-----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, OVe1FMP4VcqhNy+HmjI2WbK7FpYlzCw1BO3qe8UhuyE5ETfZxBSsXz1GBYLvU6mv OFPEqY3howlFGB5MgdJHVw== 0000950109-97-006706.txt : 19971111 0000950109-97-006706.hdr.sgml : 19971111 ACCESSION NUMBER: 0000950109-97-006706 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971110 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: SEC FILE NUMBER: 000-12436 FILM NUMBER: 97711139 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 10QSB SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-QSB QUARTERLY REPORT UNDER SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR QUARTER ENDED SEPTEMBER 30, 1997 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 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 SEPTEMBER 30, 1997 ----- --------------------------------- COMMON STOCK, $10 PAR VALUE 2,173,263 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, BROXTON STATE BANK AND COLONY MANAGEMENT SERVICES, INC. A. CONSOLIDATED BALANCE SHEETS - SEPTEMBER 30, 1997 AND DECEMBER 31, 1996. B. CONSOLIDATED STATEMENTS OF INCOME - FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996 AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996. C. CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION - FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996. 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 NINE MONTH PERIOD ENDED SEPTEMBER 30, 1997 ARE NOT NECESSARILY INDICATIVE OF THE RESULTS TO BE EXPECTED FOR THE FULL YEAR. 2 COLONY BANKCORP, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS SEPTEMBER 30, 1997 AND DECEMBER 31, 1996 (UNAUDITED) (DOLLARS IN THOUSANDS)
ASSETS SEPTEMBER 30, 1997 DECEMBER 31, 1996 ------------------ ----------------- Cash and Balances Due from Depository Institutions (Note 2) $ 9,283 $ 13,444 Federal Funds Sold 9,730 22,740 Investment Securities (Aggregate Fair Value of $56,854 and $63,328 Respectively) (Note 3) 56,877 63,377 Loans (Notes 4 and 5) 241,313 206,876 Allowance for Loan Losses (4,677) (4,435) Unearned Interest and Fees (13) (13) --------- --------- Total Loans 236,623 202,428 Premises and Equipment (Note 6) 8,573 6,953 Other Real Estate 1,183 2,803 Other Assets 8,623 7,795 --------- --------- Total Assets $ 330,892 $ 319,540 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Deposits: Noninterest-Bearing $ 26,110 $ 28,723 Interest-Bearing (Note 8) 258,638 256,953 --------- --------- Total Deposits 284,748 285,676 Borrowed Money: Federal Funds Purchased 1,250 160 Other Borrowed Money (Note 9) 14,037 5,496 --------- --------- Total Borrowed Money 15,287 5,656 Other Liabilities 2,676 2,617 Commitments and Contingencies (Note 11) Stockholders' Equity: Common Stock, Par Value $10 a Share; Authorized 5,000,000 shares, Issued 2,173,263 and 1,448,842 shares as of September 30, 1997 and December 31, 1996, Respectively 21,733 14,488 Paid-In Capital 1,137 1,137 Retained Earnings 5,494 10,145 Net Unrealized Loss on Securities Available for Sale, Net of Tax Benefit of $1 in 1997 and $3 in 1996 (183) (179) --------- --------- Total Stockholders' Equity 28,181 25,591 --------- --------- Total Liabilities and Stockholders' Equity $ 330,892 $ 319,540 ========= =========
The accompanying notes are an integral part of these balance sheets. 3 COLONY BANKCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME THREE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996 AND NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996 (UNAUDITED) (DOLLARS IN THOUSANDS)
Three Months Ended Nine Months Ended 9/30/97 9/30/96 9/30/97 9/30/96 ------- ------- ------- ------- Interest Income: Loans, including fees $ 6,286 $ 5,820 $ 18,002 $ 16,756 Federal Funds Sold 142 107 529 555 Deposits with Other Banks 8 0 34 5 Investment Securities: U.S. Treasury & Federal Agencies 769 737 2,500 2,103 State, County and Municipal 83 83 234 235 Other Investments 28 22 77 72 ---------- ---------- ---------- ---------- Total Interest Income 7,316 6,769 21,376 19,726 ---------- ---------- ---------- ---------- Interest Expense: Deposits 3,375 3,252 9,830 9,545 Federal Funds Purchased 15 24 37 27 Other Borrowed Money 224 61 445 206 ---------- ---------- ---------- ---------- Total Interest Expense 3,614 3,337 10,312 9,778 ---------- ---------- ---------- ---------- Net Interest Income 3,702 3,432 11,064 9,948 Provision for Loan Losses 332 405 1,085 1,550 ---------- ---------- ---------- ---------- Net Interest Income After Provision 3,370 3,027 9,979 8,398 ---------- ---------- ---------- ---------- Noninterest Income: Service Charge on Deposits 457 463 1,366 1,333 Other Service Charges, Commissions & Fees 92 83 315 398 