UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 29549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
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: 0-19045
COMSOUTH BANKSHARES, INC.
(Exact name of registrant as specified in its charter)
South Carolina 57-0853342
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
1136 Washington Street, Suite 200
Columbia, South Carolina 29201
(Address of principal executive offices)
(Zip Code)
(803) 343-2144
(Registrant's telephone number, including area code)
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 [X] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of April 30, 1997:
Common Stock, No Par Value 1,540,987
Class Number of Shares
<PAGE>
COMSOUTH BANKSHARES, INC
INDEX
PART I. Financial Information
Item 1. Financial Statements Page No.
Consolidated Balance Sheets -
March 31, 1997 and December 31, 1996 ......................... 2
Consolidated Statements of Operations Three months
ended March 31, 1997 and March 31, 1996
......................................................... 3
Consolidated Statements of Cash Flows Three months ended
March 31, 1997 and March 31, 1996
......................................................... 4
Notes to Consolidated Financial Statements ......................... 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations .......................... 6
PART II. Other Information
Item 1. Legal Proceedings............................................. 9
Item 4. Submission of Matters to a Vote of Security Holders .......... 9
Item 6. Exhibits and Reports on Form 8-K ............................. 9
Signature............................................................. 10
1
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
COMSOUTH BANKSHARES, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
---- ----
(Unaudited)
ASSETS
<S> <C> <C>
Cash and due from banks $ 9,747,818 $ 9,441,553
Federal funs sold 3,020,000 3,650,000
------------ ------------
Total cash and cash equivalents 12,767,818 13,091,553
Investment securities:
Held-to-maturity, at amortized cost (fair value of
$16,210,971 in 1997 and $13,035,431 in 1996) 16,344,889 13,071,927
Available-for-sale, at fair value (amortized cost of
$22,434,587 in 1997 and $21,070,548 in 1996) 22,286,385 21,034,568
Loans receivable:
(less allowance for loan losses 1997 - $1,827,335;
1996 - $1,802,402) 118,551,696 113,879,003
Premises and equipment 1,480,495 1,489,159
Accrued interest receivable 1,293,533 1,343,298
Other assets 712,292 724,956
------------ ------------
Total Assets $173,437,108 $164,634,464
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits
Noninterest bearing demand 28,609,357 35,677,721
NOW, money market and savings 60,290,348 56,290,307
Time deposits of $100,000 or more 33,411,019 26,984,224
Time deposits less than $100,000 27,582,239 23,442,953
Other time deposits 2,918,274 3,012,613
------------ ------------
Total deposits 152,811,237 145,407,818
Federal funds purchased and securities sold under
agreements to repurchase 2,865,020 2,674,394
Note payable 1,140,000 1,200,000
U.S. Treasury tax and loan accounts 1,221,097 784,106
Accrued interest 495,250 446,225
Other liabilities 789,414 481,099
------------ ------------
Total Liabilities 159,322,018 150,993,642
------------ ------------
Stockholders' Equity
Preferred Stock
(no par value, 50,000,000 shares authorized;
no shares issued or outstanding)
Special stock
(no par value, 50,000,000 shares authorized;
no shares issued or outstanding)
Common stock
(no par value, 50,000,000 shares authorized; shares
issued and outstanding - 1,536,901 in 1997 and
1,532,826 in 1996) 13,644,786 13,616,611
Retained earnings 568,118 47,958
Unrealized loss on investment securities available-for-sale,
net of applicable deferred income taxes (97,814) (23,747)
------------ ------------
Total Stockholders' Equity 14,115,090 13,640,822
------------ ------------
Total Liabilities and Stockholders' Equity $173,437,108 $164,634,464
============ ============
</TABLE>
2
<PAGE>
COMSOUTH BANKSHARES, INC.
