<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15 (D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR QUARTER ENDED MARCH 31, 1996COMMISSION FILE NUMBER 0-12436
COLONY BANKCORP, INC.
---------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
GEORGIA 58-1492391
------- ----------
(STATE OF OTHER JURISDICTION) (I.R.S. EMPLOYER)
OF INCORPORATION OR ORGANIZATION IDENTIFICATION NUMBER
302 SOUTH MAIN STREET, FITZGERALD, GEORGIA 31750
------------------------------------------------
ADDRESS OF PRINCIPAL EXECUTIVE OFFICES
912/426-6000
------------
REGISTRANT'S TELEPHONE NUMBER INCLUDING AREA CODE
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED REPORTS REQUIRED TO
BE FILED BY SECTIONS 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 CLOSE OF THE PERIOD COVERED BY THIS REPORT.
CLASS OUTSTANDING AT MARCH 31, 1996
----- -----------------------------
COMMON STOCK, $10 PAR VALUE 1,291,110
PART 1 - FINANCIAL INFORMATION
<PAGE>
ITEM 1. FINANCIAL STATEMENTS
--------------------
THE FOLLOWING FINANCIAL STATEMENTS ARE PROVIDED FOR COLONY BANKCORP, INC. AND
SUBSIDIARIES: THE BANK OF FITZGERALD, ASHBURN BANK, COMMUNITY BANK OF WILCOX,
THE BANK OF DODGE COUNTY, AND THE BANK OF WORTH.
A. CONSOLIDATED BALANCE SHEETS - MARCH 31, 1996 AND DECEMBER 31, 1995.
B. CONSOLIDATED STATEMENTS OF INCOME - FOR THE THREE MONTHS
ENDED MARCH 31, 1996 AND 1995.
C. CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION - FOR THE
THREE MONTHS ENDED MARCH 31, 1996 AND 1995.
THE CONSOLIDATED FINANCIAL STATEMENTS FURNISHED HAVE NOT BEEN EXAMINED BY
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS, BUT REFLECT, IN THE OPINION OF
MANAGEMENT, ALL ADJUSTMENTS NECESSARY FOR A FAIR PRESENTATION OF THE RESULTS OF
OPERATIONS FOR THE PERIODS PRESENTED.
THE RESULTS OF OPERATIONS FOR THE THREE MONTH PERIOD ENDED MARCH 31, 1996 ARE
NOT NECESSARILY INDICATIVE OF THE RESULTS TO BE EXPECTED FOR THE FULL YEAR.
2
<PAGE>
COLONY BANKCORP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1996 AND DECEMBER 31, 1995
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
ASSETS MARCH 31, 1996 DECEMBER 31, 1995
--------------- ------------------
<S> <C> <C>
Cash and Balances Due from Depository
Institutions (Note 2) $ 7,476 $ 9,517
Federal Funds Sold 10,960 24,325
Investment Securities (Aggregate Fair Value
of $51,751 and $45,917 Respectively) (Note 3) 51,861 46,023
Loans (Notes 4 and 5) 192,717 188,396
Allowance for Loan Losses (3,748) (3,885)
Unearned Interest and Fees (11) (11)
-------- --------
Total Loans 188,958 184,500
Premises and Equipment (Note 6) 5,565 5,624
Other Real Estate 1,549 1,721
Other Assets 5,858 6,858
-------- --------
TOTAL ASSETS $272,227 $278,568
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest-Bearing $ 24,425 $ 25,152
Interest-Bearing (Note 8) 221,753 228,091
-------- --------
Total Deposits 246,178 253,243
Borrowed Money:
Federal Funds Purchased -0- -0-
Other Borrowed Money (Note 9) 2,252 2,504
-------- --------
Total Borrowed Money 2,252 2,504
Other Liabilities 2,242 1,766
Commitments and Contingencies (Note 11)
Stockholders' Equity:
Common Stock, Par Value $10 a Share; Authorized
5,000,000 shares, Issued 1,291,110 shares as of March 31,
1996 and December 31, 1995 Respectively 12,911 12,911
Paid-In Capital 1,117 1,117
Retained Earnings 7,804 7,203
Net Unrealized Loss on Securities Available for Sale,
Net of Tax Benefit of $53 in 1996 and $20 in 1995 (277) (176)
-------- --------
Total Stockholders'' Equity 21,555 21,055
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $272,227 $278,568
======== ========
</TABLE>
The accompanying notes are an integral part of these balance sheets.
