UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO 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
For the Transition Period from to
Commission file number 333-83851
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Greenville First Bancshares, Inc.
-----------------------------------------
(Exact name of registrant as specified in its charter)
South Carolina 58-2459561
----------------------- ---------------------------------
(State of Incorporation) (I.R.S. Employer Identification No.)
112 Haywood Road
Greenville, S.C. 29607
(Address of principal executive offices) (Zip Code)
864-679-9000
(Telephone Number)
Not Applicable
----------------------------
(Former name, former address
and former fiscal year,
if changed since last report)
Check whether the issuer: (1) filed all reports required to be filed by Section
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 the past 90 days.
YES X NO
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:
1,150,000 shares of common stock, $.01 par value per share, issued and
outstanding as of October 19, 2000.
Transitional Small Business Disclosure Format (check one): YES NO X
-- --
<PAGE>
GREENVILLE FIRST BANCSHARES, INC.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The financial statements of Greenville First Bancshares, Inc. (the
"Company") are set forth in the following pages.
<PAGE>
<TABLE>
<CAPTION>
GREENVILLE FIRST BANCSHARES, INC
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2000 DECEMBER 31, 1999
(UNAUDITED) (DEVELOPMENT STAGE
ENTERPRISE)
ASSETS (AUDITED)
<S> <C> <C>
Cash and due from bank $ 916,738 $ 5,856
Federal funds sold 5,300,000 1,460,000
Investments securities available for sale 8,517,256 8,317,872
Loans 36,058,179 -
Less reserve for loan losses (430,000) -
---------------------- -----------------
35,628,179 -
--------------------- -----------------
Accrued interest receivable 333,721 246,773
Property and equipment 272,839 111,192
Other assets 109,320 -
--------------------- -----------------
Total Assets $ 51,078,053 $ 10,141,693
===================== =================
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits $ 40,837,364 $ -
Checks outstanding 228,293 -
Accounts payable 1,735 11,322
Accrued expense 159,559 18,000
Accrued interest payable 297,698 -
Other 3,320 -
--------------------- -----------------
41,527,969 29,322
--------------------- -----------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock, par value $.01 per share
10,000,000 shares authorized, no shares issued - -
Common Stock, par value $.01 per share
10,000,000 shares authorized 1,150,000 issued
and outstanding at September 30, 2000 and
December 31, 1999, respectively 11,500 11,500
Additional paid-in capital 10,635,200 10,635,200
Retained deficit (1,086,264) (534,329)
Accumulated other comprehensive loss (10,352) -
--------------------- -----------------
Total stockholders' equity 9,550,084 10,112,371
--------------------- -----------------
Total liabilities and stockholders' equity $ 51,078,053 $ 10,141,693
===================== =================
</TABLE>
See Notes to Consolidated Financial Statements that are an integral part of
these statements.
<PAGE>
<TABLE>
<CAPTION>
GREENVILLE FIRST BANCSHARES, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
FOR THE THREE MONTHS FOR THE NINE MONTHS
ENDED ENDED
SEPTEMBER 30, 2000 SEPTEMBER 30, 2000
<S> <C> <C>
INTEREST INCOME
Investments $ 229,113 $ 609,840
Loans 716,541 1,313,798
------------------------ ---------------------
Total interest income 945,654 1,923,638
INTEREST EXPENSE 474,541 873,186
------------------------ ---------------------
Net interest income 471,113 1,050,452
PROVISION FOR LOAN LOSS 150,000 430,000
OTHER INCOME 21,567 33,419
GENERAL & ADMINISTRATIVE EXPENSES
Salaries and benefits 264,332 765,301
Professional fees 35,201 100,622
Marketing 11,379 23,719
Outside services 29,459 67,558
Occupancy 69,824 210,121
Telephone 5,188 15,051
Other 39,612 97,434
------------------------ ---------------------
Total general & administrative expenses 454,995 1,279,806
------------------------ ---------------------
Net loss before taxes 112,315 625,935
PROVISION FOR INCOME TAX BENEFITS - 74,000
------------------------ ---------------------
NET LOSS $ 112,315 $ 551,935
======================== =====================
BASIC LOSS PER SHARE $ .10 $ .48
WEIGHTED AVERAGE SHARES OUTSTANDING 1,150,000 1,150,000
</TABLE>
See Notes to Consolidated Financial Statements that are in integral part of
these statements.
