SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------
FORM 10-QSB
(Mark One)
X QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
- --- EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2005.
OR
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission File No. 0-25929
THOMASVILLE BANCSHARES, INC.
----------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Georgia 58-2175800
---------------------- ---------------
(State of Incorporation) (I.R.S. Employer
Identification No.)
301 North Broad Street, Thomasville, Georgia 31792
-----------------------------------------------------------
(Address of Principal Executive Offices)
(229) 226-3300
-------------------------------
(Issuer's Telephone Number, Including Area Code)
Not Applicable
-------------------------------
(Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report)
Check whether the issuer (1) filed all reports required to be filed by
section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the issuer was required
to file such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
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APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares
outstanding of each of the issuer's classes of common equity as of the latest
practicable date.
Common stock, $1.00 par value per share 2,939,983 shares issued and
outstanding as of August 12, 2005.
Transitional small business disclosure format (check one):
Yes No X
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
- ------- --------------------
THOMASVILLE BANCSHARES, INC.
THOMASVILLE, GEORGIA
CONSOLIDATED BALANCE SHEETS
June 30, December 31,
2005 2004
ASSETS (Unaudited) (Unaudited)
- ------ ----------- -----------
Cash and due from banks $ 5,686,163 $ 5,963,843
Federal funds sold 20,593,328 662,263
------------ ------------
Total cash and cash equivalents $ 26,279,491 $ 6,626,106
------------ ------------
Investment securities:
Securities available-for-sale,
at market value $ 13,092,116 $ 18,421,154
Loans, net 207,890,678 204,328,320
Property & equipment, net 4,766,539 4,815,924
Goodwill 3,372,259 3,372,259
Other assets 3,988,492 2,320,074
------------ ------------
Total Assets $259,389,575 $239,883,837
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits
Non-interest bearing deposits $ 26,660,749 $ 26,063,129
Interest bearing deposits 193,051,156 173,143,434
------------ ------------
Total deposits $219,711,905 $199,206,563
Subordinated debentures 4,000,000 - -
Federal funds purchased - - 1,097,000
Borrowings 13,091,667 19,376,107
Other liabilities 2,044,178 682,627
------------ ------------
Total Liabilities $238,847,750 $220,362,297
------------ ------------
Commitments and contingencies
Shareholders' Equity:
Common stock, $1.00 par value, 10
million shares authorized, 2,939,577
(2005) and 2,937,625 (2004)
shares issued & outstanding $ 2,939,577 $ 2,937,625
Paid-in-capital 7,972,414 7,872,245
Retained earnings 9,712,405 8,739,226
Accumulated other
comprehensive (loss) (82,571) (27,556)
------------ ------------
Total Shareholders' Equity $ 20,541,825 $ 19,521,540
------------ ------------
Total Liabilities and
Shareholders' Equity $259,389,575 $239,883,837
============ ============
Refer to notes to the consolidated financial statements.
THOMASVILLE BANCSHARES, INC.
THOMASVILLE, GEORGIA
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
For the three months
ended June 30,
------------------------
2005 2004
---- ----
Interest income $3,707,613 $2,805,492
Interest expense 1,227,830 858,418
--------- ---------
Net interest income $2,479,783 $1,947,074
Provision for possible loan losses 105,000 105,000
--------- ---------
Net interest income after provision
for possible loan losses $2,374,783 $1,842,074
--------- ---------
Other income
Service charge on deposit accounts $ 167,283 $ 158,298
Fees, money management 255,000 258,000
Trust services 178,384 122,138
Other income and fees 101,725 96,749
--------- ---------
Total other income $ 702,392 $ 635,185
--------- ---------
Salaries and benefits $ 893,792 $ 824,589
Advertising and public relations 55,285 50,050
Depreciation 98,316 104,039
Regulatory fees and assessments 25,581 22,909
Other operating expenses 581,379 465,146
--------- ---------
Total operating expenses $1,654,353 $1,466,733
--------- ---------
Net income before taxes $1,422,822 $1,010,526
Income taxes 520,099 380,200
--------- ---------
Net income $ 902,723 $ 630,326
========= =========
Basic income per share $ .31 $ .21
========= =========
Diluted income per share $ .30 $ .21
========= =========
Refer to notes to the consolidated financial statements.
