<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15 (D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR QUARTER ENDED MARCH 31, 1997 COMMISSION FILE NUMBER 0-12436
COLONY BANKCORP, INC.
---------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
GEORGIA 58-1492391
------- ----------
(STATE OF OTHER JURISDICTION) (I.R.S. EMPLOYER)
OF INCORPORATION OR ORGANIZATION IDENTIFICATION NUMBER
302 SOUTH MAIN STREET, FITZGERALD, GEORGIA 31750
------------------------------------------------
ADDRESS OF PRINCIPAL EXECUTIVE OFFICES
912/426-6000
------------
REGISTRANT'S TELEPHONE NUMBER INCLUDING AREA CODE
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED REPORTS REQUIRED TO
BE FILED BY SECTIONS 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING
THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS
REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING
REQUIREMENTS FOR THE PAST 90 DAYS.
YES X NO
----- -----
INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S CLASSES OF
COMMON STOCK, AS OF THE CLOSE OF THE PERIOD COVERED BY THIS REPORT.
CLASS OUTSTANDING AT MARCH 31, 1997
----- -----------------------------
COMMON STOCK, $10 PAR VALUE 1,448,842
<PAGE>
PART 1 - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
--------------------
THE FOLLOWING FINANCIAL STATEMENTS ARE PROVIDED FOR COLONY BANKCORP, INC. AND
SUBSIDIARIES: THE BANK OF FITZGERALD, ASHBURN BANK, COMMUNITY BANK OF WILCOX,
THE BANK OF DODGE COUNTY, THE BANK OF WORTH, BROXTON STATE BANK AND COLONY
MANAGEMENT SERVICES, INC.
A. CONSOLIDATED BALANCE SHEETS - MARCH 31, 1997 AND DECEMBER 31, 1996.
B. CONSOLIDATED STATEMENTS OF INCOME - FOR THE THREE MONTHS ENDED
MARCH 31, 1997 AND 1996.
C. CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION - FOR THE
THREE MONTHS ENDED MARCH 31, 1997 AND 1996.
THE CONSOLIDATED FINANCIAL STATEMENTS FURNISHED HAVE NOT BEEN EXAMINED BY
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS, BUT REFLECT, IN THE OPINION OF
MANAGEMENT, ALL ADJUSTMENTS NECESSARY FOR A FAIR PRESENTATION OF THE RESULTS OF
OPERATIONS FOR THE PERIODS PRESENTED.
THE RESULTS OF OPERATIONS FOR THE THREE MONTH PERIOD ENDED MARCH 31, 1997 ARE
NOT NECESSARILY INDICATIVE OF THE RESULTS TO BE EXPECTED FOR THE FULL YEAR.
2
<PAGE>
COLONY BANKCORP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1997 AND DECEMBER 31, 1996
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
ASSETS MARCH 31, 1997 DECEMBER 31, 1996
-------------- -----------------
<S> <C> <C>
Cash and Balances Due from Depository
Institutions (Note 2) $ 11,416 $ 13,444
Federal Funds Sold 18,030 22,740
Investment Securities (Aggregate Fair Value
of $64,163 and $63,328 Respectively) (Note 3) 64,213 63,377
Loans (Notes 4 and 5) 218,178 206,876
Allowance for Loan Losses (4,569) (4,435)
Unearned Interest and Fees (9) (13)
-------- --------
Total Loans 213,600 202,428
Premises and Equipment (Note 6) 7,487 6,953
Other Real Estate 1,476 2,803
Other Assets 6,600 7,795
-------- --------
Total Assets $322,822 $319,540
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest-Bearing $ 26,829 $ 28,723
Interest-Bearing (Note 8) 261,394 256,953
-------- --------
Total Deposits 288,223 285,676
Borrowed Money:
Federal Funds Purchased 1,480 160
Other Borrowed Money (Note 9) 4,115 5,496
-------- --------
Total Borrowed Money 5,595 5,656
Other Liabilities 2,622 2,617
Commitments and Contingencies (Note 11)
Stockholders' Equity:
Common Stock, Par Value $10 a Share; Authorized
5,000,000 shares, Issued 1,448,842 shares as of
March 31, 1997 and December 31, 1996 Respectively 14,488 14,488
Paid-In Capital 1,137 1,137
Retained Earnings 11,157 10,145
Net Unrealized Loss on Securities Available for Sale,
Net of Tax Benefit of $192 in 1997 and $3 in 1996 (400) (179)
-------- --------
Total Stockholders' Equity 26,382 25,591
-------- --------
Total Liabilities and Stockholders' Equity $322,822 $319,540
======== ========
</TABLE>
The accompanying notes are an integral part of these balance sheets.
