<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10Q
[X] Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of
1934
For the period ended September 30, 1997
or
[ ] 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: 2-75364
-------
Century South Banks, Inc.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Georgia 58-1455591
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
60 Main Street West, P O Box 1000, Dahlonega, Georgia 30533
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(706) 864-1111
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
- --------------------------------------------------------------------------------
(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 [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
CLASS OUTSTANDING AS OF OCTOBER 31, 1997
- --------------------------------------------------------------------------------
Common stock, $1.00 par value 7,767,459
<PAGE>
CENTURY SOUTH BANKS, INC. AND SUBSIDIARIES
Form 10Q
INDEX
Page No.
--------
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets 3
Consolidated Statements of Income 4
Condensed Consolidated Statements of Cash Flows 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
Part II. Other Information
Item 6. Exhibits and Report on Form 8-K 18
Signatures 19
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
CENTURY SOUTH BANKS, INC. AND SUBSIDIARIES
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
------------------------------------------------
(amounts in thousands, except share data)
<S> <C> <C>
Assets
- ------
Cash and due from banks $ 26,242 34,626
Federal funds sold 34,210 38,730
Interest-earning deposits in other banks 91 677
Investment securities:
Available for sale 97,082 104,296
Held to maturity (fair value: September
30, 1997 - $40,937 and December 31,
1996 - $43,214) 40,080 42,474
Loans, net of unearned income 531,458 509,412
Less allowance for loan losses 9,823 7,565
-------- -------
Loans, net 521,635 501,847
-------- -------
Premises and equipment, net 18,116 18,311
Goodwill and other intangibles, net 6,164 6,712
Other assets 12,660 13,422
-------- -------
Total assets $756,280 761,095
======== =======
Liabilities and Shareholders' Equity
- ------------------------------------
Liabilities:
Deposits:
Noninterest-bearing demand deposits $ 76,356 75,706
Interest-bearing deposits 586,119 594,567
-------- -------
Total deposits 662,475 670,273
Federal funds purchased 2,510 1,000
Federal Home Loan Bank advances 6,906 6,982
Long-term debt 40 241
Accrued expenses and other liabilities 7,148 7,158
-------- -------
Total liabilities 679,079 685,654
-------- -------
Shareholders' Equity:
Common Stock-$1 par value. Authorized
15,000,000 shares: issued 7,826,358 shares
and outstanding 7,767,459 and 7,761,624
shares at September 30, 1997 and December 31,
1996, respectively 7,826 7,826
Additional paid-in capital 28,855 28,780
Retained earnings 40,600 39,384
Reduction for ESOP loan guarantee - (137)
Common stock in treasury (58,899 and 64,734
shares at September 30, 1997 and December 31,
1996, respectively), at cost (306) (337)
Net unrealized gain (loss) on investment
-------- -------
Securities 226 (75)
-------- -------
Total shareholders' equity 77,201 75,441
-------- -------
Total liabilities and shareholders' equity $756,280 761,095
======== =======
</TABLE>
- ----------
See accompanying notes to consolidated financial statements.
3
<PAGE>
CENTURY SOUTH BANKS, INC. AND SUBSIDIARIES
Consolidated Statements of Income
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
1997 1996 1997 1996
-------------------------------------------------------------------
<S> <C> <C> <C> <C>
(amounts in thousands, except
per share data)
Interest income:
Loans, including fees $ 13,817 13,084 40,407 38,794
Federal funds sold 443 148 1,207 1,022
Interest on deposits in other banks 4 10 25 24
Investment securities:
Taxable 1,543 1,726 4,799 5,118
Nontaxable 578 647 1,787 1,977
-------- ------- ------- -------
Total interest income 16,385 15,615 48,225 46,935
-------- ------- ------- -------
Interest expense:
Deposits 7,393 6,957 21,908 21,335
Federal funds purchased 10 12 25 12
Federal Home Loan Bank advances 105 113 316 360
Long-term debt and other borrowings 4 5 17 59
-------- ------- ------- -------
Total interest expense 7,512 7,087 22,266 21,766
-------- ------- ------- -------
Net interest income 8,873 8,528 25,959 25,169
Provision for loan losses 68 343 4,737 1,213
-------- ------- ------- -------
Net interest income after
provision for loan losses 8,805 8,185 21,222 23,956
-------- ------- ------- -------
Noninterest income:
Service charges on deposit accounts 1,047 956 3,069 2,869
Securities gains (losses), net 14 - 18 216
Other operating income 607 563 1,822 1,935
-------- ------- ------- -------
Total noninterest income 1,668 1,519 4,909 5,020
-------- ------- ------- -------
Noninterest expense:
Salaries and employee benefits 3,529 3,371 10,661 9,621
Net occupancy and equipment expense 981 816 3,031 2,422
Other operating expenses 2,080 2,232 7,417 6,680
-------- ------- ------- -------
Total noninterest expense 6,590 6,419 21,109 18,723
-------- ------- ------- -------
Income before income taxes 3,883 3,285 5,022 10,253
Income tax expense 1,428 993 1,387 3,150
-------- ------- ------- -------
Net income $ 2,455 2,292 3,635 7,103
======== ======= ======= =======
Net income per common share and
common share equivalent $ 0.31 0.30 0.47 0.91
======== ======= ======= =======
Cash dividends declared per share $0.10500 0.10000 0.31125 0.29625
======== ======= ======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
CENTURY SOUTH BANKS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Nine months ended September 30,
1997 1996
-------------------------------
(amounts in thousands)
<S> <C> <C>
Net cash provided by operating activities $ 10,356 9,105
-------- -------
Cash flows from investing activities:
Proceeds from sales of investment securities available for sale 2,272 7,840
Principal collections and maturities of investment securities:
Available for sale 23,783 23,348
Held to maturity 4,273 10,353
Proceeds from maturities of interest-earning deposits 11,002 2,099
Purchases of investment securities held to maturity (1,785) (1,088)
Purchases of investment securities available for sale (18,405) (40,682)
Investment in interest-earning deposits (10,416) (2,284)
Net increase in loans (24,711) (24,028)
Proceeds from sales of real estate acquired through foreclosure 832 373
Purchases of premises and equipment (1,293) (2,980)
Proceeds from sale of premises and equipment 2 13
-------- -------
Net cash used in investing activities (14,446) (27,036)
-------- -------
Cash flows from financing activities:
Net increase (decrease) in deposits (7,796) 12,765
Net increase in federal funds purchased 1,510 -
Net decrease in other short-term borrowings - (161)
Proceeds from issuance of long-term debt 4,010 -
Payments on long-term debt and Federal Home Loan
Bank advances (4,150) (4,296)
Dividends paid to shareholders (2,388) (2,270)
-------- -------
Net cash provided by (used in) financing activities (8,814) 6,038
-------- -------
Net decrease in cash and cash equivalents (12,904) (11,893)
Cash and cash equivalents at beginning of period 73,356 60,440
-------- -------
Cash and cash equivalents at end of period $ 60,452 48,547
======== =======
Supplemental disclosure of cash paid during the period for:
Interest $ 22,287 22,625
======== =======
Income taxes $ 3,109 3,074
======== =======
Supplemental schedule of noncash investing and financing
activities:
Real estate acquired through foreclosure $ 1,702 1,398
======== =======
Real estate sold and financed by the Company $ 1,517 1,177
======== =======
Net reduction in guaranteed ESOP loan recorded in
shareholders' equity $ 137 36
======== =======
</TABLE>
- ----------
See accompanying notes to consolidated financial statements.
