<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act of
1934 for the quarterly period ended June 30, 1996
Commission file number 33-37078
FNC BANCORP, INC.
(Exact name of Small Business Issuer
as specified in its charter)
Georgia 58-1910615
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
420 South Madison Avenue
Douglas, Georgia
(Address of principal executive offices)
(912) 384-1100
(Issuer's telephone number)
Check whether the Issuer (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
----- -----
The number of shares outstanding of the Issuer's class of common stock at
June 30, 1996 was 405,710 shares of common stock.
Transitional Small Business Disclosure Format (Check one): Yes No X
---- ----
<PAGE> 2
FNC BANCORP, INC.
FORM 10-QSB
TABLE OF CONTENTS
-----------------
PAGE
----
Part I - Financial Information
Item 1. Financial Statements:
Consolidated Balance Sheets - June 30, 1996
(Unaudited) and December 31, 1995 . . . . . . . . . . . . . . 3
Consolidated Statements of Income (Unaudited) - Three and Six
Month Periods Ended June 30, 1996 and 1995 . . . . . . . . . . 4
Consolidated Statements of Stockholders' Equity (Unaudited) -
Six Month Periods Ended June 30, 1996 and 1995 . . . . . . . . 5
Consolidated Statements of Cash Flows (Unaudited) - Six
Month Periods Ended June 30, 1996 and 1995 . . . . . . . . . . 6
Notes to Consolidated Financial Statements . . . . . . . . . . . 7
Accountants' Disclaimer of Opinion . . . . . . . . . . . . . . 8
Item 2. Management's Discussion and Analysis or Plan of Operation . . . 9
Part II - Other Information
Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . 15
Item 2. Changes in Securities . . . . . . . . . . . . . . . . . 15
Item 3. Defaults Upon Senior Securities . . . . . . . . . . . . 15
Item 4. Submission of Matters to A Vote
of Security Holders . . . . . . . . . . . . . . . . . 15
Item 5. Other Information . . . . . . . . . . . . . . . . . . . 15
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . 15
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
<PAGE> 3
<TABLE>
FNC BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
---------------------------
ASSETS
------
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
------------ ------------
(Unaudited)
<S> <C> <C>
Cash and Cash Equivalents:
Cash and due from banks $ 2,935,496 6,795,444
Interest-bearing deposits in bank 22,776 638,567
Federal funds sold 6,830,000 3,820,000
----------- -----------
Total Cash and Cash Equivalents 9,788,272 11,254,011
Investment securities (Fair value of $4,852,145 - 1996
and $5,196,885 - 1995) 4,852,145 5,191,927
Loans, net of allowance for loan losses and
unearned interest 30,686,185 31,532,756
Bank premises and equipment 1,664,761 1,694,013
Accrued interest receivable 806,896 686,724
Property acquired in settlement of loans 44,578 13,677
Organization costs, net of amortization 4,055 15,240
Other assets 573,188 129,941
----------- -----------
Total Assets $48,420,080 50,518,289
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Deposits:
Demand $ 6,468,386 9,965,771
NOW accounts 7,980,163 7,976,781
Savings 2,281,851 2,040,414
Time, $100,000 and over 5,810,254 6,629,345
Other time 19,373,313 18,573,233
----------- -----------
Total Deposits 41,913,967 45,185,544
Advances from Federal Home Loan Bank 2,540,000 595,000
Accrued interest 471,847 577,420
Income taxes payable -0- 55,195
Other liabilities 74,163 27,743
----------- -----------
Total Liabilities 44,999,977 46,440,902
----------- -----------
Stockholders' Equity:
Preferred stock, 10,000,000 shares authorized,
no shares issued -0- -0-
Common stock, $1 par value, 10,000,000
shares authorized, 405,710 shares issued
and outstanding 405,710 405,710
Additional paid in capital 3,610,541 3,610,541
Retained earnings (deficit) (579,611) 62,003
Unrealized gains (losses) on available-for-sale
securities, net of applicable deferred income taxes (16,537) (867)
----------- -----------
Total Stockholders' Equity 3,420,103 4,077,387
----------- -----------
Total Liabilities and Stockholders' Equity $48,420,080 50,518,289