3
<PAGE>
COLONY BANKCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Three Months Ended
3/31/97 3/31/96
------- -------
<S> <C> <C>
Interest Income:
Loans, including fees $5,726 $5,420
Federal Funds Sold 213 271
Deposits with Other Banks 14 3
Investment Securities:
U.S. Treasury & Federal Agencies 879 644
State, County and Municipal 76 76
Other Investments 29 28
------ ------
Total Interest Income 6,937 6,442
------ ------
Interest Expense:
Deposits 3,193 3,149
Federal Funds Purchased 5 2
Other Borrowed Money 92 71
------ ------
Total Interest Expense 3,290 3,222
------ ------
Net Interest Income 3,647 3,220
Provision for Loan Losses 285 644
------ ------
Net Interest Income After Provision 3,362 2,576
------ ------
Noninterest Income:
Service Charge on Deposits 455 425
Other Service Charges, Commissions & Fees 135 151
Security Gains, net 7 3
Other Income 97 96
------ ------
Total Noninterest Income 694 675
------ ------
Noninterest Expense:
Salaries and Employee Benefits 1,266 1,179
Occupancy and Equipment 337 272
Other Operating Expenses 814 707
------ ------
Total Noninterest Expense 2,417 2,158
------ ------
Income Before Income Taxes $1,639 1,093
Income Taxes 518 330
------ ------
Net Income $1,121 $ 763
====== ======
Net Income Per Share of Common Stock $0.77 $0.53
===== =====
Weighted Average Shares Outstanding 1,448,842 1,448,842
========= =========
</TABLE>
The accompanying notes are an integral part of these statements
4
<PAGE>
COLONY BANKCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
1997 1996
------ ------
CASH FLOW FROM OPERATING ACTIVITIES
<S> <C> <C>
Net income (loss) $ 1,121 $ 763
Adjustments to reconcile net income to net cash provided
by operating activities:
(Gain) loss on sale of investment securities (7) (3)
Depreciation 171 127
Provision for loan losses 285 644
Amortization of excess costs 14 12
Other prepaids, deferrals and accruals, net 1,509 1,650
------- -------
Total Adjustments $ 1,972 $ 2,430
------- -------
Net cash provided by operating activities $ 3,093 $ 3,193
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of securities available for sale ($6,783) ($9,238)
Proceeds from sales of securities available for sale 921 498
Proceeds from maturities of securities available for sale 5,563 3,178
Purchase of securities held for investment -0- -0-
Proceeds from maturities of securities held for investment 73 -0-
Proceeds from sales of securities held for investment -0- -0-
Decrease (Increase) in interest-bearing deposits in banks -0- -0-
(Increase) in loans (11,306) (5,132)
Purchase of premises and equipment (676) (44)
------- -------
Net cash (used in) investing activities ($12,208) ($10,738)
------- -------
CASH FLOW FROM FINANCING ACTIVITIES
Net (decrease) increase in deposits $ 2,547 ($6,595)
Net increase in short-term borrowings and Federal Funds
Purchased 1,320 -0-
Dividends paid (109) (97)
Net (decrease) increase in long-term borrowings (1,381) (252)
------- -------
Net cash provided by financing activities $2,377 $(6,944)
------- -------
Net increase (decrease) in cash and cash equivalents (6,738) (14,489)
Cash and cash equivalents at beginning of period 35,293 35,368
------- -------
Cash and cash equivalents at end of period $28,555 $20,879
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
5
<PAGE>
COLONY BANKCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
(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 (the Banks) and
Colony Management Services, Inc., Fitzgerald, Georgia. 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 March 31, 1997 and December 31, 1996. 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.
Loans
Loans are generally reported at principal amount less unearned interest and
fees. On January 1, 1995, the Company adopted SFAS No. 114, Accounting by
Creditors for Impairment of a Loan and SFAS No. 118, Accounting by Creditors for
Impairment of a Loan-Income Recognition and Disclosures. Impaired loans are
loans for which principal and interest are unlikely to be collected in
accordance with the original loan terms and, generally, represent loans
delinquent in excess of 120 days which have been placed on nonaccrual status and
for which collateral values are less than outstanding principal and interest.
Small balance, homogeneous loans are excluded from impaired loans. Generally,
interest payments received on impaired loans are applied to principal. Upon
receipt of all loan principal, additional interest payments are recognized as
interest income on the cash basis.
Other nonaccrual loans are loans for which payments of principal and interest
are considered doubtful of collection under original terms but collateral values
equal or exceed outstanding principal and interest.
6
<PAGE>
(1) Summary of Significant Accounting Policies (continued)
Colony Bankcorp, Inc.'s loans consist of commercial, financial and agricultural
loans, real estate mortgage loans and consumer loans primarily to individuals
and entities located throughout central and south Georgia. Accordingly, the
ultimate collectability of the loans is largely dependent upon economic
conditions in the central and south Georgia area.
