-----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, SsZ9toUVusMp5cdYpWouBF2F+c1jb3lUGiZWAQ+M1HcR8Emly4jGXxrbHRfHtU17 TXDIksnZbmWzZOVOhAMSmw== 0000931763-98-002092.txt : 19980813 0000931763-98-002092.hdr.sgml : 19980813 ACCESSION NUMBER: 0000931763-98-002092 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980812 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: 10-Q SEC ACT: SEC FILE NUMBER: 000-12436 FILM NUMBER: 98683184 BUSINESS ADDRESS: STREET 1: 302 S MAIN ST STREET 2: PO BOX 989 CITY: FITZGERALD STATE: GA ZIP: 31750 BUSINESS PHONE: 9124235446 10-Q 1 COLONY BANKCORP, INC. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR QUARTER ENDED JUNE 30, 1998 COMMISSION FILE NUMBER 0-12436 COLONY BANKCORP, INC. -------------------- (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) GEORGIA 58-1492391 ------- ---------- (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER) INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER 115 SOUTH GRANT 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, 1998 ----- ---------------------------- COMMON STOCK, $10 PAR VALUE 2,217,513 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, THE BANK OF WORTH, COLONY BANK SOUTHEAST AND COLONY MANAGEMENT SERVICES, INC. A. CONSOLIDATED BALANCE SHEETS JUNE 30, 1998 AND DECEMBER 31, 1997. B. CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE MONTHS ENDED JUNE 30, 1998 AND 1997 AND FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997. C. CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997. 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, 1998 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, 1998 AND DECEMBER 31, 1997 (UNAUDITED) (DOLLARS IN THOUSANDS)
ASSETS JUNE 30, 1998 DECEMBER 31, 1997 ------------- ------------------ Cash and Balances Due from Depository Institutions (Note 2) $ 11,028 $ 11,764 Federal Funds Sold 14,875 25,540 Investment Securities (Aggregate Fair Value of $64,075 and $56,891 Respectively) (Note 3) 64,092 56,916 Loans (Notes 4 and 5) 247,497 234,299 Allowance for Loan Losses -4,821 -4,575 Unearned Interest and Fees -7 -11 -------- -------- Total Loans 242,669 229,713 Premises and Equipment (Note 6) 10,464 9,135 Other Real Estate 845 1,311 Other Assets 7,891 8,568 -------- -------- Total Assets $351,864 $342,947 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Deposits: Noninterest-Bearing $ 28,177 $ 27,320 Interest-Bearing (Note 8) 274,473 270,842 -------- -------- Total Deposits 302,650 298,162 Borrowed Money: Federal Funds Purchased 0 0 Other Borrowed Money (Note 9) 15,073 13,074 -------- -------- Total Borrowed Money 15,073 13,074 Other Liabilities 2,573 2,890 Commitments and Contingencies (Note 11) Stockholders' Equity: Common Stock, Par Value $10 a Share; Authorized 5,000,000 shares, Issued 2,217,513 and 2,173,263 Shares as of June 30, 1998 and December 31, 1997 Respectively 22,175 21,733 Paid-In Capital 1,580 1,137 Retained Earnings 7,970 6,083 Net Unrealized Loss on Securities Available for Sale, Net of Tax Liability of $16 in 1998 and $25 in -157 -132 1997 -------- -------- Total Stockholders' Equity 31,568 28,821 -------- -------- Total Liabilities and Stockholders' Equity $351,864 $342,947 ======== ========
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, 1998 AND 1997 AND SIX MONTHS ENDED JUNE 30, 1998 AND 1997 (UNAUDITED) (DOLLARS IN THOUSANDS)
THREE MONTHS ENDED SIX MONTHS ENDED 6/30/98 6/30/97 6/30/98 6/30/97 ---------- ---------- ---------- ---------- Interest Income: Loans, including fees $ 6,312 $ 5,990 $ 12,595 $ 11,716 Federal Funds Sold 247 174 542 387 Deposits with Other Banks 27 12 55 26 Investment Securities: U.S. Treasury & Federal Agencies 792 852 1,515 1,731 State, County and Municipal 94 75 176 151 Other Investments 47 20 98 49 ---------- ---------- ---------- ---------- Total Interest Income 7,519 7,123 14,981 14,060 ---------- ---------- ---------- ---------- Interest Expense: Deposits 3,597 3,262 7,074 6,455 Federal Funds Purchased 2 17 2 22 Other Borrowed Money 204 129 398 221 ---------- ---------- ---------- ---------- Total Interest Expense 3,803 3,408 7,474 6,698 Net Interest Income 3,716 3,715 7,507 7,362 Provision for Loan Losses 231 468 510 753 ---------- ---------- ---------- ---------- Net Interest Income After Provision 3,485 3,247 6,997 6,609 ---------- ---------- ---------- ---------- Noninterest Income: Service Charge on Deposits 521 454 998 909 Other Service Charges, Commissions & Fees 93 88 210 223 Security Gains, net 0 2 2 9 Other Income 31 116 82 213 ---------- ---------- ---------- ---------- Total Noninterest Income 645 660 1,292 1,354 ---------- ---------- ---------- ---------- Noninterest Expense: Salaries and Employee Benefits 1,462 1,480 2,724 2,746 Occupancy and Equipment 419 350 819 687 Other Operating Expenses 844 757 1,625 1,571 ---------- ---------- ---------- ---------- Total Noninterest Expense 2,725 2,587 5,168 5,004 ---------- ---------- ---------- ---------- Income Before Income Taxes 1,405 1,320 3,121 2,959 Income Taxes 441 402 990 920 ---------- ---------- ---------- ---------- Net Income $ 964 $ 918 $ 2,131 $ 2,039 ========== ========== ========== ========== Net Income Per Share of Common Stock* Basic $0.43 $0.42 $0.96 $0.94 ========== ========== ========== ========== Diluted $0.43 $0.42 $0.96 $0.94 ========== ========== ========== ========== Weighted Average Shares Outstanding* 2,217,663 2,173,263 2,208,880 2,173,263 ========== ========== ========== ==========
*All per share data has been adjusted to reflect a 3-for-2 stock split effected as a 50% stock dividend on July 1, 1997 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, 1998 AND 1997 (UNAUDITED) (DOLLARS IN THOUSANDS)
