U.S. 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: 0-25846
CCF HOLDING COMPANY
-----------------------------------------------------------------
(Exact Name of Small Business Issuer as Specified in Its Charter)
Georgia 58-2173616
---------------------------- -------------------
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Identification No.)
Organization)
101 North Main Street
Jonesboro, Georgia 30236
----------------------------------------
(Address of Principal Executive Offices)
(770) 478-8881
------------------------------------------------
(Issuer's Telephone Number, Including Area Code)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities 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
---- -----
Number of shares outstanding of each of the issuer's classes of common equity:
As of February 10, 1997, there were issued and outstanding 865,000 shares of the
registrant's common stock.
Transitional Small Business Disclosure Format (check one):
Yes No X
--- -----
<PAGE>
FORM 10-QSB
INDEX
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION Page
Item 1. Financial Statements:
<S> <C>
Consolidated Balance Sheets as of
March 31, 1997 and December 31, 1996 ........................................ 1
Consolidated Statements of Income
for the three months ended
March 31, 1997 and March 31, 1996 ........................................... 2
Consolidated Statements of Cash Flows
for the three months ended
March 31, 1997 and March 31, 1996 ........................................... 3
Notes to Consolidated Financial Statements .................................. 5
Item 2. Management's Discussion and Analysis or Plan of Operation ................... 7
PART II. OTHER INFORMATION
Item 1. Legal Proceedings ........................................................... 9
Item 2. Changes in Securities ....................................................... 9
Item 3. Defaults upon Senior Securities ............................................. 9
Item 4. Submission of Matters to a Vote
of Securities Holders ..................................................... 9
Item 5. Other Information ........................................................... 9
Item 6. Exhibits and Reports on Form 8-K ............................................ 9
Signatures ................................................................................. 10
</TABLE>
<PAGE>
CCF HOLDING COMPANY AND SUBSIDIARY
Consolidated Balance Sheets
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
--------- -----------
(Unaudited) (Unaudited)
ASSETS
------
<S> <C> <C>
Cash and due from banks $ 2,296,024 2,059,373
Interest-bearing deposits in other financial institutions 707,912 2,688,113
Investment securities available for sale 5,339,083 6,473,228
Mortgage-backed securities available for sale 3,820,813 9,310,804
Federal Home Loan Bank stock, at cost 1,013.200 1,013,200
Loans receivable, net 70,600,474 64,376,355
Accrued interest and dividends receivable 348,075 438,000
Premises and equipment, net 1,988,747 1,871,417
Real estate owned -- --
Other assets 825,627 278,807
------------ ------------
Total assets $ 86,939,955 88,509,297
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Liabilities:
Deposits $ 72,193,234 66,766,840
Advance payments by borrowers for
property taxes and insurance 221,067 153,134
Deferred income taxes 303,078 352,940
Federal Home Loan Bank advances 1,500,000 7,500,000
Dividends payable 24,028 429,038
Other liabilities 253,761 169,722
------------ ------------
Total liabilities 74,495,168 75,371,674
------------ ------------
Stockholders' Equity:
Preferred stock, no par value; 1,000,000 shares
authorized; none issued and outstanding -- --
Common stock, $.10 par value; 4,000,000 shares
authorized; 915,900 shares issued and outstanding 86,500 91,590
Additional paid-in-capital 6,688,736 7,470,917
Retained earnings 6,506,409 6,475,785
Unearned ESOP shares (594,000) (612,000)
Unearned compensation (424,195) (371,304)
Treasury stock, at cost (50,641) (202,519)
Net unrealized holding gains on investment and
mortgage-backed securities available for sale 231,978 285,154
------------ ------------
Total stockholders' equity 12,444,787 13,137,623
Total liabilities and stockholders' equity $ 86,939,955 88,509,297
============ ============
</TABLE>
See accompanying notes to consolidated financial statements
1
<PAGE>
CCF HOLDING COMPANY AND SUBSIDIARY
Consolidated Statements of Income
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------------
1997 1996
----------- ----------
Interest and dividend income:
<S> <C> <C>
Loans (including fees) $1,384,888 945,377
Interest-bearing deposits in other financial institutions 31,490 29,601
Investment securities 70,136 251,764
Mortgage-backed securities 75,237 139,251
Dividends on Federal Home Loan Bank stock 18,113 18,264
---------- ----------
Total interest and dividend income 1,579,864 1,384,257
