<PAGE>
UNITED STATES 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 AND EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 1998
------------------------
[_] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from __________ to __________
Commission File Number: 333-12293
Peoples Bancorp, Inc.
-------------------------------------
(Exact name of small business issuer as specified in its charter)
Georgia 58-2265412
-------------------------------------- ------------------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
516 Bankhead Highway, Carrollton, Georgia 30117
-----------------------------------------------
(Address of principal executive offices)
(770) 838-9608
---------------------------
(Issuer's telephone number)
N/A
---------------------------------------------------------------------------
(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
--- ---
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by court.
Yes No
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of May 1, 1998: 800,000; $.01 par value.
Transitional Small Business Disclosure Format (Check One) Yes No X
--- ---
1
<PAGE>
PEOPLES BANCORP, INC. AND SUBSIDIARY
- --------------------------------------------------------------------------------
INDEX
-----
Page
----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheet - March 31, 1998.......................3
Consolidated Statements of Operations and Comprehensive
Income (Loss) - Three Months Ended March 31, 1998 and 1997....4
Consolidated Statement of Cash Flows - Three
Months Ended March 31, 1998 and 1997..........................5
Notes to Consolidated Financial Statements........................6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations..........7
PART II. OTHER INFORMATION
Item 4 - Submission of Matters to a Vote of Security Holders........13
Item 6 - Exhibits and Reports on Form 8-K...........................13
Signatures..........................................................14
2
<PAGE>
PART I - FINANCIAL INFORMATION
FINANCIAL STATEMENTS
PEOPLES BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
MARCH 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
Assets
------
<S> <C>
Cash and due from banks $ 252,320
Interest-bearing deposits in banks 198,000
Federal funds sold 5,435,312
Securities available-for-sale, at fair value 8,989,337
Loans 10,711,000
Less allowance for loan losses 124,544
-------------------
Loans, net 10,586,456
-------------------
Premises and equipment 495,000
Other assets 281,949
-------------------
Total assets $ 26,238,374
===================
<CAPTION>
Liabilities and Stockholders' Equity
------------------------------------
<S> <C>
Deposits
Demand $ 3,173,309
Interest-bearing demand 6,289,024
Savings 218,438
Time 8,702,478
-------------------
Total deposits 18,383,249
Other liabilities 134,700
-------------------
Total liabilities 18,517,949
-------------------
Commitments and contingent liabilities
Stockholders' equity
Preferred stock, par value $.01; 1,000,000 shares authorized;
none issued or outstanding -
Common stock, par value $.01; 10,000,000 shares authorized;
800,000 shares issued and outstanding 8,000
Capital surplus 7,970,587
Accumulated deficit (292,211)
Accumulated other comprehensive income 34,049
-------------------
Total stockholders' equity 7,720,425
-------------------
Total liabilities and stockholders' equity $ 26,238,374
===================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
3
<PAGE>
PEOPLES BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME (LOSS)
THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(Unaudited)
<TABLE>
<CAPTION>
1998 1997
------------------- -------------------
<S> <C> <C>
Interest income
Loans $ 245,892 $ 9,210
Taxable securities 121,935 8,469
Deposits in banks 990 -
Federal funds sold 50,628 101,010
------------------- -------------------
Total interest income 419,445 118,689
------------------- -------------------
Interest expense
Deposits 158,109 8,646
Other borrowings - 3,446
------------------- -------------------
Total interest expense 158,109 12,092
------------------- -------------------
Net interest income 261,336 106,597
Provision for loan losses 24,000 9,000
------------------- -------------------
Net interest income after provision for loan losses 237,336 97,597
------------------- -------------------
Gain on sales of securities available-for-sale 5,096 -
Other operating income 27,194 910
------------------- -------------------
Total other income 32,290 910
------------------- -------------------
Other expenses
Salaries and other employee benefits 137,307 110,932
Occupancy and equipment expenses 14,643 17,494
Other operating expenses 90,391 92,551
------------------- -------------------
Total other expenses 242,341 220,977
------------------- -------------------
Income (loss) before income taxes 27,285 (122,470)
Income tax expense - -
------------------- -------------------
Net income (loss) 27,285 (122,470)
------------------- -------------------
Other comprehensive income (loss):
Unrealized gains (losses) on securities available-for-sale
arising during period 5,848 (14,184)
Less: reclassification adjustment for gains included
in net income (loss) (5,096) -
------------------- -------------------
