<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 March 31, 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:
Shares of $1.00 par value common stock as of March 31, 1998
- --------------------------------------------------------------------------------
Transitional Small Business Disclosure Format (Check One): ___ Yes ___ No
<PAGE>
<TABLE>
<CAPTION>
SNB BANCSHARES, INC. AND SUBSIDIARY
INDEX
<S> <C>
PAGE
NUMBER
---------
PART I Financial Information
Condensed Consolidated Balance Sheet 1
Condensed Consolidated Statements of Income and Comprehensive Income
2
Condensed Consolidated Statements of Cash Flows
3
Notes to Condensed Consolidated Financial Statements
4
Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
PART II Other Information
ITEM 2 Changes in Securities 15
ITEM 4 Submission of Matters to a Vote of Security Holders 15
ITEM 6 Exhibits and Reports on Form 8-K 15
</TABLE>
<PAGE>
PART I, ITEM 1
FINANCIAL INFORMATION
<TABLE>
<CAPTION>
SNB BANCSHARES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEET
MARCH 31, 1998
(UNAUDITED)
($ IN THOUSANDS, EXCEPT PER SHARE AMOUNT)
ASSETS
<S> <C>
CASH AND DUE FROM BANKS $5,645
---------
FEDERAL FUNDS SOLD 4,650
---------
INVESTMENTS SECURITIES 27,927
---------
LOANS 101,683
---------
PREMISES AND EQUIPMENT 4,066
---------
OTHER ASSETS 2,168
---------
$146,139
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
DEPOSITS $124,805
---------
BORROWED MONEY 1,740
---------
OTHER LIABILITIES 1,806
---------
128,351
---------
STOCKHOLDERS' EQUITY
Common Stock, Par Value $1 Per Share; Authorized 2,500 Shares,
Issued 2,297 Shares 2,297
Paid-In Capital 10,132
Retained Earnings 5,271
Unrealized Gain on Securities Available for Sale, Net of Tax 88
---------
17,788
---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $146,139
=========
</TABLE>
The accompanying notes are an integral part of this condensed consolidated
balance sheet.
-1-
<PAGE>
PART I, ITEM 1 (CONTINUED)
FINANCIAL INFORMATION
<TABLE>
<CAPTION>
SNB BANCSHARES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED MARCH 31
(UNAUDITED)
($ IN THOUSANDS, EXCEPT PER SHARE AND SHARE AMOUNTS)
1998 1997
<S> <C> <C>
------------ --------------
INTEREST INCOME $2,994 $2,771
INTEREST EXPENSE 1,307 1,184
------------ -------------
NET INTEREST INCOME 1,687 1,587
PROVISION FOR LOAN LOSSES 35 60
------------ -------------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 1,652 1,527
NONINTEREST INCOME 461 287
NONINTEREST EXPENSE 1,438 1,228
------------ -------------
INCOME BEFORE INCOME TAXES 675 586
INCOME TAXES 210 175
------------ -------------
NET INCOME 465 411
OTHER COMPREHENSIVE INCOME, NET OF INCOME TAX
Unrealized Holding Gains (Losses) 19 (96)
------------ -------------
COMPREHENSIVE INCOME $484 $315
============ =============
BASIC EARNINGS PER COMMON AND COMMON
EQUIVALENT SHARE $.19 $.17
============ =============
DILUTED EARNINGS PER COMMON AND COMMON
EQUIVALENT SHARE $.19 $.17
============ =============
WEIGHTED AVERAGE COMMON AND COMMON EQUIVALENT
SHARES OUTSTANDING 2,490,210 2,379,054
============= =============
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
-2-
<PAGE>
PART I, ITEM 1 (CONTINUED)
FINANCIAL INFORMATION
<TABLE>
<CAPTION>
SNB BANCSHARES, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31
(UNAUDITED)
($ IN THOUSANDS)
1998 1997
----------- ------------
<S> <C> <C>
CASH PROVIDED BY OPERATIONS $795 $1,775
----------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Sale (Purchase) of Investment Securities 2,981 3,229
Net Loans Made to Customers (4,188) (3,954)
Purchase of Premises and Equipment (187) (871)
Proceeds from Sale of Other Real Estate 105 172
Proceeds from Sale of Repossessions - 14
----------- ------------
(1,289) (1,410)
----------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net Increase in Noninterest-Bearing Deposits (3,913) (468)
Net Increase in Interest-Bearing Deposits 6,777 1,701
Repayment of Demand Note to the U.S. Treasury (505) (259)
Principal Payments on Other Borrowed Money (84) (2,329)
Proceeds from Issuance of Common Stock 579 401
Dividends Paid (115) (101)
----------- ------------
2,739 (1,055)
----------- ------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 2,245 (690)
CASH AND CASH EQUIVALENTS, BEGINNING 8,050 10,468
----------- ------------
CASH AND CASH EQUIVALENTS, ENDING $10,295 $9,778
=========== ============
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
-3-
<PAGE>
PART I, ITEM 1 (CONTINUED)
FINANCIAL INFORMATION
SNB BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) BASIS OF PRESENTATION
The consolidated financial statements include SNB Bancshares, Inc. (the Company)
and its wholly-owned subsidiary, Security National Bank (the Bank), located in
Macon, Georgia. All intercompany accounts have been eliminated in
consolidation.
