U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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 September 30, 1996
___ Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from _______________ to ________________
Commission File No. 333-1546
FNB BANCSHARES, INC.
(Exact Name of Small Business Issuer as Specified in its Charter)
South Carolina 57-1033165
(State of Incorporation) (I.R.S. Employer Identification No.)
Post Office Box 1539, Gaffney, South Carolina 29342
(Address of Principal Executive Offices)
(864) 488-2265
(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 Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes X No
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:
610,338 shares of common stock, par value $.01 per share, were issued and
outstanding as of October 31, 1996.
Transitional Small Business Disclosure Format (check one): Yes
No X
<PAGE>
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
The financial statements of FNB Bancshares, Inc. (the "Company") are set
forth below:
FNB BANCSHARES, INC.
GAFFNEY, SOUTH CAROLINA
(A DEVELOPMENT STAGE ENTERPRISE)
BALANCE SHEETS
SEPTEMBER 30, 1996 DECEMBER 31, 1995
(UNAUDITED) (AUDITED)
ASSETS
Cash $ 70,647 $ 18,898
Federal Funds Sold 5,590,000 0
Office equipment 27,238 2,526
Portable Bank Unit 27,084 0
Autos 21,748 0
Land 94,539 0
Land Option - note 4 10,000 1,500
Deferred organization costs
- note 1 138,639 52,208
Total Assets $5,979,895 $ 75,132
LIABILITIES
Notes Payable $ 0 $100,000
Accrued Liabilities $ 10,952 2,110
Total Liabilities $ 10,952 $102,110
STOCKHOLDERS' EQUITY (DEFICIT)
Common Stock (10,000,000 shares
authorized, 610,338 shares issued
and outstanding, par value $.01) $ 6,103 $ 0
Preferred stock (10,000,000 shares
authorized and unissued, par value
$.01 per share)
Paid-in-surplus $6,097,377 $ 100
Deficit accumulated in the
development stage (134,537) (27,078)
Total Shareholders' equity
(deficit) 5,968,943 (27,978)
Total Liabilities and Shareholders'
equity (deficit) $5,979,895 $ 75,132
See Accompanying Notes to Financial Statements
<PAGE>
FNB BANCSHARES, INC
GAFFNEY, SOUTH CAROLINA
(A DEVELOPMENT STAGE ENTERPRISE)
UNAUDITED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED SEPTEMBER 30,
1996 1995
REVENUES:
Interest income $ 88,240
Total revenues $ 88,240 Company
was not
Operational
EXPENSES:
Salaries and employee benefits $ 54,664
Interest 6,233
Life insurance 5,496
Other operating expenses 15,890
Total expenses $ 82,283
NET INCOME (LOSS) $ 5,957
See Accompanying Notes to Financial Statements<PAGE>
FNB BANCSHARES, INC
GAFFNEY, SOUTH CAROLINA
(A DEVELOPMENT STAGE ENTERPRISE)
UNAUDITED STATEMENTS OF INCOME
FROM INCEPTION, SEPTEMBER 27, 1995,
TO SEPTEMBER 30, 1996
REVENUES:
Interest income 88,240
Total revenues $ 88,240
EXPENSES:
Salaries and employee benefits 121,038
Interest 17,000
Life insurance 11,928
Other operating expenses 72,811
Total expenses 222,777
NET INCOME (LOSS) (134,537)
See Accompanying Notes to Financial Statements<PAGE>
FNB BANCSHARES, INC
GAFFNEY, SOUTH CAROLINA
(A DEVELOPMENT STAGE ENTERPRISE)
UNAUDITED STATEMENTS OF CASH FLOWS
FROM INCEPTION, SEPTEMBER 27, 1995, TO SEPTEMBER 30, 1996
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss and accumulated deficit $ (134,537)
Adjustments to reconcile net deficit to net loss and
accumulated cash used by operating activities
Increase in accrued liabilities 10,952
Payment of deferred organization costs (138,639)
Cash used by operating activities $ (262,224)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of office equipment $ (27,238)
Purchase of Bank Units (27,084)
Purchase of land option (10,000)
Purchase of Auto (21,748)
Purchase of land (94,539)
Cash used by investing activities $ (180,609)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of Stock $6,103,380
Proceeds from note payable 375,000
Sale of common stock 100
Payoff of Notes Payable (375,000)
Cash provided by financing activities $6,103,480
NET INCREASE IN CASH AND CASH EQUIVALENTS $5,660,647
CASH AT INCEPTION (SEPTEMBER 27, 1995) $ 0
CASH AND CASH EQUIVALENTS AT END OF PERIOD
(SEPTEMBER 30, 1996) $5,660,647
See Accompanying Notes to Financial Statements<PAGE>
FNB BANCSHARES, INC
GAFFNEY, SOUTH CAROLINA
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
NOTE 1 - SUMMARY OF ORGANIZATION
ORGANIZATION. FNB Bancshares, Inc. (the "Company") was formed to become a bank
holding company that will acquire all the stock of a planned new bank, First
National Bank of the Carolinas, in Gaffney, South Carolina (the "Bank").
