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
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[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to __________
COMMISSION FILE NUMBER: 333-87763
NBG Bancorp, Inc.
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(Exact name of small business issuer as specified in its charter)
Georgia 58-2499542
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
2234 West Broad Street, Athens, Georgia 30604
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(Address of principal executive offices)
(706) 355-3122
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(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
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State the number of shares outstanding of each of the issuer's classes of common
equity, as of October 31, 2000: 741,260; $1 par value.
Transitional Small Business Disclosure Format Yes No X
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NBG BANCORP, INC. AND SUBSIDIARY
INDEX
<TABLE>
<CAPTION>
Page
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Part I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements (unaudited) 3 - 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations .............................................................7 - 9
Part II OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds......................................................9
Item 6. Exhibits and Reports on Form 8-K...............................................................9
Signatures ..........................................................................................10
</TABLE>
<PAGE>
PART I - FINANCIAL INFORMATION
FINANCIAL STATEMENTS
NBG BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 2000
(UNAUDITED)
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ASSETS
Cash and due from banks $ 1,639,167
Federal funds sold 4,630,000
Securities available-for-sale 206,900
Loans 13,190,661
Less allowance for loan losses 164,885
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13,025,776
Premises and equipment 1,495,772
Other assets 158,725
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TOTAL ASSETS $ 21,156,340
============
LIABILITIES AND STOCKHOLDER'S EQUITY
LIABILITIES
Deposits
Noninterest bearing demand $ 2,467,109
Interest bearing demand 3,603,906
Savings 6,669,098
Time 1,617,027
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14,357,140
Other liabilities 36,974
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TOTAL LIABILITIES 14,394,114
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STOCKHOLDER'S EQUITY
Preferred stock, $1 par value; 1,000,000 shares
authorized; no shares issued and outstanding --
Common stock, $1 par value; 10,000,000 shares
authorized; 741,260 shares issued and outstanding 741,260
Surplus 6,591,578
Accumulated deficit (570,612)
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TOTAL STOCKHOLDER'S EQUITY 6,762,226
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TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 21,156,340
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THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
3
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NBG BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
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THREE MONTHS NINE MONTHS
ENDED ENDED
SEPTEMBER 30, 2000 SEPTEMBER 30, 2000
<S> <C> <C>
Interest income
Loans $ 287,518 $ 357,720
Taxable securities 3,096 4,893
Federal funds sold 78,179 126,315
Deposits in other banks 0 91,384
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Total interest income 368,793 580,312
Interest expense
Deposits 119,447 150,296
Other borrowings 0 4,332
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Total interest expense 119,447 154,628
Net interest income 249,346 425,684
Provision for loan losses 73,675 164,885
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Net interest income
after provision for loan losses 175,671 260,799
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Other income
Service charges on deposit accounts 4,355 5,115
Mortgage origination fees 28,507 40,677
Other operating income 4,855 6,379
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Total other income 37,717 52,171
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Other expenses
Salaries and employee benefits 164,275 400,575
Equipment and occupancy expenses 53,546 104,501
Other operating expenses 73,882 160,478
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Total other expenses 291,703 665,554
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Loss before income taxes (78,315) (352,584)
Income taxes -- --
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Net loss $ (78,315) $(352,584)
========= =========
Basic and diluted losses per common share $ (0.11) $ (0.90)
========= =========
Weighted average shares outstanding 733,177 392,846
(basic and diluted)
Cash dividends per share of common stock $ -- $ --
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
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NBG BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2000
(UNAUDITED)
<TABLE>
<CAPTION>
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Three Months Nine Months
Ended Ended
September 30, September 30,
2000 2000
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<S> <C> <C>
OPERATING ACTIVITIES
Net loss $ (78,315) $ (352,584)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation 24,912 40,626
Provision for loan losses 73,675 164,885
Increase in other assets (24,180) (154,242)
Increase (decrease) in other liabilities 10,812 (151,687)
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Net cash provided by (used in) operating activities 6,904 (453,002)
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INVESTING ACTIVITIES
Purchase of available for sale securities (500) (206,900)
Net (increase) decrease in federal funds sold 820,000 (4,630,000)
Net increase in loans (5,786,630) (13,190,661)
Purchase of premises and equipment (49,892) (1,525,173)
Net cash used in investing activities (5,017,022) (19,552,734)
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FINANCING ACTIVITIES
Net increase in deposits 6,000,274 14,357,140
Advances on line of credit 0 200,882
Repayment of line of credit 0 (249,850)
Proceeds from issuance of common stock 242,499 7,332,837
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Net cash provided by financing activities 6,242,773 21,641,009
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Net increase in cash 1,232,655 1,635,273
Cash at beginning of period 406,512 3,894
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Cash at end of period $ 1,639,167 $ 1,639,167
============ ============
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
5
<PAGE>
NBG BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. NATURE OF BUSINESS AND BASIS OF PRESENTATION
NBG Bancorp, Inc. ("the Company") was incorporated as a Georgia
corporation on September 23, 1999 to serve as a bank holding company
for The National Bank of Georgia. The Company filed a Registration
Statement on Form SB-2 with the Securities and Exchange Commission to
register an offering for sale of a minimum of 610,000 and a maximum of
800,000 shares of the Company's $1.00 par value per share common stock
at $10.00 per share. The stock offering ended on September 1, 2000. At
the close of the offering and as of September 30, 2000, NBG Bancorp,
Inc., has raised $7,412,600 by selling 741,260 shares from the
offering. See "Part II, Item 2 - Changes in Securities and Use of
Proceeds."
