-----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, M5SmwBKjq300VbROKGK8c0ZISN3yGIhpv7/8h+McNxa+eKt4PEB/jiRnLyEHx2yB fwqOnW+d+Hzm5gAJYiP+Gg== 0000931763-96-000469.txt : 19960814 0000931763-96-000469.hdr.sgml : 19960814 ACCESSION NUMBER: 0000931763-96-000469 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960813 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: 96609368 BUSINESS ADDRESS: STREET 1: 302 S MAIN ST STREET 2: PO BOX 989 CITY: FITZGERALD STATE: GA ZIP: 31750 BUSINESS PHONE: 9124235446 10QSB 1 FORM 10-QSB SECURITIES & 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 JUNE 30, 1996 COMMISSION 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 JUNE 30, 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 - JUNE 30, 1996 AND DECEMBER 31, 1995. B. CONSOLIDATED STATEMENTS OF INCOME - FOR THE THREE MONTHS ENDED JUNE 30, 1996 AND 1995 AND FOR THE SIX MONTHS ENDED JUNE 30, 1996 AND 1995. C. CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION - FOR THE SIX MONTHS ENDED JUNE 30, 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 SIX MONTH PERIOD ENDED JUNE 30, 1996 ARE NOT NECESSARILY INDICATIVE OF THE RESULTS TO BE EXPECTED FOR THE FULL YEAR. 2 COLONY BANKCORP, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS JUNE 30, 1996 AND DECEMBER 31, 1995 (UNAUDITED) (DOLLARS IN THOUSANDS)
ASSETS JUNE 30, 1996 DECEMBER 31, 1995 -------------- ------------------ Cash and Balances Due from Depository Institutions (Note 2) $ 7,890 $ 9,517 Federal Funds Sold 8,590 24,325 Investment Securities (Aggregate Fair Value of $50,890 and $45,917 Respectively) (Note 3) 51,012 46,023 Loans (Notes 4 and 5) 201,561 188,396 Allowance for Loan Losses (4,157) (3,885) Unearned Interest and Fees (9) (11) -------- -------- Total Loans 197,395 184,500 Premises and Equipment (Note 6) 5,625 5,624 Other Real Estate 2,521 1,721 Other Assets 6,974 6,858 -------- -------- TOTAL ASSETS $280,007 $278,568 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Deposits: Noninterest-Bearing $ 23,817 $ 25,152 Interest-Bearing (Note 8) 227,649 228,091 -------- -------- Total Deposits 251,466 253,243 Borrowed Money: Federal Funds Purchased 1360 -0- Other Borrowed Money (Note 9) 3,400 2,504 -------- -------- Total Borrowed Money 4,760 2,504 Other Liabilities 1,911 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 June 30, 1996 and December 31, 1995 Respectively 12,911 12,911 Paid-In Capital 1,117 1,117 Retained Earnings 8,410 7,203 Net Unrealized Loss on Securities Available for Sale, Net of Tax Benefit of $194 in 1996 and $20 in 1995 (568) (176) -------- -------- Total Stockholders'' Equity 21,870 21,055 -------- -------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $280,007 $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 JUNE 30, 1996 AND 1995 AND SIX MONTHS ENDED JUNE 30, 1996 AND 1995 (UNAUDITED) (DOLLARS IN THOUSANDS)
THREE MONTHS ENDED SIX MONTHS ENDED 6/30/96 6/30/95 6/30/96 6/30/95 ---------- ---------- ---------- --------- Interest Income: Loans, including fees $ 5,185 $ 5,269 $ 10,256 $ 9,988 Federal Funds Sold 157 126 416 229 Deposits with Other Banks 1 15 4 33 Investment Securities: U.S. Treasury & Federal Agencies 693 605 1,310 1,248 State, County and Municipal 53 65 108 123 ---------- ---------- ---------- ---------- Total Interest Income 6,089 6,080 12,094 11,621 ---------- ---------- ---------- ---------- Interest Expense: Deposits 2,945 2,707 5,900 5,021 Federal Funds Purchased 1 13 3 29 Other Borrowed Money 74 84 145 162 ---------- ---------- ---------- ---------- Total Interest Expense 3,020 2,804 6,048 5,212 ---------- ---------- ---------- ---------- Net Interest Income 3,069 3,276 6,046 6,409 Provision for Loan Losses 491 810 1,130 1,187 ---------- ---------- ---------- ---------- Net Interest Income After Provision 2,578 2,466 4,916 5,222 ---------- ---------- ---------- ---------- Noninterest Income: Service Charge on Deposits 411 377 801 758 Other Income 192 138 418 334 Security Gains, net 0 10 3 18 ---------- ---------- ---------- ---------- Total Noninterest Income 603 525 1,222 1,110 ---------- ---------- ---------- ---------- Noninterest Expense: Salaries and Employee Benefits 1,193 1,133 2,265 2,180 Occupancy and Equipment 258 263 498 524 Other Operating Expenses 707 788 1,340 1,550 ---------- ---------- ---------- ---------- Total Noninterest Expense 2,158 2,184 4,103 4,254 ---------- ---------- ---------- ---------- Income Before Income Taxes $ 1,023 $ 807 $ 2,035 $ 2,078 Income Taxes 320 257 634 681 ---------- ---------- ---------- ---------- Net Income $ 703 $ 550 $ 1,401 $ 1,397 ========== ========== ========== ========== Net Income Per Share of Common Stock $0.54 $0.45 $1.09 $1.15 ========== ========== ========== ========== Weighted Average Shares Outstanding 1,291,110 1,216,110 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 SIX MONTHS ENDED JUNE 30, 1996 AND 1995 (UNAUDITED) (DOLLARS IN THOUSANDS)