3
<PAGE>
<TABLE>
<CAPTION>
GREENVILLE FIRST BANCSHARES, INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000
(UNAUDITED)
Accumulated
Other Total
Common Stock Additional Retained Comprehensive Shareholders
Shares Amount Paid-in Capital Deficit Loss Equity
------- ------ --------------- ------- ---- ------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1999 1,150,000 $11,500 $10,635,200 $ (534,329) $ - $ 10,112,371
Comprehensive loss, net of tax:
Net loss (551,935) (551,935)
Unrealized loss on
investments
held for sale (10,352) (10,352)
--------- ---------- ----------- ------------ ---------- ---------------
Total comprehensive loss (551,935) (10,352) (562,287)
--------- ---------- ----------- ----------- ---------- ---------------
Balance at September 30, 2000 1,150,000 $11,500 $10,635,200 $(1,086,264) $ (10,352) $ 9,550,084
========= ========== =========== =========== ========== ===============
</TABLE>
See Notes to Consolidated Financial Statements that are an integral part of
these statements.
2
<PAGE>
<TABLE>
<CAPTION>
GREENVILLE FIRST BANCSHARES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000
(UNAUDITED)
OPERATING ACTIVITIES
<S> <C>
Net loss $ (551,935)
Adjustments to reconcile net loss to cash provide by operating activities:
Provision for loan losses 430,000
Depreciation and other amortization 48,769
Accretion and amortization of securities discounts and premium, net (16,234)
Other assets, net (196,268)
Other liabilities, net 661,283
---------------------
Net cash provided by operating activities 375,615
---------------------
INVESTING ACTIVITIES
Increase (decrease) in cash realized from:
Origination of loans, net (36,058,179)
Purchase property and equipment (210,416)
Purchase of securities available for sale (10,096,752)
Increase in federal funds sold (3,840,000)
Payments and maturity of securities available for sale 9,903,250
---------------------
Net cash used in investing activities (40,302,097)
----------------------
FINANCING ACTIVITIES
Increase in deposits, net 40,837,364
---------------------
Net increase in cash 910,882
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 5,856
---------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 916,738
=====================
</TABLE>
See Notes to Consolidated Financial Statements that are in
integral part of these statements.
<PAGE>
GREENVILLE FIRST BANCSHARES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Nature of Business and Basis of Presentation
Business activity and organization
GREENVILLE FIRST BANCSHARES, INC. (the "Company") is a South Carolina
corporation organized for the purpose of owning and controlling all of the
capital stock of GREENVILLE FIRST BANK (the "Bank"). The Bank is a national bank
organized under the laws of the United States located in Greenville County,
South Carolina. The Bank began operations on January 10, 2000.
Until January 10, 2000, the Company engaged in organizational and
pre-opening activities necessary to obtain regulatory approvals and to prepare
its subsidiary, the Bank, to commence business as a financial institution. The
Bank is primarily engaged in the business of accepting demand deposits and
savings insured by the Federal Deposit Insurance Corporation, and providing
commercial, consumer and mortgage loans to the general public.
Basis of Presentation
The accompanying financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the instructions to Form 10-QSB. Accordingly, they do not include all
the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation have been included. Operating results for the nine-month
period ended September 30, 2000 are not necessarily indicative of the results
that may be expected for the year ending December 31, 2000. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Company's Registration Statement on Form SB-2
(Registration Number 333-83851) as filed with and declared effective by the
Securities and Exchange Commission.
Note 2 - Stock Option Plan
On March 21, 2000, the Board of Directors of the Company adopted a
stock incentive plan for the benefit of the directors, officers, and employees
of the Company and the Bank. The Company's shareholders approved the plan at the
annual shareholders meeting on May 11, 2000. Under the plan, the Company may
grant up to 172,500 shares of common stock options at an option price per share
not less than the fair market value on the date of grant. As of September 30,
2000, 97,000 options had been granted at an exercise price of $10.00.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION.
GENERAL
The following is a discussion of the Company's financial condition as
of September 30, 2000 and the results of operations for the three and nine
months ended September 30, 2000. These comments should be read in conjunction
with the Company's condensed consolidated financial statements and accompanying
footnotes appearing in this report.
