<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, 1998
----------------------
[_] 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
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(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 8, 1998: 556,525; $5 par value.
Transitional Small Business Disclosure Format (Check One) Yes No X
--- ---
<PAGE>
THE BANK HOLDING COMPANY
- --------------------------------------------------------------------------------
INDEX
-----
Page No.
--------
PART I. FINANCIAL INFORMATION
Item 1 - Financial Statements
Consolidated Balance Sheet - March 31, 1998 3
Consolidated Statements of Income and Comprehensive
Income - Three Months Ended March 31, 1998 and 1997 4
Consolidated Statements of Cash Flows - Three
Months Ended March 31, 1998 and 1997 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 15
Item 6 - Exhibits and Reports on Form 8-K 15
Signatures 16
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
THE BANK HOLDING COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
MARCH 31, 1998
(Unaudited)
Assets
------
Cash and due from banks $ 3,084,037
Securities available-for-sale, at fair value 20,714,381
Federal funds sold 13,310,000
Mortgage loans available-for-sale 3,674,167
Loans 90,362,924
Less allowance for loan losses (1,384,288)
-------------
Loans, net 88,978,636
-------------
Premises and equipment 3,571,845
Goodwill 2,138,609
Other assets 2,372,446
-------------
$ 137,844,121
=============
Liabilities, Preferred Stock and Common Stockholders' Equity
------------------------------------------------------------
Deposits
Noninterest-bearing demand $ 15,977,687
Interest-bearing demand 16,629,050
Savings 5,105,561
Time, $100,000 and over 19,993,713
Other time 63,474,424
-------------
Total deposits 121,180,435
-------------
Securities sold under repurchase agreements 390,000
Debentures payable 61,539
Other liabilities 2,419,764
-------------
Total liabilities 124,051,738
-------------
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 4,147,068
Accumulated other comprehensive loss (75,371)
-------------
Total common stockholders' equity 11,346,183
-------------
$ 137,844,121
=============
See Notes to Consolidated Financial Statements.
3
<PAGE>
THE BANK HOLDING COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(Unaudited)
1998 1997
----------- -----------
Interest income
Loans $ 2,340,743 $ 2,271,585
Taxable securities 341,089 315,777
Nontaxable securities 6,728 2,649
Federal funds sold 139,313 60,504
----------- -----------
Total interest income 2,827,873 2,650,515
----------- -----------
Interest expense
Deposits 1,379,512 1,196,854
Federal funds purchased and securities sold under
repurchase agreements 6,329 -
Debentures payable 1,308 1,600
----------- -----------
Total interest expense 1,387,149 1,198,454
----------- -----------
Net interest income 1,440,724 1,452,061
Provision for loan losses - 20,000
----------- -----------
Net interest income after provision for loan
losses 1,440,724 1,432,061
----------- -----------
Other income
Service charges on deposit accounts 128,994 131,900
Gain on sale of mortgage loans 120,932 76,318
Other operating income 34,369 44,047
----------- -----------
284,295 252,265
----------- -----------
Other expenses
Salaries and employee benefits 508,246 511,409
Equipment and occupancy expenses 153,290 177,109
Goodwill amortization 46,157 46,157
Other operating expenses 364,361 376,568
----------- -----------
1,072,054 1,111,243
----------- -----------
Income before income taxes 652,965 573,083
Income tax expense 264,119 225,901
----------- -----------
Net income 388,846 347,182
----------- -----------
Other comprehensive income, net of tax
Unrealized gains (losses) on securities available-
for-sale arising during period 6,379 (31,089)
----------- -----------
Comprehensive income $ 395,225 $ 316,093
=========== ===========
Earnings per common share (basic and diluted) $ 0.61 $ 0.54
=========== ===========
See Notes to Consolidated Financial Statements.
