<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
X Quarterly report under Section 13 or 15(d) of the Securities Exchange
----- Act of 1934 for the Quarterly period ended June 30, 1998
Or
Transition report under Section 13 or 15 (d) of the Securities Exchange
----- Act of 1934 for the transition period from to .
---------- --------
Commission File No. 333-10909
FORSYTH BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
Georgia 58- 2231953
(State of Incorporation) (I. R. S. Employer Identification No.)
501 Tri County Plaza, Cumming, Ga. 30040
(Address of principal executive offices)
770-886-9500
(Issuers telephone number, including area code)
Not Applicable
(Former Name, former address and former fiscal year,
if changed since last report)
Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15 (d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
X yes no
--------- --------
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
800,000 shares of common stock, at no par value, issued and outstanding as of
June 30, 1998.
Transitional Small Business Disclosure Format (check one): yes X no
---- ---
<PAGE> 2
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
Condensed Consolidated Statements of Condition as of June 30, 1998, December 31,
1997.
Condensed Consolidated Statements of Income for the three months ended June 30,
1998 and June 30, 1997 and six months ended June 30, 1998.
Condensed Consolidated Statement of Cash flows for the six months ended June 30,
1998 and June 30, 1997.
Notes to Consolidated Financial Statements.
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FORSYTH BANCSHARES, INC.
CONSOLIDATED STATEMENT OF CONDITION
AS OF JUNE 30, 1998 AND DECEMBER 31, 1997
<TABLE>
<CAPTION>
(IN THOUSANDS)
JUNE 30, 1998 DECEMBER 31, 1997
------------- -----------------
<S> <C> <C>
Assets:
Cash and due from banks $ 2,485 $ 1,787
Federal Funds Sold 1,200 2,010
Investment securities-Available
for sale 15,229 10,770
Investment securities- Held
to maturity 2,323 3,961
Loans, net of unearned income 26,676 18,800
Less: allowance for loan losses 331 235
-------- --------
Net loans 26,345 18,565
Premises and equipment, net 390 429
Other assets 666 326
-------- --------
Total Assets $ 48,638 $ 38,055
======== ========
Liabilities and Stockholders Equity
Deposits:
Non-interest bearing demand $ 3,737 $ 2,641
Interest Bearing
Demand 3,742 3,242
Savings 436 326
Time, 100,000 and over 11,698 9,687
Other time 13,737 8,925
Insured Money Market 7,396 5,525
-------- --------
Total Deposits 40,746 30,346
Other liabilities 235 198
-------- --------
Total Liabilities 40,981 30,544
-------- --------
Gain/ (Loss) Held for sale securities 29 51
Stockholders Equity:
Common stock, no par value 7,960 7,960
Retained Earnings (500) (500)
YTD Income (loss) 168 0
-------- --------
Total Stockholders Equity 7,628 7,511
-------- --------
Total liabilities and stockholders
equity $ 48,638 $ 38,055
======== ========
</TABLE>
See Notes to consolidated Financial Statements
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<PAGE> 4
FORSYTH BANCSHARES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
FOR THE THREE AND SIX MONTH PERIODS ENDED JUNE 30, 1998 AND JUNE 30, 1997
<TABLE>
<CAPTION>
(IN THOUSANDS) THREE MONTHS ENDED SIX MONTHS ENDED
-------------------------------- ----------------
JUNE 30, 1998 JUNE 30, 1997 JUNE 30, 1998
------------- ------------- ----------------
<S> <C> <C> <C>
Interest Income
Loans, including fees $ 631 $ 188 $ 1150
Federal Funds Sold 21 149 43
Investment Securities 271 98 527
Other 17 0 21
--------- --------- ---------
Total Interest Income 940 435 1741
--------- --------- ---------
Interest Expense
Time Deposits 357 142 668
Other Deposits 100 53 181
Other Interest Expense 0 0 0
Total Interest Expense 457 195 849
--------- --------- ---------
Net Interest Income 483 240 892
Provision for loan losses 49 61 100
--------- --------- ---------
Net Interest Income after provision
for loan losses 434 179 792
--------- --------- ---------
Non interest income:
Service charges and fees 25 8 43
Other 7 5 13
--------- --------- ---------
Total non interest income 32 13 56
--------- --------- ---------
Non interest expense
Salaries and employee benefits 171 172 344
Occupancy and equipment 62 63 125
