<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR QUARTER ENDED JUNE 30, 1998 COMMISSION FILE NUMBER 0-12436
COLONY BANKCORP, INC.
--------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
GEORGIA 58-1492391
------- ----------
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER)
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 JUNE 30, 1998
----- ----------------------------
COMMON STOCK, $10 PAR VALUE 2,217,513
<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, COLONY BANK SOUTHEAST AND COLONY
MANAGEMENT SERVICES, INC.
A. CONSOLIDATED BALANCE SHEETS JUNE 30, 1998 AND DECEMBER 31, 1997.
B. CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE MONTHS ENDED JUNE 30,
1998 AND 1997 AND FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997.
C. CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION FOR THE SIX
MONTHS ENDED JUNE 30, 1998 AND 1997.
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 SIX MONTH PERIOD ENDED JUNE 30, 1998 ARE NOT
NECESSARILY INDICATIVE OF THE RESULTS TO BE EXPECTED FOR THE FULL YEAR.
2
<PAGE>
COLONY BANKCORP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1998 AND DECEMBER 31, 1997
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
ASSETS JUNE 30, 1998 DECEMBER 31, 1997
------------- ------------------
<S> <C> <C>
Cash and Balances Due from Depository
Institutions (Note 2) $ 11,028 $ 11,764
Federal Funds Sold 14,875 25,540
Investment Securities (Aggregate Fair Value of
$64,075 and $56,891 Respectively) (Note 3) 64,092 56,916
Loans (Notes 4 and 5) 247,497 234,299
Allowance for Loan Losses -4,821 -4,575
Unearned Interest and Fees -7 -11
-------- --------
Total Loans 242,669 229,713
Premises and Equipment (Note 6) 10,464 9,135
Other Real Estate 845 1,311
Other Assets 7,891 8,568
-------- --------
Total Assets $351,864 $342,947
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest-Bearing $ 28,177 $ 27,320
Interest-Bearing (Note 8) 274,473 270,842
-------- --------
Total Deposits 302,650 298,162
Borrowed Money:
Federal Funds Purchased 0 0
Other Borrowed Money (Note 9) 15,073 13,074
-------- --------
Total Borrowed Money 15,073 13,074
Other Liabilities 2,573 2,890
Commitments and Contingencies (Note 11)
Stockholders' Equity:
Common Stock, Par Value $10 a Share; Authorized
5,000,000 shares, Issued 2,217,513 and 2,173,263
Shares as of June 30, 1998 and December 31, 1997
Respectively 22,175 21,733
Paid-In Capital 1,580 1,137
Retained Earnings 7,970 6,083
Net Unrealized Loss on Securities Available for Sale,
Net of Tax Liability of $16 in 1998 and $25 in -157 -132
1997 -------- --------
Total Stockholders' Equity 31,568 28,821
-------- --------
Total Liabilities and Stockholders' Equity $351,864 $342,947
======== ========
</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 JUNE 30, 1998 AND 1997
AND SIX MONTHS ENDED JUNE 30, 1998 AND 1997
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
6/30/98 6/30/97 6/30/98 6/30/97
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Interest Income:
Loans, including fees $ 6,312 $ 5,990 $ 12,595 $ 11,716
Federal Funds Sold 247 174 542 387
Deposits with Other Banks 27 12 55 26
Investment Securities:
U.S. Treasury & Federal Agencies 792 852 1,515 1,731
State, County and Municipal 94 75 176 151
Other Investments 47 20 98 49
---------- ---------- ---------- ----------
Total Interest Income 7,519 7,123 14,981 14,060
---------- ---------- ---------- ----------
Interest Expense:
Deposits 3,597 3,262 7,074 6,455
Federal Funds Purchased 2 17 2 22
Other Borrowed Money 204 129 398 221
---------- ---------- ---------- ----------
Total Interest Expense 3,803 3,408 7,474 6,698
Net Interest Income 3,716 3,715 7,507 7,362
Provision for Loan Losses 231 468 510 753
---------- ---------- ---------- ----------
Net Interest Income After Provision 3,485 3,247 6,997 6,609
---------- ---------- ---------- ----------
Noninterest Income:
Service Charge on Deposits 521 454 998 909
Other Service Charges, Commissions & Fees 93 88 210 223
Security Gains, net 0 2 2 9
Other Income 31 116 82 213
---------- ---------- ---------- ----------
Total Noninterest Income 645 660 1,292 1,354
---------- ---------- ---------- ----------
Noninterest Expense:
Salaries and Employee Benefits 1,462 1,480 2,724 2,746
Occupancy and Equipment 419 350 819 687
Other Operating Expenses 844 757 1,625 1,571
---------- ---------- ---------- ----------
Total Noninterest Expense 2,725 2,587 5,168 5,004
---------- ---------- ---------- ----------
Income Before Income Taxes 1,405 1,320 3,121 2,959
Income Taxes 441 402 990 920
---------- ---------- ---------- ----------
Net Income $ 964 $ 918 $ 2,131 $ 2,039
========== ========== ========== ==========
Net Income Per Share of Common Stock*
Basic $0.43 $0.42 $0.96 $0.94
========== ========== ========== ==========
Diluted $0.43 $0.42 $0.96 $0.94
========== ========== ========== ==========
Weighted Average Shares Outstanding* 2,217,663 2,173,263 2,208,880 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
SIX MONTHS ENDED JUNE 30, 1998 AND 1997
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
1998 1997
---------- ------------
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES
Net Income (loss) $ 2,131 $ 2,039
Adjustments to reconcile net income to net cash provided
by operating activities:
(Gain) loss on sale of investment securities -2 -9
Depreciation 459 348
Provision for loan losses 510 753
Amortization of excess costs 24 26
Other prepaids, deferrals and accruals, net 422 471
--------- ---------
Total Adjustments $ 1,413 $ 1,589
--------- ---------
Net cash provided by operating activities $ 3,544 $ 3,628
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of securities available for sale -$38,869 -$8,565