3
<PAGE>
COLONY BANKCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
3/31/96 3/31/95
---------- ----------
<S> <C> <C>
Interest Income:
Loans, including fees $ 5,071 $ 4,719
Federal Funds Sold 259 103
Deposits with Other Banks 2 23
Investment Securities:
U.S. Treasury & Federal Agencies 619 643
State, County and Municipal 54 58
---------- ----------
Total Interest Income 6,005 5,546
---------- ----------
Interest Expense:
Deposits 2,954 2,319
Federal Funds Purchased 2 16
Other Borrowed Money 71 78
---------- ----------
Total Interest Expense 3,027 2,413
---------- ----------
Net Interest Income 2,978 3,133
Provision for Loan Losses 639 377
---------- ----------
Net Interest Income After Provision 2,339 2,756
---------- ----------
Noninterest Income:
Service Charge on Deposits 390 381
Other Income 249 196
Security Gains, net 3 8
---------- ----------
Total Noninterest Income 642 585
---------- ----------
Noninterest Expense:
Salaries and Employee Benefits 1,072 1,047
Occupancy and Equipment 240 261
Other Operating Expenses 657 762
---------- ----------
Total Noninterest Expense 1,969 2,070
---------- ----------
Income Before Income Taxes $ 1,012 $ 1,271
Income Taxes 314 424
---------- ----------
Net Income $ 698 $ 847
========== ==========
Net Income Per Share of Common Stock $0.54 $0.70
========== ==========
Weighted Average Shares Outstanding 1,291,110 1,216,110
========== ==========
</TABLE>
The accompanying notes are an integral part of these statements
4
<PAGE>
COLONY BANKCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
1996 1995
---------- ---------
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES
Net income (loss) $ 698 $ 847
Adjustments to reconcile net income to net cash provided
by operating activities:
(Gain) loss on sale of investment securities (3) (8)
Depreciation 112 129
Provision for loan losses 639 377
Amortization of excess costs 12 12
Other prepaids, deferrals and accruals, net 1,698 875
-------- -------
Total Adjustments $ 2,458 $ 1,385
-------- -------
Net cash provided by operating activities $ 3,156 $ 2,232
-------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of securities available for sale $ (9,238) $(2,350)
Proceeds from sales of securities available for sale 498 1,720
Proceeds from maturities of securities available for sale 2,733 2,187
Purchase of securities held for investment -0- -0-
Proceeds from maturities of securities held for investment -0- 270
Proceeds from sales of securities held for investment -0- -0-
Decrease in interest-bearing deposits in banks -0- 481
(Increase) in loans (5,097) (4,875)
Purchase of premises and equipment (44) (169)
-------- -------
Net cash (used in) investing activities $(11,148) $(2,736)
-------- -------
CASH FLOW FROM FINANCING ACTIVITIES
Net (decrease) increase in deposits $ (7,065) $ 2,822
Net increase in short-term borrowings and Federal Funds
Purchased -0- 190
Dividends paid (97) (79)
Net (decrease) increase in long-term borrowings (252) (52)
-------- -------
Net cash provided by financing activities $ (7,414) $ 2,881
-------- -------
Net increase (decrease) in cash and cash equivalents (15,406) 2,377
Cash and cash equivalents at beginning of period 33,743 15,343
-------- -------
Cash and cash equivalents at end of period $ 18,337 $17,720
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
5
<PAGE>
COLONY BANKCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- ----------------------------------------------
Colony Bankcorp, Inc. is a multi-bank holding company located in Fitzgerald,
Georgia. The consolidated financial statements include the accounts of Colony
Bankcorp, Inc. and its wholly-owned subsidiaries, The Bank of Fitzgerald,
Fitzgerald, Georgia; Ashburn Bank, Ashburn, Georgia; The Bank of Worth,
Sylvester, Georgia; The Bank of Dodge County, Eastman, Georgia and Community
Bank of Wilcox, Pitts, Georgia (the Banks). All significant intercompany
accounts have been eliminated in consolidation. The accounting and reporting
policies of Colony Bankcorp, Inc. conform to generally accepted accounting
principles and practices utilized in the commercial banking industry. The
following is a description of the more significant of those policies
BASIS OF PRESENTATION
In preparing the financial statements, management is required to make estimates
and assumptions that affect the reported amounts of assets and liabilities as of
the balance sheet date and revenues and expenses for the period. Actual results
could differ significantly from those estimates.
Material estimates that are particularly susceptible to significant change in
the near-term relate to the determination of the allowance for loan losses, the
valuation of real estate acquired in connection with foreclosures or in
satisfaction of loans and the valuation of deferred tax assets.
INVESTMENT SECURITIES
The Company adopted Statement of Financial Accounting Standards (SFAS) No. 115
Accounting for Certain Investments in Debt and Equity Securities, as of January
1, 1994. Under the provisions of SFAS No. 115, the Company must classify its
securities as trading, available for sale or held to maturity. Trading
securities are purchased and held for sale in the near term. Securities held to
maturity are those which the Company has the ability and intent to hold until
maturity. All other securities not classified as trading or held to maturity
are considered available for sale.
Securities available for sale are measured at fair value with unrealized gains
and losses reported net of deferred taxes as a separate component of
stockholders' equity. Fair value represents an approximation of realizable
value as of March 31, 1996 and December 31, 1995. Realized and unrealized gains
and losses are determined using the specific identification method.
