SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarter Ended March 31, 1996
Commission File Number 0-27200
EVERGREEN BANCSHARES, INC.
A Florida corporation
(IRS Employer Identification No. 63-1025500)
1706 West Tennessee Street
Tallahassee, Florida 32304
(904) 222-4600
Securities Registered Pursuant to Section 12(b)
of the Securities Exchange Act of 1934: None
Securities Registered Pursuant to Section 12(g)
of the Securities Exchange Act of 1934:
Common Stock, $1.00 par value
Check whether the Issuer (1) filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the past twelve 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
The number of shares outstanding of the Registrant's Common Stock
as of September 30, 1996: 1,000,292 shares of $1.00 par value
Common Stock.
Transitional Small Business Disclosure Format
Yes No X
PART I
Item 1. Financial Statements.
The required financial statements follow. An explanation of
the computation of per share earnings on both a primary and fully
diluted basis can clearly be determined from page 8.
Condensed Consolidated Balance Sheet as of March 31, 1996 and
December 31, 1995 3
Condensed Consolidated Statement of Income for the Three
Months Ended March 31, 1996 and March 31, 1995 4
Consolidated Statement of Cash Flows for the Three Months
Ended March 31, 1996 and March 31, 1995 5
Notes to Condensed Consolidated Financial Statements 6
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EVERGREEN BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
<CAPTION>
MARCH 31 DECEMBER 31
1996 1995
ASSETS
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CASH & CASH EQUIVALENTS:
Cash & due from banks $ 3,427,598 $ 6,909,701
Fed funds sold 17,685,000 5,410,000
Total cash & cash equivalents 21,112,598 12,319,701
INVESTMENT SECURITIES:
Available for sale, at market value 21,523,755 36,877,731
Held to maturity (market value of $7,416,691 and 7,803,250 7,807,136
$7,711,770 at 3/31/96 and 12/31/95)
LOANS, Net (Allowance for Loan Loss $460,695 58,142,820 61,444,193
and $506,635 at 3/31/96 and 12/31/95)
BANK PREMISES & EQUPMENT, Net 2,742,163 2,700,572
ACCRUED INTEREST RECEIVABLE 553,902 638,902
INTANGIBLE CORE DEP PREM, Net 1,486,157 1,567,464
ORGANIZATION COST, Net 147,055 146,732
DEFERRED INCOME TAXES 230,666 116,959
OTHER ASSETS 596,085 782,015
TOTAL ASSETS $114,338,451 $124,401,405
LIABILITIES
DEPOSITS
Non-interest bearing $ 8,022,661 $ 9,050,682
Interest bearing 99,804,445 108,141,681
Total deposits 107,827,106 117,192,363
ACCRUED INTEREST PAYABLE 369,320 527,923
ACCRUED EXPENSES 48,346 121,887
TOTAL LIABILITIES 108,244,772 117,842,173
SHAREHOLDERS' EQUITY
COMMON STOCK (par $1; 1,250,000 auth.; 947,294 947,294
947,294 and 947,294 issued and outstanding at
3/31/96 and 12/31/95)
ADDITIONAL PAID-IN CAPITAL 8,529,089 8,529,089
RETAINED (EARNINGS) DEFICIT (3,127,758) (2,721,741)
UNREALIZED LOSSES ON INVESTMENT SECURITIES (254,946) (195,680)
TOTAL SHAREHOLDERS' EQUITY 6,093,679 6,559,232
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $114,338,451 $124,401,405
See Notes to Consolidated Financial Statements
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EVERGREEN BANCSHARES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<CAPTION>
FOR THE QUARTER ENDED MARCH 31
1996 1995
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Interest Income
Loans, including fees $1,302,937 $1,313,381
Investment securities:
Taxable 451,386 698,088
Non-taxable 102,505
Federal Funds Sold 209,175 41,440
Other 10,343 19,321
Total interest income 1,973,841 2,174,735
Interest Expense
Deposits 1,289,083 1,145,739
Federal funds pruchased 1,886
Other borrowed funds 211,072
Total interest expense 1,289,083 1,358,697
Net interest income before
provision for loan loss 684,758 816,038
Provision for loan loss 30,000
Net interest income after
provision for loan loss 654,758 816,038
Other Income
Service charges on deposits 111,073 122,016
Commisions and fees on deposits 43,992 16,359
Total other income 155,065 138,375
Other Expense
Salaries & employee benefits 517,562 449,537
Occupancy expense 208,699 177,490
Data processing 104,271 24,870
Professional services 12,565 23,494
Amortization of core deposit premiums 81,307 81,306
Insurance 73,599 46,874
Stationery & supplies 27,492 34,176
Furniture & equipment expense 45,204 42,973
Postage & freight 21,935 21,525
Other operating expenses 123,476 127,985
Total other expenses 1,216,110 1,030,230
INCOME(LOSS) BEFORE TAXES (406,287) (75,817)
INCOME TAX PROVISION (BENEFIT) (43,145)