Total other comprehensive income (loss) 752 (14,184)
------------------- -------------------
Comprehensive income (loss) $ 28,037 $ (136,654)
=================== ===================
Earnings (losses) per common share $ 0.03 $ (0.36)
=================== ===================
Weighted average shares outstanding 800,000 337,778
=================== ===================
Cash dividends per common share $ - $ -
=================== ===================
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
4
<PAGE>
PEOPLES BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(Unaudited)
<TABLE>
<CAPTION>
1998 1997
--------------------- ---------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $ 27,285 $ (122,470)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization 12,219 4,691
Provision for loan losses 24,000 9,000
Gain on sale of securities available-for-sale (5,096) -
Increase in interest receivable (13,769) (26,490)
Increase in interest payable 1,731 8,171
Other operating activities (9,089) 28,506
--------------------- ---------------------
Net cash provided by (used in) operating activities 37,281 (98,592)
--------------------- ---------------------
INVESTING ACTIVITIES
Purchases of securities available-for-sale (3,508,369) (2,493,559)
Proceeds from sales of securities available-for-sale 1,003,125 -
Proceeds from maturities of securities available-for-sale 518,238 -
Net increase in interest-bearing deposits in banks (198,000) -
Net increase in Federal funds sold (704,988) (7,491,132)
Net increase in loans (1,915,307) (786,744)
Purchase of premises and equipment (6,911) (118,708)
--------------------- ---------------------
Net cash used in investing activities (4,812,212) (10,890,143)
--------------------- ---------------------
FINANCING ACTIVITIES
Net increase in deposits 4,575,284 3,442,797
Repayment of advances from organizers - (291,600)
Proceeds from sale of common stock - 982,090
--------------------- ---------------------
Net cash provided by financing activities 4,575,284 4,133,287
--------------------- ---------------------
Net decrease in cash and due from banks (199,647) (6,855,448)
Cash and due from banks, beginning of period 451,967 7,040,741
--------------------- ---------------------
Cash and due from banks, end of period $ 252,320 $ 185,293
===================== =====================
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during period for:
Interest $ 156,378 $ 3,921
Income taxes - $ 3,100
NONCASH TRANSACTION
Net unrealized (gains) losses on securities available-for-sale $ (752) $ 14,184
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
5
<PAGE>
PEOPLES BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1. BASIS OF PRESENTATION
The consolidated financial information included herein is unaudited;
however, such information reflects all adjustments (consisting solely
of normal recurring adjustments) which are, in the opinion of
management, necessary for a fair statement of results for the interim
period.
The results of operations for the three month period ended March 31,
1998 are not necessarily indicative of the results to be expected for
the full year.
NOTE 2. CURRENT ACCOUNTING DEVELOPMENTS
The adoption of the provisions of SFAS No. 125, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities" that became effective on January 1, 1998 did not have a
material effect on the Company's financial statements.
The adoption of SFAS No. 128, "Earnings Per Share", that became
effective as of December 31, 1997 had no effect on the calculation of
losses per common share for the three months ended March 31, 1997.
The adoption of SFAS No. 130, "Reporting Comprehensive Income", that
became effective on January 1, 1998 required the Company to report
comprehensive income in the Company's Statements of Operations and
Comprehensive Income (Loss).
There are no other recent accounting pronouncements that have had, or
are expected to have, a material effect on the Company's financial
statements.
6
<PAGE>
PEOPLES BANCORP, INC. AND SUBSIDIARY
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following is management's discussion and analysis of certain
significant factors which have affected the financial position and
operating results of the Company and its bank subsidiary, Peoples Bank
of West Georgia, during the periods included in the accompanying
consolidated financial statements.
Liquidity and Capital Resources
As of March 31, 1998, the liquidity ratio of the Bank, as determined
under guidelines established by regulatory authorities, was
satisfactory.
At March 31, 1998, the capital ratios of the Company and the Bank were
adequate based on regulatory minimum capital requirements. The minimum
capital requirements and the actual capital ratios for the Company and
the Bank are as follows:
<TABLE>
<CAPTION>
Actual
------------------------------
Peoples Bank
Peoples of West Regulatory
Bancorp, Inc. Georgia Requirement
-------------- -------------- -------------
<S> <C> <C> <C>
Leverage capital ratios 33.94 % 25.28 % 4.00 %
Risk-based capital ratios:
Core capital 62.77 46.74 4.00
Total capital 63.79 47.77 8.00
</TABLE>
As the Company continues to grow, the capital ratios will decrease
rapidly to levels closer to, but still in excess of regulatory minimum
requirements.