In June 1997, FASB issued Statement No. 130, Reporting Comprehensive Income.
The new statement is effective for periods beginning after December 15, 1997 and
requires that all changes in equity during a period from transactions and events
from nonowner sources be reported as other comprehensive income in the financial
statements and related notes. SNB Bancshares adopted SFAS 130 on January 1,
1998. Prior years have been restated to conform with the new requirements.
As of March 31, 1998 other comprehensive income is comprised of the following:
BEFORE TAX TAX EFFECT NET OF TAX
---------- ---------- ----------
($ in Thousands)
UNREALIZED GAIN ON SECURITIES
Gain Arising During Year $34 $12 $22
Reclassification Adjustment (5) (2) (3)
---------- ---------- ---------
NET UNREALIZED GAIN $29 $10 $19
========== ========== =========
The financial information included herein is unaudited; however, such
information reflects all adjustments which are, in the opinion of management,
necessary to fairly state the financial position and results of operations for
the interim periods presented.
(2) LOANS
Loans as of March 31, 1998 are comprised of the following:
($ IN
THOUSANDS)
----------
Commercial $24,140
Real Estate-Construction 1,835
Real Estate-Other 66,327
Installment Loans to Individuals for Personal Expenditures 10,881
All Other 90
----------
103,273
Allowance for Loan Losses (1,450)
Unearned Interest and Fees (140)
----------
$101,683
==========
-4-
<PAGE>
PART I, ITEM 1 (CONTINUED)
FINANCIAL INFORMATION
(2) LOANS (CONTINUED)
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
In February 1997, the Financial Accounting Standards Board (FASB) issued
Statement No. 128, Earnings Per Share (SFAS 128). SFAS 128 replaced the
calculation of primary and fully diluted earnings per share (EPS) with basic and
diluted EPS. Unlike primary EPS, basic EPS excludes any dilutive effects of
options, warrants and convertible securities. Diluted EPS is very similar to
fully diluted EPS. All EPS amounts presented have been restated, as applicable,
to conform with the new requirements. The following presents earnings per share
for the quarter ended March 31, 1998 under the requirements of SFAS 128:
<TABLE>
<CAPTION>
<S> <C>
BASIC EARNINGS PER SHARE
Net Income Per Common Share $0.19
Weighted Average Common Shares 2,257,229
DILUTED EARNINGS PER SHARE
Net Income Per Common Share $0.19
Weighted Average Common Shares 2,490,210
</TABLE>
The exercise of the option 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 $19.6635. SNB's stock is quoted on the NASDAQ
market under the symbol SNBJ.
(4) ALLOWANCE FOR LOAN LOSSES
The allowance method is used in providing for losses on loans. Accordingly, all
loan losses decrease the allowance and all recoveries increase it. The
provision for loan losses is based on factors which, in management's judgment,
deserve current recognition in estimating possible loan losses. Such factors
considered by management include growth and composition of the loan portfolio,
economic conditions and the relationship of the allowance for loan losses to
outstanding loans.
