<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
Mark One
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 1996
----------------------
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from __________ to __________
COMMISSION FILE NUMBER: 33-77920
THE BANK HOLDING COMPANY
-----------------------------------------
(Exact name of small business issuer as specified in its charter)
GEORGIA 58-2060134
- - ------------------------------- -------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
201 W. TAYLOR STREET, GRIFFIN , GEORGIA 30224
--------------------------------------------------------------
(Address of principal executive offices)
(770) 229-2675
----------------------------------------
(Issuer's telephone number)
N/A
----------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports) and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
------- -------
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by court.
Yes _______ No _________
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of August 1, 1996: 556,525
Transitional Small Business Disclosure Format (Check One) Yes No X
--- ---
<PAGE>
THE BANK HOLDING COMPANY
- - --------------------------------------------------------------------------------
INDEX
-----
PAGE
----
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEET - JUNE 30, 1996................. 3
CONSOLIDATED STATEMENTS OF INCOME - THREE MONTHS
ENDED JUNE 30, 1996 AND 1995 AND SIX MONTHS
ENDED JUNE 30, 1996 AND 1995............................. 4
CONSOLIDATED STATEMENTS OF CASH FLOWS - SIX MONTHS
ENDED JUNE 30, 1996 AND 1995....................... 5 AND 6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS................. 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS................... 8-13
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.......................... 14
SIGNATURES
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
THE BANK HOLDING COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
JUNE 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS
- - ------
<S> <C>
Cash and due from banks $ 3,582,057
Securities available for sale, at fair value 20,233,034
Federal funds sold 2,450,000
Loans 76,834,879
Less allowance for loan losses 853,605
---------------
Loans, net 75,981,274
---------------
Mortgage loans available for sale 1,453,599
Premises and equipment, net 3,763,939
Goodwill 2,461,709
Other assets 2,120,242
---------------
$ 112,045,854
===============
LIABILITIES, PREFERRED STOCK AND COMMON STOCKHOLDERS' EQUITY
- - ------------------------------------------------------------
Deposits
Noninterest-bearing demand $ 15,422,580
Interest-bearing demand 16,525,229
Savings 5,214,902
Time, $100,00 and over 12,972,145
Other time 48,170,470
---------------
Total deposits 98,305,326
Debentures payable 91,540
Other liabilities 1,830,729
---------------
Total liabilities 100,227,595
---------------
COMMITMENTS AND CONTINGENT LIABILITIES
Redeemable 8% preferred stock, par value $60; 50,000 shares
authorized; 40,770 shares issued and outstanding 2,446,200
---------------
Common stockholders' equity
Common stock, par value $5; 10,000,000 shares authorized;
556,525 shares issued and outstanding 2,782,625
Capital surplus 4,491,861
Retained earnings 2,460,577
Unrealized losses on securities available for sale, net of taxes (363,004)
---------------
Total common stockholders' equity 9,372,059
---------------
$ 112,045,854
===============
</TABLE>
SEE NOTE TO CONSOLIDATED FINANCIAL STATEMENTS.
