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 June 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 August 8, 2000: 738,010; $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
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Item 1. Consolidated Financial Statements (unaudited)..............................................3 - 6
Item 2. Management's Discussion and Analysis and Results of Operations ...........................7 - 9
Part II Other Information
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Item 2. Changes in Securities and Use of Proceeds......................................................9
Item 6. Exhibits and Reports on Form 8-K...............................................................9
Signatures ..........................................................................................10
</TABLE>
2
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PART I - FINANCIAL INFORMATION
FINANCIAL STATEMENTS
NBG BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
June 30, 2000
(Unaudited)
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ASSETS
Cash and due from banks $ 406,512
Federal funds sold 5,450,000
Securities available-for-sale 206,400
Loans 7,404,031
Less allowance for loan losses 91,210
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7,312,821
Premises and equipment 1,470,792
Other assets 134,545
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TOTAL ASSETS $ 14,981,070
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LIABILITIES AND STOCKHOLDER'S EQUITY
LIABILITIES
Deposits
Noninterest bearing demand $ 1,430,552
Interest bearing demand 4,903,916
Savings 1,196,459
Time deposits 825,939
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8,356,866
Other liabilities 26,163
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TOTAL LIABILITIES 8,383,029
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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; 717,010 shares issued and outstanding 717,010
Surplus 6,373,328
Accumulated deficit (492,297)
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TOTAL STOCKHOLDER'S EQUITY 6,598,041
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TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 14,981,070
============
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 SIX MONTHS ENDED JUNE 30, 2000
(Unaudited)
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Three Months Six Months
Ended Ended
June 30, 2000 June 30, 2000
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Interest income
Loans $ 70,202 $ 70,202
Taxable securities 1,797 1,797
Federal funds sold 48,136 48,136
Deposits in other banks 91,384 91,384
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Total interest income 211,519 211,519
Interest expense
Deposits 30,849 30,849
Other borrowings 2,091 4,332
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Total interest expense 32,940 35,181
Net interest income 178,579 176,338
Provision for loan losses 91,210 91,210
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Net interest income
after provision for loan losses 87,369 85,128
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Other income
Service charges on deposit accounts 760 760
Mortgage origination fees 12,170 12,170
Other operating income 1,524 1,524
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Total other income 14,454 14,454
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Other expenses
Salaries and employee benefits 147,507 236,300
Equipment and occupancy expenses 36,796 50,955
Other operating expenses 50,111 86,596
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Total other expenses 234,414 373,851
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Loss before income taxes (132,591) (274,269)
Income taxes -- --
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Net loss $(132,591) $(274,269)
========= =========
Basic and diluted losses per common share $ (0.30) $ (1.23)
========= =========
Weighted average shares outstanding
(basic and diluted) 445,337 222,705
Cash dividends per share of common stock $ -- $ --
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 SIX MONTHS ENDED JUNE 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
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Three Months Six Months
Ended Ended
June 30, 2000 June 30, 2000
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<S> <C> <C>
OPERATING ACTIVITIES
Net loss $ (132,591) $ (274,269)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation 14,897 15,714
Provision for loan losses 91,210 91,210
Increase in other assets (82,484) (130,062)
Decrease in other liabilities (295,212) (162,498)
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Net cash used in operating activities (404,180) (459,905)
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INVESTING ACTIVITIES
Purchase of available for sale securities (206,400) (206,400)
Net increase in federal funds sold (5,450,000) (5,450,000)
Net increase in loans (7,404,031) (7,404,031)
Purchase of premises and equipment (1,373,704) (1,475,281)
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Net cash used in investing activities (14,434,135) (14,535,712)
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FINANCING ACTIVITIES
Net increase in deposits 8,356,866 8,356,866
Advances on line of credit 45,882 200,882
Repayment of line of credit (249,850) (249,850)
Proceeds from issuance of common stock 7,090,337 7,090,337
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Net cash provided by financing activities 15,243,235 15,398,235
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Net increase in cash 404,920 402,618
Cash at beginning of period 1,592 3,894
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Cash at end of period $ 406,512 $ 406,512
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</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. As of June 30, 2000, the offering was scheduled to
end on September 1, 2000, but the Company may extend it until November
3, 2000 at the latest. As of June 30, 2000, the Company had raised
$7,170,000 by selling 717,010 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 six month period ended June
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 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.
