<PAGE> 1
US SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
_X_ Quarterly report under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended September 30, 1996
___ Transition report under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period from ___________ to ______________
Commission file number - 33-90742
GEORGIA BANCSHARES, INC.
(Exact Name of Small Business Issuer as Specified in Its Charter)
Georgia 58-2176047
(State or Other Jurisdiction (IRS Employer Identification No.)
of Incorporation)
3333 Lawrenceville Highway
Tucker, Georgia 30084
(Address of Principal Executive Offices)
(770) 491-3333
(Issuer's Telephone Number, Including Area Code)
Check whether the issuer: (1) has filed all reports required to be filed
by Section 13 or 15(d) of the 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
Common stock, par value $4 per share: 584,228 shares
outstanding as of November 6, 1996
Traditional Small Business Disclosure Format:
Yes X No
<PAGE> 2
GEORGIA BANCSHARES, INC.
AND SUBSIDIARY
INDEX
Page No.
Part I: Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets (unaudited) September 30,
1996 and (unaudited) December 31, 1995 2
Consolidated Statements of Income (unaudited) for
the Three Months and the Nine Months Ended
September 30, 1996 and 1995 3
Consolidated Statements of Cash Flows (unaudited)
for the Nine Months Ended September 30, 1996
and 1995 4
Notes to Consolidated Financial Statements (unaudited) 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 6
Part II: Other Information 8
<PAGE> 3
Part I: Financial Information
Item 1. Financial Statements
GEORGIA BANCSHARES, INC.
AND SUBSIDIARY
Consolidated Balance Sheet
September 30, 1996 and December 31, 1995
(Unaudited)
Assets
September 30, December 31,
1996 1995
Cash and due from banks $ 2,625,232 1,253,113
Interest bearing deposits with other banks - 299,000
Federal funds sold 5,516,000 3,072,282
Investment securities available for sale
(amortized cost of $14,678,753) 14,376,329 13,831,746
Loans 27,741,126 25,621,909
Less: Allowance for loan losses 474,949 401,430
Loans, net 27,266,177 25,220,479
Premises and equipment, net 2,787,096 1,958,272
Accrued interest receivable and
other assets 1,771,956 1,754,276
$ 54,342,790 47,389,168
Liabilities and Stockholders' Equity
Liabilities:
Deposits:
Noninterest-bearing $ 7,384,494 7,430,943
Interest-bearing 40,604,983 34,035,272
Total deposits 47,989,477 41,466,215
Accrued interest payable and
other liabilities 523,315 193,256
Total liabilities 48,512,792 41,659,471
Stockholders' equity:
Common stock, $4 par value; authorized
3,000,000 shares; issued and outstanding
584,228 shares 2,336,912 2,336,912
Capital surplus 3,536,659 3,536,659
Accumulated deficit 249,972 (56,684)
Unrealized loss on investment securities,
net of tax (293,545) (87,190)
Total stockholders' equity 5,829,998 5,729,697
$ 54,342,790 47,389,168
See accompanying notes to consolidated financial statements.
<PAGE> 4
GEORGIA BANCSHARES, INC.
