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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10KSB
(Mark One)
[ X ] Annual report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For fiscal year ended DECEMBER 31, 1999
[ ] Transition report under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period from ___________ to ____________
Commission file number 000-25345
COMMUNITY CAPITAL BANCSHARES, INC.
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(Name of Small Business Issuer in Its Charter)
GEORGIA 58-2413468
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
2815 MEREDYTH DRIVE, ALBANY, GEORGIA 31707
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(Address of Principal Executive Offices) (Zip Code)
(912) 446-2265
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(Issuer's Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act: COMMON STOCK, PAR
VALUE $1.00
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 (2) has been
subject to such filing requirements for past 90 days. Yes [X] No [ ]
Check if disclosure of delinquent filers in response to Item 405 of Regulation
S-B is not contained in this form, and no disclosure will be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [ ]
State issuer's revenues for its most recent fiscal year: $1,190,675
Aggregate market value of the voting stock held by non-affiliates computed by
reference to the price at which the stock was sold, or the average bid and asked
prices of such stock, as of a specified date within the past 60 days:
$11,550,000 AS OF MARCH 23, 2000
APPLICABLE ONLY TO CORPORATE REGISTRANTS
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date. 1,050,000 AS OF MARCH 24,
2000
Transitional Small Business Disclosure format (check one): Yes [ ] No[X]
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Annual Report to Shareholders for the fiscal year ended December
31, 1999, are incorporated by reference into Part II. Portions of the Proxy
Statement for the Annual Meeting of Shareholders, scheduled to be held April 24,
2000, are incorporated by reference into Part III.
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TABLE OF CONTENTS
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PART I............................................................................................................1
ITEM 1. DESCRIPTION OF BUSINESS...............................................................................1
ITEM 2. DESCRIPTION OF PROPERTIES............................................................................12
ITEM 3. LEGAL PROCEEDINGS....................................................................................12
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS..................................................12
PART II............................................................................................................
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS................................12
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS................13
ITEM 7. FINANCIAL STATEMENTS.................................................................................13
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.................14
PART III...........................................................................................................
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE
EXCHANGE ACT.......................................................................................14
ITEM 10. EXECUTIVE COMPENSATION..............................................................................14
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT......................................14
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS......................................................14
ITEM 13. EXHIBITS, LISTS AND REPORTS ON FORM 10-KSB..........................................................14
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PART I
ITEM 1. DESCRIPTION OF BUSINESS
COMMUNITY CAPITAL
Community Capital Bancshares, Inc. was incorporated as a Georgia
business corporation on August 19, 1998, to serve as a bank holding company for
Albany Bank & Trust, N.A. Albany Bank & Trust began operations in April 1999 and
is the sole subsidiary of Community Capital.
Community Capital's principal business is the ownership and management
of Albany Bank & Trust. Community Capital was organized to facilitate Albany
Bank & Trust's ability to serve its customers' requirements for financial
services. The holding company structure provides flexibility for expansion of
Community Capital's banking business through the possible acquisition of other
financial institutions and the provision of additional capital to Albany Bank &
Trust. For example, we may assist Albany Bank & Trust in maintaining its
required capital ratios by borrowing money and contributing the proceeds of that
debt to Albany Bank & Trust as primary capital.
ALBANY BANK & TRUST
GENERAL
Albany Bank & Trust was chartered as a national bank under the laws of
the United States and began business as a full-service commercial bank on April
28, 1999. Albany Bank & Trust's lending services include consumer loans to
individuals, commercial loans to small- to medium-sized businesses and
professional concerns and real estate-related loans. Albany Bank & Trust offers
a broad array of competitively priced deposit services including demand
deposits, regular savings accounts, money market deposits, certificates of
deposit and individual retirement accounts. To complement our lending and
deposit services, we also provide cash management services, safe-deposit boxes,
travelers checks, direct deposit, automatic drafts, and courier services to
commercial customers. We offer our services through a variety of delivery
systems including our main office, automated teller machines and telephone
banking. We also intend to offer online banking in 2000.
PHILOSOPHY
Albany Bank & Trust operates as a community bank emphasizing prompt,
personalized customer service to the residents and businesses located in
Dougherty and Lee Counties, Georgia. We strive to provide responsive delivery of
quality products and services to business customers and competitively priced
consumer products to individual customers seeking a higher level of personalized
service than that provided by larger regional banks. We have adopted this
philosophy in order to attract customers and acquire market share controlled by
other financial institutions in Albany Bank & Trust's market area. We believe
that Albany Bank & Trust offers residents in Dougherty and Lee Counties the
benefits associated with a locally owned and managed bank. Albany Bank & Trust's
active call program allows its officers and directors to promote Albany Bank &
Trust by personally describing the products, services and philosophy of Albany
Bank & Trust to both existing customers and new business prospects. In addition,
both the chief executive officer, chief lending officer and chief financial
officer of Albany Bank & Trust have substantial banking experience in Dougherty
and Lee Counties, which facilitates Albany Bank & Trust's efforts to provide
products and services designed to meet the needs of our customer base.
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Albany Bank & Trust's directors are active members of the business communities
in Albany and around Dougherty and Lee Counties, and their continued active
community involvement provides them with an opportunity to promote Albany Bank &
Trust and its products and services.
MARKET AREA AND COMPETITION
Albany Bank & Trust is located in Albany, Georgia, and its primary
market area is the ten-mile radius surrounding its main office. Albany Bank &
Trust draws a majority of its business from its primary market area which
includes the majority of Dougherty County and the Southern portion of Lee
County. Albany Bank & Trust competes for deposits and loan customers with other
financial institutions whose resources are equal to or greater than those
available to Albany Bank & Trust and Community Capital. According to information
provided by the FDIC, as of June 30, 1999, Dougherty County was served by eight
commercial banks with a total of 25 offices in Dougherty County. As of June 30,
1999, the total deposits within Dougherty County for these institutions were
approximately $782 million of which approximately $10.0 million were held by
Albany Bank & Trust. At December 31, 1999, Albany Bank & Trust's total deposits
were $28.0 million. We believe our local ownership and management as well as our
focus on personalized service helps us to compete with these institutions and to
attract deposits and loans in our market area.
LOAN PORTFOLIO
LENDING POLICY. Albany Bank & Trust was established to support Albany
and the surrounding areas of Dougherty and Lee Counties. Consequently, Albany
Bank & Trust aggressively seeks creditworthy loans within a limited geographic
area. Albany Bank & Trust's primary lending functions include consumer loans to
individuals and commercial loans to small- and medium-sized businesses and
professional concerns. In addition, Albany Bank & Trust makes real
estate-related loans, including construction loans for residential and
commercial properties, and primary and secondary mortgage loans for the
acquisition or improvement of personal residences. Albany Bank & Trust's policy
is to avoid concentrations of loans to a single industry or based on a single
type of collateral.
REAL ESTATE LOANS. Albany Bank & Trust makes commercial real estate
loans, construction and development loans, and residential real estate loans.
These loans include certain commercial loans where Albany Bank & Trust takes a
security interest in real estate out of an abundance of caution and not as the
principal collateral for the loan, but exclude home equity loans, which are
classified as consumer loans.
- COMMERCIAL REAL ESTATE. Commercial real estate loan
terms generally are limited to five years or less, although
payments may be structured on a longer amortization basis.
Interest rates may be fixed or adjustable, but generally are
not fixed for a period exceeding 60 months. Albany Bank &
Trust normally charges an origination fee on these loans. We
attempt to reduce credit risk on our commercial real estate
loans by emphasizing loans on owner-occupied office and retail
buildings where the ratio of the loan principal to the value
of the collateral as established by independent appraisal does
not exceed 80% and net projected cash flow available for debt
service equals 120% of the debt service requirement. In
addition, from time to time Albany Bank & Trust requires
personal guarantees from the principal owners of the property
supported by a review by Albany Bank & Trust's management of
the principal owners' personal financial statements. Risks
associated with commercial real estate loans include
fluctuations in the value of real estate, new job creation
trends, tenant vacancy rates and the quality of the borrower's
management. Albany Bank &
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Trust attempts to limit its risk by analyzing borrowers' cash
flow and collateral value on an ongoing basis.
- CONSTRUCTION AND DEVELOPMENT LOANS. Construction and
development loans are made both on a pre-sold and speculative
basis. If the borrower has entered into an agreement to sell
the property prior to beginning construction, then the loan is
considered to be on a pre-sold basis. If the borrower has not
entered into an agreement to sell the property prior to
beginning construction, then the loan is considered to be on a
speculative basis. Construction and development loans are
generally made with a term of nine months and interest is paid
quarterly. The ratio of the loan principal to the value of the
collateral as established by independent appraisal generally
does not exceed 80%. Speculative loans are based on the
borrower's financial strength and cash flow position. Loan
proceeds are disbursed based on the percentage of completion
and only after the project has been inspected by an
experienced construction lender or appraiser. Risks associated
with construction loans include fluctuations in the value of
real estate and new job creation trends.
- RESIDENTIAL REAL ESTATE. Albany Bank & Trust's residential
real estate loans consist of residential first and second
mortgage loans and residential construction loans. We offer
fixed and variable rates on our mortgages with the
amortization of first mortgages generally not to exceed 15
years and the rates not to be fixed for over 60 months. These
loans are made consistent with Albany Bank & Trust's appraisal
policy and with the ratio of the loan principal to the value
of collateral as established by independent appraisal not to
exceed 90%. We believe these loan to value ratios are
sufficient to compensate for fluctuations in real estate
market value and to minimize losses that could result from a
downturn in the residential real estate market.
COMMERCIAL LOANS. Loans for commercial purposes in various lines of
businesses are one of the primary components of our loan portfolio. The terms of
these loans vary by purpose and by type of underlying collateral, if any. Albany
Bank & Trust typically makes equipment loans for a term of five years or less at
fixed or variable rates, with the loan fully amortized over the term. Equipment
loans generally are secured by the financed equipment, and the ratio of the loan
principal to the value of the financed equipment or other collateral is
generally 80% or less. Loans to support working capital typically have terms not
exceeding one year and usually are secured by accounts receivable, inventory or
personal guarantees of the principals of the business. For loans secured by
accounts receivable or inventory, principal is typically repaid as the assets
securing the loan are converted into cash, and for loans secured with other
types of collateral, principal is typically due at maturity. The quality of the
commercial borrower's management and its ability both to evaluate properly
changes in the supply and demand characteristics affecting its markets for
products and services and to respond effectively to such changes are significant
factors in a commercial borrower's creditworthiness.
CONSUMER LOANS. Albany Bank & Trust makes a variety of loans to
individuals for personal, family and household purposes, including secured and
unsecured installment and term loans, home equity loans and lines of credit.
Consumer loan repayments depend upon the borrower's financial stability and are
more likely to be adversely affected by divorce, job loss, illness and personal
hardships. Because many consumer loans are secured by depreciable assets such as
boats, cars, and trailers the loan should be amortized over the useful life of
the asset. To minimize the risk that the borrower cannot afford the monthly
payments, all fixed monthly obligations should not exceed 38% of the borrower's
gross monthly income. The borrower should also be employed for at least 12
months prior to obtaining the loan. The loan officer reviews the borrower's past
credit history, past income level, debt history and, when
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applicable, cash flow and determines the impact of all these factors on the
ability of the borrower to make future payments as agreed.
INVESTMENTS. In addition to loans, Albany Bank & Trust makes other
investments primarily in obligations of the United States or obligations
guaranteed as to principal and interest by the United States, other taxable
securities and other obligations of states and municipalities. As of December
31, 1999, investment securities comprised approximately 36% of Albany Bank &
Trust's assets, with net loans comprising approximately 53% of Albany Bank &
Trust's assets. Albany Bank & Trust also engages in Federal funds transactions
with its principal correspondent banks and primarily acts as a net seller of
funds. The sale of Federal funds amounts to a short-term loan from Albany Bank &
Trust to another bank.
DEPOSITS. Albany Bank & Trust offers a wide range of commercial and
consumer deposit accounts, including checking accounts, money market accounts, a
variety of certificates of deposit, and individual retirement accounts. The
primary sources of deposits are residents of, and businesses and their employees
located in, our primary market area. Deposits are obtained through personal
solicitation by Albany Bank & Trust's officers and directors, direct mail
solicitations and advertisements published in the local media. To attract
deposits Albany Bank & Trust offers a broad line of competitively priced deposit
products and services.
OTHER BANKING SERVICES. Albany Bank & Trust's other banking services
include ATM and MasterCard check cards, direct deposit, travelers checks, cash
management services, courier service for commercial customers, bank-by-mail,
bank-by-telephone, wire transfer of funds, a night depository and safe deposit
boxes.
ASSET AND LIABILITY MANAGEMENT. The Asset and Liability Management
Committee manages Albany Bank & Trust's assets and liabilities and strives to
provide an optimum and stable net interest margin, a profitable after-tax return
on assets and return on equity and adequate liquidity. The committee conducts
these management functions within the framework of written loan and investment
policies that Albany Bank & Trust has adopted. The committee attempts to
maintain a balanced position between rate sensitive assets and rate sensitive
liabilities. Specifically, it charts assets and liabilities on a matrix by
maturity, effective duration and interest adjustment period and attempts to
manage any gaps in maturity ranges.
EMPLOYEES
At December 31, 1999, Community Capital and its subsidiary employed 15
full-time employees and one part-time employee. Community Capital considers its
relationship with its employees to be excellent.
SUPERVISION AND REGULATION
Both Community Capital and Albany Bank & Trust are subject to extensive
state and federal banking regulations that impose restrictions on and provide
for general regulatory oversight of our operations. These laws are generally
intended to protect depositors and not shareholders. The following discussion
describes the material elements of the regulatory framework that applies to us.
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COMMUNITY CAPITAL
Since Community Capital owns all of the capital stock of Albany Bank &
Trust, it is a bank holding company under the federal Bank Holding Company Act
of 1956. As a result, Community Capital is primarily subject to the supervision,
examination, and reporting requirements of the Bank Holding Company Act and the
regulations of the Federal Reserve.
ACQUISITIONS OF BANKS. The Bank Holding Company Act requires every bank
holding company to obtain the Federal Reserve's prior approval before:
- acquiring direct or indirect ownership or control of any
voting shares of any bank if, after the acquisition, the bank
holding company will directly or indirectly own or control
more than 5% of the bank's voting shares;
- acquiring all or substantially all of the assets of any bank;
or
- merging or consolidating with any other bank holding company.