=========== ===========
</TABLE>
<PAGE> 4
<TABLE>
FNC BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
---------------------------------
(UNAUDITED)
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------------------------------- -------------------------------
1996 1995 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Interest Income:
Interest and fees on loans $ 827,146 680,102 1,648,019 1,316,851
Interest on investment securities:
Taxable 70,134 82,570 136,742 178,266
Interest on federal funds sold 74,743 20,013 125,519 28,197
Interest on deposits in banks 108 4 4,080 4
----------- ----------- ----------- -----------
Total 972,131 782,689 1,914,360 1,523,318
----------- ----------- ----------- -----------
Interest Expense:
Interest on deposits 458,059 384,954 924,718 712,714
Interest on Federal Funds purchased -0- 301 -0- 12,253
Interest on advances from Federal Home Loan Bank 35,769 1,761 64,652 1,761
----------- ----------- ----------- -----------
493,828 387,016 989,370 726,728
----------- ----------- ----------- -----------
Net Interest Income 478,303 395,673 924,990 796,590
Provision For Loan Losses 1,171,185 28,794 1,344,315 43,794
----------- ----------- ----------- -----------
Net Interest Income (Loss) After Provision For
Loan Losses (692,882) 366,879 (419,325) 752,796
----------- ----------- ----------- -----------
Other Income:
Service charges on deposit accounts 92,149 78,354 179,660 141,829
Insurance commissions 2,057 -0- 6,084 -0-
Fees on mortgage loans originated for sale 5,263 -0- 9,592 -0-
Gain on sale of assets -0- -0- -0- 4,591
Other Income 20,731 29,561 43,093 38,710
----------- ----------- ----------- -----------
Total 120,200 107,915 238,429 185,130
----------- ----------- ----------- -----------
Other Expenses:
Salaries 153,468 139,126 305,957 275,734
Other personnel expenses 92,949 28,878 128,435 51,421
Occupancy expense of bank premises 25,979 33,660 52,741 50,680
Furniture and equipment expense 24,613 21,271 48,176 45,605
Federal deposit insurance 500 21,389 1,500 42,777
Advertising 7,763 8,825 15,348 21,905
Data processing 15,326 13,815 32,956 23,369
Printing and office supplies 20,163 17,664 33,156 35,752
Amortization 5,592 5,592 11,184 11,184
Other operating expenses 81,924 78,152 160,554 149,154
----------- ----------- ----------- -----------
Total 428,277 368,372 790,007 707,581
----------- ----------- ----------- -----------
Income (Loss) Before Taxes (1,000,959) 106,422 (970,903) 230,345
Income Taxes (Credit) (338,929) 31,871 (329,289) 60,674
----------- ----------- ----------- -----------
Net Income (Loss) $ (662,030) 74,551 (641,614) 169,671
=========== =========== =========== ===========
Earnings Per Share $ (1.42) .17 (1.37) .38
=========== =========== =========== ===========
</TABLE>
<PAGE> 5
<TABLE>
FNC BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
SIX MONTHS ENDED JUNE 30, 1996 AND 1995
------------------------------------------
<CAPTION>
UNREALIZED
GAINS (LOSSES)
ON
AVAILABLE-
FOR-SALE
SECURITIES,
NET OF
APPLICABLE
COMMON STOCK ADDITIONAL RETAINED DEFERRED
NUMBER OF PAR PAID IN EARNINGS INCOME
SHARES VALUE CAPITAL (DEFICIT) TAXES TOTAL
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1994 405,710 $ 405,710 3,610,541 (251,173) (74,805) 3,690,273
Net Income -0- -0- -0- 169,671 -0- 169,671
Change in unrealized gains/losses on
available-for-sale securities, net
of applicable deferred income taxes -0- -0- -0- -0- 62,140 62,140
----------- ---------- ---------- ---------- ---------- ----------
Balance, June 30, 1995 (Unaudited) 405,710 $ 405,710 3,610,541 (81,502) (12,665) 3,922,084
=========== ========== =========== =========== =========== ==========
Balance, December 31, 1995 405,710 $ 405,710 3,610,541 62,003 (867) 4,077,387
Net Income -0- -0- -0- (641,614) -0- (641,614)
Change in unrealized gains/losses on
available-for-sale securities, net
of applicable deferred income taxes -0- -0- -0- -0- (15,670) (15,670)
---------- ---------- ---------- ---------- ---------- ----------
Balance, June 30, 1996 (Unaudited) 405,710 $ 405,710 3,610,541 (579,611) (16,537) 3,420,103
