<PAGE>
U. S. Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-QSB
|X| QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE
-
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997
| | TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE
EXCHANGE ACT
COMMISSION FILE NUMBER 0-19030
COMMUNITY TRUST FINANCIAL SERVICES CORPORATION
(Exact name of small business issuer as specified in its charter)
-----------------------------------------------------------------
Georgia 58-1856582
(State of incorporation) (I.R.S.Employer
Identification No.)
1784 ATLANTA HIGHWAY, HIRAM, GEORGIA 30141
------------------------------------------
(Address of principal executive offices)
(770) 445-1014
(Issuer's telephone number including area code)
--------------------------
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
PROCEEDINGS 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 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 the latest practicable date: There were 839,264 shares of Common
Stock outstanding as of August 11, 1997.
Transitional Small Business Disclosure Format (check one): Yes ; No X
---- -----
<PAGE>
COMMUNITY TRUST FINANCIAL SERVICES CORPORATION
QUARTERLY REPORT ON FORM 10-QSB
FOR THE QUARTER ENDED JUNE 30, 1997
TABLE OF CONTENTS
-----------------
ITEM PAGE
NUMBER NUMBER
- ------ ------
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
1. Consolidated Balance Sheets at June 30, 1997 (unaudited)
and December 31, 1996 (audited)............................. 1
2. Consolidated Statements of Earnings for the three months
ended June 30, 1997 and June 30, 1996, and the six months
ended June 30, 1997 and June 30, 1996 (unaudited)........... 2
3. Consolidated Statements of Cash Flows for the six months
ended June 30, 1997 and June 30, 1996 (unaudited)........... 3
4. Notes to Consolidated Financial Statements.................. 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.................... 6
PART II - OTHER INFORMATION......................................... 9
Item 1. Legal Proceedings........................................... 9
Item 2. Changes in Securities....................................... 9
Item 3. Defaults upon Senior Securities............................. 9
Item 4. Submission of Matters to a Vote of Security Holders......... 9
Item 5. Other Information........................................... 10
Item 6. Exhibits and Reports on Form 8-K............................ 10
Signatures..................................................... 11
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
COMMUNITY TRUST FINANCIAL SERVICES CORPORATION
Consolidated Balance Sheets
June 30, 1997 and December 31, 1996
<TABLE>
<CAPTION>
Assets
June 30, December 31,
1997 1996
----------- -----------
(Unaudited) (Audited)
<S> <C> <C>
Cash and due from banks 4,423,093 3,011,164
Federal funds sold 1,440,000 7,020,000
---------- ----------
Cash and cash equivalents 5,863,093 10,031,164
U. S. Treasury and other U. S. Government agency securities
available for sale 19,457,192 19,701,854
State, county, and municipal securities available for sale 4,024,779 2,716,836
Other investments 301,100 255,000
Loans 52,343,450 49,425,713
Less: Allowance for loan losses (783,479) (713,518)
---------- ----------
Loans, net 51,559,971 48,712,195
Premises and equipment 2,258,597 2,296,111
Accrued interest receivable 801,044 757,276
Other real estate and repossessions 44,440 3,000
Other assets 773,903 730,182
---------- ----------
85,084,119 85,203,618
========== ==========
Liabilities and Stockholders' Equity
Deposits:
Demand 10,676,878 9,648,648
Interest-bearing demand 17,282,509 17,211,638
Savings 13,004,359 15,546,932
Time 22,122,307 21,280,978
Time, in excess of $100,000 13,626,531 13,209,565
---------- ----------
Total deposits 76,712,584 76,897,761
Accrued interest payable 747,771 805,693
Accrued expenses and other liabilities 498,353 614,540
---------- ----------
Total liabilities 77,958,708 78,317,994
Minority interest 9,374 7,748
Stockholders' equity:
Common stock, $2.50 par value; 5,000,000 shares
authorized; 839,264 and 839,164 issued and outstanding 2,098,160 2,097,910
Additional paid-in capital 2,101,939 2,101,401
Retained earnings 2,920,733 2,682,999
Net unrealized holding loss on
securities available for sale (4,795) (4,434)
---------- ----------
Total stockholders' equity 7,116,037 6,877,876
---------- ----------
85,084,119 85,203,618
========== ==========
The consolidated balance sheet at December 31, 1996 has been taken from the audited financial statements.
</TABLE>
See accompanying notes to consolidated financial statements.
