UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
X QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 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.
2,900,089 SHARES OF COMMON STOCK, $1.00 PAR VALUE
PAGE 1 OF 20
EXHIBIT INDEX ON PAGE 2
<PAGE>
COMMUNITY CAPITAL CORPORATION
INDEX
PART I. FINANCIAL INFORMATION Page No.
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets - June 30, 1997 and
December 31, 1996............................................ 3
Condensed Consolidated Statements of Income - Six months
ended June 30, 1997 and 1996 and three months ended June 30, 1997
and 1996..................................................... 4
Condensed Consolidated Statement of Shareholders' Equity for
the six months ended June 30, 1997....................... 5
Condensed Consolidated Statements of Cash Flows - Six months
ended June 30, 1997 and 1996................................. 6
Notes to Condensed 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 4. Submission of Matters to a Vote of Security Holders...... 17
Item 6. Exhibits and Reports on Form 8-K ........................ 17
(a) Exhibits ............................................ 17
(b) Reports on Form 8-K ................................. 17
This amendment to Form 10-Q is being filed to correct scrivener's errors
contained in the Form 10-Q filed on August 13, 1997.
2
<PAGE>
COMMUNITY CAPITAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(Dollars in thousands)
<TABLE>
<CAPTION>
<S> <C> <C>
June 30, December 31,
1997 1996
ASSETS:
Cash and cash equivalents:
Cash and due from banks $ 5,240 $ 3,927
Federal funds sold 610 700
------------------ ------------------
Total cash and cash equivalents 5,850 4,627
Securities available-for-sale 60,768 23,280
Securities held-to-maturity (estimated
fair value of $700 at June 30, 1997) 700
------------------ ------------------
Total investment securities 61,468 23,280
Loans receivable 114,192 80,546
Less allowance for loan losses (1,211) (837)
------------------ ------------------
Loans, net 112,981 79,709
Premises, furniture and equipment, net 7,801 3,523
Intangible assets 3,014 47
Accrued interest receivable 1,968 1,114
Other assets 6,906 3,659
------------------ ------------------
Total assets $ 199,988 $ 115,959
================== ==================
LIABILITIES AND SHAREHOLDERS' EQUITY:
LIABILITIES:
Deposits:
Noninterest-bearing $ 16,251 $ 12,226
Interest-bearing 141,240 77,636
------------------ ------------------
Total deposits 157,491 89,862
Federal funds purchased and securities
sold under agreements to repurchase 4,888 6,783
Advances from Federal Home Loan Bank 5,081 4,889
Accrued interest payable 1,161 462
Other liabilities 463 407
------------------ ------------------
Total liabilities 169,084 102,403
------------------ ------------------
SHAREHOLDERS' EQUITY:
Common stock, $1 par value, 10,000,000 shares authorized, 2,895,501 and
1,219,109 shares issued and outstanding at June 30, 1997 and
December 31, 1996, respectively 2,896 1,219
Surplus 27,375 12,004
Unrealized gain (loss) on securities
available-for-sale, net of deferred taxes (93) 35
Retained earnings 726 298
------------------ ------------------
Total shareholders' equity 30,904 13,556
------------------ ------------------
Total liabilities and shareholders' equity $ 199,988 $ 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)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Six Months Ended Three Months Ended
June 30, June 30,
---------------------------------------- -------------------------------
1997 1996 1997 1996
---------------------------------------- ------------------------------------
Interest income:
Loans, including fees $ 4,452 $ 3,102 $ 2,561 $ 1,602
Securities, taxable 1,092 555 743 282
Securities, nontaxable 182 140 120 73
Other interest income 137 57 90 18
------------------ ------------------ ------------------ ------------------
5,863 3,854 3,514 1,975
------------------ ------------------ ------------------ ------------------
Interest expense:
Deposit 2,504 1,652 1,572 813
FHLB advances 163 154 78 74
Other interest expense 123 90 22 65
------------------ ------------------ ------------------ ------------------
2,790 1,896 1,672 952
------------------ ------------------ ------------------ ------------------
Net interest income 3,073 1,958 1,842 1,023
