<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarterly Period Ended Commission File Number
JUNE 30, 1996 33-36512
THOMASVILLE BANCSHARES, INC.
(Exact name of small business issuer as specified in its charter)
GEORGIA 58-2175800
(State or other jurisdiction of I.R.S. Employer Identification No.)
incorporation or organization)
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
------- -------
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 600,000
- ----------------------------- ----------------------------------
Class Outstanding as of August 10, 1996
<PAGE> 2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
THOMASVILLE BANCSHARES, INC.
THOMASVILLE, GEORGIA
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
ASSETS (Unaudited) (Audited)
- ------ ----------- -----------
<S> <C> <C>
Cash and due from banks $ 1,597,541 $ 1,243,244
Federal funds sold 2,090,000 5,525,000
---------- ----------
Total cash and cash equivalents $ 3,687,541 $ 6,768,244
Investment securities:
Securities available-for-sale,
at market value 2,601,063 2,654,406
Loans, net 24,747,311 10,832,537
Property & equipment, net 857,451 643,727
Other assets 523,995 189,914
---------- ----------
Total Assets $32,417,361 $21,088,828
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Liabilities:
Deposits
Non-interest bearing deposits $ 5,910,905 $ 4,379,633
Interest bearing deposits 20,700,968 11,028,833
---------- ----------
Total deposits $26,611,873 $15,408,466
Other liabilities 159,341 58,522
---------- ----------
Total Liabilities $26,771,214 $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 (287,283) (361,193)
Unrealized gain (loss) on
securities available-for-sale (38,977) 10,626
---------- ----------
Total Shareholders' Equity $ 5,646,147 $ 5,621,840
---------- ----------
Total Liabilities and
Shareholders' Equity $32,417,361 $21,088,828
========== ==========
</TABLE>
Refer to notes to the financial statements.
2
<PAGE> 3
THOMASVILLE BANCSHARES, INC.
THOMASVILLE, GEORGIA
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
For the Three Months
Ended June 30,
-----------------------
1996 1995
-------- --------
<S> <C> <C>
Interest income $590,443 $ 47
Interest expense 229,146 2,493
------- -------
Net interest income (expense) $361,297 $ (2,446)
Provision for possible loan losses 81,000 --
------- -------
Net interest income (expense) after
provision for possible loan losses $280,297 $ (2,446)
------- -------
Other income
Gain on sale of mortgage loans $ 725 --
Service charges 7,528 --
Other fees 38,396 --
Rental income 5,400 --
------- -------
Total other income $ 52,049 $ --
------- -------
Salaries and benefits $137,563 $ 58,230
Rent 6,400 1,600
Depreciation 21,945 159
Amortization 2,806 --
Data processing 5,444 --
Regulatory fees and assessments 4,439 --
Other operating expenses 116,967 9,707
------- -------
Total operating expenses $295,564 $ 69,696
------- -------
Net income (loss) before taxes $ 36,782 $(72,142)
Income taxes -- --
------- -------
Net income (loss) $ 36,782 $(72,142)
======= =======
Income per share $ .06 N/A
======= ======
</TABLE>
Refer to notes to the financial statements.
3
<PAGE> 4
THOMASVILLE BANCSHARES, INC.
THOMASVILLE, GEORGIA
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
For the Six Months
Ended June 30,
-----------------------
1996 1995
---------- --------
<S> <C> <C>
Interest income $1,035,111 $ 76
Interest expense 375,302 2,966
--------- -------
Net interest income (expense) $ 659,809 $ (2,890)
Provision for possible loan losses 111,000 --
--------- -------
Net interest income (expense) after
provision for possible loan losses $ 548,809 $ (2,890)
--------- -------
Other income
Gain on sale of mortgage loans $ 2,483 --
Service charges 12,600 --
Other fees 56,890 --
Rental income 7,448 --
--------- -------
Total other income $ 79,421 $ --
--------- -------
Salaries and benefits $ 260,746 $ 58,230
Rent 14,889 2,500
Depreciation 42,465 159
Amortization 5,612 --
Data processing 11,162 --
Regulatory fees and assessments 8,379 --
Other operating expenses 211,067 9,745
--------- -------
Total operating expenses $ 554,320 $ 70,634
--------- -------
Net income (loss) before taxes $ 73,910 $(73,524)
Income taxes -- --
--------- -------
Net income (loss) $ 73,910 $(73,524)
========= =======
Income per share $ .12 N/A
========= =======
</TABLE>
Refer to notes to the financial statements.
4
<PAGE> 5
THOMASVILLE BANCSHARES, INC.
THOMASVILLE, GEORGIA
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND FOR THE
PERIOD FROM INCEPTION (JANUARY 15, 1995) THROUGH JUNE 30, 1995
<TABLE>
<CAPTION>
For the Period Ended
June 30,
------------------------
1996 1995
------------ ----------
<S> <C> <C>
Cash flows from operating activities: $ (22,667) $(133,868)
----------- --------
Cash flows from Investing Activities:
Purchase of fixed assets $ (235,669) $ (10,607)
Deposit on real estate -- (10,000)
Increase in loans (14,025,774) --
----------- --------
Net cash used in investing activities $(14,261,443) $ (20,607)
----------- --------
Cash flows from Financing Activities:
Proceeds from borrowings $ -- $ 160,000
Sale of common stock -- 500
Increase in deposits 11,203,407 --
----------- --------
Cash provided by financing activities $ 11,203,407 $ 160,500
----------- --------
Net increase (decrease) in cash
and cash equivalents $ (3,080,703) $ 6,025
Cash and cash equivalents,
beginning of period 6,768,244 --
----------- --------
Cash and cash equivalents,
end of period $ 3,687,541 $ 6,025
=========== ========
</TABLE>
Refer to notes to the financial statements.
