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Previous: KAYE GROUP INC, 10-Q, 1997-05-15 |
Next: SECURITIES MANAGEMENT & RESEARCH INC/, 13F-E, 1997-05-15 |
<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 March 31, 1997
--------------
[ ] 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) 229-2265
--------------------------------
(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
PROCEEDING 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 May 7, 1997: 556,525
Transitional Small Business Disclosure Format (Check One) Yes No X
----- -----
<PAGE>
THE BANK HOLDING COMPANY
<TABLE>
<CAPTION>
INDEX
-----
Page No.
--------
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1 - Financial Statements
Consolidated Balance Sheet - March 31, 1997 3
Consolidated Statements of Income - Three
Months Ended March 31, 1997 and 1996 4
Consolidated Statements of Cash Flows - Three
Months Ended March 31, 1997 and 1996 5 and 6
Notes to Consolidated Financial Statements 7
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
PART II. OTHER INFORMATION
Item 4 - Submission of Matters to a Vote of Security Holders 13
Item 6 - Exhibits and Reports on Form 8-K 15
Signatures 16
</TABLE>
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
THE BANK HOLDING COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
MARCH 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
Assets
------
<S> <C>
Cash and due from banks $ 4,007,069
Securities available-for-sale, at fair value 20,649,485
Federal funds sold 3,360,000
Mortgage loans available-for-sale 658,227
Loans 85,527,573
Less allowance for loan losses 883,560
-------------
Loans, net 83,644,013
-------------
Premises and equipment 3,733,963
Goodwill 2,323,238
Other assets 2,046,948
-------------
$ 120,422,943
=============
<CAPTION>
Liabilities, Preferred Stock and Common Stockholders' Equity
------------------------------------------------------------
<S> <C>
Deposits
Noninterest-bearing demand $ 14,484,113
Interest-bearing demand 16,600,041
Savings 4,801,353
Time, $100,000 and over 17,155,858
Other time 52,480,478
-------------
Total deposits 105,521,843
Debentures payable 76,924
Other liabilities 2,047,499
-------------
Total liabilities 107,646,266
-------------
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 3,270,072
Unrealized losses on securities available-for-sale, net of taxes (214,081)
-------------
Total common stockholders' equity 10,330,477
-------------
$ 120,422,943
=============
</TABLE>
See Notes to Consolidated Financial Statements.
3
<PAGE>
THE BANK HOLDING COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
------------ ------------
<S> <C> <C>
Interest income
Loans $ 2,271,585 $ 2,103,144
Taxable securities 315,777 227,641
Nontaxable securities 2,649 6,882
Federal funds sold 60,504 59,833
------------ ------------
Total interest income 2,650,515 2,397,500
------------ ------------
Interest expense
Deposits 1,196,854 1,079,945
Note payable - 10,759
Debentures payable 1,600 1,822
------------ ------------
Total interest expense 1,198,454 1,092,526
------------ ------------
Net interest income 1,452,061 1,304,974
Provision for loan losses 20,000 15,000
------------ ------------
Net interest income after provision for loan losses 1,432,061 1,289,974
------------ ------------
Other income
Service charges on deposit accounts 131,900 126,774
Gain on sale of mortgage loans 76,318 159,749
Other operating income 44,047 73,415
------------ ------------
252,265 359,938
------------ ------------
Other expenses
Salaries and employee benefits 511,409 555,044
Equipment expenses 89,433 66,848
Occupancy expenses 87,676 74,356
Goodwill amortization 46,157 46,157
Other operating expenses 376,568 325,171
------------ ------------
1,111,243 1,067,576
------------ ------------
Income before income taxes 573,083 582,336
Income tax expense 225,901 229,250
------------ ------------
Net income $ 347,182 $ 353,086
============ ============
Net income per share of common stock $ 0.54 $ 0.55
============ ============
</TABLE>
See Notes to Consolidated Financial Statements
4
<PAGE>
THE BANK HOLDING COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
-------------- --------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 347,182 $ 353,086
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 116,373 108,871
Provision for loan losses 20,000 15,000
(Increase) decrease in mortgage loans available-for-sale 1,483,281 (572,493)
Loss on sales of other real estate - 5,531
Gain on sale of premises and equipment (9,338) -
Increase in interest receivable (48,993) (2,035)
Increase in interest payable 210,996 17,764
Other operating activities 234,815 172,029
-------------- --------------
Net cash provided by operating activities 2,354,316 97,753
-------------- --------------
INVESTING ACTIVITIES
Purchases of securities available-for-sale (3,487,875) (990,000)
Proceeds from maturities of securities available-for-sale 4,182,944 3,407,147
Increase in Federal funds sold, net (140,000) (2,850,000)
(Increase) decrease in loans, net (3,607,505) 79,118
Proceeds from sales of other real estate - 171,814
Purchase of premises and equipment (8,212) (315,873)
Proceeds from sale of premises and equipment 134,511 -
-------------- --------------
Net cash used in investing activities (2,926,137) (497,794)
-------------- --------------
FINANCING ACTIVITIES
Increase (decrease) in deposits, net 1,079,786 (253,087)
-------------- --------------
Net cash provided by (used in) financing activities 1,079,786 (253,087)
-------------- --------------
Net increase (decrease) in cash due from banks 507,965 (653,128)
Cash and due from banks at beginning of period 3,499,104 3,964,825
-------------- --------------
Cash and due from banks at end of period $ 4,007,069 $ 3,311,697
============== ==============
</TABLE>
5
<PAGE>
THE BANK HOLDING COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(Unaudited)
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
CASH FLOW INFORMATION
Cash paid during the period for:
Interest $ 987,458 $ 1,074,762
Income taxes $ 24,533 $ 54,894
NONCASH INVESTING AND FINANCING ACTIVITIES
Real estate acquired through foreclosure $ 169,691 $ 87,696
=========== ===========
Unrealized losses on securities available-for-sale $ 50,144 $ 78,410
=========== ===========
</TABLE>
See Notes to Consolidated Financial Statements.
