<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 MARCH 31, 1998
|_| 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.)
3844 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 842,320 shares of Common
Stock outstanding as of May 8, 1998.
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 MARCH 31, 1998
TABLE OF CONTENTS
-----------------
ITEM PAGE
NUMBER NUMBER
------ ------
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
1. Consolidated Balance Sheets at March 31, 1998
(unaudited) and December 31, 1997 (audited).......1
2. Consolidated Statements of Earnings for the
three months ended March 31, 1998 and
March 31, 1997 (unaudited)........................2
3. Consolidated Statements of Comprehensive
Income for the three months ended March 31, 1998
and March 31, 1997 (unaudited)....................3
4. Consolidated Statements of Cash Flows for
the three months ended March 31, 1998
and March 31, 1997 (unaudited)....................4
5. Notes to Consolidated Financial Statements........6
Item 2. Management's Discussion and Analysis or Plan of
Operation........................................8
PART II - OTHER INFORMATION..............................12
Item 1. Legal Proceedings................................12
Item 2. Changes in Securities and Use of Proceeds........12
Item 3. Defaults upon Senior Securities..................12
Item 4. Submission of Matters to a Vote of
Security Holders.................................12
Item 5. Other Information................................12
Item 6. Exhibits and Reports on Form 8-K.................12
Signatures.......................................13
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
COMMUNITY TRUST FINANCIAL SERVICES CORPORATION
Consolidated Balance Sheets
March 31, 1998 and December 31, 1997
<TABLE>
<CAPTION>
Assets
March 31, December 31,
1998 1997
----------- ------------
(Unaudited) (Audited)
<S> <C> <C>
Cash and due from banks 4,013,997 4,022,304
Federal funds sold and securities purchased under resell agreements 5,580,000 4,510,000
---------- -----------
Cash and cash equivalents 9,593,997 8,532,304
U. S. Treasury and other U. S. Government agency securities
available for sale 11,914,991 17,826,801
State, county, and municipal securities available for sale 6,884,573 5,194,210
Other investments 331,600 301,100
Loans 60,730,864 57,188,857
Less: Allowance for loan losses (862,696) (829,232)
---------- -----------
Loans, net 59,868,168 56,359,625
Premises and equipment 2,158,311 2,141,654
Accrued interest receivable 865,660 901,296
Other real estate and repossessions 0 1,500
Other assets 583,653 646,291
---------- -----------
92,200,953 91,904,781
========== ===========
Liabilities and Stockholders' Equity
Deposits:
Demand 11,151,113 12,105,179
Interest-bearing demand 18,784,406 18,644,247
Savings 12,780,371 14,808,283
Time 22,694,625 21,589,280
Time, in excess of $100,000 14,391,217 14,834,114
---------- -----------
Total deposits 79,801,732 81,981,103
Accrued interest payable 782,110 870,090
Accrued expenses and other liabilities 88,913 383,756
Federal Home Loan Bank advances and notes payable 3,700,000 800,000
---------- -----------
Total liabilities 84,372,755 84,034,949
Stockholders' equity:
Common stock, $2.50 par value; 5,000,000 shares 2,105,020 2,103,310
authorized; 842,008 and 841,324 issued and outstanding
Additional paid-in capital 2,112,176 2,109,602
Retained earnings 3,495,664 3,511,989
Accumulated other comprehensive income 115,338 144,931
---------- -----------
Total stockholders' equity 7,828,198 7,869,832
---------- -----------
92,200,953 91,904,781
========== ==========
</TABLE>
The consolidated balance sheet at December 31, 1997 has been taken from the
audited financial statements.
See accompanying notes to consolidated financial statements.
