-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Nu0epLQSKgjH4hTXZiahPfROUV/6IhzG3PWsa2UuNlbqV2OEWhYblROoTjBhzsTf I8SahcwO74Mm74zvyj4/GA== 0000931763-96-000177.txt : 19960514 0000931763-96-000177.hdr.sgml : 19960514 ACCESSION NUMBER: 0000931763-96-000177 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960513 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: COLONY BANKCORP INC CENTRAL INDEX KEY: 0000711669 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 581492391 STATE OF INCORPORATION: GA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-12436 FILM NUMBER: 96562159 BUSINESS ADDRESS: STREET 1: 302 S MAIN ST STREET 2: PO BOX 989 CITY: FITZGERALD STATE: GA ZIP: 31750 BUSINESS PHONE: 9124235446 10QSB 1 10-QST FOR PERIOD ENDED 3-31-96 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-QSB QUARTERLY REPORT UNDER SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR QUARTER ENDED MARCH 31, 1996COMMISSION FILE NUMBER 0-12436 COLONY BANKCORP, INC. --------------------- (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) GEORGIA 58-1492391 ------- ---------- (STATE OF OTHER JURISDICTION) (I.R.S. EMPLOYER) OF INCORPORATION OR ORGANIZATION IDENTIFICATION NUMBER 302 SOUTH MAIN STREET, FITZGERALD, GEORGIA 31750 ------------------------------------------------ ADDRESS OF PRINCIPAL EXECUTIVE OFFICES 912/426-6000 ------------ REGISTRANT'S TELEPHONE NUMBER INCLUDING AREA CODE INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED REPORTS REQUIRED TO BE FILED BY SECTIONS 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES X NO ------- ------ INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S CLASSES OF COMMON STOCK, AS OF THE CLOSE OF THE PERIOD COVERED BY THIS REPORT. CLASS OUTSTANDING AT MARCH 31, 1996 ----- ----------------------------- COMMON STOCK, $10 PAR VALUE 1,291,110 PART 1 - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS -------------------- THE FOLLOWING FINANCIAL STATEMENTS ARE PROVIDED FOR COLONY BANKCORP, INC. AND SUBSIDIARIES: THE BANK OF FITZGERALD, ASHBURN BANK, COMMUNITY BANK OF WILCOX, THE BANK OF DODGE COUNTY, AND THE BANK OF WORTH. A. CONSOLIDATED BALANCE SHEETS - MARCH 31, 1996 AND DECEMBER 31, 1995. B. CONSOLIDATED STATEMENTS OF INCOME - FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995. C. CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION - FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995. THE CONSOLIDATED FINANCIAL STATEMENTS FURNISHED HAVE NOT BEEN EXAMINED BY INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS, BUT REFLECT, IN THE OPINION OF MANAGEMENT, ALL ADJUSTMENTS NECESSARY FOR A FAIR PRESENTATION OF THE RESULTS OF OPERATIONS FOR THE PERIODS PRESENTED. THE RESULTS OF OPERATIONS FOR THE THREE MONTH PERIOD ENDED MARCH 31, 1996 ARE NOT NECESSARILY INDICATIVE OF THE RESULTS TO BE EXPECTED FOR THE FULL YEAR. 2 COLONY BANKCORP, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS MARCH 31, 1996 AND DECEMBER 31, 1995 (UNAUDITED) (DOLLARS IN THOUSANDS)
ASSETS MARCH 31, 1996 DECEMBER 31, 1995 --------------- ------------------ Cash and Balances Due from Depository Institutions (Note 2) $ 7,476 $ 9,517 Federal Funds Sold 10,960 24,325 Investment Securities (Aggregate Fair Value of $51,751 and $45,917 Respectively) (Note 3) 51,861 46,023 Loans (Notes 4 and 5) 192,717 188,396 Allowance for Loan Losses (3,748) (3,885) Unearned Interest and Fees (11) (11) -------- -------- Total Loans 188,958 184,500 Premises and Equipment (Note 6) 5,565 5,624 Other Real Estate 1,549 1,721 Other Assets 5,858 6,858 -------- -------- TOTAL ASSETS $272,227 $278,568 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Deposits: Noninterest-Bearing $ 24,425 $ 25,152 Interest-Bearing (Note 8) 221,753 228,091 -------- -------- Total Deposits 246,178 253,243 Borrowed Money: Federal Funds Purchased -0- -0- Other Borrowed Money (Note 9) 2,252 2,504 -------- -------- Total Borrowed Money 2,252 2,504 Other Liabilities 2,242 1,766 Commitments and Contingencies (Note 11) Stockholders' Equity: Common Stock, Par Value $10 a Share; Authorized 5,000,000 shares, Issued 1,291,110 shares as of March 31, 1996 and December 31, 1995 Respectively 12,911 12,911 Paid-In Capital 1,117 1,117 Retained Earnings 7,804 7,203 Net Unrealized Loss on Securities Available for Sale, Net of Tax Benefit of $53 in 1996 and $20 in 1995 (277) (176) -------- -------- Total Stockholders'' Equity 21,555 21,055 -------- -------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $272,227 $278,568 ======== ========
The accompanying notes are an integral part of these balance sheets. 3 COLONY BANKCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME THREE MONTHS ENDED MARCH 31, 1996 AND 1995 (UNAUDITED) (DOLLARS IN THOUSANDS)
