<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, 1999
-------------------------------------------------
[ ] 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:
3,340,624 Shares of $1.00 par value common stock as of March 31, 1999
- --------------------------------------------------------------------------------
Transitional Small Business Disclosure Format (Check One): Yes No
----- -----
<PAGE>
SNB BANCSHARES, INC. AND SUBSIDIARIES
INDEX
Page
Number
------
PART I Financial Information
Condensed Consolidated Balance Sheet 1
Condensed Consolidated Statements of Income and Comprehensive
Income 2
Condensed Consolidated Statements of Cash Flows 3
Notes to Condensed Consolidated Financial Statements 4
Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
PART II Other Information
ITEM 2 Changes in Securities 17
ITEM 4 Submission of Matters to a Vote of Security Holders 17
ITEM 6 Exhibits and Reports on Form 8-K 17
<PAGE>
PART I, ITEM 1
Financial Information
SNB BANCSHARES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
MARCH 31, 1999
(UNAUDITED)
($ IN THOUSANDS, EXCEPT PER SHARE AMOUNT)
<TABLE>
<S> <C>
ASSETS
Cash and Due from Banks $ 10,432
--------
Federal Funds Sold 2,731
--------
Investments Securities 36,733
--------
Loans 184,669
--------
Premises and Equipment 7,804
--------
Other Assets 4,033
--------
Total Assets $246,402
========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits $211,357
--------
Borrowed Money 6,165
--------
Other Liabilities 2,688
--------
220,210
Stockholders' Equity --------
Common Stock, Par Value $1 Per Share; Authorized 10,000 Shares,
Issued 3,341 Shares 3,341
Paid-In Capital 12,612
Retained Earnings 10,192
Accumulated Other Comprehensive Income, Net of Tax 47
--------
26,192
--------
Total Liabilities and Stockholders' Equity $246,402
========
</TABLE>
The accompanying notes are an integral part of this condensed consolidated
balance sheet.
-1-
<PAGE>
PART I, ITEM 1 (CONTINUED)
Financial Information
SNB BANCSHARES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED MARCH 31
(UNAUDITED)
($ IN THOUSANDS, EXCEPT PER SHARE AND SHARE AMOUNTS)
<TABLE>
<CAPTION>
1999 1998
---------- ----------
<S> <C> <C>
Interest Income $ 4,863 $ 4,433
Interest Expense 1,974 1,890
---------- ----------
Net Interest Income 2,889 2,543
Provision for Loan Losses 189 80
---------- ----------
Net Interest Income After Provision for Loan Losses 2,700 2,463
Noninterest Income 759 570
Noninterest Expense 2,215 1,999
---------- ----------
Income Before Income Taxes 1,244 1,034
Income Taxes 437 343
---------- ----------
Net Income 807 691
Other Comprehensive Income, Net of Income Tax
Unrealized Holding Gains (Losses) (151) 19
========== ==========
Comprehensive Income $ 656 $ 710
========== ==========
Basic Earnings Per Share $ 0.24 $ 0.22
========== ==========
Diluted Earnings Per Share $ 0.24 $ 0.21
========== ==========
Weighted Average Common Shares Outstanding 3,340,624 3,336,953
========== ==========
</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 CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31
(UNAUDITED)
($ IN THOUSANDS)
<TABLE>
<CAPTION>
1999 1998
------- --------
<S> <C> <C>
Cash Provided by Operations $ 856 $ 1,026
------- --------
Cash Flows from Investing Activities
Sale of Securities Available for Sale 1,206 4,052
Sale of Securities Held to Maturity 1,138 1,268
Net Loans Made to Customers (7,769) (4,705)
Purchase of Premises and Equipment (221) (216)
Proceeds from Sale of Other Real Estate 132 222
Interest-Bearing Deposits - (18)
-------- --------
(5,514) 603
-------- --------
Cash Flows from Financing Activities
Net Decrease in Noninterest-Bearing Deposits (10,336) (8,889)
Net Increase in Interest-Bearing Deposits 4,119 6,925
Repayment of Federal Funds Purchased (302) (56)
Repayment of Demand Note to the U.S. Treasury 113 (581)
Proceeds From (Principal Payments on) Other Borrowed Money (54) 6
Proceeds from Issuance of Common Stock - 579
Dividends Paid (200) (173)
-------- --------
(6,660) (2,189)
-------- --------
Net Decrease in Cash and Cash Equivalents (11,318) (560)
Cash and Cash Equivalents, Beginning 24,481 21,294
-------- --------
Cash and Cash Equivalents, Ending $ 13,163 $ 20,734
======== ========
</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 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 Bank (formerly Security National
Bank), located in Macon, Georgia and Crossroads Bank of Georgia, located in
Perry, Georgia (the Banks). All intercompany accounts have been eliminated in
consolidation. Crossroads was acquired was acquired on August 8, 1998 in a
business combination accounted for as a pooling of interests. Accordingly, all
financial information presented herein prior to August 8, 1998 has been
restated.
