<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, 2000
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 000-24139
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: 942,729 shares
outstanding as of August 1, 2000
Transitional Small Business Disclosure Format
(check one)
Yes No XX
---- ----
<PAGE>
DECATUR FIRST BANK GROUP, INC.
INDEX
<TABLE>
<CAPTION>
Page No.
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<S> <C> <C>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheet (unaudited) at June 30, 2000 3
Statements of Operations (unaudited) for the Three Months
and the Six Months Ended June 30, 2000 and 1999 4
Statements of Comprehensive Income (unaudited) for the Six
Months Ended June 30, 2000 and 1999 5
Statements of Cash Flows (unaudited) for the Six Months
Ended June 30, 2000 and 1999 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 10
Item 2. Changes in Securities 10
Item 3. Defaults Upon Senior Securities 10
Item 4. Submission of Matters to a Vote of Security Holders 10
Item 5. Other Information 10
Item 6. Exhibits and Reports on Form 8-K 10
</TABLE>
This Report contains statements which constitute forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934. These statements appear in a number of
places in this Report and include all statements regarding the intent, belief or
current expectations of the Company, its directors or its officers with respect
to, among other things: (i) the Company's financing plans; (ii) trends affecting
the Company's financial condition or results of operations; (iii) the Company's
growth strategy and operating strategy; and (iv) the declaration and payment of
dividends. Investors are cautioned that any such forward-looking statement is
not a guarantee of future performance and involves risks and uncertainties, and
that actual results may differ materially from those projected in the forward-
looking statements as a result of various factors discussed herein and those
factors discussed in detail in the Company's filings with the Securities and
Exchange Commission.
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<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
DECATUR FIRST BANK GROUP, INC.
Balance Sheet
June 30, 2000
(Unaudited)
Assets
------
<TABLE>
<CAPTION>
<S> <C>
Cash and due from banks $ 2,342,002
Federal funds sold 5,810,000
-----------
Cash and cash equivalents 8,152,002
Investment securities available for sale 17,913,688
Loans, net 30,415,404
Premises and equipment, net 1,913,279
Accrued interest receivable and other assets 1,229,222
-----------
$59,623,595
===========
Liabilities and Stockholders' Equity
------------------------------------
Liabilities:
Deposits:
Noninterest-bearing $10,228,188
Interest-bearing 35,617,096
-----------
Total deposits 45,845,284
FHLB Advances 5,000,000
Accrued interest payable and other liabilities 260,716
-----------
Total liabilities 51,106,000
-----------
Stockholders' equity:
Preferred stock, no par value; authorized
2,000,000 shares; no issued shares -
Common stock, $5 par value; authorized
10,000,000 shares; issued 942,729 shares 4,713,645
Additional paid-in capital 4,676,193
Accumulated deficit (473,984)
Accumulated comprehensive income (398,259)
-----------
Total stockholders' equity 8,517,595
-----------
$59,623,595
===========
</TABLE>
See accompanying notes to financial statements.
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<PAGE>
DECATUR FIRST BANK GROUP, INC.
Statements of Operations
For the Three Months and the Six Months Ended June 30, 2000 and 1999
(Unaudited)
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30 Ended June 30
---------------------- -----------------------
<S> <C> <C> <C> <C>
2000 1999 2000 1999
---------- -------- ---------- ----------
Interest income:
Interest and fees on loans $ 768,415 324,670 1,427,404 558,119
Interest on federal funds sold 39,771 21,763 71,631 62,528
Investment securities 287,828 284,435 552,482 580,722
---------- ------- --------- ---------
Total interest income 1,096,014 630,868 2,051,517 1,201,369
---------- ------- --------- ---------
Interest expense on deposits 329,346 219,141 642,210 434,944
Interest expense on borrowings 75,644 - 102,301 -
---------- ------- --------- ---------
Total interest expense 404,990 219,141 744,511 434,944
---------- ------- --------- ---------
Net interest income 691,024 411,727 1,307,006 766,425
Provision for loan losses 75,000 105,797 150,000 115,090
---------- ------- --------- ---------
Net interest income after provision
for loan losses 616,024 305,930 1,157,006 651,335
---------- ------- --------- ---------
Other income:
Service charges on deposit accounts 51,181 28,979 90,219 58,911
Securities gains (losses) - (3,327) - (2,335)
Gain on sales of loans 38,186 98,855 47,466 118,773
Other operating income 8,536 10,968 21,230 29,047
---------- ------- --------- ---------
Total other income 97,903 135,478 158,915 204,396
---------- ------- --------- ---------
Other expense:
Salaries and other personnel expense 308,130 217,916 564,949 425,153
Net occupancy and equipment expense 70,229 44,294 133,530 89,267
Other operating expense 229,469 210,153 432,896 383,194
---------- ------- --------- ---------
Total other expense 607,828 472,363 1,131,375 897,614
---------- ------- --------- ---------
Earnings (loss) before income taxes 106,099 (30,955) 184,546 (41,883)
Income tax expense 40,316 - 70,126 -
---------- ------- --------- ---------
Net earnings (loss) $ 65,783 (30,955) 114,420 (41,883)
========== ======= ========= =========
Earnings (loss) per common share:
Average outstanding shares 942,597 942,032 942,523 941,958
Net earnings (loss) per share $.07 (0.03) 0.12 (0.04)
========== ======= ========= =========
</TABLE>
See accompanying notes to financial statements.
