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 June 30, 1997.
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. 33-91536
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 August 10, 1997.
Transitional Small Business Disclosure Format (Check one):
Yes No X
(Page 1 of 16)
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
THOMASVILLE BANCSHARES, INC.
Thomasville, Georgia
Consolidated Balance Sheets
June 30, December 31,
1997 1996
ASSETS (Unaudited) (Unaudited)
Cash and due from banks $ 2,968,944 $ 1,801,255
Federal funds sold 5,199,297 3,826,980
Total cash and cash equivalents $ 8,168,241 $ 5,628,235
Investment securities:
Securities available-for-sale,
at market value 3,660,938 2,652,000
Loans, net 44,135,713 33,091,618
Property & equipment, net 2,513,943 1,913,536
Other assets 553,806 466,776
Total Assets $59,032,641 $43,752,165
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits
Non-interest bearing deposits $ 9,126,156 $ 6,815,217
Interest bearing deposits 42,941,180 30,882,302
Total deposits $52,067,336 $37,697,519
Other liabilities 880,431 208,389
Total Liabilities $52,947,767 $37,905,908
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 earnings (deficit) 121,760 (119,995)
Unrealized (loss)
securities available-for-sale (9,293) (6,155)
Total Shareholders' Equity $ 6,084,874 $ 5,846,257
Total Liabilities and
Shareholders' Equity $59,032,641 $43,752,165
Refer to notes to the financial statements.
THOMASVILLE BANCSHARES, INC.
Thomasville, Georgia
Consolidated Statements of Income
For the three months
ended June 30,
1997 1996
Interest income $1,079,410 $ 590,443
Interest expense 476,546 229,146
Net interest income $ 602,864 $ 361,297
Provision for possible loan losses 36,000 81,000
Net interest income after provision
for possible loan losses $ 566,864 $ 280,297
Other income
Gain on sale of mortgage loans $ 399 $ 725
Service charges 14,976 7,528
Other fees 77,543 38,396
Rental income 5,400 5,400
Total other income $ 98,318 $ 52,049
Salaries and benefits $ 201,127 $ 137,563
Advertising 38,649 15,548
Rent 135 6,400
Depreciation 32,385 21,945
Amortization 2,806 2,806
Data processing 7,344 5,444
Regulatory fees and assessments 6,767 4,439
Other operating expenses 118,142 101,419
Total operating expenses $ 407,355 $ 295,564
Net income before taxes $ 257,827 $ 36,782
Income taxes 114,200 - -
Net income $ 143,627 $ 36,782
Net income per share $ .23 $ .06
Refer to notes to the consolidated financial statements.
THOMASVILLE BANCSHARES, INC.
Thomasville, Georgia
Consolidated Statements of Income
For the six months
ended June 30,
1997 1996
Interest income $1,982,660 $1,035,111
Interest expense 874,230 375,302
Net interest income $1,108,430 $ 659,809
Provision for possible loan losses 72,000 111,000
Net interest income after provision
for possible loan losses $1,036,430 $ 548,809
Other income
Gain on sale of mortgage loans $ 975 $ 2,483
Service charges 27,572 12,600
Other fees 136,013 56,890
Rental income 10,800 7,448
Total other income $ 175,360 $ 79,421
Salaries and benefits $ 381,677 $ 260,746
Advertising 105,599 33,735
Rent 270 14,889
Depreciation 44,685 42,465
Amortization 5,612 5,612
Data processing 14,420 11,162
Regulatory fees and assessments 13,960 8,379
Other operating expenses 217,112 177,332
Total operating expenses $ 783,335 $ 554,320
Net income before taxes $ 428,455 $ 73,910
Income taxes 186,700 - -
Net income $ 241,755 $ 73,910
Net income per share $ .39 $ .12
Refer to notes to the consolidated financial statements.
THOMASVILLE BANCSHARES, INC.
Thomasville, Georgia
Consolidated Statements of Cash Flows
(Unaudited)
For the six-month period
Ended June 30,
1997 1996
Cash flows from operating activities: $ 945,439 $ (22,667)
Cash flows from Investing Activities:
Purchase of fixed assets $ (645,092) $ (235,669)
Purchase of securities, AFS (1,014,063) - -
(Increase) in loans (11,116,095) (14,025,774)
Net cash used by investing activities $(12,775,250) $(14,261,443)
Cash flows from Financing Activities:
Increase in deposits 14,369,817 11,203,407
Net cash provided from financing activities $ 14,369,817 $ 11,203,407
Net increase in cash and cash equivalents $ 2,540,006 $ (3,080,703)
Cash and cash equivalents,
beginning of period 5,628,235 6,768,244
Cash and cash equivalents, end of period $ 8,168,241 $ 3,687,541
Refer to notes to the financial statements.
THOMASVILLE BANCSHARES, INC.
Thomasville, Georgia
Notes to Consolidated Financial Statements (Unaudited)
June 30, 1997
Note 1 - Basis of Presentation
The accompanying financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the instructions to 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, 1997 are not necessarily indicative of the
results that may be expected for the year ending December 31, 1997. For
further information, refer to the financial statements and footnotes thereto
included in Form 10-KSB for the year ended December 31, 1996.