========== ========== ========== ========== ========== ==========
</TABLE>
<PAGE> 6
<TABLE>
FNC BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
(UNAUDITED)
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
-----------------------
1996 1995
---------- ----------
<S> <C> <C>
Cash Flows From Operating Activities:
Net Income (Loss) $(641,614) 169,671
Adjustments to reconcile net income or loss to net cash
provided by operating activities:
Depreciation 50,171 50,603
Amortization 11,184 11,184
Deferred income taxes (benefit) (330,008) -0-
(Gain) Loss sale of assets -0- (4,591)
(Gain) Loss on sale of securities -0- -0-
Provision for loan losses 1,344,315 43,794
Securities (accretion) amortization (25,171) (18,522)
Change in assets and liabilities:
(Increase) Decrease in accrued interest receivable (120,172) (94,922)
Increase (Decrease) in accrued interest payable (105,573) 112,811
(Increase) Decrease in other assets (105,166) (23,158)
Increase (Decrease) in other liabilities 46,420 (16,032)
Increase (Decrease) in income taxes payable (55,195) 38,160
----------- -----------
Net cash provided (used) by operating activities 69,191 268,998
----------- -----------
Cash Flows From Investing Activities:
Capital expenditures (20,919) (26,123)
Net increase in loans (528,645) (1,292,396)
(Increase) Decrease in interest-bearing deposits -0- 122
Proceeds from sale of fixed assets -0- 12,250
Proceeds from maturity of available-for-sale securities 3,490,000 750,000
Purchase of available-for-sale securities (3,185,792) (24,800)
Proceeds from maturity of held-to-maturity securities -0- 1,750,000
Purchase of held-to-maturity securities -0- (745,768)
Proceeds of maturity of securities purchased under
agreements to resell -0- 1,250,000
Payments received on mortgage-backed securities 37,003 29,180
----------- -----------
Net cash provided (used) by investing activities (208,353) 1,702,465
----------- -----------
Cash Flows From Financing Activities:
Increase (Decrease) in time deposits (19,011) 3,993,722
Increase (Decrease) in other deposits (3,252,566) (5,352,566)
Proceeds from advances from Federal Home Loan Bank 2,000,000 100,000
Repayment of advances from Federal Home Loan Bank (55,000) -0-
----------- -----------
Net cash provided (used) by financing activities (1,326,577) (1,258,844)
----------- -----------
Net increase (decrease) in cash and cash equivalents (1,465,739) 712,619
Cash and Cash Equivalents at Beginning of Year 11,254,011 5,715,087
----------- -----------
Cash and Cash Equivalents at End of Year $ 9,788,272 6,427,706
=========== ===========
Supplemental Disclosures of Cash Flow Information
- -------------------------------------------------
Cash paid during the year for:
Interest $ 1,094,943 613,917
=========== ===========
Income taxes $ 99,435 22,515
=========== ===========
Schedule of Non-Cash Investing and Financing Activities
- -------------------------------------------------------
Total increase (decrease) in unrealized losses on
securities available-for-sale $ 23,742 94,151
=========== ===========
</TABLE>
<PAGE> 7
FNC BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
Basis of Presentation
- ---------------------
The accompanying unaudited 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. 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 months ended June 30, 1996 are not necessarily indicative of
the results that may be expected for the year ending December 31, 1996. For
further information, refer to the consolidated financial statements and
footnotes thereto included in the Company's annual report to stockholders for
the year ended December 31, 1995.
<PAGE> 8
Board of Directors
FNC Bancorp, Inc. and Subsidiary
Douglas, Georgia
The accompanying consolidated balance sheet of FNC Bancorp, Inc. and Subsidiary
as of June 30, 1996, and the related statements of income, stockholders' equity
and cash flows for the three and six months ended June 30, 1996 and 1995 were
not audited by us and, accordingly, we do not express an opinion on them.
