GEORGIA-CAROLINA BANCSHARES, INC.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
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þ |
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Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the quarterly period ended June 30, 2007
- or -
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o |
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Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the transition period from to
Commission File Number 0-22891
GEORGIA-CAROLINA BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
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Georgia
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58-2326075 |
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(State or other Jurisdiction of
Incorporation or Organization)
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(I.R.S. Employer Identification Number) |
3527 Wheeler Road, Augusta, Georgia 30909
Address of principal executive offices, including zip code)
(706) 731-6600
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 þ NO o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer,
or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in
Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer o Accelerated filer o Non-accelerated filer þ
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act). YES o NO þ
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of
the latest practicable date.
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Class
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Outstanding at August 13, 2007 |
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Common Stock, $.001 Par Value
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3,397,518 shares |
GEORGIA-CAROLINA BANCSHARES, INC.
Form 10-Q
Index
Part
I - FINANCIAL INFORMATION
Item 1. Financial Statements.
GEORGIA-CAROLINA BANCSHARES, INC.
Condensed Consolidated Balance Sheets
(Unaudited)
(dollars in thousands)
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June 30, |
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December 31, |
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2007 |
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2006 |
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ASSETS |
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Cash and due from banks |
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$ |
12,573 |
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$ |
11,109 |
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Federal funds sold |
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— |
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1,182 |
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Securities available-for-sale |
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56,482 |
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53,273 |
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Loans, net of allowance for loan losses |
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300,427 |
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276,497 |
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Loans, held for sale |
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45,354 |
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56,758 |
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Bank premises and fixed assets |
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10,622 |
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10,655 |
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Accrued interest receivable |
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2,112 |
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1,738 |
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Foreclosed real estate, net of allowance |
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1,122 |
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599 |
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Deferred tax asset, net |
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1,672 |
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1,360 |
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Federal Home Loan Bank Stock |
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1,291 |
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2,131 |
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Other assets |
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1,847 |
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2,169 |
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Total assets |
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$ |
433,502 |
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$ |
417,471 |
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LIABILITIES AND SHAREHOLDERS’ EQUITY |
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Deposits: |
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Non-interest bearing |
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$ |
41,213 |
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$ |
39,848 |
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Interest-bearing: |
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NOW accounts |
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29,066 |
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28,447 |
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Savings |
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69,230 |
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53,606 |
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Money market accounts |
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12,779 |
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12,722 |
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Time deposits of $100,000, and over |
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126,510 |
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139,369 |
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Other time deposits |
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95,799 |
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67,350 |
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Total deposits |
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374,597 |
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341,342 |
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Borrowings: |
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Other liabilities, borrowings and retail agreements |
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25,175 |
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44,003 |
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Total liabilities |
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399,772 |
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385,345 |
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Shareholders’ equity: |
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Preferred stock, par value $.001; 1,000,000 shares authorized;
none issued |
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— |
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— |
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Common stock, par value $.001; 9,000,000 shares authorized;
3,396,040 and 3,376,522 shares
issued and outstanding |
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4 |
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4 |
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Additional paid-in-capital |
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14,804 |
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14,500 |
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Retained Earnings |
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19,569 |
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17,903 |
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Accumulated other comprehensive income (loss) |
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(647 |
) |
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(281 |
) |
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Total shareholders’ equity |
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33,730 |
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32,126 |
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Total liabilities and shareholders’ equity |
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$ |
433,502 |
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$ |
417,471 |
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See notes to condensed consolidated financial statements.
2
GEORGIA-CAROLINA BANCSHARES, INC.
Condensed Consolidated Statements of Income
(Unaudited)
(dollars in thousands, except per share amounts)
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Three Months Ended |
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Six Months Ended |
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June 30, |
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June 30, |
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2007 |
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2006 |
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2007 |
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2006 |
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Interest income |
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Interest and fees on loans |
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$ |
6,640 |
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$ |
5,541 |
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$ |
12,942 |
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$ |
10,700 |
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Interest on taxable securities |
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585 |
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326 |
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1,160 |
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717 |
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Interest on nontaxable securities |
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73 |
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142 |
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125 |
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177 |
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Interest on Federal funds sold |
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84 |
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48 |
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167 |
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74 |
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Total interest income |
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7,382 |
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6,057 |
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14,394 |
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11,668 |
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Interest expense |
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Interest on time deposits of $100,000 or more |
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1,604 |
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1,100 |
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3,305 |
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2,017 |
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Interest on other deposits |
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2,169 |
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1,399 |
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3,932 |
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2,728 |
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Interest on funds purchased and other borrowings |
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107 |
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152 |
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390 |
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319 |
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Total interest expense |
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3,880 |
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2,651 |
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7,627 |
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5,064 |
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Net interest income |
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3,502 |
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3,406 |
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6,767 |
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6,604 |
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Provision for loan losses |
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102 |
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275 |
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370 |
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458 |
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Net interest income after provision for loan losses |
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3,400 |
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3,131 |
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6,397 |
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6,146 |
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Non-interest income |
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Service charges on deposits |
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315 |
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202 |
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618 |
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390 |
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Other income/loss |
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178 |
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122 |
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358 |
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252 |
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Gain on sale of mortgage loans |
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2,219 |
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2,018 |
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4,255 |
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3,908 |
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2,712 |
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2,342 |
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5,231 |
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4,550 |
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Non-interest expense |
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Salaries and employee benefits |
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2,955 |
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2,961 |
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5,828 |
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5,811 |
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Occupancy expenses |
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394 |
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358 |
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750 |
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|
725 |
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Other expenses |
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1,301 |
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1,225 |
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2,473 |
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2,295 |
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4,650 |
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4,544 |
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9,051 |
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8,831 |
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Income before income taxes |
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1,462 |
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|
929 |
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2,577 |
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1,865 |
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Income tax expense |
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527 |
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296 |
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911 |
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583 |
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Net income |
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$ |
935 |
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$ |
633 |
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$ |
1,666 |
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$ |
1,282 |
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Net income per share of common stock (See Note 1) |
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Basic |
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$ |
0.28 |
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$ |
0.19 |
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$ |
0.49 |
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$ |
0.38 |
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Diluted |
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$ |
0.27 |
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$ |
0.18 |
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$ |
0.48 |
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$ |
0.37 |
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Dividends per share of common stock |
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$ |
— |
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$ |
— |
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$ |
— |
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$ |
— |
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See notes to condensed consolidated financial statements.
