SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(MARK ONE) FORM 10-Q
X QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period ended June 30, 1999
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the Transition Period from _________to_________
Commission File Number 33-76644
COMMUNITYCORP
(Exact name of registrant as specified in its charter)
South Carolina 57-1019001
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification No.)
1100 N. Jefferies Boulevard
Walterboro, SC 29488
(Address of principal executive
offices, including zip code)
(843) 549-2265
(Registrant's telephone number, including area code)
------------------------------------------------
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
YES [X] NO [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the date of this filing.
300,000 shares of common stock, $5.00 par value
PAGE 1 OF 16
EXHIBIT INDEX ON PAGE 2
<PAGE>
COMMUNITYCORP
INDEX
<TABLE>
<CAPTION>
PART I. Financial Information Page No.
- ------- --------------------- --------
<S> <C> <C>
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets - June 30, 1999 and
December 31, 1998............................................................3
Condensed Consolidated Statements of Income - Six months ended June 30,
1999 and 1998 and Three months ended June 30, 1999 and 1998..................4
Condensed Consolidated Statement of Shareholders' Equity - Six months
ended June 30, 1999..........................................................5
Condensed Consolidated Statements of Cash Flows - Six months ended June
30, 1999 and 1998............................................................6
Notes to Condensed Consolidated Financial Statements.........................7
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.............................................................8-13
PART II. Other Information
Item 4. Submission of Matters to a Vote of Security Holders.........................14
Item 6. Exhibits and Reports on Form 8-K.........................................14-16
(a) Exhibits.............................................................14-16
(b) Reports on Form 8-K..................................................14-16
</TABLE>
2
<PAGE>
COMMUNITYCORP
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1999 1998
------------- -------------
<S> <C> <C>
ASSETS:
Cash and cash equivalents:
Cash and due from banks $ 2,633,374 $ 3,864,460
Federal funds sold & repurchase agreements 11,120,000 15,610,000
------------- -------------
13,753,374 19,474,460
Securities available-for-sale 17,230,314 10,743,854
Securities held-to-maturity (estimated market value
of $4,827,239 and $5,259,426 at June 30, 1999
and December 31, 1998, respectively) 4,896,858 5,192,632
Loans receivable 55,014,541 51,879,654
Less allowance for loan losses (994,112) (929,482)
------------- -------------
Loans, net 54,020,429 50,950,172
Accrued interest receivable 881,273 790,130
Premises, furniture & equipment, net 1,846,429 1,905,761
Other assets 555,650 445,961
------------- -------------
Total assets $ 93,184,327 $ 89,502,970
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY:
Liabilities:
Deposits:
Non-interest bearing $ 10,336,473 $ 8,532,818
Interest bearing 72,988,509 71,815,951
------------- -------------
83,324,982 80,348,769
Short-term borrowings 810,000 410,000
Accrued interest payable 478,460 498,256
Other liabilities 132,110 76,367
------------- -------------
Total liabilities 84,745,552 81,333,392
------------- -------------
SHAREHOLDERS' EQUITY:
Preferred stock, $5 par value, 3,000,000 shares authorized
and unissued - -
Common stock, $5 par value, 3,000,000 shares
authorized, 300,000 shares issued and outstanding 1,500,000 1,500,000
Capital surplus 1,731,708 1,731,708
Accumulated other comprehensive income (202,676) 39,620
Retained earnings 5,437,154 4,925,661
Treasury stock (1,543 shares in 1999 and 1,543 shares in
1998) (27,411) (27,411)
------------- -------------
Total shareholders' equity 8,438,775 8,169,578
------------- -------------
Total liabilities and shareholders' equity $ 93,184,327 $ 89,502,970
============= =============
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE>
COMMUNITYCORP
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
June 30, June 30,
---------------------------- ----------------------------
1999 1998 1999 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Interest income:
Loans, including fees $ 2,523,554 $ 2,088,097 $ 1,284,329 $ 1,080,477
Securities 482,252 425,342 261,686 207,556
Other interest income 338,403 163,415 159,693 97,185
------------- ------------- ------------- -------------
Total 3,344,209 2,676,854 1,705,708 1,385,218
------------- ------------- ------------- -------------
Interest expense:
Deposit accounts 1,556,500 1,216,667 776,776 628,115
Other interest expense 10,731 10,302 5,865 4,866
------------- ------------- ------------- -------------
1,567,231 1,226,969 782,641 632,981
------------- ------------- ------------- -------------
Net interest income 1,776,978 1,449,885 923,067 752,237