Page 1 of 12
<PAGE>
COMMUNITY TRUST FINANCIAL SERVICES CORPORATION
Consolidated Statements of Earnings
(Unaudited)
<TABLE>
<CAPTION>
Three months ended
March 31,
1998 1997
---------- ----------
<S> <C> <C>
Interest income:
Interest and fees on loans $1,643,904 $1,405,814
Interest on federal funds sold 45,471 56,761
Interest on investment securities:
U.S. Treasury and U.S. Government agencies 210,248 281,173
Other 84,144 51,847
---------- ----------
Total interest income 1,983,767 1,795,595
Interest expense:
Interest on deposits
Demand 102,649 94,629
Savings 97,237 104,557
Time 316,415 312,187
Time, in excess of $100,000 220,752 194,953
Interest expense - other 22,034 6,626
---------- ----------
Total interest expense 759,087 712,952
---------- ----------
Net interest income 1,224,680 1,082,643
Provision for loan losses 89,854 62,480
---------- ----------
Net interest income after
provision for loan losses 1,134,826 1,020,163
---------- ----------
Other income:
Service charges and fees 230,235 228,481
Insurance commissions 63,823 50,518
Gain on sales of investment securities 23,812 0
Appraisal fees 36,050 20,600
Equity in loss of CashTrans (32,242) 0
Miscellaneous 40,632 8,832
---------- ----------
Total other income 362,310 308,431
Other expenses:
Salaries and employee benefits 644,701 528,307
Occupancy 174,425 168,183
Other operating 392,162 311,622
---------- ----------
Total other expenses 1,211,288 1,008,112
---------- ----------
Earnings before income taxes 285,848 320,482
Income taxes 91,671 107,714
Minority interest in earnings (loss) of consolidated subsidiary 0 (1,134)
---------- ----------
Net earnings $194,177 $213,902
========== ==========
Net earnings per common share $0.23 $0.25
========== ==========
Net earnings per common share - assuming dilution $0.22 $0.24
========== ==========
Dividends per common share $0.25 $0.25
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
Page 2 of 12
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COMMUNITY TRUST FINANCIAL SERVICES CORPORATION
Consolidated Statements of Comprehensive Income
(Unaudited)
<TABLE>
<CAPTION>
Three months ended
March 31,
1998 1997
<S> <C> <C>
Net Earnings $194,177 $213,902
Other comprehensive income, net of tax:
Unrealized losses on securities available for sale:
Unrealized losses arising during the period, net
of tax of $7,149 and $47,650, respectively (13,877) (92,948)
Less: Reclassification adjustment for gains
included in net earnings, net of tax of $8,096 (15,716) -
-------- --------
Other comprehensive income (29,593) (92,948)
-------- --------
Comprehensive income $164,584 $120,954
======== ========
</TABLE>
See Notes to Consolidated Financial Statements.
Page 3 of 12
<PAGE>
COMMUNITY TRUST FINANCIAL SERVICES CORPORATION
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31, March 31,
1998 1997
------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $194,177 $213,902
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation, amortization, and accretion 98,623 75,411
Provision for loan losses 89,854 62,480
Net gain on sale of investment securities (23,812) 0
Net gain on sale of fixed asset 0 (1,000)
Net change in:
Interest receivable 35,636 1,647
Interest payable (87,980) (68,257)
Other assets 52,115 (92,863)
Accrued expenses and other liabilities (294,843) (51,135)
------------- -------------
Net cash provided by operating activities 63,770 140,185
------------- -------------
Cash flows from investing activities:
Proceeds from maturities of securities available for sale 1,000,000 545,000
Proceeds from sales, calls, and paydowns
of securities available for sale 4,916,699 159,431
Purchase of securities available for sale (1,720,000) (1,845,765)
Purchase of other investments (30,500) (46,100)
Net increase in loans (3,689,067) (1,617,054)
Purchase of premises and equipment (84,290) (83,222)
Proceeds from sale of other real estate 90,670 0
Proceeds from sale of fixed asset 0 1,000
------------- -------------
Net cash used in investing activities 483,512 (2,886,710)
------------- -------------
Cash flows from financing activities:
Net change in demand and savings deposits (2,841,819) (99,699)
Net change in time deposits 662,448 605,220
Net proceeds from Federal Home Loan Bank advances 2,500,000 0
Net proceeds from notes payable 400,000 0
Cash dividends paid (210,502) (209,816)
Proceeds from exercise of stock options 4,284 788
------------- -------------
Net cash provided by financing activities 514,411 296,493
------------- -------------
Net change in cash and cash equivalents 1,061,693 (2,450,032)
Cash and cash equivalents at beginning of period 8,532,304 10,031,164
------------- -------------
Cash and cash equivalents at end of period $9,593,997 $7,581,132
============= =============
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest 847,067 781,209
Income taxes 120,000 10,000
Noncash investing activities:
Transfers of loans to other real estate 90,670 0
Change in other comprehensive income,net of tax (29,593) (92,498)
</TABLE>
See accompanying notes to consolidated financial statements.
Page 4 of 12
<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. 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 March 31, 1998, had a maximum availability of $2,750,000, of
which CLC had borrowed $1,905,348. 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 providing retail establishments with
automated teller machines that dispense cash or cash equivalents. The Company
owns 49% of the equity in Cash Transactions, LLC, (CashTrans) therefore, the
Company=s ownership in CashTrans is considered an investment in an
unconsolidated subsidiary. The Company has helped finance the operations of
CashTrans through a revolving line of credit which, at March 31, 1998, had a
maximum availability of $750,000, of which CashTrans had borrowed $560,000. The
financial data of the Company is not significantly affected by the operations of
CashTrans.
