share, compared to $812,000, or $.45 per diluted share in the same
period of 1997, an increase of 21 percent in net income and 20 percent in per
share earnings.
Net interest income for the first six months of 1998 was $3,302,000 compared to
$2,861,000 in 1997, an increase of 15.4%. Average interest-earning assets were
up 21.8% in 1998 over 1997. The net yield on interest-earning assets decreased
to 4.23% from 4.47%. The decrease in the net interest margin resulted primarily
from the lower loan to deposit ratio in 1998 as compared to 1997 and the
decrease in investment yields on securities.
The provision for loan losses was $100,000 and $115,000 in the first six months
of 1998 and 1997, respectively. Net loan charge-offs were $52,000 in the first
six months of 1998 and $12,000 in the same period for 1997.
Other income was $628,000 in the first six months of 1998 compared to $419,000
for the same period in 1997, an increase of 50 percent. Mortgage origination
fees were $265,000 in the first six months of 1998 compared to $134,000 in 1997,
an increase of 98 percent. Other increases resulted from higher ATM transaction
fee volume and fees on SBA loans sold.
Other expenses were $2,309,000 for the first six months of 1998 compared to
$1,916,000 for the same period in 1997, an increase of 21 percent. Other
operating expense increases included expenses related three new officer to five
additional staff positions in 1998 and higher data processing fees, supplies
costs and postage expense, which are directly related to the rapidly growing
loan portfolio and deposit base of the Bank.
11
<PAGE>
Year 2000
The Company has engaged Year 2000 consultants and has developed a plan to ensure
a smooth transition of the systems, products, and vendors which the Company
relies on, into the twenty-first century. Additionally, the Bank will work with
its loan customers to monitor potential credit exposure that might result from a
lack of their systems' readiness for the Year 2000.
Substantially all of the Company's software systems are licensed from outside
vendors. The core customer information system (CIS), loan, deposit, general
ledger, ATM and card-based systems are all maintained and processed by a third
party, M & I Data Services, Inc., the largest bank-owned data processor of banks
in the United States. The Company has received commitments from its major
vendors to provide the required systems modifications to ensure compliance.
Management believes those commitments will be met in advance of July 1, 1999.
Some software programs and some hardware will need to be modified or replaced
for Year 2000 compliance. To the extent possible, those changes will be
incorporated into the normal replacement or upgrade of hardware and systems.
Management believes it will be successful in the achievement of its plans and
does not believe that the execution of the plan will have a material adverse
effect on future operating results.
12
<PAGE>
Table 1 - Long-Term Maturity Gap and Repricing Data
The following is the long-term maturity and repricing data for the Company as of
June 30, 1998.
($ in 000's) One Two Three Four Five
Interest-bearing assets Year Years Years Years Years Beyond Total
------- ------- ------- ------- ------- ------- -------
Investment securities 14,708 10,079 5,011 - 5,028 5,544 40,370
6.12% 6.05% 6.14% - 5.66% 6.72% 6.13%
Federal funds sold 12,508 - - - - - 12,508
5.55% - - - - - 5.55%
Loans - fixed rates 26,697 9,510 12,541 4,154 5,667 2,549 61,118
8.79% 8.87% 8.77% 8.96% 8.76% 8.83% 8.81%
Loans - variable rates 21,562 8,142 6,568 3,714 4,302 1,164 45,452
9.07% 9.01% 9.23% 8.89% 8.81% 8.76% 9.04%
------- ------- ------- ------- ------- ------- --------
Total earning assets 75,475 27,731 24,120 7,868 14,997 9,257 159,448
7.81% 7.89% 8.35% 8.93% 7.74% 7.56% 7.94%
Interest bearing deposits:
NOW and savings (a) 3,322 3,322 3,322 3,322 3,322 16,612 33,222
2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50%
Money market
accounts (a) 2,448 2,448 2,448 2,448 2,448 12,235 24,475
3.90% 3.90% 3.90% 3.90% 3.90% 3.90% 3.90%
Time, $100 and over 23,796 1,868 868 263 1,208 - 28,003
5.61% 6.25% 6.31% 6.15% 6.14% - 5.70%
Other time 30,880 6,064 2,526 697 2,614 - 42,781
5.47% 6.02% 5.98% 5.83% 6.05% - 5.62%
------- ------- ------- ------- ------- ------- --------
Total interest bearing
Deposits 60,446 13,702 9,164 6,730 9,592 28,847 128,481
5.30% 4.82% 4.19% 3.50% 4.28% 3.09% 4.50%
Funds purchased 3,827 - - - - - 3,827
5.00% - - - - - 5.00%
------- ------- ------- ------- ------- ------- --------
Total interest bearing
liabilities 64,273 13,702 9,164 6,730 9,592 28,847 132,308
5.28% 4.82% 4.19% 3.39% 4.28% 3.09% 4.52%
GAP-excess assets 11,202 14,029 14,956 1,138 5,405 (19,590) 27,140
------- ------- ------- ------- ------- ------- --------
GAP-Cumulative-6/30/98 11,202 25,231 40,187 41,325 46,730 27,140 27,140
------- ------- ------- ------- ------- ------- --------
(a) - estimated cash flow runoff of 10% per year has been assumed
The Company's cash flow gap is $11,202 within one year, or 7 percent of total
interest-earning assets. Fixed-rate earning assets with maturities over five
years total $9,257, or 6 percent of total interest-earnings assets. The cash
flow gaps between one and five years will adjust significantly each year through
normal loan and deposit activity. Based on the principal cash flows and interest
rates presented above and the policies and procedures in place to monitor
interest rate risk, management believes interest rate risk is being adequately
managed within reasonable earnings fluctuation tolerances.
13
<PAGE>
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.
The regular 1998 Annual Meeting of Shareholders to reelect directors was held on
June 16, 1998. Four existing directors were reelected for a three-year term. A
total of 1,682,690 shares were cast by proxy or 98.0 percent of the total
outstanding shares. All shares were cast for the election of the directors
except 25,887 shares were withheld from two directors. No other shareholder
actions were taken at the meeting.
Item 5. Other information. None
Item 6. Exhibits or reports on Form 8-K.
On May 1, 1998, a third Form 8-K was filed containing press release disclosures
of April 24, 1998 announcing an expected delay in the merger proceedings due to
certain concerns related to a director, who is Chairman of Bryan and an 8.6
percent shareholder. The director has refused to sign certain documents
necessary to assure the pooling-of-interests accounting method, which is a
condition of closing. The press release also announced that the regular 1998
Annual Meeting of Shareholders would be held on June 16, 1998.
14
<PAGE>
Signatures
Pursuant to the requirements 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.
The Savannah Bancorp, Inc.
-------------------------------
(Registrant)
Date __7/27/98___ ___/s/_Archie H. Davis______________
Archie H. Davis - President & CEO
Date __7/27/98___ ___/s/_Robert B. Briscoe_______________
Robert B. Briscoe - Chief Financial Officer
15
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from the June 30,
1998 Form 10-QSB and is qualified in its entirety by reference to such
information.
</LEGEND>
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<NAME> THE SAVANNAH BANCORP, INC.
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