NET INCOME (LOSS) $(406,287) $(32,672)
EARNINGS PER SHARE $(0.43) $(0.04)
Net income (loss) per common share $(0.43) $(0.04)
WEIGHTED AVERAGE COMMON SHARES AND COMMON 947,294 894,476
STOCK EQUIVALENTS OUTSTANDING
See Notes to Consolidated Financial Statements<PAGE>
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EVERGREEN BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
March 31,
1996 1995
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (406,287) $ (32,672)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization 110,997 110,050
(Accretion) of discounts/amortization of premiums (137,111)
Deferred income taxes 0 176,662
(Increase) decrease in accrued interest receivable 85,000 200,286
(Increase) decrease in other assets 185,930 (34,944)
(Increase) decrease in deferred income taxes
(Increase) decrease in organizational costs (14,220) (2,114)
Increase (decrease) in accrued interest payable (158,603) (52,018)
Decrease in accrued expenses and other liabilities (73,541) 225,779
Net cash provided by (used in)
operating activities (407,835) 591,029
CASH FLOWS FROM INVESTING ACTIVITIES:
Loan Originations and principal payments 3,181,502 1,070,224,295
Principal collected on securities held to maturity 195,204 388,792
Principal collected on securities available for sale 665,468 542,842
Purchases of:
Securities available for sale (550,200)
Premises and equipment (173,474) (54,762)
Proceeds from sales of:
Premises and equipment 118,289
Proceeds from maturities of:
Securities available for sale 14,580,000
Net cash provided by (used in)
investing activities 18,566,989 1,070,550,967
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (Decrease) in Non-Interest
Bearing Deposits 1,072,713,803
Increase (Decrease) in Interest
Bearing Deposits 1,065,404,588 6,121,186
Increase (Decrease) in Securities Sold
under Agreements to repurchase 0
Net increase (Decrease) in Federal
funds purchased 0 (900,000)
Advances from Federal Home Loan Bank 0
Advances by borrowers for taxes and insurance 0
Proceeds from issuance of long-term debt 0
Repayment of long-term debt 0
Dividends paid 0 (44,726)
Common stock issued 0 1,200
Net cash provided by (used in)
financing activities 1,064,376,567 5,177,660
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 8,793,897 2,577,832
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 12,319,701 5,043,118
CASH AND CASH EQUIVALENTS, END OF YEAR $ 21,112,598 $ 7,620,950
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest
Taxes
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES:
Loans transferred to real estate owned 0
Loans made to facilitate sale of real estate owned 0
Loans exchanged for mortgage-backed securities 0
Conversion of debt to equity
Assumption of liabilities due to acquisition of assets
See Notes to Consolidated Financial Statements
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EVERGREEN BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with generally accepted
accounting principles for interim financial information and with
the instructions to Form 10-QSB. Accordingly, they do not include
all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting of normal
recurring accruals) 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 consolidated financial statements
and footnotes thereto included in Evergreen Bancshares, Inc. and
Subsidiary annual report on Form 10-KSB for the year ended December
31, 1995.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General - Evergreen Bancshares, Inc., (the "Company") was
incorporated on March 12, 1990 as a bank holding company under the
Bank Holding Company Act of 1956, as amended. The Company's
principal asset is the investment in its wholly-owned subsidiary,
Guaranty National Bank of Tallahassee (the "Bank"). The Bank was
incorporated on April 16, 1986 and opened for business on November
17, 1986, as a nationally chartered bank. The Company acquired the
Bank on July 19, 1990 in a stock for stock exchange.
The accounting and reporting policies of Evergreen Bancshares, Inc.
and its wholly-owned subsidiary (collectively, the "Company")
conform to generally accepted accounting principles and to general
practices within the banking industry. The following summarizes
the more significant of the Company's accounting and reporting
policies and practices:
Consolidation - The consolidated financial statements include
Evergreen Bancshares, Inc. and the Bank. All significant
intercompany balances and transactions have been eliminated.
