<PAGE>
FORM 10-Q/A
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report Under Section 13 or 15(d)
of the Securities and Exchange Act of 1934
For the Quarter Ended September 30, 1996 Commission File Number 0-23470
FLAG Financial Corporation
(Exact name of registrant as specified in its charter)
Georgia 58-2094179
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
101 North Greenwood St., P.O. Box 3007
LaGrange, Georgia 30240
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number,
including area code (706) 845-5000
- --------------------------------------------------------------------------------
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 and Exchange Act of 1934 during the receding 12
months (or for such shorter period that the registrant was
required to file such report), and (2) has been subject to such
filing requirement for the past 90 days. Yes X No___
Shares outstanding as of September 30, 1996: 2,036,990 shares of Common Stock,
$1.00 par value.
<PAGE>
FLAG FINANCIAL CORPORATION
INDEX
Part I. Financial Information Page
- --------------------------------------------------------------------------------
Item I. Consolidated Statements of Condition as of September 30, 1996
(Unaudited) and December 31, 1995 ........................... 1
Consolidated Statements of Income (Unaudited) for the
quarters and nine months ended September 30, 1996 and
September 30, 1995 .......................................... 2
Consolidated Statements of Cash Flows (Unaudited) for the
nine months ended September 30, 1996 and September 30, 1995 . 3
Notes to the Consolidated Financial Statements .............. 4
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations for the quarter and nine months ended
September 30, 1996 .......................................... 7
Part II. Other Information ...........................................
- --------------------------------------------------------------------------------
None ........................................................ 11
Signatures .................................................. 12
<PAGE>
FLAG FINANCIAL CORPORATION
LAGRANGE, GEORGIA
CONSOLIDATED STATEMENTS OF CONDITION
- --------------------------------------------------------------------------------
SEPTEMBER 30, DECEMBER 31,
1996 1995
ASSETS (UNAUDITED)
Cash ....................................... $ 5,394,435 $ 4,301,653
Interest bearing deposits .................. 2,546,430 1,538,601
Fed funds sold ............................. 1,920,000 2,010,000
Investment securities ...................... 8,297,041 14,555,238
Mortgage-backed securities ................. 38,274,127 44,105,262
Loans receivable - net .................... 154,238,207 149,884,834
Loans held for sale ........................ 989,347 30,709
Mortgage servicing rights .................. 1,629,167 1,455,983
Accrued interest and
dividends receivable ................... 2,042,649 1,750,434
Real estate acquired
through foreclosure .................... 483,982 800,714
Federal Home Loan bank stock ............... 1,895,900 1,895,900
Fixed assets ............................... 5,445,180 5,572,290
Deferred income taxes ...................... 1,796,937 779,055
Other assets ............................... 3,961,035 3,424,691
------------- -------------
Total assets ............................. $ 228,914,437 $ 232,105,364
============= =============
LIABILITIES
Savings accounts ........................... $ 183,737,958 $ 177,848,121
Advances from Federal Home Loan Bank ....... 18,891,667 29,504,167
Advances from borrowers
for taxes & insurance .................. 1,993,441 971,777
Advances payable to secondary market ....... 2,001,043 1,788,205
Accrued interest on deposits ............... 294,592 399,390
Dividends payable on common stock .......... 173,144 143,603
Other liabilities .......................... 1,673,168 751,885
------------- -------------
Total liabilities ........................ 208,765,013 211,407,148
------------- -------------
STOCKHOLDERS' EQUITY
Common stock ............................... 2,036,990 1,916,000
Additional paid-in capital ................. 8,044,728 7,519,001
Retained earnings .......................... 10,485,209 11,580,579
Unrealized loss - marketable securities .... (417,503) (317,364)
------------- -------------
Total stockholders' equity ............... 20,149,424 20,698,216
------------- -------------
Total liabilities and
stockholders' equity ................... $ 228,914,437 $ 232,105,364
============= =============
See Accompanying Notes to Consolidated Financial Statements
1
<PAGE>
FLAG FINANCAL CORPORATION
LAGRANGE, GEORGIA
CONSOLIDATED STATEMENTS OF INCOME
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<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS
September 30, September 30,
----------------------------- ---------------------------
1996 1995 1996 1995
-------------- ----------- ------------ -------------
Interest Income (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Interest and fees on loans . $ 3,625,015 $ 3,241,034 $ 10,583,296 $ 9,377,690
Interest and dividends
on securities ........ 250,483 264,593 768,312 988,048
Interest on mortgage-
backed securities ..... 502,732 715,220 1,668,707 2,211,278
Interest on time deposits .. 35,544 29,026 119,359 120,260
----------- ----------- ------------ ------------
Total interest income 4,413,774 4,249,873 13,139,674 12,697,276
----------- ----------- ------------ ------------
Interest Expense
Interest on Savings ........ 2,009,266 2,070,230 5,961,252 5,948,264
Interest on borrowings ..... 285,656 387,176 935,841 1,448,629
----------- ----------- ------------ ------------
Total interest expense 2,294,922 2,457,406 6,897,093 7,396,893
----------- ----------- ------------ ------------
Net interest income before
provision for loan losses 2,118,852 1,792,467 6,242,581 5,300,383
Provision for Loan Losses .. 2,550,000 195,000 3,334,529 435,000
----------- ----------- ------------ ------------
Net interest income
after provision for
loan losses ......... (431,148) 1,597,467 2,908,052 4,865,383
----------- ----------- ------------ ------------
Other Income
Fees and service charges ... 624,366 550,887 1,815,983 1,674,955
Gain on sale of investment
securities ............ 35,632 55,406 202,005 114,822
Gain on sale of loans ...... 122,435 34,657 246,450 (56,586)
Gain on sale of mortgage-backed
securities ............ 0 (11,886) 7,615 28,781
Gain (loss) on sale of real
estate-net ............ (21,964) 38,543 (56,991) 37,697
Sundry income .............. 33,282 67,413 153,548 201,607
----------- ----------- ------------ ------------
Total other income ... 793,751 735,020 2,368,610 2,001,276
----------- ----------- ------------ ------------
Operating Expenses
Compensation and benefits .. 683,995 597,550 2,030,056 1,877,015
Office occupancy expense ... 70,381 71,274 198,665 182,321
Furniture, fixtures &
equipment expenses .... 74,570 42,896 178,228 104,086
Federal deposit insurance
premium ............... 1,275,541 116,036 1,513,362 340,042
Legal and professional fees 92,496 75,783 234,236 171,911
Data processing expense .... 129,060 127,117 386,523 368,275
Advertising ................ 62,687 41,992 153,795 122,919
General and payroll tax .... 82,036 71,480 252,986 225,341
expense
Printing and postage ....... 74,024 74,844 219,569 209,995
Depreciation ............... 129,999 117,005 389,997 350,999
Other expenses ............. 304,527 173,562 770,727 503,411
----------- ----------- ------------ ------------
Total operating expenses .. 2,979,316 1,509,539 6,328,144 4,456,315
----------- ----------- ------------ ------------
Net income prior to taxes . (2,616,713) 822,948 (1,051,482) 2,410,344
Less Provision for Taxes ... ($1,006,493) $ 279,198 (454,736) 823,179
----------- ----------- ------------ ------------
Net Income ................ ($1,610,220) $ 543,750 ($ 596,746) $ 1,587,165
=========== =========== ============ ============
Primary earnings per share . ($0.77) $0.25 ($0.29) $0.72
Fully diluted earnings per
share ................ ($0.77) $0.25 ($0.29) $0.72
Book value per share ...... $9.89 $9.72 $9.89 $10.00
Equity to total assets .... 8.80% 9.57% 8.80% 9.57%
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
2
<PAGE>
FLAG FINANCIAL CORPORATION
LAGRANGE, GEORGIA
CONSOLIDATED STATEMENT OF CASH FLOWS
- --------------------------------------------------------------------------------
Nine Months Ended
-------------------------
09-30-96 09-30-95
-------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income ....................................... ($596,746) $1,587,165
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Provision for loan losses ...................... 3,334,529 435,000
Provision for depreciation ..................... 389,997 350,999
Amortization of premiums/discounts on securities 177,393 (134,382)
(Gain)/loss on sale of investment securities ... (41,047) 10,787
(Gain)/loss on sale of loans and
mortgage-backed securities ................. 238,836 61,470
(Gain)/loss on sale of real estate acquired
through foreclosure ........................ 56,991 (37,697)
(Gain) on sale of stock ........................ (160,957) (125,609)
(Increase)/decrease in accrued interest and
dividends receivable ....................... (292,215) (576,073)
(Increase)/decrease in deferred taxes .......... (956,506) (45,943)
Increase/(decrease) in accrued interest on
savings .................................... (104,798) (72,577)
Increase/(Decrease) in dividends payable on
