<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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 September 30, 1996
OR
--- TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period from to
------------------- ------------------
Commission file number 33-736564
D/W BANKSHARES, INC.
--------------------
(Exact name of registrant as specified in its charter)
GEORGIA 58-2079621
------- ----------
( State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
401 South Thornton Avenue, Dalton, Georgia 30720
-------------------------------------------------
(Address of principal executive offices)
706-226-1500
------------
(Issuer's telephone number)
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.
X Yes No
- --- ---
The number of shares outstanding of registrant's common stock par value $1.00
per share at September 30, 1996 was 700,836 shares.
Page 1
<PAGE>
D/W Bankshares, Inc.
Quarterly Report on Form 10-QSB
For the Quarter Ended September 30, 1996
Index
Page No.
Part I. Financial Information
Item 1. Consolidated Financial Statements (unaudited)
Consolidated Balance Sheets at September 30, 1996 and
December 31, 1995 3
Consolidated Statements of Earnings (unaudited) for the
three months and the nine months ended September 30, 1996
and 1995 4
Consolidated Statements of Cash Flows (unaudited) for
the nine months ended September 30, 1996 and 1995 5
Notes to Consolidated Financial Statements (unaudited) 6
Item 2. Management's Discussion and Analysis 7
Part II Other Information
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 9
Item 6. Exhibits and Reports on Form 8-K 9
Item 7. Signatures 10
Page 2
<PAGE>
D/W BANKSHARES, INC
Consolidated Balance Sheets
(Unaudited)
<TABLE>
<CAPTION>
ASSETS
September 30, 1996 December 31, 1995
----------------- -----------------
<S> <C> <C>
Cash and due from banks $ 7,264,499 $ 9,900,526
Federal funds sold 6,280,000 12,080,000
-------------- --------------
Cash and cash equivalents 13,544,499 21,980,526
Securities available for sale, approximate market value 30,713,510 25,631,762
Securities held to maturity, amortized cost 5,814,456 6,764,930
Loans, net 74,620,596 78,117,503
Premises and equipment, net 3,824,731 3,330,760
Accrued interest receivable 1,089,817 1,155,537
Other assets 808,827 870,475
-------------- --------------
$ 130,416,436 $ 137,851,493
-------------- --------------
-------------- --------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Demand $ 16,440,353 $ 17,958,950
Interest-bearing demand 38,136,864 48,097,004
Savings 5,746,249 5,398,971
Time 38,039,811 37,931,467
Time, $100,000 and over 17,766,152 15,781,550
-------------- --------------
Total deposits 116,129,429 125,167,942
Accrued interest payable 1,538,751 1,305,187
Other liabilities 396,057 108,967
Subordinated debentures 1,425,000 1,425,000
-------------- --------------
Total liabilities 119,489,237 128,007,096
-------------- --------------
Stockholders' equity:
Common stock, $1 par value 700,836 700,836
Additional paid-in capital 5,649,581 5,649,581
Retained earnings 4,639,239 3,426,511
Net unrealized gains (losses) on
securities available for sale,
net of tax (62,457) 67,469
-------------- --------------
Total stockholders' equity 10,927,199 9,844,397
-------------- --------------
$ 130,416,436 $ 137,851,493
-------------- --------------
-------------- --------------
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
D/W BANKSHARES, INC.
Consolidated Statements of Earnings
(Unaudited)
<TABLE>
<CAPTION>
THREE THREE
NINE MONTHS NINE MONTHS MONTHS MONTHS
ENDED ENDED ENDED ENDED
September 30, 1996 September 30, 1995 September 30, 1996 September 30, 1995
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Interest income:
Loans $ 6,026,675 $ 5,442,489 $ 2,034,967 $ 1,913,431
Federal funds sold 399,987 332,400 122,224 88,710
Investment securities 1,572,755 1,265,686 544,247 465,672
--------- --------- --------- ---------
Total interest income 7,999,417 7,040,575 2,701,438 2,467,813
Interest expense:
Deposits 3,688,387 3,218,395 1,220,313 1,186,026
Other 74,813 50,211 49,938 24,938
--------- --------- --------- ---------
Total interest expense 3,763,200 3,268,606 1,270,251 1,210,964
--------- --------- --------- ---------
Net interest income 4,236,217 3,771,969 1,431,187 1,256,849
Provision for Loan Losses 205,000 398,910 5,000 221,560
--------- --------- --------- ---------
Net interest income after
provision for loan losses 4,031,217 3,373,059 1,426,187 1,035,289
Other income 770,458 1,007,158 244,127 361,945
Other expenses:
Salaries and employee benefits 1,661,736 1,481,063 555,109 515,527
Occupancy 531,639 404,808 179,133 129,439
Other 791,039 762,799 318,726 249,615
--------- --------- --------- ---------
Total other expenses 2,984,414 2,648,670 1,052,968 894,581
--------- --------- --------- ---------
Earnings before income taxes 1,817,261 1,731,547 617,346 502,653
Income taxes 604,533 627,700 214,906 187,900
--------- --------- --------- ---------
Net earnings $ 1,212,728 $ 1,103,847 $ 402,440 $ 314,753
--------- --------- --------- ---------
--------- --------- --------- ---------
Net earnings per common share $ 1.73 $ 1.58 $ 0.57 $ 0.45
Weighted average number of shares 700,836 700,149 700,836 700,836
--------- --------- --------- ---------
</TABLE>
See accompanying notes to the consolidated financial statements.
