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, 2001.
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)
(229) 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 August 10, 2001.
Transitional small business disclosure format (check one):
Yes No X
---- ----
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
-----------------------------
THOMASVILLE BANCSHARES, INC.
THOMASVILLE, GEORGIA
CONSOLIDATED BALANCE SHEETS
June 30, December 31,
2001 2000
ASSETS (Unaudited) (Unaudited)
------ ----------- -----------
Cash and due from banks $ 5,255,119 $ 8,493,734
Federal funds sold - - 8,622,079
----------- -----------
Total cash and cash equivalents $ 5,255,119 $ 17,115,813
Investment securities:
Securities available-for-sale,
at market value 8,791,816 11,636,063
Loans, net 119,303,021 107,118,466
Property & equipment, net 3,501,947 3,434,425
Other real estate owned - - 137,844
Other assets 1,468,872 1,665,053
----------- -----------
Total Assets $138,320,775 $141,107,664
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Liabilities:
Deposits
Non-interest bearing deposits $ 13,475,515 $ 15,330,627
Interest bearing deposits 107,993,822 110,563,168
----------- -----------
Total deposits $121,469,337 $125,893,795
Federal funds purchased, net 2,124,798 - -
Borrowings 1,000,000 2,000,000
Other liabilities 673,758 633,621
----------- -----------
Total Liabilities $125,267,893 $128,527,416
----------- -----------
Commitments and contingencies
Shareholders' Equity:
Common stock, $1.00 par value, 10
million shares authorized, 1,395,000
shares issued & outstanding $ 1,395,000 $ 1,395,000
Paid-in-capital 8,143,086 8,112,061
Retained earnings 3,471,938 3,071,334
Accumulated other
comprehensive income 42,858 1,853
----------- -----------
Total Shareholders' Equity $ 13,052,882 $ 12,580,248
----------- -----------
Total Liabilities and
Shareholders' Equity $138,320,775 $141,107,664
=========== ===========
Refer to notes to the financial statements.
THOMASVILLE BANCSHARES, INC.
THOMASVILLE, GEORGIA
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
For the three months
ended June 30,
-----------------------
2001 2000
---- ----
Interest income $2,699,075 $2,430,100
Interest expense 1,356,271 1,098,163
--------- ---------
Net interest income $1,342,804 $1,331,937
Provision for possible loan losses 70,000 85,000
--------- ---------
Net interest income after provision
for possible loan losses $1,272,804 $1,246,937
--------- ---------
Other income
Gain on sale of mortgage loans $ 951 $ 875
Gain on sale of assets 10,254 - -
Service charges 36,015 29,055
Other fees 128,729 96,134
Rental income - - 6,900
--------- ---------
Total other income $ 175,949 $ 132,964
--------- ---------
Salaries and benefits $ 412,506 $ 364,928
Advertising and public relations 15,903 39,763
Depreciation 75,858 39,572
Legal & professional 25,424 34,679
Repairs & maintenance 39,337 40,658
Regulatory fees and assessments 18,066 15,509
Other operating expenses 185,095 181,643
--------- ---------
Total operating expenses $ 772,189 $ 716,752
--------- ---------
Net income before taxes $ 676,564 $ 663,149
Income taxes 254,500 233,700
--------- ---------
Net income $ 422,064 $ 429,449
========= =========
Basic income per share $ .30 $ .31
========= =========
Diluted income per share $ .29 $ .30
========= =========
Refer to notes to the consolidated financial statements.
THOMASVILLE BANCSHARES, INC.
