FORM 10-QSB

U. S. Securities and Exchange Commission

Washington, D.C. 20549

(Mark One)

[X]	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended March 31, 2001
[ ] 	TRANSITIONS REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1943.

For the transition period from ___________ to _________

Commission file number 0-16657
**FIRST GEORGIA HOLDING, INC.**

Georgia
58-1781773
(State or other jurisdiction or 

incorporation or organization)
(IRS Employer Identification No.)

 

1703 Gloucester Street

Brunswick, Georgia 31520

(Issuer's Address)

(912) 267-7283

(Issuer's telephone number)

Check whether the issuer (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 X No______ 

Number of shares of Common Stock outstanding as of March 31, 2001.

 

7,713,733

 

**PART 1**FINANCIAL INFORMATION
 
The consolidated financial statements of First Georgia Holding, Inc. filed as part of this report are as follows:
 
Page
Consolidated Balance Sheets as of

March 31, 2001 and September 30, 2000
3
 
 
Consolidated Income Statements for the Three Months Ended 

March 31, 2001 and 2000 and the six months ended March 31, 2001

and 2000
4
 
 
Consolidated Cash Flow Statements for the Six Months Ended 

March 31, 2001 and 2000
5
 
 
Notes to Consolidated Financial Statements
6
 
 
Management's Discussion and Analysis of Consolidated

Statements of Financial Condition and Results of Operation
7
 
 **PART II
Item 4. Submission of matters to a vote of Security Holders
14
 
 
Item 6. Exhibits and Reports on Form 8-k
15
 
 
 

 

**FIRST GEORGIA HOLDING, INC
CONSOLIDATED BALANCE SHEETS

(unaudited)
 **March 31,

2001**September 30,

2000**Assets:
 
 
Cash and cash equivalents:
 
 
Cash and due from banks
$ 8,532,060
$ 6,380,375
Federal funds sold
15,313,590 
9,840,000 
Interest bearing deposits in other banks
59,880 
366,385 
Cash and cash equivalents
23,905,530
16,586,760
 
 
 
Investment securities to be held to maturity, at cost

(fair value approximately $18,547,000 at

March 31, 2001 and $13,966,000 at 

September 30, 2000)
18,258,676
17,878,121
Loans receivable, net of allowance for loan losses of 

approximately $2,651,00 and $2,365,000 at

March 31, 2001 and September 30, 2000
193,434,932
193,644,376
Real estate owned
261,400
314,338
Federal Home Loan Bank stock, at cost
992,300
892,300
Premises and equipment, net
5,490,141
5,569,758
Accrued interest receivable
1,426,079
1,507,692
Intangible assets, net
549,839
597,653
Other assets
2,110,028
2,194,205
 
 
 
Total Assets
$ 246,428,925
$ 239,185,203
 
 
 **Liabilities and Stockholders' Equity
 
 **Liabilities:
 
 
Deposits
$ 218,762,099
$ 214,046,716
Federal Home Loan Bank advances
3,500,000
2,500,000
Other borrowings
2,000,000
2,000,000
Accrued interest receivable
729,296
719,202
Accrued expenses and other liabilities
2,235,213
1,563,679
 
227,226,608
220,829,597**Stockholders' Equity
 
 
Common stock, $1.00 par value; 10,000,000 shares 

authorized; 7,713,733 issued and outstanding
7,713,733
7,713,733
Additional paid-in capital
396,297
396,297
Retained earnings
11,092,287
10,245,576
 
 
 
Total Liabilities and Stockholders' Equity
19,202,317
18,355,606
 
 
 
 
$ 246,428,925
$ 239,185,203
 
 
See accompanying notes to consolidated financial statements.
 