4
<PAGE>
D/W BANKSHARES, INC.
Consolidated Statements of Cash Flows
Nine Months Ended September 30, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 1,212,728 $ 1,103,847
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation, amortization and accretion 329,375 33,300
Provision for loan losses 205,000 398,910
Loss on sales of securities available
for sale - 18,793
Change in:
Interest receivable 65,720 (286,739)
Interest payable 233,564 678,775
Other assets 134,613 (164,675)
Other liabilities 287,090 178,096
--------- ---------
Net cash provided by operating activities 2,468,090 1,960,307
--------- ---------
Cash flows from investing activities:
Proceeds from sales of securities available
for sale - 3,328,219
Proceeds from maturities of securities
available for sale 14,508,396 3,250,000
Purchases of securities available for sale (21,343,059) (18,028,425)
Proceeds from maturities of securities
held to maturity 2,450,000 500,000
Purchases of securities held to maturity - -
Net change in loans 3,291,907 (9,865,262)
Purchases of premises and equipment (772,848) (458,248)
--------- ---------
Net cash used by investing activities (1,865,604) (21,273,716)
--------- ----------
Cash flows from financing activities:
Net change in deposits (9,038,513) 14,364,120
Repayments of capital lease obligations - (16,263)
Proceeds from sale of subordinated debentures - 1,425,000
Proceeds from exercise of stock options - 37,496
------
Net cash provided (used) by financing activities (9,038,513) 15,810,353
--------- ----------
--------- ----------
Net increase(decrease) in cash and cash equivalents (8,436,027) (3,503,056)
Cash and cash equivalents at beginning of period 21,980,526 13,450,932
---------- ----------
---------- ----------
Cash and cash equivalents at end of period $ 13,544,499 $ 9,947,876
---------- ----------
---------- ----------
</TABLE>
See accompanying notes to the consolidated financial statements.
5
<PAGE>
D/W BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
BASIS OF PRESENTATION
On April 8, 1994, Dalton/Whitfield Bank & Trust (the "Bank") merged with Interim
D/W Corporation ("Interim"), a wholly-owned subsidiary of D/W Bankshares, Inc.
(the "Company"). As a result of this merger, the Bank operates as a subsidiary
of the Company. The September 30, 1996 financial statements have been
consolidated to include the accounts of the Company and the Bank. All
significant accounts between the Company and the Bank have been eliminated in
consolidation.
The consolidated financial statements contained in this report are unaudited but
reflect all adjustments which are, in the opinion of management, necessary to
present fairly the Company's financial position and results of operations for
the periods included herein. All such adjustments are of a normal recurring
nature.
EARNINGS PER SHARE
Earnings per share amounts are based on the weighted average number of shares
outstanding during the period.
BUSINESS COMBINATION
On September 12, 1996, the Company's board of directors approved a merger
agreement whereby the Company would be merged into Colonial BancGroup, Inc.
("Colonial") and the Bank would be merged into Colonial's Georgia subsidiary,
Colonial Bank, headquartered in Atlanta, Georgia. For the merger to be
effected, the Company's stockholders, the Federal Reserve Bank of Atlanta and
the FDIC must approve the transaction, and Colonial must complete a public
registration of its shares to be tendered with the merger.
Page 6
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996.
The following narrative should be read in conjunction with the Company's
consolidated financial statements and the notes thereto.
FINANCIAL CONDITION
Total assets decreased $7,435,057, or 5.39%, over the December 31, 1995 balance.
The investment portfolio increased $4,131,274 or 12.75%, while the loan
portfolio decreased $3,496,907, or 4.48%, during the nine months. Cash and
cash equivalents decreased $8,436,027 or 38.38%.
Total deposits decreased $9,038,513 or 7.22%, during the first nine months of
1996. Deposit customers consist primarily of individuals, small-to-medium
sized businesses and local city and county public entities.
$205,000 was added to the allowance for loan losses during the first nine months
of 1996. The allowance for loan losses was $1,433,231 and $1,291,093, or 1.88%
and 1.63% of total loans at September 30, 1996 and December 31, 1995
respectively. Loans past due 30 days or more represented 2.44% and 1.20% of
total loans at September 30, 1996 and December 31, 1995 respectively.
LIQUIDITY
The Company maintains certain levels of liquid assets in order to meet demand
from loan commitments, customer's deposit account withdrawals and other
obligations. Primary sources of liquidity are short-term investments carried in
the available-for-sale portfolio and federal funds sold. The liquidity ratio
at September 30, 1996 was 34.81% which management considers to be adequate to
meet all current and projected needs.
