SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended: June 30, 2002
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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
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SEC File Number: 000-49980
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SYNERGY FINANCIAL GROUP, INC.
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(Exact name of registrant as specified in its charter)
United States 22-3798671
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
310 North Avenue East, Cranford, New Jersey 07016
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(Address of principal executive offices) (Zip Code)
(800) 693-3838
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(Registrant's telephone number, including area code)
Check whether the registrant: (1) filed all reports required to be
filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 subsequent
to 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 No X
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APPLICABLE ONLY TO CORPORATE ISSUERS:
Number of shares outstanding of common stock as of September 16, 2002:
$0.10 Par Value Common Stock 100
- ---------------------------- -------------------------
Class Shares Outstanding
Transitional Small Business Disclosure Format (check one)
Yes No X
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SYNERGY FINANCIAL GROUP, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
Page
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PART I. FINANCIAL INFORMATION
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Item 1. Financial Statements
Consolidated Statements of Financial Condition as of June 30, 2002 (unaudited)
and December 31, 2001 (audited).................................................................1
Consolidated Statements of Income for the three and six months
ended June 30, 2002 and 2001 (unaudited)).......................................................2
Consolidated Statements of Comprehensive Income for the three and six months
ended June 30, 2002 and 2001 (unaudited)).......................................................3
Consolidated Statements of Cash Flows for the six
months ended June 30, 2002 and 2001 (unaudited).................................................4
Notes to Consolidated Financial Statements......................................................5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.............................................................6
PART II. OTHER INFORMATION
- -------- -----------------
Item 1. Legal Proceedings....................................................................................10
Item 2. Changes in Securities and Use of Proceeds............................................................10
Item 3. Defaults Upon Senior Securities......................................................................10
Item 4. Submission of Matters to a Vote of Security-Holders..................................................10
Item 5. Other Information....................................................................................10
Item 6. Exhibits and Reports on Form 8-K.....................................................................10
Signatures
SYNERGY FINANCIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
June 30,
2002 December 31,
(unaudited) 2001
------------- -------------
Assets
Cash and amounts due from banks $ 2,041,371 $ 2,026,535
Interest-bearing deposits with banks 1,784,008 1,680,969
------------- -------------
Cash and cash equivalents 3,825,379 3,707,504
Equity securities:
Held to maturity -- --
Available for sale 9,649 --
Mortgage-backed securities:
Held to maturity 11,129,868 7,152,853
Available for sale 45,190,794 43,894,168
Loans Receivable, net 290,235,305 224,688,651
Accrued interest receivable 1,527,998 1,150,969
Property and equipment, net 13,642,504 11,639,424
Federal Home Loan Bank of New York stock, at cost 2,850,000 1,550,000
Cash surrender value of officer life insurance 2,109,956 2,051,079
Deferred income taxes 91,469 291,062
Other assets 777,963 836,888
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Total assets $ 371,390,885 $ 296,962,598
============= =============
Liabilities and Equity
Liabilities:
Deposits $ 301,735,198 $ 249,813,341
Federal Home Loan Bank of New York advances 43,200,000 22,500,000
Advance payments by borrowers for taxes and insurance 1,449,280 1,045,625
Accrued interest payable on advances 157,378 174,188
Other liabilities 975,999 1,039,073
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Total liabilities 347,517,855 274,572,227
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Commitments and Contingencies -- --
Stockholders' equity:
Preferred stock; $.10 par value, 2,000,000 shares authorized;
issued and outstanding - none -- --
Common Stock; $.10 par value, 18,000,000 shares authorized;
100 shares issued and outstanding 10 10
Paid-in-capital 99,990 99,990
Retained earnings 23,443,624 22,315,215
Accumulated other comprehensive (loss) - unrealized loss
on securities available for sale,net of tax 329,406 (24,844)
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Total stockholders' equity 23,873,030 22,390,371
