<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 June 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 June 30, 1996 was 700,836 shares.
Page 1
<PAGE>
D/W Bankshares, Inc.
Quarterly Report on Form 10-QSB
For the Quarter Ended June 30, 1996
INDEX
Page No.
-------
Part I. Financial Information
Item 1. Consolidated Financial Statements (unaudited)
Consolidated Balance Sheets at June 30, 1996 and
December 31, 1995 3
Consolidated Statements of Earnings (unaudited) for the
three months and the six months ended June 30, 1996
and 1995 4
Consolidated Statements of Cash Flows (unaudited)
for the six months ended June 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
June 30, 1996 December 31, 1995
------------- -----------------
<S> <C> <C>
Cash and due from banks $ 5,130,432 $ 9,900,526
Federal funds sold 11,650,000 12,080,000
---------------- ----------------
Cash and cash equivalents 16,780,432 21,980,526
Securities avialable for sale, approximate market value 31,093,402 25,631,762
Securities held to maturity, amortized cost 6,514,616 6,764,930
Loans, net 79,049,197 78,117,503
Premises and equipment, net 3,822,188 3,330,760
Accrued interest receivable 1,266,851 1,155,537
Other assets 1,154,526 870,475
---------------- ----------------
$ 139,681,212 $ 137,851,493
---------------- ----------------
---------------- ----------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Demand $ 15,645,856 $ 17,958,950
Interest-bearing demand 46,826,245 48,097,004
Savings 5,984,232 5,398,971
Time 40,540,441 37,931,467
Time, $100,000 and over 17,094,706 15,781,550
---------------- ----------------
Total deposits 126,091,480 125,167,942
Accrued interest payable 1,379,728 1,305,187
Other liabilities 344,896 108,967
Subordinated debentures 1,425,000 1,425,000
---------------- ----------------
Total liabilities 129,241,104 128,007,096
---------------- ----------------
Stockholders' equity:
Common stock, $1 par value 700,836 700,836
Additional paid-in capital 5,649,581 5,649,581
Retained earnings 4,211,799 3,426,511
Net unrealized gains (losses) on
securities available for sale,
net of tax (122,108) 67,469
---------------- ----------------
Total stockholders' equity 10,440,108 9,844,397
---------------- ----------------
$ 139,681,212 $ 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
SIX MONTHS SIX MONTHS MONTHS MONTHS
ENDED ENDED ENDED ENDED
June 30, 1996 June 30, 1995 June 30, 1996 June 30,1995
------------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
Interest income:
Loans $ 3,991,708 $ 3,529,058 $ 1,996,294 $ 1,843,237
Federal funds sold 277,763 243,690 138,354 136,000
Investment securities 1,028,508 800,014 505,171 436,345
--------- --------- --------- ---------
Total interest income 5,297,979 4,572,762 2,639,819 2,415,582
Interest expense:
Deposits 2,468,074 2,032,369 1,238,238 1,112,829
Other 49,875 25,273 24,937 25,026
--------- --------- --------- ---------
Total interest expense 2,517,949 2,057,642 1,263,175 1,137,855
--------- --------- --------- ---------
Net interest income 2,780,030 2,515,120 1,376,644 1,277,727
Provision for Loan Losses 200,000 177,350 95,000 96,810
---------- --------- --------- ---------
Net interest income after
provision for loan losses 2,580,030 2,337,770 1,281,644 1,180,917
Other income 526,331 645,213 260,970 331,957
Other expenses:
Salaries and employee benefits 1,106,627 965,536 548,190 486,145
Occupancy 352,506 275,369 174,228 139,400
Other 472,313 513,184 267,471 263,530
--------- ------- ------- -------
Total other expenses 1,931,446 1,754,089 989,889 889,075
--------- --------- ------- -------
Earnings before income taxes 1,174,915 1,228,894 552,725 623,799
Income taxes 389,627 439,800 186,323 219,800
--------- ------- ------- -------
Net earnings $ 785,288 $ 789,094 $ 366,402 $ 403,999
--------- ------- ------- -------
--------- ------- ------- -------
Net earnings per common share $ 1.12 $ 1.13 $ 0.52 $ 0.58
Weighted average number of shares 700,836 699,805 700,836 700,836
--------- ------- ------- -------
--------- ------- ------- -------
</TABLE>
See accompanying notes to the consolidated financial statements.
4
<PAGE>
D/W BANKSHARES, INC.
Consolidated Statements of Cash Flows
Six Months ended June 30, 1996 and 1995
(Unaudited)
1996 1995
---- ----
Cash flows from operating activities:
Net Earnings $ 785,288 $ 789,094
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation, amortization and accretion 215,522 25,067
Provision for loan losses 200,000 177,350
Loss on sales of securities available
for sale - 18,793
Change in:
Interest receivable (111,314) (272,483)
Interest payable 74,541 311,044
Other assets (172,245) (129,030)
Other liabilities 235,929 121,636
------- -------
Net cash provided by operating activities 1,227,721 1,041,471
--------- ---------
Cash flows from investing activities:
Proceeds from sales of securities available
for sale - 3,328,219
Proceeds from maturities of securities
available for sale 8,008,396 -
Purchases of securities available for sale (14,802,742) (12,492,654)
Proceeds from maturities of securities
held to maturity 1,250,000 -
Purchases of securities held to maturity - -
Net change in loans (1,131,694) (7,988,586)
Purchases of premises and equipment (675,313) (79,341)
------- -------
Net cash used by investing activities (7,351,353) (17,232,362)
--------- ----------
Cash flows from financing activities:
Net change in deposits 923,538 17,563,071
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 by financing activities 923,538 19,009,304
---------- ---------
Net increase(decrease) in cash and cash equivalents (5,200,094) 2,818,413
--------- ---------
Cash and cash equivalents at beginning of period 21,980,526 13,450,932
---------- ----------
Cash and cash equivalents at end of period $ 16,780,432 $ 16,269,345
---------- ----------
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 June 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.
