<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
June 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 August 13, 1997
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) June 30, 1997
and (unaudited) December 31, 1996 2
Consolidated Statements of Earnings (unaudited) for the
Three and Six Months Ended June 30, 1997 and 1996 3
Consolidated Statements of Cash Flows (unaudited) for the
Six Months Ended June 30, 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
<PAGE>3
Part I: Financial Information
Item 1. Financial Statements
GEORGIA BANCSHARES, INC.
AND SUBSIDIARY
Consolidated Balance Sheet
June 30, 1997 and December 31, 1996
(Unaudited)
Assets
June 30, December 31,
1997 1996
Cash and due from banks $ 3,182,055 1,443,556
Federal funds sold 6,135,000 5,140,000
Investment securities available for sale
(amortized cost of $12,939,671) 12,849,916 15,870,086
Loans 40,356,118 31,639,976
Less: Allowance for loan losses 533,751 459,383
Loans, net 39,822,367 31,180,593
---------- ----------
Premises and equipment, net 2,936,015 2,980,313
Other assets 1,963,113 1,735,929
--------- ---------
$ 66,888,466 58,350,477
========== ==========
Liabilities and Stockholders' Equity
Liabilities:
Deposits:
Non-interest-bearing $ 9,819,152 8,216,142
Interest-bearing 50,217,976 43,826,883
---------- ----------
Total deposits 60,037,128 52,043,025
Other liabilities 535,077 211,684
------- -------
Total liabilities 60,572,205 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 604,295 391,139
Unrealized loss on investment securities,
net of tax (161,605) (168,942)
------- -------
Total stockholders' equity 6,316,261 6,095,768
--------- ---------
$ 66,888,466 58,350,477
========== ==========
See accompanying notes to consolidated financial statements.
<PAGE>4
<TABLE>
GEORGIA BANCSHARES, INC.
AND SUBSIDIARY
Consolidated Statements of Earnings
For the Three and Six Months Ended June 30, 1997 and 1996
(Unaudited)
<CAPTION>
Three Months Six Months
Ended Ended
June 30, June 30,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Interest income:
Loans $ 1,008,685 721,891 1,881,593 1,427,157
Investment securities 239,684 224,043 498,627 440,176
Interest on interest bearing deposits - 5,387 - 10,172
Federal funds sold 13,766 48,290 40,582 88,380
------ ------ ------ ------
Total interest income 1,262,135 999,611 2,420,802 1,965,885
--------- ------- --------- ---------
Interest expense:
Demand deposits 63,033 50,460 127,779 99,092
Savings deposits 48,275 54,519 95,339 108,836
Time deposits 423,671 338,806 810,706 674,715
Other 2,729 550 2,849 1,494
----- --- ----- -----
Total interest expense 537,708 444,335 1,036,673 884,137
------- ------- --------- --------
Net interest income 724,427 555,276 1,384,129 1,081,748
Provision for loan losses 37,500 21,000 75,000 46,500
------ ------- ------ ------
Net interest income after provision for
loan losses 686,927 534,276 1,309,129 1,035,248
------- ------- --------- ---------
Other income:
Service charges on deposit accounts 74,242 67,586 146,318 136,435
Net gain (loss) on securities transactions (760) - (760) -
Other operating income 27,861 13,993 58,796 28,123
------ ------ ------ ------
Total other income 101,343 81,579 204,354 164,558
-------- ------ ------- --------
Other expense:
Salaries and other personnel expense 274,182 208,994 554,500 412,932
Net occupancy and equipment expense 92,934 80,458 188,261 154,984
Other operating expense 165,894 131,667 353,155 256,665
------- ------- ------- --------
Total other expense 533,010 421,119 1,095,916 824,581
------- ------- --------- --------
Earnings before income taxes 255,260 194,736 417,567 375,255
Income tax expenses 90,677 63,591 145,988 120,239
------ -------- ------- --------
Net earnings $ 164,583 131,145 271,579 254,986
======= ======== ======= ========
Earnings per common share based on average
outstanding shares of 584,228 in 1997
and 1996 $ .28 .22 .46 .44
==== === ==== ===
<FN>
See accompanying notes to consolidated financial statements.