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 March 31, 1998 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
--------------------------------
On January 1, 1998, the Company adopted Statement of Financial Accounting
Standard (SFAS) No. 130, "Reporting Comprehensive Income". This statement
establishes standards for the reporting and display of comprehensive income and
its components in the financial statements. Comprehensive income is defined as
the change in equity of a business enterprise during a period from transactions
and other events and circumstances from nonowner sources. For the Company,
comprehensive income includes net income reported in the statements of earnings
and changes in the fair value of securities available for sale reported as a
component of stockholders' equity.
In February 1998, the Financial Accounting Standards Board issued Statement
No. 132, "Employer's Disclosures about Pensions and Other Postretirement
Benefits". The new statement revises employers' disclosures about pension and
other postretirement benefit plans but does not change the measurement or
recognition provisions of those plans. Statement No. 132 provides additional
information to facilitate financial analysis and eliminates certain disclosures
which are no longer useful. The statement is effective for fiscal years
beginning after December 15, 1997. The statement is not expected to have a
material impact on the consolidated financial statements of the Company.
Page 5 of 12
<PAGE>
3. Earnings Per Share
------------------
SFAS No. 128 "Earnings Per Share" became effective for the Company for the
year ended December 31, 1997. This new standard specifies the computation,
presentation, and disclosure requirements for earnings per share and is designed
to simplify previous earnings per share standards and to make domestic and
international practices more compatible. Net earnings per share is based on the
weighted average number of shares outstanding during the period while the
effects of potential common shares outstanding during the period are included in
diluted earnings per share. All net earnings per share amounts have been
restated to conform to the provisions of SFAS No. 128. Net earnings per share
amounts for the three months ended March 31, 1998 and March 31, 1997 are as
follows:
For the three months ended Net Earnings Common Shares Per Share
March 31, 1998 (Numerator) (Denominator) Amount
- -------------------------- ------------ ------------ ----------
Net earnings per share $194,177 841,671 $.23
====
Effect of dilutive securities:
Stock options - 45,614
----------- ------------
Net earnings per share -
assuming dilution $194,177 887,285 $.22
=========== ============ ====
For the three months ended Net Earnings Common Shares Per Share
March 31, 1997 (Numerator) (Denominator) Amount
- --------------------------- ------------ ------------- ----------
Net earnings per share $213,902 839,223 $.25
====
Effect of dilutive securities:
Stock options - 32,424
----------- ------------
Net earnings per share -
assuming dilution $213,902 871,647 $.24
=========== ============ ====
Page 6 of 12
<PAGE>
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
For the Three Month Period Ended March 31, 1998
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). The consolidated financial information herein
include the financial condition and results of operations, for all periods
presented, of the Company and its wholly-owned subsidiaries, Community Trust
Bank (the Bank), and Metroplex Appraisals, Inc. (Metroplex), and the Company's
75%-owned subsidiary, Community Loan Company (CLC). In May 1997, the Company
entered into a joint venture with JRH Diversified, Inc. to establish Cash
Transactions, LLC (CashTrans) as another non-bank subsidiary. The Company's 49%
interest in CashTrans is treated as an unconsolidated subsidiary for financial
reporting purposes, and, accordingly, the Company's interest is reflected in the
consolidated financial statements at its proportionate share.
Financial Condition
- -------------------
Gross loans during the first three months of 1998 increased $3,542,007 or
6.19% over the total gross loans at December 31, 1997, as compared to an
increase of $1,590,506, or 3.22%, for the same three month period ended
March 31, 1997. Management believes that the increase in loan growth was due
primarily to an increase in lending personnel. Additionally, management
believes that the relatively small increase in loan growth during the first
three months of 1997 was due primarily to an increase in competition from other
financial institutions which had moved into the Bank's market area. During the
quarter ended March 31, 1998, CLC operated from three relatively small offices.
