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 September 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.
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(Exact name of registrant as specified in its charter)
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North Carolina 56-2179531
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
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2593 WEST ROOSEVELT BOULEVARD, MONROE, NORTH CAROLINA 28111
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(Address of principal office)
(704) 225-8444
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(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
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As of September 30, 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)
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Consolidated Balance Sheets
September 30, 2000 and December 31, 1999......................................... 3
Consolidated Statements of Operations
Three Months and Nine Months Ended September 30, 2000 and 1999................... 4
Consolidated Statements of Cash Flows
Nine Months Ended September 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
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AMERICAN COMMUNITY BANCSHARES, INC.
CONSOLIDATED BALANCE SHEETS
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Sept. 30, 2000 December 31,
(Unaudited) 1999*
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(In Thousands)
ASSETS
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Cash and due from banks $ 1,078 $ 1,809
Interest-earning deposits with banks 24,575 8,468
Investment securities available for sale, at fair value 150 -
Loans 98,153 59,307
Allowance for loan losses (1,297) (813)
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NET LOANS 96,856 58,494
Loans held for sale - 1,072
Accrued interest receivable 566 299
Bank premises and equipment 3,440 2,844
Federal Home Loan Bank stock, at cost 250 250
Other assets 285 358
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TOTAL ASSETS $ 127,200 $ 73,594
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LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Demand $ 12,880 $ 7,309
Savings 1,796 889
Money market and NOW 16,701 11,018
Time 77,035 35,771
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TOTAL DEPOSITS 108,412 54,987
Advances from the Federal Home Loan Bank 5,000 5,000
Capital lease obligation 1,701 1,700
Accrued expenses and other liabilities 811 354
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TOTAL LIABILITIES 115,924 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 (1,306) (1,029)
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TOTAL STOCKHOLDERS' EQUITY 11,276 11,553
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TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 127,200 $ 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 Nine Months Ended
September 30, September 30,
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2000 1999 2000 1999
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(In Thousands, except per share data)
INTEREST INCOME
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Loans $ 2,278 $ 960 $ 5,701 $ 1,994
Investments 2 - 14 -
Interest-earning deposits with banks 289 76 559 319
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TOTAL INTEREST INCOME 2,569 1,036 6,274 2,313
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INTEREST EXPENSE
Money market, NOW and
savings deposits 153 71 427 138
Time deposits 1,159 345 2,497 719
Borrowings 128 - 357 -
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TOTAL INTEREST EXPENSE 1,440 416 3,281 857
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NET INTEREST INCOME 1,129 620 2,993 1,456
PROVISION FOR LOAN LOSSES 115 117 516 566
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NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 1,014 503 2,477 890
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NON-INTEREST INCOME
Service charges on deposit accounts 145 47 360 287
Mortgage operations 33 93 139 86
Other 58 - 101 -
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TOTAL NON-INTEREST INCOME 236 140 600 373
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NON-INTEREST EXPENSE
Salaries and employee benefits 588 408 1,609 1,051
Occupancy and equipment 224 131 542 321
Other 382 194 1,203 633
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TOTAL NON-INTEREST EXPENSE 1,194 733 3,354 2,005
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INCOME (LOSS)
BEFORE INCOME TAXES 56 (90) (277) (742)
INCOME TAXES - - - -
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NET INCOME (LOSS) $ 56 $ (90) $ (277) $ (742)
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BASIC AND DILUTED NET INCOME
(LOSS) PER COMMON SHARE $ .04 $ (.06) $ (.19) $ (.50)
============ ============= ============= ============
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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Nine Months Ended
September 30,
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2000 1999
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(In Thousands)
FLOWS FROM OPERATING ACTIVITIES
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Net loss $ (277) $ (742)
Adjustments to reconcile net loss to net
cash provided (used) by operating activities:
Depreciation and amortization, premises and equipment 211 95
Provision for loan losses 516 566
Loss on sale of equipment 5 -
Changes in assets and liabilities:
Increase in accrued interest receivable (267) (163)
Decrease in loans held for sale 1,072 -
(Increase) decrease in other assets 73 (2,304)
Increase (decrease) in accrued expenses and other liabilities 457 (49)
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NET CASH PROVIDED (USED)
BY OPERATING ACTIVITIES 1,790 (2,597)
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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 (38,878) (41,197)
Purchases of bank premises and equipment (812) (408)
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NET CASH USED BY
INVESTING ACTIVITIES (39,840) (41,629)
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CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in capital lease obligation 1 -
Net increase in demand deposits 12,161 3,980
Net increase in time deposits 41,264 30,227
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NET CASH PROVIDED BY
FINANCING ACTIVITIES 53,426 34,207
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NET INCREASE (DECREASE) IN CASH
AND DUE FROM BANKS 15,376 (10,019)
CASH AND DUE FROM BANKS, BEGINNING 10,277 14,987
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CASH AND DUE FROM
BANKS, ENDING $ 25,653 $ 4,968
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See accompanying notes.