Proceeds from sales of securities available for sale 849 2,998
Proceeds from maturities, calls, and paydowns of
investment securities:
Available for Sale 29,811 7,491
Held to Maturity 1,064 191
Decrease (Increase) in interest-bearing deposits in banks 358 297
(Increase) in loans -13,202 -25,939
Purchase of premises and equipment -1,740 -1,220
--------- ---------
Net cash (used in) investing activities -$21,729 -$24,747
--------- ---------
CASH FLOW FROM FINANCING ACTIVITIES
Net (decrease) increase in deposits $ 4,488 $ 88
Proceeds from issuance of common stock 885 0
Federal funds purchased 0 -160
Dividends paid -231 -217
Net (decrease) increase in other borrowed money 1,999 9,512
--------- ---------
Net cash provided by financing activities $ 7,141 $ 9,223
--------- ---------
Net increase (decrease) in cash and cash equivalents -11,044 -11,896
Cash and cash equivalents at beginning of period 36,290 35,293
--------- ---------
Cash and cash equivalents at end of period $ 25,246 $ 23,397
</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
- --- ------------------------------------------
BASIS OF PRESENTATION
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; Bank of Worth, Sylvester,
Georgia; The Bank of Dodge County, Eastman, Georgia; Community Bank of Wilcox,
Pitts, Georgia; Colony Bank Southeast (formerly Broxton State Bank), Broxton,
Georgia; and Colony Management Services, Inc., Fitzgerald, Georgia (the Banks).
All significant intercompany accounts have been eliminated in consolidation.
The accounting and reporting policies of Colony Bankcorp, Inc. conform to
generally accepted accounting principles and practices utilized in the
commercial banking industry.
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 foreclosure or in satisfaction of loans and the
valuation of deferred tax assets.
In February, 1997, the Financial Accounting Standards Board (FASB) issued
Statement No. 128, Earnings Per Share (SFAS 128). SFAS 128 replaced the
calculation of primary and fully diluted earnings per share (EPS) with basic and
diluted EPS. Unlike primary EPS basic EPS excludes any dilutive effects of
options, warrants and convertible securities. Diluted EPS is very similar to
fully diluted EPS. All EPS amounts presented have been restated as applicable,
to conform with the new requirements.
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 June 30, 1998 and December 31, 1997. 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. Impaired loans are recorded under SFAS 114, Accounting by Creditors for
Impairment of a Loan and SFAS 118, Accounting by Creditors for Impairment of a
Loan-Income Recognition and Disclosures. Impaired loans are loans for which
principal and interest are unlikely to be collected in accordance with the
original loan terms and, generally, represent loans delinquent in excess of 120
days which have been placed on nonaccrual status and for which collateral values
are less than outstanding principal and interest. Small balance, homogeneous
loans are excluded from impaired loans. Generally, interest payments received
on impaired loans are applied to principal. Upon receipt of all loan principal,
additional interest payments are recognized as interest income on the cash
basis.
Other nonaccrual loans are loans for which payments of principal and interest
are considered doubtful of collection under original terms but collateral values
equal or exceed outstanding principal and interest.
Colony Bankcorp, Inc.'s loans consist of commercial, financial and agricultural
loans, real estate mortgage loans and consumer loans primarily to individual's
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.
6
<PAGE>
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
- --- ------------------------------------------------------
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 accumulate
depreciation.
Depreciation is charged to operations over the estimated useful lives of the
assets. The estimated useful lives and methods of depreciation are as follows:
<TABLE>
<CAPTION>
DESCRIPTION Life in Years Method
- ----------- ------------- ------
<S> <C> <C>
Banking Premises 15-40 Straight-Line and Accelerated
Furniture and Equipment 5-10 Straight-Line and Accelerated
</TABLE>
Expenditures for major renewals and betterments are capitalized. Maintenance
and repairs are charged to operations as incurred. When property and equipment
are retired or sold, the cost and accumulated depreciation are removed from the
respective accounts and any gain or loss is reflected in other income or
expense.
CASH FLOWS
For reporting cash flows, cash and cash equivalents include cash on hand,
noninterest-bearing amounts due from banks and federal funds sold. Cash flows
from demand deposits, NOW accounts, savings accounts, loans and certificates of
deposit are reported net.
INCOME TAXES
Income taxes are provided for the tax effects of transactions reported in the
consolidated financial statements and consist of taxes currently due plus
deferred taxes. Deferred taxes are recognized for differences between the
basis of assets and liabilities for financial statement and income tax purposes.
The differences relate primarily to depreciable assets (use of different
depreciation methods for financial statement and income tax purposes) and
allowance for loan losses (use of the allowance method for financial statement
purposes and the experience method for tax purposes). The deferred tax assets
and liabilities represent the future tax return consequences of those
differences, which will either be taxable or deductible when the assets and
liabilities are recovered or settled.
