<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 September 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
-----------------------------------------------------------------
(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 a 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 November 1, 1996: 556,525
Transitional Small Business Disclosure Format (Check One) Yes No X
----- -----
<PAGE>
THE BANK HOLDING COMPANY
- -------------------------------------------------------------------------------
INDEX
-----
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1 - Financial Statements
Consolidated Balance Sheet - September 30, 1996.............. 3
Consolidated Statements of Income - Three
Months Ended September 30, 1996 and 1995 and
Nine Months Ended September 30, 1996 and 1995............. 4
Consolidated Statements of Cash Flows - Nine
Months Ended September 30, 1996 and 1995.................5 and 6
Note 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
</TABLE>
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
THE BANK HOLDING COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1996
(Unaudited)
<S> <C>
Assets
- ------
Cash and due from banks $ 3,794,693
Investment securities available
for sale, at fair value 20,454,053
Federal funds sold 2,990,000
Loans 77,933,802
Less allowance for loan losses 859,424
-----------------
Loans, net 77,074,378
Mortgage loans available for sale 1,670,276
Premises and equipment, net 3,712,905
Goodwill 2,415,552
Other assets 2,353,727
-----------------
$ 114,465,584
=================
Liabilities, Preferred Stock and Common
- ----------------------------------------
Stockholders' Equity
- --------------------
Deposits
Noninterest-bearing demand $ 13,710,105
Interest-bearing demand 16,026,921
Savings 5,337,710
Time, $100,000 and over 13,727,645
Other time 51,397,416
-----------------
Total deposits 100,199,797
Debentures payable 91,540
Other liabilities 1,908,974
-----------------
Total liabilities 102,200,311
-----------------
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 2,801,370
Unrealized losses on securities
available for sale, net of taxes (256,783)
-----------------
Total common stockholders' equity 9,819,073
-----------------
$ 114,465,584
=================
</TABLE>
See Note to Consolidated Financial Statements.
3
<PAGE>
THE BANK HOLDING COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995 AND
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------------------------- -----------------------------------------
1996 1995 1996 1995
------------------- ------------------- -----------------------------------------
<S> <C> <C> <C> <C>
Interest income
Interest and fees on loans $ 2,272,319 $ 2,048,290 $ 6,474,557 $ 6,267,212
Interest on taxable securities 292,943 227,053 805,627 685,563
Interest on nontaxable securities 4,661 8,026 17,897 24,087
Interest on Federal funds sold 36,529 121,651 126,125 181,189
------------------- ------------------- ------------------- -------------------
2,606,452 2,405,020 7,424,206 7,158,051
------------------- ------------------- ------------------- -------------------
Interest expense
Interest on deposits 1,125,725 1,117,285 3,259,502 3,211,128
Interest on Federal funds purchased
and securities sold under
agreements to repurchase 6,018 - 13,235 23,124
Interest on note payable - 35,069 24,407 105,155
Interest on debentures payable 1,670 2,311 5,674 7,157
------------------- ------------------- ------------------- -------------------
1,133,413 1,154,665 3,302,818 3,346,564
------------------- ------------------- ------------------- -------------------
Net interest income 1,473,039 1,250,355 4,121,388 3,811,487
Provision for loan losses 40,000 15,000 115,000 75,000
------------------- ------------------- ------------------- -------------------
Net interest income after
provision for loan losses 1,433,039 1,235,355 4,006,388 3,736,487
------------------- ------------------- ------------------- -------------------
Other income
Service charges on deposit accounts 128,088 131,066 397,335 381,285
Security transactions, net - - 14,663 (870)
Gain on sale of mortgage loans 99,460 179,632 409,766 422,765
Gain on sale of other loans - 112,492 - 112,492
Other 28,730 53,388 159,771 160,524
------------------- ------------------- ------------------- -------------------
256,278 476,578 981,535 1,076,196
------------------- ------------------- ------------------- -------------------
Other expense
Salaries and employee benefits 519,399 553,047 1,559,435 1,639,815
Equipment expense 66,718 57,493 202,701 176,822
Occupancy expense 85,482 74,693 239,810 206,274
Goodwill amortization 46,157 46,157 138,471 138,471
Other operating expenses 328,737 359,396 1,005,687 1,087,732
------------------- ------------------- ------------------- -------------------
1,046,493 1,090,786 3,146,104 3,249,114
------------------- ------------------- ------------------- -------------------
Income before income taxes 642,824 621,147 1,841,819 1,563,569
Applicable income taxes 253,107 224,265 709,372 558,664
------------------- ------------------- ------------------- -------------------
Net income $ 389,717 $ 396,882 $ 1,132,447 $ 1,004,905
=================== =================== =================== ===================
Per share of common stock
Net income $ 0.61 $ 0.63 $ 1.77 $ 1.54
=================== =================== =================== ===================
Dividends $ - $ - $ - $ -
=================== =================== =================== ===================
</TABLE>
See Note to Consolidated Financial Statements.
