<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
March 31, 1997
___ 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 May 6, 1997
Traditional Small Business Disclosure Format:
Yes X No
1
<PAGE> 2
GEORGIA BANCSHARES, INC.
AND SUBSIDIARY
INDEX
Page No.
Part I: Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets (unaudited) March 31, 1997
and (unaudited) December 31, 1996 2
Consolidated Statements of Earnings (unaudited)for the
Three Months Ended March 31, 1997 and 1996 3
Consolidated Statements of Cash Flows (unaudited) for the
Three Months Ended March 31, 1997 and 1996 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
2
<PAGE> 3
Part I: Financial Information
Item 1. Financial Statements
GEORGIA BANCSHARES, INC.
AND SUBSIDIARY
Consolidated Balance Sheet
March 31, 1997 and December 31, 1996
(Unaudited)
Assets
March 31, December 31,
1997 1996
Cash and due from banks $ 2,575,263 1,443,556
Federal funds sold 1,590,000 5,140,000
Investment securities available for sale
(amortized cost of $15,711,851) 15,451,321 15,870,086
Loans 34,945,402 31,639,976
Less: Allowance for loan losses 496,027 459,383
Loans, net 34,449,375 31,180,593
---------- ----------
Premises and equipment, net 2,955,102 2,980,313
Other assets 1,900,200 1,735,929
--------- ---------
$ 58,921,261 58,350,477
========== ==========
Liabilities and Stockholders' Equity
Liabilities:
Deposits:
Non-interest-bearing $ 9,231,183 8,216,142
Interest-bearing 43,270,216 43,826,883
---------- ----------
Total deposits 52,501,399 52,043,025
Other liabilities 374,132 211,684
------- -------
Total liabilities 52,875,531 52,254,709
---------- ----------
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 439,712 391,139
Unrealized loss on investment securities,
net of tax (267,553) (168,942)
--------- --------
Total stockholders' equity 6,045,730 6,095,768
--------- ---------
$ 58,921,261 58,350,477
========== ==========
See accompanying notes to consolidated financial statements.
3
<PAGE> 4
GEORGIA BANCSHARES, INC.
AND SUBSIDIARY
Consolidated Statements of Earnings
For the Three Months Ended March 31, 1997 and 1996
(Unaudited)
Three Months Ended
March 31,
1997 1996
---- ----
Interest income:
Loans $ 872,908 705,266
Investment securities 258,943 216,133
Interest on interest bearing deposits - 4,785
Federal funds sold 26,816 40,090
------ ------
Total interest income 1,158,667 966,274
--------- -------
Interest expense:
Demand deposits 64,746 48,632
Savings deposits 47,064 54,317
Time deposits 387,035 335,909
Other 120 944
--- ---
Total interest expense 498,965 439,802
-------- --------
Net interest income before provision
for loan losses 659,702 526,472
Provision for loan losses 37,500 25,500
------ ------
Net interest income after provision for
loan losses 622,202 500,972
------- -------
Other income:
Service charges on deposit account 72,076 68,849
Other operating income 30,935 14,130
------ ------
Total other income 103,011 82,979
------- ------
Other expense:
Salaries and other personnel expense 280,318 203,938
Net occupancy and equipment expense 95,327 74,526
Other operating expense 187,261 124,998
------- --------
Total other expense 562,906 403,462
------- -------
Earnings before income taxes 162,307 180,489
Income tax expenses 55,311 56,648
------ -------
Net earnings $ 106,996 123,841
======= =======
Earnings per common share based on average
outstanding shares of 584,228 in 1997
and 1996 $ .19 .22
=== ===
See accompanying notes to consolidated financial statements.
4
<PAGE> 5
GEORGIA BANCSHARES, INC.
