<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------------
FORM 10-QSB
(Mark One)
X QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
- --- EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996.
OR
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
- --- SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
------------- ------------
Commission File No. 33-36512-A
THOMASVILLE BANCSHARES, INC.
- --------------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Georgia 58 2175800
- ------------------------- ----------------------------------
(State of Incorporation) (I.R.S. Employer Identification No.)
301 North Broad Street Thomasville, Georgia 31792
- ------------------------------------------------------------------------------
(Address of Principal Executive Offices)
(912) 226-3300
- ------------------------------------------------------------------------------
(Issuer's Telephone Number, Including Area Code)
Not Applicable
- ------------------------------------------------------------------------------
(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 Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the issuer was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.
Yes X No
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares
outstanding of each of the issuer's classes of common equity as of the latest
practicable date.
Common stock, $1.00 par value per share 600,000 shares issued and
outstanding as of November 10, 1996.
(Page 1 of )
<PAGE> 2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
THOMASVILLE BANCSHARES, INC.
THOMASVILLE, GEORGIA
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
ASSETS (Unaudited) (Unaudited)
- ------ ----------- -----------
<S> <C> <C>
Cash and due from banks $ 2,562,356 $ 1,243,244
Federal funds sold 3,300,224 5,525,000
----------- -----------
Total cash and cash equivalents $ 5,862,580 $ 6,768,244
Investment securities:
Securities available-for-sale,
at market value 2,632,969 2,654,406
Loans, net 29,018,776 10,832,537
Property & equipment, net 1,325,281 643,727
Other assets 474,610 189,914
----------- -----------
Total Assets $39,314,216 $21,088,828
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Liabilities:
Deposits
Non-interest bearing deposits $ 7,511,993 $ 4,379,633
Interest bearing deposits 25,840,789 11,028,833
----------- -----------
Total deposits $33,352,782 $15,408,466
Other liabilities 221,760 58,522
----------- -----------
Total Liabilities $33,574,542 $15,466,988
----------- -----------
Commitments and contingencies
Shareholders' Equity:
Common stock, $1.00 par value,
10,000,000 shares authorized,
600,000 shares issued & outstanding $ 600,000 $ 600,000
Paid-in-capital 5,372,407 5,372,407
Retained deficit (206,554) (361,193)
Unrealized gain/(loss)
securities available-for-sale (26,179) 10,626
----------- -----------
Total Shareholders' Equity $ 5,739,674 $ 5,621,840
----------- -----------
Total Liabilities and
Shareholders' Equity $39,314,216 $21,088,828
=========== ===========
</TABLE>
Refer to notes to the consolidated financial statements.
2
<PAGE> 3
THOMASVILLE BANCSHARES, INC.
THOMASVILLE, GEORGIA
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED
(UNAUDITED)
<TABLE>
<CAPTION>
September 30,
--------------------
1996 1995
---- ----
<S> <C> <C>
Interest income $ 723,411 $ 58,609
Interest expense 284,919 2,333
---------- --------
Net interest income $ 438,492 $ 56,276
Provision for possible loan losses 100,000 - -
---------- --------
Net interest income after provision
for possible loan losses $ 338,492 $ 56,276
---------- --------
Other income
Gain on sale of mortgage loans $ 69
Service charges 10,384 - -
Other fees 30,159 - -
Rental income 5,400 - -
---------- --------
Total other income $ 46,012 $ - -
---------- --------
Salaries and benefits $ 149,040 $ 65,400
Rent 6,401 1,500
Depreciation 22,045 - -
Amortization 2,806 - -
Data processing 6,244 - -
Regulatory fees and assessments 5,727 - -
Other operating expenses 101,512 35,052
---------- --------
Total operating expenses $ 293,775 $101,952
---------- --------
Net income/(loss) before taxes $ 90,729 $(45,676)
Income taxes 10,000 - -
---------- --------
Net income/(loss) $ 80,729 $(45,676)
========== ========
Income/per share $ .13 N.A.
========== ========
</TABLE>
Refer to notes to the consolidated financial statements.
3
<PAGE> 4
THOMASVILLE BANCSHARES, INC.