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(1) |
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Adjusted for the 5-for-4 common stock split on April 1, 2005 |
3
GEORGIA-CAROLINA BANCSHARES, INC.
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
(dollars in thousands)
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Three Months Ended |
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Six Months Ended |
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June 30, |
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June 30, |
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2007 |
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2006 |
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2007 |
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2006 |
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Net income |
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$ |
935 |
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$ |
633 |
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$ |
1,666 |
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$ |
1,282 |
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Unrealized holding gains and (losses) arising
during period, less reclassifications adjustment
for gains and losses included in net income,
net of tax |
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(483 |
) |
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(170 |
) |
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(367 |
) |
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(219 |
) |
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Comprehensive income |
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$ |
452 |
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$ |
463 |
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$ |
1,299 |
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$ |
1,063 |
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See notes to the condensed consolidated financial statements.
4
GEORGIA-CAROLINA BANCSHARES, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(dollars in thousands)
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Six Months Ended June 30, |
|
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2007 |
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2006 |
|
Cash flows from operating activities |
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Net income |
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$ |
1,666 |
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$ |
1,282 |
|
Adjustments to reconcile net income
to net cash used in operating activities: |
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Depreciation and amortization |
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|
378 |
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|
391 |
|
Provision for loan losses |
|
|
370 |
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|
|
458 |
|
SFAS 123R Stock option expense |
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|
118 |
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|
149 |
|
Stock compensation |
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|
153 |
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|
52 |
|
(Gain)/Loss on sales of other real estate |
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(14 |
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— |
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Net origination & proceeds on loans originated for sale |
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11,404 |
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|
(11,731 |
) |
Increase in accrued interest receivable |
|
|
(374 |
) |
|
|
(57 |
) |
Increase in accrued interest payable |
|
|
500 |
|
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|
390 |
|
Increase in deferred tax asset, net |
|
|
(106 |
) |
|
|
(46 |
) |
Net change in other assets and liabilities |
|
|
(356 |
) |
|
|
(203 |
) |
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|
Net cash provided by (used in) operating activities |
|
|
13,739 |
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|
(9,315 |
) |
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|
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
|
|
|
Increase in federal funds sold |
|
|
1,182 |
|
|
|
— |
|
Loan originations and collections, net |
|
|
(25,009 |
) |
|
|
(2,283 |
) |
Purchases of available for sale securities |
|
|
(6,977 |
) |
|
|
(10,780 |
) |
Proceeds from maturities, sales & calls of
available-for-sale securities, net |
|
|
3,196 |
|
|
|
2,195 |
|
(Purchases)/sales of restricted securities |
|
|
840 |
|
|
|
(169 |
) |
Proceeds from sale of foreclosed real estate |
|
|
200 |
|
|
|
391 |
|
Net additions to premises and equipment |
|
|
(293 |
) |
|
|
(706 |
) |
|
|
|
|
|
|
|
Net cash used in investing activities |
|
|
(26,861 |
) |
|
|
(11,352 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
|
|
|
Net increase in deposits and funds purchased |
|
|
14,553 |
|
|
|
21,173 |
|
Proceeds from stock options exercised |
|
|
33 |
|
|
|
60 |
|
|
|
|
|
|
|
|
Net cash provided by financing activities |
|
|
14,586 |
|
|
|
21,233 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net increase in cash and due from banks |
|
|
1,464 |
|
|
|
566 |
|
|
|
|
|
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|
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|
Cash and due from banks at beginning of period |
|
|
11,109 |
|
|
|
9,498 |
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|
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|
|
|
|
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Cash and due from banks at end of period |
|
$ |
12,573 |
|
|
$ |
10,064 |
|
|
|
|
|
|
|
|
See notes to the condensed consolidated financial statements.
5
GEORGIA-CAROLINA BANCSHARES, INC.
Notes to Condensed Consolidated Financial Statements
June 30, 2007
(Unaudited)
Note 1 — Basis of Presentation
The accompanying condensed consolidated financial statements include the accounts of
Georgia-Carolina Bancshares, Inc. (the “Company”) and its wholly owned subsidiary, First Bank of
Georgia (the “Bank”). Significant intercompany transactions and accounts have been eliminated in
consolidation.
The financial statements as of June 30, 2007 and for the six months ended June 30, 2007 and 2006
are unaudited and have been prepared 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 accounting principles generally accepted in the United
States have been condensed or omitted pursuant to such rules and regulations. These condensed
consolidated financial statements should be read in conjunction with the audited financial
statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year
ended December 31, 2006.
The financial information included herein reflects all adjustments (consisting of normal recurring
adjustments) which are, in the opinion of management, necessary to a fair presentation of the
financial position and results of operations for interim periods.
Note 2 – Stock-Based Compensation
On January 1, 2006, the Company adopted the fair value recognition provisions of Financial
Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards (“SFAS”) No.
123(R), Share-Based Payment, to account for compensation costs under its stock option plans. The
adoption of SFAS No. 123(R) resulted in an additional expense in the first six months of 2007 of
approximately $118,000 relating to the expensing of stock options. Future levels of compensation
cost recognized related to share-based compensation awards may be impacted by new awards and/or
modifications, repurchases and cancellations of existing awards that may occur subsequent to the
date of adoption of this standard.
In adopting SFAS No. 123R, the Company elected to use the modified prospective method to account
for the transition from the intrinsic value method to the fair value recognition method. Under the
modified prospective method, compensation cost is recognized from the adoption date forward for all
new stock options granted and for any outstanding unvested awards as if the fair value method had
been applied to those awards as of the date of grant.
The Company previously utilized the intrinsic value method under Accounting Principles Board
Opinion No. 25, Accounting for Stock Issued to Employees (as amended) (“APB 25”). Under the
intrinsic value method prescribed by APB 25, no compensation costs were recognized for the
Company’s stock options because the option exercise price in its plans equals the market price on
the date of grant. Prior to January 1, 2006, the Company only disclosed the pro forma effects on
net income and earnings per share as if the fair value recognition provisions of SFAS 123(R) had
been utilized.
6
Note 3 — Earnings Per Share
Earnings per share are calculated on the basis of the weighted average number of shares
outstanding. As the Company has granted stock options to certain officers and other employees of
the Company, diluted earnings per share are presented in the Statements of Income.