Allowance for Loan Losses
The allowance method is used in providing for losses on loans. Accordingly, all
loan losses decrease the allowance and all recoveries increase it. The provision
for loan losses is based on factors which, in management's judgment, deserve
current recognition in estimating possible loan losses. Such factors considered
by management include growth and composition of the loan portfolio, economic
conditions and the relationship of the allowance for loan losses to outstanding
loans.
An allowance for loan losses is maintained for all impaired loans. Provisions
are made for impaired loans upon changes in expected future cash flows or
estimated net realizable value of collateral. When determination is made that
impaired loans are wholly or partially uncollectible, the uncollectible portion
is charged off.
Management believes the allowance for possible loan losses is adequate. While
management uses available information to recognize losses on loans, future
additions to the allowance may be necessary based on changes in economic
conditions. In addition, various regulatory agencies, as an integral part of
their examination process, periodically review the Company's allowance for loan
losses. Such agencies may require the Company to recognize additions to the
allowance based on their judgment about information available to them at the
time of their examination.
Premises and Equipment
Premises and equipment are recorded at acquisition cost net of accumulated
depreciation.
Depreciation is charged to operations over the estimated useful lives of the
assets. The estimated useful lives and methods of depreciation are as follows:
<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.
7
<PAGE>
(1) Summary of Significant Accounting Policies (continued)
Other Real Estate
Other real estate generally represents real estate acquired
through foreclosure and is initially recorded at the lower of
cost or estimated market value at the date of acquisition.
Losses from the acquisitions of property in full or partial
satisfaction of debt are recorded as loan losses. Subsequent
declines in value, routine holding costs and gains or losses
upon disposition are included in other losses.
(2) Cash and Balances Due from Depository Institutions
- ------------------------------------------------------
Components of cash and balances due from depository institutions
at March 31, 1997 and December 31, 1996 are as follows:
<TABLE>
<CAPTION>
March 31, 1997 December 31, 1996
-------------- -----------------
<S> <C> <C>
Cash on Hand and Cash Items $ 2,594 $ 3,692
Noninterest-Bearing Deposits with Other Banks 7,931 8,861
Interest-Bearing Deposits with Other Banks 891 891
-------- --------
$ 11,416 $ 13,444
======== ========
</TABLE>
(3) Investment Securities
- -------------------------
Investment securities as of March 31, 1997 are summarized as
follows:
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
<S> <C> <C> <C> <C>
Securities Available for Sale:
U.S. Treasury $ 999 $ 1 $ -0- $ 1,000
U.S. Government Agencies:
Mortgage-Backed 14,846 52 (149) 14,749
Other 38,659 5 (245) 38,419
State, County & Municipal 4,770 64 (25) 4,809
The Banker's Bank Stock 50 -0- -0- 50
Federal Home Loan Bank Stock 390 -0- -0- 390
Marketable Equity Securities 1,130 -0- (205) 925
-------- ------- -------- ---------
$ 60,844 $ 122 $ (624) $ 60,342
======== ======= ======== =========
Securities Held to Maturity:
U.S. Government Agencies $ 2,149 $ -0- $ (20) $ 2,129
State, County and Municipal 1,722 5 (35) 1,692
-------- ------- -------- ---------
$ 3,871 $ 5 $ (55) $ 3,821
======== ======= ======== =========
</TABLE>
8
<PAGE>
(3) Investment Securities (continued)
- -------------------------------------
The amortized cost and fair value of investment securities as of March 31, 1997
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 $ 8,169 $ 8,163 $ 750 $ 747
Due After One Year Through Five Years 33,913 33,726 2,628 2,591
Due After Five Years Through Ten Years 2,043 2,046 0 0
Due After Ten Years 303 293 493 483
------- ------- ------ ------
44,428 44,228 3,871 3,821
Federal Home Loan Bank Stock 390 390
The Banker's Bank Stock 50 50
Marketable Equity Securities 1,130 925
Mortgage-Backed Securities 14,846 14,749
------- ------- ------ ------
$60,844 $60,342 $3,871 $3,821
======= ======= ====== ======
</TABLE>
Investment securities as of December 31, 1996 are summarized as follows:
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
<S> <C> <C> <C> <C>
Securities Available for Sale:
U.S. Treasury $ 499 $ $ $ 499
U.S. Government Agencies
Mortgage-Backed Securities 16,367 78 (94) 16,351
Other 35,702 32 (70) 35,664
State, County & Municipal 5,384 86 (23) 5,447
The Banker's Bank Stock 50 50
Federal Home Loan Bank Stock 483 483
Marketable Equity Securities 1,130 (185) 945
-------- ----- -------- -------
$ 59,615 $ 196 $ (372) $59,439
======== ===== ======== =======
Securities Held to Maturity:
U.S. Government and Agencies $ 2,148 $ $ (16) $ 2,132
State, County and Municipal 1,790 3 (36) 1,757
-------- ----- -------- -------
$ 3,938 $ 3 $ (52) $ 3,889
======== ===== ======== =======
</TABLE>
Investment securities having a carrying value approximating $29,583 and $27,618
as of March 31, 1997 and December 31, 1999, respectively, were pledged to secure
public deposits and for other purposes.
