UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
|X| QUARTERLY REPORT UNDER 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 [NO FEE REQUIRED]
For the Transition Period from _________to_________
Commission File Number O-18460
COMMUNITY CAPITAL CORPORATION
(Exact name of registrant as specified in its charter)
South Carolina 57-0866395
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification No.)
109 Montague Avenue
Greenwood, SC 29646
(Address of principal executive
offices, including zip code)
(864) 941-8200
(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 |_|
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the date of this filing.
2,894,708 shares of common stock, $1.00 par value
PAGE 1 OF 20
EXHIBIT INDEX ON PAGE 2
<PAGE>
COMMUNITY CAPITAL CORPORATION
INDEX
<TABLE>
<CAPTION>
PART I. Financial Information Page No.
<S> <C>
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets - March 31, 1997 and
December 31, 1996..................................................... 3
Condensed Consolidated Statements of Income - Three months ended
March 31, 1997 and 1996............................................... 4
Condensed Consolidated Statement of Shareholders' Equity.............. 5
Condensed Consolidated Statements of Cash Flows - Three months
ended March 31, 1997 and 1996......................................... 6
Notes to Consolidated Financial Statements ........................... 7-9
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.................................. 10-16
PART II. Other Information
Item 6. Exhibits and Reports on Form 8-K.................................. 17
(a) Exhibits...................................................... 17
(b) Reports on Form 8-K........................................... 17
</TABLE>
2
<PAGE>
COMMUNITY CAPITAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(Dollars in thousands)
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
--------- -----------
<S> <C> <C>
ASSETS:
Cash and cash equivalents:
Cash and due from banks $ 4,178 $ 3,927
Federal funds sold 550 700
--------- ---------
Total cash and cash equivalents 4,728 4,627
Securities available-for-sale 32,677 23,280
Loans receivable 86,984 80,546
Less allowance for loan losses (925) (837)
--------- ---------
Loans, net 86,059 79,709
Premises & equipment, net 4,913 3,523
Other assets 6,122 4,820
--------- ---------
Total assets $ 134,499 $ 115,959
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY:
LIABILITIES:
Deposits:
Non-interest bearing $ 11,721 $ 12,226
Interest bearing 83,213 77,636
--------- ---------
Total deposits 94,934 89,862
Federal funds purchased and securities sold
under agreements to repurchase 1,892 6,783
Advances from Federal Home Loan Bank 6,015 4,889
Accrued interest and other liabilities 978 869
--------- ---------
Total liabilities 103,819 102,403
--------- ---------
SHAREHOLDERS' EQUITY:
Common stock, $1 par value, 10,000,000 shares
authorized, 2,894,708 and 1,219,109 shares
issued and outstanding at March 31, 1997 and
December 31, 1996, respectively 2,895 1,219
Surplus 27,419 12,004
Unrealized gain (loss) on securities
available-for-sale, net of deferred taxes (91) 35
Retained earnings 457 298
--------- ---------
Total shareholders' equity 30,680 13,556
--------- ---------
Total liabilities and shareholders' equity $ 134,499 $ 115,959
========= =========
</TABLE>
See notes to condensed consolidated financial statements
3
<PAGE>
COMMUNITY CAPITAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(Dollars in thousands except for per share data)
Three Months Ended
March 31,
-------------------------
1997 1996
---------- -----------
Interest income:
Loans, including fees $ 1,891 $ 1,500
Securities, taxable 349 282
Securities, nontaxable 62 57
Other interest income 47 39
---------- ----------
2,349 1,878
---------- ----------
Interest expense:
Deposit 932 838
Advances from the Federal Home Loan Bank 85 80
Other interest expense 101 25
---------- ----------
1,118 943
---------- ----------
Net interest income 1,231 935
Provision for loan losses 88 50
---------- ----------
Net interest income after provision for loan losses 1,143 885
---------- ----------
Other operating income:
Service charges on deposit accounts 138 119
Residential mortgage origination fees 51 60
Commissions from sales of mutual funds 6 78
Gain (loss) on sales of securities -- 5
Other income 101 54
---------- ----------
296 316
---------- ----------
Other operating expenses:
Salaries and benefits 583 452
Net occupancy expense 86 66
Furniture and equipment expense 120 74
Other expenses 409 314
---------- ----------
1,198 906
---------- ----------
Income before taxes 241 295
Income tax provision 82 109
---------- ----------
Net income $ 159 $ 186
========== ==========
Earnings per share $ .08 $ .14
WEIGHTED AVERAGE COMMON SHARES
AND EQUIVALENTS 2,050,916 1,318,015
See notes to condensed consolidated financial statements
4
<PAGE>
COMMUNITY CAPITAL CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
for the three months ended March 31, 1997
(UNAUDITED)
(Dollars in thousands)
<TABLE>
<CAPTION>
Unrealized
Gain (loss)
on Securities Total
Common Stock Capital Available-For Retained Shareholders'
------------------
Shares Amount Surplus Sale, Net Earnings Equity
--------- ------- ------- --------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Balance,
December 31, 1996 1,219,109 $ 1,219 $12,004 $ 35 $298 $13,556
Proceeds from stock
offering, net of
expenses 1,665,000 1,665 15,335 17,000
Proceeds from sales
of stock to ESOP 3,924 4 39 43
Proceeds from
exercise of
stock options 6,675 7 41 48
Change in fair
value for the
period (126) (126)
Net income
for the period 159 159
---------- ------- ------- -------- ---- -------
Balance, March
31, 1997 2,894,708 $ 2,895 $27,419 $ (91) $457 $30,680
========== ======= ======= ======== ==== =======
</TABLE>
See notes to condensed consolidated financial statements
5
<PAGE>
COMMUNITY CAPITAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
Three Months Ended
March 31,
------------------
1997 1996
-------- -------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 159 $ 186
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 144 96
Provision for possible loan losses 88 50
Amortization of organizational costs 10 3
Amortization less accretion on investments 8 18
Amortization of deferred loan costs 37 32
(Gain) loss on sale of securities -- (5)
Disbursements for mortgages held for sale (2,120) (2,662)
Proceeds of sales of residential mortgages 2,048 2,351
(Increase) decrease in interest receivable (10) 34
Increase (decrease) in interest payable 84 61
(Increase) decrease in other assets (92) 119
Increase (decrease) in other liabilities 25 (35)
-------- -------
Net cash provided by operating activities 381 248
-------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net increase in loans to customers (7,828) (3,727)
Purchases of securities available-for-sale (11,113) (6,487)
Sales of securities available-for-sale 501 1,252
Maturities of securities available-for-sale 1,016 3,827
Purchase of nonmarketable equity securities (363) --
Purchases of premises and equipment (891) (607)
-------- -------
Net cash used by investing activities (18,678) (5,742)
-------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Sale of capital stock 17,000 --
Stock options exercised 48 56
Proceeds from stock sales to employee benefit plan 43 --
Net increase in deposits accounts 5,072 7,284
Proceeds from FHLB borrowings 4,075 2,700
Repayments of FHLB borrowings (2,949) (3,351)
Net decrease in fed funds purchased and repos (4,891) (1,493)
-------- -------
Net cash provided by financing activities 18,398 5,196
-------- -------
NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS 101 (298)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 4,627 5,279
-------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 4,728 $ 4,981
======== =======
Cash paid during the period for:
Income taxes $ 95 $ 17
Interest $ 1,048 $ 882
See notes to condensed consolidated financial statements
6
<PAGE>
COMMUNITY CAPITAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1 - Basis of Presentation
The accompanying consolidated financial statements have been prepared in
accordance with the requirements for interim financial statements and,
accordingly, they are condensed and omit disclosures which would substantially
duplicate those contained in the most recent annual report to stockholders. The
financial statements as of March 31, 1997 and for the interim periods ended
March 31, 1997 and 1996 are unaudited and, in the opinion of management, include
all adjustments (consisting of normal recurring accruals) considered necessary
for a fair presentation. The financial information as of December 31, 1996 has
been derived from the audited financial statements as of that date. For further
information, refer to the financial statements and the notes included in the
Company's 1996 Annual Report.