LOANS
Loans are generally reported at principal amount less unearned interest and
fees. On January 1, 1995, the Company adopted SFAS No. 114, Accounting by
Creditors for Impairment of a Loan and SFAS No. 118, Accounting by Creditors for
Impairment of a Loan-Income Recognition and Disclosures. Impaired loans are
loans for which principal and interest are unlikely to be collected in
accordance with the original loan terms and, generally, represent loans
delinquent in excess of 120 days which have been placed on nonaccrual status and
for which collateral values are less than outstanding principal and interest.
Small balance, homogeneous loans are excluded from impaired loans. Generally,
interest payments received on impaired loans are applied to principal. Upon
receipt of all loan principal, additional interest payments are recognized as
interest income on the cash basis.
Other nonaccrual loans are loans for which payments of principal and interest
are considered doubtful of collection under original terms but collateral values
equal or exceed outstanding principal and interest.
6
<PAGE>
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Colony Bankcorp, Inc.'s loans consist of commercial, financial and agricultural
loans, real estate mortgage loans and consumer loans primarily to individuals
and entities located throughout central and south Georgia. Accordingly, the
ultimate collectibility of the loans is largely dependent upon economic
conditions in the central and south Georgia area.
ALLOWANCE FOR LOAN LOSSES
The allowance method is used in providing for losses on loans. Accordingly, all
loan losses decrease the allowance and all recoveries increase it. The
provision for loan losses is based on factors which, in management's judgment,
deserve current recognition in estimating possible loan losses. Such factors
considered by management include growth and composition of the loan portfolio,
economic conditions and the relationship of the allowance for loan losses to
outstanding loans.
An allowance for loan losses is maintained for all impaired loans. Provisions
are made for impaired loans upon changes in expected future cash flows or
estimated net realizable value of collateral. When determination is made that
impaired loans are wholly or partially uncollectible, the uncollectible portion
is charged off.
Management believes the allowance for possible loan losses is adequate. While
management uses available information to recognize losses on loans, future
additions to the allowance may be necessary based on changes in economic
conditions. In addition, various regulatory agencies, as an integral part of
their examination process, periodically review the Company's allowance for loan
losses. Such agencies may require the Company to recognize additions to the
allowance based on their judgment about information available to them at the
time of their examination.
PREMISES AND EQUIPMENT
Premises and equipment are recorded at acquisition cost net of accumulated
depreciation.
Depreciation is charged to operations over the estimated useful lives of the
assets. The estimated useful lives and methods of depreciation are as follows:
DESCRIPTION LIFE IN YEARS METHOD
- ------------------------- ------------- -----------------------------
Banking Premises 15-40 Straight-Line and Accelerated
Furniture and Equipment 5-10 Straight-Line and Accelerated
Expenditures for major renewals and betterments are capitalized. Maintenance
and repairs are charged to operations as incurred. When property and equipment
are retired or sold, the cost and accumulated depreciation are removed from the
respective accounts and any gain or loss is reflected in other income or
expense.
CASH FLOWS
For reporting cash flows, cash and cash equivalents include cash on hand,
noninterest-bearing amounts due from banks and federal funds sold. Cash flows
from demand deposits, NOW accounts, savings accounts, loans and certificates of
deposit are reported net.
INCOME TAXES
Income taxes are provided for the tax effects of transactions reported in the
consolidated financial statements and consist of taxes currently due plus
deferred taxes. Deferred taxes are recognized for differences between the basis
of assets and liabilities for financial statement and income tax purposes. The
differences relate primarily to depreciable assets (use of different
depreciation methods for financial statement and income tax purposes) and
allowance for loan losses (use of the allowance method for financial statement
purposes and the experience method for tax purposes). The deferred tax assets
and liabilities represent the future tax return consequences of those
differences, which will either be taxable or deductible when the assets and
liabilities are recovered or settled.
7
<PAGE>
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
OTHER REAL ESTATE
Other real estate generally represents real estate acquired through foreclosure
and is initially recorded at the lower of cost or estimated market value at the
date of acquisition. Losses from the acquisitions of property in full or
partial satisfaction of debt are recorded as loan losses. Subsequent declines
in value, routine holding costs and gains or losses upon disposition are
included in other losses.
STOCKHOLDERS' EQUITY
Banking regulations impose minimum capital levels in relation to assets. To be
considered "well capitalized," a financial institution must generally have a
leverage ratio of at least 5 percent, a tier 1 risk-based capital ratio of a
least 6 percent and a total risk-based capital ratio of at least 10 percent. As
of March 31, 1996, the Company is in compliance with its minimum regulatory
capital requirements and is considered "well capitalized" as defined by FDICIA.
