U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-QSB
[ X ] Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended June 30, 2000
[ ] Transition Report Under Section 13
or 15(d) of the Exchange Act
For the transition period ended _______________________________
Commission File Number 000-30517
AMERICAN COMMUNITY BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
North Carolina 56-2179531
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
2593 WEST ROOSEVELT BOULEVARD, MONROE, NORTH CAROLINA 28111
(Address of principal office)
(704) 225-8444
(Registrant's Telephone Number, Including Area Code)
Check whether the registrant (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act of 1934 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
----- -----
As of July 31, 2000, 1,492,062 shares of the issuer's common stock, no par
value, were outstanding.
This report contains 12 pages.
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Page No.
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Part I. FINANCIAL INFORMATION
Item 1 - Financial Statements (Unaudited)
Consolidated Balance Sheets
June 30, 2000 and December 31, 1999.............................................. 3
Consolidated Statements of Operations
Three Months and Six Months Ended June 30, 2000 and 1999......................... 4
Consolidated Statements of Cash Flows
Six Months Ended June 30, 2000 and 1999.......................................... 5
Notes to Financial Statements.................................................... 6
Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations..... 7
Part II. Other Information
Item 4. Submission of Matters to a Vote of Security Holders...................... 10
Item 6. Exhibits and Reports on Form 8-K......................................... 10
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Part I. Financial Information
Item 1 - Financial Statements
AMERICAN COMMUNITY BANCSHARES, INC.
CONSOLIDATED BALANCE SHEETS
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June 30, 2000 December 31,
(Unaudited) 1999*
---------------- -----------
(In Thousands)
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ASSETS
Cash and due from banks $ 1,419 $ 1,809
Interest-earning deposits with banks 12,139 8,468
Investment securities available for sale, at fair value 149 -
Loans 88,276 59,307
Allowance for loan losses (1,187) (813)
---------------- -----------------
NET LOANS 87,089 58,494
Loans held for sale - 1,072
Accrued interest receivable 523 299
Bank premises and equipment 3,332 2,844
Federal Home Loan Bank stock, at cost 250 250
Other assets 150 358
--------------- ----------------
TOTAL ASSETS $ 105,051 $ 73,594
=============== ================
LIABILITIES AND STOCKHOLDERS' EQUITY
.Deposits:
Demand $ 9,198 $ 7,309
Savings 1,844 889
Money market and NOW 15,083 11,018
Time 57,139 35,771
--------------- ----------------
TOTAL DEPOSITS 83,264 54,987
Federal funds purchased 3,500 -
Advances from the Federal Home Loan Bank 5,000 5,000
Capital lease obligation 1,701 1,700
Accrued expenses and other liabilities 367 354
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TOTAL LIABILITIES 93,832 62,041
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Stockholders' Equity:
Preferred stock, 2000, no par value, 1,000,000 shares
authorized; none issued; 1999, none authorized - -
Common stock, 2000, $1 par value, 9,000,000 shares
authorized, 1,492,062 shares issued and outstanding;
1999, $5 par value, 10,000,000 shares authorized
1,492,062 shares issued and outstanding 1,492 7,460
Additional paid-in capital 11,090 5,122
Accumulated deficit (1,362) (1,029)
Accumulated other comprehensive loss (1) -
--------------- ----------------
TOTAL STOCKHOLDERS' EQUITY 11,219 11,553
--------------- ----------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 105,051 $ 73,594
=============== ================
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*Derived from audited financial statements.
See accompanying notes.
