<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 SEPTEMBER 30, 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
115 SOUTH GRANT 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 SEPTEMBER 30, 1997
----- ---------------------------------
COMMON STOCK, $10 PAR VALUE 2,173,263
<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 - SEPTEMBER 30, 1997 AND
DECEMBER 31, 1996.
B. CONSOLIDATED STATEMENTS OF INCOME - FOR THE THREE MONTHS ENDED
SEPTEMBER 30, 1997 AND 1996 AND FOR THE NINE MONTHS ENDED SEPTEMBER
30, 1997 AND 1996.
C. CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION - FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 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 NINE MONTH PERIOD ENDED SEPTEMBER 30, 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
SEPTEMBER 30, 1997 AND DECEMBER 31, 1996
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
ASSETS SEPTEMBER 30, 1997 DECEMBER 31, 1996
------------------ -----------------
<S> <C> <C>
Cash and Balances Due from Depository
Institutions (Note 2) $ 9,283 $ 13,444
Federal Funds Sold 9,730 22,740
Investment Securities (Aggregate Fair Value
of $56,854 and $63,328 Respectively) (Note 3) 56,877 63,377
Loans (Notes 4 and 5) 241,313 206,876
Allowance for Loan Losses (4,677) (4,435)
Unearned Interest and Fees (13) (13)
--------- ---------
Total Loans 236,623 202,428
Premises and Equipment (Note 6) 8,573 6,953
Other Real Estate 1,183 2,803
Other Assets 8,623 7,795
--------- ---------
Total Assets $ 330,892 $ 319,540
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest-Bearing $ 26,110 $ 28,723
Interest-Bearing (Note 8) 258,638 256,953
--------- ---------
Total Deposits 284,748 285,676
Borrowed Money:
Federal Funds Purchased 1,250 160
Other Borrowed Money (Note 9) 14,037 5,496
--------- ---------
Total Borrowed Money 15,287 5,656
Other Liabilities 2,676 2,617
Commitments and Contingencies (Note 11)
Stockholders' Equity:
Common Stock, Par Value $10 a Share; Authorized
5,000,000 shares, Issued 2,173,263 and 1,448,842
shares as of September 30, 1997 and December 31,
1996, Respectively 21,733 14,488
Paid-In Capital 1,137 1,137
Retained Earnings 5,494 10,145
Net Unrealized Loss on Securities Available for Sale,
Net of Tax Benefit of $1 in 1997 and $3 in 1996 (183) (179)
--------- ---------
Total Stockholders' Equity 28,181 25,591
--------- ---------
Total Liabilities and Stockholders' Equity $ 330,892 $ 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 SEPTEMBER 30, 1997 AND 1996
AND NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
9/30/97 9/30/96 9/30/97 9/30/96
------- ------- ------- -------
Interest Income:
<S> <C> <C> <C> <C>
Loans, including fees $ 6,286 $ 5,820 $ 18,002 $ 16,756
Federal Funds Sold 142 107 529 555
Deposits with Other Banks 8 0 34 5
Investment Securities:
U.S. Treasury & Federal Agencies 769 737 2,500 2,103
State, County and Municipal 83 83 234 235
Other Investments 28 22 77 72
---------- ---------- ---------- ----------
Total Interest Income 7,316 6,769 21,376 19,726
---------- ---------- ---------- ----------
Interest Expense:
Deposits 3,375 3,252 9,830 9,545
Federal Funds Purchased 15 24 37 27
Other Borrowed Money 224 61 445 206
---------- ---------- ---------- ----------
Total Interest Expense 3,614 3,337 10,312 9,778
---------- ---------- ---------- ----------
Net Interest Income 3,702 3,432 11,064 9,948
Provision for Loan Losses 332 405 1,085 1,550
---------- ---------- ---------- ----------
Net Interest Income After Provision 3,370 3,027 9,979 8,398
---------- ---------- ---------- ----------
Noninterest Income:
Service Charge on Deposits 457 463 1,366 1,333
Other Service Charges, Commissions & Fees 92 83 315 398
Security Gains, net 0 0 9 3
Other Income 36 102 249 258
---------- ---------- ---------- ----------
Total Noninterest Income 585 648 1,939 1,992
---------- ---------- ---------- ----------
Noninterest Expense:
Salaries and Employee Benefits 1,383 1,201 4,129 3,675
Occupancy and Equipment 395 294 1,082 857
Other Operating Expenses 911 940 2,482 2,460
---------- ---------- ---------- ----------
Total Noninterest Expense 2,689 2,435 7,693 6,992
---------- ---------- ---------- ----------