THOMASVILLE, GEORGIA
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
For the six months
ended June 30,
-----------------------
2001 2000
---- ----
Interest income $5,433,180 $4,686,743
Interest expense 2,725,805 2,105,145
--------- ---------
Net interest income $2,707,375 $2,581,598
Provision for possible loan losses 145,000 160,000
--------- ---------
Net interest income after provision
for possible loan losses $2,562,375 $2,421,598
--------- ---------
Other income
Gain on sale of mortgage loans $ 3,990 $ 2,058
Gain on sale of assets 10,254 - -
Service charges 68,823 56,980
Other fees 278,095 218,037
Rental income - - 11,500
--------- ---------
Total other income $ 361,162 $ 288,575
--------- ---------
Salaries and benefits $ 804,946 $ 722,314
Advertising and public relations 52,245 74,566
Depreciation 143,844 109,330
Legal & professional 57,218 50,929
Repairs & maintenance 80,862 72,230
Regulatory fees and assessments 35,464 30,841
Other operating expenses 348,104 332,727
--------- ---------
Total operating expenses $1,522,683 $1,392,937
--------- ---------
Net income before taxes $1,400,854 $1,317,236
Income taxes 512,000 484,700
--------- ---------
Net income $ 888,854 $ 832,536
========= =========
Basic income per share $ .64 $ .60
========= =========
Diluted income per share $ .62 $ .58
========= =========
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,
--------------------------
2001 2000
---- ----
Cash flows from operating activities: $ 1,406,611 $ 1,070,404
----------- -----------
Cash flows from investing activities:
Decrease in OREO $ 137,844 $ 257,800
Purchase of fixed assets (211,366) (43,748)
Maturities, calls,
paydowns, securities, AFS 10,300,000 2,902,336
Purchase of securities, AFS (7,407,343) (788,231)
(Increase) in loans (12,329,555) (6,642,734)
----------- -----------
Net cash used by investing activities $ (9,510,420) $ (4,314,577)
----------- -----------
Cash flows from financing activities:
Options, restricted stock $ 31,025 $ 25,900
Increase (decrease) in borrowings 1,124,798 (158,376)
Increase (decrease) in deposits (4,424,458) 2,467,028
Payment of cash dividend (488,250) (414,000)
----------- -----------
Net cash provided from
(used by) financing activities $ (3,756,885) $ 1,920,549
----------- -----------
Net (decrease) in cash and cash equivalents $(11,860,694) $ (1,323,624)
Cash and cash equivalents,
beginning of period 17,115,813 7,583,110
----------- -----------
Cash and cash equivalents, end of period $ 5,255,119 $ 6,259,486
=========== ===========
Refer to notes to the consolidated financial statements.
THOMASVILLE BANCSHARES, INC.
THOMASVILLE, GEORGIA
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED)
FOR THE SIX-MONTH PERIODS ENDED JUNE 30, 2000 AND 2001
Accumulated
Common Stock Other
------------------ Paid in Retained Comprehensive
Shares Par Value Capital Earnings Income Total
------ --------- ------- -------- ------ -----
Balance,
Dec 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)
--------- ---------- ---------- --------- -------- ----------
Total comprehensive
income - - - - - - 832,536 (18,466) 814,070
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
========= ========== ========== ========= ======== ==========
Balance,
December 31,
2000 1,395,000 $ 1,395,000 $ 8,112,061 $3,071,334 $ 1,853 $12,580,248
--------- ---------- ---------- --------- -------- ----------
Comprehensive Income:
---------------------
Net income,
Six-month
period ended
June 30,
2001 - - - - - - 888,854 - - 888,854
Net unrealized
gains on
securities, six-
month period
ended June 30,
2001 - - - - - - - - 41,005 41,005
--------- ---------- ---------- --------- -------- ----------
Total comprehensive
income - - - - - - 888,854 41,005 929,859
Stock options,
restricted
stock - - - - 31,025 - - - - 31,025
Dividends
paid - - - - - - (488,250) - - (488,250)
--------- ---------- ---------- --------- -------- ----------
Balance,
June 30,
2001 1,395,000 $ 1,395,000 $ 8,143,086 $3,471,938 $ 42,858 $13,052,882
========= ========== ========== ========= ======== ==========
Refer to notes to the consolidated financial statements.
THOMASVILLE BANCSHARES, INC.
THOMASVILLE, GEORGIA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 2001
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, 2001 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 2001. 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, 2000.
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 ("FASB") issued
Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and Hedging Activities." Statement No. 133 establishes
accounting and reporting standards requiring that every derivative instrument
(including certain derivative instruments embedded in other contracts) be
recorded in the balance sheet as either an asset or a liability measured at
its fair value. The Statement requires that changes in the derivative
instrument's fair value be recognized currently in earnings unless specific
hedge accounting criteria are met. Statement No. 133, as amended, is
effective for fiscal years beginning after June 15, 2000. The Company adopted
Statement No. 133 as of September 30, 2000. The adoption of Statement No. 133
did not have a material impact on the financial position or results of
operations of the Company.