The following discussion contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995, such as
statements relating to financial results and plans for future business
development activities. Such forward-looking statements are subject to risks,
uncertainties, and other factors, which could cause actual results to differ
materially from future results expressed or implied by such forward-looking
statements. These statements appear in a number of places in this report and
include all statements that are not statements of historical fact regarding our
intent, belief, or expectations. These forward-looking statements are not
guarantees of future performance and actual results may differ materially from
those projected in the forward-looking statements. Potential risks and
uncertainties include, but are not limited to, our brief operating history, our
ability to manage rapid growth, general economic conditions, competition,
interest rate sensitivity, and exposure to regulatory and legislative changes.
Additional risks are discussed in detail in our filings with the Securities and
Exchange Commission, including the "Risk Factors" section in our Registration
Statement on Form SB-2 (Registration Number 333-83851) as filed with and
declared effective by the Securities and Exchange Commission.
Until January 10, 2000, the Company's principal activities related to
its organization, the conducting of its initial public offering, the pursuit of
approvals from the OCC for its application to charter the Bank, the pursuit of
approvals from the FDIC for its application for insurance of the deposits of the
Bank, hiring the appropriate personnel and implementing operating procedures.
The company received approval from both the FDIC and the OCC on January 7, 2000.
The Bank opened for business on January 10, 2000.
The Company completed its stock offering on November 30, 1999, upon the
issuance of 1,150,000 shares for a total of $11.5 million. The Company initially
capitalized the Bank with $8.5 million of the proceeds from the stock offering.
On April 18, 2000, the Company increased its investment in the Bank by $1.0
million utilizing proceeds from the initial offering. The Company does not
currently anticipate raising additional capital.
FINANCIAL CONDITION
At September 30, 2000, the Company had total assets of $51.1 million,
consisting principally of $35.6 million in loans, $13.8 million in investments
and $917 thousand in cash and due from bank. Liabilities at September 30, 2000
totaled $41.5 million, consisting principally of $40.8 million in deposits. At
September 30, 2000, shareholders' equity was $9.6 million.
At September 30, 2000, the Bank's loan portfolio consisted primarily of
$15.8 million of commercial real estate loans, $5.9 million of commercial
business loans, and $14.2 million of consumer and home equity loans. At
September 30, 2000, there were no non-performing loans.
5
<PAGE>
At September 30, 2000, the Bank's allowance for loan losses was $430 thousand.
Management believes that the reserve for loan losses is adequate to absorb
possible loan losses in the portfolio. Management bases its belief on its
consideration of a number of factors, including internal credit ratings and
assumptions about future events, which assumptions may or may not be accurate.
There can be no assurance that loan losses in future periods will not exceed the
allowance for loan losses or that additional allocations will not be required.
At September 30, 2000 the Bank had $40.8 million in deposits. The $40.8 million
in deposits consisted primarily of $5.2 million in personal checking, $4.4
million in business checking, $19.1 million in certificates of deposit and $12.1
million of money market accounts of which 62% are business accounts.
LIQUIDITY
Liquidity needs are met by the Bank through scheduled maturities of
loans and investments and through pricing policies for interest-bearing deposit
accounts. The level of liquidity is measured by the loan-to-total borrowed funds
ratio, which was at 87.2 % at September 30, 2000. The Bank had commitments to
fund approximately $12.0 million in loans at September 30, 2000.
The Bank plans to continue to increase its loan portfolio, while
maintaining approximately the current level of it investment portfolio. The
primary source of funding for the Bank's loan portfolio is deposits that are
acquired and the maturity of investment securities.
CAPITAL
The Bank currently maintains a level of capitalization substantially in
excess of the minimum capital requirements set by the regulatory agencies.
Despite anticipated asset growth, management expects its capital ratios to
continue to be adequate for the next two to three years. However, no assurances
can be given in this regard, as rapid growth, deterioration in loan quality, and
continued losses, or a combination of these factors, could change the Company's
capital position in a relatively short period of time.
The Bank plans to lease its permanent main office building beginning in
the fourth quarter of the year 2000.
