x
|
QUARTERLY
REPORT UNDER SECTION 13 AND 15(d) OF THE SECURITIES EXCHANGE ACT
OF
1934
For
the quarterly period ended June
30, 2007
|
o
|
TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT 1934
For
the transition period from _______ to
_______
|
Georgia
|
58-2413468
|
(State
or other jurisdiction of
|
(IRS
Employer
|
Incorporation
or organization)
|
Identification
No.)
|
PART
I - FINANCIAL INFORMATION
|
Page
No.
|
|
Financial
Statements
|
||
Consolidated
balance sheets as of December 31, 2006 and June 30, 2007
(unaudited)
|
3
|
|
Consolidated
statements of income (unaudited) for the three and six months ended
June
30, 2006 and 2007
|
4
|
|
Consolidated
statements of comprehensive income (unaudited) for the three and
six
months ended June 30, 2006 and 2007
|
5
|
|
|
||
Consolidated
statements of cash flows (unaudited) for the six months ended June
30,
2006 and 2007
|
6
|
|
Item
2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
9
|
Item
3.
|
Quantitative
and Qualitative Disclosures about Market Risk
|
13
|
Item
4.
|
Controls
and procedures
|
14
|
PART
II - OTHER INFORMATION
|
||
ITEM
1.
|
Legal
Proceedings
|
15
|
ITEM
1.A.
|
Risk
Factors
|
15
|
ITEM
2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
15
|
ITEM
3.
|
Defaults
upon Senior Securities
|
15
|
ITEM
4.
|
Submission
of matters to a vote of Security Holders
|
15
|
ITEM
5.
|
Other
Information
|
15
|
ITEM
6.
|
Exhibits
|
15
|
|
|
|
June
30, 2007
(unaudited)
|
|
|
December
31,
2006
|
|
Assets
|
|||||||
Cash
and due from banks
|
$
|
5,202
|
$
|
7,408
|
|||
Federal
funds sold
|
25,507
|
6,400
|
|||||
Securities
available for sale
|
40,813
|
36,524
|
|||||
Restricted
equity securities
|
2,590
|
2,434
|
|||||
Loans
|
176,392
|
225,630
|
|||||
Less
allowance for loan losses
|
5,821
|
5,507
|
|||||
Loans,
net
|
170,571
|
220,123
|
|||||
Premises
and equipment
|
6,673
|
6,758
|
|||||
Premises
and equipment held for sale
|
-
|
3,022
|
|||||
Goodwill
|
2,334
|
2,334
|
|||||
Core
deposit premium
|
222
|
240
|
|||||
Other
assets
|
12,592
|
11,693
|
|||||
Total
Assets
|
$
|
266,504
|
$
|
296,936
|
|||
Liabilities
and Shareholders' Equity
|
|||||||
Deposits
|
|||||||
Non-interest
bearing
|
$
|
19,055
|
$
|
19,480
|
|||
Interest
bearing
|
187,565
|
218,073
|
|||||
Total
deposits
|
206,620
|
237,553
|
|||||
Other
borrowings
|
27,000
|
27,000
|
|||||
Guaranteed
preferred beneficial interests in junior subordinated
debentures
|
4,124
|
4,124
|
|||||
Other
liabilities
|
1,491
|
1,467
|
|||||
Total
Liabilities
|
239,235
|
270,144
|
|||||
|
|||||||
Shareholders'
equity
|
|||||||
Preferred
stock, par value not stated; 2,000,000 shares authorized;
|
|||||||
no
shares issued
|
$
|
-
|
$
|
-
|
|||
Common
stock, $1.00 par value, 10,000,000 shares authorized;
|
|||||||
3,104,040
and 3,074,210 shares issued
|
3,104
|
3,074
|
|||||
Capital
surplus
|
23,311
|
23,032
|
|||||
Retained
earnings
|
2,013
|
1,654
|
|||||
Accumulated
other comprehensive loss
|
(790
|
)
|
(568
|
)
|
|||
Less
cost of treasury stock, 49,371 and 53,475 shares as of
June
30, 2007 and December 31, 2006 respectively
|
(369
|
)
|
(400
|
)
|
|||
Total
shareholders' equity
|
27,269
|
26,792
|
|||||
Total