CONSOLIDATED STATEMENTS OF OPERATION
(Unaudited)
<TABLE>
<CAPTION>
Three Months ended March 31,
1997 1996
---- ----
Interest income:
<S> <C> <C>
Interest and fees on loans $2,653,768 $2,195,351
Investment securities 539,516 368,995
Federal funds sold 48,215 46,467
---------- ----------
Total interest income 3,241,499 2,610,813
---------- ----------
Interest expense:
Deposits 1,427,395 1,142,511
Federal funds purchased and securities sold
under agreements to repurchase 44,775 19,684
U.S. Treasury tax and loan accounts 9,768 8,873
Note payable 23,250 -
---------- ----------
Total interest expense 1,505,188 1,171,068
---------- ----------
Net interest income 1,736,311 1,439,745
Provision for loan losses 15,000 10,000
---------- ----------
Net interest income after provision for loan losses 1,721,311 1,429,745
Noninterest income:
Lending operations and services 296,547 251,284
Service charges on deposit accounts 163,265 121,609
Other 22,643 19,183
---------- ----------
Total noninterest income 482,455 392,076
---------- ----------
Noninterest expense:
Salaries and employee benefits 725,732 678,405
Occupancy expenses 107,638 108,227
Furniture and equipment 109,574 92,851
Advertising and marketing 24,058 23,613
Other 400,654 366,440
---------- ----------
Total noninterest expense 1,367,656 1,269,536
---------- ----------
Income before provision for income taxes 836,110 552,285
Income tax expense (315,950) (158,219)
---------- ----------
Net income $ 520,160 $ 394,066
========== ==========
Earnings per share:
On common and common equivalents $ .32 $ .28
========== ==========
On a fully diluted basis $ .32 $ .28
========== ==========
</TABLE>
3
<PAGE>
COMSOUTH BANKSHARES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months ended March 31,
1997 1996
---- ----
Cash flows from operating activities:
<S> <C> <C>
Net income $ 520,160 $ 394,066
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation and amortization 72,765 72,765
Provision for loan losses 15,000 10,000
Deferred tax benefit (50,000)
Amortization of premium and accretion of discount
on investment securities 3,844 1,152
Decrease in interest receivable 49,765 123,989
Decrease in other assets 50,819 48,919
Increase (decrease) in interest payable 49,025 (15,604)
Increase (decrease) in other liabilities 308,315 (485,293)
----------- -----------
Cash provided by operating activities 1,069,693 99,994
----------- -----------
Cash flows from investing activities:
Purchases of investment securities, held-to-maturity (3,281,875)
Purchases of investment securities, available-for-sale (1,364,500) (5,766,800)
Maturities of investment securities, held-to-maturity 5,530 2,726,262
Net increase in loans (4,352,990) (3,803,156)
Net collections and remittances on loans serviced
for others (334,703) (287,889)
Purchases of premises and equipment (64,101) (59,057)
----------- -----------
Cash used for investing activities (9,392,639) (7,190,640)
----------- -----------
Cash flows from financing activities:
Net increase in deposits 7,403,419 8,164,568
Increase in (maturities of) federal funds purchased and
securities sold under agreement to repurchase 190,626 (983,891)
(Repayment) proceeds of note payable (60,000) 500,000
Increase in U.S. treasury, tax and loan accounts 436,991 449,683
Proceeds from issuance of common stock 28,175 -
----------- -----------
Cash provided by financing activities 7,999,211 8,130,360
----------- -----------
(Decrease) increase in cash and cash equivalents (323,735) 1,039,714
Cash and cash equivalents at beginning of period 13,091,553 17,249,878
----------- -----------
Cash and cash equivalents at end of period $12,767,818 $18,289,592
=========== ===========
Supplemental disclosure of cash flow information:
Cash paid for interest $1,456,163 $1,186,672
Cash paid for taxes $57,952 $545,912
Noncash adjustments to report investment securities,
available-for-sale at fair value:
Investment securities, available-for-sale $(148,202) $(55,605)
Other assets 50,388 18,906
Unrealized loss on investment securities, available-for-
sale, net of applicable deferred income taxes $(97,814) $(36,699)
</TABLE>
4
<PAGE>
COMSOUTH BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The unaudited interim financial statements reflect all adjustments which are, in
the opinion of management, necessary for the fair presentation of the
consolidated balance sheet and the consolidated statements of operations and of
cash flows for the interim periods presented. Such adjustments are of a normal
recurring nature. The interim financial statements, including related notes,
should be read in conjunction with the financial statements for the year ended
December 31, 1996, appearing in the Corporation's 1996 Annual Report and
included in the Corporation's Form 10-K Annual Report for the year ended
December 31, 1996. The unaudited results of operations for the three month
period ended March 31, 1997 may not necessarily be indicative of the results for
the year that will end December 31, 1997.