Income Before Income Taxes $ 1,266 1,240 4,225 3,398
Income Taxes 385 386 1,305 1,050
---------- ---------- ---------- ----------
Net Income $ 881 $ 854 $ 2,920 $ 2,348
========== ========== ========== ==========
Net Income Per Share of Common Stock* $ 0.41 $ 0.39 $ 1.34 $ 1.08
========== ========== ========== ==========
Weighted Average Shares Outstanding* 2,173,263 2,173,263 2,173,263 2,173,263
========== ========== ========== ==========
</TABLE>
* All per share data has been adjusted to reflect a 3-for-2 stock split
effected as a 50% stock dividend on July 1, 1997
The accompanying notes are an integral part of these statements
4
<PAGE>
COLONY BANKCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
1997 1996
-------- --------
CASH FLOW FROM OPERATING ACTIVITIES
<S> <C> <C>
Net income (loss) $ 2,920 $ 2,348
Adjustments to reconcile net income to net cash provided
by operating activities:
(Gain) loss on sale of investment securities (9) (3)
Depreciation 545 391
Provision for loan losses 1,085 1,550
Amortization of excess costs 38 35
Other prepaids, deferrals and accruals, net (29) (985)
-------- --------
Total Adjustments $ 1,630 $ 988
-------- --------
Net cash provided by operating activities $ 4,550 $ 3,336
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of securities available for sale ($11,447) ($14,426)
Proceeds from sales of securities available for sale 3,797 498
Proceeds from maturities of securities available for sale 13,389 7,929
Purchase of securities held for investment -0- -0-
Proceeds from maturities of securities held for investment 765 98
Proceeds from sales of securities held for investment -0- -0-
Decrease (Increase) in interest-bearing deposits in banks 297 (299)
(Increase) in loans (34,437) (18,251)
Purchase of premises and equipment (2,165) (601)
-------- --------
Net cash (used in) investing activities ($29,801) ($25,052)
-------- --------
CASH FLOW FROM FINANCING ACTIVITIES
Net (decrease) increase in deposits $ (928) $ 7,348
Net (decrease) increase in Federal Funds Purchased 1,090 500
Dividends paid (326) (291)
Net (decrease) increase in short term & long-term borrowings 8,541 1,846
-------- --------
Net cash provided by financing activities $ 8,377 $ 9,403
-------- --------
Net increase (decrease) in cash and cash equivalents (16,874) (12,313)
Cash and cash equivalents at beginning of period 35,293 35,368
-------- --------
Cash and cash equivalents at end of period $ 18,419 $ 23,055
</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 September 30, 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:
Description Life in Years Method
----------- ------------- ------
Banking Premises 15-40 Straight-Line and Accelerated
Furniture and Equipment 5-10 Straight-Line and Accelerated
Expenditures for major renewals and betterments are capitalized. Maintenance and
repairs are charged to operations as incurred. When property and equipment are
retired or sold, the cost and accumulated depreciation are removed from the
respective accounts and any gain or loss is reflected in other income or
expense.
Cash Flows
For reporting cash flows, cash and cash equivalents include cash on hand,
noninterest-bearing amounts due from banks and federal funds sold. Cash flows
from demand deposits, NOW accounts, savings accounts, loans and certificates of
deposit are reported net.
Income Taxes
Income taxes are provided for the tax effects of transactions reported in the
consolidated financial statements and consist of taxes currently due plus
deferred taxes. Deferred taxes are recognized for differences between the basis
of assets and liabilities for financial statement and income tax purposes. The
differences relate primarily to depreciable assets (use of different
depreciation methods for financial statement and income tax purposes) and
allowance for loan losses (use of the allowance method for financial statement
purposes and the experience method for tax purposes). The deferred tax assets
and liabilities represent the future tax return consequences of those
differences, which will either be taxable or deductible when the assets and
liabilities are recovered or settled.
