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 June 30, 1996
or
[ ] Transition Report Under Section 13 or 15(d ) of the Securities Exchange
Act of 1934 For the Transition Period Ended From _____ to ____
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)
Not applicable
(Former name, address and former fiscal year, if changed since last report)
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 August 1, 1996.
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
FIRST BANKSHARES, INC. AND SUBSIDIARY
Condensed Consolidated Balance Sheets
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
------------- -------------
(Unaudited) (Note)
ASSETS
<S> <C> <C>
Cash and due from banks .............................................. $ 4,277,458 $ 3,403,926
Investment securities ................................................ 21,777,123 23,966,501
Federal funds sold ................................................... 2,590,000 --
Loans, net ........................................................... 58,839,716 58,090,869
Premises and equipment, net .......................................... 1,829,232 1,828,648
Real estate acquired through foreclosure, net ........................ 646,263 808,090
Cash value of life insurance ......................................... 2,311,102 2,266,781
Other assets ......................................................... 522,760 1,886,208
------------- -------------
TOTAL ASSETS ......................................................... $ 92,793,654 $ 92,251,023
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits .......................................................... $ 78,531,087 $ 78,733,938
Federal funds purchased ........................................... 3,020,000 2,360,000
Note payable to FHLB .............................................. 2,000,000 2,000,000
Other liabilities ................................................. 1,009,401 1,249,562
------------- -------------
Total Liabilities ................................................. 84,560,488 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 ................................................. 3,027,321 2,397,106
Net unrealized gains (losses) on securities ....................... (41,430) 263,142
------------- -------------
Total Stockholders' Equity ........................................ 8,233,166 7,907,523
------------- -------------
TOTAL LIABILITIES AND EQUITY ......................................... $ 92,793,654 $ 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.
<PAGE>
FIRST BANKSHARES, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Operations
(Unaudited)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------- --------------------------
1996 1995 1996 1995
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Interest income:
Loans, including fees ....................... $ 1,580,505 $ 1,148,667 $ 3,242,335 $ 2,232,315
Investment securities ....................... 342,257 291,608 687,890 502,213
Other ....................................... 18,965 53,565 35,523 113,578
----------- ----------- ----------- -----------
Total interest income ....................... 1,941,727 1,493,840 3,965,748 2,848,106
Interest expense:
Deposits .................................... 669,371 608,187 1,347,009 1,122,984
Federal funds purchased and note payable .... 90,939 3,087 150,482 3,819
----------- ----------- ----------- -----------
Total interest expense ...................... 760,310 611,274 1,497,491 1,126,803
----------- ----------- ----------- -----------
Net interest income ......................... 1,181,417 882,566 2,468,257 1,721,303
Provision for possible loan losses ............. -- 10,000 -- 20,000
----------- ----------- ----------- -----------
Net interest income after provision
for possible loan losses .................. 1,181,417 872,566 2,468,257 1,701,303
Noninterest income ............................. 538,682 194,874 852,686 520,723
Noninterest expenses:
Salaries and employee benefits .............. 576,901 352,272 1,131,925 686,028
Occupancy and equipment ..................... 98,663 59,016 193,863 116,757
Other operating ............................. 444,962 294,487 772,800 705,180
----------- ---------- ----------- ----------
Total noninterest expenses .................. 1,120,526 705,775 2,098,588 1,507,965
----------- ---------- ----------- ----------
Income before income taxes .................. 599,573 361,665 1,222,355 714,061
Income taxes ................................... 220,238 111,522 445,303 219,645
----------- ---------- ----------- ----------
Net income .................................. $ 379,335 $ 250,143 $ 777,052 $ 494,416
=========== ========== =========== ==========
Net income per share:
Primary ................................... $ .36 $ .24 $ .74 $ .47
Fully diluted ............................. $ .35 $ .24 $ .71 $ .47
Weighted average common shares:
Primary ................................... 1,048,840 1,048,840 1,048,840 1,048,840
Fully diluted ............................. 1,094,077 1,048,840 1,094,077 1,048,840
<PAGE>
FIRST BANKSHARES, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Cash Flows
(Unaudited)
<CAPTION>
Six Months Ended June 30,
-------------------------------------
1996 1995
------------- -------------
<S> <C> <C>
Cash flows provided by operating activities .......................... $ 1,908,879 $ 405,369
Cash flows (used in) provided by investing activities ................ (1,345,660) (5,449,918)
Cash flows provided by (used in) financing activities ................ 310,312 4,926,221
------------- -------------
Net increase (decrease) in cash and cash equivalents .............. 873,531 (118,328)
Cash and cash equivalents at beginning of period ..................... 3,403,926 3,367,514
