UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[ X ] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
(Fee Required)
For the Fiscal Year Ended December 31, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
(No Fee Required)
For the Transition Period from ____________ to ______________
GEORGIA 58-1492391
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State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization Identification No.)
115 SOUTH GRANT STREET, FITZGERALD, GEORGIA 31750
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(Address of Principal Executive Offices) (Zip Code)
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Securities Registered Pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which Registered
NONE
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Securities Registered Pursuant to Section 12(g) of the Act:
Indicate by check mark whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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. [X] Yes No
Indicate by check mark if the disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X]
State the aggregate market value of the voting stock held by non-affiliates of the registrant as of March 19, 2001.
Common Stock, par value $1.00 per share - $51,123,549
(APPLICABLE ONLY TO CORPORATE REGISTRANTS)
Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of March 19, 2001.
Common Stock, par value $1.00 per share - 4,445,526 shares
DOCUMENTS INCORPORATED BY REFERENCE
Location in Form 10-K Incorporated Document
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Part I
Item 3 - Legal Proceedings Page 11 of the Company's Definitive Proxy
Statement dated March 23, 2001, in
connection with its Annual Meeting to be
held on April 24, 2001.
Part III
Item 10 - Directors, Executive Pages 3, 4 and 5 of the Company's Definitive
Officers, Promoters and Control Proxy Statement dated March 23, 2001, in
Persons; Compliance with connection with its Annual Meeting to be
Section 16(a) of the Exchange held on April 24, 2001.
Act
Item 11 - Executive Compensation Pages 6, 8, 9, 10, 11 and 12 of the Company's
Definitive Proxy Statement dated March 23,
2001, in connection with its Annual Meeting
to be held on April 24, 2001.
Item 12 - Security Ownership of Beneficial Owners Pages 7 and 8 of the
Certainand Management Company's Definitive Proxy Statement dated
March 23, 2001, in connection with its Annual
Meeting to be held on April 24, 2001.
Item 13 - Certain Relationships Page 11 of the Company's Definitive Proxy
and Related Transactions Statement dated March 23, 2001 in connection
with its Annual Meeting to be held on April
24, 2001.
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Part I
Item 1
BUSINESS OF THE COMPANY AND SUBSIDIARY BANKS
COLONY BANKCORP, INC.
Colony Bankcorp, Inc. (the "Company" or "Colony") is a Georgia business corporation which was incorporated on November 8, 1982. The Company was organized for the purpose of operating as a bank-holding company under the Federal Bank-Holding Company Act of 1956, as amended, and the bank-holding company laws of Georgia (Georgia Laws 1976, p. 168, et. seq.). On July 22, 1983, the Company, after obtaining the requisite regulatory approvals, acquired 100 percent of the issued and outstanding common stock of Colony Bank of Fitzgerald (formerly The Bank of Fitzgerald), Fitzgerald, Georgia, through the merger of the Bank with a subsidiary of the Company which was created for the purpose of organizing the Bank into a one-bank holding company. Since that time, Colony Bank of Fitzgerald has operated as a wholly-owned subsidiary of the Company.
On April 30, 1984, Colony, with the prior approval of the Federal Reserve Bank of Atlanta and the Georgia Department of Banking and Finance, acquired 100 percent of the issued and outstanding common stock of Colony Bank Wilcox (formerly Community Bank of Wilcox and Pitts Banking Company), Pitts, Wilcox County, Georgia. As part of that transaction, Colony issued an additional 17,872 shares of its $10.00 par value common stock, all of which was exchanged with the holders of shares of common stock of Pitts Banking Company for 100 percent of the 250 issued and outstanding shares of common stock of Pitts Banking Company. Since the date of acquisition, the Bank has operated as a wholly-owned subsidiary of the Company.
On November 1, 1984, after obtaining the requisite regulatory approvals, Colony acquired 100 percent of the issued and outstanding common stock of Colony Bank Ashburn (formerly Ashburn Bank), Ashburn, Turner County, Georgia, for a combination of cash and interest-bearing promissory notes. Since the date of acquisition, Colony Bank Ashburn has operated as a wholly-owned subsidiary of the Company.
On September 30, 1985, after obtaining the requisite regulatory approvals, the Company acquired 100 percent of the issued and outstanding common stock of Colony Bank of Dodge County (formerly The Bank of Dodge County), Chester, Dodge County, Georgia. The stock was acquired in exchange for the issuance of 3,500 shares of common stock of Colony. Since the date of its acquisition, Colony Bank of Dodge County has operated as a wholly-owned subsidiary of the Company.
Effective July 31, 1991, the Company acquired all of the outstanding common stock of Colony Bank Worth (formerly Worth Federal Savings and Loan Association and Bank of Worth) in exchange for cash and 7,661 of the Company's common stock for an aggregate purchase price of approximately $718,000. Colony Bank Worth has operated as a wholly-owned subsidiary of the Company.
On November 8, 1996, Colony organized Colony Management Services, Inc. to provide support services to each subsidiary. Services provided include loan and compliance review, internal audit and data processing.
Part I (Continued)
Item 1 (Continued)
On November 30, 1996, the Company acquired Broxton State Bank (name subsequently changed to Colony Bank Southeast) in a business combination accounted for as a pooling of interests. Broxton State Bank became a wholly-owned subsidiary of the Company through the exchange of 157,735 shares of the Company's common stock for all of the outstanding stock of Broxton State Bank. All financial information for 1996 presented in this document is based on the assumption that the companies were combined for the full year, and financial information presented for prior years has been restated to give effect to the combination.
On March 2, 2000, Colony Bank Ashburn purchased the capital stock of Georgia First Mortgage Company in a business combination accounted for as a purchase. The purchase price of $346,725 was the fair value of the net assets of Georgia First Mortgage at the date of purchase. Georgia First Mortgage is primarily engaged in residential real estate mortgage lending in the state of Georgia.
The Company conducts all of its operations through its bank subsidiaries. A brief description of each Bank's history and business operations is discussed below.
COLONY BANK OF FITZGERALD
History and Business of the Bank
Colony Bank of Fitzgerald is a state banking institution chartered under the laws of Georgia on November 10, 1975. Since opening on April 15, 1976, the Bank has continued a general banking business and presently serves its customers from two locations, the main office in Fitzgerald, Georgia at 302 South Main Street and a full-service branch located on Highway 129 South.
The Bank operates a full-service banking business and engages in a broad range of commercial banking activities, including accepting customary types of demand and time deposits; making individual, consumer, commercial and installment loans; money transfers; safe deposit services; and making investments in United States Government and municipal securities. The Bank does not offer trust services other than acting as custodian of individual retirement accounts.
The data processing work of the Bank is processed by Colony Management Services, Inc., a wholly-owned subsidiary of Colony Bankcorp, Inc.
Colony Bank of Fitzgerald acts as an agent for Visa Card and MasterCard through The Bankers Bank which allows merchants to accept Visa Card and MasterCard and deposit the charge tickets in their accounts with the Bank.
The Bank also offers its customers a variety of checking and savings accounts. The installment loan department makes both direct consumer loans and also purchases retail installment contracts from local automobile dealers and other sellers of consumer goods.
The Bank serves the residents of Fitzgerald and surrounding areas of Ben Hill County which has a population of approximately 16,000 people. Manufacturing facilities located in Ben Hill County employ many people and are the most significant part of the local economy. Ben Hill County also has a large agricultural industry producing timber and row crops. Major row crops are peanuts, tobacco, soybeans and corn.
Part I (Continued)
Item 1 (Continued)
A history of the Bank's financial position for fiscal years ended 2000, 1999 and 1998 is as follows:
2000 1999 1998
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Total Assets $113,939,142 $110,339,062 $100,903,605
Total Deposits 93,345,535 92,363,903 87,756,795
Total Stockholders' Equity 10,878,703 9,848,839 9,593,148
Net Income 1,684,450 1,724,382 1,665,050
Number of Issued and Outstanding
Shares 90,000 90,000 90,000
Book Value Per Share $ 120.87 $ 109.43 $ 106.59
Net Income Per Share 18.72 19.16 18.50
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The Bank's main offices are housed in a building located in Fitzgerald, Georgia. The main offices, which are owned by the Bank, consist of approximately 13,000 square feet, three drive-in windows and an adjacent parking lot. Banking operations also are conducted from the southside branch which is located at South Dixie Highway, Fitzgerald, Georgia. This branch is owned by the Bank and has been in continuous operation since it opened in December 1977. The branch is a single story building with approximately 850 square feet and is operated with three drive-in windows.
Competition
The banking business in Ben Hill County is highly competitive. The Bank competes primarily with five other commercial banks operating in Ben Hill County. Additionally, the Bank competes with one credit union located in the area and, to a lesser extent, insurance companies and governmental agencies. The banking industry is also experiencing increasing competition for deposits from less traditional sources such as money market and mutual funds. The Bank also offers "NOW" accounts, individual retirement accounts, simplified pension plans, KEOGH plans and custodial accounts for minors.
Correspondents
As of December 31, 2000, the Bank had correspondent relationships with two other banks. The Bank's principal correspondent is The Bankers Bank located in Atlanta, Georgia. These correspondent banks provide certain services to the Bank such as investing its excess funds, processing checks and other items, buying and selling federal funds, handling money fund transfers and exchanges, shipping coins and currency, providing security and safekeeping of funds and other valuable items, handling loan participations and furnishing management investment advice on the Bank's securities portfolio.
Part I (Continued)
Item 1
COLONY BANK ASHBURN
History and Business of the Bank
Colony Bank Ashburn was chartered as a state commercial bank in 1900 and currently operates under the Financial Institutions Code of Georgia. The Bank's deposits are insured up to $100,000 per account by the Federal Deposit Insurance Corporation. The Bank conducts business at the offices located at 515 East Washington and 416 East Washington in Ashburn, Turner County, Georgia, 1553 U. S. Highway 19 South in Lee County, Georgia, 137 Robert B. Lee Drive in Leesburg, Lee County, Georgia and 1031 24th Ave., E., Cordele, Georgia. The offices in Leesburg and Cordele operate under the name Colony Bank. The Bank's business largely consists of (1) the acceptance of demand, savings and time deposits; (2) the making of loans to consumers, business and other institutions; (3) investment of excess funds and sale of federal funds, U.S. Treasury obligations and state, county and municipal bonds; (4) investment services through PRIMEVEST Financial Services; and (5) internet online banking. The Bank does little mortgage lending and it does not offer trust services. It acts as an agent for Visa Card and MasterCard through The Bankers Bank.
A history of the Bank's financial position for fiscal years ended 2000, 1999 and 1998 is as follows:
2000 1999 1998
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Total Assets $182,183,214 $143,863,554 $114,402,843
Total Deposits 162,798,006 123,360,686 98,435,652
Total Stockholders' Equity 11,916,668 10,236,521 9,638,318
Net Income 1,585,150 1,427,273 1,403,712
Number of Issued and Outstanding
Shares 50,000 50,000 50,000
Book Value Per Share $ 238.33 $ 204.73 $ 192.77
Net Income Per Share 31.70 28.55 28.07
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Banking Facilities
The Bank's main office is located at 515 East Washington Street in Ashburn and consists of a building of approximately 13,000 square feet of office and banking space with an adjacent parking lot. A branch facility is located across the street from the main office and consists of a single story building with approximately 850 square feet and is operated with three drive-in windows. During 1996, the Bank entered into a 5-year lease agreement with Winn-Dixie Stores, Inc. to operate a retail banking facility at Winn Dixie's Lee County location. The office consists of 350 square feet and includes 3 teller positions, a new accounts area and a private office. The Bank opened a second Lee County office in October 1998. This full service facility, located within the city limits of Leesburg, consists of a two story brick building of approximately 5,000 square feet and includes three drive-in lanes. A fourth branch office opened in Cordele, Crisp County, Georgia on October 4, 1999. The new full-service branch facility consists of approximately 5,500 square feet, with four drive-in lanes and one automated teller machine. As a result of the purchase of Georgia First Mortgage Company, the Bank has a mortgage lending office at 616 North Westover Blvd., Albany, Dougherty County, Georgia. All occupied premises, with the exception of the Lee County Winn Dixie and the Albany locations, are owned by the Bank.
Part I (Continued)
Item 1 (Continued)
Competition
The banking business is highly competitive. The Bank competes in Turner County primarily with Community National Bank which operates out of one facility in Ashburn, Georgia. The Bank also competes with other financial institutions, including credit unions and finance companies and, to a lesser extent, with insurance companies and certain governmental agencies. The banking industry is also experiencing increased competition for deposits from less traditional sources such as money market and mutual funds.
Correspondents
Colony Bank Ashburn has correspondent relationships with the following banks:
The Bankers Bank in Atlanta, Georgia; SunTrust Bank, N.A. in Atlanta, Georgia;
Colony Bank of Fitzgerald in Fitzgerald, Georgia; AMSouth Bank of Alabama in
Birmingham, Alabama; and the Federal Home Loan Bank in Atlanta, Georgia. The
correspondent relationships facilitate the transactions of business by means of
loans, letters of credit, acceptances, collections, exchange services and data
processing. As compensation for these services, the Bank maintains balances with
its correspondents in noninterest-bearing accounts.
COLONY BANK WILCOX
History and Business of the Bank
The Bank was chartered on June 2, 1906 under the name "Pitts Banking Company." The name of the Bank subsequently was changed to Community Bank of Wilcox on June 1, 1991 and then to Colony Bank Wilcox in 2000. The Bank currently operates under the Financial Institutions Code of Georgia. The Bank's deposits are insured up to $100,000 per account by the Federal Deposit Insurance Corporation. The Bank conducts business at locations in Pitts and Rochelle in Wilcox County, Georgia. The Bank's business consists of: (1) the acceptance of demand, savings and time deposits; (2) the making of loans to consumers, business and other institutions; (3) investment of excess funds and sale of federal funds, U.S. Treasury obligations and state, county and municipal bonds; and (4) certain other miscellaneous financial services usually handled for customers by commercial banks. The Bank does little mortgage lending and it does not offer trust services.
Part I (Continued)
Item 1 (Continued)
A history of the Bank's financial position for fiscal years ended 2000, 1999 and 1998 is as follows:
2000 1999 1998
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Total Assets $34,194,626 $29,583,143 $28,075,187
Total Deposits 29,707,328 25,452,369 24,024,259
Total Stockholders' Equity 2,827,859 2,494,864 2,431,843
Net Income 380,562 330,504 288,897
Number of Issued and Outstanding
Shares 250 250 250
Book Value Per Share $ 11,311.00 $ 9,979.46 $ 9,727.37
Net Income Per Share 1,522.25 1,322.02 1,155.59
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Banking Facilities
The Bank operates out of two locations at 105 South Eighth Street, Pitts, Georgia and at Highway 280, Rochelle, Georgia, both of which are in Wilcox County. The Pitts office consists of a building of approximately 2,200 square feet of usable office and banking space which it owns. The facility contains one drive-in window and three teller windows. The Rochelle office, which opened in August 1989, consists of a building of approximately 5,000 square feet of usable office and banking space, which is owned by the Company.
Competition
The banking business is highly competitive. The Bank competes in Wilcox County primarily with five commercial banks and one savings and loan institution. In addition, the Bank competes with other financial institutions, including credit unions and finance companies and, to a lesser extent, insurance companies and certain governmental agencies. The banking industry is also experiencing increased competition for deposits from less traditional sources such as money market and mutual funds.
Correspondents
The Bank has correspondent relationships with the following banks: The Bankers Bank in Atlanta, Georgia; Federal Home Loan Bank, in Atlanta, Georgia; AMSouth Bank of Alabama in Birmingham, Alabama; and SunTrust Bank, N.A., in Atlanta, Georgia. The correspondent relationships facilitate the transactions of business by means of loans, letters of credit, acceptances, collections, exchange services and data processing. As compensation for these services, the Bank maintains balances with its correspondents in noninterest-bearing accounts.
Part I (Continued)
Item 1 (Continued)
COLONY BANK OF DODGE COUNTY
History and Business of the Bank
The Bank was chartered on June 14, 1966 under the name "Bank of Chester." The name of the Bank subsequently was changed to The Bank of Dodge County on April 15, 1983 and then to Colony Bank of Dodge County in 2000. The Bank currently operates under the Financial Institutions Code of Georgia. The Bank's deposits are insured up to $100,000 per account by the Federal Deposit Insurance Corporation. The Bank's business consists of: (1) the acceptance of demand, savings and time deposits; (2) the making of loans to consumers, business and other institutions; (3) investment of excess funds in the sale of federal funds, U.S. Treasury obligations and state, county and municipal bonds; and (4) certain other miscellaneous financial services usually handled for customers by commercial banks. The Bank does little mortgage lending and it does not offer trust services.
A history of the Bank's financial position for fiscal years ended 2000, 1999 and 1998 is as follows:
2000 1999 1998
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Total Assets $50,553,863 $45,344,816 $45,353,965
Total Deposits 43,984,777 41,211,472 41,464,683
Total Stockholders' Equity 4,100,184 3,763,451 3,555,744
Net Income 452,381 531,394 382,605
Number of Issued and Outstanding
Shares 1,750 1,750 1,750
Book Value Per Share $ 2,343.00 $ 2,150.54 $ 2,031.85
Net Income Per Share 258.50 303.65 218.63
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Banking Facilities
The Bank's main office is located at 600 Oak Street in Eastman, Dodge County, Georgia and consists of a building of approximately 11,000 square feet of office and banking space with an adjacent parking lot and is operated with three drive-in windows. The branch facility is located in Chester, Dodge County, Georgia and consists of a building with approximately 2,700 square feet of office and banking space and an adjacent parking lot. A second branch was opened during 2000 in Soperton, Treutlen County, Georgia at 310 Main Street. The branch has approximately 1,600 square feet of banking and office space with 3 walk-up teller units and 2 drive-in windows. The Bank owns all of the premises which it occupies.
Competition
The banking business is highly competitive. The Bank competes in the Dodge County area with two other banks. In addition, the Bank competes with other financial institutions, including credit unions and finance companies and, to a lesser extent, insurance companies and certain governmental agencies. The banking industry is also experiencing increased competition for deposits from less traditional sources such as money market and mutual funds.
Part I (Continued)
Item 1 (Continued)
Correspondents
The Bank has correspondent relationships with the following banks: The Bankers Bank in Atlanta, Georgia; The Federal Home Loan Bank in Atlanta, Georgia; and SunTrust Bank, N.A., in Atlanta, Georgia. The correspondent relationships facilitate the transactions of business by means of loans, letters of credit, acceptances, collections, exchange services and data processing. As compensation for these services, the Bank maintains balances with its correspondents in noninterest-bearing accounts.
COLONY BANK WORTH
Colony Bank Worth operated as a savings and loan stock association until it was acquired by the Company on July 31, 1991 at which time the association changed its name to Bank of Worth (subsequently named Colony Bank Worth) and became a state-chartered commercial bank. The Bank conducts business at its offices located at 402 West Franklin Street, Sylvester, Worth County, Georgia, 605 West Second Street, Tifton, Tift County, Georgia and 621 East By-Pass, NE, Moultrie, Colquitt County, Georgia. The Bank's business consists of: (1) the acceptance of demand, savings and time deposits; (2) the making of loans to consumers, businesses and other institutions; (3) investment of excess funds and sale of federal funds, U.S. Treasury obligations and state, county and municipal bonds; and (4) certain other miscellaneous financial services usually handled for customers by commercial banks. The Bank's deposits are insured up to $100,000 per account by the Federal Deposit Insurance Corporation. The Bank's loan portfolio is heavily concentrated in mortgage loans due to the fact that it was previously a savings and loan. The Bank does not offer trust services. It acts as an agent for Visa Card and MasterCard through The Bankers Bank.
