SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported): June 22, 1999
FLAG Financial Corporation
(Exact name of registrant as specified in its charter)
Georgia 0-24532 58-2094179
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(State of Incorporation) (Commission File Number) (IRS Employer
Identification Number)
101 North Greenwood St., P.O. Box 3007
LaGrange, Georgia 30240
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (706) 845-5000
FLAG Financial Corporation is filing this Amendment to its Form 8-K dated
January 8, 1999 to include the financial statements required pursuant to Item 7
of Form 8-K. Effective December 11, 1998, Empire Bank Corp. merged with and into
FLAG Financial Corporation. Effective January 1, 1999, Empire Banking Company
merged with and into Citizens Bank, a subsidiary of FLAG.
<PAGE>
Item 2. Acquisition or Disposition of Assets.
- -----------------------------------------------
Pursuant to an Agreement and Plan of Merger, dated as of July 30, 1998, (the
"Merger Agreement"), by and between FLAG Financial Corporation ("FLAG") and
Empire Bank Corp. ("Empire"), Empire merged with and into FLAG (the "Merger") on
December 11, 1998 (the "Effective Time"), FLAG was the surviving corporation in
the Merger, and the wholly owned subsidiary of Empire became a wholly owned
subsidiary of FLAG. At the Effective Time, each then outstanding share of the
common stock, $1.00 per value per share, of Empire (the "Empire Common Stock")
(excluding shares held by any Empire entity or any FLAG entity, in each case
other than in a fiduciary capacity or as a result of debts previously
contracted) ceased to be outstanding and was converted into and exchanged for
the right to receive 42.50 shares (the "Exchange Ratio") of the common stock,
$1.00 per value per share, of FLAG (the "FLAG Common Stock"). As a result, FLAG
issued approximately 1,124,125 shares of FLAG Common Stock to the former Empire
shareholders in exchange for all of the 26,450 shares of Empire Common Stock
that were issued and outstanding at the Effective Time (with FLAG paying cash to
the former Empire shareholders in lieu of issuing fractional shares of FLAG
Common Stock).
Pursuant to the Merger Agreement, Leonard H. Bateman, the former President and
Chief Executive Officer of Empire Banking Corp., will become a member of FLAG's
Board of Directors following the effective time.
The foregoing is qualified in its entirely by reference to the Merger Agreement
which is hereby incorporated by reference herein.
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
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(a) Financial Statements of Businesses Acquired
Empire Banking Corp.
Consolidated Balance Sheets
September 30, 1998 and 1997
Assets
1998 1997
---- ----
Cash and due from banks .................... $ 2,244,903 2,203,879
Federal funds sold ......................... 1,990,000 2,665,000
--------- ---------
Cash and cash equivalents ........... 4,234,903 4,868,879
Securities available-for-sale .............. 7,874,454 9,075,556
Securities held-to-maturity ................ 2,812,443 3,217,903
Loans ...................................... 51,616,649 45,050,875
Premises and equipment ..................... 1,444,579 1,429,928
Other assets ............................... 2,016,552 2,110,104
--------- ---------
Total assets ........................ $ 69,999,580 65,753,245
============ ===========
Liabilities and Shareholders' Equity
Deposits:
Demand ................................. $ 11,309,959 10,310,564
Interest-bearing demand ................ 6,905,968 6,090,397
Savings ................................ 2,179,817 2,281,168
Time ................................... 38,347,784 36,083,293
---------- ----------
Total deposits ...................... 58,743,528 54,765,422
Federal Home Loan Bank advances ............ 3,294,061 3,906,729
Other liabilities .......................... 410,758 367,081
---------- ----------
Total liabilities ................... 62,448,347 59,039,232
Shareholders' equity:
Common stock ............................. 270,000 270,000
Capital surplus .......................... 1,587,288 1,577,771
Retained earnings ........................ 5,808,465 5,120,538
Treasury stock ........................... (152,533) (270,342)
Accumulated other comprehensive income ... 38,013 16,046
---------- ----------
Total shareholders' equity ............ 7,551,233 6,714,013
---------- ----------
Total liabilities and
shareholders' equity .............. $ 69,999,580 65,753,245
========== ==========
<PAGE>
Empire Banking Corp.