3
<PAGE>
THE BANK HOLDING COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED JUNE 30, 1996 AND 1995 AND
SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(UNAUDITED)
<TABLE>
<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 $ 2,099,094 $ 2,091,158 $ 4,202,238 $ 4,218,922
Interest on taxable securities 285,043 231,443 512,684 458,510
Interest on nontaxable securities 6,354 8,025 13,236 16,061
Interest on Federal funds sold 29,763 52,858 89,596 59,538
----------- ----------- ------------ ------------
2,420,254 2,383,484 4,817,754 4,753,031
----------- ----------- ------------ ------------
INTEREST EXPENSE
Interest on deposits 1,053,832 1,090,847 2,133,777 2,093,843
Interest on Federal funds purchased and
securities sold under agreements to repurchase 7,217 3,925 7,217 23,124
Interest on note payable 13,648 32,014 24,407 70,086
Interest on debentures payable 2,182 2,423 4,004 4,846
----------- ----------- ------------ ------------
1,076,879 1,129,209 2,169,405 2,191,899
----------- ----------- ------------ ------------
Net interest income 1,343,375 1,254,275 2,648,349 2,561,132
PROVISION FOR LOAN LOSSES 60,000 15,000 75,000 60,000
----------- ----------- ------------ ------------
Net interest income after provision for loan losses 1,283,375 1,239,275 2,573,349 2,501,132
----------- ----------- ------------ ------------
OTHER INCOME
Service charges on deposit accounts 142,473 126,323 269,247 250,219
Security transactions, net 14,663 - 14,663 (870)
Gain on sale of mortgage loans 150,557 54,795 310,306 58,222
Other 57,626 44,018 131,041 107,136
----------- ----------- ------------ ------------
365,319 225,136 725,257 414,707
----------- ----------- ------------ ------------
OTHER EXPENSE
Salaries and employee benefits 484,992 444,335 1,040,036 901,857
Equipment expense 70,460 57,708 135,983 119,329
Occupancy expense 79,976 67,797 154,328 131,581
Goodwill amortization 46,157 46,157 92,314 92,314
Other operating expenses 350,450 358,520 676,950 728,335
----------- ----------- ------------ ------------
1,032,035 974,517 2,099,611 1,973,416
----------- ----------- ------------ ------------
Income before income taxes 616,659 489,894 1,198,995 942,423
APPLICABLE INCOME TAXES 227,015 173,188 456,265 334,399
----------- ----------- ------------ ------------
Net income $ 389,644 $ 316,706 $ 742,730 $ 608,024
=========== =========== =========== ============
PER SHARE OF COMMON STOCK
Net income $ 0.55 $ 0.55 $ 0.55 $ 0.55
=========== =========== =========== ============
Dividends $ - $ - $ - $ -
=========== =========== =========== ============
</TABLE>
SEE NOTE TO CONSOLIDATED FINANCIAL STATEMENTS.
4
<PAGE>
THE BANK HOLDING COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1995
---------------- ----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 742,730 $ 608,024
---------------- ----------------
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 218,703 199,285
Provision for loan losses 75,000 60,000
(Gain) loss on sales of securities available for sale (14,663) 870
Increase in mortgage loans available for sale (61,123) (126,390)
(Gain) loss on sales of other real estate 5,531 (2,697)
Increase (decrease) in taxes payable 58,871 (76,316)
(Increase) decrease in interest receivable (41,631) 11,070
Increase (decrease) in interest payable 120,026 (439,741)
Other assets and liabilities, net 322,682 (92,039)
---------------- ----------------
Total adjustments 683,396 (465,958)
---------------- ----------------
Net cash provided by operating activities 1,426,126 142,066
---------------- ----------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of securities available for sale (6,488,125) -
Proceeds from sales of securities available for sale 1,018,650 499,063
Proceeds from maturities of securities available for sale 3,939,840 130,763
Increase in Federal funds sold, net (60,000) (6,505,000)
(Increase) decrease in loans, net (2,500,624) 4,779,099
Proceeds from sales of other real estate 171,814 358,180
Purchase of premises and equipment (554,114) (128,500)
Purchase of Federal Home Loan Bank stock - (148,200)
---------------- ----------------
Net cash used in investing activities (4,472,559) (1,014,595)
---------------- ----------------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in deposits, net 3,163,665 4,969,513
Decrease in Federal funds purchased and securities sold
under agreements to repurchase - (3,010,000)
Repayment of note payable (500,000) -
Cash dividends paid - (139,131)
---------------- ----------------
Net cash provided by financing activities 2,663,665 1,820,382
---------------- ----------------
</TABLE>
5
<PAGE>
THE BANK HOLDING COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Net increase (decrease) in cash and due from banks $ (382,768) $ 947,853
Cash and due from banks at beginning of period 3,964,825 3,391,362
------------ ------------
Cash and due from banks at end of period $ 3,582,057 $ 4,339,215
============ ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION
Cash paid during the period for:
Interest $ 2,049,379 $ 2,631,640
Income taxes $ 344,500 $ 410,715
SUPPLEMENTAL DISCLOSURES OF NONCASH
INVESTING ACTIVITIES
Real estate acquired through foreclosure $ 137,696 $ 171,125
============ ============
Unrealized (gains) losses on securities available for sale $ 315,579 $ (262,582)
============ ============
</TABLE>
SEE NOTE TO CONSOLIDATED FINANCIAL STATEMENTS.