6
<PAGE>
THE BANK HOLDING COMPANY AND SUBSIDIARIES
NOTES 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 month period ended March 31,
1997 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 for
the three month periods ended March 31, 1997 and 1996.
NOTE 3. CURRENT ACCOUNTING DEVELOPMENTS
The Financial Accounting Standards Board has issued SFAS No. 128,
"Earnings Per Share". SFAS No. 128 establishes standards for computing
and presenting earnings per share (EPS) and applies to entities with
publicly held common stock or potential common stock. This Statement
simplifies the standards for computing earnings per share previously
found in APB Opinion No. 15, Earnings per Share, and makes them
comparable to international EPS standards. It replaces the presentation
of primary EPS with a presentation of basic EPS. It also requires dual
presentation of basic and diluted EPS on the face of the statement of
income for all entities with complex capital structures and requires a
reconciliation of the numerator and denominator of the basic EPS
computation to the numerator and denominator of the diluted EPS
computation. The effective date of this statement is for financial
statements issued for periods ending after December 15, 1997. The
adoption of this Statement is not expected to have a material effect on
earnings per share.
7
<PAGE>
THE BANK HOLDING COMPANY AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
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 March 31, 1997, the liquidity ratios of both Banks, as determined
under guidelines established by regulatory authorities, were
satisfactory.
At March 31, 1997, 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 of Bank of
Holding Spalding Henry Regulatory
Company County County Requirement
------------ ------------- ----------- -------------
<S> <C> <C> <C> <C>
Leverage capital ratios 7.08% 8.74% 9.69% 4.00%
Risk-based capital ratios:
Core capital 9.25 12.02 12.00 4.00
Total capital 10.24 13.24 12.77 8.00
</TABLE>
8
<PAGE>
Financial Condition
Following is a summary of the Company's balance sheets for the periods
indicated:
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996 Increase (Decrease)
--------------- ----------------- ---------------------------------
(Dollars in Thousands) Amount Percent
------------------------------------ --------------- ---------------
<S> <C> <C> <C> <C>
Cash and due from banks $ 4,007 $ 3,499 $ 508 14.52%
Securities 20,650 21,395 (745) (3.48)
Federal funds sold 3,360 3,220 140 4.35
Loans 84,302 82,368 1,934 2.35
Premises and equipment 3,734 3,921 (187) (4.77)
Goodwill 2,323 2,369 (46) (1.94)
Other assets 2,047 1,796 251 13.98
--------------- ----------------- ---------------
$ 120,423 $ 118,568 $ 1,855 1.56
=============== ================= ===============
Deposits $ 105,522 $ 104,442 $ 1,080 1.03%
Other borrowings 77 77 - -
Other liabilities 2,048 1,589 459 28.89
Preferred stock 2,446 2,446 - -
Common stockholders' equity 10,330 10,014 316 3.16
--------------- ----------------- ---------------
$ 120,423 $ 118,568 $ 1,855 1.56
=============== ================= ===============
</TABLE>
As indicated in the above table, the Company's total assets grew only slightly
at a rate of 1.56%. Modest deposit growth of 1.03% was the primary source of
funds for investing in loan growth. These increases in loans and deposits
represented the only significant monetary changes in the balance sheet.
9
<PAGE>
Results of Operations For The Three Months Ended March 31, 1997 and 1996
Following is a summary of the Company's operations for the periods indicated.
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------------------------
1997 1996 Increase (Decrease)
------------------ ------------------ ------------------------------------
(Dollars in Thousands) Amount Percent
--------------------------------------- ---------------- -----------------
<S> <C> <C> <C> <C>
Interest income $ 2,650 $ 2,398 $ 252 10.51%
Interest expense 1,198 1,093 105 9.61
Net interest income 1,452 1,305 147 11.26
Provision for loan losses 20 15 5 33.33
Other income 252 360 (108) (30.00)
Other expense 1,111 1,068 43 4.03
Pretax income 573 582 (9) (1.55)
Income taxes 226 229 (3) (1.31)
Net income 347 353 (6) (1.70)
</TABLE>
As indicated in the above table, the Company's net interest income has increased
by $147,000 during the first quarter of 1997 as compared to the same period in
1996. The Company's net interest margin increased to 5.43% during the first
quarter of 1997 as compared to 5.38% for the previous year.