THOMASVILLE, GEORGIA
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE QUARTERS ENDED
(UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND FOR THE PERIOD FROM
INCEPTION, JANUARY 15, 1995 THROUGH SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
September 30,
--------------------
1996 1995
---- ----
<S> <C> <C>
Interest income $1,758,522 $ 58,685
Interest expense 660,221 5,299
---------- ---------
Net interest income $1,098,301 $ 53,386
Provision for possible loan losses 211,000 - -
---------- ---------
Net interest income after provision
for possible loan losses $ 887,301 $ 53,386
---------- ---------
Other income
Gain on sale of mortgage loans $ 2,552 - -
Service charges 22,984 - -
Other fees 87,049 - -
Rental income 12,848 - -
---------- ---------
Total other income $ 125,433 $ - -
---------- ---------
Salaries and benefits $ 409,786 $ 123,630
Rent 21,290 4,000
Depreciation 64,510 - -
Amortization 8,418 - -
Data processing 17,406 - -
Regulatory fees and assessments 14,106 - -
Other operating expenses 312,579 44,956
---------- ---------
Total operating expenses $ 848,095 $ 172,586
---------- ---------
Net income/(loss) before taxes $ 164,639 $(119,200)
Income taxes 10,000 - -
---------- ---------
Net income/(loss) $ 154,639 $(119,200)
========== =========
Income/per share $ .26 N.A.
========== ========
</TABLE>
Refer to notes to the consolidated financial statements.
4
<PAGE> 5
THOMASVILLE BANCSHARES, INC.
THOMASVILLE, GEORGIA
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND FOR THE PERIOD FROM
INCEPTION, JANUARY 15, 1995 THROUGH SEPTEMBER 30, 1995
<TABLE>
<CAPTION>
For the period
Ended Sept. 30,
------------------
1996 1995
---- ----
<S> <C>
Cash flows from operating activities: $ 288,040 $ (203,946)
------------ ----------
Cash flows from Investing Activities:
Purchase of fixed assets $ (746,064) $ (197,538)
Deposit on real estate - - (10,000)
(Increase) in loans (18,391,956) - -
----------- ----------
Net cash used by investing activities $(19,138,020) $ (207,538)
------------ ----------
Cash flows from Financing Activities:
Sale of common stock $ - - $6,000,000
Increase in deposits 17,944,316 - -
------------ ----------
Net cash provided from financing activities $ 17,944,316 $6,000,000
------------ ----------
Net increase in cash and cash equivalents $ (905,664) $5,588,516
Cash and cash equivalents,
beginning of period 6,768,244 - -
------------ ----------
Cash and cash equivalents, end of period $ 5,862,580 $5,588,516
============ ==========
</TABLE>
Refer to notes to the financial statements.
5
<PAGE> 6
THOMASVILLE BANCSHARES, INC.
THOMASVILLE, GEORGIA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
SEPTEMBER 30, 1996
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions for Form 10-QSB. Accordingly, they do
not include all the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the nine-month period ended September 30, 1996 are not necessarily
indicative of the results that may be expected for the year ending December 31,
1996. For further information, refer to the financial statements and footnotes
included in the Company's annual report on Form 10-KSB for the year ended
December 31, 1995.
NOTE 2 - ORGANIZATION OF THE BUSINESS
Thomasville Bancshares, Inc., Thomasville, Georgia (the "Company"),
was incorporated under the laws of the State of Georgia on March 30, 1995, for
the purpose of becoming a bank holding company for a proposed national bank,
Thomasville National Bank (the "Bank"). The Company sold 600,000 shares of its
common stock, $1.0 par value per share, for $5,972,407. The Company injected
$4.8 million into the Bank's capital accounts upon opening on October 2, 1995.
During 1996, an additional $700,000 was injected into the Bank's capital
accounts.
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation and Reclassification. The consolidated
financial statements include the accounts of the Company and the Bank. All
significant intercompany accounts and transactions have been eliminated in
consolidation. Certain prior year amounts have been reclassified to conform to
the current year presentation.
Basis of Accounting. The accounting and reporting policies of the
Company conform to generally accepted accounting principles and to general
practices in the banking industry. The Company uses the accrual basis of
accounting by recognizing revenues when earned and expenses when incurred,
without regarding the time of receipt or payment of cash.
6
<PAGE> 7
THOMASVILLE BANCSHARES, INC.