Other Operating expense 133 99 211
--------- --------- ---------
Total non interest expenses 366 334 680
--------- --------- ---------
Income before taxes 100 (142) 168
Income tax expense 0 0 0
--------- --------- ---------
Net income $ 100 $ (142) $ 168
========= ========= =========
Net income per common share
and equivalents .125 (.18) .21
Weighted average number of
common shares outstanding 800,000 800,000 800,000
Dividends per common share 0 0 0
</TABLE>
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<PAGE> 5
FORSYTH BANCSHARES, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIOD ENDING JUNE 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
(IN THOUSANDS) SIX MONTHS ENDED
--------------------------------
June 30, 1998 June 30, 1997
------------- -------------
<S> <C> <C>
Cash flow from operating activities:
Net Loss $ 168 (120)
Adjustments to reconcile net loss to net cash used by operating
activities:
Depreciation, Amortization, and Accretion 35 23
Provision for loan losses 100 61
Change In:
Accrued interest receivable and other assets (151) (107)
Accrued interest payable and other liabilities 41 64
Net Cash used by operating activities: 193 (79)
Cash flows from investing activities:
Purchase of investment securities held to maturity and $ (2,688) (4,001)
available for sale
Net change in loans (7,876) (6,061)
Purchase of premises and equipment (41) (141)
Net cash used by investing activities: (10,605) (10,203)
Cash flows from financing activities:
Net increase in deposits 9,100 8,920
Proceeds from issuance of common stock 0
Net cash provided by financing activities: 9,100 8,920
Net increase (decrease) in cash & cash equivalents (1,312) (1,362)
Cash and cash equivalents at beginning of period 3,797 13,268
Cash and cash equivalents at end of period 2,485 11,906
</TABLE>
See notes to condensed consolidated financial statements
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<PAGE> 6
FORSYTH BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTH PERIOD ENDED JUNE 30, 1998
NOTE 1--BASIS OF PRESENTATION
The accompanying financial statements include the accounts of Forsyth
Bancshares, Inc. (Company) and its wholly owned subsidiary, The Citizens Bank of
Forsyth County (Bank). Certain information and footnote disclosures normally
included in consolidated financial statements prepared in accordance with
generally accepted accounting principles have been omitted, although the Company
believes that the disclosures are adequate to make the information presented not
misleading. In the opinion of management, the information furnished in the
condensed consolidated financial reflects all adjustment necessary to fairly
represent the Company's financial position, results of operations and cash flows
for such interim periods. Management believes that all interim period
adjustments are of a normal recurring nature.
The financial statements as of and for the three and six months ended June 30,
1998 and June 30, 1998 and as of March 31, 1998 are unaudited and have been
prepared pursuant to the rules and regulations of the Securities and Exchange
Commission (Commission). Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted and should be read in
conjunction with the audited financial statements and notes thereto included in
the Company's Annual Report on Form 10-K filed with the Commission for the year
ended December 31, 1997.
NOTE 2--BEGINNING OF OPERATIONS
The Company was incorporated under the laws of Georgia on February 14, 1996 for
the purpose of organizing the Bank. On February 3, 1997, the Bank opened for
business and the Company acquired 100% of its common stock. The Company
capitalized the bank at $6,500,000 as required by regulators. Since February 3,
1997, the Bank has been in operation as a commercial bank offering traditional
banking services in the Cumming, Forsyth County, Georgia area. Therefore, as the
Bank was only opened for five months prior to June 30, 1997, a comparison of six
month periods during 1997 and 1998 may not be relevant and have been omitted
from the Statements of Income.
NOTE 3--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CASH FLOWS
For purposes of reporting cash flows, cash consists of cash in vault, cash
items, amounts due from banks and federal funds sold.