Under the Bank Holding Company Act, an adequately capitalized and
adequately managed bank holding company located in Georgia may purchase a bank
located outside of Georgia. Conversely, an adequately capitalized and adequately
managed bank holding company located outside of Georgia may purchase a bank
located inside Georgia. In each case, however, restrictions may be placed on the
acquisition of a bank that has only been in existence for a limited amount of
time or an acquisition which may result in specified concentrations of deposits.
CHANGE IN BANK CONTROl. Subject to various exceptions, the Bank Holding
Company Act and the Change in Bank Control Act, together with related
regulations, require Federal Reserve approval prior to any person or company
acquiring "control" of a bank holding company. Control is conclusively presumed
to exist if an individual or company acquires 25% or more of any class of voting
securities of the bank holding company. Control is rebuttably presumed to exist
if a person or a company acquires 10% or more, but less than 25%, of any class
of voting securities and either the bank holding company has registered
securities under Section 12 of the Securities Act of 1934, or no other person
owns a greater percentage of that class of voting securities immediately after
the transaction.
PERMITTED ACTIVITIES. Under the Bank Holding Company Act, a bank
holding company, which has not qualified or elected to become a financial
holding company is generally prohibited from engaging in or acquiring direct or
indirect control of more than 5% of the voting shares of any company engaged in
nonbanking activities unless prior to the enactment of the Gramm-Leach-Bliley
Act the Federal Reserve found those activities to be so closely related to
banking as to be a proper incident to the business of banking. Activities that
the Federal Reserve has found to be so closely related to banking to be a proper
incident to the business of banking include:
- factoring accounts receivable,
- acquiring or servicing loans,
- leasing personal property,
- conducting discount securities brokerage activities,
- performing selected data processing services,
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- acting as agent or broker in selling credit life insurance and
other types of insurance in connection with credit
transactions, and
- performing selected insurance underwriting activities.
Despite prior approval, the Federal Reserve may order a bank holding company or
its subsidiaries to terminate any of these activities or to terminate its
ownership or control of any subsidiary when it has reasonable cause to believe
that the bank holding company's continued ownership, activity or control
constitutes a serious risk to the financial safety, soundness, or stability of
any of its bank subsidiaries.
On November 12, 1999, President Clinton signed the Gramm-Leach-Bliley
Act, which amends the Bank Holding Company Act and greatly expand the activities
in which bank holding companies and affiliates of banks are permitted to engage.
The Gramm-Leach-Bliley Act eliminates many federal and state law barriers to
affiliations among banks and securities firms, insurance companies, and other
financial service providers. The provisions of the Gramm-Leach-Bliley Act
relating to permitted activities of bank holding companies and affiliates of
banks became effective on March 11, 2000.
Generally, if Community Capital qualifies and elects to become a
financial holding company, it may engage in activities that are financial in
nature or incidental or complementary to a financial activity. Activities that
the Gramm-Leach-Bliley Act expressly lists as financial in nature include
insurance activities, providing financial, investment and advisory services,
underwriting securities and limited merchant banking activities.
To qualify to become a financial holding company, Albany Bank & Trust
and any other depository institution subsidiary of Community Capital must be
well capitalized and well managed and must have a Community Reinvestment Act
rating of at least satisfactory. Additionally, Community Capital must file an
election with the Federal Reserve to become a financial holding company and must
provide the Federal Reserve with 30 days written notice prior to engaging in a
permitted financial activity. Although we are eligible to elect to become a
financial holding company, we currently have no plans to make such an election.
SUPPORT OF SUBSIDIARY INSTITUTIONS. Under Federal Reserve policy, bank
holding companies are expected to act as a source of financial strength for, and
to commit resources to support, their depository institution subsidiaries. This
support may be required at times when, without this Federal Reserve policy, the
bank holding company might not be inclined to provide it. In addition, any
capital loans by a bank holding company to a bank will be repaid only after its
deposits and other indebtedness are repaid in full. In the event of a bank
holding company's bankruptcy, any commitment by the bank holding company to a
federal bank regulatory agency to maintain the capital of a banking subsidiary
will be assumed by the bankruptcy trustee and entitled to a priority of payment.
ALBANY BANK & TRUST
Since Albany Bank & Trust is chartered as a national bank, it is
primarily subject to the supervision, examination and reporting requirements of
the National Bank Act and the regulations of the Office of the Comptroller of
the Currency. The Office of the Comptroller of the Currency regularly examines
Albany Bank & Trust's operations and has the authority to approve or disapprove
mergers, the establishment of branches and similar corporate actions. The Office
of the Comptroller of the Currency also has the power to prevent the continuance
or development of unsafe or unsound banking practices or other violations of
law. Additionally, Albany Bank & Trust's deposits are insured by the FDIC to the
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maximum extent provided by law. Albany Bank & Trust is also subject to numerous
state and federal statutes and regulations that will affect its business,
activities and operations.
BRANCHING. National banks are required by the National Bank Act to
adhere to branching laws applicable to state banks in the states in which they
are located. Under current Georgia law, Albany Bank & Trust may open branch
offices throughout Georgia with the prior approval of the Office of the
Comptroller of the Currency and the Georgia Department of Banking and Finance.
In addition, with prior regulatory approval, Albany Bank & Trust may acquire
branches of existing banks located in Georgia. Albany Bank & Trust and any other
national or state-chartered bank generally may branch across state lines by
merging with banks in other states if allowed by the applicable states' laws.
Georgia law, with limited exceptions, currently permits branching across state
lines through interstate mergers.
Under the Federal Deposit Insurance Act, states may "opt-in" and allow
out-of-state banks to branch into their state by establishing a new start-up
branch in the state. Currently, Georgia has not opted-in to this provision.
Therefore, interstate merger is the only method through which a bank located
outside of Georgia may branch into Georgia. This provides a limited barrier of
entry into the Georgia banking market, which protects us from an important
segment of potential competition. However, because Georgia has elected not to
opt-in, our ability to establish a new start-up branch in another state may be
limited. Many states that have elected to opt-in have done so on a reciprocal
basis, meaning that an out-of-state bank may establish a new start-up branch
only if their home state has also elected to opt-in. Consequently, until Georgia
changes its election, the only way we will be able to branch into states that
have elected to opt-in on a reciprocal basis will be through interstate merger.
PROMPT CORRECTIVE ACTION. The Federal Deposit Insurance Corporation
Improvement Act of 1991 establishes a system of prompt corrective action to
resolve the problems of undercapitalized financial institutions. Under this
system, federal banking regulators have established five capital categories,
well capitalized, adequately capitalized, undercapitalized, significantly
undercapitalized and critically undercapitalized, in which all institutions are
placed. The federal banking agencies have also specified by regulation the
relevant capital levels for each of the other categories. At December 31, 1999,
we qualified for the well capitalized category.
Federal banking regulators are required to take some mandatory
supervisory actions and are authorized to take other discretionary actions with
respect to institutions in the three undercapitalized categories. The severity
of the action depends upon the capital category in which the institution is
placed. Generally, subject to a narrow exception, the banking regulator must
appoint a receiver or conservator for an institution that is critically
undercapitalized. An institution in any of the undercapitalized categories is
required to submit an acceptable capital restoration plan to its appropriate
federal banking agency. A bank holding company must guarantee that a subsidiary
depository institution meets its capital restoration plan up to the lesser of 5%
of an undercapitalized subsidiary's assets or the amount required to meet
regulatory capital requirements. An undercapitalized institution is also
generally prohibited from increasing its average total assets, making
acquisitions, establishing any branches or engaging in any new line of business,
except under an accepted capital restoration plan or with FDIC approval. The
regulations also establish procedures for downgrading an institution to a lower
capital category based on supervisory factors other than capital.
FDIC INSURANCE ASSESSMENTS. The FDIC has adopted a risk-based
assessment system for determining an insured depository institution's insurance
assessment rate. The system that takes into account the risks attributable to
different categories and concentrations of assets and liabilities. The system
assigns an institution into one of three capital categories: (1) well
capitalized; (2) adequately
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capitalized; and (3) undercapitalized. These three categories are substantially
similar to the prompt corrective action categories described above, with the
"undercapitalized" category including institutions that are undercapitalized,
significantly undercapitalized and critically undercapitalized. The FDIC also
assigns an institution to one of three supervisory subgroups based on a
supervisory evaluation that the institution's primary federal regulator provides
to the FDIC and information that the FDIC determines to be relevant to the
institution's financial condition and the risk posed to the deposit insurance
funds. Assessments range from 0 to 27 cents per $100 of deposits, depending on
the institution's capital group and supervisory subgroup. In addition, the FDIC
imposes assessments to help pay off the $780 million in annual interest payments
on the $8 billion Financing Corporation bonds issued in the late 1980s as part
of the government rescue of the thrift industry. This assessment rate is
adjusted quarterly and ranged from 1.16 cents to 1.22 cents per $100 of deposits
in 1999.
The FDIC may terminate its insurance of deposits if it finds that the
institution has engaged in unsafe and unsound practices, is in an unsafe or
unsound condition to continue operations or has violated any applicable law,
regulation, rule, order, or condition imposed by the FDIC.
COMMUNITY REINVESTMENT ACT. The Community Reinvestment Act requires the
appropriate federal regulator, in connection with their examinations of
financial institutions within their jurisdiction, to evaluate the record of each
financial institution in meeting the credit needs of its local community,
including low and moderate-income neighborhoods. These factors are also
considered in evaluating mergers, acquisitions, and applications to open a
branch or facility. Failure to adequately meet these criteria could impose
additional requirements and limitations on Albany Bank & Trust. Under the
Gramm-Leach-Bliley Act, banks with aggregate assets of not more than $250
million are subject to a Community Reinvestment Act examination only once every
60 months if the bank receives an outstanding rating, once every 48 months if it
receives a satisfactory rating and as needed if the rating is less than
satisfactory. Additionally, under the Gramm-Leach-Bliley Act, banks are required
to publicly disclose the terms of various Community Reinvestment Act-related
agreements.
OTHER REGULATIONS. Interest and other charges collected or contracted
for by Albany Bank & Trust are subject to state usury laws and federal laws
concerning interest rates. Albany Bank & Trust's loan operations are also
subject to federal laws applicable to credit transactions, such as:
- The federal Truth-In-Lending Act, governing disclosures of
credit terms to consumer borrowers;
- The Home Mortgage Disclosure Act of 1975, requiring financial
institutions to provide information to enable the public and
public officials to determine whether a financial institution
is fulfilling its obligation to help meet the housing needs of
the community it serves;
- The Equal Credit Opportunity Act, prohibiting discrimination
on the basis of race, creed or other prohibited factors in
extending credit;
- The Fair Credit Reporting Act of 1978, governing the use and
provision of information to credit reporting agencies;
- The Fair Debt Collection Act, governing the manner in which
consumer debts may be collected by collection agencies; and
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- The rules and regulations of the various federal agencies
charged with the responsibility of implementing these federal
laws.
The deposit operations of Albany Bank & Trust are subject to:
- The Right to Financial Privacy Act, which imposes a duty to
maintain confidentiality of consumer financial records and
prescribes procedures for complying with administrative
subpoenas of financial records; and
- The Electronic Funds Transfer Act and Regulation E issued by
the Federal Reserve to implement that act, which governs
automatic deposits to and withdrawals from deposit accounts
and customers' rights and liabilities arising from the use of
automated teller machines and other electronic banking
services.
CAPITAL ADEQUACY
Community Capital and Albany Bank & Trust are required to comply with
the capital adequacy standards established by the Federal Reserve, in the case
of Community Capital, and the Office of the Comptroller of the Currency, in the
case of Albany Bank & Trust. The Federal Reserve has established a risk-based
and a leverage measure of capital adequacy for bank holding companies that is
substantially similar to that adopted by the Office of the Comptroller of the
Currency for banks.
The risk-based capital standards are designed to make regulatory
capital requirements more sensitive to differences in risk profiles among banks
and bank holding companies, to account for off-balance-sheet exposure, and to
minimize disincentives for holding liquid assets. Assets and off-balance-sheet
items, such as letters of credit and unfunded loan commitments, are assigned to
broad risk categories, each with appropriate risk weights. The resulting capital
ratios represent capital as a percentage of total risk-weighted assets and
off-balance-sheet items.
The minimum guideline for the ratio of total capital to risk-weighted
assets is 8%. Total capital consists of two components, Tier 1 Capital and Tier
2 Capital. Tier 1 Capital generally consists of common shareholders' equity,
minority interests in the equity accounts of consolidated subsidiaries,
qualifying noncumulative perpetual preferred stock, and a limited amount of
qualifying cumulative perpetual preferred stock, less goodwill and other
specified intangible assets. Tier 1 Capital must equal at least 4% of
risk-weighted assets. Tier 2 Capital generally consists of subordinated debt,
other preferred stock and hybrid capital and a limited amount of loan loss
reserves. The total amount of Tier 2 Capital is limited to 100% of Tier 1
Capital. At December 31, 1999, our consolidated ratio of total capital to
risk-weighted assets was 43% and our consolidated ratio of Tier 1 Capital to
risk-weighted assets was 42%.
In addition, the Federal Reserve has established minimum leverage ratio
guidelines for bank holding companies. These guidelines provide for a minimum
ratio of Tier 1 Capital to average assets, less goodwill and other specified
intangible assets, of 3% for bank holding companies that meet certain specified
criteria, including having the highest regulatory rating and implementing the
Federal Reserve's risk-based capital measure for market risk. All other bank
holding companies generally are required to maintain a leverage ratio of at
least 4%. At December 31, 1999, our consolidated leverage ratio was 40%. The
guidelines also provide that bank holding companies experiencing internal growth
or making acquisitions will be expected to maintain strong capital positions
substantially above the minimum supervisory levels without significant reliance
on intangible assets. The Federal Reserve considers the
9
<PAGE> 12
leverage ratio and other indicators of capital strength in evaluating proposals
for expansion or new activities.
Albany Bank & Trust and Community Capital are also both subject to
other capital guidelines issued by our primary regulators, which provide for
minimum ratios of total capital to total assets.
