SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For Quarterly Period Ended September 30, 2000 Commission File No. 000-29640
COMMUNITY FIRST BANCORPORATION
--------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
South Carolina 58-2322486
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
3685 Blue Ridge Boulevard
WALHALLA, SOUTH CAROLINA 29691
--------------------------------------------------------------------------------
(Address of principal executive offices)
(864) 638-2105
--------------------------------------------------------------------------------
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and has
been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: Common Stock, no par or
stated value, 1,910,836 Shares Outstanding on October 31, 2000.
Transitional Small Business Format (Check one): Yes [ ] No [X]
<PAGE>
COMMUNITY FIRST BANCORPORATION
FORM 10-QSB
Index
Page
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheet ................................... 3
Consolidated Statement of Income ............................. 4
Consolidated Statement of Changes in Shareholders' Equity .... 5
Consolidated Statement of Cash Flows ......................... 6
Notes to Unaudited Consolidated Financial Statements ......... 7-8
Item 2. Management's Discussion and Analysis ......................... 9-12
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K ............................. 13
SIGNATURE ............................................................... 14
2
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. - Financial Statements
COMMUNITY FIRST BANCORPORATION
Consolidated Balance Sheet
<TABLE>
<CAPTION>
(Unaudited)
September 30, December 31,
2000 1999
----- ----
(Dollars in thousands)
Assets
<S> <C> <C>
Cash and due from banks ....................................................... $ 3,081 $ 4,555
Federal funds sold ............................................................ 3,820 12,410
Securities available-for-sale ................................................. 55,764 54,178
Other investments ............................................................. 386 382
Loans ......................................................................... 90,735 76,158
Allowance for loan losses ................................................. (1,016) (943)
--------- ---------
Loans - net ............................................................ 89,719 75,215
Premises and equipment - net .................................................. 4,400 4,263
Accrued interest receivable ................................................... 1,478 1,192
Other assets .................................................................. 1,497 1,388
--------- ---------
Total assets ........................................................... $ 160,145 $ 153,583
========= =========
Liabilities
Deposits
Noninterest bearing ....................................................... $ 19,687 $ 16,908
Interest bearing .......................................................... 125,591 121,710
--------- ---------
Total deposits ......................................................... 145,278 138,618
Accrued interest payable ...................................................... 1,376 1,180
Other liabilities ............................................................. 41 49
--------- ---------
Total liabilities ...................................................... 146,695 139,847
--------- ---------
Shareholders' equity
Common stock - no par value; 10,000,000 shares
authorized; issued and outstanding - 1,909,898
for 2000 and 2,002,699 for 1999 ........................................... 12,419 14,255
Retained earnings ............................................................. 2,404 1,110
Accumulated other comprehensive income ........................................ (1,373) (1,629)
--------- ---------
Total shareholders' equity ............................................. 13,450 13,736
--------- ---------
Total liabilities and shareholders' equity ............................. $ 160,145 $ 153,583
========= =========
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
3
<PAGE>
COMMUNITY FIRST BANCORPORATION
Consolidated Statement of Income
<TABLE>
<CAPTION>
(Unaudited)
Period Ended September 30,
--------------------------
Three Months Nine Months
------------ -----------
2000 1999 2000 1999
---- ---- ---- ----
(Dollars in thousands, except per share)
Interest income
<S> <C> <C> <C> <C>
Loans, including fees ..................................... $2,010 $1,596 $5,518 $4,692
Securities
Taxable ................................................. 889 833 2,671 2,187
Tax-exempt .............................................. 2 2 7 2
Other investments ......................................... 8 7 23 20
Federal funds sold ........................................ 59 238 590 798
------ ------ ------ ------
Total interest income ................................. 2,968 2,676 8,809 7,699
