<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 March 31, 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 May 9, 1997.
<PAGE> 2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
THOMASVILLE BANCSHARES, INC.
THOMASVILLE, GEORGIA
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
ASSETS (Unaudited) (Unaudited)
- ------ ----------- ------------
<S> <C> <C>
Cash and due from banks $ 1,456,205 $ 1,801,255
Federal funds sold 3,405,382 3,826,980
------------ ------------
Total cash and cash equivalents $ 4,861,587 $ 5,628,235
Investment securities:
Securities available-for-sale,
at market value 3,644,969 2,652,000
Loans, net 37,593,607 33,091,618
Property & equipment, net 2,417,269 1,913,536
Other assets 535,137 466,776
------------ ------------
Total Assets $ 49,052,569 $ 43,752,165
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Liabilities:
Deposits
Non-interest bearing deposits $ 7,520,576 $ 6,815,217
Interest bearing deposits 34,970,165 30,882,302
------------ ------------
Total deposits $ 42,490,741 $ 37,697,519
Other liabilities 631,591 208,389
------------ ------------
Total Liabilities $ 43,122,332 $ 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 deficit (21,866) (119,995)
Unrealized (loss)
securities available-for-sale (20,304) (6,155)
------------ ------------
Total Shareholders' Equity $ 5,930,237 $ 5,846,257
------------ ------------
Total Liabilities and
Shareholders' Equity $ 49,052,569 $ 43,752,165
============ ============
</TABLE>
Refer to notes to the financial statements.
2
<PAGE> 3
THOMASVILLE BANCSHARES, INC.
THOMASVILLE, GEORGIA
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
For the three months
ended March 31,
--------------------
1997 1996
---- ----
<S> <C> <C>
Interest income $903,250 $444,668
Interest expense 397,684 146,156
-------- --------
Net interest income $505,566 $298,512
Provision for possible loan losses 36,000 30,000
-------- --------
Net interest income after provision
for possible loan losses $469,566 $268,512
-------- --------
Other income
Gain on sale of mortgage loans $ 576 $ 1,758
Service charges 12,596 5,072
Other fees 58,470 18,494
Rental income 5,400 2,048
-------- --------
Total other income $ 77,042 $ 27,372
-------- --------
Salaries and benefits $180,550 $123,183
Rent 135 8,489
Depreciation 12,300 20,520
Amortization 2,806 2,806
Data processing 7,076 5,718
Regulatory fees and assessments 7,193 3,940
Other operating expenses 165,920 94,100
-------- --------
Total operating expenses $375,980 $258,756
-------- --------
Net income before taxes $170,628 $ 37,128
Income taxes 72,500 --
-------- --------
Net income $ 98,128 $ 37,128
======== ========
Net income per share $ .16 $ .06
======== ========
</TABLE>
Refer to notes to the financial statements.
3
<PAGE> 4
THOMASVILLE BANCSHARES, INC.
THOMASVILLE, GEORGIA
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------
1997 1996
---- ----
<S> <C> <C>
Cash flows from operating activities: $ 508,215 $ 126,853
----------- -----------
Cash flows from Investing Activities:
Purchase of fixed assets $ (516,033) $ (290,794)
(Increase) in loans (4,537,989) (7,748,070)
Purchase of securities, AFS (1,014,063) --
----------- -----------
Net cash used in investing activities $(6,068,085) $(8,038,864)
----------- -----------
Cash flows from Financing Activities:
Increase in deposits $ 4,793,222 $ 7,144,256
----------- -----------
Cash (used by) financing activities $ 4,793,222 $ 7,144,256
----------- -----------
Net (decrease) in cash
and cash equivalents $ (766,648) $ (767,755)
Cash and cash equivalents,
beginning of period 5,628,235 6,768,244
----------- -----------
Cash and cash equivalents,
end of period $ 4,861,587 $ 6,000,489
=========== ===========
</TABLE>
Refer to notes to the financial statements.
4
<PAGE> 5
THOMASVILLE BANCSHARES, INC.
THOMASVILLE, GEORGIA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 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 three-month
period ended March 31, 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.
5
<PAGE> 6
THOMASVILLE BANCSHARES, INC.
THOMASVILLE, GEORGIA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 1997
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 March 31, 1997, total organizational
costs, net of accumulated amortization, amounted to $39,284.
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.
6
<PAGE> 7
THOMASVILLE BANCSHARES, INC.
THOMASVILLE, GEORGIA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 1997
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,
7
<PAGE> 8
THOMASVILLE BANCSHARES, INC.
THOMASVILLE, GEORGIA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 1997
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 March 31, 1997.
For the three-month period ended March 31, 1997 net income per share was $.16.