NOTE 1 - LOAN COMMITMENTS
At March 31, 1997, standby letters of credit of $2,070,000 and undisbursed
amounts of lines of credit of $22,158,000 were outstanding.
NOTE 2 - NOTES PAYABLE
During 1996, the Corporation established a $1,200,000 revolving line of credit
with another financial institution. The line of credit expires December 31,
2001. Interest is variable at the lender's prime rate minus one-half percent
(8.0% at March 31, 1997) with interest payments due quarterly beginning March
1997. The line of credit is collateralized by 550,000 shares of Bank of
Charleston's ("BOC") common stock. At March 31, 1997, the Corporation had an
outstanding balance of $1,140,000 on this line of credit; a quarterly payment of
$60,000 was made during March 1997.
The line of credit agreement contains certain covenants. The principal financial
covenants require the Corporation to maintain the allowance for loan losses at a
minimum of 100% of non-performing assets; tangible equity to total assets at
least equal to 8% for BOC and at least equal to 6% for Bank of Columbia
("BOCL"); non-performing loans plus OREO to loans receivable plus OREO at a
ratio no greater than 1.80%; and maintain a return on average assets of at least
1%. The Corporation is also restricted from paying any dividends unless approved
by the lender.
The Corporation was in full compliance with all of the covenants at quarter end.
At March 31, 1997, BOCL had approximately $8.9 million and BOC had approximately
$9.5 million in standby credit available from other banks for short-term
borrowing.
NOTE 3 - STOCK OPTIONS
On April 29, 1997, 6,425 options were granted to non-employee directors at an
exercise price of $15.33 per share. The average high/low price for ComSouth
Bankshares, Inc. Common Stock for the 30 days prior to the measurement date,
April 29, 1997 was $15.33. The board granted 3,500 options to certain employees
on January 28, 1997 at an option price of $15.125 with an expiration date of
January 27, 2002. The closing price for the stock was $15.125 on January 28,
1997. In addition, the board granted 2,000 options to certain employees on April
29, 1997. These options were granted with an option price of $15.875, which was
the closing price of the stock on April 29, 1997, and an expiration date of
April 28, 2002. A total of 8,161 options were exercised during the period
January 1, 1997 to April 27, 1997 at an average exercise price of $7.27 per
share.
NOTE 4 - ALLOWANCE FOR CREDIT LOSSES
The Corporation adopted SFAS No. 114, "Accounting by Creditors for Impairment of
a Loan" and SFAS No. 118, "Accounting by Creditors for Impairment of a Loan -
Income Recognition and Disclosure" on January 1, 1995. These standards address
the accounting for certain loans when it is probable that all amounts due
pursuant to the contractual terms of the loan will not be collected.
Individually identified impaired loans are measured based on the present value
of payments expected to be received, using the historical effective loan rate as
the discount rate. Loans that are to be foreclosed or that are solely dependent
on the collateral for repayment may alternatively be measured based on the fair
value of the collateral for such loans or on observable market prices. If the
recorded investment in the loan exceeds the measure of fair value, a valuation
allowance is established as a component of the allowance for credit losses. The
adoption of the standards did not have a material impact on the Corporation's
financial position or results of operations. Currently, the Banks have $233,000
in loans classified as impaired loans.
5
<PAGE>
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Statements included in Management's Discussion and Analysis of Financial
Condition and Results of Operations which are not historical in nature, are
intended to be, and are hereby identified as, `forward looking statements' for
purposes of the safe harbor provided by Section 21E of the Securities Exchange
Act of 1934, as amended. The Corporation cautions readers that forward looking
statements, including without limitation, those relating to the Corporation's
future business prospects, revenues, working capital, liquidity, capital needs,
interest costs, and income, are subject to certain risks and uncertainties that
could cause actual results to differ materially from those indicated in the
forward looking statements, due to several important factors herein identified,
among others, and other risks and factors identified from time to time in the
Corporation's reports filed with the Securities and Exchange Commission.