Failure to meet capital guidelines could subject a bank or bank holding
company to a variety of enforcement remedies, including issuance of a capital
directive, the termination of deposit insurance by the FDIC, a prohibition on
accepting brokered deposits, and certain other restrictions on its business. As
described above, substantial additional restrictions can be imposed on
FDIC-insured depository institutions that fail to meet applicable capital
requirements. See "--Prompt Corrective Action."
PAYMENT OF DIVIDENDS
Community Capital is a legal entity separate and distinct from Albany
Bank & Trust. The principal source of Community Capital's cash flow, including
cash flow to pay dividends to its shareholders, is dividends that Albany Bank &
Trust pays to it. Statutory and regulatory limitations apply to Albany Bank &
Trust's payment of dividends to Community Capital as well as to Community
Capital's payment of dividends to its shareholders.
Albany Bank & Trust is required by federal law to obtain the prior
approval of the Office of the Comptroller of the Currency for payments of
dividends if the total of all dividends declared by our board of directors in
any year will exceed (1) the total of Albany Bank & Trust's net profits for that
year, plus (2) Albany Bank & Trust's retained net profits of the preceding two
years, less any required transfers to surplus.
The payment of dividends by Community Capital and Albany Bank & Trust
may also be affected by other factors, such as the requirement to maintain
adequate capital above regulatory guidelines. If, in the opinion of the Office
of the Comptroller of the Currency, Albany Bank & Trust were engaged in or about
to engage in an unsafe or unsound practice, the Office of the Comptroller of the
Currency could require, after notice and a hearing, that Albany Bank & Trust
stop or refrain from engaging in the practice. The federal banking agencies have
indicated that paying dividends that deplete a depository institution's capital
base to an inadequate level would be an unsafe and unsound banking practice.
Under the Federal Deposit Insurance Corporation Improvement Act of 1991, a
depository institution may not pay any dividend if payment would cause it to
become undercapitalized or if it already is undercapitalized. Moreover, the
federal agencies have issued policy statements that provide that bank holding
companies and insured banks should generally only pay dividends out of current
operating earnings. See "--Prompt Corrective Action" above.
RESTRICTIONS ON TRANSACTIONS WITH AFFILIATES
Community Capital and Albany Bank & Trust are subject to the provisions
of Section 23A of the Federal Reserve Act. Section 23A places limits on the
amount of:
- loans or extensions of credit to affiliates;
- investment in affiliates;
10
<PAGE> 13
- the purchase of assets from affiliates, except for real and
personal property exempted by the Federal Reserve;
- loans or extensions of credit to third parties collateralized
by the securities or obligations of affiliates; and
- any guarantee, acceptance or letter of credit issued on behalf
of an affiliate.
The aggregate of all of the above transactions is limited in amount, as
to any one affiliate, to 10% of a bank's capital and surplus and, as to all
affiliates combined, to 20% of a bank's capital and surplus. In addition to the
limitation on the amount of these transactions, each of the above transactions
must also meet specified collateral requirements. Community Capital must also
comply with certain provisions designed to avoid the taking of low-quality
assets.
Community Capital and Albany Bank & Trust are also subject to the
provisions of Section 23B of the Federal Reserve Act which, among other things,
prohibits an institution from engaging in the above transactions with affiliates
unless the transactions are on terms substantially the same, or at least as
favorable to the institution or its subsidiaries, as those prevailing at the
time for comparable transactions with nonaffiliated companies.
Albany Bank & Trust is also subject to restrictions on extensions of
credit to its executive officers, directors, certain principal shareholders and
their related interests. These extensions of credit (1) must be made on
substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with third parties, and (2)
must not involve more than the normal risk of repayment or present other
unfavorable features.
PRIVACY
The Gramm-Leach-Bliley Act also contains provisions regarding consumer
privacy. These provisions require financial institutions to disclose their
policy for collecting and protecting confidential information. Customers
generally may prevent financial institutions from sharing personal financial
information with nonaffiliated third parties except for third parties that
market the institutions' own products and services. Additionally, financial
institutions generally may not disclose consumer account numbers to any
nonaffiliated third party for use in telemarketing, direct mail marketing or
other marketing through electronic mail to the consumer.
PROPOSED LEGISLATION AND REGULATORY ACTION
New regulations and statutes are regularly proposed that contain
wide-ranging proposals for altering the structures, regulations and competitive
relationships of the nation's financial institutions. We cannot predict whether
or in what form any proposed regulation or statute will be adopted or the extent
to which our business may be affected by any new regulation or statute.
EFFECT OF GOVERNMENTAL MONETARY POLICES
Our earnings are affected by domestic economic conditions and the
monetary and fiscal policies of the United States government and its agencies.
The Federal Reserve's monetary policies have had, and are likely to continue to
have, an important impact on the operating results of commercial banks through
its power to implement national monetary policy in order, among other things, to
curb inflation
11
<PAGE> 14
or combat a recession. The monetary policies of the Federal Reserve Board affect
the levels of bank loans, investments and deposits through its control over the
issuance of United States government securities, its regulation of the discount
rate on borrowings of member banks and its influence over reserve requirements
against member bank deposits. We cannot predict the nature or impact of future
changes in monetary and fiscal policies.
SELECTED STATISTICAL INFORMATION
The responses to this section of Item I are included in the Company's
Annual Report to Shareholders under the heading "Selected Statistical
Information" at pages 33 through 39, and are incorporated herein by reference.
ITEM 2. DESCRIPTION OF PROPERTIES
Community Capital's executive offices and Albany Bank & Trust is
located at 2815 Meredyth Drive in Albany, Georgia in Dougherty County. On
November 20, 1998, Community Capital purchased approximately two acres of land
at 2815 Meredyth Drive at a purchase price of $315,000. Construction of the
permanent bank building was complete in March, 2000. The total construction
costs for the building were approximately $1.4 million. The bank building is a
two-story, Colonial style building consisting of approximately 10,700 square
feet, four drive-up widows and one automated teller machine.
Other than normal real estate commercial lending activities of Albany
Bank & Trust, Community Capital generally does not invest in real estate,
interests in real estate, real estate mortgages, or securities of or interests
in persons primarily engaged in real estate activities.
ITEM 3. LEGAL PROCEEDINGS
There are no material pending legal proceedings to which Community
Capital is a party or of which any of its properties are subject; nor are there
material proceedings known to Community Capital to be contemplated by any
governmental authority; nor are there material proceedings known to Community
Capital, pending or contemplated, in which any director, officer or affiliate or
any principal security holder of Community Capital or any associate of any of
the foregoing, is a party or has an interest adverse to Community Capital.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The response to this Item is partially included in Community Capital's
Annual Report to Shareholders at page 40 and is incorporated herein by
reference.
12
<PAGE> 15
Community Capital did not sell any unregistered shares of its common
stock, $1.00 par value, during fiscal year 1998, except for one share which
Community Capital sold to its president upon its incorporation on August 19,
1998. This share was sold to the president for $1.00 and was redeemed by
Community Capital for the same amount upon the closing of Community Capital's
initial public offering of common stock on March 11, 1999. Since this share was
sold to our president, the sale did not involve a public offering and was
therefore exempt from registration under Section 4(2) of the Securities Act of
1933.
During fiscal year 1999, Community Capital granted options to purchase
103,300 shares of its common stock, $1.00 par value, to selected employees as
compensation for their services to Albany Bank & Trust and Community Capital.
The following table sets forth information regarding the option grants:
<TABLE>
<CAPTION>
NUMBER OF OPTIONS NUMBER OF SHARES
DATE ISSUED GRANTED SUBJECT TO OPTIONS GRANTED EXERCISE PRICE
----------- ------- -------------------------- --------------
<S> <C> <C> <C>
March 11, 1999 5 82,900 $10.00
March 16, 1999 3 1,400 $10.00
April 1, 1999 2 2,000 $13.00
April 12, 1999 1 500 $13.00
April 16, 1999 2 600 $11.00
April 26, 1999 1 500 $11.00
May 3, 1999 1 200 $11.00
September 28, 1999 1 200 $10.50
November 15, 1999 1 15,000 $10.50
-- -------
1999 TOTAL 17 103,300
</TABLE>
Each of option vests in equal 20% annual increments beginning on the
first anniversary of the grant date and has a maximum term of ten years. Since
the options were granted to employees, the option grants did not involve a
public offering, and therefore were exempt from registration under Section 4(2)
of the Securities Act of 1933.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The response to this Item is included in Community Capital's Annual
Report to Shareholders under the heading, "Management's Discussion and Analysis
of Financial Condition and Results of Operations," at pages 25 through 32, and
is incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS
The following financial statements are included in Community Capital's
Annual Report to Shareholders at pages 1 through 24, and are incorporated herein
by reference.
Independent Auditors' Report
Financial Statements
13
<PAGE> 16
Consolidated Statement of Financial Condition as of December 31, 1999
Consolidated Statement of Income for the years ended December 31, 1999
Consolidated Statement of changes in Shareholders' Equity for the years
ended December 31, 1999
Consolidated Statement of Cash Flows for the years ended December 31,
1999
Notes to Consolidated Financial Statements
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not Applicable.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
The responses to this Item are included in Community Capital's Proxy
Statement for the Annual Meeting of Shareholders to be held April 24,
2000, under the following headings, and are incorporated herein by
reference.
Proposal One: Election of Directors - Class I Director Nominees,
Continuing Class II Directors and - Continuing Class III Directors" at
pages 3 through 4;
"Executive Officers," at page 6;
"Section 16(a) Beneficial Ownership Reporting Compliance," at pages 9
through 10.
ITEM 10. EXECUTIVE COMPENSATION
The responses to this Item are included in Community Capital's Proxy
Statement for the Annual Meeting of Shareholders to be held April 24, 2000,
under the heading, "Compensation" at pages 6 through 8, and are incorporated
herein by reference.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The responses to this Item are included in Community Capital's Proxy
Statement for the Annual Meeting of Shareholders to be held April 24, 2000,
under the headings, "Security Ownership of Certain Beneficial Owners," at pages
8 through 9, and are incorporated herein by reference.
14
<PAGE> 17
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The responses to this Item are included in Community Capital's Proxy
Statement for the Annual Meeting of Shareholders to be held April 24, 2000,
under the headings, "Certain Relationships and Related Transactions," at page
10, and "Compensation" at pages 6 through 8, and are incorporated herein by
reference.
15
<PAGE> 18
ITEM 13. EXHIBITS, LISTS AND REPORTS ON FORM 8-K
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit
Number Exhibit
------ -------
<S> <C>
3.1 Articles of Incorporation.(1)
3.2 Bylaws.(1)
4.1 Instruments Defining the Rights of Security Holders.
See Articles of Incorporation at Exhibit 3.1 hereto
and Bylaws at Exhibit 3.2 hereto.
10.1 Purchase Agreement for main office property dated
November 20, 1998.(2)
10.2 Agreement between Albany Bank & Trust and LRA
Constructors, Inc. dated May 17, 1999 for the
construction of the main office building.(3)
10.3 Amended and Restated Employment Agreement dated
August 19, 1998, among Albany Bank & Trust, N.A. (In
Organization), Community Capital Bancshares, Inc. and
Robert E. Lee (1) and the Form of Amendment thereto.(2)
10.4 Employment Agreement dated October 1, 1998, among
Albany Bank & Trust, N.A. (In Organization),
Community Capital Bancshares, Inc. and David C.
Guillebeau, as amended November 9, 1998 (1) and the Form
of Second Amendment thereto.(2)
10.5 Form of Community Capital Bancshares, Inc.
Organizers' Warrant Agreement.(2)
10.6 Community Capital Bancshares, Inc. Amended and
Restated 1998 Stock Incentive Plan.(4)
10.7 Form of Community Capital Bancshares, Inc. Incentive
Stock Option Award.(1)
</TABLE>
- -----------------------
(1) Incorporated herein by reference to exhibit of same number in Community
Capital's Registration Statement on Form SB-2, Registration No.
333-68307, filed December 3, 1998.
(2) Incorporated herein by reference to exhibit of same number in Community
Capital's Amendment No. 1 to Registration Statement on Form SB-2,
Registration No. 333-68307, filed February 2, 1999.
(3) Incorporated herein by reference to Exhibit 10.1 in Community Capital's
Quarterly Report on Form 10-QSB for the quarter ended June 30, 1999.
(4) Incorporated by reference to exhibit of same number in Community
Capital's Amendment No. 2 to Registration Statement on Form SB2,
Registration No. 33368307, filed February 2, 1999.
16
<PAGE> 19
13.1 Community Capital Bancshares, Inc. 1999 Annual Report
to Shareholders. Except with respect to those
portions specifically incorporated by reference into
this Report, Community Capital's 1999 Annual Report
to Shareholders is not deemed to be filed as part of
this Report.
22.1 Subsidiaries of Community Capital Bancshares, Inc.(1)
24.1 Power of Attorney (appears on the signature pages to
this Annual Report on 10-KSB).
27.1 Financial Data Schedule (for SEC use only).
(b) Reports on Form 8-K filed in the fourth quarter of 1999: None
- ---------------------
(1) Incorporated herein by reference to exhibit of same number in Community
Capital's Registration Statement on Form SB-2, Registration No.
333-68307, filed December 3, 1998.
17
<PAGE> 20
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized.
COMMUNITY CAPITAL BANCSHARES, INC.
By: /s/ Robert E. Lee
-----------------------------------
Robert E. Lee
President
Date: March 20, 2000
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears on the
signature page to this Report constitutes and appoints Robert E. Lee and Charles
M. Jones, III, and each of them, his true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution, for him and in his
name, place, and stead, in any and all capacities, to sign any and all
amendments to this Report, and to file the same, with all exhibits hereto, and
other documents in connection herewith with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents or any of them, or their
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
- ---------------------------------- Director
Robert M. Beauchamp
/s/ Bennett D. Cotton, Jr. Director March 20, 2000
- ----------------------------------
Bennett D. Cotten, Jr.