Page 1 of 11
<PAGE>
COMMUNITY TRUST FINANCIAL SERVICES CORPORATION
Consolidated Statements of Earnings
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
1997 1996 1997 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Interest income:
Interest and fees on loans $1,503,695 $1,382,065 $2,909,509 $2,574,420
Interest on federal funds sold 51,454 26,621 108,215 60,751
Interest on investment securities:
U.S. Treasury and U.S. Government agencies 278,409 269,487 559,582 544,428
Other 47,985 29,968 99,832 54,246
---------- ---------- ---------- ----------
Total interest income 1,881,543 1,708,141 3,677,138 3,233,845
Interest expense:
Interest on deposits
Demand 93,811 97,380 188,440 189,662
Savings 99,999 87,267 204,556 176,526
Time 318,927 280,349 631,114 556,705
Time, in excess of $100,000 196,988 159,816 391,941 294,148
Interest expense - other 5,951 13,171 12,577 13,204
---------- ---------- ---------- ----------
Total interest expense 715,676 637,983 1,428,628 1,230,245
---------- ---------- ---------- ----------
Net interest income 1,165,867 1,070,158 2,248,510 2,003,600
Provision for loan losses $ 64,958 $ 50,691 $ 127,438 $ 93,678
---------- ---------- ---------- ----------
Net interest income after
provision for loan losses $1,100,909 $1,019,467 $2,121,072 $1,909,922
---------- ---------- ---------- ----------
Other income:
Service charges and fees $237,519 $199,311 $466,000 $396,684
Insurance commissions 70,300 42,756 120,818 62,518
Loss on sales of investment securities 0 (9,437) 0 (8,233)
Appraisal fees 22,251 23,600 42,851 47,455
Miscellaneous 13,228 14,184 22,060 30,834
---------- ---------- ---------- ----------
Total other income 343,298 270,414 651,729 529,258
Other expenses:
Salaries and employee benefits $ 556,963 $ 461,336 $1,085,270 $ 871,437
Occupancy 162,699 133,747 330,882 261,273
Other operating 356,326 310,024 667,948 567,039
---------- ---------- ---------- ----------
Total other expenses 1,075,988 905,107 2,084,100 1,699,749
---------- ---------- ---------- ----------
Earnings before income taxes $368,219 $384,774 $688,701 $739,431
Income taxes 131,810 121,279 239,524 251,772
Minority interest in earnings of consolidated subsidiary 2,761 8,743 1,627 6,839
---------- ---------- ---------- ----------
Net earnings $ 233,648 $ 254,752 $ 447,550 $ 480,820
========== ========== ========== ==========
Net earnings per common share $ 0.28 $ 0.30 $ 0.53 $ 0.58
========== ========== ========== ==========
Weighted average common shares outstanding 839,264 835,569 839,244 836,020
========== ========== ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
Page 2 of 11
<PAGE>
COMMUNITY TRUST FINANCIAL SERVICES CORPORATION
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30, June 30,
1997 1996
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $447,550 $480,820
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation, amortization, and accretion 165,260 114,738
Provision for loan losses 127,438 93,678
Net loss on sale of investment securities 0 8,233
Net gain on sale of other real estate 0 (2,330)
Net (gain) loss on sale of fixed asset (1,000) 628
Net change in:
Interest receivable (43,768) (28,020)
Interest payable (57,922) 41,254
Other assets (105,515) (463,345)
Accrued expenses and other liabilities (114,561) 469,728
------------ -----------
Net cash provided by operating activities $417,482 $715,384
------------ -----------
Cash flows from investing activities:
Purchase of investment securities (4,348,037) (6,656,712)
Proceeds from maturities of investment securities 2,545,000 2,800,000
Proceeds from sales, calls, and paydowns
of investment securities 762,678 3,900,239
Purchase of equity securities (46,100) (205,000)
Net increase in loans (3,012,579) (9,722,322)
Purchase of bank premises and equipment (93,310) (112,480)
Proceeds from sale of other real estate 0 102,841
Improvements to other real estate 0 (3,053)
Proceeds from sale of fixed asset 1,000 1,800
------------ -----------
Net cash used in investing activities ($4,191,348) ($9,894,687)
------------ -----------
Cash flows from financing activities:
Net change in demand and savings deposits (1,443,472) 4,276,234
Net change in time deposits 1,258,295 4,692,608
Dividends paid (209,816) (209,125)
Retirement of stock 0 (7,000)
Exercise of stock options 788 552
------------ -----------
Net cash provided (used) by financing activities ($394,205) $8,753,269
------------ -----------
Net decrease in cash and cash equivalents (4,168,071) (426,034)
Cash and cash equivalents at beginning of period 10,031,164 5,907,523
------------ -----------
Cash and cash equivalents at end of period $5,863,093 $5,481,489
============ ===========
</TABLE>
See accompanying notes to consolidated financial statements.
Page 3 of 11
<PAGE>
COMMUNITY TRUST FINANCIAL SERVICES CORPORATION
Consolidated Statement of Cash Flows, continued
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30, June 30,
1997 1996
----------- -----------
<S> <C> <C>
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest 1,486,550 1,188,991
Noncash investing activities:
Transfers of loans to other real estate 37,365 0
Change in unrealized gain/(loss) on securities available
for sale, net of tax of $2,984 and $107,176 (361) (188,287)
</TABLE>
See accompanying notes to consolidated financial statements.