Consequently, its gross loans, totaling approximately $1,502,881 at March 31,
1998, or 2.47% of the Company's gross loans, do not significantly affect the
financial data analyzed. Although management anticipates growth in CLC's total
loans, management anticipates that CLC will have only a minimal impact on the
Company's balance sheet. Management anticipates some continued increase in the
Bank's loan growth for the remainder of 1998 primarily due to its increased
marketing efforts which are designed to attract new borrowers in its primary
lending area and to its establishment of a loan production office in Cobb
County, Georgia in April 1998 and its planned establishment of a full service
branch in third quarter 1998. 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 three months of 1998 was
funded primarily through a decrease in investment securities held available for
sale. Investment securities decreased by $4,221,447, or 18.34%, from
$23,021,011 at December 31, 1997, to $18,799,564 at March 31, 1998. The Bank
borrowed $2,500,000 in March 1998 on its line of credit with the Federal Home
Loan Bank in order to pursue investment opportunities with the use of these
funds. As of March 31, 1988, the funds were invested in a security purchased
under a resell agreement. Total deposits during the first three months of 1998
decreased approximately $2,179,371 or 2.66%, from $81,981,103 at December 31,
1997 to $79,801,732 at March 31, 1998. This decrease in total deposits was due
primarily to changes in deposit balances maintained by some of the Bank's large
depositors. 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 three months of 1998 was $1,983,767,
representing an increase of $188,172, or 10.48% over the same period in 1997.
This increase was primarily attributable to an increase in the Company's yield
on interest-earning assets to 9.68% for the period ended March 31,
Page 7 of 12
<PAGE>
1998, as compared to 8.92% for the same period in 1997. This increase in
yield was due primarily to an increase in loans as a percentage of average
interest-earning assets for the period ended March 31, 1998 to 71.09% as
compared to 64.32% for the same period in 1997. Typically, loans are the
Company's highest yielding asset, so a shift in the mix of earning assets may
increase yield on earning assets despite little change in market rates.
Additionally, the Company holds approximately $1,972,788 or 10.49% 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 Company 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 Company's level of non-performing assets to be at an acceptable
level. The Company's non-performing assets totaled approximately $434,812, or
0.44% of the Company's total assets as of March 31, 1998, as compared to
$393,835, or 0.47% of the Company's total assets as of December 31, 1997. The
Company's non-performing assets as of March 31, 1998 are comprised of $407,240
in loans placed on non-accrual status, as compared to its non-performing assets
as of December 31, 1997, which were comprised of $392,335 in loans placed on
non-accrual status and $1,500 in property acquired through repossession. No
material loss is anticipated on non-accrual or restructured loans, therefore no
specific reserves or writedowns were considered necessary by management as of
March 31, 1998. While there are no specific reserves for the loans designated
as non-accrual and restructured by the Bank, those loans were rated as either
substandard or doubtful by the Bank=s internal rating system. A reserve is
carried in the Bank's general allowance for loan loss in an amount equal to 15%
of the balance of any loans classified as substandard and 50% of the balance of
any loans classified as doubtful.
The Bank has no accruing loans which are contractually past due ninety days
or more as of March 31, 1998, as compared to $80,591 in such delinquent loans as
of December 31, 1997. The Bank has one restructured loan with a balance of
$7,890 as of March 31, 1998, as compared to its balance of $9,890 as of December
31, 1997. CLC has delinquent loans which are contractually past due ninety days
or more totaling $84,992, as compared to $97,196 as of December 31, 1997.
Management considers the totals of delinquent loans at the Bank and CLC to be at
acceptable levels at this time; however, that factors such as a downturn in the
local economy could cause levels of delinquent and non-performing assets to
rise.
Interest Expense
- ----------------
Interest expense for the first three months of 1998 increased $46,135, or
6.47% as compared to the same period in 1997. This increase in interest expense
occurred primarily due to a $4,404,249, or 6.78%, increase in interest-bearing
deposits and other interest-bearing liabilities for the three months ended March
31, 1988 as compared to the same period in 1997. The Company continues to seek
opportunities to maintain its net interest margin (net interest income divided
by average interest-earning assets). The Company's net interest margin as of
March 31, 1998 was 5.98%, as compared to 5.20% as of March 31, 1997, primarily
due to an increase in the Company's yield on earning assets.
Page 8 of 12
<PAGE>
Other Income
- ------------
Other income increased approximately $53,879, or 17.47%, during the first three
months of 1998 as compared to the same period in 1997 primarily due to gains
collected on sales of investment securities and increased miscellaneous income
earned by the Bank. The Bank's miscellaneous income increased approximately
$20,622, or 306.33%, during the first three months of 1998 as compared to the
same period in 1997, primarily due to income derived from a mortgage loan
division which began operations in January 1998, and gains collected on the sale
of other real estate and property acquired through repossession.