 

 

**FIRST GEORGIA HOLDING, INC.
CONSOLIDATED INCOME STATEMENTS

(unaudited)
 
 
 
 
 
 **Three Months Ended

March 31,**Six Months Ended

March 31,**2001**2000**2001**2000
Interest Income:
 
 
 
 
Loans
$ 4,843,168
$ 4,517,805
$ 9,878,970
$ 8,766,870
Interest on Federal funds sold
49,240
65,936
122,925
69,288
Interest on investments
358,392
231,766
706,123
455,400
Other
1,754
1,398
13,292
2,391
Total Interest Income
5,252,554
4,816,905
10,721,310
9,293,949
 
 
 
 
 
Interest Expense:
 
 
 
 
Deposits
2,499,376
2,214,950
5,053,985
4,090,857
FHLB advances and other borrowings
124,349
116,711
208,134
301,334
Total interest expense
2,623,725
2,331,661
5,262,119
4,392,191
 
 
 
 
 
Net interest income
2,628,829
2,485,244
5,459,191
4,901,758
Provision for loan losses
210,000
60,000
420,000
90,000
Net interest income after provision for loan losses
2,418,829
2,425,244
5,039,191
4,811,758
 
 
 
 
 
Other income:
 
 
 
 
Loan servicing fees
134,948
117,614
261,053
252,487
Deposit service charges
461,862
462,652
975,959
903,553
Gain on sale of real estate owned and foreclosed property
21,311
-
48,220
16,316
Other operating income
59,151
50,908
103,425
84,196
Total other income
677,272
631,174
1,388,657
1,256,552
 
 
 
 
 
Other Expenses:
 
 
 
 
Salaries and employee benefits
1,176,406
960,944
2,262,949
1,916,785
Premises and occupancy costs
353,493
486,739
916,541
939,262
Amortization of intangibles
23,907
23,907
47,814
47,814
Federal insurance premiums
26,023
9,166
36,577
34,290
Other operating expenses
602,152
554,102
1,238,440
1,098,421
Total other expenses
2,181,981
2,034,858
4,502,321
4,036,572
 
 
 
 
 
Income before income taxes
914,120
1,031,560
1,925,527
2,031,738
Income taxes
347,648
412,630
770,610
813,064
 
 
 
 
 
Net Income
$ 566,472
$ 618,930
$ 1,154,916
$ 1,218,674
 
 
 
 
 
Income per share of common stock:
 
 
 
 
Basic
$ 0.07
$ 0.09
$ 0.15
$ 0.17
Diluted
$ 0.07
$ 0.08
$ 0.15
$ 0.16
 
 
 
 
 
See accompanying notes to consolidated financial statements
 

 

**FIRST GEORGIA HOLDING, INC.
CONOLIDATED STATEMENT OF CASH FLOWS

(unaudited)
 **Six Months Ended

March 31,
 **2001**2000
OPERATING ACTIVITIES:
 
 
Net Income
$ 1,154,917 
$ 1,218,674
Adjustments to reconcile net income to net cash provided by operations:
 
 
Provision for loan losses
420,000 
90,000 
Depreciation and amortization
356,208
522,742 
Amortization of intangibles
47,814
47,814
Amortization of deferred loan fees
(95,902)
(12,426)
Gain on Sale of real estate owned and foreclosed property
(51,920)
(16,316)
Increase in accrued interest receivable
81,613
(54,800)
(Decrease) increase in other assets
84,177
(176,898)
(Decrease) increase in accrued interest payable
10,094
465,194
Increase (decrease) in accrued expenses and other liabilities
671,535
(266,944)
 
 
 
Net Cash Provided By Operating Activities
2,678,536
1,816,990
 
 
 
INVESTING ACTIVITIES:
 
 
Principal payments received on mortgage-backed securities
1,066,566
957,890
Maturities of investment securities
804,818
200,000
Purchase of FHLB stock
(100,000)
-
Purchase of investment securities
(2,201,266)
(1,023,095)
Loan originations, net of principal repayments
(1,051,219)
(23,229,317)
Purchase of premises and equipment
(327,265)
(1,004,060)
Proceeds from the sale of real estate owned
1,041,423
502,187
 
 
 
Net Cash Used By Investing Activities
(766,943)
(23,596,395)
 
 
 
FINANCING ACTIVITIES:
 
 
Net increase in deposits
4,715,383
34,649,657
Proceeds form other borrowings
-
2,000,000
Proceeds from FHLB advances
5,000,000
-
Repayments of FHLB advances
(4,000,000)
(4,000,000)
Cash dividends paid ($0.04 and $0.04 per share, respectively)
(308,306)
(287,935)
 
 
 
Net Cash Provided by Financing Activities
5,407,177
32,361,722
 
 
 
Net increase in cash and cash equivalents
7,318,770
10,582,317
Cash and cash equivalents at beginning of year
16,586,760
7,202,566
 