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AMERICAN COMMUNITY BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
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Three Months Ended Six Months Ended
June 30, June 30,
----------------------------- -------------------------
2000 1999 2000 1999
------------ ------------- ---------- ----------
(In Thousands, except per share data)
INTEREST INCOME
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Loans $ 1,929 $ 705 $ 3,423 $ 1,034
Investments 12 - 12 -
Interest-earning deposits with banks 116 104 270 243
------------ ------------- ------------- -------------
TOTAL INTEREST INCOME 2,057 809 3,705 1,277
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INTEREST EXPENSE
Money market, NOW and
savings deposits 144 41 274 67
Time deposits 762 239 1,338 374
Borrowings 153 - 229 -
------------ ------------- ------------- -------------
TOTAL INTEREST EXPENSE 1,059 280 1,841 441
------------ ------------- ------------- -------------
NET INTEREST INCOME 998 529 1,864 836
PROVISION FOR LOAN LOSSES 212 195 401 449
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NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 786 334 1,463 387
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NON-INTEREST INCOME
Service charges on deposit accounts 123 27 215 38
Mortgage operations 70 141 106 195
Other 32 1 43 -
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TOTAL NON-INTEREST INCOME 225 169 364 233
------------ ------------- ------------- -------------
NON-INTEREST EXPENSE
Salaries and employee benefits 532 384 1,021 643
Occupancy and equipment 144 102 318 190
Other 450 209 821 439
------------ ------------- ------------- -------------
TOTAL NON-INTEREST EXPENSE 1,126 695 2,160 1,272
------------ ------------- ------------- -------------
LOSS BEFORE INCOME TAXES (115) (192) (333) (652)
INCOME TAXES - - - -
------------ ------------- ------------- -------------
NET LOSS $ (115) $ (192) $ (333) $ (652)
============ ============= ============= =============
BASIC AND DILUTED NET LOSS
PER COMMON SHARE $ (.08) $ (.13) $ (.22) $ (.44)
============= ============= ============ ============
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 1,492,062 1,492,062 1,492,062 1,492,062
============ ============= ============= =============
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See accompanying notes.
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AMERICAN COMMUNITY BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
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Six Months Ended
June 30,
-------------------------
2000 1999
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(In Thousands)
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FLOWS FROM OPERATING ACTIVITIES
Net loss $ (333) $ (652)
Adjustments to reconcile net loss to net
cash provided (used) by operating activities:
Depreciation and amortization, premises and equipment 135 59
Provision for loan losses 401 449
Changes in assets and liabilities:
Increase in accrued interest receivable (223) (97)
Decrease in loans held for sale 1,072 -
(Increase) decrease in other assets 208 (88)
Increase (decrease) in accrued expenses and other liabilities 13 (45)
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NET CASH PROVIDED (USED)
BY OPERATING ACTIVITIES 1,273 (374)
---------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of Federal Home Loan Bank stock - (24)
Purchase of investment securities available for sale (150) -
Net increase in loans from originations and repayments (28,997) (30,832)
Purchases of bank premises and equipment (622) (325)
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NET CASH USED BY
INVESTING ACTIVITIES (29,769) (31,181)
---------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in federal funds purchased 3,500 -
Net increase in demand deposits 6,909 6,543
Net increase in time deposits 21,368 17,124
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NET CASH PROVIDED BY
FINANCING ACTIVITIES 31,777 23,667
---------- --------
NET INCREASE IN CASH
AND DUE FROM BANKS 3,281 (7,888)
CASH AND DUE FROM BANKS, BEGINNING 10,277 14,986
---------- --------
CASH AND DUE FROM
BANKS, ENDING $ 13,558 $ 7,098
========== ========
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AMERICAN COMMUNITY BANCSHARES, INC.
Notes to Financial Statements
NOTE A - ORGANIZATION AND OPERATIONS
In April 2000, American Community Bancshares, Inc. ("Bancshares") was formed as
a holding company for American Community Bank. Upon formation, one share of
Bancshares' $1 par value common stock was exchanged for each of the then
outstanding 1,492,062 shares of American Community Bank's $5 par value common
stock. Bancshares currently has no operations and conducts no business on its
own other than owning American Community Bank.
NOTE B - BASIS OF PRESENTATION
In management's opinion, the financial information, which is unaudited, reflects
all adjustments (consisting solely of normal recurring adjustments) necessary
for a fair presentation of the financial information as of and for the three
month and six month periods ended June 30, 2000, and 1999 in conformity with
generally accepted accounting principles. The financial statements include the
accounts of American Community Bancshares, Inc. (the "Company") and its
wholly-owned subsidiary, American Community Bank (the "Bank"). Operating results
for the three month and six month periods ended June 30, 2000 are not
necessarily indicative of the results that may be expected for the fiscal year
ending December 31, 2000.
The organization and business of the Company, accounting policies followed by
the Company and other information are contained in the notes to the financial
statements filed as part of American Community Bank's annual report on Form
10-KSB. This quarterly report should be read in conjunction with such annual
report.