------ ------ ------ ------
Interest expense
Time deposits $100M and over .............................. 610 568 1,720 1,513
Other deposits ............................................ 1,105 904 3,275 2,750
------ ------ ------ ------
Total interest expense ................................ 1,715 1,472 4,995 4,263
------ ------ ------ ------
Net interest income ............................................ 1,253 1,204 3,814 3,436
Provision for loan losses ...................................... 70 78 252 173
------ ------ ------ ------
Net interest income after provision ............................ 1,183 1,126 3,562 3,263
------ ------ ------ ------
Other income
Service charges on deposit accounts ....................... 159 114 396 303
Credit life insurance commissions ......................... 16 10 48 27
Other income .............................................. 61 48 172 147
------ ------ ------ ------
Total other income .................................... 236 172 616 477
------ ------ ------ ------
Other expenses
Salaries and employee benefits ............................ 434 328 1,140 992
Net occupancy expense ..................................... 46 34 133 88
Furniture and equipment expense ........................... 67 55 194 168
Other expense ............................................. 241 206 700 602
------ ------ ------ ------
Total other expenses .................................. 788 623 2,167 1,850
------ ------ ------ ------
Income before income taxes ..................................... 631 675 2,011 1,890
Income tax expense ............................................. 218 249 717 678
------ ------ ------ ------
Net income ..................................................... $ 413 $ 426 $1,294 $1,212
====== ====== ====== ======
Per share*
Net income ................................................ $ 0.22 $ 0.21 $ 0.67 $ 0.61
Net income, assuming dilution ............................. 0.20 0.20 0.62 0.57
</TABLE>
------------------
* Per share information has been retroactively adjusted to reflect a 10% stock
dividend effective December 15, 1999.
See accompanying notes to unaudited consolidated financial statements.
4
<PAGE>
COMMUNITY FIRST BANCORPORATION
Consolidated Statement of Changes in Shareholders' Equity
<TABLE>
<CAPTION>
(Unaudited)
Common Stock
------------ Accumulated
Number of Retained Other Comprehensive
Shares Amount Earnings Income Total
------ ------ -------- ------ -----
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
Balance, January 1, 1999 ............................ 1,793,792 $ 10,569 $ 3,051 $ (17) $ 13,603
----------
Comprehensive income:
Net income ...................................... - - 1,212 - 1,212
Change in unrealized holding gains
and losses on available-for-sale
securities, net of income taxes ............... - - - (935) (935)
----------
Total comprehensive income ................ - - - - 277
----------
Exercise of employee stock options .................. 10,462 77 - - 77
Costs associated with new stock option plan ......... - (16) - - (16)
---------- ---------- ---------- ---------- ----------
Balance, September 30, 1999 ......................... 1,804,254 $ 10,630 $ 4,263 $ (952) $ 13,941
========== ========== ========== ========== ==========
Balance, January 1, 2000 ............................ 2,002,699 $ 14,255 $ 1,110 $ (1,629) $ 13,736
----------
Comprehensive income:
Net income ...................................... - - 1,294 - 1,294
Change in unrealized holding gains
and losses on available-for-sale
securities, net of income taxes ............... - - - 256 256
----------
Total comprehensive income .................. - - - - 1,550
----------
Repurchase and cancellation of common stock ......... (110,000) (1,900) - - (1,900)
Exercise of employee stock options .................. 17,199 64 - - 64
---------- ---------- ---------- ---------- ----------
Balance, September 30, 2000 ......................... 1,909,898 $ 12,419 $ 2,404 $ (1,373) $ 13,450
========== ========== ========== ========== ==========
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
5
<PAGE>
COMMUNITY FIRST BANCORPORATION
Consolidated Statement of Cash Flows
<TABLE>
<CAPTION>
(Unaudited)
Nine Months Ended
September
2000 1999
---- ----
(Dollars in thousands)
Operating Activities
<S> <C> <C>
Net income ............................................................................ $ 1,294 $ 1,212
Adjustments to reconcile net income to net
cash provided by operating activities
Provision for loan losses ...................................................... 252 173
Depreciation ................................................................... 170 123
Amortization of net loan fees and costs ........................................ 56 46
Securities accretion and premium amortization .................................. (5) (16)
Increase in interest receivable ................................................ (286) (470)