---------- ----------
Interest expense:
Deposit accounts 732,268 639,880
Federal Home Loan Bank advances 42,875 --
---------- ----------
Total interest expense 775,143 639,880
---------- ----------
Net interest income 804,721 744,377
Provision for loan losses 19,000 6,838
---------- ----------
Net interest income after provision
for loan losses 785,721 737,539
---------- ----------
Other income:
Loan fees and service charges on deposit accounts 155,667 79,161
Other operating income 84,139 69,209
Net gain on sale of investment and
mortgage-backed securities 176,714 --
Net gain on sale of loans 24,647 --
---------- ----------
Total other income 441,167 148,370
---------- ----------
Other expenses:
Salaries and employee benefits 685,509 289,166
Occupancy 198,583 116,891
Federal insurance premiums 9,921 34,958
Other 283,391 156,364
---------- ----------
Total other expenses 1,177,404 597,379
---------- ----------
Income before income taxes 49,484 288,530
Income tax expense 18,860 99,288
---------- ----------
Net income $ 30,624 189,242
========== ==========
Net income per share $ .04 .17
========== ==========
Weighted average shares outstanding 814,808 1,100,813
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE>
CCF HOLDING COMPANY AND SUBSIDIARY
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------------
1997 1996
------------ ----------
Cash flows from operating activities:
<S> <C> <C>
Net income $ 30,624 189,242
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for (recovery of) loan losses 19,000 (23,700)
Depreciation expense 55,775 5,739
Accretion of discounts (65,838) (15,034)
Amortization of premiums 888 18,279
Amortization of unearned compensation --
Amortization of deferred loan fees (5,998) 19,886
Net gain on sale of investment securities and
mortgage-backed securities (176,714) --
Net gain on sale of loans (24,647) --
Deferred income tax benefit -- (13,998)
Decrease (increase) in accrued interest and
dividends receivable 89,925 (29,049)
Increase in other assets (546,820) (45,851)
(Decrease) increase in other liabilities 181,148 (134,661)
----------- -----------
Net cash (used in) provided by operating activities (442,657) (29,147)
----------- -----------
Cash flows from investing activities:
Proceeds from maturing investment securities
available for sale 914,405 4,069,798
Proceeds from sales of investment securities
available for sale 353,488 --
Purchases of investment securities held to maturity -- (2,659,255)
Principal repayments on mortgage-backed securities
available for sale 423,346 491,621
Proceeds from sales of mortgage-backed securities
available for sale 4,895,237 622,753
Proceeds from maturing mortgage-backed securities
available for sale 176,286 --
Purchase of mortgage-backed securities held to maturity -- (1,364,604)
Loan (originations) repayments, net (8,016,043) (2,299,526)
Proceeds from sale of loans 1,803,569 2,455,221
Purchases of premises and equipment (173,105) --
Sale of real estate owned -- --
----------- -----------
Net cash provided by investing activities 377,183 1,316,008
----------- -----------
</TABLE>
3
<PAGE>
CCF HOLDING COMPANY AND SUBSIDIARY
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
--------------------------
1997 1996
------------ ----------
Cash flows from financing activities:
Net (decrease) increase in savings and
<S> <C> <C>
demand deposit accounts (1,531,292) 271,131
Net increase (decrease) in certificates of deposits 6,952,911 (270,814)
Decrease in Federal Home Loan Bank advances (6,000,000) --
Net increase in advance payments by
borrowers for property taxes and insurance 67,933 141,542
Dividends paid (400,235) (391,387)
ESOP shares committed 28,800 59,676
Common stock purchased and retired (796,193) (729,022)
----------- -----------
Net cash used in financing activities (1,678,076) (918,874)
----------- -----------
(Decrease) increase in cash and cash equivalents (1,743,550) 367,987
Cash and cash equivalents at beginning of period $ 4,747,486 2,771,882
----------- -----------
Cash and cash equivalents at end of year $ 3,003,936 3,139,869
=========== ===========
Supplemental disclosure of cash flow information:
Interest paid $ 732,268 640,021
=========== ===========
Income taxes paid 18,860 130,848
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements
4
<PAGE>
CCF HOLDING COMPANY AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Unaudited)
1. Basis of Presentation
---------------------
The consolidated financial statement for the three month periods ended March 31,
1997 and 1996 are unaudited and reflect all adjustments (consisting only of
normal recurring accruals) which are, in the opinion of management, necessary
for a fair presentation of the financial position and operating results for the
interim period. Accordingly, they do not include all information and disclosures
required by generally accepted accounting principles for complete financial
statements.
