U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(MARK ONE) FORM 10-QSB
X QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
--- OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period ended September 30, 2000
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
--- THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the Transition Period from _________to_________
Commission File No. 333-69555
FIRST CAPITAL BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
United States 57-1070990
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification No.)
207 Highway 15/401 Bypass East
Bennettsville, SC 29512
(Address of principal executive
offices, including zip code)
(843) 454-9337
(Registrant's telephone number, including area code)
------------------------------------------------
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the date of this filing.
563,728 shares of common stock, $.01 par value
PAGE 1 OF 17
EXHIBIT INDEX ON PAGE 2
<PAGE>
FIRST CAPITAL BANCSHARES, INC.
Index
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION Page No.
-----------------------------
Item 1. Financial Statements (Unaudited)
<S> <C>
Condensed Consolidated Balance Sheets - September 30, 2000 and December 31, 1999.......................3
Condensed Consolidated Statements of Income - Nine months ended September 30, 2000
and for the period December 19, 1997 to September 30, 1999 and the Three months
ended September 30, 2000 and 1999....................................................................4
Condensed Consolidated Statements of Shareholders' Equity and Comprehensive Income -
Nine months ended September 30, 2000.................................................................5
Condensed Consolidated Statements of Cash Flows -
Nine months ended September 30, 2000 and 1999........................................................6
Notes to Condensed Consolidated Financial Statements.................................................7-8
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations................9-14
PART II. OTHER INFORMATION
--------------------------
Item 6. Exhibits and Reports on Form 8-K....................................................................15-18
(a) Exhibits.......................................................................................15-18
(b) Reports on Form 8-K...............................................................................15
</TABLE>
2
<PAGE>
FIRST CAPITAL BANCSHARES, INC.
Condensed Consolidated Balance Sheets
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
Assets (Unaudited)
----------- -----------
<S> <C> <C>
Cash and cash equivalents:
Cash and due from banks $ 472,044 $ 486,492
Federal funds sold & repurchase agreements 1,750,000 470,000
----------- -----------
Total cash and cash equivalents 2,222,044 956,492
----------- -----------
Securities available-for-sale 4,004,457 4,114,867
----------- -----------
Loans receivable 9,864,219 3,510,354
Less allowance for loan losses (137,872) (42,309)
----------- -----------
Loans, net 9,726,347 3,468,045
----------- -----------
Accrued interest receivable 120,639 59,866
Premises and equipment, net 826,795 797,776
Other assets 547,839 299,954
----------- -----------
Total assets $ 17,448,121 $ 9,697,000
=========== ===========
Liabilities and Shareholders' Equity
Liabilities:
Deposits:
Noninterest-bearing $ 672,900 $ 373,959
Interest-bearing 1,342,382 625,052
Savings 922,195 550,976
Time deposits $100,000 and over 3,636,261 1,582,191
Other time deposits 6,455,489 1,752,601
----------- -----------
Total deposits 13,029,227 4,884,779
Accrued interest payable 80,222 26,762
Federal funds purchased - 140,000
Other liabilities 17,365 9,111
----------- -----------
Total liabilities 13,126,814 5,060,652
----------- -----------
Shareholders' Equity
Preferred stock, $.01 par value; 10,000,000 shares authorized
and unissued - -
Common stock, $ .01 par value; 10,000,000 shares authorized,
563,728 shares issued and outstanding 5,637 5,637
Capital surplus 5,110,551 5,110,551
Accumulated other comprehensive income (loss) (30,293) (15,661)
Retained earnings (deficit) (764,588) (464,179)
----------- -----------
Total shareholders' equity 4,321,307 4,636,348
----------- -----------
Total liabilities and shareholders' equity $ 17,448,121 $ 9,697,000
=========== ===========
</TABLE>
See notes to condensed financial statements.
3
<PAGE>
FIRST CAPITAL BANCSHARES, INC.
