<PAGE>
UNITED STATES
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 September 30, 1998
-----------------------------------------------
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
For the Transition Period from ______________________ to ______________________
Commission File Number 33-80076
________________________________________________________
SNB BANCSHARES, INC.
- -------------------------------------------------------------------------------
(Name of Small Business Issuer in its Charter)
GEORGIA 58-2107916
- --------------------------------------- -----------------------------------
State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization Identification No.)
2918 RIVERSIDE DRIVE, MACON, GEORGIA 31204
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Issuer's Telephone Number (912) 722-6200
------------------------------------------------------
SAME AS ABOVE
- --------------------------------------------------------------------------------
(Former Name, Former Address and Former Fiscal Year, if Changed
Since Last Report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. X Yes 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 a court. Yes No
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
3,209,744 Shares of $1.00 par value common stock as of September 30, 1998
- --------------------------------------------------------------------------------
Transitional Small Business Disclosure Format (Check One): Yes No
--- ---
<PAGE>
SNB BANCSHARES, INC. AND SUBSIDIARIES
INDEX
PAGE
NUMBER
PART I Financial Information
Condensed Consolidated Balance Sheet ...............................1
Condensed Consolidated Statements of Income and
Comprehensive Income................................................2
Condensed Consolidated Statements of Cash Flows.....................4
Notes to Condensed Consolidated Financial Statements................5
Management's Discussion and Analysis of Financial
Condition and Results of Operations...............................12
PART II Other Information
ITEM 2 Changes in Securities........................................18
ITEM 4 Submission of Matters to a Vote of Security Holders..........18
ITEM 6 Exhibits and Reports on Form 8-K.............................20
<PAGE>
PART I, ITEM 1
FINANCIAL INFORMATION
SNB BANCSHARES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1998
(UNAUDITED)
($ IN THOUSANDS, EXCEPT PER SHARE AMOUNT)
ASSETS
CASH AND DUE FROM BANKS $ 13,642
--------
FEDERAL FUNDS SOLD 2,875
--------
INVESTMENTS SECURITIES 36,244
--------
LOANS 169,720
--------
PREMISES AND EQUIPMENT 6,940
--------
OTHER ASSETS 3,776
--------
TOTAL ASSETS $233,197
========
LIABILITIES AND STOCKHOLDERS' EQUITY
DEPOSITS $195,247
--------
BORROWED MONEY 10,343
--------
OTHER LIABILITIES 2,362
--------
$207,952
STOCKHOLDERS' EQUITY
Common Stock, Par Value $1 Per Share; Authorized
10,000 Shares; Issued 3,210 Shares 3,210
Paid-In Capital 12,306
Retained Earnings 9,464
Net Unrealized Gain on Securities Available
for Sale, Net of Tax 265
--------
25,245
--------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $233,197
========
The accompanying notes are an integral part of this condensed consolidated
balance sheet.
-1-
<PAGE>
PART I, ITEM 1 (CONTINUED)
FINANCIAL INFORMATION
<TABLE>
<CAPTION>
SNB BANCSHARES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED SEPTEMBER 30
(UNAUDITED)
($ IN THOUSANDS, EXCEPT PER SHARE AND SHARE AMOUNTS)
1998 1997
-------------- --------------
<S> <C> <C>
INTEREST INCOME $4,493 $4,363
INTEREST EXPENSE 2,057 1,900
-------------- --------------
NET INTEREST INCOME 2,436 2,463
PROVISION FOR LOAN LOSSES 198 207
-------------- --------------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 2,238 2,256
NONINTEREST INCOME 886 497
NONINTEREST EXPENSE 2,181 1,765
-------------- --------------
INCOME BEFORE INCOME TAXES 943 988
INCOME TAXES 344 337
-------------- --------------
NET INCOME 599 651
OTHER COMPREHENSIVE INCOME, NET OF INCOME TAX
Unrealized Holding Gains 164 14
-------------- --------------
COMPREHENSIVE INCOME $763 $665
============== ==============
BASIC EARNINGS PER SHARE $0.19 $0.22
============== ==============
DILUTED EARNINGS PER SHARE $0.18 $0.20
============== ==============
WEIGHTED AVERAGE COMMON AND COMMON EQUIVALENT
SHARES OUTSTANDING 3,155,500 2,948,306
============== ==============
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
-2-
<PAGE>
PART I, ITEM 1 (CONTINUED)
FINANCIAL INFORMATION
SNB BANCSHARES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30
(UNAUDITED)
($ IN THOUSANDS, EXCEPT PER SHARE AND SHARE AMOUNTS)
1998 1997
---------- ----------
INTEREST INCOME $ 13,520 $ 12,600
INTEREST EXPENSE 5,856 5,444
---------- ----------
NET INTEREST INCOME 7,664 7,156
PROVISION FOR LOAN LOSSES 466 399
---------- ----------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 7,198 6,757
NONINTEREST INCOME 2,087 1,281
NONINTEREST EXPENSE 6,234 5,196
---------- ----------
INCOME BEFORE INCOME TAXES 3,051 2,842
INCOME TAXES 1,046 959
---------- ----------
NET INCOME 2,005 1,883
OTHER COMPREHENSIVE INCOME, NET OF INCOME TAX
Unrealized Holding Gains 195 32
---------- ----------
COMPREHENSIVE INCOME $ 2,200 $ 1,915
========== ==========
BASIC EARNINGS PER SHARE $ 0.64 $ 0.64
========== ==========
DILUTED EARNINGS PER SHARE $ 0.60 $ 0.58
========== ==========
WEIGHTED AVERAGE COMMON AND COMMON EQUIVALENT
SHARES OUTSTANDING 3,134,704 2,947,551
========== ==========
The accompanying notes are an integral part of these condensed consolidated
financial statements.