The results of operations for the three month period ended March 31, 1997 are
not necessarily indicative of the results for the entire year ending December
31, 1997.
2. Accounting Policies
-------------------
Reference is made to the accounting policies of the Company described in the
notes to the consolidated financial statements contained in the Company's Annual
Report on Form 10-KSB for the fiscal year ended September 30, 1996 filed with
the Securities and Exchange Commission.
3. Reclassifications
-----------------
Certain amounts in the prior period financial statements have been reclassified
to conform to the presentation used in the current period consolidated financial
statements.
4. Mutual-to-Stock Conversion
--------------------------
In fiscal 1995, Clayton County Federal Savings and Loan Association (the
"Association") formed CCF Holding Company to acquire 100 percent of the capital
stock of the Association upon its conversion from the mutual to stock form of
ownership. The Association's conversion and the Company's common stock offering
were completed on July 11, 1995, with the sale of 1,190,250 shares of $0.10 par
value common stock at $10 per share (including 72,000 shares acquired by the
Employee Stock Ownership Plan "ESOP" of the Association). The Company received
net proceeds of $10,364,008, of which $5,182,004 was simultaneously transferred
to the Association in exchange for all of the Association's common stock. For
purposes of presenting net income per share, only post conversion net income is
considered.
5. Cash Dividend
-------------
On December 11, 1996 the Company declared a semi-annual cash dividend of $0.25
per share and a special cash dividend of $0.25 per share to stockholders of
record on December 25, 1996. These dividends were paid on January 15, 1997.
5
<PAGE>
CCF HOLDING COMPANY AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Unaudited)
6. Change in Year-end
------------------
On December 10, 1996, the Company's board of directors approved a change in the
Company's year-end from September 30 to December 31. The Company filed its
transition report on Form 10-QSB for the period from October 1, 1996 to December
31, 1996.
7. Repurchase of Common Stock
--------------------------
The Company retired 190,250 shares of common stock held as treasury stock at
September 30, 1996. In addition, the Company purchased and retired an additional
50,900 and 84,100 shares of the Company's common stock during the three-month
periods ended March 31, 1997 and December 31, 1996, respectively.
8. Name Change
-----------
Effective February 4, 1997, the Office of Thrift Supervision ("OTS") gave
approval for the Association to change its name to Heritage Bank. This name has
been fully phased in to all its markets.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Comparison of Financial Condition at March 31, 1997 and December 31, 1996
Assets - The Company's assets decreased slightly by 1.8%, or $1.6 million,
between December 31, 1996 and March 31, 1997. Loans receivable increased 9.7% to
$70.6 million at March 31, 1997, up $6.2 million from $64.4 million at December
31, 1996. At the same time, cash, interest bearing deposits in other financial
institutions and investment and mortgage-backed securities, combined, declined
by $8.4 million, or 40.8%, to $12.2 million at March 31, 1997 from $20.5 million
at December 31, 1996. Other assets increased to $826,000, of which $612,000
represents construction in progress on the Company's two new full service
offices in McDonough and Fayetteville, Georgia. The Company opened its
Fayetteville office in February 1997 and intends to open its McDonough office
during the quarter ended June 30, 1997.