AND SUBSIDIARY
Consolidated Statements of Cash Flows
For the Three Months Ended March 31, 1997 and 1996
(Unaudited)
Three Months Ended
March 31,
1997 1996
---- ----
Cash flows from operating activities:
Net earnings $ 106,996 123,841
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Provision for loan losses 37,500 25,500
Deferred tax benefits (92,630) (58,353)
Depreciation, amortization and accretion 53,920 29,915
Change in assets and liabilities:
Prepaid expenses and other assets (73,960) (14,785)
Accrued expenses and other liabilities 162,448 181,437
------- --------
Net cash provided (used) by
operating activities 194,274 287,555
------- -------
Cash flows from investing activities:
Proceeds from sales, maturities and paydowns of
investment securities 817,418 1,441,259
Purchases of investment securities (496,836) (1,850,988)
Net change in interest-bearing deposits in
other banks - (100,000)
Net increase in loans (3,306,282) (229,991)
Purchases of premises and equipment (26,818) (34,099)
-------- --------
Net cash provided (used) by
investing activities (3,012,518) (773,819)
----------- ---------
Cash flows from financing activities:
Net change in deposits 458,374 1,952,599
Dividends paid (58,423) (29,213)
-------- ---------
Net cash provided (used) by
financing activities 399,951 1,923,386
------- ---------
Net increase (decrease) in cash and cash equivalents (2,418,293) 1,437,122
Cash and cash equivalents at beginning of the period 6,583,556 4,325,395
--------- ---------
Cash and cash equivalents at end of period $ 4,165,263 5,762,517
========= =========
Supplemental cash flow information:
Cash paid for interest $ 354,801 301,893
======= =======
Cash paid for income taxes $ 57,607 -
======= =======
See accompanying notes to consolidated financial statements.
5
<PAGE> 6
GEORGIA BANCSHARES, INC.
AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Unaudited)
(1) Basis of Presentation
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information, and with the instructions to Form 10-QSB and Item
310 (b) of Regulation S-B of the Securities and Exchange Commission.
Accordingly, they do not include all of the information and footnotes
required by generally 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, 1997, are not necessarily indicative of the results that may be
expected for the year ended December 31, 1997. For further information
refer to the consolidated financial statements and footnotes thereto
included in the Company's Annual Report on Form 10-KSB for the year ended
December 31, 1996.
(2) New and Pending Pronouncements
The Financial Accounting Standards Board has issued Statements of
Financial Standards No. 125 (SFAS 125), Accounting for Transfers and
Servicing of Financial Assets and Extinguishment of Liabilities." The
Company is required to implement SFAS 125 in 1997. SFAS 125 establishes
standards for distinguishing transfers of financial assets that are
sales from transfers that are secured borrowings. The adoption is not
expected to have a significant impact on the Company.
(3) Supplemental Financial Data
Components of other operating expenses of 1% of total interest income and
other income for the periods ended March 31, 1997 and 1996 are:
Three Months Ended
March 31,
1997 1996
---- ----
Printing and supplies $ 16,931 13,637
Postage and courier 15,268 10,458
6
<PAGE> 7
GEORGIA BANCSHARES, INC.
AND SUBSIDIARY
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations - (continued)
For Each of the Three Months in the Periods Ended
March 31, 1997 and 1996
Interim Financial Condition
Georgia Bancshares, Inc. (the "Company") reported total assets of
$58,921,261 as of March 31, 1997, compared to $58,350,477 at December 31, 1996.
The most significant change in the composition of assets was an increase in
gross loans from $31,639,976 to $34,945,402. The increase was funded from a
reduction in Federal funds investments of $3,550,000. Deposits increased by
$458,374 (.88%) from December 31, 1996. The minimum growth in deposits has
resulted from consumer's resistance to invest due to unpredictable interest
rates and a normal reduction of commercial balances during the first quarter.
As a result of the loan growth, the loan to deposit ratio has increased to
66.56%. The Company's cash and cash equivalents have decrease by
$2,418,293 to $4,165,263 as of March 31, 1997.