Management knows of no trends, demands, commitments, events or uncertainties
that should result in, or are reasonably likely to result in, the Company's, or
its subsidiary's, liquidity increasing or decreasing in any material way in the
foreseeable future, other than as a result of the Company's ongoing stock
offfering and normal operations.
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 June 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 June 30, 2000 are
as follows:
<TABLE>
<CAPTION>
Actual
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The
NBG National Regulatory
Bancorp. Bank of Minimum
Inc. Georgia Requirement
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<S> <C> <C> <C>
Leverage capital ratios 101.82 % 101.51 % 4.00 %
Risk-based capital ratios:
Tier I capital 69.82 69.61 4.00
Total capital 70.78 70.57 8.00
</TABLE>
FINANCIAL CONDITION
Total assets at June 30, 2000, were $14,981,070. During the six and three month
periods ended June 30, 2000, the company originated $7,404,031 in loans. Funding
for these loans was provided by new deposits totaling $8,356,866. 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.
Funds raised in excess of loan and other operational demands are held primarily
in overnight Federal funds sold. As of June 30, 2000, the bank had $5,450,000 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 June 30, 2000 the Company had an investment in premises and equipment
totaling $1,470,792. 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 six month period ended June 30, 2000 were $132,591
and $274,269, respectively. Net interest income for the three and six months
ended June 30, 2000, was $178,579 and $176,338, respectively, which resulted in
a net interest margin for the three and six month period ended June 30, 2000 of
5.40% and 5.34%, respectively. Included in interest income for the three and six
month periods ended June 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 $91,210 for the three and six month periods ended June 30, 2000. As
of June 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.
Non-interest income totaled $14,454 for the three and six months ended June 30,
2000. This included $760 in service charges on deposits, $12,170 in mortgage
origination fees and $1,524 in other operating income.
Total non-interest expense was $234,414 for the three months ended June 30, 2000
and $373,851 for the six months ended June 30, 2000. Certain areas of
non-interest expense were higher than normal and resulted from the 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.
7
<PAGE>
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 June 30, 2000,
because of the operational losses incurred to date.
The Company was still in its organizational stage as of June 30, 1999. The
organizational stage commenced on June 1, 1999 and as of June 30, 1999,
organizational expenses of $9,429 had been incurred consisting primarily of a
$7,500 OCC application fee for the Company's subsidiary, The National Bank of
Georgia. Therefore, statements of operations and cash flows for the three and
six month periods ended June 30, 1999 and a comparative analysis to June 30,
2000 are not presented.
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.
On May 15, 2000, the Company's board of directors voted 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. As of June 30, 2000, the shares will continue to be offered on a
best-efforts, 200 share minimum basis by the executive officers of the Company,
who are receiving no commissions for sales they make. In addition, the Company
may engage sales agents to sell shares on a best efforts basis. The Company
anticipates that if sales agents are retained, such persons would be paid sales
commissions not exceeding 10% of the aggregate dollar amount of the common stock
sold by the sales agents as well as marketing related expenses. 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. As of
June 30, 2000, the offering was scheduled to end on September 1, 2000, but the
Company may extend it until November 30, 2000 at the latest.
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.
8
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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:
------------------------- /s/ William S. Huggins
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William S. Huggins
President and Chief Executive Officer
(Principal Executive Officer)
Date:
------------------------- /s/ Michael R. Carson
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Michael R. Carson
Executive Vice President and
Chief Financial Officer
(Principal Accounting Officer)