With the prior approval of the Board of Governors of the Federal
Reserve and the Georgia Department of Banking and Finance, on May 2,
2000, the Company used $6,878,600 of the net proceeds of the offering
to capitalize The National Bank of Georgia, a national bank the Company
was organizing in Athens, Georgia. In return, the Bank issued all of
its common stock to NBG Bancorp, and NBG Bancorp became the Bank's sole
stockholder. Accordingly, NBG Bancorp is now a bank holding company
within the meaning of the Bank Holding Company Act of 1956, as
currently in effect (the "Bank Holding Company Act"), and the Georgia
Bank Holding Company Act.
The 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 periods.
The results of operations for the three and nine month periods ended
September 30, 2000, are not necessarily indicative of the results to be
expected for the full year.
NOTE 2. CURRENT ACCOUNTING DEVELOPMENTS
In June 1998, the Financial Accounting Standards Board issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities".
The effective date of this statement has been deferred by SFAS No. 137
until fiscal years beginning after June 15, 2000. However, the
statement permits early adoption as of the beginning of any fiscal
quarter after its issuance. The Company expects to adopt this statement
effective January 1, 2001. SFAS No. 133 requires the Company to
recognize all derivatives as either assets or liabilities in the
balance sheet at fair value. For derivatives that are not designated as
hedges, the gain or loss must be recognized in earnings in the period
of change. For derivatives that are designated as hedges, changes in
the fair value of the hedged assets, liabilities, or firm commitments
must be recognized in earnings or recognized in other comprehensive
income until the hedged item is recognized in earnings, depending on
the nature of the hedge. The ineffective portion of a derivative's
change in fair value must be recognized in earnings immediately.
Management has not yet determined what effect the adoption of SFAS No.
133 will have on the Company's earnings or financial position.
There are no other recent accounting pronouncements that have had, or
are expected to have, a material effect on the Company's financial
statements.
6
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NBG BANCORP, INC. AND SUBSIDIARY
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
FORWARD-LOOKING STATEMENTS
Some of the statements in this report are "forward-looking statements."
Forward-looking statements include statements about the competitiveness of the
banking industry, potential regulatory obligations, potential economic growth in
our primary service area, our strategies and other statements that are not
historical facts. When we use in this report words like "anticipate," "believe,"
"expect," "estimate," and similar expressions, you should consider them as
identifying forward-looking statements. Because forward-looking statements
involve risks and uncertainties, there are important factors that could cause
actual results to differ significantly from those expressed or implied by the
forward-looking statements.
LIQUIDITY
Liquidity management involves the ability to match the cash flow requirements of
the company's customers, who may be either depositors desiring to withdraw funds
or borrowers requiring loan proceeds. This is accomplished by monitoring and
managing the balances and maturities of its loans and deposits in such a way
that its cash in vaults, cash held in correspondent bank accounts, and federal
funds sold are sufficient to meet anticipated demand for immediate funds.
Additionally, the bank is a member of the Federal Home Loan Bank and the bank
maintains a federal funds borrowed line of credit with its primary correspondent
as sources of additional liquidity as needed.
The liquidity of the Company is monitored on a periodic basis by management and
regulatory authorities. The Company has no historical reference for seasonal or
other related demands on its liquidity. Because of this lack of history and the
expected high growth of the Company, a higher than normal level of liquidity is
being maintained.
CAPITAL ADEQUACY
We believe the net proceeds of the offering will satisfy our cash requirements
for at least the next 12 months following the opening of The National Bank of
Georgia, the Company's subsidiary, on May 8, 2000. Accordingly, management does
not anticipate that it will be necessary to raise additional funds to operate
the Company or The National Bank of Georgia for at least the next 12 months.