common stock ............................... 29,541 1,631
Increase/(decrease) in other - net ............. 211,754 (362,565)
- --------------------------------------------------------------------------------
Total adjustments ............................. 2,883,518 (494,959)
- --------------------------------------------------------------------------------
Net cash provided by operating activities ..... 2,286,772 1,092,206
- --------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Maturities of interest-bearing deposits ......... (1,007,829) (1,372,087)
Maturities of investment securities ............. 4,250,382 1,150,960
Proceeds from sale of investment securities ..... 6,136,986 8,152,313
Proceeds from sale of loans and
mortgage-backed securities .................. 15,582,455 8,236,402
Loans originated net of principal collected ..... (14,783,308)
Proceeds from sale of stock ..................... 3,685,920 4,866,686
(Increase)/decrease in real estate acquired
through foreclosure ......................... 259,740 (749,745)
Purchase of investment securities ............... (4,871,454) (1,691,909)
Purchase of loans and mortgage-backed
securities .................................. (4,099,634) (7,017,924)
Deferred net origination fees/costs ............. (48,733) 17,002
Purchases of FHLB stock ......................... 0 0
Purchase of other stock ......................... (2,785,560) (3,443,505)
Purchase of fixed assets ........................ (262,887) (896,410)
(Increase)/decrease in Fed Funds Sold .......... 90,000 0
- --------------------------------------------------------------------------------
Net cash provided by investing activities ..... 2,146,078 4,206,334
- --------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITES:
Net increase in savings accounts ................ 5,889,837 9,662,835
Proceeds from FHLB advances ..................... 11,000,000 44,800,000
Repayment of FHLB advances ...................... (21,612,500) (60,555,555)
Decrease in advances to secondary market ........ 212,838 426,453
Increase in advances for borrower taxes &
insurance ................................... 1,021,664 942,469
Exercise of stock options ....................... 646,717 101,200
Cash dividends .................................. (498,624) (455,270)
- --------------------------------------------------------------------------------
Net cash used by financing activities ..... (3,340,068) (5,077,868)
- --------------------------------------------------------------------------------
Net increase/(decrease) in cash and
cash equivalents ............................ 1,092,782 220,672
Cash and cash equivalents at beginning of year ... 4,301,653 4,265,250
- --------------------------------------------------------------------------------
Cash and cash equivalents at September 30, ....... $ 5,394,435 $ 4,485,922
================================================================================
3
<PAGE>
FLAG FINANCIAL CORPORATION
LAGRANGE, GEORGIA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(UNAUDITED)
NOTE 1: Principles of Consolidation
The consolidated financial statements include the operations of FLAG Financial
Corporation ("FLAG" or "the Company") and its wholly-owned subsidiary, First
Federal Savings Bank of LaGrange ("the Bank"). The interim consolidated
financial statements included herein are unaudited but reflect all adjustments
necessary to eliminate all significant intercompany balances and transactions
and such other adjustments and accruals which, in the opinion of management, are
necessary for a fair presentation of the consolidated financial position and the
results of operation for the interim periods presented. All such adjustments are
of a normal recurring nature. Certain prior period amounts have been
reclassified to conform with the current period's presentation. For the purpose
of comparison, information is included for prior periods. Financial information
for those periods including the financial statements, footnotes and independent
auditors' opinion contained in the Company's 1995 Annual Report should be read
in conjunction with these financial statements. The results of operations for
the quarter and nine months ended September 30, 1996 are not necessarily
indicative of the results for a full year's operation.
NOTE 2: Investments
Investments are classified in three categories; held to maturity securities
(reported at amortized cost), trading securities (reported at fair value), and
available for sale securities (reported at fair value). Net unrealized gains or
losses on available for sale securities are excluded from income but reported in
a separate component of shareholder's equity. Net unrealized gains or losses on
trading securities are included in current earnings.