A history of the Bank's financial position for fiscal years ended 2000, 1999 and 1998 is as follows:
2000 1999 1998
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Total Assets $75,374,448 $57,828,759 $55,396,303
Total Deposits 66,833,730 53,154,868 51,076,265
Total Stockholders' Equity 5,424,739 4,298,618 3,969,437
Net Income 501,784 500,710 454,744
Number of Issued and Outstanding
Shares 95,790 95,790 95,790
Book Value Per Share $ 56.63 $ 44.88 $ 41.44
Net Income Per Share 5.24 5.23 4.75
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Banking Facilities
The Bank's main office is housed in a building located in Sylvester, Georgia. The building, which is owned by the Bank, consists of approximately 13,000 square feet, a drive-in window and an adjacent parking lot. On June 15, 1998, the Bank opened a branch office at 605 West Second Street, Tifton, Georgia. The office is a single story building of approximately 2,300 square feet with one attached drive-in window. A second branch office opened in 2000 in Moultrie, Colquitt County, Georgia. This branch building of approximately 5,000 square feet includes 3 walk-up teller units and 4 drive-in windows.
Part I (Continued)
Item 1 (Continued)
Competition
The banking business in Worth County, Tift County and Colquitt County is highly competitive. The Bank competes primarily with two other commercial banks operating in Worth County, six other commercial banks in Tift County and six other commercial banks in Colquitt County. Additionally, the Bank competes with credit unions of employers located in the area and, to a lesser extent, insurance companies and governmental agencies. The banking industry is also experiencing increasing competition for deposits from less traditional sources such as money market and mutual funds.
Correspondents
As of December 31, 2000, the Bank had correspondent relationships with five other banks. The Bank's principal correspondent is The Bankers Bank located in Atlanta, Georgia. These correspondent banks provide certain services to the Bank such as investing its excess funds, processing checks and other items, buying and selling federal funds, handling money fund transfers and exchanges, shipping coins and currency, providing security and safekeeping of funds and other valuable items, handling loan participations and furnishing management investment advice on the Bank's securities portfolio.
COLONY BANK SOUTHEAST
History and Business of the Bank
Colony Bank Southeast, formerly Broxton State Bank, was chartered under the laws of Georgia on August 4, 1966 and opened for business on September 1, 1966, having absorbed "Citizens Bank," a private, unincorporated bank.
The Bank is a full-service bank offering a wide variety of banking services targeted at all sectors of the Bank's primary market area. The Bank offers customary types of demand, savings, time and individual retirement accounts; installment, commercial and real estate loans; home mortgages and personal lines-of-credit; Visa and Master Card services through its correspondent, The Bankers Bank; safe deposit and night depository services; cashier's checks, money orders, traveler's checks, wire transfers and various other services that can be tailored to the customer's needs. The Bank does not offer trust services at this time.
The Bank serves the residents of Coffee County, Georgia, which has a population of approximately 32,000.
Part I (Continued)
Item 1 (Continued)
A history of the Bank's financial position for fiscal years ended 2000, 1999 and 1998 is as follows:
2000 1999 1998
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Total Assets $61,632,999 $46,012,865 $34,925,063
Total Deposits 53,591,006 39,249,813 28,405,278
Total Stockholders' Equity 4,569,285 3,434,884 3,308,576
Net Income 485,523 210,807 59,204
Number of Issued and Outstanding
Shares 50,730 50,730 50,730
Book Value Per Share $ 90.07 $ 67.71 $ 65.22
Net Income Per Share 9.57 4.16 1.17
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Banking Facilities
The Bank operates one banking office located at 401 North Alabama Street, Broxton, Georgia which consists of approximately 5,000 square feet of space. The building is equipped with four alarm-equipped vaults, one for safe-deposit boxes and cash storage, one for night depository service and two for record storage. The building has two drive-in systems, one commercial drawer and one pneumatic tube system. Colony Bank Southeast opened a branch office in Douglas, Georgia on July 6, 1998. The two story brick building located at 625 West Ward Street consists of approximately 8,300 square feet and provides four drive-in lanes for customer convenience. A second Douglas office was opened on September 8, 1999 and consists of approximately 1,200 square feet with three drive-in lanes and one automated teller machine. All occupied premises are owned by the Bank, with the exception of the newly opened branch located at 1351 A SE Bowens Mill Road, Douglas, Georgia.
Competition
The banking business in Coffee County is highly competitive. Colony Bank Southeast competes with nine other banks and one credit union in Douglas, Georgia. The banking industry is also experiencing increased competition for deposits from less traditional sources such as money market and mutual funds.
Correspondents
The Bank has correspondent relationships with the following banks: Bank of America, Atlanta, Georgia; SunTrust Bank, Atlanta, Georgia; The Bankers Bank, Atlanta, Georgia; the Federal Home Loan Bank in Atlanta, Georgia and Columbus Bank & Trust, Columbus, Georgia. The correspondent relationships facilitate the transactions of business by means of loans, letters-of-credit, acceptances, collections, exchange services and data processing. As compensation for these services, the Bank maintains balances with its correspondents in noninterest-bearing accounts.
Part I (Continued)
Item 1 (Continued)
EMPLOYEES
As of December 31, 2000, Colony Bankcorp, Inc. and its subsidiaries employed 189 full-time employees and 26 part-time employees. Colony considers its relationship with its employees to be excellent.
The subsidiary banks have noncontributory profit-sharing plans covering all employees subject to certain minimum age and service requirements. All Banks made contributions for all eligible employees in 2000. In addition, Colony Bankcorp, Inc. and its subsidiaries maintain a comprehensive employee benefit program providing, among other benefits, hospitalization, major medical insurance and life insurance. Management considers these benefits to be competitive with those offered by other financial institutions in south Georgia. Colony's employees are not represented by any collective bargaining group.
SUPERVISION AND REGULATION
Bank holding companies and banks are regulated under both federal and state law. The following is a brief summary of certain statutes and rules and regulations affecting the Company, the Banks, and to a more limited extent, the Company's subsidiaries.
This summary is qualified in its entirety by reference to the particular statute and regulatory provision referred to and is not intended to be an exhaustive description of the statutes or regulations applicable to the business of the Company and its subsidiaries. The scope of regulation and permissible activities of the Company and its subsidiaries is subject to change by future federal and state legislation. Supervision, regulation and examination of the Company and the Banks by the bank regulatory agencies are intended primarily for the protection of depositors rather than shareholders of the Company.
REGULATION OF THE COMPANY
Colony is a registered holding company under the Federal Bank Holding Company Act and the Georgia Bank Holding Company Act and is regulated under such Act by the Federal Reserve and by the Georgia Department of Banking and Finance (the "Georgia Department"), respectively. As a bank holding company, the Company is required to file annual reports with the Federal Reserve and the Georgia Department and provide such additional information as the applicable regulator may require pursuant to the Federal and Georgia Bank Holding Company Acts. The Federal Reserve and the Georgia Department may also conduct examinations of the Company to determine whether the Company is in compliance with Bank Holding Company Acts and regulations promulgated thereunder.
In addition, the Federal Bank Holding Company Act requires every bank holding company to obtain the prior approval of the Federal Reserve before: (1) acquiring direct or indirect ownership or control of more than 5 percent of the voting shares of any bank; (2) acquiring all or substantially all of the assets of a bank; and (3) merging or consolidating with another bank holding company.
Part I (Continued)
Item 1 (Continued)
The Georgia Department requires similar approval prior to the acquisition of any additional banks from every Georgia bank holding company. A Georgia bank holding company is generally prohibited from acquiring ownership or control of 5 percent or more of the voting shares of a bank unless the bank being acquired is either a bank for purposes of the Federal Bank Holding Company Act, or a federal or state savings and loan association or savings bank or federal savings bank whose deposits are insured by the Federal Savings and Loan Insurance Corporation and such bank has been in existence and continuously operating as a bank for a period of five years or more prior to the date of application to the Department for approval of such acquisition.
The Federal Reserve (pursuant to regulation and published statements) has maintained that a bank holding company must serve as a source of financial strength to its subsidiary banks. In adhering to the Federal Reserve policy, the Company may be required to provide financial support to the Bank at a time when, absent such Federal Reserve policy, the Company may not deem it advisable to provide such assistance. Similarly, the Federal Reserve also monitors the financial performance and prospects of nonbank subsidiaries with an inspection process to ascertain whether such nonbanking subsidiaries enhance or detract from the Company's ability to serve as a source of strength for the Banks.
CAPITAL REQUIREMENTS
The holding company is subject to regulatory capital requirements imposed by the Federal Reserve applied on a consolidated basis with the bank owned by the holding company. Bank holding companies must have capital (as defined in the rules) equal to eight (8) percent of risk-weighted assets. The risk weights assigned to assets are based primarily on credit risk. For example, securities with an unconditional guarantee by the United States government are assigned the least risk category. A risk weight of 50 percent is assigned to loans secured by owner-occupied one-to-four family residential mortgages. The aggregate amount of assets assigned to each risk category is multiplied by the risk weight assigned to that category to determine the weighted values, which are added together to determine total risk-weighted assets.
The Federal Reserve also requires the maintenance of minimum capital leverage ratios to be used in tandem with the risk-based guidelines in assessing the overall capital adequacy of bank holding companies. The guidelines define capital as either Tier 1 (primarily shareholder equity) or Tier 2 (certain debt instruments and a portion of the allowance for loan losses). Tier 1 capital for banking organizations includes common equity, minority interest in the equity accounts of consolidated subsidiaries, qualifying noncumulative perpetual preferred stock and qualifying cumulative perpetual preferred stock. (Cumulative perpetual preferred stock is limited to 25 percent of Tier 1 capital.) Tier 1 capital excludes goodwill; amounts of mortgage servicing assets, nonmortgage servicing assets, and purchased credit card relationships that, in the aggregate, exceed 100 percent of Tier 1 capital; nonmortgage servicing assets and purchased credit card relationships that in the aggregate, exceed 25 percent of Tier 1 capital; all other identifiable intangible assets; and deferred tax assets that are dependent upon future taxable income, net of their valuation allowance, in excess of certain limitations.
Part I (Continued)
Item 1 (Continued)
Effective June 30, 1998, the Board has established a minimum ratio of Tier 1 capital to total assets of 3.0 percent for strong bank holding companies (rated composite "1" under the BOPEC rating system of bank holding companies), and for bank holding companies that have implemented the Board's risk-based capital measure for market risk. For all other bank holding companies, the minimum ratio of Tier 1 capital to total assets is 4.0 percent. Banking organizations with supervisory, financial, operational, or managerial weaknesses, as well as organizations that are anticipating or experiencing significant growth, are expected to maintain capital ratios well above the minimum levels. Higher capital ratios may be required for any bank holding company if warranted by its particular circumstances or risk profile. Bank holding companies are required to hold capital commensurate with the level and nature of the risks, including the volume and severity of problem loans, to which they are exposed.
At December 31, 2000, Colony exceeded the minimum Tier 1, risk-based and leverage ratios. The table which follows sets forth certain capital information for the Company as of December 31, 2000.
CAPITAL ADEQUACY
($ in Thousands)
December 31, 2000
----------------------
Amount Percent
----------- ---------
Leverage Ratio
Actual $39,817,428 7.80%
Minimum Required (1) 20,397,120 4.00%
Risked-Based Capital:
Tier 1 Capital
Actual 39,817,428 9.63%
Minimum Required 16,534,020 4.00%
Total Capital
Actual 44,990,413 10.88%
Minimum Required 33,068,040 8.00%
|
(1) Represents the minimum requirement. Institutions that are contemplating acquisitions or anticipating or experiencing significant growth may be required to maintain a substantially higher leverage ratio.
THE RIEGLE-NEAL INTERSTATE BANKING AND BRANCHING EFFICIENCY ACT
Prior to the enactment of the Interstate Banking and Branching Efficiency Act of 1994 (the "Riegle-Neal Act"), interstate expansion of bank holding companies was prohibited, unless such acquisition was specifically authorized by a statute of the state in which the target bank was located. Pursuant to the Riegle-Neal Act, effective September 29, 1995, an adequately capitalized and adequately managed holding company may acquire a bank across state lines, without regard to whether such acquisition is permissible under state law. A bank holding company is considered to be "adequately capitalized" if it meets all applicable federal regulatory capital standards.
Part I (Continued)
Item 1 (Continued)
While the Riegle-Neal Act precludes a state from entirely insulating its banks from acquisition by an out-of-state holding company, a state may still provide that a bank may not be acquired by an out-of-state company unless the bank has been in existence for a specified number of years, not to exceed five years. Additionally, the Federal Reserve is directed not to approve an application for the acquisition of a bank across state lines if: (i) the applicant bank holding company, including all affiliated insured depository institutions, controls or after the acquisition would control, more than ten (10) percent of the total amount of deposits of all insured depository institutions in the United States (the "ten percent concentration limit") or (ii) the acquisition would result in the holding company controlling thirty (30) percent or more of the total deposits of insured depository institutions in any state in which the holding company controlled a bank or branch immediately prior to the acquisition (the "thirty percent concentration limit"). States may waive the thirty percent concentration limit, or may make the limits more or less restrictive, so long as they do not discriminate against out-of-state bank holding companies.
The Riegle-Neal Act also provides that, beginning on June 1, 1997, banks located in different states may merge and operate the resulting institution as a bank with interstate branches. However, a state may (i) prevent interstate branching through mergers by passing a law prior to June 1, 1997 that expressly prohibits mergers involving out-of-state banks, or (ii) permit such merger transactions prior to June 1, 1997. Under the Riegle-Neal Act, an interstate merger transaction may involve the acquisition of a branch of an insured bank without the acquisition of the bank itself, but only if the law of the state in which the branch is located permits this type of transaction.
Under the Riegle-Neal Act, a state may impose certain conditions on a branch of an out-of-state bank resulting from an interstate merger so long as such conditions do not have the effect of discriminating against out-of-state banks or bank holding companies, other than on the basis of a requirement of nationwide reciprocal treatment. The ten (10) percent concentration limit and the thirty (30) percent concentration limit described above, as well as the rights of the states to modify or waive the thirty (30) percent concentration limit, apply to interstate bank mergers in the same manner as they apply to the acquisition of out-of-state banks.
A bank resulting from an interstate merger transaction may retain and operate any office that any bank involved in the transaction was operating immediately before the transaction. After completion of the transaction, the resulting bank may establish or acquire additional branches at any location where any bank involved in the transaction could have established or acquired a branch. The Riegle-Neal Act also provides that the appropriate federal banking agency may approve an application by a bank to establish and operate an interstate branch in any state that has in effect a law that expressly permits all out-of-state banks to establish and operate such a branch.
In response to the Riegle-Neal Act, effective June 1, 1997, Georgia permitted interstate branching, although only through merger and acquisition. In addition, Georgia law provides that a bank may not be acquired by an out-of-state company unless the bank has been in existence for five years. Georgia has also adopted the thirty percent concentration limit, but permits state regulators to waive it on a case-by-case basis.
Part I (Continued)
Item 1 (Continued)
THE GRAMM-LEACH-BLILEY ACT OF 1999
The Gramm-Leach-Bliley Act (the "GLB Act") dramatically increases the ability of eligible banking organizations to affiliate with insurance, securities and other financial firms and insured depository institutions. The GLB Act permits eligible banking organizations to engage in activities and to affiliate with nonbank firms engaged in activities that are financial in nature or incidental to such financial activities and also includes some additional activities that are complementary to such financial activities.
The definition of activities that are financial in nature is handled by the GLB Act in two ways. First, there is a laundry list of activities that are designated as financial in nature. Second, the authorization of new activities as financial in nature or incidental to a financial activity requires a consultative process between the Federal Reserve Board and the Secretary of the Treasury with each having the authority to veto proposals of the other. The Federal Reserve Board has the discretion to determine what activities are complementary to financial activities.
The precise scope of the authority to engage in these new financial activities, however, depends on the type of banking organization, whether it is a holding company, a subsidiary of a national bank, or a national bank's direct conduct. The GLB Act repealed two sections of the Glass-Stegall Act, Sections 20 and 32, which restricted affiliations between securities firms and banks. The GLB Act authorizes two types of banking organizations to engage in expanded securities activities. The GLB Act authorizes a new type of bank holding company called a financial holding company to have a subsidiary company that engages in securities underwriting and dealing without limitation as to the types of securities involved. The GLB Act also permits a national bank to control a financial subsidiary that can engage in many of the expanded securities activities permitted for financial holding companies. However, additional restrictions apply to national bank financial subsidiaries.
Since the Bank Holding Company Act of 1956, and it subsequent amendments, federal law has limited the types of activities that are permitted for a bank holding company, and it has also limited the types of companies that a bank holding company can control. The GLB Act retains the bank holding company regulatory framework, but adds a new provision that authorizes enlarged authority for the new financial holding company form of organization to engage in any activity of a financial nature or incidental thereto. A new Section 4(k) of the Bank Holding Company Act provides that a financial holding company may engage in any activity, and may acquire and retain shares of any company engaged in any activity, that the Federal Reserve Board, in coordination with the Secretary of the Treasury, determines by regulation or order to be financial in nature or incidental to such financial activities, or is complementary to financial activities.
The GLB Act also amends the Bank Holding Company Act to prescribe eligibility criteria for financial holding companies, defines the scope of activities permitted for bank holding companies that do not become financial holding companies, and establishes consequences for financial holding companies that cease to maintain the status needed to qualify as a financial holding company.
Part I (Continued)
Item 1 (Continued)
There are three special criteria to qualify for the enlarged activities and affiliation. First, all the depository institutions in the bank holding company organization must be well-capitalized. Second, all of the depository institutions of the bank holding company must be well managed. Third, the bank holding company must have filed a declaration of intent with the Federal Reserve Board stating that it intends to exercise the expanded authority under the GLB Act and certify to the Federal Reserve Board that the bank holding company's depository institutions meet the well-capitalized and well managed criteria. The GLB Act also requires the bank to achieve a rating of satisfactory or better in meeting community credit needs at the most recent examination of such institution under the Community Reinvestment Act.
Once a bank holding company has filed a declaration of its intent to be a financial holding company, as long as there is no action by the Federal Reserve Board giving notice that it is not eligible, the company may proceed to engage in the activities and enter into the affiliations under the large authority conferred by the GLB Act's amendments to the Bank Holding Company Act. The holding company does not need prior approval from the Federal Reserve Board to engage in activities that the GLB Act identifies as financial in nature or that the Federal Reserve Board has determined to be financial in nature or incidental thereto by order or regulation.
The GLB Act retains the basic structure of the Bank Holding Company Act. Thus, a bank holding company that is not eligible for the expanded powers of a financial holding company is now subject to the amended Section 4(c)(8) of the Bank Holding Company Act which freezes the activities that are authorized and defined as closely related to banking activities. Under this Section a bank holding company is not eligible for the expanded activities permitted under new Section 4(k) and is limited to those specific activities previously approved by the Federal Reserve Board.
The GLB Act also addresses the consequences when a financial holding company that has exercised the expanded authority fails to maintain its eligibility to be a financial holding company. The Federal Reserve Board may impose such limitations on the conduct or activities of a noncompliant financial holding company or any affiliate of that company as the Board determines to be appropriate under the circumstances and consistent with the purpose of the Act.
The GLB Act is essentially a dramatic liberalization of the restrictions placed on banks, especially bank holding companies, regarding the areas of financial businesses in which they are allowed to compete.
REGULATION OF THE BANKS
As state-chartered banks, the Banks are examined and regulated by the Federal Deposit Insurance Corporation ("FDIC") and the Georgia Department.
The major functions of the FDIC with respect to insured banks include paying depositors to the extent provided by law in the event an insured bank is closed without adequately providing for payment of the claim of depositors, acting as a receiver of state banks placed in receivership when so appointed by state authorities, and preventing the continuance or development of unsound and unsafe banking practices. In addition, the FDIC also approves conversions, mergers, consolidations, and assumption of deposit liability transactions between insured banks and noninsured banks or institutions to prevent capital or surplus diminution in such transactions where the resulting, continued or assumed bank is an insured nonmember state bank.