OTHER REAL ESTATE
Other real estate generally represents real estate acquired through foreclosure
and is initially recorded at the lower of cost or estimated market value at the
date of acquisition. Losses from the 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.
7
<PAGE>
(2) CASH AND BALANCES DUE FROM DEPOSITORY INSTITUTIONS
- --- --------------------------------------------------
Components of cash and balances due from depository institutions at June 30,
1998 and December 31, 1997 are as follows:
<TABLE>
<CAPTION>
June 30, 1998 December 31, 1997
------------- -----------------
<S> <C> <C>
Cash on Hand and Cash Items $ 3,161 $ 3,211
Noninterest-Bearing Deposits with Other Banks 7,210 7,538
Interest-Bearing Deposits with Other Banks 657 1,015
------- -------
$11,028 $11,764
======= =======
</TABLE>
(3) INVESTMENT SECURITIES
- --- ---------------------
Investment securities as of June 30, 1998 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 $ 1,104 $ 0 -$3 $ 1,101
U.S. Government Agencies:
Mortgage-Backed 9,380 53 -35 9,398
Other 41,277 24 -69 41,232
State, County & Municipal 7,004 79 -2 7,081
The Banker's Bank Stock 50 0 0 50
Federal Home Loan Bank Stock 2,094 0 0 2,094
Marketable Equity Securities 1,130 0 -188 942
------- ---- ----- -------
$62,039 $156 -$297 $61,898
======= ==== ===== =======
Securities Held to Maturity:
U.S. Government Agencies $ 800 $ 0 -$1 $ 799
State, County and Municipal 1,394 2 -18 1,378
------- ---- ----- -------
$ 2,194 $ 2 -$19 $ 2,177
======= ==== ===== =======
</TABLE>
The amortized cost and fair value of investment securities as of June 30, 1998
by contractual maturity, are shown below. Expected maturities will differ from
contractual maturities because issues 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 Cost Fair Value Amortized Cost Fair Value
<S> <C> <C> <C> <C>
Due in One Year or Less $ 8,492 $ 8,488 $ 965 $ 964
Due After One Year Through Five Years 38,544 38,551 810 810
Due After Five Years Through Ten Years 2,349 2,375 0 0
Due After Ten Years 0 0 419 403
------- ------- ------ ------
49,385 49,414 2,194 2,177
Federal Home Loan Bank Stock 2,094 2,094 0 0
The Banker's Bank Stock 50 50 0 0
Marketable Equity Securities 1,130 942 0 0
Mortgage-Backed Securities 9,380 9,398 0 0
------- ------- ----- ------
$62,039 $61,898 $2194 $2,177
======= ======= ===== ======
</TABLE>
8
<PAGE>
(3) INVESTMENT SECURITIES (CONTINUED)
- --- ---------------------------------
Investment securities as of December 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 $ 1,074 $ 0 -$3 $ 1,071
U.S. Government Agencies:
Mortgage-Backed 10,866 60 -62 10,864
Other 33,468 41 -43 33,466
State, County & Municipal 5,328 85 -5 5,408
The Banker's Bank Stock 50 0 0 50
Federal Home Loan Bank Stock 1,870 0 0 1,870
Marketable Equity Securities 1,130 0 -188 949
------- ---- ----- -------
$53,786 $186 -$294 $53,678
======= ==== ===== =======
Securities Held to Maturity:
U.S. Government Agencies $ 1,649 $ 0 -$5 $ 1,644
State, County and Municipal 1,588 1 -20 1,569
------- ---- ----- -------
$ 3,237 $ 1 -$25 $ 3,213
======= ==== ===== =======
</TABLE>
Investment securities having a carry value approximating $24,951 and $25,563 as
of June 30, 1998 and December 31, 1997, respectively, were pledged to secure
public deposits and for other purposes.
(4) LOANS
- ----- -----
The composition of loans as of June 30, 1998 and December 31, 1997 was as
follows:
<TABLE>
<CAPTION>
June 30, 1998 December 31, 1997
------------- -----------------
<S> <C> <C>
Commercial, Financial and Agricultural $ 52,464 $ 34,883
Real Estate Construction 1,268 2,676
Real Estate Farmland 17,945 21,898
Real Estate Other 125,676 117,268
Installment Loans to Individuals 42,321 42,956
All Other Loans 7,823 14,618
-------- --------
$247,497 $234,299
======== ========
</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 $6,838 and $5,774 as of June 30, 1998 and December 31, 1997,
respectively. On June 30, 1998, the Company had 90 day past due loans with
principal balances of $1,346 and restructured loans with principal balances of
$31.
