<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 March 31, 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: 942,449 shares
outstanding as of May 11, 2000
Transitional Small Business Disclosure Format
(check one)
Yes XX No XX
-- --
<PAGE>
DECATUR FIRST BANK GROUP, INC.
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C> <C>
PART I FINANCIAL INFORMATION 4
Item 1. Financial Statements 4
Balance Sheet (unaudited) at March 31, 2000 4
Statement of Operations (unaudited) for the Three
Months Ended March 31, 2000 and 1999 6
Statement of Comprehensive Income (unaudited) for the Three
Months Ended March 31, 2000 and 1999 8
Statement of Cash Flows (unaudited) for the Three
Months Ended March 31, 2000 and 1999 10
Notes to Financial Statements (unaudited) 12
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 13
PART II. OTHER INFORMATION 15
Item 1. Legal Proceedings 15
Item 2. Changes in Securities 15
Item 3. Defaults Upon Senior Securities 15
Item 4. Submission of Matters to a Vote of Security Holders 15
Item 5. Other Information 15
Item 6. Exhibits and Reports on Form 8-K 15
</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 statements are
not guarantees of
-2-
<PAGE>
future performance and involve 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.
-3-
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
DECATUR FIRST BANK GROUP, INC.
Consolidated Balance Sheet
March 31, 2000
(Unaudited)
Assets
------
Cash and due from banks $ 3,125,599
Federal funds sold 2,520,000
-----------
Cash and cash equivalents 5,645,599
Investment securities available for sale 19,730,769
Loans, net 29,180,743
Premises and equipment, net 1,931,246
Accrued interest receivable and other assets 1,145,880
-----------
$57,634,237
===========
Liabilities and Stockholders' Equity
------------------------------------
Liabilities:
Deposits:
Noninterest-bearing $ 9,936,733
Interest-bearing 34,028,912
-----------
Total deposits 43,965,645
FHLB Advances 5,000,000
Accrued interest payable and other liabilities 230,502
-----------
Total liabilities 49,196,147
-----------
Stockholders' equity:
Common stock, $5 par value; authorized
10,000,000 shares; 942,589 shares issued 4,712,945
Additional paid-in capital 4,674,924
Accumulated deficit (539,767)
Treasury stock (140 shares), at cost (1,600)
Accumulated comprehensive income (408,412)
-----------
Total stockholders' equity 8,438,090
-----------
$57,634,237
===========
-4-
<PAGE>
See accompanying notes to financial statements.
-5-
<PAGE>
DECATUR FIRST BANK GROUP, INC.
Consolidated Statements of Operations
For the Three Months Ended March 31, 2000 and 1999
(Unaudited)
2000 1999
-------- -------
Interest income:
Interest and fees on loans $624,347 233,449
Interest on federal funds sold 31,860 40,765
Investment securities 264,655 296,287
-------- -------
Total interest income 920,862 570,501
-------- -------
Interest expense on deposits 312,864 215,803
Interest expense on borrowings 26,657 -
-------- -------
Total interest expense 339,521 215,803
-------- -------
Net interest income 581,341 354,698
Provision for loan losses 75,000 9,293
-------- -------
Net interest income after provision for loan losses 506,341 345,405
-------- -------
Other income:
Service charges on deposit accounts 39,038 29,932
Securities gains - 992
Gain on sales of loans 9,281 19,915
Other operating income 47,335 18,079
-------- -------
Total other income 95,654 68,918
-------- -------
Other expense:
Salaries and other personnel expense 256,819 207,237
Net occupancy and equipment expense 63,301 44,973
Other operating expense 203,428 173,041
-------- -------
Total other expense 523,548 425,251
-------- -------
Earnings (loss) before income taxes 78,447 (10,928)
Income tax expense (benefit) 29,810 -
-------- -------
Net earnings (loss) $ 48,637 (10,928)
======== =======
Earning (loss) per common share:
Average outstanding shares 942,449 941,887
Net earnings (loss) per share $ 0.05 (0.01)
======== =======
-6-
<PAGE>
See accompanying notes to financial statements.