THOMASVILLE BANCSHARES, INC.
THOMASVILLE, GEORGIA
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
For the six months
ended June 30,
------------------------
2005 2004
---- ----
Interest income $7,098,799 $5,536,239
Interest expense 2,321,816 1,694,504
--------- ---------
Net interest income $4,776,983 $3,841,735
Provision for possible loan losses 210,000 210,000
--------- ---------
Net interest income after provision
for possible loan losses $4,566,983 $3,631,735
--------- ---------
Other income
Service charge on deposit accounts $ 319,063 $ 313,043
Fees, money management 510,000 523,999
Trust services 344,006 228,060
Other income and fees 207,339 179,196
--------- ---------
Total other income $1,380,408 $1,244,298
--------- ---------
Salaries and benefits $1,758,194 $1,598,014
Advertising and public relations 143,867 114,675
Depreciation 196,163 209,624
Regulatory fees and assessments 52,391 47,458
Other operating expenses 1,121,403 897,521
--------- ---------
Total operating expenses $3,272,018 $2,867,292
--------- ---------
Net income before taxes $2,675,373 $2,008,741
Income taxes 967,349 731,566
--------- ---------
Net income $1,708,024 $1,277,175
========= =========
Basic income per share $ .58 $ .43
========= =========
Diluted income per share $ .56 $ .42
========= =========
Refer to notes to the consolidated financial statements.
THOMASVILLE BANCSHARES, INC.
THOMASVILLE, GEORGIA
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the six-month period
Ended June 30,
---------------------------
2005 2004
---- ----
Cash flows provided by operating activities $ 1,167,037 $ 1,264,955
----------- -----------
Cash flows from investing activities:
Purchase of fixed assets $ (146,778) $ (144,385)
Maturities, calls,
paydowns, securities, AFS 5,249,561 1,300,000
Purchase of securities, AFS - - (4,714,441)
(Increase) in loans (3,772,358) (8,379,469)
----------- -----------
Net cash used by investing activities $ 1,330,425 $(11,938,295)
----------- -----------
Cash flows from financing activities:
Issuance of stock to 401(k) $ 32,021 $ 25,497
Options, restricted stock - - 65,991
Decrease in borrowings and
Federal Funds purchased (3,381,440) 2,482,853
Increase in deposits 20,505,342 8,729,247
----------- -----------
Net cash provided from
financing activities $ 17,155,923 $ 11,303,588
----------- -----------
Net increase in cash and cash equivalents $ 19,653,385 $ 630,248
Cash and cash equivalents,
beginning of period 6,626,106 6,531,779
----------- -----------
Cash and cash equivalents, end of period $ 26,279,491 $ 7,162,027
=========== ===========
SCHEDULE OF NONCASH FINANCING ACTIVITIES
For the six-month period
Ended June 30,
---------------------------
2005 2004
---- ----
Declaration of cash dividends to be paid $ 734,845 $ 675,363
Issuance of restricted stock 70,100 65,991
Refer to notes to the consolidated financial statements.
THOMASVILLE BANCSHARES, INC.