Activities since inception have consisted of organization activities necessary
to obtain regulatory approvals and to otherwise prepare to commence business as
a financial institution.
As of September 30, 1996, 610,338 shares have been issued.
The Company is a development stage enterprise as defined by FASB Statement No.
7, "Accounting and Reporting by Development Stage Enterprises," as it devotes
substantially all its efforts to establishing a new business, its planned
principal operations have not commenced and there has been no significant
revenue from the planned principal operations.
Organization costs - Organization costs are primarily legal and consulting fees
related to the incorporation and initial organization of the Company. These
costs will be amortized over a period not to exceed five years from the
commencement of operations. Additional costs are expected to be incurred.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING. The accounting and reporting policies of the Company
conform to generally accepted accounting principles and to general practices in
the banking industry. The Company uses the accrual basis of accounting by
recognizing revenues when they are earned and expenses in the period incurred,
without regard to the time of receipt or payment of cash. The Company has
adopted a fiscal year that ends on December 31, 1996.
ORGANIZATIONAL COSTS. Organizational costs are costs that have been incurred
in the expectation that they will generate future revenues or otherwise benefit
periods after the Company reaches the operating stage. Organizational costs
generally include incorporation, legal and accounting fees incurred in
connection with establishing the Company. Salary and travel expenses, overhead
and similar operating costs are not considered to be organizational costs and
are thus expensed in the period incurred. Organizational costs are capitalized
when incurred, and are amortized over a sixty-month period beginning
immediately after the Company commences its principal operations.
INCOME TAXES. The Company will be subject to taxation whenever taxable income
is generated. As of September 30, 1996, no income taxes had been accrued since
no taxable income had been generated.
FNB BANCSHARES, INC
GAFFNEY, SOUTH CAROLINA
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
(NOTE 2 CONTINUED)
STATEMENT OF CASH FLOWS. The statement of cash flows was prepared using the
indirect method. Under this method, net loss was reconciled to net cash flows
from pre-operating activities by adjusting for the effects of current assets
and short term liabilities. For purposes of reporting cash flows, the Company
considers certain highly liquid debt instruments purchased with a maturity of
three months or less to be cash equivalents. Cash equivalents include amounts
due from banks and federal funds sold and securities purchased under agreements
to resell.
NOTE 3 - EMPLOYMENT CONTRACT AND STOCK OPTIONS
The Company has entered into an employment contract with its President and
Chief Executive Officer. The contract provides that prior to the opening of
the planned new bank the President will receive an annual salary of $72,000
plus his yearly medical insurance premium. Thereafter, he shall be paid an
annual salary of $85,000, plus his yearly medical insurance premium.
The President shall be eligible to receive a cash bonus in an amount determined
by the Board of Directors on the first anniversary of the opening date of the
Bank. For each anniversary of the opening date thereafter, the President shall
be eligible to receive a cash bonus equaling five (5%) percent of the net pre-
tax income of the Bank, if the Bank achieves certain performance levels
established by the Board of Directors from time to time.
The President shall participate in the Bank's long-term equity incentive
program and shall be eligible for the grant of stock options, restricted stock,
and other awards thereunder or under any similar plan adopted by the Company.