Liabilities and Shareholders' Equity
|
$
|
266,504
|
$
|
296,936
|
Three
months ended
|
Six
months ended
|
||||||||||||
|
|
|
June
30,
2007
|
|
|
June
30,
2006
|
|
|
June
30,
2007
|
|
|
June
30,
2006
|
|
Interest income | |||||||||||||
Loans
|
4,163
|
5,423
|
8,900
|
10,253
|
|||||||||
Investment
securities
|
449
|
469
|
884
|
938
|
|||||||||
Deposits
in banks
|
3
|
10
|
4
|
11
|
|||||||||
Federal
funds sold
|
110
|
-
|
183
|
183
|
|||||||||
Total
interest income
|
4,725
|
5,902
|
9,971
|
11,385
|
|||||||||
Interest expense | |||||||||||||
Deposits
|
2,126
|
2,511
|
4,471
|
4,721
|
|||||||||
Other
borrowed money
|
385
|
413
|
761
|
861
|
|||||||||
Total
interest expense
|
2,511
|
2,924
|
5,232
|
5,582
|
|||||||||
Net
interest income
|
2,214
|
2,978
|
4,739
|
5,803
|
|||||||||
Provision
for loan losses
|
443
|
334
|
684
|
812
|
|||||||||
Net
interest income after provision for loan losses
|
1,771
|
2,644
|
4,055
|
4,991
|
|||||||||
Other income | |||||||||||||
Service
charges on deposit accounts
|
233
|
343
|
466
|
655
|
|||||||||
Financial
service fees
|
59
|
50
|
120
|
106
|
|||||||||
Mortgage
origination fees
|
36
|
233
|
69
|
430
|
|||||||||
Loss
on sale of foreclosed properties
|
(65
|
)
|
(30
|
)
|
(64
|
)
|
(29
|
)
|
|||||
Gain
(loss) on sale of fixed assets
|
221
|
1
|
221
|
(23
|
)
|
||||||||
Increase
in cash surrender value of bank owned life insurance
policies
|
67
|
62
|
130
|
122
|
|||||||||
Other
operating income
|
51
|
95
|
111
|
145
|
|||||||||
Total
other income
|
602
|
754
|
1,053
|
1,406
|
|||||||||
Other expenses | |||||||||||||
Salaries
and employee benefits
|
1,263
|
1,291
|
2,374
|
2,718
|
|||||||||
Equipment
and occupancy expense
|
305
|
318
|
583
|
635
|
|||||||||
Marketing
expense
|
53
|
53
|
90
|
91
|
|||||||||
Data
processing expense
|
148
|
179
|
312
|
341
|
|||||||||
Administrative
expenses
|
194
|
192
|
395
|
603
|
|||||||||
Legal
and professional
|
117
|
149
|
200
|
258
|
|||||||||
Directors
fees
|
72
|
62
|
156
|
128
|
|||||||||
Amortization
of intangible assets
|
9
|
11
|
18
|
21
|
|||||||||
Stationery
and supply expense
|
33
|
52
|
68
|
114
|
|||||||||
Other
operating expenses
|
109
|
193
|
238
|
358
|
|||||||||
Total
other expense
|
2,303
|
2,500
|
4,434
|
5,267
|
|||||||||
Income
before income taxes
|
70
|
898
|
674
|
1,130
|
|||||||||
Income
tax expense
|
(1
|
)
|
286
|
191
|
359
|
||||||||
Net
Income
|
71
|
612
|
483
|
771
|
|||||||||
Basic
earnings per share
|
$
|
0.02
|
$
|
0.21
|
$
|
0.16
|
$
|
0.26
|
|||||
Diluted earnings
per share
|
$
|
0.02
|
$
|
0.20
|
$
|
0.16
|
$
|
0.26
|
|||||
Weighted
average common shares outstanding
|
3,071,883
|
2,929,516
|
3,030,244
|
2,922,284
|
|||||||||
Weighted
average diluted common shares outstanding
|
3,133,957
|
3,006,290
|
3,099,647
|
3,010,042
|
|||||||||
Dividends
declared per share
|
$
|
.02
|
$
|
.02
|
$
|
.04
|
$
|
.04
|
|
|
Three
Months Ended
|
|
Six
Months Ended
|
|||||||||
|
|
|
June
30,
2007
|
|
|
June
30,
2006
|
|
|
June
30,
2007
|
|
|
June
30,
2006
|
|
Net
Income
|
$
|
71
|
$
|
612
|
$
|
483
|
$
|
771
|
|||||
Other
comprehensive income (loss)
|
|||||||||||||
Net
unrealized holding losses arising during the period.