Part I (Continued)
Item 1 (Continued)
Subsidiary banks of a bank holding company are subject to certain restrictions imposed by the Federal Bank Holding Company Act on any extension of credit to the bank holding company or any of its subsidiaries, on investment in the stock or other securities thereof and on the taking of such stock or securities as collateral for loans to any borrower. In addition, a bank holding company and its subsidiaries are prohibited from engaging in certain tie-in-arrangements in connection with any extension of credit or provision of any property or services.
The Georgia Department regulates all areas of the banks' banking operations, including mergers, establishment of branches, loans, interest rates and reserves. The Bank must have the approval of the Commissioner to pay cash dividends, unless at the time of such payment:
(i) the total classified assets at the most recent examination of such banks do not exceed 80 percent of Tier 1 capital plus Allowance for Loan Losses as reflected at such examination;
(ii) the aggregate amount of dividends declared or anticipated to be declared in the calendar year does not exceed 50 percent of the net profits, after taxes but before dividends, for the previous calendar year; and
(iii) the ratio of Tier 1 Capital to Adjusted Total Assets shall not be less than six (6) percent.
The Banks are also subject to State of Georgia banking and usury laws restricting the amount of interest which it may charge in making loans or other extensions of credit.
EXPANSION THROUGH BRANCHING, MERGER OR CONSOLIDATION
With respect to expansion, the Banks were previously prohibited from establishing branch offices or facilities outside of the county in which their main office was located, except:
(i) in adjacent counties in certain situations, or
(ii) by means of merger or consolidation with a bank which has been in existence for at least five years.
In addition, in the case of a merger or consolidation, the acquiring bank must have been in existence for at least 24 months prior to the merger. However, effective July 1, 1996, Georgia permits the subsidiary bank(s) of any bank holding company then engaged in the banking business in the State of Georgia to establish, de novo, upon receipt of required regulatory approval, an aggregate of up to three additional branch banks in any county within the State of Georgia. Effective July 1, 1998, this same Georgia law permits, with required regulatory approval, the establishment of de novo branches in an unlimited number of counties within the State of Georgia by the subsidiary bank(s) of bank holding companies then engaged in the banking business in the State of Georgia. This law may result in increased competition in the Banks' market area.
Part I (Continued)
Item 1 (Continued)
CAPITAL REQUIREMENTS
The FDIC adopted risk-based capital guidelines that went into effect on December 31, 1990 for all FDIC insured state chartered banks that are not members of the Federal Reserve System. Beginning December 31, 1992, all banks were required to maintain a minimum ratio of total capital to risk weighted assets of eight (8) percent of which at least four (4) percent must consist of Tier 1 capital. Tier 1 capital of state chartered banks (as defined by the regulation) generally consists of: (i) common stockholders' equity; (ii) qualifying noncumulative perpetual preferred stock and related surplus; and (iii) minority interests in the equity accounts of consolidated subsidiaries. In addition, the FDIC adopted a minimum ratio of Tier 1 capital to total assets of banks, referred to as the leverage capital ratio of three (3) percent if the FDIC determines that the institution is not anticipating or experiencing significant growth and has well-diversified risk, including no undue interest rate exposure, excellent asset quality, high liquidity, good earnings and, in general, is considered a strong banking organization, rated Composite "1" under the Uniform Financial Institutions Rating System (the CAMEL rating system) established by the Federal Financial Institutions Examination Council. All other financial institutions are required to maintain a leverage ratio of four (4) percent.
Effective October 1, 1998, the FDIC amended its risk-based and leverage capital rules as follows: (1) all servicing assets and purchase credit card relationships ("PCCRs") that are included in capital are each subject to a ninety (90) percent of fair value limitation (also known as a "ten (10) percent haircut"); (2) the aggregate amount of all servicing assets and PCCRs included in capital cannot exceed 100 percent of Tier I capital; (3) the aggregate amount of nonmortgage servicing assets ("NMSAs") and PCCRS included in capital cannot exceed 25 percent of Tier 1 capital; and (4) all other intangible assets (other than qualifying PCCRS) must be deducted from Tier 1 capital.
Amounts of servicing assets and PCCRs in excess of the amounts allowable must be deducted in determining Tier 1 capital. Interest-only strips receivable, whether or not in security form, are not subject to any regulatory capital limitation under the amended rule.
FDIC INSURANCE ASSESSMENTS
The Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA"), enacted in December, 1991, provided for a number of reforms relating to the safety and soundness of the deposit insurance system, supervision of domestic and foreign depository institutions and improvement of accounting standards. One aspect of the Act is the requirement that banks will have to meet certain safety and soundness standards. In order to comply with the Act, the Federal Reserve and the FDIC implemented regulations defining operational and managerial standards relating to internal controls, loan documentation, credit underwriting, interest rate exposure, asset growth, director and officer compensation, fees and benefits, asset quality, earnings and stock valuation.
The regulations provide for a risk-based premium system which requires higher assessment rates for banks which the FDIC determines pose greater risks to the Bank Insurance Fund ("BIF"). Under the regulations, banks pay an assessment depending upon risk classification.
Part I (Continued)
Item 1 (Continued)
To arrive at risk-based assessments, the FDIC places each bank in one of nine
risk categories using a two-step process based on capital ratios and on other
relevant information. Each bank is assigned to one of three groups: (i) well
capitalized, (ii) adequately capitalized, or (iii) under capitalized, based on
its capital ratios. The FDIC also assigned each bank to one of three subgroups
based upon an evaluation of the risk posed by the bank. The three subgroups
include (i) banks that are financially sound with only a few minor weaknesses,
(ii) banks with weaknesses which, if not corrected, could result in significant
deterioration of the bank and increased risk to the BIF, and (iii) those banks
that pose a substantial probability of loss to the BIF unless corrective action
is taken. FDICIA imposes progressively more restrictive constraints on
operations management and capital distributions depending on the category in
which an institution is classified. As of December 31, 2000, the Banks met the
definition of "well capitalized" institutions and will be assessed accordingly
for 2000.
Under FDICIA, insurance of deposits may be terminated by the FDIC upon a finding that the institution has engaged in unsafe and unsound practices, is in an unsafe or unsound condition to continue operations, or has violated any applicable law, regulation, rule, order or condition imposed by the FDIC.
COMMUNITY REINVESTMENT ACT
The Company and the Banks are subject to the provisions of the Community Reinvestment Act of 1977, as amended (the "CRA") and the federal banking agencies' regulations issued thereunder. Under the CRA, all banks and thrifts have a continuing and affirmative obligation, consistent with its safe and sound operation to help meet the credit needs for their entire communities, including low- and moderate-income neighborhoods. The CRA does not establish specific lending requirements or programs for financial institutions, nor does it limit an institution's discretion to develop the types of products and services that it believes are best suited to its particular community, consistent with the CRA.
The CRA requires a depository institution's primary federal regulator, in connection with its examination of the institution, to assess the institution's record of assessing and meeting the credit needs of the community served by that institution, including low- and moderate-income neighborhoods. The regulatory agency's assessment of the institution's record is made available to the public. In the case of a bank holding company applying for approval to acquire a bank or other bank holding company, the Federal Reserve will assess the records of each subsidiary depository institution of the applicant bank holding company, and such records may be the basis for denying the application.
The evaluation system used to judge an institution's CRA performance consists of three tests: (1) a lending test; (2) an investment test; and (3) a service test. Each of these tests will be applied by the institution's primary federal regulator taking into account such factors as: (i) demographic data about the community; (ii) the institution's capacity and constraints; (iii) the institution's product offerings and business strategy; and (iv) data on the prior performance of the institution and similarly-situated lenders.
In addition, a financial institution will have the option of having its CRA performance evaluated based on a strategic plan of up to five years in length that it had developed in cooperation with local community groups. In order to be rated under a strategic plan, the institution will be required to obtain the prior approval of its federal regulator.
Part I (Continued)
Item 1 (Continued)
The interagency CRA regulations provide that an institution evaluated under a given test will receive one of five ratings for the test: (1) outstanding; (2) high satisfactory; (3) low satisfactory; (4) needs to improve; and (5) substantial noncompliance. An institution will receive a certain number of points for its rating on each test, and the points are combined to produce an overall composite rating. Evidence of discriminatory or other illegal credit practices would adversely affect an institution's overall rating. Each of Colony's subsidiary banks received a "high satisfactory" CRA rating as a result of their last CRA examination.
PROPOSED LEGISLATION
Legislation is regularly considered and adopted by both the United States Congress and the Georgia General Assembly. Such legislation could result in regulatory changes and changes in competitive relationships for banks and bank holding companies. The effect of such legislation on the business of the Company and the Banks cannot be predicted.
MONETARY POLICY
The results of operations of the Company and the Banks are affected by credit policies of monetary authorities, particularly the Federal Reserve. The instruments of monetary policy employed by the Federal Reserve include open market operations in U.S. Government securities, changes in the discount rate on member bank borrowings, changes in reserve requirements against member bank deposits and limitations on interest rates which member banks may pay on time and savings deposits. In view of the changing conditions in the foreign and national economy, as well as the effect of policies and actions taken by monetary and fiscal authorities, including the Federal Reserve, no prediction can be made as to possible future changes in interest rates, deposit levels, loan demand or the business and earnings of the Company.
Item 2
DESCRIPTION OF PROPERTY
The principal properties of the Registrant consist of the properties of the Banks. For a description of the properties of the Banks, see "Item 1 - Business of the Company and Subsidiary Banks" included elsewhere in this Annual Report.
Item 3
LEGAL PROCEEDINGS
Incorporated herein by reference to page 11 of the Company's Definitive Proxy Statement for Annual Meeting of Stockholders to be Held April 24, 2001, filed with the Securities and Exchange Commission on March 7, 2001 (File No. 000-12436).
Item 4
SUBMISSION OF MATTERS TO A VOTE OF STOCKHOLDERS
No matters were submitted to a vote of the Registrant's stockholders during the fourth quarter of 2000.
Part II
Item 5
MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS
Effective April 2, 1998, Colony Bankcorp, Inc. common stock is quoted on the NASDAQ National Market under the symbol "CBAN." Prior to this date, there was no public market for the common stock of the registrant.
The following table sets forth the high, low and close sale prices per share of the common stock as reported on the NASDAQ National Market, and the dividends declared per share for the periods indicated.
Dividend
Year Ended December 31, 2000 High Low Close Per Share
------------------------------ ------ ----- ------- -----------
Fourth Quarter $11.75 $9.38 $10.00 $0.060
Third Quarter 11.63 9.50 10.00 0.045
Second Quarter 12.50 7.94 12.00 0.045
First Quarter 14.50 10.50 11.96 0.040
Year Ended December 31, 1999
------------------------------
Fourth Quarter 14.75 11.50 13.50 0.040
Third Quarter 13.38 11.94 11.94 0.035
Second Quarter 14.63 12.00 12.00 0.035
First Quarter 15.00 11.25 13.50 0.030
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On February 18, 1997, the Company's Board of Directors approved a 50 percent stock split effected in the form of a stock dividend payable to shareholders of record on July 1, 1997. On February 16, 1999, a 100 percent stock split effected in the form of a stock dividend payable to shareholders of record on March 31, 1999 was approved by the Board. All share and per share information in this report has been restated to give retroactive effect to these splits. The Registrant paid cash dividends on its common stock of $843,653 or $0.190 per share and $620,905 or $0.140 per share in 2000 and 1999, respectively. The Company's Board of Directors approved a reduction in the par value of common stock on February 16, 1999. Par value was reduced from $10 to $1 per share.
As of December 31, 2000, the Company had approximately 1,056 shareholders of record.
Part II (Continued)
Item 6
SELECTED FINANCIAL DATA
Year Ended December 31,
---------------------------------------------------------------------------
2000 1999 1998 1997 1996
---------------------------------------------------------------------------
(Dollars in Thousands, except per share data)
Selected Balance Sheet Data:
Total Assets..................................... $ 519,903 $ 435,272 $ 381,348 $ 342,947 $ 319,540
Total Loans...................................... 388,003 315,435 252,864 234,288 206,863
Total Deposits................................... 450,012 374,450 330,746 298,162 285,676
Investment Securities............................ 70,515 62,819 71,798 56,915 63,378
Stockholders' Equity............................. 40,210 35,011 33,096 28,821 25,591
Selected Income Statement Data:
Interest Income.................................. 41,758 33,260 30,653 28,777 26,525
Interest Expense................................. 22,265 17,114 15,521 13,992 13,158
----------- ------------ ------------ ------------ ------------
Net Interest Income............................ 19,493 16,146 15,132 14,785 13,367
Provision for Loan Losses........................ 2,280 1,166 1,157 1,489 2,195
Other Income..................................... 3,491 3,119 2,659 2,528 2,649
Other Expense.................................... 14,004 12,017 11,090 10,601 9,569
----------- ------------ ------------ ------------ ------------
Income Before Tax................................ 6,700 6,082 5,544 5,223 4,252
Income Tax Expense............................... 2,187 1,902 1,692 1,605 1,319
----------- ------------ ------------ ------------ ------------
Net Income..................................... $ 4,513 $ 4,180 $ 3,852 $ 3,618 $ 2,933
=========== ============ ============ ============ ============
Per Share Data: (a)................................ $ 1.02 $ 0.94 $ 0.87 $ 0.83 $ 0.68
Net Income (Diluted)............................. 9.06 7.89 7.48 6.63 5.89
Book Value....................................... 8.96 7.85 7.43 6.58 5.83
Tangible Book Value.............................. 0.19 .140 .115 .100 .090
Dividends........................................
Profitability Ratios:.............................. 0.95% 1.03% 1.09% 1.11% 0.97%
Net Income to Average Assets..................... 12.12% 12.22% 12.22% 13.21% 12.04%
Net Income to Average Stockholders' Equity....... 4.38% 4.33% 4.66% 4.87% 4.74%
Net Interest Margin..............................
Loan Quality Ratios:
Net Charge-Offs to Total Loans................... 0.34% 0.38% 0.40% 0.58% 0.88%
Reserve for Loan Losses to Total Loans and OREO.. 1.46% 1.48% 1.86% 1.94% 2.12%
Nonperforming Assets to Total Loans and OREO..... 1.53% 1.82% 2.50% 2.51% 3.85%
Reserve for Loan Losses to Nonperforming Loans... 95.35% 81.27% 74.55% 77.23% 54.88%
Reserve for Loan Losses to Total Nonperforming
Assets......................................... 90.06% 70.47% 65.21% 63.23% 40.75%
Liquidity Ratios:
Loans to Total Deposits.......................... 86.22% 84.24% 76.45% 78.58% 72.41%
Loans to Average Earning Assets.................. 86.48% 83.37% 78.17% 77.16% 73.34%
Noninterest-Bearing Deposits to Total Deposits... 8.59% 9.01% 8.83% 9.16% 10.05%
Capital Adequacy Ratios:
Common Stockholders' Equity to Total Assets...... 7.73% 8.04% 8.68% 8.40% 8.01%
Total Stockholders' Equity to Total Assets....... 7.73% 8.04% 8.68% 8.40% 8.01%
Dividend Payout Ratio............................ 18.70% 14.86% 13.24% 12.02% 13.60%
|
(a) Per share data for all periods has been retroactively restated for a 50 percent stock split on July 1, 1997 and a 100 percent stock split on March 1, 1999. All stock splits were effected in the form of dividends.
Part II (Continued)
Item 7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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. Converting assets to cash for these funds is primarily with proceeds from collections on loans and maturities of investment securities or by attracting and obtaining new deposits. During 2000, the Company was successful in obtaining deposits as evidenced by the fact that average deposits increased by 15.98 percent to $406,864,000 in 2000 from average deposits of $350,794,000 in 1999. Should the need arise, the Company also maintains relationships with the Federal Home Loan Bank and several correspondent banks that can provide funds on short notice.
Liquidity is monitored on a regular basis by management. The Company's liquidity position remained satisfactory in 2000. Average liquid assets (cash and amounts due from banks, interest-bearing deposits in other banks, funds due and securities) represented 25.22 percent of average deposits in 2000 as compared to 28.80 percent in 1999. Average loans represented 87.97 percent of average deposits in 2000 as compared to 82.35 percent in 1999. Average interest-bearing deposits were 82.96 percent of average earning assets in 2000 as compared to 84.58 percent in 1999.
The Company satisfies most of its capital requirements through retained earnings. During 2000, retained earnings provided $3,669,000 of increase in equity. Additionally, equity had an increase of $1,506,000 resulting from the change during the year in unrealized gains on securities available for sale, net of taxes and an increase of $24,000 resulting from the stock grant plan. Thus, total equity increased by a net amount of $5,199,000. In 1999, growth in equity was provided by an increase of $3,559,000 in retained earnings and a decrease of $1,645,000 resulting from the change during the year in unrealized losses on securities available for sale, net of taxes. Thus, total equity increased by a net amount of $1,914,000 in 1999.
As of December 31, 2000, the Company's capital totaled approximately $40,210,000 and the only outstanding commitment for capital expenditures was by a subsidiary bank of approximately $1,200,000 for construction of a branch facility in Lee County.
The Federal Reserve Board and the FDIC have issued risk-based capital guidelines for U. S. banking organizations. The objective of these efforts was to provide a more uniform 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 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 in effect at the end of 2000, the Tier 1 ratio as of December 31, 2000 was 9.63 percent and total Tier 1 and 2 risk-based capital was 10.88 percent. Both of these measures compare favorably with the regulatory minimum of 4 percent for Tier 1 and 8 percent for total risk-based capital. The Company's Tier 1 leverage ratio was 7.80 percent as of December 31, 2000 which exceeds the required ratio standard of 4 percent.
Part II (Continued)
Item 7 (Continued)
Liquidity and Capital Resources (Continued)
For 2000, average capital was $37,238,000 representing 7.81 percent of average assets for the year. This percentage is down from the 1999 level of 8.41 percent.
In 2000, the Company paid annual dividends of $0.19 per share compared to $0.14 per share in 1999. The dividend payout ratio, defined as dividends per share divided by net income per share, was 18.63 percent in 2000 as compared to 14.89 percent in 1999.
As of December 31, 2000, 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 results of operations. However, it is possible that examinations by regulatory authorities in the future could precipitate additional loss charge-offs that could materially impact the Company's liquidity, capital resources and results of operations.
Results of Operations
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 market forces and economic conditions beyond the control of the Company determine interest rates, the ability to generate net interest income is dependent upon the Company'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 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 year ended December 31, 2000 increased to $4,513,000 from the 1999 net income of $4,180,000 representing an increase of $333,000, or 7.97 percent. This increase is the result of an increase in net interest income of $3,347,000 and an increase of $372,000 in noninterest income. These were offset by an increase in provision for loan losses of $1,114,000, an increase in noninterest expense, excluding securities losses, of $1,495,000, an increase in securities losses of $492,000 and an increase in income tax expenses of $285,000. The earnings increase of 7.97 percent was achieved while Company management effected an $18,000,000 bond swap transaction during 2000 that resulted in a loss on the sale of securities of $494,000 pretax ($326,000 after tax). The bond swap allowed Colony to reduce cash flow variability present in the existing portfolio, take advantage of interest rates that were near cyclical highs and extend the duration of the investment portfolio, thereby earning the higher yields available for an extended period of time into the future. Operating income, which excludes the loss on sale of securities, net of taxes, for calendar year 2000 was $4,839,000 or $1.09 per share as compared to $4,181,000 or $0.94 per share for calendar year 1999. On a fully diluted share basis, net income increased to $1.02 per share from the 1999 per share amount of $0.94, a $0.08 increase or 8.51 percent.
