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, 2000.
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. 0-25929
THOMASVILLE BANCSHARES, INC.
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(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
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(Address of Principal Executive Offices)
(912) 226-3300
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(Issuer's Telephone Number, Including Area Code)
Not Applicable
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(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 1,380,000 shares issued and
outstanding as of August 8, 2000.
(Page 1 of 17)
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
-----------------------------
THOMASVILLE BANCSHARES, INC.
THOMASVILLE, GEORGIA
CONSOLIDATED BALANCE SHEETS
At At
June 30, December 31,
2000 1999
ASSETS (Unaudited) (Unaudited)
------ ----------- -----------
Cash and due from banks $ 4,868,980 $ 7,064,353
Federal funds sold 1,390,506 518,757
----------- -----------
Total cash and cash equivalents $ 6,259,486 $ 7,583,110
Investment securities:
Securities available-for-sale,
at market value 6,904,166 9,036,737
Loans, net 96,605,634 90,122,900
Property & equipment, net 3,515,443 3,581,025
Other real estate owned 529,429 787,229
Other assets 1,264,503 1,142,118
----------- -----------
Total Assets $115,078,661 $112,253,119
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits
Non-interest bearing deposits $ 14,394,375 $ 13,460,400
Interest bearing deposits 86,223,936 84,690,886
----------- -----------
Total deposits $100,618,311 $ 98,151,286
Borrowings 2,236,760 2,395,136
Other liabilities 485,872 394,949
----------- -----------
Total Liabilities $103,340,943 $100,941,371
----------- -----------
Commitments and contingencies
Shareholders' Equity:
Common stock, $1.00 par value, 10
million shares authorized, 1,380,000
shares issued & outstanding $ 1,380,000 $ 1,380,000
Paid-in-capital 8,028,861 8,002,961
Retained earnings 2,385,302 1,966,766
Unrealized gain securities
available-for-sale (56,445) (37,979)
----------- -----------
Total Shareholders' Equity $ 11,737,718 $ 11,311,748
----------- -----------
Total Liabilities and
Shareholders' Equity $115,078,661 $112,253,119
=========== ===========
Refer to notes to the financial statements.
THOMASVILLE BANCSHARES, INC.
THOMASVILLE, GEORGIA
CONSOLIDATED STATEMENTS OF INCOME
For the three months
ended June 30,
------------------------
2000 1999
---- ----
Interest income $2,430,100 $1,928,631
Interest expense 1,098,163 856,773
--------- ---------
Net interest income $1,331,937 $1,071,858
Provision for possible loan losses 85,000 70,000
--------- ---------
Net interest income after provision
for possible loan losses $1,246,937 $1,001,858
--------- ---------
Other income
Gain on sale of mortgage loans $ 875 $ 2,252
Service charges 29,055 29,001
Other fees 96,134 141,355
Rental income 6,900 4,600
--------- ---------
Total other income $ 132,964 $ 177,208
--------- ---------
Salaries and benefits $ 364,928 $ 321,565
Advertising and public relations 39,763 42,527
Depreciation 39,572 56,316
Amortization 2,131 2,131
Data processing 1,717 11,045
Regulatory fees and assessments 15,509 11,139
Other operating expenses 253,132 197,020
--------- ---------
Total operating expenses $ 716,752 $ 641,743
--------- ---------
Net income before taxes $ 663,149 $ 537,323
Income taxes 233,700 223,500
--------- ---------
Net income $ 429,449 $ 313,823
========= =========
Basic income per share $ .31 $ .22
========= =========
Diluted income per share $ .30 $ .21
========= =========
Refer to notes to the consolidated financial statements.
THOMASVILLE BANCSHARES, INC.