Provision for loan losses 224 105 136 55
------------------ ------------------ ------------------ ------------------
Net interest income after
provision for loan losses 2,849 1,853 1,706 968
------------------ ------------------ ------------------ ------------------
Other operating income:
Service charges 375 251 237 131
Residential mortgage
origination fees 108 133 57 73
Gain (loss) on sales
of securities - 17 - 12
Other income 250 253 143 121
------------------ ------------------ ------------------ ------------------
733 654 437 337
------------------ ------------------ ------------------ ------------------
Other operating expenses:
Salaries and benefits 1,606 917 1,023 465
Net occupancy expense 199 136 113 70
Furniture and equipment
expense 284 151 164 77
Other operating expenses 882 696 473 381
------------------ ------------------ ------------------ ------------------
2,971 1,900 1,773 993
------------------ ------------------ ------------------ ------------------
Income before taxes 611 607 370 312
Income tax provision 183 217 101 108
------------------ ------------------ ------------------ ------------------
Net income $ 428 $ 390 $ 269 $ 204
================== ================== ================== ==================
Earnings per share $ .17 $ .30 $ .09 $ .16
WEIGHTED AVERAGE COMMON SHARES
AND EQUIVALENTS 2,514,273 1,316,551 2,973,708 1,339,055
</TABLE>
See notes to condensed consolidated financial statements
4
<PAGE>
COMMUNITY CAPITAL CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(UNAUDITED)
(Dollars in thousands)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Unrealized
Gain (loss)
on Securi- Total
Common Stock ties For Retained Shareholders'
Shares Amount Surplus Sale, Net Earnings Equity
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 15,283 16,948
Proceeds from sales
of stock to ESOP 4,717 5 47 52
Proceeds from
exercise of
stock options 6,675 7 41 48
Change in fair
value for the
period (128) (128)
Net income
for the period 428 428
-------------- -------------- -------------- -------------- -------------- ---------------
Balance, June
30, 1997 2,895,501 $ 2,896 $ 27,375 $ (93) $ 726 $ 30,904
============== ============== ============== ============== ============== ===============
</TABLE>
See notes to condensed consolidated financial statements
5
<PAGE>
COMMUNITY CAPITAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(Dollars in thousands)
<TABLE>
<CAPTION>
<S> <C> <C>
Six Months Ended
June 30,
--------------------------------
1997 1996
------------------ ---------------
CASH FLOWS FROM OPE ATING ACTIVITIES:
Net income $ 428 $ 390
Adjustments to reconcile net income to
net cash (used) provided by operating activities:
Depreciation and amortization 351 200
Provision for possible loan losses 224 105
Amortization of intangible assets 81 7
Amortization less accretion on investments 19 31
Amortization of deferred loan costs 76 64
Gain on sales of securities - (17)
Disbursements for mortgages held for sale (3,709) (5,268)
Proceeds of sales of residential mortgages 3,608 5,353
(Increase) decrease in interest receivable (683) (68)
Increase (decrease)in interest payable 241 83
(Increase) decrease in other assets (2,501) 18
Increase (decrease) in other liabilities 56 85
------------------ ------------------
Net cash (used) provided by operating activities (1,809) 983
------------------ ------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net increase in loans to customers (20,211) (6,948)
Purchases of securities available-for-sale (42,875) (9,406)
Sales of securities available-for-sale 500 4,012
Maturities of securities available-for-sale 4,670 3,931
Purchases of securities held-to-maturity (700) -
Purchases of nonmarketable equity securities (489) -
Purchases of premises and equipment (2,005) (680)
Acquisition of branches 35,761 -
------------------ ------------------
Net cash used by investing activities (25,349) (9,091)
------------------ ------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Sale of capital stock 16,948 -
Proceeds from exercise of stock options 48 62
Proceeds from stock sales to employee benefit plan 52 -
Stock dividend fractional shares paid in cash - (8)
Net increase in deposits accounts 13,036 7,150
Proceeds from FHLB borrowings 5,675 2,700
Repayments of FHLB borrowings (5,483) (3,586)
