<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from to
--------------- ----------------
Commission file number 333-14355
Decatur First Bank Group, Inc.
------------------------------
(Exact name of registrant as specified in its charter)
Georgia 58-2254289
- ---------------------------------------- ------------------------------------
(State of Incorporation) (I.R.S. Employer Identification No.)
1120 Commerce Drive
Decatur, Georgia 30030
- ---------------------------------------- ------------------------------------
(Address of principal executive offices) (Zip Code)
404-373-1000
------------------
(Telephone Number)
Indicate by check mark whether the registrant (1) has 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
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES XX NO
---- ----
Common stock, par value $5 per share: 941,544 shares
outstanding as of August 7, 1998
Transitional Small Business Disclosure Format
(check one)
Yes No XX
---- ----
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DECATUR FIRST BANK GROUP, INC.
INDEX
PAGE NO.
--------
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheet (unaudited) at June 30, 1998 3
Statement of Operations (unaudited) for the Three Months
and the Six Months Ended June 30, 1998 and the Six
Months Ended June 30, 1997 4
Statement of Comprehensive Income for the Three Months and
the Six Months Ended June 30, 1998 and the Six Months Ended
June 30, 1997 5
Statement of Cash Flows (unaudited) for the Six
Months Ended June 30, 1998 and 1997 6
Notes to Financial Statements (unaudited) 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 8
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 9
Item 2. Changes in Securities 9
Item 3. Defaults Upon Senior Securities 9
Item 4. Submission of Matters to a Vote of Security Holders 9
Item 5. Other Information 9
Item 6. Exhibits and Reports on Form 8-K 9
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
DECATUR FIRST BANK GROUP, INC.
Balance Sheet
June 30, 1998
(Unaudited)
Cash and due from banks $ 1,121,704
Federal funds sold 6,570,000
-----------
Cash and cash equivalents 7,691,704
Investment securities available for sale 12,042,024
Investment securities held to maturity 2,396,272
Loans, net 5,565,823
Premises and equipment, net 933,588
Accrued interest receivable and other assets 368,593
-----------
$28,998,004
===========
Liabilities and Stockholders' Equity
------------------------------------
Liabilities:
Deposits:
Noninterest-bearing $ 4,549,629
Interest-bearing 15,779,108
-----------
Total deposits 20,328,737
Accrued interest payable and other liabilities 68,284
-----------
Total liabilities 20,397,021
-----------
Stockholders' equity:
Common stock, $5 par value; authorized
10,000,000 shares; issued and outstanding
941,544 shares 4,707,720
Additional paid-in capital 4,668,036
Accumulated deficit (763,312)
Accumulated and comprehensive loss (11,461)
-----------
Total stockholders' equity 8,600,983
-----------
$28,998,004
===========
See accompanying notes to financial statements.
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DECATUR FIRST BANK GROUP, INC.
Statement of Operations
For the Three Months and the Six Months Ended June 30, 1998
and the Six Months Ended June 30, 1997
(Unaudited)
Three Months Ended Six Months Ended
June 1998 June 1998 June 1997
------------------ --------- ----------
Interest income:
Interest and fees on loans $ 123,469 209,248 -
Interest on federal funds sold 83,959 143,481 42,356
Investment securities 191,679 346,772 -
--------- -------- --------
Total interest income 399,107 699,501 42,356
--------- -------- --------
Interest expense:
Deposits 137,543 228,224 -
Other borrowings - - 15,130
--------- -------- --------
Net interest income 261,564 471,277 27,226
Provision for loan losses 38,000 80,000 -
--------- -------- --------
Net interest income after
provision for loan losses 223,564 391,277 27,226
--------- -------- --------
Other income:
Service charges on deposit accounts 22,305 35,149 -
Other operating income 8,889 13,935 -
--------- -------- --------
Total other income 31,194 49,084 -
--------- -------- --------
Other expense:
Salaries and other personnel expense 176,123 315,670 93,024
Net occupancy and equipment expense 46,167 90,966 32,119
Other operating expense 148,685 251,171 68,150
--------- -------- --------
Total other expense 370,975 657,807 193,293
--------- -------- --------
Net loss $(116,217) (217,446) (166,067)
========= ======== ========
Loss per common share based on average
outstanding shares of 941,544
Net loss per share $ (0.12) (0.23) (0.18)
========= ======== ========
See accompanying notes to financial statements.