(2) CASH AND BALANCES DUE FROM DEPOSITORY INSTITUTIONS
- ------------------------------------------------------
Components of cash and balances due from depository institutions at March 31,
1996 and December 31, 1995 are as follows:
<TABLE>
<CAPTION>
March 31, 1996 December 31, 1995
-------------- -----------------
<S> <C> <C>
Cash on Hand and Cash Items $2,437 $3,299
Noninterest-Bearing Deposits with Other Banks 4,940 6,119
Interest-Bearing Deposits with Other Banks 99 99
------ ------
$7,476 $9,517
====== ======
</TABLE>
(3) INVESTMENT SECURITIES
- -------------------------
Investment securities as of March 31, 1996 are summarized as follows:
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
<S> <C> <C> <C> <C>
Securities Available for Sale:
U.S. Treasury $ 496 $ -0- $ -0- $ 496
U.S. Government Agencies:
Mortgage-Backed 20,667 44 (186) 20,525
Other 22,525 33 (92) 22,466
State, County & Municipal 3,014 64 (9) 3,069
The Banker's Bank Stock 50 -0- -0- 50
Federal Home Loan Bank Stock 250 -0- -0- 250
Marketable Equity Securities 1,130 -0- (175) 955
------- ----- ------ -------
$48,132 $ 141 $ (462) $47,811
======= ===== ====== =======
Securities Held to Maturity:
U.S. Government Agencies $ 2,150 $ -0- $ (32) $ 2,118
State, County and Municipal 1,900 -0- (78) 1,822
------- ----- ------ -------
$ 4,050 $ -0- $ (110) $ 3,940
======= ===== ====== =======
</TABLE>
8
<PAGE>
(3) INVESTMENT SECURITIES (CONTINUED)
- -------------------------------------
The amortized cost and fair value of investment securities as of March 31, 1996
by contractual maturity, are shown below. Expected maturities will differ from
contractual maturities because issuers have the right to call or prepay
obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
SECURITIES
AVAILABLE FOR SALE HELD TO MATURITY
AMORTIZED FAIR AMORTIZED FAIR
COST VALUE COST VALUE
<S> <C> <C> <C> <C>
Due in One Year or Less $ 9,659 $ 9,661 $ 45 $ 45
Due After One Year Through Five Years 12,419 12,432 3,276 3,228
Due After Five Years Through Ten Years 3,851 3,838 100 97
Due After Ten Years 106 100 629 570
------- ------- ------ -------
26,035 26,031 4,050 3,940
Federal Home Loan Bank Stock 250 250
The Banker's Bank Stock 50 50
Marketable Equity Securities 1,130 955
Mortgage-Backed Securities 20,667 20,525
------- ------- ------- ------
$48,132 $47,811 $ 4,050 $3,940
======= ======= ====== ======
Investment securities as of December 31, 1995 are summarized as follows:
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
<S> <C> <C> <C> <C>
Securities Available for Sale:
U.S. Government and Agencies $15,438 $ 72 $ (29) $15,481
Mortgage-Backed Securities 22,210 81 (255) 22,036
State, County & Municipal 3,065 81 (8) 3,138
Marketable Equity Securities 1,430 -0- (138) 1,292
------- ------- ------ -------
$42,143 $ 234 $ (430) $41,947
======= ======= ====== =======
Securities Held to Maturity:
U.S. Government and Agencies $ 2,150 $ -0- $ (24) $ 2,126
State, County and Municipal 1,926 -0- (82) 1,844
------- ------- ------ -------
$ 4,076 $ -0- $ (106) $ 3,970
</TABLE>
Investment securities having a carrying value approximating $23,368 and $29,163
as of March 31, 1996 and December 31, 1995, respectively, were pledged to secure
public deposits and for other purposes.
9
<PAGE>
(4) LOANS
- ---------
The composition of loans as of March 31, 1996 and December 31, 1995 was as
follows:
<TABLE>
<CAPTION>
March 31, 1996 December 31, 1995
-------------- -----------------
<S> <C> <C>
Loans Secured by Real Estate
Construction and Land Development $ 864 $ 371
Secured by Farmland (Including Farm Residential and
Other Improvements) 25,502 23,441
Other 88,257 89,797
Loans to Finance Agricultural Production and Other Loans
to Farmers 20,519 17,244
Commercial and Industrial Loans (U.S. Addresses) 10,850 13,907
Loans to Individuals for Household, Family and Other Personal
Expenditures 38,756 36,393
All Other Loans 7,969 7,243
-------- -------
$192,717 $188,396
======== ========
</TABLE>
Nonaccrual loans are loans for which principal and interest are doubtful of
collection in accordance with original loan terms and for which accruals of
interest have been discontinued due to payment delinquency. Nonaccrual loans
totaled $8,073 and $5,229 as of March 31, 1996 and December 31, 1995,
respectively. On March 31, 1996, the Company had 90 day past due loans with
principal balances of $650 and restructured loans with principal balances of
$418.