Provision for loan losses 180,000 80,000 85,000 50,000
------------- ------------- ------------- -------------
Net interest income after
provision for loan losses 1,596,978 1,369,885 838,067 702,237
------------- ------------- ------------- -------------
Other operating income:
Service charges 197,539 141,414 105,167 73,867
Other income 40,464 17,364 15,941 5,012
------------- ------------- ------------- -------------
Total 238,003 158,778 121,108 78,879
------------- ------------- ------------- -------------
Other operating expenses:
Salaries and benefits 429,570 401,389 218,776 200,504
Net occupancy expense 60,345 58,968 33,369 28,652
Equipment expense 119,136 112,106 61,435 54,494
Other operating expenses 277,610 255,060 147,815 132,411
------------- ------------- ------------- -------------
Total 886,661 827,523 461,395 416,061
------------- ------------- ------------- -------------
Income before taxes 948,320 701,140 497,780 365,055
Income tax provision 317,444 227,540 169,386 116,040
------------- ------------- ------------- -------------
Net income 630,876 473,600 328,394 249,015
============= ============= ============= =============
Other comprehensive income,
net of tax:
Unrealized gains (losses)
on securities
during the period (242,296) 3,134 (179,056) 2,012
------------- ------------- ------------- -------------
Other comprehensive income (242,296) 3,134 (179,056) 2,012
------------- ------------- ------------- -------------
Comprehensive income $ 388,580 $ 476,734 $ 149,338 $ 251,027
============= ============= ============= =============
Earnings per share:
Weighted average common
shares outstanding 298,457 298,660 298,457 298,674
============= ============= ============= =============
Net income per common share $ 2.11 $ 1.59 $ 1.10 $ .83
============= ============= ============= =============
</TABLE>
See notes to condensed consolidated financial statements.
4
<PAGE>
COMMUNITYCORP
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
for the six months ended June 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
Accumulated
Common Stock Other Total
---------------------- Capital Comprehensive Retained Treasury Shareholders'
Shares Amount Surplus Income Earnings Stock Equity
------- ----------- ---------- --------- ---------- -------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance,
December 31, 1998 300,000 $ 1,500,000 $1,731,708 $ 39,620 $4,925,661 $(27,411) $ 8,169,578
Cash dividends declared
$0.40 per share (119,383) (119,383)
Other comprehensive
income (242,296) (242,296)
Net income
for the period 630,876 630,876
------- ----------- ---------- --------- ---------- -------- -----------
Balance,
June 30, 1999 300,000 $ 1,500,000 $1,731,708 $(202,676) $5,437,154 $(27,411) $ 8,438,775
======= =========== ========== ========= ========== ======== ===========
</TABLE>
See notes to condensed consolidated financial statements.
5
<PAGE>
COMMUNITYCORP
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------------------
1999 1998
------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 630,876 $ 473,600
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 91,315 93,425
Provision for possible loan losses 180,000 80,000
Amortization less accretion on investments 261 (4,219)
Amortization of deferred loan costs 37,860 13,433
Gain on sale of premises and equipment (18,500) -
(Increase) decrease in interest receivable (91,143) 14,706
Increase (decrease) in interest payable (19,796) 28,724
(Increase) decrease in other assets 17,249 (84,609)
Increase (decrease) in other liabilities 55,743 77,579
------------- -------------
Net cash provided by operating activities 883,865 692,639
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net increase in loans to customers (3,288,117) (4,966,856)
Purchases of securities available-for-sale (8,408,787) (2,299,349)
Maturities of securities available-for-sale 1,725,998 3,077,957
Purchases of securities held-to-maturity (725,000) (409,567)
Maturities of securities held-to-maturity 847,608 2,212,809
Proceeds from disposal of premises and equipment 18,500 1,426
Purchases of premises and equipment (31,983) (73,657)
------------- --------------
Net cash used by investing activities (9,861,781) (2,457,237)
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposits accounts 2,976,213 7,533,725
Increase (decrease) in short-term borrowings 400,000 (110,000)
Sale (purchase) of treasury stock - 1,000
Dividends paid (119,383) (92,509)
------------- -------------
Net cash provided by financing activities 3,256,830 7,332,216
------------- -------------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (5,721,086) 5,567,618
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 19,474,460 5,732,260
------------- -------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 13,753,374 $ 11,299,878
============= =============
Cash paid during the period for:
Income taxes $ 313,200 $ 254,800
Interest $ 1,587,027 $ 1,198,245
</TABLE>
See notes to condensed consolidated financial statements.