Other Expenses
- --------------
Other expenses for the first three months of 1998 increased $203,176, or
20.15%, as compared to the first three months of 1997. 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 the Company, and
(iii) routine salary increases. Occupancy expense increased by approximately
$6,242, or 3.71% for the first three months of 1998 as compared to the same
period for 1997, primarily due to increased furniture and equipment expenses at
the Bank. Other operating expenses for the first three months of 1998 increased
$80,540, or 25.85% as compared to the first three months of 1997, primarily due
to increased operating costs of the Bank caused by general cost increases.
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 March 31,
1998, the Company's ratio of capital to total average assets was 9.32%, 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 1 capital. Under
applicable federal regulations and interpretations thereof, the Bank's ratio of
total capital to risk weighted assets at March 31, 1998 was 11.54%, and its
ratio of Tier 1 capital to risk weighted assets was 10.29%. Under applicable
federal regulations and interpretations thereof, the Company's ratio of total
capital to risk weighted assets at March 31, 1998 was 13.07%, and its ratio of
Tier 1 capital to risk weighted assets was 11.82%. Additionally, under federal
law, all but the most highly rated banks and bank holding companies are required
to maintain a minimum ratio of Tier 1 capital to total average assets (Tier 1
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 1 leverage ratio required for the most highly-
rated banks and bank holding companies with no plans to expand. The Bank
substantially exceeds its Tier 1 leverage ratio requirement with a Tier 1
leverage ratio of 7.25% as of March 31, 1998. The Company also substantially
exceeds its Tier 1 leverage ratio requirement with a Tier 1 leverage ratio of
8.11% as of March 31, 1998. 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 March 31, 1998, the Bank's liquidity ratio
(defined as net cash, short term assets, and marketable assets divided by net
deposits and short term liabilities) was 28.48%, as compared to 32.10% at March
31, 1997. 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.
Page 9 of 12
<PAGE>
As of March 31, 1998, $2,500,000 is outstanding under this credit facility.
Additionally, the Company has a $2,500,000 revolving credit facility with The
Bankers Bank, Atlanta, Georgia, which is intended to enhance the Company's
liquidity. As of May 5, 1998, the Company had $1,600,000 in borrowings
outstanding under this facility.
Year 2000
- ---------
The Company has a Year 2000 plan in place. This plan is necessary because
many existing computer programs use only two digits, rather than four digits,
to identify a year. Such programs were designed and developed without
considering the impact of the upcoming change in the century. Since many
computer applications could fail or create erroneous results by or at Year 2000
if these problems are not corrected, management has implemented a plan to ensure
that the Company and each of its subsidiaries is prepared to continue operations
without interruption through the upcoming change in the century. Year 2000
issues relating to the Company's businesses, its operations, and its
relationships with customers, suppliers, and other constituents are reviewed by
a committee consisting of management and operations and technical staff. Goals
of the Company's plan include evaluation, of systems, prioritization of
necessary updates or replacements, responsibility assignments, and establishment
of a timeline for review, implementation, and testing. Management believes
that, to date, the goals of the plan have been met, and the testing phase is in
process. Management does not believe that Year 2000 will have a significant
impact on the Company. However, there can be no assurances that the Company's
Year 2000 plan will be able to successfully address each of the ways in which
the Year 2000 problem may impact the Company, since the Company has limited
ability to monitor or influence the Year 2000 preparedness of its customers,
borrowers, vendors, and others upon whom it relies in transacting business.
Management does not anticipate that the implementation of the Company's Year
2000 plan will entail any material capital expenditures.
Page 10 of 12
<PAGE>
COMMUNITY TRUST FINANCIAL SERVICES CORPORATION
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
-------------------------
Not applicable
Item 2. Changes in Securities and Use of Proceeds
-------------------------------------------------
Not applicable
Item 3. Defaults upon Senior Securities
---------------------------------------
Not applicable
Item 4. Submission of Matters to a Vote of Security Holders
-----------------------------------------------------------
Not applicable
Item 5. Other Information
-------------------------
Not applicable
Item 6.a Exhibits
-----------------
Exhibit
Number Description
------ -----------
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
----------------------------
No reports on Form 8-K were file during the period ended March 31, 1998.
Page 11 of 12
<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: May 13, 1998 /s/Ronnie L. Austin
-------------------
Ronnie L. Austin, President
and Chief Executive Officer
(Duly Authorized Officer)
DATE: May 13, 1998 /s/Angel J. Byrd
----------------
Angel J. Byrd
(Principal Accounting Officer)
Page 12 of 12
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