<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 June 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
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(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 August 1, 1998: 1,627,950; $.01 par value.
Transitional Small Business Disclosure Format (Check One) Yes No X
--- ---
1
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BUCKHEAD COMMUNITY BANCORP, INC. AND SUBSIDIARY
- -------------------------------------------------------------------------------
INDEX
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheet - June 30, 1998......................3
Consolidated Statements of Operations and
Comprehensive Loss - Three Months Ended
June 30, 1998 and 1997 and Six Months
Ended June 30, 1998 and 1997...................................4
Consolidated Statement of Cash Flows - Six
Months Ended June 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
2
<PAGE>
PART I - FINANCIAL INFORMATION
FINANCIAL STATEMENTS
BUCKHEAD COMMUNITY BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
JUNE 30, 1998
(Unaudited)
Assets 1998
------ -------------
Cash and due from banks $ 746,579
Federal funds sold 13,480,000
Securities available-for-sale, at fair value 6,747,037
Securities held-to-maturity, at cost (fair value $2,190,000) 2,187,700
Loans 5,081,645
Less allowance for loan losses 15,000
-------------
Loans, net 5,066,645
-------------
Premises and equipment 602,995
Other assets 383,261
-------------
Total assets $ 29,214,217
=============
Liabilities and Stockholders' Equity
------------------------------------
Deposits
Demand $ 2,407,060
Interest-bearing demand 5,567,238
Savings 137,397
Time 13,466,657
-------------
Total deposits 21,578,352
Other liabilities 60,270
-------------
Total liabilities 21,638,622
-------------
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 (512,539)
Accumulated other comprehensive loss (16,463)
-------------
Total Stockholders' equity 7,575,595
-------------
Total liabilities and stockholders' equity $ 29,214,217
=============
The accompanying notes are an integral part of these consolidated financial
statements.
3
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BUCKHEAD COMMUNITY BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
THREE MONTHS ENDED JUNE 30, 1998 AND 1997
AND SIX MONTHS ENDED JUNE 30, 1998 AND 1997
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Interest income
Loans $ 68,435 $ - $ 81,154 $ -
Taxable securities 103,734 - 150,854 -
Federal funds sold and other 123,422 4,336 229,422 4,772
------------- ------------- -------------- -------------
Total interest income 295,591 4,336 461,430 4,772
------------- ------------- -------------- -------------
Interest expense on deposits 134,155 - 156,664 -
------------- ------------- -------------- -------------
Net interest income 161,436 4,336 304,766 4,772
Provision for loan losses 13,500 - 15,000 -
------------- ------------- -------------- -------------
Net interest income after
provision for loan losses 147,936 4,336 289,766 4,772
------------- ------------- -------------- -------------
Other operating income 11,142 - 12,751 -
------------- ------------- -------------- -------------
Other expenses
Salaries and employee benefits 148,105 8,167 304,482 15,917
Occupancy and equipment expenses 62,975 9,708 116,641 11,459
Other operating expenses 99,640 2,854 253,407 18,812
------------- ------------- -------------- -------------
310,720 20,729 674,530 46,188
------------- ------------- -------------- -------------
Net loss before income taxes (151,642) (16,393) (372,013) (41,416)
Income tax expense - - - -
------------- ------------- -------------- -------------
Net loss $ (151,642) $ (16,393) $ (372,013) $ (41,416)
------------- ------------- -------------- -------------
Other comprehensive losses:
Unrealized gains (losses) on securities
available-for-sale arising during period 11,562 - (16,463) -
------------- ------------- -------------- -------------
Comprehensive loss $ (140,080) $ (16,393) $ (388,476) $ (41,416)
============= ============= ============== =============
Losses per common share $ (0.09) $ (0.20) $ (0.30) $ (0.52)
============= ============= ============== =============
Weighted average shares outstanding 1,627,950 80,000 1,281,688 80,000
============= ============= ============== =============
Cash dividends per share of common stock $ - $ - $ - $ -
============= ============= ============== =============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
4
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BUCKHEAD COMMUNITY BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1998 AND 1997