THREE MONTHS ENDED 3/31/96 3/31/95 ---------- ---------- Interest Income: Loans, including fees $ 5,071 $ 4,719 Federal Funds Sold 259 103 Deposits with Other Banks 2 23 Investment Securities: U.S. Treasury & Federal Agencies 619 643 State, County and Municipal 54 58 ---------- ---------- Total Interest Income 6,005 5,546 ---------- ---------- Interest Expense: Deposits 2,954 2,319 Federal Funds Purchased 2 16 Other Borrowed Money 71 78 ---------- ---------- Total Interest Expense 3,027 2,413 ---------- ---------- Net Interest Income 2,978 3,133 Provision for Loan Losses 639 377 ---------- ---------- Net Interest Income After Provision 2,339 2,756 ---------- ---------- Noninterest Income: Service Charge on Deposits 390 381 Other Income 249 196 Security Gains, net 3 8 ---------- ---------- Total Noninterest Income 642 585 ---------- ---------- Noninterest Expense: Salaries and Employee Benefits 1,072 1,047 Occupancy and Equipment 240 261 Other Operating Expenses 657 762 ---------- ---------- Total Noninterest Expense 1,969 2,070 ---------- ---------- Income Before Income Taxes $ 1,012 $ 1,271 Income Taxes 314 424 ---------- ---------- Net Income $ 698 $ 847 ========== ========== Net Income Per Share of Common Stock $0.54 $0.70 ========== ========== Weighted Average Shares Outstanding 1,291,110 1,216,110 ========== ==========
The accompanying notes are an integral part of these statements 4 COLONY BANKCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS THREE MONTHS ENDED MARCH 31, 1996 AND 1995 (UNAUDITED) (DOLLARS IN THOUSANDS)
1996 1995 ---------- --------- CASH FLOW FROM OPERATING ACTIVITIES Net income (loss) $ 698 $ 847 Adjustments to reconcile net income to net cash provided by operating activities: (Gain) loss on sale of investment securities (3) (8) Depreciation 112 129 Provision for loan losses 639 377 Amortization of excess costs 12 12 Other prepaids, deferrals and accruals, net 1,698 875 -------- ------- Total Adjustments $ 2,458 $ 1,385 -------- ------- Net cash provided by operating activities $ 3,156 $ 2,232 -------- ------- CASH FLOWS FROM INVESTING ACTIVITIES Purchases of securities available for sale $ (9,238) $(2,350) Proceeds from sales of securities available for sale 498 1,720 Proceeds from maturities of securities available for sale 2,733 2,187 Purchase of securities held for investment -0- -0- Proceeds from maturities of securities held for investment -0- 270 Proceeds from sales of securities held for investment -0- -0- Decrease in interest-bearing deposits in banks -0- 481 (Increase) in loans (5,097) (4,875) Purchase of premises and equipment (44) (169) -------- ------- Net cash (used in) investing activities $(11,148) $(2,736) -------- ------- CASH FLOW FROM FINANCING ACTIVITIES Net (decrease) increase in deposits $ (7,065) $ 2,822 Net increase in short-term borrowings and Federal Funds Purchased -0- 190 Dividends paid (97) (79) Net (decrease) increase in long-term borrowings (252) (52) -------- ------- Net cash provided by financing activities $ (7,414) $ 2,881 -------- ------- Net increase (decrease) in cash and cash equivalents (15,406) 2,377 Cash and cash equivalents at beginning of period 33,743 15,343 -------- ------- Cash and cash equivalents at end of period $ 18,337 $17,720
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. 5 COLONY BANKCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - ---------------------------------------------- Colony Bankcorp, Inc. is a multi-bank holding company located in Fitzgerald, Georgia. The consolidated financial statements include the accounts of Colony Bankcorp, Inc. and its wholly-owned subsidiaries, The Bank of Fitzgerald, Fitzgerald, Georgia; Ashburn Bank, Ashburn, Georgia; The Bank of Worth, Sylvester, Georgia; The Bank of Dodge County, Eastman, Georgia and Community Bank of Wilcox, Pitts, Georgia (the Banks). All significant intercompany accounts have been eliminated in consolidation. The accounting and reporting policies of Colony Bankcorp, Inc. conform to generally accepted accounting principles and practices utilized in the commercial banking industry. The following is a description of the more significant of those policies BASIS OF PRESENTATION In preparing the financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the balance sheet date and revenues and expenses for the period. Actual results could differ significantly from those estimates. Material estimates that are particularly susceptible to significant change in the near-term relate to the determination of the allowance for loan losses, the valuation of real estate acquired in connection with foreclosures or in satisfaction of loans and the valuation of deferred tax assets. INVESTMENT SECURITIES The Company adopted Statement of Financial Accounting Standards (SFAS) No. 115 Accounting for Certain Investments in Debt and Equity Securities, as of January 1, 1994. Under the provisions of SFAS No. 115, the Company must classify its securities as trading, available for sale or held to maturity. Trading securities are purchased and held for sale in the near term. Securities held to maturity are those which the Company has the ability and intent to hold until maturity. All other securities not classified as trading or held to maturity are considered available for sale. Securities available for sale are measured at fair value with unrealized gains and losses reported net of deferred taxes as a separate component of stockholders' equity. Fair value represents an approximation of realizable value as of March 31, 1996 and December 31, 