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, 1998.
OR
___ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to _____________
Commission File No. 33-36512
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 1,200,000 shares issued and
outstanding as of May 12, 1998.
(Page 1 of 14)
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
THOMASVILLE BANCSHARES, INC.
Thomasville, Georgia
Consolidated Balance Sheets
March 31, December 31,
1998 1997
ASSETS (Unaudited) (Unaudited)
Cash and due from banks $ 1,611,332 $ 2,447,683
Federal funds sold 3,043,071 1,582,269
Total cash and cash equivalents $ 4,654,403 $ 4,029,952
Investment securities:
Securities available-for-sale,
at market value 4,201,125 4,194,219
Loans, net 59,225,720 53,466,913
Property & equipment, net 2,460,254 2,484,979
Other assets 935,636 718,426
Total Assets $71,477,138 $64,894,489
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits
Non-interest bearing deposits $ 9,639,758 $ 9,334,294
Interest bearing deposits 54,467,292 48,668,118
Total deposits $64,107,050 $58,002,412
Other liabilities 683,118 423,684
Total Liabilities $64,790,168 $58,426,096
Commitments and contingencies
Shareholders' Equity:
Common stock, $1.00 par value, 10
million shares authorized, 1.2
million shares issued & outstanding $ 1,200,000 $ 1,200,000
Paid-in-capital 5,418,801 5,418,801
Retained earnings 54,943 (158,338)
Unrealized (loss)
securities available-for-sale 13,226 7,930
Total Shareholders' Equity $ 6,686,970 $ 6,468,393
Total Liabilities and
Shareholders' Equity $71,477,138 $64,894,489
Refer to notes to the financial statements.
THOMASVILLE BANCSHARES, INC.
Thomasville, Georgia
Consolidated Statements of Income
For the three months
ended March 31,
1998 1997
Interest income $1,417,512 $903,250
Interest expense 652,667 397,684
Net interest income $ 764,845 $505,566
Provision for possible loan losses 45,000 36,000
Net interest income after provision
for possible loan losses $ 719,845 $469,566
Other income
Gain on sale of mortgage loans $ 2,148 $ 576
Service charges 18,531 12,596
Other fees 84,066 58,470
Rental income 5,400 5,400
Total other income $ 110,145 $ 77,042
Salaries and benefits $ 249,834 $180,550
Advertising 23,526 66,950
Depreciation 36,149 12,300
Amortization 2,806 2,806
Data processing 9,216 7,076
Regulatory fees and assessments 8,734 7,193
Other operating expenses 126,844 99,105
Total operating expenses $ 457,109 $375,980
Net income before taxes $ 372,881 $170,628
Income taxes 159,600 72,500
Net income $ 213,281 $ 98,128
Basic income per share $ .18 $ .08
Diluted income per share $ .17 $ .08
Refer to notes to the financial statements.
THOMASVILLE BANCSHARES, INC.
Thomasville, Georgia
Consolidated Statements of Cash Flows
(Unaudited)
Three Months Ended
March 31,
1998 1997
Cash flows from operating activities: $ 335,045 $ 508,215
Cash flows from Investing Activities:
Purchase of fixed assets $ (11,425) $ (516,033)
(Increase) in loans (5,803,807) (4,537,989)
Purchase of securities, AFS - - (1,014,063)
Net cash used in investing activities $(5,815,232) $(6,068,085)
Cash flows from Financing Activities:
Increase in deposits $ 6,104,638 $ 4,793,222
Cash (used by) financing activities $ 6,104,638 $ 4,793,222
Net (decrease) in cash
and cash equivalents $ 624,451 $ (766,648)
Cash and cash equivalents,
beginning of period 4,029,952 5,628,235
Cash and cash equivalents,
end of period $ 4,654,403 $ 4,861,587
Refer to notes to the financial statements.
THOMASVILLE BANCSHARES, INC.
Thomasville, Georgia
Notes to Consolidated Financial Statements (Unaudited)
March 31, 1998
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, 1998 are not necessarily
indicative of the results that may be expected for the year ending December
31, 1998. For further information, refer to the financial statements and
footnotes thereto included in Form 10-KSB for the year ended December 31,
1997.
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. The Company
commenced banking operations on October 2, 1995. During the first calendar
quarter of 1998, the Company declared a two-for-one stock split, effected in
the form a 100% stock dividend.
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. Both earnings per share and shareholders' equity for both
the year ended and as of December 31, 1997 were reclassified to allow for the
two-for-one stock split.
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. In preparing the financial
statements, management is required to make estimates and assumptions that
affect the reported amounts of assets and liabilities as of the date of the
balance sheet and revenues and expenses for the period. Actual results could
differ significantly from those estimates. Material estimates that are
particularly susceptible to significant change in the near term relate to the
determination of the allowance for loan losses and the valuation of real
estate acquired in connection with foreclosures or in satisfaction of loans.