6
<PAGE>
THE BANK HOLDING COMPANY AND SUBSIDIARIES
NOTE TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. BASIS OF PRESENTATION
The consolidated financial information included herein is unaudited;
however, such information reflects all adjustments (consisting solely
of normal recurring adjustments) which are, in the opinion of
management, necessary for a fair statement of results for the interim
periods.
The results of operations for the three and six month periods ended
June 30, 1996 are not necessarily indicative of the results to be
expected for the full year.
7
<PAGE>
THE BANK HOLDING COMPANY AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
ITEM 2.
The following is management's discussion and analysis of certain significant
factors which have affected the financial position and operating results of the
Company and its bank subsidiaries, The Bank of Spalding County (Spalding) and
the First Community Bank of Henry County (Henry) during the periods included in
the accompanying consolidated financial statements.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 1996, the liquidity ratios of both banks, as determined under
guidelines established by regulatory authorities, were satisfactory.
At June 30, 1996, the capital ratios of the Company and the Banks were adequate
based on regulatory minimum capital requirements. The minimum capital
requirements and the actual capital ratios for the Company are as follows:
<TABLE>
<CAPTION>
ACTUAL
--------------------------------------------
FIRST
COMMUNITY
THE BANK THE BANK BANK OF
HOLDING OF SPALDING HENRY REGULATORY
COMPANY COUNTY COUNTY REQUIREMENT
---------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
Leverage capital ratio 6.80% 7.87% 11.09% 4.00%
Risk-based capital ratios:
Core capital 8.59 10.24 13.47 4.00
Total capital 9.59 11.21 14.52 8.00
</TABLE>
8
<PAGE>
FINANCIAL CONDITION
Following is a summary of the Company's balance sheets for the periods
indicated:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995 INCREASE (DECREASE)
----------- ----------- -------------------------
(DOLLARS IN THOUSANDS) AMOUNT PERCENT
------------------------- ----------- -----------
<S> <C> <C> <C> <C>
Cash and due from banks $ 3,582 $ 3,965 $ (383) (9.66)%
Securities 20,233 19,004 1,229 6.47
Federal funds sold 2,450 2,390 60 2.51
Loans 77,435 75,086 2,349 3.13
Premises and equipment 3,764 3,336 428 12.83
Goodwill 2,462 2,554 (92) (3.60)
Other assets 2,120 2,193 (73) (3.33)
----------- ----------- -----------
$ 112,046 $ 108,528 $ 3,518 3.24
=========== =========== ===========
Deposits $ 98,305 $ 95,142 $ 3,163 3.32%
Other borrowings 92 592 (500) (84.46)
Other liabilities 1,831 1,419 412 29.03
Preferred stock 2,446 2,446 - -
Common stockholders' equity 9,372 8,929 443 4.96
----------- ----------- -----------
$ 112,046 $ 108,528 $ 3,518 3.24
=========== =========== ===========
</TABLE>
As indicated in the above table, the Company's total assets during 1996 have
grown at a rate of 3.24%. Increased deposits during the second quarter of 1996
were responsible for this growth. The deposit growth has been primarily
invested in loans and securities. The Company has also fully repaid the
remaining $500,000 balance due on the note payable incurred during the
acquisition in October of 1994 of Henry.
