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, 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 November 5, 1997.
Transitional Small Business Disclosure Format (Check one):
Yes No X
(Page 1 of 14)
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
THOMASVILLE BANCSHARES, INC.
Thomasville, Georgia
Consolidated Balance Sheets
September 30, December 31,
1997 1996
ASSETS (Unaudited) (Unaudited)
Cash and due from banks $ 2,606,661 $ 1,801,255
Federal funds sold, net 799,664 3,826,980
Total cash and cash equivalents $ 3,406,325 $ 5,628,235
Investment securities:
Securities available-for-sale,
at market value 3,668,687 2,652,000
Loans, net 50,040,435 33,091,618
Property & equipment, net 2,528,153 1,913,536
Other assets 657,387 466,776
Total Assets $60,300,987 $43,752,165
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits
Non-interest bearing deposits $ 8,944,229 $ 6,815,217
Interest bearing deposits 44,737,103 30,882,302
Total deposits $53,681,332 $37,697,519
Other liabilities 333,474 208,389
Total Liabilities $54,014,806 $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) 317,476 (119,995)
Unrealized (loss)
securities available-for-sale (3,702) (6,155)
Total Shareholders' Equity $ 6,286,181 $ 5,846,257
Total Liabilities and
Shareholders' Equity $60,300,987 $43,752,165
Refer to notes to the financial statements.
THOMASVILLE BANCSHARES, INC.
Thomasville, Georgia
Consolidated Statements of Income
(Unaudited)
Three months ended
September 30,
1997 1996
Interest income $1,261,826 $ 723,411
Interest expense 571,515 284,919
Net interest income $ 690,311 $ 438,492
Provision for possible loan losses 36,000 100,000
Net interest income after provision
for possible loan losses $ 654,311 $ 338,492
Other income
Gain on sale of mortgage loans $ 1,696 $ 69
Gain on sale of other assets 1,145 - -
Service charges 16,164 10,384
Other fees 69,675 30,159
Rental income 5,400 5,400
Total other income $ 94,080 $ 46,012
Salaries and benefits $ 211,192 $ 149,040
Rent 94 6,401
Depreciation 34,616 22,045
Amortization 2,806 2,806
Repairs and maintenance 13,931 6,315
Data processing 10,378 6,244
Regulatory fees and assessments 6,672 5,727
Other operating expenses 134,286 95,197
Total operating expenses $ 413,975 $ 293,775
Net income before taxes $ 334,416 $ 90,729
Income taxes 138,700 10,000
Net income $ 195,716 $ 80,729
Net income per share $ .32 $ .13
Refer to notes to the consolidated financial statements.
THOMASVILLE BANCSHARES, INC.
Thomasville, Georgia
Consolidated Statements of Income
(Unaudited)
Nine months ended
September 30,
1997 1996
Interest income $3,244,486 $1,758,522
Interest expense 1,445,745 660,221
Net interest income $1,798,741 $1,098,301
Provision for possible loan losses 108,000 211,000
Net interest income after provision
for possible loan losses $1,690,741 $ 887,301
Other income
Gain on sale of mortgage loans $ 2,671 $ 2,552
Gain on sale of other assets 1,145 - -
Service charges 43,736 22,984
Other fees 205,688 87,049
Rental income 16,200 12,848
Total other income $ 269,440 $ 125,433
Salaries and benefits $ 592,869 $ 409,786
Rent 364 21,290
Depreciation 79,301 64,510
Amortization 8,418 8,418
Repairs and maintenance 35,483 17,525
Data processing 24,798 17,406
Regulatory fees and assessments 20,632 14,106
Other operating expenses 435,445 295,054
Total operating expenses $1,197,310 $ 848,095
Net income before taxes $ 762,871 $ 164,639
Income taxes 325,400 10,000
Net income $ 437,471 $ 154,639
Income/per share $ .71 $ .26
Refer to notes to the consolidated financial statements.
THOMASVILLE BANCSHARES, INC.