5
<PAGE>
CENTURY SOUTH BANKS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) Basis of Presentation
---------------------
The unaudited consolidated financial statements include the accounts of Century
South Banks, Inc. ("the Company") and its wholly owned subsidiaries, Bank of
Dahlonega ("BOD"), The Bank of Ellijay ("BOE"), First Bank of Polk County
("FBPC"), Georgia First Bank ("GFB"), First National Bank of Union County
("FNBUC"), Fannin County Bank, N.A. ("FCB"), Gwinnett National Bank ("GNB"),
First Community Bank of Dawsonville ("FCBD"), Peoples Bank ("PBL") and Bank of
Danielsville ("DAN").
These accompanying unaudited consolidated financial statements have been
prepared in accordance with the instructions to Form 10-Q and therefore do not
include all information and notes necessary for a fair presentation of financial
position, results of operations, and cash flows in conformity with generally
accepted accounting principles. All adjustments consisting of normal recurring
accruals which, in the opinion of management, are necessary for a fair
presentation of the financial position and results of operations for the periods
covered by this report have been included.
(2) Statement No. 125 "Accounting for Transfers and Servicing of Financial
----------------------------------------------------------------------
Assets and Extinguishments of Liabilities"
------------------------------------------
In June 1996, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards No. 125, "Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities" (Statement
125). Statement 125 provides accounting and reporting standards for transfers
and servicing of financial assets and extinguishments of liabilities based on
consistent application of a financial-components approach that focuses on
control. It distinguishes transfers of financial assets that are sales from
transfers that are secured borrowings.
Under the financial-components approach, after a transfer of financial assets,
an entity recognizes all financial and servicing assets it controls and
liabilities it has incurred and derecognizes financial assets it no longer
controls and liabilities that have been extinguished. The financial-components
approach focuses on the assets and liabilities that exist after the transfer.
Many of these assets and liabilities are components of financial assets that
existed prior to the transfer. If a transfer does not meet the criteria for a
sale, the transfer is accounted for as a secured borrowing with pledge of
collateral.
Effective January 1, 1997, the Company adopted Statement 125 for reporting
transfers and servicing of financial assets and extinguishments of liabilities
occurring after December 31, 1996. Statement 125 did not have a material impact
on the Company's financial statements.
6
<PAGE>
CENTURY SOUTH BANKS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(3) Statement No. 128 "Earnings Per Share"
--------------------------------------
In February 1997, the FASB issued Statement of Financial Accounting Standards
No. 128, "Earnings Per Share" (Statement 128). Statement 128 supersedes
Accounting Principles Board Opinion No. 15 "Earnings Per Share" and specifies
the computation, presentation, and disclosure requirements for earnings per
share (EPS) for entities with publicly held common stock or potential common
stock. Statement 128 replaces the presentation of primary EPS with a
presentation of basic EPS and fully diluted EPS with diluted EPS. It also
requires dual presentation of basic and diluted EPS on the face of the income
statement for all entities with complex capital structures and requires a
reconciliation of the numerator and denominator of the basic EPS computation to
the numerator and denominator of the diluted EPS computation. Statement 128 is
effective for financial statements for both interim and annual periods ending
after December 15, 1997. The expected impact on the Company's financial
statements of the provisions of Statement 128 is not expected to be material.
(4) Statement No. 129 "Disclosure of Information about Capital Structure"
---------------------------------------------------------------------
In February 1997, the FASB issued Statement of Financial Accounting Standards
No. 129, "Disclosures of Information about Capital Structure" (Statement 129).
Statement 129 is effective for financial statements for periods ending after
December 15, 1997. The Company does not expect that Statement 129 will require
significant revision of prior disclosures since the statement lists required
disclosures that have been included in a number of previously existing separate
statements or opinions.
(5) Long-Term Debt and Short-Term Borrowings
----------------------------------------
On January 29, 1997, the Company renewed a $1,500,000 unsecured revolving line
of credit with a bank which is payable on demand and matures on January 28,
1998. Interest is due on the line of credit quarterly. The revolving line of
credit accrues interest at the Prime Lending Rate minus one percent (1%) as
defined in the agreement. The line of credit is secured by 100% of the
outstanding common stock of one of the Company's affiliates (GNB). As of
September 30, 1997, there is no outstanding balance.
Nine of the Company's subsidiaries have invested in Federal Home Loan Bank stock
for the purpose of establishing credit lines with the Federal Home Loan Bank.