We have audited, in accordance with generally accepted auditing standards, the
consolidated balance sheet of FNC Bancorp, Inc. and Subsidiary as of December
31, 1995, and the related consolidated statements of income, stockholders'
equity and cash flows for the year then ended (not presented herein); and in our
report dated March 20, 1996, we expressed an unqualified opinion on those
consolidated financial statements.
In our opinion, the information set forth in the accompanying consolidated
balance sheet is fairly stated, in all material respects, in relation to the
consolidated financial statements from which it has been derived.
Stewart, Fowler & Stalvey, P.C.
- -------------------------------
Valdosta, Georgia
August 13, 1996
<PAGE> 9
Item 2. Management's Discussion and Analysis or Plan of Operation
Results of Operations
- ---------------------
The Company, including the operations of its subsidiary, reported a consolidated
net loss of $(641,614) for the six months ended June 30, 1996 compared to a net
income of $169,671 for the six months ended June 30, 1995. Net interest income
after provision for loan losses was a loss of $(419,325) for the six months
ended June 30, 1996 and a net income of $752,796 for the six months ended June
30, 1995. The provision for loan losses was $1,344,315 and $43,794 for the six
months ended June 30, 1996 and 1995, respectively. Non-interest income totalled
$238,429 and $185,130 for the six months ended June 30, 1996 and 1995,
respectively. Noninterest expenses totalled $790,007 and $707,581 for the six
months ended June 30, 1996 and 1995, respectively.
The following table summarizes the results of operations of the Company for the
three and six month periods ended June 30, 1996 and 1995.
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------ -------------------
1996 1995 1996 1995
-------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Interest income $ 972 783 1,914 1,523
Interest expense (494) (387) (989) (727)
-------- -------- -------- --------
Net interest income 478 396 925 796
Provision for loan losses (1,171) (29) (1,344) (43)
Noninterest income 120 108 238 185
Noninterest expense (428) (368) (790) (707)
-------- -------- -------- --------
Income (loss) before taxes (1,001) 107 (971) 231
Income taxes (credit) (339) 32 (329) 61
-------- -------- -------- --------
Net income (loss) $ (662) 75 (642) 170
======== ======== ======== ========
</TABLE>
Interest Income
- ---------------
Total interest income increased approximately $391,000 for the six months ended
June 30, 1996 compared to the six months ended June 30, 1995. This increase is
attributed to the factors explained in the following paragraphs.
This increase was the combined effect of an increase in the average loan
portfolio balance from approximately $28.0 million for the six months ended June
30, 1995 to approximately $32.5 million for the six months ended June 30, 1996
and an increase in the average rate earned on the loan portfolio from 9.40% for
the six months ended June 30, 1995 to 10.14% for the six months ended June 30,
1996. The effect of these two changes increased the interest income earned on
the loan portfolio from approximately $1,317,000 for the six months ended June
30, 1995 to approximately $1,914,000 for the six months ended June 30, 1996, an
increase of $597,000. Interest income on the loan portfolio increased from
approximately $680,000 for the quarter ended June 30, 1995 to approximately
$827,000 for the quarter ended June 30, 1996, an increase of $147,000.
Interest earned on taxable investment securities decreased from approximately
$178,000 for the six months ended June 30, 1995 to approximately $137,000 for
the six months ended June 30, 1996, a decrease of $41,000. This decrease was
the combined effect of an increase in the average taxable investment portfolio
balance from approximately $6.7 million for the six months ended June 30, 1995
to approximately $4.8 million for the six months ended June 30, 1996 and an
increase in the average rate earned on the taxable investment securities
portfolio from 5.34% for the six months ended June 30, 1995 to 5.64% for the six
months ended June 30, 1996. Interest income on the taxable investment portfolio
decreased from approximately $83,000 for the quarter ended June 30, 1995 to
approximately $70,000 for the quarter ended June 30, 1996, a decrease of
$13,000.
Interest earned on interest-bearing deposits in banks increased from
approximately $4 for the six months ended June 30, 1995 to $4,000 for the six
months ended June 30, 1996, an increase of $3,996. This increase was the result
of an increase in the average interest-bearing deposits balance from
approximately $.0 million for the six months ended June 30, 1995 to
approximately $.2 million for the six months ended June 30, 1996. Interest
income on the interest-bearing deposits increased from approximately $4 for the
quarter ended June 30, 1995 to approximately $108 for the quarter ended June 30,
1996, an increase of $104.