4
<PAGE>
THE BANK HOLDING COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(Unaudited)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
1996 1995
---------------------- ----------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 1,132,447 $ 1,004,905
---------------------- ----------------------
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 336,477 303,615
Provision for loan losses 115,000 75,000
(Gain) loss on sales of securities available for sale (14,663) 870
(Increase) decrease in mortgage loans available
for sale (277,800) 231,704
Gain on sale of loans other than mortgage loans - (112,492)
Loss on sales of other real estate 5,526 11,440
Increase (decrease) in taxes payable 94,978 (14,551)
(Increase) decrease in interest receivable (236,321) 11,398
Increase (decrease) in interest payable 182,931 (325,393)
Other assets and liabilities, net 154,457 3,079
---------------------- ----------------------
Total adjustments 360,585 184,670
---------------------- ----------------------
Net cash provided by operating activities 1,493,032 1,189,575
---------------------- ----------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of securities available for sale (6,730,078) -
Proceeds from sale of securities available for sale 998,125 499,063
Proceeds from maturities of securities available for sale 4,147,258 698,910
Increase in Federal funds sold, net (600,000) (5,805,000)
Proceeds from sale of loans other than mortgage loans - 1,892,047
(Increase) decrease in loans, net (3,633,728) 3,066,671
Proceeds from sales of other real estate 171,820 827,485
Purchase of premises and equipment (574,697) (318,436)
Purchase of Federal Home Loan Bank stock - (148,200)
---------------------- ----------------------
Net cash provided by (used in) investing activities (6,221,300) 712,540
---------------------- ----------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in deposits, net 5,058,136 1,942,621
Decrease in Federal funds purchased and securities
sold under agreements to repurchase - (3,010,000)
Cash dividends paid on common and preferred stock - (186,849)
Repayment of note payable (500,000) -
---------------------- ----------------------
Net cash provided by (used in) financing activities 4,558,136 (1,254,228)
---------------------- ----------------------
</TABLE>
5
<PAGE>
THE BANK HOLDING COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(Unaudited)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
1996 1995
--------------------- --------------------
<S> <C> <C>
Net increase (decrease) in cash and due from banks $ (170,132) $ 647,887
Cash and due from banks at beginning of period 3,964,825 3,391,362
--------------------- --------------------
Cash and due from banks at end of period $ 3,794,693 $ 4,039,249
===================== ====================
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION
Cash paid during the period for:
Interest $ 3,119,887 $ 3,671,957
Income taxes 614,394 573,215
SUPPLEMENTAL DISCLOSURES OF NONCASH
INVESTING ACTIVITIES
Real estate acquired through foreclosure $ 137,696 $ 523,059
===================== ====================
Unrealized (gains) losses on securities available
for sale $ 149,620 $ (349,954)
===================== ====================
</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 nine month periods ended
September 30, 1996 are not necessarily indicative of the results to be
expected for the full year.
NOTE 2. EARNINGS PER SHARE
Earnings per share are calculated on the basis of the weighted average
number of shares outstanding. Earnings used in the calculation are
reduced by dividends payable to preferred stockholders of $48,924 and
$146,772 for the three and nine month periods ended September 30, 1996
and 1995, respectively.