Net increase (decrease) in fed funds purchased (1,895) 1,349
------------------ ------------------
Net cash provided by financing activities 28,381 7,667
------------------ ------------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1,223 (441)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 4,627 5,279
------------------ ------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 5,850 $ 4,838
================== ==================
</TABLE>
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 June 30, 1997 and for the interim periods ended June
30, 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
<TABLE>
<CAPTION>
<S> <C> <C>
Six Months Ended
June 30,
(Dollars in thousands) 1997 1996
------------------ --------------
CASH PAID DURING THE YEAR FOR:
Income taxes $ 177 $ 148
Interest 2,549 1,812
NONCASH INVESTING AND FINANCING ACTIVITIES:
Foreclosure on loans 262 -
DETAILS OF ACQUISITIONS OF NEW BANKS:
Fixed assets acquired 617 -
Intangible assets 546 -
Organizational notes assumed (Note 4) (1,163) -
------------------ ------------------
Cash paid for acquisitions $ 0 $ -
================== ==================
DETAILS OF ACQUISITIONS OF NEW BRANCHES:
Loans, including accrued interest receivable 15,110 -
Allowance for loan losses from acquisition (255) -
Premises and equipment 2,007 -
Intangible core deposit premiums 2,502 -
Deposits, including accrued interest payable (55,051) -
Other, net (74) -
------------------ ------------------
Cash received for net liabilities assumed $ (35,761) $ -
=================== ==================
</TABLE>
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 used $3,300,000 of the net
proceeds to acquire all of the common stock of The Bank of Newberry County on
July 10, 1997. (See Note 6)
7
<PAGE>
COMMUNITY CAPITAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 3 - SHAREHOLDERS' EQUITY - Continued
On May 19, 1997, the Company granted 74,250 options pursuant to the terms of the
Company's Nonstatutory and Incentive Stock Option Plan. The options are
exercisable one year from the date of grant at a price of $12.50 per share and
expire May 19, 2002.
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.
During the organizational stages, The Bank of Barnwell County and The Bank of
Belton opened lines of credit with the Company's banking subsidiaries which were
guaranteed by the organizers of each organizing bank. Upon the banks being
approved for opening by the regulatory agencies and upon the opening of the
banks, the Company, per agreements with the organizers, agreed to pay off the
lines of credit.
The principle assets acquired and liabilities assumed in the purchase are
summarized below:
Barnwell Belton
(Dollars in thousands) 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. 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.
Six months ended
June 30,
(Dollars in thousand except per share amounts) 1997 1996
----------- ----------
Net income $ 200 $ 350
Net income per common share .08 .27
8
<PAGE>
COMMUNITY CAPITAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 5 - ACQUISITION OF BRANCHES
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 recorded the assets acquired and liabilities assumed
based on their fair market values at the date of acquisition. In recording the
loans and deposits, Carolina First Bank's book values were considered reasonable
estimates of fair value. 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 2,007
Intangible core deposit premiums 2,502
Deposits, including accrued interest payable (55,051)
Other, net (74)
------------------
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.
NOTE 6 - SUBSEQUENT EVENTS
On July 10, 1997, the Company used $3,300,000 of the proceeds from the offering
to acquire and capitalize The Bank of Newberry County. The transaction was
recorded using the purchase method of accounting. The principle assets acquired
and liabilities assumed in the purchase are summarized as follows:
(Dollars in thousands)
Premises, furniture and equipment $ 239
Intangible assets 273
Organizational notes (512)
The value of the intangible assets represents the organizational costs incurred
and the excess of the purchase price over the net assets received. These costs
will be amortized over five years on a straight-line basis.