Part II (Continued)
Item 7 (Continued)
Net Income (Continued)
Net income for the year ended December 31, 1999 increased to $4,180,000 from the 1998 net income of $3,852,000 representing an increase of $328,000, or 8.52 percent. This increase is the result of an increase in net interest income of $1,014,000 and an increase of $461,000 in noninterest income. These were offset by an increase in noninterest expense of $928,000 and an increase in income tax expenses of $210,000. The earnings increase of 8.52 percent was achieved while the Company experienced additional overhead associated with three new offices opened during the second half of 1998 and two new offices opened during the second half of 1999; however, these new offices are largely responsible for the $54,000,000 asset growth from a year ago and should further enhance shareholder value as they provide additional growth in the future. On a fully diluted per share basis, net income increased to $0.94 from the 1998 per share amount of $0.87, a $0.07 increase or 8.05 percent.
Net Interest Margin
The net interest margin increased to 4.38 percent in 2000 as compared to 4.33 percent in 1999. Net interest income increased by 20.73 percent to $19,493,000 in 2000 from $16,146,000 in 1999 on an increase in average earning assets to $448,657,000 in 2000 from $378,288,000 in 1999 with an interest spread of 3.80 percent in 2000 as compared to 3.80 percent in 1999. Average loans increased by $69,022,000 or 23.89 percent, average funds sold increased by $5,124,000 or 42.56 percent, average investment securities decreased by $3,083,000 or 4.52 percent and average interest-bearing deposits in other banks decreased by $694,000 or 7.57 percent, resulting in a net increase in average earning assets of $70,369,000 or 18.60 percent.
The net increase in average assets was funded by a net increase in average deposits of 15.98 percent to $406,864,000 in 2000 from $350,794,000 in 1999 and a net increase in average debt and funds purchased of 52.45 percent to $29,084,000 in 2000 from $19,078,000 in 1999. Average interest-bearing deposits increased by 16.33 percent to $372,214,000 in 2000 from $319,967,000 in 1999 while average noninterest-bearing deposits increased 12.40 percent to $34,650,000 in 2000 from $30,827,000 in 1999. Average noninterest-bearing deposits represented 8.52 percent of average total deposits in 2000 as compared to 8.79 percent in 1999.
The net interest margin decreased to 4.33 percent in 1999 as compared to 4.66 percent in 1998. Net interest income increased by 6.70 percent to $16,146,000 in 1999 from $15,132,000 in 1998 on an increase in average earning assets to $378,288,000 in 1999 from $329,109,000 in 1998 with an interest spread of 3.80 percent in 1999 as compared to 4.08 percent in 1998. Average loans increased by $42,127,000 or 17.07 percent, average funds sold decreased by $8,995,000 or 42.77 percent, average investment securities increased by $7,781,000 or 12.88 percent and average interest-bearing in other banks increased by $8,266,000 or 915.39 percent, resulting in a net increase in average earning assets of $49,179,000 or 14.94 percent.
The net increase in average assets was funded by a net increase in average deposits of 14.58 percent to $350,794,000 in 1999 from $306,168,000 in 1998 and a net increase in average debt and funds purchased of 42.48 percent to $18,702,000 in 1999 from $13,126,000 in 1998. Average interest-bearing deposits increased by 14.28 percent to $319,967,000 in 1999 from $279,992,000 in 1998 while average noninterest-bearing deposits increased 17.77 percent to $30,827,000 in 1999 from $26,176,000 in 1998.
Part II (Continued)
Item 7 (Continued)
Net Interest Margin (Continued)
Average noninterest-bearing deposits represented 8.79 percent of average total deposits in 1999 as compared to 8.55 percent in 1998.
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 nonaccruing, past due and other loans that management believes require attention.
The provision for loan losses is a charge to earnings in the current period to replenish the allowance for loan losses and maintain it at a level management has determined to be adequate. The provision for loan losses was $2,280,000 in 2000 as compared to $1,166,000 in 1999 representing an increase in the provision of $1,114,000 or 95.54 percent. Net loan charge-offs represented 57.06 percent of the provision for loan losses in 2000 as compared to 103.78 percent in 1999. Net loan charge-offs for 2000 represented 0.36 percent of average loans outstanding as compared to 0.42 percent in 1999. The leveling off of loan charge-offs for 2000 and 1999 resulted from management's effort the past several years to improve credit quality and to eliminate weak and marginal credits. As of December 31, 2000, the allowance for loan losses was 1.45 percent of total loans outstanding as compared to an allowance for loan losses of 1.48 percent of total loans outstanding as of December 31, 1999. The loan loss reserve of 1.45 percent of total loans outstanding provided coverage of 95.35 percent of nonperforming loans and 90.06 percent of nonperforming assets as of December 31, 2000 compared to 81.72 percent and 70.81 percent, respectively, as of December 31, 1999. The determination of the reserve rests upon management's judgment about factors affecting loan quality and assumptions about the economy. Management considers the year-end allowance for loan losses adequate to cover potential losses in the loan portfolio.
The provision for loan losses was $1,166,000 in 1999 as compared to $1,157,000 in 1998, representing an increase in the provision of $9,000 or 0.78 percent. Net loan charge-offs represented 103.78 percent of the provision for loan losses in 1999 as compared to 86.95 percent in 1998. Net loan charge-offs for 1999 represented 0.42 percent of average loans outstanding as compared to 0.41 percent in 1998. The leveling off of loan charge-offs for 1999 and 1998 resulted from management's effort the past several years to improve credit quality and to eliminate weak and marginal credits. As of December 31, 1999, the allowance for loan losses was 1.48 percent of total loans outstanding as compared to an allowance for loan losses of 1.87 percent of total loans outstanding as of December 31, 1998. The loan loss reserve of 1.48 percent of total loans outstanding provided coverage of 81.72 percent of nonperforming loans and 70.81 percent of nonperforming assets as of December 31, 1999 compared to 78.40 percent and 68.14 percent, respectively, as of December 31, 1998.
Part II (Continued)
Item 7 (Continued)
Noninterest Income
Noninterest income consists primarily of service charges on deposit accounts. Service charges on deposit accounts totaled $2,567,000 in 2000 as compared to $2,270,000 in 1999 or an increase of 13.08 percent. This increase is attributable to the increase in noninterest-bearing and interest-bearing demand deposits. All other noninterest income increased to $925,000 in 2000 from $850,000 a year ago, or an 8.82 percent increase. Approximately $208,000 of the increase is attributable to the other fee income from the mortgage company that is partially offset $95,000 by a nonrecurring recovery in 1999 on previously written-off municipal bonds. There was no other significant variance in other noninterest income accounts in 2000 or 1999.
Service charges on deposit accounts totaled $2,270,000 in 1999 as compared to $1,932,000 in 1998 or an increase of 17.49 percent. This increase is attributable to the increase in noninterest-bearing and interest-bearing demand deposit accounts. All other noninterest-income increased by $123,000 to $850,000 in 1999 from $727,000 in 1998. Approximately $95,000 of the increase in noninterest income is attributable to a recovery on previously written-off municipal bonds and is nonrecurring.
Noninterest Expense
Noninterest expense increased by 16.54 percent to $14,005,000 in 2000 from $12,017,000 in 1999. Salaries and employee benefits increased 15.69 percent to $7,463,000 in 2000 from $6,451,000 in 1999 primarily due to increased staffing with two new branches opened in 2000 and the acquisition of a mortgage company during 2000. Occupancy and equipment expense increased by 11.07 percent to $2,277,000 in 2000 from $2,050,000 in 1999 primarily due to additional depreciation and occupancy expense with the new offices opened during 2000. All other noninterest expense increased 21.27 percent to $4,264,000 in 2000 from $3,516,000 a year ago. The most significant increase was loss on sale of securities of $494,000 in 2000 compared to $2,000 in 1999. The Company effected an $18,000,000 bond swap during 2000 that resulted in the $494,000 loss from the sale of securities. The bond swap allowed Colony management to reduce cash flow variability, take advantage of interest rates that were near cyclical highs and extend the duration of the portfolio, thereby earning the higher yields available for an extended period of time into the future. Other increases in noninterest expense are primarily attributable to expenses incurred in opening two new offices and the mortgage company during 2000.
Noninterest expense increased 8.38 percent to $12,017,000 in 1999 from $11,088,000 in 1998. Salaries and employee benefits increased 12.76 percent to $6,451,000 in 2000 from $5,721,000 in 1998 primarily due to increased staffing with two new branches opened in the second half of 1999 and three new branches opened in the second half of 1998. Occupancy and equipment expense increased 9.16 percent to $2,050,000 in 1999 from $1,878,000 in 1998 primarily due to additional depreciation and occupancy expense with the new branches opened. All other noninterest expense increased 0.77 percent to $3,516,000 in 1999 from $3,489,000 in 1998. All other expenses in the aggregate realized normal change.
Part II (Continued)
Item 7 (Continued)
Income Tax Expense
Income before taxes increased by $617,000 to $6,700,000 in 2000 from $6,083,000 in 1998 with significant changes being an increase in net interest income of $3,347,000 in 2000 compared to 1999, an increase in provision for loan losses of $1,114,000 in 2000 compared to 1999 and an increase in noninterest expenses, net of noninterest income of $1,616,000 in 2000 compared to 1999. Income tax expense increased 14.97 percent to $2,187,000 in 2000 from $1,902,000 in 1999. Income tax expense as a percentage of income before taxes was 32.64 percent in 2000 compared to 31.27 percent in 1999 or an increase of 4.38 percent.
Income before taxes increased by $539,000 to $6,083,000 in 1999 from $5,544,000 in 1998 with significant changes being an increase in net interest income of $1,014,000 in 1999 compared to 1998 and an increase in noninterest expense, net of noninterest income of $467,000 in 1999 compared to 1998. Income tax expense increased 12.41 percent to $1,902,000 in 1999 from $1,692,000 in 1998. Income tax expense as a percentage of income before taxes was 31.27 percent in 1999 compared to 30.52 percent in 1998 or an increase of 2.46 percent.
Outlook for 2001
Colony is an emerging company operating in an industry filled with nonregulated competitors and a rapid pace of consolidation. The year brings with it new opportunities for growth in our existing markets, as well as opportunities to expand into new markets through branch acquisitions and branching. Colony completed two new branches in 2000, which are located in Moultrie and Soperton, Georgia. In addition Colony acquired Georgia First Mortgage Company located in Albany, Georgia during 2000. For 2001, Colony has targeted one new branch office to be located in the Dougherty/Lee County market and one loan production office to be located in the Warner Robins market. The Warner Robins office would be converted to a full-service branch office in 2002.
Forward-Looking Statements
This document contains statements that constitute "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. The words
"believe," "estimate," "expect," "intend," "anticipate" and similar expressions
and variations thereof identify certain of such forward-looking statements,
which speaks only as of the dates which they were made. The Company undertakes
no obligation to publicly update or revise any forward-looking statements,
whether as a result of new information, future events, or otherwise. Users are
cautioned that any such forward-looking statements are not guarantees of future
performance and involve risks and uncertainties, and that actual results may
differ materially from those indicated in the forward-looking statements as a
result of various factors. Users are therefore cautioned not to place undue
reliance on these forward-looking statements.
Part II (Continued)
Item 7 (Continued)
AVERAGE BALANCE SHEETS
2000 1999 1998
--------------------------------------------------------------------------------------------
Average Income/ Yields/ Average Income/ Yields/ Average Income/ Yields/
($ in thousands) Balances Expense Rates Balances Expense Rates Balances Expense Rates
-----------------------------------------------------------------------------------------------------------------------------------
Assets
Interest-Earning Assets
Loans, Net of Unearned Income
Taxable (1) $357,907 $36,333 10.15% $288,885 $28,344 9.81% $246,758 $25,851 10.48%
------------------------------------------------------------------------------------------
Investment Securities
Taxable 57,147 3,812 6.67% 57,828 3,418 5.91% 52,551 3,234 6.15%
Tax-Exempt (2) 7,966 539 6.77% 10,368 649 6.26% 7,864 596 7.58%
------------------------------------------------------------------------------------------
Total Investment Securities 65,113 4,351 6.68% 68,196 4,067 5.96% 60,415 3,830 6.34%
------------------------------------------------------------------------------------------
Interest-Bearing Deposits in
Other Banks 8,475 128 1.51% 9,169 467 5.09% 903 49 5.43%
------------------------------------------------------------------------------------------
Funds Sold 17,162 1,129 6.58% 12,038 602 5.00% 21,033 1,125 5.35%
------------------------------------------------------------------------------------------
Total Interest-Earning Assets 448,657 41,941 9.35% 378,288 33,480 8.85% 329,109 30,855 9.38%
------------------------------------------------------------------------------------------
Noninterest-Earning Assets
Cash 9,905 11,615 10,227
Allowance for Loan Losses (5,087) (4,823) (4,742)
Other Assets 23,278 21,714 18,898
------------------------------------------------------------------------------------------
Total Noninterest-Earning Assets 28,096 28,506 24,383
------------------------------------------------------------------------------------------
Total Assets $476,753 $406,794 $353,492
==========================================================================================
Liabilities and Stockholders' Equity
Interest-Bearing Liabilities
Interest-Bearing Deposits
Interest-Bearing Demand
and Savings $ 80,897 2,512 3.11% $129,291 $ 2,321 1.80% $ 72,284 $ 2,009 2.78%
Other Time 291,317 17,862 6.13% 190,676 13,652 7.16% 207,708 12,624 6.08%
------------------------------------------------------------------------------------------
Total Interest-Bearing
Deposits 372,214 20,374 5.47% 319,967 15,973 4.99% 279,992 14,633 5.22%
------------------------------------------------------------------------------------------
Other Interest-Bearing Liabilities
Debt 28,827 1,873 6.50% 18,326 1,125 6.14% 11,548 875 7.58%
Funds Purchased and Securities
Sold Under Agreement to
Repurchase 257 18 7.00% 376 16 4.26% 1,578 21 1.33%
------------------------------------------------------------------------------------------
Total Other Interest-Bearing
Liabilities 29,084 1,891 6.50% 18,702 1,141 6.10% 13,126 896 6.83%
------------------------------------------------------------------------------------------
Total Interest-Bearing
Liabilities 401,298 22,265 5.55% 338,669 17,114 5.05% 293,118 15,529 5.30%
------------------------------------------------------------------------------------------
Noninterest-Bearing Liabilities and
Stockholders' Equity
Demand Deposits 34,650 30,827 26,176
Other Liabilities 3,567 3,094 2,674
Stockholders' Equity 37,238 34,204 31,524
------------------------------------------------------------------------------------------
Total Noninterest-Bearing
Liabilities and
Stockholders' Equity 75,455 68,125 60,374
------------------------------------------------------------------------------------------
Total Liabilities and
Stockholders' Equity $476,753 $406,794 $353,492
==========================================================================================
Interest Rate Spread 3.80% 3.80% 4.08%
==========================================================================================
Net Interest Income $19,676 $16,366 $15,326
==========================================================================================
Net Interest Margin 4.39% 4.33% 4.66%
==========================================================================================
|
(1) The average balance of loans includes the average balance of nonaccrual loans. Income on such loans is recognized and recorded on the cash basis.
(2) Taxable-equivalent adjustments totaling $183,347, $220,628 and $202,547 for 2000, 1999 and 1998, respectively, are included in tax-exempt interest on investment securities. The adjustments are based on a federal tax rate of 34 percent with appropriate reductions for the effect of disallowed interest expense incurred in carrying tax-exempt obligations.
Part II (Continued)
Item 7 (Continued)
RATE/VOLUME ANALYSIS
The rate/volume analysis presented hereafter illustrates the change from year to year for each component of the taxable equivalent net interest income separated into the amount generated through volume changes and the amount generated by changes in the yields/rates.
Changes From 1999 to 2000(1) Changes From 1998 to 1999(1)
($ in thousands) Volume Rate Total Volume Rate Total
----------------------------------- ------------------------------------
Interest Income
Loans, Net -Taxable $6,772 $1,217 $7,989 $4,413 $ (1,920) $2,493
----------------------------------- ------------------------------------
Investment Securities
Taxable (40) 434 394 325 (141) 184
Tax-Exempt (150) 40 (110) 190 (137) 53
----------------------------------- ------------------------------------
Total Investment Securities (190) 474 284 515 (278) 237
----------------------------------- ------------------------------------
Interest-Bearing Deposits in
Other Banks (35) (304) (339) 449 (31) 418
----------------------------------- ------------------------------------
Funds Sold 256 271 527 (481) (42) (523)
----------------------------------- ------------------------------------
Total Interest Income 6,803 1,658 8,461 4,896 (2,271) 2,625
----------------------------------- ------------------------------------
Interest Expense
Interest-Bearing Demand and
Savings Deposits (869) 1,060 191 1,584 (1,272) 312
Time Deposits 7,206 (2,996) 4,210 (1,035) 2,063 1,028
Other Interest-Bearing Liabilities
Funds Purchased and Securities
Under Agreement to Repurchase (5) 7 2 (16) 11 (5)
Other Debt 645 103 748 514 (264) 250
----------------------------------- ------------------------------------
Total Interest
Expense (Benefit) 6,977 (1,826) 5,151 1,047 538 1,585
----------------------------------- ------------------------------------
Net Interest Income $ (174) $3,484 $3,310 $3,849 $ (2,809) $1,040
=================================== ====================================
|
(1) Changes in net interest income for the periods, based on either changes in average balances or changes in average rates for interest-earning assets and interest-bearing liabilities, are shown on this table. During each year, there are numerous and simultaneous balance and rate changes; therefore, it is not possible to precisely allocate the changes between balances and rates. For the purpose of this table, changes that are not exclusively due to balance changes or rate changes have been attributed to rates.
Part II (Continued)
Item 7 (Continued)
INTEREST RATE SENSITIVITY
The following table represents the Company's interest-sensitivity gap between interest-earning assets and interest-bearing liabilities as of December 31, 2000.
Assets and Liabilities Repricing Within
----------------------------------------------------------------------
3 Months 4 to 12 1 to 5 Over 5
($ in thousands) or Less Months 1 Year Years Years Total
---------- --------- -------- -------- -------- -------
Interest-Earning Assets
Interest-Bearing Deposits $ 2,912 $ 2,912 $ 2,912
Investment Securities 5,402 $ 2,861 8,263 $ 47,478 $ 14,774 70,515
Funds Sold 21,675 21,675 21,675
Loans, Net of Unearned Income 147,659 92,619 240,278 136,499 11,226 388,003
--------- -------- --------- -------- -------- --------
Total Interest-Earning Assets 177,648 95,480 273,128 183,977 26,000 483,105
--------- -------- --------- -------- -------- --------
Interest-Bearing Liabilities
Interest-Bearing Demand
and Savings Deposits (1) 85,905 85,905 85,905
Other Time Deposits 99,124 169,629 268,753 56,705 325,458
Short-Term Borrowings (2) 6,516 6,516 9,570 9,000 25,086
--------- -------- --------- -------- -------- --------
Total Interest-Bearing Liabilities 191,545 169,629 361,174 66,275 9,000 436,449
--------- -------- --------- -------- -------- --------
Interest-Sensitivity Gap (13,897) (74,149) (88,046) 117,702 17,000 46,656
--------- -------- --------- -------- -------- --------
Cumulative Interest-Sensitivity Gap $ (13,897) $(88,046) $ (88,046) $ 29,656 $ 46,656 $ 46,656
========= ======== ========= ======== ======== ========
|
(1) Interest-bearing demand and savings accounts for repricing purposes are considered to reprice within 3 months or less.
(2) Short-term borrowings for repricing purposes are considered to reprice within 3 months or less.
Part II (Continued)
Item 7 (Continued)
INVESTMENT PORTFOLIO
The following table presents carrying values of investment securities held by the Company as of December 31, 2000, 1999 and 1998.
($ in thousands) 2000 1999 1998
------- ------- -------
U.S. Treasuries and Government Agencies $35,266 $46,336 $51,525
Obligations of States and Political Subdivisions 8,313 9,628 8,733
Other Securities 11,815 2,365 3,093
------- ------- -------
Investment Securities 55,394 58,329 63,351
Mortgage Backed Securities 15,121 4,490 8,447
------- ------- -------
Total Investment Securities and
Mortgage Backed Securities $70,515 $62,819 $71,798
======= ======= =======
|
The following table represents maturities and weighted-average yields of investment securities held by the Company as of December 31, 2000.
