<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 September 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 ___________
Commision 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 30030
Decatur, Georgia ------------------------------------
---------------------------- (Zip Code)
(Address of principal
executive offices)
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: 932,905 shares
outstanding as of October 31, 2000
Transitional Small Business Disclosure Format
(check one)
Yes No XX
---- ----
<PAGE>
DECATUR FIRST BANK GROUP, INC.
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C> <C>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheet (unaudited) at September 30, 2000 3
Statements of Operations (unaudited) for the Three Months
and the Nine Months Ended September 30, 2000 and 1999 4
Statements of Comprehensive Income (unaudited) for the Nine
Months Ended September 30, 2000 and 1999 5
Statements of Cash Flows (unaudited) for the Nine Months
Ended September 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
September 30, 2000
(Unaudited)
Assets
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<TABLE>
<CAPTION>
<S> <C>
Cash and due from banks $ 5,109,523
Federal funds sold 1,750,000
-----------
Cash and cash equivalents 6,859,523
Investment securities available for sale 17,747,853
Loans, net 33,952,054
Premises and equipment, net 1,919,507
Accrued interest receivable and other assets 1,444,438
-----------
$61,923,375
===========
Liabilities and Stockholders' Equity
------------------------------------
Liabilities:
Deposits:
Noninterest-bearing $ 9,967,884
Interest-bearing 37,943,719
-----------
Total deposits 47,911,603
FHLB Advances 5,000,000
Accrued interest payable and other liabilities 388,232
-----------
Total liabilities 53,299,835
-----------
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 942,905 shares 4,714,525
Additional paid-in capital 4,677,601
Accumulated deficit (384,174)
Treasury stock (10,000 shares), at cost (125,000)
Accumulated comprehensive income (259,412)
-----------
Total stockholders' equity 8,623,540
-----------
$61,923,375
===========
</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 Nine Months Ended September 30, 2000 and 1999
(Unaudited)
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30 Ended September 30
-------------------- ---------------------
<S> <C> <C> <C> <C>
2000 1999 2000 1999
---------- ------- --------- ---------
Interest income:
Interest and fees on loans $ 863,729 423,556 2,291,133 981,675
Interest on federal funds sold 60,718 34,497 132,349 97,025
Investment securities 274,020 250,280 826,502 831,002
---------- ------- --------- ---------
Total interest income 1,198,467 708,333 3,249,984 1,909,702
---------- ------- --------- ---------
Interest expense on deposits 372,322 236,295 1,014,532 671,239
Interest expense on borrowings 76,178 - 178,479 -
---------- ------- --------- ---------
Total interest expense 448,500 236,295 1,193,011 671,239
---------- ------- --------- ---------
Net interest income 749,967 472,038 2,056,973 1,238,463
Provision for loan losses 50,000 5,000 200,000 120,090
---------- ------- --------- ---------
Net interest income after provision
for loan losses 699,967 467,038 1,856,973 1,118,373
---------- ------- --------- ---------
Other income:
Service charges on deposit accounts 55,235 29,860 145,454 88,771
Securities gains (losses) - (604) - (2,939)
Gain on sales of loans - 46,918 47,467 165,691
Other operating income 20,090 28,211 41,319 57,258
---------- ------- --------- ---------
Total other income 75,325 104,385 234,240 308,781
---------- ------- --------- ---------
Other expense:
Salaries and other personnel expense 313,042 252,732 877,991 677,885
Net occupancy and equipment expense 77,771 68,416 211,301 157,683
Other operating expense 237,278 169,563 670,174 552,757
---------- ------- --------- ---------
Total other expense 628,091 490,711 1,759,466 1,388,325
---------- ------- --------- ---------
Earnings (loss) before income taxes 147,201 80,712 331,747 38,829
Income tax expense 57,391 - 127,517 -
---------- ------- --------- ---------
Net earnings (loss) $ 89,810 80,712 204,230 38,829
========== ======= ========= =========
Earnings (loss) per common share:
Average outstanding shares 938,904 942,034 941,308 942,184
Net earnings (loss) per share $ .10 0.09 0.22 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 Nine Months Ended September 30, 2000 and 1999
<TABLE>
<CAPTION>
<S> <C> <C>
2000 1999
-------- --------
Net earnings (loss) $204,230 38,829
Other comprehensive income, net of tax:
Unrealized gains (losses) on investment
securities available-for-sale:
Unrealized gains (losses) arising during the period 228,818 (564,220)
Less: Income tax expense related to investment
securities available for sale (86,951) -
Less: Reclassification adjustment for gains
included in net earnings - (2,939)
-------- --------
Other comprehensive income (loss) 141,867 (567,159)
-------- --------
Comprehensive income (loss) $346,097 (528,330)
======== ========
</TABLE>
See accompanying notes to financial statements.
