<PAGE>
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, 1998
/ / Transition report under Section 13 or 15(d) of the Exchange Act for the
transition period from ____________ to ____________
Commission file number: 000-23991
CNB HOLDINGS, INC.
(Exact name of small business issuer as specified in its charter)
Georgia 58-2362335
(State of Incorporation) (I.R.S. Employer Identification No.)
7855 North Point Parkway
Suite 200
Alpharetta, Georgia 30022-4849
(Address of principal executive offices)
(770) 650-8262
(Issuer's telephone number, including area code)
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 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 No /X/
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:
Class Outstanding at July 27, 1998
----------------------------- ----------------------------
Common Stock, $1.00 par value 1,235,000
Transitional Small Business Disclosure Format: Yes / / No /X/
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
CNB HOLDINGS, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, 1998 December 31, 1997
------------- -----------------
(Unaudited)
<S> <C> <C>
ASSETS
Cash and due from banks $ 23,904 $ 60,698
Federal Funds sold 9,800,000 --
Investment securities:
Securities available-for-sale,
at market value -- --
Other investments -- --
Loans, net -- --
Premises and equipment, net 277,579 60,947
Accrued interest receivable -- --
Other assets 283,339 73,400
----------- --------
Total assets $10,391,822 $195,045
----------- --------
----------- --------
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits:
Noninterest-bearing demand $ -- $ --
Interest-bearing demand and
money market -- --
Savings -- --
Time deposits of $100,000 or more -- --
Other time deposits -- --
----------- --------
Total deposits -- --
Accrued interest payable -- --
Other liabilities 329,887 103,324
----------- --------
Total liabilities 329,887 103,324
----------- --------
Shareholders' Equity:
Common stock, $1.00 par value per share;
10,000,000 shares authorized,
1,100,000 and none shares
issued and outstanding, respectively 1,100,000 --
Surplus 9,144,210 120,000
Retained earnings (deficit) (28,279) --
Accumulated other comprehensive
income (loss) (153,996) (28,279)
----------- --------
Total shareholders' equity 10,061,935 91,721
Commitments and contingent liabilities -- --
----------- --------
Total liabilities and shareholders' equity $10,391,822 $195,045
----------- --------
----------- --------
</TABLE>
Refer to notes to the financial statements.
2
<PAGE>
CNB HOLDINGS, INC.
Statements of Income
(Unaudited)
<TABLE>
<CAPTION>
For the For the
six-month three-month
period ended period ended
June 30, 1998 June 30, 1998
------------- -------------
<S> <C> <C>
Interest income
Loans, including fees $ -- $ --
Investment securities:
U.S. Treasury Securities -- --
U.S. Government agencies and corporations -- --
Other investments -- --
Federal funds sold 37,483 37,483
---------- --------
Total interest income 37,483 37,483
---------- --------
Interest expense
Interest bearing demand and money market -- --
Savings -- --
Time deposits of $100,000 or more -- --
Other time deposits -- --
Other borrowings -- --
---------- --------
Total interest expense -- --
---------- --------
Net interest income 37,483 37,483
Provision for possible loan losses -- --
Net interest income after provision for
possible loan losses 37,483 37,483
---------- --------
Other income
Service charges on deposit accounts -- --
Investment securities gains, net -- --
Other income -- --
---------- --------
Total other income -- --
---------- --------
Other expense
Salaries and other compensation 105,089 55,988
Employee benefits 25,941 14,903
Net occupancy and equipment expense 21,492 20,969
Professional and other outside services 4,419 --
Other expense 34,538 18,413
---------- --------
Total other expenses 191,479 110,273
---------- --------
Net income (loss) before taxes (153,996) (72,790)
Income taxes -- --
---------- --------
Net income (loss) $ (153,996) $(72,790)
---------- --------
---------- --------
Basic income (loss) per share $ (.38) $ (.18)
---------- --------
---------- --------
</TABLE>
Refer to notes to the financial statements.
3
<PAGE>
CNB HOLDINGS, INC.
Statement of Comprehensive Income
(Unaudited)
<TABLE>
<CAPTION>
For the For the
six-month three-month
period ended period ended
June 30, 1998 June 30, 1998
------------- -------------
<S> <C> <C>
Net loss $ (153,996) $(72,790)
Other comprehensive income, before tax:
Unrealized holding gains (losses) arising
during period -- --
Income tax benefit (expense) -- --
---------- --------
Comprehensive loss $ (153,996) $(72,790)
---------- --------
---------- --------
</TABLE>
Refer to notes to the financial statements.