Page 4 of 11
<PAGE>
COMMUNITY TRUST FINANCIAL SERVICES CORPORATION
Notes to Consolidated Financial Statements
1. Basis of Presentation
---------------------
The consolidated financial statements include the accounts of Community
Trust Financial Services Corporation (the Company), its wholly-owned
subsidiaries, Community Trust Bank (the Bank) and Metroplex Appraisals, Inc.
(Metroplex), and its majority-owned subsidiary Community Loan Company (CLC).
All significant intercompany accounts and transactions have been eliminated in
consolidation. Effective September 1, 1995, the Company established CLC as a
non-bank subsidiary engaged in the consumer finance business in Woodstock,
Georgia. Effective April 1, 1996, CLC acquired two additional consumer finance
offices located in Rockmart, Georgia, and Rossville, Georgia. The Company owns
75% of CLC's outstanding capital stock. The remaining 25% of CLC's outstanding
capital stock is owned by an individual who is employed as President of CLC.
The Company has helped finance the operations of CLC through a revolving line of
credit which, at June 30, 1997, had a maximum availability of $1,900,000.
Effective May 16, 1997, the Company entered into a joint venture with JRH
Diversified, Inc. to establish a non-bank subsidiary that engages in the
business of selling, leasing, or servicing automated teller machines that
provide cash or cash equivalents. The Company owns 49% of the equity in Cash
Transactions, LC, ("CT") therefore, the Company's ownership in CT is considered
an investment in an unconsolidated subsidiary. The financial data of the
Company is not significantly affected by the operations of CT.
The consolidated financial information furnished herein reflects all
adjustments which are, in the opinion of management, necessary to present a fair
statement of the Company's financial position as of June 30, 1997 and the
results of its operations and cash flows for the periods covered herein. All
such adjustments are of a normal recurring nature.
2. Recent Accounting Pronouncements
--------------------------------
During February 1997, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards 128 ("SFAS 128"). SFAS 128
simplifies current standards by eliminating the presentation of primary earnings
per share ("EPS") and requiring the presentation of basic earnings per share,
which includes no potential common shares and thus no dilution. The Statement
also requires entities with complex capital structures to present basic and
diluted EPS on the face of the income statement and also eliminates the modified
treasury stock method of computing potential common shares. The Statement is
effective for financial statements issued for periods ending after December 15,
1997. Early application is not permitted. Upon adoption, restatement of all
prior-period EPS data presented is required. Management does not expect this
new standard to have a material impact on the earnings per share calculation.
3. Earnings Per Share
------------------
Earnings per share amounts are based on the weighted average number of
shares outstanding during the period.
Page 5 of 11
<PAGE>
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
For the Six Month Period Ended June 30, 1997
Management's discussion and analysis of financial condition and results of
operations analyzes the material changes in the consolidated balance sheets and
statements of earnings presented herein for Community Trust Financial Services
Corporation (the Company). Unless otherwise indicated, the term Company
includes Community Trust Bank (the Bank), Metroplex Appraisals, Inc.
(Metroplex), and Community Loan Company (CLC). Metroplex, located in Dallas,
Georgia, is a wholly-owned non-bank subsidiary of the Company which performs
appraisals of real and personal property. CLC is a majority-owned subsidiary
which is engaged in the consumer finance business with offices in Woodstock,
Georgia, Rockmart, Georgia, and Rossville, Georgia. The financial data analyzed
herein is not significantly affected by the operations of Metroplex or CLC.
Management anticipates that Metroplex will have only a minimal impact on the
Company's earnings and performance during 1997.
Financial Condition
- -------------------
Gross loans during the first six months of 1997 increased approximately
$2,917,737 or 5.90% over the total gross loans at December 31, 1996, as compared
to an increase of $9,715,565, or 24.98%, for the same six month period ended
June 30, 1996. Management believes that the decrease in loan growth was due
primarily to an increase in competition from other financial institutions which
have moved into the Bank's market area, due to changes in laws. Management
believes that the large increase in loan growth during the first six months of
1996 was due primarily to an increase in lending personnel. Since CLC operates
from three relatively small offices, its gross loans, totaling approximately
$1,166,279, or 2.23% of the Company's gross loans, do not significantly affect
the financial data analyzed. Although Management anticipates growth in CLC's
total loans, the subsidiary will have only a minimal impact on the Company's
balance sheet. Management anticipates some continued increase in the Bank's
loan growth for 1997 primarily due to its increased marketing efforts which are
designed to attract new borrowers in its primary lending area and to provide
additional loan products to its existing borrowers. Management continues to
strive for increased loan volume while meeting the criteria set by its loan
policy.