6
<PAGE>
COMMUNITYCORP
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1 - Basis of Presentation
The accompanying consolidated financial statements have been prepared in
accordance with the requirements for interim financial statements and,
accordingly, they are condensed and omit disclosures which would substantially
duplicate those contained in the most recent annual report to shareholders. The
financial statements as of June 30, 1999 and for the interim periods ended June
30, 1999 and 1998 are unaudited and, in the opinion of management, include all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation. The financial information as of December 31, 1998 has been
derived from the audited financial statements as of that date. For further
information, refer to the financial statements and the notes included in
Communitycorp's 1998 Annual Report.
Note 2 - Comprehensive Income
The following table sets forth the amounts of other comprehensive income
included in equity along with the related tax effect for the six months ended
June 30, 1999 and 1998 and for the three months ended June 30, 1999 and 1998:
<TABLE>
<CAPTION>
Pre-tax (Expense) Net of tax
For the Six Months Ended June 30, 1999: Amount Benefit Amount
------------- ------------- -----------
<S> <C> <C> <C> <C>
Net unrealized gains (losses) on securities
available for sale arising in 1999 $ (369,233) $ 126,937 $ (242,296)
------------- ------------- -----------
Other comprehensive income $ (369,233) $ 126,937 $ (242,296)
============= ============= ===========
Pre-tax (Expense) Net of tax
For the Six Months Ended June 30, 1998: Amount Benefit Amount
------------- ------------- -----------
Net unrealized gains (losses) on securities
available for sale arising in 1998 $ 4,790 $ (1,656) $ 3,134
------------- ------------- -----------
Other comprehensive income $ 4,790 $ (1,656) $ 3,134
============= ============= ===========
Pre-tax (Expense) Net of tax
For the Three Months Ended June 30, 1999: Amount Benefit Amount
------------- ------------- -----------
Net unrealized gains (losses) on securities
available for sale arising in 1999 $ (273,368) $ 94,312 $ (179,056)
------------- ------------- -----------
Other comprehensive income $ (273,368) $ 94,312 $ (179,056)
============= ============= ===========
7
<PAGE>
COMMUNITYCORP
Note 2 - Comprehensive Income -- continued
Pre-tax (Expense) Net of tax
For the Three Months Ended June 30, 1998: Amount Benefit Amount
------------- ------------- -----------
Net unrealized gains (losses) on securities
available for sale arising in 1998 $ 3,072 $ (1,060) $ 2,012
------------- ------------- -----------
Other comprehensive income $ 3,072 $ (1,060) $ 2,012
============= ============= ===========
</TABLE>
Accumulated other comprehensive income consists solely of the unrealized gain on
securities available for sale, net of the deferred tax effects.
Item 2. Management's Discussion and Analysis of Financial Condition
The following is a discussion of the Company's financial condition as of June
30, 1999 compared to December 31, 1998, and the results of operations for the
three and six months ended June 30, 1999 compared to the three and six months
ended June 30, 1998. These comments should be read in conjunction with the
Company's condensed consolidated financial statements and accompanying footnotes
appearing in this report.
Results of Operations
Net Interest Income
For the six months ended June 30, 1999, net interest income increased $327,093
or 22.56% over the same period in 1998. The net interest margin realized on
earning assets decreased from 4.57% for the six months ended June 30, 1998 to
4.17% for the same period in 1999. Yields on earning assets increased slightly
as a result of growth in loans while the increase in certificates of deposit
resulted in higher yields on interest bearing liabilities. The interest rate
spread decreased by 22 basis points from 3.79% at June 30, 1998 to 3.57% at June
30, 1999.
Net interest income increased from $752,237 for the quarter ending June 30, 1998
to $923,067 for the quarter ending June 30, 1999. This represents an increase of
$170,830 or 22.71%. The net interest margin realized on earning assets decreased
from 4.65% for the quarter ended June 30, 1998 to 4.24% for the quarter ended
June 30, 1999. The interest rate spread also decreased by 36 basis points from
3.99% at June 30, 1998 to 3.63% at June 30, 1999.