4
<PAGE>
THE BANK HOLDING COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(Unaudited)
<TABLE>
<CAPTION>
1998 1997
--------------- ----------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 388,846 $ 347,182
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 115,097 116,373
Provision for loan losses - 20,000
(Increase) decrease in mortgage loans available-for-sale (299,128) 1,483,281
Loss on sales of other real estate 19,048 -
Gain on sale of premises and equipment - (9,338)
(Increase) decrease in interest receivable 42,163 (48,993)
Increase in interest payable 210,843 210,996
Other operating activities 240,084 234,815
--------------- ----------------
Net cash provided by operating activities 716,953 2,354,316
--------------- ----------------
INVESTING ACTIVITIES
Purchases of securities available-for-sale - (3,487,875)
Proceeds from maturities of securities available-for-sale 2,514,667 4,182,944
Increase in Federal funds sold, net (7,960,000) (140,000)
Increase in loans, net (28,726) (3,607,505)
Proceeds from sales of other real estate 244,994 -
Purchase of premises and equipment (28,131) (8,212)
Proceeds from sale of premises and equipment - 134,511
--------------- ----------------
Net cash used in investing activities (5,257,196) (2,926,137)
--------------- ----------------
FINANCING ACTIVITIES
Increase in deposits, net 4,210,375 1,079,786
Net decrease in Federal funds purchased and securities
sold under repurchase agreements (854,950) -
--------------- ----------------
Net cash provided by financing activities 3,355,425 1,079,786
--------------- ----------------
Net increase (decrease) in cash and due from banks (1,184,818) 507,965
Cash and due from banks at beginning of period 4,268,855 3,499,104
--------------- ----------------
Cash and due from banks at end of period $ 3,084,037 $ 4,007,069
=============== ================
</TABLE>
5
<PAGE>
THE BANK HOLDING COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(Unaudited)
<TABLE>
<CAPTION>
1998 1997
------------- -------------
<S> <C> <C>
CASH FLOW INFORMATION
Cash paid during the period for:
Interest $ 1,176,306 $ 987,458
Income taxes $ 1,626 $ 24,533
NONCASH INVESTING AND FINANCING ACTIVITIES
Real estate acquired through foreclosure $ 284,076 $ 169,691
============= =============
Unrealized (gains) losses on securities available-for-sale $ (15,212) $ 50,144
============= =============
</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,
1998 are not necessarily indicative of the results to be expected for
the full year.
NOTE 2. EARNINGS PER COMMON SHARE
The following is a reconciliation of net income (the numerator) and
weighted-average shares outstanding (the denominator) used in
determining basic and diluted earnings per common share (EPS):
<TABLE>
<CAPTION>
Three Months Ended March 31, 1998
-------------------------------------------------------
Net Weighted-Average
Income Shares Per share
(Numerator) (Denominator) Amount
--------------- ---------------- -------------
<S> <C> <C> <C>
Net income $ 388,846
Less: preferred stock dividends (48,924)
---------------
Basic and diluted EPS $ 339,922 556,525 $ 0.61
=============== ================ ============
Three Months Ended March 31, 1997
-------------------------------------------------------
Net Weighted-Average
Income Shares Per share
(Numerator) (Denominator) Amount
--------------- ---------------- -------------
<S> <C> <C> <C>
Net income $ 347,182
Less: preferred stock dividends (48,924)
---------------
Basic and diluted EPS $ 298,258 556,525 $ 0.54
=============== ================ ============
</TABLE>
7
<PAGE>
THE BANK HOLDING COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 3. CURRENT ACCOUNTING DEVELOPMENTS
The adoption of the provisions of SFAS No. 125, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities" that became effective on January 1, 1998 did not have a
material effect on the Company's financial statements.
The adoption of SFAS No. 130, "Reporting Comprehensive Income", that
became effective on January 1, 1998 required the Company to report
comprehensive income in the Company's Statements of Income and
Comprehensive Income.
There are no other recent accounting pronouncements that have had, or
are expected to have, a material effect on the Company's financial
statements.