Note 2 - Supplemental Cash Flow Information
Three Months Ended
March 31,
---------------------
(Dollars in thousands) 1997 1996
------- ----
Cash paid during the year for:
Income taxes $ 95 $ 17
Interest 1,048 882
Noncash investing and financing activities:
Foreclosure on loans $ 262 $ --
Details of acquisitions:
Fixed assets acquired $ 617 $ --
Intangible assets 546 --
Organizational notes assumed (Note 4) (1,163) --
------- ----
Cash paid for acquisitions $ 0 $ --
======= ====
Note 3 - Shareholders' Equity
On February 14, 1997, the Company sold, through an underwritten public offering,
1,465,000 shares of its common stock at a public offering price of $11.00 per
share. On March 18, 1997, an additional 200,000 common shares were sold, also at
a public offering price of $11.00 per share, pursuant to an underwriters
over-allotment provision. Of the approximately $17,000,000 net proceeds from the
offering, the Company used $7,200,000 to acquire all of the common stock of The
Bank of Barnwell County, and $3,500,000 to acquire all of the common stock of
The Bank of Belton (See Note 4). The Company also expects to use $3,300,000 of
the net proceeds to acquire all of the common stock of The Bank of Newberry
County (In Organization). The Company anticipates that The Bank of Newberry
County will open during the second quarter of 1997.
Note 4 - Acquisition of New Banks
On February 28, 1997, the Company used $7,200,000 of the proceeds from the stock
offering to acquire and capitalize The Bank of Barnwell County. On March 30,
1997, the Company used an additional $3,500,000 of the proceeds to acquire and
capitalize The Bank of Belton. These transactions were recorded using the
purchase method of accounting. Accordingly, the consolidated financial
statements reflect the results of the operations and the assets and liabilities
of the acquired banks since the dates of the acquisitions.
7
<PAGE>
COMMUNITY CAPITAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 4 - Acquisition of New Banks - Continued
During the organizational stages, the organizers of The Bank of Barnwell County
and The Bank of Belton, respectively, opened lines of credit with Greenwood Bank
& Trust, a subsidiary of the Company. Upon the opening of such banks and the
sale of the issued and outstanding capital stock of such Banks to the Company,
the lines of credit were paid off.
The principle assets acquired and liabilities assumed in the purchase are
summarized below:
Barnwell Belton
(Dollars in thousand except per share amounts) Bank Bank
-------- --------
Premises, furniture and equipment $ 103 $ 514
Intangible assets 365 181
Organizational notes (468) (695)
The value of the intangible assets represents the organizational costs incurred
by The Bank of Barnwell County and The Bank of Belton and the excess of the
purchase price over the net assets received. These costs will be amortized over
five years using the straight-line method.
The following unaudited proforma financial information for the Company gives
effect to the acquisitions as if they occurred on January 1, 1996. There were no
proforma adjustments for the three months ended March 31, 1996 because neither
organizing bank existed prior to March 31, 1996. These proforma results have
been prepared for comparative purposes only and do not purport to be indicative
of the results of operations which actually would have resulted had the
acquisitions occurred on the date indicated, or which may result in the future.
Three months ended
March 31,
--------------------
(Dollars in thousand except per share amounts) 1997 1996
------- ------
Net income (loss) $ (69) $ 186
Net income (loss) per common share (.03) .14
Note 5 - Subsequent Events
Effective April 7, 1997, The Bank of Barnwell County acquired certain assets and
assumed certain liabilities for five branch offices of Carolina First Bank
pursuant to the terms of a Purchase and Assumption Agreement dated January 21,
1997. The transaction was recorded using the purchase method of accounting.
Accordingly, the Company will record the assets acquired and liabilities assumed
based on their fair market values at the date of acquisition. As a practical
consideration, the Company will use Carolina First Bank's book values if not
materially different from fair value.
8
<PAGE>
COMMUNITY CAPITAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 5 - Subsequent Events - Continued
The principal assets acquired and liabilities assumed in the purchase are
summarized as follows:
(Dollars in thousands)
Loans, including accrued interest receivable $ 15,110
Allowance for loan losses from acquisition (255)
Premises and equipment 1,616
Intangible core deposit premiums 2,822
Deposits, including accrued interest payable (55,051)
Other, net (3)
--------
Cash received for net liabilities assumed $(35,761)
========
The intangible core deposit premium was based on total deposits excluding
certificates of deposit greater than or equal to $100,000 and will be amortized
over fifteen years using the straight-line method.