-5-
<PAGE>
PART I, ITEM 1 (CONTINUED)
FINANCIAL INFORMATION
(4) ALLOWANCE FOR LOAN LOSSES (CONTINUED)
An allowance for loan losses is maintained for all impaired loans. Provisions
are made for impaired loans upon changes in expected future cash flows or
estimated net realizable value of collateral. When determination is made that
impaired loans are wholly or partially uncollectible, the uncollectible portion
is charged off.
The following table presents the Bank's loan loss experience on all loans for
the three months ended March 31:
<TABLE>
<CAPTION>
<S> <C> <C>
($ IN THOUSANDS)
-------------------------------
1998 1997
----------- ----------
ALLOWANCE FOR LOAN LOSSES, JANUARY 1 $1,395 $1,383
----------- ----------
Charge-Offs
Commercial, Financial and Agricultural 1 60
Real Estate - Mortgage - 27
Consumer 7 33
----------- ----------
8 120
----------- ----------
Recoveries
Commercial, Financial and Agricultural 3 1
Real Estate - Mortgage - 121
Consumer 25 3
----------- ----------
28 125
----------- ----------
NET RECOVERIES 20 5
----------- ----------
PROVISION FOR LOAN LOSSES 35 60
----------- ----------
ALLOWANCE FOR LOAN LOSSES, MARCH 31 $1,450 $1,448
=========== ==========
RATIO OF NET RECOVERIES TO AVERAGE LOANS 0.02% 0.01%
=========== ==========
</TABLE>
(5) INVESTMENT SECURITIES
The Bank records investment securities under Statement of Financial Accounting
Standards (SFAS) No. 115, Accounting for Certain Investments in Debt and Equity
Securities. In accordance with the provisions of SFAS 115, the Bank elected to
classify securities individually as either available for sale or held to
maturity. Securities classified as held to maturity are recorded at amortized
cost. Those classified as available for sale are adjusted to market value
through a tax-effected increase or reduction in stockholders' equity.
-6-
<PAGE>
PART I, ITEM 1 (CONTINUED)
FINANCIAL INFORMATION
(5) INVESTMENT SECURITIES (CONTINUED)
Investment securities as of March 31, 1998 are summarized as follows:
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
SECURITIES AVAILABLE FOR SALE COST GAINS LOSSES VALUE
--------- ---------- ---------- -----
($ in Thousands)
<S> <C> <C> <C> <C>
U.S. Treasuries $ 3,516 $51 $ 3,567
U.S. Government Agencies
Mortgage Backed 1,731 9 $(20) 1,720
Other 13,333 39 (60) 13,312
State, County and Municipal 3,690 114 3,804
Other 603 603
------- ---- ---- -------
$22,873 $213 $(80) $23,006
======= ==== ==== =======
SECURITIES HELD TO MATURITY
State, County and Municipal $ 4,921 $128 $ (3) $ 5,046
======= ==== ==== =======
</TABLE>
Unrealized holding gains, net of tax, on securities available for sale in the
amount of $88,000 have been charged to stockholders' equity as of March 31,
1998.
(6) PREMISES AND EQUIPMENT
Premises and equipment are comprised of the following as of March 31, 1998:
<TABLE>
<CAPTION>
($ IN
THOUSANDS)
---------
<S> <C>
Land $ 1,082
Building 1,836
Furniture, Fixtures and Equipment 2,378
Leasehold Improvements 116
Construction in Progress 81
-------
5,493
(1,427)
-------
$ 4,066
=======
</TABLE>
Depreciation charged to operations totaled $92,000 for the quarter ended March
31, 1998.