Condensed Consolidated Statements of Income
(Unaudited)
<TABLE>
<CAPTION>
For the period
Nine Months December 19,
Ended 1997 (inception)to Three Months Ended
September 30, September 30, September 30,
------------- ------------- ------------------------
2000 1999 2000 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Interest income
Loans, including fees $ 614,496 $ 22 $ 251,565 $ 22
Investment securities, taxable 234,439 2,121 78,669 2,121
Federal funds sold 45,687 50,036 24,974 50,036
---------- ---------- ---------- ----------
Total 894,622 52,179 355,208 52,179
---------- ---------- ---------- ----------
Interest expense
Time deposits $100,000 and over 139,792 - 57,710 -
Other deposits 291,478 326 130,674 326
Federal funds purchased and
securities sold under agreements to
repurchase 11,787 - - -
Other interest expense - 18,159 - 5,756
---------- ---------- ---------- ----------
Total 443,057 18,485 188,384 6,082
---------- ---------- ---------- ----------
Net interest income 451,565 33,694 166,824 46,097
Provision for loan losses 105,377 - 7,515 -
---------- ---------- ---------- ----------
Net interest income after
provision for loan losses 346,188 33,694 159,309 46,097
---------- ---------- ---------- ----------
Other operating income
Service charges on deposit accounts 32,624 - 17,079 -
Credit life insurance commissions 14,041 - 714 -
Other charges, commissions and fees 10,469 211 2,267 211
---------- ---------- ---------- ----------
Total 57,134 211 20,060 211
---------- ---------- ---------- ----------
Other operating expenses
Salaries and employee benefits 408,639 265,403 138,630 72,904
Net occupancy expense 44,302 13,572 15,978 1,568
Furniture and equipment expense 48,238 - 16,326 -
Other operating expenses 389,538 208,931 146,318 56,095
---------- ---------- ---------- ----------
Total 890,717 487,906 317,252 130,567
---------- ---------- ---------- ----------
Income (loss) before income taxes (487,395) (454,001) (137,883) (84,259)
Income tax expense (benefit) (186,986) (156,113) (57,942) (28,977)
---------- ---------- ---------- ----------
Net income (loss) $ (300,409) $ (297,888) $ (79,941) $ (55,282)
========== ========== ========== ==========
Earnings (loss) per share
Average shares outstanding 563,728 563,728 563,728 563,728
Net income (loss) $ (0.53) $ ( 0.53) $ (0.14) $ (0.10)
</TABLE>
See notes to condensed financial statements.
4
<PAGE>
FIRST CAPITAL BANCSHARES, INC.
Condensed Consolidated Statement of Shareholders' Equity and Comprehensive
Income for the nine months ended September 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
Accumulated
Common Stock Retained Other
----------------- Capital Earnings Comprehensive
Shares Amount Surplus (Deficit) Income Total
------ ------ ------- --------- ------------- -----
<S> <C> <C> <C> <C> <C> <C>
Balance,
December 31, 1999 563,728 $ 5,637 $ 5,110,551 $ (464,179) $ (15,661) $ 4,636,348
Net income (loss)
for the period (300,409) (300,409)
Other
comprehensive
income, net of tax
benefit of $7,571 (14,632) (14,632)
------------
Comprehensive income - - - - - (315,041)
------- ------- ----------- ------------ ---------- ------------
Balance,
September 30, 2000 563,728 $ 5,637 $ 5,110,551 $ (764,588) $ (30,293) $ 4,321,307
======= ======= =========== ============ ========== ============
</TABLE>
See notes to condensed financial statements.
