<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
-------------------
For quarter ended March 31, 2000 Commission File Number ____________
--------------
THE PB FINANCIAL SERVICES CORPORATION
(Exact name of registrant as specified in its charter)
-------------------
GEORGIA 58-2466560
------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
9570 MEDLOCK BRIDGE ROAD
DULUTH, GEORGIA 30097
(Address of Principal Executive
Offices, including Zip Code)
(770) 814-8100
--------------
(Issuer's telephone number, including area code)
NOT APPLICABLE
(Former name, former address and former
fiscal year, if changed since last report)
-------------------
Check whether the issuer: (1) has filed all reports required to be filed by
Section 13 or Section 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 requirement for the past 90 days.
Yes [X] No [ ]
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the last practicable date.
COMMON STOCK, $5.00 PAR VALUE, 775,375 SHARES AS OF MAY 8, 2000
<PAGE> 2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
THE PB FINANCIAL SERVICES CORPORATION
CONSOLIDATED BALANCE SHEET
MARCH 31, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
------------ ------------
<S> <C> <C>
ASSETS
Cash and due from banks $ 2,066,631 $ 4,343,721
Federal funds sold 4,045,000 7,476,128
Investment securities available for sale, at market value 9,008,717 6,653,163
Other investments 120,100 120,100
Loans, net of deferred loan fees 48,204,212 40,163,433
Less allowance for loan losses 477,126 399,991
------------ ------------
Loans, net 47,727,086 39,763,442
Property and equipment, net 3,765,383 3,819,279
Accrued interest receivable 337,149 289,671
Other assets 162,843 86,382
------------ ------------
TOTAL ASSETS $ 67,232,909 $ 62,551,886
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits
Noninterest-bearing demand 5,494,743 5,335,482
Interest-bearing demand and money market 18,146,979 18,079,670
Savings 199,663 144,957
Time deposits of $100,000 or more 24,369,985 21,367,001
Other time deposits 9,398,624 9,082,782
------------ ------------
Total deposits 57,609,994 54,009,892
Repurchase agreements 2,650,850 1,797,141
Borrowings 74,478 72,799
Accrued interest payable 231,588 149,045
Other liabilities 13,926 37,211
------------ ------------
Total liabilities 60,580,836 56,066,088
Stockholders' equity:
Common stock, $5.00 par value,
10,000,000 shares authorized,
775,375 shares issued and outstanding 3,876,875 3,876,875
Surplus 3,861,784 3,861,784
Accumulated deficit (945,499) (1,107,406)
Accumulated other comprehensive loss-
market valuation reserve on investment
securities available for sale (141,087) (145,455)
------------ ------------
Total stockholders' equity 6,652,073 6,485,798
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 67,232,909 $ 62,551,886
============ ============
</TABLE>
1
<PAGE> 3
THE PB FINANCIAL SERVICES CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
2000 1999
------------ ------------
<S> <C> <C>
INTEREST INCOME
Interest and fees on loans $ 1,126,140 $ 334,899
Interest on investment securities 130,374 35,901
Interest on federal funds sold 100,050 66,211
------------ ------------
Total interest income 1,356,564 437,011
INTEREST EXPENSE
Interest-bearing demand and money market 206,590 95,675
Savings 961 478
Time deposits of $100,000 or more 381,244 58,794
Other time deposits 132,230 38,764
Repurchase agreements 29,497 1,545
Other borrowings 1,679 --
------------ ------------
Total interest expense 752,201 195,256
Net interest income 604,363 241,755
PROVISION FOR LOAN LOSSES 77,135 81,467
------------ ------------
Net interest income after provision for loan losses 527,228 160,288
OTHER OPERATING INCOME
Service charges on deposit accounts 33,087 6,241
Mortgage referral commissions 58,375 52,950
Other income 18,995 15,685
------------ ------------
Total other income 110,457 74,876
OTHER OPERATING EXPENSE
Salaries and benefits 260,146 263,168
Occupancy expense, net 81,845 84,668
Other expense 133,787 97,613
------------ ------------
Total other operating expense 475,778 445,449
INCOME (LOSS) BEFORE INCOME TAXES 161,907 (210,285)
INCOME TAXES -- --
------------ ------------
NET INCOME (LOSS) $ 161,907 $ (210,285)
============ ============
BASIC EARNINGS (LOSS) PER COMMON SHARE $ 0.21 $ (0.27)
DILUTED EARNINGS PER COMMON SHARE $ 0.21 $ --
</TABLE>
2
<PAGE> 4
THE PB FINANCIAL SERVICES CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(UNAUDITED)
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 161,907 $ (210,285)
Adjustments to reconcile net loss to net cash used by
operating activities:
Depreciation of premises and equipment 65,372 58,999
Provision for loan losses 77,135 81,467
Increase in net deferred loan fees 65,235 27,945
Increase in accrued interest receivable (47,478) (71,851)
Increase in other assets (76,461) (1,993)
Increase in accrued interest payable 82,543 33,116
Decrease in other liabilities (23,285) (106,362)
------------ ------------
Net cash provided (used) by operating activities 304,968 (188,964)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of investment securities available for sale (2,493,731) (1,999,228)
Principal repayments of investment securities available for sale 142,546 70,120
Loans originated, net of principal repayments (8,106,014) (8,154,699)
Acquisition of premises and equipment (11,476) (99,726)
------------ ------------
Net cash used by investing activities (10,468,675) (10,183,533)
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in borrowings 1,679 --
Increase in repurchase agreements 853,709 --
Net increase in demand, money market and savings
deposits 281,275 8,655,145
Time deposits accepted, net of repayments 3,318,826 2,402,848
------------ ------------
Net cash provided by financing activities 4,455,489 11,057,993
Net increase (decrease) in cash and cash equivalents (5,708,218) 685,496
Cash and cash equivalents at beginning of period 11,819,849 6,189,291
------------ ------------
Cash and cash equivalents at end of period $ 6,111,631 $ 6,874,787
============ ============
</TABLE>
3
<PAGE> 5
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements for The PB
Financial Services Corporation 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 three-month period ended March 31, 2000 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 2000. For further information, refer to the financial statements
and footnotes included in the Bank's annual report included on Form 10-KSB for
the year ended December 31, 1999.