Security Gains, net 0 0 9 3 Other Income 36 102 249 258 ---------- ---------- ---------- ---------- Total Noninterest Income 585 648 1,939 1,992 ---------- ---------- ---------- ---------- Noninterest Expense: Salaries and Employee Benefits 1,383 1,201 4,129 3,675 Occupancy and Equipment 395 294 1,082 857 Other Operating Expenses 911 940 2,482 2,460 ---------- ---------- ---------- ---------- Total Noninterest Expense 2,689 2,435 7,693 6,992 ---------- ---------- ---------- ---------- Income Before Income Taxes $ 1,266 1,240 4,225 3,398 Income Taxes 385 386 1,305 1,050 ---------- ---------- ---------- ---------- Net Income $ 881 $ 854 $ 2,920 $ 2,348 ========== ========== ========== ========== Net Income Per Share of Common Stock* $ 0.41 $ 0.39 $ 1.34 $ 1.08 ========== ========== ========== ========== Weighted Average Shares Outstanding* 2,173,263 2,173,263 2,173,263 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 NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996 (UNAUDITED) (DOLLARS IN THOUSANDS)
1997 1996 -------- -------- CASH FLOW FROM OPERATING ACTIVITIES Net income (loss) $ 2,920 $ 2,348 Adjustments to reconcile net income to net cash provided by operating activities: (Gain) loss on sale of investment securities (9) (3) Depreciation 545 391 Provision for loan losses 1,085 1,550 Amortization of excess costs 38 35 Other prepaids, deferrals and accruals, net (29) (985) -------- -------- Total Adjustments $ 1,630 $ 988 -------- -------- Net cash provided by operating activities $ 4,550 $ 3,336 -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES Purchases of securities available for sale ($11,447) ($14,426) Proceeds from sales of securities available for sale 3,797 498 Proceeds from maturities of securities available for sale 13,389 7,929 Purchase of securities held for investment -0- -0- Proceeds from maturities of securities held for investment 765 98 Proceeds from sales of securities held for investment -0- -0- Decrease (Increase) in interest-bearing deposits in banks 297 (299) (Increase) in loans (34,437) (18,251) Purchase of premises and equipment (2,165) (601) -------- -------- Net cash (used in) investing activities ($29,801) ($25,052) -------- -------- CASH FLOW FROM FINANCING ACTIVITIES Net (decrease) increase in deposits $ (928) $ 7,348 Net (decrease) increase in Federal Funds Purchased 1,090 500 Dividends paid (326) (291) Net (decrease) increase in short term & long-term borrowings 8,541 1,846 -------- -------- Net cash provided by financing activities $ 8,377 $ 9,403 -------- -------- Net increase (decrease) in cash and cash equivalents (16,874) (12,313) Cash and cash equivalents at beginning of period 35,293 35,368 -------- -------- Cash and cash equivalents at end of period $ 18,419 $ 23,055
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 - ---------------------------------------------- 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; Community Bank of Wilcox, Pitts, Georgia,; Broxton State Bank, Broxton, Georgia (the Banks) and Colony Management Services, Inc., Fitzgerald, Georgia. 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 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 September 30, 1997 and December 31, 1996. 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. 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 collectability 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. (2) Cash and Balances Due from Depository Institutions - ------------------------------------------------------ Components of cash and balances due from depository institutions at September 30, 1997 and December 31, 1996 are as follows:
September 30, 1997 December 31, 1996 ------------------ ----------------- Cash on Hand and Cash Items $ 3,532 $ 3,692 Noninterest-Bearing Deposits with Other Banks 5,157 8,861 Interest-Bearing Deposits with Other Banks 594 891 ------- ------- $ 9,283 $13,444 ======= =======
(3) Investment Securities - ------------------------- Investment securities as of September 30, 1997 are summarized as follows:
Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value Securities Available for Sale: U.S. Treasury $ 2,060 $ -0- $ (2) $ 2,058 U.S. Government Agencies: Mortgage-Backed 11,921 68 (91) 11,898 Other 32,394 26 (65) 32,355 State, County & Municipal 4,830 71 (9) 4,892 The Banker's Bank Stock 50 -0- -0- 50 Federal Home Loan Bank Stock 1,459 -0- -0- 1,459 Marketable Equity Securities 1,130 -0- (182) 948 -------- -------- -------- -------- $ 53,844 $ 165 $ (349) $ 53,660 ======== ======== ======== ======== Securities Held to Maturity: U.S. Government Agencies $ 1,650 $ -0- $ (9) $ 1,641 State, County and Municipal 1,567 -0- (14) 1,553 -------- -------- -------- -------- $ 3,217 $ -0- $ (23) $ 3,194 ======== ======== ======== ========