AND SUBSIDIARY
Consolidated Statements of Income
For the Three Months and the Nine Months Ended September 30, 1996 and 1995
(Unaudited)
Three Months Nine Months
Ended Ended
1996 1995 1996 1995
Interest income:
Loans $ 729,630 671,654 2,156,787 1,874,091
Investment securities 234,828 202,174 675,004 539,790
Interest on interest
bearing deposits 550 5,034 10,722 21,490
Federal funds sold 73,805 69,645 162,185 155,958
Total interest income 1,038,813 948,507 3,004,698 2,591,329
Interest expense:
Demand deposits 58,059 55,281 157,151 140,455
Savings deposits 53,881 59,317 162,717 214,718
Time deposits 342,151 308,350 1,016,866 750,180
Other (91) 1,605 1,403 4,794
Total interest expense 454,000 424,553 1,338,137 1,110,147
Net interest income 584,813 523,954 1,666,561 1,481,182
Provision for loan losses 25,500 36,000 72,000 100,400
Net interest income
after provision for
loan losses 559,313 487,954 1,594,561 1,380,782
Other income:
Service charges on
deposit accounts 69,004 61,493 205,439 182,043
Net gain (loss) on
securities transactions - - - -
Other operating income 25,029 3,447 53,152 34,957
Total other income 94,033 64,940 258,591 217,000
Other expense:
Salaries and other
personnel expense 224,535 191,921 637,467 557,110
Net occupancy and
equipment expense 76,040 71,202 231,024 206,525
Other operating expense 145,996 132,697 402,661 373,592
Total other expense 446,571 395,820 1,271,152 1,137,227
Earnings before
income taxes 206,775 157,074 582,000 460,555
Income tax expenses 67,470 - 187,710 -
Net earnings $ 139,305 157,074 394,290 460,555
Earnings per common share
based on average outstanding
shares of 584,228 in 1996
and 1995 $ .23 .27 .67 .79
See accompanying notes to consolidated financial statements.
<PAGE> 5
GEORGIA BANCSHARES, INC.
AND SUBSIDIARY
Consolidated Statements of Cash Flows
For the Nine Months Ended September 30, 1996 and 1995
(Unaudited)
Nine Months Ended
September 30,
1996 1995
Cash flows from operating activities:
Net earnings $ 394,290 460,555
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Provision for loan losses 72,000 100,400
Depreciation, amortization and accretion 140,162 130,327
Deferred Tax Benefits (127,209) -
Loss on sale of other real estate 3,672 -
Change in assets and liabilities:
Interest receivable (12,375) (72,780)
Interest payable 297,328 302,428
Prepaid expenses and other assets 30,681 (25,262)
Accrued expenses and other liabilities 32,731 49,611
Net cash provided (used) by operating
activities 831,460 945,279
Cash flows from investing activities:
Proceeds from sales, maturities and paydowns of
investment securities 3,352,968 1,944,726
Purchases of investment securities (4,107,566) (4,204,735)
Net change in interest-bearing deposits
in other banks 299,000 496,000
Net increase in loans (2,117,698) (3,090,942)
Proceeds from sale of other real estate 66,757 -
Purchases of premises and equipment (944,712) (19,312)
Net cash provided (used) by investing
activities (3,451,251) (4,874,263)
Cash flows from financing activities:
Net change in deposits 6,523,262 6,635,903
Dividends declared (87,634) -
Net cash provided (used) by financing
activities 6,435,628 6,635,903
Net increase (decrease) in cash and
cash equivalents 3,815,837 2,706,919
Cash and cash equivalents at beginning
of the period 4,325,395 3,551,162
Cash and cash equivalents at end of period $ 8,141,232 6,258,081
Supplemental cash flow information:
Cash paid for interest $ 1,040,809 807,719
Transfer from loans to other assets $ 11,486 -
Change in unrealized loss on securities
available for sale, net of tax $ 206,355 (226,633)
See accompanying notes to consolidated financial statements.
<PAGE> 6
GEORGIA BANCSHARES, INC.
AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Unaudited)
(1) Basis of Presentation
The financial information furnished herein reflects all adjustments
which are, in the opinion of management, necessary to present a fair
statement of the results of operations and financial position for the
periods covered herein. All such adjustments are of a normal recurring
nature.
(2) Name Change and Branch Opening
The registrant's wholly owned Georgia bank subsidiary, DeKalb State Bank,
has changed its name effective September 16, 1996 to "Community Bank of
Georgia". The name was changed to facilitate expansion outside of
DeKalb County. The Bank opened a branch office in Lilburn, Georgia on
October 1, 1996. The Bank has invested approximately $850,000 to
purchase, renovate and equip a single story building with approximately
2,800 square feet of usable floor space for the new branch office.
<PAGE> 7
GEORGIA BANCSHARES, INC.
