FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE
ACT
For the transition period from ________ to ________
Commission file number 33-25402-A
LANIER BANKSHARES, INC.
(Exact name of registrant as specified in its charter)
GEORGIA 58-1814713
(State of Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
854 WASHINGTON STREET, GAINESVILLE, GEORGIA 30501
(Address of Principal Executive Offices) (Zip Code)
(770) 536-2265
(Issuer's Telephone Number, Including Area Code)
(Former name, former address and former fiscal year, if changed since last
report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months
(or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the
past 90 days. Yes____ No____
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest most practicable date:
CLASS OUTSTANDING AT November 1, 1997
Common Stock, $1.00 par value 600,000 shares
LANIER BANKSHARES, INC. & SUBSIDIARIES
INDEX
Part I. Financial Information Page No.
Consolidated Balance Sheet-September 30, 1997 3
Consolidated Statements of Income-Three and Nine Months Ended
September 30, 1997 and 1996 4
Consolidated Statements of Cash Flows-Nine Months Ended
September 30, 1997 and 1996 5
Notes To Consolidated Financial Statements 6
Management's Discussion and Analysis of Financial Condition
and Results of Operation 7 and 8
Part II. Other Information
Item 4 - Any matter submitted to the security holders
for a vote. 10
Item 6 - Exhibits and reports on Form 8-K. 10
- 2 -
LANIER BANKSHARES, INC. & SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
September 30, 1997
Cash and due from banks $4,645,796
Securities available for sale at fair value 8,101,230
Securities held for investment at cost
(fair value $ 10,042,128) 9,975,576
Loans 65,773,424
Less reserve for loan losses 783,274
----------
Net loans 64,990,150
Premises & equipment, net 3,025,862
Other assets 2,204,852
----------
$92,943,466
==========
LIABILITIES & STOCKHOLDERS' EQUITY
Deposits:
Demand $12,905,932
Interest-bearing demand 13,771,709
Savings 9,778,689
Certificates of deposit 45,577,915
----------
Total deposits $82,034,245
Obligations under captial leas 97,141
Other short-term borrowings 833,975
Other liabilities 1,059,361
----------
Total liabilities $84,024,722
Stockholders' Equity
Common stock, $1.00 par, 10,000,000 shares
authorized, 618,913 shares issued $618,913
Surplus 5,140,417
Retained earnings 3,534,112
Treasury stock (415,486)
Unrealized gains on securities available
for sale, net of taxes 40,788
----------
Total stockholders' equity $8,918,744
----------
$92,943,466
==========
- 3 -
LANIER BANKSHARES, INC. & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three Months ended Nine Months ended
September 30, September 30,
1997 1996 1997 1996
Interest income:
Interest & fees on loans $1,670,162 $1,382,864 $4,544,060 $4,057,248
Interest on Federal funds sold 3,729 24,135 50,908 106,283
Interest on taxable securities 216,948 286,676 695,660 776,326
Interest on nontax securities 78,413 0 233,757 0
--------- --------- --------- ---------
$1,969,252 $1,693,675 $5,524,385 $4,939,857
Interest expense: --------- --------- --------- ---------
Interest on deposits $895,910 $803,884 $2,534,574 $2,386,496
Interest on other borrowings 7,794 7,176 25,031 28,875
--------- --------- --------- ---------
903,704 811,060 2,559,605 2,415,371
--------- --------- --------- ---------
Net interest income before
provision for loan losses $1,065,548 $882,615 $2,964,780 $2,524,486
Provision for loan losses 50,000 30,000 110,000 90,000
--------- --------- --------- ---------
Net interest income $1,015,548 $852,615 $2,854,780 $2,434,486
--------- --------- --------- ---------
Other income
Service charges on deposit
accounts and other income $162,613 $133,124 $474,368 $374,763
Net realized gains of securities
available for sale 6,056 0 6,087 0
--------- --------- --------- ---------
$168,669 $133,124 $480,455 $374,763
--------- --------- --------- ---------
Other expense
Salaries & employee benefits $346,860 $324,475 $1,030,058 $935,233
Other operating expenses 263,259 255,397 806,264 753,571
--------- --------- --------- ---------
$610,119 $579,872 $1,836,322 $1,688,804
--------- --------- --------- ---------
Net income before
applicable income taxes $574,098 $405,867 $1,498,913 $1,120,445
Applicable income taxes 163,522 127,781 442,839 350,903
--------- --------- --------- ---------
Net income $410,576 $278,086 $1,056,074 $769,542