Effective January 1, 1995, Colony Bankcorp, Inc. recognized impaired loans as
nonaccrual loans delinquent in excess of 120 days for which collateral values
were insufficient to recover outstanding principal and interest under original
loan terms. Impaired loan data as of March 31, 1996 and December 31, 1995 was
as follows:
Total Investment in Impaired Loans $253
Less Allowance for Impaired Loan Losses (10)
----
Net Investment, March 31, 1996 $243
====
Total Investment in Impaired Loan 517
Less Allowance for Impaired Loan Losses (39)
----
Net Investment, December 31, 1995 $478
====
(5) ALLOWANCE FOR LOAN LOSSES
- -----------------------------
Transactions in the allowance for loan losses are summarized below for three
months ended March 31, 1996 and March 31, 1995 as follows:
<TABLE>
<CAPTION>
March 31, 1996 March 31, 1995
-------------- --------------
<S> <C> <C>
Balance, Beginning $3,885 $3,029
Provision Charged to Operating Expenses 639 377
Loans Charged Off (830) (316)
Loan Recoveries 54 157
------ ------
Balance, Ending $3,748 $3,247
====== ======
</TABLE>
10
<PAGE>
(6) PREMISES AND EQUIPMENT
- --------------------------
Premises and equipment are comprised of the following as of March 31, 1996 and
December 31, 1995:
<TABLE>
<CAPTION>
March 31, 1996 December 31, 1995
-------------- -----------------
<S> <C> <C>
Land $ 838 $ 838
Building 4,776 4,791
Furniture, Fixtures and Equipment 4,194 4,267
Leasehold Improvements 17 17
------- -------
9,825 9,913
Accumulated Depreciation (4,260) (4,289)
------- -------
$ 5,565 $ 5,624
======= =======
</TABLE>
(7) INCOME TAXES
- ----------------
The Company records income taxes under SFAS No. 109, Accounting for Income
Taxes, which requires an asset and liability approach to financial accounting
and reporting for income taxes. Deferred income tax assets and liabilities are
computed annually for differences between the financial statement and tax bases
of assets and liabilities that will result in taxable or deductible amounts in
the future based on enacted tax laws and rates applicable to the periods in
which the differences are expected to affect taxable income. Valuation
allowances are established when necessary to reduce deferred tax assets to the
amount expected to be realized. Income tax expense is the tax payable or
refundable for the period plus or minus the change during the period in deferred
tax assets and liabilities.
(8) DEPOSITS
- ------------
Components of interest-bearing deposits as of March 31, 1996 and December 31,
1995 are as follows:
<TABLE>
<CAPTION>
March 31, 1996 December 31, 1995
-------------- -----------------
<S> <C> <C>
Interest-Bearing Demand $ 48,079 $ 50,440
Savings 10,159 9,856
Time, $100,000 and Over 50,198 48,111
Other Time 113,317 119,684
-------- --------
$221,753 $228,091
======== ========
</TABLE>
(9) OTHER BORROWED MONEY
- ------------------------
Other borrowed money is comprised of the following as of March 31, 1996 and
December 31, 1995:
March 31, 1996 December 31, 1995
-------------- -----------------
Advance agreement with Federal Home
Loan Bank of Atlanta, dated March 31,
1995, payable in full on December 31,
1995. Interest rate determined under
the fixed rate credit program.
Effective interest rate of 6.86%
as of December 31, 1995. $ -0- $200
11
<PAGE>
(9) OTHER BORROWED MONEY (CONTINUED)
- ------------------------------------
March 31, 1996 December 31, 1995
-------------- -----------------
Variable interest debentures payable, due
in annual payments of $266,867, plus interest,
on November 1, 1996 through November 1, 1999,
collateralized by 100% of the common stock of
Ashburn Bank. Effective interest rate of
8.00% as of March 31, 1996. $1,067 $1,067
Variable interest at prime note payable, due
in annual payments of $207,143 plus quarterly
interest, balance due December 19, 1997.
Collateralized by 100% of the common stock of
The Bank of Fitzgerald and 100% of the
common stock of The Bank of Worth. Effective
interest rate of 8.25% as of March 31, 1996. 1,185 1,237
------ ------
$2,252 $2,504
====== ======
Maturities of borrowed money for the next five years as of March 31, 1996:
YEAR AMOUNT
1996 $422
1997 129
1998 267
1999 267
2000 -0-
Thereafter -0-
----
$2,252
======
(10) PROFIT SHARING PLAN
- ------------------------
The Company has a profit sharing plan that covers substantially all employees
who meet certain age and service requirement. It is the Company's policy to
make contributions to the plan as approved annually by the board of directors.
(11) COMMITMENTS AND CONTINGENT LIABILITIES
- -------------------------------------------
In the ordinary course of business, the Banks have entered into off balance
sheet financial instruments which are not reflected in the consolidated
financial statements. These instruments include commitments to extend credit,
standby letters of credit, guarantees and liability for assets held in trust.
