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, 2001.
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.
-----------------------------------------------------------------
(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)
(229) 226-3300
-------------------------------------------------------------
(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 1, 2001.
Transitional small business disclosure format (check one):
Yes No X
----- -----
(Page 1 of 15)
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
-----------------------------
THOMASVILLE BANCSHARES, INC.
THOMASVILLE, GEORGIA
CONSOLIDATED BALANCE SHEETS
September 30, December 31,
2001 2000
ASSETS (Unaudited) (Unaudited)
------ ------------- ------------
Cash and due from banks $ 4,159,330 $ 8,493,734
Interest bearing
deposits at other banks 500,000 - -
Federal funds sold 5,828,202 8,622,079
----------- -----------
Total cash and cash equivalents $ 10,487,532 $ 17,115,813
Investment securities:
Securities available-for-sale,
at market value 6,325,748 11,636,063
Loans, net 124,574,866 107,118,466
Property & equipment, net 3,466,321 3,434,425
Other real estate owned - - 137,844
Other assets 1,680,040 1,665,053
----------- -----------
Total Assets $146,534,507 $141,107,664
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Liabilities:
Deposits
Non-interest bearing deposits $ 15,133,329 $ 15,330,627
Interest bearing deposits 111,102,188 110,563,168
----------- -----------
Total deposits $126,235,517 $125,893,795
Borrowings 6,000,000 2,000,000
Other liabilities 763,139 633,621
----------- -----------
Total Liabilities $132,998,656 $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 8,156,176 8,112,061
Retained earnings 3,919,097 3,071,334
Accumulated other
comprehensive income 65,578 1,853
----------- -----------
Total Shareholders' Equity $ 13,535,851 $ 12,580,248
----------- -----------
Total Liabilities and
Shareholders' Equity $146,534,507 $141,107,664
=========== ===========
Refer to notes to the financial statements.
THOMASVILLE BANCSHARES, INC.
THOMASVILLE, GEORGIA
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three months ended
September 30,
-----------------------
2001 2000
---- ----
Interest income $2,615,578 $2,471,105
Interest expense 1,301,883 1,189,113
--------- ---------
Net interest income $1,313,695 $1,281,992
Provision for loan losses 60,000 75,000
--------- ---------
Net interest income after
provision for loan losses $1,253,695 $1,206,992
--------- ---------
Other income
Gain on sale of mortgage loans $ 483 $ 1,673
Service charges 40,953 28,707
Other fees 148,078 164,229
Rental income - - 6,890
--------- ---------
Total other income $ 189,514 $ 201,499
--------- ---------
Salaries and benefits $ 427,430 $ 371,368
Advertising and public relations 28,743 43,034
Depreciation 77,171 104,994
Legal and professional 33,305 25,030
Repairs and maintenance 39,921 38,326
Regulatory fees and assessments 17,657 15,703
Other operating expenses 170,403 92,686
--------- ---------
Total operating expenses $ 794,630 $ 691,141
--------- ---------
Net income before taxes $ 648,579 $ 717,350
Income taxes 201,420 272,052
--------- ---------
Net income after taxes $ 447,159 $ 445,298
========= =========
Basic income per share $ .32 $ .32
========= =========
Diluted income per share $ .31 $ .31
========= =========
Refer to notes to the consolidated financial statements.
THOMASVILLE BANCSHARES, INC.
THOMASVILLE, GEORGIA
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Nine months ended
September 30,
------------------------
2001 2000
---- ----
Interest income $8,048,758 $7,157,848
Interest expense 4,027,688 3,294,258
--------- ---------
Net interest income $4,021,070 $3,863,590
Provision for loan losses 205,000 235,000
--------- ---------
Net interest income after
provision for loan losses $3,816,070 $3,628,590
--------- ---------
Other income
Gain on sale of mortgage loans $ 4,473 $ 3,731
Gain on sale of assets 10,254 - -
Service charges 109,776 85,687
Other fees 426,173 382,266
Rental income - - 18,390
--------- ---------
Total other income $ 550,676 $ 490,074
--------- ---------
Salaries and benefits $1,232,376 $1,093,682
Advertising and public relations 80,988 117,600
Depreciation 221,015 214,324
Legal and professional 90,523 75,959
Repairs and maintenance 120,783 110,556
Regulatory fees and assessments 53,121 46,544
Other operating expenses 518,507 425,413
--------- ---------
Total operating expenses $2,317,313 $2,084,078
--------- ---------
Net income before taxes $2,049,433 $2,034,586
Income taxes 713,420 756,752
--------- ---------
Net income after taxes $1,336,013 $1,277,834
========= =========
Basic income per share $ .96 $ .92
========= =========
Diluted income per share $ .93 $ .89
========= =========
Refer to notes to the consolidated financial statements.
THOMASVILLE BANCSHARES, INC.