Consolidated Statements of Earnings
For the Nine Months Ended September 30, 1998 and 1997
1998 1997
---- ----
Interest income:
Loans $ ..................................... 3,259,056 3,006,700
Federal funds sold .......................... 153,181 122,458
Investments-Taxable ......................... 471,639 440,586
Investments-Nontaxable ...................... 104,393 104,636
---------- ----------
Total interest income ..................... 3,988,269 3,674,380
---------- ----------
Interest expense:
Deposits .................................... 1,977,762 1,725,282
Federal Home Loan Bank advances ............. 181,157 194,030
---------- ----------
Total interest expense .................... 2,158,919 1,919,312
---------- ----------
Net interest income ....................... 1,829,350 1,755,068
Provision for loan losses ...................... 50,000 201,000
---------- ----------
Net interest income after
provision for loan loss ............... 1,779,350 1,554,068
---------- ----------
Non interest income:
Service charges and fees .................... 604,416 575,364
Other ....................................... 41,732 68,126
---------- ----------
Total non interest income ................. 646,148 643,490
---------- ----------
Non interest expense:
Salaries and benefits ....................... 792,939 797,248
Occupancy ................................... 325,232 322,441
Other ....................................... 491,070 457,407
---------- ----------
Total noninterest expense ................. 1,609,241 1,577,096
---------- ----------
Income before taxes .................. 816,257 620,462
Income tax expense ............................. 177,000 63,500
---------- -----------
Net earnings ......................... $ 639,257 556,962
========== ==========
Basic earnings per share ........................ $ 24.29 21.56
Average shares outstanding 26,315 25,834
<PAGE>
Empire Banking Corp.
Consolidated Statements of Cash Flows
September 30, 1998 and 1997
1998 1997
---- ----
Cash flows from operating activities:
Net earnings ....................................... $ 639,257 556,962
Adjustments to reconcile net earnings
to net cash provided by operating
activities:
Depreciation, amortization and accretion .... 169,599 178,075
Provision for loan losses ................... 50,000 201,000
Change in:
Other assets .............................. (297,918) (431,681)
Other liabilities ......................... 195,677 196,820
--------- ---------
Net cash provided by
operating activities ................. 756,615 701,176
--------- ---------
Cash flows from investing activities:
Proceeds from sale of securities
available-for-sale ............................... 1,920,462 --
Proceeds from maturities of securities
held-to-maturity ................................. 202,579 --
Purchases of securities available-for-sale ......... -- (1,013,017)
Net change in loans ................................ (6,204,907) (5,466,482)
Purchases of premises and equipment ................ (45,167) (65,171)
----------- -----------
Net cash used in investing activities .. (4,127,033) (6,544,670)
----------- -----------
Cash flows from financing activities:
Net change in deposits ............................. (551,181) 4,144,046
Net change in advances ............................. (366,504) 304,936
Sale of treasury stock ............................. 129,918 7,194
Dividends paid ..................................... (67,050) (62,016)
----------- -----------
Net cash provided (used) by
investing activities................... (854,817) 4,394,160
----------- -----------
Net change in cash and cash equivalents ..... (4,225,235) (1,449,334)
Cash and cash equivalents at beginning of year ........ 8,460,138 6,318,213
----------- -----------
Cash and cash equivalents at end of year ..............$ 4,234,903 4,868,879
=========== ===========
<PAGE>
Empire Banking Corp.
Notes to Consolidated Financial Statements
(Unaudited)
(1) Organization and Basis of Presentation
Empire Banking Corp. (the "Company"), a bank holding company, owns 100% of
the outstanding common stock of Empire Banking Company (the "Bank"), which
operates in the Homerville, Georgia area.
The consolidated financial statements includes the accounts of the Company
and the Bank. All intercompany accounts and transactions have been
eliminated in consolidation.
The interim financial statements included herein are unaudited but reflect
all adjustments which, in the opinion of management, are necessary for a
fair presentation of the financial position and results of operations for
the interim period presented. All such adjustments are of a normal
recurring nature. The results of operations for the period ended September
30, 1998 are not necessarily indicative of the results of a full year's
operations.
