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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
(FEE REQUIRED)
For the Fiscal Year Ended December 31, 1996
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
(NO FEE REQUIRED)
For the Transition Period from _____________________ to ___________________
Commission File Number 0-12436
COLONY BANKCORP, INC.
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(Name of Small Business Issuer in its Charter)
GEORGIA 58-1492391
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(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization Identification No.)
302 SOUTH MAIN STREET, FITZGERALD, GEORGIA 31750
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(Address of Principal Executive Offices) (Zip Code)
Issuer's Telephone Number (912) 426-6002
Securities Registered Under Section 12(b) of the Exchange Act:
Title of Each Class Name of Each Exchange on Which Registered
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NONE
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Securities Registered Under Section 12(g) of the Exchange Act:
COMMON STOCK, $10.00 PAR VALUE
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(Title of Class)
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(Title of Class)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. [X] Yes [ ] No
Check if there is no disclosure of delinquent filers in response to Items 405
of Regulation S-B in this form, and no disclosure will be contained, to the best
of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [X]
State issuer's revenues for its most recent fiscal year: $29,173,718 for year
ended December 31, 1996.
There is no established market for the common stock of the registrant;
therefore, the aggregate market value of the voting stock held by nonaffiliates
of the registrant is not known.
NOTE: If determining whether a person is an affiliate with involve an
unreasonable effort and expense, the issuer may calculate the aggregate market
value of the common equity held by nonaffiliates on the basis of reasonable
assumptions, if the assumptions are stated.
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date.
1,448,842 shares of $10.00 par value common stock as of March 12, 1996.
DOCUMENTS INCORPORATED BY REFERENCE
If the following documents are incorporated by reference, briefly describe
them and identify the part of the Form 10-KSB (e.g., Part I, Part II, etc.) into
which the document is incorporated: (1) any annual report to security holders;
(2) any proxy or information statement; and (3) any prospectus filed pursuant
to Rule 424(b) or (c) of the Securities Act of 1933 ("Securities Act"). The
listed documents should be clearly described for identification purposes (e.g.,
annual report to security holders for fiscal year ended December 24, 1990).
See Attached
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Transitional Small Business Disclosure Format (Check one): [ ] Yes [X] No
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DOCUMENTS INCORPORATED BY REFERENCE
LOCATION IN FORM 10-KSB INCORPORATED DOCUMENT
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PART I
Item 3 - Legal Proceedings Page 5 of the Company's Definitive
Proxy Statement dated April 2, 1997,
in connection with its Annual
Meeting to be held on
April 22, 1997.
PART III
Item 9 - Directors, Executive Pages 3 and 4 of the Company's
Officers, Promoters and Control Definitive Proxy Statement dated
Persons; Compliance with Section April 2, 1997, in connection with
16(a) of the Exchange Act its Annual Meeting to be held on
April 22, 1997.
Item 10 - Executive Compensation Pages 6 and 7 of the Company's
Definitive Proxy Statement dated
April 2, 1997, in connection with
its Annual Meeting to be held on
April 22, 1997.
Item 11 - Security Ownership of Certain Pages 1 and 2 of the Company's
Beneficial Owners and Management Definitive Proxy Statement dated
April 2, 1997, in connection with
its Annual Meeting to be held on
April 22, 1997.
Item 12 - Certain Relationships and Pages 4 and 5 of the Company's
Related Transactions Definitive Proxy Statement dated
April 2, 1997, in connection with
its Annual Meeting to be held on
April 22, 1997.
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PART I
Item 1
BUSINESS OF THE COMPANY AND SUBSIDIARY BANKS
COLONY BANKCORP, INC.
Colony Bankcorp, Inc. (the "Company" or "Colony") is a Georgia business
corporation which was incorporated on November 8, 1982. The Company was
organized for the purpose of operating as a bank-holding company under the
Federal Bank-Holding Company Act of 1956, as amended, and the bank-holding
company laws of Georgia (Georgia Laws 1976, p. 168, et. seq.). On
July 22, 1983, the Company, after obtaining the requisite regulatory approvals,
acquired 100 percent of the issued and outstanding common stock of The Bank of
Fitzgerald, Fitzgerald, Georgia, through the merger of the Bank with a
subsidiary of the Company which was created for the purpose of organizing the
Bank into a one-bank holding company. Since that time, The Bank of Fitzgerald
has operated as a wholly-owned subsidiary of the Company.
On April 30, 1984, Colony, with the prior approval of the Federal Reserve Bank
of Atlanta and the Georgia Department of Banking and Finance, acquired 100
percent of the issued and outstanding common stock of Community Bank of Wilcox
(formerly Pitts Banking Company), Pitts, Wilcox County, Georgia. As part of
that transaction, Colony issued an additional 17,872 shares of its $10.00 par
value common stock, all of which was exchanged with the holders of shares of
common stock of Pitts Banking Company for 100 percent of the 250 issued and
outstanding shares of common stock of Pitts Banking Company. Since the date of
acquisition, the Bank has operated as a wholly-owned subsidiary of the Company.
On November 1, 1984, after obtaining the requisite regulatory approvals, Colony
acquired 100 percent of the issued and outstanding common stock of Ashburn Bank,
Ashburn, Turner County, Georgia, for a combination of cash and interest-bearing
promissory notes. Since the date of acquisition, Ashburn Bank has operated as a
wholly-owned subsidiary of the Company.
On September 30, 1985, after obtaining the requisite regulatory approvals, the
Company acquired 100 percent of the issued and outstanding common stock of The
Bank of Dodge County, Chester, Dodge County, Georgia. The stock was acquired in
exchange for the issuance of 3,500 shares of common stock of Colony. Since the
date of its acquisition, The Bank of Dodge County has operated as a wholly-owned
subsidiary of the Company.
Effective July 31, 1991, the Company acquired all of the outstanding common
stock of The Bank of Worth (formerly Worth Federal Savings and Loan Association)
in exchange for cash and 7,661 of the Company's common stock for an aggregate
purchase price of approximately $718,000. The Bank of Worth has operated as a
wholly-owned subsidiary of the Company.
On November 8, 1996, Colony organized Colony Management Services, Inc. to
provide support services to each subsidiary. Services provided include loan and
compliance review, internal audit and data processing.
On November 30, 1996, the Company acquired Broxton State Bank in a business
combination accounted for as a pooling of interests. Broxton State Bank became
a wholly-owned subsidiary of the Company through the exchange of 157,735 shares
of the Company's common stock for all of the outstanding stock of Broxton State
Bank. All financial information for 1996 presented in this document is based on
the assumption that the companies were combined for the full year, and financial
information presented for prior years has been restated to give effect to the
combination.
1
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PART I (CONTINUED)
Item 1
The Company conducts all of its operations through its bank subsidiaries. A
brief description of each Bank's history and business operations is discussed
below.
THE BANK OF FITZGERALD
HISTORY AND BUSINESS OF THE BANK
The Bank of Fitzgerald is a state banking institution chartered under the laws
of Georgia on November 10, 1975. Since opening on April 15, 1976, the Bank has
continued a general banking business and presently serves its customers from two
locations, the main office in Fitzgerald, Georgia at 302 South Main Street and a
full-service branch located on the South Dixie Highway.
The Bank operates a full-service banking business and engages in a broad range
of commercial banking activities, including accepting customary types of demand
and time deposits; making individual, consumer, commercial and installment
loans; money transfers; safe deposit services; and making investments in United
States Government and municipal securities. The Bank does not offer trust
services other than acting as custodian of individual retirement accounts.
The data processing work of the Bank is processed by Colony Management Services,
Inc., a wholly-owned subsidiary of Colony Bankcorp, Inc.
The Bank of Fitzgerald acts as an agent for Visa Card and MasterCard through The
Bankers Bank which allows merchants to accept Visa Card and MasterCard and
deposit the charge tickets in their accounts with the Bank.
The Bank also offers its customers a variety of checking and savings accounts.
The installment loan department makes both direct consumer loans and also
purchases retail installment contracts from local automobile dealers and other
sellers of consumer goods.
The Bank serves the residents of Fitzgerald and surrounding areas of Ben Hill
County which has a population of approximately 16,000 people. Manufacturing
facilities located in Ben Hill County employ many people and are the most
significant part of the local economy. Ben Hill County also has a large
agricultural industry producing timber and row crops. Major row crops are
peanuts, tobacco, soybeans and corn.
2
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PART I (CONTINUED)
Item 1
A history of the Bank's financial position for fiscal years ended 1996, 1995 and
1994 is as follows:
1996 1995 1994
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Total Assets $95,769,043 $100,087,536 $89,813,598
Total Deposits 86,733,163 91,843,089 83,288,306
Total Stockholders' Equity 8,079,226 7,570,010 6,002,033
Net Income (Loss) 528,181 (106,370) 544,178
Number of Issued and Outstanding
Shares 90,000 90,000 90,000
Book Value Per Share $ 89.77 $ 84.11 $ 66.69
Net Income (Loss) Per Share 5.87 (1.18) 6.05
The Bank's main offices are housed in a building located in Fitzgerald, Georgia.
The main offices, which are owned by the Bank, consist of approximately 13,000
square fee, three drive-in windows and an adjacent parking lot. Banking
operations also are conducted from the southside branch which is located at
South Dixie Highway, Fitzgerald, Georgia. This branch is owned by the Bank and
has been in continuous operation since it opened in December 1977. The branch
is a single story building with approximately 850 square feet and is operated
with three drive-in windows.
COMPETITION
The banking business in Ben Hill County is highly competitive. Community
Banking Company, a state-chartered financial institution, opened for business in
1996 and occupies the former Bank South banking office on Main Street in
Fitzgerald. In addition, the Bank competes primarily with three other
commercial banks operating in Ben Hill County. Additionally, the Bank competes
with one credit union located in the area and, to a lesser extent, insurance
companies and governmental agencies. The banking industry is also experiencing
increasing competition for deposits from less traditional sources such as money
market funds. The Bank also offers "NOW" accounts, individual retirement
accounts, simplified pension plans, KEOGH plans and custodial accounts for
minors.
CORRESPONDENTS
As of December 31, 1996, the Bank had correspondent relationships with five
other banks. The Bank's principal correspondent is The Bankers Bank located in
Atlanta, Georgia. These correspondent banks provide certain services to the
Bank such as investing its excess funds, processing checks and other items,
buying and selling federal funds, handling money fund transfers and exchanges,
shipping coins and currency, providing security and safekeeping of funds and
other valuable items, handling loan participations and furnishing management
investment advice on the Bank's securities portfolio.
3
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PART I (CONTINUED)
Item 1
ASHBURN BANK
HISTORY AND BUSINESS OF THE BANK
Ashburn Bank was chartered as a state commercial bank in 1900 and currently
operates under the Financial Institutions Code of Georgia. The Bank's deposits
are insured up to $100,000 per account by the Federal Deposit Insurance
Corporation. The Bank conducts business at the offices located at 515 East
Washington, 416 East Washington and 250 East Washington Streets in Ashburn,
Turner County, Georgia and at 1553 U. S. Highway 19 South in Leesburg, Lee
County, Georgia. The Bank's business consists of (1) the acceptance of demand,
savings and time deposits; (2) the making of loans to consumers, business and
other institutions; (3) investment of excess funds and sale of federal funds,
U.S. Treasury obligations and state, county and municipal bonds; and (4) certain
other miscellaneous financial services usually handled for customers by
commercial banks. The Bank does little mortgage lending and it does not offer
trust services. It acts as an agent for Visa Card and MasterCard through The
Bankers Bank.
A history of the Bank's financial position for fiscal years ended 1996, 1995 and
1994 is as follows:
1996 1995 1994
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Total Assets $85,665,407 $83,122,966 $75,754,843
Total Deposits 75,906,085 74,665,649 68,556,245
Total Stockholders' Equity 8,294,312 7,794,194 6,751,901
Net Income 1,420,284 1,404,897 1,078,555
Number of Issued and Outstanding
Shares 50,000 50,000 50,000
Book Value Per Share $ 165.89 $ 155.88 $ 135.04
Net Income Per Share 28.41 28.10 21.57
BANKING FACILITIES
The Bank's main office is located at 515 East Washington Street in Ashburn and
consists of a building of approximately 13,000 square feet of office and banking
space with an adjacent parking lot. One branch facility is located across the
street from the main office and consists of a single story building with
approximately 850 square feet and is operated with three drive-in windows. A
second branch facility is located at 250 East Washington Street and consists of
a single story building of approximately 3,000 square feet. During 1996, the
Bank entered into a 5-year lease agreement with Winn-Dixie Stores, Inc. to
operate a retail banking facility at Winn Dixie's Leesburg location. The office
consists of 350 square feet and includes 3 teller positions, a new accounts area
and a private office. All other occupied premises are owned by the Bank.
4
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PART I (CONTINUED)
Item 1
COMPETITION
The banking business is highly competitive. The Bank competes in Turner County
primarily with Community National Bank which operates out of one facility in
Ashburn, Georgia. Ashburn Bank is the larger of the two banks. Community
National Bank, a national bank chartered by the Office of the Comptroller of the
Currency, opened for business during 1991. The Bank also competes with other
financial institutions, including credit unions and finance companies and, to a
lesser extent, with insurance companies and certain governmental agencies. The
banking industry is also experiencing increased competition for deposits from
less traditional sources such as money market mutual funds.
CORRESPONDENTS
Ashburn Bank has correspondent relationships with the following banks: The
Bankers Bank in Atlanta, Georgia; SouthTrust Bank of Georgia, N.A. in Atlanta,
Georgia; Regions Bank in Gainesville, Georgia; The Bank of Fitzgerald in
Fitzgerald, Georgia; AMSouth Bank of Alabama in Birmingham, Alabama; and the
Federal Home Loan Bank in Atlanta, Georgia. The correspondent relationships
facilitate the transactions of business by means of loans, letters of credit,
acceptances, collections, exchange services and data processing. As
compensation for these services, the Bank maintains balances with its
correspondents in noninterest-bearing accounts.
COMMUNITY BANK OF WILCOX
HISTORY AND BUSINESS OF THE BANK
The Bank was chartered on June 2, 1906 under the name "Pitts Banking Company."
The name of the Bank subsequently was changed to Community Bank of Wilcox on
June 1, 1991 and currently operates under the Financial Institutions Code of
Georgia. The Bank's deposits are insured to $100,000 per account by the Federal
Deposit Insurance Corporation. The Bank conducts business at locations in Pitts
and Rochelle in Wilcox County, Georgia. The Bank's business consists of: (1)
the acceptance of demand, savings and time deposits; (2) the making of loans to
consumers, business and other institutions; (3) investment of excess funds and
sale of federal funds, U.S. Treasury obligations and state, county and municipal
bonds; and (4) certain other miscellaneous financial services usually handled
for customers by commercial banks. The Bank does little mortgage lending and it
does not offer trust services.
5
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PART I (CONTINUED)
Item 1
A history of the Bank's financial position for fiscal years ended 1996, 1995 and
1994 is as follows:
1996 1995 1994
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Total Assets $24,352,566 $23,824,695 $22,354,033
Total Deposits 22,169,442 21,749,447 19,765,264
Total Stockholders' Equity 2,087,243 1,959,859 1,728,373
Net Income 327,183 402,013 392,042
Number of Issued and Outstanding
Shares 250 250 250
Book Value Per Share $ 8,348.97 $ 7,839.44 $ 6,913.49
Net Income Per Share 1,308.73 1,608.05 1,568.17
BANKING FACILITIES
The Bank operates out of two locations at 105 South Eighth Street, Pitts,
Georgia and at Highway 280, Rochelle, Georgia, both of which are in Wilcox
County. The Pitts office consists of a building of approximately 2,200 square
feet of usable office and banking space which it owns. The facility contains
one drive-in window and three teller windows. The Rochelle office, which opened
in August 1989, consists of a building of approximately 5,000 square feet of
usable office and banking space, which is owned by the Company.
COMPETITION
The banking business is highly competitive. The Bank competes in Wilcox County
primarily with four commercial banks and one savings and loan institution. In
addition, the Bank competes with other financial institutions, including credit
unions and finance companies and, to a lesser extent, insurance companies and
certain governmental agencies. The banking industry is also experiencing
increased competition for deposits from less traditional sources such as money
market mutual funds.
CORRESPONDENTS
The Bank has correspondent relationships with the following banks: The Bankers
Bank in Atlanta, Georgia; SouthTrust Bank, N.A. in Atlanta, Georgia; AMSouth
Bank of Alabama in Birmingham, Alabama; and The Bank of Fitzgerald in
Fitzgerald, Georgia. The correspondent relationships facilitate the
transactions of business by means of loans, letters of credit, acceptances,
collections, exchange services and data processing. As compensation for these
services, the Bank maintains balances with its correspondents in noninterest-
bearing accounts.
6
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PART I (CONTINUED)
Item 1
THE BANK OF DODGE COUNTY
HISTORY AND BUSINESS OF THE BANK
The Bank was chartered on June 14, 1966 under the name "Bank of Chester." The
name of the Bank subsequently was changed to The Bank of Dodge County on April
15, 1983 and currently operates under the Financial Institutions Code of
Georgia. The Bank's deposits are insured up to $100,000 per account by the
Federal Deposit Insurance Corporation. The Bank's business consists of: (1)
the acceptance of demand, savings and time deposits; (2) the making of loans to
consumers, business and other institutions; (3) investment of excess funds in
the sale of federal funds, U.S. Treasury obligations and state, county and
municipal bonds; and (4) certain other miscellaneous financial services usually
handled for customers by commercial banks. The Bank does little mortgage lending
and it does not offer trust services.