Thomasville, Georgia
Consolidated Statements of Cash Flows
(Unaudited)
Nine months ended
September 30,
1997 1996
Cash flows from operating activities: $ 559,075 $ 288,040
Cash flows from Investing Activities:
Purchase of fixed assets $ (693,918) $ (746,064)
Purchase of securities,
available-for-sale (1,014,063) - -
(Increase) in loans (17,056,817) (18,391,956)
Net cash used by investing activities $(18,764,798) $(19,138,020)
Cash flows from Financing Activities:
Increase in deposits $ 15,983,813 $ 17,944,316
Net cash provided from financing activities $ 15,983,813 $ 17,944,316
Net increase in cash and cash equivalents $ (2,221,910) $ (905,664)
Cash and cash equivalents,
beginning of period 5,628,235 6,768,244
Cash and cash equivalents, end of period $ 3,406,325 $ 5,862,580
Refer to notes to the financial statements.
THOMASVILLE BANCSHARES, INC.
Thomasville, Georgia
Notes to Consolidated Financial Statements (Unaudited)
September 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 nine-month period ended September 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 the Bank's 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 September 30, 1997, total organizational costs,
net of accumulated amortization, amounted to $33,672.
Investment Securities. The Company adopted Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments 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 September 30, 1997. For the nine-month period ended September 30, 1997
net income per share was $.71.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The Company was incorporated in the State of 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 $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
of the net proceeds from the offering 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 $16.5 million to $60.3 million during
the nine-month period ended September 30, 1997. The increase was generated
through a $16.0 million increase in deposits, and $125,089 and $437,471
increases in payables and retained profits, respectively. The funds were used
in their entirety to expand the Bank's 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 September 30, 1997
financial statements evidence a satisfactory liquidity position as total cash
and cash equivalents amounted to $3.4 million, representing 5.6% of total
assets. Investment securities, which amounted to $3.7 million or 6.1% 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 nine-month period ended September 30, 1997, total deposits
increased from $37.7 million to $53.7 million, representing an annualized
increase of 56.5%. 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
iabilities 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
September 30, 1997 by regulator
Leverage ratio 9.7% 4.0%
Risk weighted ratio 13.7% 8.0%
Note that with respect to the leverage ratio, the OCC requires 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 9.7% is well above the required
minimum.
Results of Operations
For the three-month periods ended September 30, 1997 and 1996, net income
amounted to $195,716 and $80,729, respectively. On a per share basis, net
income for the three-month periods ended September 30, 1997 and 1996,
amounted to $.32 and $.13, respectively.
Net income for the nine-month period ended September 30, 1997 amounted
to $437,471, or $.71 per share. These results compare favorably to the
September 30, 1996 net income of $154,639, or $.26 per share. The primary
reasons for the increase in net income are as follows:
a. Average total earning assets have increased from $27.6 million
at September 30, 1996 to $48.6 million at September 30, 1997. The net increase
of $21.0 million represents a 76.1% increase over a twelve-month period. For
the three-month period ended September 30, 1997 as compared to the three-month
period ended September 30, 1996, average earning assets have increased by
$19.3 million, from $30.4 million (1996) to $49.7 million (1997). There can be
no assurances, however, that this level of growth can be maintained.
b. As a consequence of the increase in earning assets, interest
income, the most significant of all revenue items, increased from $1.8 million
for the nine-month period ended September 30, 1996 to $3.2 million for the
nine-month period ended September 30, 1997. The increase of $1.4 million
represents an 84.5% increase over a twelve-month period. For the three-month
periods ended September 30, 1996 and 1997, interest income increased from
$723,411 to $1.3 million, an increase of $538,415 or 74.4%. 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 $1.1 million for the
nine-month period ended September 30, 1996 to $1.8 million for the same period
one year later, a net increase of $700,440, or 63.8%. For the three-month
period ended September 30, 1996 net income was $438,492 compared to $690,311
for the same three-month period in 1997. This equates to an increase of
$251,819 or 57.4%.
The following presents, in a tabular form, the main components of interest
earning assets and interest bearing liabilities as of and for the nine months
ended September 30, 1997.
Interest Interest
Earning Assets/ Average Income/ Yield/
Bearing Liabilities Balance Cost Cost
Federal funds sold $ 3,900,302 $ 161,266 5.51%
Securities 3,391,492 147,638 5.80%
Loans 41,355,281 2,935,582 9.46%
Total $48,647,075 $3,244,486 8.89%
Deposits and
borrowings $46,892,490 $1,445,745 4.11%
Net interest income $1,798,741
Net yield on earning assets 4.93%
d. Other income has increased from $125,433 for the nine-month
period ended September 30, 1996 to $269,440 for the same period one year later.
