-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, QUbfh429cw2z2pDuL1nntU778OQpTxCUvGIlmE7VN0NLUaicDsuJzHYz2tMoAx/O wAzWuPfuXJghwcSbjWsXCg== 0000910195-96-000208.txt : 19961118 0000910195-96-000208.hdr.sgml : 19961118 ACCESSION NUMBER: 0000910195-96-000208 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961114 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BANK CORP OF GEORGIA CENTRAL INDEX KEY: 0000315708 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 581406233 STATE OF INCORPORATION: GA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 033-98300 FILM NUMBER: 96662807 BUSINESS ADDRESS: STREET 1: 4951 FORSYTH RD CITY: MACON STATE: GA ZIP: 31210 BUSINESS PHONE: 9124774428 MAIL ADDRESS: STREET 1: 4951 FORSYTH RD CITY: MACON STATE: GA ZIP: 31210 10QSB 1 FORM 10-QSB BANK CORPORATION OF GEORGIA FORM 10QSB SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 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 OR [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT For the transition period from _____________________________ to Commission File Number 017851 Bank Corporation of Georgia ------------------------------------------------------ (Exact name of registrant as specified in its charter) Georgia 581406233 -------------------------------- ---------------------- (State or other jurisdiction (I.R.S. Employer of incorporation or organization) identification number) 4951 Forsyth Road, Macon, Georgia 31210 ---------------------------------------- (Address of principal executive offices) (912) 757-2000 ------------------------------------------------ (Issuer's telephone number, including area code) (Former name, former address, and former fiscal year, if changed since last report) APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS Check whether the issuer filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by court. Yes No APPLICABLE ONLY TO CORPORATE ISSUERS Check whether the issuer (1) 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 ---- --- State the number of shares outstanding of each of the issuer's classes of common equity as of September 30, 1996: 2,264,656 shares of Common Stock, $1.00 par value per share. BANK CORPORATION OF GEORGIA INDEX Page No. PART I FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheets September 30, 1996, December 31, 1995 and September 30, 1995 3-4 Consolidated Statements of Income for the Nine Months and Quarters Ended September 30, 1996 and 1995 5-6 Consolidated Statements of Cash Flows for the Nine Months and Quarters Ended September 30, 1996 and 1995 7-8 Notes to Consolidated Financial Statements 9-10 Item 2. Management's Discussion and Analysis 11-12 PART II OTHER INFORMATION 14 Item 1. Legal Proceedings Item 2. Changes in Securities Item 3. Defaults Upon Senior Securities Item 4. Submission of Matters to a Vote of Security Holders Item 5. Other Information Item 6. Exhibits and Reports on Form 8K 2 BANK CORPORATION OF GEORGIA AND SUBS CONSOLIDATED BALANCE SHEETS SEPTEMBER 30, 1996 AND DECEMBER 31, 1995
September 30, 1996 December 31, 1995 Assets ------------------ ----------------- Cash & due from banks $10,941,425 $11,352,975 Interest bearing deposits ------- 4,000 Federal Funds sold 16,684,500 13,930,000 Investment securities: Available for sale 42,582,714 39,292,562 Held to maturity 1,088,103 1,135,448 ------------- ------------- Total investment securities 43,670,817 40,428,010 ------------- ------------- Loans 196,083,065 181,473,993 Less: Unearned discount (809,686) (931,596) Allowance for loan losses (2,928,729) (2,652,787) ------------- ------------- Loans, net 192,344,650 177,889,610 ------------- ------------- Bank premises and equipment 9,885,762 7,923,759 Accrued interest receivable 1,738,443 2,090,198 Goodwill 949,586 394,439 Other assets 7,160,125 5,645,702 ------------- ------------- $283,375,308 $259,658,693 ============= ============= Liabilities and Stockholders' Equity Deposits: Demand $43,160,819 $37,717,191 Interest bearing deposits 72,915,416 57,505,345 Savings 10,199,449 9,579,184 Time 126,666,838 119,415,019 ------------- ------------- Total deposits 252,942,522 224,216,739 ------------- ------------- Accounts payable and accruals 2,084,158 2,873,185 Other borrowed money 700,000 6,100,000 Long-term debt 1,500,000 2,770,809 ------------- ------------- Total liabilities 257,226,680 235,960,733 ------------- ------------- Minority interest in subsidiaries ------- 1,409,943 ------------- ------------- Stockholders' equity: Common stock 2,081,612 3,685,846 Capital surplus 3,059,825 3,004,201 Retained earnings 21,007,191 15,597,970 ------------- ------------- Total stockholders' equity 26,148,628 22,288,017 ------------- ------------- $283,375,308 $259,658,693 ============= =============