1996 1995 ---------- ---------- CASH FLOW FROM OPERATING ACTIVITIES Net income (loss) $ 1,401 $ 1,397 Adjustments to reconcile net income to net cash provided by operating activities: (Gain) loss on sale of investment securities (3) (18) Depreciation 227 260 Provision for loan losses 1,130 1,187 Amortization of excess costs 24 24 Other prepaids, deferrals and accruals, net (765) (1,323) --------- --------- Total Adjustments $ 613 $ 130 --------- --------- Net cash provided by operating activities $ 2,014 $ 1,527 --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES Purchases of securities available for sale $ (11,528) $ (5,290) Proceeds from sales of securities available for sale 498 2,908 Proceeds from maturities of securities available for sale 5,371 5,454 Purchase of securities held for investment -0- -0- Proceeds from maturities of securities held for investment 36 289 Proceeds from sales of securities held for investment -0- -0- Decrease (Increase) in interest-bearing deposits in banks 99 1,882 (Increase) in loans (14,023) (21,383) Purchase of premises and equipment (213) (343) --------- --------- Net cash (used in) investing activities $ (19,760) $ (16,483) --------- --------- CASH FLOW FROM FINANCING ACTIVITIES Net (decrease) increase in deposits $ (1,777) $ 11,146 Net increase in short-term borrowings and Federal Funds Purchased 2,560 1,680 Dividends paid (194) (170) Net (decrease) increase in long-term borrowings (304) (104) --------- --------- Net cash provided by financing activities $ 285 $ 12,552 --------- --------- Net increase (decrease) in cash and cash equivalents (17,461) (2,404) Cash and cash equivalents at beginning of period 33,743 15,343 --------- --------- Cash and cash equivalents at end of period $ 16,282 $ 12,939
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 June 30, 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 June 30, 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 June 30, 1996 and December 31, 1995 are as follows:
June 30, 1996 December 31, 1995 ------------- ----------------- Cash on Hand and Cash Items $2,317 $3,299 Noninterest-Bearing Deposits with Other Banks 5,375 6,119 Interest-Bearing Deposits with Other Banks 198 99 ------ ------ $7,890 $9,517 ====== ======
(3) INVESTMENT SECURITIES - ------------------------- Investment securities as of June 30, 1996 are summarized as follows:
Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value Securities Available for Sale: U.S. Treasury $ 497 $-0- $ -0- $ 497 U.S. Government Agencies: Mortgage-Backed 19,256 31 (294) 18,993 Other 23,563 9 (353) 23,219 State, County & Municipal 3,012 51 (16) 3,047 The Banker's Bank Stock 50 -0- -0- 50 Federal Home Loan Bank Stock 250 -0- -0- 250 Marketable Equity Securities 1,130 -0- (191) 939 ------- ------- ----- ------- $ 47,758 $ 91 $(854) $46,995 ======= ======= ===== ======= Securities Held to Maturity: U.S. Government Agencies $ 2,149 $-0- $ (46) $ 2,103 State, County and Municipal 1,868 -0- (76) 1,792 ------- ------- ----- ------- $ 4,017 $-0- $(122) $ 3,895 ======= ======= ===== =======
8 (3) INVESTMENT SECURITIES (CONTINUED) - ------------------------------------- The amortized cost and fair value of investment securities as of June 30, 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 $ 9,454 $ 9,449 $ 145 $ 145 Due After One Year Through Five Years 13,659 13,460 3,176 3,100 Due After Five Years Through Ten Years 3,853 3,754 100 96 Due After Ten Years 106 100 596 554 ------- ------- ------ ------- 27,072 26,763 4,017 3,895 Federal Home Loan Bank Stock 250 250 The Banker's Bank Stock 50 50 Marketable Equity Securities 1,130 939 Mortgage-Backed Securities 19,256 18,993 ------- ------- $47,758 $46,995 $4,017 $ 3,895 ======= ======= ====== =======
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 $26,115 and $29,163 as of June 30, 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 June 30, 1996 and December 31, 1995 was as follows:
June 30, 1996 December 31, 1995 ------------- ----------------- Loans Secured by Real Estate Construction and Land Development $ 848 $ 371 Secured by Farmland (Including Farm Residential and Other Improvements) 25,853 23,441 Other 88,644 89,797 Loans to Finance Agricultural Production and Other Loans to Farmers 24,009 17,244 Commercial and Industrial Loans (U.S. Addresses) 15,626 13,907 Loans to Individuals for Household, Family and Other Personal Expenditures 37,632 36,393 All Other Loans 8,949 7,243 -------- ------- $201,561 $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 $6,321 and $5,229 as of June 30, 1996 and December 31, 1995, respectively. On June 30, 1996, the Company had 90 day past due loans with principal balances of $620 and restructured loans with principal balances of $322 that were not on non-accrual or past due 90 days or more. 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 June 30, 1996 and December 31, 1995 was as follows:
Total Investment in Impaired Loans $245 Less Allowance for Impaired Loan Losses (10) ---- Net Investment, March 31, 1996 $235 ==== 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 six months ended June 30, 1996 and June 30, 1995 as follows:
June 30, 1996 June 30, 1995 -------------- -------------- Balance, Beginning $ 3,885 $ 3,029 Provision Charged to Operating Expenses 1,130 1,187 Loans Charged Off (1,450) (1,170) Loan Recoveries 592 269 ------- ------- Balance, Ending $ 4,157 $ 3,315 ======= =======
10 (6) PREMISES AND EQUIPMENT - -------------------------- Premises and equipment are comprised of the following as of June 30, 1996 and December 31, 1995:
June 30, 1996 December 31, 1995 -------------- ------------------ Land $ 848 $ 838 Building 4,779 4,791 Furniture, Fixtures and Equipment 4,350 4,267 Leasehold Improvements 17 17 ------- ------- 9,994 9,913 Accumulated Depreciation (4,369) (4,289) ------- ------- $ 5,625 $ 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 June 30, 1996 and December 31, 1995 are as follows:
June 30, 1996 December 31, 1995 ------------- ----------------- Interest-Bearing Demand $ 44,541 $ 50,440 Savings 9,998 9,856 Time, $100,000 and Over 50,152 48,111 Other Time 122,958 119,684 -------- -------- $227,649 $228,091 ======== ========
(9) OTHER BORROWED MONEY - ------------------------ Other borrowed money is comprised of the following as of June 30, 1996 and December 31, 1995:
June 30, 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) - ------------------------------------ June 30, 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 June 30, 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 June 30, 1996. 1,133 1,237 Advance agreement with Federal Reserve Bank of Atlanta dated June 28, 1996, payable in full on July 1, 1996. Interest determined under the fixed rate credit program. Effective interest rate of 5.375% as of June 30, 1996. 1,200 -0- ---------- -------- $3,400 $2,504 ========== ========
Maturities of borrowed money for the next five years as of June 30, 1996:
YEAR AMOUNT 1996 $1,570 1997 1,296 1998 267 1999 267 2000 -0- Thereafter -0- --------- $3,400 =========
(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. 12 (11) COMMITMENTS AND CONTINGENT LIABILITIES (CONTINUED) - ------------------------------------------------------- Following is an analysis of significant off balance sheet financial instruments:
June 30, 1996 December 31, 1995 June 30, 1995 ------------- ----------------- ------------- Commitments to extend credit $22,757 $17,753 $17,759 Standby letters of credit 3,268 3,499 4,938 ------- ------- ------- $26,025 $21,252 $22,697 ======= ======= =======
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. For the six months ended June 30, 1996, the Company was successful in meeting its liquidity needs with deposits decreasing $1,777,000 from December 31, 1995 by converting Federal Funds into cash. Federal Funds decreased 64.69% to $8,590,000 at June 30, 1996 from $24,325,000 at December 31, 1995. The Company's liquidity position remained acceptable for the six months ended June 30, 1996. Average liquid assets (cash and amounts due from banks, interest-bearing deposits in other banks, funds sold and investments securities) represented 28.96% of average deposits for six months ended June 30, 1996 as compared to 27.10% of average deposits for six months ended June 30, 1995 and 26.82% for calendar year 1995. Average loans represented 77.65% of average deposits for six months ended June 30, 1996 as compared to 77.92% for six months ended June 30, 1995 and 79.09% for calendar year 1995. Average interest-bearing deposits were 87.01% of average earnings assets for six months ended June 30, 1996 as compared to 87.14% for six months ended June 30, 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 and during second quarter 1996, retained earnings provided $606,000 of increase in equity. Additionally, equity capital decreased by $101,000 in first quarter 1996 and $291,000 in second quarter 1996, resulting from the change during the first two quarters of 1996 in unrealized losses on securities available for sale, net of taxes. Thus, total equity increased by a net amount of $815,000 for the six month period ended June 30, 1996. This compares to growth in equity of $1,102,000 in first quarter 1995 and $987,000 in second quarter 1995 for a total increase in equity of $2,089,000 for the six month period ended June 30, 1995 and $4,305,000 for the 1995 calendar year. At June 30, 1996, total capital of Colony amounted to approximately $21,870,000. At June 30, 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 June 30, 1996 was 10.03% and total Tier 1 and 2 risk-based capital was 11.29%. 