1998 1997 ---------- ------------ CASH FLOW FROM OPERATING ACTIVITIES Net Income (loss) $ 2,131 $ 2,039 Adjustments to reconcile net income to net cash provided by operating activities: (Gain) loss on sale of investment securities -2 -9 Depreciation 459 348 Provision for loan losses 510 753 Amortization of excess costs 24 26 Other prepaids, deferrals and accruals, net 422 471 --------- --------- Total Adjustments $ 1,413 $ 1,589 --------- --------- Net cash provided by operating activities $ 3,544 $ 3,628 --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES Purchases of securities available for sale -$38,869 -$8,565 Proceeds from sales of securities available for sale 849 2,998 Proceeds from maturities, calls, and paydowns of investment securities: Available for Sale 29,811 7,491 Held to Maturity 1,064 191 Decrease (Increase) in interest-bearing deposits in banks 358 297 (Increase) in loans -13,202 -25,939 Purchase of premises and equipment -1,740 -1,220 --------- --------- Net cash (used in) investing activities -$21,729 -$24,747 --------- --------- CASH FLOW FROM FINANCING ACTIVITIES Net (decrease) increase in deposits $ 4,488 $ 88 Proceeds from issuance of common stock 885 0 Federal funds purchased 0 -160 Dividends paid -231 -217 Net (decrease) increase in other borrowed money 1,999 9,512 --------- --------- Net cash provided by financing activities $ 7,141 $ 9,223 --------- --------- Net increase (decrease) in cash and cash equivalents -11,044 -11,896 Cash and cash equivalents at beginning of period 36,290 35,293 --------- --------- Cash and cash equivalents at end of period $ 25,246 $ 23,397
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. 5 COLONY BANKCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (DOLLARS IN THOUSANDS) (1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - --- ------------------------------------------ BASIS OF PRESENTATION 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; Bank of Worth, Sylvester, Georgia; The Bank of Dodge County, Eastman, Georgia; Community Bank of Wilcox, Pitts, Georgia; Colony Bank Southeast (formerly Broxton State Bank), Broxton, Georgia; and Colony Management Services, Inc., Fitzgerald, 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. 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 foreclosure or in satisfaction of loans and the valuation of deferred tax assets. In February, 1997, the Financial Accounting Standards Board (FASB) issued Statement No. 128, Earnings Per Share (SFAS 128). SFAS 128 replaced the calculation of primary and fully diluted earnings per share (EPS) with basic and diluted EPS. Unlike primary EPS basic EPS excludes any dilutive effects of options, warrants and convertible securities. Diluted EPS is very similar to fully diluted EPS. All EPS amounts presented have been restated as applicable, to conform with the new requirements. INVESTMENT SECURITIES The Company records investment securities under Statement of Financial Accounting Standards (SFAS) No. 115 Accounting for Certain Investments in Debt and Equity Securities. 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, 1998 and December 31, 1997. Realized and unrealized gains and losses are determined using the specific identification method. Premiums and discounts are recognized in interest income using the interest method over the period to maturity. LOANS Loans are generally reported at principal amount less unearned interest and fees. Impaired loans are recorded under SFAS 114, Accounting by Creditors for Impairment of a Loan and SFAS 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. Colony Bankcorp, Inc.'s loans consist of commercial, financial and agricultural loans, real estate mortgage loans and consumer loans primarily to individual's and entities located throughout central and south Georgia. Accordingly, the ultimate collectability of the loans is largely dependent upon economic conditions in the central and south Georgia area. 6 (1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) - --- ------------------------------------------------------ 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 accumulate 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. 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. 7 (2) CASH AND BALANCES DUE FROM DEPOSITORY INSTITUTIONS - --- -------------------------------------------------- Components of cash and balances due from depository institutions at June 30, 1998 and December 31, 1997 are as follows:
June 30, 1998 December 31, 1997 ------------- ----------------- Cash on Hand and Cash Items $ 3,161 $ 3,211 Noninterest-Bearing Deposits with Other Banks 7,210 7,538 Interest-Bearing Deposits with Other Banks 657 1,015 ------- ------- $11,028 $11,764 ======= =======
(3) INVESTMENT SECURITIES - --- --------------------- Investment securities as of June 30, 1998 are summarized as follows:
Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value Securities Available for Sale: U.S. Treasury $ 1,104 $ 0 -$3 $ 1,101 U.S. Government Agencies: Mortgage-Backed 9,380 53 -35 9,398 Other 41,277 24 -69 41,232 State, County & Municipal 7,004 79 -2 7,081 The Banker's Bank Stock 50 0 0 50 Federal Home Loan Bank Stock 2,094 0 0 2,094 Marketable Equity Securities 1,130 0 -188 942 ------- ---- ----- ------- $62,039 $156 -$297 $61,898 ======= ==== ===== ======= Securities Held to Maturity: U.S. Government Agencies $ 800 $ 0 -$1 $ 799 State, County and Municipal 1,394 2 -18 1,378 ------- ---- ----- ------- $ 2,194 $ 2 -$19 $ 2,177 ======= ==== ===== =======
The amortized cost and fair value of investment securities as of June 30, 1998 by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because issues have the right to call or prepay obligations with or without call or prepayment penalties.