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Total liabilities and stockholders' equity $ 371,390,885 $ 296,962,598
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1
SYNERGY FINANCIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
For the Six Months Ended For the Quarter Ended
June 30, June 30,
---------------------------- ---------------------------
2002 2001 2002 2001
(unaudited) (unaudited) (unaudited) (unaudited)
------------ ------------ ------------ ------------
Interest income:
Loans $ 9,340,165 $ 7,641,925 $ 4,999,009 $ 3,862,209
Investments 0 253,239 0 124,048
Mortgaged-backed securities 1,557,869 940,118 787,274 471,648
Other 3,955 256,093 906 207,102
------------ ------------ ------------ ------------
Total interest income 10,901,989 9,091,375 5,787,189 4,665,007
------------ ------------ ------------ ------------
Interest expense:
Deposits 3,244,390 3,530,551 1,679,179 1,906,175
Borrowed funds 873,919 1,007,890 459,967 498,510
------------ ------------ ------------ ------------
Total interest expense 4,118,309 4,538,441 2,139,146 2,404,685
------------ ------------ ------------ ------------
Net interest income before provision for loan losses 6,783,680 4,552,934 3,648,043 2,260,322
------------ ------------ ------------ ------------
Provision for loan losses 550,917 195,000 280,965 150,000
------------ ------------ ------------ ------------
Net interest income after provision for loan losses 6,232,763 4,357,934 3,367,078 2,110,322
------------ ------------ ------------ ------------
Other income:
Gain on sale of loans 123,523 14,867 123,523 14,867
Dividend on FHLB stock 49,247 65,558 31,640 30,702
Gain/(loss) on sale of investments (5,993) 0 0 0
Commissions 59,557 228,203 61,487 159,746
Loan servicing fees 90,891 138,915 44,809 71,388
Other fees and service charges 474,836 435,812 252,710 226,241
Insurance investment 58,877 55,305 28,014 26,787
Other 33,985 19,294 23,896 1,522
------------ ------------ ------------ ------------
Total other income 884,923 957,954 566,079 531,253
------------ ------------ ------------ ------------
Operating expenses:
Compensation and employee benefits 2,705,978 2,472,094 1,478,466 1,298,070
Office operations 1,291,600 1,130,206 709,420 587,172
Office occupancy 558,121 456,446 297,841 226,691
Professional and outside services 163,444 157,694 79,265 75,429
Education and promotion 398,891 165,902 325,453 85,540
Loan servicing 138,373 49,663 22,246 14,989
Deposit insurance 21,712 17,823 10,854 8,880
Other 111,276 115,306 55,785 (47,155)
------------ ------------ ------------ ------------
Total operating expenses 5,389,395 4,565,134 2,979,330 2,249,616
------------ ------------ ------------ ------------
Income before income tax expense 1,728,291 750,754 953,827 391,959
------------ ------------ ------------ ------------
Income tax expense 599,882 254,930 334,410 134,141
------------ ------------ ------------ ------------
Net income $ 1,128,409 $ 495,824 $ 619,417 $ 257,818
============ ============ ============ ============
2
SYNERGY FINANCIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
For the Six Months Ended For the Quarter Ended
June 30, June 30,
----------------------- ------------------------
2002 2001 2002 2001
(unaudited) (unaudited) (unaudited) (unaudited)
Net Income $1,128,409 $ 495,824 $ 619,417 $ 257,818
Other comprehensive income:
Unrealized holding gains (losses) on securities available
for sale, net of income taxes (benefit) of $199,581,
$142,581, $345,743, and ($17,650), respectively 354,250 253,698 614,320 (31,405)
---------- ---------- ---------- ----------
Comprehensive income $1,482,659 $ 749,522 $1,233,737 $ 226,413
========== ========== ========== ==========
3
SYNERGY FINANCIAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
For the Six Months Ended
June 30,
---------------------------
2002 2001
(unaudited) (unaudited)
---------------------------
Cash flows from operating activities:
Net income $ 1,128,409 $ 495,824
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 387,691 385,647
Provision for loan losses 550,917 195,000
Deferred income taxes 12 (60,910)
Amortization of deferred loan fees and costs 62,671 (41,500)
Amortization of premiums on investments
and mortgage-backed securities 118,730 35,482
Loss (gain) on sale of mortgage-backed securities 5,993 --
Gain (loss) on sale of loans (123,523) (14,867)
(Increase) decrease in accrued interest receivable (377,029) 3,767
Decrease (increase) in other assets 58,925 (61,193)
(Decrease) increase in other liabilities (63,074) (310,655)
(Increase) in cash surrender value of officer life insurance (58,877) (55,305)
Increase (decrease) in accrued interest payable on FHLB advances (16,810) (11,485)
----------- -----------
Net cash provided by operating activities 1,674,035 559,805
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Cash flows from investing activities:
Loan originations, net of principal repayments (57,642,463) (20,948,438)
Purchase of loans (13,716,682) (1,000,000)
Purchase of investment securities (10,950) (5,000,000)
Purchase of mortgaged-backed securities (19,978,937) (11,209,008)
Maturity and principal repayments of investment securities -- 5,000,000