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 June 30, 1996 was 7.89% which exceeds the required leverage ratio standard of 4%. In first and second quarter 1996, the Company paid dividends of $0.15. The dividend payout ratio, defined as dividends per share divided by net income per share, was 13.76% as compared to $0.15 for six month period ended June 30, 1995 and a dividend payout ratio of 13.04%. At June 30, 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 June 30, 1996 was $703,000 as compared with $550,000 for the three months ended June 30, 1995, or an increase of 27.82% and net income for the six months ended June 30, 1996 was $1,401,000 as compared with $1,397,000 for the six months ended June 30, 1995, or an increase of 0.29%. Second quarter 1996 earnings increased significantly over the same period in 1995 primarily due to a reduction in the bad debt provision to $491,000 in second quarter 1996 compared to $810,000 in second quarter 1995. The Company experienced a reduction in its net interest margin with a decrease in its net overhead expense to realize flat earnings for the six month period ended June 30, 1996 compared to the same period in 1995. The net interest margin decreased by 40 basis points to 4.83% in second quarter 1996 as compared to 5.23% in second quarter 1995 and decreased by 59 basis points to 4.78% for six months ended June 30, 1996 as compared to 5.37% for the same period in 1995. Net interest income decreased by 6.32% to $3,069,000 in second quarter 1996 from $3,276,000 for the same period in 1995 on an increase in average earning assets to $258,528,000 in second quarter 1996 from $240,818,000 in the same period in 1995. Net interest income decreased by 5.66% to $6,046,000 for six months ended June 30, 1996 from $6,409,000 for the same period in 1995 on an increase in average earnings assets to $257,045,000 for six months ended June 30, 1996 from $235,893,000 in the same period in 1995. For the six months ended June 30, 1996 compared to the same period in 1995, average loans increased by $11,576,000 or 6.42%, average funds sold increased by $7,865,000 or 102.38%, average investment securities increased by $2,669,000 or 5.72% and average interest-bearing deposits in other banks decreased by $957,000 or 87.96%, resulting in a net increase in average earning assets of $21,152,000 or 8.97%. The net increase in average earning assets was funded by a net increase in average deposits of 8.22% to $247,325,000 for six months ended June 30, 1996 from $228,538,000 for the same period in 1995. Average interest-bearing deposits increased by 8.81% to $223,668,000 for six months ended June 30, 1996, compared to $205,558,000 for six months ended June 30, 1995, while average noninterest-bearing deposits represented 9.57% of average total deposits for six months ended June 30, 1996 as compared to 10.15% for the same period in 1995 and 9.93% for calendar year 1995. Interest expense increased for the three months ended June 30, 1996 by $216,000 compared to the same period in 1995 and increased by $836,000 for the six months ended June 30, 1996 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 $223,668,000 for six months ended June 30, 1996 compared to $205,558,000 for six months ended June 30, 1995. The combination of the reduced net interest margin, increased average earnings assets along with increased rates on interest-bearing deposits resulted in a decrease in net interest income of $207,000 for the three months ended June 30, 1996 compared to the same period in 1995 and a decrease of $363,000 for the six months ended June 30, 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 $491,000 for the three months ended June 30, 1996 as compared to $810,000 for the same period in 1995 representing a decrease in the provision of $319,000 or 39.38%. The provision for loan losses was $1,130,000 for the six months ended June 30, 1996 compared to $1,187,000 for the same period in 1995 representing a decrease of $57,000 or 4.80%. Net loan charge-offs represented 16.70% of the provision for loan losses in second quarter 1996 as compared to 91.73% in second quarter 1995. 