Liabilities - Total deposits during the three months ended March 31, 1997 grew
to $72.2 million, an increase of $5.4, or 8.1%, from $66.8 million at December
31, 1996. This increase in deposits was used to reduce the Company's short-term
borrowings with the Federal Home Loan Bank to $1.5 million at March 31, 1997
from $7.5 million at December 31, 1996.
Stockholders' Equity - Stockholders' equity decreased $693,000, or 5.3%, from
$13.1 million at December 31, 1996 to $12.4 million at March 31, 1997. This
decrease was primarily the result of the Company's repurchase of 50,900 shares
of its common stock for $796,000 during the three months ended March 31, 1997.
The ratio of stockholders' equity as a percentage of total assets decreased to
14.3% at March 31, 1997 from 14.8% at December 31, 1996. Book value per share
increased to $15.19 as March 31, 1997 from $14.61 at December 31, 1996.
Comparison of Operating Results for the Three Months Ended March 31, 1997 and
1996
Performance Overview
Net Income - The Company's net income of $31,000 for the three-month period
ended March 31, 1997 decreased by $158,000, or 84%, from net income of $189,000
for the same period in 1996. This decrease was primarily due to an increase of
$580,000, or 97%, in other expenses, offset by gains on sales of investment and
mortgage-backed securities and loans totaling $201,000.
The increase in other expenses represent costs associated with the opening,
staffing and equipping of the Fayetteville and McDonough branches, as well as,
the hiring of additional personnel in Heritage Bank's main branch in order to
provide its customers with additional loans products. A reduction in net income
compared to prior periods, as a result of these increased expenses, is expected
by management of the Company to continue for the remainder of 1997 until the new
branches mature and higher levels of loan and deposit activity are achieved. The
Company believes that this expansion of markets, personnel, products and
services should enhance long-term shareholder value and does not expect the
decrease in earnings will be as great after 1997. This statement of beliefs
concerning the expansion of the Company is a forward looking statement. The
Private Securities Litigation Reform Act of 1995 (the "Act") provides protection
to the Company in making certain forward looking statements that are accompanied
by meaningful cautionary statements that identify important factors that could
cause actual results to differ materially from the forward looking statement. As
with any expansion, if new branches or additional personnel do not ultimately
result in increased loan and deposit activity and increased net income, these
expenses would continue to have an adverse affect on net income during 1998 and
in future periods.
Net Interest Income - Net interest income for the three-month period ended March
31, 1997 increased $60,000, or 8.1%, from $744,000 in 1996 to $805,000 for the
same period in 1997. The
7
<PAGE>
increase in the average balance of loans receivable during the three-month
period ended March 31, 1997, compared to the same period in 1996, resulted in a
$440,000, or 46.5%, increase in interest income from loans to $1.4 million from
$945,000, respectively. Conversely, investment and mortgage-backed securities
interest income declined $246,000 for the same reason from 1997 to 1996 to
$145,000 from $391,000, respectively. Interest expense increased $135,000 to
$775,000 for the three-month period ended March 31, 1997 from $640,000 for the
same period in 1996. This increase is the result of the increase in deposits and
due to FHLB advances outstanding during this quarter ended March 31, 1997.
Provision for Loan Losses - The Association's provision for loan losses remained
relatively constant for the three months ended March 31, 1997 compared to the
same period in 1996 by increasing to $19,000 from $6,838, respectively.
Management periodically evaluates the adequacy of the allowance for loan losses,
including an evaluation of past loan loss experience, current economic
conditions, volume, growth and collateral of the loan portfolio. Management also
reviews classified assets, including those loans and assets listed as
non-performing. Management currently believes that its allowance for loan losses
is adequate. However, there can be no assurances that further additions will not
be needed and any losses that may occur are not expected to exceed the amount
provided by the allowance.
Other Income - Other income increased 197%, or $293,000, to $441,000 in the
three-month period ended March 31, 1997 from $148,000 for the same period in
1996. This increase was the result of net gains on sales of investments and
mortgage-backed securities totaling $177,000 and net gains on sales of loans
totaling $25,000 during the quarter ended March 31, 1997. There were no such
sales of interest-earning assets during the same period in 1996.