THOMASVILLE, GEORGIA
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED)
FOR THE SIX-MONTH PERIODS ENDED JUNE 30, 2004 AND 2005
Accumulated
Common Stock Other
------------------- Paid in Retained Comprehensive
Shares Par Value Capital Earnings Income Total
------ --------- ------- -------- ------ -----
Balance,
December 31,
2003 2,934,076 $ 2,934,076 $ 7,615,280 $6,759,183 $ (7,033) $17,301,506
--------- ---------- ---------- --------- -------- ----------
Comprehensive Income:
- ---------------------
Net income,
six-month
period ended
June 30,
2004 - - - - - - 1,277,175 - - 1,277,175
Net unrealized
(loss) on
securities, six-
month period
ended June 30,
2004 - - - - - - - - (146,234) (146,234)
--------- ---------- ---------- --------- -------- ----------
Total comprehensive
income - - - - - - 1,277,175 (146,234) 1,130,941
Sale of
2,286 shares
to employee
401(k) plan 2,286 2,286 23,211 - - - - 25,497
Stock options,
restricted
stock
(5,414
options) - - - - 65,991 - - - - 65,991
--------- ---------- ---------- --------- -------- ----------
Balance,
June 30,
2004 2,936,362 $ 2,936,362 $ 7,704,482 $8,036,358 $(153,267) $18,523,935
========= ========== ========== ========= ======== ==========
- -----------------------------------------------------
Balance,
Dec 31,
2004 2,937,625 $ 2,937,625 $ 7,872,245 $8,739,226 $ (27,556) $19,521,540
--------- ---------- ---------- --------- -------- ----------
Comprehensive Income:
- --------------------
Net income,
six-month
period ended
June 30, 2005 - - - - - - 1,708,024 - - 1,708,024
Net unrealized
(loss) on
securities,
six-month
period ended
June 30, 2005 - - - - - - - - (55,015) (55,015)
--------- ---------- ---------- --------- -------- ----------
Total comprehensive
income - - - - - - 1,708,024 (55,015) 1,653,009
Declaration
of dividends - - - - - - (734,845) - - (734,845)
Sale of
1,952 shares
to employee
401K plan 1,952 1,952 30,069 - - - - 32,021
Stock options,
restricted
stock 5,290
options - - - - 70,100 - - - - 70,100
--------- ---------- ---------- --------- -------- ----------
Balance,
June 30,
2005 2,939,577 $ 2,939,577 $ 7,972,414 $9,712,405 $ (82,571) $20,541,825
========= ========== ========== ========= ======== ==========
Refer to notes to the consolidated financial statements.
THOMASVILLE BANCSHARES, INC.
THOMASVILLE, GEORGIA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 2005
NOTE 1 - BASIS OF PRESENTATION
The accompanying financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the instructions to Form 10-QSB. Accordingly, they do not include all
the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary
for a fair presentation have been included. Operating results for the three-
and six-month periods ended June 30, 2005 are not necessarily indicative of the
results that may be expected for the year ending December 31, 2005. These
statements should be read in conjunction with the consolidated financial
statements and footnotes thereto included in Form 10-KSB for the year ended
December 31, 2004.
NOTE 2 - SUMMARY OF ORGANIZATION
Thomasville Bancshares, Inc., Thomasville, Georgia (the "Company"), was
organized in January 1995 for a then proposed de novo bank, Thomasville
National Bank, Thomasville, Georgia (the "Bank"). The Bank commenced
operations in October 1995. The Bank is primarily engaged in the business
of obtaining deposits and providing commercial, consumer and real estate loans
to the general public. The Bank also offers trust services. The Bank operates
from two banking offices, both in Thomasville, Georgia. The Bank's depositors
are each insured up to $100,000 by the Federal Deposit Insurance Corporation,
subject to certain limitations imposed by the FDIC. In addition to the Bank,
the Company has two other subsidiaries, TNB Financial Services, Inc. ("TNBFS"),
through which the Company provides investment advisory services, and Thomasville
Capital Trust I ("TCTI") which issued $4.0 million in trust preferred securities
to unrelated investors.
NOTE 3 - INVESTMENT SECURITIES
Information pertaining to securities with gross unrealized losses at
March 31, 2005, aggregated by investment category and further segregated by
the length of time (less than or over twelve months) that the securities have
been in a continuous loss position follows:
Less than Over
Twelve Months Twelve Months Total
------------------ ------------------ ------------------
Fair Unrealized Fair Unrealized Fair Unrealized
Description Value Loss Value Loss Value Loss
- ----------- ----- ---- ----- ---- ----- ----
U.S. Agency and
Government
Corp-
orations $3,035,769 $ (14,959) $7,037,557 $(110,882) $10,073,326 $(125,841)
========= ======== ========= ======== ========== ========
At June 30, 2005, unrealized losses in the securities portfolio amounted
to $(125,841), representing 0.96% of the total portfolio. All of the unrealized
losses relate to U.S. Agency securities and securities of U.S. government
corporations. These unrealized losses were caused by fluctuations in market
interest rates, rather than concerns over the credit quality of the issuers.
The Company believes that the U.S. Agencies and government corporations will
continue to honor their interest payments on time as well as the full debt at
maturity. Because the unrealized losses are due to fluctuations in the interest
rate, and no credit-worthiness factors exist, the Company believes that the
investments are not considered other-than-temporarily impaired.