15 Net loan charge-offs represented 75.93% of the provision for loan losses in the six month period ended June 30, 1996 and 75.99% of the provision for loan losses in the six month period ended June 30, 1995. Charge-offs in both periods are attributable to weakness in the local market and in particular to the agricultural sector which experienced a difficult year in 1995 due to poor weather conditions. During the first six months of 1996 and 1995, a net of $858,000 and $902,000 was charged off. Net loan charge-offs for six months ended June 30, 1996 represented 0.45% of average loans outstanding as compared to 0.50% for six months ended June 30, 1995. At June 30, 1996 the allowance for loan losses was 2.06% of total loans outstanding as compared to an allowance for loan losses of 1.70% at June 30, 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 June 30, 1996 allowance for loan losses adequate to cover potential losses in the loan portfolio. Non-interest income consists principally of service charges on deposit accounts. Service charges on deposit accounts amounted to $411,000 in second quarter 1996 compared to $377,000 in second quarter 1995, or an increase of 9.02% and amounted to $801,000 for six months ended June 30, 1996 compared to $758,000 for six months ended June 30, 1995, or an increase of 5.67%. All other non-interest income increased by $44,000 to $192,000 for second quarter 1996 from $148,000 for second quarter 1995 and all other non-interest income increased by $69,000 to $421,000 for six months ended June 30, 1996 from $352,000 for six months ended June 30, 1995. The increase in other non-interest income was primarily attributable to a recovery realized on the sale of other real estate of approximately $58,000 during the period. Non-interest expense decreased by 1.19% to $2,158,000 for three months ended June 30, 1996 from $2,184,000 in the same period in 1995. Salaries and benefits increased by 5.30% to $1,193,000 in second quarter 1996 from $1,133,000 in second quarter 1995. All other non-interest expense decreased by 8.18% to $965,000 in second quarter 1996 from $1,051,000 in second quarter 1995. Non- interest expense decreased by 3.55% to $4,103,000 for six month period ended June 30, 1996 compared to $4,254,000 for the same period in 1995. This decrease was primarily attributable to a reduction in FDIC insurance premiums of $223,000 to $58,000 for six month period ended June 30, 1996 from $281,000 for the same period in 1995. Income before taxes increased by $216,000 to $1,023,000 in second quarter 1996 from $807,000 in second quarter 1995 and decreased by $43,000 to $2,035,000 for six months ended June 30, 1996 from $2,078,000 for the same period in 1995. The increase for the three months ended June 30, 1996 is primarily attributable to the decrease in the bad debt provision and reduced net interest margin. Income taxes as a percentage of income before taxes decreased by 1.79% to 31.28% in second quarter 1996 as compared to 31.85% in second quarter 1995 while income taxes as a percentage of income before taxes decreased by 4.94% to 31.15% for six month period ended June 30, 1996 as compared to 32.77% for the same period in 1995. Income tax expense decreased 6.90% to $634,000 for six months ended June 30, 1996 compared to $681,000 for the same period in 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 June 30, 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 June 30, 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. 16 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. 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 1984, 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 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - ------------------------------------------------------------ The Annual Meeting of the Shareholders of the Company was held on April 23, 1996. At the Annual Meeting of the Shareholders, proxies were solicited under Regulation 14 of the Securities and Exchange Act of 1934. Total shares amounted to 1,291,110. A total of 795,649 shares (61.63%) were represented by Shareholders in attendance or by proxy. The following directors were elected unanimously to serve one year until the next annual meeting: Marion H. Massee, III Ben B. Mills, Jr. Paul Branch, Jr. James D. Minix Terry L. Coleman Ralph D. Roberts, Jr. L. Morris Downing W. B. Roberts, Jr. Terry L. Hester R. Sidney Ross Milton N. Hopkins, Jr. Joe K. Shiver Harold E. Kimball, Jr. No other matters were voted upon by the shareholders. 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 June 30, 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. July 31, 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 FINANCIAL DATA SCHEDULE
9 1,000 6-MOS DEC-31-1996 JAN-01-1996 JUN-30-1996 7,692 198 8,590 0 46,995 4,017 3,895 201,561 4,157 280,007 251,466 2,560 1,911 2,200 0 0 12,911 8,959 280,007 10,256 1,418 420 12,094 5,900 6,048 4,916 1,130 3 4,103 2,035 1,401 0 0 1,401 1.09 1.09 4.78 6,321 620 322 0 3,885 1,450 592 4,157 4,157 0 0
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