-3- BANK CORPORATION OF GEORGIA AND SUBS CONSOLIDATED BALANCE SHEETS SEPTEMBER 30, 1996 AND SEPTEMBER 30, 1995
September 30, 1996 September 30, 1995 Assets ------------------ ------------------ Cash & due from banks $10,941,425 $8,981,272 Interest bearing deposits ------- 5,000 Federal Funds sold 16,684,500 10,906,671 Investment securities: Available for sale 42,582,714 41,513,060 Held to maturity 1,088,103 1,635,223 ------------- ------------- Total investment securities 43,670,817 43,148,283 ------------- ------------- Loans 196,083,065 176,491,862 Less: Unearned discount (809,686) (692,609) Allowance for loan losses (2,928,729) (2,605,227) ------------- ------------- Loans, net 192,344,650 173,194,026 ------------- ------------- Bank premises and equipment 9,885,762 7,795,674 Accrued interest receivable 1,738,443 2,158,873 Goodwill 949,586 400,327 Other assets 7,160,125 5,446,222 ------------- ------------- $283,375,308 $252,036,348 ============= ============= Liabilities and Stockholders' Equity Deposits: Demand $43,160,819 $32,472,976 Interest bearing deposits 72,915,416 54,880,257 Savings 10,199,449 9,907,338 Time 126,666,838 120,771,106 ------------- ------------- Total deposits 252,942,522 218,031,677 ------------- ------------- Accounts payable and accruals 2,084,158 2,672,286 Other borrowed money 700,000 6,370,809 Long-term debt 1,500,000 2,500,000 ------------- ------------- Total liabilities 257,226,680 229,574,772 ------------- ------------- Minority interest in subsidiaries ------- 1,270,925 ------------- ------------- Stockholders' equity: Common stock 2,081,612 3,529,846 Capital surplus 3,059,825 14,256,954 Retained earnings 21,007,191 3,403,851 ------------- ------------- Total stockholders' equity 26,148,628 21,190,651 ------------- ------------- $283,375,308 $252,036,348 ============= =============
-4- BANK CORPORATION OF GEORGIA AND SUBS CONSOLIDATED STATEMENTS OF EARNINGS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND SEPTEMBER 30, 1995
Nine Months Ended Nine Months Ended September 30, 1996 September 30, 1995 ------------------ ------------------ Interest income: Interest and fees on loans $15,289,812 $13,899,308 Interest on federal funds sold 717,907 459,946 Interest on investment securities 2,358,689 2,450,606 ------------ ----------- Total interest income 18,366,408 16,809,860 ------------ ----------- Interest expense: Interest on NOW and money market accounts 1,615,208 1,432,096 Interest on savings and time deposits 5,607,880 5,213,971 Other borrowings 401,689 300,583 ------------ ----------- Total interest expense 7,624,777 6,946,650 ------------ ----------- Net interest income 10,741,631 9,863,210 Provision for possible loan losses 373,000 355,004 ------------ ----------- Net interest income after provision for possible loan losses 10,368,631 9,508,206 ------------ ----------- Other operating income: Service charge on deposit accounts 1,165,165 1,034,367 Securities gains (losses) (6,581) 1,477 Gain on sale of SBA loans 120,889 23,930 Other 764,129 738,918 ------------ ----------- Total other operating income 2,043,602 1,798,692 ------------ ----------- Other operating expenses: Salaries and employee benefits 4,915,193 4,514,768 Occupancy 711,367 595,382 Equipment 608,562 594,063 Other operating expense 3,023,377 2,423,874 ------------ ----------- Total operating expenses 9,258,499 8,128,087 ------------ ----------- Earnings before income taxes and minority interests 3,153,734 3,178,811 Income tax expense (benefit) 674,009 694,300 ------------ ----------- Earnings before minority interests 2,479,725 2,484,511 Minority interests 46,913 262,466 ------------ ----------- Net earnings $2,432,812 $2,222,045 ============ ===========
