<PAGE>
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, 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 November 12, 1997
Traditional Small Business Disclosure Format:
Yes X No
1
<PAGE>
GEORGIA BANCSHARES, INC.
AND SUBSIDIARY
INDEX
Page No.
Part I: Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets (unaudited) September 30, 1997
and (unaudited) December 31, 1996 3
Consolidated Statements of Earnings (unaudited) for the
Three and Nine Months Ended September 30, 1997 and 1996 4
Consolidated Statements of Cash Flows (unaudited) for
the Nine Months Ended September 30, 1997 and 1996 5
Notes to Consolidated Financial Statements (unaudited) 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
Part II: Other Information 10
2
<PAGE>
Part I: Financial Information
Item 1. Financial Statements
GEORGIA BANCSHARES, INC.
AND SUBSIDIARY
Consolidated Balance Sheet
September 30, 1997 and December 31, 1996
(Unaudited)
Assets
September 30, December 31,
1997 1996
Cash and due from banks $ 5,449,302 1,443,556
Federal funds sold 5,628,000 5,140,000
Investment securities available
for sale (amortized cost
of $15,933,504) 15,878,138 15,870,086
Loans 42,484,385 31,639,976
Less: Allowance for loan losses 612,480 459,383
------- -------
Loans, net 41,871,905 31,180,593
Premises and equipment, net 2,894,654 2,980,313
Other assets 2,107,725 1,735,929
--------- ---------
$ 73,829,724 58,350,477
========== ==========
Liabilities and Stockholders' Equity
Liabilities:
Deposits:
Non-interest-bearing $ 10,571,415 8,216,142
Interest-bearing 56,107,597 43,826,883
---------- ----------
Total deposits 66,679,012 52,043,025
Other liabilities 700,308 211,684
---------- ----------
Total liabilities 67,379,320 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 717,104 391,139
Unrealized loss on investment securities,
net of tax (140,271) (168,942)
--------- ---------
Total stockholders' equity 6,450,404 6,095,768
---------- ----------
$ 73,829,724 58,350,477
========== ==========
See accompanying notes to consolidated financial statements.
3
<PAGE>
<TABLE>
GEORGIA BANCSHARES, INC.
AND SUBSIDIARY
Consolidated Statements of Earnings
For the Three and Nine Months Ended September 30, 1997 and 1996
(Unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Interest income:
Loans $ 1,095,315 729,630 2,976,908 2,156,787
Investment securities 241,000 234,828 739,627 675,004
Interest on interest bearing deposits - 550 - 10,722
Federal funds sold 98,758 73,805 139,340 162,185
------ ------ ------- -------
Total interest income 1,435,073 1,038,813 3,855,875 3,004,698
--------- --------- --------- ---------
Interest expense:
Demand deposits 64,588 58,059 192,367 157,151
Savings deposits 50,398 53,881 145,737 162,717
Time deposits 555,227 342,151 1,365,933 1,016,866
Other - (91) 2,849 1,403
------- ---- ----- -----
Total interest expense 670,213 454,000 1,706,886 1,338,137
------- ------- ---------- ----------
Net interest income 764,860 584,813 2,148,989 1,666,561
Provision for loan losses 77,500 25,500 152,500 72,000
------ ------- ------- ------
Net interest income after provision for
loan losses 687,360 559,313 1,996,489 1,594,561
------- -------- --------- ---------
Other income:
Service charges on deposit accounts 65,608 69,004 211,926 205,439
Net gain (loss) on securities transactions (702) - (1,462) -
Gain on sale of loans 14,424 - 14,424 -
Other operating income 32,967 25,029 91,763 53,152
------ ------ ------ ------
Total other income 112,297 94,033 316,651 258,591
-------- ------ ------- --------
Other expense:
Salaries and other personnel expense 269,435 224,535 823,935 637,467
Net occupancy and equipment expense 83,151 76,040 271,412 231,024
Other operating expense 182,650 145,996 535,805 402,661
-------- ------- ------- --------
Total other expense 535,236 446,571 1,631,152 1,271,152
------- --------- --------- ----------
Earnings before income taxes 264,421 206,775 681,988 582,000
Income tax expenses 93,190 67,470 239,178 187,710
------ -------- ------- --------
Net earnings $ 171,231 139,305 442,810 394,290
======= ======== ======= ========
Earnings per common share based on average
outstanding shares of 584,228 in 1997
and 1996 $ .29 .23 .76 .67
=== === === ===
<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
4
<PAGE>
GEORGIA BANCSHARES, INC.