A history of the Bank's financial position for fiscal years ended 1996, 1995 and
1994 is as follows:
1996 1995 1994
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Total Assets $44,528,215 $34,452,835 $28,317,199
Total Deposits 39,152,059 31,608,634 25,989,631
Total Stockholders' Equity 3,002,406 2,644,692 2,240,737
Net Income 414,550 241,082 219,104
Number of Issued and Outstanding
Shares 1,750 1,750 1,750
Book Value Per Share $ 1,715.66 $ 1,511.25 $ 1,280.42
Net Income Per Share 236.89 137.76 125.20
BANKING FACILITIES
The Bank's main office is located at 210 Oak Street in Eastman, Dodge County,
Georgia and consists of a building of approximately 11,000 square feet of office
and banking space with an adjacent parking lot and is operated with three drive-
in windows. The branch facility is located in Chester, Dodge County, Georgia
and consists of a building with approximately 2,700 square feet of office and
banking space and an adjacent parking lot. The Bank owns all of the premises
which it occupies.
COMPETITION
The banking business is highly competitive. The Bank competes in the Dodge
County area with two other banks. In addition, the Bank competes with other
financial institutions, including credit unions and finance companies and, to a
lesser extent, insurance companies and certain governmental agencies. The
banking industry is also experiencing increased competition for deposits from
less traditional sources such as money market mutual funds.
7
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PART I (CONTINUED)
Item 1
CORRESPONDENTS
The Bank has correspondent relationships with the following banks: The Bankers
Bank in Atlanta, Georgia; SouthTrust Bank of Georgia, N.A. in Atlanta, Georgia;
Compass Bank in Birmingham, Alabama; The Federal Home Loan Bank in Atlanta,
Georgia; and The Bank of Fitzgerald in Fitzgerald, Georgia. The correspondent
relationships facilitate the transactions of business by means of loans, letters
of credit, acceptances, collections, exchange services and data processing. As
compensation for these services, the Bank maintains balances with its
correspondents in noninterest-bearing accounts.
THE BANK OF WORTH
The Bank of Worth operated as a savings and loan stock association until it was
acquired by the Company on July 31, 1991 at which time the association changed
its name to The Bank of Worth and became a state-chartered commercial bank. The
Bank conducts business at its offices located at 402 West Franklin Street,
Sylvester, Worth County, Georgia. The Bank's business consists of: (1) the
acceptance of demand, savings and time deposits; (2) the making of loans to
consumers, businesses and other institutions; (3) investment of excess funds and
sale of federal funds, U.S. Treasury obligations and state, county and municipal
bonds; and (4) certain other miscellaneous financial services usually handled
for customers by commercial banks. The Bank's deposits are insured up to
$100,000 per account by the Federal Deposit Insurance Corporation. The Bank's
loan portfolio is heavily concentrated in mortgage loans due to the fact that it
was previously a savings and loan. The Bank does not offer trust services. It
acts as an agent for Visa Card and MasterCard through The Bankers Bank.
A history of the Bank's financial position for fiscal years ended 1996, 1995 and
1994 is as follows:
1996 1995 1994
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Total Assets $44,924,010 $39,171,254 $35,726,814
Total Deposits 41,350,280 35,865,671 33,061,690
Total Stockholders' Equity 3,237,175 3,028,498 2,491,770
Net Income 433,559 480,382 329,614
Number of Issued and Outstanding
Shares 95,790 95,790 95,790
Book Value Per Share $ 33.79 $ 31.62 $ 26.01
Net Income Per Share 4.53 5.02 3.44
BANKING FACILITIES
The Bank's offices are housed in a building located in Sylvester, Georgia. The
building, which is owned by the Bank, consists of approximately 13,000 square
feet, a drive-in window and an adjacent parking lot.
8
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PART I (CONTINUED)
Item 1
COMPETITION
The banking business in Worth County is highly competitive. The Bank competes
primarily with two other commercial banks operating in Worth County.
Additionally, the Bank competes with credit unions of employers located in the
area and, to a lesser extent, insurance companies and governmental agencies.
The banking industry is also experiencing increasing competition for deposits
from less traditional sources such as money market funds.
CORRESPONDENTS
As of December 31, 1996, the Bank had correspondent relationships with four
other banks. The Bank's principal correspondent is The Bankers Bank located in
Atlanta, Georgia. These correspondent banks provide certain services to the Bank
such as investing its excess funds, processing checks and other items, buying
and selling federal funds, handling money fund transfers and exchanges, shipping
coins and currency, providing security and safekeeping of funds and other
valuable items, handling loan participations and furnishing management
investment advice on the Bank's securities portfolio.
BROXTON STATE BANK
HISTORY AND BUSINESS OF THE BANK
Broxton State Bank was chartered under the laws of Georgia on August 4, 1966 and
opened for business on September 1, 1966, having absorbed "Citizens Bank," a
private, unincorporated bank. It has conducted a general banking business from
a single location at 401 North Alabama Street in Broxton, Georgia since that
time.
The Bank is a full-service bank offering a wide variety of banking services
targeted at all sectors of the Bank's primary market area. The Bank offers
customary types of demand, savings, time and individual retirement accounts;
installment, commercial and real estate loans; home mortgages and personal
lines-of-credit; Visa and Master Card services through its correspondent,
Columbus Bank & Trust; safe deposit and night depository services; cashier's
checks, money orders, travelers checks, wire transfers and various other
services that can be tailored to the customer's needs. The Bank does not offer
trust services at this time.
FiServe, Inc. (formerly Basis Information Technologies, which was wholly-owned
by First Financial Management Corporation) provides data processing services for
the Bank. SunTrust Bank Atlanta, Georgia supplies data processing services for
the Bank's bond accounting portfolio. The Bank utilizes the services of The
Bankers Bank, Atlanta, Georgia for all clearing and overnight federal funds
investments through a sweep investment account.
The Bank serves the residents of Coffee County, Georgia, which has a population
of approximately 32,000.
9
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PART I (CONTINUED)
Item 1
A history of the Bank's financial position for fiscal years ended 1996, 1995 and
1994 is as follows:
1996 1995 1994
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Total Assets $23,060,340 $20,679,814 $19,659,129
Total Deposits 20,540,352 18,402,955 17,710,606
Total Stockholders' Equity 2,218,141 2,015,104 1,707,041
Net Income 193,516 231,605 201,812
Number of Issued and Outstanding
Shares 50,730 50,730 50,730
Book Value Per Share $ 43.72 $ 39.72 $ 33.65
Net Income Per Share 3.81 4.57 3.98
BANKING FACILITIES
The Bank has only one banking office located at 401 North Alabama Street,
Broxton, Georgia. The building consists of approximately 5,000 square feet of
space. The building is equipped with four alarm-equipped vaults, one for safe-
deposit boxes and cash storage, one for night depository service and two for
record storage. The building has two drive-in systems, one commercial drawer
and one pneumatic tube system.
COMPETITION
The banking business in Coffee County is highly competitive. Although Broxton
State Bank is the only bank in Broxton, there are six other banks and one credit
union with offices in Douglas, Georgia, approximately eight miles from Broxton.
The banking industry is also experiencing increased competition for deposits
from less traditional sources such as money market mutual funds.
CORRESPONDENTS
The Bank has correspondent relationships with the following banks: NationsBank,
Atlanta, Georgia; SunTrust Bank, Atlanta, Georgia; The Bankers Bank, Atlanta,
Georgia; and Columbus Bank & Trust, Columbus, Georgia. The correspondent
relationships facilitate the transactions of business by means of loans,
letters-of-credit, acceptances, collections, exchange services and data
processing. As compensation for these services, the Bank maintains balances
with its correspondents in noninterest-bearing accounts.
10
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PART I (CONTINUED)
Item 1
EMPLOYEES
As of December 31, 1995, Colony Bankcorp, Inc. and its subsidiaries employed 134
full-time employees and 12 part-time employees. Colony considers its
relationship with its employees to be excellent.
The subsidiary banks have noncontributory profit-sharing plans covering all
employees subject to certain minimum age and service requirements. All Banks
made contributions for all eligible employees in 1996. In addition, Colony
Bankcorp, Inc. and its subsidiaries maintain a comprehensive employee benefit
program providing, among other benefits, hospitalization, major medical
insurance and life insurance. Management considers these benefits to be
competitive with those offered by other financial institutions in south Georgia.
Colony's employees are not represented by any collective bargaining group.
SUPERVISION AND REGULATION OF COLONY BANKCORP, INC.
Colony is a bank holding company within the meaning of the Federal Bank Holding
Company Act of 1956, as amended (the "Bank Holding Company Act"). As a bank
holding company, Colony is required to file with the Board of Governors of the
Federal Reserve System (the "Board") an annual report and such additional
information as the Board may require pursuant to the Bank Holding Company Act.
The Board may also make examinations of Colony and each of its subsidiaries. In
addition, a bank holding company is required to obtain approval prior to
acquiring, directly or indirectly, ownership or control of a bank. A bank
holding company and its subsidiaries are also prohibited from acquiring any
voting shares of, or interest in, any banks located outside the state in which
the operations of the bank holding company's subsidiaries are located, unless
the acquisition is specifically authorized by the statutes of the state in which
the target is located. Several southeastern states, including Georgia, have
enacted reciprocal legislation that authorizes interstate acquisitions of
banking organizations by bank holding companies within the southeastern states.
As a result of this legislation, the Company may become a candidate for
acquisition by banking organizations located in those states that have enacted
reciprocal legislation. In addition, the entry of large bank holding companies
from those states into the market areas serviced by the Company would probably
result in increased competition.
The Bank Holding Company Act also prohibits a bank holding company, with certain
exceptions, from acquiring more than 5 percent of the voting shares of any
company that is not a bank and from engaging in any business other than banking
or managing or controlling banks and other subsidiaries authorized by the Bank
Holding Company Act or furnishing services to, or performing services for, its
subsidiaries without the prior approval of the Board. The Board is authorized
to approve, among other things, the ownership of shares by a bank holding
company in any company the activities of which it has determined to be so
closely related to banking or to managing or controlling banks as to be a proper
incident thereto. Notice to and review by the Board of such activities would be
necessary before the Company could engage in such activities. The Board is
empowered to differentiate between activities that are initiated de novo by a
bank holding company or a subsidiary and activities commenced by acquisition of
a going concern.
11
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PART I (CONTINUED)
Item 1
The Company is also a bank holding company within the meaning of the Georgia
Bank Holding Company Act, which provides that, without the approval of the
Commissioner of the Georgia Department of Banking and Finance (the
"Commissioner"), it is unlawful (i) for any bank holding company to acquire
direct or indirect ownership or control of more than 5 percent of the voting
shares of any bank; (ii) for any bank holding company or subsidiary thereof,
other than a bank, to acquire all or substantially all of the assets of a bank;
or (iii) for any bank holding company to merge or consolidate with any other
bank holding company. It is unlawful for any bank holding company to acquire
direct or indirect ownership or control of more than 5 percent of the voting
shares of any bank unless such bank has been in existence and continuously
operating as a bank for a period of five years or more prior to the date of
application to the Commissioner for approval of such acquisition.
While the Company is not presently subject to any regulatory restrictions on
dividends, the Company's ability to pay dividends will depend to a large extent
on the amount of dividends paid by its subsidiaries. The Banks are subject to
regulatory restrictions on the payment of dividends. See Supervision and
Regulation of the Banks below.
SUPERVISION AND REGULATION OF THE BANKS
Federal banking regulations applicable to all depository financial institutions,
among other things, (i) provide federal bank regulatory agencies with powers to
prevent unsafe and unsound banking practices; (ii) restrict preferential loans
by banks to "insiders" of banks; (iii) require banks to keep information on
loans to major stockholders and executive officers; and (iv) bar certain
director and officer interlocks between financial institutions.
Colony is an affiliate of the banks under the Federal Reserve Act, which imposes
restrictions on loans to the Company by the Banks, or investments by the Banks
in securities of the Company and on the use of such securities as collateral
security for loans by the Banks to any borrower. Colony is also subject to
certain restrictions with respect to engaging in the business of issuing,
underwriting and distributing securities.
Bank holding companies may be compelled by bank regulatory authorities to invest
additional capital in the event their banks experience either significant loan
losses or rapid growth of loans or deposits. In addition, Colony may also be
required to provide additional capital to any additional banks it acquires as a
condition to obtaining the approvals and consents of regulatory authorities in
connection with such acquisitions.
The Banks are examined and regulated by the Department of Banking and Finance of
the Sate of Georgia. Pursuant to regulations adopted by that authority, the
Banks must each have the approval of the Commissioner to pay cash dividends,
unless at the time of such payment (i) the total classified assets at the most
recent examination of such Bank do not exceed 80 percent of the equity capital
as reflected by such examination; (ii) the aggregate amount of dividends
declared or anticipated to be declared in the calendar year does not exceed 50
percent of the net profits, after taxes but before dividends, for the previous
calendar year; and (iii) the ratio of equity capital to adjusted total assets is
not less than 6 percent.
12
<PAGE>
PART I (CONTINUED)
Item 1
The Banks are members of the Federal Deposit Insurance Corporation (the "FDIC"),
which currently insures the deposits of each member bank up to a maximum of
$100,000 per account. For this protection, each Bank pays a semiannual
statutory assessment and is subject to the rules and regulations of the FDIC.
The FDIC has the authority to prevent the continuance or development of unsound
and unsafe banking practices. The FDIC is also authorized to approve
conversions, mergers, consolidations and assumption of deposit liability
transactions between insured banks and uninsured banks or institutions, and to
prevent capital or surplus diminution in such transactions where the resulting,
continuing or assumed bank is an insured nonmember state bank.
MONETARY POLICY
Banking is a business that depends on interest rate differentials. In general,
the difference between the interest rates paid by the Banks on their deposits
and other borrowings and the interest rate received on loans extended to their
customers and on securities held in their portfolios comprises the major portion
of the Banks' earnings.
The earnings and growth of the Banks and of Colony are affected not only by
general economic conditions, both domestic and foreign, but also by the monetary
and fiscal policies of the United States and its agencies, particularly the
Board. The Board can and does implement national monetary policy, such as
seeking to curb inflation and combat recession, by its open market operations in
the United States government securities, limitations upon savings and time
deposit interest rates, adjustments in the amount of industry reserves that
banks and other financial institutions are required to maintain and adjustments
to the discount rates applicable to borrowings by banks from the Federal Reserve
System. In view of changing conditions in the national economy and in the money
markets, as well as the effect of actions by monetary and fiscal authorities,
including the Federal Reserve, no prediction can be made as to possible future
changes in interest rates, deposit levels, loan demand or the business and
earnings of the Banks.
RECENT REGULATORY DEVELOPMENTS
On August 8, 1995, the FDIC revised its regulations on insurance assessments to
establish a revised assessment rate schedule of 4 to 31 cents per $100 of
deposits in replacement of the then existing schedule of 23 to 31 cents per $100
of deposits for institutions whose deposits are subject to assessment by the
Bank Insurance Fund ("BIF"). The revised BIF schedule became effective on
June 1, 1995. Assessments collected at the previous assessment schedule that
exceeded the amount due under the revised schedule were refunded, including
interest, from the effective date of the revised schedule. On November 14,
1995, the FDIC further reduced the rate structure for BIF by 4 cents per $100 of
deposits, starting in January 1996. As a result, the highest rated institutions
will pay only the statutory annual minimum rate of $2,000 for FDIC insurance.
The rates for all other institutions will be reduced by 4 cents per $100 as
well, leaving a premium range of 3 to 27 cents per $100 instead of the previous
7 to 31 cents per $100 for such institutions.
13
<PAGE>
PART I (CONTINUED)
Item 1
The deposits of each of Colony's subsidiary banks are insured by the Federal
Deposit Insurance Corporation to the extent authorized by law. Each subsidiary
bank is assessed a premium by the FDIC for that coverage and the FDIC has
developed a risk-based system to determine a bank's assessment rate. The risk-
based system places institutions into one of nine risk categories using a two-
step process based first on capital ratios and then on other supervisory
information, and the insurance premiums for each commercial bank depends upon
the level of capitalization and other supervisory concerns. For the year ended
December 31, 1996, the assessment rate of all subsidiary banks of Colony except
The Bank of Fitzgerald and The Bank of Worth was the minimum assessment of
$2,000; the assessment rate of The Bank of Fitzgerald is presently .03 percent
of its domestic deposits. However, the FDIC is authorized to increase or
decrease the assessment rates by a maximum of five basis points without engaging
in a notice-and-comment rule-making proceeding, and no assurance can be
furnished that the assessment rates of the subsidiary banks of Colony will not
be increased by that five-basis point maximum in the future, or in excess of
that amount with appropriate notice by the FDIC.
In 1996, the FDIC issued The Deposit Insurance Funds Act of 1996 (Funds Act)
requiring the FDIC to impose a one-time special assessment on Savings
Association Insurance Fund (SAIF) assessable deposits held by institutions as of
March 31, 1995. The amount of the special assessment was based upon the August
31, 1996 SAIF balance and insured deposit data reported in the March 31, 1996
call reports. As a member of the SAIF, The Bank of Worth was assessed $240,000
in 1996.
On September 15, 1992, the FDIC approved final regulations adopting the risk-
related deposit insurance system that was proposed in May 1992. Under the final
risk-related insurance regulations, each insured depository institution will be
assigned to one of three risk calculations: "well-capitalized," "adequately
capitalized" or "less than adequately capitalized," as defined in regulations to
be promulgated by the federal bank regulatory agencies pursuant to FDICIA.