 
 
Cash and cash equivalents at end of quarter
$ 23,905,530
$ 17,784,883
 
 
 
Supplemental disclosure of cash paid during the period for:
 
 
Interest
$ 4,475,427
$ 4,392,191
Income taxes
465,000
615,000
 
4,940,427
5,007,191
 
 
 
Supplemental disclosure of non-cash activities:
 
 
Loans transferred to real estate owned
$ 993,978
$ 666,329
Sale of real estate owned financed by bank
192,900
759,112
 
$ 1,186,878
$ 1,425,441
 
 
 
See accompanying notes to consolidated financial statements
 
 
FIRST GEORGIA HOLDING, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(1) 	BASIS OF PRESENTATION

In the opinion of Management, the accompanying unaudited consolidated financial statements contain all adjustments necessary to present fairly the financial position of First Georgia Holding, Inc. as of March 31, 2001 and September 30, 2000. Alsoincluded are the results of its operations and changes in financial position for the three and six months ended March 31, 2001 and 2000. The results of operations for the interim periods presented are not necessarily indicative of the results to beexpected for the full year.

The consolidated financial statements include the accounts of the Company and the Bank. All significant intercompany balances and transactions have been eliminated in consolidation.

For further information, refer to the consolidated financial statements and footnotes thereto included in the Bank's Annual Report to Shareholders, incorporated by reference into the Company's Form 10-KSB for the year ended September 30, 2000.
- EARNINGS PER SHARE
Earnings per share were calculated using the weighted-average number of shares outstanding for the period. The diluted earnings per share takes into consideration the assumed increase in shares from the conversion of stock options as well.

 **Three Month Period Ended

March 31,
 **Six Month Period Ended

March 31,
 **2001**2000
 **2001**2000
Weighted average number of common shares outstanding - Basic
7,713,733
7,198,371
 
7,713,733
7,198,371
 
 
 
 
 
 
Incremental shares from the assumed conversion of stock options
31,760
486,422
 
31,760
501,132
 
 
 
 
 
 
Total - Diluted
7,745,493
7,684,793
 
7,745,493
7,699,503
 

	The incremental shares from the assumed conversion of stock options were determined using the treasury stock method under which the assumed proceeds were equal to the amount that the Company would receive upon the exercise of the options plus theamount of total benefit that would be credited to additional paid-in-capital assuming exercise of options. The assumed proceeds are used to purchase outstanding shares at the average market price during the period.

 
ALLOWANCE FOR LOAN LOSSES

Changes in the allowance for loan losses are summarized as follows:

 **Six Months

Ended March 31,

2001**Year Ended

September 30,

2000
 
 
 
Beginning Balance
$ 2,364,704
$ 1,235,566
Provision charged to operations
420,000
2,640,000
Charge-offs
(247,536)
(1,653,310)
Recoveries
113,482
142,448
Balance, end of period
$ 2,650,650
$ 2,364,704
 

 

FIRST GEORGIA HOLDING, INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

	The following discussion should be read in conjunction with the financial statements and related notes appearing elsewhere in this Form 10-Q.

LIQUIDITY

First Georgia Bank (the "Bank") has traditionally maintained levels of liquidity above levels required by regulatory authorities. As a member of the Federal Home Loan Bank System, the Bank is required to maintain a daily average balance of cash andeligible liquidity investments equal to a monthly average of 4% of withdrawable savings and short-term borrowings. The Bank's liquidity level was 6.96% and 7.79% at March 31, 2001 and September 30, 2000, respectively.

The Bank's operational needs, demand for loan disbursements, and savings withdrawals can be met by loan principal and interest payments received, new deposits, and excess liquid assets. Significant loan demand, deposit withdrawal, increaseddelinquencies, and increased real estate acquired in settlement of loans (REO) could alter this condition. Management does not foresee any liquidity problems for 2001.