8 (3) Investment Securities (continued) - ------------------------------------- The amortized cost and fair value of investment securities as of September 30, 1997 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 $13,529 $13,528 $ 1,047 $ 1,046 Due After One Year Through Five Years 24,321 24,328 1,728 1,715 Due After Five Years Through Ten Years 1,231 1,244 0 0 Due After Ten Years 203 205 442 433 ------- ------- ------- ------- 39,284 39,305 3,217 3,194 Federal Home Loan Bank Stock 1,459 1,459 The Banker's Bank Stock 50 50 Marketable Equity Securities 1,130 948 Mortgage-Backed Securities 11,921 11,898 ------- ------- ------- ------- $53,844 $53,660 $ 3,217 $ 3,194 ======= ======= ======= =======
Investment securities as of December 31, 1996 are summarized as follows:
Gross Gross Amortized Unrealized Unrealized Fair Cost Gains Losses Value Securities Available for Sale: U.S. Treasury $ 499 $ $ $ 499 U.S. Government Agencies Mortgage-Backed Securities 16,367 78 (94) 16,351 Other 35,702 32 (70) 35,664 State, County & Municipal 5,384 86 (23) 5,447 The Banker's Bank Stock 50 50 Federal Home Loan Bank Stock 483 483 Marketable Equity Securities 1,130 (185) 945 -------- -------- ------- -------- $ 59,615 $ 196 $ (372) $ 59,439 ======== ======== ======= ======== Securities Held to Maturity: U.S. Government and Agencies $ 2,148 $ $ (16) $ 2,132 State, County and Municipal 1,790 3 (36) 1,757 -------- -------- ------- -------- $ 3,938 $ 3 $ (52) $ 3,889 ======== ======== ======= ========
Investment securities having a carrying value approximating $28,029 and $27,618 as of September 30, 1997 and December 31, 1996, respectively, were pledged to secure public deposits and for other purposes. 9 (4) Loans - --------- The composition of loans as of September 30, 1997 and December 31, 1996 was as follows:
September 30, 1997 December 31, 1996 ------------------ ----------------- Commercial, Financial and Agricultural $ 51,129 $ 38,776 Real Estate - Construction 2,081 881 Real Estate - Farmland 17,369 25,770 Real Estate - Other 120,132 88,896 Installment Loans to Individuals 42,224 44,608 All Other Loans 8,378 7,945 -------- -------- $241,313 $206,876 ======== ========
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 $5,948 and $7,396 as of September 30, 1997 and December 31, 1996, respectively. On September 30, 1997, the Company had 90 day past due loans with principal balances of $269 and restructured loans with principal balances of $26. 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 September 30, 1997 and December 31, 1996 was as follows: Total Investment in Impaired Loans $1,351 Less Allowance for Impaired Loan Losses (419) ------ Net Investment, September 30, 1997 $ 932 ====== Total Investment in Impaired Loans 1,351 Less Allowance for Impaired Loan Losses (419) ------ Net Investment, December 31, 1996 $ 932 ======
(5) Allowance for Loan Losses - ----------------------------- Transactions in the allowance for loan losses are summarized below for nine months ended September 30, 1997 and September 30, 1996 as follows:
September 30, 1997 September 30, 1996 ------------------ ------------------ Balance, Beginning $ 4,435 $ 4,051 Provision Charged to Operating Expenses 1,085 1,550 Loans Charged Off (1,253) (1,747) Loan Recoveries 410 840 ------- ------- Balance, Ending $ 4,677 $ 4,694 ======= =======
10 (6) Premises and Equipment - -------------------------- Premises and equipment are comprised of the following as of September 30, 1997 and December 31, 1996:
September 30, 1997 December 31, 1996 ------------------ ----------------- Land $ 1,205 $ 973 Building 6,266 5,601 Furniture, Fixtures and Equipment 6,394 5,150 Leasehold Improvements 33 31 -------- -------- 13,898 11,755 Accumulated Depreciation (5,325) (4,802) -------- -------- $ 8,573 $ 6,953 ======== ========
In 1996, the Company began leasing a supermarket bank unit with a lease period of five years. Rent expense under this operating lease approximated $8,600 for the year ended December 31, 1996. Future minimum lease payments to be paid are as follows:
Year Ending December 31 Amount ----------- -------- 1997 $ 39,600 1998 39,600 1999 39,600 2000 39,600 2001 33,000 -------- $191,400 ========
(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 September 30, 1997 and December 31, 1996 are as follows:
September 30, 1997 December 31, 1996 ------------------ ----------------- Interest-Bearing Demand $ 47,071 $ 55,297 Savings 11,658 11,724 Time, $100,000 and Over 58,301 54,139 Other Time 141,608 135,793 -------- -------- $258,638 $256,953 ======== ========