The Board and the FDIC approved new minimum capital requirements for banks and
bank holding companies based in part on the degrees of risk to which the
institution's assets are subject. Under the new rules, Colony and its
subsidiary banks will be required to maintain a specified minimum ratio of
"qualifying" capital to risk-weighted assets. The ratio is calculated by
dividing adjusted qualifying capital by a weighted risk asset base. At least 50
percent of the institution's qualifying capital must be "Core" or "Tier 1"
capital. The balance may be "Supplementary" or "Tier 2" capital. For purposes
of the rules, a bank holding company's Tier 1 capital is essentially equal to
common stockholders' equity, including retained earnings, plus a certain amount
of perpetual preferred stock, less intangible assets; Tier 2 capital includes
the excess of any perpetual preferred stock not included in Tier 1 capital,
mandatory convertible securities, subordinated debt and general reserves for
loan and lease losses limited to 1.25 percent of total risk-weighted assets.
The weighted risk asset base is equal to the sum of the aggregate dollar value
of assets and certain off balance sheet items (such as currency or interest rate
swaps) in each of five separate risk categories, multiplied by a weight assigned
to each specific asset category. After the items in each category have been
totaled and multiplied by the category's risk factor, the total of the adjusted
qualifying capital base is divided by the weighted risk assets to derive a
ratio. A minimum ratio of 4.0 percent of Tier 1 or Core Capital is required and
a minimum ratio of 8 percent of total risk-based capital is required. The
capital regulations also require the Bank to maintain a minimum leverage ratio
of 4 percent. Colony and its subsidiary banks met all regulatory capital
requirements as of December 31, 1996 as discussed in Management's Discussion and
Analysis of Financial Condition and Results of Operations.
14
<PAGE>
PART I (CONTINUED)
Item 1
Each Bank also met its individual regulatory capital requirements as of
December 31, 1995. Under terms of a Memorandum of Understanding dated October
20, 1992 and revised October 24, 1995, The Bank of Fitzgerald is required to
maintain a Tier 1 capital/average total assets ratio of not less than 7.25
percent.
The United States Congress and the Georgia General Assembly have periodically
considered and adopted legislation that has resulted in, and could further
result in, deregulation of both banks and other financial institutions. Such
legislation could modify or eliminate geographic restrictions on banks and bank
holding companies and current prohibitions against banks engaging in certain
nonbanking activities. Such legislative changes could place the Company in more
direct competition with other financial institutions, including mutual funds,
securities brokerage firms, insurance companies and investment banking firms.
The effect of any such legislation on the business of the Company cannot be
accurately predicted. The Company cannot predict what other legislation might
be enacted or what other regulations might be adopted, or if enacted or adopted,
the effect thereof.
EXECUTIVE OFFICER
The following table sets forth certain information with respect to the executive
officer of the Registrant.
NAME (AGE) POSITION WITH THE REGISTRANT OFFICER SINCE
- ------------------- ---------------------------- -------------
James D. Minix (54) President and Chief Executive 1994
Officer and Director
The officer serves at the discretion of the board of directors.
Prior to 1994, Mr. Minix served as president of The Bank of Fitzgerald from
January 1993 through June 1994 and prior to that time, Mr. Minix served as
president of Ashburn Bank from February 1990 through December 1992.
Item 2
DESCRIPTION OF PROPERTY
The principal properties of the Registrant consist of the properties of the
Banks. For a description of the properties of the Banks, see "Item 1 - Business
of the Company and Subsidiary Banks" included elsewhere in this Annual Report.
Item 3
LEGAL PROCEEDINGS
Incorporated herein by reference to page 5 of the Company's Definitive Proxy
Statement for Annual Meeting of Stockholders to be Held April 22, 1997, which is
included as Exhibit 99(a) of this annual report on Form 10-KSB.
15
<PAGE>
Item 4
SUBMISSION OF MATTERS TO A VOTE OF STOCKHOLDERS
No matters were submitted to a vote of the Registrant's stockholders during the
fourth quarter of 1996.
PART II
Item 5
MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
(a) There currently is no public market for the common stock of the Registrant.
(b) As of March 12, 1997, there were approximately 903 holders of record of the
Registrant's common stock.
(c) The Registrant paid an annual dividend on its common stock of $.275 per
share for a total of $399,164 for fiscal 1996.
PART II
Item 6
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
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
1996, the Company was successful in obtaining deposits as evidenced by the fact
that average deposits increased by 6.63 percent to $272,042,000 in 1996 from
average deposits of $225,118,000 in 1995.
The Company's liquidity position remained acceptable in 1996. Average liquid
assets (cash and amounts due from banks, interest-bearing deposits in other
banks, funds sold and investment securities) represented 29.96 percent of
average deposits in 1996 as compared to 27.82 percent in 1995. Average loans
represented 76.89 percent of average deposits in 1996 as compared to 77.91
percent in 1995. Average interest-bearing deposits were 87.09 percent of
average earning assets in 1996 as compared to 87.86 percent in 1995.
The Company satisfies most of its capital requirements through retained
earnings. During 1996, retained earnings provided $2,534,000 of increase in
equity. Additionally, equity had a decrease of $11,000 resulting from the
change during the year in unrealized losses on securities available for sale,
net of taxes. Thus, total equity increased by a net amount of $2,523,000 in
1996. In 1995, growth in equity was provided by retained earnings of
$1,900,000.
As of December 31, 1996, total capital of Colony amounted to approximately
$25,591,000. As of December 31, 1996, there was an outstanding commitment for
capital expenditures of approximately $750,000 for construction of a facility
and furnishings for new Colony headquarters.
16
<PAGE>
PART II (CONTINUED)
Item 6
The Federal Reserve Board and the FDIC have issued risk-based 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
stockholders' 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 percent of risk-weighted assets. The Company has no Tier
2 capital other than the allowance for loan losses.
Using the capital requirements in effect at the end of 1996, the Tier I ratio as
of December 31, 1996 was 10.96 percent and total Tier 1 and 2 risk-based capital
was 12.21 percent. Both of these measures compare favorably with the regulatory
minimums of 4 percent for Tier 1 and 8 percent for total risk-based capital.
The Company's leverage ratio was 7.65 percent as of December 31, 1996 which
exceeds the required leverage ratio standard of 4 percent.
In 1996, the Company paid annual dividends of $0.275 per share. The dividend
payout ratio, defined as dividends per share divided by net income per share,
was 13.61 percent in 1996 as compared with 19.89 percent for 1995.
As of December 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.
RESULTS OF OPERATIONS
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 Banks' 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.
The net interest margin decreased to 4.80 percent in 1996 as compared to 5.27
percent in 1995. Net interest income decreased by 1.71 percent to $13,367,000
in 1996 from $13,599,000 in 1995 on an increase in average earning assets to
$282,066,000 in 1996 from $261,397,000 in 1995 with an interest spread of 4.18
percent in 1996 as compared to 4.72 percent in 1995. Average loans increased by
$10,422,000 or 5.24 percent, average funds sold increased by $5,668,000 or 53.68
percent, average investment securities increased by $4,865,000 or 9.44 percent
and average interest-bearing deposits in other banks decreased by $286,000 or
50.18 percent, resulting in a net increase in average earning assets of
$20,669,000 or 7.91 percent.
17
<PAGE>
PART II (CONTINUED)
Item 6
The net increase in average earning assets was funded by a net increase in
average deposits of 6.63 percent to $272,042,000 in 1996 from $255,118,000 in
1995. Average interest-bearing deposits increased by 6.97 percent to
$245,662,000 in 1996 from $229,662,000 in 1995 while average noninterest-bearing
deposits decreased 3.63 percent to $26,380,000 in 1996 from $25,456,000 in 1995.
Average noninterest-bearing deposits represented 9.70 percent of total deposits
in 1996 as compared to 9.98 percent in 1995.
The net interest margin increased by 1 basis point to 5.27 percent in 1995 as
compared to 5.26 percent in 1994. Net interest income increased by 5.33 percent
to $13,599,000 in 1995 from $12,911,000 in 1994 on an increase in average
earning assets to $261,397,000 in 1995 from $249,129,000 in 1994 with an
interest spread of 4.72 percent in 1995 as compared to 4.86 percent in 1994.
Average loans increased by $9,111,000 or 4.80 percent, average funds sold
increased by $3,304,000 or 45.55 percent, average investment securities
increased by $226,000 or 0.44 percent and average interest-bearing deposits in
other banks decreased by $373,000 or 39.55 percent, resulting in a net increase
in average earning assets of $12,268,000 or 4.92 percent.
The net increase in average earning assets was funded by a net increase in
average deposits of 4.54 percent to $255,118,000 in 1995 from $244,050,000 in
1994. Average interest-bearing deposits increased by 3.99 percent to
$229,662,000 in 1995 from $220,852,000 in 1994 while average noninterest-bearing
deposits increased by 9.73 percent to $25,456,000 in 1995 from $23,198,000 in
1994. Average noninterest-bearing deposits represented 9.98 percent of total
deposits in 1995 as compared to 9.50 percent in 1994.
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 nonaccruing, past due and other loans that management believes
require 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 $2,194,595 in
1996 as compared to a provision of $3,246,050 in 1995, representing a decrease
in the provision of $1,051,455 or 32.39 percent. Net loan charge-offs
represented 82.52 percent of the provision for loan losses in 1996 as compared
to 73.13 percent in 1995. The decrease in loan charge-offs in 1996 resulted
from management's effort the past several years to improve credit quality and to
eliminate weak and marginal credits. Net loan charge-offs for 1996 represented
0.87 percent of average loans outstanding as compared to 1.19 percent for 1995.
As of December 31, 1996, the allowance for loan losses was 2.14 percent of total
loans outstanding as compared to an allowance for loan losses of 2.02 percent of
total loans outstanding as of 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 year-end allowance
for loan losses adequate to cover potential losses in the loan portfolio.
18
<PAGE>
PART II (CONTINUED)
Item 6
Noninterest income consists principally of service charges on deposit accounts.
Service charges on deposit accounts amounted to $1,680,000 in 1996 as compared
to $1,592,000 in 1995 or an increase of 5.53 percent. The increase in 1996 is
compared to an increase of 2.25 percent in 1995 when service charges increased
to $1,592,000 in 1995 from $1,557,000 in 1994. All other noninterest income
increased by $227,000 to $969,000 in 1996 from $742,000 in 1995 as compared to
an increase of $321,000 to $742,000 in 1995 as compared to $421,000 in 1994.
The increase of $227,000 in noninterest income for 1996 is primarily
attributable to premiums on loans sold during 1996 of $189,000 compared to
$36,000 in 1995. The increase in noninterest income of $321,000 for 1995 is
attributable to an increase in other commissions, fees and other income of
$151,000, gain from sale of other real estate of $62,000 recovery on embezzled
funds by a former employee of $74,000 and an increase in securities gains of
$34,000.
Noninterest expense increased by 2.54 percent to $9,569,000 in 1996 from
$9,332,000 in 1995. Salaries and employee benefits increased 8.23 percent to
$5,009,000 in 1996 from $4,628,000 in 1995 primarily due to increased staffing
for internal operations and a new branch, increased health insurance premiums
and increased bonuses due to an incentive bonus plan implemented in 1996. Due
to a reduction in FDIC insurance premiums, FDIC insurance expense decreased
23.40 percent to $275,000 in 1996 from $359,000 in 1995. Other real estate
expenses decreased 36.98 percent to $288,000 in 1996 from $457,000 in 1995 and
legal and professional fees decreased 11.05 percent to $362,000 in 1996 from
$407,000 in 1995. Other real estate expense and legal fees declined due to a
reduction in expenses incurred in the disposition of other real estate owned.
All other expenses in the aggregate realized nominal change.
Noninterest expense increased by 0.29 percent to $9,332,000 in 1995 from
$9,305,000 in 1994. The significant decrease in noninterest expense was a
decrease of $255,000 in FDIC insurance premiums which was offset by an increase
in salaries and employee benefits of $96,000 and an increase in other real
estate expenses of $138,000 resulting from losses and other expenses incurred in
the disposition of other real estate owned. All other expenses in the aggregate
remained virtually unchanged.
Income before taxes increased by $897,000 to $4,252,000 in 1996 from $3,355,000
in 1995 with significant changes being a decrease in provision for loan losses
of $1,051,000 in 1996 as compared to 1995, a decrease in net interest income of
$233,000 in 1996 as compared to 1995 and a decrease in noninterest expenses net
of noninterest income of $78,000 in 1996 as compared to 1995. Income taxes as a
percentage of income before taxes increased by 5.90 percent to 31.01 percent in
1996 from 29.30 percent in 1995.
The Bank of Fitzgerald is operating under a Memorandum of Understanding
originated on October 20, 1992 and revised on October 24, 1995, which requires
the Bank to maintain specified minimum capital ratios and minimum reserve for
loan losses. The Bank of Fitzgerald was in substantial compliance with the
provisions of the Memorandum of Understanding as of December 31, 1996.
Colony is an emerging company operating in an industry filled with nonregulated
competitors and a rapid pace of consolidation. With the recent growth of the
company and the continued trend of consolidation, Colony began the renovation of
an 8,900 square feet corporate office which should be completed in June 1997.
The move to new offices will make the management team much more efficient and
assist expansion plans as new opportunities present themselves in the future.
19
<PAGE>
PART II (CONTINUED)
Item 6
In November 1996, Colony organized the company support services into one single
unit subsidiary, Colony Management Services, Inc., which will allow management
of the subsidiary to focus on its primary responsibility of credit review. This
will achieve timely recognition of marginal credit, better monitoring of
industry concentrations, additional review follow-up and development of credit-
scoring models for certain product lines. In a major cost containment
initiative, the data processing section of Colony Management Services, Inc. is
investing over $1,000,000 in computer upgrades and software enhancement. This
will allow the company to better serve its customers through improved customer
data resources and state-of-the-art technological services.
COLONY BANKCORP, INC.
AVERAGE BALANCE SHEETS
<TABLE>
<CAPTION>
1996 1995 1994
--------------------------------------------------------------------------------------------
Average Income/ Yields/ Average Income/ Yields/ Average Income/ Yields/
($ in thousands) Balances Expense Rates Balances Expense Rates Balances Expense Rates
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Interest-earning Assets
Loans, Net of Unearned Income
Taxable(1) $209,179 $22,372 10.70% $198,757 $22,049 11.09% $189,646 $19,231 10.14%
- ------------------------------------------------------------------------------------------------------------------------------------
Investment Securities
Taxable 49,380 2,962 6.00% 44,400 2,693 6.07% 43,918 2,514 5.72%
Tax-exempt(2) 6,997 483 6.90% 7,112 529 7.44% 7,368 542 7.36%
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investment Securities 56,377 3,445 6.11% 51,512 3,222 6.25% 51,286 3,056 5.96%
- ------------------------------------------------------------------------------------------------------------------------------------
Interest-bearing Deposits in
Other Banks 284 9 3.17% 570 46 8.07% 943 43 4.56%
- ------------------------------------------------------------------------------------------------------------------------------------
Funds Sold 16,226 864 5.32% 10,558 603 5.71% 7,254 276 3.80%
- ------------------------------------------------------------------------------------------------------------------------------------
Total Interest-earning Assets 282,066 26,690 9.46% 261,397 25,920 9.92% 249,129 22,606 9.07%
- ------------------------------------------------------------------------------------------------------------------------------------
Noninterest-earning Assets
Cash 8,619 8,337 7,621
Allowance for Loan Losses (4,346) (3,619) (3,006)
Other Assets 15,837 15,702 14,237
- ------------------------------------------------------------------------------------------------------------------------------------
Total Noninterest-earning
Assets 20,110 20,420 18,852
- ------------------------------------------------------------------------------------------------------------------------------------
Total Assets $302,176 $281,817 $267,981
====================================================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing Liabilities
Interest-bearing Deposits
Interest-bearing Demand and Savings $62,204 $1,863 2.99% $ 61,346 $ 1,915 3.12% $ 68,249 $ 2,024 2.97%
Other Time 183,458 11,167 6.09% 168,316 9,885 5.87% 152,603 7,163 4.69%
- ------------------------------------------------------------------------------------------------------------------------------------
Total Interest-bearing
Deposits 245,662 13,030 5.30% 229,662 11,800 5.14% 220,852 9,187 4.16%
- ------------------------------------------------------------------------------------------------------------------------------------
Other Interest-bearing Liabilities
Debt 3,347 100 2.99% 3,351 303 9.04% 3,087 235 7.61%
Funds Purchased and Securities
Under Agreement to Repurchase 303 29 9.57% 595 37 6.22% 1,880 90 4.79%
- ------------------------------------------------------------------------------------------------------------------------------------
Total Other Interest-bearing
Liabilities 3,650 129 3.53% 3,946 340 8.62% 4,967 325 6.54%
- ------------------------------------------------------------------------------------------------------------------------------------
Total Interest-bearing
Liabilities 249,312 13,159 5.28% 233,608 12,140 5.20% 225,819 9,512 4.21%
- ------------------------------------------------------------------------------------------------------------------------------------
Noninterest-bearing Liabilities and
Stockholders' Equity
Demand Deposits 26,380 25,456 23,198
Other Liabilities 2,121 2,082 1,602
Stockholders' Equity 24,363 20,671 17,362
- ------------------------------------------------------------------------------------------------------------------------------------
Total Noninterest-bearing
Liabilities and
Stockholders' Equity 52,864 48,209 42,162
- ------------------------------------------------------------------------------------------------------------------------------------
Total Liabilities and
Stockholders' Equity $302,176 $281,817 $267,981
====================================================================================================================================
Interest Rate Spread 4.18% 4.72% 4.86%
====================================================================================================================================
Net Interest Income $13,531 $13,780 $13,094
====================================================================================================================================
Net Interest Margin 4.80% 5.27% 5.26%
====================================================================================================================================
</TABLE>
(1) The average balance of loans includes the average balance of nonaccrual
loans. Income on such loans is recognized and recorded on the cash basis.