Maturity and principal repayments of mortgage-backed securities 13,110,080 4,792,419
Purchase of property and equipment (2,390,771) (527,812)
Redemption (purchase) of FHLB stock (1,300,000) --
Proceeds from sale of mortgage-backed securities 2,025,625 --
Proceeds from sale of loans 5,322,426 4,058,478
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Net cash used in investing activities (74,581,672) (24,834,361)
----------- -----------
Cash flows from financing activities:
Net increase in deposits 51,921,857 33,683,095
Net change in FHLB overnight lines of credit 5,600,000 --
Advances from FHLB 20,100,000 3,000,000
Repayment of advances from FHLB (5,000,000) (3,500,000)
Increase (decrease) in advance payments by borrowers for
taxes and insurance 403,655 192,872
Capitalization of Mutual Holding Company -- (100,000)
----------- -----------
Net cash provided by financing activities 73,025,512 33,275,967
----------- -----------
Net increase (decrease) in cash and cash equivalents 117,875 9,001,411
Cash and cash equivalents at beginning of year 3,707,504 6,138,745
----------- -----------
Cash and cash equivalents at end of period $ 3,825,379 $15,140,156
=========== ===========
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Income taxes $ 719,939 $ 319,000
=========== ===========
Interest paid on deposits $ 3,244,860 $ 3,532,546
=========== ===========
Interest paid on borrowed funds $ 885,404 $ 1,024,700
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4
SYNERGY FINANCIAL GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
NOTE 1 - Principles of Consolidation
---------------------------
The accompanying unaudited consolidated financial statements include the
accounts of Synergy Financial Group, Inc. (the "Company") and its wholly-owned
subsidiaries, Synergy Bank and Synergy Financial Services, Inc. All significant
intercompany accounts and transactions have been eliminated in consolidation.
The Company's primary business is the operation of the Bank. The Bank provides
the usual products and services of banking such as deposits and mortgage,
consumer and non-residential loans, including multi- family credits.
NOTE 2 - Basis of Presentation and Interim Financial Statements
------------------------------------------------------
These unaudited statements have been prepared in accordance with instructions
for Form 10-QSB. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. However, such information presented reflects all
adjustments (consisting solely of normal recurring adjustments) which are, in
the opinion of the Company's management, necessary for a fair presentation of
the financial position and results of operations and cash flows for these
periods.
The results of operations for the three and six months ended June 30, 2002 are
not necessarily indicative of the results to be expected for the year ending
December 31, 2002 or any other period. The unaudited consolidated financial
statements and notes thereto should be read in conjunction with the audited
financial statements and notes thereto for the year ended December 31, 2001.
In preparing the consolidated financial statements, management is required to
make estimates and assumptions that affect the reported amounts of assets and
liabilities as of the date of the consolidated statements of financial condition
and revenues and expenses for the period. Actual results could differ
significantly from these estimates.
Material estimates that are particularly susceptible to significant change in
the near term relate to the determination of the allowance for loan losses. In
connection with the determination of the allowance for loan losses, management
generally obtains independent appraisals for significant properties.
5
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
Management's discussion and analysis of financial condition and results
of operations is intended to provide assistance in understanding our
consolidated financial condition and results of operations. The information in
this section should be read with the consolidated interim financial statements
and the notes thereto included in this Form 10-QSB.
Our results of operations are primarily dependent on our net interest
income. Net interest income is a function of the balances of loans and
investments outstanding in any one period, the yields earned on those loans and
investments and the interest paid on deposits and borrowed funds that were
outstanding in that same period. To a lesser extent, our results of operations
are also affected by the relative levels of our non-interest income and
operating expenses. Our non-interest income consists primarily of fees and
service charges, dividends on our Federal Home Loan Bank ("FHLB") of New York
stock, and gains on the sale of loans and investments. The operating expenses
consist primarily of employee compensation and benefits, occupancy and equipment
expenses, data processing costs, marketing costs, professional fees, office
supplies, and telephone and postage costs. Our results of operations are also
significantly impacted by the amount of provisions for loan losses which, in
turn, are dependent upon, among other things, the size and makeup of the loan
portfolio, loan quality and loan trends.