Increase in interest payable ................................................... 196 216
(Increase) decrease in prepaid expenses and other assets ....................... (93) 22
(Decrease) increase in other accrued expenses .................................. (8) 2
Disposals of premises and equipment ............................................ - 9
Gain on sale of other real estate .............................................. - (10)
-------- --------
Net cash provided by operating activities .................................. 1,576 1,307
-------- --------
Investing activities
Purchases of available-for-sale securities ............................................ (1,973) (25,191)
Maturities of available-for-sale securities ........................................... 792 7,596
Purchases of other investments ........................................................ (4) (37)
Net increase in loans made to customers ............................................... (14,972) (5,380)
Purchases of premises and equipment ................................................... (307) (764)
Proceeds from sale of other real estate ............................................... - 10
-------- --------
Net cash used by investing activities ...................................... (16,464) (23,766)
-------- --------
Financing activities
Net increase (decrease) in demand deposits, interest
bearing transaction accounts and savings accounts ................................. 5,108 (1,220)
Net increase in certificates of deposit and other
time deposits ..................................................................... 1,552 24,100
Exercise of employee stock options .................................................... 64 61
Repurchase and cancellation of common stock ........................................... (1,900) -
-------- --------
Net cash provided by financing activities .................................. 4,824 22,941
-------- --------
(Decrease) increase in cash and cash equivalents ........................................... (10,064) 482
Cash and cash equivalents, beginning ....................................................... 16,965 17,470
-------- --------
Cash and cash equivalents, ending .......................................................... $ 6,901 $ 17,952
======== ========
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
6
<PAGE>
COMMUNITY FIRST BANCORPORATION
Notes to Unaudited Consolidated Financial Statements
Accounting Policies - A summary of significant accounting policies is included
in Community First Bancorporation's (the "Company") Annual Report for the year
ended December 31, 1999 on Form 10-KSB filed with the Securities and Exchange
Commission.
Management Opinion - In the opinion of management, the accompanying unaudited
consolidated financial statements of Community First Bancorporation reflect all
adjustments necessary for a fair presentation of the results of the periods
presented. Such adjustments were of a normal, recurring nature.
Comprehensive Income - The components of other comprehensive income or loss and
related tax effects are as follows:
<TABLE>
<CAPTION>
(Unaudited)
Period Ended September 30,
--------------------------
Three Months Nine Months
------------ -----------
2000 1999 2000 1999
----- ----- ----- ----
(Dollars in thousands)
<S> <C> <C> <C> <C>
Net income ........................................................ $ 413 $ 426 $ 1,294 $ 1,212
------- ------- ------- -------
Other comprehensive income (loss):
Change in unrealized holding gains and
losses on available-for-sale securities .................. 382 70 400 (1,459)
Income tax expense (benefit) on other
comprehensive income (loss) .............................. 138 60 144 (524)
------- ------- ------- -------
Total other comprehensive income (loss) ............... 244 10 256 (935)
------- ------- ------- -------
Comprehensive income (loss) ....................................... $ 657 $ 436 $ 1,550 $ 277
======= ======= ======= =======
</TABLE>
Statement of Cash Flows - Interest paid on deposits and other borrowings
amounted to $4,799,000 for the nine months ended September 30, 2000, and was
$4,047,000 for the nine months ended September 30, 1999. Income tax payments of
$786,000 were made during the first nine months of 2000, and income tax payments
of $616,000 were made in the 1999 period. Non-cash investment security valuation
adjustments increased available-for-sale securities by $400,000 during the 2000
period, a related shareholders' equity account increased by $256,000 and the
associated deferred income taxes changed by $144,000. During the 1999 period,
non-cash valuation adjustments decreased available-for-sale securities by
$1,459,000, decreased shareholders' equity by $935,000 and changed deferred
income taxes by $524,000. Non-cash transfers of $160,000 were made from loans to
other real estate during the first nine months of 2000.