5
<PAGE>
FIRST CAPITAL BANCSHARES, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
For the period
Nine Months December 19, 1997
Ended (inception) to
September 30, September 30,
------------- -------------
2000 1999
------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (300,409) $ (297,888)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization 48,238 50
Provision for loan losses 105,377 -
Accretion and premium amortization (4,757) -
Increase in deferred taxes (181,648) -
Increase in interest receivable (60,773) (16,981)
Increase in interest payable 53,460 322
Increase in other assets (41,966) (156,164)
Increase in other liabilities 8,254 376,420
------------- -------------
Net cash used by operating activities (374,224) (94,241)
------------- -------------
Cash flows from investing activities:
Purchases of securities available-for-sale (400,000) (2,267,503)
Maturities of securities available-for-sale 492,964 -
Net increase in loans made to customers (6,363,679) (31,023)
Purchases of premises and equipment (77,257) (748,187)
Purchase of Federal Home Loan Bank stock (16,700) -
------------- -------------
Net cash used by investing activities (6,364,672) (3,046,713)
------------- -------------
Cash flows from financing activities:
Net increase in demand deposits, interest-bearing transaction
accounts and savings accounts 1,387,490 48,309
Net increase in certificates of deposit and other time deposits 6,756,958 743,669
Proceeds from notes payable - 4,970,343
Net decrease in federal funds purchased (140,000) -
------------- -------------
Net cash provided by financing activities 8,004,448 5,762,321
------------- -------------
Net increase (decrease) in cash and cash equivalents 1,265,552 2,621,367
Cash and cash equivalents, beginning 956,492 -
------------- -------------
Cash and cash equivalents, ending $ 2,222,044 $ 2,621,367
------------- -------------
Cash paid during the period for:
Income taxes $ 2,925 $ -
Interest $ 389,597 $ 18,163
</TABLE>
See notes to condensed financial statements.
6
<PAGE>
FIRST CAPITAL BANCSHARES, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 1 - Basis of Presentation
------------------------------
The accompanying financial statements have been prepared in accordance with the
requirements for interim financial statements and, accordingly, they are
condensed and omit disclosures, which would substantially duplicate those
contained in the most recent annual report to shareholders. The financial
statements as of September 30, 2000 and for the interim periods ended September
30, 2000 and 1999 are unaudited and, in the opinion of management, include all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation. The financial information as of December 31, 1999 has been
derived from the audited financial statements as of that date. For further
information, refer to the financial statements and the notes included in First
Capital Bancshares, Inc.'s 1999 Annual Report.
Note 2 - Comprehensive Income
-----------------------------
Comprehensive income includes net income and other comprehensive income, which
is defined as nonowner-related transactions in equity. The following table sets
forth the amounts of other comprehensive income included in equity along with
the related tax effect for the three and nine month periods ended September 30,
2000:
<TABLE>
<CAPTION>
Pre-tax (Expense) Net-of-tax
Amount Benefit Amount
------ ------- ------
<S> <C> <C> <C>
For the Nine Months Ended September 30, 2000:
Unrealized gains (losses) on securities:
Unrealized holding gains (losses) arising during the period $ (22,203) $ 7,571 $ (14,632)
Plus: reclassification adjustment for
gains (losses) realized in net income - - -
--------- ---------- ---------
Net unrealized gains (losses) on securities (22,203) 7,571 (14,632)
--------- ---------- ---------
Other comprehensive income $ (22,203) $ 7,571 $ (14,632)
========= ========== =========
Pre-tax (Expense) Net-of-tax
Amount Benefit Amount
------ ------- ------
For the Three Months Ended September 30, 2000:
Unrealized gains (losses) on securities:
Unrealized holding gains (losses) arising during the period $ 71,608 $ (24,685) $ 46,923
Plus: reclassification adjustment for
gains (losses) realized in net income - - -
--------- ---------- ---------
Net unrealized gains (losses) on securities 71,608 (24,685) 46,923
--------- ---------- ---------
Other comprehensive income $ 71,608 $ (24,685) $ 46,923
========= ========== =========
</TABLE>
7
<PAGE>
FIRST CAPITAL BANCSHARES, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 2 - Comprehensive Income - continued
-----------------------------
<TABLE>
<CAPTION>
Pre-tax (Expense) Net-of-tax
Amount Benefit Amount
------ ------- ------
<S> <C> <C> <C>
For the period December 19, 1997 to September 30, 1999:
Unrealized gains (losses) on securities:
Unrealized holding gains (losses) arising during the period $ (9,859) $ 3,352 $ (6,507)
Plus: reclassification adjustment for
gains (losses) realized in net income - - -
-------- ------- --------
Net unrealized gains (losses) on securities (9,859) 3,352 (6,507)
-------- ------- --------
Other comprehensive income $ (9,859) $ 3,352 $ (6,507)
======== ======= ========
</TABLE>
Accumulated other comprehensive income consists solely of the unrealized gain on
securities available for sale, net of the deferred tax effects.