ORGANIZATION COSTS
Costs incurred for the organization of the Company and the Bank (consisting
primarily of legal, accounting, consulting, and incorporation fees) are being
capitalized and are being amortized over a period not to exceed five years (60
months).
PREOPENING EXPENSES
Costs incurred for overhead and other operating expense while in organization
are included in the 1997 operating results.
NET LOSS PER COMMON SHARE
Net loss per common share is calculated by dividing the net income (loss) by the
weighted average number of common shares outstanding during the period.
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<PAGE> 7
NOTE 4--RELATED PARTY TRANSACTIONS
There were no related party transactions during this period.
NOTE 5--PREFERRED STOCK
Shares of preferred stock may be issued from time to time in one or more series
as may be established by resolution of the board of directors of the Company.
Each resolution shall include the number of shares issued, preferences, dividend
provision, special rights and limitations as determined by the board.
NOTE 6--INCOME TAXES
Deferred tax assets and liabilities are recognized for the future tax
consequence attributable to differences between the financial statement carrying
amounts of existing asset and liabilities and their respective tax bases. Future
tax benefits, such as net operating loss carryforwards, are recognized to the
extent that realization of such benefits is more likely than not.
Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.
NOTE 7--COMMITMENTS
The Company entered into an operating lease on the building and premises which
serves as the main office of the Company and the Bank on February 9, 1996. The
inception of the lease was the earlier of the occupation of the building or
receipt of final regulatory approval. The minimum lease payments related to the
lease are for years 1997 through 2000 and are $67,500; $69,525; $71,611; and
$73,759, respectively. The lease is renewable at the end of the term at
prevailing market rates and also contains an option to purchase the premises and
facility.
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<PAGE> 8
ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GENERAL
Forsyth Bancshares, Inc. (Company) was incorporated under the laws of Georgia on
February 14, 1996 for the purpose of organizing its wholly owned subsidiary, The
Citizens Bank of Forsyth County (Bank). On February 3, 1997, the Bank opened for
business and the Company acquired 100% of its capital stock. During the fourth
quarter of 1996 and the first quarter of 1997, the Company sold 800,000 shares
of Common Stock at no par value, for a total consideration of $8,000,000. The
Bank was capitalized at $6,500,000 as required by the Georgia Department of
Banking and Finance (Georgia Department).
During 1996, the Company and the Bank were in the process of organizing and
obtaining the necessary approvals from regulatory authorities for opening.
Preliminary approval to charter the Bank was issued in July, 1996 by the Georgia
Department and the Federal Deposit Insurance Corporation. The Company's
application to become a Bank holding company pursuant to the acquisition of the
Bank was approved on November 25, 1996 by the Federal Reserve Bank of Atlanta.
On January 30, 1997, the Bank received final approval and a permit to begin
business from the Georgia Department. The Federal Deposit Insurance Corporation
approved the Bank's application on February 3, 1997.
Since February 3, 1997, the Bank has been in operation as a commercial bank
offering traditional banking services in the Cumming, Forsyth County, Georgia
area. The Citizens Bank of Forsyth County is a local community bank catering to
the needs of small to medium sized businesses and local customers who desire the
community banking relationship and services. The Bank offers a variety of
checking, savings and time accounts, and other services such as commercial and
consumer loans, safe deposit boxes, and other services related to banking. Since
it began business, management believes that the Bank's performance has
demonstrated the significant need for its services in the Bank's market area.
Forsyth Bancshares, Inc. was formed to offer the Bank flexibility and support
and at this time does not intend to engage in any additional activities
permitted by the Federal Reserve and will function solely on the Bank's behalf.
All financial data set forth herein under the caption "Item 2--Management's
Discussion and Analysis of Financial Condition and Results of Operations", have
been rounded to the nearest thousand dollars, except where otherwise specified.
SUPERVISION AND REGULATION
The Bank is subject to regulation by the Georgia Department and the Federal
Deposit Insurance Corporation. The Company's primary banking regulator is the
Board of Governors of the Federal Reserve System (Federal Reserve).