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 June
30, 1997 compared to December 31, 1996, and the results of operations for the
three and six months ended June 30, 1997 compared to the three and six months
ended June 30, 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. Effective April 7, 1997,
the Barnwell Bank acquired certain assets and assumed certain liabilities of
five branch offices of Carolina First Bank pursuant to the terms of a Purchase
and Assumption Agreement dated January 21, 1997 (the "Purchase of the
Branches"). On July 10, 1997, the Company used $3,300,000 to acquire all of the
common stock of the Bank of Newberry County (the "Newberry Bank"), formerly in
organization.
The following comments reflect the results of the stock offering, the
acquisitions of the Barnwell Bank and the Belton Bank, and the Purchase of the
Branches.
RESULTS OF OPERATIONS
NET INTEREST INCOME
For the six months ended June 30, 1997, net interest income, the major component
of the Company's net income, was $3,073,000 compared to $1,958,000 for the same
period of 1996, an increase of $1,115,000. For the quarter ended June 30, 1997,
net interest income was $1,842,000 compared to $1,023,000 for the quarter ended
June 30, 1997. The improvement was attributable to an increase in the volume of
earning assets during the period, particularly loans and investment activities,
due to the approximately $17,000,000 net proceeds from the stock offering and
the Purchase of the Branches which added approximately $15,000,000 in loans and
investable proceeds of $35,761,000. Net interest income has benefitted from the
continued strong loan demand in the Greenwood and Clemson markets. The Company
has also used its network of subsidiary banks and improved liquidity from the
Purchase of the Branches to lower its costs of funds. The rates paid on
interest-bearing liabilities decreased to 4.75% from 4.91% for the six-month
periods ended June 30, 1997 and 1996, respectively.
Due to the above factors, the Company's net interest spread and net interest
margin were 3.60% and 4.38%, respectively, for the six-month period ended June
30, 1997 as compared to 3.49% and 4.27% for the six-month period ended June 30,
1996.
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 six months and quarter ended June 30, 1997, the
provision was $224,000 and $136,000, respectively, as compared to $105,000 and
$55,000 for the six months and quarter ended June 30, 1996. 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. Upon the Purchase of the Branches, the
Company increased the allowance for loan losses by $255,000 for possible losses
in the loans acquired. Based on present information, management believes the
allowance for loan losses is adequate at June 30, 1997 to meet presently known
and inherent risks in the loan portfolio.
NONINTEREST INCOME
Total noninterest income for the six months ended June 30, 1997 was $733,000, an
increase of $79,000, or 12.1% from the comparable period in 1996. Total
noninterest income for the quarter ended June 30, 1997 was $437,000, or $100,000
higher than the comparable period in 1996.
The increases are primarily due to an increase in service charges due to the
increase in the number of deposit accounts. Origination fees on residential
mortgages declined in both the six and three-month periods ended June 30, 1997
over the same periods in 1996 due to changes in the lending rates on residential
mortgages.
NONINTEREST EXPENSE
Total noninterest expense for the first two quarters of 1997 was $2,971,000, an
increase of $1,071,000, or 56.4%, when compared to the first six months of 1996.
For the quarter ended June 30, 1997, noninterest expense was $1,773,000, an
increase of $780,000 over the comparable period in 1996.
The primary component of noninterest expense is salaries and benefits which was
$1,606,000 and $917,000 for the six months ended June 30, 1997 and 1996,
respectively. The $689,000 increase is primarily a result of the acquisition 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 $284,000 from $151,000 largely due
to an increase in depreciation charges on technological upgrades during 1996 and
the first quarter of 1997 and the new furniture and equipment for the new banks.
Net occupancy expense and other operating expenses also increased due to the
growth of the Company.
INCOME TAXES
For the six months ended June 30, 1997 and 1996, the effective income tax rate
was 30.0% and 36.0%, respectively, and the income tax provision was $183,000 and
$217,000, respectively. For the quarter ended June 30, 1997, the effective tax
rate was 27.3% compared to 34.6% for the second quarter of 1996. 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 $428,000 for the
six months ended June 30, 1997 compared to $390,000 for the comparable period in
1996. For the quarter ended June 30, 1997, net income was $269,000, an increase
of $65,000, or 31.86%, when compared to the second quarter of 1996.
