**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, DC 20549**

 

**FORM10-QSB**

 

**ý****Quarterly report under Section13 or 15 (d) of the Securities Exchange Act of 1934**

** **

**For the quarterly period ended    June 30, 2005**

 

**o****Transition report under Section13 or 15 (d) of the Exchange Act**

** **

**For thetransition period from                 to                 **

 

**CommissionFile Number  000-51112**

 

**NSBHOLDINGS, INC.**

(Exact Name ofSmall Business Issuer as Specified in Its Charter)

 
| **GEORGIA**                      | ** ** | **000-51112** | ** ** | **20-2118147**       |
|----------------------------------|------------|---------------|------------|----------------------|
| (State or Other  Jurisdiction of |       | Commission    |       | (I.R.S. Employer     |
| Incorporation or  Organization)  |       | File No.      |       | Identification  No.) |

 

###### **4077 Forsyth Road**

###### **Macon, Georgia 31210**

(Address ofPrincipal Executive Offices)

 

**(478)745-7720**

(Issuer’sTelephone Number, Including Area Code)

 

###### **Not Applicable**

(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 12, 13 or 15(d) of theExchange Act during the past 12 months (or for such shorter period that theregistrant was required to file such reports), and (2) has been subject to suchfiling requirements for the past 90 days.

 

Yes  ý      No  o

 

**APPLICABLEONLY TO CORPORATE ISSUERS**

 

State the number ofshares outstanding of each of the issuer’s classes of common equity, as of thelatest practicable date:Common Stock $5 par value, 1,736,054 shares outstanding at June 30, 2005

 

Transitional SmallBusiness Disclosure Format (check one):

 

Yes  o      No  ý

 

 

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**NSB HOLDINGS, INC.**

 

INDEX

 
| PART I:                                                                 | FINANCIAL INFORMATION                                                                                                    |   |
|-------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------|--------|
| ITEM 1.                                                                 | FINANCIAL STATEMENTS                                                                                                     |   |
|                                                                    |                                                                                                                     |   |
| The following financial  statements are provided for NSB Holdings, Inc. |                                                                                                                     |
|                                                                    |                                                                                                                     |   |
|                                                                    | Consolidated Balance Sheets (unaudited) – June 30, 2005 and December 31, 2004.                                      |   |
|                                                                    |                                                                                                                     |   |
|                                                                    | Consolidated Statements of Income  (unaudited) – For the Three Months and Six Months Ended June 30, 2005 and  2004. |   |
|                                                                    |                                                                                                                     |   |
|                                                                    | Consolidated Statements of  Cash Flows (unaudited) – For the Six Months Ended June 30, 2005 and 2004.               |   |
|                                                                    |                                                                                                                     |   |
|                                                                    | Notes to Consolidated Financial Statements  (unaudited)                                                                  |   |
|                                                                    |                                                                                                                     |   |
| ITEM 2.                                                                 | Management’s Discussion and Analysis of  Financial Condition and Results of Operations                              |   |
|                                                                    |                                                                                                                     |   |
| ITEM 3.                                                                 | Controls and Procedures                                                                                                  |   |
|                                                                    |                                                                                                                     |   |
| PART II:                                                                | OTHER INFORMATION                                                                                                        |   |

 

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**NSB HOLDINGS, INC.**

**ConsolidatedBalance Sheets**

**June 30, 2005****and****December 31, 2004**

**(Unaudited)**

 
| ** **                                                                                                    | ** ** | **As of**         | ** **  |
|---------------------------------------------------------------------------------------------------------------|------------|-------------------|-------------|
| ** **                                                                                                    | ** ** | **June 30,** | ** **  | **December 31,** | ** ** |
| ** **                                                                                                    | ** ** | **2005**          | ** **  | **2004** | ** ** |
| **Assets**                                                                                                    |       |              |        |   |   |
|                                                                                                          |       |              |        |   |   |
| Cash and due  from banks                                                                                      |       | $                 | 9,393,836   |   | $ | 5,275,001 |   |
| Federal funds  sold                                                                                           |       | 4,277,000         |        | 4,556,000 |   |
| Total cash and  cash equivalents                                                                              |       | 13,670,836        |        | 9,831,001 |   |
| Securities available  for sale, at fair value                                                                 |       | 27,159,789        |        | 19,135,653 |   |
| Federal Home  Loan Bank stock, restricted, at cost                                                            |       | 1,255,700         |        | 1,186,600 |   |
| Loans held for  sale                                                                                          |       | 826,628           |        | 890,529 |   |
| Loans, net of  unearned income                                                                                |       | 284,354,083       |        | 228,282,068 |   |
| Less - allowance  for loan losses                                                                             |       | (3,645,300        | )           | (2,800,000 | ) |
| Loans, net                                                                                                    |       | 280,708,783       |        | 225,482,068 |   |
| Bank premises  and equipment, net                                                                             |       | 5,744,587         |        | 4,608,777 |   |
| Accrued interest  receivable                                                                                  |       | 1,722,022         |        | 1,157,596 |   |
| Other assets                                                                                                  |       | 5,760,341         |        | 1,024,796 |   |
| **Total  Assets**                                                                                             |       | $                 | 336,848,686 |   | $ | 263,317,020 |   |
| ** **                                                                                                    |       |              |        |   |   |
| **Liabilities  and Shareholders’ Equity**                                                                |       |              |        |   |   |
| Deposits:                                                                                                     |       |              |        |   |   |
| Non-interest  bearing                                                                                         |       | $                 | 19,705,046  |   | $ | 16,947,999 |   |
| Interest bearing                                                                                              |       | 265,751,307       |        | 204,300,185 |   |
| Total deposits                                                                                                |       | 285,456,353       |        | 221,248,184 |   |
| Federal funds purchased                                                                                       |       | —            |        | — |   |
| FHLB borrowings                                                                                               |       | 16,200,000        |        | 19,200,000 |   |
| Trust Preferred  Securities                                                                                   |       | 10,310,000        |        | — |   |
| Accrued interest  payable                                                                                     |       | 1,111,656         |        | 663,695 |   |
| Accrued expenses  and other liabilities                                                                       |       | 363,252           |        | 239,393 |   |
| Total  liabilities                                                                                            |       | 27,984,908        |        | 20,103,088 |   |
| Shareholders’  Equity:                                                                                   |       |              |        |   |   |
| Common stock, $5  par value, authorized 10,000,000 shares, issued and outstanding 1,736,054 in  2005 and 2004 |       | 8,680,270         |        | 8,680,270 |   |
| Preferred stock,  authorized 2,000,000 shares, outstanding -0- shares                                         |       | —            |        | — |   |
| Paid-in capital  surplus                                                                                      |       | 12,047,356        |        | 12,047,356 |   |
| Retained  earnings                                                                                            |       | 2,846,197         |        | 1,353,621 |   |
| Accumulated  other comprehensive income (loss)                                                                |       | (166,398          | )           | (115,499 | ) |
| Total  shareholders’ equity                                                                              |       | 23,407,425        |        | 21,965,748 |   |
| **Total  Liabilities and Shareholders’ Equity**                                                          |       | $                 | 336,848,686 |   | $ | 263,317,020 |   |