NOTE C - COMMITMENTS
At June 30, 2000, loan commitments are as follows:
Undisbursed lines of credit $ 17,152,000
Stand-by letters of credit 1,207,000
In addition at June 30, 2000, the Company had entered into contracts for the
construction of a branch office and an option to purchase land for a proposed
branch totaling approximately $1.1 million.
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Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
This Quarterly Report on Form 10-QSB may contain certain forward-looking
statements consisting of estimates with respect to the financial condition,
results of operations and business of the Company that are subject to various
factors which could cause actual results to differ materially from these
estimates. These factors include, but are not limited to, general economic
conditions, changes in interest rates, deposit flows, loan demand, real estate
values, and competition; changes in accounting principles, policies, or
guidelines; changes in legislation or regulation; and other economic,
competitive, governmental, regulatory, and technological factors affecting the
Company's operations, pricing, products and services.
Comparison of Financial Condition at June 30, 2000 and December 31, 1999
The Bank has experienced significant growth during the first six months of 2000.
At June 30, total assets have increased by $31.5 million or 42.7% to $105.1
million. Net loans have grown by $28.6 million or 48.9% to $87.1 million while
total customer deposits have increased by $28.3 million or 51.4% to $83.3
million. While asset quality continues to be high the Bank did incur net loan
charge-offs of $27,000 during the six months. There were no non-accrual or
restructured loans at the end of the period.
Comparison of Results of Operations for the Three Months Ended June 30, 2000 and
1999
Net Loss. The Bank generated a net loss of $115,000 or $.08 per share for the
three months ended June 30, 2000, representing an improvement over the net loss
of $192,000 or $.13 per share generated during the three months ending June
30,1999. The improvement has resulted principally from the Bank's growth, as
both net interest income and non-interest income have increased substantially
during the current period.
Net Interest Income. Net interest income for the three months ended June 30,
2000 was $998,000 as compared with $529,000 for the three months ended June 30,
1999, with the increase resulting principally from the higher level of
interest-earning assets during the current period. Interest-earning assets
averaged $88.5 million during the three months ended June 30, 2000 as compared
with $40.7 million during the three months ended June 30, 1999. Substantially
all of this increase resulted from growth in loans, which have higher yields
than other types of interest-earning assets.
Provision for Loan Losses. The provision for loan losses was $212,000 and
$195,000, respectively, for the three months ended June 30, 2000 and 1999. The
allowance for loan losses at June 30, 2000 represented 1.34% of loans
outstanding with no non-accrual or restructured loans outstanding at that date.
Non-Interest Income. Non-interest income increased from $169,000 for the three
months ended June 30, 1999 to $225,000 for the three months ended June 30, 2000,
an increase of $56,000. Income from mortgage operations totaled $141,000 for the
three months ended 1999, declining to $70,000 for the same period of the current
year principally as a result of higher interest rates and a reduced demand for
mortgage loans. However, this decrease was more than offset by increased service
charges on deposit accounts, which grew from $27,000 to $123,000, and by other
non-interest income of $32,000 earned during the current period.
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Non-Interest Expense. Total non-interest expense was $1.1 million and $695,000,
respectively, for the three months ended June 30, 2000 and 1999. This increase
of $405,000 is attributable to the Bank's rapid growth, to the larger numbers of
personnel and branches in operation during the current period, and to increased
occupancy costs associated with the Bank's permanent headquarters facility that
was occupied during December of 1999 and the opening of the Wal-Mart Superstore
branch in Monroe and the Marshville branch.
Provision for Income Taxes. The Bank made no provision for income taxes during
the three months ended June 30, 2000 and 1999, as potential future tax benefits
arising from operating losses incurred have been offset by increases to the
valuation allowance associated with deferred tax assets. It is expected that as
the Bank becomes profitable and begins to demonstrate a sustained pattern of
profitability, the valuation allowance will be adjusted accordingly with the
benefit reflected in net income.
Comparison of Results of Operations for the Six Months Ended June 30, 2000 and
1999
Net Loss. The Bank generated a net loss of $333,000 or $.22 per share for the
six months ended June 30, 2000, representing a significant improvement over the
net loss of $652,000 or $.44 per share generated during the first six months of
1999. The improvement has resulted principally from the Bank's growth, as both
net interest income and non-interest income have increased substantially during
the current period.