Nonperforming Loans - As of September 30, 2000, there were $75,000 in nonaccrual
loans and no loans 90 days or more past due and still accruing.
Earnings Per Share - Basic earnings per common share is computed by dividing net
income applicable to common shares by the weighted average number of common
shares outstanding. Diluted earnings per share is computed by dividing
applicable net income by the weighted average number of common shares
outstanding and any dilutive potential common shares and dilutive stock options.
It is assumed that all dilutive stock options are exercised at the beginning of
each period and that the proceeds are used to purchase shares of the Company's
common stock at the average market price during the period. Per share
information for 1999 has been retroactively adjusted to give effect to a 10%
stock dividend effective December 15, 1999. Net income per share and net income
per share, assuming dilution, were computed as follows:
7
<PAGE>
<TABLE>
<CAPTION>
(Unaudited)
Period Ended September 30,
--------------------------
Three Months Nine Months
------------ -----------
2000 1999 2000 1999
---- ---- ---- ----
(Dollars in thousands, except per share amounts)
Net income per share, basic
<S> <C> <C> <C> <C>
Numerator - net income ................................... $ 413 $ 426 $ 1,294 $ 1,212
========== ========== ========== ==========
Denominator
Weighted average common shares
issued and outstanding ............................... 1,909,809 1,982,593 1,947,139 1,977,924
========== ========== ========== ==========
Net income per share, basic ................. $ .22 $ .21 $ .67 $ .61
========== ========== ========== ==========
Net income per share, assuming dilution
Numerator - net income ................................... $ 413 $ 426 $ 1,294 $ 1,212
========== ========== ========== ==========
Denominator
Weighted average common shares
issued and outstanding ............................... 1,909,809 1,982,593 1,947,139 1,977,924
Effect of dilutive stock options ....................... 128,399 157,777 121,004 161,001
---------- ---------- ---------- ----------
Total shares ................................ 2,038,208 2,140,370 2,068,143 2,138,925
========== ========== ========== ==========
Net income per share,
assuming dilution ......................... $ .20 $ .20 $ .62 $ .57
========== ========== ========== ==========
</TABLE>
8
<PAGE>
Item 2. - Management's Discussion and Analysis
This discussion is intended to assist in understanding the consolidated
financial condition and results of operations of Community First Bancorporation
(the "Company') and its wholly-owned subsidiary, Community First Bank. The
information should be reviewed in conjunction with the unaudited consolidated
financial statements and the related notes contained elsewhere in this report.
Forward Looking Statements
Statements included in Management's Discussion and Analysis which are
not historical in nature are intended to be, and are hereby identified as
"forward looking statements" for purposes of the safe harbor provided by Section
21E of the Securities Exchange Act of 1934, as amended. The Company cautions
readers that forward looking statements, including without limitation, those
relating to the Company's new offices, its future business prospects, revenues,
working capital, liquidity, capital needs, interest costs, and income, are
subject to certain risks and uncertainties that could cause actual results to
differ materially from those indicated in the forward looking statements, due to
several important factors herein identified, among others, and other risks and
factors identified from time to time in the Company's reports filed with the
Securities and Exchange Commission.
Results of Operations
Community First Bancorporation recorded consolidated net income of
$413,000, or $.22 per share, for the third quarter, and $1,294,000, or $.67 per
share, for the first nine months of 2000. During 1999, the Company recorded net
income of $426,000 or $.21 per share for the third quarter, and $1,212,000, or
$.61 per share, for the first nine months. Net income per share, assuming
dilution, for the three and nine month periods ended September 30, 2000 was $.20
and $.62, respectively. For the comparable 1999 periods, net income per share,
assuming dilution, was $.20 and $.57, respectively. Net income per share figures
for 1999 have been retroactively adjusted to reflect a 10% stock dividend
effective December 15, 1999.
