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 June 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
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
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(Address of principal executive offices) (Zip Code)
864-679-9000
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(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 NO X
-- --
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 August 7, 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>
GREENVILLE FIRST BANCSHARES, INC
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, 2000 December 31, 1999
(Unaudited) (Development Stage
Enterprise)
Assets (Audited)
<S> <C> <C>
Cash and due from bank $ 1,723,714 $ 5,856
Federal funds sold 6,240,000 1,460,000
Investments securities available for sale 6,368,577 8,317,872
Loans 25,248,752 -
Less reserve for loan losses (280,000) -
---------------- -----------------
24,968,752 -
--------------- -----------------
Accrued interest receivable 276,582 246,773
Property and equipment 273,662 111,192
Other assets 127,370 -
--------------- -----------------
-
Total Assets $ 39,978,657 $ 10,141,693
=============== =================
Liabilities and Stockholders' Equity
Liabilities
Deposits $ 29,014,216 $ -
Checks outstanding 1,061,041 -
Accounts payable 11,570 11,322
Accrued expense 105,064 18,000
Accrued interest payable 124,680 -
Other 1,194 -
--------------- -----------------
$ 30,317,765 $ 29,322
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Commitments and Contingencies
Stockholders' Equity
Preferred stock, par value $.01 per share
10,000,000 shares authorized, no shares issued
CommonStock, par value $.01 per share
10,000,000 shares authorized 1,150,000 issued
and outstanding at June 30, 2000 and
December 31, 1999, respectively 11,500 11,500
Additional paid-in capital 10,635,200 10,635,200
Retained deficit (973,949) (534,329)
Accumulated other comprehensive loss (11,859) -
---------------- -----------------
Total stockholders' equity 9,660,892 10,112,371
--------------- -----------------
Total liabilities and stockholders' equity $ 39,978,657 $ 10,141,693
=============== =================
See Notes to Consolidated Financial Statements which are an integral part of
these statements.
<PAGE>
GREENVILLE FIRST BANCSHARES, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
For the three months ended For the six months ended June
June 30, 2000 30, 2000
Interest income
<S> <C> <C>
Investments $ 189,069 $ 380,727
Loans 452,958 597,257
--------------------- -----------------
Total interest income 642,027 977,984
Interest expense 282,112 398,645
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Net interest income 359,915 579,339
Provision for loan loss 180,000 280,000
Other income 9,490 11,852
General & administrative expenses
Salaries and benefits 255,813 500,969
Professional fees 40,301 65,421
Marketing 10,176 12,340
Outside services 22,101 38,099
Occupancy 69,291 140,297
Telephone 3,902 9,863
Other 27,322 57,822
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Total general & administrative expenses 428,906 824,811
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Net loss before taxes 239,501 513,620
Provision for income taxes benefits 74,000 74,000
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Net loss $ 165,501 $ 439,620
===================== =================
Basic loss per share $ .14 $ .38
Weighted average shares outstanding 1,150,000 1,150,000
</TABLE>
See Notes to Consolidated Financial Statements which are in integral part of
these statements.
<PAGE>
<TABLE>
<CAPTION>
GREENVILLE FIRST BANCSHARES, INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For the six months ended June 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 (439,620) (439,620)
Unrealized loss on investments
held for sale (11,859) (11,859)
--------- ------- ---------- ----------- ---------- -------------
Total comprehensive loss (439,620) (11,859) (451,479)
--------- ------- ---------- ----------- ---------- -------------
Balance at June 30, 2000 1,150,000 $11,500 $10,635,200 $ (973,949) $ (11,859) $ 9,660,892
========= ======= =========== =========== ========== =============
</TABLE>
See Notes to Consolidated Financial Statements which are an integral part of
these statements.
<PAGE>
<TABLE>
<CAPTION>
GREENVILLE FIRST BANCSHARES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENT OF CASH FLOWS
For the six months ended June 30, 2000
(Unaudited)
Operating activities
<S> <C>
Net loss $ (439,620)
Adjustments to reconcile net loss to cash provide by operating activities:
Provision for loan losses 280,000
Depreciation and other amortization 31,487
Accretion and amortization of securities discounts and premium, net (7,471)
Other assets, net (157,179)
Other liabilities, net 1,274,227
---------------------
Net cash provided by operating activities 981,444
---------------------
Investing activities
Increase (decrease) in cash realized from:
Origination of loans, net (25,248,752)
Purchase property and equipment (193,957)
Purchase of securities available for sale (6,544,403)
Increase in federal funds sold (4,780,000)
Payments and maturity of securities available for sale 8,489,310
---------------------
Net cash used in investing activities (28,277,802)
Financing activities
Increase in deposits, net 29,014,216
---------------------
Net increase in cash 1,717,858
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 5,856
---------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 1,723,714
=====================
</TABLE>
See Notes to Consolidated Financial Statements which 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 six-month period
ended June 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 June 30, 2000 no
options had been granted.
<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 June 30, 2000 and the results of operations for the three and six months
ended June 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 $11,500,000. The Company initially
capitalized the Bank with $8,500,000 of the proceeds from the stock offering. On
April 18, 2000 the company increased its investment in the Bank by $1,000,000
utilizing proceeds from the initial offering. The Company does not currently
anticipate raising additional capital.