CAPITAL
As of September 30, 1996, stockholders' equity was $10,927,199, or 8.40% of
total assets. The Company's common stock had a book value of $15.59 based on
outstanding shares of 700,836. There are approximately 471 shareholders of
record. The equity to assets ratio of the Bank as of September 30, 1996 was
10.27%. The Company and the Bank exceed all regulatory capital requirements.
Page 7
<PAGE>
RESULTS OF OPERATIONS
Net income for the three months ended September 30, 1996 was $402,440 as
compared to $314,753 for the three months ended September 30, 1995.
Net income for the nine months ended September 30, 1996 was $1,212,728 as
compared to $1,103,847 for the nine months ended September 30, 1995.
Net interest income is affected by the differences between the interest rates
received on interest-earning assets and the interest rates paid on interest-
bearing liabilities, and the volume of interest-earning assets and interest-
bearing liabilities. On the following table is a comparison of the average
balances, interest received and paid, and the average rate for the nine months
ended September 30, 1996 and September 30, 1995 on the interest-earning assets
and interest-bearing liabilities of the Company.
NET INTEREST ANALYSIS
AVERAGE BALANCE INTEREST AVERAGE YIELD
($000) ($000)
---------------------------------------------------------
9/30/96 9/30/95 9/30/96 9/30/95 9/30/96 9/30/95
LOANS 78,630 74,568 6,027 5,442 10.22% 9.73%
INVESTMENTS 47,662 36,820 1,973 1,598 5.52% 5.79%
(INC. FED FUNDS)
INTEREST-BEARING 125,892 111,388 8,000 7,040 8.47% 8.43%
ASSETS
INTEREST-BEARING 109,527 94,628 3,763 3,269 4.58% 4.61%
LIABILITIES
INTEREST SPREAD 3.89% 3.82%
NET INTEREST MARGIN/ 4.49% 4.51%
EARNING ASSETS
Non-interest income decreased $236,700, or 23.50%, over the first nine months of
1995. Non-interest expenses increased $335,744, or 12.68%, over the first nine
months of 1995. The largest component of non-interest expenses was salaries and
employee benefits, which increased $180,673, or 12.20%. The increase was due to
additional staff required for the opening of a new branch.
Page 8
<PAGE>
PART II OTHER INFORMATION
Item 1. Legal Proceedings - None
Item 2. Change in Securities - None
Item 3. Defaults upon Senior Securities - None
Item 4. Submission of matters to a vote of Security Holders - None
Item 5. Other Information - On September 12, 1996, the Company entered
into an Agreement and Plan of Merger (the "Agreement") with
Colonial BancGroup, Inc. ("Colonial"). Pursuant to the Agreement,
the Company would be merged into Colonial and the Bank would be
merged into Colonial's Georgia subsidiary, Colonial Bank.
Item 6. Exhibits and Reports on Form 8-K
A. The Agreement and Plan of Merger by and between the Company
and Colonial BancGroup, Inc. filed as Appendix A to the Form
S- 4, Registration No. 333-15575 filed by Colonial BancGroup,
Inc. is incorporated herein by reference.
B. Reports on Form 8-K
On August 12, 1996 a Form 8-K was filed disclosing pursuant to
ITEM 5. OTHER INFORMATION, the proposed acquisition of the
Company by Colonial.
Page 9
<PAGE>
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.
D/W BANKSHARES, INC.
(Registrant)
DATE: November 13, 1996 BY:
------------------ -----------------------
Charles Y. Allgood
President & Chief
Executive Officer
DATE: November 13, 1996 BY:
------------------ ----------------------
Rita B. Gray
Secretary/Treasurer
Page 10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET (UNAUDITED) AND CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED) FOUND ON PAGES 3 & 4 OF D/W BANKSHARES, INC. 10-Q FOR QUARTER ENDED
SEPT. 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 7,264
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 6,280
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 30,714
<INVESTMENTS-CARRYING> 5,814
<INVESTMENTS-MARKET> 0
<LOANS> 74,621
<ALLOWANCE> 1,433
<TOTAL-ASSETS> 130,416
<DEPOSITS> 116,129
<SHORT-TERM> 0
<LIABILITIES-OTHER> 3,360
<LONG-TERM> 0
0
0
<COMMON> 701
<OTHER-SE> 10,266
<TOTAL-LIABILITIES-AND-EQUITY> 130,416
<INTEREST-LOAN> 6,027
<INTEREST-INVEST> 1,973
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 8,000
<INTEREST-DEPOSIT> 3,688
<INTEREST-EXPENSE> 3,763
<INTEREST-INCOME-NET> 4,236
<LOAN-LOSSES> 205
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 2,984
<INCOME-PRETAX> 1,817
<INCOME-PRE-EXTRAORDINARY> 1,817
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,213
<EPS-PRIMARY> 1.73
<EPS-DILUTED> 0
<YIELD-ACTUAL> 8.47
<LOANS-NON> 0
<LOANS-PAST> 237
<LOANS-TROUBLED> 276
<LOANS-PROBLEM> 2,077
<ALLOWANCE-OPEN> 1,291
<CHARGE-OFFS> 81
<RECOVERIES> 18
<ALLOWANCE-CLOSE> 1,433
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 1,433
</TABLE>
