SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
| x | QUARTERLY REPORT UNDER SECTION 13 AND 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2004
| ¨ | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT 1934 |
For the transition period from to
Commission File Number: 333-110127
Bainbridge Bancshares, Inc.
(Exact name of registrant as specified in its charter)
| Georgia | 20-0057499 | |
(State or other jurisdiction of Incorporation or organization) | (IRS Employer Identification No.) |
208 S. Russ St., Bainbridge, GA 39817
(Address of principal executive offices)
(229) 246-3131
(Registrant’s telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 ¨
Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of September 30, 2004:650,000 shares
Transitional Small Business Disclosure Format (check one): Yes ¨ No x
| Page No. | ||||
PART I -FINANCIAL INFORMATION | ||||
| ITEM 1. | Financial Statements | |||
| 3 | ||||
Consolidated Statements of Loss and comprehensive loss (unaudited) | 4 | |||
| 5 | ||||
| 6 | ||||
| ITEM 2. | Management’s Plan of Operation | 7 | ||
| ITEM 3. | Controls and Procedures | |||
PART II -OTHER INFORMATION | ||||
| ITEM 6. | Exhibits | 9 | ||
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PART I - FINANCIAL INFORMATION
Consolidated Balance Sheet (unaudited)
September 30, 2004
Assets | ||||
Cash and due from banks | $ | 973,904 | ||
Federal funds sold | 1,290,000 | |||
Restricted securities | 150,500 | |||
Securities available for sale, at fair value | 1,755,187 | |||
Loans | 20,255,402 | |||
Less allowance for loan losses | (201,000 | ) | ||
Loans, net | 20,054,402 | |||
Premises and equipment, net | 923,160 | |||
Other assets | 232,687 | |||
| $ | 25,379,840 | |||
Liabilities and Shareholders’ Equity | ||||
Deposits | ||||
Noninterest bearing demand | $ | 3,305,380 | ||
Interest bearing demand and savings | 9,619,446 | |||
Time deposits | 6,592,800 | |||
Total deposits | 19,517,626 | |||
Other liabilities | 38,275 | |||
Total Liabilities | $ | 19,555,901 | ||
Shareholders’ Equity | ||||
Preferred Stock, no par value, 1,000,000 shares authorized; none issued | $ | — | ||
Common Stock, no par value, 10,000,000 shares authorized; 650,000 shares issued and outstanding | ||||
Additional paid-in capital | 6,459,736 | |||
Accumulated deficit | (640,873 | ) | ||
Unrealized gain(loss) on securities | 5,076 | |||
Total shareholders’ equity | 5,823,939 | |||
| $ | 25,379,840 | |||
See Notes to Financial Statements
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Consolidated Statement of Loss and Comprehensive Loss
(Unaudited)
Three and Nine months ended September 30, 2004
| Three months | Nine Months | |||||||
Interest Income | ||||||||
Interest and fees on loans | $ | 279,580 | $ | 428,601 | ||||
Interest on investment securities | 18,435 | 22,603 | ||||||
Interest on Federal funds sold | 5,072 | 20,640 | ||||||
| 303,087 | 471,844 | |||||||
Interest Expense | ||||||||
Interest on deposits | 55,579 | 81,038 | ||||||
Interest on other borrowed funds | — | 13,691 | ||||||
| 55,579 | 94,729 | |||||||
Net interest income | 247,508 | 377,115 | ||||||
Provision for loan losses | 73,000 | 201,000 | ||||||
Net interest income (expense) after provision for loan losses | 174,508 | 176,115 | ||||||
Other income | ||||||||
Service charges on deposit accounts | 25,482 | 32,724 | ||||||
Other fees and income | 1,735 | 4,993 | ||||||
| 27,217 | 37,717 | |||||||
Other Expenses | ||||||||
Salaries & employee benefits | 134,844 | 358,913 | ||||||
Organization costs | — | — | ||||||
Premises and fixed assets | 43,655 | 101,897 | ||||||
Data processing fees | 9,300 | 15,500 | ||||||
Other expenses | 142,315 | 231,581 | ||||||
| 330,114 | 707,891 | |||||||
Net loss for the period | (128,389 | ) | (494,059 | ) | ||||
Other comprehensive income: | ||||||||
Unrealized gains on securities available for sale, net of deferred tax of $3,280 & $2,615 | 6,367 | 5,076 | ||||||
Comprehensive loss | (122,022 | ) | (488,983 | ) | ||||
Net loss per share | $ | (0.20 | ) | $ | (0.76 | ) | ||
See Notes to Financial Statements
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Consolidated Statement of Cash Flows (unaudited)
Nine months ended September 30, 2004
Cash Flows from operating activities: | ||||
Net Loss | $ | (494,059 | ) | |
Adjustments to reconcile net loss to net cash used in Operating activities: | ||||
Depreciation | 36,784 | |||
Provision for loan losses | 201,000 | |||
Net change in other assets and accrued liabilities | (168,398 | ) | ||
Net cash used in operating activities | (424,673 | ) | ||
Cash Flows from Investing Activities: | ||||
Purchase of investment securities | (1,900,611 | ) | ||
(Increase) in loans | (20,255,402 | ) | ||
(Increase) in Federal funds sold | (1,290,000 | ) | ||
Purchase of fixed assets | (388,309 | ) | ||
Net cash used in Investing activities | (23,834,322 | ) | ||
Cash Flows from Financing Activities: | ||||
Increase in deposits | 19,517,626 | |||
Payment on line of credit | (530,000 | ) | ||
Payment of advances from organizers | (220,000 | ) | ||
Proceeds from sale of common stock, net of stock offering cost | 6,452,836 | |||
Net cash provided by financing activities | 25,220,462 | |||
Net increase in cash | 961,467 | |||
Cash at beginning of period | 12,437 | |||
Cash at end of period | $ | 973,904 | ||
See notes to Financial Statements
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Notes to Consolidated Financial Statements
Note 1. Organization and Summary of Significant Accounting Policies
Organization
