<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 SEPTEMBER 30, 1998
---------------------------
[ _ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from __________ to __________
COMMISSION FILE NUMBER: 333-37405
Buckhead Community Bancorp, Inc.
--------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Georgia 58-2265980
- -------------------------------- -------------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
415 EAST PACES FERRY ROAD, N.E., ATLANTA, GEORGIA 30305
--------------------------------------------------
(Address of principal executive offices)
(404) 231-2265
----------------------------------------
(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 November 1, 1998: 1,627,950; $.01 par value.
Transitional Small Business Disclosure Format (Check One) Yes _______ No X
---
1
<PAGE>
BUCKHEAD COMMUNITY BANCORP, INC. AND SUBSIDIARY
________________________________________________________________________________
INDEX
-----
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEET - SEPTEMBER 30, 1998........................................ 3
CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE LOSS - THREE MONTHS ENDED
SEPTEMBER 30, 1998 AND 1997 AND NINE MONTHS
ENDED SEPTEMBER 30, 1998 AND 1997..................................................... 4
CONSOLIDATED STATEMENT OF CASH FLOWS - NINE
MONTHS ENDED SEPTEMBER 30, 1998 AND 1997.............................................. 5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS............................................. 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS..................................... 8
PART II. OTHER INFORMATION
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS................................ 10
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K................................................... 10
SIGNATURES.................................................................................. 11
</TABLE>
2
<PAGE>
PART I - FINANCIAL INFORMATION
FINANCIAL STATEMENTS
BUCKHEAD COMMUNITY BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS 1998
------ ---------------------
<S> <C>
Cash and due from banks $ 1,058,613
Federal funds sold 8,600,000
Securities available-for-sale, at fair value 10,654,707
Securities held-to-maturity, at cost (fair value $2,138,000) 2,115,958
Loans 11,354,602
Less allowance for loan losses 57,500
---------------------
Loans, net 11,297,102
---------------------
Premises and equipment 583,547
Other assets 449,026
---------------------
TOTAL ASSETS $ 34,758,953
=====================
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
DEPOSITS
Demand $ 4,605,770
Interest-bearing demand 6,007,998
Savings 119,547
Time 16,375,770
---------------------
TOTAL DEPOSITS 27,109,085
Other liabilities 79,490
---------------------
TOTAL LIABILITIES 27,188,575
=====================
COMMITMENTS AND CONTINGENT LIABILITIES
STOCKHOLDERS' EQUITY
Special stock, par value $.01; 1,000,000 shares
authorized; none issued -
Common stock, par value $.01; 10,000,000 shares
authorized; 1,627,950 shares issued and outstanding 16,280
Capital surplus 8,088,317
Accumulated deficit (560,898)
Accumulated other comprehensive income 26,679
---------------------
TOTAL STOCKHOLDERS' EQUITY 7,570,378
---------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 34,758,953
=====================
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
3
<PAGE>
BUCKHEAD COMMUNITY BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
THREE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
AND NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
--------------- ------------- --------------- ------------
<S> <C> <C> <C> <C>
Interest Income
Loans $ 228,926 $ - $ 310,080 $ -
Taxable securities 177791 - 328645 -
Federal funds sold and other 149,372 1,266 378,794 6,038
--------------- ------------- --------------- ------------
Total interest income 556,089 1,266 1,017,519 6,038
--------------- ------------- --------------- ------------
Interest expense on deposits 279,354 - 436,018 -
--------------- ------------- --------------- ------------
Net interest income 276,735 - 581,501 6,038
Provision for loan losses 42,500 - 57,500 -
--------------- ------------- --------------- ------------
Net interest income after
provision for loan losses 234,235 - 524,001 6,038
--------------- ------------- --------------- ------------
Other operating income 13,502 - 26,253 -
--------------- ------------- --------------- ------------
Other expenses
Salaries and employee benefits 145,462 2,833 449,944 18,750
Occupancy and equipment expenses 64,061 - 180,702 11,459
Other operating expenses 86,572 9,239 339,980 28,051
--------------- ------------- --------------- ------------
296,095 12,072 970,626 58,260
--------------- ------------- --------------- ------------
Net loss before income taxes (48,358) (10,806) (420,372) (52,222)
Income tax expense - - - -
--------------- ------------- --------------- ------------
Net loss $ (48,358) $ (10,806) $ (420,372) $ (52,222)
--------------- ------------- --------------- ------------
Other comprehensive income:
Unrealized gains on securities
available-for-sale arising during period 43,143 - 26,680 -
--------------- ------------- --------------- ------------
Comprehensive loss $ (5,215) $ (10,806) $ (393,692) $ (52,222)
=============== ============= =============== ============
Losses per common share $ (0.03) $ (0.15) $ (0.29) $ (0.67)
=============== ============= =============== ============
Weighted average shares outstanding 1,627,950 73,261 1,431,495 77,729