========= ========= ========= =========
Net income per common and
common equivalent share $0.67 $0.47 $1.71 $1.39
==== ==== ==== ====
Dividends per share of common stock $0.15 $0.00 $0.15 $0.00
==== ==== ==== ====
Average common and common equivalent
shares outstanding 614,733 588,649 617,001 552,189
======= ======= ======= =======
- 4 -
LANIER BANKSHARES, INC. & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine months ended September 30,
1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $1,056,074 $769,542
--------- ---------
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation and amortization 149,656 149,911
Provision for loan losses 110,000 90,000
Net realized gains on securities
available for sale (6,087) 0
Increase in interest receivable (27,690) (100,958)
Decrease in interest payable 14,881 (86,633)
Gain on sale of other real estate owned 0 (604)
Other assets and liabilities, net (212,377) (270,597)
--------- ---------
Total adjustments $28,383 ($218,881)
--------- ---------
Net cash provided by operating activities $1,084,457 $550,661
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of securities avail for sale ($2,136,112) ($2,750,625)
Proceeds from sales of securities
available for sale 699,319 0
Proceeds from maturities of securities
available for sale 2,902,561 1,235,796
Purchases of securities held for investment (567,540) (6,010,185)
Proceeds from maturities of securities
held for investment 2,076,172 2,742,278
Purchases of premises and equipment (90,853) (235,566)
Proceeds from sale of other real estate owned 0 4,389
Increase in loans, net (14,521,627) (157,791)
Decrease in Federal funds sold, net 1,800,000 500,000
--------- ---------
Net cash used in investing activities ($9,838,080) ($4,671,704)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in deposits $8,198,823 $5,003,377
Repayment of capital lease (26,005) (24,262)
Proceeds from issuance of common stock 0 518,626
Increase (decrease) in other borrowings, net 300,545 (350,000)
Purchase of treasury stock (434,560) 0
Proceeds from sale of treasury stock 19,941 0
Dividends paid (92,552) 0
--------- ---------
Net cash provided by financing activities $7,966,192 $5,147,741
Net increase (decrease) in cash and
due from banks ($787,431) $1,026,698
Cash and due from banks, beginning of period 5,433,227 2,996,603
--------- ---------
Cash and due from banks, end of period $4,645,796 $4,023,301
========= =========
Cash paid during the period for:
Interest $2,544,724 $2,502,004
Taxes $422,100 $470,322
NONCASH TRANSACTIONS
Unrealized(gains) losses on securities
available for sale ($71,839) $110,993
- 5 -
LANIER BANKSHARES, INC. & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1. Basis of Presentation
The financial information included herein is unaudited; however, such
information reflects all adjustments (consisting solely of normal recurring
adjustments) which are, in the opinion of management, necessary for a fair
statement of results for the reflects all adjustments (consisting solely of
normal recurring adjustements) which are, in the opinion of management,
necessary for a fair statement of results for the interim periods.
The results of operations for the nine months ended September 30, 1997 are not
necessarily indicative of the results to be expected for the full year.
Note 2. Current Accounting Developments
The Financial Accounting Standards Board has issued SFAS No. 128, "Earnings
Per Share". SFAS No. 128 establishes standards for computing and presenting
earnings per share (EPS) and applies to entities with publicly held common stock
or potential common stock. This Statement simplifies the standards for
computing earnings per share previously found in APB Opinion No. 15,
"Earnings Per Share", and makes them comparable to international EPS
standards. It replaces the presentation of primary EPS with a presentation
of basic EPS. It also requires dual presentation of basic and diluted EPS on
the face of the income statement for all entities with complex capital
structures and requires a reconciliation of the
numerator and denominator of the basic EPS computation to the numerator and
denominator of the diluted EPS computation. The effective date of this
Statement is for financial statements issued for periods ending after
December 15, 1997.
The adoption of this Statement is not expected to have a material effect on
earnings per share.