Securities Available for Sale Held to Maturity Amortized Cost Fair Value Amortized Cost Fair Value Due in One Year or Less $ 8,492 $ 8,488 $ 965 $ 964 Due After One Year Through Five Years 38,544 38,551 810 810 Due After Five Years Through Ten Years 2,349 2,375 0 0 Due After Ten Years 0 0 419 403 ------- ------- ------ ------ 49,385 49,414 2,194 2,177 Federal Home Loan Bank Stock 2,094 2,094 0 0 The Banker's Bank Stock 50 50 0 0 Marketable Equity Securities 1,130 942 0 0 Mortgage-Backed Securities 9,380 9,398 0 0 ------- ------- ----- ------ $62,039 $61,898 $2194 $2,177 ======= ======= ===== ======
8 (3) INVESTMENT SECURITIES (CONTINUED) - --- --------------------------------- Investment securities as of December 31, 1997 are summarized as follows:
Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value Securities Available for Sale: U.S. Treasury $ 1,074 $ 0 -$3 $ 1,071 U.S. Government Agencies: Mortgage-Backed 10,866 60 -62 10,864 Other 33,468 41 -43 33,466 State, County & Municipal 5,328 85 -5 5,408 The Banker's Bank Stock 50 0 0 50 Federal Home Loan Bank Stock 1,870 0 0 1,870 Marketable Equity Securities 1,130 0 -188 949 ------- ---- ----- ------- $53,786 $186 -$294 $53,678 ======= ==== ===== ======= Securities Held to Maturity: U.S. Government Agencies $ 1,649 $ 0 -$5 $ 1,644 State, County and Municipal 1,588 1 -20 1,569 ------- ---- ----- ------- $ 3,237 $ 1 -$25 $ 3,213 ======= ==== ===== =======
Investment securities having a carry value approximating $24,951 and $25,563 as of June 30, 1998 and December 31, 1997, respectively, were pledged to secure public deposits and for other purposes. (4) LOANS - ----- ----- The composition of loans as of June 30, 1998 and December 31, 1997 was as follows:
June 30, 1998 December 31, 1997 ------------- ----------------- Commercial, Financial and Agricultural $ 52,464 $ 34,883 Real Estate Construction 1,268 2,676 Real Estate Farmland 17,945 21,898 Real Estate Other 125,676 117,268 Installment Loans to Individuals 42,321 42,956 All Other Loans 7,823 14,618 -------- -------- $247,497 $234,299 ======== ========
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 $6,838 and $5,774 as of June 30, 1998 and December 31, 1997, respectively. On June 30, 1998, the Company had 90 day past due loans with principal balances of $1,346 and restructured loans with principal balances of $31. Colony Bankcorp, Inc. recognizes impaired loans as nonaccrual loans delinquent in excess of 120 days for which collateral values are insufficient to recover outstanding principal and interest under original loan terms. Impaired loan data as of June 30, 1998 and December 31, 1997 was as follows: Total Investment in Impaired Loans $1,292 Less Allowance for Impaired Loan Losses -461 ------ Net Investment, June 30, 1998 and December 31, 1997 $ 831 ====== 9 (5) ALLOWANCE FOR LOAN LOSSES - --- ------------------------- Transactions in the allowance for loan losses are summarized below for six months ended June 30, 1998 and June 30, 1997 was as follows:
June 30, 1998 June 30, 1997 ------------- ------------- Balance, Beginning $4,575 $4,434 Provision Charged to Operating Expenses 510 753 Loans Charged Off -507 -718 Loan Recoveries 243 211 ------ ------ Balance, Ending $4,821 $4,682
(6) PREMISES AND EQUIPMENT - ----- ---------------------- Premises and equipment are comprised of the following as of June 30, 1998 and December 31, 1997:
June 30, 1998 December 31, 1997 ------------- ------------------- Land $ 1,326 $ 1,306 Building 7,860 6,717 Furniture, Fixtures and Equipment 6,394 5,938 Leasehold Improvements 302 180 ------- ------- 15,882 14,141 Accumulated Depreciation -5,418 -5,006 ------- ------- $10,464 $ 9,135 ======= =======
Certain Company facilities and equipment are leased under various operating leases. Future minimum rental payments to be paid are as follows:
Year Ending December 31 Amount ----------- -------- 1998 $ 62,249 1999 57,740 2000 54,180 2001 45,644 2002 6,708 -------- $226,521 ========
(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. 10 (8) DEPOSITS - ------------ Components of interest-bearing deposits as of June 30, 1998 and December 31, 1997 are as follows:
June 30, 1998 December 31, 1997 ------------- ----------------- Interest-Bearing Demand $ 48,855 $ 54,770 Savings 12,537 11,971 Time, $100,000 and Over 70,517 61,198 Other Time 142,564 142,903 -------- -------- $274,473 $270,842 ======== ========
The aggregate amount of short-term jumbo certificates of deposit, each with a minimum denomination of $100,000, was approximately $59,195 and $51,608 as of June 30, 1998 and December 31, 1997, respectively. As of June 30, 1998, the scheduled maturities of time deposits are as follows:
Maturity Amount -------- -------- One Year and Under $172,829 One to Three Years 27,045 Three Years and Over 13,207 -------- $213,081 ========
(9) OTHER BORROWED MONEY - --- -------------------- Other borrowed money at June 30, 1998 and December 31, 1997 is summarized as follows:
June 30, 1998 December 31, 1997 ------------- ----------------- Federal Home Loan Bank Advances $12,800 $ 9,800 Debentures Payable 534 534 AmSouth Note Payable 0 821 First Port City Note Payable 867 963 The Bankers Bank Note Payable 872 956 ------- ------- $15,073 $13,074 ======= =======
Advances from the Federal Home Loan Bank (FHLB) have maturities ranging from 1998 to 2008 and interest rates ranging from 5.00 percent to 6.98 percent. Under the Blanket Agreement for Advances and Security Agreement with the FHLB, residential mortgage loans are pledged as collateral for the FHLB advances outstanding. Debentures payable were issued November 28, 1984 for $4,360. The debentures are due in annual payments of $267 plus variable interest with the unpaid balance due November 1, 1999. Collateral for the outstanding debt consists of 100 percent of the common stock of Ashburn Bank. Effective interest rate as June 30, 1998 was 8.0 percent. AmSouth note payable originated on December 20, 1994 for $1,445. Collateral consists of 100 percent of the common stock of The Bank of Fitzgerald and The Bank of Worth. This debt was paid out in February, 1998. First Port City note payable was renewed on January 30, 1997 with additional funds added for an amount totaling $963. Annual principal payments of $96 are due with interest paid quarterly at The Wall Street Prime Rate Indicator. The debt is secured by commercial real estate in downtown Fitzgerald, which includes the parent company's facilities. Any unpaid balance is due January 29, 2000. 11 (9) OTHER BORROWED MONEY (CONTINUED) - ------------------------------------ The Bankers Bank note payable originated on September 5, 1997 for $1,000 at a rate of The Wall Street Prime minus one half percent. Payments are due monthly with the entire unpaid balance due September 5, 2002. The debt is secured by all furniture, fixtures, machinery, equipment and software of Colony Management Services, Inc. Colony Bankcorp, Inc. guarantees the debt. The aggregate stated maturities of other borrowed money at June 30, 1998 are as follows:
Year Amount - ---- ------ 1998 $ 1,367 1999 564 2000 971 2001 2,000 2002 and Thereafter 10,171 ------- $15,073 =======
(10) PROFIT SHARING PLAN - ------------------------ The Company has a profit sharing plan that covers substantially all employees who meet certain age and service requirements. It is the Company's policy to make contributions to the plan as approved annually by the board of directors. The total provision for contributions to the plan was $295,452 for 1997. (11) COMMITMENTS AND CONTINGENCIES - ---------------------------------- In the normal course of business, certain commitments and contingencies are incurred which are not reflected in the consolidated financial statements. The Bank had commitments under standby letters of credit to U.S. addresses approximating $1,130 as of June 30, 1998 and $825 as of December 31, 1997. Unfulfilled loan commitments as of June 30, 1998 and December 31, 1997 approximated $37,812 and $30,197 respectively. No losses are anticipated as a result of commitments and contingencies. 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 statement. 12 (12) REGULATORY CAPITAL MATTERS - ------------------------------- The amount of dividends payable to the parent company from the subsidiary banks is limited by various banking regulatory agencies. The amount of cash dividends available from subsidiaries for payment in 1998 without prior approval from the banking regulatory agencies approximates $2,017. Upon approval by regulatory authorities, the banks may pay cash dividends to the parent company in excess of regulatory limitations. The Company is subject to various regulatory capital requirements administered by federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and, possibly, additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company's financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company must meet specific capital guidelines that involve quantitative measures of the Company's assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The Company's capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. Quantitative measures established by regulation to ensure capital adequacy require the Company to maintain minimum amounts and ratios of total and Tier 1 capital to risk-weighted assets, and of Tier 1 capital to average assets. The amounts and ratios as defined in regulations are presented hereafter. Management believes, as of June 30, 1998, the Company meets all capital adequacy requirements to which it is subject and is classified as well capitalized under the regulatory framework for prompt corrective action. In the opinion of management, there are no conditions or events since prior notification of capital adequacy from the regulators that have changed the institution's category.