</FN>
</TABLE>
<PAGE> 5
GEORGIA BANCSHARES, INC.
AND SUBSIDIARY
Consolidated Statements of Cash Flows
For the Six Months Ended June 30, 1997 and 1996
(Unaudited)
Six Months Ended
June 30,
1997 1996
---- ----
Cash flows from operating activities:
Net earnings $ 271,579 254,986
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Provision for loan losses 75,000 46,500
Deferred tax benefits (32,188) (122,147)
Depreciation, amortization and accretion 109,618 87,604
Loss on sale of Investments 760 -
Change in assets and liabilities:
Prepaid expenses and other assets (199,636) 78,946
Accrued expenses and other liabilities 323,393 200,968
------- --------
Net cash provided (used) by
operating activities 548,526 546,857
------- -------
Cash flows from investing activities:
Proceeds from sales, maturities and paydowns of
investment securities 3,522,663 2,830,152
Purchases of investment securities (496,836 (3,507,566)
Net increase in loans (8,716,774) (2,190,087)
Purchases of premises and equipment (59,760) (85,916)
------- -------
Net cash provided (used) by
investing activities (5,750,707) (2,953,417)
--------- ---------
Cash flows from financing activities:
Net change in deposits 7,994,103 4,408,289
Dividends paid (58,423) (29,213)
-------- ---------
Net cash provided (used) by
financing activities 7,935,680 4,379,076
--------- ---------
Net increase (decrease) in cash and cash equivalents 2,733,499 1,972,516
Cash and cash equivalents at beginning of the period 6,583,556 4,325,395
--------- ---------
Cash and cash equivalents at end of period $ 9,317,055 6,297,911
========= =========
Supplemental cash flow information:
Cash paid for interest $ 716,947 669,808
======= =======
Cash paid for income taxes $ 134,170 -
======= =======
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 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 six month
period ended June 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 June 30, 1997 and 1996 are:
Three Months Ended Six Months Ended
June 30, June 30
1997 1996 1997 1996
---- ---- ---- ----
Printing and supplies $ 20,548 17,199 37,479 30,836
Postage and courier 12,043 12,118 27,311 22,576
<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 Six Months in the Periods Ended
June 30, 1997 and 1996
Interim Financial Condition
Georgia Bancshares, Inc. (the "Company") reported total assets of
$66,888,466 as of June 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 $40,356,118. The increase in loans was funded
primarily by an increase in deposits of $7,994,103 (15.36%)and the sale of
investments totaling $2,548,847. The growth in deposits has resulted from Bank's
aggressive approach to increasing deposit drag the last three months. As a
result of the loan growth, the loan to deposit ratio has increased to 66.33%
from 60.80% at December 31, 1997. The Company's cash and cash equivalents have
increased by $2,733,499 to $9,317,055 as of June 30, 1997.
Liquidity
The Bank's liquid assets as a percentage of total deposits were 15.52% at
June 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 $6,316,261 as of June 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 10.73% at June 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 June 30, 1997, the Bank had a risk-weighted
total capital ratio of 14.16%, compared to 19.10% at December 31, 1996, and a
Tier I risk-weighted capital ratio of 13.08%, 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
$473,048, an increase of $251,806 from December 31, 1996. There were no related
party loans which were considered nonperforming at June 30, 1997. The
composition of the nonperforming assets is presented in the following table:
June 30, December 31,
1997 1996
Loans on nonaccrual $ 148,182 -
Other real estate owned 296,058 221,242
Other repossessed collateral 28,808 -
------ --------
Total nonperforming assets $ 473,048 221,242
========= =======
Total nonperforming assets as a
percentage of total loans (gross)
and other real estate 1.18% 0.69%
===== =====
<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 Six Months in the Periods Ended
June 30, 1997 and 1996
The allowance for loan losses totaled $533,751 at June 30, 1997, an
increase of $74,368 from December 31, 1996. The allowance for loan losses
represented 1. 32% and 1.45% of total loans at June 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 4,098
-----
Total 4,098
Recoveries:
Commercial -
Real Estate -
Installment 3,466
-----
Total 3,466
Provision charged to income 75,000
Allowance for loan losses at June 30, 1997 $ 533,751
=========
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 June 30, 1997, the Bank had $12,849,916 in investment securities
available-for-sale. The net unrealized loss on available for sale securities,
net of deferred taxes, was $161,605 on June 30, 1997. During the second quarter
of 1997, the Bank sold investment securities totaling $2,548,847 incurring a net
loss of $760 to help fund loan growth and reposition approximately $1,00,000 of
the investment portfolio. 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.