NOTE 4 - RECENT ACCOUNTING PRONOUNCEMENTS
In December 2004, the FASB issued SFAS No. 123R, "Share-Based Payment."
SFAS No. 123R establishes standards for the accounting for transactions in which
an entity exchanges its equity instruments for goods or services. It also
addresses transactions in which an entity incurs liabilities in exchange for
goods or services that are based on the fair value of the entity's equity
instruments or that may be settled by the issuance of those equity instruments.
Under SFAS No. 123R, the Company must measure the cost of employee services
received in exchange for an award of equity instruments based on the grant-date
fair value of the award. That cost will be recognized over the period during
which an employee is required to provide service in exchange for the award.
SFAS No 123R applies to all awards granted after the required effective date and
to awards modified, repurchased, or cancelled after that date. Compensation
cost will be recognized on or after the required effective date for the portion
of outstanding awards for which the requisite service has not yet been rendered,
based on the grant-date fair value of those awards calculated under SFAS No.
123R for either recognition or pro forma disclosures.
On April 14, 2005, the Securities and Exchange Commission (SEC) amended
Rule 4-01(a) of Regulation S-X that amended the compliance date for SFAS No.
123R. The SEC's new rule allows companies to implement SFAS No. 123R at the
beginning of their next fiscal year, instead of the next reporting period that
begins after June 15, 2005. The Company has determined that it will not adopt
SFAS No. 123R until January 1, 2006.
On March 29, 2005, the SEC issued Staff Accounting Bulletin No. 107 (SAB
107), "Share-Based Payment." SAB 107 expresses the view of the SEC staff
regarding the interaction between SFAS No. 123R and certain SEC rules and
regulations, provides the staff's views regarding the valuation of share-based
payments by public companies, and provides guidance regarding share-based
payments with non-employees.
The Company has not determined the full impact of adoption of SFAS No. 123R.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
- ------- ---------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
OVERVIEW
- --------
Thomasville Bancshares, Inc., a Georgia corporation (the "Company"), was
formed in March 1995 to organize and act as the holding company for Thomasville
National Bank (the "Bank"), a national banking association. The Bank opened for
business in October 1995, and presently operates two branches in Thomasville,
Georgia. The Bank is a full service commercial bank, with trust powers, and
offers a full range of interest-bearing and non-interest-bearing accounts,
including commercial and retail checking accounts, money market accounts,
individual retirement and Keogh accounts, regular interest-bearing statement
savings accounts, certificates of deposit, commercial loans, real estate loans,
home equity loans and consumer/installment loans. In addition, the Bank
provides such consumer services as U.S. Savings Bonds, travelers checks,
cashiers checks, safe deposit boxes, bank by mail services, internet banking,
direct deposit and automatic teller services.
In September 2001, the Bank formed an operating subsidiary, TNB Financial
Services, Inc., a Georgia corporation with trust powers. On March 31, 2004,
TNB Financial Services was liquidated, with all of its operations being
transferred to TNB Trust Services, a division of the Bank.
In July 2002, the Company acquired all of the issued and outstanding
capital stock of Joseph Parker & Company, Inc. ("JPC"), a Georgia corporation
and federally registered investment advisory firm located in Thomasville,
Georgia. In July 2004, JPC's name was changed to TNB Financial Services, Inc.
("TNBFS").
The Company's results of operations are largely dependent on interest
income, which is the difference between the interest earned on loans and
securities and interest paid on deposits and borrowings. The results of
operations are also affected by the level of income/fees from loans, deposits,
borrowings, as well as operating expenses, the provision for loan losses, the
impact of federal and state income taxes, and the relative levels of interest
rates and economic activity.
CRITICAL ACCOUNTING POLICIES
Critical accounting policies are defined as those that are reflective of
significant judgments and uncertainties, and could potentially result in
materially different results under different assumptions and conditions. The
Company believes that the most critical accounting policies upon which its
financial condition depends, and which involve the most complex or subjective
decisions or assessments are as follows:
Allowance for Loan Losses. Arriving at an appropriate level of allowance
for loan losses involves a high degree of judgment. The Company's allowance for
loan losses provides for probable losses based upon evaluations of known and
inherent risks in the loan portfolio. Management uses historical information
to assess the adequacy of the allowance for loan losses as well as the
prevailing business environment. The allowance is increased by provisions for
loan losses and by recoveries of loans previously charged-off and reduced by
loans charged-off.