9
<PAGE>
(4) Loans
- ---------
The composition of loans as of March 31, 1997 and December 31, 1996 was as
follows:
<TABLE>
<CAPTION>
March 31, 1997 December 31, 1996
-------------- -----------------
<S> <C> <C>
Commercial, Financial and Agricultural $ 42,880 $ 38,776
Real Estate - Construction 1,577 881
Real Estate - Farmland 15,328 25,770
Real Estate - Other 105,414 88,896
Installment Loans to Individuals 44,495 44,608
All Other Loans 8,484 7,945
--------- ---------
$ 218,178 $ 206,876
========= =========
</TABLE>
Nonaccrual loans are loans for which principal and interest are doubtful of
collection in accordance with original loan terms and for which accruals of
interest have been discontinued due to payment delinquency. Nonaccrual loans
totaled $6,346 and $7,396 as of March 31, 1997 and December 31, 1996,
respectively. On March 31, 1997, the Company had 90 day past due loans with
principal balances of $521 and restructured loans with principal balances of
$81.
Effective January 1, 1995, Colony Bankcorp, Inc. recognized impaired loans as
nonaccrual loans delinquent in excess of 120 days for which collateral values
were insufficient to recover outstanding principal and interest under original
loan terms. Impaired loan data as of March 31, 1997 and December 31, 1996 was as
follows:
<TABLE>
<S> <C>
Total Investment in Impaired Loans $1,351
Less Allowance for Impaired Loan Losses (419)
------
Net Investment, March 31, 1997 $ 932
======
Total Investment in Impaired Loans 1,351
Less Allowance for Impaired Loan Losses (419)
------
Net Investment, December 31, 1996 $ 932
======
</TABLE>
(5) Allowance for Loan Losses
- -----------------------------
Transactions in the allowance for loan losses are summarized below for three
months ended March 31, 1997 and March 31, 1996 as follows:
<TABLE>
<CAPTION>
March 31, 1997 March 31, 1996
-------------- --------------
<S> <C> <C>
Balance, Beginning $4,434 $4,051
Provision Charged to Operating Expenses 285 644
Loans Charged Off (274) (824)
Loan Recoveries 124 51
------ ------
Balance, Ending $4,569 $3,922
====== ======
</TABLE>
10
<PAGE>
(6) Premises and Equipment
- --------------------------
Premises and equipment are comprised of the following as of March 31, 1997 and
December 31, 1996:
<TABLE>
<CAPTION>
March 31, 1997 December 31, 1996
<S> <C> <C>
Land $1,094 $ 973
Building 5,826 5,601
Furniture, Fixtures and Equipment 5,289 5,150
Leasehold Improvements 31 31
------ ------
12,240 11,755
Accumulated Depreciation (4,753) (4,802)
------ ------
$7,487 $6,953
====== ======
</TABLE>
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 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.
(8) Deposits
- ------------
Components of interest-bearing deposits as of March 31, 1997 and December 31,
1996 are as follows:
<TABLE>
<CAPTION>
March 31, 1997 December 31, 1996
-------------- -----------------
<S> <C> <C>
Interest-Bearing Demand $ 65,478 $ 55,297
Savings 11,390 11,724
Time, $100,000 and Over 56,067 54,139
Other Time 128,459 135,793
-------- --------
$261,394 $256,953
======== ========
</TABLE>
11
<PAGE>
(9) Other Borrowed Money
- ------------------------
Other borrowed money is comprised of the following as of March 31, 1997 and
December 31, 1996:
<TABLE>
<CAPTION>
March 31, 1997 December 31, 1996
-------------- -----------------
<S> <C> <C>
Debentures payable, due in annual payments of $267
plus interest at variable rates, on November 1, 1997
through November 1, 1999, collateralized by 100% of the
common stock of Ashburn Bank. Effective interest rate of
8.0% as of March 31, 1997. $ 801 $ 801
Note payable, due in annual payments of $207 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 8.50% as of March 31, 1997. 977 1,029
Notes payable, due February 26, 1997 with interest at variable
rates. Collateralized by commercial real estate in downtown
Fitzgerald, Georgia. Effective interest rate of 8.50% as of
March 31, 1997. 462 291
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. 1,400 1,000
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. -0- 2,000
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 8.50% as of
December 31, 1996. 475 375
$4,115 $5,496
====== ======
</TABLE>
Maturities of borrowed money for the next five years as of March 31, 1997:
<TABLE>
<CAPTION>
Year Amount
<S> <C>
1997 $3,581
1998 267
1999 267
Thereafter -0-
------
$4,115
======
</TABLE>
12
<PAGE>
(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.