To Be Well Capitalized For Capital Under Prompt Corrective Actual Adequacy Purposes Action Provisions Amount Ratio Amount Ratio Amount Ratio AS OF JUNE 30, 1998 Total Capital to Risk-Weighted Assets $34,355 13.09% $20,994 8.00% $26,243 10.00% Tier 1 Capital to Risk-Weighted Assets 31,056 11.83% 10,497 4.00% 15,746 6.00% Tier 1 Capital to Average Assets 31,056 8.96% 13,860 4.00% 17,326 5.00% AS OF DECEMBER 31, 1997 Total Capital to Risk-Weighted Assets $31,424 12.50% $20,111 8.00% $25,139 10.00% Tier 1 Capital to Risk-Weighted Assets 28,265 11.25% 10,050 4.00% 15,075 6.00% Tier 1 Capital to Average Assets 28,265 8.44% 13,396 4.00% 16,745 5.00%
13 (13) FINANCIAL INFORMATION OF COLONY BANKCORP, INC. (PARENT ONLY) - ----------------------------------------------------------------- The parent company's balance sheets as of June 30, 1998 and December 31, 1997 and the related statements of income are as follows: COLONY BANKCORP, INC. (PARENT ONLY) BALANCE SHEETS FOR PERIOD ENDED JUNE 30, 1998 AND DECEMBER 31, 1997
ASSETS JUNE 30, 1998 DECEMBER 31, 1997 ------------- ----------------- Cash $ 297 $ 9 Investments in Subsidiaries at Equity 31,358 29,787 Other 1,511 1,534 ------- ------- Totals Assets $33,166 $31,330 ======= ======= LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities Dividends Payable $ 122 $ 109 Notes and Debentures Payable 1,401 2,318 Other 75 82 ------- ------- Stockholders' Equity 1,598 2,509 Common Stock, Par Value $10; 5,000,000 Shares Authorized, 2,217,513 and 2,173,263 Shares Issued and Outstanding as of June 30, 1998 and December 31, 1997, respectively $22,175 $21,733 Paid-In Capital 1,580 1,137 Retained Earnings 7,970 6,083 Net Unrealized Loss on Securities Available for Sale, Net of Tax -157 -132 ------- ------- Total Stockholders' Equity 31,568 28,821 ------- ------- Total Liabilities and Stockholders' Equity $33,166 $31,330 ======= =======
COLONY BANKCORP, INC. (PARENT ONLY) STATEMENT OF INCOME FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND JUNE 30, 1997
JUNE 30, 1998 JUNE 30, 1997 ------------- ------------- Income $750 $ 573 Dividends from Subsidiaries 88 144 Management Fees from Subsidiaries 40 15 ---- ----- Other $878 $ 732 Expenses $ 66 $ 94 Interest 157 200 Salaries and Benefits 199 159 ---- ----- Other $422 $ 453 ---- ----- Income Before Taxes and Equity in Undistributed Earnings of Subsidiaries 456 279 Income Tax (Benefits) -79 -109 ---- ----- Income Before Equity in Undistributed Earnings of Subsidiaries 535 388 Equity in Undistributed Earnings of Subsidiaries 1,596 1,651 ------ ------ Net Income $2,131 $2,039 ====== ======
14 (13) Financial Information of Colony Bankcorp, Inc. (Parent Only)(continued) - ---------------------------------------------------------------------------- COLONY BANKCORP, INC. (PARENT ONLY) STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND JUNE 30, 1997
JUNE 30, 1998 JUNE 30, 1997 ------------- ------------- Cash Flows from Operating Activities Net Income $ 2,131 $ 2,039 Adjustments to Reconcile Net Income to Net Cash Provided from Operating Activities Depreciation and Amortization 43 19 Equity in Undistributed Earnings of Subsidiary -1,596 -1,651 Other -21 -225 ------- ------- 557 182 Cash Flows from Investing Activities Capital Infusion in Subsidiary 0 0 Purchase of Premises and Equipment -5 -326 ------- ------- -5 -326 Cash Flows from Financing Activities Dividends Paid -231 -217 Proceeds from Issuance of Common Stock 885 0 Principal Payments on Notes and Debentures -918 -395 Proceeds from Notes and Debentures 0 868 ------- ------- -264 256 Increase (Decrease) in Cash and Cash Equivalents 288 112 Cash and Cash Equivalents, Beginning 9 61 ------- ------- Cash and Cash Equivalents, Ending $ 297 $ 173 ======= =======
(14) COMMON STOCK SPLIT - ----------------------- On February 18, 1997 a 50 percent stock split effected on July 1, 1997 in the form of a dividend was approved by the board. Weighted average shares and per share data for all periods presented in the accompanying consolidated financial statements and related notes have been retroactively restated to reflect the additional shares outstanding resulting from the stock split. 15 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, 1998, the Company was successful in meeting its liquidity needs by increasing deposits 1.51% to $302,650,000 from deposits of $298,162,000 on December 31, 1997 and reducing Federal Funds 41.76% to $14,875,000 from $25,540,000 on December 31, 1997. Additionally, the Company increased its borrowings from Federal Home Loan Bank 30.61% to $12,800,000 from Federal Home Loan Borrowings of $9,800,000 on December 31, 1997. Should the need arise, the Company also maintains relationships with several correspondent banks that can provide funds on short notice. The Company's liquidity position remained acceptable for the six months ended June 30, 1998. Average liquid assets (cash and amounts due from banks, interest-bearing deposits in other banks, funds sold and investment securities) represented 30.43% of average deposits for six months ended June 30, 1998 as compared to 31.16% of average deposits for six months ended June 30, 1997 and 29.73% for calendar year 1997. Average loans represented 79.86% of average deposits for six months ended June 30, 1998 as compared to 77.36% for six months ended June 