-3-
<PAGE>
PART I, ITEM 1 (CONTINUED)
FINANCIAL INFORMATION
SNB BANCSHARES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30
(UNAUDITED)
($ IN THOUSANDS)
1998 1997
-------- --------
CASH PROVIDED BY OPERATIONS $ 3,157 $ 3,246
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Net Sale of Investment Securities
Available for Sale 4,160 10,624
Net Sale of Investment Securities
Held to Maturity 1,092 422
Loans to Customers (26,912) (17,214)
Purchase of Premises and Equipment (1,334) (1,724)
Other Real Estate and Repossessions 632 127
-------- --------
(22,362) (7,765)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Interest-Bearing Customer Deposits 16,358 9,791
Noninterest-Bearing Customer Deposits (9,918) (8,512)
Demand Note to the U.S. Treasury (238) 119
Issuance of Common Stock 798 416
Dividends Paid (504) (363)
Federal Funds Purchased 6,263 483
(Repayments) Proceeds on Other Borrowed Money 1,670 (2,051)
-------- --------
14,429 (117)
-------- --------
NET DECREASE IN CASH AND CASH EQUIVALENTS (4,776) (4,636)
CASH AND CASH EQUIVALENTS, BEGINNING 21,293 25,582
-------- --------
CASH AND CASH EQUIVALENTS, ENDING $ 16,517 $ 20,946
======== ========
The accompanying notes are an integral part of these condensed consolidated
financial statements.
-4-
<PAGE>
PART I, ITEM 1 (CONTINUED)
FINANCIAL INFORMATION
SNB BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) BASIS OF PRESENTATION
The consolidated financial statements include SNB Bancshares, Inc. (the Company)
and its wholly-owned subsidiaries, Security National Bank located in Macon,
Georgia and Crossroads Bank of Georgia, Inc. headquartered in Perry, Georgia.
All intercompany accounts have been eliminated in consolidation.
On August 7, 1998, the Company completed an agreement to merge with Crossroads
Bancshares of Georgia, Inc. and its wholly-owned subsidiary, Crossroads Bank,
after obtaining the necessary regulatory and stockholder approvals. Crossroads
Bank has three offices in the middle Georgia area and listed assets, loans and
deposits of approximately $66 million, $48 million and $59 million,
respectively. The merger is being accounted for utilizing the pooling-of-
interests method. All prior periods have been restated to reflect the merger.
In June 1997, FASB issued Statement No. 130, Reporting Comprehensive Income.
The new statement is effective for periods beginning after December 15, 1997 and
requires that all changes in equity during a period from transactions and events
from nonowner sources be reported as other comprehensive income in the financial
statements and related notes. SNB Bancshares adopted SFAS 130 on January 1,
1998. Prior years have been restated to conform with the new requirements.
For the three months ended September 30, 1998, other comprehensive income is
comprised of the following:
BEFORE TAX TAX EFFECT NET OF TAX
---------- ---------- ----------
($ in Thousands)
UNREALIZED GAIN ON SECURITIES
Gain Arising During Year $247 $84 $163
Reclassification Adjustment 2 1 1
---- --- ----
NET UNREALIZED GAIN $249 $85 $164
==== === ====
The financial information included herein is unaudited; however, such
information reflects all adjustments which are, in the opinion of management,
necessary to fairly state the financial position and results of operations for
the interim periods presented.
-5-
<PAGE>
PART I, ITEM 1 (CONTINUED)
FINANCIAL INFORMATION
(2) LOANS
Loans as of September 30, 1998 are comprised of the following:
($ IN
THOUSANDS)
----------
Commercial $ 41,488
Real Estate-Construction 10,947
Real Estate-Other 102,119
Installment Loans to Individuals for Personal Expenditures 17,283
--------
171,837
Allowance for Loan Losses (1,984)
Unearned Interest and Fees (133)
--------
$169,720
========
Loans are generally reported at principal amount less unearned interest and
fees. Impaired loans are recorded under Statement of Financial Accounting
Standards (SFAS) No. 114, Accounting by Creditors for Impairment of a Loan and
SFAS No. 118, Accounting by Creditors for Impairment of a Loan-Income
Recognition and Disclosures. Impaired loans are loans for which principal and
interest are unlikely to be collected in accordance with the original loan terms
and, generally, represent loans delinquent in excess of 90 days which have been
placed on nonaccrual status and for which collateral values are less than
outstanding principal and interest. Small balance, homogeneous loans are
excluded from impaired loans. Generally, interest payments received on impaired
loans are applied to principal. Upon receipt of all loan principal, additional
interest payments are recognized as interest income on the cash basis.