Colony Bankcorp, Inc. recognizes impaired loans as nonaccrual loans delinquent
in excess of 120 days for which collateral values are insufficient to recover
outstanding principal and interest under original loan terms. Impaired loan
data as of June 30, 1998 and December 31, 1997 was as follows:
Total Investment in Impaired Loans $1,292
Less Allowance for Impaired Loan Losses -461
------
Net Investment, June 30, 1998 and December 31, 1997 $ 831
======
9
<PAGE>
(5) ALLOWANCE FOR LOAN LOSSES
- --- -------------------------
Transactions in the allowance for loan losses are summarized below for six
months ended June 30, 1998 and June 30, 1997 was as follows:
<TABLE>
<CAPTION>
June 30, 1998 June 30, 1997
------------- -------------
<S> <C> <C>
Balance, Beginning $4,575 $4,434
Provision Charged to Operating Expenses 510 753
Loans Charged Off -507 -718
Loan Recoveries 243 211
------ ------
Balance, Ending $4,821 $4,682
</TABLE>
(6) PREMISES AND EQUIPMENT
- ----- ----------------------
Premises and equipment are comprised of the following as of June 30, 1998 and
December 31, 1997:
<TABLE>
<CAPTION>
June 30, 1998 December 31, 1997
------------- -------------------
<S> <C> <C>
Land $ 1,326 $ 1,306
Building 7,860 6,717
Furniture, Fixtures and Equipment 6,394 5,938
Leasehold Improvements 302 180
------- -------
15,882 14,141
Accumulated Depreciation -5,418 -5,006
------- -------
$10,464 $ 9,135
======= =======
</TABLE>
Certain Company facilities and equipment are leased under various operating
leases. Future minimum rental payments to be paid are as follows:
<TABLE>
<CAPTION>
Year Ending
December 31 Amount
----------- --------
<S> <C>
1998 $ 62,249
1999 57,740
2000 54,180
2001 45,644
2002 6,708
--------
$226,521
========
</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.
10
<PAGE>
(8) DEPOSITS
- ------------
Components of interest-bearing deposits as of June 30, 1998 and December 31,
1997 are as follows:
<TABLE>
<CAPTION>
June 30, 1998 December 31, 1997
------------- -----------------
<S> <C> <C>
Interest-Bearing Demand $ 48,855 $ 54,770
Savings 12,537 11,971
Time, $100,000 and Over 70,517 61,198
Other Time 142,564 142,903
-------- --------
$274,473 $270,842
======== ========
</TABLE>
The aggregate amount of short-term jumbo certificates of deposit, each with a
minimum denomination of $100,000, was approximately $59,195 and $51,608 as of
June 30, 1998 and December 31, 1997, respectively.
As of June 30, 1998, the scheduled maturities of time deposits are as follows:
<TABLE>
<CAPTION>
Maturity Amount
-------- --------
<S> <C>
One Year and Under $172,829
One to Three Years 27,045
Three Years and Over 13,207
--------
$213,081
========
</TABLE>
(9) OTHER BORROWED MONEY
- --- --------------------
Other borrowed money at June 30, 1998 and December 31, 1997 is summarized as
follows:
<TABLE>
<CAPTION>
June 30, 1998 December 31, 1997
------------- -----------------
<S> <C> <C>
Federal Home Loan Bank Advances $12,800 $ 9,800
Debentures Payable 534 534
AmSouth Note Payable 0 821
First Port City Note Payable 867 963
The Bankers Bank Note Payable 872 956
------- -------
$15,073 $13,074
======= =======
</TABLE>
Advances from the Federal Home Loan Bank (FHLB) have maturities ranging from
1998 to 2008 and interest rates ranging from 5.00 percent to 6.98 percent.
Under the Blanket Agreement for Advances and Security Agreement with the FHLB,
residential mortgage loans are pledged as collateral for the FHLB advances
outstanding.
Debentures payable were issued November 28, 1984 for $4,360. The debentures are
due in annual payments of $267 plus variable interest with the unpaid balance
due November 1, 1999. Collateral for the outstanding debt consists of 100
percent of the common stock of Ashburn Bank. Effective interest rate as June
30, 1998 was 8.0 percent.
AmSouth note payable originated on December 20, 1994 for $1,445. Collateral
consists of 100 percent of the common stock of The Bank of Fitzgerald and The
Bank of Worth. This debt was paid out in February, 1998.
First Port City note payable was renewed on January 30, 1997 with additional
funds added for an amount totaling $963. Annual principal payments of $96 are
due with interest paid quarterly at The Wall Street Prime Rate Indicator. The
debt is secured by commercial real estate in downtown Fitzgerald, which includes
the parent company's facilities. Any unpaid balance is due January 29, 2000.
11
<PAGE>
(9) OTHER BORROWED MONEY (CONTINUED)
- ------------------------------------
The Bankers Bank note payable originated on September 5, 1997 for $1,000 at a
rate of The Wall Street Prime minus one half percent. Payments are due monthly
with the entire unpaid balance due September 5, 2002. The debt is secured by
all furniture, fixtures, machinery, equipment and software of Colony Management
Services, Inc. Colony Bankcorp, Inc. guarantees the debt.
The aggregate stated maturities of other borrowed money at June 30, 1998 are as
follows:
<TABLE>
<CAPTION>
Year Amount
- ---- ------
<S> <C>
1998 $ 1,367
1999 564
2000 971
2001 2,000
2002 and Thereafter 10,171
-------
$15,073
=======
</TABLE>
(10) PROFIT SHARING PLAN
- ------------------------
The Company has a profit sharing plan that covers substantially all employees
who meet certain age and service requirements. It is the Company's policy to
make contributions to the plan as approved annually by the board of directors.
The total provision for contributions to the plan was $295,452 for 1997.