8
<PAGE>
FIRST CAPITAL BANCSHARES, INC.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
-------------------------------------------------------------------------------
of Operations
-------------
The following is a discussion of the Company's financial condition as of
September 30, 2000 compared to December 31, 1999, and the results of operations
for the three and nine months ended September 30, 2000 compared to the three and
nine months ended September 30, 1999. It should be understood that the
discussion is based on the Bank's opening for business on September 27, 1999.
All amounts prior to September 27, 1999 related to the organizational costs
necessary to open the Bank. These comments should be read in conjunction with
the Company's condensed financial statements and accompanying footnotes
appearing in this report. This report contains "forward-looking statements"
relating to, without limitation, future economic performance, plans and
objectives of management for future operations, and projections of revenues and
other financial items that are based on the beliefs of the Company's management,
as well as assumptions made by and information currently available to the
Company's management. The words "expect," "estimate," "anticipate," and
"believe," as well as similar expressions, are intended to identify
forward-looking statements. The Company's actual results may differ materially
from the results discussed in the forward-looking statements, and the Company's
operating performance each quarter is subject to various risks and uncertainties
that are discussed in detail in the Company's filings with the Securities and
Exchange Commission.
Results of Operations
---------------------
Net Interest Income
-------------------
For the nine months ended September 30, 2000, net interest income totaled
$451,565. Total interest income for the nine months ended September 30, 2000 was
$894,622. Interest income totaling $614,496 was generated from loans, including
fees. Interest income on investments totaled $234,439. Interest income on
federal funds totaled $45,687. This income was partially offset by interest
expense of $443,057 for the nine months ended September 30, 2000. Interest
expense on deposit accounts totaled $431,270. Net interest income for the period
December 19, 1997 (inception) to September 30, 1999 was $33,694. Interest income
totaling $50,036 was generated from an escrow account used during the
organizational period and federal funds sold. However, interest expense on the
line of credit used during the organizational period totaled $18,159. The net
interest margin realized on earning assets was 4.72% for the nine months ended
September 30, 2000 and the interest rate spread was 3.28% for the nine months
ended September 30, 2000.
Net interest income for the quarter ended September 30, 2000 was $166,824. Total
interest income for the quarter ended September 30, 2000 was $355,208. Interest
income totaling $251,565 was generated from loans, including fees. Interest on
investments totaled $78,669. Interest income on federal funds sold totaled
$24,974. This income was partially offset by interest expense on deposit
accounts of $188,384 for the quarter ended September 30, 2000. Net interest
income for the quarter ended September 30, 1999 was $46,097. All of the interest
income included for the period December 19, 1997 (inception) to September 30,
1999 was generated during the quarter ended September 30, 1999. Interest expense
for the quarter ended September 30, 1999 was $6,082. The primary component of
interest expense was interest expense on the line of credit, which totaled
$5,756 for the quarter ended September 30, 1999. The net interest margin
realized on earning assets was 4.45% for the quarter ended September 30, 2000
and the interest rate spread was 3.19% for the quarter ended September 30, 2000.