4
<PAGE>
CNB HOLDINGS, INC.
Statement of Cash Flow
(Unaudited)
<TABLE>
<CAPTION>
For the six-month
period ended
June 30, 1998
-----------------
<S> <C>
Cash flows from operating activities:
Net loss $ (153,996)
Adjustments to reconcile net loss to net cash used by operating activities:
Net (accretion) amortization of investment securities --
Depreciation and amortization of premises and equipment 10,957
Provision for loan losses --
Deferred income tax benefit --
Amortization of organization costs --
Increases in other assets (18,900)
Increase in deferred organizational costs (128,039)
Increase in accrued interest payable --
Increase in other liabilities 226,563
------------
Net cash used by operating activities (63,415)
------------
Cash flows from investing activities:
Purchases of investment securities available-for-sale --
Purchases of other investments (70,000)
Maturities of investment securities available-for-sale --
Loans originated, net of principal repayments --
Purchases of premises and equipment (227,590)
------------
Net cash used by investing activities (297,590)
------------
Cash flows from financing activities:
Proceeds from loans by Organizers 240,000
Repayment of loans by Organizers (360,000)
Sale of common stock 10,244,210
Increase in deposits --
------------
Net cash provided from financing activities 10,124,210
------------
Net increase in cash and cash equivalents 9,763,205
Cash and cash equivalents, beginning of period 60,698
Cash and cash equivalents, end of period $ 9,823,903
------------
------------
</TABLE>
Refer to notes to the financial statements.
5
<PAGE>
CNB HOLDINGS, INC.
For the Six Months Ended June 30, 1998
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information and with the instructions for Form 10-QSB.
Accordingly, they do not include all the information and footnotes required
by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting of
normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the six-month period ended June 30,
1998 are not necessarily indicative of the results that may be expected for
the year ending December 31, 1998. For further information, refer to the
financial statements and footnotes included in the Company's Registration
Statement on Form SB-2 (Registration No. 333-49137).
NOTE 2 - ORGANIZATION OF THE BUSINESS
CNB Holdings, Inc., Alpharetta, Georgia (the "Company"), was
incorporated under the laws of the State of Georgia on November 5, 1997, for
the purpose of becoming a bank holding company for a proposed national bank,
Chattahoochee National Bank (the "Bank"). On April 30, 1998, the Company
completed an offering (the "Organizers' Offering") of its common stock, $1.00
par value per share (the "Common Stock"), to its organizers. Each share of
Common Stock was sold for $10.00 per share, and 200,000 shares were sold.
Proceeds from the Organizers' Offering amounted to $1,607,500, net of selling
expenses and repayment of the organizers. On June 12, 1998, the Company
commenced an initial public offering of Common Stock and sold 900,000 shares
of Common Stock at $10.00 per share. The underwriter also exercised a 30-day
over-allotment option in July 1998 to purchase an additional 135,000 shares.
Proceeds from the initial public offering (excluding the exercise of the
over-allotment option) amounted to $8,257,500, net of selling expenses.
Proceeds from exercise of the over-allotment option amounted to $1,238,625, net
of expenses. The Company injected approximately $9.6 million into the Bank's
capital accounts upon opening on July 27, 1998.
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION AND RECLASSIFICATION. Because principal banking
operations commenced on July 27, 1998, the financial statements included in
this Report include only the accounts of the Company. The Company expects
that future reports will present consolidated financial statements that
include the accounts of the Company and the Bank, with all significant
intercompany accounts and transactions eliminated in consolidation.
BASIS OF ACCOUNTING. The accounting and reporting policies of the
Company conform to generally accepted accounting principles and to general
practices in the banking industry. The Company uses the accrual basis of
accounting by recognizing revenues when earned and expenses when incurred,
without regarding the time of receipt or payment of cash.
ORGANIZATIONAL COSTS. In accordance with the Financial Accounting
Standards Board ("FASB") Statement No. 7, the Company and the Bank
capitalized all direct organizational costs that were incurred in the
expectation that they would generate future revenues or otherwise be of
benefit after the Bank opened for business. These capitalized costs are
amortized over a sixty-month period using the straight line method. As of
June 30, 1998, total organizational costs, net of accumulated amortization,
were $148,294.