In the first quarter of 2005, the Company’s Board of Directors approved a five-for-four stock split
of the Company’s common stock that was effected in the form of a stock dividend, paid on April 1,
2005 to shareholders of record on March 1, 2005. Share amounts presented in the financial
statements reflect this transaction, and the transaction has been presented in the statement of
shareholders’ equity. Per share information throughout the financial statements and note
disclosures reflect this stock split, with prior period amounts being restated to reflect the
effects of the stock split.
The following reconciles the numerators and denominators of the basic and diluted earnings per
share computations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended June 30, 2007 |
|
|
|
|
|
|
|
Weighted |
|
|
|
|
|
|
|
|
|
|
Average Shares- |
|
|
Per-Share |
|
|
|
Numerator |
|
|
Denominator |
|
|
Amount |
|
Net income |
|
$ |
935,000 |
|
|
|
|
|
|
|
|
|
Basic EPS |
|
|
|
|
|
|
|
|
|
|
|
|
Income available to common shareholders |
|
|
935,000 |
|
|
|
3,392,403 |
|
|
$ |
0.28 |
|
Effect of dilutive securities |
|
|
|
|
|
|
|
|
|
|
|
|
Options |
|
|
|
|
|
|
113,720 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS |
|
|
|
|
|
|
|
|
|
|
|
|
Income available to common
shareholders and assumed
conversions |
|
$ |
935,000 |
|
|
|
3,506,123 |
|
|
$ |
0.27 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended June 30, 2006 |
|
|
|
|
|
|
|
Weighted |
|
|
|
|
|
|
|
|
|
|
Average Shares- |
|
|
Per-Share |
|
|
|
Numerator |
|
|
Denominator |
|
|
Amount |
|
Net income |
|
$ |
633,000 |
|
|
|
|
|
|
|
|
|
Basic EPS |
|
|
|
|
|
|
|
|
|
|
|
|
Income available to common shareholders |
|
|
633,000 |
|
|
|
3,368,055 |
|
|
$ |
0.19 |
|
Effect of dilutive securities |
|
|
|
|
|
|
|
|
|
|
|
|
Options |
|
|
|
|
|
|
113,588 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS |
|
|
|
|
|
|
|
|
|
|
|
|
Income available to common
shareholders and assumed
conversions |
|
$ |
633,000 |
|
|
|
3,481,643 |
|
|
$ |
0.18 |
|
|
|
|
|
|
|
|
|
|
|
7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended June 30, 2007 |
|
|
|
|
|
|
|
Weighted |
|
|
|
|
|
|
|
|
|
|
Average Shares- |
|
|
Per-Share |
|
|
|
Numerator |
|
|
Denominator |
|
|
Amount |
|
Net income |
|
$ |
1,666,000 |
|
|
|
|
|
|
|
|
|
Basic EPS |
|
|
|
|
|
|
|
|
|
|
|
|
Income available to common shareholders |
|
|
1,666,000 |
|
|
|
3,388,279 |
|
|
$ |
0.49 |
|
Effect of dilutive securities |
|
|
|
|
|
|
|
|
|
|
|
|
Options |
|
|
|
|
|
|
114,601 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS |
|
|
|
|
|
|
|
|
|
|
|
|
Income available to common
shareholders and assumed
conversions |
|
$ |
1,666,000 |
|
|
|
3,502,880 |
|
|
$ |
0.48 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended June 30, 2006 |
|
|
|
|
|
|
|
Weighted |
|
|
|
|
|
|
|
|
|
|
Average Shares- |
|
|
Per-Share |
|
|
|
Numerator |
|
|
Denominator |
|
|
Amount |
|
Net income |
|
$ |
1,282,000 |
|
|
|
|
|
|
|
|
|
Basic EPS |
|
|
|
|
|
|
|
|
|
|
|
|
Income available to common shareholders |
|
|
1,282,000 |
|
|
|
3,364,468 |
|
|
$ |
0.38 |
|
Effect of dilutive securities |
|
|
|
|
|
|
|
|
|
|
|
|
Options |
|
|
|
|
|
|
116,163 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS |
|
|
|
|
|
|
|
|
|
|
|
|
Income available to common
shareholders and assumed
conversions |
|
$ |
1,282,000 |
|
|
|
3,480,631 |
|
|
$ |
0.37 |
|
|
|
|
|
|
|
|
|
|
|
Note 4 — Impact of Recently Issued Accounting Standards
In February 2006, the FASB issued SFAS No. 155, Accounting for Certain Hybrid Financial
Instruments, an amendment of FASB Statements No. 133 and 140. This Statement amends SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities, and SFAS No. 140, Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, and resolves issues
in Statement No. 133 Implementation Issue No. D1, Application of Statement 133 to Beneficial
Interests in Securitized Financial Assets. The provisions of this statement are effective for all
financial instruments acquired or issued after the beginning of an entity’s first fiscal year that
begins after September 15, 2006. The adoption of SFAS No. 155 did not have a material impact on
the consolidated financial statements of the Company.
In March 2006, the FASB issued SFAS No. 156, Accounting for Servicing of Financial Assets, an
amendment of FASB Statement No. 140. This Statement amends SFAS No. 140, Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities, a replacement of FASB
Statement 125, with respect to the accounting for separately-recognized servicing assets and
servicing liabilities. The provisions of this statement are effective for fiscal years
beginning after September 15, 2006. The adoption of SFAS No. 156 did not have a material impact on
the consolidated financial statements of the Company.
8
In June 2006, the FASB issued FASB Interpretation No. 48 (“FIN 48”), Accounting for Uncertainty in
Income Taxes — an interpretation of FASB Statement No. 109, which establishes that the financial
statement effects of a tax position taken or expected to be taken in a tax return are to be
recognized in the financial statements when it is more likely than not, based on the technical
merits, that the position will be sustained upon examination. FIN 48 is effective for fiscal years
beginning after December 15, 2006. The adoption of this new standard has not had a material impact
on the consolidated financial statements of the Company.
In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements, which establishes a
framework for measuring fair value in generally accepted accounting principles and expands
disclosures about fair value measurements. SFAS No. 157 defines fair value as the price that would
be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. SFAS No. 157 is effective for financial statements
issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal
years. The Company does not expect the adoption of this new standard to have a material impact on
the consolidated financial statements of the Company.