(Unaudited)
<TABLE>
<CAPTION>
1998 1997
--------------- ---------------
<S> <C> <C>
OPERATING ACTIVITIES
Net loss $ (372,013) $ (41,416)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 42,759 -
Provision for loan losses 15,000 -
Increase in interest receivable (162,694) (4,336)
Increase in interest payable 60,314 -
Other operating activities (52,792) (87)
--------------- ---------------
Net cash used in operating activities (469,426) (45,839)
--------------- ---------------
INVESTING ACTIVITIES
Purchases of securities available-for-sale (6,763,500) -
Purchases of securities held-to-maturity (2,187,700)
Net increase in Federal funds sold (13,480,000) -
Net increase in loans (5,081,645) -
Purchase of premises and equipment (295,680) -
Decrease in interest-bearing deposits in banks - 80,000
Increase in organization costs (5,500) (26,576)
--------------- ---------------
Net cash provided by (used in) investing activities (27,814,025) 53,424
--------------- ---------------
FINANCING ACTIVITIES
Net increase in deposits 21,578,352 -
Proceeds from sale of common stock 7,389,750 -
--------------- ---------------
Net cash provided by financing activities 28,968,102 -
--------------- ---------------
Net increase in cash and due from banks 684,651 7,585
Cash and due from banks, beginning of period 61,928 13,576
--------------- ---------------
Cash and due from banks, end of period $ 746,579 $ 21,161
=============== ===============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for:
Interest $ 96,350 $ -
Income taxes $ - $ 87
NONCASH TRANSACTION
Unrealized losses on securities available-for-sale $ 16,463 $ -
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
5
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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 six month period ended June 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 or
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 December 31, 1997 had no effect on the calculation of
losses per common share for the three and six month periods ended June
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. 33,
"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 he 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 June 30, 1998, the
Company had $137,311 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
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BUCKHEAD COMMUNITY BANCORP, INC. AND SUBSIDIARY
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Financial Condition
- -------------------
As of June 30, 1998, the Company had total assets of $29.2 million. The Company
raised $8.1 million from the sale of its common stock and has received $21.6
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 ($13.5 million), U. S. Treasury and Agency securities ($8.9
million), and loans ($5.1 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 June 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 second quarter, the
Company has incurred additional operating losses of $294,000. 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 June 30, 1997.
Therefore, comparative analysis with June 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 is evaluating 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: BY:/s/ Marvin Cosgray
------------------- ------------------------------------
Marvin Cosgray, President and C.E.O.
(Principal Executive Officer)
DATE: 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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 746,579
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 13,480,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 6,747,037
<INVESTMENTS-CARRYING> 2,187,700
<INVESTMENTS-MARKET> 2,190,000
<LOANS> 5,081,645
<ALLOWANCE> 15,000
<TOTAL-ASSETS> 29,214,217
<DEPOSITS> 21,578,352
<SHORT-TERM> 0
<LIABILITIES-OTHER> 60,270
<LONG-TERM> 0
0
0
<COMMON> 16,280
<OTHER-SE> 7,559,315
<TOTAL-LIABILITIES-AND-EQUITY> 29,214,217
<INTEREST-LOAN> 81,154
<INTEREST-INVEST> 150,854
<INTEREST-OTHER> 229,422
<INTEREST-TOTAL> 461,430
<INTEREST-DEPOSIT> 156,664
<INTEREST-EXPENSE> 156,664
<INTEREST-INCOME-NET> 304,766
<LOAN-LOSSES> 15,000
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 674,530
<INCOME-PRETAX> (372,013)
<INCOME-PRE-EXTRAORDINARY> (372,013)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (372,013)
<EPS-PRIMARY> (.30)
<EPS-DILUTED> (.30)
<YIELD-ACTUAL> 4.83
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 0
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 15,000
<ALLOWANCE-DOMESTIC> 15,000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