Provision and Allowance for Loan Losses
---------------------------------------
The provision for loan losses is the charge to operating earnings that
management believes is necessary to maintain the allowance for possible loan
losses at an adequate level. For the nine months ended September 30, 2000, the
provision charged to expense was $105,377. The provision charged to expense was
$7,515 for the quarter ended September 30, 2000. Since the Bank opened for
business on September 27, 1999, no amount was charged to the provision for loan
losses for that period. This is a result of management's efforts to increase the
allowance for loan losses to match the growth in the loan portfolio. There are
risks inherent in making all loans, including risks with respect to the period
of time over which loans may be repaid, risks resulting from changes in economic
and industry conditions, risks inherent in dealing with individual borrowers,
and, in the case of a collateralized loan, risks resulting from uncertainties
about the future value of the collateral. The Bank maintains an allowance for
loan losses based on, among other things, historical experience, an evaluation
of economic conditions, and regular reviews of delinquencies and loan portfolio
quality.
9
<PAGE>
FIRST CAPITAL BANCSHARES, INC.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
-----------------------------------------------------------------------
of Operations - continued
-------------
Provision and Allowance for Loan Losses -continued
---------------------------------------
Management's judgment about the adequacy of the allowance is based upon a number
of assumptions about future events, which it believes to be reasonable, but
which may not prove to be accurate. Thus, there is a risk that chargeoffs in
future periods could exceed the allowance for loan losses or that substantial
additional increases in the allowance for loan losses could be required.
Additions to the allowance for loan losses would result in a decrease of the
Bank's net income and, possibly, its capital
Noninterest Income
------------------
Noninterest income for the nine months ended September 30, 2000 was $57,134. The
primary source of this income was from service charges on deposit accounts,
which totaled $32,624. Commissions on credit life insurance totaled $14,041 and
other charges, commissions, and fees totaled $10,469 for the nine months ended
September 30, 2000. Noninterest income for the period December 19, 1997
(inception) to September 30, 1999 was $211. All of this income was generated
during the quarter ended September 30, 1999.
Noninterest income for the quarter ended September 30, 2000 totaled $20,060. The
primary source of this income was from service charges on deposit accounts,
which totaled $17,079. Commissions on credit life insurance commissions totaled
$714 and other charges, commissions, and fees totaled $2,267.
Noninterest Expense
-------------------
Total noninterest expense for the nine months ended September 30, 2000 was
$890,717. The primary component of noninterest expense was salaries and employee
benefits, which totaled $408,639 for the nine months ended September 30, 2000.
In addition, other operating expenses, which include items such as telephone,
utilities, insurance, and data processing costs, totaled $389,538 for the nine
months ended September 30, 2000. Noninterest expense for the period December 19,
1997 (inception) to September 30, 1999 was $487,906. This includes $265,403 for
salaries and benefits and $208,931 for other operating expenses. Virtually all
of these expenses were attributable to the organizational period.
Noninterest expense for the quarter ended September 30, 2000 totaled $317,252.
This was composed primarily of other operating expenses, which totaled $146,318.
In addition, salaries and employee benefits totaled $138,630 for the quarter
ended September 30, 2000. For the quarter ended September 30, 1999, noninterest
expense was $130,567. Salaries and benefits, which totaled $72,904 for the
quarter ending September 30, 1999, was the largest component of noninterest
expenses. Other operating expenses totaled $56,095 for the quarter ended
September 30, 1999. A significant portion of the noninterest expenses were
attributable to the organizational period.
Income Taxes
------------
The income tax benefit for nine months ended September 30, 2000 was $186,986 and
was a result of the Company's net operating loss. The benefit was based on an
effective tax rate of 38% at September 30, 2000. An income tax benefit of
$156,113 was recorded for the period December 19, 1997 (inception) to September
30, 1999. This represents an effective tax rate of 34% to record the income tax
benefit resulting from the net operating loss.
The income tax benefit for the quarter ended September 30, 2000 was $57,942,
which represents an effective tax rate of 42%. For the quarter ended September
30, 1999, the Company recorded an income tax benefit of $28,977, or an effective
tax rate of 34%.