/s/ Glenn A. Dowling Director March 20, 2000
- ----------------------------------
Glenn A. Dowling
</TABLE>
<PAGE> 21
<TABLE>
<S> <C> <C>
- ---------------------------------- Director
Mary Helen Dykes
/s/ Charles M. Jones, III Chairman of the Board March 20, 2000
- ---------------------------------- and Chief Executive Officer
Charles M. Jones, III
/s/ Van Cise Knowles Director March 20, 2000
- ----------------------------------
Van Cise Knowles
/s/ C. Richard Langley Director March 20, 2000
- ----------------------------------
C. Richard Langley
/s/ Robert E. Lee Director and President March 20, 2000
- ---------------------------------- (Principal Executive
Robert E. Lee Officer)
/s/ Corinne C. Martin Director March 20, 2000
- ----------------------------------
Corinne C. Martin
/s/ William F. McAfee Director March 20, 2000
- ----------------------------------
William F. McAfee
- ---------------------------------- Director
Mark M. Shoemaker
/s/ Jane Anne D. Sullivan Director March 20, 2000
- ---------------------------------
Jane Anne D. Sullivan
/s/ John P. Ventulett, Jr. Director March 20, 2000
- ----------------------------------
John P. Ventulett, Jr.
/s/ Lawrence B. Willson Director March 20, 2000
- ----------------------------------
Lawrence B. Willson
/s/ James D. Woods Director March 20, 2000
- ----------------------------------
James D. Woods
/s/ David J. Baranko Chief Financial Officer March 20, 2000
- ---------------------------------- (Principal Financial and
David J. Baranko Accounting Officer)
</TABLE>
<PAGE> 22
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Exhibit
-------- --------
<S> <C>
3.1 Articles of Incorporation.(1)
3.2 Bylaws.(1)
4.1 Instruments Defining the Rights of Security Holders. See
Articles of Incorporation at Exhibit 3.1 hereto and Bylaws at
Exhibit 3.2 hereto.
10.1 Purchase Agreement for main office property dated November 20,
1998.(2)
10.2 Agreement between Albany Bank & Trust and LRA Constructors,
Inc. dated May 17, 1999 for the construction of the main
office building.(3)
10.3 Amended and Restated Employment Agreement dated August 19,
1998, among Albany Bank & Trust, N.A. (In Organization),
Community Capital Bancshares, Inc. and Robert E. Lee(1) and
the Form of Amendment thereto.(2)
10.4 Employment Agreement dated October 1, 1998, among Albany Bank
& Trust, N.A. (In Organization), Community Capital Bancshares,
Inc. and David C. Guillebeau, as amended November 9, 1998(1)
and the Form of Second Amendment thereto.(2)
10.5 Form of Community Capital Bancshares, Inc. Organizers' Warrant
Agreement.(2)
10.6 Community Capital Bancshares, Inc. Amended and Restated 1998
Stock Incentive Plan.(4)
10.7 Form of Community Capital Bancshares, Inc. Incentive Stock
Option Award.(1)
</TABLE>
- -----------------------
(1) Incorporated herein by reference to exhibit of same number in Community
Capital's Registration Statement on Form SB-2, Registration No.
333-68307, filed December 3, 1998.
(2) Incorporated herein by reference to exhibit of same number in Community
Capital's Amendment No. 1 to Registration Statement on Form SB-2,
Registration No. 333-68307, filed February 2, 1999.
(3) Incorporated herein by reference to Exhibit 10.1 in Community Capital's
Quarterly Report on Form 10-QSB for the quarter ended June 30, 1999.
(4) Incorporated herein by reference to exhibit of same number in Community
Capital's Amendment No. 2 to Registration Statement on Form SB-2,
Registration No. 333-68307, filed February 2, 1999.
<PAGE> 23
13.1 Community Capital Bancshares, Inc. 1999 Annual Report to
Shareholders. Except with respect to those portions
specifically incorporated by reference into this Report,
Community Capital's 1999 Annual Report to Shareholders is not
deemed to be filed as part of this Report.
22.1 Subsidiaries of Community Capital Bancshares, Inc.(1)
24.1 Power of Attorney (appears on the signature pages to this
Annual Report on 10-KSB).
27.1 Financial Data Schedule (for SEC use only).
- -------------------------------
(1) Incorporated herein by reference to exhibit of same number in Community
Capital's Registration Statement on Form SB2, Registration No.
33368307, filed December 3, 1998.
<PAGE> 1
EXHIBIT 13.1
Community Capital Bancshares, Inc.
1999 Annual Report
[ALBANY BANK & TRUST LOGO]
<PAGE> 2
Community Capital Bancshares, Inc.
Annual Report
Table of Contents
<TABLE>
<CAPTION>
Page
----
<S> <C>
Independent Auditors Report ......................................... 1
FINANCIAL STATEMENTS
Consolidated balance sheet ...........................................2
Consolidated statement of operations .................................3
Consolidated statement of comprehensive loss .........................4
Consolidated statement of stockholders' equity .......................5
Consolidated statement of cash flows .................................6
Notes to consolidated financial statements ........................7-24
Management's discussion and analysis of financial condition
and results of operations ..........................................25
Selected financial information and statistical data .................33
Corporate information ...............................................40
Directors and Officers ..............................................41
</TABLE>
<PAGE> 3
INDEPENDENT AUDITOR'S REPORT
================================================================================
TO THE BOARD OF DIRECTORS
COMMUNITY CAPITAL BANCSHARES, INC.
AND SUBSIDIARY
ALBANY, GEORGIA
We have audited the accompanying consolidated balance sheet of
COMMUNITY CAPITAL BANCSHARES, INC. AND SUBSIDIARY as of December 31, 1999, and
the related consolidated statements of operations, comprehensive loss,
stockholders' equity, and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Community
Capital Bancshares, Inc. and Subsidiary as of December 31, 1999, and the results
of their operations and their cash flows for the year then ended, in conformity
with generally accepted accounting principles.
/s/ Mauldin & Jenkins, LLC
Albany, Georgia
January 14, 2000
<PAGE> 4
COMMUNITY CAPITAL BANCSHARES, INC.
AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1999
================================================================================
ASSETS
<TABLE>
<S> <C>
Cash and due from banks $ 949,326
Federal funds sold 810,000
Securities available-for-sale 13,351,772
Loans 19,607,865
Less allowance for loan losses 300,000
------------
Loans, net 19,307,865
Premises and equipment 1,910,055
Other assets 412,437
------------
$ 36,741,455
============
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
Noninterest-bearing demand $ 2,925,670
Interest-bearing demand 8,548,872
Savings 259,323
Time, $100,000 and over 11,395,227
Other time 4,888,828
------------
Total deposits 28,017,920
Other liabilities 155,409
------------
TOTAL LIABILITIES 28,173,329
------------
Commitments and contingent liabilities
Stockholders' equity
Preferred stock, par value not stated; 2,000,000 shares
authorized; no shares issued --
Common stock, par value $1.00; 10,000,000 shares authorized;
1,050,000 issued and outstanding 1,050,000
Capital surplus 8,538,483
Accumulated deficit (973,154)
Accumulated other comprehensive loss (47,203)
------------
TOTAL STOCKHOLDERS' EQUITY 8,568,126
------------
$ 36,741,455
============
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE> 5
COMMUNITY CAPITAL BANCSHARES, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999
================================================================================
<TABLE>
<S> <C>
INTEREST INCOME
Loans $ 675,427
Taxable securities 250,144
Deposits in banks 1,503
Federal funds sold 223,325
-----------
TOTAL INTEREST INCOME 1,150,399
-----------
INTEREST EXPENSE
Deposits 454,199
Other borrowed money 11,332
-----------
TOTAL INTEREST EXPENSE 465,531
-----------
NET INTEREST INCOME 684,868
PROVISION FOR LOAN LOSSES 300,000
-----------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 384,868
-----------
OTHER INCOME
Service charges on deposit accounts 26,333
Other service charges, commissions and fees 13,943
-----------
TOTAL OTHER INCOME 40,276
-----------
OTHER EXPENSES
Salaries and employee benefits 612,996
Equipment and occupancy expenses 205,988
Marketing expenses 61,303
Data processing expenses 67,563
Administrative expenses 125,765
Loan expenses 26,062
Organizational and preopening expenses 52,161
Other operating expenses 46,412
-----------
TOTAL OTHER EXPENSES 1,198,250
-----------
LOSS BEFORE INCOME TAXES (773,106)
INCOME TAX EXPENSE --
-----------
NET LOSS $ (773,106)
===========
LOSS PER COMMON SHARE $ (0.74)
===========
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE> 6
COMMUNITY CAPITAL BANCSHARES, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENT OF COMPREHENSIVE LOSS
YEAR ENDED DECEMBER 31, 1999
================================================================================
<TABLE>
<S> <C>
NET LOSS $(773,106)
OTHER COMPREHENSIVE LOSS:
Net unrealized holding losses arising
during period, net of tax (benefit) of $(24,316) (47,203)
---------
COMPREHENSIVE LOSS $(820,309)
=========
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE> 7
COMMUNITY CAPITAL BANCSHARES, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
YEAR ENDED DECEMBER 31, 1999
================================================================================
<TABLE>
<CAPTION>
ACCUMULATED
COMMON STOCK OTHER TOTAL
------------------------- CAPITAL ACCUMULATED COMPREHENSIVE STOCKHOLDERS'
SHARES PAR VALUE SURPLUS DEFICIT LOSS EQUITY
---------- ----------- ---------- ----------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1998 1 $ 1 $ 3,514 $(200,048) $ -- $ (196,533)
Net loss -- -- -- (773,106) -- (773,106)
Issuance of common
stock, net of stock
issue costs 1,050,000 1,050,000 8,533,473 -- -- 9,583,473
Imputed interest on
advances from
organizers credited to
capital surplus -- -- 1,496 -- -- 1,496
Redemption of organizers'
common stock (1) (1) -- -- -- (1)
Other comprehensive loss -- -- -- -- (47,203) (47,203)
---------- ----------- ---------- --------- -------- -----------
BALANCE, DECEMBER 31, 1999 1,050,000 $ 1,050,000 $8,538,483 $(973,154) $(47,203) $ 8,568,126
========== =========== ========== ========= ======== ===========
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE> 8
COMMUNITY CAPITAL BANCSHARES, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1999
================================================================================
<TABLE>
<S> <C>
OPERATING ACTIVITIES
Net loss $ (773,106)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation 57,383
Provision for loan losses 300,000
Imputed interest in advances from organizers 1,496
Increase in interest receivable (356,579)
Increase in interest payable 106,871
Other operating activities 45,911
------------
Net cash used in operating activities (618,024)
------------
INVESTING ACTIVITIES
Purchases of securities available for sale (14,677,461)
Proceeds from maturities of securities available for sale 1,254,170
Net increase in Federal funds sold (810,000)
Net increase in loans (19,607,865)
Purchase of equipment (1,607,305)
------------
Net cash used in investing activities (35,448,461)
------------
FINANCING ACTIVITIES
Net increase in deposits 28,017,920
Repayment of notes payable (590,801)
Redemption of organizer's stock (1)
Net proceeds from sale of common stock 9,583,473
------------
Net cash provided by financing activities 37,010,591
------------
Net increase in cash and due from banks 944,106
Cash and due from banks at beginning of year 5,220
------------
Cash and due from banks at end of year $ 949,326
============
SUPPLEMENTAL DISCLOSURE
Cash paid for interest $ 358,660
NONCASH TRANSACTION
Unrealized losses on securities available for sale $ 71,519
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE> 9
COMMUNITY CAPITAL BANCSHARES, INC.
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF BUSINESS
Community Capital Bancshares, Inc. (the "Company") is a bank
holding company whose business is conducted by its wholly-owned
subsidiary, Albany Bank & Trust (the "Bank"). The Bank is a
commercial bank located in Albany, Georgia. The Bank provides a
full range of banking services in its primary market area of
Dougherty County and the surrounding counties. The Bank commenced
its banking operations on April 28, 1999.
BASIS OF PRESENTATION
The consolidated financial statements for 1999 include the accounts
of the Company and its subsidiary. Significant intercompany
transactions and accounts are eliminated in consolidation.
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosures of contingent assets and
liabilities as of the balance sheet date and the reported amounts
of revenues and expenses during the reporting period. Actual
results could differ from those estimates. Material estimates that
are particularly susceptible to significant change in the near term
relate to the determination of the allowance for loan losses, the
valuation of foreclosed real estate and deferred tax assets.
CASH AND DUE FROM BANKS
Cash on hand, cash items in process of collection, and amounts due
from banks are included in cash and due from banks.
The Company maintains amounts due from banks which, at times, may
exceed Federally insured limits. The Company has not experienced
any losses in such accounts.
7
<PAGE> 10
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
SECURITIES
Securities are classified based on management's intention on the
date of purchase. All debt securities are classified as
available-for-sale and recorded at fair value with net unrealized
gains and losses reported in other comprehensive income (losses).
Equity securities without a readily determinable fair value are
included in securities available for sale and recorded at cost.
Interest and dividends on securities, including amortization of
premiums and accretion of discounts, are included in interest
income. Realized gains and losses from the sale of securities are
determined using the specific identification method.
LOANS
Loans are reported at their outstanding principal balances less
unearned income and the allowance for loan losses. Interest income
on loans is accrued based on the principal balance outstanding.
Fees on loans and costs incurred in the origination of consumer and
instalment loans are recognized at the time the loan is placed on
the books. Because these loan fees are not significant and the
majority of loans have maturities of one year or less, the results
of operations are not materially different than the results which
would be obtained by accounting for loan fees and costs in
accordance with generally accepted accounting principles.
8
<PAGE> 11
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
LOANS (CONTINUED)
The accrual of interest on loans is discontinued when, in
management's opinion, the borrower may be unable to meet payments
as they become due. All interest accrued but not collected for
loans that are placed on nonaccrual or charged off is reversed
against interest income. Interest income is subsequently recognized
only to the extent cash payments are received.
The allowance for loan losses is maintained at a level that
management believes to be adequate to absorb potential losses in
the loan portfolio. Loan losses are charged against the allowance
when management believes the uncollectibility of a loan is
confirmed. Subsequent recoveries are credited to the allowance.
Management's determination of the adequacy of the allowance is
based on an evaluation of the portfolio, current economic
conditions, volume, growth, composition of the loan portfolio, and
other risks inherent in the portfolio. This evaluation is
inherently subjective as it requires material estimates that are
susceptible to significant change including the amounts and timing
of future cash flows expected to be received on impaired loans. In
addition, regulatory agencies, as an integral part of their
examination process, will periodically review the Company's
allowance for loan losses, and may require the Company to record
additions to the allowance based on their judgment about
information available to them at the time of their examinations.
A loan is considered to be impaired when it is probable the Company
will be unable to collect all principal and interest payments due
in accordance with the contractual terms of the loan agreement.