Net Interest Income. Net interest income for the first six months of 2000 was
$1.9 million as compared with $836,000 during the first six months of 1999, with
the increase resulting principally from the higher level of interest-earning
assets during the current period. Interest-earning assets averaged $82.8 million
during the six months ended June 30, 2000 as compared with $32.2 million during
the first six months of 1999.
Provision for Loan Losses. The provision for loan losses was $401,000 and
$449,000, respectively, for the six months ended June 30, 2000 and 1999. The
allowance for loan losses at June 30, 2000 represented 1.34% of loans
outstanding with no non-accrual or restructured loans outstanding at that date.
Non-Interest Income. Non-interest income increased from $233,000 for the six
months ended June 30, 1999 to $364,000 for the six months ended June 30, 2000,
an increase of $131,000. Income from mortgage operations totaled $195,000 for
the six months ended 1999, declining to $106,000 for the same period of the
current year principally as a result of higher interest rates and a reduced
demand for mortgage loans. However, this decrease was more than offset by
increased service charges on deposit accounts, which grew from $38,000 to
$214,000, and by other non-interest income of $43,000 earned during the current
period.
Non-Interest Expense. Total non-interest expense was $2.2 million and $1.3
million, respectively, for the six months ended June 30, 2000 and 1999. This
increase of $888,000 is attributable to the Bank's rapid growth, to the larger
numbers of personnel and branches in operation during the current period, and to
increased occupancy costs associated with the Bank's permanent headquarters
facility that was occupied during December of 1999 and the opening of the branch
at the Wal-Mart Superstore in Monroe and completion of the Indian Trail Branch
on Highway 74.
Provision for Income Taxes. The Bank made no provision for income taxes during
the six months ended June 30, 2000 and 1999, as potential future tax benefits
arising from
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operating losses incurred have been offset by increases to the valuation
allowance associated with deferred tax assets. It is expected that as the Bank
becomes profitable and begins to demonstrate a sustained pattern of
profitability, the valuation allowance will be adjusted accordingly with the
benefit reflected in net income.
Liquidity and Capital Resources
The objective of the Company's liquidity management is to ensure the
availability of sufficient cash flows to meet all financial commitments and to
capitalize on opportunities for expansion. Liquidity management addresses the
Bank's ability to meet deposit withdrawals on demand or at contractual maturity,
and to fund new loans and investments as opportunities arise.
The primary sources of internally generated funds are principal and interest
payments on loans receivable and cash flows generated from operations. External
sources of funds consist of increases in deposits, advances from the Federal
Home Loan Bank, and Federal funds purchased.
At June 30, 2000, liquid assets comprised 13% of total assets. Management
believes that it will have sufficient funds available to meet its anticipated
future loan commitments as well as other liquidity needs.
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Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Stockholders was held on April 26, 2000. Of 1,492,062
shares entitled to vote at the meeting, 1,047,659 voted. The following matters
were voted on at the meeting:
1. Approval of the Agreement and Plan of Reorganizations and Share
Exchange, dated as of February 16, 2000, between the Bank and American
Community Bancshares, Inc. ("Bancshares"), and the transactions
contemplated by the Agreement, including the holding company
reorganization of the Bank by which its shareholders will exchange
their shares of the Bank's Common Stock for shares of the Common Stock
of Bancshares, on a one-for-one basis.
Approved with 777,023 or 74% of the shares voted
2. Election of Three Directors
Larry S. Helms, Zebulon Morris, and Carlton Tyson to three-year terms.
Each were elected as director with at least 1,033,919 or 99% of the
shares voted.
3. Ratification of Dixon Odom PLLC as independent auditors for the year
2000.
Ratified with 1,033,563 or 99% of the shares voted.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
27 Financial Data Schedule
(b) Reports on Form 8-K.
No reports on Form 8-K were filed by the Bank during the
quarter ended June 30, 2000.
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SIGNATURES
Under the requirements of the Securities Exchange Act of 1934, the Bank has duly
caused this report to be signed on its behalf by the undersigned thereunto duly
authorized.
AMERICAN COMMUNITY BANCSHARES, INC.
Date: August __, 2000 By: /s/ Randy P. Helton
-------------------------------------
Randy P. Helton
President and Chief Executive Officer
Date: August __, 2000 By: /s/ Dan R. Ellis, Jr.
-------------------------------------
Dan R. Ellis, Jr.
Senior Vice President and Chief
Financial Officer
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