GENERAL
ComSouth Bankshares, Inc. (the "Corporation") is a registered bank holding
company incorporated on May 15, 1987 pursuant to the laws of the State of South
Carolina. It presently conducts its business through its two bank subsidiaries
(the "Banks"), Bank of Columbia, NA and Bank of Charleston, NA. On March 21,
1996, the Corporation listed its common stock on the American Stock Exchange
under the ticker symbol CSB.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity is the ability to meet current and future obligations through
liquidation or maturity of existing assets or the acquisition of additional
liabilities. The Corporation's primary source of liquidity is funds derived from
the deposit gathering operations of the Corporation's two subsidiary banks - BOC
and BOCL, with additional funds provided from maturing loans and investment
securities, sales of temporary investments, or sales of investment securities
classified as available-for-sale. These funds are used to pay interest on
deposits and to fund deposit outflows. Any remaining funds are utilized for
investments and to fund loan commitments and disbursements, to repay debt, and
to fund operating expenses. Negative funds positions may be dealt with by a
combination of actions including borrowing from other banks or rediscounting
qualifying loans with the Federal Reserve Bank. At March 31, 1997, BOCL had
approximately $8.9 million while BOC had approximately $9.5 million in standby
credit available to them from other financial institutions. Management believes
that a sufficient liquidity balance is maintained through the operations of its
asset and liability management program. Additionally, the standby credit
facilities provide adequate protection in the event of negative cash flows.
At March 31, 1997 and December 31, 1996, liquid assets of approximately $51.4
million and $47.2 million, respectively, were available to meet demands for
deposit withdrawals, undisbursed amounts on lines of credit ("loan commitments")
of $22,158,000 and $21,396,000 and letters of credit totaling $2,070,000 and
$1,689,000, respectively. The amount of liquid assets available at March 31,
1997 includes cash and cash equivalents of $12,800,000, a decrease of $300,000
over the December 31, 1996 amount of $13,100,000. This decrease in cash and cash
equivalents is attributable to management's decision to improve earnings by
reducing investments in short-term federal funds in favor of increasing
investments in investment securities.
Reliance is being placed upon continued deposit growth as the principal source
of funds. Management is committed to pay competitive market rates for deposits.
Deposits were approximately $152.8 million at March 31, 1997, compared to $145.4
million at December 31, 1996. Of the total deposit base of the Corporation at
March 31, 1997, approximately $33.4 million, or 21.9%, consisted of Certificates
of Deposits in amounts of $100,000 and higher ("Jumbo Certificates"). These
Jumbo Certificates are typically issued to local customers and none are
brokered.
While most of the large time deposits are acquired from customers with standing
relationships with the Banks, it is a common industry practice not to consider
these types of deposits as core deposits because their retention can be expected
to be heavily influenced by rates offered, and they therefore have the
characteristics of shorter-term purchased funds. Certificates of deposit of
$100,000 and over involve the maintenance of an appropriate matching of maturity
distribution and a diversification of sources to achieve an appropriate level of
liquidity. Management believes that the Corporation's liquidity position is
relatively strong and is adequate to meet the withdrawal demand of these Jumbo
Certificates.
6
<PAGE>
One of the principal uses of funds is to meet loan demand at BOCL and BOC. At
March 31, 1997, total loans outstanding were approximately $120.4 million, as
compared to $115.7 million at December 31, 1996. During the first three months
of 1997, both Banks have experienced modest loan growth. The economic picture in
the markets serviced by both Banks appears to be relatively stable.
Both BOCL and BOC maintain a loan classification system to monitor exposure to
potential loan losses. Management of the Banks reviews the adequacy of the
allowance each quarter to identify problem loans in connection with its
assessment of the overall quality of the respective loan portfolios. At March
31, 1997, the allowance for loan losses at BOCL and BOC was approximately
$983,000 and $844,000, respectively. At December 31, 1996, the allowance for
loan losses at BOCL and BOC was approximately $971,000 and $831,000,
respectively. The Comptroller of the Currency ("OCC"), the Bank's primary
regulator requires national banks to maintain a Tier 1 (primarily stockholders'
equity) risk-based capital ratio of 4.0% and a total risk-based capital ratio of
8.0%. At March 31, 1997, the Tier 1 capital ratio for BOCL was 9.9% and the
total capital ratio was 11.2%, while BOC had a Tier 1 ratio of 14.0% and a total
capital ratio of 15.3%.
The Corporation's primary regulator, the Board of Governors of Federal Reserve
Board (the "Board") has issued guidelines requiring a minimum risk based capital
ratio of 8.0%, of which at least 4.0 % must consist of Tier 1 capital. The
Corporation's Tier 1 capital ratio was 11.7% and its total capital ratio was
13.0% at March 31, 1997. These ratios are well within guidelines established by
the Corporation's primary regulator.