- 6 -
LANIER BANKSHARES, INC. & SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of certain significant
factors which have affected the Company's financial position and operating
results during the periods included in the accompanying consolidated financial
statements.
Financial Condition
Total assets increased 10.70% from December 31, 1996 to September 30, 1997.
The increase is due primarily to an increase in loans of $14.4 million or
28.49%. The growth in loans was funded by a growth in deposits of
$8.2 million, a decrease in federal funds sold of $1.8 million and a decrease
in investment securities of $2.9 million.
Liquidity
Liquidity is measured by a ratio of net cash, short-term investments and
marketable securities to net deposits and short-term liabilities. The
Bank's liquidity ratio at September 30, 1997 was 27.39%. Management believes
that this ratio is adequate to meet the Company's funding needs.
Capital
Banking regulations require the banks and bank holding companies to maintain
minimum capital ratios to assets. At September 30, 1997, the Company's
capital ratios on a combined basis exceeded the required ratios as follows:
Actual Requirement
Leverage capital ratio 9.65% 4.00%
Risk based capital ratios:
Core capital 13.46% 4.00%
Total capital 14.67% 8.00%
- 7 -
LANIER BANKSHARES, INC. & SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Results of Operations
Interest income increased $585,000 or 11.83% during the nine months ended
September 30, 1997 compared to the same period in 1996. Interest expense
increased $144,000 or 5.97% during the nine months ended September 30, 1997
compared to 1996. This resulted in a increase of $441,000 or 17.44% in net
interest income. During the three months ended September 30, 1997, interest
income increased 16.27% while interest expense increased 11.42% compared to
the three months ended September 30, 1996. As a result, net interest income
increased 20.73%. These increases are a result of growth in loans and
interest-bearing deposits.
The provision for loan losses increased $20,000 during the nine months ended
September 30, 1997 as compared to the same period in 1996. The loan loss
reserve as a percentage of total loans decreased from 1.38% at
December 31, 1996 to 1.19% at September 30,1997. Based on management's
assessment of the economic environment and history of charge-offs and
recoveries, the reserve for loan losses is considered adequate to meet future
losses inherent in the portfolio.
Total other income increased $106,000 during the nine month period ended
September 30, 1997, as compared to 1996. The most significant changes occurred
in NSF fees, service charges and income from cash surrender values of life
insurance which increased $46,000, $20,000 and $24,000, respectively, as
compared to 1996. The increase in NSF fees is due to a reduction by the Bank
in the number of reversals of NSF charges. The increase in service charges is
a result of a new charge on return items and an increase in charges on business
checking accounts.
Other operating expenses increased 8.74% or $148,000. The increase is
primarily attributable to an increase of $95,000 in salary and employee
benefits. The increase in salaries was the result of increases in staff in
connection with the Bank's growth. Other increases include occupancy and
equipment of $29,000 and directors fees of $ 31,000 The increase in occupancy
and equipment expense is due to building repair and maintenance and increased
depreciation expense as a result of acquisitions. The increase in directors
fees is the result of monthly accruals made by the Bank for its liability
related to deferred compensation plans for all directors of the Bank.
Net income increased for the nine month period ended September 30, 1997 by
$287,000 as compared to the same period in 1996. The subsidiary bank continues
to experience growth, which has enabled the Company to increase earnings.
This trend is expected to continue.
Income tax expense increased by $92,000 for the nine months ended
September 30, 1997 as compared to the nine months ended September 30, 1996.
The effective tax rate decreased to 30% as compared to 31% for the same period
in 1996.
- 8 -
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
LANIER BANKSHARES, INC. & SUBSIDIARIES
Date: November 10, 1997 By:
Joseph D. Chipman, Jr.
President and Chief Executive Officer
(Principal Executive Officer)
Date: November 10, 1997 By:
Jeffrey D. Hunt
Senior Vice President, Operations
(Principal Financial and
Accounting Officer)
- 9 -
LANIER BANKSHARES, INC. & SUBSIDIARIES
PART II - OTHER INFORMATION
Item 6 - Exhibits and reports on Form 8-K
(a) Exhibits.
27. Financial Data Schedule
(a) Reports on Form 8-K.
None.
- 10 -
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<FISCAL-YEAR-END> DEC-31-1997
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