Other nonaccrual loans are loans for which payments of principal and interest
are considered doubtful of collection under original terms but collateral values
equal or exceed outstanding principal and interest.
(3) EARNINGS PER SHARE
Earnings per share are recorded under SFAS No. 128 as basic and fully diluted.
Basic earnings per share exclude the dilutive effects of options, warrants and
other common stock equivalents. Diluted earnings per share include the dilutive
effect of common stock equivalents. The following presents earnings per share
for the three and nine months ended September 30, 1998:
-6-
<PAGE>
PART I, ITEM 1 (CONTINUED)
FINANCIAL INFORMATION
(3) Earnings Per Share (CONTINUED)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, 1998 SEPTEMBER 30, 1998
------------------ ------------------
BASIC EARNINGS PER SHARE
Net Income Per Common Share $ 0.19 $ 0.64
Weighted Average Common Shares 3,155,500 3,134,704
DILUTED EARNINGS PER SHARE
Net Income Per Common Share $ 0.18 $ 0.60
Weighted Average Common Shares 3,355,928 3,342,994
The exercise of options was included in the diluted earnings per share
computation using the treasury stock method and assuming an average market price
for SNB Bancshares, Inc. stock of $21.9157 and $21.6411 for the three and nine
month periods, respectively. SNB's stock is quoted on the NASDAQ market under
the symbol SNBJ.
(4) ALLOWANCE FOR LOAN LOSSES
The allowance method is used in providing for losses on loans. Accordingly, all
loan losses decrease the allowance and all recoveries increase it. The
provision for loan losses is based on factors which, in management's judgment,
deserve current recognition in estimating possible loan losses. Such factors
considered by management include growth and composition of the loan portfolio,
economic conditions and the relationship of the allowance for loan losses to
outstanding loans.
An allowance for loan losses is maintained for all impaired loans. Provisions
are made for impaired loans upon changes in expected future cash flows or
estimated net realizable value of collateral. When determination is made that
impaired loans are wholly or partially uncollectible, the uncollectible portion
is charged off.
The following table presents the Company's loan loss experience on all loans for
the three months ended September 30:
-7-
<PAGE>
PART I, ITEM 1 (CONTINUED)
FINANCIAL INFORMATION
(4) ALLOWANCE FOR LOAN LOSSES (CONTINUED)
($ IN THOUSANDS)
------------------
1998 1997
------ ------
ALLOWANCE FOR LOAN LOSSES, JULY 1 $2,007 $1,860
------ ------
Charge-Offs
Commercial, Financial and Agricultural 6 11
Real Estate - Mortgage - 76
Consumer 224 58
------ ------
230 145
------ ------
Recoveries
Commercial, Financial and Agricultural - -
Real Estate - Mortgage - 6
Consumer 9 19
------ ------
9 25
------ ------
NET CHARGE-OFFS (221) (120)
------ ------
PROVISION FOR LOAN LOSSES 198 207
------ ------
ALLOWANCE FOR LOAN LOSSES, SEPTEMBER 30 $1,984 $1,947
====== ======
RATIO OF NET CHARGE-OFFS TO AVERAGE LOANS (0.14%) (0.09%)
====== ======
-8-
<PAGE>
PART I, ITEM 1 (CONTINUED)
FINANCIAL INFORMATION
(4) Allowance for Loan Losses (Continued)
The following table presents the Company's loan loss experience on all loans for
the nine months ended September 30:
<TABLE>
<CAPTION>
($ IN THOUSANDS)
-------------------------
1998 1997
------ ------
<S> <C> <C>
ALLOWANCE FOR LOAN LOSSES, JANUARY 1 $1,861 $1,760
------ ------
Charge-Offs
Commercial, Financial and Agricultural 22 132
Real Estate - Mortgage - 118
Consumer 375 128
------ ------
397 378
------ ------
Recoveries
Commercial, Financial and Agricultural 8 -
Real Estate - Mortgage - 128
Consumer 46 38
------ ------
54 166
------ ------
NET CHARGE-OFFS (343) (212)
------ ------
PROVISION FOR LOAN LOSSES 466 399
------ ------
ALLOWANCE FOR LOAN LOSSES, SEPTEMBER 30 $1,984 $1,947
====== ======
RATIO OF NET CHARGE-OFFS TO AVERAGE LOANS (0.06%) (0.16%)
====== ======
</TABLE>
(5) INVESTMENT SECURITIES
The Bank records investment securities under Statement of Financial Accounting
Standards (SFAS) No. 115, Accounting for Certain Investments in Debt and Equity
Securities. In accordance with the provisions of SFAS 115, the Bank elected to
classify securities individually as either available for sale or held to
maturity. Securities classified as held to maturity are recorded at amortized
cost. Those classified as available for sale are adjusted to market value
through a tax-effected increase or reduction in stockholders' equity.
