UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(MARK ONE)
( 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
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Commission File Number 333-91817
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COMMERCEFIRST BANCORP, INC.
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(Exact name of registrant as specified in its charter)
Maryland 52-2180744
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(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1804 West Street, Suite 200, Annapolis MD 21401
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(Address of principal executive offices) (Zip Code)
410-280-6695
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(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last
report)
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 No X
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practical date.
As of June 30, 2000, registrant had accepted subscriptions for
7,134,500 shares of Common Stock.
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COMMERCEFIRST BANCORP, INC.
FORM 10-QSB
INDEX
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PART I - FINANCIAL INFORMATION PAGE(S)
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Item 1 - Financial Information
Balance Sheets - June 30, 2000 (Unaudited)
and December 31, 1999 (Audited) 1
Statements of Operations 2
o Three month period ended June 30, 2000 (Unaudited)
o Six month period ended June 30, 2000 (Unaudited)
o For the period from July 9, 1999 to June 30, 2000 (Unaudited)
Statements of Changes in Stockholders' Equity 3
o For the period from July 9, 1999 to June 30, 2000 (Unaudited)
Statements of Cash Flows 4
o Six month period ended June 30, 2000 (Unaudited)
o For the period from July 9, 1999 to June 30, 2000 (Unaudited)
Notes to Financial Statements 5 - 7
Management's Discussion and Analysis of Financial Condition
and Results of Operations 8
PART II - OTHER INFORMATION 9
SIGNATURES 10
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PART I-Financial Information
ITEM 1. Financial Statements
COMMERCEFIRST BANCORP, INC. AND COMMERCEFIRST BANK
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
JUNE 30, 2000 AND DECEMBER 31, 1999
<TABLE>
ASSETS June 30, 2000 Dec 31, 1999
(Unaudited) (Audited)
<S> <C> <C>
Cash and due from banks $ 833,834 $ 143,774
Federal funds sold 5,700,000 --
Federal Reserve Bank stock 195,000 --
Equipment, at cost, net of accumulated depreciation 7,249 7,012
Security deposits 33,794 --
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TOTAL ASSETS $ 6,769,877 $ 150,786
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LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued expenses $ 154,583 $ 101,969
Deposits 28,607 --
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TOTAL LIABILITIES 183,190 101,969
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COMMITMENTS
STOCKHOLDER'S EQUITY
Common Stock
$.01 par value, 4,000,000 shares authorized,
32,500 shares issued & outstanding -- 325
713,450 shares issued and outstanding 7,135 --
Surplus 7,012,099 238,872
Deficit accumulated during the
development stage (432,547) (190,380)
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TOTAL STOCKHOLDERS' EQUITY 6,586,687 48,817
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 6,769,877 $ 150,786
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SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1
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COMMERCEFIRST BANCORP, INC. AND COMMERCEFIRST BANK
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
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<CAPTION>
Three Months Six Months For the Period from
Ended Ended July 9, 1999
June 30, 2000 June 30, 2000 (Date of Inception)
to June 30, 2000
<S> <C> <C> <C>
REVENUES:
Interest Income $ 75,315 $ 84,046 $ 88,037
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EXPENSES:
Depreciation 1,157 1,893 2,305
Legal and Professional 1,009 34,006 62,682
Salaries 89,480 176,446 303,782
Rent 35,145 46,645 52,645
Marketing and Consulting 21,763 36,900 56,750
Office Supplies 6,966 22,195 26,207
Business Development 1,028 2,269 4,008
Miscellaneous 3,436 5,857 12,205
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Total Expenses 159,984 326,211 520,584
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LOSS BEFORE INCOME TAX BENEFIT (84,669) (242,167) (432,547)
INCOME TAX BENEFIT -- -- --
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NET LOSS $ (84,669) $ (242,167) $ (432,547)
========================= ========================== =====================
EARNINGS (LOSS) PER SHARE
Basic net loss per share $(0.30) $(1.41) $(4.24)
========================= ========================== =====================
Diluted net loss per share $(0.30) $(1.41) $(4.24)
========================= ========================== =====================
Weighted average shares of
common stock outstanding 281,150 171,408 101,954
========================= ========================== =====================
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2
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COMMERCEFIRST BANCORP, INC. AND COMMERCEFIRST BANK
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM JULY 9, 1999
(DATE OF INCEPTION) TO JUNE 30, 2000
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Common Surplus Deficit Accumulated Total
Stock During the
(Par Value) Development Stage
<S> <C> <C> <C> <C>
Balances, July 9, 1999 $ -- $ -- $ -- $ --
Net Loss -- -- (432,547) (432,547)