 

2

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**NSB HOLDINGS, INC.**

**ConsolidatedStatements of Income**

**For the Three Months and Six Months Ended June 30****, 2005****and 2004**

**(Unaudited)**

 
| ** **                                            | ** ** | **Three Months Ended** | ** ** | **Six Months Ended June 30,** | ** ** |
|-------------------------------------------------------|------------|------------------------|------------|------------------------------------|------------|
| ** **                                            | ** ** | **June 30,**      | ** ** | **June 30,**                  | ** ** |
| ** **                                            | ** ** | **2005**               | ** ** | **2004**                           | ** ** | **2005** | ** ** | **2004** | ** ** |
| **Interest  and Dividend Income:**                    |       |                   |       |                               |       |   |   |   |   |
| Interest and  fees on loans                           |       | $                      | 4,732,648  |                               | $          | 2,127,895 |   | $ | 8,649,342 |   | $ | 4,109,013 |   |
| Interest on  securities:                              |       |                   |       | —                             |       |   |   |   |   |
| Taxable income                                        |       | 184,322                |       | 96,495                             |       | 340,111 |   | 199,518 |   |
| Non-taxable  income                                   |       | 30,274                 |       | 6,158                              |       | 50,016 |   | 6,158 |   |
| Income on  federal funds sold                         |       | 28,877                 |       | 2,552                              |       | 50,058 |   | 11,469 |   |
| Other interest  and dividend income                   |       | 14,943                 |       | 3,960                              |       | 24,427 |   | 7,326 |   |
| Total interest  and dividend income                   |       | 4,991,064              |       | 2,237,060                          |       | 9,113,954 |   | 4,333,484 |   |
| **Interest  Expense:**                                |       |                   |       |                               |       |   |   |   |   |
| Deposits                                              |       | 1,684,387              |       | 626,873                            |       | 2,983,003 |   | 1,268,640 |   |
| FHLB borrowings                                       |       | 136,839                |       | 35,499                             |       | 243,715 |   | 60,999 |   |
| Federal funds  purchased                              |       | 9,358                  |       | 2,049                              |       | 18,531 |   | 2,400 |   |
| Other interest  expense                               |       | 94,543                 |       | —                             |       | 94,543 |   | — |   |
| Total interest  expense                               |       | 1,925,127              |       | 664,421                            |       | 3,339,792 |   | 1,332,039 |   |
|                                                  |       |                   |       |                               |       |   |   |   |   |
| Net interest  income before provision for loan losses |       | 3,065,937              |       | 1,572,639                          |       | 5,774,162 |   | 3,001,445 |   |
| Less - provision  for loan losses                     |       | 345,000                |       | 187,000                            |       | 840,000 |   | 359,500 |   |
| Net interest  income after provision for loan losses  |       | 2,720,937              |       | 1,385,639                          |       | 4,934,162 |   | 2,641,945 |   |
| **Noninterest  Income:**                              |       |                   |       |                               |       |   |   |   |   |
| Service charges  on deposit accounts                  |       | 100,694                |       | 65,896                             |       | 186,086 |   | 111,151 |   |
| Other service  charges, commissions and fees          |       | 18,275                 |       | 9,731                              |       | 33,173 |   | 17,338 |   |
| Gain on sales /  calls of investment securities       |       | —                 |       | —                             |       | — |   | — |   |
| Other income                                          |       | 110,205                |       | 13,558                             |       | 188,127 |   | 23,542 |   |
| Total  noninterest income                             |       | 229,174                |       | 89,185                             |       | 407,386 |   | 152,031 |   |
| **Noninterest  Expense:**                             |       |                   |       |                               |       |   |   |   |   |
| Salaries                                              |       | 593,908                |       | 331,098                            |       | 1,106,521 |   | 652,337 |   |
| Employee  benefits                                    |       | 193,020                |       | 112,610                            |       | 434,608 |   | 221,209 |   |
| Net occupancy  expense                                |       | 95,018                 |       | 59,789                             |       | 164,876 |   | 109,272 |   |
| Equipment rental  and depreciation of equipment       |       | 66,322                 |       | 48,096                             |       | 128,713 |   | 87,163 |   |
| Loss on sales of  assets                              |       | —                 |       | —                             |       | — |   | — |   |
| Other expenses                                        |       | 633,100                |       | 372,057                            |       | 1,157,631 |   | 658,945 |   |
| Total  noninterest expense                            |       | 1,581,368              |       | 923,650                            |       | 2,992,349 |   | 1,728,926 |   |
|                                                  |       |                   |       |                               |       |   |   |   |   |
| **Income  Before Income Taxes**                       |       | 1,368,743              |       | 551,174                            |       | 2,349,199 |   | 1,065,050 |   |
| Provision for  income taxes                           |       | 498,847                |       | 203,996                            |       | 856,623 |   | 393,904 |   |
| **Net  Income**                                       |       | $                      | 869,896    |                               | $          | 347,178 |   | $ | 1,492,576 |   | $ | 671,146 |   |
| **Earnings  per share:**                              |       |                   |       |                               |       |   |   |   |   |
| Basic                                                 |       | $                      | 0.50       |                               | $          | 0.24 |   | $ | 0.86 |   | $ | 0.48 |   |
| Diluted                                               |       | $                      | 0.47       |                               | $          | 0.22 |   | $ | 0.80 |   | $ | 0.45 |   |

 