(2) Taxable-equivalent adjustments totaling $164,074, $179,591 and $133,462 for
1996, 1995 and 1994, respectively, are included in tax-exempt interest on
investment securities. The adjustments are based on a federal tax rate of 34
percent with appropriate reductions for the effect of disallowed interest
expense incurred in carrying tax-exempt obligations.
20
<PAGE>
PART II (CONTINUED)
Item 6
COLONY BANKCORP, INC.
Rate/Volume Analysis
The rate/volume analysis presented hereafter illustrates the change from year to
year for each component of the taxable equivalent net interest income separated
into the amount generated through volume changes and the amount generated by
changes in the yields/rates.
<TABLE>
<CAPTION>
Changes From 1995 to 1996 (1) Changes From 1994 to 1995 (1)
----------------------------- -----------------------------
($ in thousands) Volume Rate Total Volume Rate Total
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Interest Income
Loans, Net - Taxable $ 1,156 $ (833) $ 323 $ 924 $ 1,894 $ 2,818
- ------------------------------------------------------------------------------------------------------------------------------------
Investment Securities
Taxable 302 (33) 269 28 151 179
Tax-exempt (9) (37) (46) (19) 6 (13)
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investment Securities 293 (70) 223 9 157 166
- ------------------------------------------------------------------------------------------------------------------------------------
Interest-bearing Deposits in
Other Banks (23) (14) (37) (17) 20 3
- ------------------------------------------------------------------------------------------------------------------------------------
Funds Sold 324 (63) 261 126 201 327
- ------------------------------------------------------------------------------------------------------------------------------------
Total Interest Income 1,750 (980) 770 1,042 2,272 3,314
- ------------------------------------------------------------------------------------------------------------------------------------
Interest Expense
Interest-bearing Demand and
Savings Deposits 27 (79) (52) (205) 96 (109)
Time Deposits 889 393 1,282 738 1,984 2,722
- ------------------------------------------------------------------------------------------------------------------------------------
Other Interest-bearing Liabilities
Funds Purchased and Securities
Under Agreement to Repurchase (18) 10 (8) (62) 9 (63)
Other Debt 0 (203) (203) 20 48 68
- ------------------------------------------------------------------------------------------------------------------------------------
Total Interest Expense 898 121 1,019 491 2,137 2,628
- ------------------------------------------------------------------------------------------------------------------------------------
Net Interest Income $ 852 $(1,101) $(249) $ 551 $ 135 $ 686
====================================================================================================================================
</TABLE>
(1) Changes in net interest income for the periods, based on either changes in
average balances or changes in average rates for interest earning assets
and interest-bearing liabilities, are shown on this table. During each year
there are numerous and simultaneous balance and rate changes; therefore, it
is not possible to precisely allocate the changes between balances and
rates. For the purpose of this table, changes that are not exclusively due
to balance changes or rate changes have been attributed to rates.
21
<PAGE>
PART II (CONTINUED)
Item 6
COLONY BANKCORP, INC.
INTEREST RATE SENSITIVITY
The following table represents the Company's interest sensitivity gap between
interest-earning assets and interest-bearing liabilities as of
December 31, 1996.
<TABLE>
<CAPTION>
ASSETS AND LIABILITIES REPRICING WITHIN
--------------------------------------------------------------------------------
3 MONTHS 4 TO 12 1 TO 5 OVER 5
($ IN THOUSANDS) OR LESS MONTHS 1 YEAR YEARS YEARS TOTAL
----------- ----------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Interest-Earning Assets
Interest-Bearing Deposits $ 891 $ 891 $ 891
Investment Securities 4,996 $ 4,975 9,971 $ 35,609 $ 17,798 63,378
Funds Sold 22,740 22,740 22,740
Loans, Net of Unearned Income 102,737 46,397 149,134 50,775 6,954 206,863
----------- ----------- ----------- ----------- ---------- ----------
131,364 51,372 182,736 86,384 24,752 293,872
----------- ----------- ----------- ----------- ---------- ----------
Interest-Bearing Liabilities
Interest-Bearing Demand and
Savings Deposits(1) 67,021 67,021 67,021
Other Time Deposits 59,285 86,392 145,677 44,189 66 189,932
Short-Term Borrowings(2) 4,140 4,140 1,356 5,496
----------- ----------- ----------- ----------- ---------- ----------
130,446 86,392 216,838 45,545 66 262,449
----------- ----------- ----------- ----------- ---------- ----------
Interest-Sensitivity Gap 918 (35,020) (34,102) 40,839 24,686 31,423
----------- ----------- ----------- ----------- ---------- ----------
Cumulative Interest-Sensitivity Gap $ 918 $ (34,102) $ (34,102) $ 6,737 $ 31,423 $ 31,423
=========== =========== =========== =========== ========== ==========
</TABLE>
(1) Interest-bearing demand and savings accounts for repricing purposes are
considered to reprice within 3 months or less.
(2) Short-term borrowings for repricing purposes are considered to reprice
within 3 months or less.
22
<PAGE>
PART II (CONTINUED)
Item 6
COLONY BANKCORP, INC.
INVESTMENT PORTFOLIO
The following table presents carrying values of investment securities held by
the Company as of December 31, 1996, 1995 and 1994.
($ in thousands) 1996 1995 1994
-------- -------- --------
U.S. Treasuries and Government Agencies $ 38,313 $ 21,030 $ 19,507
Obligations of States and Political
Subdivisions 7,237 7,051 7,418
Other Securities 1,478 1,443 1,068
-------- -------- --------
Investment Securities 47,028 29,524 27,993
Mortgage Backed Securities 16,350 22,036 25,465
-------- -------- --------
TOTAL INVESTMENT SECURITIES AND
MORTGAGE BACKED SECURITIES $ 63,378 $ 51,560 $ 53,458
======== ======== ========
The following table represents maturities and weighted-average yields of
investment securities held by the Company as of December 31, 1996.
<TABLE>
<CAPTION>
After 1 After 5
Year but Years but
($ in thousands: yields on Within Within Within After
a tax-equivalent basis) 1 Year 5 Years 10 Years 10 Years
- ------------------------------------------------------------------------------------------------------------------------------------
Amount Yield Amount Yield Amount Yield Amount Yield
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasuries $ 499 4.75% $ 0 0.00% $ 0 0.00% $ 0 0.00%
U.S. Government Agencies 6,690 5.28 30,374 6.36 749 7.01 0 0.00
Mortgage Backed Securities 494 7.47 734 6.02 5,074 6.03 10,049 6.55
Obligations of States and Political Subdivisions 810 5.09 4,501 5.20 783 6.11 1,143 3.85
Other Securities 1,478 4.83 0 0.00 0 0.00 0 0.00
- ------------------------------------------------------------------------------------------------------------------------------------
Total Investment Portfolio $ 9,971 5.28% $ 35,609 6.21% $ 6,606 6.15% $11,192 6.27%
====================================================================================================================================
</TABLE>
23
<PAGE>
PART II (CONTINUED)
Item 6
COLONY BANKCORP, INC.
LOANS
The following table presents the composition of the Company's loan portfolio as
of December 31 for the past five years.
<TABLE>
<CAPTION>
($ in thousands) 1996 1995 1994 1993 1992
---------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Commercial, Financial and Agricultural $ 38,776 $ 34,459 $ 31,687 $ 33,491 $ 35,217
Real Estate
Construction 881 526 469 9 16
Mortgage, Farmland 25,769 23,680 26,334 25,528 24,076
Mortgage, Other 88,896 95,967 81,146 74,674 72,114
Consumer 44,608 38,865 39,263 32,080 31,505
Other 7,946 7,381 4,623 8,430 11,095
---------- --------- --------- --------- ----------
206,876 200,878 183,522 174,212 174,023
Unearned Discount (13) (41) (23) (44) (155)
Allowance for Loan Losses (4,435) (4,051) (3,179) (2,775) (2,621)
---------- --------- --------- --------- ----------
LOANS, NET $ 202,428 $ 196,786 $ 180,320 $ 171,393 $ 171,247
========== ========= ========= ========= ==========
</TABLE>
The following table presents total loans as of December 31, 1996 according to
maturity distribution.
Maturity $ in thousands
--------------
One Year or Less $ 149,134
After One Year through Five Years 50,775
After Five Years 6,954
--------------
$ 206,863
==============
The following table presents an interest rate sensitivity analysis of the
Company's loan portfolio as of December 31, 1996.
WITHIN 1 TO 5 AFTER 5
($ in thousands) 1 YEAR YEARS YEARS TOTAL
-------- -------- ------- ---------
Loans with
Predetermined Interest Rates $ 74,835 $ 50,721 $ 6,954 $ 132,510
Floating or Adjustable Rates 74,299 54 74,353
-------- -------- ------- ---------
LOANS, NET OF UNEARNED INCOME $149,134 $ 50,775 $ 6,954 $ 206,863
======== ======== ======= =========
24
<PAGE>
PART II (CONTINUED)
Item 6
COLONY BANKCORP, INC.
NONPERFORMING LOANS
A loan is placed on nonaccrual status when, in management's judgment, the
collection of interest income appears doubtful. Interest receivable that has
been accrued in prior years and is subsequently determined to have doubtful
collectibility is charged to the allowance for possible loan losses. Interest
on loans that are classified as nonaccrual is recognized when received. Past
due loans are loans whose principal or interest is past due 90 days or more. In
some cases, where borrowers are experiencing financial difficulties, loans may
be restructured to provide terms significantly different from the original
contractual terms.
The following table presents, at the dates indicated, the aggregate of
nonperforming loans for the categories indicated.
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------------------
1996 1995 1994 1993 1992
------ ------ ------ ------ ------
($ IN THOUSANDS)
--------------------------------------
<S> <C> <C> <C> <C> <C>
Loans Accounted for on a Nonaccrual Basis $7,396 $5,229 $2,197 $2,620 $3,764
Installment Loans and Term Loans
Contractually Past Due 90 Days or
More as to Interest or Principal
Payments and Still Accruing 364 213 237 405 283
Loans, the Terms of Which Have Been
Renegotiated to Provide a Reduction
or Deferral of Interest or Principal
Because of Deterioration in the Financial
Position of the Borrower 321 597 23 38 -
Loans Now Current About Which There are
Serious Doubts as to the Ability of the
Borrower to Comply with Present Loan
Repayment Terms - - - - -
</TABLE>
During the year ended December 31, 1996, approximately $2,817,000 of loans was
charged off and approximately $1,006,000 was recovered on charged-off loans.
All loans classified by regulatory authorities as loss during regular
examinations in 1996 have been charged off. As of December 31, 1996, the
allowance for loan losses was adequate to cover all loans classified by
regulatory authorities as doubtful or substandard.
25
<PAGE>
PART II (CONTINUED)
Item 6
COLONY BANKCORP, INC.
COMMITMENTS AND CONTINGENCIES
In the ordinary course of business, the Banks have entered into off balance
sheet financial instruments which are not reflected in the consolidated
financial statements. These instruments include commitments to extend credit,
standby letters of credit, guarantees and liability for assets held in trust.
Such financial instruments are recorded in the financial statements when funds
are disbursed or the instruments become payable. The Banks use the same credit
policies for these off balance sheet financial instruments as they do for
instruments that are recorded in the consolidated financial statements.
Following is an analysis of the significant off balance sheet financial
instruments as of December 31, 1996 and 1995.
1996 1995
----------------
($ IN THOUSANDS)
----------------
Commitments to Extend Credit $19,696 $17,753
Standby Letters of Credit 3,128 3,591
----------------
$22,824 $21,344
================
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 Company does not anticipate any material losses as a result of the
commitments and contingent liabilities.
The nature of the business of the Company 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.
26
<PAGE>
PART II (CONTINUED)
Item 6
COLONY BANKCORP, INC.
SUMMARY OF LOAN LOSS EXPERIENCE
The provision for possible loan losses is created by direct charges to
operations. Losses on loans are charged against the allowance in the period in
which such loans, in management's opinion, become uncollectible. Recoveries
during the period are credited to this allowance. The factors that influence
management's judgment in determining the amount charged to operating expense are
past loan experience, composition of the loan portfolio, evaluation of possible
future losses, current economic conditions and other relevant factors. The
Company's allowance for loan losses was approximately $4,435,000 as of December
31, 1996, representing 2.14 percent of year-end total loans outstanding,
compared with $4,051,000 as of December 31, 1995, which represented 2.02 percent
of year-end total loans outstanding. The allowance for loan losses is reviewed
continuously based on management's evaluation of current risk characteristics of
the loan portfolio as well as the impact of prevailing and expected economic
business conditions. Management considers the allowance for loan losses
adequate to cover possible loan losses on the loans outstanding.
Management has not allocated the Company's allowance for loan losses to specific
categories of loans. Based on management's best estimate, approximately 10
percent of the allowance should be allocated to real estate loans, 50 percent to
commercial, financial and agricultural loans and 40 percent to
consumer/installment loans as of December 31, 1996.
The following table presents an analysis of the Company's loan loss experience
for the periods indicated.
<TABLE>
<CAPTION>
($ in thousands) 1996 1995 1994 1993 1992
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Allowance for Loan Losses at Beginning of Year $ 4,051 $ 3,179 $ 2,775 $ 2,621 $ 1,965
Charge-Offs
Commercial, Financial and Agricultural 2,294 2,042 906 2,188 2,033
Real Estate 8 4 11 985 59
Consumer 515 861 925 984 1,217
------- ------- ------- ------- -------
2,817 2,907 1,842 4,157 3,309
------- ------- ------- ------- -------
Recoveries
Commercial, Financial and Agricultural 816 77 42 43 58
Real Estate 9 3 3 9 1
Consumer 181 453 103 106 181
------- ------- ------- ------- -------
1,006 533 148 158 240
------- ------- ------- ------- -------
Net Charge-Offs (1,811) (2,374) (1,694) (3,999) (3,069)
------- ------- ------- ------- -------
Provision for Loans Losses 2,195 3,246 2,098 4,153 3,725
------- ------- ------- ------- -------
Allowance for Loan Losses at End of Year $ 4,435 $ 4,051 $ 3,179 $ 2,775 $ 2,621
======= ======= ======= ======= =======
Ratio of Net Charge-Offs to Average Loans 0.87% 1.19% 0.89% 2.20% 1.70%
======= ======= ======= ======= =======
</TABLE>
27
<PAGE>
PART II (CONTINUED)
Item 6
COLONY BANKCORP, INC.
DEPOSITS
The following table presents the average amount outstanding and the average rate
paid on deposits by the Company for the years 1996, 1995 and 1994.
<TABLE>
<CAPTION>
1996 1995 1994
-------------------- ---------- ---------- ---------- ------------
AVERAGE AVERAGE AVERAGE AVERAGE AVERAGE AVERAGE
($ in thousands) AMOUNT RATE AMOUNT RATE AMOUNT RATE
---------- -------- ---------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Noninterest-Bearing Demand Deposits $ 26,380 $ 25,456 $ 23,198
Interest-Bearing Demand and Savings 62,204 2.99% 61,346 3.12% 68,249 2.97%
Time Deposits 183,458 6.09 168,316 5.87 152,603 4.69
---------- -------- ---------- ---------- ---------- ------------
$ 272,042 5.30% $ 255,118 5.14% $ 244,050 4.16%
========== ======== ========== ========== ========== ============
</TABLE>
The following table presents the maturities of the Company's other time deposits
as of December 31, 1996.
<TABLE>
<CAPTION>
OTHER TIME OTHER TIME
DEPOSITS DEPOSITS
$ 100,000 LESS THAN
($ in thousands) OR GREATER $ 100,000 TOTAL
--------------- --------------- ------------
<S> <C> <C> <C>
Months to Maturity
3 or Less $ 17,775 $ 41,510 $ 59,285
Over 3 through 6 10,975 25,276 36,251
Over 6 through 12 16,498 33,643 50,141
Over 12 Months 11,140 33,115 44,255
--------------- --------------- ------------
$ 56,388 $ 133,544 $ 189,932
=============== =============== ============
</TABLE>
RETURN ON ASSETS AND STOCKHOLDERS' EQUITY
The following table presents selected financial ratios for each of the period
indicated.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------
1996 1995 1994
------------ ----------- ----------
<S> <C> <C> <C>
Return on Assets 0.97% 0.84% 0.90%
Return on Equity 12.04% 11.48% 13.94%
Dividends Payout 13.61% 19.89% 17.27%
Equity to Assets 8.06% 7.33% 6.48%
</TABLE>
28
<PAGE>
PART II (CONTINUED)
Item 7
FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA
The following consolidated financial statements of the Registrant and its
subsidiaries are included on exhibit 99(b) of this Annual Report on Form 10-KSB:
Consolidated Balance Sheets - December 31, 1996 and 1995
Consolidated Statements of Income - Years Ended December 31, 1996 and 1995
Consolidated Statements of Stockholders' Equity - Years Ended December 31,
1996 and 1995
Consolidated Statements of Cash Flows - Years Ended December 31, 1996
and 1995
Notes to Consolidated Financial Statements
Item 8
CHANGES IN AND DISAGREEMENT WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
There was no accounting or disclosure disagreement or reportable event with the
former or current auditors that would have required the filing of a report on
Form 8-K.
PART III
Item 9
DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Incorporated herein by reference to pages 3 and 4 of the Company's Definitive
Proxy Statement for Annual Meeting of Stockholders to be held on April 22, 1997,
which is included as Exhibit 99(a) of this Annual Report on Form 10-KSB.
Item 10
EXECUTIVE COMPENSATION
Incorporated herein by reference to pages 6 and 7 of the Company's Definitive
Proxy Statement for Annual Meeting of Stockholders to be held on April 22, 1997,
which is included as Exhibit 99(a) of this Annual Report on Form 10-KSB.