CAPITAL RESOURCES

The following is reconciliation at March 31, 2001 of the Bank's equity capital to regulatory capital, under generally accepted accounting principles:

First Georgia Bank
Stockholder's Equity
$ 21,140,000
 
 
Less:
 
Intangible assets
550,000
Tangible Capital
20,590,000
 
 
Plus:
 
Qualifying intangible assets
550,000
Core Capital
21,140,000
 
 
Plus:
 
Supplemental Capital
2,602,000
 
 
Less:
 
Deducted Capital
203,000
Risk-Based Capital
$ 23,539,000
Current regulations require institutions to keep minimum regulatory tangible capital equal to 1.5% of adjusted assets, minimum core capital to adjusted assets of 4% (the leverage ratio), and risk-based capital torisk-adjusted assets of 8%. The Office of Thrift Supervision (the OTS) may increase the minimum core capital, or leverage ratio, based on its assessment of the institution's risk management systems and the level of total risk in the individualinstitution. At March 31, 2001, the Bank met all three capital requirements.

The Bank's regulatory capital and the required minimum amounts at March 31, 2001 are summarized as follows:

 

 
 
 **Required Minimum
 
 
 **Bank Capital**Amount**Excess (Defiency)
Tangible Capital
8.37%
$20,590,000
1.50%
$3,689,000
6.87%
$16,901,000
 
 
 
 
 
 
 
Core Capital
8.58%
$21,140,000
4.00%
$9,860,000
4.58%
$11,280,000
 
 
 
 
 
 
 
Risk-Based Capital
11.31%
$23,539,000
8.00%
$16,654,000
3.31%
$6,885,000
 
 
 
 
 
 
 
	

The Federal Deposit Insurance Corporation Improvement Act (FDICIA) required the Federal banking agencies to take "prompt corrective action" in respect to institutions that do not meet minimum capital requirements. Along with the ratios describedabove, FDICIA also introduced an additional capital measurement, the Tier 1 risk-based capital ratio. The Tier 1 ratio is the ratio of Tier 1 or core capital to total risk-adjusted assets. FDICIA establishes five capital tiers: "well capitalized,""adequately capitalized," "undercapitalized," "significantly undercapitalized," and "critically undercapitalized." The regulators summarize their minimum requirements for the five capital tiers established by the FDICIA as follows:

 
Risk-Based

Capital Ratio
Tier I Risk-Based Capital Ratio
Tier I

Leverage Ratio
Well Capitalized
10% or above
6% or above
5% or above
Adequately Capitalized
8% or above
4% or above
4% or above
Undercapitalized
Less than 8%
Less than 4%
Less than 4%
Significantly Undercapitalized
Less than 6%
Less than 3%
Less than 4%
Critically Undercapitalized
--------------------------
----------------------
2% or less
 

An unsatisfactory examination rating may cause an institution's capitalization category to be lower than suggested by its actual capital position. 

At March 31, 2001, the Bank's Tier 1 risk-based capital ratio was 10.16%. If a depository institution should fail to meet its regulatory capital requirements, regulatory agencies can require submission and funding of a capital restoration plan by theinstitution, place limits on its activities, require the raising of additional capital, and ultimately require the appointments of a conservator or receiver for the institution.

The Bank's capital position changed during the quarter ended March 31, 2001. Total capital as well as tangible capital, core capital, and risk-based capital continued to increase during the quarter. The mix of risk-based assets and additional earningsare the primary factors for this increase.

RESULTS OF OPERATIONS

INTEREST INCOME

Interest income on loans increased $325,363, or 7.20%, for the three-month period ended March 31, 2001 and $1,112,100, or 12.69% for the six-month period ended March 31, 2001 as compared to the same period in 2000. The Company has been aggressive inattracting new loan business while competition for loans remains strong and loan demand is still steady in the marketplace. However, the Bank continues to be selective in the loans that it makes. Interest rates decreased during the quarter and Managementexpects loan demand to maintain current levels. At March 31, 2001, the Bank utilized most of its cash to fund loans. The interest on Federal funds sold decreased $16,696 for the quarter or $25.32% and increased $53,637, or 77.41% as compared to the sameperiod in 2000. The decrease during the quarter was related to a large deposit account being taken out of the bank, which forced the bank to borrow overnight funds for a short period during the first month of the quarter. However, in a trend continuedfrom the prior fiscal year, the Bank has seen significant growth in its deposit balances. The Bank is continuing to offer a variety of deposit products, such as free checking, which has been favorably accepted in the marketplace. Consequently, the Bankhas been able to invest money into short-term interest earning vehicles, such as overnight Federal funds sold for the remainder of the six-month period. Interest on investments increased $126,626 or 54.64% for the quarter and increased $250,723 or 55.06%for the six-month period. This increase is related to the $380,555 increase in investment balances during the year. 