(11) Commitments and Contingent Liabilities
- -------------------------------------------
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. addresses
approximating $2,062 as of March 31, 1997 and $3,128 as of December 31, 1996.
Unfulfilled loan commitments as of March 31, 1997 and December 31, 1996
approximated $34,362 and $19,696 respectively. No losses are anticipated as a
result of commitments and contingencies.
Commitments generally have fixed expiration dates or other termination clauses
and may require payment of a fee. Since many of the commitment amounts expire
without being drawn upon, the total commitment amounts do not necessarily
represent future cash requirements. The credit risk involved in issuing these
financial instruments is essentially the same as that involved in extending
loans to customers. The amount of collateral obtained, if deemed necessary by
the Banks upon extension of credit, is based on management's credit evaluation
of the borrower. Collateral held varies, but may include accounts receivable,
inventory, property, plant and equipment and income-producing commercial
properties.
The Banks do not anticipate any material losses as a result of the commitments
and contingent liabilities.
The nature of the business of the Banks is such that it ordinarily results in a
certain amount of litigation. In the opinion of management and counsel for the
company and the Banks, there is no litigation in which the outcome will have a
material effect on the consolidated financial statements.
(12) Earnings Per Share
- -----------------------
Earnings per share are calculated on the basis of the weighted average number of
shares outstanding.
(13) 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. Upon approval by regulatory
authorities, the banks may pay cash dividends to the parent company in excess of
regulatory limitations.
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
classifications 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 1
capital to risk-weighted assets, and of Tier 1 capital to average assets. The
amounts and ratios as defined in regulations are presented hereafter. Management
believes, as of March 31, 1997 the
13
<PAGE>
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
For Capital Under Prompt Corrective
Actual Adequacy Purposes Action Provisions
Amount Ratio Amount Ratio Amount Ratio
<S> <C> <C> <C> <C> <C> <C>
As of March 31, 1997
Total Capital
to Risk-Weighted Assets $29,001 12.34% $18,803 8.00% $23,504 10.00%
Tier 1 Capital
to Risk-Weighted Assets 26,043 11.08% 9,401 4.00% 14,102 6.00%
Tier 1 Capital
to Average Assets 26,043 8.30% 12,558 4.00% 15,698 5.00%
As of December 31, 1996
Total Capital
to Risk-Weighted Assets $27,835 12.21% $18,238 8.00% $22,797 10.00%
Tier 1 Capital
to Risk-Weighted Assets 24,967 10.96% 9,112 4.00% 13,668 6.00%
Tier 1 Capital
to Average Assets 24,967 7.65% 13,054 4.00% 16,318 5.00%
</TABLE>
(14) Financial Information of Colony Bankcorp, Inc. (Parent Only)
- ------------------------------------------------------------------
The parent company's balance sheets as of March 31, 1997 and December 31, 1996
and the related statements of income are as follows:
COLONY BANKCORP, INC. (PARENT ONLY)
BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS March 31, 1997 December 31, 1996
<S> <C> <C>
Cash $ 51 $ 61
Investments in Subsidiaries at Equity 27,602 26,915
Other 1,092 979
------- -------
Total Assets $28,745 $27,955
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Dividends Payable $ 109 $ 109
Notes and Debentures Payable 2,240 2,121
Other 14 134
------- -------
2,363 2,364
Stockholders' Equity
Common Stock, Par Value $10; 5,000,000 Shares
Authorized, 1,448,842 Shares Issued and Outstanding
as of March 31, 1997 and December 31, 1996 $14,488 $14,488
Paid-In Capital 1,137 1,137
Retained Earnings 11,157 10,145
Net Unrealized Loss on Securities Available for Sale, Net of Tax (400) (179)
------- -------
Total Stockholders' Equity 26,382 25,591
Total Liabilities and Stockholders' Equity $28,745 $27,955
======= =======
</TABLE>
14
<PAGE>
(14) Financial Information of Colony Bankcorp, Inc. (Parent Only) (Continued)
- -----------------------------------------------------------------------------
COLONY BANKCORP, INC. (PARENT ONLY)
STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
<TABLE>
<CAPTION>
March 31, 1997 March 31, 1996
<S> <C> <C>
Income
Dividends from Subsidiaries $ 287 $ 300
Management Fees from Subsidiaries 81 127
Data Processing Fees 0 99
Other 10 6
------- ------
$ 378 $ 532
Expenses
Interest $ 44 $ 47
Salaries and Benefits 93 162
Other 75 119
------- ------
$ 212 $ 328
------- ------
Income Before Taxes and Equity in Undistributed
Earnings of Subsidiaries 166 204
Income Tax (Benefits) (47) (32)
------- ------
Income Before Equity in Undistributed Earnings
of Subsidiaries 213 236
Equity in Undistributed Earnings of Subsidiaries 908 527
------- ------
Net Income $ 1,121 $ 763
======= ======
</TABLE>
15
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATION
LIQUIDITY AND CAPITAL RESOURCES
Liquidity represents the ability to provide adequate sources of funds for
funding loan commitments and investment activities, as well as the ability to
provide sufficient funds to cover deposit withdrawals, payment of debt and
financing of operations. These funds are obtained by converting assets to cash
(representing primarily proceeds from collections on loans and maturities of
investment securities) or by attracting and obtaining new deposits. For the
three months ended March 31, 1997, the Company was successful in meeting its
liquidity needs by increasing deposits 0.89% to $288,223,000 from deposits of
$285,676,000 on December 31, 1996 and by reducing Federal Funds 20.71% to
$18,030,000 from $22,740,000 on December 31, 1996.