In February 2007, the FASB issued SFAS 159, The Fair Value Option for Financial Assets and
Financial Liabilities. SFAS 159 permits entities to choose to measure financial instruments and
certain other items at fair value that are not currently required to be measured at fair value. The
decision to elect the fair value option may be applied instrument by instrument, is irrevocable and
is applied to the entire instrument and not to only specified risks, specific cash flows or
portions of that instrument. An entity is restricted in choosing the dates to elect the fair value
option for an eligible item. Adoption of SFAS 159 is effective for the Company on January 1, 2008.
Early adoption is permitted, provided the entity also elects to apply the provisions of SFAS 157,
Fair Value Measurements. Management of the Company is currently evaluating the potential impact of
SFAS 159 on the consolidated financial statements of the Company.
Note 5 – Commitments and Contingencies
The Bank uses the same credit policies for off-balance-sheet financial instruments as it does for
other instruments that are recorded in the financial statements. Commitments to extend credit are
agreements to lend to a customer as long as there is no violation of any condition established in
the contract. Commitments generally have fixed expiration dates or other termination clauses and
may require payment of a fee. Since many of the commitments may expire without being completely
drawn upon, the total commitment amounts do not necessarily represent future cash requirements.
The Company evaluates each customer’s creditworthiness on a case-by-case basis. In managing the
Bank’s credit and market risk exposure, the Bank may participate these commitments with other
institutions when funded. The credit risk involved in issuing these financial instruments is
essentially the same as that involved in extending loans to customers. The amount of collateral
obtained, if deemed necessary by the Bank, upon extension of credit is based on management’s credit
evaluation of the customer. Collateral held varies, but may include real estate and improvements,
marketable securities, accounts receivable, inventory, equipment and personal property. At June 30,
2007, the Bank had outstanding loan commitments approximating $81.6 million.
Letters of credit are conditional commitments issued by the Bank to guarantee the performance of a
customer to a third party. The credit risk involved in issuing letters of credit is essentially
the same as that involved in extending loans to customers. The amount of standby letters of credit
whose contract amounts represent credit risk totaled approximately $1.6 million as of June 30,
2007.
9
The Bank, as part of its retail mortgage loan production activities, routinely enters into
short-term commitments to originate loans. Most of the loans will be sold to third parties upon
closing. For those loans, the Bank enters into individual forward sales commitments at the same
time the commitments to originate are finalized. While the forward sales commitments function as an
economic offset and effectively eliminate the Bank’s financial risk of rate changes during the rate
lock period, both the commitment to originate mortgage loans that will be sold and the commitment
to sell the mortgage loans are derivatives, the fair values of which are essentially equal and
offsetting. The fair values are calculated based on changes in market interest rates after the
commitment date. The notional amounts of these mortgage loan origination commitments and the
related forward sales commitments were approximately $53.2 million each at June 30, 2007. The net
unrealized gains/losses of the origination and sales commitments did not have a material effect on
the consolidated financial statements of the Company at June 30, 2007.
The Bank has executed individual forward sales commitments related to retail mortgage loans, which
are classified as loans held for sale. The forward sales commitments on retail mortgage loans
function as an economic offset and mitigate the Bank’s market risk on these loans. The notional
value of the forward sales commitments on retail mortgage loans at June 30, 2007 was approximately
$50.0 million. The fair value of the sales commitments on retail mortgage loans resulted in no
material gains or losses to the Bank at June 30, 2007.
The nature of the business of the Bank is such that it ordinarily results in a certain amount of
litigation. In the opinion of management, there are no present litigation matters in which the
anticipated outcome will have a material adverse effect on the financial statements.
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Overview
Georgia-Carolina Bancshares, Inc. (the “Company”) was incorporated under the laws of the State of
Georgia on January 31, 1997 to operate as a bank holding company pursuant to the Federal Bank
Holding Company Act of 1956, as amended. The Company is a one-bank holding company and owns 100%
of the issued and outstanding stock of First Bank of Georgia (the “Bank”), an independent,
state-chartered commercial bank. The Bank operates three offices in Augusta, Georgia, two offices
in Martinez, Georgia and one office in Thomson, Georgia. The Bank also operates three
non-depository, mortgage origination offices in Augusta, Georgia, Savannah, Georgia and
Jacksonville, Florida.
The Bank targets the banking needs of individuals and small to medium-sized businesses by
emphasizing personal service. The Bank offers a full range of deposit and lending services and is a
member of an electronic banking network that enables its customers to use the automated teller
machines of other financial institutions. In addition, the Bank offers commercial and business
credit services, as well as various consumer credit services, including home mortgage loans,
automobile loans, lines of credit, home equity loans and home improvement loans.
10
Critical Accounting Policies
The accounting and reporting policies of the Company and Bank are in accordance with
accounting principles generally accepted in the United States and conform to general practices
within the banking industry. Application of these principles requires management to make estimates
or judgments that affect the amounts reported in the financial statements and the accompanying
notes. These estimates are based on information available as of the date of the financial
statements; accordingly, as this information changes, the financial statements could reflect
different estimates or judgments. Certain policies inherently have a greater reliance on the use of
estimates, and as such have a greater possibility of producing results that could be materially
different than originally reported.
Estimates or judgments are necessary when assets and liabilities are required to be recorded at
fair value, when a decline in the value of an asset not carried on the financial statements at fair
value warrants an impairment write-down or valuation reserve, or when an asset or liability needs
to be recorded contingent upon a future event. Carrying assets and liabilities at fair value
inherently results in more financial statement volatility. The fair values and the information used
to record the valuation adjustments for certain assets and liabilities are based either on quoted
market prices or are provided by other third-party sources, when available. When third-party
information is not available, valuation adjustments are estimated in good faith by management,
primarily through the use of internal cash flow modeling techniques.
Management views critical accounting policies to be those that are highly dependent on subjective
or complex judgments, estimates and assumptions, and where changes in those estimates and
assumptions could have a significant impact on the financial statements. Management currently views
the determination of the allowance for loan losses to be the only critical accounting policy.