(11) COMMITMENTS AND CONTINGENCIES
- ----------------------------------
In the normal course of business, certain commitments and contingencies are
incurred which are not reflected in the consolidated financial statements. The
Bank had commitments under standby letters of credit to U.S. addresses
approximating $1,130 as of June 30, 1998 and $825 as of December 31, 1997.
Unfulfilled loan commitments as of June 30, 1998 and December 31, 1997
approximated $37,812 and $30,197 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 statement.
12
<PAGE>
(12) 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 1998 without prior approval from the
banking regulatory agencies approximates $2,017. 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 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 June 30, 1998, the Company meets all capital adequacy
requirements to which it is subject and is classified as well capitalized under
the regulatory framework for prompt corrective action. In the opinion of
management, there are no conditions or events since prior notification of
capital adequacy from the regulators that have changed the institution's
category.
<TABLE>
<CAPTION>
To Be Well Capitalized
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 JUNE 30, 1998
Total Capital
to Risk-Weighted Assets $34,355 13.09% $20,994 8.00% $26,243 10.00%
Tier 1 Capital
to Risk-Weighted Assets 31,056 11.83% 10,497 4.00% 15,746 6.00%
Tier 1 Capital
to Average Assets 31,056 8.96% 13,860 4.00% 17,326 5.00%
AS OF DECEMBER 31, 1997
Total Capital
to Risk-Weighted Assets $31,424 12.50% $20,111 8.00% $25,139 10.00%
Tier 1 Capital
to Risk-Weighted Assets 28,265 11.25% 10,050 4.00% 15,075 6.00%
Tier 1 Capital
to Average Assets 28,265 8.44% 13,396 4.00% 16,745 5.00%
</TABLE>
13
<PAGE>
(13) FINANCIAL INFORMATION OF COLONY BANKCORP, INC. (PARENT ONLY)
- -----------------------------------------------------------------
The parent company's balance sheets as of June 30, 1998 and December 31, 1997
and the related statements of income are as follows:
COLONY BANKCORP, INC. (PARENT ONLY)
BALANCE SHEETS
FOR PERIOD ENDED JUNE 30, 1998 AND DECEMBER 31, 1997
<TABLE>
<CAPTION>
ASSETS JUNE 30, 1998 DECEMBER 31, 1997
------------- -----------------
<S> <C> <C>
Cash $ 297 $ 9
Investments in Subsidiaries at Equity 31,358 29,787
Other 1,511 1,534
------- -------
Totals Assets $33,166 $31,330
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Dividends Payable $ 122 $ 109
Notes and Debentures Payable 1,401 2,318
Other 75 82
------- -------
Stockholders' Equity 1,598 2,509
Common Stock, Par Value $10; 5,000,000 Shares
Authorized, 2,217,513 and 2,173,263 Shares Issued
and Outstanding as of June 30, 1998 and
December 31, 1997, respectively $22,175 $21,733
Paid-In Capital 1,580 1,137
Retained Earnings 7,970 6,083
Net Unrealized Loss on Securities Available for Sale, Net of Tax -157 -132
------- -------
Total Stockholders' Equity 31,568 28,821
------- -------
Total Liabilities and Stockholders' Equity $33,166 $31,330
======= =======
</TABLE>
COLONY BANKCORP, INC. (PARENT ONLY)
STATEMENT OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND JUNE 30, 1997
<TABLE>
<CAPTION>
JUNE 30, 1998 JUNE 30, 1997
------------- -------------
<S> <C> <C>
Income $750 $ 573
Dividends from Subsidiaries 88 144
Management Fees from Subsidiaries 40 15
---- -----
Other $878 $ 732
Expenses $ 66 $ 94
Interest 157 200
Salaries and Benefits 199 159
---- -----
Other $422 $ 453
---- -----
Income Before Taxes and Equity in Undistributed Earnings of Subsidiaries 456 279
Income Tax (Benefits) -79 -109
---- -----
Income Before Equity in Undistributed Earnings of Subsidiaries 535 388
Equity in Undistributed Earnings of Subsidiaries 1,596 1,651
------ ------
Net Income $2,131 $2,039
====== ======
</TABLE>
14
<PAGE>
(13) Financial Information of Colony Bankcorp, Inc. (Parent Only)(continued)
- ----------------------------------------------------------------------------
COLONY BANKCORP, INC. (PARENT ONLY)
STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND JUNE 30, 1997
<TABLE>
<CAPTION>
JUNE 30, 1998 JUNE 30, 1997
------------- -------------
<S> <C> <C>
Cash Flows from Operating Activities
Net Income $ 2,131 $ 2,039
Adjustments to Reconcile Net Income to Net Cash
Provided from Operating Activities
Depreciation and Amortization 43 19
Equity in Undistributed Earnings of Subsidiary -1,596 -1,651
Other -21 -225
------- -------
557 182
Cash Flows from Investing Activities
Capital Infusion in Subsidiary 0 0
Purchase of Premises and Equipment -5 -326
------- -------
-5 -326
Cash Flows from Financing Activities
Dividends Paid -231 -217
Proceeds from Issuance of Common Stock 885 0
Principal Payments on Notes and Debentures -918 -395
Proceeds from Notes and Debentures 0 868
------- -------
-264 256
Increase (Decrease) in Cash and Cash Equivalents 288 112
Cash and Cash Equivalents, Beginning 9 61
------- -------
Cash and Cash Equivalents, Ending $ 297 $ 173
======= =======
</TABLE>
(14) COMMON STOCK SPLIT
- -----------------------
On February 18, 1997 a 50 percent stock split effected on July 1, 1997 in the
form of a dividend was approved by the board. Weighted average shares and per
share data for all periods presented in the accompanying consolidated financial
statements and related notes have been retroactively restated to reflect the
additional shares outstanding resulting from the stock split.