Investment Securities. The Company adopted Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investment in Debt and
Equity Securities" ("SFAS 115"). 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. As of December 31, 1997
and March 31, 1998, the Company had no securities in this
category.
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. As of December 31, 1997 and March 31, 1998, the
Company had no securities in this category.
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.
A decline below cost in the fair value of any available-for sale or
held-to-maturity security that is deemed other than temporary, results in a
charge to income and the establishment of a new cost basis for the security.
Purchase premiums and discounts on investment securities are amortized
and accreted to interest income using the level yield method on the
outstanding principal balances. In establishing the accretion of discounts
and amortization of premiums, the Company utilizes market based prepayment
assumptions. Interest and dividend income are recognized when earned.
Realized gains and losses for securities sold are included in income and are
derived using the specific identification method for determining the costs of
securities sold.
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.
Accrual of interest on loans is discontinued either when reasonable
doubt exists as to the full or timely collection of interest or principal or
when a loan becomes contractually past due by 90 days or more with respect to
interest or principal. When a loan is placed on non-accrual status, all
interest previously accrued but not collected is reversed against current
period interest income. Income on such loans is then recognized only to the
extent that cash is received and where the future collection of principal is
probable. Loans are returned to accrual status only when they are brought
fully current with respect to interest and principal and when, in the judgment
of management, the loans are estimated to be fully collectible as to both
principal and interest.
The Company adopted Statement of Financial Accounting Standards No. 114,
"Accounting by Creditors for Impairment of a Loan," as amended by SFAS 118,
"Accounting for Impairment of a Loan - Income Recognition and Disclosure".
These standards require impaired loans to be measured based on the present
value of expected future cash flows discounted at the loan's original
effective interest rate, or at the loan's observable market price, or the fair
value of the collateral if the loan is collateral dependent. A loan is
considered impaired when, based on current information and events, it is
probable that the Company will be unable to collect all amounts due according
to the contractual terms of the note agreement. Cash receipts on impaired loans
which are accruing interest are applied to principal and interest under the
contractual terms of the loan agreement. Cash receipts on impaired loans for
which the accrual of interest has been discontinued are applied to reduce the
principal amount of such loans until the principal has been recovered and are
recognized as interest income thereafter.
Allowance for Possible Loan Losses. The allowance for loan losses is
established through provisions charged to operations. Such provisions are
based on management's evaluation of the loan portfolio under current economic
conditions, past loan loss experience, adequacy of underlying collateral,
changes in the nature and volume of the loan portfolio, review of specific
problem loans, and such other factors which, in management's judgment, deserve
recognition in estimating loan losses. Loans are charged-off when, in the
opinion of management, such loans are deemed to be uncollectible. Subsequent
recoveries are added to the allowance.
Management believes that the allowance for loan losses is adequate.
While management uses available information to recognize losses of loans,
future additions to the allowance may be necessary based on changes in
economic conditions. In addition, various regulatory agencies, as an integral
part of their examination process, periodically review the Company's allowance
for loan losses. Such agencies may require the Company to recognize additions
to the allowance for loan losses based on their judgments about information
available to them at the time of their examination.
Property and Equipment. Building, 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. The Company files a consolidated income tax return. Taxes are
accounted for in accordance with 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
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases. 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. Under SFAS 109, the effect on deferred
tax assets and liabilities of a change in tax rates is recognized in income
in the period that includes the enactment date.
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.
Earnings Per Share ("EPS"). The Company adopted Statement of Financial
Accounting Standard No. 128, "Earnings Per Share" ("SFAS 128"). SFAS 128
establishes standards for computing and presenting EPS. Because the Company
has a complex capital structure, it is required to report: (i) basic EPS and
(ii) diluted EPS. Basic EPS is defined as the amount of earnings available to
each share of common stock outstanding during the reporting period. Diluted
EPS is defined as the amount of earnings available both to each share of
common stock outstanding during the reporting period and to each share that
would have been outstanding assuming the issuance of common stock for all
dilutive potential common stock outstanding during the reporting period.
Basic EPS is computed by dividing income available to common
shareholders by the weighted average number of common shares outstanding
during the period. Diluted EPS is computed assuming the conversion of all
warrants and options. For the three-month period ended March 31, 1998, basic
and diluted EPS amounted to $.18 and $.17, respectively. For the three-month
period ended March 31, 1997, both basic and diluted EPS amounted to $.08.
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. On February 28, 1998,
the Company declared a two-for-one stock split to be effected in the form of a
100% common stock dividend. The new shares were distributed to shareholders
of record as of the close of business on January 31, 1998. The stock split
increased the number of outstanding shares of Common Stock from 600,000 to
1,200,000.
Total consolidated assets increased by $6.6 million to $71.5 million during
the three-month period ended March 31, 1998. The increase was generated
through a $6.1 million increase in deposits, and $300,000 and $200,000
increases in payables and retained profits, respectively. The funds were used
to increase loans by $5.8 million, cash and cash equivalents by $600,000 and
other assets by $200,000.