Individually identified impaired loans are measured based on the
present value of expected payments using the contractual loan rate
as the discount rate, the loan's observable market price, or the
fair value of the collateral if the loan is collateral dependent.
If the recorded investment in the impaired loan exceeds the measure
of fair value, a valuation allowance is established as a component
of the allowance for loan losses. Changes to the valuation
allowance are recorded as a component of the provision for loan
losses.
PREMISES AND EQUIPMENT
Land is carried at cost. Premises and equipment are carried at cost
less accumulated depreciation computed principally by the
straight-line method over the estimated useful lives of the assets.
9
<PAGE> 12
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INCOME TAXES
Income tax expense consists of current and deferred taxes. Current
income tax provisions approximate taxes to be paid or refunded for
the applicable year. Deferred income tax assets and liabilities are
determined using the balance sheet method. Under this method, the
net deferred tax asset or liability is determined based on the tax
effects of the differences between the book and tax bases of the
various balance sheet assets and liabilities and gives current
recognition to changes in tax rates and laws.
Recognition of deferred tax balance sheet amounts is based on
management's belief that it is more likely than not that the tax
benefit associated with certain temporary differences, tax
operating loss carryforwards and tax credits will be realized. A
valuation allowance is recorded for those deferred tax items for
which it is more likely than not that realization will not occur in
the near term.
The Company and the Bank file a consolidated income tax return.
Each entity provides for income taxes based on its contribution to
income taxes (benefits) of the consolidated group.
LOSS PER COMMON SHARE
Loss per common share is computed by dividing net loss by the
weighted average number of shares of common stock outstanding. The
weighted-average number of shares outstanding for the year ended
December 31, 1999 was 1,050,000.
COMPREHENSIVE LOSS
Statement of Financial Standards ("SFAS") 130 describes
comprehensive income as the total of all components of
comprehensive income including net income. Other comprehensive
income refers to revenues, expenses, gains and losses that under
generally accepted accounting principles are included in
comprehensive income but excluded from net income. Currently, the
Company's other comprehensive loss consists of unrealized gains and
losses on available for sale securities.
10
<PAGE> 13
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
RECENT DEVELOPMENTS
In June 1998, the Financial Accounting Standards Board issued SFAS
No. 133, "Accounting for Derivative Instruments and Hedging
Activities". The effective date of this statement has been deferred
by SFAS No. 137 until fiscal years beginning after June 15, 2000.
However, the statement permits early adoption as of the beginning
of any fiscal quarter after its issuance. The Company expects to
adopt this statement effective January 1, 2001. SFAS No. 133
requires the Company to recognize all derivatives as either assets
or liabilities in the balance sheet at fair value. For derivatives
that are not designated as hedges, the gain or loss must be
recognized in earnings in the period of change. For derivatives
that are designated as hedges, changes in the fair value of the
hedged assets, liabilities, or firm commitments must be recognized
in earnings or recognized in other comprehensive income until the
hedged item is recognized in earnings, depending on the nature of
the hedge. The ineffective portion of a derivative's change in fair
value must be recognized in earnings immediately. Management has
not yet determined what effect the adoption of SFAS No. 133 will
have on the Company's earnings or financial position.
There are no other recent accounting pronouncements that have had,
or are expected to have, a material effect on the Company's
financial statements.
NOTE 2. SECURITIES
The amortized cost and fair value of securities are summarized as
follows:
<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
SECURITIES AVAILABLE FOR SALE
DECEMBER 31, 1999:
U. S. GOVERNMENT AND
AGENCY SECURITIES $ 11,904,479 $ -- $ (79,441) $ 11,825,038
STATE AND MUNICIPAL SECURITIES 1,000,000 -- -- 1,000,000
EQUITY SECURITIES 268,325 -- -- 268,325
MORTGAGE-BACKED SECURITIES 250,487 7,922 -- 258,409
------------ ------------ ------------ ------------
$ 13,423,291 $ 7,922 $ (79,441) $ 13,351,772
============ ============ ============ ============
</TABLE>
There were no pledged securities at December 31, 1999.
11
<PAGE> 14
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2. SECURITIES (CONTINUED)
The amortized cost and fair value of debt securities as of December
31, 1999 by contractual maturity are shown below. Maturities may
differ from contractual maturities of mortgage-backed securities
because the mortgages underlying the securities may be called or
prepaid with or without penalty. Therefore, these securities and
equity securities are not included in the maturity categories in the
following summary.
<TABLE>
<CAPTION>
SECURITIES AVAILABLE FOR SALE
----------------------------------
AMORTIZED FAIR
COST VALUE
----------- -----------
<S> <C> <C>
Due in one year or less $ 501,020 $ 498,438
Due from one year to five years 11,403,459 11,326,600
Due after ten years 1,000,000 1,000,000
Equity securities 268,325 268,325
Mortgage-backed securities 250,487 258,409
----------- -----------
$13,423,291 $13,351,772
=========== ===========
</TABLE>
NOTE 3. LOANS AND ALLOWANCE FOR LOAN LOSSES
The composition of loans at December 31, 1999 is summarized
as follows:
<TABLE>
<S> <C>
Commercial $ 4,456,969
Real estate - construction 749,995
Real estate - mortgage 10,779,926
Consumer, instalment and other 3,620,975
------------
19,607,865
Allowance for loan losses (300,000)
------------
Loans, net $ 19,307,865
============
</TABLE>
12
<PAGE> 15
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3. LOANS AND ALLOWANCE FOR LOAN LOSSES (CONTINUED)
Changes in the allowance for loan losses for the year ended December
31, 1999 are as follows:
<TABLE>
<S> <C>
BALANCE, BEGINNING OF YEAR $ -
Provision for loan losses 300,000
----------
BALANCE, END OF YEAR $ 300,000
==========
</TABLE>
Management has identified no amounts of impaired loans as defined by
SFAS No. 114, ("Accounting by Creditors for Impairment of a Loan").
The Company has granted loans to certain directors, executive
officers, and their related entities. The interest rates on these
loans were substantially the same as rates prevailing at the time of
the transaction and repayment terms are customary for the type of loan
involved. Changes in related party loans for the year ended December
31, 1999 are as follows:
<TABLE>
<S> <C>
BALANCE, BEGINNING OF YEAR $ -
Advances 1,069,546
Repayments (122,559)
-----------
BALANCE, END OF YEAR $ 946,987
===========
</TABLE>
NOTE 4. PREMISES AND EQUIPMENT
Premises and equipment at December 31, 1999 are summarized as follows:
<TABLE>
<S> <C>
Land $ 322,724
Equipment 549,501
Construction in progress (estimated additional costs to complete $305,000) 1,095,213
-------------
1,967,438
Accumulated depreciation (57,383)
-------------
$ 1,910,055
=============
</TABLE>
13
<PAGE> 16
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5. DEPOSITS
At December 31, 1999, the scheduled maturities of time deposits are as
follows:
<TABLE>
<S> <C>
2000 $ 13,582,570
2001 2,673,210
2002 -
2003 22,250
2004 6,025
--------------
$ 16,284,055
==============
</TABLE>
NOTE 6. SALARY DEFERRAL PLAN
The Company has a 401(k) retirement plan covering all employees,
subject to certain minimum requirements. The Plan allows employees to
defer up to 16% of their salary with partially matching Bank
contributions. The contribution expense associated with this plan was
$8,492 for the year ended December 31, 1999.
NOTE 7. INCOME TAXES
Income tax expense for the year ended December 31, 1999 consists of
the following:
<TABLE>
<S> <C>
Current $ -
Deferred (261,771)
Change in valuation allowance 261,771
----------
Income tax expense $ -
==========
</TABLE>
The Company's income tax expense differs from the amounts computed by
applying the Federal income tax statutory rates to income before
income taxes. A reconciliation of the differences for the year ended
December 31, 1999 is as follows:
<TABLE>
<CAPTION>
AMOUNT PERCENT
------------- -------
<S> <C> <C>
Income taxes at statutory rate $ (262,856) (34)%
Other items 1,085 -
Change in valuation allowance 261,771 34
------------- -------
Income tax expense $ - -%
============= =======
</TABLE>
14
<PAGE> 17
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 7. INCOME TAXES (CONTINUED)
The components of deferred income taxes at December 31, 1999 are as
follows:
<TABLE>
<S> <C>
Deferred tax assets:
Loan loss reserves $ 75,480
Preopening and organizational expenses 40,007
Securities available for sale 24,316
Net operating loss carryforward 175,519
------------
315,322
Valuation allowance (289,535)
------------
25,787
------------
Deferred tax liabilities; depreciation 1,471
------------
Net deferred taxes $ 24,316
============
</TABLE>
At December 31, 1999, the Company has available net operating loss
carryforwards of $516,232 for Federal income tax purposes. If unused,
the carryforwards will expire beginning in 2012.
NOTE 8. STOCK OPTION PLANS
The Company has a fixed stock option plan under which it has granted
options to its employees to purchase common stock at the fair market
price on the date of grant. All of the options are intended to be
incentive stock options qualifying under Section 422 of the Internal
Revenue Code for favorable tax treatment. Under the 1998 Plan, options
to purchase 88,300 shares were granted. Options under the 1998 Plan
vest over five years beginning one year after the date of the grant
and are exercisable over a period of ten years. Under the 1998 Plan,
no options to purchase shares were exercisable as of December 31,
1999.
15
<PAGE> 18
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 8. STOCK OPTION PLANS (CONTINUED)
A summary of the fixed plan at December 31, 1999 and changes during
the year ended on that date is as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1999
------------------------
Weighted-
Average
Exercise
Number Price
-------- ---------
<S> <C> <C>
Under option, beginning of year - $ -
Granted 88,300 10.10
Exercised - -
Forfeited - -
======
Under option, end of year 88,300 $10.10
======
Exercisable, end of year - -
======
Weighted average fair value per
option of options granted during
the year $ 5.21
======
</TABLE>
A further summary about options outstanding at December 31, 1999 is as
follows:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING
--------------------------------------------------
WEIGHTED- WEIGHTED-
RANGE OF AVERAGE AVERAGE
EXERCISE NUMBER CONTRACTUAL EXERCISE
PRICES OUTSTANDING LIFE IN YEARS PRICE
-------- ----------- ------------- ---------
<S> <C> <C> <C>
$ 10.00 84,300 10.0 $ 10.00
10.50 200 10.0 10.50
11.00 1,300 10.0 11.00
13.00 2,500 10.0 13.00
------
88,300 10.00 10.10
======
</TABLE>
16
<PAGE> 19
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 8. STOCK OPTION PLANS (CONTINUED)
As permitted by Statement of Financial Accounting Standard No. 123,
"Accounting for Stock-Based Compensation" (SFAS No. 123), the Company
recognizes compensation cost for stock-based employee compensation
awards in accordance with APB Opinion No. 25, "Accounting for Stock
Issued to Employees". The Company recognized no compensation cost
under the stock-based employee compensation awards for the year ended
December 31, 1999. Since no options to purchase shares were
exercisable at December 31, 1999, no compensation cost would have been
recognized in accordance with SFAS No. 123 for the year ended December
31, 1999.
The fair value of the options granted in 1999 was based upon the
discounted value of future cash flows of the options using the
following assumptions:
<TABLE>
<CAPTION>
DECEMBER 31,
1999
---------------
<S> <C>
Risk-free interest rate 6.72%
Expected life of the options 10
Expected dividends (as a percent of the fair value of the stock) 0.00%
Expected volatility 39.94%
</TABLE>
NOTE 9. COMMITMENTS AND CONTINGENT LIABILITIES
In the normal course of business, the Company has entered into
off-balance-sheet financial instruments which are not reflected in
the financial statements. These financial instruments include
commitments to extend credit and standby letters of credit. Such
financial instruments are included in the financial statements when
funds are disbursed or the instruments become payable. These
instruments involve, to varying degrees, elements of credit risk in
excess of the amount recognized in the balance sheet.
The Company's exposure to credit loss in the event of nonperformance
by the other party to the financial instrument for commitments to
extend credit and standby letters of credit is represented by the
contractual amount of those instruments. A summary of the Company's
commitments at December 31, 1999 is as follows:
<TABLE>
<S> <C>
Commitments to extend credit $ 3,895,884
==============
</TABLE>
17
<PAGE> 20
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 9. COMMITMENTS AND CONTINGENT LIABILITIES (CONTINUED)
Commitments to extend credit generally have fixed expiration dates or
other termination clauses and may require payment of a fee. Since
many of the commitments are expected to expire without being drawn
upon, the total commitment amounts do not necessarily represent
future cash requirements. The credit risk involved in issuing these
financial instruments is essentially the same as that involved in
extending loans to customers. The Company evaluates each customer's
creditworthiness on a case-by-case basis. The amount of collateral
obtained, if deemed necessary by the Company upon extension of
credit, is based on management's credit evaluation of the customer.
Collateral held varies but may include real estate and improvements,
marketable securities, accounts receivable, inventory, equipment, and
personal property.
In the normal course of business, the Company is involved in various
legal proceedings. In the opinion of management of the Company, any
liability resulting from such proceedings would not have a material
effect on the Company's financial statements.
NOTE 10. CONCENTRATIONS OF CREDIT
The Company originates primarily commercial, residential, and
consumer loans to customers in Dougherty County and surrounding
counties. The ability of the majority of the Company's customers to
honor their contractual loan obligations is dependent on the economy
in these areas. Sixty percent of the Company's loan portfolio is
concentrated in commercial loans. The other significant
concentrations of credit by type of loan are set forth in Note 3.
The Company, as a matter of policy, does not generally extend credit
to any single borrower or group of related borrowers in excess of 15%
of the Bank's capital and surplus as defined by the Office of the
Comptroller of the Currency, or approximately $1,125,000.
18
<PAGE> 21
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 11. REGULATORY MATTERS
The Bank is subject to certain restrictions on the amount of
dividends that may be declared without prior regulatory approval. At
December 31, 1999, no dividends could be declared without regulatory
approval.
The Company and the Bank are subject to various regulatory capital
requirements administered by the federal banking agencies. Failure to
meet minimum capital requirements can initiate certain mandatory, and
possibly additional discretionary actions by regulators that, if
undertaken, could have a direct material effect on the financial
statements. Under capital adequacy guidelines and the regulatory
framework for prompt corrective action, the Company and Bank must
meet specific capital guidelines that involve quantitative measures
of the assets, liabilities, and certain off-balance-sheet items as
calculated under regulatory accounting practices. The Company and
Bank's capital amounts and classification are also subject to
qualitative judgments by the regulators about components, risk
weightings, and other factors.