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 six
months ended June 30, 1998, the Company was successful in meeting its liquidity
needs by increasing deposits 1.51% to $302,650,000 from deposits of $298,162,000
on December 31, 1997 and reducing Federal Funds 41.76% to $14,875,000 from
$25,540,000 on December 31, 1997. Additionally, the Company increased its
borrowings from Federal Home Loan Bank 30.61% to $12,800,000 from Federal Home
Loan Borrowings of $9,800,000 on December 31, 1997. Should the need arise, the
Company also maintains relationships with several correspondent banks that can
provide funds on short notice.
The Company's liquidity position remained acceptable for the six months ended
June 30, 1998. Average liquid assets (cash and amounts due from banks,
interest-bearing deposits in other banks, funds sold and investment securities)
represented 30.43% of average deposits for six months ended June 30, 1998 as
compared to 31.16% of average deposits for six months ended June 30, 1997 and
29.73% for calendar year 1997. Average loans represented 79.86% of average
deposits for six months ended June 30, 1998 as compared to 77.36% for six months
ended June 30, 1997 and 80.00% for calendar year 1997. Average interest-bearing
deposits were 84.79% of average earning assets for six months ended June 30,
1998 as compared to 85.87% for six months ended June 30, 1997 and 84.92% for
calendar year 1997.
The Company satisfies most of its capital requirements through retained
earnings. During the first quarter 1998, retained earnings provided $1,045,000
of increase in equity. Additionally, equity capital decreased by $18,000 during
first quarter 1998 as a result of changes in unrealized losses on securities
available-for-sale, net of taxes and the Company realized $885,000 in proceeds
from the sale of common stock through a public offering that was completed
during the first quarter. During the second quarter of 1998, retained earnings
provided $842,000 of increase in equity. Additionally, equity capital decreased
by $6,000 during second quarter 1998 as a result of changes in unrealized losses
on available-for-sale securities, net of taxes. Thus total equity increased by
a net amount of $1,912,000 for first quarter 1998 and $836,000 for second
quarter 1998 for a net change of $2,748,000 for the six month period ended June
30, 1998. This compares to total equity increase of $1,645,000 for the six
month period ended June 30, 1997. Total equity increased by a net amount of
$3,230,000 in 1997.
At June 30, 1998, total capital of Colony amounted to $31,568,000. At June 30,
1998, there was an outstanding commitment for capital expenditures of
approximately $500,000 to complete construction and furnishings for a branch
office to be located in Leesburg, Georgia with expected occupancy in the fourth
quarter. Colony Bank Southeast subsidiary occupied their new branch in Douglas
in July, 1998.
The Federal Reserve Bank Board and 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 stockholders'
equity less goodwill. Tier 2 capital consists of 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 June 30,
1998 was 11.83% and total Tier 1 and 2 risk-based capital was 13.09%. 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 as of June
30, 1998 was 8.96% which exceeds the required leverage ratio standard of 4%.
For the first two quarters of 1998, the Company paid quarterly dividends of
$0.055 per share. The dividend payout ratio, defined as dividends per share
divided by net income per share, was 11.46% for six months ended June 30, 1998
as compared to 10.64% for the six month period ended June 30, 1997. For the
first two quarters of 1997, the company paid quarterly dividends of $0.05 per
share.
16
<PAGE>
At June 30, 1998, 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 of 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 expenses, 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
- ----------
Net income for the three months ended June 30, 1998 was $964,000 as compared
with $918,000 for the three months ended June 30, 1997, or an increase of 5.01%
and net income for the six months ended June 30, 1998 was $2,131,000 as compared
with $2,039,000 for the six months ended June 30, 1997, or an increase of 4.51%.
First and Second quarter 1998 earnings were relatively stable compared to first
and second quarter 1997 earnings.
Net Interest Margin
- -------------------
The net interest margin decreased by 35 basis points to 4.65% in second quarter
1998 as compared to 5.00% in second quarter 1997 and decreased by 25 basis
points to 4.76% for six months ended June 30, 1998 as compared to 5.01% for the
same period in 1997. Net interest income remained flat as second quarter 1998
net interest income was $3,716,000 compared to $3,715,000 for the same period in
1997 on an increase in average earning assets to $325,094,000 in second quarter
1998 from $301,549,000 in second quarter 1997. Net interest income increased by
1.97% to $7,507,000 for six months ended June 30, 1998 from $7,362,000 for the
same period in 1997 on an increase in average earning assets to $320,669,000 for
the six months ended June 30, 1998 from $297,623,000 for the same period in
1997. For the six months ended June 30, 1998 compared to the same period in
1997, average loans increased by $20,904,000 or 9.57%, average funds sold
increased by $5,474,000 or 38.86%, average investment securities decreased by
$3,978,000 or 6.60% and average interest bearing deposits in other banks
increased by $646,000 or 67.86%, resulting in a net increase in average earning
assets of $23,046,000 or 7.74%.
