<PAGE> 1
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 June 30, 1996
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Transition report under Section 13 or 15(d) of the Exchange Act
- --- For the transition period from to
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Commission File No. 333-1546
FNB BANCSHARES, INC.
--------------------
(Exact Name of Small Business Issuer as Specified in its Charter)
South Carolina 57-1033165
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(State of Incorporation) (I.R.S. Employer Identification No.)
Post Office Box 1539, Gaffney, South Carolina 29342
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(Address of Principal Executive Offices)
(864) 488-2265
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(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:
Ten shares of common stock, par value $.01 per share, were issued and
outstanding as of August 9, 1996.
Transitional Small Business Disclosure Format (check one): Yes No X
--- ---
<PAGE> 2
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 COMPANY)
UNAUDITED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
For the three months ended June 30,
<S> <C> <C>
1996 1995
---- ----
Revenues:
Interest income Company
Total Revenues $ 0 was not
Operational
Expenses:
Salary and employee benefits $ 27,037
Interest 6,097
Life Insurance 980
Other operating expenses 30,485
-------
Total Expenses $ 64,599
-------
Net Income (Loss) $(64,599)
=======
</TABLE>
See Accompanying Notes to Financial Statements
<PAGE> 3
FNB BANCSHARES, INC.
GAFFNEY, SOUTH CAROLINA
(A DEVELOPMENT STAGE COMPANY)
UNAUDITED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
From inception,
September 27, 1995, to
June 30, 1996
-------------
<S> <C>
Revenues:
Interest income
Total Revenues $ 0
Expenses:
Salaries and employee benefits $ 66,374
Interest 10,767
Life Insurance 6,432
Other operating expenses 56,921
--------
Total Expenses $ 140,494
--------
Net Income (Loss) $(140,494)
========
</TABLE>
See Accompanying Notes to Financial Statements
2
<PAGE> 4
FNB BANCSHARES, INC.
GAFFNEY, SOUTH CAROLINA
(A DEVELOPMENT STAGE COMPANY)
UNAUDITED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
From inception, September 27, 1995,
through June 30, 1996
---------------------
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss and accumulated deficit $(140,494)
Adjustments to reconcile net deficit to net loss
and accumulated cash used by operating activities
Increase in accrued liabilities 3,343
Payment of deferred organization costs (100,328)
--------
Cash used by operating activities $(237,479)
--------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of office equipment $ (7,011)
Purchase of Bank Units (21,903)
Purchase of land option (10,000)
Purchase of land (94,539)
--------
Cash used by investing activities $(133,453)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from note payable $ 375,000
Sale of common stock 100
--------
Cash provided from financing activities $ 375,100
--------
NET INCREASE (DECREASE) IN CASH $ 4,168
--------
CASH AT INCEPTION (SEPTEMBER 27, 1995) $ 0
CASH AT END OF PERIOD (JUNE 30, 1996) $ 4,168
</TABLE>
See Accompanying Notes to Financial Statements
3
<PAGE> 5
FNB BANCSHARES, INC.
GAFFNEY, SOUTH CAROLINA
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, 1996 December 31,1995
(Unaudited) (Audited)
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<S> <C> <C>
ASSETS
------
Cash $ 4,168 $ 18,898
Office equipment 7,011 2,526
Portable Bank Unit 21,903 0
Land 94,539 0
Land Option 10,000 1,500
Deferred organization costs - note 1 100,328 52,208
-------- --------
Total Assets $237,949 $ 75,132
LIABILITIES
-----------
Notes Payable - note 3 $375,000 $100,000
Accrued Liabilities 3,343 2,110
-------- --------
Total Liabilities $378,343 $102,110
STOCKHOLDERS' EQUITY (DEFICIT)
------------------------------
Common Stock (10,000,000 shares authorized, 10 shares
issued and outstanding, par value $.01)(less than $1.00)
Preferred stock (10,000,000 shares authorized and unissued,
par value $.01 per share)
Paid in surplus $ 100 $ 100
Deficit accumulated in the development stage (140,494) (27,078)
-------- --------
Total Stockholders' equity (deficit) (140,394) (26,978)
-------- --------
Total Liabilities and Stockholders' equity (deficit) $237,949 $ 75,132
</TABLE>
See Accompanying Notes to Financial Statements
4
<PAGE> 6
FNB BANCSHARES, INC.