In September, 2000, FASB issued Statement No. 140, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities." This new Statement replaces Statement No. 125, issued in June,
1996. Statement No. 140 resolves certain implementation and other issues that
have arisen since the initial adoption of Statement No. 125, but it carries
over most of Statement No. 125's provisions without change. Statement No. 140
is effective for transfers occurring after March 31, 2001 and for disclosures
relating to securitization transactions and collateral for fiscal years ending
after December 15, 2000. The adoption of Statement No. 140 will not have a
significant impact on the financial position or results of operations of the
Company.
Item 2. Management's Discussion and Analysis of Financial Condition and
---------------------------------------------------------------
Results of Operations
---------------------
Total consolidated assets decreased by $2.8 million to $138.3 million
during the six-month period ended June 30, 2001. Cash and cash equivalents
declined by $11.8 million to $5.3 million, investment securities declined by
$2.8 million to $8.8 million, loans increased by $12.2 million to $119.3
million, and all other assets decreased by $.4 million to $1.5 million. For
the six-month period ended June 30, 2001, total deposits decreased by $4.4
million to $121.5 million, all other liabilities increased by $1.2 million to
$3.8 million, and the capital accounts increased by $.4 million to $13.1
million.
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 June
30, 2001 financial statements evidence a satisfactory liquidity position as
total cash and cash equivalents amounted to $5.3 million, representing 3.8% of
total assets. Investment securities, which amounted to $8.8 million, or 6.4%
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. The
Company is not aware of any 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, 2001 by regulator
------------- ----------------
Leverage ratio 8.7% 4.0%
Risk weighted ratio 12.6% 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, 2001 and 2000, net income amounted
to $422,064 and $429,449, respectively. On a per share basis, basic and
diluted income for the three-month period ended June 30, 2001 amounted to $.30
and $.29, respectively. For the three-month period ended June 30, 2000, basic
and diluted income per share amounted to $.31 and $.30, respectively. Below
are two key facts to consider when comparing the results of the three-month
period ended June 30, 2001 with the three-month period ended June 30, 2000:
a. Net interest income increased by $11,000, while average earning assets
increased by approximately $20.0 million. The relatively small increase
in net interest income as compared to the increase in average earning
assets is due to narrowing interest margins, which are a result of a
slowing economy and monetary policy actions undertaken by the
Federal Reserve Board.
b. Net overhead expense, defined as non-interest expense less non-interest
income, increased 2.1% during the three-month period ended June 30, 2001
compared to the three-month period ended June 30, 2000, from $583,788 to
$596,240, while average earning assets grew by approximately 19% during
the same period. The relatively small increase in net overhead expense
as compared to the increase in average earning assets reflects the
benefit of economies of scale and improved operational efficiencies.
Net income for the six-month period ended June 30, 2001 amounted to $888,854,
or $.62 per diluted share. These results compare favorably with the six-month
period ended June 30, 2000 net income of $832,456, or $.58 per diluted share.
The primary reasons for the increase in net income for the six-month period
ended June 30, 2001 as compared to the six-month period ended June 30, 2000
are as follows:
a. Average total earning assets increased from $106.2 million at June 30,
2000 to $129.2 million at June 30, 2001. The net increase of $23.0
million represents a 21.7% increase over a twelve-month period. There
can be no assurance, however, that this level of growth can be
maintained.
b. As a consequence of the increase in earning assets, interest income, the
most significant revenue item, increased 15.9% from $4,686,743 for the
six-month period ended June 30, 2000 to $5,433,180 for the six-month
period ended June 30, 2001. The yield on earning assets declined from
8.84% for the six-month period ended June 30, 2000 to 8.41% for the six-
month period ended June 30, 2001. This decline is mainly in response to
the Federal Reserve Board's monetary policy actions reducing short-term
rates.
c. Net interest income represents the difference between interest received
on interest earning assets and interest paid on interest bearing
liabilities. The following table presents the main components of
interest earning assets and interest bearing liabilities for the six-
month period ended June 30, 2001.