The Company has not presented proforma financial information because the
Carolina First Bank branches do not constitute a business, and income statement
information was either not available or incomplete.
9
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
The following is a discussion of the Company's financial condition as of March
31, 1997 compared to December 31, 1996, and the results of operations for the
three months ended March 31, 1997 compared to the three months ended March 31,
1996. These comments should be read in conjunction with the Company's condensed
consolidated financial statements and accompanying footnotes appearing in this
report.
On February 14, 1997, the Company sold, through an underwritten public stock
offering, 1,465,000 shares of its common stock at a public offering price of
$11.00 per share. On March 18, 1997, an additional 200,000 common shares were
sold, also at a public offering price of $11.00 per share, pursuant to an
underwriters over-allotment provision. Of the approximately $17,000,000 net
proceeds from the offering, the Company used $7,200,000 to acquire all of the
common stock of The Bank of Barnwell County (the "Barnwell Bank"), and
$3,500,000 to acquire all of the common stock of The Bank of Belton (the "Belton
Bank"), both of which were formerly in organization.
The following comments reflect the results of the stock offering and the
acquisitions of the Barnwell Bank and the Belton Bank.
Results of Operations
Net Interest Income
For the three months ended March 31, 1997, net interest income, the major
component of the Company's net income, was $1,231,000 compared to $935,000 for
the same period of 1996, an increase of $296,000. The improvement was
attributable to an increase in average earning assets during the period,
particularly loans and investment activities, and an increase in the net yield
on earning assets to 4.37% in 1997 from 4.15% in 1996. The increase in average
earnings assets and the net yield on earning assets was due to the continued
demand for quality loans and to the proceeds received from the stock offering.
Interest income for the three months ended March 31, 1997 and 1996, was
$2,349,000 and $1,878,000, respectively. Since the yield on assets decreased
slightly to 8.33% in 1997 from 8.36% in 1996, the $471,000 increase in interest
income is attributable to volume increases in loans and investment securities.
Average loans for the three months ended March 31, 1997 were $83,618,000
compared to $64,938,000 for the comparable period of 1996 resulting in a
$391,000 increase in interest income on loans to $1,891,000 in 1997 from
$1,500,000 in 1996. Average investment securities for the three months ended
March 31, 1997 and 1996 were $27,398,000 and $22,774,000, an increase of
$4,624,000 or 20.3%
Interest expense for the three months ended March 31, 1997 and 1996 was
$1,118,000 and $943,000, respectively. The $175,000, or 18.6% increase is due to
increases in all categories of interest-bearing liabilities. Average
interest-bearing liabilities increased $16,268,000 to $92,537,000 from
$76,269,000.
10
<PAGE>
Provision and Allowance for Loan Losses
The provision for loan losses is the charge to operating earnings that
management feels is necessary to maintain the allowance for possible loan losses
at an adequate level. For the three months ended March 31, 1997 and 1996, the
provision was $88,000 and $50,000, respectively. The increase does not reflect a
negative trend in nonperforming or classified assets but is indicative of
management's decision to maintain the target ratio of the allowance for loan
losses to total loans. Based on present information, management believes the
allowance for loan losses is adequate at March 31, 1997 to meet presently known
and inherent risks in the loan portfolio.
Non-Interest Income
Total non-interest income for the three months ended March 31, 1997 was
$296,000, a decrease of $20,000, or 6.3% from the comparable period in 1996. The
reduction is primarily due to a decrease in commissions on the sales of mutual
funds to $6,000 during the first quarter of 1997 from $78,000 during the first
quarter of 1996 due to the departure, in the fourth quarter of 1996, of the
employee mainly responsible for selling mutual funds. Origination fees on
residential mortgages decreased to $51,000 from $60,000 over the comparable
three-month periods due to changes in the lending rates on residential
mortgages. These decreases were partially offset by the $19,000 increase in
service charges on deposit accounts due to deposit growth and the $47,000
increase in other operating income mainly attributable to an increase in
dividend income on nonmarketable securities.