Quantitative measures established by regulation to ensure capital
adequacy require the Company and Bank to maintain minimum amounts and
ratios of Total and Tier I capital to risk-weighted assets and of
Tier I capital to average assets. Management believes, as of December
31, 1999, the Company and the Bank meet all capital adequacy
requirements to which they are subject.
As of December 31, 1999, the most recent notification from the Office
of the Comptroller of the Currency categorized the Bank as well
capitalized under the regulatory framework for prompt corrective
action. To be categorized as well capitalized, the Bank must maintain
minimum Total risk-based, Tier I risk-based, and Tier I leverage
ratios as set forth in the following table. There are no conditions
or events since that notification that management believes have
changed the Bank's category.
19
<PAGE> 22
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 11. REGULATORY MATTERS (CONTINUED)
The Company and Bank's actual capital amounts and ratios are
presented in the following table:
<TABLE>
<CAPTION>
To Be Well
For Capital Capitalized Under
Adequacy Prompt Corrective
Actual Purposes Action Provisions
-------------------- ---------------- -----------------
Amount Ratio Amount Ratio Amount Ratio
-------- ----- -------- ----- -------- -------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Total Capital to Risk Weighted Assets:
Consolidated $ 8,874 42.97% $ 1,652 8% - - - N/A - - -
Bank $ 6,891 33.38% $ 1,652 8% $ 2,065 10%
Tier I Capital to Risk Weighted Assets:
Consolidated $ 8,615 41.71% $ 826 4% - - - N/A - - -
Bank $ 6,632 32.12% $ 826 4% $ 1,239 6%
Tier I Capital to Average Assets:
Consolidated $ 8,615 40.24% $ 857 4% - - - N/A - - -
Bank $ 6,632 31.68% $ 838 4% $ 1,047 5%
</TABLE>
NOTE 12. FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used by the Company in
estimating its fair value disclosures for financial instruments. In
cases where quoted market prices are not available, fair values are
based on estimates using discounted cash flow models. Those models
are significantly affected by the assumptions used, including the
discount rates and estimates of future cash flows. In that regard,
the derived fair value estimates cannot be substantiated by
comparison to independent markets and, in many cases, could not be
realized in immediate settlement of the instrument. The use of
different methodologies may have a material effect on the estimated
fair value amounts. Also, the fair value estimates presented herein
are based on pertinent information available to management as of
December 31, 1999. Such amounts have not been revalued for purposes
of these financial statements since those dates and, therefore,
current estimates of fair value may differ significantly from the
amounts presented herein.
20
<PAGE> 23
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 12. FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)
CASH, DUE FROM BANKS, AND FEDERAL FUNDS SOLD:
The carrying amounts of cash, due from banks, and Federal funds
sold approximate their fair value.
SECURITIES:
Fair values for securities are based on available quoted market
prices. The carrying values of equity securities with no readily
determinable fair value approximate fair values.
LOANS:
For variable-rate loans that reprice frequently and have no
significant change in credit risk, fair values are based on
carrying values. For other loans, the fair values are estimated
using discounted cash flow models, using current market interest
rates offered for loans with similar terms to borrowers of similar
credit quality. Fair values for impaired loans are estimated using
discounted cash flow models or based on the fair value of the
underlying collateral.
DEPOSITS:
The carrying amounts of demand deposits, savings deposits, and
variable-rate certificates of deposit approximate their fair
values. Fair values for fixed-rate certificates of deposit are
estimated using discounted cash flow models, using current market
interest rates offered on certificates with similar remaining
maturities.
ACCRUED INTEREST:
The carrying amounts of accrued interest approximate their fair
values.
21
<PAGE> 24
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 12. FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)
OFF-BALANCE SHEET INSTRUMENTS:
The fair values of the Company's off-balance-sheet financial
instruments are based on fees charged to enter into similar
agreements. However, commitments to extend credit and standby
letters of credit do not represent a significant value to the
Company until such commitments are funded. The Company has
determined that these instruments do not have a distinguishable
fair value and no fair value has been assigned.
The carrying amounts and estimated fair values of the Company's
financial instruments were as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1999
--------------------------------
CARRYING FAIR
AMOUNT VALUE
------------- -------------
<S> <C> <C>
FINANCIAL ASSETS:
Cash, due from banks,
and Federal funds sold $ 1,759,326 $ 1,759,326
Securities available for sale 13,351,772 13,351,772
Loans 19,307,865 19,241,000
Accrued interest receivable 356,579 356,579
FINANCIAL LIABILITIES:
Deposits 28,017,920 28,126,778
Accrued interest payable 106,871 106,871
</TABLE>
22
<PAGE> 25
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 13. PARENT COMPANY FINANCIAL INFORMATION
The following information presents the condensed balance sheet,
statements of operations, and cash flows of Community Capital
Bancshares, Inc. as of and for the year ended December 31, 1999:
CONDENSED BALANCE SHEET
<TABLE>
<S> <C>
ASSETS
Cash $ 1,983,070
Investment in subsidiary 6,585,056
---------------
$ 8,568,126
===============
STOCKHOLDERS' EQUITY $ 8,568,126
===============
</TABLE>
CONDENSED STATEMENT OF OPERATIONS
<TABLE>
<S> <C>
INCOME
Interest $ 43,095
Other income 104,247
---------
Total income 147,342
---------
EXPENSES
Salaries and employee benefits 20,749
Legal and professional fees 10,534
Interest 11,332
Other operating expenses 10,092
---------
Total expenses 52,707
---------
INCOME BEFORE EQUITY IN LOSS OF SUBSIDIARY 94,635
EQUITY IN LOSS OF SUBSIDIARY (867,741)
---------
NET LOSS $(773,106)
=========
</TABLE>
23
<PAGE> 26
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 13. PARENT COMPANY FINANCIAL INFORMATION (CONTINUED)
CONDENSED STATEMENT OF CASH FLOWS
<TABLE>
<S> <C>
OPERATING ACTIVITIES
Net loss $ (773,106)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Imputed interest on advances from organizers 1,496
Loss of subsidiary 867,741
Other operating activities 28,915
-------------
Net cash provided by operating activities 125,046
-------------
INVESTING ACTIVITIES
Investment in subsidiary (7,139,867)
-------------
Net cash used in investing activities (7,139,867)
-------------
FINANCING ACTIVITIES
Repayment of notes payable (590,801)
Redemption of common stock (1)
Net proceeds from sale of common stock 9,583,473
-------------
Net cash provided by financing activities 8,992,671
-------------
Net increase in cash 1,977,850
Cash at beginning of year 5,220
-------------
Cash at end of year $ 1,983,070
=============
</TABLE>
24
<PAGE> 27
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is a discussion of the financial condition of Community Capital
Bancshares, Inc. ("The Company") and its bank subsidiary, Albany Bank & Trust
N. A. ("The Bank") at December 31, 1999 and 1998 and the results of operations
for the year ended December 31, 1999 and for the period from inception to
December 31, 1998. The purpose of this discussion is to focus on information
about The Company's financial condition and results of operations which are not
otherwise apparent from the audited consolidated financial statements.
Reference should be made to those statements and the selected financial data
presented elsewhere in this report for an understanding of the following
discussion and analysis.
FORWARD-LOOKING STATEMENTS
The Company may from time to time make written or oral forward-looking
statements, including statements contained in the Company's filings with the
Securities and Exchange Commission and its reports to stockholders. Statements
made in the Annual Report, other than those concerning historical information,
should be considered forward-looking and subject to various risks and
uncertainties. Such forward-looking statements are made based upon management's
belief as well as assumptions made by, and information currently available to,
management pursuant to "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995. The Company's actual results may differ
materially from the results anticipated in forward-looking statements due to a
variety of factors, including governmental monetary and fiscal policies,
deposit levels, loan demand, loan collateral values, securities portfolio
values, interest rate risk management; the effects of competition in the
banking business from other commercial banks, thrifts, mortgage banking firms,
consumer finance companies, credit unions, securities brokerage firms,
insurance companies, money market funds and other financial institutions
operating in the Company's market area and elsewhere, including institutions
operating through the Internet, changes in governmental regulation relating to
the banking industry, including regulations relating to branching and
acquisitions, failure of assumptions underlying the establishment of reserves
for loan losses, including the value of collateral underlying delinquent loans
and other factors. The Company cautions that such factors are not exclusive.
The Company does not undertake to update any forward-looking statement that may
be made from time to time by, or on behalf of, the Company.
OVERVIEW
The Company's 1999 results were highlighted by the successful completion of its
common stock offering and the commencement of its banking operations on April
28, 1999. The Company's capital base will allow for substantial growth in 2000
and future years.
25
<PAGE> 28
FINANCIAL CONDITION AT DECEMBER 31, 1999 AND 1998
Following is a summary of the Company's balance sheets for the periods
indicated:
<TABLE>
<CAPTION>
--------------------------
DECEMBER 31,
--------------------------
1999 1998
--------------------------
(DOLLARS IN THOUSANDS)
--------------------------
<S> <C> <C>
Cash and due from banks $ 949 $ 5
Federal funds sold 810 --
Securities 13,352 --
Loans, net 19,308 --
Premises and equipment 1,910 360
Other assets 412 63
---------- ----------
$ 36,741 $ 428
========== ==========
Total deposits $ 28,018 $ --
Other borrowings -- 591
Other liabilities 155 34
Stockholders' equity (deficit) 8,568 (197)
---------- ----------
$ 36,741 $ 428
========== ==========
</TABLE>
FINANCIAL CONDITION AT DECEMBER 31, 1999 AND 1998
As of December 31, 1999, the Company had total assets of $36.7 million. The
Company raised $9.6 million from the sale of its common stock and has
accumulated $28 million in deposits since the commencement of operations on
April 28, 1999. The Company has invested the proceeds from its stock sale and
deposit growth in Federal funds sold ($810,000), debt securities ($13.4
million), loans ($19.6 million), and premises and equipment ($1.9 million). The
Company also repaid debt incurred during the organizational period of $680,000.
The Company expects that loan and deposit growth will be significant during the
coming year. This expected growth is not uncommon for de novo banks. The
Company was in the process of finalizing its common stock offering on December
31, 1998.
The Bank's investment portfolio, consisting primarily of Federal Agency bonds,
amounted to $13.4 million at December 31, 1999.
The Company has 59% of its loan portfolio collateralized by real estate located
in the Company's primary market area of Dougherty County and surrounding
counties. The Company's real estate mortgage and construction portfolio
consists of loans collateralized by one- to four-family residential properties
(32%) and construction loans to build one- to four-family residential
properties (4%), and nonresidential and multi-family properties consisting
primarily of small business commercial and rental properties (23%). The Company
generally requires that loans collateralized by real estate not exceed the
collateral values by the following percentages for each type of real estate
loan as listed below:
<TABLE>
<S> <C>
One- to four-family residential properties 90%
Construction loans on one- to four-family residential properties 80%
Nonresidential and multi-family properties 80%
</TABLE>
The Company's remaining 41% of its loan portfolio consists of commercial,
consumer, and other loans. The Company requires collateral commensurate with
the repayment ability and creditworthiness of the borrower.
26
<PAGE> 29
The specific economic and credit risks associated with the Company's loan
portfolio, especially the real estate portfolio, include, but are not limited
to, a general downturn in the economy which could affect unemployment rates in
the Company's market area, general real estate market deterioration, interest
rate fluctuations, deteriorated or non-existing collateral, title defects,
inaccurate appraisals, financial deterioration of borrowers, fraud, and any
violation of banking protection laws. Construction lending can also present
other specific risks to the lender such as whether developers can find builders
to buy lots for home construction, whether the builders can obtain financing
for the construction, whether the builders can sell the home to a buyer, and
whether the buyer can obtain permanent financing. Currently, real estate values
and employment trends in the Company's market area are stable with no
indications of a significant downturn in the general economy.
The Company attempts to reduce these economic and credit risks not only by
adherence to loan to value guidelines, but also by investigating the
creditworthiness of the borrower and monitoring the borrower's financial
position. Also, the Company establishes and periodically reviews its lending
policies and procedures. Banking regulations limit exposure by prohibiting loan
relationships that exceed 15% of the Bank's statutory capital in the case of
loans which are not fully secured by readily marketable or other permissible
types of collateral.
LIQUIDITY AND CAPITAL RESOURCES
The purpose of liquidity management is to ensure that there are sufficient cash
flows to satisfy demands for credit, deposit withdrawals, and other needs of
the Company. Traditional sources of liquidity include asset maturities and
growth in core deposits. A company may achieve its desired liquidity objectives
from the management of assets and liabilities and through funds provided by
operations. Funds invested in short-term marketable instruments and the
continuous maturing of other earning assets are sources of liquidity from the
asset perspective. The liability base provides sources of liquidity through
deposit growth, the maturity structure of liabilities, and accessibility to
market sources of funds.
Scheduled loan payments are a relatively stable source of funds, but loan
payoffs and deposit flows fluctuate significantly, being influenced by interest
rates and general economic conditions and competition. The Company attempts to
price its deposits to meet its asset/liability objectives consistent with local
market conditions.
State and Federal regulatory authorities monitor the liquidity and capital
resources of the Company on a periodic basis. As determined under guidelines
established by those regulatory authorities and internal policy, the Company's
liquidity was considered satisfactory.
At December 31, 1999, the Company had loan commitments outstanding of
$3,895,884. Because these commitments generally have fixed expiration dates and
many will expire without being drawn upon, the total commitment amounts do not
necessarily represent future cash requirements. If needed, the Bank has the
ability on a short-term basis to borrow and purchase Federal funds from other
financial institutions. At December 31, 1999, the Bank had arrangements with
upstream correspondent banks for short-term advances of $ 2,800,000.
At December 31, 1999, the Company's and the Bank's capital ratios were
considered adequate based on regulatory minimum capital requirements. The
Company's stockholders' equity increased $9.6 million from the issuance of
common stock net of issuance expenses, offset by a net loss of $0.8 million.
In the future, the primary source of funds available to the Company will be the
payment of dividends by its subsidiary Bank. Banking regulations limit the
amount of the dividends that may be paid without prior approval of the Bank's
regulatory agency. Currently, no dividends can be paid by the Bank to the
Company without regulatory approval.