-7-
<PAGE>
PART I, ITEM 1 (CONTINUED)
FINANCIAL INFORMATION
(7) STOCKHOLDERS' EQUITY
During the first quarter of 1998, various directors and executive officers
exercised 173,800 outstanding stock warrants at an exercise price of $3.333 per
share. The exercise of these warrants resulted in an increase in common stock
of $173,800 and an increase in paid-in capital of $405,534. A summary of
warrant transactions follows:
<TABLE>
<CAPTION>
ORIGINAL
WARRANTS
--------
<S> <C>
Granted 449,700
Canceled -
Exercised 253,150
-------
Outstanding, March 31, 1998 196,550
=======
Eligible to be Exercised, March 31, 1998 196,550
=======
</TABLE>
The Bank is required to maintain minimum amounts of capital to total "risk
weighted" assets, as defined by the banking regulations. As of March 31, 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 March 31,
1998 are as follows:
<TABLE>
<CAPTION>
ACTUAL MINIMUM
------ -------
<S> <C> <C>
Tier 1 Capital Ratio 11.66% 4.00%
Total Capital Ratio 12.91% 8.00%
Leverage Ratio 8.79% 4.00%
</TABLE>
(8) NONCASH FINANCING ACTIVITIES
Noncash investing activities for the three months ended March 31 are as follows:
<TABLE>
<CAPTION>
1998 1995
---- ----
<S> <C> <C>
Acquisition of Real Estate through Loan Foreclosure $ - $425,526
==== ========
</TABLE>
-8-
<PAGE>
PART I, ITEM 2
FINANCIAL INFORMATION
SNB BANCSHARES, INC. AND SUBSIDIARY
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 three-month periods ended March 31, 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. As SNB has no
subsidiaries other than Security National Bank (the Bank), the following
discussion refers to the financial condition and operations of the Bank.
FINANCIAL CONDITION
ASSETS
SNB continues to maintain steady growth in the midst of strong competition.
Total assets increased 9.6 percent, from $133 million at March 31, 1997 to $146
million at March 31, 1998. Since December 31, 1997, assets have increased by
2.27 percent. The majority of the asset growth is evidenced in SNB=s loan
portfolio which, net of unearned income, grew 14.9 percent since March 31, 1997
and 4.25 percent since December 31, 1997, due in part to the opening of a
mortgage division and a new branch office.
Interest-earning assets amounted to $134 million or 91.87 percent of total
assets as of March 31, 1998, compared to $129 million or 90.13 percent as of
December 31, 1997 and $121 million or 90.98 percent of total assets as of March
31, 1997. As of March 31, 1998, the loan portfolio amounted to 75.74 percent of
interest earning assets, compared to 76.81 percent as of December 31, 1997 and
72.84 percent as of March 31, 1997. Investment mix in the Bank=s portfolio has
remained relatively unchanged since December 31, 1997. SNB holds 82.38 percent
of its portfolio in the available for sale category which is reported at market
value.
Nonperforming assets totaled $1,265,000 or 0.87 percent of total assets at March
31, 1998 and reflect a decline of 17 basis points from March 31, 1997 when
nonperforming assets totaled $1,385,000 or 1.04 percent of total assets.
However, of these totals, nonperforming loans totaling $1,103,000 or 1.06
percent of total loans increased 28 percent from the prior year level when
nonperforming loans equaled $858,000 or 0.96 percent of total loans. The
increase in the current year is due primarily to an increase in loans past due
90 days or more and still accruing interest.
-9-
<PAGE>
PART I, ITEM 2 (CONTINUED)
FINANCIAL INFORMATION
FINANCIAL CONDITION (CONTINUED)
Assets (Continued)
The following table presents SNB's nonperforming assets as of March 31, 1998:
<TABLE>
<CAPTION>
($ IN THOUSANDS)
----------------
<S> <C>
Impaired and Other Nonaccrual Loans $637
Loans Past Due 90 Days or More and Still Accruing Interest 466
Restructured Loans not Included in the Above -
---------
TOTAL NONPERFORMING LOANS 1,103
Other Real Estate Owned 162
---------
TOTAL NONPERFORMING ASSETS $1,265
=========
</TABLE>
SNB's investment in bank premises and equipment totaled $4,066,000 as of March
31, 1997, compared to $3,971,000 at December 31, 1997 and $3,345,000 at March
31, 1997, representing increases of 2.39 percent and 21.55 percent,
respectively. These increases are evidences of their expanding presence in the
middle Georgia area.
Other assets equal 1.48 percent, 1.65 percent and 1.93 percent of total assets
at March 31, 1998, December 31, 1997, and March 31, 1997, respectively, and are
comprised of other real estate owned, interest receivable, prepaid expenses and
other miscellaneous assets.