10
<PAGE>
FIRST CAPITAL BANCSHARES, INC.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
-------------------------------------------------------------------------------
of Operations - continued
-------------
Net Income (Loss)
-----------------
The combination of the above factors resulted in a net loss for the nine months
ended September 30, 2000 of $300,409. The net loss before taxes of $487,395 was
partially offset by the income tax benefit of $186,986. For the period December
19, 1997 (inception) to September 30, 1999, the Company incurred a net loss of
$297,888. The net loss is primarily a result of expenses incurred during the
organizational period including salaries and other operating expenses. The net
loss before taxes of $454,001 was partially offset by the income tax benefit of
$156,113.
For the quarter ended September 30, 2000, the Company incurred a net loss of
$79,941. The net loss before taxes of $137,883 was partially offset by the
income tax benefit of $57,942. For the quarter ended September 30, 1999, the
Company incurred a net loss of $55,282. The net loss is primarily the result of
expenses incurred during the organizational period, including salaries and other
operating expenses. The net loss before taxes was $84,259, but was partially
offset by the income tax benefit of $28,977.
Assets and Liabilities
----------------------
During the first nine months of 2000, total assets increased $7,751,121 or
79.93% when compared to December 31, 1999. The primary source of growth in
assets was gross loans, which increased $6,353,865, or 181%, during the first
nine months of 2000. Total deposits increased $8,144,448, or 166.73%, from the
December 31, 1999 amount of $4,884,779. Within the deposit area, time deposits
increased $6,756,958 or 202.62% during the first nine months of 2000.
Investment Securities
---------------------
Investment securities slightly decreased from $4,114,867 at December 31, 1999 to
$4,004,457 at September 30, 2000. The majority of the decrease can be
attributable to paydowns on mortgage-backed securities. All of the Company's
investment securities were designated as available-for-sale at September 30,
2000.
Loans
-----
The Company experienced significant growth during the first nine months of 2000,
especially in the loan area. Net loans increased $6,258,302, or 180.46%, during
the period. As shown below, the main component of growth in the loan portfolio
was real estate - mortgage loans, which increased 189.44%, or $3,368,751, from
December 31, 1999. Also, consumer and other loans increased $1,639,532, or
151.06%. Balances within the major loans receivable categories as of September
30, 2000 and December 31, 1999 are as follows:
September 30, December 31,
2000 1999
------------ -----------
Real estate - construction $ 580,949 $ 65,000
Real estate - mortgage 5,147,001 1,778,250
Commercial and industrial 1,411,391 581,758
Consumer and other 2,724,878 1,085,346
------------ -----------
$ 9,864,219 $ 3,510,354
============ ===========
11
<PAGE>
FIRST CAPITAL BANCSHARES, INC.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
-------------------------------------------------------------------------------
of Operations - continued
-------------
Risk Elements in the Loan Portfolio
-----------------------------------
The following is a summary of risk elements in the loan portfolio:
September 30,
2000
-------------
Loans
Nonaccrual loans $ -
Accruing loans more than 90 days past due $ -
Loans identified by the internal review mechanism:
Criticized $ 108,960
Classified $ -
Activity in the Allowance for Loan Losses is as follows:
September 30,
2000
-------------
Balance, January 1, $ 42,309
Provision for loan losses for the period 105,377
Net loans (charged-off) recovered for the period (9,814)
-------------
Balance, end of period $ 137,872
=============
Gross loans outstanding, end of period $ 9,864,219
Allowance for loan losses to loans outstanding 1.40%
Deposits
--------
At September 30, 2000, total deposits increased by $8,144,448 or 166.73%, from
December 31, 1999. The largest increase was in other time deposits, which
increased $4,702,888, or 268.34%, from December 31, 1999 to September 30, 2000.
Expressed in percentages, noninterest-bearing deposits increased 79.94% and
interest-bearing deposits increased 173.93%.