Note 2 - Summary of Organization
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") to be located in Thomasville, Georgia.
In an initial public offering conducted during 1995, the Company sold and
issued 600,000 shares of its $1.00 par value common stock. Proceeds from the
above offering amounted to $5,972,407, net of selling expenses. All
regulatory approvals were obtained prior to commencement of operations on
October 2, 1995. The Company owns 100% of the Bank's issued and outstanding
common stock.
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, 1997, total organizational
costs, net of accumulated amortization, amounted to $36,478.
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.
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
612,000 as the average number of common stock equivalents outstanding for the
period ended June 30, 1997. For the six-month period ended June 30, 1997 net
income per share was $.39.
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. Subsequently, the Company injected an additional $700,000
into the Bank's capital accounts.
Total consolidated assets increased by $15.3 million to $59.0 million during
the six-month period ended June 30, 1997. The increase was generated through
a $14.4 million increase in deposits, and $700,000 and $200,000 increases in
payables and retained profits, respectively. The funds were used to increase
loans by $11.0 million, investment securities by $1.0 million, federal funds
sold by $1.4 million, property and equipment by $.6 million and other
miscellaneous assets by $1.2 million.
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, 1997
financial statements evidence a sound liquidity position as total cash and cash
equivalents amounted to $8.2 million, representing 13.8% of total assets.
Investment securities, which amounted to $3.7 million or 6.2% of total assets,
provide a secondary source of liquidity because they can be converted into cash
in a timely manner. In addition, 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, 1997, total deposits increased from $37.7
million to $52.1 million, representing an annualized increase of 76.2%. The
growth in deposits is primarily attributed to the opening of the new, permanent
building from which the Bank operates. The increase in work space allows the
Bank to hire additional staff and to increase the level of operations. There
are no assurances, however, that the level of growth can be maintained. 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 Office of the Comptroller of the Currency
("OCC").
Bank's Minimum required
June 30, 1997 by regulator
Leverage ratio 10.7% 4.0%
Risk weighted ratio 14.4% 8.0%
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 CAMEL 1. Although the Bank is not
rated CAMEL 1, its leverage ratio of 10.7% is well above the required minimum.
Results of Operations
Net income for the six-month period ended June 30, 1997 amounted to $241,755,
or $.39 per share. These results compare favorably to the June 30, 1996 net
income of $73,910, or $.12 per share. The primary reasons for the increase in
net income are as follows:
a. Average total earning assets have increased from $24.5 million
at June 30, 1996 to $45.1 million at June 30, 1997. The net increase of $20.6
million represents an 84.1% increase over a twelve-month period. There can be
no assurances, however, that this level of growth can be maintained.
b. As a consequence to the increase in earning assets, interest
income, the most significant of all revenue items, increased from $1,035,111
for the six-month period ended June 30, 1996 to $1,982,660 for the six-month
period ended June 30, 1997. The increase of $947,549 represents a 91.5%
increase over a twelve-month period. Again, there can be no assurances that
the Company can continue to maintain this level of growth.
c. Net interest income represents the difference between interest
received on interest earning assets and interest paid on interest bearing
liabilities. Net interest income has increased from $505,566 for the six-month
period ended June 30, 1996 to $1,108,430 for the same period one year later, a
net increase of $448,621, or 68.0%.
The following presents, in a tabular form, the main components of
interest earning assets and interest bearing liabilities.
Interest Interest
Earning Assets/ Average Income/ Yield/
Bearing Liabilities Balance Cost Cost
Federal funds sold $ 3,195,920 $ 87,017 5.45%
Securities 3,252,364 94,122 5.79%
Loans 38,702,092 1,801,521 9.31%
Total $45,150,376 $1,982,660 8.78%
Deposits and borrowings $43,338,653 $ 874,230 4.03%
Net interest income $1,108,430
Net yield on earning assets 4.91%
d. Other income has increased from $79,421 for the six-month
period ended June 30, 1996 to $175,360 for the same period one year later.
This increase is primarily due to the increase in volume of
transaction accounts. Other income as a percent of total assets has
increased from .49% for the six-month period ended June 30, 1996 to
.59% for the six-month period ended June 30, 1997.
e. Total operating expenses have increased from $554,320 for the
six-month period ended June 30, 1996 to $783,335 for the same period one year
later. Despite the increase, however, total operating expenses as a percent of
total assets declined from 3.42% to 2.65% over the one year period from
June 30, 1996 to June 30, 1997. The decline in the above ratio is an
indication of an increased efficiency attained largely due to economies of
scale.
f. Provisions for loan losses have declined from $111,000 for the
six-month period ended June 30, 1996 to $72,000 for the six-month period ended
June 30, 1997.