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 September 30, 1996, the liquidity ratios of both banks, as determined
under guidelines established by regulatory authorities, were satisfactory.
At September 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 Company County Requirement
--------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Leverage capital ratio 6.96 % 8.15 % 10.79 % 4.00 %
Risk-based capital ratios:
Core capital 9.19 11.43 13.26 4.00
Total capital 10.21 12.56 14.16 8.00
</TABLE>
8
<PAGE>
Financial Condition
Following is a summary of the Company's balance sheets for the periods
indicated:
<TABLE>
<CAPTION>
Increase (Decrease)
September 30, December 31, ---------------------
1996 1995 Amount Percent
------------- ------------ -------- ---------
(Dollars in Thousands)
----------------------------------------------------
<S> <C> <C> <C> <C>
Cash and due from banks $ 3,795 $ 3,965 $ (170) (4.29)%
Securities 20,454 19,004 1,450 7.63
Federal funds sold 2,990 2,390 600 25.10
Loans 78,745 75,086 3,659 4.87
Premises and equipment 3,713 3,336 377 11.30
Goodwill 2,415 2,554 (139) 5.44
Other assets 2,354 2,193 161 7.34
------------- ------------ --------
$ 114,466 $ 108,528 $ 5,938 5.47
============= ============ ========
Deposits $ 100,200 $ 95,142 $ 5,058 5.32%
Other borrowings 92 592 (500) (84.46)
Other liabilities 1,909 1,419 490 34.53
Preferred stock 2,446 2,446 - -
Common stockholders' equity $ 9,819 8,929 890 9.97
------------- ------------ -------
$ 114,466 $ 108,528 $ 5,938 5.47
</TABLE>
As indicated in the above table, the Company's total assets during 1996 have
grown at a rate of 5.47%. Deposit growth during the second and third quarters of
1996 were responsible for this growth. The deposit growth continues to be
invested primarily in higher yielding loans. The Company has also fully repaid
the remaining $500,000 balance due on the note payable incurred during the
acquisition of Henry in October of 1994.
9
<PAGE>
Results of Operations For The Three Months Ended September 30, 1996 and 1995 and
For The Nine Months Ended September 30, 1996 and 1995
Following is a summary of the Company's operations for the periods indicated.
<TABLE>
<CAPTION>
Three Months Ended
September 30, Increase (Decrease)
--------------------- ---------------------
1996 1995 Amount Percent
--------- --------- ---------- ----------
(Dollars in Thousands)
----------------------------------------------
<S> <C> <C> <C> <C>
Interest income $ 2,606 $ 2,405 $ 201 8.36%
Interest expense 1,133 1,155 (22) (1.90)
Net interest income 1,473 1,250 233 17.84
Provision for loan losses 40 15 25 166.67
Other income 256 477 (221) (46.33)
Other expense 1,046 1,091 (45) (4.12)
Pretax income 643 621 22 3.54
Income taxes 253 224 29 12.95
Net income 390 397 (7) (1.76)
<CAPTION>
Three Months Ended
September 30, Increase (Decrease)
--------------------- ---------------------
1996 1995 Amount Percent
--------- --------- ---------- ----------
(Dollars in Thousands)
----------------------------------------------
<S> <C> <C> <C> <C>
Interest income $ 7,424 $ 7,158 $ 266 3.72%
Interest expense 3,302 3,347 (45) (1.34)
Net interest income 4,122 3,811 311 8.16
Provision for loan losses 115 75 40 53.33
Other income 981 1,076 (95) (8.83)
Other expense 3,146 3,248 (102) (3.14)
Pretax income 1,842 1,564 278 17.77
Income taxes 710 559 151 27.01
Net income 1,132 1,005 127 12.64
</TABLE>
As indicated in the above tables, the Company's net interest income, after being
relatively flat during the first six months of the year, increased by $223,000
and $311,000 for the third quarter and first none months of 1996, as compared to
the same periods in 1995. The Company's net interest margin increased during the
first nine months of 1996 to 5.61% from 5.21% for the previous year.