3

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**NSB HOLDINGS, INC.**

**ConsolidatedStatements of Cash Flows**

**For the Six Months Ended****June 30, 2005****and 2004**

**(Unaudited)**

 
| ** **                                                                         | ** ** | **Six Months Ended June 30,** | ** ** |
|------------------------------------------------------------------------------------|------------|------------------------------------|------------|
| ** **                                                                         | ** ** | **2005**                           | ** ** | **2004** | ** ** |
| **Cash  Flows from Operating Activities:**                                         |       |                               |       |   |   |
| Net income                                                                         |       | $                                  | 1,492,576  |   | $ | 671,146 |   |
| Adjustments to  reconcile net income to net cash provided by operating activities: |       |                               |       |   |   |
| Provision for  loan losses                                                         |       | 840,000                            |       | 359,500 |   |
| Depreciation                                                                       |       | 157,866                            |       | 107,319 |   |
| Net amortization  of securities                                                    |       | 29,388                             |       | 46,934 |   |
| Loss on sales of  assets                                                           |       | —                             |       | — |   |
| Gain on sales /  calls of investment securities                                    |       | —                             |       | — |   |
| Loans held for  sale                                                               |       | 63,901                             |       | — |   |
| Changes in  accrued income and other assets                                        |       | (5,299,971                         | )          | (274,840 | ) |
| Changes in  accrued expenses and other liabilities                                 |       | 598,041                            |       | 191,652 |   |
| Net cash  provided by operating activities                                         |       | (2,118,199                         | )          | 1,101,711 |   |
| **Cash  Flows from Investing Activities:**                                         |       |                               |       |   |   |
| Net change in  loans to customers                                                  |       | (56,066,715                        | )          | (32,369,778 | ) |
| Purchase of  available for sale securities                                         |       | (6,915,946                         | )          | (4,827,401 | ) |
| Sales of  securities available for sale                                            |       | —                             |       | 497,500 |   |
| Proceeds from  maturities/calls of available for sale securities                   |       | 500,000                            |       | 2,397,341 |   |
| Purchase of  mortgage backed securities                                            |       | (2,511,751                         | )          | — |   |
| Proceeds from  paydowns on mortgage-backed securities                              |       | 797,053                            |       | — |   |
| Purchase of debt  securities                                                       |       | —                             |       | — |   |
| Purchase of FHLB  stock                                                            |       | (69,100                            | )          | (325,000 | ) |
| Property and  equipment expenditures                                               |       | (1,293,676                         | )          | (1,271,781 | ) |
| Proceeds from  sales of assets                                                     |       | —                             |       | — |   |
| Net cash used in  investing activities                                             |       | (65,560,135                        | )          | (35,899,119 | ) |
| **Cash  Flows from Financing Activities:**                                         |       |                               |       |   |   |
| Net change in  deposits                                                            |       | 64,208,169                         |       | 17,824,968 |   |
| Net increase  (decrease) in federal funds purchased                                |       | —                             |       | — |   |
| FHLB borrowings                                                                    |       | (3,000,000                         | )          | 6,500,000 |   |
| Proceeds from  Trust preferred securities                                          |       | 10,310,000                         |       | — |   |
| Proceeds from  issuance of common stock                                            |       | —                             |       | 4,862,025 |   |
| Cash dividends  paid                                                               |       | —                             |       | — |   |
| Net cash  provided by financing activities                                         |       | 71,518,169                         |       | 29,186,993 |   |
| **Net  Increase (Decrease) in Cash and Cash Equivalents**                          |       | 3,839,835                          |       | (5,610,415 | ) |
| **Cash  and Cash Equivalents, Beginning of Year**                                  |       | 9,831,001                          |       | 10,908,820 |   |
| **Cash  and Cash Equivalents, End of Quarter**                                     |       | $                                  | 13,670,836 |   | $ | 5,298,405 |   |

 

4

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**NSB HOLDINGS, INC.**

**Notes to Consolidated Financial Statements**

**(Unaudited)**

 

# ***(1)****  **Basis ofPresentation*

 

NewSouthern Bank began operation on December 10, 2001 and operates as a statechartered bank in Macon, Georgia. In November 2000, the organizers of the Bankbegan the process of establishing the Bank. From that time until commencementof operations, the proposed Bank was a development stage enterprise. The Bankchanged its name to Atlantic Southern Bank effective July 11, 2005. The Bankwill continue to operate under the name of New Southern Bank, a Division ofAtlantic Southern Bank, in a seven-county area in Central Georgia. The Bankwill operate under the name of Atlantic Southern Bank outside the seven-countyarea in Central Georgia. The Bank provides a variety of financial services toindividuals and small businesses through its offices in Middle Georgia. Itsprimary deposit products are checking, savings and term certificate accountsand its primary lending products are commercial real estate loans.

 

Atthe April 27, 2004 Annual Meeting of Shareholders, the shareholders approvedthe proposal to reorganize the Bank into a holding company structure by virtueof a share exchange whereby each share of Bank common stock issued andoutstanding was to be converted into and exchanged for the right to receive oneshare of NSB Holdings, Inc. common stock. NSB Holdings, Inc. is a companyorganized by the Bank for the purpose of serving as its holding company. Theshare exchange was consummated on January 3, 2005, and NSB Holdings, Inc.effective as of that date became the holding company for New Southern Bank. NewSouthern Bank common stock is NSB Holdings’ only significant asset. No changesin the management or business strategy of the Bank have occurred or will occuras a result of the holding company reorganization.

 

The accompanyingunaudited financial statements have been prepared in accordance with generallyaccepted accounting principles for interim financial information, and with theinstructions to Form 10-QSB and Item 310 (b) of Regulation S-B of theSecurities and Exchange Commission. Accordingly, they do not include all of theinformation and footnotes required by generally accepted accounting principlesfor complete financial statements. In the opinion of management, alladjustments (consisting of normal recurring accruals) considered necessary fora fair presentation have been included. Operating results for the period ended June30, 2005, are not necessarilyindicative of the results that may be expected for the year ended December 31, 2005. For furtherinformation refer to the financial statements and footnotes thereto included inthe Bank’s Annual Report on Form 10-KSB for the year ended December 31, 2004, which was filed with theFDIC.

 

***(2)******  ******Newand Pending Pronouncements***

 

Aspermitted by SFAS No. 123, *Accounting for Stock-BasedCompensation,*the Company currently accounts for share-basedpayments to employees using APB opinion No. 25’s intrinsic value method and, assuch, generally recognizes nocompensation expense for employee stock options. Theimpact of adoption of SFAS No. 123(R) cannot be predicted at this time becauseit will depend on levels of share-based payments granted in the future. However,had the Company adopted SFAS No. 123(R) in prior periods, the impact of thatstandard would not have materially affected the Company’s consolidatedfinancial statements. SFAS No. 123(R) also requires the benefits of taxdeductions in excess of recognized compensation cost to be reported as afinancing cash flow, rather than as an operating cash flow as required undercurrent literature. This requirement will reduce net operating cash flows andincrease net financing cash flows in the periods after adoption. While the companycannot estimate what those amounts will be in the future (because they dependon, among other things, when employees exercise stock options), the amount ofoperating cash flows recognized in prior periods for such excess tax deductionswere insignificant. SFAS No. 123(R) is effective as of the beginning of thefirst interim or annual reporting period that begins after December 15, 2005. OnApril 14, 2005, the Securities and Exchange Commission (the “SEC”) announced anew rule that amends the compliance dates for SFAS No. 123(R). The SEC’s newrule allows companies to implement SFAS No. 123(R) at the beginning of theirnext fiscal year, instead of the next reporting period, that begins afterDecember 15, 2005. SFAS No. 123(R) is effective for the Company beginning inthe first quarter of 2006.

