UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
Mark One
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period from __________ to __________
Commission File Number: 0-12498
Lanier Bankshares, Inc.
(Exact name of small business
issuer as specified in its charter)
Georgia 58-1814713
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
854 Washington Street, Gainesville, Georgia 30503
(Address of principal executive offices)
(770) 536-2265
(Issuer's telephone number)
N/A
(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 X No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDING DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports
required to be filed by Section 12, 13 or 15(d) of the Exchange
Act after the distribution of securities under a plan confirmed
by a court. Yes No
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's
classes of common equity, as of May 1, 1998: 1,200,000; $1.00
par value.
Transitional Small Business Disclosure Format (Check One) Yes No X
LANIER BANKSHARES, INC. AND SUBSIDIARIES
INDEX
Page No.
PART I. FINANCIAL INFORMATION
Item 1 - Financial Statements
Consolidated Balance Sheet - March 31, 1998 3
Consolidated Statements of Income and Comprehensive
Income - Three Months Ended March 31, 1998 and 1997 4
Consolidated Statements of Cash Flows - Three
Months Ended March 31, 1998 and 1997 5 and 6
Notes to Consolidated Financial Statements 7
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
PART II. OTHER INFORMATION
Item 4 - Submission of Matters to a Vote of Security Holders 15
Item 6 - Exhibits and Reports on Form 8-K 15
Signatures 16
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
LANIER BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
MARCH 31, 1998
(Unaudited)
Assets
Cash and due from banks $ 4,224,595
Interest-bearing deposits in banks 46,400
Securities available-for-sale, at fair value 7,746,170
Securities held-to-maturity (fair value $9,964,000) 9,847,170
Federal funds sold 3,800,000
Loans 70,525,917
Less allowance for loan losses 875,765
-----------
Loans, net 69,650,152
-----------
Premises and equipment 3,283,021
Other assets 2,333,150
-----------
$ 100,930,658
===========
Liabilities and Stockholders' Equity
Deposits
Noninterest-bearing demand $ 13,540,618
Interest-bearing demand 14,425,313
Savings 10,497,276
Time 49,501,733
-----------
Total deposits 87,964,940
Obligation under capital lease 79,037
Other borrowings 1,993,197
Other liabilities 1,303,734
-----------
Total liabilities 91,340,908
-----------
Commitments and contingent liabilities
Stockholders' equity
Common stock, par value $1.00;
10,000,000 shares authorized;
1,237,826 shares issued 1,237,826
Capital surplus 5,232,969
Retained earnings 3,473,295
Treasury stock, 37,826 shares (415,486)
Accumulated other comprehensive income 61,146
-----------
Total common stockholders' equity 9,589,750
-----------
$ 100,930,658
===========
See Notes to Consolidated Financial Statements.
LANIER BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(Unaudited)
1998 1997
Interest income
Loans $ 1,850,274 $ 1,392,153
Taxable securities 153,603 239,691
Nontaxable securities 93,551 76,773
Federal funds sold 24,649 17,554
Deposits in banks 639 792
--------- ---------
Total interest income 2,122,716 1,726,963
--------- ---------
Interest expense
Deposits 956,096 798,297
Other borrowings 12,271 6,611
--------- ---------
Total interest expense 968,367 804,908
--------- ---------
Net interest income 1,154,349 922,055
Provision for loan losses 60,000 30,000
--------- ---------
Net interest income after provision for
Loan Losses 1,094,349 892,055
--------- ---------
Other income
Service charges on deposit accounts 137,752 127,253
Other operating income 40,719 20,596
--------- ---------
178,471 147,849
--------- ---------
Other expenses
Salaries and employee benefits 368,127 341,275
Equipment and occupancy expenses 103,215 99,022
Other operating expenses 160,038 151,754
--------- ---------
631,380 592,051
--------- ---------
Income before income taxes 641,440 447,853
Income tax expense 190,736 124,692
--------- ---------
Net income 450,704 323,161
--------- ---------
Other comprehensive income, net of tax
Unrealized gains (losses) on securities
available-for-sale
arising during period 2,508 (35,214)
--------- ---------
Comprehensive income $ 453,212 $ 287,947
========= =========
Basic earnings per common share $ 0.38 $ 0.26
========= =========
Diluted earnings per common share $ 0.37 $ 0.26
========= =========
Cash dividends per share of common stock $ - $ -
========= =========
See Notes to Consolidated Financial Statements.