INTEREST EXPENSE

Interest on deposits increased $284,426 or 12.84% for the quarter ended March 31, 2001 and $963,128 or 23.54% for the six-month period ended March 31, 2001 as compared to the same period in 2000. This increase is primarily attributable to anapproximate $22 million increase in average deposit balances in the six-month period from September 30, 2000 to March 31, 2001 as compared to the same period in 2000. The market place in which the Bank operated remains conducive to deposit growth, and theBank has positioned its deposit products to take full advantage of the area's deposit growth. Interest on FHLB advances and other borrowings increased $7,638 or 6.54% for the quarter and decreased $93,200 or 30.93% for the six-month period as compared tosame period last year. At the beginning of the second quarter, the Bank was borrowing federal funds on a daily basis. However, the deposit growth rapidly increased and the Bank was able to sell federal funds on a nightly basis throughout the remainder ofthe six-month period. 

NET INTEREST INCOME

Net Interest Income increased $143,585 or 5.78% for the quarter and $557,433 or 11.37% for the six-month period ended March 31, 2001 over the same period ended March 31, 2000. While increases in loan balances offset by interest earning deposits havecontributed to the increase, the increase in non-interest bearing deposits held by the bank has been the major reason for the increase in net interest income. Management believes this growth will continue in 2001.

PROVISION FOR LOAN LOSSES

The provision for loan losses for the six-month period ended March 31, 2001 totaled $420,000. The loan loss provision increased $150,000 for the quarter and $330,000 for the six-month period ended March 31, 2001 as compared to the same periods in2000. With the growth in loan volume and the increase in charge-offs during the last quarter of the previous fiscal year, Management found it necessary to increase the loan loss provision. Net interest income after the provision for loan losses for thequarter ended March 31, 2001 decreased $6,415 or .26% from the same period last year and increased $227,433 or 4.73% for the six-month period ended March 31, 2001 over March 31, 2000. The decrease in Net Interest Income during the quarter is directlyrelated to the increase provision for loan losses. 

OTHER INCOME

Other income for the quarter increased $46,098 or 7.30% from the same quarter the previous year and $132,105 or 10.51% for the six-month period ended March 31, 2001 as compared to the same period in 2000. Loan servicing fees increased $17,334, or14.74% for the quarter ended March 31, 2001 and $8,566 or 3.39% for the six-month period as compared to the same periods in 2000. This increase results from higher fees earned on brokered mortgage loans. Deposit service charges decreased $790 or .17% forthe quarter ended March 31, 2001 and increased $72,406 or 8.01% for the six-month period. This decrease during the quarter is related to a decrease in service charges on DDA accounts. The increase during the six-month period related to increased feeincome, such as service charges and insufficient funds fees. Other operating income increased $8,243, or 16.19% for the quarter ended March 31, 2001 and $19,229 or 22,84% over the six-month period as compared to the same periods last year. This increaseis the result of increased ATM fees. Also included in other income is a gain of $21,311 for the quarter ended March 31, 2001 and $48,220 for the six-months ended March 31, 2001 on the sale of foreclosed property. There was no gain on the sale offoreclosed property for the quarter ended March 31, 2000 and there was a $31,904 increase from the same six-month period last year. 

OTHER EXPENSES

Other expenses for the quarter ended March 31, 2001 increased $147,123, or 7.23%, over the quarter ended March 31, 2001 and $465,750 or 11.54% over the six-month period ended March 31, 2001 as compared to the same periods last year. Salaries andemployee benefits increased $215,462, or 22.42% for the three-month period ending March 31, 2001 over the same period ended March 31, 2000, and $346,164 or 18.06% for the six-month period over the same period last year. The Bank added several newemployees as a result of the growth the bank is experiencing. Premises and occupancy costs decreased $133,246 or 27.38% in the quarter ended March 31, 2001 over the quarter ended March 31, 2000, and decreased $22,721 or 2.42% over the six-month periodended March 31, 2001 as compared with the same period last year. Additional computer, phone, and other office equipment were added for the new customer service areas last year which resulted in increased occupancy costs. Other operating expenses increased$48,050 or 8.67% for the quarter as compared to the same quarter last year, and increased $140,020 or 12.75% for the six-months ended March 31, 2001 as compared to the same period in 2000. This increase results primarily from an approximate $30,000increase in the Dues and Subscriptions account and an approximate $40,000 increase in the general insurance expense account. 