27
<PAGE> 30
The minimum capital requirements to be considered well capitalized under prompt
corrective action provisions and the actual capital ratios for the Company and
the Bank as of December 31, 1999 are as follows:
<TABLE>
<CAPTION>
Actual
---------------------- Regulatory
The Company Bank Requirements
---------------------------------------
<S> <C> <C> <C>
Leverage capital ratio 40.24% 31.68% 5.00%
Risk-based capital ratios:
Core capital 41.71 32.12 6.00
Total capital 42.97 33.38 10.00
</TABLE>
These ratios will decline as asset growth continues, but will still remain in
excess of the regulatory minimum requirements.
At December 31, 1999, the Company had no material commitments for capital
expenditures.
Management believes that its liquidity and capital resources are adequate and
will meet its foreseeable short and long-term needs. Management anticipates
that it will have sufficient funds available to meet current loan commitments
and to fund or refinance, on a timely basis, its other material commitments and
liabilities.
Except for expected growth common to a de novo bank, management is not aware of
any other known trends, events or uncertainties that will have or that are
reasonably likely to have a material effect on its liquidity, capital resources
or operations. Management is also not aware of any current recommendations by
the regulatory authorities which, if they were implemented, would have such an
effect.
Effects of Inflation
The impact of inflation on banks differs from its impact on non-financial
institutions. Banks, as financial intermediaries, have assets which are
primarily monetary in nature and which tend to fluctuate in concert with
inflation. A bank can reduce the impact of inflation if it can manage its rate
sensitivity gap. This gap represents the difference between rate sensitive
assets and rate sensitive liabilities. The Company, through its asset-liability
committee, attempts to structure the assets and liabilities and manage the rate
sensitivity gap, thereby seeking to minimize the potential effects of
inflation. For information on the management of the Company's interest rate
sensitive assets and liabilities, see the "Asset/Liability Management" section.
28
<PAGE> 31
RESULTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1999 AND PERIOD FROM
INCEPTION TO DECEMBER 31, 1998
Following is a summary of the Company's operations for the periods indicated.
<TABLE>
<CAPTION>
YEAR ENDED PERIOD ENDED
DECEMBER 31, 1999 DECEMBER 31, 1998
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Interest income $ 1,150 $ --
Interest expense 465 8
Net interest income (expense) 685 (8)
Provision for loan losses 300 --
Other income 40 --
Other expenses 1,198 192
Pretax loss (773) (200)
Income taxes -- --
Net loss (773) (200)
</TABLE>
The Company commenced banking operations on April 28, 1999. Prior to the
commencement, the Company was engaged in activities involving the formation of
the Company, selling its common stock, and obtaining necessary approvals. The
Company incurred operating losses totaling $359,000 during its organizational
period ($200,000 in 1998 and $159,000 in 1999). The Company incurred total
organizational and stock issue costs of $1,021,000, of which $917,000 has been
recorded as a reduction in capital surplus and $104,000 expensed upon adoption
of SOP 98-5. Through the end of 1999, the Company has incurred additional
operating losses of $614,000.
Operations during 1998 and through April of 1999 consisted primarily of the
Company's organizers engaging in organizational and pre-opening activities
necessary to obtain regulatory approvals and to prepare to commence business as
a bank. Therefore, operational comparisons between 1999 and 1998 would not be
meaningful and are not presented.
Net Interest Income
The Company's results of operations are determined by its ability to
effectively manage interest income and expense, to minimize loan and investment
losses, to generate non-interest income, and to control operating expenses.
Since interest rates are determined by market forces and economic conditions
beyond the control of the Company, its ability to generate net interest income
is dependent upon its ability to obtain an adequate net interest spread between
the rate paid on interest-bearing liabilities and the rate earned on
interest-earning assets.
The net yield on average interest-earning assets during the Company's
operational period from April 28, 1999 to December 31, 1999 was 4.27%. Average
loans were $7,305,000, average securities were $4,273,000, and average Federal
funds sold and interest-bearing deposits in banks were $4,465,000. Average
interest-bearing liabilities were $9,568,000. The rate earned on average
interest-earning assets was 7.17%. The rate paid on average interest-bearing
liabilities was 4.86%.
29
<PAGE> 32
Provision for Loan Losses
The provision for loan losses was $ 300,000 in 1999. The amount provided was
due primarily to the growth of the portfolio. Based upon management's
evaluation of the loan portfolio, management believes the reserve for loan
losses to be adequate to absorb possible losses on existing loans that may
become uncollectible. This evaluation considers past due and classified loans,
underlying collateral values, and current economic conditions which may affect
the borrower's ability to repay. As of December 31, 1999, the Company has no
nonperforming loans or assets. The allowance for loan losses as a percentage of
total loans was 1.53%.
Other Income
Other operating income consists of service charges on deposit accounts and
other miscellaneous revenues and fees. There was no other operating income in
1998.
Non-interest Expense
Other operating expense consists of salaries and employee benefits ($613,000),
equipment and occupancy expenses ($206,000), and other operating expenses
($379,000).
Income Tax
The Company had no income tax expense due to a pre-tax operating loss of
$773,000.
Asset/Liability Management
It is the Company's objective to manage assets and liabilities to provide a
satisfactory, consistent level of profitability within the framework of
established cash, loan, investment, borrowing, and capital policies. Certain
officers are charged with the responsibility for monitoring policies and
procedures that are designed to ensure acceptable composition of the
asset/liability mix. It is the overall philosophy of management to support
asset growth primarily through growth of core deposits of all categories made
by local individuals, partnerships, and corporations.
The Company's asset/liability mix is monitored on a regular basis with a report
reflecting the interest rate-sensitive assets and interest rate-sensitive
liabilities being prepared and presented to the Board of Directors of the Bank
on a quarterly basis. The objective of this policy is to monitor interest
rate-sensitive assets and liabilities so as to minimize the impact of
substantial movements in interest rates on earnings. An asset or liability is
considered to be interest rate-sensitive if it will reprice or mature within
the time period analyzed, usually one year or less. The interest
rate-sensitivity gap is the difference between the interest-earning assets and
interest-bearing liabilities scheduled to mature or reprice within such time
period. A gap is considered positive when the amount of interest rate-sensitive
assets exceeds the amount of interest rate-sensitive liabilities. A gap is
considered negative when the amount of interest rate-sensitive liabilities
exceeds the interest rate-sensitive assets. During a period of rising interest
rates, a negative gap would tend to adversely affect net interest income, while
a positive gap would tend to result in an increase in net interest income.
Conversely, during a period of falling interest rates, a negative gap would
tend to result in an increase in net interest income, while a positive gap
would tend to adversely affect net interest income. If the Company's assets and
liabilities were equally flexible and moved concurrently, the impact of any
increase or decrease in interest rates on net interest income would be minimal.
A simple interest rate "gap" analysis by itself may not be an accurate
indicator of how net interest income will be affected by changes in interest
rates. Accordingly, the Company also evaluates how the repayment of particular
assets and liabilities is impacted by changes in interest rates. Income
associated with interest-earning assets and costs associated with
interest-bearing liabilities may not be affected uniformly by changes in
interest rates. In addition, the magnitude and duration of changes in interest
rates may have a significant impact on net interest income. For example,
although certain
30
<PAGE> 33
assets and liabilities may have similar maturities or periods of repricing,
they may react in different degrees to changes in market interest rates.
Interest rates on certain types of assets and liabilities fluctuate in advance
of changes in general market rates, while interest rates on other types may lag
behind changes in general market rates. In addition, certain assets, such as
adjustable rate mortgage loans, have features (generally referred to as
"interest rate caps and floors") which limit changes in interest rates.
Prepayment and early withdrawal levels also could deviate significantly from
those assumed in calculating the interest rate gap. The ability of many
borrowers to service their debts also may decrease during periods of rising
interest rates.
Changes in interest rates also affect the Company's liquidity position. The
Company currently prices deposits in response to market rates and it is
management's intention to continue this policy. If deposits are not priced in
response to market rates, a loss of deposits could occur which would negatively
affect the Company's liquidity position.
At December 31, 1999, the Company's cumulative one-year interest
rate-sensitivity gap ratio was 43%. The Company's targeted ratio is 80% to 120%
in this time horizon. This indicates that the Company's interest-earning
liabilities will reprice during this period at a rate considerably faster than
its interest-bearing assets. The Company is not within its targeted parameters.
However, as the Company originates more variable rate loans and extends
maturities on its Certificates of deposit, the gap ratio will become more in
line with the targeted ratio, and net interest income should not be
significantly affected by changes in interest rates. A gap ratio in the
Company's current range is not unusual for a de novo bank. It is also noted
that over 95% of the Company's certificates of deposit greater than $100,000
mature within the one-year time horizon. It is management's belief that as long
as it pays the prevailing market rate on these type deposits, the Company's
liquidity, while not assured, will not be negatively affected.
The following table sets forth the distribution of the repricing of the
Company's interest-earning assets and interest-bearing liabilities as of
December 31, 1999, the interest rate-sensitivity gap, the cumulative interest
rate-sensitivity gap, the interest rate-sensitivity gap ratio and the
cumulative interest rate-sensitivity gap ratio. The table also sets forth the
time periods in which earning assets and liabilities will mature or may reprice
in accordance with their contractual terms. However, the table does not
necessarily indicate the impact of general interest rate movements on the net
interest margin since the repricing of various categories of assets and
liabilities is subject to competitive pressures and the needs of the Company's
customers. In addition, various assets and liabilities indicated as repricing
within the same period may in fact, reprice at different times within such
period and at different rates.
31
<PAGE> 34
<TABLE>
<CAPTION>
------------------------------------------------------------------------
AT DECEMBER 31, 1999
------------------------------------------------------------------------
THREE
ZERO TO MONTHS ONE TO OVER
THREE TO ONE THREE THREE
MONTHS YEAR YEARS YEARS TOTAL
------------------------------------------------------------------------
(DOLLARS IN THOUSANDS)
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
EARNING ASSETS:
Federal funds sold $ 810 $ -- $ -- $ -- $ 810
Investment securities 1,268 498 7,630 3,956 13,352
Loans 2,514 3,320 3,575 10,199 19,608
---------- ---------- ---------- ---------- ----------
4,592 3,818 11,205 14,155 33,770
---------- ---------- ---------- ---------- ----------
INTEREST-BEARING LIABILITIES:
Interest-bearing demand deposits (1) 5,920 -- 2,629 -- 8,549
Savings -- -- 259 -- 259
Certificates less than $100,000 449 8,485 2,433 28 11,395
Certificates, $100,000 and over 797 3,851 241 -- 4,889
---------- ---------- ---------- ---------- ----------
7,166 12,336 5,562 28 25,092
---------- ---------- ---------- ---------- ----------
INTEREST RATE SENSITIVITY GAP $ (2,574) $ (8,518) $ 5,643 $ 14,127 $ 8,678
========== ========== ========== ========== ==========
CUMULATIVE INTEREST RATE SENSITIVITY GAP $ (2,574) $ (11,092) $ (5,449) $ 8,678
========== ========== ========== ==========
INTEREST RATE SENSITIVITY GAP RATIO 0.64 0.31 2.01 505.54
========== ========== ========== ==========
CUMULATIVE INTEREST RATE SENSITIVITY GAP
RATIO 0.64 0.43 0.78 1.35
========== ========== ========== ==========
</TABLE>
(1) The Company has found that NOW checking accounts and savings deposits are
generally not sensitive to changes in interest rates and, therefore, it has
placed such liabilities in the "One to Three Years" category.
SELECTED FINANCIAL INFORMATION AND STATISTICAL DATA
The tables and schedules on the following pages set forth certain significant
financial information and statistical data with respect to: the distribution of
assets, liabilities and stockholders' equity of the Company, the interest rates
experienced by the Company; the investment portfolio of the Company; the loan
portfolio of the Company, including types of loans, maturities, and
sensitivities of loans to changes in interest rates and information on
nonperforming loans; summary of the loan loss experience and reserves for loan
losses of the Company; types of deposits of the Company and the return on
equity and assets for the Company.
32
<PAGE> 35
AVERAGE BALANCES AND NET INCOME ANALYSIS
The following table sets forth the amount of the Company's interest
income or interest expense for each category of interest-earning assets and
interest-bearing liabilities and the average interest rate for total
interest-earning assets and total interest-bearing liabilities, net interest
spread and net yield on average interest-earning assets.
<TABLE>
<CAPTION>
------------------------------------------------
YEAR ENDED DECEMBER 31, 1999
------------------------------------------------
INTEREST AVERAGE
AVERAGE INCOME/ YIELD/RATE
BALANCE EXPENSE PAID
--------------- -------------- -----------------
<S> <C> <C> <C>
ASSETS
Interest-earnings assets:
Loans, net of unearned interest $ 7,305 $ 675 9.24%
Investment securities:
Taxable 4,273 250 5.85
Interest-bearing deposits in banks 35 2 4.29
Federal funds sold 4,430 223 5.03
-------- --------
Total interest-earning assets 16,043 1,150 7.17
-------- --------
Noninterest-earning assets:
Cash 513
Allowance for loan losses (112)
Unrealized gain (loss) on available-for-sale
securities (5)
Other assets 944
--------
Total noninterest-earning assets 1,340
--------
TOTAL ASSETS $ 17,383
========
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing liabilities:
Savings and interest-bearing demand
deposits $ 2,972 $ 106 3.57%
Time deposits 6,450 348 5.40
Other borrowings 146 11 7.53
-------- --------
Total interest-bearing liabilities 9,568 465 4.86
-------- --------
Noninterest-bearing liabilities and
stockholders' equity:
Demand deposits 642
Other liabilities 57
Stockholders' equity 7,116
--------
Total noninterest-bearing liabilities and
stockholders' equity 7,815
--------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 17,383
========
INTEREST RATE SPREAD 2.31%
========
NET INTEREST INCOME $ 685
========
NET INTEREST MARGIN 4.27%
========
</TABLE>
33
<PAGE> 36
RATE AND VOLUME ANALYSIS
Because the Company commenced its banking operations in 1999, the change in net
interest income from banking operations is all due to volume. Therefore, a rate
and volume analysis table is not presented.