30, 1997 and 80.00% for calendar year 1997. Average interest-bearing deposits were 84.79% of average earning assets for six months ended June 30, 1998 as compared to 85.87% for six months ended June 30, 1997 and 84.92% for calendar year 1997. The Company satisfies most of its capital requirements through retained earnings. During the first quarter 1998, retained earnings provided $1,045,000 of increase in equity. Additionally, equity capital decreased by $18,000 during first quarter 1998 as a result of changes in unrealized losses on securities available-for-sale, net of taxes and the Company realized $885,000 in proceeds from the sale of common stock through a public offering that was completed during the first quarter. During the second quarter of 1998, retained earnings provided $842,000 of increase in equity. Additionally, equity capital decreased by $6,000 during second quarter 1998 as a result of changes in unrealized losses on available-for-sale securities, net of taxes. Thus total equity increased by a net amount of $1,912,000 for first quarter 1998 and $836,000 for second quarter 1998 for a net change of $2,748,000 for the six month period ended June 30, 1998. This compares to total equity increase of $1,645,000 for the six month period ended June 30, 1997. Total equity increased by a net amount of $3,230,000 in 1997. At June 30, 1998, total capital of Colony amounted to $31,568,000. At June 30, 1998, there was an outstanding commitment for capital expenditures of approximately $500,000 to complete construction and furnishings for a branch office to be located in Leesburg, Georgia with expected occupancy in the fourth quarter. Colony Bank Southeast subsidiary occupied their new branch in Douglas in July, 1998. The Federal Reserve Bank Board and 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 stockholders' equity less goodwill. Tier 2 capital consists of convertible, subordinated and other qualifying term debt and the allowance for loan losses up to 1.25 percent 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, 1998 was 11.83% and total Tier 1 and 2 risk-based capital was 13.09%. 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 as of June 30, 1998 was 8.96% which exceeds the required leverage ratio standard of 4%. For the first two quarters of 1998, the Company paid quarterly dividends of $0.055 per share. The dividend payout ratio, defined as dividends per share divided by net income per share, was 11.46% for six months ended June 30, 1998 as compared to 10.64% for the six month period ended June 30, 1997. For the first two quarters of 1997, the company paid quarterly dividends of $0.05 per share. 16 At June 30, 1998, 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 of operations. However, it is possible that examinations by regulatory authorities in the future could precipitate additional loan charge-offs which could materially impact the Company's liquidity, capital resources and operations. RESULTS OF OPERATION The Company's results of operations are determined by its ability to effectively manage interest income and expenses, 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 - ---------- Net income for the three months ended June 30, 1998 was $964,000 as compared with $918,000 for the three months ended June 30, 1997, or an increase of 5.01% and net income for the six months ended June 30, 1998 was $2,131,000 as compared with $2,039,000 for the six months ended June 30, 1997, or an increase of 4.51%. First and Second quarter 1998 earnings were relatively stable compared to first and second quarter 1997 earnings. Net Interest Margin - ------------------- The net interest margin decreased by 35 basis points to 4.65% in second quarter 1998 as compared to 5.00% in second quarter 1997 and decreased by 25 basis points to 4.76% for six months ended June 30, 1998 as compared to 5.01% for the same period in 1997. Net interest income remained flat as second quarter 1998 net interest income was $3,716,000 compared to $3,715,000 for the same period in 1997 on an increase in average earning assets to $325,094,000 in second quarter 1998 from $301,549,000 in second quarter 1997. Net interest income increased by 1.97% to $7,507,000 for six months ended June 30, 1998 from $7,362,000 for the same period in 1997 on an increase in average earning assets to $320,669,000 for the six months ended June 30, 1998 from $297,623,000 for the same period in 1997. For the six months ended June 30, 1998 compared to the same period in 1997, average loans increased by $20,904,000 or 9.57%, average funds sold increased by $5,474,000 or 38.86%, average investment securities decreased by $3,978,000 or 6.60% and average interest bearing deposits in other banks increased by $646,000 or 67.86%, resulting in a net increase in average earning assets of $23,046,000 or 7.74%. The net increase in average earnings assets was funded by a net increase in average deposits of 6.14% to $299,568,000 for six months ended June 30, 1998 from $282,229,000 for the same period in 1997. Average interest-bearing deposits increased by 6.39% to $271,896,000 for six months ended June 30, 1998 compared to $255,563,000 for six months ended June 30, 1997, while average noninterest-bearing deposits represented 9.24% of average total deposits for six month ended June 30, 1998 as compared