The Bank's increase in gross loans for the first six months of 1996 was
funded primarily through a decrease in federal funds sold. Federal funds sold
decreased by $5,580,000, or 79.49%, from $7,020,000 at December 31, 1996, to
$1,440,000 at June 30, 1997. Total deposits during the first six months of 1997
decreased approximately $185,177 or .24%, from $76,897,761 at December 31, 1996
to $76,712,584 at June 30, 1997. This relatively flat position of total
deposits was due primarily to moderate growth in the Bank's core deposits which
was offset by a reduction in deposit balances maintained by some of the Bank's
large depositors. Another factor which has also contributed to slow deposit
growth is the increased competition from other financial institutions which have
moved into Paulding County. Management is monitoring core deposits and customer
relationships in an effort to maintain overall deposit growth.
Results of Operations
- ---------------------
Interest Income
- ---------------
Interest income for the first six months of 1997 was $3,677,138,
representing an increase of $443,293, or 13.71% over the same period in 1996.
This increase was primarily attributable to the increase in the Company's total
interest earning assets to $76,126,521 for the period ended June 30, 1997 as
compared to $70,491,524 for the same period in 1996. The yield on interest-
earning assets was 9.02% for the period ended June 30, 1997, as compared to
9.29% for the same period in 1996. This decline in yield was due primarily to a
decline in market interest rates. Investment securities during the first six
months of 1997 increased by approximately $1,063,281, or 4.74% compared to total
investment securities held at December 31, 1996.
Page 6 of 11
<PAGE>
Additionally, the Company holds approximately $2,291,048 or 9.76% of its
investment portfolio in mortgage-backed securities. These mortgage-backed
securities are subject to being prepaid in part or in whole. Because a premium
was paid for the purchase of some of these mortgage-backed securities, an
accelerated payback can decrease earnings through faster amortization of the
premium. Mortgage-backed securities also may be subject to a slowdown in
repayments, especially in a rising rate environment. This type of risk, called
extension risk, is not significant since the majority of the mortgage-backed
securities owned by the Company are variable rate securities or have a final
maturity of less than five years. Management monitors the pre-payment risk and
extension risk associated with the Company's investments in mortgage-backed
securities in an effort to maintain an overall acceptable level of risk.
Although the Bank loses some interest income due to non-performing assets,
defined as loans placed on non-accrual status, real estate acquired through
foreclosure, and property acquired through repossession, management considers
the Bank's level of non-performing assets to be at an acceptable level. Non-
performing assets totaled approximately $155,317, or 0.18% of total assets as of
June 30, 1997, as compared to $33,237, or 0.04% of total assets as of December
31, 1996.
Interest Expense
- ----------------
Interest expense for the first six months of 1997 increased $198,383, or
16.13% as compared to the same period in 1996. This increase is primarily
attributable to an $8,737,813, or 15.66% increase in average interest-bearing
deposits for that same time period. The Company's net interest margin (net
interest income divided by average interest-earning assets) as of June 30, 1997
was 5.33%, as compared to 5.61% as of June 30, 1996, primarily due to the
Company's decreased yield on earning assets this year. As market rates have
become more competitive on loans during the first six months of 1997 due to
increased competition, the Company has been forced to reduce its net interest
margin to some extent in order to maintain quality asset growth.
Other Income
- ------------
Other income increased approximately $122,471, or 23.14%, during the first
six months of 1997 as compared to the same period in 1996 primarily due to
increased insurance commissions and service charges and fees. Service charges
and fee income increased approximately $69,316, or 17.47%, during the first six
months of 1997 as compared to the same period in 1996, primarily due to an
increase in the number of deposit accounts. Insurance commissions increased
approximately $58,300, or 93.25%, during the first six months of 1997 as
compared to the same period in 1996 primarily due to income derived from the
subsidiary CLC. Consumer finance companies typically sell credit life and
automobile liability insurance to many of their customers. Since CLC acquired
two additional loan offices after the first quarter of 1996, insurance
commissions for the first six months of 1997 contain the income generated by
CLC's larger loan portfolio relative to its size as of June 30, 1996.
Other Expenses
- --------------
Other expenses for the first six months of 1997 increased $384,351, or
22.61%, as compared to the first six months of 1996. This increase is
attributable primarily to an increase in salaries and employee benefits caused
by the (I) Bank's need for additional human resources due to the growing
customer base of the Bank, (ii) salary and benefit costs of CLC, and (iii)
routine salary increases. Occupancy expense increased by approximately $69,609,
or 26.64% for the first six months of 1997 as compared to the same period for
1996, primarily due to increased furniture and equipment expenses at the Bank.
Other operating expenses for the first six months of 1997 increased $100,909, or
17.80% as compared to the first six months of 1996, primarily due to payment of
directors' fees being initiated at the Company and CLC levels, whereas those
directors had served without compensation prior to September 1996.
Additionally, the purchase of two CLC offices in April 1996 generated additional
expense in the form of amortization of goodwill and a non-compete agreement.