The following summarizes FLAG's investments as of September 30, 1996:
Net After-Tax
Unrealized Unrealized
Balance Gain/Loss Gain/Loss
Investment Securities
Held to Maturity (at amortized cost) .. $ 0 $ 0 $ 0
Available for Sale (at fair value) .... 8,388,560 (91,519) (56,742)
Trading Securities .................... 0 0 0
----------- --------- ---------
Total Investment Securities ....... 8,388,560 (91,519) (56,742)
----------- --------- ---------
Mortgage Backed Securities
Held to Maturity (at amortized cost) .. $ 3,297,404 0 0
Available for Sale (at fair value) .... 35,558,597 (581,874) (360,762)
Trading Securities .................... 0 0 0
Total Mortgage Backed Securities . 38,856,001 (581,874) (360,762)
----------- --------- ---------
FHLB Stock (available for sale) ........ 1,895,900 0 0
----------- --------- ---------
Total .......................... $49,140,461 $(673,392) $(417,503)
=========== ========= =========
4
<PAGE>
FLAG FINANCIAL CORPORATION
LAGRANGE, GEORGIA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(UNAUDITED)
NOTE 3: Net Loans Receivable (Excluding Loans Held for Sale)
Loans receivable are summarized as follows:
September 30, December 31,
1996 1995
Permanent Mortgage Loans
Residential 1-4 family ..................... $ 89,509,207 $ 90,022,834
Multi-family ............................... 1,119,000 1,178,000
------------ ------------
Total permanent mortgages .................. 90,628,207 91,200,834
Commercial real estate loans ................... 33,841,000 25,593,000
Consumer and business loans .................... 18,571,000 14,731,000
Commercial loans and leases .................... 16,101,000 16,916,000
Residential construction loans ................. 4,990,000 8,048,000
------------ ------------
Gross loans receivable ..................... 164,131,207 156,488,834
------------ ------------
Less:
Undisbursed proceeds on loans in process ... 5,215,000 4,978,000
Deferred loans fees and discounts .......... 252,000 287,000
Allowance for loans losses ................. 4,426,000 1,339,000
------------ ------------
Total net loans ................................ $154,238,207 $149,884,834
============ ============
NOTE 4: Loans Held for Sale
Loans held for sale are carried at the lower of cost or market. The Bank had
$1,000,924 and $30,750 of conforming mortgage loans held for sale in the
secondary market at September 30, 1996 and December 31, 1995. The market values
of these loans at September 30, 1996 and December 31, 1995 were $989,347 and
$30,709, respectively.
NOTE 5: Supplemental Disclosure of Cash Flow Information Cash paid during the
nine months ended:
September 30,
1996 1995
Interest ....... $5,092,384 $4,700,293
Income Taxes ... $1,016,855 $825,920
NOTE 6: Stockholder's Equity
The following table sets forth changes in stockholders' equity for the nine
months ended September 30, 1996:
Balance at December 31, 1995 ............ $ 20,698,216
Net Income .............................. (596,746)
Dividends Declared ...................... (498,628)
Increase in Unrealized Losses on
Marketable Securities ................. (100,139)
Exercise of Options ..................... 646,717
------------
Balance at September 30, 1996 ........... $ 20,149,424
============
6
<PAGE>
FLAG FINANCIAL CORPORATION
LAGRANGE, GEORGIA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(UNAUDITED)
On September 12, 1996 the Board of Directors declared a $0.085 per share cash
dividend payable October 1, 1996 to shareholders of record September 20, 1996.
FLAG has 2,036,990 shares of common stock outstanding. FLAG has a stock option
plan which provides up to 201,250 shares of common stock and the granting of
stock appreciation rights. As of September 30, 196,750 stock options have been
granted, 147,000 have been exercised and included in the shares outstanding, and
3,750 have expired, leaving 46,000 options granted but not exercised.
NOTE 7: Earnings Per Share
Earnings per share for the nine months ended September 30, 1996 and 1995 were
computed based on the following:
Nine Months Ended
September 30, September 30,
1996 1995
---- ----
Net Income ..................... $ (596,746) $1,587,165
Primary Number of
Shares- Weighted Average 2,081,396 2,203,250
Fully Diluted Number of
Shares-Weighted Average 2,081,396 2,203,250
Earnings Per Share for the
Period-Weighted Average
Primary .................... $ (0.29) 0.72
Fully Diluted .............. (0.29) 0.72
In the last quarter of 1995, FLAG Financial Corporation purchased in the open
market 128,100 shares of its common stock at a purchase price of $12.75 per
share. These shares now have the status of authorized but unissued stock.
7
<PAGE>
FLAG FINANCIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
Liquidity and Capital Resources
Applicable federal regulations required the Bank to maintain cash and eligible
short-term investment securities in an amount greater than or equal to 5% of net
withdrawable deposits and borrowings payable in one year or less. This
requirement is to help assure that funding is adequate to meet deposit
withdrawals, loan fundings and other short-term liquidity needs. The Bank's
liquidity position was 8.60% as of September 30, 1996.
The Bank's primary source of liquidity (funds) are deposits, loan repayments,
proceeds from the sale of loans and securities, Federal Home Loan Bank of
Atlanta advances, Fed Funds Purchased, and earnings from investments.