LIABILITIES
Total deposits at March 31, 1998 were $125 million, increasing 2.35 percent
since December 31, 1997 and 9.22 percent since March 31, 1997. Interest-bearing
deposits equaled 83.54 percent of total deposits at March 31, 1998, compared to
79.94 percent and 82.07 percent at December 31, 1997 and March 31, 1997,
respectively. The current level represents a 6.95 percent increase from
December 31, 1997 and an 11.17 percent increase from March 31, 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 SNB's community bank atmosphere and personalized service.
Federal Home Loan Bank advances totaled $1,287,000 at March 31, 1998, down 2.09
percent and 4.10 percent from December 31, 1997 and March 31, 1997,
respectively. Other sources of borrowings for SNB at March 31, 1998 consisted
of federal funds purchased and demand notes with the U.S. Treasury. Total
borrowings at March 31, 1998 decreased 25.29 percent from December 31, 1997 when
borrowings amounted to $2,329,000. Compared to March 31, 1997, borrowings
increased 12.1 percent, from $1,551,000 to the current level of $1,740,000.
The remainder of other liabilities consists of interest payable, accrued
expenses and various other miscellaneous liabilities.
-10-
<PAGE>
PART I, ITEM 2 (CONTINUED)
FINANCIAL INFORMATION
FINANCIAL CONDITION (CONTINUED)
Capital Resources
During the first quarter of 1998, SNB realized an increase in capital of
$948,000 or 5.63 percent since December 31, 1997 due to the exercise of 173,800
outstanding stock warrants issued to directors and executive officers. Since
March 31, 1997, equity capital has increased by $2,240,000 or 14.41 percent.
Dividends paid to shareholders totaled $115,000 for the first quarter of 1998,
compared to $101,000 for the first quarter of 1997. Book value per share has
increased from $7.38 as of March 31, 1997 to $7.74 as of March 31, 1998 as a
result of continued profitability and contributed capital. Equity capital
equaled 12.17 percent of total assets as of March 31, 1998, compared to 11.79
percent as of December 31, 1997 and 11.66 percent as of March 31, 1997. As of
March 31, 1998, the Bank was in compliance with all applicable regulatory
standards regarding capital adequacy levels.
LIQUIDITY
SNB 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 March 31, 1998, the
percentage total loans to deposits was 82.64, compared to 81.13 as of December
31, 1997 and 78.57 as of March 31, 1997. Cash and cash equivalents totaled
$10,295,000, $8,050,000 and $9,778,000 as of March 31, 1998, December 31, 1997
and March 31, 1997, respectively. Cash provided from operations totaled
$795,000 for the first quarter of 1998 compared to $1,775,000 for the same
period in 1997. Cash used in investing activities for the first quarter of 1998
totaled $1,289,000 and cash provided by financing activities totaled $2,739,000
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. The Bank has established relationships
with its correspondent banks which will enable it to borrow additional funds as
needed. As of March 31, 1998, SNB had $1,740,000 in other borrowed money.
SNB has an asset/liability committee which continually monitors the relationship
of interest-earning assets and interest-bearing liabilities as it relates to
SNB's goals.
RESULTS OF OPERATIONS
INTEREST INCOME AND INTEREST EXPENSE
Interest income for the three months ended March 31, 1998 totaled $2,994,000
compared to $2,771,000 for the same period in 1997 representing an increase of
$223,000 or 8.05 percent. This increase is primarily attributable to loan
growth of 14.9 percent resulting in an increase in interest and fees on loans of
$253,000 or 11.0 percent. Interest on investment securities totaled $393,000
for the first quarter of 1998, decreasing $46,000 or 10.5 percent from the same
period in 1997. Tax-free interest on state, county and municipal obligations
represents 30.0 percent of total interest on investments, compared to 29.9
percent at March 31, 1997.