THOMASVILLE, GEORGIA
CONSOLIDATED STATEMENTS OF INCOME
For the six months
ended June 30,
------------------------
2000 1999
---- ----
Interest income $4,686,743 $3,676,292
Interest expense 2,105,145 1,651,562
--------- ---------
Net interest income $2,581,598 $2,024,730
Provision for possible loan losses 160,000 130,000
--------- ---------
Net interest income after provision
for possible loan losses $2,421,598 $1,894,730
--------- ---------
Other income
Gain on sale of mortgage loans $ 2,058 $ 3,093
Service charges 56,980 52,251
Other fees 218,037 247,803
Rental income 11,500 11,500
--------- ---------
Total other income $ 288,575 $ 314,647
--------- ---------
Salaries and benefits $ 722,314 $ 631,963
Advertising and public relations 74,566 68,537
Depreciation 109,330 109,306
Amortization 3,552 8,987
Data processing 3,828 29,550
Regulatory fees and assessments 30,841 22,195
Other operating expenses 448,506 378,916
--------- ---------
Total operating expenses $1,392,937 $1,249,454
--------- ---------
Net income before taxes $1,317,236 $ 959,923
Income taxes 484,700 390,500
--------- ---------
Net income $ 832,536 $ 569,423
========= =========
Basic income per share $ .60 $ .41
========= =========
Diluted income per share $ .58 $ .39
========= =========
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,
---------------------------
2000 1999
---- ----
Cash flows from operating activities: $ 1,070,404 $ 1,006,589
----------- -----------
Cash flows from Investing Activities:
Decrease in other real estate owned $ 257,800 $ - -
Purchase of fixed assets (43,748) (251,309)
Maturities, calls,
paydowns, securities, AFS 2,902,336 2,710,000
Purchase of securities, AFS (788,231) (3,418,484)
(Increase) in loans (6,642,734) (17,243,653)
----------- -----------
Net cash used by investing activities $ (4,314,577) $(18,203,446)
----------- -----------
Cash flows from Financing Activities:
Options, restricted stock $ 25,900 $ 11,700
Reduction in borrowings (158,376) 2,000,000
Increase in deposits 2,467,025 13,016,901
Payment of cash dividend (414,000) - -
----------- -----------
Net cash provided from financing activities $ 1,920,549 $ 15,028,601
----------- -----------
Net (decrease) in cash and cash equivalents $ (1,323,624) $ (2,168,256)
Cash and cash equivalents,
beginning of period 7,583,110 8,410,920
----------- -----------
Cash and cash equivalents, end of period $ 6,259,486 $ 6,242,664
=========== ===========
Refer to notes to the financial statements.
THOMASVILLE BANCSHARES, INC.
THOMASVILLE, GEORGIA
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED)
FOR THE SIX-MONTH PERIODS ENDED JUNE 30, 1999 AND 2000
Accumulated
Common Stock Other
------------------ Paid in Retained Comprehensive
Shares Par Value Capital Earnings Income Total
------ --------- ------- -------- ------ -----
Balance,
Dec 31,
1998 1,380,000 $ 1,380,000 $ 7,955,261 $ 744,224 $ 29,739 $10,109,224
--------- ---------- ---------- --------- -------- ----------
Comprehensive Income:
--------------------
Net income,
six-month
period ended
June 30, 1999 - - - - - - 569,423 - - 569,423
Net unrealized
(losses) on
securities,
six-month
period ended
June 30, 1999 - - - - - - - - (47,934) (47,934)
--------- ---------- ---------- --------- -------- ----------
Stock options,
restricted
stock - - - - 11,700 - - - - 11,700
--------- ---------- ---------- --------- -------- ----------
Balance,
June 30,
1999 1,380,000 $ 1,380,000 $ 7,966,961 $1,313,647 $ (18,195) $10,642,413
========= ========== ========== ========= ======== ==========
Balance,
December 31,
1999 1,380,000 $ 1,380,000 $ 8,002,961 $1,966,766 $ (37,979) $11,311,748
--------- ---------- ---------- --------- -------- ----------
Comprehensive Income:
---------------------
Net income,
six-month
period ended
June 30,
2000 - - - - - - 832,536 - - 832,536
Net unrealized
(losses) on
securities, six-
month period
ended June 30,
2000 - - - - - - - - (18,466) (18,466)
--------- ---------- ---------- --------- -------- ----------
Stock options,
restricted
stock - - - - 25,900 - - - - 25,900
Dividends paid - - - - - - (414,000) - - (414,000)
--------- ---------- ---------- --------- -------- ----------
Balance,
June 30,
2000 1,380,000 $ 1,380,000 $ 8,028,861 $2,385,302 $ (56,445) $11,737,718
========= ========== ========== ========= ======== ==========
Refer to notes to the consolidated financial statements.