The Company's liquidity position remained acceptable for the three months ended
March 31, 1997. Average liquid assets (cash and amounts due from banks,
interest-bearing deposits in other banks, funds sold and investments securities)
represented 32.68% of average deposits for three months ended March 31, 1997 as
compared to 30.29% of average deposits for three months ended March 31, 1996 and
29.96% for calendar year 1996. Average loans represented 74.92% of average
deposits for three months ended March 31, 1997 as compared to 76.33% for three
months ended March 31, 1996 and 76.89% for calendar year 1996. Average interest-
bearing deposits were 86.89% of average earning assets for three months ended
March 31, 1997 as compared to 87.90% for three months ended March 31, 1996 and
87.09% for calendar year 1996.
The Company satisfies most of its capital requirements through retained
earnings. During the first three months of 1997, retained earnings provided
$1,012,000 of increase in equity. Additionally, equity capital decreased by
$221,000 during the first three months of 1997 as a result of changes in
unrealized losses on securities available-for-sale, net of taxes. Thus, total
equity increased by a net amount of $791,000 for the three month period ended
March 31, 1997. This compares to growth in equity of $665,000 from retained
earnings and $101,000 decrease resulting from changes in unrealized losses on
securities, or total equity increase of $565,000 for the three month period
ended March 31, 1996. Total equity increased $2,523,000 for the 1996 calendar
year.
At March 31, 1997, total capital of Colony amounted to approximately
$26,382,000. At March 31, 1997, there was an outstanding commitment for capital
expenditures of approximately $500,000 for construction of a facility and
furnishings for new Colony headquarters.
The Federal Reserve Bank Board and the FDIC have issued capital guidelines for
U.S. banking organizations. The objective of these efforts was to provide a more
uniform capital framework that is sensitive to differences in risk assets among
banking organizations. The guidelines define a two-tier capital framework. Tier
1 capital consists of common stock and qualifying preferred stockholder's equity
less goodwill. Tier 2 capital consists of certain convertible, subordinated and
other qualifying term debt and the allowance for loan losses up to 1.25 of risk-
weighted assets. The Company has no Tier 2 capital other than the allowance for
loan losses.
Using the capital requirements presently in effect, the Tier 1 ratio at March
31, 1997 was 11.08% and total Tier 1 and 2 risk-based capital was 12.34%. Both
of these measures compare favorably with the regulatory minimums of 4% for Tier
1 and 8% for total risk-based capital. The Company's leverage ratio at March 31,
1997 was 8.30% which exceeds the required leverage ratio standard of 4%.
For the first quarter of 1997, the Company paid quarterly dividends of $0.075
per share. The dividend payout ratio, defined as dividends per share divided by
net income per share, was 9.74% for three months ended March 31, 1997 as
compared to $0.075 quarterly dividends for three months ended March 31, 1996 and
a dividend payout ratio of 14.15%.
16
<PAGE>
At March 31, 1997, 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 OPERATION
The Company's results of operations are determined by its ability to effectively
manage interest income and expense, to minimize loan and investment losses, to
generate noninterest income and to control noninterest expense. Since interest
rates are determined by market forces and economic conditions beyond the control
of the Company, the ability to generate net interest income is dependent upon
the Bank's ability to obtain an adequate spread between the rate earned on
earning assets and the rate paid on interest-bearing liabilities. Thus, the key
performance measure for net interest income is the interest margin or net yield,
which is taxable-equivalent net interest income divided by average earning
assets.
Net income for the three months ended March 31, 1997 was $1,121,000 as compared
to $763,000 for the three months ended March 31, 1996, or an increase of 46.92%.
First quarter 1997 earnings were higher compared to first quarter 1996 primarily
due to an increase in our net interest margin and a decrease in our provision
for loan losses.
The net interest margin increased by 25 basis points to 5.02% in first quarter
1997 as compared to 4.77% in first quarter 1996. This increase in our net
interest margin resulted in net interest income increasing by 13.26% to
$3,647,000 in first quarter, 1997 from $3,220,000 for the same period in 1996.