The provision for loan losses increased by $5,000 during the first quarter of
1997 as compared to the same period in 1997. This increase is due to the net
loan growth and minimal charge-offs during the first quarter of 1996. The
Company's reserve for loan losses amounted to 1.05% at March 31, 1997 as
compared to 1.09% at December 31, 1996. 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 repay and the underlying collateral value.
10
<PAGE>
Information with respect to nonaccrual, past due and restructured loans at March
31, 1997 and 1996 is as follows:
<TABLE>
<CAPTION>
March 31,
----------------------------------
1997 1996
---------------- ----------------
(Dollars in Thousands)
----------------------------------
<S> <C> <C>
Nonaccrual loans $ 11 $ 118
Loans contractually past due ninety days or more as to interest
or principal payments and still accruing 114 71
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 1 7
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 loans and allowance for loan loss data through
March 31, 1997 and 1996 is as follows:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------------------
1997 1996
---------------- ----------------
(Dollars in Thousands)
----------------------------------
<S> <C> <C>
Average amount of loans outstanding $ 81,595 $ 75,736
================ ================
Balance of allowance for loan losses at beginning of period $ 882 $ 868
================ ================
Loans charged off
Commercial and financial $ - $ -
Real estate mortgage - 15
Instalment 22 12
---------------- ----------------
22 27
---------------- ----------------
Loans recovered
Commercial and financial - -
Real estate mortgage - 16
Instalment 3 2
---------------- ----------------
3 18
---------------- ----------------
Net charge-offs 19 9
---------------- ----------------
Additions to allowance charged to operating expense during period 20 15
---------------- ----------------
Balance of allowance for loan losses at end of period $ 883 $ 874
================ ================
Ratio of net loans charged off during the period to
average loans outstanding .02% .01%
================ ================
</TABLE>
Other income has decreased during the first quarter of 1997 as compared to the
same period in 1996 by $108,000 due primarily to a decrease in gains on sales of
mortgage loans of $83,000.
Other expenses increased during the first quarter of 1997 as compared to the
same period in 1996 by $43,000. The most significant changes occurred in
salaries and employee benefits and other operating expenses. Salaries and
employee benefits decreased by $44,000 due primarily to a staff reduction during
1996, while other operating expenses increased by $51,000. The Company was able
to reduce staff primarily as a result of a consolidation of certain operational
duties.
The Company's provision for income taxes decreased by $3,000 during the first
quarter of 1997 as compared to the same period in 1996 due to slightly lower
pre-tax income.
The Company is not aware of any known trends, events or uncertainties, other
than the effect of events as described above, 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.
12
<PAGE>
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The annual meeting of the stockholders of the Company was
held on March 19, 1997.
(b) The following directors were elected at the meeting to serve
terms through the year ending 1997:
Charles B. Blackmon
Raymond E. Dender
Crisp B. Flynt
Harvey Goldstein
Arch W. McGarity
G. Niles Murray, III
Philip J. Mouchet
Robert H. Smalley, Jr.
James E. Sutherland, Sr.
Frank Touchstone, Jr.
Eugene M. Weatherhup, Sr.
Zack B. Hinton, Sr.
Joseph E. Gore
(c) Mauldin & Jenkins, CPA's, were approved as the Company's
Certified Public Accountants.
13
<PAGE>
The shares represented at the meeting (374,613.88 shares or 67.31%) voted as
follows:
<TABLE>
<CAPTION>
Item (b) Item (c)
# of # of
Shares Shares
--------------- ---------------
<S> <C> <C>
For 374,363.88 374,613.88
Against 250.00 -
--------------- ---------------
Total 374,613.88 374,613.88
=============== ===============
</TABLE>
14
<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
March 31, 1997
15
<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: May 14, 1997
------------------------------------------
16
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 4,007,069
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 3,360,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 20,649,485
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 84,527,573
<ALLOWANCE> 883,560
<TOTAL-ASSETS> 120,422,943
<DEPOSITS> 105,521,843
<SHORT-TERM> 0
<LIABILITIES-OTHER> 2,047,499
<LONG-TERM> 76,924
2,446,200
0
<COMMON> 2,782,625
<OTHER-SE> 7,547,852
<TOTAL-LIABILITIES-AND-EQUITY> 120,422,943
<INTEREST-LOAN> 2,271,585
<INTEREST-INVEST> 318,426
<INTEREST-OTHER> 60,504
<INTEREST-TOTAL> 2,650,515
<INTEREST-DEPOSIT> 1,196,854
<INTEREST-EXPENSE> 1,198,454
<INTEREST-INCOME-NET> 1,452,061
<LOAN-LOSSES> 20,000
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 1,111,243
<INCOME-PRETAX> 573,803
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 347,182
<EPS-PRIMARY> .54
<EPS-DILUTED> 0
<YIELD-ACTUAL> 5.43
<LOANS-NON> 11,000
<LOANS-PAST> 114,000
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 882,000
<CHARGE-OFFS> 22,000
<RECOVERIES> 3,000
<ALLOWANCE-CLOSE> 883,000
<ALLOWANCE-DOMESTIC> 883,000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
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