FINANCIAL CONDITION
At June 30, 2000, the Company had total assets of $40.0 million,
consisting principally of $25.0 million in loans, $12.6 million in investments
and $1.7 million in cash and due from bank. Liabilities at June 30, 2000 totaled
$30.3 million, consisting principally of $29.0 million in deposits and $1.1 in
checks outstanding. At June 30, 2000, shareholders' equity was $9.7 million.
At June 30, 2000, the Bank's loan portfolio consisted primarily of
$11.0 million of commercial real estate loans, $4.2 million of commercial
business loans, and $9.1 million of consumer and home equity loans. At June 30,
2000, there were no non-performing loans. At June
<PAGE>
30, 2000, the Bank's allowance for loan losses was $280,000. Management believes
this is adequate to absorb possible loan losses in the portfolio. At June 30,
2000 the Bank had $29.0 million in deposits. The $29.0 million in deposits
consisted primarily of $5.6 million in personal checking, $3.0 million in
business checking, $11.1 million in certificates of deposit and $9.3 million of
money market accounts of which 60% are business accounts.
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 86.1 % at June
30, 2000.
The Bank plans to decrease its investment portfolio and to increase its
loan portfolio. The primary source of funding for the Bank's loan portfolio is
the maturity of investment securities and deposits that are acquired.
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 $439,620 for the six months ended
June 30, 2000. The net loss for the first three months of the year 2000 was
$274,119 compared to $165,501 for the three months ended June 30, 2000. Included
in the net losses is a non-cash expense for provision for loan losses. The
provision for the first three months was $100,000 compared to $180,000 for the
three months ended June 30, 2000. Net interest income for the six months ended
June 30, 2000 was $579,339. This resulted from net interest income for the first
three months being $219,424 compared to $359,915 for the three months ended June
30, 2000. Interest income for the first six months ended June 30, 2000 was
$977,984 of which $335,957 relates to the first three months and $642,027
relates to the second three months ended June 30, 2000. Interest expense for the
six months ended June 30, 2000 was $398,645 of which $116,533 relates to the
first three months and $282,112 relates to the second three months of the year
2000.
Average loans and investments for the first three months in the year
2000 were $6.2 million and $13.0 million, respectively. The average loans and
investment for the three months ended June 30, 2000 were $18.9 million and $12.0
million, respectively. The average yields on loans and investments for the three
months ended June 30, 2000 were 9.66% and 6.34%, respectively. The
<PAGE>
average yields on loans and investments for the six months ended June 30, 2000
were 9.56% and 6.10%.
The average balance of deposits for the first six months ended June 30,
2000 was $15.8 million. The average for the first three months was $9.5 million
and the average for the second three months of the year 2000 was $22.2million.
The weighted rate on deposit for the six months ended June 30, 2000 was 5.05%
and was 4.94% and 5.12% for the first and second quarters of the year 2000,
respectively.
The Company's net spread for the six months ended June 30, 2000 was
2.80% and was 3.26% for the three months ended June 30, 2000. The Bank's net
yield on earning assets was 4.64% for the six months ended June 30, 2000
compared to 4.69% for the three months ended June 30, 2000.
The bank incurred general and administrative expenses of $824,811 for
the six months ended June 30, 2000. The related expense for the first and second
quarters of the year 2000 were $395,905 and $428,906, respectively. Salaries and
benefits represented 60.7% for the total expense for the six months ended June
30, 2000. Salaries and benefits were $245,156 and $255,813 for the first and
second quarters of 2000, respectively. Another significant expense was $140,297
for occupancy cost for the six-month period ended June 30, 2000. This expense
was $71,006 in the first quarter of 2000 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.
<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
The annual meeting of shareholders was held on May 11, 2000 to elect
four members to the Board of Directors and to consider a proposal to approve the
Company's 2000 stock incentive plan.
There were four members up for election to the Board of Directors.
The number of votes for the election of the directors was as follows: For Mr.
Cothran -1,087,470; for Mr. Johnstone - 1,087,470; for Mr. Marrero -1,087,470;
for Mr. Seaver-1,087,470; withhold authority for Mr. Cothran - 300; withhold
authority for Mr. Johnstone- 300; withhold authority for Mr. Marrero - 300; and
withhold authority for Mr. Seaver- 300. The terms of the Class I directors will
expire at the 2003 Annual Meeting of Shareholders.
The shareholders of the Company approved the Company's 2000 stock
incentive plan. The number of votes for the approval of the Plan was 513,418.
The number of votes against the Plan was 3,100; 18,400 abstained from voting and
we had 550,852 broker non-votes.
Item 5. Other Information
On April 18, 2000, the Board of Directors passed by unanimous
consent, an amendment to the Company's bylaws in order to revise the required
retirement age of the initial directors as set forth in Article 3, Section 6 of
the bylaws to 70 years of age.
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit
Number Description
------- -----------
3.1 Amendment to Bylaws
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: August 14, 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
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3.1 Amendment to Bylaws
27.1 Financial Data Schedule (for electronic filing purposes)