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AMERICAN COMMUNITY BANCSHARES, INC.
Notes to Financial Statements
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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 nine month periods ended September 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 nine month periods ended September 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
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At September 30, 2000, loan commitments are as follows:
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Undisbursed lines of credit $ 17,255,000
Stand-by letters of credit 1,370,000
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In addition at September 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.
NOTE D - SECONDARY STOCK OFFERING
American Community Bancshares, Inc. began a secondary offering of its common
stock on October 2, 2000. The offering is for a minimum of 500,000 shares and a
maximum of 1,000,000 shares at a price of $9.50 per share. The offering will
continue through December 31, 2000 unless extended to February 28, 2001.
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Item 2. Management's Discussion and Analysis of Financial Condition and Results
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of Operations
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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 September 30, 2000 and December 31, 1999
The Bank has experienced significant growth during the first nine months of
2000. At September 30, total assets have increased by $53.6 million or 72.8% to
$127.2 million. Net loans have grown by $38.4 million or 65.6% to $96.9 million
while total customer deposits have increased by $43.4 million or 97.2% to $108.4
million. While asset quality continues to be high the Bank did incur net loan
charge-offs of $32,000 during the nine months. There were $67,000 of non-accrual
loans at the end of the period.
Comparison of Results of Operations for the Three Months Ended September 30,
2000 and 1999
Net Income. The Bank generated a net profit of $56,000 or $.04 per share for the
three months ended September 30, 2000, representing an improvement over the net
loss of $90,000 or $.06 per share generated during the three months ending
September 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 September
30, 2000 was $1.1 million as compared with $620,000 for the three months ended
September 30, 1999, with the increase resulting principally from the higher
level of interest-earning assets during the current period. Interest-earning
assets averaged $110.4 million during the three months ended September 30, 2000
as compared with $52.0 million during the three months ended September 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 $115,000 and
$117,000, respectively, for the three months ended September 30, 2000 and 1999.
The allowance for loan losses at September 30, 2000 represented 1.32% of loans
outstanding with $67,000 of non-accrual loans outstanding at that date. There
were no restructured loans at the end of the period.
Non-Interest Income. Non-interest income increased from $140,000 for the three
months ended September 30, 1999 to $236,000 for the three months ended September
30, 2000, an increase of $96,000. Income from mortgage operations totaled
$93,000 for the three months ended 1999, declining to $33,000 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 $47,000 to
$145,000, and by other non-interest income of $58,000 earned during the current
period.
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Non-Interest Expense. Total non-interest expense was $1.2 million and $733,000,
respectively, for the three months ended September 30, 2000 and 1999. This
increase of $461,000 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.
Provision for Income Taxes. The Bank made no provision for income taxes during
the three months ended September 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 Nine Months Ended September 30, 2000
and 1999
Net Loss. The Bank generated a net loss of $277,000 or $.19 per share for the
nine months ended September 30, 2000, representing a significant improvement
over the net loss of $742,000 or $.50 per share generated during the first nine
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 nine months of 2000 was
$3.0 million as compared with $1.5 million during the first nine months of 1999,
with the increase resulting principally from the higher level of
interest-earning assets during the current period. Interest-earning assets
averaged $91.4 million during the nine months ended September 30, 2000 as
compared with $37.1 million during the first nine months of 1999.
Provision for Loan Losses. The provision for loan losses was $516,000 and
$566,000, respectively, for the nine months ended September 30, 2000 and 1999.
The allowance for loan losses at September 30, 2000 represented 1.32% of loans
outstanding with $67,000 of non-accrual loans outstanding at that date. There
were no restructured loans at the end of the period.
Non-Interest Income. Non-interest income increased from $373,000 for the nine
months ended September 30, 1999 to $600,000 for the nine months ended September
30, 2000, an increase of $227,000. Income from mortgage operations totaled
$86,000 for the nine months ended 1999, increasing to $139,000 for the same
period of the current year. Service charges on deposit accounts also grew from
$287,000 to $360,000, and other non-interest income of $101,000 was earned
during the current period.
Non-Interest Expense. Total non-interest expense was $3.4 million and $2.0
million, respectively, for the nine months ended September 30, 2000 and 1999.
This increase of $1.54 million 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.
Provision for Income Taxes. The Bank made no provision for income taxes during
the nine months ended September 30, 2000 and 1999, as potential future tax
benefits arising from operating losses incurred have been offset by increases to
the valuation allowance associated
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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 September 30, 2000, liquid assets comprised 20% 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
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
Financial Data Schedule
(b) Reports on Form 8-K.
No reports on Form 8-K were filed by the Bank during the
quarter ended September 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.
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AMERICAN COMMUNITY BANCSHARES, INC.
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Date: November 6, 2000 By: /s/ Randy P. Helton
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Randy P. Helton
President and Chief Executive Officer
Date: November 6, 2000 By: /s/ Dan R. Ellis, Jr.
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Dan R. Ellis, Jr.
Senior Vice President and Chief Financial Officer
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