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, 2000.
OR
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
--- SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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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
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(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 1,395,000 shares issued and
outstanding as of November 13, 2000.
(Page 1 of 16)
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
-----------------------------
THOMASVILLE BANCSHARES, INC.
THOMASVILLE, GEORGIA
CONSOLIDATED BALANCE SHEETS
At At
September 30, December 31,
2000 1999
ASSETS (Unaudited) (Unaudited)
------ ----------- -----------
Cash and due from banks $ 6,218,148 $ 7,064,353
Federal funds sold 2,157,908 518,757
----------- -----------
Total cash and cash equivalents $ 8,376,056 $ 7,583,110
Investment securities:
Securities available-for-sale,
at market value 6,920,811 9,036,737
Loans, net 102,606,445 90,122,900
Property & equipment, net 3,512,145 3,581,025
Other real estate owned 547,259 787,229
Other assets 1,513,439 1,142,118
----------- -----------
Total Assets $123,476,155 $112,253,119
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Liabilities:
Deposits
Non-interest bearing deposits $ 14,304,242 $ 13,460,400
Interest bearing deposits 94,185,793 84,690,886
----------- -----------
Total deposits $108,490,035 $ 98,151,286
Borrowings 2,080,357 2,395,136
Other liabilities 618,477 394,949
----------- -----------
Total Liabilities $111,188,869 $100,941,371
----------- -----------
Commitments and contingencies
Shareholders' Equity:
Common stock, $1.00 par value, 10
million shares authorized,
1,395,000 at September 30, 2000
and 1,380,000 at December 31, 1999
shares issued & outstanding $ 1,395,000 $ 1,380,000
Paid-in-capital 8,099,961 8,002,961
Retained earnings 2,830,599 1,966,766
Unrealized (loss), securities
available-for-sale (38,274) (37,979)
----------- -----------
Total Shareholders' Equity $ 12,287,286 $ 11,311,748
----------- -----------
Total Liabilities and
Shareholders' Equity $123,476,155 $112,253,119
=========== ===========
Refer to notes to the financial statements.
THOMASVILLE BANCSHARES, INC.
THOMASVILLE, GEORGIA
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three months ended
September 30,
-----------------------
2000 1999
---- ----
Interest income $2,471,105 $2,040,680
Interest expense 1,189,113 934,455
--------- ---------
Net interest income $1,281,992 $1,106,225
Provision for possible loan losses 75,000 90,000
--------- ---------
Net interest income after provision
for possible loan losses $1,206,992 $1,016,225
--------- ---------
Other income
Gain on sale of mortgage loans $ 1,673 $ 1,970
Service charges 28,707 43,875
Other fees 164,229 142,974
Rental income 6,890 6,900
--------- ---------
Total other income $ 201,499 $ 195,719
--------- ---------
Salaries and benefits $ 371,368 $ 341,125
Advertising and public relations 43,034 45,843
Depreciation 104,994 66,392
Amortization 2,131 2,131
Data processing 1,311 5,322
Regulatory fees and assessments 15,703 12,359
Other operating expenses 152,600 176,819
--------- ---------
Total operating expenses $ 691,141 $ 649,991
--------- ---------
Net income before taxes $ 717,350 $ 561,953
Income taxes 272,052 217,000
--------- ---------
Net income after taxes $ 445,298 $ 344,953
========= =========
Basic income per share $ .32 $ .25
========= =========
Diluted income per share $ .31 $ .24
========= =========
Refer to notes to the consolidated financial statements.
THOMASVILLE BANCSHARES, INC.