Item 11
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Incorporated herein by reference to pages 1 and 2 of the Company's Definitive
Proxy Statement for Annual Meeting of Stockholders to be held on April 22, 1997,
which is included as Exhibit 99(a) of this Annual Report on Form 10-KSB.
29
<PAGE>
PART III
Item 12
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Incorporated herein by reference to pages 4 and 5 of the Company's Definitive
Proxy Statement for Annual Meeting of Stockholders to be held on April 22, 1997,
which is included as Exhibit 99(a) of this Annual Report on Form 10-KSB.
PART IV
Item 13
EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS INCLUDED HEREIN:
EXHIBIT NO.
3(a) ARTICLES OF INCORPORATION
-filed as Exhibit 3(a) to the Registrant's Registration Statement
on Form 10 (File No. 0-18486), filed with the Commission on April
25, 1990 and incorporated herein by reference.
3(b) BYLAWS, AS AMENDED
-filed as Exhibit 3(b) to the Registrant's Registration Statement
on Form 10 (File No. 0-18486), filed with the Commission on April
25, 1990 and incorporated herein by reference.
4 INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS
-incorporated herein by reference to page 1 of the Company's
Definitive Proxy Statement for Annual Meeting of Stockholders to
be held on April 22, 1997, which is included as Exhibit 99(a) of
this Annual Report on Form 10-KSB.
10 MATERIAL CONTRACTS
10(a) DEFERRED COMPENSATION PLAN AND SAMPLE DIRECTOR AGREEMENT
-filed as Exhibit 10(a) to the Registrant's Registration Statement
on Form 10 (File No. 0-18486), filed with the Commission on April
25, 1990 and incorporated herein by reference.
10(b) PROFIT-SHARING PLAN DATED JANUARY 1, 1979
-filed as Exhibit 10(b) to the Registrant's Registration Statement
on Form 10 (File No. 0-18486), filed with the Commission on April
25, 1990 and incorporated herein by reference.
30
<PAGE>
PART IV (CONTINUED)
Item 13
(A) EXHIBITS INCLUDED HEREIN:
EXHIBIT NO.
11 STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
-incorporated herein by reference to page 4 of the consolidated
financial statements included as Exhibit 99(b) of this Annual
Report on Form 10-KSB.
21 SUBSIDIARIES OF THE COMPANY
NAME OF SUBSIDIARY STATE OF INCORPORATION
The Bank of Fitzgerald Georgia
Ashburn Bank Georgia
The Bank of Dodge County Georgia
The Bank of Worth Georgia
Community Bank of Wilcox Georgia
Broxton State Bank Georgia
Colony Management Services, Inc. Georgia
27 FINANCIAL DATA SCHEDULE
99 ADDITIONAL EXHIBITS
99(a) DEFINITIVE PROXY STATEMENT, INCORPORATED BY REFERENCE
99(b) CONSOLIDATED FINANCIAL STATEMENTS
-Independent Auditor's Report
-Consolidated Balance Sheets - December 31, 1996 and 1995
-Consolidated Statements of Income - Years ended
December 31, 1996 and 1995
-Consolidated Statements of Stockholders' Equity - Years ended
December 31, 1996 and 1995
-Consolidated Statements of Cash Flows - Years ended
December 31, 1996 and 1995
-Notes to Consolidated Financial Statements
All schedules are omitted as the required information is
inapplicable or the information is presented in the financial
statements or related notes.
(B) No reports on Form 8-K have been filed by the registrant during
the last quarter of the period covered by this report.
31
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, Colony Bankcorp, Inc. has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized:
COLONY BANKCORP, INC.
/s/ James D. Minix
__________________________________________
James D. Minix
President/Director/Chief Executive Officer
Date: March 27, 1997
___________________________________
/s/ Terry L. Hester
_________________________________________
Terry L. Hester
Executive Vice-President/Controller/Chief
Financial Officer/Director
Date: March 27, 1997
___________________________________
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated:
/s/ Paul Branch, Jr.
_________________________________________
Paul Branch, Jr., Director Date: March 31, 1997
___________________________
/s/ Terry Coleman
_________________________________________
Terry Coleman, Director Date: March 31, 1997
__________________________
/s/ L. Morris Downing
_________________________________________
L. Morris Downing, Director Date: March 31, 1997
__________________________
/s/ Milton N. Hopkins, Jr.
_________________________________________
Milton N. Hopkins, Jr., Director Date: March 31, 1997
__________________________
32
<PAGE>
/s/ Harold E. Kimball
_________________________________________
Harold E. Kimball, Director Date: March 31, 1997
___________________________
/s/ Marion H. Massee, III
_________________________________________
Marion H. Massee, III, Director Date: March 31, 1997
___________________________
/s/ Ben B. Mill, Jr.
_________________________________________
Ben B. Mill, Jr., Director Date: March 31, 1997
___________________________
/s/ Ralph D. Roberts, M.D.
_________________________________________
Ralph D. Roberts, M.D., Director Date: March 31, 1997
___________________________
/s/ W. B. Roberts, Jr.
_________________________________________
W. B. Roberts, Jr., Director Date: March 31, 1997
___________________________
/s/ R. Sidney Ross
_________________________________________
R. Sidney Ross, Director Date: March 31, 1997
___________________________
/s/ Joe K. Shiver
_________________________________________
Joe K. Shiver, Director Date: March 31, 1997
___________________________
/s/ Curtis A. Summerlin
_________________________________________
Curtis A. Summerlin, Director Date: March 31, 1997
___________________________
33
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<RESTATED>
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 12-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1995
<PERIOD-START> JAN-01-1996 JAN-01-1995
<PERIOD-END> DEC-31-1996 DEC-31-1995
<CASH> 12,552,751 10,243,284
<INT-BEARING-DEPOSITS> 891,000 99,000
<FED-FUNDS-SOLD> 22,740,000 25,125,000
<TRADING-ASSETS> 0 0
<INVESTMENTS-HELD-FOR-SALE> 59,439,089 47,483,671
<INVESTMENTS-CARRYING> 3,938,503 4,075,979
<INVESTMENTS-MARKET> 3,888,832 3,970,280
<LOANS> 206,863,198 200,837,299
<ALLOWANCE> 4,434,867 4,051,243
<TOTAL-ASSETS> 319,540,222 299,245,628
<DEPOSITS> 285,676,225 271,646,117
<SHORT-TERM> 4,300,279 200,000
<LIABILITIES-OTHER> 2,617,098 2,027,260
<LONG-TERM> 1,355,591 2,304,468
0 0
0 0
<COMMON> 14,488,420 14,488,420
<OTHER-SE> 11,102,609 8,579,363
<TOTAL-LIABILITIES-AND-EQUITY> 319,540,222 299,245,628
<INTEREST-LOAN> 22,371,529 22,048,570
<INTEREST-INVEST> 3,280,710 3,042,217
<INTEREST-OTHER> 872,390 648,393
<INTEREST-TOTAL> 26,524,629 25,739,180
<INTEREST-DEPOSIT> 12,847,850 11,800,129
<INTEREST-EXPENSE> 13,158,083 12,139,683
<INTEREST-INCOME-NET> 13,366,546 13,599,497
<LOAN-LOSSES> 2,194,595 3,246,050
<SECURITIES-GAINS> 41,140 49,167
<EXPENSE-OTHER> 9,568,832 9,331,796
<INCOME-PRETAX> 4,252,208 3,355,253
<INCOME-PRE-EXTRAORDINARY> 2,933,542 2,372,125
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 2,933,542 2,372,125
<EPS-PRIMARY> 2.02 1.72
<EPS-DILUTED> 2.02 1.72
<YIELD-ACTUAL> 4.55 4.90
<LOANS-NON> 7,395,598 5,228,900
<LOANS-PAST> 364,000 213,000
<LOANS-TROUBLED> 321,000 597,000
<LOANS-PROBLEM> 0 0
<ALLOWANCE-OPEN> 4,051,243 3,178,811
<CHARGE-OFFS> 2,817,098 2,906,937
<RECOVERIES> 1,006,127 533,319
<ALLOWANCE-CLOSE> 4,434,867 4,051,243
<ALLOWANCE-DOMESTIC> 4,434,867 4,051,243
<ALLOWANCE-FOREIGN> 0 0
<ALLOWANCE-UNALLOCATED> 0 0
</TABLE>
<PAGE>
EXHIBIT 99(a)
COLONY BANKCORP, INC.
POST OFFICE BOX 989
302 SOUTH MAIN STREET
FITZGERALD, GEORGIA 31750
PROXY STATEMENT
FOR THE ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 22, 1997
GENERAL INFORMATION
This proxy statement and the accompanying form of proxy, which are first
sent or given to shareholders on or about April 2, 1997, are furnished to the
holders of shares of common stock of Colony Bankcorp, Inc. (the "Company") in
connection with the solicitation by management of the Company of proxies for use
at the annual meeting of shareholders of the Company to be held April 22, 1997,
at 4:00 p.m., local time, at Charles A. Harris Learning Center on East Central
Technical Institute Campus on Perry House Road, Fitzgerald, Georgia, 31750 and
any adjournment or postponement thereof.
Any proxy given pursuant to this solicitation may be revoked at any time
before it is voted by so notifying the secretary of the Company, Ben B. Mills,
Jr., Post Office Box 989, 302 South Main Street, Fitzgerald, Georgia 31750, in
writing prior to the special meeting, or by appearing at the meeting and
requesting the right to vote in person at the meeting, or by delivering to the
secretary of the Company a duly executed proxy bearing a later date, without
compliance with any other formalities. If the proxy is properly signed and
returned by the shareholder and is not revoked, it will be voted at the special
meeting in the manner specified therein. If a shareholder signs and returns the
proxy but does not specify how the proxy is to be voted, the proxy will be voted
for the election as a director of each of the nominees named herein.
On April 2, 1997 the Company had issued and outstanding 1,448,842 shares of
its $10.00 par value common stock, which constitutes its only class of voting
securities, with each share entitled to one vote. Only shareholders of record
at the close of business on April 2, 1997 are entitled to notice of and to vote
at the special meeting of shareholders or any adjournments thereof.
All expenses of this solicitation, including the cost of preparing and
mailing this proxy statement, will be paid by the Company. In addition to the
solicitation by mail, directors, officers and regular employees of the Company
may solicit proxies by telephone, telegram or personal interview for which they
will receive no compensation in addition to their regular salaries.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
Principal Shareholders
The following table shows all persons known to the Board of Directors of
the Company to be the beneficial owners on March 15, 1997 of more than 5% of the
outstanding common stock of the Company, the only class of the Company's voting
securities:
Name and Address Amount and Nature Percent of Class
of Beneficial Owner of Beneficial Ownership Outstanding
- ------------------- ----------------------- -----------------
Robert Sidney Ross 175,461/1/ 12.11%
Post Office Box 666
Ocilla, Georgia 31774
Curtis A. Summerlin 92,478 6.38%
Post Office Box 309
Broxton, Georgia 31519
/1/ Includes 148,324 shares owned by Robert Sidney Ross, 26,183 shares owned by
Ross of Georgia, Inc. and 954 shares owned by minor child.
<PAGE>
Security Ownership of Directors and Executive Officers
The following table shows the number of shares of common stock beneficially
owned by each director, director nominees and by all directors, director
nominees and officers as a group on March 15, 1997.
Name of Amount and Nature of Percentage
Beneficial Owner Beneficial Ownership/1/ of Class
- ---------------- ----------------------- -----------
Paul Branch, Jr. 22,368 1.54%
Terry Coleman 25,493 1.76%
L. Morris Downing, Jr. 41,694 2.88%
Terry L. Hester 25,521/2/ 1.76%
Milton N. Hopkins, Jr. 13,937 0.96%
Edwin W. Hortman, Jr. 5,290/2/ 0.37%
Harold E. Kimball 26,552 1.83%
Marion H. Massee, III 46,736 3.23%
Ben B. Mills, Jr. 44,118 3.05%
James D. Minix 22,777/2/ 1.57%
Ralph D. Roberts, M.D. 25,339 1.75%
W.B. Roberts, Jr. 5,000 0.35%
R. Sidney Ross 175,461 12.11%
Joe K. Shiver 15,310 1.06%
Curtis A. Summerlin 92,478 6.38%
Executive Officer and
Directors as a Group
(15 persons) 588,074 40.59%
(1) Includes shares owned by spouses and minor children of officers and
directors, as well as shares owned by trust or businesses in which officers and
directors have a significant interest. The information contained herein shall
not be construed as an admission that any such person is, for purposes of
Section 13(d) or Section 13(g) of the Securities Exchange Act of 1934, the
beneficial owner of any securities not held of record by that person or entity.
(2) Includes shares held by Trustees of Colony Bankcorp, Inc. Profit Sharing
and Stock Bonus Plan, of which, Messrs, Hester, Minix and Hortman participate
and own 11,779; 4,873; and 1,236 allocated shares respectfully, on
December 31, 1996. Although shares are held by the Trustees, all plan
participants direct the Trustees in the manner in which they wish their
allocated shares to be voted. Unallocated shares, if any, will not be voted
pursuant to the plan.
<PAGE>
DIRECTOR AND MANAGEMENT INFORMATION
The Company's bylaws provide that the Board of Directors shall consist of
not less than three nor more than 25 persons, with the exact number to be fixed
and determined from time to time by resolution of the Board of Directors, or by
resolution of the shareholders at any annual or special meeting of shareholders.
There are presently 14 members of the Board of Directors, and the Board of
Directors has voted that the Board consist of 14 members for the Company's
ensuing fiscal year.
Management has nominated and the Board of Directors recommends the election
of each of the nominees set forth in the following table as a director of the
Company until the next annual meeting of shareholders or until his successor is
duly elected and qualified. All of the nominees are currently directors of the
Company. If any nominee is unable to serve as director, the proxy will be voted
for a nominee named by the Board of Directors in his stead by those persons
named to vote the proxies. The Board of Directors has no reason to believe that
any of its present nominees will be unable to serve. Provided a quorum is
present at the annual meeting, directors shall be elected by a plurality of the
votes cast by the shares of common stock represented in person or by proxy at
the annual meeting.
The following table sets forth for each director and executive officer of
the Company (a) the person's name and address, (b) his age at December 31, 1996,
(c) the year he was first elected as a director or executive officer of the
Company, and (d) his principal occupation for the last five years, his positions
with the Company and with any subsidiary of the Company. All directors serve
for a term of one year; all officers serve at the direction of the board.
DIRECTOR NOMINEES
-----------------
Ages, Term, Principal Occupation for
Name and Address Last Five Years and Other Directorships
- ---------------- ---------------------------------------
Paul Branch, Jr. Age 71; Director since November 11, 1982;
493 Benjamin H. Hill Drive West Farmer and Businessman; Director
Fitzgerald, Georgia 31750 Emeritus, The Bank of Fitzgerald
Terry Coleman Age 53; Director since May, 1990; Owner
P.O. Box 157 of Eastman Travel Services & Huddle
Eastman, Georgia 31023 House in Eastman; State Representative;
Director, The Bank of Dodge County
L. Morris Downing, Jr. Age 54; Director since July, 1994;
127 Shady Lane President of Lowell Packing Company
Fitzgerald, Georgia 31750
Terry L. Hester* Age 42; Director since March, 1990;
128 Carter's Road Executive Vice President and Chief
Fitzgerald, Georgia 31750 Financial Officer of the Company since
June, 1994; Acting President and CEO
from June 1993 to June 1994; Treasurer
since 1982; President, Community Bank
of Wilcox
Milton N. Hopkins, Jr. Age 70: Director since November 11, 1982;
360 Peacock Road Farmer and Businessman; Director,
Fitzgerald, Georgia 31750 The Bank of Fitzgerald
Harold E. Kimball Age 63, Director since November 11, 1982;
155 Pine Needle Road Vice President of Dixie Electron, Inc.;
Fitzgerald, Georgia 31750 Chairman of the Board, The Bank of
Fitzgerald
Marion H. Massee, III Age 67, Director since November 11, 1982;
226 Jeff Davis Highway Chairman of Board since February 1990;
Fitzgerald, Georgia 31750 Chairman, Massee Builders, Inc.;
Director Emeritus, The Bank of Fitzgerald
<PAGE>
DIRECTOR NOMINEES (CONTINUED)
Ages, Term, Principal Occupation for
Name and Address Last Five Years and Other Directorships
- ---------------- ---------------------------------------
Ben B. Mills, Jr. Age 64; Director since November 11, 1982;
Post Office Box 985 Attorney, Mills & Chasteen; Secretary of
Fitzgerald, Georgia 31750 Bankcorp since June 8, 1993; Director,
The Bank of Fitzgerald; Director, Ashburn
Bank
James D. Minix* Age 55; Director since March, 1994;
150 Lakeview Drive President and Chief Executive Officer of
Fitzgerald, Georgia 31750 the Company since June, 1994; President
and CEO of The Bank of Fitzgerald
January, 1993 to June, 1994; President
and CEO of Ashburn Bank February, 1990
to December, 1992; Director, The Bank of
Fitzgerald, Ashburn Bank and Broxton
State Bank
Ralph D. Roberts, M.D. Age 72; Director since November 11, 1982;
948 West Roanoke Drive Physician; Director Emeritus,
Fitzgerald, Georgia 31750 The Bank of Fitzgerald
W.B. Roberts, Jr. Age 54; Director since March, 1990;
Route 1 Box 166 Farmer and Businessman; Chairman of the
Ashburn, Georgia 31714 Board, Ashburn Bank
R. Sidney Ross Age 55; Director since November 11, 1982;
Post Office Box 666 President, Ross of Georgia, Inc.; Vice
Ocilla, Georgia 31774 Chairman of The Board; The Bank of
Fitzgerald
Joe K. Shiver Age 71; Director since June, 1994;
407 East Wallace Street President of Shiver Tractor Company;
Sylvester, Georgia 31791 Director, The Bank of Worth
Curtis A. Summerlin Age 48; Director since December, 1996;
Post Office Box 309 President and CEO, Broxton State Bank
Broxton, Georgia 31519
The Board of Directors recommends a vote FOR the proposal to elect the
thirteen nominees listed above to serve as directors for the following year.