-11-
<PAGE>
PART I, ITEM 2 (CONTINUED)
FINANCIAL INFORMATION
RESULTS OF OPERATIONS (CONTINUED)
INTEREST INCOME AND INTEREST EXPENSE
(CONTINUED)
Interest expense totaled $1,307,000 at March 31, 1998, of which 97.2 percent
consisted of interest paid on customer deposits. This represents an increase of
10.4 percent over quarter ended March 31, 1997 when total interest expense
equaled $1,184,000.
Interest income exceeded interest expense by $1,687,000 for the three months
ended March 31, 1998 resulting in an increase of $100,000 or 6.3 percent over
the prior year period ended March 31, 1997. The Bank's net interest rate margin
declined twenty-seven basis points, however, to 5.22 percent as of March 31,
1998 compared to 5.49 percent as of March 31, 1997. This is a result of the
overall higher costs of funds paid for deposits and other borrowings.
The following table presents the effective yields and costs of funds for the
three month periods ended March 31, 1998 and 1997:
Average Balance Sheets
<TABLE>
<CAPTION>
AVERAGE RATE/YIELD
BALANCE THREE
THREE MONTHS MONTHS
ENDED ENDED
MARCH 31 MARCH 31
--------------------- ------------------
1998 1997 1998 1997
-------- -------- ------- -------
<S> <C> <C> <C> <C>
($ in Thousands)
INTEREST-EARNING ASSETS
Loans $98,404 $88,435 10.25% 10.53%
Securities 28,747 30,994 6.41 6.63
Federal Funds Sold 3,933 2,776 5.33 5.13
-------- -------- ----- -----
TOTAL INTEREST-EARNING ASSETS $131,084 $122,205 9.26% 9.42%
======== ======== ===== =====
INTEREST-BEARING LIABILITIES
Deposits $102,441 $92,753 5.03% 4.91%
Borrowings 2,273 2,815 6.49 8.70
-------- -------- ----- -----
TOTAL INTEREST-BEARING LIABILITIES $104,714 $95,568 5.06% 5.02%
======== ======== ===== =====
INTEREST RATE SPREAD 4.20% 4.40%
===== =====
NET INTEREST MARGIN 5.22% 5.49%
===== =====
</TABLE>
-12-
<PAGE>
PART I, ITEM 2 (CONTINUED)
FINANCIAL INFORMATION
RESULTS OF OPERATIONS (CONTINUED)
INTEREST INCOME AND INTEREST EXPENSE (CONTINUED)
The following table provides a detailed analysis of the changes in interest
income and interest expense due to changes in rate and volume for the three
months ended March 31, 1998 compared to the three months ended March 31, 1997.
Rate/Volume Analysis
<TABLE>
<CAPTION>
CHANGES FROM 1998 TO 1997 (1)
------------------------------
NET
VOLUME RATE CHANGE
------ ---- ------
($ in Thousands)
<S> <C> <C> <C>
INTEREST INCOME
Loans $1,050 $(276) $ 774
Securities (151) (63) (214)
Federal Funds Sold 59 8 67
------ ----- -----
TOTAL INTEREST INCOME 958 (331) 627
------ ----- -----
INTEREST EXPENSE
Deposits 476 123 599
Borrowings (47) (50) (97)
------ ----- -----
TOTAL INTEREST EXPENSE 429 73 502
------ ----- -----
NET INTEREST INCOME $529 $(404) $125
====== ===== =====
</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.
-13-
<PAGE>
PART I, ITEM 2 (CONTINUED)
FINANCIAL INFORMATION
RESULTS OF OPERATIONS (CONTINUED)
PROVISION FOR LOAN LOSSES
The Bank provided $35,000 for potential loan losses for the three months ended
March 31, 1998 compared to $60,000 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 March 31, 1998, the allowance for loan losses was 1.41 percent of
outstanding loans less unearned interest. As of March 31, 1997, the comparable
level was 1.61 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 quarter ended March 31, 1998, service charges on deposits
totaled $261,000 or 56.6 percent of total noninterest income. The level of
service charges as a percent of total noninterest income has declined
approximately 270 basis points compared to the first quarter 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 $126,000 as of March 31,
1998.
Noninterest expense consists of salaries and employee benefits, occupancy,
furniture and equipment expense and other miscellaneous operating expenses.