7
<PAGE>
(1) Summary of Significant Accounting Policies (continued)
Other Real Estate
Other real estate generally represents real estate acquired through foreclosure
and is initially recorded at the lower of cost or estimated market value at the
date of acquisition. Losses from the acquisitions of property in full or partial
satisfaction of debt are recorded as loan losses. Subsequent declines in value,
routine holding costs and gains or losses upon disposition are included in other
losses.
(2) Cash and Balances Due from Depository Institutions
- ------------------------------------------------------
Components of cash and balances due from depository institutions at September
30, 1997 and December 31, 1996 are as follows:
<TABLE>
<CAPTION>
September 30, 1997 December 31, 1996
------------------ -----------------
<S> <C> <C>
Cash on Hand and Cash Items $ 3,532 $ 3,692
Noninterest-Bearing Deposits with Other Banks 5,157 8,861
Interest-Bearing Deposits with Other Banks 594 891
------- -------
$ 9,283 $13,444
======= =======
</TABLE>
(3) Investment Securities
- -------------------------
Investment securities as of September 30, 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 $ 2,060 $ -0- $ (2) $ 2,058
U.S. Government Agencies:
Mortgage-Backed 11,921 68 (91) 11,898
Other 32,394 26 (65) 32,355
State, County & Municipal 4,830 71 (9) 4,892
The Banker's Bank Stock 50 -0- -0- 50
Federal Home Loan Bank Stock 1,459 -0- -0- 1,459
Marketable Equity Securities 1,130 -0- (182) 948
-------- -------- -------- --------
$ 53,844 $ 165 $ (349) $ 53,660
======== ======== ======== ========
Securities Held to Maturity:
U.S. Government Agencies $ 1,650 $ -0- $ (9) $ 1,641
State, County and Municipal 1,567 -0- (14) 1,553
-------- -------- -------- --------
$ 3,217 $ -0- $ (23) $ 3,194
======== ======== ======== ========
</TABLE>
8
<PAGE>
(3) Investment Securities (continued)
- -------------------------------------
The amortized cost and fair value of investment securities as of September 30,
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 $13,529 $13,528 $ 1,047 $ 1,046
Due After One Year Through Five Years 24,321 24,328 1,728 1,715
Due After Five Years Through Ten Years 1,231 1,244 0 0
Due After Ten Years 203 205 442 433
------- ------- ------- -------
39,284 39,305 3,217 3,194
Federal Home Loan Bank Stock 1,459 1,459
The Banker's Bank Stock 50 50
Marketable Equity Securities 1,130 948
Mortgage-Backed Securities 11,921 11,898
------- ------- ------- -------
$53,844 $53,660 $ 3,217 $ 3,194
======= ======= ======= =======
</TABLE>
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 $ $ $ 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 $28,029 and $27,618
as of September 30, 1997 and December 31, 1996, respectively, were pledged to
secure public deposits and for other purposes.
9
<PAGE>
(4) Loans
- ---------
The composition of loans as of September 30, 1997 and December 31, 1996 was as
follows:
<TABLE>
<CAPTION>
September 30, 1997 December 31, 1996
------------------ -----------------
<S> <C> <C>
Commercial, Financial and Agricultural $ 51,129 $ 38,776
Real Estate - Construction 2,081 881
Real Estate - Farmland 17,369 25,770
Real Estate - Other 120,132 88,896
Installment Loans to Individuals 42,224 44,608
All Other Loans 8,378 7,945
-------- --------
$241,313 $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 $5,948 and $7,396 as of September 30, 1997 and December 31, 1996,
respectively. On September 30, 1997, the Company had 90 day past due loans with
principal balances of $269 and restructured loans with principal balances
of $26.