THOMASVILLE, GEORGIA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
SEPTEMBER 30, 1996
Organizational Costs. In accordance with the Financial Accounting
Standards Board ("FASB") Statement No. 7, the Company and the Bank capitalized
all direct organizational costs that were incurred in the expectation that they
would generate future revenues or otherwise be of benefit after the Bank opened
for business. These capitalized costs are amortized over a sixty-month period
using the straight line method. As of September 30, 1996, total organizational
costs, net of accumulated amortization, were $34,096.
Investment Securities. The Company adopted Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investment in Debt and
Equity Securities" ("SFAS 115") on January 15, 1995. SFAS 115 requires
investments in equity and debt securities to be classified into three
categories:
1. Held-to-maturity securities: These are securities which the
Company has the ability and intent to hold until maturity.
These securities are stated at cost, adjusted for amortization
of premiums and the accretion of discounts.
2. Trading securities: These are securities which are bought and
held principally for the purpose of selling in the near
future. Trading securities are reported at fair market value,
and related unrealized gains and losses are recognized in the
income statement.
3. Available-for-sale securities: These are securities which are
not classified as either held-to-maturity or as trading
securities. These securities are reported at fair market
value. Unrealized gains and losses are reported, net of tax,
as separate components of shareholders' equity. Unrealized
gains and losses are excluded from the income statement.
Loans, Interest and Fee Income on Loans. Loans are stated at the
principal balance outstanding. Unearned discount, unamortized loan fees and
the allowance for possible loan losses are deducted from total loans in the
statement of condition. Interest income is recognized over the term of the
loan based on the principal amount outstanding. Points on real estate loans
are taken into income to the extent they represent the direct cost of
initiating a loan. The amount in excess of direct costs is deferred and
amortized over the expected life of the loan.
7
<PAGE> 8
THOMASVILLE BANCSHARES, INC.
THOMASVILLE, GEORGIA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
SEPTEMBER 30, 1996
Loans are generally placed on non-accrual status when principal or
interest becomes ninety days past due, or when payment in full is not
anticipated. When a loan is placed on non-accrual status, interest accrued but
not received is generally reversed against interest income. If collectibility
is in doubt, cash receipts on non-accrual loans are not recorded as interest
income, but are used to reduce principal.
Allowance for Possible Loan Losses. The provisions for loan losses
charged to operating expense reflect the amount deemed appropriate by
management to establish an adequate reserve to meet the present and foreseeable
risk characteristics of the current loan portfolio. Management's judgement is
based on periodic and regular evaluation of individual loans, the overall risk
characteristics of the various portfolio segments, past experience with losses
and prevailing and anticipated economic conditions. Loans which are determined
to be uncollectible are charged against the allowance. Provisions for loan
losses and recoveries on loans previously charged-off are added to the
allowance.
The Company adopted Statement of Financial Accounting Standards No.
114, "Accounting by Creditors for Impairment of a Loan," ("SFAS 114") on
January 15, 1995. Under the new standard, a loan is considered impaired, based
on current information and events, if it is probable that the Company will be
unable to collect the scheduled payments of principal or interest when due
according to the contractual terms of the loan agreement. The measurement of
impaired loans is generally based on the present value of expected future cash
flows discounted at the historical effective interest rate, except that all
collateral-dependent loans are measured for impairment based on the fair value
of the collateral.
In October, 1994, FASB issued Statement of Financial Accounting
Standards No. 118, "Accounting by Creditors for Impairment of a Loan - Income
Recognition and Disclosure" ("SFAS 118"). SFAS 118 amends SFAS 114 to allow a
creditor to use existing methods for recognizing interest income on an impaired
loan, rather than the methods prescribed in SFAS 114.
8
<PAGE> 9
THOMASVILLE BANCSHARES, INC.
THOMASVILLE, GEORGIA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
SEPTEMBER 30, 1996
Property and Equipment. Furniture and equipment are stated at cost,
net of accumulated depreciation. Depreciation is computed using the straight
line method over the estimated useful lives of the related assets. Maintenance
and repairs are charged to operations, while major improvements are
capitalized. Upon retirement, sale or other disposition of property and
equipment, the cost and accumulated depreciation are eliminated from the
accounts, and gain or loss is included in income from operations.