NET INCOME
The Company's net income for the quarter ended June 30, 1998 was $100,000 or
$.125 per share. This compares to a loss of $142,000 or ($.18) per share for the
second quarter of 1997. The second quarter of 1997 shows such a loss primarily
because the Bank had just opened for business on February 3, 1997 and the second
quarter 1997 results included additional preopening losses that were required to
be reflected in the second quarter 1997 results. The results of income for the
second quarter of 1998 are primarily due to increases in earning assets and
significant use of deposit funds in investment sources. Net income for the first
six months of 1998 was $168,000. The Bank reflected its first profit in November
of 1997 after only ten months of operation, and has continued that trend through
the second quarter of 1998.
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<PAGE> 9
INTEREST INCOME
Interest income for the quarter ended June 30, 1998 was $940,000. The primary
components of the income was loans at $631,000; securities at $271,000; and
federal funds sold at $21,000. This compared to $435,000 for the quarter ended
June 30, 1997. The increase is primarily due to the Bank's growth and allocation
of funds to loan assets over the quarter ended March 31, 1998, interest income
was $801,000 and consisted of loan income of $519,000, securities income at
$256,000; and federal funds sold at $22,000. The total increase of $139,000 is
primarily due to an increase in the loan portfolio of approximately $4,000,000
dollars. The increase in loans is due to the economic factors and developments
in the Forsyth County area and the increase in normal customer volume.
Forsyth County is growing at a very rapid pace and continued growth in
population and development is an advantage for a community bank. The Bank began
business on February 3, 1997 and at June 30, 1997 only had a total of $9,000,000
in loans. The Company reflected over $10,000,000 in Federal funds sold at June
30, 1997 compared to only $1,200,000 at June 30, 1998. The investment portfolio
at June 30, 1997 was only approximately $4,000,000 and as of June 30, 1998 was
approximately $17,500,000. The growth in volume and the ability to invest in
loans and securities have been the primary factors involved in the increases in
interest income. The Bank continues to grow from quarter to quarter in volume,
creating higher levels of income.
INTEREST EXPENSE
Interest expense for the period quarter ended June 30, 1998 was $457,000
consisting of $357,000 in time deposit interest and $100,000 in other deposit
interest. This compared to $392,000 for the three months ended March 31, 1998,
with $311,000 in time deposit interest and $81,000 in other deposit interest.
Deposit growth increased by approximately $81,000. Again the significant growth
in the market area has enabled the Bank to increase its customer base and the
Bank continues to bring in new customers and deposits with an emphasis on core
deposits. Almost $200,000 of the deposit increase was in time deposits under
$100,000. As the Bank grows and gains recognition in its community, the Bank
should continue the growth in deposits. For the quarter ended June 30, 1997, the
Bank had interest expense of $195,000 with a deposit volume of only $22,300,000.
The Bank opened for business on February 3, 1997 and again, reflects less than
six months of operations in such six month period.
NET INTEREST INCOME
Net interest income for the quarter ended June 30, 1998 was $434,000 (before
loan loss reserve allocation) compared to $409,000 for the quarter ended March
31, 1998. The loan loss allocation for June 30, 1998 and March 31, 1998 was
$49,000 and $51,000, respectively. The loan loss reserve is currently maintained
at 1.25% of total loans outstanding. The difference in the loan loss allocation
was due primarily to the increase in the loan portfolio. Loans increased by
approximately $4,000,000 from March 31, 1998 to June 30, 1998. The net interest
spread for the quarter ended June 30, 1998 was 3.2% (before loan loss
allocation) compared to 1.06% for the year ended December 31, 1997. Although
loans increased by $4,000,000 from March 31, 1998 to June 30, 1998, deposits
also increased by $7,500,000 declining the loan to deposit earning ratio from
62% as of December 31, 1997 to 60% as of June 30, 1998, thereby reducing the net
interest margin.