9
<PAGE>
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 1996 AND 1995 AND FOR
THE SIX MONTHS ENDED JUNE 30, 1996 AND 1995
Following is a summary of the Company's operations for the periods indicated.
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30,
1996 1995 INCREASE (DECREASE)
----------- ----------- -------------------------
(DOLLARS IN THOUSANDS) AMOUNT PERCENT
------------------------- ----------- -----------
<S> <C> <C> <C> <C>
Interest income $ 2,420 $ 2,383 $ 37 1.55%
Interest expense 1,077 1,129 (52) (4.61)
Net interest income 1,343 1,254 89 7.10
Provision for loan losses 60 15 45 300.00
Other income 366 225 141 62.67
Other expense 1032 974 58 5.95
Pretax income 617 490 127 25.92
Income taxes 227 173 54 31.21
Net income 390 317 73 23.03
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
1996 1995 INCREASE (DECREASE)
----------- ----------- -------------------------
(DOLLARS IN THOUSANDS) AMOUNT PERCENT
------------------------- ----------- -----------
<S> <C> <C> <C> <C>
Interest income $ 4,818 $ 4,753 $ 65 1.37%
Interest expense 2,169 2,192 (23) (1.05)
Net interest income 2,649 2,561 88 3.44
Provision for loan losses 75 60 15 25.00
Other income 725 415 310 74.70
Other expense 2,100 1,974 126 6.38
Pretax income 1,199 942 257 27.28
Income taxes 456 334 122 36.53
Net income 743 608 135 22.20
</TABLE>
As indicated in the above tables, the Company's net interest income, after being
relatively flat during the first quarter of the year, increased by $88,000
during the second quarter. The Company's net interest margin increased slightly
during the first six months of 1996 to 5.45% from 5.21% for the previous year.
10
<PAGE>
The provision for loan losses has increased by $45,000 and $15,000 during the
second quarter and first six months of 1996, as compared to the same periods in
1995. This increase is due to the net loan growth of the loan portfolio as
compared to the loan portfolio at June 30, 1995 and to increased net charge-offs
incurred during the second quarter of 1996 of $80,000, the majority of which was
on one real estate loan in the amount of $66,000. The Company's reserve for
loan losses amounted to 1.09% at June 30, 1996 as compared to 1.14% at December
31, 1995. The allowance for loan losses is maintained at a level that is deemed
appropriate by management to adequately cover all known and inherent risks in
the loan portfolio. Management's evaluation of the loan portfolio includes a
continuing review of loan loss experience, current economic conditions which may
affect the borrower's ability to pay and the underlying collateral value of the
loans.
Information with respect to nonaccrual, past due and restructured loans at June
30, 1996 and 1995 is as follows:
<TABLE>
<CAPTION>
JUNE 30,
----------------------
1996 1995
-------- ----------
(DOLLARS IN THOUSANDS)
----------------------
<S> <C> <C>
Nonaccrual loans $ - $ 146
Loans contractually past due ninety days or more as
to interest or principal payments and still accruing 146 51
Restructured loans - -
Loans, now current about which there are serious doubts
as to the ability of the borrower to comply with loan
repayment terms - -
Interest income that would have been recorded on
nonaccrual and restructured loans under original terms - -
Interest income that was recorded on nonaccrual and
restructured loans - -
</TABLE>
It is the policy of the Banks to discontinue the accrual of interest income
when, in the opinion of management, collection of such interest becomes
doubtful. This status is accorded such interest when (1) there is a significant
deterioration in the financial condition of the borrower and full repayment of
principal and interest is not expected and (2) the principal or interest is more
than ninety days past due, unless the loan is both well-secured and in the
process of collection.
Loans classified for regulatory purposes as loss, doubtful, substandard, or
special mention that have not been included in the table above do not represent
or result from trends or uncertainties which management reasonably expects will
materially impact future operating results, liquidity or capital resources.