=============== ============= =============== ============
Cash dividends per share of common stock $ - $ - $ - $ -
=============== ============= =============== ============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
4
<PAGE>
BUCKHEAD COMMUNITY BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(UNAUDITED)
<TABLE>
<CAPTION>
1998 1997
--------------------- ----------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net loss $ (420,372) $ (52,222)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 73,532 -
Provision for loan losses 57,500 -
Increase in interest receivable (242,039) (4,996)
Increase in interest payable 79,567 -
Other operating activities (48,544) (5,512)
--------------------- ----------------------
Net cash used in operating activities (500,356) (62,730)
--------------------- ----------------------
INVESTING ACTIVITIES
Purchases of securities available-for-sale (10,628,028) -
Purchases of securities held-to-maturity (2,187,700) -
Proceeds from maturities of securities held-to-maturity 71,742 -
Net increase in Federal funds sold (8,600,000) -
Net increase in loans (11,354,602) -
Purchase of premises and equipment (297,706) -
Decrease in interest-bearing deposits in banks - 180,000
Increase in organization costs (5,500) (56,586)
--------------------- ----------------------
Net cash provided by (used in) investing activities (33,001,794) 123,414
--------------------- -----------------------
FINANCING ACTIVITIES
Net increase in deposits 27,109,085 -
Proceeds from sale of common stock 7,389,750 -
Redemption of common stock - (50,000)
--------------------- ----------------------
Net cash provided by (used in) financing activities 34,498,835 (50,000)
--------------------- ----------------------
Net increase in cash and due from banks 996,685 10,684
Cash and due from banks, beginning of period 61,928 13,576
--------------------- ----------------------
Cash and due from banks, end of period $ 1,058,613 $ 24,260
===================== ======================
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for:
Interest $ 356,451 $ -
Income taxes $ - $ 87
NONCASH TRANSACTION
Unrealized gains on securities available-for-sale $ 26,680 $ -
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
5
<PAGE>
BUCKHEAD COMMUNITY BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. NATURE OF BUSINESS AND BASIS OF PRESENTATION
Buckhead Community Bancorp, Inc. (the Company) is a one-bank holding
company whose business is conducted by its wholly-owned subsidiary,
The Buckhead Community Bank, N.A. (the Bank). The Bank is a
commercial bank located in Atlanta, Fulton County, Georgia. The
Company completed the sale of its common stock and obtained all
necessary regulatory approvals to commence operations in February of
1998. The Company sold a total of $8,139,750 of its common stock and
capitalized the Bank with $8,000,000. The Bank commenced operations
on February 6, 1998.
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 nine month period ended September
30, 1998 is 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 December31, 1997 had no effect on the calculation of
losses per common share for the three and nine month periods ended
September 30, 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 Loss.
The Financial Accounting Standards Board has issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities". SFAS
No. 133 establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments imbedded in
other contracts and for hedging activities. It requires that all
derivatives be recognized as either assets or liabilities at fair
value. The accounting for changes in the fair value of derivative
instruments (gains and losses) depends on the intended use of the
derivative. Designated uses are fair value hedges, cash flow hedges,
and foreign currency hedges. The effective date of this statement is
for all fiscal quarters of fiscal years beginning after June 15, 1999.
The Company has not assessed the impact that this statement will have
on the financial statements.
6
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 2. CURRENT ACCOUNTING DEVELOPMENTS (CONTINUED)
In April of 1998, the Accounting Standards Executive Committee issued
Statement of Position (SOP) 98-5, "Reporting on the Costs of Start Up
Activities". SOP 98-5 requires that costs of start-up activities and
organization costs be expensed as incurred. SOP 98-5 becomes
effective for financial statements for fiscal years beginning after
December 15, 1998. However, early adoption is encouraged for fiscal
years in which financial statements have not been issued. As of
September 30, 1998, the Company had $128,012 of unamortized
organization costs which will be required to be written off upon
adoption of SOP 98-5.
There are no other recent accounting pronouncements that have had, or
are expected to have, a material effect on the Company's financial
statements.
7
<PAGE>
BUCKHEAD COMMUNITY BANCORP, INC. AND SUBSIDIARY
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
- -------------------
As of September 30, 1998, the Company had total assets of $34.8 million. The
Company raised $8.1 million from the sale of its common stock and has received
$27.1 million in deposits since the commencement of operations on February 6,
1998. The Company has invested the proceeds from its stock sale and deposit
growth in Federal funds sold ($8.6 million), U. S. Treasury and Agency
securities ($12.8 million), and loans ($11.4 million). The Company expects that
loan and deposit growth will be significant during its early periods of
operations. This growth is not uncommon for de novo banks.