1995. Realized and unrealized gains and losses are determined using the specific identification method. LOANS Loans are generally reported at principal amount less unearned interest and fees. On January 1, 1995, the Company adopted SFAS No. 114, Accounting by Creditors for Impairment of a Loan and SFAS No. 118, Accounting by Creditors for Impairment of a Loan-Income Recognition and Disclosures. Impaired loans are loans for which principal and interest are unlikely to be collected in accordance with the original loan terms and, generally, represent loans delinquent in excess of 120 days which have been placed on nonaccrual status and for which collateral values are less than outstanding principal and interest. Small balance, homogeneous loans are excluded from impaired loans. Generally, interest payments received on impaired loans are applied to principal. Upon receipt of all loan principal, additional interest payments are recognized as interest income on the cash basis. Other nonaccrual loans are loans for which payments of principal and interest are considered doubtful of collection under original terms but collateral values equal or exceed outstanding principal and interest. 6 (1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Colony Bankcorp, Inc.'s loans consist of commercial, financial and agricultural loans, real estate mortgage loans and consumer loans primarily to individuals and entities located throughout central and south Georgia. Accordingly, the ultimate collectibility of the loans is largely dependent upon economic conditions in the central and south Georgia area. ALLOWANCE FOR LOAN LOSSES The allowance method is used in providing for losses on loans. Accordingly, all loan losses decrease the allowance and all recoveries increase it. The provision for loan losses is based on factors which, in management's judgment, deserve current recognition in estimating possible loan losses. Such factors considered by management include growth and composition of the loan portfolio, economic conditions and the relationship of the allowance for loan losses to outstanding loans. An allowance for loan losses is maintained for all impaired loans. Provisions are made for impaired loans upon changes in expected future cash flows or estimated net realizable value of collateral. When determination is made that impaired loans are wholly or partially uncollectible, the uncollectible portion is charged off. Management believes the allowance for possible loan losses is adequate. While management uses available information to recognize losses on loans, future additions to the allowance may be necessary based on changes in economic conditions. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Company's allowance for loan losses. Such agencies may require the Company to recognize additions to the allowance based on their judgment about information available to them at the time of their examination. PREMISES AND EQUIPMENT Premises and equipment are recorded at acquisition cost net of accumulated depreciation. Depreciation is charged to operations over the estimated useful lives of the assets. The estimated useful lives and methods of depreciation are as follows: DESCRIPTION LIFE IN YEARS METHOD - ------------------------- ------------- ----------------------------- Banking Premises 15-40 Straight-Line and Accelerated Furniture and Equipment 5-10 Straight-Line and Accelerated Expenditures for major renewals and betterments are capitalized. Maintenance and repairs are charged to operations as incurred. When property and equipment are retired or sold, the cost and accumulated depreciation are removed from the respective accounts and any gain or loss is reflected in other income or expense. CASH FLOWS For reporting cash flows, cash and cash equivalents include cash on hand, noninterest-bearing amounts due from banks and federal funds sold. Cash flows from demand deposits, NOW accounts, savings accounts, loans and certificates of deposit are reported net. INCOME TAXES Income taxes are provided for the tax effects of transactions reported in the consolidated financial statements and consist of taxes currently due plus deferred taxes. Deferred taxes are recognized for differences between the basis of assets and liabilities for financial statement and income tax purposes. The differences relate primarily to depreciable assets (use of different depreciation methods for financial statement and income tax purposes) and allowance for loan losses (use of the allowance method for financial statement purposes and the experience method for tax purposes). The deferred tax assets and liabilities represent the future tax return consequences of those differences, which will either be taxable or deductible when the assets and liabilities are recovered or settled. 