LANIER BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(Unaudited)
1998 1997
OPERATING ACTIVITIES --------- ---------
Net income $ 450,704 $ 323,161
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 47,989 49,624
Provision for loan losses 60,000 30,000
( Increase) decrease in interest
receivable (37,094) 14,880
Decrease in interest payable (66,011) (91,635)
Other operating activities (178,288) (135,798)
--------- ---------
Net cash provided by
operating activities 277,300 190,232
--------- ---------
INVESTING ACTIVITIES
(Increase) decrease in interest-bearing
deposits in banks (9,765) 4,755
Purchases of securities available-for-sale (1,707,178) (321,135)
Proceeds from maturities of securities
available-for-sale 2,835,000 276,744
Purchases of securities held-to-maturity (1,334,099) (442,540)
Proceeds from maturities of securities
held-to-maturity 380,000 -
Net (increase) decrease in Federal funds sold (3,600,000) 1,100,000
Net increase in loans (2,712,957) (1,018,222)
Purchase of premises and equipment (175,448) (5,829)
--------- ---------
Net cash used in investing activities (6,324,447) (406,227)
--------- ---------
FINANCING ACTIVITIES
Net increase (decrease) in deposits 4,950,150 (1,207,378)
Repayment of obligations under capital lease (9,130) (8,519)
Net proceeds (repayment) of other borrowings 1,268,230 (2,118)
Purchase of treasury stock - (19,200)
--------- ---------
Net cash provided by (used in) financing 6,209,250 (1,237,215)
Net increase (decrease) in cash and due from banks 162,103 (1,453,210)
Cash and due from banks at beginning of period 4,062,492 5,380,072
Cash and due from banks at end of period $ 4,224,595 $ 3,926,862
--------- ---------
LANIER BANKSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(Unaudited)
1998 1997
--------- ---------
CASH FLOW INFORMATION
Cash paid during the period for:
Interest $ 1,034,378 $ 896,543
Income taxes $ 80,561 $ 9,841
NONCASH TRANSACTIONS
Unrealized (gains) losses on
securities avail $ (3,361) $ 53,357
See Notes to Consolidated Financial Statements.
LANIER BANKSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1. BASIS OF PRESENTATION
The consolidated 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 interim periods.
The results of operations for the three month period ended March
31, 1998 are not necessarily indicative of the results to be
expected for the full year.
NOTE 2. EARNINGS PER COMMON SHARE
The following is a reconciliation of net income (the
numerator) and weighted-average shares outstanding (the
denominator) used in determining basic and diluted earnings per
common share (EPS):
Three Months Ended March 31, 1998
Net Weighted-Average
Income Shares Per share
(Numerator) (Denominator) Amount
--------- --------- -----
Basic EPS $ 450,704 1,200,000 $ 0.38
====
Effect of Dilutive
Securities Stock options - 23,694
--------- ---------
Diluted EPS $ 450,704 1,223,694 $ 0.37
========= ========= ====
Three Months Ended March 31, 1997
Net Weighted-Average
Income Shares Per share
(Numerator) (Denominator) Amount
--------- --------- -----
Basic EPS $ 323,161 1,236,992 $ 0.26
====
Effect of Dilutive
Securities Stock options - 18,954
------- ---------
Diluted EPS $ 323,161 1,255,946 $ 0.26
======= ========= ====
Weighted-average shares for March 31, 1997 have been adjusted
for a 1 for 1 common stock split declared in the first quarter
of 1998.
LANIER BANKSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 3. CURRENT ACCOUNTING DEVELOPMENTS
The adoption of the provisions of SFAS No. 125, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishments
of Liabilities" that became effective on January 1, 1998 did not
have a material effect on the Company's financial statements.
The adoption of SFAS No. 130, "Reporting Comprehensive Income",
that became effective on January 1, 1998 required the Company to
report comprehensive income in the Company's Statements of
Income and Comprehensive Income.
There are no other recent accounting pronouncements that have
had, or are expected to have, a material effect on the Company's
financial statements.
LANIER BANKSHARES, INC. AND SUBSIDIARIES
ITEM 2. 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 financial position
and operating results of the Company and its subsidiaries,
Lanier National Bank and Lanier Data Corporation during the
periods included in the accompanying consolidated financial
statements.
Liquidity and Capital Resources
As of March 31, 1998, the liquidity ratio of the Bank, as
determined under guidelines established by regulatory
authorities, were satisfactory.