10
<PAGE>
The provision for loan losses has increased by $25,000 and $40,000 during the
third quarter and first nine 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 September 30, 1995 and increased net
charge-offs incurred of $124,000 for the first nine months of 1996, 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 1.08% at September 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
September 30, 1996 and 1995 is as follows:
<TABLE>
<CAPTION>
September 30,
-----------------------
1996 1995
-------- --------
(Dollars in Thousands)
-----------------------
<S> <C> <C>
Nonaccrual loans $ 47 $ 6
Loans contractually past due ninety days or more as
to interest or principal payments and still accruing 163 25
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 3 7
Interest income that was recorded on nonaccrual and
restructured loans 2 -
</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.
<PAGE>
Information regarding certain loan and allowance for loan loss data through
September 30, 1996 and 1995 is as follows:
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
--------------------------
1996 1995
---------- ----------
(Dollars in Thousands)
--------------------------
<S> <C> <C>
Average amount of loans losses outstanding $ 76,200 $ 74,847
========== ==========
Balance of allowance for loan at beginning of period $ 868 $ 817
========== ==========
Loans charged off
Commercial and financial $ - $ 8
Real estate mortgage 101 22
Instalment 51 39
---------- ----------
152 69
---------- ----------
Loans recovered
Commercial and financial - 5
Real estate mortgage 16 28
Instalment 12 10
---------- ----------
28 43
---------- ----------
Net charge-offs 124 26
---------- ----------
Addition to allowance charged to operating expenses
during period 115 75
---------- ----------
Balance of allowance for loan losses at end of period $ 859 $ 866
========== ==========
Ratio of net loans charged off during the period to
average loans outstanding .16 .03
========== ==========
</TABLE>
Other income has decreased by $221,000 and $95,000 during the third quarter and
the first nine months of 1996 as compared to the same periods in 1995. The
decreases during the third quarter are due to gains recognized in 1995 on sales
of loans other than mortgage of $112,000 and reduced gains on sales of mortgage
loans of $80,000. The overall decrease is due primarily to the aforementioned
$112,000 gain on sales of loans other than mortgage.
Other operating expenses have decreased by $44,000 and $103,000 during the third
quarter and the first nine months of 1996 as compared to the same periods in
1995. The decreases in other operating expenses are due primarily to increases
in salaries and employee benefits of $33,000 and $80,000, respectively.
12
<PAGE>
The Company's provision for income taxes increased by $29,000 and $151,000
during the third quarter and first nine 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
September 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:
---------------------------------
Charles B. Blackmon, President
(Principal Executive Principal
Financial and Accounting
Officer)
DATE:
------------------------------
15
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 3,794,693
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 2,990,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 20,454,053
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 77,933,802
<ALLOWANCE> 859,424
<TOTAL-ASSETS> 114,465,584
<DEPOSITS> 100,199,797
<SHORT-TERM> 0
<LIABILITIES-OTHER> 1,908,974
<LONG-TERM> 91,540
2,446,200
0
<COMMON> 2,782,625
<OTHER-SE> 7,036,448
<TOTAL-LIABILITIES-AND-EQUITY> 114,465,584
<INTEREST-LOAN> 6,474,557
<INTEREST-INVEST> 823,524
<INTEREST-OTHER> 126,125
<INTEREST-TOTAL> 7,424,206
<INTEREST-DEPOSIT> 3,259,502
<INTEREST-EXPENSE> 43,316
<INTEREST-INCOME-NET> 4,121,388
<LOAN-LOSSES> 115,000
<SECURITIES-GAINS> 14,663
<EXPENSE-OTHER> 3,146,104
<INCOME-PRETAX> 1,841,819
<INCOME-PRE-EXTRAORDINARY> 1,132,447
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,132,447
<EPS-PRIMARY> 1.77
<EPS-DILUTED> 0
<YIELD-ACTUAL> 5.61
<LOANS-NON> 47,000
<LOANS-PAST> 163,000
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 868,000
<CHARGE-OFFS> 152,000
<RECOVERIES> 28,000
<ALLOWANCE-CLOSE> 859,000
<ALLOWANCE-DOMESTIC> 859,000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