The development and organization of the Barnwell Bank and the Belton Bank,
including initial operating expenditures, negatively impacted earnings for the
first two quarters of 1997. However, continued profitability at Greenwood Bank &
Trust and Clemson Bank & Trust was more than enough to offset negative earnings
at the new banks. The Company anticipates that the opening and purchase of the
Newberry Bank will have a similar effect on earnings.
ASSETS AND LIABILITIES
During the first six months of 1997, total assets grew $84,029,000, or 72.5%
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 and
the Purchase of the Branches by the Barnwell Bank. The principal assets acquired
and liabilities assumed in the purchase are summarized as follows:
(Dollars in thousands)
Loans, net of amount charged to the
allowance for loan losses $ 14,684
Accrued interest receivable 171
Premises and equipment 2,007
Intangible core deposit premiums 2,502
Deposits, (54,593)
Accrued interest payable (458)
Other, net (74)
-----------------
Cash received for net liabilities assumed $ (35,761)
=================
The Company, the Barnwell Bank, and the Belton Bank largely used excess proceeds
from the stock offering and cash received for net liabilities assumed from the
Purchase of the Branches to acquire investment securities.
The demand for quality loans in the Greenwood and Clemson markets remained
strong and also contributed to the growth of the asset base.
INVESTMENT SECURITIES
Investment securities increased $38,188,000 during the period. The increase is
due to the investment of proceeds from the stock offering and cash received for
the net liabilities assumed upon the Purchase of the Branches in U.S. Treasury
and U.S. government agency securities.
12
<PAGE>
LOANS
Loans receivable increased $33,646,000 or 41.8% during the period. This increase
was primarily due to the acquisition of $14,939,000 of loans from the Purchase
of the Branches and to the continued strong loan demand in the Greenwood and
Clemson markets. Balances within the major loan receivable categories as of June
30, 1997 and December 31, 1996 are as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
June 30, December 31,
1997 1996
(Dollars in thousands)
Commercial and agricultural $ 22,879 $ 15,348
Real estate 61,739 49,639
Home equity 11,202 9,243
Consumer, installment 15,232 4,592
Consumer, credit card and checking 2,570 1,355
Residential mortgages held for sale
& other 570 369
----------------- -----------------
$ 114,192 $ 80,546
================= =================
</TABLE>
RISK ELEMENTS IN THE LOAN PORTFOLIO
The following is a summary of risk elements in the loan portfolio:
<TABLE>
<CAPTION>
<S> <C> <C>
June 30,
--------------------------------
1997 1996
-------------------- ----------------
Loans: (Dollars in thousands)
Nonaccrual loans $ 116 $ 122
Accruing loans more than 90
days past due $ 82 $ 5
Loans identified by the internal review mechanism:
Criticized $ 2,712 $ 1,034
Classified $ 2,191 $ 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 224 50
Chargeoffs (105) (4)
Recoveries - -
Reserves related to acquisitions 255 -
-------------------- ------------------
Balance, end of period $ 1,211 $ 717
=================== ===================
Gross loans outstanding, end of period $ 114,192 $ 67,206
Allowance for Loan Losses to loans
outstanding 1.06% 1.07%
</TABLE>
13
<PAGE>
PREMISES AND EQUIPMENT
The acquisitions of the Barnwell Bank and the Belton Bank and the Purchase of
the Branches were primary contributors to the $4,278,000 increase in premises
and equipment. Additionally, the Company completed the construction of the
permanent facility for the Clemson Bank with total cost of approximately
$1,230,000.
DEPOSITS
Total deposits increased $67,629,000 or 75.2% from December 31, 1996. Upon the
purchase of the Carolina First Bank branches, the Company assumed deposit
liabilities of $54,593,000 as follows:
(Dollars in thousands)
Certificates of deposit $100M and over $ 5,689
Other time deposits 24,551
Other deposits 24,353
---------------------
Total deposits purchased $ (35,761)
=====================
Expressed in percentages, noninterest-bearing deposits increased 32.9% and
interest-bearing deposits increased 81.9%.