AND SUBSIDIARY
Consolidated Statements of Cash Flows
For the Nine Months Ended September 30, 1997 and 1996
(Unaudited)
Nine Months Ended
September 30,
1997 1996
---- ----
Cash flows from operating activities:
Net earnings $ 442,810 394,290
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Provision for loan losses 152,500 72,000
Deferred tax benefits (54,256) (127,209)
Depreciation, amortization and accretion 163,519 140,162
Loss on sale of other real estate - 3,672
Loss on sale of investments 1,462 -
Gain on sale of SBA loans (14,424) -
Change in assets and liabilities:
Prepaid expenses and other assets (330,190) 18,306
Accrued expenses and other liabilities 488,624 330,239
------- --------
Net cash provided (used) by
operating activities 850,045 831,460
------- -------
Cash flows from investing activities:
Proceeds from sales, maturities and paydowns of
investment securities 4,749,140 3,352,968
Purchases of investment securities (4,731,824) (4,107,566)
Net change in interest-bearing deposits in
other banks - 299,000
Net increase in loans (10,988,052) (2,117,698)
Proceeds from sale of loans 158,664 -
Proceeds from sale of other real estate - 66,757
Purchases of premises and equipment (63,369) (944,712)
-------- ---------
Net cash provided (used) by
investing activities (10,875,441) (3,451,251)
------------ ----------
Cash flows from financing activities:
Net change in deposits 14,635,987 6,523,262
Dividends paid (116,845) (87,634)
--------- ----------
Net cash provided (used) by
financing activities 14,519,142 6,435,628
---------- ---------
Net increase (decrease) in cash and cash equivalents 4,493,746 3,815,837
Cash and cash equivalents at beginning of the period 6,583,556 4,325,395
--------- ---------
Cash and cash equivalents at end of period $ 11,077,302 8,141,232
========== =========
Supplemental cash flow information:
Cash paid for interest $ 1,524,898 1,040,809
========= =========
Cash paid for income taxes $ 352,087 -
======= ======
Transfer from loans to other assets $ 38,891 11,486
====== ======
Change in unrealized loss on securities
available for sale, net of tax $ 28,671 206,355
====== =======
See accompanying notes to consolidated financial statements.
5
<PAGE>
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 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 nine month
period ended September 30, 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 September 30, 1997 and 1996 are:
Three Months Ended Six Months Ended
September 30, September 30,
1997 1996 1997 1996
---- ---- ---- ----
Printing and supplies $ 21,523 14,287 $ 9,002 45,123
Postage and courier 9,788 12,049 37,099 34,625
6
<PAGE>
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, 1997 and 1996
Interim Financial Condition
Georgia Bancshares, Inc. (the "Company") reported total assets of
$73,829,724 as of September 30, 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 $42,484,385. The increase in loans was funded
primarily by an increase in deposits of $14,635,987 (34.27%). The growth in
deposits has resulted from Bank's aggressive approach to relationship banking
and increasing deposit rates. As a result of the loan growth, the loan to
deposit ratio has increased to 63.72% from 60.80% at December 31, 1996.
The Company's cash and cash equivalents have increased by $4,493,746 to
$11,077,302 as of September 30, 1997.
Liquidity
The Bank's liquid assets as a percentage of total deposits were 14.36% at
September 30, 1997, compared to 12.65% at December 31, 1996. With the recent
upward changes in interest rates, the deposits have increased significantly
during the last few months. In addition to increasing rates on certificates of
deposits, the Bank issued $ 2,500,000 in brokered deposits during June, to boost
the level of deposits. 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 1997. The maximum amount borrowed
under these lines at any one time was $ 990,000. Periodically, management
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.
Capital
The capital of the Company totaled $6,450,404 as of September 30, 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 9.50% at
September 30, 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 September 30, 1997, the Bank had a
risk-weighted total capital ratio of 13.55%, compared to 19.10% at December 31,
1996, and a Tier I risk-weighted capital ratio of 12.39%, compared to 17.80% at
December 31, 1996. The decrease is primarily caused by the continued growth in
the loans.
