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 Period Ended March 31, 1996
or
[ ] Transition Report Under Section 13 or 15(d ) of the
Securities Exchange Act of 1934
----------------
Commission file number 0-26174
FIRST BANKSHARES, INC.
(Exact name of registrant as specified in its charter)
Georgia 58-2094754
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2833 Main St.
East Point, Georgia 30344
(Address of principal executive offices) (Zip Code)
(404) 768-9305
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter periods 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
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13, or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by the court. Yes X No
Applicable Only to Corporate Issuers
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date:
Common Stock, $1.00 Par Value 1,048,840 shares as of May 1, 1996.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
FIRST BANKSHARES, INC. AND SUBSIDIARY
Condensed Consolidated Balance Sheets
March 31, December 31,
1996 1995
----------- -----------
(Unaudited) (Note)
ASSETS
Cash and due from banks ................... $ 1,494,766 $ 3,403,926
Investment securities ..................... 22,696,661 23,966,501
Loans, net ................................ 64,550,277 58,090,869
Premises and equipment, net ............... 1,817,861 1,828,648
Real estate acquired through foreclosure, net 756,067 808,090
Cash value of life insurance .............. 2,288,941 2,266,781
Other assets .............................. 1,813,942 1,886,208
----------- -----------
$95,418,515 $92,251,023
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits ............................... $79,498,513 $78,733,938
Federal funds purchased ................ 1,050,000 2,360,000
Note payable to FHLB ................... 5,170,000 2,000,000
Other liabilities ...................... 1,573,455 1,249,562
----------- -----------
Total Liabilities ...................... 87,291,968 84,343,500
Stockholders' Equity:
Common stock, $1.00 par value;
10,00,000 shares authorized; 1,048,840
shares issued and outstanding ........ 1,048,840 1,048,840
Additional paid-in capital ............. 4,198,435 4,198,435
Retained earnings ...................... 2,721,405 2,397,106
Net unrealized gains (losses)
on securities........................ 157,867 263,142
----------- -----------
Total Stockholders' Equity ............. 8,126,547 7,907,523
----------- -----------
$95,418,515 $92,251,023
=========== ===========
Note: The balance sheet at December 31, 1995 has been derived from the audited
financial statements at that date but does not include all the information and
footnotes required by generally accepted accounting principles for complete
financial statements.
The accompanying note is an integral part
of the condensed consolidated financial statements.
<PAGE>
FIRST BANKSHARES, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended
March 31,
-----------------------
1996 1995
---------- ----------
Interest income:
Loans, including fees ............................ $1,661,830 $1,083,648
Investment securities ............................ 345,633 210,604
Other ............................................ 16,558 60,013
---------- ----------
Total interest income ............................ 2,024,021 1,354,265
Interest expense:
Deposits ......................................... 677,638 515,530
Federal funds purchased and note payable ......... 59,543 --
---------- ----------
Total interest expense ........................... 737,181 515,530
---------- ----------
Net interest income .............................. 1,286,840 838,735
Provision for possible loan losses .................. -- 10,000
---------- ----------
Net interest income after provision
for possible loan losses ....................... 1,286,840 828,735
Noninterest income .................................. 314,004 325,850
Noninterest expenses:
Salaries and employee benefits ................... 555,024 353,341
Occupancy and equipment .......................... 95,200 57,741
Other operating .................................. 327,838 391,108
---------- ----------
Total noninterest expenses ....................... 978,062 802,190
---------- ----------
Income before income taxes ....................... 622,782 352,395
Income taxes ........................................ 225,065 108,124
---------- ----------
Net income ....................................... $ 397,717 $ 244,271
========== ==========
Net income per share:
Primary ........................................ $ .38 $ .23
========== ==========
Fully diluted .................................. $ .37 $ .23
========== ==========
Weighted average common shares:
Primary ........................................ 1,048,840 1,048,840
Fully diluted .................................. 1,081,893 1,048,840
The accompanying note is an integral part
of the condensed consolidated financial statements.
<PAGE>
FIRST BANKSHARES, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Three Months Ended March 31,
--------------------------
1996 1995
----------- -----------
Cash flows provided by
operating activities ........................... $ 842,802 $ 301,573
Cash flows (used in) provided by
investing activities ........................... (5,303,119) 1,094,372
Cash flows provided by (used in)
financing activities ........................... 2,551,157 (323,221)
----------- -----------
Net increase (decrease) in
cash and cash equivalents ................. (1,909,160) 1,072,724
Cash and cash equivalents
at beginning of period ......................... 3,403,926 3,367,514
----------- -----------
Cash and cash equivalents
at end of period ............................... $ 1,494,766 $ 4,440,238
=========== ===========
The accompanying note is an integral part
of the condensed consolidated financial statements.