Bainbridge Bancshares, Inc. (the “Company”) was incorporated on June 25,2003 to operate as a bank holding company pursuant to the Federal Bank Holding Company Act of 1956, as amended, and to purchase 100% of the issued and outstanding capital stock of First National Bank of Decatur County (the “Bank”), an association organized under the laws of the United States, which conducts a general banking business in Bainbridge, Georgia. In March 2004, the Company obtained regulatory approval to become a registered bank holding company subject to regulation by the Board of Governors of the Federal Reserve System and the Georgia Department of Banking and Finance. In April 2004, the Bank was chartered as a national bank subject to regulations by the Office of the Comptroller of the Currency and commenced banking operations.
Significant Accounting Policies
Basis of Presentation
The accompanying consolidated financial information of the Company is unaudited; however, such information reflects all adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of the financial position and results of operations. The results of operations for the three months and nine months ended September 30, 2004 are not necessarily indicative of the results that may be expected for the full year. These statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-KSB for the year ended December 31, 2003.
The consolidated financial statements include the accounts of the Company and the Bank. Significant intercompany transactions and balances have been eliminated in consolidation.
In preparing financial statements in conformity with accounting principles generally accepted in the United States of America, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the balance sheet date and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses and deferred income taxes.
Income Taxes
The Company will be subject to Federal and state income taxes when taxable income is generated. No income taxes have been accrued because of the operation losses incurred during the preopening period.
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Item 2.Management’s Plan of Operation
Bainbridge Bancshares, Inc. (the “Company”) was incorporated in June 2003 to operate as a bank holding company pursuant to the Federal Bank Holding Company Act of 1956, as amended, and to purchase 100% of the issued and outstanding capital stock of First National Bank of Decatur County (the “Bank”), a national banking association to be organized under the laws of the United States to conduct a general banking business in Bainbridge, Georgia. In March 2004, the Company obtained regulatory approval to become a registered bank holding company subject to regulation by the Board of Governors of the Federal Reserve System and the Georgia Department of Banking and Finance. In April 2004, the Bank was chartered as a national bank subject to regulation by the Office of the Comptroller of the Currency and commenced operations.
The Company initially funded its start-up and organization costs through advances from the organizers in the amount of $220,000 from their own personal funds. The Company subsequently obtained a line of credit in the amount of $350,000 from Thomasville National Bank, which was personally guaranteed by twelve of the Company’s organizers. The Company obtained further financing through its initial public offering, completed on April 25, 2004, in which the Company sold and issued 650,000 shares of its no par value common stock. Proceeds from the stock offering amounted to approximately $6,453,836, net of selling expenses.
The Company believes that the proceeds of the offering will satisfy the cash requirements of the Company and the Bank for their respective initial years of operations. It is not anticipated that the Company will find it necessary to raise additional funds to meet expenditures required to operate the business of the Company and/or the Bank during the next 12 months. All anticipated material expenditures for such period have been identified and provided for out of the proceedings of the offering.
Item 3.Controls and Procedures
The Chief Executive Officer and Chief Financial Officer of the Company have evaluated the Company’s disclosure controls and procedures as of the end of the quarterly period covered by this Report on Form 10-QSB and have concluded that the Company’s disclosure controls and procedures are effective. During the third quarter of 2004 there were no changes in the Company’s internal controls over financial reporting that have materially affected, or that are reasonably likely to materially affect, the Company’s internal control over financial reporting.
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The following exhibits are filed with this report or incorporated herein by reference:
| 3.1 | Articles of Incorporation of the Company (filed as Exhibit 3.1 to the Company’s Form SB-2 previously filed with the SEC on October 31, 2003 and incorporated herein by reference) |
| 3.2 | Bylaws of the Company (filed as Exhibit 3.2 to the Company’s Form SB-2 previously filed with the SEC on October 31, 2003 and incorporated herein by reference) |
| 31.1 | Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
| 31.2 | Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
| 32.1 | Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| BAINBRIDGE BANCSHARES, INC. | ||
| November 15, 2004 | /s/ Tracy A. Dixon | |
| Tracy A. Dixon, | ||
| President | ||
| (principal executive officer) | ||
| November 15, 2004 | /s/ Donna H. Kelley | |
| Donna H. Kelley | ||
| Chief Financial Officer | ||
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