Cash and Cash Equivalents - Cash and cash equivalents include cash
on hand, amounts due from banks, Federal funds sold, and other
short-term, highly liquid interest bearing deposits and investment
securities with an original maturity of three months or less.
Generally, Federal funds are sold for one-day periods.
Investment Securities - Effective January 1, 1994, the Company
adopted Statement of Financial Accounting Standards No. 115,
"Accounting for Certain Investments in Debt Securities" (SFAS No.
115"), which addresses the accounting and reporting for certain
investments in debt and equity securities. This statement requires
that only debt securities that the Company has the positive intent
and ability to hold to maturity be classified as held to maturity
and reported at amortized cost. Securities that are bought and
held principally for the purpose of selling them in the near term
are required to be classified as trading securities and reported at
fair value with unrealized gains and losses reflected in the
statement of income. All other securities are required to be
classified as available-for-sale securities and reported at fair
value with unrealized gains and losses net of taxes reflected as a
separate component of shareholder's equity until realized.
Realized gains or losses on disposition of investment securities
are recorded on the trade date and are based on the net proceeds
and the adjusted carrying amount of the securities sold, using the
specific identification method.
Loans - Loans are stated at the amount of unpaid principal, net of
unearned income, deferred loan fees and an allowance for loan
losses. Interest on certain installment loans is recognized as
income over the life of the loans using a method approximating the
interest method. Interest on loans is calculated primarily by
using the simple interest method on daily balances of the principal
amount outstanding.
Nonrefundable fees and certain direct costs associated with
originating or acquiring loans are recognized over the life of
related loans as an adjustment of yield.
Allowance for Loan Losses - The allowance for loan losses is
established through a provision for loan losses charged to expense.
Loans are charged against the allowance for loan losses when
management believes that the collectibility of the principal is
unlikely. The allowance is an amount that management believes will
be adequate to absorb losses on existing loans that may become
uncollectible, based on evaluations of the collectibility of the
loans and prior loan loss experience. The evaluations take into
consideration such factors as changes in the nature and volume of
the loan portfolio, review of specific problem loans and current
economic conditions that may affect the borrowers' ability to
repay.
Impaired loans are loans for which it is probable that the creditor
will be unable to collect all amounts due according to the contract
terms of the loan agreement. Cash receipts on impaired loans are
used to reduce principal balances. Impairment losses are included
in the allowance for loan losses through a charge to the provision
for loan losses. Impairment losses are measured by the present
value of expected future cash flows discounted at the loan's
effective interest rare, or at either the loans's observable market
price or the fair value of collateral. Adjustments to impairment
losses due to changes in the fair value of impaired loan's
underlying collateral are included in the provision for loan
losses. Upon disposition of an impaired loan, any related
valuation allowance is reversed through a chargeoff to the
allowance for loan losses.
Premises and Equipment - Premises and equipment are stated at cost
less accumulated depreciation. Depreciation and amortization are
computed principally on the straight-line method over the estimated
useful lives of 7 to 40 years.
Intangible Core Deposit Premiums - The Company paid premiums to
acquire certain deposits of another financial institution. Such
premiums are being amortized over the estimated lives of the
related deposits which is generally 8 years. The core deposit
intangible study for the 1993 acquisitions was not completed by the
Company's outside auditors until the end of the second quarter of
1994. Accordingly, no amortization of the core deposit premiums
attributable to all or some of the 1993 acquisitions was included
in the first quarter 1994 financial statements.
Organization Costs - Organization costs are being amortized on a
straight-line basis over 5 years.
Income Taxes - The Company and its subsidiary file consolidated
Federal and state income tax returns. Income tax charges or
credits are generally allocated to each member of the consolidated
group on the basis of their respective taxable income or loss
included in the consolidated income tax return.
In 1993, the company adopted Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" ("SFAS 109"),
which requires an asset and liability approach to accounting for
income taxes. A cumulative effect of the change in accounting for
income taxes effective January 1, 1993, has been reported in the
consolidated statement of income. Under SFAS 109, deferred tax
assets and liabilities are recognized based on differences between
financial statement and tax basis of assets and liabilities using
presently enacted tax rates. The deferred tax provision is
computed as the change in the deferred tax asset/liability from the
beginning of the year to the end of the year.