The provision for income taxes decreased by $64,982 or 15.75% for the quarter and $42,454 or 5.22% for the six-month period ended March 31, 2001 as compared to the same period in 2000. The effective tax rate Management uses is consistent at a rate of40%.

 

FINANCIAL CONDITION

ASSETS

Cash and cash equivalents increased $7,318,770, or 44.12%, over the six-month period ended March 31, 2001. With the increase in transaction deposit accounts, the Bank has maintained higher cash and cash equivalents balances. Included in cashequivalents is an increase of $5,473,590 or 55.63% increase in Federal funds sold during the six-month period. Investment balances increased $380,555, or 2.13%, for the six months ended March 31, 2001. The Bank is investing more of its cash into interestearning assets. Premises and equipment decreased $79,617, or 1.43%. The decrease results primarily from $406,881 depreciation expense during the six-month period offset by $327,684 in purchases of new equipment related to the relocation of the ITdepartment. Other assets decreased $84,177 or 3.84% during the period as compared with the same period last year. The decrease is primarily related to an approximate $60,000 decrease in the ATM account held at the Bankers Bank, a $6,700 decrease in theother repossessed assets account, and a $8,800 decrease in the credit card clearing account. 

Loans receivable decreased $209,444 or .11% as of the six months ended March 31, 2001 over September 30, 2000. The Bank has been aggressive, yet selective, in attracting new loan business. Loan demand is steady, and the Bank has been successful indrawing strong, safe loans to the Bank. The decrease in loans is primarily related to the increase in the allowance for loan losses. The allowance for loan losses increased from $2,364,704 at September 30, 2000 to $2,650,650 at March 31, 2001. The Bank'sloan portfolio at March 31, 2001 and September 30, 2000 are summarized as follows:

 

**LOANS RECEIVABLE
 
 
 
 **March 31,

2001**September 30,

2000
Real estate mortgage loans
$ 133,061,248
$ 128,039,030
Real estate construction loans
30,753,341
35,871,217
Consumer loans
16,940,995
17,089,161
Commercial and other loans
15,517,098
15,285,001
 
196,272,682
196,284,409
Less:
 
 
Deferred loan fees
(142,524)
(212,055)
Unearned interest income
(44,577)
(63,274)
Allowance for loan losses
(2,650,650)
(2,364,704)
 
$ 193,434,932
$ 193,644,376
 

ALLOWANCE FOR LOAN LOSSES

Management conducts an extensive review of the provision for loan losses on a monthly basis. Additions to the allowance for loan losses are charged to operations based upon management's evaluation of the probable losses in its loan portfolio. Thisevaluation considers the estimated value of the underlying collateral and such other factors as, in management's judgement, deserve recognition under existing economic conditions. While management uses the best information available to make evaluations,future adjustments to the allowance may be necessary if conditions differ substantially from the assumptions used in making the evaluations. In addition, various regulatory agencies, as an integral part of their examination process, periodically reviewthe Bank's allowances for losses on loan and real estate owned. Such agencies may require the Bank to recognize additions to the allowances based on their judgements of information available to them at the time of their examination.

A loan is considered impaired when it is probable that the company will be unable to collect all amounts due according to the contractual terms of the loan agreement. The Bank's impaired loans include non-accrual loans, troubled debt restructurings,and large loans more than 90 days delinquent in which full payment of principal and interest is not expected. Cash receipts on impaired loans are used to reduce principal balances. Impairment losses are included in the allowance for loan losses through acharge to the provision for loan losses. Impairment losses are measured by the present value of expected future cash flows discounted at the loan's effective interest rate, or at either the loan's observable market price or the fair value of thecollateral. Adjustment to impairment losses due to changes in the fair market value of an impaired loan's underlying collateral are included in the provision for losses. Upon disposition of an impaired loan, any related valuation allowance is reversedthrough a charge-off to the allowance for loan losses. 

Large groups of smaller homogenous loans (consumer loans) are collectively evaluated for impairment. Commercial loans and larger balance real estate and other loans are individually evaluated for impairment. 