5
<PAGE> 6
THOMASVILLE BANCSHARES, INC.
THOMASVILLE, GEORGIA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
JUNE 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 six-month period ended June 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, $1.00 par value per share, for $5,972,407. The Company acquired
480,000 shares of the Bank's common stock (100% of the issued and outstanding
shares) for $4.8 millon upon the Bank's opening on October 2, 1995. In June
1996, the Company acquired an additional 70,000 shares of the Bank's common
stock for $700,000.
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.
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 June 30, 1996, total organizational
costs, net of accumulated amortization, were $47,703.
6
<PAGE> 7
THOMASVILLE BANCSHARES, INC.
THOMASVILLE, GEORGIA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 1996
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.
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.
7
<PAGE> 8
THOMASVILLE BANCSHARES, INC.
THOMASVILLE, GEORGIA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 1996
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.
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 June
30, 1996. For the six-month period ended June 30, 1996, net income per share
was $.12.
8
<PAGE> 9
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 (480,000 shares) for $4.8 million
immediately prior to commencement of banking operations on October 2, 1995. In
June 1996, the Company purchased an additional 70,000 shares of common stock of
the Bank for $700,000.
Total consolidated assets increased by $11.3 million to $32.4 million
during the six-month period ended June 30, 1996. The increase was generated
primarily through an $11.2 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 customers. The June
30, 1996 financial statements evidence a satisfactory liquidity position as
total cash and cash equivalents amounted to $3.7 million, representing 11.4% of
total assets. Investment securities amounted to $2.6 million, representing
8.0% 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 six-month period ended June
30, 1996, total deposits increased from $15.4 million to $26.6 million,
representing an annualized increase of 145.4%. 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.
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 regulator, the OCC.
<TABLE>
<CAPTION>
Minimum
Bank's required
June 30, 1996 by regulator
------------- ------------
<S> <C> <C>
Leverage ratio 16.1% 4.0%
Risk weighted ratio 20.2% 8.0%
</TABLE>
Note that with respect to the leverage ratio, the OCC expects a
minimum of 5.0% to 6.0% ratio for banks that are not rated a composite 1. The
Bank's leverage ratio of 16.1% is well above the required minimum.
9
<PAGE> 10
Results of Operations
Since principal banking operations only commenced on October 2,
1995, a comparison of the June 30, 1996 results (when banking operations were
in progress) to those of June 30, 1995 are not meaningful. This discussion
will therefore concentrate on the June 30, 1996 results.
Net income for the six-month period ended June 30, 1996 amounted to
$73,910, or $.12 per share. This compares favorably with the loss of $73,524
for the period ended June 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> <C>
Federal funds sold $ 3,815,604 $ 101,807 5.34%
Securities 2,641,333 77,920 5.90%
Loans 18,012,924 855,384 9.50%
---------- ---------- ----
Total $24,469,861 $1,035,111 8.46%
---------- --------- ----
Deposits $22,127,067 $ 375,302 3.39%
---------- ---------- ----
Net interest income $ 659,809
==========
Net yield on earning assets 5.39%
====
</TABLE>
b. Other income for the six-month period ended June 30, 1996
amounted to $79,421. On an annualized basis, this represents
.49% of total assets. This figure is relatively low because in
order to attract new bankingrelationships, 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 six-month period ended June 30, 1996
amounted to $554,320. On an annualized basis, this represents
3.42% of total assets. In the future this percentage may
increase due to costs and expenses associated with the new
facility.
At December 31, 1995, the allowance for loan losses amounted to
$110,000. By June 30, 1996, the allowance had grown to $218,385. Despite the
increase, however, the allowance for loan losses, as a percentage of gross
loans, declined from 1.00% to .87% during the six-month period ended June 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.
10
<PAGE> 11
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits. The following exhibit is filed with this report.
27 - Financial Data Schedule (for SEC use only)
(b) Reports on Form 8-K. No reports on Form 8-K were filed during
the quarter ended June 30, 1996.
11
<PAGE> 12
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.
Dated: August 13, 1996 By: /s/ Stephen H. Cheney
---------------------------------------
Stephen H. Cheney
President and Chief Executive Officer
(Principal Executive, Financial and
Accounting Officer)
<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
JUNE 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 1,597,541
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 2,090,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 2,601,063
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 24,965,696
<ALLOWANCE> 218,385
<TOTAL-ASSETS> 32,417,361
<DEPOSITS> 26,611,873
<SHORT-TERM> 0
<LIABILITIES-OTHER> 159,341
<LONG-TERM> 0
0
0
<COMMON> 600,000
<OTHER-SE> 5,046,147
<TOTAL-LIABILITIES-AND-EQUITY> 32,417,361
<INTEREST-LOAN> 926,870
<INTEREST-INVEST> 108,241
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 1,035,111
<INTEREST-DEPOSIT> 375,302
<INTEREST-EXPENSE> 375,302
<INTEREST-INCOME-NET> 659,809
<LOAN-LOSSES> 111,000
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 554,320
<INCOME-PRETAX> 73,910
<INCOME-PRE-EXTRAORDINARY> 73,910
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 73,910
<EPS-PRIMARY> .12
<EPS-DILUTED> .12
<YIELD-ACTUAL> 5.39
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 110,000
<CHARGE-OFFS> 2,615
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 218,385
<ALLOWANCE-DOMESTIC> 215,000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 3,385
</TABLE>