The allowance for loan losses represents management’s estimate of probable credit losses inherent
in the loan portfolio. Estimating the amount of the allowance for loan losses requires significant
judgment and the use of estimates related to the amount and timing of expected future cash flows on
impaired loans, estimated losses on non-impaired loans based on historical loss experience, and
consideration of current economic trends and conditions, all of which may be susceptible to
significant change. The loan portfolio also represents the largest asset type on the consolidated
balance sheet. Loan losses are charged off against the allowance, while recoveries of amounts
previously charged off are credited to the allowance. A provision for loan losses is charged to
operations based on management’s periodic evaluation of the factors previously mentioned, as well
as other pertinent factors.
The components of the allowance for loan losses represent an estimation made pursuant to either
Statement of Financial Accounting Standards (SFAS) No. 5, Accounting for Contingencies, or SFAS
114, Accounting by Creditors for Impairment of a Loan. The allowance for loan losses reflects
expected losses resulting from analyses developed through specific credit allocations for
individual loans and historical loss experience for each loan category. The specific credit
allocations are based on regular analyses of all loans over a fixed-dollar amount where the
internal credit rating is at or below a predetermined classification. These analyses involve a high
degree of judgment in estimating the amount of loss associated with specific loans, including
estimating the amount and timing of future cash flows and collateral values. The historical loss
element is determined, in part, by using the average of actual losses incurred over prior years for
each type of loan. The historical loss experience is adjusted for known changes in economic
conditions and credit quality trends such as changes in the amount of past due and non-performing
loans. The resulting loss allocation factors are applied to the balance of each type of loan after
removing the balance of impaired loans from each category.
There are many factors affecting the allowance for loan losses; some are quantitative while others
require qualitative judgment. Although management believes its process for determining the
allowance adequately considers all the potential factors that could potentially result in credit
losses, the process includes subjective elements and may be susceptible to significant change. To
the extent actual outcomes
11
differ from management estimates, additional provision for loan losses could be required that could
adversely affect earnings or the Company’s financial position in future periods.
New Accounting Pronouncements
In September 2006, the FASB issued SFAS 157, Fair Value Measurement. SFAS 157 defines fair value,
establishes a framework for measuring fair value in accordance with U.S. GAAP, and expands
disclosures about fair value measurements. SFAS 157 clarifies that the exchange price is the price
in an orderly transaction between market participants to sell an asset or transfer a liability at
the measurement date. SFAS 157 emphasizes that fair value is a market-based measurement and not an
entity-specific measurement. It also establishes a fair value hierarchy used in fair value
measurements and expands the required disclosures of assets and liabilities measured at fair value.
The Company will be required to adopt this statement beginning in 2008. The adoption of this
standard is not expected to have a material impact on the Company’s consolidated financial
condition, results of operations, or liquidity.
In September 2006, the Securities and Exchange Commission (“SEC”) issued Staff Accounting Bulletin
108 (“SAB 108”). SAB 108 expresses the views of the SEC regarding the process of quantifying
financial statement misstatements to determine if any restatement of prior financial statements is
required. SAB 108 addresses the two techniques commonly used in practice in accumulating and
quantifying misstatements, and requires that the technique with the most severe result be used in
determining whether a misstatement is material. SAB 108 was adopted by the Company on December 31,
2006. As a result of adopting SAB 108 on December 31, 2006, the Company recognized a decrease of
$177,000 to beginning retained earnings as of January 1, 2006. The decrease is the result of an
additional payroll accrual as of December 31, 2005, which the Company has elected to correct under
the guidance in SAB 108. Adopting SAB 108 also resulted in the restatement of net income for the
second quarter of 2006 from $619,000 to $633,000, which was also the result of an additional
payroll accrual, net of tax. Based on the method previously applied, prior to the issuance of SAB
108, the impact was considered immaterial to the Company’s consolidated financial condition,
results of operations, and liquidity.
In February 2007, the FASB issued SFAS 159, The Fair Value Option for Financial Assets and
Financial Liabilities. SFAS 159 permits entities to choose to measure financial instruments and
certain other items at fair value that are not currently required to be measured at fair value. The
decision to elect the fair value option may be applied instrument by instrument, is irrevocable,
and is applied to the entire instrument and not to only specified risks, specific cash flows or
portions of that instrument. An entity is restricted in choosing the dates to elect the fair value
option for an eligible item. Adoption of SFAS 159 is effective for the Company on January 1, 2008.
Early adoption is permitted, provided the entity also elects to apply the provisions of SFAS 157,
Fair Value Measurements. Management of the Company is currently evaluating the potential impact of
SFAS 159 on the Company’s consolidated financial condition, results of operations, and liquidity.
Results of Operations
Overview
The Company’s net income was $935,000 for the second quarter of 2007, compared to $633,000 for the
second quarter of 2006, an increase of 47.7%. Basic earnings per share were $0.28 for the second
quarter of 2007, compared to $0.19 for the second quarter of 2006.
The Company’s net income was $1,666,000 for the six months ended June 30, 2007, compared to
$1,282,000 for the six months ended June 30, 2006, an increase of 30.0%. Basic earnings per share
were $0.49 for the six months ended June 30, 2007, compared to $0.38 for the six months ended June
30, 2006.
12
The Company’s return on average assets was 0.90% (annualized) for the quarter ended June 30, 2007,
compared to 0.71% (annualized) for the quarter ended June 30, 2006. The Company’s return on
average equity for the quarter ended June 30, 2007 was 10.94% (annualized) compared to 8.59%
(annualized) for the quarter ended June 30, 2006. The Company’s return on average assets was 0.81%
(annualized) for the six months ended June 30, 2007, compared to 0.73% (annualized) for the six
months ended June 30, 2006. The Company’s return on average equity for the six months ended June
30, 2007 was 9.88% (annualized) compared to 8.79% (annualized) for the six months ended June 30,
2006.
Net Interest Income
Net interest income is the difference between the interest and fees earned on loans, securities,
and other interest-earning assets (interest income), and the interest paid on deposits and borrowed
funds (interest expense).
Net interest income was $3,502,000 for the quarter ended June 30, 2007, an increase of $96,000
(2.8%) over net interest income of $3,406,000 for the quarter ended June 30, 2006. Net interest
income was $6,767,000 for the six months ended June 30, 2007, an increase of $163,000 (2.5%) over
net interest income of $6,604,000 for the six months ended June 30, 2006. This increase was
primarily the result of investing increased deposit liability funds and other borrowed funds in
higher yielding loans, offset by higher interest rates paid by the Bank on deposit liability funds
and other borrowed funds as competitive interest rates continued to rise. Interest-earning assets
were $408,251,000 at June 30, 2007 compared to $394,227,000 at December 31, 2006 and $349,380,000
at June 30, 2006, increases of $14,024,000 (3.6%) and $58,871,000 (16.9%), respectively. Loans,
including loans held for sale, are the highest yielding component of interest-earning assets.