After 1 Year But After 5 Years But
Within 1 Year Within 5 Years Within 10 Years After 10 Years
-------------------------------------------------------------------------------------
Amount Yield Amount Yield Amount Yield Amount Yield
-------- ----- ------- ----- ------- ----- ------ -------
U.S. Government Agencies $4,035 5.85% $28,674 5.90% $ 2,541 7.00%
Mortgage Backed Securities 512 5.59 8,491 7.30 6,117 7.21
Obligations of States and
Political Subdivisions 2,056 6.13 2,837 6.02 2,934 6.58 $ 501 15.54%
Other Securities 1,660 0.00 7,476 7.33 1,737 7.42 944 3.00
-------- ----- ------- ----- ------- ----- ------ -------
Total Investment Portfolio $8,263 4.73% $47,478 6.38% $13,329 7.06% $1,445 7.35%
======== ===== ======= ===== ======= ====== ====== ======
|
Part II (Continued)
Item 7 (Continued)
LOANS
The following table presents the composition of the Company's loan portfolio as of December 31 for the past five years.
($ in thousands) 2000 1999 1998 1997 1996
--------- ---------- ---------- ---------- ----------
Commercial, Financial and Agricultural $ 77,448 $ 42,595 $ 44,879 $ 34,883 $ 38,776
Real Estate
Construction 5,961 4,003 998 2,676 881
Mortgage, Farmland 23,411 24,179 18,980 21,898 25,769
Mortgage, Other 207,396 185,663 133,857 117,268 88,896
Consumer 59,862 48,226 40,928 42,956 44,608
Other 13,929 10,775 13,227 14,618 7,946
--------- ---------- ---------- ---------- ---------
388,007 315,441 252,869 234,299 206,876
Unearned Discount (4) (6) (5) (11) (13)
Allowance for Loan Losses (5,661) (4,682) (4,726) (4,575) (4,435)
--------- ---------- ---------- ---------- ---------
Loans, Net $ 382,342 $ 310,753 $ 248,138 $ 229,713 $ 202,428
=============================================================
|
The following table presents total loans less unearned discount as of December 31, 2000 according to maturity distribution.
Maturity ($ in thousands)
------------------
One Year or Less $240,278
After One Year through Five Years 136,499
After Five Years 11,226
--------
$388,003
========
|
The following table presents an interest rate sensitivity analysis of the Company's loan portfolio as of December 31, 2000.
Within 1 to 5 After 5
($ in thousands) 1 Year Years Years Total
-------- -------- --------- --------
Loans with
Predetermined Interest Rates $118,538 $129,502 $11,226 $259,266
Floating or Adjustable Interest Rates 121,740 6,997 - 128,737
--------- -------- --------- --------
Loans, Net of Unearned Income $240,278 $136,499 $11,226 $388,003
========= ======== ========= ========
|
Part II (Continued)
Item 7 (Continued)
NONPERFORMING LOANS
A loan is placed on nonaccrual status when, in management's judgment, the collection of interest income appears doubtful. Interest receivable that has been accrued in prior years and is subsequently determined to have doubtful collectibility is charged to the allowance for possible loan losses. Interest on loans that are classified as nonaccrual is recognized when received. Past due loans are loans whose principal or interest is past due 90 days or more. In some cases, where borrowers are experiencing financial difficulties, loans may be restructured to provide terms significantly different from the original contractual terms.
The following table presents, at the dates indicated, the aggregate of nonperforming loans for the categories indicated.
December 31,
------------------------------------------------------------------------
2000 1999 1998 1997 1996
---------- ---------- ---------- ---------- ----------
($ in thousands)
------------------------------------------------------------------------
Loans Accounted for on a Nonaccrual Basis $5,164 $5,334 $5,823 $5,744 $7,396
Installment Loans and Term Loans
Contractually Past Due 90 Days or
More as to Interest or Principal
Payments and Still Accruing 751 332 296 145 364
Loans, the Terms of Which Have Been
Renegotiated to Provide a Reduction
or Deferral of Interest or Principal
Because of Deterioration in the Financial
Position of the Borrower 22 32 220 5 321
Loans Now Current About Which There are
Serious Doubts as to the Ability of the
Borrower to Comply with Present Loan
Repayment Terms - - - - -
|
During the year ended December 31, 2000, approximately $1,540,000 of loans was charged off and approximately $240,000 was recovered on charged-off loans. All loans classified by regulatory authorities as loss during regular examinations in 2000 have been charged off. As of December 31, 2000, the allowance for loan losses was adequate to cover all loans classified by regulatory authorities as doubtful or substandard.
Part II (Continued)
Item 7 (Continued)
COMMITMENTS AND CONTINGENCIES
In the ordinary course of business, the Banks have entered into off balance sheet financial instruments which are not reflected in the consolidated financial statements. These instruments include commitments to extend credit, standby letters of credit, guarantees and liability for assets held in trust. Such financial instruments are recorded in the financial statements when funds are disbursed or the instruments become payable. The Banks use the same credit policies for these off balance sheet financial instruments as they do for instruments that are recorded in the consolidated financial statements.
Following is an analysis of the significant off balance sheet financial instruments as of December 31:
2000 1999
-------- --------
($ in thousands)
----------------------
Commitments to Extend Credit $40,495 $43,197
Standby Letters of Credit 1,770 1,705
-------- --------
$42,265 $44,902
======== ========
|
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 Company does not anticipate any material losses as a result of the commitments and contingent liabilities.
The nature of the business of the Company 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.
Part II (Continued)
Item 7 (Continued)
SUMMARY OF LOAN LOSS EXPERIENCE
The allowance for possible loan losses is created by direct charges to operations. Losses on loans are charged against the allowance in the period in which such loans, in management's opinion, become uncollectible. Recoveries during the period are credited to this allowance. The factors that influence management's judgment in determining the amount charged to operating expense are past loan experience, composition of the loan portfolio, evaluation of possible future losses, current economic conditions and other relevant factors. The Company's allowance for loan losses was approximately $5,661,000 as of December 31, 2000, representing 1.45 percent of year-end total loans outstanding, compared with $4,682,000 as of December 31, 1999, which represented 1.48 percent of year-end total loans outstanding. The allowance for loan losses is reviewed continuously based on management's evaluation of current risk characteristics of the loan portfolio as well as the impact of prevailing and expected economic business conditions. Management considers the allowance for loan losses adequate to cover possible loan losses on the loans outstanding.
Management has not allocated the Company's allowance for loan losses to specific categories of loans. Based on management's best estimate, approximately 10 percent of the allowance should be allocated to real estate loans, 50 percent to commercial, financial and agricultural loans and 40 percent to consumer/installment loans as of December 31, 2000.
The following table presents an analysis of the Company's loan loss experience for the periods indicated.
($ in thousands) 2000 1999 1998 1997 1996
------ ------ ------ ------ ------
Allowance for Loan Losses at Beginning of Year $4,682 $4,726 $4,575 $4,435 $4,051
------ ------ ------ ------ ------
Charge-Offs
Commercial, Financial and Agricultural 1,004 1,288 617 1,026 2,294
Real Estate 1 19 111 160 8
Consumer 537 333 681 670 515
------ ------ ------ ------ ------
1,542 1,640 1,409 1,856 2,817
------ ------ ------ ------ ------
Recoveries
Commercial, Financial and Agricultural 69 237 144 219 816
Real Estate 16 9 36 37 9
Consumer 156 184 223 251 181
------ ------ ------ ------ ------
241 430 403 507 1,006
------ ------ ------ ------ ------
Net Charge-Offs 1,301 1,210 1,006 1,349 1,811
------ ------ ------ ------ ------
Provision for Loans Losses 2,280 1,166 1,157 1,489 2,195
------ ------ ------ ------ ------
Allowance for Loan Losses at End of Year $5,661 $4,682 $4,726 $4,575 $4,435
====== ====== ====== ====== ======
Ratio of Net Charge-Offs to Average Loans 0.36% 0.42% 0.41% 0.59% 0.87%
====== ====== ====== ====== ======
|
Part II (Continued)
Item 7 (Continued)
DEPOSITS
The following table presents the average amount outstanding and the average rate paid on deposits by the Company for the years 2000, 1999 and 1998.
2000 1999 1998
---------------------- ---------------------- ----------------------
Average Average Average Average Average Average
($ in thousands) Amount Rate Amount Rate Amount Rate
--------- --------- --------- --------- --------- ---------
Noninterest-Bearing Demand Deposits $ 34,650 $ 30,827 $ 26,176
Interest-Bearing Demand and Savings 80,897 3.11% 129,291 1.80% 72,284 2.78%
Time Deposits 291,317 6.13 190,676 7.16 207,708 6.08
--------- ---------- --------- --------- --------- ---------
$ 406,864 5.47% $ 350,794 4.99% $ 306,168 5.22%
========= ========= ========= ========= ========= =========
|
The following table presents the maturities of the Company's other time deposits as of December 31, 2000.
Other Time Other Time
Deposits Deposits
$100,000 Less Than
($ in thousands) or Greater $100,000 Total
------------ ----------- -----------
Months to Maturity
3 or Less $ 42,283 $ 56,841 $ 99,124
Over 3 through 12 54,367 115,262 169,629
Over 12 Months 15,225 41,480 56,705
----------- ----------- -----------
$111,875 $213,583 $325,458
=========== =========== ===========
|
Return on Assets and Stockholders' Equity
The following table presents selected financial ratios for each of the periods indicated.
Year Ended December 31,
--------------------------------------------------
2000 1999 1998
------------ ------------ ------------
Return on Assets 0.95% 1.03% 1.09%
Return on Equity 12.12% 12.22% 12.22%
Dividend Payout 18.70% 14.86% 13.24%
Equity to Assets 7.81% 8.41% 8.92%
|
Part II (Continued)
Item 8
FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA
The following consolidated financial statements of the Registrant and its subsidiaries are included on exhibit 99(b) of this Annual Report on Form 10-K:
Consolidated Balance Sheets - December 31, 2000 and 1999
Consolidated Statements of Income - Years Ended December 31, 2000, 1999 and 1998
Consolidated Statements of Comprehensive Income - Years Ended December 31, 2000, 1999 and 1998
Consolidated Statements of Stockholders' Equity - Years Ended December 31, 2000, 1999 and 1998
Consolidated Statements of Cash Flows - Years Ended December 31, 2000, 1999 and 1998
Notes to Consolidated Financial Statements
QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The following is a summary of the unaudited quarterly results of operations for the years ended December 31, 2000 and 1999:
Three Months Ended
------------------------------------------
Dec. 31 Sept. 30 June 30 Mar. 31
------------------------------------------
($ in thousands, except per share data)
2000
Interest Income $ 11,522 $ 10,955 $ 10,009 $ 9,272
Interest Expense 6,362 5,958 5,164 4,781
------------------------------------------
Net Interest Income 5,160 4,997 4,845 4,491
Provision for Loan Losses 446 752 605 477
Securities Losses -- (494) -- --
Noninterest Income 916 893 835 847
Noninterest Expense 3,670 3,405 3,353 3,082
------------------------------------------
Income Before Income Taxes 1,960 1,239 1,722 1,779
Provision for Income Taxes 644 400 577 566
------------------------------------------
Net Income $ 1,316 $ 839 $ 1,145 $ 1,213
==========================================
Net Income Per Common Share (1)
Basic $ 0.30 $ 0.19 $ 0.26 $ 0.27
Diluted $ 0.30 $ 0.19 $ 0.26 $ 0.27
|
Part II (Continued)
Item 8 (Continued)
Three Months Ended
---------------------------------------
Dec. 31 Sept. 30 June 30 Mar. 31
---------------------------------------
($ in thousands, except per share data)
1999
Interest Income $ 8,858 $ 8,587 $ 8,047 $ 7,768
Interest Expense 4,565 4,402 4,074 4,073
---------------------------------------
Net Interest Income 4,293 4,185 3,973 3,695
Provision for Loan Losses 497 226 194 249
Securities Gains 2 -- (2) --
Noninterest Income 764 792 826 737
Noninterest Expense 3,051 3,215 3,052 2,699
---------------------------------------
Income Before Income Taxes 1,511 1,536 1,551 1,484
Provision for Income Taxes 503 473 478 448
---------------------------------------
Net Income $ 1,008 $ 1,063 $ 1,073 $ 1,036
=======================================
Net Income Per Common Share (1)
Basic $ 0.23 $ 0.24 $ 0.24 $ 0.23
Diluted $ 0.23 $ 0.24 $ 0.24 $ 0.23
|
(1) Adjusted for stock dividends and stock splits, as applicable.
Item 9
CHANGES IN AND DISAGREEMENT WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
There was no accounting or disclosure disagreement or reportable event with the former or current auditors that would have required the filing of a report on Form 8-K.
Part III
Item 10
DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Incorporated herein by reference to pages 3 and 4 of the Company's Definitive Proxy Statement for Annual Meeting of Stockholders to be held on April 24, 2001 filed with the Securities and Exchange Commission on March 7, 2001 (File No. 000-12436).
Item 11
EXECUTIVE COMPENSATION
Incorporated herein by reference to pages 6, 8, 9, 10, 11 and 12 of the Company's Definitive Proxy Statement for Annual Meeting of Stockholders to be held on April 24, 2001, filed with the Securities and Exchange Commission on March 7, 2001 (File No. 000-12436).
Part III (Continued)
Item 12
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Incorporated herein by reference to pages 7 and 8 of the Company's Definitive Proxy Statement for Annual Meeting of Stockholders to be held on April 24, 2001, filed with the Securities and Exchange Commission on March 7, 2001 (File No. 000-12436).
Item 13
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Incorporated herein by reference to page 11 of the Company's Definitive Proxy Statement for Annual Meeting of Stockholders to be held on April 24, 2001, filed with the Securities and Exchange Commission on March 7, 2001 (File No. 000-12436).
Part IV
Item 14
EXHIBITS AND REPORTS ON FORM 8-K
(A) Exhibits included herein:
Exhibit No.
3(a) Articles of Incorporation
-filed as Exhibit 3(a) to the Registrant's Registration Statement
on Form 10 (File No. 0-18486), filed with the Commission on April
25, 1990 and incorporated herein by reference
3(b) Bylaws, as amended
-filed as Exhibit 3(b) to the Registrant's Registration Statement
on Form 10 (File No. 0-18486), filed with the Commission on April
25, 1990 and incorporated herein by reference
4 Instruments Defining the Rights of Security Holders
-incorporated herein by reference to page 1 of the Company's
Definitive Proxy Statement for Annual Meeting of Stockholders to be
held on April 24, 2001, filed with the Securities and Exchange
Commission on March 7, 2001 (File No. 000-12436).
10 Material Contracts
10(a) Deferred Compensation Plan and Sample Director Agreement
-filed as Exhibit 10(a) to the Registrant's Registration Statement
on Form 10 (File No. 0-18486), filed with the Commission on April
25, 1990 and incorporated herein by reference
|
Part IV (Continued)
Item 14
(A) Exhibits included herein:
Exhibit No.
10(b) Profit-Sharing Plan dated January 1, 1979
-filed as Exhibit 10(b) to the Registrant's Registration
Statement on Form 10 (File No. 0-18486), filed with the
Commission on April 25, 1990 and incorporated herein by reference
10(c) 1999 Restricted Stock Grant Plan and Restricted Stock Grant
Agreement
11 Statement Re Computation of Per Share Earnings
21 Subsidiaries of the Company
99 Additional Exhibits
99(a) Consolidated Financial Statements
-Independent Auditor's Report
-Consolidated Balance Sheets - December 31, 2000 and 1999
-Consolidated Statements of Income - Years Ended December 31,
2000, 1999 and 1998
-Consolidated Statements of Comprehensive Income - Years Ended
December 31, 2000, 1999 and 1998
-Consolidated Statements of Stockholders' Equity - Years
Ended December 31, 2000, 1999 and 1998
-Consolidated Statements of Cash Flows - Years Ended December 31,
2000, 1999 and 1998
-Notes to Consolidated Financial Statements
All schedules are omitted as the required information is
inapplicable or the information is presented in the financial
statements or related notes.
(B) No reports on Form 8-K have been filed by the registrant during
the last quarter of the period covered by this report.
|
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, Colony Bankcorp, Inc. has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized:
COLONY BANKCORP, INC.
/s/ James D. Minix ------------------------------------------- James D. Minix President/Director/Chief Executive Officer Date: March 28, 2001 /s/ Terry L. Hester ------------------------------------------- Terry L. Hester Executive Vice-President/Controller/Chief Financial Officer/Director Date: March 28, 2001 |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:
/s/ Terry Coleman Date: March 28, 2001 ------------------------------------- Terry Coleman, Director /s/ Morris Downing Date: March 28, 2001 ------------------------------------- L. Morris Downing, Director /s/ Milton N. Hopkins, Jr. Date: March 28, 2001 ------------------------------------- Milton N. Hopkins, Jr., Director /s/ Harold E. Kimball Date: March 28, 2001 ------------------------------------- Harold E. Kimball, Director |
/s/ Marion H. Massee Date: March 28, 2001 ------------------------------------- Marion H. Massee, III, Director /s/ Ben B. Mills, Jr. Date: March 28, 2001 ------------------------------------- Ben B. Mills, Jr., Director /s/ Walter P. Patten Date: March 28, 2001 ------------------------------------- Walter P. Patten, Director /s/ Ralph D. Roberts Date: March 28, 2001 ------------------------------------ Ralph D. Roberts, M.D., Director /s/ W. B. Roberts, Jr. Date: March 28, 2001 ----------------------------------- W. B. Roberts, Jr., Director /s/ R. Sidney Ross Date: March 28, 2001 ----------------------------------- R. Sidney Ross, Director /s/ Joe K. Shiver Date: March 28, 2001 ----------------------------------- Joe K. Shiver, Director /s/ Curtis A. Summerlin Date: March 28, 2001 ---------------------------------- Curtis A. Summerlin, Director |
EXHIBIT 10(c)
COLONY BANKCORP, INC.
1999 RESTRICTED STOCK GRANT PLAN
The terms used in the 1999 Restricted Stock Grant Plan (the "Plan") shall, unless otherwise indicated or required by the particular context, have the following meaning:
1.1 Board. The "Board" is the Board of Directors of the Company.
1.2 Common Stock. "Common Stock" is the Company's $10.00 par value of common stock and shall be the Company's $1.00 par value stock after the Articles of Incorporation are amended.
1.3 Company. The "Company" is Colony Bankcorp, Inc., a Georgia corporation, and, except as otherwise provided in Paragraphs 1.11 and 6.7 with respect to a Subsidiary that ceases to be such under the circumstances therein described, any successor in interest by way of consolidation, operation of law, merger or otherwise.
1.4 Executive Employee. An "Executive Employee" is a full-time permanent employee of the Company or one of its Subsidiaries, who is employed in an executive capacity.
1.5 Fair Market Value. "Fair Market Value" is the closing market price of the Common stock on the NASDAQ national market for the trading day immediately preceding the date Board awards a Restricted Stock Award to a particular Recipient.
1.6 Plan Period. The "Plan Period" is the period commencing February 16, 1999, and ending February 15, 2009.
1.7 Recipient. A "Recipient" is an Executive Employee designated by the Board to receive a Restricted Stock Award under and pursuant to the terms of this Plan.
1.8 Restricted Stock Award. A "Restricted Stock Award" is an award of shares of Common Stock upon and subject to the terms, restrictions, and conditions of this Plan.
1.9 Subsidiary. A "Subsidiary" is any corporation at least a majority of whose securities having ordinary voting power for the election of directors, is at the time owned by the Company and/or one or more Subsidiaries.
1.10 Termination. "Termination" is the ceasing to be an employee of the Company or one of its Subsidiaries, irrespective of cause or reason, including death, permanent total disability, or retirement.