RATE SENSITIVITY
In order to address volatility in interest rates, the Corporation maintains an
interest sensitivity management program, the objective of which is to maintain
reasonably stable growth in net interest income despite changes in market
interest rates. The Interest Rate Sensitivity Gap ("GAP") is defined as the
excess of interest sensitive assets over interest sensitive liabilities that
mature or reprice within specified time frames. The GAP is a measure of the
Corporation's risk of significant changes in net income at any point in time.
Adjustable rate loans, short term loans and temporary investments represent the
majority of the Corporation's interest sensitive assets. Money market deposit
accounts, NOW accounts, savings accounts and certificates of deposit with
maturities of less than one year represent the majority of interest sensitive
liabilities.
In addition to gap analysis, management utilizes simulation modeling techniques
to project potential earnings impact due to rate changes. Based on the
combination of the gap analysis and simulation modeling, management believes
that any reasonably expected rate change would not have a material impact on
earnings.
RESULTS OF OPERATIONS
For the first three months of 1997, the Corporation is reporting net earnings of
$520,000 or $.32 per fully diluted share, compared to $394,000 or $.28 per share
for the same period of 1996. Additionally, for the first three months of 1997,
loans outstanding have grown by 4.1% while deposits have grown by 5.1%.
The Corporation had total revenues of $3,724,000 and $3,003,000, and total
expenses of $3,204,000 and $2,609,000 for the first quarter of 1997 and 1996,
respectively. Summarized below is an analysis of the composition of revenues and
expenses for the three months ended March 31, 1997 and 1996.
Revenues for the quarters ended March 31, 1997 and 1996 were as shown in the
following table:
<TABLE>
<CAPTION>
Three Months ended March 31,
1997 1996
---- ----
<S> <C> <C> <C> <C>
Interest on loans $2,654,000 71.3% $2,195,000 73.1%
Interest on investment securities 540,000 14.5% 369,000 12.3%
Interest on temporary investments 48,000 1.3% 47,000 1.5%
Non-interest income 482,000 12.9% 392,000 13.1%
---------- ----- ---------- -----
Total Revenues $3,724,000 100.0% $3,003,000 100.0%
========== ===== ========== =====
</TABLE>
7
<PAGE>
The increase in revenue provided by interest on loans in 1997 over 1996 is
primarily the result of the strong loan growth realized by both banks during the
last half of 1996, coupled with modest growth during the first quarter of 1997.
The growth in revenue related to investment securities is primarily due to the
steady growth of deposits. A substantial portion of the funds provided by this
deposit growth have been invested in investment securities to improve earnings
in the investment portfolio.
The continued growth of income derived from the Business Manager Product was the
major factor causing the growth in non-interest income. This product provides
immediate cash flow to small businesses through the purchase by the Banks of
such businesses' receivables. The Banks are paid a fee for the billing and
collection of these receivables and retain full recourse against the seller of
the purchased receivables in case of default. Fees from this product accounted
for $70,000 of the $90,000 increase in non-interest income between the two
periods.
Service charge fees on deposit products also contributed to the improvement in
non-interest income over the prior period due to strong growth in deposit
accounts and a price increase in deposit service fees by BOCL during the third
quarter of 1996.
Mortgage loan origination fees declined by approximately $25,000 in the first
quarter of 1997 as compared to the same period of 1996 as a result of a
management decision to downsize the Mortgage lending function at BOCL during the
second quarter of 1996.