For the first quarter of 1998, salary and employee benefits amounted to
$778,000, an increase of 24.7 percent over the first quarter of 1997.
Occupancy, furniture and equipment related expenses totaled $211,000 as of March
31, 1998 compared to $159,000 as of March 31, 1997, an increase of 33.0 percent.
In total, noninterest expense for the first quarter of 1998 increased 17.1
percent compared to the first quarter of 1997, due largely to SNB's continued
growth and expansion.
NET INCOME
Net income for the quarter ended March 31, 1998 equaled $465,000 compared to
$411,000 for the same period in 1997, representing a 13.1 percent increase.
Return on average assets increased 4 basis points from 1.26 percent for the
quarter ended March 31, 1997 to 1.30 percent for the quarter ended March 31,
1998. Return on average equity for the three months ended March 31, 1998 was
calculated at 10.78 percent compared to 11.05 percent for the same period ended
March 31, 1997. This decline is largely due to the increase in capital from the
exercise of warrants during this period. Net income per share as of March 31,
1998 equaled $0.1862 compared to $0.1725 as of March 31, 1997, an increase of
7.9 percent.
-14-
<PAGE>
PART II
OTHER INFORMATION
SNB BANCSHARES, INC. AND SUBSIDIARY
ITEM 2
CHANGES IN SECURITIES (LIMITATIONS UPON PAYMENT OF DIVIDENDS)
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
There were no matters submitted to a vote of securities holders during the
quarter ended March 31, 1998.
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 March 31, 1998.
-15-
<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.
- ---------------------------------
H. Averett Walker
President/Chief Executive Officer
Date:
---------------------------
- ---------------------------------
Michael T. O'Dillon
Senior Vice-President/Treasurer/
Chief Financial Officer
Date:
----------------------------
-16-
<PAGE>
EXHIBIT NO. 11
STATEMENT OF COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
QUARTER ENDED
MARCH 31, 1998
-----------------
EARNINGS
SHARES PER SHARE
------ ---------
(in Thousands)
<S> <C> <C>
BASIC WEIGHTED AVERAGE SHARES OUTSTANDING 2,257 $0.19
===== =====
DILUTED
Average Shares Outstanding 2,257
Common Stock Equivalents 233
-----
2,490 $0.19
===== =====
QUARTER ENDED
MARCH 31, 1998
-----------------
EARNINGS
SHARES PER SHARE
------ ---------
(in Thousands)
BASIC WEIGHTED AVERAGE SHARES OUTSTANDING 2,092 $0.17
===== =====
DILUTED
Average Shares Outstanding 2,092
Common Stock Equivalents 287
-----
2,379 $0.17
===== =====
</TABLE>
1
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 5,645
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 4,650
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 23,006
<INVESTMENTS-CARRYING> 4,921
<INVESTMENTS-MARKET> 5,046
<LOANS> 103,133
<ALLOWANCE> 1,450
<TOTAL-ASSETS> 146,139
<DEPOSITS> 124,805
<SHORT-TERM> 452
<LIABILITIES-OTHER> 1,806
<LONG-TERM> 1,288
2,297
0
<COMMON> 0
<OTHER-SE> 15,491
<TOTAL-LIABILITIES-AND-EQUITY> 146,139
<INTEREST-LOAN> 2,549
<INTEREST-INVEST> 393
<INTEREST-OTHER> 52
<INTEREST-TOTAL> 2,994
<INTEREST-DEPOSIT> 1,271
<INTEREST-EXPENSE> 1,307
<INTEREST-INCOME-NET> 1,687
<LOAN-LOSSES> 35
<SECURITIES-GAINS> 5
<EXPENSE-OTHER> 1,438
<INCOME-PRETAX> 675
<INCOME-PRE-EXTRAORDINARY> 465
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 465
<EPS-PRIMARY> 0.19
<EPS-DILUTED> 0.19
<YIELD-ACTUAL> 5.03
<LOANS-NON> 637
<LOANS-PAST> 466
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,395
<CHARGE-OFFS> 8
<RECOVERIES> 28
<ALLOWANCE-CLOSE> 1,450
<ALLOWANCE-DOMESTIC> 1,450
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