On the date of the closing of the stock offering for the initial capitalization
of the Bank, the Company shall grant to the President an option to purchase a
number of shares of common stock equal to five (5%) percent of the number of
total shares sold in the public offering. These options will vest only if the
President remains employed by the Company and the Bank has met certain
performance criteria.
NOTE 4 - LAND OPTIONS
The company has an option to purchase a parcel of real estate in Gaffney, South
Carolina for the purpose of building its main banking office. The option was
acquired for $10,000 and provides for a purchase price of $110,000 payable in
cash, plus four thousand shares of the Company's common stock with an issue
price of $10 per share. This option expires on December 31, 1996.
NOTE 5 - COMMITMENTS
On April 29, 1996, the Company entered into a six year service contract with
Central Services Corporation whereby the Company would be provided data
processing services.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
The Company was organized on September 27, 1995. Since the inception the
Company's principal activities have related to its organization, the conducting
of its initial public offering, the pursuit of approvals from the Office of
Comptroller of the Currency (the "OCC") for its application to charter its
subsidiary bank, First National Bank of the Carolinas (the "Bank") (final
approval obtained on October 18, 1996), and the pursuit of approvals from the
Federal Deposit Insurance Corporation (the "FDIC") for its application for
insurance of the deposits of the Bank (final approval obtained on October 18,
1996). At September 30, 1996, the Company had total assets of $5,979,894
consisting principally of deferred organizational costs of $138,639, land of
$94,539, and Federal Funds of $5,590,000. The organizational costs related to
the organization of the Company and the Bank have been capitalized and will be
amortized over five years.
The Company's liabilities at September 30, 1996 consisted of $10,952 of accrued
liabilities. The Company had shareholders' equity of $5,968,943 at September
30, 1996.
The Company had a net loss of $134,537 for the period from the Inception Date
to September 30, 1996. These losses resulted from expenses incurred in
connection with activities related to the organization of the Company and the
Bank. These activities included (without limitation) the preparation and
filing of an application with the OCC to charter the Bank, the preparation and
filing of an application with the FDIC to obtain insurance of the deposits of
the bank, responding to questions and providing additional information to the
OCC and the FDIC in connection with the application process, the selling of the
Company's common stock in the offering, meetings and discussions among various
Organizers regarding application information, target markets, and
capitalization issues, and planning and organizing for the opening of the Bank.
Because the Company is in the organizational stage, it has had no operations
from which to generate revenues.
The Company intends to devote the remainder of this fiscal year to completing
the organization of the Bank, and organizing and developing the other business
activities of the Company. These organizational activities will include, with
respect to the Bank, hiring qualified personnel to work in the various offices
of the Bank, conducting public relations activities on behalf of the Bank, and
developing prospective business contacts for the Bank and the Company.
As of October 18, 1996, the Company had received all required approvals from
OCC, FDIC and Federal Reserve. On October 18, 1996, FNB's subsidiary, First
National Bank of the Carolinas, opened for business as a national bank.
<PAGE>
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
There are no material pending legal proceedings to which the Company or
any of its subsidiaries is a party or of which any of their property is the
subject.
ITEM 2. CHANGES IN SECURITIES.
(a) Not applicable.
(b) Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There were no matters submitted to security holders for a vote during the
three months ended September 30, 1996.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
3.1 Articles of Incorporation of the Company (incorporated by
reference to Exhibit 3.1 of the Registration Statement on Form
S-1, File No. 333-1546).
3.2 Bylaws of the Company (incorporated by reference to Exhibit 3.2
of the Registration Statement on Form S-1, File No. 333-1546).
4.1 Provisions in the Company's Articles of Incorporation and Bylaws
defining the rights of holders of the Company's Common Stock
(incorporated by reference to Exhibit 4.1 of the Registration
Statement on Form S-1, File No. 333-1546).
10.1 Option Agreement dated October 20, 1995, between James L. Moss,
as seller, and FNB Bancshares, Inc., as purchaser, for the
Blacksburg Office property (incorporated by reference to Exhibit
10.1 of the Registration Statement on Form S-1, File No. 333-
1546).