THOMASVILLE, GEORGIA
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Nine months ended
September 30,
------------------------
2000 1999
---- ----
Interest income $7,157,848 $5,716,972
Interest expense 3,294,258 2,586,017
--------- ---------
Net interest income $3,863,590 $3,130,955
Provision for possible loan losses 235,000 220,000
--------- ---------
Net interest income after provision
for possible loan losses $3,628,590 $2,910,955
--------- ---------
Other income
Gain on sale of mortgage loans $ 3,731 $ 5,063
Service charges 85,687 96,126
Other fees 382,266 390,777
Rental income 18,390 18,400
--------- ---------
Total other income $ 490,074 $ 510,366
--------- ---------
Salaries and benefits $1,093,682 $ 973,088
Advertising and public relations 117,600 114,380
Depreciation 214,324 175,698
Amortization 5,683 11,118
Data processing 5,139 34,872
Regulatory fees and assessments 46,544 34,554
Other operating expenses 601,106 555,735
--------- ---------
Total operating expenses $2,084,078 $1,899,445
--------- ---------
Net income before taxes $2,034,586 $1,521,876
Income taxes 756,752 607,500
--------- ---------
Net income after taxes $1,277,834 $ 914,376
========= =========
Basic income per share $ .92 $ .66
========= =========
Diluted income per share $ .89 $ .64
========= =========
Refer to notes to the consolidated financial statements.
THOMASVILLE BANCSHARES, INC.
THOMASVILLE, GEORGIA
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine months ended
September 30,
--------------------------
2000 1999
---- ----
Cash flows from operating activities: $ 1,547,304 $ 1,455,454
----------- -----------
Cash flows from Investing Activities:
Decrease in other real estate owned $ 239,970 $ - -
Purchase of fixed assets (145,444) (368,884)
Maturities, paydowns on securities AFS 3,600,000 3,925,172
Purchase of securities AFS (1,452,309) (4,517,734)
(Increase) in loans (12,718,545) (17,244,009)
----------- -----------
Net cash used by investing activities $(10,476,328) $(18,205,455)
----------- -----------
Cash flows from Financing Activities:
(Decrease) in borrowings $ (314,779) $ 2,000,000
Payment of cash dividends (414,000) - -
Options, restricted stock 37,000 11,700
Exercise of stock options 75,000 - -
Increase in deposits 10,338,749 15,457,895
----------- -----------
Net cash provided by financing activities $ 9,721,970 $ 17,469,595
----------- -----------
Net increase in cash and cash equivalents $ 792,946 $ 719,594
Cash and cash equivalents,
beginning of period 7,583,110 8,410,920
----------- -----------
Cash and cash equivalents, end of period $ 8,376,056 $ 9,130,514
=========== ===========
Refer to notes to the financial statements.
THOMASVILLE BANCSHARES, INC.
THOMASVILLE, GEORGIA
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED)
FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 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,
nine-month
period ended
Sept 30, 1999 - - - - - - 914,376 - - 914,376
Net unrealized
(losses) on
securities,
nine-month
period ended
Sept 30, 1999 - - - - - - - - (56,415) (56,415)
--------- ---------- ---------- --------- -------- ----------
Stock options,
restricted
stock - - - - 11,700 - - - - 11,700
--------- ---------- ---------- --------- -------- ----------
Balance,
Sept 30,
1999 1,380,000 $ 1,380,000 $ 7,966,961 $1,658,600 $ (26,676) $10,978,885
========= ========== ========== ========= ======== ==========
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,
nine-month
period ended
Sept 30,
2000 - - - - - - 1,277,834 - - 1,277,834
Net unrealized
(losses) on
securities, nine-
month period
ended Sept 30,
2000 - - - - - - - - (295) (295)
--------- ---------- ---------- --------- -------- ----------
Stock options,
restricted
stock - - - - 37,000 - - - - 37,000
Exercise of
15,000 stock
options 15,000 15,000 60,000 - - - - 75,000
Dividends paid - - - - - - (414,000) - - (414,000)
--------- ---------- ---------- --------- -------- ----------
Balance,
Sept 30,
2000 1,395,000 $ 1,395,000 $ 8,099,961 $2,830,599 $ (38,274) $12,287,286
========= ========== ========== ========= ======== ==========
Refer to notes to the consolidated financial statements.
THOMASVILLE BANCSHARES, INC.
THOMASVILLE, GEORGIA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
SEPTEMBER 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 nine-month periods ended September 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 June 1998, the Financial Accounting Standards Board issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities." SFAS No.