One of these subsidiaries drew $4,000,000 and made payments of $3,075,524 and
another subsidiary made payments of $1,000,000 in the first nine months of 1997
making the total advances under these lines approximately $6.9 million. One
subsidiary has a balance outstanding of $2.9 million with $2.0 million maturing
on January 2, 1998 and bearing interest at the rate of 5.83%, payable monthly.
The $0.9 million matures on September 1, 2006 and bears interest at the rate of
7.74% with principal and interest due monthly.
7
<PAGE>
CENTURY SOUTH BANKS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
Another subsidiary has drawn $4.0 million with $2.0 million maturing on December
28, 1998 and $2.0 million maturing on January 13, 1999 with interest, payable
monthly, based on the current LIBOR rate. The purpose of these advances was to
replace short-term deposits with longer term funds. In addition to these
advances, the nine subsidiaries have additional credit available on their credit
lines with the Federal Home Loan Bank. All lines with the Federal Home Loan
Bank are secured by a blanket lien on certain real estate loans of each of the
respective subsidiaries.
(6) Pending Acquisition
-------------------
On March 17, 1997, the Company and Bank Corporation of Georgia ("BCG"),
headquartered in Macon, Georgia signed a statement of intent to merge the two
holding companies. On March 31, 1997, the Agreement and Plan of Merger was
signed and on July 11, 1997, the Agreement and Plan of Merger was amended.
Under the proposed merger, BCG shareholders will receive 1.35 shares of Century
South Banks, Inc. common stock for each share of BCG common stock. The merger
is subject to the approval of BCG and CSBI shareholders. All regulatory
approvals have been received. Upon consummation of the merger, which is
scheduled for fourth quarter 1997, Century South Banks, Inc. will have assets of
over $1 billion. The combined operation will maintain dual headquarters in
Dahlonega and Macon.
(7) Derivatives Disclosures
-----------------------
In January 1997, the Securities and Exchange Commission approved rule amendments
(the Release) regarding disclosures about derivative financial instruments,
other financial instruments and derivative commodity instruments. The Release
requires inclusion in the footnotes to the financial statements of extensive
detail about the accounting policies followed by a registrant in connection with
its accounting for derivative financial instruments and derivative commodity
instruments. The accounting policy requirements become effective for all
registrants for filings that include financial statements for periods ending
after June 15, 1997. The Company does not presently have any derivative
financial instruments or derivative commodity instruments as defined in the
Release.
8
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GENERAL
-------
The following is a discussion of the Company's financial condition at September
30, 1997, compared to December 31, 1996, and results of operations for the three
and nine month periods ended September 30, 1997, compared to the three and nine
month periods ended September 30, 1996. This discussion should be read in
conjunction with the Company's unaudited consolidated financial statements and
accompanying notes appearing elsewhere in this report.
FINANCIAL CONDITION
-------------------
During the first nine months of 1997, total assets decreased $4.8 million or
approximately 0.6%. However, net loans grew $19.8 million or 3.9% during the
first nine months of 1997 and were funded primarily by a decrease in investment
securities of $9.6 million and a decrease in federal funds sold of $4.5 million.
The amortized cost, gross unrealized gains and losses, and estimated fair value
of available for sale and held to maturity securities by type at September 30,
1997 were as follows:
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized unrealized Estimated
(amounts in thousands) cost gains losses fair value
- -------------------------------------------------------------------------------------------------
Available for sale:
<S> <C> <C> <C> <C>
U.S. Treasury and U.S.
Government agencies $57,208 222 (110) 57,320
State, county and
municipal securities 12,549 304 (29) 12,824
Mortgage-backed securities 18,880 242 (44) 19,078
Other debt securities 4,267 18 (39) 4,246
Equity securities 3,543 110 (39) 3,614
------------------------------------------------
$96,447 896 (261) 97,082
------------------------------------------------
Held to maturity:
U.S. Government agencies $ 7,983 117 (25) 8,075
State, county and
municipal securities 28,162 806 (120) 28,848
Mortgage-backed securities 1,829 28 (4) 1,853
Other debt securities 2,106 55 - 2,161
------------------------------------------------
$40,080 1,006 (149) 40,937
------------------------------------------------
</TABLE>
9
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Balances within the major deposit categories as of September 30, 1997 and
December 31, 1996 are shown below:
(amounts in millions)
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
-------------------------- ----------------------
<S> <C> <C>
Noninterest-bearing demand deposits $ 76.4 75.7
Interest-bearing demand deposits 103.4 118.0
Money market accounts 27.0 23.7
Savings deposits 65.1 61.9
Certificates of deposit and
individual retirement accounts
of $100,000 or more 99.5 98.1
Other individual retirement accounts 42.7 40.5
Other certificates of deposit 248.4 252.4
------ -----
$662.5 670.3
====== =====
</TABLE>
LIQUIDITY AND INTEREST RATE SENSITIVITY
---------------------------------------
The primary functions of asset/liability management are to assure adequate
liquidity and maintain an appropriate balance between interest earning assets
and interest-bearing liabilities. Liquidity management involves the matching of
the cash flow requirements of customers, either depositors withdrawing funds or
borrowers needing loans, and the ability of the Company to meet those
requirements. Management monitors and maintains appropriate levels of assets
and liabilities so that maturities of assets are such that adequate funds are
provided to meet estimated customer withdrawals and loan requests.
The Company's liquidity position depends primarily upon the liquidity of its
assets relative to its need to respond to short-term demand for funds caused by
withdrawals from deposit accounts and loan funding commitments. Primary sources
of liquidity are scheduled payments on the Company's loans and interest on and
maturities of its investments. Occasionally, the Company will sell investment
securities available for sale in connection with the management of its income
tax position, its liquidity position, and its interest sensitivity gap. The
Company may also utilize its cash and due from banks, interest-earning deposits
in other banks, and federal funds sold to meet liquidity requirements as needed.