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 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 $5.3 million to $49.1 million during the
three-month period ended March 31, 1997. The increase was generated through a
$4.8 million increase in deposits, and $400,000 and $100,000 increases in
payables and retained profits, respectively. The funds were used to increase
loans by $4.5 million, and investment securities by $1.0 million. In addition,
cash and cash equivalents were reduced in order to fund the $500,000 purchase of
property and equipment.
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 March 31, 1997
financial statements evidence a satisfactory liquidity position as total cash
and cash equivalents amounted to $4.9 million, representing 10.0% of total
assets. Investment securities, which amounted to $3.6 million or 7.3% 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 three-month period ended March 31, 1997, total deposits increased from
$37.7 million to $42.5 million, representing an annualized increase of 45.2%.
There are no assurances, however, that this 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
9
<PAGE> 10
requirements by the Bank's primary regulator, the Office of the Comptroller of
the Currency ("OCC").
<TABLE>
<CAPTION>
Bank's Minimum required
March 31, 1997 by regulator
-------------- ------------
<S> <C> <C>
Leverage ratio 12.0% 4.0%
Risk weighted ratio 16.2% 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 CAMEL 1. Although the Bank is not
rated CAMEL 1, its leverage ratio of 12.0% is well above the required minimum.
Results of Operations
Net income for the three-month period ended March 31, 1997 amounted to $98,128,
or $.16 per share. These results compare favorably to the March 31, 1996 net
income of $37,128, or $.06 per share. The primary reasons for the increase in
net income are as follows:
a. Average total earning assets have increased from $21.2 million
at March 31, 1996 to $41.6 million at March 31, 1997. The net
increase of $20.4 million represents a 96.2% 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 $444,668 for the three-month period ended March 31, 1996
to $903,250 for the three-month period ended March 31, 1997.
The increase of $458,582 represents a 103.1% 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.
10
<PAGE> 11
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 $ 2,766,759 $ 37,923 5.48%
Securities 2,862,114 40,879 5.71%
Loans 36,009,804 824,448 9.16%
----------- ----------- ----
Total $41,638,677 $ 903,250 8.68%
----------- ----------- ----
Deposits and borrowings $39,724,406 $ 397,684 4.00%
----------- ----------- ----
Net interest income $ 505,566
===========
Net yield on earning assets 4.86%
====
</TABLE>
Net interest income has increased from $298,512 for the three-month period ended
March 31, 1996 to $505,566 for the same period one year later, a net increase of
$207,054, or 69.4%.
d. Other income has increased from $27,372 for the three-month
period ended March 31, 1996 to $77,042 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 .39% for the three-month
period ended March 31, 1996 to .63% for the three-month period
ended March 31, 1997.
e. Total operating expenses have increased from $258,756 for the
three-month period ended March 31, 1996 to $375,980 for the
same period one year later. Despite the increase, however,
total operating expenses as a percent of total assets declined
from 3.66% to 3.07% over the one year span from March 31, 1996
to March 31, 1997. The decline in the above ratio is an
indication of an increased efficiency attained largely due to
economies of scale.
At December 31, 1996, the allowance for loan losses amounted to $447,626. By
March 31, 1997, the allowance had grown to $483,156. Despite the increase,
however, the allowance for loan losses, as a percentage of gross loans, declined
from 1.33% to 1.27% during the three-month period ended March 31, 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.
11
<PAGE> 12
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. There were no reports on Form 8-K filed
during the quarter ended March 31, 1997.
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.
Date: May 12, 1997 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 MARCH 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 1,465,205
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 3,405,382
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 3,644,969
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 38,076,763
<ALLOWANCE> 483,156
<TOTAL-ASSETS> 49,052,569
<DEPOSITS> 42,490,741
<SHORT-TERM> 0
<LIABILITIES-OTHER> 631,591
<LONG-TERM> 0
0
0
<COMMON> 600,000
<OTHER-SE> 5,330,237
<TOTAL-LIABILITIES-AND-EQUITY> 49,052,569
<INTEREST-LOAN> 824,448
<INTEREST-INVEST> 78,802
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 903,250
<INTEREST-DEPOSIT> 397,684
<INTEREST-EXPENSE> 397,684
<INTEREST-INCOME-NET> 505,566
<LOAN-LOSSES> 36,000
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 375,980
<INCOME-PRETAX> 170,628
<INCOME-PRE-EXTRAORDINARY> 170,628
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 98,128
<EPS-PRIMARY> .16
<EPS-DILUTED> .16
<YIELD-ACTUAL> 4.86
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 20,000
<ALLOWANCE-OPEN> 447,626
<CHARGE-OFFS> 500
<RECOVERIES> 30
<ALLOWANCE-CLOSE> 483,156
<ALLOWANCE-DOMESTIC> 477,000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 6,156
</TABLE>