Page 6
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 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 increased $1,829,719, or 1.33%, over the December 31, 1995 balance.
The investment portfolio increased $5,211,326 or 16.09%, while the loan
portfolio increased $931,694, or 1.19%, during the six months. Cash and cash
equivalents decreased $5,200,094 or 23.66%.
Total deposits increased $923,538 or .74%, during the first six months of 1996.
Deposit customers consist primarily of individuals, small-to-medium sized
businesses and local city and county public entities.
$200,000 was added to the allowance for loan losses during the first six months
of 1996. The allowance for loan losses was $1,450,761 and $1,291,093, or 1.80%
and 1.63% of total loans at June 30, 1996 and December 31, 1995 respectively.
Loans past due 30 days or more represented 2.85% and 1.20% of total loans at
June 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 June 30, 1996 was 30.00% which management considers to be adequate to meet
all current and projected needs.
CAPITAL
As of June 30, 1996, stockholders' equity was $10,440,108, or 7.47% of total
assets. The Company's common stock had a book value of $14.90 based on
outstanding shares of 700,836. There are approximately 462 shareholders of
record. The equity to assets ratio of the Bank as of June 30, 1996 was 8.89%.
The Company and the Bank exceed all regulatory capital requirements.
Page 7
<PAGE>
RESULTS OF OPERATIONS
Net income for the three months ended June 30, 1996 was $366,402 as compared to
$403,999 for the three months ended June 30, 1995.
Net income for the six months ended June 30, 1996 was $785,288 as compared to
$789,094 for the six months ended June 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 six months
ended June 30, 1996 and June 30, 1995 on the interest-earning assets and
interest-bearing liabilities of the Bank.
<TABLE>
<CAPTION>
NET INTEREST ANALYSIS
AVERAGE BALANCE INTEREST AVERAGE YIELD
($000) ($000)
-------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
6/30/96 6/30/95 6/30/96 6/30/95 6/30/96 6/30/95
LOANS 78,437 72,840 3,992 3,529 10.18% 9.69%
INVESTMENTS 47,209 35,203 1,306 1,043 5.53% 5.93%
(Inc. Fed Funds)
INTEREST-BEARING 125,646 108,043 5,298 4,572 8.43% 8.45%
ASSETS
INTEREST-BEARING 108,361 92,225 2,518 2,058 4.65% 4.46%
LIABILITIES
INTEREST SPREAD 3.78% 3.99%
NET INTEREST MARGIN/ 4.48% 4.72%
EARNING ASSETS
</TABLE>
Non-interest income decreased $118,882, or 18.43%, over the first six months of
1995. Non-interest expenses increased $177,357, or 10.11%, over the first six
months of 1995. The largest component of non-interest expenses was salaries and
employee benefits, which increased $141,091, or 14.61%. The increase was due to
additional staff required for the increased volume of deposit and loan activity
and the expansion of the residential mortgage department on July 1, 1995.
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 - None
Item 6. Exhibits and Reports on Form 8-K - None
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: August 14, 1996 BY:
--------------- ----------------------------
Charles Y. Allgood
President & Chief
Executive Officer
DATE: August 14, 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 SHEETS (UNAUDITED) AND CONSOLIDATED STATEMENTS OF
OPERATIONS (UNAUDITED) FOUND ON PAGES 3 AND 4 OF D/W BANKSHARES, I 10-Q FOR
QUARTER ENDED JUNE 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 5,130
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 11,650
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 31,093
<INVESTMENTS-CARRYING> 6,515
<INVESTMENTS-MARKET> 0
<LOANS> 80,500
<ALLOWANCE> 1,451
<TOTAL-ASSETS> 139,681
<DEPOSITS> 126,091
<SHORT-TERM> 0
<LIABILITIES-OTHER> 3,150
<LONG-TERM> 0
0
0
<COMMON> 701
<OTHER-SE> 9,739
<TOTAL-LIABILITIES-AND-EQUITY> 139,681
<INTEREST-LOAN> 3,992
<INTEREST-INVEST> 1,306
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 5,298
<INTEREST-DEPOSIT> 2,468
<INTEREST-EXPENSE> 2,518
<INTEREST-INCOME-NET> 2,780
<LOAN-LOSSES> 200
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 1,931
<INCOME-PRETAX> 1,175
<INCOME-PRE-EXTRAORDINARY> 1,175
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 785
<EPS-PRIMARY> 1.12
<EPS-DILUTED> 0
<YIELD-ACTUAL> 8.43
<LOANS-NON> 0
<LOANS-PAST> 198
<LOANS-TROUBLED> 109
<LOANS-PROBLEM> 1,869
<ALLOWANCE-OPEN> 1,291
<CHARGE-OFFS> 50
<RECOVERIES> 9
<ALLOWANCE-CLOSE> 1,451
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 1,451
</TABLE>