Income Taxes. The consolidated financial statements have been
prepared on the accrual basis. When income and expenses are recognized in
different periods for financial reporting purposes and for purposes of
computing income taxes currently payable, deferred taxes are provided on such
temporary differences.
Effective January 15, 1995, the Company adopted Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS 109").
Under SFAS 109, deferred tax assets and liabilities are recognized for the
expected future tax consequences of events that have been recognized in the
financial statements or tax return. Deferred tax assets and liabilities are
measured using the enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be realized or
settled.
Statement of Cash Flows. For purposes of reporting cash flows, cash
and cash equivalents include cash on hand, amounts due from banks and federal
funds sold. Generally, federal funds are purchased or sold for one day
periods.
Net Income Per Share. Net income per share was calculated using
600,000 as the average number of shares outstanding for the period ended
September 30, 1996. For the nine-month period ended September 30, 1996 net
income per share was $.26 and for the three-month period ended September 30,
1996 net income per share was $.13.
9
<PAGE> 10
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
The Company was incorporated in Georgia on March 30, 1995 to become a bank
holding company and to own and control all of the outstanding shares of a de
novo bank, Thomasville National Bank, Thomasville, Georgia ("Bank"). In a
public offering conducted during 1995, the Company sold and issued 600,000
shares of its own $1.00 par value common stock. Proceeds from the above stock
offering amounted to $5,972,407, net of selling expenses. The Company
purchased 100% of the Bank's common stock by injecting $4.8 million into the
Bank's capital accounts immediately prior to commencement of banking operations
on October 2, 1995. During 1996, an additional $.7 million was injected into
the Bank's capital accounts.
Total consolidated assets increased by $18.2 million to $39.3 million during
the nine-month period ended September 30, 1996. The increase was generated
primarily through an $18.0 million increase in deposits. The new funds, in
their entirety, were used to expand the loan portfolio.
Liquidity and Sources of Capital
Liquidity is the Company's ability to meet all deposit withdrawals immediately,
while also providing for the credit needs of customer. The September 30, 1996
financial statements evidence a satisfactory liquidity position as total cash
and cash equivalents amounted to $5.9 million, representing 14.9% of total
assets. Investment securities amounted to $2.6 million, representing 6.7% of
total assets; these securities provide a secondary source of liquidity since
they can be converted into cash in a timely manner. Note that the Company's
ability to maintain and expand its deposit base and borrowing capabilities are
a source of liquidity. For the nine-month period ended September 30, 1996,
total deposits increased from $15.4 million to $33.4 million, representing an
annualized increase of 160.0%. Note, however, that the Company does not expect
to maintain or duplicate this growth rate. The Company's management closely
monitors and maintains appropriate levels of interest earning assets and
interest bearing liabilities so that maturities of assets are such that
adequate funds are provided to meet customer withdrawals and loan demand.
There are no trends, demands, commitments, events or uncertainties that will
result in or are reasonably likely to result in the Company's liquidity
increasing or decreasing in any material way.
10
<PAGE> 11
The Bank maintains an adequate level of capitalization as measured by the
following capital ratios and the respective minimum capital requirements by the
Bank's primary regulators, the OCC.
<TABLE>
<CAPTION>
Bank's Minimum required
Sept. 30, 1996 by regulator
-------------- ------------
<S> <C> <C>
Leverage ratio 13.6% 4.0%
Risk weighted ratio 20.6% 8.0%
</TABLE>
Note that with respect to the leverage ratio, the OCC expects a minimum of 5.0
percent to 6.0 percent ratio for banks that are not rated CAMEL 1. Although
the Bank is not rated CAMEL 1, its leverage ratio of 20.6 percent is well above
the required minimum.
Results of Operations
Since principal banking operations only commenced on October 2, 1995, a
comparison of the September 30, 1996 results (when banking operations were in
progress) to those of September 30, 1995 are not meaningful. This discussion
will therefore concentrate on the September 30, 1996 results.
Net income for the nine-month period ended September 30, 1996 amounted to
$154,639, or $.26 per share. This compares favorably with the loss of $119,200
for the period ended September 30, 1995. The following is a brief discussion
of the more significant components of net income:
a. Net interest income represents the difference between interest
received on interest earning assets and interest paid on
interest bearing liabilities. The following presents, in a
tabular form, the main components of interest earning assets
and interest bearing liabilities.