11 (9) Other Borrowed Money - ------------------------ Other borrowed money is comprised of the following as of September 30, 1997 and December 31, 1996:
September 30, 1997 December 31, 1996 ------------------ ----------------- Debentures payable, due in annual payments of $267 plus interest at variable rates, on November 1, 1997 through November 1, 1999, collateralized by 100% of the common stock of Ashburn Bank. Effective interest rate of 8.0% as of September 30, 1997. $ 801 $ 801 Note payable, due in annual payments of $207 plus quarterly interest at variable rates, 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 8.50% as of September 30, 1997. 873 1,029 Notes payable, due February 26, 1997 with interest at variable rates. Collateralized by commercial real estate in downtown Fitzgerald, Georgia. -0- 291 Notes payable due January 29, 2000 with interest at variable rates Collateralized by commercial real estate in downtown Fitzgerald, Georgia Effective interest rate of 8.50% as of September 30, 1997. 963 -0- Advance agreement with the Federal Home Loan Bank of Atlanta, dated December 30, 1996, payable in full on December 30, 1997. Interest rate determined under the daily rate credit program. -0- 1,000 Advance agreement with the Federal Home Loan Bank of Atlanta, dated September 29, 1997, payable in full on September 29, 1998. Interest rate determined under the daily rate credit program. 2,000 2,000 Note payable, due June 13, 1997 with interest at variable rate, due quarterly beginning March 13, 1997. Collateralized by guaranty of Colony Bankcorp, Inc. in addition to all furniture, fixtures, equipment and software of Colony Management Services, Inc. -0- 375 Advance agreement with the Federal Home Loan Bank of Atlanta, dated May 3, 1997, payable in full on May 3, 1998. Interest rate determined under the daily rate credit program. 1,200 -0- Advance agreement with the Federal Home Loan Bank of Atlanta, dated June 30,1997, payable in full on June 30, 1998. Interest rate determined under the daily rate credit program. 300 -0- Advance agreement with the Federal Home Loan Bank of Atlanta, dated September 3, 1997 payable in full on March 3, 1998. Interest rate determined under the daily rate credit program. 1,400 -0-
12 (9) Other Borrowed Money (continued) - ------------------------
September 30, 1997 December 31, 1996 ------------------ ----------------- Advance agreement with the Federal Home Loan Bank of Atlanta, dated May 22, 1997, payable in full on November 24, 1997. Interest rate determined under the daily rate credit program. 1,500 -0- Advance agreement with the Federal Home Loan Bank of Atlanta, dated May 28, 1997, payable in full on May 28, 2002. Effective interest rate of 6.98% on September 30, 1997. 1,000 -0- Advance agreement with the Federal Home Loan Bank of Atlanta, dated May 30, 1997, payable in full on February 27, 1998. Interest rate determined under the daily rate credit program. 1,000 -0- Advance agreement with the Federal Home Loan Bank of Atlanta, dated June 23, 1997, payable in full on February 23, 1999. Interest rate determined under the daily rate credit program. 1,000 -0- Note payable dated September 5, 1997, due on September 5, 2002, amortized over sixty months with interest at variable rate. Collateralized by guaranty of Colony Bankcorp, Inc. in addition to all furniture, fixtures, equipment, software of Colony Management Services, Inc. Effective interest rate of 8.00% on September 30, 1997. 1,000 -0- Advance agreement with the Federal Home Loan Bank of Atlanta, dated September 24, 1997, payable in full on September 24, 2002. Effective interest rate of 5.66% on September 30, 1997 with one-time call on September 24, 1999. 1,000 -0- ------- ------ $14,037 $5,496 ======= ======
Maturities of borrowed money for the next five years as of September 30, 1997:
Year Amount 1997 $ 2,682 1998 6,437 1999 1,551 Thereafter 3,367 ------- $14,037 =======
(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. 13 (11) Commitments and Contingent Liabilities - ------------------------------------------- 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 $1,702 as of September 30, 1997 and $3,128 as of December 31, 1996. Unfulfilled loan commitments as of September 30, 1997 and December 31, 1996 approximated $26,618 and $19,696 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 statements. (12) Earnings Per Share - ----------------------- Earnings per share are calculated on the basis of the weighted average number of shares outstanding. (13) 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 1997 without prior approval from the banking regulatory agencies approximates $1,562. 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 the 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 September 30, 1997 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. 14