Page 7 of 11
<PAGE>
Capital
- -------
The Company is subject to regulatory capital requirements imposed by the
Georgia Department of Banking and Finance (the "Department"). The Department
has established a minimum level of capital to total assets of 5%, with certain
adjustments, on a consolidated basis for bank holding companies. At June 30,
1997, the Company's ratio of capital to total average assets was 9.28%, using
the Department's guidelines. Under federal law, the Company and the Bank are
required to maintain a ratio of total capital to risk weighted assets of at
least 8.0%, of which at least one-half must be so-called Tier One capital.
Under applicable federal regulations and interpretations thereof, the Bank's
ratio of total capital to risk weighted assets at June 30, 1997 was 11.02%, and
its ratio of Tier One capital to risk weighted assets was 9.77%. Under
applicable federal regulations and interpretations thereof, the Company's ratio
of total capital to risk weighted assets at June 30, 1997 was 12.90%, and its
ratio of Tier One capital to risk weighted assets was 11.65%. Additionally,
under federal law, all but the most highly rated banks and bank holding
companies are required to maintain a minimum ratio of Tier One capital to total
average assets (Tier One leverage ratio) of 4.0% to 5.0%, including the most
highly-rated banks and bank holding companies that are anticipating or
experiencing significant growth. Three percent is the minimum Tier One leverage
ratio required for the most highly-rated banks and bank holding companies with
no plans to expand. The Bank substantially exceeds its Tier One leverage ratio
requirement with a Tier One leverage ratio of 6.80% as of June 30, 1997. The
Company also substantially exceeds its Tier One leverage ratio requirement with
a Tier One leverage ratio of 8.00% as of June 30, 1997. Through its policy of
controlled growth, the Company intends to maintain capital in excess of the
required minimum in order to support future growth.
Liquidity
- ---------
Liquidity represents the Company's ability to meet both loan commitments
and deposit withdrawals. As of June 30, 1997, the Bank's liquidity ratio
(defined as net cash, short term assets, and marketable assets divided by net
deposits and short term liabilities) was 30.93%, as compared to 27.40% at June
30, 1996. The Bank maintains two lines of credit to borrow fed funds that total
$3,000,000 in order to enhance liquidity. The Bank is a member of the Federal
Home Loan Bank of Atlanta and borrowings are also available through that
relationship. The amount of that credit opportunity fluctuates based on
criteria set by the Federal Home Loan Bank. Additionally, in order to enhance
liquidity at the holding company level, the Company has obtained a $2,500,000
revolving credit facility.
Page 8 of 11
<PAGE>
COMMUNITY TRUST FINANCIAL SERVICES CORPORATION
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
- -------------------------
Not applicable
Item 2. Changes in Securities
- -----------------------------
Not applicable
Item 3. Defaults upon Senior Securities
- ---------------------------------------
Not applicable
Item 4. Submission of Matters to a Vote of Security Holders
- -----------------------------------------------------------
The Company held its Annual Meeting of stockholders on April 16, 1997. Set
forth below is a brief description of the matters voted upon at the Annual
Meeting:
Proposal 1: Proposed amendment to Section 3.2 of Company's Bylaws to
provide for the classification of the Company's Board of Directors into three
classes with the members of each class being elected for a three year term
and with one class being elected each year.
Proposal 2: Proposed amendment to Section 3.3 of Company's Bylaws to
provide for the filling of vacancies occurring in the Company's Board of
Directors.
Proposal 3: Proposal to elect two Directors for terms ending in 1998,
three Directors for terms ending in 1999, and three Directors for terms
ending in 2000.
Proposal 4: Proposal to ratify the appointment of Porter, Keadle,
Moore, LLP as independent accountants of the Company for the fiscal year
ending December 31, 1997.
Set forth below are the voting results from the Annual Meeting with respect to
each of the above proposals:
<TABLE>
<CAPTION>
Votes Cast Votes Cast Votes
For Against Withheld Abstentions
---------- ---------- --------- -----------
<S> <C> <C> <C> <C>
Proposal 1: 454,473 3,400 0 5,630
-----------
Proposal 2: 454,573 3,300 0 5,630
-----------
</TABLE>
Page 9 of 11
<PAGE>
<TABLE>
<CAPTION>
Votes Cast Votes Cast Votes
For Against Withheld Abstentions
--------- --------- -------- -----------
<S> <C> <C> <C> <C>
Proposal 3:
-----------
Term Expiring in 1998
---------------------
John Helms 460,503 3,000 0 0
C. D. Rampley 460,503 3,000 0 0
Term Expiring in 1999
---------------------
J. Calvin Earwood 460,503 3,000 0 0
W. A. Foster III 460,503 3,000 0 0
Tommie R. Graham, Jr. 414,945 48,558 0 0
Term Expiring in 2000
---------------------
Ronnie L. Austin 460,503 3,000 0 0
R. Alan Bullock 460,503 3,000 0 0
Bobbie P. Cooper 460,503 3,000 0 0
Proposal 4: 458,663 40 0 4,800
-----------
</TABLE>
Item 5. Other Information
- -------------------------
In April 1997, the Company filed a notice with both the Federal Reserve Bank of
Atlanta and the Georgia Department of Banking and Finance (the "Department") of
the Company's intention to enter into a joint venture to establish a non-bank
subsidiary that would engage in the business of selling, leasing, and/or
servicing automated teller machines that provide cash or cash equivalents. The
Department and the Federal Reserve approved the venture in May 1997, and the
purchase by the Company of 49% of the equity of Cash Transactions, LLC was
consummated effective May 16, 1997.