LIQUIDITY
- ---------
As of September 30, 1998, the Bank's liquidity ratio was far in excess of its
target ratio, due to its investment in Federal funds sold and other short-term
assets. As loan growth continues to increase, the Bank's liquidity will
decrease rapidly to levels more in line with its target ratio of 30%.
CAPITAL
- -------
The minimum capital requirements for banks and bank holding companies require a
leverage capital to assets ratio of at least 4%, core capital to risk-weighted
assets ratio of at least 4%, and total capital to risk-weighted assets of at
least 8%. The Company and the Bank's capital ratios are far in excess of these
regulatory requirements. As asset growth continues, these ratios will decrease
rapidly to levels closer to, but still in excess of the regulatory minimum
requirements.
RESULTS OF OPERATIONS
- ---------------------
The Company commenced its operations on February 6, 1998. Prior to the
commencement, the Company was engaged in activities involving the formation of
the Company, selling its common stock and obtaining necessary regulatory
approvals. The Company incurred operating losses totaling $219,000 during its
organizational period ($18,000 in 1996, $123,000 in 1997, and $78,000 in 1998).
The Company incurred total organizational and stock issue costs of $186,000 of
which $151,000 was originally capitalized to be amortized over a period of sixty
months (see Note 2), and $35,000 has been recorded as a reduction of capital
surplus. From commencement of operations to the end of the third quarter, the
Company has incurred additional operating losses of $343,000. The Company
expects that it will continue to incur operating losses during its first full
year of operations, until the increase in loans and other interest-earning
assets will generate the income necessary to cover interest expense and other
operating expenses.
The Company was still in its organizational stage as of September 30, 1997.
Therefore, comparative analysis with September 30, 1998 is not presented.
8
<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. The Company's data processing service center on August 5, 1998,
sold certain assets and liabilities, consisting primarily of its core data
processing operations to InterCept Group, located in Norcross, Georgia. The
change in the Company's data service provider will require the Company to
undergo a conversion of its data processing system. At this time, management of
the Company continues to evaluate its data processing options. Due to the
significance of the year 2000 issue and additional regulatory concern over the
required computer conversion, a decision on available data processing options
will be made very soon. Management is in the process of evaluating the costs
associated with the conversion, but believes any additional costs will not have
a significant impact on the Company's financial statements. Management also
believes that the Company will be able to meet all regulatory timetable
guidelines relating to the year 2000 issue, although there can be no assurances
in this regard.
The Company is not aware of any other 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.
9
<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.
10
<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.
BUCKHEAD COMMUNITY BANCORP, INC.
(Registrant)
DATE: November 13, 1998 BY: /s/ Marvin Cosgray
--------------------- ----------------------------------------
Marvin Cosgray, President and C.E.O.
(Principal Executive Officer)
DATE: November 13, 1998 BY: /s/ Timothy D. Foreman
--------------------- ----------------------------------------
Timothy D. Foreman, C.F.O. and Treasurer
(Principal Financial and Accounting
Officer)
11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 1,058,613
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 8,600,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 10,654,707
<INVESTMENTS-CARRYING> 2,115,958
<INVESTMENTS-MARKET> 2,138,000
<LOANS> 11,345,602
<ALLOWANCE> 57,500
<TOTAL-ASSETS> 34,758,953
<DEPOSITS> 27,109,085
<SHORT-TERM> 0
<LIABILITIES-OTHER> 79,490
<LONG-TERM> 0
0
0
<COMMON> 16,280
<OTHER-SE> 7,554,098
<TOTAL-LIABILITIES-AND-EQUITY> 34,758,953
<INTEREST-LOAN> 310,080
<INTEREST-INVEST> 328,645
<INTEREST-OTHER> 378,794
<INTEREST-TOTAL> 1,017,519
<INTEREST-DEPOSIT> 436,018
<INTEREST-EXPENSE> 436,018
<INTEREST-INCOME-NET> 581,501
<LOAN-LOSSES> 57,500
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 970,626
<INCOME-PRETAX> (420,372)
<INCOME-PRE-EXTRAORDINARY> (420,372)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (420,372)
<EPS-PRIMARY> (.29)
<EPS-DILUTED> (.29)
<YIELD-ACTUAL> 4.19
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 0
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 57,500
<ALLOWANCE-DOMESTIC> 57,500
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