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 September 30, 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, September 30, 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 nine
months ended September 30, 1997 and September 30, 1996 as follows:
<TABLE>
<CAPTION>
September 30, 1997 September 30, 1996
------------------ ------------------
<S> <C> <C>
Balance, Beginning $ 4,435 $ 4,051
Provision Charged to Operating Expenses 1,085 1,550
Loans Charged Off (1,253) (1,747)
Loan Recoveries 410 840
------- -------
Balance, Ending $ 4,677 $ 4,694
======= =======
</TABLE>
10
<PAGE>
(6) Premises and Equipment
- --------------------------
Premises and equipment are comprised of the following as of September 30, 1997
and December 31, 1996:
<TABLE>
<CAPTION>
September 30, 1997 December 31, 1996
------------------ -----------------
<S> <C> <C>
Land $ 1,205 $ 973
Building 6,266 5,601
Furniture, Fixtures and Equipment 6,394 5,150
Leasehold Improvements 33 31
-------- --------
13,898 11,755
Accumulated Depreciation (5,325) (4,802)
-------- --------
$ 8,573 $ 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 September 30, 1997 and December
31, 1996 are as follows:
<TABLE>
<CAPTION>
September 30, 1997 December 31, 1996
------------------ -----------------
<S> <C> <C>
Interest-Bearing Demand $ 47,071 $ 55,297
Savings 11,658 11,724
Time, $100,000 and Over 58,301 54,139
Other Time 141,608 135,793
-------- --------
$258,638 $256,953
======== ========
</TABLE>
11
<PAGE>
(9) Other Borrowed Money
- ------------------------
Other borrowed money is comprised of the following as of September 30, 1997 and
December 31, 1996:
<TABLE>
<CAPTION>
September 30, 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 September 30, 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 September 30, 1997. 873 1,029
Notes payable, due February 26, 1997 with interest at variable
rates. Collateralized by commercial real estate in downtown
Fitzgerald, Georgia. -0- 291
Notes payable due January 29, 2000 with interest at variable rates
Collateralized by commercial real estate in downtown Fitzgerald, Georgia
Effective interest rate of 8.50% as of September 30, 1997. 963 -0-
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. -0- 1,000
Advance agreement with the Federal Home Loan Bank of Atlanta, dated September
29, 1997, payable in full on September 29, 1998. Interest rate determined under
the daily rate credit program. 2,000 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. -0- 375
Advance agreement with the Federal Home Loan Bank of Atlanta, dated May 3, 1997,
payable in full on May 3, 1998. Interest rate
determined under the daily rate credit program. 1,200 -0-
Advance agreement with the Federal Home Loan Bank of Atlanta, dated June
30,1997, payable in full on June 30, 1998. Interest rate
determined under the daily rate credit program. 300 -0-
Advance agreement with the Federal Home Loan Bank of Atlanta,
dated September 3, 1997 payable in full on March 3, 1998. Interest
rate determined under the daily rate credit program. 1,400 -0-
</TABLE>
12
<PAGE>
(9) Other Borrowed Money (continued)
- ------------------------
<TABLE>
<CAPTION>
September 30, 1997 December 31, 1996
------------------ -----------------
<S> <C> <C>
Advance agreement with the Federal Home Loan Bank of Atlanta,
dated May 22, 1997, payable in full on November 24, 1997. Interest
rate determined under the daily rate credit program. 1,500 -0-
Advance agreement with the Federal Home Loan Bank of Atlanta, dated May 28,
1997, payable in full on May 28, 2002. Effective interest
rate of 6.98% on September 30, 1997. 1,000 -0-
Advance agreement with the Federal Home Loan Bank of Atlanta,
dated May 30, 1997, payable in full on February 27, 1998. Interest
rate determined under the daily rate credit program. 1,000 -0-
Advance agreement with the Federal Home Loan Bank of Atlanta,
dated June 23, 1997, payable in full on February 23, 1999. Interest
rate determined under the daily rate credit program. 1,000 -0-
Note payable dated September 5, 1997, due on September 5, 2002,
amortized over sixty months with interest at variable rate. Collateralized
by guaranty of Colony Bankcorp, Inc. in addition to all furniture, fixtures,
equipment, software of Colony Management Services, Inc. Effective
interest rate of 8.00% on September 30, 1997. 1,000 -0-
Advance agreement with the Federal Home Loan Bank of Atlanta, dated September
24, 1997, payable in full on September 24, 2002. Effective interest rate of
5.66% on September 30, 1997 with one-time call on September 24, 1999. 1,000 -0-
------- ------
$14,037 $5,496
======= ======
</TABLE>
Maturities of borrowed money for the next five years as of September 30, 1997:
<TABLE>
<CAPTION>
Year Amount
<S> <C>
1997 $ 2,682
1998 6,437
1999 1,551
Thereafter 3,367
-------
$14,037
=======
</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.