-5- BANK CORPORATION OF GEORGIA AND SUBS CONSOLIDATED STATEMENTS OF EARNINGS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996 AND SEPTEMBER 30, 1995
Three Months Ended Three Months Ended September 30, 1996 September 30, 1995 ------------------ ------------------ Interest income: Interest and fees on loans $5,215,706 $4,726,962 Interest on federal funds sold 414,542 144,131 Interest on investment securities 792,983 815,409 ---------- ---------- Total interest income 6,423,231 5,686,502 ---------- ---------- Interest expense: Interest on NOW and money market accounts 607,807 485,320 Interest on savings and time deposits 1,913,734 1,849,285 Other borrowings 342,675 110,612 ---------- ---------- Total interest expense 2,864,216 2,445,217 ---------- ---------- Net interest income 3,559,015 3,241,285 Provision for possible loan losses 111,000 110,002 ---------- ---------- Net interest income after provision for possible loan losses 3,448,015 3,131,283 ---------- ---------- Other operating income: Service charge on deposit accounts 393,652 363,055 Securities gains (losses) ------- ------- Gain on sale of SBA loans 115,150 23,930 Other 332,906 204,130 ---------- ---------- Total other operating income 841,708 591,115 ---------- ---------- Other operating expenses: Salaries and employee benefits 1,755,606 1,583,864 Occupancy 287,911 219,840 Equipment 223,612 207,111 Other operating expense 797,278 757,687 ---------- ---------- Total operating expenses 3,064,407 2,768,502 ---------- ---------- Earnings before income taxes and minority interests 1,225,316 953,896 Income tax expense (benefit) 458,700 222,100 ---------- ---------- Earnings before minority interests 766,616 731,796 Minority interests ------- 103,490 ---------- ---------- Net earnings $766,616 $628,306 ========== ==========
-6- BANK CORPORATION OF GEORGIA AND SUBS CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND SEPTEMBER 30, 1995
Nine Months Ended Nine Months Ended September 30, 1996 September 30, 1995 ------------------ ------------------ Cash flows from operating activities: Net income $2,432,812 $2,222,045 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation 528,042 468,356 Amortization and accretion, net (93,132) (134,466) Minority interests in earnings (loss) of subsidiary 46,913 262,466 Provision for loan and real estate owned losses 373,000 355,004 Loss (gain) on sale of investment 6,581 (1,477) Change in: Other assets (808,936) (624,899) Other liabilities (789,027) 677,342 ---------- ---------- Net cash flows provided by operating activities 1,696,253 3,224,371 ---------- ---------- Cash flows from investing activities: Proceeds from maturities of investment securities 3,138,586 18,278,191 Proceeds from sales of investment securities 9,578,063 2,419,696 Purchase of investment securities (16,993,532) (19,957,167) Net increase in loans (14,828,040) (16,564,885) Purchases of premises and equipment (2,490,045) (845,043) ----------- ----------- Net cash flows used in investing activities (21,594,968) (16,669,208) ----------- ----------- Cash flows from financing activities: Net increase in deposits 28,725,783 6,338,982 Repayment of other borrowings (13,200,000) (542,808) Proceeds from other borrowings 6,800,000 1,642,808 Dividends paid ------- (191,161) Purchase of treasury stock (109,819) ------- Proceeds from issuance of common stock 21,701 ------- ---------- ---------- Net cash flows provided by financing activities 22,237,665 7,247,821 ---------- ---------- Net increase in cash and cash equivalents 2,338,950 (6,197,016) Cash and cash equivalents at beginning of period 25,286,975 26,089,959 ---------- ---------- Cash and cash equivalents at end of period 27,625,925 19,892,943 ========== ==========
-7- BANK CORPORATION OF GEORGIA AND SUBS CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996 AND SEPTEMBER 30, 1995