NON-INTEREST INCOME
Non-interest income for the quarter ended June 30, 1998 was $32,000 compared to
$24,000 for the quarter ended March 31, 1998. The increase of approximately
$8,000 is contributable to increases in deposit accounts, thereby increasing
service charges and customer service fees. As the Bank increases deposit
accounts and customer base, a steady rise in non-interest income should
continue. Non-interest
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<PAGE> 10
income for the three month period ended June 30, 1997 was only $13,000 and was
primarily related to the opening of new safe deposit boxes during the first six
(6) months of business.
NON-INTEREST EXPENSE
Non-interest expense for the quarter ended June 30, 1998 was $366,000,
consisting of $171,000 in salaries and employee benefits; $62,000 in occupancy
and equipment; and $133,000 in other operating expenses. This compares to a
total of $331,000 for the quarter ended March 31, 1998 consisting of $173,000 in
salaries and employee benefits; occupancy and equipment expense of $63,000; and
$95,000 in other operating expense. The total increase of $35,000 is primarily
due to an increase in fees such as data processing, building maintenance, and
other related fees that increase with growth of accounts and space. The Company
currently employs fourteen (14) employees including its officers and has only
increased it staff since opening February 3, 1997 by two clerical employees.
Non-interest expense for the 3 months ended June 30, 1997 was $334,000 and
consisted of $172,000 in salaries and employee benefits; $63,000 in occupancy
and equipment; and $99,000 in other operating expenses. Again the Bank opened on
February 3, 1997 and the expense reflected includes certain pre-opening expenses
that were accrued during the organization of the Bank and the Company.
INCOME TAXES
At December 31, 1997, the Company had federal and state net operating loss
carryforwards for tax purposes of approximately $116,000 and $261,000,
respectively, which will expire beginning in 2011 if not previously utilized. No
income tax expense or benefit was recorded for the periods ended June 30, 1998,
March 31, 1998 or June 30, 1997.
ASSET QUALITY
Total assets at June 30, 1998 was $48,600,000 compared to $45,600,000 at March
31, 1998, reflecting an increase of $3,000,000. Loans increased approximately
$4,000,000 or 21.3% and investment securities increased by approximately
$2,200,000. Return on average assets was .12 for quarters ended June 30, 1998
and March 31, 1998. Deposits reflected at an increase of $7,500,000 or 24.9%
during this comparison period.
As of June 30, 1998, the Company had $40,000 in past due balances on loans and
none of those over thirty (30) days. Charged off loans represented a total of
$4,000 in the portfolio, with no recoveries as of June 30, 1998. There were no
past due loans, chargeoffs or recoveries as of March 31, 1998 and June 30, 1997.
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<PAGE> 11
ALLOWANCE FOR LOAN LOSSES
The loan portfolio is periodically reviewed to evaluate the outstanding loans
and to measure both the performance of the portfolio and the adequacy of the
allowance for loan losses. This analysis includes a review of delinquency
trends, actual losses and internal credit ratings. Based on this analysis,
management considers the allowance for loan losses of $331,000 at June 30, 1998
to be adequate to cover possible loan losses in the portfolio as of that date.
However, because of the inherent uncertainty of assumptions made during the
evaluation process, there can be no assurance that loan losses in future periods
will not exceed the allowance for loan losses or that additional allocations to
the allowance will not be required. At June 30, 1998, the allowance for loan
losses was 1.25% of total loans outstanding.
ANALYSIS OF ALLOWANCE FOR LOAN LOSSES AT JUNE 30, 1998
<TABLE>
<S> <C>
Allowance for loan losses at March 31, 1998 $286,000
Charge-offs:
Commercial, financial, agricultural 0
Real Estate 0
Installment loans to individuals 4
Total Charge-offs 4
Recoveries:
Commercial, financial, agricultural 0
Real Estate 0
Installment loans to individuals 0
Total Recoveries 0
Net Charge-offs 0
Provision for loan losses charged to income 49,000
--------
Allowance for loan losses at June 30, 1998 $331,000
</TABLE>
LIQUIDITY AND CAPITAL RESOURCES
Management considers the Company's liquidity to be adequate to meet operating
and loan funding requirements at June 30, 1998. At June 30, 1998, the liquidity
ratio (i.e., cash, short-term assets and marketable assets divided by deposits
and short-term liabilities) for the Bank was 49.4% and the loan to deposit ratio
was approximately 65%. As the portfolio grows, management will continue to
monitor the liquidity of the Bank and the Company and make adjustments as deemed
necessary. Investing the Bank's available funds in loans and other high yielding
interest securities will increase the Bank's earning potential.