------------- -------------
Cash and cash equivalents at end of period ........................... $ 4,277,457 $ 3,249,186
============= =============
<PAGE>
FIRST BANKSHARES, INC. AND SUBSIDIARY
Notes to Condensed Consolidated Financial Statements
June 30, 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 and six month
periods ended June 30, 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
$1,181,417 for the quarter ended June 30, 1996 from $882,566 for the quarter
ended June 30, 1995 and to $2,468,257 for the six month period ended June 30,
1996 from $1,721,303 for the six month period ended June 30, 1995. The increase
was primarily due to increases in loan volumes 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
$1,941,727 for the quarter ended June 30, 1996 from $1,493,840 for the quarter
ended June 30, 1995 and to $3,965,748 for the six month period ended June 30,
1996 from $2,848,106 for the six month period ended June 30, 1995. The increase
in interest income was primarily the result of increases in the net loan
portfolio of 38% from $42,570,281 to $58,839,716 and in investment securities of
9% from $19,940,765 to $21,777,123 from June 30, 1995 to June 30, 1996. Total
interest expense increased to $760,310 for the quarter ended June 30, 1996 from
$611,274 for the quarter ended June 30, 1995 and to $1,497,491 for the six month
period ended June 30, 1996 from $1,126,803 for the six month period ended June
30, 1995. The increase in interest expense was primarily due to increases in
interest bearing deposits of 18% from $51,274,739 to $60,364,078 and in other
borrowings of 100% from no borrowings to $5,020,000 from June 30, 1995 to June
30, 1996. Additions to the allowance for possible loan losses (Balance of
$1,043,666 and $875,744 at June 30 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 1.73%
at June 30, 1996 remained the same as the 1.73% at December 31, 1995 as a result
of continued experience of the Company's bank subsidiary and its related
mortgage operations. 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 and six month period ended June
30, 1996 compared to a provision of $10,000 for the quarter ended June 30, 1995
and a provision of $20,000 for the six month period ended June 30, 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
increased to $538,682 for the quarter ended June 30, 1996 from $194,874 for the
quarter ended June 30, 1995 and to $852,686 for the six month period ended June
30, 1996 from $520,723 for the six month period ended June 30, 1995. Such
increases were largely attributable to gains on sales of loans in the Company's
mortgage loan operations. Noninterest expense increased to $1,120,526 for the
quarter ended June 30, 1996 from $705,775 for the quarter ended June 30, 1995
and to $2,098,588 for the six month period ended June 30, 1996 from $1,507,965
for the six month period ended June 30, 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 increased to $379,335 ($.35 per share fully
diluted) for the quarter ended June 30, 1996 from $250,143 ($.24 per share fully
diluted) for the quarter ended June 30, 1995 and to $777,052 ($.71 per share
fully diluted) for the six month period ended June 30, 1996 from $494,416 ($.47
per share fully diluted) for the six month period ended June 30, 1995. The
return on average assets and period end equity increased to 1.63% from 1.45% and
to 18.9% from 14.3%, respectively, for the six month period ended June 30, 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 $4,277,458 and federal funds sold of
$2,590,000 at June 30, 1996 and cash and cash equivalents of $3,403,926 at
December 31, 1995. The increase in liquidity reflects the Company's strategy of
having funds available for 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. The loan to deposit ratio at
June 30, 1996 was 77.9% compared to 75.1% at December 31, 1995 and 66.9% at June
30, 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.
The Company held its annual meeting of stockholders on May 16, 1996. The
following directors of the Company were elected at the meeting to serve a
one-year term expiring in 1997 at the annual meeting of the stockholders:
Richard W. Cheely, James A. Eidson, Ray E. Hannah, James L. Lynn, Cannis E.
McLain, R. Elliott Miller, Richard G. Stilley, Hugh Thompson, and Conrad M.
Waller, 808,921 votes were cast to approve, 64,651 votes were cast against, and
no votes abstained.
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: August 8, 1996 /s/ R. Elliott Miller
---------------------
R. Elliott Miller
President and Chief Executive Officer
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> APR-1-1996
<PERIOD-END> JUN-30-1996
<CASH> 4,277
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 2,590
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 21,777
<INVESTMENTS-CARRYING> 21,777
<INVESTMENTS-MARKET> 21,777
<LOANS> 59,883
<ALLOWANCE> 1,044
<TOTAL-ASSETS> 92,794
<DEPOSITS> 78,531
<SHORT-TERM> 5,020
<LIABILITIES-OTHER> 1,009
<LONG-TERM> 0
0
0
<COMMON> 1,049
<OTHER-SE> 7,184
<TOTAL-LIABILITIES-AND-EQUITY> 92,794
<INTEREST-LOAN> 1,581
<INTEREST-INVEST> 342
<INTEREST-OTHER> 19
<INTEREST-TOTAL> 1,942
<INTEREST-DEPOSIT> 669
<INTEREST-EXPENSE> 760
<INTEREST-INCOME-NET> 1,182
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 1,121
<INCOME-PRETAX> 600
<INCOME-PRE-EXTRAORDINARY> 600
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 379
<EPS-PRIMARY> .36
<EPS-DILUTED> .35
<YIELD-ACTUAL> 9.09
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,027
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 1,044
<ALLOWANCE-DOMESTIC> 1,044
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 1,044
</TABLE>