These classified loans do not represent material credits about which management
is aware of any information which causes management to have serious doubts as to
the ability of such borrowers to comply with the loan repayment terms.
11
<PAGE>
Information regarding certain loan and allowance for loan loss data through June
30, 1996 and 1995 is as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
---------------------------
1996 1995
----------- ------------
(DOLLARS IN THOUSANDS)
---------------------------
<S> <C> <C>
Average amount of loans outstanding $ 75,412 $ 76,646
========== ==========
Balance of allowance for loan losses at beginning of period $ 868 $ 817
========== ==========
Loans charged off
Commercial and financial $ - $ 8
Real estate mortgage 68 22
Installment 41 27
---------- ----------
109 57
---------- ----------
Loans recovered
Commercial and financial - 5
Real estate mortgage 16 28
Installment 4 7
---------- ----------
20 40
---------- ----------
Net charge-offs 89 17
---------- ----------
Additions to allowance charged to operating expense
during period 75 60
---------- ----------
Balance of allowance for loan losses at end of period $ 854 $ 860
========== ==========
Ratio of net loans charged off during the period to
average loans outstanding .12 .02
========== ==========
</TABLE>
Other income has increased by $141,000 and $310,000 during the second quarter
and the first six months of 1996 as compared to the same periods in 1995. The
increases are due primarily to gains recognized on the sale of mortgage loans
which have occurred due to increased mortgage loan originations during the
second quarter of 1996.
Other operating expenses have increased by $58,000 and $126,000 during the
second quarter and the first six months of 1996 as compared to the same periods
in 1995. The increase in other operating expenses are due primarily to
increases in salaries and employee benefits of $41,000 and $138,000,
respectively.
12
<PAGE>
The Company's provision for income taxes increased by $54,000 and $122,000
during the second quarter and first six months, respectively, as compared to the
same periods in 1995 due to higher pre tax income.
The Company is not aware of any known trends, events or uncertainties that will
have or that are reasonably likely to have a material effect on its liquidity,
capital resources or operations. The Company is also not aware of any current
recommendations by the regulatory authorities which, if they were implemented,
would have such an effect.
13
<PAGE>
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27. Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K have been filed during the quarter
ended June 30, 1996
14
<PAGE>
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.
THE BANK HOLDING COMPANY
BY:/s/ Charles B. Blackmon
-----------------------------------------
Charles B. Blackmon, President
(Principal Executive, Principal Financial
and Accounting Officer)
DATE:
---------------------------------------
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 3,582,057
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 2,450,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 20,233,034
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 76,834,879
<ALLOWANCE> 853,605
<TOTAL-ASSETS> 112,045,854
<DEPOSITS> 98,305,326
<SHORT-TERM> 0
<LIABILITIES-OTHER> 1,830,729
<LONG-TERM> 91,540
2,446,200
0
<COMMON> 2,782,625
<OTHER-SE> 6,589,434
<TOTAL-LIABILITIES-AND-EQUITY> 112,045,854
<INTEREST-LOAN> 4,202,238
<INTEREST-INVEST> 525,920
<INTEREST-OTHER> 89,596
<INTEREST-TOTAL> 4,817,754
<INTEREST-DEPOSIT> 2,133,777
<INTEREST-EXPENSE> 2,169,405
<INTEREST-INCOME-NET> 2,648,349
<LOAN-LOSSES> 75,000
<SECURITIES-GAINS> 14,663
<EXPENSE-OTHER> 2,099,611
<INCOME-PRETAX> 1,198,995
<INCOME-PRE-EXTRAORDINARY> 742,730
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 742,730
<EPS-PRIMARY> 1.16
<EPS-DILUTED> 0
<YIELD-ACTUAL> 5.45
<LOANS-NON> 0
<LOANS-PAST> 146,000
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 868,000
<CHARGE-OFFS> 109,000
<RECOVERIES> 20,000
<ALLOWANCE-CLOSE> 854,000
<ALLOWANCE-DOMESTIC> 854,000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