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<PAGE>
DECATUR FIRST BANK GROUP, INC.
Statements of Comprehensive Income
For the Six Months Ended June 30, 2000 and 1999
<TABLE>
<CAPTION>
<S> <C> <C>
2000 1999
-------- --------
Net earnings (loss) $114,420 (41,883)
Other comprehensive income, net of tax:
Unrealized gains (losses) on investment
securities available-for-sale:
Unrealized gains (losses) arising during the period 4,871 (456,491)
Less: Income tax expense related to investment
Securities available for sale (1,851) -
Less: Reclassification adjustment for gains
included in net earnings - (2,335)
-------- --------
Other comprehensive income (loss) 3,020 (458,826)
-------- --------
Comprehensive income (loss) $117,440 (500,709)
======== ========
</TABLE>
See accompanying notes to financial statements.
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<PAGE>
DECATUR FIRST BANK GROUP, INC.
Statements of Cash Flows
For the Six Months Ended June 30, 2000 and 1999
(Unaudited)
<TABLE>
<CAPTION>
2000 1999
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<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) $ 114,420 (41,883)
Adjustments to reconcile net earnings (loss) to net
cash provided by operating activities:
Provision for loan losses 150,000 115,090
Depreciation, amortization and accretion 100,629 98,032
Securities losses - 2,335
Change in other 156,705 15,557
----------- ----------
Net cash provided by operating activities 521,754 189,131
----------- ----------
Cash flows from investing activities:
Proceeds from sales, maturities and paydowns
of investment securities available for sale 2,080,956 6,010,992
Purchases of investment securities available for sale (2,931,798) (4,402,717)
Change in loans (5,965,032) (6,364,710)
Purchases of premises and equipment (31,336) (821,370)
----------- ----------
Net cash used by investing activities (6,847,210) (5,577,805)
----------- ----------
Cash flows from financing activities:
Net change in deposits 4,620,918 2,244,428
Net change in borrowings 5,000,000 -
Issuance of stock awards 1,749 5,000
Sale (purchase) of treasury shares 1,820 (1,600)
----------- ----------
Net cash provided by financing activities 9,624,487 2,247,828
----------- ----------
Net change in cash and cash equivalents 3,299,031 (3,140,846)
Cash and cash equivalents at beginning of the period 4,852,971 7,629,634
----------- ----------
Cash and cash equivalents at end of period $ 8,152,002 4,488,788
=========== ==========
Noncash investing activities:
Change in unrealized loss on securities available for sale, net of tax $ 3,020 (458,826)
</TABLE>
See accompanying notes to financial statements.
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<PAGE>
DECATUR FIRST BANK GROUP, INC.
Notes to Financial Statements
(Unaudited)
(1) Organization and Basis of Presentation
--------------------------------------
Decatur First Bank Group, Inc. (Decatur First), 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.
The consolidated financial statements include the accounts of Decatur First
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 inteim period presented. All such adjustments are of a normal recurring
nature. The results of operations for the period ended June 30, 2000 are
not necessarily indicative of the results of a full year's operations.
The accounting principles followed by Decatur First 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.
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<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, 2000 and 1999
Financial Condition
Total assets at June 30, 2000 were $59,623,595 representing a $9,864,699
(20%) increase from December 31, 1999. Deposits increased $4,620,917 (12%) and
loans increased $5,815,032 (24%) from December 31, 1999 to June 30, 2000. The
allowance for loan losses at June 30, 2000 totaled $524,087, representing 1.5%
of total loans compared to December 31, 1999 totals of $373,156, which
represented 1.7% of total loans. Cash and cash equivalents increased $3,299,031
from December 31, 1999 to June 30, 2000.
There were no related party loans or other loans which were considered
nonperforming at June 30, 2000.