|
(485
|
)
|
(518
|
)
|
(336
|
)
|
(620
|
)
|
|||||
Tax
benefit on unrealized holding losses
|
165
|
176
|
114
|
211
|
|||||||||
Comprehensive
income (loss)
|
$
|
(249
|
)
|
$
|
270
|
$
|
261
|
$
|
362
|
||||
2007
|
|
|
2006
|
||||
Cash
Flows from operating activities:
|
|||||||
Net
income
|
$
|
483
|
$
|
771
|
|||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
|||||||
Depreciation
|
223
|
236
|
|||||
Amortization
of core deposit premium
|
18
|
21
|
|||||
Provision
for loan losses
|
684
|
812
|
|||||
Provision
for deferred taxes
|
(143
|
)
|
(73
|
)
|
|||
Stock
option expense
|
58
|
56
|
|||||
(Increase)
decrease in interest receivable
|
567
|
(237
|
)
|
||||
Gain
on sale of fixed assets
|
(221
|
)
|
-
-
|
||||
Loss
on sale of other real estate owned
|
64
|
29
|
|||||
Other
operating activities
|
(1,899
|
)
|
1,044
|
||||
Net
cash provided by operating activities
|
(166
|
)
|
2,659
|
||||
Cash
Flows from Investing Activities:
|
|||||||
Purchase
of property and equipment
|
(147
|
)
|
(1,420
|
)
|
|||
Proceeds
from sale of fixed assets
|
3,251
|
-
-
|
|||||
Net
(increase) decrease in federal funds sold
|
(19,107
|
)
|
5,693
|
||||
Net
(increase) decrease in loans
|
48,868
|
(38,163
|
)
|
||||
Proceeds
from maturities of securities available for sale
|
589
|
1,273
|
|||||
Proceeds
from sale of other real estate owned
|
616
|
260
|
|||||
Proceeds
from sale of securities
|
1,000
|
-
-
|
|||||
Purchase
of securities available for sale
|
(6,370
|
)
|
(2,113
|
)
|
|||
Net
cash provided by (used) in investing activities
|
28,700
|
(34,470
|
)
|
||||
Cash
Flows from Financing Activities:
|
|||||||
Net
increase (decrease) in deposits
|
(30,933
|
)
|
40,291
|
||||
Dividends
paid to shareholders
|
(123
|
)
|
(121
|
)
|
|||
Proceeds
from exercise of stock options
|
272
|
539
|
|||||
Net
decrease in other borrowings
|
-
-
|
(8,000
|
)
|
||||
Treasury
stock transactions, net
|
44
|
-
-
|
|||||
Net
cash provided by(used) in financing activities
|
(30,740
|
)
|
32,709
|
||||
Net
increase (decrease) in cash
|
(2,206
|
)
|
898
|
||||
Cash
and due from banks at beginning of period
|
7,408
|
6,931
|
|||||
Cash
and due from banks at end of period
|
5,202
|
7,829
|
|||||
Supplemental
Disclosure
|
|||||||
Cash
paid for interest
|
$
|
5,403
|
$
|
5,254
|
|||
Income
taxes
|
$
|
328
|
$
|
200
|
|||
Non-Cash
Transaction
|
|||||||
Other
real estate acquired in settlement of loans
|
1,460
|
775
|
|||||
Unrealized
losses on securities available for sale
|
$
|
336
|
$
|
620
|
June
30, 2007
|
|
|
December
31, 2006
|
||||
Interest
bearing demand and savings
|
$
|
58,597,000
|
$
|
61,242,000
|
|||
Certificates
of deposit in denominations of $100,000 or greater
|
72,581,000
|
96,977,000
|
|||||
Other
certificates of deposit
|
56,385,000
|
59,854,000
|
|||||
Total
|
$
|
187,563,000
|
$
|
218,073,000
|
Tier
1 Capital to risk weighted assets Ratio, actual
|
16.81%
|
Tier
1 Capital minimum requirement
|
4.00%
|
Tier
2 Capital to risk weighted assets Ratio, actual
|
18.09%
|
Tier
2 Capital minimum requirement
|
8.00%
|
Tier
1 Leverage Ratio
|
11.00%
|
Tier
1 Leverage Ratio minimum requirement
|
4.00%
|
June-07
|
|
|
Dec-06
|
||||
Commitments
to extend credit
|
$
|
44,178,000
|
$
|
57,958,000
|
|||
Standby
letters of credit
|
$
|
1,020,000
|
$
|
1,020,000
|
Market
Rate Change
|
|
|
Effect
on
Net
Interest
Income
|
|
(Immediate)
|
||||
+200
bps
|
.82
|
%
|
||
+100
bps
|
.57
|
%
|
||
-100
bps
|
-1.82
|
%
|
||
-200
bps
|
-3.87
|
%
|
ITEM 1. |
Legal
Proceedings
|
ITEM 1.A. |
Risk
Factors
|
ITEM 2. |
UNREGISTERED
SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS
|
ITEM 3. |
DEFAULTS
UPON SENIOR SECURITIES
|
ITEM 4. |
SUBMISSION
OF MATTERS TO A VOTE OF SECURITY HOLDERS
|
Directors
|
Votes
For
|
Votes
Withheld
|
||
C.
Richard Langley
|
2,340,847
|
547,178
|
||
Jane
Anne D. Sullivan
|
2,385,551
|
502,474
|
||
James
D. Woods
|
2,320,462
|
502,474
|
||
Bennett
D. Cotton, Jr.
|
2,320,462
|
502,474
|
||
John
P. Ventulett, Jr.
|
2,320,462
|
502,474
|
ITEM 5. |
OTHER
INFORMATION
|
Item 6. |
Exhibits
|
31.1 |
Certification
of the Chief Executive officer pursuant to Rule 13a-14(a) under the
Securities exchange act of 1934, as
amended.
|
31.2 |
Certification
of the Chief Financial Officer pursuant to Rule
13a-14(a) under the Securities exchange act of 1934, as
amended.
|
32.1 |
Certification
of the Chief Executive Officer and Chief Financial Officer pursuant
to
Rule 13a-14(b) under the Securities exchange act of 1934, as
amended.
|
August
14, 2007
|
/s/
John H. Monk, Jr.
|
|
Date
|
John
H. Monk, Jr.
|
|
Chief
Executive Officer
|
August
14, 2007
|
/s/
David J. Baranko
|
|
Date
|
David
J. Baranko
|
|
Chief
Financial Officer
(Duly
authorized officer and principal financial / accounting
officer)
|