Net (Loss) Income per Common Share - Net (Loss) income per common
share is calculated on the basis of the weighted average number of
common shares outstanding. Earnings per common share were computed
by dividing the net income for the year by the weighted average
shares outstanding. Stock options granted to directors, officers
and employees are common stock equivalents. However, these common
stock equivalents did not have dilutive effect on the earnings per
share calculation.
Stock Options - The Company has a Management Stock Option and Non-
Qualified Stock Option Plans under which stock options have been
granted to key officers, directors and shareholders to purchase
shares of Company common stock. These options are currently
exercisable to purchase common stock at $10 and $12 per share. The
options terminate upon cessation of employment or death or
expiration of option periods in 1996 through 1998. In 1995, 3,100
options were exercised and in 1994, 26,435 options were exercised.
In the first quarter of 1996, 32 options were exercised.
NOTE 3 - REGULATORY MATTERS
The Agreement - On March 7, 1996, the Bank entered into a written
agreement with the Office of the Comptroller of the Currency (the
"Agreement"). The Agreement provides that the Bank will perform
the following:
- -- Develop a profit plan to improve and sustain the earnings
of the Bank.
- -- Develop a three year capital program whereby the Bank
will achieve Tier 1 capital at least equal to 5% of
adjusted total assets, Tier 1 capital at least equal to
8% of risk-weighted assets; and total risk-based capital
at least equal to 10% of risk-weighted assets by August
31, 1996;
- -- Employ an independent outside management consultant to
review and report on the current management and Board
supervision of the Bank and submit a plan of
implementation;
- -- Review the adequacy of the Bank's allowance for loan
losses and establish an effective program for the
maintenance of an adequate allowance for loan losses;
- -- Revise and implement a written asset and liability
management policy;
- -- Immediately take all steps necessary to correct each
violation of law, rule or regulation cited in any report
of examination; and
- -- Cause the Bank to refile amended Reports of Condition and
Income for the periods ending March 31, 1995, June 30,
1995 and September 30, 1995, and implement policies and
procedures to ensure the accuracy of all regulatory
reports filed by the Bank.
Management has taken measures to comply with the Agreement and
plans to continue these efforts. Failure to comply with the
requirements under the Agreement may result in the levy of civil
money penalties against the Bank and/or its directors, removal of
officers and directors, or institution of Cease-and-Desist
proceedings.
Management's Plans - Management has undertaken plans to reduce
operating expenses, restructure the deposit and loan portfolios,
increase the loan-to-deposit ratio, and reduce the Bank's interest
rate risk by more closely matching the maturities of interest
bearing deposits with interest earning assets, in efforts to reduce
the Bank's net operating losses. Management is also considering
raising additional capital through private placements.
Item 2. Management's Discussion and Analysis of Operations.
Evergreen Bancshares, Inc. (the Company), a bank holding company
located in Tallahassee, Florida, is a Florida corporation with one
subsidiary, Guaranty National Bank of Tallahassee (the Bank). A
full range of banking services are offered by the Bank through its
seven branch locations, all of which are located in the
Tallahassee, Florida area.
Late Filing of Periodic Reports
This and other reports were not timely filed by the Company.
Accordingly, the information contained herein may not be current as
of its filing. As such, the reader should also consult the
Company's other periodic filings, particularly the Company's
quarterly report on Form 10-QSB for the period ending September 30,
1996, which, as of this writing, is the most current financial data
available for the Company.
Financial Condition
Total assets of the Company decreased during the first quarter of
1996 as the Company continued its plans to improve the Bank's
regulatory capital ratios. Total assets decreased by $10 million
from $124 million at December 31, 1995 to $114 million at March 31,
1996. Total liabilities decreased to $108 million at March 31,
1996 from $118 million at December 31, 1995 and shareholders'
equity decreased $.5 million from December 31, 1995 to March 31,
1996.
Cash and cash equivalents increased $9 million due to the
investment of excess funds in Federal funds sold. The Federal
funds sold balance was increased to temporarily enhance the
liquidity position of the Company allowing the Company to
restructure its balance sheet to improve its interest margin by
reductions in high cost deposit liabilities and to provide for
interest earnings on funds to be utilized for new loans which
satisfy the underwriting criteria of the Company.
The Company collected proceeds from the maturities of and principle
payments on investment securities available for sale totaling
approximately $15 million during the first quarter of 1996. These
proceeds were used to liquidate $8 million of interest bearing
deposits which, prior to their liquidation at maturity near the end
of the first quarter, were bearing interest at above market rates.