Balances within the major deposit categories as of September 30, 2000 and
December 31, 1999 are as follows:
September 30, December 31,
2000 1999
------------ ------------
Noninterest-bearing demand deposits $ 672,900 $ 373,959
Interest-bearing demand deposits 1,342,382 625,052
Savings deposits 922,195 550,976
Time deposits $100,000 and over 3,636,261 1,582,191
Other time deposits 6,455,489 1,752,601
------------ ------------
$ 13,029,227 $ 4,884,779
============ ============
12
<PAGE>
FIRST CAPITAL BANCSHARES, INC.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
-------------------------------------------------------------------------------
of Operations - continued
-------------
Liquidity
---------
Liquidity needs are met by the Company through scheduled maturities of loans and
investments on the asset side and through pricing policies on the liability side
for interest-bearing deposit accounts. The level of liquidity is measured by the
loan-to-total borrowed funds ratio, which was at 75.7% at September 30, 2000 and
69.9% at December 31, 1999.
Securities available-for-sale, which totaled $4,004,457 at September 30, 2000,
serve as a ready source of liquidity. The Bank also has lines of credit
available with correspondent banks to purchase federal funds for periods from
one to seven days. At September 30, 2000, unused lines of credit totaled
$1,250,000.
Capital Resources
-----------------
Total shareholders' equity decreased from $4,636,348 at December 31, 1999 to
$4,321,307 at September 30, 2000. The decrease is due to the net loss for the
period of $300,409 and a negative change of $14,632 in the fair value of
securities available-for-sale.
Thrift holding companies, such as the Company, and their banking subsidiaries
are required by banking regulators to meet certain minimum levels of capital
adequacy, which are expressed in the form of certain ratios. Capital is
separated into Tier 1 capital (essentially common shareholders' equity less
intangible assets) and Tier 2 capital (essentially the allowance for loan losses
limited to 1.25% of risk-weighted assets). The first two ratios, which are based
on the degree of credit risk in the Company's assets, provide the weighting of
assets based on assigned risk factors and include off-balance sheet items such
as loan commitments and stand-by letters of credit. The ratio of Tier 1 capital
to risk-weighted assets must be at least 4.0% and the ratio of total capital
(Tier 1 capital plus Tier 2 capital) to risk-weighted assets must be at least
8.0%. The capital leverage ratio supplements the risk-based capital guidelines.
The OTS has also established a 3.0% minimum leverage ratio requirement. The
leverage ratio is computed by dividing Tier 1 capital into average assets. For
all except the highest rated banks, the minimum leverage ratio should be 3.0%
plus an additional cushion of at least 1 to 2 percent, depending upon risk
profiles and other factors.
The following table summarizes the Company's risk-based capital at September 30,
2000:
Shareholders' equity $ 4,351,600
Less: intangibles -
Tier 1 capital 4,351,600
Plus: allowance for loan losses (1) 137,872
------------
Total capital $ 4,489,472
============
Risk-weighted assets $ 11,557,000
============
Risk-based capital ratios
Tier 1 capital (to risk-weighted assets) 37.65%
Total capital (to risk-weighted assets) 38.85%
Tier 1 capital (to total assets) 24.94%
(1) limited to 1.25% of risk-weighted assets
Management believes that capital should continue to be adequate for the next 12
months.
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FIRST CAPITAL BANCSHARES, INC.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
-------------------------------------------------------------------------------
of Operations - continued
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Regulatory Matters
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On November 4, 1999, the U.S. Senate and House of Representatives each passed
the Gramm-Leach-Bliley Act, previously known as the Financial Services
Modernization Act of 1999. The Act was signed into law by President Clinton on
November 12, 1999. Among other things, the Act repeals the restrictions on banks
affiliating with securities firms contained in sections 20 and 32 of the
Glass-Steagall Act. The Act also permits bank holding companies to engage in a
statutorily provided list of financial activities, including insurance and
securities underwriting and agency activities, merchant banking, and insurance
company portfolio investment activities. The Act also authorizes activities that
are "complementary" to financial activities.
The Act contains a number of provisions specifically applicable to federal
thrifts. For example, the Act repeals the Savings Association Insurance Fund
special reserve; modernizes the Federal Home Loan Bank System; provides
regulatory relief for community banks with satisfactory or outstanding Community
Reinvestment Act ratings in the form of less frequent compliance examinations;
and creates privacy provisions that address consumer needs without disrupting
necessary information sharing between community banks and their financial
services partners.