To Be Well Capitalized For Capital Under Prompt Corrective Actual Adequacy Purposes Action Provisions Amount Ratio Amount Ratio Amount Ratio As of September 30, 1997 Total Capital to Risk-Weighted Assets $30,863 12.13% $20,352 8.00% $25,440 10.00% Tier 1 Capital to Risk-Weighted Assets 27,664 10.87% 10,176 4.00% 15,264 6.00% Tier 1 Capital to Average Assets 27,664 8.42% 13,149 4.00% 16,436 5.00% As of December 31, 1996 Total Capital to Risk-Weighted Assets $27,835 12.21% $18,238 8.00% $22,797 10.00% Tier 1 Capital to Risk-Weighted Assets 24,967 10.96% 9,112 4.00% 13,668 6.00% Tier 1 Capital to Average Assets 24,967 7.65% 13,054 4.00% 16,318 5.00%
(14) Financial Information of Colony Bankcorp, Inc. (Parent Only) - ------------------------------------------------------------------ The parent company's balance sheets as of September 30, 1997 and December 31, 1996 and the related statements of income are as follows: COLONY BANKCORP, INC. (PARENT ONLY) BALANCE SHEETS
ASSETS September 30, 1997 December 31, 1996 Cash $ 154 $ 61 Investments in Subsidiaries at Equity 29,437 26,915 Other 1,440 979 -------- -------- Total Assets $ 31,031 $ 27,955 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities Dividends Payable $ 109 $ 109 Notes and Debentures Payable 2,637 2,121 Other 104 134 -------- -------- 2,850 2,364 Stockholders' Equity Common Stock, Par Value $10; 5,000,000 Shares Authorized, 2,173,263 and 1,448,842 Shares Issued and Outstanding as of September 30, 1997 and December 31, 1996, respectively $ 21,733 $ 14,488 Paid-In Capital 1,137 1,137 Retained Earnings 5,494 10,145 Net Unrealized Loss on Securities Available for Sale, Net of Tax (183) (179) -------- -------- Total Stockholders' Equity 28,181 25,591 -------- -------- Total Liabilities and Stockholders' Equity $ 31,031 $ 27,955 ======== ========
15 (14) Financial Information of Colony Bankcorp, Inc. (Parent Only) (Continued) - ----------------------------------------------------------------------------- COLONY BANKCORP, INC. (PARENT ONLY) STATEMENT OF INCOME FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
September 30, 1997 September 30, 1996 Income Dividends from Subsidiaries $ 860 $ 825 Management Fees from Subsidiaries 207 380 Data Processing Fees 0 297 Other 30 11 ------- ------- $ 1,097 $ 1,513 Expenses Interest $ 150 $ 137 Salaries and Benefits 281 516 Other 285 384 ------- ------- $ 716 $ 1,037 ------- ------- Income Before Taxes and Equity in Undistributed Earnings of Subsidiaries 381 476 Income Tax (Benefits) (175) (109) ------- ------- Income Before Equity in Undistributed Earnings of Subsidiaries 556 585 Equity in Undistributed Earnings of Subsidiaries 2,364 1,763 ------- ------- Net Income $ 2,920 $ 2,348 ======= =======
16 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 nine months ended September 30, 1997, the Company was successful in meeting its liquidity needs by reducing Federal Funds 57.21% to $9,730,000 from $22,740,000 on December 31, 1996. Deposits remained flat for the nine months ended September 30, 1997 with a 0.32% reduction to $284,748,000 on September 30, 1997 from $285,676,000 on December 31, 1996. The Company's liquidity position remained acceptable for the nine months ended September 30, 1997. Average liquid assets (cash and amounts due from banks, interest-bearing deposits in other banks, funds sold and investments securities) represented 29.91% of average deposits for nine months ended September 30, 1997 as compared to 28.97% of average deposits for nine months ended September 30, 1996 and 29.96% for calendar year 1996. Average loans represented 79.61% of average deposits for nine months ended September 30, 1997 as compared to 76.38% for nine months ended September 30, 1996 and 76.89% for calendar year 1996. Average interest-bearing deposits were 85.15% of average earning assets for nine months ended September 30, 1997 as compared to 87.28% for nine months ended September 30, 1996 and 87.09% for calendar year 1996. The Company satisfies most of its capital requirements through retained earnings. During the first three quarters of 1997, retained earnings provided $1,012,000, $809,000 and $773,000 increase in equity, respectively. Additionally, equity capital decreased by $4,000 for the first three quarters of 1997 resulting from the change in unrealized losses on securities available-for-sale, net of