AND SUBSIDIARY
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
For Each of the Nine Months in the Periods Ended
September 30, 1996 and 1995
Financial Condition
Total assets at September 30, 1996, were $54,342,790, representing a
$6,953,622 (14.67%) increase from December 31, 1995. Deposits increased
$6,523,262 (15.73%) from December 31, 1995, the majority of the growth has
been in interest bearing demand deposits and certificates of deposits. Loans
increased $2,045,698 (8.11%) since December 31, 1995. The growth in loans is
lower than in the nine month period ending September 30, 1995. The deposits
grew at a greater rate and the excess liquidity was invested in investment
securities and federal funds. Investment securities at September 30, 1996,
were $14,376,329, representing an increase of $544,583 (3.94%). Cash and cash
equivalents were $8,141,232 at September 30, 1996, an increase of $3,815,837
from December 31, 1995. As of September 30, 1996, $5,516,000 was invested in
federal funds.
The total of nonperforming assets which includes nonaccruing loans,
repossessed collateral and loans for which payments are more than 90 days
past due increased $56,480 from $9,701 at December 31, 1995 to $66,181 at
September 30, 1996. There were no related party loans which were considered
nonperforming at September 30, 1996.
The Bank was most recently examined by its primary regulatory authority in
July 1996. There were no recommendations by the regulatory authority that
in management's opinion will have material effects on the Bank's liquidity,
capital resources or operations.
Results of Operations
Net interest income for the first nine months of 1996 was $1,594,561, an
increase of $213,779 (15.48%) compared to the same period for 1995. The net
interest margin for the nine months ending September 30, 1996 was 4.37%, a
decline from 4.54% for the same period in 1995. The decline was due to the
reduction of interest rates in late 1995 and early 1996. Interest income
for the first nine months of 1996 was $3,004,698, representing an increase
of $413,369 (15.95%) over the same period in 1995. The growth in interest
income was primarily due to the increase in funds available for loans and
investments. Interest expense for the first nine months of 1996 increased
$227,990 (20.54%) compared to the same period in 1995. The growth in
interest expense was greater than interest income primarily due to the
types of investments available and the increase in deposits concentrated in
interest bearing demand deposits and certificates of deposits.
The provision for loan losses for the first nine months of 1996 was $72,000
compared to $100,400 for the same period for 1995. The decrease is primarily
attributable to reduction in loan growth and the level of the reserve for
loan losses in relationship to total loans. The allowance for loan losses
at September 30, 1996 totaled $474,949, representing 1.71% of total loans
compared to December 31, 1995 totals of $362,141 representing 1.45% of
total loans. The loan portfolio is periodically reviewed to evaluate the
outstanding loans and to measure both the performance of the portfolio and
the adeqyacy of the allowance for loan losses. This analysis includes a review
of delinquent loans, trends, actual losses and internal credit ratings.
Management's judgement to the adequacy of the allowance is based upon a number
of assumptions and future events which it believes to be reasonable. However,
because of the inherent uncertainty of assumptions during the evaluation
process, there can be no assurance that loan losses in future periods will not
exceed the allowance for loan losses or that additional allocations to the
allowance will not be required.
Other income for the first nine months of 1996 was $258,591, an increase of
$41,591 (19.17%) compared to the same period in 1995. The increase in
service charges on deposit accounts is due to an increase in the number of
accounts and deposit activity which totaled $23,393. The remaining increase
in income was due to cash value life insurance income and surcharging
foreign customers for utilizing the Bank's automated teller machines.
<PAGE> 8
GEORGIA BANCSHARES, INC.
AND SUBSIDIARY
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations - (continued)
For Each of the Nine Months in the Periods Ended
September 30, 1996 and 1995
Other expenses for the first nine months of 1996 increased $133,925 (11.78%)
compared to the first nine months in 1995. This increase is primarily
attributable to an increase in salary and personnel expenses of
approximately $80,357 associated with the increase of personnel needed
to accommodate growth, merit increases, and an increase of $24,499 in net
occupancy and equipment expense related to general increases in insurance,
repairs and maintenance, and utilities.