to 9.45% for the same period in 1997 and 9.46% for calendar year 1997. Interest expense increased for the three months ended June 30, 1998 by $395,000 compared to the same period in 1997 and increased by $776,000 for the six months ended June 30, 1998 compared to the same period in 1997. The increase in interest expense is primarily attributable to the increase in average interest- bearing deposits to $271,896,000 for the six months ended June 30, 1998 compared to $255,563,000 for the six months ended June 30, 1997 and in increase in average borrowings to $10,631,000 for the six months ended June 30, 1998 compared to $6,572,000 for the six months ended June 30, 1997. The combination of a decreased net interest margin and an increase in average earning assets resulted in a change in net interest income of $1,000 for second quarter 1998 compared to second quarter 1997 and an increase in net interest income of $145,000 for six months ended June 30, 1998 compared to the same period in 1997. Provision for Loan Losses - ------------------------- 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. 17 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 that management had determined to be adequate. The provision for loan losses was $231,000 for second quarter 1998 compared to $468,000 for second quarter 1997 and $510,000 for six months ended June 30, 1998 compared to $753,000 for the same period in 1997. The decrease in the provision for loan losses in both periods is attributable to a leveling off of problem loans and an adequate build-up in the loan loss reserve for any future losses. Net loan charge-offs represented 66.66% of the provision for loan losses in second quarter 1998 as compared to 76.28% in second quarter 1997. Net loan charge-offs represented 51.96% of the provision for loan losses in the six month period ended June 30, 1998 as compared to 67.33% of the provision for loan losses in the six month period ended June 30, 1997. During the first six months of 1998 and 1997, a net of $265,000 and $507,000, respectively was charged-off. Net loan charge- offs for the six months ended June 30, 1998 represented 0.11% of average loans outstanding as compared to 0.23% for six months ended June 30, 1997. At June 30, 1998 the allowance for loan losses was 1.95% of total loans outstanding as compared to an allowance for loan losses of 2.01% at June 30, 1997 and 1.95% at December 31, 1997. The allowance for loan losses of 1.95% of total loans at June 30, 1998 provided coverage of 61.67% of nonperforming loans and 55.65% of nonperforming assets, compared to 62.59% and 51.56%, respectively at June 30, 1997. 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, 1998 allowance for loan losses adequate to cover potential losses in the loan portfolio. Noninterest Income - ------------------ Noninterest income consists primarily of service charges on deposit accounts. Service charges on deposit accounts amounted to $521,000 in second quarter 1998 compared to $454,000 in second quarter 1997, or an increase of 14.76% and amounted to $998,000 for six months ended June 30, 1998 compared to $909,000 for six months ended June 30, 1997, or an increase of 9.79%. All other non-interest income decreased by $82,000 to $124,000 for second quarter 1998 from $206,000 for second quarter 1997 and all other noninterest income decreased by $151,000 to $294,000 for six months ended June 30, 1998 from $445,000 for six months ended June 30, 1997. The primary decrease of all other noninterest income is primarily attributable to gains realized on the sale of other assets in the six months ended June 30, 1997 which did not recur in 1998. Additionally, credit life insurance commissions reflected a $40,000 decrease for the six months ended June 30, 1998 as compared to the same period in 1997. Noninterest Expense - ------------------- Noninterest expense increased by 5.33% to $2,725,000 for three months ended June 30, 1998 from $2,587,000 for the same period in 1997. Salaries and benefits remained flat for the two periods, however, occupancy and equipment expense increased 19.71% to $419,000 for second quarter 1998 from $350,000 for the same period in 1997. This increase is attributable to increased occupancy expense with the Company's branching into three new markets. All other noninterest expense increased by 11.49% to $844,000 for second quarter, 1998 from $757,000 for second quarter 1997 with the most significant increase being data processing expenses as the Company incurred additional expenses with the updating of its computer/software equipment. Noninterest expense increased by 3.28% to $5,168,000 for six months ended June 30, 1998 from $5,004,000 for the same period in 1997. Salaries and benefits remained flat as total salaries and benefits amounted to $2,724,000 for six months ended June 30, 1998 compared to $2,746,000 for the same period in 1997. Occupancy and equipment expense increased by 19.21% to $819,000 for six months ended June 30, 1998 compared to $687,000 for six months ended June 30, 1997. This increase results from the Company branching into three new markets in 1998. All other noninterest expense increased by 3.44% to $1,625,000 for six months ended June 30, 1998 compared to $1,571,000 for the same period in 1997. Income Tax Expense - ------------------ Income before