The proceeds were also used to fund a normal reduction in non-
interest bearing deposits totaling $1 million. The balance of the
funds collected from investment securities available for sale were
invested in Federal funds sold.
Loans, net of the allowance for loan losses, decreased by $3
million as the repayment of loans outstanding exceeded the dollar
amount of new loans. The dollar amount of principal repayments in
excess of amounts funded were invested in Federal funds sold. The
Company's underwriting criteria are generally considered to be
conservative and the Company will only fund loans that generate an
acceptable return relative to the credit risk. Also, management
has evaluated loan growth as such growth relates to improvement in
the Bank's regulatory capital ratios. Management's plans for the
improvement of the Bank's regulatory capital ratios include among
other alternatives, restructuring the Bank's balance sheet as well
as a reduction in the total assets of the Bank. Management's plans
relating to improving the Bank's regulatory capital ratios are more
fully discussed in Regulatory Issues. The Company continues to
experience past due loans, non accrual loans and charge-offs that
are below industry averages. Management has reviewed the allowance
for loan losses as of March 31, 1996 and in the opinion of
management, the loan loss reserve is adequate.
Results of Operations
Total interest income for the quarter ended March 31, 1996 was $1.9
million, a decrease of $201,000 from the corresponding period of
the preceding year. The decrease in total interest income
primarily results from a decline in interest income from investment
securities of $349,000 off set by an increase in interest income
from Federal funds sold of $168,000. The decline in interest
income from investment securities results from lower balances
invested in investment securities available for sale during the
period ended March 31, 1996 as compared with the comparable period
for 1995. The increase in interest income from Federal funds sold
for the current quarter when compared to the corresponding quarter
of the preceding year resulted from larger balances invested in
Federal funds.
Total interest expense had a small decline for the first quarter of
1996 when compared to the first quarter of 1995. A favorable
decrease in interest expense on other borrowed funds was offset by
an increase in interest expense related to deposit accounts.
Net interest income before provision for loan loss declined
approximately $131,000 during the first quarter of 1996 when
compared to the comparable period for 1995. This resulted from the
decline in interest margins associated with the Company's increased
investments in Federal funds sold funding deposits with above
market rates for most of the quarter.
Other operating expenses increased $186,000 during the quarter
ended March 31, 1996 when compared to the corresponding period of
the preceding year. The increase in other operating expenses
principally results from increases in salaries and employee
benefits and data processing charges. Bank management has
identified market segments where the Bank should have success in
attracting from competing financial institutions new loan and low
costs deposit relationships in the Tallahassee market. Management
believes the additions to the management group will provide the
Bank with access to new account relationships. Data processing
charges increased during the current quarter as compared to the
prior year comparable period as the current period reflects three
months of data processing charges under the Bank's new data
processing contract.
The Company's net loss for the quarter ended March 31, 1996 was
$406,000 compared to a net loss of 76,000 for the first quarter of
1995. Loss per common share was ($.43) for the quarter ended March
31, 1996 based on weighted average common shares and common stock
equivalents outstanding of 947,294 compared to a net loss of
$33,000 and loss per common share of ($.04) based on weighted
average common shares and common stock equivalents outstanding of
894,476 for the quarter ended March 31, 1995.
Regulatory Issues
On March 7, 1996, the Bank entered into a Formal Agreement with its
primary federal regulator, the Office of the Comptroller of the
Currency (OCC). The Formal Agreement is the Bank's written
commitment to take certain actions requested by the OCC. In
particular, the Formal Agreement provides that the Bank will:
develop a profit plan to improve the Bank's earnings; develop a
three-year capital program, including meeting certain regulatory
capital ratios (discussed below); employ an outside consultant to
review and report on the current management and board supervision
of the Bank; submit a plan of implementation of the management
consultant's recommendations; revise and improve the Bank's
procedures for maintaining its allowance for loan losses; adjust
and revise the Bank's assets and liability management policy;
correct any violations of the law, rule or regulation; refile call
reports for the first three quarters of 1995; and ensure the
accuracy of all future regulatory reports filed by the Bank. The
Bank believes it is in compliance with most of the requirements.
The failure to comply with the requirements under the Formal
Agreement may result in the levy of civil money penalties against
the Bank and/or its directors, the removal of officers and/or
directors, or the institution of cease and desist proceedings
against the Bank and/or its directors.