Three Months Ended Three Months Ended September 30, 1996 September 30, 1995 ------------------ ------------------ Cash flows from operating activities: Net income $766,616 $628,306 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation 206,533 166,352 Amortization and accretion, net (27,322) 5,887 Minority interests in earnings (loss) of subsidiary ------- 103,490 Provision for loan and real estate owned losses 111,000 110,002 Loss (gain) on sale of investment ------- ----- Change in: Other assets (496,863) (439,803) Other liabilities 256,712 (412,785) --------- --------- Net cash flows provided by operating activities 816,676 161,449 --------- --------- Cash flows from investing activities: (8,769) Proceeds from maturities of investment securities 313,962 4,242,307 Proceeds from sales of investment securities 4,005,000 427,800 Purchase of investment securities (3,895,407) ------- Net increase in loans (5,196,211) (5,063,323) Purchases of premises and equipment (585,819) (36,900) --------- --------- Net cash flows provided by (used in) investing activities (5,358,475) (430,116) ---------- --------- Cash flows from financing activities: Net increase in deposits 9,871,844 656,607 Repayment of other borrowings (7,000,000) (542,808) Dividends paid ------- (189,485) Purchase of treasury stock (44,952) ------- ---------- --------- Net cash flows provided by (used in) financing 2,826,892 (75,686) ---------- --------- Net increase in cash and cash equivalents (1,714,907) (344,353) Cash and cash equivalents at beginning of period 29,340,832 20,237,296 ---------- ---------- Cash and cash equivalents at end of period 27,625,925 19,892,943 ========== ==========
-8- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The financial statements included herein have been prepared by Bank Corporation of Georgia (BCG), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although BCG believes that the disclosures contained herein are adequate to make the information presented not misleading. In the opinion of management, the information furnished in the condensed consolidated financial statements reflects all adjustments which are ordinary in nature and necessary to present fairly BCG's financial position, results of operations and changes in financial position for such interim period. These financial statements should be read in conjunction with BCG's financial statements and the notes thereto as of December 31, 1995, included in BCG's annual report on Form 10KSB for the year ended December 31, 1995. Bank Corporation of Georgia is a bank holding company whose business is primarily conducted by its wholly-owned banking subsidiaries First South Bank, N. A. ("FSB"), Ameribank, N. A. ("Ameribank"), and Effingham Bank & Trust ("Effingham"). The accounting principles followed by Bank Corporation of Georgia and its subsidiaries, and the methods of applying those principles conform with generally accepted accounting principles and with general practices within the banking industry, where applicable. BCG's consolidated financial statements include the accounts of the parent company and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. Investment securities are classified and accounted for according to Statement of Financial Accounting Standards ("SFAS") No. 115, "Accounting for Certain Investments in Debt and Equity Securities," adopted by the Company January 1, 1994. Pursuant to SFAS 115 investments are classified and accounted for as follows: Debt securities that BCG has the positive intent and ability to hold to maturity are classified as held-to-maturity and reported at amortized cost. Debt and equity securities that are bought and held principally for the purpose of selling them in the near term are classified as trading securities and reported at fair value, with unrealized gains and losses included in earnings. Debt and equity securities not classified as either held-to-maturity securities or trading securities are classified as available-for-sale securities and reported at fair value, with unrealized gains and losses excluded from earnings and reported in a separate component of shareholders' equity. Prior to adoption of SFAS 115 all securities were carried at cost adjusted for amortization of premiums and accretions of discounts, as required by SFAS 12, "Accounting for Certain Marketable Securities." For the three months ended and the nine months ended September 30, 1996 substantially all of BCG's securities were in the available-for-sale security portfolio. -9- Interest income on loans is recognized in a manner that results in a level yield on the principal amount