7
<PAGE>
Financial Condition
Following is a summary of the Company's balance sheets for the periods
indicated:
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997 Increase (Decrease)
-------------- ---------------- --------------------------------
(Dollars in Thousands) Amount Percent
----------------------------------- -------------- --------------
<S> <C> <C> <C> <C>
Cash and due from banks $ 252 $ 452 $ (200) (44.25)%
Interest-bearing deposits in banks 198 - 198 -
Securities 8,989 6,997 1,992 28.47
Federal funds sold 5,435 4,730 705 14.90
Loans 10,587 8,695 1,892 21.76
Premises and equipment 495 496 (1) (0.20)
Other assets 282 265 17 6.42
-------------- ---------------- --------------
$ 26,238 $ 21,635 $ 4,603 21.28
============== ================ ==============
Deposits $ 18,383 $ 13,808 $ 4,575 33.13 %
Other liabilities 135 135 - -
Stockholders' equity 7,720 7,692 28 0.36
-------------- ---------------- --------------
$ 26,238 $ 21,635 $ 4,603 21.28
============== ================ ==============
</TABLE>
As indicated in the above table, the Company's total assets grew at a rate of
21.28%. This high rate of growth is not uncommon for a de novo bank. Significant
deposit growth of 33.13% was invested in loans, securities, and interest-bearing
deposits in banks. The Company's loan to deposit ratio has decreased from 63.7%
at December 31, 1997 to 58.26% at March 31, 1998 as deposit growth outpaced new
loan demand during the first quarter.
8
<PAGE>
Results of Operations For The Three Months Ended March 31, 1998 and 1997
Following is a summary of the Company's operations for the periods indicated.
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------------------------
1998 1997
----------------- -----------------
Increase
(Dollars in Thousands) (Decrease)
------------------------------------- -----------------
<S> <C> <C> <C>
Interest income $ 419 $ 119 $ 300
Interest expense 158 12 146
Net interest income 261 107 154
Provision for loan losses 24 9 15
Other income 32 1 31
Other expense 242 221 21
Net income (loss) 27 (122) 149
</TABLE>
As indicated in the above table, the Company's net interest income has increased
by $154,000 during the first quarter of 1998 as compared to the same period in
1997. The Company's net interest margin decreased to 4.92% during the first
quarter of 1998 as compared to 5.38% for the previous year. The increase in net
income is due primarily to the increased volume of average interest-earning
assets. The decrease in the net interest margin is due to the significant
deposit growth that has outpaced new loan demand.
The provision for loan losses increased by $15,000 during the first quarter of
1998 as compared to the same period in 1997. This increase is due primarily to
the net loan growth. The Company's reserve for loan losses amounted to 1.16% at
March 31, 1998 as compared to 1.15% at December 31, 1997. The allowance for loan
losses is maintained at a level that is deemed appropriate by management to
adequately cover all known and inherent risks in the loan portfolio.
Management's evaluation of the loan portfolio includes a continuing review of
loan loss experience, current economic conditions which may affect the
borrower's ability to repay and the underlying collateral value.
9
<PAGE>
Information with respect to nonaccrual, past due and restructured loans at March
31, 1998 and 1997 is as follows:
<TABLE>
<CAPTION>
March 31,
---------------------------------
1998 1997
--------------- ---------------
(Dollars in Thousands)
---------------------------------
<S> <C> <C>
Nonaccrual loans $ - $ -
Loans contractually past due ninety days or more as to interest
or principal payments and still accruing - -
Restructured loans - -
Loans, now current about which there are serious doubts as to the
ability of the borrower to comply with loan repayment terms - -
Interest income that would have been recorded on nonaccrual
and restructured loans under original terms - -
Interest income that was recorded on nonaccrual and restructured loans - -
</TABLE>
It is the policy of the Bank to discontinue the accrual of interest income when,
in the opinion of management, collection of such interest becomes doubtful. This
status is accorded such interest when (1) there is a significant deterioration
in the financial condition of the borrower and full repayment of principal and
interest is not expected and (2) the principal or interest is more than ninety
days past due, unless the loan is both well-secured and in the process of
collection.
Loans classified for regulatory purposes as loss, doubtful, substandard, or
special mention that have not been included in the table above do not represent
or result from trends or uncertainties which management reasonably expects will
materially impact future operating results, liquidity or capital resources.