The accounting principles followed by the Company and the methods of
applying these principles conform with generally accepted accounting
principles (GAAP) and with general practices within the banking industry.
In preparing financial statements in conformity with GAAP, management is
required to make estimates and assumptions that affect the reported amounts
in the financial statements. Actual results could differ significantly from
those estimates. Material estimates common to the banking industry that are
particularly susceptible to significant change in the near term include,
but are not limited to, the determinations of the allowance for loan
losses, the valuation of real estate acquired in connection with or in lieu
of foreclosure on loans, and valuation allowances associated with deferred
tax assets, the recognition of which are based on future taxable income.
<PAGE>
(b) Pro Forma Financial Information
FLAG FINANCIAL CORPORATION AND SUBSIDIARIES
Pro Forma Condensed Consolidated Balance Sheet
September 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
Pro Other
Pro Forma Forma Pending Pro Forma Pro Forma
FLAG Empire Adjustments Combined Transaction Adjustments Combined
---- ------ ----------- -------- ----- ----------- --------
ASSETS
<S> <C> <C> <C> <C> <C> <C> <C>
Cash and due from banks ............. $ 14,629,422 2,244,903 16,874,325 288,206 17,162,531
Federal funds sold .................. 10,510,000 1,990,000 12,500,000 12,500,000
---------- --------- ------- ---------- -------- ------- ----------
Cash and cash equivalents ...... 25,139,422 4,234,903 0 29,374,325 288,206 0 29,662,531
Interest-bearing deposits ........... 13,067,997 13,067,997 13,067,997
Securities held-to-maturity ......... 1,551,485 2,812,443 4,363,928 4,363,928
Securities available-for-sale, ...... 64,276,913 7,874,454 72,151,367 1,014,278 73,165,645
Other investments ................... 5,748,503 5,748,503 5,748,503
Loans held for sale ................. 5,118,696 5,118,696 5,118,696
Loans, net .......................... 310,953,360 51,616,649 362,570,009 22,759,392 385,329,401
Premises and equipment, net ......... 12,308,657 1,444,579 13,753,236 1,254,929 15,068,165
Other assets ........................ 15,482,475 2,016,552 17,499,027 1,360,761 18,859,788
---------- --------- ------- ---------- --------- ------- ----------
Total assets ................ $ 453,647,508 69,990,580 0 523,647,088 26,677,566 0 550,324,654
============= ========== ======= =========== ========== ======= ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
Noninterest-bearing ............ $ 29,546,528 11,309,959 40,856,487 2,078,200 42,934,687
Interest-bearing ............... 321,726,342 47,433,569 369,159,911 21,082,750 390,242,661
----------- ---------- ------- ----------- ---------- -------- -----------
Total deposits ...................... 351,272,870 58,743,528 0 410,016,398 23,160,950 0 433,177,348
Accrued expenses and other liabilites 8,544,913 410,758 8,955,671 549,046 9,504,717
Federal Home Loan Bank advances ..... 51,875,000 3,294,061 55,169,061 500,000 55,669,061
Fed funds purchased ................. 260,000 260,000 740,000 1,000,000
Other borrowed funds ................ 2,001,334 2,001,334 2,001,334
--------- --------- ------- ---------- --------- -------- -----------
Total liabilities ........... $ 413,954,117 62,448,347 0 476,402,464 24,949,996 0 501,352,460
Stockholders' Equity:
Preferred stock ..................... 0 0
Common stock ........................ 5,180,932 270,000 854,125 6,305,057 175,000 87,500 6,567,557
Capital surplus ..................... 8,856,865 1,587,288 (1,006,658) 9,437,495 1,180,396 (87,500) 10,530,391
Retained earnings ................... 24,123,204 5,808,465 29,931,669 371,097 30,302,766
Unrealized gain (loss) on securitis . 1,532,390 38,013 1,570,403 1,077 1,571,480
Treasury stock ...................... (152,533) 152,533 0 0
---------- -------- ------- ---------- --------- ------- ----------
Total shareholders' equity . 39,693,391 7,551,233 0 47,244,624 1,727,570 0 48,972,194
---------- --------- ------- ---------- --------- ------- ----------
Total liabilities and
stockholders' equity ...... $ 453,647,508 69,999,580 0 523,647,088 26,677,566 0 550,324,654