The Management's Discussion and Analysis section of this Form 10-QSB
contains certain forward- looking statements (as defined in the Private
Securities Litigation Reform Act of 1995). These forward- looking statements
project our future operations, which involve risks and uncertainties. Our actual
results may differ significantly from the results discussed in these
forward-looking statements. Our results of operations are affected by general
economic, regulatory and competitive conditions, including changes in prevailing
interest rates and the policies of regulatory agencies and state and federal tax
authorities.
Comparison of Financial Condition at June 30, 2002 and December 31, 2001
Assets. Total assets increased $74.4 million, or 25.1%, to $371.4
million at June 30, 2002 from approximately $297.0 million at December 31, 2001.
The increase in total assets resulted primarily from a $65.5 million increase in
net loans receivable and a $5.3 million increase in securities. The increase in
securities was due primarily to an increase in mortgage backed securities which
increased by $8.9 million, in connection with our strategies to conservatively
leverage capital and invest excess cash flow derived from financing activities.
The increase in loans primarily resulted from growth in the residential mortgage
loan, auto loan and non-residential mortgage loan portfolios of $47.1 million,
$14.1 million and $5.7 million, respectively.
Residential loans increased due to historically low interest rates
resulting in an increased volume of refinancing activity as well as promotional
efforts aimed at increasing the proportion of short to medium term home equity
loans to total loans in our portfolio. Auto loans increased due to a purchase of
$13.7 million of indirect auto loans from a local financial institution during
the quarter ended June 30, 2002. Non- residential loans and multi-family loans
increased as a result of an effort to further diversify the loan portfolio by
promoting these types of credits.
6
Liabilities. Total liabilities increased $72.9 million, or 26.6% to
$347.5 million at June 30, 2002 from $274.6 million at December 31, 2001. The
increase in total liabilities resulted primarily from an increase of $51.9
million in deposits, of which $17.9 million was in core deposits, and a $20.7
million increase in FHLB advances. The majority of the deposit growth consisted
of an increase in certificates of deposit, with terms predominantly in excess of
one year, which were offered at competitive rates to lock in prevailing low
interest rates. The increase in FHLB advances was to fund strong loan
originations during this period and for other investing activities. It is
projected that the deposit flow from existing and new branches will be used to
fund our loan demand and possibly pay down the intermediate FHLB advances.
Equity. Total equity increased $1.5 million to $23.9 million at June
30, 2002 from $22.4 million at December 31, 2001. The increase in equity
reflects $1.1 million in net income for the six months ended June 30, 2002, and
a net increase in accumulated other comprehensive income of $354,000,
attributable to an unrealized gain on available-for-sale securities.
Comparison of Operating Results for Six Months Ended June 30, 2002 and 2001
Net Income. Net income increased by $633,000 to $1.1 million for the
six months ended June 30, 2002 compared to $496,000 for the same period in 2001,
a 128% increase. The increase was attributable primarily to a $2.2 million
increase in net interest income, offset by a $356,000 increase in the provision
for loan losses, a $73,000 decrease in other income, an $824,000 increase in
operating expenses, and a $345,000 increase in income tax expense.
Net Interest Income. Net interest income grew $2.2 million, or 49.0%
for the six months ended June 30, 2002 compared to the same period in 2001.
Total interest income increased by $1.8 million to $10.9 million for the six
months ended June 30, 2002, while total interest expense fell by $420,000 to
$4.1 million for the six months ended June 30, 2002.
The 19.9% increase in total interest income was primarily due to a
$72.9 million, or 29.5%, increase in the average balance of interest-earning
assets, offset by a 54 basis point decrease in the average yield earned thereon.
The decrease in the average yield was primarily attributable to lower market
interest rates during the 2002 period, offset by a greater growth in the balance
of loans relative to the growth in securities which generally earn a lower
yield.
The 9.3% decrease in total interest expense resulted primarily from a
93 basis point decrease in the average cost of interest-bearing liabilities,
offset by a $76.7 million, or 32.2%, increase in the average balance of
interest-bearing liabilities. The decrease in the average cost of
interest-bearing liabilities is primarily attributable to our pricing strategies
and lower market interest rates in the 2002 period. The majority of the increase
in the average balance of liabilities for the 2002 period was comprised of a
$47.5 million increase in the average balance of certificates of deposit, the
cost of which was offset by a 196 basis point decline in the average cost
thereof.