Such financial instruments are recorded in the financial statements when funds
are disbursed or the instruments become payable. The Banks use the same credit
policies for these off balance sheet financial instruments as they do for
instruments that are recorded in the consolidated financial statements.
Following is an analysis of significant off balance sheet financial instruments:
<TABLE>
<CAPTION>
March 31, 1996 December 31, 1995 March 31, 1995
-------------- ----------------- --------------
<S> <C> <C> <C>
Commitments to extend credit $28,430 $17,753 $26,199
Standby letters of credit 3,383 3,499 4,878
------- ------- -------
$31,813 $21,252 $31,077
======= ======= =======
</TABLE>
12
<PAGE>
(11) COMMITMENTS AND CONTINGENT LIABILITIES (CONTINUED)
- ---------------------------------------------------------
Commitments generally have fixed expiration dates or other termination clauses
and may require payment of a fee. Since many of the commitment amounts expire
without being drawn upon, the total commitment amounts do not necessarily
represent future cash requirements. The credit risk involved in issuing these
financial instruments is essentially the same as that involved in extending
loans to customers. The amount of collateral obtained, if deemed necessary by
the Banks upon extension of credit, is based on management's credit evaluation
of the borrower. Collateral held varies, but may include accounts receivable,
inventory, property, plant and equipment and income-producing commercial
properties.
The Banks do not anticipate any material losses as a result of the commitments
and contingent liabilities.
The nature of the business of the Banks is such that it ordinarily results in a
certain amount of litigation. In the opinion of management and counsel for the
company and the Banks, there is no litigation in which the outcome will have a
material effect on the consolidated financial statements.
(12) EARNINGS PER SHARE
- -----------------------
Earnings per share are calculated on the basis of the weighted average number of
shares outstanding.
13
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATION
LIQUIDITY AND CAPITAL RESOURCES
Liquidity represents the ability to provide adequate sources of funds for
funding loan commitments and investment activities, as well as the ability to
provide sufficient funds to cover deposit withdrawals, payment of debt and
financing of operations. These funds are obtained by converting assets to cash
(representing primarily proceeds from collections on loans and maturities of
investment securities) or by attracting and obtaining new deposits. During
first quarter 1996, the Company was successful in meeting its liquidity needs
with deposits decreasing $7,065,000 from December 31, 1995 by converting Federal
Funds into cash. Federal Funds decreased 54.94% to $10,960,000 at March 31,
1996 from $24,325,000 at December 31, 1995.
The Company's liquidity position remained acceptable for first quarter 1996.
Average liquid assets (cash and amounts due from banks, interest-bearing
deposits in other banks, funds sold and investment securities) represented
29.61% of average deposits in first quarter, 1996 as compared to 28.45% in first
quarter, 1995 and 26.82% for calendar year 1995. Average loans represented
77.02% of average deposits in first quarter, 1996 as compared to 76.81% in first
quarter, 1995 and 79.09% for calendar year 1995. Average interest-bearing
deposits were 88.09% of average earning assets in first quarter, 1996 as
compared to 88.38% in first quarter, 1995 and 87.91% for calendar year 1995.
The Company satisfies most of its capital requirements through retained
earnings. During first quarter, 1996, retained earnings provided $601,000 of
increase in equity. Additionally, equity capital decreased by $101,000
resulting from the change during first quarter 1996 in unrealized losses on
securities available for sale, net of taxes. Thus, total equity increased by a
net amount of $500,000 in first quarter, 1996. This compares to growth in
equity of $1,102,000 in first quarter, 1995 and $4,305,000 for the 1995 calendar
year.
At March 31, 1996, total capital of Colony amounted to approximately
$21,555,000. At March 31, 1996, there were no outstanding commitments for any
major expenditures.
The Federal Reserve Bank Board and the FDIC have issued capital guidelines for
U.S. banking organizations. The objective of these efforts was to provide a
more uniform capital framework that is sensitive to differences in risk assets
among banking organizations. The guidelines define a two-tier capital
framework. Tier 1 capital consists of common stock and qualifying preferred
stockholder's equity less goodwill. Tier 2 capital consists of certain
convertible, subordinated and other qualifying term debt and the allowance for
loan losses up to 1.25 of risk-weighted assets. The Company has no Tier 2
capital other than the allowance for loan losses.
Using the capital requirements presently in effect, the Tier 1 ratio at March
31, 1996 was 10.07% and total Tier 1 and 2 risk-based capital was 11.33%. Both
of these measures compare favorably with the regulatory minimums of 4% for Tier
1 and 8% for total risk-based capital. The Company's leverage ratio at March
31, 1996 was 7.77% which exceeds the required leverage ratio standard of 4%.