133 establishes new accounting and reporting activities for derivatives. The
Standard requires all derivatives to be (i) measured at fair market value and
(ii) recognized as either assets or liabilities in the balance sheet. Under
certain conditions, a derivative may be specifically designated as a hedge.
Accounting for the changes in fair value of a derivative depends on the
intended use of the derivative and the resulting designation. In July 1999,
the Financial Accounting Standards Board issued SFAS No. 137, "Accounting for
Derivative Instruments and Hedging Activities - Deferral of the Effective Date
of SFAS No. 133." SFAS No. 137 delays the effective date of SFAS No. 133 for
one year. In June 2000, the Financial Accounting Standards Board issued SFAS
No. 138, "Accounting for Certain Derivative Instruments and Certain Hedging
Activities, an amendment of SFAS No. 133." SFAS No. 138 amends certain
provisions of SFAS No. 133. Adoption of the Standard is required for the
Company's December 31, 2001, financial statements with early adoption allowed
as of the beginning of any quarter after June 30, 1998. The adoption of
SFAS No. 133 is not expected to result in a material financial impact based on
the Company's limited use of derivatives.
Item 2. Management's Discussion and Analysis of Financial Condition and
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Results of Operations
---------------------
Total consolidated assets increased by $11.2 million to $123.5 million during
the nine-month period ended September 30, 2000. The increase was generated
through a $10.3 million increase in deposits, approximately a $100,000 increase
in stated capital, and approximately a $900,000 increase in retained earnings.
The Bank utilized the above funds to increase loans by $12.5 million, cash and
cash equivalents by approximately $800,000 and other assets by approximately
$400,000. Note that investment securities and other real estate owned were
reduced by $2.1 million and approximately $300,000, respectively during the
nine-month period ended September 30, 2000.
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, 2000 financial statements evidence a satisfactory liquidity
position as total cash and cash equivalents amounted to $8.4 million,
representing 6.8% of total assets. Investment securities, which amounted to
$6.9 million or 5.6% 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, 2000, total deposits increased from $98.2 million at December 31,
1999 to $108.5 million at September 30, 2000, representing an annualized
increase of 12.2%. 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 requirements by
the Bank's primary regulator, the Office of the Comptroller of the Currency
("OCC").
Bank's Minimum required
September 30, 2000 by regulator
------------------ ----------------
Leverage ratio 10.0% 4.0%
Risk weighted ratio 13.7% 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 September 30, 2000 and 1999, net income
amounted to $445,298 and $344,953, respectively. On a per share basis, basic
and diluted income for the three-month period ended September 30, 2000
amounted to $.32 and $.31, respectively. For the three-month period ended
September 30, 1999, basic and diluted income per share amounted to $.25 and
$.24, respectively. The improvement in net income for the three-month period
ended September 30, 2000 as compared to the three-month period ended September
30, 1999, is primarily due to the following:
(i) Net interest margin increased by approximately $176,000 due to a higher
level of earning assets, combined with higher yields on earning
assets.
(ii) Non-interest income increased by approximately $5,000, due to an
increase in the number of transactional accounts. In addition,
the provision for loan losses was reduced by approximately $15,000.
(iii) The increase in net interest margin and non-interest income discussed
above were more than adequate to cover a $41,000 increase
in other operating expenses. The increase in other operating
expenses was primarily due to (a) the hiring of new employees
needed to service the increased volume in business and (b) other
expenses, such as depreciation, supplies and postage, where the
increases reflected the Company's growth.
Net income for the nine-month period ended September 30, 2000 amounted to
$1,277,834, or $.89 per diluted share. These results compare favorably to the
September 30, 1999 net income of $914,376, or $.64 per diluted share. The
primary reasons for the increase in net income for the nine-month period ended
September 30, 2000 as compared to the nine-month period ended September 30,
1999 are as follows:
a. Average total earning assets have increased from $90.7 million at
September 30, 1999 to $107.5 million at September 30, 2000. The
net increase of $16.8 million represents an 18.5% increase over a
twelve-month period. 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
$5,716,972 for the nine-month period ended September 30, 1999 to
$7,157,848 for the nine-month period ended September 30, 2000.