Requirements by banking regulators include the monitoring of risk-based capital
guidelines for banks and holding companies that are designed to make capital
requirements more sensitive to differences in risk profiles and account for off
balance sheet items. The Bank and the Company substantially exceeded the
regulatory minimums on capital requirements and ratios as of September 30, 2000.
However, as the Company and the Bank continue to grow and the loan portfolio
increases, these ratios should adjust downward. Management will monitor these
amounts and ratios on a continuous basis. The minimum capital requirements and
the actual capital ratios for the Company and the Bank as of September 30, 2000
are as follows:
<TABLE>
<CAPTION>
ACTUAL
--------------------------------
THE NATIONAL
NBG BANCORP, BANK OF REGULATORY
INC. GEORGIA MINIMUM
REQUIREMENT
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<S> <C> <C> <C>
Leverage capital ratios 37.89 % 37.78 % 4.00 %
Risk-based capital ratios:
Tier I capital 48.62 48.47 4.00
Total capital 49.80 49.66 8.00
</TABLE>
7
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FINANCIAL CONDITION
Total assets at September 30, 2000, were $21,156,340. During the nine and three
month periods ended September 30, 2000, the company originated $13,190,661 and
$5,786,630 in loans, respectively. Funding for these loans was provided by new
deposits totaling $14,357,140 and $6,000,274 for the nine and three month
periods ended September 30, 2000, respectively. As required, the Company also
purchased stock in The Federal Reserve Bank totaling $206,400. The Federal
Reserve Bank stock is being classified as available for sale and is being
carried at original cost due to no readily determinable fair value. In addition,
the Company joined the Federal Home Loan Bank and purchased $500 of stock in the
bank. The Federal Home Loan bank stock is also being classified as available for
sale and is being carried at original cost due to no readily determinable fair
value.
Funds raised in excess of loan and other operational demands are held primarily
in overnight Federal funds sold. As of September 30, 2000, the Company had
$4,630,000 in overnight Federal funds sold. The Company expects to begin
purchasing investment securities other than overnight federal funds sold as its
loan growth stabilizes and opportunities appropriate to the Company's overall
asset and liability strategies and goals present themselves. Management expects
continued strong growth in assets and liabilities during the remainder of the
year. The company's growth rates are a result of the newness of the bank.
Management monitors its growth in all categories to maintain a proper mix of
types, maturities, and interest rates. Management believes that its current
capital level is adequate to maintain the current growth of the Company.
As of September 30, 2000 the Company had an investment in premises and equipment
totaling $1,495,772. The Company does not anticipate any further major
investments in premises and equipment during the remainder of fiscal year 2000.
RESULTS OF OPERATIONS
The Company's subsidiary, The National Bank of Georgia, received its charter
from the Office of the Comptroller of the Currency on May 3, 2000. The Bank
commenced operations on May 8, 2000.
The Company's results of operations are determined by its ability to effectively
manage net interest income, control non-interest expenses, generate non-interest
income and minimize loan losses. In order for the Company to become profitable,
it must increase the amount of its earning assets so that net interest income
along with non-interest income is sufficient to cover normal operating expenses
incurred in a banking operation and the bank's provision for loan losses.
Net losses for the three and nine month periods ended September 30, 2000 were
($78,315) and ($352,584), respectively. Net interest income for the three and
nine months ended September 30, 2000, was $249,346 and $425,684, respectively,
which resulted in a net interest margin for the three and nine month periods
ended September 30, 2000 of 6.29% and 6.47%, respectively. Included in interest
income for the three and nine month periods ended September 30, 2000 was $91,384
earned from deposits in other banks. This amount represents the interest earned
on stock subscription funds held in escrow during the escrow period. The
interest was not considered earned by the Company until the funds were released
from escrow on May 2, 2000.
The provision for loan losses represents a charge to earnings in the current
period to maintain an allowance for possible future loan losses. These charges
are at a level that management determines is adequate based on the makeup of the
loan portfolio and current economic considerations. The provision for loan
losses was $73,675 and $164,885 for the three and nine month periods ended
September 30, 2000, respectively, which resulted in the Company's allowance for
loan losses as a percentage of total loans being 1.25% as of September 30, 2000.
As of September 30, 2000, no loans had been charged off by the Company. In
addition, there were no loans past due greater than thirty days and no loans had
been placed on nonaccrual status or restructured.
Non-interest income totaled $37,717 and $52,171 for the three and nine months
ended September 30, 2000, respectively. This included $4,355 in service charges
on deposits, $28,507 in mortgage origination fees and $4,855 in other operating
income for the three months ended September 30, 2000. In comparison, this
included $5,115 in service charges on deposits, $40,677 in mortgage origination
fees and $6,379 in other operating income for the nine months ended September
30, 2000.