Asset Quality
Nonperforming assets which includes nonaccruing loans, repossessed
collateral and loans for which payments are more than 90 days past due, totaled
$561,188, an increase of $401,224 from December 31, 1996. There were no related
party loans which were considered nonperforming at September 30, 1997. The
composition of the nonperforming assets is presented in the following table:
September 30, December 31,
1997 1996
Loans on nonaccrual $ 222,803 11,469
Other real estate owned 299,494 148,495
Other repossessed collateral 38,891 -
------- -------
Total nonperforming assets $ 561,188 159,964
========= =======
Total nonperforming assets as
a percentage of total loans
(gross) and other real estate 1.31% 0.50%
===== =====
7
<PAGE>
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, 1997 and 1996
The allowance for loan losses totaled $612,480 at September 30, 1997, an
increase of $153,097 from December 31, 1996. The allowance for loan losses
represented 1. 44% and 1.45% of total loans at September 30, 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 4,373
-----
Total 4,373
Recoveries:
Commercial -
Real Estate -
Installment 4,970
-----
Total 4,970
-----
Provision charge to income 152,500
-------
Allowance for loan losses at September 30, 1997 $ 612,480
=========
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 1997. 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 September 30, 1997, the Bank had $15,878,138 in investment securities
available-for-sale. The net unrealized loss on available for sale securities,
net of deferred taxes, was $140,271 on September 30, 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>
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, 1997 and 1996
Results of Operations
Net interest income for the first nine months of 1997 was $2,148,989, an
increase $482,428 (28.95%) compared to the same period for 1996. Interest income
for the first nine months of 1997 was $3,855,875, representing an increase of $
851,177 (28.33%) 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
six months of 1997 increased $368,749 (27.56%) compared to the same period in
1996.
Amounts charged to expense related to the allowance for loan losses for
the first nine months of 1997 increased $80,500 compared to the same period for
1996. The increase is primarily attributable to the loan growth for the first
nine 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 nine months of 1997 was $316,651, an increase
of $58,060 (22.45%) compared to the same period in 1996. The Bank sold one SBA
loan with an outstanding balance of $144,916 during the third quarter of 1997
for a gain of $ 14,424. The remaining increase was due to increases in cash
value life insurance income of $28,281, service charges of $6,487 and other
increases of $8,868.
Other expenses for the first nine months of 1997 increased $360,000
(28.32%) compared to the first nine months in 1996. This increase is primarily
attributable to a branch addition in October 1996. Approximately $219,226, or
60.90%, of the increase in other expenses is related to the branch addition.
9
<PAGE>
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 were filed on Form 8-K during the nine months ended September
30, 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
<PAGE>
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: November 13, 1997
11
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 5,449,302
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 5,628,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 15,878,138
<INVESTMENTS-CARRYING> 15,878,138
<INVESTMENTS-MARKET> 15,878,138
<LOANS> 42,484,385
<ALLOWANCE> 612,480
<TOTAL-ASSETS> 73,829,724
<DEPOSITS> 66,679,012
<SHORT-TERM> 0
<LIABILITIES-OTHER> 700,308
<LONG-TERM> 0
0
0
<COMMON> 2,336,912
<OTHER-SE> 4,113,492
<TOTAL-LIABILITIES-AND-EQUITY> 73,829,724
<INTEREST-LOAN> 2,976,908
<INTEREST-INVEST> 739,627
<INTEREST-OTHER> 139,340
<INTEREST-TOTAL> 3,855,875
<INTEREST-DEPOSIT> 1,704,037
<INTEREST-EXPENSE> 1,706,886
<INTEREST-INCOME-NET> 2,148,989
<LOAN-LOSSES> 152,500
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 1,631,152
<INCOME-PRETAX> 681,988
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 239,178
<EPS-PRIMARY> .76
<EPS-DILUTED> .76
<YIELD-ACTUAL> 4.57
<LOANS-NON> 222,803
<LOANS-PAST> 165,606
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 967,810
<ALLOWANCE-OPEN> 459,383
<CHARGE-OFFS> 4,373
<RECOVERIES> 4,970
<ALLOWANCE-CLOSE> 612,480
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 612,480
</TABLE>