Net Interest Income
Net interest income is the amount of interest income earned on interest
earning assets (loans, securities, interest bearing deposits in other banks,
federal funds sold and other investments), less the interest expense incurred on
interest bearing liabilities (interest bearing deposits and other borrowings),
and is the principal source of the Company's earnings. Net interest income is
affected by the level of interest rates, volume and mix of interest earning
assets and interest bearing liabilities and the relative funding of these
assets.
For analysis purposes, interest income from tax-exempt investments is
adjusted to an amount that would have to be earned on taxable investments to
produce the same after-tax yields, assuming a 34% Federal income tax rate. This
adjusted amount is referred to as fully taxable equivalent ("FTE") interest
income. The Company had only $7,000 in income from tax-exempt sources during the
first nine months ($11,000 FTE) and $2,000 of income ($3,000 FTE) from those
sources in the same period of 1999.
For the third quarter of 2000, FTE net interest income was $1,253,000,
an increase of $49,000 or 4.1% over the comparable 1999 period. For the first
nine months of 2000, FTE net interest income was $3,818,000, an increase of
$381,000 or 11.1% over the first nine months of 1999. The increases in FTE net
interest income for the 2000 periods resulted primarily from the positive
effects of higher amounts of interest earning assets enhanced by the higher
rates of interest earned on those assets. These positive developments were
offset somewhat by the negative effects of increased amounts of interest bearing
liabilities and higher rates paid. Average interest earning assets during the
2000 nine-month period were $155,311,000, an increase of $13,991,000 or 9.9%
over the comparable period of 1999. Average investment securities for the 2000
nine-month period were $58,118,000, an increase of $10,420,000 or 21.8% over the
average amount for the same period of 1999. Average loans for the 2000 nine
month period totaled $83,645,000, an increase of $12,564,000 or 17.7% over the
same period of 1999. The average yield on interest earning assets increased by
9
<PAGE>
30 basis points to 7.58% for the 2000 nine month period. Average interest
bearing liabilities during the 2000 nine-month period were $129,280,000,
representing an increase of $12,014,000 or 10.2% over the amount for the same
period of 1999. Average time deposits of $100,000 and over increased to
$37,804,000 for the 2000 nine-month period from $36,623,000 in the same prior
year period. Average other time deposits increased to $45,644,000 in the 2000
period, compared with $41,122,000 in the 1999 period. The average interest rate
spread (average yield on interest earning assets less the average rate paid on
interest bearing liabilities) for the first nine months of 2000 and 1999 was
2.42%. Net yield on earning assets (net interest income divided by average
interest earning assets) was 3.28% for the first nine months of 2000, an
increase of 3 basis points from 3.25% for the first nine months of 1999.
Increases in interest earning assets and interest bearing liabilities
resulted from the Company's continuing marketing strategies to increase its
market share in its local service areas in Anderson and Oconee Counties of South
Carolina. The Anderson County, South Carolina market represents a relatively new
undertaking by the Company. A branch office was opened in a temporary facility
in the city of Anderson on January 4, 1999. Construction and occupancy of the
permanent facility there was accomplished during the fourth quarter of 1999. The
Company further expanded its presence in Anderson County during 2000 by opening
an office in the Town of Williamston.
During the first eighteen months of its operation, the new Anderson
County operation primarily focused its efforts on the acquisition of new deposit
accounts. The Company initially invested funds from these new deposits primarily
in investment securities instead of loans because of management's criteria for
credit quality and liquidity considerations. Therefore, as expected in this new
market area, growth in deposits was much more rapid than was growth in the
higher-yielding loan categories. However, because the Company now has a base of
experience in the Anderson County market, management has begun to increase its
utilization of deposits derived from the Anderson market for making quality
loans.
Interest rates have increased at a moderate pace since the middle of
the second quarter of 1999 due to concerns that inflationary pressures may be a
threat to the country's economic stability. Late in the 1999 second quarter, the
Federal Reserve Bank's Open Market Committee initiated a series of rate
increases as a means to curtail this threat. The efforts of the Open Market
Committee to effect sustainable economic growth are ongoing and have resulted in
further increases in interest rates during the year 2000, as well. The potential
effects of the increases are not anticipated to cause any significant positive
or adverse results for the Company.