At September 30, 1997, the Company's cash and due from banks was $26.2 million,
its federal funds sold were $34.2 million, its interest-earning deposits in
other banks were $0.09 million, and its investment securities designated as
available for sale were $97.1 million. All of the above could be converted to
cash on relatively short notice.
The Company also has the ability, on a short-term basis, to purchase federal
funds from other financial institutions. Presently, the Company has made
arrangements with commercial banks for short-term unsecured advances of up to
approximately $39.4 million, in addition to credit which is available in the
form of Federal Home Loan Bank advances.
10
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
The relative interest rate sensitivity of the Company's assets and liabilities
indicates the extent to which the Company's net interest income may be affected
by interest rate movements. The Company's ability to reprice assets and
liabilities in the same dollar amounts and at the same time minimizes interest
rate risks. One method of measuring the impact of interest rate changes on net
interest income is to measure, in a number of time frames, the interest
sensitivity gap, by subtracting interest-sensitive liabilities from interest-
sensitive assets, as reflected in the following table. Such interest
sensitivity gap represents the risk, or opportunity, in repricing. If more
assets than liabilities are repriced at a given time in a rising rate
environment, net interest income improves; in a declining rate environment, net
interest income deteriorates. Conversely, if more liabilities than assets are
repriced while interest rates are rising, net interest income deteriorates; if
interest rates are falling, net interest income improves.
The Company's strategy in minimizing interest rate risk is to minimize the
impact of short-term interest rate movements on its net interest income while
managing its middle and long-term interest sensitivity gap in light of overall
economic trends in interest rates. The following table illustrates the relative
sensitivity of the Company to changing interest rates as of September 30, 1997.
<TABLE>
<CAPTION>
0-90 DAYS 91-365 DAYS 1-5 YEARS OVER 5 YEARS
CURRENT CURRENT CUMULATIVE CURRENT CUMULATIVE CURRENT CUMULATIVE
------------------------------------------------------------------------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
INTEREST-SENSITIVE ASSETS $255,422 159,926 415,348 254,974 670,322 32,860 703,182
INTEREST-SENSITIVE
LIABILITIES 295,906 199,464 495,370 99,787 595,157 418 595,575
-------- ------- ------- ------- ------- ------ -------
INTEREST-SENSITIVITY GAP $(40,484) (39,538) (80,022) 155,187 75,165 32,442 107,607
======== ======= ======= ======= ======= ====== =======
RATIO OF INTEREST-SENSITIVE
ASSETS TO INTEREST-
SENSITIVE LIABILITIES 0.86 0.80 0.84 2.56 1.13 78.61 1.18
======== ======= ======= ======= ======= ====== =======
</TABLE>
RESULTS OF OPERATIONS
---------------------
Net Interest Income
- -------------------
Net interest income is an effective measurement of how well management has
balanced the Company's interest rate sensitive assets and liabilities. The
Company's net interest income is its principal source of income. Interest-
earning assets for the Company include loans, federal funds sold, interest-
earning deposits in other banks, and investment securities. The Company's
interest-bearing liabilities include its deposits, federal funds purchased,
Federal Home Loan Bank advances, other short-term borrowings, and long-term
debt.
11
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Net interest income for the three months ended September 30, 1997 increased
$345,000 or 4.05% over the same period of 1996. For the nine months ended
September 30, 1997, net interest income was $25,959,000 representing an increase
of $790,000 or 3.14% as compared to the nine months ended September 30, 1996.
The average yield earned on interest-earning assets, on a fully tax equivalent
basis, decreased to 9.40% for the nine months ended September 30, 1997 from
9.61% for the nine months ended September 30, 1996 and the average rate paid on
interest-bearing liabilities decreased to 5.02% for the nine months ended
September 30, 1997 from 5.13% for the nine months ended September 30, 1996. The
Company's interest rate differential decreased to 4.38% from 4.48% and its net
interest margin (net interest income divided by average interest-earning assets)
decreased to 5.12% for the first nine months of 1997 from 5.22% for the same
period of 1996.
Allowance for Loan Losses
- -------------------------
The Company provides for loan losses on a monthly basis based upon information
available at the end of each period. By such additions, management maintains
the allowance for loan losses at a level adequate to provide for losses that can
be reasonably anticipated. The level of the allowance for loan losses is based
on, among other things, management's periodic loan-by-loan evaluation of
potential losses, as well as its assessment of prevailing and anticipated
economic conditions in its market areas. Reviews are conducted throughout the
year by senior officers of the Company and by unrelated third parties. In the
second quarter of 1997, the Company recorded approximately $3.7 million in
additional loan loss provisions to reflect both the results of an in-depth study
of the loan portfolios at two subsidiary banks where recent management changes
have occurred and a revision of the estimation process used by the Company.
A substantial portion of the Company's loan portfolio is secured by real estate
in markets in northern Georgia, southeastern Tennessee, and southwestern North
Carolina. To some extent the ultimate collectibility of a substantial portion
of the Company's loan portfolio is dependent on or susceptible to changes in
market conditions in these markets.
The allowance for loan losses approximated 1.85% of outstanding loans at
September 30, 1997 as compared to 1.49% at December 31, 1996 and 1.52% at
September 30, 1996. The allowance increased to $9,823,000 at September 30, 1997
from $7,565,000 at December 31, 1996 and $7,602,000 at September 30, 1996. The
provision for loan losses increased to $4,737,000 for the nine months ended
September 30, 1997 from $1,213,000 for the nine months ended September 30, 1996.
This increase in the provision for loan losses was primarily due to the
recording of the additional provisions, as discussed above. Net loan charge offs
for the nine months ended September 30, 1997 were $2,479,000 as compared to
$659,000 for the nine months ended September 30, 1996. Net loans charged off as
a percentage of average loans was 0.64% for the nine months ended September 30,
1997 as compared to 0.18% for the nine months ended September 30, 1996.
12
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Nonperforming Loans, Nonperforming Assets, and Underperforming Loans
- --------------------------------------------------------------------
Nonperforming loans include nonaccrual loans. The Company has not restructured
any loans of significance through September 30, 1997. Nonperforming assets
include nonperforming loans, real estate acquired through foreclosure,
securities which are in default, and other repossessed assets. Underperforming
loans consist of loans which are past due with respect to principal or interest
more than 90 days and still accruing interest.