INVESTMENT SECURITIES. The Company adopted Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investment in Debt and
Equity Securities" ("SFAS 115") on April 24, 1998. SFAS 115 requires
investments in equity and debt securities to be classified into three
categories:
6
<PAGE>
1. Held-to-maturity securities: These are securities which the Company
has the ability and intent to hold until maturity. These securities
are stated at cost, adjusted for amortization of premiums and the
accretion of discounts.
2. Trading securities: These are securities which are bought and held
principally for the purpose of selling in the near future. Trading
securities are reported at fair market value, and related unrealized
gains and losses are recognized in the income statement.
3. Available-for-sale securities: These are securities which are not
classified as either held-to-maturity or as trading securities. These
securities are reported at fair market value. Unrealized gains and
losses are reported, net of tax, as separate components of
shareholders' equity. Unrealized gains and losses are excluded from
the income statement.
Premium and discount on all investment securities are amortized
(deducted) and accredited (added), respectively, to interest income on the
effective yield method over the period to the maturity of the related
securities.
Gains or losses on disposition are computed by the specific
identification method for all securities.
PROPERTY AND EQUIPMENT. Furniture and equipment are stated at cost, net
of accumulated depreciation. Depreciation is computed using the straight
line method over the estimated useful lives of the related assets.
Maintenance and repairs are charged to operations, while major improvements
are capitalized. Upon retirement, sale or other disposition of property and
equipment, the cost and accumulated depreciation are eliminated from the
accounts, and gain or loss is included in income from operations.
INCOME TAXES. The financial statements have been prepared on the
accrual basis. When income and expenses are recognized in different periods
from financial reporting purposes and for purposes of computing income taxes
currently payable, deferred taxes are provided on such temporary differences.
Effective April 24, 1998, the Company adopted Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS 109").
Under SFAS 109, deferred tax assets and liabilities are recognized for the
expected future tax consequences of events that have been recognized in the
financial statements or tax return. Deferred tax assets and liabilities are
measured using the enacted tax rates expected to apply to taxable income in
the years in which those temporary differences are expected to be realized or
settled.
STATEMENT OF CASH FLOWS. For purposes of reporting cash flows, cash and
cash equivalents include cash on hand, amounts due from banks and federal
funds sold. Generally, federal funds are purchased or sold for one day
periods.
NET INCOME (LOSS) PER SHARE. Net income per share was calculated using
406,557, as the weighted average number of shares outstanding for the period
ended June 30, 1998. For the six-month period ended June 30, 1998 net income
(loss) per share was $(.38).
ACCOUNTING FOR TRANSFERS AND SERVICING OF FINANCIAL ASSETS AND
EXTINGUISHMENTS OF LIABILITIES. SFAS 125 is effective for transfers and
servicing of financial assets and extinguishments of liabilities occurring
after December 31, 1996, and is to be applied prospectively. Earlier or
retroactive application is not permitted. However, in December 1996, the
Financial Accounting Standards Board issued Statement of Financial Accounting
Standards No. 127 ("SFAS 127"), "Deferral of the Effective Date of Certain
Provisions of FASB Statement No. 125." This statement defers the effective
date of certain provisions for one year (December 31, 1997). The deferred
provisions relate to repurchase agreements, dollar-roll transactions,
securities lending, and similar transactions. The effective
7
<PAGE>
date for all other transfers and servicing of financial assets is unchanged.
The adoption of SFAS 125 did not have a material impact on the Company's
financial statements.
EARNINGS PER SHARE. The Financial Accounting Standards Board has issued
Statement of Financial Accounting Standards No. 128 ("SFAS 128"), "Earnings
Per Share." This statement is effective for financial statements issued for
periods ending after December 15, 1997. This statement supersedes Accounting
Principles Board Opinion No. 15 ("APB 15"), "Earnings Per Share," and
simplifies earnings per share computations by replacing primary earnings per
share with basic earnings per share, which shows no effects from dilutive
securities. Entities with complex capital structures will have to show
diluted earnings per share, which is similar to the fully diluted earnings
per share computation under APB 15. The adoption of SFAS 128 did not have a
significant impact on the financial condition or results of operations of the
Company.
DISCLOSURE OF INFORMATION ABOUT CAPITAL STRUCTURE. The Financial
Accounting Standards Board has issued Statement of Financing Accounting
Standards No. 129 ("SFAS 129"), "Disclosure of Information About Capital
Structure." This statement is effective for financial statements issued for
periods ending after December 15, 1997. This statement consolidates existing
disclosure requirements on capital structure. The adoption of SFAS 129 did
not have a significant impact on the financial condition or results of
operations of the Company.