Provision for Loan Losses. We maintain an allowance for loan losses
through provisions for loan losses which are charged to operations. The
provision is made to adjust the total allowance for loan losses to an amount
that represents management's best estimate of losses known and inherent in the
loan portfolio at the balance sheet date that are both probable and reasonable
to estimate. In estimating the known and inherent loan losses in the loan
portfolio that are both probable and reasonable to estimate, management
considers factors such as internal analysis of credit quality, general levels of
loan delinquencies, collateral
7
values, Synergy Bank's historical loan loss experience, changes in loan
concentrations by loan category, peer group information and economic and market
trends affecting our market area. The provision established for loan losses each
month reflects management's assessment of these factors in relation to the level
of the allowance at such time. Management's estimation did not change either in
estimation methods or assumptions during either period.
The provision for loan losses was $551,000 for the six months ended
June 30, 2002 compared to $195,000 for the same period in 2001. We had net
charge-offs of $8,000 for the six months ended June 30, 2002 compared to net
charge-offs of $80,000 for the same period in 2001. The increase in the
provision for loan losses for the 2002 period as compared to the 2001 period
reflects a significant amount of new loan growth of which the majority is less
seasoned credits. The total loan portfolio grew to $290.2 million at June 30,
2002 from $206.8 million at June 30, 2001, representing a 40.3% increase. The
growth in the loan portfolio included a significant growth in multi-family and
non-residential loans, from 4.0% of the portfolio at June 30, 2001 to 6.7% at
June 30, 2002, and this change in loan concentrations by loan category was also
considered in management's loan loss analysis and its decision to increase the
provision for the 2002 period.
In addition, the $551,000 provision for the 2002 period reflects a
$65.5 million, or 29.2%, increase in the loan portfolio between December 31,
2001 and June 30, 2002, which includes a $5.7 million, or 41.5%, increase in
non-residential mortgage loans. Furthermore, during the second quarter the
institution acquired approximately $13.7 million of indirect auto loans from a
local financial institution. The loans acquired consisted of $9.9 million of
performing loans, $2.9 million of loans past due one to twenty-nine days and
$867,000 of loans past due thirty to fifty-nine days. These credits were
acquired at different price levels to provide us an estimated rate of return
given the level of risk inherent with these types of credits. Consequently, a
higher loan loss reserve percentage has been established on these purchased
loans.
Our allowance for loan losses stood at $1.9 million at June 30, 2002
compared to $1.3 million at June 30, 2001. Management allocates the allowance to
various categories based on its classified assets, historical loan loss
experience, and its assessment of the risk characteristics of each loan category
and the relative balances at month end of each loan category. The allocation did
not change materially from June 30, 2002 to June 30, 2001.
Other Income. Other income, which is primarily composed of deposit
account fees, ATM fees, loan fees and service charges, decreased by $73,000 to
$885,000 for the six months ended June 30, 2002 from $958,000 the same period in
2001. The decrease was primarily due to a $169,000 decrease in commission fees
from Synergy Financial Group, Inc.'s wholly-owned subsidiary, Synergy Financial
Services, Inc., due to lower commissions earned from securities and insurance
sales. The decrease in commission fees was offset by an increase in gain on
sales of mortgages of $60,000 and settlement gains of $74,000 from the sale of
the credit card portfolio recognized in the quarter ended June 30, 2002. There
was also a $6,000 loss on the sale of a mortgage-backed security held as
available for sale in the 2002 period as compared to a $6,000 gain on the sale
of a mortgage-backed security held as available for sale in the 2001 period.
Operating Expenses. Operating expenses increased to $5.4 million for
the six months ended June 30, 2002, an $824,000 increase compared to the same
period in 2001. The increase resulted mostly from higher operating expenses
associated with two additional branch offices opened in the first half of 2002
and record volume of loan originations during the period.
8
Historically, we have had a high level of operating expense because of
the large number of branch offices relative to our asset size. At June 30, 2002,
Synergy Bank operated six on-site branch offices located on the corporate
premises of its former credit union sponsor. Although we do not incur rent
expense for these facilities, higher personnel costs are needed to operate these
facilities along with our independent branch offices and main office.
We also expect increased expenses in the future as a result of the
establishment of the employee stock ownership plan, stock benefit plans, and
directors' retirement plan, as well as increased costs associated with being a
public company, such as periodic reporting, annual meeting materials, retention
of a transfer agent and professional fees.