Accrual of interest on loans is discontinued when reasonable doubt exists as to
the full, timely collection of interest or principal or they become
contractually in default for 90 days or more as to either interest or principal
unless they are both well secured and in the process of collection. When a loan
is placed on nonaccrual status, previously accrued and uncollected interest for
the year in which the loan is placed on nonaccrual status is charged to interest
income on loans unless management believes the accrued interest is recoverable
through the liquidation of collateral.
Management is not aware of any loans classified for regulatory purposes as loss,
doubtful, substandard, or special mention that have not been disclosed below
which 1) represent or result from trends or uncertainties which management
reasonably expects will materially impact future operating results, liquidity,
or capital resources, or 2) represent material credits about which management is
aware of any information which causes management to have serious doubts as to
the ability of such borrowers to comply with the loan repayment terms.
The table on the following page provides information concerning nonperforming
loans, nonperforming assets, underperforming loans and certain asset quality
ratios at September 30, 1997 and December 31, 1996.
13
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
(amounts in thousands, except ratios and percentages)
<S> <C> <C>
Nonperforming loans $2,101 2,888
Real estate acquired through foreclosure and other repossessed
assets 1,804 2,647
------ -----
Nonperforming assets $3,905 5,535
====== =====
Underperforming loans $1,183 1,572
====== =====
Asset Quality Ratios:
Nonperforming loans to total loans,
Net of unearned income 0.40% 0.57%
====== =====
Nonperforming assets to total loans,
Net of unearned income,real estate acquired through foreclosure, and
other repossessed assets 0.73% 1.08%
====== =====
Allowance for loan losses to Nonperforming loans 4.67x 2.62x
====== =====
Underperforming loans to total loans,net of unearned income 0.22% 0.31%
====== =====
Nonperforming loans to total assets 0.28% 0.38%
====== =====
Nonperforming assets to total assets 0.52% 0.73%
====== =====
</TABLE>
The Company's management provides for loan losses through a charge to earnings
to bring the allowance to a level which in management's judgement is considered
adequate to absorb potential losses inherent in the loan portfolio. A
substantial portion of the allowance is general in nature and is available for
the portfolio in its entirety.
Noninterest Income
- ------------------
Noninterest income for the third quarter of 1997 increased $149,000 or 9.8% as
compared to the same period of 1996. This increase was primarily due to an
increase in service charges on deposit accounts of $91,000, an increase in net
securities gains (losses) of $14,000, and an increase in credit card fees of
$19,000. For the first nine months of 1997, noninterest income decreased
$111,000 or 2.2%. This decrease was primarily attributable to the inclusion of
a $224,000 gain recorded in the first quarter of 1996 relating to the sale of
the mortgage servicing portfolio and also a decrease in net securities gains
(losses) of $198,000. The decrease was partially offset by an increase in
service charges on deposit accounts of $200,000, an increase in credit card fees
of $75,000, and an increase in fees associated with the Internal Revenue Service
Rapid Refund program of $33,000.
14
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Noninterest Expense
- -------------------
The $171,000 or 2.7% increase in noninterest expense for the third quarter of
1997 as compared to the third quarter of 1996 was primarily due to an increase
in salary and benefit expense of $158,000 and an increase in net occupancy and
equipment expense of $165,000. This increase was offset by decreases in
advertising and marketing, stationery and supplies, and postage of $45,000,
$30,000, and $25,000, respectively. The first nine months of 1997 as compared
to the same period of 1996 resulted in an increase of $2,386,000 or 12.7%. This
increase was primarily due to an increase in salary and benefit expense of
$1,040,000 mainly due to an increase in the number of employees, an increase in
net occupancy and equipment expense of $609,000 due to write-offs of equipment
that was determined to be obsolete, and an increase in net foreclosed asset
related expenses of $112,000. Also, increases were noted in computer fees and
ATM expense of $83,000 and $84,000, respectively.
Income Tax Expense
- ------------------
The third quarter 1997 income tax expense was approximately $1,428,000, or an
effective rate of 36.8%, as compared to approximately $993,000 for the third
quarter 1996, or an effective rate of 30.2%. During the first nine months of
1997 income tax expense was approximately $1,387,000, or an effective rate of
27.6%, compared to approximately $3,150,000, or an effective rate of 30.7% for
the same period in 1996.
Net Income
- ----------
The Company's third quarter 1997 net earnings were $0.31 per share or $2,455,000
as compared to $0.30 or $2,292,000 for the third quarter of 1996, representing
an increase of 7.1%. Earnings for the nine months ended September 30, 1997 were
$3,635,000 down 48.8% from $7,103,000 for the comparable period in 1996.
Earnings per share for the nine months ended September 30, 1997 were $0.47 per
share as compared to $0.91 per share for the corresponding period ended
September 30, 1996. These decreases in net income are a result of special
charges recorded in the second quarter of 1997. These special charges totaled
$2,725,000 net of related taxes. The special charges consisted of additions to
the loan loss provision as previously discussed, write-offs of equipment that
was determined to be obsolete, and buyouts of various vendor contracts and
leases.
Performance Ratios
- ------------------
Performance of banks is often measured by various ratio analyses. Two widely
recognized performance indicators are return on average equity and return on
average assets. The return on average equity for the nine months ended
September 30, 1997 was 6.38% (annualized) as compared to 13.36% (annualized) for
the nine months ended September 30, 1996. The Company's return on average
assets was 0.65% (annualized) and 1.33% (annualized) for the nine month periods
ended September 30, 1997 and 1996, respectively. These ratios reflect the
special charges taken in the second quarter of 1997.