<TABLE>
<CAPTION>
Interest Interest
Earning Assets/ Average Income/ Yield/
Bearing Liabilities Balance Cost Cost
- ------------------- ------- -------- ------
<S> <C> <C>
Federal funds sold $ 3,827,422 $ 151,571 5.28%
Securities 2,636,114 115,926 5.86%
Loans 21,074,757 1,482,926 9.38%
----------- ---------- ----
Total $27,538,293 $1,750,423 8.48%
----------- ---------- ----
Deposits $19,511,062 $ 670,797 4.58%
----------- ---------- ----
Net interest income $1,079,626
==========
Net yield on earning assets 5.23%
====
</TABLE>
b. Other income for the nine-month period ended September 30,
1996 amounted to $125,433. On an annualized basis, this
represents .43% of total assets. This figure is relatively
low because in order to attract new banking
11
<PAGE> 12
relationships, the Banks's fee structure and charges are low
when compared to other banks. The above fees and charges may
increase in the future.
c. Operating expenses, for the nine-month period ended September
30, 1996 amounted to $848,095. On an annualized basis, this
represents 2.88% of total assets. In the future this
percentage may increase due to costs and expenses associated
with the new facility.
Net income for the three-month period ended September 30, 1996 amounted to
$80,729, or $.13 per share. This compares favorably with the net loss of
$(45,676) attained during the three-month period ended September 30, 1995.
Recall, however, that planned principal operations commenced after September 30,
1995 (October 2, 1995). The following is a brief discussion of the more
significant components of net income:
a. Net interest income for the three-month period ended September 30,
1996 amounted to $438,492.
b. Other income for the three-month period ended September 30, 1996
amounted to $46,012.
c. Operating expenses for the three-month period ended September 30, 1996
amounted to $293,775.
At December 31, 1995, the allowance for loan losses amounted to $110,000. By
September 30, 1996, the allowance had grown to $315,717. The allowance for
loan losses, as a percentage of gross loans, increased from 1.00% to 1.08%
during the nine-month period ended September 30, 1996. Management considers
the allowance for loan losses to be adequate and sufficient to absorb possible
future losses; however, there can be no assurance that charge-offs in future
periods will not exceed the allowance for loan losses or that additional
provisions to the allowance will not be required.
The Company is not aware of any current recommendation by the regulatory
authorities which, if they were to be implemented, would have a material effect
on the Company's liquidity, capital resources, or results of operations.
12
<PAGE> 13
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
THOMASVILLE BANCSHARES, INC.
----------------------------
(Registrant)
Date: November 12, 1996 BY: /s/ Stephen H. Cheney
----------------- ------------------------
Stephen H. Cheney
President and Chief Executive Officer
(Chief Executive, Financial and
Accounting Officer)
13
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THOMASVILLE
BANCSHARES, INC. UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIOD
ENDED SEPTEMBER 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 2,562,356
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 3,300,224
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 2,632,969
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 29,334,493
<ALLOWANCE> 315,717
<TOTAL-ASSETS> 39,314,216
<DEPOSITS> 33,352,782
<SHORT-TERM> 0
<LIABILITIES-OTHER> 221,760
<LONG-TERM> 0
0
0
<COMMON> 600,000
<OTHER-SE> 5,139,674
<TOTAL-LIABILITIES-AND-EQUITY> 39,314,216
<INTEREST-LOAN> 1,606,951
<INTEREST-INVEST> 151,571
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 1,758,522
<INTEREST-DEPOSIT> 660,221
<INTEREST-EXPENSE> 660,221
<INTEREST-INCOME-NET> 1,098,301
<LOAN-LOSSES> 211,000
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 848,095
<INCOME-PRETAX> 164,639
<INCOME-PRE-EXTRAORDINARY> 164,639
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 154,639
<EPS-PRIMARY> .26
<EPS-DILUTED> .26
<YIELD-ACTUAL> 5.23
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 110,000
<CHARGE-OFFS> 3,249
<RECOVERIES> 2,033
<ALLOWANCE-CLOSE> 315,717
<ALLOWANCE-DOMESTIC> 310,000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 5,717
</TABLE>