Interest earned on federal funds sold increased from approximately $28,000 for
the six months ended June 30, 1995 to approximately $126,000 for the six months
ended June 30, 1996, an increase of $98,000. This increase was the net effect
of an increase in the average federal funds sold balance from approximately $1.1
million for the six months ended June 30, 1995 to approximately $5.2 million for
the six months ended June 30, 1996 and a decrease in the rate earned on the
federal funds sold from 5.08% for the six months ended June 30, 1995 to
approximately 4.80% for the six months ended June 30, 1996. Interest income on
federal funds sold increased from approximately $20,000 for the quarter ended
June 30, 1995 to approximately $75,000 for the quarter ended June 30, 1996, an
increase of $55,000.
Interest Expense
- ----------------
Total interest expense increased approximately $262,000 for the six months ended
June 30, 1996 compared to the six months ended June 30, 1995. This increase is
attributed to the factors explained in the following paragraphs.
This increase was the combined effect of an increase in the average balance of
interest-bearing deposits from approximately $31.8 million for the six months
ended June 30, 1995 to approximately $35.3 million for the six months ended June
30, 1996 and an increase in the average rate paid on interest-bearing deposits
from 4.49% for the six months ended June 30, 1995 to 5.24% for the six months
ended June 30, 1996. Interest expense on interest-bearing deposits increased
from approximately $385,000 for the quarter ended June 30, 1995 to approximately
$458,000 for the quarter ended June 30, 1996, an increase of $73,000.
The Bank also incurred approximately $12,000 of interest expense on Federal
Funds purchased during the six months ended June 30, 1995 compared to -0- for
the six months ended June 30, 1996.
At June 30, 1996, the Bank had outstanding advances from the Federal Home Loan
Bank of $2,540,000 at an average rate of 5.56% maturing through May 16, 2005.
Interest expense incurred for the six months ended June 30, 1996 totalled
approximately $65,000 and approximately $1,800 for the six months ended June 30,
1995.
Noninterest Income
- ------------------
The following table presents the principal components of noninterest income for
the three and six month periods ended June 30, 1996 and 1995.
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------ -------------------
1996 1995 1996 1995
-------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Service charges on deposit
accounts $ 92 78 180 142
Insurance commissions 2 -0- 6 -0-
Fees on mortgage loans originated
for sale 6 -0- 10 -0-
Gain on sale of assets -0- -0- -0- 5
Other income 20 30 42 38
-------- -------- -------- --------
Total noninterest income $ 120 108 238 185
======== ======== ======== ========
</TABLE>
Service charges on deposit accounts for the six months ended June 30, 1996 as
compared to the six months ended June 30, 1995, increase approximately $38,000.
This increase was related primarily to an increase in NSF fees and transaction
deposit account activity. Insurance commissions for the six months ended June
30, 1996 as compared to the six months ended June 30, 1995, increased
approximately $6,000. The Company recognized gain on the sale of fixed assets
of approximately $5,000 during the six months ended June 30, 1995. All other
income totalled approximately $52000 and $38000 for the six months ended June
30, 1996 and 1995, respectively.
Noninterest Expenses
- --------------------
The following table presents the principal components of noninterest expenses
for the three and six month periods ended June 30, 1996 and 1995.
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------ -------------------
1996 1995 1996 1995
-------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Salaries $ 154 139 306 276
Other personnel expenses 93 29 128 51
Occupancy expense of bank
premises 26 34 53 51
Furniture and equipment expense 24 21 48 46
Federal deposit insurance 1 21 2 43
Advertising 7 9 15 22
Data processing 15 14 33 23
Printing and office supplies 20 18 33 36
Amortization 6 6 11 11
Other operating expenses 82 77 161 148
-------- -------- -------- --------
Total noninterest expenses $ 428 368 790 707
======== ======== ======== ========
</TABLE>
Noninterest expenses for the six months ended June 30, 1996 as compared to the
six months ended June 30, 1995, increased approximately $83,000 or 11.7%.