 

There are no other recentaccounting pronouncements that have had, or are expected to have, a materialeffect on the Company’s financial statements.

 

5

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***(3)******  ******OtherComprehensive Income***

 

During the six monthsended June 30, 2005, the Companyhad unrealized holding gains on investment securities which were reported ascomprehensive income. An analysis of accumulated other comprehensive incomesince December 31, 2004 follows:

 
| Accumulated  other comprehensive income (loss) at December 31, 2004 |   | $        | (115,499 | ) |
|--------------------------------------------------------------------------|--------|----------|----------|---|
| Other  comprehensive income, net of tax:                                 |   |     |     |
| Gross change in  unrealized loss on securities availible for sale        |   | (68,205  | )        |
| Deferred tax  effect                                                     |   | 17,306   |     |
| Net change                                                               |   | (166,398 | )        |
| Less:  Reclassification adjustment for gains realized in net income      |   | —   |     |
| Accumulated  other comprehensive income (loss) at June 30, 2005     |   | $        | (166,398 | ) |

 

# ***(4)****  **Earnings PerShare*

 

Basic earnings per share are basedon the weighted average number of common shares outstanding during the periodwhile the effects of potential shares outstanding during the period areincluded in diluted earnings per share. The reconciliation of the amounts usedin the computation of both “basic earnings per share” and “diluted earnings pershare” for each period is presented as follows:

 

**For the Six Months Ended June 30, 2005**

 
| ** **                                  | ** ** | ** **   | ** ** | **Average** | ** ** | ** **    | ** ** |
|---------------------------------------------|------------|--------------|------------|-------------|------------|---------------|------------|
| ** **                                  | ** ** | **Net**      | ** ** | **Common**  | ** ** | **Per Share** | ** ** |
| ** **                                  | ** ** | **Earnings** | ** ** | **Shares**  | ** ** | **Amount**    | ** ** |
| Basic earnings  per share                   |       | $            | 1,492,576  |        | 1,736,054  |          | 0.86       |   |
| Effect of  dilutive common stock issuances: |       |         |       |        |       |          |       |
| Stock options                               |       | —       |       | 127,231     |       | (0.06         | )          |
| Diluted earnings  per share                 |       | $            | 1,492,576  |        | 1,863,285  |          | 0.80       |   |

 

**For the Six Months EndedJune 30, 2004**

 
| ** **                                  | ** ** | ** **   | ** ** | **Average** | ** ** | ** **    | ** ** |
|---------------------------------------------|------------|--------------|------------|-------------|------------|---------------|------------|
| ** **                                  | ** ** | **Net**      | ** ** | **Common**  | ** ** | **Per Share** | ** ** |
| ** **                                  | ** ** | **Earnings** | ** ** | **Shares**  | ** ** | **Amount**    | ** ** |
| Basic earnings  per share                   |       | $            | 671,146    |        | 1,398,416  |          | 0.48       |   |
| Effect of  dilutive common stock issuances: |       |         |       |        |       |          |       |
| Stock options                               |       | —       |       | 104,413     |       | (0.03         | )          |
| Diluted earnings  per share                 |       | $            | 671,146    |        | 1,502,829  |          | 0.45       |   |

 

# ***(5)****  **TrustPreferred Securities*

 

On April 28, 2005, NSBStatutory Trust 1 (“NST”), a wholly owned subsidiary of the Company closed apooled private offering of 10,000 Trust Preferred Securities with a liquidationamount of $1,000 per security. The proceeds of the offering were loaned to theCompany in exchange for junior subordinated debentures with terms similar tothe Trust Preferred Securities. The sole assets of NST are the juniorsubordinated debentures of the Company and payments thereunder. The juniorsubordinated debentures and the back-up obligations, in the aggregate,constitute a full and unconditional guarantee by the Company of the obligationsof NST under the Trust Preferred Securities. Distributions on the TrustPreferred Securities are payable semi-annually at the

 

6

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annual rate of threemonth LIBOR plus 205 basis points and are included in interest expense in theconsolidated financial statements. These securities are considered Tier 1capital (with certain limitations applicable) under current regulatoryguidelines. As of June 30, 2005, the outstanding principal balance of the TrustPreferred Securities was $10,000,000.

 

The junior subordinateddebentures are subject to mandatory redemption, in whole or in part, uponrepayment of the Trust Preferred Securities at maturity or their earlierredemption at the liquidation amount. Subject to the Company having receivedprior approval of the Federal Reserve, if then required, the Trust PreferredSecurities are redeemable prior to the maturity date of June 15, 2035 at theoption of the Company on or after March, 2009 at par, on or after June, 2005 ata premium, or upon the occurrence of specific events defined within the trustindenture. The Company has the option to defer distributions on the Trust PreferredSecurities from time to time for a period not to exceed 20 consecutive quarterlyperiods.

 

# ***(6)****  **SalaryContinuation Plan*

 

During the second quarterof 2005, the Bank established a Salary Continuation Agreement for its Presidentand certain executive officers whereby benefits are payable at age fifty to sixty-sevenfor a period of twelve to fifteen years after retirement. The present value ofthe estimated liability is being accrued over the expected remaining years ofemployment. The Bank expensed approximately $8,680 for the six month periodended June 30, 2005 under this plan.

 

The Bank is the owner andbeneficiary of life insurance policies purchased during the second quarter of2005 on the lives of the President and certain key officers. The Bank intendsto use these policies to fund the Salary Continuation Plan described above. Thecarrying value of the policies was approximately $4,018,797 at June 30, 2005.The Bank accrued income of approximately $18,797 for the six month period endedJune 30, 2005 for the increase in the cash surrender value of these policies.

 

7

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**NSB HOLDINGS, INC.**

**Item 2. Management’s Discussion and Analysis ofFinancial Condition and Results of Operations**

**For Each of the Six Months in thePeriod Ended**

**June 30, 2005 and 2004**

 

Thefollowing discussion of financial condition as of June 30, 2005 compared to December31, 2004, and the results of operations for the six months ended June 30, 2005 compared to the sixmonths ended June 30, 2004should be read in conjunction with the condensed financial statements andaccompanying footnotes appearing in this report. Please note that the Companyacquired its only asset, 100% of the common stock of New Southern Bank, as ofJanuary 3, 2005. All information for 2004 is information regarding New SouthernBank.