Item 6.a Exhibits
- -----------------
Exhibit
Number Description
- ------ -----------
3.2 Bylaws of the Company as amended through April 1997
27 Financial Data Schedule, which is submitted
electronically to the Securities and Exchange Commission for
information only and not filed.
Item 6.b Reports on Form 8-K
- ----------------------------
Not applicable
Page 10 of 11
<PAGE>
COMMUNITY TRUST FINANCIAL SERVICES CORPORATION
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Community Trust Financial Services Corporation
----------------------------------------------
(Registrant)
DATE: August 11, 1997 /s/Ronnie L. Austin
-------------------
Ronnie L. Austin, President
and Chief Executive Officer
(Duly Authorized Officer)
DATE: August 11, 1997 /s/Angel J. Byrd
----------------
Angel J. Byrd
(Principal Accounting Officer)
Page 11 of 11
<PAGE>
BYLAWS
OF
COMMUNITY TRUST FINANCIAL SERVICES CORPORATION
ARTICLE ONE
-----------
SHARE CERTIFICATES
1.1 Each shareholder shall be entitled to a certificate certifying the
number of shares of the corporation owned by him. Share certificates shall be
issued in consecutive order and shall be numbered in the order in which they are
issued. They shall be signed by the President or a Vice President and the
Secretary or an Assistant Secretary, and the seal of the corporation shall be
affixed thereto. A record of each share certificate shall be kept in the books
of the corporation, and on such record shall be entered the name of the person
owning the shares represented by that certificate, the number of shares
represented by that certificate, and the date of issue. In addition, the
corporation shall maintain at its principal place of business or registered
office a record of the names and addresses of its shareholders and the total
number of shares held by each.
1.2 Transfers of shares of the corporation shall be made only upon the
books of the corporation, which transfer shall be made only at the direction of
the shareholder designated on the certificate or at the direction of his
attorney, lawfully
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constituted in writing, and upon surrender of the properly endorsed certificate
or certificates for such shares. Each share certificate exchanged or returned to
the corporation shall be canceled by the Secretary or by an Assistant Secretary
and shall be placed with its stub in the books of the corporation.
1.3 The Board of Directors shall fix a record date as of which the
corporation shall determine the shareholders who are entitled to notice of or to
vote at any meeting of stockholders, to consent to corporation action in writing
without a meeting, to receive payment of any dividend or other distribution or
allotment of any rights, or to exercise any other lawful right of stockholders.
1.4 In the event that a share certificate is lost, stolen or destroyed,
another certificate may be issued in its place pursuant to such regulations as
the Board of Directors may establish concerning proof of such loss, theft, or
destruction and concerning the giving of satisfactory bond or bonds of
indemnity.
1.5 The issue, transfer, conversion, and registration of stock
certificates shall be governed by such other regulations as the Board of
Directors may establish.
ARTICLE TWO
-----------
SHAREHOLDERS' MEETINGS
2.1 The annual meeting of shareholders of the corporation shall be held
during the first four (4) months after the end of each fiscal year of the
corporation at such time and place, within or without the State of Georgia, as
the Board of Directors may from time to time determine.
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2.2 Special meetings of the shareholders may be called at anytime by the
Board of Directors, the President, or any holder or holders of twenty-five
percent (25%) or more of the outstanding shares of the corporation. Special
meetings of the shareholders shall be held at such time and place, within or
without the State of Georgia, as may be designated by the person or persons
calling the meeting.
2.3 The Secretary or an Assistant Secretary shall deliver, either
personally or by first class mail, a written notice of the place, day, and time
of all meetings of shareholders, not less than ten (10) nor more than fifty (50)
days before the date of the meeting to each shareholder of record entitled to
vote at such meeting. If mailed, such notice shall be deemed to be delivered
when deposited in the United States mail, addressed to the shareholder at his
address as it appears on the share transfer records of the corporation, with
first class postage thereon prepaid. The notice of any special meeting of
shareholders shall state the purpose or purposes for which the meeting is
called. Notice of any meeting of shareholders need not be given to any
shareholder who signs a waiver of notice, either before or after the meeting. No
such waiver of notice of a shareholder's meeting with respect to a plan of
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<PAGE>
merger or a plan of consolidation shall be effective unless the provisions of
Paragraph (1) of subsection (d) of Section 14-2-113 of the Official Code of
Georgia Annotated are followed. Attendance of a shareholder at a meeting, either
in person or by proxy, shall constitute waiver of notice of such meeting and a
waiver of any and all objections to the place of the meeting, the time of the
meeting, and the manner in which the meeting has been called or convened unless
a shareholder states at the beginning of the meeting any such objection or
objections to the transaction of business at the meeting.