taxes. Thus, total equity increased by a net amount of $2,590,000 for the nine month period ended September 30, 1997. This compares to growth in equity from retained earnings of $665,000, $635,000 and $757,000, respectively for the nine month period ended September 30, 1996. Additionally, equity capital decreased by $269,000 for the first three quarters of 1996 resulting from the change in unrealized losses on securities available-for-sale, net of taxes. Thus total equity increased by a net amount of $1,788,000 for the nine month period ended September 30, 1996. Total equity increased $2,523,000 for the 1996 calendar year. At September 30, 1997, total capital of Colony amounted to approximately $28,181,000. At September 30, 1997, there was an outstanding commitment for expenditures of approximately $1,075,000 by Broxton State Bank for a branch operation in the Douglas, Georgia market. 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 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 September 30, 1997 was 10.87% and total Tier 1 and 2 risk-based capital was 12.13%. 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 September 30, 1997 was 8.42% which exceeds the required leverage ratio standard of 4%. For the first three quarters of 1997, the Company paid quarterly dividends of $0.05 per share. The dividend payout ratio, defined as dividends per share divided by net income per share, was 11.19% for nine months ended September 30, 1997 as compared to a 13.89% dividend payout ratio for the nine month period ended September 30, 1996. For the first three quarters of 1996, the Company paid quarterly dividends of $0.05 per share. 17 At September 30, 1997, 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 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 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 September 30, 1997 was $881,000 as compared with $854,000 for the three months ended September 30, 1996, or an increase of 3.16% and net income for the nine months ended September 30, 1997 was $2,920,000 as compared with $2,348,000 for the nine months ended September 30, 1996, or an increase of 24.36%. Third quarter 1997 earnings were flat compared to the same period in 1996, though our net interest income increased to $3,702,000 in third quarter 1997 compared to $3,432,000 in third quarter 1996. The increase in net interest income was offset by salaries and benefits increasing to $1,383,000 in third quarter 1997 from $1,201,000 in third quarter 1996 due to an extra payroll period and occupancy and equipment expenses increasing to $395,000 in third quarter 1997 from $294,000 in third quarter 1996 due to additional expenses with a branch operation in Lee County, Georgia and additional depreciation expenses with equipment purchased. The net interest income was higher due to increased volume and increased net interest margin for the first three quarters in 1997 as compared to the same period in 1996. The net interest margin decreased by 3 basis points to 4.88% in third quarter 1997 as compared to 4.91% in third quarter 1996 and increased by 14 basis points to 4.97% for nine months ended September 30, 1997 as compared to 4.83% for the same period in 1996. Net interest income increased by 7.87% to $3,702,000 in third quarter 1997 from $3,432,000 for the same period in 1996 on an increase in average earnings assets to $308,155,000 in third quarter 1997 from $283,785,000 for the same period in 1996. Net interest income increased by 11.22% to $11,064,000 for nine months ended September 30, 1997 from $9,948,000 for the same period in 1996 on an increase in average earning assets to $301,139,000 for nine months ended September 30, 1997 from $278,834,000 for the same period in 1996. For the nine months ended September 30, 1997 compared to the same period in 1996, average loans increased by $15,991,000 or 7.65%, average Federal Funds sold decreased by $1,312,000 or 9.46%, average investment securities increased by $6,956,000, or 12.47% and average interest bearing deposits in other banks increased by $670,000 or 614.67%, resulting in a net increase in average earning assets of $22,305,000 or 8.00%. The net increase in average earning assets was funded by a net increase in average deposits of 5.41% to $282,719,000 for nine months ended September 30, 1997 from $268,206,000 for the same period in 1996. Average interest-bearing deposits increased by 5.69% to $256,415,000 for nine months ended September 30, 1997 compared to $242,609,000 for nine months ended September 30, 1996, while average noninterest-bearing deposits represented 9.30% of average total deposits for nine months ended