THOMASVILLE BANCSHARES, INC.
THOMASVILLE, GEORGIA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 2000
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 and six-month periods ended June 30, 2000 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 2000. These statements should be read in conjunction with the
consolidated financial statements and footnotes thereto included in Form 10-
KSB for the year ended December 31, 1999.
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, thus increasing the then total number of
outstanding shares to 1,200,000. During 1998, the Company conducted a
secondary public offering and sold 180,000 shares of its $1.00 par value
common stock for $2,676,366, net of selling expenses, thus increasing the
number of outstanding shares to 1,380,000. The Bank is primarily engaged in
the business of obtaining deposits and providing commercial, consumer and real
estate loans to the general public. The Bank's deposits are each insured up
to $100,000 by the Federal Deposit Insurance Corporation (the "FDIC"), subject
to certain limitations imposed by the FDIC.
NOTE 3 - RECENT ACCOUNTING PRONOUNCEMENTS
In March, 1998, the American Institute of Certified Public Accountants
issued Statement of Position ("SOP") 98-1, "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use. SOP 98-1 provides
guidance for capitalizing and expensing the costs of computer software
developed or obtained for internal use. SOP 98-1 is effective for financial
statements for fiscal years beginning after December 15, 1998. The adoption
of SOP 98-1 did not have a material impact on the accompanying consolidated
financial statements.
SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities" was issued in June, 1998 and is effective for all calendar-year
entities beginning in January, 2000. This Statement applies to all entities
and requires that all derivatives be recognized as assets or liabilities in
the balance sheet, at fair values. Gains and losses of derivative instruments
not designated as hedges will be recognized in the income statement. As the
Company does not invest in derivative instruments, the adoption of SFAS No.
133 is not expected to have a material impact on the Company's financial
statements.
SFAS No. 134, "Accounting for Mortgage-Backed Securities Retained after
the Securitization of Mortgage Loans Held for Sale by a Mortgage Banking
Enterprise" amends prior accounting standards, primarily SFAS 65, with respect
to the classification of retained interests, such as mortgage-backed
securities, following a securitization of mortgage loans held for sale. This
statement became effective in the first quarter of 1999. Since the Company
does not securitize mortgage loans, no financial statement impact has resulted
from adopting this statement.
Item 2. Management's Discussion and Analysis of Financial Condition and
---------------------------------------------------------------
Results of Operations
---------------------
Total consolidated assets increased by $2.9 million to $115.1 million during
the six-month period ended June 30, 2000. The increase was generated through
a $2.5 million increase in deposits to $100.6 million and a $400,000
increase to $11.7 million in the equity accounts. The Bank utilized the above
funds to increase its loan portfolio to $96.6 million, net of the allowance.
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 its customers. The
June 30, 2000 financial statements evidence a satisfactory liquidity position
as total cash and cash equivalents amounted to $6.3 million, representing 5.4%
of total assets. Investment securities, which amounted to $6.9 million, or
6.0%, of total assets, provide a secondary source of liquidity because they can
be converted into cash in a timely manner. 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, 2000 by regulator
------------- ----------------
Leverage ratio 9.5% 4.0%
Risk weighted ratio 13.0% 8.0%
As evidenced above, the Bank's capital ratios are well above the OCC's
required minimums.
Results of Operations
---------------------
For the three-month periods ended June 30, 2000 and 1999, net income amounted
to $429,449 and $313,823, respectively. On a per share basis, basic and
diluted income for the three-month period ended June 30, 2000 amounted to $.31
and $.30, respectively. For the three-month period ended June 30, 1999, basic
and diluted income per share amounted to $.22 and $.21, respectively. The
improvement in net income for the three-month period ended June 30, 2000 as
compared to the three-month period ended June 30, 1999, is primarily due to
the following:
(i) Net interest income increased by approximately $260,000, due to a
higher level of earning assets combined with higher yields on earning
assets.
(ii) The above increase in net interest income was more than adequate to
cover a $44,000 reduction in non-interest income and a $75,000
increase in other operating expenses.