2.4 At all meetings of the shareholders, each holder of shares of the
corporation shall be entitled to cast one vote, either in person or by written
proxy, for each share standing in his name on the books of the corporation as of
the record date determined under Section 1.3 of these bylaws.
2.5 At all meetings of shareholders, a majority of the outstanding
shares of the corporation entitled to vote, represented in person or by proxy,
shall constitute a quorum for the transaction of business. Except as otherwise
required by law or by Article Seven of these bylaws, all resolutions adopted and
all business transacted shall require the favorable vote of a majority of the
shares represented at the meeting and entitled to vote. The holders of a
majority of the shares represented at a meeting, whether or not a quorum is
present, may adjourn such meeting from time to time.
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<PAGE>
ARTICLE THREE
-------------
BOARD OF DIRECTORS
3.1 Subject to these bylaws and any lawful agreement between the
shareholders, the full and entire management of the affairs and business of the
corporation shall be vested in the Board of Directors, which shall have and may
exercise all of the powers that the corporation may exercise.
3.2 The Board of Directors shall consist of at least three(3), but not
more than ten (10) members, the precise number to be fixed by resolution of the
Directors from time to time. The Board of Directors shall be divided into three
classes as nearly equal in number as possible. The members of each class shall
be elected for a term of three years and until their successors are elected and
qualified with one class of directors being elected by ballot annually, except
that at the first election of directors following the effectiveness of this
Section 3.2: one class shall be elected for terms of one year and until their
successors are elected and qualified; another class shall be elected for terms
of two years and until their successors are elected and qualified; and the third
class shall be elected for terms of three years and until their successors are
elected and qualified. A majority of the members of the Board of Directors shall
constitute a quorum for the transaction of business. Except as otherwise
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<PAGE>
provided in these Bylaws, all resolutions adopted and all business transacted by
the Board of Directors shall require the affirmative vote of a majority of the
directors present at the meeting.
3.3 Any vacancy occurring in the Board of Directors may be filled by a
person selected by the affirmative vote of a majority of the remaining directors
or, if the vacancy is not so filled or if only one (1) director remains, by the
shareholders. A director selected to fill a vacancy shall serve for the
unexpired term of such director's predecessor; provided, however, that when the
number of directors is increased, the directorships to be filled by reason of
such increase shall be filled by persons whose terms shall expire at the next
election of directors by the shareholders.
3.4 The directors shall meet annually, without notice, immediately
following the annual meeting of the shareholders. The President or any director
may call a special meeting of the directors at any time by giving each director
forty-eight hours notice. Such notice may be given personally or by first class
mail, telegram, or cablegram and shall be deemed given twenty-four hours after
it is mailed or at the time the telegram or cablegram is sent, addressed to the
director at his address as it appears on the share records of the corporation
or,
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<PAGE>
if he is not a shareholder, addressed to his business address. A director may
waive notice of any such meeting by a written instrument, either before or after
the meeting. Attendance of director at a meeting shall constitute a waiver of
notice of such meeting and a waiver of any and all objections to the place of
the meeting, the time of the meeting, and the manner in which it has been called
or convened unless a director states at the beginning of the meeting any such
objection or objections to the transaction of business at that meeting. Any
meeting of the Board of Directors may be held within or without the State of
Georgia at any place the person or persons calling the meeting designates.
3.5 Any action required to be taken at a meeting of the directors or any
action that may be taken at a meeting of the directors may be taken without a
meeting if a consent in writing, setting forth the action so taken, shall be
signed by all the directors, which consent shall be filed with the minutes of
the proceedings of the directors.
3.6 Any one or more directors may be removed from office, with or
without cause, at any meeting of shareholders by the affirmative vote of the
holder or holders of a majority of the shares of the corporation.
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<PAGE>
ARTICLE FOUR
------------
OFFICERS
4.1 The Board of Directors shall elect a President, a Secretary, and a
Treasurer and may elect a Chairman of the Board and one or more Vice Presidents
or assistant officers. Any person may hold two or more offices, except that no
person may hold both the offices of President and Secretary.
4.2 The President shall be the chief executive officer of the
corporation and shall be responsible for the administration of the corporation,
including general supervision of the policies of the corporation and general and
active management of the financial affairs of the corporation. He shall execute
bonds, mortgages, or other contracts under the seal of the corporation. The
President shall have the authority to institute or defend legal proceedings when
the directors are deadlocked.
4.3 The Secretary shall keep minutes of all meetings of the shareholders
and directors and shall have charge of the minute books, share books, and seal
of the corporation and shall perform such other duties and exercise such other
powers as the President or a majority of the Board of Directors may from time to
time designate.