REPORTING COMPREHENSIVE INCOME. The Financial Accounting Standards
Board has issued Statement of Financial Accounting Standards No. 130 ("SFAS
130"), "Reporting Comprehensive Income." SFAS 130 is effective July 1, 1998.
Under SFAS 130, a company will begin showing changes in assets and
liabilities in a new comprehensive income statement or alternative
presentation as opposed to showing some of the items as transactions in
shareholders' equity accounts. Upon adoption, all comparative annual and
interim financial statements will present a comprehensive income statement or
alternative disclosure, for all years presented. The adoption of SFAS 130
did not have a significant impact on the financial condition or results of
operations of the Company.
PENDING ACCOUNTING PRONOUNCEMENTS. The Financial Accounting Standards
Board has issued Statement of Financial Accounting Standard No. 131 ("SFAS
131"), "Disclosures about Segments of an Enterprise and Relation
Information." SFAS 131 is effective July 1, 1998, and requires disclosure of
certain financial information by segments of a company's business. The
adoption of SFAS 131 is not expected to have a significant impact on the
financial condition or results of operations of the Company.
The Financial Accounting Standards Board has issued Statement of
Financial Accounting Standards No. 132 ("SFAS 132"), "Employers' Disclosures
about Pensions and other Postretirement Benefits." SFAS 132 is effective for
fiscal years beginning after December 31, 1997. The adoption of SFAS 132 is
not expected to have a significant impact on the financial condition or
results of operations of the Company.
NOTE 4 - OTHER COMPREHENSIVE INCOME
Other comprehensive income (loss) is compiled of the following:
Unrealized
Gains (Losses)
on Securities
-------------
Beginning balance - January 1, 1998 $ --
Current - period change --
-------------
Ending balance - June 30, 1998 $ --
-------------
-------------
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
CNB Holdings, Inc. (the "Company") was incorporated in Georgia
on November 5, 1997 to become a bank holding company and to own and control
all of the outstanding shares of a de novo bank, Chattahoochee National Bank,
Alpharetta, Georgia (the "Bank"). In a private offering and a separate
public offering conducted during 1998, the Company sold and issued an
aggregate of 1,235,000 shares of common stock, par value $1.00 per share (the
"Common Stock"), at $10.00 per share. Proceeds from these stock offerings
amounted to an aggregate of $11,103,625, net of selling expenses and
repayment to organizers. The Company purchased 100% of the Bank's common
stock by injecting approximately $9.6 million into the Bank's capital
accounts immediately prior to commencement of banking operations on July 27,
1997.
Total consolidated assets increased by $10,196,776 from
$195,045 at December 31, 1997 to $10,391,821 during the six-month period
ended June 30, 1998. The increase was generated through a $10,124,210
increase in capital.
FINANCIAL CONDITION
Management intends to monitor the financial condition of the
Bank in order to protect depositors, increases retained earnings and protect
current and future earnings. Further discussion of significant items
affecting the Bank's financial condition are discussed in detail below.
ASSET QUALITY
A major key to long-term earnings growth is the maintenance of
a high-quality loan portfolio. The Bank's directive in this regard will be
carried out through its policies and procedures for extending credit to the
Bank's customers. The goal and result of these policies and procedures is to
provide a sound basis for a new credit extensions and an early recognition of
problem assets to allow the most flexibility in their timely disposition.
Because principal banking operations commenced on July 27,
1998, management is not yet in a position to determine the composition of
non-performing assets. Additions to the allowance for loan losses will be
made periodically to maintain the allowance at an appropriate level based
upon management's analysis of potential risk in the loan portfolio. The
amount of the loan loss provision will be determined by an evaluation for the
level of loans outstanding, the level of non-performing loans, historical
loan loss experience, delinquency trends, the amount of actual losses charged
to the reserve in a given period, and assessment of present and anticipated
economic conditions.
LIQUIDITY AND SOURCES OF CAPITAL
Liquidity is the Company's ability to meet all deposit
withdrawals immediately, while also providing for the credit needs of
customers. The June 30, 1998 financial statements evidence a satisfactory
liquidity position as total cash and cash equivalents amounted to
approximately $9.8 million, representing 96.1% of total assets.