Non-Interest Expense
Total non-interest expense for the quarter ended March 31, 1997 was $1,198,000
an increase of $292,000 or 32.2%, when compared to the first three months of
1996. The primary component of non-interest expense is salaries and benefits
which was $583,000 and $452,000 for the three months ended March 31, 1997 and
1996, respectively. The $131,000 increase is primarily a result of the purchase
and opening of the Barnwell Bank and the Belton Bank and the hiring of new
employees to meet the data processing and other needs of the Company's network
of banks. Furniture and equipment expense increased to $120,000 from $74,000
largely due to an increase in depreciation charges on imaging equipment and
other technological upgrades during 1996 and the first quarter of 1997. Net
occupancy expense and other operating expenses increased due to the growth of
the Company.
Income Taxes
For the three months ended March 31, 1997 and 1996, the effective income tax
rate was 34.0% and 36.0%, respectively, and the income tax provision was $82,000
and $109,000, respectively. The decrease in the effective tax rate was partially
due to an increase in tax-exempt income.
11
<PAGE>
Net Income
The combination of the above factors resulted in net income of $159,000 for the
quarter ended March 31, 1997 compared to $186,000 for the quarter ended March
31, 1996.
The development and organization of the Barnwell Bank and the Belton Bank,
including initial operating expenditures, negatively impacted earnings for the
first quarter of 1997. The Company anticipates that the opening and purchase of
The Bank of Newberry County, which is expected to occur during the second
quarter of 1997, will have a similar effect on earnings.
Assets and Liabilities
During the first three months of 1997, total assets grew $18,540,000, or 16.0%
when compared to December 31, 1996. Much of the growth was attributable to the
stock offering which resulted in net proceeds of approximately $17,000,000. The
Company and the Barnwell Bank and the Belton Bank largely used excess proceeds,
after paying off organizational notes and the short term borrowings, to acquire
U.S. Treasury and government agency securities.
The demand for quality loans in the Greenwood and Clemson markets remained
strong and also contributed to the growth of the asset base. Loan growth was
funded mainly by the $5,072,000 increase in deposits and partially by the stock
offering.
Investment Securities
Investment securities increased $9,397,000 during the period. The increase is
mainly due to the investment of proceeds from the stock offering in U.S.
Treasury and U.S. government agency securities.
12
<PAGE>
Loans
Demand for quality loans remained stable in the Greenwood and Clemson
marketplaces. Loans receivable increased $6,438,000 or 8.0% during the period.
Balances within the major loan receivable categories as of March 31, 1997 and
December 31, 1996 are as follows:
March 31, December 31,
1997 1996
-------- -----------
(Dollars in thousands)
Commercial and agricultural $17,570 $15,348
Real estate 53,156 49,639
Home equity 9,532 9,243
Consumer, installment 5,000 4,592
Consumer, credit card and checking 1,205 1,355
Residential mortgages held for sale
& other 521 369
------- -------
$86,984 $80,546
======= =======
Risk Elements in the Loan Portfolio
The following is a summary of risk elements in the loan portfolio:
March 31,
------------------------
1997 1996
------- --------
Loans: (Dollars in thousands)
Nonaccrual loans $ 135 $ 122
Accruing loans more than 90
days past due $ 90 $ 5
Loans identified by the internal
review mechanism:
Criticized $ 2,712 $ 1,034
Classified $ 2,242 $ 1,929
Activity in the Allowance for Loan Losses
is as follows: 1997 1996
------- --------
Dollars in thousands)
Balance, January 1, $ 837 $ 671
Provision for loan losses for the period 88 50
Chargeoffs -- (4)
Recoveries -- --
------- --------
Balance, end of period $ 925 $ 717
======= ========
Gross loans outstanding, end of period $86,984 $ 67,206
Allowance for Loan Losses to loans
outstanding 1.06% 1.07%
13
<PAGE>
Premises and Equipment
The acquisitions of the Barnwell Bank and the Belton Bank were primary
contributors to the $1,390,000 increase in premises and equipment. Additionally,
the Company incurred cost of approximately $320,000 on the construction of the
permanent facility for the Clemson Bank.
Deposits
Total deposits increased $5,072,000 or 5.6% from December 31, 1996. Expressed in
percentages, non-interest bearing deposits decreased 4.1% and interest bearing
deposits increased 7.2%.