7 (1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) OTHER REAL ESTATE Other real estate generally represents real estate acquired through foreclosure and is initially recorded at the lower of cost or estimated market value at the date of acquisition. Losses from the acquisitions of property in full or partial satisfaction of debt are recorded as loan losses. Subsequent declines in value, routine holding costs and gains or losses upon disposition are included in other losses. STOCKHOLDERS' EQUITY Banking regulations impose minimum capital levels in relation to assets. To be considered "well capitalized," a financial institution must generally have a leverage ratio of at least 5 percent, a tier 1 risk-based capital ratio of a least 6 percent and a total risk-based capital ratio of at least 10 percent. As of March 31, 1996, the Company is in compliance with its minimum regulatory capital requirements and is considered "well capitalized" as defined by FDICIA. (2) CASH AND BALANCES DUE FROM DEPOSITORY INSTITUTIONS - ------------------------------------------------------ Components of cash and balances due from depository institutions at March 31, 1996 and December 31, 1995 are as follows:
March 31, 1996 December 31, 1995 -------------- ----------------- Cash on Hand and Cash Items $2,437 $3,299 Noninterest-Bearing Deposits with Other Banks 4,940 6,119 Interest-Bearing Deposits with Other Banks 99 99 ------ ------ $7,476 $9,517 ====== ======
(3) INVESTMENT SECURITIES - ------------------------- Investment securities as of March 31, 1996 are summarized as follows:
Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value Securities Available for Sale: U.S. Treasury $ 496 $ -0- $ -0- $ 496 U.S. Government Agencies: Mortgage-Backed 20,667 44 (186) 20,525 Other 22,525 33 (92) 22,466 State, County & Municipal 3,014 64 (9) 3,069 The Banker's Bank Stock 50 -0- -0- 50 Federal Home Loan Bank Stock 250 -0- -0- 250 Marketable Equity Securities 1,130 -0- (175) 955 ------- ----- ------ ------- $48,132 $ 141 $ (462) $47,811 ======= ===== ====== ======= Securities Held to Maturity: U.S. Government Agencies $ 2,150 $ -0- $ (32) $ 2,118 State, County and Municipal 1,900 -0- (78) 1,822 ------- ----- ------ ------- $ 4,050 $ -0- $ (110) $ 3,940 ======= ===== ====== =======
8 (3) INVESTMENT SECURITIES (CONTINUED) - ------------------------------------- The amortized cost and fair value of investment securities as of March 31, 1996 by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because issuers have the right to call or prepay obligations with or without call or prepayment penalties.
SECURITIES AVAILABLE FOR SALE HELD TO MATURITY AMORTIZED FAIR AMORTIZED FAIR COST VALUE COST VALUE Due in One Year or Less $ 9,659 $ 9,661 $ 45 $ 45 Due After One Year Through Five Years 12,419 12,432 3,276 3,228 Due After Five Years Through Ten Years 3,851 3,838 100 97 Due After Ten Years 106 100 629 570 ------- ------- ------ ------- 26,035 26,031 4,050 3,940 Federal Home Loan Bank Stock 250 250 The Banker's Bank Stock 50 50 Marketable Equity Securities 1,130 955 Mortgage-Backed Securities 20,667 20,525 ------- ------- ------- ------ $48,132 $47,811 $ 4,050 $3,940 ======= ======= ====== ====== Investment securities as of December 31, 1995 are summarized as follows: Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value Securities Available for Sale: U.S. Government and Agencies $15,438 $ 72 $ (29) $15,481 Mortgage-Backed Securities 22,210 81 (255) 22,036 State, County & Municipal 3,065 81 (8) 3,138 Marketable Equity Securities 1,430 -0- (138) 1,292 ------- ------- ------ ------- $42,143 $ 234 $ (430) $41,947 ======= ======= ====== ======= Securities Held to Maturity: U.S. Government and Agencies $ 2,150 $ -0- $ (24) $ 2,126 State, County and Municipal 1,926 -0- (82) 1,844 ------- ------- ------ ------- $ 4,076 $ -0- $ (106) $ 3,970
Investment securities having a carrying value approximating $23,368 and $29,163 as of March 31, 1996 and December 31, 1995, respectively, were pledged to secure public deposits and for other purposes. 9 (4) LOANS - --------- The composition of loans as of March 31, 1996 and December 31, 1995 was as follows:
March 31, 1996 December 31, 1995 -------------- ----------------- Loans Secured by Real Estate Construction and Land Development $ 864 $ 371 Secured by Farmland (Including Farm Residential and Other Improvements) 25,502 23,441 Other 88,257 89,797 Loans to Finance Agricultural Production and Other Loans to Farmers 20,519 17,244 Commercial and Industrial Loans (U.S. Addresses) 10,850 13,907 Loans to Individuals for Household, Family and Other Personal Expenditures 38,756 36,393 All Other Loans 7,969 7,243 -------- ------- $192,717 $188,396 ======== ========
Nonaccrual loans are loans for which principal and interest are doubtful of collection in accordance with original loan terms and for which accruals of interest have been discontinued due to payment delinquency. Nonaccrual loans totaled $8,073 and $5,229 as of March 31, 1996 and December 31, 1995, respectively. On March 31, 1996, the Company had 90 day past due loans with principal balances of $650 and restructured loans with principal balances of $418. Effective January 1, 1995, Colony Bankcorp, Inc. recognized impaired loans as nonaccrual loans delinquent in excess of 120 days for which collateral values were insufficient to recover outstanding principal and interest under original loan terms. Impaired loan data as of March 31, 1996 and December 31, 1995 was as follows: Total Investment in Impaired Loans $253 Less Allowance for Impaired Loan Losses (10) ---- Net Investment, March 31, 1996 $243 ==== Total Investment in Impaired Loan 517 Less Allowance for Impaired Loan Losses (39) ---- Net Investment, December 31, 1995 $478 ==== (5) ALLOWANCE FOR LOAN LOSSES - ----------------------------- Transactions in the allowance for loan losses are summarized below for three months ended March 31, 1996 and March 31, 1995 as follows:
March 31, 1996 March 31, 1995 -------------- -------------- Balance, Beginning $3,885 $3,029 Provision Charged to Operating Expenses 639 377 Loans Charged Off (830) (316) Loan Recoveries 54 157 ------ ------ Balance, Ending $3,748 $3,247 ====== ======
10 (6) PREMISES AND EQUIPMENT - -------------------------- Premises and equipment are comprised of the following as of March 31, 1996 and December 31, 1995:
March 31, 1996 December 31, 1995 -------------- ----------------- Land $ 838 $ 838 Building 4,776 4,791 Furniture, Fixtures and Equipment 4,194 4,267 Leasehold Improvements 17 17 ------- ------- 9,825 9,913 Accumulated Depreciation (4,260) (4,289) ------- ------- $ 5,565 $ 5,624 ======= =======
(7) INCOME TAXES - ---------------- The Company records income taxes under SFAS No. 109, Accounting for Income Taxes, which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed annually for differences between the financial statement and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is the tax payable or refundable for the period plus or minus the change during the period in deferred tax assets and liabilities. (8) DEPOSITS - ------------ Components of interest-bearing deposits as of March 31, 1996 and December 31, 1995 are as follows:
March 31, 1996 December 31, 1995 -------------- ----------------- Interest-Bearing Demand $ 48,079 $ 50,440 Savings 10,159 9,856 Time, $100,000 and Over 50,198 48,111 Other Time 113,317 119,684 -------- -------- $221,753 $228,091 ======== ========
(9) OTHER BORROWED MONEY - ------------------------ Other borrowed money is comprised of the following as of March 31, 1996 and December 31, 1995: March 31, 1996 December 31, 1995 -------------- ----------------- Advance agreement with Federal Home Loan Bank of Atlanta, dated March 31, 1995, payable in full on December 31, 1995. Interest rate determined under the fixed rate credit program. Effective interest rate of 6.86% as of December 31, 1995. $ -0- $200 11 (9) OTHER BORROWED MONEY (CONTINUED) - ------------------------------------ March 31, 1996 December 31, 1995 -------------- ----------------- Variable interest debentures payable, due in annual payments of $266,867, plus interest, on November 1, 1996 through November 1, 1999, collateralized by 100% of the common stock of Ashburn Bank. Effective interest rate of 8.00% as of March 31, 1996. $1,067 $1,067 Variable interest at prime note payable, due in annual payments of $207,143 plus quarterly interest, balance due December 19, 1997. Collateralized by 100% of the common stock of The Bank of Fitzgerald and 100% of the common stock of The Bank of Worth. Effective interest rate of 8.25% as of March 31, 1996. 1,185 1,237 ------ ------ $2,252 $2,504 ====== ====== Maturities of borrowed money for the next five years as of March 31, 1996: YEAR AMOUNT 1996 $422 1997 129 1998 267 1999 267 2000 -0- Thereafter -0- ---- $2,252 ====== (10) PROFIT SHARING PLAN - ------------------------ The Company has a profit sharing plan that covers substantially all employees who meet certain age and service requirement. It is the Company's policy to make contributions to the plan as approved annually by the board of directors. (11) COMMITMENTS AND CONTINGENT LIABILITIES - ------------------------------------------- In the ordinary course of business, the Banks have entered into off balance sheet financial instruments which are not reflected in the consolidated financial statements. These instruments include commitments to extend credit, standby letters of credit, guarantees and liability for assets held in trust. Such financial instruments are recorded in the financial statements when funds are disbursed or the instruments become payable. The Banks use the same credit policies for these off balance sheet financial instruments as they do for instruments that are recorded in the consolidated financial statements. Following is an analysis of significant off balance sheet financial instruments:
March 31, 1996 December 31, 1995 March 31, 1995 -------------- ----------------- -------------- Commitments to extend credit $28,430 $17,753 $26,199 Standby letters of credit 3,383 3,499 4,878 ------- ------- ------- $31,813 $21,252 $31,077 ======= ======= =======