2.1 Purposes. This Plan is being adopted for the purpose of establishing incentives designed to recognize, reward and retain Executive Employees whose performance, contribution and skills are critical to the Company; and to promote the increased ownership of Common Stock among Executive Employees of the Company and its Subsidiaries in order to increase their proprietary interest in the Company's business.
2.2 Eligibility. Only Executive Employees shall be eligible to receive Restricted Stock Awards under this Plan. Determinations as to which Executive Employees may become Recipients as well as the amount and time of Restricted Awards shall be made by the Board.
3.1 General authority. The Plan shall be administered by the Board. Without limiting the generality of the foregoing, but subject to the provisions of Paragraph 6.4, the Board shall have full and final authority in its discretion to:
(a) interpret conclusively the provisions of this Plan and decide all questions of fact arising in its applications;
(b) adopt, amend and rescind rules and regulations relating to this Plan;
(c) determine the Executive Employees to whom Restricted Stock Awards shall be made and the amount of each such Restricted Stock Award; and
(d) make any other determinations it deems necessary or advisable, subject only to those determinations which may be reserved to the Board.
4.1 Maximum amount available. The maximum number of shares of Common Stock which may be subject to Restricted Stock Awards hereunder is 22,175 - shares of the $10.00 par value common stock of the Company (44,350 shares of the $1.00 par value common stock of the Company after the amendment to the Articles of Incorporation and two for one split of the shares).
4.2 Adjustments. The Restricted Stock Awards (and the shares of Common Stock represented thereby) shall be adjusted by the Board, but only in order to prevent dilution or enlargement of such awards in the event of a stock dividend, stock split-up or share combination, exchange of shares, recapitalizations, merger, consolidation, acquisition of property or shares, separation, reorganization, liquidation, or the like of or by the Company.
5.1 Restricted stock awards. Restricted Stock Awards may be made prior to February 15, 2009. Such awards may be made to any Executive Employee, regardless of whether prior Restricted Stock Awards have been made to such person.
5.2 Notice. The Board shall promptly provide each Recipient with written notice setting forth:
(a) the amount of the Restricted Stock Award;
(b) the Fair Market Value of the shares of Common Stock awarded; and
(c) such other terms and conditions relevant thereto as may be considered appropriate by the Board.
5.3 Government and other regulations. The obligations of the Company to issue or transfer Common Stock awarded pursuant hereto are subject to:
(a) compliance with all applicable governmental rules and regulations, and administrative action;
(b) the effectiveness of a registration statement under the Securities Act of 1933, as amended, if deemed necessary or appropriate by the Company; and
(c) the satisfaction of any listing requirements (or authority for listing upon official notice of issuance) for each stock exchange on which outstanding shares of the same class may then be listed.
5.4 Restrictions on transfer. The shares of Common Stock awarded pursuant to this Plan are subject to the following restrictions:
(a) Stock certificates evidencing such shares shall be issued in the sole name of the Recipient (but shall be held by the Company until the restrictions shall have lapsed in accordance herewith) and shall bear a legend which, in part, shall provide that:
"The shares of Colony Bankcorp, Inc. Common Stock evidenced by this certificate are subject to the terms and restrictions of the Colony Bankcorp, Inc. 1999 Restricted Stock Grant Plan; such shares are subject to forfeiture or cancellation under the terms of said Plan; and such shares shall not be sold, transferred, assigned, pledged, encumbered or otherwise alienated or hypothecated except pursuant to the provisions of said Plan, a copy of which is available from Colony Bankcorp, Inc. upon request."
(b) No such shares may be sold, transferred, assigned, pledged, encumbered or otherwise alienated or hypothecated, unless, until and then only to the extent that said restriction shall have lapsed in accordance with Paragraph 5.5 hereof.
5.5 Lapse of restriction. The restrictions in Paragraph 5.4(b) hereof shall lapse upon the date of approval of the Plan by the Company's stockholders. Subject to the provisions of Article VI, the restrictions contained in Paragraph 5.4(a) and (b) hereof shall lapse as follows:
(a) Said restrictions shall lapse with respect to the shares awarded pursuant to a Restricted Stock Award, on the date three years after the Restricted Stock Award is made, but only if on the date the restrictions are to lapse, the Recipient has been an employee of the Company continuously from the time of the Restricted Stock Award to such date of lapse. Temporary leaves of absence which are approved by the Company shall not be considered a break in that employee's continuous employment with the Company. The purpose of the restrictions is to provide an incentive to each Recipient to remain with the Company or one of its Subsidiaries and to perform assigned tasks and responsibilities in a manner consistent with the best interests of the Company and its stockholders.
(b) The Board may at any time in its sole discretion accelerate or waive all or any portion of restrictions remaining in respect of the Restricted Stock Award. This right may be exercised for any or all Recipients.
(c) In the event of the Recipient's death, permanent total disability, or retirement, the Board may, in its discretion, elect to waive all or any portion of the restrictions remaining in respect of the Restricted Stock Award .
(d) Risk of forfeiture under Section 5.6 shall terminate with respect to all Shares upon the occurrence of any of the following: (1) any merger, consolidations, reorganization, division or other corporate transaction in which the Common Stock is converted into another security or into the right to receive securities or property of the Company or of any other entity, other than a transaction where the holders of all of the Company's securities before the transaction own substantially all of the securities of the surviving entity in the transaction (e.g., a merger to change domicile would not trigger termination of rights); (2) the Company's sale of all or substantially all of its assets, or liquidation of all or substantially all of its assets, or (3) a change of control of the Company, which for example, but not by way of limitation, shall be deemed to have occurred (i) upon the accumulation by any person of beneficial ownership of voting securities of the Company in excess of ten percent (10%) of the then- outstanding voting securities, or (ii) by the removal at one time by the vote of shareholders of one half or more of the members of the Company's Board of Directors.
5.6 Effect of termination. Except as otherwise provided in Article VI, in the event of Termination, all shares still subject to the restrictions hereof shall be returned to or canceled by the Company and shall be deemed to have been forfeited by the Recipient, unless and then only to the extent the Compensation Committee shall, in its sole discretion, elect in writing to waive said return and forfeiture in accordance with Paragraph 5.5(b) or (c) hereof.
5.7 Rights as stockholder. Upon issuance of the stock certificates evidencing the Restricted Stock Award and subject to the restrictions contained in Paragraph 5.4 hereof, the Recipient shall have all the rights of a stockholder of the Company with respect to the shares of Common Stock represented by said Restricted Stock Award, including the right to vote the shares and receive all dividends and other distributions paid or made with respect thereto, except the Company at its discretion may hold possession of the share certificates with a blank stock power signed by Recipient to enforce the restrictions in the shares.
6.1 Termination and amendment. The Board may terminate or amend the Plan at any time, except that Restricted Stock Awards then outstanding shall not be adversely affected thereby without the written consent of the respective Recipients holding such Awards.
The Board may make such amendments to the Plan as it shall deem advisable except that the approval by a majority of the Company's stockholders, present or represented at a meeting duly held in accordance with the laws of Georgia shall be required for any amendment which would increase the maximum number of shares of Common Stock available under Paragraph 4.1 hereof to exceed 1% of the outstanding stock of the Company.
6.2 Limitation of liability of the company. As illustrative of the limitations of liability of the Company, but not intended to be exhaustive thereof, nothing in the Plan shall be construed to:
(a) give any employee of the Company or any of its Subsidiaries any right to be granted any awards other than at the sole discretion of the Board;
(b) give any Recipient any rights whatsoever with respect to shares of Common Stock except as specifically provided in the Plan;
(c) limit in any way the right of the Company or its Subsidiaries to terminate the employment of any Recipient at any time; or
(d) be evidence of any agreement or understanding, expressed or implied, that the Company or any of its Subsidiaries will employ any Recipient in any particular position, at any particular rate of compensation, or for any particular period of time.
6.3 Nonexclusivity of the plan. Nothing contained herein is intended to amend, modify or rescind any previously approved compensation plans or programs entered into by the Company or any of its Subsidiaries. This Plan shall be in addition to any and all such plans or programs. The adoption of this Plan by the Board shall not be construed as creating any limitations on the power or authority of the Board to adopt such other additional incentive or other compensation arrangements as the Board may deem necessary or desirable.
6.4 Effective date of the plan. The Plan shall be deemed effective as of February 16, 1999.
6.5 Headings. The headings of the Articles and their subparts in this Plan are for convenience of reading only and are not meant to be of substantive significance and shall not add or detract from the meaning of such Article or subpart.
6.6 Other provisions. The following provisions are also in effect hereunder.
(a) All expenses of administering the Plan shall be borne by the Company.
(b) No person shall have any claim or right to receive an award if, in the opinion of counsel, such receipt conflicts with law or is opposed to public policy.
(c) The place of administration of the Plan shall be conclusively deemed to be within the State of Georgia, and the validity, construction, interpretation, administration and effect of the Plan and of its rules and regulations and the rights of any and all personnel having or claiming to have an interest herein or hereunder shall be governed by and determined exclusively and solely in accordance with the laws of the State of Georgia.
(d) This Plan shall be binding upon and inure to the benefit of the successors and assigns of the Company and each Subsidiary, whether by way of merger, consolidation, operation of law, assignment, purchase or other acquisition of substantially all of the assets or business of the Company or any Subsidiary and any such successor or assign shall absolutely and unconditionally assume all of the Company's and each Subsidiary's obligations hereunder.
(e) Restricted Stock Grant Awards shall be made pursuant to the form of Restricted Stock Grant Agreement attached hereto as Exhibit "A."
IN WITNESS WHEREOF, the Company has executed the foregoing Plan by and through its duly authorized offices this 16th day of February, 1999.
COLONY BANKCORP, INC.
BY: /s/ Terry Hester
-----------------------------------
Chief Financial Officer
|
RESTRICTED STOCK GRANT AGREEMENT
THIS RESTRICTED STOCK GRANT AGREEMENT (this "Agreement"), dated as of January 3, 2000, is by and between COLONY BANKCORP, INC., a Georgia Corporation (the "Company") , and Walter Patten ("Grantee").
WHEREAS, the Board of Directors of the Company has determined that Grantee is to be granted as compensation for his duties as an Executive Employee of the Company, shares of the common stock, $1.00 par value, of the Company (the "Common Stock") subject to the restrictions set forth in this Agreement.
NOW, THEREFORE, the Company and Grantee hereby agree as follows:
(a) During the period and under the conditions set forth in Section 3 below, the Shares are subject to forfeiture. If an Event of Forfeiture (as defined below) occurs, then the certificate representing the Shares subject to such forfeiture shall be delivered to the Company, it shall be canceled, and the Shares represented thereby shall no longer be recorded as outstanding shares in the Company's stock records, but rather shall become authorized but unissued shares of the Company. Grantee shall receive no consideration or compensation in connection with forfeiture of any Shares. If any certificate representing Shares canceled by the Company represents as well Shares not subject to forfeiture hereunder, then the Company shall issue a replacement certificate to the record holder of such Shares representing that number of shares not forfeited and canceled.
(b) Each certificate representing Shares which are subject to restriction under this Agreement shall carry the following legend:
"The shares of Colony Bankcorp, Inc. Common Stock evidenced by this certificate are subject to the terms and restrictions of the Colony Bankcorp, Inc. 1999 Restricted Stock Grant Plan; such shares are subject to forfeiture or cancellation under the terms of said Plan; and such shares shall not be sold, transferred, assigned, pledged, encumbered or otherwise alienated or hypothecated except pursuant to the provisions of said Plan, a copy of which is available from Colony Bankcorp, Inc. upon request."
At any time and from time to time when the restrictions hereunder lapse with respect to a number of Shares, Grantee may submit the certificate representing such Shares to the Company requesting the reissuance of one or more certificates representing restricted Shares and Shares no longer subject to such restrictions. Such replacement certificate for Shares no longer subject to restrictions under this Agreement shall contain no legend regarding such restrictions may contain such other legends required under federal or state securities laws or otherwise deemed prudent by the Company.
(c) For so long as Shares are subject to restriction under this Agreement, such Shares are not transferrable by Grantee, and accordingly they may not be sold, transferred by gift or otherwise, pledged, or hypothecated, nor shall Grantee permit any lien or encumbrance be placed upon such Shares.
(a) All Shares shall be subject to this Agreement for three years from the Effective Date (defined below). After three years measured from the Effective Date, the Shares shall no longer be subject to this Agreement, so that after three years there will remain no Shares subject hereto. At such time as there are no Shares subject to this Agreement, then this Agreement will terminate, provided, however, that all Shares subject to this Agreement at the time of occurrence of an Event of Forfeiture shall remain subject to this Agreement, and this Agreement shall remain in effect until forfeiture of the Shares has been properly documented and such Shares have been canceled in the stock records of the Company.
(c) Forfeiture of Shares subject to this Agreement shall occur ("Event of Forfeiture"), except as provided in paragraph (d) or (e) below, at any time Grantee shall have a Termination as defined in the Plan. For purposes of this Agreement "Executive Employee" shall have the same meaning as in the Plan.
(d) If an Event of Forfeiture would otherwise have occurred under paragraph (c) as a result of Grantee's death, disability or retirement, then the Company may, at its discretion, waive the restrictions with respect to any or all of the Shares subject to this Agreement under any conditions it deems appropriate, or permit full ownership rights to vest as scheduled over the three-year period notwithstanding Grantee's failure because of death, disability or retirement to meet the requirements of paragraph (c) above over that period.
(e) Risk of forfeiture under Section 2 above shall terminate with respect to all Shares upon the occurrence of any of the following: (1) any merger, consolidation, reorganization, division or other corporate transaction in which the Common Stock is converted into another security or into the right to receive securities or property of the Company or of any other entity, other than a transaction where the holders of all of the Company's securities before the transaction own substantially all of the securities of the surviving entity in the transaction (e.g., a merger to change domicile would not trigger termination of rights); (2) the Company's sale of all or substantially all of its assets, or liquidation of all or substantially all of its assets; or (3) a change of control of the Company, which, for example, but not by way of limitation, shall be deemed to have occurred (i) upon the accumulation by any person or beneficial ownership of voting securities of the Company in excess of ten percent (10%) of the then-outstanding voting securities, or (ii) by the removal at one time by the vote of shareholders of one-half or more of the members of the Company's Board of Directors.
(a) Grantee acknowledges that the Shares are being granted as compensation and as an incentive, and Grantee is not giving anything of value in consideration of the grant. Grantee understands that he or she may be subject to federal and state income tax as a result of the grant of the Shares. He or she has or will seek advice from his or her own tax advisor with respect to the tax effect of the grant; including the effect of and decision whether or not to elect to be taxed currently under Section 83(b) of the Internal Revenue Code of 1986, as amended, in connection with the transferred property.
(b) Grantee further acknowledges that the Shares have not been sold to Grantee pursuant to registration under the Securities Act of 1933, as amended (the "Securities Act"), or under any applicable state securities laws, and that the further sale, transfer, pledge or other disposition of the Shares by Grantee must comply with the Securities Act and applicable state securities laws.
(a) At the option of the Company to facilitate effecting the forfeiture of Shares Grantee shall deliver to and deposit with the Company the share certificate or certificates representing the Shares, together with stock transfer powers duly endorsed in blank.
(b) Except as otherwise expressly provided in this Agreement, Grantee shall have all the rights of a shareholder with respect to the Shares while they are held in trust under this Agreement, including the right to vote the Shares and to receive any cash dividends declared thereon. If there occurs any stock dividend, stock split or similar distribution or exchange with respect to the Shares, any new, substituted or additional securities to which Grantee thereby becomes entitled by reason of his or her ownership of the Shares shall be deposited with the Agent and treated thereafter as part of the "Shares" for purposes of this Agreement.
To Grantee: Walter Patten
106 Northlake Drive
Sylvester, GA 31791
000-00-0000
To the Company: Colony Bankcorp, Inc.
Post Office Box 1029
Fitzgerald, GA 31750
|
or to such other address or facsimile number as the parties hereto shall have last designated by notice to the other party. Any notice given by personal delivery or mail shall be deemed to have been delivered on the date of receipt of such delivery at such address; and any notice given by facsimile transmission shall be deemed to have been delivered on the date of transmission if received during business hours on a business day, or the next business day after transmission if received after business hours on a business day or at any time on a nonbusiness day.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.
COLONY BANKCORP, INC.
By: /s/ James D. Minix, President
--------------------------------------
James D. Minix, President
Grantor
/s/ Walter Patten
---------------------------------------
Walter Patten
Grantee
|
EXHIBIT NO. 11
STATEMENT OF COMPUTATION OF EARNINGS PER SHARE
Year Ended
December 31, 2000
----------------------------
Earnings
Shares Per Share
---------- -------------
(In Thousands)
Basic Weighted Average Shares Outstanding 4,439 $1.02
========= ============
Diluted
Average Shares Outstanding 4,439
Common Stock Equivalents 0
---------
4,439 $1.02
========= ============
Year Ended
December 31, 1999
----------------------------
Basic Weighted Average Shares Outstanding 4,435 $0.94
========= ============
Diluted
Average Shares Outstanding 4,435
Common Stock Equivalents 0
----------
4,435 $0.94
========== ============
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EXHIBIT NO. 21
SUBSIDIARIES OF THE COMPANY
Name of Subsidiary State of Incorporation
----------------------------------------------- -----------------------------
Colony Bank of Fitzgerald Georgia
Colony Bank Ashburn Georgia
Colony Bank of Dodge County Georgia
Colony Bank Worth Georgia
Colony Bank Wilcox Georgia
Colony Bank Southeast Georgia
Colony Management Services, Inc. Georgia
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EXHIBIT 99(a)
MCNAIR, MCLEMORE, MIDDLEBROOKS & CO., LLP
CERTIFIED PUBLIC ACCOUNTANTS
A PARTNERSHIP INCLUDING A PROFESSIONAL CORPORATION
RALPH S. McLEMORE, SR., C.P.A. (1963-1977) 389 MULBERRY STREET SIDNEY B. McNAIR, C.P.A. (1954-1992) POST OFFICE BOX ONE ______________________________________ MACON, GEORGIA 31202 SIDNEY E. MIDDLEBROOKS, C.P.A., P.C. (912) 746-6277 RAY C. PEARSON, C.P.A. FAX (912) 741-8353 J. RANDOLPH NICHOLS, C.P.A. WILLIAM H. EPPS, JR., C.P.A. 1117 MORNINGSIDE DRIVE RAYMOND A. PIPPIN, JR., C.P.A. POST OFFICE BOX 1287 JERRY A. WOLFE, C.P.A. PERRY, GA 31069 W. E. BARFIELD, JR., C.P.A. (912) 987-0947 HOWARD S. HOLLEMAN, C.P.A. FAX (912) 987-0526 F. GAY McMICHAEL, C.P.A. |
RICHARD A. WHITTEN, JR., C.P.A.
ELIZABETH WARE HARDIN, C.P.A.
CAROLINE E. GRIFFIN, C.P.A.
RONNIE K. GILBERT, C.P.A.
REPORT OF INDEPENDENT ACCOUNTANTS
The Board of Directors and Stockholders
Colony Bankcorp, Inc. and Subsidiaries
We have audited the accompanying consolidated balance sheets of Colony Bankcorp, Inc. and Subsidiaries as of December 31, 2000 and 1999 and the related consolidated statements of income, comprehensive income, changes in stockholders' equity and cash flows for each of the years in the three-year period ended December 31, 2000. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Colony Bankcorp, Inc. and Subsidiaries as of December 31, 2000 and 1999 and the results of operations and cash flows for each of the years in the three-year period ended December 31, 2000 in conformity with generally accepted accounting principles.