Non-interest checking accounts continue to be a growing source of funds for the
Bank. The Bank's principle uses of funds are the origination of loans, the
purchase of mortgage-backed and investment securities, and for the repayment of
borrowings and advances. Primarily, funds have been used this quarter to fund
newly originated loans and to pay off FHLB advances.
The Consolidated Cash Flow Statements for the periods ending September 30, 1996
and 1995 further outline the sources and uses of funds for this quarter.
An adequate level of capital is not only a regulated requirement, but is
necessary to provide the foundation for balance sheet expansion and protection
from future losses. The chart below reflects the Bank's capital as of September
30, 1996. As indicated in the following chart, FLAG and the Bank are
significantly above all capital levels which are considered necessary under
current industry standards and are required by regulatory agencies.
REQUIRED ACTUAL EXCESS
CAPITAL CAPITAL CAPITAL
Tangible Capital
($000) ............. $ 3,450 $19,235 $15,785
% .................. 1.50% 8.36% 6.86%
Core Capital
($000) ............. $ 6,900 $19,235 $12,335
% .................. 3.00% 8.36% 5.36%
Risk-based Capital
($000) ............. $12,286 $23,457 $11,171
% .................. 8.00% 15.27% 7.27%
CHANGES IN FINANCIAL CONDITION
December 31, 1995 and September 30, 1996
Total assets decreased approximately $3.19 million since December 31, 1995, from
$232,105,364 at December 31, 1995 to $228,914,437 at September 30, 1996. Total
liabilities decreased $2.64 million, from $211,407,148 at December 31, 1995 to
$208,765,013 at September 30, 1996. The decrease in assets resulted from the
sales and calls of investments and mortgage-backed securities, and these funds
were used to fund loans and pay down $10.61 million of Federal Home Loan Bank of
Atlanta advances. Nonperforming assets, which include the Bennett Funding
leases, were $6.6 million at September 30, 1996,
8
<PAGE>
FLAG FINANCIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
versus $2.2 million at December 31, 1995. Excluding Bennett Funding,
nonperforming assets would have been $1.9 million, a 14% reduction from the
level at year-end 1995. Reserves for losses were $4.4 million, up from $1.6
million at December 31, 1995.
Stockholder's Equity has decreased $548,792 since December 31, 1995 as follows:
Balance at December 31, 1995 ............. $ 20,698,216
Net Income ............................... (596,746)
Dividends Declared ....................... (498,625)
Increase in Unrealized Losses on
Marketable Securities .................. (100,139)
Exercise of Options ...................... 646,717
------------
Balance at September 30, 1996 ............ $ 20,149,424
============
RESULTS OF OPERATIONS
Quarter ended September 30, 1996 and 1995
FLAG Financial reported a net loss in the third quarter of 1996 of $1,610,000 or
$0.76 per share which is compared to net income of $544,000 or $0.25 per share
for the same period in 1995. The loss is the result of two nonrecurring charges.
The first of these charges, which was anticipated and previously disclosed, was
a $2.3 million charge in the third quarter related to a $4.5 million portfolio
of equipment leases sold to the Bank through the Bennett Funding Group, Inc.
Although there is no way to anticipate the timing or ultimate resolution of the
Bennett Funding matter, the Company continues to seek full recovery of the
amounts invested with and through Bennett Funding Group, Inc.
Secondly, the Bank had a special assessment to fund the Savings Association
Insurance Fund ("SAIF") totaling $1,150,000. The SAIF assessment is part of a
recapitalization of the Savings Association Insurance Fund which was signed into
law on September 30, 1996, and all financial institutions which are insured
under SAIF participated in the assessment. The assessment is expected, among
other things, to result in significantly lower deposit insurance premiums in
future periods.
From a recurring earnings standpoint, profitability increased during the third
quarter as a result of higher net interest income and strong growth in fee
income. Specifically, net interest income increased 18% from the third quarter
of 1995, while other income increased 8% in the same time period.
RESULTS OF OPERATIONS
Nine months ended Septemer 30, 1996 and 1995
Even though reported results were below last year's comparable figures, core
earnings saw improvement. Net interest income before provision for loan losses
increased 17% in the first nine months of 1996 as compared to the same period in
1995. Interest expense decreased 6.75% from 1995 due to a 35% decrease on
interest paid on FHLB advances. Non-interest income also increased 18% from the
year ago period because of an increase in gains on the sale of investment
securities and an increase in fees and service charges.