NOTE 2 - ORGANIZATION OF THE BUSINESS
The Peachtree Bank (the "Bank") was organized under the laws of the State of
Georgia as a state-chartered commercial bank and began its banking operations
on October 5, 1998. On July 15, 1999, the Bank became a subsidiary of The PB
Financial Services Corporation (the "Company") as a result of a tax-free
reorganization in which the stockholders of the Bank exchanged all outstanding
Bank stock for stock in the Company.
NOTE 3 - LOANS
Loans are reported at the gross amount outstanding, reduced by the net deferred
loan fees and a valuation allowance for loan losses. Interest income is
recognized over the term of the loans based on the unpaid daily principal
amount outstanding. Loan origination fees are deferred and recognized as income
over the actual life of the loan using the interest method. Loans are generally
placed on nonaccrual status when the payment of principal and/or interest is
past due 90 days or more.
4
<PAGE> 6
Major classifications of loans are as follows:
<TABLE>
<CAPTION>
March 31, 2000 December 31, 1999
-------------- -----------------
<S> <C> <C>
Commercial $ 9,266,619 $ 5,645,589
Real estate-construction 16,677,839 11,910,797
Real estate-commercial and residential 17,273,387 18,453,654
Real estate-home equity 1,534,929 1,331,965
Installment loans to individuals 3,651,359 2,956,114
- --------------------------------------------------------------------------
Total loans 48,404,133 40,298,119
Less: Net deferred loan fees 199,921 134,686
Allowance for loan losses 477,126 399,991
- --------------------------------------------------------------------------
Loans, net $ 47,727,086 $ 39,763,442
</TABLE>
Through March 31, 2000, there were no loan charge-offs, and there were no
nonperforming loans
NOTE 4 - ACCUMULATED OTHER COMPREHENSIVE INCOME
Accumulated other comprehensive income (loss) is comprised of the following:
<TABLE>
<CAPTION>
Unrealized
Gains (Losses)
On Securities
--------------
<S> <C>
Beginning balance - January 1, 2000 $(145,455)
Current period change $ 4,368
---------
Ending balance - March 31, 2000 $(141,087)
</TABLE>
NOTE 5 - RECENT ACCOUNTING PRONOUNCEMENT
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 133 (SFAS 133) "Accounting for Derivative Instruments
and Hedging Activities". SFAS 133 is effective for fiscal years beginning after
June 15, 1999. Under SFAS 133 a company will recognize all freestanding
derivative instruments in the statement of financial position as either assets
or liabilities and will measure them at fair value. The difference between a
derivative's previous carrying amount and its fair value shall be reported as a
transition adjustment presented in net income or other
5
<PAGE> 7
comprehensive income as appropriate in a manner similar to the cumulative
effect of a change in accounting principle. This statement also determines the
accounting for the changes in fair value of a derivative, depending on the
intended use of the derivative and resulting designation. The adoption of SFAS
133 is not expected to have a significant impact on the financial condition or
results of operations of the Bank.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
At March 31, 2000, the Company's total assets increased $4.7 million or 7% from
December 31, 1999. Loans, the primary category of assets, grew from $39.7
million to $47.7 million, an increase of $8 million, while investment
securities available for sale increased $2.4 million to $9 million in the first
quarter of 2000. The increases in loans and investments were the primary result
of the redeployment of a significant portion of the Company's cash and federal
funds sold into interest earning assets, and secondarily by an increase in
deposits of $3.6 million.
The Company reported net income for the quarter ended March 31, 2000 of
$161,907 compared to a net loss of $(210,285) for the same period one year ago.