Requirements by banking regulators now include the monitoring of risk based
capital guidelines for banks and holding companies that are designed to make
capital requirements more sensitive to differences in risk profiles and account
for off balance sheet items. Tier 1 capital includes common shareholders'
equity, qualifying perpetual preferred stock and minority interest in equity
accounts of consolidated subsidiaries, but exclude goodwill and most other
intangibles and excludes the allowance for loan and lease losses. Tier 2 capital
included the excess of any preferred stock not included in Tier 1 capital,
mandatory convertible securities, hybrid capital instruments, subordinated debt
and intermediate term-preferred stock and general reserves for loans and lease
losses up to 1.25% of risk weighted assets.
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<PAGE> 12
The Bank and the Company exceed the regulatory minimums on capital requirements
and ratios. However, as the Company and the Bank continue to grow and the loan
portfolio gets larger, these ratios will adjust downward. Management will
monitor these amounts and ratios on a continuos basis. The schedule on the
following page reflects the current regulatory capital levels in more detail,
including comparisons of actual capital levels to the regulatory minimums.
FORSYTH BANCSHARES, INC.
AND
CITIZENS BANK OF FORSYTH COUNTY
REGULATORY CAPITAL REQUIREMENTS
JUNE 30, 1998
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Actual Required Excess
------ -------- ------
Amount Percent Amount Percent Amount Percent
------ ------- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
FORSYTH BANCSHARES, INC.
Risk-based capital:
Tier 1 capital $7,628 32% $ 241 4.00% $7,258 28%
Total capital $7,628 32% 1,009 8.00% 6,490 24%
Tier 1 Leverage $7,628 32% 1,009 4.00% 6,490 28%
CITIZENS BANK OF FORSYTH
COUNTY
Tier 1 capital $6,246 21% $ 243 4.00% $6,003 17%
Tier 2 capital $6,577 22% 491 8.00% 6,086 12%
Tier 1 Leverage $6,577 23% 243 4.00% 6,334 19%
</TABLE>
YEAR 2000 ISSUE
The Company recognizes the scope and potential problems associated with the Year
2000 compliance program. As the Bank and Company were organized in 1996 and
1997, and their respective computer systems are relatively new, management does
not believe that the Bank or the Company are at material risk with respect to
its operations. Nevertheless, the Company has adopted a plan of action and has
in place a team to define and implement steps that will solve the problem for
all of the Company's mission critical systems and hardware. The Company has
progressed through the awareness and assessment phases and is well into the
renovation phase where the work is done to ensure mission critical systems are
compliant. In addition to systems compliance, the Company has evaluated all
significant credit relationships to determine any risks represented to the
Company by the impact of year 2000 on customer operations. Based on this
evaluation, the Company is not aware of more than the normal credit risk
associated with these relationships and no special additions to the allowance
for loan losses are believed to be necessary. Also, the Company has incorporated
Year 2000 compliance into its loan policy and underwriting standards.
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<PAGE> 13
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
shareholders. 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, on
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.
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<PAGE> 14
PART II--OTHER INFORMATION
Item 1. Legal Proceedings---Not applicable
Item 2. Changes in Securities---Not applicable
Item 3. Defaults upon Senior Securities---Not applicable
Item 4. Submission of matters to a Vote of Security Holders
(a) The Annual Meeting of Shareholders was held on May 12, 1998.