9
<PAGE>
PART I, ITEM 1 (CONTINUED)
Financial Information
(5) INVESTMENT SECURITIES
Investment securities as of September 30, 1998 are summarized as follows:
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Securities Available for Sale Cost Gains Losses Value
--------- ---------- ---------- --------
($ in Thousands)
<S> <C> <C> <C> <C>
U.S. Treasuries $ 4,019 $ 75 $ 4,094
U.S. Government Agencies
Mortgage Backed 4,546 65 4,611
Other 18,718 131 $(19) 18,830
State, County and Municipal 3,570 148 3,718
Other 831 831
------- ---- ---- -------
$31,684 $419 $(19) $32,084
======= ==== ==== =======
Securities Held to Maturity
State, County and Municipal $ 4,160 $138 $ (1) $ 4,297
======= ==== ==== =======
</TABLE>
Unrealized holding gains, net of tax, on securities available for sale in the
amount of $265,000 have been recorded in stockholders' equity as of September
30, 1998.
(6) PREMISES AND EQUIPMENT
Premises and equipment are comprised of the following as of September 30, 1998:
<TABLE>
<CAPTION>
($ IN THOUSANDS)
-----------------
<S> <C>
Land $ 1,915
Building 3,336
Furniture, Fixtures and Equipment 3,330
Leasehold Improvements 192
Construction in Progress 634
-------
9,407
Accumulated Depreciation (2,467)
-------
Net Premises and Equipment $ 6,940
=======
</TABLE>
Depreciation charged to operations totaled $160,000 for the three months ended
September 30, 1998 and $462,000 for the nine months ended September 30, 1998.
10
<PAGE>
PART I, ITEM 1 (CONTINUED)
FINANCIAL INFORMATION
(7) STOCKHOLDERS' EQUITY
During the first and third quarters of 1998, various directors and executive
officers exercised 173,800 and 65,700 outstanding stock warrants, respectively,
at an exercise price of $3.333 per share. The exercise of warrants resulted in
an increase in common stock of $239,500 and an increase in paid-in capital of
$558,754. A summary of warrant transactions follows:
<TABLE>
<CAPTION>
ORIGINAL
WARRANTS
--------
<S> <C>
Granted 449,700
Canceled -
Exercised 318,850
-------
Outstanding, September 30, 1998 130,850
=======
Eligible to be Exercised, September 30, 1998 130,850
=======
</TABLE>
The Bank is required to maintain minimum amounts of capital to total "risk
weighted" assets, as defined by the banking regulations. As of September 30,
1998, the Bank is required to have minimum Tier 1 and Total Capital Ratios of 4
percent and 8 percent, respectively, and a leverage ratio (Tier 1 Capital to
average assets) of at least 4 percent. The Bank's actual ratios as of September
30, 1998 are as follows:
<TABLE>
<CAPTION>
ACTUAL MINIMUM
-------------- ----------------
<S> <C> <C>
Tier 1 Capital Ratio 10.62% 4.00%
Total Capital Ratio 11.79% 8.00%
Leverage Ratio 8.55% 4.00%
</TABLE>
(8) NONCASH FINANCING ACTIVITIES
Noncash investing activities for the nine months ended September 30 are as
follows:
<TABLE>
<CAPTION>
1998 1997
-------------- --------------
<S> <C> <C>
Acquisition of Real Estate through Loan Foreclosure $349,384 $457,663
======== ========
</TABLE>
11
<PAGE>
PART I, ITEM 2
Financial Information
SNB BANCSHARES, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following narrative presents management's discussion and analysis of SNB
Bancshares, Inc.'s (SNB's) financial condition and results of operations as of
and for the nine-month periods ended September 30, 1998 and 1997. The historical
financial statements of SNB are set forth elsewhere herein. This discussion
should be read in conjunction with those financial statements and the other
financial information included in this quarterly report. SNB owns and operates
Security National Bank (Security Bank) and Crossroads Bank of Georgia
(Crossroads Bank). Crossroads Bank was acquired August 7, 1998 in a business
combination accounted for as a pooling-of-interests. All prior period balances
included hereafter have been restated to give retroactive effect to the
pooling-of-interests. SNB and its wholly-owned subsidiaries are collectively
known as "the Company."
FINANCIAL CONDITION
ASSETS
The Company operates banking offices in Bibb and Houston Counties (Georgia) and
continues to generate steady growth in the midst of strong competition. Total
assets increased 13.6 percent, from $205 million at September 30, 1997 to $233
million at September 30, 1998. Since December 31, 1997, assets have increased by
7.77 percent. The majority of the asset growth is evidenced in the Company's
loan portfolio which, net of unearned income, grew 22.3 percent since September
30, 1997 and 18.0 percent since December 31, 1997, due in part to the opening of
a mortgage division and new branches.
Interest-earning assets amounted to $209 million or 90.25 percent of total
assets as of September 30, 1998, compared to $193 million or 89.62 percent as of
December 31, 1997 and $184 million or 90.77 percent of total assets as of
September 30, 1997. As of September 30, 1998, the loan portfolio amounted to
82.22 percent of interest earning assets, compared to 75.02 percent as of
December 31, 1997 and 76.15 percent as of September 30, 1997. Investment mix in
the Bank's portfolio has remained relatively unchanged since December 31, 1997.
The Company holds 88.52 percent of its portfolio in the available for sale
category which is reported at market value.