15
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Capital Resources
- -----------------
The Company is subject to various regulatory capital requirements administered
by the federal banking agencies. Failure to meet minimum capital requirements
can initiate certain mandatory, and possibly additional discretionary actions by
regulators that, if undertaken, could have a direct material effect on the
Company's consolidated financial statements. Under capital adequacy guidelines
and the regulatory framework for prompt corrective action, the Company must meet
specific capital guidelines that involve quantitative measures of assets,
liabilities, and certain off-balance sheet items as calculated under regulatory
accounting practices. The capital amounts and classification are also subject
to qualitative judgments by the regulators about components, risk weightings,
and other factors.
Quantitative measures established by regulation to ensure capital adequacy
require the Company on a consolidated basis, and the Parent company and
subsidiary banks individually, to maintain minimum amounts and ratios (set forth
in the table below) of total and Tier 1 capital, (as defined in the
regulations), to risk-weighted assets (as defined) and of Tier 1 capital to
average assets. Management believes, as of September 30, 1997 that the Company
meets all capital adequacy requirements to which it is subject.
The Company's actual capital amounts and ratios are presented below on a
consolidated basis:
<TABLE>
<CAPTION>
To Be Well
Capitalized
Under Prompt
For Capital Corrective
Actual Adequacy Purposes Action Provisions
--------------------------------------------------------------------------------------------------------
Amount Ratio Amount Ratio Amount Ratio
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
As of September 30, 1997:
Total Capital (to Risk greater than greater than greater than greater than
Weighted Assets): $77,579 15.1% or equal to $41,179 or equal to 8.0% or equal to $51,474 or equal to 10.0%
Tier 1 Capital (to Risk greater than greater than greater than greater than
Weighted Assets): $71,103 13.8% or equal to $20,590 or equal to 4.0% or equal to $30,885 or equal to 6.0%
Tier 1 Capital (to greater than greater than greater than greater than
Average Assets): $71,103 9.5% or equal to $30,070 or equal to 4.0% or equal to $37,588 or equal to 5.0%
</TABLE>
16
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
The Company continues to maintain a level of capital well in excess of
regulatory requirements and available for supporting future growth. The
Company's level of capital can be measured by its average shareholders' equity
to average assets ratio of 10.14% and its ratio of shareholders' equity to
assets of 10.21% at September 30, 1997.
Inflation
- ---------
Inflation impacts the growth in total assets in the banking industry and causes
a need to increase equity capital at higher than normal rates to meet capital
adequacy requirements. The Company copes with the effects of inflation through
effectively managing its interest rate sensitivity gap position, by periodically
reviewing and adjusting its pricing of services to consider current costs, and
through managing its level of net income relative to its dividend payout policy.
The impact of inflation has been minimal to the Company in recent years.
17
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Report on Form 8-K
(a) Exhibits
The following exhibits are attached:
Exhibit 11 Computation of Per Share Earnings
Exhibit 20 Shareholders' Report
Exhibit 27 Financial Data Schedule
(b) There were no reports filed on Form 8-K for the
quarter ended September 30, 1997.
18
<PAGE>
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.
Century South Banks, Inc.
DATE: November 14, 1997 By: /s/ James A. Faulkner
------------------ --------------------------
James A. Faulkner
President & CEO
DATE: November 14, 1997 By: /s/ Susan J. Anderson
------------------ --------------------------
Susan J. Anderson
Senior Vice President, CFO,
and Secretary/Treasurer
19
<PAGE>
EXHIBIT 11
CENTURY SOUTH BANKS, INC. AND SUBSIDIARIES
Statement re Computation of Per Share Earnings
The following computations set forth the calculations of primary and fully
diluted net income per common share and common share equivalents for the three
and nine month periods ended September 30, 1997 and 1996.
<TABLE>
<CAPTION>
Primary Fully Diluted
Earnings Earnings
Per Share Per Share
----------- -------------
(amounts in thousands, except per share data)
For the three months ended September 30, 1997:
<S> <C> <C>
Net income $2,455 2,455
====== =====
Weighted average number of common
shares outstanding 7,767 7,767
Common share equivalents resulting
from stock options 27 28
------ -----
Adjusted weighted average number
of common and common equivalent
shares outstanding 7,794 7,795
====== =====
Net income per common and
common equivalent share $ 0.31 0.31
====== =====
For the three months ended September 30, 1996:
Net income $2,292 2,292
====== =====
Weighted average number of common
shares outstanding 7,762 7,762
Common share equivalents resulting
from stock options 14 14
------ -----
Adjusted weighted average number
of common and common equivalent
shares outstanding 7,776 7,776
====== =====
Net income per common and
common equivalent share $ 0.30 0.30
====== =====
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Primary Fully Diluted
Earnings Earnings
Per Share Per Share
--------- -------------
<S> <C> <C>
(amounts in thousands, except per share data)
For the nine months ended September 30, 1997:
Net income $3,635 3,635
====== =====
Weighted average number of common
shares outstanding 7,767 7,767
Common share equivalents resulting
from stock options 27 28
------ -----
Adjusted weighted average number
of common and common equivalent
shares outstanding 7,794 7,795
====== =====
Net income per common and
common equivalent share $ 0.47 0.47
====== =====
For the nine months ended September 30, 1996:
Net income $7,103 7,103
====== =====
Weighted average number of common
shares outstanding 7,762 7,762
Common share equivalents resulting
from stock options 13 14
------ -----
Adjusted weighted average number
of common and common equivalent
shares outstanding 7,775 7,776
====== =====
Net income per common and
common equivalent share $ 0.91 0.91
====== =====
</TABLE>
<PAGE>
EXHIBIT 20
CHIEF EXECUTIVE OFFICER'S MESSAGE
Dear Shareholders:
We were saddened as we began the quarter with the very untimely death of
Roger Bennett, a Century South Banks, Inc. board member, representing the
Peoples Bank in Lavonia. We all extend to Roger's family and friends our
deepest sympathy at the loss of this outstanding person. We also experienced
the loss of one of our valued affiliate bank officers in the death of Joe
Vignola in August. We want to continue to express to his family our sympathy in
their loss.