Net income for the six-month period ended June 30, 2000 amounted to $832,536,
or $.58 per diluted share. These results compare favorably to the June 30,
1999 net income of $569,423, or $.39 per diluted share. The primary reasons
for the increase in net income for the six-month period ended June 30, 2000 as
compared to the six-month period ended June 30, 1999 are as follows:
a. Average total earning assets increased from $87.3 million at
June 30, 1999 to $106.2 million at June 30, 2000. The net
increase of $18.9 million represents a 21.6% 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
$3,676,292 for the six-month period ended June 30, 1999 to
$4,686,743 for the six-month period ended June 30, 2000. The
increase of $1,010,451 represents a 27.5% 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.
The following presents, in a tabular form, the main components of
interest earning assets and interest bearing liabilities.
(Dollars in 000's)
Interest Interest
Earning Assets/ Average Income/ Yield/
Bearing Liabilities Balance Cost Cost
------------------- ------- -------- ------
Federal funds sold $ 1,812 $ 56 6.18%
Securities 7,199 213 5.92%
Loans 97,171 4,418 9.09%
Total $ 106,182 $ 4,687 8.84%
---------- --------- ----
Deposits and borrowings $ 89,154 $ 2,105 4.72%
========== --------- ----
Net interest income $ 2,582
=========
Net yield on earning assets 4.87%
====
Net interest income has increased from $2,024,730 for the six-month period
ended June 30, 1999 to $2,581,598 for the six-month period ended June 30,
2000, a net increase of $556,868, or 27.5%. Net yield on earning assets
increased from 4.64% for the six-month period ended June 30, 1999 to 4.87% for
the six-month period ended June 30, 2000.
d. Other income declined from $314,647 for the six-month period ended
June 30, 1999 to $288,575 for the six-month period ended June 30,
2000. Other income as a percentage of total assets declined from
.61% of total assets at June 30, 1999 to .50% of total assets at
June 30, 2000. The reasons for the above decline are twofold: (i)
due to the rising interest rate environment, the Bank had
experienced lower volume in mortgage refinancing, and thus lower
fees, and (ii) there was a decline in fees earned from insufficient
funds charges due to a decline in the number of overdraft accounts.
e. Total operating expenses increased from $1,249,454 for the
six-month period ended June 30, 1999 to $1,392,937 for the six-
month period ended June 30, 2000. Despite the increase, however,
total operating expenses as a percent of total assets remained
unchanged at 2.41% over the one year span from June 30, 1999 to
June 30, 2000. Management believes that operating expense as a
percentage of total assets is currently low and is encouraged by
the fact that it is not increasing.
At December 31, 1999, the allowance for loan losses amounted to $1,109,707.
By June 30, 2000, the allowance had grown to $1,190,283. Despite the
increase, however, the allowance for loan losses, as a percentage of gross
loans, remained constant at 1.22% of gross loans, at December 31, 1999 and at
June 30, 2000. 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 2000 Annual Meeting of Shareholders of the Company was held on May 23,
2000. At the meeting, the following persons were elected as Class II
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,
Harold L. Jackson and Diane W. Parker.
The number of votes cast for and against the election of each nominee for
director was as follows:
Votes Votes Votes
FOR AGAINST WITHHELD
----- ------- --------
Charles E. Hancock, MD 913,671 0 800
Charles H. Hodges, III 914,271 0 200
Harold L. Jackson 914,271 0 200
Diane W. Parker 914,271 0 200
In addition, the shareholders of the Company ratified the appointment of
Francis & Co., CPAs as auditors for the Company and its subsidiary for the
fiscal year ending December 31, 2000. The number of votes for and against the
ratification of Francis & Co., CPAs was as follows:
Votes Votes
FOR AGAINST
----- -------
911,971 1,000
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 2000
Annual Meeting of Shareholders as their term of office continued after the
Annual Meeting: Charles A. Balfour, Clifford S. Campbell, Jr., Stephen H.
Cheney, David A. Cone, David O. Lewis, Charles W. McKinnon, Jr., Randall L.
Moore, 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, 2000
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 8, 2000 BY: /s/ Stephen H. Cheney
----------------- -----------------------------------------
Stephen H. Cheney
President and Chief Executive Officer
(Principal Executive, Financial
and Accounting Officer)