<PAGE>
FIRST BANKSHARES, INC. AND SUBSIDIARY
Notes to Condensed Consolidated Financial Statements
March 31, 1996
(Unaudited)
BASIS OF PRESENTATION The accompanying unaudited condensed consolidated
financial statements of First Bankshares, Inc. and Subsidiary (the Company) have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-QSB and
Regulation S-B. Accordingly, they do not include all the information and
footnotes required by generally accepted accounting principles for complete
consolidated financial statements. In the opinion of management, all adjustments
(consisting of normal recurring items) considered necessary for a fair
presentation have been included. Operating results for the three month period
ended March 31, 1996 are not necessarily indicative of the results that may be
expected for the year ended December 31, 1996. For further information, refer to
the audited consolidated financial statements and notes thereto included in the
Company's Form 10-KSB for the year ended December 31, 1995.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations
Net interest income increased to $1,286,840 for the quarter ended March 31, 1996
from $838,735 for the quarter ended March 31, 1995. The increase was primarily
due to increases in loans and other interest bearing assets and the relative
market interest rates and fees which exceed the related cost of funds for
investing in such assets. Total interest income increased to $2,024,021 for the
quarter ended March 31, 1996 from $1,354,265 for the quarter ended March 31,
1995. The increase in interest income was primarily the result of increases in
the net loan portfolio of 55% from $41,593,564 to $64,550,277 and in investment
securities of 38% from $16,391,188 to $22,696,661 from March 31, 1995 to March
31, 1996. Total interest expense increased to $737,181 for the quarter ended
March 31, 1996 from $515,530 for the quarter ended March 31, 1995. The increase
in interest expense was primarily due to increases in interest bearing deposits
of 12% from $52,057,150 to $58,312,939 and in other borrowings of 100% from no
borrowings to $6,220,000 from March 31, 1995 to March 31, 1996.
Additions to the allowance for possible loans losses ($1,029,517 and $1,003,448
at March 31 1996 and 1995, respectively, and $1,026,830 at December 31, 1995)
are made periodically to maintain the allowance at an appropriate level based on
management's analysis of potential risk in the loan portfolio. The ratio of the
allowance for possible loan losses to loans of 1.56% at March 31, 1996 decreased
from 1.73% at December 31, 1995 as a result of the increase in mortgage loans in
process of settlement. The amount of the provision for possible loan losses is
determined by an evaluation of the amount of loans outstanding, the amount of
non-performing loans, historical loan loss experience, delinquency trends, the
amount of losses actually charged to the allowance in a given period, and an
assessment of present and anticipated economic conditions that might possibly
impact the Company's market. Management determined that no additional provision
was necessary for the allowance for the quarter ended March 31, 1996 compared to
a provision of $10,000 for the quarter ended March 31, 1995. However,
management's judgment is based upon a number of assumptions about future events,
which are believed to be reasonable, but which may or may not prove valid. Thus,
there can be no assurance that charge-offs in future periods will not exceed the
allowance for possible loan losses, that additional increases in the allowance
will not be required, or that any particular level of allowance for possible
loan losses will be maintained.
Noninterest income was $314,004 for the quarter ended March 31, 1996 compared to
$325,850 for the quarter ended March 31, 1995. Fees and other income related to
deposit accounts increased slightly, however, such increase was offset by a
reduction in income from non-recurring life insurance benefits.
Noninterest expense increased to $978,062 for the quarter ended March 31, 1996
from $802,190 for the quarter ended March 31, 1995. The increases were primarily
related to an increase in the number of full-time employees, particularly
related to the increase in the mortgage loan operations and normal salary
increases.
The Company's net income was $397,717 ($.37 per share fully diluted) for the
quarter ended March 31, 1996 compared to net income of $244,271 ($.23 per share
fully diluted) for the quarter ended March 31, 1995. The return on average
assets and equity increased to 1.66% from 1.5% and to 19.7% from 14.4%,
respectively, for the quarter ended March 31, 1996 and 1995. The increases in
net income and returns reflect the increase in net interest income, the
reduction in the provision for possible loan losses, and the increase in
noninterest expenses.
Liquidity and Sources of Capital
The Company had cash and cash equivalents of $1,494,766 at March 31, 1996 and
$3,403,926 at December 31, 1995. The decrease reflects the Company's increased
investment in earning assets and the relative stability of the Company's need to
respond to short term demand for funds caused by withdrawals from deposit
accounts and loan funding commitments. The loan to deposit ratio at March 31,
1996 was 79.2% compared to 75.1% at December 31, 1995 and 68.8% at March 31,
1995. The increase in this ratio continues to reflect the Company's strategy of
increasing investments in higher earning loans and related fee opportunities.
Primary sources of liquidity are the scheduled repayments on the Company's loans
and interest on and maturities of its investments. Occasionally, the Company may
sell investment securities in connection with the management of its interest
sensitivity gap. The Company may also utilize its cash and due from banks,
interest-earning deposits in financial institutions, federal funds sold,
borrowings from FHLB and repurchase agreements to meet liquidity requirements as
needed. The Company also has the ability, on a short-term basis, to purchase
federal funds from other financial institutions. Presently, the Company has made
arrangements with commercial banks for short-term unsecured and secured advances
of up to $12,250,000 and with the Federal Home Loan Bank for borrowings up to
$5,170,000. The Company believes that its liquidity will be sufficient to meet
its operating requirements over the near term.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
There are no material pending legal proceedings to which the Company or the Bank
is a party or of which any of their property is subject.
Item 2. Changes in Securities.
(a) Not applicable.
(b) Not applicable.
Item 3. Defaults Upon Senior Securities.
(a) Not applicable.
(b) Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 5. Other Information.
Not applicable.
Item 6. Other Information.
(a) Exhibits.
None.
(b) Reports on Forms 8-K.
None
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FIRST BANKSHARES, INC.
(Registrant)
Date May 6, 1996 /s/ R. Elliott Miller
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R. Elliott Miller
President and Chief Executive Officer