##### *** ***

##### ***Advisory Note Regarding Forward-Looking Statements***

 

The statements contained in this report on Form 10-QSB that arenot historical facts are forward-looking statements subject to the safe harborcreated by the Private Securities Litigation Reform Act of 1995. We cautionreaders of this report that such forward-looking statements involve known andunknown risks, uncertainties and other factors which may cause the actualresults, performance or achievements of us to be materially different fromthose expressed or implied by such forward-looking statements. Although webelieve that our expectations of future performance is based on reasonableassumptions within the bounds of our knowledge of our business and operations,there can be no assurance that actual results will not differ materially fromour expectations.

 

Factors which could cause actual results to differ fromexpectations include, among other things:

 

•      the challenges, costs and complications associated with thecontinued development of our branches;

•      the potential that loan charge-offs may exceed the allowance forloan losses or that such allowance will be increased as a result of factorsbeyond the control of us;

•      our dependence on senior management;

•      competition from existing financial institutions operating inour market areas as well as the entry into such areas of new competitors withgreater resources, broader branch networks and more comprehensive services;

•      adverse conditions in the stock market, the public debt market,and other capital markets (including changes in interest rate conditions);

•      changes in deposit rates, the net interest margin, and fundingsources;

•      inflation, interest rate, market, and monetary fluctuations;

•      risks inherent in making loans including repayment risks andvalue of collateral;

•      the strength of the United States economy in general and thestrength of the local economies in which we conduct operations may be differentthan expected resulting in, among other things, a deterioration in creditquality or a reduced demand for credit, including the resultant effect on ourloan portfolio and allowance for loan losses;

•      fluctuations in consumer spending and saving habits;

•      the demand for our products and services;

•      technological changes;

•      the challenges and uncertainties in the implementation of ourexpansion and development strategies;

•      the ability to increase market share;

•      the adequacy of expense projections and estimates of impairmentloss;

•      the impact of changes in accounting policies by the Securitiesand Exchange Commission;

•      unanticipated regulatory or judicial proceedings;

•      the potential negative effects of future legislation affectingfinancial institutions (including without limitation laws concerning taxes,banking, securities, and insurance);

•      the effects of, and changes in, trade, monetary and fiscalpolicies and laws, including interest rate policies of the Board of Governorsof the Federal Reserve System;

•      the timely development and acceptance of products and services,including products and services offered through alternative delivery channelssuch as the Internet;

•      the impact on our business, as well as on the risks set forthabove, of various domestic or international military or terrorist activities orconflicts;

•      other factors described in this report and in other reports wehave filed with the Securities and Exchange Commission; and

•      Our success at managing the risks involved in the foregoing.

 

8

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#### **Forward-lookingstatements speak only as of the date on which they are made. We undertake noobligation to update any forward-looking statement to reflect events orcircumstances after the date on which the statement is made to reflect theoccurrence of unanticipated events.**

 

**CRITICALACCOUNTING POLICIES**

 

Allowancefor Loan Losses - A loan is considered impaired, based on current informationand events, if it is probable that the Company will be unable to collect thescheduled payments of principal or interest when due according to thecontractual terms of the loan agreement. Uncollateralized loans are measuredfor impairment based on the present value of expected future cash flowsdiscounted at the historical effective interest rate, while allcollateral-dependent loans are measured for impairment based on the fair valueof the collateral. The Bank uses several factors in determining if a loan isimpaired. The internal asset classification procedures include a thoroughreview of significant loans and lending relationships and include theaccumulation of related data. This data includes loan payment status, borrowers’financial data, and borrowers’ operating factors such as cash flows, operatingincome or loss, etc.

 

Theallowance for loan losses is established through charges to earnings in theform of a provision for loan losses. Increases and decreases in the allowancedue to changes in the measurement of the impaired loans are included in theprovision for loan losses. Loans continue to be classified as impaired unlessthey are brought fully current and the collection of scheduled interest andprincipal is considered probable. When a loan or portion of a loan isdetermined to be uncollectible, the portion deemed uncollectible is chargedagainst the allowance and subsequent recoveries, if any, are credited to theallowance.

 

Management’speriodic evaluation of the adequacy of the allowance also considers impairedloans and takes into consideration the Bank’s past loan loss experience, knownand inherent risks in the portfolio, adverse situations that may affect theborrowers’ ability to repay, estimated value of any underlying collateral, andcurrent economic conditions. While management believes that it has establishedthe allowance in accordance with generally accepted accounting principles andhas taken into account the views of its regulators and the current economicenvironment, there can be no assurance that in the future the Bank’s regulatorsor its economic environment will not require further increases in theallowance.

 

### **Financial Condition**

 

Thecomposition of assets and liabilities for the Company is as follows:

 
| ** **                     | ** ** | **June 30,** | ** ** | **December 31,** | ** ** | ** **        | ** ** | ** **   | ** ** |
|--------------------------------|------------|-------------------|------------|-----------------------|------------|-------------------|------------|--------------|------------|
| ** **                     | ** ** | **2005**          | ** ** | **2004**              | ** ** | **$ Change** | ** ** | **% Change** | ** ** |
| **Assets:**                    |       |              |       |                  |       |              |       |         |       |
| Cash and due  from banks       |       | $                 | 9,393,836  |                  | $          | 5,275,001         |       | $            | 4,118,835  |   | 78.08 | % |
| Federal funds  sold            |       | 4,277,000         |       | 4,556,000             |       | (279,000          | )          | -6.12        | %          |
| Securities  available for sale |       | 27,159,789        |       | 19,135,653            |       | 8,024,136         |       | 41.93        | %          |
| Loans                          |       | 284,354,083       |       | 228,282,068           |       | 56,072,015        |       | 24.56        | %          |
| Total assets                   |       | 336,848,686       |       | 263,317,020           |       | 73,531,666        |       | 27.93        | %          |
| **Liabilities:**               |       |              |       |                  |       |              |       |         |       |
| Deposits                       |       | 285,456,353       |       | 221,248,184           |       | 64,208,169        |       | 29.02        | %          |
| FHLB borrowings                |       | 16,200,000        |       | 19,200,000            |       | (3,000,000        | )          | -15.63       | %          |
|                           |       |              |       |                  |       |              |       |         |       |
| Loan to Deposit  Ratio         |       | 99.61             | %          | 103.18                | %          |              |       |         |       |
|                                |            |                   |            |                       |            |                   |            |              |            |  |  |  |

 

Themost significant change in the composition of assets was the increase in loansdue to continued growth of the Company. The most significant change in thecomposition of liabilities was the increase in deposits to fund loan growth.