The Act also prohibits new unitary thrift holding companies from engaging in
nonfinancial activities or affiliating with nonfinancial entities. The
prohibition applies to a company that becomes a unitary thrift holding company
pursuant to an application filed with the OTS after May 4, 1999. However, a
grandfathered unitary thrift holding company, such as our Company, retains its
authority to engage in nonfinancial activities.
The Act is intended to grant to community banks certain powers as a matter of
right that larger institutions have accumulated on an ad hoc basis.
Nevertheless, the Act may have the result of increasing the amount of
competition that we face from larger institutions and other types of companies.
In fact, it is not possible to predict the full effect that the Act will have on
us. From time to time other changes are proposed to laws affecting the banking
industry, and these changes could have a material effect on our business and
prospects. We cannot predict the nature or the extent of the effect on our
business and earnings of fiscal or monetary policies, economic controls, or new
federal or state legislation.
From time to time, various bills are introduced in the United States Congress
and various regulations are proposed by appropriate agencies with respect to the
regulation of financial institutions. Certain of these proposals, if adopted,
could significantly change the regulation of banks and the financial services
industry. The Company cannot predict whether any of these proposals will be
adopted or, if adopted, how these proposals would affect the Company.
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FIRST CAPITAL BANCSHARES, INC.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
3.1. Articles of Incorporation and all amendments*
3.2. Bylaws*
4.1. See Exhibits 3.1 and 3.2 for provisions in First Capital
Bancshares's Articles of Incorporation and bylaws defining the
rights of holders of the common stock*
4.2. Form of certificate of common stock*
10.1. Revised and Restated Letter of Employment dated February 24,
1999, between First Capital Bancshares and J. Aubrey Crosland*
10.2. Letter of Employment dated November 2, 1998, between First
Capital Bancshares and John M. Digby*
10.3 Purchase Agreement dated April 20, 1998, between First Capital
Bancshares, as buyer, and James B. Connelly, as seller*
10.4 Form of escrow agreement among First Capital Bancshares, Banc
Stock Financial Services, Inc. and The Banker's Bank*
10.5 Sales Agency Agreement among First Capital Bancshares and Banc
Stock Financial Services, Inc.*
10.6 An agreement for software and account processing services
dated December 7, 1998 with Fiserv Solutions, Inc.*
10.7 Revised and Restated Letter of Employment dated February 24,
1999, between J. Randy McDonald and First Capital Bancshares*
10.8 Form of Stock Order Form*
10.9 1999 Stock Incentive Plan (previously filed as Exhibit 10.9 to
the Company's Form 10-KSB for the period ended December 31,
1999, SEC File No. 333-69555).
13.1 The Company's 1999 Annual Report (previously filed as Exhibit
13 to the Company's Form 10-KSB for the period ended December
31, 1999, SEC File No. 333-69555).
21.1 Subsidiaries of The Company (previously filed as Exhibit 21 to
the Company's Form 10-KSB for the period ended December 31,
1999, SEC File No. 333-69555).
27.1. Financial Data Schedule for the period ended September 30,
2000 (for electronic filing purposes)
99.1 Press release filed by the Company August 11,2000 to announce
restructuring of the Company's senior management.
----------------
*Incorporated by reference to our Registration Statement on Form SB-2, File No.
333-69555.
Reports on Form 8-K.
(b) Reports on Form 8-K - No reports on Form 8-K were filed during the quarter
ended September 30, 2000.
Items 1, 2, 3, 4, and 5 are not applicable.
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FIRST CAPITAL BANCSHARES, INC.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FIRST CAPITAL BANCSHARES, INC.
Date: November 8, 2000 By: /s/ CHARLES O. RIVERS
-------------------------------------
Charles O. Rivers
President and Chief Executive Officer
By: /s/ JOHN M. DIGBY
-------------------------------------
John M. Digby
Chief Financial Officer and
Principal Accounting Officer
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