13
<PAGE>
(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 $1,702 as of September 30, 1997 and $3,128 as of December 31,
1996. Unfulfilled loan commitments as of September 30, 1997 and December 31,
1996 approximated $26,618 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 September 30, 1997 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.
14
<PAGE>
<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 September 30, 1997
Total Capital
to Risk-Weighted Assets $30,863 12.13% $20,352 8.00% $25,440 10.00%
Tier 1 Capital
to Risk-Weighted Assets 27,664 10.87% 10,176 4.00% 15,264 6.00%
Tier 1 Capital
to Average Assets 27,664 8.42% 13,149 4.00% 16,436 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 September 30, 1997 and December 31,
1996 and the related statements of income are as follows:
COLONY BANKCORP, INC. (PARENT ONLY)
BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS September 30, 1997 December 31, 1996
<S> <C> <C>
Cash $ 154 $ 61
Investments in Subsidiaries at Equity 29,437 26,915
Other 1,440 979
-------- --------
Total Assets $ 31,031 $ 27,955
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Dividends Payable $ 109 $ 109
Notes and Debentures Payable 2,637 2,121
Other 104 134
-------- --------
2,850 2,364
Stockholders' Equity
Common Stock, Par Value $10; 5,000,000 Shares
Authorized, 2,173,263 and 1,448,842 Shares
Issued and Outstanding as of September 30, 1997
and December 31, 1996, respectively $ 21,733 $ 14,488
Paid-In Capital 1,137 1,137
Retained Earnings 5,494 10,145
Net Unrealized Loss on Securities Available for Sale, Net of Tax (183) (179)
-------- --------
Total Stockholders' Equity 28,181 25,591
-------- --------
Total Liabilities and Stockholders' Equity $ 31,031 $ 27,955
======== ========
</TABLE>
15
<PAGE>
(14) Financial Information of Colony Bankcorp, Inc. (Parent Only) (Continued)
- -----------------------------------------------------------------------------
COLONY BANKCORP, INC. (PARENT ONLY)
STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
<TABLE>
<CAPTION>
September 30, 1997 September 30, 1996
<S> <C> <C>
Income
Dividends from Subsidiaries $ 860 $ 825
Management Fees from Subsidiaries 207 380
Data Processing Fees 0 297
Other 30 11
------- -------
$ 1,097 $ 1,513
Expenses
Interest $ 150 $ 137
Salaries and Benefits 281 516
Other 285 384
------- -------
$ 716 $ 1,037
------- -------
Income Before Taxes and Equity in Undistributed
Earnings of Subsidiaries 381 476
Income Tax (Benefits) (175) (109)
------- -------
Income Before Equity in Undistributed Earnings
of Subsidiaries 556 585
Equity in Undistributed Earnings of Subsidiaries 2,364 1,763
------- -------
Net Income $ 2,920 $ 2,348
======= =======
</TABLE>
16
<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 nine
months ended September 30, 1997, the Company was successful in meeting its
liquidity needs by reducing Federal Funds 57.21% to $9,730,000 from $22,740,000
on December 31, 1996. Deposits remained flat for the nine months ended September
30, 1997 with a 0.32% reduction to $284,748,000 on September 30, 1997 from
$285,676,000 on December 31, 1996.
The Company's liquidity position remained acceptable for the nine months ended
September 30, 1997. Average liquid assets (cash and amounts due from banks,
interest-bearing deposits in other banks, funds sold and investments securities)
represented 29.91% of average deposits for nine months ended September 30, 1997
as compared to 28.97% of average deposits for nine months ended September 30,
1996 and 29.96% for calendar year 1996. Average loans represented 79.61% of
average deposits for nine months ended September 30, 1997 as compared to 76.38%
for nine months ended September 30, 1996 and 76.89% for calendar year 1996.
Average interest-bearing deposits were 85.15% of average earning assets for nine
months ended September 30, 1997 as compared to 87.28% for nine months ended
September 30, 1996 and 87.09% for calendar year 1996.