Costs of Raising Capital -- (115,266) -- (115,266)
Issuance of 713,450 shares of
common stock at $10
per share 7,315 7,127,365 -- 7,134,680
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Balances, June 30, 2000 $ 7,315 $ 7,012,099 $ (432,547) $ 6,586,867
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SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3
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COMMERCEFIRST BANCORP, INC. AND COMMERCEFIRST BANK
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE PERIOD FROM
SIX MONTHS JULY 9, 1999
ENDED (DATE OF INCEPTION)
JUNE 30, 2000 TO JUNE 30, 2000
<S> <C> <C>
CASH FLOWS FROM ACTIVITIES:
Net Loss $ (242,167) $ (432,547)
Adjustments to reconcile net loss to net cash
used by operating activities:
Depreciation 1,893 2,305
Increase in security deposits (33,794) (33,794)
Increase in accounts payable
and accrued expenses 52,614 154,583
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Net cash used by operating activities (221,454) (309,453)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment (2,130) (9,554)
Purchase of Federal Reserve Bank Stock (195,000) (195,000)
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Net cash used in investing activites (197,130) (204,554)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in deposits 28,607 28,607
Proceeds from issuance of common stock 6,809,500 7,134,500
Costs of raising capital (28,463) (115,266)
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Net cash provided by financing activities 6,808,644 7,047,841
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NET INCREASE IN CASH 6,390,000 6,533,384
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 143,774 --
CASH AND CASH EQUIVALENTS, END OF PERIOD $6,533,834 $6,533,834
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Supplemental Cash Flows Information:
Interest Payments $ -- $ --
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Income Tax Payments $ -- $ --
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</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
4
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COMMERCEFIRST BANCORP, INC. AND COMMERCEFIRST BANK
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES
CommerceFirst Bancorp, Inc. (the "Company") was incorporated on July 9, 1999,
under the laws of the State of Maryland, primarily to own all of the outstanding
shares of a new bank with the name CommerceFirst Bank (the "Bank"). Upon
obtaining all required regulatory approvals and complying with all terms and
conditions contained in the prospectus, the Company broke escrow accepted
subscriptions for and issued an additional 648,450 shares of common stock for
$6,484,500, capitalized the Bank with $6,500,000 and officially opened its
retail location and began its operations on June 29, 2000.
The Bank will be a full service community oriented financial institution
operating primarily in the Anne Arundel County area, emphasizing commercial
banking services to corporations, partnerships, small and medium sized
businesses and sole proprietorships as well as to non-profit organizations and
associations.
The Company is in the development stage and its efforts through June 30, 2000
have been principally devoted to raising capital, acquiring property and
equipment, recruiting and training personnel, and start up operations. The
Company meets the criteria defined by Statement of Financial Accounting
Standards (SFAS) No. 7, "Accounting and Reporting by Development Stage
Enterprises."
On August 18, 2000, the Company is expected to complete an initial public
offering of its securities. The Company expects that the proceeds of the
offering will enable it to fund its operations at least through December 31,
2001.
BASIS OF PRESENTATION:
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not contain all of the information and
footnotes required by generally accepted accounting principles for complete
consolidated financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for fair
presentation of the results of operations for the periods presented have been
included.
The financial data at December 31, 1999 is derived from audited financial
statements that are included in the Company's Prospectus dated February 22, 2000
and the supplement thereto dated July 20, 2000 relating to its offering of
800,000 shares of common stock and should be read in conjunction with the
audited financial statements and notes contained therein. Interim results are
not necessarily indicative of results for the full year.
PRINCIPLES OF CONSOLIDATION:
The consolidated financial statements include the accounts of CommerceFirst
Bancorp, Inc and CommerceFirst Bank. All significant intercompany accounts and
transactions have been eliminated.
5
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COMMERCEFIRST BANCORP, INC. AND COMMERCEFIRST BANK
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
USE OF ESTIMATES:
The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates. It is
again suggested that these financial statements be read in conjunction with the
prospectus dated February 22, 2000 and the supplement thereto dated July 20,
2000.
DEPRECIATION:
Depreciation is computed using the straight-line method over the estimated
useful lives of the assets.
CREDIT RISK:
The Bank has deposits and Federal funds sold of approximately $5,859,000 with
one financial institution as of June 30, 2000.
CASH AND CASH EQUIVALENTS:
The Bank included cash due from banks and Federal Funds sold as cash equivalents
for purchases of reporting cash flows.