The net increase in average earnings assets was funded by a net increase in
average deposits of 6.14% to $299,568,000 for six months ended June 30, 1998
from $282,229,000 for the same period in 1997. Average interest-bearing
deposits increased by 6.39% to $271,896,000 for six months ended June 30, 1998
compared to $255,563,000 for six months ended June 30, 1997, while average
noninterest-bearing deposits represented 9.24% of average total deposits for six
month ended June 30, 1998 as compared to 9.45% for the same period in 1997 and
9.46% for calendar year 1997.
Interest expense increased for the three months ended June 30, 1998 by $395,000
compared to the same period in 1997 and increased by $776,000 for the six months
ended June 30, 1998 compared to the same period in 1997. The increase in
interest expense is primarily attributable to the increase in average interest-
bearing deposits to $271,896,000 for the six months ended June 30, 1998 compared
to $255,563,000 for the six months ended June 30, 1997 and in increase in
average borrowings to $10,631,000 for the six months ended June 30, 1998
compared to $6,572,000 for the six months ended June 30, 1997. The combination
of a decreased net interest margin and an increase in average earning assets
resulted in a change in net interest income of $1,000 for second quarter 1998
compared to second quarter 1997 and an increase in net interest income of
$145,000 for six months ended June 30, 1998 compared to the same period in 1997.
Provision for Loan Losses
- -------------------------
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.
17
<PAGE>
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 that
management had determined to be adequate. The provision for loan losses was
$231,000 for second quarter 1998 compared to $468,000 for second quarter 1997
and $510,000 for six months ended June 30, 1998 compared to $753,000 for the
same period in 1997. The decrease in the provision for loan losses in both
periods 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 66.66% of the provision for loan losses in second quarter 1998 as
compared to 76.28% in second quarter 1997. Net loan charge-offs represented
51.96% of the provision for loan losses in the six month period ended June 30,
1998 as compared to 67.33% of the provision for loan losses in the six month
period ended June 30, 1997. During the first six months of 1998 and 1997, a
net of $265,000 and $507,000, respectively was charged-off. Net loan charge-
offs for the six months ended June 30, 1998 represented 0.11% of average loans
outstanding as compared to 0.23% for six months ended June 30, 1997. At June
30, 1998 the allowance for loan losses was 1.95% of total loans outstanding as
compared to an allowance for loan losses of 2.01% at June 30, 1997 and 1.95% at
December 31, 1997. The allowance for loan losses of 1.95% of total loans at
June 30, 1998 provided coverage of 61.67% of nonperforming loans and 55.65% of
nonperforming assets, compared to 62.59% and 51.56%, respectively at June 30,
1997. The determination of the reserve rests upon management's judgment about
factors affecting loan quality and assumptions about the economy. Management
considers the June 30, 1998 allowance for loan losses adequate to cover
potential losses in the loan portfolio.
Noninterest Income
- ------------------
Noninterest income consists primarily of service charges on deposit accounts.
Service charges on deposit accounts amounted to $521,000 in second quarter 1998
compared to $454,000 in second quarter 1997, or an increase of 14.76% and
amounted to $998,000 for six months ended June 30, 1998 compared to $909,000 for
six months ended June 30, 1997, or an increase of 9.79%. All other non-interest
income decreased by $82,000 to $124,000 for second quarter 1998 from $206,000
for second quarter 1997 and all other noninterest income decreased by $151,000
to $294,000 for six months ended June 30, 1998 from $445,000 for six months
ended June 30, 1997. The primary decrease of all other noninterest income is
primarily attributable to gains realized on the sale of other assets in the six
months ended June 30, 1997 which did not recur in 1998. Additionally, credit
life insurance commissions reflected a $40,000 decrease for the six months ended
June 30, 1998 as compared to the same period in 1997.
Noninterest Expense
- -------------------
Noninterest expense increased by 5.33% to $2,725,000 for three months ended June
30, 1998 from $2,587,000 for the same period in 1997. Salaries and benefits
remained flat for the two periods, however, occupancy and equipment expense
increased 19.71% to $419,000 for second quarter 1998 from $350,000 for the same
period in 1997. This increase is attributable to increased occupancy expense
with the Company's branching into three new markets. All other noninterest
expense increased by 11.49% to $844,000 for second quarter, 1998 from $757,000
for second quarter 1997 with the most significant increase being data processing
expenses as the Company incurred additional expenses with the updating of its
computer/software equipment. Noninterest expense increased by 3.28% to
$5,168,000 for six months ended June 30, 1998 from $5,004,000 for the same
period in 1997. Salaries and benefits remained flat as total salaries and
benefits amounted to $2,724,000 for six months ended June 30, 1998 compared to
$2,746,000 for the same period in 1997. Occupancy and equipment expense
increased by 19.21% to $819,000 for six months ended June 30, 1998 compared to
$687,000 for six months ended June 30, 1997. This increase results from the
Company branching into three new markets in 1998. All other noninterest expense
increased by 3.44% to $1,625,000 for six months ended June 30, 1998 compared to
$1,571,000 for the same period in 1997.
Income Tax Expense
- ------------------
Income before taxes increased by 6.44% to $1,405,000 in second quarter 1998 from
$1,320,000 in second quarter 1997 and increased by 5.47% to $3,121,000 for six
months ended June 30, 1998 compared to $2,959,000 for the same period in 1997.