Provision and Allowance for Loan Losses
The provision for loan losses charged to expense was $70,000 for the
third quarter of 2000 compared with $78,000 for the third quarter of 1999, and
totaled $252,000 for the first nine months of 2000 compared with $173,000 for
the comparable period of 1999. At September 30, 2000, the allowance for loan
losses was 1.12% of loans, compared with 1.24% of loans at December 31, 1999.
During the 2000 nine-month period, net charge-offs totaled $179,000, compared
with $188,000 charged off during the same period of 1999. As of September 30,
2000, there were $75,000 in nonaccrual loans and no loans over 90 days past due
and still accruing interest. The amount of nonaccrual loans at September 30,
2000 is $49,000 less than the amount at September 30, 1999 and $134,000 less
than the amount of nonaccrual loans as of December 31, 1999. The majority of the
nonaccrual loans are secured by real estate. When the estimated realizable value
of collateral associated with nonperforming loans is believed to be insufficient
to satisfy the debt, management generally charges-off the excess amount of the
debt.
Management believes that the allowance for loan losses is adequate to
absorb all estimated future risk of loss inherent in the loan portfolio as of
September 30, 2000.
10
<PAGE>
Noninterest Income
Noninterest income totaled $236,000 for the third quarter of 2000,
compared with $172,000 for the 1999 quarter. Noninterest income was $616,000 for
the first nine months of 2000 and $477,000 for the same 1999 period. The higher
noninterest income in 2000 was attributable primarily to increased fees derived
from charges assessed against deposit accounts and fees for card-based services,
including credit card fees and fees for ATM usage. During the 1999 nine month
period, a $10,000 gain was recognized from the sale of other real estate with no
comparable item in 2000. There were no realized securities gains or losses in
the 2000 or 1999 periods.
Noninterest Expenses
Noninterest expenses totaled $788,000 for the third quarter of 2000,
compared with $623,000 for the 1999 period, representing an increase of $165,000
or 26.5%. Noninterest expenses were $2,167,000 for the first nine months of 2000
compared with $1,850,000 for the same period of 1999. Salaries and employee
benefits for the 2000 quarter totaled $434,000, an increase of $106,000 over the
1999 three month period. For the first nine months of 2000, salaries and
employee benefits totaled $1,140,000 representing an increase of $148,000 or
14.9% over the same period of 1999. This increase resulted largely from an
increase in number of employees associated with the Company's branch expansions,
normal increases in salaries and wages granted from time to time, and higher
costs of employment taxes and employee insurance benefits. During the 2000
nine-month period, no amounts were accrued toward year-end incentive bonuses,
compared with $10,000 accrued in 1999.
Occupancy and furniture and equipment expenses for the third quarter of
2000 totaled $113,000, an increase of $24,000, or 27.0% compared with the same
period of 1999. Such expenses increased $71,000 or 27.7% during the first nine
months of 2000. These increases resulted primarily from higher depreciation,
utilities and equipment maintenance associated with the occupancy of the new
permanent branch office facility in Anderson since the fourth quarter of 1999
and the branch in Williamston since its opening in 2000. Other expenses for the
2000 three-month period totaled $241,000 and were $35,000 more than in 1999. For
the 2000 nine-month period, other expenses increased by $98,000, or 16.3%, over
the 1999 amount to $700,000. These expenses also increased primarily due to
expenses associated with the opening of the permanent Anderson branch and the
Williamston branch. Higher account volumes have increased processing costs such
as fees charged by correspondent institutions for providing check clearing
services, credit card and ATM interchange. Also, costs for telephone, data
communication and operating supplies have increased from the expanded office
network.
Management anticipates that higher amounts of noninterest expenses will
continue during the remainder of 2000.
Liquidity
Liquidity is the ability to meet current and future obligations through
the liquidation or maturity of existing assets or the acquisition of additional
liabilities. The Company manages both assets and liabilities to achieve
appropriate levels of liquidity. Cash and short-term investments are the
Company's primary sources of asset liquidity. These funds provide a cushion
against short-term fluctuations in cash flow from both deposits and loans.