In first quarter, 1996, the Company paid quarterly dividends of $.075. The
dividend payout ratio, defined as dividends per share divided by net income per
share, was 13.89% as compared to $.075 for first quarter, 1995 and a dividend
payout ratio of 10.79%.
At March 31, 1996, management was not aware of any recommendations by regulatory
authorities which, if they were to be implemented, would have a material effect
on the Company's liquidity, capital resources or operations. However, it is
possible that examinations by regulatory authorities in the future could
precipitate additional loss charge-offs which could materially impact the
Company's liquidity, capital resources and operations.
14
<PAGE>
RESULTS OF OPERATION
The Company's results of operations are determined by its ability to effectively
manage interest income and expense, to minimize loan and investment losses, to
generate noninterest income and to control noninterest expense. Since interest
rates are determined by market forces and economic conditions beyond the control
of the Company, the ability to generate net interest income is dependent upon
the Bank's ability to obtain an adequate spread between the rate earned on
earning assets and the rate paid on interest-bearing liabilities. Thus, the key
performance measure for net interest income is the interest margin or net yield,
which is taxable-equivalent net interest income divided by average earning
assets.
Net income for the three months ended March 31, 1996 was $698,000 as compared to
$847,000 for the three months ended March 31, 1995, or a decrease of 17.59%.
First quarter 1996 earnings were lower compared to first quarter 1995 primarily
due to a reduction in our net interest margin and an increase in our provision
for loan losses as we continue to address problem loans and maintain our bad
debt reserve at adequate levels.
The net interest margin decreased by 79 points to 4.72% in first quarter 1996 as
compared to 5.51% in first quarter 1995. This reduction in our net interest
margin resulted in net interest income decreasing by 4.95% to $2,978,000 in
first quarter, 1996 from $3,133,000 for the same period in 1995. Average
earning assets increased to $255,605,000 in first quarter, 1996 from
$230,317,000 in first quarter, 1995. Average loans increased by $16,036,000 or
9.25%, average Federal Funds sold increased by $11,715,000 or 158.31%, average
investment securities decreased by $871,000 or 1.82% and average interest-
bearing deposits in other banks decreased by $1,592,000 or 92.13%, resulting in
a net increase in average assets of $25,288,000 or 10.98%.
The net increase in average earning assets was funded by a net increase in
average deposits of 9.90% to $245,972,000 for first quarter, 1996 from
$223,822,000 for first quarter, 1995. Average interest-bearing deposits
increased by 10.40% to $222,226,000 at March 31, 1996 compared to $201,285,000
at March 31, 1995, while average noninterest-bearing deposits represented 9.92%
of total deposits at March 31, 1996 compared to 10.79% at March 31, 1995 and
9.93% at December 31, 1995.
Interest expense increased for the three months ended March 31, 1996 by $614,000
compared to the same period in 1995. The increase in interest expense is
primarily attributable to the increase in interest rates in 1996 as compared to
1995 and the increase in our average interest-bearing deposits to $222,226,000
at March 31, 1996 compared to $201,285,000 at March 31, 1995. The combination
of the reduced net interest margin, increased average earning assets along with
increased higher rates on interest bearing deposits resulted in a decrease in
net interest income of $155,000 for the three months ended March 31, 1996
compared to the same period in 1995.
The allowance for loan losses represents a reserve for potential losses in the
loan portfolio. The adequacy of the allowance for loan losses is evaluated
periodically based on a review of all significant loans, with a particular
emphasis on non-accruing, past due and other loans that management believes
requires attention.
The provision for loan losses is a charge to earnings in the current period to
replenish the allowance for loan losses and maintain it at a level management
has determined to be adequate. The provision for loan losses was $639,000 for
the three months ended March 31, 1996 as compared to $377,000 for the same
period in 1995 representing an increase in the provision of $262,000 or 69.50%.
The increase in provision for loan losses during first quarter 1996 was
necessitated by the Company's continued efforts to address problem loans and to
provide an adequate loan loss reserve for future losses. Net loan charge-offs
represented 121.44% of the provision for loan losses in the first quarter of
1996 as compared to 42.17% in the first quarter of 1995. Charge-offs in the
first quarter of 1996 are attributable to weakness in the local market and in
particular to the agricultural sector which had a difficult year in 1995. Net
loan charge-offs for the three months ended March 31, 1996 represented 0.42% of
average loans outstanding as compared to 0.09% for three months ended March 31,
1995. At March 31, 1996, the allowance for loan losses was 1.94% of total loans
outstanding as compared to an allowance for loan losses of 1.82% at March 31,
1995 and 2.06% at December 31, 1995. The determination of the reserve rests
upon management's judgment about factors affecting loan quality and assumptions
about the economy. Management considers the March 31, 1996 allowance for loan
losses adequate to cover potential losses in the loan portfolio.
15
<PAGE>
Non-interest income consists principally of service charges on deposit accounts.