On a more positive note, I am pleased to report on the performance of your
company for the third quarter of 1997. We had a significant rebound from the
second quarter of 1997, and I am happy to tell you that our earnings were
$2,455,000 or $0.31 per share. This compares to $2,292,000 or $0.30 per share
for the third quarter of 1996. Year to date earnings now stand at $3,635,000 or
$0.47 per share for the first three quarters of 1997, and, of course, were
adversely affected by the special charges that were taken at the end of second
quarter. However, as I am sure each of you know, the stock market has received
this action, as well as the pending merger with Bank Corporation of Georgia,
very positively. The result is our stock has performed extremely well having
reached a new all time high of $23.00 on Monday, October 27, 1997.
As we continue to move forward toward the merger of Century South Banks,
Inc. and Bank Corporation of Georgia, we are extremely excited about the
organization that is coming together. We feel that, you as shareholders, will
be most pleased with the results that this fine staff of professional bankers
will be able to deliver in the months and years ahead. The merger is moving
toward consummation. We have received regulatory approval and the dates for the
special shareholders' meetings have been set. Bank Corporation shareholders
will meet December 15, 1997, to approve the merger and the existing Century
South Banks, Inc. shareholders will meet December 15, 1997, to approve the
issuance of the additional shares of common stock.
As the enclosed figures reflect, we were able to maintain our provision for
loan losses in the third quarter at a minimal level and also experienced a
decrease in our nonperforming assets from the level of the previous quarter to
$3,905,000 as compared to $4,304,000 at September 30, 1996, and $4,435,000 at
December 31, 1996. Nonperforming assets, as a percentage of loans plus
foreclosed assets, were 0.73% at September 30, 1997 as compared to 0.86% at
September 30, 1996 and 1.08% at December 31, 1996. All of this bodes well for
our future performance and is testimony to the quality of our balance sheet.
The growth in assets in our banks have slowed somewhat and represents, for the
third quarter, a 4% increase over total assets at September 30, 1996. While we
would hope to see accelerated growth in assets in the coming quarters, we remain
committed to maintaining a high quality balance sheet and are not willing to
sacrifice quality in the interest of growth alone. We feel this action is, in
the long term, for the best interest of our company and has the greatest
potential for enhancing long term shareholder value. We are pleased to have
continued our stated policy of increasing quarterly cash dividends and are also
very pleased at the participation in our Dividend Reinvestment Plan that now
represents approximately 51.37 percent of our shareholders.
As always, we appreciate the confidence that you have shown in the
management of your Company and we look forward to the merger with Bank
Corporation of Georgia which will create the third largest Georgia based bank
holding company and one that we feel has tremendous potential for growth in the
future. We appreciate your continued business and support and welcome any
comments that you might have.
Sincerely,
James A. Faulkner
President & CEO
<PAGE>
CENTURY SOUTH BANKS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
<TABLE>
<CAPTION>
September 30, September 30,
1997 1996
-----------------------------------
(amounts in thousands)
<S> <C> <C>
ASSETS
Cash and due from banks $ 26,242 $ 32,197
Federal funds sold 34,210 16,350
Interest-earning deposits in other banks 91 638
Investment securities 137,162 150,008
Loans, net of unearned income 531,458 499,660
Allowance for loan losses (9,823) (7,602)
Premises and equipment, net 18,116 17,689
Other assets 18,824 18,753
---------------------------------
Total assets $756,280 $727,693
=================================
LIABILITIES
Noninterest-bearing deposits $ 76,356 $ 76,065
Interest-bearing deposits 586,119 563,006
Federal funds purchased 2,510 -
Other short-term borrowings - 340
Federal home loan bank advances 6,906 7,007
Long-term debt 40 300
Other liabilities 7,148 7,697
---------------------------------
Total liabilities 679,079 654,415
---------------------------------
SHAREHOLDERS' EQUITY
Common stock 7,826 7,826
Additional paid-in capital 28,855 28,780
Retained earnings 40,600 37,902
Reduction for esop loan guarantee - (190)
Common stock in treasury, at cost (306) (337)
Net unrealized gain (loss) on investment securities 226 (703)
Total shareholders' equity 77,201 73,278
---------------------------------
Total liabilities and shareholders' equity $756,280 $727,693
=================================
</TABLE>
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
1997 1996 1997 1996
--------------------------------------------------------------
<S> <C> <C> <C> <C>
(amounts in thousands, except per share data)
Interest income $ 16,385 $ 15,615 $ 48,225 $ 46,935
Interest expense 7,512 7,087 22,266 21,766
--------------------------------------------------------------
Net interest income 8,873 8,528 25,959 25,169
Provision for loan losses 68 343 4,737 1,213
Noninterest income 1,668 1,519 4,909 5,020
Noninterest expense 6,590 6,419 21,109 18,723
Income tax expense 1,428 993 1,387 3,150
--------------------------------------------------------------
Net income $ 2,455 $ 2,292 $ 3,635 $ 7,103
==============================================================
Weighted average common shares outstanding
and common share equivalents 7,794 7,776 7,794 7,775
Net income per share $ 0.32 $ 0.30 $ 0.47 $ 0.91
Dividends declared per share $0.10500 $0.10000 $0.31125 $0.29625
</TABLE>
<PAGE>
CenturySouthbanks
- --------------------------------------------------------------------------------
Inc.
SENIOR OFFICERS
- --------------------------------------------------------------------------------
J. Russell Ivie Chairman
James A. Faulkner President & CEO
Susan J. Anderson Senior Vice President/Sec.-Treas. & CFO
Tony E. Collins Senior Vice President & COO
Gary L. Evans Senior Vice President/Asst. Secretary & CCO
Charles A. Langford Senior Investment Officer
DIRECTORS
- --------------------------------------------------------------------------------
J. Russell Ivie, Chairman Dudley K. Owens
E.H. Chambers, Jr. William D. Reeves
William L. Dhandler C.J. (Jim) Sisson
Clarence B. Denard E. Paul Stringer
James A. Faulkner Myron B. Turner
Thomas T. Folger, Jr. Al. J. Wimpy
Sherman Green George A. Winn
DIRECTORS EMERITUS
- --------------------------------------------------------------------------------
J. Marvin Anderson James H. Sanders, Sr.
Glen W. Marshall Forrest J. Sisk, Sr.