McNAIR, McLEMORE, MIDDLEBROOKS & CO., LLP
Macon, Georgia
February 7, 2001
COLONY BANKCORP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31
ASSETS
2000 1999
------------- -------------
Cash and Balances Due from Depository Institutions $ 18,594,312 $ 22,549,919
Federal Funds Sold 21,675,000 15,290,000
Investment Securities
Available for Sale, at Fair Value 70,222,242 61,856,218
Held to Maturity, at Cost (Fair Value of $290,732 and
$937,449 as of December 31, 2000 and 1999, Respectively) 293,020 963,196
------------- -------------
70,515,262 62,819,414
Loans Held for Sale 1,512,683 --
Loans 388,006,830 315,440,689
Allowance for Loan Losses (5,661,315) (4,682,024)
Unearned Interest and Fees (3,954) (5,379)
------------- -------------
382,341,561 310,753,286
Premises and Equipment 14,047,269 12,847,033
Other Real Estate 349,121 883,257
Other Assets 10,867,389 10,129,025
------------- -------------
Total Assets $ 519,902,597 $ 435,271,934
============= =============
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The accompanying notes are an integral part of these balance sheets.
COLONY BANKCORP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31
LIABILITIES AND STOCKHOLDERS' EQUITY
2000 1999
------------- -------------
Deposits
Noninterest-Bearing $ 38,648,547 $ 33,720,097
Interest-Bearing 411,363,397 340,730,166
------------- -------------
450,011,944 374,450,263
Borrowed Money 25,085,719 21,966,801
Other Liabilities 4,594,801 3,844,232
Stockholders' Equity
Common Stock, Par Value $1 a Share; Authorized
20,000,000 Shares, Issued 4,440,276 and 4,435,026
Shares as of December 31, 2000 and 1999, Respectively 4,440,276 4,435,026
Paid-In Capital 21,602,953 21,537,328
Retained Earnings 14,436,056 10,766,844
Restricted Stock - Unearned Compensation (47,250) --
Accumulated Other Comprehensive Income, Net of Tax (221,902) (1,728,560)
------------- -------------
40,210,133 35,010,638
------------- -------------
Total Liabilities and Stockholders' Equity $ 519,902,597 $ 435,271,934
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The accompanying notes are an integral part of these balance sheets.
COLONY BANKCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31
2000 1999 1998
----------- ----------- -----------
Interest Income
Loans, Including Fees $36,332,732 $28,344,263 $25,851,093
Federal Funds Sold 1,128,886 602,017 1,125,395
Deposits with Other Banks 127,820 467,316 49,455
Investment Securities
U. S. Treasury -- -- 40,461
U. S. Government Agencies 3,253,912 3,212,869 2,957,590
State, County and Municipal 355,909 428,278 393,179
Other Investments 465,200 62,328 93,666
Dividends on Other Investments 93,348 143,245 141,847
----------- ----------- -----------
41,757,807 33,260,316 30,652,686
----------- ----------- -----------
Interest Expense
Deposits 20,373,735 15,972,709 14,624,765
Federal Funds Purchased 17,966 16,198 21,518
Borrowed Money 1,873,008 1,125,446 874,782
----------- ----------- -----------
22,264,709 17,114,353 15,521,065
----------- ----------- -----------
Net Interest Income 19,493,098 16,145,963 15,131,621
Provision for Loan Losses 2,279,810 1,166,000 1,157,330
----------- ----------- -----------
Net Interest Income After Provision for Loan Losses 17,213,288 14,979,963 13,974,291
----------- ----------- -----------
Noninterest Income
Service Charges on Deposits 2,566,669 2,269,836 1,931,721
Other Service Charges, Commissions and Fees 413,930 673,506 372,918
Securities Gains -- -- 40,838
Other 510,691 176,375 313,156
----------- ----------- -----------
3,491,290 3,119,717 2,658,633
----------- ----------- -----------
Noninterest Expenses
Salaries and Employee Benefits 7,463,278 6,450,944 5,721,257
Occupancy and Equipment 2,277,178 2,049,777 1,878,200
Directors' Fees 362,084 354,986 350,125
Securities Losses 494,343 2,115 --
Legal and Professional Fees 450,620 255,644 297,282
Other Real Estate Expense 32,232 113,568 252,089
Other 2,924,789 2,789,965 2,589,551
----------- ----------- -----------
14,004,524 12,016,999 11,088,504
----------- ----------- -----------
Income Before Income Taxes 6,700,054 6,082,681 5,544,420
Income Taxes 2,187,189 1,902,464 1,692,472
----------- ----------- -----------
Net Income $ 4,512,865 $ 4,180,217 $ 3,851,948
=========== =========== ===========
Net Income Per Share of Common Stock
Basic $ 1.02 $ 0.94 $ 0.87
=========== =========== ===========
Diluted $ 1.02 $ 0.94 $ 0.87
=========== =========== ===========
Weighted Average Shares Outstanding 4,439,014 4,435,026 4,426,276
=========== =========== ===========
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The accompanying notes are an integral part of these statements.
COLONY BANKCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31
2000 1999 1998
----------- ----------- -----------
Net Income $ 4,512,865 $ 4,180,217 $ 3,851,948
----------- ----------- -----------
Other Comprehensive Income, Net of Tax
Gains (Losses) on Securities
Arising During the Year 1,180,392 (1,646,355) 75,842
Reclassification Adjustment 326,266 1,396 (26,953)
----------- ----------- -----------
Unrealized Gains (Losses) on Securities 1,506,658 (1,644,959) 48,889
----------- ----------- -----------
Comprehensive Income $ 6,019,523 $ 2,535,258 $ 3,900,837
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The accompanying notes are an integral part of these statements.
COLONY BANKCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
Restricted
Stock - Accumulated
Unearned Other
Shares Common Paid-In Retained Compen- Comprehensive
Outstanding Stock Capital Earnings sation Income Total
----------- ------------ ----------- ----------- ---------- ------------- -----------
Balance, December 31, 1997 2,173,263 $ 21,732,630 $ 1,137,424 $ 6,083,128 $ - $ (132,490) $28,820,962
Common Stock Issuance 44,250 442,500 442,287 884,787
Unrealized Gain on Securities
Available for Sale, Net of Tax of
$24,951 48,889 48,889
Dividends Paid (510,031) (510,031)
Net Income 3,851,948 3,851,948
----------- ------------ ----------- ----------- ---------- ------------- -----------
Balance, December 31, 1998 2,217,513 22,175,130 1,579,711 9,425,045 - (83,601) 33,096,285
Change in Par Value of Common Stock (19,957,617) 19,957,617 -
100 Percent Stock Dividend 2,217,513 2,217,513 (2,217,513) -
Unrealized Loss on Securities
Available for Sale, Net of Tax
Benefit of ($817,220) (1,644,959) (1,644,959)
Dividends Paid (620,905) (620,905)
Net Income 4,180,217 4,180,217
----------- ------------ ----------- ----------- ---------- ------------- -----------
Balance, December 31, 1999 4,435,026 4,435,026 21,537,328 10,766,844 - (1,728,560) 35,010,638
Common Stock Granted 5,250 5,250 65,625 (70,875) -
Amortization of Unearned Compensation 23,625 23,625
Unrealized Gain on Securities
Available for Sale, Net of Tax of
$749,583 1,506,658 1,506,658
Dividends Paid (843,653) (843,653)
Net Income 4,512,865 4,512,865
----------- ------------ ----------- ----------- ---------- ------------- -----------
Balance, December 31, 2000 4,440,276 $ 4,440,276 $21,602,953 $14,436,056 $ (47,250) $ (221,902) $40,210,133
=========== ============ =========== =========== ========== ============= ===========
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The accompanying notes are an integral part of these statements.
COLONY BANKCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31
2000 1999 1998
------------ ------------ ------------
Cash Flows from Operating Activities
Net Income $ 4,512,865 $ 4,180,217 $ 3,851,948
Adjustments to Reconcile Net Income to Net
Cash Provided from Operating Activities
Depreciation 1,280,312 1,168,173 975,416
Amortization and Accretion 100,135 176,335 (24,522)
Provision for Loan Losses 2,279,810 1,166,000 1,157,330
Deferred Income Taxes (396,917) (211,637) (7,175)
Securities (Gains) Losses 494,343 2,115 (40,838)
(Gain) Loss on Sale of Equipment (74,923) (12,305) (570)
(Gain) Loss on Sale of Other Real Estate and Repossessions (4,872) (19,651) 20,418
Other Real Estate Writedown -- 23,000 (3,906)
Change In
Interest Receivable (1,024,025) 13,075 (406,960)
Prepaid Expenses (179,324) 39,808 (22,718)
Interest Payable 453,009 261,657 145,607
Accrued Expenses and Accounts Payable 321,238 198,665 162,348
Other (351,018) (55,757) (51,426)
------------ ------------ ------------
7,410,633 6,929,695 5,754,952
------------ ------------ ------------
Cash Flows from Investing Activities
Interest-Bearing Deposits in Other Banks 3,802,024 (5,657,411) (42,125)
Purchase of Investment Securities
Available for Sale (28,893,359) (32,344,903) (87,364,577)
Proceeds from Sale of Investment Securities
Available for Sale 17,480,023 3,044,183 5,118,297
Proceeds from Maturities, Calls and Paydowns
of Investment Securities
Available for Sale 4,653,291 35,081,355 65,800,538
Held to Maturity 814,578 604,197 1,750,190
Proceeds from Sale of Equipment 230,125 22,242 135,200
Net Loans to Customers, Net of Loans Received in Business Acquisition (75,493,775) (65,211,495) (20,686,240)
Purchase of Premises and Equipment, Net of Property and Equipment
Received in Business Acquisition (2,632,908) (2,339,296) (3,661,144)
Other Real Estate and Repossessions 1,102,562 1,481,408 1,513,034
Cash Surrender Value of Life Insurance (56,054) (61,481) (34,036)
Cash Used in Business Acquisition, Net (111,687) --
------------ ------------ ------------
(79,105,180) (65,381,201) (37,470,863)
------------ ------------ ------------
Cash Flows from Financing Activities
Interest-Bearing Customer Deposits 70,633,231 39,200,292 30,687,650
Noninterest-Bearing Customer Deposits 4,928,450 4,504,459 1,895,808
Proceeds from Borrowed Money 9,697,611 10,700,000 7,500,000
Dividends Paid (754,634) (576,556) (485,642)
Principal Payments on Borrowed Money (6,578,694) (3,254,069) (6,053,172)
Proceeds from Issuance of Common Stock -- -- 884,787
------------ ------------ ------------
77,925,964 50,574,126 34,429,431
------------ ------------ ------------
Net Increase (Decrease) in Cash and Cash Equivalents 6,231,417 (7,877,380) 2,713,520
Cash and Cash Equivalents, Beginning 31,125,662 39,003,042 36,289,522
------------ ------------ ------------
Cash and Cash Equivalents, Ending $ 37,357,079 $ 31,125,662 $ 39,003,042
============ ============ ============
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The accompanying notes are an integral part of these statements.
COLONY BANKCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(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, Colony Bank of Fitzgerald, Fitzgerald, Georgia; Colony Bank Ashburn, Ashburn, Georgia; Colony Bank Worth, Sylvester, Georgia; Colony Bank of Dodge County, Eastman, Georgia; Colony Bank Wilcox, Rochelle, Georgia; Colony Bank Southeast, 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. Certain reclassifications have been made in the 1998 and 1999 financial statements to conform to the 2000 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.
Description of Business
The Banks provide a full range of retail and commercial banking services for consumers and small to medium size businesses primarily in south Georgia. Lending and investing activities are funded primarily by deposits gathered through its retail branch office network. Lending is concentrated in agricultural, commercial and real estate loans to local borrowers. In management's opinion, although the Banks have a high concentration of agricultural and real estate loans, these loans are well collateralized and do not pose an adverse credit risk. In addition, the balance of the loan portfolio is sufficiently diversified to avoid significant concentration of credit risk. Although the Banks have a diversified loan portfolio, a substantial portion of borrowers' ability to honor their contracts is dependent upon the viability of the real estate economic sector.
The success of Colony is dependent, to a certain extent, upon the economic conditions in the geographic markets it serves. No assurance can be given that the current economic conditions will continue. Adverse changes in the economic conditions in these geographic markets would likely have a material adverse effect on the Company's results of operations and financial condition. The operating results of Colony depend primarily on its net interest income. Accordingly, operations are subject to risks and uncertainties surrounding the exposure to changes in the interest rate environment.
(1) Summary of Significant Accounting Policies (Continued)
Investment Securities
The Company records investment securities under Statement of Financial Accounting Standards No. 115, Accounting for Certain Investments in Debt and Equity Securities. Under the provisions of SFAS 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 December 31, 2000 and 1999. 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 Held for Sale
Mortgage loans held for sale are reported at the lower of cost or market value. The method used to determine this amount is the individual loan method.
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.
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.
(1) Summary of Significant Accounting Policies (Continued)
Allowance for Loan Losses (Continued)
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
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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 acquisition 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.
(1) Summary of Significant Accounting Policies (Continued)
Comprehensive Income
Accounting principles generally require that recognized revenue, expenses, gains and losses be included in net income. Certain changes in assets and liabilities, such as unrealized gains and losses on securities available for sale, represent equity changes from economic events of the period other than transactions with owners and are not reported in the consolidated statement of income but as a separate component of the equity section of the consolidated balance sheets. Such items are considered components of other comprehensive income. Statement of Financial Accounting Standards 130 requires the presentation in the financial statements of net income and all items of other comprehensive income as total comprehensive income.
Changes in Accounting Principles and Effects of New Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standard (SFAS) No. 133, Accounting for Derivative Instruments and Hedging Activities, which establishes accounting and reporting standards requiring that every derivative instrument (including certain derivative instruments embedded in other contracts) be recorded in the balance sheet as either an asset or liability measured at its fair value. The Statement requires that changes in the derivative's fair value be recognized currently in earnings unless specific hedge accounting criteria are met. Special accounting for qualifying hedges allows a derivative's gain or loss to offset related results on the hedged item in the income statement, and requires that a company must formally document, designate and assess the effectiveness of transactions that receive hedge accounting. In June 1999, the FASB issued SFAS No. 137, Accounting for Derivative Instruments and Hedging Activities-Deferral of the Effective Date of FASB Statement No. 133, which delays the original effective date of SFAS No. 133 until fiscal years beginning after June 15, 2000. In June 2000, the FASB issued SFAS No. 138, Accounting for Certain Derivative Instruments and Certain Hedging Activities an Amendment of FASB Statement No. 133, which addresses a limited number of issues causing implementation difficulties for certain entities that apply Statement 133. Management does not anticipate that the derivative statements will have a material effect, if any, on the financial position and results of operations of Colony.
During the second quarter of 1998, the American Institute of Certified Public Accountants issued Statement of Position (SOP) 98-5, Accounting for Start-up Costs. SOP 98-5 provides guidance on the financial reporting of start-up costs and organization costs and requires start-up costs to be expensed as incurred. The adoption of the Statement had no impact on Colony's financial position or results of operations.
Restricted Stock - Unearned Compensation
In 1999, the board of directors of Colony Bankcorp, Inc. adopted a restricted stock grant plan which awards certain executive officers common shares of the Company. The maximum number of shares which may be subject to restricted stock awards is 44,350. During 2000, 5,250 shares were issued under this plan. The shares are recorded at fair market value (on the date granted) as a separate component of stockholders' equity. The cost of these shares is being amortized against earnings using the straight-line method over 3 years (the restriction period).
(2) Cash and Balances Due from Depository Institutions
Components of cash and balances due from depository institutions are as follows as of December 31:
2000 1999
----------- -----------
Cash on Hand and Cash Items $ 4,845,555 $ 7,457,109
Noninterest-Bearing Deposits with Other Banks 10,836,523 8,378,553
Interest-Bearing Deposits with Other Banks 2,912,234 6,714,257
----------- -----------
$18,594,312 $22,549,919
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(3) Investment Securities
Investment securities as of December 31, 2000 are summarized as follows:
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
------------ ------------ ------------ ------------
Securities Available for Sale
U.S. Government Agencies
Mortgage Backed $ 15,112,106 $ 44,753 $ (36,255) $ 15,120,604
Other 35,508,778 57,154 (299,853) 35,266,079
State, County and Municipal 8,043,933 32,970 (56,285) 8,020,618
Corporate Obligations 9,007,070 206,165 9,213,235
The Banker's Bank Stock 50,000 50,000
Federal Home Loan Bank Stock 1,609,700 1,609,700
Marketable Equity Securities 1,130,022 (188,016) 942,006
------------ ------------ ------------ ------------
$ 70,461,609 $ 341,042 $ (580,409) $ 70,222,242
============ ============ ============ ============
Securities Held to Maturity
State, County and Municipal $ 293,020 $ -- $ (2,288) $ 290,732
============ ============ ============ ============
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The amortized cost and fair value of investment securities as of December 31, 2000, 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.
(3) Investment Securities (Continued)
Securities
----------------------------------------------------------------------------
Available for Sale Held to Maturity
------------------------------------ ------------------------------------
Amortized Fair Amortized Fair
Cost Value Cost Value
---------------- ---------------- --------------- ----------------
Due in One Year or Less $ 5,902,374 $ 5,884,271 $ 100,000 $ 99,913
Due After One Year Through Five Years 32,939,472 32,674,079
Due After Five Years Through Ten Years 4,400,683 4,418,091
Due After Ten Years 310,183 310,257 193,020 190,819
---------------- ---------------- --------------- ----------------
43,552,712 43,286,698 293,020 290,732
Corporate Obligations 9,007,069 9,213,234
Federal Home Loan Bank Stock 1,609,700 1,609,700
The Banker's Bank Stock 50,000 50,000
Marketable Equity Securities 1,130,022 942,006
Mortgage Backed Securities 15,112,106 15,120,604
---------------- ---------------- --------------- ----------------
$ 70,461,609 $ 70,222,242 $ 293,020 $ 290,732
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Investment securities as of December 31, 1999 are summarized as follows:
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
---------------- ---------------- --------------- ----------------
Securities Available for Sale
U.S. Government Agencies
Mortgage Backed $ 4,628,732 $ (138,957) $ 4,489,775
Other 48,290,906 (1,954,827) 46,336,079
State, County and Municipal 8,826,558 $ 2,789 (165,002) 8,664,345
The Banker's Bank Stock 50,000 50,000
Federal Home Loan Bank Stock 1,425,600 1,425,600
Marketable Equity Securities 1,130,022 (239,603) 890,419
---------------- ---------------- --------------- ----------------
$ 64,351,818 $ 2,789 $ (2,498,389) $ 61,856,218
================ ================ =============== ================
Securities Held to Maturity
State, County and Municipal $ 963,196 $ 12 $ (25,759) $ 937,449
================ ================ =============== ================
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Proceeds from sales of investments available for sale were $17,480,023 in 2000, $3,044,183 in 1999 and $5,118,297 in 1998. Gross realized gains totaled $336, $2,720 and $40,838 in 2000, 1999 and 1998, respectively. Gross realized losses totaled $494,679 in 2000, $4,835 in 1999 and $0 in 1998, respectively.
Investment securities having a carrying value approximating $32,657,900 and $28,317,600 as of December 31, 2000 and 1999, respectively, were pledged to secure public deposits and for other purposes.
(4) Loans
The composition of loans as of December 31 are:
2000 1999
------------ ------------
Commercial, Financial and Agricultural $ 77,447,854 $ 42,594,703
Real Estate-Construction 5,960,659 4,003,226
Real Estate-Farmland 23,411,176 24,178,687
Real Estate-Other 207,395,518 185,662,574
Installment Loans to Individuals 59,862,199 48,226,090
All Other Loans 13,929,424 10,775,409
------------ ------------
$388,006,830 $315,440,689
============ ============
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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 $5,164,263 and $5,333,917 as of December 31, 2000 and 1999, respectively. Foregone interest on nonaccrual loans approximated $575,000 in 2000, $524,000 in 1999 and $611,000 in 1998.