RESULTS OF OPERATIONS
The Company incurred a net loss of $551,935 for the nine months ended
September 30, 2000. The net loss for the three months ended September 30, 2000
was $112,315 compared to net losses of $165,501 and $274,119 for the three month
periods ended June 30, 2000 and March 31, 2000, respectively. Included in the
net losses are non-cash expenses for provision for loan losses. The provision
for loan losses for the third quarter was $150,000 compared to $180,000 for the
second quarter and $100,000 for the first quarter. Net interest income for the
nine months ended September 30, 2000 was $1.1 million. Net interest income
continues to increase each quarter. This increase resulted primarily from growth
in both earning assets and interest bearing deposits. Net interest income was
$471,113 for the third quarter. This is an increase of $111,198 compared to the
second quarter and an increase of $251,689 compared to the first quarter of the
year 2000. Interest income for the first nine months ended September 30, 2000
was $1.9 million of which $945,654 or 49.2% relates to the three months ended
September 30, 2000. Interest expense for the
6
<PAGE>
nine months ended September 30, 2000 was $873,186 of which $474,541 or 54.3%
relates to the third quarter of 2000.
Average loans and investments for the third quarter of the year 2000
were $29.0 million and $13.7 million, respectively. The average loans and
investments for the three months ended September 30, 2000 compared to the second
quarter increased $10.1 million and $1.7 million, respectively. The average
yields on loans and investments for the three months ended September 30, 2000
were 9.83% and 6.63%, respectively. The average yields on loans and investments
for the nine months ended September 30, 2000 were 9.69% and 6.29%.
The average balance of deposits for the first nine months ended
September 30, 2000 was $22.1 million, while the average balance for the third
quarter was $34.4 million. This represents a $12.2 million or 54.9% increase
compared to the average for the second quarter of the year 2000. The weighted
rate on deposit for the nine months ended September 30, 2000 was 5.27% and was
5.49% and 5.12% for the third and second quarters of the year 2000,
respectively.
The Company's earning assets to deposit spread for the nine months
ended September 30, 2000 was 3.02% and was 3.31% for the three months ended
September 30, 2000. The Bank's net yield on earning assets was 4.53% for the
nine months ended September 30, 2000 compared to 4.39% for the three months
ended September 30, 2000.
As a result of growth in interest earning assets and interest bearing
deposits, net interest income for the third quarter was $471,113 or 44.9% of the
net interest income for the nine months ended September 30, 2000. During the
same three-month period, general and administrative expense was $454,995 that
represents only 35.6% of the total for the nine-month period. The bank has been
able to increase net interest income each quarter while general and
administrative expense has remained relatively unchanged. During the third
quarter of the year 2000, the net interest income exceeded the general and
administrative expenses by $16,118.
The Bank incurred general and administrative expenses of $1.3 million
for the nine months ended September 30, 2000. The related expense for the third
quarter of the year 2000 was $454,995 compared to $428,906 for the three months
ended June 30, 2000. Salaries and benefits represented 59.8% for the total
expense for the nine months ended September 30, 2000. Salaries and benefits were
$765,301 for the first nine months and $264,332 for the third quarter of 2000.
Another significant expense was $210,121 for occupancy cost for the nine-month
period ended September 30, 2000. This expense was $69,824 in the third quarter
compared to $69,291 for the second quarter of 2000.
In the second quarter of 2000 the company recorded an income tax
benefit of $74,000 related to the future value of the Company's current
operating losses. No provision or benefit was recorded in the third quarter of
the year 2000.
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
----------------------------
There are no material pending legal proceedings to which the Company
is a party or of which any of their property is the subject.
ITEM 2. CHANGES IN SECURITIES
--------------------------------
Not applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
------------------------------------------
Not applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
--------------------------------------------------------------
None
ITEM 5. OTHER INFORMATION
----------------------------
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
-------------------------------------------
(a) Exhibits
Exhibit
Number Description
27.1 Financial Data Schedule (for electronic filing purposes)
(b) Reports on Form 8-K
None
<PAGE>
SIGNATURES
Pursuant to the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
GREENVILLE FIRST BANCSHARES, INC.
Date: November 7, 2000 /s/ R. Arthur Seaver, Jr.
----------------------------------------
R. Arthur Seaver, Jr.
Chief Executive Officer
/s/ James M. Austin, III
----------------------------------------
James M. Austin, III
Chief Financial Officr
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
------- -----------
27.1 Financial Data Schedule (for electronic filing purposes)