These classified loans do not represent material credits about which management
is aware of any information which causes management to have serious doubts as to
the ability of such borrowers to comply with the loan repayment terms.
10
<PAGE>
Information regarding certain loans and allowance for loan loss data through
March 31, 1998 and 1997 is as follows:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------------------
1998 1997
--------------- ---------------
(Dollars in Thousands)
---------------------------------
<S> <C> <C>
Average amount of loans outstanding $ 9,626 $ 217
=============== ===============
Balance of allowance for loan losses at beginning of period $ 101 $ -
=============== ===============
Loans charged off
Commercial and financial $ - $ -
Real estate mortgage - -
Instalment 5 -
--------------- ---------------
5 -
--------------- ---------------
Loans recovered
Commercial and financial - -
Real estate mortgage - -
Instalment 5 -
--------------- ---------------
5 -
--------------- ---------------
Net charge-offs - -
--------------- ---------------
Additions to allowance charged to operating expense during period 24 9
--------------- ---------------
Balance of allowance for loan losses at end of period $ 125 $ 9
=============== ===============
Ratio of net loans charged off during the period to
average loans outstanding -% -%
=============== ===============
</TABLE>
Other income has increased during the first quarter of 1998 as compared to the
same period in 1997 by $31,000 due primarily to increases in service charges and
mortgage loan origination fees.
Other expenses increased during the first quarter of 1998 as compared to the
same period in 1997 by $21,000. The most significant changes occurred in
salaries and employee benefits which increased by $26,000.
The Company has recorded no provision for income taxes due to cumulative net
operating losses.
11
<PAGE>
Capability of Data Processing Software to Accommodate the Year 2000
- -------------------------------------------------------------------
Like many financial institutions, the Company relies upon computers for the
daily conduct of their business and for data processing generally. There is
concern among industry experts that commencing on January 1, 2000, computers
will be unable to "read" the new year and that there may be widespread computer
malfunctions. Management has assessed the electronic systems, programs,
applications, and other electronic components used in operations and believes
that the Company's hardware and software have been programmed to be able to
accurately recognize the year 2000, and that significant additional costs will
not be incurred in connection with the year 2000 issue, although there can be no
assurances in this regard.
The Company is not aware of any known trends, events or uncertainties, other
than the effect of events as described above, that will have or that are
reasonably likely to have a material effect on its liquidity, capital resources
or operations. The Company is also not aware of any current recommendations by
the regulatory authorities which, if they were implemented, would have such an
effect.
12
<PAGE>
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
27. Financial Data Schedule.
(b) Reports on Form 8-K.
None.
13
<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.
PEOPLES BANCORP, INC.
(Registrant)
DATE: BY: /s/ Timothy I. Warren
--------------------- -------------------------------------------
Timothy I. Warren. President and C.E.O.
(Principal Executive Officer)
DATE: BY: /s/ Elaine B. Lovvorn
--------------------- -------------------------------------------
Elaine B. Lovvorn, Secretary and Treasurer
(Principal Financial and Accounting Officer)
14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 252,320
<INT-BEARING-DEPOSITS> 198,000
<FED-FUNDS-SOLD> 5,435,312
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 8,989,337
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 10,711,000
<ALLOWANCE> 124,544
<TOTAL-ASSETS> 26,238,374
<DEPOSITS> 18,383,249
<SHORT-TERM> 0
<LIABILITIES-OTHER> 134,700
<LONG-TERM> 0
0
0
<COMMON> 8,000
<OTHER-SE> 7,712,425
<TOTAL-LIABILITIES-AND-EQUITY> 26,238,374
<INTEREST-LOAN> 245,892
<INTEREST-INVEST> 121,935
<INTEREST-OTHER> 51,618
<INTEREST-TOTAL> 419,445
<INTEREST-DEPOSIT> 158,109
<INTEREST-EXPENSE> 158,109
<INTEREST-INCOME-NET> 261,336
<LOAN-LOSSES> 24,000
<SECURITIES-GAINS> 5,096
<EXPENSE-OTHER> 242,341
<INCOME-PRETAX> 27,285
<INCOME-PRE-EXTRAORDINARY> 27,285
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 27,285
<EPS-PRIMARY> .03
<EPS-DILUTED> .03
<YIELD-ACTUAL> 4.92
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 101,000
<CHARGE-OFFS> 5,000
<RECOVERIES> 5,000
<ALLOWANCE-CLOSE> 125,000
<ALLOWANCE-DOMESTIC> 125,000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