Total loans, net of the allowance for loan losses, were $345,781,000 at June 30, 2007 compared to
$333,255,000 at December 31, 2006 and $297,573,000 at June 30, 2006, increases of $12,526,000
(3.8%) and $48,208,000 (16.2%) respectively. The increase continues to be primarily attributable to
the Company’s continuing loan growth in the Augusta, Georgia and Columbia County, Georgia market
areas.
Interest Income
Interest income for the three months ended June 30, 2007 was $7,382,000, an increase of $1,325,000
(21.9%) from $6,057,000 for the three months ended June 30, 2006. Interest income for the six
months ended June 30, 2007 was $14,394,000, an increase of $2,726,000 (23.4%) from $11,668,000 for
the six months ended June 30, 2006. The increase in interest income primarily resulted from an
increase in interest and fees on loans. The increase in interest and fees on loans resulted from
higher yields on the Bank’s growing loan portfolio. Interest income and fees on loans for the three
months ended June 30, 2007 were $6,640,000, an increase of $1,099,000 (19.8%) from $5,541,000 for
the three months ended June 30, 2006. Interest income and fees on loans for the six months ended
June 30, 2007 were $12,942,000, an increase of $2,242,000 (21.0%) from $10,700,000 for the six
months ended June 30, 2006. The Bank’s opportunity to increase the investment in loans continues
to be primarily attributable to the Bank’s growth in the Augusta, Georgia and Columbia County,
Georgia market areas.
Interest Expense
Interest expense for the three months ended June 30, 2007 was $3,880,000, an increase of $1,229,000
(46.4%) from $2,651,000 for the three months ended June 30, 2006. Interest expense for the six
months ended June 30, 2007 was $7,627,000, an increase of $2,563,000 (50.6%) from $5,064,000 for
the six months ended June 30, 2006. While the Bank has experienced a significant increase in the
amount of interest-bearing deposits from June 30, 2006 to June 30, 2007, interest expense on these
deposits has also increased due to the higher interest rate environment.
13
Provision for Loan Losses
The provision for loan losses was $102,000 for the three months ended June 30, 2007, compared to
$275,000 for the three months ended June 30, 2006, representing a decrease of 62.9%. The provision
for loan losses was $370,000 for the six months ended June 30, 2007, compared to $458,000 for the
six months ended June 30, 2006, representing a decrease of 19.2%. This decrease is the result of
management’s continuing analysis of the adequacy of the allowance for loan losses. The ratio of
the allowance for loan losses to total gross loans was 1.34% at June 30, 2007 and 1.31% at December
31, 2006. Excluding the balance of loans held for sale by the Bank, the ratio of the allowance for
loan losses to gross loans was 1.54% at June 30, 2007 and 1.58% at December 31, 2006. Management
considers the current allowance for loan losses appropriate based upon its analysis of the
potential risk in the portfolio; however, there can be no assurance that charge-offs in future
periods will not exceed the allowance for loan losses or that additional provisions will not be
required.
Non-interest Income
Non-interest income for the three months ended June 30, 2007 was $2,712,000, an increase of
$370,000 (15.8%) from $2,342,000 for the three months ended June 30, 2006. Non-interest income for
the six months ended June 30, 2007 was $5,231,000, an increase of $681,000 (15.0%) from $4,550,000
for the six months ended June 30, 2006. Service charges on deposit accounts were $315,000 for the
three months ended June 30, 2007, an increase of $113,000 (55.9%) from $202,000 for the three
months ended June 30, 2006. Service charges on deposit accounts were $618,000 for the six months
ended June 30, 2007, an increase of $228,000 (58.5%) from $390,000 for the six months ended June
30, 2006. Gain on sale of mortgage loans originated and sold by the Bank’s mortgage division was
$2,219,000 for the three months ended June 30, 2007, an increase of $201,000 (10.0%) from
$2,018,000 for the three months ended June 30, 2006. Gain on sale of mortgage loans originated and
sold by the Bank’s mortgage division was $4,255,000 for the six months ended June 30, 2007, an
increase of $347,000 (8.9%) from $3,908,000 for the six months ended June 30, 2006. Substantially
all loans originated by the division are sold in the secondary market with servicing rights
released.
Non-interest Expense
Non-interest expense for the three months ended June 30, 2007 was $4,650,000, an increase of
$106,000 (2.3%) from $4,544,000 for the three months ended June 30, 2006. Non-interest expense for
the six months ended June 30, 2007 was $9,051,000, an increase of $220,000 (2.5%) from $8,831,000
for the six months ended June 30, 2006. Salary and employee benefit costs were $2,955,000 for the
three months ended June 30, 2007, a decrease of $6,000 (0.2%) from $2,961,000 for the three months
ended June 30, 2006. Salary and employee benefit costs were $5,828,000 for the six months ended
June 30, 2007, an increase of $17,000 (0.3%) from $5,811,000 for the six months ended June 30,
2006. Occupancy and other non-interest expenses for the three months ended June 30, 2007 increased
by $112,000 (7.1%) to $1,695,000 from $1,583,000 during the three months ended June 30, 2006.
Occupancy and other non-interest expenses for the six months ended June 30, 2007 increased by
$203,000 (6.7%) to $3,223,000 from $3,020,000 during the six months ended June 30, 2006. This
increase was primarily a result of the continued expansion and growth of the Bank, including
expenses associated with the new main office.
Income Taxes
The Company recorded income tax expense of $527,000 for the three months ended June 30, 2007,
resulting from net income before taxes of $1,462,000 for the quarter. The Company recorded income
tax expense of $911,000 for the six months ended June 30, 2007, resulting from net income before
taxes of $2,577,000 for the period. Included in the income tax expense for the six months ended
June 30, 2007 is a deferred tax valuation allowance of $18,795 related to the Georgia low income
housing tax credits.