Balances within the major deposit categories as of June 30, 1997 and December
31, 1996 are as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
June 30, December 31,
1997 1996
(Dollars in thousands)
Noninterest-bearing demand deposits $ 16,251 $ 12,226
Interest-bearing demand deposits 28,056 8,296
Money market accounts 17,576 14,035
Savings deposits 12,987 8,681
Certificates of deposit 82,621 46,624
----------------- ------------------
$ 157,491 $ 89,862
================= ==================
</TABLE>
LONG-TERM DEBT
Advances from the Federal Home Loan Bank increased to $5,081,000 as of June 30,
1997 from $4,889,000 as of December 31, 1996. Of the total borrowings as of June
30, 1997, the following advances have maturity dates greater than one year:
<TABLE>
<CAPTION>
<S> <C> <C>
Principal Maturity
Amount Interest Rate Date
(Dollars in thousands)
$ 400 6.31%-fixed July 22, 1998
1,000 6.26%-fixed July 29, 1998
800 5.66%-variable May 23, 2000
--------------------
$ 2,200
====================
</TABLE>
14
<PAGE>
CAPITAL
Quantitative measures established by the federal banking agencies to ensure
capital adequacy require the Company and its 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 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.
The Company and its 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 Company and its banking
subsidiaries and the regulatory minimum requirements at June 30, 1997
Tier 1 Total Tier 1
Risk Based Risk Based Leverage
Actual ratio:
Community Capital Corporation 21.18% 22.00% 14.25%
Greenwood Bank & Trust 10.34 11.27 7.84
Clemson Bank & Trust 23.82 24.90 17.35
The Bank of Barnwell County 16.16 17.02 8.61
The Bank of Belton 94.16 94.76 45.45
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
LIQUIDITY AND CAPITAL RESOURCES
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 $52,000
proceeds from sales of stock to the Employee Stock Ownership Plan, and net
income of $428,000. 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 $128,000 net of the deferred tax
effects.
The Company used approximately $7,200,000 of the net proceeds from the stock
offering to purchase and capitalize the Barnwell Bank and used approximately
$3,500,000 to purchase and capitalize Belton Bank. On July 10, 1997, the Company
used $3,300,000 of the net proceeds to purchase and capitalize The Bank of
Newberry County.
15
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES - Continued
The Company's liquidity was improved by the stock offering and the Purchase of
the Branches, resulting in a decrease in the loans-to-deposits ratio to 72.5% as
of June 30, 1997 from 89.6% as of December 31, 1996. A significant portion of
the cash received was invested in securities of the U.S. Treasury and U.S.
government agencies. For the near term, maturities and sales of securities
available for sale are expected to be a primary source of liquidity as the
Company and its subsidiary banks deploy these funds into loans to achieve the
desired mix of assets and liabilities. The Company also expects to build its
deposit base in its new markets. Short-term borrowings are not expected to be a
primary source of liquidity for the near term: however, the Company has
approximately $12,625,000 of unused lines of credit to purchase federal funds
and a $5,000,000 line of credit with another financial institution as other
liquidity sources.
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. Earlier application is not
permitted.
16
<PAGE>
COMMUNITY CAPITAL CORPORATION
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On May 19, 1997, the Company held its Annual Meeting of Shareholders for the
purpose of (a) electing nine members to the board of directors; and (b)
ratifying the appointment of Tourville, Simpson & Henderson, certified public
accountants, as the Company's independent auditors for the fiscal year ending
December 31, 1997. Each of the nominees for director received the number of
affirmative votes of shareholders required for such nominee's election in
accordance with the Bylaws of the Company, and Tourville, Simpson & Henderson
received the requisite number of affirmative votes required for approval
pursuant to the Bylaws of the Company. Of the 2,890,785 outstanding shareholders
of the Company, 2,293,732 shareholders either voted in person or by proxy for
the two matters presented for shareholders' approval.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
I. Earnings per share computations
(b)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.