12 (11) COMMITMENTS AND CONTINGENT LIABILITIES (CONTINUED) - --------------------------------------------------------- Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitment amounts expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The credit risk involved in issuing these financial instruments is essentially the same as that involved in extending loans to customers. The amount of collateral obtained, if deemed necessary by the Banks upon extension of credit, is based on management's credit evaluation of the borrower. Collateral held varies, but may include accounts receivable, inventory, property, plant and equipment and income-producing commercial properties. The Banks do not anticipate any material losses as a result of the commitments and contingent liabilities. The nature of the business of the Banks is such that it ordinarily results in a certain amount of litigation. In the opinion of management and counsel for the company and the Banks, there is no litigation in which the outcome will have a material effect on the consolidated financial statements. (12) EARNINGS PER SHARE - ----------------------- Earnings per share are calculated on the basis of the weighted average number of shares outstanding. 13 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION LIQUIDITY AND CAPITAL RESOURCES Liquidity represents the ability to provide adequate sources of funds for funding loan commitments and investment activities, as well as the ability to provide sufficient funds to cover deposit withdrawals, payment of debt and financing of operations. These funds are obtained by converting assets to cash (representing primarily proceeds from collections on loans and maturities of investment securities) or by attracting and obtaining new deposits. During first quarter 1996, the Company was successful in meeting its liquidity needs with deposits decreasing $7,065,000 from December 31, 1995 by converting Federal Funds into cash. Federal Funds decreased 54.94% to $10,960,000 at March 31, 1996 from $24,325,000 at December 31, 1995. The Company's liquidity position remained acceptable for first quarter 1996. Average liquid assets (cash and amounts due from banks, interest-bearing deposits in other banks, funds sold and investment securities) represented 29.61% of average deposits in first quarter, 1996 as compared to 28.45% in first quarter, 1995 and 26.82% for calendar year 1995. Average loans represented 77.02% of average deposits in first quarter, 1996 as compared to 76.81% in first quarter, 1995 and 79.09% for calendar year 1995. Average interest-bearing deposits were 88.09% of average earning assets in first quarter, 1996 as compared to 88.38% in first quarter, 1995 and 87.91% for calendar year 1995. The Company satisfies most of its capital requirements through retained earnings. During first quarter, 1996, retained earnings provided $601,000 of increase in equity. Additionally, equity capital decreased by $101,000 resulting from the change during first quarter 1996 in unrealized losses on securities available for sale, net of taxes. Thus, total equity increased by a net amount of $500,000 in first quarter, 1996. This compares to growth in equity of $1,102,000 in first quarter, 1995 and $4,305,000 for the 1995 calendar year. At March 31, 1996, total capital of Colony amounted to approximately $21,555,000. At March 31, 1996, there were no outstanding commitments for any major expenditures. The Federal Reserve Bank Board and the FDIC have issued capital guidelines for U.S. banking organizations. The objective of these efforts was to provide a more uniform capital framework that is sensitive to differences in risk assets among banking organizations. The guidelines define a two-tier capital framework. Tier 1 capital consists of common stock and qualifying preferred stockholder's equity less goodwill. Tier 2 capital consists of certain convertible, subordinated and other qualifying term debt and the allowance for loan losses up to 1.25 of risk-weighted assets. The Company has no Tier 2 capital other than the allowance for loan losses. Using the capital requirements presently in effect, the Tier 1 ratio at March 31, 1996 was 10.07% and total Tier 1 and 2 risk-based capital was 11.33%. Both of these measures compare favorably with the regulatory minimums of 4% for Tier 1 and 8% for total risk-based capital. The Company's leverage ratio at March 31, 1996 was 7.77% which exceeds the required leverage ratio standard of 4%. In first quarter, 1996, the Company paid quarterly dividends of $.075. The dividend payout ratio, defined as dividends per share divided by net income per share, was 13.89% as compared to $.075 for first quarter, 1995 and a dividend payout ratio of 10.79%. At March 31, 1996, management was not aware of any recommendations by regulatory authorities which, if they were to be implemented, would have a material effect on the Company's liquidity, capital resources or operations. However, it is possible that examinations by regulatory authorities in the future could precipitate additional loss charge-offs which could materially impact the Company's liquidity, capital resources and operations. 