Compensation and other personnel expenses increased approximately $107,000 for
the six months ended June 30, 1996 as compared to the six months ended June 30,
1995. This increase reflects increases in the number of employees, in wage
levels, in the cost of employee benefits, and the payment of a termination
amount upon the termination of the employment agreement with the bank's
president. Excluding federal deposit insurance, all other expenses increased
approximately $17,000 for the six months ended June 30, 1996 compared to the six
months ended June 30, 1995. This increase is attributable primarily to a larger
volume of business. Additionally, federal deposit insurance amounted to
approximately $2,000 for the six months ended June 30, 1996 compared to
approximately $43,000 for the six months ended June 30, 1995.
Provision for Loan Losses
- -------------------------
The provision for loan losses for the six months ended June 30, 1996 was
approximately $1,344,000 compared to approximately $43,000 for the six months
ended June 30, 1995. The balance of the allowance for loan losses was
approximately $1,501,000 (approximately 4.7% of outstanding loans) at June 30,
1996 and approximately $430,000 (approximately 1.5% of outstanding loans) at
June 30, 1995. Actual loan charge-offs net of recoveries were approximately
$229,000 of net charge-offs for the six months ended June 30, 1996 and
approximately $18000 of net charge-offs for the six months ended June 30, 1995.
Non-accrual loans were approximately $181,000 at June 30, 1996. Loans ninety
days or more past due and still accruing amounted to approximately $9,000 at
June 30, 1996. In determining an adequate level of loan loss reserves, such
loans were included in such consideration.
The amount of the provision for loan losses is a result of the amount of loans
charged off, the amount of loans recovered and management's conclusion
concerning the level of the allowance for loan losses. The level of the
allowance for loan losses is based upon a number of factors including the Bank's
past loan loss experience, management's evaluation of the collectibility of
loans, the general state of the economy and other relevant factors.
In June, 1996, the bank completed a review of its loan portfolio in conjunction
with the departure of two lending officials. Based upon the review, the
allowance for loan losses was increased to approximately $1,501,000.
Income Taxes
- ------------
The provision for income taxes reflected an effective rate of 26.3% for the six
months ended June 30, 1995. A tax credit was accrued for the six months ended
June 30, 1996 based upon the loss incurred of approximately $971,000 before
taxes.
Financial Condition
- -------------------
The Company, including its subsidiary bank, reported consolidated total assets
of approximately $48.4 million at June 30, 1996 and approximately $50.5 million
at December 31, 1995 representing a decrease of approximately $2.1 million.
During the six months ended June 30, 1996, cash and due from banks decreased
$3.9 million, Federal Home Loan Bank advances totaled $2.0 million, interest-
bearing cash decreased $.5 million, investments decreased $.3 million and
operations generated $.1 million providing $6.8 million of funds available which
were used to reduce deposits by $3.3 million, increase loans by $.5 million and
increase federal funds sold by $3.0 million.
The decrease in cash and due from banks and other liquid assets was attributed
to the reduction in deposits. Deposits were reduced primarily as a result of
local government and agri-business depositors making substantial deposits near
the end of the calendar year with such funds being disbursed during the first
few weeks of the calendar year in the ordinary course of business.
A number of factors contribute to the increase in loans. Such factors include
the community response to a new community bank (First National Bank of Coffee
County which opened on September 23, 1991), which was further enhanced with the
opening of the bank's permanent banking facility in the latter part of 1992, and
the business development activities of the Board of Directors. The interest
rates as previously discussed are reflective of interest rates in general and
market conditions including competition. Changes in short-term funds including
cash and due from banks, federal funds sold, interest-bearing deposits and
investment securities are reflective of the liquidity position of the Company.
The Company's subsidiary Bank is required to maintain minimum amounts of capital
to total "risk-weighted" assets, as defined by the banking regulators. At June
30, 1996, a comparison of the minimum required and actual capital ratios are as
follows:
MINIMUM
REQUIRED ACTUAL
-------- ------
Leverage capital ratio 4.0% 6.9%
Tier one capital to "risk-weighted" assets 4.0% 10.2%
Tier two capital to "risk-weighted" assets 8.0% 11.5%
For the remainder of 1996, management conservatively projects a net income of a
minimum of $50,000 per month.
Liquidity and Capital Resources
- -------------------------------
Liquidity management involves the matching of the cash flow requirements of
customers, either depositors withdrawing funds or funding additional loans, and
the ability of the Bank to meet those requirements. Management monitors and
maintains appropriate levels of assets and liabilities so that maturities of
assets are such that adequate funds are provided to meet estimated customer
withdrawals and loan requests.