4.4 The Treasurer shall be charged with the management of the financial
affairs of the corporation. He shall perform such duties as treasurers usually
perform and shall perform such other duties and shall exercise such other powers
as the President or a majority of the Board of Directors may from time to time
designate.
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<PAGE>
4.5 The Vice Presidents, if any, shall perform such duties as vice
presidents usually perform and shall perform such other duties and shall
exercise such other powers as the President or a majority of the Board of
Directors may from time to time designate. In the absence of the President or in
the event of his death or inability to act, the Vice President (or in the event
there be more than one Vice President, the Vice Presidents in the order
designated at the time of their election, or in the absence of any designation,
then in the order of their election) shall perform the duties of the President
and, when so acting, shall have all the powers of and be subject to all the
restrictions upon the President.
4.6 The Board of Directors or the President may appoint one or more Vice
Presidents and such other officers, assistant officers, and agents as, in the
judgment of the Board of Directors or the President, will be in the best
interests of the corporation. Any Vice President so appointed shall perform the
duties described in Section 4.5 of these bylaws. Any other officers or assistant
officers so appointed shall perform such duties as elected officers or assistant
officers having the same title usually perform and shall perform such other
duties and shall exercise such other powers as the President or majority of the
Board of Directors may from time to time designate.
4.7 The Board of Directors may remove any officer, assistant officer, or
agent elected or appointed by it whenever in the Board's judgment the best
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<PAGE>
interests of the corporation will be served thereby. The President or the Board
of Directors may remove any officer, assistant officer, or agent appointed by
the President whenever in his or its judgment the best interests of the
corporation will be served thereby.
ARTICLE FIVE
------------
SEAL
The seal of the corporation shall be in such form as the Board of
Directors may from time to time determine. In the event that use of the seal is
at any time inconvenient, the signature of the corporation followed by the word
"SEAL" enclosed in parenthesis or scroll shall be deemed the seal of the
corporation. The seal of the corporation shall remain in the custody of the
Secretary, and he shall affix it on the share certificates and such other papers
as the law, these bylaws, or the Board of Directors may direct.
ARTICLE SIX
-----------
INDEMNIFICATION, INSURANCE, AND REIMBURSEMENT
6.1 Each person who is or was a director, officer, employee, or agent of
the corporation (including the heirs, executors, administrators, or estate of
such person) or who is or was serving, at the request of the corporation, as a
director, officer, employee, or agent of another corporation, partnership, joint
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<PAGE>
venture, trust, or other enterprise shall by right be indemnified by the
corporation, to the full extent permitted or authorized by the present and
future laws of the State of Georgia, against any liability, cost, payment, or
expense asserted against him or paid or incurred by him in his capacity as such
a director, officer, employee, or agent, whether asserted, paid, or incurred
during or after his service as such a director, officer, employer, or agent. The
corporation may purchase and maintain, at its expense, insurance to protect
itself and any such person against any such liability, cost, payment, or
expense. The foregoing right of indemnification shall not be deemed exclusive of
any other right to which those indemnified or seeking indemnification may be
entitled both as to action in their official capacities and as to action in
another capacity while holding such offices, and the corporation may provide
such additional rights to its directors, officers, employees, and agents.
6.2 Any payments made to any director, officer, employees or shareholder
of the corporation, including, without limitation, payments as salaries,
commissions, bonuses, fees, interest, rents, or entertainment expenses, which
payments, after having been deducted for income tax purposes by the corporation,
shall have been disallowed in whole or in part as a deductible expense by the
Internal Revenue Service or the Georgia Department of Revenue, shall be
reimbursed by such director, officer, employee, or shareholder to the
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<PAGE>
corporation to the full extent of such disallowance. It shall be the duty of the
Board of Directors to enforce the reimbursement of all such amounts so
disallowed. In the event any such director, officer, employee, or shareholder
fails or refuses to reimburse such amounts upon demand made by the corporation,
the corporation may, without limiting any other remedies it may have, withhold
from future payments due and owing to such director, officer, employee, or
shareholder, an amount or amounts sufficient to reimburse the corporation to the
full extent of such disallowance. All directors, officers, employees, and
shareholders receiving any such payment as aforesaid shall, upon demand made by
the corporation and as a condition to receiving any such payment, acknowledge
and agree in writing that in the event such payment or any portion thereof is
disallowed by the Internal Revenue Service or the Georgia Department of Revenue
as a deductible expense, the amount of all such payments, to the extent of such
disallowance, shall be returned to the corporation.
ARTICLE SEVEN
-------------
AMENDMENT
These bylaws may be amended at any meeting of the shareholders by the
affirmative vote of a majority of the issued and outstanding shares of the
corporation, or at any meeting of the directors of the corporation by an
affirmative vote of a majority of all directors then holding office, provided,
that the shareholders may provide by resolution that any bylaw provision
repealed, amended, adopted or altered by them may not be repealed, amended,
adopted or altered by the Board of Directors.
- 12 -
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