INCOME TAX:
The Company uses the liability method of accounting for income taxes as required
by SFAS No. 109, "Accounting for Income Taxes." Under the liability method,
deferred-tax assets and liabilities are determined based on differences between
the financial statement carrying amounts and the tax basis of existing assets
and liabilities (i.e., temporary differences) and are measured at the enacted
rates that will be in effect when these differences reverse. Deferred income
taxes will be recognized when it is deemed more likely than not that the
benefits of such deferred income taxes will be realized, accordingly, no
deferred income taxes or income tax benefits have been recorded by the Company.
NET LOSS PER COMMON SHARE:
Net Loss per common share has been computed (basic and diluted) for all periods
presented and is based on the weighted average number of shares outstanding
during the period. There are no common stock equivalents resulting from dilutive
stock options.
NOTE 2. FEDERAL RESERVE BANK STOCK
Federal Reserve Bank stock is an equity interest in the Federal Reserve Bank
which does not have a readily determinable fair value for propose of Statement
of Financial Accounting Statement ("SFAS") No. 115, Accounting for Certain
Investment in Debt and Equity Securites, because its ownership is restricted and
it lacks a market. Federal Reserve Bank stock can be sold back only at its par
value of $100 per share and only to the Federal Reserve Bank or another member
institution.
NOTE 3. COSTS ASSOCIATED WITH START-UP ACTIVITIES
The Company expenses costs incurred during the start-up phase of organization in
accordance with The American Institute of Certified Public Accountants'
Statement of Position 98-5 "Reporting on the Costs of Start-Up Activities."
NOTE 4. COSTS ASSOCIATED WITH RAISING CAPITAL
The Company has incurred $115,246 in expenses relating to costs associated with
raising Capital, including $102,078 incurred through March 31, 2000. Previously
issued financial statements as of March 31, 2000 have reflected these costs as
development stage expenses. These costs which are legal and professional and
marketing and consulting, are now treated as a reduction of surplus in the
stockholders' equity section of the balance sheet. Total stockholders' equity
on previously issued financial statements has not changed.
6
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COMMERCEFIRST BANCORP, INC. AND COMMERCEFIRST BANK
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5. COMMON STOCK SUBSCRIPTION FUNDS
As a result of the Company's prospectus dated February 22, 2000 and the
supplement thereto dated July 20, 2000, the Company, through an escrow agent,
has been receiving subscriptions for the Company's common stock. As of June 30,
2000, the amount received was $6,581,000; these funds were invested in
short-term government obligations and investments that are permissible under
Commission rule 15c2-4.
NOTE 6. FUNDING OF ORGANIZATIONAL EXPENSES
Organizational activities of the Company have been funded by the purchase of
organizer shares by each of the 13 organizers. Each organizer has purchased 50
shares of common stock at a price of $1,000 per share, or an aggregate amount of
$650,000 and 650 shares of common stock. Each of these shares will be used for
the purchase of 100 shares of common stock in the offering. The shares to be
purchased in the offering with the organizer shares were counted in determining
whether the minimum number of shares was subscribed for in the offering. In
anticipation of the successful completion of the offering, the share information
presented in the equity section of the balance sheet and in the earnings (loss)
per share calculation displayed on the statement of operations has been adjusted
to reflect the conversion of each organizer share into 100 shares of common
stock.
NOTE 7. USE OF PROCEEDS
On February 22, 2000, the Company's registration statement on Form SB-2 (No.
333-91817) relating to its initial public offering of common stock, $0.01 par
value, was declared effective by the Securities and Exchange Commission. On June
29, 2000, subscriptions for 648,450 shares were accepted and a closing was held
with respect to such shares resulting in net proceeds of $6,484,500.
NOTE 8. RELATED PARTY TRANSACTIONS
The Company has paid $20,000 during the six months ended June 30, 2000 for legal
expenses to a law firm of which the Chairman of the Board of the Company is also
a principal. The Company also sub-leased office space in Annapolis, Maryland for
$1,500 per month from this law firm. The terms of the sub-lease agreement appear
to be at least as favorable as what could have been attained from an
unaffiliated party. Accounts payable and accrued expenses include $25,206
payable to the law firm and $92,168 of unpaid officer salaries.
NOTE 9. COMMITMENTS
On February 17, 2000, the Company entered into a lease for a facility to serve
as the executive offices for the Company and as the main banking office for the
new Bank and paid $38,395 in rent during the six months ended June 30, 2000. The
facility, which is approximately 8,100 square feet and located in Annapolis,
Maryland, is leased by the Company for five years with three five year renewal
options, at an initial rent of $19 per square foot, plus annual increases of 3%.
Delivery of the premises occurred in June 2000.