Service charges on deposit accounts amounted to $390,000 in first quarter, 1996
compared to $381,000 in first quarter, 1995, or an increase of 2.36%. All other
non-interest income increased by $53,000 to $249,000 for first quarter 1996 from
$196,000 for first quarter 1995, or an increase of 27.04%. The increase in
other non-interest income was primarily attributable to a recovery realized on
the sale of other real estate of approximately $51,000 during the quarter.
Non-interest expense decreased by 4.88% to $1,969,000 in three months ended
March 31, 1996 from $2,070,000 in the same period in 1995. Salaries and
employee benefits increased by 2.39% to $1,072,000 in first quarter, 1996 from
$1,047,000 in first quarter 1995. All other non-interest expense decreased by
12.32% to $897,000 in first quarter 1996 from $1,023,000 in first quarter 1995.
This decrease was primarily attributable to a reduction in FDIC insurance
assessment of $113,000 to $27,000 for first quarter 1996 from $140,000 for first
quarter 1995.
Income before taxes decreased by $259,000 to $1,012,000 in first quarter 1996
from $1,271,000 in first quarter 1995. The decrease for the three months ended
March 31, 1996 is primarily attributable to the increased provision for loan
losses and reduced net interest margin. Income taxes as a percentage of income
before taxes decreased by 6.98% to 31.03% in first quarter, 1996 as compared to
33.36% in first quarter, 1995 due to lower net interest income. Income tax
expense decreased 25.94% to $314,000 in first quarter 1996 as compared to
$424,000 in first quarter, 1995.
The Bank of Fitzgerald is operating under a Memorandum of Understanding dating
back to October, 1992 that was revised in October, 1995 due to portions of the
old Memorandum of Understanding not being relevant to the bank's current
situation. The current Memorandum requires that the Bank maintain specified
minimum capital ratios and minimum reserves for loan losses. The Bank of
Fitzgerald was in substantial compliance with the provisions of the Memorandum
of Understanding at March 31, 1996.
LIQUIDITY
- ---------
The Company's goals with respect to liquidity are to insure that sufficient
funds are available to meet current operating requirements, to provide reserves
against unforeseen liquidity requirements. Management continuously reviews the
Company's liquidity position, which is maintained on a basis consistent with
established internal guidelines and the tests and reviews of the various
regulatory authorities. The Company's primary liquidity sources at March 31,
1996 included cash, due from banks, federal funds and short-term investment
securities. The Company also has the ability, on a short-term basis, to borrow
funds from the Federal Reserve System and to invest in federal funds sold from
other financial institutions. The mix of asset maturities contributes to the
company's overall liquidity position.
CERTAIN TRANSACTIONS
- --------------------
In the normal course of business, officers and directors of the Banks, and
certain business organizations and individuals associated with them, maintain a
variety of banking relationships with the bank. Transactions with senior
officers and directors are made on terms comparable to those available to other
bank customers.
16
<PAGE>
BUSINESS
GENERAL
- -------
The Company was organized in 1983 as a bank holding company through the merger
of The Bank of Fitzgerald with a subsidiary of the Company. Since that time,
The Bank of Fitzgerald, which was formed by principals of Colony Bankcorp, Inc.
in 1976, has operated as a wholly-owned subsidiary of the Company. In April
1984, Colony Bankcorp, Inc. acquired Community Bank of Wilcox, and in November
1989, Ashburn Bank became a wholly-owned subsidiary of Colony Bankcorp, Inc.
Colony Bankcorp, Inc. continued its growth with the acquisition of The Bank of
Dodge County in September 1985. In August 1991, Colony Bankcorp, Inc. acquired
The Bank of Worth.
Through its five subsidiary banks, Colony Bankcorp, Inc. operates a full-service
banking business and offers a broad range of retail and commercial banking
services including checking, savings, NOW accounts, money market and time
deposits of various types; loans for business, agriculture, real estate,
personal uses, home improvement and automobiles; credit card; letters of credit;
trust services investment, and discount brokerage services; IRA's, safe deposit
box rentals, bank money orders, and electronic funds transfer services,
including wire transfers and automated teller machines. Each of the Banks is a
state chartered institution whose customer deposits are insured up to applicable
limits by the Federal Deposit Insurance Corporation.
17
<PAGE>
PART II - OTHER INFORMATION
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
- -----------------------------------------
A. Exhibits - None
B. There have been no reports filed on Form 8-K for the quarter ended March
31, 1996.
18
<PAGE>
SIGNATURE
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.
COLONY BANKCORP, INC.
May 8, 1996 /s/ James D. Minix
- --------------------------- --------------------------------
DATE James D. Minix, President and
Chief Executive Officer
/s/ Terry L. Hester
---------------------------------
Terry L. Hester, Executive Vice
President and
Chief Financial Officer
19
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
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<TOTAL-ASSETS> 272,227
<DEPOSITS> 246,178
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<COMMON> 12,911
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