The Company satisfies most of its capital requirements through retained
earnings. During the first three quarters of 1997, retained earnings provided
$1,012,000, $809,000 and $773,000 increase in equity, respectively.
Additionally, equity capital decreased by $4,000 for the first three quarters of
1997 resulting from the change in unrealized losses on securities
available-for-sale, net of taxes. Thus, total equity increased by a net amount
of $2,590,000 for the nine month period ended September 30, 1997. This compares
to growth in equity from retained earnings of $665,000, $635,000 and $757,000,
respectively for the nine month period ended September 30, 1996. Additionally,
equity capital decreased by $269,000 for the first three quarters of 1996
resulting from the change in unrealized losses on securities available-for-sale,
net of taxes. Thus total equity increased by a net amount of $1,788,000 for the
nine month period ended September 30, 1996. Total equity increased $2,523,000
for the 1996 calendar year.
At September 30, 1997, total capital of Colony amounted to approximately
$28,181,000. At September 30, 1997, there was an outstanding commitment for
expenditures of approximately $1,075,000 by Broxton State Bank for a branch
operation in the Douglas, Georgia market.
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 percent
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
September 30, 1997 was 10.87% and total Tier 1 and 2 risk-based capital was
12.13%. 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 September 30, 1997 was 8.42% which exceeds the required leverage ratio
standard of 4%.
For the first three quarters of 1997, the Company paid quarterly dividends of
$0.05 per share. The dividend payout ratio, defined as dividends per share
divided by net income per share, was 11.19% for nine months ended September 30,
1997 as compared to a 13.89% dividend payout ratio for the nine month period
ended September 30, 1996. For the first three quarters of 1996, the Company paid
quarterly dividends of $0.05 per share.
17
<PAGE>
At September 30, 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 loan 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 September 30, 1997 was $881,000 as
compared with $854,000 for the three months ended September 30, 1996, or an
increase of 3.16% and net income for the nine months ended September 30, 1997
was $2,920,000 as compared with $2,348,000 for the nine months ended September
30, 1996, or an increase of 24.36%. Third quarter 1997 earnings were flat
compared to the same period in 1996, though our net interest income increased to
$3,702,000 in third quarter 1997 compared to $3,432,000 in third quarter 1996.
The increase in net interest income was offset by salaries and benefits
increasing to $1,383,000 in third quarter 1997 from $1,201,000 in third quarter
1996 due to an extra payroll period and occupancy and equipment expenses
increasing to $395,000 in third quarter 1997 from $294,000 in third quarter 1996
due to additional expenses with a branch operation in Lee County, Georgia and
additional depreciation expenses with equipment purchased. The net interest
income was higher due to increased volume and increased net interest margin for
the first three quarters in 1997 as compared to the same period in 1996.
The net interest margin decreased by 3 basis points to 4.88% in third quarter
1997 as compared to 4.91% in third quarter 1996 and increased by 14 basis points
to 4.97% for nine months ended September 30, 1997 as compared to 4.83% for the
same period in 1996. Net interest income increased by 7.87% to $3,702,000 in
third quarter 1997 from $3,432,000 for the same period in 1996 on an increase in
average earnings assets to $308,155,000 in third quarter 1997 from $283,785,000
for the same period in 1996. Net interest income increased by 11.22% to
$11,064,000 for nine months ended September 30, 1997 from $9,948,000 for the
same period in 1996 on an increase in average earning assets to $301,139,000 for
nine months ended September 30, 1997 from $278,834,000 for the same period in
1996. For the nine months ended September 30, 1997 compared to the same period
in 1996, average loans increased by $15,991,000 or 7.65%, average Federal Funds
sold decreased by $1,312,000 or 9.46%, average investment securities increased
by $6,956,000, or 12.47% and average interest bearing deposits in other banks
increased by $670,000 or 614.67%, resulting in a net increase in average earning
assets of $22,305,000 or 8.00%.
The net increase in average earning assets was funded by a net increase in
average deposits of 5.41% to $282,719,000 for nine months ended September 30,
1997 from $268,206,000 for the same period in 1996. Average interest-bearing
deposits increased by 5.69% to $256,415,000 for nine months ended September 30,
1997 compared to $242,609,000 for nine months ended September 30, 1996, while
average noninterest-bearing deposits represented 9.30% of average total deposits
for nine months ended September 30, 1997 as compared to 9.54% for the same
period in 1996 and 9.70% for calendar year 1996.