Operating Expenses for the quarters ended March 31, 1997 and 1996 were as shown
in the following table:
<TABLE>
<CAPTION>
Three Months ended March 31,
1997 1996
---- ----
<S> <C> <C> <C> <C>
Interest on deposits $1,427,000 44.5% $1,142,000 43.8%
Interest on note payable and
securities sold under agreements
to repurchase 78,000 2.4% 29,000 1.1%
Provision for loan losses 15,000 .5% 10,000 .4%
Salaries and employee benefits 726,000 22.7% 678,000 26.0%
Occupancy expenses 108,000 3.4% 108,000 4.1%
Furniture and equipment expenses 110,000 3.4% 93,000 3.6%
Legal and regulatory 139,000 4.3% 163,000 6.2%
Printing and supplies 42,000 1.3% 38,000 1.5%
Advertising and marketing 24,000 .8% 24,000 .9%
Other 535,000 16.7% 324,000 12.4%
---------- ----- ---------- -----
Total Operating Expenses $3,204,000 100.0% $2,609,000 100.0%
========== ===== ========== =====
</TABLE>
The change in interest paid on deposits is principally due to strong growth in
deposits during 1996 and the first quarter of 1997. The increase in salaries and
employee benefits is primarily due to increased staffing needed to support the
strong loan and deposit growth during 1996 and 1997. The decrease in legal and
regulatory expenses is primarily due to a reduction in activity concerning the
defense of a group of pending lawsuits. The increase in other expenses is
primarily due to income tax expense as taxes increased by approximately
$155,000. Increased pretax earnings for 1997 resulted in an increase of $105,000
in tax expense and the company reduced its deferred tax valuation reserve by
$50,000 in the first quarter of 1996. In addition, data communication line
expenses increased by $17,000, director fees increased by $4,000 and losses
other than bad debts increased by approximately $30,000 between the two periods.
The increase related to data communications was the result of upgrades to
delivery systems as a result of the growth over the past two years. The change
in director fees is the result of an increase in director fees implemented
during the first quarter of 1997. The increase in losses other than bad debts is
the result of overdrafts deemed to be uncollectible and the accrual of
approximately $16,000 in expenses for a potential loss as a result of a customer
fraud.
8
<PAGE>
NET INTEREST INCOME
Net interest income represents the difference between interest earned on assets
and the interest paid on liabilities. It traditionally constitutes the largest
source of a financial institution's earnings.
Net interest income for the three months ended March 31, 1997 and 1996 was
$1,736,000 and $1,440,000, respectively. The average yield on earning assets was
8.3% and 8.5%, the average rate paid on interest bearing liabilities was 4.7%
and 4.7%, and the annualized net interest margin was 4.4% and 4.7% for the
quarters ended March 31, 1997 and 1996, respectively.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On October 8, 1996, the judge handling the stockholder litigation by the former
director of the Corporation and Bank of Columbia against the Corporation and
eight of its present and former directors ruled that the plaintiff could not
maintain the suit as a class action or as a derivative suit. Only the individual
claims of the named plaintiff will be covered by the suit. Those claims will
continue to be vigorously defended. Plaintiff has appealed this ruling.
On or about November 5, 1996 through April 23, 1997, sixteen other stockholders
or former stockholders of the Corporation instituted nearly identical suits
against the Corporation and the same directors and former directors of the
Corporation who are defendants in the suit referenced above. The suits were
instituted in the Court of Common Pleas for Richland County, South Carolina and
make essentially the same allegations as the above lawsuit and seek damages on
account of the alleged activities of the defendant directors. The plaintiffs do
not seek to recover any damages from the Corporation but the Corporation may,
nevertheless, incur significant expenses to indemnify the defendant directors
pursuant to applicable law.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) Annual Meeting: April 29, 1997
(b) The following directors were elected at the annual meeting:
VOTES
FOR AGAINST
LaVonne N. Phillips 1,192,242 23,046
W. Carlyle Blakeney, Jr. 1,192,242 23,046
Arthur P. Swanson 1,145,977 69,311
The following directors continue their terms of office as directors:
Arthur M. Swanson
Mason R. Chrisman
John C.B. Smith, Jr.
R. Lee Burrows, Jr.
Charles R. Jackson
J. Michael Kapp
(c) J.W. Hunt and Company LLP was appointed independent accountants
of the Corporation for the fiscal year ending December 31,
1997. The stockholders voted 1,210,216 votes for and 506
against this appointment, with 4,566 votes abstaining.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8 - K
(a) Exhibit 27, Financial Data Schedule.
(b) No reports on Form 8-K have been filed during the quarter.
9
<PAGE>
SIGNATURE
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.
COMSOUTH BANKSHARES, INC.
(Registrant)
s/Harry R. Brown
Date: May 12, 1997 By: ----------------------------
(Harry R. Brown)
Chief Financial Officer,
Chief Operating Officer,
Secretary and Treasurer
10
<PAGE>
EXHIBIT INDEX
Exhibit 27 Financial Data Schedule
11
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Balance Sheet at March 31, 1997 (unaudited) and the Consolidated
Statement of Operation for the Three Months Ended March 31, 1997 (unaudited) and
is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
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0
0
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</TABLE>