Provision and Allowance for Loan Losses
The provision for loan losses is the charge to operating earnings that
management feels is necessary to maintain the allowance for possible loan losses
at an adequate level. For the six months ended June 30, 1999, the provision
charged to expense was $180,000. The increase of $100,000 from the comparable
period in 1998 is a result of management's efforts to increase the allowance for
loan losses to match the $8,760,515 growth in the loan portfolio since June 30,
1998 and to cover the charge offs of a number of small unsecured loans. For the
quarter ended June 30, 1999 and 1998, the provision charged to expense was
$85,000 and $50,000, respectively. Based on present information, management
believes the allowance for loan losses is adequate at June 30, 1999 to meet
presently known and inherent risks in the loan portfolio.
8
<PAGE>
COMMUNITYCORP
Item 2. Management's Discussion and Analysis -- continued
Non-Interest Income
Non-interest income during the six months ended June 30, 1999 was $238,003, an
increase of $79,225 or 49.90% from the comparable period in 1998. The increase
is primarily a result of an increase in service charges from $141,414 at June
30, 1998 to $197,539 at June 30, 1999. Overdraft and NSF fees increased by
$44,804 to $138,279 at June 30, 1999. This change is a result of the increase in
deposit accounts over the two periods. Deposits at June 30, 1998 were
$64,476,813 compared to $83,324,982 at June 30, 1999.
For the quarter ended June 30, 1999, non-interest income increased $42,229 or
53.54% over the same period in 1998. This increase is primarily due to service
charges which increased $31,300 or 42.37% from the quarter ended June 30, 1998
to the quarter ended June 30, 1999.
Non-Interest Expense
Total non-interest expense for the six months ended June 30, 1999 was $886,661
or 7.15% higher than the six months ended June 30, 1998. Salaries and employee
benefits increased from $401,389 at June 30, 1998 to $429,570 for the six months
ended June 30, 1999.
For the quarter ended June 30, 1999, non-interest expense increased $45,334 or
10.90% over the same period in 1998. The largest increase between the quarter
ended June 30, 1999 and the quarter ended June 30, 1998 was in salaries and
benefits which increased $18,272 or 9.11%.
Income Taxes
The income tax provision for the six months ended June 30, 1999 was $317,444 as
compared to $227,540 for the same period in 1998. The effective tax rates were
33.47% and 32.45% at June 30, 1999 and 1998, respectively. The effective tax
rates were 34.03% and 31.79% for the quarter ended June 30, 1999 and June 30,
1998, respectively.
Net Income
The combination of the above factors resulted in net income for the six months
ended June 30, 1999 of $630,876 as compared to $473,600 for the same period in
1998. This represents an increase of $157,276 or 33.21% over the same period in
1998. For the quarter ended June 30, 1999, net income was $328,394 as compared
to $249,015 for the quarter ended June 30, 1998. This represents an increase of
$79,379 or 31.88% from the quarter ending June 30, 1999 as compared to the
quarter ending June 30, 1998.
Assets and Liabilities
During the first six months of 1999, total assets increased $3,681,357 or 4.11%
when compared to December 31, 1998. The primary reason for the increase in
assets was due to an increase in securities available for sale of $6,486,460
during the first six months of 1999, whereas cash and cash equivalents decreased
$5,721,086. In addition, loans increased $3,134,887 or 6.04% from December 31,
1998 to June 30, 1999. Total deposits increased $2,976,213 or 3.70% from the
December 31, 1998 amount of $80,348,769. Within the deposit area, savings
increased $4,058,931 or 29.56% and interest bearing demand deposits decreased
$3,617,231 or 18.20% during the first six months of 1999. Additionally,
non-interest bearing deposits and certificates of deposit increased $1,803,655
and $730,858 respectively over the amounts reported at December 31, 1998.
9
<PAGE>
COMMUNITYCORP
Item 2. Management's Discussion and Analysis -- continued
Investment Securities
Investment securities increased from $15,936,486 at December 31, 1998 to
$22,127,172 at June 30, 1999. Securities available-for-sale increased $6,486,460
or 60.37% from December 31, 1998 to June 30, 1999.
