U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[ ] Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of
1934
For the quarterly period ended:
------------------
[X] Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from October 1, 1996 to December 31, 1996
--------------- -----------------
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
PART I. FINANCIAL INFORMATION Page
Item 1. Financial Statements:
Consolidated Balance Sheets as of
December 31, 1996 and September 30, 1996 . . . . 1
Consolidated Statements of Income
for the three months ended
December 31, 1996 and December 31, 1995 . . . . 2
Consolidated Statements of Cash Flows
for the three months ended
December 31, 1996 and December 31, 1995 . . . . 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
<PAGE>
CCF HOLDING COMPANY AND SUBSIDIARY
Consolidated Balance Sheets
<TABLE>
<CAPTION>
December 31, September 30,
1996 1996
------------ -------------
(Unaudited) (Audited)
ASSETS
------
<S> <C> <C>
Cash and due from banks $ 2,059,373 2,133,135
Interest-bearing deposits in other financial institutions 2,688,113 512,610
Investment securities available for sale 6,473,228 13,353,381
Mortgage-backed securities available for sale 9,310,804 10,024,936
Federal Home Loan Bank stock, at cost 1,013,200 1,013,200
Loans receivable, net 64,376,355 51,499,574
Accrued interest and dividends receivable 438,000 511,072
Premises and equipment, net 1,871,417 1,119,628
Real estate owned -- --
Other assets 278,807 115,004
------------ ----------
Total assets $ 88,509,297 80,282,540
============ ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Liabilities:
Deposits $ 66,766,840 61,821,674
Advance payments by borrowers for
property taxes and insurance 153,134 531,105
Deferred income taxes 352,940 206,536
Federal Home Loan Bank advances 7,500,000 2,500,000
Savings Association Insurance Fund
assessment payable -- 397,568
Dividends payable 429,038 6,188
Other liabilities 169,722 379,565
------------ ----------
Total liabilities 75,371,674 65,842,636
------------ ----------
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 91,590 119,025
Additional paid-in-capital 7,470,917 10,971,714
Retained earnings 6,475,785 6,809,054
Unearned ESOP shares (612,000) (630,000)
Unearned compensation (371,304) (371,304)
Treasury stock, at cost (202,519) (2,502,009)
Net unrealized holding gains on investment and
mortgage-backed securities available for sale 285,154 43,424
------------ ----------
Total stockholders' equity 13,137,623 14,439,904
------------ ----------
Total liabilities and stockholders' equity $ 88,509,297 80,282,540
============ ==========
</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
December 31,
-----------------------
1996 1995
--------- ----------
Interest and dividend income:
<S> <C> <C>
Loans (including fees) $1,208,917 932,046
Interest-bearing deposits in other financial institutions 18,727 60,180
Investment securities 123,746 249,812
Mortgage-backed securities 153,800 140,161
Dividends on Federal Home Loan Bank stock 18,465 18,515
--------- ---------
Total interest and dividend income 1,523,655 1,400,714
Interest expense:
Deposit accounts 631,824 662,425
Federal Home Loan Bank advances 64,263 --
--------- ---------
Total interest expense 696,087 662,425
Net interest income 827,568 738,289
Provision for loan losses 6,851 7,625
Net interest income after provision
for loan losses 820,717 730,664
--------- ---------
Other income:
Loan fees and service charges on deposit accounts 113,926 79,535
Other operating income 36,517 24,926
--------- ---------
Total other income 150,443 104,461
--------- ---------
Other expenses:
Salaries and employee benefits 483,099 284,848
Occupancy 117,212 114,932
Federal insurance premiums 26,948 42,060
Other 205,560 110,372
--------- ---------
Total other expenses 832,819 552,212
--------- ---------
Income before income taxes 138,341 282,913
Income tax expense 48,760 98,738
--------- ---------
Net income $ 89,581 184,175
========== =========
Net income per share $ .10 .16
========== =========
Weighted average shares outstanding 893,512 1,118,850
========== =========
</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
December 31,
----------------------------
1996 1995
------------ ----------
Cash flows from operating activities:
<S> <C> <C>
Net income $ 89,581 184,175
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan losses 6,851 7,625
Depreciation expense 39,597 25,704
Accretion of discounts (15,659) (6,783)
Amortization of premiums 26,703 11,967
Amortization of unearned compensation 22,555 --
Amortization of deferred loan fees (36,312) (26,694)
Net gain on sale of investment securities and
mortgage-backed securities (1,955) --
Deferred income tax benefit -- (11,428)
Decrease (increase) in accrued interest and
dividends receivable 73,072 (14,748)
Decrease in other assets (163,803) 52,964
Payment of Savings Association Insurance
Fund assessment (397,568) --
(Decrease) increase in other liabilities (232,398) 9,581
------------ ----------
Net cash (used in) provided by operating activities (589,336) 232,363
------------ ----------
Cash flows from investing activities:
Proceeds from called investment securities
available 500,000 --
Proceeds from sales of investment securities
available for sale 6,489,946 --
Proceeds from maturing investment securities
available for sale -- 2,500,000
Purchases of investment securities held to maturity -- (4,498,645)
Principal repayments on mortgage-backed securities 505,458 350,116