Results of Operations
Net income for the six months ended June 30, 2000 was $114,420, compared to
a net loss of $41,883 for the same period in 1999. The increase in net income
was primarily associated with an increase in net interest income ($541,000).
These increases were offset by $234,000 in additional other expenses as well as
an increase in provision for loan losses of $35,000.
For the six months ended June 30, 2000, the Bank's yield on earning assets
was 8.3% while the cost of funding sources was 4.12%. While the net interest
spread was 4.18%, the net interest margin, which considers the effect of non-
interest bearing deposits, was 5.24%, an increase of 111 basis points as
compared to the same period in the prior year. The increase in the net interest
margin was due to an increase in the amount of outstanding loans and the
proportion of outstanding loans as well as an increase in non-interest bearing
deposits relative to total deposits. Net interest income increased $541,000 for
the six months ended June 30, 2000 over the same period for 1999 primarily due
to the volume of earning assets and interest bearing liabilities. Management
monitors the rate sensitivity of earning assets and interest-bearing liabilities
over the entire life of these instruments, but places particular emphasis on the
first year.
Other income decreased approximately $45,000 for the six months ended June
30, 2000, compared to the same period for 1999 due to a reduction in fees from
the sale of SBA loans. This decrease was offset with an increase in service
charges on deposit accounts of approximately $32,000 related to an increase in
the number of accounts.
Other expense increased approximately $234,000 for the six months ended
June 30, 2000, compared to the same period for 1999, primarily due to an
increase in the volume of business, which led to additional expense necessary to
service new business.
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<PAGE>
Capital
The following tables present Decatur First's regulatory capital position at
June 30, 2000:
Risk-Based Capital Ratios
-------------------------
Tier 1 Tangible Capital, Actual 19.65%
Tier 1 Tangible Capital minimum requirement 4.00%
-----
Excess 15.65%
=====
Total Capital, Actual 20.83%
Total Capital minimum requirement 8.00%
-----
Excess 12.83%
=====
Leverage Ratio
--------------
Tier 1 Tangible Capital to adjusted total assets
("Leverage Ratio") 15.22%
Minimum leverage requirement 4.00%
-----
Excess 11.22%
=====
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<PAGE>
PART II. OTHER INFORMATION
DECATUR FIRST BANK GROUP, INC.
Item 1. Legal Proceedings
-----------------
None
Item 2. Changes in Securities
---------------------
During the three months ended June 30, 2000 Decatur First granted 100
shares of its common stock, $5.00 par value, to selected employees as
compensation for their services to the Bank. Since the Company only
granted the shares to employees, the transactions did not involve a
public offering, and therefore were exempt from registration under
Section 4(2) of the Securities Act of 1933. The following table sets
forth the number of shares issued to employees on the dates indicated:
Date Number of Shares
---- ----------------
Jan. 18, 2000 40
April 19, 2000 100
Additionally, on June 6, 2000, Decatur First sold 140 shares of its
common stock being held as treasury shares to an employee. This sale of
140 shares for cash consideration of $1,820.00 did not involve a public
offering, and therefore was exempt from registration under Section 4(2)
of the Securities Act of 1933.
Item 3. Defaults Upon Senior Securities
-------------------------------
None
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
a. On May 2, 2000, Decatur First held its annual meeting of
shareholders at which the following five Class II directors nominees
were elected to a three year term expiring in 2003 by the vote
indicated:
For Withheld Total
------- -------- -------
Merriell Autrey, Jr. 675,756 266,873 942,629
John Walter Drake 675,756 266,873 942,629
William F. Floyd 675,756 266,873 942,629
Robert E. Lanier 675,756 266,873 942,629
Roger K. Quillen 675,756 266,873 942,629
Item 5. Other Information
-----------------
Shareholder proposals submitted for consideration at Decatur First's
2001 Annual Meeting of Shareholders must be received by Decatur First
no later than December 1, 2000, to be included in the 2001 proxy
materials. A shareholder must notify Decatur First before February 1,
2001 if the shareholder has a proposal to present at the 2001 Annual
Meeting which the shareholder intends to present other than by
inclusion in Decatur First's proxy material. If Decatur First does not
receive notice prior to February 1, 2001, proxies solicited by the
management of Decatur First will confer discretionary authority upon
the management of Decatur First to vote upon any such proposal.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
Exhibit
Number
-------
27 Financial Data Schedule (for SEC purposes only)
No reports on Form 8-K were filed during the quarter for which this
report was filed.
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<PAGE>
DECATUR FIRST BANK GROUP, INC.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant has
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: August 14, 2000
-----------------------------------
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