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DECATUR FIRST BANK GROUP, INC.
Statement of Comprehensive Income
For the Three Months and the Six Months Ended June 30, 1998
and the Six Months Ended June 30, 1997
Three Months Ended Six Months Ended
June 1998 June 1998 June 1997
------------------ --------- ---------
Net loss $(116,217) (217,446) (166,067)
Other comprehensive income, net of tax:
Unrealized gains (losses) on investment
securities available-for-sale:
Unrealized gains (losses) arising
during the period 4,454 (7,963) -
Less: Reclassification adjustment for
gains included in net earnings - - -
--------- -------- --------
Other comprehensive income 4,454 (7,963) -
--------- -------- --------
Comprehensive income loss (111,763) (225,409) (166,067)
========= ======== ========
See accompanying notes to financial statements.
-5-
<PAGE>
DECATUR FIRST BANK GROUP, INC.
Statements of Cash Flows
For the Six Months Ended June 30, 1998 and 1997
(Unaudited)
1998 1997
---------- ----------
Cash flows from operating activities:
Net loss $ (217,446) (166,067)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Provision for loan losses 80,000 -
Depreciation, amortization and accretion 59,497 -
Change in:
Other (200,577) 95,930
------------ --------
Net cash used by operating activities (278,526) (70,137)
------------ --------
Cash flows from investing activities:
Proceeds from sales, maturities and paydowns 940,000 -
of investment securities held to maturity
Purchases of investment securities held to
maturity (500,000) -
Purchases of investment securities available
for sale (6,314,552) -
Change in loans (4,114,623) -
Purchases of premises and equipment (30,571) (546,389)
------------ --------
Net cash used by investing activities (10,019,746) (546,389)
------------ --------
Cash flows from financing activities:
Net change in deposits 11,663,185 -
Proceeds from note payable - 675,000
------------ --------
Net cash provided by financing activities 11,663,185 675,000
------------ --------
Net change in cash and cash equivalents 1,364,913 58,474
Cash and cash equivalents at beginning of the period 6,326,791 23,935
------------ --------
Cash and cash equivalents at end of period $ 7,691,704 82,409
============ ========
Noncash investing activities:
Change in unrealized loss on securities available
for sale, net of tax (7,963) -
See accompanying notes to financial statements.
-6-
<PAGE>
DECATUR FIRST BANK GROUP, INC.
Notes to Financial Statements
(Unaudited)
(1) Organization and Basis of Presentation
--------------------------------------
Decatur First Bank Group, Inc. (the Company), a bank holding company, owns
100% of the outstanding common stock of Decatur First Bank (the Bank), which
operates in the Decatur, Georgia area. The Bank opened for business on
September 2, 1997, and prior to that date activities of the Company were
devoted solely to securing banking facilities, raising capital and procuring
management and other personnel.
The consolidated financial statements include the accounts of the Company
and the Bank. All intercompany accounts and transactions have been
eliminated in consolidation.
The interim financial statements included herein are unaudited but reflect
all adjustments which, in the opinion of management, are necessary for a
fair presentation of the financial position and results of operations for
the interim period presented. All such adjustments are of a normal recurring
nature. The results of operations for the period ended June 30, 1998 are not
necessarily indicative of the results of a full year's operations.
The accounting principles followed by the Company and the methods of
applying these principles conform with generally accepted accounting
principles (GAAP) and with general practices within the banking industry. In
preparing financial statements in conformity with GAAP, management is
required to make estimates and assumptions that affect the reported amounts
in the financial statements. Actual results could differ significantly from
those estimates. Material estimates common to the banking industry that are
particularly susceptible to significant change in the near term include, but
are not limited to, the determinations of the allowance for loan losses, the
valuation of real estate acquired in connection with or in lieu of
foreclosure on loans, and valuation allowances associated with deferred tax
assets, the recognition of which are based on future taxable income.