8
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Total non-interest expense was $291,703 for the three months ended September 30,
2000 and $665,554 for the nine months ended September 30, 2000. Certain areas of
non-interest expense were higher than normal and resulted from normal startup
costs incurred during the organization stage of the Company. Total pre-opening
expenses accumulated during the organizational period from June 1, 1999 to May
7, 2000 were $428,705 and consisted primarily of salaries, consulting and legal
fees connected with the formation of the company and equipment and occupancy
expenses. Non-interest expense should stabilize during the remainder of this
year.
Stock offering costs, which amounted to $79,762, represent all expenses directly
related to the company's efforts to raise capital and include legal fees,
printing and supplies costs, accounting fees, application costs, postage
expense, telephone charges, and compensation. Such costs were charged to
additional paid-in capital upon the commencement of operations of the company
and its wholly owned subsidiary, The National Bank of Georgia.
The Company will be subject to federal and state income taxes when taxable
income is generated. No income taxes have been accrued as of September 30, 2000,
because of the operational losses incurred to date.
The Company was still in its organizational stage as of September 30, 1999. The
organizational stage commenced on June 1, 1999 and as of September 30, 1999,
organizational expenses of $122,610 had been incurred. The organizational
expenses incurred through September 30, 1999 consisted primarily of the
following:
Salaries and Wages $94,153
Filing and Application Fees 10,339
Equipment and occupancy expenses 12,357
Salaries and wages include the accrual of payments due under employment
contracts with the Bank's senior officers for services rendered during the
organizational phase of the Company. The accruals amounted to $80,000 as of
September 30, 1999. The organizational expenses through September 30, 1999 were
funded with a $250,000 line of credit at a commercial bank. As of September 30,
1999, the line of credit had a balance of $38,000.
Therefore, statements of operations and cash flows for the three and nine month
periods ended September 30, 1999 and a comparative analysis to September 30,
2000 are not presented.
The Company is not aware of any 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.
PART II - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Use of Proceeds From Sales of Registered Securities
On December 6, 1999, the Company commenced an initial public offering of a
minimum of 610,000 shares and a maximum of 800,000 shares of its common stock at
an offering price of $10.00 per share. The shares in the offering are registered
under the Securities Act of 1933, as amended, pursuant to an effective
Registration Statement on Form SB-2 (the "Registration Statement," registration
number 333-87763). The Registration Statement was declared effective by the
Securities and Exchange Commission (the "SEC") on December 6, 1999.
9
<PAGE>
On March 5, 2000, the Company's board of directors voted to extend the offering
for a 90-day period ending June 3, 2000, and on May 15, 2000, the Company's
board of directors voted again to extend the stock offering for another 90-day
period ending September 1, 2000. As of May 15, 2000, the minimum share purchase
was reduced to 200 shares of the company's stock. Prior to May 2, 2000, all
subscription funds tendered were deposited in an interest-bearing escrow account
with Georgia First Bank, N.A., Gainesville, Georgia (the "Escrow Agent") pending
completion of certain conditions of the offering.
As of May 2, 2000, the minimum number of shares to be sold in the Offering had
been attained. Accordingly, on May 2, 2000, the Escrow Agent released the
subscription funds to The National Bank of Georgia. Since May 2, 2000, all
subscription funds tendered have been deposited directly with the Company and
have been made immediately available for use by the Company. The stock offering
ended on September 1, 2000. At the close of the offering and as of September 30,
2000, NBG Bancorp, Inc., raised $7,412,600 by selling 741,260 shares from the
offering.
The Company used $6,878,600 of the net proceeds of the offering on May 2, 2000
to capitalize The National Bank of Georgia. In return, The National Bank of
Georgia issued all of its common stock to the Company, and the Company became
the Bank's sole shareholder. The Company subsequently injected an additional
$434,000 of additional offering proceeds into the Bank. The Company is using the
remaining net proceeds of the offering for working capital purposes.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
27. Financial Data Schedule, (for SEC use only).
(b) Reports on Form 8-K.
None.
10
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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.
NBG BANCORP, INC.
(REGISTRANT)
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Date: November 14, 2000 /s/ William S. Huggins
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William S. Huggins
President and Chief Executive Officer
(Principal Executive Officer)
Date: November 24, 2000 /s/ Michael R. Carson
----------------- ----------------------------
Michael R. Carson
Executive Vice President and
Chief Financial Officer
(Principal Accounting Officer)