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, 1999, other comprehensive income is comprised of the following:
Before Tax Tax Effect Net of Tax
---------- ---------- ----------
($ in Thousands)
Unrealized Loss on Securities
Loss Arising During Year $(229) $(78) $(151)
Reclassification Adjustment - - -
----- ---- -----
Net Unrealized Loss $(229) $(78) $(151)
===== ==== =====
The financial information included herein is unaudited; however, such
information reflects all adjustments which are, in the opinion of management,
necessary to fairly state the financial position and results of operations for
the interim periods presented.
(2) Loans
Loans as of March 31, 1999 are comprised of the following:
($ in Thousands)
----------------
Commercial $ 39,421
Real Estate-Construction 14,046
Real Estate-Other 115,447
Installment Loans to Individuals for Personal Expenditures 17,336
All Other 675
--------
186,925
Allowance for Loan Losses (2,121)
Unearned Interest and Fees (135)
--------
$184,669
========
-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, 1999 under the requirements of SFAS 128:
Basic Earnings Per Share
Net Income Per Common Share $0.24
Weighted Average Common Shares 3,340,624
Diluted Earnings Per Share
Net Income Per Common Share $0.24
Weighted Average Common Shares 3,372,686
The assumed exercise of stock options is 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 $18.4799. SNB's stock is quoted on the
NASDAQ market under the symbol SNBJ.
(4) Allowance for Loan Losses
The allowance method is used in providing for losses on loans. Accordingly, all
loan losses decrease the allowance and all recoveries increase it. The provision
for loan losses is based on factors which, in management's judgment, deserve
current recognition in estimating possible loan losses. Such factors considered
by management include growth and composition of the loan portfolio, economic
conditions and the relationship of the allowance for loan losses to outstanding
loans.
-5-
<PAGE>
PART I, ITEM 1 (CONTINUED)
Financial Information
(4) Allowance for Loan Losses (Continued)
An allowance for loan losses is maintained for all impaired loans. Provisions
are made for impaired loans upon changes in expected future cash flows or
estimated net realizable value of collateral. When determination is made that
impaired loans are wholly or partially uncollectible, the uncollectible portion
is charged off.
The following table presents the Bank's loan loss experience on all loans for
the three months ended March 31:
($ in Thousands)
-------------------
1999 1998
------ ------
Allowance for Loan Losses, January 1 $2,070 $1,861
------ ------
Charge-Offs
Commercial, Financial and Agricultural 9 1
Real Estate - Mortgage - 64
Consumer 142 9
------ ------
151 74
------ ------
Recoveries
Commercial, Financial and Agricultural - 5
Real Estate - Mortgage - -
------ ------
Consumer 13 26
------ ------
13 31
------ ------
Net Charge-Offs (138) (43)
------ ------
Provision for Loan Losses 189 80
------ ------
Allowance for Loan Losses, March 31 $2,121 $1,898
====== ======
Ratio of Net Recoveries to Average Loans (0.08)% (0.13)%
====== ======
(5) Investment Securities
The Bank records investment securities under Statement of Financial Accounting
Standards (SFAS) No. 115, Accounting for Certain Investments in Debt and Equity
Securities. In accordance with the provisions of SFAS 115, the Bank elected to
classify securities individually as either available for sale or held to
maturity. Securities classified as held to maturity are recorded at amortized
cost. Those classified as available for sale are adjusted to market value
through a tax-effected increase or reduction in stockholders' equity.