For the three-month periods ended September 30, 1996 and 1997, other income
increased from $46,012 to $94,080. This increase of $48,068 represents a
104.4% improvement. This increase is primarily due to the increase in volume
of transaction accounts. Other income as a percent of total assets has
increased from .43% for the nine-month period ended September 30, 1996 to .59%
for the nine-month period ended September 30, 1997.
e. Total operating expenses have increased from $848,095 for the
nine-month period ended September 30, 1996 to $1.2 million for the same period
one year later. Despite the increase, however, total operating expenses as a
percent of total assets declined from 2.88% to 2.65% over the one-year period
from September 30, 1996 to September 30, 1997. Total operating expenses
increased from $293,775 in the three-month period ended September 30, 1996
to $413,975 in the three-month period ended September 30, 1997. As a
percent of total assets, however, total operating expenses have decreased
from 2.99% for the three month period ended September 30, 1996 to 2.75%
for the three-month period ended September 30, 1997. This decline is due
primarily to increased efficiency attained from economies of scale.
f. Provisions for loan losses have declined from $211,000 for
the nine-month period ended September 30, 1996 to $108,000 for the nine-month
period ended September 30, 1997. For the three-month periods ended
September 30, 1996 and 1997, provisions for loan losses declined from
$100,000 to $36,000, a net reduction of $64,000.
At December 31, 1996, the allowance for loan losses amounted to $447,626.
By September 30, 1997, the allowance had grown to $540,548. Despite the
increase, the allowance for loan losses, as a percentage of gross loans,
declined from 1.33% to 1.07% during the nine-month period ended
September 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 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. No reports on Form 8-K were filed during
the quarter ended September 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: November 5, 1997 BY: /s/ Stephen H. Cheney
Stephen H. Cheney
President and Chief Executive Officer
(Principal Executive, Financial and Accounting
Officer).
Exhibit 27.1
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 September 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 $ 2,606,661
9-03(2) Interest bearing deposits 0
9-03(3) Federal funds sold - purchased
securities for sale 1,313,654
9-03(4) Trading account assets 0
9-03(6) Investment and mortgage backed
securities held for sale 3,668,687
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 50,580,984
9-03(7)(2) Allowance for losses 540,548
9-03(11) Total assets 60,814,978
9-03(12) Deposits 53,681,332
9-03(13) Short-term borrowings 513,990
9-03(15) Other liabilities 333,475
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 5,686,181
9-03(23) Total liabilities and
stockholders' equity 60,814,978
9-04(1) Interest and fees on loans 2,935,582
9-04(2) Interest and dividends
on investments 308,904
9-04(4) Other interest income 0
9-04(5) Total interest income 3,244,486
9-04(6) Interest on deposits 1,434,437
9-04(9) Total interest expense 1,445,745
9-04(10) Net interest income 1,798,741
9-04(11) Provision for loan losses 108,000
9-04(13)(h) Investment securities gains/losses 0
9-04(14) Other expenses 1,197,310
9-04(15) Income/loss before income tax 762,871
Item Number Item Description Amount
9-04(17) Income/loss before
extraordinary items 762,871
9-04(18) Extraordinary items, less tax 0
9-04(19) Cumulative change in
accounting principles 0
9-04(20) Net income or loss 437,471
9-04(21) Earnings per share - primary .71
9-04(21) Earnings per share - fully diluted .71
I.B.5. Net yield - interest earning
assets - actual 4.93%
III.C.1(a) Loans on non-accrual 0
III.C.1(b) Accruing loans past due
90 days or more 4,000
III.C.1(c) Troubled debt restructuring 0
III.C.2. Potential problem loans 146,000
IV.A.1 Allowance for loan losses -
beginning of period 516,271
IV.A.2 Total chargeoffs 12,483
IV.A.3 Total recoveries 760
IV.A.4 Allowance for loan losses -
end of period 540,548
IV.B.1 Loan loss allowance allocated to
domestic loans 531,000
IV.B.2 Loan loss allowance allocated to
foreign loans 0
IV.B.3 Loan loss allowance - unallocated 9,548