Interest expense increased for the three months ended September 30, 1997 by
$277,000 compared to the same period in 1996 and increased by $534,000 for the
nine months ended September 30, 1997 compared to the same period in 1996. The
increase in interest expense is primarily attributable to the increase in
average interest-bearing deposits to $256,415,000 for the nine months ended
September 30, 1997 compared to $242,609,000 for nine months ended September 30,
1996. The combination of an increase in the net interest margin and increased
average earning assets resulted in an increase in net interest income of
$270,000 for third quarter 1997 compared to the same period in 1996 and an
increase in net interest income of $1,116,000 for nine months ended September
30, 1997 compared to the same period in 1996.
18
<PAGE>
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 was $332,000 for the three months ended September
30, 1997 as compared to $405,000 for the same period in 1996, representing a
decrease in the provision of $73,000 or 18.02%. The provision for loan losses
was $1,085,000 for the nine months ended September 30, 1997 compared to
$1,550,000 for the same period in 1996 representing a decrease of $465,000 or
30.00%. The decrease in the provision for loan losses during the first nine
months of 1997 is 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 101.51% of the provision for loan losses in third
quarter 1997 as compared to 8.15% in the third quarter of 1996. Net loan
charge-offs represented 77.70% of the provision for loan losses in the nine
month period ended September 30, 1997 as compared to 58.52% of the provision for
loan losses in the nine month period ended September 30, 1996. During the first
nine months of 1997 and 1996, a net of $843,000 and $907,000, respectively was
charged-off. Net loan charge-offs for the nine months ended September 30, 1997
represented 0.37% of average loans outstanding as compared to 0.43% for nine
months ended September 30, 1996. At September 30, 1997, the allowance for loan
losses was 1.94% of total loans outstanding as compared to an allowance for loan
losses of 2.15% at September 30, 1996 and 2.14% at December 31, 1996. Asset
quality continued to improve in the third quarter of 1997 as the ratio of
nonperforming assets to loans and other real estate decreased to 3.11% from
4.84% in the third quarter of 1996. The loan loss reserve of 1.94% of total
loans outstanding provided coverage of 75.39% of nonperforming loans and 63.31%
of nonperforming assets, up from 59.46% and 44.88% in the third quarter of 1996,
respectively. The determination of the reserve rests upon management's judgment
about factors affecting loan quality and assumptions about the economy.
Management considers the September 30, 1997 allowance for loan losses adequate
to cover potential losses in the loan portfolio.
Non-interest income consists primarily of service charges on deposit accounts.
Service charges on deposit accounts amounted to $457,000 in third quarter 1997
compared to $463,000 in third quarter 1996, or an decrease of 1.30% and amounted
to $1,366,000 for nine months ended September 30, 1997 compared to $1,333,000
for nine months ended September 30, 1996, or an increase of 2.48%. All other
non-interest income decreased by $57,000 to $128,000 for third quarter 1997 from
$185,000 for third quarter, 1996 and all other non-interest income decreased by
$86,000 to $573,000 for nine months ended September 30, 1997 from $659,000 for
nine months ended September 30, 1996. The nine month period ended September 30,
1996 included a one-time booking of credit life insurance fees approximating
$45,000 to account for the variance in the nine months ended September 30, 1997
compared to the same period in 1996.
Non-interest expense increased by 10.43% to $2,689,000 in three months ended
September 30, 1997 from $2,435,000 for the same period in 1996. Salaries and
benefits increased by 15.15% to $1,383,000 in third quarter 1997 from $1,201,000
in third quarter 1996 and was attributable to an increase in employees for an
additional branch bank and an additional payroll period in third quarter 1997
compared to the same period in 1996. Occupancy and equipment expenses increased
34.35% in three months ended September 30, 1997 to $395,000 from $294,000 in the
same period in 1996. This increase was attributable to the additional branch
location and increased depreciation with our technological equipment purchases
in 1997. All other non-interest expenses remained flat as third quarter 1997
expenses totaled $911,000 compared to $940,000 for third quarter 1996.