Balances within the major deposit categories as of March 31, 1997 and December
31, 1996 are as follows:
March 31, December 31,
1997 1996
------- -------
(Dollars in thousands)
Non-interest bearing demand deposits $11,721 $12,226
Interest bearing demand deposits 10,484 8,296
Money market accounts 13,742 14,035
Savings deposits 9,510 8,681
Certificates of deposit 49,477 46,624
------- -------
$94,934 $89,862
======= =======
Long-term Debt
Advances from the Federal Home Loan Bank increased to $6,015,000 as of March 31,
1997 from $4,889,000 as of December 31, 1996. Of the total borrowings, $400,000
with a fixed interest rate of 6.31% is due in more than one year and is payable
on July 22, 1998.
Capital
Quantitive measures established by the federal banking agencies to ensure
capital adequacy require the banking subsidiaries to maintain minimum ratios of
Tier 1 and total capital as a percentage of assets and off-balance-sheet
exposures, adjusted for risk weights ranging from 0% to 100%. Tier 1 capital of
the banking subsidiaries consists of common shareholders' equity, excluding the
unrealized gain or loss on securities available for sale, minus certain
intangible assets. Tier 2 capital consists of the allowance for loan losses
subject to certain limitations. Total capital for purposes of computing the
capital ratios consists of the sum of Tier 1 and Tier 2 capital. The regulatory
minimum requirements are 4% for Tier 1 and 8% for total risk-based capital.
14
<PAGE>
Capital - Continued
The banking subsidiaries are also required to maintain capital at a minimum
level based on total average assets, which is known as the leverage ratio. Only
the strongest banks are allowed to maintain capital at the minimum requirement
of 3%. All others are subject to maintaining ratios 1% to 2% above the minimum.
The following table summarizes the capital ratios of the banking subsidiaries
and the regulated minimum requirements at March 31, 1997
Tier 1 Total Tier 1
Risk Based Risk Based Leverage
------------- ------------- -----------
Actual ratio:
Greenwood Bank & Trust 10.41% 11.36% 7.93%
Clemson Bank & Trust 25.15 25.46 19.91
The Bank of Barnwell County 124.98 124.98 233.29
The Bank of Belton 236.29 236.29 1,235.70
Regulatory minimums:
For capital adequacy purposes 4.00 8.00 4.00
To be well-capitalized under
prompt action provisions 6.00 10.00 5.00
The Federal Reserve Board has similar requirements for bank holding companies.
As of March 31, 1997, the Company was not subject to these requirements because
the Federal Reserve guidelines contain an exemption for bank holding companies
with less than $150,000,000 in consolidated assets; however, upon the
acquisition of the Carolina First Bank branches by the Barnwell Bank on April 7,
1997, the Company will be subject to the Federal Reserve Board requirements.
Giving effect to the acquisition of the branches as if it occurred on March 31,
1997, the Company would have exceeded all of its minimum requirements.
Liquidity and Capital Resources
The Company used approximately $7,200,000 of the $17,000,000 net proceeds from
the stock offering to purchase and capitalize the Barnwell Bank and used
approximately $3,500,000 to purchase and capitalize the Belton Bank. The Company
expects to use $3,300,000 of the net proceeds to purchase and capitalize The
Bank of Newberry County (In Organization). The opening and purchase of The Bank
of Newberry County is expected to occur during the second quarter of 1997 and is
contingent upon regulatory approval.
15
<PAGE>
Liquidity and Capital Resources - Continued
Shareholders' equity was increased by the $17,000,000 net proceeds from the
offering, the $48,000 proceeds from the exercise of stock options, the $43,000
proceeds from sales of stock to the Employee Stock Ownership Plan, and net
income of $159,000. Due to changes in the market rates of interest, the fair
value of the Company's securities available for sale decreased which had the
effect of decreasing shareholders' equity by $126,000 net of the deferred tax
effects.