GAFFNEY, SOUTH CAROLINA
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
JUNE 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 of 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 organizational activities
necessary to obtain regulatory approvals and to otherwise prepare to commence
business as a financial institution.
The Company filed a Registration Statement on Form S-1 with the Securities and
Exchange Commission offering for sale a minimum of 500,000 and a maximum of
800,000 shares of its common stock, par value $.01 per share. As of June 30,
1996, the Company has received subscriptions for 324,118 shares.
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 of its efforts to establishing a new business, its planned
principal operations have not commenced and there has been no significant
revenue for the planned principal operations.
ORGANIZATIONAL 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.
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 expenses 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 June 30, 1996, no income taxes had been accrued since no
taxable income had been generated.
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.
NOTE 3 - NOTES PAYABLE
The Company has obtained a line of credit for $250,000 from a commercial bank
with interest computed at the bank's prime rate. Interest is payable quarterly
and the maturity date of the principal is the earlier of (i) the date that the
amounts paid by the subscribers in the planned public stock offering are
released from escrow pursuant to the terms of the offering or (ii) the date the
offering is terminated.
5
<PAGE> 7
NOTE 3 - NOTES PAYABLE (CONTINUED)
The Company has also obtained a line of credit for $150,000 from a commercial
bank with interest computed at the bank's prime rate. Interest is payable
quarterly and the maturity date of the principal is the earlier of (i) the date
that the amounts paid by the subscribers in the planned public stock offering
are released from escrow pursuant to the terms of the offering or (ii) the date
the offering is terminated.
The organizers of the planned new bank have guaranteed the payment of both of
the above notes. The outstanding balances as of December 31, 1995, and June
30, 1996, were $100,000 and $375,000, respectively.
NOTE 4 - 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 5% 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 5% 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 5 - 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 6 - 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.
6
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
The Company was organized on September 27, 1995 (the "Inception
Date"). Since the Inception Date, 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")(preliminary approval obtained in May 1996), the pursuit
of approvals from the Federal Deposit Insurance Corporation (the "FDIC") for
its application for insurance of the deposits of the Bank (preliminary approval
obtained in April 1996), and the pursuit of approvals from the Federal Reserve
Bank of Richmond (the "Federal Reserve") and the South Carolina State Board of
Financial Institutions (the "South Carolina Board") for its applications
seeking approval to become a bank holding company by acquiring all of the
capital stock to be issued by the Bank.
At June 30, 1996, the Company had total assets of $237,949, consisting
principally of deferred organizational costs of $100,328, land of $94,539, and
portable bank units of $21,903. 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 June 30, 1996, were $378,343, consisting
of two notes payable of $250,000 and $125,000, respectively, and accrued
liabilities of $3,343. The notes payable accrue interest at the prime rate.
The Company has a shareholder's deficit of $140,394 at June 30, 1996.
The Company had a net loss of $140,494 for the period from the
Inception Date to June 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, the preparation and filing of applications with the Federal Reserve
and the South Carolina Board for approval for the Company to acquire the Bank,
responding to questions and providing additional information to the OCC, the
FDIC, the Federal Reserve, and the South Carolina Board 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
conducting the offering, 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, completing
all required steps for final approval from the OCC for the Bank to open for
business, hiring qualified personnel to work in the various offices of the
Bank, conducting public relations activities on behalf of the Bank, developing
prospective business contacts for the Bank and the Company, and taking other
actions necessary for a successful bank opening. With respect to the Company,
these activities include completing all required steps for final approval from
the Federal Reserve and the South Carolina Board for its applications seeking
approval to become a bank holding company by acquiring all of the capital stock
to be issued by the Bank.
7
<PAGE> 9
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 June 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).
8
<PAGE> 10
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 June 30, 1996.
9
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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: August 9, 1996 By: /s/ V. Stephen Moss
----------------------------------
V. Stephen Moss
President and Chief Executive Officer
10
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C>
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) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
</TABLE>
11
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<TABLE>
<S> <C>
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) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
27 Financial Data Schedule (for SEC use only) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
</TABLE>
12
<TABLE> <S> <C>
<ARTICLE> CT
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF FNB BANCSHARES, INC. FOR THE SIX MONTHS ENDED JUNE 30,
1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<TOTAL-ASSETS> 237,949
0
0
<COMMON> 100
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 237,949
<TOTAL-REVENUES> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (64,599)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