Proceeds from sales of mortgage-backed securities
available for sale 477,926 --
Purchase of mortgage-backed securities held to maturity -- (1,971,908)
Loan (originations) repayments, net (12,847,320) (1,802,833)
Purchases of premises and equipment (791,386) (34,232)
Sale of real estate owned -- 75,626
------------ ----------
Net cash used in investing activities (5,665,376) (5,381,876)
------------ ----------
</TABLE>
3
<PAGE>
CCF HOLDING COMPANY AND SUBSIDIARY
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
December 31,
---------------------------
1996 1995
------------ ----------
<S> <C> <C>
Cash flows from financing activities:
Net increase in savings and demand
deposit accounts 2,029,967 186,557
Net increase (decrease) in certificates of deposits 2,915,199 (152,949)
Increase in Federal Home Loan Bank advances 5,000,000 --
Net decrease in advance payments by
borrowers for property taxes and insurance (377,971) (559,659)
ESOP shares committed 18,000 --
Common stock purchased and retired (1,228,742) --
------------ ----------
Net cash provided by financing activities 8,356,453 (526,051)
------------ ----------
Increase (decrease) in cash and cash equivalents 2,101,741 (5,675,564)
Cash and cash equivalents at beginning of period $ 2,645,745 8,447,446
------------ ----------
Cash and cash equivalents at end of year $ 4,747,486 2,771,882
=========== ==========
Supplemental disclosure of cash flow information:
Interest paid $ 696,087 662,425
=========== ==========
Income taxes paid $ 165,000 98,738
=========== ==========
</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 December
31, 1996 and December 31, 1995 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.
As discussed in note 6, the Company has changed its year-end from September 30
to December 31. The results of operations for the three months ended December
31, 1996 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.
7. Repurchase of Common Stock
--------------------------
The Company has retired 190,250 shares of common stock held as treasury stock at
September 30, 1996. In addition, the Company purchased and retired an additional
84,100 shares of the Company's common stock as of December 31, 1996.
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 will
be phased in to all markets by mid-March 1997.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Comparison of Financial Condition at December 31, 1996 and September 30, 1996
The Company's assets increased 10.2%, or $8.2 million, between September 30,
1996 and December 31, 1996. This increase was primarily due to the increase in
loans receivable to $64.4 million at December 31, 1996, up $12.9 million from
$51.5 million at September 30, 1996. The asset increase was also attributed to
the Company's $2.2 million increase in interest-bearing deposits in other
financial institutions and the $752,000 increase in premises and equipment. The
Company continued with its plans to open two new full service offices in
McDonough and Fayetteville, Georgia. The OTS approval was received during the
quarter for both offices. The Company plans to open the Fayetteville office
during the quarter ended March 31, 1997 and the McDonough office during the
quarter ended June 30, 1997. These increases were funded by the Company's
reinvestment of investment and mortgage-backed securities into higher interest
yielding loans receivable. Investment and mortgage-backed securities decreased
$7.6 million, or 32.5%, to $15.8 million at December 31, 1996 from $23.4 million
to at September 30, 1996. The Company's growth in assets was also funded by the
$4.9 increase in deposits which grew to $66.8 million at December 31, 1996 from
$61.8 million at September 30, 1996. The Company has also utilized its ability
to obtain short-term Federal Home Loan Bank advances which increased to $7.5
million from $2.5 million at September 30, 1996.
Stockholders' equity decreased $1.3 million, or 9.0%, from $14.4 million at
September 30, 1996 to $13.1 million at December 31, 1996. This decrease was the
result of the Company's repurchase of 84,100 shares of its common stock for $1.3
million and the declaration of a $0.25 dividend per share totaling $423,000. The
net decrease in stockholders' equity was partially offset by an increase of
$242,000 in the unrealized holding gains on investment and mortgage-backed
securities available for sale. The ratio of stockholders' equity as a percent of
total assets decreased to 14.8% at December 31, 1996 from 18.0% at September 30,
1996. Book value per share decreased to $14.61 as December 31, 1996 from $14.68
at September 30, 1996.
Comparison of Operating Results for the Three Months Ended December 31, 1996 and
1995
Net Income The Company's net income of $89,581 for the three-month
period ended December 31, 1996 decreased by $95,000 or 51.4% from net income of
$184,175 for the same period in 1995. This decrease was primarily due to an
increase of $123,000, or 8.8%, in total interest and dividend income, offset by
a larger increase of $198,000, or 70.0%, in salaries and employee benefits.
Net Interest Income Net interest income for the three-month period ended
December 31, 1996 increased $89,000, or 12.1%, from $738,000 in 1995 to $828,000
for the same period in 1996. The increase in the average balance of loans
receivable during the three-month period ended December 31, 1996, compared to
the same period in 1995, resulted in an increase in interest income from loans
to $1.2 million from $932,000, respectively, an increase of $277,000, or 29.7%.