Results of Operations
Net interest income for the first six months of 1997 was $1,384,129, an
increase $302,381 (27.95%) compared to the same period for 1996. Interest income
for the first six months of 1997 was $2,420,802, representing an increase of $
454,917 (23.14%) 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 $152,536 (17.25%) 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 six months of 1997 increased $28,500 compared to the same period for
1996. The increase is primarily attributable to the loan growth for the first
six months in 1997 and management's belief in maintaining a high level of the
allowance for loan losses in relationship to total loans.
<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 Six Months in the Periods Ended
June 30, 1997 and 1996
Results of Operations (Continued)
Other income for the first six months of 1997 was $204,354, an increase
of $39,796 (24.18%) 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 $9,883. The remaining increase was due to
increases in cash value life insurance income of $20,274 and other increases of
$9,639.
Other expenses for the first six months of 1997 increased $271,335
(32.91%) compared to the first six months in 1996. This increase is primarily
attributable to a branch addition in October 1996. Approximately $150,814, or
55.58%, of the increase in other expenses is related to the branch addition.
<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
On May 15, 1997, the Company held its Annual Meeting of Shareholders
for the purpose of (a) electing three directors for three-year terms,
and (b) ratifying the appointment of Porter Keadle Moore, LLP as
independent auditors.
Each nominee for director received the number of affirmative votes of
shareholders required for such nominees election in accordance with the
Bylaws of the Company, with 380,598 shares voting for each nominee and
700 shares withholding vote, out of a total 584,228 outstanding shares.
The three nominees elected at the meeting were James L. Armstrong, Jr.,
Thomas M. Carnes and Robert C. Pittard. The other directors are Eugene
L. Argo, Ted A. Murphy, HE Norton and Dr. Dean T. Teusaw. The
Appointment of independent auditors also received the requisite number
of affirmative votes required for approval pursuant to the Bylaws of
the Company. Of the 584,228 outstanding shares of the Company, the
voting was as follows: 380,458 shares voted for, 250 voted against, and
600 abstained.
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K.
No reports were filed on Form 8-K during the six months ended June 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.
<PAGE>11
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: August 13, 1997
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 3,182,055
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 6,135,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 12,849,916
<INVESTMENTS-CARRYING> 12,849,916
<INVESTMENTS-MARKET> 12,849,916
<LOANS> 40,356,118
<ALLOWANCE> 533,751
<TOTAL-ASSETS> 66,888,466
<DEPOSITS> 60,037,128
<SHORT-TERM> 0
<LIABILITIES-OTHER> 535,077
<LONG-TERM> 0
0
0
<COMMON> 2,336,912
<OTHER-SE> 3,979,349
<TOTAL-LIABILITIES-AND-EQUITY> 66,888,466
<INTEREST-LOAN> 1,881,593
<INTEREST-INVEST> 498,627
<INTEREST-OTHER> 40,582
<INTEREST-TOTAL> 2,420,802
<INTEREST-DEPOSIT> 1,033,824
<INTEREST-EXPENSE> 1,036,673
<INTEREST-INCOME-NET> 1,384,129
<LOAN-LOSSES> 75,000
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 1,095,916
<INCOME-PRETAX> 417,567
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 271,579
<EPS-PRIMARY> .46
<EPS-DILUTED> .46
<YIELD-ACTUAL> 4.71
<LOANS-NON> 148,182
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 704,601
<ALLOWANCE-OPEN> 459,383
<CHARGE-OFFS> 4,098
<RECOVERIES> 3,466
<ALLOWANCE-CLOSE> 533,751
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 533,751
</TABLE>