Other Expenses - Other expenses for the three months ended March 31, 1997
increased 97% from $597,000 for the three-month period ended December 31, 1996
to $1.2 million for the same period in 1997, an increase of $580,000. As
discussed above under net income, this increase is the result of additional
personnel hired by the Company since the three-month period ended March 31,
1996. Salaries and employee benefits increased to $685,000 as of March 31, 1997
compared to $289,000 during the same three-month period in 1996. In addition,
occupancy expense increased $82,000 to $199,000 for the three-month period ended
March 31, 1997 from $117,000 during the same period in 1996.
Income Taxes - Effective tax rates during the two three-month periods were
comparable as there were no changes in statutory tax rates.
Liquidity Resources - The Company's wholly-owned subsidiary, Heritage Bank (the
"Bank") is required to maintain minimum levels of liquid assets as defined by
the Office of Thrift Supervision (OTS) regulations. The OTS minimum required
liquidity ratio is 5% and the minimum short-term liquidity ratio is 1%. The
Bank's liquidity ratio averaged 26.69% during March 1997 compared to 33.50%
during the month of March 1996. The Bank manages its liquidity levels in order
to meet funding needs for deposit outflows, payments of real estate taxes and
escrow accounts on mortgage loans, loan funding commitments, and repayments of
borrowings, when applicable. The primary source of funds are deposits,
amortization and prepayments of loans, the sale and maturity of investment and
mortgage-backed securities, short-term Federal Home Loan Bank advances and funds
provided by operations.
8
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
NONE
Item 2. Changes in Securities
NONE
Item 3. Defaults upon Senior Securities.
NONE
Item 4. Submission of Matters to a Vote of Security Holders.
Incorporated by reference from Item 4 of the Form 10-QSB for the
quarter ended December 31, 1996.
Item 5. Other Information
NONE
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 11 - Computation of Per Share Earnings
(b) A Form 8-K (Item 7), dated March 6, 1997, was filed during the
quarter under report.
9
<PAGE>
CCF HOLDING COMPANY AND SUBSIDIARY
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.
CCF HOLDING COMPANY
Date: May 9 , 1997 BY:\s\ David B. Turner
--- --------------------------
David B. Turner
President and
Chief Executive Officer
Date: May 9 , 1997 BY:\s\ Mary Jo Rogers
--- --------------------------
Mary Jo Rogers
Vice President and
Chief Financial Officer
10
Exhibit 11
CCF HOLDING COMPANY AND SUBSIDIARY
Computation of Per Share Earnings
Three Months Ended
March 31, 1997
Common stock - shares outstanding as of
December 31, 1996, net of 4,168 treasury stock 911,732
Unallocated ESOP shares as of December 31, 1996 (61,200)
ESOP shares - committed 600
Shares repurchased (36,324)
----------
Weighted average shares outstanding 814,808
==========
Net income per share $ .04
==========
11
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 2,296
<INT-BEARING-DEPOSITS> 708
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 9,160
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 71,164
<ALLOWANCE> 564
<TOTAL-ASSETS> 86,940
<DEPOSITS> 72,193
<SHORT-TERM> 1,999
<LIABILITIES-OTHER> 303
<LONG-TERM> 0
0
0
<COMMON> 87
<OTHER-SE> 12,358
<TOTAL-LIABILITIES-AND-EQUITY> 86,940
<INTEREST-LOAN> 1,385
<INTEREST-INVEST> 145
<INTEREST-OTHER> 50
<INTEREST-TOTAL> 1,580
<INTEREST-DEPOSIT> 732
<INTEREST-EXPENSE> 775
<INTEREST-INCOME-NET> 805
<LOAN-LOSSES> 19
<SECURITIES-GAINS> 177
<EXPENSE-OTHER> 1,177
<INCOME-PRETAX> 49
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 31
<EPS-PRIMARY> .04
<EPS-DILUTED> 0
<YIELD-ACTUAL> 7.38
<LOANS-NON> 297
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 1,215
<ALLOWANCE-OPEN> 547
<CHARGE-OFFS> 2
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 564
<ALLOWANCE-DOMESTIC> 564
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