Net interest income for the three months ended March 31, 2000 was $604,363
compared to $241,755 for the same period in 1999, with the increase attributed
to a greater volume of interest earning assets that earn a higher interest rate
than the rate paid on interest bearing liabilities. The ratio of loans to
deposits was 84% at March 31, 2000
The provision for loan losses for the three months ended March 31, 2000 was
$77,135 compared to $81,467 for the first quarter of 1999. The provision for
loan losses reflects management's estimate of potential loan losses inherent in
the portfolio and the creation of an allowance for loan losses adequate to
absorb such losses. The allowance for loan losses represented approximately
.99% of total loans outstanding at March 31, 2000 and approximately 1% of total
loans outstanding at March 31, 1999. Management believes that the current
allowance of $477,126 is adequate based upon the Bank's loan portfolio and
current economic conditions.
Non-interest income for the three months ended March 31, 2000 was $110,457,
compared to $74,876 for the same period one year ago. Non-interest income
consists primarily of mortgage referral fees and service charges on deposit
accounts. Service charges on deposit accounts increased from $6,241 at March
31, 1999 to $33,087 at March 31, 2000, reflecting the growth in activity in
personal and commercial checking accounts over the year.
Non-interest expense was $475,778 for the first quarter of 2000, as compared to
$445,449 for the same period one year ago. Non-interest expense consists
primarily of salaries and benefits and other operating expenses.
6
<PAGE> 8
The Company reported net income of $161,907 for the quarter ended March 31,
2000 compared to a loss of $(210,285) for the first quarter of 1999. Due to the
net operating loss carryforward and the recognition of tax benefits being
dependent on future earnings, there was no tax provision in either period.
INVESTMENTS
The investment portfolio consists of federal funds sold, U.S. Government agency
obligations and Federal Home Loan Bank stock, which provide the Bank with a
source of liquidity and a long-term and relatively stable source of income.
Additionally, the investment portfolio provides a balance to interest rate and
credit risk in other categories of the balance sheet while providing a vehicle
for the investment of available funds and furnishing liquidity to The Peachtree
Bank.
LIQUIDITY
The Peachtree Bank must maintain, on a daily basis, sufficient funds to cover
the withdrawals from depositors' accounts and to supply new borrowers with
funds. To meet these obligations, the Bank keeps cash on hand, maintains
account balances with its correspondent banks, and purchases and sells federal
funds and other short-term investments. Asset and liability maturities are
monitored in an attempt to match these to meet liquidity needs. It is the
policy of the Bank to monitor its liquidity to meet regulatory requirements and
the local funding requirements.
In addition, the Bank has arrangements with correspondent banks for short-term
unsecured advances up to $3,900,000. No amounts were borrowed under these
arrangements in 1999 or 2000.
CAPITAL RESOURCES
Management is committed to maintaining capital at a level to protect
depositors, provide for reasonable growth, and fully comply with all regulatory
requirements. The following table presents The Peachtree Bank's regulatory
capital position at March 31, 2000:
7
<PAGE> 9
RISK-BASED CAPITAL RATIOS
<TABLE>
<S> <C>
Tier 1 Capital 11.02%
Tier 1 Capital minimum requirement 4.00%
------
Excess 7.02%
------
Total Capital 11.80%
Total Capital minimum requirement 8.00%
------
Excess 3.80%
------
</TABLE>
PART II OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 27 - Financial Data Schedule
(b) Report on Form 8-K
There were no reports on Form 8-K filed during the
quarter ended March 31, 2000.
SIGNATURE
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.
THE PB FINANCIAL SERVICES CORPORATION
May 10, 2000 /s/ KELLY J. JOHNSON
------------------------
Kelly J. Johnson
(PRINCIPAL FINANCIAL
OFFICER)
8
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<EXCHANGE-RATE> 1
<CASH> 2,066,631
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 4,045,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 9,008,717
<INVESTMENTS-CARRYING> 120,100
<INVESTMENTS-MARKET> 0
<LOANS> 48,204,212
<ALLOWANCE> 477,126
<TOTAL-ASSETS> 67,232,909
<DEPOSITS> 57,609,994
<SHORT-TERM> 2,725,328
<LIABILITIES-OTHER> 245,514
<LONG-TERM> 0
0
0
<COMMON> 3,876,875
<OTHER-SE> 2,775,198
<TOTAL-LIABILITIES-AND-EQUITY> 107,232,909
<INTEREST-LOAN> 1,126,140
<INTEREST-INVEST> 130,374
<INTEREST-OTHER> 100,050
<INTEREST-TOTAL> 1,356,564
<INTEREST-DEPOSIT> 0
<INTEREST-EXPENSE> 752,201
<INTEREST-INCOME-NET> 604,363
<LOAN-LOSSES> 77,135
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 475,778
<INCOME-PRETAX> 161,907
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 161,907
<EPS-BASIC> .21
<EPS-DILUTED> 0
<YIELD-ACTUAL> 0
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 399,991
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 477,126
<ALLOWANCE-DOMESTIC> 477,126
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