Nonperforming assets totaled $1,647,000 or 0.71 percent of total assets at
September 30, 1998 and reflect a decline of 35 basis points from September 30,
1997 when nonperforming assets totaled $1,478,000 or 1.06 percent of total
assets. Nonperforming assets are comprised, primarily, of nonperforming loans.
Nonperforming loans totaling $1,125,000 or 0.66 percent of total loans
remaining relatively unchanged from the prior year level when nonperforming
loans equaled $1,094,000 or 0.78 percent of total loans.
12
<PAGE>
PART I, ITEM 2 (CONTINUED)
Financial Information
FINANCIAL CONDITION (CONTINUED)
ASSETS (CONTINUED)
The followling table presents the Company's nonperforming asets as of September
30, 1998:
($ in
Thousands)
-------------
Impaired and Other Nonaccrual Loans $ 780
Loans Past Due 90 Days or More and Still Accruing Interest 345
Restructured Loans not Included in the Above -
------
TOTAL NONPERFORMING LOANS 1,125
Other Real Estate Owned 522
------
TOTAL NONPERFORMING ASSETS $1,647
======
The Company's investment in bank premises and equipment totaled $6,940,000 as of
September 30, 1998, compared to $6,075,000 at December 31, 1997 and $6,120,000
at September 30, 1997, representing changes of 14.24 percent and 13.40 percent,
respectively. These increases are evidences of their expanding presence in the
middle Georgia area in addition to capital expenditures related to the Company's
Year 2000 project.
Other assets equal 1.62 percent, 1.93 percent and 1.97 percent of total assets
at September 30, 1998, December 31, 1997, and September 30, 1997, respectively,
and are comprised of other real estate owned, interest receivable, prepaid
expenses and other miscellaneous assets.
LIABILITIES
Total deposits at September 30, 1998 were $195 million, increasing 3.41 percent
since December 31, 1997 and 9.58 percent since September 30, 1997. Interest-
bearing deposits equaled 83.91 percent of total deposits at September 30, 1998,
compared to 78.11 percent and 83.68 percent at December 31, 1997 and September
30, 1997, respectively. The current level represents an 11.09 percent increase
from December 31, 1997 and a 9.89 percent increase from September 30, 1997.
Again, much of this growth can be attributed to the efforts to increase
visibility in the middle Georgia area through additional branch locations and
continued use of advertising to promote the Company's community bank atmosphere,
competitive rates and personalized service.
Federal Home Loan Bank advances totaled $3,110,000 at September 30, 1998, up
136.50 percent from December 31, 1997 and September 30, 1997, respectively.
Other sources of borrowings for the Company at September 30, 1998 consisted of
federal funds purchased, demand notes with the U.S. Treasury and capital leases.
Total borrowings at September 30, 1998 increased 290.60 percent from December
31, 1997 when borrowings amounted to $2,648,000. Compared to September 30,
1997, borrowings increased 265.56 percent, from $2,829,000 to the current level
of $10,343,000.
The remainder of other liabilities consists of interest payable, accrued
expenses and various other miscellaneous liabilities.
13
<PAGE>
PART I, ITEM 2 (CONTINUED)
Financial Information
FINANCIAL CONDITION (CONTINUED)
CAPITAL RESOURCES
During the first three quarters of 1998, the Company realized an increase in
capital of $2,495,000 or 10.97 percent since December 31, 1997 due to earnings
and to the exercise of 239,500 outstanding stock warrants issued to directors
and executive officers. Since September 30, 1997, equity capital has increased
by $3,227,000 or 14.66 percent. Dividends paid to stockholders totaled $504,000
for the first nine months of 1998, compared to $363,000 for the first nine
months of 1997. Book value per share has increased from $7.45 as of September
30, 1997 to $7.86 as of September 30, 1998 as a result of continued
profitability and contributed capital. Equity capital equaled 10.83 percent of
total assets as of September 30, 1998, compared to 10.51 percent as of December
31, 1997 and 10.73 percent as of September 30, 1997. As of September 30, 1998,
the subsidiary banks were in compliance with all applicable regulatory standards
regarding capital adequacy levels.
LIQUIDITY
The Company manages its liquidity position to ensure adequate cash flow for
deposit withdrawals and credit commitments. Needs are met through loan
repayments, net interest and fee income and the sale and maturity of existing
investments. In addition, liquidity is continuously provided through the
acquisition of new deposits or the renewal of maturing deposits. As of
September 30, 1998, the percentage of total loans to deposits was 87.94,
compared to 77.21 as of December 31, 1997 and 78.78 as of September 30, 1997.
Cash and cash equivalents totaled $16,517,000, $21,293,000 and $20,946,000 as of
September 30, 1998, December 31, 1997 and September 30, 1997, respectively.
Cash provided from operations totaled $3,157,000 for the first nine months of
1998, compared to $3,246,000 for the same period in 1997. Cash used in
investing activities for the first nine months of 1998 totaled $22,362,000 and
cash provided by financing activities was $14,429,000 for the same period. Net
loans made to customers accounted for the majority of cash outflows while
customer deposits and sales of investment securities provided the majority of
cash inflows. Security and Crossroads Banks have established relationships with
their correspondent banks which will enable them to borrow additional funds as
needed. As of September 30, 1998, the Company had $10,343,000 in other borrowed
money.