Liquidity
The Bank's liquid assets as a percentage of total deposits were 7.93% at
March 31, 1997, compared to 12.65% at December 31, 1996. The Company has
approximately $3,900,000 in available federal fund lines of credit with
correspondent banks. The Company has occasionally advanced on these lines during
March of 1997. The maximum amount borrowed under these lines at any one time was
$670,000. With the recent upward changes in interest rates, management believes
the deposits will increase during the next few months to fund the continuing
loan growth and meet short-term operating requirements. Management also analyzes
the level of off-balance sheet commitments such as unfunded loan equivalents,
loan repayments, maturity of investment securities, liquid investment, and
available fund lines in an attempt to minimize the possibility that a potential
shortfall will exist. Based on this analysis, management believes that the
Company has adequate liquidity to meet short-term operating requirements.
However, no assurance can be given in this regard.
Capital
The capital of the Company totaled $6,045,730 as of March 31, 1997. The
capital of the Company and the Bank exceeded all prescribed regulatory capital
guidelines. Regulations require that the most highly rated banks maintain a Tier
1 leverage ratio of 3% plus an additional cushion of at least 1 to 2 percentage
points. Tier 1 capital consists of common shareholders' equity, less certain
intangibles. The Bank's Tier 1 leverage ratio was 10.82% at March 31, 1997,
compared to 11.90% at December 31, 1996. Regulations require that the Bank
maintain a minimum total risk weighted capital ratio of 8%, with one-half of
this amount, or 4%, made up of Tier 1 capital. Risk-weighted assets consist of
balance sheet assets adjusted by risk category, and off-balance sheet assets
equivalents similarly adjusted. At March 31, 1997, the Bank had a risk-weighted
total capital ratio of 15.77%, compared to 19.10% at December 31, 1996, and a
Tier I risk-weighted capital ratio of 14.61%, compared to 17.80% at December 31,
1996. The decrease is primarily caused by the transfer of assets between the
federal funds and loans categories.
Asset Quality
Nonperforming assets which includes nonaccruing loans, repossessed
collateral and loans for which payments are more than 90 days past due, totaled
$173,726, a reduction of $56,493 from December 31, 1996. There were no related
party loans which were considered nonperforming at March 31, 1997. The
composition of the nonperforming assets is presented in the following table:
March 31, December 31,
1997 1996
Loans on nonaccrual $ 20,633 -
Other real estate owned 125,000 221,242
Other repossessed collateral 28,093 -
------- -------
Total nonperforming assets $ 173,726 221,242
========= =======
Total nonperforming assets as
a percentage of total loans
(gross) and other real estate 0.49% 0.69%
===== =====
7
<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 Three Months in the Periods Ended
March 31, 1997 and 1996
The allowance for loan losses totaled $496,027 at March 31, 1997, an
increase of $36,644 from December 31, 1996. The allowance for loan losses
represented 1.42% and 1.45% of total loans at March 31, 1997 and December 31,
1996, respectively. An analysis of the allowance for loan losses since December
31, 1996 follows:
Allowance for loan losses at December 31, 1996 $ 459,383
Charge-offs:
Commercial -
Real Estate -
Installment 4,098
-----
Total 4,098
Recoveries:
Commercial -
Real Estate -
Installment 3,242
-----
Total 3,242
Provision charged to income 37,500
---------
Allowance for loan losses at March 31, 1997 $ 496,027
=========
The loan portfolio is reviewed periodically to evaluate the outstanding
loans and to measure the performance of the portfolio and the adequacy of the
allowance for loan losses. This analysis includes a review of delinquency
trends, actual losses, and internal credit ratings. Management's judgment as to
the adequacy of the allowance is based upon a number of assumptions about future
events which it believes to be reasonable, but which may or may not be
reasonable. However, because of the inherent uncertainty of assumptions made
during the evaluation process, there can be no assurance that loan losses in
future periods will not exceed the allowance for loan losses of that additional
allocations to the allowance will not be required.
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.