-7-
<PAGE>
DECATUR FIRST BANK GROUP, INC.
Consolidated Statements of Comprehensive Income
For the Three Months Ended March 31, 2000 and 1999
(Unaudited)
2000 1999
-------- --------
Net earnings (loss) $ 48,637 (10,928)
Other comprehensive income, net of tax:
Unrealized gains (losses) on investment
securities available-for-sale:
Unrealized losses arising during the period (11,505) (174,198)
Less: Income tax expense related to
investment securities available for sale 4,372 -
Less: Reclassification adjustment
for gains included in net earnings - 992
-------- --------
Other comprehensive income (7,133) (173,206)
-------- --------
Comprehensive income (loss) (41,504) (184,134)
======== ========
-8-
<PAGE>
See accompanying notes to financial statements.
-9-
<PAGE>
DECATUR FIRST BANK GROUP, INC.
Consolidated Statements of Cash Flows
For the Three Months Ended March 31, 2000 and 1999
(Unaudited)
<TABLE>
2000 1999
----------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) $ 48,637 (10,928)
Adjustments to reconcile net earnings (loss) to
net cash provided by operating activities:
Provision for loan losses 75,000 9,293
Depreciation, amortization and accretion 49,655 49,156
Securities gains - (992)
Change in other 209,835 (47,873)
----------- ----------
Net cash provided (used) by operating activities 383,127 (1,344)
----------- ----------
Cash flows from investing activities:
Proceeds from sales, maturities and paydowns
of investment securities available for sale - 850,992
Purchases of investment securities available for sale (2,662,052) (3,806,680)
Change in loans (4,655,371) (222,211)
Purchases of premises and equipment (14,354) (259,713)
----------- ----------
Net cash used by investing activities (7,331,777) (3,437,612)
Cash flows from financing activities:
Net change in deposits 2,741,277 (495,258)
Net change in borrowings 5,000,000 -
Purchase of treasury shares - (1,100)
----------- ----------
Net cash provided by financing activities 7,741,277 (496,358)
----------- ----------
Net change in cash and cash equivalents 792,628 (3,935,314)
Cash and cash equivalents at beginning of the period 4,852,971 7,629,634
----------- ----------
Cash and cash equivalents at end of period $ 5,645,599 3,694,320
=========== ==========
Noncash investing activities:
Change in unrealized loss on securities available
for sale, net of tax $ (7,133) (173,206)
</TABLE>
-10-
<PAGE>
See accompanying notes to financial statements.
-11-
<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.
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
inteim period presented. All such adjustments are of a normal recurring
nature. The results of operations for the period ended March 31, 2000 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.
-12-
<PAGE>
Item 2.
DECATUR FIRST BANK GROUP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
For the Three Months Ended March 31, 2000 and 1999
Financial Condition
Total assets at March 31, 2000 were $57,634,237 representing a $7,875,341
(16%) increase from December 31, 1999. Deposits increased $2,741,277 (7%) from
December 31, 1999. Loans increased $4,580,371 (19%). The allowance for loan
losses at March 31, 2000 totaled $448,436, representing 1.5% of total loans
compared to December 31, 1999 totals of $373,156, which represented 1.5% of
total loans. Cash and cash equivalents increased $792,628 from December 31,
1999.
There were no related party loans or other loans which were considered
nonperforming at March 31, 2000.
Results of Operations
For the three months ended March 31, 2000, the Bank's net interest spread is
3.82%, while net interest margin, which considers the effect of non-interest
bearing deposits, was 4.91%.
Net income for the three months ended March 31, 2000 was $48,637, compared to
a net loss of $10,928 for the same period for 1999. The increase in net income
was primarily associated with an increase in net interest income ($226,000) as
well as an increase in non-interest income ($27,000). These increases were
offset by $98,000 in additional other expenses as well as an increase in
provision for loan losses of $66,000.