(b) The following directors were elected for a term of one year
and until a successor is duly qualified and elected:
Catherine M. Amos
Jeffrey S. Bagley
Bill H. Barnett
Danny M. Bennett
Michael P. Bennett
Bryan L. Bettis
Talmadge W. Bolton
Thomas L. Bower III
Charles R. Castleberry
David H. Denton
Charles D. Ingram
Herbert A. Lang, Jr.
John P. McGruder
James J. Myers
Danny L. Reid
Charles R. Smith
Wyatt L. Willingham
Jerry M. Wood
(c) The following matters were voted on at the meeting as was
previously identified in the Proxy materials forwarded to
each shareholder:
1. Proposal to elect the 18 individuals nominated by
management as Directors. Votes were cast as follows:
<TABLE>
<CAPTION>
Director For Against Abstain
-------- --- ------- -------
<S> <C> <C> <C>
Catherine M. Amos 475,680 (59.5%) 0 0
Jeffrey S. Bagley 475,680 (59.5%) 0 0
Bill H. Barnett 475,680 (59.5%) 0 0
Danny M. Bennett 475,680 (59.5%) 0 0
Michael P. Bennett 475,680 (59.5%) 0 0
Bryan L. Bettis 475,680 (59.5%) 0 0
Talmadge W. Bolton 475,680 (59.5%) 0 0
Thomas L. Bower III 475,680 (59.5%) 0 0
Charles R. Castleberry 475,680 (59.5%) 0 0
</TABLE>
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<PAGE> 15
<TABLE>
<CAPTION>
Director For Against Abstain
-------- --- ------- -------
<S> <C> <C> <C>
David H. Denton 475,680 (59.5%) 0 0
Charles D. Ingram 475,680 (59.5%) 0 0
Herbert A. Lang, Jr. 475,680 (59.5%) 0 0
John P. McGruder 475,680 (59.5%) 0 0
James J. Myers 475,680 (59.5%) 0 0
Danny L. Reid 475,680 (59.5%) 0 0
Charles R. Smith 475,680 (59.5%) 0 0
Wyatt L. Willingham 475,680 (59.5%) 0 0
</TABLE>
Item 5. Other Information---Not applicable
Item 6. Exhibits and reports on Form 8-K
(a) Exhibits
--Exhibit 27.1--Financial Data Schedule (for SEC use only).
(b) Reports on Form 8-K--None
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<PAGE> 16
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.
FORSYTH BANCSHARES, INC.
BY: /s/ DAVID H. DENTON
----------------------------------------------
Name: David H. Denton
Title: President and Chief Executive Officer
Date: August 14, 1998
- 16 -
<PAGE> 17
INDEX TO EXHIBITS
Exhibit 27.1 Financial Data Schedule (for SEC use only).
- 17 -
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 2,485,000
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 1,200,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 15,229,000
<INVESTMENTS-CARRYING> 2,323,000
<INVESTMENTS-MARKET> 2,323,000
<LOANS> 26,676,000
<ALLOWANCE> 331,000
<TOTAL-ASSETS> 48,638,000
<DEPOSITS> 40,746,000
<SHORT-TERM> 0
<LIABILITIES-OTHER> 235,000
<LONG-TERM> 0
0
0
<COMMON> 7,960,000
<OTHER-SE> 29,000
<TOTAL-LIABILITIES-AND-EQUITY> 48,638,000
<INTEREST-LOAN> 1,150,000
<INTEREST-INVEST> 570,000
<INTEREST-OTHER> 21,000
<INTEREST-TOTAL> 1,741,000
<INTEREST-DEPOSIT> 849,000
<INTEREST-EXPENSE> 0
<INTEREST-INCOME-NET> 892,000
<LOAN-LOSSES> 100,000
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 680,000
<INCOME-PRETAX> 168,000
<INCOME-PRE-EXTRAORDINARY> 168,000
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 168,000
<EPS-PRIMARY> .21
<EPS-DILUTED> .21
<YIELD-ACTUAL> 8.30
<LOANS-NON> 0
<LOANS-PAST> 42,000
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 235,000
<CHARGE-OFFS> 4,000
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 336,000
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 331,000
</TABLE>