Average earning assets increased to $293,697,000 in first quarter, 1997 from
$274,399,000 in first quarter 1996. Average loans increased by $9,297,000 or
4.61%, average Federal Funds sold decreased by $3,934,000 or 19.61%, average
investment securities increased by $13,101,000, or 25.03% and average interest
bearing deposits in other banks increased by $834,000 or 613.24%, resulting in a
net increase in average earnings assets of $19,298,000 or 7.03%.
The net increase in average earning assets was funded by a net increase in
average deposits of 6.52% to $281,835,000 for first quarter 1997 from
$264,585,000 for first quarter 1996. Average interest-bearing deposits increased
by 5.80% to $255,193,000 at March 31, 1997 compared to $241,197,000 at March 31,
1996, while average noninterest-bearing deposits represented 9.45% of total
deposits at March 31, 1997 compared to 8.84% at March 31, 1996 and 9.70% at
December 31, 1996.
Interest expense increased for the three months ended March 31, 1997 by $68,000
compared to the same period in 1996. This increase is primarily attributable to
the increase in average interest-bearing deposits to $255,193,000 at March 31,
1997 compared to $241,197,000 at March 31, 1996. The combination of the
increased net interest margin, increased average interest-bearing deposits and
increased average earnings assets resulted in an increase in net interest income
of $427,000 for the three months ended March 31, 1997 compared to the same
period in 1996.
The allowance for loan losses represents a reserve for potential losses in the
loan portfolio. The adequacy of the allowance for loan losses is evaluated
periodically based on a review of all significant loans, with a particular
emphasis on non-accruing, past due and other loans that management believes
requires attention.
The provision for loan losses is a charge to earnings in the current period to
replenish the allowance for loan losses and maintain it at a level management
has determined to be adequate. The provision for loan losses was $285,000 for
the three months ended March 31, 1997 as compared to $644,000 for the three
months ended March 31, 1996, representing a decrease in the provision of
$359,000 or 55.75%. The decrease in the provision for loan losses during first
quarter 1997 was attributable to a leveling off of problem loans and an adequate
build-up in the loan loss reserve for any future losses. Net loan charge-offs
represented 52.63% of the provision for loan losses in the first quarter of 1997
as compared to 119.88% in the first quarter of 1996. Net loan charge-offs for
the three months ended March 31, 1997 represented 0.07% of average loans
outstanding as compared to 0.38% for three months ended March 31, 1996. At March
31, 1997, the allowance for loan losses was 2.09% of total loans outstanding as
compared to an allowance for loan losses of 1.91% at March 31, 1996 and 2.14% at
December 31, 1996. The determination of the reserve rests upon management's
judgment
17
<PAGE>
about factors affecting loan quality and assumptions about the economy.
Management considers the March 31, 1997 allowance for loan losses adequate to
cover potential losses in the loan portfolio.
Non-interest income consists principally of service charges on deposit accounts.
Service charges on deposit accounts amounted to $455,000 in first quarter 1997
compared to $425,000 in first quarter 1996, or an increase of 7.06%. All other
non-interest income decreased by $11,000 to $239,000 for first quarter 1997 from
$250,000 for first quarter, 1996. There were no significant variances in other
non-interest income for the two periods.
Non-interest expense increased by 12.00% to $2,417,000 in three months ended
March 31, 1997 from $2,158,000 in the same period in 1996. Salaries and employee
benefits increased by 7.38% to $1,266,000 in first quarter 1997 from $1,179,000
in first quarter 1996 primarily due to additional staffing of subsidiary branch
and holding company and increased health insurance premiums. All other non-
interest expense increased by 17.57% to $1,151,000 in first quarter 1997 from
$979,000 in first quarter 1996. This increase was primarily attributable to
other losses on real estate write downs increasing $95,000 above prior period
expenses and occupancy and equipment expenses increasing $65,000 due to an
additional branch operation and equipment purchases.
Income before taxes increased by $546,000 to $1,639,000 in first quarter 1997
from $1,093,000 in first quarter 1996. The increase for the three months ended
March 31, 1997 is primarily attributable to the decreased loan loss provision
and the increased net interest margin. Income taxes as a percentage of income
before taxes increased by 4.67% to 31.60% in first quarter 1997 as compared to
30.19% in first quarter 1996 due to increased net interest income. Income tax
expense increased 56.97% to $518,000 in first quarter 1997 as compared to
$330,000 in first quarter 1996.
The Bank of Fitzgerald is operating under a Memorandum of Understanding dating
back to October, 1992 that was revised in October, 1995 due to portions of the
original Memorandum of Understanding not being relevant to the bank's current
situation. The current Memorandum requires that the Bank maintain specified
minimum capital ratios and minimum reserves for loan losses. The Bank of
Fitzgerald was in substantial compliance with the provisions of the Memorandum
of Understanding at March 31, 1997.