 

9

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### **Asset Quality**

 

The compositionof nonperforming assets which includes nonaccruing loans, repossessedcollateral and loans for which payments are more than 90 days past due is shownbelow.

 
| ** **                                                                                | ** ** | **June 30,** | ** ** | **December 31,** | ** ** |
|-------------------------------------------------------------------------------------------|------------|-------------------|------------|-----------------------|------------|
| ** **                                                                                | ** ** | **2005**          | ** ** | **2004**              | ** ** |
| Loans on  nonaccrual                                                                      |       | $                 | 356,174    |                  | $          | 137,314 |   |
| Loans greater  than 90 days past due                                                      |       | —            |       | —                |       |
| Other real  estate owned                                                                  |       | —            |       | —                |       |
| Other  repossessed collateral                                                             |       | —            |       | —                |       |
|                                                                                      |       |              |       |                  |       |
| Total  nonperforming assets                                                               |       | $                 | 356,174    |                  | $          | 137,314 |   |
|                                                                                      |       |              |       |                  |       |
| Total  nonperforming assets as a percentage of total loans (gross) and other real  estate |       | 0.13              | %          | 0.06                  | %          |

 

The increase inloans on a nonaccrual represents one loan totaling $242,000 which wastransferred by management to a non-accrual status during the year. At thistime, management does not expect any material losses due to the collateralposition and specific reserves related to these credits. There were no relatedparty loans, which were considered nonperforming at June 30, 2005.

 

Asummary of changes in the allowance for loan losses of the Company is asfollows:

 
| ** **                          | ** ** | ** ** | ** ** | **% of Loans** | ** ** |
|-------------------------------------|------------|------------|------------|----------------|------------|
| Balance at December 31, 2004   | ** ** | $          | 2,800,000  |           | 1.23       | % |
|                                |       |       |       |           |       |
| Add: Provision  for loan losses     |       | 840,000    |       |           |       |
|                                |       | 3,640,000  |       |           |       |
| Less: Net  (charge-offs) recoveries |       | 5,300      |       |           |       |
|                                |       |       |       |           |       |
| Balance at  June 30, 2005      |       | $          | 3,645,300  |           | 1.28       | % |

 

Theloan portfolio is reviewed periodically to evaluate the outstanding loans andto measure the performance of the portfolio and the adequacy of the allowancefor loan losses. This analysis includes a review of delinquency trends, actuallosses, and internal credit ratings. Management’s judgment as to the adequacyof the allowance is based upon a number of assumptions about future eventswhich it believes to be reasonable, but which may or may not be reasonable. However,because of the inherent uncertainty of assumptions made during the evaluationprocess, there can be no assurance that loan losses in future periods will notexceed the allowance for loan losses or that additional allocations to theallowance will not be required.

 

Managementtakes a number of factors into consideration when determining the additions tobe made to the loan loss allowance. As a new institution, the Bank does not yethave a sufficient history of portfolio performance on which to base additions. Accordingly,additions to the reserve are primarily based on maintaining a ratio of theallowance for loan losses to total loans in a range of 1.00% to 1.50%. Underthis methodology, charge-offs will increase the amount of additions to theallowance and recoveries will reduce additions.

 

Inaddition, management performs an on-going loan review process. All new loansare risk rated under loan policy guidelines. On a monthly basis, the compositerisk ratings are evaluated in a model that assesses the adequacy of the currentallowance for loan losses, and this evaluation is presented to the Board ofDirectors each month.   Large loans are reviewed periodically. Risk ratings may be changed if itappears that new loans may not have received the proper initial grading or, ifon existing loans, credit conditions have improved or worsened.

 

10

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Asthe Bank matures, the additions to the loan loss allowance will be based moreon historical performance, the detailed loan review and allowance adequacyevaluation.

 

TheBank’s policy is to place loans on non-accrual status when it appears that thecollection of principal and interest in accordance with the terms of the loanis doubtful. Any loan which becomes 90 days past due as to principal orinterest is automatically placed on non-accrual. Exceptions are allowed for90-day past due loans when such loans are well secured and in process ofcollection.

 

### **Results of Operations**

 

# ***General***

 

TheCompany’s results of operations are determined by its ability to effectivelymanage interest income and expense, to minimize loan and investment losses, togenerate noninterest income and to control noninterest expense. Since interestrates are determined by market forces and economic conditions beyond thecontrol of the Company, the ability to generate interest income is dependentupon the Bank’s ability to obtain an adequate spread between the rate earned onearning assets and the rate paid on interest-bearing liabilities.

 

# **Thefollowing table shows the significant components of Net Income:**

 
| ** **                     | ** ** | **Six Months Ended** | ** ** | ** ** | ** ** | ** **        | ** ** |
|--------------------------------|------------|----------------------|------------|------------|------------|-------------------|------------|
| ** **                     | ** ** | **June 30,**    | ** ** | ** ** | ** ** | ** **        | ** ** |
| ** **                     | ** ** | **2005**             | ** ** | **2004**   | ** ** | **$ Change** | ** ** | **% Change** | ** ** |
| Interest Income                |       | $                    | 9,113,954  |       | $          | 4,333,484         |       | $ | 4,780,470 |   | 110.31 | % |
| Interest Expense               |       | 3,339,792            |       | 1,332,039  |       | 2,007,753         |       | 150.73 | % |
| Net Interest  Income           |       | 5,774,162            |       | 3,001,445  |       | 2,772,717         |       | 92.38 | % |
| Provision for  Loan Losses     |       | 840,000              |       | 359,500    |       | 480,500           |       | 133.66 | % |
| Net Income                     |       | 1,492,576            |       | 671,146    |       | 821,430           |       | 122.39 | % |
| Net Income Per  Diluted Shares |       | $                    | 0.80       |       | $          | 0.45              |       | 0.35 |   | 77.78 | % |
|                                |            |                      |            |            |            |                   |            |  |  |  |  |  |

 

# **Theincreases in interest income and interest expense are primarily due to thecontinued growth in loans and deposits of the Bank. The increase in theprovision for loan losses** as comparedto the six month period ended June 30, 2004 is primarily related to thesignificant growth in our loan portfolio.