7
<PAGE>
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should be read in conjunction with the prospectus dated
February 22,2000 and the supplement thereto dated July 20, 2000.
CommerceFirst Bancorp, Inc. (the "Company") is a bank holding company that is in
the process of offering up to 800,000 shares of its common stock at a price of
$10.00 per share (the "Offering"). CommerceFirst Bancorp may also sell up to an
additional 200,000 shares of common stock if the number of shares subscribed for
exceeds the number of shares offered. As of June 30, 2000, the Company devoted
substantially all of its efforts to establishing a new banking business and
raising capital and is therefore defined as a development stage company. As of
June 29, 2000, having received all requisite regulatory approvals and have
complied with all other terms and conditions contained in the prospectus, the
Company broke escrow and CommerceFirst Bank opened for business. No significant
banking transactions occurred on June 29 or 30, 2000.
Organizational activities of the Company have been funded by the purchase of
organizer shares by each of the 13 organizers. Each organizer has purchased 50
shares of common stock at a price of $1,000 per share, or an aggregate amount of
$650,000 and 650 shares of common stock. Each of these shares was used for the
purchase of 100 shares of common stock in the offering. The shares purchased in
the offering with the organizer shares were counted in determining whether the
minimum number of shares was subscribed for in the offering. This temporary
funding source was sufficient to meet the Company's needs until the sale of
shares pursuant to the Offering is completed.
The Bank has incurred approximately $425,000 in expenses for furniture, fixtures
and equipment and leasehold improvements for its headquarters, branch and
operations space. The Bank has contracted its data processing requirements to an
outside vendor. The Company had no employees at June 30, 2000 but, at the Bank
level, had twelve employees at opening.
SUBSCRIPTION FOR COMMON STOCK
As of June 30, 2000, the Company has received $6,581,000 in subscription funds
through an escrow agent as a result of the Offering. These funds have been
invested in short-term government obligations and repurchase agreements and do
not include $650,000 of organizer shares. Of that amount, $6,484,500 represented
eligible subscriptions received through June 27, 2000 and was the amount of
the escrow breakage.
RESULTS OF OPERATIONS
The Company reported a net loss of $84,669 for the quarter and a net loss of
$242,167 for the six months ended June 30, 2000. From date of inception to June
30, 2000 the Company reported a cumulative loss of $432,547. The loss is
attributable primarily to start-up costs associated with filing fees, legal fees
and salary expenses. The Company earned $84,013 in interest income from
organizer and subscription funds during the first half of 2000.
8
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings
Not Applicable
ITEM 2. Changes in Securities and Use of Proceeds
On February 22, 2000, the Company's registration statement on Form SB-2 (No.
333-91817) relating to its initial offering of common stock, $0.01 par value,
was declared effective by the Securities and Exchange Commission, and the
offering commenced. On June 29, 2000, subscriptions for 648,450 shares
(excluding shares relating to the conversion of organizer shares) were accepted
and a closing was held with respect to such shares, resulting of net proceeds of
$6,484,500. No person or entity underwrote the Company's offering, which was
made through the efforts of the Company's organizing directors and executive
officers, with the limited assistance of Koonce Securities, Inc., in order to
comply with the securities laws of certain of the states in which the shares
were offered. Koonce will receive a fee of $15,000 for its services in
connection with the offering, plus payment of $558 through June 30, 2000 for
deposit delivery services. $6,500,000 (including funds from the prior issuance
of organizer shares) has been contributed to the capital of the Bank for use in
its lending and investment activities; the Company has received reimbursement of
$59,746 from the Bank for payment of Bank-related expenses prior to opening. As
of June 30, 2000, $96,500 remaining in the escrow account.
On July 20, 2000, the Company's supplement statement dated July 20, 2000 was
declared effective by the Securities and Exchange Commission, and the offering
was extended to August 18, 2000.
ITEM 3. Defaults upon Senior Securities
Not Applicable
ITEM 4. Submission of Maters to a Vote of Securities Holders
Not Applicable
ITEM 5. Other Information
Not Applicable
ITEM 6. Exhibits and reports on Form 8-K
a)Exhibit 27. Financial Data Schedule
b)Report on Form 8-K - No reports on Form 8-K were filed during the
quarter.
9
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SIGNATURES
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.
COMMERCEFIRST BANCORP, INC.
Date: August 11, 2000 By: /s/ Richard J. Morgan
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Richard J. Morgan, President
Date August 11, 2000 By: /s/ Lamont Thomas
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Lamont Thomas, Executive Vice President
Principal Financial and Accounting Officer
10