Colony is an emerging company operating in an industry filled with non-regulated
competitors and a rapid pace of consolidation. With the recent growth of our
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 our management team much more efficient and
assist our expansion plans as new opportunities present themselves in the
future.
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 is
investing over $1,000,000 in computer up-grades and software enhancement. This
will allow the company to better serve our customers through improved customer
data resources and state-of-the-art technological services.
Liquidity
- ---------
The Company's goals with respect to liquidity are to insure that sufficient
funds are available to meet current operating requirements, to provide reserves
against unforeseen liquidity requirements. Management continuously reviews the
Company's liquidity position, which is maintained on a basis consistent with
established internal guidelines and the tests and reviews of the various
regulatory authorities. The Company's primary liquidity sources at March 31,
1997 included cash, due from banks, federal funds and short-term investment
securities. The Company also has the ability, on a short-term basis, to borrow
funds from the Federal Reserve System and to invest in federal funds sold from
other financial institutions. The mix of asset maturities contributes to the
company's overall liquidity position.
18
<PAGE>
Certain Transactions
- --------------------
In the normal course of business, officers and directors of the Banks, and
certain business organizations and individuals associated with them, maintain a
variety of banking relationships with the bank. Transactions with senior
officers and directors are made on terms comparable to those available to other
bank customers.
BUSINESS
General
- -------
The Company was organized in 1983 as a bank holding company through the merger
of The Bank of Fitzgerald with a subsidiary of the Company. Since that time, The
Bank of Fitzgerald, which was formed by principals of Colony Bankcorp, Inc. in
1976, has operated as a wholly-owned subsidiary of the Company. In April 1984,
Colony Bankcorp, Inc. acquired Community Bank of Wilcox, and in November 1984,
Ashburn Bank became a wholly-owned subsidiary of Colony Bankcorp, Inc. Colony
Bankcorp, Inc. continued its growth with the acquisition of The Bank of Dodge
County in September 1985. In August 1991, Colony Bankcorp, Inc. acquired The
Bank of Worth. In November 1996, Colony Bankcorp, Inc. acquired Broxton State
Bank and in November, 1996 formed a non-bank subsidiary, Colony Management
Services, Inc.
Through its six subsidiary banks, Colony Bankcorp, Inc. operates a full-service
banking business and offers a broad range of retail and commercial banking
services including checking, savings, NOW accounts, money market and time
deposits of various types; loans for business, agriculture, real estate,
personal uses, home improvement and automobiles; credit card; letters of credit;
trust services investment, and discount brokerage services; IRA's, safe deposit
box rentals, bank money orders, and electronic funds transfer services,
including wire transfers and automated teller machines. Each of the Banks is a
state chartered institution whose customer deposits are insured up to applicable
limits by the Federal Deposit Insurance Corporation.
19
<PAGE>
PART II - OTHER INFORMATION
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
- -----------------------------------------
A. Exhibits - None
B. There have been no reports filed on Form 8-K for the quarter ended
March 31, 1997.
20
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
COLONY BANKCORP, INC.
May 9, 1997 /s/ James D. Minix
- ---------------------- ---------------------------------------------
DATE James D. Minix, President and
Chief Executive Officer
/s/ Terry L. Hester
---------------------------------------------
Terry L. Hester, Executive Vice President and
Chief Financial Officer
21
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 10,525
<INT-BEARING-DEPOSITS> 891
<FED-FUNDS-SOLD> 18,030
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 60,342
<INVESTMENTS-CARRYING> 3,871
<INVESTMENTS-MARKET> 3,821
<LOANS> 218,169
<ALLOWANCE> 4,569
<TOTAL-ASSETS> 322,822
<DEPOSITS> 288,223
<SHORT-TERM> 4,794
<LIABILITIES-OTHER> 2,622
<LONG-TERM> 801
0
0
<COMMON> 14,488
<OTHER-SE> 11,894
<TOTAL-LIABILITIES-AND-EQUITY> 322,822
<INTEREST-LOAN> 5,726
<INTEREST-INVEST> 984
<INTEREST-OTHER> 227
<INTEREST-TOTAL> 6,937
<INTEREST-DEPOSIT> 3,193
<INTEREST-EXPENSE> 3,290
<INTEREST-INCOME-NET> 3,647
<LOAN-LOSSES> 285
<SECURITIES-GAINS> 7
<EXPENSE-OTHER> 2,417
<INCOME-PRETAX> 1,639
<INCOME-PRE-EXTRAORDINARY> 1,121
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,121
<EPS-PRIMARY> .77
<EPS-DILUTED> 0
<YIELD-ACTUAL> 5.02
<LOANS-NON> 6,346
<LOANS-PAST> 521
<LOANS-TROUBLED> 81
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 4,434
<CHARGE-OFFS> 274
<RECOVERIES> 124
<ALLOWANCE-CLOSE> 4,569
<ALLOWANCE-DOMESTIC> 4,569
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