Management is committed to maintaining capital at a level
sufficient to protect depositors, provide for reasonable growth, and fully
comply with all regulatory requirements. Management's strategy to achieve
this goal is to retain sufficient earnings while providing a reasonable
return on equity.
This table below illustrates the Company's regulatory capital
ratios at June 30, 1998:
<TABLE>
<CAPTION>
Minimum
regulatory
June 30, 1998 requirement
------------- -----------
<S> <C> <C>
Tier 1 Capita 96.4% 4.0%
Tier 2 Capita -- --
Total risk-based capital ratio 96.4% 8.0%
---- ---
Leverage ratio 97.8% 3.0%
---- ---
</TABLE>
9
<PAGE>
Note that with respect to the leverage ratio, the OCC expects a minimum
of 5.0 percent to 6.0 percent ratio for banks that are not rated CAMEL 1. The
Bank does not yet have a CAMEL rating.
RESULTS OF OPERATIONS
Since principal banking operations only commenced on July 27,
1998, a comparison of the June 30, 1998 results (when banking operations were
in progress) to those of June 30, 1997 (when banking operations had not
commenced) is not meaningful. This discussion will therefore only comment on
the June 30, 1998 results.
Net loss for the six-month period ended June 30, 1998 amounted
to $153,996, or $(.38) per share. The following is a brief discussion of the
more significant components of net income (loss):
a. Net interest income represents the difference between
interest received on interest earning assets and interest
paid on interest bearing liabilities. The following
presents, in a tabular form, the main components of
interest earning assets and interest bearing liabilities.
<TABLE>
<CAPTION>
Interest Interest
Earning Assets/ Average Income/ Yield/
Bearing Liabilities Balance Cost Cost
- ------------------- ------- --------- ------
<S> <C> <C> <C>
Federal funds sold $4,034,219 $37,483 5.28%
Securities -- -- --
Loans -- -- --
---------- ------- ----
Total $4,034,219 $37,483 5.28%
---------- ------- ----
---------- ------- ----
Deposit $ -- $ -- --
---------- ------- ----
---------- ------- ----
Net interest income $37,483 5.28%
------- ----
------- ----
Net yield on earning assets 5.28%
----
----
</TABLE>
b. Other income for the six-month period ended June 30, 1998
amounted to $0.0. On an annualized basis, this represents
0.0% of total assets. The figure is relatively low
because in order to attract new banking relationships,
the Bank's fee structure and charges are low when
compared to other banks. The above fees and charges may
increase in the future.
c. Operating expenses for the six-month period ended June
30, 1998 amounted to $191,479. On an annualized basis,
this represents 1.8% of total assets. In the future, this
percentage will increase due to costs and expenses
associated with the commencement of operations.
At December 31, 1997 and June 30, 1998, the allowance for loan
losses amounted to $0, as the Bank commenced operations after June 30, 1998.
There can be no assurance that charge-offs in future periods will not exceed
the allowance for loan losses that will be established in future periods.
The Company is not aware of any current recommendation by the
regulatory authorities which, if they were to be implemented, would have a
material effect on the Company's liquidity, capital resources, or results of
operations.
YEAR 2000 COMPLIANCE
The Year 2000 issue refers generally to the data structure
problem that will prevent certain systems from properly recognizing dates
after the year 1999. For example, computer programs and various types of
electronic equipment that process date information by reference to two digits
rather than four to define the applicable year may recognize a date using
"00" as the year 1900 rather than the year 2000. The Year 2000 problem could
result in system failures or miscalculations causing disruptions of
operations. The Year 2000 problem may occur in
10
<PAGE>
computer software programs, computer hardware systems and any device that
relies on a computer chip if that chip relies on date information.