Securities available-for-sale are the Company's principal source of secondary
asset liquidity. However, the availability of this source is influenced by
market conditions. Individual and commercial deposits are the Company's primary
source of funds for credit activities.
As of September 30, 2000, the ratio of loans to total deposits was
62.5%, compared with 54.9% as of December 31, 1999 and 53.8% as of September 30,
1999. The increase in the loan-to-deposit ratio for 2000 is generally the result
of the volume of loans growing faster than deposits in the Oconee County market
area.
Deposits as of September 30, 2000 had increased by $6,660,000 or 4.8%
over the amount at December 31, 1999 and were $9,902,000 or 7.3% greater than
their levels of September 30, 1999. The new operations in Anderson County
contributed significantly to the increase in deposits.
11
<PAGE>
Management believes that the Company's liquidity sources are adequate
to meet its operating needs.
Capital Resources
The Company's equity capital decreased by $286,000 since December 31,
1999 as the result of net income of $1,294,000 for the first nine months of
2000, $64,000 added from the exercise of employee stock options, plus $256,000
from changes in unrealized holding gains and losses on available-for-sale
securities, net of deferred tax effects, less $1,900,000 expended to repurchase
and cancel 110,000 shares of the Company's outstanding common stock.
Early in 2000, management became aware of one shareholder's intention
to offer for sale at one time all of his 110,000 shares of the Company's common
stock. Trading of the Company's common stock generally involves relatively few
shares traded among private individuals and there are no known market makers.
The Board of Directors considered that the sudden sale of such a large number of
shares might adversely affect the value of its stock and disrupt the limited
local trading activities. Therefore, the Board determined that it was in the
best interest of all its shareholders to make an offer to repurchase and cancel
the 110,000 shares of available common stock. The repurchase was completed in
the second quarter of 2000 and was funded by cash dividends the Company received
from its subsidiary bank. The repurchase was not part of any planned stock
repurchase program, and any such future transactions will be evaluated on a
case-by-case basis.
The Company and its banking subsidiary (the "Bank") are subject to
regulatory risk-based capital adequacy standards. Under these standards, bank
holding companies and banks are required to maintain certain minimum ratios of
capital to risk-weighted assets and average total assets. Under the provisions
of the Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA),
federal bank regulatory authorities are required to implement prescribed "prompt
corrective actions" upon the deterioration of the capital position of a bank. If
the capital position of an affected institution was to fall below certain
levels, increasingly stringent regulatory corrective actions are mandated.
The September 30, 2000 risk based capital ratios for the Company and
the Bank are presented in the following table, compared with the "well
capitalized" and minimum ratios under the regulatory definitions and guidelines:
Total
Tier 1 Capital Leverage
------ ------- --------
Community First Bancorporation ............. 15.0% 16.0% 9.3%
Community First Bank ....................... 14.0% 15.0% 8.7%
Minimum "well-capitalized" requirement ..... 6.0% 10.0% 5.0%
Minimum requirement ........................ 4.0% 8.0% 3.0%
12
<PAGE>
PART II - OTHER INFORMATION
Item 6. - Exhibits and Reports on Form 8-K.
(a) Exhibits
Exhibit No.
from Item 601 of
Regulation S-B Description
--------------- ----------------------
27 Financial Data Schedule
(b) Reports on Form 8-K. None.
13
<PAGE>
SIGNATURE
In accordance with the requirements of the Exchange Act, the registrant
has caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
COMMUNITY FIRST BANCORPORATION
November 10, 2000 /s/ Frederick D. Shepherd, Jr.
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Date Frederick D. Shepherd, Jr., President and Chief
Executive Officer (also principal accounting officer)
14
<PAGE>
Exhibit Index
Exhibits
Exhibit No.
from Item 601 of
Regulation S-B Description
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27 Financial Data Schedule
15