-7-
<PAGE>
Item 2.
DECATUR FIRST BANK GROUP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
For the Six Months Ended June 30, 1998
FINANCIAL CONDITION
Total assets at June 30, 1998 were $28,998,000 representing a $11,372,000
(65%) increase from December 31, 1997. Deposits increased $11,663,000 (135%)
from December 31, 1997. Loans increased $4,035,000 (264%). The allowance for
loan losses at June 30, 1998 totaled $112,000, representing 2% of total loans
compared to December 31, 1997 totals of $32,000 which represented 2.05% of total
loans. Cash and cash equivalents increased $1,365,000 from December 31, 1997.
There were no related party loans or other loans which were considered
nonperforming at June 30, 1998.
RESULTS OF OPERATIONS
For the six months ended June 30, 1998, the Bank's yield on earning assets
has been 6.73%. The cost of funding sources for the six month period ended June
30, 1998, was 3.93%. While net interest spread is 2.80%, net interest margin,
which considers the effect of non-interest bearing deposits, was 4.53%.
CAPITAL
The following tables present Decatur First Bank Group, Inc.'s regulatory
capital position at June 30, 1998:
Risk-Based Capital Ratios
-------------------------
Tier 1 Tangible Capital, Actual 71.06%
Tier 1 Tangible Capital minimum requirement 4.00%
-----
Excess 67.06%
=====
Total Capital, Actual 71.99%
Total Capital minimum requirement 8.00%
-----
Excess 63.99%
=====
Leverage Ratio
--------------
Tier 1 Tangible Capital to adjusted total assets
("Leverage Ratio") 32.44%
Minimum leverage requirement 4.00%
-----
Excess 28.44%
=====
-8-
<PAGE>
PART II. OTHER INFORMATION
DECATUR FIRST BANK GROUP, INC.
Item 1. Legal Proceedings
-----------------
None
Item 2. Changes in Securities
---------------------
None
Item 3. Defaults Upon Senior Securities
-------------------------------
None
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
a. The 1998 Annual Meeting of Shareholders was held on May 11, 1998.
b. Election of directors
The shareholders voted 520,824 shares in the affirmative,
for the election of the 13 directors for staggered terms
of one, two and three years for the Company.
c. The shareholders voted 514,124 shares in the affirmative and 700
shares in the negative, with 6,100 shares abstaining for the
approval of the Decatur First Bank Group, Inc. 1997 Stock Incentive
Plan.
Item 5. Other Information
-----------------
None
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
None
-9-
<PAGE>
DECATUR FIRST BANK GROUP, INC.
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.
DECATUR FIRST BANK GROUP, INC.
By: /s/ Judy B. Turner
----------------------------------
Judy B. Turner
President, Chief Executive Officer and
Principal Accounting Officer
Date:
---------------------------------
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 1,121,704
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 6,570,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 12,042,024
<INVESTMENTS-CARRYING> 2,396,272
<INVESTMENTS-MARKET> 0
<LOANS> 5,565,823
<ALLOWANCE> 112,000
<TOTAL-ASSETS> 28,998,004
<DEPOSITS> 20,328,737
<SHORT-TERM> 0
<LIABILITIES-OTHER> 68,284
<LONG-TERM> 0
0
0
<COMMON> 4,707,720
<OTHER-SE> 3,893,263
<TOTAL-LIABILITIES-AND-EQUITY> 28,998,004
<INTEREST-LOAN> 209,248
<INTEREST-INVEST> 346,772
<INTEREST-OTHER> 143,481
<INTEREST-TOTAL> 699,501
<INTEREST-DEPOSIT> 228,224
<INTEREST-EXPENSE> 228,224
<INTEREST-INCOME-NET> 471,277
<LOAN-LOSSES> 80,000
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 657,807
<INCOME-PRETAX> (217,446)
<INCOME-PRE-EXTRAORDINARY> (217,446)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (217,446)
<EPS-PRIMARY> (.23)
<EPS-DILUTED> (.23)
<YIELD-ACTUAL> 0
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 32,000
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 112,000
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 112,000
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