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 December 31 and for the years then ended follows:
2000 1999
------------ ------------
Total Investment in Impaired Loans $ 490,987 $ 885,036
Less Allowance for Impaired Loan Losses (73,651) (106,321)
------------ ------------
Net Investment, December 31 $ 417,336 $ 778,715
============ ============
Average Investment during the Year $ 688,924 $ 2,116,272
============ ============
Income Recognized during the Year $ 57,147 $ 71,890
============ ============
Income Collected during the Year $ 57,147 $ 69,404
============ ============
|
(5) Allowance for Loan Losses
Transactions in the allowance for loan losses are summarized below for the years ended December 31:
2000 1999 1998
----------- ----------- -----------
Balance, Beginning $ 4,682,024 $ 4,726,161 $ 4,575,265
Provision Charged to Operating Expenses 2,279,810 1,166,000 1,157,330
Loans Charged Off (1,541,952) (1,639,943) (1,409,770)
Loan Recoveries 241,433 429,806 403,336
----------- ----------- -----------
Balance, Ending $ 5,661,315 $ 4,682,024 $ 4,726,161
=========== =========== ===========
|
The allowances for loan losses presented above include allowances for impaired loan losses. Transactions in the allowance for impaired loan losses during 2000, 1999 and 1998 were as follows:
2000 1999 1998
----------- ----------- -----------
Balance, Beginning $ 106,321 $ 374,675 $ 460,703
Provision Charged to Operating Expenses 150,679 (144,862) 14,267
Loans Charged Off (218,145) (123,492) (100,295)
Loan Recoveries 34,796 -- --
----------- ----------- -----------
Balance, Ending $ 73,651 $ 106,321 $ 374,675
=========== =========== ===========
|
(6) Premises and Equipment
Premises and equipment are comprised of the following as of December 31:
2000 1999
----------- -----------
Land $ 1,769,274 $ 1,571,779
Building 11,013,457 9,841,094
Furniture, Fixtures and Equipment 8,770,606 7,775,341
Leasehold Improvements 262,344 326,963
Construction in Progress 47,920 95,746
----------- -----------
21,863,601 19,610,923
Accumulated Depreciation (7,816,332) (6,763,890)
----------- -----------
$14,047,269 $12,847,033
=========== ===========
|
Depreciation charged to operations totaled $1,280,312 in 2000, $1,168,173 in 1999 and $975,416 in 1998.
(6) Premises and Equipment (Continued)
Certain Company facilities and equipment are leased under various operating leases. Rental expense approximated $153,500 for 2000, $137,600 for 1999 and $147,800 for 1998.
Future minimum rental payments as of December 31, 2000 are as follows:
Year Ending
December 31 Amount
----------- --------------
2001 $ 149,165
2002 95,828
2003 68,517
2004 10,104
2005 1,438
--------------
$ 325,052
==============
(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.
The components of income tax expense for the years ended December 31 are as follows:
2000 1999 1998
----------- ----------- -----------
Current Federal Expense $ 2,484,106 $ 2,090,601 $ 1,641,502
Deferred Federal Benefit (396,917) (211,637) (7,175)
----------- ----------- -----------
Federal Income Tax Expense 2,087,189 1,878,964 1,634,327
Current State Income Tax Expense 100,000 23,500 58,145
----------- ----------- -----------
$ 2,187,189 $ 1,902,464 $ 1,692,472
=========== =========== ===========
|
The federal income tax expense of $2,087,189 in 2000, $1,878,964 in 1999 and $1,634,327 in 1998 is less than the income taxes computed by applying the federal statutory rate of 34 percent to income before income taxes. The reasons for the differences are as follows:
(7) Income Taxes (Continued)
2000 1999 1998
----------- ----------- -----------
Statutory Federal Income Taxes $ 2,278,018 $ 2,068,112 $ 1,885,103
Tax-Exempt Interest (172,891) (187,304) (179,152)
Interest Expense Disallowance 33,662 34,023 31,011
Premiums on Officers' Life Insurance (18,489) (20,904) (23,828)
Meal and Entertainment Disallowance 4,619 4,591 5,467
State Income Taxes (47,938) (22,311) (17,527)
Other 10,208 2,757 (66,747)
----------- ----------- -----------
Actual Federal Income Taxes $ 2,087,189 $ 1,878,964 $ 1,634,327
=========== =========== ===========
|
Deferred taxes in the accompanying balance sheets as of December 31 include the following:
2000 1999
----------- -----------
Deferred Tax Assets
Allowance for Loan Losses $ 1,333,833 $ 935,208
Deferred Compensation 233,712 221,909
Other Real Estate -- 7,820
Other 7,816 2,099
----------- -----------
1,575,361 1,167,036
Deferred Tax Liabilities
Premises and Equipment (285,785) (274,377)
----------- -----------
1,289,576 892,659
Deferred Tax Asset on
Unrealized Securities Losses 17,456 767,039
----------- -----------
Net Deferred Tax Assets $ 1,307,032 $ 1,659,698
=========== ===========
|
(8) Deposits
Components of interest-bearing deposits as of December 31 are as follows:
2000 1999
------------ ------------
Interest-Bearing Demand $ 72,833,119 $ 66,418,353
Savings 13,072,303 13,541,366
Time, $100,000 and Over 111,874,988 90,459,902
Other Time 213,582,987 170,310,545
------------ ------------
$411,363,397 $340,730,166
============ ============
|
The aggregate amount of short-term jumbo certificates of deposit, each with a minimum denomination of $100,000, was approximately $99,262,800 and $81,129,000 as of December 31, 2000 and 1999, respectively.
(8) Deposits (Continued)
As of December 31, 2000, the scheduled maturities of certificates of deposit are as follows:
Year Amount
------------------- ---------------
2001 $268,753,114
2002 32,342,196
2003 13,673,362
2004 2,867,009
2005 and Thereafter 7,822,294
------------
$325,457,975
============
(9) Borrowed Money
|
Borrowed money at December 31 is summarized as follows:
2000 1999
----------- -----------
Federal Home Loan Bank Advances $23,800,000 $20,700,000
First Port City Note Payable 674,290 674,240
The Banker's Bank Note Payable 611,429 592,561
----------- -----------
$25,085,719 $21,966,801
=========== ===========
|
Advances from the Federal Home Loan Bank (FHLB) have maturities ranging from 2001 to 2010 and interest rates ranging from 5.51 percent to 6.98 percent. Under the Blanket Agreement for Advances and Security Agreement with the FHLB, residential first mortgage loans are pledged as collateral for the FHLB advances outstanding.
First Port City note payable was renewed on January 29, 2000 with additional funds added for an amount totaling $963,200. Annual principal payments of $96,320 are due with interest paid quarterly at The Wall Street Prime minus one half percent. 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, 2003.
The Banker's Bank note payable was renewed on October 23, 2000 for $625,000 at a rate of The Wall Street Prime minus one half percent. Payments are due monthly with the entire unpaid balance due October 23, 2003. The debt is secured by all furniture, fixtures, machinery, equipment and software of Colony Management Services, Inc. Colony Bankcorp, Inc. guarantees the debt.
(9) Borrowed Money (Continued)
The aggregate stated maturities of borrowed money at December 31, 2000 are as
follows:
Year Amount
------------------- ----------------
2001 $6,515,550
2002 4,935,330
2003 3,634,839
2004 1,000,000
2005 and Thereafter 9,000,000
-----------
$25,085,719
===========
|
(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 $369,334 for 2000, $328,256 for 1999 and $264,222 for 1998.
(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. Commitments under standby letters of credit to U.S. addressees approximated $1,770,000 as of December 31, 2000 and $1,705,000 as of December 31, 1999. Unfulfilled loan commitments as of December 31, 2000 and 1999 approximated $40,495,000 and $43,197,000, respectively. No losses are anticipated as a result of commitments and contingencies.
(12) Deferred Compensation Plan
The Banks have deferred compensation plans covering directors choosing to participate through individual deferred compensation contracts. In accordance with terms of the contracts, the Banks are committed to pay the directors deferred compensation over a period of 10 years, beginning at age 65. In the event of a director's death before age 65, payments are made to the director's named beneficiary over a period of 10 years, beginning on the first day of the month following the death of the director.
Liabilities accrued under the plan totaled $688,286 and $653,573 as of December 31, 2000 and 1999, respectively. Benefit payments under the contracts were $68,378 in 2000 and $63,195 in 1999. Provisions charged to operations totaled $103,091 in 2000, $105,965 in 1999 and $79,278 in 1998.
(13) Interest Income and Expense
Interest income of $362,441, $430,435 and $339,632 from state, county and municipal bonds was exempt from regular income taxes in 2000, 1999 and 1998, respectively.
Interest on deposits includes interest expense on time certificates of $100,000 or more totaling $6,314,057, $4,756,433 and $4,140,604 for the years ended December 31, 2000, 1999 and 1998, respectively.
(14) Supplemental Cash Flow Information
Cash payments for the following were made during the years ended December 31:
2000 1999 1998
----------- ----------- -----------
Interest Expense $21,795,255 $16,882,943 $15,375,481
=========== =========== ===========
Income Taxes $ 2,351,106 $ 1,800,000 $ 1,625,000
=========== =========== ===========
|
Noncash financing and investing activities for the years ended December 31 are as follows:
2000 1999 1998
----------- ----------- -----------
Acquisitions of Real Estate
Through Loan Foreclosures $ 567,006 $ 1,431,704 $ 995,442
=========== =========== ===========
Stock Split Effected as Stock Dividend $ -- $ 2,217,513 $ --
=========== =========== ===========
Change in Par Value of Common Stock $ -- $19,957,617 $ --
=========== =========== ===========
Acquisitions, Net of Cash Acquired:
Cash Paid, Less Acquired $ 111,687 $ -- $ --
Liabilities 458,273 -- --
----------- ----------- -----------
Fair Value of Assets Acquired $ 569,960 $ -- $ --
=========== =========== ===========
|
(15) Related Party Transactions
The aggregate balance of direct and indirect loans to directors, executive officers or principal holders of equity securities of the Company was $12,098,184 as of December 31, 2000 and $8,288,667 as of December 31, 1999. All such loans were made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with other persons and do not involve more than a normal risk of collectibility. A summary of activity of related party loans is shown below:
2000 1999
------------ ------------
Balance, Beginning $ 8,288,667 $ 6,844,196
New Loans 11,357,415 8,007,259
Repayments (7,604,013) (6,811,597)
Transactions Due to Changes in Directors 56,115 248,809
------------ ------------
Balance, Ending $ 12,098,184 $ 8,288,667
============ ============
|
(16) Fair Value of Financial Instruments
SFAS No. 107, Disclosures about Fair Value of Financial Instruments, requires disclosure of fair value information about financial instruments, whether or not recognized on the face of the balance sheet, for which it is practicable to estimate that value. The assumptions used in the estimation of the fair value of Colony Bankcorp, Inc. and Subsidiaries' financial instruments are detailed below. Where quoted prices are not available, fair values are based on estimates using discounted cash flows and other valuation techniques. The use of discounted cash flows can be significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. The following disclosures should not be considered a surrogate of the liquidation value of the Company, but rather a good-faith estimate of the increase or decrease in value of financial instruments held by the Company since purchase, origination or issuance.
Cash and Short-Term Investments - For cash, due from banks, bank-owned deposits and federal funds sold, the carrying amount is a reasonable estimate of fair value.
Investment Securities - Fair values for investment securities are based on quoted market prices.
Loans - The fair value of fixed rate loans is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings. For variable rate loans, the carrying amount is a reasonable estimate of fair value.
Deposit Liabilities - The fair value of demand deposits, savings accounts and certain money market deposits is the amount payable on demand at the reporting date. The fair value of fixed maturity certificates of deposit is estimated by discounting the future cash flows using the rates currently offered for deposits of similar remaining maturities.
Standby Letters of Credit and Commitments to Extend Credit - Because standby letters of credit and commitments to extend credit are made using variable rates, the contract value is a reasonable estimate of fair value.
(16) Fair Value of Financial Instruments (Continued)
The carrying amount and estimated fair values of the Company's financial instruments as of December 31 are as follows:
2000 1999
----------------------------------- -----------------------------------
Carrying Estimated Carrying Estimated
Amount Fair Value Amount Fair Value
--------------- ----------------- ---------------- ----------------
(in Thousands)
Assets
Cash and Short-Term Investments $40,269 $40,269 $ 37,840 $ 37,840
Investment Securities Available for Sale 70,222 70,222 61,856 61,856
Investment Securities Held to Maturity 293 291 963 937
Loans 388,007 386,591 315,441 310,804
Loans Held for Sale 1,513 1,513 - -
Liabilities
Deposits 450,012 451,823 374,450 374,866
Borrowed Money 25,086 25,086 21,967 21,967
Unrecognized Financial Instruments
Standby Letters of Credit - 1,770 - 1,705
Commitments to Extend Credit - 40,495 - 43,197
|
Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company's entire holdings of a particular financial instrument. Because no market exists for a significant portion of the Company's financial instruments, fair value estimates are based on many judgments. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.
Fair value estimates are based on existing on and off-balance sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. Significant assets and liabilities that are not considered financial instruments include deferred income taxes and premises and equipment. In addition, the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in the estimates.
(17) 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 2001 without prior approval from the banking regulatory agencies approximates $2,256,000. Upon approval by regulatory authorities, the banks may pay cash dividends to the parent company in excess of regulatory limitations.
(17) Regulatory Capital Matters (Continued)
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 consolidated 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 classification 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 I capital to risk-weighted assets, and of Tier I capital to average assets. The amounts and ratios as defined in regulations are presented hereafter. Management believes, as of December 31, 2000, 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 Under
For Capital Prompt Corrective
Actual Adequacy Purposes Action Provisions
------------------------------ ---------------------------- -----------------------------
Amount Ratio Amount Ratio Amount Ratio
---------------- ----------- --------------- --------- --------------- ----------
As of December 31, 2000
Total Capital
to Risk-Weighted Assets $44,990,413 10.88% $33,068,040 8.00% $41,335,050 10.00%
Tier I Capital
to Risk-Weighted Assets 39,817,428 9.63 16,534,020 4.00 24,801,030 6.00
Tier I Capital
to Average Assets 39,817,428 7.80 20,397,120 4.00 25,496,400 5.00
As of December 31, 1999
Total Capital
to Risk-Weighted Assets 40,266,776 11.88 27,107,916 8.00 33,884,895 10.00
Tier I Capital
to Risk-Weighted Assets 36,025,666 10.63 13,553,929 4.00 20,330,894 6.00
Tier I Capital
to Average Assets 36,025,666 8.39 17,175,526 4.00 21,469,408 5.00
|
(18) Business Combinations
On March 2, 2000, Colony Bank Ashburn purchased the capital stock of Georgia First Mortgage Company in a business combination accounted for as a purchase. The purchase price of $346,725 was the fair value of the net assets of Georgia First Mortgage at the date of purchase. Georgia First Mortgage is primarily engaged in residential real estate mortgage lending in the state of Georgia.
(19) Financial Information of Colony Bankcorp, Inc. (Parent Only)
The parent company's balance sheets as of December 31, 2000 and 1999 and the related statements of income and comprehensive income and cash flows for each of the years in the three-year period then ended are as follows:
COLONY BANKCORP, INC. (PARENT ONLY)
BALANCE SHEETS
DECEMBER 31
ASSETS
2000 1999
------------ ------------
Cash $ 3,718 $ 247,022
Investment in Subsidiaries, at Equity 39,875,534 34,265,641
Other 1,354,047 1,448,468
------------ ------------
Total Assets $ 41,233,299 $ 35,961,131
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Dividends Payable $ 266,417 $ 177,401
Notes and Debentures Payable 674,290 674,240
Other 82,459 98,852
------------ ------------
1,023,166 950,493
------------ ------------
Stockholders' Equity
Common Stock, Par Value $1 a Share; Authorized
20,000,000 Shares, Issued 4,440,276 and 4,435,026
Shares as of December 31, 2000 and 1999, Respectively 4,440,276 4,435,026
Paid-In Capital 21,602,953 21,537,328
Retained Earnings 14,436,056 10,766,844
Restricted Stock - Unearned Compensation (47,250) --
Accumulated Other Comprehensive Income, Net of Tax (221,902) (1,728,560)
------------ ------------
Total Stockholders' Equity 40,210,133 35,010,638
------------ ------------
Total Liabilities and Stockholders' Equity $ 41,233,299 $ 35,961,131
============ ============
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(19) Financial Information of Colony Bankcorp, Inc. (Parent Only) (Continued)
COLONY BANKCORP, INC. (PARENT ONLY)
STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31
2000 1999 1998
----------- ----------- -----------
Income
Dividends from Subsidiaries $ 1,956,250 $ 1,500,000 $ 2,400,000
Management Fees from Subsidiaries -- -- 175,500
Other 70,423 88,501 76,872
----------- ----------- -----------
2,026,673 1,588,501 2,652,372
----------- ----------- -----------
Expenses
Interest 59,295 74,668 117,431
Amortization 17,951 17,951 17,951
Other 813,804 742,622 717,773
----------- ----------- -----------
891,050 835,241 853,155
----------- ----------- -----------
Income Before Taxes and Equity in
Undistributed Earnings of Subsidiaries 1,135,623 753,260 1,799,217
Income Tax Benefits 274,007 234,576 169,953
----------- ----------- -----------
Income Before Equity in Undistributed
Earnings of Subsidiaries 1,409,630 987,836 1,969,170
Equity in Undistributed Earnings of Subsidiaries 3,103,235 3,192,381 1,882,778
----------- ----------- -----------
Net Income 4,512,865 4,180,217 3,851,948
----------- ----------- -----------
Other Comprehensive Income, Net of Tax
Gains (Losses) on Securities
Arising During the Year 1,180,392 (1,646,355) 75,842
Reclassification Adjustment 326,266 1,396 (26,953)
----------- ----------- -----------
Unrealized Gains (Losses) in Securities 1,506,658 (1,644,959) 48,889
----------- ----------- -----------
Comprehensive Income $ 6,019,523 $ 2,535,258 $ 3,900,837
=========== =========== ===========
|
(19) Financial Information of Colony Bankcorp, Inc. (Parent Only) (Continued)
COLONY BANKCORP, INC. (PARENT ONLY)
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31
2000 1999 1998
----------- ----------- -----------
Cash Flows from Operating Activities
Net Income $ 4,512,865 $ 4,180,217 $ 3,851,948
Adjustments to Reconcile Net Income to Net Cash
Provided from Operating Activities
Depreciation and Amortization 114,133 87,349 85,771
Equity in Undistributed Earnings of Subsidiaries (3,103,235) (3,192,381) (1,882,778)
Other (11,283) 56,858 37,839
----------- ----------- -----------
1,512,480 1,132,043 2,092,780
----------- ----------- -----------
Cash Flows from Investing Activities
Capital Infusion in Subsidiary (1,000,000) -- (1,000,000)
Purchases of Premises and Equipment (1,200) (56,062) (110,227)
----------- ----------- -----------
(1,001,200) (56,062) (1,110,227)
----------- ----------- -----------
Cash Flows from Financing Activities
Dividends Paid (754,634) (576,556) (485,642)
Proceeds from Issuance of Common Stock -- -- 884,787
Principal Payments on Notes and Debentures -- (363,187) (1,280,379)
Proceeds from Notes and Debentures 50 -- --
----------- ----------- -----------
(754,584) (939,743) (881,234)
----------- ----------- -----------
Increase (Decrease) in Cash (243,304) 136,238 101,319
Cash, Beginning 247,022 110,784 9,465
----------- ----------- -----------
Cash, Ending $ 3,718 $ 247,022 $ 110,784
=========== =========== ===========
|
(20) Common Stock Split
On February 16, 1999, a 100 percent stock split effected on March 31, 1999 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.
(21) Legal Contingencies
In the ordinary course of business, there are various legal proceedings pending against Colony and its subsidiaries. The aggregate liabilities, if any, arising from such proceedings would not, in the opinion of management, have a material adverse effect on Colony's consolidated financial position.