For the three months ended March 31, 2000, the Bank's yield on earning assets
has been 7.87% while the cost of funding sources is 4.05%. While net interest
spread is 3.82%, net interest margin, which considers the effect of non-interest
bearing deposits, was 4.91%, an increase of 78 basis points as compared to the
same period in the prior year. Net interest margin is higher than the prior
year due to an increase in the amount and proportion of outstanding loans as
well as an increase in non-interest bearing deposits relative to total deposits.
Net interest income in the aggregate increased for the three months ended March
31, 2000, over the same period for 1999 primarily due to the volume of earnings
assets and interest bearing liabilities. Management monitors the rate
sensitivity of earnings assets and interest-bearing liabilities over the entire
life of these instruments, but places particular emphasis on the first year.
Other income increased approximately $27,000 for the three months ended March
31, 2000, compared to the same period for 1999. This increase was primarily
associated with an increase in service charges on deposit accounts of
approximately $10,000 related to an increase in the number of accounts and a
$29,000 increase in other operating income.
Other expense increased approximately $98,000 for the three months ended
March 31, 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.
-13-
<PAGE>
Capital
The following tables present Decatur First Bank Group, Inc.'s regulatory
capital position at March 31, 2000:
Risk-Based Capital Ratios
-------------------------
Tier 1 Tangible Capital, Actual 20.46%
Tier 1 Tangible Capital minimum requirement 4.00%
-----
Excess 16.46%
=====
Total Capital, Actual 21.53%
Total Capital minimum requirement 8.00%
-----
Excess 13.53%
=====
Leverage Ratio
--------------
Tier 1 Tangible Capital to adjusted total assets
("Leverage Ratio") 16.86%
Minimum leverage requirement 4.00%
-----
Excess 12.86%
=====
-14-
<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
---------------------------------------------------
None
Item 5. Other Information
-----------------
Pursuant to Rule 14a-4(c)(1) promulgated under the Securities Exchange
Act of 1934, as amended, shareholders desiring to present a proposal
for consideration at the Company's 2001 Annual Meeting of Shareholders
must notify the Company in writing at its principal office at 1120
Commerce Drive, Decatur, Georgia 30030 of the contents of such proposal
no later than February 1, 2001. Failure to timely submit such a
proposal will enable the proxies appointed by management to exercise
their discretionary voting authority when the proposal is raised at the
Annual Meeting of Shareholders without any discussion of the matter in
the proxy statement.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
Financial Data Schedule (for SEC purposes only)
-15-
<PAGE>
DECATUR FIRST BANK GROUP, INC.
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.
DECATUR FIRST BANK GROUP, INC.
By: /s/ Judy B. Turner
------------------
Judy B. Turner
President, Chief Executive Officer and
Principal Accounting Officer
Date:
-16-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 3,126
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 2,520
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 19,731
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 29,629
<ALLOWANCE> 448
<TOTAL-ASSETS> 57,634
<DEPOSITS> 43,966
<SHORT-TERM> 0
<LIABILITIES-OTHER> 231
<LONG-TERM> 5,000
0
0
<COMMON> 4,713
<OTHER-SE> 3,725
<TOTAL-LIABILITIES-AND-EQUITY> 57,634
<INTEREST-LOAN> 624
<INTEREST-INVEST> 265
<INTEREST-OTHER> 32
<INTEREST-TOTAL> 921
<INTEREST-DEPOSIT> 313
<INTEREST-EXPENSE> 340
<INTEREST-INCOME-NET> 581
<LOAN-LOSSES> 75
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 524
<INCOME-PRETAX> 78
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-BASIC> 0
<EPS-DILUTED> 0.05
<YIELD-ACTUAL> 4.91
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 373
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 448
<ALLOWANCE-DOMESTIC> 448
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