At March 31, 1998, the capital ratios of the Company and the
Bank were adequate based on regulatory minimum capital
requirements. The minimum capital requirements and the actual
capital ratios for the Company and the Bank are as follows:
Actual
----------------------------
Lanier Lanier Regulatory
Bankshares, National Requirement
Inc. Bank
---------- -------- -----------
Leverage capital ratios 9.87 % 9.66 % 4.00 %
Risk-based capital ratios:
Core capital 13.89 13.60 4.00
Total capital 15.14 14.85 8.00
Financial Condition
Following is a summary of the Company's balance sheets for the
periods indicated:
March 31, December 31,
1998 1997 Increase (Decrease)
(Dollars in Thousands) Amount Percent
------ ------ ----- -------
Cash and due from banks $ 4,225 $ 4,062 $ 163 4.01 %
Interest-bearing deposits
in banks 46 37 9 24.32
Securities 17,594 17,764 (170) (0.96)
Federal funds sold 3,800 200 3,600 1,800.00
Loans 69,650 66,997 2,653 3.96
Premises and equipment 3,283 3,156 127 4.02
Other assets 2,333 2,256 77 3.41
------- ------ -----
$ 100,931 $ 94,472 $ 6,459 6.84
======= ====== =====
Deposits $ 87,965 $ 83,015 $ 4,950 5.96 %
Other borrowings 2,072 813 1,259 154.86
Other liabilities 1,304 1,507 (203) (13.47)
Stockholders' equity 9,590 9,137 453 4.96
------- ------ -----
$ 100,931 $ 94,472 $ 6,459 6.84
======= ====== =====
As indicated in the above table, the Company's total assets grew
at a rate of 6.84%. Deposits grew at a rate of 5.96%. Coupled
with increased other borrowings, this growth funded loan growth
of 3.96%. The excess funds were temporarily invested in Federal
funds sold in anticipation of increased loan demand.
Results of Operations For The Three Months Ended March 31, 1998
and 1997
Following is a summary of the Company's operations for the
periods indicated.
Three Months Ended
March 31,
1998 1997 Increase (Decrease)
(Dollars in Thousands) Amount Percent
----- ----- ----
Interest income $ 2,123 $ 1,727 $ 396 22.93 %
Interest expense 968 805 163 20.25
----- ----- ---
Net interest income 1,155 922 233 25.27
Provision for loan losses 60 30 30 100.00
Other income 178 148 30 20.27
Other expense 631 592 39 6.59
----- ----- ---
Pretax income 642 448 194 43.30
Income taxes 191 125 66 52.80
----- ----- ---
Net income 451 323 128 39.63
===== ===== ===
As indicated in the above table, the Company's net interest
income has increased by $233,000 during the first quarter of
1998 as compared to the same period in 1997. The Company's net
interest margin increased to 5.17% during the first quarter of
1998 as compared to 5.07% for the previous year. These
increases are due primarily to increases in average
interest-earning assets.
The provision for loan losses increased by $30,000 during the
first quarter of 1998 as compared to the same period in 1998.
This increase is due to net loan growth as the Company had
minimal charge-offs during the first quarter of 1998. The
Company's reserve for loan losses amounted to 1.24% at March 31,
1998 as compared to 1.23% at December 31, 1997. The allowance
for loan losses is maintained at a level that is deemed
appropriate by management to adequately cover all known and
inherent risks in the loan portfolio. Management's evaluation of
the loan portfolio includes a continuing review of loan loss
experience, current economic conditions which may affect the
borrower's ability to repay and the underlying collateral value.
Information with respect to nonaccrual, past due and
restructured loans at March 31, 1998 and 1997 is as follows:
March 31,
1998 1997
(Dollars in Thousands)
Nonaccrual loans $ 121 $ 143
Loans contractually past due ninety days
or more as to interest or principal
payments and still accruing 43 84
Restructured loans - -
Loans, now current about which there are
serious doubts as to the ability of the
borrower to comply with loan repayment terms - -
Interest income that would have been recorded
on nonaccrual and restructured loans under
original terms 11 14
Interest income that was recorded on
nonaccrual and restructured loans - -
It is the policy of the Bank to discontinue the accrual of
interest income when, in the opinion of management, collection
of such interest becomes doubtful. This status is accorded such
interest when (1) there is a significant deterioration in the
financial condition of the borrower and full repayment of
principal and interest is not expected and (2) the principal or
interest is more than ninety days past due, unless the loan is
both well-secured and in the process of collection.
Loans classified for regulatory purposes as loss, doubtful,
substandard, or special mention that have not been included in
the table above do not represent or result from trends or
uncertainties which management reasonably expects will
materially impact future operating results, liquidity or capital
resources. These classified loans do not represent material
credits about which management is aware of any information which
causes management to have serious doubts as to the ability of
such borrowers to comply with the loan repayment terms.