outstanding. Statement of Financial Accounting Standards ("SFAS") No. 91 "Accounting for Nonrefundable Fees and Cost Associated with Originating and Acquiring Loans and Initial Direct Costs of Leases," issued in December, 1986, generally requires deferral and amortization of loan fees and direct costs over the life of the related loan. Since January 1, 1987, BCG has been in compliance with SFAS No. 91. This statement has not had a material impact on the Company's results of operations. Effective January 1, 1993, BCG adopted Statement of Financial Accounting Standards("SFAS") No. 109 in accounting for financial income tax expense. Previously, BCG accounted for financial income tax expense under the provisions of SFAS 96. Upon application of SFAS 109, the future tax consequences of the differences between the financial reporting and tax bases of the Company's assets and liabilities resulted in a net deferred tax asset. A valuation allowance was established for all of the net deferred tax asset as of January 1, 1993, and accordingly, the initial adoption of SFAS 109 had no effect on the 1993 financial statements. At December 31, 1994, after considering the operating results for 1994 and other matters, the Company reduced the valuation allowance in order to adjust the net deferred tax asset to an amount which management believes will more likely than not be realized. The valuation allowance was reduced at March 31, June 30, and September 30, 1995 by the tax expense that would have been recorded on pretax income times the statutory rate. Therefore, no tax expense was recorded for the first quarter of 1995. BCG's provision for loan losses is based upon management's continuing review and evaluation of the loan portfolio and is intended to create an allowance adequate to absorb losses on loans outstanding as of the end of each reporting period. For individually significant amounts, management's review consists of evaluations of the financial strength of the borrowers and the related collateral. The review of groups of loans, which are individually insignificant, is based upon the delinquency status of the group, lending policies and previous collections experience by each category. Premises and equipment are stated at cost less accumulated depreciation and amortization. Depreciation is principally computed on the straightline method over the estimated useful lives of the assets. Earnings per share are based upon weighted average outstanding shares of common stock of 2,215,415 for the nine months ended September 30, 1996, and 2,264,656 for the three months ended September 30, 1996. There are statutory and regulatory requirements applicable to payment of dividends by the Banks as well as by BCG to its shareholders. A cash dividend of $.10 per share was declared on August 28, 1996 to stockholders of record on September 15, 1996, payable October 1, 1996. -10- Statement of Financial Accounting Standards ("SFAS") No. 95 "Statement of Cash Flows," issued in November, 1987, generally requires a statement of cash flows as part of a full set of financial statements for all business enterprises in place of a statement of changes in financial position. For purposes of the Statement of Cash Flows, BCG considers cash and cash equivalents to include cash on hand and amounts due from banks and federal funds sold. MANAGEMENT'S DISCUSSION AND ANALYSIS Earnings Summary ---------------- Net income for the first nine months of 1996 was $2,432,812, an increase of $211,000 over the same period in 1995. The net income per share for the nine months ended September 30, 1996 and 1995 was $1.10 and $1.07, respectively. Net income for the quarter ended September 30, 1996 was $766,616, an increase of $138,000 over the same period in 1995. The net income per share for these two periods was $.34 and $.30, respectively. Net interest income for the nine months ended September 30, 1996 increased $878,000 or 8.9 percent over the same period in 1995. Net interest income for the quarter ended September 30, 1996 increased $317,000 or 9.8 percent over the same period in 1995. These increases are primarily due to an increase in net interest earning assets over the same period in 1995. The net interest margin, as a percentage of earning