SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-QSB
(Mark One)
X QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
---- EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2002.
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
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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 May 10, 2002.
Transitional small business disclosure format (check one):
Yes No X
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
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THOMASVILLE BANCSHARES, INC.
THOMASVILLE, GEORGIA
CONSOLIDATED BALANCE SHEETS
March 31, December 31,
2002 2001
ASSETS (Unaudited) (Unaudited)
------ ----------- -----------
Cash and due from banks $ 6,056,075 $ 6,223,676
Federal funds sold 3,972,202 356,202
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Total cash and cash equivalents $ 10,028,277 $ 6,579,878
------------ ------------
Investment securities:
Securities available-for-sale,
at market value $ 7,673,773 $ 7,135,162
Loans, net 138,395,331 134,335,739
Property & equipment, net 4,099,166 3,694,814
Other assets 1,544,760 1,522,783
------------ ------------
Total Assets $161,741,307 $153,268,376
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits
Non-interest bearing deposits $ 17,277,486 $ 16,562,792
Interest bearing deposits 119,216,435 116,150,265
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Total deposits $136,493,921 $132,713,057
Borrowings 10,000,000 6,000,000
Other liabilities 948,795 666,206
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Total Liabilities $147,442,716 $139,379,263
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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 8,219,658 8,200,908
Retained earnings 4,696,624 4,265,111
Accumulated other
comprehensive income (12,691) 28,094
------------ ------------
Total Shareholders' Equity $ 14,298,591 $ 13,889,113
------------ ------------
Total Liabilities and
Shareholders' Equity $161,741,307 $153,268,376
============ ============
Refer to notes to the financial statements.
THOMASVILLE BANCSHARES, INC.
THOMASVILLE, GEORGIA
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
For the three months
ended March 31,
---------------------------
2002 2001
---- ----
Interest income $2,365,824 $2,734,105
Interest expense 1,024,929 1,369,534
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Net interest income $1,340,895 $1,364,571
Provision for possible loan losses 55,000 75,000
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Net interest income after provision
for possible loan losses $1,285,895 $1,289,571
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Other income
Gain on sale of mortgage loans $ 888 $ 3,039
Service charges 39,302 32,808
Other fees 138,625 149,366
Gain from settlement of securities 808 - -
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Total other income $ 179,623 $ 185,213
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Operating expenses
Salaries and benefits $ 445,308 $ 392,440
Advertising and public relations 36,185 36,342
Depreciation 76,663 67,986
Regulatory fees and assessments 9,580 17,398
Other operating expenses 259,269 240,328
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Total operating expenses $ 827,005 $ 754,494
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Net income before taxes $ 638,513 $ 720,290
Income taxes 207,000 257,500
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Net income $ 431,513 $ 462,790
========== ==========
Basic income per share $ .31 $ .33
========== ==========
Diluted income per share $ .30 $ .32
========== ==========
Refer to notes to the financial statements.
THOMASVILLE BANCSHARES, INC.
THOMASVILLE, GEORGIA
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended
March 31,
----------------------------
2002 2001
---- ----
Cash flows from operating activities: $ 824,192 $ 886,004
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Cash flows from Investing Activities:
Decrease in other real estate owned $ - - $ 4,338
Purchase of fixed assets (481,015) (39,437)
(Increase) in loans (4,114,592) (4,699,295)
Purchase of securities, AFS (1,229,800) (7,316,156)
Proceeds from settlements
of securities 650,000 - -
Maturities, calls, paydowns, AFS - - 7,500,000
----------- -----------
Net cash used by investing activities $(5,175,407) $(4,550,550)
----------- -----------
Cash flows from Financing Activities:
Increase in borrowings $ 4,000,000 $ - -
Increase (decrease) in deposits 3,780,864 (4,629,481)
Options, restricted stock 18,750 16,575
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Net cash used by financing activities $ 7,799,614 $(4,612,906)
----------- -----------
Net (decrease) in cash
and cash equivalents $ 3,448,399 $(8,277,452)
Cash and cash equivalents,
beginning of period 6,579,878 17,115,813
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Cash and cash equivalents,
end of period $10,028,277 $ 8,838,361
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Refer to notes to the financial statements.