Furthermore, we intend to expand our branch office network, and
expenses related to such expansion will impact earnings in future periods.
Income Tax Expense. Income tax expense increased by $345,000, or 135%,
during the six months ended June 30, 2002 as compared to the same period in
2001, reflecting higher income for the 2002 period.
Synergy Financial Group, Inc. and its subsidiaries file New Jersey
income tax returns and are subject to a state income tax that is calculated
based on federal taxable income, subject to certain adjustments. In July 2002,
New Jersey eliminated the 3% tax rate formerly applicable to thrift institutions
located in New Jersey, and such institutions are now subject to the 9% tax rate
applicable to New Jersey corporations. Such change is retroactive to January 1,
2002. The net effect of the retroactive tax increase on Synergy Financial Group,
Inc. is not material, however, the increased tax rate will have an effect on
future tax periods.
Regulatory Capital Requirements
The Bank is subject to federal regulations that impose certain minimum
capital requirements. Quantitative measures, established by regulation to ensure
capital adequacy, require the Bank to maintain amounts and ratios of tangible
and core capital to adjusted total assets and of total risk-basked capital to
risk- weighted assets. On June 30, 2002, the Bank was in compliance with all of
its regulatory capital requirements.
9
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
------------------
The Company and its subsidiaries, from time to time, may be a party to
routine litigation, which arises in the normal course of business, such as
claims to enforce liens, condemnation proceedings on properties in which Synergy
Bank, the wholly-owned subsidiary of the Company, holds security interests,
claims involving the making and servicing of real property loans, and other
issues incident to its business. There were no lawsuits pending or known to be
contemplated at June 30, 2002 that would have a material effect on its
operations or income.
Item 2. Changes in Securities and Use of Proceeds.
------------------------------------------
None.
Item 3. Defaults Upon Senior Securities.
--------------------------------
None.
Item 4. Submission of Matters to a Vote of Security-Holders.
---------------------------------------------------
None.
Item 5. Other Information.
------------------
On September 17, 2002, the Company completed a minority stock offering
and issuance of 43.5% of its outstanding common stock. A total of 1,454,750
shares were sold, at $10.00 per share, to eligible depositors of Synergy Bank in
a subscription offering. The majority of shares continue to be owned by Synergy,
MHC, the Company's mutual holding company parent, which owned 100% of the
outstanding stock of the Company prior to the minority offering. The Company's
stock commenced trading on the OTC Electronic Bulletin Board under the symbol
"SYNF" on September 18, 2002.
Item 6. Exhibits and Reports on Form 8-K.
--------------------------------
a) Exhibits:
99.1 Certification pursuant to 18 U.S.C.ss.1350, as adopted pursuant
to ss.906 of the Sarbanes-Oxley Act of 2002
b) Reports on Form 8-K:
None.
10
SIGNATURES
Pursuant to the requirements of Sections 13 or 15(d) 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.
SYNERGY FINANCIAL GROUP, INC.
Date: September 23, 2002 By:/s/John S. Fiore
----------------------------------------
John S. Fiore
President and Chief Executive Officer
(Duly Authorized Representative)
Pursuant to the requirement of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
/s/John S. Fiore /s/Ralph A. Fernandez
- ------------------------------------- -------------------------------------------
John S. Fiore Ralph A. Fernandez
President and Chief Executive Officer Vice President and Chief Financial Officer
(Principal Executive Officer) (Principal Financial and Accounting Officer)
Date: September 23, 2002 Date: September 23, 2002
11
SECTION 302 CERTIFICATION
I, John S. Fiore, President and Chief Executive Officer of Synergy
Financial Group, Inc., certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Synergy Financial
Group, Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
have:
(a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared;
(b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the "Evaluation Date"); and
(c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons
performing the equivalent functions):
(a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
(b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
Date: September 23, 2002 /s/John S. Fiore
--------------------------------------
John S. Fiore
President and Chief Executive Officer
SECTION 302 CERTIFICATION
I, Ralph A. Fernandez, Vice President and Chief Financial Officer of
Synergy Financial Group, Inc., certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Synergy Financial
Group, Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
(a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
(b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
(c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
(a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
(b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Date: September 23, 2002 /s/Ralph A. Fernandez
--------------------------------------------
Ralph A. Fernandez
Vice President and Chief Financial Officer