The Company continues to operate within recommendation of the Board of Directors
with a loans-to-assets ratio of 64.7% and a loans-to-funds ratio of 84.6% as of
March 31, 1997 compared to a loans-to-assets ratio of 69.5% and a loans-to-funds
ratio of 79.3% as of December 31, 1996. The decrease in the loans-to-assets
ratio was attributable to proceeds from the stock offering which were invested
in investment securities. Proceeds from the stock offering were also used to
reduce the Company's short-term borrowings resulting in the increase in the
loans-to-funds ratio. Due to the proceeds from the stock offering and to the
$35,000,000 cash received from the acquisition of the Carolina First Bank
branches on April 7, 1997, short-term borrowings are not expected to be a
primary source of liquidity in the near-term; however, the Company has
approximately $13,400,000 of unused lines of credit for federal funds purchased
and a $5,000,000 line of credit from another financial institution. The Company
also has approximately $32,677,000 of securities available for sale as a second
source of liquidity.
Generally, the Company depends on dividends from its subsidiary banks as its
primary source of liquidity. The ability of the banks to pay dividends is
subject to general regulatory restrictions which may, but are not expected to,
have a material negative impact on the liquidity available to the Company.
Additionally, the Company has proceeds from the stock offering not invested in
its new banks available for general corporate purposes.
Regulatory Matters
The management of the Company is not aware of any current recommendations by
regulatory authorities which, if they were to be implemented, would have a
material effect on liquidity, capital resources, or operations.
Accounting Rule Changes
During the first quarter of 1997, the Financial Accounting Standards Board
issued Statement No. 128, "Earnings Per Share", which addresses the computation,
presentation, and disclosure requirements for earnings per share by entities
with publicly held common stock. Statement No. 128 is effective for both interim
and annual periods ending after December 15, 1997.
16
<PAGE>
COMMUNITY CAPITAL CORPORATION
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
11. Earnings per share computations
27. Financial Data Schedule
(b) The Company filed a report on Form 8-K on February 18, 1997,
announcing that it is trading on the American Stock Exchange under the
symbol CYL and that the Company had issued 1,465,000 shares of its common
stock. The report on Form 8-K included, as an exhibit, a copy of the News
Release. No financial statements were required with the Form 8-K.
The Company filed a report on Form 8-K on March 19, 1997, reporting the
acquisition and initial capitalization of The Bank of Barnwell County, a
South Carolina state bank (formerly in organization) in Barnwell, South
Carolina on February 28, 1997. The Company paid cash of $7,200,000 for all
720,000 shares of the bank's common stock. The report on Form 8-K
included, as an exhibit, a copy of the press release announcing the
acquisition and opening of the bank. No financial statements were filed
with this report.
The Company filed a report on Form 8-K on April 14, 1997, reporting the
acquisition and initial capitalization of The Bank of Belton, a South
Carolina state bank (formerly in organization) in Belton, South Carolina
on March 25, 1997. The Company paid cash of $3,500,000 for all 350,000
shares of the bank's common stock. The report on Form 8-K included, as an
exhibit, a copy of the press release announcing the acquisition and
opening of the bank. No financial statements were filed with this report.
Items 1 through 5 are not applicable.
17
<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.
COMMUNITY CAPITAL CORPORATION
By: /S/ WILLIAM G. STEVENS
-------------------------------
William G. Stevens
President &
Chief Executive Officer
Date: May 14, 1997 By: /S/ JAMES H. STARK
-------------------------------
James H. Stark
Chief Financial Officer
18
<PAGE>
EXHIBIT 11
COMMUNITY CAPITAL CORPORATION
EARNINGS PER SHARE
Three Months Ended
Primary and Fully Diluted March 31,
Earnings Per Share --------------------------
- ------------------------- 1997 1996
---------- ----------
(Dollars in thousands except for
per share data)
Net income
$ 159 $ 186
Add: Interest revenue
from assumed purchase
of government securities,
net of tax
-- --
---------- ----------
Adjusted net income for
fully diluted shares
$ 159 $ 186
========== ==========
Weighted average number
of common shares
outstanding(1) 1,986,256 1,217,068
Dilutive stock
equivalents(1)(2) 64,660 100,947
---------- ----------
Total stock and equivalents 2,050,916 1,318,015
Earnings per share of common
and equivalent share $ .08 $ .14
(1) Restated for the effects of the 5% stock dividend in May of 1996.
(2) Computed using the Treasury Stock Aggregate Method modified for the 20%
limitation.
19
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