10.2 Option Agreement dated December 31, 1995, between William K.
Brumbach, Jr., Linwood B. Brumbach, Evelyn B. Sanles and
Patricia Brumbach Clary, as sellers, and FNB Bancshares, Inc.,
as purchaser, for the secondary parcel for the Gaffney Office
property (incorporated by reference to Exhibit 10.2 of the
Registration Statement on Form S-1, File No. 333-1546).
10.3 Option Agreement dated January 10, 1996, between Wylie L.
Hamrick and Catherine H. Beattie, as sellers, and FNB
Bancshares, Inc., as purchaser, for the primary parcel for the
Gaffney Office property (incorporated by reference to Exhibit
10.3 of the Registration Statement on Form S-1, File No. 333-
1546).
10.4 Line of Credit Note dated September 27, 1995, by The Company to
The Bankers Bank (incorporated by reference to Exhibit 10.4 of
the Registration Statement on Form S-1, File No. 333-1546).
10.5 Employment Agreement dated January 17, 1996, between the Company
and V. Stephen Moss (incorporated by reference to Exhibit 10.5
of the Registration Statement on Form S-1, File No. 333-1546).
10.6 Escrow Agreement dated March 8, 1996, between The Company and
The Bankers Bank (incorporated by reference to Exhibit 10.6 of
the Registration Statement on Form S-1, File No. 333-1546).
10.7 Commitment Letter dated March 27, 1996, from Spartanburg
National Bank for a $150,000 line of credit (incorporated by
reference to Exhibit 10.7 of the Registration Statement on Form
S-1, File No. 333-1546).
(b) Reports on Form 8-K.
There were no reports on Form 8-K filed by the Company during the quarter
ended September 30, 1996.<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
FNB BANCSHARES, INC.
(Registrant)
Date: November 11, 1996 By: /s/ V. Stephen Moss
V. Stephen Moss
President and Chief Executive Officer<PAGE>
EXHIBIT INDEX
Page
3.1 Articles of Incorporation of the Company
(incorporated by reference to Exhibit 3.1 of the
Registration Statement on Form S-1, File No. 333-1546)
3.2 Bylaws of the Company (incorporated by reference to
Exhibit 3.2 of the Registration Statement on Form S-1,
File No. 333-1546)
4.1 Provisions in the Company's Articles of Incorporation and
Bylaws defining the rights of holders of the Company's
Common Stock (incorporated by reference to Exhibit 4.1
of the Registration Statement on Form S-1, File No. 333-1546)
10.1 Option Agreement dated October 20, 1995, between
James L. Moss, as seller, and FNB Bancshares, Inc., as purchaser,
for the Blacksburg Office property (incorporated by reference
to Exhibit 10.1 of the Registration Statement on Form S-1,
File No. 333-1546)
10.2 Option Agreement dated December 31, 1995, between
William K. Brumbach, Jr., Linwood B. Brumbach, Evelyn B. Sanles
and Patricia Brumbach Clary, as sellers, and FNB Bancshares, Inc.,
as purchaser, for the secondary parcel for the Gaffney Office
property (incorporated by reference to Exhibit 10.2 of the
Registration Statement on Form S-1, File No. 333-1546)
10.3 Option Agreement dated January 10, 1996, between
Wylie L. Hamrick and Catherine H. Beattie, as sellers, and
FNB Bancshares, Inc., as purchaser, for the primary parcel
for the Gaffney Office property (incorporated by reference to
Exhibit 10.3 of the Registration Statement on Form S-1,
File No. 333-1546)
10.4 Line of Credit Note dated September 27, 1995, by
The Company to The Bankers Bank (incorporated by reference to
Exhibit 10.4 of the Registration Statement on Form S-1,
File No. 333-1546)
10.5 Employment Agreement dated January 17, 1996, between
the Company and V. Stephen Moss (incorporated by reference to
Exhibit 10.5 of the Registration Statement on Form S-1,
File No. 333-1546)
10.6 Escrow Agreement dated March 8, 1996, between The Company and
The Bankers Bank (incorporated by reference to Exhibit 10.6
of the Registration Statement on Form S-1, File No. 333-1546)
10.7 Commitment Letter dated March 27, 1996, from Spartanburg National Bank
for a $150,000 line of credit (incorporated by reference to
Exhibit 10.7 of the Registration Statement on Form S-1,
File No. 333-1546)
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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