Loans
The demand for loans continued to increase in the Walterboro marketplace during
the first six months of 1999. Net loans increased $3,070,257 or 6.03% during the
period. Balances within the major loans receivable categories as of June 30,
1999 and December 31, 1998 are as follows:
June 30, December 31,
1999 1998
------------- --------------
Commercial and industrial $ 37,338,287 $ 34,733,571
Real estate 7,388,436 7,813,792
Consumer 9,845,559 8,864,037
Agricultural 148,500 161,719
Other, net 293,759 306,535
------------- --------------
$ 55,014,541 $ 51,879,654
============= ==============
Risk Elements in the Loan Portfolio
The following is a summary of risk elements in the loan portfolio:
June 30,
------------------------------
1999 1998
------------- --------------
Loans: Nonaccrual loans $ 763,682 $ 605,974
Accruing loans more than 90
days past due $ 4,000 $ 7,419
Loans identified by the internal review
mechanism:
Criticized $ 174,172 $ 202,615
Classified $ 836,221 $ 717,696
10
<PAGE>
COMMUNITYCORP
Item 2. Management's Discussion and Analysis -- continued
Risk Elements in the Loan Portfolio -- continued
Activity in the Allowance for Loan Losses is as follows:
June 30,
1999 1998
------------- --------------
Balance, January 1, $ 929,482 $ 743,260
Provision for loan losses for the period 180,000 80,000
Net loans (charged off) recovered for
the period (115,370) (36,511)
------------- --------------
Balance, end of period $ 994,112 $ 786,749
============= ==============
Gross loans outstanding, end of period $ 55,014,541 $ 46,254,026
Allowance for Loan Losses to
loans outstanding 1.81% 1.70%
Deposits
At June 30, 1999, total deposits increased by $2,976,213 or 3.70% from December
31, 1998. Expressed in percentages, non-interest bearing deposits increased
21.14% and interest bearing deposits increased 1.63%.
Balances within the major deposit categories as of June 30, 1999 and December
31, 1998 are as follows:
June 30, December 31,
1999 1998
------------- --------------
Non-interest bearing demand deposits $ 10,336,473 $ 8,532,818
Interest bearing demand deposits 16,255,623 19,872,854
Savings deposits 17,790,032 13,731,101
Certificates of deposit 38,942,854 38,211,996
------------- --------------
$ 83,324,982 $ 80,348,769
============= ==============
Liquidity
Liquidity needs are met by the Company through scheduled maturities of loans and
investments on the asset side and through pricing policies on the liability side
for interest-bearing deposit accounts. The level of liquidity is measured by the
loan-to-total borrowed funds ratio which was at 65.39% at June 30, 1999 and
64.24% at December 31, 1998.
Securities available-for-sale which totaled $17,230,314 at June 30, 1999, serve
as a ready source of liquidity. The Company also has lines of credit available
with correspondent banks to purchase federal funds for periods from one to seven
days. At June 30, 1999, unused lines of credit totaled $2,500,000.
11
<PAGE>
COMMUNITYCORP
Item 2. Management's Discussion and Analysis -- continued
Capital Resources
Total shareholders' equity increased from $8,169,578 at December 31, 1998 to
$8,438,775 at June 30, 1999. The increase of $269,197 is attributable to
earnings for the period of $630,876 with dividends paid out of $119,383 and a
decrease of $242,296 in the fair value of securities available-for-sale.
Bank holding companies, such as the Company, and their banking subsidiaries are
required by banking regulators to meet certain minimum levels of capital
adequacy which are expressed in the form of certain ratios. Capital is separated
into Tier I capital (essentially common shareholders' equity less intangible
assets) and Tier II capital (essentially the allowance for loan losses limited
to 1.25% of risk-weighted assets). The first two ratios, which are based on the
degree of credit risk in the Company's assets, provide the weighting of assets
based on assigned risk factors and include off-balance sheet items such as loan
commitments and stand-by letters of credit. The ratio of Tier I capital to
risk-weighted assets must be at least 4.0% and the ratio of total capital (Tier
I capital plus Tier 2 capital) to risk-weighted assets must be at least 8.0%.
The capital leverage ratio supplements the risk-based capital guidelines. Banks
and bank holding companies are required to maintain a minimum ratio of Tier I
capital to adjusted quarterly average total assets of 3.0%.
The following table summarizes the Company's risk-based capital at June 30,
1999:
Shareholders' equity $ 8,641,451
Less: intangibles (13,434)
-------------
Tier I capital 8,628,017
Plus: allowance for loan losses (1) 768,649
-------------
Total capital $ 9,396,666
=============
Risk-weighted assets $ 61,491,907
=============
Risk based capital ratios
Tier I 14.03%
Total capital 15.28%
Leverage ratio 9.29%
(1) limited to 1.25% of risk-weighted assets
Regulatory Matters
The management of the Company is not aware of any current recommendations by
regulatory authorities which, if they were to be implemented, would have a
material effect on liquidity, capital resources, or operations.