THOMASVILLE BANCSHARES, INC.
THOMASVILLE, GEORGIA
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED)
FOR THE THREE-MONTH PERIODS ENDED MARCH 31, 2001 AND 2002
Accumulated
Common Stock Other
------------------- Paid in Retained Comprehensive
Shares Par Value Capital Earnings Income Total
------ --------- ------- -------- ------ -----
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,
three-month
period ended
Mar. 31,
2001 - - - - - - 462,790 - - 462,790
Net unrealized
gains on
securities, three-
month period
ended Mar. 31,
2001 - - - - - - - - 29,010 29,010
--------- ---------- ---------- --------- -------- ----------
Total comprehensive
income - - - - - - 462,790 29,010 491,800
Stock options,
restricted
stock - - - - 16,575 - - - - 16,575
--------- ---------- ---------- --------- -------- ----------
Balance,
Mar. 31,
2001 1,395,000 $ 1,395,000 $ 8,128,636 $3,534,124 $ 30,863 $13,088,623
========= ========== ========== ========= ======== ==========
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Balance,
Dec 31,
2001 1,395,000 $ 1,395,000 $ 8,200,908 $4,265,111 $ 28,094 $13,889,113
--------- ---------- ---------- --------- -------- ----------
Comprehensive Income:
--------------------
Net income,
three-month
period ended
Mar. 31, 2002 - - - - - - 431,513 - - 431,513
Net unrealized
(loss) on
securities,
three-month
period ended
Mar. 31, 2002 - - - - - - - - (40,785) (40,785)
--------- ---------- ---------- --------- -------- ----------
Total comprehensive
income - - - - - - 431,513 (40,785) 390,728
Stock options,
restricted
stock - - - - 18,750 - - - - 18,750
--------- ---------- ---------- --------- -------- ----------
Balance,
Mar. 31,
2002 1,395,000 $ 1,395,000 $ 8,219,658 $4,696,624 $ (12,691) $14,298,591
========= ========== ========== ========= ======== ==========
Refer to notes to the consolidated financial statements.
THOMASVILLE BANCSHARES, INC.
THOMASVILLE, GEORGIA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 2002
NOTE 1 - BASIS OF PRESENTATION
The accompanying financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the instructions to Form 10-QSB. Accordingly, they do not include all
the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary
for a fair presentation have been included. Operating results for the three-
month period ended March 31, 2002 are not necessarily indicative of the results
that may be expected for the year ending December 31, 2002. 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, 2001.
NOTE 2 - SUMMARY OF ORGANIZATION
Thomasville Bancshares, Inc., Thomasville, Georgia (the "Company"), was
organized in January, 1995 for a then proposed de novo bank, Thomasville
National Bank, Thomasville, Georgia (the "Bank"). The Company commenced
operations on October 2, 1995. 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 operates from two banking offices, both in
Thomasville, Georgia. 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 operations 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 operations 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 operations 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 operations
of the Company.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
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RESULTS OF OPERATIONS
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Total consolidated assets increased by $8.4 million to $161.7 million
during the three-month period ended March 31, 2002. Cash and cash equivalents
increased by $3.4 million to $10.0 million, investment securities increased by
$.5 million to $7.7 million, and loans increased by $4.1 million to $138.4
million. For the three-month period ended March 31, 2002, total deposits
decreased by $2.8 million to $136.5 million, other liabilities increased by
$.3 million to $.9 million, borrowings increased by $4.0 million to $10.0
million, and the capital accounts increased by $.4 million to $14.3 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
March 31, 2002 financial statements evidence a satisfactory liquidity
position as total cash and cash equivalents amounted to $10.0 million,
representing 6.2% of total assets. Investment securities, which amounted
to $7.7 million or 4.7% 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
March 31, 2002 by regulator
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Leverage ratio 8.7% 4.0%
Risk weighted ratio 11.5% 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 March 31, 2002 and 2001, net income
amounted to $431,513 and $462,790, respectively. On a per share basis, basic
and diluted income for the three-month period ended March 31, 2002 amounted
to $.31 and $.30, respectively. For the three-month period ended March 31,
2001, basic and diluted income per share amounted to $.33 and $.32,
respectively. The factors primarily affecting the Bank's results of operations
for the first quarter of 2002 as compared to the first quarter of 2001 are
discussed below:
a. Despite a significant increase in earning assets (average total earning
assets increased from $125.5 million at March 31, 2001 to $146.7 million
at March 31, 2002), interest income, the most significant revenue item,
declined from $2,734,105 for the three-month period ended March 31, 2001
to $2,365,824 for the three-month period ended March 31, 2002. This
decline in interest income is due to a decline in the yield on earning
assets from 8.71% for the three-month period ended March 31, 2001 to
6.45% for the three-month period ended March 31, 2002.