The Company filed a report on Form 8-K on April 22, 1997,
reporting the acquisition of five branches from Carolina First
Bank on April 7, 1997 by the Bank of Barnwell County, a
wholly-owned subsidiary of the Company. The Form 8-K included a
copy of the Purchase and Assumption Agreement dated January 21,
1997, by and among the Company, The Bank of Barnwell County, and
Carolina First Bank (incorporated by reference to the Company's
Registration Statement on form S-2 originally filed on December
20, 1996 as amended) and a copy of a press release announcing
the acquisition.
Items 1 through 5 are not applicable.
17
<PAGE>
COMMUNITY CAPITAL CORPORATION
PART II - OTHER INFORMATION
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:
William G. Stevens
President & Chief Executive Officer
Date: August , 1997 By:
James H. Stark
Chief Financial Officer
18
<PAGE>
EXHIBIT I
COMMUNITY CAPITAL CORPORATION
EARNINGS PER SHARE
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Six Months Ended Three Months Ended
Primary and Fully Diluted June 30, June 30,
-------------------- --------------
Earnings Per Share 1997 1996 1997 1996
- -------------------------- -------------- -------------- -------------- -------------
(Dollars in thousands except for per share data)
Net income $ 428 $ 390 $ 269 $ 204
Add: Interest revenue
from assumed purchase
of government securities,
net of tax - 1 - 3
-------------- -------------- -------------- ---------------
Adjusted net income for
fully diluted shares $ 428 $ 391 $ 269 $ 208
============== ============== ============== ===============
Weighted average number
of common shares
outstanding 2,443,136 1,217,310 2,894,995 1,218,065
Dilutive stock
equivalents 71,137 99,241 78,713 120,990
-------------- -------------- -------------- ---------------
Total stock and
equivalents 2,514,273 1,316,551 2,973,708 1,339,055
============== ============== ============== ===============
Earnings per share of
common and equivalent
share $ .17 $ .30 $ .09 $ .16
============== ============== ============== ===============
</TABLE>
(1) Restated for the effect of the 5% stock dividend in May of 1996.
(2) Computed using the Treasury Stock Aggregate Method modified for the 20%
limitation.
19
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-1-1997
<PERIOD-END> JUN-30-1997
<CASH> 5,240,000
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 610,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 60,768,000
<INVESTMENTS-CARRYING> 700,000
<INVESTMENTS-MARKET> 700,000
<LOANS> 114,192,000
<ALLOWANCE> 1,211,000
<TOTAL-ASSETS> 199,988,000
<DEPOSITS> 157,491,000
<SHORT-TERM> 7,769,000
<LIABILITIES-OTHER> 1,624,000
<LONG-TERM> 2,200,000
0
0
<COMMON> 2,896,000
<OTHER-SE> 28,008,000
<TOTAL-LIABILITIES-AND-EQUITY> 199,988,000
<INTEREST-LOAN> 4,452,000
<INTEREST-INVEST> 1,274,000
<INTEREST-OTHER> 137,000
<INTEREST-TOTAL> 5,863,000
<INTEREST-DEPOSIT> 2,504,000
<INTEREST-EXPENSE> 2,790,000
<INTEREST-INCOME-NET> 3,073,000
<LOAN-LOSSES> 224,000
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 2,971,000
<INCOME-PRETAX> 611,000
<INCOME-PRE-EXTRAORDINARY> 611,000
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 428,000
<EPS-PRIMARY> 0.17
<EPS-DILUTED> 0.17
<YIELD-ACTUAL> 4.38
<LOANS-NON> 116,000
<LOANS-PAST> 82,000
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 2,712,000
<ALLOWANCE-OPEN> 837,000
<CHARGE-OFFS> 105,000
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 1,211,000
<ALLOWANCE-DOMESTIC> 1,211,000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