-6-
<PAGE>
PART I, ITEM 1 (CONTINUED)
Financial Information
(5) Investment Securities (Continued)
Investment securities as of March 31, 1999 are summarized as follows:
Gross Gross
Amortized Unrealized Unrealized Fair
Securities Available for Sale Cost Gains Losses Value
--------- ---------- ---------- -----
($ in Thousands)
U.S. Treasuries $ 3,494 $ 43 $ 3,537
U.S. Government Agencies
Mortgage Backed 7,509 15 $ (63) 7,461
Other 16,724 36 (64) 16,696
State, County and Municipal 4,378 122 (18) 4,482
Other 1,542 1,542
------- ----- ----- -------
$33,647 216 $(145) $33,718
======= ===== ===== =======
Securities Held to Maturity
State, County and Municipal $ 3,015 $ 119 $ - $ 3,134
======= ===== ===== =======
Unrealized holding gains, net of tax, on securities available for sale in the
amount of $47,000 have been credited to stockholders' equity as of March 31,
1999.
(6) Premises and Equipment
Premises and equipment are comprised of the following as of March 31, 1999:
($ in
Thousands)
----------
Land $ 2,116
Building 4,144
Furniture, Fixtures and Equipment 3,572
Leasehold Improvements 317
Construction in Progress 276
-------
10,425
(2,621)
-------
$ 7,804
=======
Depreciation charged to operations totaled $202,725 for the quarter ended March
31, 1999.
-7-
<PAGE>
PART I, ITEM 1 (CONTINUED)
Financial Information
(7) Stockholders' Equity
During 1996, the board of directors of SNB Bancshares, Inc. adopted the 1996
incentive stock option plan which granted key officers the right to purchase
shares of common stock at the price of $9.00, as adjusted for stock splits,
representing the market value of the stock at the date of the option grant.
Option holders may exercise in accordance with a vesting schedule beginning with
20 percent the first year and increasing 20 percent for each year thereafter
such that 100 percent of granted options may be exercised by the end of the
fifth year. Unexercised options expire at the end of the tenth year. A summary
of option transactions for the first quarter of 1999 follows:
Incentive
Stock
Options
---------
Granted 62,500
Canceled -
Exercised -
-------
Outstanding, March 31, 1999 62,500
=======
Eligible to be Exercised, March 31, 1999 25,000
=======
The Company is required to maintain minimum amounts of capital to total "risk
weighted" assets, as defined by the banking regulations. As of March 31, 1999,
the Company 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 Company's actual ratios as of March
31, 1999 are as follows:
Actual Minimum
------ -------
Tier 1 Capital Ratio 13.55% 4.00%
Total Capital Ratio 14.65% 8.00%
Leverage Ratio 10.74% 4.00%
(8) Noncash Financing Activities
Noncash investing activities for the three months ended March 31 are as follows:
1999 1998
------- -------
Acquisition of Real Estate through Loan Foreclosure $ - $50,543
======= =======
-8-
<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 three-month periods ended March 31, 1999 and 1998. 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 report. SNB owns and operates Security
Bank of Bibb County (Security) and Crossroads Bank of Georgia (Crossroads). SNB
and its wholly-owned subsidiaries are collectively known as "the Company."
Overview
The Company's net income for the three-month period ended March 31, 1999 was
$807,000 or $0.24 diluted earnings per share, compared to $691,000 or $0.21 per
share in the same three-month period in the preceding year. The increase in net
income for the three months ended March 31, 1999 primarily relates to the
continued growth of the Company largely recognized in its loan portfolio.
The Company recorded an annualized return on average assets of 1.34 percent for
the three-month period ended March 31, 1999 compared to 1.30 percent for the
same period in 1998. Return on average equity of 12.60 percent was recorded for
the three-month period ended March 31, 1999, compared to 11.93 percent for the
same period in 1998.
At March 31, 1999, the Company had total assets of $246 million compared to $252
million at December 31, 1998. Management attributes the majority of this
decrease to the Federal Reserve Bank's inability to process Security's cash
letter on December 31, 1998, which amounted to $5.3 million. The processing of
this cash letter would have resulted in the reduction of transactional deposit
accounts on December 31, 1998 by $5.3 million, in addition to the reduction of
cash and due from and total assets. Total interest-earning assets remained
relatively the same over this time frame amounting to $224 million or 90.96
percent of total assets as of March 31, 1999, compared to $227 million or 89.81
percent of total assets as of December 31, 1998.
Financial Condition
Cash and Cash Equivalents
Cash and due from banks decreased approximately $3.4 million to $10.4 million at
March 31, 1999 from $13.8 million at December 31, 1998, and federal funds sold
decreased by $7.9 million or 74.36 percent to $2.7 million at March 31, 1999
from $10.7 million at December 31, 1998. These fluctuations are largely due to
the aforementioned cash letter problem on December 31, 1998.
-9-
<PAGE>
PART I, ITEM 2 (CONTINUED)
Financial Information
Financial Condition (Continued)
Investment Securities
Investment securities also decreased since December 31, 1998 when investment
securities totaled $39.3 million. As of March 31, 1999, investment securities
totaled $36.7 million, a reduction of $2.6 million or 6.5 percent, since
December 31, 1998. Management attributes a significant portion of the reduction
to the funding of new loans. The Company's investment in securities is largely
centered in U.S. Government Agency securities.
Loans Receivable, Net
Aggregate loans receivable totaled $184.7 million at March 31, 1999, an increase
of $7.6 million, or 4.28 percent, from $177.1 million at December 31, 1998. The
mix of loans is substantially unchanged at those dates.
Nonperforming Assets
The Company's total nonperforming assets increased to approximately $2.0 million
or 0.8 percent of total assets at March 31, 1999 compared to $1.5 million, or
0.6 percent, at December 31, 1998. Nonperforming loans increased $656,000, or
82.3 percent, from $797,000 at December 31, 1998 to approximately $1.5 million
at March 31, 1999. The amount of other real estate owned that was held by the
Company on March 31, 1999 amounted to $581,000, a decrease of $140,000, or 19.4
percent, since December 31, 1998. There were no foreclosures of real estate
during the first quarter of 1999.
The following table presents the Company's nonperforming assets as of March 31,
1999:
($ in
Thousands)
---------
Impaired and Other Nonaccrual Loans $ 830
Loans Past Due 90 Days or More and Still Accruing Interest 623
Restructured Loans not Included in the Above -
------
Total Nonperforming Loans 1,453
Other Real Estate Owned 581
------
Total Nonperforming Assets $2,034
======
-10-
<PAGE>
PART I, ITEM 2 (CONTINUED)
Financial Information
Financial Condition (Continued)
Deposits
Deposits decreased $6.2 million, or 2.86 percent, from $217.6 million at
December 31, 1998 to $211.4 million at March 31, 1999. The decrease in deposits
was largely due to the inability of the Federal Reserve to process Security's
cash letter on December 31, 1998, as previously discussed. Interest-bearing
deposits actually showed an increase of $4.1 million, or 2.46 percent, over the
same time period.
Equity
At March 31, 1999, total equity was $26.2 million, or 10.63 percent of total
assets, compared to $25.7 million, or 10.18 percent of total assets, as of
December 31, 1998. Total equity increased primarily due to the retention of net
income during the quarter ended March 31, 1999, net of dividends paid.
Results of Operations
Net Income
The Company's net income increased 16.8 percent to $807,000 for the three months
ended March 31, 1999, compared to $691,000 recorded in the comparable prior
period. This increase in net income is essentially due to the continued loan
growth resulting in a 14.4 percent increase in interest and fees on loans along
with an increase of 97.8 percent in mortgage origination fees resulting from the
establishment of the Company's Houston and Chatham County mortgage lending
offices. Noninterest expenses also increased for the three months ended March
31, 1999 to $2.2 million from $2.0 million for the three months ended March 31,
1998.
Net Interest Income
The Company's net interest margin remained relatively unchanged for the
comparable three month periods. Net interest income before the provision for
loan losses amounted to $2.9 million for the three-month period ended March 31,
1999 versus $2.5 million for the comparable period ended March 31, 1998.
Total interest income increased to $4.9 million for the three month period ended
March 31, 1999 from $4.4 million during the comparable prior year period. Again,
the increase is primarily due to an increase in loans of 24.4 percent as of
March 31, 1999 compared to March 31, 1998.
Total interest expense increased minimally for the three months ended March 31,
1999 compared to the prior period ended March 31, 1998.
-11-
<PAGE>
PART I, ITEM 2 (CONTINUED)
Financial Information
Results of Operations (Continued)
Net Interest Income (Continued)
The following table presents the effective yields and costs of funds for the
three-month periods ended March 31, 1999 and 1998:
Average Balance Sheets
Average Balance Rate/Yield
Three Months Ended Three Months Ended
March 31 March 31
------------------- ---------------
1999 1998 1999 1998
-------- -------- ------ -----
($ in Thousands)
Interest-Earning Assets
Loans $180,169 $145,203 9.56% 10.33%
Securities 38,037 36,439 6.15 6.28
Federal Funds Sold 3,059 12,880 4.32 5.40
-------- -------- ---- -----
Total Interest-Earning Assets $221,265 $194,522 8.87% 9.25%
======== ======== ==== =====
Interest-Bearing Liabilities
Deposits $167,386 $153,369 4.49% 4.82%
Borrowings 8,205 2,584 4.68 6.04
-------- -------- ---- -----
Total Interest-Bearing Liabilities $175,591 $155,953 4.50% 4.85%
======== ======== ==== =====
Interest Rate Spread 4.37% 4.40%
==== =====
Net Interest Margin 5.30% 5.36%
==== =====
-12-
<PAGE>
PART I, ITEM 2 (CONTINUED)
Financial Information
Results of Operations (Continued)
Net Interest Income (Continued)
The following table provides a detailed analysis of the changes in interest
income and interest expense due to changes in rate and volume for the three
months ended March 31, 1999 compared to the nine months ended March 31, 1998.
Rate/Volume Analysis
Changes From 1999 to 1998 (1)
----------------------------------
Net
Volume Rate Change
------ ------- ------
($ in Thousands)
Interest Income
Loans $3,613 $(1,461) $2,152
Securities 100 (48) 52
Federal Funds Sold (531) (33) (564)
------ ------- ------
Total Interest Income 3,182 (1,542) 1,640
------ ------- ------
Interest Expense
Deposits 676 (564) 112
Borrowings 339 (111) 228
------ ------- ------
Total Interest Expense 1,015 (675) 340
------ ------- ------
Net Interest Income $2,167 $ (867) $1,300
====== ======= ======
(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
Financial Information (CONTINUED)
Results of Operations (Continued)
Provision for Loan Losses
The Company establishes a provision for loan losses, which is charged to
operations, in order to maintain the allowance for loan losses at a level which
is deemed to be appropriate by management. The amount of this provision is based
upon an assessment of prior loss experience, the volume and type of lending
presently being conducted by the Company, industry standards, past due loans,
economic conditions of the Company's market area and other factors related to
the collectability of the Company's loan portfolio. For the three-month period
ended March 31, 1999, the provision for loan losses amounted to $189,000. The
provision for loan losses was $80,000 for the three-month period ended March 31,
1998.
Although management utilizes its best judgment in providing for inherent losses,
there can be no assurance that the Company will not have to increase its
provisions for loan losses in the future as a result of future increases in
nonperforming loans or for other reasons which could adversely affect the
Company's results of operations. In addition, various regulatory agencies, as an
integral part of their examination process, periodically review the allowance
for loan losses. Such agencies may require the Company to recognize additions to
the allowance for loan losses based on their judgments of information which is
available to them at the time of their examination.
Noninterest Income and Expense
Noninterest income for the three-months ended March 31, 1999 was $759,000
compared to $570,000 for the comparable prior period. The increase was largely
the result of an increase in mortgage origination fees generated by the
Company's mortgage lending offices operated in Warner Robins and Savannah,
Georgia. Service charges on deposit accounts amounted to $351,000 and $348,000
for the three months ended March 31, 1999 and 1998, respectively.
Total noninterest expense increased 10.8 percent for the three months ended
March 31, 1999 compared to the same period in 1998. This increase is due to the
continued growth of the Company through personnel and capital assets.
Income Taxes
Income tax expense totaled $437,000 for the three months ended March 31, 1999
compared to $342,000 for the comparable prior period. These amounts resulted in
the effective tax rates of 35 percent for 1999 and 33 percent for 1998.
Liquidity and Capital Adequacy
Stockholders' equity increased $2.3 million to $26.2 million at March 31, 1999
due mainly to retention of earnings, net of dividends paid. It is management's
intention to continue paying a reasonable return on stockholders' investment
while retaining adequate earnings to allow for continued growth.
-14-
<PAGE>
PART I, ITEM 2
Financial Information (CONTINUED)
Results of Operations (Continued)
Liquidity and Capital Adequacy (Continued)
The Federal Reserve Board measures capital adequacy for bank holding companies
by using a risk-based capital frame-work and by monitoring compliance with
minimum leverage ratio guidelines. The minimum ratio of total risk-based capital
to risk-adjusted assets is 8 percent at March 31, 1999, of which 4 percent must
be Tier 1 capital. The Company's total risk-based capital ratio was 14.65
percent at March 31, 1999. The Company's Tier 1 risk-based capital ratio was
13.55 percent at March 31, 1999.
In addition, the Federal Reserve Board has established minimum leverage ratio
guidelines for bank holding companies. Those guidelines provide for a minimum
leverage ratio of 3 percent for financial institutions that meet certain
criteria, including that they maintain the highest regulatory rating. All other
financial institutions are required to maintain a leverage ratio of 4 percent.
The Company's leverage ratio was 10.74 percent at March 31, 1999.
The Federal Deposit Insurance Corporation Improvement Act (FDICIA) establishes
minimum capital requirements for all depository institutions and established
five capital tiers: "well capitalized," "adequately capitalized,"
"under-capitalized," "significantly under-capitalized" and "critically
under-capitalized." FDICIA imposes significant restrictions on the operations of
a bank that is not at least adequately capitalized. A depository institution's
capital tier will depend upon where its capital levels are in relation to
various other capital measures that include a risk-based capital measure, a
leverage ratio capital measure and other factors. Under regulations adopted, for
an institution to be well capitalized, it must have a total risk-based capital
ratio of at least 10 percent, a Tier 1 risk-based capital ratio of at least 6
percent and a Tier 1 leverage ratio of at least 5 percent. The institution may
also not be subject to any specific capital order or directive.
At March 31, 1999, both of the Company's subsidiary banks were in compliance
with established guidelines.
Market Risk and Interest Rate Risk
Market risk is the risk of loss from adverse changes in market prices and rates.
The Company's market risk arises primarily from interest rate risk inherent in
its lending, investment and deposit taking activities. To that end, management
actively monitors and manages its interest rate risk exposure.
Year 2000 Issues
The Company relies heavily upon computers for the daily conduct of its business
and will commit all resources necessary to achieve a satisfactory and timely
solution to computer based problems related to the Year 2000 and beyond.
The Year 2000 Issue is the result of computer programs being written using two
digits rather than four to define the applicable year. Any of the Company's
programs that have time-sensitive software may recognize a date using "00" as
the year 1900 rather than the year 2000.
-15-
<PAGE>
PART I, ITEM 2 (CONTINUED)
Financial Information
Results of Operations (Continued)
Year 2000 Issues (Continued)
In accordance with sound management policy and directives from regulatory
agencies, the Company began the Year 2000 review of hardware and software in
1997. The review included not only computer and information systems but heating
and cooling systems, alarms, vaults, elevators and other office equipment, and
was completed in 1998. Items that were found not Year 2000 compliant were slated
for upgrade or replacement.
The Company presently believes that, with modification to existing software and
conversion to new software, the Year 2000 problem will not be a significant
operational problem for the Company's computer system or the third parties'
computer systems with whom the Company relies upon.
Forward Looking Statements
Within these financial statements we have included certain "forward looking
statements" concerning the future operations of the Company. It is management's
desire to take advantage of the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995. This statement is for the express
purpose of availing the Company of the protections of such safe harbor with
respect to all "forward looking statements" contained in our financial
statements. We have used "forward looking statements" to describe the future
plans and strategies including our expectations of the Company's future
financial results. Management's ability to predict results or the effect of
future plans and strategy is inherently uncertain. Factors that could affect
results include interest rate trends, competition, the general economic climate
in the middle Georgia area, the southeastern United States region and the
country as a whole, loan delinquency rates, Year 2000 uncertainties, and changes
in federal and state regulations. These factors should be considered in
evaluating the "forward looking statements," and undue reliance should not be
placed on such statements.
-16-
<PAGE>
PART II
Other Information
SNB BANCSHARES, INC. AND SUBSIDIARIES
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(a) footnote 24, filed with the Securities and Exchange Commission for
the year ended December 31, 1998 (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, 1999.
ITEM 6
Exhibits and Reports on Form 8-K
<TABLE>
<CAPTION>
PAGE
----------
<S> <C> <C>
(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, 1999 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, 1999 and Incorporated Herein
11 -Statement Re Computation of Per Share Earnings Attachment
27 -Financial Data Schedule Attachment
27(a) -Restated Financial Data Schedule Attachment
</TABLE>
(b) Reports on Form 8-K
No reports on Form 8-K have been filed by the registrant during the quarter
ended March 31, 1999.
-17-
<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: May 17, 1999
--------------------------------------------------
/s/ Michael T. O'Dillon
- -------------------------------------------------------
Michael T. O'Dillon
Senior Vice-President/Treasurer/Chief Financial Officer
Date: May 17, 1999
--------------------------------------------------
<PAGE>
EXHIBIT NO.11
STATEMENT OF COMPUTATION OF EARNINGS PER SHARE
Quarter Ended
March 31, 1999
-------------------------
Earnings
Shares Per Share
------ ---------
(in Thousands)
3,341 $0.24
Basic Weighted Average Shares Outstanding ===== =====
Diluted
Average Shares Outstanding 3,341
Common Stock Equivalents 32
-----
3,373 $0.24
===== =====
Quarter Ended
March 31, 1998
-------------------------
Earnings
Shares Per Share
------ ---------
(in Thousands)
Basic Weighted Average Shares Outstanding 3,104 $0.22
===== =====
Diluted
Average Shares Outstanding 3,104
Common Stock Equivalents 233
-----
3,337 $0.21
===== =====
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 10,414
<INT-BEARING-DEPOSITS> 18
<FED-FUNDS-SOLD> 2,731
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 33,718
<INVESTMENTS-CARRYING> 3,015
<INVESTMENTS-MARKET> 3,134
<LOANS> 186,790
<ALLOWANCE> 2,121
<TOTAL-ASSETS> 246,402
<DEPOSITS> 211,357
<SHORT-TERM> 2,914
<LIABILITIES-OTHER> 2,688
<LONG-TERM> 3,251
3,341
0
<COMMON> 0
<OTHER-SE> 22,851
<TOTAL-LIABILITIES-AND-EQUITY> 246,402
<INTEREST-LOAN> 4,289
<INTEREST-INVEST> 540
<INTEREST-OTHER> 34
<INTEREST-TOTAL> 4,863
<INTEREST-DEPOSIT> 1,878
<INTEREST-EXPENSE> 1,974
<INTEREST-INCOME-NET> 2,889
<LOAN-LOSSES> 189
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 2,215
<INCOME-PRETAX> 1,244
<INCOME-PRE-EXTRAORDINARY> 807
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 807
<EPS-PRIMARY> 0.24
<EPS-DILUTED> 0.24
<YIELD-ACTUAL> 5.11
<LOANS-NON> 830
<LOANS-PAST> 623
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 2,070
<CHARGE-OFFS> 151
<RECOVERIES> 13
<ALLOWANCE-CLOSE> 2,121
<ALLOWANCE-DOMESTIC> 2,121
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<RESTATED>
<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> 9,073
<INT-BEARING-DEPOSITS> 18
<FED-FUNDS-SOLD> 11,660
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 31,024
<INVESTMENTS-CARRYING> 4,921
<INVESTMENTS-MARKET> 5,046
<LOANS> 150,096
<ALLOWANCE> 1,898
<TOTAL-ASSETS> 215,021
<DEPOSITS> 186,842
<SHORT-TERM> 452
<LIABILITIES-OTHER> 2,294
<LONG-TERM> 1,565
3,144
0
<COMMON> 0
<OTHER-SE> 20,722
<TOTAL-LIABILITIES-AND-EQUITY> 215,021
<INTEREST-LOAN> 3,751
<INTEREST-INVEST> 507
<INTEREST-OTHER> 174
<INTEREST-TOTAL> 4,432
<INTEREST-DEPOSIT> 1,850
<INTEREST-EXPENSE> 1,890
<INTEREST-INCOME-NET> 2,543
<LOAN-LOSSES> 80
<SECURITIES-GAINS> 5
<EXPENSE-OTHER> 1,999
<INCOME-PRETAX> 1,033
<INCOME-PRE-EXTRAORDINARY> 691
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 691
<EPS-PRIMARY> 0.22
<EPS-DILUTED> 0.20
<YIELD-ACTUAL> 5.14
<LOANS-NON> 719
<LOANS-PAST> 467
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,861
<CHARGE-OFFS> 74
<RECOVERIES> 31
<ALLOWANCE-CLOSE> 1,898
<ALLOWANCE-DOMESTIC> 1,898
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