taxes increased by 6.44% to $1,405,000 in second quarter 1998 from $1,320,000 in second quarter 1997 and increased by 5.47% to $3,121,000 for six months ended June 30, 1998 compared to $2,959,000 for the same period in 1997. The increase for the six months ended June 30, 1998 is primarily attributable to the increased net interest income. Income taxes as a percentage of income before taxes increased by 3.09% to 31.39% in second quarter 1998 as compared to 30.45% in second quarter 1997 and increased by 2.02% to 31.72% for six months ended June 30, 1998 as compared to 31.09% for six months ended June 30, 1997. Income tax expense increased 9.70% to $441,000 for second quarter 1998 compared to $402,000 for second quarter 1997 and increased 7.61% to $990,000 for six months ended June 30, 1998 compared to $920,000 for the same period in 1997. 18 Future Outlook - -------------- Colony is an emerging company operating in a industry filled with non-regulated competitors and a rapid pace of consolidation. 1998 brings with it new opportunities for growth in our existing markets, as well as opportunities to expand into new markets through bank acquisitions and branching. Colony has already opened new branches in Douglas, Tifton and Cordele during 1998. These new branches are located in three growth markets in South Georgia and the Company anticipates opening a new branch office in Leesburg during the fourth quarter of 1998. Colony Management Services, Inc. has invested over $1,000,000 in computer up-grades and software enhancements in a major cost containment initiative. Not only will this reduce overhead through back-office consolidation, but it also will allow us to better serve our customers through improved customer data resources and state-of-the-art technological services. Year 2000 Compliance - -------------------- The Company has developed policy, procedures and plans to address the possible exposure related to the impact on its financial, informational and operational systems of the Year 2000. The Company recently, underwent a major computer conversion, which has been tested and assured to be Year 2000 compliant. Other equipment has been identified and vendors are being contacted. The Company's subsidiary, Colony Management Services, Inc. is responsible for coordinating efforts of all bank subsidiaries in any follow-up procedures necessary. While there may be some expenses incurred during the next two years, it is not expected to have a material effect on the Company's consolidated financial statements. Liquidity - --------- The Company's goals with respect to liquidity are to ensure that sufficient funds are available to meet current operating requirements and 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, 1998 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. 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 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. In November 1996, Colony Bankcorp, Inc. acquired Colony Bank Southeast and in November, 1996 formed a non-bank subsidiary Colony Management Services, Inc. Through its six 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 19 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. On April 2, 1998, the Company was listed on Nasdaq National Market. The Company's common stock trades on the Nasdaq Stock Market under the symbol "CBAN". The Company presently has 926 shareholders of record as of June 30, 1998. "The Nasdaq Stock Market" or "Nasdaq" is a highly-regulated electronic securities market comprised of competing Market Makers whose trading is supported by a communications network linking them to quotation dissemination, trade reporting and order execution systems. This market also provides specialized automation services for screen-based negotiations of transactions, on-line comparison of transactions, and a range of informational services tailored to the needs of the securities industry, investors and issuers. The Nasdaq Stock Market is operated by The Nasdaq Stock Market, Inc., a wholly-onwed subsidiary of the National Association of Securities Dealers, Inc. 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 28, 1998. At the Annual Meeting of the Shareholders, proxies were solicited under Regulation 14 of the Securities and Exchange Act of 1934. Total shares amount to 2,217,513. A total of 1,539,008.5 shares (69%) were represented by shareholders in attendance or by proxy. The following directors were elected by yes votes totaling 1,539,008.5 shares 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 L. Morris Downing, Jr. W. B. Roberts, Jr. Terry L. Hester R. Sidney Ross Milton N. Hopkins, Jr. Joe K. Shiver Harold E. Kimball Curtis Summerlin 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, 1998. 20 SIGNATURE Pursuant to the requirements of the Securities and 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. August 10, 1998 /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 21 EX-27 2 FINANCIAL DATA SCHEDULE
9 1,000 6-MOS DEC-31-1998 JAN-01-1998 JUN-30-1998 10,371 657 14,875 0 61,898 2,194 2,177 247,490 4,821 351,864 302,650 1,000 2,573 14,073 0 0 22,175 9,393 351,864 12,595 1,789 597 14,981 7,074 7,474 7,507 510 2 5,168 3,121 3,121 0 0 2,131 0.96 0.96 4.76 6,838 1,346 31 0 4,575 507 243 4,821 4,821 0 0
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