Investment Securities
At March 31, 1997, the Bank had $15,451,321 in investment securities
available-for-sale . The net unrealized loss on available for sale securities,
net of deferred taxes, was $267,553 on March 31, 1997. The Bank invests
primarily in obligations of the United States or obligations guaranteed as to
principal and interest by the United States and other taxable and tax exempt
securities. The Bank has included in its investment portfolio instruments
described as a derivative, primarily, structured note derivatives. Structured
notes are debt securities whose cash flow characteristics depend on one or
more indexes. Structured notes carry high credit ratings and are issued as
floating-rate instruments. In a rising interest rate environment, the market
value of these securities can decrease due to the fact that the embedded
options, puts, calls, etc., become evident. There can be no assurance that as
interest rates change in the future the amount of unrealized loss will not
increase, but if these securities are held until they mature and are repaid in
accordance with their terms, these principal losses will not be realized.
8
<PAGE> 9
GEORGIA BANCSHARES, INC.
AND SUBSIDIARY
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations - (continued)
For Each of the Three Months in the Periods Ended
March 31, 1997 and 1996
Results of Operations
Net interest income for the first three months of 1997 was $659,702, an
increase $133,230 (25.31%) in the first three months of 1997 compared to the
same period for 1996. Interest income for the first three months of 1997 was
$1,158,667, representing an increase of $192,393 (19.91%) over the same period
in 1996. The growth in interest income was primarily due to an increase in loan
balances. Interest expense for the first three months of 1997 increased $59,163
(13.45%) compared to the same period in 1996. The growth in interest income was
greater than interest expense primarily due to the growth in loan balances
outstanding exceeding the growth in deposits.
Amounts charged to expense related to the allowance for loan losses
for the first three months of 1997 increased $12,500 compared to the same
period for 1996. The increase is primarily attributable to the loan growth
for the first three months in 1997 and management's belief in maintaining a
high level of the allowance for loan losses in relationship to total loans.
Other income for the first three months of 1997 was $103,011, an increase
of $20,032 (24.14%) compared to the same period in 1996. The increase in service
charges on deposit accounts is due to an increase in the number of accounts and
deposit activity which totaled $3,227. The remaining increase was due to
increases in cash value life insurance income, fees from origination of mortgage
loans and merchant account fees.
Other expenses for the first three months of 1997 increased $159,444
(39.52%) compared to the first three months in 1996. This increase is primarily
attributable to a branch addition in October 1996. Approximately $81,969, or
50.82%, of the increase in other expenses is related to the branch addition.
9
<PAGE> 10
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.
No Reports on Form 8-K were filed during the quarter ended
March 31, 1997.
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.
10
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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/ Ted A. Murphy
Ted A. Murphy
President and CEO
By: /s/ David L. Edgar
David L. Edgar, CPA
Principal Financial Officer
Date: May 12, 1997
11
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 2,575,263
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 1,590,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 15,451,321
<INVESTMENTS-CARRYING> 15,451,321
<INVESTMENTS-MARKET> 15,451,321
<LOANS> 34,945,402
<ALLOWANCE> 496,027
<TOTAL-ASSETS> 58,921,261
<DEPOSITS> 52,501,399
<SHORT-TERM> 0
<LIABILITIES-OTHER> 374,132
<LONG-TERM> 0
0
0
<COMMON> 2,336,912
<OTHER-SE> 3,708,818
<TOTAL-LIABILITIES-AND-EQUITY> 58,921,261
<INTEREST-LOAN> 872,908
<INTEREST-INVEST> 258,943
<INTEREST-OTHER> 26,816
<INTEREST-TOTAL> 1,158,667
<INTEREST-DEPOSIT> 498,845
<INTEREST-EXPENSE> 498,965
<INTEREST-INCOME-NET> 659,702
<LOAN-LOSSES> 37,500
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 562,906
<INCOME-PRETAX> 162,307
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 106,996
<EPS-PRIMARY> .19
<EPS-DILUTED> .19
<YIELD-ACTUAL> 4.90
<LOANS-NON> 20,633
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 706,162
<ALLOWANCE-OPEN> 459,383
<CHARGE-OFFS> 4,098
<RECOVERIES> 3,242
<ALLOWANCE-CLOSE> 496,027
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 496,027
</TABLE>