Non-interest expense increased by 10.02% to $7,693,000 for nine month period
ended September 30 1997 compared to $6,992,000 for the same period in 1996. This
increase was primarily attributable to additional staffing at the branch
location, and additional payroll period in third quarter 1997 and additional
occupancy and equipment expenses associated with the new branch location and
technological equipment purchases.
Income before taxes increased by $26,000 to $1,266,000 in third quarter 1997
from $1,240,000 in third quarter 1996 and increased by $827,000 to $4,225,000
for nine months ended September 30, 1997 from $3,398,000 for the same period in
1996. The increase for both periods is primarily attributable to the increased
net interest income and a reduction in the loan loss provision. Income taxes as
a percentage of income before taxes decreased by 2.31% to 30.41% in third
quarter 1997 as compared to 31.13% in third quarter 1996 while income taxes as a
percentage of income before taxes decreased by 0.03% to 30.89% for nine months
ended September 30, 1997 as compared to 30.90% for the same period in 1996.
Income tax expense increased 24.29% to $1,305,000 for nine month period ended
September 30, 1997 compared to $1,050,000 for the same period in 1996.
19
<PAGE>
The Bank of Fitzgerald had been operating under a Memorandum of Understanding
dating back to October, 1992 that required the Bank to maintain specified
minimum capital ratios and minimum reserves for loan losses. During third
quarter 1997 the Memorandum of Understanding was lifted by regulatory
authorities due to the progress made at the bank.
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 recently moved into its
new 8,900 square feet corporate office. 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. Colony, through it subsidiary,
Broxton State Bank, has broken ground in third quarter 1997 for a branch
location in Douglas, Georgia. The building will be approximately 9,000 square
feet and offers the Company an opportunity to expand into the rapidly growing
Douglas/Coffee County, Georgia market.
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 September 30,
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.
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
20
<PAGE>
Bankcorp, Inc. acquired Broxton State Bank and in November, 1996 formed a non-
bank subsidiary, Colony Management Services, Inc. Ashburn Bank expanded its
operation by branching into Lee County, Georgia in October, 1996. Broxton State
Bank has announced plans to expand its operation by opening a branch office in
Coffee County, Georgia in second quarter 1998.
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.
The Company had a 3-for-2 stock split effected as a 50% stock dividend on July
1, 1997. This increased the number of outstanding shares of Colony common stock
issued to 2,173,263 shares from 1,448,842.
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
September 30, 1997.
21
<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.
November 5, 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
22
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 8,689
<INT-BEARING-DEPOSITS> 594
<FED-FUNDS-SOLD> 9,730
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 53,660
<INVESTMENTS-CARRYING> 3,217
<INVESTMENTS-MARKET> 3,194
<LOANS> 241,300
<ALLOWANCE> 4,677
<TOTAL-ASSETS> 330,892
<DEPOSITS> 284,748
<SHORT-TERM> 8,273
<LIABILITIES-OTHER> 2,676
<LONG-TERM> 5,764
0
0
<COMMON> 21,733
<OTHER-SE> 6,448
<TOTAL-LIABILITIES-AND-EQUITY> 330,892
<INTEREST-LOAN> 18,002
<INTEREST-INVEST> 2,811
<INTEREST-OTHER> 563
<INTEREST-TOTAL> 21,376
<INTEREST-DEPOSIT> 9,830
<INTEREST-EXPENSE> 10,312
<INTEREST-INCOME-NET> 11,064
<LOAN-LOSSES> 1,085
<SECURITIES-GAINS> 9
<EXPENSE-OTHER> 7,693
<INCOME-PRETAX> 4,225
<INCOME-PRE-EXTRAORDINARY> 2,920
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,920
<EPS-PRIMARY> 1.34
<EPS-DILUTED> 1.34
<YIELD-ACTUAL> 497
<LOANS-NON> 5,948
<LOANS-PAST> 269
<LOANS-TROUBLED> 26
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 4,435
<CHARGE-OFFS> 1,253
<RECOVERIES> 410
<ALLOWANCE-CLOSE> 4,667
<ALLOWANCE-DOMESTIC> 4,667
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