14
Financial Condition
Overview
Total consolidated assets at June 30, 2007 were $433,502,000, an increase of $16,031,000 (3.8%)
from December 31, 2006 total consolidated assets of $417,471,000. At June 30, 2007, loans
represented 85.8% of interest-earning assets compared to 85.6% at December 31, 2006. Investments in
securities at June 30, 2007 were $56,482,000, an increase of $3,209,000 (6.0%) from $53,273,000 at
December 31, 2006. Interest-bearing deposits at June 30, 2007 were $333,384,000, an increase of
$31,890,000 (10.6%) from the December 31, 2006 balance of $301,494,000. The Bank’s lines of credit
balances with the Federal Home Loan Bank were $11,000,000 at June 30, 2007, as compared to December
31, 2006 balances of $31,828,000, a decrease of $20,828,000 (65.4%). There was a $3,123,000 shift
in the Bank’s Federal funds position to funds purchased of $1,941,000 at June 30, 2007, as compared
to $1,182,000 in Federal funds sold at December 31, 2006. The Bank’s retail repurchase agreements
amounted to $6,918,000 at June 30, 2007, an increase of $185,000 (2.7%) from the December 31, 2006
balance of $6,733,000. The Company’s balance on its line of credit with a correspondent bank was
$700,000 at both June 30, 2007 and December 31, 2006.
Management continuously monitors the financial condition of the Bank in order to protect
depositors, increase retained earnings and protect current and future earnings. Further discussion
of significant items affecting the Bank’s financial condition is presented in detail below.
Asset Quality
A major key to long-term earnings growth is the maintenance of a high-quality loan portfolio. The
Bank’s directive in this regard is carried out through its policies and procedures for extending
credit to the Bank’s customers. The goal of these policies and procedures is to provide a sound
basis for new credit extensions and an early recognition of problem assets to allow the most
flexibility in their timely disposition.
Non-performing assets were $3,373,000 at June 30, 2007, compared to $2,885,000 at December 31,
2006. The composition of non-performing assets for each date is shown below.
|
|
|
|
|
|
|
|
|
|
|
June 30, |
|
|
December 31, |
|
|
|
2007 |
|
|
2006 |
|
Non-accrual loans |
|
$ |
2,251,000 |
|
|
$ |
2,286,000 |
|
OREO, net of valuation allowance |
|
|
1,122,000 |
|
|
|
599,000 |
|
|
|
|
|
|
|
|
|
|
$ |
3,373,000 |
|
|
$ |
2,885,000 |
|
|
|
|
|
|
|
|
The ratio of non-performing assets to total loans and other real estate was 0.96% at June 30, 2007
and 0.85% at December 31, 2006.
The reduction and disposition of non-performing assets is a management priority.
Additions to the allowance for loan losses are made periodically to maintain the allowance at an
appropriate level based upon management’s analysis of potential risk in the loan portfolio, as
described above under the heading “Critical Accounting Policies.” During the quarter ended June 30,
2007, management determined that the allowance for loan losses should be increased through a
provision for loan losses of $102,000. The ratio of the allowance for loan losses to total gross
loans was 1.34% at June 30, 2007 and 1.31% at December 31, 2006. Excluding the balance of loans
held for sale by the Bank, the
15
ratio of the allowance for loan losses to gross loans was 1.54% at June 30, 2007 and 1.58% at
December 31, 2006. Management considers the current allowance for loan losses appropriate based
upon its analysis of the potential risk in the portfolio; however, there can be no assurance that
charge-offs in future periods will not exceed the allowance for loan losses or that additional
provisions will not be required.
Liquidity and Capital Resources
Liquidity is the ability of an organization to meet its financial commitments and obligations on a
timely basis. These commitments and obligations include credit needs of customers, withdrawals by
depositors, and payment of operating expenses and dividends. The Bank does not anticipate any
events which would require liquidity beyond that which is available through deposit growth,
investment maturities, federal funds lines, and other lines of credit and funding sources. The Bank
actively manages the levels, types and maturities of earning assets, in relation to the sources
available to fund current and future needs, to ensure that adequate funding will be available at
all times.
The Bank’s liquidity remains adequate to meet operating and loan funding requirements. The Bank’s
liquidity ratio at June 30, 2007 was 16.6%, compared to 15.1% at December 31, 2006.
Management is committed to maintaining capital at a level sufficient to protect depositors, provide
for reasonable growth, and fully comply with all regulatory requirements. Management’s strategy to
achieve this goal is to retain sufficient earnings while providing a reasonable return on equity.
Federal banking regulations establish certain capital adequacy standards required to be maintained
by banks. These regulations set minimum requirements of 4.0% for “Tier 1” risk-based capital, 8.0%
for total risk-based capital and 4.0% for the “Tier 1” leverage ratio. At June 30, 2007, the
Bank’s Tier 1 risk-based capital ratio was 9.4% and the total risk-based capital ratio was 10.6%,
compared to 9.4% and 10.7% at December 31, 2006, respectively. At June 30, 2007, the Bank’s
leverage ratio was 8.4% compared to 8.1% at December 31, 2006.
Off-Balance Sheet Arrangements
In the ordinary course of business, the Bank may enter into off-balance sheet financial instruments
which are not reflected in the financial statements. These instruments include commitments to
extend credit and standby letters of credit. Such financial instruments are recorded in the
financial statements when funds are disbursed or the instruments become payable.
The following is an analysis of significant off-balance sheet financial instruments at June 30,
2007 and December 31, 2006.
|
|
|
|
|
|
|
|
|
|
|
At |
|
|
At |
|
|
|
June 30, |
|
|
December 31, |
|
|
|
2007 |
|
|
2006 |
|
|
|
(in thousands) |
|
|
|
|
|
|
|
|
Commitments to extend credit |
|
$ |
81,595 |
|
|
$ |
79,828 |
|
Standby letters of credit |
|
|
1,608 |
|
|
|
2,389 |
|
|
|
|
|
|
|
|
|
|
$ |
83,203 |
|
|
$ |
82,217 |
|
|
|
|
|
|
|
|
16
Cautionary Note Regarding Forward-Looking Statements
The Company may, from time to time, make written or oral forward-looking statements, including
statements contained in the Company’s filings with the Securities and Exchange Commission (the
“Commission”) and its reports to stockholders. Such forward-looking statements are made based on
management’s belief as well as assumptions made by, and information currently available to,
management pursuant to “safe harbor” provisions of the Private Securities Litigation Reform Act of
1995.