EXECUTIVE OFFICERS
Edwin W. Hortman, Jr.* Age 43; President and CEO of Colony
111 Stratford Street Management Services since November 1996;
Fitzgerald, Georgia 31750 Senior Vice President of the Company
since February, 1996; Vice President of
the Company November, 1992 to February,
1996; Executive Vice President of United
Bank of Griffin, 1985-1992
*Messrs, Minix, Hester and Hortman are the only executive officers of the
Company.
CERTAIN TRANSACTIONS
Each of the subsidiary banks of the Company has made loans in the ordinary
course of its business to officers and directors of the Company, and also to
their relatives, spouses, and entities in which they may have an interest. Each
of these loans has been made in strict compliance with state and federal
statutes and rules and
<PAGE>
regulations of the Federal Deposit Insurance Corporation and the Georgia
Department of Banking and Finance. As of December 31, 1996, certain executive
officers and directors and companies in which they are an executive officer or
partner or in which they have a 10% or more beneficial interest, were indebted
to the banks in the aggregate amount of $6,692,036.00. Each of the loans was
made in the ordinary course of business, on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for
comparable transactions with other persons, and did not involve more than the
normal risk of collectibility or present other unfavorable features.
The law firm of Mills & Chasteen, of which director Ben B. Mills, Jr. is a
partner, was paid $99,281.58 in 1996 by Colony Bankcorp, Inc. and its
subsidiaries for services rendered by that firm to those entities in the normal
course of business.
CERTAIN LITIGATION
There are presently three lawsuits involving subsidiary banks of Colony
Bankcorp, Inc. as follows:
1. Civil Action Number 95V-3607. Dodge Superior Court Pettice Lee Moore, II
and Edna Lee W. Moore vs. The Bank of Dodge County. This action was split off
from an earlier lawsuit filed in Ben Hill County against several member banks
and involves a claim by the Moores that they were overcharged when payment was
made of their loans in 1989. The lawsuit alleges fraud, conversion, breach of
contract, and seeks actual damages, punitive damages, and attorneys' fees in
excess of one million dollars. The case was tried in November, 1995, which
resulted in a jury verdict for the Moores in the amount of $26,000.00. This case
is on appeal to the Georgia Court of Appeals and a decision is expected
momentarily. It is believed that at the very most exposure to The Bank of Dodge
County would be $26,000.00.
2. Civil Action No. 96-CV-247. Ben Hill County Superior Court - Pettice Lee
Moore, II and Edna Lee W. Moore vs. The Bank of Fitzgerald. This action was
refiled in September, 1996, against The Bank of Fitzgerald. This suit seeks to
recover damages for alleged fraud, conversion, and wrongful foreclosure
concerning loans made to the plaintiffs in 1989. All the transactions with the
plaintiffs have been well documented and it is believed that the action is a
frivolous one. After the suit was filed, Pettice Lee Moore, II died and his
administrator has not yet been named a party.
3. Civil Action No. 94-CV-240 Ben Hill County Superior Court - Sharon Moore vs.
The Bank of Fitzgerald. In this case, Sharon Moore, who is the wife of Pettice
Lee Moore, II, filed suit against The Bank of Fitzgerald in August, 1994,
seeking damages based on various allegations of wrongful disclosure, breach of
contract, etc. In many respects, the complaint is very similar to the complaint
filed by Pettice Lee Moore, II and his mother in 1993. A motion for summary
judgement was filed in this case by the bank and was granted by the trial court.
An appeal was filed to the Georgia Court of Appeals and the ruling of the lower
court was affirmed on March 6, 1997. It is believed that this case is now
essentially over, although Mrs. Moore may possibly try to have certiorari
granted to the Supreme Court of Georgia. The granting of such request would be
very unlikely.
DIRECTOR'S FEES, COMMITTEES AND ATTENDANCE
Directors of the Company receive $500.00 for each meeting of the Board of
Directors of Colony Bankcorp attended, and $400.00 for each meeting of the Board
of Directors at which they are not in attendance. In addition, each director of
the Company, except Terry L. Hester, W. B. Roberts, Jr., Terry Coleman, L.
Morris Downing, Jr., Joe K. Shiver and Curtis Summerlin, is also a director of
The Bank of Fitzgerald, and in that capacity the directors are compensated for
participation on the Board of Directors of The Bank of Fitzgerald at $400.00 for
each meeting of the Board attended and $300.00 for each meeting at which they
are not in attendance. Directors emeritus receive $200.00 for each Board meeting
that they attend.
James D. Minix, W. B. Roberts, Jr. and Ben B. Mills, Jr. serve as
directors of Ashburn Bank and receive additional compensation for service in
that capacity of $300.00 for each board meeting attended and $50.00 for
<PAGE>
each loan and audit committee meeting. Terry Coleman serves as director of The
Bank of Dodge County and receives additional compensation for service in that
capacity of $50.00 for each loan committee meeting and $200.00 for each board
meeting attended. Joe K. Shiver serves as a director of The Bank of Worth and
receives additional compensation for those services in that capacity of $25.00
for each loan committee meeting and $200.00 for each board meeting attended.
Curtis A. Summerlin and James D. Minix serve as directors of Broxton State Bank
and receives $300.00 for each meeting attended.
Under a plan, as amended, some directors of The Bank of Fitzgerald were
able to defer all or a portion of director's fees in return for a deferred
income agreement under which a director agrees to serve as a director for either
five or ten years without the director's fees compensation in exchange for an
agreement for the Bank to pay the director a deferred amount of income at death,
or upon their attaining the age of 65. With the deferred compensation, the Bank
has purchased key man insurance on the participating directors to pay to the
Bank a death benefit equal in value to the projected cost of the deferred
income. Management believes the program will have no net cost to the Bank. The
Bank charged $60,716.48 in expenses to the deferred compensation arrangement in
1996, representing payments made to four directors who had attained the
specified age, together with a difference between premiums paid for the key man
insurance by the Bank and accrual for funding payments under the plan at
retirement and the increase in the cash value of the policies. All directors are
participating in the plan, except for new directors elected since 1990. Neither
the Company nor the other subsidiaries of the Company have a similar deferred
income arrangement. All fees covered by that deferred compensation plan have
been deferred, and all directors are now receiving directors fees. The Bank of
Fitzgerald continues to pay premiums on the insurance policies procured, with
four directors in 1996 receiving payments pursuant to that plan.
In 1996, the Board of Directors of the Company held 12 meetings. All
directors attended at least 75% of all meetings of the full Board of Directors
during 1996.
The Board of Directors of the Company has formed the following Committees:
(a) an Audit Committee, presently consisting of Messrs. Branch, Hopkins and
Kimball, which is responsible for reviewing and evaluating the Company's
financial controls, (b) an Executive Committee, presently consisting of Messrs.
Minix, Massee, Ross, Kimball and Mills, which is responsible for assisting the
Board on the discharge of its duties and (c) an Incentive and Compensation
Committee, presently consisting of Messrs. Minix, Massee, Kimball, Downing and
Shiver, which is responsible for reviewing and setting the salaries and bonuses
of the executive officers of the Company and establishing and reviewing a cash
incentive and profit sharing compensation plan for the employees of the Company
and subsidiary banks.
During the 1996 Fiscal Year, there were ten meetings of the Audit
Committee, three meetings of the Executive Committee and three meetings of the
Incentive and Compensation Committee. No additional compensation was paid for
serving on these committees.
EXECUTIVE COMPENSATION
The following table sets forth the aggregate annual compensation for each of the
Company's chief executive officers and for each of the Company's executive
officers whose compensation exceeded $100,000.00.
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation
----------------------------------------------------------
Name and Other Annual Long Term All Other
Principal Position(a) Year(b) Salary(c) Bonus(d) Compensation(e) Compensation(f) Compensation(g)
- --------------------- ------- --------- -------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
James D. Minix, President 1996 $121,800.12 $12,000.00 $22,723.94(1) $ -0- $ -0-
and Chief Executive 1995 $116,000.04 $12,000.00 $20,347.22(1) $ -0- $ -0-
Officer of Bankcorp 1994 $110,000.02 $10,000.00 $24,064.86(1) $ -0- $ -0-
</TABLE>
<PAGE>
*(1) Includes dollar value of Group Term Life and company vehicle provided to
executive officers as follows:
Name 1996 1995 1994
---- ---- ---- ----
James D. Minix $ 1,961.44 $ 1,472.22 $ 1,214.84
Includes contribution to the profit sharing plan of Colony Bankcorp, Inc.
as follows:
Name 1996 1995 1994
---- ---- ---- ----
James D. Minix $10,562.50 $ 9,375.00 $14,400.02
Includes director's fees paid by the Company and its subsidiaries as
follows:
Name 1996 1995 1994
---- ---- ---- ----
James D. Minix $10,200.00 $ 9,500.00 $ 8,450.00
See "Certain Transactions" for additional information concerning fees paid
to directors.
(f) There were no long term compensation awards for restricted stock awards or
options/SARs or long term compensation payouts for LTIP payouts for any
executive officers.
(g) There was no additional compensation for any executive officers to be
reported in column (g)
Each of the subsidiary banks of the Company has adopted a profit
sharing and stock bonus plan which provides for the Board of Directors to
make a discretionary contribution to the plan in an amount out of profits
not to exceed 15% of the total annual compensation of the employees
eligible to participate in the plan. Employees are eligible to participate
after completion of one year of service. The contribution by the Bank is
allocated among the participants according to the ratio of the
participant's compensation to the total compensation of all employees. The
employee's interest vests over a period of 7 years; prior to 1989 an
employee's interest in its individual account vested over a period of 11
years. For the year ending December 31, 1996 the Board of Directors of the
Company and subsidiary banks voted to contribute in the aggregate
$233,466.95.00 of the profits of the Company to the Company's profit
sharing plans.
James D. Minix, Terry L. Hester and Edwin W. Hortman, Jr. are the
only executive officers of Colony Bankcorp, Inc. Mr. Minix has served as
President and Chief Executive Officer of the Company since June 1, 1994.
Prior to being elected President of the Company, he served as President
of The Bank of Fitzgerald from January 1, 1993, to June 1, 1994 and as
President of Ashburn Bank from February 26, 1990 to December 31, 1992. Mr.
Hester has served as Executive Vice President and Chief Financial Officer
since June 1, 1994. Prior to being elected Executive Vice President, he
served as Acting President and Chief Executive Officer of the Company from
June 8, 1993 to June 1, 1994. Mr. Hester has served as Treasurer of the
Company since 1982. Mr. Hortman has served as Senior Vice President since
February 1996 and as Vice President from November, 1992 to February, 1996
and is responsible for credit review, compliance, auditing and data
processing. Mr. Hortman has served as President and Chief Executive
Officer of Colony Management Services, Inc. since its inception in
November, 1996.
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed McNair, McLemore, Middlebrooks &
Co. as the Company's independent public accountants for the fiscal year
ending December 31, 1997. Representatives of McNair, McLemore,
Middlebrooks & Co. will be present at the annual meeting and will have
the opportunity to make a statement if they desire to do so and will be
available to respond to appropriate questions by shareholders.
<PAGE>
OTHER MATTERS
The Board of Directors does not contemplate bringing before the meeting any
matter other than those specified in the notice of annual meeting of
shareholders, nor does it have information that other matters will be presented
at the meeting. If other matters come before the meeting, signed proxies will
be voted upon such questions in accordance with the best judgment of the
persons acting under the proxies.
FORM 10-KSB
Upon receipt of a written request, the Company will, without charge,
furnish any owner of common stock a copy of its annual report to the Securities
and Exchange Commission on Form 10-KSB for the fiscal year ended December 31,
1996 including financial statements and the schedule thereto. Copies of
exhibits to the Form 10-KSB are also available upon specific request and payment
of a reasonable charge for reproduction. Such requests should be directed to
the secretary of the Company at the address indicated on the front of the proxy
statement.
SHAREHOLDER PROPOSALS
Any shareholder proposal intended to be presented at the 1997 annual
meeting of shareholders and to be included in the Company's proxy statement and
proxy for that meeting must be received by the Company, directed to the
attention of the Secretary, not later than December 12, 1997. Any such proposal
must comply with all respects with the rules and regulations of the Securities
and Exchange Commission.
By order of the
Board of Directors
JAMES D. MINIX, President
and Chief Executive Officer
Fitzgerald, Georgia
April 2, 1997
<PAGE>
EXHIBIT 99(B)
COLONY BANKCORP, INC. AND SUBSIDIARIES
FITZGERALD, GEORGIA
CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 1996 AND 1995 AND
REPORT OF INDEPENDENT ACCOUNTANTS
<PAGE>
COLONY BANKCORP, INC. AND SUBSIDIARIES
CONTENTS
Report of Independent Accountants........................... 1
Consolidated Balance Sheets................................. 2
Consolidated Statements of Operations....................... 4
Consolidated Statements of Changes in Stockholders' Equity.. 5
Consolidated Statements of Cash Flows....................... 6
Notes to Consolidated Financial Statements.................. 7
<PAGE>
[Letterhead of McNair, McLemore, Middlebrooks & Co., LLP appears here]
February 4, 1997
REPORT OF INDEPENDENT ACCOUNTANTS
The Board of Directors and Stockholders
Colony Bankcorp, Inc. and Subsidiaries
We have audited the accompanying consolidated balance sheets of COLONY BANKCORP,
INC. AND SUBSIDIARIES as of December 31, 1996 and 1995 and the related
consolidated statements of operations, changes in stockholders' equity and cash
flows for each of the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Colony Bankcorp,
Inc. and Subsidiaries as of December 31, 1996 and 1995 and the results of
operations and cash flows for each of the years then ended in conformity with
generally accepted accounting principles.
/s/ [signature appears here]
McNAIR, McLEMORE, MIDDLEBROOKS & CO., LLP
-1-
<PAGE>
COLONY BANKCORP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31
ASSETS
1996 1995
------------ ------------
CASH AND BALANCES DUE FROM DEPOSITORY
INSTITUTIONS $ 13,443,751 $ 10,342,284
FEDERAL FUNDS SOLD 22,740,000 25,125,000
INVESTMENT SECURITIES (AGGREGATE FAIR
VALUE OF $63,327,921 AND $51,453,951
AS OF DECEMBER 31, 1996 AND 1995,
RESPECTIVELY) 63,377,592 51,559,650
LOANS 206,875,747 200,878,039
Allowance for Loan Losses (4,434,867) (4,051,243)
Unearned Interest and Fees (12,549) (40,740)
------------ ------------
202,428,331 196,786,056
PREMISES AND EQUIPMENT 6,952,634 6,263,987
OTHER REAL ESTATE 2,802,806 2,001,221
OTHER ASSETS 7,795,108 7,167,430
------------ ------------
TOTAL ASSETS $319,540,222 $299,245,628
============ ============
The accompanying notes are an integral part of these balance sheets.
-2-
<PAGE>
COLONY BANKCORP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31
LIABILITIES AND STOCKHOLDERS' EQUITY
1996 1995
------------ ------------
DEPOSITS
Noninterest-Bearing $ 28,723,436 $ 27,858,380
Interest-Bearing 256,952,789 243,787,737
------------ ------------
285,676,225 271,646,117
BORROWED MONEY
Federal Funds Purchased 160,000 -
Other Borrowed Money 5,495,870 2,504,468
------------ ------------
5,655,870 2,504,468
OTHER LIABILITIES 2,617,098 2,027,260
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common Stock, Par Value $10 a Share;
Authorized 5,000,000 Shares,
Issued 1,448,842 Shares as of
December 31, 1996 and 1995 14,488,420 14,488,420
Paid-In Capital 1,137,424 1,137,424
Retained Earnings 10,144,118 7,609,740
Net Unrealized Loss on Securities
Available for Sale, Net of Tax
Benefit of $3,195 in 1996 and $15,634
in 1995 (178,933) (167,801)
----------- ------------
25,591,029 23,067,783
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $319,540,222 $299,245,628
============ ============
The accompanying notes are an integral part of these balance sheets.
-3-
<PAGE>
<TABLE>
<CAPTION>
COLONY BANKCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31
1996 1995
---------------- -----------------
<S> <C> <C>
INTEREST INCOME
Loans, Including Fees $22,371,529 $ 22,048,570
Federal Funds Sold 863,648 602,877
Deposits with Other Banks 8,742 45,516
Investment Securities
U. S. Treasury 48,024 96,835
U. S. Government Agencies 2,817,365 2,499,886
State, County and Municipal 318,497 348,618
Other Investments 73,622 -
Dividends on Other Investments 23,202 96,878
---------------- -----------------
26,524,629 25,739,180
---------------- -----------------
INTEREST EXPENSE
Deposits 12,847,850 11,800,129
Federal Funds Purchased 28,517 36,533
Other Borrowed Money 281,716 303,021
---------------- -----------------
13,158,083 12,139,683
---------------- -----------------
NET INTEREST INCOME 13,366,546 13,599,497
Provision for Loan Losses 2,194,595 3,246,050
---------------- -----------------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 11,171,951 10,353,447
---------------- -----------------
NONINTEREST INCOME
Service Charges on Deposits 1,679,895 1,591,913
Other Service Charges, Commissions and Fees 464,193 154,314
Securities Gains 41,140 49,167
Other 463,861 538,208
---------------- -----------------
2,649,089 2,333,602
---------------- -----------------
NONINTEREST EXPENSES
Salaries and Employee Benefits 5,009,239 4,628,285
Occupancy and Equipment 1,185,489 1,179,145
Directors' Fees 335,875 290,750
FDIC Premiums 274,636 359,212
Legal and Professional Fees 362,177 406,976
Other Real Estate Expense 288,377 456,810
Other 2,113,039 2,010,618
---------------- -----------------
9,568,832 9,331,796
---------------- -----------------
INCOME BEFORE INCOME TAXES 4,252,208 3,355,253
INCOME TAXES 1,318,666 983,128
---------------- -----------------
NET INCOME $ 2,933,542 $ 2,372,125
================ =================
NET INCOME PER SHARE OF COMMON STOCK $2.02 $1.72
================ =================
WEIGHTED AVERAGE SHARES OUTSTANDING 1,448,842 1,379,112
================ =================
</TABLE>
The accompanying notes are an integral part of these statements.