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<PAGE>
DECATUR FIRST BANK GROUP, INC.
Statements of Cash Flows
For the Nine Months Ended September 30, 2000 and 1999
(Unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
2000 1999
------------ ----------
Cash flows from operating activities:
Net earnings (loss) $ 204,230 38,830
Adjustments to reconcile net earnings (loss) to net
cash provided by operating activities:
Provision for loan losses 200,000 120,000
Depreciation, amortization and accretion 146,353 159,726
Securities losses - 2,939
Change in other (65,410) 111,516
------------ ----------
Net cash provided by operating activities 485,173 433,101
------------ ----------
Cash flows from investing activities:
Proceeds from sales, maturities and paydowns
of investment securities available for sale 2,269,875 6,604,405
Purchases of investment securities available for sale (2,729,958) (5,275,017)
Change in loans (9,504,216) (9,628,567)
Purchases of premises and equipment (82,416) (1,003,999)
------------ ----------
Net cash used by investing activities (10,046,715) (9,303,178)
----------- ----------
Cash flows from financing activities:
Net change in deposits 6,687,236 3,699,156
Net change in borrowings 5,000,000 -
Issuance of stock awards 4,038 5,000
Purchase of treasury shares (123,180) (1,600)
------------ ----------
Net cash provided by financing activities 11,568,094 3,702,556
------------ ----------
Net change in cash and cash equivalents 2,006,552 (5,167,521)
Cash and cash equivalents at beginning of the period 4,852,971 7,629,634
------------ ----------
Cash and cash equivalents at end of period $ 6,859,523 2,462,113
============ ==========
Noncash investing activities:
Change in unrealized loss on securities available for sale, net of tax $ 141,867 (567,159)
</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 September 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 Nine Months Ended September 30, 2000 and 1999
Financial Condition
Total assets at September 30, 2000 were $61,923,375 representing a
$12,164,479 (24%) increase from December 31, 1999. Deposits increased $6,687,236
(16%) and loans increased $9,527,911 (38%) from December 31, 1999 to September
30, 2000. The allowance for loan losses at September 30, 2000 totaled $574,087,
representing 1.7% of total loans compared to December 31, 1999 totals of
$373,156, which represented 1.7% of total loans. Cash and cash equivalents
increased $2,006,552 from December 31, 1999 to September 30, 2000.
At September 30, 2000, the Bank had one loan totaling $95,000 that had been
placed in nonaccrual status. Other than this loan, there were no related party
loans or other loans which were considered nonperforming at September 30, 2000.
Results of Operations
Net income for the nine months ended September 30, 2000 was $204,230,
compared to a net income of $38,829 for the same period in 1999. The increase
in net income was primarily associated with an increase in net interest income
($818,510). This increase was offset by $371,141 in additional other expenses
as well as an increase in provision for loan losses of $80,000.
For the nine months ended September 30, 2000, the Bank's yield on earning
assets was 8.4% while the cost of funding sources was 4.20%. While the net
interest spread was 4.16%, the net interest margin, which considers the effect
of non-interest bearing deposits, was 5.25%, an increase of 112 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 $818,510 for
the nine months ended September 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 $75,000 for the nine months ended
September 30, 2000, compared to the same period for 1999 due to a reduction in
fees from the sale of SBA loans. This overall decrease was caused by a
reduction in the sale of SBA loans of $119,000, and was offset by an increase in
service charges on deposit accounts of approximately $56,000 related to an
increase in the number of accounts.
Other expense increased approximately $371,000 for the nine months ended
September 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
September 30, 2000:
Risk-Based Capital Ratios
-------------------------
Tier 1 Tangible Capital, Actual 17.77%
Tier 1 Tangible Capital minimum requirement 4.00%
-----
Excess 13.77%
=====
Total Capital, Actual 18.93%
Total Capital minimum requirement 8.00%
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Excess 10.93%
=====
Leverage Ratio
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Tier 1 Tangible Capital to adjusted total assets
("Leverage Ratio") 14.56%
Minimum leverage requirement 4.00%
-----
Excess 10.56%
=====
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<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
---------------------------------------------------
There were no matters submitted to shareholders during the third
quarter of 2000.
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: November 13, 2000
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