In the opinion of Management, the most important area of the Formal
Agreement relates to the achievement of certain prescribed capital
ratios no later than August 31, 1996.
Under guidelines established by the Federal banking regulators,
capital adequacy is currently measured for regulatory purposes by
certain risk-based capital ratios, supplemented by a leverage
ratio. The risk-based capital ratios are calculated as a ratio of
capital to risk-weighted assets. Risk-weighted assets are computed
by measuring the relative credit risks of both the asset categories
on the balance sheet and various off-balance sheet exposures.
Capital is divided into two classes: Tier 1 and Tier 2. Tier 1
capital consists primarily of common shareholders' equity and
qualifying perpetual preferred stock, net of goodwill and other
disallowed intangible assets. Tier 2 capital, which is limited to
the total of Tier 1 capital and other specific limitations,
includes allowable amounts of subordinated debt, mandatory
convertible securities, preferred stock and the allowance for loan
losses. Under current requirements, the minimum Tier 1 risk-
weighted ratio is 4%, and the minimum total capital ratio,
consisting of both Tier 1 and Tier 2 capital, is 8%.
The Tier 1 leverage ratio is the ratio of Tier 1 capital only to
average total assets for the most recent quarter, after reduction
of those assets for goodwill and other disallowed intangible assets
at the measurement date. The required ratio ranges from 3% to 5%,
subject to Federal bank regulatory evaluation of the organization's
overall safety and soundness.
Article IV of the Formal Agreement requires the Bank to achieve
certain capital ratios by August 31, 1996. These required capital
ratios are significantly higher than those presently recorded by
the Bank. The Formal Agreement requires the attainment of the
following ratios:
Ratio Required Ratio
Tier 1 leverage 5.0%
Tier 1 risk weighted 8.0%
Total risk weighted 10.0%
These ratios exceed the ratios required for the regulatory rating,
well-capitalized. The following is a summary of the Bank's capital
ratios:
Ratio March 31, 1996
Tier 1 leverage 4.12%
Tier 1 risk weighted 7.91%
Total risk weighted 8.68%
Management has instituted a capital and profitability plan, that if
successfully completed, will increase the Bank's capital to an
amount which will put the Bank in compliance with the Formal
Agreement. The capital plan provides for the Bank to monitor asset
growth giving consideration to the favorable impact shrinking the
size of the Bank would have on the Bank's capital ratios; changing
the mix of assets and liabilities by emphasizing loans in favor of
investment securities and core deposits in favor of high cost
deposits; improving the net interest margin and non-interest income
and controlling overhead; and augmenting capital. The Bank's
primary plan to augment capital is through the sale of additional
stock to its shareholder, which is dependent on a private placement
of stock by the Company. In addition, the Bank is considering the
sale of one or more branches which would be likely to be undertaken
if favorable premiums and excess liquidity are available.
PART II
Item 1. Legal Proceedings.
The Company is not aware of any pending legal proceedings,
other than routine litigation incidental to the business of the
Bank, to which the Bank is a party or to which any of its
properties is subject. The Company is aware of no pending legal
proceedings to which it is a party.
Item 2. Changes in Securities.
No instruments defining the rights of the holders of the
Company's only class of securities, its Common Stock, have been
materially modified. No other class of securities has been issued.
Item 3. Defaults Upon Senior Securities.
The Company has had no defaults on any indebtedness under
which it is obligated.
Item 4. Submission of Matters to a Vote of Security Holders.
No matters were submitted to a vote of shareholders during the
quarter.
Item 5. Other Information.
The Company declines to present any additional information.
Item 6. Exhibits and Reports on Form 8-K.
A. Exhibits
Exhibit No. Description Page No.
11 Statement Re: Computation of Per Share Earnings (See
Page 8) Filed Herewith
27 Financial Data Schedule (For SEC Use Only) Filed Herewith
B. Reports on Form 8-K
No reports on Form 8-K were filed during the first quarter of
1996.
SIGNATURES
In accordance with the requirements of the Exchange Act, the
Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
Date: December 9, 1996
EVERGREEN BANCSHARES, INC.
(Registrant)
BY: /s/ Linda C. Alexionok
Linda C. Alexionok
Secretary
BY: /s/ Vernon E. Sanders
Vernon E. Sanders
Principal Financial Officer,
Treasurer and a Director
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<ARTICLE> 9
<S> <C>
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