Income Taxes. The Company estimates income tax expense based on the amount
it expects to owe various tax authorities. Taxes are discussed in more detail
in Note 13 of the consolidated financial statements. Accrued taxes represent
the net estimated amount due to or to be received from taxing authorities. In
estimating accrued taxes, management assesses the relative merits and risks of
the appropriate tax treatment of transactions taking into account statutory,
judicial and regulatory guidance in the context of its tax position. Although
the Company uses available information to record accrued income taxes,
underlying estimates and assumptions can change over time as a result of
unanticipated events or circumstances such as changes in tax laws influencing
the Company's overall tax position.
Valuation of Goodwill/Intangible Assets and Analysis for Impairment. The
Company utilized the purchase method to reflect its acquisition of JPC.
Accordingly, the Company was required to record assets acquired and liabilities
assumed at their fair value which is an estimate determined by the use of
internal or other valuation techniques. These valuation estimates result in
goodwill and other intangible assets. Goodwill is subject to ongoing periodic
reviews and is evaluated using various fair value techniques including multiples
of price/equity and price/earnings ratios.
Additional information regarding these critical accounting policies is set
forth in the notes to the Company's financial statements included in the
Company's Form 10-KSB for the year ended December 31, 2004.
FINANCIAL CONDITION
Total consolidated assets increased by $19.5 million, to $259.4 million,
during the six-month period ended June 30, 2005. Cash and cash equivalents
increased by $19.6 million, to $26.3 million; investment securities decreased by
$5.3 million, to $13.1 million; loans increased by $3.6 million, to $207.9
million; and other assets increased by $1.6 million, to $12.1 million. To fund
the growth in assets, deposits increased by $20.5 million, to $219.7 million;
borrowings decreased by $3.4 million, to $17.1 million; other liabilities
increased by $1.4 million, to $2.0 million; and the capital accounts increased
by $1.0 million, to $20.5 million.
Liquidity and Capital Resources
Liquidity is the Company's ability to meet all deposit withdrawals
immediately, while also providing for the credit needs of customers. The
June 30, 2005 financial statements evidence a satisfactory liquidity
position as total cash and cash equivalents amounted to $26.3 million,
representing 10.1% of total assets. Investment securities, which amounted
to $13.1 million, or 5.0% of total assets, provide a secondary source of
liquidity because they can be converted into cash in a timely manner. The
Company's management closely monitors and maintains appropriate levels of
interest earning assets and interest bearing liabilities so that maturities
of assets are such that adequate funds are provided to meet customer
withdrawals and loan demand. The Company is not aware of any trends, demands,
commitments, events or uncertainties that will result in or are reasonably
likely to result in the Company's liquidity increasing or decreasing in any
material way.
The Bank maintains an adequate level of capitalization as measured by the
following capital ratios and the respective minimum capital requirements
established by the Bank's primary regulator, the Office of the Comptroller of
the Currency ("OCC").
Bank's Minimum required
June 30, 2005 by regulator
-------------- ----------------
Leverage ratio 8.7% 4.0%
Risk weighted ratio 12.6% 8.0%
On March 30, 2005, the Company, through a newly formed Delaware statutory
trust, completed the sale of $4.0 million of trust preferred securities (the
"Trust Preferred Securities"). The Trust Preferred Securities have a maturity
of 30 years and are redeemable beginning in June 2010 or upon the occurrence of
certain other conditions. The Company used approximately $2.7 million of the
proceeds from the sale of the Trust Preferred Securities to repay holding
company indebtedness and the remaining approximately $1.3 million was
contributed as capital to the Bank. The Trust Preferred Securities pay
cumulative cash distributions accumulating from the date of issuance at an
annual rate of LIBOR plus 1.90% of the liquidation amount of $1,000 per
preferred security on March 31, June 30, September 30 and December 31 of each
year. The Trust Preferred Securities are recorded as subordinated debt on the
consolidated balance sheet, but, subject to certain limitations, will qualify
as Tier 1 capital for regulatory capital purposes.
Off-Balance Sheet Arrangements
In the ordinary course of business, the Bank may enter into off-balance
sheet financial instruments which are not reflected in the financial statements.