The Bank's liquidity position depends primarily upon the liquidity of its assets
relative to its need to respond to short-term demand for funds caused by
withdrawals from deposit accounts and loan funding commitments. Primary sources
of liquidity are scheduled payments on its loans and interest on the Bank's
investments. The Bank may also utilize its cash and due from banks, short-term
deposits with financial institutions, federal funds sold and investment
securities to meet liquidity requirements. At June 30, 1996, the Company's cash
and due from banks were approximately $2.8 million in excess of its reserve
requirement of approximately $.2 million and its federal funds sold were
approximately $6.8 million. All of the above can be converted to cash on short
notice. The sale of investments which had a market value of approximately $4.9
million at June 30, 1996 can also be used to meet liquidity requirements to the
extent the investments are not pledged. At June 30, 1996, the market value of
pledged securities was $3.9 million.
The Bank also has the ability, on a short-term basis, to borrow and purchase
federal funds from other financial institutions.
The bank is a member of the Federal Home Loan Bank of Atlanta and as such has
the ability to secure advances there from, although the cost of such advances
exceed lower cost alternatives such as deposits from the local community. The
bank had advances outstanding of $2,540,000 at June 30, 1996, at an average rate
of 5.56%.
<PAGE> 15
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
- --------------------------
None.
Item 2. Changes in Securities
- ------------------------------
None.
Item 3. Defaults Upon Senior Securities
- ----------------------------------------
None.
Item 4. Submission of Matters to a Vote of Security Holders
- ------------------------------------------------------------
None.
Item 5. Other Information
- --------------------------
None.
Item 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
(A) Exhibits:
Exhibit No.
-----------
27.1 Financial Data Schedule
(B) Reports on Form 8-K:
The Company did not file any reports on Form 8-K during the quarter
ended June 30, 1996.
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.
FNC BANCORP, INC.
----------------------------------------
(Registrant)
Date August 14, 1996 By BOB CATION
------------------------------- ---------------------------------
Bob Cation
Chairman
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 2,935,496
<INT-BEARING-DEPOSITS> 22,776
<FED-FUNDS-SOLD> 6,830,000
<TRADING-ASSETS> -0-
<INVESTMENTS-HELD-FOR-SALE> 4,852,145
<INVESTMENTS-CARRYING> -0-
<INVESTMENTS-MARKET> -0-
<LOANS> 32,187,067
<ALLOWANCE> 1,500,882
<TOTAL-ASSETS> 48,420,080
<DEPOSITS> 41,913,967
<SHORT-TERM> -0-
<LIABILITIES-OTHER> 546,010
<LONG-TERM> 2,540,000
<COMMON> 405,710
-0-
-0-
<OTHER-SE> 3,014,393
<TOTAL-LIABILITIES-AND-EQUITY> 48,420,080
<INTEREST-LOAN> 1,648,019
<INTEREST-INVEST> 163,742
<INTEREST-OTHER> 129,599
<INTEREST-TOTAL> 1,914,360
<INTEREST-DEPOSIT> 924,718
<INTEREST-EXPENSE> 989,370
<INTEREST-INCOME-NET> 924,990
<LOAN-LOSSES> 1,344,315
<SECURITIES-GAINS> -0-
<EXPENSE-OTHER> 790,007
<INCOME-PRETAX> (970,903)
<INCOME-PRE-EXTRAORDINARY> (641,614)
<EXTRAORDINARY> -0-
<CHANGES> -0-
<NET-INCOME> (641,614)
<EPS-PRIMARY> (1.37)
<EPS-DILUTED> (1.37)
<YIELD-ACTUAL> -0-
<LOANS-NON> -0-
<LOANS-PAST> -0-
<LOANS-TROUBLED> -0-
<LOANS-PROBLEM> -0-
<ALLOWANCE-OPEN> -0-
<CHARGE-OFFS> -0-
<RECOVERIES> -0-
<ALLOWANCE-CLOSE> -0-
<ALLOWANCE-DOMESTIC> -0-
<ALLOWANCE-FOREIGN> -0-
<ALLOWANCE-UNALLOCATED> -0-
</TABLE>