14 RESULTS OF OPERATION The Company's results of operations are determined by its ability to effectively manage interest income and expense, to minimize loan and investment losses, to generate noninterest income and to control noninterest expense. Since interest rates are determined by market forces and economic conditions beyond the control of the Company, the ability to generate net interest income is dependent upon the Bank's ability to obtain an adequate spread between the rate earned on earning assets and the rate paid on interest-bearing liabilities. Thus, the key performance measure for net interest income is the interest margin or net yield, which is taxable-equivalent net interest income divided by average earning assets. Net income for the three months ended March 31, 1996 was $698,000 as compared to $847,000 for the three months ended March 31, 1995, or a decrease of 17.59%. First quarter 1996 earnings were lower compared to first quarter 1995 primarily due to a reduction in our net interest margin and an increase in our provision for loan losses as we continue to address problem loans and maintain our bad debt reserve at adequate levels. The net interest margin decreased by 79 points to 4.72% in first quarter 1996 as compared to 5.51% in first quarter 1995. This reduction in our net interest margin resulted in net interest income decreasing by 4.95% to $2,978,000 in first quarter, 1996 from $3,133,000 for the same period in 1995. Average earning assets increased to $255,605,000 in first quarter, 1996 from $230,317,000 in first quarter, 1995. Average loans increased by $16,036,000 or 9.25%, average Federal Funds sold increased by $11,715,000 or 158.31%, average investment securities decreased by $871,000 or 1.82% and average interest- bearing deposits in other banks decreased by $1,592,000 or 92.13%, resulting in a net increase in average assets of $25,288,000 or 10.98%. The net increase in average earning assets was funded by a net increase in average deposits of 9.90% to $245,972,000 for first quarter, 1996 from $223,822,000 for first quarter, 1995. Average interest-bearing deposits increased by 10.40% to $222,226,000 at March 31, 1996 compared to $201,285,000 at March 31, 1995, while average noninterest-bearing deposits represented 9.92% of total deposits at March 31, 1996 compared to 10.79% at March 31, 1995 and 9.93% at December 31, 1995. Interest expense increased for the three months ended March 31, 1996 by $614,000 compared to the same period in 1995. The increase in interest expense is primarily attributable to the increase in interest rates in 1996 as compared to 1995 and the increase in our average interest-bearing deposits to $222,226,000 at March 31, 1996 compared to $201,285,000 at March 31, 1995. The combination of the reduced net interest margin, increased average earning assets along with increased higher rates on interest bearing deposits resulted in a decrease in net interest income of $155,000 for the three months ended March 31, 1996 compared to the same period in 1995. The allowance for loan losses represents a reserve for potential losses in the loan portfolio. The adequacy of the allowance for loan losses is evaluated periodically based on a review of all significant loans, with a particular emphasis on non-accruing, past due and other loans that management believes requires attention. The provision for loan losses is a charge to earnings in the current period to replenish the allowance for loan losses and maintain it at a level management has determined to be adequate. The provision for loan losses was $639,000 for the three months ended March 31, 1996 as compared to $377,000 for the same period in 1995 representing an increase in the provision of $262,000 or 69.50%. The increase in provision for loan losses during first quarter 1996 was necessitated by the Company's continued efforts to address problem loans and to provide an adequate loan loss reserve for future losses. Net loan charge-offs represented 121.44% of the provision for loan losses in the first quarter of 1996 as compared to 42.17% in the first quarter of 1995. Charge-offs in the first quarter of 1996 are attributable to weakness in the local market and in particular to the agricultural sector which had a difficult year in 1995. Net loan charge-offs for the three months ended March 31, 1996 represented 0.42% of average loans outstanding as compared to 0.09% for three months ended March 31, 1995. At March 31, 1996, the allowance for loan losses was 1.94% of total loans outstanding as compared to an allowance for loan losses of 1.82% at March 31, 1995 and 2.06% at December 31, 1995. The determination of the reserve rests upon management's judgment about factors affecting loan quality and assumptions about the economy. Management considers the March 31, 1996 allowance for loan losses adequate to cover potential losses in the loan portfolio. 