These instruments include commitments to extend credit and standby letters of
credit. Such financial instruments are recorded in the financial statements
when funds are disbursed or the instruments become payable.
Following is an analysis of significant off-balance sheet financial
instruments at June 30, 2005 and December 31, 2004.
At At
June 30, December 31,
2005 2004
---- ----
(In thousands)
Commitments to extend credit $ 39,705 $ 25,115
Standby letters of credit 4,954 4,420
------- -------
$ 44,659 $ 29,535
======= =======
RESULTS OF OPERATIONS
For the three-month periods ended June 30, 2005 and 2004, net income
amounted to $902,723 and $630,326, respectively. On a per share basis, basic
and diluted income for the three-month period ended June 30, 2005 was $0.31
and $0.30, respectively. For the three-month period ended June 30, 2004, basic
and diluted income per share, were both $0.21. Management believes that the
following facts are important to consider when comparing the results of the
three-month period ended June 30, 2005 with the three-month period ended June
30, 2004:
a. Net interest income increased by approximately $533,000, or by 27.3%. This
was accomplished over a time period when total assets have increased by only
18.9%.
b. The above increase combined with a $67,000 increase in non-interest income
was more than sufficient to offset the $188,000 increase in operating
expense.
Net income for the six-month period ended June 30, 2005 amounted to
$1,708,024, or $0.58 and $0.56 per basic and diluted share. For the six-month
period ended June 30, 2004, net income amounted to $1,277,175, or $0.43 and
$0.42 per basic and diluted share. Management believes that the following facts
are important to consider when comparing the results of operations for the six-
month period ended June 30, 2005 with the six-month period ended June 30, 2004:
a. Average total earning assets increased from $198.7 million for the six
months ended June 30, 2004 to $228.5 million for the six months ended
June 30, 2005. The net increase of $29.8 million represents a 15.0%
increase in average earning assets over a twelve-month period.
b. The yield on earning assets increased from 5.57% for the six-month period
ended June 30, 2004 to 6.21% for the six-month period ended June 30,
2005. This increase is mainly due to economic policies undertaken by the
Federal Reserve Board. Interest income increased from $5,536,239 for the
six-month period ended June 30, 2004 to $7,098,799 for the six-month period
ended June 30, 2005 because of the growth in average earning assets and the
higher yields on all earning asset categories.
c. Net interest income represents the difference between interest received
on interest earning assets and interest paid on interest bearing
liabilities. The following table presents the main components of
interest earning assets and interest bearing liabilities for the six-
month period ended June 30, 2005.
(Dollars in 000's)
Interest Interest
Earning Assets/ Average Income/ Yield/
Bearing Liabilities Balance Cost Cost
- ------------------- ------- ----- ----
Federal funds sold $ 5,103 $ 72 2.82%
Securities 13,808 260 3.76%
Loans 209,600 6,767 6.46%
-------- ------- ----
Total $ 228,511 $ 7,099 6.21%
-------- ------- ----
Deposits and borrowings $ 197,190 $ 2,322 2.36%
-------- ------- ----
Net interest income $ 4,777
=======
Net yield on earning assets 4.18%
====
Net interest income increased from $3,841,735 for the six-month period
ended June 30, 2004 to $4,776,983 for the six-month period ended June 30,
2005, an increase of $935,248, or 24.3%. While the average cost of funds
decreased by 38 basis points to 1.98% for the six months ended June 30,
2005 as compared to the six months ended June 30, 2004, the yield on
earning assets increased by 64 basis points over the same period. As a
result, the net yield on earning assets increased from 3.87% for the six-
month period ended June 30, 2004 to 4.18% for the six-month period ended
June 30, 2005.
d. Other income increased from $1,244,298 for the six-month period ended June
30, 2004 to $1,380,408 for the six-month period ended June 30, 2005. As a
percent of average total assets, other income decreased from 1.19% for the
six-month period ended June 30, 2004 to 1.10% for the six-month period
ended June 30, 2005.
e. Total operating expenses increased from $2,867,292 for the six-month
period ended June 30, 2004 to $3,272,018 for the six-month period ended
June 30, 2005. As a percent of average total assets, total operating
expenses declined from 2.74% for the six-month period ended June 30,
2004 to 2.62% for the six-month period ended June 30, 2005.