8
<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, 1998, the liquidity ratios of both Banks, as determined
under guidelines established by regulatory authorities, were
satisfactory.
At March 31, 1998, 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 % 9.29 % 8.51 % 4.00 %
Risk-based capital ratios:
Core capital 10.68 13.31 13.39 4.00
Total capital 11.88 14.57 14.55 8.00
</TABLE>
9
<PAGE>
Financial Condition
Following is a summary of the Company's balance sheets for the periods
indicated:
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997 Increase (Decrease)
-------------- ---------------- --------------------------------
(Dollars in Thousands) Amount Percent
----------------------------------- -------------- --------------
<S> <C> <C> <C> <C>
Cash and due from banks $ 3,084 $ 4,269 $ (1,185) (27.76) %
Securities 20,714 23,214 (2,500) (10.77)
Federal funds sold 13,310 5,350 7,960 148.69
Loans 92,653 92,609 44 0.05
Premises and equipment 3,572 3,612 (40) (1.11)
Goodwill 2,139 2,185 (46) (2.11)
Other assets 2,372 2,382 (10) (0.42)
-------------- ---------------- --------------
$ 137,844 $ 133,621 $ 4,223 3.16
============== ================ ==============
Deposits $ 121,180 $ 116,970 $ 4,210 3.60 %
Federal funds purchased and securities sold
under repurchase agreements 390 1,245 (855) (68.67)
Other borrowings 62 62 - -
Other liabilities 2,420 1,898 522 27.50
Preferred stock 2,446 2,446 - -
Common stockholders' equity 11,346 11,000 346 3.15
-------------- ---------------- --------------
$ 137,844 $ 133,621 $ 4,223 3.16
============== ================ ==============
</TABLE>
As indicated in the above table, the Company's total assets during 1998 have
grown at a rate of 3.16%. The increases in deposits and the net decrease in
securities have been temporarily invested in Federal funds sold.
10
<PAGE>
Results of Operations For The Three Months Ended March 31, 1998 and 1997
Following is a summary of the Company's operations for the periods indicated.
<TABLE>
<CAPTION>
Three Months Ended
March 31,
--------------------------------------
1998 1997 Increase (Decrease)
----------------- ----------------- -----------------------------------
(Dollars in Thousands) Amount Percent
-------------------------------------- --------------- ----------------
<S> <C> <C> <C> <C>
Interest income $ 2,828 $ 2,650 $ 178 6.72 %
Interest expense 1,387 1,198 189 15.78
Net interest income 1,441 1,452 (11) (0.76)
Provision for loan losses - 20 (20) (100.00)
Other income 284 252 32 12.70
Other expense 1,072 1,111 (39) (3.51)
Pretax income 653 573 80 13.96
Income taxes 264 226 38 16.81
Net income 389 347 42 12.10
</TABLE>
As indicated in the above table, the Company's net interest income has decreased
by $11,000 during the first quarter of 1998 as compared to the same period in
1997. The Company's net interest margin decreased to 4.79% during the first
quarter of 1998 as compared to 5.43% for the previous year, primarily due to
increased investment in Federal funds sold.
The provision for loan losses decreased by $20,000 during the first quarter of
1998 as compared to the same period in 1997. The Company's reserve for loan
losses amounted to 1.53% at March 31, 1998 as compared to 1.57% at December 31,
1997. 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.
11
<PAGE>
Information with respect to nonaccrual, past due and restructured loans at March
31, 1998 and 1997 is as follows:
<TABLE>
<CAPTION>
March 31,
---------------------------------
1998 1997
--------------- ---------------
(Dollars in Thousands)
---------------------------------
<S> <C> <C>
Nonaccrual loans $ 466 $ 11
Loans contractually past due ninety days or more as to interest
or principal payments and still accruing 56 114
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 13 1
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.