The increase of $1,440,876 represents a 25.2% 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 $ 2,121 $ 101 6.35%
Securities 7,023 313 5.94%
Loans 98,361 6,744 9.14%
-------- ------- ----
Total $ 107,505 $ 7,158 8.88%
-------- ------- ----
Deposits and borrowings $ 89,903 $ 3,294 4.89%
-------- ------- ----
Net interest income $ 3,864
=======
Net yield on earning assets 4.79%
====
Net interest income has increased from $3,130,955 for the nine-month period
ended September 30, 1999 to $3,863,590 for the nine-month period ended
September 30, 2000, a net increase of $732,635, or 23.4%. Net yield on
earning assets increased from 4.60% for the nine-month period ended September
30, 1999 to 4.79% for the nine-month period ended September 30, 2000.
d. Other income declined from $510,366 for the nine-month period ended
September 30, 1999 to $490,074 for the nine-month period ended
September 30, 2000. Other income as a percentage of total assets
has declined from .64% of total assets at September 30, 1999 to
.53% of total assets at September 30, 2000. The reasons for the
above decline are twofold: (i) The rising interest rate
environment caused a slow-down in mortgage refinancing, resulting
in a lower fee income for the Bank and (ii) there was a decline in
fees earned from insufficient funds charges due to a decline in the
number of overdraft transactions.
e. Total operating expenses have increased from $1,899,445 for the nine-
month period ended September 30, 1999 to $2,084,078 for the nine-
month period ended September 30, 2000. Total operating expenses
as a percentage of total assets declined from 2.38% to 2.25% over
the one year span from September 30, 1999 to September 30, 2000.
The above decline is due to attainment of higher operational
efficiencies.
At December 31, 1999, the allowance for loan losses amounted to $1,109,707.
By September 30, 2000, the allowance for loan losses had grown to $1,251,043.
Despite the increase, however, the allowance for loan losses, as a percentage
of gross loans, declined from 1.22% to 1.20% during the nine-month period ended
September 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.
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995
--------------------------------------------------------------------------------
Certain statements in this Form 10-QSB contain "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995,
which statements generally can be identified by the use of forward-looking
terminology, such as "may," "will," "expect," "estimate," "anticipate,"
"believe," "target," "plan," "project," or "continue" or the negatives thereof
or other variations thereon or similar terminology, and are made on the basis
of management's plans and current analyses of the Company, its business and the
industry as a whole. These forward-looking statements are subject to risks and
uncertainties, including, but not limited to, economic conditions, competition,
interest rate sensitivity and exposure to regulatory and legislative changes
and other risks as detailed from time to time in the Company's filings with the
Securities and Exchange Commission. The above factors, in some cases, have
affected, and in the future could affect, the Company's financial performance
and could cause actual results for fiscal 2000 and beyond to differ materially
from those expressed or implied in such forward-looking statements. The
Company does not undertake to publicly update or revise its forward-looking
statements even if experience or future changes made it clear that any
projected results expressed or implied therein will not be realized.
PART II - OTHER INFORMATION
Item 2. Changes in Securities
------------------------------
Pursuant to the exercise of stock options awarded pursuant to an
employment agreement with the Company, on September 18, 2000, the Company
issued 15,000 shares of Common Stock to an employee of the Company at an
exercise price of $5.00 per share.
The issuance of securities described above was made in reliance on the
exemption from registration provided by Section 4(2) of the Securities Act of
1933 as a transaction by an issuer not involving a public offering. The
securities were acquired by the recipient thereof for investment and with no
view toward the resale or distribution thereof. The offer and sale of the
above securities was made without any public solicitation and the stock
certificates bear restrictive legends. No underwriter was involved in the
transaction and no commissions were paid.
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 September 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: November 13, 2000 BY: /s/ Stephen H. Cheney
----------------- -----------------------------------------
Stephen H. Cheney
President and Chief Executive Officer
(Principal Executive, Financial
and Accounting Officer)