 

Compositionof other noninterest income is as follows:

 
| ** **                                      | ** ** | **Six Months Ended** | ** ** | ** ** | ** ** | ** **        | ** ** |
|-------------------------------------------------|------------|----------------------|------------|------------|------------|-------------------|------------|
| ** **                                      | ** ** | **June 30,**    | ** ** | ** ** | ** ** | ** **        | ** ** |
| ** **                                      | ** ** | **2005**             | ** ** | **2004**   | ** ** | **$ Change** | ** ** | **% Change** | ** ** |
| Service charges  on deposit accounts            |       | $                    | 186,086    |       | $          | 111,151           |       | $ | 74,935 |   | 67.42 | % |
| Other service  charges, commissions and fees    |       | 33,173               |       | 17,338     |       | 15,835            |       | 91.33 | % |
| Gain on sales /  calls of investment securities |       | —               |       | —     |       | —            |       | — |   |
| Other income                                    |       | 188,127              |       | 23,542     |       | 164,585           |       | 699.11 | % |
| Total  noninterest income                       |       | 407,386              |       | 152,031    |       | 255,355           |       | 167.96 | % |
|                                                 |            |                      |            |            |            |                   |            |  |  |  |  |  |

 

Servicecharges on deposit accounts are evaluated against service charges from otherbanks in the local market and against the Bank’s own cost structure inproviding the deposit services. This income should grow with the growth in theBank’s demand deposit account base. Other income consists primarily of incomefrom mortgage loan brokerage activity started in 2004.

 

11

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Compositionof other noninterest expense is as follows:

 
| ** **                                      | ** ** | **Six Months Ended** | ** ** | ** ** | ** ** | ** **        | ** ** |
|-------------------------------------------------|------------|----------------------|------------|------------|------------|-------------------|------------|
| ** **                                      | ** ** | **June 30,**    | ** ** | ** ** | ** ** | ** **        | ** ** |
| ** **                                      | ** ** | **2005**             | ** ** | **2004**   | ** ** | **$ Change** | ** ** | **% Change** | ** ** |
| Salaries                                        |       | $                    | 1,106,521  |       | $          | 652,337           |       | $ | 454,184 |   | 69.62 | % |
| Employee  benefits                              |       | 434,608              |       | 221,209    |       | 213,399           |       | 96.47 | % |
| Net occupancy  expense                          |       | 164,876              |       | 109,272    |       | 55,604            |       | 50.89 | % |
| Equipment rental  and depreciation of equipment |       | 128,713              |       | 87,163     |       | 41,550            |       | 47.67 | % |
| Loss on sales of  assets                        |       | —               |       | —     |       | —            |       | — |   |
| Other expenses                                  |       | 1,157,631            |       | 658,945    |       | 498,686           |       | 75.68 | % |
| Total  noninterest expense                      |       | 2,992,349            |       | 1,728,926  |       | 1,263,423         |       | 73.08 | % |
|                                                 |            |                      |            |            |            |                   |            |  |  |  |  |  |

 

Theincreases in noninterest expenses are primarily due to the growth of the bank. Themost significant increases in the second quarter of 2005 are increases insalaries and employee benefits. The increase in salaries and employees benefitsrepresents normal increases in salaries and an increase in the number ofemployees. At June 30, 2005, the number of full-time equivalent employees was 55compared to 31 at June 30, 2004. The increase in the number of full-timeequivalent employees is directly related to the growth of the bank and thehiring for two new branches.  Additionally,the bank relocated its Operations Department during the first quarter of 2005.The bank operates from five facilities as of June, 2005 compared to twofacilities as of June, 2004. The increases in other expenses are notattributable to any one particular item, but represent normal increases.

 

Othermajor expenses included in other expenses are as follows:

 
| ** **                    | ** ** | **Six Months Ended** | ** ** |
|-------------------------------|------------|----------------------|------------|
| ** **                    | ** ** | **June 30,**    | ** ** |
| ** **                    | ** ** | **2005**             | ** ** | **2004** | ** ** |
| Advertising                   |       | 96,449               |       | 77,453 |   |
| Brokerage fees                |       | 143,234              |       | 44,415 |   |
| Data processing               |       | 109,893              |       | 88,209 |   |
| Director and  committtee fees |       | 106,525              |       | 14,000 |   |

 

Theincrease in brokerage fees is due to the growth in total brokered deposits. Directorand committee fees increased significantly due to the fact that the bank beganpaying director and committee fees during June of 2004.

 

### **Liquidity**

 

TheBank’s internal and external liquidity resources are considered by managementto be adequate to handle expected growth and normal cash flow demands fromexisting deposits and loans.

 

TheBank’s liquid assets as a percentage of total deposits were as follows:

 
| ** **                                 | ** ** | **June 30,** | ** ** | **December 31,** | ** ** |
|--------------------------------------------|------------|-------------------|------------|-----------------------|------------|
| ** **                                 | ** ** | **2005**          | ** ** | **2004**              | ** ** |
| Liquid assets as  a percentage of deposits |       | 4.79              | %          | 4.44                  | %          |

 

TheBank’s available federal fund lines of credit with correspondent banks andadvances outstanding were as follows:

 
| ** **                               | ** ** | **June 30,** | ** ** | **December 31,** | ** ** |
|------------------------------------------|------------|-------------------|------------|-----------------------|------------|
| ** **                               | ** ** | **2005**          | ** ** | **2004**              | ** ** |
| Federal funds  purchased lines available |       | $                 | 17,450,000 |                  | $          | 12,750,000 |   |
| Federal funds  purchased outstanding     |       | —            |       | —                |       |
|                                          |            |                   |            |                       |            |  |  |

 

12

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The Bank had advances from the Federal Home Loan Bank(the “FHLB”) as follows:

 
| ** **                                                         | ** ** | **June 30, 2005** | ** ** |
|--------------------------------------------------------------------|------------|------------------------|------------|
| ** **                                                         | ** ** | **Due Date**           | ** ** | **Outstanding** | ** ** |
| Three month  Libor plus fifty-two basis points, current rate 3.52% |       | July 7, 2008      |       | $ | 6,000,000 |   |
| Three month  Libor minus fifty basis points, current rate 3.52%    |       | June 18, 2007     |       | $ | 5,000,000 |   |
| One month Libor  plus five basis points, current rate 3.31%        |       | October 20, 2006  |       | $ | 5,200,000 |   |
| Overnight funds  rate - 3.00%                                      |       |                   |       | $ | — |   |

 

Stock in the FHLB and a blanket lien on residential,multifamily and commercial loans with a carrying value of $33,255,097 securethe current advances. The Bank is required to maintain a minimum investment inFHLB stock of the lesser of 0.2% of total assets or $25,000,000, plus 4.5% oftotal advances while the advance agreement is in effect.

 
| ** **                    | ** ** | **June 30,** | ** ** | **December 31,** | ** ** |
|-------------------------------|------------|-------------------|------------|-----------------------|------------|
| ** **                    | ** ** | **2005**          | ** ** | **2004**              | ** ** |
| Federal Home  Loan Bank stock |       | $                 | 1,255,700  |                  | $          | 1,186,600 |   |
|                               |            |                   |            |                       |            |  |  |

 

Atleast monthly, management analyzes the level of off-balance sheet commitmentssuch as unfunded loan equivalents, loan repayments, maturity of investmentsecurities, liquid investment, and available fund lines in an attempt tominimize the possibility that a potential shortfall will exist.