THOMASVILLE, GEORGIA
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine months ended
September 30,
--------------------------
2001 2000
---- ----
Cash flows from operating activities: $ 1,857,942 $ 1,547,304
----------- -----------
Cash flows from Investing Activities:
Decrease in other real estate owned $ 137,844 $ 239,970
Purchase of fixed assets (252,911) (145,444)
Maturities, paydowns on securities AFS 14,400,000 3,600,000
Purchase of securities AFS (9,007,343) (1,452,309)
(Increase) in loans (17,661,400) (12,718,545)
----------- -----------
Net cash used by investing activities $(12,383,810) $(10,476,328)
----------- -----------
Cash flows from Financing Activities:
Increase (decrease) in borrowings $ 4,000,000 $ (314,779)
Payment of cash dividends (488,250) (414,000)
Options, restricted stock 44,115 37,000
Exercise of stock options - - 75,000
Increase in deposits 341,722 10,338,749
----------- -----------
Net cash provided by financing activities $ 3,897,587 $ 9,721,970
----------- -----------
Net increase in cash and cash equivalents $ (6,628,281) $ 792,946
Cash and cash equivalents,
beginning of period 17,115,813 7,583,110
----------- -----------
Cash and cash equivalents, end of period $ 10,487,532 $ 8,376,056
=========== ===========
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, 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,
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)
--------- ---------- ---------- --------- -------- ----------
Total comprehensive
income - - - - - - 1,277,834 (295) 1,277,539
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
========= ========== ========== ========= ======== ==========
-----------------------------------------
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,
Nine-month
period ended
Sept 30,
2001 - - - - - - 1,336,013 - - 1,336,013
Net unrealized
gains on
securities, nine-
month period
ended Sept 30,
2001 - - - - - - - - 63,725 63,725
--------- ---------- ---------- --------- -------- ----------
Total comprehensive
income - - - - - - 1,336,013 63,725 1,399,738
Stock options,
restricted
stock - - - - 44,115 - - - - 44,115
Dividends
paid - - - - - - (488,250) - - (488,250)
--------- ---------- ---------- --------- -------- ----------
Balance,
Sept 30,
2001 1,395,000 $ 1,395,000 $ 8,156,176 $3,919,097 $ 65,578 $13,535,851
========= ========== ========== ========= ======== ==========
Refer to notes to the consolidated financial statements.
THOMASVILLE BANCSHARES, INC.
THOMASVILLE, GEORGIA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
SEPTEMBER 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 nine-month periods ended September 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. 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 depositors
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
Statement of Financial Accounting Standards No. 141, "Business
Combinations" ("FASB 141") addresses financial accounting and reporting for
business combinations and supersedes both APB Opinion No. 16, "Business
Combinations" and FASB Statement No. 38, "Accounting for Preacquisition
Contingencies of Purchased Enterprises." All business combinations in the
scope of FASB 141 are to be accounted for using one method - the purchase
method. The provisions of FASB 141 apply to all business combinations
initiated after June 30, 2001. The adoption of FASB 141 is not expected to
have a material impact on the financial position or results of operation of
the Company.
Statement of Financial Accounting Standards No. 142, "Goodwill and Other
Intangible Assets" ("FASB 142") addresses financial accounting and reporting
for acquired goodwill and other intangible assets and supersedes APB Opinion
No. 17, "Intangible Assets." FASB 142 addresses how intangible assets that
are acquired individually or with a group of other assets (but not those
acquired in a business combination) should be accounted for in financial
statements upon their acquisition. FASB 142 also addresses how goodwill and
other intangible assets should be accounted for after they have been initially
recognized in the financial statements. FASB 142 is effective for fiscal
years beginning after December 15, 2001. The adoption of FASB 142 is not
expected to have a material impact on the financial position or results of
operation of the Company.
Statement of Financial Accounting Standards No. 143, "Accounting for
Asset Retirement Obligations" ("FASB 143") addresses financial accounting and
reporting for obligations associated with the retirement of tangible long-
lived assets and the associated asset retirement costs. FASB 143 applies to
all entities. FASB 143 also applies to legal obligations associated with the
retirement of long-lived assets that result from the acquisition,
construction, development and (or) the normal operation of a long-lived asset,
except for certain obligations of leases. FASB 143 amends FASB Statement No.
19, "Financial Accounting and Reporting by Oil and Gas Producing Companies".
FASB 143 is effective for fiscal years beginning after December 15, 2002.
The adoption of FASB 143 is not expected to have a material impact on the
financial position or results of operation of the Company.
Statement of Financial Accounting Standards No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets" ("FASB 144") addresses financial
accounting and reporting for the impairment or disposal of long-lived assets.
FASB 144 supersedes both FASB Statement No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of"
and the accounting and reporting provisions of APB Opinion No. 30, "Reporting
the Results of Operation - Reporting the Effects of Disposal of a Segment of a
Business, and Extraordinary, Unusual and Infrequently Occurring Events and
Transactions," for the disposal of a Segment of a business (as previously
defined in that opinion). FASB 144 also amends ARB No. 51, "Consolidated
Financial Statements" to eliminate the exception to consolidation for a
subsidiary for which control is likely temporary. The provisions of FASB 144
are required to be applied with fiscal years beginning after December 15,
2001. Adoption of FASB 144 is not expected to have a material impact on the
financial position or results of operation of the Company.