September 30, 1997 as compared to 9.54% for the same period in 1996 and 9.70% for calendar year 1996. Interest expense increased for the three months ended September 30, 1997 by $277,000 compared to the same period in 1996 and increased by $534,000 for the nine months ended September 30, 1997 compared to the same period in 1996. The increase in interest expense is primarily attributable to the increase in average interest-bearing deposits to $256,415,000 for the nine months ended September 30, 1997 compared to $242,609,000 for nine months ended September 30, 1996. The combination of an increase in the net interest margin and increased average earning assets resulted in an increase in net interest income of $270,000 for third quarter 1997 compared to the same period in 1996 and an increase in net interest income of $1,116,000 for nine months ended September 30, 1997 compared to the same period in 1996. 18 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 was $332,000 for the three months ended September 30, 1997 as compared to $405,000 for the same period in 1996, representing a decrease in the provision of $73,000 or 18.02%. The provision for loan losses was $1,085,000 for the nine months ended September 30, 1997 compared to $1,550,000 for the same period in 1996 representing a decrease of $465,000 or 30.00%. The decrease in the provision for loan losses during the first nine months of 1997 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 101.51% of the provision for loan losses in third quarter 1997 as compared to 8.15% in the third quarter of 1996. Net loan charge-offs represented 77.70% of the provision for loan losses in the nine month period ended September 30, 1997 as compared to 58.52% of the provision for loan losses in the nine month period ended September 30, 1996. During the first nine months of 1997 and 1996, a net of $843,000 and $907,000, respectively was charged-off. Net loan charge-offs for the nine months ended September 30, 1997 represented 0.37% of average loans outstanding as compared to 0.43% for nine months ended September 30, 1996. At September 30, 1997, the allowance for loan losses was 1.94% of total loans outstanding as compared to an allowance for loan losses of 2.15% at September 30, 1996 and 2.14% at December 31, 1996. Asset quality continued to improve in the third quarter of 1997 as the ratio of nonperforming assets to loans and other real estate decreased to 3.11% from 4.84% in the third quarter of 1996. The loan loss reserve of 1.94% of total loans outstanding provided coverage of 75.39% of nonperforming loans and 63.31% of nonperforming assets, up from 59.46% and 44.88% in the third quarter of 1996, respectively. The determination of the reserve rests upon management's judgment about factors affecting loan quality and assumptions about the economy. Management considers the September 30, 1997 allowance for loan losses adequate to cover potential losses in the loan portfolio. Non-interest income consists primarily of service charges on deposit accounts. Service charges on deposit accounts amounted to $457,000 in third quarter 1997 compared to $463,000 in third quarter 1996, or an decrease of 1.30% and amounted to $1,366,000 for nine months ended September 30, 1997 compared to $1,333,000 for nine months ended September 30, 1996, or an increase of 2.48%. All other non-interest income decreased by $57,000 to $128,000 for third quarter 1997 from $185,000 for third quarter, 1996 and all other non-interest income decreased by $86,000 to $573,000 for nine months ended September 30, 1997 from $659,000 for nine months ended September 30, 1996. The nine month period ended September 30, 1996 included a one-time booking of credit life insurance fees approximating $45,000 to account for the variance in the nine months ended September 30, 1997 compared to the same period in 1996. Non-interest expense increased by 10.43% to $2,689,000 in three months ended September 30, 1997 from $2,435,000 for the same period in 1996. Salaries and benefits increased by 15.15% to $1,383,000 in third quarter 1997 from $1,201,000 in third quarter 1996 and was attributable to an increase in employees for an additional branch bank and an additional payroll period in third quarter 1997 compared to the same period in 1996. Occupancy and equipment expenses increased 34.35% in three months ended September 30, 1997 to $395,000 from $294,000 in the same period in 1996. This increase was attributable to the additional branch location and increased depreciation with our technological equipment purchases in 1997. All other non-interest expenses remained flat as third quarter 1997 