For the three-month period ended June 30, 1997, net income amounted to
$143,627, or $.23 per share. These results compare favorably with the net
income of $36,782, or $.06 per share for the three-month period ended
June 30, 1996. The primary reasons for the increase in net income are:
(i) a $22.5 million increase in average earning assets from $25.6 million for
the three-month period ended June 30, 1996 to $48.1 million for the
three-month period ended June 30, 1997; (ii) a $241,567 increase in net
interest income from $361,297 for the three-month period ended June 30, 1996 to
$602,864 for the three-month period ended June 30, 1997; (iii) a $46,269
increase in other income from $52,049 for the three-month period ended
June 30, 1996 to $98,318 for the three-month period ended June 30, 1997;
(iv) a $45,000 decrease in provision for loan losses from $81,000 for the
three-month period ended June 30, 1996 to $36,000 for the three-month period
ended June 30, 1997; and (v) a decrease in operating expenses as a
percentage of total assets from 3.65% for the three-month period ended
June 30, 1996 to 2.76% for the three-month period ended June 30, 1997.
At December 31, 1996, the allowance for loan losses amounted to $447,626.
By June 30, 1997, the allowance had grown to $516,271.
Despite the increase, however, the allowance for loan losses, as a percentage
of gross loans, declined from 1.33% to 1.16% during the six-month period ended
June 30, 1997. 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.
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
The 1997 Annual Meeting of Stockholders of the Company was held on
May 8, 1997. At the meeting the following persons were elected as directors to
serve for a term of three years and until their successors are elected and
qualified: Charles E. Hancock, M.D., Charles H. Hodges, III and Harold L.
Jackson.
The number of votes cast for and against the election of each nominee
for director was as follows:
Votes Votes
FOR WITHHELD
Charles E. Hancock, M.D. 351,667 288
Charles H. Hodges, III 351,667 288
Harold L. Jackson 351,667 288
No other matters were presented or voted for at the Annual Meeting.
The following persons did not stand for reelection to the Board at the
1997 Annual Meeting of Shareholders as their term of office continued after the
Annual Meeting: Charles A. Balfour, Clifford S. Campbell, Jr., Stephen H.
Cheney, Charles W. McKinnon, Jr., Cochran A. Scott, Jr. and Richard L.
Singletary, Jr.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
-27.1 - Financial data schedule (for SEC use only).
(b) Reports on Form 8-K. There were no reports on Form 8-K
filed during the quarter ended June 30, 1997.
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: August 12, 1997 BY: /s/ Stephen H. Cheney
Stephen H. Cheney
President and Chief Executive Officer
(Principal Executive, Financial
and Accounting officer).
Financial Data Schedule Submitted Under Item 601(a)(27) of Regulation S-B
This schedule contains summary financial information extracted from Thomasville
Bancshares, Inc. unaudited consolidated financial statements for the period
ended June 30, 1997 and is qualified in its entirety by reference to such
financial statements.
Item Number Item Description Amount
9-03(1) Cash and due from banks $ 2,968,944
9-03(2) Interest bearing deposits 0
9-03(3) Federal funds sold - purchased
securities for sale 5,199,297
9-03(4) Trading account assets 0
9-03(6) Investment and mortgage backed
securities held for sale 3,675,017
9-03(6) Investment and mortgage backed
securities held to maturity -
carrying value 0
9-03(6) Investment and mortgage backed
securities held to maturity -
market value 0
9-03(7) Loans 44,651,984
9-03(7)(2) Allowance for losses 516,271
9-03(11) Total assets 59,032,641
9-03(12) Deposits 52,067,336
9-03(13) Short-term borrowings 567,994
9-03(15) Other liabilities 312,437
9-03(16) Long-term debt 0
9-03(19) Preferred stock -
mandatory redemption 0
9-03(20) Preferred stock -
no mandatory redemption 0
9-03(21) Common stocks 600,000
9-03(22) Other stockholders' equity 5,484,874
9-03(23) Total liabilities and
stockholders' equity 59,032,641
9-04(1) Interest and fees on loans 1,801,521
9-04(2) Interest and dividends
on investments 181,139
9-04(4) Other interest income 0
9-04(5) Total interest income 1,982,660
9-04(6) Interest on deposits 868,713
9-04(9) Total interest expense 874,230
9-04(10) Net interest income 1,108,430
9-04(11) Provision for loan losses 72,000
9-04(13)(h) Investment securities gains/losses 0
9-04(14) Other expenses 783,335
9-04(15) Income/loss before income tax 428,455
Item Number Item Description Amount
9-04(17) Income/loss before
extraordinary items 428,455
9-04(18) Extraordinary items, less tax 0
9-04(19) Cumulative change in
accounting principles 0
9-04(20) Net income or loss 241,755
9-04(21) Earnings per share - primary .40
9-04(21) Earnings per share - fully diluted .39
I.B.5. Net yield - interest earning
assets - actual 4.91%
III.C.1(a) Loans on non-accrual 0
III.C.1(b) Accruing loans past due
90 days or more 0
III.C.1(c) Troubled debt restructuring 0
III.C.2. Potential problem loans 38,000
IV.A.1 Allowance for loan losses -
beginning of period 447,626
IV.A.2 Total chargeoffs 3,826
IV.A.3 Total recoveries 471
IV.A.4 Allowance for loan losses -
end of period 516,271
IV.B.1 Loan loss allowance allocated to
domestic loans 502,308
IV.B.2 Loan loss allowance allocated to
foreign loans 0
IV.B.3 Loan loss allowance - unallocated 13,963