The Company’s actual results may differ materially from the results anticipated in these
forward-looking statements due to a variety of factors, including governmental monetary and
fiscal policies, deposit levels, loan demand, loan collateral values, securities portfolio
values and interest rate risk management; the effects of competition in the banking business from
other commercial banks, savings and loan associations, mortgage banking firms, consumer finance
companies, credit unions, securities brokerage firms, insurance companies, money market mutual
funds and other financial institutions operating in the Company’s market area and elsewhere,
including institutions operating through the Internet; changes in government regulations relating
to the banking industry, including regulations relating to branching and acquisitions; failure of
assumptions underlying the establishment of reserves for loan losses, including the value of
collateral underlying delinquent loans; and other factors. The Company cautions that such factors
are not exclusive. The Company does not undertake to update any forward-looking statements that
may be made from time to time by, or on behalf of, the Company.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
There have been no material changes in the Company’s quantitative and qualitative disclosures about
market risk as of June 30, 2007 from that presented under the heading “Liquidity and Interest Rate
Sensitivity” and “Market Risk” in Item 7 of the Company’s Annual Report on Form 10-K for the year
ended December 31, 2006.
Item 4. Controls and Procedures.
Management has developed and implemented a policy and procedures for reviewing disclosure controls
and procedures and internal controls over financial reporting on a quarterly basis. Management,
including the Chief Executive Officer and the Chief Financial Officer, has evaluated the
effectiveness of the design and operation of disclosure controls and procedures as of June 30, 2007
and, based on such evaluation, has concluded that these controls and procedures are effective.
Disclosure controls and procedures are the Company’s controls and other procedures that are
designed to ensure that information required to be disclosed by the Company in the reports that it
files or submits under the Exchange Act is recorded, processed, summarized and reported, within the
time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure
controls and procedures include, without limitation, controls and procedures designed to ensure
that information required to be disclosed by the Company in the reports that it files under the
Exchange Act is accumulated and communicated to management, including the Chief Executive Officer
and the Chief Financial Officer, as appropriate to allow timely decisions regarding required
disclosure.
There were no changes in the Company’s internal control over financial reporting during the
Company’s last fiscal quarter that have materially affected, or are reasonably likely to materially
affect, the Company’s internal control over financial reporting.
All internal control systems, no matter how well designed, have inherent limitations. Therefore,
even those systems determined to be effective can provide only reasonable assurance with respect to
financial statement preparation and presentation.
17
Item 4T. Controls and Procedures.
Not applicable.
Part II — OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
The 2007 Annual Meeting of Shareholders of the Company (the “Annual Meeting”) was held on May 21,
2007. At the Annual Meeting, the following persons were elected as directors to serve as Class I
directors, for a term of three years and until their successors are elected and qualified: Phillip
G. Farr, Samuel A. Fowler, Jr., Arthur J. Gay, Jr., Joseph D. Greene, Hugh L. Hamilton, Jr., and
Remer Y. Brinson, III.
The number of votes cast for and withheld in the election of each nominee for director was as
follows:
|
|
|
|
|
|
|
|
|
|
|
Votes |
|
Votes |
|
|
FOR |
|
WITHHELD |
Phillip G. Farr |
|
|
2,486,815 |
|
|
|
117,314 |
|
Samuel A. Fowler, Jr. |
|
|
2,479,895 |
|
|
|
124,234 |
|
Arthur J. Gay, Jr. |
|
|
2,488,195 |
|
|
|
115,934 |
|
Joseph D. Greene |
|
|
2,496,327 |
|
|
|
107,802 |
|
Hugh L. Hamilton, Jr. |
|
|
2,488,195 |
|
|
|
115,934 |
|
Remer Y. Brinson, III |
|
|
2,488,195 |
|
|
|
115,934 |
|
The following persons did not stand for reelection to the Board at the Annual Meeting as their term
of office continued after the Annual Meeting: Patrick G. Blanchard, David W. Joesbury, Sr., John
W. Lee, A. Montague Miller, Robert N. Wilson, Jr., Bennye M. Young, Larry DeMeyers, J. Randal
Hall, George H. Inman, James L. Lemley, M.D. and Julian W. Osbon.
Item 6. Exhibits.
The following exhibits are filed with this Report:
|
|
|
|
|
Exhibit No. |
|
|
|
Description |
|
3.1
|
|
-
|
|
Articles of Incorporation of the Company (incorporated herein by reference to Exhibit
3.1 of the Company’s Registration Statement on Form SB-2 under the Securities Act of 1933,
as amended, Registration No. 333-69763). |
|
|
|
|
|
3.1.1
|
|
-
|
|
Articles of Amendment to the Articles of Incorporation of the Company (incorporated
herein by reference to Exhibit 3.1.1 of the Company’s Annual Report on Form 10-KSB for the
year ended December 31, 2000). |
|
|
|
|
|
3.2
|
|
-
|
|
By-Laws of the Company (incorporated herein by reference to Exhibit 3.2 of the
Company’s Registration Statement on Form SB-2 under the Securities Act of 1933, as amended,
Registration No. 333-69763). |
|
|
|
|
|
31.1
|
|
-
|
|
Certification of President and Chief Executive Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002. |
18
|
|
|
|
|
Exhibit No. |
|
|
|
Description |
|
31.2
|
|
-
|
|
Certification of Senior Vice President and Chief Financial Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002. |
|
|
|
|
|
32.1
|
|
-
|
|
Certifications Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
19
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.
|
|
|
|
|
|
GEORGIA-CAROLINA BANCSHARES, INC.
|
|
August 13, 2007 |
By: |
/s/ Patrick G. Blanchard
|
|
|
|
Patrick G. Blanchard |
|
|
|
President and Chief Executive Officer
(principal executive officer) |
|
|
|
|
|
August 13, 2007 |
By: |
/s/ Bradley J. Gregory, Sr.
|
|
|
|
Bradley J. Gregory, Sr. |
|
|
|
Senior Vice President and Chief Financial Officer
(principal financial and accounting officer) |
|
|
EXHIBIT INDEX
|
|
|
Exhibit No. |
|
Description of Exhibit |
|
Exhibit 31.1
|
|
Certification of President and Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|
|
|
Exhibit 31.2
|
|
Certification of Senior Vice President and Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002. |
|
|
|
Exhibit 32.1
|
|
Certifications Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |