<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, 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.)
<TABLE>
<S> <C> <C>
2918 RIVERSIDE DRIVE, MACON, GEORGIA 31204
- --------------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
</TABLE>
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 $1.00 par value common stock as of September 30, 1999
- ------------------------------------------------------------------------------
Transitional Small Business Disclosure Format (Check One): ___ Yes ___ No
<PAGE>
SNB BANCSHARES, INC. AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
Page
Number
-------------
<S> <C>
PART I Financial Information
Condensed Consolidated Balance Sheet 1
Condensed Consolidated Statements of Income and Comprehensive Income 2
Condensed Consolidated Statements of Cash Flows 4
Notes to Condensed Consolidated Financial Statements 5
Management's Discussion and Analysis of Financial
Condition and Results of Operations 12
PART II Other Information
ITEM 1 Legal Proceedings 20
ITEM 2 Changes in Securities 20
ITEM 3 Defaults Upon Senior Securities 20
ITEM 4 Submission of Matters to a Vote of Security Holders 20
ITEM 5 Other Information 20
ITEM 6 Exhibits and Reports on Form 8-K 21
</TABLE>
<PAGE>
PART I, ITEM 1
Financial Information
SNB BANCSHARES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1999
(UNAUDITED)
($ IN THOUSANDS, EXCEPT PER SHARE AMOUNT)
ASSETS
Cash and Due from Banks $ 11,097
-------------
Federal Funds Sold 9,060
-------------
Investments Securities 37,754
-------------
Loans 195,041
-------------
Premises and Equipment 8,049
-------------
Other Assets 3,866
-------------
Total Assets $ 264,867
=============
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits $ 226,628
-------------
Borrowed Money 8,600
-------------
Other Liabilities 2,648
-------------
237,876
-------------
Stockholders' Equity
Common Stock, Par Value $1 Per Share; Authorized
10,000 Shares; Issued and Outstanding 3,341 Shares 3,341
Paid-In Capital 12,612
Retained Earnings 11,338
Accumulated Other Comprehensive Income, Net of Tax (300)
-------------
26,991
-------------
Total Liabilities and Stockholders' Equity $ 264,867
=============
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 SEPTEMBER 30
(UNAUDITED)
($ IN THOUSANDS, EXCEPT PER SHARE AND SHARE AMOUNTS)
<TABLE>
<CAPTION>
1999 1998
--------------- --------------
<S> <C> <C>
Interest Income $ 5,165 $ 4,493
Interest Expense 2,172 2,057
------------ -------------
Net Interest Income 2,993 2,436
Provision for Loan Losses 190 198
------------ -------------
Net Interest Income After Provision for Loan Losses 2,803 2,238
Noninterest Income 746 886
Noninterest Expense 2,474 2,181
------------ -------------
Income Before Income Taxes 1,075 943
Income Taxes 286 344
------------ -------------
Net Income 789 599
Other Comprehensive Income, Net of Income Tax
Unrealized Holding Gains (Losses) (61) 164
------------ -------------
Comprehensive Income $ 728 $ 763
============ =============
Basic Earnings Per Share $ 0.24 $ 0.19
============ =============
Diluted Earnings Per Share $ 0.23 $ 0.18
============ =============
Weighted Average Common and Common Equivalent
Shares Outstanding 3,373,145 3,155,500
============ =============
</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)
<TABLE>
<CAPTION>
1999 1998
----------------- ------------------
<S> <C> <C>
Interest Income $ 15,010 $ 13,746
Interest Expense 6,205 5,856
----------------- -----------------
Net Interest Income 8,805 7,890
Provision for Loan Losses 528 466
----------------- -----------------
Net Interest Income After Provision for Loan Losses 8,277 7,424
Noninterest Income 2,274 1,861
Noninterest Expense 7,065 6,234
----------------- -----------------
Income Before Income Taxes 3,486 3,051
Income Taxes 1,098 1,046
----------------- -----------------
Net Income 2,388 2,005
Other Comprehensive Income, Net of Income Tax
Unrealized Holding Gains (Losses) (498) 195
----------------- -----------------
Comprehensive Income $ 1,890 $ 2,200
================= =================
Basic Earnings Per Share $ 0.71 $ 0.64
================= =================
Diluted Earnings Per Share $ 0.71 $ 0.60
================= =================
Weighted Average Common and Common Equivalent
Shares Outstanding 3,373,145 3,134,704
================= =================
</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
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30
(UNAUDITED)
($ IN THOUSANDS)
<TABLE>
<CAPTION>
1999 1998
----------------- ----------------
<S> <C> <C>
Cash Provided by Operations $ 3,150 $ 3,157
---------------- ----------------
Cash Flows from Investing Activities
Net Sale (Purchase) of Investment Securities
Available for Sale (383) 4,160
Net Sale of Investment Securities
Held to Maturity 1,138 1,092
Loans to Customers (18,476) (26,912)
Purchase of Premises and Equipment (789) (1,334)
Other Real Estate and Repossessions 424 632
---------------- ----------------
(18,086) (22,362)
---------------- ----------------
Cash Flows from Financing Activities
Interest-Bearing Customer Deposits 18,154 16,358
Noninterest-Bearing Customer Deposits (9,099) (9,918)
Demand Note to the U.S. Treasury 838 (238)
Issuance of Common Stock - 798
Dividends Paid (635) (504)
Federal Funds Purchased 1,461 6,263
Repayments on Notes to Federal Home Loan Bank (107) 1,670
---------------- ----------------
10,612 14,429
---------------- ----------------
Net Decrease in Cash and Cash Equivalents (4,324) (4,776)
Cash and Cash Equivalents, Beginning 24,481 21,293
---------------- ----------------
Cash and Cash Equivalents, Ending $ 20,157 $ 16,517
================ ================
</TABLE>
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 Bank of Bibb County, located in
Macon, Georgia and Security Bank of Houston County (formerly Crossroads Bank of
Georgia), located in Perry, Georgia (the Banks). All intercompany accounts have
been eliminated in consolidation.
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.
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.
For the three months ended September 30, 1999, other comprehensive income is
comprised of the following:
<TABLE>
<CAPTION>
Before Tax Tax Effect Net of Tax
--------------- ------------- -------------
($ in Thousands)
<S> <C> <C> <C>
Unrealized Loss on Securities
Loss Arising During Year $(182) $(120) $(62)
Reclassification Adjustment 2 1 1
--------------- ------------- -------------
Net Unrealized Loss $(180) $(119) $(61)
=============== ============= =============
</TABLE>
-5-
<PAGE>
PART I, ITEM 1 (CONTINUED)
Financial Information
(2) Loans
Loans as of September 30, 1999 are comprised of the following:
<TABLE>
<CAPTION>
($ in
Thousands)
--------------
<S> <C>
Commercial $ 38,174
Real Estate-Construction 15,791
Real Estate-Other 122,300
Installment Loans to Individuals for Personal Expenditures 17,228
Other 4,032
--------------
197,525
Allowance for Loan Losses (2,356)
Unearned Interest and Fees (128)
--------------
$195,041
==============
</TABLE>
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 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, 1999 under the requirements of SFAS
128:
-6-
<PAGE>
PART I, ITEM 1 (CONTINUED)
Financial Information
(3) Earnings Per Share (Continued)
<TABLE>
<CAPTION>
Three Months Nine Months
Ended Ended
September 30, September 30,
1999 1999
-------------- --------------
<S> <C> <C>
Basic Earnings Per Share
Net Income Per Common Share $ 0.24 $ 0.71
Weighted Average Common Shares 3,340,624 3,340,624
Diluted Earnings Per Share
Net Income Per Common Share $ 0.23 $ 0.71
Weighted Average Common Shares 3,373,145 3,373,145
</TABLE>
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 $18.3650 and $18.6609 for the three and
nine month periods, respectively. SNB's stock is quoted on the NASDAQ market
under the symbol SNBJ.
(4) Allowance for Loan Losses
The allowance method is used in providing for losses on loans. Accordingly, all
loan losses decrease the allowance and all recoveries increase it. The provision
for loan losses is based on factors which, in management's judgment, deserve
current recognition in estimating possible loan losses. Such factors considered
by management include growth and composition of the loan portfolio, economic
conditions and the relationship of the allowance for loan losses to outstanding
loans.
An allowance for loan losses is maintained for all impaired loans. Provisions
are made for impaired loans upon changes in expected future cash flows or
estimated net realizable value of collateral. When determination is made that
impaired loans are wholly or partially uncollectible, the uncollectible portion
is charged off.
The following table presents the Company's loan loss experience on all loans for
the three months ended September 30:
-7-
<PAGE>
PART I, ITEM 1 (CONTINUED)
Financial Information
(4) Allowance for Loan Losses (Continued)
<TABLE>
<CAPTION>
($ in Thousands)
----------------------------
1999 1998
------------ -----------
<S> <C> <C>
Allowance for Loan Losses, July 1 $2,258 $ 2,007
------------ -----------
Charge-Offs
Commercial, Financial and Agricultural 55 6
Real Estate - Mortgage - -
Consumer 42 224
------------ -----------
97 230
------------ -----------
Recoveries
Commercial, Financial and Agricultural - -
Real Estate - Mortgage - -
Consumer 5 9
------------ -----------
5 9
------------ -----------
Net Charge-Offs (92) (221)
----------- -----------
Provision for Loan Losses 190 198
----------- -----------
Allowance for Loan Losses, September 30 $ 2,356 $ 1,984
=========== ===========
Ratio of Net Charge-Offs to Average Loans (0.05)% (0.14)%
=========== ===========
</TABLE>
-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)
------------------------------
1999 1998
------------ -------------
<S> <C> <C>
Allowance for Loan Losses, January 1 $2,070 $1,861
------------ -------------
Charge-Offs
Commercial, Financial and Agricultural 68 22
Real Estate - Mortgage - -
Consumer 249 375
------------ -------------
317 397
------------ -------------
Recoveries
Commercial, Financial and Agricultural 38 8
Real Estate - Mortgage - -
Consumer 37 46
------------ -------------
75 54
------------ -------------
Net Charge-Offs (242) (343)
------------ ------------
Provision for Loan Losses 528 466
------------ ------------
Allowance for Loan Losses, September 30 $2,356 $1,984
============ =============
Ratio of Net Charge-Offs to Average Loans (0.13)% (0.06)%
============ ============
</TABLE>
(5) Investment Securities
The Bank records investment securities under Statement of Financial Accounting
Standards (SFAS) No. 115, Accounting for Certain Investments in Debt and Equity
Securities. In accordance with the provisions of SFAS 115, the Bank elected to
classify securities individually as either available for sale or held to
maturity. Securities classified as held to maturity are recorded at amortized
cost. Those classified as available for sale are adjusted to market value
through a tax-effected increase or reduction in stockholders' equity.
-9-
<PAGE>
PART I, ITEM 1 (CONTINUED)
Financial Information
(5) Investment Securities
Investment securities as of September 30, 1999 are summarized as follows:
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Securities Available for Sale Cost Gains Losses Value
----------------- ----------------- ----------------- -----------------
($ in Thousands)
<S> <C> <C> <C> <C>
U.S. Treasuries $ 994 $ 8 $ 1,002
U.S. Government Agencies
Mortgage Backed 9,873 5 $ (160) 9,718
Other 17,692 (262) 17,430
State, County and Municipal 5,090 41 (77) 5,054
Other 1,542 (9) 1,533
---------------- ---------------- --------------- ----------------
$ 35,191 $ 54 $ (508) $ 34,737
================ ================ =============== ================
Securities Held to Maturity
State, County and Municipal $ 3,017 $ 45 $ (3) $ 3,059
================ ================ ============== ================
</TABLE>
Unrealized holding losses, net of tax, on securities available for sale
approximating $300,000 have been recorded in stockholders' equity as of
September 30, 1999.
(6) Premises and Equipment
Premises and equipment are comprised of the following as of September 30, 1999:
($ in
Thousands)
--------------
Land $ 2,116
Building 4,041
Furniture, Fixtures and Equipment 4,298
Leasehold Improvements 195
Construction in Progress 218
---------
10,868
(2,819)
---------
$ 8,049
=========
Depreciation charged to operations totaled $109,002 for the three months ended
September 30, 1999 and $526,049 for the nine months ended September 30, 1999.
-10-
<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 through September 30, 1999 follows:
Incentive
Stock
Options
---------------
Granted 62,500
Canceled -
Exercised -
---------------
Outstanding, September 30, 1999 62,500
===============
Eligible to be Exercised, September 30, 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 September 30,
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
September 30, 1999 are as follows:
Actual Minimum
-------------- ----------------
Tier 1 Capital Ratio 12.99% 4.00%
Total Capital Ratio 14.13% 8.00%
Leverage Ratio 10.84% 4.00%
(8) Noncash Financing Activities
Noncash investing activities for the nine months ended September 30 are as
follows:
<TABLE>
<CAPTION>
1999 1998
------------- -------------
<S> <C> <C>
Acquisition of Real Estate through Loan Foreclosure $ - $ 349,384
============= =============
</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 three-month and nine-month periods ended September 30, 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 and Security Bank of Houston County
(formerly Crossroads Bank of Georgia). SNB and its wholly-owned subsidiaries are
collectively known as "the Company."
Overview
The Company's net income for the three-month and nine-month periods ended
September 30, 1999 was $789,000 and $2,388,000 or $0.23 and $0.71 diluted
earnings per share, compared to $599,000 and $2,005,000 or $0.18 and $0.60 in
the same three-month and nine-month periods in the preceding year. The increase
in net income for the three-month and nine-month periods ended September 30,
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 1.26 percent for
the nine-month period ended September 30, 1999 compared to 1.22 percent for the
same period in 1998. Return on average equity of 12.11 percent was recorded for
the nine-month period ended September 30, 1999, compared to 11.13 percent for
the same period in 1998.
At September 30, 1999, the Company had total assets of $265 million compared to
$252 million at December 31, 1998. Management attributes the majority of this
increase to the continued loan and deposit growth. In relation, total interest
earning assets increased 6.6 percent over this time frame amounting to $242
million or 91.31 percent of total assets as of September 30, 1999, compared to
$227 million or 89.81 percent of total assets as of December 31, 1998. The
Company has introduced a retail banking Internet service which has been well
received by customers, whereby the customers can pay bills, open accounts, apply
for loans and communicate with the bank via e-mail. As it is a new service
however, little growth can currently be attributed to this product.
Financial Condition
Cash and Cash Equivalents
Cash and due from banks decreased approximately $2.7 million to $11 million at
September 30, 1999 from $13.8 million at December 31, 1998 and federal funds
sold decreased by $1.6 million or 14.94 percent to $9.1 million at September 30,
1999 from $10.7 million at December 31, 1998. These are normal fluctuations seen
in the conduct of customer business and the increased loan demand upon the
Company.
-12-
<PAGE>
PART I, ITEM 2 (CONTINUED)
Financial Information
Financial Condition (Continued)
Investment Securities
Investment securities have also decreased modestly since December 31, 1998 when
investment securities totaled $39.3 million. As of September 30, 1999,
investment securities totaled $37.8 million, a decrease of $1.5 million or 3.9
percent since December 31, 1998. The net decrease was primarily due to an
increase in mortgage-backed and U. S. Agency securities offset by the sales and
maturity of U. S. Treasury and municipal securities. This fluctuation is also
considered a normal result of everyday business operations as the liquidity and
loan needs of the customers are addressed. The Company's investment in
securities is largely centered in U.S. Government Agency securities and
primarily classified as available for sale.
Loans Receivable, Net
Aggregate loans receivable totaled $195 million at September 30, 1999, an
increase of $18 million or 10.1 percent from $177.1 million at December 31,
1998. The majority of new loans being funded are commercial and residential
mortgage loans. The mix of loans is substantially unchanged at those dates.
Nonperforming Assets
The Company's level of nonperforming assets remains relatively unchanged at
approximately $1.7 million or 0.6 percent of total assets at September 30, 1999
compared to $1.5 million or 0.6 percent at December 31, 1998. Nonperforming
loans increased $619,000 or 77.7 percent from $797,000 at December 31, 1998 to
approximately $1.4 million at September 30, 1999. This increase results from a
308.4 percent increase of loans past due 90 days or more and still accruing
interest.
The amount of other real estate owned that was held by the Company on September
30, 1999 totaled $235,000, a decrease of $486,000 or 67.4 percent since December
31, 1998. Approximately $296,000 of this decrease is due to the sale of one
foreclosed property by Security Bank of Houston County. The Bank recognized a
loss on the sale of this property in the amount of $67,000. The remainder of the
decrease is attributed to various sales of properties held by Security Bank of
Bibb County as of December 31, 1998. There were no foreclosures of real estate
during the third quarter of 1999.
-13-
<PAGE>
PART I, ITEM 2 (CONTINUED)
Financial Information
Financial Condition (Continued)
Nonperforming Assets (Continued)
The following table presents the Company's nonperforming assets as of September
30, 1999:
<TABLE>
<CAPTION>
($ in
Thousands)
---------------
<S> <C>
Impaired and Other Nonaccrual Loans $ 587
Loans Past Due 90 Days or More and Still Accruing Interest 829
Restructured Loans not Included in the Above -
------------
Total Nonperforming Loans 1,416
Other Real Estate Owned 235
------------
Total Nonperforming Assets $ 1,651
============
</TABLE>
Deposits
Deposits increased $9.1 million or 4.16 percent from $217.6 million at December
31, 1998 to $226.6 million at September 30, 1999. The nominal increase in
deposits is attributed to the Company's continued growth in the middle Georgia
area. Interest-bearing deposits actually increased $18.2 million or 10.9 percent
over the same time period.
Equity
At September 30, 1999, total equity was $27 million or 10.19 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 intervening period, net of dividends paid.
Results of Operations
Net Income
The Company's net income increased 31.9 percent to $789,000 for the three months
ended September 30, 1999, compared to $599,000 recorded in the comparable prior
period. Net income increased 19.1 percent to $2,388,000 for the nine months
ended September 30, 1999, compared to $2,005,000 for the comparable period. This
increase in net income is primarily due to the continued loan growth resulting
in increases of 22.7 percent and 12.7 percent in interest and fees on loans for
the three- and nine-month periods, respectively, along with an increase in
mortgage origination fees resulting from the establishment of the Company's
Houston and Chatham County mortgage lending offices.
-14-
<PAGE>
PART I, ITEM 2 (CONTINUED)
Financial Information
Results of Operations (Continued)
Net Interest Income
The Company's net interest margin increased from 5.13 percent for the nine
months ended September 30, 1998 to 5.27 percent for the same period in 1999. Net
interest income before the provision for loan losses amounted to $3.0 million
and $8.8 million for the three and nine month periods, respectively, ending
September 30, 1999 versus $2.4 million and $7.9 million for the comparable
periods ending September 30, 1998.
Total interest income increased to $5.2 million and $15.0 million for the three-
and nine-month periods ended September 30, 1999 from $4.5 million and $13.7
million during the comparable prior periods. The increase was primarily the
result of an increase in the average interest-earning assets of $27.5 million
for the nine months ended September 30, 1999 compared to the nine months ended
September 30, 1998. Additionally, the yield earned on average interest-earning
assets decreased 13 basis points during the nine months ended September 30, 1999
compared to the 1998 period.
Total interest expense increased minimally by $115,000 and $350,000 to $2.2
million and $6.2 million for the three and nine months ended September 30, 1999
from $2.1 million and $5.9 million for the comparable prior periods. The
increase was due to an increase in interest expense associated with deposits,
where the average balance increased by $28.0 million during the nine months
ended September 30, 1999 compared to the 1998 period.
The following table presents the effective yields and costs of funds for the
nine month periods ended September 30, 1999 and 1998:
Average Balance Sheets
<TABLE>
<CAPTION>
Average Balance Rate/Yield
Nine Months Ended Nine Months Ended
September 30 September 30
---------------------------------- -------------------------------
1999 1998 1999 1998
-------------- --------------- ------------ ---------------
($ in Thousands)
<S> <C> <C> <C> <C>
Interest-Earning Assets
Loans $186,153 $154,476 9.52% 9.98%
Securities 36,037 36,692 6.36 5.68
Federal Funds Sold 4,398 7,956 4.55 6.57
------------- -------------- ----------- --------------
Total Interest-Earning Assets $226,588 $199,124 8.92% 9.05%
============= ============== =========== ==============
Interest-Bearing Liabilities
Deposits $218,036 $189,995 3.60% 3.95%
Borrowings 8,241 4,805 5.02 6.12
------------- -------------- ----------- --------------
Total Interest-Bearing Liabilities $226,277 $194,800 3.66% 4.01%
============= ============== =========== ==============
Interest Rate Spread 5.26% 5.04%
=========== ==============
Net Interest Margin 5.27% 5.13%
=========== ==============
</TABLE>
-15-
<PAGE>
PART I, ITEM 2 (CONTINUED)
Financial Information
Results of Operations (Continued)
Interest Income and Interest Expense (Continued)
The following table provides a detailed analysis of the changes in interest
income and interest expense due to changes in rate and volume for the nine
months ended September 30, 1999 compared to the nine months ended September 30,
1998.
Rate/Volume Analysis
<TABLE>
<CAPTION>
Changes From 1998 to 1999 (1)
---------------------------------------------------
Net
Volume Rate Change
--------------- ------------ --------------
($ in Thousands)
<S> <C> <C> <C>
Interest Income
Loans $4,136 $(1,814) $ 2,322
Securities (55) 265 210
Federal Funds Sold (337) (41) (378)
-------------- ---------- -------------
Total Interest Income 3,744 (1,590) 2,154
-------------- ---------- -------------
Interest Expense
Deposits 1,109 (663) 446
Borrowings 286 (54) 232
-------------- ---------- -------------
Total Interest Expense 1,395 (717) 678
-------------- ---------- -------------
Net Interest Income $2,349 $ (873) $ 1,476
============== ========== =============
</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 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 and
nine-month periods ended September 30, 1999, the provision for loan losses
amounted to $190,000 and $528,000. The provision for loan losses was $198,000
and $466,000 for the three- and nine-month periods ended September 30, 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 and nine months ended September 30, 1999 was
$746,000 and $2.3 million, respectively, compared to $886,000 and $1.9 million
for the comparable prior periods. The increase for the nine-month period 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 remained relatively unchanged for
the three- and nine-month periods amounting to $406,000 and $1.1 million for
1999 and $381,000 and $1.1 million for 1998.
Total noninterest expense was $2.5 million and $7.1 million for the three and
nine months ended September 30, 1999 compared to $2.2 million and $6.2 million
for the comparable periods in 1998. This increase can be attributed to the
continued growth of the Company through personnel and capital assets. Salaries
and employee benefits increased 14.5 percent and 15.6 percent to $1.4 million
and $3.9 million for the three and nine months ended September 30, 1999 compared
to $1.2 million and $3.4 million for the comparable period in 1998.
Income Taxes
Income tax expense totaled $286,000 and $1.1 million for the three- and
nine-month periods ended September 30, 1999 compared to $345,000 and $1.0
million for the comparable prior periods. These amounts resulted in the
effective tax rates of 32 percent for the nine months ended September 30, 1999
and 34 percent for the nine months ended September 30, 1998.
-17-
<PAGE>
PART I, ITEM 2 (CONTINUED)
Financial Information
Results of Operations (Continued)
Liquidity and Capital Adequacy
Stockholders' equity increased $1.3 million to $27.0 million at September 30,
1999 due primarily 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.
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 September 30, 1999, of which 4 percent
must be Tier 1 capital. The Company's total risk-based capital ratio was 14.13
percent at September 30, 1999. The Company's Tier 1 risk-based capital ratio was
12.99 percent at September 30, 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 10.84 percent at September 30, 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 September 30, 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.
-18-
<PAGE>
PART I, ITEM 2 (CONTINUED)
Financial Information
Results of Operations (Continued)
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.
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 regulation. These factors should be considered in
evaluating the "forward looking statements," and undue reliance should not be
placed on such statements.
-19-
<PAGE>
PART II
Other Information
SNB BANCSHARES, INC. AND SUBSIDIARY
ITEM 1
Legal Proceedings
None
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 3
Defaults Upon Senior Securities
None
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 September 30, 1999.
ITEM 5
Other Information
None
-20-
<PAGE>
PART II
Other Information (Continued)
ITEM 6
Exhibits and Reports on Form 8-K
<TABLE>
<CAPTION>
Page
---------------------
<S> <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(b) to the Registrant's 10-QSB (File No.
000-23261). Filed with the Commission on August 13, 1999 and
Incorporated Herein
11 - Statement Re Computation of Per Share Earnings Attachment
27 - 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 September 30, 1999.
-21-
<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: 11/8/99
------------------------------
/s/ Michael T. O'Dillon
- -----------------------------------
Michael T. O'Dillon
Senior Vice-President/Treasurer/Chief Financial Officer
Date: 11/8/1999
------------------------------
-22-
<PAGE>
EXHIBIT NO. 11
STATEMENT OF COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
September 30, 1999 September 30, 1999
--------------------------------- ------------------------------------
Earnings Earnings
Shares Per Share Shares Per Share
------------- --------------- ------------ -------------------
(in Thousands) (in Thousands)
<S> <C> <C> <C> <C>
Basic Weighted Average
Shares Outstanding 3,341 $0.71 3,341 $0.24
============= =============== ============ ===================
Diluted
Average Shares Outstanding 3,341 3,341
Common Stock Equivalents 32 32
------------- ------------
3,373 $0.71 3,373 $0.23
============= =============== ============ ===================
</TABLE>
<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>
-23-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 11,067
<INT-BEARING-DEPOSITS> 30
<FED-FUNDS-SOLD> 9,060
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 34,737
<INVESTMENTS-CARRYING> 3,017
<INVESTMENTS-MARKET> 3,059
<LOANS> 197,397
<ALLOWANCE> 2,356
<TOTAL-ASSETS> 264,867
<DEPOSITS> 226,867
<SHORT-TERM> 5,295
<LIABILITIES-OTHER> 2,648
<LONG-TERM> 3,305
0
0
<COMMON> 3,341
<OTHER-SE> 23,650
<TOTAL-LIABILITIES-AND-EQUITY> 264,867
<INTEREST-LOAN> 13,285
<INTEREST-INVEST> 1,572
<INTEREST-OTHER> 153
<INTEREST-TOTAL> 15,010
<INTEREST-DEPOSIT> 5,895
<INTEREST-EXPENSE> 6,205
<INTEREST-INCOME-NET> 8,805
<LOAN-LOSSES> 528
<SECURITIES-GAINS> (2)
<EXPENSE-OTHER> 7,065
<INCOME-PRETAX> 3,486
<INCOME-PRE-EXTRAORDINARY> 2,388
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,388
<EPS-BASIC> 0.71
<EPS-DILUTED> 0.71
<YIELD-ACTUAL> 4.85
<LOANS-NON> 587
<LOANS-PAST> 829
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 2,070
<CHARGE-OFFS> 317
<RECOVERIES> 75
<ALLOWANCE-CLOSE> 2,356
<ALLOWANCE-DOMESTIC> 2,356
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