expenses totaled $911,000 compared to $940,000 for third quarter 1996. Non-interest expense increased by 10.02% to $7,693,000 for nine month period ended September 30 1997 compared to $6,992,000 for the same period in 1996. This increase was primarily attributable to additional staffing at the branch location, and additional payroll period in third quarter 1997 and additional occupancy and equipment expenses associated with the new branch location and technological equipment purchases. Income before taxes increased by $26,000 to $1,266,000 in third quarter 1997 from $1,240,000 in third quarter 1996 and increased by $827,000 to $4,225,000 for nine months ended September 30, 1997 from $3,398,000 for the same period in 1996. The increase for both periods is primarily attributable to the increased net interest income and a reduction in the loan loss provision. Income taxes as a percentage of income before taxes decreased by 2.31% to 30.41% in third quarter 1997 as compared to 31.13% in third quarter 1996 while income taxes as a percentage of income before taxes decreased by 0.03% to 30.89% for nine months ended September 30, 1997 as compared to 30.90% for the same period in 1996. Income tax expense increased 24.29% to $1,305,000 for nine month period ended September 30, 1997 compared to $1,050,000 for the same period in 1996. 19 The Bank of Fitzgerald had been operating under a Memorandum of Understanding dating back to October, 1992 that required the Bank to maintain specified minimum capital ratios and minimum reserves for loan losses. During third quarter 1997 the Memorandum of Understanding was lifted by regulatory authorities due to the progress made at the bank. Colony is an emerging company operating in an industry filled with non-regulated competitors and a rapid pace of consolidation. With the recent growth of our company and the continued trend of consolidation, Colony recently moved into its new 8,900 square feet corporate office. The move to new offices will make our management team much more efficient and assist our expansion plans as new opportunities present themselves in the future. Colony, through it subsidiary, Broxton State Bank, has broken ground in third quarter 1997 for a branch location in Douglas, Georgia. The building will be approximately 9,000 square feet and offers the Company an opportunity to expand into the rapidly growing Douglas/Coffee County, Georgia market. In November, 1996 Colony organized the company support services into one single unit subsidiary, Colony Management Services, Inc., which will allow management of the subsidiary to focus on its primary responsibility of credit review. This will achieve timely recognition of marginal credit, better monitoring of industry concentrations, additional review follow-up, and development of credit scoring models for certain product lines. In a major cost containment initiative, the data processing section of Colony Management Services is investing over $1,000,000 in computer up-grades and software enhancement. This will allow the company to better serve our customers through improved customer data resources and state-of-the-art technological services. 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 September 30, 1997 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 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. In November 1996, Colony 20 Bankcorp, Inc. acquired Broxton State Bank and in November, 1996 formed a non- bank subsidiary, Colony Management Services, Inc. Ashburn Bank expanded its operation by branching into Lee County, Georgia in October, 1996. Broxton State Bank has announced plans to expand its operation by opening a branch office in Coffee County, Georgia in second quarter 1998. 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 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. The Company had a 3-for-2 stock split effected as a 50% stock dividend on July 1, 1997. This increased the number of outstanding shares of Colony common stock issued to 2,173,263 shares from 1,448,842. 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 September 30, 1997. 21 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. November 5, 1997 /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 22 EX-27 2 FINANCIAL DATA SCHEDULE
9 1,000 9-MOS DEC-31-1997 JAN-01-1997 SEP-30-1997 8,689 594 9,730 0 53,660 3,217 3,194 241,300 4,677 330,892 284,748 8,273 2,676 5,764 0 0 21,733 6,448 330,892 18,002 2,811 563 21,376 9,830 10,312 11,064 1,085 9 7,693 4,225 2,920 0 0 2,920 1.34 1.34 497 5,948 269 26 0 4,435 1,253 410 4,667 4,667 0 0
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