Year 2000
Like many financial institutions, the Bank relies upon computers for the daily
conduct of its business and for information systems processing. There is concern
among industry experts that on January 1, 2000 computers will be unable to
"read" the new year, which may result in widespread computer malfunctions. While
the Bank believes that it has available resources and has adopted a plan to
address Year 2000 compliance, it is still dependent to a certain degree on other
third party vendors. The Bank acquired a new data processing system in early
1997 which the Bank believes is Year 2000 compliant. Testing for this new system
was completed as of March 31, 1999. All phases of the testing were considered to
be successful. The Bank has incurred approximately $15,000 in expenses to
upgrade its computer systems to become Year 2000 compliant. Any other costs
associated with upgrading are not expected to be material.
12
<PAGE>
COMMUNITYCORP
Item 2. Management's Discussion and Analysis -- continued
Year 2000 -- continued
The Bank anticipates that the costs to upgrade other ancillary systems will not
materially differ from normal costs incurred during prior years to upgrade and
maintain its computer systems. The Bank has completed an evaluation of all its
internal systems and software and the network connections it maintains, and it
may incur only minor additional costs. The Bank is seeking assurances about the
Year 2000 compliance with respect to the other third party hardware and software
systems it uses, and the Bank believes that its internal systems and software
and the network connections it maintains will be adequately programmed to
address the Year 2000 issue. The Bank has completed testing all ancillary
systems, such as telephone systems and security devices, as of March 31, 1999.
There can be no assurances that all hardware and software that the Bank uses
will be Year 2000 compliant, and the Bank cannot predict with any certainty the
costs it will incur to respond to any Year 2000 issues. Factors which may affect
the amount of these costs include the Bank's inability to control third party
modification plans, the Bank's ability to identify and correct all relevant
computer codes, the availability and cost of engaging personnel trained in
solving Year 2000 issues, and other similar uncertainties.
Further, the business of many of the Bank's customers may be negatively affected
by the Year 2000 issue, and any financial difficulties incurred by the Bank's
customers in solving Year 2000 issues could negatively affect those customers'
ability to repay any loans which the Bank may have extended. Therefore, even if
the Bank does not incur significant direct costs in connection with responding
to the Year 2000 issue, there can be no assurance that the failure or delay of
the Bank's customers or other third parties in addressing the Year 2000 issue or
the costs involved in such process will not have a material adverse effect on
the Bank's business, financial condition, or results of operations.
The Bank has developed a Contingency Plan (Plan) to ensure its ability to
continue as a functioning entity after January 1, 2000. The Plan includes
remediation contingency planning and business resumption contingency planning.
The remediation contingency plans are designed to ensure that responsible
personnel, vendors and service providers adhere to the Bank's Year 2000 plans
and objectives. The business resumption contingency plans are designed to
provide assurance that mission-critical functions will continue in the event
that systems or applications fail as a result of year 2000 problems.
13
<PAGE>
COMMUNITYCORP
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
On April 27, 1999, the Company held its Annual Meeting of Shareholders for the
purpose of (a) electing three directors for three-year terms, and (b) ratifying
the appointment of Tourville, Simpson & Henderson, L.L.P., as the Company's
independent auditors for the fiscal year ending December 31, 1999.
The nominees for director received the number of affirmative votes of
shareholders required for such nominee's election in accordance with the Bylaws
of the Company with 218,930 shareholders voting for the nominees out of a total
300,000 outstanding shareholders. There were 600 abstention votes and no votes
against the election of the directors. Tourville, Simpson & Henderson, L.L.P.
also received the requisite number of affirmative votes required for approval
pursuant to the Bylaws of the Company. Of the 300,000 outstanding shareholders
of the Company, 219,580 shareholders voted for their selection as independent
auditors. There were no abstention or no votes against their selection as
auditors.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27. Financial Data Schedule
(b) Reports on Form 8-K - No reports on Form 8-K were filed during the quarter
ended June 30, 1999.
Items 1, 2, 3 and 5 are not applicable.
14
<PAGE>
COMMUNITYCORP
PART II - OTHER INFORMATION
SIGNATURE
Pursuant to the requirements 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.
COMMUNITYCORP
By:
------------------------------------
W. Roger Crook
President & Chief Executive Officer
Date: By:
------------------------------------
Gwen P. Bunton
Chief Financial Officer
15
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<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 2,633,374
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<FED-FUNDS-SOLD> 11,120,000
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<INVESTMENTS-HELD-FOR-SALE> 17,230,314
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<ALLOWANCE> 994,112
<TOTAL-ASSETS> 93,184,327
<DEPOSITS> 83,324,982
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0
0
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