9
<PAGE>
FLAG FINANCIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
PROVISION FOR LOAN AND LEASE LOSSES
Management utilizes a systematic methodology to independently evaluate the
adequacy of the allowances for loan and lease losses. The adequacy of the
reserve for loan losses is determined through management's informed judgment
concerning the amount of risk inherent in the Bank's loan and lease portfolios.
This judgment is based on such factors as the levels of non-performing and
substandard loans and leases, portfolio mix, borrowers' financial condition,
estimated underlying collateral values, current and prospective loacal economic
conditions, and historical loss experience. Management expects the allowance to
increase as the Bank continues to expand the following loan portfolios:
consumer, commercial, and commercial real estate. Actual losses in the form of
loans charged-off during the nine months ended September 30, 1996 and year ended
December 31, 1995 are presented as follows:
September 30, December 31,
1996 1995
Average net loans .............................. $ 53,211,982 $146,144,000
Allowance for possible loan and lease losses,
beginning of period .......................... 1,339,000 1,244,000
Charge-offs for the period:
Consumer ..................................... 83,000 118,000
Commercial and business loans ................ - -
Residential construction loans ............... 22,000 23,000
Permanent mortgage loans ..................... 167,000 60,000
Commercial real estate loans ................. - 364,000
------------ ------------
Total charge-offs ........................ 272,000 565,000
------------ ------------
Recoveries for the period:
Consumer ..................................... 25,000 30,000
Commercial and business loans ................ - -
Residential construction loans ............... - -
Permanent mortgage loans ..................... - -
Commercial real estate loans ................. - -
------------ ------------
Total recoveries ......................... 25,000 30,000
------------ ------------
Net charge-offs for the period ................. 247,000 535,000
Provision for loan and lease losses ............ 3,334,000 630,000
Allowance for possible loan and lease losses,
end of period ............................ $ 4,426,000 $ 1,339,000
============ ============
Ratio of allowance for loan and lease losses to
average net loans outstanding ............. 2.89% 0.92%
Ratio of net charge-offs during the period to
average net loans and leases outstanding
during the period ............................ 0.16% 0.37%
10
<PAGE>
FLAG FINANCIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
The following table represents the allocation of the allowance:
September 30, December 31,
1996 1995
Percent of Percent of
Amount Total Loans Amount Total Loans
Permanent mortgage loans ....... $ - - $ 16,000 0.01%
Commercial real estate loans ... 301,000 0.19% 257,000 0.17%
Consumer and business loans .... 3,000 0.02% 19,000 0.01%
Commercial loans & leases ...... 2,978,000 1.93% - -
Residential construction loans . - - - -
Total Loans Allocated ...... 3,282,000 2.13% 292,000 0.19%
--------- ---- ------- ----
Unallocated allowance .......... 1,144,000 0.74% 1,047,000 0.71%
Total allowance for
possible loan losses ...... 4,426,000 2.87% 1,339,000 0.90%
========= ==== ========= ====
The Bank continues to monitor the credit worthiness of its loan and lease
portfolio. The following table represents the non-accrual loans and other
non-performing assets. Interest income is recognized on a cash basis for these
loans.
September 30, December 31,
1996 1995
Non-accruing loans:
Residential mortgage loans:
1-4 family ................................. $1,207,000 $1,064,000
Multi-family ............................... - -
Commercial real estate loans ............... - 207,000
Consumer and business loans ................ 202,000 123,000
Commercial loans/leases .................... 4,616,000 -
---------- ----------
Total non-accruing loans/leases ........ 6,025,000 1,394,000
---------- ----------
Real estate acquired through foreclosure
other repossessed collateral ............... 526,000 801,000
---------- ----------
Total non-performing assets .............. 6,551,000 2,195,000
========== ==========
Ratio of total non-performing assets to:
Total loans and real estate acquired
through foreclosure ........................ 4.20% 1.48%
Total assets ................................. 2.86% 0.95%
11
<PAGE>
FLAG FINANCIAL CORPORATION
PART II. OTHER INFORMATION
No Other Information to Declare
12
<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.
FLAG FINANCIAL CORPORATION
(Registrant)
Date: December 2, 1996 Ellison C. Rudd
----------------------------
Ellison C. Rudd
Chief Financial Officer
(Duly authorized officer)
<TABLE> <S> <C>
<ARTICLE> 9
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<PERIOD-END> SEP-30-1996
<FISCAL-YEAR-END> DEC-31-1996
<CASH> 5,394,435
<INT-BEARING-DEPOSITS> 2,546,430
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0
0
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