The following tables illustrate the Bank's allowance for loan losses and its problem loans. 

**ANALYSIS OF NON-ACCRUING AND PAST DUE LOANS
 
 
 
 **March 31,

2001**September 30,

2000**Non-accruing Loans
 
 
Construction
$ -
$ 211,769
First Mortgage
2,002,864
3,204,784
Second Mortgage
556,675
182,759
Consumer
278,768
121,057
Total non-accruing loans
2,838,307
3,720,333
 
 
 **Past Due Loans
 
 
Real Estate
-
-
Construction
647,702
369,992
Mortgage
-
-
Consumer
164,122
116,409
Total past due loans
811,824
486,401
 
 
 **Total non-accruing and past due loans
$ 3,650,131
$ 4,206,734
 
 
 
Percentage of total loans
1.86%
2.14%
 
 
 
Real estate acquired through foreclosure
$ 261,400
$ 314,338
 
 
 **Total non-accruing, past due loans, and

non-performing assets
$ 3,911,531
$ 4,521,072
 

 

**ANALYSIS OF ALLOWANCE FOR LOAN LOSSES
 
 
 
 **Six Months Ended

March 31,

2001**Year Ended

September 30,

2000
Beginning balance
$2,364,704
$1,235,566
Loans charged-off:
 
 
Real estate construction
7,639
-
Real estate mortgage
64,116
540,371
Consumer and other
175,781
1,112,939
Total Charge-offs
247,536
1,653,310
 
 
 
Recoveries:
 
 
Real estate construction
-
-
Real estate mortgage
38,468
11,344
Consumer and other
75,015
131,104
Total recoveries
113,483
142,448
 
 
 
Net charge-offs
134,053
1,510,862
 
 
 
Provision charged to operations
420,000
2,640,000
 
 
 
Balance at end of period
$2,650,651
$2,364,704
 
 
 
Ratio of net charge-offs to 

average loans outstanding
0.07%
0.77%
 

LIABILITIES

Deposits have increased $4,715,383, or 2.20%, for the six-month period ended March 31, 2001. This increase is the result of an increase in non-interest bearing deposit accounts which was offset by $9 million in maturing certificates of deposit duringthe first three months of the fiscal year. First Georgia has continued to be successful in its efforts to obtain new deposit business. However, due to the large amount of maturities during the first quarter, the Bank increased its position in Federal HomeLoan Bank advances, as evidenced by the increase of $1,000,000, or 40%. Accrued expenses and other liabilities increased $671,534, or 42.95% for the six months ended March 31, 2001. This increase is attributable to approximately $220,000 increase in thedeposit clearing account and an $584,000 increase in the official checks account during the six-month period offset by a$120,000 decrease in the accrued bonuses account. Bonuses were accrued during the 12 months ended September 30, 2000 and paid duringthe first quarter of 2001.

 

PART II

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

First Georgia Holding, Inc. held its annual meeting January 16, 2001. The following votes were taken:
**Proposal 1: Election of James D. Moore, D. Lamont Shell, and M. Frank Deloach as directors.

 

	

James D. Moore
For
4,480,458
Withhold Authority for
5,434
Withhold Authority for Particular Director
-
4,485,892

 

 

D. Lamont Shell
For
4,479,446
Withhold Authority for
5,434
Withhold Authority for Particular Director
1,012
4,485,892

 

 

M. Frank Deloach
For
4,480,458
Withhold Authority for
5,434
Withhold Authority for Particular Director
-
4,485,892

 

The directors terms who continued after the meeting are as follows:

	

Henry S. Bishop, E. Raymond Mock, B.W. Bowie, Terry K. Driggers and Roy K. Hodnett

 
**Proposal 2: Approval of the 2000 Stock Option Plan

 

For
4,126,327
Against
292,639
Abstain
66,926
4,485,892

 

 

ITEM 6. EXHIBITS AND REPORTS ON FORM *K
- Exhibits. 

There are no exhibits filed with this report,

B. Reports on Form 8-K

The Bank filed no reports on Form 8-K for the quarter ended March 31, 2001.

 

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

Date: May 5, 2001 

By: /s/ G. Fred Coolidge III

       Secretary and Treasurer************************************************************************************************