Conversely, investment and mortgage-backed securities interest income declined
$112,000 for the same reason from 1996 to 1995 to $278,000 from $390,000,
respectively. Interest expense on deposits decreased $31,000 due to lower market
interest rates paid, while interest expense of FHLB advances increased $64,000
due to new borrowings by the Company.
Provision for Loan Losses The Association's provision for loan losses
remained relatively constant for the three months ended December 31, 1996
compared to the same period in 1995 by decreasing to $6,851 from $7,625,
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.
7
<PAGE>
Part I - FINANCIAL INFORMATION, Item 2. - (Continued)
Other Income Other income increased $46,000, or 44.0%, to $150,00 in the
three-month period ended December 31, 1996 from $104,000 for the same period in
1995. This increase was primarily the result of increases in loans fees and
service charges on deposit accounts attributable to the underlying increases in
the respective loan and deposit bases of the Company.
Other Expense Other expenses for the three months ended December 31, 1995
increased from $552,000 for the three-month period ended December 31, 1995 to
$833,000 for the same period in 1996, an increase of $281,000, or 50.8%. This
increase is primarily due to the $198,000 increase in salaries and employee
benefit expenses which increased to $483,099 for the same period in 1996 from
$285,000 in 1995. The number of Company employees has grown by 9 during the last
three months in an effort to support the growth plans of the Company, largely in
the area of loan originations in new and existing loan products.
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, Clayton County
Federal Savings and Loan Association (the "Association") 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 Association's liquidity ratio
averaged 26.7% during December 1996 compared to 33.5% during the month of
December 1995. The Association 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.
At the Company's Annual Meeting of Shareholders held on January 23, 1997, the
following individuals were elected to the Board of Directors:
For Withheld
------- --------
Edwin S. Kemp 724,384 102
Joseph B. Mundy 724,484 2
The following directors had terms of office that continued after the meeting:
David B. Turner John B. Lee, Jr.
Charles S. Tucker
The following proposal was approved at the Company's Annual Meeting:
<TABLE>
<CAPTION>
For Against Abstain
<S> <C> <C> <C>
1. Ratify the appointment of KPMG Peat Marwick LLP as
independent auditors for the fiscal year ending
December 31, 1997. 724,461 0 25
</TABLE>
Item 5. Other Information
NONE
Item 6. Exhibits and Reports on Form 8-K
(a) See Exhibit Index
(b) A Current Report on Form 8-K (Item 8), dated December 10, 1996,
was filed during the quarter for which this report is filed.
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: February 13, 1997 BY: \s\ David B. Turner
----------------------------
David B. Turner
President and
Chief Executive Officer
Date: February 13, 1997 BY: \s\ Thomas L. Sawyer
----------------------------
Thomas L. Sawyer
Vice-President and
Chief Financial Officer
10
CCF HOLDING AND SUBSIDIARY
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
11.1 Computation of Per Share Earnings
11
<PAGE>
Exhibit 11.1
CCF HOLDING COMPANY AND SUBSIDIARY
Computation of Per Share Earnings
Three Months Ended
December 31, 1996
-----------------
Common stock - shares outstanding as of
September 30, 1996, net of 190,250 treasury stock .......... 1,000,000
Unallocated ESOP shares as of September 30, 1996 .............. (63,000)
ESOP shares - committed ....................................... 600
Shares repurchased ............................................ (44,088)
----------
Weighted average shares outstanding ........................... 893,512
==========
Net income per share .......................................... $ .10
==========
12
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1996
<CASH> 2,060
<INT-BEARING-DEPOSITS> 2,688
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 15,784
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 64,376
<ALLOWANCE> 547
<TOTAL-ASSETS> 88,509
<DEPOSITS> 66,767
<SHORT-TERM> 7,500
<LIABILITIES-OTHER> 1,105
<LONG-TERM> 0
0
0
<COMMON> 92
<OTHER-SE> 13,046
<TOTAL-LIABILITIES-AND-EQUITY> 8,848
<INTEREST-LOAN> 1,209
<INTEREST-INVEST> 278
<INTEREST-OTHER> 37
<INTEREST-TOTAL> 1,524
<INTEREST-DEPOSIT> 632
<INTEREST-EXPENSE> 696
<INTEREST-INCOME-NET> 828
<LOAN-LOSSES> 7
<SECURITIES-GAINS> 1,955
<EXPENSE-OTHER> 833
<INCOME-PRETAX> 138
<INCOME-PRE-EXTRAORDINARY> 138
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 90
<EPS-PRIMARY> 0.10
<EPS-DILUTED> 0.10
<YIELD-ACTUAL> 7.16
<LOANS-NON> 378
<LOANS-PAST> 378
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 540
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 547
<ALLOWANCE-DOMESTIC> 547
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 546
</TABLE>