-4-
<PAGE>
COLONY BANKCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
<TABLE>
<CAPTION>
NET
UNREALIZED
GAIN (LOSS)
SHARES COMMON PAID-IN RETAINED ON SECURITIES
OUTSTANDING STOCK CAPITAL EARNINGS AVAILABLE
FOR SALE TOTAL
----------- ----------- ------------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1995, AS 608,055 $ 6,080,550 $ 1,447,798 $10,432,847 $(1,211,516) $16,749,679
PREVIOUSLY REPORTED
Adjustment in Connection
with Pooling of Interests 157,732 1,577,320 20,176 276,685 (169,636) 1,704,545
----------- ----------- ------------- ----------- ----------- -----------
BALANCE, JANUARY 1, 1995, AS
RESTATED 765,787 7,657,870 1,467,974 10,709,532 (1,381,152) 18,454,224
Equity Transfer 5,000,000 (5,000,000) -
Issuance of Common Stock 75,000 750,000 750,000 1,500,000
100 Percent Stock Split 608,055 6,080,550 (6,080,550) -
Net Unrealized Gain on
Securities Available
for Sale, Net of Tax 1,213,351 1,213,351
Dividends Paid (471,917) (471,917)
Net Income 2,372,125 2,372,125
----------- ----------- ------------- ----------- ----------- -----------
BALANCE, DECEMBER 31, 1995 1,448,842 14,488,420 1,137,424 7,609,740 (167,801) 23,067,783
Net Unrealized Loss on
Securities Available for
Sale, Net of Tax (11,132) (11,132)
Dividends Paid (399,164) (399,164)
Net Income 2,933,542 2,933,542
------------ ---------- ------------- ----------- ----------- -----------
BALANCE, DECEMBER 31, 1996 1,448,842 $14,488,420 $ 1,137,424 $10,144,118 $ (178,933) $25,591,029
=========== =========== ============= =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
-5-
<PAGE>
<TABLE>
<CAPTION>
COLONY BANKCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31
1996 1995
-------------- ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 2,933,542 $ 2,372,125
Adjustments to Reconcile Net Income to Net
Cash Provided from Operating Activities
Depreciation 561,314 592,641
Amortization and Accretion 155,951 109,305
Provision for Loan Losses 2,194,595 3,246,050
Deferred Income Taxes (179,896) (78,772)
Securities Gains (41,140) (49,167)
(Gain) Loss on Sale of Equipment (19,521) 51,734
Loss on Sale of Other Real Estate and Repossessions 50,149 250,314
Other Real Estate Writedown 21,440 -
CHANGE IN
Interest Receivable 159,991 (422,070)
Prepaid Expenses (88,840) (48,354)
Interest Payable 100,413 369,608
Accrued Expenses and Accounts Payable 302,664 (116,418)
Other (393,873) 13,379
-------------- ------------
5,756,789 6,290,375
-------------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Interest-Bearing Deposits in Other Banks (792,000) 1,783,000
Purchase of Investment Securities
Available for Sale (33,797,492) (10,397,162)
Proceeds from Sale of Investment Securities
Available for Sale 4,010,848 8,758,525
Proceeds from Maturities, Calls and Paydowns
of Investment Securities
Available for Sale 17,753,150 4,667,539
Held to Maturity 153,372 654,291
Proceeds from Sale of Equipment 65,198 55,862
Loans to Customers (9,626,783) (20,748,449)
Purchase of Premises and Equipment (1,295,639) (499,313)
Other Real Estate 955,081 954,242
Cash Surrender Value of Life Insurance (40,402) 387,967
-------------- ------------
(22,614,667) (14,383,498)
-------------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Interest-Bearing Customer Deposits 13,165,052 27,285,204
Noninterest-Bearing Customer Deposits 865,055 (392,250)
Proceeds from Long-Term Borrowing 826,269 -
Dividends Paid (399,164) (471,917)
Federal Funds Purchased 2,000,000 (760,000)
Note to Federal Home Loan Bank 1,000,000 200,000
Principal Payments on Notes and Debentures (674,867) (474,866)
Proceeds from Issuance of Common Stock - 1,500,000
-------------- ------------
16,782,345 26,886,171
-------------- ------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (75,533) 18,793,048
CASH AND CASH EQUIVALENTS, BEGINNING 35,368,284 16,575,236
-------------- ------------
CASH AND CASH EQUIVALENTS, ENDING $ 35,292,751 $ 35,368,284
============== ============
</TABLE>
The accompanying notes are an integral part of these statements.
-6-
<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; Community Bank
of Wilcox, Pitts, Georgia; Broxton State Bank, Broxton, Georgia; and Colony
Management Services, Inc., Fitzgerald, 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 records investment securities under Statement of Financial
Accounting Standards (SFAS) No. 115, Accounting for Certain Investments in Debt
and Equity Securities. 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 December 31, 1996 and 1995. Realized and unrealized gains and
losses are determined using the specific identification method. Premiums and
discounts are recognized in interest income using the interest method over the
period to maturity.
-7-
<PAGE>
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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.
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.
-8-
<PAGE>
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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:
<TABLE>
<CAPTION>
DESCRIPTION LIFE IN YEARS METHOD
- ---------------------- ------------------ ---------------
<S> <C> <C>
Banking Premises 15-40 Straight-Line and
Accelerated
Furniture and Equipment 5-10 Straight-Line and
Accelerated
</TABLE>
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.
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 acquisition 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.
-9-
<PAGE>
(2) CASH AND BALANCES DUE FROM DEPOSITORY INSTITUTIONS
Components of cash and balances due from depository institutions are as follows
as of December 31:
<TABLE>
<CAPTION>
1996 1995
------------- -----------
<S> <C> <C>
Cash on Hand and Cash Items $ 3,692,074 $ 3,477,640
Noninterest-Bearing Deposits with Other Banks 8,860,677 6,765,644
Interest-Bearing Deposits with Other Banks 891,000 99,000
------------- -----------
$13,443,751 $10,342,284
============= ===========
</TABLE>
(3) INVESTMENT SECURITIES
Investment securities as of December 31, 1996 are summarized as follows:
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
------------- ----------- ---------- -----------
SECURITIES AVAILABLE FOR SALE
<S> <C> <C> <C> <C>
U.S. Treasury $ 499,382 $ (6) $ 499,376
U.S. Government Agencies
Mortgage Backed 16,366,676 $ 78,077 (94,219) 16,350,534
Other 35,702,287 31,737 (69,554) 35,664,470
State, County and Municipal 5,383,462 86,185 (22,823) 5,446,824
The Banker's Bank Stock 50,000 50,000
Federal Home Loan Bank Stock 483,000 483,000
Marketable Equity Securities 1,130,021 (185,136) 944,885
----------- -------- --------- -----------
$59,614,828 $195,999 $(371,738) $59,439,089
=========== ======== ========= ===========
SECURITIES HELD TO MATURITY
U.S. Government Agencies $ 2,148,659 $ (16,312) $ 2,132,347
State, County and Municipal 1,789,844 $ 2,597 (35,956) 1,756,485
----------- -------- --------- -----------
$ 3,938,503 $ 2,597 $ (52,268) $ 3,888,832
=========== ======== ========= ===========
</TABLE>
-10-
<PAGE>
(3) INVESTMENT SECURITIES (CONTINUED)
The amortized cost and fair value of investment securities as of December 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 $ 7,431,815 $ 7,355,645 $ 645,000 $ 642,308
Due After One Year Through Five Years 32,012,580 32,099,930 2,774,913 2,750,413
Due After Five Years Through Ten Years 1,523,481 1,530,840
Due After Ten Years 617,255 624,255 518,590 496,111
----------- ----------- ---------- -----------
41,585,131 41,610,670 3,938,503 3,888,832
Federal Home Loan Bank Stock 483,000 483,000
The Banker's Bank Stock 50,000 50,000
Marketable Equity Securities 1,130,021 944,885
Mortgage Backed Securities 16,366,676 16,350,534
------------ ------------
$59,614,828 $59,439,089 $3,938,503 $ 3,888,832
=========== =========== ========== ===========
Investment securities as of December 31, 1995 are summarized as follows:
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
------------- ----------- ---------- -----------
SECURITIES AVAILABLE FOR SALE
U.S. Treasury $ 988,704 $ 3,796 $ 992,500
U.S. Government Agencies
Mortgage Backed 22,209,705 81,559 $ (255,095) 22,036,169
Other 17,842,272 87,879 (42,877) 17,887,274
State, County and Municipal 5,046,946 96,094 (18,553) 5,124,487
The Banker's Bank Stock 50,000 50,000
Federal Home Loan Bank Stock 249,800 249,800
Marketable Equity Securities 1,279,680 1,213 (137,452) 1,143,441
----------- ----------- ---------- -----------
$47,667,107 $ 270,541 $ (453,977) $47,483,671
=========== =========== ========== ===========
SECURITIES HELD TO MATURITY
U.S. Government Agencies $ 2,149,888 $ (23,434) $ 2,126,454
State, County and Municipal 1,926,091 (82,265) 1,843,826
----------- ----------- ---------- -----------
$ 4,075,979 $ - $ (105,699) $ 3,970,280
=========== =========== ========== ===========
</TABLE>
-11-
<PAGE>
(3) INVESTMENT SECURITIES (CONTINUED)
Proceeds from sales of investments available for sale were $4,010,848 in 1996
and $8,758,525 in 1995. Gross realized gains totaled $41,140 and $49,167 in
1996 and 1995, respectively.
Investment securities having a carrying value approximating $27,618,000 and
$29,632,000 as of December 31, 1996 and 1995, respectively, were pledged to
secure public deposits and for other purposes.
(4) LOANS
The composition of loans as of December 31 are:
1996 1995
------------ ------------
Commercial, Financial and Agricultural $ 38,775,940 $ 34,458,773
Real Estate-Construction 881,000 526,016
Real Estate-Farmland 25,769,419 23,680,501
Real Estate-Other 88,895,963 95,966,779
Installment Loans to Individuals 44,608,274 38,865,019
All Other Loans 7,945,151 7,380,951
------------ ------------
$206,875,747 $200,878,039
============ ============
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 $7,395,598 and $5,228,900 as of December 31, 1996 and 1995,
respectively. Foregone interest on nonaccrual loans approximated $693,000 in
1996 and $462,400 in 1995.
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 December 31 and for the years then ended
follows:
1996 1995
-------------------------
Total Investment in Impaired Loans $ 1,350,985 $ 517,138
Less Allowance for Impaired Loan Losses (419,490) (38,696)
----------- -----------
Net Investment, December 31 $ 931,495 $ 478,442
=========== ===========
Average Investment during the Year 1,361,810 $ 517,160
=========== ===========
Income Recognized during the Year $ 110,381 $ 3,219
=========== ===========
Income Collected during the Year $ 110,381 $ -
=========== ===========
-12-
<PAGE>
(5) ALLOWANCE FOR LOAN LOSSES
Transactions in the allowance for loan losses are summarized below for the years
ended December 31:
1996 1995
----------- -----------
BALANCE, BEGINNING $ 4,051,243 $ 3,178,811
Provision Charged to Operating Expenses 2,194,595 3,246,050
Loans Charged Off (2,817,098) (2,906,937)
Loan Recoveries 1,006,127 533,319
----------- -----------
BALANCE, ENDING $ 4,434,867 $ 4,051,243
=========== ===========
The allowances for loan losses presented above include allowances for impaired
loan losses which were established as of January 1, 1995. Transactions in the
allowance for impaired loan losses during 1996 and 1995 were as follows:
<TABLE>
<CAPTION>
1996 1995
-------- -------
<S> <C> <C>
BALANCE, BEGINNING $ 38,696 $26,895
Provision Charged to Operating Expenses 382,716 11,801
Loans Charged Off (1,922) -
Loan Recoveries - -
-------- -------
BALANCE, ENDING $419,490 $38,696
======== =======
</TABLE>
(6) PREMISES AND EQUIPMENT
Premises and equipment are comprised of the following as of December 31:
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Land $ 972,647 $ 908,746
Building 5,601,368 5,255,627
Furniture, Fixtures and Equipment 5,150,076 4,790,972
Leasehold Improvements 30,705 17,332
----------- -----------
11,754,796 10,972,677
Accumulated Depreciation (4,802,162) (4,708,690)
----------- -----------
$ 6,952,634 $ 6,263,987
=========== ===========
</TABLE>
Depreciation charged to operations totaled $561,314 in 1996 and $592,641 in
1995.
-13-
<PAGE>
(6) PREMISES AND EQUIPMENT (CONTINUED)
In 1996, the Company began leasing a supermarket bank unit with a lease period
of five years. Rent expense under this operating lease approximated $8,600 for
the year ended December 31, 1996.
Future minimum lease payments to be paid as of December 31, 1996 are as follows:
<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31 AMOUNT
- ------------ --------
<S> <C>
1997 $ 39,600
1998 39,600
1999 39,600
2000 39,600
2001 33,000
----------
$191,400
==========
</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.
The components of income tax expense for the years ended December 31 are as
follows:
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Current Federal Expense $1,459,272 $1,069,811
Deferred Federal Benefit (177,468) (86,683)
---------- ----------
Federal Income Tax Expense 1,281,804 983,128
Current State Income Tax Expense 36,862 -
---------- ----------
$1,318,666 $ 983,128
========== ==========
</TABLE>
-14-
<PAGE>
(7) INCOME TAXES (CONTINUED)
The federal income tax expense of $1,281,804 in 1996 and $983,128 in 1995 is
less than the income taxes computed by applying the federal statutory rate of 34
percent to income before income taxes. The reasons for the differences are as
follows:
<TABLE>
<CAPTION>
1996 1995
--------- ----------
<S> <C> <C>
FEDERAL STATUTORY INCOME TAXES $1,445,751 $1,140,786
Tax-Exempt Interest (143,101) (153,441)
Interest Expense Disallowance 21,758 23,058
Premiums on Officers' Life Insurance (12,976) (19,688)
Meal and Entertainment Disallowance 3,358 2,551
State Income Taxes (29,023) -
Other (3,963) (10,138)
--------- ----------
ACTUAL INCOME TAXES $1,281,804 $ 983,128
========== ==========
Deferred taxes in the accompanying balance sheets as of December 31 include the following:
1996 1995
--------- ----------
DEFERRED TAX ASSETS
Allowance for Loan Losses $ 511,382 $ 325,691
Deferred Compensation 133,488 119,233
Other Real Estate 61,377 63,437
Other 4,633 6,965
--------- ----------
710,880 515,326
DEFERRED TAX LIABILITIES
Premises and Equipment (42,286) (24,200)
--------- ----------
668,594 491,126
DEFERRED TAX ASSET ON UNREALIZED SECURITIES LOSSES 3,195 15,634
--------- ----------
$ 671,789 $ 506,760
========== ==========
</TABLE>
(8) DEPOSITS
Components of interest-bearing deposits as of December 31 are as follows:
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Interest-Bearing Demand $ 55,296,693 $ 55,114,889
Savings 11,724,296 10,953,278
Time, $100,000 and Over 54,138,600 50,192,129
Other Time 135,793,200 127,527,441
------------ ------------
$256,952,789 $243,787,737
============ ============
</TABLE>
-15-
<PAGE>
(8) DEPOSITS (CONTINUED)
The aggregate amount of short-term jumbo certificates of deposit, each with a
minimum denomination of $100,000, was approximately $45,356,000 and $41,432,000
as of December 31, 1996 and 1995, respectively.
As of December 31, 1996, the scheduled maturities of certificates of deposit are
as follows:
<TABLE>
<CAPTION>
YEAR AMOUNT
- ---- ------
<S> <C>
1997 $143,923,675
1998 31,621,624
1999 9,234,230
2000 3,278,993
2001 and Thereafter 1,873,278
--------------
$189,931,800
==============
</TABLE>
(9) OTHER BORROWED MONEY
Other borrowed money is comprised of the following as of December 31:
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
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. $ - $ 200,000
Debentures payable, due in annual payments of $266,867
plus interest at variable rates, on November 1, 1996 through
November 1, 1999, collateralized by 100% of the common
stock of Ashburn Bank. Effective interest rate of 8.0% as of
December 31, 1996. 800,601 1,067,468
Note payable, due in annual payments of $207,143 plus
quarterly interest at variable rates, 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 8.75% as of
December 31, 1996. 1,029,000 1,237,000
Notes payable, due February 26, 1997 with interest at
variable rates. Collateralized by commercial real estate in
downtown Fitzgerald, Georgia. Effective interest rate of
8.75% as of December 31, 1996. 291,269 -
</TABLE>
-16-
<PAGE>
(9) OTHER BORROWED MONEY (CONTINUED)
<TABLE>
<CAPTION>
1996 1995
------------ ----------
<S> <C> <C>
Advance agreement with the Federal Home Loan Bank of
Atlanta, dated December 30, 1996, payable in full on
December 30, 1997. Interest rate determined under the daily
rate credit program. Effective interest rate of 6.95% as of
December 31, 1996. $ 1,000,000 $ -
Advance agreement with the Federal Home Loan Bank of
Atlanta, dated September 27, 1996, payable in full on
September 27, 1997. Interest rate determined under the
daily rate credit program. Effective interest rate of 6.95%
as of December 31, 1996. 2,000,000 -
Note payable, due June 13, 1997 with interest at variable
rate, due quarterly beginning March 13, 1997.