In preparation for January 1, 2000, the Company has
implemented a Company-wide program to prepare its computer systems and
applications for the year 2000. The Company's plans include necessary
reviews of vendors, customers, third party processors and other external
parties with whom the Company conducts business. The Company is incurring
internal staff costs as well as consulting and other expenses related to the
execution of the implementation plan. Presently, management has not yet
completely determined the year 2000 implementation costs, but such costs are
not expected to have a material financial impact on the Company's business,
financial condition or results of operations because the Company and its
computer systems are relatively new. The Company is aware that the Commission
has recently issued an interpretive release, Release No. 33-7558 (the
"Interpretation"), which supersedes Staff Legal Bulletin No. 5 for purposes
of providing guidance to public companies with quarter ends after the
effective date of the Interpretation (i.e., after August 4, 1998) as to
disclosures concerning their year 2000 issues. The Company is reviewing and
evaluating the Interpretation for purposes of the Company's future filings.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Except for the historical information contained in this
Report, the matters reflected or discussed in this Report which relate to the
Company's beliefs, expectations, plans, future estimates and the like are
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. Such forward-looking statements are not
guarantees of future performance and are subject to risks, uncertainties and
other factors that may cause the actual results, performance or achievements
of the Company to differ materially from historical results or from any
results expressed or implied by such forward-looking statements. Such
factors include, without limitation, general economic conditions,
governmental monetary and fiscal policies, deposit levels, loan demand, loan
collateral values, securities portfolio values and interest rate risk
management, the effects of competition in the banking business from other
commercial banks, savings and loan associations, mortgage banking firms,
consumer finance companies, credit unions, securities brokerage firms,
insurance companies, money market mutual funds and other financial
institutions operating in the Company's market area and elsewhere, including
institutions operating through the Internet, changes in government
regulations relating to the banking industry, including regulations relating
to branching and acquisitions, failure of assumptions underlying the
establishment of reserves for loan losses, including the value of collateral
underlying delinquent loans, and other factors discussed in this report and
the Company's Registration Statement on Form SB-2 (Registration No.
333-49137). Many of such factors are beyond the Company's ability to control
or predict, and readers are cautioned not to put undue reliance on such
forward-looking statements. The Company disclaims any obligation to update
or review any forward-looking statements contained in this Report or in any
statement referencing this Report, whether as a result of new information,
future events or otherwise.
11
<PAGE>
PART II. OTHER INFORMATION
ITEM 3. CHANGES IN SECURITIES AND USE OF PROCEEDS.
On April 30, 1998, the Company issued to the organizers of the
Company and their affiliates in a private placement exempt from registration
under Section 4(2) of and Rule 506 promulgated under the Securities Act of
1933, as amended, an aggregate of 200,000 shares of Common Stock for an
aggregate purchase price of $2,000,000 (the "Organizers' Offering"). All of
the Common Stock was acquired by the organizers for investment purposes and
with no view toward the resale or distribution thereof. The offers and sales
were made without public solicitation, and the stock certificates bear
restrictive legends. No underwriter was involved in the transactions, and no
commissions were paid.
On June 8, 1998, the Company's Registration Statement on Form
SB-2 (Registration No. 333-49137), relating to the registration of 1,035,000
shares of Common Stock, was declared effective. The underwriter for the
offering was J.C. Bradford & Co. LLC. On June 12, 1998, 900,000 shares of
Common Stock were sold, and the underwriter exercised an over-allotment
option in July 1998 to purchase the additional 135,000 shares of Common Stock
for an aggregate purchase price of $10,350,000 (the "IPO"). Proceeds from the
IPO amounted to $9,496,125, net of underwriting discounts and commissions.
Underwriting discounts and commissions incurred in the IPO were approximately
$853,875. The Company's total organizational and offering expenses for the
IPO, consisting primarily of legal, accounting, marketing and printing
expenses, were approximately $110,000, and the net offering proceeds to the
Company were approximately $9,496,125. The Company used the net proceeds of
the IPO, together with the net proceeds of the Organizers' Offering, to
inject approximately $9.6 million into the Bank's capital accounts upon
opening on July 27, 1998. In addition, approximately $360,000 was used to
repay the organizers (all of the directors and certain officers of the
Company) for repayment of their contributions. Funds remaining,
approximately $1,536,125, have been and will be used for working capital and
other general purposes.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits. The following exhibit is filed with this Report:
Exhibit No. Description
----------- -----------
27.1 Financial Data Schedule (for SEC use only).
(b) Reports on Form 8-K. No report on Form 8-K was filed during
the quarter ended June 30, 1998.
12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
Date: August 14, 1998 By: /s/ H.N. Padget, Jr.
-----------------------------------
H. N. Padget, Jr., President and
Chief Executive Officer
Date: August 14, 1998 By: /s/ Valerie Donnell
-----------------------------------
Valerie Donnell, Chief Financial
Officer
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF CNB HOLDINGS, INC. FOR THE SIX MONTH PERIOD FROM
JANUARY 1, 1998 THROUGH JUNE 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 23,903
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0
0
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<INCOME-PRETAX> (153,996)
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<NET-INCOME> (153,996)
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</TABLE>