Allowance for Loan Losses
At December 31, 2004, the allowance for loan losses amounted to
$2,224,845; at June 30, 2005, the allowance amounted to $2,438,240. The
allowance for loan losses, as a percent of gross loans, increased from 1.08%
to 1.15% during the six-month period ended June 30, 2005. Management
considers the allowance for loan losses to be adequate and sufficient to absorb
anticipated future losses; however, there can be no assurance that charge-offs
in future periods will not exceed the allowance for loan losses or that
additional provisions to the allowance will not be required.
The Company is not aware of any current recommendation by the regulatory
authorities which, if implemented, would have a material effect on the Company's
liquidity, capital resources, or results of operations.
ITEM 3. CONTROLS AND PROCEDURES
- ------- -----------------------
Management has developed and implemented a policy and procedures for
reviewing disclosure controls and procedures and internal controls over
financial reporting on a quarterly basis. Management, including the Chief
Executive Officer (the Company's principal executive and financial officer),
evaluated the effectiveness of the design and operation of disclosure controls
and procedures as of June 30, 2005 and, based on their evaluation, the
Company's Chief Executive Officer concluded that these controls and procedures
are operating effectively. Disclosure controls and procedures are the Company's
controls and other procedures that are designed to ensure that information
required to be disclosed by the Company in the reports that it files or submits
under the Securities Exchange Act is recorded, processed, summarized and
reported, within the time periods specified in the Securities and Exchange
Commission's rules and forms. Disclosure controls and procedures include,
without limitation, controls and procedures designed to ensure that information
required to be disclosed by the Company in the reports that it files under the
Securities Exchange Act is accumulated and communicated to management, including
the principal executive and financial officers, as appropriate to allow timely
decisions regarding required disclosure.
There were no changes in the Company's internal control over financial
reporting during the Company's last fiscal quarter that have materially
affected, or are reasonably likely to materially affect, the Company's internal
control over financial reporting.
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------- ---------------------------------------------------
The 2005 Annual Meeting of Shareholders of the Company was held on May 17,
2005. At the meeting, the following persons were elected as Class III
directors to serve for a term of three years and until their successors are
elected as qualified: Charles A. Balfour, David O. Lewis, Richard L.
Singletary, Jr., and Stephen H. Cheney.
The number of votes cast for and withheld with respect to the election of
each nominee for director was as follows:
Votes Votes
For Withheld
--- --------
Charles A. Balfour 1,906,991 7,990
David O. Lewis 1,906,991 7,990
Richard L. Singletary, Jr. 1,906,991 7,990
Stephen H. Cheney 1,906,991 7,990
In addition, the shareholders of the Company ratified the appointment of
Francis and Company, CPAs as auditors for the Company and its subsidiaries for
the year ending December 31, 2005. The number of votes for, against and
withheld with respect to the ratification of Francis and Company, CPAs was as
follows:
Votes Votes
For Withheld
--- --------
1,911,781 3,200
No other matters were presented or voted on at the Annual Meeting.
The following persons did not stand for reelection at the 2004 Annual Meeting
of Shareholders as their term of office continued after the Annual Meeting:
Charles E. Hancock, Charles H. Hodges, III, Harold L. Jackson, Diane W. Parker,
David A. Cone, Charles W. McKinnon, Jr., Randall L. Moore, Cochran A. Scott,
Jr., and J. Mark Parker.
ITEM 6. EXHIBITS
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The following exhibits are filed with this report.
Exhibit
Number Description
------- -----------
3.1 Articles of Incorporation of the Company (incorporated
herein by referenced to the Company's Registration
Statement on Form SB-2 under the Securities Act of 1933,
Registration Number 33-91536)
3.2 Bylaws of the Company (incorporated herein by referenced
to the Company's Registration Statement on Form SB-2
under the Securities Act of 1933, Registration Number
33-91536)
31.1 Certification Pursuant to Rule 13a-14(a), As Adopted
Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
32.1 Certification Pursuant to 18 U.S.C. Section 1350, As
Adopted Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THOMASVILLE BANCSHARES, INC.
-------------------------------------
(Registrant)
Date: August 12, 2005 By: /s/Stephen H. Cheney
----------------- ------------------------------------
Stephen H. Cheney
President and Chief Executive Officer
(Principal Executive, Financial and Accounting
Officer)