The increase for the six months ended June 30, 1998 is primarily attributable to
the increased net interest income. Income taxes as a percentage of income
before taxes increased by 3.09% to 31.39% in second quarter 1998 as compared to
30.45% in second quarter 1997 and increased by 2.02% to 31.72% for six months
ended June 30, 1998 as compared to 31.09% for six months ended June 30, 1997.
Income tax expense increased 9.70% to $441,000 for second quarter 1998 compared
to $402,000 for second quarter 1997 and increased 7.61% to $990,000 for six
months ended June 30, 1998 compared to $920,000 for the same period in 1997.
18
<PAGE>
Future Outlook
- --------------
Colony is an emerging company operating in a industry filled with non-regulated
competitors and a rapid pace of consolidation. 1998 brings with it new
opportunities for growth in our existing markets, as well as opportunities to
expand into new markets through bank acquisitions and branching. Colony has
already opened new branches in Douglas, Tifton and Cordele during 1998. These
new branches are located in three growth markets in South Georgia and the
Company anticipates opening a new branch office in Leesburg during the fourth
quarter of 1998. Colony Management Services, Inc. has invested over $1,000,000
in computer up-grades and software enhancements in a major cost containment
initiative. Not only will this reduce overhead through back-office
consolidation, but it also will allow us to better serve our customers through
improved customer data resources and state-of-the-art technological services.
Year 2000 Compliance
- --------------------
The Company has developed policy, procedures and plans to address the possible
exposure related to the impact on its financial, informational and operational
systems of the Year 2000. The Company recently, underwent a major computer
conversion, which has been tested and assured to be Year 2000 compliant. Other
equipment has been identified and vendors are being contacted. The Company's
subsidiary, Colony Management Services, Inc. is responsible for coordinating
efforts of all bank subsidiaries in any follow-up procedures necessary. While
there may be some expenses incurred during the next two years, it is not
expected to have a material effect on the Company's consolidated financial
statements.
Liquidity
- ---------
The Company's goals with respect to liquidity are to ensure that sufficient
funds are available to meet current operating requirements and 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 June
30, 1998 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 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 Colony Bank
Southeast 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
19
<PAGE>
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.
On April 2, 1998, the Company was listed on Nasdaq National Market. The
Company's common stock trades on the Nasdaq Stock Market under the symbol
"CBAN". The Company presently has 926 shareholders of record as of June 30,
1998. "The Nasdaq Stock Market" or "Nasdaq" is a highly-regulated electronic
securities market comprised of competing Market Makers whose trading is
supported by a communications network linking them to quotation dissemination,
trade reporting and order execution systems. This market also provides
specialized automation services for screen-based negotiations of transactions,
on-line comparison of transactions, and a range of informational services
tailored to the needs of the securities industry, investors and issuers. The
Nasdaq Stock Market is operated by The Nasdaq Stock Market, Inc., a wholly-onwed
subsidiary of the National Association of Securities Dealers, Inc.
PART II OTHER INFORMATION
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- -----------------------------------------------------------
The Annual Meeting of the Shareholders of the Company was held on April 28,
1998. At the Annual Meeting of the Shareholders, proxies were solicited under
Regulation 14 of the Securities and Exchange Act of 1934. Total shares amount
to 2,217,513. A total of 1,539,008.5 shares (69%) were represented by
shareholders in attendance or by proxy. The following directors were elected by
yes votes totaling 1,539,008.5 shares to serve one year until the next annual
meeting:
Marion H. Massee, III Ben B. Mills, Jr.
Paul Branch, Jr. James D. Minix
Terry L. Coleman Ralph D. Roberts
L. Morris Downing, Jr. W. B. Roberts, Jr.
Terry L. Hester R. Sidney Ross
Milton N. Hopkins, Jr. Joe K. Shiver
Harold E. Kimball Curtis Summerlin
No other matters were voted upon by the shareholders.
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 June 30,
1998.
20
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities and 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.
August 10, 1998 /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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 10,371
<INT-BEARING-DEPOSITS> 657
<FED-FUNDS-SOLD> 14,875
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 61,898
<INVESTMENTS-CARRYING> 2,194
<INVESTMENTS-MARKET> 2,177
<LOANS> 247,490
<ALLOWANCE> 4,821
<TOTAL-ASSETS> 351,864
<DEPOSITS> 302,650
<SHORT-TERM> 1,000
<LIABILITIES-OTHER> 2,573
<LONG-TERM> 14,073
0
0
<COMMON> 22,175
<OTHER-SE> 9,393
<TOTAL-LIABILITIES-AND-EQUITY> 351,864
<INTEREST-LOAN> 12,595
<INTEREST-INVEST> 1,789
<INTEREST-OTHER> 597
<INTEREST-TOTAL> 14,981
<INTEREST-DEPOSIT> 7,074
<INTEREST-EXPENSE> 7,474
<INTEREST-INCOME-NET> 7,507
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<EXPENSE-OTHER> 5,168
<INCOME-PRETAX> 3,121
<INCOME-PRE-EXTRAORDINARY> 3,121
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,131
<EPS-PRIMARY> 0.96
<EPS-DILUTED> 0.96
<YIELD-ACTUAL> 4.76
<LOANS-NON> 6,838
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<ALLOWANCE-CLOSE> 4,821
<ALLOWANCE-DOMESTIC> 4,821
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