============ ========== ======= =========== ========== ======= ===========
</TABLE>
See accompanying notes to pro forma condensed consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
FLAG FINANCIAL CORPORATION AND SUBSIDIARIES
Pro Forma Consolidated Statement of Earnings
For the Nine Months Ended September 30, 1998
(Unaudited)
Other
Pro Forma Pending Pro Forma
FLAG Empire Combined Transaction Combined
---- ------ -------- ----------- --------
<S> <C> <C> <C> <C> <C>
Interest income ............................. $26,701,664 3,988,269 30,689,933 2,170,597 32,860,530
Interest expense ............................ 13,255,876 2,158,919 15,414,795 991,649 16,406,444
----------- ----------- ----------- ----------- -----------
Net interest income ..................... 13,445,788 1,829,350 15,275,138 1,178,948 16,454,086
Provision for loan losses ................... 666,000 50,000 716,000 45,000 761,000
----------- ----------- ----------- ----------- -----------
Net interest income after
provision for loan losses ............. 12,779,788 1,779,350 14,559,138 1,133,948 15,693,086
Noninterest income:
Fees and service charges ................ 2,903,886 604,416 3,508,302 165,270 3,673,572
Net realized gains on
the sale of assets ................... 1,245,471 1,245,471 9,023 1,254,494
Other operating income .................. 1,101,347 41,732 1,143,079 46,914 1,189,993
----------- ----------- ----------- ----------- -----------
Total noninterest income .................... 5,250,704 646,148 5,896,852 221,207 6,118,059
Noninterest expense:
Salaries and employee benefits .......... 7,050,429 792,939 7,843,368 500,488 8,343,856
Net occupancy and equipment expenses .... 2,458,048 325,232 2,783,280 205,946 2,989,226
Other operating expenses ................ 5,565,427 490,070 6,056,497 363,462 6,419,959
----------- ----------- ----------- ----------- -----------
Total noninterest expense ................... 15,073,904 1,609,241 16,683,145 1,069,896 17,753,041
Income before income taxes .............. 2,956,588 816,257 3,772,845 285,259 4,058,104
Income tax expense .......................... 788,077 177,000 965,077 95,535 1,060,612
----------- ----------- ----------- ----------- -----------
Net income .............................. $ 2,168,511 639,257 2,807,768 189,724 2,997,492
=========== =========== =========== =========== ===========
Net income per common
share outstanding ................... $ .42 24.29 .45 .46
=========== =========== =========== ===========
Weighted average outstanding shares ......... 5,180,932 26,315 6,299,320 6,554,320
</TABLE>
See accompanying notes to pro forma condensed consolidated financial statements
<PAGE>
FLAG FINANCIAL CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
(1) The unaudited pro forma consolidated balance sheet as of September 30, 1998
and consolidated statements of earnings for the nine months ended September
30, 1998 have been prepared based on the historical consolidated balance
sheets and statements of earnings, which give effect to the Merger of
Empire with and into FLAG accounted for as a poolikng of interests, based
on the exchange of 42.5 shares of FLAG Common Stock for each outstanding
share of Empire Common Stock.
(2) In the opinion of management of the respective companies included above,
all adjustments considered necessary for a fair presentation of the
financial position and results for the period presented have been included.
Adjustments, if any, are normal and recurring nature.
(c) Exhibits. The following exhibits are filed as part of this report:
2.1 Agreement and Plan of Merger, dated July 30, 1998, by and between
FLAG Financial Corporation and Empire Bank Corp. (incorporated by
reference from Exhibit 2 to FLAG Financial Corporation's Registration
Statement on Form S-4, Registration No. 333-61803).
99.1 Press release, dated December 16, 1998, issued by the Registrant.
(incorporated by reference from Exhibit 99.1 to FLAG Financial
Corporation's Current Report on Form 8-K dated January 8, 1999)
<PAGE>
SIGNATURE
Pursuant to the requirement of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
FLAG Financial Corporation
(Registrant)
Dated: June 22, 1999 By: /s/ John S. Holle
-----------------
(Signature)
Name: John S. Holle
Title: Chairman of the Board