Item 2. Management's Discussion and Analysis of Financial Condition and
---------------------------------------------------------------
Results of Operations
---------------------
Total consolidated assets increased by $5.4 million to $146.5 million during
the nine-month period ended September 30, 2001. The increase was generated
through a $.3 million increase in deposits, a $4.0 million increase in
borrowings, a $.1 million increase in other liabilities, and a $1.0 million
increase in the capital accounts. The Bank utilized the $5.4 million increase
in sources of funds to restructure its assets as follows: Loans were
increased by $17.4 million to $124.6 million, cash and cash equivalents were
reduced by $6.6 million to $10.5 million, securities were reduced by $5.3
million to $6.3 million, and all other assets were reduced by $.1 million to
$4.8 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
September 30, 2001 financial statements evidence a satisfactory liquidity
position as total cash and cash equivalents amounted to $10.5 million,
representing 7.1% of total assets. Investment securities, which amounted to
$6.3 million or 4.3% 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. Management 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
established by the Bank's primary regulator, the Office of the Comptroller of
the Currency ("OCC").
Bank's Minimum required
September 30, 2001 by regulator
------------------ ------------
Leverage ratio 9.0% 4.0%
Risk weighted ratio 12.3% 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, 2001 and 2000, net income
amounted to $447,159 and $445,298, respectively. On a per share basis, basic
income for both three-month periods ended September 30, 2001 and 2000 amounted
to $.32. For both three-month periods ended September 30, 2001 and 2000,
diluted income per share amounted to $.31. Below are two key factors to
consider when comparing the net income results for the three-month period
ended September 30, 2001 with those of the three-month period ended September
30, 2000:
a. Net interest income increased by approximately $32,000, while average
earning assets increased by approximately $20.7 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 23.6% during the three-month period ended September
30, 2001 compared to the three-month period ended September 30, 2000,
from $489,642 to $605,116, while average earning assets grew by
approximately 19% during the same period. This indicates that the
increase in net overhead expense is outpacing the growth in assets.
Net income for the nine-month period ended September 30, 2001 amounted to
$1,336,013, or $.93 per diluted share. These results compare favorably to the
September 30, 2000 net income of $1,277,834, or $.89 per diluted share. The
primary reasons for the increase in net income for the nine-month period ended
September 30, 2001 as compared to the nine-month period ended September 30,
2000 are as follows:
a. Average total earning assets increased from $107.5 million for the
nine-month period ended September 30, 2000 to $128.2 million for the
nine-month period ended September 30, 2001. The net increase of $20.7
million represents a 19.2% increase over a twelve-month period. There
can be no assurances, however, that this level of growth can be
maintained.
b. As a result of the increase in earning assets, interest income, the most
significant revenue item, increased by $890,910, or 12.4%, from
$7,157,848 for the nine-month period ended September 30, 2000 to
$8,048,758 for the nine-month period ended September 30, 2001. The cost
of fund declined from 4.89% for the nine-month period ended September
30, 2000 to 4.81% for the nine-month period ended September 30, 2001.
c. Net interest income, the difference between interest received on
interest earning assets and interest paid on interest bearing
liabilities, increased from $3,863,590 for the nine-month period ended
September 30, 2000 to $4,021,070 for the nine-month period ended
September 30, 2001, a net increase of $157,480, or 4.1%. Net yield on
earning assets decreased from 4.79% for the nine-month period ended
September 30, 2000 to 4.18% for the nine-month period ended September
30, 2001. The reason for the decline in the net yield on earning assets
is that the yield on earning assets declined by 51 basis points, from
8.88% to 8.37%, while the cost of funds declined 8 basis points, from
4.89% to 4.81%.
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 $ 4,815 $ 159 4.40%
Securities 9,606 464 6.44%
Loans 113,753 7,426 8.70%
-------- ------- ----
Total $ 128,174 $ 8,049 8.37%
-------- ------- ----
Deposits and borrowings $ 111,686 $ 4,028 4.81%
-------- ------- ----
Net interest income $ 4,021
=======
Net yield on earning assets 4.18%
====
d. Other income increased from $490,074 for the nine-month period ended
September 30, 2000 to $550,676 for the nine-month period ended September
30, 2001. As a percentage of average total assets, other income declined
from .56% for the nine-month period ended September 30, 2000 to .53% for
the nine-month period ended September 30, 2001.
e. Total operating expenses increased from $2,084,078 for the nine-
month period ended September 30, 2000 to $2,317,313 for the nine-month
period ended September 30, 2001. Total operating expenses as a
percentage of average total assets declined from 2.35% for the nine-
month period ended September 30, 2000 to 2.23% for the nine-month period
ended September 30, 2001. The decline is due to attainment of higher
operational efficiencies.
At December 31, 2000, the allowance for loan losses amounted to $1,365,057.
At September 30, 2001, the allowance for loan losses amounted to $1,532,236.
As a percentage of gross loans, the allowance declined from 1.26% at December
31, 2000 to 1.22% at September 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.
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. The 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 2001
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 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 September 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: November 7, 2001 BY: /s/ Stephen H. Cheney
----------------- -----------------------------------------
Stephen H. Cheney
President and Chief Executive Officer
(Principal Executive, Financial and
Accounting Officer)