15 Non-interest income consists principally of service charges on deposit accounts. Service charges on deposit accounts amounted to $390,000 in first quarter, 1996 compared to $381,000 in first quarter, 1995, or an increase of 2.36%. All other non-interest income increased by $53,000 to $249,000 for first quarter 1996 from $196,000 for first quarter 1995, or an increase of 27.04%. The increase in other non-interest income was primarily attributable to a recovery realized on the sale of other real estate of approximately $51,000 during the quarter. Non-interest expense decreased by 4.88% to $1,969,000 in three months ended March 31, 1996 from $2,070,000 in the same period in 1995. Salaries and employee benefits increased by 2.39% to $1,072,000 in first quarter, 1996 from $1,047,000 in first quarter 1995. All other non-interest expense decreased by 12.32% to $897,000 in first quarter 1996 from $1,023,000 in first quarter 1995. This decrease was primarily attributable to a reduction in FDIC insurance assessment of $113,000 to $27,000 for first quarter 1996 from $140,000 for first quarter 1995. Income before taxes decreased by $259,000 to $1,012,000 in first quarter 1996 from $1,271,000 in first quarter 1995. The decrease for the three months ended March 31, 1996 is primarily attributable to the increased provision for loan losses and reduced net interest margin. Income taxes as a percentage of income before taxes decreased by 6.98% to 31.03% in first quarter, 1996 as compared to 33.36% in first quarter, 1995 due to lower net interest income. Income tax expense decreased 25.94% to $314,000 in first quarter 1996 as compared to $424,000 in first quarter, 1995. The Bank of Fitzgerald is operating under a Memorandum of Understanding dating back to October, 1992 that was revised in October, 1995 due to portions of the old Memorandum of Understanding not being relevant to the bank's current situation. The current Memorandum requires that the Bank maintain specified minimum capital ratios and minimum reserves for loan losses. The Bank of Fitzgerald was in substantial compliance with the provisions of the Memorandum of Understanding at March 31, 1996. LIQUIDITY - --------- The Company's goals with respect to liquidity are to insure that sufficient funds are available to meet current operating requirements, to provide reserves against unforeseen liquidity requirements. Management continuously reviews the Company's liquidity position, which is maintained on a basis consistent with established internal guidelines and the tests and reviews of the various regulatory authorities. The Company's primary liquidity sources at March 31, 1996 included cash, due from banks, federal funds and short-term investment securities. The Company also has the ability, on a short-term basis, to borrow funds from the Federal Reserve System and to invest in federal funds sold from other financial institutions. The mix of asset maturities contributes to the company's overall liquidity position. CERTAIN TRANSACTIONS - -------------------- In the normal course of business, officers and directors of the Banks, and certain business organizations and individuals associated with them, maintain a variety of banking relationships with the bank. Transactions with senior officers and directors are made on terms comparable to those available to other bank customers. 16 BUSINESS GENERAL - ------- The Company was organized in 1983 as a bank holding company through the merger of The Bank of Fitzgerald with a subsidiary of the Company. Since that time, The Bank of Fitzgerald, which was formed by principals of Colony Bankcorp, Inc. in 1976, has operated as a wholly-owned subsidiary of the Company. In April 1984, Colony Bankcorp, Inc. acquired Community Bank of Wilcox, and in November 1989, Ashburn Bank became a wholly-owned subsidiary of Colony Bankcorp, Inc. Colony Bankcorp, Inc. continued its growth with the acquisition of The Bank of Dodge County in September 1985. In August 1991, Colony Bankcorp, Inc. acquired The Bank of Worth. Through its five subsidiary banks, Colony Bankcorp, Inc. operates a full-service banking business and offers a broad range of retail and commercial banking services including checking, savings, NOW accounts, money market and time deposits of various types; loans for business, agriculture, real estate, personal uses, home improvement and automobiles; credit card; letters of credit; trust services investment, and discount brokerage services; IRA's, safe deposit box rentals, bank money orders, and electronic funds transfer services, including wire transfers and automated teller machines. Each of the Banks is a state chartered institution whose customer deposits are insured up to applicable limits by the Federal Deposit Insurance Corporation. 17 PART II - OTHER INFORMATION ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K - ----------------------------------------- A. Exhibits - None B. There have been no reports filed on Form 8-K for the quarter ended March 31, 1996. 18 SIGNATURE 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. COLONY BANKCORP, INC. May 8, 1996 /s/ James D. Minix - --------------------------- -------------------------------- DATE James D. Minix, President and Chief Executive Officer /s/ Terry L. Hester --------------------------------- Terry L. Hester, Executive Vice President and Chief Financial Officer 19 EX-27 2 ARTICLE 9 FDS
9 1,000 3-MOS DEC-31-1996 JAN-01-1996 MAR-31-1996 7,377 99 10,960 0 47,811 4,050 3,940 192,706 3,748 272,227 246,178 0 2,242 2,252 0 0 12,911 8,644 272,227 5,071 673 261 6,005 2,954 3,027 2,978 639 3 1,969 1,012 1,012 0 0 698 .54 .54 4.72 8,073 650 418 0 3,885 830 54 3,748 3,748 0 0
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