RISK ELEMENTS
Information with respect to nonaccrual, past due, and restructured loans at
December 31, 1999 is as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1999
(DOLLARS IN THOUSANDS)
<S> <C>
Nonaccrual loans $ 0
Loans contractually past due ninety days or more
as to interest or principal payments and still accruing 0
Restructured loans 0
Loans, now current about which there are serious
doubts as to the ability of the borrower to comply
with loan repayment terms 0
</TABLE>
It is the policy of the Bank to discontinue the accrual of interest income
when, in the opinion of management, collection of such interest becomes
doubtful. This status is accorded such interest when (1) there is a significant
deterioration in the financial condition of the borrower and full repayment of
principal and interest is not expected and (2) the principal or interest is
more than ninety days past due, unless the loan is both well-secured and in the
process of collection.
Loans classified for regulatory purposes as loss, doubtful, substandard, or
special mention that have not been included in the table above do not represent
or result from trends or uncertainties which management reasonably expects will
materially impact future operating results, liquidity, or capital resources.
These classified loans do not represent material credits about which management
is aware of any information which causes management to have serious doubts as
to the ability of such borrowers to comply with the loan repayment terms.
34
<PAGE> 37
SUMMARY OF LOAN LOSS EXPERIENCE
The following table summarizes average loan balances for the year determined
using the daily average balances during the period of banking operations;
changes in the allowance for loan losses arising from loans charged off and
recoveries on loans previously charged off; additions to the allowance which
have been charged to operating expense; and the ratio of net charge-offs during
the period to average loans.
<TABLE>
<CAPTION>
1999
(Dollars in Thousands)
<S> <C>
Average amount of loans outstanding
(since April 28, 1999) $ 7,305
========
Balance of allowance for loan losses
at beginning of period $ --
--------
Loans charged off --
--------
Loans recovered --
--------
Net charge-offs --
--------
Additions to allowance charged to operating
expense during period 300
--------
Balance of allowance for loan losses
at end of period $ 300
========
Ratio of net loans charged off during the
period to average loans outstanding --%
========
</TABLE>
ALLOWANCE FOR LOAN LOSSES
The allowance for loan losses is maintained at a level that is deemed
appropriate by management to adequately cover all known and inherent risks in
the loan portfolio. Management's evaluation of the loan portfolio includes a
periodic review of loan loss experience, current economic conditions which may
affect the borrower's ability to pay and the underlying collateral value of the
loans.
INVESTMENT PORTFOLIO
TYPES OF INVESTMENTS
The carrying amounts of securities at the dates indicated, which are all
classified as available-for-sale, are summarized as follows:
<TABLE>
<CAPTION>
----------------
DECEMBER 31,
1999
(DOLLARS IN
THOUSANDS)
----------------
<S> <C>
U. S. Government and agency securities $ 11,825
State and municipal securities 1,000
Mortgage-backed securities 259
Equity securities 268
--------
Total securities $ 13,352
========
</TABLE>
35
<PAGE> 38
MATURITIES
The amounts of investment securities in each category as of December 31, 1999
are shown in the following table according to contractual maturity
classifications (1) one year or less, (2) after one year through five years,
(3) after five years through ten years, and (4) after ten years.
<TABLE>
<CAPTION>
------------------------- -------------------------
U. S. TREASURY AND
OTHER U. S. GOVERNMENT
AGENCIES AND STATE AND
CORPORATIONS POLITICAL SUBDIVISIONS
------------------------- -------------------------
YIELD YIELD
AMOUNT (1) AMOUNT (1)
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Maturity:
One year or less $ 767 5.28% $ -- --%
After one year through five years 11,585 6.78 -- --
After five years through ten years -- -- -- --
After ten years -- -- 1,000 6.50
---------- ---------- ---------- ----------
$ 12,352 6.69% $ 1,000 6.50%
========== ========== ========== ==========
</TABLE>
(1) Yields were computed using coupon interest, adding discount accretion
or subtracting premium amortization, as appropriate, on a ratable
basis over the life of each security. The weighted average yield for
each maturity range was computed using the acquisition price of each
security in that range.
LOAN PORTFOLIO
TYPES OF LOANS
The amount of loans outstanding at the indicated dates are shown in the
following table according to the type of loan.
<TABLE>
<CAPTION>
----------------
DECEMBER 31,
1999
(DOLLARS IN
THOUSANDS)
----------------
<S> <C>
Commercial $ 4,457
Real estate - construction 750
Real estate - mortgage 10,780
Consumer installment loans and other 3,621
------------
19,608
Less allowance for loan losses 300
------------
Net loans $ 19,308
============
</TABLE>
36
<PAGE> 39
MATURITIES AND SENSITIVITIES OF LOANS TO CHANGES IN INTEREST RATES
Commercial and Construction loans as of December 31, 1999 are shown in the
following table according to contractual maturity classifications (1) one year
or less, (2) after one year through five years, and (3) after five years.
<TABLE>
<CAPTION>
-----------
(DOLLARS IN
THOUSANDS)
-----------
<S> <C>
COMMERCIAL:
One year or less $ 1,575
After one year through five years 2,651
After five years 231
----------
4,457
----------
CONSTRUCTION:
One year or less 750
After one year through five years --
After five years --
----------
750
----------
$ 5,207
==========
</TABLE>
The following table summarizes these loans at December 31, 1999, with the due
dates after one year, which have predetermined and floating or adjustable
interest rates.
<TABLE>
<CAPTION>
-----------
(DOLLARS IN
THOUSANDS)
-----------
<S> <C>
Predetermined interest rates $ 2,867
Floating or adjustable interest rates 15
----------
$ 2,882
==========
</TABLE>
As of December 31, 1999, management had made no allocations of its allowance
for loan losses to specific categories of loans. Based on management's best
estimate, the allocation of the allowance for loan losses to types of loans, as
of the indicated dates, is as follows:
<TABLE>
<CAPTION>
--------- -----------
PERCENT OF
LOANS IN
CATEGORY TO
AMOUNT TOTAL LOANS
-----------------------
(DOLLARS IN THOUSANDS)
-----------------------
<S> <C> <C>
Commercial, financial, industrial and agricultural $ 77 23%
Real estate 128 59
Consumer 82 18
Unallocated 13 --
-------- --------
$ 300 100%
======== ========
</TABLE>
37
<PAGE> 40
DEPOSITS
Average amount of deposits and average rate paid thereon, classified as to
noninterest-bearing demand deposits, interest-bearing demand and savings
deposits and time deposits for the year ended December 31, 1999 is presented
below:
<TABLE>
<CAPTION>
------------ -----------
AMOUNT RATE
--------------------------
(DOLLARS IN THOUSANDS)
--------------------------
<S> <C> <C>
Noninterest-bearing demand deposits $ 642 --%
Interest-bearing demand and savings deposits 2,972 3.57
Time deposits 6,450 5.40
----------
Total deposits $ 10,064
==========
</TABLE>
The Company has a large, stable base of time deposits, with little dependence
on volatile deposits of $100,000 or more. The time deposits are principally
certificates of deposit and individual retirement accounts obtained from
individual customers.
The amounts of time certificates of deposit issued in amounts of $100,000 or
more as of December 31, 1999, are shown below by category, which is based on
time remaining until maturity of (i) three months or less, (ii) over three
through twelve months and (iii) over twelve months.
<TABLE>
<CAPTION>
------------
(DOLLARS IN
THOUSANDS)
------------
<S> <C>
Three months or less $ 797
Over three through twelve months 3,851
Over twelve months 241
----------
$ 4,889
==========
</TABLE>
RETURN ON ASSETS AND STOCKHOLDERS' EQUITY
The following table shows return on assets (net loss divided by average total
assets), return on equity (net loss divided by average stockholders' equity),
dividend payout ratio (dividends declared per share divided by net income per
share) and stockholders' equity to asset ratio (average stockholders' equity
divided by average total assets) for the year ended December 31, 1999.
<TABLE>
<S> <C>
Return on assets (4.45)%
Return on equity (10.86)
Dividends payout --
Equity to assets ratio 40.94
</TABLE>
38
<PAGE> 41
IMPACT OF INFLATION
The consolidated financial statements and related consolidated financial data
presented herein have been prepared in accordance with generally accepted
accounting principles and practices within the banking industry which require
the measurement of financial position and operating results in terms of
historical dollars without considering the changes in the relative purchasing
power of money over time due to inflation. Unlike most industrial companies,
virtually all the assets and liabilities of a financial institution are
monetary in nature. As a result, interest rates have a more significant impact
on a financial institution's performance than the effects of general levels of
inflation.
39
<PAGE> 42
CORPORATE INFORMATION
The Company's common stock is traded on the OTC Bulletin Board. The following
table shows the high and low bid information for the Company's common stock for
each quarter since March 11, 1999, the date on which our common stock was first
listed on the OTC Bulletin Board. These quotations reflect inter-dealer prices,
without retail mark-up, mark-down, or commission, and may not represent actual
transactions.
<TABLE>
<CAPTION>
HIGH AND LOW BID PRICE PER SHARE
--------------------------------
HIGH LOW
---- ---
<S> <C> <C>
1999:
First Quarter $ 15.50 $ 12.375
Second Quarter 13.625 10.625
Third Quarter 12.75 10.50
Fourth Quarter 12.25 10.00
</TABLE>
The Company's Common Stock was held by approximately 1,100 shareholders of
record at December 31, 1999.
DIVIDENDS
The Bank is subject to restrictions on the payment of dividends under federal
banking laws and the regulations of the Office of the Comptroller of the
Currency. The Company is subject to limits on payment of dividends under
Georgia law and by the rules, regulations and policies of federal banking
authorities. No assurance can be given that any dividends will be declared by
the Company in the future, or if declared, what the amount should be or whether
such dividends would continue. Future dividend policy will depend on the Bank's
earning, capital position, financial condition and other factors. The Company
has not paid any dividends to date.
FORM 10-KSB
A copy of the Company's 1999 Annual Report on Form 10-KSB, filed with the
Securities and Exchange Commission, is available at no charge to each
shareholder upon written request to:
David J. Baranko
Community Capital Bancshares, Inc.
P.O. Box 71269
Albany, Georgia 31708-1269
General Counsel
Powell, Goldstein, Frazer & Murphy, LLP
Atlanta, Georgia
Independent Auditors
Mauldin & Jenkins, LLC
Albany, Georgia
40
<PAGE> 43
COMMUNITY CAPITAL BANCSHARES, INC.
- -------------------------------------------------------------------------------
DIRECTORS AND OFFICERS
- -------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
DIRECTORS
CHARLES M. JONES, III ROBERT M. BEAUCHAMP BENNETT D. COTTEN, JR.
Chairman & CEO, Attorney Orthopedic Surgeon
Community Capital Bancshares, Inc. Beauchamp & Associates, Southwest Georgia
Chief Executive Officer, LLC Orthopedic and Sports
Consolidated Loan and Medicine
Mortgage Companies
GLENN A. DOWLING MARY HELEN DYKES VAN CISE KNOWLES
Podiatrist, Managing Partner Secretary and Treasurer Surgeon
Ambulatory Surgery Center Bobs Candies, Inc. Van C. Knowles M.D., P.C.
and Albany Podiatry
Associates
C. RICHARD LANGLEY ROBERT E. LEE CORINNE C. MARTIN
Attorney President Ownership Interest -
Langley & Lee Community Capital Carlton Company, a
Bancshares Caterpillar equipment
distributor
WILLIAM F. MCAFEE MARK M. SHOEMAKER JANE ANNE SULLIVAN
Business Owner - Bill McAfee Medical Doctor Business owner, Buildings
Leasing, a commercial truck Albany Anesthesia Assoc. Exchange, a real estate
lessor holding company
JOHN P. VENTULETT, JR. LAWRENCE B. WILLSON JAMES D. WOODS
Executive Insurance Agent Vice President and farm Medical Doctor
Howard, Ventulett and Bishop manager, Sunnyland Farms, Drs. Adams and Woods,
Insurors, Inc. Inc. M.D., P.C
OFFICERS
ROBERT E. LEE DAVID C. GUILLEBEAU DAVID J. BARANKO
President Executive Vice President Chief Financial Officer and
Senior Lending Executive Secretary
</TABLE>
41
<PAGE> 44
ALBANY BANK & TRUST
- -------------------------------------------------------------------------------
OFFICERS AND STAFF
- -------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
OFFICERS
ROBERT E. LEE DAVID C. GUILLEBEAU DAVID J. BARANKO
President & CEO Executive Vice President Chief Financial Officer
and Senior Lending
Executive
ROSA M. RAMSEY GINGER G. GOODYEAR
Vice President and Branch Assistant Vice President and
Manager Director of Marketing
STAFF
TANYA M. BULLARD DIANNE J. CARVER MARGARET V. CARVER
Customer Service Specialist Deposit Operations Executive Secretary
TODD L. DIBBELL APRIL R. DUNN ELAINE O. EURE
Assistant Head Teller Part time teller Loan Operations
STEPHANIE G. FORD STEPHANIE JOSEPH LINDA F. LITTLETON
Customer Service Teller Loan Operations and Teller
Representative
ANGELA W. ROBERTS ROBIE K. SUTTON LADONNA J. URICK
Head Teller Facilities Management and Teller and Customer Service
Courier Representative
</TABLE>
42
<TABLE> <S> <C>
<ARTICLE> 9
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<EXCHANGE-RATE> 1
<CASH> 949,326
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 810,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 13,351,772
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 19,607,865
<ALLOWANCE> 300,000
<TOTAL-ASSETS> 36,741,455
<DEPOSITS> 28,017,920
<SHORT-TERM> 0
<LIABILITIES-OTHER> 155,409
<LONG-TERM> 0
0
0
<COMMON> 1,050,000
<OTHER-SE> 7,518,126
<TOTAL-LIABILITIES-AND-EQUITY> 36,741,455
<INTEREST-LOAN> 675,427
<INTEREST-INVEST> 250,144
<INTEREST-OTHER> 224,828
<INTEREST-TOTAL> 1,150,399
<INTEREST-DEPOSIT> 454,199
<INTEREST-EXPENSE> 465,531
<INTEREST-INCOME-NET> 684,868
<LOAN-LOSSES> 300,000
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 1,198,250
<INCOME-PRETAX> (773,106)
<INCOME-PRE-EXTRAORDINARY> (773,106)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (773,106)
<EPS-BASIC> (.74)
<EPS-DILUTED> (.74)
<YIELD-ACTUAL> 4.27
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 0
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 300,000
<ALLOWANCE-DOMESTIC> 300,000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