The Company has an asset/liability committee which continually monitors the
relationship of interest-earning assets and interest-bearing liabilities as it
relates to the Company's goals.
RESULTS OF OPERATIONS
INTEREST INCOME AND INTEREST EXPENSE
Interest income for the nine months ended September 30, 1998 totaled $13,520,000
compared to $12,600,000 for the same period in 1997 representing an increase of
$920,000 or 7.30 percent. This increase is primarily attributable to loan
growth of 22.3 percent resulting in an increase in interest and fees on loans of
$1,046,000 or 9.9 percent. Interest on investment securities totaled $1,562,000
for the nine months of 1998, decreasing $44,000 or 2.70 percent from the same
period in 1997.
14
<PAGE>
PART I, ITEM 2 (CONTINUED)
Financial Information
RESULTS OF OPERATIONS (CONTINUED)
INTEREST INCOME AND INTEREST EXPENSE (CONTINUED)
Interest expense totaled $5,855,000 at September 30, 1998, of which 96.23
percent consisted of interest paid on customer deposits. This represents an
increase of 7.60 percent over the nine months ended September 30, 1997 when
total interest expense equaled $5,444,000.
Interest income exceeded interest expense by $7,664,000 for the nine months
ended September 30, 1998 representing an increase of $508,000 or 7.10 percent
over the prior year period ended September 30, 1997. The Company's net interest
rate margin was calculated at 5.13 percent as of September 30, 1998 compared to
5.16 percent as of September 30, 1997.
The following table presents the effective yields and costs of funds for the
nine-month periods ended September 30, 1998 and 1997:
Average Balance Sheets
<TABLE>
<CAPTION>
Average Balance Rate/Yield
Nine Months Ended Nine Months Ended
September 30 September 30
-------------------------- ---------------------
1998 1997 1998 1997
--------- -------- ------ -----
<S> <C> <C> <C> <C>
($ in Thousands)
INTEREST-EARNING ASSETS
Loans $154,476 $137,062 9.98% 10.23%
Securities 36,692 36,512 5.68 5.87
Federal Funds Sold 7,956 10,715 6.57 5.78
-------- -------- ---- -----
TOTAL INTEREST-EARNING ASSETS $199,124 $184,289 9.05% 9.11%
======== ======== ==== =====
INTEREST-BEARING LIABILITIES
Deposits $189,995 $175,932 3.95% 4.02%
Borrowings 4,805 2,716 6.12 6.96
-------- -------- ---- -----
TOTAL INTEREST-BEARING LIABILITIES $194,800 $178,648 4.01% 4.06%
======== ======== ==== =====
INTEREST RATE SPREAD 5.04% 5.04%
==== =====
NET INTEREST MARGIN 5.13% 5.17%
==== =====
</TABLE>
15
<PAGE>
PART I, ITEM 2 (CONTINUED)
Financial Information
RESULTS OF OPERATIONS (CONTINUED)
INTEREST INCOME AND INTEREST EXPENSE (CONTINUED)
The following table provides a detailed analysis of the changes in interest
income and interest expense due to changes in rate and volume for the nine
months ended September 30, 1998 compared to the nine months ended September 30,
1997.
Rate/Volume Analysis
<TABLE>
<CAPTION>
CHANGES FROM 1998 TO 1997 (1)
------------------------------------------
NET
VOLUME RATE CHANGE
------ ----- ------
<S> <C> <C> <C>
($ in Thousands)
INTEREST INCOME
Loans $1,782 $(387) $1,395
Securities 11 (70) (59)
Federal Funds Sold (159) 63 (96)
------ ----- ------
TOTAL INTEREST INCOME 1,634 (394) 1,240
------ ----- ------
INTEREST EXPENSE
Deposits 565 (122) 443
Borrowings 145 (40) 105
------ ----- ------
TOTAL INTEREST EXPENSE 710 (162) 548
------ ----- ------
NET INTEREST INCOME $ 924 $(232) $ 692
====== ===== ======
</TABLE>
(1) Changes in net interest income for the periods, based on either changes in
average balances or changes in average rates for interest-earning assets
and interest-bearing liabilities, are shown on this table. During each
year there are numerous and simultaneous balance and rate changes;
therefore, it is not possible to precisely allocate the changes between
balances and rates. For the purpose of this table, changes that are not
exclusively due to balance changes or rate changes have been attributed to
rates.
-16-
<PAGE>
PART I, ITEM 2 (CONTINUED)
Financial Information
RESULTS OF OPERATIONS (CONTINUED)
PROVISION FOR LOAN LOSSES
The Banks provided $466,000 for potential loan losses for the nine months ended
September 30, 1998 compared to $399,000 for the same period in 1997. The amount
of the provision for loan losses is the result of judgment made by management
after giving due consideration to the credit worthiness and size of the loan
portfolio.
Management seeks to maintain the allowance for loan losses at a level which will
be adequate under current economic conditions. However, management's judgment
is based upon a number of assumptions about future events, which are believed to
be reasonable, but which may or may not prove valid. Thus, there can be no
assurance that charge-offs in future periods will not exceed the allowance for
possible loan losses, that additional increases in the allowance will not be
required, or that any particular level of allowance for possible loan losses
will be maintained.