(Dollars in 000's)
Interest Interest
Earning Assets/ Average Income/ Yield/
Bearing Liabilities Balance Cost Cost
------------------- ------- -------- ------
Federal funds sold $ 5,309 $ 131 4.94%
Securities 10,138 347 6.85%
Loans 113,734 4,955 8.71%
-------- ------- ----
Total $ 129,181 $ 5,433 8.41%
======== ------- ----
Deposits and borrowings $ 109,613 $ 2,726 4.97%
======== ------- ----
Net interest income $ 2,707
=======
Net yield on earning assets 4.19%
====
Net interest income increased from $2,581,598 for the six-month period ended
June 30, 2000 to $2,707,375 for the six-month period ended June 30, 2001, a
net increase of $125,777, or 4.9%. Net yield on earning assets decreased from
4.87% for the six-month period ended June 30, 2000 to 4.19% for the six-month
period ended June 30, 2001; the decrease is attributable to two factors:
(i) the yield on earning assets decreased by 43 basis points to
8.41% and
(ii) the cost of funds increased by 25 basis points to 4.97%.
d. Other income increased from $288,575 for the six-month period ended June
30, 2000 to $361,162 for the six-month period ended June 30, 2001.
Other income as a percent of average total assets increased from .50%
for the six-month period ended June 30, 2000 to .52% for the six-month
period ended June 30, 2001. The majority of this increase is due to fee
income from overdraft accounts.
e. Total operating expenses increased from $1,392,937 for the six-month
period ended June 30, 2000 to $1,522,683 for the six-month period ended
June 30, 2001. As a percentage of average total assets, total operating
expenses decreased from 2.41% for the six-month period ended June 30,
2000 to 2.20% for the six-month period ended June 30, 2001.
At December 31, 2000, the allowance for loan losses amounted to $1,365,057.
At June 30, 2001, the allowance amounted to $1,513,294. As a percentage of
gross loans, the allowance decreased from 1.26% to 1.25% during the six-month
period ended June 30, 2001. Management considers the allowance for loan
losses to be adequate and sufficient to absorb estimated 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 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 2001 Annual Meeting of Shareholders of the Company was held on May 22,
2001. At the meeting, the following persons were elected as Class III
directors to serve for a term of three tears and until their successors are
elected as qualified: David A. Cone, Charles W. McKinnon, Jr., Randall L.
Moore, Cochran A. Scott, Jr., and Richard L. Singletary, Jr.
The number of votes cast for and withheld with respect to the election of each
nominee for director was as follows:
Votes Votes
For Withheld
------- --------
David A. Cone 935,582 1,950
Charles W. McKinnon, Jr. 935,582 1,950
Randall L. Moore 935,582 1,950
Cochran A. Scott, Jr. 935,582 1,950
Richard L. Singletary, Jr. 935,582 1,950
In addition, the shareholders of the Company ratified the appointment of
Francis and Company, CPAs as auditors for the Company and its subsidiary for
the year ending December 31, 2001. The number of votes for, against and
withheld with respect to the ratification of Francis and Company, CPAs was as
follows:
Votes Votes Votes
For Against Withheld
------- ------- --------
935,532 800 1,200
No other matters were presented or voted on at the Annual Meeting.
The following persons did not stand for reelection at the 2001 Annual Meeting
of Shareholders as their term of office continued after the Annual Meeting:
Charles A. Balfour, Clifford S. Campbell, Jr., Stephen H. Cheney, Charles E.
Hancock, Charles H. Hodges, III, Harold L. Jackson, David O. Lewis, and Diane
W. Parker.
Item 6. Exhibits and Reports on Form 8-K
-----------------------------------------
(a) Exhibits. None.
(b) Reports on Form 8-K. There were no reports on Form 8-K filed
during the quarter ended June 30, 2001.
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 10, 2001 BY: /s/ Stephen H. Cheney
----------------- ----------------------------------------
Stephen H. Cheney
President and Chief Executive Officer
(Principal Executive, Financial and
Accounting Officer)