assets, decreased to 5.75 percent for the first nine months of 1996 as compared to 5.93 percent for the same period in 1995. For the quarter ended September 30, 1996, the net interest margin as a percent of interest earning assets was 5.58 percent versus 5.66 percent for the same period in 1995. Non-interest income for the nine month period ended September 30, 1996 increased $245,000 or 13.6 percent from 1995 to 1996. Non-interest income for the quarter ended September 30, 1996 increased by $251,000 or 42.4 percent over the same period in 1995. These increases were primarily the result of increases in gains on sales of SBA loans and gains on sales of other loans. Non-interest expense increased by $1,130,000 in the first nine months of 1996 from the same period in 1995, an increase of 13.9 percent. Non-interest expense increased by $296,000 during the quarter ended September 30, 1996, an increase of 10.7 percent over the same period in 1995. These increases were primarily due to an increase in salaries and employee benefits and merger related expenses. During 1996, the Company acquired one branch and opened two new branch offices, which resulted in an increase in operating expenses over the same periods in 1995. Additionally, during the second quarter of 1996, Effingham Bank & Trust merged with BCG, and various expenses related to the merger were recognized in that period. -11- For the first nine months of 1996, return on equity was 13.1 percent on an annualized basis versus 14.6 percent for the same period a year earlier. For the quarter ended September 30, 1996, return on equity was 11.9 percent on an annualized basis versus 12.0 percent for the same period in 1995. The decline in return on equity was related to several factors, among which were the cessation of tax benefits related to net operating losses from Ameribank and the costs associated with the 3 branch acquisitions/openings mentioned above. Risk Elements ------------- The allowance for loan losses at September 30, 1996 was $2,928,729 or 10.4 percent and 12.4 percent higher than at December 31, 1995 and September 30, 1995, respectively. At September 30, 1996, the allowance represented 1.49 percent of total loans as compared with 1.46 percent at December 31, 1995 and 1.48 percent at September 30, 1995. At September 30, 1996 non-performing loans represented .19% of total loans as compared with .56% at December 31, 1995 and .48% at September 30, 1995. The allowance for loan losses as a percentage of non-performing loans was 769% at September 30, 1996 as compared with 263% at December 31, 1995 and 310% at September 30, 1995. Capital Resources ----------------- Shareholders' equity of $26,148,628 at September 30, 1996 increased 23.4 percent over the same period in 1995 resulting in book value per outstanding common of share of $11.55 compared to $10.55 at December 31, 1995 and $10.17 at September 30, 1995. Capital for BCG is above regulatory requirements, with GAAP equity of 9.23 percent of total assets at September 30, 1996. The increases in shareholders' equity was primarily the result of earnings and the issuance of approximately $1.8 million of BCG stock to former Americorp stockholders in March, 1996. Set forth below are pertinent capital ratios for the Company and the Banks as of September 30, 1996:
First Bank South Corporation Minimum Capital Requirement Bank Ameribank Effingham of Georgia - --------------------------- ------ --------- --------- ----------- Tier 1 Capital to Risk- based Assets: 4.00% 10.89% 10.30% 14.25% 10.91% Total Capital to Risk- based Assets: 8.00% 12.14% 11.53% 15.27% 12.14% Leverage Ratio (Tier 1 Capital to Total Assets): 3.00% 8.48% 7.88% 8.87% 8.32% Minimum for "Well Capitalized" Banks = 8% Minimum for "Well Capitalized" Banks = 10% Minimum for "Well Capitalized" Banks = 6% -12- Liquidity and Interest Rate Sensitivity --------------------------------------- Liquidity management involves the ability to meet cash flow requirements of customers who may be depositors making withdrawals or borrowers needing credit funding. BCG's cash flows are generated from interest and fee income, as well as from loan repayments, deposit acquisition, and maturities or sales of investments. BCG's liquidity