As of September 30, 1998, the allowance for loan losses was 1.16 percent of net
loans. As of September 30, 1997, the comparable level was 1.39 percent.
NONINTEREST INCOME AND NONINTEREST EXPENSE
Noninterest income consists of service charges on deposits, other service
charges, commissions and fees, security transactions, other miscellaneous income
and, in 1998, mortgage loan related fees produced by the opening of a mortgage
division. For the nine months ended September 30, 1998, service charges on
deposits totaled $1,131,000 or 54.2 percent of total noninterest income. The
level of service charges as a percent of total noninterest income has declined
approximately 192 basis points compared to the first nine months of 1997. This
decline is attributable not to a decrease in service charges but to an increase
in other noninterest income, primarily mortgage loan origination fees. Mortgage
origination and other mortgage related fees totaled $473,000 as of September 30,
1998.
Noninterest expense consists of salaries and employee benefits, occupancy,
furniture and equipment expense and other miscellaneous operating expenses. For
the first nine months of 1998, salary and employee benefits amounted to
$3,383,000, an increase of 27.8 percent over the first nine months of 1997.
Occupancy, furniture and equipment related expenses totaled $889,000 as of
September 30, 1998 compared to $749,000 as of September 30, 1997, an increase of
18.7 percent. In total, noninterest expense for the first nine months of 1998
increased 20.0 percent compared to the first nine months of 1997, due largely to
the Company's continued growth and expansion.
NET INCOME
Net income for the nine months ended September 30, 1998 equaled $2,005,000
compared to $1,883,000 for the same period in 1997, representing a 6.5 percent
increase. Return on average assets equaled 1.22 percent for the nine months
ended September 30, 1998 and 1.27 percent for the nine months ended September
30, 1997. Return on average equity for the nine months ended September 30, 1998
was calculated at 11.13 percent compared to 12.10 percent for the same period
ended September 30, 1997. This decline is largely due to the increase in
capital from the exercise of warrants during this period. Net income per share
for the nine months ended September 30, 1998 was $0.60 compared to $0.58 for the
same period in 1997.
-17-
<PAGE>
PART II
Other Information
SNB BANCSHARES, INC. AND SUBSIDIARIES
ITEM 2
CHANGES IN SECURITIES (LIMITATIONS UPON PAYMENT OF DIVIDENDS)
On August 7, 1998 the Company amended its charter to give effect to the recent
approval granted by the regulatory authorities, increasing the number of
authorized shares of common stock from 5,000,000 to 10,000,000. This
authorization places no further restrictions upon the rights of the current
holders of such securities.
The information required for limitations upon payment of dividends is
incorporated herein by reference to the Company's annual report of 10-KSB,
Exhibit 99(b) footnote 22, filed with the Securities and Exchange Commission for
the year ended December 31, 1997 (File No. 000-23261).
ITEM 4
Submission of Matters to a Vote of Security Holders
(a) Incorporated herein by references to Page 1 of Company's Definitive Proxy
Statement for the 1998 Annual Meeting of Stockholders held on August 6,
1998 filed with the Securities and Exchange Commission (File No. 333-
49977).
(b) Incorporated herein by reference to Pages 5 through 9 of Company's
Definitive Proxy Statement for the 1998 Annual Meeting of Stockholders held
on August 6, 1998 filed with the Securities and Exchange Commission (File
No. 333-49977).
(c) PROPOSAL I - AGREEMENT AND PLAN OF MERGER
Incorporated herein by reference to the Company's Joint Proxy
Statement/Prospectus for the 1998 Annual Meeting of Stockholders held on
August 6, 1998 filed with the Securities and Exchange Commission on Form S-
4 (File No. 333-49977).
The Agreement and Plan of Merger was approved by a total of 1,689,997 votes
(73.2 percent) for the proposal and 4,480 votes against. There were no
abstentions.
PROPOSAL II - AMENDMENT TO THE ARTICLES OF INCORPORATION
Incorporated herein by reference to the Company's Joint Proxy
Statement/Prospectus for the 1998 Annual Meeting of Stockholders held on
August 6, 1998 filed with the Securities and Exchange Commission on Form S-
4 (File No. 333-49977).
Amendment to the Articles of Incorporation was approved by a total of
1,829,544 votes (79.4 percent) for the proposal and 54,975 votes against.
Abstentions totaled 17,900.
-18-
<PAGE>
PART II
Other Information
SNB BANCSHARES, INC. AND SUBSIDIARIES
ITEM 4 (CONTINUED)
Submission of Matters to a Vote of Security Holders (CONTINUED)
(c) (Continued)
PROPOSAL III - AMENDMENT TO THE ARTICLES OF INCORPORATION AND RESTRUCTURE
OF THE BOARD OF DIRECTORS; ELECTION OF DIRECTORS
Incorporated herein by reference to the Company's Joint Proxy
Statement/Prospectus for the 1998 Annual Meeting of Stockholders held on
August 6, 1998 filed with the Securities and Exchange Commission on Form S-
4 (File No. 333-49977).