b. Interest expense also declined, from $1,369,534 for the three-month
period ended March 31, 2001 to $1,024,929 for the three-month period ended
March 31, 2002. This decline resulted from a decline in the cost of
funds, from 5.12% for the three-month period ended March 31, 2001 to
2.91% for the three-month period ended March 31, 2002.
c. Net interest income, the difference between interest received on interest
earning assets and interest paid on interest bearing liabilities, declined
from $1,364,571 for the three-month period ended March 31, 2001 to
$1,340,895 for the three-month period ended March 31, 2002, a net decrease
of $23,676, or 1.7%. Net yield on earning assets decreased from 4.35% for
the three-month period ended March 31, 2001 to 3.66% for the three-month
period ended March 31, 2002. The primary reason for the decline is that
the decrease in the yield on earning assets was larger than the decrease
in the cost of funds, resulting in a narrower net interest margin.
Narrower net interest margins are generally being experienced industry-
wide and are a result of the Federal Reserve Board's monetary policy
actions, lowering short-term interest rates in an effort to boost the
economy.
The following presents, in a tabular form, the main components of
interest-earning assets and interest bearing liabilities for the three-month
period ended March 31, 2002.
(Dollars in 000's)
Interest Interest
Earning Assets/ Average Income/ Yield/
Bearing Liabilities Balance Cost Cost
------------------- ------- -------- ------
Federal funds sold $ 1,670 $ 5 1.20%
Securities 7,412 108 5.82%
Loans 137,663 2,253 6.55%
--------- -------- ----
Total $ 146,745 $ 2,366 6.45%
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Deposits and borrowings $ 140,758 $ 1,025 2.91%
========= -------- ----
Net interest income $ 1,341
========
Net yield on earning assets 3.66%
====
d. Other income declined from $185,213 for the three-month period ended
March 31, 2001 to $179,623 for the three-month period ended March 31,
2002. This decline is primarily due to competitive pressures. As a
percentage of average total assets, other income declined from .54% for
the three-month period ended March 31, 2001 to .46% for the three-month
period ended March 31, 2002.
e. Total operating expenses increased from $754,494 for the three-month
period ended March 31, 2001 to $827,005 for the three-month period ended
March 31, 2002. As a percentage of average total assets, total operating
expenses declined from 2.20% for the three-month period ended March 31,
2001 to 2.13% for the three-month period ended March 31, 2002. The
decline in the above ratio is due primarily to the attainment of
economies of scale.
Allowance for Loan Losses
-------------------------
At December 31, 2001, the allowance for loan losses amounted to
$1,564,769. At March 31, 2002, the allowance amounted to $1,644,755. The
allowance for loan losses, as a percentage of gross loans, increased from 1.15%
to 1.17% during the three-month period ended March 31, 2002. Management
considers the allowance for loan losses to be adequate and sufficient to absorb
anticipated 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 6. Exhibits and Reports on Form 8-K
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(a) Exhibits. None.
(b) Reports on Form 8-K. There were no reports on Form 8-K filed during
the quarter ended March 31, 2002.
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.
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(Registrant)
Date: May 10, 2002 BY: /s/ Stephen H. Cheney
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Stephen H. Cheney
President and Chief Executive Officer
(Principal Executive, Financial and Accounting
Officer)