Collateralized by guaranty of Colony Bankcorp, Inc. in
addition to all furniture, fixtures, equipment and software of
Colony Management Services, Inc. Effective interest rate of
8.25% as of December 31, 1996. 375,000 -
------------ ----------
$ 5,495,870 $2,504,468
============ ==========
</TABLE>
<TABLE>
<CAPTION>
Maturities of borrowed money during the ensuing years are as follows:
YEAR AMOUNT
- ---- ------------
<S> <C>
1997 $ 4,140,279
1998 1,088,724
1999 266,867
Thereafter -
------------
$ 5,495,870
============
</TABLE>
(10) PROFIT SHARING PLAN
The Company has a profit sharing plan that covers substantially all employees
who meet certain age and service requirements. It is the Company's policy to
make contributions to the plan as approved annually by the board of directors.
The total provision for contributions to the plan was $233,467 for 1996 and
$209,745 for 1995.
-17-
<PAGE>
(11) COMMITMENTS AND CONTINGENCIES
In the normal course of business, certain commitments and contingencies are
incurred which are not reflected in the consolidated financial statements. The
Bank had commitments under standby letters of credit to U.S. addressees
approximating $3,128,000 as of December 31, 1996 and $3,591,000 as of December
31, 1995. Unfulfilled loan commitments as of December 31, 1996 and 1995
approximated $19,696,000 and $17,753,000, respectively. No losses are
anticipated as a result of commitments and contingencies.
(12) DEFERRED COMPENSATION PLAN
The Banks have deferred compensation plans covering directors choosing to
participate through individual deferred compensation contracts. In accordance
with terms of the contracts, the Banks are committed to pay the directors
deferred compensation over a period of 10 years, beginning at age 65. In the
event of a director's death before age 65, payments are made to the director's
named beneficiary over a period of 10 years, beginning on the first day of the
month following the death of the director.
Liabilities accrued under the plan totaled $392,613 and $350,685 as of December
31, 1996 and 1995, respectively. Benefit payments under the contracts were
$28,746 in 1996 and $29,991 in 1995. Provisions charged to operations totaled
$70,400 in 1996 and $69,408 in 1995.
(13) INTEREST INCOME AND EXPENSE
Interest income of $322,536 and $339,945 from state, county and municipal bonds
was exempt from regular income taxes in 1996 and 1995, respectively.
Interest on deposits includes interest expense on time certificates of $100,000
or more totaling $2,761,374 and $2,846,050 for the years ended December 31, 1996
and 1995, respectively.
(14) SUPPLEMENTAL CASH FLOW INFORMATION
Cash payments for the following were made during the years ended December 31:
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Interest Expense $13,056,999 $11,878,167
=========== ===========
Income Taxes $ 1,246,399 $ 1,183,749
=========== ===========
Noncash financing and investing activities for the years ended December 31 are as follows:
1996 1995
----------- -----------
Acquisitions of Real Estate Through Loan Foreclosures $ 1,676,239 $ 1,047,224
=========== ===========
100 Percent Stock Split Effected as Stock Dividend $ - $ 6,080,550
=========== ===========
</TABLE>
-18-
<PAGE>
(15) RELATED PARTY TRANSACTIONS
The aggregate balance of direct and indirect loans to directors, executive
officers or principal holders of equity securities of the Bank was $6,692,036 as
of December 31, 1996 and $9,154,589 as of December 31, 1995. All such loans
were made on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
other persons and do not involve more than a normal risk of collectibility. A
summary of activity of related party loans is shown below:
<TABLE>
<CAPTION>
1996 1995
------------ -----------
<S> <C> <C>
BALANCE, BEGINNING $ 9,154,589 $ 6,202,768
New Loans 13,021,619 8,570,264
Repayments (16,038,215) (5,618,443)
Transactions Due to Changes in Directors 554,043 -
------------ -----------
BALANCE, ENDING $ 6,692,036 $ 9,154,589
============ ===========
</TABLE>
(16) FAIR VALUE OF FINANCIAL INSTRUMENTS
SFAS No. 107, Disclosures about Fair Value of Financial Instruments, requires
disclosure of fair value information about financial instruments, whether or not
recognized on the face of the balance sheet, for which it is practicable to
estimate that value. The assumptions used in the estimation of the fair value
of Colony Bankcorp, Inc. and Subsidiaries' financial instruments are detailed
below. Where quoted prices are not available, fair values are based on
estimates using discounted cash flows and other valuation techniques. The use
of discounted cash flows can be significantly affected by the assumptions used,
including the discount rate and estimates of future cash flows. The following
disclosures should not be considered a surrogate of the liquidation value of the
Company, but rather a good-faith estimate of the increase or decrease in value
of financial instruments held by the Company since purchase, origination or
issuance.
CASH AND SHORT-TERM INVESTMENTS - For cash, due from banks, bank-owned deposits
and federal funds sold, the carrying amount is a reasonable estimate of fair
value.
INVESTMENT SECURITIES - Fair values for investment securities are based on
quoted market prices.
LOANS - The fair value of fixed rate loans is estimated by discounting the
future cash flows using the current rates at which similar loans would be made
to borrowers with similar credit ratings. For variable rate loans, the carrying
amount is a reasonable estimate of fair value.
DEPOSIT LIABILITIES - The fair value of demand deposits, savings accounts and
certain money market deposits is the amount payable on demand at the reporting
date. The fair value of fixed maturity certificates of deposit is estimated by
discounting the future cash flows using the rates currently offered for deposits
of similar remaining maturities.
STANDBY LETTERS OF CREDIT AND COMMITMENTS TO EXTEND CREDIT - Because standby
letters of credit and commitments to extend credit are made using variable
rates, the contract value is a reasonable estimate of fair value.
-19-
<PAGE>
(16) FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)
The carrying amount and estimated fair values of the Company's financial
instruments as of December 31 are as follows:
<TABLE>
<CAPTION>
1996 1995
---------------------- ----------------------
CARRYING ESTIMATED Carrying Estimated
AMOUNT FAIR VALUE Amount Fair Value
---------- ---------- -------- ------------
(in Thousands)
ASSETS
<S> <C> <C> <C> <C><C>
Cash and Short-Term Investments $ 36,184 $ 36,184 $ 35,467 $ 35,467
Investment Securities Available for Sale 59,439 59,439 47,484 47,484
Investment Securities Held to Maturity 3,939 3,889 4,076 3,970
Loans 202,428 209,049 196,786 197,520
LIABILITIES
Deposits 285,676 285,669 271,646 272,079
Borrowed Money 5,656 5,656 2,504 2,504
UNRECOGNIZED FINANCIAL INSTRUMENTS
Standby Letters of Credit 3,128 3,128 3,591 3,591
Commitments to Extend Credit 19,696 19,696 17,753 17,753
</TABLE>
Fair value estimates are made at a specific point in time, based on relevant
market information and information about the financial instrument. These
estimates do not reflect any premium or discount that could result from offering
for sale at one time the Company's entire holdings of a particular financial
instrument. Because no market exists for a significant portion of the Company's
financial instruments, fair value estimates are based on many judgments. These
estimates are subjective in nature and involve uncertainties and matters of
significant judgment and therefore cannot be determined with precision. Changes
in assumptions could significantly affect the estimates.
Fair value estimates are based on existing on and off-balance sheet financial
instruments without attempting to estimate the value of anticipated future
business and the value of assets and liabilities that are not considered
financial instruments. Significant assets and liabilities that are not
considered financial instruments include deferred income taxes and premises and
equipment. In addition, the tax ramifications related to the realization of the
unrealized gains and losses can have a significant effect on fair value
estimates and have not been considered in the estimates.
(17) REGULATORY CAPITAL MATTERS
The amount of dividends payable to the parent company from the subsidiary banks
is limited by various banking regulatory agencies. The amount of cash dividends
available from subsidiaries for payment in 1997 without prior approval from the
banking regulatory agencies approximates $1,562,000. Upon approval by
regulatory authorities, the banks may pay cash dividends to the parent company
in excess of regulatory limitations.
-20-
<PAGE>
(17) REGULATORY CAPITAL MATTERS (CONTINUED)
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 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 the Company's
assets, liabilities and certain off-balance sheet items as calculated under
regulatory accounting practices. The Company's 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 to maintain minimum amounts and ratios of total and Tier I
capital to risk-weighted assets, and of Tier I capital to average assets. The
amounts and ratios as defined in regulations are presented hereafter.
Management believes, as of December 31, 1996, the Company meets all capital
adequacy requirements to which it is subject and is classified as well
capitalized under the regulatory framework for prompt corrective action. In
the opinion of management, there are no conditions or events since prior
notification of capital adequacy from the regulators that have changed the
institution's category.
<TABLE>
<CAPTION>
TO BE WELL
CAPITALIZED UNDER
FOR CAPITAL PROMPT CORRECTIVE
ACTUAL ADEQUACY PURPOSES ACTION PROVISIONS
--------------------- ------------------------- ----------------------
AMOUNT RATIO AMOUNT RATIO AMOUNT RATIO
----------- -------- ----------- ------------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
AS OF DECEMBER 31, 1996
Total Capital
to Risk-Weighted Assets $27,835,044 12.21% $18,237,539 8.00% $22,796,924 10.00%
Tier I Capital
to Risk-Weighted Assets 24,966,981 10.96% 9,112,037 4.00 13,668,055 6.00
Tier I Capital
to Average Assets 24,966,981 7.65 13,054,631 4.00 16,318,288 5.00
AS OF DECEMBER 31, 1995
Total Capital
to Risk-Weighted Assets 25,123,380 11.62 17,296,647 8.00 21,620,809 10.00
Tier I Capital
to Risk-Weighted Assets 22,405,007 10.37 8,642,240 4.00 12,963,360 6.00
Tier I Capital
to Average Assets 22,405,007 7.38 12,143,635 4.00 15,179,544 5.00
</TABLE>
-21-
<PAGE>
(18) FINANCIAL INFORMATION OF COLONY BANKCORP, INC. (PARENT ONLY)
The parent company's balance sheets as of December 31, 1996 and 1995 and the
related statements of income and cash flows for the years then ended are as
follows:
<TABLE>
<CAPTION>
COLONY BANKCORP, INC. (PARENT ONLY)
BALANCE SHEETS
DECEMBER 31
ASSETS
1996 1995
----------- -----------
<S> <C> <C>
Cash $ 60,916 $ 92,565
Investment in Subsidiaries, at Equity 26,915,009 25,012,364
Other 978,847 373,493
----------- -----------
TOTAL ASSETS $27,954,772 $25,478,422
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Dividends Payable $ 108,663 $ 96,833
Notes and Debentures Payable 2,120,870 2,304,468
Other 134,210 9,338
----------- -----------
2,363,743 2,410,639
----------- -----------
STOCKHOLDERS' EQUITY
Common Stock, Par Value $10; 5,000,000 Shares Authorized,
1,448,842 Shares Issued and Outstanding as of December 31,
1996 and 1995 14,488,420 14,488,420
Paid-In Capital 1,137,424 1,137,424
Retained Earnings 10,144,118 7,609,740
Net Unrealized Loss on Securities Available for
Sale, Net of Tax (178,933) (167,801)
----------- -----------
TOTAL STOCKHOLDERS' EQUITY 25,591,029 23,067,783
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $27,954,772 $25,478,422
=========== ===========
</TABLE>
-22-
<PAGE>
(18) FINANCIAL INFORMATION OF COLONY BANKCORP, INC. (PARENT ONLY) (CONTINUED)
COLONY BANKCORP, INC. (PARENT ONLY)
STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31
<TABLE>
<CAPTION>
1996 1995
---------- ----------
INCOME
<S> <C> <C>
Dividends from Subsidiaries $1,400,000 $1,025,000
Management Fees from Subsidiaries 506,225 600,492
Data Processing Fees 396,000 -
Other 17,140 9,874
---------- ----------
2,319,365 1,635,366
---------- ----------
EXPENSES
Interest 182,016 221,901
Amortization 17,951 17,951
Other 1,248,270 772,039
---------- ----------
1,448,237 1,011,891
---------- ----------
INCOME BEFORE TAXES AND EQUITY IN UNDISTRIBUTED
EARNINGS OF SUBSIDIARIES 871,128 623,475
Income Tax Benefits 149,138 120,040
---------- ----------
INCOME BEFORE EQUITY IN UNDISTRIBUTED EARNINGS
OF SUBSIDIARIES 1,020,266 743,515
Equity in Undistributed Earnings of Subsidiaries 1,913,276 1,628,610
---------- ----------
NET INCOME $2,933,542 $2,372,125
========== ==========
</TABLE>
-23-
<PAGE>
(18) FINANCIAL INFORMATION OF COLONY BANKCORP, INC. (PARENT ONLY) (CONTINUED)
COLONY BANKCORP, INC. (PARENT ONLY)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net Income $ 2,933,542 $ 2,372,125
Adjustments to Reconcile Net Income to Net Cash
Provided from Operating Activities
Depreciation and Amortization 42,611 32,664
Equity in Undistributed Earnings of Subsidiary (1,913,276) (1,628,610)
Other (167,813) (49,441)
----------- -----------
895,064 726,738
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital Infusion in Subsidiary (500) (1,350,000)
Purchases of Premises and Equipment (343,451) (6,801)
----------- -----------
(343,951) (1,356,801)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Dividends Paid (399,164) (370,457)
Proceeds from Issuance of Common Stock - 1,500,000
Principal Payments on Notes and Debentures (474,867) (474,866)
Proceeds from Notes and Debentures 291,269 -
----------- -----------
(582,762) 654,677
----------- -----------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (31,649) 24,614
CASH AND CASH EQUIVALENTS, BEGINNING 92,565 67,951
----------- -----------
CASH AND CASH EQUIVALENTS, ENDING $ 60,916 $ 92,565
=========== ===========
</TABLE>
(19) COMMON STOCK SPLIT
On May 16, 1995, the board of directors approved a 100 percent stock split to be
effected on July 1, 1995 in the form of a dividend to stockholders of record on
June 30, 1995. Share and per share data for all periods presented in the
accompanying consolidated financial statements and related notes have been
retroactively restated to reflect the additional shares outstanding resulting
from the stock split.
-24-
<PAGE>
(20) BUSINESS COMBINATIONS
On November 30, 1996, the Company acquired Broxton State Bank in a business
combination accounted for as a pooling of interests. Broxton State Bank became
a wholly-owned subsidiary of the Company through the exchange of 157,732 shares
of the Company's common stock for all of the outstanding stock of Broxton State
Bank. The accompanying financial statements for 1996 are based on the
assumption that the companies were combined for the full year, and financial
statements of the prior year have been restated to give effect to the
combination.
Summarized results of operations of the separate companies for the period from
January 1, 1996 through November 30, 1996, the date of acquisition, are as
follows:
<TABLE>
<CAPTION>
COLONY BANKCORP, INC.
AND SUBSIDIARIES BROXTON STATE BANK
--------------------- ------------------
<S> <C> <C>
Net Interest Income $11,302,001 $875,029
=========== =========
Provision for Loan Losses 77,210 25,000
=========== =========
Noninterest Income 23,829 194,455
=========== =========
Noninterest Expense 55,474 830,903
=========== =========
Net Income 96,845 173,806
=========== =========
</TABLE>
The summarized assets and liabilities of the separate companies on November 30,
1996, the date of acquisition, were as follows:
<TABLE>
<CAPTION>
COLONY BANKCORP, INC.
AND SUBSIDIARIES BROXTON STATE BANK
---------------------- ------------------
<S> <C> <C>
Cash and Due from Banks $ 37,202,098 $ 1,070,820
Investment Securities 53,356,287 8,463,744
Loans, Net 189,391,798 12,311,331
Premises and Equipment 5,939,136 577,568
Other Assets 10,098,812 582,113
------------- ------------
295,988,131 23,005,576
Deposits (266,221,662) (20,596,034)
Other Liabilities (6,417,960) (204,451)
------------- ------------
$ 23,348,509 $ 2,205,091
============= ============
</TABLE>
-25-
<PAGE>
(20) BUSINESS COMBINATIONS (CONTINUED)
Following is a reconciliation of the amounts of net interest income and net
income previously reported for 1995 with restated amounts:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
1995
--------------
<S> <C>
Net Interest Income and Other Income
Colony Bankcorp, Inc. and Subsidiaries,
As Previously Reported $14,700,164
Broxton State Bank 1,232,935
-----------
As Restated $15,933,099
===========
Net Income
Colony Bankcorp, Inc. and Subsidiaries,
As Previously Reported $ 2,140,520
Broxton State Bank 231,605
-----------
As Restated $ 2,372,125
===========
</TABLE>
No significant intercompany transactions occurred between the Company and
Broxton State Bank prior to the pooling of interests that would affect prior
operations. There was no change in accounting policies or reporting periods as
a result of the pooling of interests.
(21) RECLASSIFICATIONS
Certain reclassifications have been made in the 1995 financial statements to
conform to the 1996 presentation.
-26-