 

### **Capital**

 

Thefollowing table summarizes the capital position of the Company:

 
| ** **                                         | ** ** | **June 30,** | ** ** | **December 31,** | ** ** | ** **        | ** ** | ** **   | ** ** |
|----------------------------------------------------|------------|-------------------|------------|-----------------------|------------|-------------------|------------|--------------|------------|
| ** **                                         | ** ** | **2005**          | ** ** | **2004**              | ** ** | **$ Change** | ** ** | **% Change** | ** ** |
| Total Capital -  Bank                              |       | $                 | 33,393,596 |                  | $          | 21,965,748        |       | $            | 11,427,848 |   | 52.03 | % |
| Total Capital -  Consolidated                      |       | $                 | 31,430,000 |                  | $          | 21,965,748        |       | $            | 9,464,252  |   | 43.09 | % |
|                                               |       |              |       |                  |       |              |       |         |       |
| Tier 1 Leverage  Ratio - Bank                      |       | 10.55             | %          | 8.91                  | %          | 1.64              | %          | 18.41        | %          |
| Tier 1 Leverage  Ratio - Consolidated              |       | 9.88              | %          | 8.91                  | %          | 0.97              | %          | 10.89        | %          |
|                                               |       |              |       |                  |       |              |       |         |       |
| Risk Weighted  Total Capital Ratio - Bank          |       | 10.88             | %          | 10.21                 | %          | 0.67              | %          | 6.56         | %          |
| Risk Weighted  Total Capital Ratio - Consolidated  |       | 10.18             | %          | 10.21                 | %          | -0.03             | %          | -0.29        | %          |
|                                               |       |              |       |                  |       |              |       |         |       |
| Tier 1 Risk  Weighted Capital Ratio - Bank         |       | 12.06             | %          | 9.06                  | %          | 3.00              | %          | 33.11        | %          |
| Tier 1 Risk  Weighted Capital Ratio - Consolidated |       | 11.36             | %          | 9.06                  | %          | 2.30              | %          | 25.39        | %          |

 

Thecapital of the Company exceeded all prescribed regulatory capital guidelines. Regulationsrequire that the most highly rated banks maintain a Tier 1 leverage ratio of 3%plus an additional cushion of at least 1 to 2 percentage points. Tier 1 capitalconsists of common shareholders’ equity, less certain intangibles. Regulationsrequire that the Bank maintain a minimum total risk weighted capital ratio of8%, with one-half of this amount, or 4%, made up of Tier I capital.

 

The increase in the Bank’s capital ratios is primarily due to the issuanceof $10,000,000 in Trust Preferred Securities during the second quarter of 2005.

 

13

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**NSB HOLDINGS, INC.**

**Item 3. Controls and Procedures**

**For the Six months Ended June 30,2005**

 

TheCompany’s management, including the Chief Executive Officer and Chief FinancialOfficer, supervised and participated in an evaluation of the effectiveness ofits disclosure controls and procedures (as defined in federal securities rules)as of the end of the period covered by this report. Based on, and as of thedate of, that evaluation, the Company’s Chief Executive Officer and ChiefFinancial Officer have concluded that the Company’s disclosure controls andprocedures were effective in accumulating and communicating information tomanagement, including the Chief Executive Officer and Chief Financial Officer,as appropriate to allow timely decisions regarding required disclosures of thatinformation under the Securities and Exchange Commission’s rules and forms andthat the Company’s disclosure controls and procedures are designed to ensurethat the information required to be disclosed in reports that are filed orsubmitted by the Company under the Securities Exchange Act is recorded,processed, summarized and reported within the time periods specified in theSecurities and Exchange Commission’s rules and forms.

#### ** **

#### **During the second quarter of 2005, there were nosignificant changes in the Company’s internal control over financial reporting or,to the Company’s knowledge, in other factors that could significantly affectthose internal controls subsequent to the date the Company carried out itsevaluation that have materially affected, or are reasonably likely tomaterially affect, the Company’s internal control over financial reporting, andthere have been no corrective actions with respect to significant deficienciesor material weaknesses.**

 

14

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**NSBHOLDINGS, INC.**

**Part II.Other Information**

**For the Sixmonths Ended June 30, 2005**

 

#### **PART II: OTHER INFORMATION:**

 

Item 1. Legal Proceedings

 

There are no materiallegal proceedings to which the Company is a party or of which their property isthe subject.

 

Item 2. Unregistered Sales of Equity Securitiesand Use of Proceeds

 

None

 

Item 3. Defaults Upon Senior Securities

 

Not Applicable

 

Item 4. Submission of Matters to a Voteof Security-Holders

 

There were no matterssubmitted to security holders for a vote during the three months ended June 30, 2005.

 

Item 5. Other Information

 

None

 

Item 6. Exhibits

 
| (a)    |   | Exhibits:                                                                                                                                           |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                |
| 31.1   |   | Certification of Chief  Executive Officer Pursuant to Rule 13a-14 under the Securities Exchange Act  of 1934, as amended                            |
|   |   |                                                                                                                                                |
| 31.2   |   | Certification of Chief  Financial Officer Pursuant to Rule 13a-14 under the Securities Exchange Act  of 1934, as amended                            |
|   |   |                                                                                                                                                |
| 32.1   |   | Certification of Chief Executive Officer pursuant to  18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the  Sarbanes-Oxley Act of 2002 |
|   |   |                                                                                                                                                |
| 32.2   |   | Certification of Chief Financial Officer pursuant to  18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the  Sarbanes-Oxley Act of 2002 |

 

**SIGNATURES**

 

In accordance with the requirements ofthe Securities Exchange Act, the registrant caused this report to be signed onits behalf by the undersigned, thereunto duly authorized.

 

**NSB HOLDINGS, INC.**

 

 
| /s/  Mark A. Stevens                  |   |
|---------------------------------------|--------|
|                                  |
| Mark A. Stevens                       |
| President and Chief Executive Officer |

 

 

Date: August 12, 2005

 

15

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