Income tax expense for the first nine month period ending September 30,
1996 was $187,710. The Company is expects to utilize the entire net
operating loss carryover for federal income tax purposes during 1996.
Capital
The following tables present the Bank's regulatory capital position at
September 30, 1996:
Risk-Based Capital Ratios
Tier 1 Tangible Capital 17.9%
Tier 1 Tangible Capital minimum requirement 4.0%
Excess 13.9%
Total Capital 19.2%
Total Capital minimum requirement 8.0%
Excess 11.2%
Leverage Ratio
Tier 1 Tangible Capital to adjusted total assets
("Leverage Ratio") 11.6%
Minimum leverage requirement 3.0%
Excess 8.6 %
<PAGE> 9
GEORGIA BANCSHARES, INC.
AND SUBSIDIARY
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
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K.
On September 26, 1996, the Company filed a Current Report on Form 8-K
regarding the change in the name of the registrant's wholly owned
subsidiary.
The following Exhibits are filed with or incorporated by reference in
this Report as indicated below:
2 Plan and Agreement of Reorganization, dated as of February 16,
1995, by and among the Bank, Interim and the Company
(incorporated by reference from Appendix A to the Proxy
Statement/Prospectus included in the Company's Registration
Statement on Form S-4, Commission File No. 33-90742, filed
with the Commission on March 31, 1995 (the "S-4 Registration
Statement")).
3.1 Articles of Incorporation of the Company (incorporated by
reference from Exhibit 3.1 to the S-4 Registration Statement.
3.2 Bylaws of the Company (incorporated by reference from Exhibit
3.2 to the S-4 Registration Statement).
4 Form of Certificate representing shares of the $4.00 par value
common stock of the Company (incorporated by reference from
Exhibit 4.1 to the S-4 Registration Statement).
21 List of Subsidiaries of the Company (incorporated by reference
from Exhibit 21 to the Form 8-K, Commission File No. 33-90742,
filed with the Commission on August 18, 1995.
99.2 Description of the Company Common Stock (incorporated by
reference from Exhibit 99.1 to the Form 8-K, Commission File
No. 33-90742, filed with the Commission on August 18, 1995).
<PAGE> 10
GEORGIA BANCSHARES, INC.
AND SUBSIDIARY
SIGNATURES
In accordance with the requirements of the Securities Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
GEORGIA BANCSHARES, INC.
By: /s/ David L. Edgar
David L. Edgar, CPA, Principal
Financial Officer and Principal
Accounting Officer
Date: November 13, 1996
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 2,625,232
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 5,516,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 14,376,329
<INVESTMENTS-CARRYING> 14,376,329
<INVESTMENTS-MARKET> 14,376,329
<LOANS> 27,741,126
<ALLOWANCE> 474,949
<TOTAL-ASSETS> 54,342,790
<DEPOSITS> 47,989,477
<SHORT-TERM> 0
<LIABILITIES-OTHER> 523,315
<LONG-TERM> 0
0
0
<COMMON> 2,336,912
<OTHER-SE> 3,493,086
<TOTAL-LIABILITIES-AND-EQUITY> 54,342,790
<INTEREST-LOAN> 2,156,787
<INTEREST-INVEST> 675,004
<INTEREST-OTHER> 172,907
<INTEREST-TOTAL> 3,004,698
<INTEREST-DEPOSIT> 1,336,734
<INTEREST-EXPENSE> 1,338,137
<INTEREST-INCOME-NET> 1,666,561
<LOAN-LOSSES> 72,000
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 1,271,152
<INCOME-PRETAX> 582,000
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 582,000
<EPS-PRIMARY> .67
<EPS-DILUTED> .67
<YIELD-ACTUAL> 4.87
<LOANS-NON> 66,181
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 731,083
<ALLOWANCE-OPEN> 401,430
<CHARGE-OFFS> 16,063
<RECOVERIES> 17,582
<ALLOWANCE-CLOSE> 474,949
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 474,949
</TABLE>