Rodney B. McCombs
AFFILIATES
- --------------------------------------------------------------------------------
Bank of Dahlonega Fannin County Bank, N.A.
60 Main Street West 480 W. First Street
Dahlonega, GA 30533 Blue Ridge, GA 30513
John L. Lewis, President Steve M. Eaton, President
706-864-3314 706-632-2075
The Bank of Ellijay Gwinnett National Bank
Sand and Broad Street 3200 Peachtree Industrial Boulevard
Ellijay, GA 30540 Duluth, GA 30136
C. Paul Nealey, President Terry Evans, President
706-276-3400 770-497-9797
First Bank of Polk County First Community Bank of Dawsonville
40 Ocoee Street 136 Highway 400 South
Copperhill, TN 37317 Dawsonville, GA 30534
David E. Adkisson, President Gary L. Evans, President
423-496-3261 706-216-5050
Georgia First Bank Peoples Bank
455 Jesse Jewell Parkway 13321 Jones Street
Gainesville, GA 30501 Lavonia, GA 30553
Andrew K. Walker, President J. Douglas Cleveland, President
770-535-8000 706-356-8040
First National Bank of Union County Bank of Danielsville
420 Blue Ridge Highway Courthouse Square
Blairsville, GA 30512 Danielsville, GA 30633
Rodney B. McCombs, Interim President L. Banister Sexton, President
706-745-5571 706-795-2121
<PAGE>
FINANCIAL HIGHLIGHTS (UNAUDITED)
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
AS OF AND FOR NINE MONTHS
ENDED SEPTEMBER 30,
1997 1996 PERCENTAGE CHANGE
-----------------------------------------------------------
<S> <C> <C> <C>
(amounts in thousands, except per share data)
Loans, net $521,635 $492,058 6.01%
Deposits 662,475 639,071 3.66
Total assets 756,280 727,693 3.93
Shareholders' equity 77,201 73,278 5.35
Net income 3,635 7,103 (48.82)
Book value per share 9.94 9.44 5.30
Net income per share 0.47 0.91 (48.35)
Weighted average common shares outstanding
and common share equivalents 7,794 7,775 0.24
Nonperforming loans 2,101 2,455 (14.42)
Other real estate and other
nonperforming assets 1,804 1,849 (2.43)
FINANCIAL RATIOS
- --------------------------------------------------------------------------------------------------------
Return on average assets 0.65% 1.33% (51.13)%
Return on average shareholders' equity 6.38 13.36 (52.25)
Net interest margin (taxable equivalent) 5.12 5.22 (1.92)
Allowance for loan losses to loans 1.85 1.52 21.71
Nonperforming assets to total assets 0.52 0.59 (11.86)
</TABLE>
<PAGE>
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
STOCK INFORMATION
Century South Banks, Inc. ("CSBI") lists its stock for trading on the National
Association of Securities Dealers Automated Quotations System ("NASDAQ"). The
ticker tape symbol is "CSBI". Market price for the quarter ended September 30,
1997:
Three month high ......................... $ 20.25
Three month low .......................... $ 18.00
Closing price ............................ $ 20.25
- --------------------------------------------------------------------------------
SHAREHOLDER SERVICES
Shareholders wishing to change the name or address on their stock, to report
lost certificates or to consolidate accounts should contact:
Century South Banks, Inc.
Shareholder Relations
P.O. Box 1000
Dahlonega, Georgia 30533
(706) 864-1111
- --------------------------------------------------------------------------------
DIVIDEND REINVESTMENT PLAN/CASH CONTRIBUTIONS
Shareholders wishing to automatically reinvest quarterly dividends into Century
South Banks, Inc. common stock or make voluntary cash contributions should
contact:
Century South Banks, Inc.
Cividend Reinvestment Plan/Cash Contributions
P.O. Box 1000
Dahlonega, Georgia 30533
(706) 864-1111
- --------------------------------------------------------------------------------
INVESTOR RELATIONS
Shareholders, analysts, and others seeking financial information on Century
South Banks, Inc. should contact:
James A. Faulkner Susan J. Anderson
President & CEO or Senior Vice President & CFO
(706) 864-3915 (706) 864-3915
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 26,242
<INT-BEARING-DEPOSITS> 91
<FED-FUNDS-SOLD> 34,210
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 97,082
<INVESTMENTS-CARRYING> 40,080
<INVESTMENTS-MARKET> 40,937
<LOANS> 531,458
<ALLOWANCE> 9,823
<TOTAL-ASSETS> 756,280
<DEPOSITS> 662,475
<SHORT-TERM> 2,510
<LIABILITIES-OTHER> 7,148
<LONG-TERM> 6,946
0
0
<COMMON> 7,826
<OTHER-SE> 69,375
<TOTAL-LIABILITIES-AND-EQUITY> 756,280
<INTEREST-LOAN> 40,407
<INTEREST-INVEST> 6,586
<INTEREST-OTHER> 1,232
<INTEREST-TOTAL> 48,225
<INTEREST-DEPOSIT> 21,908
<INTEREST-EXPENSE> 22,266
<INTEREST-INCOME-NET> 25,959
<LOAN-LOSSES> 4,737
<SECURITIES-GAINS> 18
<EXPENSE-OTHER> 21,109
<INCOME-PRETAX> 5,022
<INCOME-PRE-EXTRAORDINARY> 5,022
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,635
<EPS-PRIMARY> 0.47
<EPS-DILUTED> 0.47
<YIELD-ACTUAL> 5.12
<LOANS-NON> 2,101
<LOANS-PAST> 1,183
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 7,565
<CHARGE-OFFS> 2,682
<RECOVERIES> 203
<ALLOWANCE-CLOSE> 9,823
<ALLOWANCE-DOMESTIC> 9,823
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