Information regarding certain loans and allowance for loan loss
data through March 31, 1998 and 1997 is as follows:
Three Months Ended
March 31,
1998 1997
(Dollars in Thousands)
Average amount of loans outstanding $ 68,931 $ 51,569
====== ======
Balance of allowance for loan losses
at beginning of period $ 837 $ 707
------ ------
Loans charged off
Commercial and financial $ - $ -
Real estate mortgage - -
Instalment 24 2
------ -------
24 2
------ -------
Loans recovered
Commercial and financial - -
Real estate mortgage - -
Instalment 2 1
------- -------
2 1
------- -------
Net charge-offs 22 1
------- -------
Addition to allowance charged to operating
expense during period 60 30
------- -------
$ 875 $ 736
======= =======
Ratio of net loans charged off during
the period to average loans outstanding .03% .01%
======= =======
Other income has increased during the first quarter of 1998 as compared to the
same period in 1997 by $30,000 due to an increase in service charges of $10,000
and other miscellaneous revenues of $20,000.
Other expenses increased during the first quarter of 1998 as compared to the
same period in 1997 by $39,000. Increased salaries and employee benefits of
$27,000 accounted for the majority of the increase.
The Company's provision for income taxes increased by $66,000 during the first
quarter of 1998 as compared to the same period in 1997 due to higher pre-tax
income. The Company's effective tax rate increased to 29.7% for the first
quarter of 1998 as compared to 27.8% for the quarter of 1997.
Capability of Data Processing Software to Accommodate the Year 2000
Like many financial institutions, the Company relies upon computers for
the daily conduct of their business and for data processing generally.
There is concern among industry experts that commencing on January 1, 2000,
computers will be unable to "read" the new year and that there may be
widespread computer malfunctions. Management has assessed the electronic
systems, programs, applications, and other electronic components used in
operations and believes that the Company's hardware and software have been
programmed to be able to accurately recognize the year 2000, and that
significant additional costs will not be incurred in connection with the
year 2000 issue, although there can be no assurances in this regard.
The Company is not aware of any known trends, events or uncertainties,
other than the effect of events as described above, that will have
or that are reasonable likely to have a material effect on its liquidity,
capital resources or operations. The Company is also not aware of any
current recommendations by the regulatory authorities which, if they
were implemented, would have such an effect.
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27. Financial Data Schedule
(b) Reports on Form 8-K
None
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.
BY: /s/ Joseph D. Chipman, Jr.
Joseph D. Chipman, Jr.
President and Chief Executive
Officer (Principal Executive Officer)
BY: /s/ Jeffrey D. Hunt
Jeffrey D. Hunt, Senior Vice President,
Operations (Principal Financial and
Accounting Officer)
DATE: March 12, 1998
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 4,270,995
<INT-BEARING-DEPOSITS> 46,308
<FED-FUNDS-SOLD> 3,800,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 7,746,170
<INVESTMENTS-CARRYING> 9,847,170
<INVESTMENTS-MARKET> 9,964,000
<LOANS> 70,525,917
<ALLOWANCE> 875,765
<TOTAL-ASSETS> 100,930,658
<DEPOSITS> 87,964,940
<SHORT-TERM> 1,993,197
<LIABILITIES-OTHER> 1,382,771
<LONG-TERM> 0
0
0
<COMMON> 1,237,826
<OTHER-SE> 8,351,924
<TOTAL-LIABILITIES-AND-EQUITY> 100,930,658
<INTEREST-LOAN> 1,850,274
<INTEREST-INVEST> 247,154
<INTEREST-OTHER> 25,288
<INTEREST-TOTAL> 2,122,716
<INTEREST-DEPOSIT> 956,096
<INTEREST-EXPENSE> 12,271
<INTEREST-INCOME-NET> 1,154,349
<LOAN-LOSSES> 60,000
<SECURITIES-GAINS> 1,972
<EXPENSE-OTHER> 809,851
<INCOME-PRETAX> 641,440
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 2,508
<CHANGES> 0
<NET-INCOME> 453,212
<EPS-PRIMARY> .38
<EPS-DILUTED> .37
<YIELD-ACTUAL> 9.99
<LOANS-NON> 121,000
<LOANS-PAST> 43,000
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 658,000
<ALLOWANCE-OPEN> 837,092
<CHARGE-OFFS> 23,277
<RECOVERIES> 1,950
<ALLOWANCE-CLOSE> 875,765
<ALLOWANCE-DOMESTIC> 60,000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