Restructure of the Board of Directors was approved by a total of 1,678,688
votes (72.8 percent) for the proposal and 6,075 votes against. Abstentions
totaled 6,075.
Each of the eight nominees named was approved by a total of 1,894,859 votes
(99.9 percent). Abstentions totaled 1,625.
PROPOSAL IV - RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
Incorporated herein by reference to the Company's Joint Proxy
Statement/Prospectus for the 1998 Annual Meeting of Stockholders held on
August 6, 1998 filed with the Securities and Exchange Commission on Form S-
4 (File No. 333-49977).
McNair, McLemore, Middlebrooks & Co., LLP was approved by a total of
1,891,119 votes (82.1 percent). Abstentions totaled 11,300.
-19-
<PAGE>
PART II
OTHER INFORMATION
SNB BANCSHARES, INC. AND SUBSIDIARIES
ITEM 6
EXHIBITS AND REPORTS ON FORM 8-K
PAGE
----
(a) EXHIBITS INCLUDED HEREIN AND INCORPORATED BY REFERENCE:
3(a) - Articles of Incorporation N/A
- Filed as Exhibit 3.2 to the Registrant's Registration
Statement on Form S-4 (File No. 333-49977) Filed with
the Commission on April 13, 1998 and Incorporated Herein
3(b) - Bylaws N/A
- Filed as Exhibit 3.2 to the Registrant's Registration
Statement on Form S-4 (File No. 333-49977), Filed with
the Commission on April 13, 1998 and Incorporated Herein
11 - Statement Re Computation of Per Share Earnings Attachment
27 - Financial Data Schedule Attachment
(b) REPORTS ON FORM 8-K
No reports on Form 8-K have been filed by the registrant during the
quarter ended September 30, 1998.
-20-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, SNB Bancshares, Inc. has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized:
SNB BANCSHARES, INC.
/s/ H. Averett Walker
- ---------------------------------
H. Averett Walker
President/Chief Executive Officer
Date: 11/16/98
---------------------------
/s/ Michael T. O'Dillon
- ---------------------------------
Michael T. O'Dillon
Senior Vice-President/Treasurer/Chief Financial Officer
Date: 11/16/98
---------------------------
-21-
<PAGE>
EXHIBIT NO. 11
STATEMENT OF COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
NINE MONTHS ENDED THREE MONTHS ENDED
SEPTEMBER 30, 1998 SEPTEMBER 30, 1998
--------------------------- ----------------------------
EARNINGS EARNINGS
SHARES PER SHARE SHARES PER SHARE
------ --------- ------ ---------
(in Thousands) (in Thousands)
<S> <C> <C> <C> <C>
BASIC WEIGHTED AVERAGE
Shares Outstanding 3,135 $0.64 3,156 $0.19
===== ===== ===== =====
DILUTED
Average Shares Outstanding 3,135 3,156
Common Stock Equivalents 208 200
----- -----
3,343 $0.60 3,356 $0.18
===== ===== ===== =====
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED THREE MONTHS ENDED
SEPTEMBER 30, 1997 SEPTEMBER 30, 1997
--------------------------- ----------------------------
EARNINGS EARNINGS
SHARES PER SHARE SHARES PER SHARE
------ --------- ------ ---------
(in Thousands) (in Thousands)
<S> <C> <C> <C> <C>
BASIC WEIGHTED AVERAGE
Shares Outstanding 2,498 $0.64 2,498 $0.22
===== ===== ===== =====
DILUTED
Average Shares Outstanding 2,498 2,498
Common Stock Equivalents 757 773
----- -----
3,255 $0.58 3,271 $0.20
===== ===== ===== =====
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 13,642
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 2,875
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 32,084
<INVESTMENTS-CARRYING> 4,160
<INVESTMENTS-MARKET> 4,297
<LOANS> 171,704
<ALLOWANCE> 1,984
<TOTAL-ASSETS> 233,197
<DEPOSITS> 195,247
<SHORT-TERM> 431
<LIABILITIES-OTHER> 2,362
<LONG-TERM> 3,305
0
0
<COMMON> 3,210
<OTHER-SE> 22,035
<TOTAL-LIABILITIES-AND-EQUITY> 233,197
<INTEREST-LOAN> 11,564
<INTEREST-INVEST> 1,562
<INTEREST-OTHER> 394
<INTEREST-TOTAL> 13,520
<INTEREST-DEPOSIT> 5,635
<INTEREST-EXPENSE> 5,855
<INTEREST-INCOME-NET> 7,664
<LOAN-LOSSES> 466
<SECURITIES-GAINS> 2
<EXPENSE-OTHER> 6,234
<INCOME-PRETAX> 3,051
<INCOME-PRE-EXTRAORDINARY> 2,005
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,005
<EPS-PRIMARY> 0.64
<EPS-DILUTED> 0.60
<YIELD-ACTUAL> 4.89
<LOANS-NON> 780
<LOANS-PAST> 345
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,395
<CHARGE-OFFS> 397
<RECOVERIES> 54
<ALLOWANCE-CLOSE> 1,984
<ALLOWANCE-DOMESTIC> 1,984
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