needs are provided for primarily through short-term securities, and the maturing of loans. Federal funds sold represent the BCG's primary source of immediate liquidity and were maintained at a level adequate to meet immediate needs. Federal funds averaged $16,391,390 and $6,689,051 for the nine months ended September 30, 1996 and 1995, respectively. Federal funds averaged $17,080,015 and $9,193,219 for the three months ended September 30, 1996 and 1995, respectively. Maturities in BCG's loan and investment portfolios are monitored regularly to avoid matching short-term deposits with long-term loans and investments. Other assets and liabilities are also monitored to provide the proper balance between liquidity, safety, and profitability. This monitoring process must be continuous due to the constant flow of cash which is inherent in a financial institution. BCG actively manages its interest rate sensitive assets and liabilities to reduce the impact of interest rate fluctuations. At September 30, 1996, BCG's rate sensitive liabilities exceeded rate sensitive assets due within one year by $27.2 million. BCG manages its liquidity through the volatility of its deposits and patterns in loan demand, its current liquidity position, its ability to control funding needs and potential sources of funds. As part of managing liquidity, the Company monitors its loan to deposit ratio on a daily basis. The target ratio is 85 percent. At September 30, 1996 the ratio was 77.52 percent. BCG experienced a net increase in cash and cash equivalents, its primary source of liquidity, of $2,338,950 during the first nine months of 1996. Operating activities provided $1,696,253 of funds. Adjustments to net income for non-cash expenses of depreciation, amortization, and provision for loan losses are included in this amount as a net provision of funds. Investing activities used $21,594,968 of funds, primarily due to an increase in loans and net purchases of investment securities during the nine month period. Financing activities provided net cash of $22,237,665 due to an increase in deposit accounts during the nine months ended September 30, 1996. FASB STATEMENTS --------------- The Financial Accounting Standards Board (the "FASB") recently issued Statement No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed of." SFAS 121 establishes accounting standards for the impairment of long-lived assets, certain identifiable intangibles, and goodwill related to those assets to be held and used and for long-lived assets and certain identifiable intangibles to be disposed of SFAS 121 is effective for financial statements for fiscal years beginning after December 15, 1995 and with early adoption permitted. Presently, BCG is unable to determine the impact that adoption of SFAS 121 will have on the consolidated financial statements, but management anticipates that the impact will not be material. -13- PART II. OTHER INFORMATION Item 1. Legal Proceedings ----------------- Neither Bank Corporation of Georgia nor its subsidiaries is a party to any pending legal proceedings which Management believes would have a material effect upon the operations or financial condition of Bank Corporation of Georgia. Item 2. Changes in Securities - Not applicable. --------------------- Item 3. Defaults Upon Senior Securities Not applicable. Item 4. Submission of Matters to a Vote of Security Holders - Not applicable. Item 5. Other Information Not applicable. Item 6. Exhibits and Reports on Form 8K Not applicable. (a) Exhibits. Exhibit 27 - Financial Data Schedule (b) Reports on Form 8-K. Not applicable -14- SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized. Date: November 13, 1996 ------------------- BANK CORPORATION OF GEORGIA /s/ James R. McLemore, Jr. James R. McLemore, Jr. Treasurer (Principal Financial Officer)
EX-27 2 FINANCIAL DATA SCHEDULE
9 0000315708 BANK CORPORATION OF GEORGIA 1,000 9-MOS DEC-31-1996 JAN-01-1996 SEP-30-1996 10,941 0 16,685 0 42,583 1,088 0 195,943 (2,929) 283,375 252,943 700 2,084 1,500 0 0 2,082 24,067 283,375 15,289 2,359 718 18,342 7,223 7,625 10,742 373 (7) 9,258 3,154 0 0 0 2,433 1.10 1.10 5.75 208 173 0 0 (2,653) 218 119 (2,929) (2,929) 0 0
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