12
<PAGE>
Information regarding certain loans and allowance for loan loss data through
March 31, 1998 and 1997 is as follows:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------------------
1998 1997
--------------- ---------------
(Dollars in Thousands)
---------------------------------
<S> <C> <C>
Average amount of loans outstanding $ 88,490 $ 81,595
=============== ===============
Balance of allowance for loan losses at beginning of period $ 1,424 $ 882
=============== ===============
Loans charged off
Commercial and financial $ 1 $ -
Real estate mortgage 26 -
Instalment 48 22
--------------- ---------------
75 22
--------------- ---------------
Loans recovered
Commercial and financial - -
Real estate mortgage - -
Instalment 35 3
--------------- ---------------
35 3
--------------- ---------------
Net charge-offs 40 19
--------------- ---------------
Additions to allowance charged to operating expense during period - 20
--------------- ---------------
Balance of allowance for loan losses at end of period $ 1,384 $ 883
=============== ===============
Ratio of net loans charged off during the period to
average loans outstanding .05% .02%
=============== ===============
</TABLE>
Other income has increased during the first quarter of 1998 as compared to the
same period in 1997 by $32,000 due primarily to an increase in gains on sales of
mortgage loans of $45,000.
Other operating expenses have decreased by $39,000 for the first quarter of 1998
as compared to the same period in 1997. The decreases in other expenses are due
primarily to decreases in equipment and occupancy expenses of $24,000 and other
operating expenses of $12,000 for the first quarter of 1998 as compared to the
previous year.
The Company's provision for income taxes increased by $38,000 during the first
quarter of 1998 as compared to the same period in 1997 due to higher pre-tax
income.
13
<PAGE>
Capability of Data Processing Software to Accommodate the Year 2000
- -------------------------------------------------------------------
Like many financial institutions, the Company relies upon computers for the
daily conduct of their business and for data processing generally. There is
concern among industry experts that commencing on January 1, 2000, computers
will be unable to "read" the new year and that there may be widespread computer
malfunctions. Management has assessed the electronic systems, programs,
applications, and other electronic components used in operations and believes
that the Company's hardware and software have been programmed to be able to
accurately recognize the year 2000, and that significant additional costs will
not be incurred in connection with the year 2000 issue, although there can be no
assurances in this regard.
Business Combination
- --------------------
The Company entered into an Agreement and Plan of Reorganization with Premier
Bancshares, Inc. (Premier) of Atlanta, Georgia on December 3, 1997. Consummation
of the merger is subject to customary regulatory and stockholder approval.
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.
14
<PAGE>
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
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, 1998
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, 1998
----------------------------------------
16
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 3,084,037
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 13,310,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 20,714,381
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 90,362,924
<ALLOWANCE> (1,384,288)
<TOTAL-ASSETS> 137,844,121
<DEPOSITS> 121,180,435
<SHORT-TERM> 390,000
<LIABILITIES-OTHER> 2,419,764
<LONG-TERM> 61,539
2,446,200
0
<COMMON> 2,782,625
<OTHER-SE> 8,563,558
<TOTAL-LIABILITIES-AND-EQUITY> 137,844,121
<INTEREST-LOAN> 2,340,743
<INTEREST-INVEST> 347,817
<INTEREST-OTHER> 139,313
<INTEREST-TOTAL> 2,827,873
<INTEREST-DEPOSIT> 1,379,512
<INTEREST-EXPENSE> 1,387,149
<INTEREST-INCOME-NET> 1,440,724
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 1,072,054
<INCOME-PRETAX> 652,965
<INCOME-PRE-EXTRAORDINARY> 652,965
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 388,846
<EPS-PRIMARY> .61
<EPS-DILUTED> .61
<YIELD-ACTUAL> 4.79
<LOANS-NON> 466
<LOANS-PAST> 56
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,424
<CHARGE-OFFS> 75
<RECOVERIES> 35
<ALLOWANCE-CLOSE> 1,384
<ALLOWANCE-DOMESTIC> 1,384
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