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, 1998 financial statements evidence a satisfactory liquidity position as
total cash and cash equivalents amounted to $4.7 million, representing 6.5% of
total assets. Investment securities, which amounted to $4.2 million or 5.9%
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, 1998, total deposits
increased from $58.0 million to $64.1 million, representing an annualized
increase of 42.1%. 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 requirements by
the Bank's primary regulator, the Office of the Comptroller of the Currency
("OCC").
Bank's Minimum required
March 31, 1998 by regulator
Leverage ratio 9.1% 4.0%
Risk weighted ratio 11.6% 8.0%
As evidenced above, the Bank's capital ratios are well above the OCC's
required minimums.
Results of Operations
Net income for the three-month period ended March 31, 1998 amounted to
$213,281, or $.17 per diluted share. These results compare favorably to the
March 31, 1997 net income of $98,128, or $.08 per diluted share. The primary
reasons for the increase in net income are as follows:
a.Average total earning assets have increased from $41.6 million at
March 31, 1997 to $63.3 million at March 31, 1998. The net
increase of $21.7 million represents a 52.2% 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 $903,250
for the three-month period ended March 31, 1997 to $1,417,512 for
the three-month period ended March 31, 1998. The increase of
$514,262 represents a 56.9% 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.
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 $ 1,753,485 $ 23,109 5.27%
Securities 4,207,180 57,422 5.46%
Loans 57,317,141 1,336,981 9.33%
Total $63,277,806 $1,417,512 8.96%
Deposits and borrowings $61,167,973 $ 652,667 4.27%
Net interest income $ 764,845
Net yield on earning assets 4.83%
Net interest income has increased from $505,566 for the three-month period
ended March 31, 1997 to $764,845 for the same period one year later, a net
increase of $259,279, or 51.3%.
d.Other income has increased from $77,042 for the three-month period
ended March 31, 1997 to $110,145 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, however, has decreased from .63% for the three-month
period ended March 31, 1997 to .62% for the three-month period
ended March 31, 1998.
e.Total operating expenses have increased from $375,980 for the three-
month period ended March 31, 1997 to $457,109 for the same period
one year later. Despite the increase, however, total operating
expenses as a percent of total assets declined from 3.07% to 2.56%
over the one year span from March 31, 1997 to March 31, 1998. The
decline in the above ratio is an indication of an increased
efficiency attained largely due to economies of scale.
At December 31, 1997, the allowance for loan losses amounted to $644,913. By
March 31, 1998, the allowance had grown to $690,596. Despite the increase,
however, the allowance for loan losses, as a percentage of gross loans,
declined from 1.19% to 1.15% during the three-month period ended March 31,
1998. 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. There were no reports on Form 8-K filed
during the quarter ended March 31, 1998.
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: May 13, 1998 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 March 31, 1998 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 $ 1,611,332
9-03(2) Interest bearing deposits 0
9-03(3) Federal funds sold - purchased
securities for sale 3,043,071
9-03(4) Trading account assets 0
9-03(6) Investment and mortgage backed
securities held for sale 4,201,125
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 59,916,316
9-03(7)(2) Allowance for losses 690,596
9-03(11) Total assets 71,477,138
9-03(12) Deposits 64,107,050
9-03(13) Short-term borrowings 0
9-03(15) Other liabilities 683,118
9-03(16) Long-term debt
9-03(19) Preferred stock -
mandatory redemption 0
9-03(20) Preferred stock -
no mandatory redemption 0
9-03(21) Common stocks 1,200,000
9-03(22) Other stockholders' equity 5,486,970
9-03(23) Total liabilities and
stockholders' equity 71,477,138
9-04(1) Interest and fees on loans 1,336,981
9-04(2) Interest and dividends
on investments 80,531
9-04(4) Other interest income 0
9-04(5) Total interest income 1,417,512
9-04(6) Interest on deposits 649,253
9-04(9) Total interest expense 652,667
9-04(10) Net interest income 764,845
9-04(11) Provision for loan losses 45,000
9-04(13)(h) Investment securities gains/losses 0
9-04(14) Other expenses 457,109
9-04(15) Income/loss before income tax 372,881
9-04(17) Income/loss before
extraordinary items 372,881
9-04(18) Extraordinary items, less tax 0
9-04(19) Cumulative change in
accounting principles 0
9-04(20) Net income or loss 213,281
9-04(21) Earnings per share - basic .18
9-04(21) Earnings per share - diluted .17
I.B.5. Net yield - interest earning
assets - actual 4.83%
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 1,088,000
IV.A.1 Allowance for loan losses -
beginning of period 644,913
IV.A.2 Total chargeoffs 684
IV.A.3 Total recoveries 1,367
IV.A.4 Allowance for loan losses -
end of period 690,596
IV.B.1 Loan loss allowance allocated to
domestic loans 680,000
IV.B.2 Loan loss allowance allocated to
foreign loans 0
IV.B.3 Loan loss allowance - unallocated 10,596
